THIRTEENTH CONGRESS OF THE REPUBLIC 
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"04 JUM 30 $6 
OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
S. - No. 489 
Introduced by Senator S. R. OsmeRa 111 
EXPLANATORY NOTE 
Due to various unforeseen economic developments, it has ceased in 
recent years to be exceptional for the executive branch to impound certain 
portions of the national budget as officially passed by Congress in the General 
Appropriations Act. The unilateral impoundment or non-release of funds has 
often led to delay andlor termination of critical and vital infrastructure and 
capital investments. Effectively, though perhaps unwittingly, 
this process 
virtually awards the Department of Budget and Management the power of 
veto over Congressional initiatives. 
This bill formalizes the rules and procedures in the impoundment of 
budget funds for if and when necessary, ' and specified and valid reasons, and 
guidelines to be followed in the imposition of budgetary reserves. By preserving 
Congress' role in the budgetary process, it seeks to ensure that the national 
perspective is preserved in the implementation of budgetary allocations and that 
the national welfare 'is safeguarded even and especially during conditions of 
economic emergencies. 
In view of the foregoing, the immediate approval of this bill is earnestly 
requested. 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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"04 JJN 30 P& :01 
First Regular Session 
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'___P_)__P. 
S E N A T E  
S. No. 
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489 
Introduced by Senator S. R. OsmeAa 111 
THE BUDGET IMPOUNDMENT CONTROL ACT 
Be if enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 
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Title. -- This Act shall be known as the "Budget 
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SEC. 2. Declaration of Policy. - It is the policy of the State to formulate 
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and implement a National Budget that is truly an instrument of national 
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development. Towards this end, all appropriations, except those which shall be 
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deferred, rescinded, reserved, or otherwise provided in the 
General 
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Appropriations Act, shall be automatically released within the first semester of the 
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year through the issuance of advices of allotment in accordance with approved 
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work and financial plans, and shall be utilized according to the purposes provided 
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in the General Appropriations Act. Any deferral, rescission or reservation of 
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appropriations in the General Appropriations Act shall be in accordance with this 
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Act. 
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(b) 
Reservation - means imposition of reserves on appropriated 
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amount for government expenditures. 
Impoundment Controi Act of 2004." 
SEC. 3. Definitions of Terms. - For purposes of this Act: 
(a) 
Rescission - means cancellation of all or parts of an enacted 
appropriation which has not yet been spent or obligated. 


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(c) 
Deferral or releases - means withholding or delaying the release of 
appropriated amounts provided for projects or activities. 
(d) 
Impoundment resolution - means a joint resolution of both Houses 
of Congress expressing its disapproval of a rescission, reservation or deferral of 
an appropriation or several appropriation items as proposed by the President. 
(e) 
Advice of allotment - the formal document issued by the 
Department of Budget and Management which contains the authorizations, 
conditions, and amount of obligations that an agency can incur pursuant to a 
legislative appropriation. 
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Work-and-financial plan - the monthly breakdown of financial 
requirements and physical performance targets of an agency. 
(9) 
Appropriations - unless otherwise described or specified herein, 
the term appropriations refers to the appropriations included in the annual 
General Appropriations Act. 
SEC. 4. Rescission aiid Reservation of a Budget Appropriafion. - 
Whenever the President, upon the recommendation of the Secretary 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; 
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(3) 
(4) 
(5) 
the reasons why the budget appropriation should be rescinded or is 
to be so reserved; 
the estimated fiscal, economic and budgetary effect of the 
proposed rescission or reservation; and 
all facts, circumstances and considerations relating to or bearing 
upon the proposed rescission of the proposed rescission of 
reservation upon the purposes, programs, activities and projects for 
which such appropriation is provided. 
SEC. 
5. 
Approval of Rescission or Reservation. - Both Houses of 
Congress shall act on the proposed rescission/reservation within sixty (60) 
calendar days after the receipt of such proposal from the President by issuing a 
joint impoundment resolution: 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 day after 
such first day. If Congress does not issue an impoundment resolution within the 
specified period, the President shall proceed with the rescission/reservation 
procedures: Provided, That funds corresponding to the rescinded appropriations 
shall revert to the un-appropriated surplus of the general fund and shall not be 
made available for expenditure for any purpose except as provided for by a 
subsequent legislative enactment. 
SEC. 6. Use of Reserves. -When changes in conditions during the year 
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. 
SEC. 
7. 
Deferral of Releases. - (a) Whenever the President, the 
Secretary of Budget and Management, the head of any department, agency or 
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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: 
the amount of the appropriation proposed to be deferred; 
any account, department, agency or instrumentality of the 
Government to which such appropriation is available for obligation, 
and the specific projects or governmental functions involved; 
the period of time during which the appropriation is proposed to be 
deferred; 
the reasons for the proposed deferral, including any legal authority 
invoked by him to justify the proposed deferral; 
the estimated fiscal, economic and budgetary effect of the 
proposed deferral; 
all facts, circumstances and considerations relating to or bearing 
upon the proposed deferral and the decision to effect the proposed 
deferral, including any 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 upon the objects, purposes, program, 
activities and projects for which such appropriation is provided. 
A deferral may not be proposed for any period of time extending 
beyond the end of the fiscal year in which the special message proposing the 
deferral was transmitted to the House of Representatives and the Senate. 
SEC. 8. 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 
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been submitted on the first day of the succeeding regular session of Congress 
and the sixty (600 day period referred to in this Section shall commence on the 
day aher such first day. If Congress does not issue an impoundment resolution 
within the specified period, the President shall proceed with the deferral 
procedures. 
SEC. 9. Submission of Quarterly Reports. - Within thirty (30) days after 
the end of each quarter, the Secretary 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 appropriations, 
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 special-purpose fund shall be supported with schedules 
indicating the specific departmentdagencies, corporations 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. 
SEC. 10. 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 more proposals for impoundment, reservation, or 
deferral on one or more appropriation items through the Committee on Finance 
of the Senate and the Committee on Appropriations of the House of 
Representatives. 
SEC. 11, Penal Provision. - Any violation of the Section 2, 4, 5, 6, 7, 8, 
and 9 of this Act shall be punished by a fine not exceeding One hundred 
thousand 
pesos (PI 00,000.00) and the penalty of temporary special 
disq ualification. 
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SEC. 12. Repealing Clause. -All laws, decrees, executive orders, letters 
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of instructions, letters of implementation, rules and regulations or parts thereof 
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inconsistent with the provisions of this Act are hereby repealed, modified, 
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superseded or amended accordingly. 
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SEC. 13. Effectivity Clause. -This Act shall take effect fifteen (15) days 
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after its complete publication in the Official Gazette or in at least two (2) national 
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newspapers of general circulation, whichever comes earlier. 
Approved,