TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
25 JUL -7 P1 :39
SENATE 
S. No.
Introduced by Senator FRANCIS N. PANGILINAN
AN ACT
REGULATING THE ALLOCATION AND UTILIZATION OF CONFIDENTIAL 
AND INTELLIGENCE FUNDS (CIF) IMPOSING PENALTIES FOR MISUSE AND 
MISAPPROPRIATION AND FOR OTHER PURPOSES
EXPLANATORY NOTE
The Philippine Constitution mandates accountability, transparency, and 
independent oversight of public funds, primarily through the Commission on Audit's 
(COA) powers and the principle of public trust. However, the very nature of 
Confidential and Intelligence Funds (CIFs), which are lumpsum allocations for 
sensitive surveillance and intelligence activities, inherently challenges these 
principles, leading to persistent concerns about misuse and corruption.1
Historically, CIFs required presidential approval or specific authorization in the 
General Appropriations Act (GAA). There were, however, no strict or consistent 
guidelines on CIFs' release, utilization, and audit despite said funds' critical role in 
national security and public order.
It was only through COA-DBM-DILG-GCG-DND Joint Circular (JC) No. 2015-01 
that comprehensive guidelines were established. However, the exemption of CIFs
1 The Advocatj. De Guzman, Jenny, "Confidential Fund: Enemies of the State. Published on November 9, 2023. Avaiiable at 
hHT»s;//advncati-online.com/article/confidenbal-funds-enemies-of-the-state. (Accessed on July 1, 2025).


from standard auditing procedures, crucial for operational secrecy, has unfortunately 
become a fertile ground for abuse.
Recent inquiries by the House Committee on Good Government and Public 
Accountability confirmed the following major deviations in the use of CIFs: CIFs 
were allocated to agencies without national security mandates, irregularly used for 
non-agency initiatives or "ghost transactions," liquidated with unverified receipts, 
and diverted from their intended purpose to augment general operations. This 
"unrestricted access with minimal accountability" fuels public concern over how 
taxpayer money is spent, often perceived as enabling political patronage and 
"criminal politics."2
While the Department of Budget and Management (DBM) reported a 16% 
decrease in CIF allocation in the proposed 2025 budget (P10.29 billion down from 
P12.38B in 2024),3 the fundamental issues of CIF misuse persists.
This bill aims to rectify these systemic flaws by specifically limiting CIF allocation 
to agencies with clear security-related objectives. It seeks to establish tighter 
guidelines and stricter oversight mechanisms in consonance with Joint Circular No. 
2015-01's specified permissible expenses to safeguard public funds, prevent fraud, 
misuse, and misappropriation, and ensure government integrity.
The immediate passage of this bill is earnestly sought.
FRANCIS^NrPANGILINAN
Senator
2 Inquirer.net. Confi funds accountability and governance. Published on November 24, 2024. Available at 
httns://oDinion.inQuirer.net/178602/confi-funds-accountabilitv-and-aovemance. (Accessed on July 1, 2025).
3 DBM; Confidential and Intelligence Funds down by 16% in proposed 2025 national budget. Available at 
httDs://www.dbm.aov.Dh/index.DhD/manaQement-2/2906-dbm-confldential-and-intelliqence-funds-d0wn-bY-16-in-pr0P0?dd- 
2025-nabonal-budqet. (Accessed on July 1, 2025).


TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
Z5 JUL -7 P1 39
S. No.
SENATE
227
Introduced by Senator FRANCIS N. PANGILJNAN
AN ACT
REGULATING THE ALLOCATION AND UTILIZATION OF CONFIDENTIAL 
AND INTELLIGENCE FUNDS, IMPOSING PENALTIES FOR ITS MISUSE AND 
MISAPPROPRIATION, AND FOR OTHER PURPOSES
Be enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
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Section 1. Title- This Act shall be known as the "'Confidential & Intelligence
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Funds (CIF) Utilization and Accountability Act".
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Sec. 2. Declaration of State Policies.- The State recognizes the need for the
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allocation and use of confidential and intelligence funds in government agencies with
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mandates that are directly related to national security, law enforcement, and
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intelligence operations, and other related critical functions requiring discretion.
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It is the policy of the state that the use of such funds must be subject to
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stringent oversight, accountability, and transparency to ensure that they are not
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misused, or diverted for unauthorized purposes.
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Further, it is the policy of the state to maintain public trust in the use of public
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funds, protect the integrity of government operations, and prevent corruption in the
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management of confidential and intelligence funds.
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Sec. 3. Entitlement to Confidential and Intelligence Funds-
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Confidential/intelligence fund shall be allocated to agencies as indicated under the
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General Appropriations Act and to all other agencies, department, and units with
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mandates related to national security, peace and order, and intelligence gathering.


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Sec. 4. Limits on Confidential/Intelligence Fund Allocation. - The total
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allocation for confidential/intelligence funds for any single agency, considering the
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population serviced, shall not exceed ten percent (10%) of the total annual budget
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of the agency, unless otherwise explicitly authorized by law.
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Sec. 5. Definition of Terms. - As used in this Act, the following terms re
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defined as follows:
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a. Accountable Officer (AO) refers to every officer of the government whose
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duties permit or require the possession or custody of government funds and
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property and who shall be accountable therefore and for the safekeeping
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thereof in conformity with laws and regulations;
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b. Audit and Oversight Authorities refers to the Commission on Audit (COA),
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Philippines Congress composed of the Senate and the House of
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Representatives, or any other relevant body empowered by law to audit
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government agencies and ensure proper use of public funds;
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c. Confidential Fund (CF) refers to the lump-sum amount released or disbursed
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to civilian government agencies that are intended to support its mandate or
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operations directly related to Confidential Expenses in Confidential Programs
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for national security and peace and order;
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d. Confidential Expenses (CE) refer to those expenses directly related to
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national security and peace and order, including but not limited to
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surveillance activities and information gathering, in civilian government
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agencies with mandates directly related to peace and order and intelligence
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gathering;
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e. Government-Owned or Controlled Corporation (GOCC) refers to any entity
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organized as a stock or non-stock corporation, vested with functions relating
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to public needs whether governmental or proprietary in nature, and owned
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by the Government of the Republic of the Philippines directly or through Its
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instrumentalities either wholly or, where applicable as in the case of stock
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corporations, to the extent of at least a majority of its outstanding capital
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stock.
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The term "GOCC" shall include Government Instrumentalities with
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Corporate Powers/Government Corporate Entities and Government Financial


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Institutions, and Subsidiaries as defined under Republic Act (R.A.) No. 10149
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or the GOCC Governance Act of 2011;
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f. Governance Commission for GOCCs (GCG) refers to the central advisory,
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monitoring, and oversight body, with authority to formulate, implement and
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coordinate policies involving GOCCs, created under R.A. No. 10149;
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g. Head of Agency (HoA) refers to the highest official of the NGA and LGU. In
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the case of GOCCs, the HoA refers to the President and/or Chief Executive
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Officer, who is in-charge of the day-to-day operations of the corporation;
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h. Inteiiigence and Confidentiai Fund Audit Unit (ICFAU) refers to the unit
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created under the Office of the Chairperson of the COA in charge of the
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audit of CF and IF;
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i. Inteiiigence Fund (IF) refers to the lump-sum amount released or disbursed
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to military agencies or agencies engaged in intelligence activities, including
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funds sourced from savings.
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j. Inteiiigence Expenses (IE) refer to those related to intelligence information
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gathering activities of uniformed and military personnel, and Intelligence
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Practitioners that have direct impact to national security;
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k. Locai Government Unit (LGU) refers to a province, city or municipality;
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I. Misuse and Misappropriation of CF and/or IF refers to the unauthorized use,
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misappropriation, diversion, or expenditure of confidential/intelligence funds
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for purposes other than those specifically approved in the budget or law, or
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in violation of established rules and regulations, including disbursement of
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confidential/intelligence
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funds of an agency allocated with such budget in the GAA but the mandate
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is not directly related to national security or peace and order;
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m. National Government Agency (NGA) refers to any department, bureau or
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office of the national government, or any of its branches and
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instrumentalities, other than GOCCs and LGUs;
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n. Notice of Disallowance (ND) refers to a written notification to the HoA
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and/or accountant informing and requiring the person/s liable to restitute
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the amount of CE and/or IE disapproved/disallowed in audit, either in whole


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or in part, as a result of illegal, irregular, or improper
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disbursement/expenditure of such funds;
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0. Special Disbursing Officer (SDO) refers to the HoA or a regular employee
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designated by the HoA to be in charge of making disbursements of CF
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and/or IF so received and accountable therefor;
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Sec. 6. General Guidelines.- Confidential funds shall be allocated to
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government agencies with a mandate directly related to national security and peace
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and order, or intelligence gathering for specific and essential purposes, including,
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national defense and security operations, law enforcement, prevention and response
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to terrorism and organized crime, emergency responses to national crises where the
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immediate release of information could jeopardize public safety or national interests.
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Sec. 7. Limitations on Use.- Confidential/intelligence funds shall not be used
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for agency operations not directly related to peace and order or intelligence
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gathering, political activities, personal or private expenditure of government officials
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or employees, and public relations or other non-security-related purposes.
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Sec. 8. Reporting and Transparency.- All NGAs, LGUs, and GOCCs releasing CF
17 
and IF shall submit reports on the use thereof to the COA-ICFAU for its audit of the
18 
CF and IF utilization, and other audit and oversight authorities, without
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compromising confidentiality.
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SEC. 9. Public Disclosure.- While maintaining the necessary confidentiality, a
21 
summary of the allocation and purpose of the confidential funds should be disclosed
22 
to the public, in a manner that does not endanger national security or law
23 
enforcement operations.
24 
Sec. 10. Confidentiality and Loss of Confidentiality Status.- With due regard for
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the protection from unauthorized disclosure of classified information relating to
26 
sensitive, confidential and intelligence matters, all information and documents
27 
related to CF and IF are to be treated as confidential.
28 
However, CF loses confidentiality status and shall be declassified immediately
29 
once COA issues an ND. The CF, including all the information and documents related
30 
thereto shall then be subject to inquiries and investigations, with documents and
31 
related information to be made public, without need of compulsory processes.


1 
Sec. 11. Oversight and Audit- The Commission on Audit (COA) shall have the
2 
authority to audit the use of confidential funds in all government agencies.
3 
The COA shall (i) review whether the funds were used strictly for the intended
4 
purpose, (ii) examine the documentation and receipts to ensure proper use, and (iii)
5 
conduct random and special audits whenever deemed necessary.
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The COA and other relevant oversight authorities shall conduct special audits or
7 
investigations if there are reasonable grounds to suspect misuse, fraud, or
8 
corruption involving confidential funds.
9 
Civil society organizations shall be encouraged to monitor the use of
10 
confidential funds, provided that they respect the confidentiality of sensitive
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operations.
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Sec. 12. Prima facie evidence of misuse and misappropriation.- The following
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shall constitute prima facie evidence of misuse and misappropriation of the funds:
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(i) Failure to comply with the documentary requirements evidencing proper
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disbursement and liquidation of the CF and/or IF;
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(ii) Failure to comply with Section 6 of this Act on the submission of reports to
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Audit and other Oversight Authorities, including the Commission on Audit,
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Senate, House of Representatives, and the Office of the President;
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(iii) Disbursement of funds allocated to a government agency, unit or
20 
instrumentality the mandate of which is not directly related to national
21 
security or peace and order;
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(iv) Disbursement of funds to another person who shall make further
23 
disbursement of funds; or
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(v) Disbursement of funds for activities not directly related to national security,
25 
peace and order, or intelligence gathering for effective implementation of
26 
its law enforcement mandate.
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Sec. 13. Penalties for Misuse and Misappropriation of Confidential Funds.- The
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SDO and the HoA shall be jointly and severally liable in case of failure to render
29 
accounts, misappropriation, or misuse of the funds committed intentionally or
30 
through negligence. Penalty shall include perpetual disqualification from office and
31 
loss of benefits.


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Sec. 14. Implementing Rules and Regulations- The Department of Budget and 
Management (DBM), in consultation with the Commission on Audit (COA), the 
National Security Council (NSC), and other relevant agencies, shall promulgate the 
necessary rules and regulations to implement the provisions of this Act within ninety 
(90) calendar days from publication of this Act. These rules shall include detailed 
procedures for the justification, approval, reporting, and auditing of confidential 
funds.
The Commission on Audit, Bureau of Treasury, Department of Interior and 
Local Government, Governance Commission for Government-owned or -controlled 
Corporations, Department of Budget and Management, and the Department of 
National Defense shall review and revise their existing circulars and joint circulars in 
accordance with this Act.
Sec. 15. Suppletory Application of the Government Auditing Code and 
Government Accounting Manual- The entitlement, release, use, reporting, and audit 
of confidential and intelligence funds shall not be contrary to the requirements of the 
Government Accounting Manual and must be audited solely by the COA-ICF AD 
under the Government Auditing Code.
Sec. 16. Prescription of Crimes - The offenses punishable under this Act shall 
prescribe in twenty (20) years.
Sec. 17. Joint Congressional Oversight Committee in Intelligence and 
Confidential Funds- A Joint Congressional Oversight Committee in Intelligence and 
Confidential Funds shall be created, composed of five (5) members from the Senate 
and the House of Representatives.
The joint panel shall be co-chaired by the Senate Committee on Accountability 
of Public Officers and Investigation and the house panei on good government and 
public accountabiiity.
Its members shall include the chairpersons of the Senate finance panel and the 
House Appropriations Committee, and two (2) members of the minority blocs of 
each Chamber.
The Joint Committee will conduct a semi-annual review of the status and 
implementation of programs and activities financed by intelligence and confidential 
funds, and report to Congress no later than June 30 of each year.


1 
Sec. 18. Annual Audit by the Commission on Audit (COA).- The COA shall
2 
conduct a yearly special audit on all intelligence and confidential funds, and report to
3 
Congress no later than June 30 of each year.
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Sec. 19. Separability Clause- If any provision of this Act is declared
5 
unconstitutional or inoperative, the other provisions not so declared shall remain in
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force and effect.
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Sec. 20. Repealing Clause- All laws, decrees, orders, rules, and regulations or
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parts thereof inconsistent with the provisions of this Act are hereby repealed or
9 
modified accordingly.
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Sec. 21. Effectivity Clause. -This Act shall take effect fifteen (15) days after its
11 
publication in the Official Gazette or in at least two (2) newspapers of general
12 
circulation.
Approved,