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, pursuant to
Section 354 of Republic Act (RA) No. 7160.1

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

1 The Local Government Code of 1991

iv
 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.

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
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
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
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 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
2.4 Fund Release Procedures .............................................................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
3.4 Fund Release Procedures .............................................................158
4.0 Share in Value Added Tax ..................................................................... 159
4.1 Legal Bases ....................................................................................159
4.2 Computation of Shares ...............................................................159
4.3 Fund Release Procedures .............................................................161
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
5.4 Fund Release Procedures .............................................................163

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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
List of Tables

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
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 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
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
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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
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

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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.
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

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SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

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 corruption.2

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).
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:
• In training workshops - more work than listening to lectures.
• In focused group discussions - discuss/resolve the issues at hand.
• In formal institutions - schools and formal classes are used.
• 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
2 Handbook on the Participation of Civil Society Organizations in the Local Budget Process 2
Local Government Code of 1991
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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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:

l 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;
l Accountability – abide by the policies, standards and guidelines of engagement that may be agreed
upon, and fulfil commitments;
l Integrity – adhere to moral and professional standards;
l Partnership – cooperate and share responsibilities to ensure that the objectives of the engagement
are achieved;
l Consultation and mutual empowerment – enhance knowledge sharing and continuing dialogue; 
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
l Sustainability – ensure continuing engagement by instituting progressive policies and operational
mechanisms that will promote and environment of mutual trust

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.

Delays in project implementation caused

Reduces delay in the 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.

Bringing the government closer to

Develops trust in the people enhances partnership in

3 Participatory Budgeting, edited by Anwar Shah, Public Sector Governance and Accountability Series, The World Bank, Washington D.C., undated
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SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

Government all government undertakings.

People who have ownership of the

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

The vigilance of stakeholders in monitoring

Ensures continuity 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.
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).

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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
mediumterm 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).
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 GovernmentOwned 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
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medium-term. The CDP contains: (1) Ecological Profile; (2) Sectoral Development Plan; and (3)
Implementing instruments.
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:

1. That the AIP should be prepared and approved before the start of the local budget preparation
phase; and
2. That the local budgets shall fund PPAs included in the AIP.
It may also be gleaned from the foregoing that the link between the plan and the budget is actually provided
by the investment programs, particularly by the AIP (see Figure 2 below). Thus, to ensue plan-budget
linkage and ensure that local budgets truly operationalize approved local development plans, it is imperative
that:

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1. The investment programs contain priority PPAs that will directly contribute to the achievement
of the goals and objectives of the LGU, as embodied in the development plans; and
2. The local budgets fund the PPAs included in the investment programs, particularly in the AIP.

Figure 2. Plan-Budget Link Model

}
PLAN PDPFP/CDP
Development
Planning (6-15
Years )

}
PDIP/
LDIP

Investment

AIP

BUDGET Annual/Supplemental
Budget
}
Programming
(3-6 Years )

Link

(1 Year )
(1 Year )

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.

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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 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

· Personal Services o Based on the latest approved

Plantilla of Personnel;
o Proposed creation and filling-up of positions shall be included as separate
items; and
o Requirements for retirement benefits / terminal leave benefits, salary
increases shall be included.
· Maintenance and Other Operating Expenses (MOOE) o Items which are
based on contracts / fixed rates shall not be indexed with inflation;
o Consider budgetary implications of price changes (inflation);
o Include maintenance requirements of existing as well as newly-completed
facilities and newly-acquired assets (e.g. vehicles); and
o Consider demand-driven changes, e.g. population, cost of maintaining an
ideal level of service.
· Capital Outlays o Include office equipment and furniture and fixtures that have
to be procured over the medium-term.
The aforementioned forecasts are used as inputs to finalize the LDIP 4, 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.

4 The process described hereinafter may also be adopted by the Provinces.

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The Structured List of PPAs is subjected to further screening using

the following tools5:

 Urgency Test Matrix;  Resource Impact Matrix; 

Conflict-Compatibility-Complementary matrix; and 
Goal Achievement Matrix.

Based on the results of the foregoing screening tools, a ranked list

of PPAs is derived. The ranked list of PPAs shall be considered
for investment programming. It shall then be cross-matched with
available resources, particularly with investible funds, as identified
by the Local Finance Committee (LFC), through the evaluation
Tools for Prioritizing PPAs:

Urgency Test Matrix compares the level of urgency of PPAs.

Resource Impact Matrix compares how the PPAs will impact on
LGU resources, including financial, manpower and natural
resources.
Conflict-CompatibilityComplementary Matrix checks if the PPAs
will conflict with or complement each other.
Goal Achievement Matrix checks how each PPA contributes to
the achievement of the LGU vision or goals.

5 Concise Illustrative Guide for the Preparation, Review,

Monitoring and Updating of the CDP and LDIP
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New Investment Financing Potential =

Medium Term Revenue Forecast – Medium Term
of the Medium Term Revenue Forecasts vis-à-vis the Forecast of COE and CO for Administrative/Support
Medium Term Forecast of Current Operating Services
Expenses (COE) and capital outlays (CO) for 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
In filling out the AIP Summary Form, the following pointers shall be observed:

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1. Column 1 - AIP Reference Code

The AIP Reference Code is vital to ensuring the Plan-Budget Linkage. The code assigned to each PPA
facilitates validation 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.
2. 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. Pr oject B. Op erationalization 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
The foregoing structure requires that all activities and Program – an integrated group of activities that
projects be subsumed under a specific program, contribute to a particular continuing objective of a
which, in turn, should be under the responsibility of a department/ agency.
particular department/ office in the LGU. • Project – a special undertaking carried out within
a definite time frame and intended to result in
Accordingly, the program(s) should be directly
some pre-determined measure of goods and
related to the mandate of the Department/Office as it services.
should contribute to the achievement of the • Activity – a work process that contributes to the
Department’s/Office’s organizational outcome(s). implementation of a program, sub-program or
3. Column 3 - Implementing Office/Department project.
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.
4. Columns 4 and 5 - Implementation Schedule
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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.
5. Column 6 - Expected Outputs

Major Final Outputs (MFOs) shall be identified for each Program while immediate outputs shall be
identified for each project and activity.
An MFO is a good or service that a department/agency is mandated to deliver to external clients
through the implementation of PPAs.
It may be defined relative to the outcomes that they contribute to, the client or community group it
serves, and the business lines of the department/agency.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 PPA implementation managed

and
Supervision LGU personnel supervised

2. Public Affairs, Information, Information, Education and Communication

Communication and Technical activities and materials
Assistance developed/ disseminated
Stakeholders assisted

B. Operationalization of the Internal Internal Audit Unit operationalized

Audit Unit

1. Rehabilitation of Office
Office Facilities
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.
6. 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:

l General Fund (GF) Proper

l GF – Special Account (SA) – 20% Development Fund (DF)
l GF – Local Disaster Risk Reduction Management Fund
(LDRRMF)  Transfers from NGAs (Other than those accruing
to the GF)  Transfers from GOCCs (Other than those accruing
to the GF)  Transfers from Other LGUs
l Income of Local Economic Enterprises (for its own operations) 
Others
7. Columns 8 to 11 - Estimated Cost

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

6 The Organizational Performance Indicator Framework (OPIF) Reference Guide, 2012

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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.
8. Columns 12 to 14 – Amount of Climate Change PPAs7

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.
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.

7 DBM-CCC-DILG JMC No. 2015-01 dated July 23, 2015

8 Government Procurement Reform Act
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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

l Inclusion of all procurement activities planned for the year;

l Include provisions to cover foreseeable emergencies or contingencies usually indicated by
historical records;
l 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.
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

9 PIB Brief, 2014

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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 PiB 10

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:
l Reinforce the meaning of accountability as a commitment to perform;
l Empower citizens to participate in the utilization and allocation of resources with more
transparent, accountable and responsive budget documents;
l 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;
l 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;
l 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
l Ensure that projects and programs are properly aligned with national development goals and
objectives.

10 Source: Technical Notes on the 2015 Proposed National Budget

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PART II. THE LOCAL BUDGET PROCESS

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

2
Figure 4. The Local Budget Process

ACCOUNTABILITY

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0 PREPARATION

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+ EXECUTION AUTHORIZATION

REVIEW
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
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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

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).
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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:

lDetermine the income reasonably projected as collectible for the ensuing fiscal year;
lRecommend the appropriate tax and other revenue measures or borrowings considered realistic
and feasible to support the budget;
l 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;
l Recommend to the LCE the proper allocation of expenditures for each development
project/activity and between current operating expenditures and capital outlays; and 
Recommend to the LCE the amount to be allocated for capital outlay.
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:

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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 Check that AIP priorities are
from the LCE that contains Call to the accredited CSOs. highlighted in the Budget Call.
general objectives, policy Include in the Budget Call a
decisions, strategies, and requirement for the Department
prioritized PPAs by sector/office Heads to consult with accredited
as reflected in the AIP for the CSOs.
budget year
ACTIVITY LGU ROLES CSO ROLES
2. CONDUCT THE
BUDGET FORUM Invite accredited CSOs to the
A one-day forum wherein the Budget Forum. Ideally, the
LBO explains to Department Budget Forum may provide Participate in the Budget Forum
Heads the major thrusts and information on why to gain an overall appreciation
policy directions, sources of recommended priorities of of the thrusts and priorities of
income, spending ceilings and accredited CSOs were not the LGU for the budget year as
budget strategies. included in the identified PPAs. contained in the Budget Call.
3. PREPARE 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 with
submits these to the LBO for with accredited CSOs. The the Department Heads
review and consolidation. He/ Budget Call may already concerned in determining the
She needs to determine the prescribe such requirement. target beneficiaries and funding
expected outputs for the budget requirements for the particular
year and estimated costs. 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
noninclusion.
4. CONDUCT BUDGET
HEARINGS
The technical budget hearings
Invite accredited CSOs to the Participate in the budget
are conducted by the LFC to
budget hearings in relation to hearings to provide inputs on
validate the revenue sources,
sectoral concerns. sectoral concerns.
PPAs, cost estimates and
expected outputs for the budget
year.
5. EVALUATE BUDGET
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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 of other CSOs in engaging LFC.
cost criteria. CSOs in LFC.

ACTIVITY LGU ROLES CSO ROLES

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.

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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.

JUNE 16
Figure 5. Budget Preparation Flowchart

INDICATIVE RESPONSIBLE
ACTIVITY
JUNE 16
SCHEDULE OFFICIALS
ISSUE THE
BUDGET CALL

LCE

Conduct Budget
Forum
LCE/LFC
Department Heads

PREPARE AND
SUBMIT BUDGET
JULYPROPOSALS
15
Department Heads

CONDUCT BUDGET
HEARING
AUGUST 15
LCE/LFC

PREPARE THE
EXECUTIVE BUDGET

OCTOBER 10
LCE/LFC
PREPARE THE
BUDGET MESSAGE

OCTOBER
SUBMIT10
EXECUTIVE
BUDGET TO THE
SANGGUNIAN 23
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GOVERNMENT UNITS

LCE/LFC

OCTOBER 16
LCE
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?

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

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

All these elements are explained in Budget Preparation workshops prior to the preparation of budget
proposals for the Budget Year.
Departments and offices of the LGU shall be guided by the policies, ceilings and targets embodied in the
Budget Call.
Budget proposals are reviewed as to their consistency with the AIP and Budget Call policies.

Why is the Budget Call Important?

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

How is the budget forum conducted? 1. Invite all stakeholders to a one-day Budget
Forum to explain and discuss the following:
¤ objectives for the budget year, major thrusts and
policy decisions;

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¤ sources of income for the past three (3) years; 

income estimates and corresponding assumptions;
 spending ceilings and budget strategies. 
timelines of activities; and  forms to be used.

2. Use focused group discussion (FGD) to engender group participation.

3. Close the forum by summarizing all issues raised.

Step 2. Prepare and Submit Budget Proposals

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

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;
2) 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.
2.3 Prepare the Project Procurement Management Plan (PPMP) for the Budget Year

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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.
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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.

l 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:

A. Local (Internal) Sources

1. Tax Revenue
2. Non-tax Revenue

B. External Sources
1. Internal Revenue Allotment (IRA)
2. Share from GOCCs (PAGCOR AND PCSO)
3. Other shares from National Tax Collection
4. Inter-Local Transfer
5. Extraordinary Receipts/Grants/Donation/Aids

C. Non-Income Receipts
1. Capital Investment Receipts
2. Receipts from Loans and Borrowings
3. 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:

l 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).
l 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
l 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
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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:

l Previous Years’ Fiscal Performance  Development Goals and Objectives

l Policy Thrusts  Priority PPAs  Estimates of Income and Sources Thereof 
Major Items in the Expenditure Program  Major Final Outputs/Performance
Indicators/Targets Contents of the Budget Message

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

l Proposed budget by sector, office and expenditure class;

l Justification for the need to expand (increased number of beneficiaries) without
sacrificing quality of service delivery;
l Identification of new/additional beneficiaries if service delivery is expanded;

and  Justification for new PPAs to be implemented during the budget year.
How to Prepare the Budget Message

1. Present the objectives, policies, strategies, and priority 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.

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

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

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

 Present in simple graphs or charts the income trend and expenditure pattern showing what
results or output were produced during the period.

4. Discuss the current year’s income and expenditure performance and disclose any improvements in
the production of results as compared with those during the past five (5) years.

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

¤ Show the analysis in graphical form: The comparison of performance for the last five (5) years
vis-à-vis the performance for the current year.
¤ Discuss and explain policy decisions that will improve service delivery in terms of quality,
quantity, and timeliness criteria. Relate the funding to the issues being resolved by the
proposed spending policies.
¤ Summarize the goods and services to be delivered for the budget year. These are the expected
results of the budget designed to close the service gaps.

An illustrative example of a Budget Message is shown on pages 41-43.

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.

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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
Code Classification (Actual) (Proposed)
Particulars First Semester Second Semester Total
(Actual) (Estimate)
2 3 4 5 6 8
1 7

I. Beginning Cash Balance

II. 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 Tax
Total Tax Revenue
2. Non-Tax Revenue
a. Regulatory Fees
b. Service/User Charges
c. Receipts from Economic Enterprise
d. Other Receipts
Total Non-Tax Revenue
Total Local Sources
B. External Sources
1. Internal Revenue Allotment
2. Share from GOCCs (PAGCOR and PCSO)
3. Other Shares from National Tax Collection
a. Share from Ecozone
b. Share from EVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
4. Inter-Local Transfer
5. Extraordinary Receipts/Grants/Donations/Aids
Total External Sources
C. Non-Income Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt Securities of Other Entities
c. Collection of Loans Receivable
Total Capital Investment Receipts
2. Receipts from Loans and Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Borrowings and Loans
Total Non- Income Receipts
Total Receipts
III. 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

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Approved:

Local Chief Executive

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.
2. 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.

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LBP Form No. 2

PROGRAMMED APPROPRIATION AND OBLIGATION BY OBJECT OF EXPENDITURE

LGU:________________________
Office: ______________________________

Current Year (Estimate)

Object of Expenditure Account Code Past Year First Semester Second Semester Budget Year
(Actual) (Actual) (Actual) (Proposed)
Total
3 4 5 7
1 2 6

Personal Services
Salaries and Wages
Salaries and Wages - Regular
Other Compensation
Personal Economic Relief Allowance (PERA)
Personnel Benefit Contribution
Other Personnel Benefit
Maintenance and Other Operating Expenses
Travelling Expenses
Training and Scholarship Expenses
Supplies and Materials Expenses
Utility Expenses
Communication Expenses
Awards/Rewards Expenses
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.

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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.

LBP Form No. 2a

Programmed Appropriation and Obligation for Special Purpose Appropriations
LGU:___________________________

Office: ______________________________

Current Year
AIP Reference Code Sector Program/Project/Activity Past Year (Actual) Budget Year
Actual Estimate 6 (Proposed) 7
1 2 3 4 5

Prepared: Reviewed: Approved:

________________________ _______________________________________ ______________________________

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 Incumbent Rate/Annum Rate/Annum Decrease
Position Title 4 9
1 2 SG/Step Amount SG/Step Amount
3
5 6 7 8

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Prepared: Reviewed:
Approved:
___________________________________ ___________________________________
___________________________________ Department Head Human Resource Management Officer
Local Chief Executive

INSTRUCTIONSI
NSTRUCTIONS
ColumnColumnss 1 1 and 2 and 2–– Indicate t Indicate the he old and new old and new item numberitem numbers of the plantilla positions of the plantilla pos tion. .

ColumnColumns 3 s 3 and and 44 – – Indicate the position title and the name of the incumbent occupying each position. If the position is unfilled, indicate the word
“vacant”Indicate the pos tion itle and the name of the incumbent o cupying each pos tion. If the pos tion is unfilled, indicate the word “vacant” under column 4 under
column 4. .
If the position is proposed for abolition, If the pos tion is proposed for abol tion, place the place the position titlepos tion itle inside a bracket inside a
bracket. . If the position is proposed for reclassification, If the pos tion is proposed for recla s fication, place the place the previous position tprevious pos
tion itleitle in a bracketin a bracket and indicate the proposed position title below it. and indicate the proposed pos tion itle below it.

Column Column 55 and and 66 – – Indicate Indicate the the current salary grade/step and corresponding rate per annum of each position. Include as a footnote the
compensation law/circcurrent salary grade/step and corresponding rate per annum of each pos tion. Include as a footnote the compensation law/circular
being ular being implemented. implemented. For the initial implementationFor the in tial implementation of changes, of changes, attachattach a copy a
copy of the Position Allocation List of the Pos tion Allocation List. .

Column Column 77 & & 88 – – Indicate the salary grade/step and Indicate the salary grade/step and corresponding corresponding rate per annum of each position
rate per annum of each pos tion proposed for the budget year proposed for the budget year. .

Column Column 99 – – Indicate the Indicate the difference betweendifference between the old and the new rates of compensation per annum the old and the new
rates of compensation per annum forfor the budget year. the budget year.

Notes: 1. Notes: 1. Prepare the same form for each local economic enterprise/public utility.Prepare the same form for each local economic enterprise/public ut lity.

22. . Separate plantilla using the same format shall be prepared for Casual Employees whose salaries are chargeable against Personal Services
Appropriation.Separate plantilla using the same format shall be prepared for Casual Employees whose salaries are chargeable against Personal Services
Appropriation.

33. . Only funded vacant positions shall be included in the plantilla. All unfunded vacant positions shall be removed/deleted from the plantilla.Only
funded vacant pos tions shall be included in the plantilla. All unfunded vacant pos tions shall be removed/deleted from the plantilla.
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 Proposed Budget for the Budget
Description Major Final Output Indicator Budget Year Year
PS MOOE CO Total
1 2 3 4 5 6 7 8 9

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Prepared: Reviewed: Local Finance Committee

___________________________ ___________________________ ___________________________ ___________________________

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

Approved:

___________________________
Local Chief Executive

INSTRUCTIONS INSTRUCTIONS

Mandate: Mandate: Quote the provision of the LGC on the mandate of the Department/Office. Quote the provision of the LGC on the mandate of the
Department/Of ice.
Vision: Vision: Indicate theIndicate the future role of the department/offuture role of the department/office in the LGU’s ice in the LGU’s development.development.
Mission: Mission: Indicate the significant role of the department/ofIndicate the significant role of the department/office in attaining the visionice in at aining the vision.
.
Organizational Outcome: The specific shortOrganizational Outcome: The specific short--term benefits to clients and the community as a result of the LGU’s delivery of
Major term benefits to clients and the community as a result of the LGU’s delivery of Major Final Final Outputs as defined in the Outputs as defined in the
organization’s results framework.organization’s results framework.

Column 1Column 1-- Indicate the PPA reference code reflected in the AIP corresponding to each PPAIndicate the PPA reference code reflected in the AIP
corresponding to each PPA. .

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

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

Column 4Column 4-- Indicate the means Indicate the means for measurifor measuringng the quantity, quality and timeliness of service delivery to the clients.the
quantity, quality and timeliness of service delivery to the clients.
Column 5Column 5-- Indicate the target for the budget year in terms of the Indicate the target for the budget year in terms of the performance indicator expressed in
quantity, quality and timeliness.performance indicator expressed in quantity, quality and timeliness.

ColumnColumns s 66,7,8 & ,7,8 & 99 – – Indicate the proposed Indicate the proposed bubudget for the Pdget for the PPPA, broken down by expense class A, broken
down by expense class -- PersonalPersonal Services (PS), Maintenance and Other Operating Expenses Services (PS), Maintenance and Other
Operating Expenses ((MOOE) and Capital Outlay (COMOOE) and Capital Outlay (CO)), including Special Purpose Appropriations at, including
Special Purpose Appropriations attributed to and implemented by the Department/Office.ributed to and implemented by the Department/Of ice.

Note: 1. Note: 1. ThThis Form shalis Form shall be prepared by the Department Head, reviewed by the Local Planning and Development Officer, for be prepared by
the Department Head, reviewed by the Local Planning and Development Of icer, for the targets and the Local Budget Ofthe targets and the Local Budget
Officer, icer, for the proposed budgetfor the proposed budget and approved by the Local Chief Executive.and approved by the Local Chief Executive.

LBP Form No. 5

Statement of Indebtedness
LGU: _____________________________________

Date Principal Previous Payments Made Amount Due Balance of the

Contracted Amount (Budget Year) Principal
Creditor Term Purpose
Principal Interest Total Principa Interest Total
l
1 2 3 4 5 6 7 8 9 10 11 12

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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.

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

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Certified Correct:

Local Budget Officer Local Treasurer Local Planning and Development Coordinator

Approved:

Local Chief Executive

This form presents the statutory and contractual obligations, and budgetary requirements.

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

LBP Form No. 7

Statement of Fund Allocation by Sector CY ______
LGU: ______________________________

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

TOTAL
APPROPRIATIONS

Certified Correct: Approved:

Local Budget Officer Local Accountant Local Chief

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GOVERNMENT UNITS

INSTRUCTIONS

1.
The Statement of Fund Allocation is a summary of appropriations covering the proposed expenditures of the budget year.

2.
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.

3.
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, 2015.1

4.
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 front-line 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.

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

1. The row in Column 1 under the new revenue source shall be filled for Supplemental Budget funded from the new revenue source.
2. 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.
3. The row in Column 1 under savings shall be filled for Supplemental Budget funded from savings.
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4. The row in Column 1 under Realignment shall be filled for Supplemental Budget funded from realignment.
5. The row in Column 1 under Reversion shall be filled for Supplemental Budget funded from Reversion.
6. 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.
7. Indicate under Column 3 the appropriate amount for whatever funding source of the Supplemental Budget.
8. 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.

LBP Form No. 9

STATEMENT OF SUPPLEMENTAL APPROPRIATION CY 2016

___________________________
Province/City/Municipality

Implementing Office Particulars/Purpose AIP Code Object of Account Amount

Expenditure Code

(4) (5)
(1) (2) (3) (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.

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1.7.2 LEP

OFFICIAL
SEAL

LOCAL EXPENDITURE PROGRAM

January 1 to December 31, 2017

PART 1. RECEIPTS PROGRAM

RECEIPTS PROGRAM
FY 2015-2017
( In 000 Pesos )

Current Year
Income Past Year
Receipts Budget Year
Receipts Classificatio Receipts
(Actual and Receipts
n ( Actual )
Estimate)
1. Receipts:
A. Local Sources

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GOVERNMENT UNITS

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
Total Non-Tax Revenue

B. External Sources
1. Internal Revenue Allotment
2. Share from GOCCs (PAGCOR
And PCSO)
3. Other Shares from National Tax
Collection
a. Share from Ecozone
b. Share from EVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
4. Inter-Local Transfer
5. Extraordinary Receipts/Grants/Donation/ Aids
Total External Sources
C. Other Receipts
1. Capital Investment Receipts
a. Proceeds from Sale of Assets
b. Proceeds from Sale of Debt
Securities of Other Entities
c. Collection of Loans Receivable
Total Capital Investment
Receipts
2. Receipts from Loans and
Borrowings
a. Acquisition of Loans
b. Issuance of Bonds
Total Receipts from Borrowings And
Loans
3. Income of Local Economic
Enterprises Total Non-Income Receipts
Total Available Resources for Appropriation
PART 2. EXPENDITURE PROGRAM

A. OFFICE OF THE MAYOR

Mandate:
Vision:
Mission:
Organizational Outcome:

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1. Proposed New Appropriations by Program, Activity and Project

AIP PPA Proposed

Major Final Performance Budget
Reference Target
Output Indicator
Code PS MOOE CO Total

2. Proposed New Appropriations, by Object of Expenditures

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

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
Training and Scholarship Expenses
Telephone Expenses – Landline
Telephone Expenses – Mobile
Postage and Deliveries
Subscription Expenses

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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
Confidential Expenses
Other Professional Expenses
TOTAL MOOE

PROPERTY PLANT & EQUIPMENT

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

TOTAL APPROPRIATIONS
3. Special Purpose Appropriations

1. LOCAL DISASTER RISK REDUCTION AND MANAGEMENT FUND

a. Proposed New Appropriations

Object of Expenditure Account Current Year

Past Year Budget Year
Code Expenditures
Expenditures Expenditures
(Actual and
(Actual) ( 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-

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Schoolbuildings
TOTAL MOOE
CAPITAL OUTLAY
Rescue Equipment
Building and Structure
Land Improvements
TOTAL CAPITAL OUTLAY
TOTAL APPROPRIATIONS
b. Special Provisions

1. 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.

2. 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.

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

2. APPROPRIATIONS FOR LOCAL ECONOMIC ENTERPRISES

a. Proposed New Appropriations

Object of Expenditure Current Year
Past Year Budget Year
Account Expenditures
Expenditures Expenditures
Code (Actual and
(Actual) ( 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
TOTAL APPROPRIATIONS
b. Special Provisions

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1. Use and Release of Fund.

3. APPROPRIATIONS FOR DEVELOPMENT PROGRAMS AND PROJECTS

a. Proposed New Appropriations

Object of Expenditure Account Budget

Code Year
( Estimate )

MOOE
Details of which are
presented in the attached
Annex “ “ which forms an
CAPITAL OUTLAYS integral part hereof
TOTAL APPROPRIATIONS
b. Special Provisions

1. Use and Release of Fund.

4. OTHER SPECIAL PURPOSE APPROPRIATIONS

a. Proposed New Appropriations

Object of Expenditure Account Budget

Code Year
( Estimate )

Details of which are presented

in the attached Annex “ “ which
forms an integral part hereof

b. Special Provisions

1. Use and Release of Fund.

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:
a. 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.

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b. 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 manmade calamities or other causes not attributable to the fault or negligence of
the agency concerned during the validity of the appropriations.
c. 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.
d. Difference between the approved budget for the contract and the contract award price.
e. 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)
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 authorized by law and in this Ordinance, as well as the implementation of priority
programs, activities or projects covered in this Ordinance.
PART 4. SUMMARY OF THE FY 2017 PROPOSED NEW APPROPRIATIONS

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

General
Account Social Economic Other
Object of Expense Public TOTAL
Code Services Services Services
Services

1. Personal Services
(specify object of expense)
2.
Total, Personal Services
2. Maintenance and
Other
Operating Expenses (MOOE)
(specify object of expense)
Total, MOOE
3. Financial Expenses
Total, Financial Expenses
4. Capital Outlays
(specify object of expense)
Total, Capital Outlays
5. Special Purpose
Appropriations
( SPA )
(specify SPA)
Total, Special Purpose
Appropriations
Total Appropriations

Proposed New Appropriations, by Office

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Personal Financial
Office MOOE CO TOTAL
Services Expenses

a. Office of the Mayor

b. Office of the Sanggunian
c. Etc.

3. 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
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.

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SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

Exhibit 2

DISTRIBUTION BY TYPE OF REVENUE

Budget Year
2%
(in million pesos ) 17%
1%

3%1%

IRA 87.00M
P 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

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s FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE
BUDG TMANAGEMENT
OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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

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SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEM NT

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.

Maintenance and Other Operating Expenses

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.

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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
1.7.4 Local Budget Preparation Form No. 4

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

Mandate, Vision/Mission, Major Final Output,
Performance Indicators and Targets CY 2017CY
2017
Province of DimaguibaProvince of Dimaguiba

OfficeOffice : : OfficeOffice of the Local Planni of the Local Planning and Development Coordinatorg and
Development Coordinator
MandateMandate : : ¥ ¥ Formulate Formulate integrated integrated economic, economic, special special
physical physical and and other other development development plans and
policplans and policies for consideration of the Local Development Counciles for
consideration of the Local Development Council; and; and
¥ ¥ Monitor and evaluate Monitor and evaluate the implementation of the the
implementation of the different programsdifferent programs, activ, activities ties

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and projects in the LGU in accordance with the approved development plan.and
projects in the LGU in accordance with the approved development plan.
VisionVision : : Towards Towards effective effective and and sustainable sustainable planniplanning g for
for the the Province Province of of Dimaguiba’s Dimaguiba’s progress and
advancement.progress and advancement.
MissionMission : : Initiate and cause the particInitiate and cause the particpatory formulation, coordination
and integration of ipatory formulation, coordination and integration of effective
effective and and comprehensive comprehensive development development plans;
plans; analyze analyze income income and and expenditure expenditure patterns;
patterns; provide provide sufficsufficient ent and and reliable reliable information;
information; conduct conduct researches and continuing studies for project
planniresearches and continuing studies for project planning; monitog; monitor and
evaluate the r and evaluate the implementation of programs and projects with
feedback mechanism in support of implementation of programs and projects with
feedback mechanism in support of the LGU visthe LGU vision.on.
Organizational Organizational
: : Sound planniSound planning and development management effected.g and
development management effected.
OutcomeOutcome

Proposed Budget for FY

2017Proposed Budget for FY 2017

t PSPS MOMO CO TotalT

OE E CO otal

Monitoring
and Percentage of
Project Monitoring Percentage of
Monitoring
10001000-1-- Project Monitoring Projects Projects 0 100,000 0 0
an d Implemented and 7575% 200,000 300,000
1-0101-004- and Evaluation
and Evaluation Evaluation Implemented an % 200,00 100,00 300,00
004-001-00 1
ProgramProgram Evaluation MonitoredMonito d
ServicesSer red
vices

Prepared by:Prepared by: Reviewed by:Reviewed by:

Department HeadDepartment Head Local PlanniLocal Planning and g and Local Budget
OfficerLocal Budget Officer Local TreasurerLocal Treasurer
Development CoordinatorDevelopment Coordinator

Approved by:Approved by:

Local Chief ExecutiveLocal Chief Executive

Chapter 2. Budget Authorization Phase

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1.01.0 IntroductionIntroduction
2.02.0 Legal Basis of Budget AuthorizationLegal Basis of Budget Authorization
3.03.0 Key Players in Budget AuthorizationKey Players in Budget Authorization
4.04.0 The Budget Authorization Flow ChartThe Budget Authorization Flow Chart
5.05.0 Steps in the Budget Authorization PhaseSteps in the Budget Authorization Phase

Step 1.Step 1. Enact Appropriation Ordinance Enact Appropriation Ordinance

1.11.1 Check the submitted Budget DocumentsCheck the submitted Budget

Documents
1.21.2 Evaluate the BudgetEvaluate the Budget
1.31.3 Deliberate on the BudgetDeliberate on the Budget
1.41.4 Authorize the Annual BudgetAuthorize the Annual Budget

Step 2.Step 2. Approve the Appropriation Ordinance Approve the Appropriation Ordinance
Step 3.Step 3. Post the Appropriation Ordinance Post the Appropriation Ordinance
Step 4.Step 4. Submit the Appropriation Ordinance for Review Submit the Appropriation
Ordinance for Review

6.06.0 Changes in the Annual BudgetChanges in the Annual Budget

7.07.0 Effectivity of BudgetsEffectivity of Budgets
8.08.0 Local Budget Authorization FormsLocal Budget Authorization Forms
• • LBA Form No. 1A - Checklists on Documentary and LBA
Form No. 1A - Checklists on Documentary and Signature
Requirements for the Annual BudgetSignature Requirements for
the Annual Budget
• • LBA Form No. 1B - Checklists on Documentary and Signature
LBA Form No. 1B - Checklists on Documentary and Signature
Requirements for the Supplemental BudgetRequirements for the
Supplemental Budget
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).
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).
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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.
Table 2. Emerging Roles of CSOs in the Budget Authorization Phase

ACTIVITY LGU ROLES CSO ROLES

1. DELIBERATE ON THE
BUDGET
The Sanggunian shall consider Sanggunian to post notice of budget Observing the Internal Rules of the executive
budget as a priority deliberation schedule in three (3) Procedure (IRP) of the Sanggunian, measure which shall take
precedence conspicuous places at least seven the accredited CSOs may: over all other pending and proposed (7) days
before the conduct of said
measures. As a rule, all Sanggunian activity. Invite accredited CSOs to a. Provide inputs on sectoral sessions shall be
open to the public, attend and provide inputs during concerns; and unless otherwise provided by law the budget
deliberation sessions, b. Raise questions on changes
(Article 105 [b], IRR of RA No.7160). including committee hearings. in the Executive Budget not found in the approved
AIP.
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2. AUTHORIZE THE ANNUAL

BUDGET
The Sanggunian authorizes Sanggunian may allow accredited Accredited CSOs to observe the 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 affix if any, subject to the fifteen (15) and in the deliberation and enactment his signature in every page
thereof. ten (10) days reglementary period of AO, subject to the applicable Otherwise, the LCE may exercise for
approval, for provinces, and reglementary period.
veto power. cities or municipalities, respectively,
per Section 54 (b), RA No. 7160.

4. P A dialect, in a bulletin board at the

O T entrance of the provincial capitol or city,
S I or municipal hall, as the case may be,
T O and in at least two (2) other conspicuous
N places in the local government unit
T concerned ( Section 59 [a and b], RA
H O No. 7160).
E R Comply with the Full Disclosure Policy
D pursuant to existing DILG issuances.
A I
Comply with the posting requirement
P N
under Section 59 (a and b), RA No.
P A
7160.
R N
Monitor the posting of the approved
O C
AO, and assist in making this known to
P E
the public.
R The Sanggunian is required to post the
I AO, in Filipino, English and the local

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

Local Finance Heads of

Local Chief Sanggunian Committee Departments

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E
xecutive (LCE) (LFC)

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.”
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
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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:
1. DILG-endorsed Gender and Development
Plan and Budget
2. 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
5. List of PPAs for the Local Council for the
Protection of Children
6. List of PPAs for Senior Citizens and
Persons with Disabilities
7. 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 Realized Local Treasurer and Local Accountant*

Income

• Certification of Savings Local Treasurer and Local Accountant*

New Revenue Measure/s: Local Treasurer and Local Accountant*

• Certified Statement of Income from 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

• Certificate of Source of Funds Local Treasurer

Available for Appropriations Local Accountant
LCE
*As recommended by COA.
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

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¡ 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).
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.
among others:

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 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,
¥ Is the budget consistent with the AIP?
¥ 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?

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¥ 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
¡ 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

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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

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by the Sanggunian and duly certified by the Presiding Officer to the LCE for approval
(Article 469 (c (3), IRR, RA No. 7160).
¤ Voting Requirement to Enact an Appropriation Ordinance

 An Appropriation is defined under In determining the total membership of the

Section 306(b) of RA No. 7160 as “an authorization made by Sanggunian, the Vice-Governor or the Vice-
ordinance directing the payment of goods and services Mayor, as the case maybe, is included
(Gamboa vs. Aguirre and Araneta, G.R. No.
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
that the for other ordinances that do not involve authorization for the use of public funds.
enactment of an The decisions of the Supreme Court in the following cases would sustain the inference
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
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specifically 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
(c) 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).
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
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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).
l 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).
l 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).

l 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 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
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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.
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

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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.

c. 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.
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)}.

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¤ 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

l 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).
l The effectivity of budgets is subject further to compliance with the posting requirements.
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

Local Chief Executive

Annual Operating Budget of Local Head of the Local

Economic Enterprise, if any Economic
Enterprise
Local Chief Executive

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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

¥ 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

CHECKLIST ON DOCUMENTARY AND SIGNATURE
REQUIREMENTS FOR THE SUPPLEMENTAL BUDGET

Document Signatory

Funds Actually Available:

¥ 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

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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

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.

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The budget documents consisting of the following are incorporated herein and made integral
part of this Ordinance:
1. Plantilla of Personnel; and
2. Annual Operating Budget of Local Economic Enterprise(s), if any.

Section 2. 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 _____________.

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UNITS
Sample Formats

Ordinance Authorizing Supplemental Appropriations

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:

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APPROPRIATION ORDINANCE NO. __________

Series of _______

AN ORDINANCE AUTHORIZING SUPPLEMENTAL BUDGET NO. __, SERIES _______

INVOLVING AN AMOUNT OF____________________ (P__________) FOR
____________(purpose)_______ ________).

Be it ordained in Regular Session assembled:

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:

BUDG T OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

Proposed New Appropriations Language

For __________________________________________ …….P___________

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New Appropriations by Program/Activity/Project (‘000)

Current Operating
Program/Project/Activity Expenditures
Maintenance Capital Financial
Total
Personal and Other Outlay Expenses
Services Operating
Expenses

A. Programs

I. General
Administration
Services
a. General
Administrative and
Support Services
b.

Sub-total

II. Operations
a.
b.
c.

Sub-total
Total, Programs

B. Projects

I. Locally-funded Project
a.
b.

Sub-total
Total, Projects
Total New Appropriations

Program Appropriation and Obligation by Object (‘000)

Account Current
Object of Expenditure Past Year Budget Year
Code* Year

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Personal Services (PS)

Total PS

Maintenance and Other Operating

Expenses (MOOE)

Total MOOE

Capital Outlay (CO)

Total CO

Financial Expenses

Total Financial Expenses

TOTAL APPROPRIATIONS

Section 4. Separability Clause. If, for any reason, any section or provision of this Ordinance
is declared invalid or unconstitutional, other sections or provisions thereof which are not
affected thereby shall continue to be in full force and effect.

Section 5. Effectivity. The provisions of this Ordinance shall take

effect on _________________.
BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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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:

Approval Letter of the LCE

Date

THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN

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Ladies/Gentlemen:

Today, I sign Appropriation Ordinance No. __________ for Fiscal Year ____ entitled,
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 (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

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Veto Message - Partial Veto

Date

THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN

Ladies/Gentlemen:

Today, I sign Appropriation Ordinance No. __________ for Fiscal Year ____ entitled,
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 (or AN ORDINANCE AUTHORIZING SUPPLEMENTAL BUDGET NO. __,
SERIES _______ INVOLVING AN AMOUNT OF____________________ (P__________) FOR
____________(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

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Veto Message - Total Veto

Date

THE HONORABLE PRESIDING OFFICER

THE HONORABLE MEMBERS OF THE SANGGUNIAN

Ladies/Gentlemen:

Today, I veto Appropriation Ordinance No. __________ for Fiscal Year ____ entitled,
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 (or AN ORDINANCE AUTHORIZING SUPPLEMENTAL BUDGET NO. __,
SERIES _______ INVOLVING AN AMOUNT OF____________________ (P__________) FOR
____________(purpose)________________).

Pursuant to the powers vested in me by the Local Government Code of 1991, I veto all
items of 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

Be it ordained in Regular Session assembled:

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 ____________________.

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x--------------------------------------------x

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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:

(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)

Chapter 3. Budget Review Phase

1.0 Introduction
2.0 Legal Basis of Budget Review
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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
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).
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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.
Table 3. Emerging Roles of CSOs in the Budget Review Phase

ACTIVITY LGU ROLES CSO ROLES

1. ISSUE THE REVIEW ACTION
The reviewing authority may If the arrangement is allowed in Check the LGU compliance with the
declare the AO as: the terms of engagement between review findings.
a) operative in its entirety; the LGU and CSO, the LGU may
furnish copy of the review letter to
b) operative in its entirety, the accredited CSOs.
subject to conditions;
c) inoperative in its entirety;
or
d) 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.
Figure 7. The Budget Review Flow Chart
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Secretary to the Local Chief

Reviewing Authority Sanggunian

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:
1. 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
Local Chief Executive
AIP, duly supported by the DILG- Local Planning Officer approved GAD Plan and
Budget, Local
Disaster Risk Reduction Management Local Budget Officer

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Plan, List of PPAs for the Local Council the Protection of Children, and Peace and Local Chief
Executive
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

Funds Actually Available:

• 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

• 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
Document Signatory
Realignment of Appropriations in Times of Public
Calamity Local Treasurer

• Certificate of Source of Funds Local Accountant

Available for Appropriations Local Chief Executive

Supplemental AIP, if any

Local Planning and Development Officer
Local Budget Officer
Local Chief Executive

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

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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:

a. 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).
b. 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.
c. 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).
d. 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).
e. 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).
f. 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).
g. 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).
h. Verify if the projects in the Appropriation Ordinance are found in the approved AIP (Section 305
[i], RA No. 7160).
i. Verify if there are items in the Appropriation Ordinance that are specifically prohibited by law.
j. 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).

a. Review Actions

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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:
¤ 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.

b. 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
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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.
 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.

c. Format of the Review Action

The review action by the DBM RO shall be in the form of a letter, while that of the Sangguniang
Panlalawigan shall be in the form of a Resolution. All the findings must be disclosed in the
review action. (See sample Formats of Review Letters and Resolutions).

d. 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)

e. 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).

f. Return of the Reviewed Appropriation Ordinance to the LGU Concerned

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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).

g. 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).
h. 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 findings and enact a new Ordinance
• Non-provision or insufficient provision for any of the
budgetary requirements authorizing the Annual Appropriations for
submission to the 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 operative • The LGU shall comply with the conditions imposed
subject to conditions. before any disbursements are made and the LCE
shall notify the reviewing authority of such action.

i. Enforcement of Ordinances or Resolutions after Disapproval by Reviewing Authority

Any attempt to enforce any 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).
3.7 Local Budget Review Forms

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LBR Form No. 1A

CHECKLIST ON DOCUMENTARY AND SIGNATURE

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
SanggunianPresiding Officer
c. Appropriation Ordinance
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

any
Sanggunian Presiding Officer

_______________________ Reviewing
Officer

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LBR Form No. 1B

CHECKLIST ON DOCUMENTARY AND SIGNATURE 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
Certified Statement of Additional Realized Income Accountant
Certification of Savings Local Treasurer and Local
Accountant

d. New Revenue Measures:

Local Treasurer and Local
Certified Statement of Income from New Revenue
Measures; Accountant
Copy of duly enacted Tax Ordinance which imposes
new local taxes, charges, fees, fines or penalties
or which raises existing local taxes, charges,
fees, fines or penalties; and
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

e. Realignment of Appropriations in Times of Public

Calamity Local Treasurer

Local Accountant
Certificate of Source of Funds Available for
LCE
Appropriations

f. Veto message, if any LCE

g. Sanggunian’s action on veto, if any Secretary to the Sanggunian

Presiding Officer

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_______________________ Reviewing
Officer

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LBR Form No. 2

SUMMARY OF FINDINGS AND

RECOMMENDED REVIEW ACTIONS

FINDINGS REVIEW ACTIONS

__________________________________
Reviewing Officer

LBR Form No. 3A

SUMMARY WORKSHEET - RECEIPTS & EXPENDITURES

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Province/City/Municipality

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
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Others

Total Appropriations

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.
BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

LBR Form No. 3-B

BUDGETARY REQUIREMENTS & LIMITATIONS

Province/City/Municipality

BUDGETARY REQUIREMENTS

Particulars Minimum
Basis of Percentage / Appropriation Amount Excess /
Computation Rate Required Appropriated (Deficiency) Remarks
A B C D (BxC) E F (E-D) G

A. Budgetary Requirements
20%
IRA - Budget
Development ≥20%
Year
Projects
Regular
5% LDRRMF Sources - ≥5%
Budget Year
Aid to Total Number
≥ 1,000
Barangays of Barangay

B. Statement of Statutory Requirements and Contractual Obligat ions

Total Annual
Statutory/ Full
Contractual Provision or
Obligation Due 100% of the
Debt Service for the Budget Annual
Year but not to Amortization
exceed 20% of for the Year
Regular

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Sources,
Budget Year

C. Budgetary Requirements f or Attribution in the Reg ular PPAs

5% Gender & General Fund

5%
Development - Budget Year

Senior
General Fund
Citizens &
- Budget Year
PWDs

1% Protection IRA - Budget

1%
of Children Year
Estimated
Total
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
Regular
20% Debt
Source, 20%
Service
Budget Year
Peace and
Confidential
Order Program 30%
Fund
- Budget Year

________________________
Reviewing Officer

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BUDGETARY LIMITATIONS

Still
Allowable /
Maximum (Excess
Basis of Percentage Appropriation Amount over the
Particulars Computation / Rate Allowed Appropriated Limitation) Remarks

A B C D (BxC) E F (E-D) G
Estimated
Total
Receipts - <100%
Appropriation
Budget Year
Regular
<45%
Source - Next
Personal Services or
Preceding
<55%
Fiscal Year
RPT - Next
2% Discretionary
Preceding <2%
Fund
Fiscal Year
Regular
20% Debt Service Source - <20%
Budget Year
Peace &
Order <30%
Confidential Fund Program
Total 3%?
Appropriation

Reviewing Officer

3.8 illustrative Example

8.8.0 0Illustrative Example Illustrative Example

Summary ofSummary of Findings and Findings and Recommended Recommended Review

ActionsReview Actions

FINDINGSFINDINGS REVIEW ACTIONS REVIEW ACTIONS

Incomplete budget documents ReturnReturn immediately immediately

appended Incomplete budget in writing, the in writing, the
documents appended to the Appropriation Ordinance with the
Appropriation Ordinanceto the budget Appropriation Ordinance with
Appropriation Ordinance the budget documents and require
resubmission with documents and
require resubmission with complete
budget documentscomplete budget
documents
Lack of required signatories in the Lack Return immediately Return immediately
of required signatories in the in writing, the in writing, the
Appropriation Ordinance or budget Appropriation OrAppropriation

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Appropriation Ordinance or budget Ordinance with the budget dinance with

documents documents the budget documents and require
resubmission duly documents and
require resubmission dul y signed
documentssigned documents
Appropriation Ordinance fully complies Declare the Appropriation Ordinance
Appropriation Ordinance fully complies Declare the Appropriation Ordinance
with the budgetary requirements and operative in its entiretyoperative in its
with the budgetary requirements and entirety
general limitationsgeneral limitations
Some items of Some items of Declare the Appropriation Ordinance
appropriation require prior appropriation Declare the Appropriation Ordinance
require prior approval by appropriate operative in its entirety with some
authorities, prior approval by operative in its entirety with some
appropriate authorities, prior clearance conditionsconditions
or documentation, and other clearance
or documentation, and other
conditions.conditions.
The aggregate amount appropriated Declare the Appropriation Ordinance
The aggregate amount appropriated Declare the Appropriation Ordinance
exceeds the estimates of noperative in its entiretyinoperative in
incomeexceeds the estimates of income i its entirety
The Appropriation Ordinance diThe Declare the Appropriation Ordinance
Appropriation Ordinance did not not Declare the Appropriation Ordinance
sufficsufficiently provide for payment of noperative in its entiretyinoperative in
i
loans ently provide for payment of loans its entirety
and other indebtednessand other
indebtedness
ProvisProvision on for debt servicfor Declare the Appropriation Ordinance
debt servicing exceeds 20%ng exceeds Declare the Appropriation Ordinance
20% of the regular incomeof the regular i noperative in part, disallowing the
income inoperative in part, disallowing the
excess.excess.
insuffic insufficient provision for Declare the Appropriation Ordinance
requirements bent provis on for Declare the Appropriation Ordinance
requirements by y attribution (i.e., operatoperative in ive in partpart subject
GAD, , LCPC, )attribution (i.e., GAD, , to subject to conditions conditions
LCPC, )

3.9 Sample Formats

9.1 Sample Format No. 1 - Review Letter Declaring the Appropriation Ordinance Operative in its Entirety

_____________________
___________________
Date Date

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The Honorable Members of the SanggunianThe Honorable Members of

the Sanggunian Province/City/Municipality of
_____________Province/City/Municipality of _____________

Thru: The Provincial Governor/City/Municipal MayorThru: The

Provincial Governor/City/Municipal Mayor Ladies/Gentlemen:

Ladies/Gentlemen:

Pursuant to the provisions of the Local Government Code of 1991 (Republic Act [R.A.] No. 7160),
Pursuant to the provisions of the Local Government Code of 1991 (Republic Act [R.A.] No. 7160),
our review of the FY 2017 our review of the FY 2017 Annual/Supplemental Budget No. ___ of the
Province/City/Municipality of Annual/Supplemental Budget No. ___ of the Province/City/Municipality
of ____________, ____________, involving involving a a total total appropriation appropriation of
P___________ of P___________ under Appropriation under Appropriation Ordinance Ordinance
No. _________, submitted to this Office for review on_________, reveals substantial complianNo.
_________, submi ted to this O fice for review on_________, reveals substantial compliance ce with
the same law and its Implementing Rules and Regulations.with the same law and its Implementing
Rules and Regulations.

Accordingly, the said Appropriation Ordinance is declared Accordingly, the said Appropriation
Ordinance is declared operative operative in in its its entirety entirety effective on e fective on
________________, subject to the posting requirement under Section 59 of R.A. No.
7160.________________, subject to the posting requirement under Section 59 of R.A. No. 7160.

It It i s is understood understood that that this this review review action action does does not not
authorize authorize any any item item of of appropriation appropriation that that is is specifically
prohibited by or inconsistent with the provisions of law.specifica ly prohibited by or inconsistent with the
provisions of law.

Compliance Compliance plementing local government unit. plementing local government unit. with
with all a l existing existing laws, laws, rules rules and and regulations regulations shall sha l be be the
the responsibility responsibility of of the the imim

Very truly yours,Very truly yours,

By Authority of the By Authority of the

Secretary of Budget and Management: Secretary of Budget and Management:

____________________________________________
Director IVDirector IV

9.2 Sample Format No. 2 - Review Letter Declaring the Appropriation Ordinance Operative in its Entirety
Subject to Some Conditions

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)
,
t
y
e
_______________________ e
Date Date

The Hon The Honorable Members of the Sanggunian rable Members of

the Sanggunian Province/City/Municipality of y
Province/City/Municipality of _____________ __ _ 0
,
Thru: The Provincial Governor/City/Municipal Thru: The Provincial
Governor/City/Municipal MayorMayor

Ladies/Gentlemen: Ladies/Gentlemen:
s
Pursuant to Pursuant to the provisions of the Local Government Code of 1991 (Republic Act
1 [R.A.] No. 7160 he provisions of the Local Government Code of 1991 (Republic Act [R.A.] No.
. 7160), our review of our review of the FY 2017 Annual/Supplemental Budget No. ___ of the s
2
. Province/City/Municipali the FY 2017 Annual/Supplemental Budget No. __ of the
Province/City/Municipality of __ of ____________, involving an , involving an appropriation
e
ofappropriation of P___________ under Appropriation OrdinancP__ _ under Appropriation
Ordina ce No. __ No. _________, submitted to this Office for review on_________, reveals
substantial complianc , submitted to his Office for review on__ , reveals substantial compliance
1 with with the same law and its Implementing Rules and Regulations, except for the following:e
. same law and its Implementing Rules and Regulations, except for the following:
2 1.
. 2.

NotwiNotwithstahstanding the above, the Appropriation Ordinanding the above, the

Appropriation Ordinance is declared ce is declared operative operative in in its its entirety
entiret effective on __effective on ___________, subject to the posting requirement under
I Section 59 of R.A. No. 716_ , subject to he posting requirement under Section 59 of R.A. No.
s 7160, and further subject toand further subject to the following conditions:he following
conditions:
1.

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i 2.

The Province/City/MunicipThe Province/City/Municipal government shall comply with al

government shall comply with the herein conditions and notify thie herein conditions and notify
this Office ofOffice of the actions taken thereon.the actions taken thereon.
t isIt is understood understood that that this this review review action action does does not not
authorize authorize any any item item of of appropriation appropriation that that is i
pecifispecifically prohibited by or inconsistent with the prally
prohibited by or inconsistent with e provisions ofovisions of
law.law.
Compliance Compliance with with all all existing existing laws, laws, rules rules and and
regulations regulations hall shall be be the the responsibilresponsibility ty of of the th
mplementing local government unit.implementing local government unit.
Very truly yours, Very truly yours,

By Authority ofBy Authority of the the

Secretary ofSecretary of Budget and
Management:Budget and Man
gement:
__________________________
Director
IVDirect
or IV

9.3 Sample Format No. 3 - Review Letter Declaring the Appropriation Ordinance Inoperative in its
Entirety

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o
______________________
.
DateDate
The Honorable Members of the SanggunianThe Honorable Members of the Sanggunian e
Province/City/Municipality of
Province/City/Municipality of
_______________
Thru: The Provincial Governor/City/Municipal MayorThru: The Provincial _
Governor/City/Municipal Mayor

Ladies/Gentlemen:Ladies/Gentlemen:

w
Pursuant to the provisions of the Local Government Code of 1991 (Republic Act [R.A.] No.
Pursuant to the provisions of the Local Government Code of 1991 (Republic Act [R.A.] N
l 7160)7160), , our our review review of of the the FY FY 20172017 Annual/Supplemental
Annual/Supplemental Budget Budget No. No. ___ __ of of the th Province/City/Municipality
Province/City/Municipality of of ____________, __, involving involving an an appropriation a
appropr ation of of P___________ P _ under under Appropriation Appropr ation Ordinance
Ordi ance No. No. _________, __, submitted submitted to to this this Office Office for for l
review revie on_________, shows that it has not complied with the budgetary requirements
and general on __, shows that it has not complied with the budgetary requirements and g ner y
I imital mitations as well as other provisions of law as enumerated hereunder:tions as well as
othe provisions of law as enumerated hereunder:
t 1. 1.
t 2. 2.
3. 3. g
r
4. 4.
5. 5.

n In view view thereof, thereof, the the said said Appropriation Appropr ation Ordinance Ordi n
ance is is declared declared inoperative inoperative in in its its entiretyentiret t
effective immediately. Consequently, the previous year’s budget is deemed reenacted ffective
immediately. Consequently, the previous year’s budget is deemed reenacted pending pendin e
he submission of a new ordinance authorizing the annual appropriations, taking into account
the submission of a new ordi ance authorizing the annu l appropr ations, taking into accou he
s
abovethe above-mentioned findings. Nevertheless, it is understood that, in the
,
implementation of the -mentioned findings. N vertheless, it is understood that, in the
e
implementation of th eenacted budget, only the annual appropriation for salarireenacted
budget, only the annual appropr ation for salaries and wages of existing positions, es and
wages of existing position
statutory statutory and and contractual contractual obligations, obligations, and and essential
essential operating operating expenses expen es authorized authorized in in the th annual and
supplemental budgets for the preceding year shall be deemed reenacted.annu l and
supplemental budgets for the pr ceding year shall be deemed reenacted.

Very truly yours, Very truly yours,

By Authority of the By Authority of the

Secretary of Budget and
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Management:Secretary of Budget
and M nagement:
____________________________
Director IVDirector IV

9.4 Sample Format No. 4 - Review Letter Declaring the Appropriation Ordinance Inoperative in
Part

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__ ______________________________________ ou
DateDate ry
of
e Honorable MembThe Honorable No
Th Members of the rs of the .
Pr SanggunianSanggunian wit
ovince/City/Municipality of _____________Province/City/Municipality of _____________ h

Th
ru: TheThru: The Provincial
Governor/City/Municipal MayorProvincial
La
Governor/City Municipal Mayor

Pu
dies/GLadies/Gentle
rev
men:ntlemen:
__ __
__ rsuant to the provisions of the Local Government Code Pursuant to the provisions of the
Local Government Code of 1991 (Republic Act No. 7160), f 1991 (Republic Act No. 7160), our ,
the
iew of the FY 2017 Annual/Supplemental Budget No. ___review of the FY 2017 Th
1. e
Annual/Supplemental Budget No. ___ of the Province/City/Municipalitof the
2. thi
Province/City/Municipality of
3. s
__________, involving a____________, involving an appropriation of P___________ under
4.
Appropriation Ordinance appro riation of P___________ under Appro riation Ordinance No.
w
_______, submitted _________, submitted to this Office for review on_________, shows
substantial compliance o this Office for review on_________, shows substantial compliance t is
In with same law and its Implementing Rules and Regulations, except for the same law and its
su Implementing Rules and Regulations, except for the following:he following:
Pr the
1.
Off 2.
3.
It i 4. hich are disallowed on the amount of P which are disallowed on
sp the amount of P
______________________.______________________.
Co
im view of the above, thIn view of the above, the budget is declared budget is declared
inoperative in partinoperative in part effectiv effective on ____________ on
Ve ______________,
bject subject to the to the posting posting requirements requirements under under Section
By Section 59 59of R.A. of R.A. No. No. 71607160. . The ovince/City/Municipal government shall
Se comply with the herein Province/City/Municipal government shall comply with the herein review
findings and notify view findings and notify this
Dir ice of the actions taken thereon.Office of the actions taken thereon.
s It understood is understood that that this this review review action action does does not
authorize not authorize any any item item of appropriation of appropriation that thais
ecifically prohibited by or inconsistent withspecifically prohibited by or inconsistent with the
provisions of law.the provisions of law.
mpliance Compliance with with all existing all existing laws, laws, rules rules and and
regulations regulations shall shall be thbe responthe responsibility ibility of theof
plementing local government unit.implementing local government unit.
ry trulVery truly
yours, yours,

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Authority By Authority of the f he

cretary of Budget and
Management:Secretary of Budget and
Management:
ector
IVDirector
IV

9.5 Sample Format No. 5 – Resolution Declaring the Appropriation Ordinance Operative in its Entirety

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RESOLUTION NO. ___RESOLUTION NO. ___

A RESOLUTION DECLARING THE APPROPRIATION A RESOLUTION

DECLARING THE APPROPRIATION ORDINANCE
NO.ORDINANCE NO. ___ ___
OF THE CITY/MUNICIPALITY OF ____________________ OF THE
CITY/MUNICIPALITY OF ____________________
OPERATIVE IN ITS
ENTIRETYOPERATIVE IN ITS ENTIRETY
WHEREAS, ApWHEREAS, Appropriation Ordinance No. ___ of the City/Municipality of
___________ ropriation Ordinance No. _ of the City/Municipality of _
authorizing authorizing its its AnAnnual ual Budget Budget for for Fiscal Fiscal Year
Year ______, , involving involving an an apappropriation ropriation of of
P_P____________, , was was submitted submitted to to this this SangSanggunian
unian for for review review on on
___________________ pursuant to the provisions of Republic Act (R.A.) No. 7160;
pursuant o the provisions of Republic Act (R.A.) No. 7160;

WHEREAS, the subject ApWHEREAS, the subject Appropriaropriation Ordinance shows

substantial compliance with the same law tion Ordinance shows substantial
compliance with the same law and its Implementing Rules and Regulations;and its
Implementing Rules and Regulations;

NOW, NOW, THEREFORE, THEREFORE, on on motion motion of of SP SP Member Member

____________ duly duly seconded seconded by by SP SP Member Member
______________;;

THE SANGGUNIANG PANLALAWIGAN IN SESSION DULY ASSEMBLED:THE SANGGUNIANG

PANLALAWIGAN IN SESSION DULY ASSEMBLED:

RESOLVED, RESOLVED, to to declare declare ApAppropriation ropriation Ordinance Ordinance

No. No. _____ of of the the City/Municipality City/Municipality of of _____________
operative in its entirety,operative in its entirety, effective on _ effective on
______________, subject to, subject to the posting requirements under Section 59
of R.A. No. 7160.the posting requirements under Section 59 of R.A. No. 7160.

RESOLVED FURTHER, to inform theRESOLVED FURTHER, to inform the City/Municipality that

this review action does not authorize City/Municipality that this review action does
not authorize any item of apany item of appropriation that is specifically prohibited
by or inconsistent with theropriation that is specif cally prohibited by or inconsistent
with the provisions of law.provisions of law.

RESOLVED FINALRESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang

Panlungsod/Bayan Y, to send a copy of this Resolution to the Sang uniang
Panlungsod/Bayan of of the City/Municipality of _the City/Municipality of
_____________ through the City/Municipal Mayor. through the City/Municipal Mayor.
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9.6 Sample Format No. 6 - Resolution Declaring the Appropriation Ordinance Operative in its
Entirety Subject to Some Conditions

RESOLUTION NO. ___RESOLUTION NO. ___

A RESOLUTION DECLARING THE APPROPRIATION ORDINANCE NO. ____ A

RESOLUTION DECLARING THE APPROPRIATION ORDINANCE NO. ____
OF THE CITY/MUNICIPALITY OF ____________________________ OF THE
CITY/MUNICIPALITY OF ____________________________
OPERATIVE IN ITS ENTIRETY SUBJECT TOOPERATIVE IN ITS ENTIRETY
SUBJECT TO SOME CONDITIONSSOME CONDITIONS

WHEREAS, WHEREAS, Appropriation Appropriation Ordinance Ordinance No. No. ___ ___ of of the
the City/Municipality City/Municipality of of _______________ _______________
authorizing its Annual Budget for Fiscal Year _____, involving an appropriation of
authorizing its Annual Budget for Fiscal Year _____, involving an appropriation of
P____________, P____________, was was submitted submi ted to to this this
Sanggunian Sanggunian for for review review on on
_________________________ pursuant to the provisions of Republic Act (R.A.)
No. 7160;___________ pursuant to the provisions of Republic Act (R.A.) No. 7160;
WHEREAS, WHEREAS, subject Appropriation Ordinance reveals substantial compliance with the
same law subject Appropriation Ordinance reveals substantial compliance with the
same law and its Implementing Rules and Regulations except for the following:and its
Implementing Rules and Regulations except for the fo lowing:
11..
2.2.
NOW NOW THEREFORE, THEREFORE, on on motion motion of of SP SP Member Member ______
______ duly duly seconded seconded by by SP SP Member Member
___________;___________;

THE SANGGUNIANG PANLALAWIGAN IN SESSION DULY ASSEMBLED:THE SANGGUNIANG

PANLALAWIGAN IN SESSION DULY ASSEMBLED:

RESOLVED,RESOLVED, to to declare declare Appropriation Appropriation Ordinance Ordinance

No. No. ____ ____ of of the the City/Municipality City/Municipality of of
____________________ ____ OPERATIVE OPERATIVE IN IN ITS ITS ENTIRETY,
ENTIRETY, effective e fective ______________, ______________, subject subject
to to the the posting posting requirements requirements under under Section Section
5959 of of R.A. R.A. No. No. 71607160, , and and subject further to the following
conditions:subject further to the fo lowing conditions:
11..
22
RESOLVED FURTHER, to require the City/Municipality to comply with the hRESOLVED FURTHER, to
require the City/Municipality to comply with the herein conditions and erein conditions
and notify this body of actions taken thereon.notify this body of actions taken thereon.

RESOLVED FURTHER, to inform the City/Municipality that this review action does not authorize
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 any item of appropriation that is specifica ly prohibited by or inconsistent with the
provisions provisions of law.of law.

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RESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang Panlungsod/Bayan

RESOLVED FINALLY, to send a copy of this Resolution to the Sangguniang
Panlungsod/Bayan of the City/Municipality of _____________ through the
City/Municipal Mayor.of the City/Municipality of _____________ through the
City/Municipal Mayor.

ADOPTED. _____ADOPTED. _____((Date)Date)_____._____.

x- - - - - - -- - - - - - - - - -- - - - - - -- - - - - - - -x x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
We hereby certify that the foregoing is a true and accurate copy of the Resolution which We hereby
certify that the foregoing is a true and accurate copy of the Resolution which
was duly adopted by the Sangguniang Panlalawigan of ___________ during its Regular Session was
duly adopted by the Sangguniang Panlalawigan of ___________ during its Regular Session held on
________________.held on ________________.

____________________________________________________
SeSecretary to the Sanggunian cretary to the Sanggunian
Presiding OfficerPresiding O ficer

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

deemed ___________, through the City/Municipal Mayor, thatreenacted pending the submission
and enactment/approval the previous year’s budget is 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
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duly adopted by the Sangguniang Panlalawigan of ___________ during its regular session held I hereby

certify that the foregoing is a true and accurate copy of the Resolution which was on
__________________.
__________________________
Secretary to the Sanggunian
Presiding Officer

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 following
items of appropriation:requirements and general limitations as well as other provisions of law, except for
the

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
_______________.
_________________________

Secretary to the Sanggunian

Presiding Officer

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9.9 Sample Format No. 9- Stamp of Review

RE IEWED
V
VISI
PURSUANT TO THE PRO NS OF REPUBLIC ACT NO. 7160
O

Y OF BUDGET AND

______________
ETA
R
BY AUTHORITY OF THE SECR
___
___________ _
DI REC TOR IV

REFERENCE: REVIEW LE TER DATED: _____________

T

Seal of

the
REVIEWED
Province

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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: _____________

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)
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• 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.
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

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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.
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

ACTIVITY LGU ROLES CSO ROLES

1. RELEASE THE
ALLOTMENTS ( LBM/ARO )

The Local Budget Matrix (LBM) is Post information on Monitor the LGU compliance on the
issued to effect the comprehensive allotment releases release of allotments.
release of allotment for a (LBM/SAROs) in
Department/ Office. Release of three (3) conspicuous places
reserve amounts shall be effected in the LGU within twenty (20) days Inform beneficiaries and
through the use of Allotment Release from the release of the allotment.12 communities concerned of the
Order/s (ARO/s). release of allotments through
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tri-media or
conduct meetings with the
beneficiaries and communities
concerned.
ACTIVITY Post information on receipts and Monitor the postings as required expenditures in
three (3) conspicuous under RA No. 7160 and the Full places in the LGU within ten
2. POST THE STATEMENT (10) days Disclosure Policy of the DILG.
OF RECEIPTS AND after the end of the month pursuant to Section
EXPENDITURES IN 513 of RA No. 7160; and
THE LGU WEBSITE
within approval Report of Receipts and Expenditures as required under the Full
The LGU shall post the monthly Disclosure twenty by the (20)LCE days of the after Annual the Advocate of media.
Statement of Receipts and posted for information the citizen’s through awareness tri-
Expenditures within ten (10) days
after the end of the month pursuant
to Section 513 of RA No. 7160 Policy of the DILG.

3. PREPARE CASH PROGRAM Post information on the following: Monitor the LGU compliance on the preparation
AND FINANCIAL AND of cash program and a. Cash Program financial and physical performance
PHYSICAL PERFORMANCE b. Financial and Physical Performance targets. Targets
TARGETS
in three (3) conspicuous places in the Inform beneficiaries and communities LGU
The Local Treasurer shall prepare within twenty (20)11 days after concerned of the information through the end of each
the Cash Program. The [LFC] / quarter. tri-media or conduct meetings with
Department Heads shall prepare the the beneficiaries and communities
Summary of Financial and Physical concerned
Performance Targets for the entire
year. The detailed financial and
performance targets present the
quarterly breakdown of the financial
allocation needed to accomplish a
specific level of target.

4. OBLIGATE AND Invite accredited CSOs, if qualified Attend as observer in the as observers, in the
DISBURSE FUNDS FOR procurement procurement process and carry process at least three (3) calendar days
IMPLEMENTATION OF PPAS out the responsibilities provided before each procurement activities in under Section
- PROCUREMENT PROCESS 13.4 of the IRR of RA compliance with the Government No. 9184. May use as
reference the Procurement Reform Act, RA No. GPPBissued Procurement Observers
Procurement Process 9184. Guide (POG).

To enhance the transparency of the

process, the BAC shall, in all stages
of procurement process, invite, in
addition to the representative of
Commission on Audit, at least two
(2) observers to sit in its
proceedings, one (1) from a duly
recognized private group in a duly
recognized private group in a sector
or discipline relevant to the
procurement at hand.
LGU ROLES CSO ROLES

11 Reglementary period patterned after that prescribed in the Full Disclosure Policy of the DILG per MC
No. 2013-140 dated December 3, 2013.
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GOVERNMENT UNITS

ACTIVITY LGU ROLES CSO ROLES

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
PPAs, the following must be ensured: (This may be differentiated from the 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 mid-term and annual, and aimed pricing of goods, contracts and at comparing
accomplishments vs. services targets)
• PPA fund release/ utilization
• proper delivery to target beneficiaries

5. ADJUST CASH PROGRAM FOR

SHORTAGES AND OVERAGES

The LFC, through the Local Treasurer, Post information on adjusted Cash Monitor the LGU compliance on shall use the
results of the cash flow Program in three (3) conspicuous the preparation of adjusted cash analysis as basis for adjusting
the places in the LGU within twenty (20) program, and financial and physical Cash Program and the financial and days
after the end of each quarter.12 performance targets. physical targets.

6. PROVIDE CORRECTIVE
ACTIONS FOR NEGATIVE
DEVIATIONS

The LFC shall compare the actual Render reports on actions taken to Monitor appropriate interventions performance in
both the financial address negative deviations. and measures taken by the LGU on and physical accomplishments vis
negative deviations.
à-vis the targets for the quarter. Provide copies of catch-up plans to
For variances, Department Heads parties concerned. Assist the LGU in implementing concerned shall
take corrective Partner with accredited CSOs appropriate interventions on negative
deviations, which may include actions or prepare necessary in addressing service
gaps and providing possible support for service adjustments to catch up with the acknowledge contribution
of CSOs. and/or resource gaps in the delivery plans for the year. of services.
4.4 The Budget Execution Flow Chart
Figure 8. The Budget Execution Flow Chart

LOCAL
LOCAL DEPARTMENT LOCAL
BUDGET LFC
ACCOUNTANT HEADS TREASURER

12 Reglementary period patterned after that prescribed in the Full Disclosure Policy of the DILG per MC No. 2013-140 dated December 3, 2013.
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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.
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:
1. 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
nonpermanent 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.

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2. 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.
3. The allotment for Financial Expenses (FinEx) shall also be released comprehensively for
the whole year, using LBE Form No. 1B.
4. 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
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

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• 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.
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
regularly 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.
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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.
• 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.
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4.7 Local Budget Execution Forms

LBE Form No. 1LBE Form No. 1

ARO For AROPS For PS
Annual BudgetAnnual Budget

Supplemental
BudgetSupplemental Budget

Reenact Reenacted Budgetd Budget

ALLOTMENT RELEASE ORDER FOR PERSONAL SERVICESALLOTMENT

RELEASE ORDER FOR PERSONAL SERVICES
FY_________________FY_________________

Local Government UnitLocal Government :____Unit:_____________________ Fund

CoFund eCode: _________: ____ DepartmenDepartment/Of/Office: ____fice:
_______________________
PurposePurp: ose____: _________________________________________________________________________
_____________________________________________________________________________________
PPA O ject as UTHORIZE ED Previously ly This
PP A b Class/Obj D F Previous d Thi s
PA PA s/A OR LATER
ESCRI RI ect Cl AUTHORIZ Released R elease
P P D P Account t PROAPPR AT FOR LAT ER Release Relea
P se
C od od DESC AP OPRIIATI I RELEASR E AmountAm
Accoun
eC e TIONTI CodeCo ON (PSON) ELEASE ount
ON de (PS)
( 1) ( 1) (2) (2) (3) (3) (4) (4) (5) (5) (6) (6) (7) (7)

TO TA TA
LT L
O
AMOUNT IN WORDSAMOUNT IN WORDS
________________________________________________________________________________________
________________________________________________________________________________________

NOTES___________________________________________________________________NOTES_______
____________________________________________________________

The The allotments allotments herein herein releasedreleased shall shall be used be used
solely solely for the for the purposes purposes indicated indicated and and disbursements
thereto shall be made in accordance with existing budgeting, accounting disbursements
thereto shall be made in accordance with existing budgeting, accounting and auditing rules and
regulations. It is theand auditing rules and regulations. It is the primary responsibility of the
head of the primary responsibility of the head of the DepartmentDepartment/Office or Unit
concerned to keep /Office or Unit concerned to keep expenditures within the limits of the
amount x enditures within the limits of the amount allotted.allotted.

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Recommended By: Recommended By: Approved By: Approved By:

____________________________________
____________________________________________
Local Budget Officer Local Budget Officer Local Chief ExecutiveLocal Chief Executive

ARO No. ARO No.________________________

Date of Issue : Date of Issue : ______ ______
Page______of Page______of______Pages____Pages

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 o 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.

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SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANA MENT

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 Object Class/ AUTHORIZED Previously This
PPA DESCRIP Account Code APPROPRIATI FOR LATER Released Release
Code TION 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:

__________________ ______________________
Local Budget Officer Local Chief Executive

ARO No.____________
Date of Issue : ______

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Page______of______Pages
INSTRUCTIONS for LBE Form No.1A

ARO for MOOE 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 o 300 Trust Fund

¥ Indicate the source of appropriation which may either be: Annual Budget, Supplemental
Budget or Reenacted Budget

¥ Column 1:Indicate the PPA reference code as identified in the AIP Summary Form

¥ Column 2:Briefly describe the PPA to be implemented

¥ Column 3: Indicate the Account Code for the Object Classification Code based on
the Revised Chart of Accounts for LGUs

¥ Column 4: Indicate the Authorized Appropriation for MOOE

¥ Column 5: Indicate the amount of standby appropriation for MOOE to answer for unforeseen
events and shortfalls in revenue collection.

¥ Column 6: Indicate the Amount Previously Released.

¥ Column 7: Indicate the amount of MOOE to be released comprehensively for the

entire year / released of allotment under FLR portion.

¥ For control purposes, each ARO should be numbered.

SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

LBE Form No. 1B Annual Budget

ARO For FinEX
Supplemental Budget

Reenacted Budget

ALLOTMENT RELEASE ORDER FOR FINANCIAL EXPENSES

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FY_________________

Local Government Unit:_____________________ Fund Code: _________

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

__________________ ______________________
Local Budget Officer Local Chief Executive

ARO No.____________
Date of Issue : ______
Page______of______Pages
INSTRUCTIONS for LBE Form No.1B

ARO for FinEx 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 o 300 Trust Fund

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¥ Indicate the source of appropriation which may either be: Annual Budget, Supplemental
Budget or Reenacted Budget

¥ 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 FinEx

¥ Column 5: Indicate the amount of standby appropriation for FinEx to answer for unforeseen
events and shortfalls in revenue collection.

¥ Column 6: Indicate the Amount Previously Released.

¥ Column 7: Indicate the amount of FinEx to be released comprehensively for the

entire year / released of allotment under FLR portion.

¥ For control purposes, each ARO should be numbered.

SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

LBE Form No. 2

ARO For CapEx Annual Budget

Supplemental Budget Reenacted Budget

ALLOTMENT RELEASE ORDER FOR CAPITAL

EXPENDITURES
FY_________________

Local Government Unit:_____________________ Fund Code: _________

Department/Office: _______________________
Purpose: _________________________________________________________________________
_________________________________________________________________________________
PPA Object Class/ AUTHORIZED Previously This
PPA DESCRIP Account Code APPROPRIATI FOR LATER Released Release
Code TION ON (CapEx) RELEASE Amount
(1) (2) (3) (4) (5) (6) (7)

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TOTAL
AMOUNT IN WORDS
____________________________________________________________________________________
____________________________________________________________________________________

NOTES___________________________________________________________________

The allotments herein released shall be used solely for the purposes indicated
and disbursements thereto shall be made in accordance with existing budgeting,
accounting and auditing rules and regulations. It is the primary responsibility of
the head of the Department/Office or Unit concerned to keep expenditures within
the limits of the amount allotted.

Recommended By: Approved By:

__________________ ______________________
Local Budget Officer Local Chief Executive

ARO No.____________
Date of Issue : ______
Page______of______Pages
INSTRUCTIONS for LBE Form No.2

ARO for CapEx 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 o 300 Trust Fund

¥ Indicate the source of appropriation which may either be: Annual Budget, Supplemental
Budget or Reenacted Budget

¥ Column 1:Indicate the PPA reference code as identified in the AIP Summary Form

¥ Column 2:Briefly describe the PPA to be implemented

¥ Column 3: Indicate the Account Code for the Object Classification Code based on
the Revised Chart of Accounts for LGUs

¥ Column 4: Indicate the Authorized Appropriation for CapEx

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¥ Column 5: Indicate the amount of standby appropriation for CapEx to answer for unforeseen
events and shortfalls in revenue collection.

¥ Column 6: Indicate the Amount Previously Released.

¥ Column 7: Indicate the amount of CapEx to be released comprehensively for the

entire year / released of allotment under FLR portion.

¥ For control purposes, each ARO should be numbered.

SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

LBE Form No. 3

SUMMARY OF FINANCIAL AND PHYSICAL PERFORMANCE TARGETS

LGU : _____________________________
Department/Office: _____________________________
Major Final Output(s): _____________________________

Prior P
Year h
T Pe Accom y
o rf plishm s
t ents
or i R
a (ACTU
m c e
l AL)
an a m
Program/
ce l a
Project/Activity
C In T r
o di a k
s ca r s
t to g
r e
t
s

(1) ( (3) (4) ( (

2 5 6
) ) )

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Prepared by: Approved by:

_________________________ _________________________
Department Head Local Chief Executive

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INSTRUCTIONS For LBE Form No. 3

The Summary of Financial and Physical Performance Targets shall be accomplished as follows:

¥ Indicate the name of the province, city, and municipality implementing the budget.

¥ Indicate the Department/Office concerned.

¥ 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

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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.
5.2 Legal Bases of Budget Accountability
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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:
l 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) ;
l 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) ;
l 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) ;
l 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) ;
l 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;  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
l 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
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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) ;
l 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;
l Maintain and update all general and subsidiary ledgers; and
l 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) ;
l 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) ;
l Together with the members of the LFC, propose corrective actions for negative deviations
(financial and physical) to the LCE through the LFC; and
l 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:
l 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
l Prepare and submit periodic reports to the LFC and LCE in such forms as prescribed under this
Manual.
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;
l Monitor physical and financial performance of major final outputs identified with his department
using performance indicators as basis of evaluating performance; and
l Prepare and submit periodic reports to the LFC and LCE in such forms as prescribed under this

Manual. Local Finance Committee – The LFC shall:

l 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
l 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).

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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

ACTIVITY LGU ROLES CSO ROLES

1. MONITOR OUTPUTS
AND RESULTS OF PPAs

The appropriations recorded in the Invite accredited CSOs to participate Actively participate in the local project
books shall be compared with the in the local project monitoring monitoring activities.
actual collections and activities.
disbursements for the same period. Enhance CSOs own technical capability
Post financial information in three in project monitoring.
Expenditures are tracked and (3) conspicuous places in the
LGU within twenty (20) days Monitor PPA implementation and
monitored vis-à-vis the outputs and
after the end of each quarter. check on the following:
accomplishments.
Invite accredited CSOs in the midyear • standards of service
and year-end assessment of the overall • quality of work
performance of the LGU.
• timeliness of implementation
Invite accredited CSO in the impact
assessment of the programs and • pricing of goods, contracts, and
projects, and the overall services
performance of the LGU. • PPA fund release/ utilization
Make use of available and existing • proper delivery to target
monitoring tools such as the beneficiaries
Citizens Satisfaction Report Card
Provide recommendations based
(from CODE-NGO) and the LGU
on monitoring results.
Fiscal Sustainability Scorecard
(from BLGF). 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:
l provides feedback for PPA implementation adjustments during execution of the budget; 
provides information to the general public on the performance of the LGU; and

l 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;
l monitoring of financial performance shall include actual obligation and disbursements for each
PPA that is being implemented ;
l 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
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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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BUDGET
EXECUTION:

Implementation
of PPA
PLANNING/
PROGRAMMING
&
Budget
Preparation

Figure 10. The Budget Accountability Flow Chart

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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.
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
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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. 3) 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:
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

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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.

l 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 A ctual 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 P250 P300 P300 1%
Services in farmers Trained 0 0 2
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.
l 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 __________

Account Estimated Total Actual Income for Total

Title/ Income Estimated Actual Variance
the Quarter
Description Previous Estimated
Account Income to Income
Quarter Income 1st 2nd 3rd
of Income Code Date to Date Remarks
This Quarter Mont Mont Mont Amount %
h h h

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

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
- Share from National Wealth

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 Bala Obligations Incurred

M nce
of Unobliga
FO T Prev This T Prev This T
Implemen App ted
/ o ious Qua o ious Qua o Rem
ting Unit Contin Curre ro- Allotmen
PA t Qua rter t Qua rter t arks
pria t
P uing nt
a rter a tion rter a
l s l s l

(1) (2) (3) (4) ( (6) (7) ( (9) (10) (11) ( (13) (14)
5 8 1
) ) 2
)

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.

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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.

LBAc Form No. 3

QUARTERLY PHYSICAL REPORT OF OPERATIONS
For the Quarter Ending ___________
Department/Office: __________________

Major Target Output Actual Performance Variance

Final as of
PPA Performance Remark
Outpu ______
Code Indicator 1st 2nd 3rd 4th 1st 2nd 3rd 4th s
t Total Total
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

Prepared by: Certified Correct:

___________________ __________ _______________________________________ ________

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

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submitted directly to the Local Finance Committee on or before the 10th day of the month following the quarter being reported

LBAc No. 4

STATEMENT OF RECEIPTS & EXPENDITURES

For the Fiscal Year Ending_________

Province/City/Municipality__________________________

Amounts Variance
Particulars Remarks
Estimate Actual Amounts %

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

I. Beginning Cash Balance

II. 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
Total Non-Tax Revenue

B. External Sources
1. Internal Revenue Allotment
2. Share from GOCCs (PAGCOR and
PCSO
3. Other Shares from National Tax
Collection
a. Share from Ecozone
b. Share from EVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
4. Inter-Local Transfer
5. Extraordinary
Receipts/Grants/Donation/Aids
Total External Sources

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

Amounts Variance
Particulars 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

Prepared by: Certified Correct:

___________________ __________ ____________________ _________

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.

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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.

LBAc Form No. 5

PHYSICAL AND FINANCIAL PERFORMANCE EVALUATION FORM
As of the ____ Semester Ending ______
Department/Office______________
PAP PAP
Code Description/
PHYSICAL PERFORMANCE FINANCIAL PERFORMANCE
Major Final
Output

Actual
Target Actual % of Allotment Absorptive
Variance Obligations Variance
Output Output Accomplishment Released Capacity
Incurred

(1) (2) (3) (4) (5) = 4- (6) = 4/5 (7) (8) (9) =8-7 (10) = 8/7
3

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.

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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)

T he 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.
FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDG T OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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
2.2 Distribution of Shares
2.3 Use of the Fund
2.4 Fund Release Procedures

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

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3.4 Fund Release Procedures

4.0 Share in the Value-Added Tax

4.1 Legal Bases
4.2 Computation of Shares
4.3 Fund Release Procedures

5.0 Tobacco Excise Taxes

5.1 Legal Bases
5.1 Computation of Shares
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:
l Income tax
l Estate tax and donor’s tax  Value-added tax  Other
percentage taxes  Taxes imposed by special laws,
such as travel tax.
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.

1.2 Distribution of Shares

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%)  Cities -

Twenty-three percent (23%)  Municipalities -
Thirty-four percent (34%)  Barangays - Twenty
percent (20%)

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20
Figure 11. IRA share per LGU level

Provinces

34
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A2
3
Barangays
20 %
23 %

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Cities
23 %

Municipalities 34
%

Illustrative examples showing the shares of provinces, cities and municipalities using the ‘codal
formula’:

l Population - Fifty percent (50%)  Land

Area - Twenty-five percent (25%)
l Equal Share - Twenty-five percent (25%
)

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GOVERNMENT UNITS Figure 12. Computation of IRA based on Indicative Factors

50
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A2
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 5 50 %

Land Area
25 %

Population

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.

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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;
¤ 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 outof-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:
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 ¤ 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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1.4 Fund Release Procedures

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

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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 TaxesBureau 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:
l One percent (1%) of the gross sales or receipts of the preceding calendar year; or

l other taxes, fees and charges, including interests and fines the government agency or government- Forty

percent (40%) of the mining taxes, royalties, forestry, energy resources production, and such
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).

2.2 Distribution of Shares

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:

l 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%.

Figure 13. Distribution of Shares from National

city will
Wealth ( where the natural resources are located in the province )
have a share of 65%, and the barangay, 35%.

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20 Provi

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 5
20 %

Barangay
35 %

Component City
or Municipality

45 %

l Where the natural resources are located in a highly urbanized or independent component city, the
SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENTBUDG T OPERATIONS MANUAL FOR LOCAL

GOVERNMENT UNITS Figure 14. Distribution of Shares from National Wealth

( where the natural resources are located in a highly urbanized or independent component city )

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356
5+A Barangay

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 35 %

City
65 %

on the basis of population (70%) and land area (30%).However, where natural resources are located in two
(2) or more cities, the allocation of shares shall be computed

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)

2.4 Fund Release Procedures

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:
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.

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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.)

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3.2 Computation of Shares

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.

3.4 Fund Release Procedures

The following procedures are applied in releasing the shares of LGUs in the gross income taxes paid by all
businesses and enterprises within the ECOZONES:

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.

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.
4.0 Share in Value Added Tax

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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.

4.2 Computation of Shares

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
Distributed as follows: M
20% share of LGUs (city/municipality) P 0.127
M
80% share of national government P 0.509
M
P 0.636
M

Figure 17. Formula for the Computation of LGUs’ VAT Shares

d by
100% to the city or municipality where the
roducers
business is located
ch or
If VAT is paid by manufacturers, producers with factories,
t/s
project offices, plantations and plants

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If VAT is paid by

70+
manufacturers, producers,
exporters where the
plantation is located at a
place other than the place
where the
30% to the
city or
municipality
where the principal
70% to the city or

3 A
0
the city/
30 % to
municipality where the
factory, project offices,
plant or
plantation is located
office is located

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municipality where 28% to

422
the city/is located

3
0 8+A municip

ality where the principal

office

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ry is located
3 0A
7
+ 42% to the city/
municipality where
the factory is located

70% shall be
is paid by the prorated among the
urers, producers, localities where the
rs and has two factories, project
more factories, 30% to the city/ offices, plants
and plantations municipality where and plantations
the principal office are located
is located

e foregoing formula, the BIR prepares a certification of the computed LGU share from VAT tax
ollections and submits to DBM.
the plantation is located

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4.3 Fund Release Procedures

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.

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.

5.0 Tobacco Excise Taxes

5.1 Legal Bases

1. R.A. No. 7171 dated January 9, 1992, entitled, “An Act to Promote the Development of Farmers
in the Virginia Tobacco Producing Provinces”.

2. 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”
5.2 Computation of Shares of LGUs
1. Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171

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a. 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
b. 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.

2. Burley and Native Tobacco Excise Taxes Pursuant to RA No. 8240, as Amended
a. 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
b. 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
l Cooperative projects that will enhance better quality of products, increase productivity, guarantee
the market and as a whole increase farmers’ income;
l Livelihood projects particularly the development of alternative farming system to enhance
farmers’ income;
l 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
l 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;
l Programs that will provide financial support for tobacco farmers who are displaced or who cease
to produce tobacco;
l Cooperative programs to assist tobacco farmers in planting alternative crops or implementing
other livelihood projects;
l Livelihood programs and projects that will promote, enhance, and develop the tourism potential
of tobacco-growing provinces;
l Infrastructure projects such as farm to market roads, schools, hospitals, and rural health facilities;
and
l Agro-industrial projects that will enable tobacco farmers to be involved in the management and
subsequent ownership of projects, such as post-harvest and secondary processing like cigarette
manufacturing and by-product utilization.

5.4 Fund Release Procedures

Figure 19. Fund Release Procedures of LGU Shares from Tobacco Excise Tax

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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.

The BTr, in turn, downloads the fund through the issuance of

Authority to Debit Account to the AGSBs, which credits the
shares of the beneficiary LGUs to their respective accounts.

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PART IV. FREQUENTLY ASKED QUESTIONS

?
? ?
?

Budget Preparation

1. 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. 13 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.14
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.”15

2. 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.

3. 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.
4. Is an Appropriation Ordinance necessary to authorize utilization of loan proceeds?

13 Laraño vs. Commission on Audit

14 City of General Santos vs. Commission on Audit, G.R. 199439, April 22, 2014
15 Conte vs. Commission on Audit, G.R. No. 116422, November 4, 1996
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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.

5. 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.

6. How is the CNA Incentive Bonus classified in the budget?

The CNA Incentive Bonus shall be taken up as PS Expenditure.

Budget Authorization
1. 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 said authorization may be included as a general provision/section in the ordinance authorizing the
annual appropriations.

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2. 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.

3. 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.

4. 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:
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 For augmentation of existing For re-appropriation – may be to a
savings? 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?
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For provinces or highly urbanized No Yes

cities, will the ordinance be
subject to review by DBM?
5. 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.

6. 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.

7. 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 reduction shall be made in the total appropriation of the department, office or
agency concerned in the total of the General Appropriations Bill.”
8. 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 (1 st) 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).

9. 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?
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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.”

10. 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.

11. 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).
12. 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.

13. 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.”
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However, if the Presiding Officer refuses to sign, such refusal will not affect the validity of the
Appropriation Ordinance duly passed by the Sanggunian since the Presiding Officer has no veto power.
In such case, the Secretary to the Sanggunian may certify to the fact of the Presiding Officer‘s refusal to
sign.

14. 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.

15. 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.
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.

16. 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.

17. 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.

18. 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?
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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.

19. 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:
l No creation of positions  No new
programs, projects and activities
l 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
20. 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.

21. Section 53 of the LGC provides that, “A majority of all the members of the sanggunian who have
been elected and qualified shall constitute a quorum to transact official business.”
a. What comprises a “quorum,” and “majority” in the Sanggunian?
b. Is the Presiding Officer included in the determination of the entire membership of the
Sanggunian for purposes of computing the quorum? Can the Presiding Officer vote?
c. 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.16
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.17
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
16 Javellana v. Tayo as cited in Zamora vs. Caballero, G.R. 147767, January 14, 2004
17 Perez v. Dela Cruz as cited in Zamora vs. Caballero
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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.18
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 the
qualified majority of the sanggunian. In this case, the approval is to be voted not
just by the majority of those present in a session there being a quorum but by the
majority of all the members of the sanggunian duly elected and qualified regardless of
whether all of them were present or not in a particular session.19
22. 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
1. 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.

2. 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.

3. 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.

18 Zamora vs. Caballero

19 La Carlota City vs. Rojo, G.R. 181367, April 24, 2012
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4. 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.

5. 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.
6. 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.

7. 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
1. 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
nonrelease 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 policybased 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.

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2. 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 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.20

3. 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.21

4. Who is the proper authority for the hiring of casual and job order employees in the Office of the
ViceMayor/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/ViceGovernor is limited to those employees of the local Sanggunian, as well as those of the
Office of the ViceMayor/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

20 Quisumbing vs. Garcia, G.R. No. 175527, December 8, 2008

21 Atienza vs. Villarosa, G.R. 161081, May 10, 2005 10
Atienza vs. Villarosa, G.R. 161081, May 10,
2005
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Panlalawigan.10
items of Appropriations included, By Attribution, in the
General Fund Annual Budget
1. What are the items of appropriations that shall be included, by attribution, in the General Fund
Annual Budget? The following items of appropriations shall be included, by attribution, in the General
Fund Annual Budget:
a. Gender and Development (GAD) programs, projects and 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;
b. 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);
c. 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;
d. 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);
e. 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.
f. 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.

Confidential Expenses
1. 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.

2. 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.
3. What are the legal bases for the allocation and use of funds for confidential expenses?
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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.”

4. What are the general guidelines in the allocation and use of public funds for confidential expenses?
The guidelines for the allocation and use of public funds for confidential purposes are prescribed under
COA-DBM-DILG-GCG-DND JC No. 2015-01. The following provisions thereof may be emphasized:
a. The allocation for peace and order concerns may be provided in the annual budgets of LGUs
provided that such is a priority concern. It is provided further that the specific amount for Peace and
Order Program (POP) is included in their Peace and Order and Public Safety Plan and that there is a
specific appropriation for POP in their annual Budget. The computation of allowable CF of an LGU
shall be based on the budget of the LGU’s POP only.
b. All allocations for CF shall be supported with a Physical and Financial Plan indicating the proposed
amount allocated for each program, activity and project, where disbursements pertaining to CE shall
be based.
c. The release and utilization of the total CF shall be covered by a resolution duly approved by two-
thirds (2 /3) of the total membership of the Local Peace and Order Council.
d. In the event that additional CF in excess of the limitation is extremely necessary, additional
appropriation supported with duly authorized supplemental budget shall be approved by the
Secretary of the DILG.
e. CF shall be used only for the following Confidential Expenses:
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
f. 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  Construction or acquisition of
buildings and housing structures
g. Conduct of confidential activities shall, as far as practicable, be done with proper collaboration with
any of the following law enforcement agencies: (a) the Philippine National Police, (b) the Armed
Forces of the Philippines, (c) the Philippine Drug Enforcement Agency, or (d) other agencies with
lawenforcement functions. Such collaboration, if undertaken, must be specified in the
accomplishment report of the concerned agency.
h. Disbursement from CF shall be supported with documentary evidence of payment, among others,
which shall be submitted to the Intelligence and Confidential Fund Audit Unit in a sealed envelope
signed by the Special Disbursing O.
i. Disbursements from the CF shall be supported by Certification of the Accountable Officer of the CF
signed under oath.

5. What are Peace and Order Programs (POP)?

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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:
l Crime prevention and law enforcement activities;
l Aid and/or capability development for personnel of law enforcement agencies, and volunteers/
partners; and
l Programs for anti-illegal drug, illegal gambling, counter-insurgency and/or counter terrorism,
illegal logging, illegal mining, illegal fishing, smuggling and human trafficking.

6. What are the procedural guidelines in the release, use and augmentation of Confidential Fund?
COA-DBM-DILG-GCG-DND JC No. 2015-01 likewise provides for the following procedural
guidelines:
a. LGUs with peace and order concerns shall allocate in their respective Annual Appropriations
Ordinance funds for POP, as part of the Peace and Order and Public Safety Plan. The total amount of
CF shall not exceed thirty (30%) of the total annual amount allocated for the LGU’s POP.
b. The release and use of CF shall be covered by a Resolution duly approved by two-thirds (2/3) of the
total membership of the Local Peace and Order Council.
c. LGUs shall secure Certification from the concerned PNP Chief in their locality relative to the peace
and order situation highlighting in concrete details the circumstances which require the urgency in
allocating CF.
d. Additional CF shall be covered with a supplemental budget authorized by the Sanggunian concerned
and/or reviewed by the DBM Secretary or his authorized representative as the case may be, the
source of which shall not come from the 20% Development Fund of the LGU.
e. Request for additional CF in excess of the ceiling provided in item 5.1.3.1 of the JC shall be filed
with the concerned DILG Field Officer justifying the need therefor supported with the following
documentary requirements:
l Duly approved Three-Year Peace and Order and Public Safety Plan
l Annual and Supplemental Appropriations Ordinance indicating the appropriations for CF
l Certification from the Budget Officer as to the availability of appropriations
l 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
l Physical and Financial Plans for both the original allocation for CF and the subject request 
Certification of Full Disclosure Policy compliance
f. Upon review of the documents and field-verification of the circumstances as to the need to allocate
additional CF, the DILG Regional Office shall forward the request within five (5) days to the
Director of the Bureau of Local Government Supervision (BLGS) for further evaluation. The
Director of the BLGS shall submit his or her recommendation to the Secretary of the DILG, who
shall approve or disapprove the request.
Special Education Fund
1. 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

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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.

2. 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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DECS-DBM-DILG Joint Circular (JC) Prioritization of Expenses Charged against the SEF
No. 01s. 1998
April 14, 1998 1. Operation and maintenance of public schools,
including organization of extension, non-formal,
Prescribing the Rules and Regulations
on the Utilization of the Special remedial and summer classes, as well as payment
Education Funds (SEF) by the Local of existing allowances of teachers granted by LGUs
School Boards for the Operation and chargeable against the SEF as of 31 December
Maintenance of Elementary and 1997, provided that any additional allowances that
Secondary Public may be granted to teachers by LGUs shall be
Schools charged to the general fund of LGUs, subject to
DECS-DBM-DILG JC No. 01-A existing budgeting rules and regulations;
March 14, 2000 2. Construction and repair of school buildings,
facilities and equipment, including the acquisition,
Supplemental Provisions to DECS, DBM titling and improvement of school sites;
and DILG JC No. 1, s. 1998 dated 14
April 1998
3. Educational research;
4. Acquisition/procurement of books, instructional
DECS-DBM-DILG JC No. 01-B materials, periodicals and equipment, including IT
June 25, 2001 resources;
Further Clarifying Certain Provisions
5. Expenses for school sports activities of the national,
regional, division, district, municipal and barangay
of DECS, DBM and DILG JC Nos. 1, s.
levels, including DepEd-related activities including
1998 and 01-A, s. 2000 dated April 14,
co-curricular activities.
1998 and March 14, 2000, respectively
6. Establishment of new classes as extensions of
existing 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;
7. Payment of compensation of those teaching
personnel who will be hired temporarily in
instances where there are no teaching positions
available in DedEd; and
8. 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-
DBMDILG JC No. 01-A.

3. 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).

4. What is the Budget Process for the SEF?

a. 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.
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,
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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).

b. 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).

c. 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.

d. 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).

SEF Budget Preparation Form No. 1

INCOME AND EXPENDITURE ESTIMATES FOR FY _______

Provincial/City/Municipal School Board of ________________
Province/City/Municipality (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

Rank Program/Activity/Project* Maintenance Total

Personal Capital
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and Other
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) SEF Budget
Authorization Form No. 01

Provincial/City/Municipality of ____________________ Local School Board

of___________________________

Province/City/Municipality

____________ 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

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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 _______:

Expenditure Program for Budget Year

Maintenance and
Personal Capital
Rank Program/Activity/Project* Other Operating Total
Services Expenses Outlays

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
________________________ ____________
________________________ ____________
________________________ ____________

Maintenance and Other Operating Expenses

________________________ ____________
________________________ ____________
________________________ ____________

Capital Outlays
________________________ ____________
________________________ ____________
________________________ ____________

Financial Expenses
________________________ ____________
________________________ ____________
________________________ ____________

Sub-Total ___________
Balance P
============
Prepared by:

______________________
Local Accountant

Approved by:
______________________
LCE, Chairman, LSB

Local Disaster Risk Reduction and Management Fund

1. 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
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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.

2. 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.

3. 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: a. Not less than 5% of the estimated revenues from regular sources of the LGUs;
b. The unexpended balance of the LDRRMF in the preceding years within the 5-year validity period of
the Special Trust Fund;
c. Funds transferred from the NDRRMF upon approval of the President; and
d. Funds received from other LGUs and other sources.

4. 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.

5. 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).

6. Who may declare and lift a state of calamity?

Pursuant to Section 16 of RA No. 10121, the National Disaster Risk Reduction and Management
Council (NDRRMC) as the National Council shall recommend to the President of the Philippines the
declaration of a cluster of barangays, municipalities, cities, provinces and regions under a state of
calamity, and the lifting thereof based on the criteria set by the National Council.
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

1. Are barangays created by LGUs after the effectivity of RA No. 7160 entitled to IRA shares?

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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).

2. 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

1. 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

1. 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.

2. 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.
The allocation of funds for the implementation of a GAD Plan is a statutory requirement that must be
complied with by provinces, cities, municipalities and barangays.
The Philippine Plan for Gender-Responsive Development (PPGD), 1995-2025, which was adopted
through E.O. No. 273, specifies the services that must be implemented for women in relation to those
stipulated in RA No. 7160.
DBM-NEDA-NCRFW JC No. 2004-1 (superseding DBM-NEDA-NCRFW JC No. 2001-01) provides
the guidelines for the preparation of annual GAD Plan and Budget and Accomplishment Report to
implement the Section on programs/projects related to GAD as provided in the annual GAA.
For a more comprehensive discussion on GAD, refer to the Primer on Gender Mainstreaming and
Institutionalization in the Budgeting Process, August 2002, issued jointly by the DBM and NCRFW
through the support of the Canadian International Development Agency.

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PCW-DILG-DBM-NEDA JMC No. 2013-1 prescribes the policies and procedures in mainstreaming
gender perspective in local planning, programming and budgeting; local legislation; project
development, implementation, monitoring and evaluation.
PCW-DILG-DBM-NEDA JMC No. 2016-01 dated January 12, 2016 provides the guidelines for the
preparation of GAD Plan and Budget; and Accomplishment Reports.

3. 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.

4. 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.

5. 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;
• Maintenance and Other Operating Expenses; and
• Capital Outlays.
The GAD PPAs may be classified into:
a. Organization-focused, where efforts are geared to respond to gender issues that affect the welfare
and performance of women and men employees of the LGU; and
b. Client-focused, where efforts address gender issues that affect the LGU’s clients and/or constituents.

6. 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,
highlyurbanized 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

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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)

1. 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

1. 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:
a. 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.
b. Authorized Allowances/Benefits
• Personnel Economic Relief Allowance (PERA);
• 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.

2. 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:
(a) 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
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GOVERNMENT UNITS

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. – x
x x

(b) 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.”

3. What are the guidelines on the PS Limitation?

Local Budget Circular (LBC) No. 98 dated October 14, l The PS Limitation/Cap is the amount
2011 was issued to provide the guidelines on the equivalent to 45% of the total income from
regular sources earned in the next
preparation and review of the PS component of the annual preceding fiscal year for 1st to 3rd class
and supplemental budgets of LGUs, in relation to the provinces/cities/ municipalities, or 55% for
waiver on the PS Limitation under Sections 325 (a) and lower class LGUs, including barangays.
331 (b) of RA No. 7160. l The Total PS cost refers to:
Step 1: Compare the PS Limitation and the Total ¤ Salaries of existing regular personnel;
Annual PS Budget, net of waived items.
¤ Statutory and contractual obligations
Step 2: Analyze the results. (ECIP, HIC, Pag-IBIG, RLIP, RG and
TL Benefits); and
a. If the Total Annual PS Budget, net of
waived items, is less than the PS Limitation, ¤ Authorized allowances/benefits.
then the LGU may still provide for additional PS costs to the extent of the difference
between the said amounts.
b. 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 ( P 5,000,000)

*Total Annual PS Budget P 35,000,000

Less: Waived Items 2,500,000
Net Annual PS Budget P 32,500,000

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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

1. 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.
2. 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.

3. 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 OVERSIGHT ACTIVITIESAC
AGENCIES NG TIVITIES
OVERSIGHT
AGENCIES NG OVERSIGHT PROVINCEPRO CITY/
UIDELINES, AGENCIESNG VINCE MUNICIPALITYCITY/
YEAR/MONTHYEAR/ OVERSIGHT MUNICIPALITY
GUG MANUALS,
MONTH IDELINES, AGENCIES
MANUALS,
TOOLS,
SYSTEMSTOOLS,
SYSTEMS
Year 1 – JulyYear 1 – 1.1. RPS Sourcebook •• ((Election Election •• ((Election Election
July 2.2. (DILG)RPS Year) Year) Year) Year)
Sourcebook (DILG) Reconstitution of Reconstitution
CDP CDP Guide Local Reconstitution Reconstitution of of
Guide and and of Local Planning Local Local Planning
Illustrative Guide
TeamPlanning TeamPlanning Team
(DILG)Illustrative
Team
Guide (DILG)
1.1. DILG DILG Policy •• Setting Setting of of •• Preparation of
Policy Guidelines planning planning workplan
Guidelines on on guidelines for Preparation of
Updating Updating updating guidelines workplan for
of of Local Local for updating updating/preparation
PlansPlans planning database for
planning database updating/preparation
of CDPof CDP
1.1. PLPEM PLPEM and •• Assessment
and other other Assessment of of
reference reference implementation
implementation of of
documents current
documents PDPFPcurrent
((NEDANEDA)) PDPFP
1.1. PLPEM PLPEM and •• BLGF BLGF •• Updating Updating
and other other of of planning
reference reference generates/generates/ planning
2.2. documents updates updates
databasedatabase
3.3. documents financial financial
((NEDANEDA)) indicators
e-SRE (BLGF)e- indicators and and
SRE (BLGF) transmits to
LGFPMS Provinces
transmits to
(BLGF)LGFPMS
Provinces
(BLGF) through the DILGthrough
the DILG
1.1. RPS Sourcebook •• RR aa PP II DD •• Updating of
2.2. (DILG)RPS SS // LL DD II S S RaPIDS/LDISUpdati
Sourcebook (DILG) financial financial •• ng of RaPIDS/LDIS
3.3. CDP CDP Guide
indicators
4.4. Guide and and Updating Updating of
Illustrative Guide indicators from
of Ecological
(DILG)Illustrative from BLGF BLGF
Ecological
Guide (DILG) made made
ProfileProfile
LGPMS available to cities
(DILG)LGPMS and available to
(DILG) cities and
RaPIDS
municipalities by
(DILG)RaPIDS
DILGmunicipalities
(DILG)
by DILG
Year 1 – August to 1.1. PLPEM PLPEM and •• Formulation
NovemberYear 1 – and other other Formulation of of
August to November reference reference PDPFP PDPFP

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

documents ((Analysis Analysis

documents of of the the
((NEDANEDA)) planning planning
environment;
environment;
Formulation
Formulation of of
goals, goals,
strategies
strategies and and
objectives;
objectives;
Identification of
priority Identification
of priority programs,
projects and
programs, projects
and
activities)activities)
1.1. RPS Sourcebook •• Formulation
2.2. (DILG)RPS Formulation of of
Sourcebook (DILG) goals, goals,
3.3. CDP CDP Guide strategies and
Guide and and objectives strategies
Illustrative Guide and objectives
(DILG)Illustrative based on the review
Guide (DILG) and based on the
RaPIDS Guide review and analysis
•• in order to make
(DILG)RaPIDS
analysis in order to
Guide (DILG) make them more
responsive to them
more responsive to
the current situation
and the current
situation and to
make them
consistent to make
them consistent with
higher level
planswith higher
level plans

Identification
Identification of of
priority priority
PPAs PPAs to to
achieve achieve the
the goals/objectives
goals/objectives for
for the the next next
six six years years
(( structured list of
PPAsstructured list
of PPAs ))
Year 1 – SeptemberYear 1.1. DILG DILG •• ((Election Election •• ((Election Election
1 – September Guidelines Year) Year) Year) Year)
Guidelines onon Reconstitution of Reconstitution
Reconstitution Local Reconstitution Reconstitution of of
Reconstitution of of Local of Local Local Local
Local Special Special Special Special
Special Bodies Bodies Bodies Bodies
BodiesSpecial ((Local Local ((Local Local
Bodies Development Development
2.2. CSO Development Development
HandbookCSO Council, Council, Council, Council,
Peace Peace and Peace Peace and
Handbook
and Order Order and Order Order
Council, Council, Council, Council,
Local Local Health Local Local Health
Health Board and Health Board and
Local School Board Local School Board

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 SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

and Local School and Local School

Board)Board) Board)Board)
NG OVERSIGHT ACTIVITIES
AGENCIES
YEAR/MONTH GUIDELINES, MANUALS, NG OVERSIGHT PROVINCE CITY/MUNICIPALITY
TOOLS, SYSTEMS AGENCIES
Year 1 – November- DILG Policy Guidelines • Convening of PDC • Mayor to present
December on Updating of Local to present draft Structured List of
Plans PDPFPs and PPAs to PDC
Structured
List of
PPAs of
Cities and

Municipalities for
the purpose of
harmonization
PLPEM (NEDA) • Approval of PDPFP

RMM (BLGF) • BLGF to • Medium-Term • Medium-Term

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

BOM (DBM) • Medium-Term • Medium-Term

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

Year 1 December – Year PLPEM (NEDA) • Formulation of

2 February PDIP
Year 2 – January 1. CDP Illustrative • Finalization of
Guide LDIP:
2. RMM (BLGF) Finalization of Local
Resource
Mobilization
Program and
Medium
Term Financing Plan
• Drafting of
Implementati
on
Instruments:
Legislative
Requirements,
CapDev Agenda and
Monitoring and
Evaluation Strategy

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

Year 2 – February CDP Illustrative Guide • Finalization of I m p l

(DILG) ementation
Instruments
Year 2 – March CDP Illustrative Guide • Conduct • Approval of CDP to
(DILG) review of include the I m p l e
approved mentationInst
ruments
CDP (LDIP, Legislative
and Requirements,
provide feedback to CapDev Program
component LGUs and M&E
Strategy)
• Submission of CDP
to the Province for
review
PLPEM and other • Approval of PDIP
reference documents
(NEDA)
NG OVERSIGHT ACTIVITIES
AGENCIES
YEAR/MONTH GU IDELINES, NG OVERSIGHT PROVINCE CITY/MUNICIPALITY
MANUALS, AGENCIES
TOOLS, SYSTEMS
Year 2 – May* 1. RPS Sourcebook • Preparation of AIP • Preparation of AIP by
2. (DILG) by the Local the Local Finance
CDP Guide and Finance Committee
3. Illustrative Guide Committee
4. (DILG)
5. RMM (BLGF)
BOM (DBM)
PLPEM (NEDA)
Year 2 – June 7* 1. CDP Guide and • Approval of AIP by • Approval of AIP by
Illustrative Guide the Local the Local
2. (DILG) Sanggunian Sanggunian
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 • Issuance of Budget
Call Call
Year 2 – June 16* BOM (DBM) • Conduct of • Conduct of
Budget 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
• Submission of Executive
Executive Budget Budget to Local
to Local Sanggunian for
Sanggunian for approval
approval (not later (not later than
than October
October 16) 16)
Year 2 – October 17 BOM (DBM) • Enactment of an A p • Enactment of an
propriation Appropriation
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 SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

onwards* Ordinance Ordinance

authorizing the authorizing the
Annual Budget Annual Budget
Year 2 – Within three (3) BOM (DBM) • Submission of • Submission of
days after approval Appropriatio Appropriation
of the Ordinance n Ordinance to
authorizing the Ordinance to DBM Province for review
Annual or for review
Supplemental
Appropriations*

Year 2 – Within ninety BOM (DBM) • Review of • Review of • Review of

(90) days from the Appropriatio Appropriation Appropriation
receipt of the n Ordinance of Ordinance of Ordinance of
submitted Provinces, Component Cities
Annual or HUCs/ICCs and Barangays
and
Supplemental Municipality of Municipalities
Budgets for review Pateros
of
Provinces, Cities and
Municipalities*
Year 3 – January- BOM (DBM) • Budget Execution • Budget Execution
December*
Budget Budget
• •
Accountability Accountability
Year 3 – January- PLPEM (NEDA) • Monitoring of
December* implementation of
the PDPFP and
PDIP
1. RPS Sourcebook • Monitoring of
(DILG) implementation of
2. CDP Guide the CDP
and
Illustrative Guide
(DILG)
NG OVERSIGHT ACTIVITIES
AGENCIES
YEAR/MONTH GUIDELINES, MANUALS, NG OVERSIGHT PROVINCE CITY/MUNICIPALITY
TOOLS, SYSTEMS AGENCIES
April* PLPEM (NEDA) • Adjustment of PDIP

CD Guide and • Adjustment of LDIP

P Illustrative 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
2. (DILG)
BOM (DBM)
* - recurring every year

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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 MFO 1: Percentage of programs/ EXECUTIVE

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

LOCAL l Enact ordinances, approve MFO 1: Number of ordinances LEGISLATIVE

SANGGUNIAN resolutions and LEGISLATIVE PROGRAM
and/or resolutions
(including VICE appropriate funds for the SERVICES enacted
LOCAL CHIEF welfare of the LGU and its
EXECUTIVE) inhabitants Percentage of enacted
ordinances and/or
l Approve ordinances and resolutions rated at least
pass resolutions necessary satisfactory by
for an efficient and stakeholders
effective local government
Percentage of a p p r o p
l Approve Annual and r i a t i o n ordinances
Supplemental Budgets of enacted within
the LGU prescribed
deadline
Review action completed
for all submitted LGU
budgets within the
prescribed period rated at
least satisfactory in the
case of Annual Budget

OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS

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LOCAL l Take charge of both the MFO 1: FINANCIAL

ACCOUNTANT accounting and internal ACCOUNTING Percentage of ACCOUNTING
audit services of the LGU expenditures with NO AND REPORTING
SERVICES
adverse COA audit PROGRAM
l Review supporting findings
documents before
preparation of vouchers to Percentage of Bank R e c
determine completeness of o n c i l i a t i o n
requirements completed within 5 days
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: MANAGEMENT

ADMINISTRATOR administration-related Number of management AND
MANAGEMENT AND
plans and strategies upon ADMINISTRATIVE and administrationrelated ADMINISTRATION
approval of the LCE plans and PROGRAM
SERVICES
strategies of PPAs
l Delivery of administrative
support services during Percentage of
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 implemen ted
Percentage of
effectiveness and
efficiency of response
during disaster/
calamities

LOCAL  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/aquacultural
productivity of farmers,
fishermen and local
entrepreneurs

OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

LOCAL MFO 1: Percentage of updated APPRAISAL AND

ASSESSOR l Ensure all laws and records on the valuation ASSESSMENT OF
APPRAISAL AND
policies governing the ASSESSMENT and assessment of real REAL PROPERTY
appraisal and assessment properties PROGRAM
SERVICE
of real properties for
taxation purposes are Percentage of increase in
properly executed tax revenues due to
appraisal and assessment
l Exercise the functions of of real properties
appraisal and assessment
primarily for taxation Percentage of certificates
purposes of all real issued within the
properties in the LGU prescribed period of
concerned issuance

l Issue, upon request of any Percentage of city/

interested party, certified municipal assessors
copies of assessment supervised
records of real property
and all other records
relative to its assessment
l Exercise technical
supervision and visitorial
functions (Provincial
Assessor)

LOCAL BUDGET l Review and consolidate MFO 1: BUDGET

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

OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS

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LOCAL MFO 1: Percentage of ENGINEERING

ENGINEER l Administer, coordinate, ENGINEERING AND infrastructure projects AND
supervise, and control the INFRASTRUCTURE completed according to INFRASTRUCTUR
construction, m a i n t e n MANAGEMENT standards, within project E
a n c e , improvement, and SERVICES budget and schedule MANAGEMENT
repair of roads, bridges, PROGRAM
and other engineering and Percentage of reports,
public works projects of designs, studies and
the LGU concerned other required documents
completed within the
l Provide engineering 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 be MFO 1: Percentage of Property, GENERAL

SERVICES accountable for all FACILITIES Plant and Equipment of SERVICES
OFFICER properties, real or AND SUPPLY the LGU accounted for PROGRAM
personal, and supplies MANAGEMENT in the year-end inventory
owned by the LGU and SERVICES report submitted on time
those granted to it in the to the Commission on
form of donation, Audit
reparation, assistance and
Quantity of supplies
counterpart of joint
purchased, issued and
projects.
balances properly
l Maintain and supervise maintained
janitorial, security, Percentage of public
landscaping and other buildings and other real
related services in all local property properly
government public maintained
buildings and other real
property, whether owned
or leased by the LGU

OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS

LOCAL HEALTH l Formulate and implement MFO 1: Number of policies HEALTH

OFFICER policies, plans, programs HEALTH formulated and SERVICES
and projects to promote IMPROVEMENT implemented PROGRAM
the health of the people in SERVICES
the LGU concerned Strategic local health
plan prepared within
l Information campaign and deadline
render health intelligence
Number of confined/
services
out-patient served
Number of persons
provided with health
services
Number of
barangays
provided with
health

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information services

LOCAL LEGAL l Render his opinion in MFO 1: Percentage of requests LEGAL

OFFICER writing on any question of LEGAL for legal opinion/ r e c o SERVICES
law when requested to do ASSISTANCE m m e n d a t i o n s PROGRAM
so by the LCEs, AND RESEARCH acted upon/responded to
Sanggunian and other SERVICES within 15 days from
department heads receipt of request
l Represent the LGU in all Percentage of cases
civil actions and special represented or acted
proceedings upon

LOCAL l Formulate integrated MFO 1: PLANNING,

PLANNING AND economic, social, physical PLANNING, Percentage of PPAs in MONITORING
DEVELOPMENT and other development MONITORING the duly updated AND
COORDINATOR plans and policies for AND EVALUATION approved LDIP derived EVALUATION
consideration of the local from the duly updated PROGRAM
SERVICES
development council. approved PDPFP/CDP;

l Monitor and evaluate the Percentage of PPAs in

implementation of the the duly approved AIP
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 in
approved development the Appropriation
Ordinance derived from
plan
the duly approved AIP
Percentage of project
proposals prepared
Percentage of projects
implemented and
monitored

OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS

LOCAL SOCIAL MFO 1: Improved response time SOCIAL AND

l Formulate and implement
WELFARE AND WELFARE
social welfare measures, SOCIAL WELFARE to social welfare issues
DEVELOPMENT AND DEVELOPMENT and concerns DEVELOPMENT
plans and strategies
OFFICER SERVICES PROGRAM
l Be in the frontline of
service delivery,
particularly those which
have to do with immediate
relief during and
assistance in the aftermath
of man-made and natural
disasters and calamities

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LOCAL l The treasurer shall take MFO 1: TREASURY

TREASURER charge of the treasury TREASURY Percentage of actual OPERATIONS
office, perform the duties OPERATIONS revenues over estimated PROGRAM
provided for under Book revenues for the current
SERVICES
II of the LGC. year

l Take custody and exercise Percentage increase of

proper management of the collections for the
funds of the LGU current year over last
concerned. year

l Submit to the LCE Percentage of notices

certified statement of issued to delinquent
taxpayers within the
income and expenditures
prescribed period.
for budget 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

OFFICE MANDATE/FUNCTION MFOs PIs PROGRAMS

LOCAL MFO 1: Percentage of required VETERINARY

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

l Enforce all laws and

regulations for the
prevention of cruelty to
animals.
l Take the necessary
measures to eradicate,
prevent or cure all forms
of animal diseases

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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
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

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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.
Annex D. Coding Structure by Type of LGU and Office
11 ProvincePr
ovince
11 0101 Mandatory OfficesMandatory Offices
11 0101 00100 Office of the GovernorOffice of the Governor
1
11 0101 00200 Office of the ViceOffice of the Vice-Governor-Governor
2
11 0101 00300 Office of the Members of the Sangguniang PanlaOffice of the
3 Members of the Sangguniang Panlalawiganwigan
11 0101 00400 Office of the Secretary to the Sangguniang PanlaOffice of the
4 Secretary to the Sangguniang Panlalawiganwigan
11 0101 00500 Office Office of the Provincial Treasurerof the Provincial
5 Treasurer
11 0101 00600 Office of the Provincial AssessorOffice of the Provincial
6 Assessor
11 0101 00700 Office of the Provincial AccountantOffice of the Provincial
7 Accountant
11 0101 00800 Office of the Provincial EngineerOffice of the Provincial
8 Engineer
11 0101 00900 Office of the Provincial Budget OfficerOffice of the Provincial
9 Budget Officer
11 0101 01001 Office of the Provincial Planning Office of the Provincial
0 Planning and Development Coordinatorand Development
Coordinator
11 0101 01101 Office of the Provincial Legal OfficerOffice of the Provincial
1 Legal Officer
11 0101 01201 Office of the Provincial AdministratorOffice of the Provincial
2 Administrator
11 0101 01301 Office of the Provincial Health OfficerOffice of the Provincial
3 Health Officer
11 0101 01401 Office of the Provincial Social Welfare and Development
4 OfficerOffice of the Provincial Social Welfare and
Development Officer
11 0101 01501 Office of the Provincial General Services OfficerOffice of the
5 Provincial General Services Officer
11 0101 01601 Office of the Provincial AgriculturistOffice of the Provincial
6 Agriculturist
11 0101 01701 Office of the Provincial VeterinarianOffice of the Provincial
7 Veterinarian
11 0202 Optional Optiona Ofl Officesfices
11 0202 00100 Office of the Provincial Population OfficerOffice of the
1 Provincial Population Officer

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11 0202 00200 Office of the Office of the Provincial Natural Resources and
2 Environment Provincial Natural Resources and Environment
OfficerOfficer
11 0202 00300 Office of the Provincial Cooperative OfficerOffice of the
3 Provincial Cooperative Officer
11 0202 00400 Office of the Provincial ArchitectOffice of the Provincial
4 Architect
11 0202 00500 Office of the Provincial Information OfficerOffice of the
5 Provincial Information Officer
11 0303 OthersOthers

22 CitiesCities
22 0101 MandatorMandat ory y OfficesOffices
22 0101 00100 Office of the City MayorOffice of the City Mayor
1
22 0101 00200 Office of the City ViceOffice of the City Vice-Mayor-Mayor
2
22 0101 00300 Office of the Sangguniang Panlungsod MembersOffice of the
3 Sangguniang Panlungsod Members
22 0101 00400 Office of the Secretary to the Sangguniang PanlungsodOffice
4 of the Secretary to the Sangguniang Panlungsod
22 0101 00500 Office of the City TreasurerOffice of the City Treasurer
5
22 0101 00600 Office of the City AssessorOffice of the City Assessor
6
22 0101 00700 Office of the City AccountantOffice of the City Accountant
7
22 0101 00800 Office of the City Budget OfficerOffice of the City Budget
8 Officer
22 0101 00900 Office of the City Planning and Development
9 CoordinatorOffice of the City Planning and Development
Coordinator
22 0101 01001 Office of the City EngineerOffice of the City Engineer
0
22 0101 01101 Office of the City HealthOffice of the City Health Officer
1 Officer
22 0101 01201 Office of the City CivOffice of the City Civil Registrarl
2 Registrar

2 01 013 Office of the City Administrator

2 01 014 Office of the City Legal Officer

2 01 015 Office of the City Veterinarian

2 01 016 Office of the City Social Welfare and Development Officer

2 01 017 Office of the City General Services Officer

2 02 Optional Offices

2 02 001 Office of the City Architect

2 02 002 Office of the City Information Officer

2 02 003 Office of the City Agriculturist

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2 02 004 Office of the City Population Officer

2 02 005 Office of the City Environment and Natural Resources Officer

2 02 006 Office of the City Cooperatives Officer

2 03 Others

3 Municipalitie
s

3 01 Mandator y 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

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Annex E. AiP Summary Form

CY ____ Annual Investment Program (AIP) CY _ A nual Investment Program

(AIP)
As of _______________________As of _______________________
P
r ovince/City/Municipality/Barangay: _______________________________________Province/City/Municipality/Barangay: _______________________________________

e I Schedule of e Amount Amount Amount of Climate Change

Schedule of d (in thousand pesos(in thousand pesos) ) PPAs Amount of Climate
Implementation F Change PPAs
(in thousand pesos (in thousand pesos)
Implementation ts )

n C E n l Maintenan e la C g
g o g P ce y y
n e S Maintena
Climate
te S ) nc and C Climate Climate
mplementi t xpect Other Climate
Change
ng S edEx undin and Change Change
Implementi pect g Other Change
Adaptati
Office/ Outp Fundi Operating on Mitigatio
AIP C
Office/ uts Sourc Operating Adaptati n
Reference ompleti Personal apital Total Typology
Departme Outp e o n Mitigatio
AIP onCom Persona OutlayCa Total CC
nt tart u Sourc n
Referenc pleti ervices pital Out Typolo
Departme Date S Expenses
Code Code Program/Project/Activity Date (PS)Serv (CO) Code
n art Da Expenses (12)(12)
Program/Project/Ac ivity Date ices ( (CO) (11) (13)(13) Code
Description Description (MOOE(
(11)
MOOE) )
(6) (7)
(1)(1) (3)(3) (4)(4) (5)(5) (6) (7) (8)(8) (9)(9) (10)(10) (14)(14)
8+9+1
(2)(2) 08 9+1 0

General
General
Services
Services
(1000)(1000)

Social Social
Services
Services
(3000)(3000)

Economic
Economic
Services
Services
(8000)(8000)

Other Other
Services
Services
(9000)(9000)

Prepared by:Prepared by: Attested by:Attested by:

Planning Officer Planning Officer Budget Officer Budget Officer Local Chief Executive Local Chief Executive

Annex E-1
Local Government Unit: ____________________________________
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GAD Plan and Budget

Budget Year: _______________

Annex E-2
Local Government Unit: _________________________
LOCAL DISASTERRISK REDUCTION AND MANAGEMENT PLAN Budget Year:
_______________

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BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

Annex E-3
Local Government Unit: _________________________
LOCAL CLIMATE CHANGE ACTION PLAN
Budget Year: _______________

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AIP Implementing Estimated

Target Output Implementation
Reference Cost
Sector P/A/P
Office/Department AIP AB AIP AB
Schedule
Code
(1) (2) (3) (4) (5) (6) (7) (8) (9)

TOTAL P

Prepared by: Approved:

Planning and
Development
Coordinator Local Budget Officer Local Chief Executive
INSTRUCTIONS: This form is an aggrupation of the programs, activitiesand
projects identified/mainstreamed for the Local Climate Change Action
in the AIP:
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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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

Annex E-4
Local Government Unit: _________________________
LIST OF PPAS FOR THE LOCAL COUNCIL FOR THE PROTECTION OF CHILDREN

Budget Year: _______________

AIP Estimated Implementatio

Implementing Target Output
Reference Cost n
Sector P/A/P
AIP AB AIP AB
Office/Department
Code Schedule
(1) (2) (3) (4) (5) (6) (7) (8) (9)

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TOTAL

Prepared by: Approved:

Planning and
Development
Coordinator Local Budget Officer Local Chief Executive
INSTRUCTIONS: This form is an aggrupation of the programs, activitiesand
projects
identified/mainstreamed for the Implementation of Programs for the
Local Council for the Protection of Children 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
Annex E-5
Local Government Unit: _________________________
LIST OF PPAS FOR SENIOR CITIZENS AND PERSONS WITH DISABILITIES
Budget Year: _______________

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Annex E-6

Local Government Unit: _________________________

PEACE AND ORDER PLAN
Budget Year: _______________

BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

Annex E-7

Local Government Unit: _________________________

LIST OF PPAS TO COMBAT ACQUIRED IMMUNE DEFICIENCY SYNDROME
Budget Year: _______________

AIP Implementing Estimated

Target Output Implementation
Reference Cost
Sector P/A/P
Office/Department AIP AB AIP AB
Schedule
Code
(1) (2) (3) (4) (5) (6) (7) (8) (9)

TOTAL P

Prepared by: Approved:

Planning and
Development
Coordinator Local Budget Officer Local Chief Executive

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INSTRUCTIONS: This form is an aggrupation of the programs, activitiesand

projects identified/mainstreamed for the Acquired Immune Deficiency
Syndrome 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

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.

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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.
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
Government for a specific purpose or 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.

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SUPPORT TO THE LGUs FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCE MANAGEMENT

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.
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.
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

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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
V-A Director Julian Ll. Pacificador, Jr.
Assistant Director Ruby P. Muro
Nympha R. Manalastas
Rujen A. Polo
Ella Lorraine Obra

V-B Director Renato M. De Vera

Assistant Director Rodrigo M. Marquez
Teresita S. Villaroman
Alexander P. Calma
OV Director Maria Angelita C. Cells
Assistant Director Bella V. Regaspi
Jesus James M. Javier
Joanna M. Rasco
O VI Director Alfonso B. Bedonia, Jr.
Assistant Director Mae L. Chua
Cecile C. Lacson
Mariel Dave M. Gallego
Lynnie S. Baban

VII Director Carmela S. Fernan

Assistant Director Ricky L. Sanchez
Jose A. Salvador, Jr.
Joanna Stephanie P. Rodriguez
NIR Assistant Director Jesusa Dimpna O.
Lejos
Gelimae S. Itulid
Haide M. Senajon
Ruben R. Duenas
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VIII Director Imelda C. Laceras

Rheand Cornell M. Palomino
Evelyn R. Japzon
Mary Kim U. Homeres
O IX Director Annabelle C. Echavez
Mark Louie C. Martin
Eddie Albert A. Cruz
OX Director Annabelle M. Atillo
Margarita S. Villamala
O XI Director Gary R. Martel
Assistant Director Maria Fe D. Jagna
Carolina C. Armada
Nonito H. Dela Cruz
XII Director Akmad J. Usman
Assistant Director Libertine G. Cagang
Asima A. Adiong
Shara D. Abdul
XIII Director Achilles Gerard C. Bravo
Assistant Director Jenneth C. Partosa
Edna P. Jamolin
Paul A. Abarca
Judi D. Acdal

MB Director Leila Magda G. Rivera

Rainier H. Diaz
John Aries S. Macaspac
Joseph P. Decrepito
Loren Grace M. Lomio
LGU PFM 2 PROJECT ORGANIZATION
Chair Project Steering Committee (PSC)
Secretary Florencio B. Abad, DBM Chair
Undersecretary Janet B. Abuel, DBM Alternate

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 BUDGET OPERATIONS MANUAL FOR LOCAL GOVERNMENT UNITS

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 UnionAlternate

Imprest Administrator Imprest Accounting Officer

Director Julian Ll. Pacificador, Jr. Director Ruby R. Esteban

Technical Assistance Team Project Technical Working Group

Team Leader DBM

Mr. Ian D. Collins Director Leila Magda G. Rivera
Assistant Director Ruby P. Muro
Decentralization Expert
Dr. Norman R. Ramos DOF
Director Niño Raymond B. Alvina
Institutional Development Expert
Ms. Mary Geraldine C. Naraja DILG
Project Task Force

Director Anna Liza F. Bonagua

Assistant Director Dennis D. Villaseñor
Project Task Force Support Staff
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

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