BARANGAY BUDGETING

BUDGET
AUTHORIZATION
THE LOCAL BUDGET
PROCESS
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 BUDGET AUTHORIZATION
2nd phase in the budget process
Legislative function enacting the
ordinance authorizing the budget
Starts from the time the
Sangguniang Barangay (SB)
receives the Barangay Budget from
the Punong Barangay (PB)
 LEGAL BASES

No money shall be paid out of the

local treasury except in pursuance of
an appropriations ordinance (AO) or
law (Sec 305 [a], LGC)

The SB shall enact annual and

supplemental budgets in accordance
with the provisions of the Code
(Sec 391 [a][3], LGC)
 BUDGET
KeyAUTHORIZATION
Players:

1. Punong Barangay

2. Sangguniang Barangay

3. Committee on Appropriations/Finance

4. Barangay Treasurer

5. Barangay Secretary
 STEPS IN BUDGET
AUTHORIZATION
ON OR BEFORE
1. ENACT THE AO BEGINNING OF
ENSUING YEAR

2. APPROVE THE AO ON OR BEFORE

BEGINNING OF
ENSUING YEAR

3. POST THE AO NLT 5 DAYS AFTER

APPROVAL OF AO

4. SUBMIT THE AO
FOR REVIEW WITHIN 10 DAYS AFTER
APPROVAL OF AO
 WHAT MARKS THE START OF THE BUDGET
AUTHORIZATION PHASE?

LCE shall submit the executive

budget to the Sanggunian –
NOT LATER THAN 16th of OCTOBER of
the current fiscal year (Sec 318, LGC)
LIABILITY FOR FAILURE TO SUBMIT
AN EXECUTIVE BUDGET

Failure to submit the budget within

the prescribed period –
Subjects LCE to criminal and
administrative penalties provided
under the Code and other applicable
laws (Sec 318, LGC)
 Sec. 60 – Grounds for disciplinary actions
 (Secs. 61-68 – other rules on disciplinary actions)
 Villanueva vs. Ople, GR. 165125, Nov. 18, 2005
BUDGET AUTHORIZATION
o Legal Basis –

“On or before the end of the

current fiscal year, the
Sanggunian concerned shall
enact, through an ordinance, the
annual budget of the local
government unit for the ensuing
fiscal year on the basis of the
estimates of income and
expenditures submitted by the
local chief executive.”

(Sec 319, RA No. 7160)

steps
STEP 1. ENACT THE APPROPRIATION
ORDINANCE

1.1 CHECK THE BUDGET

DOCUMENTS SUBMITTED

1b
 ANNUAL BUDGET
Document Signatory
Budget Message PB
Proposed Annual Budget PB
Plantilla of Personnel BT and PB

Annual Investment Program (AIP) - SB

approved by Sanggunian
List of Project Under the 20% DF BS and PB

DILG-endorsed GAD Plan and Budget LGOO

Barangay Disaster Risk Reduction and BDRRM
Management Plan – approved by BDRRM Committee
Council
Annual Procurement Plan (APP) BS and PB

1b
 SUPPLEMENTAL BUDGET
Document Signatory

Transmittal Letter PB
Statement of Funding Sources BT, C/M
Accountant
and PB
Statement of Supplemental BS and PB
Appropriations
Supplemental AIP – approved by SB BT and PB
 STEP 1.2 EVALUATE THE BUDGET

 Receipts Program
Check/validate: 
1.Check Budget year’s total estimated
income and assess probability of
collection (Sec 391[a][2], LGC)

2. Check if the taxes and fees identified as

sources of estimated income are within
scope of authority and properly computed
(Secs 152-155, 271, 285, 292, LGC)
exp
 STEP 1.2 EVALUATE THE BUDGET
• Expenditure Program

Check/validate:
 Aggregate income (BY) vs. aggregate
expenditure program (BY) (Sec 324 [a], LGC)
 Regular income (BY) – basis for computing
20% ceiling for debt servicing (Sec 324 [b],
LGC)
 Regular income (BY) – basis for 5% LDRRMF
(RA No. 10121 [2010]; NDRRMC, DBM & DILG JMC
No. 2013-1 dated March 25, 2013)

 Regular income realized in the NEXT

PRECEDING fiscal year – basis for computing
the PS Limitation (Sec 325 [a], LGC)
app
 STEP 1.2 EVALUATE THE BUDGET
Check/validate the Expenditure Program:

 Provisions for PS and associated costs – PhilHealth, GSIS

Premiums, Pag-IBIG, PERA, YEB, Cash Gift

 Actual receipts from basic RPT in the NEXT PRECEDING

calendar year – 2% ceiling for appropriations for
discretionary purposes (Sec 325 [h], LGC)

 Amount of IRA (BY) – minimum 20% for appropriation

for development projects (Sec 287, LGC)
Authorized Uses (DBM-DILG JMC No. 2017-1; 2/22/17)
Quisumbing, et al. vs. Garcia, et al.
GR No. 175527, 08 December 2008
(re Section 22 (c), LGC - Unless otherwise provided in this Code, no contract may be entered into by the local
chief executive in behalf of the local government unit without prior authorization by the sanggunian
concerned.)

app
 Quisumbing, et al. vs. Garcia, et al.
The question of whether a sanggunian
authorization separate from the appropriation
ordinance is required should be resolved depending
on the particular circumstances of the case. Resort
to the appropriation ordinance is necessary in order
to determine if there is a provision therein which
specifically covers the expense to be incurred or the
contract to be entered into. 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.
 Quisumbing, et al. vs. Garcia, et al.
On the other hand, should the appropriation
ordinance describe the projects in generic terms
such as "infrastructure projects," "inter-municipal
waterworks, drainage and sewerage, flood control,
and irrigation systems projects," "reclamation
projects" or "roads and bridges," there is an obvious
need for a covering contract for every specific
project that in turn requires approval by the
sanggunian. Specific sanggunian approval may also
be required for the purchase of goods and services
which are neither specified in the appropriation
ordinance nor encompassed within the regular
personal services and maintenance operating
expenses.
•See also COA Memo No. 2010-014 dated 22 April 2010
 COA MEMORANDUM No. 2010-014
dated 22 April 2010

• Subject – Prior approval or authorization by

the sanggunian before the LCE incurs
expense or enters into contract on behalf of
the LGU; When necessary and not necessary
The incurrence of expenses or entering into
contract by the LCE on behalf of the LGU
which are NOT in accordance with the
framework laid out in the ruling of the SC in
the Quisumbing case shall be DISALLOWED IN
AUDIT
 STEP 1.2 EVALUATE THE BUDGET

• Expenditure Program

Check/validate:
 80% of Nat’l Wealth from dev. and utilization
of hydrothermal… applied SOLELY to lower
cost of electricity…
 Discretionary expenses, if any, does not
exceed 2% of actual RPT in the NPY
 Honoria does not exceed the authorized rates

 BEP projects are consistent with AIP

 10% of General Fund is set aside for SK

 STEP 1.3 DELIBERATE ON THE BUDGET

Procedures in the deliberation may vary depending on the

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

4th sub
 STEP 1.4 AUTHORIZE THE BUDGET

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

basic rules
 STEP 1.4 AUTHORIZE THE BUDGET

 RULES IN THE ENACTMENT OF THE AO

 A majority of all members of the Sanggunian

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

 The proposed AO shall be in writing and shall

contain an assigned number, a title or caption,
an enacting or ordaining clause, and the date of
its effectivity. In addition, it shall be
accompanied by a brief explanatory note
containing the justification for its approval
(Article 107[b], IRR)

cont
 STEP 1.4 AUTHORIZE THE BUDGET

 RULES IN THE ENACTMENT OF THE AO

 The proposed AO 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],
IRR)

 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 to, normally the
Committee on Appropriations, or certified as
urgent by the LCE (Article 107[d], IRR)

cont
 STEP 1.4 AUTHORIZE THE BUDGET

 RULES IN THE ENACTMENT OF THE AO

 The proposed AO if duly certified by the LCE as
urgent, whether or not it is included in the
calendar of business, may be presented and
considered by the body at the same meeting
without need of suspending the rules
(Art 107[e], IRR)

 An AO certified by the LCE as urgent may be

submitted for final voting immediately after
debate or amendment during the second
reading (Art 107[f], IRR)

 The approved AO shall be stamped with the seal

of the Sanggunian and recorded in a book kept
for the purpose (Art 107 [h], IRR)
cont
EFFECT OF A BILL CERTIFIED AS URGENT
 Whether or not included in calendar of
business, the Bill may be presented and
considered by the body at the same
meeting without suspending the rules (Art
107 [e], IRR)

 It may be submitted for final voting

immediately after debate or amendments
during 2nd reading (Art 107 [f], IRR)
 Malonzo vs. Zamora, GR No. 137718, July 27, 1999 –
There is nothing in the law, however, which prohibits
that the three readings of a proposed ordinance be held
in just one session day.

 Sec 52 ©, LGC - No two (2) sessions, regular or special,

may be held in a single day.
 LIMITATIONS ON LEGISLATIVE ACTION
The Local Sanggunian –

oMay not increase the proposed amount in

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

oMay not include new items except to

provide for statutory and contractual
obligations
obut in no case shall it exceed the total
appropriations in the executive budget

(Art 415, IRR)

 Enact the AO

After budget deliberation, the Sanggunian

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

“ORDINANCES ENACTED BY THE

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

WHAT IS MAJORITY?

SC – IS THE NUMBER GREATER THAN HALF OF

ANY TOTAL
The enacted AO shall –
Be stamped with seal of Sanggunian
Recorded in a book kept for the purpose
Be signed by the Barangay Secretary
(Sec 469, LGC; Art 122, IRR)
 Step 2. APPROVAL OF THE AO BY THE PB

“ORDINANCES ENACTED BY THE

SANGGUNIANG BARANGAY SHALL, UPON
APPROVAL BY THE MAJORITY OF ALL ITS
MEMBERS, BE SIGNED BY THE PUNONG
BARANGAY” (Sec 54 [c], LGC)
o THE PB HAS NO VETO POWER – since he is also the
Presiding Officer of the SB
(Sec 49, LGC)
 CHANGES IN THE ANNUAL BUDGET
 General Rule (1)
o All budgetary proposals shall be included and
considered in the budget preparation process

o After the LCE submitted the executive budget

to the Sanggunian, no ordinance providing for
a supplemental budget shall be enacted (Sec
321, LGC)
 CHANGES IN THE ANNUAL BUDGET
 Exception
Changes in the annual budget may be done
through SUPPLEMENTAL BUDGETS
o 1When supported by funds actually available as
certified by the local treasurer
o 2If covered by new revenue sources
o 3In times of public calamity

(Sec 321, LGC; Art 417, IRR as amended by

AO No. 47 dated 12 April 1993)
 SUPPLEMENTAL BUDGET
 1When supported by funds actually available as
certified by the local treasurer - (2)

1. Money actually collected as certified by local

treasurer at any given point during the fiscal year,
which is over and above the estimated income
collection for that point in the year – otherwise
stated, when realized income exceeds estimated
income as of any given day, month or quarter of
the said fiscal year
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
2. When there are savings -
Savings refer to portions or balances as of any given point in
the fiscal year of any programmed or allotted appropriation
which remain free of any obligation or encumbrance and
which are still available after the satisfactory completion or
the unavoidable discontinuance or abandonment of the
work, activity or purpose for which the appropriation was
originally authorized, or which result from unobligated
compensation and related costs pertaining to vacant
positions and leaves of absence without pay
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
 2If covered by new revenue source/s -

1. New revenue source refers to money measure not

otherwise considered during the preparation and
enactment of the annual budget. Such new
revenue measures include ordinance passed by the
Sanggunian during the fiscal year but after the
annual budget had already been enacted into law
which imposes new local taxes, charges, fees, fines
or penalties (Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET

     2. Such revenue sources also include new or higher

remittances, contributions, subsidies or grants in
aid from the National Government or from
government corporations and private entities
which have not been included in the estimates of
income which served as basis for the annual
budget (Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
 In times of public calamity -
By way of budgetary realignment to set aside
appropriations for the purchase of supplies and
materials or the payment of services, which are
exceptionally urgent or absolutely indispensable to
prevent imminent danger to, or loss of, life or
property, in the jurisdiction of the LGU or in other
areas declared in a state of calamity by the
President (Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 SUPPLEMENTAL BUDGET
 3In times of public calamity -  
In such case, the AO shall clearly indicate the
following:
 The sources of funds available for appropriations
as certified under oath jointly by the local
treasurer and the local accountant and attested
by the LCE;
 The items of appropriations affected; and
 The reasons for the change
(Sec 321, LGC; Art 417, IRR as amended by AO No. 47)
 CHANGES IN THE ANNUAL BUDGET
 General Rule (2)
o Funds shall be available exclusively for the
specific purpose for which they have been
appropriated
o No ordinance shall be passed authorizing
any transfer of appropriations from one
item to another
(Section 336, LGC)
 CHANGES IN THE ANNUAL BUDGET

 Exception
The LCE or the presiding officer of the
Sanggunian may, BY ORDINANCE, be authorized
to augment any item in the approved annual
budget for their respective offices from savings
in other items WITHIN THE SAME EXPENSE
CLASS of their respective appropriations (Sec
336, LGC)
 SAMPLE PORTION OF AO

Section 4. General Provisions. The following policies are

hereby adopted for the fiscal year:

a. The Punong Barangay or Presiding Officer of the

Sanggunian is hereby authorized to augment any item
in the approved annual budget from savings in other
items within the same expense class of the
appropriations in their respective offices, in
accordance with Section 336 of the Local Government
Code of 1991.
b. All procurement shall strictly follow the provisions of
Republic Act No. 9184, the Government Procurement
Reform Act.
 EFFECTIVITY OF THE BUDGET

“The ordinance enacting the annual budget

shall take effect at the beginning of the
ensuing fiscal year…” (Sec 320, LGC)
 EFFECTIVITY OF THE
SUPPLEMENTAL BUDGET

“An ordinance enacting a supplemental

budget, however, shall take effect upon its
approval or on the date fixed therein”
(Sec 320, LGC)
 3. EFFECTIVITY AND POSTING OF AO

Unless otherwise stated in the ordinance or

resolution approving the local development plan
and public investment program, the same shall
take effect after ten (10) days from the date a
copy thereof is posted -
o in a bulletin board at the entrance of the barangay hall;
AND
o in at least two (2) other conspicuous places in the LGU 
  (Sec 59 [a], LGC; DILG MC No. 2010-149, 12/14/10)
 3. EFFECTIVITY AND POSTING OF AO

The Secretary to the Sanggunian shall cause the

posting of an ordinance or resolution in the
bulletin board at the entrance of the provincial
capitol, and city, municipal, or barangay hall, and
in at least two (2) conspicuous places in the LGU
concerned not later than five (5) days after
approval thereof
  (Sec 59 [b], LGC)
 EFFECTIVITY AND POSTING OF AO

The text of the ordinance or resolution shall be

disseminated and posted in Filipino or English
and in the language or dialect understood by the
majority of the people in the LGU, and the
Secretary to the Sanggunian shall record such fact
in a book kept for the purpose, stating the dates
of (1) approval and (2) posting
(Sec 59 [a], LGC)
 EFFECT OF FAILURE TO
ENACT THE BUDGET (p. 56, BOMB)
In case the Sanggunian fails to pass the ordinance
authorizing the annual appropriations by January 1st –

CONSEQUENCES:
o The AO of the preceding year shall be
deemed reenacted

Annual and Supplemental Budgets

 EFFECT OF FAILURE TO
ENACT THE BUDGET
CONSEQUENCES:

oThe Sanggunian shall continue to hold

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

oNo other business shall be taken up in such

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

Items of appropriations deemed reenacted

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

As authorized in the AB and SBs

 Effect of Failure to Enact the Budget

No ordinance authorizing supplemental

appropriations shall be passed in place of
the annual appropriations

(Sec 323, LGC)

 1. Kailan ang simula ng “Budget
Authorization?

 Sagot:
– Ito ay nagsisimula sa oras na natanggap
na ng Sanggunian Barangay ang
Barangay Badyet mula sa Punong
Barangay
 2. Ano ang legal na basehan sa
paggamit ng pondo ng barangay?
 Sagot:
– Seksyon 305 (a) ng LGC – Walang pera na
ipambabayad mula sa lokal na yaman
kundi alingsunod sa appropriation
ordinance o batas.
3. Kailan dapat isumite ng Punong Barangay and
taunang badyet ng barangay?

 Sagot:
– Ito ay dapat na ma-isumite ng hindi
lalampas sa ika-16 ng Oktubre ng
kasalukuyang piskal na taon.
4. Ano ang magiging parusa sa Punong Barangay
kung sakaling hindi niya na isumite ang badyet sa
tamang panahon?

 Sagot:
– Siya ay pwedeng kasuhan, kriminal at/o
administratibo.
 5. May takdang panahon ba ang Sangguniang
Barangay sa pagpasa ng badyet?
 Sagot:
– Oo, sa araw ng o bago katapusan ng
kasalukuyang piskal na taon, ang Sangguniang
ay dapat ng nakapag-pasa na ng ordinansa na
ipinapasa ang taunang badyet ng lokal na
pamahalaan para sa padating na taong piskal.
 6. Maari bang pabilisin ang pagpasa ng
barangay badyet?

 Sagot:
o Oo, kung ito ay i-sertipika ng Punong
Barangay bilang “urgent.”
 7. Ano ang epekto pag hindi naipasa ang taunang
badyet bago mag-umpisa ang taong piskal?

 Sagot:
o Magpapatuloy ang sesyon ng Sangguniang Barangay
na ang taunang badyet lang ang tatalakayin.
o Walang ibang bagay na pwedeng talakayin
o Magkaroon ng “reenacted” na badyet.
o Hindi pwedeng magpasa ng “supplemental budget.”
7. Ilang bahagi ng Internal Revenue Allotment ang
dapat pumunta sa “development projects”?

 Sagot:
– Hindi bababa sa 20%
 8. Dapat bang naka-lista ang mga proyekto
sa badyet? Bakit?

 Sagot:
o Oo, sapagkat kung hindi ito naka-lista
kailangan pa ng panibagong pahintulot mula
sa Sangguniang Barangay bago magamit ang
perang nakalaan.
9. Ano ang bagong tawag sa Calamity Fund?
Ilang bahagi ng badyet ang dapat ilaan dito?

 Sagot:
o LDRRMF
o Dapat hindi ito kukulangin sa 5% ng
tinantiyang kita mula sa regular sources.
 10. Magagamit ba ang natirang pera sa LDRRMF
pagkatapos ng taon? 

 Sagot:
o Hindi, ano mang balanse ay dapat pumunta sa
“trust fund” hanggang matapos ang limang
taon – pagtapos ng limang taon, pwede nang
ibalik ang buong balanse ng LDRRMF sa GF.
 11. Kailan magiging epektibo ang
taunang badyet ng barangay?

 Sagot:
o Pagkatapos ng takdang panahon ng
paglathala.