.,,,,' 
SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
) 
i', 
APR 14 
1~9 :27 
SENATE 
S. No. 
2719 
Introduced by Senator Ralph G. Recto 
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 
Explanatory Note 
The National Budget is considered the most important tool that the government must use 
effectively to achieve our country's socio-economic development goals. It is through the 
expenditure program that the government provides public goods, such as infrastructure, needed 
to nurture the country's prosperity for the long-term. It is also a tool for a meaningful change, for 
it sets the pace and manner by which the government serves its people. 
If we are to ensure that poverty and joblessness are significantly reduced, that our 
economy sustains its rapid growth over the long-term, and that corruption is decisively curbed, 
then Public Financial Management (PFM) in our country must be transformed. 
The last four and a half years were marked by unprecedented developments that shook up 
the status quo of opacity, impunity, and exclusivity in the use of public funds. First, credit must 
be given to the Aquino Administration for setting the pace and tone of PFM reform by 
introducing innovations such as Performance Informed Budgeting and Bottom-Up Budgeting. 
On the other hand, Congress has played its crucial role in the PFM reform: by, among 
others, ensuring timely approval of the annual General Appropriations Act and preventing abuse-
prone re-enacted budget and by strengthening accountability reporting and imposing sanctions 
for failure of the agencies to comply with the same. 
Fulfilling its unenviable role of diligently examining each peso spent, the Commission on 
Audit (COA) courageously revealed abuses in the use of public funds, leading to the prosecution 
of high public officials. Moreover, in recent times, the Supreme Court played an important role 
in reforming PFM by reasserting Constitutional roles through its decisive decisions on the 
Priority Development Assistance Fund (PDAF) and the Disbursement Acceleration Program 
(DAP). 
Most importantly, it is the people themselves who made these reforms possible. Through 
their persistent demand to hold the corrupt accountable, their instruction to increase transparency 
and accountability in the collection, allocation, and use of public funds, and their proactive 
engagement in tile budgeting process, they pushed the government institutions towards the 
straight path to reforms. 
What matters now is to ensure that PFM reforms are sustained and even further escalated 
beyond the present Administration. It is, thus, the responsibility of Congress-who holds the 


power of the purse--to pass legislation that institutionalizes greater accountability in the use of 
public funds. Only through this measure can we ensure that public funds are truly used for the 
benefit of our countrymen. 
Thus, I propose this Public Financial Management and Accountability Act to establish a 
comprehensive legal framework on the allocation, use, and accounting of public funds. 
This bill seeks to sustain the transformation of the Philippine PFM system by establishing 
broad, holistic, and modem principles for PFM that will place the Philippines at par with 
international standards and best practices, and by addressing the infirmities surfaced by the 
Supreme Court's rulings on PDAF and DAP. 
It also supports the Administration's bid to ensure the irreversibility of PFM reforms that 
it has introduced: those that establish greater fiscal responsibility, more tightly linked 
development planning and budgeting, streamline budget execution and financial management, 
and strengthen citizen's access to budget information and participation in PFM. 
Most importantly, this bill seeks to strengthen Congress' power of the purse, enabling it 
to better scrutinize the President's budget proposal and to hold agencies accountable for the 
propriety and the results of their use of public funds: 
• 
It enforces the general rule that all expenditures must be approved by Congress. It 
requires the Executive to submit special appropriations in case new spending is needed 
but not provided for in the GAA. It also limits the extent of budget re-enactment. 
• 
It tightens rules on savings, realigrunents, and the use of unprogranuned appropriations, 
keeping only reasonable flexibilities for the Executive to manage goverrunent's finances 
while curbing broad powers that, in the past, impinged on Congress' powers. 
• 
It rationalizes lump-sum funds in the GAA, special funds, and special accounts in the 
general fund: monies which have practically been kept away from Congress' scrutiny, 
and which have, unfortunately, enabled unscrupulous persons to pilfer public funds. 
• 
It mandates the Executive and all goverrunent entities to provide Congress and the public 
with their strategic plans, their performance targets together with their budget proposals, 
and regular financial and performance accountability reports, including a Post Budget 
Status Report detailing the implementation status of each item in the GAA. 
The bill was drafted by the Department of Budget and Management. This representation 
supports the principles and objectives of the proposed measure. However, it is understood that 
the specific provisions of the bill is subj ect to amendments considering the wisdom of this 
Congress expressed in the subsequent deliberations in the committees and plenary sessions, in 
order to further enhance this Executive version. 
A great opportunity is in our hands: a chance to correct the mistakes of the past, 
strengthen public institutions, ensure maximum benefit to the people for taxes paid, and restore 
the trust of the people with the goverrunent. It is my hope that my esteemed colleagues in the 
Senate will not let this unique opportunity pass. 
In view of the foregoing, immediate passage of this bill is earnestly sought. 


SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
) 
SENATE 
S. No. 
2719 
Introduced by Senator Ralph G. Recto 
AN ACT 
" 
;~"'i ii,' L' 
1I~)thrr 11f tljf ,::"""'1 \r.-t:1I ~ 
'1'5 
APR14 A9:2a 
l<H,;I\EH J"'/~ 
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 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled,' 
1 
PART I 
2 
PRELIMINARY PROVISIONS 
3 
SECTION 1. Short Title. -
This Act shall be known as the "Public Financial 
4 
Accountability Act." 
5 
SEC. 2. Declaration of Policy and Objectives. - It is hereby declared the policy of the 
6 
State to ensure accountability and integrity in the use of public resources by ensuring 
7 
transparency, fiscal responsibility, results-orientation, efficiency, and effectiveness. This shall be 
8 
upheld through the establishment of an integrated system of planning, budgeting, management, 
9 
accounting, reporting and review of public finances. In light of these requirements, the State 
10 
shall pursue the following specific objectives: 
11 
(a) To enforce the power of Congress to authorize all appropriations and hold 
12 
government accountable in the use of public resources, as well as the responsibility of 
13 
all government agencies to propose, execute and deliver committed results in the 
14 
appropriations acts in a timely, predictable, and economic manner; 
15 
(b) To promote people's empowerment in the management of public resources by 
16 
enforcing their right to access infonnation on, and to contribute in the formulation 
17 
and implementation of, the financial affairs of the government; 
18 
(c) To strengthen the integration of planning, budgeting, and performance management 
19 
and ensure ample safeguards in managing public finances, including through internal 
20 
controls, accounting, reporting, and risk management; and 
21 
SEC. 3. 
Scope and Coverage. -
The provisions of this Act shall apply to the 
22 
management of revenues, expenditures, financing arrangements, and assets and liabilities of 
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national government agencies (NGAs), government-owned or -controlled corporations (GOCCs), 
and local government units (LGU s) to the extent provided herein. 
SEC. 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); 
(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; 
(c) 
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; 
(d) 
Cabinet refers to the Executive Secretary and the Secretaries of the departments 
under the executive branch; 
( e) 
Fiscal Year refers to a period of twelve months commencing on January I until 
December 31 ; 
(t) 
Government Agencies collectively refer to NGAs, GOCCs and LGUs; 
(g) 
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; 
(h) 
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 ofLGUs; 
G) 
Local Government Units refer to provinces, cities, municipalities, and barangays, 
as well as autonomous regions authorized to be created in the Constitution; 
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(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; 
(I) 
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; 
(n) 
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 
(0) 
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 GOCC. 
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 II 
ADDITIONAL ROLES AND RESPONSIBILITIES 
SEC. 5. Congress. - 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 related laws, and hold Government Agencies accountable for their 
financial and non-financial performance; 
(b) 
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 govermnent performance and 
performance of government agencies; and 
(c) 
Consider the consolidated annual financial statements of government prepared by 
the Office of the Comptroller General (OCG) and the audited government agency reports 
bytheCOA. 
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. 
Page 3 of26 


" 
1 
SEC. 6. President. - The President shall, in addition to hisfher powers under the 
2 
Constitution and existing laws, perform the following: 
3 
(a) 
Approve the Statement of Fiscal Policy, and the Medium-term Fiscal Strategy for 
4 
submission to Congress; 
5 
(b) 
Approve the Budget Priorities Framework to identifY the priority areas for 
6 
government spending and guide the budget preparation exercise; and, 
7 
(c) 
Authorize changes in the functional, operational and organizational structure 
8 
within and among the DBM, Department of Finance (DOF), and National Economic and 
9 
Development Authority (NEDA), as may be necessary, to ensure the effective 
10 
implementation ofthis Act. 
11 
SEC. 7. Commission on Audit. - The COA shall, in addition to its powers under the 
12 
Constitution and existing laws, coordinate with the DBM, through the OCG, for the proper 
13 
enforcement oftimely accounting and reporting of public finances. 
14 
SEC. 8. Department of Budget and Management. - The DBM shall, in addition to its 
15 
mandates and functions under existing laws, perform the following: 
16 
(a) 
Prepare, in coordination with the agencies concerned, and DOF, NEDA and OP in 
17 
the Development Budget Coordination Committee (DBCC), the Statement of Fiscal 
18 
Policy, the Medium-term Fiscal Strategy, the Budget Priorities Framework, and the Mid-
19 
year and Annual Fiscal Reports as required in this Act; 
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(b) 
Monitor and evaluate the financial and non-financial performance ofNGAs; 
( c) 
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; 
(d) 
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 ofLGUs; 
(e) 
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 
To ensure the effective formulation and execution of fiscal policies, the Secretary of 
Budget and Management shall 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: 
Page 4 of26 


1 
i. 
Formulate measures on effective internal controls, for the implementation by 
2 
Government Agencies, to ensure the integrity, accuracy, completeness, and reliability of 
3 
government financial and management systems; 
4 
11. 
Oversee the implementation of, and Government Agencies' compliance with, 
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accounting and auditing rules and regulations promulgated by the COA; 
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iii. Oversee and manage the financial reporting of Government Agencies, including (1) 
7 
to monitor the periodic and annual management and financial accounts with regard to 
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accuracy, timeliness, completeness, and compliance with this Act, standards, 
9 
rules and regulations; and (2) to consolidate the financial reports for submission 
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to the President, Congress, and COA; 
11 
iv. Oversee the operationalization of the financial management information system of 
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the government; 
13 
v. Formulate competency-based human resource policies for positions in public financial 
14 
management and coordinate on capacity building requirements on PFM with other 
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agencies; 
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vi. Oversee the implementation of Public Expenditure Framework policies ofLGUs; 
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vii. Coordinate with counterpart agency officials to ensure compliance with the foregoing 
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functions; and 
19 
viii. Perform such other functions as may be necessary to properly implement the 
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provisions under this Section. 
21 
The OCG shall be headed by the Comptroller General who shall be of the same rank as 
22 
an Undersecretary, and with the structure and staff complement as may be approved by the 
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DBM. The heads of agency shall designate a Comptroller in their respective offices to oversee 
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the implementation of the above-mentioned functions at the agency level in coordination with 
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the Comptroller General. 
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SEC. 9. Department of Finance. - The DOF shall, in addition to its mandates and 
27 
functions under existing laws, perform the following: 
28 
(a) Monitor and manage fiscal risks to the government, including those from public-
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private partnerships; 
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(b) Compile and publish government fiscal statistics in accordance with international 
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standards; and 
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(c) Formulate policies and standards for the acquisition and management of fixed assets 
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byNGAs. 
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The Bureau of the Treasury (BTr) shall, in addition to its mandates and functions under 
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existing laws, perform the following: 
Page 5 of26 


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i. 
Manage the Treasury Single Account (TSA) maintained at the BSP or an agent bank, 
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with the prior approval of the Secretary of Finance; 
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ii. 
Put in place arrangements for the execution of duly authorized payments from the 
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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; 
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iii. 
Manage the financial assets and liabilities of the government, including (i) banking 
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arrangements for, and bank accounts of, the government; (ii) hedging and other risk 
management activities associated with debt management, cash management and 
financial investment; (iii) 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 related to the management of financial assets 
and liabilities; 
14 
iv. 
Issue instructions on the management and recording of financial assets and liabilities 
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of the government; 
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v. 
Authorize the opening and closing of bank accounts ofNGAs; 
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vi. 
Administer the release of cash requirements covering all types of transfers to LGUs; 
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and 
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vii. 
Establish and maintain a consolidated registry of fixed assets of the National 
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Government. 
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SEC. 
10. National Economic and Development Authority. - The NEDA shall, III 
22 
addition to its mandates and functions under existing laws, perform the following: 
23 
(a) 
Coordinate with the Regional Development Councils (RDCs), on the formulation 
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of regional development plans and policies that are consistent with the established 
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national priorities; 
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(b) 
Coordinate the formulation of an annual and medium-term public investment 
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program consistent with the approved Medium-term Fiscal Strategy and in the context of 
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the preparation of the National Budget; 
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( c) 
Set standards for Government Agencies in proposing, assessing, monitoring and 
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evaluating development policies, plans and projects including those financed by grants 
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and concessionalloans; 
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(d) 
Assist and support the capacity building of RDCs and LGUs in development 
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planning and investment programming; and 
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SEC. 11. Heads of Government Agencies. - The heads of NGAs, GOCCs and LGUs 
35 
shall, in addition to responsibilities provided under existing laws, be responsible for the 
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following: 
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(a) Keep the DBM and DOF informed of significant changes, issues, and risks that could 
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impact on the finances of the government; 
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1 
(b) Participate in the processes to develop the Medium-term Fiscal Strategy, the Budget 
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Priorities Framework, and the Proposed National Budget as required by the DBM; 
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(c) Manage their respective agencies, including GOCCs, and other resources placed 
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under their supervision, in an efficient, effective and economic mauner in order to deliver 
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the outputs and attain the outcomes set in their respective budgets; 
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(d) Take appropriate measures to ensure that contractual commitments or obligations do 
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not exceed the amounts appropriated in their respective budgets; 
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(e) Ensure that their respective agencies settle all contractual obligations or approve 
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payment thereon within the time prescribed by law; 
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(f) Institute effective and efficient management systems, procedure and practices for 
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assets, liabilities, and personnel, including internal controls, risk management, and 
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performance review; 
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(g) Demonstrate that due regard has been taken on the recommendations provided in 
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internal and external audit evaluation reports, to the extent authorized in their respective 
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budgets; and 
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(h) Provide accounting and reporting of public finances as required in this Act. 
17 
PART III 
18 
FISCAL RESPONSIBILITY 
19 
SEC. 12. Fiscal Responsibility Principles. - The State shall pursue its policy objectives 
20 
in accordance with the following Fiscal Responsibility Principles: 
21 
(a) 
Implement fiscal policies and strategies consistent with the achievement of 
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macroeconomic stability and inclusive economic development; 
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(b) 
Manage resources in a fiscally and environmentally sustainable way; 
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(c) 
Maintain prudent levels of public debt; 
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(d) 
Maintain an appropriate balance between government revenues and expenditures; 
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and 
( e) 
Manage fiscal risks in a prudent mauner. 
27 
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SEC. 13. Statement of Fiscal Policy. - The DBM, in coordination with DOF, NEDA 
29 
and OP in the DBCC, shall prepare, subject to the approval of the President, the Statement of 
30 
Fiscal Policy which shall contain measurable medium-term macroeconomic and fiscal objectives 
31 
and forecasts consistent with the Fiscal Responsibility Principles. 
32 
The President shall submit for information of Congress, the Statement of Fiscal Policy 
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not later than ninety (90) days upon commencement of hislher term of office and update the 
34 
measurable fiscal objectives set forth therein three (3) years thereafter. 
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SEC. 14. Medium-term Fiscal Strategy. - The DBM, in coordination with the DOF, 
2 
NEDA, and OP in the DBCC, shall prepare, subject to approval of the President, a Medium-tenn 
3 
Fiscal Strategy consistent with the approved Statement of Fiscal Policy, to be updated annually. 
4 
It shall include a summary of the fiscal policies for revenue, debt, deficit, expenditure, and fiscal 
5 
risk management, supported by a medium-tenn fiscal sustainability analysis, consistent with the 
6 
measurable fiscal objectives established in the approved Statement of Fiscal Policy. The lRR of 
7 
this Act shall detail the other specifications for the Medium-Tenn Fiscal Strategy. 
8 
The President shall submit for the infonnation of Congress, the Medium-tenn Fiscal 
9 
Strategy for the following fiscal year not later than March 15 of the current year and shall publish 
10 
the said report on a government website not later than seven (7) days after it is submitted to 
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Congress. 
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SEC. 15. Fiscal Reports. - The DBM, in coordination with the DOF, NEDA, and OP in 
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the DBCC, shall produce a Mid-year Fiscal Report (MFR), covering the first half of the fiscal 
14 
year and an Annual Fiscal Report (AFR) on the government's macroeconomic and fiscal 
15 
perfonnance. 
16 
The MFR and AFR shall include infonnation on macroeconomic and fiscal outturns for 
17 
the period covered as compared against forecasts and objectives stated in the Medium-Tenn 
18 
Fiscal Strategy; as well as reporting on budget execution, at least in the aggregate and by agency 
19 
level, compared against approved appropriations and other spending authorities. The IRR of this 
20 
Act shall detail the other specifications for the contents of the MFR and AFR. 
21 
The President shall submit the MFR to Congress not later than September 30 of each year 
22 
while the AFR shall be submitted together with the Proposed National Budget. Said reports shall 
23 
be published on a government website not later than seven (7) days after they are submitted to 
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Congress. 
25 
SEC. 16. Long-term Vision Report - The NEDA, in coordination with the DOF, DBM 
26 
and OP in the DBCC, shall submit a Long-tenn Vision Report to the President and Cabinet, and 
27 
Congress not later than October 31 and November 30, respectively. Said Report shall assess the 
28 
long-tenn sustainability of existing government policies over the next thirty (30) years, taking 
29 
into account demographic, environmental, and other changes. 
30 
The first Long-tenn Vision Report shall be submitted to the President and Cabinet, and 
31 
Congress within two (2) years from the effectivity of this Act, to be updated every six (6) years 
32 
thereafter. 
33 
The NEDA shall cause the publication of the Long-tenn Vision Report on a government 
34 
website not later than seven (7) days upon submission to Congress. 
35 
SEC. 17. Deviations from Fiscal Objectives. - The government may deviate from the 
36 
medium-tenn fiscal objectives in the approved Statement of Fiscal Policy on a temporary basis, 
Page 8 of26 


1 
where such deviation is due to a major natural disaster, unanticipated severe economic shock, or 
2 
other significant unforeseeable event that cannot be accommodated through accessing the 
3 
Contingent Fnnd and/or the National Disaster Risk Reduction and Management Fund, as may be 
4 
applicable or prudent fiscal policy adjustments, or the use of other flexibilities provided in this 
5 
Act. 
6 
The President shall submit a report to the Congress, stating the reasons for any such 
7 
deviations, the plans and the expected time to address such deviations, as part of the succeeding 
B 
Medium-term Fiscal Strategy or its annual update, or in the Mid-year or Annual Fiscal Report, 
9 
whichever is the next report due and within the prescribed period under this Act. 
10 
SEC. 18. Shared Fiscal Discipline. - All proposed revenue eroding and expenditure 
11 
bills shall include a Financial and Budgetary Information Sheet upon filing of the bill containing 
12 
an estimate of the financial and budgetary implications of said proposal for the initial year of 
13 
implementation and the next five (5) years. Expenditure bills refer to those which will result in a 
14 
reduction of revenue collections or an increase in national govermnent expenditures, including 
15 
those mandating the creation of recurring expenditures. 
16 
Each House of Congress shall provide guidelines prescribing the form, content of 
17 
the Financial and Budgetary Information Sheet, as well as the appropriate offices from which 
1 B 
such information shall be acquired, and the implications of non-compliance with said 
19 
submission. 
20 
PART IV 
21 
BUDGET PREPARATION, EXECUTION, AND ADJUSTMENT 
22 
SEC. 19. Governing Principles in Budget Preparation. - There is hereby established a 
23 
set of governing principles to be observed by the DBM in the preparation and the presentation to 
24 
Congress of the Proposed National Budget: 
25 
26 
27 
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32 
33 
34 
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36 
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(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 govermnent for a given fiscal year shall 
be included, identifying those requiring approval by Congress and those authorized under 
existing laws; 
(c) 
All 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; 
(d) 
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; 
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( e) 
All appropriations shall be valid until the end of the fiscal year; 
2 
(f) 
Items of appropriations shall be presented in such a way as to identify both the 
3 
entity responsible for the expenditure and the intended results from the use of the 
4 
appropriation in order to evaluate the performance of the agency; 
5 
(g) 
Both the financial and non-financial performance of agencies shall be presented in 
6 
the Proposed National Budget and the General Appropriations Act to ensure a 
7 
performance- informed budget; and 
8 
(h) 
Items of appropriations shall be reflected by department, agencies, bureaus, and 
9 
offices, and shall be presented for information purposes, by region and province, and 
10 
eventually, by city or municipality. 
11 
SEC. 20. Planning-Budgeting Linkage - Development strategies identified in the 
12 
Philippine Development Plan shall be a primary consideration in the formulation of the budget 
13 
priorities framework. These shall also be the basis for drawing up strategic and prioritized 
14 
programs and projects in the multi-year public investment program, which in tum will be 
15 
considered in the formulation of the annual agency budgets that conform to the annual budget 
16 
ceilings approved by the President. 
17 
The implementation of programs and projects funded under the annual agency budgets 
18 
shall be monitored to ensure economy, efficiency, and effectiveness in the use of public funds. 
19 
Monitoring and evaluation of these projects shall cover, among others, the planned and actual 
20 
performance of agencies, citing reasons for deviation andlor poor absorptive capacities. The 
21 
results of the project evaluation shall inform the assessment of subsequent plans and budget 
22 
proposals of agencies. 
23 
SEC. 21. Budget Priorities Framework. - The DBM, in coordination with the DOF, 
24 
NEDA and OP in the DBCC, shall present to the President and Cabinet, in April of each year, a 
25 
Budget Priorities Framework which shall guide the formulation of the Budget for the following 
26 
year by containing the medium-term fiscal strategy and targets underlying the budget; the 
27 
priority areas for government spending reflected in the PDP, estimated amonnt and planned 
28 
allocation of the fiscal space; and other requirements laid down in the IRR. 
29 
SEC. 22. The Budget Preparation Process. - The DBM shall determine the budget 
30 
preparation process and calendar. The budget preparation process shall cover: (i) NGAs; (ii) 
31 
GOCCs with respect to their impact on revenues, expenditures, assets, and liabilities and risks of 
32 
the government; and (iii) LGUs as to their impact on revenues and expenditures of the 
33 
government. 
34 
SEC. 23. The Proposed National Budget. - The President shall submit to Congress, not 
35 
later than thirty (30) days from the fourth Monday of July of every year, the Proposed National 
36 
Budget, which shall be the basis ofthe general appropriations bill. 
Page 10 of26 


The President shall detennine the fonn and content of the Proposed National Budget 
2 
which shall include, but not limited, to the following: 
3 
(a) President's Budget Message - provides a preview of the Proposed National Budget, 
4 
explaining the principles, objectives and policy framework adopted and the spending 
5 
priorities for the fiscal year; 
6 
(b) National Expenditure Program (NEP) - includes the strategic objectives, details of the 
7 
three-year (3-year) expenditure program, perfonnance infonnation, 
such as key 
8 
strategies, outputs and outcomes for agencies in relation to their budgets, and staffing 
9 
summary; 
10 
(c) Budget of Expenditures and Sources of Financing (BESF) -
contains the 
11 
macroeconomic parameters; dimensions of three-year (3-year) expenditure program, 
12 
revenues, 
financing, and outstanding debt; overview of the financial positions of 
13 
GOCCs, LGUs, and public-private partnership projects, as well as the other items listed 
14 
in the IRR; 
15 
(d) Fiscal Risk Statement - presents a consolidated statement of the fiscal risks that the 
16 
national government faces, including those from the contingent liabilities of Government 
17 
Agencies and other items listed in the IRR. 
18 
(e) Post Budget Status Report - this report should indicate a brief accomplishment on all 
19 
PI AlPs of agencies of the government as reflected in the General Appropriations Act and 
20 
includes specific programs, activities and projects funded from lump-sum appropriations 
21 
and Special Purpose Funds. 
22 
Congress may not increase the appropriations recommended by the President for the 
23 
operations of government as specified in the Proposed National Budget. 
24 
The President shall publish the Proposed National Budget on a Government website on 
25 
the same day as it is presented to Congress. 
26 
SEC. 24. Lump Sum Appropriations. - To promote the transparent and detailed 
27 
disclosure of all proposed government spending, lump sum appropriations and special purpose 
28 
funds (SPFs) in the Proposed National Budget shall be limited to: (i) the National Disaster Risk 
29 
Reduction and Management Fund (NDRRMF); (ii) the Contingent Fund (CF); (iii) Statutory 
30 
Shares of LGUs; and (iv) other SPFs not falling under any of the preceding purposes and the 
31 
details of which could not be detennined during the budget preparation stage. 
32 
SEC. 25. National Disaster Risk Reduction and Management Fund. - The NDRRMF 
33 
shall be used for (i) disaster risk reduction or mitigation, prevention and preparedness activities, 
34 
such as, but not limited to, training of personnel, procurement of equipment, and capital 
35 
expenditures; and (ii) relief, recovery, reconstruction and other work or services in connection 
36 
with natural or human induced calamities which may occur during the budget year or those that 
37 
occurred in the preceding two (2) years. 
Page 11 of26 


1 
All releases from the NDRRMF shall be subject to the prior approval of tbe President, 
2 
who may take into consideration the recommendation of the National Disaster Risk Reduction 
3 
and Management Council and the appropriate agency for local and international disasters and 
4 
calamities. 
5 
SEC. 
26. Contingent Fund. -
The Contingent Fund shall cover the funding 
6 
requirements of new and/or urgent and unforeseen projects and activities of NGAs and GOCCs 
7 
that need to be implemented or paid daring the year, such as, legal obligation of the government 
8 
arising from final and executory decisions by competent autbority, including arbitration awards, 
9 
mediation settlement, or compromise agreements, requirements of newly created offices, or 
10 
deficiencies in tbe appropriations for local and external travels of the President. 
11 
As a rule, all releases from the Contingent Fund shall be approved by the President. 
12 
However, disbursements due to final and executory decisions promulgated by competent 
13 
authorities shall only require the approval of the DBM. 
14 
The DBM shall inform Congress of all releases from tbe Contingent Fund in the quarterly 
15 
and annual fiscal reports including information on the date of release, the amount covered, 
16 
corresponding purpose/s and recipient agency. 
17 
SEC. 27. Statutory Shares of Local Government Units. - The shares of LGUs in the 
18 
proceeds from national taxes and otber transfers to LGUs authorized by law shall be released to 
19 
the LGUs in accordance with tbe provisions on tbe use, allocation, and release of the funds as 
20 
may be provided in pertinent laws, rules and regulations. 
21 
SEC. 28. Unprogrammed Appropriations. -
Congress may autborize standby 
22 
appropriations to cover the funding requirements of other priority projects and activities or 
23 
contingencies, as well as provide appropriations cover for foreign-assisted projects (FAPs) not 
24 
specifically included in tbe programmed component of tbe Appropriations Law. 
The 
25 
Unprogrammed Appropriations shall have the same level of details as in the programmed 
26 
component of the Appropriations Law. 
The amount authorized under tbe Unprogrammed 
27 
Appropriations shall not exceed two percent (2%) of the total proposed expenditnre in the 
28 
programmed component of the Appropriations Law. 
29 
The Unprogrammed Appropriations shall take effect only when supported by excess 
30 
collections generated in anyone of the particular tax or non-tax revenue source from its 
31 
corresponding revenue collection target in the BE SF as certified by the BTr, or when there are 
32 
new loan agreements for FAPs. In no case shall the Unprogrammed Appropriations be activated 
33 
or released when there is a risk of breaching the measurable fiscal objectives for the budget 
34 
balance (including a deficit) or debt for tbe financial year or futnre years as provided in the 
35 
Statement of Fiscal Policy and Medium-term Fiscal Strategy or ifthere is a risk of breaching any 
36 
of the Fiscal Responsibility Principles. 
Page 12 of26 


1 
Priority projects and activities or contingencies shall pertain to expenditures, the payment 
2 
of which are not covered under the Contingent Fund and could not be delayed until the 
3 
succeeding budget years without hanning public interest or arising from the government's legal 
4 
obligation such, compliance with a government guarantee or settlement of final and executory 
5 
decisions by competent authorities. 
6 
Releases from the Unprogrammed Appropriations shall be subject to the prior approval of 
7 
the President of the Philippines, except final and executory decisions which shall instead require 
8 
the approval of the DBM. 
9 
The DBM shall infonn Congress of all releases from the Unprogrammed Appropriations 
10 
in the quarterly and annual reports including infonnation on the date of release, the amount 
11 
covered, corresponding purpose/s and recipient agency. 
12 
SEC. 29. Release and Expenditure of Public Funds. -
The government shall 
13 
commence releases of Public Funds covered by an Appropriations Law as soon as such Law 
14 
comes into force to ensure timely and efficient disbursement by the appropriate implementing 
15 
agencies, subject to pertinent budgeting and auditing rules and regulations. 
16 
SEC. 30. Early Procurement Activities. - To ensure timely contract implementation 
17 
and efficient delivery of services, all Government Agencies are authorized to undertake 
18 
procurement activities from pre-procurement conference until post-qualification of bids even 
19 
prior to the passage of the Appropriations Law, Corporate Operating Budgets (COBs) or 
20 
Appropriations Ordinance, in accordance with IRRs to be issued by DBM. 
21 
Government Agencies may proceed with the awarding of contract upon approval or 
22 
enactment of their respective appropriations or budget authorization document, as the case may 
23 
be, and based on the amount authorized therein. 
24 
SEC. 31. Re-enacted Budget. - If, by the end of any fiscal year, Congress shall have 
25 
failed to enact the General Appropriations Bill for the ensuing fiscal year, the General 
26 
Appropriations Law for the preceding fiscal year shall be deemed re-enacted and shall remain in 
27 
force and effect until the said General Appropriations Bill is passed by the Congress. 
28 
Consistent with the Fiscal Responsibility Principles, the Re-enacted Budget shall be 
29 
enforced as follows: 
30 
(a) The aggregate level of the Re-enacted Budget shall be limited to the total amount 
31 
appropriated in the preceding year's Appropriations Law, but shall in no case exceed the 
32 
level of the sources of financing under the Budget of Expenditure and Sources of 
33 
Financing (BESF) of the Proposed National Budget; 
34 
(b) All completed programs, projects and activities, as well as program support for 
35 
GOCCs and equity contribution of the national government shall be excluded from the 
36 
Re-enacted Budget; 
Page 13 of26 


1 
(c) The appropriations for the following shall be limited to the amount authorized under 
2 
the Re-enacted Budget, but in no case exceed the amount proposed by the President in 
3 
the Proposed National Budget: 
4 
I. Ongoing programs, projects and activities; 
5 
2. Personnel benefits, including retirement gratuities, pensions, terminal leave 
6 
pays and related expenses; 
7 
3. NDRRMF, Contingent Fund, Statutory Shares ofLGUs, and other SPFs; and 
8 
4. Budgetary support to GOCCs but further limited to the amount of subsidy 
9 
for their operational requirements. 
10 
The items andlor amount of appropriations not covered under the Re-enacted Budget as 
11 
provided above shall not be released, disbursed, or utilized for the purpose previously authorized 
12 
nor be declared savings to augment existing items of appropriations in the Re-enacted Budget. 
13 
The DBM shall issue gnidelines on the aggregate level of appropriations authorized under 
14 
the Re-enacted Budget in accordance with the foregoing, the level of obligations by agencies, 
15 
supporting requirements to determine actual needs, and other pertinent rules in the 
16 
implementation of the Re-enacted Budget. 
17 
Upon enactment of the General Appropriations Law, all releases under aRe-enacted 
18 
Budget consistent with this Section shall be deemed to have been implemented pursuant to, and 
19 
charged against, for account recording purposes, the general appropriations law for the current 
20 
fiscal year. 
21 
SEC. 32. Special Appropriations Bill. - A Special Appropriations Bill is a legislative 
22 
proposal to provide authorization for expenditures for a specific purpose not included or not 
23 
covered under the annual appropriations laws. It shall, specify the purposels for which it is 
24 
intended and be valid until the end of the fiscal year of its enactment. 
25 
A Special Appropriations Bill shall be supported by funds actually available or those 
26 
which are not included in the fiscal year's sources of financing under the BESF as certified by 
27 
the National Treasurer, or to be raised by a corresponding revenue measure proposed therein. 
28 
The amount to be authorized by Congress in a Supplemental Appropriations Bill may be more 
29 
than that originally proposed for as long as the same is supported by any or a combination of the 
30 
above sources and is consistent with the Fiscal Responsibility Principles and the MTFS. 
A 
31 
Special Appropriations Bill may only be proposed after the passage of the General 
32 
Appropriations Law, except for disaster-related purposes, as well as urgent and unforeseen 
33 
requirements of the government. 
34 
SEC. 33. Multi-year Contracts. - Multi-year contracts (MYCs) shall refer to contracts 
35 
entered into by NGAs and GOCCs where the delivery of goods, civil works, and services will 
36 
cover more than one (l) year. NGAs entering into MYCs shall first secure a Multi-year 
37 
Obligational Authority (MYOA) from the DBM but in no case shall obligate and disburse more 
Page 14 of26 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
than the current year's appropriation for the said year's phase of project implementation. GOCCs 
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 5 of Republic 
Act No. 9184 for MYCs and the certification of availability of funds required prior to contract 
execution under Section 85 of Presidential Decree No. 1445. 
SEC. 34. 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. 
SEC. 
35. Meaning of Savings. -
Savings refer to portion or balances of any 
programmed items of appropriations in the general appropriations law, which have not been 
released or obligated as a result of the following: 
(a) 
Completion of a program, project or activity at a lower cost than that 
programmed. For this purpose, completion shall refer to the award of contract to the 
contractor, supplier or consultant. Any difference between the approved budget for the 
contract and the amount of contract award may be declared as Savings; 
(b) 
Decreased cost realized from the implementation of measures resulting in lower 
input costs or efficiencies which enabled agencies to meet and deliver their targets andlor 
implement or complete their projects or activities; 
(c) 
Discontinuance or abandonment ofa project or activity for causes not attributable 
to the fault or negligence of either the NGA mandated to undertake or authorized to 
implement said project or activity or the procurement agent, at any time during the 
validity of the appropriations; 
(d) 
Non-commencement of a program, project or activity for which the 
appropriations is authorized. For this purpose, non-commencement shall refer to the 
inability of the NGA to obligate an allotment on or before June 30 of the current fiscal 
year due to causes not attributable to the fault or negligence of the agency; or 
Page 15 of26 


(e) 
Unused compensation and related costs as well as pension and retirement benefits. 
2 
SEC. 
36. Rules on Augmentation. - Augmentation is the act of the constitutional 
3 
officers authorized under Section 34 of this Act to use Savings realized in their respective 
4 
appropriations in order to address a deficiency in other items of their respective appropriations. 
5 
A deficiency in an item of appropriations may result from the following, as determined by the 
6 
Head of Agency: 
7 
(a) 
Unforeseen modifications or adjustments in the program, project or activity 
8 
(PPA); or 
9 
(b) 
Adjustment in the cost of implementing the PP A due to justified causes. 
10 
In particular, the authorized constitutional officers shall observe the following when 
11 
augmenting an item of appropriations from Savings: 
12 
(a) 
There should be an existing item of appropriations to be augmented. For this 
13 
purpose, the particulars of the expenditures to be funded by augmentation from Savings 
14 
should be within the scope of or may be attributed to the item of appropriations to be 
15 
augmented; and 
16 
(b) 
In no case shall a non-existent allotment class III a PPA be funded by 
17 
augmentation from Savings. 
18 
SEC. 37. Rules on Realignment. - Realignment is the limited flexibility given to NGAs 
19 
to modify or change the specific details within a PP A that shall not entail any augmentation of 
20 
the amount appropriated for the said PP A during budget execution. 
Realignment may be 
21 
undertaken in any ofthe cases specified in the IRR. 
22 
The following are authorized to approve realignments: 
23 
(a) 
For the Executive branch, the respective Heads of Agencies, except for: 
(i) 
24 
realignment, within PS for the payment of authorized magna carta benefits; from one 
25 
allotment class to another and, from one operating unit to another, which shall be subject 
26 
to approval of the DBM, and (ii) realignment of intelligence funds which shall require 
27 
approval of the President of the Philippines; 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
(b) 
For the Senate of the Philippines, all types of realignment shall require approval 
of the Senate President; 
(c) 
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. 
Page 16 of26 


1 
The DBM shall promulgate the rules and regulations necessary to ensure the uniform 
2 
implementation among the various branches of government, the proper recording of 
3 
realignments, and the timely submission of reports by all the offices concerned. 
4 
PART V 
5 
FINANCIAL MANAGEMENT 
6 
SEC. 38. General Fund. - All monies received by NGAs, whether coming from taxes, 
7 
fees, charges, penalties, income, dividends, interest earnings, loan proceeds, grants, donations, 
8 
asset sale proceeds and such other receivables, shall accrue to the General Fund and be remitted 
9 
to the National Treasury, unless otherwise provided by law or stipulated by covering loan or 
10 
grant agreements. Monies under the General Fund shall be made available to support the 
11 
requirements of the NG authorized in an Appropriations Law. 
12 
A Special Account in the General Fund (SAGF) shall be established by law only under 
13 
exceptional circumstances to record taxes, fees, charges penalties, income, dividend, interest 
14 
earnings, grants, and donations collected, earned or received by NGAs for specified purposes. 
15 
All laws authorizing the establishment of SAGFs shall specifY the period of use thereof which 
16 
shaH not exceed three (3) years, or if no period is specified, shaH be deemed to be until the 
17 
fulfilment of the purpose for which the SAGF was authorized or for three years, whichever 
18 
comes earlier. All interests earned by SAGFs shaH accrue to the General Fund. The balance of 
19 
SAGFs upon their termination shaH form part of the General Fund. 
20 
AH earmarked revenues with significant inflows, a large portion of which are not or not 
21 
expected to be programmed for disbursement during the year shaH be treated as Trust Funds and 
22 
recorded as trust receipts. Proceeds from these Trust Funds shaH be recorded only as revenue 
23 
inflow in the General Fund when programmed to be spent for the year. 
24 
The Permanent Committee created under EO No. 292, s. 1989 shall recommend for 
25 
approval of the President the change in the treatment of existing SAGFs that shaH be converted 
26 
into Trust Funds by virtue of the foregoing. The recording of revenue inflows from these SAGFs 
27 
shaH be governed by the guidelines to be issued by the Permanent Committee. 
28 
SEC. 39. Special Funds. - In exceptional cases when an SAGF is not suitable for the 
29 
operations of a fund, Special Funds shaH be authorized by law and limited to the foHowing: 
30 
(a) 
Trust Fund - constituted from identified revenue sources and other receipts by 
31 
NGAs or public officials acting as trustees, agents, or administrators for the fulfillment of 
32 
obligations or accomplishment of specified purposes. Trust Funds shall be deposited in 
33 
the Treasury Single Account (TSA); 
34 
(b) 
Revolving Fund - constituted from receipts derived from business-type activities 
35 
ofNGAs to be used for the operating requirements of said business-type activities and as 
36 
such are considered self-liquidating. Revolving Funds shall be deposited in the TSA or in 
37 
an Authorized Government Depository Bank (AGDB) upon authority of the National 
38 
Treasurer; and 
Page 17 of26 


( c) 
Retained Fund -
constituted from taxes, fees, charges, penalties, income, 
2 
dividends, or interest earnings 
collected, earned or received 
by NGAs which are 
3 
expressly authorized by law to be retained by NGAs and utilized for specified purposes. 
4 
Retained Funds shall be deposited in the TSA or in an AGDB upon authority of the 
5 
National Treasurer. 
6 
Notwithstanding the provisions of laws to the contrary, Special Funds may only be 
7 
established after evaluation by the Permanent Committee, , as to their proper category and 
8 
compliance with the foregoing conditions. Any interest earned by Special Funds shall accrue to 
9 
said Funds. 
10 
SEC. 
40. Review by the Permanent Committee. - The Permanent Committee shall 
11 
review all existing SAGFs and Special Funds to validate their compliance with the foregoing 
12 
requirements. Upon evaluation, the Permanent Committee shall recommend for approval of the 
13 
President the modification andlor termination of said funds as may be necessary. 
14 
It shall likewise review all SAGFs created upon the passage of this Act and may 
15 
recommend to extend their validity period, but in no case shall the extension exceed three (3) 
16 
years at anyone time, subject to approval of the President. 
17 
The Permanent Committee shall jointly issue guidelines for the establishment, review and 
18 
evaluation, accounting and reporting, and termination of SAGFs and Special Funds. 
19 
SEC. 
41. Escrow Fund. - Escrow Funds are constituted from funds for which the 
20 
government's legal right to use is contingent upon a future event which mayor may not occur. 
21 
Escrow Funds shall be deposited in the TSA or an AGDB upon authority of the National 
22 
Treasurer, and shall subsequently be part of the General Fund upon the occurrence of the future 
23 
contingent event. Any interest earned by an Escrow Fund shall accrue to the said Fund. The 
24 
amounts under escrow, including interest earned shall form part of the General Fund upon the 
25 
occurrence of the future contingent event. 
26 
SEC. 42. Waiver, Abatement, Refund and Compromise Agreements. - No public 
27 
official shall waive, abate, refund, or enter into a compromise agreement on a tax liability or the 
28 
payment of fees or charges except in accordance with law. All waivers, abatements, refunds or 
29 
compromise agreements made by an NGA shall be properly accounted for and reported. Refund 
30 
of taxes and other revenues shall be treated as a reduction in revenue collections. 
31 
SEC. 
43. Grants. - NGAs may accept, with prior coordination with DOF, grants, in 
32 
cash or in kind, from domestic or foreign sources, for purposes relevant to their functions. In the 
33 
case of grants, in cash or in kind, from governments of foreign countries, their agencies and 
34 
instrumentalities and international or multilateral institutions or organizations, acceptance 
35 
thereof shall be subject to the prior clearance and approval by the President or his authorized 
36 
representative based on the recommendation of the Secretary of Finance. 
Page 18 of26 


1 
The provisions of this Section shall not apply to 1) any grant received by LGUs or 
2 
GOCCs, except where the grant is received by them on behalf of the NG , or 2) any grant 
3 
authorized or covered in accordance with existing law. 
4 
SEC. 44. Treasury Single Account. - The TSA refers to the banking arrangement 
5 
managed by the BTr wherein the government transacts all monies collected, received or paid by 
6 
NGAs in one bank account or a set of linked bank accounts and gets a consolidated view of its 
7 
cash position on at least, a daily basis. 
8 
The TSA shall cover remittances, releases or disbursements from the General Fund, 
9 
SAGFs, Special Funds, and any other fund managed by the BTr, except in any of the following 
10 
instances: 
11 
(a) 
12 
(b) 
13 
(c) 
When monies under the General Fund are placed under investments; 
When the BTr is required to hold foreign currency accounts; or 
When authorized by the Secretary of Finance. 
14 
The BTr, in coordination with NGAs authorized by law to undertake revenue collection 
15 
and administration, shall make the necessary arrangements with authorized agent banks (AABs) 
16 
to facilitate the collection and transfer of said revenues to the TSA. AABs shall deposit said 
17 
collections to TSA within the period and in the manner prescribed by laws, rules and regulations. 
18 
SEC. 45. Oversight on Government Bank Accounts. - Notwithstanding any provision of 
19 
law to the contrary, the ETr shall undertake any of the following in case of violation of a 
20 
provision in this Act and guidelines issued on the implementation ofthe TSA: 
21 
(a) Transfer balances ofNGA bank accounts to the TSA; 
22 
(b) Close anyNGA bank account; and/or 
23 
(c) Revoke the authority to open anyNGA bank account. 
24 
The NGA or GOCC which has opened a bank account, as well as the bank concerned, 
25 
shall promptly disclose information regarding such account to the BTr. 
26 
SEC. 46. Treasury Cash Management. - The BTr shall issue orders for the conduct of 
27 
cash management including the requirement to provide projections on the timing of future 
28 
transactions of NGAs. If there is a projected cash shortfall, the Btr may request the DBM to 
29 
temporarily suspend or withdraw a portion or the full allotment issued. 
30 
SEC. 47. Investments. - The BTr may invest portions of the funds held in the TSA for 
31 
such periods as the BTr may deem prudent considering cash management requirements and 
32 
based on terms and conditions as may be set by the IRR of this Act. Investments are authorized 
33 
to be made in any of the following: 
34 
(a) 
deposit with any highly reputable bank following a selection criteria to be issued 
35 
by the Secretary of Finance in consultation with the Bangko Sentral ng Pilipinas; 
36 
37 
(b) 
(c) 
sovereign-issued securities with an investment grade rating; or 
other fixed income securities with an AAA credit rating issued by at least two (2) 
38 
reputable international credit rating agencies acceptable to the Secretary of Finance. 
Page 19 of26 


1 
The BTr may appoint a fimd manager as an agent of the NG to undertake the investment 
2 
ofthe funds. 
3 
Interest eamed and other income from investments shall accrue to the General Fund, 
4 
unless otherwise provided by law. 
5 
SEC. 48. Managemeltt of National Govemment Borrowings. - Borrowings by the NG 
6 
shall be for any of the following purposes: 
7 
1. Financing budget deficits and liquidity shortfalls; 
8 
2. Refinancing and pre-financing maturing debts; 
9 
3. Obtaining foreign currency on behalf of the Bangko Sentral ng Pilipinas; 
10 
4. On-lending to an approved entity; 
11 
5. Financing all sums of money paid to fulfill guarantees; 
12 
6. Regulating internal monetary conditions should the necessity arise; 
13 
7. Providing financing to remedy the effects of natural calamities; or 
14 
8. Defraying expenditures covered by appropriations. 
15 
Borrowing under this Act should adhere to the Fiscal Responsibility Principles and 
16 
measurable fiscal objectives in the Statement of Fiscal Policy. 
17 
SEC. 49. Borrowings by Govemment -Owned or -Controlled Corporations. - Before 
18 
the end of each fiscal year, the Head of a GOCC shall prepare a borrowing program for the 
19 
following fiscal year which shall support the Corporate Operating Budget and for the medium 
20 
term, both of which shall include a full financial plan with the details of the loans, refinancing 
21 
and repayment that the GOCC intends to take. Said borrowing program, including changes 
22 
thereon, shall be subject to the approval of the Head of the NGA overseeing the GOCC, and shall 
23 
be submitted to DOF for information, and shall be published in the concerned GOCC website. 
24 
GOCCs shall seek approval ofDOF for their borrowing activities as defined in the IRR. 
25 
Nothing in this Section shall be construed as creating a government guarantee on any 
26 
borrowing, loans or refinancing and repayment that the GOCC intends to take. 
27 
SEC. 50. Local Govemment Borrowings. - An LGU may borrow funds from domestic 
28 
and foreign sources in accordance with the Local Government Code of 1991 or any other 
29 
applicable law. The financial plan including borrowing program shall be published in the 
30 
appropriate government website within seven (7) days after the borrowing program has been 
31 
approved. 
32 
SEC. 51. Debt Reporting. - The DOF through the BTr shall ensure that the records 
33 
include information on the principal, terms of repayment, amounts drawn, interests and service 
34 
charges accrued, principal and interests paid, and the balance outstanding, and shall make the 
35 
records available in a timely way to the President and Congress when requested and in 
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accordance with the reporting requirements in this Act. 
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Each LGU and GOCC shall maintain records and provide reports to the DOF on loans as 
38 
required by relevant laws, rules and regulations. 
Page 20 of26 


1 
SEC. 52. Guarantees. - Guarantee, indemnity or security shall be provided to an NGA 
2 
or a GOCC as provided by law, and subject to the annual guarantee ceiling prescribed in the 
3 
General Appropriations Law, and upon such terms and conditions as the Secretary of Finance 
4 
may recommend consistent with relevant laws, rules and regulations. The overall level of 
5 
guarantee, indemnity or security shall adhere to the Fiscal Responsibility Principles laid down in 
6 
this Act and the fiscal objectives in the Statement of Fiscal Policy. 
7 
The DOF shall charge a risk-based fee for any guarantee, indemnity, security, relending 
8 
or similar financial accommodation it may extend to a GOCC. 
9 
SEC. 53. Limitation on tlte Liability oftlte National Government For Debts ofOtlter 
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Entities. - The NG shall not be liable for any implied guarantees asserted by any person, but 
11 
only for explicit guarantees extended in accordance with existing laws, and guarantees in favor 
12 
of the Govemment Service Insurance System (GSIS), Home Development Mutual Fund 
13 
(HDMF), Philippine Health Insurance Corporation, and the Social Security System (SSS) in their 
14 
respective charters. 
15 
SEC. 54. Payments Made for Contingent Liabilities. - Any money paid by the DOF 
16 
pursuant to any guarantee, indemnity, or security authorized by law and the expenses associated 
17 
with the same shall constitute a debt due the NG from the entity for whose benefit the payment 
18 
on the guarantee, indemnity, or security was made. 
19 
SEC. 55. Information on Contingent Liabilities. - The DOF shall keep a complete and 
20 
updated registry of all contingent liabilities of the NG, and provide the OCG with a report on 
21 
contingent liabilities as of the fiscal year. 
22 
PART VI 
23 
ACCOUNTABILITY AND REPORTING 
24 
SEC. 56. Financial Management and Internal Control. - The Head of Agency shall be 
25 
responsible and accountable for the financial management of the agency which shall include 
26 
meeting performance targets, controlling costs, mitigating adverse risks to agency operations, 
27 
and ensuring that budgets are managed with integrity and in compliance with applicable laws. 
28 
Adequate internal controls shall be ensured and an internal audit function shall be maintained. 
29 
The OCG shall oversee the operation of an integrated internal control framework across 
30 
Govemment Agencies. 
31 
SEC. 57. NGA Annual Plans and Propos!,d Budgets. - The Head of each NGA shall produce 
32 
an Annual Plan which shall have a medium term scope, with details for the following fiscal year, and 
33 
shall include information on the strategic priorities for the medium-term, consistent with the Philippine 
34 
Development Plan; pelfonnance infonnation; summruy proposed budget including financial forecasts 
35 
assumptions and highlighting significant capital proj ects; and other information as required in the IRR, as 
36 
well as the Budget Call and other related orders from the DBM. The Annual Plan shall be submitted to 
37 
DBM during the budget preparation process consistent with the timetable and other guidelines in the 
38 
Budget Call. 
Page 21 of26 


The Head of the NGA shall ensure that the Annual Plan is updated to be consistent with 
2 
a) the Proposed National Budget, no later than thirty (30) days after the President has submitted 
3 
the same to Congress, and; b) the General Appropriations Act, no later than thirty (30) days after 
4 
its enactment. Both revisions of the Annual Plan shall be submitted to Congress and published on 
5 
a government website within the aforementioned timeframes. 
6 
SEC. 58. NGA Reporting Requirements. - For greater transparency and accountability, 
7 
each Head of an NGA shall: 
8 
(a) 
Submit monthly and quarterly reports on the agency's financial and non-financial 
9 
performance to the DBM and OCG, not later than thirty (30) days after the end of every 
10 
month and quarter in the format specified by the DBM and shall publish the same on a 
11 
government website within the same reglementary period; 
12 
(b) 
Prepare an Annual Report which shall include year-end financial statements, 
13 
reporting on non-financial performance compared against the Annual Plan, and other 
14 
information as required in the IRR; submit the said Report to the DBM, OCG, and 
15 
Congress no later than six (6) months after the end of the fiscal year; and publish the said 
16 
Report in a government website no later than seven (7) days after its submission to 
17 
Congress. 
18 
The monthly, quarterly, and annual reports of a Department shall incorporate the reports 
19 
of its attached NGAs and GOCCs subject to guidelines prescribed in the IRR. 
20 
SEC. 59. Service Agreements. - The Head of an NGA may enter into a service and/or 
21 
performance agreement with another agency for the latter to provide services charged against the 
22 
budget of said principal agency. 
23 
SEC. 60. Corporate Operating Budget (COB). - The Board of Directors or Trustees of a 
24 
GOCC shall prepare and submit a COB to the Head of the NGA overseeing said GOCC, the 
25 
DBM, and the DOF, not later than ninety (90) days prior to the commencement of the fiscal year, 
26 
which shall include, the objectives of the GOCCs and its subsidiaries, the activities to be 
27 
undertaken, performance targets and risks; forecasts of fmancial statements for the next three (3) 
28 
years; and other information as may be required in the IRR. 
29 
The Head of the NGA overseeing said GOCC shall endorse the Board-approved COB to 
30 
the DBM, for the latter's approval. The Head of a GOCC shall publish the DBM-approved COB 
31 
of the GOCC on the official website of the Corporation not later than fourteen (14) days after the 
32 
approval of the COB. 
33 
SEC. 
61. GOCC Reporting Requirements. -
For greater transparency and 
34 
accountability, each Head of GOCCs shall: 
Page 22 of26 


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(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 required information for the whole corporate group, consistent with guidelines 
prescribed in the IRR. 
SEC. 62. Service Agreement for a GOCe. - 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. 
SEC. 63. Local Government Units. - The Local Chief Executives (LCEs) shall ensure 
that adequate internal controls and an internal 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. 
SEC. 64. 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 rnles and 
regulations promulgated by the COA. 
SEC. 65. 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. 
Page 23 of26 


, , 
SEC. 66. Government Consolidated Reporting - The OCG shall submit a quarterly 
2 
report on the consolidated financial performance of the government to the President, which 
3 
includes information showing performance against the Appropriations Law, not later than sixty 
4 
(60) days after the end of each quarter. This report shall be published in a government website 
5 
within seven (7) days after the report is submitted to the President. 
6 
The OCG shall prepare the consolidated annual financial statements, not later than six (6) 
7 
months after the end of the fiscal year, for submission to the President, Congress and COA. 
8 
PART VII 
9 
TRANSPARENCY AND PARTICIPATION 
10 
SEC. 67. People 's Access to Public Financial Information. - Before the start of each 
11 
fiscal year, the DBM shall promulgate a Calendar of Disclosures, and shall publish this on the 
12 
government website and such calendar shall contain the schedule of release of all budget 
13 
documents and information required by this Act and its IRR. The DBM shall monitor and 
14 
periodically report to Congress and the public on the compliance of agencies with the Calendar 
15 
of Disclosures and other fiscal transparency requirements under this Act and its IRR. 
16 
All documents and reports required to be published by this Act and its IRR shall 
17 
automatically be made available electronically in a government website. Current and historical 
18 
data on government revenues, expenditures, and borrowings, shall be made available 
19 
electronically, in open data format, on a government website, subject to guidelines in the IRR. 
20 
SEC. 68. The People's Budget. - The DBM shall, for every fiscal year, publish citizen-
21 
friendly summaries of the following, subject to guidelines and other specifications in the IRR: 
22 
(a) the Statement of Fiscal Policy in the year of the President's election and any updates 
23 
thereafter within thirty (30) days from submission to Congress; 
24 
(b) the Proposed National Budget, to be published in electronic format within thirty (30) 
25 
days from submission to Congress of the Proposed National Budget; 
26 
(c) the General Appropriations Law, to be published in electronic format in a government 
27 
website within thirty (30) days from its effectivity; and 
28 
(d) the Annual Fiscal Report, to be published in electronic format in a government 
29 
website within thirty (30) days from submission to Congress. 
30 
SEC. 69. People's Participation in the Budget Process. - Government shall establish 
31 
and implement suitable participatory budget mechanisms to facilitate the open, inclusive, and 
32 
meaningful engagement of citizens throughout the budget process-from budget preparation, to 
33 
legislation, to execution, and to accountability and audit. Such participatory mechanisms may 
34 
include consultations and partnerships with civil society organizations (CSOs), non-government 
35 
organizations (NGOs), people's organizations (POs), academics and experts, and other 
36 
individual and organized stakeholders throughout the annual budget process. 
Page 24 of26 


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PART VIII 
ENFORCEMENT 
SEC. 70. 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; 
(b) 
The COA may disallow any expenditure charged against augmentation using 
savings, 
(c) 
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 Act; 
(d) 
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 
(e) 
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 report/so 
Without prejudice to the provisions of other laws: 
i. 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; 
Page 25 of26 


ii. Any public official or employee, holding office or employment in a casual, temporary, 
2 
holdover, permanent or regular capacity, who shall cause the inclusion of fraudulent 
3 
information in any accountability report, shall be penalized with imprisonment not 
4 
exceeding five (5) years, or a fine not exceeding One Million Pesos (PI,OOO,OOO.OO), or 
5 
both, without prejudice to disallowances that may be made by COA against expenditures 
6 
related to such fraudulent information, provided, that this fine is reviewed and adjusted 
7 
periodically to be reasonable; 
8 
iii. A conviction under this Act shall carry with it civil liability, which may either consist of 
9 
restitution for the damage done or forfeiture in favor of the govemment of any 
10 
unwarranted benefit derived from the act or acts in question, or both, at the discretion of 
11 
the courts, in addition to possible administrative liability; and 
12 
iv. Private individuals who shall conspire with the erring public officials or employees, 
13 
whether as co-principals, accomplices or accessories, in the commission of any violation 
14 
of this Act shall be subject to the same penalties as the public officials or employees and 
15 
shall be tried jointly with them. 
16 
SEC. 71. Jurisdiction. - Actions under this Act shall be cognizable by the courts, 
17 
tribunals, bodies, agencies or authorities with appropriate jurisdiction under existing laws. 
18 
PART IX 
19 
FINAL PROVISIONS 
20 
SEC. 72. Implementing Rules and Regulations. - The DBM in consultation with the 
21 
DOF, BTr, NEDA and COA, in coordination with agencies concerned shall issue the guidelines 
22 
necessary for the proper implementation of this Act. 
23 
SEC. 73. Transitory Provisions. -
The DBM, DOF, BTr, NEDA and COA shall 
24 
produce and submit within thirty (30) days from promulgation of the IRR, a Transitory Plan for 
25 
information, to the Joint Congressional Oversight Committee on Public Expenditures to ensure 
26 
the proper implementation of the provisions of this Act, presenting the Sections that will not be 
27 
implemented on the passing of this Act and those requiring compliance with certain conditions or 
28 
the happening of events before the provisions herein may be implemented. 
29 
SEC. 74. RepeaL - Any law, presidential decree or issuance, executive order, letter of 
30 
instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof 
31 
contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or 
32 
amended accordingly. (Note: specific laws to be repealed will need to be identified for clarity.) 
33 
SEC. 75. Separability Clause. - If any provision of this Act is declared invalid or 
34 
unconstitutional, the other provisions not affected thereby shall remain valid and subsisting. 
35 
SEC. 76. Effectivity Clause. - This Act shall take effect fifteen (15) days following its 
36 
publication in the Official Gazette or in two (2) newspapers of general circulation. 
Approved, 
Page 26 of26