Republic of the Philippines
House of Representatives
‘Quezon City

Sixteenth Congress
First Regular Session

rouse sino. 6117

Introduced by Representatives Leni Gerona-Robredo, Kaka J. Bag-ao, Henedina R.
Abad

EXPLANATORY NOTE.

The Constitution empowers the Congress of the Philippines with approving and enacting the
annual operational budget of the Philippine Government. Our charter specifically states
appropriation measures originate from the House of Representatives, being the most
representative of the people. In this regard we must create a sound Public Fiscal
Management Policy to ensure that the People's Money is spent for inclusive growth and
every peso is accounted for.

The proposed measure aims to institutionalize a sound Public Fiscal Management Policy in
Budget Preparation, Budget Execution, and Fiscal Responsibility. It will create a system that
mandates each government to craft a medium-term fiscal strategy and to submit regular
fiscal reports to ensure that government programs are sufficiently funded for implementation
This mechanism will ensure that the people's needs are addressed and government
services reach their intended constituents.

In addition, the proposed law will create additional safeguards to ensure that public funds will
be used for their proper allocation. This bill aims to grant the Congress with additional
oversight powers over National Government Agencies. It also establishes the Office of the
Comptroller General under the Department of Budget and Management which will ensure
that government agencies be held accountable for their budgets. Furthermore, transparency
and people's participation mechanisms are institutionalized such as, the publication of
disclosures and the People’s Budget.

These provisions will ensure that reforms made this administration will continue well after
2016.

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

Leni Gprdha - Robredo Kaka). Bagiao
Representative, ThirdDistrict Camarines Sur Representative, Dinagat Islands
Avi . Abad

Rey , Batanes



Republic of the Philippines
House of Representatives
‘Quezon City

Sixteenth Congress
First Regular Session

6117

HOUSE BILL NO.

Introduced by Representatives Leni Gerona-Robredo, Kaka J. Bag-ao, Henedina R, Abad

“AN ACT TO ENFORCE GREATER ACCOUNTABILITY IN PUBLIC FINANCIAL
MANAGEMENT (PFM) BY STRENGTHENING CONGRESS’ POWER OF THE PURSE,
INSTITUTING AN INTEGRATED PFM SYSTEM, AND INCREASING BUDGET
TRANSPARENCY AND PARTICIPATION, AND FOR OTHER PURPOSES.”

PARTI
PRELIMINARY PROVISIONS

Section 1. Short Title. - This Act shall be known as the “Public Financial Accountability Act.”

Section 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, budgeting, management, accounting, reporting
and review of public finances. In light of these requirements, the State shall pursue the following
specific objectives:

(a) To enforce the power of Congress to authorize all appropriations and hold government
accountable in the use of public resources, as well as the responsibility of all government
agencies to propose, execute and deliver committed results in the appropriations acts in a
timely, predictable, and economic manner;

(b) To promote people's empowerment 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

(©) To strengthen the integration of planning, budgeting, and performance management and
ensure ample safeguards in managing public finances, including through internal controls,
accounting, reporting, and risk management;

Section 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.

Section 4. Definition of Terms. — The following terms when used in this Act and the implementing
rules and regulations shall be understood, as follows:

a) Accounting Standards refer to authoritative statements on how transactions and other

events should be reflected in the accounts and financial statements of Government Agencies
as promulgated by the Commission on Audit (COA);

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b) Allotment refers to the authorization issued by the Department of Budget and Management
(DBM) for NGAs, GOCCs, or LGUs to incur obligations up to a certain amount, for a
specified public purpose, and within a specified period of time, in accordance with the
Appropriations Law;

Appropriations Law refers to the legislative authorization for the utilization of Public Funds

for specific public purposes covering a specified period of time. This may refer to either a

general or special appropriations law;

Cabinet refers to the Executive Secretary and the Secretaries of the departments under the

executive branch;

Fiscal Year refers to a period of twelve months commencing on January 1 until December

31;

f) Government Agencies collectively refer to NGAs, GOCCs and LGUs;

9g) Government-Owned or -Controlled Corporations refer to agencies with corporate

powers, whether or not 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 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.

This includes Government Financial Institutions, government corporate instrumentalities and

related corporations;

Government Financial Institutions refer to financial institutions in which the GRP directly

or indirectly owns the majority of the capital stock and which are either: (i) registered with, or

directly supervised by, the Bangko Sentral ng Pilipinas (BSP); 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;

i) Head of Agency refers to the head of the department or agency in the case of NGAs, the
Board of Directors or Trustees in the case of GOCCs as well as certain agencies which are
structured as such, and the local chief executive in the case of LGUs;

j) Local Government Units refer to provinces, cities, municipalities, and barangays, as well
as autonomous regions authorized to be created in the Constitution;

k)_ 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, and the Office of the Ombudsman;

1) Proposed National Budget refers to a financial plan to be submitted by the President to
Congress reflective of national objectives, strategies and programs;

m) Public Officials 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;

Public Funds refer to the monies of all Government Agencies sourced from taxes, fees,

charges, penalties, income, dividends, interest earnings, loan proceeds, grants, proceeds

from the sale of assets, and such other receivables of the government that the

Government has a legal right to retain and use and shall not include any money received in

error; and

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

Goce.

°)

d)

e)

h)

n)

)

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 IL
ADDITIONAL ROLES AND RESPONSIBILITIES

Section 5. Congress of the Philippines. — The Congress shall, in addition to its powers under the
Constitution and existing laws, perform the following :

a) Monitor and review government performance against the requirements of appropriations and
elated laws, and hold Government Agencies accountable for their financial and non-financial
performance;

Review reports on planned and actual performance, including the Statement of Fiscal Policy,
the Medium Term Fiscal Strategy, fiscal reports, annual plans of government agencies,
periodic and annual reports on government performance and performance of government
agencies; and

Consider the consolidated annual financial statements of government prepared by the Office
of the Comptroller General (OCG) and the audited government agency reports by the COA.

b)

c

Congress shall undertake the foregoing through any of its existing committees, support offices or
one created for the purpose to strengthen the oversight role of Congress.

Section 6. President of the Philippines. - The President shall, in addition to his/her powers under
the Constitution and existing laws, perform the following:

a)

Approve the Statement of Fiscal Policy, and the Medium-term Fiscal Strategy for submission
to Congress;

b) Approve the Budget Priorities Framework to identify the priority areas for government
spending and guide the budget preparation exercise; and,

‘Authorize changes in the functional, operational and organizational structure within and
among the DBM, Department of Finance (DOF), and National Economic and Development
Authority (NEDA), as may be necessary, to ensure the effective implementation of this Act.

°)

Section 7. Commission on Audit. - The COA shall, in addition to its powers under the Constitution
and existing laws, coordinate with the DBM, through the OCG, for the proper enforcement of timely
accounting and reporting of public finances.

Section 8. Department of Budget and Management. - The DBM shall, in addition to its mandates
and functions under existing laws, perform the following:

a) Prepare, in coordination with the agencies concemed, and DOF, NEDA and OP in the
Development Budget Coordination Committee (DBCC), the Statement of Fiscal Policy, the
Medium-term Fiscal Strategy, the Budget Priorities Framework, and the Mid-year and
Annual Fiscal Reports as required in this Act;

b) Monitor and evaluate the financial and non-financial performance of NGAs;

©) Evaluate and review the financial and non-financial performance of GOCCs with special laws

and charters, in coordination with the DOF and the Governance Commission for GOCCs

(GCG), and approve the annual corporate operating budgets (COBs) of the GOCCs;

Monitor and review, together with the Bureau of Local Government Finance (BLGF) under

the DOF and Department of the Interior and Local Government (DILG), the financial and

non-financial performance of LGUs;

‘Assess, together with the BLGF under the DOF and DILG, the PFM systems of LGUs and

assist them in designing and implementing PFM improvement measures; and

d)

e)

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To ensure the effective formulation and execution of fiscal policies, the Secretary of Budget and
Management shail lead the DBCC, with the Secretary of Finance, the Director General of the NEDA.
Secretariat and a representative from the OP as members, and the Governor of the BSP as
resource person.

To enhance the management of public finances, there is hereby created an Office of the Comptroller
General under the supervision and control of the DBM which shall perform the following functions:

a) Formulate measures on effective intemal controls, for the implementation by

Government Agencies, to ensure the integrity, accuracy, completeness, and reliability of

government financial and management systems;

Oversee the implementation of, and Government Agencies’ compliance with, accounting

and auditing rules and regulations promulgated by the COA;

Oversee and manage the financial reporting of Government Agencies, including (1) to

monitor the periodic and annual management and financial accounts with regard to

accuracy, timeliness, completeness, and compliance with this Act, standards,

rules and regulations; and (2) to consolidate the financial reports for

submission to the President, Congress, and COA;

Oversee the operationalization of the financial management information system of the

government;

Formulate competency-based human resource policies for positions in public financial

management and coordinate on capacity building requirements on PFM with other

agencies;

f) Oversee the implementation of Public Expenditure Framework policies of LGUs;

) Coordinate with counterpart agency officials to ensure compliance with the foregoing
functions; and

h) Perform such other functions as may be necessary to properly implement the provisions
under this Section

b)

i)

d)

e)

The OCG shall be headed by the Comptroller General who shall be of the same rank as an
Undersecretary, and with the structure and staff complement as may be approved by the DBM. The
heads of agency shall designate a Comptroller in their respective offices to oversee the
implementation of the above-mentioned functions at the agency level in coordination with the
Comptroller General.

Section 9. Department of Finance. - The DOF shall, in addition to its mandates and functions
under existing laws, perform the following:

a) Monitor and manage fiscal risks to the government, including those from public-private
partnerships;

b) Compile and publish government fiscal statistics in accordance with international standards;
and

©) Formulate policies and standards for the acquisition and management of fixed assets by
NGAs.

The Bureau of the Treasury (BTr) shall, in addition to its mandates and functions under existing
laws, perform the following:

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a) _ Manage the Treasury Single Account (TSA) maintained at the BSP or an agent bank,
with the prior approval of the Secretary of Finance;

b) Put in place arrangements for the execution of duly authorized payments from the
TSA, which may include the appointment of banks to operate as agents of the National
Government with the prior approval of the Secretary of Finance;

) Manage the financial assets and liabilities of the government, including (i) banking
arrangements for, and bank accounts of, the government; (ii) hedging and other risk
management activities associated with debt management, cash management and financial
investment; (i) appointment of dealers, assets managers and other agents to support debt,
cash and investment management activities; (iv) maintenance of an accurate record of the
stock and flow of financial assets and liabilities; and (v) tracking and reporting on fiscal risks
Telated to the management of financial assets and liabilities;

d) __ Issue instructions on the management and recording of financial assets and liabilities
of the government;

) Authorize the opening and closing of bank accounts of NGAs;

f) Administer the release of cash requirements covering all types of transfers to LGUs;
and

g) Establish and maintain a consolidated registry of fixed assets of the National
Government.

Section 10. National Economic and Development Authority. — The NEDA shall, in addition to its
mandates and functions under existing laws, perform the following:

a) Coordinate with the Regional Development Councils (ROCs), on the formulation of regional
development plans and policies that are consistent with the established national priorities;
Coordinate the formulation of an annual and medium-term public investment program
consistent with the approved Medium-term Fiscal Strategy and in the context of the
preparation of the National Budget;

Set standards for Government Agencies in proposing, assessing, monitoring and evaluating
development policies, plans and projects including those financed by grants and concessional
loans;

Assist and support the capacity building of RDCs and LGUs in development planning and
investment programming; and

b)

°)

d)

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Section 11. Heads of Government Agencies. - The heads of NGAs, GOCCs and LGUs shall, in
addition to responsibilities provided under existing laws, be responsible for the following:

a) Keep the DBM and DOF informed of significant changes, issues, and risks that could impact
on the finances of the government;

Participate in the processes to develop the Medium-term Fiscal Strategy, the Budget Priorities
Framework, and the Proposed National Budget as required by the DBM;

Manage their respective agencies, including GOCCs, and other resources placed under their
supervision, in an efficient, effective and economic manner in order to deliver the outputs and
attain the outcomes set in their respective budgets;

Take appropriate measures to ensure that contractual commitments or obligations do not
exceed the amounts appropriated in their respective budgets;

Ensure that their respective agencies settles all contractual obligations or approves payment
thereon within the time prescribed by law;

f) Institute effective and efficient management systems, procedure and practices for assets,
liabilities, and personnel, including internal controls, risk management, and performance
review;

Demonstrate that due regard has been taken on the recommendations provided in internal
and external audit evaluation reports, to the extent authorized in their respective budgets; and
Provide accounting and reporting of public finances as required in this Act.

b)

°)

d)

2)

9)
hy

PARTII
FISCAL RESPONSIBILITY

Section 12. Fiscal Responsibility Principles. - The State shall pursue its policy objectives in
accordance with the following Fiscal Responsibility Principles:

Implement fiscal policies and strategies consistent with the achievement of macroeconomic
stability and inclusive economic development,

Manage resources in a fiscally and environmentally sustainable way;

Maintain prudent levels of public debt;

Maintain an appropriate balance between government revenues and expenditures; and
Manage fiscal risks in a prudent manner.

Section 13. Statement of Fiscal Policy. - The DBM, in coordination with DOF, NEDA and OP in
the DBCC, shall prepare, subject to the approval of the President, the Statement of Fiscal Policy
which shall contain measurable medium-term macroeconomic and fiscal objectives and forecasts
consistent with the Fiscal Responsibility Principles.

The President shall submit for information of Congress, the Statement of Fiscal Policy not later than
ninety (90) days upon commencement of his/her term of office and update the measurable fiscal
objectives set forth therein three (3) years thereafter.

Section 14. Medium-term Fiscal Strategy. - The DBM, in coordination with the DOF, NEDA, and
OP in the DBCC, shall prepare, subject to approval of the President, a Medium-term Fiscal Strategy
Consistent with the approved Statement of Fiscal Policy, to be updated annually. It shall include a
‘summary of the fiscal policies for revenue, debt, deficit, expenditure, and fiscal risk management,
supported by a medium-term fiscal sustainability analysis, consistent with the measurable fiscal
objectives established in the approved Statement of Fiscal Policy. The IRR of this Act shall detail the
other specifications for the Medium-Term Fiscal Strategy.

The President shall submit for the information of Congress, the Medium-term Fiscal Strategy for the
following fiscal year not later than March 15 of the current year and shall publish the said report on a
government website not later than seven (7) days after it is submitted to Congress.

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WOUYADAMHAWNE

Section 15. Fiscal Reports. - The DBM, in coordination with the DOF, NEDA, and OP in the
DBCC, shall produce a Mid-year Fiscal Report (MFR), covering the first half of the fiscal year and an
‘Annual Fiscal Report (AFR) on the government's macroeconomic and fiscal performance.

The MFR and AFR shall include information on macroeconomic and fiscal outtumns for the period
covered as compared against forecasts and objectives stated in the Medium-Term Fiscal Strategy;
as well as reporting on budget execution, at least in the aggregate and by agency level, compared
against approved appropriations and other spending authorities. The IRR of this Act shall detail the
other specifications for the contents of the MFR and AFR.

The President shall submit the MFR to Congress not later than September 30 of each year while
the AFR shall be submitted together with the Proposed National Budget. Said reports shall be
published on a goverment website not later than seven (7) days after they are submitted to Congress.

Section 16. Long-term Vision Report. - The NEDA, in coordination with the DOF, DBM and
OP in the DBCC, shall submit a Long-term Vision Report to the President and Cabinet, and
Congress not later than October 31 and November 30, respectively. Said Report shall assess the
long-term sustainability of existing government policies over the next thirty (30) years, taking into
account demographic, environmental, and other changes.

The first Long-term Vision Report shall be submitted to the President and Cabinet, and
Congress within two (2) years from the effectivity of this Act, to be updated every six (6) years
thereafter.

The NEDA shall cause the publication of the Long-term Vision Report on a government website
not later than seven (7) days upon submission to Congress.

Section 17. Deviations from Fiscal Objectives. - The government may deviate from the
medium-term fiscal objectives in the approved Statement of Fiscal Policy on a temporary basis,
where such deviation is due to a major natural disaster, unanticipated severe economic shock, or
other significant unforeseeable event that cannot be accommodated through accessing the
Contingent Fund and/or the National Disaster Risk Reduction and Management Fund, as may be
applicable or prudent fiscal policy adjustments, or the use of other flexibilities provided in this Act.

The President shall submit a report to the Congress, stating the reasons for any such deviations, the
plans and the expected time to address such deviations, as part of the succeeding Medium-term
Fiscal Strategy or its annual update, or in the Mid-year or Annual Fiscal Report, whichever is the
next report due and within the prescribed period under this Act.

Section 18. Shared Fiscal Discipline. All proposed revenue eroding and expenditure bills shall
include a Financial and Budgetary Information Sheet upon filing of the bill containing an estimate of
the financial and budgetary implications of said proposal for the initial year of implementation and
the next five (5) years. Expenditure bills refer to those which will result in a reduction of revenue
collections or an increase in national government expenditures, including those mandating the
creation of recurring expenditures

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.

PARTIV
BUDGET PREPARATION, EXECUTION, AND ADJUSTMENT

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Section 19. Governing Principles in Budget Preparation. — There is hereby established a set of
governing principles to be observed by the DBM in the preparation and the presentation to
Congress of the Proposed 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;

Al 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;

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;

All appropriations shall be valid until the end of the fiscal year,

f) Items of appropriations shall be presented in such a way as to identify both the entity

responsible for the expenditure and the intended results from the use of the appropriation in

order to evaluate the performance of the agency;

Both the financial and non-financial performance of agencies shall be presented in the

Proposed National Budget and the General Appropriations Act to ensure a performance-

informed budget; and

Items of appropriations shall be reflected by department, agencies, bureaus, and offices, and

shall be presented for information purposes, by region and province, and eventually, by city

or municipality.

°)

qd

@

9)

h)

Section 20. Planning-Budgeting Linkage - Development strategies identified in the Philippine
Development Plan shall be a 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, 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 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.

Section 21. Budget Priorities Framework. - The DBM, in coordination with the DOF, NEDA and
OP in the DBCC, shall present to the President and Cabinet, in April of each year, a Budget
Priorities Framework which shall guide the formulation of the Budget for the following year by
containing the medium-term fiscal strategy and targets underlying the budget; the priority areas for
government spending reflected in the PDP, estimated amount and planned allocation of the fiscal
‘space; and other requirements laid down in the IRR.

Section 22. Budget with UACS. All appropriation laws shall adopt the Unified Accounts Code
Structure (UACS) formulated by the DBM, COA and DOF. The UACS shall cover the funding
source, organization, location, MFO, program, activity and project (P/A/P), and object codes which
shall be used in the release of appropriations for a unified accounting, auditing and reporting of all
the financial transactions of the government.

Section 23. Program Expenditure Classification. The budget
i . structure of all i
shall adopt the Program Expenditure Classification (PREXC) established by the De eee

8|Pag


‘enables an integrated group of activities and projects that contribute to a particular objective or
outcome to be classified in a program. This aims to facilitate the evaluation of the cost effectiveness
of agency programs and provide better information for analysis and feedback for planning and
prioritization of expenditures.

Section 24. The Budget Preparation Process. ~ The 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 revenues, expenditures, assets, and liabilities and risks of the
government; and (ii) LGUs as to their impact on revenues and expenditures of the government.

Section 25. 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

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,

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;

Budget of Expenditures and Sources of Financing (BESF) - contains the macroeconomic
parameters; dimensions of three-year (3-year) expenditure program, revenues, financing,
and outstanding debt; overview of the financial positions of GOCCs, LGUs, and public-
private partnership projects, as well as the other items listed in the IRR;

Fiscal Risk Statement — presents a consolidated statement of the fiscal risks that the national
government faces, including those from the contingent liabilities of Government Agencies
and other items listed in the IRR.

b)

°)

d)

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 a Government website on the
same day as it is presented to Congress.

Section 26. Lump Sum Appropriations. - To promote the transparent and detailed disclosure of all
proposed government spending, lump sum appropriations and special purpose funds (SPFs) in the
Proposed National Budget shall be limited to: (i) the National Disaster Risk Reduction and
Management Fund (NDRRMF); (i) the Contingent Fund (CF); (ii) Statutory Shares of LGUs; and
(iv) other SPFs not falling under any of the preceding purposes and the details of which could not be
determined during the budget preparation stage.

Section 27. National Disaster Risk Reduction and Management Fund. - The NDRRMF shall be
used for (i) 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 (ii)
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.

All releases from the NDRRMF shall be subject to the pri i

prior approval of the President,
into consideration the recommendation of the National Disaster Risk Reduction ani Magee
Council and the appropriate agency for local and international disasters and calamities.

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Section 28. Contingent Fun The Contingent Fund shall cover the funding requirements of new
and/or urgent projects and activities of national government agencies and GOCCs that need to be
implemented or paid during the year, such as, legal obligation of the government arising from final
and executory decisions by competent authority, including arbitration awards, mediation settlement,
or compromise agreements, requirements of newly created offices, or deficiencies in the
appropriations for local and external travels of the President of the Philippines.

Releases from the Contingent Fund shalll be subject to approval by the President of the Philippines,
other than payment resulting from final and executory decisions promulgated by competent
authorities, which shall be subject to approval by the DBM.

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 purposels and recipient agency.

Section 29. 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,

Section 30. 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 Appropriations Law. The Unprogrammed Appropriations shall have
the same level of details as in the programmed component of the Appropriations Law. The amount
authorized under the Unprogrammed Appropriations shall not exceed two percent (2%) of the total
proposed expenditure in the programmed component of the Appropriations Law.

The Unprogrammed Appropriations shall take effect only when supported by excess collections
generated in any one of the particular tax or non-tax revenue source from its corresponding revenue
collections target in the BESF as certified by the BTr, or when there are new loan agreements for
FAPs. Inno case shall the Unprogrammed Appropriations be activated or released when there is a
tisk of breaching the measurable fiscal objectives for the budget balance (including a deficit) or debt
for the financial year or future years as provided in the Statement of Fiscal Policy and Medium-term
Fiscal Strategy or if there is a risk of breaching any of the Fiscal Responsibility Principles.

Priority projects and activities or contingencies shall pertain to expenditures, the payment of which
are not covered under the Contingent Fund and could not be delayed until the succeeding budget
years without harming public interest or arising from the government's legal obligation such,
compliance with a government guarantee or settlement of final and executory decisions by
competent authorities.

Releases from the Unprogrammed Appropriations shall be subject to the prior approval of the
President of the Philippines, other than final and executory decisions, which shall be subject to
approval of the DBM.

The DBM shall inform Congress of all releases from the Unprogrammed Appropriations in the
quarterly and annual reports including information on the date of release, the amount covered,
corresponding purposes and recipient agency.

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Section 31. Release and Expenditure of Public Funds. - The government shall commence
releases of Public Funds covered by an Appropriations Law as soon as such Law comes into force
to ensure timely and efficient disbursement by the appropriate implementing agencies, subject to
pertinent budgeting and auditing rules andregulations.

Section 32. Early Procurement Activities. - To ensure timely contract implementation and efficient
delivery of services, all Government Agencies are authorized to undertake procurement activities
from pre-procurement conference until post-qualification of bids even prior to the passage of the
Appropriations Law, Corporate Operating Budgets (COBs) or Appropriations Ordinance, in
accordance with IRRs to be issued by DBM.

Government Agencies may proceed with the awarding 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.

Section 33. Re-enacted Budget. — If, by the end of any fiscal year, Congress shall have failed to
enact the General Appropriations Bill for the ensuing fiscal year, the General Appropriations Law for
the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the
said General Appropriations Bill is passed by the Congress.

Consistent with the Fiscal Responsibility Principles, the Re-enacted Budget shall be enforced as
follows:

a) The aggregate level of the Re-enacted Budget shall be limited to the total amount
appropriated in the preceding year's Appropriations Law, but shall in no case exceed the
level of the sources of financing under the Budget of Expenditure and Sources of
Financing (BESF) of the Proposed National Budget ;
All completed programs, projects and activities, as well as program support for GOCCs
and equity contribution of the national government shall be excluded from the Re-
enacted Budget;
The appropriations for the following shall be limited to the amount authorized under
the Re-enacted Budget, but in no case exceed the amount proposed by the President 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; and
4. Budgetary support to GOCCs but further limited to the amount of subsidy for their
operational requirements.

b)

0)

The items and/or amount of appropriations not covered under the Re-enacted Budget as
provided above shall not be released, disbursed, or utilized for the purpose previously authorized
nor be declared savings to augment existing items of appropriations in the Re-enacted Budget.

‘The DBM shall issue guidelines on the aggregate level of appropriations authorized under the
Re-enacted Budget in accordance with the foregoing, the level of obligations by agencies,
supporting requirements to determine actual needs, and other pertinent rules in the implementation
of the Re-enacted Budget.

Upon enactment of the General Appropriations Law, all releases under a Re-enacted Budget

consistent with this Section shall be deemed to have been implemented pursuant to, and charged
against, for account recording purposes, the general appropriations law for the current fiscal year.

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Section 34. Special Appropriations Bill. - A Special Appropriations Bill is a legislative proposal to
provide authorization for expenditures 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 be valid until
the end of the fiscal year of its enactment.

A Special Appropriations Bill shall be supported by funds actually available or those which are
not included in the fiscal year’s sources of financing under the BESF as certified by the National
Treasurer, or to be raised by a corresponding revenue measure proposed therein. The amount to
be authorized by Congress in a Supplemental Appropriations Bill may be more than that originally
proposed for as long as the same is supported by any or a combination of the above sources and is
consistent with the Fiscal Responsibility Principles and the MTFS. A Special Appropriations Bill
may only be proposed after the passage of the General Appropriations Law, except for disaster-
related purposes, as well as urgent and unforeseen requirements of the government.

Section 35. Multi-year Contracts. — Multi-year contracts (MYCs) shall refer to contracts entered
into by NGAs and GOCCs where the delivery of goods, civil works, and services will cover more
than one (1) year. The DBM shall identify the requirements and/or prescribe guidelines before
agencies may enter into MYCs. This includes the issuance of a multi-year obligational authority
(MYOA) prior to the procurement of MYCs. The DBM, in setting the requirements for the issuance of
a MYOA, shall consider the types of multi-year contracts if these are capital intensive or regular and
Tecurring, such as, janitorial and security services, telecommunications requirements, provision for
water, rental of office space and equipment, and lease-purchase agreements. The obligation to be
incurred for MYCs shall in no case exceed the allotment released for the purpose during the year.

In the case of GOCCs, they shall secure prior authority from their respective governing
boards before entering into MYCs

The MYOA issued by the DBM for NGAs, and the amount authorized by the governing
board for GOCCs' governing board shall be the basis of the ABC under Section of Republic Act
No, 9184for MYCs and the certification of availability of funds required prior to contract
execution under Section 85 of Presidential Decree No. 1445.

Section 36. Authority to Declare and Use Savings. - The President of the Philippines, the Senate
President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court,
the Heads of the Civil Service Commission (CSC), the Commission on Elections (COMELEC), and
the COA are hereby authorized to declare and use savings in their respective appropriations to
augment actual deficiencies incurred for the current year in any item of their respective
appropriations.

The foregoing constitutional officers authorized to use savings shall be responsible for ensuring
that quarterly reports on their respective use of savings shall be submitted to the Senate Committee
‘on Finance and the House Committee on Appropriations, copy furnished the DBM. The report shall
indicate, among others, the amount of savings generated, the sources and grounds used therefor,
and the existing item of appropriations augmented. They shall likewise ensure that said reports are
posted on their respective official websites.

The DBM shall determine the procedure, as well as the supporting documents needed in the
declaration and use of savings authorized in this Act.

Section 37. Meaning of Savings. - Savings may be declared when there are balances of any
programmed appropriations in this Act which have not been released or obligated resulting from:

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WOUAHAWNE

(2) __ Discontinuance or abandonment of a program, activity or project (P/A/P) by the head
of agency concerned, for justifiable causes not attributable to the fault or negligence
of the agency and which will render it impossible to implement said P/A/P within the
year;

(b)  Non-commencement or the inability of an agency to obligate an allotment for
justifiable causes not attributable to the fault or negligence of the agency and which
will render it impossible to implement said P/A/P within the year,

(©) __ Improved systems and efficiencies in the implementation of P/A/Ps and delivery of
services which are consistent with their performance targets;

(d) A lower contract cost than that provided in the approved budget for the contract; and

(e) Unused Personnel Services costs pertaining to: (i) unfilled, vacant or abolished
positions; (ji) non-entitiement to allowances and benefits; (ji) leaves of absence
without pay; and (iv) death of pensioners, decrease in the number of retirees, or
other related causes.

Section 38. 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
P/A/P within their respective offices. A deficiency in a P/A/P may result from the following, as
determined by the Head of Agency:

(a) Unforeseen modifications or adjustments in the P/A/P; or
(b) __Re-assessment in the use, prioritization and/or distribution of resources:

In particular, the authorized constitutional officers shall observe the following when augmenting
an item of appropriations from Savings:

(a) There should be an existing item of appropriations to be augmented. For this purpose, the
particulars of the expenditures to be funded by augmentation from Savings should be within
the scope of or may be attributed to the item of appropriations to be augmented.

(b) The existence of a P/A/P regardless of the availability of allotment class/es is sufficient for
the purpose of augmentation; and

(c) In no case shall a non-existent P/A/P be funded by augmentation from Savings.
Section 39. Rules on Realignment. — Realignment is the limited flexibility given to NGAs to
reallocate, modify or change the details within an existing P/A/P which shall not entail any
‘augmentation of the amount appropriated for the said P/A/P during budget execution. Realignment
may be undertaken in any of the cases specified in the IRR.

The following are authorized to approve realignments:

(a) For the Executive branch, the President in the realignment of intelligence funds; the DBM or
the respective Heads of Agencies, as may be provided in the guidelines;

(b) For the Senate of the Philippines, all of reali it
oleae types of realignment shall require approval of the

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(©) For the House of Representatives, all types of realignment shall require approval of the
Speaker;

(d) For the Judicial branch, the Chief Justice with regard to the Supreme Court and lower courts,
and the respective Presiding Justices of the Court of Appeals, Court of Tax Appeals and
Sandiganbayan, except for realignment of intelligence funds which shall require approval of
the Chief Justice; and

(e) For the CSC, COMELEC, and COA, all types of realignment shall require approval of their
respective Chairpersons.

The DBM shall promulgate the rules and regulations necessary to ensure the uniform
implementation among the various branches of government, the proper recording of realignments,
and the timely submission of reports by all the offices concerned.

PARTV
FINANCIAL MANAGEMENT

Section 40. 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 NG authorized in an Appropriations Law.

‘A Special Account in the General Fund (SAGF) shall be established by law only under
exceptional circumstances to record taxes, fees, charges penalties, income, dividend, interest
earnings, grants, and donations collected, earned or received by NGAs for specified purposes. All
laws authorizing the establishment of SAGFs shall specify the period of use thereof which shall not
exceed three (3) years, or if no period is specified, shall be deemed to be until the fulfilment of the
purpose for which the SAGF was authorized or for three years, whichever comes earlier. 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 year shall be treated as Trust Funds and recorded
as trust receipts. Proceeds from these Trust Funds shall be recorded only as revenue inflow in the
General Fund when programmed to be spent for the year.

The Permanent Committee created under EO No. 292, s. 1989 shall recommend for approval of
the President the change in the treatment of existing SAGFs that shall be converted into Trust
Funds by virtue of the foregoing. The recording of revenue inflows from these SAGFs shall be
governed by the guidelines to be issued by the Permanent Committee.

Section 41. Special Funds. —\n 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 acting as trustees, agents, or administrators for the fuffillment of obligations or
accomplishment of specified purposes. Trust Funds shall be deposited in the Treasury
Single Account (TSA);

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(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 as such are
considered 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

(©) Retained Fund — constituted from taxes, fees, charges, penalties, income, dividends, or
interest earnings collected, eared or received by NGAs which are 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.

Notwithstanding the provisions of laws to the contrary, Special Funds may only be established after
evaluation by the Permanent Committee, , as to their proper category and compliance with the
foregoing conditions. Any interest earned by Special Funds shall accrue to said Funds.

Section 42. Review by the Permanent Committee. - The Permanent Committee shall review all
existing SAGFs and Special Funds to validate their compliance with the foregoing requirements.
Upon evaluation, the Permanent Committee shall recommend for approval of the President the
modification and/or termination of said funds as may be necessary.

It shall likewise review all SAGFs created upon the passage of this Act and may recommend to
extend their validity period, but in no case shall the extension exceed three (3) years at any one
time, subject to approval of the President.

The Permanent Committee shall jointly issue guidelines for the establishment, review and
evaluation, accounting and reporting, and termination of SAGFs and Special Funds.

Section 43. 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, and shall
subsequently be part of the General Fund upon the occurrence of the future contingent event. Any
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.

Section 44. 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 or 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 revenue collections.

Section 45. Grants. - NGAs may accept, with prior coordination with DOF, 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 his authorized
representative based on the recommendation of the Secretary of Finance.

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 NG , or 2) any grant authorized or covered in
accordance with existing law.

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Section 46. Treasury Single Account. - The TSA refers to the banking arrangement 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, 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. ABs shall deposit said collections
to TSA within the period and in the manner prescribed by laws, rules and regulations.

Section 47.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 NGA bank accounts to the TSA;

(b) Close any NGA bank account; and/or

(©) Revoke the authority to open any NGA bank account.

The NGA or GOCC which has opened a bank account, as well as the bank concemed, shall
promptly disclose information regarding such account to the BTr.

Section 48. 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. If there is a projected cash shortfall, the Btr may request the DBM to temporarily suspend or
withdraw a portion or the full allotment issued.

Section 49. 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 and based on
terms and conditions as may be set by the IRR of this Act. Investments are authorized to be made in
any of the following:

(a) deposit with any highly reputable bank following a selection criteria to be issued by the
Secretary of Finance in consultation with the Bangko Sentral ng Pilipinas;

(b) sovereign-issued securities with an investment grade rating; or

(©) other fixed income securities with an AAA credit rating issued by at least two (2) reputable
international credit rating agencies acceptable to the Secretary of Finance.

The BTr may appoint a fund manager as an agent of the NG to undertake the investment of the
funds.

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Interest eared and other income from investments shall accrue to the General Fund, unless
otherwise provided by law.

Section 50. Management of National Government Borrowings. —
Borrowings by the NG shall be for any of the following purposes:

.. Financing budget deficits and liquidity shortfalls;

. Refinancing and pre-financing maturing debts;

‘Obtaining foreign currency on behalf of the Bangko Sentral ng Pilipinas;
‘On-lending to an approved entity;

Financing all sums of money paid to futfill guarantees;

Regulating internal monetary conditions should the necessity arise;
Providing financing to remedy the effects of natural calamities; or

. Defraying expenditures covered by appropriations.

@rNOMaeON=

Borrowing under this Act should adhere to the Fiscal Responsibility Principles and measurable
fiscal objectives in the Statement of Fiscal Policy.

Section 51. 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 Corporate Operating Budget and for the medium term, both of
which 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, and shall be submitted to DOF for
information, and shall be published in the concerned GOCC website

GOCCs shall seek approval of DOF for their borrowing activities as defined 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.

Section 52. Local Government Borrowings. - An LGU may borrow funds from domestic and
foreign sources in accordance with the Local Government Code of 1991 or any other applicable law.
The financial plan including borrowing program shall be published in the appropriate government
website within seven (7) days after the borrowing program has been approved.

Section 53. Debt Reporting. - The DOF through the BTr shall ensure that the records include
information on the principal, terms of repayment, amounts drawn, interests 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 and Congress when requested 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.

Section 54. 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 General
Appropriations Law, 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

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Section §5, Limitation on the Liability of the National Government For Debts of Other
Entities, - The NG shall not be liable for any implied guarantees asserted by any person, but only
for explicit guarantees extended in accordance with existing laws, and guarantees in favor of the
Government Service Insurance System (GSIS), Home Development Mutual Fund (HDMF),
Philippine Health Insurance Corporation, and the Social Security System (SSS) in their respective
charters.

Section 56. 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 NG from the entity for whose benefit the payment on the
guarantee, indemnity, or security was made.

Section 57. Information on Contingent Liabilities. - The DOF shall keep a complete and updated
registry of all contingent liabilities of the NG, and provide the OCG with a report on contingent
liabilities as of the fiscal year.

PART VI
ACCOUNTABILITY AND REPORTING

Section 58. 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 and an internal audit function shall be maintained.

The OCG shall oversee the operation of an integrated internal control framework across
Government Agencies.

Section 59. NGA Annual Plans and Proposed Budgets. - The 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, consistent with the
Philippine Development Plan; performance information; summary proposed budget including
financial forecasts assumptions and highlighting significant capital projects; and other information as
required in the IRR, as well as the Budget Call and other related orders 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 Head of the NGA shall ensure that the Annual Plan is updated to be consistent with a) the
Proposed National Budget, no later than thirty (30) days after the President has submitted the same
to Congress, and; b) the General Appropriations Act, no later than thirty (30) days after its
enactment. Both revisions of the Annual Plan shall be submitted to Congress and published on a
government website within the aforementioned timeframes.

The Annual Plan of a Department shall incorporate the Annual Plans of its attached NGAs and
GOCCs subject to guidelines prescribed in the IRR.

Section 60. NGA Reporting Requirements. — For greater transparency and accountability, each
Head of an NGA shall:

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(a) Submit monthly and quarterly reports on the agency's financial and non-financial
performance to the DBM and OCG, not later than thirty (30) days after the end of every
month and quarter in the format specified by the DBM and shall publish the same on a
government website within the same reglementary period;

(b) Prepare an Annual Report which shall include year-end financial statements, reporting on
non-financial performance compared against the Annual Plan, and other information as
required in the IRR; submit the said Report to the DBM, OCG, and Congress no later than
six (6) months after the end of the fiscal year; and publish the said Report in a government
website no later than seven (7) days after its submission to Congress.

The monthly, quarterly, and annual reports of a Department shall incorporate the reports of its
attached NGAs and GOCCs subject to guidelines prescribed in the IRR.

Section 61. Service Agreements. - The Head of an NGA may enter into a service and/or
performance agreement with another agency for the latter to provide services charged against the
budget of said principal agency.

Section 62. Corporate Operating Budget (COB). - The Board of Directors or Trustees of a GOCC
shall prepare and submit a COB to the Head of the NGA overseeing said GOCC, the DBM, and the
DOF, not later than ninety (90) days prior to the commencement of the fiscal year, which shall
include, the objectives of the GOCCs and its subsidiaries, the activities to be undertaken,
performance targets and risks; forecasts of financial statements for the next three (3) years; and
other information as may be required in the IRR.

The Head of the NGA overseeing said GOCC shall endorse the Board-approved COB to the
DBM, for the latter's approval. The Head of a GOCC shall publish the DBM-approved COB of the
GOCC on the official website of the Corporation not later than fourteen (14) days after the approval
of the COB.

Section 63. GOCC Reporting Requirements. ~ For greater transparency and accountability, each
Head of GOCCs shall

(a) Provide quarterly reports on financial and non-financial performance to the DOF,
Governance Commission for GOCCs (GCG) and the DBM, no later than thirty (30) days
after the end of the quarter, in the format and time specified by the DOF, GCG and DBM and
shall publish it on their official website within the same period; and

(b) Prepare an Annual Report, which shall include year-end financial statements, reporting on
non-financial performance compared against the COB, and other information as required in
the IRR; submit the same to the overseeing NGA, DBM, GCG, DOF and Congress no later
than six (6) months after the end of the fiscal year; and publish the said Report in a
government website no later than seven (7) days after its submission to Congress.

GOCCs with subsidiaries shall reflect in its quarterly and annual reports the aforementioned
Tequired information for the whole corporate group, consistent with guidelines prescribed in the IRR.

Section 64. Service Agreement for a GOCC. - Where GOCCs implement government non-
commercial programs, such as housing provision, irrigation and electrification, and receive
government funding, a service agreement with the NGA overseeing said GOCC shall specify the
terms of delivery of goods or services that the GOCC must provide, and the funds that the
government will pay. Program funds shall be under the budget of the NGA overseeing said GOCC.

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Section 65. Local Government Units. - The Local Chief Executives (LCEs) shall ensure that
adequate internal controls and an intemal audit function are maintained.

The LCEs shall provide financial and non-financial performance information of their respective
LGUs to the OCG, DILG, and the BLGF under the DOF, subject to the guidelines to be issued
thereon.

Section 66. Application of Accounting and Auditing Requirements. — Any expenditure of public
money, including government assets or liabilities incurred by and for the Government regardless of
‘the source of funding, shall be subject to accounting and auditing rules and regulations promulgated
by the COA.

Section 67. Accounting Standards. - The Comptroller General shall develop guidelines to
oversee the implementation of the accounting standards mandated by the COA, for use by all
Government Agencies.

The Heads of Agencies shall ensure full, accurate and proper records are kept for their
respective agencies on financial matters and for performance in the production of goods and
services.

The DBM, OCG and COA shall ensure that complete, accurate and appropriate records of the
government are kept on both financial and non-financial performances.

Section 68. Government Consolidated Reporting — The OCG shall submit a quarterly report on
the consolidated financial performance of the government to the President, which includes
information showing performance against the Appropriations Law, not later than sixty (60) days after
the end of each quarter. This report shall be published in a government website within seven (7)
days after the report is submitted to the President.

The OCG shall prepare the consolidated annual financial statements, not later than six (6)
months after the end of the fiscal year, for submission to the President, Congress and COA.

PART VIL
‘TRANSPARENCY AND PARTICIPATION

Section 69. 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 and 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 a government website. Current and historical data on government
Tevenues, expenditures, and borrowings, shall be made available electronically, in open data format,
on a government website, subject to guidelines in the IRR.

Section 70. The People’s Budget. ~The 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;

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(b) the Proposed National Budget, to be published in electronic format within thirty (30) days
from submission to Congress of the Proposed National Budget;

(0) the General Appropriations Law, to be published in electronic format in a government website
within thirty (30) days from its effectivity; and

(d) the Annual Fiscal Report, to be published in electronic format in a government website within
thirty (30) days from submission to Congress.

Section 71. People’s Participation in the Budget Process. — government shall establish and
implement suitable participatory budget mechanisms to facilitate the open, inclusive, and meaningful
engagement of citizens throughout the budget process—from budget preparation, to legislation, to
execution, and to accountability and audit. Such participatory mechanisms may include
consultations and partnerships with civil society organizations (CSOs), non-government
organizations (NGOs), people's organizations (POs), academics and experts, and other individual
and organized stakeholders throughout the annual budget process.

To aid the empowerment of grassroots organizations and communities in the national budget
process, the DBM, DILG, and other relevant agencies shall facilitate a process wherein CSOs,
NGOs, POs, community organizations and LGUs can jointly identify local priority poverty reduction
and development needs which will serve as input to the formulation of the Proposed National
Budget. Such process shall consider the pursuit of meaningful local devolution and local
accountability, as well as the strengthening of regional and local development councils’ roles in the
national budget process.

Policies and regulations for the establishment of participatory budgeting mechanisms
established by laws shall be formulated and enforced by:

i, The DBM, together with other relevant agencies of the executive, when it comes to
participation in budget preparation, execution, and accountability;

ii. The House of Representatives and the Senate, through their relevant committees, when it
comes to participation in budget legislation; and

ili, The COA, when it comes to participation in the conduct of audit.

PART Vill
ENFORCEMENT

Section 72. Sanctions and Penalties. - 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 for items of appropriations
covered in the negative list or realignment nor recommend the use of savings by the
President until such time as the non-compliant agency has submitted the report/s required
under this Act;

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(b) The COA may disallow any expenditure charged against augmentation using savings, and
any expenditure due to realignment, which were made within the period succeeding the
reporting period when the agency failed to comply with the reporting requirements under this

(c) Failure to report on the income and/or funds retained at the end of a reporting period shall
render all disbursements against such income or funds in subsequent reporting periods as
void, and will render the responsible official liable under existing laws; and

(d) The Congress may motu proprio or upon the request of COA and/or DBM 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 reports.

Without prejudice to the provisions of other laws:

Every obligation, expenditure or payment authorized or incurred in violation of the provisions
of this Act shall be void and shall render the public official and/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 incur any obligation 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 him;

ii. 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 that may be made by COA against expenditures related to such
fraudulent information, provided, that this fine is reviewed and adjusted periodically to be
reasonable;

lili, 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

iv. 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.

Section 73. Jurisdiction. — Actions under this Act shall be cognizable by the courts, tribunals,
bodies, agencies or authorities with appropriate jurisdiction under existing laws.



PART IX
FINAL PROVISIONS

Section 74. Implementing Rules and Regulations. - The DBM in consultation with the DOF, BTr,
NEDA and COA, in coordination with agencies concerned shall issue the guidelines necessary for
the proper implementation of this Act

Section 75. Transitory Provisions. - The DBM, DOF, BTr, NEDA and COA shall produce and
submit within thirty (30) days from promulgation of the IRR, a Transitory Plan for information, to the
Joint Congressional Oversight Committee on Public Expenditures to ensure the proper
implementation of the provisions of this Act, presenting the Sections that will not be implemented on
the passing of this Act and those requiring compliance with certain conditions or the happening of
events before the provisions herein may be implemented.

Section 76. Repeal. - 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. (Note: specific laws to be repealed will need to be identified for clarity.)

Section 77. Scope of Application. - The provisions in this Act on savings, augmentation, related
concepts, and the Unprogrammed Appropriations hitherto applies mutatis mutandis to appropriation
laws.

Section 78. Separability Clause. - If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.

Section 79. 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.

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