BARANGAY BUDGETING

BUDGET
AUTHORIZATION

ATTY. JANET B. ABUEL, CPA, MPP, LLM

Undersecretary
Department of Budget and Management
WHAT ARE THE LEGAL BASES OF BUDGET
AUTHORIZATION?
No money shall be paid out of the
local treasury except in pursuance of
an appropriations ordinance (AO) or
law (Sec 305 [a], LGC)

The SB shall enact annual and

supplemental budgets in accordance
with the provisions of the Code
(Sec 391 [a][3], LGC)
 WHO ARE THE KEY PLAYERS
IN BUDGET AUTHORIZATION?

1. Punong Barangay

2. Sangguniang Barangay

3. Committee on Appropriations/Finance

4. Barangay Treasurer

5. Barangay Secretary
 STEPS IN BUDGET AUTHORIZATION

ON OR BEFORE
1. ENACT THE AO BEGINNING OF
ENSUING YEAR

2. APPROVE THE AO ON OR BEFORE

BEGINNING OF
ENSUING YEAR

3. POST THE AO NLT 5 DAYS AFTER

APPROVAL OF AO

4. SUBMIT THE AO
FOR REVIEW WITHIN 10 DAYS AFTER
APPROVAL OF AO
WHEN SHALL THE PB SUBMIT THE
EXECUTIVE BUDGET TO THE SB?

LCE shall submit the executive

budget to the Sanggunian –
NOT LATER THAN 16th of OCTOBER of
the current fiscal year (Sec 318, LGC)
CAN THERE BE A LIABILITY ON THE PART OF
THE PB IF THE EXECUTIVE BUDGET IS NOT
SUBMITTED ON TIME?

Failure to submit the budget within

the prescribed period –
Subjects LCE to criminal and
administrative penalties provided
under the Code and other applicable
laws (Sec 318, LGC)
 Sec. 60 – Grounds for disciplinary actions
 Secs. 61-68 – other rules on disciplinary actions
 Villanueva vs. Ople, GR No. 165125, Nov. 18, 2005
 VILLANUEVA VS. OPLE
(G.R. No. 165125, November 18, 2005, Third Division)

• The Municipal Mayor and Vice-Mayor were charged by the

Petitioners before the Office of the Ombudsman for violation
of Section 3(e) of RA No. 3019 or the Anti-Graft and Corrupt
Practices Act, in relation to Sections 305 (a), 318 and 351 of
the LGC.
• Among others, the Petitioners alleged that the FY 2003
proposed Annual Budget of the Municipality was submitted by
the Mayor belatedly to the Sangguniang Bayan, only on June
11, 2003, instead of October 16 of the preceding year, as
mandated by Section 318 of the LGC.

7
 SC DECISION ON THE ISSUE:

Fourth, petitioners relied solely on Section 318 of the LGC, which allegedly
exposed the mayor to criminal liability for delay in submitting a budget
proposal. The pertinent provision reads:

“Sec. 318. Preparation of the Budget by the Local Chief Executive. — 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.

The local chief executive shall submit the said executive budget to the
sanggunian concerned not later than the sixteenth (16th) of October of the current
fiscal year. Failure to submit such budget on the date prescribed herein shall subject
the local chief executive to such criminal and administrative penalties as provided for
under this Code and other applicable laws.”

Under the above LGC provision, criminal liability for delay in submitting the
budget is qualified by various circumstances. For instance, the mayor must first
receive the necessary financial documents from other city officials in order to
be able to prepare the budget. In addition, criminal liability must conform to
the provisions of the LGC and other applicable laws. Noteworthy is the fact that
petitioners failed to present evidence that would fulfill these qualifications
stated in the law.
 WHAT SHOULD BE PASSED BY THE
SB TO AUTHORIZE THE EXECUTIVE
BUDGET, AND WHEN?

“On or before the end of the current fiscal year,

the Sanggunian concerned shall enact, 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.”

(Sec 319, RA No. 7160)

steps
 STEP 1. ENACT THE APPROPRIATION
ORDINANCE

WHAT ARE THE STEPS TO ENACT THE

AO?

1.1 CHECK THE BUDGET DOCUMENTS

SUBMITTED
1.2 EVALUATE THE BUDGET
1.3 DELIBERATE ON THE BUDGET
1.4 AUTHORIZE THE BUDGET
1b
STEP 1. ENACT THE APPROPRIATION
ORDINANCE

1.1 CHECK THE BUDGET

DOCUMENTS SUBMITTED

1b
 ANNUAL BUDGET
Document Signatory
1. Budget Message PB
2. Proposed Annual Budget PB
3. Plantilla of Personnel BT and PB
4. Statement of Indebtedness, if any PB and BT
5. Sanggunian-approved Annual Investment • BS, BT and
Program (AIP) PB
• BDC
• SB
6. List of Projects under the 20% DF (if not listed in BS and PB
the Annual Budget)
7. Annual Procurement Plan (APP) BS and PB

1b
 SUPPLEMENTAL BUDGET

Document Signatory

Transmittal Letter PB
Statement of Funding Sources BT, C/M
Accountant
and PB
Statement of Supplemental BT and PB
Appropriations
Sanggunian-Approved Supplemental • BS, BT
AIP and PB
• BDC
• SB
 STEP 1.2 EVALUATE THE BUDGET
Check/validate:
• Receipts Program
 Budget year’s total estimated income
and assess probability of collection
(Sec 391[a][2], LGC)
 If the taxes and fees identified as
sources of estimated income are within
scope of authority and properly
computed (Secs 152-155, 271, 285,
292, LGC)
exp
• Expenditure Program

b. Budgetary Requirements (Sec 324, LGC)

• The aggregate amount appropriated does

not exceed the estimates of income (BY)

• Full provision shall be made for all

statutory and contractual obligations of
the LGU, and that the amount
appropriated for debt servicing does not
exceed twenty percent (20%) of the
regular income of the LGU (BY)

app
• Expenditure Program

 Compliance with 55% PS Limitation

(Sec. 331[b], LGC; LBC No. 145 (3/2/22) –
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 of the FY 2022
General Appropriations Act, RA No. 11639,
and Years Thereafter

app
• Expenditure Program
 Honoraria of barangay officials within authorized
rates of the equivalent salary grade
 10% of GF of the Barangay - SK Fund [lump-
sum*] (Sec 20 [a], RA No. 10742 [Sangguniang
Kabataan Reform Act of 2015], as amended by RA
No. 11768)
*The Sangguniang Barangay shall appropriate the Sangguniang Kabataan funds in lump-
sum which shall be disbursed solely for youth development and empowerment purposes

 DBM-DILG-NYC JMC No. 1, s. 2019 (1/23/19)-

Guidelines on the Appropriation, Release, Planning and
Budgeting Process for the SK Funds

 COA Circular No. 2020-003 (1/28/20)-Prescribing the

Use of the “Handbook on the Financial Transactions of
the Sangguniang Kabataan” on the Proper Recording
and Reporting of SK Funds
app
• Expenditure Program

 Provision for LDRRMF of not less than 5% of

estimated regular income for BY (Sec. 21, RA
No. 10121 [2010]; NDRRMC-DBM-DILG JMC
No. 2013-1 [3/25/13])

 Provisions for PS and associated costs –

PhilHealth, GSIS Premiums, Pag-IBIG, PERA, YEB,
Cash Gift
• Expenditure Program

 Share of barangay from the national wealth - at

least 80% of the proceeds derived from the
development and utilization of hydrothermal,
geothermal, and other source of energy applied
solely to lower the cost of electricity in the
barangay where the source of energy is located
(Sec 294 , LGC)
 Provision for discretionary expenses, if any - not
exceeding 2% of the actual receipts derived from
the share of the barangay from Real Property Tax
in the next preceding calendar year (Sec 325[h],
LGC)
• Expenditure Program

 Projects in the barangay expenditure program are

consistent with the AIP (Article 410, IRR)
 No barangay fund is appropriated or applied for
the benefit of any religious sect or activity nor any
undertaking or purpose private in character
(Sec 335, LGC)
 No barangay fund is appropriated for
entertainment or reception except to the extent of
the representation allowances authorized by law
or for reception of visiting dignitaries of foreign
governments or foreign missions, or when
expressly authorized by the President in specific
cases (Sec 343, LGC)
• Expenditure Program

 Provision for development projects – no less than

20% of IRA (NTA) for the BY (Sec 287, LGC)
Authorized Uses (DBM-DOF-DILG JMC No. 1
[11/4/20] – Revised Guidelines on the
Appropriation and Utilization of the 20% of the IRA
[NTA])
Quisumbing, et al. vs. Garcia, et al.
GR No. 175527, 08 December 2008
(re Section 22 (c), LGC - Unless otherwise provided
in this Code, no contract may be entered into by
the local chief executive in behalf of the local
government unit without prior authorization by the
sanggunian concerned.)
app
 QUISUMBING V. GARCIA
(G.R. No. 175527, December 08, 2008, En Banc)
• In the COA audit report covering the 2004 financial audit of the Province of
Cebu, it stated that several contracts entered into by the Provincial
Governor were not supported by a Sangguniang Panlalawigan Resolution
authorizing the Provincial Governor to enter into a contract, as required
under Section 22 of the LGC. The audit team recommended that LCE must
secure the required authorization from the Sanggunian.
• The Provincial Governor sought reconsideration of the findings and
recommendation of the COA, but nevertheless, filed a Petition for
Declaratory Relief before the RTC.
• The Governor alleged that the infrastructure contracts complied with the
bidding procedures under RA No. 9184, the Government Procurement
Reform Act, and were entered into pursuant to the general and/or
supplemental appropriation ordinances passed by the Sangguniang
Panlalawigan, thus, a separate authority to enter into such contracts was
no longer necessary.
22
• The RTC ruled, among others, that it is only when the contract
(entered into by the LCE) involves obligations which are not backed
by prior ordinances that the prior authority of the Sanggunian
concerned is required, and that in the case, the Sangguniang
Panlalawigan had already given its prior authorization when it
passed the appropriation ordinances which authorized the
expenditures in the questioned contracts.
• The Petitioners, all members of the Sangguniang Panlalawigan,
assailed the decision of the RTC before the Supreme Court.
Nevertheless, in the course of the proceedings, it became apparent
that the Province was operating under a reenacted budget in 2004.

23
• UNDER REENACTED BUDGET, CONTRACTUAL OBLIGATIONS NOT IN THE
PREVIOUS YEAR’S ANNUAL AND SUPPLEMENTAL BUDGETS CANNOT BE
DISBURSED; NEW INFRASTRUCTURE CONTRACTS ARE NOT INCLUDED AS
REENACTED ITEMS, THUS, REQUIRE PRIOR APPROVAL OF THE SANGGUNIAN.
 There appear two basic premises from which the Court can proceed to
discuss the question of whether prior approval by the Sangguniang
Panlalawigan was required before Gov. Garcia could have validly entered into
the questioned contracts. First, the Province of Cebu was operating under a
reenacted budget in 2004. Second, Gov. Garcia entered into contracts on
behalf of the province while this reenacted budget was in force.
 The fact that the Province of Cebu operated under a reenacted budget in
2004 lent a complexion to this case which the trial court did not apprehend.
Sec. 323 of R.A. No. 7160 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.
24
  It should be observed that, as indicated by the word only preceding the
above enumeration in Sec. 323, the items for which disbursements may
be made under a reenacted budget are exclusive. Clearly, contractual
obligations which were not included in the previous year’s annual and
supplemental budgets cannot be disbursed by the local government
unit. It follows, too, that new contracts entered into by the LCE require
the prior approval of the sanggunian.

• WHEN THE APPROPRIATION ORDINANCE IS DEEMED SUFFICIENT

AUTHORIZATION OF THE SANGGUNIAN FOR THE LOCAL CHIEF EXECUTIVE
TO ENTER INTO CONTRACTS.
 The question of whether a sanggunian authorization separate from the
appropriation ordinance is required should be resolved depending on
the particular circumstances of the case. Resort to the appropriation
ordinance 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.
25
Should the appropriation ordinance, for instance, already
contain in sufficient detail the project and cost of a capital
outlay such that all that LCE needs to do after undergoing the
requisite public bidding is to execute the contract, no further
authorization is required, the appropriation ordinance already
being sufficient.
 On the other hand, should the appropriation ordinance describe the
projects in generic terms 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. 26
 COA MEMORANDUM No. 2010-014
dated 22 April 2010
• Subject – Prior approval or authorization
by the sanggunian before the LCE incurs
expense or enters into contract on behalf
of the LGU; When necessary and not
necessary

The incurrence of expenses or entering

into contract by the LCE on behalf of the
LGU which are NOT in accordance with the
framework laid out in the ruling of the SC
in the Quisumbing case shall be
DISALLOWED IN AUDIT
Quisumbing Decision reiterated in recent
cases:

• VERCELES VS. COA

(G.R. No. 211553, September 13, 2016, En Banc)

• CORELLA v. PHILKONSTRAK and RAPAL

(G.R. No. 218663, February 28, 2022, 2nd Div)
 STEP 1.3 DELIBERATE ON THE BUDGET

Procedures in the deliberation may vary depending on

the Sanggunian’s Internal Rules of Procedure
The Sanggunian shall, among others, ensure that the
provisions on budgetary requirements and general
limitations under RA No. 7160 and other laws are
strictly complied with in the proposed budget

4th
sub
 STEP 1.4 AUTHORIZE THE BUDGET

Contents of the AO
 An assigned number, title or caption, enacting
or ordaining clause, and the date of proposed
effectivity (Article 107 [b], IRR)
 A provision identifying the documents appended
to the AO that will form an integral part thereof
– Plantilla of Personnel; AIP; List of 20% DF;
APP
 Receipts Program
 Expenditure Program
 General Provisions

basic rules
 STEP 1.4 AUTHORIZE THE BUDGET

Contents of the AO (for Supplemental Budget)

 An assigned number, a title or caption, an
enacting or ordaining clause, and the date of
the proposed effectivity (Article 107(b), IRR)
A provision identifying the supporting
documents to the AO, if any, such as but not
limited to the following:
o Supplemental AIP
o Others (specify)

 Sources of Income
 Supplemental Items of Appropriation (Use of
Funds)
basic rules
LIMITATIONS ON LEGISLATIVE ACTION
The Local Sanggunian –
oMay not increase the proposed amount in
the executive budget
oMay not 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
(Art 415, IRR)
LIMITATIONS ON LEGISLATIVE ACTION
The Local Sanggunian –

oMay not increase the proposed

amount in the executive budget
(Sarmiento, et al. vs. The
Treasurer of the Philippines, et al.
[GR Nos. 125680 and 126313,
September 04, 2001] – refers to
total budget not individual items
of appropriations)
• 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.
LIMITATIONS ON LEGISLATIVE ACTION
The Local Sanggunian –

oMay not include new items

oexcept to provide for statutory and

contractual obligations
 but in no case shall it exceed the
total appropriations in the
executive budget
(Art 415, IRR)
 LIMITATIONS ON LEGISLATIVE ACTION
Application – is the act of the Sanggunian
proper?

o Proposed executive budget – total amount is P1M

Scenario 1 - PB included only 10% development fund (P50K);

SB increased to 20% - added 50K in the AO for development
projects

Scenario 2 - PB forgot to include payment for loans due

amounting to 50K; SB added 50K in the AO for payment of
loans

Scenario 3 – PB did not include funding provision for trainings

and seminars; SB included 50K for trainings and seminars
which it deducted from supplies – so that the total amount of
the proposed budget is not exceeded
 STEP 1.4 AUTHORIZE THE BUDGET

RULES IN THE ENACTMENT OF

THE AO

A majority of all members of the

Sanggunian who have been
elected and qualified shall
constitute a quorum to transact
official business
(Section 53, LGC)

cont
 ENACTMENT OF THE AO

After budget deliberation, the

Sanggunian authorizes the Annual
Budget through an Appropriation
Ordinance which serves as the
legislative authorization directing the
payment of goods and services from
local government funds under
specified conditions or for specific
purposes (Sec 306, LGC)
 ENACTMENT OF THE AO

“ORDINANCES ENACTED BY THE

SANGGUNIANG BARANGAY SHALL,
UPON APPROVAL BY THE
MAJORITY OF ALL ITS MEMBERS,
BE SIGNED BY THE PUNONG
BARANGAY”
(Sec 54 [c], LGC)
The PB is the Presiding Officer of
the SB but he does not vote, except
only to break a tie (Sec 49, LGC;
Art 102, IRR)

WHAT IS MAJORITY?
SC – IS THE NUMBER GREATER/MORE
THAN HALF OF ANY TOTAL
(Zamora v Caballero, G.R. No. 147767, January 14, 2004)
Javier v Cadiao
(G.R. No. 185369, August 03, 2016)
Should the Vice Governor, as the
presiding officer of the Sangguniang
Panlalawigan, be counted in the
determination of what number
constitutes as the majority?
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.

In the instant petition, when the Combong

Resolution was deliberated upon, all the ten
(10) regular and three (3) ex-officio members,
plus the Presiding Officer, were present. Seven
members voted for, while six voted against the
Combong Resolution. There was no tie to
break as the majority vote had already been
obtained.
Application to the Barangay

 How many is the total membership of the

SB for determining “Majority”?

 For Quorum
 7 Regular Members
 1 SK Chairperson – ex officio member
 1 PB as Presiding Officer
Total = 9; Hence, majority is 5

 For Voting
× exclude the Presiding Officer
Total = 8; Hence, majority is 5
Application to the Barangay

 8 members and PB/PO present = 9

 4 members – yes
x 4 members – no

Questions:
1. Quorum?
2. Will the PB/PO vote?
3. If PB/PO voted yes, is the vote sufficient to
enact the AO?

 6 members and PB/PO present = 7

 3 members – yes
x 3 members – no
Application to the Barangay

 4 members and PB/PO present = 5

 All 5 present – yes

Questions:
1. Quorum?
2. With all 5 present voting, is the vote
sufficient to enact the AO?
The enacted AO shall –
 Be stamped with seal of
Sanggunian
 Recorded in a book kept for the
purpose
 Be signed by the Barangay
Secretary
(Sec 469, LGC; Art 122, IRR)
 STEP 2. APPROVE THE AO

“ORDINANCES ENACTED BY THE

SANGGUNIANG BARANGAY SHALL,
UPON APPROVAL BY THE MAJORITY
OF ALL ITS MEMBERS, BE SIGNED BY
THE PUNONG BARANGAY” (Sec 54
[c], LGC)
oTHE PB HAS NO VETO POWER – since he
is also the Presiding Officer of the SB
(Sec 49, LGC)
 STEP 3. POST THE AO

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 -
o in a bulletin board at the entrance of the
barangay hall; AND
o in at least two (2) other conspicuous places
in the LGU (Sec 59 [a], LGC)
 POST THE AO

The Secretary to the Sanggunian shall

cause the posting of an ordinance or
resolution in the bulletin board at the
entrance of the provincial capitol, and
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
(Sec 59 [b], LGC)
 POST THE AO

The text of the ordinance or resolution

shall be disseminated and posted in
Filipino or English and in the language or
dialect understood by the majority of the
people in the LGU, and the Secretary to
the Sanggunian shall record such fact in
a book kept for the purpose, stating the
dates of (1) approval and (2) posting
(Sec 59 [a], LGC)
STEP 4. FORWARD COPIES OF THE APPROVED
AO TO THE REVIEWING AUTHORITY

“Within 10 days from its approval, copies

of the barangay ordinance authorizing the
annual appropriations shall be furnished
the sangguniang panlungsod or
sangguniang bayan, as the case may be,
through the city or municipal budget
officer. The sanggunian concerned shall
have the power to review such ordinance
in order to ensure that the provisions of
this Title (Title Five – Local Fiscal
Administration) are complied with.”
(Sec 333, LGC)
 CAN THERE BE CHANGES IN THE
ANNUAL BUDGET?
 General Rule
o All budgetary proposals shall be
included and considered in the budget
preparation process

o After the LCE submitted the executive

budget to the Sanggunian, no
ordinance providing for a
supplemental budget shall be enacted
(Sec 321, LGC)
 CHANGES IN THE ANNUAL BUDGET
 Exception:
Changes in the annual budget may be done through –
SUPPLEMENTAL BUDGET (Sec 321, LGC; Art 417, IRR as
amended by AO No. 47 dated 12 April 1993)
1. When supported by funds actually available as certified by the
local treasurer
a. realized income exceeds estimated income as of any given
day, month or quarter of the said fiscal year
b. When there are savings
2. If covered by new revenue source/s
a. Money measure not otherwise considered during the
preparation and enactment of the annual budget
b. Also include new or higher remittances, contributions,
subsidies or grants in aid from the National Government or
from government corporations and private entities
3. In times of public calamity
 SUPPLEMENTAL BUDGET
1. When supported by funds actually available
as certified by the local treasurer -

a. Money actually collected as certified by

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 – otherwise stated, when
realized income exceeds estimated income
as of any given day, month or quarter of the
said fiscal year
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
b. When there are savings -
Savings refer to portions or balances as of any
given point in the fiscal year of 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
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
2. If covered by new revenue source/s -

a. 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 law which imposes new local taxes,
charges, fees, fines or penalties
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET

b. Such revenue sources also include new

or higher remittances, contributions,
subsidies or grants in aid from the
National Government 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
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL 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
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
In times of public calamity -
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 by the
LCE;
 The items of appropriations affected;
and
 The reasons for the change
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
CHANGES IN THE ANNUAL BUDGET
 General Rule
o Funds shall be available exclusively
for the specific purpose for which
they have been appropriated
o No ordinance shall be passed
authorizing any transfer of
appropriations from one item to
another
(Section 336, LGC)
 CHANGES IN THE ANNUAL BUDGET
 Exception
(Use of Savings and Augmentation)

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 (Sec 336, LGC)
 SAMPLE PORTION OF AO

Section 4. General Provisions. The following

policies are hereby adopted for the fiscal
year:

a. The Punong Barangay or Presiding Officer of

the Sanggunian is hereby authorized to
augment any item in the approved annual
budget from savings in other items within
the same expense class of the appropriations
in their respective offices, in accordance with
Section 336 of the Local Government Code of
1991.
b. All procurement shall strictly follow the
provisions of Republic Act No. 9184, the
Government Procurement Reform Act.
 EFFECT OF FAILURE TO
ENACT THE BUDGET
In case the Sanggunian fails to pass the
ordinance authorizing the annual
appropriations by January 1st –

CONSEQUENCES:

oThe AO of the preceding year shall be

deemed reenacted

Annual and Supplemental Budgets

 EFFECT OF FAILURE TO
ENACT THE BUDGET
CONSEQUENCES:

oThe Sanggunian shall continue to

hold sessions without additional
remuneration for its members until
the AO is approved

oNo other business shall be taken up in

such sessions
(Sec 323, LGC; Article 415, IRR)
Effect of Failure to Enact the Budget

Items of appropriations deemed

reenacted
– Honoraria of barangay officials
– Salaries and wages of employees
– Statutory and Contractual
Obligations
– Essential operating expenses

As authorized in the AB and SBs

Effect of Failure to Enact the Budget

No ordinance authorizing

supplemental appropriations shall
be passed in place of the annual
appropriations
(Sec 323, LGC)
 IMPLEMENTATION OF REENACTED BUDGET

Local Treasurer
1. Excludes from the estimates of income
for the preceding fiscal year those
realized from non-recurring sources
2. Compares the revised income
estimates with aggregate reenacted
appropriations
 IMPLEMENTATION OF REENACTED BUDGET

Local Treasurer
3. If income is less than appropriations,
advise the Sanggunian concerned
 Sanggunian, within 10 days from receipt of
advice, make necessary adjustments

 The revised appropriations authorized by the

Sanggunian shall then be the basis for
disbursements
(Sec 323, LGC)
 Duration of the Reenacted Budget
The reenacted budget shall remain
in force and effect until the
ordinance authorizing the
proposed appropriations is passed
by the Sanggunian
(Sec 323, LGC)
Barangay Budgeting

BUDGET REVIEW
 BUDGET REVIEW
3rd phase in the budget process
Undertaken by the Sangguniang
Panlungsod or Sangguniang Bayan to
ensure compliance of the Barangay
Appropriation Ordinance with all the
budgetary requirements and limitations
provided in the LGC
(Sec 333, LGC; Art 424, IRR)
Starts from the time the reviewing
Sanggunian receives the AO
 WHEN AND TO WHOM SHOULD THE AO BE
SUBMITTED FOR REVIEW?

• Within 10 days from its approval, copies of

the barangay ordinance authorizing the
annual appropriations shall be furnished
• The sangguniang panlungsod or
sangguniang bayan, as the case may be,
through the city or municipal budget
officer.
• The sanggunian concerned shall have the
power to review such ordinance in order to
ensure that the provisions of this Title
(Title Five – Local Fiscal Administration)
are complied with.” (Sec 333, LGC)
 WHO SUBMITS THE AO TO THE
REVIEWING SANGGUNIAN?

“Within 10 days after its enactment,

the sangguniang barangay shall
furnish copies of all barangay
ordinances to the sangguniang
panlungsod or sangguniang bayan
concerned for review as to whether the
ordinance is consistent with law and
city or municipal ordinances.”
(Sec 57, LGC; Art 111, IRR)
WHAT SHALL THE REVIEWING SANGGUNIAN
CHECK IN ITS REVIEW OF THE AO?

• “The sanggunian concerned shall review

the barangay ordinance to ensure
compliance thereof with all the budgetary
requirements and limitations provided in
this Rule (Rule XXXIV – Local Government
Budgeting).” (Art 424 [b], IRR)
• “Whether the ordinance is consistent with
law and city or municipal ordinances.”
(Sec 57, LGC; Art 111, IRR)
 WITHIN WHAT PERIOD SHOULD THE
AO BE REVIEWED?

• 60 days from receipt of the AO by

the reviewing Sanggunian
(Art 424, IRR)
Can the budget already be
implemented pending the review
thereof by the Sanggunian?
 HOW IS THE BUDGET REVIEW DONE?
 Step 1 – Review the AO within 60 days from
receipt

 Initially, check completeness of the AO and

appended budget documents

 Inaction on the part of the Sanggunian within

60 days from receipt –

SAID ORDINANCE SHALL CONTINUE TO BE IN

FULL FORCE AND EFFECT
(Sec 333, LGC; Art 424, IRR)
Step 2 – Declare the Review Action

Actions:
(1) Declare the AO as Operative

If the AO complied with all the

budgetary requirements and
limitations prescribed (under Secs
324 and 325, as well as other
applicable requirements, LGC)
 (2) Declare the AO as
Inoperative in its Entirety

1. When ordinance contains

appropriations in excess of estimates of
income (Sec 333 [a], LGC)
2. No sufficient provision for payment of
loans (Sec 303, LGC)
3. Non-provision or insufficient provision
for any of the budgetary requirements
under Sec 324 of LGC(Sec 333 [a], LGC)
 (3) Declare the AO as
Inoperative in Part

When it has not complied with

some budgetary requirements or
general limitations or any
provision of the LGC, and that
such non-compliance may be
corrected by imposition of
conditions in the review action
Step 3 – Return the reviewed AO
Within the same 60-day
reglementary period

To the PB, through the CBO/MBO

With advice of review action in the

form of resolution or letter of
review (Art 424 [d], IRR)
EFFECTS OF REVIEW ACTION?
• AO Operative – continue to execute
the AO/budget
• Inoperative in part - for proper
adjustments or corrections
Upon receipt of advice, Barangay
Treasurer or the City or Municipal
Treasurer who has custody of the funds
shall NOT make further disbursement
from any item or appropriation declared
inoperative, disallowed or reduced
(Sec 333, LGC; Art 424 [d])
 EFFECTS OF REVIEW ACTION?
• Inoperative in its entirety - for
proper adjustments or corrections
Barangay to operate on a reenacted
budget until such time that the NEW
ordinance authorizing annual
appropriations shall have met the
objections and disallowances raised by
the reviewing Sanggunian
(Sec 333, LGC; Art 424 [d])
Can the budget already be
implemented pending the review
thereof by the Sanggunian?

YES!!!