l{rlnrblrc oi tlrc [,hilitrt)1nesDEPARTMENT OF'f]ItE INTERIOR AND LOCAL GOVERNMPNT

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DJLd Legal Opinrorr No. ll, S.2tJ13

0 5 .iUr 2013RAMONITA CENTINOcentr am@vahoo.com

Dear Ms. Centino:

'Ihis pertains to your ennil posing a query which we hereby quote in toto, viz:

"DOES THE RE:I'ROACTIVE EFFECT OF APPROPRIATIONORDINANCE ENABLE LOCAL GOVERNMENT TO ENTER INTOCONTRACTS PRIOR T'O i'HE APPROVAL OF THEIR BUDGET?"

Perhaps, you are referring to the reenactment of appropriation ordi'rance of thepreceding year in case the sai.rggunian concerned failed to enact the appropriationordina'ce within ninery (90) days from the beginning of the fiscal year. section 323 ofthe Local Government code of' 1991 (LGC) is unccluivocal in respect to what items of theappropriarions shall be deemed rllenacted, thus:

"Section 323. Failure to Enact the Annual Approp ations. _ In case rhesanggunian concerned fails to pass the ordinance authorizing the annualappropriations ar the beginrfng of the ensuing fiscal year, it shall conrinue rohold sessions, without additional remuneration for its members, until suchordinance is approved, ar.rd no other bu.siness may be tahen up during suchsessions. If the sanggunian still fails to enact such ordinance after ninety (90)days from the beginning of the fiscal year, the ordinance authorizing theappropriations of the preceding year shall be deemed reenacted and shallremain in force and effbcr until the ordinalce authorizing the proposedappropriations is passed by the sanggunian concerned. However. onlL the

(emphasis ours)

.'

Based on the aflorequoted provision, only the annual appropriations for contractuarobligations for the preceding year shall be deemed reenacted if the sanggunian fa s toenact the appropriation ordina'ce after ninery (90) days from the begini;g of the fiscaryear' Therefore, in such cases, onry existing contracts entered into by rocai governmentunits ftom their preceding year's appropriation ordinance are deemed reenacted anddisbursement of funds shall be in accordance therewith.

Accordingly, a local government unit can enter into contracts before its currentyear's appropriation ordinance has been passed by the sanggunian; provided that funds forsuch new contracts may not be disbursed yet until the appropriation ordinance for thecurrent year has been enacted, in conformity with Section 323 of the LGC.

We hope to have enlightened you on the matter.

Very truly yours,

rv

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