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

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 3862 _

Introduced by REP. KAKA BAG-AO, REP. TOMASITO VILLARIN,
REP. NANCY CATAMCO and REP. HENEDINA ABAD

EXPLANATORY NOTE

Article Il, Section 9 of the 1987 Constitution expresses the desire of the state to “promote a
just and dynamic social order" that will ensure prosperity and free people from poverty through
policies that provide adequate social services. Section 21 advocates for Rural Development
while Section 23 mandates the state to encourage non-governmental, community-based,
sectoral organizations that promote the welfare of the nation.

In line with the government's aim of transparency and inclusion on how public finances are
made, the concept of Bottom-up Budgeting has been introduced. This is a more progressive
approach as compared to the national government directly creating the budget proposals for all
government agencies. Instead, inputs from the grassroots communities are taken as an
essential element of the program. This makes the budgeting process more participatory through
the genuine involvement of grassroots organizations and communities. It also seeks to increase
citizens’ access to local service delivery through a demand-driven budget planning process and

to strengthen government accountability in local public service provision.

‘Through this practice, we would be able to empower our constituents from the grassroots level
to participate in governance through the budget process, a manifestation of participatory
reform geared towards the acceleration of rural development.


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

IASITO VILLARIN
KBAYAN Partylist

a ani . Obs
REP. HENEDI! aon

Lone District, nes



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

SEVENTEENTH CONGRESS
First Regular Session

House Bill No, 3862

Introduced by REP. KAKA BAG-AO, REP. TOMASITO VILLARIN,
REP, NANCY CATAMCO and REP. HENEDINA ABAD

AN ACT
INSTITUTIONALIZING PEOPLE'S PARTICIPATION IN THE BUDGET PROCESS,
PARTICULARLY IN PLANNING AND IDENTIFICATION OF PROGRAMS AND
PROJECTS, WITH THE END VIEW OF ACCELERATING RURAL DEVELOPMENT

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

SECTION 4. Short Title. - This Act shall be known and cited as the “Participatory Reform for
Rural Development (PRRD) Act of 2016."

SEC. 2. Declaration of Policy. - In pursuit of inclusive growth and poverty reduction, it is
hereby declared the policy of the State to institutionalize transparency, accountability and
citizen's participatory reform in governance, as a means of attaining rural development,
pursuant to Sections 21 and 23, Article II of the 1987 Philippine Constitution.

The Bottom-up Budgeting (BUB) program aims to achieve community empowerment by
encouraging citizens to take active roles in the community by articulating their needs to the
government and determining what projects are responsive to their needs. The process will also
stimulate partnership between local government and civil society organizations particularly in
local development planning and budgeting. The result of the local planning and budgeting is

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the convergence of plans and priorities by the local government units and the civil society.
These local development plans are then harmonized at the pertinent national government
agencies’ programs and budgets for implementation.

SEC. 3. Definition of Terms. - As used in this Act, the following terms shall be defined as
follows:

a. Basic Sectors - refer to the disadvantaged sectors of Philippine society, namely:
farmer-peasant, agrarian reform beneficiaries, artisanal fisherfolk, workers in the
formal sector and migrant workers, workers in the informal sector, indigenous
peoples and cultural communities, women, differently-abled persons, senior citizens,
victims of calamities and disasters, youth and students, children, and urban poor;

b. Bottom-up Budgeting (BuB) - an approach to the preparation of agency budget
proposals, taking into consideration the development needs of cities/municipalities as
identified in their respective local poverty reduction action plans that shall be
formulated with the strong participation of basic sector organizations and other civil
society organizations;

©. Quil Society Organizations ~ include non-government organizations (NGOs), People's
Organizations (POs), basic sector organizations, cooperatives, trade unions,
professional associations, faith-based organizations, media groups, indigenous
peoples movements, foundations, and other citizen’s groups which are non-profit and
are formed primarily for social and economic development to plan and monitor
government programs and projects, engage in policy discussions, and actively
participate in collaborative activities with the government;

d. Community-Based Monitoring Systems (CBMS) - an organized process of data
collection and processing at the local level and integration of data to local planning,
program implementation and impact monitoring. It promotes evidence-based
policymaking and program implementation while empowering communities to
participate in the process.


Good Financial Housekeeping — is conferred to local government units that obtained
an unqualified or qualified Commission on Audit (COA) opinion and have complied
with the Full Disclosure Policy. It is a component of the Seal of Good Local
Governance;

Local Poverty Reduction Action Plan (LPRAP) - the local government unit (LGU) plan
which contains programs and projects collectively drawn through a participatory
process by the LGU with civil society organizations (CSOs) and other stakeholders,
and which will directly address the needs of the poor constituencies and the
marginalized sectors in the city or municipality;

Parent Leaders ~ Pantawid Pamilyang Pilipino Progam (4Ps) grantees chosen by their
co-grantees/fellow parents to lead a cluster of family-grantees. Their role and
function is to ensure the compliance to the conditionalities of the 4Ps program of the
grantees. They preside over meetings during community assemblies, disseminate
information and updates, follow-up/monitor commitment and compliance to
conditionalities on health and education. They also act as the bridge of the
community in communicating to the municipal link assigned in the area and to other
stakeholders in the municipality or city;

Poor ~ refers to individuals and families whose income falls below the poverty
threshold as defined by the National Statistical Coordination Board. ‘These are those
who cannot afford to provide for their minimum basic needs of food, health,
education, housing ard other essential amenities of life in a sustained manner;

Private Sector ~ refer to organizations of business individuals or entities such as
business chambers, and the like. It is considered a prime engine in the economy to
promote development via investment and employment;

Public Financial Management Assessment - refers to the diagnostic review of a local
government unit’s existing structure, policies, systems and procedures for generating
and managing its financial resources. It is conducted to determine the extent to


which the LGU is able to establish and operationalize an open and orderly Public
Financial Management (PFM) system in the LGU using as criteria the critical
dimensions of an open and orderly PFM system provided under the PFM Assessment
Tool for Local government Units (PFMAT for LGUs) developed by the Department of
Budget and Management (DBM);

k. Public Financial Management Improvement Plan ~ refers to the set of
programs/projects/activities (PAs) that will be undertaken by the LGU to address the
areas in Public Financial Management (PFM) that need to be further improved and/or
sustained based on the assessment by the LGU of the different critical dimensions of
an open and orderly PFM system provided under the PFM Assessment Tool for LGUs;

|. Seal of Good Local Governance (SGLG) ~ is the scaled up version of the Seal of Good
Housekeeping. It is a recognition given to local governments for their good
performance in the areas of a) transparency and accountability In the use of public
funds; b) preparation for disasters; c) sensitivity to the needs of the vulnerable and
marginalized sectors; d) attraction of investments and generation of employment; e)
maintain security; and f) safeguarding the environment.

SEC. 4. Empowerment Process and Bottom-up Budgeting Procedure. ~ The following
processes shall serve as the main components to implement the empowerment of LGUs and
Bottom-up Budgeting approach:

a. Social preparation. In preparation for poverty reduction planning, the
City/Municipal Local Government Operations Officer (C/MGLOO), together with the
CSOs, shall organize various capacity building activities to ensure that the
communities in the LGUs will have a clear understanding of how they can provide
inputs into policies and programs that affect their lives and for community members
to meaningfully participate in the local governance.

b. Collection of relevant economic and social data. The LGUs shall collect and
collate all relevant information, statistics, and sex-disaggregated data for poverty

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reduction planning, Data will be obtained from various sources such as the
Community-Based Monitoring System (CBFMS), Field Health Service Information
System (FHSIS), administrative records of National Government Agencies (NGAs),
and the National Household Targeting System, among others.

Conduct of LPRAP Workshop. The LGUs, through the LPRATs, shall conduct a
workshop to formulate a Local Poverty Reduction Action Plan (LPRAP) based on
relevant sex-disaggregated economic, social and climate change vulnerability data, as
well as feedback from the members of the LPRAT. The active participation of CSOs,
basic sector representatives and other non-government stakeholders must be
ensured as they shall help validate data and analysis that will be presented by the
LGU. In addition, the LGU shall invite concerned Agency Regional Offices (AROs) of
the participating national agencies and government corporations to the workshop to
provide information on the programs of their respective agencies and to provide
technical assistance in the formulation of the LPRAP. The LPRAP shall identify the
poverty reduction strategy to be undertaken by the LGU and other stakeholders,
including the national agencies. Gender mainstreaming and climate change
adaptation strategies shall also be incorporated in the planning process.

Identification of priority poverty reduction projects. During the LPRAP
Workshop, the LPRAT shall also identify gender-responsive, results-based priority
poverty reduction projects to be funded by the LGUs and those which will be
submitted to national agencies for consideration in the next General Appropriations
Act. The identified priority projects which will be funded by the LGUs shall later be
formalized and included in the LGU in its Annual Investment Program (AIP) and local
budget.

In identifying projects to be funded by the national government, LGUs are
encouraged to identify priority poverty reduction projects which are already being
undertaken by these national government agencies as listed in the Menu of Programs
determined by the DBM.


However, LGUs may still include projects outside of the Menu of Programs in
their list of priority projects if these are more urgently needed by the LGUs, subject
to further determination by the DBM that such projects can be accommodated by the
national government.

Endorsement of CSOs. The list of priority projects requires the endorsement of
CSOs from the community before it can be considered by the national government
for inclusion in the latter's budget. As representatives of the non-government
members of the LPRAT, the NAPC identified basic sector representative or an NGA
accredited/recognized CSO leader, a Panatawid Pamilya parent leader, or an LGU
accredited CSO must sign and endorse the list of priority projects as proof of genuine
participation in identifying the priority projects.

Approval of Sanggunian, The Sanggunian must also approve the list of priority
projects before it is submitted to the national government, through the issuance of a
Sanggunian Resolution.

Submission of the List of Priority Poverty Reduction Projects. The list of
priority poverty reduction projects duly endorsed by the CSOs and approved by the
Sanggunian shall be submitted to the RPRAT through the DILG Regional Office.

Integration of the LGU projects in the budgets of participating NGAs. The
DILG Regional Office shall consolidate all submitted LPRAPs and distribute copies to
the RPRAT members. The RPRAT shall review all identified LGU projects that have
been submitted to them for funding consideration. The RPRAT shall then submit the
list of priority poverty reduction projects to the Central Offices (CO) of participating
NGAs which are being requested to fund projects included in the priority list, National
Anti-Poverty Commission (NAPC) and the regional offices of DBM, DILG, the
Department of Social Welfare and Development (DSWD), and the offices of the
concerned District Representatives. In cases where projects are not accepted by the
RPRAT and have to be replaced, the RPRAT shall duly inform the authorized LPRAT
representatives, including the three (3) CSO LPRAT signatories.


Agency budget submission to DBM. The participating NGAs should submit their
budget proposals, which incorporate the LGU identified priority projects, to DBM.

Consolidation and review of all LGU identified priority projects. NAPC shall
also consolidate and summarize the list of priority projects submitted by the cities
and municipalities. This will then be compared with the lists submitted by each
participating NGA to ensure that all projects submitted by LGUs have been
considered by the concerned agency and that no LGU list of priority projects exceeds
the set budget cap. Projects that have not been included in the agency ceilings shall
be elevated to the NPRAT for consideration and action, The NPRAT must submit
budgetary recommendations to DBM concerning projects that have not been included
within the budget ceilings of participating agencies.

Institutionalizing governance reforms. \GUs that have shown a good track
record in their implementation of BuB shall be provided with performance incentives.
To qualify for the performance incentives, an LGU must comply with the following
conditions:

1. Good Financial Management
i, Attain Good Financial Housekeeping;
ji, Implementation of the PFM improvement measures as contained in the
duly PEM improvement plan.
2. Timely Implementation of BuB Projects
i. Completed at least 80% of the previous year’s BuB projects by September
30 of the current year;
ii, Completed at least 50% of the current year’s BuB projects by September
30 of the current year;
iii Computation of the percentage shall be based on number of projects and
not the budgetary allocation;
3, Participatory Governance
i. Have not been the subject of a complaint related to the participation of
CSOs in the BuB process that has been validated by the RPRAT;
ii, Conducting regular LPRAT meetings.


Based on the criteria, the RPRAT shall determine by October each year, which

LGUs will be eligible to receive incentives such as additional budgetary allocation on

top of the initial proposed budget cap that the LPRAP may submit for the succeeding

year, and additional projects which may not necessarily be included in the Menu of

Programs provided that it must attain outcomes in any of the following national

budget priority areas:

Basic Education;
Public Health;

Social Protection;

Disaster Risk Reduction and Management; and
Job Generation and Livelihood,

eaoge

SEC. 5. Creation of the Local Poverty Reduction Action Team (LPRAT). — The LPRAT is
hereby created to spearhead the formulation and monitoring of the LPRAP. It shall be headed
by the Local Chief Executive (LCE) of the city or municipality as Chairperson, and the CSO
representative elected by the CSO Assembly, as the Co-Chalrperson. It shall be composed of
the following members:

a. Representatives from Government:

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2.

District Representatives;

Sanggunian Panlungsod/Bayan Member which is the Chairperson of the
Committee on Appropriation;

Liga ng Barangay President;

All local government department heads such as the Planning Officer, Budget
Officer, Fishery and Aquaculture Officer, Social Welfare and Development Officer,
Health Officer, Public Employment Service Office (PESO) Manager and Tourism
Officer;

Representatives of NGAs such as the DSWD municipal links/National Community
Driven Program area coordinators, the DILG City/Municipal Local Government
Operations Officer (C/MLGOO), the Schools District Supervisor, Agrarian Reform
Officer, DTI Field Officer, City/Municipal Environment and Natural Resource

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Management Officer (CENRO), PESO representatives of the Department of Labor
and Employment (DOLE) and other NGA representatives.

b. Representatives from CSOs, who must be residents of the city or municipality that

can come from the following groups:

CSeneaunune

Pantawid Pamilya Parent-Leaders recognized by DSWD;

DOH organized Community Health Teams;

Parent-Teacher Associations;

CSOs accredited or recognized by any NGA;

Women’s group;

Basic sector organization;

Basic sector organization recognized by NAPC;

Other community or grassroots organizations;

In cities/municipalities where Indigenous peoples (IPs) comprise over twenty
percent (20%) of the population, one of the elected representatives must come
from the IP sector.

c. Representative from a local business group or association.

The LPRAT shall always be composed of an equal number of government and CSO

representatives. The members of the LPRAT should also be composed of at least 30% women.
It shall identify priority projects through a consensus among Its members. If consensus cannot
be reached, the decision will be made through a majority vote.

Elected officials at the national and local levels, including the barangay, their immediate

relatives up to the first degree of consanguinity or affinity, and LGU employees are ineligible to
be elected as CSO representatives.

SEC. 6. Roles and Responsibilities of the LPRAT. — The LPRAT shall:

a. Organize and facilitate the conduct of workshops for the formulation of the LPRAP;

i


b. Identify poverty reduction strategies to be undertaken by the LGU and other
stakeholders based on the results of the poverty situational analysis;

c. Identify priority poverty reduction projects;

d. Identify additional projects that could serve as replacement in case any of the
submitted projects are not accepted during the RPRAT validation;

€. Monitor the projects and programs that shall be funded by the annual National
Budget;

f. Adopt rules of procedures for the orderly and expeditious conduct of meetings and
other business of the team;

g. Perform such other acts and functions as may be necessary.

SEC. 7. Creation of the Regional Poverty Reduction Action Team (RPRAT). - The
RPRAT is hereby created to provide support and guidance to LGUs throughout the BuB process
and make decisions on implementation issues raised at the regional level. It shall be headed by
the DILG Regional Director as Chairperson and the DBM Regional Director and NAPC Secretariat
Representative as Vice-Chairpersons. It shall be composed of the following members:

Regional Directors of BuB participating agencies;

b. Designated representatives of participating agencies that do not have regional
offices;

All Provincial Planning and Development Coordinators (PPDCs) in the region;

d. NAPC Sectoral representatives (SR) as identified by the NAPC Office of the Vice-Chair
for the Basic Sectors who must be a resident of the region, and a Basic Sector
Council member selected from among Basic Sector Council members in the region;

e. All the NAPC Provincial Focal Persons (PFPs) and their alternates who are elected in
the process facilitated by the NAPC and the alternate representative selected by the
PFP. This does not refer to the elected members of the basic sectors of NAPC at the
national level.

‘The DILG shall serve as the Secretariat of the RPRAT. The Secretariat shall be composed
of the DILG BuB Focal Person, the Regional coordinator and other personnel as may be

assigned by the PRAT Chairperson.

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SEC. 8. Roles and Responsibilities of the RPRAT. ~ The RPRAT shall:
Conduct orientation workshops for the LPRAT on the bottom-up budgeting process;

a
b. Take the lead in organizing workshops and Monitoring the bottom-up process;
¢. Act as the resource Person on the guidelines on bottom-up budgeting;

d. Responsible in engaging the DSWD Municipal link and the Pantawid Pamilya family
leaders especially in the formulation of multi-year work and financial plans for
addressing supply side challenges;

. Monitor the activities of the LGUs and the Progress of submission of Project proposals
and LPRAPs to DBM and DILG, among others;

f- Ensure that the LGUs submit priority projects within their budget cap and inform the
HDPRC and NAPC of cases of non-compliance;

9 Inform the ROCs about the inclusion of programs and projects for the cities and
municipalities in the budget proposals of the participating agencies,

SEC. 9. Creation of the National Poverty Reduction Action Team (NPRAT). ~ The
NPRAT is hereby created composed of senior officials of the DILG, DBM, DSWD, DOLE, NAPC,
Department of Agriculture (DA), Department of Education (DepE¥d), Department of Energy
(DOE), Department of Environment and Natural Resources (DENR), Department of Health
(POH), Department of Trade and Industry (DTI), National Commission on Indigenous Peoples
(NCIP), Technical Education and Skills Development Authority (TESDA), National Electrification
Administration (NEA) and the Philippine Coconut Authority (PCA). ‘The DILG shall serve as its
Chairperson while the DBM and NAPC shall serve as Vice-Chairpersons. It shall serve asa
coordinating body among the participating agencies where implementation issues can be
discussed and addressed.

SEC. 10. Report and Feedback Mechanism. — The process involved including experiences
and lessons learned and possible recommendations for improvement shall be properly
documented. Further, mapping of the approved project of LGUs and communities shall be
Posted in the appropriate government websites and other public posting areas of the LGUs and
all participating NGAs.

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A Grievance and Redress Mechanism (GRM) shall be established to address complaints
and concerns raised by any BUB stakeholder or concerned citizen relating to BuB planning and
project identification or project implementation.

SEC. 11. Implementing Rules and Regulations. - Within ninety (90) days after the
effectivity of this Act, the Department of Interior and Local Government (DILG), Department of
Budget and Management (DBM), and the National Anti-Poverty Commission (NAPC), in
consultation with the concerned agencies and CSOs, shall promulgate the rules and regulations
necessary for the implementation of this Act.

SEC. 12, Separability Clause. - If any provision of this Act is declared unconstitutional, the
same shall not affect the validity and effectivity of the other provisions hereof.

SEC. 13. Repealing Clause. ~ DBM-DILG-DSWD-NAPC Joint Memorandum Circular No. 7, s.
2015 is hereby repealed. All laws, decrees, orders, issuances, rules and regulations or parts
thereof inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 14. Effectivity. ~ This Act shall take effect fifteen (15) days after its publication in the

Official Gazette or in a newspaper of general circulation.

Approved,

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