OBSERVATION ON THE MUNICIPAL BUDGET PREPARATION ISSUES FOR THE

MUNICIPAL ANNUAL BUDGET FOR C.Y. 2011 OF THE LOCAL GOVERNMENT

UNIT OF QUEZON, PALAWAN
By: Eddie J. Luneta
Municipal Budget Officer
I.

INTRODUCTION
1. The Municipal Budgets are prepared for:
a) Annual Budget
b) Supplemental Budget
2. Legal Basis:
a) Local Government Code (LGC) of 1991
(Republic Act No. 7160 Section 314 to Section 328)
b) Budget Operations Manual for Local Government Units (BOM-LGU)
2008 Edition (LBC 2008-90 September 1, 2008)
c) DBM-NEDA-DILG-DOF Joint Memorandum Circular No. 1 Series of
2007.

II.

METHODS AND PROCEDURES

The Municipal Annual Budget for the ensuing fiscal period is prepared
and must be submitted by the Local Chief Executive (LCE) not later than
the 16th day of October of the current period (LGC R.A. 7160, Section
318) to the Sangguniang Bayan for legislation and authorization.
Prior to the submission of the Municipal Annual Budget to the
Sangguniang Bayan (SB) the budget the preparation must be done
according to the requisites of the BOM-LGU.
Accordingly, the Budget preparations must follow some specific rules
and procedures as embodied in the (BOM-LGU) some of which are as
follows:

An Annual Investment Plan (AIP) must already been adopted not

later than the 15th of July of the current year (Sec.305 [h], Sec. 305
[i], Sec. 305 [g] of the LGC R.A. 7160).

III.

The budget preparation shall start upon adoption and approval of

the AIP to be used with the object of expenditures in the budget.
(Art. 410 IRR of R.A. 7160)
A Budget Call must be issued prior to the preparations of the
budget. (Part I, Chapter 2, Item 3.6, BOM-LGU).
The department heads must submit the estimates of their budgets
to the LCE on/or before the 15th of July of the current year (Sec.
317 LGC R.A. 7160).
The Municipal Budget Officer will:
a) Review and consolidate the budget estimates of the different
departments and offices including the Capital Expenditures (Sec.
475 (b.2) LGC R.A. 7160).
b) Assist the LCE, as the case maybe, in the preparation of the
budget and during budget hearings (Sec. 475 [b.3] LGC R.A.
7160).
The LCE will prepare the Budget and submit the budget to the SB
on/or before the 16th of October of the current year (Sec. 318 LGC
R.A. 7160).
All budget preparation forms must be signed by all concerned
department heads, to be reviewed and consolidated by the Budget
Officer and to be approved by the LCE. (PART II, Chapter 1, Item
5.0, page 49, BOM-LGU).

OBSERVATIONS
However, certain conditions were observed that
violated the provisions of the law as follows:

may have

1) ISSUES CONCERNING THE ANNUAL INVESTMENT PLAN (AIP)

a) In case an Annual Investment Plan for Calendar Year 2011
is not yet adopted (Chapter 1, Item 3.7, page 53, BOM-LGU
and DBM-NEDA-DILG-DOF Joint Memorandum Circular No. 1
Series of 2007), the Annual Municipal Budget for Calendar
Year 2011 cannot be reviewed, consolidated and signed
by the Municipal Budget Officer nor can be approved for
legislation and authorization by the Local Chief Executive.

b) Considering the composition of the Municipal Development

Council (MDC) Members, the formulation of the Annual
Investment Plan must have thoroughly presented the Plans,
Programs and Activity as enumerated in the AIP.
c) The Municipal Development Council was convened. However, the
deliberations of the AIP may be lacking in the necessary
elements to establish an effective linkage to the budget
preparations, considering that when the MDC was convened a
workshop was not held to discuss the contents of the AIP.
d) If we have to take into consideration the composition of the MDC
the preparations of the AIP can take up to 2-3 days to complete
the AIP to be used as an effective tool to establish the financial
operations of the LGU.
e) The Annual Investment Plan cannot be submitted for adoption
simultaneously with the municipal annual budget because the
object of expenditures of the annual budget should reconcile
with the total cost of locally funded programs in the AIP.
2) ISSUES CONCERNING THE PREPARATION OF THE ANNUAL BUDGET
a) The Annual Municipal Budget for Calendar Year 2011 CANNOT
BE REVIEWED, CONSOLIDATED AND SIGNED by the Acting
Municipal Budget Officer as per Sec. 475 (b.2) Local
Government Code R.A. 7160 because of the conflict on legal
policies and procedures on the basis of the reassignment of the
incumbent Municipal Budget Officer (Office Order No. 01, dated
June 10, 2010 by the Office of the Mayor).
b) The Municipal Budget Officer was not allowed to participate in
the budget preparation by virtue of the Office Order No. 01,
dated June 10, 2010, issued by the Office of the Municipal Mayor,
Local Government Unit, Province of Palawan in a form of a
reassignment order to the Office of the Economic Enterprise
under the Office of the Mayor.

c) The legality of this reassignment order was strongly protested

in the Office of the Municipal Mayor by a letter dated June 28,
2010 a copy of which was furnished to the Civil Service
Commission.
d) The Office Order No. 01, dated June 10, 2010 of the Office of the
Mayor cannot circumvent the law (LGC of 1991, R.A. 7160).
IV.

COMMENTS
1) ISSUES IN THE ADOPTION OF THE ANNUAL INVESTMENT PLAN (AIP)
FOR C.Y. 2011.
a) As of today, July 14, 2010, there was still no adopted AIP for
C.Y. 2011 for the LGU.
b) The adoption of the AIP must be ahead of at least one month
in order to effectively link the AIP with the budget. It cannot be
the other way around that the budget should be prepared ahead
of the AIP.
Please take note that the Statement of Receipts (LBP Form
No. 1) in the budget must be dated not later than the date of
the adoption of the AIP for 2011.
c) There was no adopted Annual Investment Plan (AIP) for C.Y.
2011, therefore, theoretically, the preparation of the Municipal
Annual Budget should not have been initiated. (PART II, Chapter
1, Item 5.0, page 54, BOM-LGU).
d) The AIP must carry the same amount for the Plans, Programs and
Activities for locally funded projects including but not limited to
the general fund expenditures of all departments.
e) The executive budget hearing must be conducted using the AIP
as the guide in preparing the departmental functional
statements. The all new appropriations must specify and indicate
the purpose of the new appropriations.

f) The Mission and Vision of the Local Government Unit must be in

conformity with the new thrust for development of the new
national government leadership.
g) The Lump sum appropriations should strictly be avoided.
2) ISSUES ON THE BUDGET PREPARATION OF THE MUNICIPAL ANNUAL
BUDGET FOR C.Y. 2011.
a) The Acting Municipal Budget Officer is not authorized TO
REVIEW, CONSOLIDATE AND SIGN the Municipal Annual Budget
for C.Y. 2011. (PART II, Chapter 1, Item 3.0, page 51, BOM-LGU
and LGC R.A. 7160 Sec. 475 [b.(2)]) because it violates the
mandate of the Municipal Budget Officer.
b) Under the provisions of the Budget Operations Manual for LGUs
2008 Edition, only the incumbent Municipal Budget Officer is
mandated to review, consolidate and sign the Annual Budgets.
c) The reassignment of the Municipal Budget Officer under Office
Order No. 01 dated June 10, 2010 cannot authorize the Acting
Municipal Budget Officer to review, consolidate and sign the
Annual Budget for apparent reasons to the effect that:
1. The Office Order No. 01 dated June 10, 2010, did not
designate the Municipal Budget Officer to perform any other
function other than being the Municipal Budget Officer;
2. The Office Order No. 01 merely enumerated some additional
job responsibilities to the Municipal Budget Officer in order to
legalize the issuance of the said order as a compliance to the
Omnibus Rules Implementing Book V of Executive Order No.
292 and Sec. 6 (a) of Memorandum Circular No. 40 Series of
1998 of the Civil Service Commission ;
3. Being a department head the Municipal Budget Officer must
have been designated to head a specific office, to be
responsible of the office and to manage some personnel in
order to alienate the functions of the Municipal Budget

Officer of his mandated function in the Municipal Budget

Office to that effect.
d) In effect we are operating with two (2) and not one (1) municipal
budget officers because of the existence of a Municipal Budget
Officer and an Acting Budget Officer a violation of Sec. 475 Local
Government Code of 1991 R.A. 7160.
The position of the Acting Municipal Budget Officer is not a
specified position in the Local Government Code. The acting
municipal budget officer can only function if the position of the
municipal budget officer is declared as vacant.
If there is an incumbent in the position of municipal budget
officer, the acting municipal budget officer cannot assume the
functions of the former.
The reassignment order for the Municipal Budget Officer must
indicate a specific position for reassignment in order to alienate
the Municipal Budget Officer on his functions such as the budget
preparation.
Unlike the other department heads, the reassignment of the
municipal budget officer must be specific to some other position
to alienate him from his mandated function to avoid any possible
violation of the Local Government Code and the Budget
Operations Manual.
As mandated, the job duties and responsibilities of the municipal
budget officer are directly related to the budget preparation.
Therefore, if he is not allowed to perform such function it must
be specific and not implied. It is mandated by law.
The reassignment of the municipal budget officer was strongly
protested in the Office of the Municipal Mayor in a letter dated
June 28, 2010 a copy of which is also furnished to the Civil
Service Commission under CSC REF. No. ND-10-160.

For this reason the performance of the Acting Municipal Budget

Officer in the budget preparation is a violation of both the LGC of
1991 R.A. 7160 and the Local Budget Circular No. 2008-90.
d. As far as budget preparation issues are concerned the
reassignment order for the municipal budget officer is contrary
to the rules, policies and procedures in the budget preparation
and review.
The municipal budget officer must assist the LCE in the
preparation of the budgets.
It is a mandate from the law (LGC of 1991 R.A. 7160) and the
memorandum circular (DBM LBC 2008-90 September 1, 2008)
therefore cannot be circumvented by the Office Order No. 01,
dated June 10, 2010 issued by the Office of the Mayor.
e. There is no decided case in any court of law for this situation,
where in a budget officer will not be allowed to participate in the
budget preparation. But there is a decided case against
reassignment of a Municipal Budget Officer (Remedios Pastor vs.
City of Pasig G.R. No. 146873, May 9, 2002, Supreme Court en
banc).
f. The reassignment order of the municipal budget officer must
have been in a designation to some other position or
department, as the head of office, his function in the budget
office had been alienated.
Because of the absence of a designation for the municipal
budget officer to other position, the performance of the Acting
Municipal Budget Officer in the budget preparation becomes
invalid.
g. The Office Order No. 01 in this case, cannot be over and above
the Local Government Code of 1991 (R.A. 7160). This is an
apparent violation of the rule of law.
h. It was also noticed that the Office Order No. 01 was issued on
June 10, 2010. Apparently, the elected officials term of office
ended at noon of June 30, 2010. The new term of office for all

elected officials started at noon of June 30, 2010 (Sec. 43, LGC of
1991. R.A. 7160).

It was noticed that no new office order was issued after the
term of office of the LCE expired at noon of June 30, 2010.

The Office Order No. 01 automatically expired at the end of

the term of the LCE. It cannot be continually implemented
under the LCEs new term of office.

A new office order must have been issued for the

reassignment of the municipal budget officer for the action to
be legal.

The office order is applicable to all appointed employees

regardless whether there is a change of leadership or none.

There is an abuse of authority for the continuing

implementation of the Officer Order No. 01, dated June 10,
2010 for the reassignment of the Municipal Budget Officer.

The reassignment order is no different from the appointment

of employees in co-terminus positions.

The appointment of co-terminus employees automatically

ends with the term of office of the appointing authority. A new
appointment is issued to this effect.

i. We have to adhere to the Memorandum Circular No. 11, dated

June 25, 2010 of the Civil Service Commission, as supported by
the Memorandum Circular No. 2010-72 dated July 30, 2010 of the
Department of Interior and Local Government.
V.

CONCLUSION
It is apparent that there are violations inferred in the budget
preparation. Unless corrected it can be the basis of a negative opinion
on the review action from the reviewing authority such as the
Sangguniang Panlalawigan.

If it can be proven that there is indeed an infraction of law, the

submission of the Municipal Annual Budget for C.Y. 2011 is tantamount
to NO SUBMISSION of the municipal annual budget. It is a violation of
LGC of 1991 R.A. 7160.

EDDIE J. LUNETA
Municipal Budget Officer
LGU-Quezon
Province of Palawan