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).C Dy under Section 336 is not a budget and need not emanate from the LCE? (Kmphasis Applying the foregoing rules to your case, if he intention of Mayor Quimbo in using, the funds taken from savings under the Office of the Sangguniang Bayan was indeed to propose a Supplemental Budget, since according to you it was denominated as Supplemental Budget No. 2, F.Y. 2017, pursuant to Section 321 of the Local Government Code of 1991, we are of the view that the same is tenable for the following reasons: 1, Since the source of funds was denominated as “savings”, such funds are deemed actually available, to be certified by the Municipal Treasurer; 2. Said savings were already reverted: 3. As such, it can be re-appropriated to any item of expenditure under any expense class. As to the use of Capital Outlay and Maintenance and Other Operating Expet (MOOE) of the Offices of the Sangguniang Bayan by LCE, the limitations on the use of said finds are provided under Section 322 of the Local Government Code of 1991, thus: Section 322. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations, - Unexpended balances of appropriations authorized in the annual appropriations ordinance shall revert to the unappropriated surplus of the general fund at the end of the fiscal year and shall not thereafter be available for the expenditure except by subsequent enactment, However, appropriations for capital outlays shall continue and remain_valid until fully spent, reverted or the project is completed. Reversions of continuing appropriations shall not be allowed unless obligations therefor have been fully paid or otherwise settled ‘The balances of continuing appropriations shall be reviewed as part of the annual budget preparation and the sanggunian concerned may approve, upon recommendation of the local chief executive, the reversion of funds no longer needed in connection with the activities funded by said continuing appropriations subject to the provisions of this Section. Bust’ Operations Manual for the Local Government, 2016 edition _(htp://www-dbm gov. ph/wp: contenvuplods/ssiances/2016/Local620Budger%20 ular/LBC. 112 BOM insideMs20pages-conrec620paging, FINAL pd)O On the other hand, ifthe intention of Mayor Quimbo in proposing the Supplemental Budget was actually to use said savings under the Office of the Sangguniang Bayan to augment® items under the Office of the Mayor, we are of the view that this is already ide of 1991 inconsistent with Section 336 of the Local Government Asexplained by the DBM in their Budget Operations Manual for Local Government, 2016 Udition, the ordinance providing for the use of savings for augmentation 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. Therefore, Mayor Quimbo cannot use the savings of the Office of the Sanggunian to augment an item under the Office of the Mayor ‘As you also represented in your letter, your good Office (the Office of the Municipal Vice-Mayor) requested the Municipal Budget Officer to submit proposed Supplemental Budget No. 3, series of 2017 using the same savings under the Office of the Sangguniang Bayan, You further represented that your proposed Supplemental Budget did not bear the signature of Mayor Quimbo. If your intention in requesting the Municipal Budget Officer to submit proposed Supplemental Budget No. 3, series of 2017 was indeed to propose a Supplemental Budget, then this is inconsistent with Section 321 of the Local Government Gode of 1991, as reiterated in the DBM in their Budget Operations Manual for Local Government, 2016 Edition, which requires that the supplemental budget should emanate from the LCE. However, if your good Office's intention in using the savings under the Office of the Sangguniang Bayan was to augment items under the Office of the Sangguniang Bayan then the same is tenable since as already mentioned above, the LCL or the Presiding Officer of the Sanggunian may augment any item in the approved annual budget for their respective offices from savings in other items provided however that it is within the same ‘expense class of their respective appropriations, While it is true that your proposal to use savings for augmentation under the Office of the Sangguniang Bayan does not require the prior nod or permission of the LCE as explained above, since the use of savings for augmentation requires the passage of an * Attcle 454, IRK ofthe Local Government Code of 1991 states “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 resurces is determined to be deficient”ie © ordinance, the Mayor shall nonetheless be required to approve the same pursuant to Section. 54 of the Local Government Code of 1991 We hope to have sufficiently addressed your concerns ‘Thank you. fryfagy yous, AUSTERE A. PANADERO. Undersecretary Lsa77 fo Copy farntahed: DIK, PAISAL O, ABUTAZU ILG REGION 1X 5 Pajares Ave, San Francisco District Pagadian City ‘Section 54, Approval of Onlinances (@) Bvery ordinance enacted by the sangguniang panlalawigan, sanygunlang pantungrod, oF sangguniang bsyan shall be presented to the provincial governor or cty or municipal mayor. as the case may be I the local chief ‘executive concerned approves he same, he shall fix his signatwre on each a every page theteof otherwise, he shall vto it and return the same with his objections tothe sanggunian, which may proceed 1 reconsie® the same, The stnggunian concerned may override the veto ofthe local chief executive by two-thitds (2) vote of allits members. thereby making the ordinance or resolution effective forall legal intents an purposes