FAQs for LGUs' Budgeting

A. Budget Preparation
Can the LGU appropriate for Monetization of Leave Credits?
Generally, Monetization of Leave Credits is chargeable against savings. However, under CSC-DBM Joint Circular No. 2, s.2003,
Monetization of Leave Credits, CNA Incentive Bonus, Overtime Pay, and such other benefits that are authorized by law but are
chargeable against savings of the LGUs may also be included by direct appropriation either in the annual budget or supplemental
budget of the LGU concerned, provided these are within the PS Limitation as stipulated under Section 325 (a) of R.A. No. 7160.
Section 315 of R.A. No. 7160 provides that the local treasurer shall submit a certified statement covering the income and
expenditures of the preceding fiscal year, the actual income and expenditures of the 1 st two quarters of the current year,
and the estimated income and expenditures for the last two quarters of the current year. Article 411 of the IRR of R.A. No.
7160 provides that all such statements of income and expenditures shall be jointly certified by the local treasurer and the
local accountant.
Can the LCE revise the amounts indicated in the Certification issued by the Treasurer?
Can the Treasurer object to such decision/action of the LCE? What is the remedy of the Treasurer?
In case the treasurer does not concur with the decision/action of the LCE, he should state so in writing. Section 342 of R.A. No.
7160 may be applied by analogy, which states that, Unless he registers his objection in writing, the local treasurer, accountant,
budget officer, or other accountable officer shall not be relieved of liability for illegal or improper use or application or deposit of
government funds or property by reason of his having acted upon the direction of a superior officer, elective or appointive, or upon
participation of other department heads or officers of equivalent rank. The superior officer directing, or the department head
participating in such illegal or improper use or application or deposit of government funds or property, shall be jointly and
severally liable with the local treasurer, accountant, budget officer, or other accountable officer for the sum or property so illegally
or improperly used, applied or deposited.
Can appropriation for development projects of no less than twenty percent (20%) of the IRA be appropriated in lump-sum
amount?
No. The said 20% appropriation should cover itemized projects. Section 287 of R.A. No. 7160 provides that each LGU shall
appropriate in its annual budget no less than 20% of its annual IRA for development projects. Article 384 of its IRR provides
further that the local development projects to be funded are those embodied or contained in the local development plans.
Article 410 further provides that the LDCs shall submit to the local finance committee a copy of the local development plan and
annual investment program prepared and approved during the fiscal year before the calendar for budget preparation in accordance
with applicable laws, specifying therein projects proposed for inclusion in the local government budget. x x x. The local finance
committee shall use the plan to ensure that projects proposed for local funding are included in the budget.
Is an Appropriation Ordinance necessary to authorize utilization of R.A. No. 7171 Funds?
There are two components of the R.A. No. 7171 shares of LGUs:
Direct shares
Congressional shares
The direct shares of LGUs from R.A. No. 7171 Funds are released without specifying the projects/purposes covered
thereby. Accordingly, an Appropriation Ordinance is necessary to authorize the use of the said share to cover the projects/purposes
enumerated under R.A. No. 7171, as implemented by Memorandum Circular (MC) No. 61-A of the Office of the President.
The Congressional shares of the district from R.A. No. 7171 Funds are released with specific projects/purposes identified by the
legislator concerned. Thus, they are considered as Trust Funds.
A trust fund shall only be used for the specific purpose for which it was created or for which it came into the possession of the
local government unit (Section 309, R.A. No. 7160). Trust Funds are Special Funds that are deemed automatically appropriated
for purposes indicated therefor (Article 448 [b], IRR of R.A. No. 7160).
Accordingly, such congressional shares no longer require Appropriation Ordinances.
Is an Appropriation Ordinance necessary to authorize utilization of loan proceeds?
Loans, interests, bond issues, and other contributions for specific purposes are considered as special accounts in the general fund
(Section 313, R.A. No. 7160). A special account in the general fund requires an Appropriation Ordinance for its utilization.
Is an Appropriation Ordinance necessary to authorize the use of the shares in the proceeds fromthe development and
utilization of the national wealth?
Yes. Article 391 of the IRR of R.A. No. 7160 provides that the proceeds from the shares of LGUs in the proceeds from the
development and utilization of the national wealth shall be appropriated by their respective Sanggunian to finance local
development and livelihood projects. Article 454 (d) of the same IRR reiterates this mandate and provides further that
disbursements from such special accounts under the General Fund shall proceed from itemized appropriations in the budgets of
LGU instead of by lump-sum. Such itemized appropriations shall be for specific development projects/activities embodied in the
local development plan and/or public investment program formulated and prioritized by the LDC and approved by the Sanggunian