Republi of he Phlpinas DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DILG RAPOLCOM Corer, EDSA carer Czon Avene, West Tango, Qunzon Cy pi gow ate opinion No. 22s, 201T HON. RIZA‘T. MELICOR 23 NOV 2017 Vice-Mayor Labason, Zamboanga del Norte Dear Vice-Mayor Melicor his has reference to your letter requesting the Department's clarification on the following issues: 1, Whether the Local Chief Executive (LCE) can unilaterally use budgetary savings in the Sangguniang Bayan as sources of funds for Supplemental Budget, without prior nod or permission from the Vice- Mayor: 2. Whether a Supplemental Budget (Supplemental Budget No, 3 in this Jeter) or the Sangguniang Bayan with sources of funds coming from the savings in the Sangguniang Bayan, be approved even without the signature of the Local Chief Executive (LCE): Whether it is proper for the Local Chief Executive (LCE) to take all the budgetary allocations for Capital Outlay and MOOE of the Offices of the San, them all under his office, Worthy to note, in this connection, is that, this has been done by the LCE of this municipality, in the previous years, and he is bound of doing the same again in the annual budget of this municipality, for the ensuing year 2018. suniang Bayan, and other departments in the LGU, and placed Per your letter, on 24 July 2017, Mayor Eddie 'T. Quimbo, Labason, Zamboanga del Norte, forwarded to your Office, for your consideration, the former's proposed Supplemental Budget No. 2, F.Y. 2017, You mentioned in your letter that in the said proposed Supplemental Budget No, 2, two (2) of the identified sources of funds were taken from savings under the Office of the Sangguniang Bayan,O O For this, the Municipal Budget Officer of Labason inquired from the Office of Budget Officer if the Mayor can outrightly utilize said savings under the Office ofthe Sangguniang Bayan. ‘The Provincial Budget Officer answered in the negative unless the proposed utilization of such savings is with prior permission from the head of Legislative Department, that is, the Vice-Mayor. the Thus, Mayor Quimbo, through the Municipal Budget Officer amended Supplemental Budget No. 2, FY. 2017 wherein the savings under the Office of Sangguniang Bayan were no longer used as among the sources of funds, the For this, you requested the Municipal Budget Officer to submit proposed Supplemental Budget No. 3, series of 2017 using the said savings under the Office of Sangguniang Bayan. Ilowever, this proposed Supplemental Budget did not bear signature of Mayor Quimbo since according to the Municipal Budget Officer, the May would not allow any way the passage of said Supplemental Budget Since your queries are interrelated, we shall answer them in one (1) discussion. At the outset, may we invite your attention to Sections 321 and 336 of Republic No. 7160 or the Local Government Code of 1991, thus: Section 321. Changes in the Annual Budget. - All budgetary proposals shall be included and considered in the budget preparation process. After the local chief ned shall have submitted the executive budget to the sanggunian, no ordinance providing for a supplemental budget shall be enacted, except when supported by funds actually available as certified by the local treasurer or by new executive cone A supplem tal budget may also be enacted in times of public calamity by way of budgetary realignment to set aside appropriations for the purchase of supplies and materials or the payment of services which are exceptionally urgent or absolutely indispensable to prevent imminent danger to, or loss of, life or property, in the jurisdiction of the local government unit or in other areas declared by the President in a state of calamity. Such ordinance shall clearly indicate the sources of funds available {for appropriations, as certified under oath by the local treasurer and local accountant and attested by the local chief executive, and the various items of appropriations, affected and the reasons for the change. Section 336. Use of Appropriated Funds and Savings. - 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 Jing olficer of the sanggunian unother. However, the local chief executive or the pres the the yor Act~ concerned may, by ordinance, be authorized to augment any item in the approved annual budget for their respective offices from savings in other items within the same expense ¢lass of their respective appropriations. ‘The Department of Budget and Management (DBM) in its Budget Operations Manual for Local Government, 2016 Edition explained the aforequoted provisions in this “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 10 review by the DBM or the Sangguniang Panlalawigan, as the case may be (Sectioi 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 supplement judget submitted by the LCE. ‘The ordinance will give the omnibus authority to the LCE or the Presiding Officer of the Sanggunian to augment any ed annual budget for their respective offices from savings in other items within the same expense class of their respective appropriations, ‘The proposed ordinance granting the authority to use savings under Section 336 of RA No. 7160 need mnate from the LCE 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 Le On the other hand, the proposed ordinance granting authority to use savings * s¥unds actually available” shall mean the amount of money actualy collected 3 certified by the local treasurer at any siven point during the fiscal year which is aver and above the esti ec income collection for that point in the year Ths. Funds are actually available when realize income exceeds estimated income as of any given day, month of quarter ofthe said fiscal year. Funds are likewise deemed actually avalable when there ate savings. For this purpose, savings refer to the portions or balances as of any given point the fiscal year of any programme or alloted appropriation ‘shit remain free of any obligation or encumbrance andl which ae sil available ater the satisfactory completion of the "unavoidable discontinuance or abandonment ofthe work, activity or purpose for which the appropriation was originally suthorized, or which result ftom tun-obligaed compensation and related costs pertaining to vacant positions and leaves ‘of absences without pay (Budget Operations Manual for LGU).