Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
       HOUSE BILL NO. _____ 
________________________________________________________________ 
Introduced by Representative Michael L. Romero 
_______________________________________________________________________ 
EXPLANATORY NOTE 
Budget legislation is one of the four stages involved in the budget cycle of 
the government, the others being budget preparation, budget implementation 
and accountability. 
The state realizes that there is an urgent need for a framework that clarifies 
the management of public resources, especially in view of the pressures our 
public resources face during and in the aftermath of the Covid-19 pandemic. 
We can’t afford to waste public money during this difficult time. We need to 
manage the budget as well as we could. 
An important reform is the requirement that all proposed revenue eroding 
and expenditure bills include a Financial and Budgetary Information Sheet 
upon submission. 
The passing of the General Appropriations Act is a vital role performed by 
Congress which originates exclusively with the House of representatives. It 
is the most important guiding document of the national socio-economic 
policy of the government for the year. The manner of its preparation and 
execution must conform to the reforms contained in this measure. 
This clarifies the processes and regulations for budget preparation, 
management, and reporting, and also introduces a rule that all congressional 
proposals that will erode government revenues, such as tax breaks, should 
have a corresponding revenue source identified. 
The state shall justify the Budget Priorities Framework, which has been 
regarded as an international best-practice for budgeting, to ensure that the 
national budget is allocated towards clear national priorities. 
September 12, 2022
11:57 am
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As the most important guiding document of national policy for the year, the 
General Appropriations Act must be prepared, discussed, and enforced in a 
manner that upholds national interest and the Constitution. It must be 
prepared and implemented with a view towards national objectives for the 
year. 
The state shall cater to medium-term planning, particularly in infrastructure, 
to ensure that projects that are initiated during one budget year are carried 
out to completion. 
The state shall also introduce filters on multi-year contracts to ensure that 
only such contracts that the government can fully meet will be initiated. 
The concept of contingent liabilities is important. Congress shall determine 
the budget, but many liabilities we incur are not in the budget. This is due to 
some contracts that the government enters without Congressional approval 
that impose liabilities on the government. such liabilities shall be managed 
and limited. 
This House Bill seeks to strengthen the institutions, mechanisms and 
processes involved in budget preparation, authorization, execution and 
accountability. It will help to optimize the contributions of the national budget 
to national development 
Thus, the early passage of this bill is earnestly requested. 
MICHAEL ROMERO


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _____ 
___________________________________________________________________________ 
Introduced by Representative Michael L. Romero 
___________________________________________________________________________ 
AN ACT 
TO REFORM THE BUDGET PROCESS BY ENFORCING GREATER 
ACCOUNTABILITY IN PUBLIC FINANCIAL MANAGEMENT (PFM), 
PROMOTING FISCAL SUSTAINABILITY, UPHOLDING CONGRESS 
POWER OF THE PURSE, INSTITUTING AN INTEGRATED PFM SYSTEM, 
INCREASING BUDGET TRANSPARENCY, PARTICIPATION AND FOR 
OTHER PURPOSES 
Be if enacted by Ibe Senate and House of Representatives of the Philippines in Congress 
assembled: 
PARTI 
PRELIMINARY PROVISIONS 
Section 1. Short Title. — This Act shall be known as the "Budget 
Modernization Act of 2022." 
SEC. 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 establishment 
of an integrated system of planning, programming, budgeting, management, 
accounting, reporting and review of public finances, wherein internal controls 
arc embedded within these processes. In light of these requirements, the 
State shall pursue the following specific objectives: 
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(a) To enforce the power of Congress to authorize all appropriations 
and hold government accountable in the use of public resources, 
as well as to ensure the responsibility of all government agencies 
to propose, execute and deliver committed results in the 
appropriations act in a timely, predictable, and economic manner; 
(b) To promote people's involvement 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, programming, 
budgeting, accounting, disbursement, reporting and performance 
management and ensure ample safeguards in managing public 
finances through internal controls and risk management. 
SEC. 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. 
SEC. 4. Definition of Terms. —The following terms when used in this Act 
and the implementing rules and regulations ORR) should be understood, as 
follows: 
(a) Activity refers to a recurring work process that contributes to the 
implementation of a program or sub-program; 
(b) Allotment refers to the authorization issued to Government 
Agencies to incur contractual commitments and disburse funds 
up to a certain amount, for a specified public purpose, and within 
a specified period of time, in accordance with the Appropriations 
Law; 
(c) Allotment Class refers to the classification of expenditures under 
an item of appropriation with the following categories: Personnel 
Services, Maintenance and Other Operating Expenses, Financial 
Expenses, and Capital Outlays; 
(d) Appropriations refers to an authorization pursuant to laws 
directing the disbursement of 


 
Public Funds under specified conditions or for specified public 
purposes; 
(e) Appropriations Law refers to either a general or special 
appropriations law; 
(f) Cabinet refers to the Executive Secretary and the Secretaries of 
the Departments under the Executive Branch; 
@ Cash Budgeting System refers to the annual appropriations that limit 
incurring obligations and disbursing payments to goods delivered and 
services rendered, inspected and accepted within the current fiscal 
year. Payments, of which, may be settled within the Extended Payment 
Period; 
(h) Development Budget Coordination Committee (DBCC) refers to the body 
primarily responsible for the review and approval of the macroeconomic 
targets, revenue projections, borrowing level, aggregate budget level and 
expenditure priorities and the recommendation to the Cabinet and the 
President of the consolidated public sector financial position and the 
National Government fiscal program. The Secretary of Budget and 
Management leads the DBCC, with the Secretary of Finance, the 
Director General of the National Economic and Development Authority 
(NEDA) Secretariat and a representative from the Office of the President 
as members, and the Governor of the Bangko Sentral ng Pilipinas (BSP) 
as a resource person; 
(i) Disbursement refers to settlement of government obligations either in 
the currency, check or constructive cash such as the issuance of Tax 
Remittance Advice for the remittance to BIR of taxes withheld from 
employees and suppliers and Non-Cash Availment Authority for direct 
payments made by international financial institutions to suppliers and 
consultants of foreign assisted projects; 
0) Extended Payment Period refers to the first three (3)-month period in 
the following fiscal year when payments, chargeable against the 
Appropriations Law of the previous fiscal year, can be processed and 
disbursed for goods delivered and services rendered, inspected and 
accepted by the end of the previous fiscal year; 
(k) Fiscal Year refers to a period of twelve (12) months commencing on 
January 1 until December 31; 
(l) Government Agencies collectively refer to all NGAs, GOCCs and LGUs 
(m) Government-Owned or -Controlled Corporations refer to agencies with 
corporate powers, 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 directly or through its instrumentalities 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. includes 
Government Financial Institutions, government instrumentalities with 
corporate powers, government corporate entities and related 
corporations; 
(n) Government Financial Institutions refer to financial institutions or 
corporations in which the government directly or indirectly owns the 
majority of the capital stock and which are either: (i) registered with, 
or directly supervised by, the Bangko Sentra/ ng Pilipinas; 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; 
(o) Head of Agency refers to the head of thc department or agency in the 
casc of NGAs, the Board of Directors or Trustees or its duly authorized 
officials in the case of GOCCs, State Universities and Colleges (SUCs) 
and local water districts, and the local chief executive in the case of 
LGUs; 
(p) Item of Appropriation refers to the amount of appropriations for an 
activity or project in the Appropriations Law; 
(q) Local Government Units refer to provinces, cities, municipalities, and 
barangays, as well as autonomous regions created by law pursuant to 
the Constitution; 
(r) Mum-year Contracting Authority (MYCA) refers to the authority issued 
by I)BM to agencies, covering the full contract cost, for the 
procurement of multi-year projects; 
(s) Multi-year Projects refer to projects undertaken by agencies covering a 
period of more than one fiscal year and exceeding twelve months; 
(t) National Government Agencies refer to units of the National 
Government, as distinguished from GOCCs and LGUs, which include 
any of the departments, bureaus, offices or instrumentalities of the 
Executive, Judicial and Legislative branches of government, as well as 
the Constitutional Commissions, Commission on Human Rights and 
the Office of the Ombudsman; 
(u) Program refers to a group of activities and projects that contribute to 
a common particular outcome; 


 
(v) Project refers to a special undertaking carried out within a definite time 
frame and intended to result in some pre-determined measure of goods 
and services; 
(w) Proposed National Budget refers to a financial plan of annual revenue 
and expenditures to be submitted by the President to Congress that 
reflect national policies, pursuant to Section 22 of Article VII of the 
Constitution; 
(x) Public Officials and Employees 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; 
(y) Public Funds refer to the monies of all Government Agencies received, 
collected, receivable from taxes, fees, charges, penalties, income, 
dividends, interest earnings, domestic loan proceeds, external loans 
and grants, proceeds from the sale of assets, that the Government has 
a legal right to retain and use; 
(z) Spill-over Projects refer to contracts authorized and undertaken in the 
immediately preceding General Appropriations Act (GAA) which were 
not fully implemented; 
(aa) Subsidiary refers to a corporation where at least a majority of the 
outstanding capital stock is owned or controlled, directly or indirectly 
and through one or more intermediaries, by a GOCC; and 
(bb) Treasury Single Account (TSA) refers to the account maintained by the 
Bureau of the Treasury (BTr) with the BSP or agent bank for a unified 
structure of government bank accounts to enable consolidation and 
optimum utilization of government cash resources. 
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 II 
BUDGET PREPARATION, EXECUTION, AND 
ADJUSTMENT 
SEC. 5. Governing Principles in Budget Preparation. — There is hereby 
established a set of governing principles to be observed by the NGAs and 
GOCCs in the preparation of their annual budget proposals, and by the DBM 
in the preparation, and the presentation to Congress, of the Proposed Annual 
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 Fiscal 
Year shall be included, identifying those requiring approval by 
Congress 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 agency 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. "Ihe performance shall be evaluated based on the actual 
disbursements and contractual commitments as compared to the 
appropriations; 
(e) All appropriations in the GAA shall be valid for one Fiscal Year, 
reckoned from the effectivity thereof until the end of the Fiscal Year 
concerned. When necessary or appropriate, a three month Extended 
Payment Period in the following Fiscal Year may be availed of to allow 
agencies to settle payments for goods and services delivered, inspected 
and accepted during the previous Fiscal Year; 
(0 For evaluating the performance of an agency, programs, activities and 
projects shall be presented in such a way as to identify the entity 
responsible for the expenditure and the intended results from the use 
of the appropriations; 
@ Both the financial and non-financial performance of agencies shall be 
presented in the Proposed National Budget to ensure a performance-
informed budget; and 
(h) Programs, activities and projects shall be reflected by department, 
agencies, bureaus, and offices, and shall bc presented for information 
purposes, by region and province, and eventually, by city or 
municipality. 
SEC. 6. Planning-Programming-Budgeting Linkage. — Development 
strategies identified in the PDP shall be the 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 (PIP), 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 PIP shall be reflective of the Regional Development Investment 
Programs that, in turn, also take into consideration the intra-regional and 
inter-provincial development plans and investment programs of the local 
government units within each region. 
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 
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. 
SEC. 7. Budget Priorities Framework. —The DBCC shall submit to the 
President and Cabinet, within April of each year, a Budget Priorities 
Framework to guide the formulation of the Proposed National Budget for the 
following year. It shall contain the targets underlying the budget; the priority 
areas for government spending reflected in the PDP and PIP, estimated 
amount and planned allocation of the fiscal space; and other requirements 
laid down in the IRR. 
SEC. 8. The Budget Preparation Process. — DBM shall determine the 
budget preparation process and calendar. The budget preparation process 
shall cover: (i) NGAs; (ii) GOCCs with respect to their impact on revenue, 
expenditure, assets, and liabilities and risks of the government; and (iii) LGUs 
as to their impact on revenue and expenditure of the government. 


 
SEC. 9. 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 (GAB). 
The President shall determine the form and content of the Proposed 
National Budget which shall 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) Budget of Expenditures and Sources of Financing (BESO — contains 
the macroeconomic parameters; dimensions of three-year (3-ycar) 
expenditure program, revenue, financing, and outstanding debt; 
overview of the financial positions of GOCCs, LGUs, and public-private 
partnership projects, list of new multi-year projects, including the 
project duration, the total project cost and contractual authorities 
issued as well as the other items listed in the IRR; 
(c) 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; 
Congress may not increase the appropriations recommended by the 
President for the operations of government as specified in the Proposed 
National Budget. 
The President shall publish the Proposed National Budget on the 
Government website on the same day it is presented to Congress. 
SEC. 10. Program Classification. —The Proposed National Budget shall 
adopt a structure based on a program classification that groups line items 
under the objectives or outcomes to which they contribute to. Performance 
information shall be provided for each program to facilitate the evaluation of 
its cost effectiveness and provide better information for analysis and feedback 
for planning and prioritization of expenditures. 
In addition, the performance information and targets contained in the 
Proposed National Budget shall be updated after the passage of the GAA 


 
taking into consideration the amount appropriated for each program. For this 
purpose, NGAs and GOCCs shall propose adjustments in its outputs and 
outcomes for the consideration and approval of the DBM. 
SEC. 11. Special Purpose Funds. — To promote the transparent and 
detailed disclosure of all proposed government spending, Special Purpose 
Funds (SPFs) in the Proposed National Budget shall be limited to the: (1) the 
NDRRMF; (2) the Contingent Fund; (3) Statutory Shares of LGUs; and (4) 
other SPFs not falling under any of the preceding purposes, the details of 
which could not be determined during the budget preparation stage, and 
based on the parameters to be set in the IRR. 
SEC. 12. National Disaster Risk Reduction and Management Fund. —The 
NDRRMF shall be used for: (1) 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 (2) 
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 preceding two (2) years. 
of the amount appropriated for the NDRRMF, there shall be specific 
allocation as Quick Response Fund (QRF), as may be provided under existing 
law, which shall be used as a standby fund in order that the situation and 
living conditions of people in communities or areas stricken by natural or 
human induced calamities, epidemics, crises, and catastrophes may be 
normalized as quickly as possible. 
The NDRRMF and QRF shall also be used for obligation and payment of 
Spill-over Projects approved or funded from the NDRRMF or QRF of the 
immediately preceding Fiscal Year. 
Releases from the NDRRMF, except for QRF and Spill-over Projects, 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 for local disasters and calamities and the 
appropriate agency for international crises. 
SEC. 13. Contingent Fund —The Contingent Fund shall cover the funding 
requirements of new or urgent projects or activities of NGAs, GOCCs, and 
LGUs that need to be implemented or paid during the year, such as: (i) legal 
obligation of the government arising from the final and executory decisions 
of competent authorities, including arbitration awards, mediation settlement, 
or compromise agreements; (li) requirements of newly created offices; or (iii) 
deficiencies in the appropriations for local and external travels of the 
President of the Philippines.  
Releases from the Contingent Fund shall be subject to approval by the 
President of the Philippines, other than payment resulting from final and 
executory decisions of competent authorities, which shall be released by the 
DBM subject to availability of funds. 
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. 
SEC. 14. 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 regulations. 
SEC. 15. Unprogrammed Appropriations. — Congress may authorize 
standby appropriations to cover the funding requirements of other priority 
projects and activities or contingencies, as well as provide appropriations 
cover for foreign-assisted projects (FAPs) not specifically included in the 


 
programmed component of the GAA that requires implementation during the 
year. The unprogrammed Appropriations shall indicate the purposes from 
which the amount authorized therein may be used. The Unprogrammed 
Appropriations shall not exceed three percent 3% of the total proposed 
expenditure, net of contractual, statutory and other legal obligations in the 
programmed component of the GAA. 
Expenditures to be funded under the Unprogrammed Appropriations may 
be authorized only when supported by: (i) excess revenue collections in any 
one of the particular non-tax revenue sources from its corresponding revenue 
collections target in the BESF as certified by the BTr; (ii) new revenue 
collections or those arising from new tax or non-tax revenues which are not 
part of the original revenue sources in the BESF; or (iii) when there are 
approved loan proceeds for new and ongoing FAI's. 
In no case shall the Unprogrammed Appropriations be activated or 
released when the DBCC determines that there is a risk of breaching the 
fiscal objectives set forth in the Statement of Fiscal Policy. 
Releases from the Unprogrammed Appropriations shall be subject to the 
prior approval of the President of the Philippines, other than the final and 
executory decisions of competent authorities, including arbitration awards, 
mediation settlement, or compromise agreements. 
The DBM shall include information on releases from releases from the 
Unprogrammed Appropriations in the quarterly and annual reports 
submitted to Congress. 
SEC. 16. Budget with Accounts Codes. — All items of appropriations in the 
Appropriations Law shall be given accounts codes by the DBM pursuant to 
the Unified Accounts Code Structure that applies to all the assets, liabilities, 
equities, income, and expenses of the government. 
SEC. 17. Re-enacted Budget. —If, by the end of any Fiscal Year, Congress 
has failed to enact a GAA for the ensuing Fiscal Year, the GAA of the 
preceding Fiscal Year shall be deemed re-enacted and shall remain in force 
and effect until a GAA for the ensuing Fiscal Year is passed by the Congress. 
Consistent with the Fiscal Responsibility Principles, the re-enacted budget 
shall be enforced as follows: 


 
(a) The level of the re-enacted budget shall be limited to the total amount 
appropriated in the preceding year's GAA, but shall in no case exceed 
the level of the sources of financing under the BESF of the Proposed 
National Budget for the year; 
(b) The appropriations for the following shall be limited to the amount 
authorized under the re enacted budget, but in no case exceed the 
amount in the Proposed National Budget: 
1. Ongoing programs, projects and activities; 
2. Personnel benefits, including retirement gratuities, pensions, 
terminal leave pays and related expenses; 
3. NDRRMF, Contingent Fund, Statutory Shares of LGUs, and other 
SPFs; 
4. Budgetary support to GOCCs for their operational requirements 
and ongoing programs, activities or projects; and 
5. Newly-approved FAPs. 
(c) In no case shall the following items of the re-enacted budget be 
considered for release, disbursement, and utilization: 
1. Complected programs, projects and activities funded in the GAA 
of the preceding Fiscal Year; and 
2. Equity contribution of the National Government to GOCCs. 
The DBM shall issue guidelines on the aggregate and agency levels of 
appropriations authorized under the re-enacted budget in accordance with 
the foregoing, supporting requirements to determine actual needs, and other 
pertinent rules in the implementation of the re-enacted budget. 
Upon enactment of the GAA anytime during the current Fiscal Year, all 
releases under a reenacted budget consistent with this Section shall be 
considered valid obligations and deemed to have been implemented pursuant 
to and charged against, for account recording purposes, the GAA for the 
current Fiscal Year. 
The enacted GAA shall be valid from its effectivity until the end of the 
current Fiscal Year. 
SEC. 18. Special Appropriations Bill. —A Special Appropriations Bill is a 
proposal submitted by the President, as recommended by the DBM, before 
Congress to provide authorization for expenditure 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 the validity period which shall 
not exceed one (1) year from its enactment. 
Cash-based estimates shall be adopted in the proposed special 
appropriations bills to promote faster and more effective delivery of services. 
A Special Appropriations Bill shall be supported by funds actually 
available as certified by the National Treasurer, or to be raised by a 
corresponding revenue measure proposed therein. 
No Special Appropriations Bill shall be passed during a re-enacted budget, 
except for the following: (1) disaster-related purposes; (2) urgent projects 
and/or activities; and (3) unforeseen requirements of the government. 
SEC. 19. Release of Public Funds. — The government shall commence 
releases of Public Funds covered by an Appropriations Law as soon as it 
comes into force to ensure timely and efficient disbursement by the 
appropriate implementing agencies, subject to pertinent budgeting, 
accounting and auditing rules and regulations. Upon the implementation of 
the cash budgeting system, the Appropriations Law shall be considered the 
authority of the agencies to contract out and disburse funds, except for the 
following instances: (i) when provided in the Appropriations Law; and (ii) 
when the appropriations have requirements before release, such as work and 
financial plan, feasibility study, pre-feasibility study, and preliminary and 
detailed engineering. 
SEC. 20. Cash Budgeting System. — Appropriations authorized in the GAA 
for NGAs, budgetary support to GOCCs, national projects implemented by 
LGUs, and SPFs, shall be available for obligation only until the end of each 
Fiscal Year. obligations incurred by the National Government within each 
Fiscal Year shall be implemented during the same Fiscal Year. Goods and 
services corresponding to said obligations shall be delivered or rendered, 
inspected and accepted by the end of each Fiscal Year. Payments for 
obligations incurred shall be made until the end of the Extended Payment 


 
Period. Payments during the Extended Payment Period shall be chargeable 
against the GINA of the preceding Fiscal Year. 
Appropriations covering financial subsidy to LGUs shall be available for 
obligation and disbursement until the end of the succeeding Fiscal Year. On 
the other hand, appropriations for the statutory shares of LGUs shall be 
available for obligation and disbursement until fully expended. 
All funds transferred between or among Government Agencies shall not be 
considered disbursed until the transferred amounts have been actually 
utilized to pay for goods delivered and services rendered, inspected and 
accepted. 
Any unreleased appropriations at the end of the Fiscal Year shall lapse, 
while unobligated allotments and unexpended or undisbursed funds at the 
end of the Extended Payment Period shall revert to the unappropriated 
surplus of the General Fund in accordance with Section 28, Chapter 4, Book 
VI of E.O. No. 292 and shall not thereafter be available for expenditure except 
by subsequent legislative enactment. For financial subsidies to LGUs, 
reversion shall be made to the National Treasury after the end of the 
succeeding Fiscal Year. 
SEC. 21. Government Funding Commitment. In accordance with the 
Constitution, no money shall be paid out of the Treasury except in pursuance 
of an appropriation made by law. 
Accordingly, a Certification of Availability of Funds (CAF) shall be required 
prior to entering into contract. The CAF shall be issued by the Chief 
Accountant or the highest accounting officer in the agency. 
For Multi-year Projects, the CAF shall be issued annually based on the 
annual budget for the year. In case of Multi-year Projects with no funding 
requirement on any given year, the CAF shall be the certification of the chief 
accountant that no fund is needed for the year as indicated in the approved 
MYCA. 
The CAF shall be stamped or appended to the contract and shall become an 
integral part thereof. 
SEC. 22. Multi-year Contracts. The issuance of a MYCA or any similar 
document shall be required before agencies may enter into multi-year 
contracts, subject to the requirements and guidelines prescribed by the DBM. 


 
Provided, That for foreign-assisted projects funded by foreign loans, the 
issuance of a MYCA shall no longer be necessary. 
In the procurement of multi-year projects, the MYCA or any similar 
document shall be required prior to commencement of any procurement 
activity. 
In the case of GOCCs, they shall secure prior authority from their 
respective governing boards before entering into multi-year contracts. 
For LGUs, they shall secure any equivalent document issued by their 
respective sanggunian authorizing them to enter into multi-year contracts. 
For the multi-year Public-Private Partnership projects with government 
undertakings authorized under R.A. No. 6957, as amended by R.A. No. 7718, 
the same shall be covered by a letter of commitment issued in accordance 
with the guidelines issued by the DBM. 
The implementing agency shall ensure that the annual funding 
requirements for the multi-year projects shall be included in its budget 
proposals for the covered years, consistent with the funding schedule in the 
MYCA and equivalent authorities, and letter of commitment. In the case of 
NGAs and qualified GOCCs, the DBM shall ensure that the funding 
requirement for the multi-year projects are included in the National 
Expenditure Program to be submitted to Congress who shall give due 
consideration of the said proposal. In the case of GOCCs and LGUs, due 
consideration shall be given by the governing board of GOCCs and the 
sangggnian of the LGUs, respectively. 
In all instances, the disbursements to be incurred for multi-year 
contracts shall in no case exceed the cash appropriations for the purpose 
during the year. Procurement of multi-year projects shall be subject to the 
provisions of R-A. No. 9184 and its IRR and GPPB guidelines. 
SEC. 23. Early Procurement Activities. — To ensure full budget utilization, 
timely contract implementation and efficient delivery of services, agencies are 
authorized to undertake procurement activities from pre-procurement 
conference until recommendation to the head of the procuring entity as to 
the award of contract, based on their proposed budget in the NEP, COBs or 
Appropriations Ordinance, in accordance with the guidelines issued by the 
Government Procurement Policy Board. 


 
In exceptional circumstances where the early procurement activity was 
delayed, agencies shall undertake only the procurement of goods, 
infrastructure and consulting services to the extent that may be delivered or 
rendered, inspected, and accepted during the Fiscal Year consistent with the 
cash budgeting system. 
For FAPs, agencies may undertake early procurement activities based on 
the amount proposed by the agency in the NEP including those under the 
Unprogrammed Appropriations and shall be awarded only upon approval of 
the loan agreement. 
For multi-year projects, the issuance of a MYCA by the DBM is required 
prior to commencement of any procurement activity. All existing Multi-year 
Obligational Authority shall be understood to refer to MYCA. 
Notwithstanding the mandatory procurement timelines, agencies may 
only proceed with the issuance of the notice of award 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. 
SEC. 24. Timely Implementation of Activities or Projects. — Government 
Agencies shall ensure that all activities or projects are fully delivered, 
inspected, and accepted by the end of the Fiscal Year. 
In exceptional circumstances where the implementation of an activity, or 
a project has been delayed due to force majeure or other justifiable reasons 
as determined by the agency or decided by a competent authority, and in 
both instances without the fault of the contractor, the funding requirements 
for its completion shall be chargeable against any available fund in the 
succeeding Fiscal Year. 
SEC. 25. Authority to Declare and Use Savings. —The President of the 
Philippines, the President of the Senate of the Philippines, the Speaker of the 
House of Representatives, the Chief Justice of the Supreme Court, the Heads 
of the CSC, the Commission on Elections, and the COA are hereby authorized 
to declare and use savings in their respective appropriations in the current 
year to augment actual deficiencies incurred for the current year in and item 
of their respective appropriations. 


 
SEC. 26. Meaning of Savings. —Savings refer to portions or balances of any 
released appropriations in the Appropriations Law which have not been 
obligated as a result of any of the following: 
(a) Completion, final discontinuance, or abandonment of an activity or 
project for which the appropriation is authorized; or 
(b) Implementation of measures resulting in improved systems and 
efficiencies and thus enabled an agency to meet and deliver the 
required or planned targets at a lesser cost. 
In case final discontinuance of abandonment is used as basis in the 
declaration of savings, such discontinued or abandoned activity or project 
shall no longer be proposed for funding in the next two (2) Fiscal Years. 
Allotments that were not obligated due to the fault or negligence of the 
agency concerned shall not be considered savings. 
SEC. 27. Rules on Augmentation. — Augmentation is the act of the 
constitutional officers authorized to use savings in their respective 
appropriations to cover a deficiency in any existing item of appropriation for 
their respective offices. 
The particulars of the expenditure to be funded from savings should be 
within the scope of, or be covered by, an existing item of appropriation. The 
existence of an item of appropriation regardless of the availability of allotment 
class/es is sufficient for the purpose of augmentation. 
In no case shall a non-existent item of appropriation be funded by 
augmentation from savings. 
SEC. 28. Rules on Modification in the Allotment. — Limited flexibility 
shall be given to NGAs to modify or change the allotment within an existing 
item of appropriation. Such modification shall not entail any augmentation 
of the amount appropriated for the said item of appropriation during budget 
execution. 
The DBM shall issue rules and procedures to govern modification in the 
allotment, specifying the cases or circumstances when such modifications 
maybe undertaken to ensure the uniform implementation among the various 
branches of government, the proper recording of modifications, and the 
timely submission of reports by all the offices concerned. 
PART III 


 
FINANCIAL MANAGEMENT 
SEC. 29. 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 National Government authorized in an 
Appropriations Law. 
A Special Account in the General Fund (SAGE) shall be established by law 
only under exceptional circumstances to recognize taxes, fees, charges, 
penalties, income, dividend, interest earnings, grants, and donations 
collected, cranked or received by NGAs for specified purposes. All laws 
authorizing the establishment of SAGFs shall specify the period of use 
thereof, or if no period is specified, it shall be deemed to be until the fulfilment 
of the purpose for which the SAGF was authorized. All interests earned 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 Fiscal 
Year, shall be treated as Trust Funds and recorded as trust receipts. Proceeds 
from these Trust Funds shall be recognized only as revenue inflow in the 
General Fund when programmed to be spent for the year. 
The Permanent Committee created under Executive Order (EO) No. 292, 
s. 1987, composed of the Secretary of Finance as Chairperson, the Secretary 
of Budget and Management and the Chairperson of the COA as members, 
shall identify SAGFs that shall be converted into Trust Funds. The 
recognition of revenue inflows from these SAGFs converted into Trust Funds 
shall be governed by the guidelines to be issued by the Permanent 
Committee. In all cases, the authorized uses of purposes shall continue to be 
those specified in the law creating the SAGFs. 
SEC. 30. Special Funds. —In exceptional cases when an SAGF 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 or Employees acting as trustees, 


 
agents, or administrators for the fulfilment of commitments or 
accomplishment of specified purposes. Trust Funds shall be deposited 
in the TSA; 
(b) Revolving Fund — constituted from receipts derived from business-
type activities of NGAs to be used for the operating requirements of said 
business-type activities and are considered self-perpetuating and 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, 
income, dividends, or interest earnings collected, earned or received by 
NGAs which arc 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. 
Any interest earned by Special Funds shall accrue to the General Fund 
unless otherwise authorized by law. 
SEC. 31. Review by the Permanent Committee. — Upon the effectivity of 
this Act and every three years thereafter, the Permanent Committee shall 
review all existing SAGFs and Special Funds to validate their compliance with 
the requirements under Sections 45 and 46 and to determine whether these 
Funds should be modified, terminated, or continued. The Permanent 
Committee shall recommend for the approval of the President, the 
modification or termination of any of the said funds based on any of the 
following grounds: (i) when there is no legal basis for its creation;(ii) when its 
terms have expired; (iii) when the purpose for its creation has been attained 
or no longer exist, (iv) when it is no longer necessary for the attainment of 
the purposes for which said Funds were established; (v) when needed by the 
General Fund in times of calamities and emergencies; (vi) when it is used in 
violation of the rules and regulations issued by the Committee; or (vii) when 
they have remained dormant for an unreasonable length of time. 
The Permanent Committee shall issue guidelines for the establishment, 
review and evaluation, accounting and reporting, and termination of SAGFs 
and Special Funds. 


 
SEC. 32. 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. An interest earned 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. 
SEC. 33. Waiver, Abatement, Refund and Compromise Agreements. — 
No public official 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 Of 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 current 
year's revenue collections for budgeting and fiscal reporting purposes. 
SEC. 34. Grants. —NGAs may accept, upon prior coordination with the DOF 
and the Department of Foreign Affairs, grants, in cash or in kind, from 
domestic or foreign sources, for purposes relevant to their functions. In the 
case of grants, in cash or in kind, from governments of foreign countries, 
their agencies and instrumentalities and international or multilateral 
institutions or organizations, acceptance thereof shall be subject to the prior 
clearance and approval by the President or the President's authorized 
representative, based on the recommendation of the Secretary of Finance and 
the Secretary of Foreign Affairs. 
The provisions of this Section shall not apply to: (1) any grant received by 
LGUs or GOCCs, except where the grant is received by them on behalf of the 
National Government (NG); or (2) any grant authorized or covered in 
accordance with existing law. 
Grants received shall be valued, in the case of grants received in kind, and 
recognized on the books of the recipient agency of the National Government. 


 
SEC. 35. Treasury Single Account. —The TSA refers to the banking 
arrangements 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 on at 
least, a daily basis. 
The TSA shall cover remittances, releases or disbursements from the 
General Fund, SAGFs, Special Funds, Escrow Funds, Letters of Credit 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. 
SEC. 36. Oversight on Government Bank Accounts. — Notwithstanding 
any provision of law to the contrary, the BTr shall undertake any of the 
following in case of violation of a provision in this Act and guidelines issued 
on the implementation of the TSA: 
(a) Transfer balances of bank accounts to the TSA; 
(b) Close any bank account; and/or 
(c) Revoke the authority to open any bank account. 
'The government agency which has opened a bank account, as well as the 
bank concerned shall promptly disclose information regarding such account 
to the BTr. 
SEC. 37. Treasury Cash Management. — The BTr shall issue orders for the 
conduct of cash management including the requirement to provide 
projections on the timing of future transactions of NGAs taking into 


 
consideration that the appropriations law is considered the authority of the 
agencies to contract out and disburse funds, except for those instances 
stated in Section 35 of this Act. 
SEC. 38. Investments. —The BTr may invest portions of the funds held in 
the TSA for such periods as the BTr may deem prudent considering cash 
management requirements. Investments are authorized to be made in any of 
the following: 
(a) Bank deposit with any highly reputable bank following a selection 
criterion to be issued by the 
BTr and money market instruments with well recognized and 
established financial institution; (b) Sovereign-issued securities with an 
investment grade rating; or 
(c) Other fixed income securities with an AAA credit rating issued by at 
least two (2) reputable international credit rating agencies. 
The BTr may appoint a fund manager as an agent of the National 
Government to undertake the investment of the funds. Fund Manager refers 
to person responsible for implementing a funds investing strategy and 
managing its portfolio trading activities. 
Interest earned and other income from Investments shall accrue to the 
General Fund, unless otherwise provided by law. 
SEC. 39. Management of National Government Borrowings. — Borrowings 
by the National Government shall be for purposes provided by law including 
any of the following: 
(1) Financing budget deficits and liquidity shortfalls; 
(2) Refinancing and pre-financing maturing debts; 
(3) Undertaking liability and risk management transactions; 
(4) Supporting the BSP in maintaining external and monetary 
stability; 
(5) On-lending to an approved entity, 
(6) Financing all sums of money paid to fulfill guarantees; 
(7) Increasing liquidity and promoting stability of the government 
securities market; 


 
(8) Financing developmental activities and projects of thc National 
Government; (9) Providing financing to address or remedy the 
effects or impacts of natural or human induced disasters; or 
(10) Defraying expenditures covered by appropriations. 
Borrowing under this Act should adhere to the Fiscal Responsibility 
Principles and measurable fiscal objectives in the Statement of Fiscal Policy. 
SEC. 
40. 
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 COB and for the medium term. Both borrowing programs 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, shall be submitted to DOF for information, 
and published in the concerned GOCC website. 
GOCCs shall seek DOF approval and monetary board concurrence for 
foreign borrowings or the latter’s opinion for domestic borrowing activities as 
provided in the IRR. 
Nothing in this Section shall be construed as creating a government 
guarantee on any borrowing, loans or refinancing and repayment that the 
GOCC intends to take. 
SEC. 41. Local Movement Borrowings. —An LGU may borrow funds from 
domestic sources in accordance with the Local Government Code of 1991 and 
other applicable laws. LGUs may also be allowed to access foreign sources 
for major infrastructure projects, through multilateral financial institutions, 
subject to the guidelines to be issued by the DOF. 
LGUs shall develop their borrowing programs, as part of their 
comprehensive development and annual investment plans, which shall be 
published in the LGU website. 
SEC. 42. Debt Reporting. — The DOF, through the BTr, shall ensure that 
the records include information on the principal, terms of repayment, 
amounts drawn, interests, penalties 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, Congress, and COA 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. 
SEC. 43. Debt Audit. — Upon the effectivity of this Act, the COA shall 
conduct a debt audit of all loans contracted or guaranteed by the National 
Government. For those loans contracted or guaranteed after the passage of 
this Act, the COA shall review the said loans five (5) years from the date of 
consummation or guarantee. 
SEC. 44. Guarantees, —Guarantee, indemnity or security shall be provided 
to an NGA or a GOCC as provided by law, and subject to the annual 
guarantee ceiling prescribed in the GAA, and upon such terms and 
conditions as the Secretary of Finance may recommend consistent with 
relevant laws, rules and regulations. The overall level of guarantee, indemnity 
or security shall adhere to the Fiscal Responsibility Principles laid down in 
this Act and the fiscal objectives in the Statement of Fiscal Policy. 
The DOF shall charge a risk-based fee for any guarantee, indemnity, 
security, relending or similar financial accommodation it may extend to a 
GOCC. 
In no case shall the National Government be liable for any borrowing by 
any agency of the government except for explicit guarantees as provided by 
law. 
SEC. 45. Limitation on the Liability of the National/ Government for 
Debts of Other Entities. — The National Government shall not be liable for 
any implied guarantee asserted by any person or entity, but only for explicit 
guarantees extended in accordance with existing laws and guarantees in 
favor of the Government Service Insurance System, Home Development 
Mutual Fund, Philippine Health Insurance Corporation, and the Social 
Security System in their respective charters. 


 
SEC. 46. 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 National Government from the entity for whose benefit the payment on 
the guarantee, indemnity, or security was made. 
SEC. 47. Information on Contingent Liabilities. —The DOF shall keep a 
complete and updated registry of all contingent liabilities of the National 
Government and provide the DBM and Congress with a report on contingent 
liabilities. Subject to existing laws, rules, and regulations, the DOF shall have 
the power to compel any national government agency and instrumentality, 
including GOCCs, to submit documents and other pertinent information 
necessary for the completion of such registry. 
PART IV 
ACCOUNTABILITY AND REPORTING 
SEC. 48. Financial Management and Internal 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, while an internal audit function 
shall be maintained, as may be applicable. 
SEC. 49. Integrated Financial Management Information System. — There 
shall be an integrated financial management information system (IFMIS), 
which shall be the single portal of all financial transactions and reports to be 
used by NGAs, GOCCs and LGUs to integrate budgeting, cash management 
and accounting processes. 
The IFMIS shall be managed by the National Accounting and Finance 
Office under the DBM, which was established under EO No. 292, s. 1987, to 
take charge of the maintenance of the data bank of financial information and 


 
to provide the necessary data required by the President, fiscal agencies and 
international financial institutions, analyze and evaluate the accounts and 
overall financial performance of the government, and supervise the 
management of the accounts of government agencies and instrumentalities. 
The development and implementation of IFMIS shall be in coordination 
with other key oversight agencies, that is, and C()A, and in accordance with 
IA() No. 55, s. 2()11, directing the integration and automation of government 
financial management systems. 
Electronic and digital authorizations within the IFMIS including, but 
not limited to, certification on availability of fund as well as general and 
application information technology (IT) controls done through, and resulting 
in, the implementation of IT systems shall be valid for all legal intents, as 
well as for auditing purposes. 
SEC. 50. NGA Annual Plans and Proposed Buckets. — 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, both the national and regional level, 
consistent with the Philippine Development Plan; performance information; 
summary proposed budget including financial forecast assumptions and 
highlighting significant capital projects; and other information as required in 
the IRR, as well as the Budget Call and other related issuances 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 Annual Plan of a Department shall incorporate the Annual Plans of 
its attached NGAs and GOCCs subject to guidelines prescribed in the IRR. 
SEC. 51. Submission of Post Fiscal Year Budget Status. The DBM shall 
submit to the Speaker of the House of Representatives, the President of the 
Senate of the Philippines, the House Committee on Appropriations and the 
Senate Committee on Finance a post Fiscal Year budget status report not 
later than May 31 of the current year. 
SEC. 52. Internal Audit Standards. — The DBM shall formulate and issue 
the guidelines and standards for internal audit in the NGAs, GOCCs and 
LGUs. 


 
PART V 
TRANSPARENCY AND PARTICIPATION 
SEC. 53. Shared Fiscal Discipline. —All proposed revenue eroding and 
expenditure bills shall include a Financial and Budgetary Information Sheet 
upon filing of the bill. The said information sheet shall contain an estimate 
of the financial and budgetary implications of said proposal for the initial 
year of implementation. Expenditure bills refer to those which increase 
National Government expenditures, including those mandating the creation 
of recurring expenditures; while revenue eroding bills refer to those which 
will result in a reduction of revenue collections. 
Each House of Congress shall provide guidelines prescribing the form, 
content of the Financial and Budgetary Information Sheet, as well as the 
appropriate offices from which such information shall be acquired, and the 
implications of non-compliance with said submission. 
SEC. 54. People's Access to Public Financial Information. —Before the 
start of each Fiscal Year, the DBM shall promulgate a Calendar of 
Disclosures, and shall publish this on the government website. 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 transparency 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 the government 
website. Current and historical data on government revenues, expenditures, 
and borrowings, shall be made available electronically, in open data format, 
on the government website, subject to guidelines established in the IRR. 
SEC, 55. The People's Budget. —"Ihe DBM shall, for every Fiscal Year, 
publish citizen-friendly 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 thereafter within thirty (30) days from submission to 
Congress; 


 
(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 annual GAA and special appropriations laws, to be published in 
electronic format in the government website within thirty (30) days from 
its effectivity; and 
(d) The Annual Fiscal Report of the preceding fiscal year, to be published 
in electronic format in the government website on the last working day 
of the current year. 
SEC. 56. Participatory Budget Process. —The government shall establish 
and implement suitable participatory budget mechanisms to facilitate the 
open, inclusive, and meaningful engagement of citizens throughout the 
budget process. The DBM and DILG, together with other relevant agencies, 
shall formulate policies and programs, activities, and projects to enhance 
participation in the planning, budgeting and accountability processes. 
Such participatory mechanisms may include (1) consultations with the Local 
Development Councils in the formulation of the national and local 
government budgets; and (ii) partnerships with civil society organizations 
(CS()s), academic institutions and experts on programs that monitor and help 
improve agency or local government preparation, execution, and monitoring 
of the budget. Capacity development of CSOs to participate under the 
principles of constructive engagement with government may also be 
conducted. 
PART VI 
ENFORCEMENT 
SEC. 57. Sanctions and Penalties. — (i) 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 or 
any modification in the alignment nor recommend the use of savings 
bv the President until such time as the non-compliant agency has 
submitted the report/ s required under this Act; 
(b) The COA may suspend or disallow any expenditure due to 
modification in the allotment, which were made within the period 


 
succeeding the reporting period when the agency failed to comply 
with the reporting requirements under this Act; 
(c) Failure of the responsible officer to report on the income and/or 
funds retained at the end of a reporting period shall be considered a 
neglect of duty, subject to the penalty provided under existing laws; 
and 
(d) The Congress may motu proprio, 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. 
(ii) Without prejudice to the provisions of other laws: 
(a) Every contractual commitment, expenditure or payment authorized 
or incurred in violation of the provisions of this Act shall be void and 
shall render the Public Official 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 delays the implementation of any 
contractual agreement shall be liable and imposed the appropriate 
administrative sanctions based on existing laws and civil service 
rules. A Public Official or Employee who knowingly incurs any 
contractual commitment 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 such Public Official or 
Employee; 
(b) 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 by the 
COA against expenditures related to such fraudulent information, 
provided, that this fine is reviewed and adjusted periodically to be 
reasonable; 
(c) A conviction 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 


 
(d) Private individuals who shall conspire with the erring Public 
Officials or Employees, whether as co-principals, 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 shall be tried jointly with them. 
PARTVII 
FINAL PROVISIONS 
SEC. 58. Implementing Rules and Regulations. —'The DBM, in 
consultation with the DOF, BTr, NEDA and COA, and in coordination with 
agencies concerned, shall issue the rules and regulations necessary for the 
proper implementation of this Act within ninety (90) days from the effectivity 
of this .Act. The IRR may be amended by the DBM3 in consultation with the 
D()F, BTr, NEDA and COA and in coordination with the agencies concerned, 
as the need arises. 
SEC. 59. 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 to or inconsistent 
with the provisions of this Act is hereby repealed, modified or amended 
accordingly. 
SEC. 60. Separability Clause. — If for any reason, any section or provision 
of this Act is declared unconstitutional or invalid, other sections or provisions 
which are not affected thereby shall continue to be in full force and effect. 
SEC. 61. Effectivity Clause. — This Act shall take effect fifteen (15) days 
following its publication in the Official Gazette or in two (2) newspapers of 
general circulation. 
Approved,