1. Regular Projects

1.1 National Sector

The Budget/Finance Officer of each national government agency prepares and submits to the agency head, for approval, a budget estimate covering the agency's estimated current operating expenditures and capital outlays for the ensuing fiscal year. The budget estimate is then submitted to the head of the department concerned for consolidation and approval. Once approved at the department level, the same is forwarded to the Secretary of the Department of Budget and Management for review. The budget proposals of all national government agencies are approved by the President of the Philippines and are then submitted to Congress for budget authorization/enactment.

Applicable Laws, Rules and Regulations

Section 13, P.D. 1177

"Section 13. Submission of the Budget. The President shall, in accordance with section sixteen (1), Article VIII of the Constitution, submit within thirty days from the opening of each regular session of the National Assembly (Congress) as the basis for the preparation of the General Appropriation Act, a national government budget of estimated receipts based on existing and proposed revenue measures, and estimated expenditures. The President shall include in the budget submission the proposed expenditure level of the Legislative and Judicial Branches and of Constitutional bodies which shall have undergone the same process of evaluation and which shall have been subject to the same budgetary policies and standards applicable to agencies in the Executive Branch.

The President may transmit to the National Assembly(Congress), from time to time, such proposed supplemental or deficiency appropriations as are, in his judgement, (a) necessary on account of laws enacted after the transmission of the Budget, or (b) otherwise needed in the public interest."

Section 14, P.D. 1177

"Section 14. Form and Content of the Budget. The budget proposal of the President shall include current operating expenditures and capital outlays. It shall comprise such funds as may be necessary for the operation of the program, projects and activities of the various departments and agencies. The General Appropriations Act and other Appropriations Act necessary to cover the budget proposals shall be submitted to the National Assembly (Congress) to accompany the President's budget submission."

Section 25, PD 1177

"Sec. 25 Department Approval of Proposed Appropriations. No legislative proposal which, if enacted, would authorize subsequent appropriations, shall be transmitted to the President by any bureau or agency, without the prior approval of the Head of the Department concerned or by the Chairman or Chief Executive Officer of a Cabinet level body which coordinates the multi-sectoral formulation and implementation of a particular program of expenditures involving one or more departments. No legislative proposal involving the appropriation of funds shall be transmitted to the National Assembly without the approval of the President."

Section 14 Chap. 3 Book VI, Executive Order No. 292 (Administrative Code of 1987)

"Sec. 14. Budget Estimates.-Each head of department, office or agency of the National Government, including Legislative and Judicial Branches, and including government owned and controlled corporations, shall submit his request for appropriations to the Department of Budget in accordance with the budget calendar, format, and such rules and regulations as may be issued in implementation of this Decree.

The budget estimates of agencies shall include the following information:

• Objectives, functions, activities, programs and projects showing the general character and relative importance of the work to be accomplished or the services to be rendered, and the principal elements of cost involved;
• Linkage of the work and financial proposals to approved development plans;
• Estimated current operating expenditures and capital outlays, with comparative data for the preceding and current budget years;
• Identification by region, pursuant to policies on the regionalization of government operations;
• Financial sources, reflecting all revenues, proceeds of foreign and domestic borrowings, and other sources, particularly those which accrue to the General Funds;
• Contingent liabilities, including national government guarantees of obligations of government-owned or controlled corporations and their subsidiaries;
• Brief description of the major thrusts and priority programs and projects for the budget year, results expected for each budgetary program and project, the nature of the work to be performed, estimated costs per unit of work measurement, including the various objects of expenditure for each project;

• Organization charts and staffing patterns indicating the list of existing and proposed positions with corresponding salaries, and proposals for position classification and salary changes, duly supported by adequate justification."

Local Development Councils (LDCs) 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 scheduled date for budget preparation in accordance with applicable laws, specifying therein projects proposed for inclusion in the local government budget. The Local Finance Committee uses the plan to ensure that projects proposed for local funding are included in the budget. The Committee recommends to the local chief executive concerned the amount to be allocated for capital outlay under each development activity or infrastructure project. It also prepares estimates of income and budgetary ceilings and submits the same to the chief executive concerned.

The treasurer of each LGU submits to his local chief executive a statement certified by him and by the local accountant, covering the income and expenditures of the preceding fiscal year, the actual income and expenditures of the first two quarters of the current year and the estimated income and expenditures for the last two quarters of the current year, on or before the fifteenth day of July of each year. Based on the budget proposals of the heads of offices or departments, and the estimates of income and budgetary ceilings from the Local Finance Committee, the local chief executive prepares the executive budget for the ensuing fiscal year.

The local chief executive submits the executive budget to the sanggunian concerned not later than the sixteenth day of October of the current fiscal year.

On or before the end of the current fiscal year, the sanggunian concerned enacts, through an ordinance, the annual budget of the

LGU for the ensuing fiscal year on the basis of the estimates of income and expenditures submitted by the local chief executive.

The local chief executive approves or vetoes the ordinance of the sangguniang panlalawigan, sangguniang panlunsod, or sangguniang bayan. The punong barangay has no power to veto any particular item or items of an appropriations ordinance enacted by the sangguniang barangay. Once the appropriations ordinance has been approved or vetoed by the local chief executive concerned, it is then submitted to the proper authorities for review as follows:

Appropriation Ordinances of Reviewing Authority

• Provinces, highly urbanized Department of Budget cities and independent component and Management cities and municipalities within the metropolitan manila area.
• Componentcities and Sanggunian Municipalities/Panlalawigan
• Barangays Sangguniang Bayan/Sangguniang Panlungsod

Article 410, Rule XXXIV, IRR of R.A. 7160

"Art. 410. Submission of Local Development Plan. - 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 as well as in the budgets of NGAs or GOCCs concerned.

The local finance committee shall use the plan to ensure that projects proposed for local funding are included in the budget.

NGAs and GOCCs shall provide LGUs all necessary information on projects already funded in their respective budgets. Such information shall include specifically, among other things: name of project, location, sources, and levels of funding for said projects. The same information must be made available to the local finance committee concerned within the first quarter of the year to avoid duplications in funding project proposals."

Article 411, Rule XXXIV, IRR of R.A. 7160

"Art. 411. Submission of Detailed Statements of Income and Expenditures. - On or before the fifteenth (15th) day of July of each year, local treasurers shall submit to their respective local chief executives a certified statement, covering the income and expenditures of the preceding fiscal year, the actual income and expenditures of the first two (2) quarters of the current year and the estimated income and expenditures for the last two (2) quarters of the current year.

All statements of income and expenditures referred to in this Article, shall be jointly certified by the local treasurer and the local accountant.

Article 412, Rule XXXIV, IRR OF R.A. 7160

Article 412, Local Finance Committee - There shall be created in every province, city, or municipality a local planning and development coordinator, the local budget officer, and the local treasurer. The committee shall:

• Determine the income reasonably projected as collectible for the ensuing fiscal year;
• Recommend appropriate tax and other revenue measures or borrowings which may be required to support the budget;
• Recommend to the local chief executive concerned the level of annual expenditures and ceilings of spending for economic, social, and general services based on the approved local development plans;
• Recommend to the local chief executive concerned the proper allocation of expenditures for each development activity between current operating expenditures and capital outlays
• Recommend to the local chief executive concerned the amount to be allocated for capital outlay under each development activity or infrastructure project;
• Assist the sangguniang panlalawigan in the review and evaluation of the budget of component cities and municipalities in the case of the provincial finance committee, the barangay budgets in the case of the city or the municipal finance committee and recommend appropriate action thereon;
• Assist the sanggunian concerned in analysis and review of annual regular and supplemental budgets of the respective LGUs to determine compliance with statutory and administrative requirements; and
• Conduct semi-annual review and general examination of costs and accomplishments against performance standards applied in undertaking development projects, and prepare a report thereon. A copy of the report shall be furnished the local chief executive and the sangguniang concerned, and shall be posted in conspicuous and publicly accessible places in the provinces, cities, municipalities , and barangays."

"Art. 414. Preparation of Executive Budget. - Upon receipt of the statements of incomes and expenditures from the local treasurer, the budget proposals of the heads of offices or departments, and the estimates of income and budgetary ceilings from the local finance committee, the local chief executive shall prepare the executive budget for the ensuing fiscal year.

The local chief executive shall submit the executive budget to the sanggunian concerned not later than the sixteenth (16th) day of October of the current fiscal year. If the local chief executive fails to submit the budget within the prescribed date, he shall be subject to such criminal and administrative penalties as provided under these Rules and other applicable laws."

Article 415, Rule XXXIV, IRR of R.A. 7160

"Art. 415. Budget Authorization.

Legislative Authorization of the Budget - On or before the end of the current fiscal year, the sanggunian concerned shall enact, through an ordinance, the annual budget of the LGU for the ensuing fiscal year on the basis of the estimates of income and expenditures submitted by the local executive.

In case the sanggunian concerned fails to pass the ordinance authorizing the annual appropriations at the beginning of the ensuing fiscal year, 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, and no other business may be taken up during such sessions. If the sanggunian still fails to enact such ordinance after ninety (90) days from the beginning of the fiscal year, the reenacted budget shall remain in force and effect until such time that the ordinance authorizing the annual appropriations is approved by the sanggunian concerned. 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 xxx."

Veto Power of the Local Chief Executive - The local chief executive may veto any ordinance of the sangguniang panlalawigan, sangguniang panlungsod, or sangguniang bayan on the groung that it is ultra vires or prejudicial to the public welfare, stating his reasons therefor in writing.

The local chief executive, except the punong baranggay, shall exercise the power to veto any particular item or items of an appropriations ordinance, or an ordinance or resolution adopting a local development plan and public investment program, or an ordinance directing the payment of money or creating liability. In such cases, the veto shall not affect the item or items which are not objected to. The vetoed item or items shall not take effect unless the sanggunian overrides the veto in the manner provided in Rule XVII of these Rules; otherwise, the item or items in the appropriations ordinance of the previous year corresponding to those vetoed, if any, shall be deemed reenacted."

Article 421, Rule XXXIV, IRR of R.A. 7160

"Article 421, Review of Appropriations Ordinances of Provinces, Highly-Urbanized Cities and Independent Component Cities, and Municipalities within the Metropolitan Manila Area. - DBM shall review ordinances authorizing the annual or supplemental appropriations of provinces, highly-urbanized cities, independent component cities, and municipalities within MMA in accordance with the immediately succeeding Article."

Article 422, Rule XXXIV, IRR of R.A. 7160

"Article 422, Review of Appropriations Ordinances of Component Cities and Municipalities - The Sangguniang Panlalawigan shall review the ordinances authorizing annual or supplemental appropriations of component cities and municipalities in the same manner and within the same period prescribed for the review of other ordinances.

Article 424, Rule XXXIV, IRR of R.A. 7160

Article 424, Review of Barangay Budgets - 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.

The sanggunian concerned shall review the barangay ordinance to ensure compliance thereof with all the budgetary requirements and limitations provided in this Rule.

1.3 Corporate Sector

Prior to the beginning of the fiscal year, each Budget/Finance Officer of the government owned or controlled corporations prepares and submits to the agency head concerned an operating budget consisting of estimates of revenues, expenditures and borrowings. Estimates of expenditures include current operating expenditures and capital expenditures. The agency head concerned recommends the operating budget to the agency's governing board for approval; and the Board then submits the same to the Office of the President thru the Secretary of the Department of Budget and Management for consideration and final approval. The approved budget is returned to the agency head concerned for implementation.

Applicable Laws, Rules And Regulations

Section 6, Executive Order 518

"Section 6 Operating Budget - Each government-owned or controlled corporation shall prepare an operating budget consisting of (1) estimates of revenues, (2) estimates of expenditure, and (3) estimates of borrowings. The expenditure estimates shall cover current operating and capital expenditures. The operating budget of government owned or controlled corporation shall be prepared following such procedure and guidelines as may be determined by the President/Prime Minister. They shall be prepared prior to the beginning of the fiscal year and recommended by the Governing Board of the Corporation, for consideration and final approval by the President/Prime Minister."

Section 7, Executive Order 518

"Section 7. Projected Financial Statements - The operating budgets of government owned or controlled corporation shall be accompanied by a projected Balance Sheet, Profit and Loss Statement, Cash Flow Statement, and such other financial projections as may be required, together with the underlying assumptions adopted in making the projections.

Corporations, including financial institutions, shall submit as attachment to their operating budget proposals, the projected sources and uses of funds statement for the budget year, an estimated sources and uses of funds statement for the current year, and an actual statement of sources and uses of funds for the preceding year. The letter two submissions shall be accompanied by comparative data on the approved funds flows established for the said year.

Section 8, Executive Order 518

"Section 8 Financial Institutions - The operating budgets of government financial institutions shall be subject to the review and approval process provided under this Act: Provided, That rediscounting, lending and borrowing transactions of these institutions shall not be considered as part of their operating budgets for purposes of this Order: Provided, Further, That capital outlays included within the scope of the budget and approval process herein provided shall include permanent investments, such as equity investments in subsidiaries or affiliated companies, land acquisition, building construction, land improvements, and the like: Provided, Finally, That loans granted to other financial institutions which have the effect of increasing the fringe benefits or compensation of the staff of the original lending institutions or for purposes of allowing the implementation of capital projects for use of the institution shall be considered as part of the operating budget governed by this Order."

Section 9, Executive Order 518

"Section 9. Long Term Budget - The Governing Board of an institution shall prepare a long term budget consisting of estimates of income, expenditure and debt for the budget year and at least the subsequent four-year period. In the case of capital outlays, budget estimates shall be prepared to cover the cost of capital projects scheduled over the five year period beginning with the budget year.

The operating budget proposal shall be accompanied by an assessment of the economic and business conditions which will have a bearing on the corporation's operations."

Section 22, Presidential Decree 1177

"Section 22. Budgetary Requirements of Government - Owned or Controlled Corporations. The internal operating budgets of government-owned or -controlled corporations and of chartered institutions shall be approved with a budget calendar and format as may be approved by the President: provided, that such budgets shall be subject to review and approval as part of the budget process in cases where national government budgetary support is needed in terms of (a) capital or equity inputs, (b) operating contributions to support specific activities undertaken by the institution as part of its regular functions, and (c) guarantee of the national government for obligations or contracts entered into by the corporations: provided further, that the submission of interim financial statements may be required by the Commission."