Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 3449

Introduced by Reps. NERI J. COLMENARES, CARLOS ISAGANI T. ZARATE,
LUZVIMINDA C. ILAGAN, EMMI A. DE JESUS, ANTONIO L. TINIO,
FERNANDO HICAP and TERRY RIDON

THE CONGRESSIONAL BUDGET AND IMPOUNDMENT CONTROL ACT

EXPLANATORY NOTE

This bill aims to strengthen the “Congressional power of the purse” as enshrined in the 1987
Constitution in light of current developments wherein massive corruption involving billions of
public funds happen right under our nose. The public is outraged by the news of the public coffers
being used by individuals for their own personal benefit, depriving the masses of the people of basic
services they desperately need.

Article VI, Section 25 (5) of the 1987 Constitution states that “No law shall be passed authorizing
any transfer of appropriations ...” Further, Article VI, Section 24 of the 1987 Constitution also states
that “Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills, shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments.”

Tt was President Benigno S. Aquino III himself, during his term as a Senator in the Fourteenth
Congress, who introduced a bill seeking Congressional control over the power of the president on
budget impoundment. However, when he became the President, he must have forgotten this bill
that he himself submitted for Congress’ enactment. The President is now exercising the same power
he previously wanted Congress to control. As explained by then Sen. Aquino in his bill,
“Impoundment refers to the refusal of the President, for whatever reason, to release funds
appropriated by Congress. It is the failure to spend or obligate budget authority of any type.” Yet, it
appears that Pres. Aquino is now doing the same thing as was done by his predecessor.



Despite the provisions of the Constitution granting powers to the Congress to control the
appropriation of public fund, the President still wields considerable control over public spending
through the exercise of budget impoundment. The President and the Department of Budget and
‘Management are able to circumvent the General Appropriations Act by impounding the release of
public funds in the middle of a fiscal year, trampling upon the Congressional power over the purse.
‘As a result, billions of pesos in public funds are being spent on items not appropriated by Congress,
in violation of the provisions of the Constitution,

‘This bill will protect the public fund from unbridled and arbitrary realignment of funds for activities
that are not authorized by Congress.

In this light, the passage of this bill is earnestly sought.

Approved,

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 3449,

Introduced by
BAYAN MUNA Rep. NeriColmenares, GABRIELA Women’s Party Rep, Luz Ilagan, ACT
Teachers Party-List Rep. Antonio Tinio, GABRIELA Women’s Party Rep. Emmi de Jesus,
ANAKPAWIS Rep. Fernando Hicap, BAYAN MUNA Rep. Carlos Isagani Zarate and
KABATAAN Rep. Terry Ridon

THE CONGRESSIONAL BUDGET AND IMPOUNDMENT CONTROL ACT

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

SECTION 1. Title.
Control Act.”

this is Act shall be known as “he Congressional Budget and Impoundment

SECTION 2. Declaration of Policy. - It is the policy of the State to formulate and implement a
National Budget that is truly an instrument of national development. The National Budget, as
approved and enacted by Congtess through the General Appropriations Act, should be faithfully
executed to the letter. No amount of money coming from the public fund should be spent
onactivities that are not authorized by Congress.

Towards this end, all appropriations, except those which shall be deferred, rescinded, reserved, or
otherwise withheld in the General Appropriations Act, shall be teleased within the first semester of
the year through the issuance of advices of allotment in accordance with approved work and
financial plans, and shall be utilized according to the purposes provided in the General
Appropriations Act. Any deferral, rescission or reservation of appropriations in the General
Approptiations Act shall be in accordance with this Act.

SECTION 3. The Congress declares that it is essential -

1) to assure effective congressional control over the budgetary process;


2)

3)
4)

5)

to provide for the congressional determination each year of the appropriate level of national
revenues and expenditures;

to provide a system of impoundment control;
to establish national budget priorities; and

that Congress be provided by the executive branch with full and detailed information for
Congress to effectively discharge its duties.

SECTION 4, Definition of Terms. - For purposes of this Act:

a)

b)

©
)

4

h)

d

Lump sum - means funds allocated without being broken down into detailed purpose,
program, activity or project.

Rescission - means cancellation of all or part of an enacted appropriation, which has not yet
been spent or obligated.

Reserve - means the amount set aside from a particular appropriation to provide for
contingencies and emergencies which may arise later in the calendar year.

Reservation - means imposition of reserves on appropriated amounts for government
expenditures.

Deferral of releases - means withholding or delayingthe release of appropriated amounts
provided for projects or activities.

Impoundment resolution - means a joint resolution of bothHouses of Congress expressing
its approval of a rescission, reservation or deferral of an appropriation or several
appropriation items as proposed by the President.

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

Unobligated allotment - means the portion of allotment that has not yet been incurred or
paid by the department, agency or any instrumentality of the government upon which the
allotment was issued,

Work-and-financial plan -means the monthly breakdown of financial requirements and
physical performance targets of an agency.

Appropriations - unless otherwise described or specified herein, the term appropriations
refers to the appropriations included in the annual General Appropriations Act and as
defined in the Administrative Code of 1987.


k) Unreleased appropriation - means the portion of appropriation that has not yet been made
available for allotment to the department, agency or instrumentality of Government upon
which an appropriation was authorized by Congress.

SECTION 5. Submission of the Proposed National Budget by the President to Congress. -
Whenever the President submits to Congress the proposed National Budget, itmust include a
detailed enumeration of itemsfor appropriation including but not limited to the, special purpose
funds, unprogrammed funds, the automatic appropriations and debt-service payments.

SECTION 6. Lump Sum Approptiations.-No lump sum amounts,upon which its disbursement
shall beunder the discretion of the President or head of any agency/department of the
government,that does not contain specific items enumerated for allocation shall be included in any
annual General Appropriations Act. Each item in the proposed budget shall contain the detailed
purpose for which funds will be appropriated,

Lump sum amountsfor Calamity Fundsshall be appropriated by Congress, Provided,That
expenditures for this particular appropriation shall require a report by the recipient
agency/department to the House of Representatives and the Senate, in the event of its
disbursement. Lump sum appropriation to cover for contingencies may be authorized by Congress,
Provided, That the amount to be set aside for contingency funds shall not exceed one percent (1%)
of the total appropriations for a calendar year.

SECTION 7. Automatic and Debt-Servicing Appropriations.- Provisions for automatic
appropriations and debt-service amortizations shall indicate the institutions, banks ot lending
corporations from where the loans are obtained and the principal amounts and interests obligatedfor
each loan.

SECTION 8. Rescission and Reservation of a Budget Appropriation. -Whenever the
President, upon the recommendation of the Secretary of the Department of Budget and
‘Management, determines that all or part of any budget appropriation will not be required to carry
out the full objectives or scope of programs for which it is provided, or that such budget
appropriation should be rescinded for fiscal policy or other reasons, including the termination of
authorized projects or activities, or whenever all or part of any budget appropriation for the current
fiscal year is to be reserved from obligation for such fiscal year, the President shall transmit to both
Houses of Congress a special message specifying:

1, ‘The amount of budget appropriation which he proposes to be rescinded or which is to be so
reserved

2. Any account, department, agency or instrumentality of the government to which such
budget appropriation is available for obligation, and the specific projects or governmental

functions involved;

3. The reasons why the budget appropriations should be rescinded or is to be so reserve

4. The estimated fiscal, economic and budgetary effect of the proposed rescission or
reservation; and


5, All facts, circumstances and considerations relating to or bearing upon the proposed
rescission or reservation, and the estimated effect of the proposed rescission or reservation
upon the purposes, programs, activities and projects for which such appropriation is
provided.

SECTION 9. Approval of Rescission or Reservation, - Both Houses of Congress shall act on
the proposed rescission or reservation within sixty (60) calendar days after the receipt of such
proposal from the President by issuing a joint impoundment resolution approved in Plenary:
Provided, That if the President's special message is received within a period of less than sixty (60)
calendar days before the end of a regular session, the President's message shall be deemed to
have been submitted on the first day of the succeeding regular session of Congress and the sixty
(60) day period referred to in this Section shall commence on the first day of such succeeding
regular session. If Congress does not issue an impoundment resolution within the specified period,
the President shall not proceed withthe rescission orreservation procedures. Provided, however, that
in the event of a Congressional approval to rescind, the funds corresponding to the rescinded
appropriations shall revert to the General Fund and shall not be made available for expenditure for
any purpose except as provided for by a subsequent legislative enactment,

SECTION 10, Use of Reserves. - When changes in conditions during the year, as determined by
Congress, justify the use of the reserved appropriations which have been imposed under this Act or
under the General Appropriations Act, the amount involved shall be allocated back for the use by,
and upon the request of the Department, office or agency on whose appropriation the reserve was
originally imposed.

SECTION 11. Deferral of Releases.

8) Whenever the President, the Secretary of Budget and Management, the head of any department,
agency or instrumentality of the Government proposes to defer the release of any appropriation
for a specific purpose, program, activity, or project, the President shall transmit to the House of
Representatives and the Senate a special message specifying:

(1) The amount of the appropriation proposed to be deferred;
(2) Any account, department, agency or instrumentality of the Government to which such

appropriation is available for obligation, and the specific projects or governmental functions
invoh

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

(4) The reasons for the proposed deferral, including any legal authority invoked by him to justify
the proposed deferral;

(8) The estimated fiscal, economic and budgetary effect of the proposed deferral;
(6) All facts, circumstances and considerations relating to or bearing upon the proposed deferral

and the decision to effect the proposed deferral, including an analysis of such facts,
circumstances and considerations in terms of their application to any legal authority and


specific elements of legal authority invoked by him to justify such proposed deferral, and
the estimated effect of the proposed deferral upon the objects, purposes, program, activities
and projects for which such appropriation is provided.

b) A deferral may not be proposed for any period of time extending beyond the end of the fiscal
year.

SECTION 12. Approval of Release Deferral. - Both Houses of Congress shall act on the
proposed deferral within sixty (60) calendar days after the receipt of the proposal from the
President: Provided, That if the President's special message is received within a period of less than
sixty (60) calendar days before the end of a regular session, the President's. message shall be
deemed to have been submitted on the first day of the succeeding regular session of Congress and
the sixty (60) day period referred to in this Section shall commence on the first day of such
succeeding regular session. If Congress does not issue an impoundment resolution within the
specified period, the President shall not proceed with the deferral procedures,

SECTION 13, Submission of Quarterly Reports. - Within thirty (30) days after the end of each
quarter, the Secretary ofthe Department of Budget and Management shall submit to the Committee
on Appropriations of the House of Representatives and the Committee on Finance of the Senate, a
list of releases made out of reserved and deferred appropriations, and comparative statements
showing the annual general appropriations, the annual program of continuing and automatic
apptoptiations, and the corresponding releases of allotments and cash allocations for each
department, agency, corporation and fund: Provided, That the releases from each lump-sum or
specialpurpose fundsshall be supported with schedules indicating the specific departments /agencies,
cotpotations or entities which received the fund releases and the purposes of such releases. The
quarterly reports shall also include a cumulative summary of all appropriations rescinded, deferred or
reserved.

SECTION 14. Mode of Transmittal of the Special Message of the President, - The President
shall transmit to Congress at any time during the budget year but not later than the fifteenth day of
October of the budget year the special message which may include one or mote proposals for
impoundment, reservation, or deferral on one or more appropriation items through the Committee
‘on Finance ofthe Senate and the Committee on Appropriations of the House of Representatives.

SECTION 15. Withdrawal of Unobligated Allotments. - The President, through the
recommendation of the Secretary of Budget and Management, may withdraw unobligated allouments
whenever a program, activity or project from which an allotment was made has been discontinued
or abandoned with finality, The withdrawn unobligated allotments shall revert to the General Fund
and shall not thereafter be made available for expenditure except by subsequent legislative
enactment.

SECTION 16. Unreleased Appropriation. - All unreleased appropriation and unexpended
balances of appropriations shall revert to the General Fund and shall not thereafter be made
available for expenditure except by subsequent legislative enactment or authorization.

SECTION 17, Penal Provision. - Any violation of the provisionsof this Act shall be punished by
afine notexceeding Five Hundred Thousand Pesos (P500,000.00) and the penalty of perpetual
special disqualification.


SECTION 18. Repealing Clause.-The provisions in the annual General Appropriations Act,
specifically, but not limited to, the provisions on impoundment, retention or deduction of allotment,
and lump sum appropriationsand all laws, decrees, executive orders, letters of instructions, letters of
implementation, rules and regulations or parts thereof inconsistent with the provisions of this Act
archereby repealed, modified, superseded or amended accordingly.

SECTION 19. Effectivity Clause. - This Act shall take effect fifteen (15) days after its complete

publication in the Official Gazette or in at least nwo (2) national newspapers of general
circulation, whichever comes earlier.

Approved,