BUDGET OPERATIONS MANUAL

FOR LOCAL GOVERNMENT UNITS

2023 EDITION
 The Budget Operations Manual for Local Government Units,
2023 Edition, may be reproduced provided written permission is
obtained from the Department of Budget and Management.
 BUDGET OPERATIONS MANUAL
FOR LOCAL GOVERNMENT UNITS

2023 EDITION

This Manual was prepared with the Technical Assistance

of the Asian Development Bank.
 REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF BUDGET AND MANAGEMENT
GENERAL SOLANO STREET, SAN MIGUEL, MANILA

LOCAL BUDGET CIRCULAR No. _____________

152
Date: _____________
August 2, 2023

To : Local Chief Executives, Members of the Local Sanggunian, Local Budget

Officers, Local Treasurers, Local Planning and Development Coordinators,
Local Accountants, and All Others Concerned

Subject : BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

(BOM for LGUs), 2023 EDITION

1.0 BACKGROUND

1.1 Pursuant to Section 354 of the Local Government Code of 1991 (Republic Act
No. 7160) and Article 426 of its Implementing Rules and Regulations, the Department
of Budget and Management (DBM) shall promulgate a BOM for LGUs to improve and
systematize the methods, techniques, and procedures employed in budget
preparation, authorization, execution, and accountability, as well as extend technical
assistance in local government budgeting.

1.2 The previous version of the BOM for LGUs was promulgated under the auspices of
the European Union Project, LGU PFM 2, and the same was officially prescribed by
DBM through Local Budget Circular (LBC) No. 112 dated June 10, 2016.1

1.3 However, there have been significant developments in local government budgeting
which call for the need to update the BOM for LGUs, 2016 Edition.

2.0 PURPOSE

This Circular is being issued to prescribe the institutionalization of the BOM for LGUs, 2023
Edition as a guide for all provinces, cities, and municipalities in local government budgeting.

3.0 THE BOM for LGUs, 2023 EDITION

3.1 The BOM for LGUs, 2023 Edition provides for the enhanced framework and
approaches to local budgeting which shall enjoin the LGUs to be more responsible
and accountable for the funds entrusted to them and direct their financial resources
according to their thrust and mandates.

3.2 Specifically, the BOM for LGUs, 2023 Edition contains the following enhancements
and new features, to wit:

1
Budget Operations Manual for Local Government Units (BOM for LGUs), 2016 Edition
 3.2.1 Discussion on the fundamental principles governing local taxation and fiscal
matters, limitations on the taxing powers of LGUs, and fundamental
principles in local government budgeting;

3.2.2 Enhanced framework for strengthening policy-based budgeting by

specifying how to harmonize the linkage among policy-making, planning,
and budgeting;

3.2.3 Streamlining and updating of local budget forms;

3.2.4 Introduction of the Cash Budgeting System, a new approach to budgeting,

which LGUs may adopt to instill fiscal discipline and ensure efficient and
timely delivery of public service; and

3.2.5 Integration of other developments concerning local budget operations, in

view of the enactment of new laws and issuance of updated/new policies
and guidelines, including the implementation of the Supreme Court Ruling
on the Mandanas-Garcia Case.

4.0 ELECTRONIC BUDGET SYSTEM FOR LGUs

4.1 To assist the LGUs in the preparation of the different forms required in the budgeting
processes and to facilitate the online submission of the Annual/Supplemental Budgets
and other reports, the electronic Budget (eBudget) System for LGUs was enhanced
under the Technical Assistance of Asian Development Bank.

4.2 The eBudget System also facilitates the online submission of report to the electronic
Statement of Receipts and Expenditure (eSRE) System of the Department of Finance
– Bureau of Local Government Finance by the Local Budget Officer. The eBudget
System shall be made available free of charge to LGUs interested in automating their
local budget processes.

5.0 ROLL-OUT ACTIVITIES

5. 1 Training on the BOM for LGUs, 2023 Edition shall be conducted by the Regional
Offices in coordination with the Local Government and Regional Coordination Bureau.

5.2 The Regional Offices, with the support of the Information Communications and
Technology Systems Service, shall provide technical assistance to LGUs who are
interested to use the eBudget System for LGUs.

6.0 ITEMS FOR RESOLUTION

Interpretation of the provisions of this Circular and the BOM for LGUs, 2023 Edition, including
relevant items not covered therein, shall be referred to the DBM for resolution.

7.0 SEPARABILITY CLAUSE

If any provision of this Circular and the BOM for LGUs, 2023 Edition is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.
8.0 REPEALING CLAUSE

This Circular and the BOM for LGUs, 2023 Edition supersede LBC No. 112 dated June 10,
2016 and the BOM for LGUs, 2016 Edition, respectively.

9.0 EFFECTIVITY

The BOM for LGUs, 2023 Edition shall take effect in FY 2023.

Secretary
Message from the Secretary

Unity amid diversity has been the resounding call of

the administration of President Ferdinand R. Marcos
Jr., even before his assumption of duty. This
message has fueled our whole-of-nation approach in
the pursuit of economic transformation across all
sectors and the growth of our localities.

As we seek the empowerment of local government

units (LGUs), we are reminded that the budget plays
an important role in development planning at all
levels of government.

It is in this light that we bring you the 2023 Edition of

the Budget Operations Manual for LGUs.

Planning and budgeting must go hand-in-hand. At

the same time, Public Financial Management (PFM)
is crucial not only in identifying, but also in prioritizing
high-impact programs, projects, and activities that
truly respond to the needs of the people while
maximizing our finite resources. We hope this
Manual will aid our local governments in effectively
performing their functions, implementing local plans,
and providing quality public service, especially with
the recent developments brought about by the
Supreme Court Ruling on the Mandanas - Garcia
Case.

As the Department of Budget and Management

continues to be at the forefront of institutionalizing
budget reforms and promoting efficient PFM in the
country, we hope that this Manual will aid and guide
LGUs, who continue to be our ever-reliable bridge to
the people.

Let us work together towards enhancing

bureaucratic efficiency and promoting sound fiscal
management, in fulfillment of the Philippine
Development Plan 2023 to 2028 and our Agenda for
Prosperity.

Wabillahi Tawfiq Wal Hidaya, Wasalamu alaikum wa

rahmatullahi wa Barakatuhu.

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Table of Contents
List of Acronyms and Abbreviations…………………………………………………….. xii
PART I. THE BUDGETING FRAMEWORK FOR LOCAL GOVERNMENT UNITS……….. 1
Fundamental Principles Governing Local Taxation and Fiscal Matters………………… 2
Limitations on the Taxing Powers of the Local Government Units……………………… 2
Fundamental Principles in Local Government Budgeting………………………………… 6
CHAPTER 1. PARTICIPATORY BUDGETING…………………………………………… 8
1.1 Legal Bases of Participatory Budgeting…………………………………………….. 8
1.2 Guidelines on Participatory Budgeting……………………………………………… 8
1.3 Benefits of Participatory Budgeting…………………………………………………. 10
1.4 Membership of CSOs to the Local Development Council…………………………. 11
1.5 Roles of CSOs in the Local Budget Process……………………………………….. 11
CHAPTER 2. POLICY-BASED BUDGETING…………………………………………….. 15
2.1 Legal Bases of Policy-Based Budgeting……………………………………………. 15
2.2 Key Players in Policy-Based Budgeting…………………………………………….. 16
2.3 Harmonizing Plans and Policies…………………………………………………….. 17
2.4 Linking the Budget to Harmonized Plans and Policies…………………………….. 19
2.5 Synchronized Plan-Budget Process………………………………………………… 20
2.6 Preparation of the Annual Investment Program…………………………………… 23
2.7 Procurement Planning and Budgeting Linkage……………………………………. 29
CHAPTER 3. PERFORMANCE-INFORMED BUDGETING…………………………….. 31
3.1 Legal Bases of PIB……………………………………………………………………. 31
3.2 Key Players in PIB……………………………………………………………………. 31
3.3 Conceptual Framework of PIB………………………………………………………. 32
3.4 Key Features/Benefits of PIB………………………………………………………… 33
3.5 PIB Process…………………………………………………………………………… 34
CHAPTER 4. NEW APPROACH IN BUDGETING……………………………………….. 36
4.1 Cash Budgeting System……………………………………………………………… 36
4.2 Fundamental Principles of CBS……………………………………………………... 37
4.3 Benefits of Adopting CBS…………………………………………………………….. 38

PART II. THE LOCAL BUDGET PROCESS………………………………………………….. 39

CHAPTER 1. BUDGET PREPARATION PHASE………………………………………… 40
1.1 Legal Basis of Budget Preparation………………………………………………….. 40
1.2 Key Players in Budget Preparation………………………………………………….. 40
1.3 The Budget Preparation Flowchart…………………………………………………. 44

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 1.4 Steps in the Budget Preparation Phase…………………………………………….. 44
1.5 Local Budget Preparation Forms……………………………………………………. 59
1.6 Illustrative Examples…………………………………………………………………. 72
CHAPTER 2. BUDGET AUTHORIZATION PHASE……………………………………… 90
2.1 Legal Basis of Budget Authorization………………………………………………… 90
2.2 Key Players in Budget Authorization………………………………………………... 90
2.3 The Budget Authorization Flowchart………………………………………………... 93
2.4 Steps in the Budget Authorization Phase…………………………………………… 93
2.5 Local Budget Authorization Forms………………………………………………….. 109
2.6 Illustrative Examples…………………………………………………………………. 112
CHAPTER 3. BUDGET REVIEW PHASE…………………………………………………. 127
3.1 Legal Bases of Budget Review……………………………………………………… 127
3.2 Key Players in Budget Review………………………………………………………. 127
3.3 Reglementary Period of Review……………………………………………..……… 128
3.4 The Budget Review Flowchart………………………………………………………. 128
3.5 Steps in the Budget Review Phase…………………………………………………. 129
3.6 Local Budget Review Forms…………………………………………………………. 136
3.7 Illustrative Examples…………………………………………………………………. 155
3.8 Stamp of Review……………………………………………………………………… 163
CHAPTER 4. THE BUDGET EXECUTION PHASE……………………………………… 164
4.1 Legal Bases of Budget Execution…………………………………………………… 164
4.2 Key Players in Budget Execution…………………………………………………… 165
4.3 The Budget Execution Flowchart……………………….…………………………… 169
4.4 Budgetary Accounts in Budget Execution……………….…………………………. 169
4.5 Steps in the Budget Execution Phase………………………………………………. 170
4.6 Changes in the Annual Budget………………………………………………………. 174
4.7 Reenacted Budget……………………………………………………………………. 176
4.8 Local Budget Execution Forms……………………………………………………… 178
CHAPTER 5. THE BUDGET ACCOUNTABILITY PHASE……………………………… 194
5.1 Legal Bases of Budget Accountability……………………………………….……… 194
5.2 Key Players in Budget Accountability……………………………………………….. 194
5.3 The Budget Monitoring and Evaluation Framework……………………………….. 199
5.4 Steps in the Budget Accountability Phase………………………………………….. 201
5.5 Local Budget Accountability Reports……………………………………………….. 205

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PART III: ALLOCATIONS TO LOCAL GOVERNMENT UNITS…………………………….. 214
CHAPTER 1. NATIONAL TAX ALLOTMENT (FORMERLY INTERNAL REVENUE
ALLOTMENT)………………………………………………………………………………… 215
1.1 Legal Bases…………………………………………………………………………… 215
1.2 Supreme Court Ruling on the Mandanas-Garcia Case…………………………… 215
1.3 Distribution of Shares………………………………………………………………… 217
1.4 Uses of the Fund……………………………………………………………………… 218
1.5 Fund Release Procedures…………………………………………………………… 219
CHAPTER 2. SHARE IN THE UTILIZATION AND DEVELOPMENT OF NATIONAL
WEALTH……………………………………………………………………………………… 220
2.1 Legal Bases…………………………………………………………………………… 220
2.2 Distribution of Shares………………………………………………………………… 220
2.3 Uses of the Fund……………………………………………………………………… 221
2.4 Fund Release Procedures…………………………………………………………… 221
CHAPTER 3. SHARE IN THE GROSS INCOME TAXES PAID BY ALL
BUSINESSES AND ENTERPRISES WITHIN THE SPECIAL ECONOMIC ZONES….. 223
3.1 Legal Bases…………………………………………………………………………… 223
3.2 Computation of Shares………………………………………………………………. 223
3.3 Uses of the Fund……………………………………………………………………… 223
3.4 Fund Release Procedures…………………………………………………………… 223
CHAPTER 4. SHARE IN VALUE-ADDED TAX…………………………………………… 225
4.1 Legal Bases…………………………………………………………………………… 225
4.2 Computation of Shares………………………………………………………………. 225
4.3 Uses of the Fund……………………………………………………………………… 226
4.4 Fund Release Procedures…………………………………………………………… 227
CHAPTER 5. SHARE IN TOBACCO EXCISE TAXES…………………………………… 228
5.1 Legal Bases…………………………………………………………………………… 228
5.2 Computation of Shares of LGUs……………………………………………………. 228
5.3 Uses of the Fund……………………………………………………………………… 229
5.4 Fund Release Procedures…………………………………………………………… 230
5.5 Treatment of the Shares……………………………………………………………… 231

PART IV – SPECIAL FUNDS…………………………………………………………………… 232

CHAPTER 1. SPECIAL EDUCATION FUND……………………………………………... 232
1.1 Legal Bases…………………………………………………………………………… 232
1.2 Policy Guidelines……………………………………………………………………… 233
1.3 Allowable Expenses Chargeable against the SEF………………………………… 233
1.4 Planning and Budgeting for the SEF………………………………………………… 237

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 CHAPTER 2. SPECIAL HEALTH FUND…………………………………………………... 240
2.1 Legal Bases…………………………………………………………………………… 240
2.2 Policy Guidelines……………………………………………………………………… 240
2.3 Fund Sources of SHF………………………………………………………………… 240
2.4 Allowable Expenses Chargeable Against the SHF………………………………… 241
2.5 Steps in the Establishment of the SHF……………………………………………… 242
2.6 Planning and Budgeting for the SHF……………………………………………….. 243
2.7 SHF Budget Preparation Forms……………………………………………………... 247

PART V. FREQUENTLY ASKED QUESTIONS (FAQs)……………………………………. 253

Budget Preparation…………………………………………………………………………... 253
Budget Authorization…………………………………………………………………………. 260
Budget Review………………………………………………………………………………... 271
Budget Execution…………………………………………………………………………….. 273
Allocations to Local Government Units…………………………………………………….. 277
Items of Appropriations Included, By Attribution, in the General Fund Annual Budget… 279
Confidential Expenses……………………………………………………………………….. 279
Local Disaster Risk Reduction and Management Fund…………………………………... 283
Aid to Barangays……………………………………………………………………………… 285
Gender and Development…………………………………………………………………… 285
Indigenous Cultural Communities/Indigenous Peoples…………………………………... 287
Creation of Positions…………………………………………………………………………. 287

ANNEXES
Annex A. Synchronized Local Planning and Budgeting Calendar……………………….. 289
Annex B. Proposed Major Final Output (MFO) and Performance Indicators (PIs) of the
Different Mandatory Offices in LGUs……………………………………………………….. 294
Annex C. The Service Falling Under Each of the Major Sectors Pursuant to the New
Government Accounting System of the Commission on Audit…………………………… 300
Annex D. Coding Structure by Type of LGU and Office…………………………………… 302
Annex E. Process Guide for Climate Change Expenditure Tagging…………………….. 304
Annex F. Project Monitoring/Inspection Report……………………………………………. 305

GLOSSARY OF TERMS………………………………………………………………………… 306

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List of Figures
Figure 1. Benefits of Participatory Budgeting……………………………………….. 10
Figure 2. Plan-Budget Link Model……………………………………………………. 20
Figure 3. AIP Preparation Flowchart………………………………………………… 24
Figure 4. AIP Reference Code Guide…………………………………………..…… 25
Figure 5. Procurement Planning and Budgeting Linkage…………………………. 30
Figure 6. PIB Conceptual Framework……………………………………………….. 33
Figure 7. Comparison Between Obligation-Based Budgeting and CBS…………. 37
Figure 8. The Local Budget Process………………………………………………… 39
Figure 9. Budget Preparation Flowchart…………………………………………….. 44
Figure 10. Budget Authorization Flowchart…………………………………………… 93
Figure 11. Budget Review Flowchart………………………………………………….. 129
Figure 12. Budget Execution Flowchart………………………………………………. 169
Figure 13. Budget Monitoring and Evaluation Framework………………………….. 200
Figure 14. Budget Accountability Flowchart………………………………………….. 201
Figure 15. NTA Share per LGU Level………………………………………………… 217
Figure 16. Distribution of Shares from National Wealth…………………………….. 221
Figure 17. Distribution of Shares from National Wealth…………………………….. 221
Figure 18. Formula for the Computation of LGUs' VAT Shares……………………. 226

List of Tables
Table 1. Taxing Powers, by LGU Level………………………………………………. 4
Table 2. Roles of CSOs in the Local Budget Process………………………………. 11
Table 3. Sample Template for Medium Term Revenue Forecast………………….. 21
Table 4. AIP Summary Form………………………………………………………….. 25
Table 5. Roles of CSOs in the Budget Preparation Phase………………………… 42
Table 6. Roles of CSOs in the Budget Authorization Phase………………………. 91
Table 7. Roles of CSOs in the Budget Review Phase………………………………. 128
Table 8. Review Actions and Corrective Measures…………………………………. 134
Table 9. Roles of CSOs in the Budget Execution Phase…………………………… 166
Table 10. Difference of the Use of Savings through Supplemental Budget and
Augmentation…………………………………………………………………. 175
Table 11. Roles of CSOs in the Budget Accountability Phase………………………. 198
Table 12. Required Accountability Reports……………………………………………. 203
Table 13. Variance Analysis of Output/Physical Performance………………………. 204
Table 14. Variance Analysis of Financial Performance………………………………. 204
Table 15. Distribution of NTA Shares Formula………………………………………... 217
Table 16. Types of National Wealth with Corresponding Collecting Agency………. 220
Table 17. Timelines for the Budget Process of SHF………………………………….. 245

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LIST OF ABBREVIATONS
AGSB Authorized Government Servicing Bank
AIP Annual Investment Program
AO Appropriation Ordinance
APP Annual Procurement Plan
BAC Bids and Awards Committee
BLGF Bureau of Local Government Finance
BOM Budget Operations Manual
CapEx Capital Expenditure
CBS Cash Budgeting System
CCET Climate Change Expenditure Tagging
CDP Comprehensive Development Plan
CLUP Comprehensive Land Use Plan
CO Capital Outlay
COA Commission on Audit
COE Current Operating Expenditures
CSC Civil Service Commission
CSO Civil Society Organization
DBM Department of Budget and Management
DENR Department of Environment and Natural Resources
DF Development Fund
DILG Department of the Interior and Local Government
DOF Department of Finance
ELA Executive-Legislative Agenda
FE Financial Expenses
GAD Gender and Development
HoPE Head of the Procuring Entity
IAM Internal Audit Manual
IRA Internal Revenue Allotment
IRP Internal Rules of Procedure
IRR Implementing Rules and Regulations
JMC Joint Memorandum Circular
LBAc Local Budget Accountability
LBA Local Budget Authorization
LBE Local Budget Execution
LBO Local Budget Officer
LBP Local Budget Preparation
LBR Local Budget Review
LCE Local Chief Executive
LDC Local Development Council
LDIP Local Development Investment Program
LEE Local Economic Enterprise
LEP Local Expenditure Program
LFC Local Finance Committee
LGC Local Government Code of 1991
LGU Local Government Unit
LPDC Local Planning and Development Coordinator
MFO Major Final Output
MOOE Maintenance and Other Operating Expenses
MTEF Medium Term Expenditure Framework

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NDRRMC National Disaster Risk Reduction and Management Council
NEDA National Economic and Development Authority
NGA National Government Agency
NTA National Tax Allotment
PEM Public Expenditure Management
PPA Program/Project/Activity
PDPFP Provincial Development and Physical Framework Plan
PI Performance Indicator
PERA Personnel Economic Relief Allowance
PFM Public Financial Management
PIB Performance-Informed Budgeting
PPMP Project Procurement Management Plan
PS Personal Services
PU Public Utility
RA Republic Act
RATA Representation and Transportation Allowances
RO Regional Office
RPT Real Property Tax

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Foreword
Pursuant to its mandate under Section 354 of Republic Act No. 7160 or the Local
Government Code of 1991 to promulgate a Budget Operations Manual for Local
Government Units (BOM for LGUs) to improve and systematize methods, techniques,
and procedures employed in the local budget process, the Department of Budget and
Management (DBM) is issuing the BOM for LGUs, 2023 Edition.

The BOM for LGUs, 2023 Edition reflects the earnest endeavor to sustain efforts to
make Public Financial Management (PFM) more responsive, transparent, and
accountable at the local level. It provides an enhanced framework for strengthening
policy-based budgeting by specifying how to harmonize the linkage among policy-
making, planning, and budgeting. It also reinforces the Performance-Informed
Budgeting Framework.

On top of this, the Manual features the Cash Budgeting System, a new approach to
budgeting pursuant to Executive Order (EO) No. 91, series of 2019, which LGUs may
adopt to instill fiscal discipline and ensure efficient and timely delivery of public service.

The Manual also continues to espouse participatory budgeting, which reinforces the
roles of Civil Society Organizations in the local budget process. This is in line with our
commitment to promote open government in the country, and in accordance with EO
No. 31, series of 2023, institutionalizing the Philippine Open Government Partnership.

The foregoing new approaches to budgeting, as well as the latest issuances on local
budgeting, including the recent developments brought by the implementation of the
Supreme Court Ruling on the Mandanas-Garcia Case, are integrated and reflected in
the entire budget process. This makes the BOM for LGUs, 2023 Edition a potent and
effective tool for sound and efficient local PFM, which is key to a better local budgeting
process toward the growth of our localities and the nation.

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PART I. THE BUDGETING FRAMEWORK
FOR LOCAL GOVERNMENT UNITS
Local Fiscal Administration is governed by Book II - Local Taxation and Fiscal Matters
of the Local Government Code (LGC) of 1991 (Republic Act [RA] No. 7160). The same
law lays down the fundamental principles of taxation and budgeting from which the
policies that form part of the budgeting framework for local government units (LGUs)
are derived.

The principle of participatory governance is advocated to be applied in the budget

process. It attempts to persuade local thinking on the benefits of engaging civil society
organizations (CSOs) in local governance.

Complementary to participatory governance is strengthening the linkage among

policy-making, planning and budgeting. It addresses the mismatch between policy
objectives and resource realities, as documented in the LGU Public Financial
Management Reform Roadmap. This gap, which is due to planning being largely
separated from policy-making, leads to lack of fiscal discipline, and consequently,
impairs service delivery. Both policy-making and planning are also weakly linked to
budgeting which results to frequent year-in adjustments in budget items, thus,
reducing the credibility of the budget.

The inclusion of procurement planning in the preparation of the budget adds to the
credibility of the budget inasmuch as the costing and programming of implementation
are already initially determined as inputs to budget proposals.

To deepen our understanding on Performance-Informed Budgeting, the discussion

has been expanded in this Edition.

Another budgeting approach presented in this Edition is the Cash Budgeting System
which instills fiscal discipline by limiting contractual obligations for projects completed
within the year.

11
Fundamental Principles Governing Local Taxation and Fiscal
Matters

Taxation and other revenue-raising powers of LGUs are governed by the following
fundamental principles as embodied under Sections 130 and 132 of the LGC, to wit:

“SECTION 130. Fundamental Principles. – The following fundamental

principles shall govern the exercise of the taxing and other revenue-raising
powers of local government units:

a. Taxation shall be uniform in each local government unit;

b. Taxes, fees, charges and other impositions shall:

1) be equitable and based as far as practicable on the taxpayer’s

ability to pay;

2) be levied and collected only for public purposes;

3) not be unjust, excessive, oppressive, or confiscatory;

4) not be contrary to law, public policy, national economic policy,

or in restraint of trade;

c. The collection of local taxes, fees, charges and other impositions

shall in no case be let to any private person;

d. The revenue collected pursuant to the provisions of this Code shall

inure solely to the benefit of, and be subject to disposition by, the
local government unit levying the tax, fee, charge or other
imposition unless otherwise specifically provided herein; and

e. Each local government unit shall, as far as practicable, evolve a

progressive system of taxation.”

“SECTION 132. Local Taxing Authority. - The power to impose a tax, fee,
or charge or to generate revenue under this Code shall be exercised by the
sanggunian of the local government unit concerned through an appropriate
ordinance.”

Limitations on the Taxing Powers of the Local Government Units

Section 133 of the LGC prescribes that, “[u]nless otherwise provided herein, the
exercise of the taxing powers of provinces, cities, municipalities, and barangays shall
not extend to the levy of the following:

a. Income tax, except when levied on banks and other financial institutions;

b. Documentary stamp tax;

2 2
c. Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis
causa, except as otherwise provided herein;

d. Customs duties, registration fees of vessel and wharfage on wharves, tonnage

dues, and all other kinds of customs fees, charges and dues except wharfage
on wharves constructed and maintained by the local government unit
concerned;

e. Taxes, fees and charges and other impositions upon goods carried into or out
of, or passing through, the territorial jurisdictions of local government units in
the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes,
fees or charges in any form whatsoever upon such goods or merchandise;

f. Taxes, fees or charges on agricultural and aquatic products when sold by

marginal farmers or fishermen;

g. Taxes on business enterprises certified to by the Board of Investments as

pioneer or non-pioneer for a period of six (6) and four (4) years, respectively
from the date of registration;

h. Excise taxes on articles enumerated under the National Internal Revenue

Code, as amended, and taxes, fees or charges on petroleum products;

i. Percentage or value-added tax (VAT) on sales, barters or exchanges or similar

transactions on goods or services except as otherwise provided herein;

j. Taxes on the gross receipts of transportation contractors and persons engaged

in the transportation of passengers or freight by hire and common carriers by
air, land or water, except as provided in this Code;

k. Taxes on premium paid by way of reinsurance or retrocession;

l. Taxes, fees or charges for the registration of motor vehicle and for the issuance
of all kinds of licenses or permits for the driving thereof, except tricycles;

m. Taxes, fees, or charges on Philippine products actually exported, except as

otherwise provided herein;

n. Taxes, fees, or charges, on Countryside and Barangay Business Enterprises

and cooperatives duly registered under R.A. No. 6810 and Republic Act
Numbered Sixty-nine thirty-eight (R.A. No. 6938) otherwise known as the
“Cooperatives Code of the Philippines” respectively; and

o. Taxes, fees or charges, of any kind on the National Government, its agencies,
instrumentalities, and local government units.”

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 Table 1 presents the taxing powers of each level of LGU based on the LGC.
Table 1. Taxing Powers, by LGU Level

Municipalities within
Tax Base Province Cities Municipalities the Metropolitan
Manila Area

Transfer of Real Property Ownership Yes Yes No Yes

(Section 135 of the LGC)

Printing and Publication (Section 136 of the Yes Yes No Yes

LGC)

Franchise Tax (Section 137 of the LGC) Yes Yes No Yes

Sand, Gravel and Other Quarry Resources Yes Yes No Yes

(Section 138 of the LGC)

Professional Tax (with required Yes Yes No Yes

government examination) (Section 139 of
the LGC)

Amusement Tax (Section 140 of the LGC, Yes Yes No Yes

as amended by RA No. 9640, 21 May
2009)

Annual Fixed Tax for Every Delivery Truck Yes Yes No Yes
or Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in,
Certain Products (Section 141 of the LGC)

Business Tax (Section 143 of the LGC) No Yes Yes Yes

Community Tax (Section 156 of the LGC) No Yes Yes Yes

Real Property Tax (RPT) (Section 232 of Yes Yes No1 Yes
the LGC)

Additional Levy on Real Property for the Yes Yes No Yes

Special Education Fund (SEF) (Section
235 of the LGC)

Additional Ad Valorem Tax on Idle Lands Yes Yes No Yes

(Section 236 of the LGC)

Special Levy on Lands Benefited by Public Yes Yes Yes Yes

Works, Projects or Improvements Funded
by LGU concerned (Section 240 of the
LGC)

Socialized Housing Tax (RA No. 7279 and No Yes No No

Department of Finance [DOF] Local
Finance Circular No. 1-97 dated April 10,
19972)

1
Section 271 of the LGC provides that the proceeds of the basic real property tax, including interest thereon, and proceeds from
the use, lease or disposition, sale or redemption of property acquired at a public auction by the province shall be distributed as
follows: 1) province – thirty-five (35%) shall accrue to the general funds; 2) municipality – forty percent (40%) to the general fund
of the municipality where the property is located; and 3) barangay – twenty-five percent (25%) shall accrue to the barangay where
the property is located.
2
Guidelines for the Implementation of Sections 7, 20, and 43 of R.A. 7279 otherwise known as the Urban Development and
Housing Act of 1992; and to Supplement Local Finance Circular No. 3-92 dated September 11, 1992
4 4
 Municipalities within
Tax Base Province Cities Municipalities the Metropolitan
Manila Area

Fees and Charges on Business No Yes Yes Yes

Occupation (Section 147 of the LGC)

Fees for Sealing and Licensing of Weights No Yes Yes Yes

and Measures (Section 148 of the LGC)

Fishery Rentals, Fees and Charges No Yes Yes Yes

(Section 149 of the LGC)

Service Fees and Charges (Section 153 of Yes Yes Yes Yes
the LGC)

Public Utility Charges (Section 154 of the Yes Yes Yes Yes
LGC)

Toll Fees or Charges (Section 155 of the Yes Yes Yes Yes
LGC)

Other Fees and Charges (Sections 147 No Yes Yes Yes

and 151 of the LGC)

Taxing Powers of Municipalities

 Except as otherwise provided in the LGC, municipalities may levy taxes, fees
and charges not otherwise levied by the provinces (Section 142 of the LGC).

Taxing Powers of Cities

 Except as otherwise provided in the LGC, the city may levy the taxes, fees and
charges which the province or municipality may impose: Provided, however,
that the taxes, fees, and charges levied and collected by highly-urbanized and
independent component cities shall accrue to them and distributed in
accordance with the provisions of the same law (Section 151 of the LGC).

 The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent (50%)
except the rates of professional and amusement taxes (Section 151 of the
LGC).

 The city may levy and collect a percentage tax on any business not otherwise
specified under paragraphs (a) to (g), Article 233 of the Implementing Rules
and Regulations (IRR) of the LGC, at rates not exceeding three percent (3%)
of the gross sales or receipts of the preceding calendar year (Article 237 [b] of
IRR of the LGC implementing Section 151 of the LGC).

 A city may levy local business tax in addition to local franchise tax at the same
time (Angeles Electric Corporation v. City of Angeles and Juliet G. Quinsaat,
General Registry [G.R.] No. 213136, September 5, 2018).

55
Taxing Powers of the Municipalities within the Metropolitan Manila Area

• The municipalities within the Metropolitan Manila Area (MMA) may levy the
taxes on businesses enumerated in Article 233 of the IRR of the LGC, at rates
not exceeding fifty percent (50%) of the maximum rates prescribed for said
businesses (Article 236 [a] of the IRR of the LGC).

• The municipalities within the MMA, pursuant to Article 275 of the IRR of the
LGC, may levy and collect the taxes which may be imposed by the province at
the rates not exceeding those prescribed under Articles 225, 226, 227, 228,
229, 230, and 231 of the IRR of the LGC (Article 236 [b] of the IRR of the LGC).

• In the case of the basic RPT, the municipalities within the MMA shall fix a
uniform rate not exceeding two percent (2%) of the assessed value of real
property (Section 233 [b] of the LGC).

Fundamental Principles in Local Government Budgeting

Section 305 of the LGC provides the following fundamental principles which govern
the financial affairs, transactions, and operations of LGUs, to wit:

“SECTION 305. Fundamental Principles. - The financial affairs, transactions,

and operations of local government units shall be governed by the following
fundamental principles:

a. No money shall be paid out of the local treasury except in pursuance of an

appropriations ordinance or law;

b. Local government funds and monies shall be spent solely for public
purposes;

c. Local revenue is generated only from sources expressly authorized by law

or ordinance, and collection thereof shall at all times be acknowledged
properly;

d. All monies officially received by a local government officer in any capacity

or on any occasion shall be accounted for as local funds unless otherwise
provided by law;

e. Trust funds in the local treasury shall not be paid out except in fulfillment
of the purpose for which the trust was created or the funds received;

f. Every officer of the local government unit whose duties permit or require
the possession or custody of local funds shall be properly bonded, and
such officer shall be accountable and responsible for said funds and for
the safekeeping thereof in conformity with the provisions of law;

g. Local governments shall formulate sound financial plans, and local

budgets shall be based on functions, activities, and projects, in terms of
expected results;

6 6
h. Local budget plans and goals shall, as far as practicable, be harmonized
with national development plans, goals, and strategies in order to optimize
the utilization of resources and to avoid duplication in use of fiscal and
physical resources;

i. Local budgets shall operationalize approved local development plans;

j. Local government units shall ensure that their respective budgets

incorporate the requirements of their component units and provide for
equitable allocation of resources among these component units;

k. National planning shall be based on local planning to ensure that the

needs and aspirations of the people as articulated by the local government
units in their respective local development plans, are considered in the
formulation of budgets of national line agencies or offices;

l. Fiscal responsibility shall be shared by all those exercising authority over

the financial affairs, transactions, and operations of the local government
units; and

m. The local government unit shall endeavor to have a balanced budget in

each fiscal year of operation.”

77
CHAPTER 1. PARTICIPATORY BUDGETING

Participatory budgeting is an approach wherein citizens, through CSOs,3 are allowed

to take part in the process of allocating public resources. It offers citizens the
opportunity to contribute in the formulation of options and in making choices that will
affect how their government acts. Since participatory budgeting helps promote
transparency, it has the potential of reducing government inefficiencies and
corruption.4

1.1 Legal Bases of Participatory Budgeting

“The State shall encourage non-governmental, community-based, or

sectoral organizations that promote the welfare of the nation.” (Section
23, Article II of the 1987 Philippine Constitution)

“The participation of the private sector in local governance, particularly

in the delivery of basic services, shall be encouraged to ensure the
viability of local autonomy as an alternative strategy for sustainable
development.” (Section 3 [l] of the LGC)

“Local government units shall promote the establishment and operation

of people’s and non-governmental organizations to become active
partners in the pursuit of local autonomy.” (Section 34 of the LGC)

1.2 Guidelines on Participatory Budgeting

To ensure the genuine and meaningful engagement of civil society, the

following parameters shall guide both the LGUs and CSOs:

a. LGUs shall allow and practice genuine participation of people in the

planning and budgeting processes to promote and establish transparency
and accountability in all transactions related to public financial management
(PFM).

b. LGUs shall encourage participation and involvement of the CSOs, as part

of the Local Development Councils (LDCs) and as observers in the Local
Finance Committees (LFCs), in the processes of setting directions and
allocating available resources. The purpose is to draw concerned citizens
together to participate and give inputs in decision-making related to local
plans and budget.

3
CSOs refer to a non-state and non-profit association that works to improve society and the human condition. Basic types of
CSOs include non-governmental organizations, people’s organizations, civic organizations, cooperatives, social movements,
professional groups, business groups, and people’s councils.
4
Handbook on the Participation of Civil Society Organizations in the Local Budget Process (Local Budget Circular No. 106 dated
June 9, 2015)
8 8
 c. LGUs shall apply democratic principles in group decision-making
techniques to arrive at choices and preferences that are genuinely
responsive to people’s needs, particularly those of the marginalized and
disadvantaged members of society.

d. LGUs shall embody decisions arrived at in the plan and budget as products
of broad–based consultation and participation that engender people’s
collective consensus, commitment, and ownership.

e. LGUs are encouraged to enhance participative planning in different venues,

such as:
• In training workshops - more work than listening to lectures;
• In focused group discussions - discuss/resolve the issues at hand;
• In formal institutions - schools and formal classes are used; and
• Digital Governance - wide use of electronic system or computers to
communicate with constituents via social media and other interactive
platforms.

f. LGUs shall establish priorities and allocate resources during investment

programming of programs, projects, and activities (PPAs) as major links to
budgeting. The ranked PPAs and their corresponding resource
requirements become the bases for preparing the annual budget proposals.

Both LGUs and CSOs shall also be guided by the following Principles of
Engagement, as embodied under Item 4.1 of the Department of Budget and
Management (DBM) National Budget Circular No. 536 dated January 31, 2012:5

• Transparency – provide all parties, as well as the general public, timely

access to relevant and verified information/data subject to the limits of the
law;

• Accountability – abide by the policies, standards, and guidelines of

engagement that may be agreed upon, and fulfill commitments;

• Integrity – adhere to moral and professional standards in fulfilling

commitments;

• Partnership – cooperate and share responsibilities to ensure that the

objectives of the engagement are achieved;

• Consultation and mutual empowerment – enhance knowledge sharing

and continuing dialogue;

• Respect internal processes – understand and abide by the limitations of

the stakeholders with respect to the nature of the information to be
disclosed and the extent of involvement based on institutional/legally
imposed limitations;

5
Guidelines on Partnership with Civil Society Organizations and Other Stakeholders in the Preparation of Agency Budget
Proposals

99
 • Sustainability – ensure continuing engagement by instituting progressive
policies and operational mechanisms that will promote an environment of
mutual trust; and

• National interest – uphold the national welfare above the interest of

organizations or individuals.

1.3 Benefits of Participatory Budgeting

Participatory budgeting increases opportunities for participation. While

questions remain regarding whether the quality of participation is sufficient to
ensure lasting interest in participating, and whether it is sufficiently broad-
based, participatory budgeting can break down barriers between citizens and
government, thereby, improving mutual understanding and communication.

Participatory budgeting also strengthens local CSOs, which may improve local
governance in the long term. It is noted, though, that the organizations that gain
access to decision making and partnership with local government may
themselves become arms of the local government.

Participatory budgeting can also help make infrastructure and services more
relevant to communities they serve and can result in additional revenue for local
development.6

Figure 1 below further outlines the benefits of participatory budgeting.

Figure 1. Benefits of Participatory Budgeting

6
Participatory Budgeting, edited by Anwar Shah, Public Sector Governance and Accountability Series, The World Bank,
Washington D.C., undated
10 10
1.4 Membership of CSOs to the Local Development Council

The CSO shall be represented in the LDCs pursuant to Section 107 (b) and (c)
of the LGC, as follows:

a. The city or municipal development council shall be headed by the mayor

and shall be composed of the following members:

1. All punong barangays in the city or municipality;

2. The chairperson of the committee on appropriations of the

sangguniang panlungsod or sangguniang bayan concerned;

3. The congressman/congresswoman or his/her representative; and

4. Representatives of non-governmental organizations operating in the

city or municipality, as the case may be, who shall constitute not less
than one-fourth (1/4) of the members of the fully organized council.

b. The provincial development council shall be headed by the governor and

shall be composed of the following members:

1. All mayors of component cities and municipalities;

2. The chairperson of the committee on appropriations of the

sangguniang panlalawigan;

3. The congressman/congresswoman or his/her representative; and

4. Representatives of non-governmental organizations operating in the

province, who shall constitute not less than one-fourth (1/4) of the
members of the fully organized council.

1.5 Roles of CSOs in the Local Budget Process

Decisions involving sources of financing, priorities in the use of funds, and

allocation of scarce resources necessitate the involvement of stakeholders who
can share ideas and information on sound PFM.

The CSOs may be engaged in all phases of the budget process, as provided in
the Handbook on the Participation of CSOs in the Local Budget Process, and
as outlined in the subsequent Chapters of this Manual.
Table 2. Roles of CSOs in the Local Budget Process7

ACTIVITY CSO ROLES

Budget Preparation Phase
1. ISSUE THE BUDGET CALL Check that Annual Investment Program
(AIP) priorities are highlighted in the
Budget Call.

7
Source: Handbook on the Participation of Civil Society Organizations in the Local Budget Process
11
11
 ACTIVITY CSO ROLES
2. CONDUCT THE BUDGET The accredited CSOs may participate in
FORUM the Budget Forum to gain an overall
appreciation of the thrusts and priorities
of the LGU for the budget year as
contained in the Budget Call.

3. PREPARE AND SUBMIT The accredited CSOs sectoral

BUDGET PROPOSALS representative may partner with the
Department Heads concerned in
determining the target beneficiaries and
funding requirements for the particular
sector.

The CSOs may also propose projects

for consideration by the Department
Heads concerned. In cases where
CSOs’ proposed PPAs are not included
in the budget, CSOs can request
information from the LGU on the
reasons for non-inclusion.

4. CONDUCT BUDGET The accredited CSOs may participate in

HEARINGS the budget hearings to provide inputs
on sectoral concerns.

5. EVALUATE BUDGET The accredited CSOs may replicate the

PROPOSALS best practices of other CSOs in
engaging LFC.

6. SUBMIT EXECUTIVE BUDGET The accredited CSOs may attend the

TO SANGGUNIAN State of the Province/City/Municipality
Address.

Budget Authorization Phase

1. DELIBERATE ON THE BUDGET Observing the Internal Rules of
Procedure (IRP) of the sanggunian, the
accredited CSOs may:

a. Provide inputs on sectoral

concerns; and

b. Raise questions on changes in

the Executive Budget not found in
the approved AIP.

2. AUTHORIZE THE ANNUAL The accredited CSOs may observe the

BUDGET voting conducted by the sanggunian.

3. APPROVE THE The accredited CSOs may inform the

APPROPRIATION ORDINANCE local chief executive (LCE) in writing of
(AO) their observation in the deliberation and
12 12
 ACTIVITY CSO ROLES
enactment of AO, subject to the
applicable reglementary period.

4. POST THE APPROPRIATION The accredited CSOs may monitor the

ORDINANCE posting pursuant to the requirements
under the LGC of the approved AO, and
may assist in making this known to the
public.

Budget Review Phase

1. ISSUE THE REVIEW ACTION The accredited CSOs may request for a
copy of the review action from the LGU.

Budget Execution Phase

1. RELEASE THE ALLOTMENTS Monitor the LGU compliance on the
release of allotments.

Inform beneficiaries and communities

concerned of the release of allotments
through tri-media or conduct meetings
with the beneficiaries and communities
concerned.

2. POST THE STATEMENT OF Monitor the posting as required under

RECEIPTS AND EXPENDITURES the LGC and the Full Disclosure Policy
IN THE LGU WEBSITE of the Department of the Interior and
Local Government (DILG).

Advocate for citizen’s awareness of

posted information through tri-media.

3. PREPARE CASH PROGRAM Monitor the LGU compliance on the

AND FINANCIAL AND PHYSICAL preparation of cash program and
PERFORMANCE TARGETS financial and physical performance
targets.

Inform beneficiaries and communities

concerned of the information through
tri-media or conduct meetings with the
beneficiaries and communities
concerned.

4. PROCURE, AND OBLIGATE

AND DISBURSE FUNDS FOR PPA
IMPLEMENTATION

4.1 Procurement Process Attend as observer in the procurement

process and carry out the
responsibilities provided under Section
13.4 of the IRR of RA No. 9184. May
use as reference the Government

13
13
 ACTIVITY CSO ROLES
Procurement Policy Board (GPPB)-
issued 2014 Procurement Observers
Guide.

4.2 PPA Execution May participate in the monitoring of

ongoing projects and prepare the
Project Monitoring/Inspection Report
(Annex F of this Manual) for submission
to the LCE.

The accredited CSOs may check the

following, among others:

● standards of service;
● quality of work;
● timeliness of implementation;
● pricing of goods, contracts, and
services;
● PPA fund release/utilization; and
● proper delivery to target
beneficiaries.

May assist the LGU in undertaking

appropriate interventions on negative
deviations on PPA execution, which
may include providing possible support
for service and/or resource gaps in the
delivery of services.

May check the LGU compliance with

the review action.

Budget Accountability Phase

1. EVALUATE OUTPUTS AND May participate in the project
RESULTS OF PPAs evaluation.

Enhance CSOs own technical capability

in project evaluation.

May provide recommendations based

on evaluation results.

May organize citizens’ fora with the

LGU to provide feedback to the
community.

14 14
CHAPTER 2. POLICY-BASED BUDGETING

Policy-based budgeting means that the budget is prepared with due regard to local
government policy, which, in turn, should be harmonized with the development plans
and reflected in the investment programs that the LGUs are required to prepare
pursuant to the LGC.

A major indicator of policy-based budgeting is when an LGU is able to fund in its

general fund budget/s the PPAs that were prioritized in the investment programs,
which, in turn, were based on the approved long-term development plan.

Another indicator of policy-based budgeting is orderliness in the planning and

budgeting processes, as demonstrated in compliance with the Synchronized Local
Planning and Budgeting Calendar (SLPBC) for LGUs.

2.1 Legal Bases of Policy-Based Budgeting

“Each local government unit shall have a comprehensive multi-sectoral

development plan to be initiated by its development council and approved
by its sanggunian. For this purpose, the development council at the
provincial, city, municipal, or barangay level, shall assist the corresponding
sanggunian in setting the direction of economic and social development, and
coordinating development efforts within its territorial jurisdiction.” (Section
106 of the LGC)

“The provincial, city, and municipal development councils shall exercise the
following functions:

(1) Formulate long-term, medium-term, and annual socio-economic

development plans and policies;

(2) Formulate the medium-term and annual public investment programs;”

(Section 109 [a] [1-2] of the LGC)

“Local budget plans and goals shall, as far as practicable, be harmonized

with national development plans, goals, and strategies in order to optimize
the utilization of resources and to avoid duplication in the use of fiscal and
physical resources;” (Section 305 [h] of the LGC)

“Local budgets shall operationalize approved local development plans;”

(Section 305 [i] of the LGC)

15
15
 “LDCs shall submit to the local finance committee a copy of the approved local
development plan and AIP prepared and approved during the fiscal year
before the calendar for budget preparation in accordance with applicable
laws, specifying therein projects proposed for inclusion in the local
government budget as well as in the budgets of [National Government
Agencies] NGAs or [Government- Owned or –Controlled Corporations]
GOCCs concerned.

The local finance committee shall use the plan to ensure that projects
proposed for local funding are included in the budget.

NGAs and GOCCs shall provide LGUs all necessary information on projects
already funded in their respective budgets. Such information shall include
specifically, among other things: name of project, location, sources, and levels
of funding for said projects. The same information must be made available to
the local finance committee concerned within the first quarter of the year to
avoid duplications in funding project proposals.” (Article 410 of the IRR of the
LGC)

2.2 Key Players in Policy-Based Budgeting

LDC Chairman – The city or municipal development council shall be headed by

the mayor (Section 107 [b] of the LGC).

The provincial development council shall be headed by the governor (Section

107 [c] of the LGC).

LDC Members – Each LGU shall have a comprehensive multi-sectoral

development plan to be initiated by its development council and approved by its
sanggunian. The development council at the provincial, city, municipal, or
barangay level, shall assist the corresponding sanggunian in setting the
direction of economic and social development, and coordinating development
efforts within its territorial jurisdiction (Section 106 of the LGC).

The composition of the provincial, city or municipal development council shall

be consistent with Sections 107 (b) and (c) of the LGC.

LDC Executive Committee – The executive committee shall exercise the

following powers and functions under Section 111 (b) of the LGC:

1. Ensure that the decisions of the council are faithfully carried out and
implemented;

2. Act on matters requiring immediate attention or action by the council;

3. Formulate policies, plans, and programs based on the general principles

laid down by the council; and

4. Act on other matters that may be authorized by the council.

16 16
 To do away with unwieldy and costly meetings of the development council, the
creation of an executive committee composed of few members is authorized to
do the execution and administrative functions of the council.

Secretariat – There is hereby constituted for each LDC a secretariat which shall
be responsible for providing technical support in the documentation of
proceedings, preparation of reports, and such other assistance as may be
required in the discharge of its functions.

The secretariats of the provincial, city, and municipal development councils

shall be headed by their respective planning and development coordinators.

Sanggunian – Each LGU shall have a comprehensive multi-sectoral

development plan to be initiated by its development council and approved by
its sanggunian (Section 106 of the LGC).

2.3 Harmonizing Plans and Policies

Section 106 of the LGC explicitly requires all LGUs to have a comprehensive
multi-sectoral development plan, which shall be translated into PPAs through
investment programs.

To operationalize the aforementioned requirement, the planning manuals

issued by the Department of Human Settlements and Urban Development
(DHSUD), DILG, and National Economic and Development Authority (NEDA)
require the LGUs to prepare the following:

For Provinces

2.3.1 Provincial Development and Physical Framework Plan (PDPFP)

The PDPFP is a document that identifies strategies and corresponding

PPAs that serve as primary inputs to the provincial investment
programming, budgeting and implementation. The PDPFP also serves
as a key vertical influence in linking provincial development objectives
with local, regional and national policies and priorities.

2.3.2 Provincial Development Investment Program (PDIP)

The PDIP is a basic document linking the local development plan to the
budget for provinces. It contains a prioritized list of PPAs which are
derived from the PDPFP matched with financing resources, and to be
implemented within a three (3) to six (6)-year period.

For Cities and Municipalities

2.3.3 Comprehensive Development Plan (CDP)

The CDP is the multi-sectoral plan formulated at the city or municipal

level, which embodies the vision, sectoral goals, objectives,
development strategies and policies within the terms of LGU officials
and the medium-term. The CDP contains: (1) Ecological Profile;
(2) Sectoral Development Plan; and (3) Implementing Instruments.
17
17
 2.3.4 Local Development Investment Program (LDIP)

The LDIP is a basic document linking the local development plan to the
budget for cities and municipalities. It contains a prioritized list of PPAs
which are derived from the CDP matched with financing resources, and
to be implemented within a three (3) to six (6)-year period.

The LDIP is the principal document for implementing the CDP. It

translates the CDP into PPAs, and reflects those which shall be
prioritized by the LGU for funding in the general fund budgets or through
other fund generation schemes.

2.3.5 Comprehensive Land Use Plan (CLUP)

The CLUP is the plan for the long-term management of the local territory
that defines the guidelines on the allocation, utilization, development,
and management of all lands according to the inherent qualities of the
land itself and supportive economic, demographic, socio-cultural and
environmental objectives of the city or municipality. It identifies areas
where development can and cannot be located and directs public and
private investment accordingly. It also contains PPAs related to land use
and urban planning that should be integrated to the CDP, LDIP, and AIP.

For Provinces, Cities, and Municipalities

2.3.6 Executive-Legislative Agenda (ELA)

The ELA is a unifying document corresponding to the term of local

elective officials that is developed and mutually agreed upon by both the
executive and legislative departments of an LGU. The ELA supports
existing LGU planning processes and adds greater value to the CLUP
and CDP by moving them forward to getting implemented and
monitored.8

2.3.7 Annual Investment Program (AIP)

The AIP refers to the annual slice of the PDIP/LDIP, which constitutes
the total resource requirements for all PPAs consisting of the annual
capital expenditure (CapEx) and regular operating requirements of the
LGU.

As also provided under Section 305 (h) of the LGC and Article 410 of the IRR
of the same law, the foregoing plans and investment programs should be
harmonized with the plans and investment programs of higher level LGUs, as
well as that of the national government (NG), to optimize the utilization of
resources and to avoid duplication in the use of fiscal and physical resources.

8
Clarificatory Guidelines on the Formulation of the Executive-Legislative Agenda (ELA) (DILG Memorandum Circular No. 2019-
114 dated 18 July 2019)
18 18
 Moreover, in formulating the investment programs, policies of both executive
and legislative departments should also be considered.

The ELA shall be mutually developed and agreed upon by the executive and
legislative departments of the LGU. While the ELA is also a planning tool, it is
not meant to replace or duplicate existing planning systems. Instead, it should
reflect the policies of the current administration and should be used as an
instrument to implement and monitor the long-term plans (PDPFP and CDP) of
the LGUs.9

The processes for formulating the foregoing development plans and investment
programs are detailed under the CLUP Guidebooks and Supplemental
Guidelines, and subsequent amendments issued by DHSUD, the CDP Guide
and Concise Illustrative Guide for the Preparation, Review, Monitoring and
Updating of the CDP and LDIP issued by the DILG, Interim Guidelines on the
Formulation of PDPFP, and the Manual for Provincial/Local Planning and
Expenditure Management issued by the NEDA.

2.4 Linking the Budget to Harmonized Plans and Policies

The IRR of the LGC is very instructive on how to ensure that local budgets are
linked to harmonized local plans and policies.

To reiterate, Article 410 of the IRR of the LGC provides that LDCs shall submit
to the LFC a copy of the local development plan and AIP prepared and
approved during the fiscal year before the calendar for budget preparation in
accordance with applicable laws, specifying therein projects proposed for
inclusion in the local government budget as well as in the budgets of NGAs and
GOCCs concerned.

The foregoing provision is clear on the following:

1. That the AIP should be prepared and approved before the start of the local
budget preparation phase; and

2. That the local budgets shall fund PPAs included in the AIP.

It may also be gleaned from the foregoing that the link between the plan and
the budget is actually provided by the investment programs, particularly by the
AIP (see Figure 2). Hence, to ensure plan-budget linkage wherein the local
budgets truly operationalize approved local development plans, it is imperative
that:

1. The investment programs contain priority PPAs that will directly contribute
to the achievement of the goals and objectives of the LGU, as embodied
in the development plans; and

2. The local budgets fund the PPAs included in the investment programs,
particularly in the AIP.

9
Concise Illustrative Guide for the Preparation, Review, Monitoring and Updating of the CDP and LDIP issued by the DILG
19
19
 Figure 2. Plan-Budget Link Model10

2.5 Synchronized Plan-Budget Process

The planning-budgeting cycle commences in July of an election year when the

LGUs reconstitute their Local Planning Teams. Provinces start setting the
guidelines for the updating of the planning databases, while the cities and
municipalities start preparing the work plan for the updating or preparation of
the CDP and CLUP.

From July to August, the provinces assess the implementation of their

respective PDPFP and update their planning databases. The cities and
municipalities, on the other hand, update their Rationalized Planning Indicator
Data Sets (RaPIDS) or Local Development Indicator Set (LDIS) and their
Ecological Profile.

To help the provinces in updating their planning databases, the Bureau of Local
Government Finance (BLGF), through the DILG, may provide them with data
on financial indicators. The DILG also provides the RaPIDS and/or LDIS
financial indicators to the cities and municipalities.

Starting September, the LGUs reconstitute their Local Special Bodies – LDC,
Peace and Order Council, Local Health Board (LHB), and Local School Board
(LSB).

From November to December, the Provincial Development Councils (PDCs)

are convened to deliberate on the PDPFP and Structured List of PPAs of their
component cities and municipalities for the purpose of harmonization. At the

10
Source: DILG Local Planning Illustrative Guide: Preparing and Updating the CDP
20 20
 city and municipal levels, the LCE presents the Structured List of PPAs to the
PDC.

Within the said period, the Medium-Term Revenue Forecasts for planning
purposes are generated by the Local Treasurers while the Medium-Term
Forecasts of Current Operating Expenses (COE) and Capital Outlays (CO) for
administrative/support services are prepared by the LFC, with the Local Budget
Officer (LBO) in the lead.

Table 3. Sample Template for Medium Term Revenue Forecast11

Past Four (4) Years

Past Three (3) Years
Historical Values
Historical Growth Rates
(in thousand pesos)
Particulars With Three
2018 2019 2020 2021 2019 2020 2021 Negative (3) Year
Values? Average
RECEIPTS
Local Sources
Tax Revenue
Non-tax Revenue
External Sources
National Tax
Allotment (NTA)
Shares other than
NTA
Non-Income Receipts
Proceeds from Sale
of Assets/
Investments (Bonds
or Securities)
Collection of Loans
Receivable
Receipts from
Loans, Borrowings
or Issuance of Bonds

NOTES:

1. If there are negative values in any of the past three (3) years growth rate,
input "1" on the appropriate box so that the three (3)-year average will be
based on the median which will be less affected by the decline in the growth
of the revenue item (e.g., business taxes).

2. The LGU may also seek guidance and assistance from the BLGF on revenue
forecasting.

The BLGF and DBM shall provide technical assistance to the Local Treasurer and
LFCs, respectively, in coming up with the aforementioned forecasts.

11
Source: Figure 6 of eSRE 2015 BLGF Manual and Form 3.d Summary Medium Term Financing Plan of DILG CDP Illustrative
Guide
21
21
 Points to Consider in Formulating the Medium-Term Forecast of COE and CO for
Administrative/Support Services

 Personal Services (PS)

 Based on the latest approved Plantilla of Personnel;
 Proposed creation and filling-up of positions shall be included as separate
items; and
 Requirements for retirement benefits / terminal leave benefits, salary
increases, and other authorized benefits shall be included.

 Maintenance and Other Operating Expenses (MOOE)

 Consider demand-driven changes e.g., population, cost of maintaining an
ideal level of service;
 Consider budgetary implications of price changes (inflation), except those
based on contracts or with fixed rates; and
 Include maintenance requirements of existing as well as newly-completed
facilities and newly-acquired assets e.g., vehicles.

 Financial Expenses (FEs)

 Include Management Supervisions/Trusteeship Fees, Interest Expenses,
Interest Paid to Residents other than General Government, Interest Paid to
other General Government Units, Guarantee Fees, Bank Charges,
Commitment Fees and Other Financial Charges, all other fees and charges
related to loans payable, and losses incurred relative to foreign exchange
transactions (Commission on Audit [COA] Government Accounting Manual
Volume III).

 Capital Outlays (COs)

 Include office equipment and furniture and fixtures that have to be procured
over the medium-term.

The aforementioned forecasts are used as

inputs to finalize the LDIP,12 which takes off Tools for Prioritizing PPAs:
from the Structured List of PPAs or the long
Urgency Test Matrix compares
list of the PPAs13 that will implement the the level of urgency of PPAs.
goals and objectives reflected in the CDP,
PDPFP, and CLUP. Resource Impact Matrix
compares how the PPAs will
impact on LGU resources,
The Structured List of PPAs is subjected to
including financial, manpower
further screening using the following and natural resources.
tools:14
 Urgency Test Matrix;
Conflict – Compatibility –
 Resource Impact Matrix; Complementary Matrix checks if
 Conflict-Compatibility- the PPAs will conflict with or
Complementary Matrix; and complement each other.
 Goal Achievement Matrix.
Goal Achievement Matrix checks
Based on the results of the foregoing how each PPA contributes to the
achievement of the LGU vision or
screening tools, a ranked list of PPAs is goals.
derived. The ranked list of PPAs shall be

12
The process described hereinafter may also be adopted by the Provinces.
13
The Structured List of PPAs or the Long List of PPAs is from the five (5) development sectors. This will be the main source of
PPAs that will later be prioritized for implementation. Note that this list should be traceable or linked to the descriptors in the LGU
Vision, Goals and Objectives.
14
Concise Illustrative Guide for the Preparation, Review, Monitoring and Updating of the CDP
22 22
 considered for investment programming. It shall then be cross-matched with
available resources, particularly with investible funds, as identified by the LFC,
through the evaluation of the Medium-Term Revenue Forecasts vis-à-vis the
Medium-Term Forecast of COE and CO for administrative/support services.

Thereafter, the LGU will prepare the

LDIP depending on the financing New Investment Financing Potential =
approach it will adopt. If it chooses to Medium Term Revenue Forecast –
take a more conservative approach,
Medium Term Forecast of COE and
then the PPAs to be included in the
CO for Administrative/Support Services
LDIP will be limited to the new
investment financing potential of the
LGU.

If the LGU chooses to be pragmatic or developmental in its financing approach,

then it will include PPAs in the LDIP that can be funded by the new investment
financing potential of the LGU, as well as from additional funds resulting from
resource generation measures and other financing options, e.g., borrowings,
bond flotations, Public-Private Partnerships.

The LDIP is considered as an implementation instrument of the CDP, PDPFP,

and CLUP, thus, is approved with the CDP, together with other implementation
instruments.

2.6 Preparation of the Annual Investment Program

Based on the approved LDIP, the annual slice thereof is culled out to constitute
the AIP. As defined under DILG-NEDA-DBM-DOF Joint Memorandum Circular
(JMC) No. 1, dated November 18, 2016,15 AIP refers to the annual slice of the
LDIP, which constitutes the total requirements for all PPAs consisting of the
annual CapEx and regular operating requirements of the LGU.

The AIP preparation flowchart (Figure 3) shows the sequence of activities from
the time the LDC convened until the same is approved by the sanggunian
concerned.
Preparation and/or Approval of AIP by the LDC – The LDC shall meet at
least once every six (6) months or as often as may be necessary (Section 110
of the LGC). The Synchronized Local Planning and Budgeting Calendar
(SLPBC 2016) under the DILG-NEDA-DBM-DOF JMC No. 1, s. 2016 provides
that the preparation of the AIP shall be done within the month of May of each
year.

Contents of the AIP – It is the responsibility of the LGUs to ensure that, apart
from the PDPFP, CLUP, and CDP, the priorities and requirements of the
following various plans were considered in the formulation of the AIP:

● DILG-endorsed Gender and Development Plan and Budget;

15
Updated Guidelines on the Harmonization of Local Planning, Investment Programming, Resource Mobilization, Budgeting,
Expenditure Management, and Performance Monitoring and Coordination in Fiscal Oversight
23
23
 ● Local Disaster Risk Reduction and Management Plan as reviewed by the
appropriate reviewing authority consistent with RA No. 10121, its IRR, and
pertinent issuances of the National Disaster Risk Reduction and
Management Council (NDRRMC);
● Local Climate Change Action Plan;
● Peace and Order Plan;
● Local Youth Development Plan;
● Local Nutrition Action Plan;
● Annual Cultural Development Plan approved by the Local Culture and Arts
Council through a Resolution;
● Indicative Annual Procurement Plan (APP);
● List of PPAs for the Local Council for the Protection of Children;
● List of PPAs for Senior Citizens and Persons with Disabilities;
● List of PPAs to Combat Acquired Immune Deficiency Syndrome (AIDS);
● List of PPAs to Address the Problem of Illegal Drugs; and
● Other documents/plans as may be required and/or deemed necessary in
the relevant Local Budget Memorandum to be issued by the DBM.

Submission of LDC-approved AIP to the Sanggunian – Reasonable time

prior to June 7 of each year.

Approval of the AIP by the Sanggunian – The SLPBC 2016 under the DILG-
NEDA-DBM-DOF JMC No. 1, s. 2016 provides that the approval of the AIP by
the sanggunian shall be made on or before June 7 of every year.

Figure 3. AIP Preparation Flowchart

24 24
Unless otherwise modified, the AIP Summary Form below shall be used:
Table 4. AIP Summary Form

In filling out the AIP Summary Form, the following pointers shall be observed:

1. Column 1 – AIP Reference Code

The AIP Reference Code is vital to ensuring the Plan-Budget Linkage. The
code assigned to each PPA facilitates validation whether the PPAs funded
in the budget are the same PPAs prioritized in the AIP.

Figure 4. AIP Reference Code Guide

The codes for the offices were included to establish the responsibility centers
for the PPAs.

25
25
 Services falling under each sector are presented under Annex C of this
Manual while the suggested coding structure for the offices in the LGU are
presented under Annex D of this Manual.

2. Column 2 – Program/Project/Activity Description

Column 2 should reflect a concise description of the work to be done under

a particular sector to achieve specific objectives. The scope and nature of
the work to be undertaken by the LGU is better captured by presenting the
PPAs in the following manner:

PPA Structure Example

I. Program I. Executive Governance Program
A. 1. Activity 1 A. 1. General Management and Supervision
2. Public Affairs, Information, Communication
2. Activity 2 and Technical Assistance
B. Project B. Operationalization of the Internal Audit Unit
(IAU)
1. Project 1 1. Rehabilitation of Office Facilities for the IAU
2. Purchase of Office Equipment and Furniture
2. Project 2 and Fixtures for the IAU

The foregoing structure requires • Program – an integrated group of

that all activities and projects be activities that contribute to a particular
subsumed under a specific continuing objective of a
program, which, in turn, should be department/agency.
under the responsibility of a
particular Office/Department in the • Project – a special undertaking carried
LGU. Accordingly, the program(s) out within a definite time frame and
should be directly related to the intended to result in some pre-
mandate of the Office/Department determined measure of goods and
as it should contribute to the services.
achievement of the
Office’s/Department’s • Activity – a work process that
contributes to the implementation of a
organizational outcome(s).
program, sub-program or project.

3. Column 3 – Implementing Office/Department

The implementing Office/Department refers to the Office/Department

responsible for the execution of the PPAs, and for delivering the services as
mandated by the LGC. The implementing Office/Department should be
presented by sector.

4. Columns 4 and 5 – Schedule of Implementation

The expected start and completion dates should be specified to provide a

concrete basis for work plans, and to serve as a guide in procurement
planning.

26 26
 5. Column 6 – Expected Outputs

Major Final Outputs (MFOs) shall be identified for each program while
immediate outputs shall be identified for each project and activity.

An MFO is a good or service that a department/agency is mandated to deliver

to external clients through the implementation of PPAs. It may be defined
relative to the outcomes that they contribute to, the client or community group
it serves, and the business lines of the department/agency. 16

Immediate Output, for purposes of accomplishing the AIP Summary Form,

refer to what is actually produced when the activities are undertaken.

For Example:

PPAs MFO/Immediate Output

I. Executive Governance Program Executive Governance Services
A. 1. General Management PPA implementation managed
and LGU personnel supervised
Supervision
2. Public Affairs, Information, Education and
Information, Communication activities and
Communication and materials developed/disseminated
Technical Assistance Stakeholders assisted
B. Operationalization of the IAU Internal Audit operationalized
1. Rehabilitation of Office Office Facilities for the IAU
Facilities for the IAU rehabilitated
2. Purchase of Office Office Equipment and Furniture and
Equipment and Furniture Fixtures purchased
and Fixtures for the IAU

Sample MFOs and their corresponding Performance Indicators (PIs) are

presented under Annex B of this Manual.

6. Column 7 – Funding Source

Consistent with the provisions of the LGC and its IRR, whereby the AIP
should indicate the PPAs for inclusion in the local government budget as well
as in the budgets of NGAs or GOCCs concerned, the following may be
indicated under the column for funding source:

• General Fund (GF) Proper;

• GF – Special Account (SA) – 20% Development Fund (DF);
• GF – Local Disaster Risk Reduction Management Fund (LDRRMF);
• Transfers from NGAs (Other than those accruing to the GF);
• Transfers from GOCCs (Other than those accruing to the GF);
• Transfers from other LGUs;
• Income of Local Economic Enterprises (LEEs) (for its own operations);
• Loan proceeds; and
• Others.

16
The Organizational Performance Indicator Framework (OPIF) Reference Guide, 2012
27
27
 7. Columns 8 to 12 – Estimated Cost

The total cost of the PPAs is broken down into PS, MOOE, FE, and CO.

For purposes of the AIP, the total PS and MOOE costs of a particular
program or office, both line departments and administrative/legislative
support services, shall represent the current operating cost for all regular
activities.

Meanwhile, management supervision/trusteeship fees, interest expenses,

guarantee fees, bank charges, commitment fees and other financial charges
incurred in owning or borrowing an asset property shall form part of the FE.
Costs which add to the fixed assets of the LGU are categorized as CO.

8. Columns 13 to 15 – Amount of Climate Change PPAs

Indicate the amount pertaining to PPAs for Climate Change Adaptation

(CCA) and Climate Change Mitigation (CCM) under Columns 13 and 14,
respectively.

PPAs for CCA are measures that address the drivers of vulnerability.
Vulnerability is the degree to which people or systems are susceptible to the
adverse effects of climate change but are unable to cope with them.
Vulnerability can be decreased by reduced exposure (e.g., shifting population
or assets to less risky areas through zoning regulations), or by increasing
coping capacity (e.g., well-targeted poverty reduction, income and livelihood
diversification, health programs and dissemination of climate risk
information).

Measures that directly confront climate change impacts are PPAs that
directly address the impacts or potential impacts of climate change variability
such as construction of infrastructure that incorporate climate change risks
in the design.

Measures that build resilience to current and future climate risks, on the other
hand, refer to those which increase the capacity of the social or ecological
system to reach or maintain an acceptable level of functioning or structuring
while undergoing changes.

PPAs for CCM are measures to reduce greenhouse gas emissions such as,
but not limited to, improved energy efficiency, use of renewable energy,
improved forest management, and improved transport systems. They also
include measures to protect and enhance greenhouse gas sinks and
reservoirs such as, but not limited to, Bantay Gubat, Bantay Bakawan, and
reforestation.

The entire cost of the PPA is reflected as Climate Change expenditure if the
program/project profile indicates that the primary goal/objective of the PPA
is to provide a direct adaptation or mitigation response.

If CCA or CCM is not the primary objective of the PPAs, only the cost of
specific components of the PPA that match those listed in the Climate
Change Typologies in Annex A of the DBM-Climate Change Commission-
28 28
 DILG JMC No. 2015-01 dated July 23, 201517 is reflected.

2.7 Procurement Planning and Budgeting Linkage

Section 7 of RA No. 918418 and Section 7.3.2 of its IRR explicitly provides that
all procurement should be within the approved budget of the Procuring Entity
and should be meticulously and judiciously planned by the Procuring Entity
concerned.

The importance of painstakingly planning all procurement is underscored by the

provision of RA No. 9184 that no government procurement shall be undertaken
unless it is in accordance with the approved APP of the Procuring Entity.

At the local level, as soon as the AIP has been approved by the respective local
sanggunian, departments/offices or end-user units may start preparing their
Project Procurement Management Plans (PPMPs) to support the requirements
and/or cost estimates of the different PPAs, as embodied in the approved AIP.

Individual department/office/end-user units shall prepare their respective

PPMPs for all PPAs with proposed procurement of goods and services, civil
works, and/or consulting services for the operation of their respective
departments/offices.

The PPMP shall include: (a) information on whether PPAs will be contracted
out, implemented by administration, or consigned; (b) the type and objective of
contract to be employed; (c) the extent/size of contract scopes/packages; (d)
the procurement methods to be adopted, and indicating if the procurement
tasks are to be outsourced; (e) the time schedule for each procurement activity
and for the contract implementation; and (f) the estimated budget for the general
components of the contract.

The PPMP, as appended to the budget proposals of Departments/Offices, shall

then be submitted to the procuring entity’s Budget Office for evaluation during
the budget preparation phase. The PPMPs included in the budget proposal
shall be forwarded to the Bids and Awards Committee (BAC) Secretariat for
consolidation into an indicative APP, and to the BAC for the final
recommendation of the appropriate procurement modality.

In the consolidation of PPMPs, the BAC may adopt a strategy wherein similar
items to be procured are packaged into one procurement undertaking under a
single PPMP. For this purpose, the indicative APP shall include: (a) Name of
Procurement Project; (b) Procurement Management Office/end-
use/implementing unit; (c) Method of Procurement; (d) Schedule of identified
procurement activities as reflected in the APP form approved by the GPPB; (e)
Source of Funds; (f) Indicative Approved Budget for the Contract (ABC); and
(g) other relevant descriptions of the project, if applicable.

The indicative APP, an attachment to the budget proposal, shall be submitted

to the Head of the Procuring Entity (HoPE) for approval.

17
Revised Guidelines for Tagging/Tracking Climate Change Expenditures in the Local Budget (Amending JMC 2014-01, dated
August 7, 2014)
18
Government Procurement Reform Act
29
29
 Factors to consider in preparing/consolidating the APP

• Inclusion of all procurement activities planned for the year;

• Include provisions to cover foreseeable emergencies or contingencies

usually indicated by historical records; and

• Scheduling of procurement activities in the APP should be done in such a

manner that the BAC and other offices/units involved in the procurement
process in the LGU are able to efficiently manage the conduct of
procurement transactions.

Figure 5 shows the procurement planning and budgeting linkage with indicative
schedules:

Figure 5. Procurement Planning and Budgeting Linkage

30 30
CHAPTER 3. PERFORMANCE-INFORMED BUDGETING

Performance-Informed Budgeting (PIB) is the budgeting approach that uses

performance information to link funding to results and to provide a framework for a
more informed resource allocation and management.19

PIB, therefore, enables the more meaningful presentation of the budget, whereby each
peso is aligned with PIs and tangible targets set by the LGU.

Emphasis of an output-driven organization, with corresponding PIs and targets, are

discussed in this Manual as an expenditure approach to show full disclosure,
transparency and accountability in the budget.

3.1 Legal Bases of PIB

Budget proposals of LGUs shall include a brief description of the functions,

projects, and activities for the ensuing fiscal year, expected results for each
function, project, and activity, and the nature of work to be performed,
including the objects of expenditure for each function, project, and activity
(Section 317 [b] [3] of the LGC).

“Local governments shall formulate sound financial plans, and local budgets
shall be based on functions, activities, and projects, in terms of expected
results.” (Section 305 [g] of the LGC)

“Expected Results refers to the services, products, or benefits that shall

accrue to the public, estimated in terms of performance measures or
physical targets.” (Section 306 [g] of the LGC)

3.2 Key Players in PIB

Local Planning and Development Coordinator (LPDC) – The LPDC shall:

• Prepare a Logical Framework for all PPAs for implementation;

• Prioritize the PPAs according to urgency, economy and efficiency and

general social welfare objectives;

• Baseline data of PPAs scheduled for implementation should be made

available for target setting;

19
PIB Brief, 2014

31
31
 • Coordinate with the LBO and all Department Heads in setting up their
MFOs, PIs and corresponding targets for the budget year;

• Guide all department heads in formulating vision statements for their

respective departments that should be aligned to the LGU Vision; and

• Assist in the monitoring and evaluation of the physical and financial

performance of PPAs.

Local Budget Officer – The LBO shall:

• Provide information on actual costs of implementing existing PPAs

broken down by expense class and objects of expenditures for the past
year and current year (first semester);

• Estimate costs of PPAs for the second semester of the current year and
budget year; and

• Coordinate with Local Accountant and Local Treasurer in projecting

realistic cost estimates for the budget year.

Local Accountant – The Local Accountant shall provide information to all

Department Heads of actual costs of implementing PPAs for the past year and
first semester of the current year broken down by expense class and objects of
expenditures.

Department/Office Heads – The Department/Office Heads shall:

• Facilitate in the formulation of the vision for the Department/Office

including the expected outcome of the various MFOs;

• Project the target outputs for each PI for all PPAs; and

• Maintain a database for all quantifiable information.

Local Chief Executive – The LCE shall ensure the alignment of the various
Departments/Offices Vision Statements to the major vision of the LGU, and
guide all Departments/Offices to attain the expected organizational outcome.

3.3 Conceptual Framework of PIB

The PIB Framework follows the Results Framework or the Logical Framework
which each Department should establish, and which the LGU should consider
in identifying and prioritizing PPAs during investment programming. It is noted
that in prioritizing PPAs, the LGUs may use the Goal Achievement Matrix, which
can validate the results framework, thus, enable the LGU to formulate its
performance information.

32
32
 PIB requires LGUs to strengthen the link between planning and budgeting and
show this linkage in the presentation of the budget.

The PIB uses performance information to assist in deciding where the

government funds will go. Performance information, both financial and non-
financial, are presented in the budget documents which provides the context for
the PPAs pursued by the LGU.

The PIB Conceptual Framework is presented in Figure 6 below:

Figure 6. PIB Conceptual Framework

In the budgeting process, the Departments/Offices of the LGU are required to

identify their PPAs that will produce the corresponding MFOs, which in turn,
contribute to the attainment of the Organizational Outcome. The Organizational
Outcome, which could be more than one, should lead to the attainment of the
Department’s mandate, mission and vision. Outcomes are the key desired end-
results that an LGU seeks to achieve usually over a number of years in line with
its socioeconomic development plan, through the delivery by departments and
offices of their outputs and the implementation of PPAs.20

3.4 Key Features/Benefits of PIB21

The PIB as a core PFM reform program is seen as a critical tool in steering the
LGU towards inclusive growth and delivers the following key benefits:

• Reinforce the meaning of accountability as a commitment to perform;

• Empower citizens to participate in the utilization and allocation of

resources with more transparent, accountable, and responsive budget
documents;

• Enable LGUs to see opportunities on how activities fit in the broader

development plan and how they could collaborate with other LGUs in
achieving a common goal;

• Allow the Executive Branch to ensure that each peso spent is tightly
linked to its priority outcomes, to reduce overlaps and to avoid duplicative
or inefficient spending;

20
See PIB Frequently-Asked Questions at https://pfm.gov.ph/ckfinder/userfiles/files/PIB%20FAQs%20v7%2021414.pdf
21
Source: Technical Notes on the 2015 Proposed National Budget

33
33
 • Enable the sanggunian to better evaluate the budget proposals and
exercise their oversight function to check if the LGU deliver the targeted
results; and

• Ensure that projects and program are properly aligned with the local and
national development goals and objectives.

3.5 PIB Process

The PIB process is undertaken as follows:

3.5.1 Formulate the Major Final Outputs. An MFO is a good or service that
a department/office is mandated to deliver to external clients through the
implementation of PPAs. It may be a single output or group of outputs
that are similar in nature, targeted at the same organizational outcome
and capable of being summarized by a common performance indicator.
The formulation of MFOs involves analyzing the department/office
mandate, mission and vision, and organizational outcome, and
identifying the goods and services to be delivered to external clients.22

3.5.2 Determine the PPAs to be implemented. PPAs are activities

undertaken by a department/office to achieve the purpose for which it is
established or created, or to deliver its MFOs. A Program is an integrated
group of activities that contributes to a particular continuing objective of
a department/agency. A Project is a special department or agency
undertaking carried out within a definite time frame and intended to result
in some predetermined measure of goods and services. An Activity is a
work process that contributes to a program or sub-program or project.23

3.5.3 Determine the relevant Performance Indicators. A PI is a

characteristic of performance (quantity, quality, timeliness, or cost) that
is to be measured and will illustrate the standard by which a
department/office is expected to deliver its MFO. PIs should be
verifiable, observable, credible and sustainable, especially for frontline
functions of department/office.24

The application of the PIB in the budget process may be illustrated in the
various budget forms/documents, as follows:

• Local Budget Preparation Form (LBP) No. 4 – Mandate,

Vision/Mission, Major Final Output, Performance Indicators and
Targets;

22
See Inter-Agency Task Force on the Harmonization of the National Government Performance Monitoring, Information and
Reporting Systems (Administrative Order No. 25, s. 2011) Memorandum Circular No. 2012-1 dated August 13, 2012
23
See PIB Frequently-Asked Questions at https://pfm.gov.ph/ckfinder/userfiles/files/PIB%20FAQs%20v7%2021414.pdf
24 24
See Inter-Agency Task Force on the Harmonization of the National Government Performance Monitoring, Information and
Reporting Systems (Administrative Order No. 25, s. 2011) Memorandum Circular No. 2012-1 dated August 13, 2012

34
34
• Local Expenditure Program (LEP);

• Appropriation Ordinance – Illustrative Example of Ordinance

Authorizing the Annual Appropriations;

• Local Budget Execution (LBE) Form No. 5 – Summary of Financial

and Physical Performance Targets;

• Local Budget Accountability (LBAc) Form No. 2 – Quarterly

Financial Report of Operations;

• LBAc Form No. 3 – Quarterly Physical Report of Operations; and

• LBAc Form No. 5 – Physical and Financial Performance

Evaluation Form.

35
35
CHAPTER 4. NEW APPROACH IN BUDGETING

To better address the slow pace of implementation of development projects, LGUs

may consider adopting Cash Budgeting System (CBS) to expedite the implementation
of programs or projects.

4.1 Cash Budgeting System

As a general rule, unexpended balances of appropriations shall lapse at the end

of the fiscal year pursuant to Sections 322 and 328 of the LGC. For CO
appropriations, the same shall remain valid in the ensuing fiscal years until fully
spent, reverted or the project is completed. Sections 322 and 328 of the LGC
provide:

“Unexpended balances of appropriations authorized in the annual

appropriations ordinance shall revert to the unappropriated surplus of the
general fund at the end of the fiscal year and shall not thereafter be
available for the expenditure except by subsequent enactment. However,
appropriations for capital outlays shall continue and remain valid until fully
spent, reverted or the project is completed. Reversions of continuing
appropriations shall not be allowed unless obligations therefor have been
fully paid or otherwise settled.

The balances of continuing appropriations shall be reviewed as part of the

annual budget preparation and the sanggunian concerned may approve,
upon recommendation of the local chief executive, the reversion of funds
no longer needed in connection with the activities funded by said
continuing appropriations subject to the provisions of this section.”
(Section 322 of the LGC)

“Appropriations for ordinary administrative purposes not duly obligated

shall terminate with the fiscal year and all unexpended balances thereof
shall be automatically reverted on the thirty-first (31st) day of December
of each year to the general fund of the local government unit.” (Section
328 of the LGC)

The CBS at the national level is mandated under EO No. 91, s. 2019. 25 The
strategy seeks to improve the fiscal planning of the NG to speed up the
implementation of programs and to deliver goods and services to the people in a
timely manner.

The LCE and/or local sanggunian may provide for the adoption of the CBS in the
General Provision of the AO authorizing the annual budget.
25
Adopting the Cash Budgeting System Beginning Fiscal Year 2019, and for Other Purposes

36
36
4.2 Fundamental Principles of CBS

The adoption of a similar strategy in the LGUs may find basis under the following
fundamental principles in local government budgeting, among others:

“(g) Local governments shall formulate sound financial plans, and local
budgets shall be based on functions, activities, and projects, in terms
of expected results;

(h) Local budget plans and goals shall, as far as practicable, be

harmonized with national development plans, goals, and strategies
in order to optimize utilization of resources and to avoid duplication
in use of fiscal and physical resources;” (Section 305 [g] [h] of the
LGC)

The CBS suggests that the annual budget should only contain the projected
budget requirements of PPAs that can be fully implemented and paid within the
fiscal year covered by the AO. Hence, PPAs included in the annual budget
should be completed by the end of the fiscal year.

Under CBS, all appropriations for a fiscal year shall be available for obligation
and disbursement only until the end of the same fiscal year. Specifically, the
construction of infrastructure projects, delivery of goods and services, inspection,
and acceptance shall be made within the fiscal year. Furthermore, the CBS
suggests that corresponding payments shall be made within the same fiscal year,
which may be extended until the end of the EPP, which shall be a period of three
(3) months after the end of the validity of appropriations, unless another period
has been determined by the sanggunian, upon recommendation of the LCE.

To complement the CBS at the local level, the LGUs may undertake Early
Procurement activities (EPA), especially for CO projects, subject to the
appropriate guidelines on the matter.

Transition to the CBS may include: (a) Multi-year planning activities; (b) Limiting
budget provision to implementation-ready projects; and (c) Formulation of a
Procurement Strategy and conduct of EPA to enable full implementation of PPAs
within the fiscal year.
Figure 7. Comparison Between Obligation-Based Budgeting and CBS26

26
Source: DBM Primer on Reforming the Philippine Budget

37
37
4.3 Benefits of Adopting CBS27

Some benefits of the CBS are:

1. LGUs will include only implementation-ready projects in their local

budgets.

2. Once implementation schedules have aligned to the new shorter time

horizon, LGUs will only need to focus on implementing the current year’s
budget.

3. Completion of projects is facilitated which would translate to the immediate

provision of intended public services.

4. Transactions with contractors and suppliers will be smoother, more

transparent, and faster.

5. LGUs’ administrative load, as well as the accounting for the use of funds,
will substantially decrease and be simplified.

6. Non-compliance by contractors and suppliers in contract agreements are

likely lessened.

27
See also DBM Primer on Reforming the Philippine Budget.

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38
PART II. THE LOCAL BUDGET PROCESS
The budget process in LGUs is divided into five (5) phases: (1) Budget Preparation;
(2) Budget Authorization; (3) Budget Review; (4) Budget Execution; and (5) Budget
Accountability. These phases are interrelated and sequential, as can be seen from
Figure 8 below:

Figure 8. The Local Budget Process

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39
CHAPTER 1. BUDGET PREPARATION PHASE

Budget preparation is the first phase of the local budget process. It involves cost
estimation per PPA, preparation of budget proposals, executive review of budget
proposals, and preparation of the Local Expenditure Program (LEP) and the budget
message. This phase starts with the issuance of the Budget Call, and ends with
submission of the executive budget to the sanggunian on or before October 16 of each
year.

1.1 Legal Basis of Budget Preparation

“Upon receipt of the statements of income and expenditures from the

treasurer, the budget proposals of the heads of departments and offices, and
the estimates of income and budgetary ceilings from the local finance
committee, the local chief executive shall prepare the executive budget for the
ensuing fiscal year in accordance with the provisions of this Title.” (Section 318
of the LGC)

1.2 Key Players in Budget Preparation

Local Chief Executive – The LCE shall prepare the executive budget for the
ensuing fiscal year upon receipt of the statements of income and expenditure
from the treasurer, the budget proposals from the heads of various departments
and offices, and the estimates of income and budgetary ceilings from the LFC.

The LCE shall submit the said executive budget to the sanggunian concerned
not later than the 16th of October of the current fiscal year (Section 318 of the
LGC).

Local Finance Committee – The LFC, composed of the LPDC, LBO, and the
Local Treasurer, shall have, among others, the following functions as defined in
Section 316 of the LGC:

• Determine the income reasonably projected as collectible for the ensuing

fiscal year;

• Recommend the appropriate tax and other revenue measures or

borrowings which may be considered appropriate to support the budget;

• Recommend to the LCE concerned the level of annual expenditures and

the ceilings of spending for economic, social, and general services based
on the approved local development plans;

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 • Recommend to the LCE concerned the proper allocation of expenditures
for each development activity and between COEs and COs; and

• Recommend to the LCE concerned the amount to be allocated for COs

under each development activity or infrastructure project.

Local Treasurer – On or before the fifteenth (15th) day of July of each year, the
Local Treasurer shall submit to the LCE a certified statement covering the
income and expenditures of the preceding fiscal year, the actual income and
expenditures of the first two (2) quarters of the current year, and the estimated
income and expenditures for the last two (2) quarters of the current year (Section
315 of the LGC).

Local Budget Officer - The LBO shall review and consolidate the budget
proposals of different departments and offices of the LGU. The LBO shall also
assist the LCE in the preparation of the budget and during budget hearings
(Section 475 [b] [2-3] of the LGC).

The LBO shall prepare the draft Budget Message and the LEP, in coordination
with other members of the LFC prior to the submission of said documents to the
LCE.

Local Planning and Development Coordinator - The LPDC shall analyze the
income and expenditure patterns, and formulate and recommend fiscal plans and
policies for consideration of the LFC of the LGU concerned (Section 476 [b] [6]
of the LGC).

Local Accountant – The Local Accountant, jointly with the Local Treasurer, shall
certify all statement of income and expenditure of the preceding fiscal year, the
actual income and expenditures of the first two (2) quarters of the current year
and the estimated income and expenditure for the last two (2) quarters of the
current year (Article 411 of the IRR of the LGC).

Heads of Departments/Offices and Heads of Local Economic

Enterprises/Public Utilities - The Heads of Department/Offices/LEEs/PUs shall
submit budget proposals for their respective departments or offices to the LCE
thru the LFC on or before the fifteenth (15th) day of July of each year. The said
budget proposal shall be prepared in accordance with such policy and program
guidelines as the LCE concerned may issue in conformity with the local
development plan, the budgetary ceilings prescribed by the local finance
committee, and the general requirements prescribed in Title V, Book II of the LGC
(Section 317 [a] of the LGC).

The sanggunian is considered a separate office for purposes of Budget

Preparation. Thus, the Vice-LCE shall prepare and submit to the LCE the budget
proposal of the office of the sanggunian.

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 CSOs and the Private Sector Groups - The CSOs shall have the following
functions shown in Table 5 based on the Handbook on the Participation of CSOs
in the Local Budget Process:

Table 5. Roles of CSOs in the Budget Preparation Phase

ACTIVITY LGU ROLES CSO ROLES

1. ISSUE THE
BUDGET CALL

The Budget Call is a Provide a copy of the Check that AIP priorities
directive from the LCE Budget Call to the are highlighted in the
that contains general accredited CSOs. Budget Call.
objectives, policy Include in the Budget
decisions, strategies, Call a requirement for
and prioritized PPAs by the Department Heads
sector/office as reflected to consult with
in the AIP of the budget accredited CSOs.
year.

2. CONDUCT THE
BUDGET FORUM

A one-day forum Invite accredited CSOs The CSOs may

wherein the LBO to the Budget Forum. participate in the Budget
explains to Department Ideally, the Budget Forum to gain an overall
Heads the major thrusts Forum may provide appreciation of the thrusts
and policy directions, information on why and priorities of the LGU
sources of income, recommended priorities for the budget year as
spending ceilings, and of accredited CSOs contained in the Budget
budget strategies. were not included in the Call.
identified PPAs.

3. PREPARE AND
SUBMIT BUDGET
PROPOSALS

Each Department Head LCE to ensure that the The accredited CSOs
prepares the budget Department Heads sectoral representative
proposals and submits consulted with may partner with the
these to the LBO for accredited CSOs. The Department Heads
review and Budget Call may concerned in
consolidation. He/she already prescribe such determining the target
needs to determine the requirement. beneficiaries and funding
expected outputs for the requirements for the
budget year and particular sector. The
estimated costs. CSOs may also propose
projects for consideration
by the Department Heads
concerned.

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 ACTIVITY LGU ROLES CSO ROLES

In cases where CSOs’

proposed PPAs are not
included in the budget,
CSOs can request
information from the LGU
on the reasons for non-
inclusion.

4. CONDUCT
BUDGET
HEARINGS

The technical budget Invite accredited CSOs The CSOs may

hearings are conducted to the budget hearings participate in the budget
by the LFC to validate in relation to sectoral hearings to provide inputs
the revenue sources, concerns. on sectoral concerns.
PPAs, cost estimates,
and expected outputs for
the budget year.

5. EVALUATE
BUDGET
PROPOSALS

The LFC evaluates all May replicate the best May replicate the best
budget proposals using practices of other LGUs practices of other CSOs in
the output and cost in engaging CSOs in engaging LFC.
criteria. LFC.

6. SUBMIT
EXECUTIVE
BUDGET TO
SANGGUNIAN

After consolidation of the Invite accredited CSOs May attend the State of
budget proposal and to the State of the the Province/City/
approval thereof by the Province/City/Municipal Municipality Address.
LCE, the LCE shall ity Address.
submit the proposed
executive budget not
later than October 16 of
the current fiscal year
pursuant to Section 318
of the LGC.

This is usually done

through a State of the
Province/City/

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 ACTIVITY LGU ROLES CSO ROLES
Municipality Address
where the LCE presents
the proposed annual
budget to the
sanggunian and other
stakeholders.

1.3 The Budget Preparation Flowchart

The budget preparation flowchart is shown in Figure 9. The sequence of activities

in preparing the LEP should be synchronized with the mandated deadline of its
submission to the local sanggunian.

Figure 9. Budget Preparation Flowchart

1.4 Steps in the Budget Preparation Phase

A. ANNUAL BUDGET

Step 1. Issue the Budget Call

The budget call signals the start of the budget preparation phase. This executive
directive is issued based on the approved AIP, the LGC, and this Manual.

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What is a Budget Call?

A budget call is a directive from the LCE specifying the objectives, policy
decisions, strategies, financing requirements, and prioritized PPAs by
sector/office as reflected in the AIP. It provides clear guidelines in the
preparation of individual budget proposals.

This directive shall be disseminated not later than June 16 to allow more time
for the Department Heads to submit reasonable proposals for the budget year.

What are found in the Budget Call?

1. Spending ceilings by major expenditure (PS, MOOE, FE, and CO);

2. Resource allocation scheme or fiscal policy decisions;
3. Objectives, strategies, and priority PPAs;
4. Expected results;
5. Budget Calendar and budget preparation forms; and
6. Other administrative guidelines.

All these elements are explained in budget preparation workshops prior to the
preparation of budget proposals for the budget year.

Departments and offices of the LGU shall be guided by the policies, ceilings,
and targets embodied in the budget call.

Budget proposals are reviewed as to their consistency with the AIP and budget
call policies.

Why is the Budget Call important?

• It emphasizes the policy objectives of the budget;

• It emphasizes the guidelines to be observed in the preparation of budget
proposals;
• It focuses on the output aimed to be produced during the budget year;
• It firms up policy decisions on how the budget shall be financed; and
• It prescribes the budget preparation schedule and forms.

How is the budget forum conducted?

1. Invite all stakeholders to a one-day budget forum to explain and discuss

the following:

• Objectives for the budget year, major thrusts, and policy

decisions;
• Sources of income for the past three (3) years;
• Income estimates and corresponding assumptions;
• Spending ceilings and budget strategies;
• Timelines of activities; and
• Forms to be used.

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 2. Use focused group discussion to engender group participation.

3. Close the forum by summarizing all issues raised.

Step 2. Prepare and Submit Budget Proposals

The budget proposals of various departments and offices shall be prepared using
uniform templates to ensure the completeness and comprehensiveness of budget
information, as well as to facilitate the consolidation of all proposals in an accurate
and timely manner.

A. Firm up MFOs, Identify PIs, and Set Targets

The MFOs identified for the programs under the AIP shall be firmed up to
ensure their alignment with the Department’s/Office’s organizational
outcome, mandate, vision, and mission.

Thereafter, the corresponding PIs shall be identified. PIs are the means to
measure how well the goods or services were delivered. This is where we
measure the quantity, quality, and timeliness of service delivery to the clients.

Annex B of this Manual contains the proposed MFOs and their corresponding
PIs of the different mandatory offices in LGUs.

Taking into consideration resource availability vis-à-vis what should be

delivered by the Department/Office, set the target/s for the budget year.

B. Estimate Costs for the Budget Year

There are three (3) types of costs that may be reflected in the budget: (i) COE;
(ii) FE; and (iii) CO.

Current Operating Expenditures refer to appropriations for the purchase of

goods and services for the conduct of normal local government operations
within the fiscal year, including goods and services that will be used or
consumed during the budget year.

These are expenses allocated to mandatory PS and other associated PS

costs. These include salaries and wages, Personnel Benefit Contributions,
Mid-Year Bonus, Year-End Bonus and Cash Gift, Representation Allowance
and Transportation Allowance, among others.

The other costs, which are variable, are the MOOE. These include Travel
Expenses Office Supplies Expenses, Rent, Water, Electricity, Fuel,
Telephone Expenses, Internet Expenses, Security Services, Repair and
Maintenance Expenses, Confidential Expenses, Printing Expenses,
Extraordinary and Miscellaneous Expenses, Representation Expenses,
among others.

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 Financial Expenses are expenses which are not used in the actual
operation of the LGU. These expenses include bank charges, interest
expense, commitment fees, and other financial charges.

Capital Outlays refer to appropriations for the purchase of goods and

services, the benefits of which extend beyond the fiscal year and which add
to the asset of the LGU concerned, including investment in public utilities
(PUs) such as public markets and slaughter houses.

C. Prepare the PPMP for the Budget Year

The PPMP shall be prepared by all Departments/Offices for all PPAs with
proposed procurement of goods, civil works, and consulting services. This
shall be done by firming up the PPMP prepared based on the approved AIP,
taking into consideration the available resources, particularly the budget
ceilings of the Department/Office concerned.

D. Consolidate PPMPs into APP

The consolidation and evaluation of PPMPs will be made much faster and
economical through the BAC. This means that decisions on the mode of
procurement, type and specifications of items to be procured, when to
procure, and costs have been considered.

E. Review and Consolidate Budget Proposals

The budget proposals by various Departments/Offices shall be reviewed by

the LBO using the following criteria:

• Consistency with policies set forth in the budget call;

• Compliance with budgetary requirements, general limitations
and other provisions under the LGC; and
• Accuracy of horizontal and vertical computations.

Budget proposals not in conformity with policies and guidelines shall be

returned for revision.

All budget proposals shall be consolidated by the LBO for submission to the
LFC to be used in the conduct of budget hearings.

Step 3. Conduct Budget Hearings and Evaluate Budget Proposals

The hearing and evaluation of budget proposals shall follow this procedure:

A. Conduct technical budget hearings

A technical budget hearing is conducted to:

• Review the rationale of the Department/Office;

• Review the PPAs by Department/Office;

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 • Validate output projection; and
• Review costs estimates.

This technical hearing may be conducted for at least ten (10) working days
(August 15 to 25).

B. Evaluate budget proposals

Members of the LFC shall evaluate all budget proposals using the following
criteria:

• Rationale of the PPA;

• MFO and PIs criteria targets; and
• Cost criterion.

Step 4. Prepare the Local Expenditure Program

The LEP/Executive Budget shall primarily consist of two (2) parts: (i) estimates of
receipts; and (ii) proposed appropriations for the budget year.

Guidelines in the Preparation of the LEP

PART 1. RECEIPTS PROGRAM

The first part of the LEP is the Receipts Program. The receipts structure shall
cover the immediate past year, the current year, and the budget year.

⚫ Beginning cash balance shall be net of amounts earmarked for

specific purposes (e.g., continuing appropriations, 20% Development
Fund, payables, others [restricted funds]).

⚫ Receipts sources are generated from the accomplished LBP Form

No. 1, which reflects the following:

A. Local (Internal) Sources

1. Tax Revenue
2. Non-Tax Revenue

B. External Sources
1. Share from National Tax Allotment (NTA) (formerly
known as Internal Revenue Allotment [IRA])
2. Share from GOCCs (Philippine Amusement and Gaming
Corporation [PAGCOR] and Philippine Charity
Sweepstakes Office [PCSO])
3. Other Shares from National Tax Collections
4. Inter-Local Transfer
5. Extraordinary Receipts/Grants/Donation/Aids

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 C. Non-Income Receipts
1. Capital Investment Receipts
2. Receipts from Loans and Borrowings
3. Income of LEEs from its own operations

⚫ The Receipts Program shall comply with the following:

a. Taxes, fees, or charges identified as sources are in

accordance with the revenue ordinances of the LGU (Section
132 of the LGC); and

b. The estimated receipts from RPT correspond to the total

amount of due and demandable RPT, including delinquent
accounts.

Any proposed measure/s to increase the income of the LGU shall be subject
to approval by the sanggunian. These new revenue measures may include
the following:

⚫ New or additional local taxes, charges, fees, fines, or penalties; and

⚫ Loan proceeds (to finance capital projects).

PART 2. EXPENDITURE PROGRAM

The second part of the LEP is the Expenditure Program. The details of the
expenditure program shall include:

A. Proposed New Appropriations by PPA. Each Department/Office

shall present its Performance Information which includes its mandate,
vision, mission, organizational outcome, MFOs and corresponding PIs,
targets, and the proposed budgets by expense class (PS, MOOE, FE,
and CO).

Rules on the Preparation of the Expenditure Program of the LEP

Each Department/Office shall ensure compliance with the following

requirements:

a. 20% of the National Tax Allotment for Development Projects

(Section 287 of the LGC)

Provision of no less than twenty percent (20%) of the NTA

intended for development projects (Section 287 of the LGC and
DBM-DOF-DILG JMC No. 1 dated November 4, 2020).28

The items that are not allowed to be charged against the 20%
Development Fund are the following:

28
Revised Guidelines on the Appropriation and Utilization of the Twenty percent (20%) of the Annual Internal Revenue Allotment
for Development Projects (LGUs)

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 ⚫ PS expenditures, such as salaries, wages, overtime pay,
and other personnel benefits;

⚫ Administrative expenses, such as supplies, meals,

representation, communication, water and electricity,
petroleum products, and the like;

⚫ Travelling expenses, whether domestic or foreign;

⚫ Registration fees and other expenses related to the

conduct of and participation in training, seminars,
conferences or conventions;

⚫ Purchase, maintenance or repair of administrative office’

furniture, fixtures, equipment or appliances; and

⚫ Purchase, maintenance or repair of motor vehicles used

for administrative purposes.

b. Budgetary Requirements (Section 324 of the LGC)

⚫ The aggregate amount appropriated does not exceed the

estimates of income;

⚫ Full provision shall be made for all statutory and contractual

obligations of the LGU, and that the amount of
appropriations for debt servicing do not exceed twenty
percent (20%) of the regular income of the LGU;

⚫ Provision of aid to component barangays shall be in

amounts of not less than One Thousand Pesos (P1,000.00)
per barangay; and

⚫ Not less than five percent (5%) of the estimated revenue

from regular sources shall be set aside as the Local Disaster
Risk Reduction Management Fund (LDRRMF), of which
thirty percent (30%) lumpsum allocation for Quick Response
Fund (QRF) and seventy percent (70%) for disaster
prevention and mitigation, preparedness, response,
rehabilitation, and recovery (Section 21 of RA No. 10121 and
NDRRMC-DBM-DILG JMC No. 2013-1 dated March 25,
2013).29

c. General Limitations

⚫ Total appropriations, whether annual or supplemental, for

PS for one (1) fiscal year shall not exceed forty-five percent
(45%) in the case of first to third class provinces, cities and

29
Allocation and Utilization of the Local Disaster Risk Reduction and Management Fund (LDRRMF)

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 municipalities, and fifty-five percent (55%) in the case of
fourth class or lower, of the total annual income from regular
sources realized in the next preceding fiscal year (Section
325 [a] of the LGC). For the computation of the total PS cost
for waived items and determination on PS Limitation
compliance, the LGU may refer to Annexes A and B of Local
Budget Circular No. 145 dated March 2, 2022,30
respectively;

⚫ No official or employee shall be entitled to a salary rate

higher than the maximum fixed for the position or other
positions of equivalent rank by applicable laws or rules and
regulations issued thereunder (Section 325 [b] of the LGC);

⚫ No local fund shall be appropriated to increase or adjust

salaries or wages of officials and employees of the national
government, except as may be expressly authorized by law
(Section 325 [c] of the LGC);

⚫ In cases of abolition of positions and the creation of new

ones resulting from the abolition of existing positions in the
career service, such abolition or creation is made in
accordance with pertinent provisions of the LGC and civil
service laws, rules and regulations (Section 325 [d] of the
LGC);

⚫ Positions in the official plantilla for career positions which are

occupied by incumbents holding permanent appointment
shall be covered by adequate appropriations (Section 325
[e] of the LGC);

⚫ No changes in designation or nomenclature of positions

resulting in a promotion or demotion in rank or increase or
decrease in compensation shall be allowed, except when the
position is actually vacant, and the filling of such position
shall be strictly made in accordance with civil service laws,
rules and regulations (Sections 325 [f] of the LGC);

⚫ The creation of new positions and salary increases or

adjustments shall in no case be made retroactive (Section
325 [g] of the LGC); and

⚫ The annual appropriations for discretionary purposes of the

LCE shall not exceed two percent (2%) of the actual receipts
derived from basic RPT in the next preceding calendar year.
Discretionary funds shall be disbursed only for public
purposes to be supported by appropriate vouchers and

30
Guidelines on the Implementation of Personal Services (PS) Limitation on Local Government Budgets and Determination of
Waived PS Items Pursuant to Section 93 of the General Provisions (GPs) of the Fiscal Year (FY) 2022 General Appropriations
Act (GAA), Republic Act (RA) No. 11639, and Years Thereafter

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 subject to such guidelines as may be prescribed by law. No
amount shall be appropriated for the same purpose except
as authorized under Section 325 [h] of the LGC.

d. Budgetary Requirements by Attribution

The following are budgetary requirements for specific sectors or

concerns as prescribed by pertinent laws, rules and regulations
that shall be included in the LGUs' annual budgets as contained
in their respective local development plans and integrated in the
AIP. The same may be provided in the annual budget as direct
appropriation and/or by attribution.

⚫ Gender and Development Budget (RA No. 7192, RA No.

9710; Philippine Commission on Women [PCW]-DILG-
DBM-NEDA Joint Memorandum Circular [JMC] No. 2013-
01, as amended by PCW-DILG-DBM-NEDA JMC No. 2016-
01 dated January 12, 2016);

⚫ Local Council for the Protection of Children – One percent

(1%) of the NTA of barangays, municipalities, and cities shall
be allocated for the strengthening and implementation of the
programs of the Local Council for the Protection of Children
(LCPC) (Section 15 of RA No. 9344);

⚫ PPAs and services that will address the needs of senior

citizens (RA No. 7432, as amended by RA No. 9994 and RA
No. 7876) and differently-abled persons (RA No. 7277, as
amended by RA Nos. 9442 and 10070, and Batas
Pambansa Blg. 344);

⚫ Community-based Human Immunodeficiency

Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS)
prevention and care services (RA No. 11166); and

⚫ PPAs to address the Problem of Illegal Drugs (Section 51 of

RA No. 9165 and its IRR).

e. Compliance with Other Applicable Laws, Rules and

Regulations

⚫ Plan – Budget Linkage – All PPAs shall be included/listed in

the AIP (Section 305 [i] of the LGC);

⚫ Confidential Fund – The total fund for Confidential Fund (CF)

shall not exceed thirty percent (30%) of the total annual
amount allocated for the LGU’s Peace and Order Program
pursuant to Section 5.1.3.1 of Commission on Audit (COA)-
DBM-DILG-Government Commission for GOCCs (GCG)-

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 Department of National Defense (DND) Joint Circular (JC)
No. 2015-01 dated January 8, 2015; and

⚫ Other items of expenditure that are expressly prescribed or

authorized under existing laws, rules, and regulations.

Among others, verify if appropriations for specific purposes

required by law, which may be attributed to regular PPAs, are
fully provided. For guidance, the LGU may refer to LBR Form
No. 2 in Part II, Chapter 3 of this Manual.

f. Annual Operating Budget of Local Economic Enterprise –

shall comply with the following requirements:

⚫ The LGU maintains a special account in the General Fund

(GF) for the LEE (Section 313 [a] of the LGC).

⚫ Salaries, wages, representation, and transportation

allowances of LEE officials and employees shall not be
included in the annual or supplemental budget or in the
computation of the maximum amount for PS of the LGU.

⚫ The appropriations for PS of LEEs shall be charged to their

respective budgets (Section 325 [a] of the LGC).

⚫ No LEE official or employee is allowed a salary rate higher

than the maximum fixed for the position or other positions of
equivalent rank.

⚫ PPAs of LEE are included in the AIP.

⚫ Under Section 313 of the LGC, the rule on the treatment of

the income of the LEE is as follows:

a. The costs of improvement, repair, and other related

expenses of the LEE shall be deducted from the
income from the operation of the said LEE;

b. The balance thereof shall first be applied for the return

of advances or loans made; and

c. Any excess shall form part of the GF of the LGU.

⚫ The AOB of each LEE is presented separately in the LEP

which shall be included for enactment by the sanggunian.

B. Proposed New Appropriations by Object of Expenditures

C. Special Purpose Appropriations shall be provided for the following

purposes:

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 ⚫ Appropriation for Development Projects – at least twenty percent
(20%) of the NTA intended for development projects (Section
287 of the LGC);

⚫ Appropriation for Disaster Risk Reduction and Management

Program – Not less than five percent (5%) of estimated regular
income for the budget year (Section 324 [d] of the LGC, as
amended under Section 21 of RA No. 10121);

⚫ Appropriation for Debt Service – Not exceeding twenty percent

(20%) of the regular income (Section 324 [b] of the LGC);

⚫ Advances or Loans to LEEs/PUs (Section 313 of the LGC);

⚫ Aid to Barangays (Section 324 [c] of the LGC); and

⚫ Other special purpose appropriations as authorized by law.

D. Special Provisions. Policies on the use of funds, specific purpose/s or

expected outputs and measures to reduce cost shall be provided after
the presentation of the expenditure program for each
Department/Office or Special Purpose of Appropriations, as may be
applicable.

PART 3. GENERAL PROVISIONS

The LEP shall also include the General Provisions (GPs), which are policies
and guidelines on receipts and expenditures.

⚫ Explicit provisions on the manner and procedure for revenue

generation and utilization shall be provided as guideposts for avoiding
delays in the implementation of development projects and activities.

⚫ General guidelines on the treatment of income from the operation of

LEEs and PUs, and use of savings and/or augmentation shall be clearly
provided.

⚫ The GP shall also provide policies on the expenditure side, specifically

for PS and all other personnel benefits, MOOE, FE, and CO. A
provision on cost-cutting or economy measures may be included to all
objects of expenditures.

⚫ All items in the GP shall be supported by rules and policies issued by

oversight agencies such as the COA, Civil Service Commission (CSC),
DBM, and DILG.

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 PART 4. SUMMARY OF THE PROPOSED NEW APPROPRIATIONS

The LEP shall also provide the Summary of New Appropriations by Expense
Class, by Object of Expenditure and by Sector, and by Department/Office. It
shall also include the Summary Statement of All Statutory and Contractual
Obligations.

The LEP shall be the material document for deliberation and authorization by the
sanggunian.

Step 5. Prepare the Budget Message

The budget document shall contain a budget message of the LCE set forth in
brief the significance of the executive budget, particularly in relation to the
approved local development plan (Section 314 [b] [1] of the LGC).

What is a Budget Message?

A budget message is a summary of the proposed executive budget prepared by

the LCE highlighting the following:

• Previous Years’ Fiscal performance;

• Development Goals and Objectives;
• Policy Thrusts;
• Priority PPAs;
• Estimate of Income and Sources Thereof;
• Major Items in the Expenditure Program; and
• MFOs/PIs/Targets.

Contents of the Budget Message

The budget message provides justification for the policy decisions contained in
the proposed executive budget. It should include, among others, the following:

• Proposed budget by sector, office, and expenditure class;

• Justification for the need to expand (increased number of beneficiaries)

without sacrificing quality of service delivery;

• Identification of new/additional beneficiaries if service delivery is

expanded; and

• Justification for new PPAs to be implemented during the budget year.

How to Prepare the Budget Message

1. Present the objectives, policies, strategies, and priority PPAs of the LGU
for the budget year and relate their consistency with the proposed revenue
and expenditure structure.

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 • Explain the program thrusts and the justification or reasons why
resources have to be focused on said programs.

• Include with the justification the expected results of the projects and
activities that will rationalize budget allocation and accountability.

2. Identify the “flagship projects” by sector and by program and relate how
they are envisioned to carry out the development goals for the next three
(3) years.

3. Review the past five (5) years revenue and expenditure patterns and
disclose what basic services and facilities were provided.

• Present in simple graphs or charts the income trend and

expenditure pattern showing what results or output were produced
during the period.

4. Discuss the current year’s income and expenditure performance and

disclose any improvements in the production of results as compared with
those during the past five (5) years.

5. Disclose service gaps to show the inability of the LGU to deliver basic
services. This may be used as a major justification for proposals to expand
the budget for a sector/office.

• Show the analysis in graphical form: The comparison of

performance for the last five (5) years vis-à-vis the performance for
the current year.

• Discuss and explain policy decisions that will improve service

delivery in terms of quality, quantity, and timeliness criteria. Relate
the funding to the issues being resolved by the proposed spending
policies.

• Summarize the goods and services to be delivered for the budget

year. These are the expected results of the budget designed to
close the service gaps.

An illustrative example of a budget message is shown in Item 1.6 of this Chapter.

Step 6. Submit the Local Expenditure Program, together with the following
documents, to the sanggunian not later than the 16th of October of the
current fiscal year (Section 318 of the LGC):

• Budget Message;
• Plantilla of Personnel (LBP Form No. 3);
• Statement of Indebtedness (LBP Form No. 5);
• Annual Operating Budget of Local Economic Enterprise/s, if any; and
• AIP, duly approved by the local sanggunian.

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It is the responsibility and accountability of the LGU to ensure that the priority
PPAs are embodied in the relevant plans and/or documents as required by law,
and are incorporated in the AIP.

B. SUPPLEMENTAL BUDGET

General Rule

All budgetary proposals shall be included and considered in the budget

preparation process. After the LCE concerned shall have submitted the executive
budget to the sanggunian, no ordinance providing for a supplemental budget
shall be enacted (Section 321 of the LGC).

Exceptions

Changes in the annual budget may be done through supplemental budgets under
the following circumstances (Article 417 of the IRR of the LGC, as amended by
Administrative Order No. 47):

1. When supported by funds actually available as certified by the local

treasurer

Funds actually available refer to the amount of money actually collected,

as certified by the local treasurer, at any given point during the fiscal
year, which is over and above the estimated income collection for that
point in the year.

Thus, funds are actually available when realized income exceeds

estimated income as of any given day, month, or quarter of a given fiscal
year.

Funds are likewise deemed actually available when there are savings.

Savings refer to portions or balances as of any given point in the fiscal

year or any programmed or allotted appropriation which remain free of
any obligation or encumbrance and which are still available after the
satisfactory completion or the unavoidable discontinuance or
abandonment of the work, activity or purpose for which the appropriation
was originally authorized, or which result from unobligated compensation
and related costs pertaining to vacant positions and leaves of absence
without pay (Article 454 [b] [1] of the IRR of the LGC).

2. If covered by new revenue source/s

New revenue source refers to money measure not otherwise considered

during the preparation and enactment of the annual budget. Such new
revenue measures include ordinance passed by the sanggunian during
the fiscal year but after the annual budget had already been enacted into

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 law which imposes new local taxes, charges, fees, fines or penalties, or
which raises existing local taxes, charges, fees, fines or penalties.

Such revenue sources also include new or higher remittances,

contributions, subsidies or grants in aid from the NG or from government
corporations and private entities which have not been included in the
estimates of income which served as basis for the annual budget.

3. In times of public calamity

By way of budgetary realignment to set aside appropriations for the

purchase of supplies and materials or the payment of services, which are
exceptionally urgent or absolutely indispensable to prevent imminent
danger to, or loss of, life or property, in the jurisdiction of the LGU or in
other areas declared in a state of calamity by the President or the local
sanggunian (Section 321 of the LGC; Article 417 of the IRR of the LGC,
as amended by Administrative Order No. 47; and National Disaster Risk
Reduction and Management Council [NDRRMC] Memorandum Order
No. 60, s. 2019).31

In such case, the AO shall clearly indicate the following:

• The sources of funds available for appropriations as certified

under oath jointly by the local treasurer and the local accountant,
and attested to by the LCE;

• The items of appropriations affected; and

• The reasons for the change.

The LCE shall prepare the Supplemental Budget using LBP Form No. 8
– Statement of Funding Sources (Supplemental Budget) and LBP Form
No. 9 – Statement of Supplemental Appropriation in Item 1.5 of this
Chapter.

31
Revised Guidelines for the Declaration of a State of Calamity

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1.5 Local Budget Preparation Forms

LBP Form No. 1

BUDGET OF EXPENDITURES AND SOURCES OF FINANCING

Local Government Unit: _____________________

GENERAL FUND

Past Current Year

Account Budget
Particulars Code
Year First Second Year
(Actual)1 Semester Semester Total (Proposed)
(Actual) (Estimate)
(1) (2) (3) (4) (5) (6) (7)
I. Beginning Cash Balance

II. Receipts
Regular Income
A. Local Sources
1. Tax Revenue
a. Real Property Tax (RPT)
i. Basic RPT
b. Business Tax
c. Other Local Taxes
Total Tax Revenue

2. Non-Tax Revenue
a. Regulatory Fees
b. Service/User Charges
c. Receipts from Economic Enterprises
d. Other Receipts
Total Non-Tax Revenue
Total Local Sources

B. External Sources
1. National Tax Allotment (formerly Internal
Revenue Allotment)
2. Share from Government-Owned and/or
Controlled Corporations (Philippine
Amusement and Gaming Corporation and
Philippine Charity Sweepstakes Office)
3. Other Shares from National Tax Collection
a. Share from Special Economic Zone
b. Share from Expanded Value-Added
Tax
c. Share from National Wealth
d. Share from Tobacco Excise Tax
Total External Sources
Total Regular Income

Non-Regular Income
A. External Sources
1. Inter-Local Transfer
2. Extraordinary Receipts/Grants/Donations/
Aids
Total External Sources

B. Non-Income Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt Securities of
Other Entities
c. Collection of Loans Receivable
Total Capital Investment Receipts

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 Past Current Year
Account Budget
First Second
Particulars Code
Year
Semester Semester Total Year
(Actual)1 (Actual) (Estimate)
(Proposed)

(1) (2) (3) (4) (5) (6) (7)

2. Receipts from Loans and Borrowings

a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Loans and Borrowings
3. Other Non-Income Receipts
Total Non-Income Receipts
Total Non-Regular Income

Total Receipts

III. Expenditures
Personal Services
Salaries and Wages – Regular/Others
Personnel Economic Relief Allowance

Maintenance and Other Operating Expenses

Traveling Expenses
Training and Scholarship Expenses

Financial Expenses

Capital Outlay
Buildings
Office Equipment

Special Purpose Appropriations (SPAs)

Appropriation for Development Programs/ Projects
(20% Development Fund)
Appropriation for Local Disaster Risk Reduction
and Management Programs/Projects
Appropriation for Debt Service
Subsidy to Local Economic Enterprise/ Public
Utilities
Aid to Barangays
Other Authorized SPAs

Total Expenditures

IV. Ending Balance

1/ Based on the Trial Balance for the Applicable Year

We hereby certify that the information presented are true and correct. We further certify that
the foregoing estimated receipts are reasonably projected as collectible for the Budget Year.

______________ _________________ _____________________________________

Local Treasurer Local Budget Officer Local Planning and Development Coordinator

______________
Local Accountant

Approved by:

__________________
Local Chief Executive

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Instructions:

Column 1 – Indicate the receipts by major source and expenditures by expense class. The
beginning cash balance shall be net of amounts earmarked for specific purposes (e.g.,
continuing appropriations, 20% Development Fund).

Column 2 – Indicate the account code for each itemized receipt using the Revised Chart of
Accounts for LGUs, as prescribed under Commission on Audit Circular No. 2015-009 dated
December 1, 2015.

Column 3 – Indicate the past year’s actual receipts and expenditures. The past year’s and the
first two quarters of the current year’s actual receipts and expenditures shall be jointly certified
by the Local Treasurer and the Local Accountant, based on the Trial Balance for the applicable
year.

Columns 4 and 5 – Indicate the current year’s estimated receipts and expenditures, as follows:

• First semester – actual receipts and expenditures jointly certified by the Local
Treasurer and the Local Accountant.

• Second semester – estimated receipts and expenditures prepared by the Local

Budget Officer.

Column 6 – Indicate the totals of the amounts under Columns 4 and 5.

Column 7 – Indicate the proposed amount of receipts and expenditures for the budget year.

Notes:

1. Prepare the same form for each local economic enterprise/public utility.

2. Regular revenues refer to taxes, fees, and receipts actually realized, including the NTA
(formerly IRA) and other shares provided for in Sections 284, 290 and 291 of the LGC,
but exclusive of non-recurring receipts such as national aids, grants, financial assistance,
loan proceeds, sales of assets, miscellaneous income/receipts and other similar receipts
(based on the Bureau of Local Government Finance Memorandum Circular No. 16-2015
dated June 19, 201532 which include the Guidebook for the New Local Government
Financial Performance Monitoring System).

32
Local Public Financial Management Tools for the Electronic Statement of Receipts and Expenditures

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LBP Form No. 2

PROGRAMMED APPROPRIATION AND OBLIGATION BY OBJECT OF EXPENDITURE

Local Government Unit: ___________________

Department/Office: ______________________________

Current Year
Past Budget
Account First Second
Object of Expenditure Year Total Year
Code Semester Semester
(Actual) (Proposed)
(Actual) (Estimates)
(1) (2) (3) (4) (5) (6) (7)
Personal Services
Salaries and Wages
Salaries and Wages – Regular
Other Compensations
Personal Economic Relief Allowance
Personnel Benefit Contribution
Other Personnel Benefit

Maintenance and Other Operating

Expenses
Travelling Expenses
Training and Scholarship Expenses
Supplies and Materials Expenses
Utility Expenses
Communication Expenses
Awards/Rewards Expenses

Financial Expenses

Capital Outlays
Investment Property
Land and Buildings
Property, Plant and Equipment
Land
Land Improvement

Special Purpose Appropriations

(SPAs)
Appropriation for Development
Programs/Projects (20%
Development Fund)
Appropriation for Local Disaster Risk
Reduction and Management
(LDRRM) Programs/Projects
Appropriation for Debt Service
Subsidy to Local Economic
Enterprises/Public Utilities
Aid to Barangays
Other Authorized SPAs

Total Appropriations

Prepared by: Reviewed by: Approved by:

__________________ ____________________ _____________________

Department Head Local Budget Officer Local Chief Executive

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Instructions:
Column 1 – Indicate the applicable Objects of Expenditure for the programmed appropriation
and Special Purpose Appropriations, if any.

Column 2 – Indicate account code using the Revised Chart of Accounts for LGUs, as
prescribed under Commission on Audit Circular No. 2015-009 dated December 1, 2015.

Column 3 - Indicate the actual expenditures incurred in the Past Year.

Columns 4 and 5 - Indicate current year’s expenditures, as follows:

• First semester – actual expenditures as certified by the Local Accountant.

• Second semester – estimated expenditures prepared by the Department Head. The

totals of this column for all Departments/Offices should tally with the amount of
Expenditures per Columns 4 and 5 of LBP Form No. 1.

Column 6 – Indicate the totals of the amounts under Columns 4 and 5.

Column 7 – Indicate the proposed expenditures for the budget year.

Note: The Local Budget Officer shall prepare a summary for all offices using LBP Form No. 1
of this Manual.

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 LBP Form No. 3

PLANTILLA OF PERSONNEL FY _____

Local Government Unit: _________________

Current Year Budget Year

Item
Authorized Proposed
Number
Position Name of Rate/Annum Rate/Annum
Increase/Decrease
Title Incumbent Salary
Old New Grade Amount SG/Step Amount
(SG)/Step
(1) (2) (3) (4) (5) (6) (7) (8) (9)

Prepared by: Reviewed by: Approved by:

______________________________ _________________ ________________

Human Resource Management Officer Local Budget Officer Local Chief Executive

Instructions:

Columns 1 and 2 - Indicate the old and new item numbers of the plantilla position.

Columns 3 and 4 - Indicate the position title and the name of the incumbent occupying each
position. If the position is unfilled, indicate the word “vacant” under Column 4. If the position is
proposed for abolition, place the position title inside a bracket. If a position is proposed for
reclassification, place the previous position title in a bracket and indicate the proposed position
title below it.

Columns 5 and 6 - Indicate the current SG/step and corresponding rate per annum of each
position. Include as a footnote the compensation law/circular being implemented. For the initial
implementation of changes, attach a copy of the Position Allocation List.

Columns 7 and 8 - Indicate the SG/step and corresponding rate per annum of each position
proposed for the budget year.

Column 9 - Indicate the difference between the old and the new rates of compensation per
annum for the budget year.

Additional Instructions:

1. The plantilla of personnel shall be presented according to Department/Office.

2. Use the same form for each local economic enterprise/public utility.

3. Using the same form, a separate plantilla shall be prepared for Casual Employees whose
salaries are chargeable against Personal Services appropriation.

4. Only funded vacant positions shall be included in the plantilla, unfunded positions shall
be removed/deleted from the plantilla.

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LBP Form No. 4

MANDATE, VISION/MISSION, MAJOR FINAL OUTPUT, PERFORMANCE INDICATORS

AND TARGETS FY______
Local Government Unit: _________________

Department/Office :
Mandate :
Vision :
Mission :
Organizational Outcome :

Annual Proposed Budget for the

Program/ Target
Investment Major Performance Budget Year
Project/ for the
Program Final Indicator/
Activity Budget
Reference Output Output PS MOOE FE CO Total
Description Year
Code
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Prepared by: Reviewed by: Local Finance Committee

________________ _________________ _________________ _____________
Department Head Local Planning and Local Budget Officer Local Treasurer
Development
Coordinator

Approved by:

__________________
Local Chief Executive

Instructions:

Department/Office: Indicate the Department/Office implementing the budget.

Mandate: Quote the provision of the LGC on the mandate of the Department/Office.

Vision: Indicate the future role of the Department/Office in the LGU’s development.

Mission: Indicate the significant role of the Department/Office in attaining the vision.

Organizational Outcome: The specific short-term benefits to clients and the community as a
result of the LGU’s delivery of Major Final Outputs as defined in the organization’s results
framework.

Column 1 – Indicate the PPA reference code reflected in the AIP by each PPA.

Column 2 – Indicate a concise description of the work to be done under a particular sector to
achieve specific objectives. Present the PPAs following the structure prescribed in this
Manual.

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Column 3 – Indicate the good or service that a department/agency is mandated to deliver to
external clients through the implementation of PPAs.

Column 4 – Indicate the means for measuring the quantity, quality and timeliness of service
delivery to the clients.

Column 5 – Indicate the target for the budget year in terms of the performance indicator
expressed in quantity, quality, and timeliness.

Columns 6, 7, 8, and 9 – Indicate the proposed budget for the PPA, broken down by expense
class - PS, MOOE, FE, and CO, including Special Purpose Appropriations attributed to and
implemented by the Department/Office.

Column 10 – Indicate the total amount of the proposed budget.

Note: This form shall be prepared by the Department Head, reviewed by the Local Planning
and Development Coordinator for the targets, and Local Budget Officer and Local Treasurer
for the proposed budget, and approved by the Local Chief Executive.

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LBP Form No. 5

STATEMENT OF INDEBTEDNESS
Local Government Unit: _________________

Previous Payments Made Amount Due Balance of

Date Principal
Creditor Term Purpose the
Contracted Amount Principal Interest Total Principal Interest Total
Principal
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

Certified Correct by: Noted by:

__________________ ____________________
Local Accountant Local Chief Executive

Instructions:

Column 1 – Indicate the full name of creditors with their corresponding addresses under each
fund/special account and under each office.

Column 2 – Indicate the date when the obligation is incurred.

Column 3 – Indicate the period (months/years) within which to pay the loan.

Column 4 – Indicate the principal amount of the loan.

Column 5 – Indicate the purpose of the loan incurred.

Columns 6, 7, and 8 – Indicate the total payments prior to budget year, including payments
within the current year.

Columns 9, 10, and 11 – Indicate the amounts due and budgeted for the budget year.

Column 12 – Indicate the balance of the principal after deducting previous payments and
amount due for the budget year (Columns 6 to 11).

Note: Prepare the same form for each local economic enterprise/public utility.

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 LBP Form No. 6

STATEMENT OF STATUTORY AND CONTRACTUAL OBLIGATIONS

AND BUDGETARY REQUIREMENTS FY _______
Local Government Unit: _________________

Description Amount
(1) (2)
1. Statutory and Contractual Obligations
1.1 5% Metro Manila Development Authority Contribution for
Local Government Units in National Capital Region only
(Republic Act No. 7924)
1.2 Retirement Gratuity Benefits
1.3 Terminal Leave Benefits
1.4 Debt Service
1.5 Employees Compensation Insurance Premiums
1.6 PhilHealth Contributions
1.7 Pag-IBIG Contributions
1.8 Retirement and Life Insurance Premiums

2. Budgetary Requirements
2.1 20% of National Tax Allotment (formerly Internal Revenue
Allotment) for Development Projects (20% Development Fund)
2.2 5% Local Disaster Risk Reduction and Management Fund
2.3 Financial Assistance to Barangays (Php1,000.00 minimum
aid)

TOTAL

Certified Correct by:

________________ _______________ ___________________________

Local Budget Officer Local Treasurer Local Planning and Development Coordinator

Approved by:

________________
Local Chief Executive

Instructions:

Column 1 – Indicate the Statutory and Contractual Obligations and Budgetary Requirements
for the budget year.

Column 2 – Indicate the amount for each Contractual Obligations and Budgetary
Requirements for the budget year.

Note: Prepare the same form for each local economic enterprise/public utility.

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LBP Form No. 7

STATEMENT OF FUND ALLOCATION BY SECTOR FY _______

Local Government Unit: _________________

General
Account Social Economic Other
Particulars Public Total
Code Services Services Services
Services
(1) (2) (3) (4) (5) (6) (7)

Total Appropriations

Certified Correct by: Approved by:

__________________ ___________________
Local Budget Officer Local Chief Executive

Instructions:

Column 1 - Specify all allocations by sector/service, inclusive of lumpsum appropriations for

5% Disaster Risk Reduction Management Fund, 20% Development Fund, Aid to Barangays
and Financial Expenses.

Column 2 - Indicate account code using the Revised Chart of Accounts for LGUs, as
prescribed under COA Circular No. 2015-009 dated December 1, 2015.

Column 3 - Indicate all PPAs that provide planning, financial, administrative, legal and
legislative services to the front-line services of the LGU.

Column 4 - Indicate all PPAs that promote the well-being and general welfare of constituents
or people such as education, health, public safety, and protection of the marginalized and
disadvantaged members of the society.

Column 5 - Indicate all PPAs directed towards promoting growth in the economy, using all
factors in production, such as increasing productivity in agriculture and all other industries,
generating employment, and other livelihood projects.

Column 6 - Indicate all PPAs that cannot be categorized in any of the sectors identified
above.

Column 7 – Indicate the total amount of all PPAs.

Note: Prepare the same form for each local economic enterprise/public utility.

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LBP Form No. 8

STATEMENT OF FUNDING SOURCES (SUPPLEMENTAL BUDGET) FY ______

Local Government Unit: _________________

Fund/Special Account: ______________

Account
Particulars Amounts
Classification
(1) (2) (3)
1.0 New Revenue Sources
Tax Revenue
Loan Proceeds (Borrowings)
2.0 Actual Collection in Excess of the
Estimated Income
3.0 Savings
4.0 Realignment

Certified Correct by:

___________________ ___________________
Local Treasurer Local Accountant

Instructions:

Column 1 - Indicate the appropriate funding sources.

Column 2 - Indicate the appropriate account classifications as prescribed in the Revised Chart
of Accounts for LGUs. Indicate the details of the funding sources (e.g., Tax Revenue: Real
Property Tax/Real Property Transfer Tax/Fines and Penalties, etc.).

Column 3 - Indicate the appropriate amount for each funding source.

Note: The certification shall be signed by the Local Treasurer and/or Local Accountant
depending on the funding source.

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LBP Form No. 9

STATEMENT OF SUPPLEMENTAL APPROPRIATION FY______

Local Government Unit: _________________

Annual
Investment
Implementing Particulars/ Object of Account
Program Amount
Office Purpose Expenditure Code
Reference
Code
(1) (2) (3) (4) (5) (6)

Prepared by: Approved by:

___________________ ___________________
Local Budget Officer Local Chief Executive

Instructions:

Column 1 - Indicate the particular implementing office.

Column 2 - Indicate the PPAs/particulars/purpose of appropriation based on the approved

AIP.

Column 3 - Indicate the AIP Reference Code of the related PPAs.

Column 4 – Indicate the Object of Expenditure of the related PPAs.

Column 5 - Indicate the appropriate account code prescribed under the revised Chart of
Accounts for LGUs.

Column 6 - Indicate the amount corresponding to each PPAs/particulars/purpose of

appropriation and object of expenditure.

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1.6 Illustrative Examples

1.6.1 Budget Call

Provincial/City/Municipal Budget Memorandum No. 1-2023

16 June 2023

TO : All Heads of Offices, Department Heads, Chairperson of the Committee

on Appropriations, Members of the Sanggunian and Others Concerned

SUBJECT : Guidelines on the Preparation and Submission of Annual General Fund

Budget of Departments/Offices for Fiscal Year (FY) 2024

I. Purpose:

This Budget Call for FY 2024 is issued primarily to prescribe guidelines to be observed
by departments/offices in the preparation of budget proposals consistent with the Annual
Investment Program (AIP) for FY 2024 and the Local Government Code of 1991.

II. Objectives and Policy Guidelines:

Consistent with the approved AIP, the local government unit (LGU) shall focus its
resources to the attainment of the following general objectives:

1.1 Increased per capita income of constituents by twenty percent (20%);

1.2 Delivered basic services to all constituents of the LGU; and
1.3 Provided full employment to poor urban residents.

For FY 2024, the LGU shall direct its resources towards increased agricultural
productivity; promote quality in the production of competitive products in the world and
domestic markets; and provide health, social, education services geared towards
promoting economic growth with equity to marginalized citizens.

To support the budget for FY 2024 the following fiscal policies and measures were
approved and endorsed by the Sanggunian:

1. Enhanced tax collection efficiency by launching a vigorous tax info campaign

supported by an intensified tax collection effort.

2. Upgraded the scale of fees comparable with other LGUs belonging to the same
class; and

3. Financed the completion of the _____ Bridge in Barangay _____ through borrowing
from the Development Bank of the Philippines in the amount of P3.1 M payable in
ten (10) years at ten percent (10%) per annum.

The allocation scheme of the net amount available for appropriation for FY 2024 shall be
based on the following priority:

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 Amount Percentages of
Priority Functional Activity (P000) Total
1 Basic Services Operation 58.1 51%
2 Support to Basic Service 3.4 3%
3 Gen. Policy/Legislative 23.7 20%
4 Development Projects 20.9 18%
5 Statutory/Contractual 8.6 8%
114.7 100%

Guidelines to be observed in the allocation of “free resources”.

1st Priority Expansion of existing services/facilities

2nd Priority Execution of new development projects
3rd Priority Increased personnel benefits of local personnel

III. Receipts Estimates and Spending Ceiling

The receipts estimates for FY 2024 are to be generated from the following sources:

Sources of Financing Amount % to Total

National Tax Allotment (formerly Internal 103,841 90.00%
Revenue Allotment)
National Wealth 1,143 1.00%
Local Tax Revenues 3,516 3.50%
Operating and Misc. Income 3,151 2.80%
Borrowings 3,100 2.70%
Others (Grants and Sale of Fixed Assets) - -
114,751 100.00%

A. General Services Sector

Particulars PS MOOE FE CO TOTAL
Office of the Local Chief Executive 1500 500 500 2500
(LCE)
Sanggunian 2500 500 100 3100
Treasurer 800 500 300 1600
Accounting Office 300 200 300 800
Budget 300 100 100 500
Planning and Development Office 300 200 100 600
Legal 200 100 100 400
General Services 200 100 14000 14300
TOTAL 6100 2200 15500 23800

B. Social Services Sectors

Particulars PS MOOE FE CO TOTAL
Health Services 5100 4000 1000 10100
Day Care 1000 500 - 1500
Social, Welfare and Development 4000 3000 1400 8400
Population Development 1500 2000 1000 4500
TOTAL 11600 9500 3400 24500

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 C. Economic Services Sector

Particulars PS MOOE FE CO TOTAL

Engineering 3500 2000 24600 30100
Assessor 1500 1500 - 3000
Agricultural Services 3500 1500 10500 15500
Environment and Natural 2500 1000 1500 5000
Resources
Development of Cooperatives 2500 500 - 3000
Veterinary Services 5500 3400 1000 9900
TOTAL 19000 9900 37600 66500

GRAND TOTAL 36700 21600 0 56500 114800

IV. Budget Calendar and Budget Preparation

All concerned are enjoined to follow the schedule as directed in the memorandum,
particularly on the submission of budget proposals at designated inclusive dates and on
the prescribed forms herein attached.

1. Schedule of Activities
Activity Inclusive Date
1.1 Issuance of the Budget Call June 16
1.2 Budget Forum June 16
1.3 Preparation/Submission of Budget Proposals June 24-28
1.4 Technical Budget Hearings August 26 – September 15
1.5 Consolidation of Budget Proposal September 16 – 30
1.6 Preparation of the Budget Message and Local October 1 – 15
Expenditure Program (LEP)
1.7 Submission of the LEP October 16

2. The following local budget preparation (LBP) forms shall be submitted:

LBP Form Responsible Officer
1.1 LBP Form No. 1 – Budget of Expenditures Prepared by the Local Finance
and Sources of Financing Committee (LFC) and Local
Accountant, and approved by the LCE
1.2 LBP Form No. 2 – Programmed Prepared by the Department Head,
Appropriation and Obligation by Object of reviewed by the Local Budget Officer
Expenditure (LBO), and approved by the LCE
1.3 LBP Form No. 3 – Plantilla of Personnel Prepared by the Human Resource
Management Officer, reviewed by the
LBO, and approved by the LCE
1.4 LBP Form No. 4 – Mandate, Prepared by the Department Head,
Vision/Mission, Major Final Output, reviewed by the LFC, and approved by
Performance Indicators and Targets by the LCE
Department/Office
1.5 LBP Form No. 5 – Statement of Certified correct by the Local
Indebtedness Accountant, and noted by the LCE
1.6 LBP Form No. 6 – Statement of Statutory Certified correct by the LFC, and
and Contractual Obligations and approved by the LCE
Budgetary Requirements

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 LBP Form Responsible Officer
1.7 LBP Form No. 7 – Statement of Fund Certified correct by the LBO, and
Allocation by Sector approved by the LCE
1.8 LBP Form No. 8 – Statement of Funding Certified correct by the Local Treasurer
Sources (Supplemental Budget) and/or Local Accountant depending on
the funding source
1.9 LBP Form No. 9 – Statement of Prepared by the LBO, and approved by
Supplemental Appropriation the LCE

LBP Form Nos. 2, 3 and 4 shall be submitted to the LFC, through the LBO, on or before August
15 for consolidation and review.

Any queries, clarificatory question, issues and observations relative to these guidelines shall
be referred at once to the LFC for resolution during the budget workshop. Technical and other
assistance in the preparation of the FY 2024 Annual Budget may be requested from the LBO.

Please be guided accordingly.

___________________
Local Chief Executive

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1.6.2 Local Expenditure Program

OFFICIAL SEAL
OF THE
LOCAL
GOVERNMENT
UNIT

LOCAL EXPENDITURE PROGRAM

January 1 to December 31, 2024

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PART 1. RECEIPTS PROGRAM

RECEIPTS PROGRAM
FY 2022-2024
(In 000 Pesos)

Current Year
Past Budget
Particulars
Account First Second
Code
Year
Total
Year
(Actual) Semester Semester (Proposed)
(Actual) (Estimate)
(1) (2) (3) (4) (5) (6) (7)
I. Beginning Cash Balance

II. Receipts
Regular Income
A. Local Sources
1. Tax Revenue
a. Real Property Tax (RPT)
i. Basic RPT
b. Business Tax
c. Other Local Taxes
Total Tax Revenue

2. Non-Tax Revenue
a. Regulatory Fees
b. Service/User Charges
c. Receipts from Economic
Enterprises
d. Other Receipts
Total Non-Tax Revenue
Total Local Sources

B. External Sources
1. National Tax Allotment (NTA)
(formerly Internal Revenue
Allotment [IRA])
2. Share from Government-Owned
and/or Controlled Corporations
(Philippine Amusement and Gaming
Corporation and Philippine Charity
Sweepstakes Office)
3. Other Shares from National Tax
Collections
a. Share from Ecozone
b. Share from eVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
Total External Sources
Total Regular Income

Non-Regular Income
A. External Sources
1. Inter-Local Transfer
2. Extraordinary
Receipts/Grants/Donations/Aids
Total External Sources

B. Non-Income Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt
Securities of Other Entities
c. Collection of Loans Receivable
Total Capital Investment Receipts

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 2. Receipts from Loans and Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Loans and
Borrowings
3. Other Non-Income Receipts
Total Non-Income Receipts
Total Non-Regular Income

Total Available Resources for

Appropriation

PART 2. EXPENDITURE PROGRAM

A. OFFICE OF THE MAYOR

Mandate:
Vision:
Mission:
Organizational Outcome:

1. Proposed New Appropriations by Program, Project, and Activity (PPA)

Annual Proposed Budget

Investment Major
Performance Maintenance
Program Final
PPA Indicator Target Personal and Other Financial Capital
(AIP) Output (PI)
Reference (MFO) Services Operating Expenses Outlay Total
Code (PS) Expenses (FE) (CO)
(MOOE)

2. Proposed New Appropriations, by Object of Expenditures

Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
PS
Salaries and Wages – Regular
Salaries and Wages – Casual/Contractual
Personnel Economic Relief Allowance
Representation Allowance
Transportation Allowance
Clothing/Uniform Allowance
Honoraria
Year-End Bonus
Cash Gift
Other Bonuses and Allowances
Retirement and Life Insurance Premiums
Pag-IBIG Contributions
PhilHealth Contributions
Employees Compensation Insurance
Premium (ECIP)
Terminal Leave Benefits
TOTAL PS

MOOE
Travelling Expenses
Training and Scholarship Expenses
Telephone Expenses – Landline
Telephone Expenses – Mobile
Postage and Deliveries

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 Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
Subscription Expenses
Rent/Lease Expense
Office Supplies Expenses
Fuel, Oil, and Lubricant Expenses
Repairs and Maintenance – Land
Transport Equipment
Repairs and Maintenance – Office
Equipment
Repairs and Maintenance – Building and
Other Structures
Donations
Representation Expenses
Confidential Expenses
Other Professional Expenses
TOTAL MOOE

FE
Management Supervision/Trusteeship
Fees
Interest Expenses
Guarantee Fees
Bank Charges
Commitment Fees
Other Financial Charges
TOTAL FE

CO
Office Equipment
Technical and Scientific Machinery
Equipment
Land Improvements
TOTAL CO
TOTAL APPROPRIATIONS

3. Special Purpose Appropriations

3.1 LOCAL DISASTER RISK REDUCTION AND MANAGEMENT FUND
A. Proposed New Appropriations
Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
QUICK RESPONSE FUND (30%)

DISASTER PREPAREDNESS,
PREVENTION, MITIGATION,
RESPONSE, REHABILITATION AND
RECOVERY (70%)

MOOE
Training Expenses
Telephone Expenses – Landline
Telephone Expenses – Mobile
Insurance Expenses
Rent/Lease Expense
Supplies and Medicines
Fuel, Oil and Lubricant Expenses
Repairs and Maintenance – School
Buildings
TOTAL MOOE

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 CO
Rescue Equipment
Building and Structure
Land Improvements
TOTAL CO

TOTAL APPROPRIATIONS

B. Special Provisions

1. Use and Release of Fund. The amount herein appropriated shall be used
in accordance with Republic Act No. 10121, “The Philippine Disaster Risk
Reduction and Management Act of 2010,” which shall include relief,
rehabilitation, reconstruction, and other works or services, including pre-
disaster activities, in connection with the occurrence of natural calamities,
epidemics as declared by the Department of Health, and other
catastrophes. Provided, that the projects and activities are incorporated in
the Local Disaster Risk Reduction and Management (LDRRM) Plan, and
integrated in the approved Annual Investment Program. Provided further,
that the utilization of the Fund shall be in accordance with the provisions of
National Disaster Risk Reduction and Management Council-Department of
Budget and Management (DBM)-Department of the Interior and Local
Government (DILG) Joint Memorandum Circular (JMC) No. 2013-1 dated
March 25, 2013.

2. Quick Response Fund. Of the amount appropriated for LDRRM Fund,

thirty percent (30%) shall be allocated as Quick Response Fund (QRF) or
stand-by fund for relief, and recovery programs in order that the situation
and living conditions of people in the communities or areas stricken by
disasters, calamities, epidemics, or complex emergencies, may be
normalized as quickly as possible.

The release and use of QRF shall be supported by a resolution of the

Sanggunian declaring the local government unit (LGU) under state of
calamity or a Presidential declaration of state of calamity.

3. In no case shall the QRF be used for the pre-disaster, nor be realigned for
any other purpose.

3.2 APPROPRIATIONS FOR DEVELOPMENT PROGRAMS AND PROJECTS

A. Proposed New Appropriations

Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
MOOE

CO

TOTAL APPROPRIATIONS

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 B. Special Provisions

Use and Release of Fund. The 20% Development Fund shall be strictly utilized
in accordance with the general policies provided in DBM-Department of
Finance-DILG JMC No. 1 dated November 4, 2020, and for the projects
included in the approved Annual Investment Program of the [LGU] for the Fiscal
Year 2024. The development projects identified shall be consistent with the
Local Development Plan duly approved by the Local Development Council and
the local sanggunian. The disbursement of this fund shall be based on the
approved Project Procurement Management Plan for the Fiscal Year 2024, and
subject to all existing budgeting, accounting, and auditing laws, rules and
regulations.

3.3 OTHER SPECIAL PURPOSE APPROPRIATIONS

A. Proposed New Appropriations

Current Year
Past Year Budget Year
Office/Program/ Account
Expenditures
Expenditures
Expenditures
Object of Expenditure Code
(Actual)
(Actual and
(Proposed)
Estimate)
a. Office of the Mayor
b. Office of the Sanggunian
c. etc.

B. Special Provisions

Use and Release of Fund. The release, utilization, and disbursement of the
appropriation herein provided shall be subject to all existing budgeting,
accounting, and auditing laws, rules and regulations.

3.4 APPROPRIATIONS FOR LOCAL ECONOMIC ENTERPRISES

A. Proposed New Appropriations

Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
SUBSIDY TO LOCAL ECONOMIC
ENTERPRISE (LEE)

OPERATING EXPENSES FUNDED BY

INCOME OF THE LEE

TOTAL APPROPRIATIONS

B. Special Provisions

Appropriation for Programs and Specific Activities. The amount

appropriated herein for subsidies and programs of the LEE shall be used
specifically for the identified activities subject to existing budgeting, accounting,
and auditing laws, rules and regulations.

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 PART 3. GENERAL PROVISIONS

Section 1. Availability of Appropriations. Unexpended balances of appropriations authorized

in the annual appropriations ordinance shall revert to the unappropriated surplus of the general
fund at the end of the fiscal year and shall not thereafter be available for the expenditure except
by subsequent enactment. However, appropriations for CO shall continue and remain valid until
fully spent, reverted or the project is completed. Reversions of continuing appropriations shall not
be allowed unless obligations therefor have been fully paid or otherwise settled.

Section 2. Limitation on Cash Advance. Notwithstanding any provision of law to the contrary,
cash advances shall not be granted until such time that the earlier cash advances availed of by
the officials or employees or employees concerned shall have been liquidated pursuant to
pertinent accounting.

Section 3. Meaning of Savings. Savings refer to portions or balances as of any given point in
the fiscal year or any programmed or allotted appropriation which remain free of any obligation or
encumbrance and which are still available after the satisfactory completion or the unavoidable
discontinuance or abandonment of the work, activity or purpose for which the appropriation was
originally authorized, or which result from unobligated compensation and related costs pertaining
to vacant positions and leaves of absence without pay.

Section 4. Use of Savings and Augmentation. Funds shall be available exclusively for the
specific purpose for which they have been appropriated. No ordinance shall be passed authorizing
any transfer of appropriations from one item to another. However, the local chief executive or the
presiding officer of the sanggunian concerned may, by ordinance, be authorized to augment any
item in the approved annual budget for their respective offices from savings in other items within
the same expense class of their respective appropriations.

PART 4. SUMMARY OF THE FY 2024 PROPOSED NEW APPROPRIATIONS

1. Proposed New Appropriations, by Object of Expenditure and by Sector

General
Account Social Economic Other
Object of Expenditure Public Total
Code Services Services Services
Services
1. PS
(specify object of expenditure)
Total, PS

2. MOOE
(specify object of expenditure)
Total, MOOE

3. FE
(specify object of expenditure)
Total, FE

4. CO
(specify object of expenditure)
Total, CO
5. Special Purpose Appropriations
(SPA)
(specify object of expenditure)
Total, SPA
Total Appropriations

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2. Proposed New Appropriations, by Office

Office PS MOOE FE CO Total

a. Office of the Mayor
b. Office of the Sanggunian
c. etc.

3. Summary Statement of All Statutory and Contractual Obligations

Particulars Amount
1. Statutory and Contractual Obligations
1.1 5% Metro Manila Development Authority Contribution for Local Government
Units in National Capital Region only (Republic Act No. 7924)
1.2 Retirement Gratuity Benefits
1.3 Terminal Leave Benefits
1.4 Debt Service
1.5 Employees Compensation Insurance Premiums
1.6 PhilHealth Contributions
1.7 Pag-IBIG Contributions
1.8 Retirement and Life Insurance Premiums

2. Budgetary Requirements
2.1 20% of NTA (formerly IRA) for Development Projects (20% Development Fund)
2.2 5% LDRRM Fund
2.3 Financial Assistance to Barangays (Php1,000.00 minimum aid)

TOTAL

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1.6.3 Budget Message

Republic of the Philippines

Province/City/Municipality of _______________

___(Date)___

BUDGET MESSAGE

The Honorable Members

Sangguniang Panlalawigan/Panlungsod/Bayan
[Local Government Unit]

Ladies/Gentlemen:

May I submit the proposed Annual Budget for FY 2024 of the

Provincial/City/Municipal Government for both the General Fund and Operation of
Economic Enterprise pursuant to Section 318 of Republic Act No. 7160 or the Local
Government Code of 1991 (LGC).

A. INTRODUCTION

This Executive Budget was prepared after a thorough deliberation with all
concerned departments/offices and interested citizens to make it an effective
tool for equitably allocating the limited resources of government to the different
sectors, thus, making the Budget an instrument for the economic and social
upliftment of our people. We have substantially committed funds for the
programs, projects, and activities needed for an efficient and effective delivery
of the basic services enumerated in the LGC.

It is important to stress that the preparation of this Budget has been open to
the public through private sector representation to make decisions more
participative and democratic. This is also in keeping with government’s thrust
for transparency and accountability in the budget-making process. We take full
cognizance of the significant roles demonstrated by non-government
organizations, other private sector associations, and the general public in the
planning and pre-budget preparation stage by way of their membership in the
Local Development Council Executive Committee.

Moreover, this Budget integrates the Provincial/City/Municipal Development

Plan into the expenditure program by proposing only those projects which have
been ranked as priority in the Annual Investment Program.

The Expenditure Program and Sources of Financing are illustrated in Exhibits

1 and 2.

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 Exhibit 1. Expenditure Program (Distribution by Sector)
Budget Year (in million pesos)

Exhibit 2. Distribution by Type of Revenue

Budget Year (in million pesos)

B. GOALS AND OBJECTIVES

The province/municipality expects to attain the following objectives during the plan
period:

o Increase per capita income by a stated realistic percentage;

o Provide accessibility to all basic needs and services;

o Realistic percentage of citizens/constituents of the province;

o Provide expanded employment opportunities to the urban poor residents; and

o Increase agricultural productivity and enhance delivery of health care services.

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 C. FISCAL POLICIES

Revenue-generating measures include enhanced tax collection via a vigorous tax

information campaign and intensified tax collection effort.

Exhibit 3 shows the trend of expenditures for FY 2022 to FY 2024. The Health, Nutrition
and Population Control Sector has registered sizeable increases for the three-year
period. This is attributed to the absorption of devolved health services. Expenditure for
Economic Sector has also been increasing due to the provision of more infrastructure
projects and bigger allocation for the agriculture sub-sector.

Exhibit 3. Expenditure Program by Sector

Comparative Trend for FY 2022 to 2024 (in millions)

It has long been recognized that in order for a local government unit to achieve efficient
and effective operation, it should aim for the improvement of the ratio of its overhead
costs to cost of production and service delivery. Thus, it is important to present in this
Message, through the chart below, the direct cost of public goods and services
produced and delivered vis-à-vis their associated costs. This presentation slices the
budget pie on the basis of functional activity.

Exhibit 4. Distribution of LGU Budget by Functional Activity

Budget Year (in million pesos)

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The distribution of the LGU budget (Exhibit 4), shows that P58,092,677 or 51% is
allocated for the operation of frontline services; P23,751,197.00 or 21% is provided for
General Policy, Administration and Finance Services; P20,923,547.00 or 18% will be
spent for development projects; P8,625,845.00, representing 7% of the total budget
will be for Other Purposes (Aid to Barangays, Reserve for Calamity and Debt Service);
and P3,441,320 or 3% is provided as support to frontline services.

D. DISTRIBUTION BY MAJOR EXPENSE CLASS

Personal Services (PS)

The total expenditures for PS for the budget year amounted to P50,138,976, inclusive
of the provision for Salary Standardization of P9,418,928. Total PS accounts for 44%
of the total LGU budget.

Maintenance and Other Operating Expenses (MOOE)

The amount of P34,687,449 has been set aside for MOOE, representing 30% of the
budget.

Capital Outlays (CO)

Expenditures for (CO) will amount to P23,628,361 or 21% of the total expenditures. It
includes provisions for development projects, Loan Outlay, Livestock and Crops
Outlays, Equipment Outlays in the amounts of P20,288,000, P2,361,291, P879,070
and P100,000, respectively. The amount of P20,288,000 for development projects
include P16,800,000 funded from the 20% Development Fund.

Other Purposes

The amounts of P5,479,975 and P816,000 are set aside as reserve for Calamity and
Aid to Barangays, respectively.

E. OPERATION OF ECONOMIC ENTERPRISE

The proposed Budget for the Operation of Economic Enterprise (Operation of

Telephone Service) in FY 2024 shall be sourced from the estimated Telephone Service
Income of P33,400,000 allocated as follows:

Particulars Amount % to Total

PS 7,600,000 22
MOOE 3,420,000 10
CO 7,980,000 24
Transfer to General Fund 6,000,000 18
Debt Servicing 6,200,000 19
5% Reserve 1,670,000 5
Unappropriated Balance 530,000 2
TOTAL 33,400,000 100

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 CONCLUSION

Submitted together with this Message are the Local Expenditure Program, Plantilla of
Personnel, Annual Operating Budget of LEEs, approved Annual Investment Program
and other supporting schedules. Gentlemen and Ladies of the Sanggunian, this budget
proposal manifests our determination to lay a strong foundation for a greater and
progressive province/city/municipality. Let us join our hands together as we go about
our mission of provider a brighter future for our constituents.

Very truly yours,

____________________________________
NAME OF THE LOCAL CHIEF EXECUTIVE

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1.6.4 Local Budget Preparation Form No. 4

MANDATE, VISION/MISSION, MAJOR FINAL OUTPUT, PERFORMANCE INDICATORS

AND TARGETS FY 2024
Local Government Unit: ________________________

Department/Office : Office of the Local Planning and Development Coordinator

Mandate : a. Formulate integrated economic, special physical and
other development plans and policies for consideration
of the Local Development Council; and

b. Monitor and evaluate the implementation of the

different programs, activities and projects in the LGU in
accordance with approved development plan.

Vision : Towards effective and sustainable planning for the

Province’s progress and advancement.

Mission : Initiate and cause the participatory formulation,

coordination and integration of effective and
comprehensive development plans; analyze income and
expenditure patterns; provide sufficient and reliable
information; conduct researches and continuing studies for
project planning; monitor and evaluate the implementation
of programs and projects with feedback mechanism in
support of the LGU vision.

Organizational Outcome : Sound planning and development management effected.

Annual
Program/ Target Proposed Budget for the
Investment Major Performance Budget Year
Project/ for the
Program Final Indicator/
Activity Budget
Reference Output Output PS MOOE FE CO Total
Description Year
Code
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1000-1-01- Project Monitoring Percentage 75% 200,000 100,000 300,000
004-001 Monitoring and of Projects
and Evaluation Implemented
Evaluation Services and
Program Monitored

Prepared by: Reviewed by: Local Finance Committee

________________ _________________ ________________ ____________

Department Head Local Planning and Local Budget Officer Local Treasurer
Development
Coordinator

Approved by:

________________
Local Chief Executive

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CHAPTER 2. BUDGET AUTHORIZATION PHASE

Budget Authorization is the second phase in the local budget process. This phase
starts from the time the sanggunian receives the LEP submitted by the LCE, and ends
with the enactment of the AO and approval thereof by the LCE.

Authorization of the budget is done through an AO enacted by the local sanggunian in

accordance with the fundamental principle that:

“No money shall be paid out of the local treasury except in

pursuance of an appropriations ordinance or law.” (Section 305 [a]
of the LGC)

2.1 Legal Basis of Budget Authorization

“On or before the end of the current fiscal year, the sanggunian concerned
shall, through an ordinance, the annual budget of the local government unit
for the ensuing fiscal year on the basis of the estimates of income and
expenditures submitted by the local chief executive.” (Section 319 of the
LGC)

2.2 Key Players in Budget Authorization

Local Chief Executive – The LCE shall submit the LEP to the sanggunian
concerned for authorization (Section 318 of the LGC). After the enactment of the
AO, the LCE shall approve or veto the same (Sections 54 and 55 of the LGC).

Sanggunian – As the legislative body of the LGU, the sanggunian shall enact
the annual and supplemental budgets and appropriate funds for specific
programs, projects, services and activities, or for other purposes not contrary to
law, in order to promote the general welfare of the locality and its inhabitants
(Sections 447 [a] [2] [i], 458 [a] [2] [i], and 468 [a] [2] [i] of the LGC).

The sanggunian may, by ordinance, authorize the LCE or the Presiding Officer
of the Sanggunian to augment any item in the approved annual budget for their
respective offices from savings in other items within the same expense class of
their respective appropriations (Section 336 of the LGC).

Committee on Appropriation/Finance – The Committee on

Appropriation/Finance, as one of the standing committees of the sanggunian,
shall be responsible for conducting a preliminary review and evaluation of the
LEP. It shall submit its report and recommendation to the sanggunian proper.

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 Secretary to the Sanggunian – The Secretary to the Sanggunian shall stamp
the AO with the seal of the sanggunian and record the same, with the dates of
passage and publication, in a book kept for the purpose. He/she shall affix his
signature to the enacted AO and present the same to the Presiding Officer for
his signature and forward copies thereof to the LCE for approval (Section 469 [c]
of the LGC). Subsequently, he/she shall cause the posting of an ordinance or
resolution in the bulletin board at the entrance of the provincial capitol and the
city, municipal, or barangay hall and in at least two (2) conspicuous places in the
LGU concerned not later than five (5) days after approval thereof (Section 59 [b]
of the LGC).

Local Finance Committee – The LFC shall assist the sanggunian in the analysis
and review of the annual and supplemental budgets of the LGU to determine
compliance with statutory and administrative requirements (Section 316 [g] of the
LGC).

Heads of Departments and Offices – Upon request of the sanggunian coursed

through the LCE, Heads of the Departments and Offices may appear before the
body or the Committee on Appropriation/Finance to explain or justify their
proposals.

CSOs and the Private Sector Groups – Should the sanggunian allow the CSOs
to participate in the budget authorization phase, it may refer to the following roles
as shown in Table 6 below based on the Handbook on the Participation of CSOs
in the Local Budget Process.

Table 6. Roles of CSOs in the Budget Authorization Phase33

ACTIVITY LGU ROLES CSO ROLES

1. DELIBERATE ON
THE BUDGET

The Sanggunian shall Sanggunian to post Observing the Internal

consider the executive notice of the budget Rules of Procedure
budget as a priority deliberation schedule in (IRP) of the Sanggunian,
measure which shall three (3) conspicuous the accredited CSOs
take precedence over places at least seven (7) may:
all other pending and days before the conduct
proposed measures. of said activity. a. Provide inputs on
As a rule, all sectoral concerns;
sanggunian sessions Invite accredited CSOs and
shall be open to the to attend and provide
public, unless inputs during the budget b. Raise questions on
otherwise provided by deliberation sessions, changes in the
law. including committee Executive Budget
hearings. not found in the
approved AIP.

33
Source: Handbook on the Participation of Civil Society Organizations in the Local Budget Process

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 ACTIVITY LGU ROLES CSO ROLES
2. AUTHORIZE THE
ANNUAL BUDGET

The sanggunian Sanggunian may allow The accredited CSOs

authorizes the annual accredited CSOs to may observe the voting
budget through an AO. observe the voting for conducted by the
the enactment of the AO. sanggunian.

3. APPROVE THE
APPROPRIATION
ORDINANCE

The AO enacted by the LCE to consider formal The accredited CSOs

sanggunian shall be comments and may inform the LCE in
presented to the LCE observations of writing of their
for approval, in which accredited CSO, if any, observation in the
case the LCE shall affix subject to the fifteen (15) deliberation and
his/her signature in and ten (10) days enactment of AO,
every page thereof. reglementary period for subject to the applicable
Otherwise, the LCE approval, for provinces, reglementary period.
may exercise veto and cities or
power. municipalities,
respectively, pursuant to
Section 54 (b) of the
LGC.

4. POST THE
APPROPRIATION
ORDINANCE

The secretary to the Comply with the Full The accredited CSOs
sanggunian is required Disclosure Policy may monitor the posting
to post the AO, in pursuant to existing pursuant to the
Filipino or English and DILG issuances. requirements under the
in the language or LGC of the approved
dialect understood by Comply with the posting AO, and may assist in
the majority of the requirement under making this known to the
people in the LGU Section 59 (a) (b) of the public.
concerned, on a LGC.
bulletin board at the
entrance of the
provincial capitol or
city, or municipal hall,
as the case may be,
and in at least two (2)
other conspicuous
places in the LGU
concerned.

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2.3 The Budget Authorization Flowchart

The flowchart in Figure 10 describes the sequence of activities in budget

authorization.

Figure 10. Budget Authorization Flowchart

2.4 Steps in the Budget Authorization Phase

There are only four (4) major steps to follow in Budget Authorization:

Step 1. Enact the Appropriation Ordinance

Section 319 of the LGC provides that:

“On or before the end of the current fiscal year, the sanggunian
concerned shall, through an ordinance, the annual budget of the
local government unit for the ensuing fiscal year on the basis of the
estimates of income and expenditures submitted by the local chief
executive.”

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 2.4.1.1 Check the Submitted Budget Documents

Using Local Budget Authorization (LBA) Form Nos. 1A and 1B

(Checklists on Documentary and Signature Requirements for the
Annual/Supplemental Budget) in this Chapter, the sanggunian, with the
assistance of the LFC, shall check if the required documents with the
prescribed signatures are submitted.

2.4.1.2 Evaluate the Budget

The sanggunian, with the assistance of the LFC, shall evaluate and
deliberate on the LEP in terms of compliance with the budgetary
requirements and general limitations.

• Receipts Program – shall comply with the following

requirements:

a. Taxes, fees, or charges identified as sources are in

accordance with the revenue ordinances of the LGU
(Section 132 of the LGC); and

b. The estimated receipts from RPT correspond to the total

amount of due and demandable RPT, including delinquent
accounts.

⚫ Expenditure Program – shall comply with the following

budgetary requirements:

a. Budgetary Requirements (Section 324 of the LGC)

⚫ The aggregate amount appropriated does not exceed

the estimates of income;

⚫ Full provision shall be made for all statutory and

contractual obligations of the LGU, and that the amount
of appropriations for debt servicing do not exceed twenty
percent (20%) of the regular income of the LGU;

⚫ Provision of aid to component barangays shall be in

amounts of not less than One Thousand Pesos
(P1,000.00) per barangay; and

⚫ Not less than five percent (5%) of the estimated revenue

from regular sources shall be set aside as the Local
Disaster Risk Reduction Management Fund (LDRRMF),
of which thirty percent (30%) lumpsum allocation for
Quick Response Fund (QRF) and seventy percent
(70%) for disaster prevention and mitigation,
preparedness, response, rehabilitation, and recovery
(Section 21 of RA No. 10121 and NDRRMC-DBM-DILG

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 JMC No. 2013-1 dated March 25, 2013).34

b. 20% of the National Tax Allotment for Development

Projects

Provision of no less than twenty percent (20%) of the NTA

intended for development projects (Section 287 of the LGC
and DBM-DOF-DILG JMC No. 1 dated November 4, 2020).35

c. General Limitations

⚫ Total appropriations, whether annual or supplemental,

for PS for one (1) fiscal year shall not exceed forty-five
percent (45%) in the case of first to third class provinces,
cities and municipalities, and fifty-five percent (55%) in
the case of fourth class or lower, of the total annual
income from regular sources realized in the next
preceding fiscal year (Section 325 [a] of the LGC). The
sanggunian may use Local Budget Review (LBR) Form
Nos. 2A and 2B in Part II, Chapter 3 of this Manual;

⚫ No official or employee shall be entitled to a salary rate

higher than the maximum fixed for the position or other
positions of equivalent rank by applicable laws or rules
and regulations issued thereunder (Section 325 [b] of
the LGC);

⚫ Compare the authorized salary grade and salary for

each position with the authorized rate in the Salary
Schedule being implemented by the LGU. The Plantilla
of Personnel and the Index of Occupational Services36
may be used for the purpose;

⚫ No local fund shall be appropriated to increase or adjust

salaries or wages of officials and employees of the
national government, except as may be expressly
authorized by law (Section 325 [c] of the LGC);

⚫ In cases of abolition of positions and the creation of new

ones resulting from the abolition of existing positions in
the career service, such abolition or creation is made in
accordance with pertinent provisions of the LGC and
civil service laws, rules and regulations (Section 325 [d]
of the LGC);

34
Allocation and Utilization of the Local Disaster Risk Reduction and Management Fund (LDRRMF)
35
Revised Guidelines on the Appropriation and Utilization of the Twenty percent (20%) of the Annual Internal Revenue Allotment
for Development Projects (LGUs)
36
Local Budget Circular No. 137 dated July 13, 2021

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 ⚫ Positions in the official plantilla for career positions
which are occupied by incumbents holding permanent
appointment shall be covered by adequate
appropriations (Section 325 [e] of the LGC);

⚫ No changes in designation or nomenclature of positions

resulting in a promotion or demotion in rank or increase
or decrease in compensation shall be allowed, except
when the position is actually vacant, and the filling of
such position shall be strictly made in accordance with
civil service laws, rules and regulations (Sections 325 [f]
of the LGC);

⚫ The creation of new positions and salary increases or

adjustments shall in no case be made retroactive
(Section 325 [g] of the LGC); and

⚫ The annual appropriations for discretionary purposes of

the LCE shall not exceed two percent (2%) of the actual
receipts derived from basic RPT in the next preceding
calendar year. Discretionary funds shall be disbursed
only for public purposes to be supported by appropriate
vouchers and subject to such guidelines as may be
prescribed by law. No amount shall be appropriated for
the same purpose except as authorized under Section
325 [h] of the LGC.

d. Compliance with Provisions of Other Applicable Laws,

Rules and Regulations

⚫ Projects in the AO are found in the approved Annual

Investment Program (Section 305 [i] of the LGC);

⚫ No items in the AO are specifically prohibited by law;

and

⚫ Other items of expenditure are expressly prescribed or

authorized under existing laws, rules, and regulations.

Among others, verify if appropriations for specific purposes

required by law, which may be attributed to regular PPAs,
are fully provided. For guidance, the sanggunian may refer
to LBR Form No. 2 in Part II, Chapter 3 of this Manual.

The proposed APP, which is the consolidation of PPMPs of

all Departments/Offices or end-user units in the LGU, which
includes all procurement activities and schedules planned
for the budget year that are integrated in the AIP, may be
used by the sanggunian in its evaluation of the LEP, among
others.

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 e. Annual Operating Budget of Local Economic Enterprise
– shall comply with the following requirements:

⚫ The LGU maintains a special account in the General

Fund (GF) for the LEE (Section 313 [a] of the LGC).

⚫ Salaries, wages, representation, and transportation

allowances of LEE officials and employees shall not be
included in the annual or supplemental budget or in the
computation of the maximum amount for PS of the LGU.

⚫ The appropriations for PS of LEEs shall be charged to

their respective budgets (Section 325 [a] of the LGC).

⚫ No LEE official or employee is allowed a salary rate

higher than the maximum fixed for the position or other
positions of equivalent rank.

⚫ PPAs of LEE are included in the AIP.

⚫ Under Section 313 of the LGC, the rule on the treatment

of the income of the LEE is as follows:

a. The costs of improvement, repair, and other

related expenses of the LEE shall be deducted
from the income from the operation of the said
LEE;

b. The balance thereof shall first be applied for the

return of advances or loans made; and

c. Any excess shall form part of the GF of the LGU.

⚫ The AOB of each LEE is presented separately in the

LEP which shall be included for enactment by the
sanggunian.

The sanggunian may refer to Local Budget

Circular (LBC) No. 111 dated June 10, 2016
prescribing the Manual on the Setting Up and
Operation of LEE.

2.4.1.3 Deliberate the Budget

The sanggunian shall consider the LEP as a priority measure if certified

as urgent by the LCE, thus, shall take precedence over all other
pending and proposed measures.

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 All sanggunian sessions shall be open to the public unless a closed-
door session is ordered by an affirmative vote of majority of the
members present, there being a quorum, in the public interest or for
reasons of security, decency, or morality. No two (2) sessions, regular
or special, may be held in a single day (Section 52 [c] of the LGC).

⚫ Presentation of the Executive Budget to the Sanggunian

On the first day of the deliberation on the LEP, the LCE may
address the members of the sanggunian to present the thrusts,
programs and priorities of the budget under consideration. The LCE
may likewise brief the sanggunian on the level of proposed
expenditures; how they are strategically allocated among the three
(3) mandated sectoral services (social, economic, and general
services) and the sources of financing, i.e., revenues, other
receipts and borrowings that will support the budget.

⚫ Deliberation Proper

The procedures observed in the budget deliberation may vary from

one LGU to another depending on the IRP adopted by the
sanggunian.

• The Committee on Appropriations/Finance may conduct its

own budget hearing and may call upon the LFC and Heads
of Departments and Offices during the preliminary review
and evaluation of the budget. The Committee then renders
its report and recommendations to the sanggunian proper.

• The LFC, in assisting the sanggunian, shall:

o Make available pertinent data to enable the

sanggunian and the Committee on
Appropriations/Finance to carry out a more objective
review and analysis of the proposed expenditure
program and its component activities, the projected
revenues and other sources of financing; and

o Be present during committee hearings and

sanggunian sessions as may be required by the
legislative body to explain any detail of the LEP that
the members may wish to be clarified on.

• When allowed in the IRP, the accredited CSOs may be

invited to attend and provide inputs during budget
deliberation sessions, including committee hearings.

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• The sanggunian shall, among others, ensure that the
provisions on budgetary requirements and general
limitations under the LGC and other laws are strictly
complied with.

• During budget deliberation, the sanggunian may use the

following guide questions, among others:

o Is the budget consistent with the approved AIP?

o Do the estimated revenues and other receipts have

reasonable probability of collection?

o Are new taxes and other revenue measures proposed

to finance the budget covered by tax ordinances?

o Are the proposed borrowing or other credit financing

within the capability of the LGU to pay?

o Does the budget adequately provide funds for the

delivery of basic services and maintenance of facilities
enumerated under Section 17 of the LGC?

o Are the requirements of component LGUs considered

and equitably provided for in the budget?

o Is the proposed expenditure program within the

recommended ceiling for economic, social, and
general public services?

o Are the existing/proposed organizational structure and

staffing pattern designed and implemented taking into
consideration the service requirements and financial
capability of the LGU subject to the minimum standards
and guidelines of the CSC and the provisions of the
LGC?

o Does the existing/proposed staffing complement have

the capability to implement the plans and programs
and deliver basic public services?

o Are there expenditures that need to be reduced to

ensure an effective and efficient use of resources in
local government operations?

o Are there projects or activities that need to be “fast-

tracked”?

o Are there procedures to be simplified to optimize

utilization of resources?

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 • The Heads of Departments and Offices, as authorized by the
LCE, when requested to appear before the sanggunian to
explain or justify their budgets, may present the following:

o The mandate, vision and mission, MFOs, PIs, targets,

functions, and corresponding projects of the
Department/Office and their relevance to the total
development efforts of the LGU;

o The nature of the work to be performed for each PPA

measured in terms of expected results, as well as the
level of funding being proposed, including
organizational setup/staffing modification, if any, and
the personnel complement tasked to perform the work;
and

o The accomplishment of the Department/Office for the

preceding fiscal year, particularly the extent to which it
has met its targets.

2.4.1.4 Authorize the Annual Budget

After budget deliberation, the sanggunian authorizes the annual budget

through an AO. (Please see illustrative example in Item 2.6 of this
Chapter.)

An appropriation refers to an authorization made by ordinance,

directing the payment of goods and services from local government
funds under specified conditions or for specific purposes (Section 306
[b] of the LGC).

⚫ Contents of the Appropriation Ordinance

The AO shall contain, among others, the following:

⚫ Assigned number, title or caption, enacting or ordaining

clause, and the date of proposed effectivity (Article 107 [b]
of IRR of the LGC);

⚫ A provision identifying the documents appended to the AO

that will form part of the authorized budget, such as, but not
limited to, the following:

o Plantilla of Personnel; and

o AOB/s of LEE/s, if any;

⚫ Receipts Program;

⚫ Expenditure Program by Department/Office:

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 o mandate, vision, mission and organizational
outcome, MFO, PIs, and targets;

o new appropriations of PPA, expense class, and

object of expenditures; and

o special provisions, if any;

⚫ Special Purpose Appropriations, including provision on

loan payment, if any, shall be reflected under the
appropriate implementing Department/Office;

⚫ General Provisions may include authority on the use of

savings and augmentation, among others; and

⚫ Summary of new appropriations by Expense Class, by

Object of Expenditure by Sector, by Department/Office,
and Summary Statement of all Statutory and Contractual
Obligations.

⚫ Rules Governing the Enactment of an Appropriation

Ordinance

The enactment of the proposed AO shall be governed by the rules

prescribed under Section 54 of the LGC and Article 107 of its IRR,
as well as the IRP adopted by the sanggunian concerned. In
summary, the following may constitute basic requirements and
process of enactment:

o A majority of all the members of the sanggunian who have

been elected and qualified shall constitute a quorum to
transact official business. Should a question of quorum be
raised during a session, the Presiding Officer shall
immediately proceed to call the roll of the members and
thereafter announce the results (Section 53 [a] of the LGC
and Article 106 [a] [b] of its IRR).

o The proposed AO shall be accompanied by a brief

explanatory note containing the justification for its approval
(Article 107 [b] of the IRR of the LGC).

o The proposed AO shall be signed by the author or authors

and submitted to the Secretary to the Sanggunian who shall
report the same to the sanggunian at its next meeting (Article
107 [b] of the IRR of the LGC).

o No ordinance shall be considered on second reading in any

regular meeting unless it has been reported out by the
proper committee to which it was referred, normally the
Committee on Appropriations, or certified as urgent by the
LCE (Article 107 [d] of the IRR of the LGC).

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 o The proposed AO, if certified as urgent by the LCE, may be
presented to and considered by the sanggunian at the same
meeting when it was first reported to the sanggunian,
whether or not it is included in the calendar of business
without need of suspending the rules (Article 107 [e] of the
IRR of the LGC).

o The Secretary to the Sanggunian shall prepare copies of the

proposed AO in the form it was passed during the second
reading, and shall distribute to each sanggunian member a
copy thereof for the third reading and final consideration
(Article 107 [f] of the IRR of the LGC).

o If the proposed AO is certified as urgent by the LCE, it may

be submitted for final voting immediately after debate or
amendment during the second reading (Article 107 [f] of the
IRR of the LGC).

o An ordinance authorizing or directing the payment of money

or creating liability shall require the affirmative vote of a
majority of all the sanggunian members for its passage
(Article 107 [g] of the IRR of the LGC).

o The approved AO shall be stamped with the seal of the

sanggunian and recorded in a book kept for the purpose
(Article 107 [h] of the IRR of the LGC).

o The Secretary to the Sanggunian shall affix his signature to

the enacted AO and present the same to the Presiding
Officer for his signature (Section 469 [c] [2] of the LGC).

o The Secretary to the Sanggunian shall forward the AO

enacted by the Sanggunian and duly certified by the
Presiding Officer to the LCE for approval (Section 469 [c] [3]
of the LGC).

⚫ Voting Requirement to Enact an Appropriation Ordinance

o An AO requires the
affirmative vote of a majority In determining the total
of all the sanggunian membership of the
members (Municipality of Sanggunian, the Vice-
Corella vs. Philkonstrak Governor or the Vice-Mayor,
[Corella], G.R. No. 218663, as the case may be, is
February 28, 2022). included (Romeo Gamboa,
Jr vs. Marcelo Aguirre, Jr.
o For purposes of ascertaining and Juan Araneta, G.R. No.
if a quorum exists, the Vice- 134213, July 20, 1999).
Governor/Vice-Mayor, as

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 the Presiding Officer, shall be considered a part of the
sanggunian. In determining the number which constitutes
the majority vote, the Vice-Governor/Vice-Mayor shall be
excluded. Their right to vote is merely contingent and arises
only when there is a tie to break (J. Tobias Javier and
Vincent Piccio III vs. Rhodora Cadiao, et al., G.R.
No.185369, August 3, 2016).

Simple Majority means the majority vote of all those

present in a session there being a quorum, while
Qualified Majority refers to the majority vote of all the
members duly elected and qualified regardless of whether
or not all of them were present or not in a particular
session (La Carlota City vs. Atty. Rex Rojo, G.R. No.
181367, April 24, 2012).

In the case of Corella, the Supreme Court (SC) ruled as follows:

o Article 107 (g) of the IRR of the LGC provides the general
rule that no ordinance or resolution shall be passed by the
sanggunian without the prior approval of a majority of all the
members present.

o The exception to the general rule is that for ordinances or

resolutions authorizing or directing the payment of money or
creating liability, what is needed is the affirmative vote of a
majority of all the sanggunian members, whether
present or not.

o The term “appropriation,” as defined under Section 306 (b)

of the LGC “refers to an authorization made by ordinance,
directing the payment of goods and services from local
government funds under specified conditions or for specific
purposes.”

o Juxtaposing this definition with the exception in Article

107(g) of the IRR of the LGC, that “any ordinance x x x
authorizing or directing the payment of money x x x, shall
require the affirmative vote of a majority of all the
sanggunian members,” it is express and clear that an
“appropriation ordinance” is one such ordinance
contemplated in the exception.

• When an AO will serve as the Sanggunian authorization for

the LCE to enter into contracts

o “The question of whether a sanggunian authorization

separate from the [AO] is required should be resolved
depending on the particular circumstances of the case.

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 Resort to the [AO] is necessary in order to determine if there
is a provision therein which specifically covers the expense
to be incurred or the contract to be entered into. Should the
[AO], for instance, already contain in sufficient detail the
project and cost of a capital outlay such that all the [LCE]
needs to do after undergoing the requisite public bidding is
to execute the contract, no further authorization is required,
the [AO] already being sufficient.” (Hon. Gabriel Luis
Quisumbing, et al. vs. Hon. Gwendolyn Garcia, et al., G.R.
No. 175527, December 8, 2008).

o In Corella, the SC explained, “[i]n the landmark case of

Quisumbing v. Garcia (Quisumbing), the Court delineated
when a sangguniang bayan authorization is still necessary
to accompany the appropriation ordinance and when it is
not. Depending on the circumstances of the case, if the
project is provided for in sufficient detail in the appropriation
ordinance, meaning the transactions, bonds, contracts,
documents, and other obligations the mayor would enter into
in behalf of the municipality, among others, are enumerated,
then no separate authorization is necessary. On the other
hand, if the project is merely couched in general and generic
terms, then a separate approval by the sangguniang bayan
in accordance with the law is required.”

o “The recent case of Verceles, Jr. v. Commission on Audit

(Verceles)37 citing Quisumbing, elaborated on this issue,
thus:

Explained simply, the [Local Government Code] requires

the local chief executive to secure prior authorization
from the sanggunian before he can enter into contracts
on behalf of the LGU. A separate prior authorization is no
longer required if the specific projects are covered by
appropriations of the LGU. The appropriation
ordinance passed by the sanggunian is the local
chief executive's authority to enter into a contract
implementing the project.

As required in Quisumbing, the local chief executive

must inquire if the provisions in the appropriation
ordinance specifically covers the expense to be incurred
or the contract to be entered into.

If the project or program is identified in the

appropriation ordinance in sufficient detail, then
there is no more need to obtain a separate or
additional authority from the sanggunian. In such

37
G.R. No. 211553 dated September 13, 2016

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 case, the project and the cost are already identified
and approved by the sanggunian through the
appropriation ordinance. To require the local chief
executive to secure another authorization for a project
that has been specifically identified and approved by the
sanggunian is antithetical to a responsive local
government envisioned in the Constitution and in the
[Local Government Code]. (Emphasis supplied)

As the Verceles case explained, "sufficient authority" in

an appropriation ordinance simply means specifically
and expressly setting aside an amount of money for a
certain project or program.”

⚫ Limitations on Legislative Action

The local sanggunian may not increase the proposed amount in

the executive budget nor include new items except to provide for
statutory and contractual obligations but in no case shall it exceed
the total appropriations in the executive budget (Article 415 [a] of
the IRR of the LGC).

The doctrine enunciated in the case of Andres Sarmiento, et al.

vs. The Treasurer of the Philippines, et al. (G.R. Nos. 125680 and
126313, September 4, 2001) may be applied where the SC ruled
that:

“For his part, the Solicitor General claims that the phrase "for
the operation of the government" means that Congress is
enjoined from increasing the total budget for the operation of
the government as recommended by the President, not the
individual items of appropriations.

We agree. Records of the 1986 Constitutional Commission

reveals that the purpose of the above-quoted provision is to
avoid the possibility of a big budget deficit if Congress were
given an unbridled hand in passing upon the appropriations
recommended by the President as specified in the budget.
The constitutional prohibition against such increase is an
assurance that the expected income of the government will
be sufficient for the operational expenses of its different
agencies and projects specified in the appropriations law.”

It may be noted that the subject provision of the LGC prohibiting

the increase in the proposed amount in the executive budget is
similar to the provision in Executive Order No. 292, s. 1987
(Administrative Code of 1987), particularly Section 24, Chapter 4
on Budget Authorization, Book VI, in the case of national
government budgeting, to wit:

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 “SECTION 24. Prohibition Against the Increase of
Appropriation. – The Congress shall in no case increase the
appropriation of any project or program of any department,
bureau, agency or office of the Government over the amount
submitted by the President in his budget proposal. In case
of any reduction in the proposed appropriation for a project
or program, a corresponding reduction shall be made in the
total appropriation of the department, office or agency
concerned in the total of the General Appropriations Bill.”

Step 2. Approve the Appropriation Ordinance

The AO enacted by the sanggunian shall be presented to the LCE. If the LCE
approves the same, he/she shall affix his signature on every page thereof
(Sample Format No. 3 – Approval Letter of the LCE). Otherwise, he/she shall
veto it and return the same with his objections to the sanggunian, which may
proceed to reconsider the same (Section 54 [a] of the LGC). As clearly inferred
from Section 55 (b) of the LGC, a veto may be partial (Sample Format No. 4 –
Veto Message [Partial]) or total (Sample Format No. 5 – Veto Message [Total
Veto]).

The veto shall be communicated by the LCE concerned to the sanggunian within
fifteen (15) days in the case of a province, and ten (10) days in the case of a city
or a municipality; otherwise, the ordinance shall be deemed approved as if
he/she had signed it (Section 54 [b] of the LGC).

A. Veto power of the LCE (Section 55 of the LGC)

Based on Section 55 (a) (b) and (c) of the LGC, the following are apparent:

⚫ The LCE may veto any ordinance on the ground that it is ultra vires (i.e.,
“beyond the powers”) or prejudicial to the public welfare, stating his
reasons therefor in writing.

⚫ The LCE, except the Punong Barangay, shall have the power to veto
any particular item or items of an appropriation ordinance, an ordinance
or resolution adopting a local development plan and public investment
program, or an ordinance directing the payment of money or creating
liability.

⚫ The veto shall not affect the item or items which are not objected to.
The LCE has to sign the AO even if he has vetoed certain items in the
AO. The vetoed item or items shall not take effect unless the
sanggunian overrides the veto; otherwise, the item or items in the AO
of the previous year corresponding to those vetoed, if any, shall be
deemed reenacted.

As gleaned from the foregoing, the LCE has to sign the AO in every
page thereof even if he has vetoed an item or items of an AO. He/she
should state his reasons in writing for the vetoed items.

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 ⚫ The LCE may veto an ordinance or resolution only once.

B. Override of the Veto

Pursuant to Section 55 (c) of the LGC, the sanggunian may override the veto
of the LCE by two-thirds (2/3) vote of all its members. Such override will make
the ordinance effective even without the approval of the LCE concerned.

Step 3. Post the Appropriation Ordinance

The Secretary to the Sanggunian concerned shall cause the posting of an

ordinance or resolution in the bulletin board at the entrance of the provincial
capitol or city, municipality, or barangay hall, as the case may be, and in at least
two (2) conspicuous places in the LGU concerned not later than five (5) days
after the approval thereof (Section 59 [a] of the LGC and Article 113 of its IRR).

The text of the ordinance or resolution shall be disseminated and posted in

Filipino or English or in the language or dialect understood by the majority of the
people in the LGU concerned, and the Secretary to the Sanggunian shall record
such fact in a book kept for the purpose, stating the dates of approval and posting
(Section 59 [b] of the LGC).

In the case of highly-urbanized cities (HUCs) and independent component cities

(ICCs), the main feature of the ordinance or resolution duly enacted or adopted
shall, in addition to being posted, be published once in a local newspaper of
general circulation within the city; provided that in the absence thereof the
ordinance or resolution shall be published in any newspaper of general
circulation (Section 59 [d] of the LGC).

As a general rule, under Section 59 (a) of the LGC, an ordinance or a resolution

approving the local development plan and public investment program shall take
effect after ten (10) days from the date a copy thereof is posted in a bulletin board
at the entrance of the provincial capitol or city, municipal, or barangay hall, as
the case may be, and in at least two (2) other conspicuous places in the LGU
concerned, unless otherwise stated.

Step 4. Forward copies of the approved Appropriation Ordinance to the

reviewing authority

For component cities and municipalities, the Secretary to the Sangguniang

Panlungsod or Sangguniang Bayan, as the case may be, shall forward to the
Sangguniang Panlalawigan within three (3) days after approval, copies of the
approved AO for review in accordance with Section 327 of the LGC (Section 56
of the LGC in relation to Section 327 of the LGC).

For provinces, HUCs, ICCs, and municipalities within the MMA, the Secretary to
the Sangguniang Panlalawigan, Sangguniang Panlungsod, or Sangguniang
Bayan, as the case may be, shall transmit to the DBM within three (3) days after
its approval, copies of the approved AO for review in accordance with Section

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 327 of the LGC (Section 56 of the LGC in relation to Sections 326 and 327 of the
LGC).

The AO shall be supported with the documentary requirements bearing the

prescribed signatures as specified in LBR Form Nos. 1A and 1B in the Budget
Review Phase, Part II, Chapter 3 of this Manual.

Effectivity of the Annual/Supplemental Budget

“The ordinance enacting the annual budget shall take effect at the beginning of the
ensuing calendar year. An ordinance enacting a supplemental budget, however, shall
take effect upon its approval or on the date fixed therein.” (Section 320 of the LGC)

Changes in the Annual Budget

Pursuant to Section 321 of the LGC and Article 417 of its IRR, as amended by
Administrative Order No. 47 dated April 12, 1993, changes in the annual budget may
be done through supplemental budgets. No ordinance providing for a supplemental
budget shall be enacted except for the following:

1. When supported by funds actually available as certified by the local treasurer;

2. If covered by new revenue sources; and

3. In times of public calamity by way of budgetary realignment.

The detailed discussion on the enactment of the AO authorizing a Supplemental

Budget is presented in the Budget Preparation Phase, Part II, Chapter 1 of this
Manual.

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2.5 Local Budget Authorization Forms

LBA Form No. 1A

CHECKLIST ON DOCUMENTARY AND SIGNATURE REQUIREMENTS

FOR THE ANNUAL BUDGET

DOCUMENT SIGNATORY REMARKS

Budget Message Local Chief Executive (LCE)

Local Expenditure Program LCE

Plantilla of Personnel Human Resource

Management Officer

Local Budget Officer (LBO)

LCE

Annual Operating Budget of Local Head of the Local Economic

Economic Enterprise, if any Enterprise

LCE

Annual Investment Program (AIP)

(As approved by the sanggunian
through a Resolution)

1. AIP Local Planning and

Development Coordinator

LBO

LCE

2. Resolution Secretary to the Sanggunian

Presiding Officer

LCE

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LBA Form No. 1B

CHECKLIST ON DOCUMENTARY AND SIGNATURE REQUIREMENTS

FOR THE SUPPLEMENTAL BUDGET

DOCUMENT SIGNATORY REMARKS

Funds Actually Available:

Certified Statement of Additional Local Treasurer

Realized Income
Local Accountant

Certification of Savings with Local Treasurer

Sanggunian Resolution covering
the reversion of savings, unless
Local Accountant
reversion is also covered in the AO

New Revenue Measure/s:

Certified Statement of Income from
Local Treasurer
New Revenue Measures

Copy of duly enacted Tax Local Accountant

Ordinance which imposes new local
taxes, charges, fees, fines or Secretary to the Sanggunian
penalties or which raises existing
local taxes, charges, fees, fines, or Presiding Officer
penalties
Local Chief Executive (LCE)
Copy of official communication
stating that the LGU is a recipient of
new or higher remittances,
contributions, subsidies or grants in
aid from the National Government
or from government corporations
and private entities

Copy of official communication /

document covering the approved
loan
Realignment of appropriations in times of
Public Calamity:

Certificate, under oath, of Source Local Treasurer

of Funds Available for Appropriation
Local Accountant

LCE

Statement of Supplemental Local Budget Officer (LBO)

Appropriations
LCE

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 DOCUMENT SIGNATORY REMARKS

Supplemental Annual Investment

Program (AIP)
(As approved by the sanggunian
through a Resolution)

1. Supplemental AIP Local Planning and

Development Coordinator

LBO

LCE

2. Resolution Secretary to the Sanggunian

Presiding Officer

LCE

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2.6 Illustrative Examples

Sample Format No. 1 – Ordinance Authorizing the Annual Appropriations

APPROPRIATION ORDINANCE NO. _____

Series of ____

AN ORDINANCE AUTHORIZING THE ANNUAL BUDGET OF (NAME OF LGU) IN THE

TOTAL AMOUNT OF _________________ (P____________) COVERING THE
VARIOUS EXPENDITURES FOR THE OPERATION OF THE (PROVINCIAL/CITY/
MUNICIPAL) GOVERNMENT FOR FISCAL YEAR (FY) ______, AND APPROPRIATING
THE NECESSARY FUNDS FOR THE PURPOSE

Introduced by:

Be it ordained in Regular Session assembled:

Section 1. The Annual Budget of the (Name of LGU) in the total amount of
___________________ (P_______) covering the various expenditures for the operation of
the (Provincial/City/Municipal) Government for FY _____ is hereby approved.

The following budget documents are incorporated herein, and made integral part of this
Ordinance:

1. Plantilla of Personnel; and

2. Annual Operating Budget of Local Economic Enterprise/s, if any.

Section 2. Sources of Funds

RECEIPTS PROGRAM
FY 2022-2024
(In 000 Pesos)
Current Year
Past Budget
Particulars
Account First Second
Code Year
Total
Year
(Actual) Semester Semester (Proposed)
(Actual) (Estimate)
(1) (2) (3) (4) (5) (6) (7)
I. Beginning Cash Balance

II. Receipts
Regular Income
A. Local Sources
1. Tax Revenue
a. Real Property Tax (RPT)
i. Basic RPT
b. Business Tax
c. Other Local Taxes
Total Tax Revenue

2. Non-Tax Revenue
a. Regulatory Fees
b. Service/User Charges
c. Receipts from Economic
Enterprises
d. Other Receipts
Total Non-Tax Revenue
Total Local Sources

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 B. External Sources
1. National Tax Allotment (NTA)
(formerly Internal Revenue
Allotment [IRA])
2. Share from Government-Owned
and/or Controlled Corporations
(Philippine Amusement and Gaming
Corporation and Philippine Charity
Sweepstakes Office)
3. Other Shares from National Tax
Collection
a. Share from Ecozone
b. Share from eVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
Total External Sources
Total Regular Income

Non-Regular Income
A. External Sources
1. Inter-Local Transfer
2. Extraordinary
Receipts/Grants/Donations/Aids
Total External Sources
B. Non-Income Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt
Securities of Other Entities
c. Collections of Loans Receivable
Total Capital Investment Receipts
2.Receipts from Loans and
Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Loans and
Borrowings
3. Other Non-Income Receipts
Total Non-Income Receipts
Total Non-Regular Income

Total Available Resources for

Appropriation

Section 3. Use of Fund

A. OFFICE OF THE MAYOR

Mandate:
Vision:
Mission:
Organizational Outcome:

1. Proposed New Appropriations by Program, Project, and Activity (PPA)

Annual Proposed Budget

Investment Major
Performance Maintenance
Program Final
PPA Indicator Target Personal and Other Financial Capital
(AIP) Output (PI)
Reference (MFO) Services Operating Expenses Outlay Total
Code (PS) Expenses (FE) (CO)
(MOOE)

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 2. Proposed New Appropriations, by Object of Expenditures
Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)

PS
Salaries and Wages – Regular
Salaries and Wages –
Casual/Contractual
Personnel Economic Relief
Allowance
Representation Allowance
Transportation Allowance
Clothing/Uniform Allowance
Honoraria
Year-End Bonus
Cash Gift
Other Bonuses and Allowances
Retirement and Life Insurance
Premiums
Pag-IBIG Contributions
PhilHealth Contributions
Employees Compensation
Insurance Premium (ECIP)
Terminal Leave Benefits
TOTAL PS

MOOE
Travelling Expenses
Training and Scholarship
Expenses
Telephone Expenses – Landline
Telephone Expenses – Mobile
Postage and Deliveries
Subscription Expenses
Rent/Lease Expense
Office Supplies Expenses
Fuel, Oil, and Lubricant
Expenses
Repairs and Maintenance –
Land Transport Equipment
Repairs and Maintenance –
Office Equipment
Repairs and Maintenance –
Building and Other Structures
Donations
Representation Expenses
Confidential Expenses
Other Professional Expenses
TOTAL MOOE

FE
Management
Supervision/Trusteeship Fees
Interest Expenses
Guarantee Fees
Bank Charges
Commitment Fees
Other Financial Charges
TOTAL FE

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 Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)

CO
Office Equipment
Technical and Scientific
Machinery Equipment
Land Improvements
TOTAL CO

TOTAL APPROPRIATIONS

3. Special Purpose Appropriations

3.1 LOCAL DISASTER RISK REDUCTION AND MANAGEMENT FUND

A. Proposed New Appropriations

Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
QUICK RESPONSE FUND (30%)

DISASTER PREPAREDNESS,
PREVENTION, MITIGATION,
RESPONSE, REHABILITATION
AND RECOVERY (70%)

MOOE
Training Expenses
Telephone Expenses –
Landline
Telephone Expenses – Mobile
Insurance Expenses
Rent/Lease Expense
Supplies and Medicines
Fuel, Oil and Lubricant
Expenses
Repairs and Maintenance –
School Buildings
TOTAL MOOE

CO
Rescue Equipment
Building and Structure
Land Improvements
TOTAL CO

TOTAL APPROPRIATIONS

B. Special Provisions

1. Use and Release of Fund. The amount herein appropriated shall be

used in accordance with Republic Act No. 10121, “The Philippine
Disaster Risk Reduction and Management Act of 2010,” which shall
include relief, rehabilitation, reconstruction, and other works or services,
including pre-disaster activities, in connection with the occurrence of

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 natural calamities, epidemics as declared by the Department of Health,
and other catastrophes. Provided, that the projects and activities are
incorporated in the Local Disaster Risk Reduction and Management
(LDRRM) Plan, and integrated in the approved Annual Investment
Program. Provided further, that the utilization of the Fund shall be in
accordance with the provisions of National Disaster Risk Reduction and
Management Council-Department of Budget and Management (DBM)-
Department of the Interior and Local Government (DILG) Joint
Memorandum Circular (JMC) No. 2013-1 dated March 25, 2013.

2. Quick Response Fund. Of the amount appropriated for LDRRM Fund,

thirty percent (30%) shall be allocated as Quick Response Fund (QRF)
or stand-by fund for relief, and recovery programs in order that the
situation and living conditions of people in the communities or areas
stricken by disasters, calamities, epidemics, or complex emergencies,
may be normalized as quickly as possible.

The release and use of QRF shall be supported by a resolution of the

Sanggunian declaring the local government unit (LGU) under state of
calamity or a Presidential declaration of state of calamity.

3. In no case shall the QRF be used for the pre-disaster, nor be realigned
for any other purpose.

3.2 APPROPRIATIONS FOR DEVELOPMENT PROGRAMS AND

PROJECTS

A. Proposed New Appropriations

Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)

MOOE

CO

TOTAL APPROPRIATIONS

B. Special Provisions

Use and Release of Fund. The 20% Development Fund shall be strictly
utilized in accordance with the general policies prescribed under DBM-
Department of Finance-DILG JMC No. 1 dated November 4, 2020, and
for the projects included in the approved AIP of the [LGU] for FY 2024.
The development projects identified shall be consistent with the local
development plan duly approved by the Local Development Council and
local sanggunian. The disbursement of this fund shall be based on the
approved Project Procurement Management Plan for FY 2024, and
shall be subject to all existing budgeting, accounting, and auditing laws,
rules, and regulations.

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 3.3 OTHER SPECIAL PURPOSE APPROPRIATIONS

A. Proposed New Appropriations

Current Year
Office/Program/ Past Year Budget Year
Account Expenditures
Expenditures Expenditures
Object of Expenditure Code
(Actual)
(Actual and
(Proposed)
Estimate)
a. Office of the Mayor
b. Office of the Sanggunian
c. etc.

B. Special Provisions

Use and Release of Fund. The release, utilization, and disbursement

of the appropriation herein provided shall be subject to all existing
budgeting, accounting, and auditing laws, rules and regulations.

3.4 APPROPRIATIONS FOR LOCAL ECONOMIC ENTERPRISES

A. Proposed New Appropriations

Current Year
Past Year Budget Year
Account Expenditures
Object of Expenditure Code
Expenditures
(Actual and
Expenditures
(Actual) (Proposed)
Estimate)
SUBSIDY TO LOCAL
ECONOMIC ENTERPRISE
(LEE)

OPERATING EXPENSES
FUNDED BY INCOME OF
THE LEE

TOTAL APPROPRIATIONS

B. Special Provisions

Appropriation for Programs and Specific Activities. The amount

appropriated herein for subsidies and programs of the LEE shall be used
specifically for the identified activities subject to existing budgeting,
accounting, and auditing laws, rules and regulations.

4. Summary of the FY 2024 Proposed New Appropriations

4.1 Proposed New Appropriations, by Object of Expenditure and by Sector

General
Object of Account Social Economic Other
Public Total
Expenditure Code Services Services Services
Services
1. PS
(specify object of
expenditure)
Total, PS
2. MOOE
(specify object of
expenditure)
Total, MOOE

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 3. FE
(specify object of
expenditure)
Total, FE
4. CO
(specify object of
expenditure)
Total, CO
5. Special Purpose
Appropriations
(SPA)
(specify object of
expenditure)
Total, SPA
Total Appropriations

4.2 Proposed New Appropriations, by Office

Office PS MOOE FE CO Total

a. Office of the Mayor
b. Office of the Sanggunian
c. etc.

4.3 Summary of Statement of All Statutory and Contractual Obligations

Particulars Amount
1. Statutory and Contractual Obligations
1.1 5% Metro Manila Development Authority Contribution for Local
Government Units in National Capital Region only (Republic Act
No. 7924)
1.2 Retirement Gratuity Benefits
1.3 Terminal Leave Benefits
1.4 Debt Service
1.5 Employees Compensation Insurance Premiums
1.6 PhilHealth Contributions
1.7 Pag-IBIG Contributions
1.8 Retirement and Life Insurance Premiums

2. Budgetary Requirements
2.1 20% of NTA (formerly IRA) for Development Projects (20%
Development Fund)
2.2 5% LDRRM Fund
2.3 Financial Assistance to Barangays (Php1,000.00 minimum aid)

TOTAL

Section 4. General Provisions

The following policies are hereby adopted for the fiscal year:

4.1 Availability of Appropriations. Unexpended balances of appropriations authorized in

the annual appropriations ordinance shall revert to the unappropriated surplus of the
general fund at the end of the fiscal year and shall not thereafter be available for the
expenditure except by subsequent enactment. However, appropriations for CO shall
continue and remain valid until fully spent, reverted or the project is completed.
Reversions of continuing appropriations shall not be allowed unless obligations therefor
have been fully paid or otherwise settled.

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4.2 Limitation on Cash Advance. Notwithstanding any provision of law to the contrary,
cash advances shall not be granted until such time that the earlier cash advances
availed of by the officials or employees or employees concerned shall have been
liquidated pursuant to pertinent accounting.

4.3 Meaning of Savings. Savings refer to portions or balances as of any given point in the
fiscal year or any programmed or allotted appropriation which remain free of any
obligation or encumbrance and which are still available after the satisfactory completion
or the unavoidable discontinuance or abandonment of the work, activity or purpose for
which the appropriation was originally authorized, or which result from unobligated
compensation and related costs pertaining to vacant positions and leaves of absence
without pay.

4.4 Use of Savings and Augmentation. Funds shall be available exclusively for the
specific purpose for which they have been appropriated. No ordinance shall be passed
authorizing any transfer of appropriations from one item to another. However, the local
chief executive or the presiding officer of the sanggunian concerned may, by ordinance,
be authorized to augment any item in the approved annual budget for their respective
offices from savings in other items within the same expense class of their respective
appropriations.

Section 5. Separability Clause. If, for any reason, any Section or provision of this
Appropriation Ordinance is disallowed in Budget Review or declared invalid by proper
authorities, other Sections or provisions hereof that are not affected shall continue to be in
full force and effect.

Section 6. Effectivity. The provisions of this Appropriation Ordinance shall take effect on
January One, Two Thousand and ________.

ENACTED: This ____ day of _______ at __________.

x--------------------------------------x

I HEREBY CERTIFY
THAT THIS ORDINANCE IS DULY ENACTED
BY THE SANGGUNIAN ON ____________.

NAME AND SIGNATURE

OF THE SECRETARY TO THE SANGGUNIAN

NAME AND SIGNATURE

OF THE PRESIDING OFFICER

APPROVED:

NAME AND SIGNATURE

OF THE LOCAL CHIEF EXECUTIVE

DATE OF APPROVAL

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Sample Format No. 2 – Ordinance Authorizing Supplemental Appropriations

APPROPRIATION ORDINANCE NO. _____

Series of _______

AN ORDINANCE AUTHORIZING SUPPLEMENTAL BUDGET NO. _____,

SERIES OF _____ INVOLVING AN AMOUNT OF ___________ (P_______)
FOR _________(PURPOSE)____________.

Be it ordained in Regular Session assembled.

Section 1. The Supplemental Budget of the (Name of LGU) for Fiscal Year ____ in the total
amount of _______ (P________) for ___________________ is hereby approved.

The following budget documents are incorporated herein and made integral part of this
Ordinance:

1.
2.
3.
4.

Section 2. Sources of Funds. The sources for the Supplemental Budget in the total
amount of ________________ (P__________) shall be as follows:

FUND SOURCE AMOUNT

Funds Actually Available:
a) Additional Realized Income P_____________
b) Savings _____________
Sub-Total P_____________

New Revenue Measures

a) New local taxes, charges, fines or penalties P_____________
b) Remittances/Contributions/Subsidies/Grants from
NGAs/Government Corporations/Private Entities _____________
Sub-Total P_____________

Total P_____________

Section 3. Use of Funds. The amount of _______________ (P_______) is hereby

appropriated for the Supplemental Budget of the (Name of LGU), as follows:

1. Appropriations by Office, Program, Project, Activity (PPA), and Performance Indicator

(PI)

Annual
Proposed Budget
Investment Major
Program Office/ Final Maintenance and
PI Target Personal Financial Capital
(AIP) PPA Output Other Operating
Services Expenses Outlay Total
Reference (MFO) Expenses
(PS) (FE) (CO)
Code (MOOE)

TOTAL NEW APPROPRIATIONS

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2. Appropriations by Object of Expenditures

Account
Object of Expenditure Past Year Current Year Budget Year
Code

PS

Total, PS

MOOE

Total, MOOE

FE

Total, FE

CO

Total, CO
TOTAL APPROPRIATIONS

Section 4. Separability Clause. If, for any reason, any section or provision of this
Ordinance is declared invalid or unconstitutional, other sections or provisions thereof which
are not affected thereby shall continue to be in full force and effect.

Section 5. Effectivity. The provisions of this Ordinance shall take effect on

_______________.

ENACTED: This ____ day of _________ at _______________.

x------------------------------------------x

I HEREBY CERTIFY
THAT THIS ORDINANCE IS DULY ENACTED
BY THE SANGGUNIAN ON ____________.

NAME AND SIGNATURE

OF THE SECRETARY TO THE SANGGUNIAN

NAME AND SIGNATURE

OF THE PRESIDING OFFICER

APPROVED:

NAME AND SIGNATURE

OF THE LOCAL CHIEF EXECUTIVE

DATE OF APPROVAL

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Sample Format No. 3 - Approval Letter of the LCE

____Date____

THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN
[LOCAL GOVERNMENT UNIT]

Ladies/Gentlemen:

Today, I sign Appropriation Ordinance No. ________, Series of ______, entitled, AN

ORDINANCE AUTHORIZING THE ANNUAL BUDGET OF (NAME OF LGU) IN THE
TOTAL AMOUNT OF _________________ (P____________) COVERING THE
VARIOUS EXPENDITURES FOR THE OPERATION OF THE (PROVINCIAL/CITY/
MUNICIPAL) GOVERNMENT FOR FISCAL YEAR ______, AND APPROPRIATING
THE NECESSARY FUNDS FOR THE PURPOSE (or AN ORDINANCE AUTHORIZING
SUPPLEMENTAL BUDGET NO. _____, SERIES OF _____ INVOLVING AN AMOUNT
OF _________________ [P___________] FOR ________[PURPOSE]______).

With the passage of the FY _____ Annual/Supplemental Budget of the (Name of LGU)
under Appropriation Ordinance No._____, Series of _____, we will be giving better basic
services to our constituents.

In accordance with the law, I am returning the approved Appropriation Ordinance

No.____, Series of ______ to the Sanggunian.

Very truly yours,

NAME AND SIGNATURE OF

THE LOCAL CHIEF EXECUTIVE

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Sample Format No. 4 – Veto Message (Partial Veto)

____Date____

THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN
[LOCAL GOVERNMENT UNIT]

Ladies/Gentlemen:

Today, I sign Appropriation Ordinance No. ________, Series of ______, entitled, AN

ORDINANCE AUTHORIZING THE ANNUAL BUDGET OF (NAME OF LGU) IN THE
TOTAL AMOUNT OF _________________ (P____________) COVERING THE
VARIOUS EXPENDITURES FOR THE OPERATION OF THE (PROVINCIAL/CITY/
MUNICIPAL) GOVERNMENT FOR FISCAL YEAR ______, AND APPROPRIATING
THE NECESSARY FUNDS FOR THE PURPOSE (or AN ORDINANCE AUTHORIZING
SUPPLEMENTAL BUDGET NO. _____, SERIES OF _____ INVOLVING AN AMOUNT
OF _________________ [P___________] FOR ________[PURPOSE]______).

However, pursuant to the powers vested in me by the Local Government Code of 1991,
I am duty bound to veto some items of appropriation in the above-mentioned
Appropriation Ordinance on the grounds that they result from ultra vires acts of the
Sanggunian and are prejudicial to public welfare, as follows:

(Enumerate the vetoed item/s and the particular reason/s for veto.)

With the passage of the FY _____ Annual/Supplemental Budget of the (Name of LGU)
under Appropriation Ordinance No._____, Series of _____, we will be giving better basic
services to our constituents.

In accordance with the law, I am returning the approved Appropriation Ordinance

No.____, Series of ______ together with my partial veto to the Sanggunian.

Very truly yours,

NAME AND SIGNATURE OF

THE LOCAL CHIEF EXECUTIVE

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Sample Format No. 5 – Veto Message (Total Veto)

____Date____

THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN
[LOCAL GOVERNMENT UNIT]

Ladies/Gentlemen:

Today, I veto Appropriation Ordinance No. ________, Series of ______, entitled, AN

ORDINANCE AUTHORIZING THE ANNUAL BUDGET OF (NAME OF LGU) IN THE
TOTAL AMOUNT OF _________________ (P____________) COVERING THE
VARIOUS EXPENDITURES FOR THE OPERATION OF THE (PROVINCIAL/CITY/
MUNICIPAL) GOVERNMENT FOR FISCAL YEAR ______, AND APPROPRIATING
THE NECESSARY FUNDS FOR THE PURPOSE (or AN ORDINANCE AUTHORIZING
SUPPLEMENTAL BUDGET NO. _____, SERIES OF _____ INVOLVING AN AMOUNT
OF _________________ [P___________] FOR ________[PURPOSE]______).

Pursuant to the powers vested in me by the Local Government Code of 1991, I veto all
items of appropriation embodied the above-mentioned Appropriation Ordinance on the
grounds that they result from ultra vires acts of the Sanggunian and are prejudicial to public
welfare, as follows:

(Enumerate the vetoed item/s and the particular reason/s for veto.)

Hence, I am respectfully returning the approved Appropriation Ordinance No.____, Series

of _____ together with the Veto Message to the Sanggunian.

Very truly yours,

NAME AND SIGNATURE OF

THE LOCAL CHIEF EXECUTIVE

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Sample Format No. 6 – Ordinance Authorizing Use of Savings and Augmentation

ORDINANCE NO. __________

Series of _______

AN ORDINANCE AUTHORIZING THE GOVERNOR/MAYOR

AND/OR THE PRESIDING OFFICER OF THE SANGGUNIAN
TO USE SAVINGS FOR AUGMENTATION
IN ACCORDANCE WITH THE LOCAL GOVERNMENT CODE OF 1991

Be it ordained in Regular Session assembled:

Section 1. Use of Savings and Augmentation. In accordance with Section 336 of

Republic Act No. 7160 or the Local Government Code of 1991, the Governor/Mayor and/or
the Presiding Officer of the Sanggunian is/are authorized to augment any item in the
approved annual budget for their respective offices from savings in other items within the
same expense class of their respective appropriations.

For this purpose, “savings” refer to portions or balances of any programmed appropriation
free from any obligation or encumbrance still available after the satisfactory completion or
unavoidable discontinuance or abandonment of the work, activity or purpose for which the
appropriation is authorized, or arising from unpaid compensation and related costs
pertaining to vacant positions and leaves of absence without pay.

“Augmentation” implies the existence in the budget of an item, project, activity or purpose
with an appropriation which, upon implementation or subsequent evaluation of needed
resources, is determined to be deficient.

Section 2. Priority in the Use of Personal Services (PS) Savings. Priority shall be given
to the personnel benefits of local employees in the use of PS savings.

Section 3. Separability Clause. If, for any reason, any section or provision of this
Ordinance is declared invalid or unconstitutional, other sections or provisions thereof which
are not affected thereby shall continue to be in full force and effect.

Section 4. Effectivity. The provisions of this Ordinance shall take effect on

_______________.

ENACTED: This ____ day of __________ at ____________________.

x--------------------------------------------x

I HEREBY CERTIFY
THAT THIS ORDINANCE IS DULY ENACTED
BY THE SANGGUNIAN ON ____________.

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 NAME AND SIGNATURE
OF THE SECRETARY TO THE SANGGUNIAN

NAME AND SIGNATURE

OF THE PRESIDING OFFICER

APPROVED:

NAME AND SIGNATURE

OF THE LOCAL CHIEF EXECUTIVE

DATE OF APPROVAL

(Note: This form may be adopted in case the sanggunian decides to grant the
authority for use of savings and augmentation under Section 336 of the LGC and the
same authority was not incorporated in the ordinance authorizing the Annual Budget
of the LGU.)

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CHAPTER 3. BUDGET REVIEW PHASE

Budget Review is the third phase in the local budget process. Its primary purpose is
to determine whether the AO has complied with the budgetary requirements and
general limitations set forth in the LGC, as well as provisions of other applicable laws.
It starts from the time the reviewing authority receives the AO for review and ends with
the issuance of the review action.

3.1 Legal Bases of Budget Review

“The Department of Budget and Management shall review ordinances

authorizing the annual or supplemental appropriations of provinces, highly-
urbanized cities, independent component cities, and municipalities within the
Metropolitan Manila Area in accordance with the immediately succeeding
section.” (Section 326 of the LGC)

“The sangguniang panlalawigan shall review the ordinance authorizing

annual or supplemental appropriations of component cities and
municipalities in the same manner and within the same period prescribed for
the review of other ordinances.” (Section 327 of the LGC)

3.2 Key Players in Budget Review

Secretary to the Sanggunian – Within three (3) days after the approval of the
ordinance authorizing annual or supplemental appropriations, the Secretary to
the Sanggunian shall forward the said ordinance to the DBM Regional Office
(RO) or Sangguniang Panlalawigan for review (Section 56 [a] in relation to
Sections 326 and 327 of the LGC).

Department of Budget and Management Regional Office – The DBM RO

shall review the ordinances authorizing the annual or supplemental
appropriations of provinces, HUCs, and ICCs within its jurisdiction, and
municipalities within the Metropolitan Manila Area. The DBM RO shall, within the
reglementary period of review, advise the Sangguniang Panlalawigan,
Sangguniang Panlungsod, or Sangguniang Bayan concerned, through the LCE,
of any action in the AO under review (Section 326 in relation to Section 327 of
the LGC).

Sangguniang Panlalawigan – The Sangguniang Panlalawigan shall review the

ordinance authorizing annual or supplemental appropriations of component cities
and municipalities within the province. The Sangguniang Panlalawigan shall,
within the reglementary period of review, advise the Sangguniang Panlungsod
or Sangguniang Bayan concerned, through the LCE, of any action in the AO
under review (Section 327 of the LGC).

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 Provincial Finance Committee – The Provincial Finance Committee shall assist
the Sangguniang Panlalawigan in the review and evaluation of budget of
component cities and municipalities and recommend the appropriate action
thereon (Section 316 [f] of the LGC).

CSOs and the Private Sector Groups – The CSOs may request for a copy of
the budget review findings from the LGU as shown in Table 7 below.

Table 7. Roles of CSOs in the Budget Review Phase

ACTIVITY LGU ROLES CSO ROLES

ISSUE THE REVIEW
ACTION

The reviewing authority If the arrangement is May request for a copy

may declare the AO as: allowed in the terms of of the review action from
engagement between the LGU.
a) Operative in its the LGU and CSO, the
entirety; or LGU may furnish a copy
of the review action to
b) Operative in its the accredited CSOs.
entirety, subject to
conditions; or

c) Inoperative in its
entirety; or

d) Inoperative in part.

3.3 Reglementary Period of Review

The AOs of provinces, HUCs, ICCs, component cities, and municipalities shall
be reviewed within ninety (90) days from receipt of copies of such ordinances
(Section 327 of the LGC).

3.4 The Budget Review Flowchart

The budget review flowchart (Figure 11) shows the sequence of activities from
the time the Secretary to the Sanggunian submits the approved AO to the
reviewing body/office until the same is returned together with the review action
to the Sangguniang Panlalawigan, Sangguniang Panlungsod, or Sangguniang
Bayan concerned through the LCE.

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 Figure 11. Budget Review Flowchart

3.5 Steps in the Budget Review Phase

Step 1. Check the Appropriation Ordinance with the Appended Budget

Documents

Using LBR Form Nos. 1A and 1B (Checklists on Documentary and Signature

Requirements for the Annual Budget and Supplemental Budget, respectively,
found in Item 3.6 of this Chapter), the DBM RO or Sangguniang Panlalawigan,
as the case may be, shall check if the required documents with the appropriate
signatures have been submitted together with the AO.

All AOs must carry the seal of the LGU (Section 469 [c] [2] of the LGC).

• Incomplete Submission

If the AO submitted for review lacks any of the documents or the required
signatures mentioned in LBR Form Nos. 1A and 1B in this Chapter, the
said AO shall not be reviewed, and shall be officially returned in writing by
the DBM RO or Sangguniang Panlalawigan to the LGU concerned,
through its Secretary to the Sanggunian, requiring the resubmission of the
same with the necessary budget documents and/or signatures.

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 Step 2. Review the Appropriation Ordinance

Using LBR Form No. 2 in Item 3.6 of this Chapter, the DBM RO or Sangguniang
Panlalawigan shall validate the provisions in the AO for compliance with the
budgetary requirements and general limitations pursuant to Sections 324 and
325 of the LGC, respectively, and other provisions of applicable laws, rules, and
regulations.

Step 3. Prepare and Issue the Review Action

The DBM RO or Sangguniang Panlalawigan may prepare and issue the Review
Action based on the Summary of Findings and Recommended Review Actions
using LBR Form No. 2 in Item 3.6 of this Chapter.

A. Review Actions

After the evaluation of the AO and its supporting documents, the DBM RO or
Sangguniang Panlalawigan may take any of the following actions:

• Declare the AO operative in its entirety.

The AO shall be declared operative in its entirety when it fully complies

with the budgetary requirements and general limitations set forth under
Title V on Local Fiscal Administration of the LGC and other provisions
of applicable laws, rules, and regulations (Section 327 of the LGC).

Meanwhile, the AO may be subjected to conditions in the following

cases:

o Certain items of appropriation require prior clearance or

documentation;

o Certain items of appropriation require prior approval by

appropriate authorities;

o Certain items of appropriation are found to be deficient from what

is prescribed by law and need to be increased (e.g., insufficient
provisions for Philippine Health Insurance Corporation
(PhilHealth), Government Service Insurance System premiums
for some employees, etc.), except in cases where the AO has to
be declared inoperative in its entirety; and/or

o Other conditions that need to be complied with to make the parts

of the AO operative.

• Declare the AO inoperative in its entirety.

The AO shall be declared inoperative under any of the following cases:

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 o When appropriation exceeds estimates of income (Section 324
[a] of the LGC);

o Non-provision or insufficient provision for any of the budgetary

requirements under Section 324 of the LGC;

o Non-provision or insufficient provision of the twenty percent

(20%) of the NTA for development projects (Section 287 of the
LGC);

o When all the PPAs included in the AO are different from those
listed in the AIP;

o When the AIP is not approved/adopted by the sanggunian before

the enactment of the AO authorizing the annual budget, pursuant
to Section 305 (i) of the LGC, which states that, “[l]ocal budgets
shall operationalize approved local development plans;” and/or

o When no sufficient appropriation is provided for loans and other

indebtedness incurred or when no provision is made to redeem
or retire bonds, debentures, securities, notes and other
obligations issued (Section 303 of the LGC).

• Declare the AO inoperative in part.

The AO may be declared inoperative in part under the following

instances:

o When some items are contrary to the limitation or in excess of

the amount prescribed by the LGC, such as, but not limited to,
funds for discretionary purposes, PS, confidential expenses,
debt servicing;

o When some items have no legal basis (e.g., rice subsidy, cost of
living allowance, and the like);

o When some PPAs not included in the approved AIP are funded;
and/or

o When the amount appropriated in the AO is higher than the

amount provided in the AIP for the same PPA.

B. Effects of the Review Action

• When the AO is declared operative in its entirety, it shall continue to be

in full force and effect.

• When the AO is declared operative in its entirety, subject to conditions,

those items not subject to conditions shall continue to be in full force

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 and effect. The items of appropriation subject to conditions shall take
effect only upon compliance with the conditions imposed.

• When the AO is declared inoperative in its entirety:

o The AO loses force and effect;

o The LGU concerned shall operate under a reenacted budget

effective immediately until such time that the new ordinance
authorizing the annual appropriations is enacted and approved;

o The Local Treasurer shall not make further disbursements of

funds from any of the items of appropriation declared
inoperative, disallowed, or reduced (Section 327 of the LGC);
and

o The budget shall be revised to comply with the provisions of

laws, rules, and regulations, and authorized through another AO,
which shall then be submitted to the reviewing authority.

• When the AO is declared inoperative in part:

o The Local Treasurer shall not make further disbursements of

funds from any of the items of appropriation declared
inoperative, disallowed, or reduced (Section 327 of the LGC);
and

o Only the items of appropriation that have not been declared

inoperative, or have not been disallowed, shall continue to be in
full force and effect.

C. Format of the Review Action

The review action by the DBM RO shall be in the form of a letter, while that
of the Sangguniang Panlalawigan shall be in the form of a resolution. All
the findings must be disclosed in the review action as shown in the
illustrative examples of review letters and resolutions in Item 3.7 of this
Chapter.

D. Nature of the Review Action

• The review action does not amend the act of the sanggunian as
embodied in the AO.

o The primary purpose of the review is to determine whether the AO

has complied with the applicable provisions of laws, rules, and
regulations.

132
132
 o The findings of the reviewing authority are merely enumeration of
infractions of budgetary requirements, general limitations, other
provisions of the LGC, and other applicable laws, rules, and
regulations, as well as recommendations of what specific actions
the sanggunian will undertake to comply with the provisions of
law. The sanggunian shall take immediate action to correct or
remedy any identified infractions.

o The condition requiring provision for deficiencies shall be acted

upon in the next supplemental budget. If the affected PPA is
prioritized as urgent, a complete reallocation of resources is
necessary to provide for deficiencies.

• The review action, likewise, does not authorize an item or items of

appropriation that is/are specifically prohibited by law.

E. Stamp of Review

The stamp of review of the DBM RO or Sangguniang Panlalawigan shall be

affixed on every page of the reviewed AO and duly signed by the Regional
Director or by the Secretary to the Sanggunian and/or the Presiding Officer,
as the case may be (See sample format of the Stamp of Review in Item 3.8
of this Chapter).

F. Return of the Reviewed Appropriation Ordinance to the LGU

concerned

The DBM RO or Sangguniang Panlalawigan shall, within ninety (90) days

from receipt of the copy of the AO, advise the sanggunian concerned,
through the LCE, of the action on the AO reviewed (Section 327 of the
LGC).

G. Failure to Review the Appropriation Ordinance within the Mandated

Period

If after the ninety (90) days reglementary period of review, the DBM RO or
Sangguniang Panlalawigan takes no action on the AO for review, the same
shall be deemed to have been reviewed in accordance with law and shall
continue to be in full force and effect (Section 327 of the LGC).

H. Review Actions and Corrective Measures

The review actions and its corresponding corrective measures are shown
in Table 8.

133
133
 Table 8. Review Actions and Corrective Measures

REVIEW ACTIONS CORRECTIVE MEASURES

AO is declared inoperative in its
entirety.

• Appropriation exceeds • The LGU, through the Local

estimates of income; Treasurer, shall not make
further disbursements of funds
• Non-provision or insufficient from any of the items of
provision for any of the appropriation declared
budgetary requirements; inoperative, disallowed, or
reduced.
• Non-provision or insufficient • The LGU shall revise its LEP
provision of twenty percent to comply with the review
(20%) of the NTA for findings and enact a new
development projects; ordinance authorizing the
annual appropriations for
• When all projects included in submission to the reviewing
the AO are different from those authority.
listed in the AIP;

• When the AIP is not

approved/adopted by the
sanggunian before the
enactment of the AO
authorizing the annual budget;
and/or

• When no sufficient
appropriation is provided for
loans and other indebtedness
incurred or when no provision
is made to redeem or retire
bonds, debentures, securities,
notes and other obligations
issued.

AO is declared inoperative in part.

• For items without legal • The LGU, through the Local

basis; and/or Treasurer, shall not make
further disbursements of
funds from any of the items of
appropriation declared
inoperative, disallowed, or
reduced.

134
134
 REVIEW ACTIONS CORRECTIVE MEASURES

• For items that are contrary • The LGU shall reduce the
to limitations or in excess of appropriated amount
the amount prescribed by accordingly.
law.

AO is declared operative in its • The LGU shall comply with

entirety, subject to conditions the conditions imposed
before any disbursements are
made, and the LCE shall
notify the reviewing authority
of such action.

I. Enforcement of Ordinances or Resolutions after Disapproval by

Reviewing Authority

Any attempt to enforce any ordinance or resolution approving the local

development plan and public investment program, after disapproval
thereof, shall be sufficient ground for the suspension or dismissal of the
official or employee concerned (Section 58 of the LGC).

135
135
3.6 Local Budget Review Forms

LBR Form No. 1A

CHECKLIST ON DOCUMENTARY AND SIGNATURE
REQUIREMENTS FOR THE ANNUAL BUDGET
______________ ______________
Date Received Deadline
______________________________ ______________
Local Government Unit (LGU) Class

______________ _______________
Title Fund

DOCUMENT SIGNATORY REMARKS

a. Transmittal Letter Secretary to the Sanggunian Letter dated: _____________

b. Budget Message Local Chief Executive (LCE)

c. Appropriation Ordinance Secretary to the Sanggunian AO No.: __________________

(AO), carrying the seal of Date Approved: ____________
the LGU, together with the Presiding Officer Amount:
following documents: __________________
LCE

Annual Investment Local Planning Development

Program (AIP) Coordinator
Local Budget Officer (LBO)

LCE

Resolution approving the Secretary to the Sanggunian Resolution No.: ____________

AIP Date: ____________________
Presiding Officer

LCE

d. Annual Operating Budget Department Head

of each Local Economic
Enterprise (LEE), if any, LBO
and the AO for the newly-
created LEE LCE

e. Veto Message, if any LCE

f. Sanggunian’s action on Secretary to the Sanggunian

veto, if any
Presiding Officer

Prepared by:

________________________
Reviewing Officer

136
136
LBR Form No. 1B
CHECKLIST ON DOCUMENTARY AND SIGNATURE
REQUIREMENTS FOR THE SUPPLEMENTAL BUDGET
______________ ______________
Date Received Deadline
_________________________________ ______________
Local Government Unit (LGU) Class

______________ _______________
Title Fund

DOCUMENT SIGNATORY REMARKS

a. Transmittal Letter Secretary to the Sanggunian Letter dated: ______________

b. Appropriation Ordinance Secretary to the Sanggunian AO No.:

(AO), carrying the seal of the Presiding Oficer __________________
LGU Date Approved:
Local Chief Executive (LCE) ____________

c. Funds Actually Available

Local Treasurer
Certified Statement of
Additional Realized Income Local Accountant

Certification of Savings Local Treasurer

Local Accountant

d. New Revenue Measure/s:

Local Treasurer
Certified Statement of Income
form New Revenue Measures Local Accountant

Copy of duly enacted Tax

Ordinance which imposes new
local taxes, charges, fees,
fines or penalties or which
raises existing local taxes,
charges, fees, fines, or
penalties

Copy of official communication

stating that the LGU is a
recipient of new or higher
remittances, contributions,
subsidies or grants in aid from
the National Government or
from government corporations
and private entities.

Copy of official
communication/document
covering the approved loan

137
137
 DOCUMENT SIGNATORY REMARKS

e. Realignment of Local Treasurer

Appropriations in Times of
Public Calamity Local Accountant
Certificate of Source of Funds LCE
Available for Appropriations

f. Statement of Supplemental Local Budget Officer (LBO)

Appropriation, unless
included in the AO LCE

g. Supplemental Annual Local Planning Development

Investment Program (AIP), if Coordinator
applicable, approved by the
LBO
Sanggunian
LCE

Resolution approving the Secretary to the Sanggunian

supplemental AIP
Presiding Officer

LCE

h. Veto Message, if any LCE

i. Sanggunian’s action on veto, Secretary to the Sanggunian

if any
Presiding Officer

Prepared by:

________________________
Reviewing Officer

138
138
 LBR Form No. 2

SUMMARY OF FINDINGS AND RECOMMENDED REVIEW ACTIONS

_____________________________ _____________________
Local Government Unit (LGU) Title

COMPLIANT? RECOMMENDED
FINDINGS
REVIEW ACTIONS
YES NO
(1) (2) (3)

I. BUDGETARY REQUIREMENTS (Section 324 of the If the aggregate amount

Local Government Code of 1991 [LGC] and Article appropriated exceeds the
419 of its Implementing Rules and Regulations estimates of income, declare AO
[IRR] and other pertinent laws) inoperative in its entirety.

a. The aggregate amount appropriated shall not

exceed the estimates of income.

Estimates of Income vs. Total Appropriations

(Section 324 [a] of the LGC and Article 419 [c]
of its IRR)

Total Estimates of Income P ____________

Less: Total Appropriations ____________

Unappropriated Balance/
(Excess Appropriation) ____________

b. Full provision shall be made for all statutory and Declare AO inoperative in its
contractual obligations of the LGU concerned entirety when no sufficient
provided that the amount of appropriations for debt appropriation is provided for
servicing shall not exceed twenty percent (20%) of loans and other indebtedness.
the regular income of the LGU concerned.
Disallow the amount in excess of
Debt Servicing Cap (Section 324 [b] of the LGC the twenty percent (20%) of the
and Article 419 [b] of its IRR) regular income. Hence, declare
the AO inoperative in part.
Regular Income (Budget Year) _____________
Multiply by 20% x 20%

Allowable Ceiling ____________

Less: Appropriations ____________

Balance/(Excess Appropriation) ____________

139
139
 COMPLIANT? RECOMMENDED
FINDINGS
REVIEW ACTIONS
YES NO
(1) (2) (3)

c. In the case of provinces, cities, and municipalities, aid to Declare AO inoperative in its
barangays shall be provided in amounts of not less than entirety for non-provision or
One Thousand Pesos (P1,000.00) per barangay. insufficient provision of Aid
to Barangays.
Aid to Barangays (Section 324 [c] of the LGC and
Article 419 [c] of its IRR)

Number of Barangays
Multiply by P1,000.00 x P1,000.00

Minimum Requirement

Less: Appropriations

Deficiency/(Allowable
appropriation over minimum
requirement)

d. Not less than five percent (5%) of the estimated revenue Declare AO inoperative in its
from regular sources shall be set aside as the Local entirety for non-provision or
Disaster Risk Reduction and Management Fund insufficient provision of
(LDRRMF) to support disaster risk management activities LDRRMF.
such as, but not limited to, pre-disaster preparedness
programs including training, purchasing life-saving rescue Cite as condition if provision
equipment, supplies and medicines, for post-disaster of QRF is more or less than
activities, and for the payment of premiums on calamity thirty percent (30%).39
insurance. (Section 21 of Republic Act [RA] No. 1012138
and Rule 18, Section 1 of its IRR).

LDRRMF

Regular Income (Budget Year)

Multiply by 5% x 5%

Minimum Requirement

Less: Appropriations

Deficiency/(Allowable
appropriation over minimum
requirement)

Total Appropriations - LDRRMF

38
An Act Strengthening the Philippine Disaster Risk Reduction and Management System, Providing for the National Disaster
Risk Reduction and Management Framework and Institutionalizing the National Disaster Risk Reduction and Management Plan,
Appropriating Funds Therefor and for Other Purposes
39
Of the amount appropriated for LDRRMF, thirty percent (30%) shall be allocated as Quick Response Fund (QRF) or stand-by
fund for relief and recovery programs in order that situation and living conditions of people in communities or areas stricken by
disasters, calamities, epidemics, or complex emergencies, may be normalized as quickly as possible. (Section 21 of RA
No. 10121 and Rule 18, Section 2 of its IRR).

140
140
 COMPLIANT? RECOMMENDED
FINDINGS
REVIEW ACTIONS
YES NO
(1) (2) (3)

Appropriated for 70% LDRRMF

Appropriated for 30% QRF

II. GENERAL LIMITATIONS (Section 325 of the LGC and

Article 420 of its IRR)

a. The total appropriations, whether annual or supplemental, Disallow amount in excess

for Personal Services (PS) of an LGU for one (1) fiscal year of the PS Limitation. Hence,
shall not exceed forty-five percent (45%) in the case of first declare AO inoperative in
to third class provinces, cities, and municipalities, and fifty- part.
five percent (55%) in case of fourth class or lower, of the
total annual income from regular sources realized in the
next preceding fiscal year. The appropriations for salaries,
wages, representation and transportation allowances of
officials and employees of the public utilities and economic
enterprises owned, operated, and maintained by the LGU
concerned shall not be included in the annual budget or in
the computation of the maximum amount for PS. The
appropriations for the PS of such economic enterprises
shall be charged to their respective budgets.

For the computation of the total PS cost for waived items

and determination on PS Limitation compliance, the
reviewing authority may refer to LBR Form Nos. 2A and
2B, respectively.

b. No official or employee shall be entitled to a salary rate Disallow amount in excess

higher than the maximum fixed for his position or other of the prescribed salary
positions of equivalent rank by applicable laws or rules and rates for positions. Hence,
regulations issued thereunder. declare AO inoperative in
part.
(Validation could be done through cross-checking of the list
of positions in the LGU's Plantilla of Personnel [POP] and
the Index of Occupational Services, Position Titles, and
Salary Grades in the Local Government [IOS-LGU], CY
2021 Edition pursuant to Local Budget Circular [LBC]
No. 137 dated July 13, 2021).40

c. No local fund shall be appropriated to increase or adjust Disallow appropriation

salaries or wages of officials and employees of the national except those expressly
government, except as may be expressly authorized by authorized by law. Hence,
law. declare AO inoperative in
part.

d. In cases of abolition of positions and the creation of new Cite as condition if non-
ones resulting from the abolition of existing positions in the compliant
career service, such abolition or creation shall be made in
accordance with pertinent provisions of the LGC and civil
service laws, rules, and regulations.

40
Index of Occupational Services, Position Titles and Salary Grades in the Local Government (IOS-LGU), CY 2021 Edition

141
141
 COMPLIANT? RECOMMENDED
FINDINGS
REVIEW ACTIONS
YES NO
(1) (2) (3)
e. Positions in the official plantilla for career positions which Cite as condition if non-
are occupied by incumbents holding permanent compliant
appointments shall be covered by adequate
appropriations.

f. No changes in designation or nomenclature of positions If non-compliant, disallow

resulting in a promotion or demotion in rank, or increase or and declare AO inoperative
decrease in compensation shall be allowed, except when in part.
the position is actually vacant, and the filling of such
positions shall be strictly made in accordance with civil
service law, rules and regulations.

g. The creation of new positions and salary increase or Cite as condition if non-
adjustments shall in no case be made retroactive. compliant

h. The annual appropriations for discretionary purposes of Declare the AO inoperative

the Local Chief Executive (LCE) shall not exceed two in part if appropriation is in
percent (2%) of the actual receipts derived from basic real excess of the amount
property tax in the next preceding calendar year. allowed by the LGC.
Discretionary funds shall be disbursed only for public
purposes to be supported by appropriate vouchers and
subject to such guidelines as may be prescribed by law.
No amount shall be appropriated for the same purpose
except as authorized in Section 325 of the LGC.

Discretionary Expenses

Actual receipts derived from

basic real property tax in the
next preceding year*
Multiply by 2% x 2%

Maximum Allowable Amount

Appropriations

Balance/(Excess Appropriation)

*Next preceding fiscal year refers to two (2) years prior

to the budget year.

142
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 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
III. 20% of the National Tax Allotment for Development Declare AO inoperative in its
Projects (Section 287 of the LGC) entirety for non-provision or
insufficient provision of the
Each LGU shall appropriate in its annual budget no less than 20% DF.
twenty percent (20%) of its annual National Tax Allotment
(NTA) for development projects pursuant to Section 287 of the
LGC. Appropriation for development projects shall be itemized
in the budget (Department of Budget and Management [DBM]-
Department of Finance [DOF]-Department of the Interior and
Local Government [DILG] Joint Memorandum Circular [JMC]
No. 1 dated November 4, 2020).41

20% Development Fund (DF) Allocation

Total NTA P
Multiply by 20% x 20%

Minimum Requirement P
Less: Appropriations P

Deficiency/(Allowable appropriation
over minimum requirement) P

Items not allowed to be charged against the 20% DF (DBM- Disallow items included in
DOF-DILG JMC No. 1, s. 2020): the negative list

1. PS expenditures, such as salaries, wages, overtime pay,

and other personnel benefits;

2. Administrative expenses, such as supplies, meals,

representation, communication, water and electricity,
petroleum products, and the like;

3. Travelling expenses, whether domestic or foreign;

4. Registration fees and other expenses related to the

conduct of and participation to trainings, seminars,
conferences or conventions;

5. Purchase, maintenance, or repair of administrative office

furniture, fixtures, equipment or appliances; and

6. Purchase, maintenance, or repair of motor vehicles used

for administrative purposes.

41
Revised Guidelines on the Appropriation and Utilization of the Twenty Percent (20%) of the Annual Internal Revenue Allotment
for Development Projects

143
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 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
IV. Budgetary Requirements by Attribution

The following are budgetary requirements for specific sectors

or concerns as prescribed by pertinent laws, rules and
regulations that shall be included in the LGUs' annual
appropriations as contained in their respective local
development plans and integrated in the corresponding Annual
Investment Programs (AIPs). The same may be provided in the
annual appropriations as direct appropriation and/or by
attribution:

1. Gender and Development Budget (RA No. 7192,42 RA Cite as condition

No. 9710;43 Philippine Commission on Women [PCW]-
DILG-DBM-National Economic Development Authority
[NEDA] JMC No. 2013-01,44 as amended by PCW-DILG-
DBM-NEDA JMC No. 2016-01 dated January 12, 2016)45

LGUs shall formulate their annual Gender and

Development (GAD) Plans and Budgets (GPBs) within the
context of their mandates to ensure gender mainstreaming
in their policies, programs and projects. GAD planning and
budgeting shall be integrated in the regular activities of the
LGUs, the cost of implementation of which shall be at least
five percent (5%) of their total annual budgets.

At least five percent (5%) of the total LGU budget

appropriations authorized under the annual budget shall
correspond to activities supporting GAD programs,
projects, and activities (PPAs). The GAD budget shall be
drawn from the LGU’s PS, Maintenance and Other
Operating Expenses, and Capital Outlay. The five percent
(5%) GAD budget shall endeavor to influence the
remaining 95% of the LGU budget toward gender-
responsiveness.

GAD Budget
Total Appropriations
Multiply by 5% x 5%

Minimum Requirement

GAD Budget

Deficiency/(Allowable
appropriations over minimum
requirement

42
An Act Promoting the Integration of Women as Full and Equal Partners of Men in Development and Nation Building and for
Other Purposes
43
An Act Providing for the Magna Carta of Women
44
Guidelines on the Localization of the Magna Carta of Women
45
Amendments to PCW-DILG-DBM-NEDA JMC No. 2013-01: Guidelines on the Localization of the Magna Carta of Women

144
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 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
2. Local Council for the Protection of Children Cite as condition
One percent (1%) of the NTA of barangays,
municipalities, and cities shall be allocated for the
strengthening and implementation of the programs of the
Local Council for the Protection of Children (Section 15 of
RA No. 9344).46

Total NTA P
Multiply by 1% x 1%

Total Requirement
Less: Appropriations

Excess/(Deficiency)

3. Programs, projects, activities and services that will address Cite as observation
the needs of senior citizens (RA No. 7432,47 as amended
by RA No. 999448 and RA No. 7876)49 and differently-abled
persons (RA No. 7277,50 as amended by RA Nos. 944251
and 10070,52 and Batas Pambansa Blg. 344)53
Total appropriations for Senior
Citizens P

Total appropriations for

Differently-abled P

4. Community-based Human Immunodeficiency Virus/ Cite as observation

Acquired Immune Deficiency Syndrome (HIV/AIDS)
prevention and care services (RA No. 11166)54

Total appropriations for PPAs to

combat HIV/AIDS P

46
An Act Establishing a Comprehensive Juvenile Justice and Welfare System, Creating the Juvenile Justice and Welfare
Council under the Department of Justice, Appropriating Funds Therefor and for Other Purposes
47
An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and Special Privileges and for Other
Purposes
48
An Act Granting Additional Benefits and Privileges to Senior Citizens, Further Amending Republic Act No. 7432, as amended,
otherwise known as “An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and Special
Privileges and for Other Purposes”
49
An Act Establishing a Senior Citizens Center in All Cities and Municipalities of the Philippines, and Appropriating Funds Therefor
50
An Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Disabled Person and their Integration into the
Mainstream of Society and for Other Purposes
51
An Act Amending Republic Act No. 7277, Otherwise Known as the “Magna Carta for Disabled Persons, and for Other Purposes”
52
Establishing Institutional Mechanism to Ensure the Implementation of Programs and Services for Persons with Disabilities in
Every Province, City and Municipality, Amending Republic Act No. 7277, Otherwise Known as the Magna Carta for Disabled
Persons, as amended, and for Other Purposes
53
An Act to Enhance the Mobility of Disabled Persons by Requiring Certain Buildings, Institutions, Establishments and Public
Utilities to Install Facilities and Other Devices
54
An Act Strengthening the Philippine Comprehensive Policy on Human Immunodeficiency Virus (HIV) And Acquired Immune
Deficiency Syndrome (AIDS) Prevention, Treatment, Care, and Support, and, Reconstituting the Philippine National Aids Council
(PNAC), Repealing for the Purpose Republic Act No. 8504, Otherwise Known as the "Philippine Aids Prevention and Control Act
of 1998", and Appropriating Funds Therefor

145
145
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
5. Programs, projects, and activities to address the Problem Cite as observation
of Illegal Drugs (Section 51 of RA No. 916555 and its IRR)

Total appropriations for PPAs to

address problem of Illegal Drugs P

V. Compliance with Other Applicable Laws, Rules and

Regulations

1. Plan-Budget Linkage

Local budgets shall operationalize approved local

development plans (Section 305 [i] of the LGC).

a. The LGU has an approved AIP. Declare AO inoperative in its

entirety if the AIP is not
approved/ adopted by the
sanggunian before the
enactment of the AO.

b. All PPAs in the AO are included/listed in the AIP. Declare AO inoperative in its
entirety when all the PPAs
included in the AO are
different from those listed in
the AIP.

Declare AO inoperative in
part when some PPAs not
included in the approved
AIP are funded under the
annual budget/
supplemental budget.

2. Confidential Fund Declare AO inoperative in

part when appropriation is in
The Confidential Fund (CF) shall not exceed thirty percent excess of the amount
(30%) of the total annual amount allocated for the LGU’s prescribed.
Peace and Order Program pursuant to Section 5.1.3.1 of
Commission on Audit (COA)-DBM-DILG-Government
Commission for GOCCs (GCG)-Department of National
Defense (DND) Joint Circular (JC) No. 2015-01 dated
January 8, 2015.56

Total Budget for Peace and

Order Programs P
Multiply by 30% x 30%

Maximum Allowable Amount P

55
An Act Instituting the Comprehensive Dangerous Drugs Act of 2002, Repealing Republic Act No. 6425, Otherwise Known as
the Dangerous Drugs Act of 1972, as amended, Providing Funds Therefor, and for Other Purposes
56
Guidelines on the Entitlement, Release, Use, Reporting and Audit of Confidential and/or Intelligence Funds

146
146
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
Less: Appropriations for CF P

Balance/(Excess Appropriation) P

3. Monthly cash subsidy for Solo Parents (RA No. 8972,57 as Cite as condition
amended by RA No. 11861)58

4. Share from National Taxes Cite as condition

The proceeds from the share of LGU’s from national taxes

shall be appropriated and utilized for PPAs in accordance
with pertinent laws, rules and regulations:

a. Share in Tobacco Excise Tax P ____________

pursuant to RA No. 7171,59 as
incorporated in RA No. 8424,60
as amended by RA No. 1134661
(Virginia Tobacco);

b. Share in Tobacco Excise Tax P ____________

pursuant to RA No. 8240,62 as
amended by RA No. 10351,63
and as further amended by RA
No. 11346 (Burley and Native
Tobacco Products);

c. Share in the proceeds from the P ____________

utilization and development
national wealth under Sections
289 and 290 of the LGC and RA
No. 9513;64

d. Share in the Gross Income P ____________

Taxes Paid by All Businesses
and Enterprises within the
Special Economic Zones
pursuant to RA No. 7922,65 as

57
An Act Providing for Benefits and Privileges to Solo Parents and their Children, Appropriating Funds Therefor and for Other
Purposes
58
An Act Granting Additional Benefits to Solo Parents, amending for the Purpose Republic Act No. 8972, entitled “An Act Providing
for Benefits and Privileges to Solo Parents and their Children, Appropriating Funds Therefor and for Other Purposes
59
An Act to Promote the Development of the Farmer in the Virginia Tobacco Producing Provinces
60
An Act Amending the National Internal Revenue Code, as amended, and for Other Purposes
61
An Act Increasing the Excise Tax on Tobacco Products, Imposing Excise Tax on Heated Tobacco Products and Vapor
Products, Increasing the Penalties for Violations of Provisions on Articles Subject to Excise Tax, and Earmarking a Portion of the
Total Excise Tax Collection from Sugar-Sweetened Beverages, Alcohol, Tobacco, Heated Tobacco and Vapor Products for
Universal Health Care, amending for this Purpose Sections 144, 145, 146, 147, 152, 164, 260, 262, 263, 265, 288, And 289,
Repealing Section 288(B) and 288(C), and Creating New Sections 263-A, 265-B, and 288-A of the National Internal Revenue
Code of 1997, as amended by Republic Act No. 10963, and for Other Purposes
62
An Act Amending Sections 138, 140, & 142 of the National Internal Revenue Code, as amended, and for Other Purposes
63
An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141, 142, 143, 144, 145, 8, 131
and 288 of Republic Act No. 8424. Otherwise Known as the National Internal Revenue Code of 1997, as amended by Republic
Act No. 9334, and for Other Purposes
64
An Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and for Other Purposes
65
An Act Establishing a Special Economic Zone and Free Port in the Municipality of Santa Ana and the Neighboring Islands in

147
147
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
amended by RA No. 9400,66 and
RA No. 8748;67

e. Share in Value-Added Tax (VAT) P ____________

pursuant to RA No. 7643;68

f. Share in VAT in lieu of Franchise P ____________

Tax pursuant to RA No. 795369
and RA No. 8407;70

g. Share in two percent (2%) P ____________

Special Privilege Tax (Mini-
Hydroelectric) pursuant to RA
No. 7156;71 and

h. Others (please specify). P ____________

5. The appropriation for Donations shall be spent solely for Cite as condition
public purpose pursuant to Sections 305 (b), 335 and 351
of the LGC.

6. The purchase and specifications of the motor vehicle shall Cite as condition
be subject to the provisions of Administrative Order No. 14
dated December 10, 201872 and Budget Circular (BC) No.
2022-1 dated February 11, 2022,73 and BC No. 2022-1A
dated March 1, 2023.74

7. Prohibition Against Expenses for Reception and Cite as condition

Entertainment (Section 343 of the LGC)

No money shall be appropriated, used, or paid for

entertainment or reception except to the extent of the
representation allowances authorized by law or for the
reception of visiting dignitaries of foreign governments or

the Municipality of Aparri, Province of Cagayan, Providing Funds Therefor, and For Other Purposes
66
An Act Amending Republic Act No. 7227, as amended, Otherwise Known as the Bases Conversion and Development Act of
1992, and for Other Purposes
67
An Act Amending Republic Act No. 7916, Otherwise Known as the “Special Economic Zone Act of 1995”
68
An Act to Empower the Commissioner of Internal Revenue to Require the Payment of the Value-Added Tax Every Month and
to Allow Local Government Units to Share in VAT Revenue, Amending for this Purpose Certain Sections of the National Internal
Revenue Code
69
An Act Amending Republic Act Numbered Sixty-Six Hundred Thirty-Two Entitled ‘An Act Granting the Philippine Racing Club,
Inc., a Franchise to Operate and Maintain a Race Track for Horse Racing in the Province of Rizal’, and Extending the Said
Franchise by Twenty-Five Years from the Expiration of the Term Thereof
70
An Act Amending Republic Act Numbered Sixty-Six Hundred Thirty-One Entitled "An Act Granting Manila Jockey Club, Inc., a
Franchise to Construct, Operate and Maintain a Racetrack for Horse Racing in the City of Manila or Any Place within the Provinces
of Bulacan, Cavite or Rizal" and Extending the Said Franchise by Twenty-Five Years (25) from the Expiration of the Term Thereof
71
An Act Granting Incentives to Mini-Hydroelectric Power Developers and for Other Purposes
72
Consolidating and Rationalizing the Rules on the Acquisition of Government Motor Vehicles, Adopting a Centralized System
of Procurement Therefor, and for Other Purposes
73
Omnibus Guidelines on the Acquisition, Use, Rental, and Replacement of Government Motor Vehicles
74
Supplemental Guidelines on the Acquisition, Use, Rental, and Replacement of Government Motor Vehicles

148
148
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
foreign missions, or when expressly authorized by the
President in specific cases.

8. The grant of Terminal Leave Benefits and Monetization of Cite as condition

Leave Credits shall be in accordance with CSC Omnibus
Rules on Leave pursuant to CSC Memorandum Circular
No. 41, s. 1998,75 BC No. 2013-1 dated April 12, 2013,76
and BC No. 2016-2 dated March 29, 2016.77

9. Magna Carta Benefits of Public Health Workers Cite as condition

Appropriations for Magna Carta Benefits of Public Health

Workers shall be in accordance with DBM-Department of
Health (DOH) JC No. 1 dated November 29, 2012,78 as
amended by DBM-DOH JC No. 1 dated July 15, 2016.79

10. Magna Carta Benefits of Public Social Workers Cite as condition

Appropriations for Magna Carta Benefits of Public Social

Workers shall be in accordance with DBM-Department of
Social Welfare and Development JC No. 1 dated
December 27, 2018.80

11. Appropriation for wages - Casual/ Contractual Cite as condition

The appropriation for wages - Casual/Contractual shall be

subject to pertinent budgeting, accounting, and auditing
rules and regulations, and to the following provisions of
CSC's 2017 Omnibus Rules on Appointments and Other
Human Resource Actions, as follows:

1. Employees under contractual or casual appointment

are entitled to the same benefits enjoyed by regular
employees; and

2. In no case shall a casual appointment be issued to fill

a vacant plantilla position or a casual employee
perform the duties and responsibilities of the vacant
plantilla position.

75
Amendments to Rules I and XVI of the Omnibus Rules Implementing Book V of the Administrative Code of 1987 (Executive
Order 292)
76
Guidelines Prescribing the Documentary Requirements and Procedures in Processing/Payment of Retirement Benefits of
Government Employees
77
Computation and Funding of Terminal Leave Benefits and Monetization of Leave Credits
78
Rules and Regulation on the Grant of Compensation-Related Magna Carta Benefits to Public Health Workers (PHWs)
79
Amendment to DBM-DOH Joint Circular No. 1 s. 2012 Regarding the Rules and Regulations on the Grant of Compensation-
Related Magna Carta Benefits to Public Health Workers (PHWs)
80
Rules and Regulations on the Grant of Compensation-Related Magna Carta Benefits to Public Social Workers (PSWs)

149
149
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
12. The appropriation for Honoraria shall be spent in Cite as condition
accordance with BC Nos. 2007-1 dated April 23, 200781
and 2007-2 dated October 1, 2007,82 as may be applicable.

13. Night Shift Differential shall be in accordance with RA No. Cite as condition
11701,83 item 6.0 of DOH-DBM JC No. 1 dated November
29, 2012, and CSC-DBM-GCG Joint Circular No. 1 dated
August 1, 2023.

14. Overtime Pay shall be pursuant to CSC-DBM JC No. 2 Cite as condition

dated November 25, 2015.84

15. Personnel Economic Relief Allowance shall be pursuant to Cite as condition

BC Nos. 2009-3 dated August 18, 2009,85 and 2011-2
dated September 26, 2011.86

16. Representation and Transportation Allowance shall be Cite as condition

pursuant to LBC No. 103 dated May 15, 2013,87 the
specific rates per position is indicated in Annex B of the
same LBC.

17. Uniform/Clothing Allowance shall be pursuant to BC No. Cite as condition

2018-1 dated March 8, 2018,88 and the pertinent general
provision in the annual General Appropriations Act.

18. Productivity Enhancement Incentive shall be pursuant to Cite as condition

Item 6.0 of BC No. 2017-4 dated December 4, 201789 – not
exceeding P5,000.

19. Anniversary Bonus shall be pursuant to LBC No. 65 dated Cite as condition
March 3, 199790 - not exceeding P3,000 for every
milestone year
20. Loyalty Pay shall be pursuant to CSC MC No. 6 dated Cite as condition
March 1, 200291 - P10,000 for the first ten (10) years in
government service and P5,000 for the succeeding every
five (5) years thereafter.

81
Guidelines on the Grant of Honoraria to Lecturers, Resource Persons, Coordinators and Facilitators
82
Guidelines on the Grant of Honoraria Due to Assignment in Government Special Projects
83
An Act Granting Night Shift Differential Pay to Government Employees Including those in Government-Owned or -Controlled
Corporations and Appropriating Funds Therefor
84
Policies and Guidelines on Overtime Services and Overtime Pay for Government Employees
85
Rules and Regulations on the Grant of the Personnel Economic Relief Allowance at P2,000 per Month
86
Amendatory Rules on the Grant of the Personnel Economic Relief Allowance (PERA)
87
Amended Rules and Regulations on the Grant of Representation and Transportation Allowances
88
Rules and Regulations on the Grant of Uniform/Clothing Allowance (U/CA) to Civilian Government Personnel
89
Guidelines on the Grant of the Productivity Enhancement Incentive (PEI) to Government Employees for Fiscal Year (FY) 2017
and Years Thereafter
90
Guidelines on the Grant of Anniversary Bonus in the Local Government
91
Revised Policies on the Grant of Loyalty Award

150
150
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)
21. Mid-Year Bonus shall be pursuant to BC No. 2017-2 dated Cite as condition
May 8, 201792 and BC No. 2019-4 dated July 5, 201993 -
equivalent to one (1) month basic pay.

22. Position Titles and Classifications Cite as condition

Pursuant to Manual on Position Compensation and

Classification as prescribed under Circular Letter No.
2007-6 dated February 19, 2007,94 in classifying positions,
LGUs shall be guided by the IOS-LGU under LBC No. 137
dated July 13, 2021.

All positions in the LGUs shall be allocated to their proper

position titles and salary grades in accordance with the
IOS-LGU.

23. Other relevant policies, rules, and regulations Cite as condition

VI. Review of Annual Operating Budget of Local Economic Cite as condition

Enterprise/s (Sections 313 [a] and 325 of the LGC)

1. The LGU maintains a special account in the General Fund

(GF) for the LEE.

2. Salaries, wages, representation, and transportation

allowances of LEE officials and employees shall not be
included in the annual or supplemental budget in the
computation of the maximum amount for PS of the LGU.

3. The appropriations for PS of LEEs shall be charged to their

respective budgets.

4. LEE official or employee is not allowed a salary rate higher

than the maximum fixed for the position or other positions
of equivalent rank.

5. Each LEE has its own separate AOB.

6. PPAs of LEE is included in the AIP.

7. The profits or income derived from the operation of LEE

are applied as follows:

a. The costs of improvement, repair, and other related

expenses of the LEE shall be deducted from the
income from the operation of the said LEE;

b. The balance thereof shall first be applied for the return

of advances or loans made; and

92
Rules and Regulations on the Grant of the Mid-Year Bonus for FY 2017 and Years Thereafter
93
Clarification on the Grant of Mid-Year Bonus to Government Employees on Scholarship
94
Manual on Position Classification and Compensation

151
151
 COMPLIANT? RECOMMENDED
FINDINGS
YES NO REVIEW ACTIONS
(1) (2) (3)

c. Any excess shall form part of the GF of LGU.

8. The AOB of each LEE is presented separately in the LEP

which shall be included for enactment by the sanggunian.

9. Compliance to other applicable laws, rules, and

regulations.

OVERALL REVIEW ACTION

The Appropriation Ordinance is operative in its entirety.

The Appropriation Ordinance is operative in its entirety, subject to conditions
The Appropriation Ordinance is inoperative in its entirety.
The Appropriation Ordinance is inoperative in part.

Prepared by: Reviewed by: Approved by:

______________________ ______________________ ______________________

Instructions:

A. The Local Budget Review (LBR) Form No. 2 (Summary of Findings and Recommended
Review Actions) shall be prepared by the Reviewing Officer.

B. LBR Form No. 2 is intended to reflect the following:

Column 1 – The findings shall indicate the relevant existing laws, rules, and regulations
applicable to the budget in review.

Column 2 – Check the appropriate box whether or not the LGU has complied with the
requirements specified in Column 1.

Column 3 – Indicate the recommended review actions.

152
152
LBR Form No. 2A
TOTAL PERSONAL SERVICES (PS) COST FOR WAIVED ITEMS
Local Government Unit: _________________

(a) Cost of hospital services transferred from the Province of _________ to the City of
_________________:

Salaries
Step Increments

Personnel Economic Relief Allowance

Uniform/Clothing Allowance
Representation and Transportation Allowances
Mid-Year Bonus
Productivity Enhancement Incentive
Year-End Bonus and Cash Gift
Magna Carta Benefits of Public Health Workers
(itemized per kind of allowance/benefit)
Magna Carta Benefits of Public Social Workers
(itemized per kind of allowance/benefit)

ECC Contributions
PHILHEALTH Contributions
PAG-IBIG Contributions
Retirement and Life Insurance Contributions

Other Personnel Benefits

Sub-Total
(b) Retirement Gratuity
(c) Terminal Leave Benefits
(d) Monetization of Leave Credits
(e) Special benefits authorized to be granted to LGU
personnel during emergency situations
(f) Salaries and Benefits of Health/Medical personnel
that may be hired to perform functions related to
emergency situations
(g) Salary Differentials of LGU hired Public Health
Workers

Sub-Total
Total PS Cost for Waived Items

Prepared by: Reviewed by: Approved by:

_____________________ _________________ ________________

Note:
The list of waived items shall be based on the General Provision of the applicable General Appropriations Act and the
corresponding guidelines to be issued for the purpose.

153
153
LBR Form No. 2B
DETERMINATION ON PERSONAL SERVICES (PS) LIMITATION COMPLIANCE
Local Government Unit: _______________________

A. Total Income from Regular Sources (TIRS) realized in the

next preceding fiscal year

B. PS Limitation (45% or 55% of TIRS)

Salaries of existing permanent positions

Salaries of existing temporary, contractual and casual
positions
Step Increments
Personnel Economic Relief Allowance
Uniform/Clothing Allowance
Representation and Transportation Allowances
Mid-Year Bonus
Productivity Enhancement Incentive
Year-End Bonus and Cash Gift
Magna Carta Benefits of Public Health Workers
(itemized per kind of allowance/benefit)
Magna Carta Benefits of Public Social Workers
(itemized per kind of allowance/benefit)
Monetization of Leave Credits
Other legally authorized allowances/benefits

ECC Contributions
PHILHEALTH Contributions
PAG-IBIG Contributions
Retirement and Life Insurance Contributions

Retirement Gratuity
Terminal Leave Benefits

C. Total Annual PS Budget

D. Less: Total PS Cost for Waived Items

(from LBR Form No. 2A)

E. Difference: Total Annual PS Budget, Net of Waived Items

(E = C – D)

F. Less: Excess PS Cost of Local Economic Enterprise

chargeable against PS General Fund

G. Additional Allowable PS Budget or

Excess Over the PS Limitation (H = B – E – F)

Prepared by: Reviewed by: Approved by:

_____________________ _________________ ________________

Note: Local Budget Review Form No. 2B is based on Annex B of Local Budget Circular No. 145 dated March 2, 2022.
154
3.7 Illustrative Examples

Review Letter Declaring the Appropriation Ordinance Operative in its Entirety

________
Date

The Honorable Members of the Sanggunian

Province/City/Municipality of ________

Thru: The Provincial Governor/City/Municipal Mayor

Ladies/Gentlemen:

Pursuant to the provisions of Republic Act No. 7160 or the Local Government Code of
1991 (LGC), our review of the FY 2024 Annual/Supplemental Budget No. ___ (General
Fund/Local Economic Enterprise, a special account under the General Fund) of the
Province/City/Municipality of ____________, involving a total appropriation of
P_________, submitted to this Office for review on ________, reveals substantial
compliance with the same law and its Implementing Rules and Regulations and other
applicable laws, rules and regulations.

Accordingly, the said Appropriation Ordinance is declared operative in its entirety

effective on _______________, subject to the posting requirement under Section 59 of
the LGC.

Further, please be reminded of Section 56 in relation with Sections 326 and 327 of the
LGC which provides that within three (3) days after approval of the Ordinance authorizing
annual or supplemental appropriations, the Secretary to the Sanggunian shall forward
the said Ordinance to the appropriate reviewing authority. (state as may be applicable)

It is understood that this review action does not authorize any item of appropriation that
is specifically prohibited by or inconsistent with the provisions of law.

Compliance with all existing laws, rules, and regulations shall be the responsibility of the
province/city/municipality.

Very truly yours,

By Authority of the
Secretary of Budget and Management:

________________
Director IV

155
155
Review Letter Declaring the Appropriation Ordinance Operative in its Entirety,
Subject to Conditions

_________
Date

The Honorable Members of the Sanggunian

Province/City/Municipality of ________

Thru: The Provincial Governor/City/Municipal Mayor

Ladies/Gentlemen:

Pursuant to the provisions of Republic Act No. 7160 or the Local Government Code of
1991 (LGC), our review of the FY 2024 Annual/Supplemental Budget No. ___ (General
Fund / Local Economic Enterprise, a special account under the General Fund) of the
Province/City/Municipality of __________, involving an appropriation of P___________
under Appropriation Ordinance No. ______, submitted to this Office for review on
________, reveals substantial compliance with the same law and its Implementing Rules
and Regulations and other applicable laws rules and regulations, except for the following:

1.
2.

Notwithstanding the above, the Appropriation Ordinance is declared operative in its

entirety effective on _________, subject to the posting requirement under Section 59 of
the LGC, and further subject to the following condition/s:

1.
2.

Further, please be reminded of Section 56 in relation with Sections 326 and 327 of the
LGC which provides that within three (3) days after approval of the Ordinance authorizing
annual or supplemental appropriations, the Secretary to the Sanggunian shall forward
the said Ordinance to the appropriate reviewing authority. (state as may be applicable)

It is understood that this review action does not authorize any item of appropriation that
is specifically prohibited by or inconsistent with the provisions of law.

Compliance with all existing laws, rules and regulations shall be the responsibility of the
province/city/municipality.

Very truly yours,

By Authority of the
Secretary of Budget and Management:

_______________
Director IV

156
156
Review Letter Declaring the Appropriation Ordinance Inoperative in its Entirety

_________
Date

The Honorable Members of the Sanggunian

Province/City/Municipality of ________

Thru: The Provincial Governor/City/Municipal Mayor

Ladies/Gentlemen:

Pursuant to the provisions of Republic Act No. 7160 or the Local Government Code of
1991 (LGC) and other applicable laws, rules and regulations, our review of the FY 2024
Annual/Supplemental Budget No. ___ (General Fund/Local Economic Enterprise, a
special account under the General Fund) of the Province/City/Municipality of
__________, involving an appropriation of P___________ under Appropriation
Ordinance No. ______, submitted to this Office for review on ________, shows that it
has not complied with the budgetary requirements and general limitations as well as
other provisions of law as enumerated hereunder:

1.
2.

In view thereof, the said Appropriation Ordinance is declared inoperative in its entirety
effective immediately. Consequently, the previous year’s budget is deemed reenacted
pending the submission of a new Ordinance authorizing the annual appropriations,
taking into account the above-mentioned findings. Nevertheless, it is understood that, in
the implementation of the reenacted budget, only the annual appropriation for salaries
and wages of existing positions, statutory and contractual obligations and essential
operating expenses authorized in the annual and supplemental budgets for the
preceding year shall be deemed reenacted in accordance with Section 323 of the LGC.

Further, please be reminded of Section 56 in relation with Sections 326 and 327 of the
LGC which provides that within three (3) days after approval of the Ordinance authorizing
annual or supplemental appropriations, the Secretary to the Sanggunian shall forward
the said Ordinance to the appropriate reviewing authority. (state as may be applicable)

Very truly yours,

By Authority of the
Secretary of Budget and Management:

_______________
Director IV

157
157
Review Letter Declaring the Appropriation Ordinance Inoperative in Part

_________
Date

The Honorable Members of the Sanggunian

Province/City/Municipality of ________

Thru: The Provincial Governor/City/Municipal Mayor

Ladies/Gentlemen:

Pursuant to the provisions of Republic Act No. 7160 or the Local Government Code of
1991 (LGC), our review of the FY 2024 Annual/Supplemental Budget No. ___ (General
Fund/ Local Economic Enterprise, a special account under the General Fund) of the
Province/City/Municipality of __________, involving an appropriation of
P___________ under Appropriation Ordinance No. ______, submitted to this Office for
review on ________, reveals substantial compliance with the same law and its
Implementing Rules and Regulations and other applicable laws rules and regulations,
except for the following items of appropriation which are hereby disallowed in the total
amount of P________:

1.
2.

In view of the above, the budget is declared inoperative in part effective on ______,
subject to the posting requirements under Section 59 of the LGC.

Further, please be reminded of Section 56 in relation with Sections 326 and 327 of the
LGC which provides that within three (3) days after approval of the Ordinance
authorizing annual or supplemental appropriations, the Secretary to the Sanggunian
shall forward the said Ordinance to the appropriate reviewing authority. (state as may
be applicable)

It is understood that this review action does not authorize any item of appropriation that
is specifically prohibited by or inconsistent with the provisions of law.

Compliance with all existing laws, rules and regulations shall be the responsibility of
the province/city/municipality.

Very truly yours,

By Authority of the
Secretary of Budget and Management:

______________________
Director IV

158
158
Resolution Declaring the Appropriation Ordinance Operative in its Entirety

Resolution No. _______

A RESOLUTION DECLARING THE APPROPRIATION ORDINANCE NO. _____

OF THE CITY/MUNICIPALITY OF __________________ OPERATIVE IN ITS ENTIRETY

WHEREAS, Appropriation Ordinance No. ____ of the City/Municipality of ______

authorizing its Annual Budget for Fiscal Year _____, involving an appropriation
of P________, was submitted to this Sanggunian for review on ______ pursuant
to the provisions of Republic Act No. 7160 or the Local Government Code of
1991 (LGC);

WHEREAS, the subject Appropriation Ordinance shows substantial compliance with the
same law and its Implementing Rules and Regulations;

NOW, THEREFORE, on motion of SP Member ________duly seconded by SP Member

____;

THE SANGGUNIANG PANLALAWIGAN IN SESSION DULY ASSEMBLED:

RESOLVED, to declare Appropriation Ordinance No. ____ of the City/Municipality of

_________ OPERATIVE IN ITS ENTIRETY, effective _________, subject to
the posting requirements under Section 59 of the LGC.

RESOLVED FURTHER, to inform the City/Municipality that this review action does not
authorize any item of appropriation that is specifically prohibited by or
inconsistent with the provisions of law.

RESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang

Panlungsod/Bayan of the City/Municipality of ___________ through the
City/Municipal Mayor.

ADOPTED. (Date) .
x- - - - - - - - - - - - - - - - - - - - - - - - -x

We hereby certify that the foregoing is a true and accurate copy of the Resolution which
was duly adopted by the Sangguniang Panlalawigan of _______ during its Regular
Session held on ___________.

________________________ ________________
Secretary to the Sanggunian Presiding Officer

159
159
Resolution Declaring the Appropriation Ordinance Operative in its Entirety,
Subject to Conditions

Resolution No. _______

A RESOLUTION DECLARING THE APPROPRIATION ORDINANCE NO. _____

OF THE CITY/MUNICIPALITY OF __________________
OPERATIVE IN ITS ENTIRETY, SUBJECT TO CONDITIONS

WHEREAS, Appropriation Ordinance No. ____ of the City/Municipality of ______

authorizing its Annual Budget for Fiscal Year _____, involving an appropriation
of P_________, was submitted to this Sanggunian for review on ________
pursuant to the provisions of Republic Act No. 7160 or the Local Government
Code of 1991 (LGC);

WHEREAS, the subject Appropriation Ordinance reveals substantial compliance with the
same law and its Implementing Rules and Regulations except for the following:

1.
2.

NOW, THEREFORE, on motion of SP Member ________ duly seconded by SP Member

_______;

THE SANGGUNIANG PANLALAWIGAN IN SESSION DULY ASSEMBLED:

RESOLVED, to declare Appropriation Ordinance No. ____ of the City/Municipality of

________ OPERATIVE IN ITS ENTIRETY, effective _________, subject to the
posting requirements under Section 59 of the LGC, and subject to the
following conditions:

1.
2.

RESOLVED FURTHER, to inform the City/Municipality that this review action does not
authorize any item of appropriation that is specifically prohibited by or
inconsistent with the provisions of law.

RESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang

Panlungsod/Bayan of the City/Municipality of ___________ through the
City/Municipal Mayor.

ADOPTED. (Date) .
x- - - - - - - - - - - - - - - - - - - - - - - - -x

We hereby certify that the foregoing is a true and accurate copy of the Resolution which
was duly adopted by the Sangguniang Panlalawigan of _______ during its Regular
Session held on ___________.

________________________ ________________
Secretary to the Sanggunian Presiding Officer

160
160
Resolution Declaring the Appropriation Ordinance Inoperative in its Entirety

Resolution No. _______

A RESOLUTION DECLARING THE APPROPRIATION ORDINANCE NO. _____

OF THE CITY/MUNICIPALITY OF ________________ INOPERATIVE IN ITS ENTIRETY

WHEREAS, Appropriation Ordinance No. ____ of the City/Municipality of ______

authorizing its Annual Budget for Fiscal Year _____, involving an appropriation
of P_________, was submitted to this Sanggunian for review on ________
pursuant to the provisions of Republic Act No. 7160 or the Local Government
Code of 1991 (LGC);

WHEREAS, the subject Appropriation Ordinance has not complied with the budgetary
requirements and general limitations as well as other provisions of law as
enumerated hereunder:

1.
2.

NOW, THEREFORE, on motion of SP Member ________ duly seconded by SP Member

_______;

THE SANGGUNIANG PANLALAWIGAN IN SESSION DULY ASSEMBLED:

RESOLVED, to declare Appropriation Ordinance No. ____ of the City/Municipality of

_________ INOPERATIVE ITS ENTIRETY, effective immediately.

RESOLVED FURTHER, to inform the Sangguniang Panlungsod/Bayan of the

City/Municipality of ________, through the City/Municipal Mayor, that the
previous year’s budget is deemed reenacted pending the submission and
enactment/approval of the new Ordinance authorizing the annual
appropriations, taking into account the above-mentioned findings, and that, in
the implementation of the reenacted budget, only the annual appropriation for
salaries and wages of existing positions, statutory and contractual obligations,
and essential operating expenses authorized in the annual and supplemental
budgets for the preceding year shall be deemed reenacted.

RESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang

Panlungsod/Bayan of the City/Municipality of ___________ through the
City/Municipal Mayor.

ADOPTED. (Date) .
x- - - - - - - - - - - - - - - - - - - - - - - - -x

We hereby certify that the foregoing is a true and accurate copy of the Resolution which
was duly adopted by the Sangguniang Panlalawigan of _______ during its Regular
Session held on ___________.

________________________ ________________
Secretary to the Sanggunian Presiding Officer

161
161
Resolution Declaring the Appropriation Ordinance Inoperative in Part
Resolution No. _______

A RESOLUTION DECLARING THE APPROPRIATION ORDINANCE NO. _____

OF THE CITY/MUNICIPALITY OF __________________ INOPERATIVE IN PART

WHEREAS, Appropriation Ordinance No. ____ of the City/Municipality of ______

authorizing its Annual Budget for Fiscal Year _____, involving an appropriation
of P_________, was submitted to this Sanggunian for review on ________
pursuant to the provisions of Republic Act No. 7160 or the Local Government
Code of 1991 (LGC);

WHEREAS, the subject Appropriation Ordinance has substantially complied with the
budgetary requirements and general limitations as well as other provisions of
law, except for the following items of appropriation which are hereby disallowed
in the total amount of P________:

1.
2.

NOW, THEREFORE, on motion of SP Member ________ duly seconded by SP Member

_______;

THE SANGGUNIANG PANLALAWIGAN IN SESSION DULY ASSEMBLED:

RESOLVED, to declare Appropriation Ordinance No. ____ of the City/Municipality of

_________ INOPERATIVE IN PART, effective _________, subject to the
posting requirements under Section 59 of the LGC.

RESOLVED FURTHER, to inform the City/Municipality that this review action does not
authorize any item of appropriation that is specifically prohibited by or
inconsistent with the provisions of law.

RESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang

Panlungsod/Bayan of the City/Municipality of ___________ through the
City/Municipal Mayor.

ADOPTED. (Date) .
x- - - - - - - - - - - - - - - - - - - - - - - - -x

We hereby certify that the foregoing is a true and accurate copy of the Resolution which
was duly adopted by the Sangguniang Panlalawigan of _______ during its Regular
Session held on ___________.

________________________ ________________
Secretary to the Sanggunian Presiding Officer

162
162
3.8 Stamp of Review

REVIEWED
PURSUANT TO THE PROVISIONS OF REPUBLIC ACT NO. 7160
BY AUTHORITY OF THE SECRETARY OF BUDGET AND MANAGEMENT

__________________
Director IV

REFERENCE: REVIEW LETTER DATED: ___________

REVIEWED
Seal of
the
Province

PURSUANT TO THE PROVISIONS OF REPUBLIC ACT NO. 7160

BY AUTHORITY OF THE SANGGUNIANG PANLALAWIGAN

__________________________________________________
(Authorized Signatory/ies per the Internal Rules of Procedure)

REFERENCE: RESOLUTION NO. ______ DATED: ___________

163
163
CHAPTER 4. THE BUDGET EXECUTION PHASE

The execution of the budget in accordance with existing laws, rules, and regulations is
the fourth phase of the budget process in local governments. After the usual recording
of appropriations in the proper registries, the execution of the budget involves the
release of allotments, the certification of available appropriations and cash, the
recording of actual obligations and disbursements of funds for approved PPAs, and
the delivery of goods and services to target clients in the most efficient, effective,
economical, and ethical way. A critical aspect of this phase is the collection and/or
receipt of revenues to ensure that cash is available for payment of obligations and for
timely implementation of programs and projects.

4.1 Legal Bases of Budget Execution

The fundamental principles governing all financial transactions in local

governments are covered in Section 305 of the LGC. The responsibility, however,
for the execution of annual and supplemental budgets shall be vested primarily
in the LCE concerned (Section 320 of the LGC).

The use of appropriated funds pursuant to Section 336 of the LGC shall be
available exclusively for the specific purpose for which they have been
appropriated.

Another legal basis in the budget execution is the certification requirement under
Section 344 of the LGC which provides that, “[n]o money shall be disbursed
unless the local budget officer certifies to the existence of appropriation that has
been legally made for the purpose, the local accountant has obligated said
appropriation, and the local treasurer certifies to the availability of funds for the
purpose.”

Disbursements of local funds shall be made in accordance with the ordinance

authorizing the annual or supplemental appropriations even without the prior
approval of the sanggunian concerned (Section 346 of the LGC).

In case of reenacted budget, Section 323 of the LGC states that, “[i]n the
implementation of such reenacted ordinance, the local treasurer concerned shall
exclude from the estimates of income for the preceding fiscal year those realized
from nonrecurring sources, like national aids, proceeds from loans, sale of
assets, prior year adjustments, and other analogous sources of income. No
ordinance authorizing supplemental appropriations shall be passed in place of
the annual appropriations.”

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4.2 Key Players in Budget Execution

Local Chief Executive - The LCE shall be responsible for the execution of the
AO authorizing the annual budget and all subsequent supplemental budgets
(Section 320 of the LGC). The Governor/Mayor is the HoPE (Section 5 [j] [iii] of
RA No. 9184).

Vice Governor/Vice Mayor - The Vice-LCE shall sign all warrants drawn on the
provincial/city/municipal treasury for all expenditures appropriated for the
operation of the Sangguniang Panlalawigan/Panlungsod/Bayan (Sections 466 [a]
[1], 456 [a] [1], and 445 [a] [1] of the LGC). Likewise, he/she can sign
appointments for officials and employees of the local sanggunian if their salaries
are derived from the appropriation specifically for the said local legislative body
(Ramon M. Atienza vs. Jose T. Villarosa, G.R. No. 161081, May 10, 2005).

Local Budget Officer - The LBO shall be responsible for: (1) the preparation of
release documents (Allotment Release Order [ARO]) for COE and CO; and
(2) the certification on the availability of appropriations for obligation requests.
The LBO shall coordinate with the Local Treasurer, Local Accountant, and the
LPDC in the release of appropriations and allotments pursuant to Section 475 of
the LGC.

Local Treasurer- The Local Treasurer shall be responsible for the custody and
proper management of the funds of the LGU concerned. He/she takes custody
and exercise proper management of the local government funds, takes charge
of the disbursement of all local government funds and such other funds the
custody of which may be entrusted to him/her by law or other competent
authority, and the maintenance and updating of the tax information system of the
LGU (Section 470 of the LGC). The Local Treasurer also certifies as to the
availability of funds prior to any disbursements and prepares the Cash Program
for the LGU.

Local Accountant – The Local Accountant shall be responsible for ensuring

validity, reliability, and propriety of all financial transactions of the LGU
concerned. The Local Accountant also reviews supporting documents before the
preparation of vouchers to determine completeness of requirement (Section 474
of the LGC), and keeps and maintains the Books of Accounts pursuant to the
New Government Accounting System (NGAS).

The Local Accountant performs regular functions (e.g. pre-audit) because it is an

inherent function of the accounting unit to ensure that disbursements are in
compliance with laws, rules, and regulations that they are properly documented.

Local Planning and Development Coordinator – The LPDC shall be

responsible for the formulation of an integrated economic, social, physical, and
other development plans and policies for consideration of the LDC; monitoring
and evaluation of the implementation of the different development PPAs in the
LGU concerned in accordance with the approved development plan; analysis of
income and expenditure patterns; and formulation and recommendation of fiscal
plans and policies for consideration of the LFC (Section 476 of the LGC).

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 Department Head – The Department Head shall be responsible for the
preparation of financial and physical performance targets and obligation requests
for authorized PPAs of the Department/Office concerned, implementation of
PPAs to deliver goods and services to target clients, and monitoring and
evaluation of actual performance of PPAs to ensure smooth and proper
implementation.

CSOs and the Private Sector Groups – The CSOs shall have the following
roles in the budget execution phase as shown in Table 9 below:

Table 9. Roles of CSOs in the Budget Execution Phase

ACTIVITY LGU ROLES CSO ROLES

1. RELEASE THE
ALLOTMENTS

The ARO is issued to effect Post information on Monitor the LGU

the comprehensive release AROs in three (3) compliance on the
allotment for a Department/ conspicuous places in release of allotments.
Office. Release of reserve the LGU within twenty
amounts shall also be (20) days from the Inform beneficiaries
effected through the use of release of the and communities
ARO/s. allotment. concerned of the
ii. release of allotments
through tri-media or
conduct meetings with
the beneficiaries and
communities
concerned.
2. POST THE
STATEMENT OF
RECEIPTS AND
EXPENDITURES IN
THE LGU WEBSITE

The LGU shall post the Post information on Monitor the postings as
monthly Statement of receipts and required under the LGC
Receipts and Expenditures expenditures in three and the Full Disclosure
within ten (10) days following (3) conspicuous Policy of the DILG.
the end of every month and places in the LGU
for at least two (2) within ten (10) days Advocate for the
consecutive weeks. after the end of the citizen’s awareness of
month, and within posted information
twenty (20) days after through tri-media.
the end of the first
quarter as required
under the Full
Disclosure Policy of
95

the DILG.
95
DILG Memorandum Circular No. 2019-149 dated August 30, 2019

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 ACTIVITY LGU ROLES CSO ROLES
3. PREPARE CASH
PROGRAM AND
FINANCIAL AND
PHYSICAL
PERFORMANCE
TARGETS

The Local Treasurer shall Post information on Monitor the LGU

prepare the Cash Program. the Cash Program, compliance on the
The LFC/Department Heads and Financial and preparation of cash
shall prepare the Summary Physical Performance program and financial
of Financial and Physical Targets in three (3) and physical
Performance Targets for the conspicuous places in performance targets.
entire year. The detailed the LGU within twenty
financial and performance (20) days after the Inform beneficiaries
targets present the quarterly end of each quarter and communities
breakdown of the financial as required under the concerned of the
allocation needed to Full Disclosure Policy information through tri-
accomplish a specific level of of the DILG. media or conduct
target. a.
meetings with the
beneficiaries and
communities
concerned.
4. PROCURE, AND
OBLIGATE AND
DISBURSE FUNDS FOR
PPA
IMPLEMENTATION

Procurement Process

To enhance the Invite accredited Attend as observer in

transparency of the process, CSOs, if qualified as the procurement
the BAC shall, in all stages of observers, in the process and carry out
procurement process, invite, procurement process the responsibilities
in addition to the at least five (5) provided under Section
representative of COA, at calendar days before 13.4 of the Revised
least two (2) observers to sit each procurement IRR of RA No. 9184.
in its proceedings, one (1) activities in May use as reference
from a duly recognized compliance with the GPPB-issued 2014
private group in a sector or Section 13.3 of the Procurement
discipline relevant to the Revised IRR of RA Observers Guide.
procurement at hand. No. 9184.

PPA Execution

The responsibility for the Invite accredited May participate in the

execution of the annual and CSOs to spot check monitoring of ongoing
supplemental budget shall or track projects and prepare

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 ACTIVITY LGU ROLES CSO ROLES
be vested primarily in the implementation of Monitoring Report
LCE concerned. In the ongoing projects. (Annex F of this
implementation of PPAs, the Manual) for submission
following must be ensured: (This may be to the LCE.
differentiated from the
• Standards of service; monitoring activity in The CSO may check
the Budget the following, among
• Quality of work; Accountability Phase others:
which is done on ● Standards of
• Timeliness of scheduled periods, service;
implementation; i.e., quarterly, mid- ● Quality of work;
term and annual, and ● Timeliness of
• Pricing of goods, aimed at comparing implementation;
contracts and services; accomplishments vs. ● Pricing of goods,
targets.) contracts, and
• PPA fund services;
release/utilization; and ● PPA fund release/
utilization; and
• Proper delivery to target ● Proper delivery to
beneficiaries. target beneficiaries.

May assist the LGU in

undertaking
appropriate
interventions on
negative deviations on
PPA execution, which
may include providing
possible support for
service and/or
resource gaps in the
delivery of services.

May check the LGU

compliance with the
review action.

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4.3 The Budget Execution Flowchart

The flowchart in Figure 12 shows the sequence of activities in the budget

execution phase.
Figure 12. Budget Execution Flowchart

4.4 Budgetary Accounts in Budget Execution

The budgetary accounts to be maintained during the budget execution process

include the following:

• Appropriation: An authorization made by ordinance, directing the

payment of goods and services from local government funds under
specified conditions or purposes.

• Allotment: An authorization issued by the LCE to a Department/Office of

the LGU which authorizes it to incur obligations for a specific amount within
its appropriation.

• Obligation: The specific amount within the allotment which is committed

to be paid by the LGU for any lawful expenditure made by an accountable
officer for and in behalf of the LGU concerned.

• Disbursement: The settlement of obligations and/or accounts payable by

cash, check, or other authorized modes of payment.

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4.5 Steps in the Budget Execution Phase

Step 1. Release of Allotments on the Basis of the Authorized and Approved

Appropriation Ordinance

1. Record the AO in the Registries of Appropriation, Allotment,

Obligations (RAAOs) for each expense class.

2. Prepare the AROs. On the basis of the authorized and approved AO,
the following AROs shall be released by the LBOs:

a. ARO for PS and Associated PS Costs (Local Budget Execution

[LBE] Form No. 1) shall be issued (either comprehensively
released for the whole year or quarterly, as applicable) to release
the appropriations for salaries and wages of regular permanent
positions and contractual and non-permanent positions. The
itemized plantilla positions of contractual and non-permanent
positions shall be used as basis for the release. This shall avoid
the creation of lumpsum amounts for PS except for authorized
salary increase pending issuance of pertinent guidelines.

b. The allotment for MOOE shall also be released (either

comprehensively for the whole year or quarterly, as applicable),
using LBE Form No. 1A in Item 4.8 of this Chapter. The
appropriations pertaining to the “For Later Release” portion of
MOOE shall be for contingent purposes i.e., to respond to
shortfalls in revenues and other unforeseen events.

c. The allotment for FE shall also be released comprehensively for

the whole year, using LBE Form No. 1B in Item 4.8 of this
Chapter.

d. The allotment for CapEx shall be released on the basis of the

work program and the ranking of PPAs as presented in the
approved AIP and as authorized and prioritized in the AO, using
LBE Form No. 1C in Item 4.8 of this Chapter.

The ARO gives the authority to spend within the confines of the PPAs,
as defined in the AO.

The ARO is issued to each Department/Office to give the Department

Head the comprehensive authority to incur obligations up to the
amount of the released allotment. The imposition of an amount “For
Later Release” is to provide safeguards for shortfalls in the collection
of revenues during the budget year.

It is noted that these are all policy-based actions that should be

consistent with the General Provisions (GPs) of the AO.

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 The following information shall be reflected in the ARO:

• Source of Appropriation: whether it is authorized under the

annual budget, supplemental budget, or reenacted budget;
and

• PPA Reference Code is the same as the AIP Reference Code.

3. Provide copies of ARO after its approval by the LCE. The released
amount shall be stamped with the official seal of the LGU and shall be
recorded in the proper registry by the LBO and Local Accountant.
Copies of the ARO, as approved, shall be distributed as follows:

Original – LBO
Duplicate – Department Head
Triplicate – Local Accountant
Quadruplicate – Records
Quintuplicate – Local Treasurer

Release of ARO for Supplemental Budgets, as well as the

realignment of savings from one expense class to another, shall follow
the same process outlined above. But for augmentation of deficiencies
in allotment within the same expense class for offices within the
executive or legislative departments, the ARO shall be the release
document to effect the changes. The former requires the submission
of a supplemental budget for authorization by the sanggunian. The
latter, on the other hand, can be done pursuant to a new ordinance or
resolution of the sanggunian granting the LCE or the Presiding Officer
the authority for the purpose.

Step 2. Prepare the Detailed and Summary of Financial and Physical

Performance Targets and Cash Program

4.5.2.1 Prepare the Detailed Financial and Physical Performance Targets by

PPA and Performance Indicator

The Department Heads shall prepare the Detailed Financial and

Physical Performance Targets by PPA. This document presents the
quarterly breakdown of the financial allocation that is needed to
accomplish a specific level of targets. It enables the
Department/Offices to match available resources with the level of
effort to deliver their goods/services or outputs, and determine the
magnitude and timing of additional releases.

4.5.2.2 Prepare the Summary of Financial and Physical Performance Targets

On the basis of the detailed financial and physical performance targets

of the different Departments/Offices, the LFC shall prepare the
summary of financial and physical performance targets for the entire
calendar year to serve as basis in comparing actual level of

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 accomplishment for the preceding year and knowing the available
resources for the budget year.

4.5.2.3 Prepare the Cash Program

• Determine a realistic cash inflow on a monthly basis. Use as basis

the actual inflow of revenues for the past three (3) years. Consider
the months where revenue is high, like when payments of taxes
become due, or months where revenue collection is low. A line
graph may be used to show the high and low points of revenue
collection to provide a historical or empirical basis of cash inflows.

• The Cash Flow Model of the BLGF may be used as reference.

• Determine a realistic cash outflow on a monthly basis. Analyze in

detail the timing of expected payments affecting regular
operations (payment of PS and MOOE including COs such as
acquisition of equipment) and payments for the acquisition of civil
works under RA No. 9184 (land and land improvements and
building construction). Also, include in the projected cash outflows
the financial requirements for calamities and emergencies,
accounts payables and outstanding obligations due for payment,
as well as debt servicing.

• The detailed financial and physical performance targets shall be

considered in determining the magnitude and timing of cash
outflows.

• Compute the difference between the cash inflows and outflows

within a given period, month by month to be more specific, to
determine the net cash flow. A projected cumulative net cash flow
will indicate the capacity to generate surplus. Conversely, a
cumulative negative cash flow will reveal the amount of additional
cash requirements to sustain operations.

4.5.2.4 Revise and adjust the PPMP and corresponding APP

As soon as the AO authorizing the annual/supplemental budget is

enacted and approved, and where there are significant changes in the
amount authorized by the sanggunian, the Department Heads of the
LGU concerned shall adjust/revise their respective PPMPs, taking into
consideration cash availability and time of procurement which were
formulated during the budget preparation phase.

This budget for the contracts shall be matched with the amount
released through the AROs. If the amount is reduced, then there
should be corresponding reduction in the quantity to be procured and
vice versa. Consequently, the APP shall be adjusted. In cases where
the authorized amount in the ARO is the same as the proposed
amount submitted during budget preparation, the PPMP/APP need

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 not be adjusted.

The revised PPMPs shall be submitted to the BAC, through its

Secretariat, for consolidation and finalization of the modes of
procurement under the APP, subject to approval by the HoPE.

No procurement shall be undertaken unless it is in accordance

with the approved APP of the LGU. The individual PPMPs and
consolidated approved APP shall be maintained and updated
regularly at least every six (6) months or as often as may be
necessary.

4.5.2.5 Procure Goods/Civil Works and Consulting Services

Based on the adjusted/approved APP, the Departments/Offices shall

procure the goods, services, equipment, civil works, and consulting
services required for the implementation of PPAs.

In these procurement activities, the provisions of RA No. 9184 and its

Revised IRR shall be observed and strictly complied with.

Step 3. Obligate and Disburse Funds

Pursuant to the modified accrual system under the NGAS, obligations shall be
taken up in the registry (RAAO) as they are incurred (please refer to COA Circular
No. 2001-005 dated October 30, 2001).96 Accordingly, expenditures and
obligations incurred during the fiscal year shall be taken up in the accounts of
that year.

Obligations already incurred but not yet paid (accounts payable) shall be settled
in accordance with existing budgeting, accounting, and auditing rules and
regulations.

Step 4. Adjust Cash Program for Shortages and Overages

The Local Treasurer adjusts the cash program where there are increases or
decreases on actual cash collections, and on the basis of the adjusted cash
program, the LFC adjusts the financial and physical targets.

The LFC shall determine amounts considered as over-collection of taxes, and

effect upward adjustments in the cash program to match the increase in the cash
receipts forecast. If this is not done, a significant amount of cash will be idle at
the end of the year.

Identify amounts considered as under-collection of taxes and revenues. This is a

signal that the original cash receipts forecast is overstated. It becomes necessary
to decrease the cash disbursement program for the remaining months to prevent
the incurrence of a cash overdraft.

96
New Government Accounting System

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 Step 5. Implement Corrective Measures as Proposed by the Local Finance
Committee and approved by the Local Chief Executive

4.5.5.1 The LFC shall compare the actual performance in both the financial
and physical accomplishments vis-à-vis the targets for the quarter.

• If the actual financial performance is greater than the estimated

cost, it means that there was overspending beyond the available
resources. This reflects inefficiency if the actual physical
performance is below the target. This needs corrective action.

• If the actual financial performance is lower than the estimated

cost, it means that the estimated cost was overstated and
performance is ineffective if the physical targets were not met.
This also needs corrective action.

• If the actual physical performance is greater than the target, it

indicates that financial resources were utilized to the maximum
resulting in better than ordinary performance. This is assuming
that targets were realistically set and not understated. In this
case, no corrective action is needed.

• If the actual physical performance is lower than the target, it

indicates that the targets were overambitious or the people
worked below par. Corrective action is needed in this case.

4.5.5.2 The Department Heads shall explain substantial negative deviations,

and recommend remedial measures to address negative deviations.

4.5.5.3 The Department Heads shall prepare adjustments in the original

targets to catch up with plans for the fiscal year.

4.5.5.4 Proposed corrective action shall be submitted by the Department

Heads concerned to the LPDC for review and evaluation after which it
shall be discussed with the LFC members for final deliberation. The
proposed corrective action is then recommended by the LFC to the
LCE for approval. Upon approval, the Department Head concerned
shall implement corrective action to get back on track with planned
targets for the fiscal year.

4.6 Changes in the Annual Budget

Use of Savings for Augmentation

General Rule

Funds shall be available exclusively for the specific purpose for which they have
been appropriated. No ordinance shall be passed authorizing any transfer of
appropriations from one item to another (Section 336 of the LGC).

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Exception

The LCE or the Presiding Officer of the sanggunian may, by ordinance, be

authorized to augment any item in the approved annual budget for their
respective offices from savings in other items within the same expense class of
their respective appropriations (Section 336 of the LGC and Article 454 [b] of its
IRR).

Savings refer to portions or balances of any programmed appropriation free from

any obligation or encumbrance still available after the satisfactory completion or
the unavoidable discontinuance or abandonment of the work, activity or purpose
for which the appropriation is authorized, or arising from unpaid compensation
and related costs pertaining to vacant positions and leaves of absence without
pay (Article 454 [b] [1] of the IRR of the LGC).

Augmentation implies the existence in the budget of an item, project, activity or

purpose with an appropriation which upon implementation or subsequent
evaluation of needed resources is determined to be deficient (Article 454 [b] [2]
of the IRR of the LGC).

The ordinance authorizing the annual budget may include in its GP an omnibus
authority to the LCE or the Presiding Officer of the sanggunian to augment any
item in the approved annual budget for their respective offices from savings in
other items within the same expense class of their respective appropriations
(refer to the Illustrative Example in Section 2.6 of Chapter 2 of this Manual). LBE
Form No. 2 in Item 4.8 of this Chapter shall be used for augmentation.

Difference between the Use of Savings through Supplemental Budget and

Augmentation under Sections 321 and 336 of the LGC
Table 10. Difference of the Use of Savings through Supplemental Budget and Augmentation

Use of savings through Use of savings and

Requirement Supplemental Budget augmentation
(Section 321 of the LGC) (Section 336 of the LGC)

1. What is the instrument AO covering the Ordinance (if condition on

required for authority? supplemental budget the use of Savings is not
included in the General
Provisions of the AB)

2. Is there a need for a Supplemental budget needed No need for a supplemental

supplemental budget? budget

3. What is the purpose of For re-appropriation—may be For augmentation of existing

savings? to a different expense class item/s of expenditure within
the same expense class

4. Where should the From the LCE only From the LCE or the
proposal emanate? sanggunian

5. For provinces or highly Yes No

urbanized cities, will the
ordinance be subject to
review by DBM?

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4.7 Reenacted Budget

Pursuant to Section 323 of the LGC, the LGU will operate under a reenacted
budget in the following instances:

1. Failure of the sanggunian to pass the ordinance authorizing the annual

appropriations at the beginning of the ensuing fiscal year;

By implication, this includes the failure of the LCE to prepare the annual
budget for the ensuing fiscal year; and

2. When the AO authorizing the annual budget is declared inoperative in its

entirety by the reviewing authority under Sections 326 and 327 of the LGC.

Reenacted Items of Appropriation

Only the annual appropriations for salaries and wages of existing positions,
statutory and contractual obligations, and essential operating expenses
authorized in the annual and supplemental budgets for the preceding year shall
be deemed reenacted and disbursement of funds shall be in accordance
therewith (Section 323 of the LGC).

Preparing the Reenacted Budget

The LGU may prepare the reenacted budget, as follows:

• The Local Treasurer shall exclude from the estimates of income for the
preceding fiscal year those realized from nonrecurring sources, like national
aids, proceeds from loans, sale of assets, prior year adjustments, and other
analogous sources of income. The Local Treasurer may use LBE Form No.
3 in Item 4.8 of this Chapter for the purpose.

• The LBO shall reflect the annual appropriations for salaries and wages of
existing positions, statutory and contractual obligations, and essential
operating expenses authorized in the annual and supplemental budgets for
the preceding fiscal year. The LBO may use LBE Form No. 4 in Section 4.8
of this Chapter to identify the reenacted appropriations of the annual and
supplemental budgets.

• If the revised income estimates is sufficient to cover the aggregate

appropriation, then the reenacted budget shall remain in full force and effect
until the ordinance authorizing the proposed appropriations is passed by
the sanggunian concerned.

• In case the revised income estimates be less than the aggregate reenacted
appropriations, the Local Treasurer concerned shall accordingly advise the
sanggunian concerned which shall, within ten (10) days from the receipt of
such advice, make the necessary adjustments or reductions. The revised
appropriations authorized by the sanggunian concerned shall then be the
basis for disbursements (Section 323 of the LGC).

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Limitations under a Reenacted Budget

A reenacted budget will have implied disadvantages such as, but not limited to,
the following:

1. No new PPAs shall be implemented;

2. No utilization of the increase in NTA allocation for the year may be

allowed since the same is not covered by an AO;

3. No supplemental appropriations shall be enacted;

4. No implementation of non-recurring activities no matter how vital they

may be; and

5. No creation of new positions.

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4.8 Local Budget Execution Forms

LBE Form No. 1

Annual Budget
Supplemental Budget
Reenacted Budget

ALLOTMENT RELEASE ORDER FOR PERSONAL SERVICES (ARO for PS)

FY_________

Local Government Unit (LGU): ______________________ Fund Code: ______

Department/Office: __________________________
Purpose: _________________________________________________________________

Object
Authorized For Previously
PPA PPA Class/ This
Appropriation Later Released
Code Description Account Release
for PS Release Amount
Code
(1) (2) (3) (4) (5) (6) (7)

TOTAL

AMOUNT IN WORDS
_________________________________________________________________________
_________________________________________________________________________

NOTES:
_________________________________________________________________________
_________________________________________________________________________

The allotments herein released shall be used solely for the purposes indicated, and
disbursements thereto shall be made in accordance with existing budgeting,
accounting, and auditing rules and regulations. It is the primary responsibility of the
head of the Department/Office or Unit concerned to keep expenditures within the limits
of the amount allotted.

Recommended by: Approved by:

____________________ _____________________
Local Budget Officer Local Chief Executive

ARO No.___________
Date of Issue: _______
Page ____ of ______

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Instructions:

Check the box corresponding to the source of appropriation which may either be: Annual
Budget, Supplemental Budget or Reenacted Budget.

Local Government Unit: Indicate the name of the province, city, and municipality
implementing the budget.

Department/Office: Indicate the Department/Office concerned.

Purpose: Indicate the purpose.

Fund Code: Indicate the Fund Code (e.g., 100 - General Fund or 200 - Special Education
Fund).

Column 1 - Indicate the PPA reference code as identified in the Annual Investment Program
Summary Form.

Column 2 - Briefly describe the PPA to be implemented.

Column 3 - Indicate the Account Code for the Object Classification Code based on the
Revised Chart of Accounts for LGUs.

Column 4 - Indicate the Authorized Appropriation for PS.

Column 5 - Indicate the amount of standby appropriation for PS to answer for unforeseen
events and shortfalls in revenue collection.

Column 6 - Indicate the amount previously released.

Column 7 - Indicate the amount of PS to be released comprehensively for the entire

year/released of allotment under For Later Release portion.

For control purposes, each ARO should be numbered, indicating the date of issuance and
page number.

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LBE Form No. 1A

Annual Budget
Supplemental Budget
Reenacted Budget

ALLOTMENT RELEASE ORDER FOR

MAINTENANCE AND OTHER OPERATING EXPENSES (ARO for MOOE)
FY_____________

Local Government Unit: ______________________ Fund Code:______

Department/Office: __________________________
Purpose: __________________________________________________________________

Authorized Previously
PPA PPA Object Class/ For Later This
Appropriation Released
Code Description Account Code Release Release
for MOOE Amount
(1) (2) (3) (4) (5) (6) (7)

TOTAL

AMOUNT IN WORDS
_________________________________________________________________________
_________________________________________________________________________

NOTES:
_________________________________________________________________________
_________________________________________________________________________

The allotments herein released shall be used solely for the purposes indicated, and
disbursements thereto shall be made in accordance with existing budgeting,
accounting, and auditing rules and regulations. It is the primary responsibility of the
head of the Department/Office or Unit concerned to keep expenditures within the limits
of the amount allotted.

Recommended by: Approved by:

____________________ _____________________
Local Budget Officer Local Chief Executive

ARO No.___________
Date of Issue: _______
Page ____ of ______

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Instructions:

Check the box corresponding to the source of appropriation which may either be: Annual
Budget, Supplemental Budget or Reenacted Budget.

Local Government Unit: Indicate the name of the province, city, and municipality
implementing the budget.

Department/Office: Indicate the Department/Office concerned.

Purpose: Indicate the purpose.

Fund Code: Indicate the Fund Code (e.g., 100 - General Fund or 200 - Special Education
Fund).

Column 1 - Indicate the PPA reference code as identified in the AIP Summary Form.

Column 2 - Briefly describe the PPA to be implemented.

Column 3 - Indicate the Account Code for the Object Classification Code based on the
Revised Chart of Accounts for LGUs.

Column 4 - Indicate the Authorized Appropriation for MOOE.

Column 5 - Indicate the amount of standby appropriation for MOOE to answer for unforeseen
events and shortfalls in revenue collection.

Column 6 - Indicate the amount previously released.

Column 7 - Indicate the amount of MOOE to be released comprehensively for the entire
year/released of allotment under For Later Release portion.

For control purposes, each ARO should be numbered, indicating the date of issuance and
page number.

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LBE Form No. 1B

Annual Budget
Supplemental Budget
Reenacted Budget

ALLOTMENT RELEASE ORDER FOR FINANCIAL EXPENSES (ARO for FE)

FY_____________

Local Government Unit: ______________________ Fund Code:______

Department/Office: __________________________
Purpose: __________________________________________________________________

Object Authorized Previously

PPA PPA For Later This
Class/Account Appropriation Released
Code Description Release Release
Code for FE Amount
(1) (2) (3) (4) (5) (6) (7)

TOTAL

AMOUNT IN WORDS
_________________________________________________________________________
_________________________________________________________________________

NOTES:
_________________________________________________________________________
_________________________________________________________________________

The allotments herein released shall be used solely for the purposes indicated, and
disbursements thereto shall be made in accordance with existing budgeting,
accounting, and auditing rules and regulations. It is the primary responsibility of the
head of the Department/Office or Unit concerned to keep expenditures within the limits
of the amount allotted.

Recommended by: Approved by:

____________________ _____________________
Local Budget Officer Local Chief Executive

ARO No.___________
Date of Issue: _______
Page ____ of ______

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Instructions:

Check the box corresponding to the source of appropriation which may either be: Annual
Budget, Supplemental Budget, or Reenacted Budget.

Local Government Unit: Indicate the name of the province, city, and municipality
implementing the budget.

Department/Office: Indicate the Department/Office concerned.

Purpose: Indicate the purpose.

Fund Code: Indicate the Fund Code (e.g., 100 - General Fund or 200 - Special Education
Fund).

Column 1 - Indicate the PPA reference code as identified in the AIP Summary Form.

Column 2 - Briefly describe the PPA to be implemented.

Column 3 - Indicate the Account Code for the Object Classification Code based on the
Revised Chart of Accounts for LGUs.

Column 4 - Indicate the Authorized Appropriation for FE.

Column 5 - Indicate the amount of standby appropriation for FE to answer for unforeseen
events and shortfalls in revenue collection.

Column 6 - Indicate the amount previously released.

Column 7 - Indicate the amount of FE to be released comprehensively for the entire

year/released of allotment under For Later Release portion.

For control purposes, each ARO should be numbered, indicating the date of issuance and
page number.

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LBE Form No. 1C

Annual Budget
Supplemental Budget
Reenacted Budget

ALLOTMENT RELEASE ORDER FOR CAPITAL EXPENDITURES (ARO for CapEx)

FY_____________

Local Government Unit: ______________________ Fund Code:______

Department/Office: __________________________
Purpose: __________________________________________________________________

PPA PPA Object Authorized For Later Previously This

Code Description Class/Account Appropriation Release Released Release
Code for CapEx Amount
(1) (2) (3) (4) (5) (6) (7)

TOTAL

AMOUNT IN WORDS
_________________________________________________________________________
_________________________________________________________________________

NOTES:
_________________________________________________________________________
_________________________________________________________________________

The allotments herein released shall be used solely for the purposes indicated, and
disbursements thereto shall be made in accordance with existing budgeting,
accounting, and auditing rules and regulations. It is the primary responsibility of the
head of the Department/Office or Unit concerned to keep expenditures within the limits
of the amount allotted.

Recommended by: Approved by:

____________________ _____________________
Local Budget Officer Local Chief Executive

ARO No.___________
Date of Issue: _______
Page ____ of ______

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Instructions:

Check the box corresponding to the source of appropriation which may either be: Annual
Budget, Supplemental Budget, or Reenacted Budget.

Local Government Unit: Indicate the name of the province, city, and municipality
implementing the budget.

Department/Office: Indicate the Department/Office concerned.

Purpose: Indicate the purpose.

Fund Code: Indicate the Fund Code (e.g., 100 - General Fund or 200 - Special Education
Fund).

Column 1 - Indicate the PPA reference code as identified in the AIP Summary Form.

Column 2 - Briefly describe the PPA to be implemented.

Column 3 - Indicate the Account Code for the Object Classification Code based on the
Revised Chart of Accounts for LGUs.

Column 4 - Indicate the Authorized Appropriation for CapEx.

Column 5 - Indicate the amount of standby appropriation for CapEx to answer for unforeseen
events and shortfalls in revenue collection.

Column 6 - Indicate the amount previously released.

Column 7 - Indicate the amount of CapEx to be released comprehensively for the entire
year/released of allotment under For Later Release portion.

For control purposes, each ARO should be numbered, indicating the date of issuance and
page number.

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LBE Form No. 2

AUGMENTATION FORM
FY ________

Local Government Unit: ______________________

Office: Executive/Sanggunian Ordinance No.: ______________

Sources of Funds Uses of Funds

FROM TO
Object of Expense Object of Expense
Amount Amount
Expenditures Class Expenditures Class
(1) (2) (3) (4) (5) (6)

TOTAL TOTAL

Certified Correct by: Prepared by:

________________ ___________________
Local Accountant Local Budget Officer

Approved by:

_______________________________
Local Chief Executive (LCE)/Vice-LCE

Instructions:

Local Government Unit (LGU): Indicate the name of the province, city, or municipality.

Ordinance No.: Indicate the number of the ordinance authorizing the use of savings for
augmentation.

Columns 1 to 3 – Identify the sources of funds, i.e., object of expenditures, expense class,
and amount.

Columns 4 to 6 – Indicate the uses of funds, i.e., object of expenditures, expense class, and
amount.

Notes:

1. Savings can augment only existing items of appropriation in the Appropriation Ordinance.

2. Savings can augment only items of appropriation in the same expense (e.g., PS to PS
and MOOE to MOOE). Savings from CO cannot be used for augmentation purposes.

3. An ordinance is needed to authorize the augmentation unless provision of the same is

already reflected in the General Provisions of the Appropriation Ordinance covering the
annual budget of the LGU.

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LBE Form No. 3

ADJUSTED RECEIPTS PROGRAM FOR REENACTED APPROPRIATIONS

Local Government Unit: _______________________

Amount
Adjustments
of the Adjusted
Income (Amounts of
Sources of Income Preceding Income
Classification Non-Recurring
Fiscal Year Estimates
Sources)
Estimates
(1) (2) (3) (4) (5) = (3) – (4)
Regular Income
A. Local Sources
1. Tax Revenue
a. Real Property Tax (RPT)
i. Basic RPT
b. Business Tax
c. Other Local Taxes
Total Tax Revenue
2. Non-Tax Revenue
a. Regulatory Fees
b. Service/User Charges
c. Receipts from Economic
Enterprises
d. Other Receipts
Total Non-Tax Revenue
Total Local Sources
B. External Sources
1. National Tax Allotment (formerly
Internal Revenue Allotment)
2. Share from GOCCs (PAGCOR and
PCSO)
3. Other Shares from National Tax
Collection
a. Share from Ecozone
b. Share from EVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
Total External Sources
Total Regular Income

Non-Regular Income
A. External Sources
1. Inter-Local Transfer
2. Extraordinary
Receipts/Grants/Donations/Aids
Total External Sources

B. Non-Income Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt Securities
of Other Entities
c. Collections of Loans Receivable
Total Capital/Investment Receipts
2. Receipts from Loans and Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Loans and
Borrowings
3. Other Non-Income Receipts
Total Non-Income Receipts

Total Non-Regular Income

Total Receipts

Certified Correct by: Approved by:

________________ ________________
Local Treasurer Local Chief Executive
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 Instructions:

Local Government Unit: Indicate the name of the province, city, or municipality implementing
the budget.

Column 1 – Using the Appropriation Ordinance of the preceding fiscal year, indicate the
sources of income covering the annual and supplemental budgets.

Column 2 – Indicate the income classification on every item of receipt.

Column 3 – Reflect the amounts for the recurring and non-recurring sources for the
preceding fiscal year.

Column 4 – Reflect the non-recurring sources of funds.

Column 5 – Indicate the difference between the amount of the preceding fiscal year
estimates and the amount of the non-recurring sources of funds for the adjusted income
estimates (Column 3 – Column 4).

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LBE Form No. 4

REENACTED APPROPRIATIONS OF THE ANNUAL AND SUPPLEMENTAL BUDGETS

Local Government Unit: _________________________

Expenditure Program

Department/Office : _____________________________
Mandate : _____________________________
Vision : _____________________________
Mission : _____________________________
Organizational Outcome : _____________________________

Appropriations Adjustments
Account of the (Essential Adjusted
Particulars
Code Preceding Year Operating Appropriations
(Actual) Expenses)
(1) (2) (3) (4) (5)
Reenacted Appropriations by Expense
Class and Object of Expenditures
1. Personal Services
Salaries and Wages of existing
positions
Other Compensation
Personal Economic Relief
Allowance
Personnel Benefit Contribution
Other Personnel Benefit
Sub-Total
2. Maintenance and Other Operating
Expenses
Sub-Total
3. Special Purpose Appropriation
Appropriation for Local Disaster Risk
Reduction and Management
Programs/Projects
Appropriation for Debt Service
Aid to Barangays
Sub-Total
Total Reenacted Appropriations

Certified Correct by: Approved by:

________________ ________________
Local Budget Officer Local Chief Executive
Certified Correct by:

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 Instructions:

Department/Office: Indicate the Department/Office implementing the budget.

Mandate: Quote the provision of the LGC on the mandate of the Department/Office.

Vision: Indicate the future role of the Department/Office in the LGU’s development.

Mission: Indicate the significant role of the Department/Office in attaining the vision.

Organizational Outcome: The specific short-term benefits to clients and the community as a
result of the LGU’s delivery of Major Final Outputs as defined in the organization’s results
framework.

Column 1 – Specify the object of expenditures by expense class and by Department/Office,

and the special purpose appropriations.

Column 2 - Indicate the account code using the COA Revised Chart of Accounts for Local
Governments.

Column 3 - Indicate the actual expenditure items of the previous year’s annual and
supplemental Appropriation Ordinance.

Column 4 – Reflect the essential operating expenses from the preceding year’s annual and
supplemental Appropriation Ordinance as identified by the Local Chief Executive (LCE) for
the executive branch and/or the Vice-LCE for the legislative branch.

Column 5 – Indicate the adjusted appropriation.

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LBE Form No. 5

SUMMARY OF FINANCIAL AND PHYSICAL PERFORMANCE TARGETS

FY_____________

Local Government Unit : ___________________________

Department/Office : ___________________________
Major Final Output (MFO) : ___________________________

Program/
Prior Year
Project/ Performance Physical
Total Cost Accomplishments Remarks
Activity Indicator Targets
(Actual)
(PPA)
(1) (2) (3) (4) (5) (6)

Prepared by:

___________________ ____________________ ___________________

Local Planning and Local Budget Officer Local Treasurer
Development Coordinator

Approved:

___________________
Local Chief Executive

Instructions:

Local Government Unit: Indicate the name of the province, city, or municipality implementing
the budget.

Department/Office: Indicate the Department/Office concerned.

Major Final Output: Indicate the MFO(s) which shall be delivered as a result of the
implementation of PPAs.

o Services which are not directly consumed by the external clients such as the following
shall be subsumed under executive services:

Example: MFO: Executive Services (Accounting and Internal Services)

PPA: Preparation and submission of reports
Performance Indicator: 90% of financial reports submitted on time

Column 1 – Indicate the PPAs that will deliver the MFO/s (Example: MFO – Agricultural
Services; PPA – Swine Dispersal Program).

Column 2 – Indicate the amount approved for the current year by allotment class.

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Column 3 – Indicate the performance standards/criteria and indicators set in Local Budget
Preparation Form No. 4 (Mandate, Vision, Mission, MFO, Performance Indicators and
Targets) that will be accomplished by the LGU (e.g., No. of beneficiaries of swine dispersal
program).

Column 4 – Indicate the accomplishment during the preceding year.

Column 5 – Indicate the targets for each performance indicator to be accomplished for the
current year.

Column 6 – Indicate other information relative to the performance.

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LBE Form No. 5A

DETAILED FINANCIAL AND PHYSICAL PERFORMANCE TARGETS

Local Government Unit : _______________________

Department/Office : _______________________
Major Final Output : _______________________

Program/Project/ Financial Allocation Physical Targets

Activity (PPA)/
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Performance
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Indicator/s
(1) (2) (3)

Prepared by: Approved by:

___________________ _________________
Department Head Local Chief Executive

Instructions:

Local Government Unit: Indicate the name of the province, city, or municipality implementing
the budget.

Department/Office: Indicate the Department/Office concerned.

Major Final Output/s: Indicate the Major Final Output/s (MFO/s) which shall be delivered as
a result of the implementation of PPAs by different Departments/Offices to external clients,
such as, but not limited to, the following:

Executive Services Agricultural Services

Legislative Services Social Services
Veterinary Services Engineering Services
Health Services Budget and Management Services

Column 1 – Indicate the PPAs which are identifiable to the Major Final Output (MFO),
Example: MFO – Agricultural Services; PPA – Swine Dispersal Program. Performance
indicators shall also be indicated in each of the PPAs.

Column 2 – Indicate the quarterly financial allocation based on the currently approved
budget for the Department/Office.

Column 3 – Indicate the quarterly physical targets for each performance indicator per PPA.

Note: LBE Form No. 5A shall be prepared within seven (7) days after the approval of the
Appropriation Ordinance and the same shall be submitted to the LCE.

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CHAPTER 5. THE BUDGET ACCOUNTABILITY PHASE

Budget accountability is the last and final phase of the budget process. Budget
accountability, in simple terms, is accounting for the budget. It involves the use of
management control techniques to assist in tracking receipts of income/revenues and
expenditures. The budget cycle is incomplete without accountability. This mechanism
provides a venue for the LCE, local sanggunian, and stakeholders to be continuously
informed of the status of implementation of PPAs. It covers the monitoring and analysis
of all financial transactions, the recording of budgetary accounts in the registries,
recording in the books of accounts of all receipts and expenditures, and financial
reporting of their current status. An integral part of accountability is the evaluation of
the financial and physical performance of the LGU. The assessment of performance
is necessary to introduce improvements and reforms to make the budget more
transparent to the people and stakeholders.

In this Manual, the focus of discussion is accounting for the budget, and not the audit
of accounts. The examination of the legality and propriety of obligations and
expenditures incurred in the process of executing the budget is within the realm of
COA for external audit. Auditing is discussed in another field. It is understood,
however, that in the execution of the budget, officials and employees involved shall
strictly observe and follow the existing law, rules, and regulations of COA, DBM, BLGF,
DILG, and other oversight agencies.

5.1 Legal Bases of Budget Accountability

“Any officer of the local government unit whose duty permits or requires the
possession or custody of local government funds shall be accountable and
responsible for the safekeeping thereof in conformity with the provisions of
this Title. Other local officers who, though not accountable by the nature of
their duties, may likewise be similarly held accountable and responsible for
local government funds through their participation in the use or application
thereof.” (Section 340 of the LGC)

“Fiscal responsibility shall be shared by all those exercising authority over

the financial affairs, transactions, and operations of the local government
units.” (Section 305 [l] of the LGC)

5.2 Key Players in Budget Accountability

Local Chief Executive – The LCE shall be primarily responsible for the
execution of the annual and supplemental budgets and the accountability
therefor (Section 320 of the LGC).

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Specifically, the LCE shall:

• Ensure that all taxes and other revenues of the LGU are collected, and that
local government funds are applied to the payment of expenses and
settlement of obligations, in accordance with law or ordinance (Sections 444
[b] [3] [iii]; 455 [b] [3] [iii]; and 465 [b] [3] [iii] of the LGC);

• Cause the periodic examination of books, records, and other documents

maintained by accountable officials, agents, or employees of the LGU to
ensure that income collection and disbursements are properly recorded
(Sections 444 [b] [1] [xi]; 455 [b] [1] [xi]; and 465 [b] [1] [xi] of the LGC);

• Ensure that accountable officials are able to submit periodic reports in such
forms as may be required under this Manual and by applicable rules;

• Ensure that all executive officials and employees faithfully discharge their
duties and functions as provided by law and the LGC (Sections 444 [b] [1]
[x]; 455 [b] [1] [x]; and 465 [b] [1] [x] of the LGC); and

• Submit to the sanggunian concerned, on or before March 31 of each year,

an annual report covering the immediately preceding calendar year which
shall contain among others the budgetary/financial performance as well as
physical accomplishments of the LGU (Section 97 of the LGC and Article
189 of its IRR).

Local Treasurer – The Local Treasurer shall:

• Collect all local taxes, fees, and charges (Section 170 of the LGC);

• Report regularly to the LCE on the tax collection efforts in the LGU (Section
470 [b] of the LGC);

• Advise the LCE, the sanggunian, and other local and national government
officials concerned regarding the disposition of local government funds, and
on such other matters relative to public finance (Section 470 [d] [1] of the
LGC);

• Take custody and exercise proper management of the funds of the LGU
concerned (Section 470 [d] [2] of the LGC);

• Take charge of the disbursement of all local government funds and such
other funds the custody of which may be entrusted to him by law or other
competent authority (Section 470 [d] [3] of the LGC);

• Submit periodic reports to the LCE through the LFC in such forms
prescribed under this Manual;

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 • Post the required reports on monthly collections and disbursements at
prominent places in the main office building of the LGU, its plaza and main
street (Section 513 of the LGC); and

• Exercise such other powers and perform such other duties and functions as
may be prescribed by law or ordinance (Section 470 [e] of the LGC).

Local Accountant – The Local Accountant shall:

• Prepare and submit financial statements to the LCE and to the sanggunian
concerned (Section 474 [b] [2] of the LGC);

• Appraise the sanggunian and other local government officials on the

financial condition and operations of the LGU concerned (Section 474 [b]
[3] of the LGC);

• Install and maintain an internal audit system in the LGU concerned (Section
474 [b] [1] of the LGC);

The accountant performs pre-audit of government financial transactions as

it is inherent to the accounting and fiscal control processes of the
government. Hence, the conduct of such activity is part of the establishment
and maintenance of an adequate internal control system to ensure that
disbursements are in compliance with laws, rules, and regulations, and they
are properly documented.

Meanwhile, an internal audit is undertaken ex post facto or after the

fact/transaction. Being part of a separate internal control component
(monitoring and evaluation), it is instituted to determine whether internal
controls are well-designed and properly implemented.

Foregoing considered, pre-audit activity of the Local Accountant is

considered as a non-internal audit task and is separate from the post-audit
functions (e.g. compliance, management and operations audits) of the
Internal Auditor.

• Record all financial transactions in the appropriate journals and keep all
supporting documents attached thereto, as follows:

• statement of cash advances, liquidation, salaries, allowances,

reimbursement, and remittances pertaining to the LGU;

• statement of journal entry vouchers and liquidation of the same and

other adjustments related thereto; and

• maintain individual ledger for officials and employees of the LGU

pertaining to payroll and deductions;

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 • Record and post in the index cards detail of purchased furniture, fixture, and
equipment, including disposal thereof, if any;

• Maintain and update all general and subsidiary ledgers both manual and
electronic data recording; and

• Prepare and submit periodic reports to the LCE through the LFC in such
forms prescribed under this Manual.

Local Budget Officer – The LBO shall:

• Certify the availability of appropriations and allotments to which

expenditures and obligations may be properly charged (Section 344 of the
LGC);

• In coordination with the Local Accountant, Local Treasurer, and LPDC,

monitor and evaluate budget performance of all PPAs (financial and
physical evaluation of actual results vs targets) (Sections 316 [h] and 475
[c] of the LGC);

• Together with the members of the LFC, propose corrective actions for
negative deviations (financial and physical) to the LCE through the LFC;
and

• Prepare and submit periodic budgetary reports to the LCE through the LFC
and to the DBM in such forms prescribed under this Manual (Section 475
[b] [5] of the LGC).

Local Planning and Development Coordinator - The LPDC shall:

• Monitor and evaluate the implementation of the different development PPAs

in the LGU concerned in accordance with the approved development plan
(Section 476 [b] [4] of the LGC);

• Analyze the income and expenditure patterns, and formulate and

recommend fiscal plans and policies for consideration of the LFC of the LGU
concerned (Section 476 [b] [6] of the LGC); and

• Prepare and submit periodic reports to the LCE through the LFC in such
forms prescribed under this Manual.

Heads of Departments/Offices – The Heads of Departments/Offices shall:

• Monitor the implementation of all PPAs under their respective supervision

to ensure adherence to plans, targets, and performance indicators;

• Monitor physical and financial performance of MFOs identified with his

Department/Office using performance indicators as basis of evaluating
performance; and

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 • Prepare and submit periodic reports to the LFC in such forms as prescribed
under this Manual.

Local Finance Committee – The LFC shall:

• Conduct a semi-annual review and general examination of expenditures

and actual accomplishments against performance standards in undertaking
development projects (Section 316 [h] of the LGC); and

• Post the semi-annual and general examination report in conspicuous and

publicly accessible places in the LGU, and furnish a copy of the report to
the LCE and the sanggunian concerned (Section 316 [h] of the LGC).

CSOs and the Private Sector Groups – The CSOs shall perform their duties
and responsibilities as shown in Table 11 below based on the Handbook on the
Participation of CSOs in the Local Budget Process.

Table 11. Roles of CSOs in the Budget Accountability Phase

ACTIVITY LGU ROLES CSO ROLES

EVALUATE OUTPUTS
AND RESULTS OF
PPAs

The appropriations Invite accredited CSOs May participate in the

recorded in the books to participate in the local project evaluation.
shall be compared with project monitoring
the actual collections activities. Enhance CSOs own
and disbursements for technical capability in
the same period. Post financial project evaluation.
information in three (3)
Expenditures are conspicuous places in May provide
tracked and monitored the LGU within twenty recommendations
vis-à-vis the outputs and (20) days after the end of based on evaluation
accomplishments each quarter. results.

Invite accredited CSOs May organize citizens’

in the mid-year and year- fora with the LGU to
end assessment of the provide feedback to
overall performance of the community.
the LGU.

Invite accredited CSOs

in the impact
assessment of the
programs and projects,
and the overall
performance of the LGU.

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 ACTIVITY LGU ROLES CSO ROLES
Make use of available
and existing monitoring
tools such as the
Citizens Satisfaction
Report Card (from the
Caucus of Development
NGO Networks) and the
LGU Fiscal
Sustainability Scorecard
(from BLGF).

5.3 The Budget Monitoring and Evaluation Framework

The following summarizes the role of the budget accountability phase in the
planning, programming, and budgeting cycle:

• provides feedback for PPA implementation adjustments during execution of

the budget;

• provides information to the general public on the performance of the LGU;

and

• provides necessary input information to the planning and programming of

PPAs for inclusion in the budget preparation forms.

The monitoring and evaluation of agreed outputs of individual

Departments/Offices together with agreed corresponding performance indicators
shall be the main function of Department/Office Heads:

• monitoring of financial performance shall include actual obligation and

disbursements for each PPA that is being implemented;

• monitoring of actual financial performance shall see to it that the extent of

deviation from the budget are controlled and managed;

• monitoring of physical performance for each PPA shall include actual

physical output produced at a given time for each performance indicator
identified and agreed after a group consultation;

• the evaluation of the financial performance of all PPAs being implemented

which should include a variance analysis between actual obligations and
disbursements vs authorized appropriations;

• the evaluation of the physical performance of all PPAs (their outputs and
performance indicators) should include a variance analysis between actual
outputs vs targets; and

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 • a periodic report of the overall performance of all ranked PPAs shall be
reported by Department/Office Head to the LFC and LCE for purposes of
improving and refining the financial and physical performance of PPAs
implemented by the LGU.

To improve and refine the outputs of Departments/Offices, a menu of PIs per

MFO shall first be agreed by all Departments/Offices in coordination with the
LFC, LCE, and local sanggunian. These PIs may be further enhanced by giving
opportunity to interested stakeholders or CSOs to give their suggestions and
ideas for improvement. The final PIs for implementation shall pass the local
sanggunian for adoption.

Please refer to samples of PPAs, their MFOs, and menu of PIs for each output
in Annex B of this Manual.

The entire process of monitoring and evaluation of the financial and physical
performance of ranked PPAs and their PIs are illustrated in the following
conceptual framework:

Figure 13. Budget Monitoring and Evaluation Framework

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 Figure 14. Budget Accountability Flowchart

5.4 Steps in the Budget Accountability Phase

Budget accountability is accounting for the local budget, which involves the
following three (3) steps:

Step 1. Monitor receipts and expenditures

The budgets of the LGU are accounted for starting on the first day of the fiscal
year. All transactions are recorded, documented, monitored, and evaluated. The
estimated receipts and appropriations are in amounts approved, reviewed, and
recorded in the books where they shall be compared with actual collections and
disbursements for the same period. This simple monitoring process is necessary
to keep track of all receipts and expenditures for a particular period.

Monitoring of Receipts

The required accountability report to undertake the monitoring of receipts or

income/revenue/borrowings is shown in Local Budget Accountability (LBAc)
Form No. 1 or the Quarterly Report of Receipts in Item 5.5 of this Chapter. This
is certified by the Local Accountant based on the actual collections from the Local
Treasurer’s Report of Daily Collections.

This report keeps track of all receipts (income/revenue and borrowings) for each
month of the quarter and shows the variance between estimated receipts and
actual receipts collected as of the end of the quarter.

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 Monitoring of Expenditures

The monitoring of expenditures includes the monitoring of appropriations,

allotments, obligations, and disbursements.

• The LBO shall keep track of the appropriations released through

allotments and subsequently obligated by the various departments and
offices. This ensures that funds used for the PPAs funded in the budget
are used exclusively for the specific purpose/s for which they have been
appropriated pursuant to Sections 336 and 305 (a) of the LGC.

• The LBO and the Local Accountant shall ensure that lawful expenditures
and obligations incurred during a fiscal year shall be taken up in the
accounts of that year pursuant to Section 350 of the LGC.

• The LBO shall prepare LBAc Form No. 2 or the Quarterly Financial
Report of Operations in Item 5.5 of this Chapter that will give a picture of
the efficiency and effectiveness of the rate of utilization of appropriations
by the various Departments/Offices of the LGU.

• The Local Treasurer, LBO, and the Local Accountant shall prepare LBAc
Form No. 4 or the Statement of Receipts and Expenditures (SRE) in Item
5.5 of this Chapter pursuant to Section 352 of the LGC for the fiscal year.

• The Local Treasurer, Local Accountant, LBO, and other

accountable officials shall post the approved SRE in at least three
(3) publicly accessible and conspicuous places in the LGU within
thirty (30) days from the end of the fiscal year.

• A copy of the SRE, furnished to the LBO, shall be submitted to the

DBM through its RO within the same period.

Monitoring of Physical Outputs and Accomplishments

Each Department/Office Head shall prepare LBAc Form No. 3 or the Quarterly
Physical Report of Operations in Item 5.5 of this Chapter that shows the actual
performance per activity vs target output. Also, the LGU shall prepare the LBAc
Form No. 6 or Monitoring of Physical and Financial Accomplishments in Item 5.5
of this Chapter to reflect the actual physical accomplishments vis-à-vis targeted
outputs for PPAs with corresponding plans, e.g., GAD, LDRRM, etc.

A Project Monitoring Report, which shall cover all procurement activities in

the APP, whether ongoing and completed, shall be prepared by the BAC on
a semestral basis to be approved by the HoPE and submitted to the GPPB
within fourteen (14) calendar days after the end of each semester.

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Step 2. Submit Accountability Reports

It is imperative that the Local Accountant, Local Treasurer, LBO, LPDC, and
Heads of Departments/Offices shall submit the required accountability reports
for monitoring purposes. They establish a database of the performance record of
the various Departments/Offices of the LGU concerned. A summary of these
forms/reports are listed in the Table 12 below:

Table 12. Required Accountability Reports

Responsible Date of
LBAc Form No. Description
Official/s Submission
LBAc Form No. 1 Quarterly Report of Local Treasurer Ten (10) days
Receipts and Local after the end of
Accountant each quarter
LBAc Form No. 2 Quarterly Financial LBO Ten (10) days
Report of Operations after the end of
each quarter
LBAc Form No. 3 Quarterly Physical Department/Office Ten (10) days
Report of Operations Heads and LPDC after the end of
each quarter
LBAc Form No. 4 Statement of Receipts Local Treasurer, Within thirty (30)
and Expenditures LBO, Local days from the end
Accountant, and of fiscal year
LCE
LBAc Form No. 5 Physical and Financial LFC Within thirty (30)
Performance Evaluation days from the end
Form of each semester
LBAc Form No. 6 Monitoring of Physical LPDC and LCE Within thirty (30)
and Financial days from the end
Accomplishments of each semester

Step 3. Evaluate Performance of each Department/Office

Pursuant to Sections 316 (h) and 320 of the LGC, the LFC and LCE are tasked
to conduct semi-annual review and general examination of expenses and
accomplishments against performance standards applied in the implementation
of development projects and delivery of basic services.

• The assessment of performance shall primarily be a review of outputs per

PPA for each Department/Office. Since there is no standard performance for
identified performance indicators as of date, the review will be limited to a
variance analysis of actual results vis-à-vis planned targets for each
performance indicator. Similar approach will be used to the expenditure per
PPA and per performance indicator. The format for this variance analysis is
shown in the following example:

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 Table 13. Variance Analysis of Output/Physical Performance

PPA PPA Performance Actual

Target Variance %
Code Description Indicators Output
(1) (2) (3) (4) (5) (6) = (5) – (4) (7) = (6) / (4)
8000-1-1 Extension Number of 150 50 (100) (67%)
Services in trained farmers
Agriculture
Number of 100 120 20 20%
Womenfolk
trained in Home
Gardening

This process of review shall be improved gradually as standards of

performance are developed for each performance indicator. A similar
variance analysis approach shall be used for assessing the financial
performance of the PPA as shown in the example below:

Table 14. Variance Analysis of Financial Performance

PPA PPA Performance Actual

Target Variance %
Code Description Indicators Output
(1) (2) (3) (4) (5) (6) = (5) – (4) (7) = (6) / (4)
8000-1-1 Extension Number of P2500 P3000 P500 20%
Services in trained farmers
Agriculture

• The review and analysis of the output and financial performance per PPA
and per indicator are done to have a complete picture of the extent of
performance.

• The LFC shall report the results of the evaluation to the LCE, local
sanggunian, oversight agencies, and other observers to promote
transparency and accessibility to LGU budget performance. It will also serve
as bases for re-evaluating current policies and practices. The LGU may either
sustain good performance or remedy shortcomings to enable it to be on track
in its plans for the year and subsequent years.

Use LBAc Form No. 5 in Item 5.5 of this Chapter to evaluate physical and
financial performance of the LGU.

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 5.5 Local Budget Accountability Reports

LBAc Form No. 1

QUARTERLY REPORT OF RECEIPTS
For the Quarter Ending _________

Account Estimated Estimated Total Actual Income Total

Variance
Title/ Account Income Income Estimated for the Quarter Actual
Remarks
Description Code Previous This Income 1st 2nd 3rd Income
Amount %
of Income Quarter Quarter to Date Month Month Month to Date
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

Prepared by: Certified Correct by:

___________________ ___________________
Local Treasurer Local Accountant
Date: ______________ Date: ______________

Instructions:

Column 1 – Indicate the appropriate account classification and nature of the actual income generated
during the period as appearing in Columns 3 to 9 in accordance with the NGAS, i.e., Other Taxes,
Community Tax, Share from Internal Revenue Collection, Share from Expanded Value-Added Tax, and
Share from National Wealth.

Column 2 – Indicate the account code pursuant to the Revised Chart of Accounts for LGUs.

Column 3 – Indicate the estimated income of the previous quarter.

Column 4 – Indicate the estimated income of the current quarter reported based on BLGF reportorial
requirements.

Column 5 – Indicate the estimated income from January to the end of the quarter reported.

Columns 6 to 8 – Indicate the actual income realized during the three (3) months of the quarter reported.

Column 9 - Indicate the cumulative total of each income category from January 1 to the end of the
quarter reported. Said total should tally with the income account per Trial Balance as of date.

Column 10 – Indicate the difference between the estimated income and actual income to date (Column
9 – Column 5).

Column 11 – Indicate the percentage increase/(decrease) in the income (Column 10 / Column 5).

Column 12 – Identify additional information/reasons for the material increase or decrease of actual
income realized during the period compared with estimates.

Note: This report shall be submitted directly to the LFC thru the LBO on or before the 10th day of the
month following the quarter reported.

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 LBAc Form No. 2
QUARTERLY FINANCIAL REPORT OF OPERATIONS
For the Quarter Ending _________

Appropriation Allotment Released Obligations Incurred

MFO/ Implementing Balance of Unobligated
PPA Unit Previous This Appropriation Previous This Allotment Remarks
Continuing Current Total Total Total
Quarters Quarter Quarters Quarter

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (`11) (12) (13) (14)

Certified Correct by:

_______________________
Local Budget Officer
Date: __________________

Instructions:

Column 1 - Indicate the MFO and PPA Code of the activity as listed in the General Fund
Budget.

Column 2 – Identify the implementing unit, i.e. General Services Department, Accounting
Department, among others.

Column 3 – Indicate the unreleased appropriation of the past year which can still be released
during the current year.

Column 4 – Indicate the current year’s appropriation in the approved budget, whether from the
annual budget or from supplemental budgets.

Column 5 – Indicate the total appropriation (Column 3 + Column 4).

Column 6 – Indicate the current year’s allotment released in the previous quarters and prior
years’ unobligated allotment. The prior years’ unobligated allotment and obligations shall be
shown separately for full disclosure.

Column 7 – Indicate the allotment released during the quarter being reported.

Column 8 – Indicate the total allotment released as of end of the quarter being reported
(Column 6 + Column 7).

Column 9 - Indicate the unreleased appropriation as of end of the quarter being reported
(Column 5 – Column 8).

Column 10 – Indicate the current year obligations incurred in the previous quarters as recorded
in the Registry of Appropriations, Allotment and Obligation (RAAO).

Column 11 – Indicate the obligations incurred during the quarter being reported as recorded in
the RAAO.

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Column 12 – Indicate the total obligations incurred as of end of the quarter being reported
(Column 10 + Column 11).

Column 13 – Indicate the unobligated allotment which should tally with the balance shown in
the Statement of Allotments, Obligations, and Balances as of end of the quarter being reported
(Column 8 – Column 12).

Column 14 – Identify other relevant information for which no appropriate column is provided.

Note: This report shall be submitted directly to the LFC on or before the 20th day of the month
following the quarter being reported.

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 LBAc Form No. 3

QUARTERLY PHYSICAL REPORT OF OPERATIONS

For the Quarter Ending ___________

Department/Office: ______________________

Target Output Actual Performance

Major
PPA Performance Variance
Final 1st 2nd 3rd 4th 1st 2nd 3rd 4th
Code Indicator Total Total as of Remarks
Output Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter ________

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

Prepared by:

_______________________ ______________________________
Department/Office Head Local Planning and Development Coordinator
Date: __________________ Date: __________________

Instructions:

Column 1 – Indicate the code assigned to the PPA as reflected in the AIP.

Column 2 – Identify the goods and services that a Department/Office is mandated to deliver to
external clients through the implementation of the PPA.

Column 3 – Indicate the predetermined measure of the results of an PPA against a standard of
performance required to achieve set policy objectives within a given period.

Columns 4 to 8 – Indicate the annual target output with quarterly breakdown. The total of which
(Column 8) shall be consistent with LBE Form No. 5 (Summary of Financial and Physical
Performance Targets).

Columns 9 to 13 – Indicate the quarterly actual performances and cumulative performance of a

given quarter.

Column 14 – Indicate the total variance between the actual performances versus target outputs
as of the quarter covered by the report.

Column 15 – Indicate the relevant information/reasons/justifications for increase or decrease in

actual performance vs target output as of the quarter covered by the report.

Note: This report shall be prepared by each Department/Office Head, in coordination with the
LPDC, and submitted to the LFC or before the 10th day of the month following the quarter
reported.

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LBAc Form No. 4

STATEMENT OF RECEIPTS AND EXPENDITURES

For the Fiscal Year Ending __________

Local Government Unit: ________________________

Account Amounts Variance

Particulars Remarks
Code Estimate Actual Amounts %
(1) (2) (3) (4) (5) (6) (7)
I. Beginning Cash Balance

II. Receipts:
A. Local Sources
1. Tax Revenue
a. Real Property Tax (RPT)
i. Basic RPT
b. Business Tax
c. Other Local Taxes
Total Tax Revenue
2. Non-Tax Revenue
a. Regulatory Fees
b. Service/User Charges
c. Receipts from Economic Enterprises
c. Other Receipts
Total Non-Tax Revenue
Total Local Sources

B. External Sources
1. National Tax Allotment (formerly Internal
Revenue Allotment)
2. Share from GOCCs
3. Other Share from National Tax Collection
a. Share from Ecozone
b. Share from EVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
4. Extraordinary Receipts/Grants/Donations/
Aids
5. Inter-Local Transfers
Total External Sources

C. Non-Income Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt Securities
of Other Entities
c. Collection of Loans Receivable
Total Capital Investment Receipts
2. Receipts from Loans and Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Loans and Borrowing
3. Other Non-Income Receipts
Total Non-Income Receipts
Total Receipts

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 Account Amounts Variance Remarks
Particulars
Code Estimate Actual Amounts %
(1) (2) (3) (4) (5) (6) (7)
III. Expenditures
A. General Public Services
B. Economic Services
C. Social Services
D. Other Services
Total Expenditure

Prepared by:

_______________________ _______________________
Local Treasurer Local Budget Officer
Date: _________________ Date: _________________

Certified Correct by: Approved by:

_______________________ _______________________
Local Accountant Local Chief Executive
Date: __________________ Date: __________________

Instructions:

Column 1 – Indicate the details of the income/receipts and expenditures. Beginning cash balance
shall be net of amounts earmarked for specific purposes (e.g., continuing appropriations, 20%
Development Fund, payables, others [restricted funds]).

Column 2 – Indicate the account code using the Revise Chart of Accounts for LGUs.

Column 3 – Indicate the estimated income/receipts and expenditures for the fiscal year being
reported.

Column 4 – Indicate the actual income/receipts and expenditures for the fiscal year being
reported.

Column 5 - Indicate the difference between the estimated and actual income/receipts and
expenditures for the fiscal year reported (Column 3 – Column 2).

Column 6 – Indicate the variance expressed in percentage (Column 5 / Column 3).

Column 7 – Indicate other relevant information/reasons/justifications for increase or decrease in

actual vis-à-vis target receipts and expenditures.

Note: This report shall be prepared by the Local Treasurer and LBO, certified correct by the Local
Accountant, and submitted to the LCE within thirty (30) days from the end of the fiscal year. The
LBO shall furnish the DBM a copy of the report, through its Regional Office, within the same
period.

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LBAc Form No. 5
PHYSICAL AND FINANCIAL PERFORMANCE EVALUATION FORM
As of the ____ Semester Ending ______

Department/Office: ______________________
PPA PHYSICAL PERFORMANCE FINANCIAL PERFORMANCE
PPA Description/ Actual
Target Actual % of Allotment Absorptive
Code Major Final Variance Obligations Variance
Output Output Accomplishment Released Capacity
Output Incurred
(1) (2) (3) (4) (5) = (4) –(3) (6) = (4) / (3) (7) (8) (9) = (8) - (7) (10) = (8) / (7)

TOTAL

Prepared by: Local Finance Committee

_____________________________________ _________________ ________________

Local Planning and Development Coordinator Local Budget Officer Local Treasurer
Date: ___________________ Date: ___________ Date: ____________

Instructions:

Column 1 – Indicate the code assigned to the PPA as reflected in the AIP.

Column 2 – Indicate the MFOs of various PPA of the Department/Office.

Column 3 – Indicate the target output for the semester reported.

Column 4 – Indicate the actual output for the semester reported.

Column 5 – Indicate the difference between Columns 4 and 3.

Column 6 – Indicate the physical accomplishment expressed in percentage (Column 4 / Column

3).

Column 7 – Indicate the allotment released for the Department/Office for the semester being
reported.

Column 8 – Indicate the actual obligations incurred as reflected in the Registry of Appropriations,
Allotments and Obligations for the semester being reported.

Column 9 – Indicate the difference between Columns 8 and 7.

Column 10 – Indicate the financial accomplishment expressed in percentage (Column 8 /

Column 7)

Note: This report shall be prepared by the LFC and submitted to the LCE within thirty (30) days
after the end of each semester.

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 LBAc Form No. 6

[LGU Name]
Monitoring of Physical and Financial Accomplishments
FY _______

Target Estimated
AIP Implementing Output Cost
Actual Actual
Plan/PPAs Reference Office/ Remarks
Code Department
Accomplishment/s Expenditures
AIP AB AIP AB

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
GAD Plan and Budget
1. PPA 1
2. PPA 2
Local Disaster Risk Reduction
and Management Plan
1. PPA 1
2. PPA 2
Local Climate Change Action
Plan
1. PPA 1
2. PPA 2
List of PPAs for the Local
Council for the Protection of
Children
1. PPA 1
2. PPA 2
List of PPAs for Senior Citizens
and Persons with Disabilities
1. PPA 1
2. PPA 2
Peace and Order Plan
1. PPA 1
2. PPA 2
List of PPAs to Combat
Acquired Immune Deficiency
Syndrome
1. PPA 1
2. PPA 2

Other Reports/Plan as required

by DILG/DBM issuances
1. PPA 1
2. PPA 2

Prepared by: Approved by:

____________________________________ ________________
Local Planning and Development Coordinator Local Chief Executive

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Instructions:

Column 1 – Indicate the programs, projects and activities identified/mainstreamed for each
plan (e.g. GAD, LDRMMF, etc.).

Column 2 - Indicate the AIP Reference Code.

Column 3 – Indicate the Implementing Office/Department per PPA.

Column 4 – Indicate the target output as indicated in the AIP.

Column 5 – Indicate the actual accomplishment for the year reported.

Column 6 – Indicate the amount for the specific PPA as reflected in the AIP.

Column 7 – Indicate the amount for the specific PPA as reflected in the Annual Budget.

Column 9 – Indicate the actual expenditures incurred for the year reported.

Column 10 – Indicate other relevant information such as status of the implementation and
reasons for the delay, if any.

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PART III: ALLOCATIONS TO LOCAL
GOVERNMENT UNITS

The 1973 Constitution laid down the principle of local autonomy based on self-reliance.
The enactment of the 1987 Constitution marked more resolute efforts towards the
attainment of the nation’s dream of genuine and meaningful local autonomy.

Section 2, Article X of the 1987 Constitution provides that, “[t]he territorial and political
subdivisions shall enjoy local autonomy.”

This Constitutional mandate is embodied in the LGC, which provides for the
establishment of a more responsive and accountable government structure instituted
through a system of decentralization.

Effective sharing of political and administrative powers between the national and local
governments, on the other hand, is anchored, in part, on the equitable diffusion of
national tax among the different levels of government as well as the sharing of
proceeds from the development of national wealth and other special shares with the
inhabitants of a particular community by the way of direct benefits. This part of the
Manual delves into the provisions of law as well as the procedures set forth by different
issuances by which LGUs may effectively access the different allocations to LGUs.

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CHAPTER 1. NATIONAL TAX ALLOTMENT (FORMERLY INTERNAL
REVENUE ALLOTMENT)

The NTA, formerly known as IRA, refers to the shares of LGUs from the national taxes
equivalent to 40% of the total annual revenue collection of the 3 rd year preceding the
current fiscal year which is released directly without the need for any further action, to
the provincial, city, municipal, or barangay treasurer, as the case may be.

1.1 Legal Bases

Section 6, Article X, General Provisions of the 1987 Philippine Constitution

provides that LGUs shall have a just share, as determined by law, in the national
taxes which shall be automatically released to them.

Section 284 of the LGC provides that LGUs shall have forty percent (40%) share
in the national internal revenue taxes (NIRT) based on the collection of the third
fiscal year preceding the current fiscal year.

Sections 18 and 286 of the LGC and Articles 383 and 390 of its IRR provide that
the share of LGUs shall be automatically and directly released to the provincial,
city, municipal, or barangay treasurer without the need for any further action, and
shall not be subject to any lien or holdback that may be imposed by the national
government (NG).

Section 4 of RA No. 9358, appropriating a supplemental budget for FY 2006,

provides, among others, that the IRA/NTA is considered automatically
appropriated which means that the same need not pass through congressional
approval before it is released to the LGUs. This provision of the law makes the
release of NTA shares more predictable and allows LGUs to plan/program the
use of their NTA fund more effectively.

1.2 Supreme Court Ruling on the Mandanas-Garcia Case

Background

The SC Ruling on the Mandanas-Garcia Case refers to the SC’s final decision
on the two (2) separate petitions filed before the SC: (1) the petition filed by
Congressman Hermilando I. Mandanas and other local officials vs Executive
Secretary Paquito N. Ochoa, Jr., et al. (G.R. No. 199802, April 10, 2019); and (2)
Congressman Enrique T. Garcia, Jr. vs Executive Secretary Paquito N. Ochoa,
Jr., et al. (G.R. No. 208488, April 10, 2019).

Both petitions challenged the manner in which the NG computed the IRA shares
of LGUs. In particular, the petitioners pleaded with the SC to mandate the NG to
compute the IRA based on the “just shares” of the LGUs.

In its July 3, 2018 Decision, the SC granted the Mandanas-Garcia petitions,

declaring as unconstitutional the phrase “internal revenue” appearing in Section
284 of the LGC. As such, the SC ordered the deletion of the said phrase.

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 The SC ruled that the determination of the just share of the LGUs should not be
based solely on NIRT but on all national taxes. The SC also ruled that any
mention of “internal revenue allotment” in the LGC shall be understood as
pertaining to the allotment of the LGUs derived from the national taxes. It further
ordered the Secretaries of Finance and Budget and Management,
Commissioners of Internal Revenue and Customs, as well as the National
Treasurer to include all collections of national taxes in the computation of the
base of the just share of the LGUs, based on the ratio provided in the now-
modified Section 284 of the LGC.

The SC Ruling became final and executory on April 10, 2019, affirming its earlier
decision promulgated in July 3, 2018.

Following the SC ruling, the IRA, referred to as the NTA, now covers the share
of LGUs in all national taxes.

National Taxes include the following:

• Income tax;
• Estate tax and donor’s tax;
• Value-added tax (VAT);
• Other percentage taxes;
• Taxes imposed by special laws, such as travel tax;
• Customs duties; and
• Taxes and duties by other collecting agencies.

Moreover, since the SC Resolution declared unconstitutional the phrase “internal

revenue” appearing in pertinent sections of the LGC, the nomenclature in lieu of
the term “Internal Revenue Allotment” shall be “National Tax Allotment” starting
FY 2022 General Appropriations Act (GAA).

Impact of the Supreme Court Ruling on the Mandanas-Garcia Case

The impact of the SC decision significantly increased the tax base on which the
share of the LGUs is computed from, thus, strengthening fiscal decentralization.
It clarifies the distinction between “national internal revenue taxes” and “national
taxes” as the base in the computation of the IRA of LGUs.

NIRT includes only taxes collected by the Bureau of Internal Revenue (BIR) while
“National taxes,” consists of all taxes and duties collected by the NG through the
BIR, the Bureau of Customs (BOC), and other collecting agencies.

Implications of the Supreme Court Ruling on the National Government and

the Local Government Units

The significant increase in the shares of LGUs presents a unique opportunity for
the LGUs to assume the functions that have been devolved to them under the
LGC and other subsequent and pertinent laws.

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1.3 Distribution of Shares

Pursuant to Section 285 of the LGC and Article 382 (a) of its IRR, the just share
of LGUs in the national taxes is allocated in the following manner for the four (4)
levels of LGUs:

• Provinces - Twenty-three percent (23%)

• Cities - Twenty-three percent (23%)
• Municipalities - Thirty-four percent (34%)
• Barangays - Twenty percent (20%)

Figure 15. NTA Share per LGU Level

The distribution of the shares of individual provinces, cities, and municipalities is

based on the following formula prescribed in Section 285 of the LGC:

Table 15. Distribution of NTA Shares Formula

Factor Sharing (%) Basis

Population 50% Based on the Census of Population
conducted by the Philippine Statistics
Authority every five (5) years as approved by
the President through a proclamation
Land Area 25% Based on the Masterlist of land area
prepared by the Land Management Bureau
of the Department of Environment and
Natural Resources (DENR)
Equal Sharing 25%
Total 100%

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 The issuance of RA No. 11683 amended Section 450 of the LGC which provides
for the portability of the NTA of a newly-converted city. The said NTA portability
provides that the newly converted city shall bring its latest NTA as a municipality
to the allotment of cities.

The total share of the cities plus the amount equal to the newly converted city’s
most recent NTA share as a municipality shall be allocated to cities based on
population, land area, and equal sharing as prescribed in Section 285 of the LGC.
Moreover, the remaining municipal shares shall also be allocated to the
municipalities in the same manner. The said portability shall be effective for a
period of three (3) years, upon the effectivity of the conversion into cityhood.

In the case of barangays, the allocation of the individual share, shall be P80,000
for each barangay with a population of not less than one hundred (100)
inhabitants. The balance to be distributed shall be based on population - 60%
and equal sharing - 40%.

1.4 Uses of the Fund

• Pursuant to Section 17 of the LGC, the fund shall be used to provide for
basic services and facilities, particularly those which have been devolved
by the NG.

• Section 287 of the LGC and Article 384 of its IRR direct LGUs to set aside
no less than twenty percent (20%) of its annual NTA to fund development
projects as identified in the LGUs’ development plans.

• The DBM, DOF, and DILG issued JMC No. 1 dated November 4, 202097 to
increase the responsiveness of the guidelines and promote greater
autonomy, transparency, and accountability in LGUs’ appropriation and
utilization of their respective twenty percent (20%) DF, as provided under
the LGC.

• Essentially, the said JMC no longer prescribes the specific allowable

development projects that may be funded by the LGUs out of their
respective 20% DFs. Instead, said JMC sets the general policies and
guidelines to be observed by LGUs in identifying and implementing
development projects to be funded under the 20% DF, including the
prescription of the prohibited expenditure items enumerated below:

a. PS expenditures, such as salaries, wages, overtime pay, and other

personnel benefits;

b. Administrative expenses, such as supplies, meals, representation,

communication, water and electricity, petroleum products, and the
like;

97
Revised Guidelines on the Appropriation and Utilization of the Twenty Percent (20%) of the Annual Internal Revenue Allotment
for Development Projects

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 c. Travelling expenses, whether domestic or foreign;

d. Registration fees and other expenses related to the conduct of and

participation in training, seminars, conferences or conventions;

e. Purchase, maintenance or repair of administrative office’ furniture,

fixtures, equipment or appliances; and

f. Purchase, maintenance or repair of motor vehicles used for

administrative purposes.

• It must be noted that one important provision of the JMC is the policy that
the development projects that may be included by the LGUs under their
respective 20% DFs shall be those that are necessary, appropriate, or
incidental to the efficient and effective local governance, and those which
are essential to the promotion of the general welfare of the people, which
is anchored on Section 16 of the LGC.

• Lastly, Item 6.0 of the DBM-DOF-DILG JMC No. 1, s. 2020 provides that
the LGUs shall prepare quarterly reports on the utilization of the 20% DF,
consistent with the reporting requirements prescribed by the DOF-BLGF.

1.5 Fund Release Procedures

The release of the NTA shares of LGUs follows these procedures:

a. For budget preparation purposes, the BIR, BOC, and the Bureau of the
Treasury (BTr) submit certifications on the LGU shares from the actual
collections of national taxes to the DBM which is equivalent to forty percent
(40%) of the total annual revenue collection of the third fiscal year preceding
the current fiscal year;

b. The DBM programs the equivalent amount of NTA in the National

Expenditure Program. Based on the certifications issued by the BIR, BOC,
and BTr, the DBM computes the individual share of each LGU using the
codal formula, and informs the beneficiary LGUs of their respective NTA
shares through a Local Budget Memorandum issued not later than June 15
of the current fiscal year for the purpose;

c. At the beginning of the year, the DBM prepares and releases

comprehensively the corresponding release documents to the BTr;

d. The BTr, in turn downloads the fund through the issuance of Authority to
Debit Account to the Authorized Government Servicing Bank (AGSBs),
which credits the shares of the beneficiary LGUs to their respective
accounts.

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CHAPTER 2. SHARE IN THE UTILIZATION AND DEVELOPMENT OF
NATIONAL WEALTH

2.1 Legal Bases

Sections 289 and 290 of the LGC and Articles 386 and 387 of its IRR provide
that the LGUs are entitled to forty percent (40%) of the gross collection by the
NG from the preceding fiscal year out of the proceeds derived from the utilization
and development of national wealth within the LGUs’ respective areas.

The following are the four (4) types of national wealth with the corresponding
collecting agency:

Table 16. Types of National Wealth with Corresponding Collecting Agency

Particulars Collecting Agency

Forest Charges DENR
Royalty Income from Mineral DENR-Mines and Geosciences Bureau
Reservation (MGB)
Energy Resources Production Department of Energy (DOE)
Mining Taxes BIR

LGUs shall also have a share from proceeds derived by any government agency
or GOCC engaged in the utilization and development of the national wealth
based on the following formula whichever will produce a higher share for the
LGU:

• One percent (1%) of the gross sales or receipts of the preceding calendar
year; or

• Forty percent (40%) of the mining taxes, royalties, forestry, energy

resources production, and such other taxes, fees and charges, including
interests and fines the government agency or GOCC would have paid if it
were not otherwise exempt (Section 291 of the LGC and Article 388 of its
IRR).

2.2 Distribution of Shares

Pursuant to Section 292 of the LGC and Article 389 of its IRR, the distribution of
LGU shares from national wealth shall be as follows:

• Where the natural resources are located in the province, the province will
have a share of 20%, the component city/municipality, 45%; and the
barangay, 35%.

• Where the natural resources are located in a HUC/ICC, the city will have a
share of 65%, and the barangay, 35%.

However, where natural resources are located in two (2) or more cities, the
allocation of shares shall be computed on the basis of population (70%) and
land area (30%).

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 Figure 16. Distribution of Shares from National Wealth Figure 17. Distribution of Shares from National Wealth
(where the natural resources are located in the province) (where the natural resources are located in HUC or ICC)

2.3 Uses of the Fund

LGU share from proceeds of national wealth shall be used to finance local
development and livelihood projects of the recipient LGU.

In the case of proceeds derived from the development and utilization of

hydrothermal, geothermal and other sources of energy, eighty percent (80%) of
the proceeds shall be applied solely to lower the cost of electricity in the LGU
where such source of energy is located (Section 294 of the LGC and Article 391
of its IRR).

In the case of any government agency or GOCCs engaged in the utilization and
development of the national wealth, such share shall be directly remitted by the
government agency/GOCC concerned to the provincial, city, municipal, or
barangay treasurer within five (5) days after the end of each quarter (Section 293
of the LGC and Article 390 [c] of its IRR).

2.4 Fund Release Procedures

DBM-DOF-DENR-DOE JC No. 2006-1 dated February 13, 2006,98 DOF-DBM-

DILG-DENR JC No. 2009-1 dated March 31, 2009,99 DENR-DOF-DBM-DILG JC
No. 2010-1 dated June 25, 2010,100 and DOF-DBM JC 2016-1 dated January 4,
2016101 prescribe the guidelines and procedures for the release of LGU shares
in the proceeds from the utilization and development of national wealth,
summarized as follows:

98
Revised Guidelines and Procedures on the Release of the Share of [LGUs] in the Proceeds from the Development and
Utilization of National Wealth
99
Updated Guidelines and Procedures on the Release of the Share of Local Government Units from the Collections Derived by
the National Government from Mining Taxes
100
Share of Local Governments Derived by the National Government from Royalty Income Collected from Mineral Reservations
101
Guidelines for the Direct Release of Funds by the Bureau of the Treasury (BTr) to Local Government Units (LGUs) in FY 2016
and Thereafter

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 a. The collecting agencies, i.e., BIR, DENR, DENR-MGB, and DOE, submit
to DBM a certification of the projected total shares of LGUs based on the
immediately preceding year’s collections as basis for provision of
appropriations cover;

b. During budget execution, the collecting agencies and BTr submit to DBM
a reconciled certification on actual collections and actual remittances from
the immediately preceding year;

c. Based on the reconciled certification/s submitted by the collecting

agencies and BTr, the DBM prepares and releases the corresponding
release documents to the BTr; and

d. The BTr, in turn, downloads the fund through the issuance of Authority to
Debit Account to the AGSBs, which credits the shares of the beneficiary
LGUs to their respective accounts.

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CHAPTER 3. SHARE IN THE GROSS INCOME TAXES PAID BY ALL
BUSINESSES AND ENTERPRISES WITHIN THE SPECIAL
ECONOMIC ZONES

3.1 Legal Bases

• RA No. 7922, entitled, “An Act Establishing a Special Economic Zone and
Free Port in the Municipality of Santa Ana and the Neighboring Islands in
the Municipality of Aparri, Province of Cagayan, Providing Funds Therefor,
and for Other Purposes;” and

• DBM-DOF Joint Circular No. 2 dated August 7, 2014.102

(Note: The other shares of LGUs in ECOZONEs, such as those specified

under RA No. 7227, are already remitted to the beneficiary LGUs pursuant
to RA No. 9400.)103

3.2 Computation of Shares

LGUs within the Cagayan Special Economic Zone (CSEZ) are entitled to a share
in the five percent (5%) final tax on Gross Income Earned (GIE) paid by
registered enterprises within the CSEZ, as follows:

• One percent (1%) to the Province of Cagayan; and

• One-half percent (1/2%) to be shared by the municipalities affected by the

declaration of the CSEZ in proportion to their income from business
activities within the CSEZ.

3.3 Uses of the Fund

The shares of LGUs from the final tax on GIE paid by registered enterprises
within the CSEZ shall be used for local development projects.

3.4 Fund Release Procedures

The following procedures are applied in releasing the shares of LGUs in the gross
income taxes paid by all businesses and enterprises within the ECOZONES:

a. For budget preparation purposes, the BIR submits to the DBM on or

before March 15 of every year a certification on the total computed LGU
shares based on the actual revenue collections corresponding to thirty
percent (30%) of the total final tax collected on GIE for the base year,
which is two (2) years immediately preceding the current year;

102
Guidelines and Procedures on the Release of the Shares of Local Government Units from the Gross Income Earned by All
Businesses within the Cagayan Special Economic Zone for FY 2012 and Subsequent Years
103
An Act Amending Republic Act No. 7227, as amended, Otherwise Known as the Bases Conversion and Development Act of
1992, and for Other Purposes

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 b. During budget execution, the BIR and BTr submit reconciled certification/s
of actual collections and remittances to the DBM;

c. Based on the reconciled certification/s submitted by the BIR and BTr, the
DBM prepares and releases the corresponding release documents to the
BTr; and

d. The BTr, in turn, downloads the fund through the issuance of Authority to
Debit Account to the AGSBs, which credits the shares of the beneficiary
LGUs to their respective accounts.

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CHAPTER 4. SHARE IN VALUE-ADDED TAX

4.1 Legal Bases

VAT is the internal revenue tax imposed under Sections 106 and 108 of the
National Internal Revenue Code (NIRC) of 1997, as amended by RA No. 10963.
In addition to its NTA shares, RA No. 7643 allows LGUs to share from VAT
revenues equivalent to fifty percent (50%) of the excess in VAT collection from
the immediately preceding year, to be distributed as follows:

• Twenty percent (20%) to the city/municipality; and

• Eighty percent (80%) to the national government.

DBM-DOF-DILG Joint Circular No. 1-02 dated February 6, 2002104 prescribes

the guidelines and procedures on the release of the twenty percent (20%) of the
fifty percent (50%) share of LGUs in the incremental collection VAT.

4.2 Computation of Shares

LGUs are entitled to a share in VAT only when there is an incremental collection
from VAT which refers to the excess in the annual increase in actual collection
of VAT in the immediately preceding year over the annual increase in the second
preceding year, illustrated as follows:

VAT Collection Increase

Year
(in Php) (in Php)
2023 64.55M 20.972 M
2022 43.383M 19.700 M
2021 23.886 M -

Formula for the distribution of LGUs’ share in the Incremental Collection from
VAT:

2023 increase in collection P 20.972 M

Less: 2022 increase in collection P 19.700 M
Excess of increase in collection P 1.272 M
50% share in incremental collection P 0.636 M
Distributed as follows:
20% share of LGUs (city/municipality) P 0.127 M
80% share of national government P 0.509 M
P 0.636 M

Guidelines and Procedures on the Release of the Twenty Percent (20%) of the Fifty Percent (50%) Share of Local Government
104

Share of Local Government Units (LGUs) in the Incremental Collection from Value-Added Tax (VAT)

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 Figure 18. Formula for the Computation of LGUs' VAT Shares

4.3 Uses of the Fund

Consistent with Section 21 of RA No. 9337 which amended Section 288 of the
NIRC of 1997, fifty percent (50%) of the share from the incremental revenue from
the VAT shall be allocated and used exclusively for the following purposes:

• Fifteen percent (15%) for public elementary and secondary education, to

finance the construction of buildings, purchases of school furniture, and
in-service teacher training;

• Ten percent (10%) for health insurance premiums of enrolled indigents as

a counterpart contribution of the local government to sustain the universal
coverage of the national health insurance program;

• Fifteen percent (15%) for environmental conservation to fully implement a

comprehensive national reforestation program; and

• Ten percent (10%) for agricultural modernization to finance the

construction of farm-to-market roads and irrigation facilities.

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 Such allocations shall be segregated as separate trust funds by the national
treasury and shall be over and above the annual appropriation for similar
purposes.

4.4 Fund Release Procedures

The following procedures are applied in releasing the VAT shares of LGUs:

a. For budget preparation purposes, the BIR submits to DBM a certification

of estimated revenue collections corresponding to twenty percent (20%)
of the fifty percent (50%) of the incremental collection from VAT
collections;

b. During budget execution, the BIR submits to DBM a certification of actual

revenue collections corresponding to twenty percent (20%) of the fifty
percent (50%) of the incremental collection from VAT collections;

c. Based on the certification submitted by the BIR, the DBM prepares and
releases the corresponding release documents to the BTr; and

b. The BTr, in turn, downloads the fund through the issuance of Authority to
Debit Account to the AGSBs, which credits the shares of the beneficiary
LGUs to their respective accounts.

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CHAPTER 5. SHARE IN TOBACCO EXCISE TAXES

5.1 Legal Bases

5.1.1 RA No. 7171, entitled, “An Act to Promote the Development of Farmers in
the Virginia Tobacco Producing Provinces;”

5.1.2 RA No. 8240, as amended by RA No. 10351, entitled, “An Act

Restructuring the Excise Tax on Alcohol and Tobacco Products by
Amending Sections 141, 142, 143, 144, 145, 8, 131 and 288 of RA No.
8424, Otherwise Known as the National Internal Revenue Code of 1997,
as Amended by RA No. 9334, and for Other Purposes;”

5.1.3 RA No. 11346, entitled, “An Act Increasing the Excise Tax on Tobacco
Products, Imposing Excise Tax on Heated Tobacco Products and Vapor
Products, Increasing the Penalties for Violations of Provisions on Articles
Subject to Excise Tax, and Earmarking a Portion of the Total Excise Tax
Collection from Sugar-Sweetened Beverages, Alcohol, Tobacco, Heated
Tobacco and Vapor Products for Universal Health Care, Amending for this
Purpose Sections 144, 145, 146, 147, 152, 164, 260, 262, 263, 265, 288,
and 289, Repealing Section 288(B) and 288(C), and Creating New
Sections 263-A, 265-B, and 288-A of the National Internal Revenue Code
of 1997, as Amended by Republic Act No. 10963, and for Other
Purposes;”

5.1.4 Department of Agriculture (DA)-DBM-National Tobacco Administration

JMC No. 2020-1 dated June 25, 2020, entitled, “Guidelines on the
Allocation, Release, and Utilization of the Shares of Local Government
Units (LGUs) from the Revenues from Excise Taxes on Tobacco Products
Pursuant to Republic Act (RA) No. 8240, as amended by RA No. 10351,
and as further amended by RA No. 11346, and Collections from the
Proceeds of the Excise Taxes on Locally Manufactured Virginia-Type
Cigarettes Pursuant to RA No. 7171, as incorporated in RA No. 8424, as
amended;” and

5.1.5 Memorandum Circular (MC) No. 61-A dated November 28, 1993, entitled
“Amending Memorandum Circular No. 61 Prescribing the Guidelines for
the Implementation of RA No. 7171 dated January 9, 1992.”

5.2 Computation of Shares of LGUs

5.2.1 Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under

RA No. 7171, as amended

a. The fund equivalent to fifteen percent (15%) of the collections from

the proceeds of the excise taxes on locally manufactured Virginia-
type cigarettes, but not exceeding Seventeen Billion Pesos (Php 17
Billion), shall be computed based on the actual collections, as
certified by the BIR, for the second calendar year preceding the
year of distribution, as appropriated in the GAA; and

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 b. National Tobacco Administration-certified list of qualified tobacco-
producing LGUs and their corresponding volume of production (in
kilograms) for the second year preceding the year of distribution.

5.2.2 Burley and Native Tobacco Excise Taxes Pursuant to RA No. 8240, as
amended

a. The fund equivalent to five percent (5%) of the revenues collected

from excise tax on tobacco products pursuant to RA No. 8240, as
amended by RA No. 10351, and as further amended by RA No.
11346, but not exceeding Four Billion Pesos (Php 4 Billion), shall
be computed based on actual collections, as certified by the BIR
for the second calendar year preceding the year of distribution, as
appropriated in the GAA; and

b. National Tobacco Administration-certified list of qualified tobacco-

producing LGUs and their corresponding volume of production (in
kilograms) for the second year preceding the year of distribution.

5.3 Uses of the Fund

5.3.1 Shares of LGUs from the Collection of Excise Tax on Locally

Manufactured Virginia-Type Cigarettes under RA No. 7171, as amended
by RA No. 11346

• Cooperative projects that will enhance better quality of products,

increase productivity, guarantee the market and as a whole
increase farmers’ income;

• Livelihood projects particularly the development of alternative

farming systems to enhance farmers’ income;

• Agro-industrial projects that will enable tobacco farmers in the

Virginia tobacco-producing provinces to be involved in the
management and subsequent ownership of these projects such as
post-harvest and secondary processing like cigarette
manufacturing and by-product utilization;

• Infrastructure projects such as farm-to-market roads, bridges,

schools, hospitals, rural health facilities, and irrigation systems;

• Programs and projects that will promote, enhance, and develop the
tourism potential of Virginia tobacco-growing provinces; and

• Programs that will provide financial assistance for tobacco farmers

that were displaced or who cease to produce tobacco.

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 5.3.2 Shares of LGUs from the Collection of Burley and Native Tobacco Excise
Tax Pursuant to RA No. 8240, as amended by RA No. 11346

• Programs that will provide inputs, training, and other support for
tobacco farmers who shift to production of agricultural products
other than tobacco including, but not limited to, high-value crops,
spices, rice, corn, sugarcane, coconut, livestock and fisheries;

• Programs that will provide financial support for tobacco farmers

who are displaced or who cease to produce tobacco;

• Cooperative programs to assist tobacco farmers in planting

alternative crops or implementing other livelihood projects;

• Livelihood programs and projects that will promote, enhance, and

develop the tourism potential of tobacco-growing provinces;

• Infrastructure projects such as farm-to-market roads, bridges,

schools, hospitals, rural health facilities, and irrigation systems; and

• Agro-industrial projects that will enable tobacco farmers to be

involved in the management and subsequent ownership of
projects, such as post-harvest and secondary processing like
cigarette manufacturing and by-product utilization.

5.4 Fund Release Procedures

The following procedures are applied in releasing the shares of LGUs from
tobacco excise taxes:

a. The BIR submits to DBM on or before April 15 the estimated collection

and the shares of the LGUs from tobacco excise tax for purposes of
providing appropriations cover;

b. During budget execution, the DA endorses and submits a National

Tobacco Administration-certified list of beneficiary tobacco-producing
LGUs and their corresponding volume of production (in kilograms) for the
second year preceding the year of distribution to serve as basis for
determining the respective shares of beneficiary LGUs;

c. Based on the National Tobacco Administration-certified list of beneficiary

tobacco-LGUs and their corresponding volume of tobacco production, as
endorsed and submitted by the DA, the DBM computes the individual
share of the beneficiary LGUs, and releases the corresponding release
documents to the BTr; and

d. The BTr, in turn, downloads the fund through the issuance of Authority to
Debit Account to the AGSBs, which credits the shares of the beneficiary
LGUs to their respective accounts.

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5.5 Treatment of the Shares

Pursuant to item 2.4 of the DA-DBM-National Tobacco Administration JMC No.

2020-1 dated June 25, 2020,105 the shares of the beneficiary LGUs from tobacco
excise taxes shall be treated as a special account under the general fund of the
LGUs, to be utilized exclusively for programs and projects pursuant to Sections
14 and 16 of RA No. 11346 and its guidelines.

105
Guidelines on the Allocation, Release, and Utilization of the Shares of Local Government Units (LGUs) from the Revenues
from Excise Taxes on Tobacco Products Pursuant to Republic Act (RA) No. 8240, as Amended by RA No. 10351, and as Further
Amended by RA No. 11346, and Collections from the Proceeds of the Excise Taxes on Locally Manufactured Virginia-Type
Cigarettes Pursuant to RA No. 7171, as Incorporated in RA No. 8424, as Amended

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PART IV – SPECIAL FUNDS

CHAPTER 1. SPECIAL EDUCATION FUND

1.1 Legal Bases

The Special Education Fund (SEF) is one of the special funds that shall be
maintained in every provincial, city, or municipal treasury. The SEF arises from
the proceeds of the additional one percent (1%) real property tax which shall be
in addition to the basic real property tax. Section 309 (a) of the LGC provides that
the SEF “shall consist of the respective shares of provinces, cities, municipalities
and barangays in the proceeds of the additional tax on real property to be
appropriated for purposes prescribed in Section 272 of [the LGC].”

Section 272 of the LGC also provides that proceeds from the additional one
percent (1%) tax on real property accruing to the SEF shall be automatically
released to the Local School Boards (LSBs). In the case of provinces, the
proceeds shall be divided equally between the provincial and municipal school
boards. Likewise, the same section also provides that the SEF shall be allocated
to the following:

a. Operation and maintenance of public schools;

b. Construction and repair of school buildings;
c. Facilities and equipment;
d. Educational research;
e. Purchase of books and periodicals; and
f. Sports development.

Further, Section 100 (c) of the same law provides that the annual school board
budget shall give priority to the following:

a. Construction, repair, and maintenance of school buildings and other

facilities of public elementary and secondary schools;
b. Establishment and maintenance of extension classes where necessary;
and
c. Sports activities at the division, district, municipal, and barangay levels.

Section 7 (b) of RA No. 10410, otherwise known as the "Early Years Act of 2013",
provides that LGUs shall include allocations from their SEF for the Early
Childhood Care and Development (ECCD) Program.

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1.2 Policy Guidelines

The implementing guidelines on the utilization of the SEF are clarified in the
following Joint Circulars (JCs) issued by the Department of Education (DepEd),
DBM, DILG:

• JC No. 1, s. 2017 dated January 19, 2017, entitled, “Revised Guidelines

on the Use of the Special Education Fund (SEF);”

• JC No. 1, s. 2020 dated August 27, 2020, entitled, “Addendum to DepEd-

DBM-DILG JC No. 1, s. 2017 dated January 19, 2017, entitled, “Revised
Guidelines on the Use of the Special Education Fund (SEF)””; and

• JC No. 2, s. 2020 dated October 23, 2020, entitled, “Addendum No. 2

[Clarification to DepEd-DBM-DILG JC No. 1, series of 2017 dated January
19, 2017, entitled, “Revised Guidelines on the Use of the Special
Education Fund (SEF).”

1.3 Allowable Expenses Chargeable against the SEF

In all instances, the allocation for the following expenditure items chargeable
against the SEF shall be net of the budgetary provision for the same or
related item(s) in the budget for the DepEd and the ECCD Council, as may
be determined by the LSB, and that which may be funded out of the Special
Purpose Funds:

1.3.1 Operation and maintenance of public schools:

1.3.1.1 Payment of compensation/allowances of teachers locally-

hired in elementary and secondary schools identified to have
shortages per the teacher deployment analysis of DepEd;
the rates of compensation/allowances shall be determined
by the LSB based on funds available, but not to exceed the
salary schedule being implemented by the LGU concerned:
Provided, that for the purpose of hiring teachers chargeable
against the SEF, the LSB in each province, city or
municipality shall utilize the list found in the Registry of
Qualified Applicants (RQA);

1.3.1.2 Payment of salaries/wages of utility workers and security

guards hired in public elementary and secondary schools
which have not been provided such position in the DepEd
budget;

1.3.1.3 Payment of expenses pertaining to the operation of schools,

which may include utilities and communication expenses;

1.3.1.4 Payment of compensation/allowances of locally-hired

dentists and/or dental aide positions to serve in public

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 elementary and secondary schools; Provided, that the rates
of compensation shall be determined by the LSB based on
funds available, but not to exceed the salary schedule being
implemented by the LGU concerned; Provided further, that
the grant of Magna Carta benefits to said personnel shall be
subject to the provisions of DBM-Department of Health
(DOH) JC No. 1, s. 2012, as amended by DBM-DOH JC No.
1, s. 2016; Provided finally, that for the purpose of hiring
dentists and/or dental aides positions chargeable against the
SEF, the LSB in each province, city and municipality shall
strictly comply with the existing Civil Service laws, rules and
regulations;

1.3.1.5 Payment of expenses pertaining to the operation of schools,

which may include, but not limited to, utilities,
communication expenses, scouting activities (jamboree,
camping, hiking, outdoor activities, scout trainings, and
instructional drills/exercises) of the Boy Scouts of the
Philippines and the Girl Scouts of the Philippines, programs
to promote campus journalism, Parents-Teachers
Association activities. Student Council Government
Activities, and other extra-curricular activities that promote
leadership and values as may be provided under the
corresponding DepEd issuances. Such expenses may be
included in the Maintenance and Other Operating Expenses
allocation of schools;

1.3.1.6 Payment of dental supplies and other related expenses

pertaining to the operation of dental facilities in public
elementary and secondary schools;

1.3.1.7 Establishment of dental facilities, and acquisition of

apparatus and/or equipment, subject to the prevailing
requirements and specifications set by the DepEd, in
consultation with the DOH;

1.3.1.8 Payment of costs and expenses in connection with the

acquisition, production, reproduction, and printing of learning
materials for the learners such as, self-learning modules,
textbooks, activity sheets, and study guides/manuals
approved by DepEd;

1.3.1.9 Purchase of external storage devices (compact disc/digital

versatile disc, USB storage, and hard drive);

1.3.1.10 Communication expenses such as, but not limited to,

landline phone for communication, load (call, text, and data)
for mobile phone communication and Wi-Fi connection;

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 1.3.1.11 Payment of subscription fee for videoconferencing or remote
communication tools/application or platforms;

1.3.1.12 Payment of honoraria and allowances of locally-hired

personnel, trained and qualified tutors or learning facilitators;

1.3.1.13 Training/webinars for teaching and non-teaching personnel,

school leaders, parents, learning facilitators, and community
education volunteers;

1.3.1.14 Payment of cost and expenses in the distribution and

retrieval of learning materials for the learners such as, but
not limited to, transportation expenses of DepEd personnel
and expenses in the distribution on the retrieval of self-
learning modules, and shipment, delivery, and courier
services; and

1.3.1.15 Health and Sanitation Expenses:

• personal Protective Equipment such as, but not limited

to, facemasks, face shields, hand gloves, surgical caps,
hats, eye goggles, and hazmat suits;

• medical devices such as, but not limited to,

thermal/temperature scanners, and digital
thermometers;

• vaccines, vitamins and minerals; and food

supplements;

• hand sanitizers, alcohol, disinfectants, anti-bacterial or

germicidal soaps, cleaning equipment, bleach, foot bath;
and

• psychosocial first aid, mental and physical examination

or check-up for teaching and non-teaching personnel
and learners, and medical doctor’s consultation.

1.3.2 Construction and repair of school buildings:

1.3.2.1 Construction, repair and maintenance of school buildings

and other facilities for public elementary and secondary
schools, which are deemed to have shortage of classrooms
or of other facilities, as the case may be, per DepEd
classroom deployment analysis, subject to existing
standards/specifications set by DepEd and/or Department of
Public Works and Highways; furthermore, this item shall be
given priority in the SEF Budget;

1.3.2.2 Acquisition and titling of school sites; and

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 1.3.2.3 Installation of health areas or facilities such as, but not
limited to, school clinics and wash areas.

1.3.3 Facilities and equipment:

1.3.3.1 Acquisition of laboratory, technical and similar apparatus,

and information technology equipment and corollary
supporting services (e.g. internet connection, maintenance,
etc.), subject to the prevailing requirements and
specifications set by the DepEd;

1.3.3.2 Personal computer, laptop computer, tablet, notebook, and

smartphone;

1.3.3.3 Printer, scanner, photocopying machine, and other printing

or photocopying equipment and their consumables;

1.3.3.4 Television set, antenna/cable satellite connection, radio with

AM/FM channel, two-way radio for remote/off the grid areas;
and

1.3.3.5 Primary and secondary batteries, car battery, and solar

panel.

1.3.4 Educational research:

Educational research other than the research subject areas funded in

the DepEd budget, subject to the prevailing policies and guidelines of
the DepEd.

1.3.5 Purchase of books and periodicals:

Purchase of library books and periodicals for the libraries of the different
elementary and secondary schools in the province, city, and
municipality, and purchase of instructional materials, workbooks and
textbooks needed by public elementary and secondary schools, subject
to the prevailing policies and guidelines of the DepEd.

1.3.6 Sports development:

Expenses for school sports activities at the national, regional, division,

district, municipal and barangay levels, as well as for other DepEd-
related activities, subject to the prevailing requirements and
specifications set by the DepEd.

1.3.7 Funding for the ECCD Program for the following purposes:

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 1.3.7.1 Direct services related to the implementation of the ECCD
program, such as salaries/allowances of locally-hired Child
Development Teachers and/or Day Care Workers, etc.;
1.3.7.2 Organization and support of parent cooperatives to establish
community-based ECCD programs;

1.3.7.3 Provision of counterpart funds for the continuing

professional development of ECCD public service providers;

1.3.7.4 Provision of facilities for the conduct of the ECCD Program;

and

1.3.7.5 Payment of expenses pertaining to the operations of

National Child Development Centers, including, but not
limited to, utilities (i.e. electricity and water expenses) and
communication (i.e. telephone expenses).

1.3.8 Funding for the implementation of the National Feeding Program for
undernourished children in public day care, kindergarten and
elementary schools, particularly for the following purpose (RA No.
11037, DepEd-DBM-DILG JC No. 1, s. 2020):

1.3.8.1 Supplemental Feeding Program for Day Care Children;

1.3.8.2 School-Based Feeding Program;

1.3.8.3 Milk Feeding Program;

1.3.8.4 Micronutrient Supplements;

1.3.8.5 Health Examination, Vaccination, and Deworming;

1.3.8.6 Gulayan sa Paaralan;

1.3.8.7 Water, Sanitation, and Hygiene (WASH); and

1.3.8.8 Integrated Nutrition Education, Behavioral Transformation,

and Social Mobilization.

1.4 Planning and Budgeting for the SEF

1.4.1 Budget Preparation

The LSB shall formulate a three-year program indicating strategic prioritization

policies in the allocation of the SEF to schools taking into consideration equitable
sharing, priority needs and such factors as enrollment ratio, distance of the
schools, performance, drop-out rate, and location of schools, as well as the goals
and objectives of the LGU's Comprehensive Development Plan (CDP), and the
expenditures, programs, projects and activities in the LGU's Local Development

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 Investment Program (LDIP) prior to the formulation and preparation of its Annual
Budget for the incoming year. It is understood that the DepEd representative to
the LSB shall be responsible for coordinating municipal/city school plans with
that of the province and ensuring that the School Improvement Plan (SIP) and
the Division Education Development Plan (DEDP) are formulated collaboratively
with the stakeholders in the community.

Step 1.

The budget preparation phase of the SEF starts only after the official issuance
by the LFC of the Estimated Proceeds of the Special Levy on Real Property,
constituting the SEF, and the criteria set by the DepEd on the annual budgeting
needs for the operation and maintenance of public schools. The annual
budgetary requirements of public schools shall be based on the DepEd-approved
SIP and DEDP in the implementation of ECCD Program, kindergarten,
elementary and secondary, formal and non-formal education programs,
chargeable to their respective SEFs.

Step 2.

In accordance with the criteria set by the DepEd, the Local School Board
determines the annual supplemental budgetary needs for the operation and
maintenance of public schools within the province, city or municipality, as the
case may be, and the supplementary local cost of meeting such needs, which
shall be reflected in the form of an Annual School Board Budget corresponding
to its share of the proceeds of the special levy on real property constituting the
SEF (Section 99 [a] of the LGC).

Step 3.

The division superintendent, city superintendent, or district supervisor, as the

case may be, shall prepare the budget of the School Board concerned. Such
budget shall be supported by PPAs of the School Board for the ensuing fiscal
year (Section 100 [b] of the LGC).

The provincial SEF Budget shall, as much as possible, fill the funding gap in the
needs of all the public schools covered by the province.

Finally, the corollary budget allocation shall be complementary to the budget of

the national programs.

1.4.2 Budget Authorization

Step 4.

The SEF budget prepared by the division superintendent, city superintendent or

district supervisor, as the case may be, shall be submitted to the School Board,
chaired/co-chaired by the LCE and the division superintendents of schools, for
approval. The affirmative vote of the majority of all the members of the LSB shall

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be necessary to approve the SEF budget, through an LSB Resolution (Section
100 [b] of the LGC).

1.4.3 Budget Execution

Step 5.

The SEF shall be released exclusively for the specific purpose for which they
have been allocated in the approved School Board Budget.

Step 6.
Disbursements shall be made in accordance with the “authority to disburse”
issued by the LSB to the provincial, city, and municipal treasurer (Section 99 [b]
of the LGC), subject to existing accounting and auditing rules.

1.4.4 Budget Accountability

Step 7.

A quarterly report of the SEF utilization shall be prepared and submitted by the
LSB to the DepEd Regional Offices (ROs), copy furnished the DBM ROs and the
DILG ROs. The quarterly reports shall be submitted one (1) week after the end
of each quarter. For this purpose, the Report of SEF Utilization shown in SEF
Budget Accountability Form No. 1 shall be used (Annex B of DepEd-DBM-DILG
JC No. 1, s. 2017).

Step 8.

The LSB shall post the utilization report of the SEF Budget in the website of the
LGU and/or in at least three (3) conspicuous public places for transparency and
accountability in compliance with the Full Disclosure Policy of the DILG.

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CHAPTER 2. SPECIAL HEALTH FUND

2.1 Legal Bases

Section 41 (d) of RA No. 11223, otherwise known as the Universal Health Care
(UHC) Act, specifies that the LGUs that commit to the integration of local health
systems into Province-Wide/City-Wide Health Systems (P/CWHS) shall exhibit
managerial integration in the first three (3) years from the enactment of the UHC
Act, and financial integration within the next three (3) years thereafter.

Section 20 of the same Act provides that all resources intended for health
services to finance population-based and individual-based health services,
health system operating costs, capital investments, and remuneration of
additional health workers and incentives for all health workers shall be pooled to
the Special Health Fund (SHF).

2.2 Policy Guidelines

The implementing guidelines on the utilization of the SHF was provided in the
DOH- DBM- DOF- DILG-Philippine Health Insurance Corporation (PhilHealth)
JMC No. 2021-0001 dated January 13, 2021, entitled, “Guidelines on the
Allocation, Utilization, and Monitoring of, And Accountability for, the Special
Health Fund.”

The SHF shall be treated as a separate type of Special Fund by the Province,
HUC and ICC levels participating in the P/CWHS, and is deemed automatically
appropriated for health expenditures.

2.3 Fund Sources of SHF

The fund sources for the SHF shall be as follows, consistent with Section 20.1 of
the IRR of the UHC Act:

a. Financial grants and subsidies from NGAs, such as the DOH, as included
in the GAA in accordance with Section 22 of the IRR of the UHC Act;

b. Income from PhilHealth payments as provided under Section 21 of the

IRR of the UHC Act;

c. Donations and financial grants from CSOs, including faith-based

organizations, and official development assistance from the International
Health Partners (IHPs); and

d. Other fund sources, which may include, among others, provincial, city, and
municipal budgets intended for health through a mechanism of
cooperative undertakings as provided under Section 33 of the LGC.

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2.4 Allowable Expenses Chargeable Against the SHF

The SHF shall be used to augment LGU funds for health for the following
expenditure items as determined and approved by the Provincial/City Health
Board (P/CHB) consistent with Section 20.2 of IRR of RA No. 11223:

2.4.1 Population-based health services, which include the following:

a. Environmental health services, including vector control, water

quality, and sanitation;

b. Health promotion programs or campaigns;

c. Epidemiology and disease surveillance;

d. Services related to disease elimination;

e. Services related to preparedness and response to public health

emergencies or disasters; and

f. Other health services will be classified by DOH as population-based

health services in subsequent guidelines.

2.4.2 Individual-based health services, which include the following:

a. Ambulatory and inpatient care;

b. Medicines;

c. Laboratory tests and procedures; and

d. Other health services will be classified by DOH and PhilHealth as

individual-based health services in subsequent guidelines.

2.4.3 Health systems operating costs, which include the following:

a. Support to the management of the health system, including the

operations of the P/CHWS, health board, and operations and hiring
of personnel for the Management Support Unit as provided in DOH-
DBM-DOF-DILG-PhilHealth JMC No. 2021-0001;

b. Gasoline for ambulances, patient transport vehicles, vehicles used

for delivery of health services and transportation of health
commodities and diagnostic specimens;

c. Fees that form part of accreditation and licensing requirements;

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 d. Learning and development interventions or capacity building
activities, including registration/participation fees related to the
efficient and effective delivery of health services and management
of the health systems, as determined by the P/CHB; and

e. Conduct of trainings, seminars, conferences or conventions relevant

to the management of health systems and delivery of health
services.

2.4.4 Capital investments based on health facility development plan, which

include the following:

a. Health infrastructure, including facility improvements related to direct

delivery of health services;

b. Health equipment and instruments;

c. Information technology and equipment for health facilities;

d. Ambulances and patient transport vehicles, subject to existing

guidelines; and

e. Mobile clinics and other ambulatory health services, subject to

existing guidelines.

2.4.5 Remuneration of additional health workers until such time that the LGUs
have implemented incremental creation of plantilla positions to hire the
required number of health care workers based on the standards
determined by the DOH, subject to PS Limitation pursuant to Section 325
(a) of the LGC. The salary schedule shall be based on prevailing Salary
Standardization Laws and other relevant laws, rules, and regulations
governing the salaries and benefits of public health workers. The
corresponding salary shall not exceed the rates being implemented in the
concerned LGU.

2.4.6 Incentives for all health workers, including Barangay Health Workers and
Barangay Nutrition Scholars, within the territorial jurisdiction of the P/CHB.
The allocation mechanism shall be decided upon by the Health Board.

2.5 Steps in the Establishment of the SHF

2.5.1 An SHF depository bank account shall be created in accordance with the
existing DOF-BLGF Guidelines on AGSBs and other relevant issuances.

The P/CHB to issue a resolution on the opening of the SHF account. The
concerned Sanggunian Panlalawigan/ Panlungsod (SP) will then issue a
resolution endorsing the P/CHB resolution on the opening of the SHF
account.

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 2.5.2 A separate book of accounts with complete financial reporting obligations
shall be created and maintained by the Provincial/ City Accountant at the
Province, HUC, and ICC levels. Subsidiary ledgers shall likewise be
created for each identified fund source.

2.5.3 If funds shall be transmitted to the component LGUs from the SHF, these
funds shall be transferred to the Trust Fund of the component LGUs. A
subsidiary ledger in the Trust Fund shall be created for this purpose.

2.6 Planning and Budgeting for the SHF

The P/CHB, through the Provincial/ City Health Office, shall facilitate the
formulation of the Local Investment Plan for Health (LIPH) and Annual
Operational Plan (AOP) of the P/CWHS. These plans shall be aligned with the
Local Development Plan, and Medium-Term and AIP of the concerned LGUs.

The LIPH and AOP shall then serve as the bases for SHF budget preparation,
PPMP and APP to support the requirements and/or cost estimates of the different
expenditure items as embodied in the proposed budget.

Timelines for the SHF planning and budgeting shall be in accordance with LGU
planning and budgeting guidelines issued by DBM and other concerned NGAs.

The P/CHB shall consider the timelines of the local budget process to effectively
integrate into its annual budget the local counterpart funds of the participating
LGUs.

Budget Preparation

• P/CHB to convene and prepare the estimates of income from PhilHealth

payments and indicative amounts from DOH, among others, that will form
part of the SHF, and expenditure items that will be sourced from the SHF.
This shall include the percentage of the SHF that shall be retained at the
provincial/city level and those that shall be downloaded to the component
LGUs.

• The SHF Budget shall be presented by PPAs and by expense class using
SHF Budget Preparation Form No. 1.

• The allocation of the SHF shall be decided upon by the P/CHB, in

consultation with component LGUs and based on their respective investment
plan for health. The P/CHB may transfer either an agreed amount or
percentage to the component LGUs/LEE or through a mechanism based on
the performance of the component LGUs/LEE. The setting-up and operation
of LEE shall be in accordance with existing DBM guidelines.

• The amount that will be retained at the province level shall be used for
operating expenses and equity considerations, as decided upon by the PHB.
At the minimum, the number of Geographically Isolated and Disadvantaged

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 Areas, number of Indigenous Cultural Communities/Indigenous Peoples,
and health status of component LGUs, prioritizing national health indicators
in the national plans, shall serve as bases for additional financial support to
component LGUs.

Budget Authorization

• A P/CHB Resolution approving the budget for priority health programs,

projects and activities within the P/CWHS shall be formulated using the SHF
Budget Authorization Form No. 1.

• The P/CHB Resolution on the SHF budget, as well as the LIPH, AOP and
annual budgetary proposals, shall be deliberated, endorsed and/or approved
by the chairperson, the vice-chairperson and a majority of the members of
the P/CHB.

• The P/CHB shall furnish the DOH and PhilHealth copies of the approved
SHF budget.

Budget Execution

• The Provincial/City Budget Officer, Treasurer, and Accountant shall be

furnished with a copy of the approved Board Resolution as basis for
certification of availability of funds, disbursement and for recording purposes

• A copy of approved Board Resolution shall be furnished to Component

LGUs, hospitals and/or LEE for recording purposes.

• The Provincial/City Accountant shall issue the certification of availability of

funds for the SHF.

• The SHF shall be released exclusively for the specific purpose for which they
have been allocated in the approved SHF Budget.

• In addition to existing government budgeting, accounting, and auditing rules

and regulations, all disbursements from the SHF shall be in accordance with:

1. Allowable expenses chargeable against the SHF;

2. The LIPH and AOP;
3. Contractual arrangement between DOH and the P/CHB;
4. Contractual arrangement between PhilHealth and the P/CHB; and
5. Contractual arrangement between the CSO/ IHP, and P/CHB.

• The authorized signing official/s for the disbursement of funds shall be in

accordance with the LGC and the UHC Act.

• Any procurement chargeable against the SHF shall be in accordance with

RA No. 9184, its IRR as amended, GPPB guidelines and other related
issuances.

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 Budget Accountability

• Quarterly and annual reports shall be submitted to DOH and PhilHealth using
the SHF Budget Accountability Form Nos. 1 and 2 on SHF utilization and
other prescribed forms, copy furnished the component LGUs, P/CHO and
hospitals.

• The utilization reports of the SHF budget shall be posted in the website of
the P/CHWS and involved LGUs, and/or in at least three (3) conspicuous
public places in compliance with the Full Disclosure Policy of DILG.

The budget process of the SHF may be guided by the following timelines:
Table 17. Timelines for the Budget Process of SHF

Planning-
Budgeting Specific Activities Timeline
Framework
Planning for Formulation of the AOP of the 4th quarter, two (2) years
SHF P/CWHS prior to the budget year
covered by the AOP

Submission of copies of the AOP to the 3rd quarter of the year

DOH and PhilHealth. preceding the budget
year covered by the AOP
Budget Preparation of the estimates of 3rd quarter of the
Preparation income and expenditure items that will preceding year
be sourced from the SHF

Budget Issuance of resolution to authorize and 1st quarter of the current

Authorization approval of the SHF budget and the year
utilization of funds.

Submission of the copies of approved

SHF budget to the DOH and PhilHealth
Budget Submission of the copy of approved 1st quarter of the current
Execution Board Resolution to the Provincial/ City year
Budget Officer, Treasurer and
Accountant
Issuance of certification of availability 1st quarter of the current
of funds for the SHF by the Provincial/ year
City Accountant
Furnishing a copy of approved Board 1st quarter of the current
Resolution to Component LGUs, year
hospitals and/or LEE for recording
purposes

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 Planning-
Budgeting Specific Activities Timeline
Framework
Budget Submission of required quarterly and Quarterly Reports: Not
Accountability annual reports using the SHF Budget later than the 20th day
Accountability Form No. 1 on SHF after the end of the
utilization and other prescribed forms quarter

Annual Reports: Not later

than the 15th day of
February of the following
year
Submission of liquidation reports of End of the current year or
cash advances and other supporting not later than the 20th of
documents January of the following
year
Posting of the utilization report of the 1st quarter of the
SHF budget succeeding year

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2.7 SHF Budget Preparation Forms

SHF Budget Preparation Form No. 1

INCOME AND EXPENDITURES ESTIMATES FOR FY _____

Provincial/City Health Board of _______
Province/City

Estimated Income for Budget Year xxx

Financial Grants and Subsidies from NGAs ………………………………………………… xxx
PhilHealth Payments ………………………………………………………………………… xxx
Donations from CSOs, and IHPs ……………………………………………………………. xxx
Concerned LGUs’ Local Budget intended for Health ……………………………………….. xxx
Other Sources ………………………………………………………………………………… xxx
Add: Previous Years Unexpended Balances
(including Continuing Appropriation) xxx
TOTAL xxx
Less: Continuing Appropriation xxx
Net Amount Available for Appropriation xxx

Proposed Expenditures for Budget Year

Source of
Fund Maintenance
Program/ (NGA grants, and Other
PhilHealth payments, Personal Capital
Rank Project/ Operating Total
donations, LGU budget, Services Outlays
Activity others) Expenses

Total Expenditures
xxx xxx xxx xxx xxx
for FY

Balance/Deficit xxx xxx xxx xxx xxx

Prepared by:

________________________
Chairman of Provincial/City Local Health Board or his/her Authorized Representative

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SHF Budget Authorization Form No. 1

Provincial/City Board of _______________

Local Health Board of _________________________________
Province/City

______________ Regular Session

Begun and held in ______________, ________________, on ________ day of

________________, ____________.

Provincial/City Health Board Resolution No. _________________________

A RESOLUTION APPROVING THE BUDGET FOR PRIORITY HEALTH PROGRAMS,

PROJECTS AND ACTIVITIES WITHIN THE PROVINCE-WIDE/CITY-WIDE HEALTH
SYSTEM

Be it resolved by the Provincial/City Health Board of _____________________________ in

Council assembles:

Section 1. Source of Funds. The following income as indicated herein are hereby declared
as sources of funds, particularly income derived from PhilHealth payments shall accrue to the
Special Health Fund, necessary to finance the implementation of priority health programs,
projects and activities of the Province/City of _______ from January 1 to December 31, 20__,
except otherwise specifically provided herein:

Estimated Income for Budget Year P________

Financial Grants and Subsidies from NGAs ________
PhilHealth Payments ________
Donations from CSOs and IHPs ________
Concerned LGUs’ Local Budget intended for Health ________
Other Sources
Add: Previous Years Unexpended Balances
(including Continuing Appropriation) ________
Gross Income ________
Less: Continuing Appropriation ________
Net Amount Available for Appropriation ________

Section 2. Allocation of Funds. The following sums are hereby allocated out of the herein
sources of the Special Health Fund and any unexpended balances thereof in the Local
Treasury of the Province/City for the implementation of priority health programs, projects and
activities in the Province/City of _______ from January 1 to December 31, 20__:

Expenditure Program for Budget Year

Source of Fund Maintenance

Program/
(NGA grants, PhilHealth Personal and Other Capital
Rank Project/ Total
payments, donations, LGU Services Operating Outlays
Activity budget, others) Expenses

Total xxx xxx xxx xxx xxx

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Expenditure Program for Budget Year

Schedule of
Rank Program/Project/Activity Expected Output
Delivery

Section 3. Effectivity. This Resolution shall take effect immediately upon its approval.

Date Adopted: _________________

Carried Unanimously,

Provincial/City Health Board Members

Names Signatures
_____________________ _____________________
_____________________ _____________________
_____________________ _____________________

I HEREBY CERTIFY to the correctness of the above-quoted Provincial/City Health Board Resolution.

________________________
Secretary-Designate of LHB
ATTESTED:

_______________________
Vice-Chairperson of P/CHB
APPROVED:

__________________________
Chairperson of P/CHB or his/her
Authorized Representative

Date: _____________________

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SHF Budget Accountability Form No. 1

REPORT OF UTILIZATION
For the Quarter Ending _____

Province/City Health Board of ________________

Receipt for the SHF P ______________

Less: DISBURSEMENTS (broken down by source of fund,

expense class and by object of expenditures)

Personal Services
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Maintenance and Other Operating Expenses

_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Capital Outlays
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Sub-total _______________
Balance P ______________

Prepared by:

________________________
Provincial/City Accountant

Approved by:

_____________________________
Chairman of Provincial/City Health Board
or his/her Authorized Representative

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SHF Budget Accountability Form No. 2

REPORT OF UTILIZATION
For the Quarter Ending _____

Province/City Health Board of ________________

Receipt for the SHF P ______________

Less: DISBURSEMENTS (broken down by source of fund,

expense class and by object of expenditures)

Sources of Fund Financial Grants and Subsidies from NGAs

(Principal PHB/CHB _________________________________________ _______________
share) _________________________________________
_________________________________________

PhilHealth Payments
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Donations from CSOs and IHPs

_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Concerned LGUs’ local Budget intended for Health

_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Share to component Share to component LGU 1

LGUs/LEEs _________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Share to component LGU 2

_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Share to LEE 1
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

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 Share to LEE 1
_________________________________________ _______________
_________________________________________ _______________
_________________________________________ _______________

Sub-total _______________
Balance P ______________

Prepared by:

________________________
Provincial/City Accountant

Approved by:

_____________________________
Chairman of Provincial/City Health Board
or his/her Authorized Representative

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PART V. FREQUENTLY ASKED
QUESTIONS (FAQs)

Budget Preparation
1. Does the LCE need to approve the Sanggunian Resolution approving the
AIP?

Yes. Section 54 (a) of the LGC provides that, “[e]very ordinance enacted by the
sangguniang panlalawigan, sangguniang panlungsod, or sangguniang bayan shall be
presented to the provincial governor or city or municipal mayor, as the case may be. If
the [LCE] concerned approves the same, he shall affix his signature on each and every
page thereof; otherwise, he shall veto it and return the same with his objections to the
sanggunian, which may proceed to reconsider the same. The sanggunian concerned
may override the veto of the [LCE] by two-thirds (2/3) vote of all its members, thereby
making the ordinance or resolution effective for all legal intents and purposes.”

Further, Section 55 (b) of the LGC provides that, “[t]he [LCE], except the punong
barangay, shall have the power to veto any particular item or items of an appropriations
ordinance, an ordinance or resolution adopting a local development plan and public
investment program, or an ordinance directing the payment of money or creating
liability. In such a case, the veto shall not affect the item or items which are not objected
to. The vetoed item or items shall not take effect unless the sanggunian overrides the
veto in the manner herein provided; otherwise, the item or items in the appropriations
ordinance of the previous year corresponding to those vetoed, if any, shall be deemed
reenacted.”

Conversely, Section 55 (c) of the same law provides that, “[t]he [LCE] may veto an
ordinance or resolution only once. The sanggunian may override the veto of the [LCE]
concerned by two-thirds (2/3) vote of all its members, thereby making the ordinance
effective even without the approval of the [LCE] concerned.”

2. Should the projects covered by continuing appropriations still be included

as part of the current year’s AIP?

No. It is no longer necessary to include projects covered by continuing appropriations

in the current year’s AIP considering that the said projects already formed part of
previously approved AIP/s covered by appropriation ordinance/s enacted in prior
year/s.

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3. Can the AIP cover only the twenty percent (20%) of the annual NTA for
development projects (20% DF) and not the total resource requirements for
a particular budget year?

No. The AIP should cover the total resource requirements, i.e., current operating
expenditures and capital outlays, including development projects chargeable against
the 20% DF, and not only the 20% DF for a particular budget year.

DILG-NEDA-DBM-DOF Joint Memorandum Circular (JMC) No. 1 dated November 18,

2016 defines AIP as the annual slice of the Local Development Investment Program,
which constitutes the total resource requirements for all PPAs consisting of the annual
capital expenditure (CapEx) and regular operating requirements of the LGU.

4. Do current year’s excess collections from business and real property taxes
and prior year’s surplus fall under the category of “funds actually available”
which may be used to fund a supplemental budget?

Yes. Both fall under the category of funds actually available.

The current year’s excess collections on business and real property taxes may be used
as funding source for supplemental budget, as long as they are shown to be in excess
of the target revenue collections for the year. Article 417 of the IRR of the LGC, as
amended by Administrative Order No. 47 dated April 12, 1993, provides, among
others, that:

“No ordinance providing for a supplemental budget shall be enacted except for
the following:

(a) When supported by funds actually available as certified by the local

treasurer; or by new revenue sources;

Funds actually available refers to the amount of money actually collected

as certified by the local treasurer during a given fiscal year which is over
and above the realized estimated income of that year. An appropriation
ordinance providing for the supplemental budget sourced out of funds
actually available shall be enacted only once during the fiscal year. x x x”

Likewise, prior year’s excess collections may be utilized to fund a supplemental budget
pursuant to Section 322 of the LGC which provides in part that, “[u]nexpended
balances of appropriations authorized in the annual appropriations ordinance shall
revert to the unappropriated surplus of the general fund at the end of the fiscal year
and shall not thereafter be available for the expenditure except by subsequent
enactment.”

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5. In the case of supplemental budgets, what amount will be certified as actually
available by the local treasurer and when is the fund considered actually
available?

Article 417 of the IRR of the LGC, as amended by Administrative Order No. 47 dated
April 12, 1993, provides, in part, as follows:

“ARTICLE 417. Changes in the Annual Budget. — Changes in the annual budget
may be done through supplemental budgets.

No ordinance providing for a supplemental budget shall be enacted except for the
following:

(a) When supported by funds actually available as certified by the local

treasurer; or by new revenue sources;

Funds actually available refers to the amount of money actually collected as

certified by the local treasurer during a given fiscal year which is over and
above the realized estimated income of that year. An appropriation
ordinance providing for the supplemental budget sourced out of funds
actually available shall be enacted only once during the fiscal year.

(b) In times of public calamity by way of budgetary realignment to set aside

appropriations for the purchase of supplies and materials or the payment of
services which are exceptionally urgent or absolutely indispensable to
prevent imminent danger to, or loss of, life or property, in the jurisdiction of
the LGU or in other areas declared in a state of calamity by the President.
Such ordinance shall clearly indicate the sources of funds available for
appropriations, as certified under oath jointly by the local treasurer and the
local accountant and attested by the local chief executive, and the various
items of appropriations affected, and the reasons for the change.”

6. Can the surplus from the Special Education Fund (SEF) be used to fund a
supplemental budget?

No. Surplus from the SEF or those arising from unexpended balances from the
previous year’s SEF may not be used to fund a supplemental budget of the General
Fund.

Section 272 of the LGC provides, among others, that, “the proceeds [referring to SEF]
shall be allocated for the operation and maintenance of public schools, construction
and repair of school buildings, facilities and equipment, educational research,
purchase of books and periodicals, and sports development as determined and
approved by the local school board.”

Relatedly, Section 309 (a) of the LGC requires every provincial, city, or municipal
treasury to maintain a special fund, particularly an SEF, “which shall consist of the
respective shares of provinces, cities, municipalities, and barangays in the proceeds
of the additional tax on real property to be appropriated for purposes prescribed in
Section 272 of [the] Code.”

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 Article 448 (b) of the IRR of the LGC prescribes that the special funds maintained by
the provincial, city or municipal treasury shall be deemed automatically appropriated
for purposes indicated therefor.

7. What is Personal Services (PS)?

Section 306 [k] of the LGC defines PS as appropriations for the payment of salaries,
wages, and other compensation of permanent, temporary, contractual, and casual
employees of the LGU.

Other compensation consists of the following:106

Authorized Allowances/Benefits

Personnel Economic Relief Allowance

Uniform/Clothing Allowance
Representation and Transportation Allowances
Mid-Year Bonus
Year-End Bonus and Cash Gift
Magna Carta Benefits of Public Health Workers
Magna Carta Benefits of Public Social Workers
Step Increment and Merit Increase
Productivity Enhancement Incentive
Other legally authorized allowances/benefits (e.g., Loyalty Award, Anniversary
Bonus, among others)

Fixed Personnel Expenditures

Employees' Compensation Commission Contributions

PhilHealth Contributions
Pag-IBIG Contributions
Retirement and Life Insurance Contributions

Other Personnel Benefits

Retirement Gratuity Benefits

Terminal Leave Benefits
Monetization of Leave Credits

106
See Local Budget Circular No. 145 dated March 2, 2022, entitled, “Guidelines on the Implementation of Personal Services
(PS) Limitation on Local Government Budgets and Determination of Waived PS Items Pursuant to Section 93 of the General
Provisions (GPs) of the Fiscal Year (FY) 2022 General Appropriations Act (GAA), Republic Act (RA) No. 11639, and Years
Thereafter”

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8. What is the legal basis for the PS Limitation?

Section 325 (a) of the LGC prescribes that, “[t]he total appropriations, whether annual
or supplemental, for personal services of a local government unit for one (1) fiscal year
shall not exceed forty-five percent (45%) in the case of first to third class provinces,
cities and municipalities, and fifty-five percent (55%) in the case of the fourth class or
lower, of the total annual income from regular sources realized in the next preceding
fiscal year. The appropriations for salaries, wages, representation and transportation
allowances of officials and employees of the public utilities and economic enterprises
owned, operated, and maintained by the local government unit concerned shall not be
included in the annual budget or in the computation of the maximum amount for
personal services. The appropriations for the personal services of such economic
enterprises shall be charged to their respective budgets.”

Section 331 (b) of the same law provides that, “[t]he total annual appropriations for
personal services of a barangay for one (1) fiscal year shall not exceed fifty-five
percent (55%) of the total annual income actually realized from local sources during
the next preceding fiscal year.”

9. How is the PS Limitation computed for existing LGUs?

The PS Limitation in an LGU budget for a budget year shall be determined as

follows:107

For an Existing Province, City, or Municipality

a. Compute the Total Annual Income from Regular Sources realized in the next
preceding fiscal year (TIRS), based on the trial balance as of December 31 of
said year which should be the amount reflected in the Local Budget Preparation
Form No. 1 (Budget of Expenditures and Sources of Financing).

b. Compute the PS Limitation by using the following formula, as applicable:

PS Limitation, 1st to 3rd class PCM = (45%) (TIRS)

PS Limitation, 4th to 6th class PCM = (55%) (TIRS)

For an Existing Barangay

a. Compute the Total Income Actually Realized from Local Sources during the next
preceding fiscal year (TILS), based on the trial balance as of December 31 of
said year.

b. Compute the PS Limitation by using the following formula:

PS Limitation, Barangay = (55%) (TILS)

107
See Local Budget Circular No. 145 dated March 2, 2022, entitled, “Guidelines on the Implementation of Personal Services
(PS) Limitation on Local Government Budgets and Determination of Waived PS Items Pursuant to Section 93 of the General
Provisions (GPs) of the Fiscal Year (FY) 2022 General Appropriations Act (GAA), Republic Act (RA) No. 11639, and Years
Thereafter”

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10. How is the PS Limitation computed for new LGUs?

For the initial year of its creation, the PS Limitation on the annual and supplemental
budget/s of a newly-created LGU shall be based on the total estimated income to be
generated by the LGU during the year from both internal sources, such as share from
local taxes, fees, and charges, and external sources, such as shares of LGUs from
the National Tax Allotment (NTA) and utilization and development of the national
wealth, among others. It must be understood that, in determining the total estimated
income, the LGU shall not include the financial subsidies/assistance that it may
receive from the National Government and other extraordinary receipts, such as
loans, donations, capital income, and other non-recurring income.

For the year immediately following the initial year of its creation, the PS Limitation on
the annual and supplemental budget/s of a newly-created LGU shall be based on the
total income generated by the LGU in the preceding year, applying the specific types
of income to be included and excluded as cited in the preceding paragraph.

In the succeeding years, Sections 325 (a) and 331 (b) of the LGC, as the case may
be, shall already govern the computation of the PS limitation on the annual and
supplemental budget/s of newly-created LGUs.108

11. What are waived PS Items?

Waived PS items are those that are excluded from the computation of PS Limitation
prescribed under Sections 325 (a) and 331 (b) of the LGC.109 The waived PS items
are specified in the pertinent General Provision (GP) of the annual General
Appropriations Act (GAA).

For FY 2023, pursuant to Section 95 of the GPs of the FY 2023 GAA, RA No. 11963,
the enforcement of the PS Limitation under Sections 325 (a) and 331 (b) of the LGC,
shall be waived to enable LGUs to:

a. Absorb the cost of hospital services transferred from provinces to newly-

created cities;

b. Pay the Collective Negotiation Agreement Incentives of their employees;

c. Pay the Retirement Gratuity Benefits and Terminal Leave Benefits, including
the monetization of Leave Credits of their employees;

d. Pay the minimum Year-End Bonus of One Thousand Pesos (P1,000) for the
Punong Barangay and Six Hundred Pesos (P600) for other mandatory
barangay officials, and their Cash Gifts;

e. Pay the salaries and benefits of health/medical personnel that may be hired to
perform functions related to emergency situations;

108
See Local Budget Circular No. 145 dated March 2, 2022, entitled, “Guidelines on the Implementation of Personal Services
(PS) Limitation on Local Government Budgets and Determination of Waived PS Items Pursuant to Section 93 of the General
Provisions (GPs) of the Fiscal Year (FY) 2022 General Appropriations Act (GAA), Republic Act (RA) No. 11639, and Years
Thereafter”
109
Same as above

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 f. Pay the special benefits that may be authorized to be granted to LGU
personnel during emergency situations;

g. Pay the salary differentials of LGU-hired Public Health Workers to fully

implement the provisions of RA No. 7305; and

h. Pay the salaries and other benefits of additional personnel that may be hired
by the LGUs to implement the devolved basic services and functions, subject
to the guidelines issued by the Department of Budget and Management (DBM).

12. In relation to the creation of non-mandatory positions and offices, does the
requirement of full implementation of the Salary Standardization Law (SSL)
refer to the implementation of 100% of a specific tranche or 100%
implementation of the four (4) tranches?

The “full Implementation of the SSL” as a requirement for the creation of non-
mandatory positions and offices is complied with when the salary rates of LGU
personnel already correspond to the maximum allowable percentage of the salary
schedule applicable to the particular LGU based on its income class for a specific year
or tranche.

For instance, a first-class province is considered to have fully implemented the SSL if
the modified salary schedule that it adopts for a specific year or tranche is one
hundred percent (100%) of the salary schedule for NGAs prescribed for the same
specific year or tranche, as authorized pursuant to RA No. 11466 or the Salary
Standardization Law of 2019 and the pertinent guidelines issued by the DBM.

On the other hand, a sixth-class province is considered to have fully implemented the
SSL if the modified salary schedule that it adopts for a specific year or tranche is
seventy-five percent (75%) of the authorized salary schedule for NGAs prescribed for
the same specific year or tranche.

13. Is the inclusion of appropriation for Early and Voluntary Separation

Incentive Program (EVSIP) legally tenable?

No. It is not legally tenable. An early retirement program to be valid should be by virtue
of a valid reorganization pursuant to a law passed by Congress. Although local
autonomy grants local governments the power to streamline and reorganize as may
be inferred from Sections 16 and 76 of the LGC, it does not confer authority upon any
LGU to create a separate and supplementary retirement benefit plan.

Section 28 (b) of Commonwealth Act No. 186, as amended, prohibits government

agencies from establishing supplementary retirement or pension plans from the time
the Government Service Insurance System charter took effect, while those plans
already existing when the charter was enacted were declared abolished. The purpose
behind the proscription found in Section 28 (b), as amended, was to address the need
to prevent the proliferation of iniquitous plans. According to the Supreme Court:

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 “x x x Sec. 28 (b) as amended by RA 4968 in no uncertain terms bars the
creation of any insurance or retirement plan – other than the GSIS – for
government officers and employees, in order to prevent undue and
inequitous proliferation of such plans. x x x. To ignore this and rule
otherwise would be tantamount to permitting every other government
office or agency to put up its own supplementary retirement benefit plan
under the guise of such ‘financial assistance’.”110

14. Can the LGU provide appropriations for Monetization of Leave Credits?

Generally, Monetization of Leave Credits is chargeable against savings. However,

under CSC-DBM Joint Circular No. 2, s. 2003, Monetization of Leave Credits, CNA
Incentive, Overtime Pay, and such other benefits that are authorized by law but are
chargeable against savings of the LGUs may also be included by direct appropriation
either in the annual budget or supplemental budget of the LGU concerned, provided
these are within the PS Limitation, as stipulated under Section 325 (a) of the LGC.

15. How is the CNA Incentive classified in the budget?

The CNA Incentive shall be taken up as PS Expenditure.

Budget Authorization
16. Does the proposed ordinance covering the grant of authority to the LCE
and/or the Presiding Officer of the Sanggunian to use savings and augment
within the same expense class in their respective appropriations under
Section 336 of the LGC need to emanate from the LCE like that of a
supplemental budget?

No. The proposed ordinance granting the authority to use savings under Section 336
of the LGC need not emanate from the LCE unlike that of a supplemental budget.

A supplemental budget reflects changes in the annual budget under the conditions
provided in Section 321 of the LGC and Article 417 of its IRR as amended by
Administrative Order No. 47 dated April 12, 1993. Accordingly, since the annual budget
emanates from the LCE as provided under Section 318 of the LGC, the supplemental
budget should likewise emanate from the LCE.

On the other hand, the proposed ordinance granting authority to use savings under
Section 336 of the LGC is not a budget and need not emanate from the LCE.

110
Conte vs. Commission on Audit, G.R. No. 116422, November 4, 1966

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17. Can the Sanggunian increase items of appropriation in the executive
budget?

Yes, provided that the aggregate increase does not result to an excess over the total
proposed amount in the executive budget pursuant to Article 415 (a) of the IRR of the
LGC.

As a reference, the ruling in Sarmiento, et al. vs. The Treasurer of the Philippines, et
al., may be applied wherein the Supreme Court agreed with the claim of the Solicitor
General that, “Congress is enjoined from increasing the total budget for the operation
of the Government as recommended by the President, not the individual items of
appropriations.” “Records of the 1986 Constitutional Commission reveal that the
purpose of the above-quoted provision [Section 25 (1), Article VI of the 1987
Constitution] is to avoid the possibility of a big budget deficit if Congress were given
an unbridled hand in passing upon the appropriations recommended by the President
as specified in the budget. The constitutional prohibition against such increase is an
assurance that the expected income of the government will be sufficient for the
operational expenses of its different agencies and projects specified in the
appropriations law.111

It may be noted that the subject provision of the LGC prohibiting the increase in the
proposed amount in the executive budget is similar to the provision in Executive Order
No. 292 (the Administrative Code of 1987), particularly Section 24, Chapter 4 on
Budget Authorization, Book VI, in the case of national government budgeting, to wit:

“SEC. 24. Prohibition Against the Increase of Appropriation. – The Congress

shall in no case increase the appropriation of any project or program of any
department, bureau, agency or office of the Government over the amount
submitted by the President in his budget proposal. In case of any reduction
in the proposed appropriation for a project or program, a corresponding
reduction shall be made in the total appropriation of the department, office or
agency concerned in the total of the General Appropriations Bill.”

18. Can the LCE veto an item of appropriation that was deleted by the
sanggunian during budget authorization?

No. The LCE can only veto existing items of appropriations in the annual budget
approved by the sanggunian. Since the items of appropriations have been deleted by
the sanggunian, there is no existing item of appropriation that could be validly vetoed
by the LCE.

Section 55 (b) of the LGC expressly provides that, “[t]he local chief executive, except
the punong barangay, shall have the power to veto any particular item or items of an
appropriations ordinance x x x.”

111
G.R. Nos. 125680 and 126313, September 4, 2001

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19. What are the effects of veto by the LCE?

Section 55 (b) of the LGC provides that the veto shall not affect the item or items which
are not objected to. Further, the vetoed item or items shall not take effect, unless the
sanggunian overrides the veto by two-thirds (2/3) vote of all its members pursuant to
Section 55 (c) of the LGC.

In the event that the sanggunian fails to override the veto, the item or items in the
appropriations ordinance of the previous year corresponding to those vetoed, if any,
shall be deemed reenacted (Section 55 [b] of the LGC).

20. Can the appropriation for development projects of no less than twenty
percent (20%) of the NTA be appropriated in a lumpsum amount?

Generally, the appropriation for the 20% Development Fund (DF) should be in the form
of itemized projects. Section 287 of the LGC provides that each LGU shall appropriate
in its annual budget no less than twenty percent (20%) of its annual NTA for
development projects. Article 384 of the IRR of the LGC further provides that it shall
be mandatory for each LGU to set aside in its annual budgets amounts no less than
twenty percent (20%) of its NTA for the next year as appropriation for local
development projects that are embodied or contained in local development plans.

Article 454 (d) of the same IRR provides further, to wit:

(d) Disbursements of Appropriations for Development Projects — Art. 391 of Rule

XXXII of these Rules mandate each LGU to appropriate their share in the
proceeds from the development and utilization of the national wealth to finance
local development and livelihood projects, respectively.

Disbursements from such special accounts under the General Fund shall
proceed from itemized appropriations in the budgets of LGU instead of by
lumpsum. Such itemized appropriations shall be for specific development
projects/activities embodied in the local development plan and/or public
investment program formulated and prioritized by the Local Development
Council and approved by the sanggunian concerned. x x x”

21. What is the implication if the LGU appropriated the 20% DF in lumpsum
amount?

In the case of Verceles vs. COA (G.R. No. 211553, September 13, 2016), the SC ruled
in part, as follows:

“While a blanket authority is not per se ineffective, it does not suffice for purposes
of implementing projects funded by lump-sum appropriations. The nature of
lump-sum appropriations vis-a-vis the power of the purse of the SP (as the
legislative organ of the LGU) requires the local chief executive to obtain definite
and specific authorizations before he can enter into contracts funded by lump-
sum appropriations. The exception is when the appropriation ordinance already

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262
identifies the specific projects and the costs of the projects to be funded by lump-
sum appropriations.

We elaborate on these points below.

First, the nature of a lump-sum appropriation requires specific

authorization from the SP before projects funded by it can be implemented.

The LGC defines appropriation as the authorization made by ordinance, directing

the payment of goods and services from local government funds under specified
conditions or for specific purposes. The power of appropriation involves (a) the
setting apart by law (in the case of LGUs, by ordinance) of a certain sum from
the public revenue for (b) a specified purpose. Lump-sum, on the other hand,
means 'consisting of a single sum of money.' Lump-sum appropriation is thus a
single sum of money set aside by the legislature for a specified purpose.

Relevant in the present case is the EDF, a lump-sum fund intended for the
economic development projects of the Province. The description 'economic
development,' by itself, is a generic term as it does not readily specify the projects
that may be covered by the lump-sum appropriation. To stress, the CY 2001
appropriation ordinance did not at all identify the projects to be funded by the
EDF. On this basis, Verceles should have clearly obtained prior approval from
the SP before he entered into the first MOA.

Quisumbing instructs us that should the appropriation ordinance describe the

projects in generic terms, there is a need for a covering contract for every specific
project that in turn requires approval by the sanggunian. Thus, the blanket
authority, even granting that Verceles vetoed its revocation, was not a sufficient
authority for him to enter into the first MOA as he was not specifically authorized
to do so.

Second, the power of the purse of the SP requires the governor to obtain prior
authority before he can implement projects funded by lump-sum appropriations.

The SP, as the legislative organ of the province, exercises the power of the purse
in much the same way as the Congress does at the national level.

The SP decides how the provincial budget will be spent; what projects, activities
and programs to fund; and the amounts of money to be spent for each project,
activity or program. On the other hand, the governor, as the local chief executive
tasked to enforce ordinances, is expected to faithfully execute the appropriation
ordinance and to spend the budget in accordance with its provisions.

In the landmark case of Belgica v. Secretary Ochoa, the Court had the
opportunity to discuss the characteristics of the Priority Development Assistance
Fund (PDAF) as a lump-sum amount of money given to individual legislators.
We held that -

[w]hat beckons constitutional infirmity are appropriations which merely

provide for a singular lump-sum amount to be tapped as a source of
funding for multiple purposes. Since such appropriation type necessitates
the further determination of both the actual amount to be expended and

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 the actual purpose of the appropriation which must still be chosen from
the multiple purposes stated in the law, it cannot be said that the
appropriation law already indicates a "specific appropriation of
money" and hence, without a proper line-item which the President may
veto. [emphasis and underscoring supplied]

Using this as parameter, we note that the CY 2001 EDF is akin to the PDAF as
they are both singular lump-sum amounts to be tapped as a funding source for
multiple purposes. They are both described in generic terms (‘economic
development fund’ and ‘priority development assistance fund’), which requires
the further determination of the actual amount to be spent and the actual purpose
of the appropriation.

We employ the above analogy to emphasize that the 2001 EDF was not a
specific appropriation of money as Verceles would want the Court to believe in
his attempt to justify the first MOA. At the time the SP enacted the 2001
appropriation ordinance, it had not yet set apart certain sums of money from the
EDF for specified purposes. In other words, the SP had not yet completely
exercised its power of the purse such that all the governor had to do was to
implement the projects identified in the appropriation ordinance. On the contrary,
the 2001 EDF did not specify the projects to be funded.

Further, Section 6 of the 2001 appropriation ordinance stated that ‘appropriations

under the 20% EDF shall be approved by the Sanggunian Panlalawigan.’
Obviously, the SP wanted to ensure that the projects to be funded by the EDF
still go through the deliberations of the SP members precisely because these
projects had not been previously identified and approved by the SP.

Since the 2001 EDF was a lump-sum amount not yet apportioned to
specified development projects, Verceles needed to secure prior authority
from the SP. Having failed to secure prior authority, the first MOA was
unauthorized and properly disallowed.” (Emphasis supplied)

22. Is an Appropriation Ordinance necessary to authorize utilization of loan

proceeds?

Yes. An Appropriation Ordinance is necessary to authorize utilization of loan proceeds.

Section 313 of the LGC provides that LGUs shall maintain special accounts in the
general fund for loans, interests, bond issues, and other contributions for specific
purposes. In this regard, the rule under Section 305 (a) of the LGC shall apply, which
prescribes that no money shall be paid out of the local treasury except in pursuance
of an Appropriation Ordinance or law.

23. Is an Appropriation Ordinance necessary to authorize the use of the shares

in the proceeds from the development and utilization of the national wealth?

Yes. Article 391 of the IRR of the LGC provides that the proceeds from the shares of
LGUs in the proceeds from the development and utilization of the national wealth shall
be appropriated by their respective sanggunian to finance local development and
livelihood projects, provided that at least eighty percent (80%) of the proceeds derived

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264
 from the development and utilization of hydrothermal, geothermal, and other sources
of energy shall be applied solely to lower the cost of electricity in the LGU where such
source of energy is located.

Article 454 (d) of the same IRR reiterates this mandate and provides further that
disbursements from such special accounts under the General Fund shall proceed from
itemized appropriations in the budgets of LGU instead of by lump sum.

Such itemized appropriations shall be for specific development projects/activities

embodied in the local development plan and/or public investment program formulated
and prioritized by the LDC and approved by the sanggunian concerned.

24. Section 53 of the LGC provides that, “[a] majority of all the members of the
sanggunian who have been elected and qualified shall constitute a quorum
to transact official business.”

a. What comprises a “quorum,” and “majority” in the Sanggunian?

Quorum is defined as that number of members of a body which, when legally

assembled in their proper places, will enable the body to transact its proper
business or that number which makes a lawful body and gives it power to pass
upon a law or ordinance or do any valid act. 112

Section 53 of the LGC requires that the majority of all members of the sanggunian
who have been elected and qualified shall constitute a quorum to transact official
business.

Majority, when required to constitute a quorum, means the number greater than
half or more than half of any total. 113

b. Is the Presiding Officer included in the determination of the entire membership of

the Sanggunian for purposes of computing the quorum? Can the Presiding
Officer vote?

In the case of Javier and Piccio III vs. Cadiao, et al.,114 the SC ruled, to wit:

“The Vice Governor, as the Presiding Officer, shall be considered a part

of the SP for purposes of ascertaining if a quorum exists. In determining
the number which constitutes as the majority vote, the Vice Governor is
excluded. The Vice Governor's right to vote is merely contingent and
arises only when there is a tie to break.”

c. What constitutes simple majority and qualified majority?

Generally, ordinary measures require for its enactment only the approval of a
simple majority of the sanggunian members present, there being a quorum.
These pertain to the normal transactions of the sanggunian which are approved
by the sanggunian through a vote of simple majority of those present. On the
112
Javellana vs. Tayo as cited in Zamora vs. Caballero, G.R. No. 147767, January 14, 2004
113
Perez vs. Dela Cruz as cited in Zamora vs. Caballero
114
G.R. No. 185369, August 03, 2016

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 other hand, there are certain measures where the LGC requires for its approval
the vote of majority of all the members who were duly elected and qualified. This
is called approval by the qualified majority of the sanggunian. In this case, the
approval is to be voted not just by the majority of those present in a session there
being a quorum but by the majority of all the members of the sanggunian duly
elected and qualified regardless of whether all of them were present or not in a
particular session, there being a quorum.115

25. What shall be deemed as essential operating expenses? Can these include
all Prior Year’s Maintenance and Other Operating Expenses (MOOE)? If not,
who shall determine the same?

It is imperative to distinguish MOOE from essential operating expenses. MOOE is

defined as an allocation to support the operations of the LGUs including those for
supplies and materials, transportation and travel, utilities and other maintenance
activities.

On the other hand, essential operating expenses refers to specific objects of

expenditure under MOOE, which are of utmost importance, indispensable, and
extremely necessary for the continued operation of a particular LGU.

Determination of essential operating expenses in the executive branch shall be made

by the LCE, while for the legislative branch, it shall be done by the Vice-LCE.

As a reference, in Atienza vs. Villarosa, the SC ruled that “[t]he Vice-Governor, as the
presiding officer of the Sangguniang Panlalawigan, has administrative control of the
funds of the said body. Accordingly, it is the Vice-Governor who has the authority to
approve disbursement vouchers for expenditures appropriated for the operation of the
Sangguniang Panlalawigan.”116

26. What is the voting requirement to pass an Appropriation Ordinance?

In Municipality of Corella vs. Philkonstrak, the SC ruled as follows:

“An appropriation ordinance requires the affirmative vote of a majority of

all the sanggunian members.

Article 107(g) of the IRR of the Local Government Code provides the general
rule that no ordinance or resolution shall be passed by the sanggunian without
prior approval of a majority of all the members present. The exception to the
general rule is that for ordinances or resolutions authorizing or directing the
payment of money or creating a liability, what is needed is the affirmative vote
of a majority of all the sanggunian members, whether present or not. Simply,
the quorum in the general rule depends on the number of the sanggunian
members present while the quorum in the exception depends on the total
number of sanggunian members voted into office.

115
La Carlota City vs. Rojo, GR No. 181367, April 24, 2012
116
G.R. No. 161081, May 10, 2005

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 In the case at bar, Corella asserts that Municipal Ordinance No. 2010-02, the
appropriation ordinance in question, directs and authorizes the payment of
money; thus, requires a majority vote of all the members of the sangguniang
bayan, not only of the members present. Thus, since the sangguniang bayan
of Corella is composed of a total of 11 members, the majority vote of six is
required in order for municipal ordinance no. 2010-02 to be valid and binding.

However, the municipal ordinance only obtained five affirmative votes, based
on the quorum on the sanggunian members present at that time, which was
eight members. Thus, Tocmo contends that Municipal Ordinance No. 2010-02
is null and void. Consequently, the contract between Corella and Philkonstrak
is null and void too.”

27. Section 320 of the LGC provides that “[t]he ordinance enacting the annual
budget shall take effect at the beginning of the ensuing calendar year. An
ordinance enacting a supplemental budget, however, shall take effect upon
its approval or on the date fixed therein.” Does this mean that the
requirement of publication under Section 59 of the LGC and Article 113 of its
IRR can already by dispensed with?

No. Posting and/or publication, as the case may be, of the appropriation ordinance is
required under Section 59 of the LGC. The word “shall” connoting mandatory character
or command117 was used by the law without any qualification or exemption, as follows:

“(a) Unless otherwise stated in the ordinance or resolution approving the local
development plan and public investment program, the same shall take effect
after ten (10) days from the date a copy thereof is posted in a bulletin board at
the entrance of the provincial capitol or city, municipal, or barangay hall, as the
case may be, and in at least two (2) other conspicuous places in the local
government unit concerned.” (Emphasis supplied)

“(d) In the case of highly urbanized and independent component cities, the
main features of the ordinance or resolution duly enacted or adopted shall, in
addition to being posted, be published once in a local newspaper of general
circulation within the city, provided, that in the absence thereof, the ordinance or
resolution shall be published in any newspaper of general circulation.” (Emphasis
supplied)

28. How may the use of savings and augmentation under Section 336 of the LGC
and the use of the savings as funds actually available for supplemental
budget under Article 417 of the IRR of the LGC, as amended by
Administrative Order No. 47 (implementing Section 321 of the LGC) be
distinguished?
The following table summarizes the distinctions between the use of savings under
Sections 336 and 321 of the LGC as aforementioned:

117
Jurisprudence and statutory construction teach us that the word "shall" connotes mandatory character; it indicates a word of
command, and one which has always or which must be given a compulsory meaning, and it is generally imperative or mandatory
in nature (Enriquez v. Enriquez, 505 Phil. 193, 199 [2005], as cited in UCPB General Insurance Company, Inc. vs. Hughes
Electronics Corporation, G.R. No. 190385. November 16, 2016)

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 SECTION 336 SECTION 321
REQUIREMENT (Use of savings and (Use of savings through
augmentation) Supplemental Budget)
What is the instrument Ordinance Appropriation Ordinance
required for authority? covering a supplemental
budget
Is there a need for a No need for a Supplemental budget
supplemental budget? supplemental budget needed
Where should the proposal From the LCE or the From the LCE only
emanate? Sanggunian

For provinces or highly No Yes

urbanized cities, will the
ordinance be subject to
review by DBM?

Nevertheless, as to voting requirement, the affirmative vote of a majority of all the

sanggunian members is required to pass an Appropriation Ordinance, whether for
annual or supplemental budget, under Article 107 (g) of the IRR of the LGC. Relatedly,
the use of savings and augmentation within the same expense class falls under the
category of “Use of Appropriated Funds and Savings” under Section 336 of the LGC.
Hence, if the Appropriation Ordinance requires qualified majority in its passage, it
follows that any modification in said appropriation will have to comply with the same
requirement.

29. Can the Sanggunian pass an Appropriation Ordinance covering a

supplemental budget for the current fiscal year after December 31?

No. The Sanggunian cannot pass an Appropriation Ordinance covering a

supplemental budget for the current year after December 31.

Supplemental budgets cover changes in the annual budget, thus, they should be
authorized within the fiscal year covered by the annual budget. Section 353 of the LGC
provides that the official fiscal year of LGUs shall be the period beginning with the first
(1st) day of January and ending with the thirty-first (31st) day of December of the same
year.

Further, the reversion of funds under Section 322 of the LGC is at the end of the fiscal
year (except in cases of continuing appropriations when the capital outlay projects are
not yet completed).

30. What is the effect if the Appropriation Ordinance is not posted or published?
Is posting/publication a requirement for the effectivity of the Appropriation
Ordinance?

If the Appropriation Ordinance is not posted and/or published, as the case may be, its
validity may be questioned. However, laws, ordinances and other issuances enjoy the
presumption of regularity and validity until invalidated by the court.

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31. In the exercise of the veto power, the reenacted figure results in a situation
where the expenditure is greater than the estimated income. What figure or
procedure should the LGU adopt?

By analogy, the rule under Section 323 of the LGC may be applied. The reenacted
figure should not exceed the estimated income since the basic rule is that the
aggregate amount appropriated shall not exceed the estimates of income (Section 324
[a] of the LGC).

32. One of the functions of the Secretary to the Sanggunian is to keep the seal
of the LGU and affix the same with his signature to all ordinances,
resolutions, and other official acts of the sanggunian. What is the effect on
the ordinance if the Secretary to the Sanggunian does not sign the
ordinance?

The law provides that the Secretary to the Sanggunian shall affix his signature to all
ordinances and present the same to the Presiding Officer for his signature (Section
469 [c] [2] of the LGC and Article 122 [a] [3] [ii] of its IRR).

Accordingly, the Secretary to the Sanggunian cannot refuse to sign the Appropriation
Ordinance. Otherwise, he/she may be liable under applicable laws.

Nevertheless, in case the Secretary to the Sanggunian refuses to sign, such refusal
will not affect the validity of the Appropriation Ordinance duly passed by the
Sanggunian. Otherwise, that would be tantamount to giving the Secretary to the
Sanggunian the “veto power” or the control in deciding whether the Appropriation
Ordinance will be valid or not, and if it will be submitted for the consideration of the
LCE.

33. One of the functions of the Secretary to the Sanggunian is to keep the seal
of the LGU and affix the same with his signature to all ordinances,
resolutions, and other official acts of the Sanggunian and present the same
to the Presiding Officer for his signature. What if the Presiding Officer does
not sign the ordinance? What is the effect on the ordinance?

The following provisions of the LGC mandate the Presiding Officer to sign the
ordinance:

• The Secretary to the Sanggunian shall affix his signature to all ordinances
and present the same to the Presiding Officer for his signature (Section 469
[c] [2] of the LGC and Article 122 [a] [3] [iii] of the IRR of the same law).

• The Secretary to the Sanggunian shall forward to the LCE for approval,
copies of ordinances enacted by the Sanggunian and duly certified by the
Presiding Officer (Section 469 [c] [3] of the LGC and Article 122 [a] [3] [iii] of
the IRR of the same law).

Further, Section 49 provides that the temporary Presiding Officer “shall certify within
ten (10) days from the passage of the ordinance x x x.”

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 However, if the Presiding Officer refuses to sign, such refusal will not affect the validity
of the Appropriation Ordinance duly passed by the Sanggunian since the Presiding
Officer has no veto power. In such case, the Secretary to the Sanggunian may certify
to the fact of the Presiding Officer’s refusal to sign.

34. Can the Sanggunian withdraw the proposed Appropriation Ordinance which
was already submitted to the LCE for approval?

Currently, there appears to be no relevant legal provision in such a case. However, it

may be assumed that the withdrawal of the proposed Appropriation Ordinance may
generally not be allowed since the legislative process at such point has already been
completed. Hence, the executive consideration of the proposed Appropriation
Ordinance should take its course.

Ultimately, however, the foregoing premise is without prejudice to the decision of the
Sanggunian and/or the LCE based on their sound discretion and the Internal Rules of
Procedure.

35. What amount may the LGUs appropriate in their annual/supplemental

budgets (ABs/SBs) covering proceeds from loans? May the total amount of
the loan as approved (but actually to be released in tranches) be considered
as “funds actually available” or only those amounts that are released to and
actually received by the LGU?

The total amount of the approved loan even if it would be received in tranches may be
the subject of appropriations under the AB or SB.

Section 316 (b) of the LGC provides that the LFC shall recommend the appropriate
tax and other revenue measures or borrowing which may be appropriated to support
the budget.

Further, SB may be enacted when it is supported by new revenue sources pursuant

to Section 321 of the LGC. It may be gleaned from Article 417 of the IRR of the same
law as amended by Administrative Order No. 47 dated April 12, 1993, that approved
loans may be considered as a new revenue source when it has not been included in
the estimate of income which served as basis for the AB or not taken into account
during the preparation and enactment of the AB.

36. If the amount to be appropriated will be based on the loan proceeds released
to and actually received by the LGU, will the LGU have to conduct a separate
procurement for every loan proceeds received, in view of the provisions of
RA No. 9184 (The Government Procurement Reform Act)?

Considering the total loan proceeds shall be appropriated (even if released in

tranches) in the AB or SB, the procurement shall be for the entire amount of
appropriations. Under General Provision No. 33 of the FY 2023 General
Appropriations Act, LGUs are allowed to enter into a multi-year contract. A resolution
authorizing the LCE to enter into multi-year contracts passed by the sanggunian shall

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 be required prior to the commencement of any procurement activity for multi-year
projects. Consistent with Section 5 of RA No. 9184, the Approved Budget for the
Contract (ABC) for purposes of procurement is the budget for the contract approved
by the Sanggunian as embodied in the Appropriation Ordinance authorizing the
Annual/Supplement Budget.

37. Whose signatures are required in the Appropriation Ordinance? Will the
Appropriation Ordinance need the signature of all the members of the
Sanggunian or only those who have voted in favor of its passage?

The minimum signatures required in an Appropriation Ordinance are those of the

Secretary to the Sanggunian, the Presiding Officer (Section 469 [c] [2] of the LGC),
and the LCE (Section 54 of the LGC).

The Internal Rules of Procedure of the Sanggunian may, however, provide additional
requirements for signatures in the Appropriation Ordinance.

38. Can the Sanggunian validly appropriate amounts for projects under the
Office of the Sanggunian?

As a general rule, projects should be appropriated in the proper offices under the
executive department as it is the LCE who is primarily vested with the responsibility for
the execution of local budgets and the accountability therefor.

On the other hand, the functions of the Sanggunian is primarily legislative in nature,
thus, they are not tasked to execute budgets or implement projects. However,
appropriations for projects for the Office of the Sanggunian (e.g., construction of
building) may be provided under the said Office.

Budget Review
39. May the provision for lumpsum before its legal basis is issued, like salary
adjustments, be allowed in budget review?

If a legal basis exists during the review of Appropriation Ordinance, the provision for
the lumpsum may be allowed. Nevertheless, a condition that subsequent provisions
should be made only when there is an existing legal basis at the time of enactment of
the Appropriation Ordinance shall be imposed in the review action, otherwise, the
lumpsum will be disallowed.

40. Can the reviewing officer include the list of specific documentary
requirements (i.e., certificate of savings, trial balance, etc.) in the documents
to be submitted if the funding source is from PS savings, loans, etc?

In the checklist of Documentary and Signature Requirements for Supplemental

Budget, the Certification of Savings is already included. Hence, the Trial Balance may
no longer be required. However, it is the responsibility and accountability of the
certifying officials in the Certification of Savings to ensure that the declarations therein
are true and correct. Otherwise, they may be made liable under applicable laws.

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41. Can the Sanggunian or LCE withdraw an Appropriation Ordinance already
submitted to a reviewing body?

Generally, the enactment of the Appropriation Ordinance has already been completed
at the LGU level. Hence, the review process must take its course.

42. Under what budget will an LGU operate after the local sanggunian has
overridden the veto of the budget or items of appropriation by the LCE?

The budget or items of appropriations as overridden shall be implemented. Under

Section 55 of the LGC, the vetoed item or items of appropriation shall not take effect
unless the Sanggunian overrides the veto; otherwise, the item or items in the
Appropriation Ordinance of the previous year corresponding to those vetoed, if any,
shall be deemed reenacted.

43. The LCE vetoed some items in the Appropriation Ordinance. The
Sanggunian, instead of overriding the veto, passed a new Appropriation
Ordinance which already adopted the original Executive Budget. Did the
Sanggunian take the proper action on the matter? Which ordinance shall be
the basis of budget review?

No, the Sanggunian did not take the proper action on the matter. Pursuant to Section
55 of the LGC, the Sanggunian may override the veto of the LCE by two-thirds (2/3)
vote of all its members thereby making the ordinance effective.

Since the first Appropriation Ordinance, enacted in accordance with the pertinent
provisions of the LGC, was already submitted to the reviewing authority, the same
shall be the basis of the budget review.

44. May the LGUs appropriate less than 20% for development projects in its
annual budget?

No. Section 287 of the LGC mandates LGUs to appropriate no less than 20% of its
annual NTA for development projects in the annual budget. In which case, insufficient
provision of the 20% of the annual NTA for development projects will result to the
declaration of the Appropriation Ordinance as inoperative in its entirety.

45. On budget review, can the reviewing officer include the list of specific
documentary requirements (i.e., certificate of savings, trial balance, etc.) in
the documents to be submitted if the funding source is from PS savings,
loans, etc.?

In the checklist of Documentary and Signature Requirements for Supplemental

Budget, the Certification of Savings is already included. Hence, the Trial Balance may
no longer be required. However, it is the responsibility and accountability of the
certifying officials in the Certification of Savings to ensure that the declaration therein
are true and correct. Otherwise, they may be made liable under applicable laws.

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46. Should an ordinance authorizing supplemental appropriations
(supplemental budget) submitted after the fiscal year be reviewed?

Yes, provided the ordinance authorizing the supplemental appropriations was enacted
within the fiscal year covered by the annual budget, inasmuch as supplemental
budgets cover changes in the annual budget as authorized under Section 321 of the
LGC, as implemented by Article 417 of its IRR, as amended by Administrative Order
No. 47 dated April 12, 1993.

Budget Execution
47. Are adjustments in the release of annual allotments of Offices due to shortfall
in the receipt/collection of anticipated revenues considered changes in the
Annual Budget, which necessitate the passage of an ordinance or resolution
by the Sanggunian?

An ordinance or resolution is not required to be passed by the Sanggunian to effect

adjustments in the release of quarterly allotments of Offices.

Any shortfall in revenue collection should signal the deferment of non-priority

expenditures and the non-release of the allotments indicated as reserve, for later
release or needing clearance under the Allotment Release Order (ARO). These
reserve impositions, earmarking of funds for clearance and withholding of funds for
later release to provide safeguards for shortfall in the collection of anticipated revenues
are policy-based actions to be reflected in the Appropriation Ordinance for the budget
year prior to the issuance or release of the ARO.

Accordingly, the deferment of non-priority expenditures and non-release of allotments

are activities within the budget execution phase of the local budget process which are
authorized by law to be undertaken by the Executive Branch of the LGU. Hence, an
ordinance or resolution by the Legislative Branch of the LGU is no longer necessary.
However, accountability/accounting reports reflecting the same must be furnished the
Sanggunian on a regular basis.

Finally, it may be noted that Section 337 of the LGC provides that the “[d]isbursements
in accordance with appropriations in the approved annual budget may be made from
any local fund in the custody of the treasurer, but the total disbursements from any
local fund shall in no case exceed fifty percent (50%) of the uncollected estimated
revenue accruing to such local fund in addition to the actual collections: Provided,
however, That no cash overdraft in any local fund shall be incurred at the end of the
fiscal year. x x x”

48. When is a sanggunian authorization separate from the appropriation

ordinance necessary for contracts entered into by the local chief executive
for and in behalf of the LGU?

If an appropriation ordinance already contains in sufficient detail the project and cost
of a capital outlay such that all that the local chief executive needs to do after
undergoing the requisite public bidding is to execute the contract, no further

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 sanggunian authorization is required, the appropriation ordinance already being
sufficient.

On the other hand, if an appropriation ordinance contains lumpsum appropriations for

capital outlays or describes the projects in generic terms without details such as
“infrastructure projects”, “inter-municipal waterworks, drainage and sewerage, flood
control, and irrigation systems projects,” “reclamation projects” or “roads and bridges,”
there is an obvious need for a covering contract for every specific project that in turn
requires approval by the sanggunian. Specific sanggunian approval may also be
required for the purchase of goods and services which are neither specified in the
appropriation ordinance nor encompassed within the regular/personal services and
maintenance operating expenses.

49. Who between the LCE and the Vice LCE is authorized to approve purchase
orders issued in connection with the procurement of supplies, materials,
equipment, including fuel, repairs and maintenance of the Sanggunian?

The Vice-LCE has the authority.

The authority granted to the Vice-LCE to sign all warrants drawn on the local treasury
for all expenditures appropriated for the operation of the Sanggunian as well as to
approve disbursement vouchers relating thereto necessarily includes the authority to
approve purchase orders covering the same.

Effectively, since it is the Vice LCE who approves disbursement vouchers and
approves the payment for the procurement of the supplies, materials and equipment
needed for the operation of the Sanggunian, then he also has the authority to approve
the purchase orders to cause the delivery of the said supplies, materials or equipment.

50. Who is the proper authority for the hiring of casual and job order employees
in the Office of the Vice-Mayor/Vice-Governor and in the Sanggunian
Bayan/Panlungsod/Panlalawigan?

The authority to appoint casual and job order employees of the local Sanggunian
belongs to the Vice-Mayor/Vice-Governor. The authority of the Vice-Governor/Vice-
mayor to appoint the officials and employees of the local Sanggunian is anchored on
the fact that the salaries of these employees are derived from the appropriation
specifically for the said local legislative body.

It is the source of their salaries which sets the employees and officials of the local
Sanggunian apart from the other employees and officials of the LGU. Accordingly, the
appointing power of the Vice-Mayor/Vice-Governor is limited to those employees of
the local Sanggunian, as well as those of the Office of the Vice-Mayor/Vice-Governor,
whose salaries are paid out of the funds appropriated for the Sangguniang Bayan/
Panlungsod/Panlalawigan.

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 As a corollary, if the salary of an employee or official is charged against the municipal/
city/provincial funds, even if this employee reports to the Vice-Mayor/Vice-Governor or
is assigned to his office, the Mayor/Governor retains the authority to appoint the said
employee pursuant to Sections 444(b) (v); 455(b)(v); and 465(b) (v) of the LGC.

The Vice-Mayor/Vice-Governor, as the presiding officer of the local Sanggunian, has

administrative control of the funds of the said body. Accordingly, it is the Vice-
Mayor/Vice-Governor who has the authority to approve disbursement vouchers for
expenditures appropriated for the operation of the Sangguniang Panlalawigan.

51. Can the LGU pass an ordinance authorizing use of savings and
augmentation under Section 336 of the LGC when operating under a
reenacted budget?

No. Use of savings and augmentation under Section 336 of the LGC is possible only
when there is an “approved annual budget” for the current year. A reenacted budget
does not qualify as an approved annual budget for the current year.

52. Is the payment of RATA, Hazard Pay and Subsistence Allowance allowed
under a reenacted budget?

Yes. RATA, Hazard Pay and Subsistence Allowance, which are authorized in the
Appropriation Ordinances of the previous year, are deemed reenacted. To construe
“salaries” in a limited sense will deprive an employee with an otherwise authorized
allowance or benefit. Only the rates of the subject allowances provided in the prior
year’s budget are considered reenacted.

Section 323 of the LGC provides that in case of failure to enact the annual
appropriations by the sanggunian “only the annual appropriations for salaries and
wages of existing positions, statutory and contractual obligations, and essential
operating expenses x x x shall be deemed reenacted.”

Following the nature of the enumerated items that are deemed reenacted, the phrase
“salaries of existing positions” should be construed to cover all authorized personnel
services and/or benefits for existing positions in the preceding year.

Authorized personnel benefits pertain to those under Section 4 (f) of Congress Joint
Resolution No. 4 date June 17, 2009 or the Salary Standardization Law, to wit:
Personnel Economic Relief Allowance, Uniform/Clothing Allowance, Year-End and
Cash Gift, Hazard Pay, etc.

53. Can the LCE and Vice-LCE hire personnel under a reenacted budget?

The LCE may appoint personnel in the executive branch when operating under a
reenacted budget as long as the position is existing and funded in the Plantilla of
Personnel of the previous year’s budget.

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 Meanwhile, the Vice-LCE can sign appointments for officials and employees in the
Sanggunian if their salaries are derived from the appropriation specifically for the said
local legislative body (Atienza vs. Villarosa, G.R. No. 161081, May 10, 2005).

54. What is the effect if the reenacted appropriation is higher than the
subsequently approved current appropriation?

When the reenacted appropriations is higher than the approved appropriations, the
LGU concerned should make the necessary adjustments/reductions and corrective
actions.

The rule under Section 323 of the LGC may be applied, by analogy, which provides
that “[i]n case the revised income estimates be less than the aggregate reenacted
appropriations, the local treasurer concerned shall accordingly advise the Sanggunian
concerned which shall, within ten (10) days from the receipt of such advice, make the
necessary adjustments or reductions. The revised appropriations authorized by the
Sanggunian concerned shall then be the basis for disbursements.”

55. In case of failure to enact an annual budget, are appropriations authorized in

the preceding year’s supplemental budgets deemed reenacted?

Yes. Article 415 (a) of the IRR of the LGC provides that “x x x Only the annual
appropriations for salaries and wages of existing positions, statutory and contractual
obligations, and essential operating expenses authorized in the annual and
supplemental budgets for the preceding year shall be deemed reenacted
(emphasis supplied).

56. Is the appropriation for development projects of no less than twenty percent
(20%) of the NTA included in the reenacted items?

No. Only the annual appropriations for salaries and wages of existing positions,
statutory and contractual obligations, and essential operating expenses authorized in
the annual and supplemental budgets for the preceding year shall be deemed
reenacted and disbursement of funds shall be in accordance therewith (Section 323
of the LGC and Article 415 of its IRR).

Accordingly, there can be no implementation of new projects under a reenacted

budget.

In Quisumbing vs, Garcia, G.R. No. 175527, December 8, 2008, the SC reiterated the
provision of Section 323 of the LGC which provides that, “in case of a reenacted
budget, “only the annual appropriations for salaries and wages of existing positions,
statutory and contractual obligations, and essential operating expenses authorized in
the annual and supplemental budgets for the preceding year shall be deemed
reenacted and disbursement of funds shall be in accordance therewith.” Hence, the
appropriation for development projects of no less than twenty percent (20%) of the
NTA is not included in the reenacted items.

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57. Is the honoraria granted to judges by LGUs limited to the maximum rate set
under Local Budget Circular No. 62 dated 29 July 1996?

The provisions of LBC No. 62 are directory and cannot be used to limit the amount of
honoraria to be granted by LGUs to judges stationed in their locality following the
rationale of the Supreme Court in the Dadole vs. COA, G.R. No. 125350, December
3, 2002 (Dadole) wherein LBC No. 55 was declared void for going beyond the law it
sought to implement.

In the case of Dadole, the SC ruled that: “Section 458, par. (a)(1)(xi), of RA 7160, the
law that supposedly serves as the legal basis of LBC 55, allows the grant of additional
allowances to judges "when the finances of the city government allow." The said
provision does not authorize setting a definite maximum limit to the additional
allowances granted to judges. Thus, we need not belabor the point that the finances
of a city government may allow the grant of additional allowances higher than P1,000
if the revenues of the said city government exceed its annual expenditures.”

58. May the appropriations for security services be used to pay the salaries and
wages of contractual employees of the LGU tasked to perform functions of
security personnel?

No, the appropriation for security services is an MOOE item which may not be used to
pay the salaries and wages of contractual employees which is a PS item.

Pursuant to Section 336 of the LGC, “funds shall only be available exclusively for the
specific purpose for which they have been appropriated.”

59. Can the vetoed item of appropriation which was overridden by the
Sanggunian Panlalawigan be implemented and/or executed?

Yes. The action of the Sangguniang Panlalawigan overriding the veto by the LCE
effectively renders the vetoed items operative, as if not vetoed at all.

Pursuant to Section 54 of the LGC, “x x x The sanggunian concerned may override

the veto of the local chief executive by two-thirds (2/3) vote of all its members, thereby
making the ordinance or resolution effective for all legal intents and purposes.”

Allocations to Local Government Units

60. Are barangays created by LGUs after the effectivity of the LGC entitled to
NTA shares?

No. Pursuant to Section 285 of the LGC, the financial requirements of barangays
created by LGUs after the effectivity of the LGC shall be the responsibility of the LGU
concerned.

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61. How are the NTA shares of the cities and municipalities computed
considering the NTA portability?

Pursuant to RA No. 11683,118 to minimize the effect of conversion, the municipalities

converted into cities shall bring their respective allotments derived from the national
taxes, known as the NTA, to the allotment of cities.

Under Section 2 of the IRR of RA No. 11683, the amount shall be equivalent to the
newly-converted cities' most recent NTA shares as municipalities. The resulting
allocation shall be distributed based on population, land area, and equal sharing as
prescribed in Section 285 of the LGC. The said portability shall be effective for a period
of three (3) years from conversion into cityhood.

ILLUSTRATION:

In 2022, Municipality A was converted into a component city (named as City A) after
it was ratified through affirmative votes cast in a plebiscite. Municipality A has a current
NTA share of Php 100.0 million. For FY 2023 the total NTA share of LGUs is estimated
to be at Php 1.0 Trillion. In the computation of the FY 2023 NTA share of cities and
municipalities, the following steps shall be followed.

Step 1. Determine the NTA allocation per LGU level based on Section 285 of the
LGC.
2023 NTA: Php 1.0 Trillion
LGU Level Allocation Total NTA Shares
Provinces 23% 230,000,000,000
Cities 23% 230,000,000,000
Municipalities 34% 340,000,000,000
Barangays 20% 200,000,000,000
TOTAL 100% 1,000,000,000,000

Step 2. Subtract the last annual NTA share of the newly-converted city as a
municipality from the aggregate share of municipalities and add it to the aggregate
share of cities.

2022 NTA of Municipality A: Php 100 million

Total Adjusted
LGU Level Allocation
NTA Shares
Provinces 23.00% 230,000,000,000
Cities 23.10% 230,100,000,000
Municipalities 33.90% 339,900,000,000
Barangays 20.00% 200,000,000,000
TOTAL 100% 1,000,000,000,000

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An Act Amending Section 450 of Republic Act No. 7160, otherwise known as The Local Government Code of 1991, as
amended by Republic Act No. 9009, by Providing for the Requisites for the Conversion of a Municipality into a Component City,
and for Other Purposes

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 Step 3. Allocate the shares based on the following formula:

For provinces, cities, and municipalities:

a. Population – Fifty percent (50%);
b. Land Area – Twenty-five percent (25%); and
c. Equal sharing – Twenty-five percent (25%).

Items of Appropriations Included, By Attribution, in the

General Fund Annual Budget
62. What are the items of appropriations that shall be included, by attribution, in
the General Fund Annual Budget?

The following items of appropriations shall be included, by attribution, in the General

Fund Annual Budget:

a. Gender and Development (GAD) programs, projects and activities (PPAs) (RA
No. 7192, RA No. 9710; Philippine Commission on Women [PCW]-DILG-DBM-
NEDA Joint Memorandum Circular [JMC] No. 2013-01, as amended by PCW-
DILG-DBM-NEDA JMC No. 2016-01 dated January 12, 2016);

b. Programs, projects, activities and services that will address the needs of senior
citizens (RA No. 7432, as amended by RA No. 9994 and RA No. 7876) and
differently-abled persons (RA No. 7277, as amended by RA Nos. 9442 and
10070, and Batas Pambansa Blg. 344);

c. Community-based Human Immunodeficiency Virus/Acquired Immune

Deficiency Syndrome (HIV/AIDS) prevention and care services (RA No. 11166);
and

d. Local Council for the Protection of Children – One percent (1%) of the NTA of
barangays, municipalities, and cities shall be allocated for the strengthening and
implementation of the programs of the Local Council for the Protection of
Children (LCPC) (Section 15 of RA No. 9344).

Confidential Expenses
63. What are Confidential Expenses?

Pursuant to Commission on Audit-Department of Budget and Management-

Department of the Interior and Local Government- Governance Commission for
Government-Owned and/or –Controlled Corporations (GCG)-Department of National
Defense (DND) Joint Circular (JC) No. 2015-01 dated January 8, 2015, Confidential
Expenses refer to those expenses pertaining/related to surveillance activities in civilian
government agencies that are intended to support the mandate or operations of the
agency.

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64. What is Confidential Fund?

Pursuant to COA-DBM-DILG-GCG-DND JC No. 2015-01 dated January 8, 2015,

Confidential Fund (CF) refers to the lumpsum amount provided as such in the
appropriation ordinances of LGUs for their Confidential Expenses.

65. What are the legal bases for the allocation and use of funds for confidential
expenses?

The general welfare clause under Section 16 of the LGC states, among others, that,
LGUs shall “…maintain peace and order, and preserve the comfort and convenience
of their inhabitants.”

COA-DBM-DILG-GCG-DND JC No. 2015-01 dated January 8, 2015 provides the

“Guidelines on the Entitlement, Release, Use, Reporting and Audit of Confidential
and/or Intelligence Funds.”

66. What are the general guidelines in the allocation and use of public funds for
confidential expenses?

The guidelines for the allocation and use of public funds for confidential purposes are
prescribed under COA-DBM-DILG-GCG-DND JC No. 2015-01. The following
provisions thereof may be emphasized:

a. The allocation for peace and order concerns may be provided in the annual
budgets of LGUs provided that such is a priority concern. It is provided further
that the specific amount for Peace and Order Program (POP) is included in their
Peace and Order and Public Safety Plan and that there is a specific
appropriation for POP in their annual Budget. The computation of allowable CF
of an LGU shall be based on the budget of the LGU’s POP only.

b. All allocations for CF shall be supported with a Physical and Financial Plan
indicating the proposed amount allocated for each program, activity and project,
where disbursements pertaining to CE shall be based.

c. The release and utilization of the total CF shall be covered by a resolution duly
approved by two-thirds (2/3) of the total membership of the Local Peace and
Order Council.

d. In the event that additional CF in excess of the limitation is extremely necessary,

additional appropriation supported with duly authorized supplemental budget
shall be approved by the Secretary of the DILG.

e. CF shall be used only for the following Confidential Expenses:

• Purchase of information necessary for the formulation and implementation

of program, activities and projects relevant to national security and peace
and order;

• Rental of transport vehicle related to confidential activities;

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 • Rentals and the incidental expenses related to the maintenance of
safehouses;

• Purchase or rental of supplies, materials and equipment for confidential

operations that cannot be done through regular procedures without
compromising the information gathering activity concerned;

• Payment of rewards of informers;

• Uncover/prevent illegal activities that pose a clear and present danger to

agency personnel/property or other facilities and resources under the
agency protection, done in coordination with the appropriate law
enforcement agencies; and

• Others that may be authorized by the GAA or other special law/s.

f. In no case shall the CF be used for the following:

• Salaries, wages, overtime, additional compensation, allowance or other

fringe benefits of official and employees who are employed by the
government in whatever capacity or elected offices, except when
authorized by law;

• Representation, consultancy fees or entertainment expenses; and

• Construction or acquisition of buildings and housing structures.

g. Conduct of confidential activities shall, as far as practicable, be done with proper

collaboration with any of the following law enforcement agencies: (a) the
Philippine National Police, (b) the Armed Forces of the Philippines, (c) the
Philippine Drug Enforcement Agency, or (d) other agencies with law-
enforcement functions. Such collaboration, if undertaken, must be specified in
the accomplishment report of the concerned agency.

h. Disbursement from CF shall be supported with documentary evidence of

payment, among others, which shall be submitted to the Intelligence and
Confidential Fund Audit Unit in a sealed envelope signed by the Special
Disbursing Officer.

i. Disbursements from the CF shall be supported by Certification of the

Accountable Officer of the CF signed under oath.

67. What are Peace and Order Programs (POP)?

Pursuant to COA-DBM-DILG-GCG-DND JC No. 2015-01 dated January 8, 2015 and

DILG Memorandum Circular No. 2022-118 dated September 19, 2022,119 Peace and
Order Programs refer to any or a combination of the following programs, activities and
projects which may be included as part of the Peace and Order and Public Safety Plan
of LGUs so that these shall be eligible for funding of the CF:

119
Guidelines on the Development and Formulation of the Peace and Order and Public Safety Plan (POPS-PLAN) 2023-2025

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 a. Crime and disorder – violations of the law and situations that disrupt harmonious
living within a community.

• Illegal drugs – a mandatory sub-area, in compliance to RA No. 9165 or the

Comprehensive Dangerous Drugs Act of 2022

Consistent with the above provisions, this sub-area is expected to be

formulated and accomplished by the Sub-TWG on LADPA formulation, in
close coordination with the POPS TWG, as may be necessary.

b. Conflict – Refers to a situation where two or more groups are in disagreement

with each other or in disagreement with the State. The source of disagreement
may be the control and possession of resources, when one party feels deprived,
offended or oppressed by another or by the policies and programs of the State.

i. Violent extremism and terrorism;

ii. Insurgency/armed conflict; and
iii. Prevalence of private armed groups, contributing to the proliferation of
gun culture, “rido” or clan wars, unjust use of military and police
auxiliaries.

c. Threats to the environment and human security (illegal logging, illegal mining,
illegal, unreported, and unregulated fishing (IUUF), smuggling, illegal activities
related to quarrying, etc.)

d. Other related-peace and order concerns that may be deemed necessary.

68. What are the procedural guidelines in the release, use and augmentation of
Confidential Fund?

COA-DBM-DILG-GCG-DND JC No. 2015-01 likewise provides for the following

procedural guidelines:

a. LGUs with peace and order concerns shall allocate in their respective Annual
Appropriations Ordinance funds for POP, as part of the Peace and Order and
Public Safety Plan. The total amount of CF shall not exceed thirty (30%) of the
total annual amount allocated for the LGU’s POP.

b. The release and use of CF shall be covered by a Resolution duly approved by

two-thirds (2/3) of the total membership of the Local Peace and Order Council.

c. LGUs shall secure Certification from the concerned PNP Chief in their locality
relative to the peace and order situation highlighting in concrete details the
circumstances which require the urgency in allocating CF.

d. Additional CF shall be covered with a supplemental budget authorized by the

Sanggunian concerned and/or reviewed by the DBM Secretary or his authorized
representative as the case may be, the source of which shall not come from the
20% Development Fund of the LGU.

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 e. Request for additional CF in excess of the ceiling provided in item 5.1.3.1 of the
JC shall be filed with the concerned DILG Field Officer justifying the need
therefor supported with the following documentary requirements:

• Duly approved Three-Year Peace and Order and Public Safety Plan;

• Annual and Supplemental Appropriations Ordinance indicating the

appropriations for CF;

• Certification from the Budget Officer as to the availability of

appropriations;

• Certifications from the concerned PNP Chief in their locality relative to

the peace and order situation highlighting in concrete details the
circumstances which require the urgency in allocating funds for
confidential activities;

• Physical and Financial Plans for both the original allocation for CF and
the subject request; and

• Certification of Full Disclosure Policy compliance.

f. Upon review of the documents and field-verification of the circumstances as to

the need to allocate additional CF, the DILG Regional Office shall forward the
request within five (5) days to the Director of the Bureau of Local Government
Supervision (BLGS) for further evaluation. The Director of the BLGS shall submit
his or her recommendation to the Secretary of the DILG, who shall approve or
disapprove the request.

Local Disaster Risk Reduction and Management Fund

69. What is a “State of Calamity”?

Pursuant to RA No. 10121120 and its IRR issued on September 27, 2010, it is a
condition involving mass casualty and/or major damages to property, disruption of
means of livelihood, roads and normal way of life of people in the affected areas as a
result of the occurrence of natural or human-induced hazard.

70. What is the Local Disaster Risk Reduction and Management Fund
(LDRRMF)? Is it over and above the Calamity Fund?

Pursuant to RA No. 10121, the present Local Calamity Fund shall henceforth be known
as the Local Disaster Risk Reduction and Management Fund (LDRRMF) which shall
be sourced from not less than five percent (5%) of the estimated revenue from regular
sources. Hence, the LDRRMF is not over and above but is now what was previously
called the Local Calamity Fund.

120
An Act Strengthening the Philippine Disaster Risk Reduction and Management System, Providing for the National Disaster
Risk Reduction and Management Framework and Institutionalizing the National Disaster Risk Reduction and Management Plan,
Appropriating Funds Therefor and for Other Purposes

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71. Is LDRRMF sourced only from the not less than 5% of the estimated revenue
from regular sources?

Per Commission on Audit Circular No. 2012-002 dated September 12, 2012,121 the
following are all the sources of the LDRRMF:

a. Not less than five percent (5%) of the estimated revenues from regular sources
of the LGUs;
b. The unexpended balance of the LDRRMF in the preceding years within the 5-
year validity period of the Special Trust Fund;
c. Funds transferred from the NDRRMF upon approval of the President; and
d. Funds received from other LGUs and other sources.

72. What are the general guidelines on the use and allocation of the LDRRMF?

Pursuant to NDRRMC-DBM-DILG Joint Memorandum Circular No. 2013-1 dated

March 25, 2013, citing Section 21 of RA No. 10121, the LDRRMF amounting to not
less than five percent (5%) of the estimated revenue from regular sources shall be set
aside to support disaster risk management activities such as, but not limited to the pre-
disaster preparedness programs including training, purchase of disaster response and
rescue equipment, supplies and medicines, for post-disaster activities, and payment
of premiums on calamity insurance.

Of the amount appropriated for LDRRMF, thirty percent (30%) shall be allocated as a
lumpsum Quick Response Fund (QRF) or stand-by fund for relief and recovery
programs in order that situation and living conditions of people in communities or areas
stricken by disasters, calamities, epidemics or complex emergencies, may be
normalized as quickly as possible.

73. Can the purchase of drugs and medicines be included as part of pre-disaster
activities for which the LDRRMF may be used?

Yes. Purchase of drugs and medicines may be included as part of pre-disaster

activities for which the LDRRMF may be used (Section 1, Rule 18, IRR of RA
No. 10121).

74. Who may declare and lift a state of calamity?

Pursuant to Section 16 of RA No. 10121, the National Disaster Risk Reduction and
Management Council (NDRRMC) as the National Council shall recommend to the
President of the Philippines the declaration of a cluster of barangays, municipalities,
cities, provinces and regions under a state of calamity, and the lifting thereof based on
the criteria set by the National Council.

121
Accounting and Reporting Guidelines for the Local Disaster Risk Reduction and Management Fund (LDRRMF) of Local
Government Units (LGUs), National Disaster Risk Reduction and Management Fund (NDRRMF) given to LGUs and Receipts
from Other Sources

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 The declaration and lifting of the state of calamity may also be issued by the local
sanggunian upon the recommendation of the LDRRMC, based on the results of the
damage assessment and needs analysis.

Aid to Barangays
75. What is the legal basis for the provision of Aid to Barangays?

Section 324 (c) of the LGC provides that, “[i]n the case of provinces, cities, and
municipalities, aid to component barangays shall be provided in amounts of not less
than One Thousand Pesos (P1,000.00) per barangay;”

Gender and Development

76. What is Gender and Development (GAD)?

GAD is an approach to development that focuses on how social, economic, political

and cultural forces determine how differently women and men participate in, benefit
from, and control resources and activities for development. It recognizes the different
roles, responsibilities, expectations, interests, needs, and contributions of men and
women in society and integrates these gender concerns in the development planning
process. GAD recognizes women as agents of development and not merely as passive
recipients of development assistance.

77. What are the legal bases for GAD and GAD Planning and Budgeting?

RA No. 7192 and Executive Order No. 273 mandate agencies, including LGUs, to
institutionalize GAD in government by incorporating the GAD concerns in their
planning, programming and budgeting process.

The allocation of funds for the implementation of a GAD Plan is a statutory requirement
that must be complied with by provinces, cities, municipalities and barangays.

The Philippine Plan for Gender-Responsive Development (PPGD), 1995-2025, which

was adopted through E.O. No. 273, specifies the services that must be implemented
for women in relation to those stipulated in RA No. 7160.

DBM-NEDA-NCRFW JC No. 2004-1 (superseding DBM-NEDA-NCRFW JC No. 2001-

01) provides the guidelines for the preparation of annual GAD Plan and Budget and
Accomplishment Report to implement the Section on programs/projects related to
GAD as provided in the annual GAA.

For a more comprehensive discussion on GAD, refer to the Primer on Gender

Mainstreaming and Institutionalization in the Budgeting Process, August 2002, issued
jointly by the DBM and NCRFW through the support of the Canadian International
Development Agency.

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 PCW-DILG-DBM-NEDA JMC No. 2013-1 prescribes the policies and procedures in
mainstreaming gender perspective in local planning, programming and budgeting;
local legislation; project development, implementation, monitoring and evaluation.

PCW-DILG-DBM-NEDA JMC No. 2016-01 dated January 12, 2016 provides the
guidelines for the preparation of GAD Plan and Budget; and Accomplishment Reports.

78. What is a GAD Plan?

A GAD Plan is a tool for gender mainstreaming. A GAD Plan is a systematically

designed set of PPAs carried out by agencies for a given period of time to address
gender issues and concerns of their respective sectors and constituents, specifying
the targets to be achieved and identifying the performance indicators that will measure
their accomplishments.

The GAD Plan is viewed as an integral part of the overall LGU plan. The formulation
of a GAD Plan shall follow the regular planning and budget calendar/schedule of LGUs
and shall be anchored on the existing Comprehensive Land Use Plan, Provincial
Development and Physical Framework Plan/Comprehensive Development Plan, Local
Development Investment Program and Annual Investment Program (AIP) preparation.

79. What is a GAD Budget?

A GAD budget is the total amount provided in the General Fund Budget of the LGU to
finance the PPAs in the GAD Plan.

The earmarking of at least five percent (5%) of the total annual appropriation for GAD-
related activities is an indicative figure that should be attributed to the existing PPAs
of LGUs’ budgets.

Accordingly, the GAD budget must not be interpreted as an additional and separate
fund that will be provided by the national or local government.

80. How is the GAD budget prepared?

The GAD Budget is prepared based on the estimated costs of functions and PPAs
translated from the demands/commitments identified in the GAD Plan. The GAD Focal
Point Chairperson, in close coordination with the LGU’s Budget Officer, shall be
responsible for the preparation of the GAD Budget.

The review of the GAD budget proposal is done following the regular evaluation
process applicable to the regular budget proposal, of which the GAD budget is a
component.

In the determination of expenditure ceilings in terms of sectoral service and nature of

expenditure as basis for budget preparation, the LFC shall ensure that the GAD Plan,
approved by the LDC and the Sanggunian, are considered as among the primary
source documents used.

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 The costs of functions and PPAs to implement the GAD Plan may include any or all of
the following items:

• Maintenance and Other Operating Expenses; and

• Capital Outlays.

The GAD PPAs may be classified into:

a. Organization-focused, where efforts are geared to respond to gender issues

that affect the welfare and performance of women and men employees of the
LGU; and

b. Client-focused, where efforts address gender issues that affect the LGU’s
clients and/or constituents.

81. Who reviews and approves the GAD Plan and Budget (GPB)?

Pursuant to PCW-DILG-DBM-NEDA JMC No. 2016-01 dated January 12, 2016, all
provinces, highly urbanized cities, independent component cities, and LGUs within
Metro Manila shall submit their GPBs, accompanied by their GAD ARs, to the DILG
Regional Office for their review and endorsement. Reviewed and endorsed GPBs shall
be returned to the LGUs concerned for incorporation in their annual budgets to be
enacted by their Local Sanggunian.

Component cities and municipalities shall submit their GPBs to the PPDO to ensure
the alignment of the municipality/city GAD PPAs with the priorities of the province and
then from the PPDO to the DILG Provincial Office for its review and endorsement.
DILG endorsed GPBs shall be returned to the LGUs concerned for incorporation in
their annual budgets to be enacted by their Local Sanggunian.

Indigenous Cultural Communities (ICC)/Indigenous Peoples

(IP)
82. What is the funding source for the salaries of ICCs/IPs?

Since the representative from ICCs/IPs is specified in the LGC, and reinforced in RA
No. 8371, the funding requirements relative to the IP representative to the Sanggunian
shall be charged against the PS budget of the LGU, which shall be waived from the
PS limitation only on the initial year of creation.

Creation of Positions
83. What is the general rule on the creation of positions in LGUs?

Section 76 of the LGC empowers LGUs to design and implement their own
organizational structure and staffing pattern that will effectively address their

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 respective developmental plans, programs, objectives and priorities. The creation of
positions shall be consistent with the rules and regulations established under Civil
Service Commission Memorandum Circular No. 12, series of 2022.122

Further, per existing policy, creation of non-mandatory positions and offices in LGUs
may be allowed subject to the following conditions:

• That they are priority needs as identified by the LCE, the Sanggunian and/or
LDCs concerned consistent with Section 17 of the LGC;

• All mandatory positions stipulated under the LGC and other pertinent laws have
been created and provided;

• The SSL has been fully implemented;

• The general limitations on PS expenditures are not exceeded; and

• The classification of the positions is consistent with the standards and

implementing rules and regulations of RA No. 6758.

84. Can the LGU create new positions without corresponding appropriations?

The LGC provides that the Sanggunian shall determine the positions and the salaries,
wages, allowances and other emoluments and benefits of officials and employees paid
wholly or mainly from local funds and provide for expenditures necessary for the proper
conduct of programs, projects, services and activities of the local government (Section
447 [a][1][viii]; Section 458 [a][1][viii]; and Section 468 [a][1][viii] of the LGC).

Accordingly, any position created in the LGU shall be adequately provided with funding
requirements for basic salary, including the associated compensation attached to the
position such as allowances, RATA if entitled thereto, year-end benefits, etc., for it to
be considered a properly created position. Otherwise, a position is not deemed
properly created if such had not been fully provided corresponding appropriations for
basic salary and other compensation.

85. Are unfunded positions considered vacant and deemed to be abolished?

A vacant position is an authorized position in the official plantilla which is unfilled.

Although vacant, the same is covered by adequate appropriation for salaries and
associated compensation costs.

On the other hand, unfunded positions, that is, those not covered by funds for salaries
and associated compensation costs, should be deleted in the plantilla since there are
no appropriations to back up their legal existence.

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2022 Guidelines and Standards in the Establishment of Organizational Structures and Staffing Patterns in Local Government
Units

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Annex A. Synchronized Local Planning and Budgeting Calendar
ACTIVITIES
NG OVERSIGHT
AGENCIES
YEAR/
GUIDELINES, NG OVERSIGHT CITY/
MONTH PROVINCE
MANUALS, TOOLS, AGENCIES MUNICIPALITY
SYSTEMS
Year 1 – July 1. RPS • (Election Year) • (Election Year)
Sourcebook Reconstitution of Reconstitution of
(DILG) Local Planning Local Planning Team
2. CDP Guide and Team
Illustrative
Guide (DILG)
1. DILG Policy • Setting of planning • Preparation of
Guidelines on guidelines for workplan for
Updating of updating planning updating/preparation
Local Plans database of CDP
1. PLPEM and • Assessment of
other reference implementation of
documents current PDPFP
(NEDA)
1. PLPEM and • BLGF generates/ • Updating of
other reference updates financial planning database
documents indicators and
(NEDA) transmits to
2. eSRE (BLGF) Provinces through
3. LGFPMS the DILG
(BLGF)
1. RPS • RaPIDS / LDIS • Updating of
Sourcebook financial indicators RaPIDS/LDIS
(DILG) from BLGF made
2. CDP Guide and available to cities and • Updating of
Illustrative municipalities by Ecological Profile
Guide (DILG) DILG
3. LGPMS (DILG)
4. RaPIDS (DILG)
Year 1 – August 1. PLPEM and • Formulation of
to November other reference PDPFP (Analysis of
documents the planning
(NEDA) environment;
Formulation of
goals, strategies
and objectives;
Identification of
priority PPAs)

1. RPS • Formulation of goals,

Sourcebook strategies and
(DILG) objectives based on
2. CDP Guide and the review and
Illustrative analysis in order to
Guide (DILG) make them more
3. RaPIDS Guide responsive to the
(DILG) current situation and
to make them
consistent with
higher level plans

• Identification of
priority PPAs to
achieve the

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 ACTIVITIES
NG OVERSIGHT
AGENCIES
YEAR/
GUIDELINES, NG OVERSIGHT CITY/
MONTH PROVINCE
MANUALS, TOOLS, AGENCIES MUNICIPALITY
SYSTEMS
goals/objectives for
the next six years
(structured list of
PPAs)

Year 1 – 1. DILG • (Election Year) • (Election Year)

September Guidelines on Reconstitution of Reconstitution of
Reconstitution Local Special Local Special Bodies
of Local Bodies (Local (Local Development
Special Bodies Development Council, Peace and
2. CSO Council, Peace and Order Council, Local
Handbook Order Council, Health Board and
Local Health Board Local School Board)
and Local School
Board)

Year 1 – DILG Policy • Convening of PDC • Mayor to present

November- Guidelines on to present draft Structured List of
December Updating of Local PDPFPs and PPAs
Plans Structured List of
PPAs of Cities and
Municipalities for
the purpose of
harmonization
PLPEM (NEDA) • Approval of PDPFP

RMM (BLGF) • BLGF to provide • Medium-Term • Medium-Term

Medium Term Revenue (Own- Revenue (Own-
Forecasts to Local Source and Source and External)
Treasurers External) Forecasts Forecasts for
(November) for Planning Planning Purposes
Purposes generated (latest
generated (latest year Yt-2) by Local
year Yt-2) by Local Treasurers
Treasurers
BOM (DBM) • Medium-Term • Medium-Term
Forecasts for Forecasts for Current
Current Operating Operating Expenses
Expenses prepared prepared by Local
by Local Finance Finance Committee
Committee
1. RPS • Sectoral
Sourcebook Development Plans
(DILG) completed (Ranked
2. CDP Guide and List of PPAs
Illustrative completed)
Guide (DILG) • Preparation of First
Draft of LDIP: New
Development
Investment
Financing Potential
component
Year 1 PLPEM (NEDA) • Formulation of
December – PDIP
Year 2 February

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 ACTIVITIES
NG OVERSIGHT
AGENCIES
YEAR/
GUIDELINES, NG OVERSIGHT CITY/
MONTH PROVINCE
MANUALS, TOOLS, AGENCIES MUNICIPALITY
SYSTEMS
Year 2 – January 1. CDP Illustrative • Finalization of LDIP:
Guide Finalization of Local
2. RMM (BLGF) Resource
Mobilization Program
and Medium-Term
Financing Plan

• Drafting of
Implementation
Instruments:
Legislative
Requirements,
CapDev Agenda and
Monitoring and
Evaluation Strategy
Year 2 – CDP Illustrative • Finalization of
February Guide (DILG) Implementation
Instruments

Year 2 – March CDP Illustrative • Conduct review of • Approval of CDP to

Guide (DILG) approved CDP and include the
provide feedback to Implementation
component LGUs Instruments (LDIP,
Legislative
Requirements,
CapDev Program
and M&E Strategy)

• Submission of CDP
to the Province for
review
PLPEM and other • Approval of PDIP
reference
documents (NEDA)

Year 2 – May* 1. RPS • Preparation of AIP • Preparation of AIP by

Sourcebook by the Local the Local Finance
(DILG) Finance Committee Committee
2. CDP Guide and
Illustrative
Guide (DILG)
3. RMM (BLGF)
4. BOM (DBM)
5. PLPEM
(NEDA)
Year 2 – June 7* 1. CDP Guide and • Approval of AIP by • Approval of AIP by
Illustrative the Local the Local
Guide (DILG) Sanggunian Sanggunian
2. BOM (DBM)

Year 2 – June BOM (DBM) • Issuance of Local

15* Budget
Memorandum on
NTA level for ensuing
year by DBM

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 ACTIVITIES
NG OVERSIGHT
AGENCIES
YEAR/
GUIDELINES, NG OVERSIGHT CITY/
MONTH PROVINCE
MANUALS, TOOLS, AGENCIES MUNICIPALITY
SYSTEMS
Year 2 – June BOM (DBM) • Issuance of Budget • Issuance of Budget
16* Call Call
Year 2 – July 5* BOM (DBM) • Conduct of Budget • Conduct of Budget
Forum Forum
Year 2 – July 15* BOM (DBM) • Prepare and submit • Prepare and submit
Budget Proposals Budget Proposals
(Department (Department Heads)
Heads)
Year 2 – August* BOM (DBM) • Conduct of Budget • Conduct of Budget
Hearing (August 15) Hearing (August 15)
Year 2 – BOM (DBM) • Preparation of • Preparation of
October* Executive Budget Executive Budget
(October 10) (October 10)

• Submission of • Submission of
Executive Budget to Executive Budget to
Local Sanggunian Local Sanggunian for
for approval (not approval (not later
later than October than October 16)
16)
Year 2 – October BOM (DBM) • Enactment of an • Enactment of an
17 onwards* Appropriation Appropriation
Ordinance Ordinance
authorizing the authorizing the
Annual Budget Annual Budget
Year 2 – Within BOM (DBM) • Submission of • Submission of
three (3) days Appropriation Appropriation
after approval of Ordinance to DBM Ordinance to
the Ordinance for review Province for review
authorizing the
Annual or
Supplemental
Appropriations*
Year 2 – Within BOM (DBM) • Review of • Review of • Review of
ninety (90) days Appropriation Appropriation Appropriation
from the receipt Ordinance of Ordinance of Ordinance of
of the submitted Provinces, Component Cities Barangays
Annual or HUCs/ICCs and and Municipalities
Supplemental Municipality of
Budgets for Pateros
review of
Provinces, Cities
and
Municipalities*
Year 3 – January- BOM (DBM) • Budget Execution • Budget Execution
December*
• Budget • Budget
Accountability Accountability

Year 3 – January- PLPEM (NEDA) • Monitoring of

December* implementation of
the PDPFP and
PDIP

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 ACTIVITIES
NG OVERSIGHT
AGENCIES
YEAR/
GUIDELINES, NG OVERSIGHT CITY/
MONTH PROVINCE
MANUALS, TOOLS, AGENCIES MUNICIPALITY
SYSTEMS
1.RPS • Monitoring of
Sourcebook implementation of
(DILG) the CDP
2. CDP Guide and
Illustrative
Guide (DILG)
April* PLPEM (NEDA) • Adjustment of PDIP
CDP Guide and • Adjustment of LDIP
Illustrative Guide
(DILG)

Yearn – May* 1. PLPEM • Preparation of AIP • Preparation of AIP

(NEDA)
2. CDP Guide and
Illustrative
Guide (DILG)
Yearn – June 7* 1. CDP Guide and • Approval of AIP • Approval of AIP
Illustrative
Guide (DILG)
2. BOM (DBM)

* - recurring every year

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 Annex B. Proposed Major Final Output (MFO) and Performance Indicators (PIs)
of the Different Mandatory Offices in LGUs

MANDATE/
OFFICE MFO PIs PROGRAMS
FUNCTION
LOCAL CHIEF • Exercise general MFO 1: Percentage of EXECUTIVE
EXECUTIVE (LCE) supervision and control EXECUTIVE programs, projects, GOVERNANCE
over all programs, GOVERNANCE and activities (PPAs) PROGRAM
projects, services and SERVICES fully implemented
activities of the LGU within prescribed
schedule
• Enforce all laws and
ordinances relative to Percentage of policies
the governance of the and ordinances fully
LGU and the exercise enforced
of the appropriate
corporate powers Percentage of
services delivered
• Ensure the delivery of rated at least
basic services and the satisfactory by clients
provision of adequate
facilities
LOCAL • Enact ordinances, MFO 1: Number of ordinances LEGISLATIVE
SANGGUNIAN approve resolutions LEGISLATIVE and/or resolutions PROGRAM
(including Vice-LCE) and appropriate funds SERVICES enacted
for the welfare of the
LGU and its inhabitants Percentage of
enacted ordinances
• Approve ordinances and/or resolutions
and pass resolutions rated at least
necessary for an satisfactory by
efficient and effective stakeholders
local government
Percentage of
• Approve Annual and appropriation
Supplemental Budgets ordinances enacted
of the LGU within prescribed
deadline

Review action
completed for all
submitted LGU
budgets within the
prescribed period
rated at least
satisfactory in the
case of Annual
Budget

LOCAL • Take charge of both MFO 1: Percentage of FINANCIAL

ACCOUNTANT the accounting and ACCOUNTING expenditures with NO ACCOUNTING AND
internal audit services SERVICES adverse COA audit REPORTING
of the LGU findings PROGRAM

• Review supporting Percentage of Bank

documents before Reconciliation
preparation of completed within 5
vouchers to determine days from receipt of
completeness of Bank Statements
requirements
Percentage of cash
• Prepare and submit advances liquidated
financial statements to within the prescribed
the LCE and the deadline
sanggunian concerned

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 MANDATE/
OFFICE MFO PIs PROGRAMS
FUNCTION
Percentage of
financial reports
submitted within the
prescribed deadline

Budget Utilization
Rate (Obligation and
Disbursement)

LOCAL • Develop management MFO 1: Number of MANAGEMENT AND

ADMINISTRATOR and administration- MANAGEMENT management and ADMINISTRATION
related plans and AND administration-related PROGRAM
strategies upon ADMINISTRATIVE plans and strategies
approval of the LCE SERVICES of PPAs
Percentage of
• Delivery of management and
administrative support administration-related
services during and plans/strategies or
after man-made and PPAs approved
natural disasters and
calamities Percentage of
management and
administration-related
plans/strategies and
PPAs implemented

Percentage of
effectiveness and
efficiency of response
during
disaster/calamities

LOCAL • Delivery of basic MFO 1: Percentage of AGRICULTURAL

AGRICULTURIST agricultural and AGRICULTURAL agricultural services PRODUCTION
support services PRODUCTION fully implemented PROGRAM
SERVICES within prescribed
schedule

Percentage of
increase in
agricultural/aqua-
cultural productivity of
farmers, fishermen
and local
entrepreneurs

LOCAL ASSESSOR • Ensure all laws and MFO 1: Percentage of APPRAISAL AND
policies governing the APPRAISAL AND updated records on ASSESSMENT OF
appraisal and ASSESSMENT the valuation and REAL PROPERTY
assessment of real SERVICE assessment of real PROGRAM
properties for taxation properties
purposes are properly
executed Percentage of
increase in tax
• Exercise the functions revenues due to
of appraisal and appraisal and
assessment primarily assessment of real
for taxation purposes of properties
all real properties in the
LGU concerned Percentage of
certificates issued
• Issue, upon request of within the prescribed
any interested party, period of issuance
certified copies of

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 MANDATE/
OFFICE MFO PIs PROGRAMS
FUNCTION
assessment records of Percentage of
real property and all city/municipal
other records relative assessors supervised
to its assessment

• Exercise technical
supervision and
visitorial functions
(Provincial Assessor)

LOCAL BUDGET • Review and MFO 1: On-time submission of BUDGET

OFFICER consolidate budget BUDGET consolidated budget MANAGEMENT
proposals of different MANAGEMENT proposals to LCE PROGRAM
departments and SERVICES
offices of the LGU On-time release
(within the standard
• Assist the LCE in the time) of release
preparation of the documents
annual and
supplemental budgets On-time submission of
required reports to
• Study and evaluate oversight agencies
budgetary implications
of proposed legislation Percentage of
and submit comments attendance to LFC
and recommendations meetings
thereon
Percentage of
• Acts as member of the acceptance of the
Local Finance proposed budget by
Committee the LCE

On-time processing of
action documents

No overdrafts in
appropriation

LOCAL ENGINEER • Administer, coordinate, ENGINEERING Percentage of ENGINEERING AND

supervise, and control AND infrastructure projects INFRASTRUCTURE
the construction, INFRASTRUCTURE completed according MANAGEMENT
maintenance, MANAGEMENT to standards, within PROGRAM
improvement, and SERVICES project budget and
repair of roads, schedule
bridges, and other
engineering and public Percentage of reports,
works projects of the designs, studies and
LGU concerned other required
documents completed
• Provide engineering within the prescribed
services to the LGU schedule/deadline
concerned, including
investigation and
survey, engineering Percentage of permits
designs, feasibility issued within
studies, and project prescribed schedule
management. (building permits, etc.)

• Regulate and ensure

compliance with
existing policies in
infrastructure
development and
public works

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 MANDATE/
OFFICE MFO PIs PROGRAMS
FUNCTION
LOCAL GENERAL • Take custody of and be MFO 1: Percentage of GENERAL SERVICES
SERVICES OFFICER accountable for all FACILITIES AND Property, Plant and PROGRAM
properties, real or SUPPLY Equipment of the LGU
personal, and supplies MANAGEMENT accounted for in the
owned by the LGU and SERVICES year-end inventory
those granted to it in report submitted on
the form of donation, time to the
reparation, assistance Commission on Audit
and counterpart of joint
projects. Quantity of supplies
purchased, issued
• Maintain and supervise and balances properly
janitorial, security, maintained
landscaping and other
related services in all Percentage of public
local government buildings and other
public buildings and real property properly
other real property, maintained
whether owned or
leased by the LGU

LOCAL HEALTH • Formulate and MFO 1: HEALTH Number of policies HEALTH SERVICES
OFFICER implement policies, IMPROVEMENT formulated and PROGRAM
plans, programs and SERVICES implemented
projects to promote the
health of the people in Strategic local health
the LGU concerned plan prepared within
deadline
• Information campaign
and render health Number of
intelligence services confined/out-patient
served

Number of persons
provided with health
services

Number of barangays
provided with health
information services

LOCAL LEGAL • Render his opinion in MFO 1: Percentage of LEGAL SERVICES

OFFICER writing on any question LEGAL requests for legal PROGRAM
of law when requested ASSISTANCE AND opinion/
to do so by the LCEs, RESEARCH recommendations
Sanggunian and other SERVICES acted
department heads upon/responded to
within 15 days from
• Represent the LGU in receipt of request
all civil actions and
special proceedings Percentage of cases
represented or acted
upon

LOCAL PLANNING • Formulate integrated MFO 1: Percentage of PPAs PLANNING,

AND economic, social, PLANNING, in the duly updated MONITORING AND
DEVELOPMENT physical and other MONITORING AND approved LDIP EVALUATION
COORDINATOR development plans and EVALUATION derived from the duly PROGRAM
policies for SERVICES updated approved
consideration of the PDPFP/CDP
local development
council. Percentage of PPAs
in the duly approved
AIP derived from the
annual slice of the

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 MANDATE/
OFFICE MFO PIs PROGRAMS
FUNCTION
• Monitor and evaluate duly updated
the implementation of approved LDIP
the different programs,
activities, and projects Percentage of PPAs
in the LGU concerned in the Appropriation
in accordance with the Ordinance derived
approved development from the duly
plan approved AIP

Percentage of project
proposals prepared

Percentage of
projects implemented
and monitored

LOCAL SOCIAL • Formulate and MFO 1: Improved response SOCIAL AND

WELFARE AND implement social SOCIAL WELFARE time to social welfare WELFARE
DEVELOPMENT welfare measures, AND issues and concerns DEVELOPMENT
OFFICER plans and strategies DEVELOPMENT PROGRAM
SERVICES
• Be in the frontline of
service delivery,
particularly those which
have to do with
immediate relief during
and assistance in the
aftermath of man-made
and natural and
calamities

LOCAL TREASURER • The treasurer shall TREASURY Percentage of actual TREASURY

take charge of the OPERATIONS revenues over OPERATIONS
treasury office, perform SERVICES estimated revenues PROGRAM
the duties provided for for the current year
under Book II of the
LGC. Percentage increase
of collections for the
• Take custody and current year over last
exercise proper year
management of the
funds of the LGU Percentage of notices
concerned. issued to delinquent
taxpayers within the
• Submit to the LCE prescribed period
certified statement of
income and Percentage of civil
expenditures for remedies/actions filed
budget preparation against delinquent
purposes taxpayers within the
prescribed period

Percentage of
collections duly
receipted and intactly
deposited the
following banking day

Submission of
detailed statement of
receipts and
expenditures within
the prescribed period

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 MANDATE/
OFFICE MFO PIs PROGRAMS
FUNCTION
LOCAL • Regulate the keeping MFO 1: Percentage of VETERINARY
VETERINARIAN of domestic animals. VETERINARY required laws, acts REGULATION
REGULATION and other regulatory PROGRAM
• Regulate and inspect SERVICES guidelines
poultry, milk and dairy implemented/
products for public enforced
consumption
Percentage of
• Enforce all laws and reported animal
regulations for the diseases treated
prevention of cruelty to
animals.

• Take the necessary

measures to eradicate,
prevent or cure all
forms of animal
diseases

LOCAL DISASTER • Set the direction, MFO 1: Number of pre- DRRM PROGRAM
RISK REDUCTION development, DISASTER RISK disaster training
AND MANGEMENT implementation, and REDUCTION AND conducted
OFFICER coordination of disaster MANAGEMENT
risk management SERVICES DRRM Plan
program formulated and
updated

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Annex C. The Service Falling Under Each of the Major Sectors Pursuant to the
New Government Accounting System of the Commission on Audit

General Public Services Sector

• Executive Services
• Legislative Services
• Planning and Development Coordination Services
• Budgeting Services
• Treasury Services
• Accounting Services
• Administrative Services
• Civil Registry Services
• General Services
• Assessment of Real Property Services
• Auditing Services l Information Services
• Legal Services l Prosecution Services
• Administration of Justice Services
• Land Registration Services
• Claim Registration Services
• Police Services
• Fire Protection Services
• Repair and Maintenance of Government Facilities

Social Services Sector

• Education and Manpower Development
Public Education Services
Medical Subsidiary Services
Manpower Development Services
Sports Center, Athletic Field, and Playground Maintenance Service cultural
Project Services
Cultural/Conference/Convention Center
Operation Services
• Health
Health Services Field Projects (Immunization, Inoculation, Blood Donor
Services)
Day Care Clinic
Hospital Services
Chest Clinic
• Housing and Community Development
• Housing Projects
Sanitary Services
Street Cleaning
Garbage Collection
Sewerage and Drainage
Street Lighting
Community Development Services

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Economic Services Sector
• Agricultural Services
• Veterinary Services
• Natural Resources Services
• Architectural Services
• Engineering Services
• Economic Enterprises and Public Utilities Operation Services
• Tourism Services

Other Services
Services that cannot be categorized in any of the sectors identified above shall be
under other services.

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 Annex D. Coding Structure by Type of LGU and Office

1 Province
1 01 Mandatory Offices
1 01 001 Office of the Governor
1 01 002 Office of the Vice-Governor
1 01 003 Office of the Members of the Sangguniang Panlalawigan
1 01 004 Office of the Secretary to the Sangguniang Panlalawigan
1 01 005 Office of the Provincial Treasurer
1 01 006 Office of the Provincial Assessor
1 01 007 Office of the Provincial Accountant
1 01 008 Office of the Provincial Engineer
1 01 009 Office of the Provincial Budget Officer
1 01 010 Office of the Provincial Planning and Development Coordinator
1 01 011 Office of the Provincial Legal Officer
1 01 012 Office of the Provincial Administrator
1 01 013 Office of the Provincial Health Officer
1 01 014 Office of the Provincial Social Welfare and Development Officer
1 01 015 Office of the Provincial General Services Officer
1 01 016 Office of the Provincial Agriculturist
1 01 017 Office of the Provincial Veterinarian
1 02 Optional Offices
1 02 001 Office of the Provincial Population Officer
1 02 002 Office of the Provincial Natural Resources and Environment Officer
1 02 003 Office of the Provincial Cooperative Officer
1 02 004 Office of the Provincial Architect
1 02 005 Office of the Provincial Information Officer
1 03 Others

2 Cities
2 01 Mandatory Offices
2 01 001 Office of the City Mayor
2 01 002 Office of the City Vice-Mayor
2 01 003 Office of the Sangguniang Panlungsod Members
2 01 004 Office of the Secretary to the Sangguniang Panlungsod
2 01 005 Office of the City Treasurer
2 01 006 Office of the City Assessor
2 01 007 Office of the City Accountant
2 01 008 Office of the City Budget Officer
2 01 009 Office of the City Planning and Development Coordinator
2 01 010 Office of the City Engineer
2 01 011 Office of the City Health Officer
2 01 012 Office of the City Civil Registrar
2 01 013 Office of the City Administrator
2 01 014 Office of the City Legal Officer
2 01 015 Office of the City Veterinarian
2 01 016 Office of the City Social Welfare and Development Officer
2 01 017 Office of the City General Services Officer
2 02 Optional Offices
2 02 001 Office of the City Architect
2 02 002 Office of the City Information Officer
2 02 003 Office of the City Agriculturist

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2 02 004 Office of the City Population Officer
2 02 005 Office of the City Environment and Natural Resources Officer
2 02 006 Office of the City Cooperatives Officer
2 03 Others

3 Municipalities
3 01 Mandatory Offices
3 01 001 Office of the Municipal Mayor
3 01 002 Office of the Municipal Vice-Mayor
3 01 003 Office of the Sangguniang Bayan Members
3 01 004 Office of the Secretary to the Sangguniang Bayan
3 01 005 Office of the Municipal Treasurer
3 01 006 Office of the Municipal Assessor
3 01 007 Office of the Municipal Accountant
3 01 008 Office of the Municipal Budget Officer
3 01 009 Office of the Municipal Planning and Development Coordinator
3 01 010 Office of the Municipal Engineer/Building Official
3 01 011 Office of the Municipal Health Officer
3 01 012 Office of the Municipal Civil Registrar
3 02 Optional Offices
3 02 001 Office of the Municipal Administrator
3 02 002 Office of the Municipal Legal Officer
3 02 003 Office of the Municipal Agriculturist
3 02 004 Office of the Municipal Environment and Natural Resources
3 02 005 Office of the Municipal Social Welfare and Development Officer
3 02 006 Office of the Municipal Architect
3 02 007 Office of the Municipal Information Officer
3 03 Others

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Annex E. Process Guide for Climate Change Expenditure Tagging

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 Annex F. Project Monitoring/Inspection Report

PROJECT MONITORING/INSPECTION REPORT

As of Month Year (Quarterly)

Name of Project Date of

Implementing Major Action Taken/
(Total Project Cost Location Project Issues
Agency Findings Recommendation
[TPC]) Inspection
Project 1 (TPC)

Submitted by: ______________________ Noted by: ____________________

Designation/Office: _________________ Agency Head
Date: _____________________________

Instructions:

Name of Project: Indicate the title of the project as found in the approved program of work, loan, or
grant agreement.

TPC: Indicate the total project cost of the project, in million pesos.

Location: Indicate the location, i.e., barangay/municipality/city/province/region where the project is

implemented.

Implementing Agency: Indicate the name of agency/GOCC/LGU that implemented the project.

Date of Project Inspection: Indicate the month, day, and year when the project inspection was
conducted.

Major Findings: Indicate the major observations during the project inspection, including the latest
physical status of the project (Ahead, On, or Behind Schedule)

Issues: Indicate the operational constraints/concerns observed during project implementation.

Actions Taken/Recommendation: Indicate the remedial measures taken/being recommended to

improve work progress or to commend outstanding performance, include updates on agency actions,
provide information if issues were elevated, the requested actions, and the corresponding response.

Report Deadline – One (1) month after the reporting quarter.

Note: At the end of the report, indicate the name, designation, and office of the person who prepared
the same, including the date the report was prepared.

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GLOSSARY OF TERMS
Accountability - Holding local government officials answerable to the public where their
authority is derived, for use of public resources, to face consequences for their actions inside
and outside of the government.

Activity – a work process designed to contribute to the accomplishment of specific objectives

and the implementation of a program, sub-program, or projects.

Annual Budget - Refers to the financial plan embodying the estimates of income and
expenditures for one (1) fiscal year (Section 306 [a] of the LGC).

Annual Investment Program (AIP) - Refers to the annual slice of the Local Development
Investment Program (LDIP) which constitutes the total resource requirements for all PPAs
consisting of the annual capital expenditure and regular operating requirements of the LGU.

Appropriation– Refers to an authorization made by Ordinance, directing the payment of

goods and services from local government funds under the specified conditions or for specific
purposes (Section 306 [b] of the LGC).

Allotment - An authorization issued to a Department/Office by an LGU to allow the latter to

incur obligation for specified amounts contained in an appropriation Ordinance.

Appropriation Ordinance - Refers to the law or Ordinance passed by the local sanggunian
directing the payment of goods and services from local government funds.

Allocation - This is the amount earmarked for a specific program, activity or project to pursue
a development objective.

Budget Deficit- A financial status to which government expenditures exceed revenues.

Bottom-Up-Budgeting - An approach to preparing the budget proposal of agencies, taking

into consideration the development needs of provinces, cities and municipalities as identified
in their local poverty reduction program.

Budget Authorization - The second phase of the local budget process where local receipts
and revenue are authorized for expenditure for local development.

Budget Preparation - The first phase of the local budget process where generated funds are
allocated to prioritized programs/activities/projects of the LGU to pursue its development goal.

Budget Accountability - The last phase of the budget process where all funds are accounted
for at End of the year to explain what PPAs were implemented, where funds were spent and
Utilized and results were attained.

Budget Review - This is the third phase of the local budget process where the local budget
is subjected to scrutiny and evaluation in pursuance of the LGC.

Budget Execution - This the fourth phase of the local budget process where the authorized
budget is used to implement approved PPAs.

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Capital Outlays - refers to appropriations for the purchase of goods and services, the benefits
of which extend beyond the fiscal year and which add to the assets of the LGU concerned,
including investments in public utilities such as public markets and slaughterhouses (Section
306 [d] of the LGC).

Civil Society Organizations- A non-state and non-profit association that works to improve
society and the human condition.

Comprehensive Development Plan (CDP) - A multi-sectoral plan formulated at the

City/municipal level embodying the vision, sectoral goals, objectives, and policies within the
term of LGU officials and the medium term.

Continuing Appropriation - refers to an appropriation available to support obligations for a

specified purpose or projects, such as those for the construction of physical structures or for
the acquisition of real property or equipment, even when these obligations are incurred beyond
the budget year (Section 306 [e] of the LGC).

Current Operating Expenditures – refers to appropriations for the purchase of goods and
services for the conduct of normal local government operations within the fiscal year, including
goods and services that will be used or consumed during the budget year.

CSO Representative - A member CSO who is authorized by the CSO to participate in the
local budget process of a particular LGU.

Debt Service- The sum loan repayments, interest payments, commitment fees, and other
bank charges on foreign or domestic borrowings.

Financial Expenditures - A new expense class for management supervision, which includes
interest expenses, trusteeship fees, bank charges, and other financial charges.

Income - Refers to revenues and receipts collected or received forming the gross accretions
of funds of the LGU (Section 306[i] of the LGC).

Local Development Council (LDC) - The body mandated by law to assist the corresponding
Sanggunian in setting the direction of economic and social development, and coordinating
development efforts within the territorial jurisdiction of the LGU.

Local Development Investment Program - A basic document linking the plan to the budget.
It contains a prioritized list of PPAs which are derived from the CDP in the case of cities and
municipalities, and the PDPFP, in the case of provinces. The LDIP should include PPAs to be
implemented and financed annually within a three (3) to six (6)-year period.

Major Final Outputs (MFOs) - Goods and services that a department/office in the LGU should
deliver to constituents through the implementation of programs, activities and projects. These
MFOs have corresponding performance indicators according to quality, quantity and
timeliness.

Maintenance and Other Operating Expenses (MOOE)- An allocation to support the

operations of local government units including those for supplies and materials, transportation
and travel, utilities and other maintenance activities.

Mission Statement – An action-oriented statement that describes the organization’s

purpose/s, its core functions, philosophies and goals that leads to the realization of its vision.

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Non-tax Revenues - Fees, charges and other government collections in exchange for
services rendered and penalties imposed.

Organizational Outcomes (OOs) – short-to medium-term benefits to clients and communities

as a result of MFO delivery.

Participatory Budgeting - an approach wherein citizens, through CSOs are allowed to take
part in the process of allocating public resources.

Performance Indicator (PI) – a characteristic of performance (i.e., quantity, quality,

timeliness and cost) that is to be measured.

Performance Target (PT) – a predetermined level (numerical target) of quantity, quality,

timeliness, and cost of an output.

Performance Measurement (PM) – use of methods to measure incremental progress

indicators from baselines to targets.

Programmed Appropriations - Appropriations in the Ordinance that are supported by

existing resources and can be released during the budget year.

Program - A homogenous group of activities necessary for the performance of major purpose
for which the LGU is established.

Project - A special undertaking to be carried out within a definite time frame which is intended
to result in some pre-determined measure of goods and services.

Receipts - Refer to income realized from operations and activities of the local government or
are received by it in the exercise of its corporate functions, consisting of charges for services
rendered, conveniences furnished, or the price of a commodity sold, as well as loans,
contributions or aids from other entities, except provisional advances for budgetary purposes
(Section 306 [l] of the LGC).

Resources - Refers to the revenues, gross borrowings free or unencumbered cash balances.

Revenues - Refer to the income derived from the regular system of taxation enforced under
authority of law or Ordinance and, as such, accrue more or less regularly every year (Section
306 [m] of the LGC).

Reversion - refer to the moving of an unexpended balance of an appropriation to the

unappropriated surplus of the general fund at the end of the fiscal year and shall not be
available for expenditures except by subsequent enactment.

Stakeholders - people or organization that may come from either within or outside the LGU.
The ones most commonly-referred to as stakeholders in an LGU setting are its constituents
or clients. These are the businessmen, private-sector groups, senior citizens, women, farmers,
fishermen, differently-able, indigents and disadvantaged-members of society.

Supplemental Budget - A budget that is enacted after the Annual Budget. Changes in the
annual May be done through supplemental budgets pursuant to Section 321 of the LGC.

Savings - refer to portions or balances of programmed appropriations which have not been
released or obligated resulting from: i) discontinuance by the head of the agency concerned
of the program, activity or project (P/A/P), for justifiable causes or for causes not attributable
to the fault or negligence of the agency and which will render it impossible to implement the

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said P/A/P; ii) Non-commencement or inability of the agency to obligate an allotment for
causes not attributable to the fault or negligence of the agency and which will render it
impossible to implement the said P/A/P; iii) improved systems and efficiencies in the
implementation of P/A/Ps and delivery of services which are consistent with their performance
targets; iv) a lower contract cost than that provided in the approved budget for the contract;
and v) unused personal services costs pertaining to a) unfilled, vacant or abolished positions;
b) non-entitlement to allowance and benefits; c) leaves of absence without pay; and d) death
of pensioners, decrease in the number of retirees, or other related causes.

Tax Revenues - Compulsory charges or levies imposed by the local government on real
property. Goods and services, individuals, and entities like income tax, value-added tax, and
special taxes.

Transparency - Full disclosure of all local government transactions, which should include
programs/activities/ projects which are relevant, timely, and accessible/accurate information
on local governance.

Unprogrammed Appropriations - Appropriations in the local annual budget that can only be
utilized when revenue collections exceed targets, and when new revenue sources arise, or
when loans are approved for specific projects.

Vision Statement – is an aspirational statement made by an organization that articulates what

they would like to achieve. It depicts a vision of what the organization will look like in the future
and sets a defined direction for the planning and execution of department-level strategies.

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 PROJECT TEAM FOR THE UPDATING OF THE
BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

Project Team Leaders : Undersecretary Wilford Will L. Wong (2022 to 2023)

Assistant Secretary Rolando U. Toledo (2022 to 2023)
Assistant Secretary Achilles Gerard C. Bravo (2022)

Project Team Leader – : Undersecretary Janet B. Abuel

Technical Review Subgroup

Central Office Technical Team : Director Ryan S. Lita (2022 to 2023)

Members and Overall Director John Aries S. Macaspac (2022)
Coordinators

Regional Offices (ROs) : Ruby P. Muro

Technical Team Members Joseph Cicero M. Sy

Irene B. Gahid
Marie Christine D. Andaya

Ria V. Bansigan
Ryan A. Milanes

Francis C. Bautista
Ludivina T. Potot

Isabel C. Taguinod
Rosalie C. Abesamis

Nympha R. Manalastas
Jacqueline B. Ludovice

Ricky L. Sanchez
Alexander P. Calma

Maria Angelita C. Cells

Antonio F. Villanueva Jr.

Mae L. Chua
Maria Liane L. Gayomali

Lenin S. Bernales
Maricor U. Baquial

Imelda C. Laceras
Aleli N. Hernandez

Mark Louie C. Martin

Alelie B. Ramos

Rudylia C. Parrel
Nonito H. dela Cruz

Gary R. Martel
Antonio M. Faunillan, Jr.

Akmad J. Usman
Libertine C. Cagang

Maria Fe D. Jagna
Jenneth C. Partosa

ADB Consultant : Atty. Julian Ll. Pacificador, Jr.

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 PROJECT TEAM FOR THE UPDATING OF THE
BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
Technical Support

Rowena M. Marte Michael M. Lacsamana

RO for the
Local Government Ruby Ann G. Añonuevo Crystine S. Cuartero
MIMAROPA
and Regional Amabelle Colleen T. Francisco Christian G. Mendoza
Coordination Bureau Alvin A. Amil
Roxanne Cleath A. Gonzaga February E. Manuel
RO V Jennifer B. Barcoma
Director Andrea Celene M. Magtalas Joanna M. Rasco
Legal Service Atty. Rosemarie D. Pagala
Atty. Philip Jeffrey D. David Mariel Dave M. Gallego
RO VI
Cecile C. Lacson
DBM Regional Offices
Carlo C. Maraat
Katherine B. Castro RO VII Annie J. Linguis
RO for the National Edith W. Velarde Zarah Leigh A. Ranile
Capital Region Neljie G. Amande
Marione Bien A. Bungcayao Juvy A. Lobedica
RO VIII Absal N. Abah
Atty. Noemi P. Humilde Neuman M. Gallardo
RO for the Cordillera
Mayna M. Caymo
Administrative Region
Deysabel B. Quindasan Eddie Albert A. Cruz
RO IX
Giovanni O. Tabanao
Julius Jose M. Camara
RO I Mike M. Flores Eden N. Pingol
Christa N. Mendoza RO X Mary Ann Margaret T. Melad
Mark Welnorr M. Callao
Jose C. Pamittan
Juliet T. Bilag Namnama Grace Elarcosa
RO II
Macario C. Gumabay, Jr. RO XI Mary Emlea Ganzon
Enrique C. Bugar Hubert Von Labor

Jenina M. Pineda Arlyn B. Adajar

Ariel P. Dayrit Hamzur M. Nawal
Thelma Abigail N. Macalino Roxanne Mae D. Mapa
RO III
Katrina Mae M. Yalung Joshua C. Tianchon
RO XII
Camille Dianne D. Tulabut Cherry W. Bravo
Arnelie R. Guiao Nasrudin P. Salik
Ma. Ayla I. Nacional
Ella Loraine D. Obra Mary Methyl Joy B. Gabiazon
Rujen A. Polo
RO IV-A Rissah Maryelle S. Arenas Elvin D. Chatto
James Christopher C. Verano RO XIII Desiree G. Ruben
Melody F. Tomo Rhona Mae U. Gabia

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 Republic of the Philippines
DEPARTMENT OF BUDGET AND MANAGEMENT