No. It is not legally tenable. An early retirement program to be valid should be by virtue of a valid reorganization pursuant to a law passed by Congress.¹ Although local autonomy grants local governments the power to streamline and reorganize as may be inferred from Sections 16 and 76 of the Local Government Code of 1991, it does not confer authority upon any local government unit to create a separate and supplementary retirement benefit plan.²

Section 28, paragraph (b) of Commonwealth Act No. 186, as amended, prohibits government agencies from establishing supplementary retirement or pension plans from the time the Government Service Insurance System charter took effect, while those plans already existing when the charter was enacted were declared abolished. The purpose behind the proscription found in Section 28, paragraph (b), as amended was to address the need to prevent the proliferation of inequitous plans. According to the Supreme Court:

“x x x Sec. 28 (b) as amended by RA No. 4968 in no uncertain terms bars the creation of any insurance or retirement plan – other than the GSIS – for government officers and employees, in order to prevent undue and inequitous proliferation of such plans. x x x. To ignore this and rule otherwise would be tantamount to permitting every other government office or agency to put up its own supplementary retirement benefit plan under the guise of such “financial assistance.”³

^[1] Laraño vs. Commission on Audit

^[2] City of General Santos vs. Commission on Audit, G.R. 199439, April 22, 2014

^[3] Conte vs. Commission on Audit, G.R. No. 116422, November 4, 1996

Generally, Monetization of Leave Credits is chargeable against savings. However, under Civil Service Commission-Department of Budget and Management (DBM) Joint Circular No. 2, s. 2003, Monetization of Leave Credits, Collective Negotiation Agreement (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 Personal Services (PS) Limitation, as stipulated under Section 325 (a) of RA No. 7160.

No. The said appropriation for the 20% Development Fund should cover itemized projects. Section 287 of RA 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 the IRR of RA No. 7160 further provides that it shall be mandatory for each LGU to set aside in its annual budgets amounts no less than 20% of its IRA for the next year as appropriation for local development projects that embodied or contained in local development plans.

Yes. An Appropriation Ordinance is necessary to authorize utilization of loan proceeds. Loans, interests, bond issues, and other contributions for specific purposes form part of the general fund of the LGU.

Pursuant to Section 305 (a) of RA No. 7160, no money shall be paid out of the local treasury except in pursuance of an appropriation ordinance or law.

Yes. Article 391 of the IRR of RA 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 concerned.

The CNA Incentive Bonus shall be taken up as PS Expenditure

As to voting requirement – The affirmative vote of a majority of all the Sanggunian members is required to pass an Appropriation Ordinance, whether for annual or supplemental budget, under Article 107 (g) of the IRR of RA No. 7160. Relatedly, the use of savings and augmentation within the same expense class falls under the category of “Use of Appropriated Funds and Savings” under Section 336 of the same law. Hence, if the Appropriation Ordinance requires qualified majority in its passage, it follows that any modification in said appropriation will have to comply with the same requirement.

As to procedural requirement – A supplemental budget is not required in passing an ordinance authorizing the use of savings and augmentation within the same expense class under Section 336 of RA No. 7160 since the law merely requires the authority “by ordinance.”

While the ordinance under aforementioned Section 336 and an Appropriation Ordinance have the same voting requirements, each has a different procedural requirement. Further, the ordinance under Section 336 may have a regular format simply stating that the LCE and/or the Presiding Officer of the Sanggunian is 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, as opposed to the use of savings considered as funds actually available to be covered by a supplemental budget as provided under Article 417 of RA No. 7160, as amended by AO No. 47 (implementing Section 321 of RA No. 7160).

Should the Sanggunian decide to grant the LCE and/or the Presiding Officer of the Sanggunian with the authority to use savings and augment within the same expense class in their respective appropriations, the said authorization may be included as a general provision/section in the ordinance authorizing the annual appropriations.

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 to review by the DBM or the Sangguniang Panlalawigan, as the case may be (Sections 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 supplemental budget submitted by the LCE. The ordinance 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.

No. The proposed ordinance granting the authority to use savings under Section 336 of RA No. 7160 need not emanate from the LCE unlike that of a supplemental budget.

A 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 LCE.

On the other hand, the proposed ordinance granting authority to use savings under Section 336 is not a budget and need not emanate from the LCE.

The following matrix summarizes the distinctions between the use of savings under Sections 336 and 321
as aforementioned:

No. Use of savings and augmentation under Section 336 of RA No. 7160 is possible only when there is an “approved annual budget” for the current year. A reenacted budget does not qualify as an approved annual budget for the current year.

Yes, provided that the aggregate increase does not cause an excess over the total proposed amount in the executive budget pursuant to Article 415 (a) of the IRR of RA No. 7160.

Yes, but only to provide for statutory and contractual obligations and it does not cause an excess over the total proposed amount in the executive budget pursuant to Article 415 (a) of the IRR of RA No. 7160.

As reference to questions 6 and 7 hereof, the doctrine enunciated in the case of Sarmiento, et al. vs. The Treasurer of the Philippines, et al. (GR Nos. 125680 and 126313, September 04, 2001) may be applied where the Supreme Court ruled that under Section 25 (1), Article VI of the 1987 Constitution, Congress is enjoined from increasing the total budget for the operation of the Government as recommended by the President, not the individual items of appropriations. Records of the 1986 Constitutional Commission reveal that the purpose of the provision is to avoid the possibility of a big budget deficit if Congress were given an unbridled hand in passing upon the appropriations recommended by the President as specified in the budget. The constitutional prohibition against such increase is an assurance that the expected income of the government will be sufficient for the operational expenses of its different agencies and projects specified in the appropriations law.

It may be noted that the subject provision of R.A. No. 7160 prohibiting the increase in the proposed amount in the executive budget is similar to the provision in Executive Order No. 292 (the Administrative Code of 1987), particularly Section 24, Chapter 4 on Budget Authorization, Book VI, in the case of national government budgeting to wit:
“SEC. 24. Prohibition Against the Increase of Appropriation. – The Congress shall in no case increase the appropriation of any project or program of any department, bureau, agency or office of the Government over the amount submitted by the President in his budget proposal. In case of any reduction in the proposed appropriation for a project or program, a corresponding reduction shall be made in the total appropriation of the department, office or agency concerned in the total of the General Appropriations Bill.”

No. The Sanggunian cannot pass an Appropriation Ordinance covering a supplemental budget for the current year after December 31.

Supplemental budgets cover changes in the annual budget, thus, they should be authorized within the fiscal year covered by the annual budget. Section 353 of RA No. 7160 provides that the official fiscal year of LGUs shall be the period beginning with the first (1st) day of January and ending with the thirty-first (31st) day of December of the same year.

Further, the reversion of funds under Section 322 of RA No. 7160 is at the end of the fiscal year (except in cases of continuing appropriations when the capital outlay projects are not yet completed).

Posting and/or publication, as the case maybe, of an ordinance is required under Section 59 of RA No. 7160. The mandatory word “shall” was used by the law without any qualification or exemption, as follows:

“(a) 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 in a bulletin board at the entrance of the provincial capitol or city, municipal, or barangay hall, as the case may be, and in at least two (2) other conspicuous places in the local government unit
concerned.”

“(d) In the case of highly urbanized and independent component cities, the main features of the ordinance or resolution duly enacted or adopted shall, in addition to being posted, be published once in a local newspaper of general circulation within the city, provided, that in the absence thereof, the ordinance or resolution shall be published in any newspaper of general circulation.”

If the Appropriation Ordinance is not posted and/or published, as the case may be, its validity may be questioned. However, laws, ordinances and other issuances enjoy the presumption of regularity and validity until invalidated by the court.

By analogy, the rule under Section 323 of RA No. 7160 may be applied. The reenacted figure should not exceed the estimated income since the basic rule is that the aggregate amount appropriated shall not exceed the estimates of income (Section 324[a], RA No. 7160).

The law provides that the Secretary to the Sanggunian shall affix his signature to all ordinances and present the same to the Presiding Officer for his signature (Section 469 [c] [2], RA No. 7160; Article 122 [a] [3] [ii], IRR of RA No. 7160).

The requirement is mandatory. Accordingly, the Secretary to the Sanggunian cannot refuse to sign the Appropriation Ordinance. Otherwise, he/she may be liable under applicable laws.

Nevertheless, in case the Secretary to the Sanggunian refuses to sign, such refusal will not affect the validity of the Appropriation Ordinance duly passed by the Sanggunian. Otherwise, that would be tantamount to giving the Secretary to the Sanggunian the “veto power” or the control in deciding whether the Appropriation Ordinance will be valid or not, and if it will be submitted for the consideration of the LCE.

The following provisions of RA No. 7160 mandate the Presiding Officer to sign the ordinance:

The Secretary to the Sanggunian shall affix his signature to all ordinances and present the same to the Presiding Officer for his signature (Section 469 [c (2) ], RA No. 7160; Article 122 [a (3) (ii)], IRR of RA No. 7160).

The Secretary to the Sanggunian shall forward to the LCE for approval, copies of ordinances enacted by the Sanggunian and duly certified by the Presiding Officer (Section 469 [c (3)], RA No. 7160; Article 122 [a (3) (iii)], IRR of RA No. 7160).

Further, Section 49 provides that the temporary Presiding Officer “shall certify within 10 days from the passage of the ordinance xxx.”

However, if the Presiding Officer refuses to sign, such refusal will not affect the validity of the Appropriation Ordinance duly passed by the Sanggunian since the Presiding Officer has no veto power. In such case, the Secretary to the Sanggunian may certify to the fact of the Presiding Officer‘s refusal to sign.

There appears to be no legal provision in such a case. However, it may be assumed that the withdrawal of the proposed Appropriation Ordinance may not be allowed since the legislation process at such point has already been completed. Thus, the executive consideration of the proposed Appropriation Ordinance should take its course.

The total amount of the approved loan even if it would be received in tranches may be the subject of appropriations under the AB or SB.

Section 316 (b) of RA No. 7160 provides that the LFC shall recommend the appropriate tax and other revenue measures or borrowing which may be appropriated to support the budget.

Further, SB may be enacted when it is supported by new revenue sources pursuant to Section 321 of RA No. 7160. It may be gleaned from Article 417 of the IRR of the same law as amended by AO No. 47 that approved loans may be considered as a new revenue source when it has not been included in the estimate of income which served as basis for the AB or not taken into account during the preparation and enactment of the AB.

For SB supported by funds actually available as certified by the local treasurer, the amounts to be certified are only those actually collected at any given point during the fiscal year, which is over and above the estimated income collection for that point in the year. Further, funds are likewise deemed actually available when there are savings as defined under Article 417 of the IRR of RA No. 7160, as amended by AO No. 47.

In this particular case, a separate procurement for every loan proceeds released by the lender and actually received and appropriated by the LGU is necessary under Section 5 of R.A. No. 9184, the Approved Budget for the Contract (ABC) for purposes of procurement is the budget for the contract approved by the Sanggunian as embodied in the Appropriation Ordinance authorizing the Annual/Supplement Budget. However, in order to avoid the situation where the separate procurements will be construed as Splitting of Contract, which is prohibited under R.A. No. 9184, it is necessary for the LGU to appropriate the total amount received by the LGU, where releases of loan proceeds are made in several tranches.

The minimum signatures required in an Appropriation Ordinance are those of the Secretary to the Sanggunian, the Presiding Officer, and the LCE.

The Internal Rules of Procedure of the Sanggunian may, however, provide additional requirements for signatures in the Appropriation Ordinance.

Only 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 year shall be deemed reenacted and disbursement of funds shall be in accordance therewith (Section 323, RA No. 7160; Article 415, IRR of R. No. 7160).

Accordingly, a reenacted budget will have implied disadvantages, such as, but not limited to, the following:

• No creation of positions
• No new programs, projects and activities
• No utilization of the increase in IRA allocation for the year since the same is not covered by an Appropriation Ordinance
• Non-implementation of non-recurring activities no matter how vital they may be
• No supplemental appropriations

No. Only 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 year shall be deemed reenacted and disbursement of funds shall be in accordance therewith (Section 323, RA No. 7160; Article 415, IRR of RA No. 7160).

Accordingly, there can be no implementation of new projects under a reenacted budget.

As a general rule, projects should be appropriated in the proper offices under the executive department as it is the LCE who is primarily vested with the responsibility for the execution of local budgets and the accountability therefor.

On the other hand, the functions of the Sanggunian is primarily legislative in nature, thus, they are not tasked to execute budgets or implement projects. However, appropriations for projects for the Office of the Sanggunian (e.g., construction of building) may be provided under the said Office.

Yes, provided the ordinance authorizing the supplemental appropriations was enacted within the fiscal year covered by the annual budget, inasmuch as supplemental budgets cover changes in the annual budget as authorized under Section 321 of RA No. 7160, as implemented by Article 417 of its IRR as amended by AO No. 47 dated 12 April 1993.

If a legal basis exists during the review of Appropriation Ordinance, the provision for the lump-sum may be allowed. Nevertheless, a condition that subsequent provisions should be made only when there is an existing legal basis at the time of enactment of the Appropriation Ordinance shall be imposed in the review action. Otherwise, in the absence of a legal basis at the time of the budget review, the lump-sum will be disallowed.

No. The enactment of the Appropriation Ordinance has already been completed at the LGU level. Hence, the review process must take its course.

The budget or items of appropriations as overridden shall be implemented. Under Section 55 of RA No. 7160, the vetoed item or items of appropriation shall not take effect unless the Sanggunian overrides the veto; otherwise, the item or items in the Appropriation Ordinance of the previous year corresponding to those vetoed, if any, shall be deemed reenacted.

No. Section 287 of the LGC mandates LGUs to appropriate no less than 20% of its annual IRA for development projects in the annual budget. In which case, insufficient provisions for 20% of the IRA for development projects will render the declaration of the Appropriation Ordinance as inoperative in its entirety.

In the checklist of Documentary and Signature Requirements for Supplemental Budget, the Certification of Savings is already included. Hence, the Trial Balance may no longer be required. However, it is the responsibility and accountability of the certifying officials in the Certification of Savings to ensure that the declaration therein are true and correct. Otherwise, they may be made liable under applicable laws.

No, the Sanggunian did not take the proper action on the matter. Pursuant to Section 55 of RA No. 7160, the Sanggunian may override the veto of the LCE by two-thirds (2/3) vote of all its members thereby making the ordinance effective.

The first Appropriation Ordinance which was enacted in accordance with the pertinent provisions of RA No. 7160 shall be the basis of the budget review.

An ordinance or resolution is not required to be passed by the Sanggunian to effect adjustments in the release of quarterly allotments of Offices.

Any shortfall in revenue collection should signal the deferment of non-priority expenditures and the nonrelease of the allotments indicated as reserve, for later release or needing clearance under the Allotment Release Order (ARO). These reserve impositions, earmarking of funds for clearance and withholding of funds for later release to provide safeguards for shortfall in the collection of anticipated revenues are policybased actions to be reflected in the Appropriation Ordinance for the budget year prior to the issuance or release of the ARO.

Accordingly, the deferment of non-priority expenditures and non-release of allotments are activities within the budget execution phase of the local budget process which are authorized by law to be undertaken by the Executive Branch of the LGU. Hence, an ordinance or resolution by the Legislative Branch of the LGU is no longer necessary. However, accountability/accounting reports reflecting the same must be furnished the Sanggunian on a regular basis.

If an appropriation ordinance already contains 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 sanggunian authorization is required, the appropriation ordinance already being sufficient.

On the other hand, if an appropriation ordinance contains lumpsum appropriations for capital outlays or describes the projects in generic terms without details 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.⁸

[8] Quisumbing vs. Garcia, G.R. No. 175527, December 8, 2008

The Vice-LCE has the authority.

The authority granted to the Vice LCE to sign all warrants drawn on the local treasury for all expenditures appropriated for the operation of the Sanggunian as well as to approve disbursement vouchers relating thereto necessarily includes the authority to approve purchase orders covering the same.

Effectively, since it is the Vice LCE who approves disbursement vouchers and approves the payment for the procurement of the supplies, materials and equipment needed for the operation of the Sanggunian, then he also has the authority to approve the purchase orders to cause the delivery of the said supplies, materials
or equipment.⁹

^[9]Atienza vs. Villarosa, G.R. 161081, May 10, 2005

Who is the approving officer/signatory of the vouchers prepared for the payment of salaries of job order employees in the Office of the Vice-Mayor/Vice-Governor and in the Sanggunian?

The authority to appoint casual and job order employees of the local Sanggunian belongs to the Vice-Mayor/Vice-Governor. The authority of the Vice-Governor/Vice-mayor to appoint the officials and employees of the local Sanggunian is anchored on the fact that the salaries of these employees are derived from the appropriation specifically for the said local legislative body.

It is the source of their salaries which sets the employees and officials of the local Sanggunian apart from the other employees and officials of the LGU. Accordingly, the appointing power of the Vice-Mayor/ViceGovernor is limited to those employees of the local Sanggunian, as well as those of the Office of the ViceMayor/Vice-Governor, whose salaries are paid out of the funds appropriated for the Sangguniang Bayan/ Panlungsod/Panlalawigan.

As a corollary, if the salary of an employee or official is charged against the municipal/ city/provincial funds, even if this employee reports to the Vice-Mayor/Vice-Governor or is assigned to his office, the Mayor/Governor retains the authority to appoint the said employee pursuant to Sections 444(b) (v); 455(b) (v); and 465(b) (v) of the LGC.

The Vice-Mayor/Vice-Governor, as the presiding officer of the local Sanggunian, has administrative control of the funds of the said body. Accordingly, it is the Vice-Mayor/ViceGovernor who has the authority to approve disbursement vouchers for expenditures appropriated for the operation of the Sangguniang Panlalawigan.¹⁰

^[10] Atienza vs. Villarosa, G.R. 161081, May 10, 2005