KT OF THE Tera REPUBLIC OF THE PHILIPPINES )EPARTMENT OF THE INTERIOR AND LOCAL GOVERNME! Francisco Gold Condominium II EDSA Cor. Mapagmahal St., Diliman Quezon City TIME! Lite LEGAL SERVICE ee DILG Opinion No. 30 $. 2011 JUN28 200 DIRECTOR PEDRO A. NOVAL, JR. Regional Director, DILG-Region VII Sudlon, Lahug, Cebu City Dear RD Noval: This has reference to your letter dated 15 June 2011 asking for a prompt reply and guidance on this issue: “Whecher or not the 20% Development Fund is among those considered as re-enacted in a re-enacted budget.” We answer in the negative. We concur with the opinion rendered by the Regional Director of the Department of Budget and Management (DBM) and the COA Auditor mentioned in your letter. In support thereto, may we invite your attention to the following provisions of the Local Government Code of 1991 (RA 7160) and its Implementing Rules and Regulations (IRR): “SECTION 323. Failure to Enact the Annual Appropriations. - In case the sanggunian concerned fails to pass the ordinance authorizing the annual appropriations at the beginning of the ensuing fiscal year, it shall continue to hold sessions, without additional remuneration for its members, until such ordinance is approved, and no other business may be taken up during such sessions. If the sanggunian still fails to enact such ordinance after ninety (90) days from the beginning of the fiscal year, the ordinance authorizing the appropriations of the preceding year shall be deemed reenacted and shall remain in force and effect until the ordinance authorizing the proposed appropriations is passed by the sanggunian concerned. However, only the annual ‘ations for salaries and way of existing positions, statutory and contractual obligations, and essential rating expen: chorized it Land supplemental budgets for the ling: vear shall be deemed reenacted and disbursement of fu shall be in accordance therewith. In the implementation of such reenacted ordinance, the local treasurer concerned shall exclude from the estimates of income for the preceding fiscal year those realized from nonrecurring sources, like national aids, proceeds from Ioans, sale of assets, prior year adjustments, and other analogous sources of income. No ordinance authorizing supplemental appropriations shall be passed in place of the annual appropriations. xxx wor Axx (Emphasis Supplied) “ART. 415. Budget Authorization. xxx Jn 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 reenacted. xxx 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. ax aax ax The aforequoted provisions clearly provide the consequence in case the Sanggunian fails to enact the annual appropriations, that is, the budget of the preceding year is reenacted. In case of reenacted budget, only the annual appropriations for salaries and wages of existing positions, statutory and contractual obligations, and essential operating expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed reenacted. This was reiterated by the Supreme Court in the case of Villanueva vs. Ople’, Accordingly, in a reenacted budget, there will be no creation of positions, no filling of positions, no new programs, projects and activities, the increase in Internal Revenue Allotment (IRA) allocation for the year cannot be utilized since the same is not covered by an Appropriation Ordinance, and non-recurring activities cannot be undertaken no matter how vital they may be. Since there can be no implementation of new projects under a reenacted budget, necessarily therefore the twenty percent (20%) Development Fund is not included in the reenacted items. We have we have addressed your concern accordingly. Very truly yours, FTYCSESUS BIDODUE IV Director III is/17 Ao