Clarification on DILG Opinion No. 70, s. 2003 Re Enactment of Annual or Supplemental Budgets

June 26, 2003 DILG LEGAL OPINION NO. 070-03 Hon . Emilia T. Boncodin Secretary DEPARTMENT OF BUDGET AND MANAGEMENT Manila Dear Secretary Boncodin : This refers to the request for clarification of Governor Leandro B. Verceles, Jr. of Catanduanes, on our DILG Opinion No. 70, s. 2003, wherein in substance, we opined that the enactment of the Annual or Supplemental budgets requires only the Simple Majority vote, or, the majority vote of those present members and constituting a quorum vis--vis the DBM-COA Joint Circular No. 93-2, wherein the provisions of it stated that: " An affirmative vote of a majority of the total membership in the local sanggunian shall be required for the passage of the appropriation ordinance " (Sec. 4.2.1 (d), DBM-COA Joint Circular). Having been subsequently apprised of the abovecited provision of the Joint Circular, may we take this opportunity to seek your Department's and that of the COA's re-examination of the said provision, and in support thereof, we aver the following legal justifications, viz: The core issue involved here is whether or not the enactment of the annual or supplemental budget requires the approval of a qualified majority of the members of the sanggunian. " Qualified Majority " is defined as the majority vote of all the members of the sanggunian concerned. On the other hand " Simple Majority " is defined as the majority vote of those present members only, there being a quorum. We are of the view that the enactment of an annual or supplemental budget requires only the vote of a Simple Majority, which is the majority vote of those present members, there being a quorum. It bears stressing that under Section 306 of the Local Government Code providing for the Definition of Terms, " Annual Budget " is defined as referring to a financial plan embodying the estimates of income and expenditures for one (1) fiscal year. Under Section 321 of the same Code, supplemental budget pertains to budgetary realignment to be utilized for expenses specified therein, subject to the availability of funds as certified by the local treasurer. On the other hand, " Appropriation " is defined under the same Section 306 as referring to " an authorization made by ordinance directing the payment of goods and services from local government funds under specified conditions or for specific purposes ". caITAC May we point out that based on experience, in most cases, " Annual Budget " and " Appropriations " are interchangeably used by local government officials as if referring to one and the same thing. This is not the case, however, because when Section 306 defined " Annual Budget " and " Appropriations " separately, then the legislative intent is clear and explicit to treat each of this distinctively and, therefore, technically speaking, they are not the same. Even Section 55 of the Local Government Code would bolster this position when it treated separately Appropriations Ordinance and an Ordinance directing the payment of money or creating liability. Section 55 (b) of the same Code provides that: " The local chief executive, except the punong barangay, shall have the power to veto any particular item or items of an appropriations ordinance, an ordinance or resolution adopting a local development plan and public investment program, or an ordinance directing the payment of money or creating liability . . .". With respect to the sanggunian's action vis--vis the expenditures of the local government unit concerned, Section 319 of the Local Government Code is very clear in requiring legislative authorization of the budget. Section 319 provides that " 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 ". Hence, it is clear that what is there to be authorized by the sanggunian is the Annual Budget and not the Appropriations. Annual Budget, as said before, is not a direction to pay money but it is a plan providing for the estimates of expenditures of a particular local government unit. Such being the case, an Annual Budget, is to be approved only by the simple majority of the sanggunian concerned. Supplemental Budget, on the other hand, being only a budgetary realignment, likewise requires the approval of only Simple Majority of the sanggunian. Please note further that Section 468 (2) (i) of the Local Government Code, providing for the powers of the Sangguniang Panlalawigan vests unto said sanggunian the power to appropriate the annual and supplemental appropriations of the provincial government, and appropriate funds for specific programs, projects, services and activities of the province, and for other purposes not contrary to law. It is to be noted that with respect to the enactment of the annual and supplemental appropriations, the law is silent as to what kind of majority vote is required of that sanggunian, unlike succeeding provisions which specifically require qualified majority vote of that sanggunian for their passage. In its silence, the presumption is, the same is to be enacted only by a simple majority vote. With respect, however, to ordinance or resolution (specific appropriations) authorizing or directing the payment of money or creating a liability, we believe that the same requires the approval of a Qualified Majority of the sanggunian. This is precisely what is being reiterated under Article 107, 2nd sentence of paragraph (g) of the Implementing Rules and Regulations of the Local Government Code, which provides that ". . . Any ordinance or resolution authorizing or directing the payment of money or creating liability, shall require the affirmative vote of a majority of all the sanggunian members for its passage ". Appropriation has been defined as the legislative designation of a certain amount of money as being set apart, allotted, or assigned for a specific purpose. Purpose of a general appropriation bill is to fund programs that have been separately authorized by other legislation (Colorado General Assembly vs. Lamm, Colo., 704 P.2d 1371, 1382). A specific appropriation is an act of the legislature by which a named sum of money has been set apart in the treasury, and devoted to the payment of a particular demand (Black's Law Dictionary, 6th Ed., 1990). Parenthetically, may we invite your attention to the express provisions of the Local Government Code wherein the majority vote of ALL the members of the Sangguniang Panlalawigan are required, viz: "SEC. 468. Powers, Duties, Functions and Compensation : (a) The sangguniang panlalawigan . . . ii. Subject to the provisions of Book II of this Code and applicable laws and upon the majority vote of all the members of the sangguniang panlalawigan, enact ordinances levying taxes, fees and charges, prescribing the rate thereof for general and specific purposes and granting tax exemptions, incentives or reliefs; iii. Subject to the provisions of Book II of this Code and applicable laws and upon the majority vote of all the members of the sangguniang panlalawigan, authorize the provincial governor to negotiate and contract loans and other forms of indebtedness; iv. Subject to the provisions of Book II of this Code and applicable laws and upon the majority vote of all the members of the sangguniang panlalawigan, enact ordinances authorizing time floatation of bonds or other instruments of indebtedness, for the purpose of raising funds to finance development projects." "Article 98 of the Implementing Rules and Regulations of RA 7160: ii. Enactment of ordinances, levying taxes, fees and charges prescribing the rates thereof; for general and specific purposes, and granting tax exemptions, incentives or general relief (Sec. 468, par. 2-ii, RA 7160). iii. Adoption of resolution authorizing the Provincial Governor to negotiate and contract loans and other forms of indebtedness (par. 2-iii, Ibid. ). iv. Enact ordinances authorizing the floatation of bonds or other instruments of indebtedness for the purpose of raising funds to finance development projects (par. 2-iv, Ibid. ); v. Adoption of a resolution authorizing the Provincial Governor to lease to private parties such buildings held in a proprietary capacity, subject to existing laws, rules and regulations (par. 2-v, Ibid. )." Article 107 of the Implementing Rules and Regulations of RA 7160. "(g) No ordinance or resolution passed by the sanggunian in a regular or special session duly called for the purpose shall be valid unless approved by a majority of the members present, there being a quorum. Any ordinance or resolution authorizing or directing the payment of money or creating a liability, shall require the affirmative vote of a majority of all the sanggunian members for its passage." Section 463 (d) of RA 7160: "(d) Unless otherwise provided therein, heads of departments and offices shall be appointed by the governor with the concurrence of the majority of all the sangguniang panlalawigan members, subject to Civil Service law, rules and regulations. The Sangguniang Panlalawigan shall act on the appointment within fifteen (15) days from the date of its submission, otherwise the same shall be deemed confirmed." It is beyond doubt that the DBM and the COA have the proper authority to issue such Budget Operations Manual for LGUs (Joint Circular No. 93-2), pursuant to Section 354 of the Local Government Code of 1991. May we however invite your attention to the fact that this Department was not consulted in the preparation of the said Budget Operations Manual wherein we could have properly submitted our position particularly on the number of votes needed in the enactment of the Annual or Supplemental Budgets. Further, this Department, since the enactment of the Code, had been advocating, through our legal opinions, that enactment of annual and supplemental budget requires the approval of only the simple majority, that is, majority of those present constituting a quorum. This has also been the practice in the local government units. Henceforth, it is our earnest request that the cited provisions of DBM-COA Joint Circular No. 93-2, be reconsidered and be accordingly clarified in support of our legal justifications as lead implementor of the Local Government Code, as well as the practice of the LGUs on the matter. Thank you, with the anticipation that this letter will merit your favorably consideration. Very truly yours, (SGD.) JOSE D. LINA, JR. Secretary Department of Interior and Local Government