HAUSE OF REPRESENTATIVES
RECEIVED
pave: _03 AUG 2016

Republic of the Philippines
HOUSE OF REPRESENTATIVE
Quezon City

TEENTH CONGRESS.
First Regwar Session

HOUSE BILL No, 2887

“AN ACT
TO ENFORCE GREATER ACCOUNTABILITY IN
PUBLIC FINANCIAL MANAGEMENT (PEM) BY STRENGTHENING
CONGRESS’ POWER OF THE PURSE, INSTITUTING AN
INTEGRATED PFM SY! |, AND INCREASING
BUDGET TRANSPARENCY AND PARTICIPATION,
AND FOR OTHER PURPOSES.”

Introduced by REP. HENEDINA RAZON- ABAD.

EXPLANATORY NOTE

The Constitution empowers the Congress of the Philippines with approving and
enacting the annual operational budget of the Philippine Government. Our charter
specifically states appropriation measures originate from the House of Representatives,
being the most representative of the people. In this regard we must create a sound Public
Fiscal Management Policy to ensure that the People’s Money is spent for inclusive growth
and every peso is accounted for

‘The proposed measure aims to institutionalize a sound Public Fiscal Management
Policy in Budget Preparation, Budget Execution, and Fiscal Responsibility, It will create a
system that mandates each government to cratta fiscal strategy and to submit fiscal reports
to ensure that government programs are sufficiently funded for implementation, This
mechanism will ensure that the people's needs are addressed and government services
reach their intended constituents

In addition, the proposed law will create additional safeguards to ensure that public
funds are allocated and used for their intended purpose. This bill aims to grant the Congress
with additional oversight powers over National Government Agencies to exact
accountability from government agencies over their use of public resources, It alsa
establishes the Office of the Comptroller General under the Department of Budget and
Management which will ensure that government agencies strictly adhere to the principles of
public financial accountability, Furthermore, transparency and peoples participation
mechanisms are institutionalized such as, the publication of disclosures and the People’s
Budget



Vhese provisions will ensure that reforms made will create a culture of fiscal
responsibility, accountability and transparency in government.

In view of the foregoing, passage of this bill is urgently sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

2387

HOUSE BILL NO.

Introduced by HON. HENEDINA RAZON-ABAD

“AN ACT
TO ENFORCE GREATER ACCOUNTABILITY IN
PUBLIC FINANCIAL MANAGEMENT (PFM) BY STRENGTHENING
CONGRESS’ POWER OF THE PURSE, INSTITUTING AN
INTEGRATED PFM SYSTEM, AND INCREASING
BUDGET TRANSPARENCY AND PARTICIPATION,
AND FOR OTHER PURPOSES.”

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

PARTI
PRELIMINARY PROVISIONS

SECTION L. Short Title. ~ This Act shall be known as the “Public Financial Accountability Act.”

ON 2. Declaration of Policy and Objectives. — It is hereby declared the policy of the State to
ensure accountability and integrity in the use of public resources by ensuring transparency, fiscal
responsibility, results-orientation, efficiency. and effectiveness. This shall be upheld through the
estublishment of an integrated system of planning, budgeting, management, accounting, reporting
and review of public finances. In light of these requirements, the State sball pursue the following
specific objectives:

(a) To enforce the power of Congress to authorize all appropriations and hold government
accountable in the use of public resources, as well as the responsibility of all government
agencies to propose, execute and deliver committed results in the appropriations acts in a
timely, predictable, and economic manner;

(b) To promote people's empowerment in the management of public resources by enforcing their
right to access information on, and to contribute in the formulation and implementation of,
the financial affairs of the government; and

(c) To strengthen the integration of planning, budgeting, and performance management and

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ensure ample safeguards in managing public finances, including through internal controls,
accounting, reporting, and risk management;

SECTION 3. Scope and Coverage. ~ The provisions of this Act shall apply to the management of
revenues, expenditures, financing arrangements, and assets and liabilities of national government
agencies (NGAs), government-owned or -controlled corporations (GOCCs), and local government
units (LGUs) to the extent provided herein.

SECTION 4. Definition of Terms. ~ The following terms when used in this Act and the
implementing rules and regulations shall be understood, as follows:

(a) Accounting Standards refer to authoritative statements on how transactions and other events:
should be reflected in the accounts and financial statements of Government Agencies as
promulgated by the Commission on Audit (COA);

(b) Allotment refers to the authorization issued by the Department of Budget and Management
(DBM) for NGAs, GOCCs, or LGUs to incur obligations up to a certain amount, for a
specified public purpose, and within a specified period of time, in accordance with the
Appropriations Law;

(©) Appropriations Law refers to the legislative authorization for the utilization of Public Funds
for specific public purposes covering a specified period of time. This may refer to either «
general or special appropriations law;

(d) Cabinet refers to the Executive Secretary and the Secretaries of the departments under the
‘executive branch;

(e) Fiscal Year refers to a period of twelve months commencing on January 1 until December 31;
(1) Government Agencies collectively refer to NGAs, GOCCs and LGUs;

(g) Government-Owned or -Controlled Corporations reler to agencies with corporate powers,
whether or not organized as a stock or non-stock corporation, vested with functions relating
to public needs whether governmental or proprietary in nature, and owned by the
Government of the Republic of the Philippines either wholly or, where applicable as in the
case of stock corporations, to the extent of at least a majority of its outstanding capital stock.
This includes Government Financial Institutions. government corporate instrumentalities and
related corporations;

(h) Government Financial Institutions refer to financial institutions in which the GRP directly
or indirectly owns the majority of the capital stock and which are either: (i) registered with,
or directly supervised by. the Bangko Sentral ng Pilipinas (BSP); or (ii) authorized to collect
or transact funds or contributions from the public and place them in financial instruments or
assets such as deposits, loans, bonds and equity:

(i) Head of Agency refers to the head of the department or agency in the case of NGAs, the
Board of Directors or Trustees in the case of GOCCs as well as certain agencies which are
structured as such, and the local chief executive in the case of LGUs;

2)


s Well as.

() Local Government Units refer to provinces, cities, municipalities, and barangays,
autonomous regions authorized to be created in the Constitution;

(k) National Government Agencies refer wo units of the national government, as inguished
from GOCCs and LGUs, which include any of the departments, bureaus, offices or
instrumentalities of the Executive, Judicial and Legislative branches of government, aswell
as the Constitutional Commissions, and the Office of the Ombudsman;

(1) Proposed National Budget reers to a financial plan to be submitted by the President to
Congress reflective of national objectives, strategies and programs;

(m) Public Officials refer to elective and appointive officials and employees, in a permanent or
temporary capacity, whether in the career or non-career service, including military and
uniformed personnel, regardless of the rank, form or amount of compensation;

(n) Public Funds refer to the monies of all Government Agencies sourced trom taxes, fees,
charges, penalties, income, dividends, interest earnings, loan proceeds, grants, proceeds
from the sale of assets, and such other receivables of the government that the
Government has a legal right to retain and use and shall not include any money received in
error; and

(0) Subsidiary refers to a corporation where at least a majority of the outstanding capital stock is
owned or controlled, directiy or indirectly and through one or more intermediaries, by a
Goce.

In this Act the singular may be read as the plural and the plural may be read as the singular, as the
context requires.

PART IL
ADDITIONAL ROLES AND RESPONSIBILITIES,

SECTION 5. Congress. — The Congress shall, in addition to its powers under the Constitution and
existing laws, perform the following:

(a) Monitor and review government performance against the requirements of appropriations and
related laws, and hold Government Agencies accountable for their financial and non-financial
performane

(b) Review reports on planned and actual performance, including the Statement of Fiscal Polic:
the Medium Term Fiscal Strategy, fiscal reports, annual plans of government agencie
periodic and annual reports on government performance and performance of government
agencies; and

(c) Consider the consolidated annual financial statements of government prepared by the Office
of the Comptroller General (OCG) and the audited government agency reports by the COA.

Congress shall undertake the foregoing through any of its existing committees, support offices or
one created for the purpose to strengthen the oversight role of Congress.

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SECTION 6. President. - The President shall, in addition to his/her powers under the
and existing laws, perform the following:

(a) Approve the Statement of Fis
to Congress;

al Policy, and the Medium-term Fiscal Strategy for submission

(b) Approve the Budget Priorities Framework to identify the priority areas for government
spending and guide the budget preparation exercise; and,

(c) Authorize changes in the funetional, operational and organizational structure within and
among the DBM, Department of Finance (DOF), and National Economic and Development
Authority (NEDA), as may be necessary, to ensure the effective implementation of this Act

SECTION 7. Commission on Audit. - The COA shall, in addition to its powers under the
Constitution and existing laws, coordinate with the DBM, through the OCG, for the proper
enforcement of timely accounting and reporting of publie finances.

SECTION 8. Department of Budget and Management, ~ The DBM shall, in addition to its
mandates and functions under existing laws, perform the following:

(a) Prepare, in coordination with the ageneies concerned, and DOR, NEDA and OP in the
Development Budget Coordination Committee (DBCC), the Statement of Fiseal Policy, the
Medium-term Fiscal Strategy, the Budget Priorities Framework, und the Mid-year and
Annual Fiscal Reports as required in this Act;

(b) Monitor and evaluate the financial and non-financial performance of NGAs;

(c) Evaluate and review the financial and non-financial performance of GOCCs with special laws
and charters, in coordination with the DOF and the Governance Commission for GOCCs
(GCG), and approve the annual corporate operating budgets (COBs) of the GOCCs;

(d) Monitor and review, together with the Bureau of Local Government Finance (BLGF) under
the DOF and Department of the Interior and Local Government (DILG), the financial and
non-financial performance of LGUs;

(c) Assess, together wi
them in d

h the BLGF under the DOF and DILG, the PFM systems of LGUs and
jgning and implementing PFM improvement measures; and

as

fo ensure the effective formulation and execution of fiscal policies, the Secretary of Budget and
Management shall lead the DBCC, with the Seeretary of Finance, the Director General of the NEDA
Secretariat and a representative from the OP as members, and the Governor of the BSP as resource
person,

To enhance the management of public finances, there is hereby created an Office of the
Comptroller General under the supervision and control of the DBM which shall perform the
following functions:

i, Formulate measures on effective internal controls. for the implementation by Government
Agencies, to ensure the integrity, accuracy, completeness, and reliability of government
financial and management systems:

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ii. Oversee the implementation of, and Government Agencies’ compliance with, accounting and
auditing rules and regulations promulgated by the COA:

iii, Oversee and manage the financial reporting of Government Agencies, including (1) to
monitor the periodic and annual management and financial accounts with regard to
accuracy, timeliness, completeness, and compliance with this Act, standards, rules
and regulations; and (2) to consolidate the financial reports for submission to the
President, Congress, and COA;

iv, Oversee the operationalization of the financial management information system of the
government;

v. Formulate competency-based human resource policies for positions in public financial
management and coordinate on capacity building requirements on PFM with other agencies;

vi. Oversee the implementation of Public Expenditure Framework policies of LGUs;

vii. Coordinate with counterpart agency officials to ensure compliance with the foregoii
functions; and

ing

viii. Perform such other functions as may be necessary to properly implement the provisions
under this Section.

The OCG shall be headed by the Comptroller General who shall be of the same rank as an
Undersecretary, and with the structure and staff complement as may be approved by the DBM. The
heads of agency shall designate a Comptroller in their respective offices to oversee the
implementation of the above-mentioned funetions at the agency level in coordination with the
Comptroller General

SECTION 9. Department of Finance. ~The DOF shall, in addition to its mandates and functions
under existing laws, perform the following:

(a) Monitor and manage fiscal risks to the government, including those from public-private
partnerships:

(b) Compile and publish government fiscal statist
and

in accordance with international standards:

(c) Formulate policies and standards for the acquisition and management of fixed assets by
NGAs.

The Bureau of the Treasury (BTr) shall, in addition to its mandates and functions under existing
laws, perform the following:

i, Manage the Treasury Single Account (TSA) maintained at the BSP or an agent bank, with the
prior approval of the Secretary of Finance:

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ii, Put in place arrangements for the execution of duly authorized payments from the TSA,
which may include the appointment of banks to operate as agents of the National Government
with the prior approval of the Secretary of Finance;

iii, Manage the financial assets and liabilities of the government, including (i) banking
arrangements for, and bank accounts of, the government; (ii) hedging and other risk
management activities associated with debt management, cash management and fina
investment; (iii) appointment of dealers, assets managers and other agents to support debt,
cash and investment management activities; (iv) maintenance of an accurate record of the
stock and flow of financial assets and liabilities; and (v) tracking and reporting on fiscal risks
related fo the management of financial assets and liabilities;

cial

iv, Issue instructions on the management and recording of financial assets and liabilities of the
government,

v. Authorize the opening and closing of bank accounts of NGAS;

vi. Administer the release of cash requirements covering all types of transfers to LGUs; and

vii, Establish and maintain a consolidated registry of fixed assets of the National Government

SECTION 10, National Economic and Development Authority. - The NEDA shall, in addition to
its mandates and functions under existing laws, perform the following:

(a) Coordinate with the Regional Development Councils (RDCs), on the formulation of regional
development plans and policies that are consistent with the established national priorities;

(b) Coordinate the formulation of an annual and medium-term public investment program
consistent with the approved Medium-term Fiscal Strategy and in the context of the
preparation of the National Budget;

(c) Set standards for Government Agencies in proposing, assessing, monitoring and evaluating
development policies, plans and projects including those financed by grants and concessional
loans;

(d) Assist and support the capacity building of RDCs and LGUs in development planning and
investment programming; and

ECTION LL. Heads of Government Agencies. - The heads of NGAs, GOCCs and LGUs shall, in
addition to responsibilities provided under existing laws, be responsible for the following:

(a) Keep the DBM and DOF informed of significant changes, issues, and risks that could impact
on the finances of the government;

(b) Participate in the processes to develop the Medium-term Fiscal Strategy, the Budget Priorities
Framework, and the Proposed National Budget as required by the DBM;

6]


(c) Manage their respective agencies, including GOCCs, and other resources placed under their
supervision, in an efficient, effective and economic manner in order to deliver the outputs and
attain the outcomes set in their respective budgets;

(d) Take appropriate measures to ensure that contractual commitments or obligations do not
exceed the amounts appropriated in their respective budgets:

(e) Ensure that their respective agencies settles all contractual obligations or approves payment
thereon within the time prescribed by law;

(8) Institute effective and efficient management systems, procedure and practices for assets,
liabilities, and personnel, including internal controls, risk management, and performance
reviews

(g) Demonstrate that due regard has been taken on the recommendations provided in internal and
external audit evaluation reports, to the extent authorized in their respective budgets; and

(h) Provide accounting and reporting of public finances as requited in this Act.

PART LL
PONSIBILITY

SECTION 12. Fiscal Responsibility Principles. — The State shall pursue its policy objectives in
accordance with the following Fiscal Responsibility Principles

(a) Implement fiscal policies and strategies consistent with the achievement of macroeconomic
stability and inclusive economic development;

(b) Manage resources in a fiscally and environmentally sustainable way;
(c) Maintain prudent levels of public debt;

(d) Maintain an appropriate balance between government revenues and expenditures; and

(e) Manage fiscal risks in a prudent manner.
SECTION 13. Statement of Fiscal Policy. ~The DBM, in coordination with DOF, NEDA and OP in
the DBCC, shall prepare, subject to the approval of the President, the Statement of Fiscal Policy
which shall contain measurable medium-term macroeconomic and fiscal objectives and forecasts
consistent with the Fiscal Responsibility Principles.

The President shall submit for information of Congress, the Statement of Fiscal Policy not later
than ninety (90) days upon commencement of his/her term of office and update the measurable fiscal
objectives set forth therein three (3) years thereafter.

SECTION 14. Medium-term Fiscal Strategy. ~ The DBM, in coordination with the DOF, NEDA,
and OP in the DBCC, shall prepare, subject to approval of the President, a Medium-term Fiscal
Strategy consistent with the approved Statement of Fiscal Policy, to be updated annually. [t shall

7\


include a summary of the fiscal policies for revenue, debt, deficit, expenditure, and fiscal risk
management, supported by a medium-term fiscal sustainability analysis, consistent with the
measurable fiscal objectives established in the approved Statement of Fiscal Policy. The IRR of U
Act shall detail the other specifications for the Medium-Term Fiscal Strategy.

The President shall submit for the information of Congress, the Medium-term Fiscal Strategy for
the following fiscal year not later than March 15 of the current year and shall publish the said report
ona government website not later than seven (7) days after it is submitted to Congress.

SECTION 15, Fiscal Reports, ~ The DBM, in coordination with the DOF, NEDA, and OP in the
DBCC, shall produce a Mid-year Fiscal Report (MFR), covering the first half of the fiscal year and
an Annual Fiscal Report (AFR) on the government’s macroeconomic and fiscal performance.

The MER and AFR shall include information on macroeconomic and fiscal outturns for the
period covered as compared against forecasts and objectives stated in the Medium-Term Fiscal
Strategy; as well as reporting on budget execution, at least in the aggregate and by agency level.
compared against approved appropriations and other spending authorities. The IRR of this Act shall
detail the other specifications for the contents of the MFR and AFR.

The President shall submit the MFR to Congress not later than September 30 of each year while the
AER shall be submitted together with the Proposed National Budget. Said reports shail be published
on a government website not later than seven (7) days after they are submitted to Congress

SECTION 16. Long-term Vision Report. ~ The NEDA, in coordination with the DOF, DBM and
OP in the DBCC, shall submit a Long-term Vision Report to the President and Cabinet, and Congress
not later than October 31 and November 30, respectively. Said Report shall assess the long-term
sustainability of existing government policies over the next thirty (30) years, taking into account
demographic, environmental, and other changes

The first Long-term Vision Report shall be submitted to the President and Cabinet, and Congress
within two (2) years from the effectivity of this Act, to be updated every six (6) years thereafter,

The NEDA shall cause the publication of the Long-term Vision Report on a government website
not later than seven (7) days upon submission to Congress.

SECTION 17, Deviations from Fiscal Objectives, - The government may deviate from the medium-
term fiscal objectives in the approved Statement of Fiseal Policy on a temporary basis, where such
deviation is due to a major natural disaster, unanticipated severe economic shock, or other significant
unforeseeable event that cannot be accommodated through accessing the Contingent Fund and/or the
National Disaster Risk Reduction and Management Fund, as may be applicable or prudent fiscal
policy adjustments, or the use of other flexibilities provided in this Act,

The President shall submit a report to the Congress, stating the reasons for any such deviations,
the plans and the expected time to address such deviations, as part of the succeeding Medium-term
Viseal Strategy or its annual update, or in the Mid-year or Annual Fiscal Report, whichever is the
next report due and within the prescribed period under this Act.

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PARTIV
BUDGET PREPARATION, EXECUTION, AND ADJUSTMEN1

CTION 18. Governing Principles in Budget Preparation. — here is hereby established a set of
governing principles to be observed by the DBM in the preparation and the presentation to Congress
of the Proposed National Budget:

(a) Cash-based estimates shall be adopted in the proposed general and special appropriations
bills to promote faster and more effective delivery of services;

(b) The overall expenditure program of the government for a given fi

cal year shall be included,
identifying those requiring approval by Cong

s and those authorized under existing laws;

(c) All sources of funds and authorized uses available to the agency shall be considered in the
evaluation of agency proposals and determination of ageney budget levels, and shall likewise
be disclosed in the Proposed National Budget and reports;

(d) Evaluation of agency proposals may include the analysis of a development plan, master plan
or road map, agency capability as demonstrated by previous years” performance, its
contribution to projects and activities of other agencies, utilization of funds appropriated or
released, and such other criteria as may be determined by the DBM:

(e) All appropriations shall be valid until the end of the fiscal year;

(1) Wems of appropriations shall be presented in such a way as to identity both the entity
responsible for the expenditure and the intended results from the use of the appropriation in
order (o evaluate the performance of the agency;

(g) Both the financial and non-financial performance of agencies shall be presented in the
Proposed National Budget and the General Appropriations Act to ensure a performance-
informed budget; and

(h) lems of appropriations shall be reflected by department, agencies, bureaus, and offices, and
shall be presented for information purposes, by region and province, and eventually, by city
or municipali

SECTION 19. Planning-Budgeting Linkage - Development strategies identitied in the Philippine
Development Plan shall be a primary consideration in the formulation of the budget priorities
framework, ‘These shall also be the basis for drawing up strategic and prioritized programs and
projects in the multi-year public investment program, which in turn will be considered in the
formulation of the annual agency budgets that conform to the annual budget ceilings approved by the
President.

The implementation of programs and projects funded under the annual agency budgets shall be
monitored to ensure economy, efficiency, and effectiveness in the use of public funds, Monitoring
and evaluation of these projects shall cover, among others, the planned and actual performance of

91


agencies, citing reasons for deviation and/or poor absorptive capacities. The results of the project
evaluation shall inform the assessment of subsequent plans and budget proposals of agencies.

CTION 20. Budget Priorities Framework, — The DBM, in coordination with the DOF, NEDA
and OP in the DBCC, shall present to the President and Cabinet, in April of each year, a Budget
Priorities Framework which shall guide the formulation of the Budget for the following year by
containing the medium-term fiscal strategy and targets underlying the budget; the priority areas for
government spending reflected in the PDP, estimated amount and planned allocation of the fiscal
space; and other requirements laid down in the IRR.

SECTION 21. The Budget Preparation Process, ~The DBM shall determine the budget preparation
process and calendar. The budget preparation process shall cover: (i) NGAS; (i) GOCCs with respect
to their impact on revenues, expenditures, assets, and liabilities and risks of the government; and (iii)
LGUs as to their impact on revenues and expenditures of the government,

ECTION 22. The Proposed National Budget, ~ The President shall submit to Congress, not later
than thirty (30) days from the fourth Monday of July of every year, the Proposed National Budget,
which shall be the basis of the general appropriations bill

The President shall determine the form and content of the Proposed National Budget which shal!
include, but not limited, to the following:

(a) President’s Budget Message - provides a preview of the Proposed National Budget,
explaining the principles, objectives and policy framework adopted and the spending,
priorities for the fiscal year;

(b) National Expenditure Program (NEP) ~ includes the strategic objectives, details of the three-
year (3-year) expenditure program, performance information, such as key strategies, outputs
and outcomes for agencies in relation to their budgets, and staffing summary;

(c) Budget of Expenditures and Sources of Financing (BESF) ~ contains the macroeconomic
parameters; dimensions of three-year (3-year) expenditure program, revenues, financing, and
outstanding debt; overview of the financial positions of GC LGUs, and public-private
partnership projects, as well as the other items listed in the IRR;

(d) Fiscal Risk Statement ~ presents a consolidated statement of the fiscal risks that the national
government faces, including those from the contingent liabilities of Government Agencies
and other items listed in the IRR.

The President shall publish the Proposed National Budget on a Government website on the same
day as it is presented to Congress.

SECTION 23. Lump Sui Appropriations, - To promote the transparent and delailed disclosure of
all proposed government spending, lump sum appropriations and special purpose funds (SPFs) in the
Proposed National Budget shall be limited to: (i) the National Disaster Risk Reduction and
Management Fund (NDRRMF); (ii) the Contingent Fund (CF); (iii) Statutory Shares of LGUs; and
(iv) other SPEs not falling under any of the preceding purposes and the details of which could not be
determined during the budget preparation stage

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SECTION 24, National Disaster Risk Reduction and Management Fund. - The NDRRMF shall be
used for (i) disaster risk reduction or mitigation, prevention and preparedness activities, such as, but
not limited to, training of personnel, procurement of equipment, and capital expenditures; and (ii)
relief, recovery, reconstruction and other work or services in connection with natural or human
induced calamities which may occur during the budget year or those that occurred in the precedi
two (2) years.

Alll releases from the NDRRME shall be subject to the prior approval of the President, who may
take into consideration the recommendation of the National Disaster Risk Reduction and
Management Council and the appropriate agency for local and international d

sters and calamities.

SCTION 25, Contingent Fund, ~The Contingent Fund shall cover the funding requirements of
new and/or urgent and unforeseen projects and activities of NGAs and GOCCs that need to be
implemented or paid during the year, such as, legal obligation of the government arising from final
and executory decisions by competent authority, including arbitration awards, mediation settlement.
or compromise agreements, requirements of newly created offices, ot deficiencies in the
appropriations for local and external travels of the President.

As a rule, all releases from the Contingent Fund shall be approved by the President. However.
disbursements due to final and executoty decisions promulgated by competent authorities shall only
require the approval of the DBM

‘The DBM shall inform Congress of all releases from the Contingent Fund in the quarterly and
annual fiscal reports including information on the date of release, the amount covered, corresponding,
purpose/s and recipient agency

SECTION 26. Statutory Shares of Local Government Units, - The shares of LGUs in the proceeds
from national taxes and other transfers to LGUs authorized by law shall be released to the LGUs in
accordance with the provisions on the use, allocation, and release of the funds as may be provided in
pertinent laws, rules and regulatior

SECTION 27. Unprogrammed Appropriations. Congress may authorize standby appropriations 1
cover the funding requirements of other priority projects and activities or contingencies, as well as
provide appropriations cover for foreign-assisted projects (APs) not specifically included in the
programmed component of the Appropriations Law, The Unprogrammed Appropriations shall have
the same level of details as in the programmed component of the Appropriations Law. The amount
authorized under the Unprogrammed Appropriations shall not exceed two percent (2%) of the total
proposed expenditure in the programmed component of the Appropriations Law.

‘The Unprogrammed Appropriations shall take effect only when supported by excess collections
generated in any one of the particular tax or non-tax revenue source from its corresponding revenue
collection target in the BESF as certified by the BTr, or when there are new loan agreements tor

In no case shall the Unprogrammed Appropriations be activated or released when there is a

tisk of breaching the measurable fiscal objectives for the budget balance (including a deficit) or debt

for the financial year or future years as provided in the Statement of Fiscal Policy and Medium-term
Fiscal Strategy or if there is a risk of breaching any of the Fiscal Responsibility Principles.

Priority projects and activities or contingencies shall pertain to expenditures, the payment of
which are not covered under the Contingent Fund and could not be delayed until the succeeding

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budget years without harming public interest or arising from the government's legal obligation such,
compliance with a government guarantee or settlement of final and executory decisions by
competent authorities.

Releases from the Unprogrammed Appropriations shall be subject to the prior approval of the
President of the Philippines, except final and executory decisions which shall instead require the
approval of the DBM.

‘The DBM shall inform Congress of all releases from the Unprogrammed Appropriations in the
quarterly and annual reports including information on the date of release, the amount covered,
corresponding purpose/s and recipient agency.

SECTION 28. Release and Expenditure of Public Funds. - The government shall commence
releases of Public Funds covered by an Appropriations Law as soon as such Law comes into force 10
ensure timely and eflicient disbursement by the appropriate implementing agencies, subject to
pertinent budgeting and auditing rules and regulations.

SECTION 29. Early Procurement Activities. - To ensure timely contract implementation and
efficient delivery of services, all Government Agencies are authorized to undertake procurement
activities from pre-procurement conference until post-qualification of bids even prior to the passage
of the Appropriations Law, Corporate Operating Budgets (COBs) or Appropriations Ordinance, in
accordance with IRRs to be issued by DBM.

Government Agencies may proceed with the awarding of contract upon approval or enactment of
their respective appropriations or budget authorization document, as the case may be, and based on
the amount authorized therein.

“TION 30. Re-enacted Budget. ~ If, by the end of any fiscal year, Congr
enact the General Appropriations Bill for the ensuing fiscal year, the General Appropriations Law for

preceding fiscal year shall be deemed re-enacted and shall remain in force and effeet until the
said General Appropriations Bill is passed by the Congress.

shall have failed to

Consistent with the Fiscal Responsibility Principles, the Re-enacted Budget shall be enforced as
follows

(a) The aggregate level of the Re-enacied Budget shall be limited to the total amount
appropriated in the preceding year’s Appropriations Lavy, but shall in no case exceed the level of
the sources of financing under the Budget of Expenditure and Sources of Financing (BESF)
of the Proposed National Budget ;

(b) All completed programs, projects and activities, as well as progeam support for GOCCs
and equity contribution of the national government shall be excluded from the Re-enacted
Budget;

(c) The appropriations for the following shall be limited to the amount authorized under
the Re-enacted Budget, but in no case exceed the amount proposed by the President in
the Proposed National Budget:

1. Ongoing programs, projects and activities:
2. Personnel benefits. including retirement gratuities. pensions, terminal leave pays

12]


and related expenses:

NDRRMF, Contingent Fund, Statutory Shares of LGUs, and other SPFs; and

4. Budgetary support to GOCCs but further limited to the amount of subsidy for their
operational requirements,

‘The items and/or amount of appropriations not covered under the Re-enacted Budget as provided
above shall not be released, disbursed, or utilized for the purpose previously authorized nor be
declared savings to augment existing items of appropriations in the Re-enacted Budget

The DBM shall issue guidelines on the aggregate level of appropriations authorized under the
Re-enacted Budget in accordance with the foregoing, the level of obligations by agencies, supporting
requirements to determine actual needs, and other pertinent rules in the implementation of the Re-
enacted Budget

Upon enactment of the General Appropriations Law, all releases under a Re-enacted Budget
consistent with this Section shall be deemed to have been implemented pursuant 0, and charged
against, for account recording purposes, the general appropriations law for the

uurrent fiseal year

SECTION 31. Special Appropriations Bill, ~ A Special Appropriations Bill is a legislative proposal
(o provide authorization for expenditures for a specific purpose not included or not covered under the
annual appropriations laws. It shall, specify the purpose/s for which it is intended and be valid until
the end of the fiscal year of its enactment.

A Special Appropriations Bill shall be supported by funds actually available or those which are
not included in the fiscal year’s sources of financing under the BESF as certified by the National
Ireasurer, or to be raised by a corresponding revenue measure proposed therein, ‘The amount to be
authorized by Congress in a Supplemental Appropriations Bill may be more than that originally
proposed for as long as the same is supported by any or a combination of the above sources and is
consistent with the Fiscal Responsibility Principles and the MTFS. A Special Appropriations Bill
may only be proposed after the passage of the General Appropriations Law, except for disaster
related purposes, as well as urgent and unforeseen requirements of the government.

SECTION 32. Multi-year Contracts, - Multi-year contracts (MYCs) shall refer to contracts entered
into by NGAs and GOCCs where the delivery of goods, civil works, and services will cover more
than one (1) year. NGAs entering into MYCs shall first secure a Multi-year Obligational Authority
(MYOA) from the DBM but in no case shall obligate and disburse more than the current y
appropriation for the said year’s phase of project implementation. GOCCs shall secure prior
authority from their respective governing boards before entering into MYC:

ears

The MYOA issued by the DBM for NGAs, and the amount authorized by the governing
board for GOCCs" governing board shall be the basis of the ABC under Section 5 of Republic Act
No, 9184 for MYCs and the certification of availability of funds required prior to contact
execution under Section 85 of Presidential Decree No. 1445.

SECTION Authority to Declare and Use Savings, - The President of the Philippines, the Senate
President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the
Heads of the Civil Service Commission (CSC), the Commission on Elections (COMELEC), and the
COA are hereby authorized to declare and use savings in their respective appropriations to augment
actual deficiencies incurred for the current year in any item of their respective appropriations.

13)


‘The foregoing constitutional officers authorized to use savings shall be responsible for ensuring
that quarterly reports on their respective use of savings shall be submitted to the Senate Committee
on Finance and the House Committee on Appropriations, copy fumished the DBM. The report shall
indicate, among others, the amount of savings generated, the sources and grounds used therefor, and
the existing item of appropriations augmented. They shall likewise ensure that said reports are posted
‘on their respective official websites.

‘The DBM shall determine the procedure, as well as the supporting documents needed in the
declaration and use of savings authorized in this Act.

SECTION 34, Meaning of Savings. - Savings refer to portion or balances of any programmed items
of appropriations in the general appropriations law, which have not been released or obligated as
result of the following:

(a) Completion of a program, project or activity at a lower cost than that programmed. For this,
purpose, completion shall refer to the award of contract to the contractor, supplier or
consultant. Any difference between the approved budget for the contract and the amount of
contract award may be declared as Savings;

(b) Decreased cost realized from the implementation of measures resulting in lower input costs
or efficiencies which enabled agencies to meet and deliver their targets and/or implement or
complete their projects or activitie

(c) Discontinuance or abandonment of a project or activity for causes not attributable to the fault
or negligence of either the NGA mandated to undertake or authorized to implement said
project or activity or the procurement agent, at any time during the validity of the
appropriations:

(d) Non-commencement of a program, project or activity for which the appropriations is
authorized. For this purpose, non-commencement shall refer to the inability of the NGA to
obligate an allotment on or before June 30 of the current fiscal year due to causes not
attributable to the fault or negligence of the agency; or

(¢) Unused compensation and related costs as well as pension and retirement benefits.

SECTION 35. Rules on Augmentation. - Augmentation is the act of the constitutional oflivers
authorized under Section 34 of this Act to use Savings realized in their respective appropriations in
order to address a deficiency in other items of their respective appropriations. A deficiency in an item
of appropriations may result from the following, as determined by the Head of Agency:

(a) Unforeseen modifications or adjustments in the program, project or activity (PPA); or

(b) Adjustment in the cost of implementing the PPA due to justified causes.

In particular, the authorized constitutional officers shall observe the following when augmenting
an item of appropriations from Savings:

(a) There should be an existing item of appropriations to be augmented. For this purpose, the
particulars of the expenditures to be funded by augmentation from Savings should be within
the scope of or may be attributed to the item of appropriations to be augmented; and

14|


(b) In no case shall a non-existent allotment class ina PPA be funded by augmentation from
Savings.

SECTION 36, Rules on Realignment, - Realignment is the limited flexibility given to NGAs to
modify or change the speci details within a PPA that shall not entail any augmentation of the
amount appropriated for the said PPA during budget execution, Realignment may be undertaken in
any of the cases specified in the IRR.

The following are authorized to approve realignments:

(a) For the Executive branch, the respective Heads of Agencies, except for: (i) realignment,
within PS for the payment of authorized magna carta benefits; from one allotment class to
another and, from one operating unit to another, which shall be subject to approval of the
DBM, and (ii) realignment of intelligence funds which shall require approval of the President
of the Philippines;

(b) For the Senate of the Philippines, all types of realignment shall require approval of the Senate
President;

(c) For the House of Representatives, all types of realignment shall require approval of the
Speaker;

(d) For the Judicial branch, the Chief Justice with regard to the Supreme Court and lower courts,
and the respective Presiding Justices of the Court of Appeals, Court of Tax Appeals and
Sandiganbayan, except for realignment of intelligence funds which shall require approval of
the Chief Justice; and

(e) For the CSC, COMELEC, and COA, all types of realignment shall require approval of their
respective Chairpersons.

The DBM shall promulgate the rules and regulations necessary to ensure the uniform
implementation among the various branches of government, the proper recording of realignments.
and the timely submission of reports by all the offices concerned.

PART V
FINANCIAL MANAGEMENT

ION 37. General Fund. ~ All monies received by NGAs, whether coming from taxes, fees,
charges, penalties, income, dividends, interest earnings, loan proceeds, grants, donations, asset sale
proceeds and such other receivables, shall accrue to the General Fund and be remitted to the National
Treasury, unless otherwise provided by law or stipulated by covering loan or grant agreements.
Monies under the General Fund shall be made available to support the requirements of the NG
authorized in an Appropriations Law.

A Special Account in the General Fund (SAGE) shall be established by law only under
exceptional circumstances to record taxes, fees, charges penalties, income, dividend, interest
earnings, grants, and donations collected, earned or received by NGAs for specified purposes. All
laws authorizing the establishment of SAGFs shall specify the period of use thereof which shall not
exceed three (3) years, or if no period is specified, shall be deemed to be until the fulfilment of the

15|


purpose for which the SAGE was authorized or for three years, whichever comes earlier, All interests.
ned by SAGFs shall accrue to the General Fund. The balance of SAGFs upon their termination
shall form part of the General Fund.

All earmarked revenues with significant inflows, a large portion of which are not or not expected
to be programmed for disbursement during the year shall be treated as Trust Funds and recorded as
trust receipts. Proceeds from these ‘Trust Funds shall be recorded only as revenue inflow in the
General Fund when programmed to be spent for the year.

‘The Permanent Committee created under EO No. 292, s. 1989 shall recommend for approval of
the President the change in the treatment of existing SAGFS that shall be converted into Trust Funds
by virtue of the foregoing. The recording of revenue inflows from these SAGFs shall be governed
by the guidelines to be issued by the Permanent Committee.

SECTION 38. Special Funds. ~ In exceptional cases when an SAGE is not suitable for the
operations of a fund, Special Funds shall be authorized by law and limited to the following:

(a) ‘Trust Fund ~ constituted from identified revenue sources and other receipts by NGAs or
public officials acting as trustees, agents. or administrators for the fulfillment of obligations
or accomplishment of specified purposes. Trust Funds shall be deposited in the Treasury
Single Account (TSA);

(b) Revolving Fund — constituted trom receipts derived from business-type activities of NGAs to
be used for the operating requirements of said business-type activities and as such are
considered. self-liquidating, Revolving Funds shall be deposited in the TSA or in an
Authorized Government Depository Bank (AGDB) upon authority of the National Treasurer:
and

(c) Retained Fund ~ constituted from taxes, fees, charges, penalties, ineome, dividends, or
interest earnings collected, earned or received by NGAs which are expressly authorized by
law to be retained by NGAs and utilized for specified purposes. Retained Funds shall be
deposited in the TSA or in an AGDB upon authority of the National Treasurer

Notwithstanding the provisions of laws to the contrary, Special Funds may only be established
after evaluation by the Permanent Committee, , as to their proper category and compliance with the
foregoing conditions, Any interest earned by Special Funds shall acerue to said Funds.

SECTION 39, Review by the Permanent Committee, - The Permanent Committee shall review all
sting SAGES and Special Funds to validate their compliance with the foregoing requirements.
Upon evaluation, the Permanent Committee shall recommend for approval of the President the
modification and/or termination of said funds as may be necessary.

It shall likewise review all SAGES created upon the passage of this Act and may recommend 10
extend their validity period, but in no case shall the extension exceed three (3) years at any one time
subject to approval of the President,

The Permanent Committee shall jointly issue guidelines for the establishment, review and
evaluation, accounting and reporting, and termination of SAGE's and Special Funds,

16|


SECTION 40. Escrow Fund, - Escrow Funds are constituted from funds for which the
government's legal right to use is contingent upon a future event which may or may not occur.
Escrow Funds shall be deposited in the TSA or an AGDB upon authority of the National ‘Treasurer,
and shall subsequently be part of the General Fund upon the occurrence of the future contingent
event. Any interest eared by an Escrow Fund shall accrue to the said Fund. ‘The amounts under
escrow, including interest earned shall form part of the General Fund upon the occurrence of the
future contingent event

SECTION 41, Waiver, Abatement, Refund and Compromise Agreements. — No public otticial shall
waive, abate, refund, or enter into a compromise agreement on a tax liability or the payment of fees
or charges except in accordance with law. All waivers, abatements, refunds or compromise
agreements made by an NGA shall be properly accounted for and reported. Refund of taxes and
other revenues shall be treated as a reduction in revenue collections.

“TION 42. Grants. - NGAs may accept, with prior coordin: DOF, grants, in cash or in
kind, trom domestic or foreign sources, for purposes relevant to their functions. In the case of grants,
ish or in kind, from

overnments of fore ies. their agencies and instrumentalities anil

cou
nizations, acceptance thereof shall be subject to the
prior clearance and approval by the President or his authorized representative based on the
recommendation of the Secretary of Finance.

international or multilateral institutions or org

The provisions of this Scction shall not apply to 1) any grant received by LGUs or GOCCs.
except where the grant is received by them on behaif of the NG . or 2) any grant authorized ot
covered in accordance with existing law.

SECTION 43. Treasury Single Account. — The TSA refers to the banking arrangement managed by
the BTr wherein the government transacts all monies collected, received or paid by NGAs in one
bank account or a set of linked bank accounts and gets a consolidated view of its cash position an at
least. a daily basis.

‘The TSA shall cover remittances, releases or disbursements from the General Fund, SAGFs.
Special Funds, and any other fund managed by the BTr, except in any of the following instances:

(a) When monies under the General Fund are placed under investments;

(b) When the BTr is required to hold foreign currency accounts: or

(c) When authorized by the Secretary of Finance.

The BTr, in coordination with NGAs authorized by law to undertake revenue collection and
administration, shall make the necessary arrangements with authorized agent banks (AABs) to

facilitate the collection and transfer of said revenues to the TSA. AABs shall deposit said collections
to TSA within the period and in the manner prescribed by laws. rules and regulations,

SECTION 44, Oversight on Government Bank Accounts. — Notwit!
to the contrary. the BTr shall undertake any of the following in case of
Act and guidelines issued on the implementation of the TSA:

nding any provision of law
lation of a provision in this

(a) Transfer balances of NGA bank accounts to the TSA:

17|


(b) Close an

NGA bank account; and/or
(c) Revoke the authority to open any NGA bank account.

The NGA or GOCE which has opened a bank account, as well as the bank concerned, shall
prompdy disclose information regarding such account to the BTr,

ECTION 45, Treasury Cash Management. — The B'lr shall issue orders for the conduct of cash
management including the requirement to provide projections on the timing of future transactions of
NGAs. If there is a projected cash shortfall, the Ber may request the DBM to temporarily suspend or
withdraw a portion or the full allotment issued.

SECTION 46, Investments, ~ ‘The BTr may invest portions of the funds held in the TSA for such
periods as the B'Tr may deem prudent considering cash management requirements and based on
terms and conditions as may be set by the IRR of this Act, Investments are authorized to be made in
any of the following:

(a) deposit with any highly reputable bank following a selection criteria to be issued by the
Secretary of Finance in consultation with the Bangko Sentral ng Pilipinas,

(b) sovereign-issued securities with an investment grade rating; or

{c) other fixed incom
international credit ri

's with an AAA credit rating issued by at least two (2) reputable
ing agencies acceptable to the Secretary of Finance

The Br may appoint a fund manager as an agent of the NG to undertake the investment of the
funds,

Interest eared and other income from investments shall accrue to the General Fund, unless
otherwise provided by law.

SECTION 47, Management of National Government Borrowings. —

Borrowings by the NG shall be for any of the following purposes:

1, Financing budget deficits and liquidity shortfall

2. Refinancing and pre-finaneing maturing debts;

3. Obtaining foreign currency on behalf of the Bangko Sentral ng Pilipinas:
4. On-lending to an approved entity:

5. Financing all sums of money paid to fulfill guarantees:

6. Regulating internal monetary conditions should the necessity arise:

Providing finaneing to remedy the effets of natural calamities: or
8. Defraying expenditures covered by appropriations

Borrowing under this Act should adhere to the
| objectives in the Statement of Fiscal Policy,

iscal Responsibility Principles and measurable

18]


SECTION 48, Borrowings by Government -Owned or -Controlled Corporations, ~ Before the end
of each fiscal year, the Head of a GOCC shall prepare a borrowing program for the following fiscal
year which shall support the Corporate Operating Budget and for the medium term, both of which
shall include a full financial plan with the details of the loans, refinancing and repayment that the
GOCC intends to take. Said borrowing program, including changes thereon, shall be subject to the
approval of the Head of the NGA overseeing the GOCC, and shall be submitted to DOP tor
information, and shall be published in the concerned GOCC website,

GOCCs shall seek approval of DOF for their borrowing activities as defined in the IRR.

Nothing in this Section shall be construed as creating a government guarantee on any borrowing,
Joans or refinaneing and repayment that the GOCC intends to take.

SECTION 49. Local Government Borrowings. — An LGU may borrow funds from domestic and
foreign sources in accordance with the Local Government Code of 1991 or any other applicable law
The financial plan including borrowing program shall be published in the appropriate government
website within seven (7) days after the borrowing program has been approved,

SECTION 50, Debt Reporting, ~ The DOF through the BTr shall ensure that the records include
information on the principal, terms of repayment, amounts drawn, interests and service charges
accrued, principal and interests paid, and the balance outstanding, and shall make the records
available in a timely way to the President and Congress when requested and in accordance with the
reporting requirements in this Act.

Each LGU and GOCC shall maintain records and provide reports to the DOF on loans as
required by relevant laws, rules and regulations.

SECTION SI. Guarantees. — Guarantee, indemnity or security shall be provided to an NGA or &
GOCC as provided by law, and subject to the annual guarantee ceiling prescribed in the General
Appropriations Law, and upon such terms and conditions as the Secretary of Finance may
recommend consistent with relevant laws, rules and regulations, The overall level of guarante
indemnity or security shall adhere to the Fiscal Responsibility Principles laid down in this Act and
ihe fiscal objectives in the Statement of Fiscal Polic

The DOF shall charge a risk-based fee for any guarantee, indemnity, security. relending or
similar financial accommodation it may extend to a GOCC,

SECTION 52. Limitation on the Liability of the National Government For Debts of Other
Entities, ~ The NG shall not be liable for any implied guarantees asserted by any person, but only for
explicit guarantees extended in accordance with existing Jaws, and guarantees in favor of the
Government Service Insurance System (GSIS), Home Development Mutual Fund (HDMF),
Philippine Health Insurance Corporation, and the Social Security System (SSS) in their respective
charters,

SECTION 53. Payments Made for Contingent Liabilities. - Any money paid by the DOF pursuant
to any guarantee, indemnity, or security authorized by law and the expenses associated with the same
shall constitute a debt due the NG from the entity for whose benefit the payment on the guarantee
indemnity, or security was made.

19|


SECTION 54. Information on Contingent Liabilities. ~ The DOF shall keep a complete and
updated registry of all contingent liabilities of the NG, and provide the OCG with a report on
contingent liabilities as of the fiscal year.

PART VI
ACCOUNTABILITY AND REPORTING

SECTION 55. Financial Management and Internat Control, ~ The Head of Agency shall be
responsible and accountable for the financial management of the agency which shall include meeting
performance targets, controlling costs, mitigating adverse risks to agency operations, and ensuring
that budgets are managed with integrity and in compliance with applicable laws, Adequate internal
controls shall be ensured and an internal audit function shall be maintained.

The OCG shall oversee the operation of an integrated internal control framework across
Government Agencies.

SECTION 56. NGA Annual Plans and Proposed Budgets, ~ The Head of each NGA shall produce
«an Annual Plan which shall have a medium term scope, with details for the following fiscal year, and
shall include information on the strategic priorities for the medium-term, consistent with the
Philippine Development Plan; performance information; summary proposed budget including
financial forecasts assumptions and highlighting significant capital projects; and other information us
required in the IRR, as well as the Budget Call and other related orders from the DBM. The Annual
Plan shall be submitted to DBM during the budget preparation process consistent with the timetable
and other guidelines in the Budget Call

The Head of the NGA shall ensure that the Annual Plan is updated to be consistent with a) the
Proposed National Budget, no later than thirty (30) days after the President has submitted the same to
Congress, and; b) the General Appropriations Act, no later than thirty (30) days after its enactment
Both revisions of the Annual Plan shall be submitted to Congress and published on a government
website within the aforementioned timeframes.

The Annual Plan of a Department shall incorporate the Annual Plans of its attached NGAs and
GOCCs subject to guidelines prescribed in the IRR.

SECTION 57. NGA Reporting Requirements. ~ For greater transparency and accountability, each
Head of an NGA shall:

(a) Submit monthly and quarterly reports on the ageney’s finan
performance to the DBM and OCG, not later than thirty (30) days after the end of every
month and quarter in the format specified by the DBM and shall publish the same on a
government website within the same reglementary_ period

(b) Prepare an Annual Report which shall include year-end financial statements, reporting on
non-financial performance compared against the Annual Plan, and other information as
required in the IRR; submit the said Report to the DBM, OCG, and Congress no later than six

after the end of the fiscal year; and publish the said Report in a government

website no later than seven (7) days after its submission to Congress.

20)


The monthly, quarterly, and annual reports of a Department shall incorporate the reports of its
attached NGAs and GOCCs subject to guidelines prescribed in the IRR.

SECTION 58. Service Agreements. — The Head of an NGA may enter imo a service and/or
performance agreement with another agency for the latter to provide services charged against the
‘budget of said principal agency.

SECTION 59. Corporate Operating Budget (COB). ~ The Board of Directors or Trustees of a
GOCC shall prepare and submit a COB to the Head of the NGA overseeing said GOCC, the DBM,
and the DOF, not later than ninety (90) days prior to the commencement of the fisca which
ll include, the objectives of the GOCCs and its subsidiaries, the activities to be under
performance targets and risks; forecasts of financial statements for the next three (3) years; and other
information as may be required in the IRR.

The Head of the NGA overseeing said GOCC shall endorse the Board-approved COB to the
DBM, for the latter's approval. The Head of a GOCC shall publish the DBM-approved COB of the
GOCC on the official website of the Corporation not later than fourteen (14) days after the approval
of the COB.

” Reporting Requirements. ~ Vor greater transparency and accountability, each

(a) Provide quarterly reports on financial and non-financial performance to the DOF’, Governance
Commission for GOCCs (GCG) and the DBM, no later than thirty (30) days afier the end of
the quarter, in the format and time specified by the DOF, GCG and DBM and shall publish it
on their official website within the same period; and

(b) Prepare an Annual Report, which shall include year-end financial st reporting on
non-financial performance compared against the COB, and other information as required in
the IRR: submit the same to the overseeing NGA, DBM, GCG, DOF and Congress no later
than six (6) months after the end of the fiscal year; and publish the said Report in a
government website no later than seven (7) days after its submission to Congress.

GOCCs with subsidiaries shall reflect in its quarterly and annual reports the aforementioned
required information for the whole corporate group, consistent with guidelines prescribed in the IRR

SECTION 61. Service Agreement for a GOCC, ~ Where GOCCs implement government non-
commercial programs, such as housing provision, irrigation and electrification, and receive
government funding, a service agreement with the NGA overseeing said GOCC shall specify the
terms of delivery of goods or services that the GOCC must provide, and the funds that the
‘government will pay. Program funds shall be under the budget of the NGA overseeing said GOCC

“TION 62. Local Government Units. — The Local Chief Executives (LCEs) shall ensure that
adequate internal controls and an internal audit function are maintained.

Vhe LCEs shall provide financial and non-linancial performance information of their
respectivel.GUs to the OCG, DILG and the BLGF under the DOF, subject to the guidelines to be
issued thereon.

21)


63. Application of Accounting and Auditing Requirements. — Any expenditure of public
cluding government assets or liabilities incurred by and for the Government regardless of
the source of funding, shall be subject to accounting and auditing rules and regulations promulgated
bby the COA.

SECTION 64. Accounting Standards, — Vhe Comptroller General shall develop guidelines to
oversee the implementation of the accounting standards mandated by the COA, for use by all
Giovernment Agencies.

The Heads of Agencies shall ensure full, accurate and proper records are kept for their respective
agencies on financial matters and for performance in the production of goods and services.

The DBM, OCG and COA shall ensure that complete, accurate and appropriate records of the
government are kept on both financial and non-financial performances.

SCTION 65. Government Consolidated Reporting — The OCG shall submit a quarterly report on
the consolidated financial performance of the government to the President, which includes
information showing performance against the Appropriations Law, not later than sixty (60) days after
the end of each quarter. This report shall be published in a government website within seven (7) days
aller the report is submitted to the President.

The OCG shall prepare the consolidated annual financial statements, not later than
afier the end of the fiscal year, for submission to the President, Congress and COA.

ix (6) months

PART VIE
TRANSPARENCY AND PARTICIPATION

SECTION 66. People’s Access to Public Financial Information. - Before the start of each fiscal
, the DBM shall promulgate a Calendar of Disclosures, and shall publish this on the government
site and such calendar shall contain the schedule of release of all budget documents and
information required by this Act and its IRR. The DBM shall monitor and periodically report to
Congress and the public on the compliance of agencies with the Calendar of Disclosures and other
fiscal transpareney requirements under this Act and its IRR.

All documents and reports required to be published by this Act and its IRR shall automatically be
made available electronically in a government website. Current and historical data on government
revenues, expenditures, and borrowings, shall be made available electronically, in open data format,
on a government website, subject to guidelines in the IRR.

ECTION 67. The People’s Budget. -The DBM shall, for every fiscal year, publish citizen-
-ndly summaries of the following, subject to guidelines and other specifications in the IRR:

(a) the Statement of Fiscal Policy in the year of the President's election and any updates
thereafier within thirty (30) days from submission to Congress;

22|


(b) the Proposed National Budget, to be published in electronic format within thirty (30) days
from submission to Congress of the Proposed National Budget;

(c) the General Appropriations Law, to be published in electronic format in a government website
within thirty (30) days from its effectivity; and

(d) the Annual Fiscal Report, to be published in electronic format in a government website within
thirty (30) days from submission to Congress.

SECTION 68. People’s Participation in the Budget Process. ~ government shall establish and
implement suitable participatory budget mechanisms to facilitate the open, inclusive, and meaningful
engagement of citizens throughout the budget process—from budget preparation, to legislation, to
execution, and to accountability and audit, Such participatory mechanisms may include consultations
and partnerships with civil society organizations (CSOs), non-government organizations (NGOs),
people's organizations (POs), academics and experts, and other individual and organized
stakeholders throughout the annual budget process.

To aid the empowerment of grassroots organizations and communities in the national budget
process, the DBM, DILG, and other relevant agencies shall facilitate a process wherein CSO:
NGOs, POs, community organizations and LGUs can jointly identify local priority poverty reduction
and development needs which will serve as input to the formulation of the Proposed National
Budget. Such process shall consider the pursuit of meaningful local devolution and local
accountability, as well as the strengthening of regional and local development councils’ roles in the
national budget process.

Policies and regulations for the establishment of participatory budgeting mechanisms established
by laws shall be formulated and enforced by

i. The DBM, together with other relevant agencies of the executive, when it comes to
participation in budget preparation, execution, and accountability;

ii, The House of Representatives and the Senate, through their relevant committees, when it
comes to participation in budget legislation; and

‘The COA, when it comes to particip:

n in the conduct of audit.

PART VIL
ENFORCEMENT.

ION 69. Sanctions and Penalties. — Without prejudice to the provisions of other laws, the
following sanctions and liabilities in case of failure to comply with the reporting and posting
requirements under this Act, shall be imposed

a) ‘The DBM shall not approve any request for release of allotments for items of appropriations
covered in the negative list or realignment nor recommend the use of savings by the President

234


until such time as the non-compliant agency has submitted the report/s required under this
Act;

») The COA may disallow any expenditure charged against augmentation using savings, and any
expenditure due to realignment, which were made within the period succeeding the reporting
period when the agency failed to comply with the reporting requirements under this Act:

¢) Failure to report on the income and/or funds retained at the end of a reporting period shall
render all disbursements against such income or funds in subsequent reporting periods as
void, and will render the responsible official liable under existing laws; and

a) ‘The Congress may motu proprio or upon the request of COA and/or DBM through its
appropriate oversight committee compel the head of the non-compliant agency, under pain of
contempt, to produce the required report/s and to explain reasons for failure to submit and
disclose said report/s.

Without prejudice to the provisions of other laws:

i, Every obligation, expenditure or payment authorized or incurred in violation of the
provisions of this Act shall be void and shall render the public official and/or employee
authorizing or making such payment and every person in collusion with said official or
employee shall jointly and severally be held liable to the government for the full amount so
paid or received. The public official or employee who knowingly ineur any obligation or
authorizes any expenditure in violation of the provisions of this Act or takes part therein shall
likewise be removed or dismissed from office, after due notice and hearing, even if no
criminal charge is instituted against him;

ii, Any public official or employee, holding office or employment in a casual, temporary,
holdover, permanent or regular capacity, who shall cause the inclusion of fraudulent
information in any accountability report, shall be penalized. with imprisonment not exceeding
five (5) years, or a fine not exceeding One Million Pesos (P1,000,000.00), or both, without
prejudice to disallowances that may be made by COA against expenditures related to such
fraudulent information, provided, that this fine is reviewed and adjusted periodically to be
reasonable;

iii, A convietion under this Act shall carry with it civil liability, which may either consist of
restitution for the damage done or forfeiture in favor of the government of any unwarranted
benefit derived from the act or acts in question, or both, at the discretion of the courts, in
addition to possible administrative liability; and

iv. Private individuals who shall conspire with the erting public officials or employees, whether
as co-prineipals, accomplices or accessories, in the commission of any violation of this Act
shall be subject to the same penalties as the public officials or employees and shail be tried
jointly with them

SECTION 70, Jurisdiction. — Actions under this Act shall be cognizable by the courts, tribunals,
bodies, agencies or authorities with appropriate jurisdiction under existing laws.

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PART 1X
FINAL PROVISIONS

‘TION 71, Jmplementing Rules and Regulations. - The DBM in consultation with the DOF.
Bir, NEDA and COA, in coordination with agencies concerned shall issue the guidelines necessary
for the proper implementation of this Act.

SECTION 72. Transitory Provisions. - The DBM, DOF, BTrt, NEDA and COA shall produce and
submit within thirty (30) days from promulgation of the IRR. a Transitory Plan for information, to
the Joint Congressional Oversight Committee on Public Expenditures to ensure the proper
implementation of the provisions of this Act, presenting the Sections that will not be implemented on
the passing of this Act and those requiring compliance with certain conditions or the happening of
events before the provisions herein may be implemented.

SECTION 73. Repealing Clause. ~ Any law, presidential decree or issuance, executive order, letter
of instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof
contrary (0 or inconsistent with the provisions of this Act is hereby repealed, modified or amended
accordingly. (Note: specific laws to be repealed will need to be identified for clarity.)

ON 74. Separability Clause. — If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.

IN 75. Effectivity Clause. — This Act shall take effect fifteen (15) days following its
on in the Official Gazette or in two (2) newspapers of general circulation,

Approved,

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