Definition of Terms.
SEC. 14. Definition of
Terms.—When used in this Chapter:
The term "annual budget" means a financial plan embodying the
estimates of income certified as reasonably collectible by the
provincial treasurer in the case of provinces and their respective
municipalities and by the city treasurer in the case of cities, and
appropriations covering the proposed expenditures for the ensuing fiscal
year.
The term "supplemental budget" is a supplementary financial
plan embodying changes during the fiscal year in the annual estimates of
income and appropriations.
The term "income" covers all revenues and receipts collected
or received, forming the gross accretions of funds of the
Government.
The term "revenue" refers to 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.
The term "receipts" refers to income realized from operations
and activities of the Government or are received by the Government
in the exercise of its corporate functions, consisting of charges
for services rendered, or for conveniences furnished, or the price
of a commodity sold as well as authorized contributions or aids
from other entities, except provisional advances for budgetary purposes.
Loans for specific projects or activities shall be considered as
"receipts".
The term "appropriations" refers to the estimates of
expenditures in a budget when finally approved by the appropriate
authorities concerned.
The term "continuing appropriations" refers to
appropriations for specific projects, such as those for construction of
physical structures, or for the acquisition of real property or
equipment, which shall continue to be available until the
project is completed or abandoned. Reversions shall not be made or
appropriations obligated by contract. Appropriations not obligated by
contract may not be continued if the same would result in a negative
balance in the unappropriated account of the fund concerned.
The term "current operating expenditures" refers to
"appropriations for the purchase of goods and services for current
consumption within the fiscal year, including the acquisition of
furniture and equipment of nominal value usually used in the conduct of
normal government operations.
The term "capital outlays" or "capital expenditures" refers to
the purchase of goods and services of a life-expectancy extending beyond
the fiscal year and which add to the assets of the local government
concerned, except furniture and equipment of nominal value usually used
in the conduct of normal government operations.
The term "budget document" refers to the instrument used by the
budget-making authority to present a comprehensive financial program to
the appropriating body.
Form and Content.
SEC. 15. Form and Content.—The provincial, city and
municipal budget shall primarily consist of two parts: (1) the estimates
of income certified collectible by the treasurer concerned; and (2) the
total appropriations covering (a) the current operating expenditures;
and (b) capital outlays.
The budget document shall contain:
a budgetary message of the local chief executive setting
forth in brief the significance of the appropriations proposed:
a brief summary of the functions and activities in relation to
the goals and objectives of the local government for the fiscal period;
and
summary financial statements setting forth:
the actual income and expenditures during
the last completed year;
the actual income and expenditures of the first three
quarters and the estimated income and expenditures for the fourth
quarter of the fiscal year in progress;
the estimated income for the ensuing fiscal year from
ordinances and laws existing at the time the proposed budget is
transmitted, together with other revenue-raising proposals, if any;
the estimated expenditures necessary to carry out the
functions and activities of the local government for the ensuing fiscal
year;
all essential facts regarding the bonded and other long-term
obligations and indebtedness of the local government, of any;
summary statement of all statutory and contractual obligations
due; and
such other financial statements and data as are deemed
necessary or desirable in order to make known in all practicable detail
the financial condition of the local government.
Submission of Detailed Statements of Income and Expenditures.
SEC. 16. Submission of Detailed Statements of Income and
Expenditures.—On or before the fifteenth day of April of each year,
the local treasurers shall submit to their respective local chief
executives a certified statement covering the income and expenditures
pertaining to the preceding fiscal year; the actual income and
expenditures of the first three quarters and the estimated income and
expenditures for the fourth quarter of the current year; and the
estimates of income for the ensuing fiscal year. The local treasurer
shall also certify to the reasonable probability of realizing the
estimates of income for the ensuing fiscal year.
Submission of Budget Proposals by Heads of Offices.
SEC. 17. Submission of Budget Proposals by Heads of
Offices.—Each head of office shall submit a statement of the
proposed expenditures recommended by him for his office to the local
chief executive on or before the date the said local chief executive may
determine, but not later than April fifteen of each year and in
accordance with such policy guidelines as the latter may issue in
conformity with the general requirements of this Chapter.
Budget proposals for all offices, departments, or projects,
shall be divided into two primary categories, namely—the current
operating expenditures and the capital outlays. Such
budget proposals shall be supported by:
Personnel schedules containing the following information:
A detailed plantilla of personnel indicating position titles, names
of incumbents, and present and proposed rates of salaries and wages,
excluding those hired on the daily basis;
Proposed new positions and corresponding salary rates;
and
Positions proposed for abolition and the aggregate
amount involved.
Brief narrative description of the nature of the work to be
performed and explanation of the significance and scope of each program.
Preparation of the budget by the local chief executive.
SEC. 18. Preparation of the budget by the local chief
executive.—Upon receipt of the statements of income and expenditures
from the treasurer and the budget proposals of the head of offices as
provided for in the preceding sections, the local chief executives shall
prepare the budget for the ensuing fiscal year in accordance with
Legislative authorization of the budget.
SEC. 19. Legislative authorization of the budget.—On
or before the end of the fiscal year, the local board or council shall
approve through the enactment of an appropriation ordinance the annual
budgets for each fund of the local government unit for the ensuing
fiscal year on the basis of the statement unit of the certified
estimated income and budget proposals submitted by the local chief
executive. In the case of cities, the budgets thus enacted by the local
board or council shall be subject to further approval by the City Mayor.
Majority vote required in the approval of budgets.
SEC. 20. Majority vote required in the approval of
budgets.—Approval by the board or council of the budgets of the
local government shall require the affirmative votes of a majority of
all the members thereof.
Veto power of the city mayor.
SEC. 21. Veto power of the city mayor.—Within ten
days after receipt of the appropriation ordinance, or any resolution or
motion directing the payment of money or creating liability, the city
mayor shall return it with his approval or veto. If he takes no action
within the time prescribed, it shall be deemed to have been approved.
If he returns it with his veto, his reasons therefor must be
stated in writing. The ordinance, resolution, or motion may then be
re-enacted by the affirmation votes of at least two-thirds of all the
members of the board or council, in which case the same shall again be
forwarded to the city mayor for his approval. If within ten days after
receipt of the re-enacted ordinance, resolution, or motion, the city
mayor takes no action, it shall be deemed to have been approved, but if
within said time the city mayor again returns it with his veto, stating
writing his reasons therefor, the ordinance, resolution, or motion, if
re-enacted by a two-thirds vote, shall be forwarded forthwith by the
board or council to the Secretary of Finance for his approval or
disapproval within thirty days after receipt thereof. The decision of
the Secretary shall be final.
Sealing, recording and distribution of appropriation ordinances.
SEC. 22. Sealing,
recording and distribution of appropriation ordinances.—Each
approved ordinance, resolution or motion hereinabove referred to shall
bear the official seal of the local government concerned, signed by the
presiding officer of the board or council and attested to by the board
or council secretary, and recorded in a book kept for the purpose. It
shall be the duty of the board or council secretary to furnish the local
treasurer concerned with a least three copies of the approved
appropriation ordinance within ten days from the approval thereof. In
the case of provinces and cities, the local auditor shall likewise be
furn shed with copies thereof.
Effectivity of budgets.
SEC. 23. Effectivity of budgets.—The
approved annual budget shall be deemed to be operative and in full
force and effect as of the beginning of the fiscal year. A supplemental
budget, however, shall take effect upon its approval or on the date
fixed in the appropriation ordinance for its effectivity.
The role of the treasurer in the budget process.
SEC. 24. The role of the treasurer in the budget
process.— The provincial, city and municipal treasurer shall be the
chief financial officer of their respective local governments and in
such capacity shall provide technical and staff services to the chief
executive and other local officials in budget preparation,
authorization, execution and accountability.
Changes in the annual budget.
SEC. 25. Changes in the annual budget.—Changes in
the annual budget may be made within the fiscal year by way of
supplemental budgets which shall be enacted in the same manner as the
annual budget but not oftener than once a month. Additional supplemental
budgets, however, may in times of emergency be enacted in the manner
herein provided to set aside appropriations for the purchase of supplies
and materials and/or the payment of services which are exceptionally
urgent or absolutely indispensable to prevent imminent danger to, or
loss of, life or property.
Whenever any change is made in the budget, the supplemental
appropriation ordinance shall clearly indicate the various items of
appropriations affected and the reasons for the change.
SEC.
26. Failure to enact an annual budget.—If the local
legislative body shall fail to pass the annual budget before the
beginning of the ensuing fiscal year, or when the budget which has been
enacted is declared inoperative in its entirety by the reviewing
officer, 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 fiscal year shall be deemed re-enacted and disbursements
of funds shall be in accordance therewith until a new budget or a
revised budget meeting the objections of the reviewing officer is
approved.
In the implementation of a re-enacted budget, the local
treasurer concerned shall exclude from the estimates of income for the
preceding fiscal year those realized from non-recurring sources, like
national aids, proceeds from loans, sale of assets, prior year
adjustments, and other analogous sources of income.
Should the
revised income estimates be less than the aggregate re-enacted
appropriations, the treasurer shall accordingly advise the local board
or council which shall, within ten days from receipt of such advice,
make the necessary adjustments or reductions. The revised appropriations
authorized by the board or council shall then be the basis for
disbursements.
Budgetary Requirements.
SEC. 27. Budgetary Requirements.—The
budgets of provinces, cities and municipalities for any fiscal year
shall comply with the following requirements:
The aggregate amount appropriated shall not exceed the
estimated income certified collectible by the local treasurer;
Full provisions shall be made for all statutory and contractual
obligations of the local government concerned;
Twenty per cent of the national internal revenue allotment
accruing to the general fund of the local government shall be
appropriated for developmental projects or activities;
Aids to legally constituted barrios shall be provided in amounts
not exceeding P500.00 per barrio; and
Two per cent of the estimated revenue from regular sources,
shall be set up as a yearly unappropriated reserve to cover unforeseen
expenditures arising from the occurrence of natural calamities or
financial dislocation on account thereof.
General limitations.
SEC. 28. General limitations.—
The total annual appropriations for salaries and wages of
provincial, city and municipal officials and employee for one fiscal
year shall not exceed forty-five per cent (45%), in the case of all
first and second class provinces, cities and municipalities and
fifty-five per cent (55%), in the case of those lower than second class,
of the total annual income actually realized from regular sources
during the next preceding fiscal year or the current fiscal year
estimates from the same sources certified as collectible by the
provincial or city treasurer concerned, whichever is lower. The
appropriations for salaries and wages of officials and employees in the
public schools, hospitals, health and agricultural services, public
utilities, markets and slaughter-houses, and other economic enterprises
owned, operated and maintained by the province, city or municipality, as
well as representation and emergency cost-of-living allowances, shall
not be included in the computation of the maximum amount expendable for
salaries and wages.
The Secretary of Finance, however, may authorize appropriations in
excess of the percentages hereinabove fixed subject to such conditions
as he may impose, but in no case shall the excess in appropriations for
salaries and wages be more than twenty-five per cent (25%) of the
maximum expendable amounts nor shall such exemption be granted in case
of overdraft or imminence thereof.
No official or employee shall receive a salary rate higher than
the maximum fixed by law or regulation for his position or other
positions of equivalent rank.
No local fund shall be appropriated to increase or adjust
salaries or wages of officials and employees of the national
government assigned in the local government, except as may
hereafter be expressly authorized by law.
In case a reduction of salaries and wages becomes necessary,
such reduction shall be general in character and the percentage thereof
shall be uniform for similar rates of salaries and wages. In cases of
abolition of positions in the competitive or career service, such
abolition shall be made in accordance with pertinent provisions of the
Civil Service Law and Rules, and in the case of officials or employees
appointed at the national level such reduction in that portion of their
salary paid out of local funds as authorized by law or abolition of
position shall not be given effect unless approved by the Head of the
National Department or Commission concerned.
Non-funding of existing positions in the competitive or
non-competitive services which are occupied by incumbents holding
permanent appointments shall be unlawful.
Changes in designation or nomenclature of positions resulting
in a promotion or demotion in rank and/or increase or decrease in
compensation shall not be authorized, except when the position is
actually vacant, and the filling of such positions shall be strictly
made in accordance with the Civil Service Law and Rules.
Except as may be expressly authorized by law, creation of new
positions and salary increases or adjustments shall not be retroactive
but, rather, invariably prospective in effect.
The annual appropriations for discretionary purposes of the local
chief executive shall not exceed one per cent of the real property tax
collections actually realized during the next preceding fiscal year or
P100,000.00, whichever amount is lower.
Review of Provincial and City Budgets.
SEC. 29. Review of Provincial and City Budgets.—Within
ten days from receipt by the provincial or city treasurer of copies of
the provincial or city budget approved by the local board or council, he
shall furnish copies thereof to the Secretary of Finance who shall have
the power to review the same in order to ascertain compliance with the
foregoing requirements and general limitations. If within ninety days
after receipt of his copies of the provincial or city budgets, the
Secretary of Finance takes no action thereon, the same shall be deemed
to have been passed in accordance with law and shall continue to be in
full force and effect. If within the same period the Secretary of
Finance shall have ascertained that a provincial or city budget has not
complied with the budgetary requirements set forth in Section 27 hereof,
the budget shall be declared inoperative in its entirety. Items of
appropriations contrary to, or in excess of, any of the general
limitations prescribed in Section 28 hereof shall be disallowed or
reduced accordingly and any violation of any of the aforesaid general
limitations shall constitute sufficient ground for declaring the budget
inoperative either in part or in its entirety.
The Secretary of
Finance shall, within the ninety-day period hereinabove fixed, advise
the provincial governor or the city mayor concerned thru the local
treasurer or any action taken on the budget under review. Following
receipt of such advice, it shall be unlawful for the local treasurer to
make further disbursement of funds from any of the items of
appropriation declared inoperative, disallowed or reduced.
SEC.
30. Review of Municipal Budgets.—Municipal budgets shall be
reviewed by the provincial treasurer in the same manner and within the
same period as prescribed in the preceding section. The budgetary
requirements and general limitations prescribed for provincial and city
budgets shall likewise be applicable to municipal budgets.
If
within ninety days from receipt of his copies of the municipal budget
from the municipal treasurer concerned, the provincial treasurer takes
no action thereon, the same shall be deemed to have been passed in
accordance with law and shall continue to be in full force and effect.
If within the ninety days the provincial treasurer shall have
ascertained that a municipal budget has not complied with the budgetary
requirements set forth in Section 27 hereof or when the income estimates
certified by the municipal treasurer are found to be unrealistic and
improbable of collection, the provincial treasurer shall, within the
ninety-day period hereinabove fixed declare the budget inoperative in
its entirety. Items of appropriation contrary to, or in excess of, any
of the general limitations prescribed in Section 28 hereof shall be
disallowed or reduced accordingly and any other violation of any of the
aforesaid general limitations shall constitute sufficient ground for
declaring the budget inoperative either in part or in its entirety.
The provincial treasurer shall within the ninety-day period advise the
municipal mayor thru the municipal treasurer of any action taken on the
budget under review. Following receipt of such advice, it shall be
unlawful for the municipal treasurer to make further disbursement of
funds from any of the items of appropriation declared inoperative,
disallowed, or reduced.
Duration of appropriations; closing special budgets.
SEC. 31. Duration of
appropriations; closing special budgets.—Appropriations for ordinary
administrative purposes shall terminate with the fiscal year and all
unexpended balances thereof shall be reverted on the thirtieth day of
June of each year to the unappropriated account by way of a special
budget which shall serve as a supporting document to the corresponding
journal voucher. Similarly, thru the special budget, all income accounts
shall be brought into balance before closing the books, reducing the
classes of income that have been over-estimated and increasing those
that have been underestimated to the amounts actually realized.
Such special budgets reverting unexpended appropriations for ordinary
administrative purposes and of income receivable and actual income
adjustments shall not require any action by the local legislative body.
However, legislative action by the local board or council is necessary
in the following cases: (1) where overdrafts in any of the appropriation
accounts have been incurred; and (2) reversions of continuing
appropriation or appropriations obligated by the contract as may be
authorized by law.
The annual barrio budget.
SEC. 32. The annual barrio budget.—The
annual barrio budget shall primarily consist of two parts: (a) the
estimates of income certified collectible by the municipal treasurer on
the basis of estimates prepared by the barrio treasurer from local
sources; and (2) the total appropriations covering current operating
expenditures and capital outlays, if any.
Submission of detailed statements of income and expenditures for the barrio budget.
SEC. 33. Submission of detailed statements of income
and expenditures for the barrio budget.—On or before the fifteenth
day of April of each year, the municipal treasurer shall furnish the
barrio captain with a certified statement covering the estimates of
income from local sources and expenditures pertaining to the ensuing
fiscal year and thereby certify to the reasonable probability or
realizing the estimates of income prepared and submitted by the barrio
treasurer.
Preparation of the barrio budget the barrio captain.
SEC. 34. Preparation of the barrio budget the barrio
captain.—Upon receipt of the foregoing statements, the barrio
captain shall prepare the budget for the ensuing fiscal year. The said
budget shall contain the estimate of income as certified by the
municipal treasurer and the proposed expenditures for the ensuing fiscal
year.
The barrio captain shall submit the budget to the barrio
council not later than May sixteen of the year.
Action of the barrio council.
SEC. 35. Action
of the barrio council.—On or before the end of the fiscal year, the
barrio council may enact through an appropriation ordinance the annual
barrio budget for the local fund for the ensuing fiscal year on the
basis of the statement of the certified estimated income and budget
proposals submitted by the barrio captain.
Effectivity of barrio budgets.
SEC. 36. Effectivity of barrio budgets.—Any
provision of law to the contrary notwithstanding, the barrio budget
approved by the barrio council shall be deemed operative and in full
force and effect at the beginning of the fiscal year. A barrio
supplemental budget shall take effect upon its approval or on the date
fixed in the appropriation ordinance for its effectivity.
Changes in the barrio budget.
SEC. 37. Changes in the barrio budget.—Changes in
the budget in the case of appropriations for ordinary administrative
purposes may be made within the fiscal year by way of supplemental
budgets which shall be adopted in the game manner as the annual budget.
Review of the barrio budget.
SEC. 38. Review of the barrio budget.—Within ten
days from its approval, copies of the barrio budget shall be submitted
by the barrio council to the municipal treasurer concerned who shall
have the power to review such budget in order to see to it that the
aggregate amount appropriated has not exceeded the estimated income
cerified collectible; that full provisions have been made for all
statutory and contractual obligations; that no officials or employee
shall receive per diems, wages or salaries an excess of existing laws or
executive orders. If within ninety days after receipt of his copies of
the budget the municipal treasurer takes no action thereon, the same
shall be deemed to have been passed in accordance with law and shall
continue to be in full force and effect. If within the same period the
municipal treasurer concerned shall have ascertained that a barrio
budget has approved appropriations excess of the estimates of income
duly certified collectible or that the same has not fully provided for
statutory or contractual obligations, the budget shall be declared
inoperative in its entirety. Items of appropriation in excess of
existing salary laws and executive orders shall be disallowed or reduced
accordingly. The municipal treasurer shall, within the ninety-day
period hereinabove fixed, advise the barrio captain concerned, thru the
barrio treasurer, of any action taken on the budget under review.
Following receipt of such advice, it shall be unlawful for the barrio
treasurer or the municipal treasurer who has custody of the funds to
make further disbursement of funds from any of the items of
appropriation declared inoperative, disallowed or reduced.
Disbursement of appropriations for development projects.
SEC. 39. Disbursement of appropriations for development
projects.—Appropriations for development projects funded from the
twenty per cent of the annual internal revenue allotment of the local
government and from the barrio development fund shall not be disbursed
until after the corresponding work programs shall have been reviewed by
the Secretary of Local Government and Community Development or his duly
authorized representative. The Secretary shall issue the guidelines
necessary in the proper implementation of this Section.
Administrative issuances; Budget operations manual.
SEC. 40. Administrative issuances; Budget operations
manual.—The Secretary of Finance shall have rules and regulations as
may be necessary to facilitate effective implementation of the
provisions of this Chapter and shall within one year from the
effectivity hereof, promulgate a Budget Operations Manual for local
governments to improve and systematize methods, techniques and
procedures employed in budget preparation, authorization, execution and
accountability.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
