Manual on Sectoral and Barangay Planning, Programming and Budgeting System 

 
VOLUME V ANNEX B 

MANUAL
ON
SECTORAL AND BARANGAY
PLANNING, PROGRAMMING, AND BUDGETING SYSTEM

1.0 INTRODUCTION

Comprehensive Land Use Planning puts into practice the essence of local
autonomy among LGUs. This continuum of processes and its outputs which come in the
form of a Development Plan, Investment Programs and City Budget set the direction
which the City of Makati has to take to enable itself together with the key development
partners to realize their fullest development as a self-reliant highly urbanized community
and to transform themselves into active partners in the attainment of national goals.

This Manual covers the issues, problems and concerns that the City faces as well
as considers the financial environment where it operates.

1.1 Aims of the Guidelines

This aims to develop the knowledge and understanding of the major development
issues and challenges facing the City of Makati. Important concepts and processes are
defined here to provide an introduction to the language of development planners,
investment programmers and fiscal managers.

This also intends to assist City Government Departments, Sectoral Groups and
Barangay Councils in undertaking development planning, investment programming and
budgeting. Flowcharts, worksheets and forms are provided as tools in facilitating the
preparation of the Medium-Term Development Plan, Annual Investment Plan, Barangay
Development Plan, SK Development Plan, and Annual City Budget.

1.2 Learning Objectives

• To appreciate and understand the dynamics of the local development planning,

investment programming and budgeting
• To describe the roles of the stakeholders in all stages of local development planning,
investment programming and budgeting
• To institutionalize the processes identified and apply the concepts and tools
presented
• To list the issues that the City must consider and prioritize, and assess its financial
capability and potential
• To come up with a Medium-Term Development Plan, Annual Investment Plan,
Barangay Development Plan, SK Development Plan, and City Budget which are
responsive to the needs of the key stakeholders and the goals set in the Ten-Year
Development Agenda for the City of Makati

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1.3 Methodologies Getting

Organized
Interactive discussion, workshops, consultation,
participative and technical assessments are among the
methodologies to be employed in the process of undertaking
development planning-investment programming and budgeting.
Vision
2.0 CONCEPTS, LEGAL FRAMEWORK AND PROCESSES Setting/
Review
2.1 Legal Mandate
Situation
Development planning is mandated by law. The Local Analysis
Government Code pf 1981 (R.A. 7160); The Urban Development
and Housing Act of 1992 (RA 7279);; and The Social Reform and
Poverty Alleviation Act of 1997 (R.A. 8425) all mandated the Goals &
Objectives,
formulation of local development plans.
Target
Setting
As defined by the Local Government Code, the barangay
is “the primary planning and implementing unit of government
policies, plans, programs, projects and activities in the community, Formulation
and as a forum wherein the collective views of the people may be of Policies
expressed crystallized and considered”

Furthermore, the Local Government Code also stipulated Generation

the creation of barangay development councils. Sec. 106 states of
that “each local government unit (including barangays) shall have Strategies
a comprehensive multi-sectoral development plan to be initiated
by its development council and approved by its sanggunian. For
this purpose, the development council at the barangay level shall Evaluation
assist the corresponding sanggunian in setting the direction of & Selection
economic and social development, and coordinating development of Strategy
efforts within its territorial jurisdiction.”

Detailing of
Chosen
Strategy

Plan
Implementation

Monitoring,
Evaluation and
Feedback

Figure 1
Local Development
Planning Process

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PHILIPPINE LEGISLATION, MANDATED DEVELOPMENT PLANS

AND PARTICIPATORY PLANNING POLICIES

• The Comprehensive Land Use Plan Book 1, Chapter 1, Section 3 (j)

The Local (CLUP) which is a long-term guide for & (1)
Government Code of the development of the area Book 1, Chapter 4, Section 34,
1991 (RA 7160) legislated through the Zoning states that “local government
Ordinance covering 10-15 years units should promote the
• The Comprehensive Development establishment and operation
Plan (CDP) which is a medium-term of people’s and non-
plan of action implementing the governmental organizations
CLUP that can cover a period of 3-6 to become active partners in the
years pursuit of local autonomy.”
• The Local Development
Investment Plan (LDIP) which is a Book 3, Section 476, b (7),
short-term plan containing the describes among the
programs and projects based on the responsibilities of the City
CLUP and CDP which covers a Planning and Development
period of 3 years Coordinator to “promote
• The Annual Investment Plan which people participation in
is a tool for annually linking the development planning within
approved CDP and LDIP with the the local government unit
annual City Budget concerned.”

The Urban • The National Urban Development Article 1, Section 2 (e):

Development and and Housing Framework, prepared Encourage more people’s
Housing Act of 1992 by the Housing and Land Use participation in the urban
(RA 7279) Regulatory Board every five years, development process.
refers to the comprehensive plan for
urban and urbanizable areas aimed
at achieving the objectives of the
Urban Development and Housing
Program
The Social Reform • An area-based, sectoral and focused Section 2, 4 (b): The SRA shall
and Poverty intervention to poverty alleviation to be enhanced by government in
Alleviation Act of institutionalize and enhance the equal partnership with the
1997 (RA 8425) Social Reform Agenda (SRA) which different sectors through
embodies the results of the series of appropriate and meaningful
consultations and summits on poverty consultations and
alleviation. participation in governance.

Section 5 (6):
Institutionalization of basic
sectoral and NGO
participation in effective
planning, decision-making,
implementation, monitoring
and evaluation of the SRA at
all levels.

The Implementing Rules and Regulations of the Local Government Code

provided that the barangay development council shall have the following functions:
mobilize people’s participation in local development efforts; prepare barangay
development plans; and monitor and evaluate the implementation of national or local
programs and projects.”

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2.2 Annual Investment Planning/Barangay Development Planning

(Local Development Investment Programming)

2.2.1 Concept. This is a process of allocating the investible portion of the annual
general fund budget for funding the development programs, projects and activities
identified in the Comprehensive Land Use Plan (CLUP) and the Comprehensive
Development Plan (CDP).

The LDIP is coterminous with the CDP, i.e., it has a time frame of three (3) years
broken down into annual streams of fund allocation for projects determined to be of high
priority by the incumbent officials in consultation with their various constituencies. As a
guide to public spending, the LDIP is intended to result in increased socio-cultural well-
being of the residents as well as accelerate local economic development by eliciting and
orchestrating desired private sector investments.

2.2.2 Mandate. Section 109, Title 6 of the Local Government Code mandates the Local
Development Council (LDC) to “formulate medium-term and annual development
investment programs.” The LDC is headed by the LCE with the following members: all
punong barangays in the city/municipality, Chairman of the Committee on Appropriations
of the Sanggunian, the congressman or his representative, and representatives of NGOs
operating in the city/municipality, as the case maybe, who shall constitute not less than
one-fourth of the members of the fully organized council (Section 107).

Pursuant to Section 109 of the Code, the LDC shall also exercise the following functions:

• Formulate long-term, medium-term and annual socio-economic development plans

and policies;
• Appraise and prioritize socioeconomic development programs and projects;
• Formulate local investment incentives to promote the inflow and direction of private
investment capital;
• Coordinate, monitor and evaluate the implementation of the development programs
and projects; and
• Perform such other functions as maybe provided bylaw or competent authority.

2.2.3 Process. The LDC shall form an executive committee which shall be the highest
government body when the council is not in session. It is empowered to represent the
LDC and act in its behalf in between sessions. Refer to the Local Government Code for
the composition, powers and functions of the executive committee which basically serves
as the implementing arm of the LDC.

LDCs shall also organize sectoral or functional committees to assist them in

performing their functions (Section 112, RA 7160). There is no substantive change here,
except that in EO 319, these sectoral committees shall be formed according to the rules
and regulations prescribed under EO 112.

The UDPO shall serve as the secretariat to LDC which shall provide technical
support, document proceedings, and prepare reports. The LDC may avail of the services
of NGOs or educational or research institutions for this purpose. Under the Code, the
secretariat, which is headed by the City Planning and Development Coordinator, shall

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also render such other assistance as the council may require in discharging its functions
(Section 113, RA 7160 and EO 319).

The AIP/BDP procedural flow is described briefly in Figure 2.

Figure 2. AIP/BDP Process and Development Planning-Investment

Programming-Budgeting and Implementation Cycle

LOCAL DEVELOPMENT PLAN 1. DEVELOPMENT

PLANNING

SUGGEST
(BDC) (LCE0 (PO/NGO)
(NGA) (LLB) (HOD) ETC. PROJECT IDEAS + PROPOSALS 2. INVESTMENT
PROGRAMMING
(LPDO) SCREEN WITH
PREPARE (LTO)
TECHINCAL CRITERIA

5-10 YR. FINANCIAL STATEMENTS

ANALYZE,
ESTIMATE (LFC)
PRELIMINARY LIST OF
PROJECTS PROJECTED FUNDS FOR CAPITAL
OUTLAYS FROM REGULAR
SOURCES
(LDC) EXCOM) DELIBERATE
(LPDO) EVALUATE
SELECT
ESTIMATE COST.
PROJECTED FUNDS FROM IMPROVED
FISCAL MANAGEMENT

(LFC)
RECOMMENDS
RANKED LIST OF CUT BORROW PROJECTED FUNDS FROM PUBLIC TO LCE + LDC
PROJECTS BORRROWING, ETC
NO

MATCHED
? TOTAL FUNDS AVAILABLE FOR PUBLIC
INVESTMENT

(LPDO) PREPARES YES

(LDC) APPROVES,
ENDORSES
3 YR. INVESTMENT PROGRAM

(LLB) ADOPT RESOLUTION, ORDINANCES, ETC.

ANNUAL BUDGET 3. BUDGETING

IMPLEMENTATION

(LCE)
(H OD) IMPLEMENT IMPLEMENTATION
(PO/NGO)

3.0 OBJECTIVES
Chart prepared by Professor Ernesto Serote.

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This Manual provides a methodology to assist department and barangay officials,

staff and other community stakeholders in preparing an Annual Investment
Plan/Barangay Development Plan; program the implementation of a range of programs,
projects and tasks; prepare an annual and multi–year budget; and evaluate the
implementation of the programs and projects in the Annual Investment Plan/Barangay
Development Plan. The Manual is a guideline for sector/department and barangay
officials, staff, barangay residents, and other barangay and city stakeholders in preparing
an Annual Investment Plan and Barangay Development Plan.

4.0 PLANNING ORGANIZATION

In preparing an Annual Investment Plan/Barangay Development Plan, the

Sector/Department Head or Barangay Chairman should create a Sectoral/Department
Planning Team (S/DPT) or Barangay Planning Team (BPT). The S/DPT or BPT shall
serve as the technical working group of the sector/department or barangay in conducting
the studies, surveys, analysis, organization of sector/department/barangay consultations
and putting together reports necessary in the formulation of the Annual Investment
Plan/Barangay Development Plan. It shall also serve as the secretariat of the City
Development Council/Barangay Development Council.

5.0 THE PLANNING PROCESS

5.1 In preparing an Annual Investment Plan, Barangay Development Plan, and

SK Development Plan, four (4) basic questions should be asked. These are:

5.1.1 Where are we now?

5.1.2 Where would we like to be?
5.1.3 What issues do we need to address to get there?
5.1.4 What actions do we need to take to get there?

5.2 Situation Analysis: Where are we now?

In answering the first question, the S/DPT or BPT needs to undertake a situation
analysis. A situation analysis provides the sector/department or barangay a detailed
profile of their community. It is like a medical chart of a patient which contains the results
of different tests showing the health condition of the patient. Thus the situation analysis
will show a detailed and comprehensive description of the current conditions of the
sector and the barangay will cover areas such as demography or population, economic
development, social conditions, physical status including infrastructure, environment and
finance among others.

In order to get a detailed and comprehensive profile of the sector or barangay,

the following data should be collected either from primary data such as surveys and
census or secondary data contained in city or national data and information bases.

Major Data categories

A. Demography
B. Health
C. Education
D. Social Welfare
E. Housing
F. Protective Services

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G. Sports and Recreation

H. Economics
I. Land Use
J. Environmental Management
K. Infrastructure
L. Governance and Institutional

Based on these data, the S/DPT or BPT will then prepare a diagnostic report
which will show the current situation in the barangay, such as:

For the barangays, the key data are the following:

Sub-categories

A. Demography

9 Population per Barangay

9 Household population and HH size
9 Migration Rate
9 Migration Pattern
9 Day time and Night time population
9 Number of transients/ renters
9 Number of home owners no longer living in Makati but are voters
9 Number non-resident voters
9 Number of Households with renters

B. Health

9 Ten Leading Causes of Death

9 Age Distribution of Deaths
9 Ten Leading Causes of Morbidity
9 Infant Mortality Rates
9 Ten Leading Causes of Infant Deaths
9 Prevalence of Severe Malnutrition
9 Disability Profile

o Visual
o Hearing
o Speech
o Orthopedic
o Deformities
o Mental
o Motor

C. Facilities

9 Number of Medical Professionals

9 Number of yellow card holders

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D. Education

9 Participation Rate
9 Retention Rate

9 Drop-Out Rate
9 Completion Rate
9 Number of out of school youth

E. Social Welfare

9 Number of surveyed street children, mendicants

9 Elderly
9 Profile of Drug dependents by street

F. Housing

9 Inventory of Urban Poor Settlements

9 Number of Urban Poor/ Informal Settlers
9 Number of homeless families/ individuals
9 Number of HH who are not Squatters but are living in depressed area
9 HH without access to electricity, telecom, water supply

9 Profile of housing occupancy

o owner occupied
o owner occupied but shared with renters
o solely rented/ leased to single family occupants
o solely rented/ leased to multiple occupants

9 Lease/ rental value

o whole dwelling unit

o room
o bed spacer

9 Cost of rent (public housing, condo rooms etc)

G. Protective Services

Public Safety
9 Frequency and Type of Crime Committed
9 Percentage of crime victims by sex
9 Percentage of abusers of minors by sex
9 Number of crime incidence where suspects have been apprehended
9 Average duration of litigation

Peace and order

9 Incidence of index and non-index
9 Crimes Incidence of terrorism and kidnapping
9 Fire Incidence Status
9 Number of illegally parked vehicles

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H. Economics

Labor Force
9 Employment Rate
9 Unemployment Rate
9 Underemployment rate

Family Income & Expenditure

9 Per capita income of family
9 Sources of family income
9 Average family income
9 Average family expenditure
9 Number of HH with Income above poverty threshold
9 Number of HH with income above food threshold
9 Number of residents working abroad
9 Number of establishments – by type, size, ownership

I. Land Use

9 Blighted Areas
9 Existing Land Use Map

J. Environmental Management

Land Quality
9 Percentage of waste disposed
9 Solid waste collection: m3/day or tons/day
9 Disposal method

Water Quality
9 Percentage of squatter colonies on riverside

K. Infrastructure

Water Supply & distribution

9 Percentage of HH with access to potable water
9 Power & electrification
9 Percentage of HH with electricity connection
9 Telephone density (per 100 population)
9 Percentage of HH with computers

Sewerage
9 Number of HH with sanitary toilets

For the detailed sectoral data requirements, refer to Annex 1 for the sectoral guidelines.

Each sector is asked to come up with the following:

1. Key Data Requirements (include primary and secondary data and sources)

Among the basic data requirements that the City should have are the physical
features and demographic data which serve as fundamental basic of analysis.

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GENERAL PHYSICAL CHARACTERISTICS

• Location and Neighboring LGUs

• Land Area by Barangay, Number of Purok/Sitio (including Barangay Proper)
• Barangay Lay
• Distance from Barangay Proper to Poblacion
• Approximate travel time from Barangay Proper to Poblacion
• Means of access to barangay (state whether (i) all year round, (ii) dry season
only, (iii) wet season, (iv) never; and state why for (ii), (iii) and (iv))
• Trail footpaths
• Topography
• Slope
• Soil
• Geology, Geomorphology, Hydrogeology
• Tidal Regime
• Water Resources (ground water, surface water)
• Climate
• Land Use

DEMOGRAPHIC PROFILE

1. Population Change
• Components of Population Change
• Fertility
• Mortality
• Migration
• Historical Growth of the Population/Trends
• Projected Total Population

2. Population Distribution

• Total Population/Households By Barangay

• Urban/Rural Distribution
• Urbanization Trends
• Density
• Projected Total Population/No. of Households By Barangay

3. Population Composition

• Total Population By Age Group and Sex

• Age Dependency Ratios
• Labor Force and Employment
• Projected Total Population By Age-Group, By Sex

4. Other Population Descriptions

• Marital Status
• Mother Tongue/Ethnicity
• Religious Affiliation
• Literacy Rate
• Disabled Persons
• Residence of Population Over 5 Years Period

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5. POPDEV 27 Core Indicators

• Population Processes

1. Crude Birth Rate

2. Crude Death Rate
3. Total Fertility Rate
4. Maternal Mortality Rate

• Population Outcomes
5. Annual Population Growth Rate
6. Percentage of Population by Five-Year Age Group and by Sex
7. Percentage of Urban Population by Sex

• Development Processes

8. Percentage Distribution of Local Government Expenditures by Specific

Activities
9. Labor Force Participation Rate by Sex
10. Length of Local Government Roads by surface Type
11. Elementary and Secondary Cohort Survival Rates
12. Doctor-Population Ratio
13. Hospital Bed-Population Ratio
14. Percent of births attended by Health Personnel
15. Contraceptive Prevalence Rate
16. Percentage Distribution of Households by Type of Housing Unit Occupied
17. Percentage Distribution of Households by Main Source of Water Supply
18. Percentage Distribution of Households by Type of Toilet Facilities Being Used
19. Percentage Distribution of Households by Type of Garbage Disposal
20. Crime Rate by Type
21. Percentage Distribution of DSWD Clienteles Served by Type and by Sex

• Development Outcomes

22. Unemployment Rate, Total and by Sex

23. Average Family Income
24. Literacy Rate by Sex
25. Percentage of Malnourished 7-10 Years Old Children
26. Percentage of Infants with Low Birth Weight
27. Morbidity Rates by Leading Causes

From the diagnostic report, the S/DPT or BPT will be able to identify problems,
issues, constraints, external influences and concerns as well as positive characteristics
of the sector or barangay. The diagnostic report should be detailed, specific and
supported by verifiable and empirical data in order to provide a clear and definite
picture of the sector or barangay.

For example in the section on demography, the diagnostic report should include
not only a breakdown of population by age, and sex but must also distinguish how many
are landowner/ resident/ voter and non-voter; long-term tenant /resident/voter and non-
voter; landowner /non-resident/ voter or non-voter short term or transient/ resident/ voter
or non-voter. In the section on economic conditions, the diagnostic report should include
income by type of resident. The diagnostic report should differentiate which among the

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establishments in the barangay are owned by barangay residents and which ones are
owned by non-residents defined in terms of chain establishments or not.

For the sectors, the diagnostic report should contain a section listing down the
problems, issues, constraints and concerns of the sector by barangay, while for the
barangay it should be by sub-sector. The S/DPT or BPT together with other stakeholders
and residents will discuss the Diagnostic Report. The problems, issues, constraints and
concerns will then be ranked according to severity, urgency and impact on the sector or
barangay. In ranking the problems, the S/DPT or BPT will then give a score of one (1) to
five (5) to each problem, with five (5) being the most serious, urgent, or has the highest
impact, and one (1) being the least serious or urgent. The S/DPT or BPT will then add
the scores for each problem identified.

Problem 1: 5+4+3+5+3+4 = 24
Problem 2: 3+4+2+5+4+3 = 21
Problem 3: 4+5+2+1+4+3 = 19

In this example, Problem A is the most serious and urgent problem, while
Problem 2 is the next and Problem 3 is the least urgent.

To further analyze the current situation, the problems, issues, constraints and
concerns, a problem tree or fishbone analysis should be used. These tools illustrate the
linkages of problems to one another and define the hierarchy of sub-problems within a
single problem.

Fishbone analysis is a way of establishing, identifying, analyzing and presenting

possible causes connected with a problem or condition. Fishbone analysis is focused on
presenting the context and content of the problem. It creates possibilities for potential
solutions to the problem. Choose a particular problem to be analyzed. Write the problem
on the head of the fish or the main bone. Identify the main factors causing the problem.
Draw branch arrows to the main arrow. Write the major possible causes previously
identified on each branch. Identify the detailed factors of each major cause. Draw smaller
bones or arrows to the branch arrows. Write each detailed factor on each small twig or
arrow. Continue connecting more arrows to the twig arrows. If arrows are connected to
twig arrows, it means that the causes of the problem have underlying causes. Check
whether all the factors that may be causing the problem have been completely identified
and reflected in the diagram. Check if the relationship of causes to the core and
secondary causes is properly illustrated.

Example:

Problem – low achievement level of Makati elementary students in math, science and
english.

A problem tree or fishbone analysis will show that there are many interrelated
problems which contribute to this such as lack of qualified math, science and English
teachers because of low pay and competition from other employment opportunities
which provide higher pay. The low pay is due to the salary Standardization Law. Another
sub-problem is the poor study habits of students due to lack of supervision of parents
who have to work because of the difficult economic situation. The problem tree or
fishbone analysis should be presented for each problem to help evaluate the strategies,
programs and projects which will be formulated later.

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Like the fishbone analysis, the problem tree analysis illustrates how problems are
linked and interrelated in a situation. The illustration defines the causes and effects of
identified core problems and other corollary problems which may result from these core
problems. As in fishbone analysis, the S/DPT or BPT will identify a core problem. Then
the team establishes the cause and effect relationship among the problems identified.
Draw a tree trunk and write the core problem. Identify the main causes of the problem
and diagram these as primary roots. Secondary roots are drawn to illustrate secondary
causes emanating from the primary causes and so on. The effects of the main problem
are then drawn as main branches and labeled according to the main effects or
consequences of the main problem. Secondary effects derived from the primary effects
and so on. Roots with the most secondary and tertiary connections are the primary
causes while those with the most linkages of branches and twigs are the biggest impact
of the main problem.

After completing the Diagnostic Report and upon completion of the problem
identification, problem ranking and fishbone/ problem tree analysis, the S/DPT or BPT

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would now have a comprehensive and clear grasp of the situation prevailing in their
sector or barangay.
The S/DPT or BPT should now proceed to conducting a SWOT Analysis using
the findings contained in the Diagnostic Report. A SWOT Analysis is a frequently used
technique in situation analysis. It seeks to organize information about the sector or
barangay along four (4) categories that are likely to have the greatest impact on the
future of the sector or barangay. It is also a way to analyze the sector or barangay’s
position in relation to its internal and external environment. The SWOT Analysis will be
carried out after the completion of the Diagnostic Report which provides a quantifiable
analysis of the sector or barangay’s strengths, weaknesses, opportunities and threats.
The indicators may be compared against city, metropolitan or national standards in order
to compare the sector or barangay’s situation against other cities in the country/
barangays in Makati or elsewhere.

The purpose of SWOT is to bring out critical issues that exist in the minds of the
sectoral and barangay officials, the S/DPT, the BPT, and other stakeholders. This
process will help the S/DPT or BPT focus their attention on areas which require in-depth
analysis.

The following are questions which may be used as guide in conducting a SWOT
Analysis:

Strengths What are the advantages of the sector or barangay?

What does the sector or barangay do well?
What are the positive characteristics of the barangay in terms of
economic, social, physical, environment, finance and governance
factors?

Weakness What are the internal problems being faced by the sector or
barangay?
What is not being done or done unsatisfactorily?
What are the internal issues, constraints and concerns?
What are the policies, regulatory and institutional limitations to
improving delivery of service or addressing problems?

Opportunities What are the trends happening in Makati, the metropolitan area,
the country, in Asia and the rest of the world which presents
opportunities for the sector or barangay? These can include
development trends, changes in policy at the national level,
developments in technology, trends in doing things at the global
level such as outsourcing of jobs or problems in other countries
which the sector or barangay can explore.

Threats What external obstacles does the sector or barangay face?

This includes factors which the sector or barangay has no control
over such as national government laws such as the Salary
Standardization Law, economic slowdown, devaluation among
others.

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Strength Weaknesses Opportunities Threat

Economic
Social
Physical
Environment
Governance
and
Institutional

5.3 Vision Formulation: Where would we like to be?

Upon completion of the SWOT Analysis, the S/DPT or BPT can now proceed to
answering the next question. Where would we like to be?

In answering the question: “Where would we like to be?”, the S/DPT or BPT will
have to formulate a draft Vision for the sector or barangay. The S/DPT or BPT will take
the results of the SWOT analysis, the Diagnostic Report, Problem Identification/Ranking,
and Fishbone/Problem Tree Analysis and use these in formulating a draft Sector or
Barangay Vision.

In formulating the draft Vision, the S/DPT or BPT Team should frame the
question within a specific timeframe such as “Where would we want to be in five years?’.
In order to establish a reference to determine when the vision will be achieved and
whether it will be achieved within that timeframe.

The Vision should be a shared aspiration or goal of the whole sector or barangay
and not just the S/DPT or BPT. Thus, it is important that consultations with as wide a
cross-section of the sector or barangay as possible should be undertaken.

The Vision should also be measurable and verifiable so at the end of each year in
the five- year timeline, the sector or barangay can measure its achievement vis-à-vis the
Vision. After five (5) years, the achievement of the vision should be quantifiable. All
strategies, programs and projects should be aligned to the vision and the achievement of
such.

Features of the Vision include the following:

Graphic – It should evoke a vivid image sector officials or residents of the barangay
would like to see their sector or barangay transformed into. Example: A Tree-lined,
Garden Barangay.

Specific – It should be descriptive and refer specifically to the sector or barangay.

Example: The Heritage Center of the City. The Entertainment Zone. The Automotive
Village.

Time-bound – The Vision should include a definite time frame for achieving the
Vision. Example: Vision 2020.

Simple – the Vision should not have abstract and complicated words that are difficult
to remember or understand. All residents of whatever income class or educational
attainment should understand the Vision and relate to it.

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Shared – The Vision should be based on common values, aspirations and dreams of
as great a cross-section of the sector or barangay and not just the S/DPT or BPT or a
few but influential residents.

In order for all stakeholders to have a common understanding of how to make

their vision a reality, it is necessary that the Vision Statement be translated into a Mission
Statement with quantitative performance targets or indicators that embody the kind of
development being envisioned.

A sample Mission Statement could include the following quantitative performance

targets:

Reduce flooding by fifty percent (50%)

Reduce traffic by thirty percent (30%)
Totally eradicate drug addiction among the youth
Minimize the incidence of crime by eighty percent (80%)
Reduce unemployment by fifty percent (50%)

In quantifying the mission, the sector or barangay should choose indicators which
are most relevant to the vision it has formulated. If the sector or barangay seeks to be a
Heritage Barangay and a Tourist Destination it should include in the mission indicators
such as increase number of tourists, facilities and attractions.

Performance targets can also be presented in the form of maps showing the
physical implications of the Vision formulated. Maps are visual images of describing
future scenarios and attributes of the barangay.

The vision formulated as a result of the sectoral or barangay consultations will

now serve as the focus of all efforts of the sector or barangay.

5.4 Strategy Formulation: What issues do we need to address to get there?

The S/DPT or BPT can now proceed to the next phase of the process and
answer the question: “What issues do we need to address to get there?”

In the preceding phases, the city’s/ barangay’s current conditions were identified
and the vision for its future determined. In this phase, the S/DPT or BPT will identify the
challenges in achieving the vision. Key issues will now be further assessed and
prioritized according to urgency and available resources. Once the priority list is
developed, the S/DPT or BPT should now identify the corresponding options available to
bridge the gap between the current situation and the achievement of the vision.

The purpose of this phase is to build on information generated from previous

phases to define and prioritize sectoral or barangay development issues and design
appropriate, relevant and responsive strategies and actions to address them.

Based on the SWOT Analysis, possible strategies should be identified and

formulated. Strategies should be formulated according to the following:

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Strengths-Opportunities Strategies

Strategies that maximize strengths of the sector or barangay while utilizing opportunities
around it.
Example:

For sectors

Strength: Makati is the country’s financial district.

Opportunity: There is an increase in number of working population from different areas.
Strategy: Develop a housing program for the housing population.

For barangays

Strength: The barangay has a number of heritage sites.

Opportunity: The City has been declared a Tourist Center.
Strategy: Develop heritage sites to promote tourist-oriented activities in the
barangay.

Weakness-Opportunities Strategies

Strategies which use opportunities to address weaknesses.

Example:

For sectors

Weakness: There is a high unemployment rate within Makati.

Opportunity: There is an increasing number of ICT jobs in the City.
Strategy: Develop a workforce development program focusing on ICT for city
residents

For barangays

Weakness: The barangay has a lot of dilapidated and deteriorating residential

structures.
Opportunity: There is a high demand for rental housing.
Strategy: Promote the improvement of deteriorating structures in the barangay by
encouraging the conversion into rental housing.

Strengths-Threats Strategies

Strategies which use the barangay’s strengths toward the threats.

Example:

For sectors

Strength: Makati has the best social development program.

Threat: The proliferation of informal settlers remains unresolved.
Strategy: Develop an affordable housing program for the informal settlers.

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For barangays

Strength: The barangay has sizable open land.

Threat: New commercial development in the adjacent city has drawn many
residents to shop there.
Strategy: Encourage the development of commercial space in available land.

Weaknesses-Threats Strategies

Strategies which address weaknesses to minimize impact of threats.

Example:

For the sectors

Weakness: The cost of office space in Makati is relatively high.

Threat: Commercial and business centers are emerging in nearby cities
Strategy: Provision of business retention incentives to firms currently located in the
city; and/or develop satellite business centers which have lesser office
space cost.

For barangays

Weakness: The barangay has many informal settlers.

Threat: Poverty in the nearby provinces is causing increased migration in the
barangay where many of their relatives live.
Strategy: Relocate, decrease or control the number of informal settlers in the
barangay.

The strategies formulated will form the long list of sectoral or barangay strategies
which will then be evaluated as to which will be undertaken. The Sector should
formulate a set of criteria relevant to the sector or barangay which it will use in evaluating
the strategies identified. Weights should be given each criterion to determine the relative
importance of each in relation to the set. Examples of criteria are:

5.4.1 Financial viability

5.4.2 Social and political stability
5.4.3 Priority need or ranking in priority problem
5.4.4 Connectivity to other strategies
5.4.5 No. of beneficiaries and social impact
5.4.6 Environmental implication
54.7 Impact on barangay/city productivity

To validate the prioritized strategies formulated using the SWOT Analysis, the
S/DPT or BPT will now use the results of the problem identification and prioritization; and
the fishbone/ problem tree analysis done in the first phase. Using the priority problems
defined, the S/DPT or BPT should then formulate strategies to address these priority
issues and if needed, formulate related, corollary or sub-strategies to address the
secondary causes of the main problem. A parallel fishbone or tree could be drawn to
illustrate corresponding strategies to the priority problems.

The results of the two strategy formulation exercises can be compared and a final
list of strategies chosen by using a set of criteria based on urgency, degree of impact in

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terms of its effect on interrelated problems, magnitude of contribution to the achievement

of the vision among others.

The final list of strategies should be presented and discussed with the sector
officials, Barangay Development Council and as wide a cross section of the sector or
barangay as possible to get the community agreement and support to the strategies.

5.5 Program and Project Identification: What actions must we take to get there?

After evaluating the strategies and prioritizing them, programs and projects
should then be identified for implementing each strategy. Programs and projects need
not be limited to only physical projects, studies or activities. It should also include
necessary policy recommendations, legislative action, regulatory reform and/or
institutional changes necessary to carry out the strategy effectively. The programs and
projects should not be limited to what the sector or barangay should be doing but also
what the city government, national agencies and the private sector can do to carry out
the strategy. Programs which require cooperation with other sectors or adjacent
barangays, barangay clusters or several barangay clusters should also be identified if
such programs are necessary to address sectoral or barangay problems and achieve the
sectoral or barangay vision.
These should be in the following format.

Strategy 1
Program 1
Project 1
Project 2
Project 3
Program 2
Project 1
Project 2

Strategy 2
Program 1
Project 1
Project 2

Example: Using the previous example of the problem of low achievement level of Makati
elementary students in math, science and English, we can formulate this into a
strategy:

Strategy: Increase achievement levels of Makati elementary students in Math, Science and
English by undertaking an aggressive recruitment program.

Program 1: Enter into a collaboration/partnership with the private sector.

Project 1: Organize an Education Development Council which involves

private educational institutions, NGOs and business
corporations primarily to provide technical and financial support
to raising the achievement level.

Project 2: Promote volunteers from Makati professionals to donate a few

hours of their time to teach math, science, and english in
Makati’s public schools.

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Project 3: Encourage new graduates in math, sciences, and english to

devote a year after graduation to teaching in Makati schools.
This will be supported financially by the Education Development
Council and the City Government.

PROJECT / PROGRAM PROFILE

PROJECT TITLE

PROJECT START
SECTOR SCHEDULE COMPLETION

PROJECT LOCATION

S Study or Survey Packaged Program

TYPE OF PROJECT
Development Project Policy/Regulatory Reform

Institutional Building Others

SUMMARY OF OBJECTIVES

TARGET BENEFICIARIES

PROJECT DESCRIPTION

PROJECT DURATION

KEY RESULT AREAS

VERIFIABLE INDICATORS

IMPORTANT ASSUMPTIONS/
CONDITIONS FOR THE PROJECT

PROJECT LINKAGES/
OTHER SECTOR LINKAGES
Project Implementation in Total: Million Pesos
Million Pesos
Million Pesos
ESTIMATED INVESTMENT REQUIREMENT
Million Pesos

Annual Requirement Expenditure for Operation & Maintenance:

lion Pesos

IMPLEMENTING DEPARTMENT/OFFICE/UNIT

RELEVANT DEPARTMENTS/OFFICES/UNITS
TO BE COORDINATED WITH

PROVISIONAL SCHEME FOR FUND

PROCUREMENT

PRIVATE SECTOR PARTICIPATION

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6.0 PROGRAMMING

The first step in programming is the forecasting of revenues. It will give the sector
officials or Barangay Development Council and the S/DPT and BPT a basis for
determining which of the priority programs and projects can be implemented given the
resources available. The revenue forecasts consist of the expected revenues given
normal conditions and additional revenues due to discretionary changes and
administrative measures. Discretionary changes may consist of increasing the rates or
bases of the taxes, fees or charges and other changes in the tax structure that require
legislative actions. Administrative measures are those that are implemented even without
legislative action such as increased tax collection efficiency, improvement in
assessment, improvement in fiscal information base and improvement in collection
systems and procedures.

After revenues are forecasted, the normal operating expenditures of the sector or
barangay including on-going or continuing projects are determined.

Based on the forecasted revenues and expenditures, the available sector budget
or barangay revenues for new priority programs and projects is determined or estimated.
This is then used to identify which programs and projects – classified as capital
expenditures, maintenance and operating expenses, studies, policy/ regulatory and
institutional reform and others not otherwise classified.

The S/DPT or BPT proceeds to distribute the revenues available among the
priority projects which will be implemented or undertaken in the first year. Earlier
identified priority projects which should be or can be implemented and funded by other
levels of government such as city departments, national agencies or the private sector
should be classified as such. Priority projects which cannot be funded by any source
can be considered for loan financing or other forms of funding including joint venture or
BOT.

Priority projects which cannot be funded in whole or in part in the first year is
programmed for succeeding years based on their level of priority, duration of
implementation and impact on the achievement of the Vision.

This list of program of implementation of priority programs and projects including

implementing units and funding sources should be transformed into a Five-Year Capital
Investment Folio or Five-Year Investment Plan which will be the basis of the Barangay
Annual Investment Plan. Programs and projects can be rolled forward or backward
depending on the availability of resources and the implementation capability of the
barangays as well as other implementing units.

7.0 LOCAL GOVERNMENT BUDGETING PROCESS

The Local Government Budget is the LGU’s financial plan and instrument to
implement the local development plan and local development investment program. It
embodies the estimated income certified as reasonably collectible and projected
appropriations covering the proposed expenditures for the ensuing fiscal year.

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The LGU Budget embodies the estimated income certified as reasonably

collectible and projected appropriations covering the proposed expenditures for the
ensuing fiscal year, otherwise known as the annual financial plan of the LGU. Such
estimated income and proposed expenditures are consolidated in a budget document
which is the instrument used by the local chief executive to present a comprehensive
financial plan to the Sanggunian concerned. The annual budget of the LGU becomes
operative and executory after the
sanggunian has given its legislative authorization by enacting an appropriations
ordinance. Without such appropriation ordinance, no money shall be paid out of the
local treasury.

7.1 Mandate. The Local Government Code of 1991 provides the mandate of LGUs on
budgeting. As a body politic and corporate entity, “every LGU shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate or incidental for its efficient and effective governance, and those which are
essential for the promotion of the general welfare.” (Section 16) This means that LGUs
shall prepare an annual budget to carry out their mandated functions and duties which
also include “efficient and effective provision of the basic services and facilities.” (Section
17)

Fundamental Budgeting Principles. The local government budget becomes operative

and executory once given a legislative authorization by the Sanggunian concerned. The
authority to spend is provided when the local government budget is in compliance with
the following fundamental principles stipulated in the Local Government Code of 1991,
Section 305 as follows:

1. No money shall be paid out of the local treasury except in pursuance of an

appropriations ordinance or law;

2. Local government funds and monies shall be spent solely for public purposes;

3. Local revenue is generated only from sources expressly authorized by law or

ordinance, and collection thereof shall at all times be acknowledged properly;

4. All monies officially received by a local government officer in any capacity or in any
occasion shall be accounted for as local funds, unless otherwise provided by law;

5. Trust funds in the local treasury shall not be paid out except in fulfillment of the
purpose for which the trust was created or the funds received;

6. Every officer of the LGU whose duties permit or require the possession or custody of
local funds shall be properly bonded, and such officer shall be accountable and
responsible for said funds and for the safekeeping thereof in conformity with the
provisions of the law;

7. Local government shall formulate sound financial plans, and the local budgets shall
be based on functions, activities, and projects, in terms of expected results;

8. Local budget plans and goals shall, as far as practicable, be harmonized with
national development plans, goals, and strategies in order to optimize the utilization
of resources and to avoid duplication in the us e of fiscal and physical resources;

9. Local budget shall operationalize approved local development plans;

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10. Local government units shall ensure that their respective budgets incorporate the
requirement of their component units and provide for equitable allocation of
resources among these component units;

11. National planning shall be based on local planning to ensure that the needs and
aspirations of the people are articulated by the local government unit in their
respective local development plans are considered in the formulation of budgets of
national line agencies or offices;

12. Fiscal responsibility shall be shared by all those exercising authority over the
financial affairs, transactions, and operations of the local government units; and

13. The local government unit shall endeavor to have a balanced budget in end fiscal
year of operation.

Budgetary Requirements. Section 324 also states that the budgets of LGUs should
comply with the following requirements:

14. The aggregate amount appropriated not exceeding the estimated income certified
collectible by the local treasurer;

15. Full provisions are made for all statutory and contractual obligations of the local
government;

16. Aids to legally constituted barangays are provided in amounts not exceeding
P1,00.00 per barangay; and

17. Two (2) percent of the estimated revenue from regular sources
is set-up as a yearly unappropriated reserve to cover
unforeseen expenditures arising from the occurrence if natural Budget
calamities or financial dislocation on account thereof. Preparation

In addition to the fundamental principles and budgetary

requirements, the Code also enumerates general limitations to be
complied with by the provincial, city and municipal governments in
the use of their funds as follows: Budget
Authorization
1. The total appropriations, whether annual or supplemental, for
personal services of a local government unit for one (1) fiscal
year shall not exceed forty-five percent (45%) in the case of first
to third class provinces, cities, and municipalities, and fifty-five
Budget Review
(55%) in the case of fourth class or lower, of the total annual
income from regular sources realized in the next preceding
fiscal year. The appropriations for salaries, wages,
representation and transportation allowances of officials and
employees of the public utilities and economic enterprises Budget
owned, operated and maintained by the LGU concerned shall Execution
not be included in the annual budget or in the computation of
the maximum amount for personal services. The appropriations
for the personal services of such economic enterprises shall be
charged to their respective budgets; Budget
Accountability

2. No official or employee shall be entitled to a salary rate higher Figure 3

than the maximum fixed for his position or other positions of Local Budget
Process

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equivalent rank by applicable laws or rules and regulations issued thereunder;

3. No local fund shall be appropriated to increase or adjust salaries or wages of officials

and employees of the national government, except as may be expressly authorized
by law;

4. In cases of abolition of positions and the creation of new ones resulting from the
abolition or creation shall be made in accordance with pertinent provisions of this
code and the civil service law, rules and regulations;

5. Positions in the official plantilla for career position which are occupied by incumbents
holding permanent appointments shall be covered by adequate appropriations;

6. No changes in designation or nomenclature of positions resulting in a promotion or

demotion in rank or increase or decrease in compensation shall be allowed, except
when the position is actually vacant, and the filling of such positions shall be strictly
made in accordance with the civil service law rules, and regulations;

7. The creation of new positions and salary increases of adjustments shall in no case be
made retroactive; and

8. The annual appropriations for discretionary purposes of the local chief executive shall
not exceed two percent (2%) of the actual receipts derived from basic real property
tax in the next preceding calendar year. Discretionary funds shall be disbursed only
for public purposes to be supported by appropriate vouchers and subject to such
guidelines as may be prescribed by law. No amount shall be appropriated for the
same purpose except as authorized under this Section.

7.2 Process. As illustrated in Figure 3, the Local Budget Process has five stages or
phases as follows:

1. Budget Preparation

This is the first phase of the local government budget process which involves
three stages, namely: 1) budget planning, including some estimation, and programming
of expenditures to undertake priority functions, programs, projects and activities; 2) cost
estimation and 3) executive review. The outcome of the process is the Executive
Budget consisting of accomplished budget preparation forms and other budget
documents, which is submitted by the Local Chief executive to the Sanggunian for
authorization.

Budget planning includes the following: 1) setting of budget policies, objectives,

thrust and priorities; 2) determination of fiscal targets on income; 3) determination of
sectoral expenditure ceiling and the aggregate level of expenditures; and 4) formulation
of programs.

2. Budget Authorization

This the second phase in the local government budget process which starts from
the time the Local Chief Executive (LCE) submits the budget to the Sanggunian for

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legislative deliberation and ends with the enactment of the corresponding appropriation
ordinance (the legislative instrument authorizing the budget).

3. Budget Review

This is the third phase of the budget process. The appropriation ordinance
enacted by the Sanggunian authorizing the proposed program of income and
expenditures or the budget submitted by the Local Chief Executive has to pass through
a process of review by the reviewing officer/s so designated by law. It determines
whether or not the annual or supplemental budgets are operative and wholly executory
or inoperative in part or in its entirety.

4. Budget Execution

This is the fourth phase in the local budget process which involves the release of
funds appropriated for the performance/prosecution of functions/projects/activities. The
activities during this phase of local budgeting take place before the beginning of the
budget year. Budget Execution starts with the preparation of and preparation of the
Work and Financial Plans (WFPs) by the Department Heads and submitted to the Local
Chief Executive through the Local Budget Officer for evaluation. When the Local Chief
Executive approves the WFPs, the Local Budget Officer prepares the Advice of
Allotment (AA) based on the approved WFPs and submittal of the same to the Local
Chief Executive. With the approval of the AAs from the Local Chief Executive, the Local
Budget Officer transmits back the AAs to concerned Department/Office Heads.

5. Budget Accountability

The last phase of the local budget process is budget accountability, which refers
to the accounting for the performance of the LGU in terms of income/revenue generation
and resource utilization. This process encompasses the recording and reporting of
estimated and actual income and expenditures as well as the evaluation of fiscal
operation vis-à-vis planned targets.

8.0 SECTORAL PLANNING AND INVESTMENT PROGRAMMING

8.1 Concepts. The five development sectors (social, economic, physical,

environmental and institutional sectors) are abstract concepts which are nevertheless
useful help to understanding the even more abstract concept “development”. Each of the
sectors may be seen as an aspect or dimension of development. Each sector has a
specific function to contribute to development; the absence of one or a few of these
sectors makes holistic development not possible. In this undertaking, the institutional
sector is split into administrative sector and financing sector.

8.2 Mandate. It is the policy of the State to encourage non-governmental, community-

based, or sectoral organizations to participate in activities that promote the welfare of the
nation (Sec 23 of 1987 Constitution). Furthermore, the Local Government Code
encourages LGUs to link up with the private sector, non-government organizations
(NGOs), and people’s organizations (POs) as partners in pursuing local development.
Such linkage may come in the form of joint venture and other cooperative arrangements
as well as financial and other assistance (Section 35 and 36).

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The Code explicitly mandates NGOs and PO participation in the participation in

the Local Development Council, which assists the Sangguniang Panlungsod in setting
the direction of economic and social development, in coordinating development efforts
within its territorial jurisdiction, and its initiating a comprehensive multi-sectoral
comprehensive development plan to be approved by the Sanggunian (Section 106, LGC
of 1991). This mandate only assures civil society participation at the development
planning level but not necessarily extending to the vast arena of implementation
particularly in local budgeting process. Although the NGOs and POs are not identified as
members of the Local Finance Committee, the role and responsibilities of civil society
organizations in terms being active partners in local development may be extended
through informal structures and venues such as organizing ad-hoc or steering
committees and holding deliberations, dialogues or consultations with concerned
agencies and LGU officials.

8.3 Process. The Sectoral groups shall present the database according to the five (5)
identified sectors, namely: Social, Economic, Environmental Management, Physical/
Infrastructure, Institutional Development and Management (Administrative and
Financial).

Venues for intra and inter-sectoral consultation and planning workshops shall be
provided to the different interest groups to create an opportunity to air issues and
concerns that directly affect their sectors as well as identify their implications and
possible solutions. Interconnection of among and between issues and concerns may be
presented using different models (e.g., population and development analytical
framework, streams analytical model, problem tree model, etc.) and matrices (problem-
solution finding matrix, technical findings, issues-opportunities-implication-policy option
matrix, etc.) Refer to the tools to be employed by the sectoral groups in Annex 1.

9.0 INSTITUTIONALIZING PLANNING AND INVESTMENT PROGRAMMING

9.1 Concept and Objective. The term “institutionalize” means to incorporate into a
structured and often highly formalized system. Institutionalizing development planning
and investment programming means to incorporate structures and formalized the
processes, local planning structures, local skilled individuals and other available local
human resources who may contribute to the planning and implementation of the
Medium-Term Development Plan, Medium-Term Investment Program, Annual
Investment Program and City Budget.

Organizing the Institutions for Planning, Investment Programming and Budgeting aims
to:

• Gain commitment and involvement of executive and legislative bodies and well as
other stakeholders
• Ensure availability of resources in terms of human resources/personnel and financial
resources
• Obtain valuable inputs and creative ideas from people in the community to address
development issues and concerns
• Identify similar and different concerns in the community and open venues for unity
and conflict resolution among the different interest groups or stakeholders in the
concerned LGU; and
• Gain support and bring about a sense of community ownership of the MTDP and
AIP, which will help to ensure the realization of the vision, goals and objectives as
well successful implementation of the programs and projects.

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9.2 Mandate. Title 3, Section 76 of the Local Government Code (RA 7160) stipulates
that every LGU shall design and implement its own organizational structure and staffing
pattern taking into consideration its service requirements and financial capability, subject
to the minimum standards and guidelines prescribed by the Civil Service Commission.

The design and structure of the Local Planning and

Development Office shall be designed in accordance with the
Assess
powers, functions and duties of the appointive officials common Available
to all municipalities, cities and provinces as stipulated in Title 5, Resources
Article 6, Section 476, of RA 7160.

The organization and functions of the Local

Development Council (LDC) are described in the Title 6,
Sections 106-115 of RA 7160. In particular, Section 112 of RA Organize the
Local Planning
7160 provides that the LDCs may form a sectoral or functional Team
committees to assist them in the performance of their functions.
As enumerated in Rule XXIII, Article 182 of the Implementing
Rules and Regulations of RA 7160, the duties and functions of
the sectoral committees are as follows:
Create the
Stakeholders
• Provide the LDC with data and information essential to the Group
formulation of plans, programs and activities;
• Define sectoral or functional objectives, set targets, and
identify programs, projects and activities for the particular
sector or function; Mobilize
• Collate and analyze information and statistics and conduct Technical
related studies; Working
• Conduct public hearings on vital issues affecting the sector Groups
or function;
• Coordinate planning, programming, and implementation of
programs, projects and activities within each sector;
• Monitor and evaluate programs and projects; and Identify
Partners and
• Perform such other functions as may be assigned by the
Challengers
LDC.

9.3 Process. As illustrated in Figure 4, the process in getting

organized for planning, investment programming and budgeting
at the local level are as follows: Select
Planning
9.3.1 Assessing Available Resources Consultant(s),
if needed
This step includes the:

1. Conduct performance evaluation of concerned personnel

and institutional structures, particularly the City’s Urban Establish
Development Department Terms of
Reference
2. Evaluate office capability in terms of facilities and space for
planning
3. Review available financial resources allocated for planning Figure 4
Getting Organized
4. Provide necessary recommendation for consideration in the
local budget. If local resources are limited, augment

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through tapping external sources to fund planning undertakings

The evaluation of the City’s human resources and local planning organization in
intended to provide recommendations for improving and institutionalizing appropriate
organizational changes in the City Government Organization including the planning arms
to become responsive to its planning needs. The Local Planning Team is comprised of
the Local Chief Executive as Head, Local Sanggunian, the Local Development Council,
Sectoral/Functional Committees, Local Planning and Development Office, Department
Heads, Stakeholders Group and Technical Working Groups for Local Planning.

9.3.2 Organizing the Local Planning Team

The steps are:

1. Organize/strengthen the Local Planning and Development Office (CPDO or MPDO)

2. For new local administration, reconstitute the Local Development Council (LDC)
and Local Sanggunian Committees, if necessary. This may require accreditation of
NGOs and POs by the Local Sanggunian and/or recruitment of technically
competent legal cum environmental planning experts in the Local Sanggunian.
3. Mobilize the Local Development Council (CDC/MDC) to undertake preparation and
formulation of CLUP Issuance of Executive Order creating the Local Planning
Team

Refer to Figure 5 for the Local Planning Structure.

9.3.3 Creating the Stakeholders Group

In creating the Stakeholders Group, it is essential to employ a holistic approach

or procedure to gain a better understanding of the system, and to address the impact of
changes to that system, by means of identifying key stakeholders and assessing their
respective interests in the system. Patterns of common ground and possible conflicts
among stakeholders are identified and used as a basis for development management
options. Stakeholders can be any individual or groups of people, organized or
unorganized, who share an interest or stake in a particular issue or system. A dichotomy
between stakeholders is those who affect or determine decisions and those who can be
affected, either positively or negatively, by decisions, actions or consequences of the
land use plan.

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Figure 5. Local Planning Structure

. Local Chief Executive Local Development

Local
Political (Mayor) Council
Sanggunian

Technical Local Special

Bodies

Executive
Committee

Other Urban Development

Departments Department

Technical Working Group(s)

Standing Committees Department Sectoral Development
Representatives Committee

Social Sector

Economic Sector

Environmental Sector

Physical/Infrastructure Sector

Administrative Sector

Finance Sector

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9.3.4 Organizing Technical Working Groups

This entails the following steps:

1. Organize a small body of ten (10) to twenty (20) stakeholder representatives per
sector who have a particular interest or expertise in a specific issue or problem.
They may come from different professional disciplines, city/municipal departments,
and sectors.
2. Direct the TWGs to play lead roles in research, issue analysis, participatory and
technical assessment.
3. Identify TWG Coordinators who shall coordinate inter-sectoral technical analysis of
issues, needs, opportunities, among other concerns

9.3.5 Identifying the Partners and Challengers

The City should identify its partners (supportive allies who would pave the way
for the efficient and effective formulation of development goals, objectives and targets
as well as supporters in implementing and monitoring the MTDP and AIP and executing
the City Budget. They provide support in legislative and budget advocacy as well as
community information and education campaign. The planning, investment
programming and budgeting arena is not composed of all “yes” participants and
stakeholders. Even in the LGU side, challengers within the local government system
whose interests do not conform with the local administration are inevitable. They may
come as a political opposition block which may pose threat in the coming up with a
consensus or challenging interest groups.

9.3.6 Selecting Consultants

When the LGU is assessed to have a limited technical capability to

prepare/update its MTDP, MTIP or AIP, an individual consultant or private consulting
firms may be hired per general guidelines provided by the Department of Interior and
Local Government (DILG) and existing laws on procurement of professional services.

9.3.7 Establishing the Terms of Reference

This mainly refers to the process of determining the scope of development

planning, investing programming and budgeting and reviewing terms of reference
periodically to assure that these are being observed and are up-to-date. These factors
will ultimately determine how comprehensive or focused the planning, investment
programming and budgeting efforts will be. The local planning actors may decide that
resources for development planning are not adequate to effect a simultaneous review of
the full range of development issues facing the local community. In this case, the
resulting development planning approach would be designed to focus on priority issues
identified while simultaneously considering the impact of activities in other areas upon it.

10.0 CONSTITUTIONAL AND LEGAL BASES

Each LGU has the power to create its own sources of revenue and to levy taxes,
fees, and charges, subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy (Section 5, Article X, l987
Constitution).

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Each LGU shall exercise its power to create its own sources of revenue and levy
taxes, fees, and charges subject to the provisions herein and consistent with the basic
policy of local autonomy. (Section 129, Local Government Code of 1991)

10.1 Economics of Public Finance Considerations

On the Distribution of the Burden

ƒ “Ability-to-Pay” Principle
ƒ “Benefits Received” Principle

On Smith’s Principles of Taxation/Canons of Taxation

ƒ Equity
ƒ Certainty
ƒ Convenience
ƒ Economy
ƒ Adequacy

10.2 The Dual Nature of Local Government Units

Political and Corporate Nature of Local Government Units. – Every local

government unit created or recognized under this Code is a body politic and corporate
endowed with powers to be exercised by it in conformity with law. As such, it shall
exercise powers as a political subdivision of the National government and as a corporate
entity representing the inhabitants of its territory. (Section 25, Local Government Code of
1991)

10.3 Administrative Concerns

Administrative concerns encompass the following:

z The organization for local revenue administration
z Systems and procedures
z Costs

10.4 Sources of Barangay Revenues

A. TAX REVENUE
Imposition Rates
On stores or retailers with fixed business At a rate not exceeding one percent (1%) of such
establishments with gross sales or receipts of the gross sales or receipts.
preceding calendar year of Fifty thousand pesos
(P50,000.00) or less, in the case of cities, and
Thirty thousand pesos (P30,000.00) or less, in the
case of municipalities. (Sec. 152(a), RA 7160,
Local Government Code of 1991)

Surcharge in unpaid taxes.(Sec. 168, RA Not exceeding 25%

17160)
B. SHARES FROM LOCAL TAXES
Real Property Tax (Sec. 271, RA 7160) Shares
Barangays within component municipalities 25% for the barangay where the property is located

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Barangays in cities and municipalities within MMA. 30% to be distributed among the component
barangays as follows: 50% to the barangay where
the property is located and 50% equally to all
component barangay.
Community Tax (Sec. 164(C), RA 7160) One-half (1/2) of collections collected by the
barangay treasurer
Tax on Sand, Gravel and Other Quarry resources 40% for the barangay where the sand, gravel, and
(Sec. 138, RA 7160) other quarry resources is extracted.
C. SHARES FROM NATIONAL TAXES
Internal Revenue Taxes 20% of the 40% share of all LGUs based on the
• Income tax collection for the third preceding fiscal year,
• Excise tax and donor’s tax distributed as follows: 60% based on population
40% equal sharing. P80,000 for barangays with
• Value-added tax population with at least 100.
• Other percentage taxes
• Taxes imposed by special laws, e.g., travel
tax (Sec. 285, RA 7160)
Share from the development of utilization of the 35% of the 40% share of the LGUs (allocated to the
national wealth (Sec. 292, RA 7160) barangay where the natural resource is located.)
D. Service Fees or Charges
Fees or charges for services rendered in Reasonable amount to cover cost of “regulation or
connection with the regulation of use of barangay- the use of barangay-owned properties or service
owned properties or service facilities, such as facilities.”
palay, copra, or tobacco driers. (Sec. 152(b), RA
7160)
E. Barangay Clearance
Barangay clearance Sec. 152(c), RA 7160 Reasonable amount, but must not be more than
50% of mayors permit fee.
F. Other Fees and Charges
On commercial breeding of fighting cocks (annual
sale of more than five (5) fighting cock of registered
Cost of regulation
breeder)
On cockfights and cockpits
On places of recreation which charge admission
fees Not less than the rates specified in ART 240(d)(4)
On billboards, signboards, neon signs and outdoor of the IRR
advertisements (Sec. 152(d), RA 7160)
G. Fees and Service or User Charges Under the Cost of regulation
Common Revenue-Raising Powers of LGUs
Secretary’s Fees Reasonable rates to recover cost of providing the
Solid Waste Disposal service.
Health Services
Physical Examination
Cemetery Fees
Other Services
Toll fees or charges for the use of any public road, Reasonable rates to recover cost and expenses for
pier or wharf, waterway, bridge, ferry or maintaining the facility.
telecommunication system funded and constructed
by the barangay
Operation of Economic Enterprises Reasonable rates of returns.
• Barangay Markets
• Multi-purpose Halls
• Barangay Waterworks

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• Parking Areas
• Bus Terminals
H. Aids from Higher LGUs
From provinces, cities and municipalities Not less than P1,000 per barangay

10.5 Other Sources

• Solicitations of monies or properties from private agencies and individuals for

specific purposes, to accrue to the barangay as trust fund

• Grants-in-Aids, subsidies, contributions, and revenues made available to the

barangays from national, provincials, city or municipal funds

10.6 Proceeds from fund raising activities

Suggested Contents of a Barangay Revenue Code

Chapter I - General Provisions

Chapter II - Tax on Business
Chapter III - Service Fees and Charges
Chapter IV - Economic Enterprises
Chapter V - General Administrative Provisions

10.7 Steps in the Enactment of a Revenue Code

1. Filing of Draft Code

2. Publication for three (3) consecutive days in a newspaper of local
circulation/posting simultaneously in four (4) conspicuous places. Within ten
(10) days from date of filing [Art. 276(b)(1)]
3. Sending of written notices of proposed ordinance, including copy thereof, to
interested parties in the barangay [Art 276(b)(2)]
4. Public Hearings not earlier than ten (10) days from sending out of notices/last
day of publication/last day of posting, whichever is later [Art. 276(b)(3)]
5. Sanggunian Committee Report, Sanggunian deliberations, approval [Internal
Rules]
6. Approval by majority of all sanggunian barangay members, to be signed by
the punong barangay [ Section 54(c)]
7. Submission of approved Revenue Code top sangguniang panlungsod/bayan
within ten (10) days after approval [Section 57
8. Effectivity. Ten (10) days after and posting, unless otherwise stated in the
ordinance. In case effectivity falls on any other date other than the beginning
of the quarter, the same shall be considered as effective at the beginning of
the next quarter and taxes, fees, and charges due shall begin to accrue
therefrom [Section 59/.Art. 276]
9. Copies furnished treasurer for public dissemination [Section 189]
10. For ordinances with penal sanctions: Posting for a minimum of three (3)
consecutive weeks and publication in a newspaper of general circulation,
where available; transmittal of official copies to the Chief Executive Officer of
the Official Gazette [Section 511]

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[Sections refer to Local Government Code of 1991; Articles to the

Implementing Rules and Regulations of R.A. 7160. Publication requirements
are optional for barangays. Public hearings prior to enactment are, however,
mandatory.]

10.8 Planning and Budgeting Linkage

One of the local budgeting principles specified in the Code is that ‘local
government budget shall operationalize the approved local development plans’. This
emphasizes the need and the importance of linking planning with budgeting. The plan
specifies the programs, projects and activities, which shall be supported by the funds
being budgeted for the period. Without the plan or priority programs and projects, there is
no basis for the programming of funds. There is no basis for budgeting.

The plan sets the priority areas of services and specifies the target output and
accomplishments. The budget, on the other hand, programs or allocate the resources
available to carry out the activities required to accomplish the targets. The national
planning and budgeting processes follow this principle. So do the local planning and
budgeting processes (Local Government Budgeting Manual).

10.8.1 Fundamental Budgeting Principles of Local Government Units

The following fundamental principles shall govern local government budgeting:

1. National planning shall be based on regional and local planning to ensure that the
needs and aspirations of the people as well as those of the LGUs shall be
considered in the formulations of budgets of National Government Agencies;
2. Local budget plans and goals shall, as far as practicable, be harmonized with
national development goals and strategies in order to optimize the utilization of
resources and to avoid duplication in the use of fiscal and physical resources;
3. LGUs shall formulate sound financial plans and local budgets shall be based on
functions, activities and projects in terms expected results;
4. LGU’S shall ensure that their respective budgets incorporate the requirements of
their component LGUs and provide for equitable allocation of resources among
these LGUs;
5. Local government budget shall operationalize approved Local Development
Plans;
6. No money shall be paid out of local treasury except in pursuance of
appropriations ordinance or law;
7. LGU shall endeavor to have a balanced budget in each fiscal year of operation;
8. Local government funds and monies shall be spent solely for public purposes;
9. Trust funds in local treasury shall not be paid out except in fulfillment of the
purpose for which the trust was created or the funds received;
10. Fiscal responsibility shall be shared by all those experiencing authority over the
financial affairs transactions and operations of LGUs;
11. Local revenue is generated only from sources expressly authorized by law or
ordinance or collection thereof shall at all time be acknowledge properly;
12. All monies officially received by a local government officer in any capacity or on
any occasion shall be accounted for as local funds unless otherwise provided by
law; and
13. Every officer of LGU whose duties permit or require the possession of custody of
local funds shall be properly bonded and such officer shall be accountable and

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responsible for said funds and for the safekeeping thereof in conformity with the
provisions of law. (Budget Operations Manual for LGUs)

10.8.2 The Budget Process

There are five (5) phases in the budget process, namely: (1) budget preparation,
(2) budget authorization, (3) budget review, (4) budget execution, and (5) budget
accountability

1. Preparation – Upon receipt of the statement of income and expenditures, the

punong barangay prepares the budget for the ensuing fiscal year, observing the
applicable budgetary requirements and limitations. The “executive budget” must
be submitted to the sangguniang barangay not later than October 16th of the
current year under pain of sanctions

2. Authorization – The barangay budget is authorized by the Sangguniang

Barangay thru the enactment of an Appropriation Ordinance.

3. Review – The Sangguniang Panlungsod/bayan, through the city/budget officer,

reviews the barangay budget.

4. Execution – The implementation of the approved budget.

5. Accountability – The accurate recording and reporting of income and

expenditures, and the evaluation of accomplishments vis-à-vis planned targets.
(Local Government Budgeting Manual)

10.8.3 The Budgetary Requirements

1. The aggregate amount appropriated shall not exceed the estimates of income;
2. Full provision shall be made for all statutory and contractual obligations…
Provided, that the amount of appropriations for debt servicing shall not exceed
twenty percent (20%) of the regular income of local government unit concerned;
3. Five percent (5%) of the estimated income from regular sources shall be set
aside as an annual lump sum appropriation for unforeseen expenditures arising
from the occurrence of calamities (Section 324, Local Government Code of
1991).

10.8.4 Other Mandatory Appropriations

1. Appropriation in the annual budget of not less than twenty percent (20%)
of the barangay’s internal revenue allotment for development projects.
(Section 287, Local Government Code of 1991)
2. Appropriation for Sangguniang Kabataan (SK) programs, projects, and
activities equivalent to ten percent (10%) of the general fund of the
barangay for the budget year.
3. Provision for the delivery of basic services pursuant to Section 17 of R. A.
7160.

10.8.5 General Limitations

The limitations applicable to barangays are:

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1. The amount expendable for personal services shall not exceed fifty-five
percent (55%) of the total annual income from regular sources realized in
the next preceding fiscal year.
2. The annual appropriations for discretionary purposes of the Punong
Barangay shall not exceed two percent (2%) of the actual receipts from
the basic real property tax in the next preceding fiscal year.

10.8.6 Position Classification and Compensation of Barangay Officials and

Personnel

Punong Barangay SG 14
Sangguniang Barangay members,
Barangay Secretary and Barangay
Treasurer SG 10
Utility Worker SG 1
Clerk I SG 3
Accounting Clerk I SG 4
Barangay Health Aide SG 4
Revenue Collection Clerk I SG 5
Day Care Worker I SG 6
Administrative Assistant SG 8

(Local Budget Circular No. 63, October 22, 1996)

11.0 UNDERSTANDING BARANGAY FINANCIAL STATEMENTS

The Accounting System

Effective on January 1, 2002, the New Government Accounting System

(NGAS) was prescribed for all local government units (LGUs), except
barangays. (COA Circular No. 2002-003 dated June 20, 2002)

In other words, the modified accrual system is not applicable to barangays and,
therefore, the actual cash for receipts and obligations for expenditures will continue to be
observed by the barangays.

The accounting cycle for barangays may be illustrated, as follows:

The Accounting System

Event Documentation Books

Transaction Approvals Of Accounts

Statement
Of Operation
Trial
Balance
Balance
Sheet

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Statement of Operations 1

INCOME
Real Property Taxes P___________

Business Taxes and Licenses P___________

Internal Revenue Allotments P___________

Operating and Service Income P___________

Miscellaneous Income P___________

Aids, Grants and Subsidies P___________

Total Income P__________

Deduct Expenditures
Personal Services P__________

Maintenance and other Operating Expenses P___________

Capital Outlay P___________

Total Expenditure P___________

EXCESS (DEFICIT) OF INCOME

OVER EXPENDITURES P___________

ADD, Cumulative Results of Operation

at the Beginning of the period P___________

Cumulative Results of Operation

at the End of the period
(see balance sheet) P___________

CUMULATIVE RESULTS OF
OPERATION BREAKDOWN:

Unappropriated P___________

Appropriated P___________

Residual Equity on Investor P____________

1
The formats for the Statement of Operations and Balance Sheet presented here conform
to the Barangay Accounting Manual, COA Circular No. 93-396.
The recording and reporting system formats appearing in the annexes are adopted from
the Bureau of Local Government Finance system SIE System.

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Balance Sheet

ASSETS
(What the Barangay Has)

Cash in Barangay Treasure P ___________

Cash in the City/Municipal Treasury P____________

Cash in Bank P____________

Cash, Disbursing Officer P____________

Receivables, Miscellaneous P____________

Inventories, Miscellaneous P____________

Fixed Assets – Land and Land Improvements P____________

Fixed Assets – Building and Structures P____________

Fixed Assets – Furniture, Fixtures, Equipment,

Work Animals & books P____________

TOTAL ASSETS P____________

LIABILITIES
(What the Barangay Owes)

Payable, Barangay Obligations P____________

Payable Miscellaneous P_________

Special Trust Funds P_________

TOTAL LIABILITIES P _________

RESIDUAL EQUITIES
(What the Barangay Owns)

Cumulative Results of Operations P_________

(See Statement of Operations)

Invested Capital P_________

TOTAL RESIDUAL EQUITY P_________

TOTAL LIABILITIES AND RESIDUAL EQUITY P_________

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The Statement of Operations and the Balance Sheet are derived from the Trial
Balance.

The Statement of Operations show the Income and the Expenditures from the
beginning of the fiscal year up to the date the Statement is made.

The Balance Sheet shows the financial condition of the barangay as of a given
date.

For development planning and budgeting the data provided by the Statement of
Operations in relation to prior years’ data are useful.

In the next session the manner by which the financial data provided by the
financial statements are translated into user-friendly information will be illustrated.

11.1 Setting-Up a Barangay Financial Data Bank

Financial analysis is enhanced by tabulating data for five (5) years in the following
manner:

Template 1

Income
Year 1 Year 2 Year 3 Year 4 Year 5

Real Property Taxes P____ P____ P____ P____ P____

Business Taxes and Licenses P____ P____ P____ P____ P____
Internal Revenue Allotment P____ P____ P____ P____ P____
Miscellaneous Income P____ P____ P____ P____ P____
Aids, Grants and Subsidies P____ P____ P____ P____ P____

TOTALS P____ P____ P____ P____ P____

Expenditures
Year 1 Year 2 Year 3 Year 4 Year 5

Personal Services P____ P____ P____ P____ P____

Maintenance and other P____ P____ P____ P____ P____

Operating Expenses

Capital Outlay P____ P____ P____ P____ P____

TOTALS P____ P____ P____ P____ P____

1. For Template 1 the absolute Peso values are entered. To standardize values,
the following methods are employed:

2. Divide the individual items in each row (say year 1) by the total of the row to
arrive at percentages. Repeat the process for the other rows. Enter these
percentages in lieu of the absolute peso values in Template 1 to comprise

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Template 2, which provide the profiles of the income and expenditures for the
given years.

3. For Template 3, divide each item by the population, to arrive at the per capita
figures.

Standardized values provide a convenient way for comparing financial data of the
barangay against those of the city and the other barangays.

The same data in Template 1 can be used for forecasting income and expenditures.

Two (2) techniques are commonly employed:

1. The average growth method, and

2. The linear regression method

Performance measurements can be developed from the data in Template.

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