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Issuance of Department Authority to LGUs for the Purchase of Motor Vehicles

The Authority to Purchase Motor Vehicles is a measure adopted by the national government in order to avoid the procurement of luxury motor vehicles, thereby, ensure prudence in the utilization of government funds.

Objectives

The Authority to Purchase Motor Vehicle is required in order to ensure that:

• The motor vehicles to be purchased are cost-effective, fuel-efficient and environment-friendly, and at par with the improvements and developments in the automotive industry and relevant technology;

• The procurement is done in the most efficient and economic manner;

• The specifications of the motor vehicles do not fall within the category of a “luxury vehicle”;

• The fund for the motor vehicle purchases is sourced from appropriate and allowable fund sources; and

• Prudence is observed in the utilization of government funds

General Guidelines

• All LGUs are prohibited from acquiring and/or using luxury vehicles for their operations.

• LGUs are encouraged to dedicate a percentage of their vehicular requirements to the purchase of motor vehicles using alternative fuel types.

• Proposed acquisitions that are not under the approving authority of the LCE must seek prior approval from DBM, OP or DILG.

• All motor vehicles intended to be purchased shall not contain a brand name.

• Strict compliance with budgetary, procurement and auditing laws, regulations and standards shall be observed.

• LGUs, within thirty (30) days from the completion of the procurement process, shall submit a written report on the acquisition to the concerned DILG Office that issued the authority.

• No post-purchase authority shall or could be issued by the DILG.

• No authority shall be issued to proposed acquisition of luxury vehicles or motor vehicles with any of the following specifications: 

• Car (sedan or hatchback)    - With an engine displacement exceeding 2500cc, if gasoline-fed; or 3500cc, if diesel-fed; and/or with an engine exceeding four (4)-cylinders

• Passenger Van or Pick-Up Type Vehicle - With an engine displacement exceeding 2500cc, if gasoline-fed; or 3000cc, if diesel-fed; and/or with an engine exceeding four (4)-cylinders

• Multi-Purpose Vehicle (MPV) - With an engine displacement exceeding 2500cc, if gasoline-fed; or 2800cc, if diesel-fed; and/or with an engine exceeding four (4)-cylinders

• Sports Utility Vehicle (SUV) - With an engine displacement exceeding 2700cc, if gasoline-fed; or 3000cc, if diesel-fed; and/or with an engine exceeding four (4)-cylinders

Background / Legal Basis

• Due to complaints from procuring entities on the capacity and readiness of the Procurement Service to undertake the centralized procurement of motor vehicles, Government Procurement Policy Board Resolution No. 20-2019 was passed on September 5, 2019 approving the delisting of motor vehicles used for: (i) the exercise of executive functions; (ii) transport of personnel, equipment, supplies, products and materials; (iii) transport of sick and/or injured persons; (iv) patrol operations; and (v) fire-fighting operations from the list of common-use supplies and equipment of the Procurement Service. In effect, the procuring entities can now undertake their own procurement of motor vehicles.

• Administrative Order No. 14 dated December 10, 2018 entitled “Consolidating and Rationalizing the Rules on the Acquisition of Government Motor Vehicles, Adopting a Centralized System of Procurement Therefor, and For Other Purposes” is the latest presidential directive that governs the purchase of motor vehicles by all government offices, including Government-Owned or Controlled Corporations (GOCCs), Government Financial Institutions (GFIs), State Universities and Colleges (SUCs), and Local Government Units (LGUs). It states that “the National Government adopts a policy of procuring, in the most efficient and economic manner, motor vehicles that are cost-effective, fuel-efficient, and environment-friendly, and at par with improvements and developments in the automotive industry and relevant technology.”

• DBM Budget Circular No. 2019-2 (Subject: Guidelines Implementing Certain Provisions of Administrative Order No. 14, S. 2018) dated March 4, 2019 provides for specific guidelines on: allowable engine displacements of motor vehicles that may be purchased by government agencies; and approving authorities for the acquisition of government motor vehicles.

• Memorandum Circular No. 2021-004 was issued on January 18, 2021 in order to reiterate, for emphasis, the relevant provisions of several issuances relating to the Purchase/Acquisition of Government Motor Vehicles, to streamline the process of issuance of authority to LGUs for the purchase of motor vehicles of the Secretary of the Department, and to delegate to the concerned DILG Regional Offices the authority to review, approve, and issue authority for specific LGU requests.  The guidelines cover LGU purchase of motor vehicles including those whose purchase requires an issued authority from the Secretary of the Interior and Local Government.

• DILG Memorandum Circular No. 2021-102 dated September 10, 2021 was also issued amending Item 5.2 Sources of Fund, particularly 5.2.2 of DILG Memorandum Circular No. 2021-004 to the effect that the 20% of the Annual Internal Revenue Allotment for Development Projects may be utilized in the acquisition of motor vehicles except, however, for the purchase of motor vehicle used for administrative purposes pursuant to Item 3.2.5.6 of DBM-DOF-DILG Joint Memorandum Circular No. 1 issued on November 4, 2020.  Also provided in DILG MC No. 2021-102 is the addition of administrative requirements for the issuance of Department Authority when utilizing the 20% Development Fund, and the change in the number of working days, from 3 to 7, to notify the LGU if the nature of the request does not need an authorization from the Department or if the same lacks any documentary requirement, or approve the request if it complies with all the requirements and falls within the delegated authority of the regional director.

• DBM BC No. 2022-01, entitled: Omnibus Guidelines on the Acquisition, Use, Rental, and Replacement of Government Motor Vehicle, was issued last  February 11, 2022 which provide guidelines on: 1) Allowable engine displacements of motor vehicles that may be purchased by government agencies; 2) Approving authorities for the acquisition of government motor vehicles and; 3) modes of acquisition.

• DILG Memorandum Circular No. 2022-105, entitled:  Revised Policy Guidelines on Motor Vehicle Purchase/ Acquisition, Use, and Rental by the Local Government Units was issued last August 23, 2022 in support of the issued DBM BC No. 2022-01.

Approving Authority by Fund Source and Vehicle Type

Sources of Funds

• Unencumbered local funds that are free from obligation or not yet obligated which may include unobligated loan proceeds taken up as trust fund. Other local unencumbered funds including but not limited to the following:

• Local Disaster Risk Reduction and Management Fund provided, that it shall be utilized in the acquisition of motor vehicles and heavy equipment to be exclusively used for response and rescue/relief activities

• Portion of the 20% generated from the collection of building permit fees and other charges under the National Building Code

• Portion of the 20% LGU share generated from the collection of fire permits under the Fire Code Revenues

• Cash awards and prizes from award-giving national government agencies or government-controlled corporations

• Loan proceeds from lending institutions

• Proceeds from Per Family Payment Rate or PhilHealth Capitation Trust Fund

• Donations from private entities

• National government funds under the General Appropriations Act (GAA), such as, Performance Challenge Fund (PCF), Local Government Support Fund - Assistance to Municipalities (LGSF-AM) or Other Financial Assistance to LGUs

• Twenty percent (20%) of the Annual Internal Revenue Allotment for Development Projects except for the purchase of motor vehicle to be used for administrative purposes pursuant to Item 3.2.5.6 of DBM-DOF-DILG JMC No. 1.

Documentary and Procedural Requirements

• LCE’s letter-request stating the following:

• Number and specific type of vehicle to be purchased,

• Specifications (i.e., engine displacement, fuel use as to gasoline- or diesel-fed, and number of cylinders),

• Purpose and deployment for which the vehicle will be used, and

• Official email address

• Certification of Availability of Funds by the Local Accountant or Head of the Accounting Unit, or in his/her absence, the Local Treasurer or Budget Officer; and 

• Certified true copy of an Ordinance approving such purchase, and:

When utilizing trust funds such as, unexpended DRRM fund balances from previous year(s) and funds transferred/donated to the  requesting LGU from higher level LGUs, government corporations, etc.:

• Current sanggunian resolution

When utilizing loan proceeds:

• Certified true copy of the loan agreement between the LGU and the lending institution, and 

• Appropriate sanggunian resolution

When utilizing the 20% Development Fund:

• Certified true copy of the duly approved Local Development Plan and Annual Investment Plan (AIP) or Local Development Investment Program (LDIP) / Provincial Development Investment Program (PDIP) for the year (indicating the page indicating the project/purchase), and

• Certification signed by the concerned LCE that the proposed motor vehicle to be purchased shall not be used for administrative purposes, 

• Updated (current calendar year) inventory/accounting of all existing motor vehicles showing their status/condition/worthiness (e.g., good, fair, repairable or unserviceable) duly certified by the LGU’s Property/Supply Officer.

Processing Time

• City/Municipal Office : 3 working days

• Provincial Office : 3 working days

• Regional Office : 3 working days for HUC/Provincial Clients

7 working days for City/Municipal clients 

Procedure in the Citizen's Charter

Guidelines for Issuance of Department Authority to LGUs for the Purchase of Motor Vehicles using the FY 2022 Seal of Good Local Governance (SGLG) Incentive Fund

This has reference to the implementation of the FY 2022 SGLG Incentive Fund as provided for in DILG MC 2023-019 dated January 31, 2023, entitled “Operational Guidelines on the Implementation of the FY 2022 SGLG Incentive Fund”.

Relative thereto, may we provide you with the following guidelines for LGU vehicle purchase and acquisition using the said fund:

1. Additional Documentary Requirements for the Purchase of Motor Vehicle

i. In addition to the basic requirements listed in Section 5.6 of DILG MC 2022-105 dated August 23, 2022, a copy of the NOTICE TO IMPLEMENT (NTI) must also be included in the motor vehicle request for authority, pursuant toitems 6.4.4 & 6.4.5, which provides as follows: “In case the proponent project is Purchase of Motor Vehicle, LGU recipient should secure first the NTI issued by the DILG Regional Office before requesting the Authority to Purchase Motor Vehicle (APMV).”

ii. The DILG Regional Office shall upload the receiving copy of the NTI to the SGLG Incentive fund Web Application. The use of the fund for vehicle purchase is valid within 12 months upon receipt of the NTI from the issuing DILG Regional Office.

2. On Approving Authorities Reiteration of Item 6.0 Approving Authorities of DBM Budget Circular 2022-1, dated February 11, 2022, to wit:

i. Approval for (a) Specific-purpose vehicles, such as medical ambulances, military and police patrol vehicles, armored vehicles, prisoners’ vans, and fire trucks; (b) heavy equipment, such as road construction equipment, cargo transport equipment, farm machinery, waste management/environmental sanitation equipment and similar vehicle/equipment; (c) locally-assembled owner- or passenger-type jeeps; (d) motorized bancas/boats; (e) vehicles for mass transport when necessary in the interest of public service; and (f) motorcycles and tri-wheel vehicles using SGLG funds classified under the General Appropriations Act (GAA) is for approval of the DBM.

ii. Approval of motor vehicles such as MPVs, SUVs, pick-up type vehicles, vans, ATV, and passenger vans, regardless of fund source, to include SGLG fund, is under the approval of the DILG.

Source: DILG Unnumbered Memorandum date May 9, 2023 re: Guidelines for Issuance of Department Authority to LGUs for the Purchase of Motor Vehicles using the FY 2022 Seal of Good Local Governance (SGLG) Incentive Fund

Legal Bases / References

1. Unnumbered Memo 2024.03.01 Policy Reiteration on the Issuance of Department Authority to the Local Government Units (LGUs for the Purchase Vehicles)