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

FIFTEENTH CONGRESS
First Regular Session

944

House Bill No.

Introduced by Honorable REYNALDO V. UMALI

EXPLANATORY NOTE

Article VI Section 25 (1) of the 1987 Constitution provides that “Congress may
not increase the appropriations recommended by the President for the operation
of the Government as specified in the budget. The form, content and manner of
preparation of the budget shall be prescribed by law.” Clearly then, while it is the
President who proposes the national budget it is the Congress that prescribes
the form, content and manner of budget preparation albeit subject to the
limitations found in the Constitution. Hence, as the "power of the sword" belongs
to the President, "the power of the purse” resides in Congress.

In practice, however, the President still wields considerable control over public
‘spending through the exercise of budget impoundment.

Impoundment refers to the refusal of the President, for whatever reason, to
release funds appropriated by Congress. It is the failure to spend or obligate
budget authority of any type.

While its constitutional conferment is not expressed, the Administrative Code has
given the President specific authority, when in his judgment the pubic interest
requires and upon due notice to the head of office concemed, to suspend or
otherwise stop further expenditure of funds allotted for any agency.

Of recent times however, this presidential prerogative has been misused and
abused, and has emasculated Congress’ authority to check the President's
discretionary power to spend public funds. In effect, the President seems to have
a vast and unbridled control over the national budget.

This bill seeks to increase congressional oversight and to limit executive
influence over specific appropriations in the General Appropriations Act. This
undertaking is urgently needed in the light of the current economic crisis
confronting the whole world, the consequences of which are deemed to severely
affect our country in the coming years.

Md
In view thereof, early consideration and approval of this bill is earnestly sought.

Representative
Second District, Province of Oriental Mindoro



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

FIFTEENTH CONGRESS
First Regular Session

9

House Bill No.

Introduced by Honorable REYNALDO V. UMALI

THE BUDGET IMPOUNDMENT CONTROL ACT
Be it enacted by the Senate and the House of Representatives of the Philippines
in Congress assembled:
SECTION 1. Title. - This is Act shall be known as "The Budget Impoundment

Control Act".

SECTION 2. Declaration of Policy. - It is the policy of the State to formulate and
implement a National Budget that is truly an instrument of national development.
Towards this end, all appropriations, except those which shall be deferred,
rescinded, reserved, or otherwise withheld in the General Appropriations Act,
shall be released within the first semester of the year through the issuance of
advices of allotment in accordance with approved work and financial plans, and
shall be utilized according to the purposes provided in the General
Appropriations Act. Any deferral, rescission or reservation of appropriations in the

General Appropriations Act shall be in accordance with this Act.

SECTION 3. Definition of Terms. - For purposes of this Act

(1) Rescission - means cancellation of all or part of an enacted appropriation,

which has not yet been spent or obligated.


(2) Reservation - means imposition of reserves on appropriated amounts for

government expenditures.

(3) Deferral of Releases - means withholding or delaying the release of
appropriated amounts provided for projects or activities. Impoundment
resolution - means a joint resolution of both Houses of Congress expressing
its approval of a rescission, reservation or deferral of an appropriation or

several appropriation items as proposed by the President.

(4) Advice of Allotment - the formal document issued by the Department of
Budget and Management, which contains authorizations, conditions, and
amount of obligations that an agency can incur pursuant to a legislative

appropriation.

(5) Work-and-Financial Plan - the monthly breakdown of financial requirements

and physical performance targets of an agency.

(6) Appropriations - unless otherwise described or specified herein, the term
appropriations refers to the appropriations included in the annual General

Appropriations Act.

SECTION 4. Rescission and Reservation of a Budget Appropriation. -
Whenever the President, upon the recommendation of the Secretary of the
Department of Budget and Management, determines that all or part of any
budget appropriation will not be required to carry out the full objectives or scope
of programs for which it is provided, or that such budget appropriation should be
rescinded for fiscal policy or other reasons, including the termination of
authorized projects or activities, or whenever all or part of any budget

appropriation for the current fiscal year is to be reserved from obligation for such


fiscal year, the President shall transmit to both Houses of Congress a special

message specifying:

1) The amount of budget appropriation which he proposes to be rescinded or

which is to be so reserved;
2) Any account, department, agency or instrumentality of the government to
which such budget appropriation is available for obligation, and the specific

projects or governmental functions involved;

3

The reasons why the budget appropriations should be rescinded or is to be

so reserved;

4

The estimated fiscal, economic and budgetary effect of the proposed

rescission or reservation; and

5)

All facts, circumstances and considerations relating to or bearing upon the
proposed rescission or reservation, and the estimated effect of the proposed
rescission or reservation upon the purposes, programs, activities and projects

for which such appropriation is provided.

SECTION 5. Approval of Rescission or Reservation. - Both Houses of
Congress shall act on the proposed rescission or reservation within sixty (60)
calendar days after the receipt of such proposal from the President by issuing a
joint impoundment resolution: Provided, That if the President's special message
is received within the period of less than sixty (60) calendar days before the end
of a regular session, the President's message shall be deemed to have been
‘submitted on the first day of the succeeding regular session of Congress and the
‘sixty (60) day period referred to in this Section shall commence on the day after

such first day. If Congress does not issue an impoundment resolution within the


specified period, the President shall not proceed with the rescission or
reservation procedures. Provided, however, that in the event of a Congressional
approval to rescind, the funds corresponding to the rescinded appropriations
shall revert to the unappropriated surplus of the general fund and shall not be
made available for expenditure for any purpose except as provided for by a

subsequent legislative enactment.

SECTION 6. Use of Reserves. - When changes in conditions during the year
justify the use of the reserved appropriations which have been imposed under
this Act or under the General Appropriations Act, the amount involved shall be
allocated back for the use by, and upon the request of the Department, office or

agency on whose appropriation the reserve was originally imposed.

SECTION 7. Deferral of Releases.

(1) Whenever the President, the Secretary of Budget and Management, the head
of any department, agency or instrumentality of the Government proposes to
defer the release of any appropriation for a specific purpose, program,
activity, or project, the President shall transmit to the House of

Representatives and the Senate a special message specifying:

(a) The amount of the appropriation proposed to be deferred;

(b) Any account, department, agency or instrumentality of the Government to
which such appropriation is available for obligation, and the specific

projects or governmental functions involved;

(c) The period of time during which the appropriation is proposed to be
deferred;


(d) The reasons for the proposed deferral, including any legal authority

invoked by him to justify the proposed deferral;

(e) The estimated fiscal, economic and budgetary effect of the proposed

deferral;

(f) All facts, circumstances and considerations relating to or bearing upon the
proposed deferral and the decision to effect the proposed deferral,
including an analysis of such facts, circumstances and considerations in
terms of their application to any legal authority and specific elements of
legal authority invoked by him to justify such proposed deferral, and the
estimated effect of the proposed deferral upon the objects, purposes,

program, activities and projects for which such appropriation is provided.

(2) A deferral may not be proposed for any period of time extending beyond the
end of the fiscal year in which the special message proposing the deferral

was transmitted to the House of Representatives and the Senate

SECTION 8. Approval of Release Deferral. - Both Houses of Congress shall
act on the proposed deferral within sixty (60) calendar days after the receipt of
the proposal from the President: Provided That if the President's special
message is received within a period of less than sixty (60) calendar days before
the end of a regular session, the President's message shall be deemed to have
been submitted on the first day of the succeeding regular session of Congress
and the sixty (60) day period referred to in this Section shall commence on the
day after such first day. If Congress does not issue an impoundment resolution
within the specified period, the President shall not proceed with the deferral

procedures.


SECTION 9. Submission of Quarterly Reports. - Within thirty (30) days after
the end of each quarter, the Secretary of the Department of Budget and
Management shall submit to the Committee on Appropriations of the House of
Representatives and the Committee on Finance of the Senate, a list of releases
made out of reserved and deferred appropriations, and comparative statements
showing the annual general appropriations, the annual program of continuing and
automatic appropriations, and the corresponding releases of allotments and cash
allocations for each department, agency, corporation and fund: Provided, That
the releases from each lump-sum or special-purpose fund shall be supported
with schedules indicating the specific departments | agencies, corporations or
entities which received the fund releases and the purposes of such releases. The
quarterly reports shall also include a cumulative summary of all appropriations

rescinded, deferred or reserved.

SECTION 10. Mode of Transmittal of the Special Message of the President.-
The President shall transmit to Congress at any time during the budget year, but
not later than the fifteenth day of October of the budget year, the special
message which may include one or more proposals for impoundment,
reservation, or deferral on one or more appropriation items through the
Committee on Finance of the Senate and the Committee on Appropriations of the

House of Representatives.

SECTION 11. Penal Provision. - Any violation of the Sections 2, 4, 5, 6, 7, 8,
and 9 of this Act shall be punished by of fine not exceeding Five Hundred
Thousand Pesos (500,000.00) and the penalty of perpetual special

disqualification.

SECTION 12. Repealing Clause. - All laws, decrees, executive orders, letters of
instructions, letters of implementation, rules and regulations or parts thereof

inconsistent with the provisions of this Act are hereby repealed, modified,


superseded or amended accordingly.
SECTION 13. Effectivity Clause. - This Act shall take effect fifteen (15) days
after its complete publication in the Official Gazette or in at least two (2) national

newspapers of general circulation, whichever comes earlier.

Approved,