I

Replrblic of the Philippines

DEPARTMEI{T OT THE INTERIORAND LOCAT

GOVXruITT

DlI,C-NAPOI-COM Building, EDSA comer Quezon Avenue, Quczm

Ciiy

www.dilg.gov.ph

OFFICE OF THE UilDERSECRETARY FOR LOCAL GOVERNIiIEiIT

HON. MARILYNA. IIMENEZ

Municipality of Libmanan, Carnarines Sur

DILG Legal Opinion No.20,S.2OL4

0 3 JUN 2014

Dear Mayor fimenez:

This refers to yow 25 April 2014 letter requesting this Department's guidance and legl
opinion conceming Section 323 of the Local Government Code, namely:

"1. Can tfu sangguniang bayan take up resolutions, ordinaruvs nruL other matters tir tit'
ses;ions duing the nitety (90) days (sic) ftom the beginning of the fscal year uthet tluy
haae not yet approoe (sic) the appropriations ordinance of the ctnent year? If the ansuter
is in the negatiae, ahat are the pssible administtafuie liabllitics ol the concerncit oflrtiitls
of the sangguniang bayan?

2. Can the sangguniang bayan take up renlutions, orilinanczs and othq matters in its
sessions after the 90 day peiod. from the beginning of the fiscal year uthnr they haae not
yet aryroaed the aryroprintions ordinance of the cunent year and when the LGU is aheada,
in a re-enacted budget? If the answer is in thc negatioe, what are the possible administratiue
liabilities of the concenud olfcials of thz sangguniang bayan?
3. What are cor:ered by the term "additional rcmunerations" mentioned in Section 323 that
cannot be girten to mzmbers of thc sangguninng (sic) when tfu LGU is on a re<nacAd
budget?

4. Arc the

"

", "L4sgc,arte_bsgfu_91

hcalth workers" and "fonuep" pnrt of salaries and zoages anil,/or contractual and statutoyn
obligations of the LGU therclore couW be lawlully be ilisbursd and releavil to members of
the sanggunian or other oficials while the LGU is on a re-enacted budget?

5. Hotrt is statutory and conbactual obligations of the LGU defnetl?

6. May a continuing inftastructure deuelopment project (completion canflot be fnished
utithin one fscal lear) of the LGU with funding and implementation requirements cooered
by a Memoranilum of Agreement (MOA) and/or contunct with other line agencies nnd stalcc
holders be considered as one of tht "antraetual obligations" of thz LGU?

7. May the budget for a continuing antractual obligation of the LGU (referring to
in[rastructure project with MOA with othzr linc agencizs and stakzholders mentinaei.iv
thc sftth query) funded from the 20% Economic Deaelopment Fund (EDF) of the LGU, be
lna,fully relea*d anrl the deaelopment project continued for the culrent year undn the

"re-rn)

b,uagrt", consideing thot the ,ongguln zoould not approve tht

appropiations for both thc gencral fund nnd thz 20% EDF of the LGU?

pinciple of

8. In genetal, urhnt arc the possible remetlies of the local chief execatitu if majoity of the
nembers of the sangguniang bayan would not approoe the submitted etecutiue budget on
its meits and hnae continued opposition to said budget nlely becau* of political colour
and affiliation? Said acts are clearly grossly inimical to public seruice and public interest.
9. May the LGU choov not to follout thc afore-cited DBM Regional Opiniona on uthnt are
" essential operating expenvs" of the LGU uniln the re-enacted budget and disburse fands
follouing thc MOOE appropriations in the 2013 budget alreaily re<nacteil in the current
year per Section 232 of the LGC?"

In your letter you alleged that despite the timely submission of the executive budget of the
LGU for the current year, the Sangguniang Bayan (hereinafter referred to as "SB") failed to
enact the 2014 budget ordinance of the LGU covering the General Furd, 20olo Economic
Development Fund (EDF), 5% Catamity Fund and 296 Discretionary Fund for the current
year.

For failure of the SB to pass the budget ordinance for the current year, your local
goyernment unit (LGU) is now on a re-enacted budget effective April 2014 following
Section 323 ofthe Local Government Code (hereinafter, the "Code"), uiz.:

Section 323. Failure to Etwct the Annual Appropiations. - In case lfu

sanggunian concerned fails to pass tht ordinance authoizing the anrutal
appropriations at the begrnning of tfu ensuing fiscnl yea4 it slull continue to
"

Itold sssions, ttithout additional renruneration for its memhers, until sucft
orditunce is approtsed, and no other business mny be taken up duing such
sessions. lf the sanggunian still fails to entct such ordinance after nineA Q0)
days from the begtnning of tlu fiscnl vear, tfu ordinance authorizing the
aryropiations of the preceding gear shallbe dtemed reetwcted and shall remnin
in force and e{ect until the ordinance authoizine the proposd appropriations
is passed by the sanwnian concerned. Hozoarcr, only the annual
appropiations for salaies and wages of eisting positions, statutory and
contractual obligations, and. essential operating expenss authoized in the
annual nnd supplementnl budgets for the preceding year shnll be deemed
reenacted and disburvmefi of funds shall be in accordance thereutith.

ln the implementation of such reenacted orilinance, tht local treasurer

concerned shall excludt from thc estimates of income for the preceding fscal
year tlnse rcalized from nonrecurring sources, lilce national aids, proceeds f'rom
loans, xle of asvts, prior year adjustments, and other atulogous rcurces of
income, No ordinance authoizing supplemzntal appropiations shall be passed
in place of the annual appropriations.
.

ln reference to he
fo. ophi{rn

atdld

20 February 2014 opinbn of oBli,lRegbn V wtiich was rndoEd in resods

b I'hyor Jimene.'s 16

Fbruary m11 eoqest

,)*n

In

,n*r* estimates be less than ,n"Qg*gr* reenacted

case the
apprcpiations, the local treasurer concenud shall accordingly adztise the
sanggunian conczrned which shall, uithin ten (10) days frcm tfu reuipt of such
adoice, malce the necessary adjustments or reductions. The reuised
appropriatians authoized by the sanggunian concerned shnll then be the basis
for disbursements. " [Underscoring ours]
Considering the limitations set forth in Section 323 of the Code, your LGtls
irnplementation of development plans and the delivery of the essential and basic senhces
to its constituents for the year is severely affected.
Hence, this request.

li

and

2pd

Qrrerie$

The first sentence ofSection 323 ofthe Code needs no lirrther elucidation as it clearly states
that if the SB fails to pass an ordinance authorizing the annual budget, it shall continue to

hold sessions, until such ordinance is approved and no other businegs may be taken up
during such sessions.

It

is al elementary rule in statutory construction that when the words and phrases of a
statute are clear and unequivocal, their meaning must be determined from the language
employed and the statute must be taken to mean exacdy what it says.s
The above-mentioned provision further provides that "if the s'nqgunian still fa s to enact
such ordinance after ninery (90) days from the beginning of the fiscal year, the ordihance
authorizing the appropriations of the preceding year shall be deemed reenacted and shall
remain in force and effect untjl the ordirrance authorizing the appropriations is passed by
the sanggunian concerned"6. Hence, by necessary implication, the SB can take up other
matters after the lapse ofthe 90-day period considering that the LGU is already operating
on a reenacted budget subject to certain lirnitations.

Anent the possible liabilities of the concerned officials of the SB in the first irstance,
reference should be made to Section 60 of the Code to determine the applicable ground/s
for disciplinary action.

3d &

4r

ercie:.Additional

Remunerations" and Disbunement of

Benefits Authorized by Iaw Under a
Reenacted Budpet
The matter being within the administrative experlise of the Department of Budget ano'
Management (DBM), this Department deems it proper to refer the same for an authoritative
interpretation of said agency. (Please see attached copy of letter to the DBM.)

5
6

8a.arda, et d., 16. G|j$b, t al. (G.R. No.

?n Sentsncs, Sedion 323

81

163. 26 Sptenber 1908)

5d & 6d

o
Oueries: .9rarurorJr, &

Con tnc tual O bligations

ofthe Code, obligations refer ro an amount committed to

be paid by the local governmetrt unit (LGLI) for any lawfirl act made by an accountable
offrcer for and in behalf of the local government unit concerned. Under Section 323 ofthe
As defined under Section 306 (j)

Code only "statutory obligations," or those demandable obligations derived fiom an e.:rpress
provision of law7, and "contractual obligations," or those obligations incurred by virtue of

contracts entered into by the local chief executive pursuant to Section 22 (c'f ol fneCohe,
that were authorized in the annual and supplemenal budgets of the preee<llsgJcel shall
be deened reenacted and disbursements shall be in accordance therewith.
Clearly, a continuing infrastructure development project of the LGU which was allegedly
covered by a validly executed Memorandum of Agreement (MOA) and authorized in the
annual or supplemental budget of the preceding year is among those deemed reenacted^
76 Qaery:, Coatinuing Appropria tions

Inliastructure projects already authorized in the preceding year's appropriations ordinance

are classified as "conthuing appropriations"e and are available to support obligations
incurred pursuant to the implementation of the infrastructure proiect even when these
obligatioru are incurred beyond the budget year. By express provision of Section 32210,
reversions of continuing appropriations shall not be allowed unless obligations therefor
have been fully paid or otherwise setded.
Clearly, following Section 322 in relation to Section 323 of the Code, appropriarions for
contractual obligations of LGUs, such as the infrastructure project funded from the 20olo
economic development fund that were authorized in the budget of the preceding )'ear as
in this case, may be lawfirlly disbursed until the project is completed. What ulv-,ha-'
prohibits is the implementation of new projects or the incurring of new obligations under
a reenactd budget, as well as the disbursement of furlds not authorized in the
annuaVsupplemental budgets for the preceding year.

O!rcry: Nature

of the

SBb

Authorization of the Budget

The action of the SB in authorizing the annual appropriations is legislative in nature anh
requires the collective exercise of judgment or discretion by the members thereof as
opposed to the exercise of a purely ministerial function as distinguished, tn Roble A,rzastre
Anicle 1 157 & 1 158, Civil Code of t|e Fhiippinos
(c) Unless otle ise pro!,iled in bb Cod, no coitsacl nEy be
hb by h6 l@l d&l xcutiv in bddf of he locl go\rernfibnt lihqrt p|kr
aulhorizElion by he sangguni oncemd.
Arprwialion' rde|s b an app.lprialirl a/ailable b suppod fio obliratiorF for a spcifred puD6e o. prjei1, such as hc llr he
' (e) 'Conlinuiryplrysical
cdrsfuc{on of
stu(trfrs or
be acquiriltuo of rBal propdy o. equirrrrl elco slEn hese obtEalixE a|e nured beyord tle brdge{ ye.r.
7

x[

onM

ir

Sclion 322. RetroFlon of Une4sded Baldlc6 ofApFopriations, Co. inuhg ADproFiatims. -Unoeonded balancs of appropdaliois aufp.ized h tle
annual appro9dali(lrg ordirance shdl G'/rtb t16 omlpropdabd surpuls o{ hggle(al fund at ho erd of Ee 6saa,rearad shail rrot tE ee&lr.bp-a..jldJc
for exprdifure ercspt by subsquer enaafnent. Ho*va, ooroodatirts foacdilalo al|s shal codinie and lElnahvatd unilfully soant tsvtrtd oatE
orciecl is comoletsd. Reve6bns of contnuino aoorcorialionr shall cor$rue ard rmah valid until fu[y s06nl letreied or fis orcict b comotetld.
10

Inc.

vs.Hon

ruAo)un"aoneral

(G.R. No. 128509.

o"r0rr,2006),

the suprerne

Court ratiocinated:

"Discretion," when applied to public functionaies, means a poTtler or

ight confened upon thzm by law or acting offcially, unils certain
circumstances, uncontrolleil by the judgment or conscience ofothers. A purely
ministerial act or duty in contradiction to a discretiorul act i6 oflc which an
fficer or tribunal performs in a giuen state offacts, in a prescitted manner, in
obedience to the mandnte of n legal authority, without regard to or the exercis
of his ozm jwlgment upon the prcpriety or impmprizty of the act dorc. If the
laat imposes a duty upon a public fficer anil giaes him thz ight to decide hoat
or when the duty shnll be peforncd, such duty is disctetionary and not
ministeial. The duty is ministeinl only when tht ilischarge of thz ume
requircs neither the exercise of officinl discretion or judgmmt.

Notably, Republic Act No. 9,185, otherwise known as t}lle Anti-Red Tape Act of 2(M7,
excludes from its coverage those ofEces perforrning legislative functions, among others, as
it covers offices exercising purely rninisterial fi:nctions.rl
Nonetheless, disciplinary action agairst erring members of the SB may be commenced
based on the applicable ground,/s as enumerated under Section 6O of the Code.

9\ Qtery. DBM Interpretation of

tial

"Essen

O oera tin s ExDe Dses

"

The interpretation of the DBM of "essential operating expenses" is persuasive and deserves
respect urder the "Doctrine of Respect for Admiaistrative or Practical Construction" as
explained by the Suprerne Court 2'd Division tn Pffiippiae A-au*meat and Gamiag
Corpontion w. Pffiippine Geming /urisdiction lacorpond, et al (G.R t\b. lTfit A'
April 2009), uiz.:

"ln applying

said doctrine, courts often refer to seaeral factors uhich

pinciple
controlling weight in particular instances, or as inileryndent ruIes in
themslues. The* factors incluile the respect ilue the goaetnmmtal agencies
chargeil with ailministration thcir contpetet ce, expeftness, ex?erimcel
anil informeil judgmmt anil the fact that they lrequently are the ilrafterc
of the lau they interpref, that the agmcy is the one on zahich the
legislature must rely to ailoise it as to the practical anrking out of the
etatute, and practical application of the statute ptesents the agency witb
unique oVportunity and exryricnces for discoaeing defciencies, inaccuracies,
or improoements in the statute."
may be regarded as ba*s thereof - factors leading the courts to giue the

I' Seclion

14 (a),

7160

In view oithe

*t"glg

pronouncemmt of the Court, tn" iotQ*t"tioVopirrion of the

DBM on the subject is controlling, hence, should be accorded weight and respect.
Norwithstanding the foregoing opinion, the Municipality of Libmanan is not precluded
from seeking the DBM of the DOJ's opinion should it find the foregoing opinion
insufrcient.

Very uuly yours,

AUSIEREA. PAT{ADERO
Underrccretary : (D

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hd

o*J
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ARDELOItrS T, PASIOR, OlC,

D|LG

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