REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES j
Quezon City, Metro Manila

SIXTEENTH CONGRESS
Second Regular Session

House Bill No 4908

Introduced by Kabataan Party-List Representative Terry L. Ridon

EXPLANATORY NOTE

It is undeniable that the government's budget policy of automatic appropriation
for debt servicing has, year after year, scandalously eaten up the most monstrous
share of the people's money, effectively diverting finances away from the deliveery of
basic social serivices to the people

In the youth sector alone, there are currently eight (8) million children,
adolescents and young adults who are out of school because the government cannot
accommodate them in their inadequate infastructures. Where they exist, public
schools, universities and colleges perennially suffer from decrepit facilities. Section 5,
Article XIV of our Constitution directs us to give the highest appropriation in the
government budget to education spending, but we have always failed to do so
because we are bound to pay our debts without question nor scrutiny.

In order to address the needs of a sovereign people, the United Nations
prescribes that governments must spend an equivalent of at least six (6) percent of
their country's gross domestic product (GDP) in educating their citizens, The
Philippines, because of its monstrous debt burden, spends more or less just two (2)
percent annually. In fact, the total debt service expenditure for 2015 is pegged at
P789.75 billion, of which P372.86 billion is for interest payments, P26.6 billion is for
net lending and P390.38 billion is for principal amortization. This is equivalent to about
5.5 percent of the projected 2015 GDP. Meanwhile, only P369 billion is allotted for the
education sector (sum of P318.9 billion for the Department of Education, P41,22 billion
for state universities and colleges, P2.53 billion for the Commission on Higher
Education, and P5.41 billion for the Technical Education and Skills Development
Authority, This is equialent to only 2.6 percent of the projected GDP for 2015.

Filipino students have been — year in and year out ~ shortchanged by the
government due to its policy of prioritizing debt servicing, Such continued
misprioritization has forced our public schools and universities to increase tuition and
other fees annually, thus effectively closing its doors and denying education to millions
of poor Filipinos,


A law repealing the automatic nature of funds for debt service is also needed
to open the billions of funds automatically appropriated for debt payment to public
scrutiny. No less than past treasurers and budget secretaries of the national
government have repeatedly emphasized that even funds automatically appropriated
for debt can also be manipulated by unscrupulous public officials. Given the current
situation wherein Congress ~ and in turn, the public — has no power over debt service
funds, there is no way for Filipinos to check on the said funds. In light of the growing
public clamor for accountability and transparency in public financing, Congress must
be empowered to review funds for debt service by repealing its automatic character.
Passing such law will open the heavy curtains of secrecy that has long been drawn
close to the public due to the automatic nature of the said funds.

The need to repeal the provisions on automatic appropriations for debt service
in order to address the grave crisis in social services, in particular the public education
sector, is now, more than ever, urgent. Similar legislative measures have often been
proposed in the past, but until now, no law has been passed to address this concern
We must thus implement, at the minimum, the six (6) percent prescription by the United
Nations in order to address the tragic condition of our education sector. In
implementing this automatic appropriation for education, we are securing not only the
future of the youth, but the future of our nation

In light of the forgoing, the urgent passage of this bill - which has been first filed
by former Kabataan Partylist Rep. Raymond Palatino in the 15th Congress — is
eamestly sought.

HON.
Representative,

RRY L. RIDON
bataan Party-list


REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SIXTEENTH CONGRESS.
Second Regular Session

4908

House Bill No.

Introduced by Kabataan Party-List Representative Terry L. Ridon

AN ACT
EFFECTIVELY REPEALING THE AUTOMATIC APPROPRIATION FOR DEBT
SERVICE AND INSTITUTIONALIZING THE AUTOMATIC APPROPRIATION OF
SIX PERCENT (6%) OF THE GROSS DOMESTIC PRODUCT TO PUBLIC
EDUCATION SECTOR SPENDING BY AMENDING SECTION 31 OF
PRESIDENTIAL DECREE NO. 1177 AND SECTION 26, CHAPTER 4, BOOK VI OF
EXECUTIVE ORDER NO. 292, OTHERWISE KNOWN AS THE “ADMINISTRATIVE
CODE OF 1987” WHICH REITERATES IN TOTO SECTION 31 OF PRESIDENTIAL.
DECREE NO. 1177

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

SECTION 1. Section 31 of Presidential Decree No. 1177 of July 20,1977 entitled
“Revising the Budget process in Order to Institutionalize the Budgetarty Innovations of
The New Society” is hereby amended as follows:

Section 31, Automatic Appropriations. - All expenditures for (a) personnel
retirement premiums, government service insurance, and other similar fixed
SOCIAL SERVICE expenditures, (B) BUDGETARY REQUIREMENTS OF
STATE COLLEGES AND UNIVERSITIES, EXPENDITURES FOR TEACHERS
AND BASIC EDUCATION CLASSROOM REQUIREMENTS, AND OTHER
SIMILAR EDUCATION EXPENDITURES, THE SUM OF WHICH SHALL IN NO
CASE BE LESS THAN 6% OF THE GROSS DOMESTIC PRODUCT (GDP)
are automatically appropriated: provided, that no obligations shall be incurred
or payments made from funds thus automatically appropriated except as issued
in the form of regular budgetary allotments.

SECTION 2. Section 26, Chapter 4, Book VI of Executive Order No. 292, otherwise
known as the "Administrative Code of 1987," which reiterates in toto Section 31 of
Presidential Decree No. 1177 and similar laws, decrees, executive orders,
administrative orders, or circulars are likewise hereby amended accordingly.


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SECTION 3. The funding for the payment of the principal and interest of the country's
domestic and foreign debt shall undergo the same annual appropriations process like
all regular items of the National Budget under the General Appropriations Act. The
same shall be recommended annually by the Executive through the Department of
Budget and Management (DBM) and shall be subject to the review and scrutiny of
both Houses of Congress.

SECTION 4. Separability Clause. — If any section or provision of this Act shall be
declared unconstitutional, the remaining sections or provisions shall not be affected
thereby.

SECTION 5. Effectivity Clause, ~ This Act shall take effect fifteen (15) days after its
publication in at east two (2) newspapers of general circulation.

Approved,