Budget Process Lgu

BUDGET OPERATIONS MANUAL
FOR LOCAL GOVERNMENT UNITS
2016 EDITION
THIS MANUAL WAS DEVELOPED WITH
SUPPORT FROM THE EUROPEAN UNION
UNDER THE PROJECT

“SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND
ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)”
The Budget Operations Manual for Local Government Units,
2016 Edition, may be reproduced provided written permission
is obtained from the Department of Budget and Management.
Message from the Secretary
Over the last six years, we designed and built our Public Financial
Management reforms on these principles: that the budget is one of
the most potent tools for achieving inclusive growth in the country,
and that this growth can only be catalyzed and sustained by good
governance.
Because of this, we streamlined our budget reforms to ensure that
the government spends within means, that it invests in the right
priorities and delivers measurable results, and that it accomplishes
these within an environment that empowers citizens through greater
transparency, accountability, and meaningful citizens’ participation.
In all of this, we must not overlook the crucial role that our local
governments play in effecting public financial management reform,
or their influence in our pursuit of transformative governance. Thus,
we bring to you the 2016 Edition of the Budget Operations Manual
for Local Government Units (BOM for LGUs), which details
reforms for responsive, transparent, and accountable local
government spending, especially as they mirror efforts that are being
undertaken at the national level.
What is particularly notable about this edition is its adoption of
Participatory Budgeting mechanisms and the Performance Informed
Budgeting approach, which gives our people—with the help of civil
society organizations—a greater voice on how public funds are
spent. At the same time, citizen-centric and performance-based
budgeting creates firm links between the budget and service delivery
standards, resulting in greater accountability for every peso that
government spends.
Furthermore, this Manual provides the framework for strengthening
policy-based budgeting among LGUs, specifically through the
harmonization of development plans, investment programs, and
policies, and then tying these closely to the resulting budget. This
Edition also incorporates the latest laws, jurisprudence, and issuances
on local budgeting.
As the most comprehensive and definitive guide on local budget
operations, the 2016 Edition of the BOM for LGUs represents yet
another accomplishment for local expenditure reform, as well as our
broader goal of instituting transparency, accountability, and openness
in public spending. We trust that this edition will become a valuable
instrument for budget efficiency and effectiveness on the local level,
and that it will likewise allow our LGUs to bring real and sustainable
progress to the very communities they serve.
Mabuhay at Maraming Salamat po!
Florencio B. Abad
Secretary
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT
REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF BUDGET AND MANAGEMENT
GENERAL SOLANO STREET, SAN MIGUEL, MANILA
No. 112
LOCAL BUDGET CIRCULAR Date: June 10, 2016
TO : Local Chief Executives, Members of the Local Sanggunian, Local Budget Officers,
Local Treasurers, Local Development and Planning Officers, Local Accountants,
and All Others Concerned
SUBJECT : BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS (BOM
for LGUs), 2016 EDITION

1.0 PURPOSE
This Circular is being issued to prescribe the BOM for LGUs, 2016 Edition, as a guide for all
provinces, cities and municipalities.
2.0 THE BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS, 2016 EDITION
2.1 The BOM for LGUs, 2016 Edition, is issued by the Department of Budget and Management
(DBM) to improve and systematize methods, techniques, and procedures employed in the
preparation, authorization, review, execution, and accountability in local budget operations,
1
pursuant to Section 354 of Republic Act (RA) No. 7160.
2.2 This latest edition of the BOM for LGUs contains the following enhancements and new
features:
2.2.1 Emphasis on participatory budgeting, specifically on the emerging roles and

engagement of the civil society organizations (CSOs) in each phase of the local
budget process, consistent with the Handbook on the Participation of Civil
Society Organization in the Local Budget Process which was issued under Local
Budget Circular (LBC) No. 106 dated June 9, 2015.
2.2.2 Framework for strengthening policy- based budgeting by harmonizing

development plans, investment programs and policies, and linking the budget to
these harmonized plans and policies, pursuant to the pertinent provisions of RA
No. 7160 and its Implementing Rules and Regulations.
2.2.3 Introduction of the Performance-Informed Budgeting (PIB) approach, which uses

performance information in appropriation documents to link funding to results and to
provide a framework for more informed resource allocation and management.
࿿࿿࿿࿿5掔⺊࿿࿿࿿࿿࿿࿿࿿࿿࿿6Ѐⓦ࿿࿿࿿࿿࿿࿿࿿࿿࿿737 The Local Government Code of 1991
iv
BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
2.2.4 Streamlining of local budget forms and accounts consistent with the Revised
Chart of Accounts for LGUs, as prescribed under Commission on Audit Circular
No. 2015-009 dated December 1, 2015; and
2.2.5 Integration of other developments concerning local budget operations, in view of the
enactment of new laws and issuance of updated/new policies and guidelines.
3.0 ELECTRONIC BUDGET SYSTEM FOR LGUs
3.1 To facilitate the preparation of the local budgets consistent with the BOM for LGUs, 2016
Edition, an Electronic Budget (eBudget) System for LGUs was designed and developed by
the DBM under the auspices of the European Union - funded project, "Support to the Local
Government Units for More Effective and Accountable Public Financial Management (LGU
PFM 2 Project)."
3.2 The eBudget System automates the preparation of the local budgets following the
procedures outlined in the BOM for LGUs, 2016 Edition. The same shall be made available
free of charge to LGUs interested in automating their local budget preparation process.
4.0 ROLL-OUT ACTIVITIES
4.1 Trainings for the LGUs on the BOM for LGUs, 2016 Edition, and the eBudget System for
LGUs shall be conducted by the Regional Inter-Agency Teams on PFM led by the DBM
Regional Offices.
5.0 SAVING CLAUSE
Cases not covered by this Circular and the BOM for LGUs, 2016 Edition, shall be referred to the
DBM for resolution.
6.0 REPEALING CLAUSE
This Circular and the BOM for LGUs, 2016 Edition, supersede LBC No. 2008-90 dated
September 1, 2008 and the BOM for LGUs, 2008 Edition, respectively.
7.0 EFFECTIVITY
The guidelines provided in the BOM for LGUs, 2016 Edition, shall take effect in FY 2017.
FLORENCIO B. ABAD
Secretary
v
Participatory Budgeting p1
1
Legal Bases
1
0 Guidelines
Benefits
Budget
3
Framework 1
4
Emerging I
Roles
2 4 5
Policy-Based Legal Bases Plans and

Policies
Budgeting
p4
Budget Budget
Authorization Review
? ?? FAQs IV 166 167 174 Budget
166
? Budget
Execution
Budget Preparation 175
Budget
Execution Reglementary Review Changes in
p112 Period
Introduction p85 Annual
Budget
4 88 87
86 3 70 60
Introduction 112 Steps in Flow Chart Le
Legal Bases Flow Chart
Budget Key Players Steps in the K
Legal Bases, Key Players 113 Review
Budget
Authorization
Flow Chart, Budgetary Accounts in Budget Execution 117 III Phase
Steps in the Budget Execution Phase 118

ALGU
Budget
Accountability 5 150 0 Internal Revenue Allotment (IRA)
p132
0 Introduction
0 Legal Bases 155 158
0 Key Players Special Shares ShareininthetheGrossIncome e

TaxesPaidbybyAllAll
5888 The Budget Monitoring and Evaluation Framework BusinessesandEnterprise s
withinthetheEcozones
23 Accounting for Budget

Budget Operations Manual Roadmap
Parts Budget Framework
Chapters Budget Process
29 Section Allocations
Pages
FAQs
6 7 12 3 14 14 14
Linking the Synchronized Procurement

Legal Basis Conceptual Benefits
Budget Plan-Budget Planning and PIB Framework
Process Budgeting 13
Linkage
Budget Process 16 II 1
23 Budget
Preparation
22 Introduction
Legal Basis p18
Flow Chart
23 Key Players
2 Steps in
Budget 95a++70+
Preparation
57 Budget
58
Introduction
Legal Basis Authorization
Key Players p57
176 Items of Appropriations
177 179 186 187 187 187 189 190 192

Confidential Special Local Disaster Allocation Aid to Gender and ICC/IP Personal Creation of
Expenses Education Risk Reduction to LGUs Barangays Development Service Positions
Fund and Limitations
Management
Fund
160 162
me Share in Value Tobacco Excise Taxes
ises Added Tax

Table of Contents
List of Acronyms and Abbreviations....................................................................xii
PART I. THE BUDGETING FRAMEWORK FOR LGUs 1

Introduction.....................................................................................................................1
Chapter 1. Participatory Budgeting..................................................................................1
1.1 Legal Bases of Participatory Budgeting............................................1
1.2 Guidelines on Participatory Budgeting..............................................2
1.3 Benefits of Participatory Budgeting...................................................3
1.4 Emerging Roles of CSOs in the Budget Process............................4
Chapter 2. Policy-Based Budgeting...................................................................................4
2.1 Legal Bases of Plan-Budget Linkage.................................................4
2.2 Harmonizing Plans and Policies..........................................................5
2.3 Linking the Budget to Harmonized Plans and Policies................6
2.4 Synchronized Plan-Budget Process....................................................7
2.5 Procurement Planning and Budgeting Linkage............................12
Chapter 3. Performance Informed Budgeting (PIB)................................................13
3.1 Legal Basis of PIB.................................................................................14
3.2 Conceptual Framework of PIB..........................................................14
3.3 Benefits of PIB.......................................................................................14
PART II. THE LOCAL BUDGET PROCESS 15

Chapter 1. Budget Preparation Phase............................................................................17
1.1 Introduction.............................................................................................17
1.2 Legal Basis of Budget Preparation...................................................17
1.3 Key Players in Budget Preparation..................................................17
1.4 The Budget Preparation Flow Chart................................................21
1.5 Steps in the Budget Preparation Phase............................................22
1.6 Local Budget Preparation
Forms 29
1.7 Illustrative Examples
....39
Chapter 2. Budget Authorization Phase........................................................................56

2.1 Introduction.............................................................................................56
2.2 Legal Basis of Budget Authorization...............................................57
2.3 Key Players in Budget Authorization..............................................57
2.4 The Budget Authorization
Flow Chart 59
2.5 Steps in the Budget
Authorization Phase 59
2.6 Changes in the Annual
Budget 69
2.7 Local Budget Authorization Forms..................................................71
Chapter 3. Budget Review Phase......................................................................................84
3.1 Introduction.............................................................................................85
3.2 Legal Bases of Budget Review..........................................................85
3.3 Key Players in Budget Review..........................................................85
viii
3.4 Reglementary Period of Review ................................................... 86
3.5 The Budget Review Flow Chart .................................................... 86
3.6 Steps in the Budget Review Phase ................................................ 87
3.7 Local Budget Review Forms ......................................................... 94
3.8 Illustrative Example ..................................................................... 101
3.9 Sample Formats ............................................................................ 102
Chapter 4. The Budget Execution Phase .......................................................... 111
4.1 Introduction .................................................................................. 111
4.2 Legal Bases of Budget Execution ................................................ 112
4.3 Key Players in Budget Execution ................................................ 112
4.4 The Budget Execution Flow Chart ............................................. 116
4.5 Budgetary Accounts in Budget Execution ................................ 116
4.6 Steps in the Budget Execution Phase ......................................... 117
4.7 Local Budget Execution Forms................................................... 121
Chapter 5. The Budget Accountability Phase .................................................. 131
5.1 Introduction .................................................................................. 131
5.2 Legal Bases of Budget Accountability ........................................ 132
5.3 Key Players in Budget Accountability ........................................ 132
5.4 The Budget Monitoring and Evaluation Framework ............... 135
5.5 Steps in the Budget Accountability Phase ................................. 138
5.6 Local Budget Accountability Reports ........................................ 142
PART III: ALLOCATIONS TO LOCAL GOVERNMENT UNITS (ALGU) 149
1.0 Internal Revenue Allotment (IRA) ...................................................... 150
1.1 Legal Bases .................................................................................... 150

1.2 Distribution of Shares .................................................................. 151
1.3 Use of the Fund ............................................................................. 152
1.4 Fund Release Procedures ............................................................. 154
2.0 Special Shares ........................................................................................ 154
2.1 Legal Bases .................................................................................... 154
2.2 Distribution of Shares .................................................................. 155
2.3 Use of the Fund ............................................................................. 156
3.0 Share in the Gross Income Taxes Paid by All
Businesses and Enterprises within the Ecozones. ................................ 157
3.1 Legal Basis .................................................................................... 157
3.2 Computation of Shares ................................................................ 158
3.3 Use of the Fund ............................................................................ 158
4.0 Share in Value Added Tax ..................................................................... 159
4.1 Legal Bases .................................................................................... 159
4.2 Computation of Shares ............................................................... 159
ix
5.0
Tobacco Excise Taxes ............................................................................ 161
5.1 Legal Bases .................................................................................... 161
5.2 Computation of Shares of LGUs ................................................. 162
5.3 Use of the Fund ............................................................................. 162
PART IV. FREQUENTLY ASKED QUESTIONS 165
Budget Preparation .......................................................................................... 165

Budget Authorization ...................................................................................... 166
Budget Review .................................................................................................. 173
Budget Execution ............................................................................................. 174
Items of Appropriations Included, By Attribution, in the General Fund
Annual Budget .............................................................................. 176
Confidential Expenses ..................................................................................... 176
Special Education Fund ................................................................................... 179
Local Disaster Risk Reduction and Management Fund .............................. 186
Allocation to Local Government Units ......................................................... 187
Aid to Barangays .............................................................................................. 187
Gender and Development ............................................................................... 187
Indigenous Cultural Communities (ICC)/Indigenous Peoples (IP) ......... 189
Personal Services Limitation .......................................................................... 189
Creation of Positions ....................................................................................... 191
Annexes 193
Annex A. Synchronized Planning and Budgeting Calendar .................... 193

Annex B. Proposed Major Final Outputs (MFOs) and Performance
Indicators (PIs) of the Different Mandatory Offices in LGUs 197
Annex C. The Services Falling Under Each of the Major Sectors
Pursuant to the New Government Accounting System
(NGAS) of the Commission on Audit (COA) .......................... 204
Annex D. Coding Structure by Type of LGU and Office .......................... 206
Annex E. AIP Summary Form ..................................................................... 208
Annex E1. Gender and Development Plan and Budget ............................. 209
Annex E2. Local Disaster Risk Reduction and Management Plan ........... 210
Annex E3. Local Climate Change Action Plans .......................................... 211
Annex E4. List of PPAs for the Local Council for the Protection of
Children ......................................................................................... 212
Annex E5. List of PPAs for Senior Citizens and Persons with Disabilities.... 213
Annex E6. Peace and Order Plan ................................................................... 214
Annex E7. List of PPAs to Combat Acquired Immune Deficiency
Syndrome ....................................................................................... 215
Glossary of Terms ............................................................................................ 216
x
List of Tables
Table 1. Emerging Roles of CSOs in the Budget Preparation Phase..........18

Table 2. Emerging Roles of CSOs in the Budget Authorization Phase......58
Table 3. Emerging Roles of CSOs in the Budget Review Phase..................86
Table 4. Emerging Roles of CSOs in the Budget Execution Phase 113
Table 5. Emerging Roles of CSOs in the Budget Accountability Phase 135
Table 6. Required Accountability Reports 140
Table 7. Variance Analysis of Output/Physical Performance 140
Table 8. Variance Analysis of Financial Performance 140
Figures
Figure 1. Benefits of Participatory Budgeting......................................................3

Figure 2. Plan-Budget Link Model..........................................................................7
Figure 3. PIB Structure..............................................................................................14
Figure 4. The Local Budget Process.....................................................................15
Figure 5. Budget Preparation Flowchart..............................................................21
Figure 6. The Budget Authorization Flow Chart...............................................59
Figure 7. The Budget Review Flow Chart...........................................................87
Figure 8. The Budget Execution Flow Chart....................................................116
Figure 9. Budget Monitoring & Evaluation Framework...............................137
Figure 10. The Budget Accountability Flow Chart.........................................138
Figure 11. IRA share per LGU level...................................................................151
Figure 12. Computation of IRA based on Indicative Factors......................152
Figure 13. Fund Release Procedures of LGU Share from the IRA...........154
Figure 13. Distribution of Shares from National Wealth..............................155
Figure 14. Distribution of Shares from National Wealth..............................156
Figure 15. Fund Release Procedures of LGU Shares in the proceeds
from Forest Charges, Royalties from Mineral Reservation,
Mining Taxes, and Energy Source Production...........................157
Figure 16. Fund Release Procedures of LGU Shares from Ecozone Share
in Value Added Tax.............................................................................158
Figure 17. Formula for the Computation of LGUs’ VAT Shares................160
Figure 18. Fund Release Procedures of LGU Share from VAT tax
payments/collections..........................................................................161
Figure 19. Fund Release Procedures of LGU Shares from Tobacco
Excise Tax..............................................................................................163
xi
List of Acronyms and Abbreviations
ADCOM Additional Compensation

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
CCT Climate Change Tagging
CDP Comprehensive Development 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
DILG Department of the Interior and Local Government
DOF Department of Finance
DRRMP Disaster Risk Reduction and Management Plan
GAD Gender and Development
GSB Government Servicing Bank
HOPE Head of Procuring Entity
IAM Internal Audit Manual for Local Government Units
IRA Internal Revenue Allotment
LBM Local Budget Matrix
LBO Local Budget Officer
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
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
xii
NEDA National Economic and Development Authority
NGA National Government Agency
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
RATA Representation and Transportation Allowances
RG/TLB Retirement Gratuity/Terminal Leave Benefits
RO Regional Office
RPT Real Property Tax
SB Supplemental Budget
xiii
Foreword
Pursuant to its mandate under Section 354 of Republic Act (RA) No. 7160 to promulgate a Budget
Operations Manual for local government units to improve and systematize methods, techniques, and
procedures employed in the local budget process, the Department of Budget and Management (DBM) is
issuing the Budget Operations Manual for Local Government Units (BOM for LGUs), 2016 Edition.
The BOM for LGUs, 2016 Edition, reflects the earnest endeavour to mirror at the local level the efforts
being undertaken at the national level to make public expenditure management more responsive, transparent
and accountable.
Thus, the Manual continues to espouse participatory budgeting, and reinforces the emerging roles of Civil
Society Organizations in the local budget process, as embodied in the separate Handbook issued for the
purpose.
The BOM for LGUs, 2016 Edition, also provides the framework for strengthening policy-based budgeting
by specifying how to harmonize development plans, investment programs and policies, and how to link the
budget to these harmonized plans and policies.
It also adopts the Performance Informed Budgeting Structure to ensure that the budget documents produced
will be more comprehensible and relevant through the presentation of performance information. This means
that stakeholders will be informed on how each government peso is aligned with performance indicators and
tangible targets of the LGU.
The foregoing paradigm shifts, as well as the latest issuances on local budgeting, are integrated and reflected
in the entire budget process, thus making the BOM for LGUs, 2016 Edition a potent and effective tool for
sound and efficient local public expenditure management.
xiv
PART I. THE BUDGETING FRAMEWORK FOR LGUS
introduction
The first part of the BOM for LGUs, 2016 Edition contains three chapters.
Chapter 1 advocates the principles of participatory governance in the budget process. It attempts to persuade
local thinking on the benefits of engaging civil society organizations (CSOs) in collective decision-making.
Complementary to the chapter on participatory budgeting, Chapter 2 focuses on further strengthening the
linkage among policy, plan and budget. The inclusion of this Chapter is an attempt to address the mismatch
between policy objectives and resource realities, as documented in the Local Government Units Public
Financial Management (LGU PFM) Reform Roadmap. The mismatch, which is due to planning being
largely separated from policy-making, leads to lack of fiscal discipline, and consequently, poor service
delivery. Both policy-making and planning are also weakly linked to budgeting resulting to frequent and
numerous in-year adjustments in budget items, thus, reducing the credibility of the budget.
Finally, Chapter 3 explains the rationale for performance informed budgeting, its conceptual framework and
its benefits.
CHAPTER 1. PARTICIPATORY BUDGETING
Participatory budgeting is an approach wherein citizens, through CSOs, 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 corruption1.
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, 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], Republic Act [RA] No. 71602).
Role of People’s and Non-governmental Organizations. - 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, RA No. 7160).
23 Handbook on the Participation of Civil Society Organizations in the Local Budget Process
24 Local Government Code of 1991
1
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:
1.2.1 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
PFM.
1.2.2 LGUs shall encourage participation and involvement of the CSOs, as part of the Local Development
Councils (LDC) 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.
1.2.3 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.
1.2.4 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.
1.2.5 LGUs are encouraged to enhance participative planning in different venues, such as:
5888 In training workshops - more work than listening to lectures.
5889 In focused group discussions - discuss/resolve the issues at hand.
5890 In formal institutions - schools and formal classes are used.
5891 Digital Governance - wide use of electronic system or computers to communicate
with constituents via social media and other inter-active platforms.
1.2.6 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
DBM National Budget Circular No. 536 dated January 31, 2012:
5888 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;
5889 Accountability – abide by the policies, standards and guidelines of engagement that may be
agreed upon, and fulfil commitments;
5890 Integrity – adhere to moral and professional standards;
5891 Partnership – cooperate and share responsibilities to ensure that the objectives of the
engagement are achieved;
5892 Consultation and mutual empowerment – enhance knowledge sharing and continuing
dialogue;
5893 Respect for 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; and
5894 Sustainability – ensure continuing engagement by instituting progressive policies and
operational mechanisms that will promote and environment of mutual trust
2
1.3 Benefits of Participatory Budgeting
Based on a World Bank study, 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.3
Figure No. 1 below further outlines the benefits of participatory budgeting.
Figure 1. Benefits of Participatory Budgeting
Service gaps due to Fund Constraint

Helps the LGU maximize may be addressed by CSOs or the
the use of resources private sector who participate willingly
in the execution of public projects.
Reduces delay in the Delays in project implementation caused

by conflicts from concerned Groups who
implementation of were never involved in the formulation of
urgent projects the project or activity may be resolved
through active engagement by CSOs.
Develops trust in Bringing the government closer to
the people enhances partnership in

Government
all government undertakings.
Ensures continuity People who have ownership of the

plan are committed to its effective
and sustainability of
implementation until completion even
plans and budgets when there is a change in leadership.
Ensures continuity The vigilance of stakeholders in monitoring

the status of approved PPAs in all phases of
and sustainability of
the budget will ensure the successful delivery
plans and budgets of goods and services to target clients.
3 Participatory Budgeting, edited by Anwar Shah, Public Sector Governance and Accountability Series, The World Bank, Washington D.C., undated
3
1.4 Emerging Roles of CSOs in the 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 public financial
management.
The CSOs may be engaged in all phases of the budget process, as provided in the Handbook on the
Participation of Civil Society Organizations in the Local Budget Process, and as outlined in subsequent
Chapters of this Manual.
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 RA No. 7160.
A major indicator therefore 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 budget processes, as
demonstrated by compliance with the Synchronized Planning and Budgeting Calendar for LGUs.
2.1 Legal Bases of Plan-Budget Linkage
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, RA No. 7160).
The provincial, city and municipal development councils shall, among others: (1) formulate long-term,
medium-term and annual socio-economic development plans and policies; and (2) formulate the medium-
term and annual public investment programs (Section 109, RA No. 7160).
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], RA No. 7160).
Local budgets shall operationalize approved local development plans (Section 305 [i], RA No. 7160).
4
L[ocal] D[evelopment] C[ouncil]s shall submit to the local finance committee a copy of the local
development plan and annual investment program 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, Implementing Rules and Regulations [IRR], RA No. 7160).
2.2 Harmonizing Plans and Policies
RA No. 7160 explicitly requires all LGUs to have a multi-sectoral development plan, which shall be
translated into programs, projects and activities (PPAs) through investment programs.
To operationalize the aforementioned requirement of the law, the existing planning manuals issued by the
Department of the Interior and Local Government (DILG) and National Economic and Development
Authority (NEDA) require the LGUs to prepare the following:
For provinces and highly-urbanized cities:
2.2.1 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 process. The PDPFP also serves as a key vertical influence in
linking provincial development objectives with local, regional and national policies and priorities.
2.2.2 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 Provincial Development and Physical Framework Plan
(PDPFP) matched with financing resources, and to be implemented within a three to six-year period.
For component cities and municipalities:
2.2.3 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.
5
2.2.4 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 to six-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.
For Provinces, Cities and Municipalities
2.2.5 Annual Investment Program (AIP)

The AIP refers to the annual slice of the Provincial/Local Development Investment Program, which
constitutes the total resource requirements for all PPAs, i.e., the annual capital expenditure and regular
operating requirements of the LGU.
As also provided under RA No. 7160, 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, to
optimize the utilization of resources and to avoid duplication in the use of fiscal and physical resources.
Moreover, in formulating the investment programs, policies of both the executive and legislative
departments should also be considered.
The processes for formulating the foregoing development plans and investment programs are detailed under
the CDP Guide and Concise Illustrative Guide for the Preparation, Review, Monitoring and Updating of the
CDP and LDIP issued by the DILG, and in the Manual for Provincial/Local Planning and Expenditure
Management issued by the NEDA.
2.3 Linking the Budget to Harmonized Plans and Policies
The IRR of RA No. 7160 is very instructive on how to ensure that the local budgets are linked to
harmonized local plans and policies.
The IRR, particularly Article 410 thereof, provides that local development councils (LDCs) shall submit to the
local finance committee (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 National Government
Agencies (NGAs) or Government-Owned or –Controlled Corporations (GOCCs) concerned.
The foregoing provision is clear on the following:
23 That the AIP should be prepared and approved before the start of the local budget preparation
phase; and
24 That the local budgets shall fund PPAs included in the AIP.
6
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 below). Thus, to ensue plan-budget linkage and
ensure that local budgets truly operationalize approved local development plans, it is imperative that:
5888 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
5889 The local budgets fund the PPAs included in the investment programs, particularly in the AIP.
Figure 2. Plan-Budget Link Model

PLAN PDPFP/CDP
}
Development Planning
}
(6-15 Years)
PDIP/
LDIP Investment Programming
(3-6 Years)
Link AIP
(1 Year)
BUDGET Annual/Supplemental
} (1 Year)
Budget
2.4 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.
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 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 – Local Development Council, Peace
and Order Council, Local Health Board and Local School Board.
From November to December, the Provincial Development Councils are convened to deliberate on the PDPFP
and Structured List of PPAs of their component cities and municipalities for the purpose of harmonization. At
7
the city and municipal levels, the Mayor presents the Structured List of PPAs to the Provincial Development
Council.
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 and Capital Outlays for
administrative/support services are generated by the Local Finance Committee (LFC), with the Local
Budget Officer in the lead.
The BLGF and DBM shall provide technical assistance to the Local Treasurers and LFCs, respectively, in
coming up with the aforementioned forecasts.
Points to Consider in Formulating the Medium Term Forecast of COE and CO for
Administrative/Support Services
0 Personal Services
0 Based on the latest approved Plantilla of Personnel;
1 Proposed creation and filling-up of positions shall be included as separate
items; and
2 Requirements for retirement benefits / terminal leave benefits, salary
increases shall be included.
1 Maintenance and Other Operating Expenses (MOOE)
0 Items which are based on contracts / fixed rates shall not be indexed with
inflation;
1 Consider budgetary implications of price changes (inflation);
2 Include maintenance requirements of existing as well as newly-completed
facilities and newly-acquired assets (e.g. vehicles); and
3 Consider demand-driven changes, e.g. population, cost of maintaining an
ideal level of service.
2 Capital Outlays
0 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 LDIP4, which takes off from the Structured
List of PPAs or the long list of the PPAs that will implement the goals
and objectives reflected in the CDP. Tools for Prioritizing PPAs:
The Structured List of PPAs is subjected to further screening Urgency Test Matrix compares
the level of urgency of PPAs.
using the following tools5:
Resource Impact Matrix
0 Urgency Test Matrix; compares how the PPAs will
impact on LGU resources,
1 Resource Impact Matrix; including financial, manpower
2 Conflict-Compatibility-Complementary matrix; and and natural resources.
3 Goal Achievement Matrix.
Conflict-Compatibili
t y - Complementary Matrix
checks if the PPAs will conflict
with or complement each other.
Based on the results of the foregoing screening tools, a ranked list of
Goal Achievement Matrix
PPAs is derived. The ranked list of PPAs shall be considered for checks how each PPA
investment programming. It shall then be cross-matched with contributes to the achievement
available resources, particularly with investible funds, as identified of the LGU vision or goals.
by the Local Finance Committee (LFC), through the evaluation
0 The process described hereinafter may also be adopted by the Provinces.

1 Concise Illustrative Guide for the Preparation, Review,
Monitoring and Updating of the CDP and LDIP
8
of the Medium Term Revenue Forecasts vis-à-vis

New Investment Financing Potential =
the Medium Term Forecast of Current Operating
Medium Term Revenue Forecast – Medium Term Forecast
Expenses (COE) and capital outlays (CO) for of COE and CO for Administrative/Support Services
administrative/support services.
Thereafter, the LGU will prepare the LDIP depending on the financing approach it will adopt. If it chooses
to take a more conservative approach, then the PPAs to be included in the 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, thus, is approved with the CDP,
together with the other implementation instruments.
Based on the approved LDIP, the annual slice thereof is culled out to constitute the AIP.
Unless otherwise modified, the AIP Summary Form below, as prescribed under DBM-Climate Change
Commission (CCC)-DILG Joint Memorandum Circular (JMC) No. 2014-1 dated August 7, 2014, as
amended by DBM-CCC-DILG JMC No. 2015-1 dated July 23, 2015, shall be used.
CY ____ Annual Investment Program (AIP)

CY ____ Investment Program (AIP)
Annual Asof
As of _______________________
Province/City/Municipality/Barangay: _______________________________________
Province/City/Municipality/Barangay: _______________________________________ Schedule of Amount Amount of Climate Change PPAs

Implementation (in thousand pesos) (in thousand pesos)
Implementing Schedule of MaintenanceAmount Amount of Climate Change PPAs
AIP Reference Program/Project/Activity Expected Funding
Office/ Implementation (in thousand pesos) Climate (in thousand pesos)
and Other Climate
Code Description Implementing Start Date Completion Outputs Source Personal Maintenance Capital Outlay Total Change Change CC Typology
Department Operating
AIP Reference Program/Project/Activity Office/ Date Expected Funding Services (PS) and Other (CO) Climate Climate Code
Expenses Adaptation Mitigation
Code Description Department Start Date Completion Outputs Source Personal Operating Capital Outlay Total Change Change CC Typology
Date Services (PS) (MOOE)
(CO) Code
Expenses Adaptation Mitigation
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
(MOOE) 8+9+10
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
General
8+9+10
Services
General
(1000)
Services
(1000)
Social
Services
Social
(3000)
Services
(3000)
Economic
Services
Economic
(8000)
Services
(8000)
Other
Services
Other
(9000)
Services
(9000)
Prepared by: Attested by:
Prepared by: Attested by:
Planning Officer Budget Officer Local Chief Executive

Planning Officer Budget Officer Local Chief Executive
9
In filling out the AIP Summary Form, the following pointers shall be observed:
23 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 of whether or not the PPAs funded in the budget are the same PPAs prioritized in
the AIP.
0000- 000- 0- 0- 00- 000- 000- 000
Activity
Project / Activity
Program
Office
Office Type ( 1- Mandatory, 2 - Optional )
LGU Level ( 1 - Province, 2 - City, 3 – Municipality )
Sub-Sector (if any)
Sector ( 1000 – General Public Services Sector, 3000 – Social Ser-
vices Sector, 8000 – Economic Services Sector, 9000
– Other Services)
The codes for the offices were included to establish the responsibility centers for the PPAs.
Services falling under each sector are presented under Annex C while the suggested coding structure
for the offices in the LGU are presented under Annex D.
5888 Column 2 - PPA 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. Activity 2 2. Public Affairs, Information, Communication
and Technical Assistance
B. Project B. Operationalization of the Internal Audit Unit

1. Activity 1 1. Rehabilitation of Office Facilities
2. Activity 2 2. Purchase of Office Equipment and Furniture
and Fixtures
Theforegoingstructurerequiresthatallactivities Program – an integrated group of activities that

and projects be subsumed under a specific contribute to a particular continuing objective of a
program, which, in turn, should be under the department/ agency.
responsibility of a particular department/ office 0 Project – a special undertaking carried out within
in the LGU. Accordingly, the program(s) should a definite time frame and intended to result in
be directly related to the mandate of the some pre-determined measure of goods and
services.
Department/Office as it should contribute to the
1 Activity – a work process that contributes to the
achievement of the Department’s/Office’s
implementation of a program, sub-program or
organizational outcome(s). project.
10
0 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 Local Government Code of 1991. The
implementing Office/Department should be presented by sector.
1 Columns 4 and 5 - Implementation Schedule
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.
2 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.6
Immediate Output, for purposes of 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 and PPA implementation managed

Supervision LGU personnel supervised
2. Public Affairs, Information, Information, Education and Communication
Communication and Technical activities and materials developed/
Assistance disseminated
Stakeholders assisted
B. Operationalization of the Internal Internal Audit Unit operationalized
Audit Unit
1. Rehabilitation of Office Facilities Office Facilities
2. Purchase of Office Equipment Office Equipment and Furniture and

and Furniture and Fixtures Fixtures
Sample MFOs and their corresponding Performance Indicators (PIs) are presented under Annex B.
0 Column 7 - Funding Source
Consistent with the provisions of RA No. 7160 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:
0 General Fund (GF) Proper

1 GF – Special Account (SA) – 20% Development Fund (DF)
6 The Organizational Performance Indicator Framework (OPIF) Reference Guide, 2012
11
23 GF – Local Disaster Risk Reduction Management Fund (LDRRMF)

24 Transfers from NGAs (Other than those accruing to the GF)
25 Transfers from GOCCs (Other than those accruing to the GF)
26 Transfers from Other LGUs
27 Income of Local Economic Enterprises (for its own operations)
28 Others
24 Columns 8 to 11 - Estimated Cost
The total cost of the PPAs is broken down into PS, MOOE 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. Costs which add to the fixed assets of the LGU are categorized as capital outlays.
25 Columns 12 to 14 – Amount of Climate Change PPAs 7
Indicate the amount pertaining to PPAs for Climate Change Adaptation (CCA) and Climate Change
Mitigation under Columns 12 and 13, 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 reforestration.
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 CC Typologies (Annex A of DBM-CCC-DILG JMC No. 2015-01
dated July 23, 2015) is reflected.
2.5 Procurement Planning and Budgeting Linkage
Section 7 of RA No. 91848 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.
5888 DBM-CCC-DILG JMC No. 2015-01 dated July 23, 2015

5889 Government Procurement Reform Act
12
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 Annual
Procurement Plan 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 unit 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 budget preparation phase.
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.
Factors to consider in preparing/consolidating the APP
0 Inclusion of all procurement activities planned for the year;

1 Include provisions to cover foreseeable emergencies or contingencies usually indicated by
historical records;
2 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.
CHAPTER 3. PERFORMANCE INFORMED BUDGETING

(PIB)
In parallel with the efforts of the national government to make the national budget a vehicle for a more
responsive, transparent and accountable public expenditure management, PIB is also being adopted as an
approach in local budgeting.
PIB is the new budgeting approach that uses performance information in appropriation documents to link
funding to results and to provide a framework for more informed resource allocation and management.9
PIB, therefore, enables the more meaningful presentation of the budget, whereby each government peso is
aligned with performance indicators and tangible targets of the LGU.
9 PIB Brief, 2014

13
3.1 Legal Basis of PiB

Budgets 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], RA No. 7160).
3.2 Conceptual Framework of PiB

The PIB Structure follows the Results Framework or the Logical Framework (LogFrame) 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.
In the budgeting process, the Departments/Offices of the LGU are required to specify their PPAs that will
lead to the delivery of the corresponding MFOs, which, in turn, contribute to the attainment of the
Organizational Outcome. The Organizational Outcome should contribute to the attainment of the
Department’s mandate, mission and vision.
The PIB Structure is presented under Figure 3.
Figure 3. PIB Structure
Mandate, Mission and Vision
Organizational Outcomes
Major Final Outputs
Programs, Projects and Activities
3.3 Benefits of PiB10
The PIB as a core PFM reform program is seen as a critical tool in steering the government towards
inclusive growth and delivers the following key benefits:
0 Reinforce the meaning of accountability as a commitment to perform;
1 Empower citizens to participate in the utilization and allocation of resources with more
transparent, accountable and responsive budget documents;
2 Enable individual agencies/LGUs to see opportunities on how activities fit in the broader development
plan and how they could collaborate with other agencies/LGUs in achieving a common goal;
3 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;
4 Enable legislators to better evaluate the budget proposals and to better exercise their oversight
function to check if the agencies/LGU deliver the results they committed to deliver; and
5 Ensure that projects and programs are properly aligned with national development goals and
objectives.
10 Source: Technical Notes on the 2015 Proposed National Budget

14
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMBUDGETNTOPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
PART II. THE LOCAL BUDGET PROCESS

The budget process in LGUs is divided into five (5) phases: (1) Budget Preparation; (2) Budget Authorization;
0 Budget Review; (4) Budget Execution and (5) Budget Accountability. These phases are interrelated and
sequential, as can be seen from Figure 4 below:
Figure 4. The Local Budget Process

ACCOUNTABILITY PREPARATION
EXECUTION 20 REVIEWAUTHORIZATION
15
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDGTOPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
CHAPTER 1. BUDGET PREPARATION
1.0 Introduction
2.0 Legal Basis
3.0 Key Players in Budget Preparation
4.0 The Budget Preparation Flow Chart
5.0 Steps in the Budget Preparation Phase
Step 1. Issue the Budget Call
Step 2. Prepare and Submit Budget Proposals

2.1 Firm Up Major Final Outputs, Identify Performance Indicators and Set Targets
2.2 Estimate Costs for the Budget Year (PS, MOOE, CO) for Each PPA
2.3 Prepare the Project Procurement Management Plan (PPMP)
2.4 Consolidate PPMPs into APP
2.5 Review and Consolidate the Budget Proposals
Step 3. Conduct Budget Hearings and Evaluate Budget

Proposals Step 4. Prepare the Local Expenditure Program Step
5. Prepare the Budget Message
Step 6. Submit the Local Expenditure Program to the Local Sanggunian
6.0 Local Budget Preparation Forms to be Accomplished

LBP Form No. 1 - Budget of Expenditures and Sources of Financing
LBP Form No. 2 - Programmed Appropriation
and Obligations by Object of Expenditures
LBP Form No. 2A - Programmed Appropriation and
Obligations for Special Purpose Appropriations
LBP Form No. 3 - Personnel Schedule
LBP Form No. 4 - Mandate, Vision/Mission, Major Final Output,
Performance Indicators and Targets by Department/Office
LBP Form No. 5 - Statement of Indebtedness
LBP Form No. 6 - Statement of Statutory and
Contractual Obligations & Budgetary Requirements
LBP Form No. 7 - Statement of Fund Allocation by Sector
LBP Form No. 8 - Statement of Funding Source
LBP Form No. 9 - Statement of Supplemental Appropriation
7.0 Illustrative Examples

7.1 Budget Call
7.2 Local Expenditure Program
7.3 Budget Message
7.4 Local Budget Preparation No. 4
16
CHAPTER 1. BUDGET PREPARATION PHASE
1.1 introduction
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 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.
1.2 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 year in accordance
with the provisions of [Title V, Book II of RA No. 7160] (Section 318, RA No. 7160).
1.3 Key Players in Budget Preparation

Local Chief Executive (LCE) - 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 revenue and budgetary ceilings from the Local
Finance Committee.
He shall submit said Executive Budget to the Sanggunian concerned not later than the 16th of October of the
current fiscal year (Section 318, RA No. 7160).
Local Finance Committee (LFC) - The LFC composed of the Local Planning and Development
Coordinator, Local Budget Officer and the Local Treasurer shall have, among others, the following
functions, as defined in Section 316 of RA No. 7160:
0 Determine the income reasonably projected as collectible for the ensuing fiscal year;
1 Recommend the appropriate tax and other revenue measures or borrowings considered realistic
and feasible to support the budget;
2 Recommend to the LCE the level of annual expenditures and ceilings of spending for economic,
social, and general public services based on the approved local development plan;
3 Recommend to the LCE the proper allocation of expenditures for each development
project/activity and between current operating expenditures and capital outlays; and
4 Recommend to the LCE the amount to be allocated for capital outlay.
17
Local Treasurer - 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, RA No. 7160).
Local Budget Officer (LBO) – 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 consultation meetings with stakeholders (Section 475, [b 2-3], RA No. 7160).
He/she 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 (LPDC) – The LPDC shall analyze the income and
expenditure patterns, and recommend fiscal plan and policies for consideration of the local finance
committee of the LGU (Section 476 [6], RA No. 7160).
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, IRR of RA No. 7160).
Heads of Departments and Offices/Heads of LEEs/PUs – The Heads of Departments and

Offices/LEEs/PUs shall submit budget proposals for their respective departments or offices to the LCE thru
the LFC on or before the 15th of July of each year. Said budget proposal shall be prepared in accordance
with the approved AIP, guidelines and spending ceilings as specified in the Budget Call, and the other
general requirements prescribed under Section 317 of RA No. 7160.
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.
CSOs and the Private Sector Group - The CSOs shall have the following functions based on the
Handbook on the Participation of Civil Society Organizations in the Local Budget Process:
Table 1. Emerging Roles of CSOs in the Budget Preparation Phase

ACTIVITY LGU ROLES CSO ROLES
1. ISSUE THE BUDGET CALL

The Budget Call is a directive Provide a copy of the Budget Call Check that AIP priorities are
from the LCE that contains to the accredited CSOs. Include highlighted in the Budget Call.
general objectives, policy in the Budget Call a requirement
decisions, strategies, and for the Department Heads to
prioritized PPAs by sector/office consult with accredited CSOs.
as reflected in the AIP for the
budget year
18

23CONDUCT THE
BUDGET FORUM
A one-day forum wherein the Invite accredited CSOs to the Participate in the Budget Forum
LBO explains to Department BudgetForum.Ideally,theBudget to gain an overall appreciation
Heads the major thrusts and Forum may provide information of the thrusts and priorities of
policy directions, sources of on why recommended priorities the LGU for the budget year as
income, spending ceilings and of accredited CSOs were not contained in the Budget Call.
budget strategies. included in the identified PPAs.
23PREPARE AND SUBMIT
BUDGET PROPOSALS
Each Department Head prepares LCE to ensure that the The accredited CSOs sectoral
the budget proposals and Department Heads consulted representative may partner
submits these to the LBO for with accredited CSOs. The with the Department Heads
review and consolidation. He/ Budget Call may already concerned in determining
She needs to determine the prescribe such requirement. the target beneficiaries and
expected outputs for the budget funding requirements for the
year and estimated costs. 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
HEARINGS
The technical budget hearings are Invite accredited CSOs to the Participate in the budget
conducted by the LFC to validate budget hearings in relation to hearings to provide inputs on
the revenue sources, PPAs, cost sectoral concerns. sectoral concerns.
estimates and expected outputs
for the budget year.
5. EVALUATE BUDGET
PROPOSALS
The LFC evaluates all budget May replicate the best practices May replicate the best practices
proposals using the output and of other LGUs in engaging CSOs of other CSOs in engaging LFC.
cost criteria. in LFC.
19

6. SUBMIT EXECUTIVE
BUDGET TO SANGGUNIAN
After consolidation of the budget Invite accredited CSOs to the Attend the SOPA/SOCA/
proposal and approval thereof by SOPA/SOCA/SOMA. SOMA.
the LCE, the LGU shall submit
the proposed executive budget
not later than October 16 of
the current fiscal year pursuant
to Section 318 of RA No. 7160.
This is usually done through
a State of the Province/City/
Municipality Address (SOPA/
SOCA/SOMA), where the LCE
presents the proposed Annual
Budget to the Sanggunian and
other stakeholders.
20
1.4 The Budget Preparation Flow Chart

The budget preparation flow chart below is shown in Figure 5. The sequence of activities in preparing the
LEP should be synchronized with the mandated deadline for its submission to the Local Sanggunian.
Figure 5. Budget Preparation Flowchart
INDICATIVE RESPONSIBLE
ACTIVITY
SCHEDULE OFFICIALS
ISSUE THE
BUDGET CALL
JUNE 16 LCE
LCE/LFC
Conduct Budget
Forum
JUNE 16 Department
Heads
PREPARE AND
Department
SUBMIT BUDGET JULY 15
Heads
PROPOSALS
CONDUCT BUDGET
HEARING
AUGUST 15 LCE/LFC
PREPARE THE
EXECUTIVE BUDGET
OCTOBER 10 LCE/LFC
PREPARE THE
BUDGET MESSAGE
OCTOBER 10 LCE/LFC
SUBMIT EXECUTIVE
BUDGET TO THE OCTOBER 16 LCE
SANGGUNIAN
21
1.5 Steps in the Budget Preparation Phase.
Step 1. Issue the Budget Call.
The Budget Call signals the start of the budget preparation period. This executive directive is issued
based on the approved AIP, Local Government Code and this Manual.
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?
5888 Spending ceilings by major expenditure (PS, MOOE and CO);

5889 Resource allocation scheme or fiscal policy decisions;
5890 Objectives, strategies and priority PAPs;
5891 Expected results;
5892 Budget Calendar and budget preparation forms; and
5893 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?

23 It emphasizes the policy objectives of the budget.
24 It emphasizes the guidelines to be observed in the preparation of budget proposals.
25 It focuses on the outputs aimed to be produced during the budget year.
26 It firms up policy decisions on how the budget shall be financed; and
27 It prescribes the budget preparation schedule and forms.
How is the budget forum conducted?

5888 Invite all stakeholders to a one-day Budget Forum to explain and discuss the following:
5888 objectives for the budget year, major thrusts and policy decisions;
5889 sources of income for the past three (3) years;
5890 income estimates and corresponding assumptions;
5891 spending ceilings and budget strategies.
5892 timelines of activities; and
5893 forms to be used.
5889 Use focused group discussion (FGD) to engender group participation.
5890 Close the forum by summarizing all issues raised.

22
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.
2.1 Firm up MFOs, Identify Performance Indicators (PIs) and Set Targets
The MFO(s) 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 contains the Menu of Suggested MFOS and their corresponding PIs.
Taking into consideration resource availability vis-à-vis what should be delivered by the Department/
Office, set the target(s) for the budget year.
2.2 Estimate Costs for the Budget Year
There are three types of costs that may be reflected in the budget: 1) the current operating expenditures;
23 financial expenses; and 3) the capital costs or CO (e.g., equipment or structures that add to the fixed
assets of the LGU).
Current Operating Expenditures (COE) 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 Personal Services (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 (RATA), etc.. These are fixed costs which
do not vary regardless of the number of outputs produced.
The other costs, which are variable, are the Maintenance and Other Operating Expenses. 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 & Miscellaneous Expenses and Representation Expenses, etc..
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 Outlay (CO) - refers 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 local government unit concerned,
including investment in public utilities such as public markets and slaughter houses.
23
2.3 Prepare the Project Procurement Management Plan (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.
2.4 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.
2.5 Review and Consolidate Budget Proposals
The budget proposals by various Departments/Offices shall be reviewed by the Local Budget Officer (LBO)
using the following criteria:
Consistency with policies set forth in the Budget Call;

Compliance with budgetary requirements, general limitations and other provisions under RA No.
7160; 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:
3.1 Conduct technical budget hearings
A technical budget hearing is conducted to:

review the rationale of the Department/Office;
review the PPAs by department/office;
validate output projection; and
review costs estimates.
This technical hearing shall be conducted for at least ten (10) working days (August 15 to 25).
3.2 Evaluate budget proposals
Members of the LFC shall evaluate all budget proposals using the following criteria:
rationale of the PPA;
major output and performance indicators criteria, targets; and
cost criterion.
Step 4. Prepare Local Expenditure Program (LEP)

The Local Expenditure Program (LEP)/Executive Budget shall primarily consist of two (2) parts:
estimates of receipts; and the proposed appropriations for the budget year.
24
Guidelines in the Preparation of the Local Expenditure 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 accomplished Local Budget Preparation (LBP) Form No. 1,
which reflects the following:
Local (Internal) Sources

Tax Revenue
Non-tax Revenue
External Sources
Internal Revenue Allotment (IRA)
Share from GOCCs (PAGCOR AND PCSO)
Other shares from National Tax Collection
Inter-Local Transfer
Extraordinary Receipts/Grants/Donation/Aids
Non-Income Receipts
Capital Investment Receipts
Receipts from Loans and Borrowings
Income of Local Economic Enterprises for its own operations
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
Loan proceeds (to finance capital projects).
The second part of the LEP is the Expenditure Program. The details of the expenditure program shall
include:
Performance Information. Each Department/Office shall present its mandate, vision/mission, major
final outputs and corresponding performance indicators, targets for the budget year and the PPAs
that will deliver the MFOs and corresponding budget (PS, MOOE and CO).
Proposed New Appropriations by Object of Expenditures
Special Purpose Appropriations shall be provided for the following purposes:
Appropriation for Development Projects - at least 20% of IRA (Section 287, RA No. 7160)
Appropriation for Disaster Risk Reduction and Management Program. - at least 5% of estimated
regular income for the budget year (Section 324 [d], RA No. 7160, 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], RA No. 7160)
Advances/Loans to Local Economic Enterprises/Public Utilities (Section 313, RA No. 7160)
Aid to Barangays (Section 324 [c], RA No. 7160)
Other authorized special purpose appropriations
25
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 or office.
The LEP shall also include the General Provisions, which are policies and guidelines on receipts and
expenditure.
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, for example, on the treatment of income coming from the operation of local
economic enterprises and public utilities, shall be clearly provided.
The LEP shall also provide guidelines on the expenditure side, specifically for personal services and all
other personnel benefits, for maintenance and other operating expenses, and for capital outlays. A
policy provision on cost-cutting or economy measures shall be included to all objects of expenditures.
These guidelines shall be supported by rules and policies coming from oversight agencies like the
COA, the CSC, the DBM and the DILG.
The LEP shall also provide the Summary of New Appropriations by Expense Class and By Sector, and
by Department/Office. It shall also include the Summary Statement of All Statutory and Contractual
Obligations Due.
The LEP shall be the material document for deliberation and authorization by the Sanggunian.
Step 5. Prepare the Budget Message
Legal Basis
T he budget document shall contain “A budget message of the local chief executive set forth
in brief the significance of the executive budget, particularly in relation to the
approved local development plan.” (Section 314 [b], RA No. 7160)
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
Estimates of Income and Sources Thereof
Major Items in the Expenditure Program
Major Final Outputs/Performance Indicators/Targets
26
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
Present the objectives, policies, strategies, and priority programs/projects activities of the LGU for
the budget year and relate their consistency with the proposed revenue and expenditure structure.
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.
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.
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.
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.
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 on pages 41-43.
27
Step 6. Submit Local Expenditure Program, together with the following documents, to the Sanggunian
not later than the 16th of October of the current year (Section 318, RA No. 7160):
Budget Message;
Plantilla of Personnel;
Statement of Indebtedness;
Annual Operating Budget of Local Economic Enterprise(s), if any;
Annual Investment Program, duly supported by:
DILG-endorsed GAD Plan and Budget;
Local Disaster Risk Reduction Management Plan;
Climate Change Action Plan;
Peace and Order Plan;
List of PPAs for the Local Council for the Protection of Children;
List of PPAs for Senior Citizens and Persons with Disabilities; and
List of PPAs to combat AIDS.
28
1.6 Local Budget Preparation Forms

LBP Form No. 1
BUDGET OF EXPENDITURES AND SOURCES OF FINANCING
LGU: _____________________________
GENERAL FUND
Account Income Past Year Current Year Appropriation Budget Year
Particulars Code Classification (Actual) First Semester Second Semester Total (Proposed)
1 2 3 4 (Actual) (Estimate) 8
5 6 7
I. Beginning Cash Balance

Receipts
A. Local Sources
Tax Revenue
a. Real Property Tax (RPT)
Basic RPT
Special Education Fund
Business Tax
Other Local Tax
Total Tax Revenue
Non-Tax Revenue
Regulatory Fees
Service/User Charges
Receipts from Economic Enterprise
Other Receipts
Total Non-Tax Revenue
Total Local Sources
External Sources
Internal Revenue Allotment
Share from GOCCs (PAGCOR and PCSO)
Other Shares from National Tax Collection
Share from Ecozone
Share from EVAT
Share from National Wealth
Share from Tobacco Excise Tax
Extraordinary Receipts/Grants/Donations/Aids Total
External Sources
Non-Income Receipts
Proceeds from Sale of Assets
Proceeds from Sale of Debt Securities of Other Entities
Collection of Loans Receivable
Total Capital Investment Receipts
Receipts from Loans and Borrowings
Acquisition of Loans
Issuance of Bonds
Total Receipts from Borrowings and Loans
Total Non- Income Receipts
Total Receipts
Expenditures
Personal Services
Salaries and Wages
Salaries and Wages – Regular
Other Compensation
Personal Economic Relief Allowance (PERA)
Personnel Benefit Contributions
Other Personnel Benefits
Maintenance and Other Operating Expenses

Traveling Expenses
Training and Scholarship Expenses
Supplies and Materials Expenses
Utility Expenses
Communication Expenses
Awards/Rewards Expenses
Survey, Research. Exploration and Development Expenses
Demolition/Relocation and Desilting/Dredging Expenses
Generation, Transmission and Distribution Expenses
Confidential Expenses
Extraordinary Expenses
Professional Services
General Services
Repairs and Maintenance
Financial Assistance / Subsidy
Financial Expenses
Capital Outlays
Investment Property
Land and Buildings
Property, Plant and Equipment
Land
Land Improvements
Biological Assets
Intangible Assets
Special Purpose Appropriations (SPAs)
Appropriation for Development Programs/Projects (20%)
(Development Fund)
Appropriation for Local Disaster Risk Reduction and Management
(LDRRM) Programs/Projects (5% LDRRM Fund)
Appropriations for Debt Service
Advance/Loans to Local Economic Enterprise/ Public Utilities
Aid to Barangays
Other Authorized SPAs
Total Expenditures
IV. Ending Balance
We hereby certify that the information presented above are true and correct. We further certify that the foregoing estimated receipts are reasonably projected as collectible for Budget Year.
Local Treasurer Local Budget Officer Local Planning Development Officer Local Accountant
Approved:
Local Chief Executive
29
INSTRUCTIONS
Column 1 – Indicate the receipts by major source. 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 – Classify the income into regular (R) or non-regular (NR).
Column 4 - 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.
Columns 5 and 6 – Indicate 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 7 – Indicate the totals of the amounts under Columns 5 and 6.
Column 8 – 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.
Based on the Bureau of Local Government Finance Memorandum Circular No. 16-2015 dated June 19, 2015 re Local Public Financial Management (PFM) Tools for the
Electronic Statement of Receipts and Expenditures (which include the Guidebook for the New Local Government Financial Performance Monitoring System), regular
revenues refer to taxes, fees and receipts actually realized, including the IRA and other shares provided for in Sections 284, 290 and 291 of RA No. 7160, 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.
30
LBP Form No. 2
PROGRAMMED APPROPRIATION AND OBLIGATION BY OBJECT OF EXPENDITURE

LGU:________________________
Office: ______________________________
Object of Expenditure Account Code Past Year Current Year (Estimate) Budget Year
First Semester Second Semester
(Actual) (Actual) (Actual) Total (Proposed)
1 2 3 4 5 6 7
Personal Services
Salaries and Wages
Salaries and Wages - Regular
Other Compensation
Personal Economic Relief Allowance (PERA)
Personnel Benefit Contribution
Other Personnel Benefit
Travelling Expenses
Supplies and Materials Expenses
Utility Expenses
Communication Expenses
Awards/Rewards Expenses
Survey, Research, Exploration and Development Expenses
Demolition/Relocation and Desilting/Dredging Expenses
Generation, Transmission and Distribution Expenses
Confidential, Intelligence and Extraordinary Expenses
Professional Services
General Services
Repairs and Maintenance
Financial Assistance/Subsidy
Financial Expenses
Capital Outlays
Investment Property
Land and Buildings
Property, Plant and Equipment
Land
Land Improvements
Biological Asset
Intangible Assets
Total Appropriations
Prepared: Reviewed: Approved:
________________________________________ _____________________________ _______________________

Department Head Local Budget Officer Local Chief Executive
INSTRUCTIONS
This form is intended to reflect the following:
Column 1 – Indicate the applicable Objects of Expenditures.
Indicate under Financial Expenditures whether the amounts represent bank charges, interest expense, commitment charges, documentary
stamp expense and other financial charges, losses incurred relative to foreign exchange transactions and debt service subsidy to GOCCs
consistent with NGAs.
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 5 and 6 of LBP Form No. 1.
Column 6 – Indicate the totals of the amounts under Columns 5 and 6.
Column 7 – Indicate the proposed expenditures for the budget year.
Note: 1. The Local Budget Officer shall prepare a summary for all offices using LBP Form No. 1.
31
LBP Form No. 2a

Programmed Appropriation and Obligation for Special Purpose Appropriations
LGU:___________________________
Office: ______________________________
AIP Reference Code Sector Program/Project/Activity Past Year (Actual) Current Year Budget Year
Actual Estimate (Proposed)

1 2 3 4 5 6 7

________________________ _______________________________________ ______________________________
Department Head Local Budget Officer Local Chief Executive
This form is intended to reflect the details of Special Purpose Appropriations lodged under each Department/Office.
LBP Form No. 3

Personnel Schedule CY ____________
LGU: _____________________________________
Office: ____________
Item Number Name of Current Year Authorized Budget Year Proposed Increase /
Old New Position Title Incumbent Rate/Annum Rate/Annum Decrease
SG/Step Amount SG/Step Amount
1 2 3 4 9
5 6 7 8

___________________________________ ___________________________________ ___________________________________
Department Head Human Resource Management Officer Local Chief Executive
INSTRUCTIONS
Columnss11and22––Indicatethetheoldandnewitemnumberssofoftheplantillapositiontion. .
Columnss33and44––Indicatethepositiontititleandthenameofoftheincumbentocccupyingeachpositiontion. .IfIfthepositiontionisisunfilled,indicatetheword“vacant”undercolumn44. .
IfIfthepositiontionisisproposedforforabolition,tion,placethepositiontiontititleinsideaabracket..
IfIfthepositiontionisisproposedforforreclasssification,placethepreviouspositiontiontititle ininaabracketandindicatetheproposedpositiontiontititlebelowitit..
Column55and66––Indicatethecurrentsalarygrade/stepandcorrespondingrespondingrateperannnumofofeachposition.. Includeasasaafoootnotethecompensationlaw/circularbeing
implemented.. Fortheinitialtialimplementationofofchanges,attachaacopyofofthePositiontionAllocationList. .
Column77&&88––Indicatethesalarygrade/stepandcorrespondingrespondingrateperannnumofofeachpositiontionproposedforforthebudgetyear..
Column99––Indicatethedifferencebetweeentheoldandthenewratesofofcompensationperannnumforforthebudgetyear. .
Notes:11. .Preparethesameformforforeachlocaleconomicenterprise/publicutilility. .
22. .SeparateplantillausingthesameformatshallbebepreparedforforCasualEmployeeeswhosesalariesarechargeableagainstPersonalServicesApppropriation. .
33. .Onlyfundedvacantpositionsshallbebeincludedinintheplantilla. .AllAllunfundedvacantpositionsshallbeberemoved/deletedfromtheplantilla. .
32
LBP Form No. 4

Mandate, Vision/Mission, Major Final Output, Performance Indicators and Targets CY ____________
LGU: _____________________________________
Office :
Mandate :
Vision :
Mission :
Organizational Outcome :
AIP Reference Code Program/Project/Activity Performance/Output Target for the Budget Proposed Budget for the Budget
Major Final Output Year
Description Indicator Year
PS MOOE CO Total
1 2 3 4 5 6 7 8 9
Prepared: Reviewed: Local Finance Committee

___________________________ ___________________________ ___________________________ ___________________________
Department Head Local Planning and Development Coordinator Local Budget Officer Local Treasurer
Approved:
___________________________
IINSTRUCTIONS
Mandate: Quote the provision of the LLGC on the mandate of the Department/Officef ice..
Vision: Indicate the future role of the department/officeice in the LLGU’s development..
Mission: Indicate the significant role of the department/office in attainingaining the vision..
Organizational Outcome: The specific short--term benefits to clients and the community as aa result of the LLGU’s delivery of Major Final Outputs as defined in the
organization’s results frameework..
Columnn 11-- Indicate the PPA reference code reflected in the AIP corresponding to each PPA..
Columnn 22-- Indicate aa concise description of the work to be done under aa particular sector to achieve specific objectivess.. Present the PPAs folllowinging the
structure prescribed in this Manual..
Columnn 33-- Indicate the good or service that aa department/agency is mandated to deliver to external clients through the iimplementation ofof PPAs..
Columnn 44-- Indicate the means for measuring the quantity, quality and titimeliness of service delivery to the clients..
Columnn 55-- Indicate the target for the budget year in termss of the performance indicator expressed in quantity, quality and titimeliness..
Columnsns 6,7,8 & 99 –– Indicate the proposed budget for the PPA, broken downn by expense class -- Personal Services ((PS), Maintenance and Other Operating Expenses
((MOOE) and Capital Outlay ((CO),, including Special Purpose Appropriations attributedributed to and iimplemented by the Department/Officef ice..
Note: 11.. This Fororm shalll be prepared by the Department Head, revieweded by the Local Planning and Development Officer,icer, for the targets and the Local
Budget Officer,icer, for the proposed budget and approved by the Local Chief Executive..
33
LBP Form No. 5

Statement of Indebtedness
LGU: _____________________________________
Date Principal Previous Payments Made Amount Due Balance of the

Creditor Contracted Term Amount Purpose (Budget Year) Principal
Principal Interest Total Principal Interest Total
1 2 3 4 5 6 7 8 9 10 11 12
Certified Correct: Noted by:
___________________________ ___________________________
Local Accountant Local Chief Executive
INSTRUCTIONS
This form is intended to reflect the following:
Column 1 – Full name of creditors with their corresponding addresses under each fund/special account and under each office.
Column 2 – Date when the obligation is incurred.
Column 3 – Period (months/years) within which to pay the loan.
Column 4 – Principal amount of the loan.
Column 5 – Purpose of the loan incurred.
Columns 6, 7 & 8 – Total payments prior to budget year, including payments within the current year.
Columns 9, 10 & 11 – Amounts due and budgeted for the budget year.
Column 12 – Balance of the principal after deducting previous payments and amount due for the budget year (Columns 6-11].
Note: 1. Prepare the same form for each local economic enterprise/public utility.
34
LBP Form No. 6
Statement of Statutory and Contractual Obligations and Budgetary Requirements CY_______
LGU: __________________________________
Description Amounts
1 2
1. Statutory and Contractual Obligations
1.1 5% MMDA Contribution for LGUs in NCR only (R.A.

1.2 Retirement Gratuity
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 IRA for Development Fund
2.2 5% Local Disaster Risk Reduction and Management
2.3 Financial Assistance to Barangays (Php 1,000.00 minimum aid)
TOTAL
Certified Correct:
Local Budget Officer Local Treasurer Local Planning and Development Coordinator
Approved:
This form presents the statutory and contractual obligations, and budgetary requirements.
Prepare the same form for each local economic enterprise/public utility.
35
LBP Form No. 7

Statement of Fund Allocation by Sector CY ______
LGU: ______________________________
General Public
Particulars Account Code Services Social Services Economic Services Other Services Total
1 2 3 4 5 6 7
TOTAL APPROPRIATIONS
Certified Correct: Approved:
Local Budget Officer Local Accountant Local Chief
INSTRUCTIONS
The Statement of Fund Allocation is a summary of appropriations covering the proposed expenditures of the budget year.
Indicate all allocations by sector/service, inclusive of lump-sum 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 Commission on Audit Circular No. 2015-009 dated December
1
1, 2015.
Columns 3-6 - The classification of PPAs that should fall within a sector shall follow these guidelines:
Column 3: Public Service Sector - All PAPs that provide planning, financial, administrative, legal and legislative services to the frontline services of the LGUs
shall be categorized within this sector.
Column 4: Economic Services Sector - All PAPs directed towards promoting growth in the economy, using all factors in production, like increasing
productivity in agriculture and all other industries, generating employment and other livelihood projects, shall within this sector.
Column 5: Social Services Sector - All PAPs that promote the well-being and general welfare of constituents or people like education, health, public safety,
and protection of the marginalized and disadvantaged members of the society, shall be classified within this sector.
Column 6: Other Services - PAPs that cannot be categorized in any of the sectors identified above
Prepare the same form for each local economic enterprise/public utility.
36
LBP Form No. 8

STATEMENT OF FUNDING SOURCES
(SUPPLEMENTAL BUDGET)
FY ______
__________________________________
Province/City/Municipality
__________________________________
Fund/Special Account
Particulars Account Classification Amounts

(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
5.0 Reversion
Total Estimated Income
Certified Correct:
_____________________________ _______________________________________
Local Treasurer Local Accountant
INSTRUCTIONS
The row in Column 1 under the new revenue source shall be filled for Supplemental Budget funded from the new revenue source.
The row in Column 1 under actual collection in excess of the estimated income shall be filled for Supplemental Budget funded from the said source.
The row in Column 1 under savings shall be filled for Supplemental Budget funded from savings.
The row in Column 1 under Realignment shall be filled for Supplemental Budget funded from realignment.
The row in Column 1 under Reversion shall be filled for Supplemental Budget funded from Reversion.
Indicate under Column 2 the account classification using the Revised Chart of Accounts for LGUs, as prescribed under Commission
on Audit Circular No. 2015-009 dated December 1, 2015.
Indicate under Column 3 the appropriate amount for whatever funding source of the Supplemental Budget.
The certification to be signed by the Local Treasurer and Local Accountant shall depend on funding source (i.e., additional realized
income, savings, new revenue measure/s, realignment in times of public calamity) of the Supplemental Budget to be enacted.
37
LBP Form No. 9
STATEMENT OF SUPPLEMENTAL APPROPRIATION CY 2016
___________________________
Implementing Office Particulars/Purpose AIP Code Object of Account Amount

Expenditure Code
(1) (2) (3) (4) (5) (6)
Prepared: Approved:
_______________________________ __________________________________
Local Budget Officer Local Chief Executive
INSTRUCTIONS
Column 1 - Indicate the implementing office of the item of appropriation.

Column 2 - Indicate the particulars/purpose of the appropriation in relation to the pertinent PPAs in the approved AIP.
Column 3 - Indicate the AIP Reference Code of the related PPAs.
Column 4 - Indicate the appropriate account code using the chart of accounts as prescribed by the COA.
Column 5 - Indicate the amount corresponding to each purpose/PPA and object of expenditure.
38
1.7 illustrative Examples
1.7.1 Budget Call
Provincial/City/Municipal Budget Memorandum No. 1-2016

16 June 2016
TO: All Heads of Offices, Departments Heads, Chairman 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
Offices/Departments for Fiscal Year 2017
Purpose: This Budget Call for FY 2017 is issued primarily to prescribe guidelines to be observed by
offices/departments in the preparation of budget proposals consistent with the Annual Investment
Program for FY 2017 and the Local Government Code.
Objectives and Policy Guidelines:
Consistent with the approved AIP, the LGU shall focus its resources to the attainment of the following
general objectives:
1 Increased per capita income of constituents by 20%;
2 Delivered basic services to all constituents of the LGU; and
3 Provided full employment to poor urban residents.
For FY 2017, 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 2017 the following fiscal policies and measures were approved and
endorsed by the Sanggunian:
Enhanced tax collection efficiency by launching a vigorous tax info campaign supported by an
intensified tax collection effort.
Upgraded the scale of fees comparable with other LGUs belonging to the same class; and
Financed the completion of the San Jose Bridge in Barangay Dita through borrowing from the DBP in
the amount of P3.1 M payable in 10 years at 10% per annum.
The allocation scheme of the net amount available for appropriation for FY 2017 shall be based on
the following priority:
Priority Functional Activity Amount Percent ages of

(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”:
39
1st Priority Expansion of existing services/facilities

2nd Priority Execution of new development projects
3rd Priority Increased personnel benefits of local personnel
Receipts Estimates and Spending Ceiling:
The receipts estimates for FY 2017 are to be generated from the following sources:
Sources of Financing Amount % to

Total
IRA 103,841 90.00%
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 CO TOTAL

Office of the LCE 1500 500 500 2500
Sanggunian 2500 500 100 3100
Treasurer 800 500 300 1500
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 15400 23700
B. Social Services Sector

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
C. Economic Services Sector

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 56400 114700
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.
40
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
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 June 24-28
Proposals
1.4 Technical Budget Hearings August 16 – September 15
1.5 Consolidation of Budget Proposal September 15-30
1.6 Preparation of the Budget Message and October 1-15
Local 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

2.1 LBP Form No. 1 - Budget of Prepared by the Local
Expenditures and Sources of Financing Finance Committee (LFC)
and Local Accountant
2.2 LBP Form No. 2 - Programmed Prepared by the Department
Appropriation and Obligations by Object Head and Reviewed by the
of Expenditures Local Budget Officer
2.3 LBP Form No. 2A - Programmed Prepared by the Department
Appropriation and Obligations for Head and Reviewed by the
Special Purpose Appropriations Local Budget Officer
2.4 LBP Form No. 3 - Personnel Schedule Prepared by the Department
Head and reviewed by the
Human Resource
Management Officer
2.5 LBP Form No. 4 - Mandate, Prepared by the Department
Vision/Mission, Major Final Output, Head and Reviewed by the
Performance Indicators and Targets by LFC
Department/Office
2.6 LBP Form No. 5 - Statement
of Certified correct by the Local
Indebtedness Accountant and Local
Budget Officer
2.7 LBP Form No. 6 - Statement of Certified correct by the LFC
Statutory and Contractual Obligations & and Local Accountant
Budgetary Requirements
2.8 LBP Form No. 7 - Statement of Fund Certified correct by the Local
Allocation by Sector Accountant and Local
Budget Officer
LBP Forms Nos. 2, 2A, 3 and 4 shall be submitted to the LFC, thru the Local Budget Officer, on or before
August 15 for consolidation and review.
Any queries, clarificatory questions, 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 2017 Annual Budget may be requested from the Local Budget Officer.
Please be guided accordingly.
41
1.7.2 LEP
OFFICIAL
SEAL
LOCAL EXPENDITURE PROGRAM

January 1 to December 31, 2017
42
PART 1. RECEIPTS PROGRAM
RECEIPTS PROGRAM
FY 2015-2017
(In 000 Pesos)
Past Year Current Year

Income Receipts Budget Year
Receipts Receipts
Classification (Actual and Receipts
(Actual)
Estimate)
1. Receipts:
A. Local Sources
1. Tax Revenue
a. Real Property Tax (RPT)
i. Basic RPT
ii. Special Education Fund
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
Enterprise
d. Other Receipts
B. External Sources
Share from GOCCs (PAGCOR
And PCSO)
Other Shares from National Tax
Collection
Share from Ecozone
Share from EVAT
Extraordinary Receipts/Grants/Donation/
Aids
Total External Sources
C. Other Receipts
Proceeds from Sale of Debt
Securities of Other Entities
Total Capital Investment
Receipts
Receipts from Loans and
Borrowings
Acquisition of Loans
Issuance of Bonds
Total Receipts from Borrowings And Loans
Income of Local Economic Enterprises
Total Non-Income Receipts
Total Available Resources for Appropriation
43
PART 2. EXPENDITURE PROGRAM
OFFICE OF THE MAYOR
Mandate:
Vision:
Mission:
Organizational Outcome:
Proposed New Appropriations by Program, Activity and Project
AIP PPA Major Final Performance Target Proposed

Reference Budget
Output Indicator
Code PS MOOE CO Total
Proposed New Appropriations, by Object of Expenditures

Account Past Year Current Year
Expendi- Budget Year
Expendi-
Object of Expenditure Code tures Expenditures
tures
(Actual and (Proposed)
(Actual)
Estimate)
PERSONAL SERVICES
Salaries and Wages – Regular
Salaries and Wages – Others
Personnel Economic Relief Allowance (PERA)
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 PERSONAL SERVICES
MAINTENANCE & OTHER OPERATING EXPENSES
Traveling Expenses
Telephone Expenses – Landline
Telephone Expenses – Mobile
Postage and Deliveries
Subscription Expenses
44
Rent/Lease Expense
Office Supplies Expenses
Fuel, Oil & Lubricant Expenses
Repairs & Maintenance–Land Transport Equipment
Repairs & Maintenance-Office Equipment
Repairs & Maintenance-Buildings and Other Structures
Donations
Representation Expenses
Other Professional Expenses
TOTAL MOOE
PROPERTY PLANT & EQUIPMENT

Office Equipment
Technical and Scientific Machinery Equipment
Land Improvements
TOTAL PROPERTY PLANT & EQUIPMENT
Special Purpose Appropriations

LOCAL DISASTER RISK REDUCTION AND MANAGEMENT FUND a.
Proposed New Appropriations
Object of Expenditure Account Past Year Current Year Budget Year

Code Expenditures Expenditures Expenditures
(Actual) (Actual and (Proposed)
Estimate)
QUICK RESPONSE FUND
DISASTER PREPAREDNESS FUND
Maintenance & Other Operating Expenses
Travel Expenses
Training Expenses
Telephone Expenses – Landline
Telephone Expenses – Mobile
Insurance Expenses
Rent/Lease Expense
Supplies and Medicines
Fuel, Oil & Lubricant Expenses
Repairs & Maintenance-Schoolbuildings
TOTAL MOOE
CAPITAL OUTLAY
Rescue Equipment
Building and Structure
Land Improvements
TOTAL CAPITAL OUTLAY
45
Special Provisions
Use and Release of Fund. The amount herein appropriated shall be used in accordance with
RA 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 DOH, and other catastrophes. PROVIDED, that the projects and
activities are incorporated in the Local Disaster Risk Reduction and Management Plan
(LDRRMP), and integrated in the approved Annual Investment Program. PROVIDED
FURTHER, that the utilization of the Fund shall be in accordance with the provisions of
NDRRMC-DBM-DILG Joint Memorandum Circular No. 2013-1 dated March 25, 2013.
Quick Response Fund. Of the amount appropriated for LDRRM Fund, thirty-percent (30%) shall be
allocated as Quick response Fund (QRF) of stand-by fund for relief, recovery programs in order
that the situation and living conditions of people in the communities or areas stricken by disaster,
calamity and epidemics may be normalized as quickly as possible.
The release and use of QRF shall be supported by a resolution of the Sanggunian declaring
the LGU under state of calamity or a Presidential declaration of state of calamity.
In no case shall the QRF be used for pre-disaster, nor be re-aligned for any other purpose.
APPROPRIATIONS FOR LOCAL ECONOMIC ENTERPRISES

Object of Expenditure Account Past Year Current Year Budget Year
Expenditures Expenditures Expenditures
Code (Actual) (Actual and (Proposed)
Estimate)
SUBSIDY TO LOCAL ECONOMIC
ENTERPRISE
OPERATING EXPENSES FUNDED BY Details of which are
INCOME OF THE LOCAL ECONOMIC presented in the

ENTERPRISE attached Annual
Operating Budget
which forms an
integral part hereof
Special Provisions
1. Use and Release of Fund.
46
APPROPRIATIONS FOR DEVELOPMENT PROGRAMS AND PROJECTS a.
Object of Expenditure Account Budget

Code Year
(Estimate)
MOOE Details of which are
presented in the attached

CAPITAL OUTLAYS Annex “ “ which forms an
integral part hereof
Special Provisions
OTHER SPECIAL PURPOSE APPROPRIATIONS

Object of Expenditure Account Budget
Code Year
(Estimate)
Details of which are presented
in the attached Annex “ “ which

forms an integral part hereof
Special Provisions
47
PART 3. GENERAL PROVISIONS
Section 1. Availability of Appropriations. Appropriations for CO under this Ordinance shall be available
for release and obligation for the purpose specified for a period extending to one fiscal year after
the end of the year in which such items were appropriated.
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 concerned shall have been liquidated pursuant to pertinent accounting
and auditing rules and regulations.
Section 3. Meaning of Savings. Savings refer to portions or balances of any released appropriations in this
Ordinance which have not been obligated as a result of the following:
Final discontinuance or abandonment of an on-going program, activity or project by the head of
the agency concerned due to causes not attributable to the fault or negligence of the
agency which would not render it possible for the agency implement the said P/A/P during
the validity of the appropriation.
Non-commencement of the P/A/P for which the appropriation is released. For this purpose,
non-commencement shall refer to the inability of the agency or its duly authorized
procurement agent to obligate the released allotment and implement the P/A/P due to
natural or man-made calamities or other causes not attributable to the fault or negligence
of the agency concerned during the validity of the appropriations.
Decreased cost resulting from improved efficiency during the implementation or until the
completion by agencies of their of P/A/Ps: Provided, that the agencies will still be able to
deliver the targets and services as approved in this Ordinance.
Difference between the approved budget for the contract and the contract award price.
Unused personal services costs pertaining to a) unfilled, vacant or abolished positions;
non-entitlement to allowance and benefits; c) leaves of absence without pay; and d)
unutilized pensions and retirement benefits arising from death of pensioners, decrease in
the number of retirees, or other related causes.
Section 4. Priority in the Use of Savings. In the use of savings, priority shall be given to the augmentation
of the amounts set aside for the payment of compensation, year-end bonus and cash gift,
retirement gratuity, terminal leave benefits, old-age pension of veterans and other personnel
benefits autho-rized by law and in this Ordinance, as well as the implementation of priority
programs, activities or projects covered in this Ordinance.
48
PART 4. SUMMARY OF THE FY 2017 PROPOSED NEW APPROPRIATIONS
Proposed New Appropriations, by Object of Expense and by Sector
Account General Social Economic Other

Object of Expense Public TOTAL
Code Services Services Services
Services
Personal Services
(specify object of expense)
Total, Personal Services
2. Maintenance and Other
Operating Expenses (MOOE)
Total, MOOE
Financial Expenses Total,
Financial Expenses
Capital Outlays
Total, Capital Outlays
Special PurposeAppropriations
(SPA)
(specify SPA)
Total, Special Purpose Appropriations
2. Proposed New Appropriations, by Office
Office Personal MOOE Financial CO TOTAL

Services Expenses
Office of the Mayor

Office of the Sanggunian
Etc.
Summary Statement of All Statutory and Contractual Obligations Due
Particulars Amount
1. Statutory and Contractual Obligations
1.1 5% MMDA Contribution for LGUs in NCR only

(RA No. 7924)
1.2 Terminal Leave and Retirement Gratuity
Benefits (compulsory retirement age and end of
term for elective officials)
1.3 Debt Service
1.4 ECIP
1.5 PHIC
1.6 Pag-Ibig
1.7 LRIC
2. Budgetary Requirements
2.1 20% of IRA for Development Fund

2.2 5% Local Disaster Risk Reduction and Management Fund
(LDRRMF)
2.3 Financial Assistance to Barangays (P1,000
minimum aid)
TOTAL
49
1.7.3 Budget Message
Republic of the Philippines

Province/City/Municipality of _______________
(Date)
BUDGET MESSAGE
The Honorable Members

Sangguniang Panlalawigan/Panlungsod/Bayan
Gentlemen and Ladies:
May I submit the proposed Annual Budgets for FY 2017 of the

Provincial/City/Municipal Government for both the General Fund and Operation of
Economic Enterprise pursuant to Section 318 of RA 7160.
50
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDGETOPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
Exhibit 1
Exhibit 2
DISTRIBUTION BY TYPE OF REVENUE

Budget Year 2%
(in million pesos) 17%

1%
3%
1%
IR A P 87.00M 76%
Operating & Misc. R ev. 1.58

B orrowings 3.10
Hospital Income 1.58
Local Taxes 19.08
Transf. Fr. Eco. Ent. 2.00
51
GOALS AND OBJECTIVES
The province/municipality expects to attain the following objectives during the plan period:
Increase per capita income by a stated realistic percentage
Provide accessibility to all basic needs and services
Realistic percentage of citizens/constituents of the province
Provide expanded employment opportunities to the urban poor residents; and
Increase agricultural productivity and enhance delivery of health care services.
FISCAL POLICIES
Revenue-generating measures include enhanced tax collection via a vigorous tax information cam-
paign and intensified tax collection effort.
Exhibit 4 shows the trend of expenditures for FY 20__ to FY 20__. The Health, Nutrition and Popu-
lation 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 in-
creasing due to the provision of more infrastructure projects and bigger allocation for the
agriculture sub-sector.
Exhibit 4 Distribution by Functional Activity
52
It has been long 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 5
The distribution of the LGU budget (Exhibit 5), shows that P58,092,677 or 51% is allocated for
the operation of frontline services; P3,441,320 or 3% is provided support to frontline services;
P26,888,301 or 18% will be spent for development projects; P23,671,197 or 20% is provided
for General Policy, Administration and Finance Services; and P8,657,266, representing 8% of
the total budget will be for Other Purposes (Aid to Barangays, Reserve for Calamity and Debt
Service).
DISTRIBUTION BY MAJOR EXPENSE CLASS
Personal Services
The total expenditures for Personal Services for the budget year is P50,138,976 inclusive of
the provision for Salary Standardization of P9,418,928. Total Personal Services accounts for
44% of the total LGU budget.

The amount of P34,687,449 has been set aside for MOOE, representing 30% of the budget.
Capital Outlays
Expenditures for Capital Outlays 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.
53
Other Purposes
The amounts of P5,479,975 and P816,000 are set aside as reserve for Calamity and Aid to
Barangays, respectively.
OPERATION OF ECONOMIC ENTERPRISE
The proposed Budget for the Operation of Economic Enterprise (Operation of Telephone Service) in FY 20__ shall be
sourced from the estimated Telephone Service Income of P33,400,000 allocated as follows:
Particulars Amount (P) % to Total
Personal Services 7,600,000 22
Maintenance and Other
Operating Expenses 3,420,000 10
Capital Outlays 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
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 providing a brighter future for our
constituents.
Very truly yours,

______________________________________
PROVINCIAL GOVERNOR/CITY MAYOR/MUNICIPAL MAYOR
54
1.7.4 Local Budget Preparation Form No. 4
Mandate,VisVision/Mission,MajorFinalOutput,PerformanceIndicatorsandandTargets
CYCY2017
ProvinceofofDimaguiba
Office : : OfficeofofthetheLocalPlanniningandandDevelopmentCoordinator
Mandate : : ¥ ¥ Formulateintegratedeconomic,specialphysicalandandotherdevelopment
plansandandpoliciciesforforconsiderationofofthetheLocalDevelopmentCouncil; and;and
¥ ¥ Monitorandandevaluatethetheimplementationion ofofthethedifferentnt programs, activ,ivities
andandprojectsininthetheLGULGUininaccordancewithwiththetheapproved d developmentplanplan..
VisVision : : TowardseffectiveandandsustainableplanniningforforthetheProvinceofofDimaguiba’s
progressandandadvancement..
Mission : : Initiateandandcausethetheparticiipatorycformulation,coordinationandandintegrationofof
effective andand comprehensive development plans; analyze income andand
expenditure patterns; provide sufficicient andand reliable information; conduct
researchesandandcontinuingstudiesforforprojectplannining;monitor andrandevaluatethethe
implementationion ofofprogramsandandprojectswithwithfeedbackmechanismininsupportofof
thetheLGULGUvisision..
Organizational : : Soundplanniningand d developmentmanagementeffected..
Outcome
Performance/Perfor Target ProposedBudgetforforFYFY20172017

AIPAIPRefeferrence PPPA MajorFinalFinal forforthethe
Output
CodeCode Description Output Budget
Indicator yearyear PSPS MOOOE COCO TotalTotal
ProjectMonitoring Monitoringandand Percentageof of
100000-1--01-01-004-004-001-001 Projects
andandEvaluation Evaluation 75%75% 200,200,0000 100,100,0000 300,300,0000
Implementedandand
Program Services
Monitored
Preparedby:by: Reviewedby:by:
DepartmentHead LocalPlanniningandand LocalBudgetOfficer LocalTreasurer
DevelopmentCoordinator
Approvedby:by:
LocalChiefExecutive
55
CHAPTER 2. BUDGET AUTHORIZATION PHASE
1.01.0 Introduction
2.02.0 LegalLegalBasisBasisof ofBudgetAuthorization
3.03.0 KeyKeyPlayersin inBudgetAuthorization
4.04.0 TheTheBudgetAuthorizationFlowFlowChartChart
5.05.0 StepsStepsin inthetheBudgetAuthorizationPhasePhase
StepStep1. 1Enact.EnactAppropriationOrdinanceance
1.1.1 CheckthethesubmittedBudgetDocuments
1.21.2 EvaluatethetheBudget
1.31.3 DeliberateononthetheBudget
1.41.4 AuthorizethetheAnnualBudget
StepStep2. 2Approve.thetheAppropriationOrdinanceance
StepStep3. 3Post.PostthetheAppropriationOrdinanceance
StepStep4. 4Submit.thetheAppropriationOrdinanceanceforforReview
6.06.0 Changesin inthetheAnnualBudget

7.07.0 Effectivityof ofBudgets
8.08.0 LocalLocalBudgetAuthorizationForms
• • LBALBAFormFormNoNo.1A.1A-Checklists-ononDocumentaryandand
SignatureRequirementsforforthetheAnnualBudget
• • LBALBAFormFormNoNo.1B.1B-Checklists-ononDocumentaryandandSignature
RequirementsforforthetheSupplementalBudget
2.1 introduction
Budget Authorization is the second phase in the local budget process. This phase starts from the time the
Sanggunian receives the Local Expenditure Program (LEP) submitted by the LCE, and ends with the
enactment of the Appropriation Ordinance and approval thereof by the LCE.
Authorization of the budget is done through an Appropriation Ordinance 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 Appropriation Ordinance or law” (Section 305 (a), RA No. 7160).
56
2.2 Legal Basis of Budget Authorization

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 (Section 319, RA No. 7160).
2.3 Key Players in Budget Authorization
Local Chief Executive - The LCE shall submit the LEP to the Sanggunian for authorization (Section 318,
RA No. 7160). After the enactment of the Appropriation Ordinance, the LCE shall approve or veto the same
(Sections 54 and 55, RA No. 7160).
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
(2) (ii), 458 (2)(i), and 468 (2)(i), RA No. 7160).
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, RA No. 7160; Article 454[b],
IRR of RA No. 7160).
.
Committee on Appropriations/Finance – The Committee on Appropriations/Finance, as one of the standing
committees of the Sanggunian, shall be responsible for conducting a preliminary review and evaluation of the
Local Expenditure Program. It shall submit its report and recommendation to the Sanggunian proper.
Secretary to the Sanggunian – The Secretary to the Sanggunian shall stamp the Appropriation Ordinance
with the seal of the Sanggunian and record the same in a book kept for the purpose. He shall affix his
signature to the enacted Appropriation Ordinance and present the same to the Presiding Officer for his
signature and forward copies thereof to the LCE for approval (Section 469, RA No. 7160). Subsequently, he
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 in at least two (2) conspicuous places in the local
government unit concerned not later than five (5) days after approvial thereof (Sec. 59 (b), RA No. 7160).
Local Finance Committee - The LFC shall assist the Sanggunian in the analysis and review of the annual
and supplemental budgets to determine compliance with statutory and administrative requirements (Section
316 [g], RA No. 7160).
Heads of Departments and Offices - Upon request of the Sanggunian through the LCE, Heads of
Departments and Offices may appear before the body or the Committee on Appropriations/Finance to
explain or justify their proposals.
CSOs and Private Sector Groups – Should the Sanggunian allow the CSOs to participate in the budget
authorization phase, it may refer to the Handbook on the Participation of Civil Society Organizations in the
Local Budget Process.
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Table 2. Emerging Roles of CSOs in the Budget Authorization Phase
DELIBERATE ON THE
BUDGET
The Sanggunian shall consider the Sanggunian to post notice of budget Observing the Internal Rules of
executive budget as a priority measure deliberation schedule in three (3) Procedure (IRP) of the Sanggunian,
which shall take precedence over all conspicuous places at least seven the accredited CSOs may:
other pending and proposed measures. days before the conduct of said
As a rule, all Sanggunian sessions shall activity. Invite accredited CSOs to Provide inputs on sectoral
be open to the public, unless otherwise attend and provide inputs during the concerns; and
provided by law (Article 105 [b], IRR budget deliberation sessions, Raise questions on changes in
of RA No.7160). including committee hearings. the Executive Budget not
found in the approved AIP.
AUTHORIZE THE ANNUAL
BUDGET
The Sanggunian authorizes the Sanggunian may allow accredited Accredited CSOs to observe the
annual budget through an CSOs to observe the voting for the voting conducted by the Sanggunian.
Appropriation Ordinance (AO). enactment of the AO.
3. APPROVE THE
APPROPRIATION
ORDINANCE
The AO enacted by the Sanggunian LCE to consider formal comments Accredited CSOs to inform the
shall be presented to the LCE for and observations of accredited CSO, LCE in writing of their observation
approval, in which case he shall if any, subject to the fifteen (15) and in the deliberation and enactment of
affix his signature in every page ten (10) days reglementary period AO, subject to the applicable
thereof. Otherwise, the LCE may for approval, for provinces, and reglementary period.
exercise veto power. cities or municipalities, respectively,
per Section 54 (b), RA No. 7160.
POSTTHEAPPROPRIATION
ORDINANCE
The Sanggunian is required to post Comply with the Full Disclosure Monitor the posting of the approved
the AO, in Filipino, English and the Policy pursuant to existing DILG AO, and assist in making this
local dialect, in a bulletin board at issuances. known to the public.
the entrance of the provincial
capitol or city, or municipal hall, as Comply with the posting
the case may be, and in at least two requirement under Section 59 (a
other conspicuous places in the local and b), RA No. 7160.
government unit concerned (Section
59 [a and b], RA No. 7160).
58
2.4 The Budget Authorization Flow Chart
The flow chart below clearly describes the sequence of activities in budget authorization.
Figure 6. The Budget Authorization Flow Chart
Sanggunian Local Finance Heads of

Local Chief
Committee Departments
Executive (LCE)
(LFC) and Offices
The Committee on
LCE submits/ the Appropriations/

LEP Finance subjects the Justifies Budget
Executive LEP to a Prelimi- Proposals
Budget nary Review and
Evaluation
Assists the Sanggu-
Deliberates nian in the analysis/

review of the annual
on the LEP
or supplemental
budgets
Authorizes the
Approves/
Vetoes the
Appropriation Annual Budget
Ordinance
If AO is Approved - the Secretary to the

Sanggunian posts the AO and forwards cop-
ies thereof to the
Reviewing Authority
If AO is Vetoed - Sanggunian may override

the Veto by a 2/3 vote of all members
2.5 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 RA No. 7160 provides that “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.”
59
1.1. Check the Submitted Budget Documents
Use Local Budget Authorization Form Nos. 1A and 1B (Checklists on Documentary and Signature
Requirements for the Annual/Supplemental Budget), the Sanggunian, with the assistance of the LFC,
shall check if the following documents are submitted for authorization:
For Annual Budget (Please refer to LBA Form No. 1A)
Document Signatory
Budget Message Local Chief Officer
Local Expenditure Program Local Chief Officer
Plantilla of Personnel Schedule HRMO/Local Chief Officer
Annual Operating Budget of Local Economic Head of the Local Economic Enterprise/
Enterprise, if any Local Chief Executive
AIP Secretary to the Sanggunian/
(Approved by the Sanggunian through a Resolution) Presiding Officer
Supporting Documents:
DILG-endorsed Gender and
Development Plan and Budget
Local Disaster Risk Reduction
Management Plan (LDRRMP)
3. Climate Change Action Plan (CCAP) Local Planning and Development Officer/
4. Peace and Order Plan Local Budget Officer/Local Chief Officer
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 AIDS
For Supplemental Budget (Please refer to LBA Form No. 1B)
Document Signatory*
Funds Actually Available:
Certified Statement of Additional Local Treasurer and Local Accountant*
Realized Income
Certification of Savings Local Treasurer and Local Accountant*
New Revenue Measure/s:
Certified Statement of Income from Local Treasurer and Local Accountant*
New Revenue Measure/s
Copy of duly enacted ordinance which imposes
new local taxes, charges, fees, fines, or
penalties or which raises existing local taxes,
charges, fees, fines and 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
Realignment of Appropriations in
Times of Natural Calamity
Local Treasurer
Certificate of Source of Funds Local Accountant
Available for Appropriations LCE
*As recommended by COA.
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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.
The Receipts Portion in the LEP

To check the budget year’s aggregate estimated income which will be compared with the
aggregate expenditure program (Section 324 [a], RA No. 7160);
To check if the taxes and fees identified as sources of the estimated income are in
accordance with the approved Local Revenue Code;
To check if the estimated receipts from Real Property Taxes (RPT) correspond to the total
amount of due and demandable RPT, including delinquent accounts;
The Expenditure Program

Determine the overall level of appropriations by department/office/unit and special purpose
appropriations and the overall total;
To check the provisions for associated PS costs, e.g. Philhealth, GSIS premiums, Pag-IBIG,
PERA, Year-end Bonus and Cash Gift, RATA, etc;
To check that the provision for debt services does not exceed the ceiling required by law which
is 20% of the regular income of the LGU concerned (Section 324 (b), RA No. 7160);
To check that the provision for Local Disaster and Risk Reduction Management Fund
(LDRRMF) is not less than 5% of the estimated regular income required by law (RA No.
10121);
To check that the provision from IRA for development projects is not less than 20%
required by law (Section 287, RA No. 7160);
To check that the provision for discretionary expenses, if any, does not exceed 2% of the
actual receipts derived from basic Real Property Tax (RPT) in the next preceding year
(Section 325 (h), RA No. 7160); and
To verify if the projects in the budget are consistent with the AIP.
The proposed APP, which is the consolidation of all PPMPs of all

departments/offices or end-user units in the LGU, and which shall
include all procurement activities planned for the budget year, and
schedules of procurement activities, which are integrated into the
AIP, may be used by the Sanggunian in its evaluation of the LEP
(Executive Budget), among others.
1.3. Deliberate on 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. As a public rule, all Sanggunian
sessions shall be open to the public, unless otherwise provided by law (Article 105 [b], IRR of RA
No. 7160).
61
1.3.1 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.
1.3.2 Deliberation Proper

The procedures observed in budget deliberation may vary from one LGU to another
depending on the Internal Rules of Procedure (IRP) adopted by the Sanggunian members.
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:
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
Be present during committee hearings and Sanggunian sessions as may be required by
the legislative body to explain any detail of the (LEP) executive budget 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.
The Heads of Departments and Offices, as authorized by the LCE, may, when
requested to appear before the Sanggunian to explain or justify their budgets,
present the following:
The mandate, vision/mission, major final output, performance indicators and
targets functions and corresponding projects of the department/office and their
relevance to the total development efforts of the LGU;
The nature of the work to be performed for each program, project and activity
measured in terms of expected results, as well as the level of funding being
proposed, including the organizational setup/staffing modification, if any, and
the personnel complement tasked to perform the work; and
The accomplishment of the department/office for the preceding fiscal year,
particularly the extent to which it has met its target.
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.
During budget deliberation, the Sanggunian may use the following guide questions, among
others:
Is the budget consistent with the AIP?
62
Does the budget adequately provide funds for the delivery of basic services and
maintenance of facilities enumerated under Section 17 of RA No. 7160?
Are the requirements of component LGUs considered and equitably allocated for in
the budget?
Is the proposed expenditure program within the recommended ceiling for economic,
social and general public services?
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
Civil Service Commission (CSC) and the provisions of RA No. 7160?
Does the existing/proposed complement have the capability to implement the plans
and programs and to deliver basic public services?
Are there expenditures that need to be reduced to ensure reasonable economy in local
government operations?
Will there be projects or activities that need to be “fast tracked,’ and procedures to be
simplified to minimize utilization of resources?
Are the estimated revenues and other receipts of reasonable probability of collection?
Are the new tax and other revenue measures proposed to finance the budget
covered by tax ordinances? Is the proposed borrowing or other credit financing
within the capability of the LGU to pay?
1.4. Authorize the Annual Budget
After budget deliberation, the Sanggunian authorizes the annual budget through an Appropriation
Ordinance. (Please see illustrative example).
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 purpose (Section 306
[b], RA No. 7160).
Contents of the Appropriation Ordinance

The Appropriation Ordinance shall contain, among others, the following:
An assigned number, a title or caption, an enacting or ordaining clause, and the date of
proposed effectivity (Article 107 [b], IRR of RA No. 7160).
A provision identifying the documents the documents appended to the Appropriation
Ordinance that will form part of the authorized budget such as, buth not limited to, the
following:
Plantilla of Personnel; and
Annual Operating Budget of Local Economic Enterprise(s), if any
Receipts Program
Expenditure Program by Department/Office/Unit:
mandate, vision, mission and organizational outcome;
new appropriations of PPA, expense class and object of expenditures;
special provisions, if any
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Special Purpose Appropriations shall be reflected under the appropriate implementing

Department/Office/Unit
General Provisions; and
Summary of new appropriations by object of expenses and by sector, and by Department/
Office, and Summary Statement of all Statutory and Contractual Obligations Due.
Rules Governing the Enactment of an Appropriation Ordinance
The enactment of the proposed Appropriation Ordinance shall be governed by the rules
prescribed under Section 54 of RA No. 7160, Article 107 of its IRR, as well as the Internal Rules
of Procedure by the Sanggunian concerned. In summary, the following may constitute basic
requirements and process of enactment:
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, RA No. 7160; Article
106, IRR of RA No. 7160).
The proposed Appropriation Ordinance shall be accompanied by a brief explanatory note
containing the justification for its approval (Article 107 [b], IRR of RA No. 7160).
The proposed Appropriation Ordinance 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), RA No. 7160).
The proposed Appropriation Ordinance 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), IRR of RA No. 7160).
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], IRR
of RA No. 7160).
¡ The Secretary to the Sanggunian shall prepare copies of the proposed Appropriation
Ordinance 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], IRR of RA No. 7160).
If the proposed Appropriation Ordinance 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], IRR of RA No.7160).
The approved Appropriation Ordinance shall be stamped with the seal of the Sanggunian and
recorded in a book kept for the purpose (Article 107 (h), IRR of RA No. 7160).
The Secretary to the Sanggunian shall affix his signature to the enacted Appropriation
Ordinance and present the same to the Presiding Officer for his signature (Article 469
(c) (2) IRR, RA No. 7160).
The Secretary to the Sanggunian shall forward the Appropriation Ordinance enacted by the
Sanggunian and duly certified by the Presiding Officer to the LCE for approval
(Article 469 (c (3), IRR, RA No. 7160).
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Voting Requirement to Enact an Appropriation Ordinance

An Appropriation is defined under Section
In determining the total membership of the
306(b) of RA No. 7160 as “an Sanggunian, the Vice-Governor or the Vice-
authorization made by ordinance Mayor, as the case maybe, is included
directing the payment of goods and (Gamboa vs. Aguirre and Araneta, G.R. No.
services from local government 134213, July 20, 1999).
funds.”
Pursuant to Article 107(g), IRR of RA No. 7160, “x x x. Any ordinance or resolution
directing the payment of money . . ., shall require the affirmative vote of a majority of
all the Sanggunian members for its passage.
While the IRR of RA No. 7160 does not explicitly state that an appropriation ordinance
requires the majority vote of all the members of the sanggunian (qualified majority), it
does not likewise expressly state that it requires only a majority vote of the members
present there being a quorum (simple majority).
Simple Majority means the majority vote of all those present in a session there being
a quorum, while qualified majority refer to the majority vote of all the members duly
elected and qualified regardless of wehther all of them were present or not in a
particular session (La Carlota City vs. Rojo, G.R. No. 181367, April 24, 2012).
Reading the definition of an “Appropriation” under Section 306 (b) of RA No. 7160 as an
authorization made by ordinance directing the payment of goods and services from
local government funds vis-à-vis the second sentence of Article 107 (g) of the IRR of RA
No. 7160 that any ordinance authorizing or directing payment of money or creating
liability shall require the affirmative vote of all sanggunian members for its passage, it can
be clearly inferred that an appropriation ordinance shall require the affirmative vote of a
majority of all the sanggunian members for its passage, that is, qualified majority.
The law would impose a more onerous requirement on a sanggunian authorization for the
passage of an ordinance directing payment of goods and services than that required for
other ordinances that do not involve authorization for the use of public funds.
The decisions of the Supreme Court in the following cases would sustain the inference that
the enactment of an Appropriation Ordinance (would) indeed require the majority
vote of all the members of the sanggunian:
ZAMORA VS. CABALLERO, G.R. No. 147767, January 14, 2004
“Lastly, for a resolution authorizing the Governor to enter into a construction
contract to be valid, the vote of the majority of all members of the
Sanggunian, and not only of those present during the session, is required
(italics supplied) in accordance with Section 468[54] of the LGC in relation to
Article 107[55] of its Implementing Rules.
X x x Applying Section 468 of the LGC and Article 107 of its Implementing
Rules, there being fourteen members in the Sanggunian, the approval of eight
members is required to authorize the governor to enter into the Contract with
the Allado Company since it involves the creation of liability for payment on
the part of the local government unit.”
QUISUMBING VS. GARCIA, G.R. No. 175527, December 8, 2008
“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
65
covers the expense to be incurred or the contract to be entered into. Should the
appropriation ordinance, for instance, already contain 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 authorization is required, the appropriation ordinance
already being sufficient (italics supplied).”
Given these Decisions of the Supreme Court, the following pronouncements are clear:
Provided that the Appropriation Ordinance already contains sufficient detail of the
project/s and the cost/s thereof, the Appropriation Ordinance will serve as the
sanggunian authorization for the local chief executive to enter into contracts, thus,
considered as sufficient compliance of the requirement under Section 22
(c) of RA No. 7160, which provides:
“x x x
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. A legible copy of such
contract shall be posted at a conspicuous place in the provincial capitol or
the city, municipal or barangay hall.”
A resolution (or ordinance) authorizing the local chief executive to enter into
contract/s involves the creation of liability on the part of the LGU, thus, it
requires the majority vote of all members of the sanggunian pursuant to
Article 107 of the IRR if RA No. 7160.
Since the Appropriation Ordinance can be a substitute for the principal condition of prior
sanggunian authorization before the local chief executive enters into contracts, then the
voting requirement for that principal condition of sanggunian authorization (which is
majority of all sanggunian members) should also be the voting requirement for the
acceptable substitute thereof (i.e., the Appropriation Ordinance).
Limitations on Legislative Action

The 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, IRR of RA No. 7160).
Failure to Enact the Annual Appropriations (Section 323, RA No. 7160)
In case the Sanggunian concerned fails to pass the ordinance authorizing the annual
appropriations at the beginning of the ensuing fiscal year, the ordinance authorizing the
appropriations of the preceding year shall be deemed re-enacted. The Sanggunian shall
continue to hold sessions, without additional remuneration for its members, until the
ordinance authorizing the annual appropriations is approved, and no other business may be
taken up during such sessions (Article 415, IRR of RA No. 7160).
If the Sanggunian still fails to enact such ordinance after 90 days from the beginning of the
fiscal year, the preceding year’s budget shall remain in force and effect until such time that
the ordinance authorizing the annual appropriations is passed by the Sanggunian concerned
(Article 415, IRR of RA No. 7160).
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1.5 The 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 for the
preceding year shall be deemed re-enacted and disbursement of funds shall be in accordance
therewith (Section 323, RA No. 7160).
Essential operating expenses refer to specific objects of expenditure under Maintenance and Other
Operating Expenses, which are necessary for the operation of a particular local government unit to
carry out its mandate in providing efficient and effective basic services. The local government unit
is in the best position to identify expenses which, according to its best judgment, are essential to its
operation.
In the implementation of the 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. National aids shall not include the IRA of LGUs and their shares in the utilization and
development of national wealth (Section 323, RA No. 7160; Article 415, IRR of RA No. 7160).
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 10
days from 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, RA No. 7160).
No ordinance authorizing supplemental appropriations shall be passed in place of the annual
appropriations (Section 323, RA No. 7160).
Step 2. Approve the Appropriation Ordinance
The Appropriation Ordinance enacted by the Sanggunian shall be presented to the LCE for approval, in
which case, he shall affix his signature on every page thereof (Sample Format No.2- Approval Letter of the
LCE). Otherwise, he shall veto it and return the same with his objections to the Sanggunian, which may
proceed to reconsider the same. A veto may be partial (Sample Format No. 3) or total (Sample Format No.4)
The veto shall be communicated by the LCE to the Sanggunian within 15 days in the case of a province, and
10 days in the case of a city or municipality; otherwise, the ordinance shall be deemed approved as if the
LCE had signed it (Section 54 [b], RA No. 7160).
Veto power of the LCE (Section 55, RA No. 7160).

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 therefore 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 that are not objected to. The LCE has to sign the
Appropriation Ordinance even if he has vetoed certain items in the Appropriation Ordinance. The
vetoed item or items 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 re-enacted.The vetoed item or items shall not take effect unless
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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 re-enacted.
The LCE may veto an ordinance or resolution only once.
Override of the Veto (Section 55 [c], RA No. 7160; Article 109 [e], IRR of RA No. 7160).
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 for all legal intents and purposes even without
the approval of the LCE.
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 and the city, municipal, or barangay hall in at least
two (2) conspicuous places in the local government unit concerned not later than five (5) days after the
approval thereof. (Section 59 (b), RA No. 7160)
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 local government unit concerned, and the
secretary to the sanggunian shall record such fact in a book kept for the purpose, stating the dates of
approval and postings.
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. (Section 59 (d), RA No. 7160).
The Appropriation Ordinance shall take effect after ten (10) days from the date a copy thereof is posted in
the bulletin board at the entrance of the provincial capitol and the city, municipal, or barangay hall as the
case may be, and in at least two (2) other conspicuous places in the government unit concerned. (Section 59
[a], RA No. 7160; DILG MC No. 2010-149, 12/14/10)
In Tanada vs Tuvera, the Supreme Court declared that a law “which have not been published has no force
and effect” (136 SCRA 27, April 24, 1985).
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 (Section 56, RA No. 7160), copies of the approved Appropriation Ordinance for review in
accordance with Section 327 of RA No. 7160.
For provinces, highly–urbanized cities, independent component cities and municipalities within the
Metropolitan Manila Area, 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
(Section 56, RA No. 7160), copies of the approved Appropriation Ordinance for review in accordance with
(Section 326 of RA No. 7160).
The Appropriation Ordinance shall be supported by the approved AIP, duly supported by the DILG-endorsed
GAD Plan and Budget, Local Disaster Risk Reduction and Management Plan, list of PPAs for the Local
Council for the Proection of Children and Peace and Order Plan, Sangguinan Resolution approving the AIP,
veto message, if any, and Sanggunian action on the veto, if any.
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2.6 Changes in the Annual Budget

Supplemental Budget
General Rule
All budgetary proposals shall be included and considered in the budget preparation process. After the
LCE shall have submitted the executive budget to the Sanggunian, no ordinance providing for a
supplemental budget shall be enacted (Section 321, RA No. 7160).
Exceptions
Changes in the annual budget may be done through supplemental budgets under the following
circumstances (Article 417, IRR of RA No. 7160 as amended by AO No. 47):
a. 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], IRR of RA No. 7160).
b. 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 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 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.
In times of public calamity (Section 321, RA No. 7160; Article 417, IRR of RA No. 7160, as
amended by AO No. 47).
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.
69
In such case, the Appropriation Ordinance 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.
Sample Format No. 1 on page 76 illustrates an ordinance authorizing supplemental
appropriations. d. Use of Appropriated Funds and Savings
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, RA No. 7160).
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 ms
within the same expense class of their respective appropriations {Section 336, RA No. 7160;
(Article 454 [b], IRR of RA No. 7160)}.
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], IRR of RA No. 7160).
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], IRR of RA No. 7160).
Sample Format No. 5 on page 83 illustrates an ordinance authorizing the use of savings and
augmentation.
e. Effectivity of Budgets
The ordinance enacting the annual budget shall take effect at the beginning of the ensuing calendar
year (Section 320, RA No. 7160).
An ordinance enacting a supplemental budget shall take effect upon its approval or on the date fixed
therein (Section 320, RA No. 7160).
The effectivity of budgets is subject further to compliance with the posting requirements.
70
2.7 Local Budget Authorization Forms
LBA Form No. 1A

CHECKLIST ON DOCUMENTARY AND SIGNATURE
REQUIREMENTS FOR THE ANNUAL BUDGET
Document Signatory
Budget Message Local Chief Executive
Local Expenditure Program Local Chief Executive
Plantilla of Personnel HRMO

Annual Operating Budget of Head of the Local Economic

Local Economic Enterprise, if Enterprise
any Local Chief Executive
AIP Secretary to the Sanggunian

(Approved by the Sanggunian Presiding Officer
through a Resolution) Local Chief Executive
Supporting Documents:
¥ DILG-endorsed GAD Local Planning and Development
Plan and Budget Officer
¥ Local Disaster Risk Local Budget Officer
Reduction Management Local Chief Executive
Plan
Climate Change Action
Plan
¥ Peace and Order Plan
71
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
AIDS
LBA Form No. 1B

REQUIREMENTS FOR THE SUPPLEMENTAL BUDGET
Document Signatory

¥ Certified Statement of Additional Realized Income Local Treasurer and
¥ Certification of Savings Local Accountant
Local Treasurer and
Local Accountant
New Revenue Measure/s:

¥ Certified Statement of Income from New Revenue Local Treasurer and
Measure/s Local Accountant
¥ Copy of duly enacted 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
Realignment of Appropriations in Times of Public
Calamity:
¥ Certificate of Source of Funds Available for Local Treasurer
Appropriations Local Accountant and
LCE
72
Illustrative Example
Ordinance Authorizing the Annual Appropriations
APPROPRIATION ORDINANCE NO. _______

Series of ________
AN ORDINANCE AUTHORIZING THE ANNUAL BUDGET OF (Name of LGU) FOR

FISCAL YEAR _____ IN THE TOTAL AMOUNT
OF ______________________________ (P_____________) COVERING THE VARIOUS
EXPENDITURES FOR THE OPERATION OF THE ____________ GOVERNMENT FOR
FISCAL YEAR ______, 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) for Fiscal Year _____ in the total
amount of ______________________________ (P____________) covering the various
expenditures for the operation of the Provincial/City/Municipal Government for the year
____ is hereby approved.
The budget documents consisting of the following are incorporated herein and made
integral part of this Ordinance:
Plantilla of Personnel; and
Annual Operating Budget of Local Economic Enterprise(s), if any.
Section 2. Receipts Program (Refer to the illustrative example of the LEP on pages 44 to 51)
Section 3. Expenditure Program (Refer to the illustrative example of the LEP on

pages 44 to 51)
Section 4. General Provisions (Refer to the illustrative Example of the LEP on pages 44 to 51)
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 thereby
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 _____________.
73
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
ENACTED: This ____ day of __________ at ____________________.
x--------------------------------------------x
I HEREBY CERTIFY
THAT THIS IS A TRUE AND ACCURATE COPY
OF THE ORDINANCE 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:
74
Sample Formats
Ordinance Authorizing Supplemental Appropriations
APPROPRIATION ORDINANCE NO. __________

Series of _______
AN ORDINANCE AUTHORIZING SUPPLEMENTAL BUDGET NO. __, SERIES

_______ INVOLVING AN AMOUNT OF____________________ (P__________) FOR
____________(purpose)_______ ________).
Section 1. The Supplemental Budget of the (Name of LGU) Government for Fiscal Year
_____ in the total amount of ______________________________ (P____________) for
________________________________ is hereby approved.
The budget documents consisting of the following are incorporated herein and made
integral part of this Ordinance:
1.
2.
3.
4.
Section 2. Sources of Funds. The sources of funds for the Supplemental Budget in the total
amount of _____________________________________ (P___________) shall be as follows:
Beginning Balance P___________

Add: Income Sources
(Funds Actually Available Certified by Local Treasurer
or New Revenue Source
or Item/s to be Realigned in Times of Public Calamity) ____________
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:
75
Proposed New Appropriations Language
For __________________________________________ …….P___________
New Appropriations by Program/Activity/Project (‘000)
Current Operating
Expenditures Capital Financial
Program/Project/Activity Maintenance Total
Personal and Other Outlay Expenses
Services Operating
Expenses
A. Programs
General
Administration
Services
General
Administrative and
Support Services
b.
Sub-total
Operations a.
b.
c.
Sub-total
Total, Programs
Projects
I. Locally-funded
Project a.
b.
Sub-total
Total, Projects
Total New Appropriations
76
Program Appropriation and Obligation by Object (‘000)
Object of Expenditure Account Past Year Current Budget Year

Code* Year
Personal Services (PS)
Total PS
Maintenance and Other Operating

Expenses (MOOE)
Total MOOE
Capital Outlay (CO)
Total CO
Financial Expenses
Total Financial Expenses
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

_________________.
77
ENACTED: This ____ day of __________ at ____________________
x--------------------------------------------x
I HEREBY CERTIFY
NAME AND SIGNATURE

NAME AND SIGNATURE

APPROVED:

DATE OF APPROVAL:
78
Approval Letter of the LCE
Date
THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN
Ladies/Gentlemen:
Today, I sign Appropriation Ordinance No. __________ for Fiscal Year ____ entitled,
FISCAL YEAR _____ IN THE TOTAL AMOUNT OF ______________________________
(P_____________) COVERING THE VARIOUS EXPENDITURES FOR THE
OPERATION OF THE ____________ GOVERNMENT FOR FISCAL YEAR ______, AND
APPROPRIATING THE NECESSARY FUNDS FOR THE PURPOSE (or AN
ORDINANCE AUTHORIZING SUPPLEMENTAL BUDGET NO. __, SERIES _______
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. _____, we will be giving better basic services to our
constituents.
Very truly yours,
NAME AND SIGNATURE

LOCAL CHIEF EXECUTIVE
79
Veto Message - Partial Veto
Date

Ladies/Gentlemen:
Today, I sign Appropriation Ordinance No. __________ for Fiscal Year ____ entitled,
____________(purpose)________________).
On the other hand, 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 abovecited
Appropriation Ordinance No. ______ on the grounds that they result from ultra vires acts of
the Sanggunian and are prejudicial to public welfare, as follows:
Item(s) of Appropriation Reason(s) for Veto

1.
2.
In view of the foregoing, with the passage of the FY ______ Annual/Supplemental

Budget of the (Name of LGU) under Appropriation Ordinance No. _____, we will be giving
better basic services to our constituents.
Accordingly, I am returning the approved Appropriation Ordinance No. _____

together with my partial veto, to the Sanggunian, for their appropriate action.
Very truly yours,
NAME AND SIGNATURE

OF THE LOCAL CHIEF EXECUTIVE
80
Veto Message - Total Veto
Date

Ladies/Gentlemen:
Today, I veto Appropriation Ordinance No. __________ for Fiscal Year ____ entitled,
____________(purpose)________________).
Pursuant to the powers vested in me by the Local Government Code of 1991, I veto all
items of appropriations embodied in the abovementioned Appropriation Ordinance No.
______ for the following reasons:
Item(s) of Appropriation Reason(s) for Veto

1.
2.
These acts of the Sanggunian are ultra vires and prejudicial to public welfare.
Hence, I am respectfully returning Appropriation Ordinance No. _____, together with

this Veto Message to the Sanggunian, for its appropriate action.
Very truly yours,
NAME AND SIGNATURE

OF THE LOCAL CHIEF EXECUTIVE
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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
Section 1. Use of Savings and Augmentation. In accordance with Section 336 of

Republic Act No. 7160, 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
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.
“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 Savings. Priority shall be given to
the personnel benefits of local employees in the use of Personal Services 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
82
I HEREBY CERTIFY
NAME AND SIGNATURE

NAME AND SIGNATURE

APPROVED:

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 R.A. No. 7160 and the same authority was
not incorporated in the Ordinance authorizing the Annual Appropriations of the LGU)
83
CHAPTER 3. BUDGET REVIEW PHASE
1.0 Introduction
2.0 Legal Basis of Budget Review
3.0 Key Players in Budget Review
4.0 Reglementary Period of Review
5.0 The Budget Review Flow Chart
6.0 Steps in the Budget Review Phase
Step 1. Check the Appropriation Ordinance with the Appended Budget Documents
Step 2. Review the Appropriation Ordinance Step 3. Issue the Review Action
Review Actions
Effects of the Review Action
Format of the Review Action
Nature of the Review Action
Stamp of Review
Return of the Reviewed Appropriation Ordinance to the LGU Concerned
Failure to Review the Appropriation Ordinance within the Mandated Period
Review Actions and Corrective Measures
Enforcement of Ordinances or Resolutions after
Disapproval by Reviewing Authority
7.0 Local Budget Review Forms
7.1. LBR Form No. 1A - Checklist on Documentary and
Signature Requirements for the Annual Budget
7.2. LBR Form No. 1B - Checklist on Documentary and
Signature Requirements for the Supplemental Budget
7.3. LBR Form No. 2 - Table Recapitulating the Findings and Possible Review Action
7.4. LBR Form No. 3A - Summary Worksheet - Receipts and Expenditures
7.5. LBR Form No. 3B - Budgetary Requirements and Limitations
8.0 Illustrative Example – Table Recapitulating the Findings and Proposed Review Actions
9.0 Sample Formats
9.1 Review Letter Declaring the Appropriation Ordinance Operative in its Entirety
9.2 Review Letter Declaring the Appropriation Ordinance
Operative in its Entirety Subject to Some Conditions
9.3 Review Letter Declaring the Appropriation Ordinance Inoperative in its Entirety
9.4 Review Letter Declaring the Appropriation Ordinance Inoperative in Part
9.5 Resolution Declaring the Appropriation Ordinance Operative in its Entirety
9.6 Resolution Declaring the Appropriation Ordinance Operative
in its Entirety Subject to Some Conditions
9.7 Resolution Declaring the Appropriation Ordinance Inoperative in its Entirety
9.8 Resolution Declaring the Appropriation Ordinance Inoperative in Part
9.9 Stamp of Review
84
3.1 introduction
Budget Review is the third phase in the local budget process. Its primary purpose is to determine whether
the Appropriation Ordinance has complied with the budgetary requirements and general limitations set forth
in the Local Government Code of 1991, as well as provisions of other applicable laws. It starts from the time
the reviewing authority receives the Appropriation Ordinance for review and ends with the issuance of the
review action.
3.2 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 Section 327 of RA No. 7160 (Section 326 of RA No. 7160).
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, RA No.7160).
3.3 Key Players in Budget Review
Secretary to the Sanggunian - 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
Department of Budget and Management Regional Office (DBM RO) or Sangguniang Panlalawigan for
review (Section 56 in relation with Sections 326 and 327, RA No. 7160).
Sangguniang Panlalawigan - The Sangguniang Panlalawigan shall review the ordinance authorizing annual
or supplemental appropriations of component cities and municipalities within the province (Section 327, RA
No. 7160).
Provincial Finance Committee – The Provincial Finance Committee shall assist the Sangguniang
Panlalawigan in the review and evaluation of budgets of component cities and municipalities and
recommend the appropriate action thereon (Section 315 [f], RA No. 7160).
Department of Budget and Management Regional Office – The DBM RO shall review the ordinance
authorizing the annual or supplemental appropriations of provinces, highly-urbanized cities and independent
component cities within its jurisdiction, and municipalities within the Metropolitan Manila Area (Section
326, RA No. 7160).
CSOs and Private Sector: The CSOs shall check the LGU compliance with the review following the
Handbook on the Participation of CSOs in the Local Budget Process.
85
Table 3. Emerging Roles of CSOs in the Budget Review Phase

1. ISSUE THE REVIEW ACTION
The reviewing authority may If the arrangement is allowed in Check the LGU compliance with
declare the AO as: the terms of engagement between the review findings.
the LGU and CSO, the LGU may
operative in its entirety; furnish copy of the review letter
operative in its entirety, subject to the accredited CSOs.
to conditions;
inoperative in its entirety; or
inoperative in part.
3.4 Reglementary Period of Review

The Appropriation Ordinance of provinces, highly-urbanized cities, independent component cities,
component cities and municipalities shall be reviewed within 90 days from receipt of copies of such
ordinances (Section 327, RA No. 7160).
3.5 The Budget Review Flow Chart

The budget review flow chart below (Figure 12) shows the sequence of activities from the time the Secretary
to the Sanggunian submits the approved Appropriation Ordinance to the reviewing body/office until the same
is returned together with the budget review action to the Sanggunian concerned through the LCE.
86
Figure 7. The Budget Review Flow Chart
Secretary to the Reviewing Authority Local Chief

Sanggunian
Sanggunian Executive
Submits the Checks the
Appropriation
Appropriation
Ordinance
Ordinance
and budgetary
Accomplish requirements
LBR Form Nos.

1A and 1B
Checks compliance with

budgetary
requirements and
general limitations
Checks compliance with
Reviews the
AIP Appropriation
Checks for items that Ordinance
are prohibited by
the law
Accomplish LBR Comply with the

Budget Review Acts on the
Form No. 2 Issues the
Review Action Findings not Budget Review
Prepare Review
requiring Findings
Action
Sanggunian action
3.6 Steps in the Budget Review Phase
Step 1. Check the Appropriation Ordinance with the Appended Budget Documents.
Using LBR Form Nos. 1A and No. 1B (Checklists on Documentary and Signature Requirements for the
Annual Budget and Supplemental Budget, respectively), the DBM RO or Sangguniang Panlalawigan, as the
case may be, shall check if the following documents with the required signatures have been submitted
together with the Appropriation Ordinance:
87
For Annual Budget (Please refer to LBR Form No. 1A)
Document Signatory
Transmittal Letter Secretary to the Sanggunian
Appropriation Ordinance Secretary to the Sanggunian
Presiding Officer

AIP, duly supported by the DILG- Local Planning Officer
approved GAD Plan and Budget, Local
Disaster Risk Reduction Management Local Budget Officer
Plan, List of PPAs for the Local Council
the Protection of Children, and Peace
and Order Plan.
Sanggunian Resolution approving the AIP Secretary to the Local
Sanggunian
Presiding Officer
Veto message, if any Local Chief Executive
Sanggunian’s action on veto, if any Secretary to the Sanggunian
Presiding Officer
2. For Supplemental Budget (Please refer to LBR Form No. 1B)
Document Signatory
Transmittal Letter Secretary to the Sanggunian
Appropriation Ordinance Secretary to the Sanggunian
Presiding Officer
LCE
•Certified Statement of Additional Realized Income Local Treasurer
•Certification of Savings Local Treasurer and Local Accountant
New Revenue Measures: Local Treasurer and Local Accountant
Certified Statement of Income from New Revenue

Measures
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
remittances, contributions, subsidies or grants in
aid from the National Government or from
88
Document Signatory
Realignment of Appropriations in Times of Public Calamity Local Treasurer
•Certificate of Source of Funds Available for Local Accountant
Appropriations Local Chief Executive
Supplemental AIP, if any Local Planning and Development Officer
Local Budget Officer
Sanggunian Resolution approving the Supplemental AIP Secretary to the Local Sanggunian
Presiding Officer
Veto message, if any LCE
Sanggunian’s action on veto, if any Secretary to the Local Sanggunian
Presiding Officer
All Appropriation Ordinances must carry the seal of the LGU.
Incomplete Submission
If the Appropriation Ordinance submitted for review lacks any of the documents or the required signatures
mentioned above, the said Appropriation Ordinance 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.
Step 2. Review the Appropriation Ordinance
The reviewing officer shall validate the provisions of the Appropriation Ordinance for compliance with the
budgetary requirements and general limitations. In addition, the following checks/validation should also be
undertaken:
Verify that no official or employee is allowed a salary rate higher than the maximum fixed for his
position or other positions of equivalent rank (Section 325 [b], RA No. 7160).
Using the Plantilla of Personnel, check the authorized salary grade and the corresponding salary for each
position, and compare with the authorized rate in the Salary Schedule being implemented by the
LGU. Use the Index of Occupational Services to check the correct position titles.
Verify that no local fund is 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], RA No. 7160).
In cases of abolition of positions and the creation of new ones resulting from the abolition of existing
positions in the career service, check that such abolition or creation is made in accordance with
pertinent provisions of R.A. No. 7160 and civil service laws, rules and regulations (Section 325
[d], RA No. 7160).
89
Verify that all positions in the official plantilla for career positions, which are occupied by
incumbents holding permanent appointments, are covered by adequate appropriations (Section
325 [e], RA No. 7160).
Verify that there are no changes in designation or nomenclature of positions resulting in a promotion
or demotion in rank or increase or decrease in compensation, except when the position is actually
vacant (Section 325 [f], RA No. 7160).
Verify that the effectivity of the creation of new positions and salary increases and adjustments is not
made retroactive (Section 325 [g], RA No. 7160).
Verify if the projects in the Appropriation Ordinance are found in the approved AIP (Section 305 [i],
RA No. 7160).
Verify if there are items in the Appropriation Ordinance that are specifically prohibited by law.
Use LBR No. 3A in determining deficiencies in budgetary requirements and limitations and LBR No.
3B in identifying compliance with the provisions of the Local Budget Circular covering the BOM
for LGUs, 2016 Edition.
Step 3. Issue the Review Action
The DBM RO or Sangguniang Panlalawigan may prepare the Table Recapitulating the Findings and
Possible Review Action (LBR Form No. 2).
This Table summarizes the various findings of the reviewing authority and indicates the possible action that
may be taken (See illustrative example on page 101).
Review Actions
After the evaluation of the Appropriation Ordinance and its supporting documents, the reviewing
authority may take any of the following actions:
Declare the Appropriation Ordinance operative in its entirety.

The Appropriation Ordinance shall be declared operative in its entirety when it fully complies
with the budgetary requirements and general limitations set forth under RA No. 7160 (Section
327, RA No. 7160).
Declare the Appropriation Ordinance operative in its entirety, subject to conditions.
The Appropriation Ordinance shall be declared operative in its entirety but subject to
conditions in the following cases:
Certain items of appropriation require prior clearance or documentation;
Certain items of appropriation require prior approval by appropriate authorities;
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 PhilHealth, GSIS premiums for some
employees, etc.), except in cases where the Appropriation Ordinance has to be declared
inoperative in its entirety; and/or
Other conditions that may restrain the declaration of the Appropriation Ordinance as
operative in its entirety.
Declare the Appropriation Ordinance inoperative in its entirety.
The Appropriation Ordinance shall be declared inoperative in its entirety under any of the
following cases:
90
When appropriation exceeds estimates of income (Section 324 [a], RA No. 7160);
Non-provision or insufficient provision for any of the budgetary requirements under Section
324 of RA No. 7160;
Non-provision or insufficient provision of the 20% of the IRA for development projects
(Section 287, RA No. 7160);
When all the PPAs included in the Appropriation Ordinance are different from those listed in
the AIP;
When the AIP is approved/adopted by the Sanggunian after the enactment of the Appropriation
Ordinance for Annual Budget, pursuant to Section 305 (i) of RA 7160, which states that
“local budgets shall operationalize approved local development plans;” and
When no sufficient appropriation is provided for payment of 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, RA No. 7160).
Declare the Appropriation Ordinance inoperative in part.
The Appropriation Ordinance may be declared inoperative in part under the following conditions:
When some items are contrary to limitation or in excess of the amount prescribed by RA No.
7160, such as, but not limited to, Discretionary Purposes, Personal Services, Funds for
Confidential Expenses, Appropriation for Debt Servicing;
When some items have no legal basis (e.g., rice subsidy, COLA, etc.);
When some PPAs not included in the approved AIP are funded under the annual/
supplemental budget; and
When the amount appropriated in the AO is higher than the amount provided in the AIP for
the same PPA.
Effects of the Review Action

When the Appropriation Ordinance is declared operative in its entirety, it shall continue to be in
full force and effect.
When the Appropriation Ordinance is declared operative in its entirety, subject to conditions,
those items not subject to conditions shall continue to be in full force and effect. The items of
appropriation subject to conditions shall take effect only upon compliance with the conditions
imposed.
When the Appropriation Ordinance is declared inoperative in its entirety:
The Appropriation Ordinance loses force and effect.
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.
The local treasurer shall not make further disbursements of funds from any of the items of
appropriation declared inoperative, disallowed, or reduced (Section 327, RA No. 7160).
The budget shall be revised to comply with the provisions of law and authorized through another
Appropriation Ordinance, which shall then be submitted to the reviewing authority.
91
When the Appropriation Ordinance is declared inoperative in part:

The local treasurer shall not make further disbursements of funds from any of the items of
appropriation declared inoperative, disallowed, or reduced (Section 327, RA No. 7160).
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.
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. (See sample Formats of Review Letters and Resolutions).
Nature of the Review Action

The review action does not amend the act of the Sanggunian as embodied in the Appropriation
Ordinance.
The primary purpose of the review is to determine whether the Appropriation Ordinance has
complied with the provisions of law.
The findings of the reviewing authority are merely enumeration of infractions of budgetary
requirements, general limitations and other provisions of RA No. 7160 and other
applicable laws, 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.
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.
Based on jurisprudence, “For an ordinance to be valid, it shall not violate any law or statute.”
(Magtajas vs. Pryce Properties Corp., Inc., 234 SCRA 255)
Stamp of Review
The stamp of review of the DBM RO or Sangguniang Panlalawigan shall be affixed on every page of the
reviewed Appropriations Ordinance 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).
Return of the Reviewed Appropriation Ordinance to the LGU Concerned

The DBM RO or Sangguniang Panlalawigan shall, within the 90-day reglementary period, advise
the Sanggunian concerned, through the LCE, of the action on the Appropriation Ordinance
reviewed (Section 327, RA No. 7160).
Failure to Review the Appropriation Ordinance within the Mandated Period

If within 90 days from receipt of the copy of the Appropriation Ordinance, the DBM RO or
Sanggunian Panlalawigan takes no action thereon, 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, RA No. 7160).
92
Review Actions and Corrective Measures
REVIEW ACTIONS CORRECTIVE MEASURES

Appropriation Ordinance is declared
inoperative in its entirety.
•Appropriation exceeds estimates of income •The LGU shall revise its LEP to comply with the review
•Non-provision or insufficient provision for any of the findings and enact a new Ordinance authorizing
the Annual Appropriations for submission to the
budgetary requirements reviewing authority.
Non-provision or insufficient provision of 20%

Development Projects
No sufficient appropriation is provided for payment of
loans and other indebtedness incurred
When all projects included in the appropriation
ordinance are different from those listed in the AIP.
AIP is approved after the enactment of the
appropriation ordinance for Annual Budget
Appropriation Ordinance is declared inoperative in part.
•For items without legal basis. •The LGU, through the Treasurer, shall not make
further disbursements of funds from any of the items
of appropriation declared inoperative, disallowed
or reduced and the LCE shall notify the reviewing
authority of such action.
•For items that are contrary to limitations or in excess •The LGU shall reduce the appropriated amount
of the amount prescribed by law accordingly.

Appropriation Ordinance is declared •The LGU shall comply with the conditions imposed
operative subject to conditions. before any disbursements are made and the LCE shall
notify the reviewing authority of such action.
Enforcement of Ordinances or Resolutions after Disapproval by Reviewing Authority

Any attempt to enforce any disapproved ordinance or resolution adopting the local development
plan and public investment program, after disapproval by the LCE or by the reviewing authority,
shall be sufficient ground for or the suspension or dismissal of the official or employee concerned
(Article 112, IRR of RA No. 7160).
93
3.7 Local Budget Review Forms
LBR Form No. 1A

REQUIREMENTS FOR THE ANNUAL BUDGET
_____________ _____________
Date Received Deadline
_________________________________________ _____________
Local Government Unit Class
_________________________________________ ______________________
Title General Fund
Check each item Signatory Remarks
a. Transmittal Letter Secretary to the Sanggunian
b. Budget Message LCE
Secretary to the Sanggunian

c. Appropriation Ordinance Presiding Officer
LCE
d .Annual Investment Program to LCE
include Annexes E1, E2, E4 and Planning Officer
E6. Budget Officer
e. Resolution approving the Annual Secretary to theSanggunian
Investment Program Presiding Officer
f. Veto message, if any LCE
g. Sanggunian’s action on veto, if Secretary to the Sanggunian

any Presiding Officer
_______________________
Reviewing Officer
94
LBR Form No. 1B

REQUIREMENTS FOR THE SUPPLEMENTAL BUDGET
_____________ _____________
Date Received Deadline
_________________________________________ _____________
Local Government Unit Class
_________________________________________ ______________________
Title General Fund
Check each item Signatory Remarks
a. Transmittal Letter Secretary to the Sanggunian
b. Appropriation Ordinance Secretary to the Sanggunian

Presiding Officer
LCE
c. Funds Actually Available: Local Treasurer and Local

Accountant
Certified Statement of Additional Realized
Income Certification of Savings Local Treasurer and Local
Accountant
d. New Revenue Measures:

Local Treasurer and Local
Certified Statement of Income from New Accountant
Revenue Measures;
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; and
remittances, contributions, subsidies or grants
in aid from the National Government or from
e. Realignment of Appropriations in Times of

Public Calamity
Local Treasurer
Certificate of Source of Funds Available for Local Accountant
Appropriations
LCE
f. Veto message, if any LCE
g. Sanggunian’s action on veto, if any Secretary to the Sanggunian

Presiding Officer
_______________________
Reviewing Officer
95
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDETOPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
LBR Form No. 2
SUMMARY OF FINDINGS AND

RECOMMENDED REVIEW ACTIONS
FINDINGS REVIEW ACTIONS
__________________________________
Reviewing Officer
96
LBR Form No. 3A
SUMMARY WORKSHEET - RECEIPTS & EXPENDITURES
Next Preceding Budget Year
Fiscal Year
Source of Funds 20___ 20___
Beginning Balance - -
Regular Sources*
Non-Regular/Non-recurring
Sources
Total Available for
Appropriation
Less: Appropriations
Current Operating Expenditures & Capital
Outlay
Personal Services
MOOE
Capital Outlay -
Budgetary Requirement Appropriations

Not less than 20%
Development Projects
Not less than 5% LDRRMF
Aid to Barangay
Debt Service
Requirements By Attribution
GAD & LCPC -
Other Expenditures
Special Purpose
Appropriation
Subsidy to LEE
Others
Unappropriated Balance
Reviewing Officer
Based on the Bureau of Local Government Finance Memorandum Circular No. 16-2015 dated June 19, 2015 re Local Public
Financial Management (PFM) Tools for the Electronic Statement of Receipts and Expenditures (which include the Guidebook
for the New Local Government Financial Performance Monitoring System), regular revenues refer to taxes, fees and receipts
actually realized, including the IRA and other shares provided for in Sections 284, 290 and 291 of RA No. 7160, 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.
97
LBR Form No. 3-B
BUDGETARY REQUIREMENTS & LIMITATIONS

BUDGETARY REQUIREMENTS
Basis of Percentage / Minimum Amount Excess /
Particulars Appropriation
Computation Rate Appropriated (Deficiency) Remarks
Required
A B C D (BxC) E F (E-D) G
A. Budgetary Requirements
20% IRA - Budget ≥20%

Development
Year
Projects
Regular ≥5%
5% LDRRMF Sources -
Budget Year
Aid to Total Number ≥1,000
Barangays of Barangay
B. Statement of Statutory Requirements and Contractual Obligations
Total Annual
Statutory/
Contractual Full
Obligation Due Provision or
Debt Service for the Budget 100% of the
Year but not Annual
to exceed 20% Amortization
of Regular for the Year
Sources,
Budget Year
C. Budgetary Requirements for Attribution in the Regular PPAs
5% Gender & General Fund 5%

Development - Budget Year
Senior General Fund
Citizens &
- Budget Year
PWDs
1% Protection IRA - Budget 1%
of Children Year
98
Total Estimated
Receipts - 100%
Appropriation
Budget Year
Regular
Personal Source, Next 45% or 55%
Services Preceding
Fiscal Year
2% Basic RPT -
Discretionary Next Preceding 2%
Fund Fiscal Year
20% Debt Regular
Source, 20%
Service
Budget Year
Confidential Peace and
Order Program 30%
Fund
- Budget Year
________________________
Reviewing Officer
99
BUDGETARY LIMITATIONS
Still
Basis of Maximum Amount Allowable /
Particulars Percentage Appropriation (Excess Remarks
Computation Appropriated
/ Rate Allowed over the
Limitation)
A B C D (BxC) E F (E-D) G
Total Estimated
Receipts - <100%
Appropriation
Budget Year
Regular <45%
Source - Next
Personal Services or
Preceding
<55%
Fiscal Year
2% Discretionary RPT - Next
Preceding <2%
Fund
Fiscal Year
Regular
20% Debt Service Source - <20%
Budget Year
Peace &
Order <30%
Confidential Fund Program
Total 3%?
Appropriation
Reviewing Officer
100
3.8 illustrative Example
SummmaryofofFindingsandandRecommmendedReviewActions
FINDINGS REVIEWACTIONS
Incompletetebudgetdocumentsapappended Returnimmmediatelyininwriting,thethe
totothetheApAppropriationOrdinance ApAppropriationOrdinancewithwiththethebudget
documentsandandrequireresubmissionwithwith
completetebudgetdocuments
LackLackofofrequiredsignatoriesininthethe Returnimmmediatelyininwriting,thethe
ApAppropriationOrdinanceororbudget ApAppropriationOrdinanceOrwithwiththethebudget
documents documentsandandrequireresubmissiondulyduly
signed d documents
ApAppropriationOrdinancefullyfullycomplies DeclarethetheApAppropriationOrdinance
withwiththethebudgetaryrequirementsandand operativeininitsitsentirety
generallimitations
Someitemsofofapappropriationrequirepriorprior DeclarethetheApAppropriationOrdinance
apapprovalbybyapappropriateauthorities,priorprior operativeininitsitsentiretywithwithsome
clearancence orordocumentation,andandother conditions
conditions..
TheTheagaggregateamountapappropriated DeclarethetheApAppropriationOrdinance
exceexceedsthe e estimatesofofincome inoperativeininitsitsentirety
TheTheApAppropriationOrdinancedididnotnot DeclarethetheApAppropriationOrdinance
sufficicientlyprovideforforpaymentofofloans inoperativeininitsitsentirety
andandotherindebtedness
Provisisionforfordebtdebtservicicingexceexceeds20%20% DeclarethetheApAppropriationOrdinance
ofofthetheregularincome inoperativeininpart,part,disallowingthethe
excess..
insufficicientprovisisionforforrequirementsbyby DeclarethetheApAppropriationOrdinance
attribution(i .(ie..e, .GAD,, LCPC,) ) operativeiveininpartpartsubjecttotoconditions
101
3.9 Sample Formats

9.1 Sample Format No. 1 - Review Letter Declaring the Appropriation Ordinance
Operative in its Entirety
____________________
Date
The Honorable Membersbers of the Sanggunian

Province/City/Municipality of _____________
Thru: The ProvincialGovernor/City/Municipal Mayor
Ladies/Gentlemen:
Pursuant to the provisions of the Local Government Code of 1991 (Republic Act [R..AA..]] No.. 7160), our
review of the FY 2017 Annual/SupplementalBudget No.. ___ ofthe Province/City/Municipalityof
,, involving aa total appropriation of PP___________ under Appropriation Ordinance
No.. ,, submittted to this Offfice for review on ,, reveals substantial complianpliance
with the samee lawand itsImplementingple enting Rulesand Regulations..
Accordingly, the said Appropriation Ordinance isis declared operative in its entirety efffective on
,,subject to the posting requirement underSection 59 of RR.A.A.. No.. 7160..
ItIt isis understood that this review action does not authorize any item of appropriation that isis
specificallyly prohibited byor inconsistent with the provisionsof law..
Compliancepliance with alll existing laws, rules and regulations shalll be the responsibility of the
implementing local governmentent unit..
Very truly yours,
By Authority ofthe
Secretaryof Budgetand Management:
______________________
DirectorIV
102
Operative in its Entirety Subject to Some Conditions
______________________
DateDate
TheTheHononorableMembersof ofthetheSanggunian
Province/City/Municipalityof of _____________
Thru:Thru:TheTheProvincialGovernor/City/MunicipalMayorMayor
Ladies/Gentlemen:
Pursuantto theotheprovisionsof theoftheLocalLocalGovernmentCodeCodeof 1991of1991(RepublicActAct[R .[RA..]ANo.]No.7160),.7160),

ourourrevieviewof theoftheFYFY20172017Annual/SupplementalBudgetBudgetNoNo.. of theoftheProvince/City/Municipality of of
__________,__invol,volvingan anappropriationof ofP P___________underunderAppropriationOrdinanance
NoNo.. _______,__submitted,to thisothisOfficeOfficefor forrevieviewon on_______, rev,revealssubstantialcompliance

withwithethesamesamelawlawandandits itsImplementintingRulesRulesandandRegulations,exceptexceptfor forthethefollfollowing:
1.
2.
Notwitwithstandindingthetheabove,above,thetheAppropriationOrdinananceis declaredisoperativein inits itsentirety

effeffectiveon on _________, subject,subjectto tohethepostingpostingrequirementunderunderSectionSection59 59of
Rof.AR..ANo.No.7160,.7160, andandfurtherfurthersubjectsubjectto tohethefollfollowingconditions:
1.
2.
TheTheProvince/City/Municipal governmentalshallshallcomplycomplywithwithethehereinhereinconditionsandandnotifynotifythisthis
OfficeOfficeof theoftheactionsactionstakentakenthereonthereon..
It isIt isunderstoodthatthatthisthisrevieviewactionactiondoesdoesnotnotauthorizeanyanyitemitemof ofappropriationthatthatis is
specificificallyprohibitedby byor inconsistentorwithwithetheprovisionsprof lawoflaw..
Compliancewithwithall allexistingexistinglaws,laws,rulesrulesandandregulationsshallshallbe
bethetheresponsibilibilityof ofthethe implementintinglocallocalgovernmentunitunit..
VeryVerytrulytrulyyours,yours,
By ByAuthorityof theofthe
Secretaryof BudgetofBudgetandandMananagement:
_______________________ __
DirectorIV IV
103
Inoperative in its Entirety
______________________
DateDate
TheTheHononorableMembersof ofthetheSanggunian
Province/City/Municipalityof of __
Thru:Thru:TheTheProvincialGovernor/City/MunicipalMayorMayor
Ladies/Gentlemen:
Pursuantto tothetheprovisionsof ofthetheLocalLocalGovernmentCodeCodeof of19911991(RepublicActAct[R.[RA..]ANo.]No..

7160),7160),ourourreviewviewof ofthetheFYFY20172017Annual/SupplementalBudgetBudgetNoNo.._____of ofthethe
Province/City/Municipalityof of____________, involving,ananappropriatiationof ofP P___________
underunderAppropriatiationOrdinananceNoNo.. _______, ,submittedto
tothisthisOfficeOfficeforforreviewreview
onon_______, shows,showsthatthatit hasithasnotnotcompliedwithwiththethebudgetaryrequirementsandandgeneneral
limimitationstionsas aswellwellas asotherotherpprovisionsof oflawlawas asenumeratedhereunder:
1.
2.
3.
4.
5.
In Inviewviewthereof,thethesaidsaidAppropriatiationOrdinananceis isdeclaredinoperativein initsitsentirety

effeffectiveimmediatelymediately.Consequently,.thethepreviousyear’syear’sbudgetbudgetis deemedisreenactedpending
thethesubmissionof ofa newanewordinananceauthorizingthetheannualalppropriatappropriations,takingtakingintointoaccount
thetheaboveabove-mentioned-findings.Nev.evertheless,it isit understoodisthat,that,in theintheimplementationof ofthethe
reenactedbudget,onlyonlythetheannualalppropriatappropriationforforsalariessalariesandandwageswagesof
ofexistingpositions, statutoryandandcontractualobligations,andandessentialoperatingexpensesesauthorizedin inthethe
annualandlandsupplementalbudgetsforforthetheprececedingyearyearshallshallbebedeemedreenacted..
VeryVerytrulytrulyyours,yours,
ByByAuthorityof ofthethe
Secretaryof ofBudgetBudgetandandMananagement:
____________________________
DirectorIV IV
104
Inoperative in Part
________________________
DateDate
The HonorableTheHonorableMembembersoftheofSangguniantheSanggunian
Province/City/Municipalityof of _____________
Thru:Thru:The ProvincialTheProvincialGovernor/City/MunicipalyorMayor
Ladies/Ges/Gentlemen:
PursuantPursuanttotheto provisitheonsvisiofnstheof LocaltheLocalGovernmentmentCodeCofde1991of1991(Republic(RepublicAct NoAct.

7160),No.7160),our our reviewreviewoftheof FYthe2017FY2017Annual/SupplementalBudgetBudgetNo. No. of theof Province/City/Municipalitytheof of
____________, involving,involviangapproanppropriationofP of P_______ underunderApproppropriationOrdinanceOrdinanceNo. No.

_________, sub,mittedtotedthisto OfficethisOfficeforreviewforreviewon on_____, sho,wsshowssubstantialsubstantialcompliancecompliancewith with
the samethesamelawandlaw itsandImpleitsmplementingRulesRulesand Regulations,andRegulations,exceptexceptforheforfollowing:thefollowing:
1. 1.
2. 2.
3. 3.
4. 4.
whichwhicharedisallowedaredisallowedontheonamountthe ountfP of P __________________. .
In viewIn viewoftheof above,theabovthe , budgetthebudgetisdeclariseclaredinoperativeinoperativepartin parteffective ctiveon on __________, ,
subjectsubjectto theto thepostingpostingrequirequirementsunderunderSectionSection59 59of Rof.A. R.NoA. . No7160.7160. . The The

Province/CityProvince/City/Municipalgovernmgovernmentshall shallcomplycomplywith withthe hereinthehereinviewreviewfindingsfindingsand andnotifynotifythis this
OfficeOfficeoftheofactionstheactionstakentakthereonthereon. .
It is Itunderstoodisunderstoodthat tthatis thisreviewreviewactionactidonesdoesnot authorizenotauthorizeany anyitem itemofapproofppropriationhat thatis
is specificallyspecificallyprohibitedprohibitedbyorbyinconsistentorinconsistentwith thewithprovisitheovisionsoflawof. law.
ComplianceCompliancewith withall existingallexistinglaws,laws,rulesrulesand andregulationsregulationsshall

shallbe theb responthesponsibilityof theof the implemplementinglocal localgovernmntmentunit. unit.
Very Vertruly trulyyours,yours,
By AuthorityBy orityfheof the

SecretarySecretaryofBudgetofBudgetand Management:andManagement:
DirectorDirectorIV IV
105
9.5 Sample Format No. 5 – Resolution Declaring the Appropriation Ordinance

Operative in its Entirety
RESOLUTIONNO..____
AARESOLUTIONDECLARINGTHEAPPROPRIATIONORDINANCENO..____
OFTHECITY/MUNICIPALITYOF_
OPERATIVEININITSENTIRETY
WHEREAS,ApppropriationOrdinanceNoNo. . ___ofofthetheCity/Municipalityofof____________
authorizingitsitsAnnnualBudgetforforFiscalYear_____, ,involvingananapppropriationofof
PP___________, , was submitted toto thisthis Sangggunian forfor review onon
___________________pursuant t otothetheprovisionsofofRepublicActAct(R(R.A.A.). )NoNo. .7160;
WHEREAS,thethesubjectApppropriationOrdinanceshowssubstantialcompliancewiththethesamelawlaw
anditsitsImplementingRulesandRegulations;
NOW, THEREFORE, onon motionofof SPSP Member____________duly seconded byby SPSP Member
_____________; ;
THESANGGUNIANGUNIANG PANLALAWIGANININSESSSIONDULYASSSEMBLED:
RESOLVED, toto declare Apppropriation Ordinance NoNo. . _____ ofof thethe City/Municipality ofof
_____________operativeininitsitsentirety,effectiveonon______________, ,subjecttoto
thethepostingrequirementsunderSection5959ofofRR.A.A..NoNo. .7160..
RESOLVEDFURTHER,totoinformthetheCity/Municipalitythatthisthisreviewactiondoesnotnotauthorize
anyitemofofapppropriationthatisisspecifificallyprohibitedbybyororinconsistentwiththethe
provisionsofoflawlaw..
RESOLVEDFINALLLY,totosendaacopyofofthisthisResolutiontotothetheSanggguniangPanlungsod/Bayanofof
thetheCity/Municipalityofof______________throughthetheCity/MunicipalMayor..
ADOPTED.._____(Date)______. .
x-x - - - - - ---- - - - - - - - ---- - - - - ---- - - - - - -x-x
IherebycertifythattheforegoingisisaatrueandacccuratecopyofofthetheResolutionwhichwhichwas
dulyadoptedbybythetheSanggguniangPanlalawiganofof____________duringitsitsRegularSesssionheld
onon_________________. .
SecretarytotothetheSangggunian
PresidingOfficer
106
9.6 Sample Format No. 6 - Resolution Declaring the Appropriation Ordinance Operative
in its Entirety Subject to Some Conditions
RESOLUTIONNO..___
AARESOLUTIONDECLARINGTHEAPPROPRIATIONORDINANCENO..____
OFTHECITY/MUNICIPALITYUNICIPALITYOF____________________________
OPERATIVEINITSENTIRETYSUBJECTTOSOMEECONDITIONS
WHEREAS, Appropriation Ordinance No.. ___ of the City/Municipality of _______________

authorizing its Annual Budget for Fiscal Year ,, involving an appropriation of
PP ,, was submititted to this Sanggunian for review on
__________________ pursuant to the provisions of Republic Act (R..AA..)) No.. 7160;
WHEREAS, subject Appropriation Ordinance reveals substantial compliancepliance with the samee
law and its Implementingple enting Rules and Regulations except for the folllowing:
11..
22..
NOW THEREFORE, on motion of SP Member ______ duly seconded by SP Member
;;
THESANGGUNIANGPANLALAWIGANINSESSIONDULYASSEMBLED:BLED:
RESOLVED, to declare Appropriation Ordinance No.. ____ of the City/Municipality of

____________ OPERATIVE IN ITS ENTIRETY, efffective ,,
subject to the posting requirements under Section 59 of RR.A.A.. No.. 7160, and
subject further to the folllowing conditions:
11..
22
RESOLVED FURTHER, to require the City/Municipalityunicipality to comply with the hherein
conditions and notify this body of actions taken thereon..
RESOLVED FURTHER, to inform the City/Municipalityunicipality that this review action does not
authorize any item of appropriation that isis specificallly prohibited by or inconsistent
with the provisions of law..
RESOLVED FINALLY, to send aa copy of this Resolution to the Sangguniang Panlungsod/Bayan of the
City/Municipalityunicipality of _____________ through the City/Municipalunicipal Mayor..
ADOPTED.. _____(Date) ..
xx-- -- -- -- -- -- --- -- -- -- -- -- -- -- -- --- -- -- -- -- -- --- -- -- -- -- -- -- --xx
Wee hereby certify that the foregoing isis aa true and accurate copy of the Resolution which
was duly adopted by the Sangguniang Panlalawigan of ___________ during its Regular Session
held on ..
__________________________
Presiding Offficer
107
9.7 Sample Format No. 7 – 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/Supplemental Budget for Fiscal Year _____, involving an
appropriation of P____________, was submitted to this Sanggunian for review on
______________ pursuant to the provisions of Republic Act (R.A.) No. 7160;
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 in 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
I 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 __________________.
__________________________
Presiding Officer
108
9.8 Sample Format No. 8 - 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 (R.A.) No. 7160;
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:
1.
2.
which are disallowed in the amount of P ___________________.
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 R.A No. 7160:
RESOLVED FURTHER, to require the City/Municipality to comply with the herein review findings and
notify this body of actions taken thereon.
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
I 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
_______________.
_________________________

Presiding Officer
109
9.9 Sample Format No. 9- 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: _____________
Seal of
the
REVIEWED
Province
PURSUANT TO THE PROVISIONS OF REPUBLIC ACT NO. 7160
BY AUTHORITY OF THE SANGGUNIANG PANLALAWIGAN
_______________________ _______________________
(Authorized Signatory/ies per the Internal Rules of Procedures)
REFERENCE: RESOLUTION NO. _____ DATED: _____________
110
CHAPTER 4. THE BUDGET EXECUTION PHASE
1.0 Introduction
2.0 Legal Bases of Budget Execution
3.0 Key Players In Budget Execution
4.0 The Budget Execution Flow Chart
5.0 Budgetary Accounts in Budget Execution
6.0 Steps in the Budget Execution Phase
Step 1. Release of Allotments for the LGU on the basis of the Approved Appropriation
Ordinance
Step 2. Prepare Summary of Financial and Physical Performance Targets and Cash
Program
2.1 Prepare the Detailed Financial and Physical Performance Targets
2.2 Prepare the Summary of Financial and Physical Performance Targets
2.3 Prepare the Cash Program for the Budget Execution Year
2.4 Prepare the Local Cash Matrix
2.5 Revise and Adjust the Project Procurement Management Plan (PPMP)
and corresponding Annual Procurement Plan (APP)
2.6 Procure Goods/Civil Works (Least Cost and Most Responsive Criteria)/
Consulting Services (Highest Rated and Most Responsive Criteria)
Step 3. Obligate and Disburse Funds
Step 4. Adjust Cash Programs for Shortages and Overages
Step 5. Provide Corrective Actions for Negative Deviations
7.0 Local Budget Execution Forms

LBE Form No 1 - Allotment Release Order for PS (Allotment for the Whole Year)
LBE Form No. 1A - Allotment Release Order for MOOE (Allotment for the Whole
Year)
LBE Form No. 1B - Allotment Release Order for FinEx (Allotment for the whole year)
LBE Form No. 2 - Allotment Release Order for Capital Expenditures (Allotment on
the basis of the Work Program and Project Priorities as Reflected in the AIP)
LBE Form No. 3 - Summary of Financial and Physical Performance Targets
4.1 introduction
The execution of the budget in accordance with existing rules, laws 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.
111
A critical aspect of this phase is the collection of funds to ensure that cash is available for payment of obligations
and further ensuring that disbursements do not exceed appropriations. While seemingly a separate activity, the
collection and/or receipt of revenues are considered an integral part of Budget Execution.
4.2 Legal Bases of Budget Execution
The fundamental principles governing all financial transactions in local governments are covered in Section
305 of RA No. 7160. The responsibility, however, for the execution of authorized annual and supplemental
budgets shall be vested upon the Local Chief Executive (Section 320 of RA No. 7160).
The use of appropriated Funds pursuant to Section 336 of RA No. 7160 shall be exclusively for the specific
purpose for which they have been appropriated.
Another legal basis in Budget Execution is the Certification requirement before local funds are utilized.
Section 344 of R.A. No.7160 provides that “No 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.
Finally, 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 R.A. No. 7160).
4.3 Key Players in Budget Execution
Local Chief Executive (LCE) – The LCE shall be responsible for the execution of the Annual Budget or
Appropriations Ordinance and all subsequent supplemental budgets (Section 320, RA No. 7160). He/she is
the Head of the Procuring Entity.
Vice Governor/ Vice Mayor - The Vice Governor/Vice Mayor shall sign all warrants drawn on the
provincial/ city/municipal treasury and for all expenditures appropriated for the operations of the
Sanggunian Panlalawigan/ Panglungsod/Bayan (Sections 466, 456, and 445, RA No. 7160). Likewise, he/she
can sign appointments for employees in the Sanggunian (Atienza vs. Villarosa).
Local Budget Officer (LBO) - The LBO shall be responsible for: (1) the preparation of release documents
(Allotment Release Order) for COE and CO; (2) the certification on the availability of appropriations for
obligation requests; and (3) the preparation and submission of annual reports or Statement of Allotments,
Obligations and Balances. The LBO shall coordinate with the Local Treasurer, Local Accountant and the
Local Planning and Development Coordinator in the release of appropriations and allotments pursuant to
Section 475, RA No. 7160. As such, the LBO should maintain a registry of Appropriations, Allotments and
Obligations and should certify as to existence and availability of appropriations and allotments pursuant to
Section 344 of RA No. 7160.
Local Treasurer - The Local Treasurer shall be responsible for the custody and proper management of the funds
of the LGU concerned. He takes charge of the collection of revenues and disbursement of local government funds
and such other funds the custody and proper management of the funds of the LGU concerned of which is
entrusted to him by law or other competent authority and the maintenance and updating of tax information
system of the LGU. The Local Treasurer also certifies as to the availability of funds prior to any disbursements
(Section 470 of RA No. 7160). The Local Treasurer shall prepare the Cash Program for the LGU.
112
Local Accountant – The Local Accountant shall be responsible for ensuring the 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 requirements; and keeps and
maintains the Books of Accounts pursuant to the New Government Accounting System (Section 474, RA
No.7160). The Local Accountant is not responsible for the operation and management of an effective
Internal Audit Services (IAS) in the LGU concerned, pursuant to AO 278 as implemented by DBM Circular
No. 2004-4 dated 22 March 2004, as further articulated under Gutierrez vs. DBM (18 March 2010).
Local Planning and Development Coordinator (LPDC) – The LPDC shall be responsible for the
formulation of an integrated economic, social, physical, and other development plans and policies for
consideration of the local development council; the monitoring and evaluation of the implementation of the
various development programs, activities, and projects in the LGU concerned, in accordance with the
approved development plan, the analysis of income and expenditure patterns; and the formulation of fiscal
plans and policies for consideration of the Local Finance Committee (Section 476, RA No. 7160).
Department Head – The Department Head shall be responsible for the preparation of financial and physical
performance targets and obligation requests for authorized programs, activities, and projects of department/ office
concerned; implementation of programs, activities, and projects to deliver goods and services to target clients;
monitoring and evaluation of actual performance of PPAs to ensure smooth and proper implementation.
Civil Society Organizations (CSOs)/Private Sector Groups – The accredited CSOs shall monitor the LGU
compliance on the release of allotments, the preparation of cash program and financial and physical performance
targets and corresponding adjustments, the postings as required under R.A. No. 7160 and the Full Disclosure
Policy of the DILG and the appropriate interventions and measures taken up by the LGU on negative deviations
and may assist LGUs in implementing said interventions and measures. Accordingly, inform beneficiaries and
communities concerned of the information and advocate for the citizen’s awareness of posted information. Also,
the accredited CSOs attend as observers in the procurement process and carry out the responsibilities as such;
participate in the spot check or tracking of implementation of on-going projects.
Table 4. Emerging Roles of CSOs in the Budget Execution Phase

RELEASE THE
ALLOTMENTS (LBM/ARO)
The Local Budget Matrix (LBM) is Post information on allotment Monitor the LGU compliance on the
issued to effect the comprehensive releases (LBM/SAROs) in three release of allotments.
release of allotment for a Department/ conspicuous places in the LGU
Office. Release of reserve amounts within twenty (20) days from the
shall be effected through the use of release of the allotment.12 Inform beneficiaries and communities
Allotment Release Order/s (ARO/s). concerned of the release of allotments
through tri-media or conduct meetings
with the beneficiaries and
communities concerned.
113
POST THE STATEMENT OF

RECEIPTS AND
EXPENDITURES IN THE
LGU WEBSITE
The LGU shall post the monthly Post information on receipts and Monitor the postings as required
Statement of Receipts and expenditures in three (3) conspicuous under RA No. 7160 and the Full
Expenditures within ten (10) days places in the LGU within ten (10) days Disclosure Policy of the DILG.
after the end of the month pursuant after the end of the month pursuant to
to Section 513 of RA No. 7160 Section 513 of RA No. 7160; and
within twenty (20) days after the
Advocate for the citizen’s awareness
approval by the LCE of the Annual
of posted information through tri-
Report of Receipts and Expenditures
media.
as required under the Full Disclosure
Policy of the DILG.
PREPARE CASH PROGRAM

AND FINANCIAL AND
PHYSICAL PERFORMANCE
TARGETS
The Local Treasurer shall prepare Post information on the following: Monitor the LGU compliance on the
the Cash Program. The [LFC] / preparation of cash program and
Department Heads shall prepare the a. Cash Program financial and physical performance
Summary of Financial and Physical b. Financial and Physical targets.
Performance Targets for the entire Performance Targets
year. The detailed financial and
performance targets present the in three (3) conspicuous places in the
Inform beneficiaries and communities
quarterly breakdown of the financial LGU within twenty (20) days after
concerned of the information through
allocation needed to accomplish a the end of each quarter.13 tri-media or conduct meetings with the
specific level of target.
beneficiaries and communities
concerned
OBLIGATE AND DISBURSE

FUNDS FOR
IMPLEMENTATION OF PPAS -
PROCUREMENT PROCESS
Procurement Process
To enhance the transparency of the Invite accredited CSOs, if qualified Attend as observer in the
process, the BAC shall, in all stages as observers, in the procurement procurement process and carry out
of procurement process, invite, in process at least three (3) calendar the responsibilities provided under
addition to the representative of days before each procurement Section 13.4 of the IRR of RA No.
Commission on Audit, at least two activities in compliance with the 9184. May use as reference the
observers to sit in its proceedings, one Government Procurement Reform GPPBissued Procurement Observers
(1) from a duly recognized private Act, RA No. 9184. Guide (POG).
group in a duly recognized private
group in a sector or discipline relevant
to the procurement at hand.
13 Reglementary period patterned after that prescribed in the Full Disclosure Policy of the DILG per MC No. 2013-140 dated December 3, 2013.
114
PPA Implementation
The responsibility for the execution of Invite accredited CSOs to spot check Participate in the spot check or
the annual and supplemental budget or track implementation of ongoing tracking of implementation of
shall be vested primary in the LCE projects. ongoing projects and prepare Project
concerned. In the implementation of Monitoring Report for submission to
(This may be differentiated from the
PPAs, the following must be ensured: the LCE. (Annex B)
monitoring activity in the Budget
standards of service Accountability Phase which is done
quality of work on scheduled periods, i.e., quarterly,
timelines of implementation pricing mid-term and annual, and aimed at
of goods, contracts and services comparing accomplishments vs.
PPA fund release/ utilization targets)
proper delivery to target
beneficiaries
ADJUST CASH PROGRAM FOR

SHORTAGES AND OVERAGES
The LFC, through the Local

Treasurer, shall use the results of the Post information on adjusted Cash Monitor the LGU compliance on the
cash flow analysis as basis for Program in three (3) conspicuous preparation of adjusted cash
adjusting the Cash Program and the places in the LGU within twenty (20) program, and financial and physical
financial and physical targets. days after the end of each quarter.14 performance targets.
PROVIDE CORRECTIVE
ACTIONS FOR
NEGATIVE DEVIATIONS
The LFC shall compare the actual

performance in both the financial Render reports on actions taken to Monitor appropriate interventions
and physical accomplishments vis-à- address negative deviations. and measures taken by the LGU on
vis the targets for the quarter. For negative deviations.
variances, Department Heads Provide copies of catch-up plans to
concerned shall take corrective parties concerned. Assist the LGU in implementing
actions or prepare necessary appropriate interventions on
Partner with accredited CSOs negative deviations, which may
adjustments to catch up with the in addressing service gaps and include providing possible support
plans for the year. acknowledge contribution of CSOs. for service and/or resource gaps in
the delivery of services.
14 Reglementary period patterned after that prescribed in the Full Disclosure Policy of the DILG per MC No. 2013-140 dated December 3, 2013.
115
4.4 The Budget Execution Flow Chart

Figure 8. The Budget Execution Flow Chart
LOCAL LOCAL DEPARTMENT LOCAL
BUDGET LFC
ACCOUNTANT HEADS TREASURER
OFFICER
Prepare the Prepare
Release the Detailed Summary of Prepare the

Allotment Financial/ Financial/
Physical Physical Cash Program
Performance Performance
Targets Targets
Obligate and Adjust Cash

Disburse
Funds for Programs,
Implementation Financial/
of PPAs Physical
Performance
Targets for
Shortages and
Overages
Implement
Corrective
Actions for
Negative
Deviations
4.5 Budgetary Accounts in Budget Execution
The budgetary accounts to be maintained during the budget execution process include the following:
Appropriations
Allotments
Obligations
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 Local Chief Executive (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.
116
4.6 Steps in the Budget Execution Phase
Step 1. Release of Allotments on the Basis of the Authorized and Approved Appropriation Ordinance.
1.1. Prepare the Allotment Release Orders (AROs). On the basis of the authorized and approved
Appropriation Ordinance, the following AROs shall be released by the Local Budget Officer:
ARO for Personal Services and Associated Personal Services Costs (LBE Form No. 1) shall
be used to comprehensively release for the whole year the appropriations for salaries and
wages of regular permanent positions and the salaries and wages of 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 Personal Services.
The allotment for Maintenance and Other Operating Expenses (MOOE) shall also be released
comprehensively for the whole year, using LBE Form No. 1A. 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.
The allotment for Financial Expenses (FinEx) shall also be released comprehensively for the
whole year, using LBE Form No. 1B.
The allotment for Capital Expenditures 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 appropriation ordinance, using LBE Form No. 2.
The ARO gives the authority to spend within the confines of the PPAs, as defined in the
Appropriation Ordinance.
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 of the Appropriation Ordinance.
The following information shall be reflected in the ARO:
Source of Appropriation: whether it is authorized under the Annual Budget or Supplemental
Budget or Re-enacted Budget.
PPA Reference Code is the same as the AIP Reference Code
1.2 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 – Local Budget Officer
Duplicate – Department Head
Triplicate – Local Accountant
Quadruplicate – Records
Release of ARO for Supplemental Budgets (SBs) shall follow the same process outlined above.
But for augmentation of deficiencies in allotment within the same class for offices within the
117
executive or legislative departments, or realignment of savings from one expense class to

another, the ARO shall be the release document to effect the changes. The former 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. The latter, on the other hand, requires the
submission of a Supplemental Budget for Authorization by the Sanggunian.
Step 2. Prepare the Summary of Financial and Physical Performance Targets and Cash Program.
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 Departments/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.
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 accomplishment
for the preceding year and knowing the available resources for the budget year.
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 acquisition of
equipment) and payments for the acquisition of civil works under R.A. 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.
2.4 Revise and adjust the Project Procurement Management Plan (PPMP) and corresponding Annual
Procurement Plan (APP).
As soon as the appropriation ordinance 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, which were formulated during the budget preparation phase.
118
This budget for the contracts shall be matched with the amount released through the AROs. If the
amount is reduced, then there should be a 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 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 APP shall be maintained and updated
regular-ly at least every six (6) months or as often as may be necessary.
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 New Government Accounting System (NGAS),
obligations shall be taken up in the registry (RAAO) as they are incurred (Please refer to COA
Circular No. 2001-005 dated 30 October 2001). 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, 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.
Step 5. Implement corrective measures as proposed by the Local Finance Committee and approved by
the Local Chief Executive
5.1 The LFC shall compare the actual performance in both the financial and physical
accomplishments vis-à-vis the targets for the quarter.
119
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.
5.2 The Department Heads shall explain substantial negative deviations, and recommend remedial
measures to address negative deviations.
5.3 The Department Heads shall prepare adjustments in the original targets to catch up with plans for
the fiscal year.
5.4 Proposed corrective action shall be submitted by 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.
120
4.7 Local Budget Execution Forms
LBE FormLBE FormNo.1 No. 1

ARO ForAROPSFor PS AnnualAnnualBdgetBudge
t
SupplementalSupplementalBudgetBudget
ReenactenactedBudgetBudget
ALLOTMENTRELEASERELEASEORDERORDERFORFORPERSONALSERVICESSERVI
CES
FY FY
LocalLocalGovernmernmentUnit: Unit:_____________________ FundFunCode:Code: _________

Departmentment/Office: : _______________________
Purpose:Purpose: _____________________________________________________________________ ____
_____________________________________________________________________________________
PPAPPA PPAPPA ObjectObjectClass/Class/ PreviouslyPreviously This This
AUTHORIZED
FORFORLATERLATER
DESCRIPDESCRIP AccountAccount APPROPROPRIATI ReleasedReleased ReleaseRelease
RELEASEASE
CodeCode TIONTION CodeCode ON (PS)ON (PS) AmountAmount
(1) (1) (2) (2) (3) (3) (4) (4) (5) (5) (6) (6) (7) (7)
TOTALTOTAL
AMOUNTAMOUNTINWORDSINWORDS
________________________________________________________________________________________
________________________________________________________________________________________
NOTESNOTES
The Theallotmentsallotmentshereinhereinreleasedreleasedshallshallbe usedbeusedsolelysolelyfor thefor thepurposespurposesindicatedindicatedand and
disbursementstheretotheretoshallshallbemadebemadeinaccordanceinaccordancewithwithexistingexistingbudgeting,budgeting,accountingaccounting and
andauditingauditingrulesrulesand andregulationsregulations.It .is It heis primarytheprimaryresponsibilityoftheof headtheheadoftheof the
Department/OfficeDepartment/OfficeorUnitor Unitconconcerneded to keeptokeexp expenditureswithinwithine limitsthelimitsoftheof amounttheamount allottedallotted..
RecommendedBy: By: ApprovedApprovedBy: By:

__________________ ______________________
LocalLocalBudgetBudgetOfficerOfficer LocalLocalChiefChiefExecutiveExecutive
AROARONo. No.
DateDateofIssueofIssue: : ______
PagePage__ of__of__ PagesPages
121
INSTRUCTIONS for LBE Form No.1
ARO for PS shall be accomplished as follows:
Indicate the name of the province, city, and municipality implementing the budget.
Indicate the Department/Office concerned.
Indicate the Fund Code, which may be:

o 100 General Fund
o 200 Special Education Fund
300 Trust Fund
Indicate the source of appropriation which may either be: Annual Budget, Supplemental Budget or
ReenactedBudget
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 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 FLR portion.
For control purposes, each ARO should be numbered.
122
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANABUDGETMENTOPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
LBE Form No. 1A

ARO For MOOE Annual Budget
Supplemental Budget
Reenacted Budget
ALLOTMENT RELEASE ORDER FOR MAINTENANCE AND OTHER OPERATING

EXPENSES
FY_________________
Local Government Unit:_____________________ Fund Code: _________

Department/Office: _______________________
Purpose: _________________________________________________________________________
_________________________________________________________________________________
PPA PPA Object Class/ AUTHORIZED FOR LATER Previously This
DESCRIP Account APPROPRIATI Released Release
Code TION Code ON (MOOE) RELEASE 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:

__________________ ______________________
ARO No.____________
Date of Issue : ______
Page______of______Pages
123
INSTRUCTIONS for LBE Form No.1A
ARO for MOOE shall be accomplished as follows:

o 100 General Fund
300 Trust Fund
Reenacted Budget
Column 4: Indicate the Authorized Appropriation for MOOE
Column 5: Indicate the amount of standby appropriation for MOOE to answer for
Column 7: Indicate the amount of MOOE to be released comprehensively for the

124
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCEBUDGETMANAGEMOPERATIONSNT MANUAL FOR LOCAL GOVERNMENT UNITS
LBE Form No. Annual Budget

1B
ARO For FinEX
Supplemental
Budget
Reenacted Budget
ALLOTMENT RELEASE ORDER FOR FINANCIAL EXPENSES
FY_________________

Purpose: _________________________________________________________________________
_________________________________________________________________________________
Code TION Code ON (FinEx) RELEASE Amount
(1) (2) (3) (4) (5) (6) (7)
TOTAL
AMOUNT IN WORDS
____________________________________________________________________________________
____________________________________________________________________________________
NOTES___________________________________________________________________
allotted.

__________________ ______________________
ARO No.____________
125
INSTRUCTIONS for LBE Form No.1B
ARO for FinEx shall be accomplished as follows:

o 100 General Fund
300 Trust Fund
Reenacted Budget
Column 4: Indicate the Authorized Appropriation for FinEx
Column 5: Indicate the amount of standby appropriation for FinEx to answer for
Column 7: Indicate the amount of FinEx to be released comprehensively for the

126
LBE Form No. 2

ARO For CapEx Annual Budget
Supplemental
Budget
Reenacted Budget
ALLOTMENT RELEASE ORDER FOR CAPITAL EXPENDITURES
FY_________________

Purpose: _________________________________________________________________________
_________________________________________________________________________________
Code TION Code ON (CapEx) RELEASE Amount
(1) (2) (3) (4) (5) (6) (7)
TOTAL
AMOUNT IN WORDS
____________________________________________________________________________________
____________________________________________________________________________________
NOTES___________________________________________________________________
allotted.

__________________ ______________________
ARO No.____________
127
INSTRUCTIONS for LBE Form No.2
ARO for CapEx shall be accomplished as follows:

o 100 General Fund
300 Trust Fund
Reenacted Budget
Column 4: Indicate the Authorized Appropriation for CapEx
Column 5: Indicate the amount of standby appropriation for CapEx to answer for
Column 7: Indicate the amount of CapEx to be released comprehensively for the

128
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE BUDGETMANAGEMENTOPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS
LBE Form No. 3
SUMMARY OF FINANCIAL AND PHYSICAL PERFORMANCE TARGETS
LGU : _____________________________
Department/Office: _____________________________
Major Final Output(s): _____________________________
Performance Prior Year Physical

Program/Project/Activity Total Cost Accomplishments Remarks
Indicator Targets
(ACTUAL)
(1) (2) (3) (4) (5) (6)
Prepared by: Approved by:
_________________________ _________________________
Department Head Local Chief Executive
129
INSTRUCTIONS For LBE Form No. 3
The Summary of Financial and Physical Performance Targets shall be accomplished as follows:
Indicate the Major Final Output(s) which shall be delivered as a result of the implementation of the
PPAs
o Services which are not directly consumed by the external clients such as the following shall
be subsumed under executive services:
E.g.: MFO: Executive Services ( Accounting and Internal Services)

PPA: Preparation and submission of reports
PI : 90% of financial reports submitted on time
Column 1: Indicate the PPAs which will deliver the MFOs.

Example: MFO - Agricultural Services ; PPA - Swine dispersal program
Column 2: Indicate the Amount approved for the current year by allotment class
Column 3: Indicate the Performance standards/ criteria and indicators set 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
130
CHAPTER 5. THE BUDGET ACCOUNTABILITY PHASE
1.0 Introduction
2.0 Legal Bases of Budget Accountability
3.0 Key Players in Budget Accountability
4.0 The Budget Accountability Flow Chart
5.0 Steps in the Budget Accountability Phase
Step 1. Monitor Receipts and Expenditures
Step 2. Submit Accountability Reports
Step 3. Evaluate Performance of Each Department/Office
6.0 Local Budget Accountability Forms
LBAc Form No. 1 - Quarterly Report of Income
LBAc Form No. 2 - Quarterly Financial Report of Operations
LBAc Form No. 3 - Quarterly Physical Report of Operations
LBAc Form No. 4 - Statement of Receipts and Expenditures
LBAc Form No. 5- Physical and Financial Performance Evaluation Form
5.1 introduction
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 a management control techniques to assist in
tracking receipts of income/revenues and controlling expenditures. The five (5) phases of the budget 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 being funded by public
funds. 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. This review and 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 law and the rules and regulations of COA, DBM, BLGF, DILG and other oversight agencies.
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5.2 Legal Bases of Budget Accountability
Section 340 of RA No. 7160 provides that “any officer of the LGU 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 held accountable and responsible for local government funds
through their participation in the use or application thereof.”
Section 305 of RA No. 7160 also provides that “Fiscal responsibility shall be shared by all those exercising
authority over the financial affairs, transactions, and operations of the local government unit.
5.3 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, R.A. No. 7160).
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], 465 [b] [3] [iii], RA No. 7160);
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]; 465 [b] [1][xi], RA No. 7160);
Ensure that accountable officials are able to submit periodic reports in such forms as may be required
under this Manual and by applicable Rules (Sections 444 [b] [1] [x]; 455 [b] [1] [x]; 465 [b][1]
[x]; RA No. 7160);
Ensure that all executive officials and employees faithfully discharge their duties and functions as
provided by law and the Local Government Code (Sections 444 [b] [1] [x]; 455 [b] [1] [x]; 465
[b] [1] [x], RA No. 7160);
Submit to the Sanggunian, 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, RA No. 7160 and
Article 189 Rule XXIV, IRR of RA No. 7160).
Local Treasurer – The Local Treasurer shall:

Collect all local taxes, fees and charges (Section 170, RA No. 7160);
Report regularly to the LCE on the tax collection efforts in the LGU (Section 470 [b],RA No. 7160);
Advise the LCE, the Sanggunian, and other local and national government officials regarding the
disposition of local government funds and on such other matters relative to public finance (Section
470 [d] [1],RA No. 7160);
Take custody and exercise proper management of the funds of the LGU (Section 470 [d][2],RA No.
7160);
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],RA No.
7160);
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 in three (3) conspicuous and
accessible public places in the LGU (Section 513, RA No. 7160); and
Exercise such other powers and perform such other duties and functions as may be prescribed by law
or ordinance (Section 470 [e], RA No. 7160).
Local Accountant – The Local Accountant shall:

Prepare and submit financial statements to the LCE and to the Sanggunian (Section 474 [b][2], RA
No 7160);
Apprise the Sanggunian and other local government officials concerned on the financial condition
and operations of the LGU (Section 474 [b] [3],RA No. 7160);
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;
maintain individual ledger for officials and employees of the LGU pertaining to payroll and
deductions;
Record and post in the index cards details of purchased furniture, fixture and equipment , including
disposal thereof, if any;
Maintain and update all general and subsidiary ledgers; and
Prepare and submit periodic reports to the LCE through the LFC in such forms prescribed in this
Manual.
Local Budget Officer - The LBO shall:

Certify as to the availability of appropriations and allotments to which expenditures and obligations
may be properly charged (Section 344, RA No. 7160);
In coordination with the Local Accountant, Local Treasurer and Planning and Development
Coordinator, monitor and evaluate budget performance of all PPAs (financial and physical
evaluation of actual results vs. targets) (Section 316 [h]; 475 [c], RA No. 7160);
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 reports to the LCE through the LFC and to the DBM in such forms
prescribed under this Manual (Section 475 [b] [5], RA No. 7160).
Planning and Development Coordinator – The Planning and Development Coordinator shall:
Monitor and evaluate the implementation of development programs and projects of the various
departments/offices in accordance with the approved development plan (Section 476 [b] [4], RA
No. 7160);
Analyze the income and expenditure patterns, and formulate and recommend fiscal plans and
policies for consideration of the LFC (Section 476 [b] [6], RA No. 7160); and
Prepare and submit periodic reports to the LFC and LCE in such forms as prescribed under this
Manual.
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Heads of Departments/Offices - The Heads of Departments/Offices shall:

Monitor the implementation of all PPAs under his supervision to ensure adherence to plans, targets
and performance indicators;
Monitor physical and financial performance of major final outputs identified with his department
using performance indicators as basis of evaluating performance; and
Prepare and submit periodic reports to the LFC and LCE 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], RA No.
7160); and
Post the semi-annual and general examination report in conspicuous and accessible places in the
LGU and furnish a copy of this report to the LCE and the Sanggunian concerned (Section 316 [h],
RA No. 7160).
CSOs and Private Sector Organizations – The CSOs shall perform their duties and responsibilities prescribed
under the Handbook on the Participation of Civil Society Organizations in the Local Budget Process.
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Table 5. Emerging Roles of CSOs in the Budget Accountability Phase
MONITOR OUTPUTS AND

RESULTS OF PPAs The
appropriations recorded in the Invite accredited CSOs to Actively participate in the local
books shall be compared with the participate in the local project monitoring activities.
actual collections and project monitoring activities.
Enhance CSOs own technical
disbursements for the same period.
Post financial information in three capability in project monitoring.
Expenditures are tracked and (3) conspicuous places in the
monitored vis-à-vis the outputs LGU within twenty (20) days Monitor PPA implementation
and accomplishments. after the end of each quarter. and check on the following:
Invite accredited CSOs in the mid- standards of service

year and year-end assessment of the
quality of work
overall performance of the LGU.
timeliness of implementation
Invite accredited CSO in the
impact assessment of the pricing of goods,
programs and projects, and the contracts, and services
overall performance of the LGU.
PPA fund release/ utilization
Make use of available and
existing monitoring tools such as proper delivery to
the Citizens Satisfaction Report target beneficiaries
Card (from CODE-NGO) and the
LGU Fiscal Sustainability Provide recommendations
Scorecard (from BLGF). based on monitoring results.
Organize citizens’ fora with
the LGU to provide
feedback to the community.
Actively participate in the
impact assessment of programs
and projects and of the overall
performance of the LGU.
5.4 The Budget Monitoring and Evaluation Framework
The following chart summarizes the role of 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 ;
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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;
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 refine and improve the outputs of Departments/Offices a menu of performance indicators (PIs) per major
final output shall first be agreed by all departments/offices in coordination with Planning, LFC, LCE and
Local Sanggunian. These PIs may be further improved or revised 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 major outputs and a menu of PIs for each output in Annex #.
The entire process of monitoring an evaluation of the financial and physical performance of ranked PPAs
and their PIs are illustrated in a conceptual framework below:
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Figure 9. Budget Monitoring & Evaluation Framework

BUDGET
ACCOUNTABILITY
BUDGET PLANNING/
EXECUTION: PROGRAMMING
Implementation BUDGET &
Budget
of PPA AUTHORIZATION Preparation
MONITORING EVALUATION
OF RESULTS OF RESULTS
By PPA/PIs By PPA/PIs
Financial:
Obligations vs. Financial:
Disbursements Actual vs. Budget
Physical: Physical:
Quantity and Actual vs. Target

Timeliness
CLIENTS’
FEEDBACK
RESULTS
General Public
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Figure 10. The Budget Accountability Flow Chart
Budget Budget Planning/ Budget Budget
Execution Accountability Programming Preparation Authorization
Implementation Planning Resource

Programming
of PPAs Allocation
of PPAs
Monitor Receipts Submit Accountability
& Expenditures Reports

Monitoring Performance
Evaluation
of Outputs/
(outputs vs.
Results of PPAs
targets)
Results
Constituents
5.5 Steps in the Budget Accountability Phase
Budget accountability is accounting for the local budget, which involves three (3) steps:
Step 1. Monitor receipts and expenditures

The budgets of the LGU are accounted for on the first day of the fiscal year. It is, therefore, logical that from
the very beginning of the fiscal year one is in receipt of income/revenue/borrowings or one is in the payment
process of a valid obligation. All these 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 Form No. 1 (LBAc Form No. 1) or the
Quarterly Report of Receipts. This is prepared by the Local Accountant based on the actual
collections from the Local Treasurer’s Report of Daily Collections.
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This report keeps track of all receipts (income/revenue, 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.
Monitoring of Expenditures
The monitoring of expenditures include the monitoring of appropriations, allotments, obligations and
disbursements.
The Local Budget Officer shall keep track of the appropriations released through allotments and
subsequently obligated and disbursed by the various departments and offices. This ensures that the
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 RA No. 7160.
The LBO and the Local Accountant shall ensure that lawful expenditures incurred during a fiscal year
shall be taken up in the books of accounts of that year pursuant to Section 350 of RA No. 7160.
The LBO shall prepare Local Budget Accountability Form No. 2 (LBAc Form No. 2) or the Quarterly
Financial Report of Operations that would reflect obligations incurred vis-à-vis the released
allotments and available appropriations. This will give a picture of the efficiency and effectiveness
of the rate of utilization of appropriations and absorptive capacity by the various
departments/offices of the LGU.
The Local Treasurer, LBO and the Local Accountant shall prepare Local Budget Accountability
Form No. 4 (LBAc Form No. 4) or Statement of Receipts and Expenditures (Summary of Income
and Expenditures pursuant to Section 352 of RA No. 7160) for the fiscal year.
The Local Treasurer, LBO and the Local Accountant and other accountable officials shall post
the SRE in at least three (3) publicly accessible and conspicuous places in the LGU within 30
days from end of the fiscal year.
A copy of the SRE furnished to the LBO shall be submitted to the DBM through its Regional
Office within the same period.
Monitoring of Physical Outputs and Accomplishments

Each Department/Office Head shall prepare Local Budget Accountability Form No. 3 (LBAc Form No.
or the Quarterly Physical Report of Operations where actual performance per PPA is shown against
the target output.
A Project Monitoring Report (PMR), 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.
Step 2.Submit Accountability Reports
It is imperative that the Local Accountant, Local Treasurer, Local Budget Officer, Planning and Development
Coordinator 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 shown thus:
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Table 6. Required Accountability Reports

Local Budget Accountability Description Responsible Official Date of Submission
(LBAc) Form No.

LBAc Form No. 1 Quarterly Report of Income Local Accountant 10 Days after the End
of Each Quarter
LBAc Form No. 2 Quarterly Financial Local Budget Officer 10 Days after the End
Report of Operations of Each Quarter
LBAc Form No. 3 Quarterly Physical Department/ Office 10 Days after the End
Report of Operations Heads, Planning and Of Each Quarter
Development Coordinator
LBAc Form No.4 Statement of Receipts Local Treasurer, Local Budget Within 30 Days from
and Expenditures Officer, Local Accountant End of Fiscal Year
Step 3.Evaluate Performance of each Department/Office
Pursuant to Section 316 and 320 of RA No. 7160, the LFC and LCE are tasked to conduct a 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 as of this date for identified performance indicators, 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 for the expenditure per PPA and per performance indicator. The
format for this variance analysis is shown in the following example:
Table 7. Variance Analysis of Output/Physical Performance

PPA Code PPA Performance Target Actual Output Variance %
Description Indicators
(1) (2) (3) (4) (5) (4-5)=(6) 6/4=(7)
8000-1-1 Extension Trained Number 150 50 100 (67%)
Services of Farmers
Womenfolk 100 120 20 20%
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. See example below:
Table 8. Variance Analysis of Financial Performance
PPA Code PPA Performance Target Actual Output Variance %

Description Indicators
(1) (2) (3) (4) (5) (4-5)=(6) 6/4=(7)
8000-1-1 Extension Number of P2500 P3000 P300 12%
Services in farmers Trained
Agriculture
The review and analysis of the output and financial performance per PPA and per indicator are done
in tandem to have a complete picture of the extent and latitude of performance.
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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.
The form to be accomplished in the evaluation of performance shall be LBAc Form No. 5 - Physical and
Financial Performance Evaluation Form.
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5.6 Local Budget Accountability Reports
LBAc Form No. 1
QUARTERLY REPORT OF INCOME For the Quarter Ending __________
Estimated Estimated Total Actual Income

Account Total Variance
Title/ Account Income Estimated for the Quarter Actual
Income
Description Code Previous Income 1st 2nd 3rd Income Amount % Remarks
This Quarter
of Income Quarter to Date Month Month Month to Date
(1) (2) (6) (7) (8) (9) (10) (11) (12)
(3) (4) (5)
Prepared by: Certified Correct:
___________________ __________ ___________________ __________

LOCAL TREASURER Date LOCAL ACCOUNTANT Date
INSTRUCTIONS:
Column (1) shall refer to the appropriate account classification and nature of the actual income generated during the period
as appearing in Column (3) to (9) in accordance with the Revised Chart of Accounts for LGUs, i.e.,
Other Taxes
Community Tax
Share from Internal Revenue Collection
Share from Expanded Value Added Tax
Column (2) shall denote the numerical code per Revised Chart of Accounts for LGUs.
Column (3) shall indicate the estimated income of previous quarter.
Column (4) shall indicate the estimated income of the current quarter reported based on BLGF reportorial requirements.
Column (5) shall refer to the estimated income from January to the end of the quarter reported.
Columns (6) to (8) shall refer to the actual income realized during the three months of the quarter reported, while Column (9)
shall 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 even date.
Column (10) shall indicate the difference between the estimated income and actual income to date (Col.9 – Col.5).
Column (11) shall indicate the percentage increase/(decrease) in the income (Col. 10 / Col. 5)
Column (12) shall refer to additional information/reasons for material increase or decrease of actual income realized during
the period compared with estimates.
This report shall be submitted directly to the Local Finance Committee thru the Local Budget Officer on or before the 10th
day of the month following the quarter reported.
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LBAc No. 2
QUARTERLY FINANCIAL REPORT OF OPERATIONS

For the Quarter Ending ______________
Appropriation Allotment Released Balance Obligations Incurred

MFO/ Implementing Previous This of Previous This Unobligated
PAP Unit Continuing Current Total Total Appro- Total Allotment Remarks
Quarters Quarter Quarters Quarter
priation
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
Prepared by:
_____________________ _________
LOCAL BUDGET OFFICER Date
INSTRUCTIONS:
Column (1) shall refer to the major final output and PPA Code of the activity as listed down in the General Fund Budget.
Column (2) shall refer to the implementing unit (i.e. General Services Department, Accounting Department, etc.).
Column (3) shall refer to the unreleased appropriation of the past year which can still be released during the current year.
Column (4) shall indicate the current year’s appropriation in the approved budget, whether from the annual budget or from supplemental budgets.
Column (5) shall refer to the total appropriation (Col. 3 + Col. 4).
Column (6) shall refer to 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) shall refer to the allotment released during the quarter being reported.
Column (8) shall refer to the total allotment released as of end of the quarter being reported (Col. 6 + Col. 7).
Column (9) shall refer to the unreleased appropriation (Col. 5 – Col. 8) as of end of the quarter being reported.
Column (10) shall refer to the current year obligations incurred in the previous quarters as recorded in the Registry of Allotment and Obligation (RAO).
Column (11) shall refer to the obligations incurred during the quarter being reported as recorded in the RAO.
Column (12) shall refer to the total obligations incurred as of end of the quarter being reported (Col. 10 + Col. 11).
Column (13) shall refer to the unobligated allotment (Col. 8 – Col. 12) which should tally with the balance shown in the Statement of Allotments,
Obligations, and Balances as of end of the quarter being reported.
Column (14) shall contain other relevant information for which no appropriate column is provided.
This report shall be prepared by the Local Budget Officer and submitted directly to the Local Finance Committee on or before the 10th 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: __________________
PPA Major Performance Target Output Actual Performance Variance

Final 1st 2nd 3rd 4th 1st 2nd 3rd 4th as of Remarks
Code Indicator Total Total
Output Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter ______
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

___________________ __________ _______________________________________ ________
DEPARTMENT HEAD Date PLANNING AND DEVELOPMENT COORDINATOR Date
INSTRUCTIONS:
Column (1) – shall refer to the code assigned to the PPA as reflected in the AIP.
Column (2) – shall refer to the goods and services that a Department/Office is mandated to deliver to its external clients
through the implementation of the PPA.
Column (3) – shall refer to the predetermined measure of the results of a PPA against a standard of performance required
to achieve set policy objectives within a given period.
Column (4) to (8) – shall refer to the annual target output with quarterly breakdown. The total of which (Column 8) shall
be consistent with LBE Form No. 4 (Summary of Financial and Physical Performance Targets).
Column (9) to (13) – shall reflect the quarterly actual performances and the cumulative performance as of a given quarter. Column (14)
– shall reflect the total variance between the actual performances versus target outputs as of the quarter covered by
the report.
Column (15) – shall reflect relevant information/reasons/justifications for increase or decrease in actual performance
versus target output as of the quarter covered by the report.
This Report shall be prepared by each Department/Office head, in coordination with the Planning and Development Coordinator, and
submitted directly to the Local Finance Committee on or before the 10th day of the month following the quarter being reported
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LBAc No. 4
STATEMENT OF RECEIPTS & EXPENDITURES

For the Fiscal Year Ending_________
Province/City/Municipality__________________________
Particulars Amounts Variance Remarks
Estimate Actual Amounts %
(1) (2) (3) (4) (5) (6)
I. Beginning Cash Balance
Receipts:
A. Local Sources
Tax Revenue
Real Property Tax (RPT)
Basic RPT
Business Tax
Other Local Taxes
Total Tax Revenue
Non-Tax Revenue
Regulatory Fees
Service/User Charges
Receipts from
Economic Enterprise
Other Receipts
B. External Sources
Share from GOCCs (PAGCOR and
PCSO
Other Shares from National
Tax Collection
Share from Ecozone
Share from EVAT
Extraordinary
Receipts/Grants/Donation/Aids
Total External Sources
Non-Income Receipts
Proceeds from Sale of Debt
Securities of Other Entities
Total Capital Investment Receipts
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Particulars Amounts Variance Remarks

Estimate Actual Amounts %
(1) (2) (3) (4) (5) (6)
2. Receipts from Loans and
Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Borrowings and
Loans
Total Non-Income Receipts
Total Receipts
III. Expenditures
A. General Public Services

B. Economic Services
C. Social Services
D. Other Services
TOTAL EXPENDITURE
___________________ __________ ____________________ _________
LOCAL TREASURER Date LOCAL ACCOUNTANT Date
INSTRUCTIONS:
Column (1) shall refer to 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, and payables, others (restricted funds)).
Column (2) shall refer to the account code using the Revised Chart of Accounts for LGUs.
Column (3) shall refer to the estimated income/receipts and expenditures for the fiscal year being reported.
Column (4) shall refer to the difference between the estimated and actual income/receipts and expenditures for
the fiscal year reported (Column 3 – Column 2).
Column (5) shall refer to the variance expressed in percentage (Column 5 / Column 3)
Column (6) shall reflect relevant information/reasons/justifications for increase or decrease in actual versus
target receipts and expenditures.
This Report shall be prepared by the Local Treasurer, certified correct by the Local Accountant and
submitted to the LCE by the LFC within 30 days from the end of the fiscal year. Also, a copy of this
Report furnished to the Local Budget Officer shall be submitted to the Department of Budget and
Management 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______________
PAP PAP
Description/ PHYSICAL PERFORMANCE FINANCIAL PERFORMANCE
Code
Major Final
Output
Target Actual Variance % of Allotment Actual Variance Absorptive
Obligations
Output Output Accomplishment Released Capacity
Incurred
(1) (2) (3) (4) (5) = 4-3 (6) = 4/5 (7) (8) (9) =8-7 (10) = 8/7
TOTAL
Prepared by:
_________________________ _____________
LOCAL FINANCE COMMITTEE Date
INSTRUCTIONS:
Column (1) – shall refer to the code assigned to the PPA as reflected in the AIP.
Column (2) – shall refer to the MFO of the various PPA of the Department/Office.
Column (3) – shall refer to the target output for the semester being reported.
Column (4) – shall refer to the actual output for the semester reported.
Column (5) – shall refer to the difference between Column 4 and Column 3.
Column (6) – shall refer the physical accomplishment expressed in percentage (column 4 / Column 5).
Column (7) – shall refer to the allotment released for the Department/Office for the semester being reported.
Column (8) – shall refer to the actual obligations incurred as reflected in the Registry of Allotment and Obligation (RAO) for the
semester being reported.
Column (9) – shall refer to the difference between Column 8 and Column 7.
Column (10) – shall refer to the financial accomplishment expressed in percentage (Column 8 / Column 7).
This Report shall be prepared by the Local Finance Committee and submitted to the LCE within 30 days after the end of each
semester.
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PART III: ALLOCATIONS TO LOCAL

GOVERNMENT UNITS (ALGU)
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, “The territorial and political
subdivisions shall enjoy local autonomy.”
This Constitutional mandate is given flesh by R.A. No. 7160, otherwise known as the 1991
Local Government Code, which provides for the establishment of 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
internal revenues among the different levels of government as well as the sharing of proceeds
from the development of national wealth and from other special shares with the inhabitants of a
particular community by the way of direct benefits. This part of the Manual delves on the
provisions of law as well as on the procedures set forth by different issuances by which Local
Government Units (LGUs) may effectively access the different allocations to LGUs.
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ALLOCATiONS TO LOCAL GOvERNMENT UNiTS (ALGU)

1.0 Internal Revenue Allocation
1.1 Legal Bases
1.2 Distribution of Shares
1.3 Use of the Fund
1.4 Fund Release Procedures
2.0 Share in the Utilization and Development of National Wealth
2.1 Legal Bases

2.3 Use of the Fund
3.0 Share in the Gross Income Taxes Paid by all Businesses
and Enterprises within the ECOZONES.

3.1 Legal Basis
3.2 Computation of Shares
3.3 Use of the Fund
4.0 Share in the Value-Added Tax
4.1 Legal Bases

5.0 Tobacco Excise Taxes
5.1 Legal Bases

5.2 Use of the Fund
5.3 Fund release Procedures
1.0 INTERNAL REVENUE ALLOTMENT (IRA)
1.1 Legal Bases

The Internal Revenue Allotment (IRA) refers to the shares of LGUs from the national internal revenue taxes
(NIRT) equivalent to 40% of the total annual revenue collection of the 3rd year preceding the current fiscal
year (Section 284, RA No. 7160, Article 378 [c], IRR of RA No. 7160).
National internal revenue taxes include the following:
Income tax
Estate tax and donor’s tax
Value-added tax
Other percentage taxes
Taxes imposed by special laws, such as travel tax.
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The allocation of the share of each LGU shall be released directly, without need of any further action, to the
provincial, city, municipal or barangay treasurer, as the case may be. The IRA shall not be subject to any lien
or holdback that may be imposed by the national government for whatever purpose (Section 286, RA No.
7160, Article No. 383 [c], IRR of RA No. 7160).
Beginning FY 2007, the IRA is not only automatically released but treated as an automatic appropriation
(Section 4, RA No. 9358, FY 2006 Supplemental Appropriations). This means that the IRA need not pass
through congressional approval before it is released to LGUs. This provision of the law makes the release of
IRA shares more predictable and allows LGUs to plan/program the use of their IRA fund more effectively.

Section 285 of the Local Government Code (LGC) as implemented by Article 382 (a), IRR of RA No. 7160,
provides the “codal formula” or the manner of allocation of the IRA share prescribed by Code for the four
levels of LGUs as follows:
l Provinces - Twenty-three percent (23%)

l Cities - Twenty-three percent (23%)
l Municipalities - Thirty-four percent (34%)
20 +
l Barangays - Twenty percent (20%)
Figure11.IRAshareperLGUlevel
Provinces
23%
Barangays
20%
Cities
23%
Municipalities
34%
Illustrative examples showing the shares of provinces, cities and municipalities using the ‘codal formula’:
l Population - Fifty percent (50%)

l Land Area - Twenty-five percent (25%)
l Equal Share - Twenty-five percent (25%)
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50 +
Figure12.ComputationofIRAbasedonIndicativeFactors
Land Area
25%
Population
50%
Equal Sharing
25%
The IRA share based on population is computed using the population data from a census of population
conducted by the Philippine Statistics Authority every 5 years as contained in a Presidential Proclamation
Order.
The IRA share based on land area is computed using the consolidated masterlist of land area prepared by the
Land Management Bureau (LMB) of the Department of Environment and Natural Resources (DENR) every
three (3) years.
The allocation of the individual share in the case of barangays, shall be P80,000 for each barangay with a
population of not less than 100 inhabitants. The balance to be distributed shall be based on population (60%)
and equal sharing (40%).
1.3 Use of the Fund

Pursuant to Section 17 of RA No. 7160, the fund shall be used to provide for basic services and
facilities, particularly those which have been devolved by the National Government.
Section 287, RA No. 7160, and Article 383 (b), IRR of RA No. 7160 direct LGUs to set aside no less than
20% of their IRA to fund development projects as identified in the LGUs’ development plans.
The DBM-DILG Joint Memorandum Circular No. 2011-1 dated April 13, 2011, prescribes the
specific use of the 20% Development Fund for the following development projects:
Social Development
Construction or rehabilitation of health centers, rural health units or hospitals, and purchase of
medical equipment;
Construction or rehabilitation of local government-owned potable water supply system;
Establishment or rehabilitation of Manpower Development Centers;
Construction or rehabilitation of evacuation centers;
Purchase or repair of area-wide calamity related alarm or warning system;
Rehabilitation of cultural/historical sites;
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Purchase or repair of appropriate calamity-related rescue operations equipment such as

inflatable boats, breathing apparatus, extraction tools, safe line rescue ropes, fire
extinguishers, chainsaws, two (2) way handheld radios and the like;
Purchase and development of land for the relocation of informal settlers and relocation of
victims of calamities;
Construction or rehabilitation of facilities such as multi-purpose hall intended to cater out-of-
school youths, women, senior citizens, minors, displaced families, indigenous people and
differently-abled persons; and
Installation and maintenance of street lighting system except payment of electric bills.
Economic Development
Construction or rehabilitation of communal irrigation or water impounding system and purchase
of post-harvest facilities such as farm or hand tractor with trailer, thresher and mechanical
driers;
Construction or rehabilitation of local roads or bridges and purchase of appropriate engineering
equipment such as dump trucks, graders and pay loaders;
Capital expenditures related to the implementation of livelihood or entrepreneurship/local
economic development projects; and
Amortization of loans used to finance development projects cited in this Joint Circular, subject
to the 20% debt service cap.
Environmental Management
Reforestation and urban greening;
Construction or rehabilitation of sanitary landfills, material recovery facilities and purchase of
garbage trucks and related equipment;
Implementation of flood and erosion control projects such as rehabilitation and construction of
drainage systems, de-silting of rivers, de-clogging of canals; and
Other environmental management projects that promote air and water quality, as well as
productivity of the coastal or freshwater habitat, agricultural land and forest land.
Expenditure Items Not Covered

The following expense items that are not related to and/or not connected with the implementation of
development projects, programs and activities shall not be paid out of the 20% development fund:
Administrative expenses such as cash gifts, bonuses, food allowance, medical assistance,
uniforms, supplies, meetings, communication, water and light, petroleum products and the
like;
Salaries, wages or overtime pay;
Traveling expenses, whether domestic or foreign;
Registration or participation fees in training, seminars, conferences or conventions;
Construction, repair or refinishing of administrative offices;
Purchase of administrative office furniture, fixtures, equipment or appliances; and
Purchase, maintenance or repair of motor vehicles or motor cycles.
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The release of LGU share from the IRA follows these procedures:
Figure 13. Fund Release Procedures of LGU Share from the IRA
For budget preparation purposes, the BIR submits to DBM a certification of the LGU share from
NIRT equivalent to 40% of the total annual revenue collection of the 3rd year preceding the current
fiscal year, as reconciled with the BTr.
The DBM programs the equivalent amount of IRA

in the National Expenditure Program.
Based on the BIR certification and codal formula, the DBM computes the
individual share of each LGU, and informs the beneficiary LGUs of their
respective IRA shares through a Local Budget Memorandum issued not later
than June 15 of the preceding year for the purpose.
At the beginning of the year, the DBM prepares and releases

comprehensively the corresponding release documents to the Bureau of
the Treasury (BTr).
The BTr, in turn, downloads the fund through the issuance of Authority to
Debit Account to the Authorized Government Servicing Banks (AGSBs),
which credits the shares of the beneficiary LGUs to their respective
accounts.
2.0 SPECIAL SHARES

2.1 Legal Bases
In addition to the internal revenue allotment, LGUs are also entitled to 40% of the gross collection by the
national government from the preceding fiscal year out of the proceeds derived from the utilization and
development of national wealth within the LGUs’ respective areas (Section 289 and 290, RA No. 7160 and
Articles 386 and 387, IRR of RA No.7160).
There following are the four (4) types of national wealth with the corresponding collecting agency:
Particulars Collecting Agency
Forest Charges Department of Environment and Natural

Resources (DENR) – OSEC
Royalties and Mineral Reservation DENR - Mines and Geo-Sciences Bureau
EnergyProduction Resources Department of Energy
Mining Taxes Bureau of Internal Revenue
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LGUs shall also have a share from proceeds derived by any government agency or government-owned or
controlled corporation 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 government-
owned or controlled corporation would have paid if it were not otherwise exempt (Section 291, RA
No. 7160; Article 388, IRR of RA No. 7160).

Pursuant to Section 292 of RA No. 7160 and Article 389, IRR of RA No. 7160, 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%.
20 +
Figure 13. Distribution of Shares from National Wealth
(wherethenaturalresourcesarelocatedintheprovince)
Province
20%
Barangay
35%
Component City
or Municipality
45%
Where the natural resources are located in a highly urbanized or independent component city, the city
will have a share of 65%, and the barangay, 35%.
155
Figure 14. Distribution of Shares from National Wealth

(where the
natural 35 resourcesarelocatedinahighlyurbanizedorindependent + componentcity)
Barangay
35%
City
65%
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%).
2.3 Use 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, 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, RA No. 7160; Article 391, IRR of RA No. 7160)
In the case of any government agency or government-owned or controlled corporations engaged in the
utilization and development of the national wealth, such share shall be directly remitted by the government
agency/government-owned or controlled corporation concerned to the provincial, city, municipal, or
barangay treasurer within five (5) days after the end of each quarter. (Section 293, RA No. 7160; Article 390
[b], IRR of RA No. 7160)

DBM-DOF-DOE Joint Circular (JC) No. 2006-1 dated February 13, 2006, DOF-DBM-DILG-DENR JC No.
2009-1 dated March 31, 2009, DENR-DOF-DBM-DILG JC No. 2010-1 dated June 25, 2010, and DOF-
DBM JC 2016-1 dated January 4, 2016 prescribe the guidelines and procedures for the release of LGU
shares in the proceeds from the utilization and development of national wealth, summarized hereunder:
156
Forest Charges, Royalties from Mineral Reservation, Mining Taxes, and Energy Source Production
Figure 15. Fund Release Procedures of LGU Shares in the proceeds from Forest Charges,
Royalties from Mineral Reservation, Mining Taxes, and Energy Source Production
The collecting agencies, i.e., Bureau of Internal Revenue (BIR), the

Department of Environment and Natural Resources (DENR), DENR-Mines
and Geosciences Bureau (MGB), and the Department of Energy 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.
During budget execution, the collecting agencies and the BTr

submit to DBM a reconciled certification on actual collections
and actual remittances from the immediately preceding year.
Based on the reconciled certification/s submitted the collecting agencies and BTr, the DBM
prepares and releases the corresponding release documents to the BTr.
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.
3.0 SHARE IN THE GROSS INCOME TAXES PAID BY

ALL BUSINESSES AND ENTERPRISES WITHIN THE
ECOZONES.
3.1 Legal Basis

R.A. No. 7922 and DBM-DOF Joint Circular No. 2 dated August 7, 2014 (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)
(Note: The other shares of LGUs in ECOZONEs [such as those under RA No. 7227] are already remitted to
the beneficiary LGUs pursuant to RA No. 9400.)
157

Local government units 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 Zone in
proportion to their income from business activities within the Zone
3.3 Use 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.

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:
Figure 16. Fund Release Procedures of LGU Shares from Ecozone Share in Value Added Tax
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.
During budget execution, the BIR and BTr submit reconciled

certification/s of actual collections and remittances to the DBM.
Based on the reconciled certification/s submitted by the BIR and BTr, the DBM prepares and
releases the corresponding release documents to the BTr.

158
4.0 SHARE IN VALUE ADDED TAX
4.1 Legal Bases

Value-Added Tax (VAT) is the internal revenue tax imposed under Section Nos. 106 and 108 of the NIRC of
1997 (formerly Sections 100, 101 and 102 of the NIRC of 1977). In addition to its IRA shares, RA No. 7643
allows Local Government Units (LGUs) to share from VAT revenues equivalent to 50% of the excess in VAT
collection from the immediately preceding year, to be distributed as follows:
20% to the city/municipality

80% to the national government
DBM-DOF-DILG Joint Circular No. 1-02 dated February 6, 2002 prescribes the guidelines and procedures
on the release of the 20% of the 50% share of LGUs in the incremental collection VAT.

LGUs are entitled to a share in VAT only when there is an incremental collection from Value-Added Tax
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:
Year VAT Collection (in Php) Increase (in Php)
2013 64.55 M 20.972 M
2012 43.383 M 19.700 M
2011 23.886 M -
Formula for the Distribution of LGUs’ share in the Incremental Collection from VAT:
2013 increase in collection P 20.972 M
Less: 2012 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
159
Figure 17. Formula for the Computation of LGUs’ VAT Shares
If VAT is paid by
100% to the city or
manufacturers, producers municipality where the
without branch or business is located
sales/outlet/s
30% to the city

If VAT is paid by or municipality
manufacturers, producers where the principal
office is located
with factories, project
offices, plantations and 70% to the city or
plants municipality where
the factory, project
offices, plant or
plantation is located
28% to the city/
municipality where
30 + 30% tothecity/
municipality where
If VAT is paid by the plantation the principal office
manufacturers, producers, is located is located
0
exporters where the
plantation is located at a
place other than the place
where the factory is
located
42% to the city/
municipality where
30 +
If VAT is paid by the
30+
manufacturers, producers,
exporters and has two
or more factories,
thefactory islocated
plants and plantations
70% shall be
prorated among the
localities where the
30% to the city/ factories, project
offices, plants
municipality where and plantations
the principal office are located
is located
Based on the foregoing formula, the BIR prepares a certification of the computed LGU share from VAT tax
payments/collections and submits to DBM.
160
Figure 18. Fund Release Procedures of LGU Share from VAT tax payments/collections
For budget preparation purposes, the BIR submits to DBM a certification of

estimated revenue collections corresponding to 20% of the 50% of the
incremental collection from VAT collections.
During budget execution, the BIR submits to DBM a certification

of actual revenue collections corresponding to 20% of the
50% of the incremental collection from VAT collections.
Based on the certification submitted by the BIR, the DBM prepares

and releases the corresponding release documents to the BTr.

5.0 TOBACCO EXCISE TAXES
5.1 Legal Bases
R.A. No. 7171 dated January 9, 1992, entitled, “An Act to Promote the Development of Farmers in
the Virginia Tobacco Producing Provinces”.
R.A. No. 8240, as amended by R.A. 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”
161
5.2 Computation of Shares of LGUs

Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171
BIR Certification on the fifteen percent (15%) excise tax collection on locally manufactured Virginia
type cigarettes for the second calendar year preceding the year of distribution, as appropriated in
the General Appropriations Act; and
National Tobacco Administration (NTA)-certified list of beneficiary tobacco-producing LGUs and
their corresponding volume of production (in kilograms) for the second year preceding the year
of distribution.
Burley and Native Tobacco Excise Taxes Pursuant to RA No. 8240, as Amended
BIR Certification of the 15% of the incremental revenue collected from the excise tax on tobacco
products under RA No. 8240 for the second calendar year preceding the year of distribution, as
appropriated in the General Appropriations Act; and
NTA-certified list of beneficiary tobacco-producing LGUs and their corresponding volume of
production (in kilograms) for the second year preceding the year of distribution.
5.3 Use 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
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 system 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 project such as post-
harvest and secondary processing like cigarette manufacturing and by-product utilization; and
Infrastructure projects such as farm-to-market roads.
5.3.2 Shares of LGUs from the Collection of Burley and Native Tobacco Excise Tax Pursuant to RA No.
8240, as Amended
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, schools, hospitals, and rural health facilities;
and
162
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.
Figure 19. Fund Release Procedures of LGU Shares from Tobacco Excise Tax
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.
During budget execution, the Department of Agriculture (DA) endorses and submits an NTA-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 benecifiary LGUs.
Based on the NTA-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.

163
PART IV. FREQUENTLY ASKED QUESTIONS

?
? ?
?
Budget Preparation
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.1 Although local autonomy grants local
governments the power to streamline and reorganize as may be inferred from Sections 16 and 76 of the
Local Government Code of 1991, it does not confer authority upon any local government unit to create a
separate and supplementary retirement benefit plan.2
Section 28, paragraph (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, paragraph (b), as amended was to
address the need to prevent the proliferation of inequitous plans. According to the Supreme Court:
“x x x Sec. 28 (b) as amended by RA No. 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.”3
Can the LGU appropriate for Monetization of Leave Credits?

Generally, Monetization of Leave Credits is chargeable against savings. However, under Civil Service
Commission-Department of Budget and Management (DBM) Joint Circular No. 2, s. 2003, Monetization of
Leave Credits, Collective Negotiation Agreement (CNA) Incentive Bonus, 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 Personal Services (PS) Limitation, as stipulated under Section 325 (a) of RA No. 7160.
Can the appropriation for development projects of no less than twenty percent 20% of the IRA be
appropriated in a lumpsum amount?
No. The said appropriation for the 20% Development Fund should cover itemized projects. Section 287
of RA No. 7160 provides that each LGU shall appropriate in its annual budget no less than 20% of its
annual IRA for development projects. Article 384 of the IRR of RA No. 7160 further provides that it
shall be mandatory for each LGU to set aside in its annual budgets amounts no less than 20% of its IRA
for the next year as appropriation for local development projects that embodied or contained in local
development plans.
Laraño vs. Commission on Audit

City of General Santos vs. Commission on Audit, G.R. 199439, April 22, 2014
Conte vs. Commission on Audit, G.R. No. 116422, November 4, 1996
165
Is an Appropriation Ordinance necessary to authorize utilization of loan proceeds?

Yes. An Appropriation Ordinance is necessary to authorize utilization of loan proceeds. Loans, interests,
bond issues, and other contributions for specific purposes form part of the general fund of the LGU.
Pursuant to Section 305 (a) of RA No. 7160, no money shall be paid out of the local treasury except in
pursuance of an appropriation ordinance or law.
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 RA No. 7160 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.
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.
How is the CNA Incentive Bonus classified in the budget?

The CNA Incentive Bonus shall be taken up as PS Expenditure.
Budget Authorization
Are the voting and procedural requirements of the ordinance authorizing the use of savings and
augmentation under Section 336 of RA No. 7160 the same as those for the ordinance authorizing the use
of savings as a fund source for a supplemental budget under Article 417 of RA No. 7160, as amended by
Administrative Order (AO) No. 47 dated 12 April 1993 (implementing Section 321 of RA No. 7160)?
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 RA No. 7160. 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 same law.
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.
As to procedural requirement – A supplemental budget is not required in passing an ordinance
authorizing the use of savings and augmentation within the same expense class under Section 336 of RA
No. 7160 since the law merely requires the authority “by ordinance.”
While the ordinance under aforementioned Section 336 and an Appropriation Ordinance have the same
voting requirements, each has a different procedural requirement. Further, the ordinance under Section 336
may have a regular format simply stating that the LCE and/or the Presiding Officer of the Sanggunian is
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, as opposed to the use of savings
considered as funds actually available to be covered by a supplemental budget as provided under Article 417
of RA No. 7160, as amended by AO No. 47 (implementing Section 321 of RA No. 7160).
Should the Sanggunian decide to grant the LCE and/or the Presiding Officer of the Sanggunian with the
authority to use savings and augment within the same expense class in their respective appropriations, the
166
said authorization may be included as a general provision/section in the ordinance authorizing the annual
appropriations.
What is the difference between the use of savings as a fund source for a supplemental budget under
Article 417 of the IRR of RA No. 7160 as amended by AO No. 47 (implementing Section 321 of RA
No. 7160) and the use of savings for augmentation under Section 336 of RA No. 7160?
The use of savings under Article 417 of the IRR, as amended by AO No. 47, implementing Section 321
of RA No. 7160 will require the enactment of an ordinance authorizing supplemental appropriations
(supplemental budget).
Under AO No. 47, an ordinance providing for a supplemental budget may be enacted when supported by
funds actually available as certified by the local treasurer. The said AO further provides that funds are
likewise deemed actually available when there are savings.
In this case, the usual process of authorizing a supplemental budget will always apply. The supplemental
budget will involve the reversion of the savings and its corresponding re-appropriation to any item of
expenditure under any expense class. Accordingly, the Appropriation Ordinance shall be subject to review by
the DBM or the Sangguniang Panlalawigan, as the case may be (Sections 326 and 327, RA No. 7160).
On the other hand, the use of savings for augmentation under Section 336 will require the enactment of
an ordinance, without the necessity of a supplemental budget submitted by the LCE. The ordinance will
give the 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.
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 RA No. 7160 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 RA No. 7160
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 RA No. 7160 and Article 417 of its IRR as amended by AO No. 47. Accordingly, since the annual
budget emanates from the LCE as provided under Section 318 of RA No. 7160, the supplemental budget
should likewise emanate from the LCE.
On the other hand, the proposed ordinance granting authority to use savings under Section 336 is not a
budget and need not emanate from the LCE.
How may the use of savings and augmentation under Section 336 and the use of the savings as funds
actually available for supplemental budget under Article 417 of the IRR of RA No. 7160, as amended
by AO No. 47 (implementing Section 321 of RA No. 7160) be distinguished?
The following matrix summarizes the distinctions between the use of savings under Sections 336 and
321 as aforementioned:
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REQUIREMENT SECTION 336 SECTION 321

(Use of savings and Augmentation) (Use of savings thru
Supplemental Budget)
What is the instrument required Ordinance Appropriation Ordinance covering
for authority? a supplemental budget
Is there a need for a supplemental No need for a supplemental budget Supplemental budget needed
budget?
What is the purpose of the savings? For augmentation of existing For re-appropriation – may be to a
item/s of expenditure within the different expense class
same expense class
Where should the proposal From the LCE or the Sanggunian From the LCE only
emanate?
For provinces or highly urbanized No Yes
cities, will the ordinance be subject
to review by DBM?
Can the LGU pass an ordinance authorizing use of savings and augmentation under Section 336 of RA
No. 7160 when operating under a reenacted budget?
No. Use of savings and augmentation under Section 336 of RA No. 7160 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.
Can the Sanggunian increase items of appropriation in the executive budget?

Yes, provided that the aggregate increase does not cause an excess over the total proposed amount in the
executive budget pursuant to Article 415 (a) of the IRR of RA No. 7160.
Can the Sanggunian introduce/include new items in the executive budget?

Yes, but only to provide for statutory and contractual obligations and it does not cause an excess over the
total proposed amount in the executive budget pursuant to Article 415 (a) of the IRR of RA No. 7160.
As reference to questions 6 and 7 hereof, the doctrine enunciated in the case of Sarmiento, et al. vs. The
Treasurer of the Philippines, et al. (GR Nos. 125680 and 126313, September 04, 2001) may be applied
where the Supreme Court ruled that under Section 25 (1), Article VI of the 1987 Constitution, 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 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 R.A. No. 7160 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
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reduction shall be made in the total appropriation of the department, office or agency
concerned in the total of the General Appropriations Bill.”
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 RA No. 7160 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 RA No. 7160 is at the end of the fiscal year (except
in cases of continuing appropriations when the capital outlay projects are not yet completed).
Section 320 of RA No. 7160 provides that “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.” What about the requirement of
publication under Section 59 of RA No. 7160 and Article 113 of its IRR?
Posting and/or publication, as the case maybe, of an ordinance is required under Section 59 of RA No.
7160. The mandatory word “shall” 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.”
“(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.”
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.
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 RA No. 7160 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], RA No. 7160).
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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], RA No. 7160; Article 122
[a] [3] [ii], IRR of RA No. 7160).
The requirement is mandatory. 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.
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 RA No. 7160 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) ], RA No. 7160; Article 122
[a (3) (ii)], IRR of RA No. 7160).
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)],
RA No. 7160; Article 122 [a (3) (iii)], IRR of RA No. 7160).
Further, Section 49 provides that the temporary Presiding Officer “shall certify within 10 days from the
passage of the ordinance xxx.”
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.
Can the Sanggunian withdraw the proposed Appropriation Ordinance which was already submitted to
the LCE for approval?
There appears to be no legal provision in such a case. However, it may be assumed that the withdrawal
of the proposed Appropriation Ordinance may not be allowed since the legislation process at such point
has already been completed. Thus, the executive consideration of the proposed Appropriation Ordinance
should take its course.
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 RA No. 7160 provides that the LFC shall recommend the appropriate tax and other
revenue measures or borrowing which may be appropriated to support the budget.
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Further, SB may be enacted when it is supported by new revenue sources pursuant to Section 321 of RA
No. 7160. It may be gleaned from Article 417 of the IRR of the same law as amended by AO No. 47 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.
In the case of SBs, what amount will be certified as actually available by the local treasurer and when is
the fund considered actually available?
For SB supported by funds actually available as certified by the local treasurer, the amounts to be certified are
only those actually collected at any given point during the fiscal year, which is over and above the estimated
income collection for that point in the year. Further, funds are likewise deemed actually available when there
are savings as defined under Article 417 of the IRR of RA No. 7160, as amended by AO No. 47.
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)?
In this particular case, a separate procurement for every loan proceeds released by the lender and actually
received and appropriated by the LGU is necessary under Section 5 of R.A. 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.
However, in order to avoid the situation where the separate procurements will be construed as Splitting of
Contract, which is prohibited under R.A. No. 9184, it is necessary for the LGU to appropriate the total
amount received by the LGU, where releases of loan proceeds are made in several tranches.
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, and the LCE.
The Internal Rules of Procedure of the Sanggunian may, however, provide additional requirements for
signatures in the Appropriation Ordinance.
What are the disadvantages of a reenacted budget in case of failure of the Sanggunian to enact the
annual appropriations?
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, RA No. 7160; Article 415, IRR of R. No. 7160).
Accordingly, a reenacted budget will have implied disadvantages, such as, but not limited to, the following:
No creation of positions
No new programs, projects and activities
No utilization of the increase in IRA allocation for the year since the same is not covered by an
Appropriation Ordinance
Non-implementation of non-recurring activities no matter how vital they may be
No supplemental appropriations
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Is the appropriation for development projects of no less than twenty percent (20%) of the IRA 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, RA No. 7160; Article 415, IRR of RA No. 7160).
Accordingly, there can be no implementation of new projects under a reenacted budget.
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.”
What comprises a “quorum,” and “majority” in the Sanggunian?
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?
What constitutes simple majority and qualified majority?
Answer a: 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.4
In computing the quorum of the Sanggunian, the entire membership must be taken
into account as 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.5
Majority, when required to constitute a quorum, means the number greater than half
or more than half of any total.
Answer b: The vice LCEs are also included in the determination of the entire membership of the
sanggunian as the LGC clearly provides that the respective sanggunians shall be
composed of the vice-mayor or vice-governor as Presiding Officer. As Presiding
Officer, the vice-mayor or vice-governor can vote only to break a tie. In effect, the
Presiding Officer votes when it matters the most, that is, to break a deadlock in the
votes. Clearly, as presiding officer, the vice-mayor or vice-governor is a member of the
Sanggunian considering that he is mandated under the LGC to vote to break a tie. To
construe otherwise would create an anomalous and absurd situation where the
Presiding Officer who votes to break a tie during a Sanggunian session is not
considered a member of the Sanggunian.6
Answer c: 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 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
thequalified 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.7
Javellana v. Tayo as cited in Zamora vs. Caballero, G.R. 147767, January 14, 2004
Perez v. Dela Cruz as cited in Zamora vs. Caballero
Zamora vs. Caballero
La Carlota City vs. Rojo, G.R. 181367, April 24, 2012
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Can the Sanggunian validly appropriate for some 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
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 RA No. 7160, as implemented by Article 417 of its IRR as
amended by AO No. 47 dated 12 April 1993.
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 lump-sum 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, in the absence of a legal basis at the time of the budget review, the lump-sum
will be disallowed.
Can the LCE or Sanggunian withdraw an Appropriation Ordinance already submitted to a reviewing
body?
No. The enactment of the Appropriation Ordinance has already been completed at the LGU level. Hence,
the review process must take its course.
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 RA No.
7160, 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.
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 IRA for
development projects in the annual budget. In which case, insufficient provisions for 20% of the IRA for
development projects will render the declaration of the Appropriation Ordinance as inoperative in its entirety.
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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.
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 RA No. 7160,
the Sanggunian may override the veto of the LCE by two-thirds (2/3) vote of all its members thereby
making the ordinance effective.
The first Appropriation Ordinance which was enacted in accordance with the pertinent provisions of RA
No. 7160 shall be the basis of the budget review.
Budget Execution
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.
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 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
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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.8
Who between the Local Chief Executive (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.9
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?
Who is the approving officer/signatory of the vouchers prepared for the payment of salaries of job
order employees in the Office of the Vice-Mayor/Vice-Governor and in the Sanggunian?
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.
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/ViceGovernor who has the
authority to approve disbursement vouchers for expenditures appropriated for the operation of the
Sangguniang Panlalawigan.10
Quisumbing vs. Garcia, G.R. No. 175527, December 8, 2008

Atienza vs. Villarosa, G.R. 161081, May 10, 2005
Atienza vs. Villarosa, G.R. 161081, May 10, 2005
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items of Appropriations included, By Attribution, in

the General Fund Annual Budget
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:
Gender and Development (GAD) programs, projects and activites (PPAs) that specify women’s needs and
GAD concerns pursuant to R.A. No. 7192 (Women in Development and Nation-Building Act), the
Department of Budget and Management (DBM), National Economic and Development Authority
(NEDA), and National Commission on the Role of Filipino Women (NCRFW) Joint Circular (JC) No.
2004-1 issued in 2004 (superseding DBM-NEDA-NCRFW JC No. 2001-1 dated August 15, 2001), and
Philippine Commission on Women-DILG-DBM-NEDA JMC No. 2016-01 dated January 12, 2016;
PPAs and services that will address the needs of senior citizens pursuant to the applicable provisions in
the annual General Appropriations Acts (GAA) and RA No. 7432 ( An Act to Maximize the
Contribution of Senior Citizens to the Nation Building, Grant Benefits and Special Privileges and for
Other Purposes), RA No. 7876 (An Act Establishing a Senior Citizens Center in All Cities and
Municipalities of the Philippines, and Appropriating Funds Therefor);
PPAs, services and facilities that will address the needs of differently – abled persons pursuant to RA No.
7277 (Magna Carta for Disabled Persons) 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 pursuant to RA No. 8504 (Philippine AIDS Prevention and
Control Act of 1998);
Implementation of the programs of the Local Councils for the Protection of Children (LCPC) pursuant to RA
No. 9344 (Juvenile Justice and Welfare Act of 2006). One percent (1%) of the IRA of barangays,
municipalities and cities shall be allocated for the strengthening and implementation of the programs of
the LCPC: Provided that the disbursement of the fund shall be made by the LGU concerned.
Implementation of programs for Public Social Workers pursuant to RA No. 9433 (An Act providing for
Magna Carta for Public Social Workers) and its IRR.
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.
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 lump-sum amount provided as such in the appropriation ordinances of LGUs for their
Confidential Expenses.
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What are the legal bases for the allocation and use of funds for confidential expenses?
The general welfare clause under Section 16 of RA No. 7160 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.”
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:
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.
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.
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.
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.
CF shall be used only for the following Confidential Expenses:
l Purchase of information necessary for the formulation and implementation of program, activities
and projects relevant to national security and peace and order
l Rental of transport vehicle related to confidential activities
l Rentals and the incidental expenses related to the maintenance of safehouses
l 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
l Payment of rewards of informers
l 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
l Others that may be authorized by the GAA or other special law/s
In no case shall the CF be used for the following:
l 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
l Representation, consultancy fees or entertainment expenses
l Construction or acquisition of buildings and housing structures
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.
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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 O.
Disbursements from the CF shall be supported by Certification of the Accountable Officer of the CF
signed under oath.
What are Peace and Order Programs (POP)?

Pursuant to COA-DBM-DILG-GCG-DND JC No. 2015-01 dated January 8, 2015, 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:
Crime prevention and law enforcement activities;
Aid and/or capability development for personnel of law enforcement agencies, and volunteers/
partners; and
Programs for anti-illegal drug, illegal gambling, counter-insurgency and/or counter terrorism, illegal
logging, illegal mining, illegal fishing, smuggling and human trafficking.
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:
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.
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.
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.
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.
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
Certification of Full Disclosure Policy compliance
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.
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What are the legal bases for Special Education Fund (SEF)?
One of the special funds that shall be maintained in every provincial, city or municipal treasury is the
Special Education Fund (SEF). Section 309 (a) of RA No. 7160 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 this Code.”
Section 272 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. In the case of provinces,
the proceeds shall be divided equally between the provincial and municipal School Boards; provided that
the proceeds shall be allocated for the following as determined and approved by the Local School Board:
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.
What are the policy guidelines on the use of the SEF?

The implementing guidelines on the utilization of the utilization of the SEF are clarified in the Joint
Circulars issued by the DECS (now, Department of Education [DepEd]), the DBM and the DILG:
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Prioritization of Expenses Charged against the SEF
DECS-DBM-DILG Joint Circular (JC) Operation and maintenance of public schools, including
No. 01s. 1998 organization of extension, non-formal, remedial and
April 14, 1998 summer classes, as well as payment of existing
allowances of teachers granted by LGUs chargeable
Prescribing the Rules and Regulations against the SEF as of 31 December 1997, provided
on the Utilization of the Special
that any additional allowances that may be granted to
Education Funds (SEF) by the Local
teachers by LGUs shall be charged to the general
School Boards for the Operation and
Maintenance of Elementary and fund of LGUs, subject to existing budgeting rules and
Secondary Public Schools regulations;
Construction and repair of school buildings, facilities
DECS-DBM-DILG JC No. 01-A
and equipment, including the acquisition, titling
March 14, 2000
and improvement of school sites;
Supplemental Provisions to DECS, Educational research;
DBM and DILG JC No. 1, s. 1998 Acquisition/procurement of books, instructional
dated 14 April 1998 materials, periodicals and equipment, including IT
DECS-DBM-DILG JC No. 01-B resources;
June 25, 2001 Expenses for school sports activities of the national,
regional, division, district, municipal and barangay
Further Clarifying Certain Provisions levels, including DepEd-related activities including
of DECS, DBM and DILG JC Nos. 1, s. co-curricular activities.
1998 and 01-A, s. 2000 dated April 14, Establishment of new classes as extensions of existing
1998 and March 14, 2000, respectively
public elementary or secondary schools as approved
by the DepEd Secretary, recommended by the DepEd
Regional Director and certified by the Schools
Division Superintendent as to the necessity and
urgency of establishing extension classes in the
province, city and municipality, provided that no
extension classes shall be established unless the
number of pupils shall at least be 15;
Payment of compensation of those teaching personnel
who will be hired temporarily in instances where
there are no teaching positions available in DedEd;
and
Payment of salaries and authorized allowances of
teachers hired to handle new classes as extensions
of existing public elementary or secondary schools
established pursuant to Section 2.1 of DECS-
DBM-DILG JC No. 01-A.
Is an Appropriation Ordinance necessary to authorize the utilization of the SEF?

No. Pursuant to Article 448 of the IRR of RA No. 7160, Special Funds, which include the SEF, shall be
deemed automatically appropriated for purposes indicated therefor.
The allocation of the SEF shall be determined and approved by the Local School Board (Section 272,
RA No. 7160).
What is the Budget Process for the SEF?

Budget Preparation
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.
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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],
RA No. 7160).
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], RA No. 7160).
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 Local School Board shall be necessary to approve the budget (Section 100
[b], RA No. 7160).
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
Chairman/Co-Chairman of the Local School Board to the provincial, city, municipal treasurer
(Section 99 [b], RA No. 7160), subject to existing accounting and auditing rules.
Budget Accountability
Step 7. A quarterly report of the SEF utilization shall be prepared and submitted by the Local
School Board 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 hereof
shall be used (Item 3.0 of Joint Circular no. 01-A of DECs, DBM and DILG dated March 14, 2000).
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SEF Budget Preparation Form No. 1
INCOME AND EXPENDITURE ESTIMATES FOR FY _______

Provincial/City/Municipal School Board of ________________
(In P000)
Estimated Income for Budget Year xxx

Additional One Percent (1%) Tax on Real Property …………………………………… 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
Maintenance
Rank Program/Activity/Project* Personal and Other Capital Total
Services Operating Outlays
Expenses
Total Expenditures for BY ______ xxx xxx xxx xxx

Balance /Deficit xxx
Prepared by:
_____________________________
Division Superintendent/Supervisor
Co-Chairman, LSB
*Please refer to prioritization on the use of the SEF (DECS-DBM-DILG JC Nos. 01, 01-A and 01-B)
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SEF Budget Authorization Form No. 01
Provincial/City/Municipality of ____________________
Local School Board of___________________________
____________ Regular Session
Begun and held in __________________, ________________, on ________ day of __________,

____________.
Local School Board Resolution No. _____________
A RESOLUTION APPROVING THE BUDGET FOR PRIORITY EDUCATION PROJECTS IN

THE PROVINCE/CITY/MUNICIPAL SCHOOL BOARD
Be it resolved by the Local School Board of _________________ in Council assembled:
Section 1. Source of Funds. The following income as indicated herein are hereby declared as sources of
funds, particularly the additional one percent (1%) Tax on Real Property which are realistic and probable to
be collected and remitted to the Local Treasury, necessary to finance the implementation of priority
education projects of the Province/City/Municipality of __________________ from
January one to December thirty-one, two thousand ___________, except otherwise specifically
provided herein:
Estimated Income for Budget Year
Additional One Percent (1%) Tax on Real Property P_______________
Add: Previous Years Unexpended Balances

(including Continuing Appropriation) _______________
Gross Income P_______________
Less: Continuing Appropriation _______________
Net Amount Available for Appropriation P
================
Section 2. Allocation of Funds. The following sums are hereby allocated out of the additional
one percent (1%) Tax on Real Property and any unexpended balances thereof in the Local
Treasury of the Province/City/Municipality for the implementation of priority education projects in
the Province/City/Municipality from January one to December thirty-one, two thousand _______:
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Expenditure Program for Budget Year
Personal Maintenance and Capital

Rank Program/Activity/Project* Other Operating Total
Services Outlays
Expenses
Total
*Please refer to prioritization on the use of the SEF (DECS-DBM-DILG JC Nos. 01, 01-A and 01-B)
Expected Output
Rank P/A/P Expected Output Schedule of Delivery
Section 3. Effectivity. This Resolution shall take effect immediately upon its approval.
Date Adopted: __________________
Carried Unanimously,
Local School Board Members
Names Signatures
______________ ______________
______________ ______________
______________ ______________
I HEREBY CERTIFY to the correctness of the above-quoted Local School Board Resolution.
_____________________
Secretary-Designate to the LSB
Attested:
_________________
Co-Chairman, LSB
APPROVED:
____________________
LCE, Chairman, LSB
Date: _____________
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SEF Budget Accountability Form No. 01
REPORT OF SEF UTILIZATION

For the Quarter Ending __________
Province/City/Municipality __________________
Receipt from SEF P ___________
Less: DISBURSEMENTS (broken down by expense class and
by object of expenditures)
Personal Services
________________________ ____________
________________________ ____________
________________________ ____________
________________________ ____________
________________________ ____________
________________________ ____________
Capital Outlays
________________________ ____________
________________________ ____________
________________________ ____________
Financial Expenses
________________________ ____________
________________________ ____________
________________________ ____________
Sub-Total ___________
Balance P
============
Prepared by:
______________________
Local Accountant
Approved by:
______________________
LCE, Chairman, LSB
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Local Disaster Risk Reduction and Management Fund
What is a “State of Calamity”?

Pursuant to RA No. 10121 (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) 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.
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
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.
Is LDRRMF sourced only from the not less than 5% of the estimated revenue from regular sources?
Per COA Circular No. 2012-002 dated September 12, 2012, the following are all the sources of the LDRRMF:
Not less than 5% of the estimated revenues from regular sources of the LGUs;
The unexpended balance of the LDRRMF in the preceding years within the 5-year validity period of
the Special Trust Fund;
Funds transferred from the NDRRMF upon approval of the President; and
Funds received from other LGUs and other sources.
What are the general guidelines on the use and allocation of the LDRRMF?
Pursuant to NDRRMC-DBM-DILG Joint Memorandum Circular (JMC) 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.
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).
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
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.
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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.
Allocation to Local Government Units
Are barangays created by LGUs after the effectivity of RA No. 7160 entitled to IRA shares?
No. The financial requirements of barangays created by LGUs after the effectivity of RA No. 7160 shall
be the responsibility of the LGU concerned (Section 285, RA No. 7161).
For purposes of determining the IRA allocation of LGUs based on land area, can the DBM adjust the
IRA of the LGU concerned based on the individual certification issued by the Land Management
Bureau (LMB) to LGUs?
Under RA No. 7160, all issues affecting land area falls under the function of the LMB-Department of
Environment and Natural Resources (DENR). For purposes of IRA computation based on land area, any
change in the land area shall be made every 3rd year after 1999 per the consolidated master list of land
area to be submitted by the LMB-DENR to DBM on or before December 15.
In the ARMM, the request of the LMB-ARMM for land area adjustment of LGU shall be endorsed by
the DENR-ARMM and approved by the Regional ARMM Governor for final endorsement/submission to
the Secretary of the DENR.
Aid to Barangays
What is the legal basis for the provision of Aid to Barangays?

Section 324 (c) of RA No. 7160 provides that, “In 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
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.
What are the legal bases for GAD and GAD Planning and Budgeting?
RA No. 7192 and Executive Order (E.O.) No. 273 mandate agencies, including LGUs, to institutionalize
GAD in government by incorporating the GAD concerns in their planning, programming and budgeting
process.
187
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.
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.
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.
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 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.
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.
The costs of functions and PPAs to implement the GAD Plan may include any or all of the following items:
Personal Services;
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Maintenance and Other Operating Expenses; and

Capital Outlays.
The GAD PPAs may be classified into:
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
Client-focused, where efforts address gender issues that affect the LGU’s clients and/or constituents.
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)
What is the funding source for the salaries of ICCs/IPs?

Since the representative from ICCs/IPs is specified in RA No. 7160, 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.
Personal Services Limitation
What is Personal Services (PS)?

PS refers to appropriations for the payment of salaries, wages and other compensation of permanent,
temporary, contractual, and casual employees of the LGU (Section 306 [k], RA No. 7160).
For purposes of computing the 45%/55% PS Limitation, the “other compensation” as referred to therein
and as determined pursuant to AO No. 42 dated March 3, 1993 issued by the President consists of the
following:
Statutory and Contractual Obligations
Employees Compensation Insurance Premiums (ECIP);
Health Insurance Contributions (HIC);
Pag-IBIG Contributions (Pag-IBIG);
Life and Retirement Insurance Contributions (LRIC); and
Retirement Gratuity and Terminal Leave (RG/TL) Benefits.
Authorized Allowances/Benefits
Personnel Economic Relief Allowance (PERA);
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Uniform/Clothing Allowance (U/CA);

Commutable and Representation and Transportation Allowances (RATA);
Year-end Benefits (YEB);
Step Increments for Length of Service;
Magna Carta Benefits of PHWs;
Specialists’ Fees and Allowances (when there is employer-employee relationship); and
All other legally authorized allowances/benefits of officials and employees of LGUs.
c. Lump-sum Appropriations
Lump-sum for Salary Adjustments;
Lump-sum for Creation of New Positions; and
Lump-sum for Casual/Contractual Positions.
What is the legal basis for the PS Limitation?

The limitation of appropriations for PS for LGUs is prescribed under Section 325 (a) for provinces, cities
and municipalities, and Section 331 (b) for barangays, of RA No. 7160, which, respectively, provide:
“SEC. 325. General Limitations. – The use of the provincial, city, and municipal funds shall be
subject to the following limitations:
The 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 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;”
“SEC. 331. Preparation of the Barangay Budget. –
xxx
The total appropriations for personal services of a barangay for one (1) fiscal year shall not
exceed fifty-five (55%) of the total annual income actually realized from local sources during the
next preceding fiscal year.”
What are the guidelines on the PS Limitation?

Local Budget Circular (LBC) No. 98 dated October 14, 2011 The PS Limitation/Cap is the amount equivalent
to 45% of the total income from regular
was issued to provide the guidelines on the preparation and sources earned in the next preceding fiscal
review of the PS component of the annual and supplemental year for 1st to 3rd class provinces/cities/
budgets of LGUs, in relation to the waiver on the PS Limitation municipalities, or 55% for lower class LGUs,
under Sections 325 (a) and 331 (b) of RA No. 7160. including barangays.
The Total PS cost refers to:
Step 1: Compare the PS Limitation and the Total
Annual PS Budget, net of waived items. Salaries of existing regular personnel;
Step 2: Analyze the results. Statutory and contractual obligations

(ECIP, HIC, Pag-IBIG, RLIP, RG and
If the Total Annual PS Budget, net of waived TL Benefits); and
items, is less than the PS Limitation, then the Authorized allowances/benefits.
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LGU may still provide for additional PS costs to the extent of the difference between the
said amounts.
If the Total Annual PS Budget is equal to or greater than the PS Limitation, then the LGU can
no longer provide for additional or new PS costs.
The following is a simple illustration of the computation of the PS Limitation:
LGU A is a 4th Class Municipality.

LGU A’s total income from regular sources realized in the next preceding year is P50,000,000.
The total PS cost for waived items of LGU A is P2,500,000.
Computation of LGU A’s Allowable PS Level:

Total Income from Regular Sources Realized in the Next Preceding Year P50,000,000
Multiply by PS Limitation Rate 55%
PS Limitation 27,500,000
Less: Total Annual PS Budget, Net of Waived Items* 32,500,000
Excess Over PS Limitation (P5,000,000)
*Total Annual PS Budget P 35,000,000

Less: Waived Items 2,500,000
Net Annual PS Budget P 32,500,000
Since the Net Annual PS Budget has already exceeded the PS Limitation, LGU A may no longer incur
additional PS costs. Moreover, if the excess over the PS Limitation is due to the creation of new
positions in the LGU, such creation shall not be allowed.
For details and more illustrative examples, please refer to LBC No. 98 dated October 14, 2011.
Creation of Positions
What is the general rule on the creation of positions in LGUs?

Section 76 of RA No. 7160 empowers LGUs to design and implement their own organizational structure
and staffing pattern that will effectively address their respective developmental plans, programs,
objectives and priorities. The creation of positions shall be consistent with the rules and regulations
established CSC Memorandum Circular No. 19, series of 1992.
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 RA No. 7160;
All mandatory positions stipulated under RA No. 7160 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.
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Can the LGU create new positions without corresponding appropriations?

RA No. 7160 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], RA No. 7160).
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.
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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Annex A. Synchronized Planning and Budgeting Calendar

NG OVERSIIGHT AGENCIIES ACTIIVIITIIES
YEAR/MONTH GUIIDELIINES,, MANUALS,,
TOOLS,, SYSTEMS NG OVERSIIGHT AGENCIIES PROVIINCE CIITY/MUNIICIIPALIITY
Yearr 1 – July 1.. RPS Sourcebook ((DILG)) • ((Electioti n Year) • ((Electioti n Year)
2.. CDP Guiide and Reconstitution off Locall Reconstitution off Locall
Illustrativeti Guiide ((DILG)) Planniing Team Planniing Team
1.. DILG Policy Guiidelines • Setting off planniing • Preparatioti n off workplan
on Updating off Locall guiidelines forr updating forr updating//preparatioti n
Plans planniing database off CDP
1.. PLPEM and ottherr • Assessmentt off
referef r nce documents iimplementatioti n off
((NEDA)) currentt PDPFP
1.. PLPEM and ottherr • BLGF generates/t / • Updating off planniing
referef r nce documents updates financiall database
((NEDA)) iindicatorst rs and
2.. e-SRE ((BLGF)) transmits to Proviinces
3.. LGFPMS ((BLGF)) tthrough tthe DILG
1.. RPS Sourcebook ((DILG)) • R a P II D S // L D II S • Updating off RaPIIDS/LDIIS
2.. CDP Guiide and financiall iindicatorst rs
Illustrativeti Guiide ((DILG)) from BLGF made • Updating off Ecologicall
3.. LGPMS ((DILG)) available to cities and Profile
4.. RaPIIDS ((DILG)) municiipalities by DILG
Yearr 1 – Augustt to Novemberr 1.. PLPEM and ottherr • Forrmulatioti n off PDPFP
referef r nce documents ((Analysisis off tthe
((NEDA)) planniing environment;
Forrmulatioti n off
goals,, stratet gies
and objectives;ti ;
IIdentificatioti n off priority
programs,, projectsj ts and
activities)iti )
1.. RPS Sourcebook ((DILG)) • Forrmulatioti n off goals,,

2.. CDP Guiide and stratet gies and objectivesti
Illustrative Guiide ((DILG)) based on tthe review and
3.. RaPIIDS Guiide ((DILG)) analysisis iin orrderr to make
tthem more responsive to
tthe currentt situation and
to make tthem consistet ntt
with hiigherr levell plans
• IIdentificatioti n off priority
PPAs to achieve tthe

goals/o/ bjectivesti forr
tthe nextt six years
(strtructtured listt off PPAs))
Yearr 1 – Septemberr 1.. DILG Guiidelines on • ((Electioti n Year) • ((Electioti n Year)
Reconstitution off Locall Reconstitution off Locall Reconstitution off Locall
Speciall Bodies Speciall Bodies (Locall Speciall Bodies (Locall
2.. CSO Handbook Developmentt Council, Developmentt Council,
Peace and Orrderr Peace and Orrderr
Council, Locall Healtlth Council, Locall Healtlth
Boarrd and Locall Schooll Boarrd and Locall Schooll
Boarrd)) Boarrd))
193
NG OVERSIGHT AGENCIES ACTIVITIES

YEAR/MONTH GUIDELINES, MANUALS,
TOOLS, SYSTEMS NG OVERSIGHT AGENCIES PROVINCE CITY/MUNICIPALITY
Year 1 – November-December DILG Policy Guidelines on • Convening of PDC to • Mayor to present

Updating of Local Plans present draft PDPFPs Structured List of PPAs
and Structured List to PDC
of PPAs of Cities
and Municipalities
for the purpose of
harmonization
PLPEM (NEDA) • Approval of PDPFP
RMM (BLGF) • BLGF to provide • Medium-Term Revenue • Medium-Term Revenue

Medium Term (Own-Source and (Own-Source and
Forecasts to External) Forecasts External) Forecasts
Local Treasurers for Planning Purposes for Planning Purposes
(November) generated (latest year generated (latest year Yt-
Yt-2) by Local Treasurers 2) by Local Treasurers
BOM (DBM) • Medium-Term • Medium-Term Forecasts

Forecasts for Current for Current Operating
Operating Expenses Expenses prepared
prepared by Local by Local Finance
Finance Committee Committee
1. RPS Sourcebook (DILG) • Sectoral Development
2. CDP Guide and Plans completed
Illustrative Guide (DILG) (Ranked List of PPAs
completed)
• Preparation of
First Draft of LDIP:

New Development
Investment Financing
Potential component
Year 1 December – Year 2 PLPEM (NEDA) • Formulation of PDIP
February
Year 2 – January 1. CDP Illustrative Guide • Finalization of LDIP:
2. RMM (BLGF) Finalization of Local
Resource Mobilization
Program and Medium
Term Financing Plan
• Drafting of
Implementation
Instruments: Legislative
Requirements, CapDev
Agenda and Monitoring
and Evaluation Strategy
Year 2 – February CDP Illustrative Guide (DILG) • Finalization of
Implementation
Instruments
Year 2 – March CDP Illustrative Guide (DILG) • Conduct review of • Approval of CDP
approved CDP and to 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 reference • Approval of PDIP
documents (NEDA)
194

Year 2 – May* 1. RPS Sourcebook (DILG) • Preparation of AIP • Preparation of AIP

2. CDP Guide and by the Local Finance by the Local Finance
Illustrative Guide (DILG) Committee Committee
3. RMM (BLGF)
4. BOM (DBM)
5. PLPEM (NEDA)
Year 2 – June 7* 1. CDP Guide and • Approval of AIP by the • Approval of AIP by the
Illustrative Guide (DILG) Local Sanggunian Local Sanggunian
2. BOM (DBM)
Year 2 – June 15* BOM (DBM) • Issuance of Local
Budget Memorandum
on IRA level for
ensuing year by DBM
Year 2 – June 16* BOM (DBM) • Issuance of Budget Call • Issuance of Budget Call
Year 2 – June 16* 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 Heads) (Department Heads)
Year 2 – August* BOM (DBM) • Conduct of Budget • Conduct of Budget
Hearing (August 15) Hearing (August 15)
Year 2 – October* BOM (DBM) • Preparation of • Preparation of Executive
Executive Budget Budget (October 10)
(October 10)
• Submission of Executive
• Submission of Budget to Local
Executive Budget to Sanggunian for approval
Local Sanggunian for (not later than October
approval (not later than 16)
October 16)
Year 2 – October 17 onwards* BOM (DBM) • Enactment of an • Enactment of an
Appropriation Appropriation Ordinance
Ordinance authorizing authorizing the Annual
the Annual Budget Budget
Year 2 – Within three (3) BOM (DBM) • Submission of • Submission of
days after approval Appropriation Appropriation Ordinance
of the Ordinance Ordinance to DBM for to Province for review
authorizing the Annual review
or Supplemental
Appropriations*
Year 2 – Within ninety (90) BOM (DBM) • Review of • Review of Appropriation • Review of Appropriation
days from the receipt Appropriation Ordinance of Ordinance of Barangays
of the submitted Ordinance of Component Cities and
Annual or Supplemental Provinces, HUCs/ICCs Municipalities
Budgets for review of and Municipality of
Provinces, Cities and Pateros
Municipalities*
Year 3 – January-December* BOM (DBM) • Budget Execution • Budget Execution
• Budget Accountability • Budget Accountability
Year 3 – January-December* PLPEM (NEDA) • Monitoring of

implementation of the
PDPFP and PDIP
1. RPS Sourcebook (DILG) • Monitoring of
2. CDP Guide and implementation of the
Illustrative Guide (DILG) CDP
195

April* PLPEM (NEDA) • Adjustment of PDIP
CDP Guide and Illustrative • Adjustment of LDIP

Guide (DILG)
Yearn – May* 1. PLPEM (NEDA) • Preparation of AIP • Preparation of AIP
2. CDP Guide and
Illustrative Guide (DILG)
Yearn – June 7* 1. CDP Guide and • Approval of AIP • Approval of AIP
Illustrative Guide (DILG)
BOM (DBM)
- recurring every year
196
Annex B. Proposed Major Final Outputs (MFOs) and

Performance indicators (Pis) of the Different Mandatory
Offices in LGUs
OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS
LOCAL CHIEF l Exercise general MFO 1: Percentage of programs/ EXECUTIVE

EXECUTIVE supervision and control EXECUTIVE activities/projects (PPAs) GOVERNANCE
over all programs, GOVERNANCE fully implemented within PROGRAM
projects, services and SERVICES prescribed schedule
activities of the LGU
Percentage of policies
l Enforce all laws and and ordinances fully
ordinances relative to the enforced
governance of the LGU Percentage of services
and the exercise of the
appropriate corporate delivered rated at least
powers satisfactory by clients
l Ensure the delivery of
basic services and the
provision of adequate
facilities
LOCAL l Enact ordinances, MFO 1: Number of ordinances LEGISLATIVE

SANGGUNIAN approve resolutions and LEGISLATIVE and/or resolutions PROGRAM
(including VICE appropriate funds for the SERVICES enacted
LOCAL CHIEF welfare of the LGU and its
EXECUTIVE) inhabitants Percentage of enacted
l Approve ordinances and ordinances and/or
resolutions rated at
pass resolutions necessary least satisfactory by
for an efficient and stakeholders
effective local government
l Approve Annual and Percentage of
appropriation
Supplemental Budgets of ordinances enacted
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
197
LOCAL l Take charge of both the MFO 1: Percentage of FINANCIAL

ACCOUNTANT accounting and internal ACCOUNTING expenditures with NO ACCOUNTING
audit services of the LGU SERVICES adverse COA audit AND REPORTING
findings PROGRAM
l Review supporting
documents before Percentage of Bank
preparation of vouchers to Reconciliation
determine completeness completed within 5 days
of requirements from receipt of Bank
l Prepare and submit Statements
financial statements to the Percentage of cash

LCE and the sanggunian advances liquidated
concerned within the prescribed
deadline
Percentage of financial
reports submitted within
the prescribed deadline
Budget Utilization
Rate (Obligation and
Disbursement)
LOCAL l Develop management and MFO 1: Number of management MANAGEMENT
ADMINISTRATOR administration-related MANAGEMENT AND and administration- AND
plans and strategies uponADMINISTRATIVE related plans and ADMINISTRATION
approval of the LCE SERVICES strategies of PPAs PROGRAM
l Delivery of administrative Percentage of
support services during management and
and after man-made and administration-related
natural disasters and plans/strategies or PPAs
calamities approved
Percentage of
management and
administration-related
plans/strategies and
PPAs implemented
Percentage of
effectiveness and
efficiency of response
during disaster/
calamities
LOCAL l Delivery of basic MFO 1: Percentage of AGRICULTURAL
AGRICULTURIST agricultural and support AGRICULTURAL agricultural services fully PRODUCTION
services PRODUCTION implemented within PROGRAM
SERVICES prescribed schedule
Percentage of increase
in agricultural/aqua-
cultural productivity of
farmers, fishermen and
local entrepreneurs
198
LOCAL ASSESSOR l Ensure all laws and MFO 1: Percentage of updated APPRAISAL AND
policies governing the APPRAISAL AND records on the valuation ASSESSMENT OF
appraisal and assessment of and assessment of real REAL PROPERTY
ASSESSMENT
real properties for taxation properties PROGRAM
SERVICE
purposes are properly
executed Percentage of increase
in tax revenues due to
Exercise the functions of appraisal and assessment
appraisal and assessment of real properties
primarily for taxation
purposes of all real Percentage of certificates
properties in the LGU issued within the
concerned prescribed period of
issuance
Issue, upon request of any
interested party, certified Percentage of city/
copies of assessment municipal assessors
records of real property supervised
and all other records
relative to its assessment
Exercisetechnical
supervision and visitorial
functions (Provincial
Assessor)
LOCAL BUDGET l Review and consolidate MFO 1: On-time submission BUDGET

OFFICER budget proposals of BUDGET of consolidated budget MANAGEMENT
different departments and proposals to LCE PROGRAM
MANAGEMENT
offices of the LGU SERVICES
On-time release (within
Assist the LCE in the the standard time) of
preparation of the annual release documents
and supplemental budgets On-time submission
Study and evaluate of required reports to
budgetary implications of oversight agencies
proposed legislation and
submit comments and Percentage of attendance
recommendations thereon to LFC meetings
Percentage of acceptance
Acts as member of the Local of the proposed budget
by the LCE
Finance Committee
On-time processing of
action documents
No overdrafts in
appropriation
199
LOCAL l Administer, coordinate, MFO 1: Percentage of ENGINEERING

ENGINEER supervise, and control ENGINEERING AND infrastructure projects AND
the construction, INFRASTRUCTURE completed according to INFRASTRUCTURE
maintenance, MANAGEMENT standards, within project MANAGEMENT
improvement, and repair SERVICES budget and schedule PROGRAM
of roads, bridges, and
Percentage of reports,
other engineering and
public works projects of designs, studies
the LGU concerned and other required
l Provide engineering documents completed
within the prescribed
services to the LGU schedule/deadline
concerned, including
investigation and survey, Percentage of permits
engineering designs, issued within prescribed
feasibility studies, and schedule (building
project management. permits, etc.)
l Regulate and ensure
compliance with existing
policies in infrastructure
development and public
works
LOCAL GENERAL l Take custody of and MFO 1: Percentage of Property, GENERAL

SERVICES be accountable for FACILITIES Plant and Equipment of SERVICES
OFFICER all properties, real or AND SUPPLY
the LGU accounted for PROGRAM
personal, and supplies in the year-end inventory
MANAGEMENT
owned by the LGU and report submitted on time
SERVICES
those granted to it in to the Commission on
the form of donation, Audit
reparation, assistance Quantity of supplies
and counterpart of joint
projects. purchased, issued
and balances properly
Maintain and supervise maintained
janitorial, security,
landscaping and other Percentage of public
related services in all buildings and other
local government public real property properly
buildings and other real maintained
property, whether owned
or leased by the LGU
200
LOCAL HEALTH l Formulate and implement MFO 1: Number of policies HEALTH SERVICES
OFFICER policies, plans, programs HEALTH formulated and PROGRAM
and projects to promote IMPROVEMENT implemented
the health of the people SERVICES Strategic local health
in the LGU concerned
plan prepared within
Information campaign and deadline
render health intelligence
services Number of confined/
out-patient served
Number of persons
provided with health
services
Number of barangays
provided with health
information services
Percentage of requests LEGAL SERVICES
LOCAL LEGAL l Render his opinion in MFO 1:
OFFICER writing on any question LEGAL ASSISTANCE for legal opinion/ PROGRAM
of law when requested to recommendations
AND RESEARCH
do so by the LCEs, acted upon/responded
SERVICES
Sanggunian and other to within 15 days from
department heads receipt of request
Percentage of cases
Represent the LGU in all
civil actions and special represented or acted
proceedings upon
LOCAL l Formulate integrated MFO 1: Percentage of PPAs in the PLANNING,

PLANNING AND economic, social, physical PLANNING, duly updated approved MONITORING
DEVELOPMENT and other development MONITORING AND
LDIP derived from the AND EVALUATION
COORDINATOR plans and policies for duly updated approved PROGRAM
EVALUATION
consideration of the local PDPFP/CDP;
SERVICES
development council.
Percentage of PPAs in
Monitor and evaluate the the duly approved AIP
implementation of the derived from the annual
different programs, slice of the duly updated
activities, and projects in approved LDIP;
the LGU concerned in
accordance with the Percentage of PPAs
approved development in the Appropriation
plan Ordinance derived from
the duly approved AIP
Percentage of project
proposals prepared
Percentage of projects
implemented and
monitored
201
LOCAL SOCIAL l Formulate and implement MFO 1: Improved response time SOCIAL AND
WELFARE AND social welfare measures, SOCIAL WELFARE to social welfare issues WELFARE
DEVELOPMENT plans and strategies AND DEVELOPMENT and concerns DEVELOPMENT
OFFICER l Be in the frontline SERVICES PROGRAM
of service delivery,
particularly those
which have to do with
immediate relief during
and assistance in the
aftermath of man-made
and natural disasters and
calamities
LOCAL l The treasurer shall take MFO 1: Percentage of actual TREASURY

TREASURER charge of the treasury TREASURY revenues over estimated OPERATIONS
office, perform the duties revenues for the current PROGRAM
OPERATIONS
provided for under Book year
SERVICES
II of the LGC. Percentage increase
Take custody and exercise of collections for the
proper management of current year over last
the funds of the LGU year
concerned.
Percentage of notices
Submit to the LCE certified issued to delinquent
statement of income and taxpayers within the
expenditures for budget prescribed period.
preparation purposes
Percentage of civil
remedies/actions filed
against delinquent
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
202

LOCAL l Regulate the keeping of MFO 1: Percentage of required VETERINARY
VETERINARIAN domestic animals. VETERINARY laws, acts and other REGULATION
l Regulate and inspect REGULATION regulatory guidelines PROGRAM
implemented/ enforced
poultry, milk and dairy SERVICES
products for public Percentage of reported
consumption animal diseases treated
Enforce all laws and

regulations for the
prevention of cruelty to
animals.
Takethe necessary measures
to eradicate, prevent or
cure all forms of animal
diseases
203
Annex C. The Services Falling Under Each of the Major

Sectors Pursuant to the New Government Accounting
System (NGAS) of the Commission on Audit (COA)
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
Information Services
Legal Services
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
204
Hospital Services
Chest Clinic
Housing and Community Development
Housing Projects
Sanitary Services
Street Cleaning
Garbage Collection
Sewerage and Drainage
Street Lighting
Community Development Services
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.
205
Annex D. Coding Structure by Type of LGU and Office

11 Province
11 0101 MandatoryOffices
11 0101 001001 OfficeofofthetheGovernor
11 0101 002002 OfficeofofthetheViceVice-Governor-
11 0101 003003 OfficeofofthetheMembersofofthetheSanggunianguniang Panlalalawigan
11 0101 004004 OfficeofofthetheSecretarytotothetheSanggunianguniang Panlalalawigan
11 0101 005005 OfficeofofthetheProvincialTreasurer
11 0101 006006 OfficeofofthetheProvincialAssessor
11 0101 007007 OfficeofofthetheProvincialAccountant
11 0101 008008 OfficeofofthetheProvincialEngineer
11 0101 009009 OfficeofofthetheProvincialBudgetOfficer
11 0101 010010 OfficeofofthetheProvincialPlanPlanniingandandDevelopmentCoCoordinator
11 0101 011011 OfficeofofthetheProvincialLegalOfficer
11 0101 012012 OfficeofofthetheProvincialAdministrator
11 0101 013013 OfficeofofthetheProvincialHealthOfficer
11 0101 014014 OfficeofofthetheProvincialSocialWelfareandandDevelopmentOfficer
11 0101 015015 OfficeofofthetheProvincialGeneralServicesOfficer
11 0101 016016 OfficeofofthetheProvincialAgriculturist
11 0101 017017 OfficeofofthetheProvincialVeteterinarian
11 0202 OptionalOffices
11 0202 001001 OfficeofofthetheProvincialPopulationOfficer
11 0202 002002 OfficeofofthetheProvincialNaturalResourcesandandEnvironment
Officer
11 0202 003003 OfficeofofthetheProvincialCoCooperativeOfficer
11 0202 004004 OfficeofofthetheProvincialArchitect
11 0202 005005 OfficeofofthetheProvincialInformationOfficer
11 0303 Others
22 Cities
22 0101 Mandatory Offices
22 0101 001001 OfficeofofthetheCityCityMayor
22 0101 002002 OfficeofofthetheCityCityViceVice-Mayor-
22 0101 003003 OfficeofofthetheSanggunianguniang PanlungsodMembers
22 0101 004004 OfficeofofthetheSecretarytotothetheSanggunianguniang Panlungsod
22 0101 005005 OfficeofofthetheCityCityTreasurer
22 0101 006006 OfficeofofthetheCityCityAssessor
22 0101 007007 OfficeofofthetheCityCityAccountant
22 0101 008008 OfficeofofthetheCityCityBudgetOfficer
22 0101 009009 OfficeofofthetheCityCityPlanPlanniingandandDevelopmentCoCoordinator
22 0101 010010 OfficeofofthetheCityCityEngineer
22 0101 011011 OfficeofofthetheCityCityHealthOfficer
22 0101 012012 OfficeofofthetheCityCityCivivilRegistrar
206
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
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
Officer
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
207
Annex E. AiP Summary Form
CYCY_____AnnnualInvestmentProgram(AIP)
AsAsofof_______________________ _
Province/City/Municipality/Barangay:
_______________________________________
Scheduleof of AmountAmount AmountAmountof ClimateofClimateChangeChangePPAsPPAs

(in thousand(inthousandpesos)pesos) (in thousand(inthousandpesos)pesos)
Implementationmentation
AIPAIPReference Program/Project/Activitivity Implementingme ting ExpectectedFundinding Maintenanance
Office/Office/ andandOtherOther ClimateClimate ClimateClimate
CodeCode Description Completion Outputstputs SourceSource Personal CapitalCapitalOutlayOutlay TotalTotal CCCCTypology
Department StartartDateDate DateDate Services(PS)(PS) Operating (CO)(CO) ChangeChange ChangeChange CodeCode
Expenseses Adaptationptation Mitigation
(MOOE) (11)(11)
(1)(1) (2)(2) (3)(3) (4)(4) (5)(5) (6)(6) (7)(7) (8)(8) (9)(9) (10)(10) (12)(12) (13)(13) (14)(14)
8+9+9+10
Geneneral
Services
(100000)
SocialSocial
Services
(300000)
Econonomic
Services
(800000)
OtherOther
Services
(900000)
Preparedby:by: Attestedby:by:
PlanningOfficer BudgetOfficer LocalLocalChiefChiefExecutive
208
Annex E-1
Local Government Unit: ____________________________________
GAD Plan and Budget
Budget Year: _______________
AIP Implementing Target Output Estimated Cost Implementation

Reference Sector P/A/P
Office/Department Schedule
Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development
Coordinator Local Budget Officer Local Chief Executive
INSTRUCTIONS: This form is an aggrupation of the programs, activities and projects

identified/mainstreamed for the Gender and Development in the AIP:
Column 1 - AIP Reference Code
Column 2 - Indicate the Sector
Column 3 - Program, Activity and Project
Column 4 - Implementing Office/Department
Column 5 - Target Output as indicated in the AIP
Column 6 - Target Output as indicated in the Annual Budget
Column 7 - Estimated Cost as indicated in the AIP
Column 8 - Estimated Cost as proposed in the Annual Budget
Column 9 - Period of Implementation schedule/duration of the program, activity, project
Prescribed format under PCW-DILG-DBM-NEDA Joint Memorandum Circular 2013-01.
209
Annex E-2
Local Government Unit: _________________________
LOCAL DISASTER RISK REDUCTION AND MANAGEMENT PLAN
Budget Year: _______________

Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development

identified/mainstreamed for the Local Disaster Risk Reduction Management in the AIP:
210
BUDGETBUDGETOPERATIONSOPERATIONSMANUALMANUALFORFORLOCALLOCALGOVERNMENTGOVERNMENTUNITSUNITS
Annex E-3
LOCAL CLIMATE CHANGE ACTION PLAN
Budget Year: _______________

Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development
identified/mainstreamed for the Local Climate Change Action in the AIP:
211
Annex E-4
LIST OF PPAS FOR THE LOCAL COUNCIL FOR THE PROTECTION OF CHILDREN
Budget Year: _______________

Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development
identified/mainstreamed for the Implementation of Programs for the Local Council for the Protection of
Children in the AIP:
212
Annex E-5
LIST OF PPAS FOR SENIOR CITIZENS AND PERSONS WITH DISABILITIES
Budget Year: _______________

Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development
identified/mainstreamed for the Senior Citizens and Persons with Disabilities in the AIP:
213
SUPPORT TO THE LGUs FOR MORE EFFECTIVEI AND ACCOUNTABLE PUBLICIC FINANCEI MANAGEMENT
Annex E-6
PEACE AND ORDER PLAN

Budget Year: _______________

Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development
identified/mainstreamed for the Peace and Order in the AIP:
214
BUDGETBUDGETOPERATIONSOPERATIONSMANUALANUALFORFORLOCALLOCALGOVERNMENTGOVERNENTUNITSUNITS
Annex E-7
LIST OF PPAS TO COMBAT ACQUIRED IMMUNE DEFICIENCY SYNDROME

Budget Year: _______________

Code AIP AB AIP AB
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL P P
Prepared
by: Approved:
Planning and
Development
identified/mainstreamed for the Acquired Immune Deficiency Syndrome in the AIP:
215
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 government.
Activity - A work process designed to contribute to the accomplishment of specific objectives and the
implementation of a program, sub-program, or project.
Annual Budget - Refers to the financial plan embodying the estimates of income and expenditures for One
(1) fiscal year (Section 306 [a], RA No. 7160).
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.
Appropriations– 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], RA
No. 7160).
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 Local Government Code.
Budget Execution - This the fourth phase of the local budget process where the authorized budget is Used to
implement approved PPAs.
Capital Expenditures or Capital Outlays - An allotment class to be spent for the purchase of goods and
services that add to government assets, including infrastructure outlays, purchase of vehicles, and
Investments in the capital stock of government corporation.
Civil Society Organizations-A non-state and non-profit association that works to improve society and the
Human condition.
216
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 Appropriations These are expenditures incurred and committed to be paid by the local purpose or
Government for a specific project even when these obligations are incurred beyond the budget
year. For revisiting.
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 allotment 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
local government unit (Section 306[i], RA No. 7160).
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 3 to 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.
Non-tax Revenues - Fees, charges and other government collections in exchange for services rendered and
penalties imposed.
Participatory Budgeting - Is an approach wherein citizens, through CSOs are allowed to take part in the
process of allocating public resources.
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], RA No. 7160).
Resources - Refers to the revenues, gross borrowings free or unencumbered cash balances.
217
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], RA No. 7160).
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 RA No. 7160.
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 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 l 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.
218
TASK FORCE FOR THE ENHANCEMENT OF BUDGET OPERATIONS MANUAL FOR

LOCAL GOVERNMENT UNITS (BOM FOR LGUs)
CHAIR : Director Liza B. Fangsilat
ASSISTANT CHAIR : Director Ma. Angelita C. Cells
MEMBERS : Director Ruby R. Esteban
Director Nenita A. Failon
Director Isabel C. Taguinod
Director Elisa D. Salon
Director Julian Ll. Pacificador, Jr.
Director Renato M. De Vera
TWG/SECRETARIAT : Marie Christine D. Andaya

Noemi P. Humilde
Carmencita S. Marasigan
Agnes D. Cortez
Assistant Director Estrella E. Mandap

Myrna C. Cadaoas
Ria V. Bansigan
Mavidette D. Alvarado
Jose C. Pamittan
Asssistant Director Rosalie C. Abesamis

Ariel P. Dayrit
Assistant Director Ruby P. Muro

Nympha R. Manalastas
Assistant Director Rodrigo M. Marquez

Teresita S. Villaroman
Christian R. Mendoza
Leticia D. Imperial
Jesus James M. Javier
TRAINERS OF THE BUDGET OFPERATIONS MANUAL FOR LGUs (BOM FOR LGUs),
2016 EDITION
DBM CAR Director Liza B. Fangsilat

Marie Christine D. Andaya
Noemi P. Humilde
Jefflynne Valerie B. Biddic
DBM NCR Diretor Ruby R. Esteban
Carmencita S. Marasigan
Katherine B. Castro
Lovelle C. Saguid
Roxanne Dr. Anatalio
DBM RO I Director Nenita A. Failon
Myrna C. Cadaoas
Ria V. Bansigan
Rosa M. Dulay
DBM RO II Director Isabel C. Taguinod
Mavidette D. Alvarado
Jose C. Pamittan
DBM RO III Director Elisa D. Salon
Assistant Director Rosalie C. Abesamis
Adoracion Q. Mangalino
Lovely Lynn D. Sangalang
219
DBM RO IV-A Director Julian Ll. Pacificador, Jr.

Nympha R. Manalastas
Rujen A. Polo
DBM RO IV-B Ella Lorraine Obra
Director Renato M. De Vera
Assistant Director Rodrigo M. Marquez
Teresita S. Villaroman
DBM RO V Alexander P. Calma
Director Maria Angelita C. Cells
Assistant Director Bella V. Regaspi
Jesus James M. Javier
DBM RO VI Joanna M. Rasco
Director Alfonso B. Bedonia, Jr.
Assistant Director Mae L. Chua
Cecile C. Lacson
Mariel Dave M. Gallego
DBM RO VII Lynnie S. Baban
Director Carmela S. Fernan
Assistant Director Ricky L. Sanchez
Jose A. Salvador, Jr.
DBM NIR Joanna Stephanie P. Rodriguez
Assistant Director Jesusa Dimpna O. Lejos
Gelimae S. Itulid
Haide M. Senajon
DBM RO VIII Ruben R. Duenas
Director Imelda C. Laceras
Rheand Cornell M. Palomino
Evelyn R. Japzon
DBM RO IX Mary Kim U. Homeres
Director Annabelle C. Echavez
Mark Louie C. Martin
DBM RO X Eddie Albert A. Cruz
Director Annabelle M. Atillo
DBM RO XI Margarita S. Villamala
Director Gary R. Martel
Assistant Director Maria Fe D. Jagna
Carolina C. Armada
DBM RO XII Nonito H. Dela Cruz
Director Akmad J. Usman
Assistant Director Libertine G. Cagang
Asima A. Adiong
DBM RO XIII Shara D. Abdul
Director Achilles Gerard C. Bravo
Assistant Director Jenneth C. Partosa
Edna P. Jamolin
Paul A. Abarca
PEMB Judi D. Acdal
Director Leila Magda G. Rivera
Rainier H. Diaz
John Aries S. Macaspac
Joseph P. Decrepito
Loren Grace M. Lomio
220
LGU PFM 2 PROJECT ORGANIZATION
Chair Project Steering Committee (PSC)

Secretary Florencio B. Abad, DBM Chair
Undersecretary Janet B. Abuel, DBM Alternate
Members Undersecretary Jeremias N. Paul, DOF

Executive Director Jocelyn T. Pendon, DOF-BLGF Alternate
Undersecretary Austere A. Panadero, DILG

Director Anna Liza F. Bonagua, DILG Alternate
Deputy Director General Margarita R. Songco, NEDA

Director Remedios S. Endencia, NEDA Alternate
Mr. Achim Tillessen, European Union

Ms. Brenda Candries, European Union Alternate
Imprest Administrator Imprest Accounting Officer

Director Julian Ll. Pacificador, Jr. Director Ruby R. Esteban
Project Task Force
Technical Assistance Team Project Technical Working Group
Team Leader DBM

Mr. Ian D. Collins Director Leila Magda G. Rivera
Decentralization Expert
Dr. Norman R. Ramos DOF
Director Niño Raymond B. Alvina
Institutional Development Expert
Ms. Mary Geraldine C. Naraja DILG
Director Anna Liza F. Bonagua Assistant
Project Task Force Support Staff Director Dennis D. Villaseñor
NEDA
Deputy Imprest Administrator
Director Remedios S. Endencia
Mr. Ryan Joseph E. Dagdag
Ms. Cynthia A. Villena
Ms. Claire Michelle G. Balde
Administrative Officer
Ms. Rowena M. Marte
Agency Project Teams
Administrative Assistant II
Mr. Lemuel Dizon DBM
Ms. Nympha R. Manalastas
Administrative Assistant I Ms. Carmencita S. Marasigan
Ms. Ma. Gina C. Manuel Mr. John Aries S. Macaspac
Ms. Loren Grace M. Lomio
Administrative Aide
Roberto M. Acon DOF-BLGF
Director Ma. Pamela P. Quizon
Ms. Anabelle C. Garrido
DILG
Ms. Jenifer G. Galorport
Mr. Arce Fajardo
Ms. Evelyn Castro
Ms. Anna Victoria C. Quibot
NEDA
Ms. Hazel de Chavez
221

Budget Process Lgu

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BUDGET OPERATIONS MANUAL

FOR LOCAL GOVERNMENT UNITS

THIS MANUAL WAS DEVELOPED WITH

SUPPORT FROM THE EUROPEAN UNION

UNDER THE PROJECT

REPUBLIC OF THE PHILIPPINES

for LGUs), 2016 EDITION

2.2.1 Emphasis on participatory budgeting, specifically on the emerging roles and

2.2.2 Framework for strengthening policy- based budgeting by harmonizing

2.2.3 Introduction of the Performance-Informed Budgeting (PIB) approach, which uses

࿿࿿࿿࿿5掔⺊࿿࿿࿿࿿࿿࿿࿿࿿࿿6Ѐⓦ࿿࿿࿿࿿࿿࿿࿿࿿࿿737 The Local Government Code of 1991

3.0 ELECTRONIC BUDGET SYSTEM FOR LGUs

4.0 ROLL-OUT ACTIVITIES

5.0 SAVING CLAUSE

6.0 REPEALING CLAUSE

Policy-Based Legal Bases Plans and

Steps in the Budget Execution Phase 118

0 Legal Bases 155 158

0 Key Players Special Shares ShareininthetheGrossIncome e

23 Accounting for Budget

Parts Budget Framework

Chapters Budget Process

Linking the Synchronized Procurement

176 Items of Appropriations

177 179 186 187 187 187 189 190 192

me Share in Value Tobacco Excise Taxes

ises Added Tax

List of Acronyms and Abbreviations....................................................................xii

PART I. THE BUDGETING FRAMEWORK FOR LGUs 1

PART II. THE LOCAL BUDGET PROCESS 15

Chapter 2. Budget Authorization Phase........................................................................56

1.0 Internal Revenue Allotment (IRA) ...................................................... 150

1.1 Legal Bases .................................................................................... 150

Budget Preparation .......................................................................................... 165

Annex A. Synchronized Planning and Budgeting Calendar .................... 193

Table 1. Emerging Roles of CSOs in the Budget Preparation Phase..........18

Figure 1. Benefits of Participatory Budgeting......................................................3

ADCOM Additional Compensation

PART I. THE BUDGETING FRAMEWORK FOR LGUS

CHAPTER 1. PARTICIPATORY BUDGETING

1.1 Legal Bases of Participatory Budgeting

1.2 Guidelines on Participatory Budgeting

1.3 Benefits of Participatory Budgeting

Figure No. 1 below further outlines the benefits of participatory budgeting.

Figure 1. Benefits of Participatory Budgeting

Service gaps due to Fund Constraint

Reduces delay in the Delays in project implementation caused

Develops trust in Bringing the government closer to

the people enhances partnership in

Ensures continuity People who have ownership of the

Ensures continuity The vigilance of stakeholders in monitoring

1.4 Emerging Roles of CSOs in the Budget Process

CHAPTER 2. POLICY-BASED BUDGETING

2.1 Legal Bases of Plan-Budget Linkage

2.2 Harmonizing Plans and Policies

For provinces and highly-urbanized cities:

2.2.1 Provincial Development and Physical Framework Plan (PDPFP)

2.2.2 Provincial Development Investment Program (PDIP)

For component cities and municipalities: