To Be Known As The Decree On Local Fiscal Administration

Case Overview and Summary

SUMMARY OF PRESIDENTIAL DECREE NO. 477

Scope and Fundamental Principles (Sections 1-3):
- Governs the conduct and management of financial affairs, transactions, and operations of provinces, cities, municipalities, and barrios.
- Outlines fundamental principles for local government financial management, including lawful appropriations, public fund usage, revenue collection, trust fund handling, bonding of accountable officers, sound financial planning, and fiscal responsibility sharing.
- The Department of Finance exercises general supervision over local government financial affairs and funds investment.

Local Funds and Other Special Funds (Sections 4-13):
- Defines "fund" as a sum of money set aside for specific activities or objectives. (Section 4)
- Requires accounting of all monies received by public officers as government funds, except as specifically exempted. (Section 5)
- Requires remittance of collected taxes, revenues, and receipts into the appropriate government treasury. (Section 6)
- Establishes two local funds: General Fund and Infrastructure Fund. (Section 7)
- General Fund consists of monies not accruing to any other fund and is available for general expenditures. (Section 7a)
- Infrastructure Fund consists of earmarked monies for road, bridge, highway, public improvement, and transportation projects. (Section 7b)
- Creates a Special Education Fund from the additional 1% real property tax for educational purposes. (Section 8)
- Defines trust funds as private and public monies held for fulfilling obligations. (Section 9)
- Requires separate books and depository accounts for each fund. (Section 10)
- Requires local treasurers to maintain depository accounts with designated government depository banks. (Section 11)
- Mandates separation of personal money from public funds. (Section 12)
- Requires maintaining special accounts in the General Fund for public utilities, economic enterprises, Barrio Development Fund, loans, interest, bond issues, and other contributions. (Section 13)

Budgeting (Sections 14-40):
- Defines terms related to budgeting, including "annual budget", "supplemental budget", "income", "revenue", "receipts", "appropriations", "continuing appropriations", "current operating expenditures", "capital outlays", and "budget document". (Section 14)
- Specifies the form and content of provincial, city, and municipal budgets, including estimates of income, appropriations, budgetary message, financial statements, and other fiscal data. (Section 15)
- Outlines the process for submitting detailed statements of income and expenditures by local treasurers and budget proposals by heads of offices. (Sections 16-17)
- Describes the preparation of the budget by the local chief executive and submission to the local board or council. (Sections 18-19)
- Requires majority vote approval of budgets by the local board or council and veto power of the city mayor. (Sections 20-21)
- Mandates sealing, recording, and distribution of approved appropriation ordinances. (Section 22)
- Specifies the effectivity of approved annual and supplemental budgets. (Section 23)
- Outlines the role of the treasurer in the budget process. (Section 24)
- Allows changes in the annual budget through supplemental budgets, with limitations. (Section 25)
- Provides provisions for failure to enact an annual budget. (Section 26)
- Establishes budgetary requirements, including not exceeding certified income, providing for statutory and contractual obligations, allocating 20% of national internal revenue allotment for development projects, aiding barrios up to P500 each, and setting aside 2% of regular revenue as an unappropriated reserve. (Section 27)
- Imposes general limitations on appropriations for salaries and wages, salary rates, adjustments, position abolition, and discretionary purposes of the local chief executive. (Section 28)
- Requires review of provincial and city budgets by the Secretary of Finance and municipal budgets by the provincial treasurer. (Sections 29-30)
- Specifies the duration of appropriations and closing of special budgets. (Section 31)
- Outlines the preparation and approval process for the annual barrio budget. (Sections 32-38)
- Requires review of barrio budgets by the municipal treasurer. (Section 38)
- Mandates review of work programs for development projects by the Secretary of Local Government and Community Development. (Section 39)
- Authorizes the Secretary of Finance to issue rules, regulations, and a Budget Operations Manual for local governments. (Section 40)

Expenditures, Disbursements, Accounting, and Accountability (Sections 41-59):
- Prohibits disbursement of revenue funds except through lawful appropriations or statutory authority, and trust funds except for their intended purpose. (Section 41)
- Prohibits appropriation or application of public money or property for religious or private purposes. (Section 42)
- Restricts the use of appropriated funds exclusively for their specific purposes, with no transfers or reversions except by the local legislative body. (Section 43)
- Limits total disbursements from any local fund to actual collections plus 50% of uncollected estimated revenue for municipalities, and prohibits cash overdrafts at the fiscal year-end, except in emergencies. (Section 44)
- Prohibits advance payments on contracts without prior approval from the President, Secretary of Finance, and Commission on Audit. (Section 45)
- Allows cash advances to local officials or employees in accordance with Commission on Audit rules and regulations. (Section 46)
- Holds accountable every officer with custody of government funds for their safekeeping and proper use. (Section 47)
- Prohibits local treasurers or accountable officers from having pecuniary interests in local government contracts or businesses. (Section 48)
- Establishes joint and several liability for illegal or improper use or application of government funds or property by superior officers, department heads, or officers of equivalent rank. (Section 49)
- Prohibits appropriation, use, or supply of money for entertainment or receptions, except for representation allowances, foreign dignitary receptions, or specific Presidential authorization. (Section 50)
- Requires certification of available appropriations and funds by the treasurer, and approval of vouchers and payrolls by the head of the department or office with administrative control over the fund. (Section 51)
- Authorizes provincial and city treasurers to draw checks in settlement of obligations, countersigned by the provincial or city auditor. (Section 52)
- Requires local treasurers to furnish the local legislative body with monthly financial statements and year-end statements within 60 days. (Section 53)
- Mandates local treasurers and accountable officers to render accounts in the form, style, and content prescribed by the Commission on Audit. (Section 54)
- Allows auditorial visitation and inspection of books, accounts, papers, and cash of local treasurers or accountable officers by the Commission on Audit or its representatives. (Section 55)
- Prohibits booking or crediting unrealized estimated revenues at the fiscal year-end. (Section 56)
- Requires accounting for all lawful expenditures and obligations incurred during the year. (Section 57)
- Establishes personal liability for unlawful expenditures or use of property. (Section 58)
- Sets the official fiscal year from July 1 to June 30 of the following year. (Section 59)

Organization for Local Fiscal Administration (Sections 60-79):
- Establishes a separate office headed by a provincial or city treasurer, appointed by the President upon recommendation of the Secretary of Finance, as the chief financial officer of the local government unit. (Section 60)
- Outlines the qualifications for provincial or city treasurers, including citizenship, moral character, college degree, civil service eligibility, experience as an assistant treasurer, and other requirements prescribed by the Secretary of Finance. (Section 61)
- Specifies the compensation and emoluments of provincial or city treasurers as fixed by law or executive order. (Section 62)
- Provides for the appointment of subprovincial treasurers by the provincial treasurer, with approval from the Secretary of Finance. (Section 63)
- Requires the appointment of assistant provincial or city treasurers by the provincial or city treasurer, subject to the approval of the Secretary of Finance. (Section 64)
- Outlines the qualifications for assistant provincial or city treasurers, including citizenship, moral character, college degree, civil service eligibility, experience as an administrative deputy, and other requirements prescribed by the Secretary of Finance. (Section 65)
- Specifies the functions of assistant provincial or city treasurers, including assisting the treasurer and administering oaths related to accounts and notifications. (Section 65)
- Provides for the compensation of assistant provincial or city treasurers as fixed by law. (Section 66)
- Establishes the position of administrative deputy in each provincial or city treasury, appointed by the local chief executive with approval from the Secretary of Finance. (Section 67)
- Outlines the qualifications for administrative deputies, including citizenship, college education, experience in the local treasury service, civil service eligibility, and other requirements prescribed by the Secretary of Finance. (Section 68)
- Specifies the functions of administrative deputies, including maintaining personnel discipline, coordinating treasury functions, discharging duties of the assistant treasurer, and other assigned duties. (Section 68)
- Provides for the compensation of administrative deputies as fixed by law or executive order. (Section 69)
- Establishes a separate office headed by a municipal or municipal district treasurer, appointed by the provincial treasurer with approval from the Secretary of Finance, as the financial officer and deputy of the provincial treasurer for revenue collection. (Section 70)
- Outlines the principal duties of municipal or municipal district treasurers, including collecting revenues, requisitioning supplies, inspecting public utilities, supervising public markets, keeping accounts and records, and performing duties assigned by the provincial treasurer. (Section 70)
- Specifies the qualifications for municipal or municipal district treasurers, including citizenship, college education, experience in the local treasury service, civil service eligibility, and other requirements prescribed by the Secretary of Finance. (Section 71)
- Provides for the compensation of municipal or municipal district treasurers as fixed by law. (Section 72)
- Allows auditorial visitation and inspection of cash and accounts of municipal or municipal district treasurers by the provincial treasurer, deputy, provincial auditor, or representative at least once per quarter. (Section 73)
- Requires the appointment of assistant municipal or municipal district treasurers by the provincial treasurer, with approval from the Secretary of Finance. (Section 74)
- Outlines the qualifications for assistant municipal or municipal district treasurers, including college education, experience in the local treasury service, civil service eligibility, and other requirements prescribed by the Secretary of Finance. (Section 75)
- Specifies the functions of assistant municipal or municipal district treasurers, including assisting the treasurer and performing assigned duties. (Section 75)
- Provides for the compensation of assistant municipal or municipal district treasurers as fixed by law or executive order. (Section 76)
- Allows the provincial treasurer to designate an officer-in-charge from the ranks of regular or assistant treasurers in case of absence, suspension, or disability of the municipal or municipal district treasurer. (Section 77)
- Authorizes the local chief executive to appoint all other local treasury personnel not otherwise provided for in the decree, with the number and salaries determined by the local board or council in accordance with existing laws and regulations. (Section 78)
- Establishes the Local Treasury Career Service, comprising all local treasurers, assistants, and subordinates, for which the Department of Finance shall conduct in-service training programs and seminars. (Section 79)
- Authorizes the Secretary of Finance to conduct entrance and qualifying examinations for the Local Treasury Career Service, in coordination with the Civil Service Commission. (Section 79)

Final Provisions (Sections 80-84):
- Requires the Secretary of Finance to promulgate implementing rules and regulations, and the Chairman of the Commission on Audit to prescribe accounting and auditing rules and regulations. (Section 80)
- Provides a one-year transition period for local governments to change their budget form and establish the Infrastructure Fund, and allows for the promotion of incumbent treasurers and assistants who do not meet the educational requirements under certain conditions. (Section 81)
- Includes a separability clause. (Section 82)
- Repeals or modifies all laws, acts, decrees, executive orders, proclamations, and administrative regulations contrary to or inconsistent with the provisions of the decree. (Section 83)
- Sets the effectivity date of the decree upon approval. (Section 84)