BUDGET AUTHORIZATION

BUDGET
AUTHORIZATION
THE LOCAL BUDGET PROCESS
Budget Preparation Phase Accountability Preparation
Budget Authorization Phase

Budget Review Phase
Budget Execution Phase Execution
Authorization
Budget Accountability Phase

Review
01 Starts from the time the Sangguniang Barangay receives
the barangay budget from the Punong Barangay
02 Legislative function enacting the ordinance

authorizing the budget
“No money shall be paid out of

the local treasury except in BUDGET
pursuance of an appropriations AUTHORIZATION
ordinance or law”
(Section 305[a], RA No. 7160)
3
KEY PLAYERS IN BUDGET AUTHORIZATION
Punong Sanggunian Chairperson, Barangay Barangay

Barangay Barangay Committee on Treasurer Secretary
Signs the Enacts the Appropriations Submits the Posts the
appropriation appropriation Conducts review detailed appropriation
ordinance upon ordinances and evaluation of Statement of ordinance
the approval of authorizing the the Barangay Income and
the majority of annual and Expenditure Expenditure
all members of supplemental Program submitted on/before
the barangay budgets by the punong September 15
sanggunian Sec. 391(a)(3), RA 7160
barangay
4
What are the 3 steps in preparing the barangay annual budget?
Step Step Step

1 2 3
Barangay
Treasurer
Punong Punong
Submits the Barangay Barangay
detailed Submits the
Prepares the
Statement of proposed Annual
barangay budget
Income and Budget to
in coordination
Expenditure on Sangguniang
with the Barangay
or before Barangay not later
Development
September 15 than October 16
Council
What marks the start of the budget authorization phase?
“The local chief executive shall submit the said executive

budget to the sanggunian concerned not later than the
sixteenth (16th) of October of the current fiscal year”
Punong (Section 318, RA No. 7160)
Barangay
What is the liability for failure to submit an executive budget?

“Failure to submit such budget on the date prescribed
herein shall subject the local chief executive to such
criminal and administrative penalties as provided
for under this Code and other applicable laws.”
(Section 318, RA No. 7160)
6
STEPS IN BUDGET AUTHORIZATION
Step Enact the Appropriation Ordinance (AO)

1 ⮚ on/before the beginning of ensuing year
Step Approve (sign) the AO

Step Post the AO

3 ⮚ not later than 5 days after the approval of the AO
Step Submit the AO for Review

4 ⮚ within 10 days after the approval of the AO
7
BUDGET AUTHORIZATION
By the Sangguniang Kabataan (SK)
Step SK shall pass a resolution approving the SK budget
1  before the beginning of the ensuing year
Step SK Chairperson shall sign the resolution

2 ⮚ upon the approval of the resolution by the majority
of all SK members
Step SK Secretary shall post the resolution

3 ⮚ not later than 5 days after the approval thereof
DBM-DILG-NYC Step SK Secretary shall submit the budget for

Joint Memorandum
Circular No. 1 dated 4 review
January 23, 2019 ⮚ within 10 days after the approval of the budget
8
ENACT THE APPROPRIATION ORDINANCE Step
1
Who authorizes the Barangay Budget?
“On or before the end of the current fiscal year, the

sanggunian concerned shall enact, through an
ordinance, the annual budget of the local
government unit for the ensuing fiscal year on the
basis of the estimates of income and expenditures
submitted by the local chief executive.” Sanggunian
(Section 319, RA No. 7160) Barangay
Enacts the annual
“The Sangguniang Barangay, as the legislative budget thru an
body, shall enact annual and supplemental budgets appropriation
in accordance with the provisions of this Code” ordinance not later
(Section 319(a)(3), RA No. 7160) than December 31
9
COMPOSITION OF SANGGUNIANG BARANGAY
Enacts the annual budget thru an appropriation ordinance not later than
December 31
Punong Seven (7) Regular Sangguniang

Barangay as Sangguniang Kabataan Chair
Presiding Officer Barangay Members as Ex-officio
Member
10
STEPS IN BUDGET AUTHORIZATION
Step Enact the Appropriation Ordinance (AO)

1.1 Check the submitted budget documents
1.2 Evaluate the Budget
1.3 Deliberate on the Budget
1.4 Authorize the Annual Budget

11
1
1.1 Check the submitted budget documents
Barangay
⮚ Budget
Secretary Authorization
(BBP Form No. 3)
Form No. 1
(Checklist on
(BBP Form No. 2-A)
Documentary
(BBP Form No. 4)
and Signature
Duly approved by the
Sanggunian through
Requirements
a RESOLUTION
for the
Annual
Budget)
Barangay Budget Preparation (BBP) Forms

12
1
Barangay Budget Preparation
(BBP) Forms
BBP Form No. 1 ⮚ Budget of Expenditures
and Sources of Financing
BBP Form No. 2 ⮚ Programmed Appropriation
by PPA, Expense Class,
Object of Expenditure and
Expected Results
13
1
⮚ BSBP Form No. 1 Barangay
Budget
Authorization
Form No. 2
(Checklist on
Documentary
and Signature
Requirements
for a
Supplemental
Budget)
Barangay Supplemental
Budget Preparation
⮚ BSBP Form No. 2
(BSBP) Forms
14
1
1.2 Evaluate the Budget
RECEIPTS PROGRAM
1. Check the budget year’s total estimated income and assess
the probability of its collection
(Section 391[a][2], RA No. 7160)
2. Check if the taxes and fees identified as sources of the
estimated income are within the scope of taxing and other
revenue-raising powers of barangays
(Sections 152-155, 271,285 and 292, RA No. 7160)
Regular Revenues (R)

Non-Recurring Receipts (NR)
15
1
Regular Revenues (R)
⮚ a. National Tax Allotment
b. National Aids
⮚ c. Share in Real Property Tax
Bureau of Local Government Finance Memorandum Circular No. 16-2015 dated June 19, 2015
16
1
Non-Recurring Receipts (NR)
⮚ a. Financial Assistance
⮚ b. Loan Proceeds
⮚ c. Grants
Bureau of Local Government Finance Memorandum Circular No. 16-2015 dated June 19, 2015
17
1
EXPENDITURE PROGRAM
1. The overall level of appropriations does not exceed the total estimated
income for the budget year (Section 324[a], RA No. 7160)
Total Estimated Income 4,372,782.00

Level of Appropriations 4,372,782.00
18
1
EXPENDITURE PROGRAM
2. The total annual appropriations for personal services (PS) shall not
exceed 55% of the total income actually realized from local sources during
the next preceding fiscal year (Section 331[b], RA No. 7160)
“Next Preceding Fiscal Year

- It is the fiscal year that is
two (2) years before the
budget year. For example, if
FY 2025 is the budget year,
the next preceding fiscal year
shall be FY 2023”
Local Budget Circular No. 156 dated April 15, 2024
19
1
Budget Year 2025
Immediately Preceding Fiscal Year 2024
Next Preceding Fiscal Year 2023
Total Income Actually Realized from Local Sources (TILS) 2,000,000.00
Multiply by rate of PS Limitation 55%

Computed PS Limitation
1,100,000.00
20
1
EXPENDITURE PROGRAM
3. The provision for debt servicing should not exceed the ceiling, i.e., 20% of
the regular income of the barangay (Section 324[b], RA No. 7160)
“Full provision shall be made for all statutory and

contractual obligations of the local government unit
concerned: Provided, however, That the number of
appropriations for debt servicing shall not exceed twenty
percent (20%) of the regular income of the local
government unit concerned”
21
1
BUDGET YEAR:
National Tax Allotment (R) 5,250,000.00
Share in Real Property Tax (R) 500,000.00
Grants (NR) 250,000.00
Annual Amortization 1,148,000.00
Total regular income 5,750,000.00

Multiply by rate 20%
Debt Service 1,150,000.00
22
Step
ENACT THE APPROPRIATION ORDINANCE 1
EXPENDITURE PROGRAM
4. 10% of the General Fund is set aside for the Sangguniang Kabataan
BUDGET YEAR: SK Fund:

500,000.00
600,000.00
Share in Real Property Tax (R)
Grants (NR) 250,000.00
General Fund 6,000,000.00
23
Step
EXPENDITURE PROGRAM
4. 10% of the General Fund is set aside for the Sangguniang Kabataan
DBM-DILG-NYC Joint Memorandum Circular No. 1 dated January 23, 2019
Sangguniang
Kabataan
passing a resolution
approving the SK
budget
24
Step
EXPENDITURE PROGRAM
5. The appropriation for the Barangay Disaster Risk Reduction and
Management Fund is not less than 5% of the estimated revenue from
regular sources (Section 21, RA No. 10121)
BUDGET YEAR: BDRRM Fund:

Share in Real Property Tax (R) 500,000.00 287,500.00
Grants (NR) 250,000.00
Total regular income 5,750,000.00
25
Step
EXPENDITURE PROGRAM
6. The provision for development projects is not less than 20% of National
Tax Allotment (NTA) share of the barangay, and the projects are in the
Barangay Development Plan (BDP) and Annual Investment Program (AIP)
7. The development projects chargeable against the 20% development fund
complies with DBM-DOF-DILG Joint Memorandum Circular No. 2020-1
dated November 4, 2020
BUDGET YEAR: Development Fund:

National Tax Allotment 5,250,000.00
1,050,000.00
26
Step
EXPENDITURE PROGRAM
8. At least 80% of the share of the barangay from the national wealth
(proceeds derived from the development and utilization of hydrothermal,
geothermal, and other source of energy) are applied solely to lower the cost
of electricity in the barangay where the source of energy is located
9. The provision for discretionary expenses does not exceed 2% of the
actual receipts from the share of the barangay from Real Property Tax in the
next preceding calendar year (Section 325[h], RA No. 7160)
27
Step
EXPENDITURE PROGRAM
10. The honoraria of barangay officials (elective and appointive) do not
exceed the authorized rates of the equivalent salary grade of the
positions (Local Budget Circular No. 63 dated October 22, 1996)
28
Step
EXPENDITURE PROGRAM
11. The projects in the expenditure program are consistent with the Annual
Investment Program (AIP) (Article 410, IRR, RA No. 7160)
12. No fund is appropriated for the benefit sect or activity/
undertaking/purpose private in character (Section 335, RA No. 7160)
13. No fund is appropriated for entertainment/reception except to extent of
the representation allowances authorized by law or reception of visiting
dignitaries of foreign governments/missions, or when expressly authorized
by the President in specific cases (Section 343, RA No. 7160)
29
Step
EXPENDITURE PROGRAM
Gender and Development (5% of General Fund)
Provisions for Senior Citizens and PWDs (General Fund)

Protection of Children (1% of National Tax Allotment)
*by attribution
30
Step
1.3 Deliberate on the Budget
⮚ Deliberation procedures may vary depending on the
Internal Rules and Procedures (IRP)
⮚ Focus may be on the deliverables of the proposed
budget and in assessing the sufficiency of funding
⮚ Look into the past performance and recommend positive

measures to improve delivery of basic services
⮚ Ensure that the budget is in order and will be
declared operative in its entirety
31
Step
Aside from the Quorum and Voting requirements, the process
of enactment of appropriation ordinance shall be provided for
in the Internal Rules and Procedures (IRP)
which shall be adopted by the Sangguniang Barangay
The IRP shall provide for the following (Section 50, RA No. 7160):
⮚Organization of the sanggunian and the election of its
officers as well as the creation of standing committees;
⮚The order and calendar of business for each session;
⮚The legislative process;
⮚The parliamentary procedures which include the conduct
of members during sessions; and
⮚Such other rules as the sanggunian may adopt.
32
Step
Basic Services and Facilities
(Section 17[b][1], RA No. 7160)
⮚Agricultural support services; ⮚Maintenance of barangay roads and

⮚Health and social welfare bridges and water supply systems;
services; ⮚Infrastructure facilities, such as
⮚Services and facilities related to multi-purpose hall, multi-purpose
general hygiene and sanitation, pavement, plaza, sports center, and
beautification, and solid waste other similar facilities;
collection; ⮚Information and reading center; and
⮚Maintenance of Katarungang ⮚Satellite or public market, where
Pambarangay; viable.
33
Step
Can the Sangguniang Barangay increase items
of appropriations in the budget?
provided the total increase does not exceed the

total amount proposed in the executive budget.
(Article 415[a], IRR of RA No. 7160)
(Sarmiento, et.al. vs. The Treasurer of the Philippines)
34
Step
Can the Sangguniang Barangay include new
items of appropriations in the budget?
but only to provide for statutory and contractual

obligations and it does not cause the total to exceed
the total amount proposed in the executive budget.
(Article 415[a], IRR of RA No. 7160)
(Sarmiento, et.al. vs. The Treasurer of the Philippines)
35
Step
Can the Sangguniang Barangay reduce the
appropriations in the budget?
36
Step
Can the Punong Barangay veto the Appropriation
Ordinance?
because the Punong Barangay is also the Presiding Officer of the

Sangguniang Barangay. The duly-enacted Appropriation
Ordinance shall be signed by the Punong Barangay upon approval
by the majority of all the Sangguniang Barangay members
(Sec. 54[c], RA No. 7160)
37
Step
1.4 Authorize the Annual Budget
⮚ Sanggunian Barangay authorizes the annual budget

with the enactment of the Appropriation Ordinance
⮚ Governed by rules, provisions, or

basic requirements and process of
enactment
(Article 107 and Article 108, IRR, RA No. 7160,
and Internal Rules and Procedures of the
Sanggunian Barangay )
38
Step
01 A majority of all the members of the sanggunian who
have been elected and qualified shall constitute a quorum to
transact official business (Section 53, RA No. 7160)
Voting Requirement (Article 108[c], IRR, RA No. 7160)
The vote of the majority of all the

members of the Sanggunian Barangay
is required for the enactment of the
Appropriation Ordinance
The Punong Barangay, as Presiding

Officer, may only vote to break a tie
39
Step
02 The proposed appropriation ordinance shall be in writing and
shall contain an assigned number, a title or caption, an
enacting or ordaining clause, and the date of its effectivity. In
addition, it shall be accompanied by a brief explanatory note
containing the justification for its approval
(Article 107[b], IRR, RA No. 7160)
03 The proposed appropriation ordinance

shall be signed by the author or authors
and submitted to the Secretary to the
Sanggunian who shall report the same to
the Sanggunian at its next meeting (Article
107[b], IRR, RA No. 7160)
40
S
⮚ Assigned number A
M
⮚ Title or caption
P
L
⮚ Enacting or ordaining clause E
⮚ Provision – documents appended
⮚ Receipts Program
⮚ Expenditure Program
⮚ General Provisions
⮚ Date of effectivity
APPROPRIATION ORDINANCE
41
⮚ Assigned number S
A
⮚ Title or caption M
P
⮚ Enacting or ordaining clause L
E
⮚ Provision – documents appended
⮚ Sources of Income
⮚ Supplemental Items of Appropriations
⮚ Date of effectivity
SUPPLEMENTAL
APPROPRIATION ORDINANCE
42
Step
04 No ordinance shall be considered on second reading in any
regular meeting unless it has been reported out by the proper
committee to which it was referred to, normally the Committee on
Appropriations, or certified as urgent by the local chief
executive (Article 107[d], IRR, RA No. 7160)
05 The proposed appropriation ordinance if
duly certified by the local chief executive
as urgent, whether or not it is included in
the calendar of business, may be
presented and considered by the body at
the same meeting without need of
suspending the rules
(Article 107[e], IRR, RA No. 7160)
43
Step
06 An appropriation ordinance certified by the local chief executive
as urgent may be submitted for final voting immediately after
debate or amendment during the second reading
(Article 107[f], IRR, RA No. 7160)
07 The approved appropriation ordinance shall be stamped with the

seal of the Sanggunian and recorded in a book kept for the
purpose (Article 107[h], IRR, RA No. 7160)
44
Step
Failure to Enact the Appropriation
Ordinance covering the Annual Budget at
the beginning of the ensuing fiscal year
(Article 415, IRR, RA No. 7160)
⮚ The ordinance authorizing the appropriations of

the preceding year shall be deemed reenacted
⮚ The Sanggunian shall continue to hold sessions without additional
remuneration for its members, until the ordinance authorizing the
annual appropriations is approved, no other business may be
taken up during such sessions
⮚ Preceding year’s
⮚ Failure to enact appropriation budget shall remain
ordinance after 90 days from the
in force and effect
beginning of the fiscal year
45
REENACTED BUDGET
Only the annual appropriations for salaries
and wages of existing positions, statutory
and contractual obligations, and essential
operating expenses authorized under the
annual and supplemental budgets for the
preceding year shall be deemed reenacted
⮚ Maintenance and Other Operating Expenses (MOOE)

⮚ Necessary for the operation of a particular LGU to carry out
its mandate in providing efficient and effective basic services
⮚ The LGU is in the best position to identify expenses which
according to its judgement, are essential to its operations
(Local Budget Circular No. 112 dated June 10, 2016, Budget Operations
Manual for Local Government Units, 2016 Edition)
46
DISADVANTAGES
OF REENACTED BUDGET
⮚ No creation of positions
⮚ No new programs, projects and activities
⮚ No utilization of the increase in NTA for the year
⮚ Non-implementation of non-recurring activities
⮚ No supplemental appropriations shall be passed in
place of annual appropriations
47
Step APPROVE (SIGN) THE APPROPRIATION
2 ORDINANCE
“Ordinances enacted by the Sangguniang Barangay

shall, upon approval of the majority of all its
members, be signed by the punong barangay.”
(Section 54[c], RA No. 7160; Article 108[c], IRR, RA No. 7160)
⮚Punong Barangay has no veto power

(Section 55[b], RA No. 7160; Article 109[b], IRR, RA No. 7160)
48
Step
POST THE APPROPRIATION ORDINANCE
3
“The secretary to the sanggunian concerned shall

cause the posting of an ordinance or resolution in
the bulletin board at the entrance of the provincial
capitol and the city, municipal, or barangay hall and
at least two (2) conspicuous places in the local
government unit concerned not later than five (5)
days after approval thereof.”
(Section 59[b], RA No. 7160)
49
Step SUBMIT THE APPROPRIATION
4 ORDINANCE FOR REVIEW
“Within ten (10) days from its approval, copies of

the barangay ordinance authorizing the annual
appropriations shall be furnished the
Sangguniang Panlungsod or the Sangguniang
Bayan, through the City or Municipal Budget
Officer, as the case may be”
(Section 333[a], RA No. 7160)
50
EFFECTIVITY OF BUDGETS
⮚The ordinance enacting the annual budget shall take

effect at the beginning of the ensuing calendar year
⮚An ordinance enacting a supplemental budget

shall take effect upon its approval or on the date
fixed therein
⮚The effectivity of budgets is further
subject to compliance with the posting
requirements
51
APPROPRIATION ORDINANCE AS RELEASE
DOCUMENT (AORD)
No need to prepare or issue an Allotment Release Order
⮚ In case of unforeseen substantial shortfall in revenues, the
Sangguniang Barangay may authorize the Punong Barangay to issue a
negative Allotment Release Order that will effectively reduce the
amounts of some items of appropriation in the Appropriation Ordinance
USE OF SAVINGS (FOR SUPPLEMENTAL OR

AUGMENTATION) REQUIRES AN ORDINANCE
⮚ Savings involving transfer from one expense class to another –
Supplemental Appropriation Ordinance
⮚ Savings will be used within the same expense class to augment an

existing item of appropriation
– Simple Ordinance
52

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BUDGET

Budget Preparation Phase Accountability Preparation

Budget Authorization Phase

Budget Accountability Phase

02 Legislative function enacting the ordinance

“No money shall be paid out of

Punong Sanggunian Chairperson, Barangay Barangay

Step Step Step

“The local chief executive shall submit the said executive

What is the liability for failure to submit an executive budget?

Step Enact the Appropriation Ordinance (AO)

Step Approve (sign) the AO

Step Post the AO

Step Submit the AO for Review

Step SK Chairperson shall sign the resolution

Step SK Secretary shall post the resolution

DBM-DILG-NYC Step SK Secretary shall submit the budget for

“On or before the end of the current fiscal year, the

Punong Seven (7) Regular Sangguniang

Step Enact the Appropriation Ordinance (AO)

1.1 Check the submitted budget documents

1.2 Evaluate the Budget

1.3 Deliberate on the Budget

1.4 Authorize the Annual Budget

Barangay Budget Preparation (BBP) Forms

Regular Revenues (R)

⮚ a. National Tax Allotment

⮚ c. Share in Real Property Tax

Total Estimated Income 4,372,782.00

“Next Preceding Fiscal Year

Local Budget Circular No. 156 dated April 15, 2024

Total Income Actually Realized from Local Sources (TILS) 2,000,000.00

Multiply by rate of PS Limitation 55%

“Full provision shall be made for all statutory and

Total regular income 5,750,000.00

BUDGET YEAR: SK Fund:

DBM-DILG-NYC Joint Memorandum Circular No. 1 dated January 23, 2019

BUDGET YEAR: BDRRM Fund:

BUDGET YEAR: Development Fund:

Provisions for Senior Citizens and PWDs (General Fund)

⮚ Look into the past performance and recommend positive

⮚Agricultural support services; ⮚Maintenance of barangay roads and

provided the total increase does not exceed the

but only to provide for statutory and contractual

because the Punong Barangay is also the Presiding Officer of the

⮚ Sanggunian Barangay authorizes the annual budget

⮚ Governed by rules, provisions, or

Voting Requirement (Article 108[c], IRR, RA No. 7160)

The vote of the majority of all the

The Punong Barangay, as Presiding

03 The proposed appropriation ordinance

⮚ Provision – documents appended

⮚ Supplemental Items of Appropriations

07 The approved appropriation ordinance shall be stamped with the

⮚ The ordinance authorizing the appropriations of

⮚ Maintenance and Other Operating Expenses (MOOE)

“Ordinances enacted by the Sangguniang Barangay

⮚Punong Barangay has no veto power

“The secretary to the sanggunian concerned shall

“Within ten (10) days from its approval, copies of