f/
n( t'lr s-.'tiTlaip
SEVENTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
F irst R egular S ession 
)
*17 
MAY 11 
P3-45
S E N A T E
S enate Bill No. 1450
RECEIVED BY;
y
p >
In tro d u ced  by S en ato r LOREN LEGARDA
AN ACT TO REFORM THE BUDGET PROCESS BY ENFORCING 
GREATER ACCOUNTABILITY IN PUBLIC FINANCIAL MANAGEMENT 
(PFM), PROMOTING FISCAL SUSTAINABILITY, INSTITUTING AN 
INTEGRATED PFM SYSTEM, INCREASING BUDGET TRANSPARENCY 
AND PARTICIPATION, AND FOR OTHER PURPOSES
Explanatory Note
A 2015 paper published by the International M onetary Fund shows that 
the 
country’s 
public 
financial 
m anagem ent 
(PFM) 
framework 
is 
fragmented and not readily accessible to the public. A 2016 report from 
the World Bank recom m ends the revision of the PFM legal framework to 
address w eaknesses in budget credibility and legislative oversight, among 
others. 
The 
World 
Bank 
report 
further 
observes 
th at 
the 
last 
comprehensive PFM law was enacted in 1987, th u s the necessity of 
updating it to conform to international best practices.
The proposed m easure aim s to modernize the country’s legal framework 
for PFM by institutionalizing reforms in budgeting and strengthening the 
oversight functions of Congress over the budgeting process. Apart from 
clarifying the definition of savings, augm entation, and realignm ent in line 
with judicial pronouncem ents, it also provides param eters on the 
im plem entation of a re-enacted national budget.
Moreover, the bill creates the Office of the Comptroller General to assist 
the Commission on Audit in enforcing accounting and auditing rules and 
in monitoring the compliance of agencies to audit findings.
In order to ensure an efficient PFM system  th at is transparent and fully 
accountable to the public, immediate passage of the bill is sought.


tlf
SEVENTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
F irst R egular S ession 
)
S E N A T E  
S enate Bill No.4A5 0
of tlif
'17 
HAY 11 
?3'45
-sV
RECtiVtO BV:
In tro d u ced  by S en ato r LOREN LEGARDA
AN ACT TO REFORM THE BUDGET PROCESS BY ENFORCING GREATER 
ACCOUNTABILITY 
IN 
PUBLIC 
FINANCIAL 
MANAGEMENT 
(PFM), 
PROMOTING FISCAL SUSTAINABILITY, INSTITUTING AN INTEGRATED 
PFM 
SYSTEM, 
INCREASING 
BUDGET 
TRANSPARENCY 
AND 
PARTICIPATION, AND FOR OTHER PURPOSES
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S ection 1.
Act.”
PART 1
PRELIMINARY PROVISIONS
S h o rt Title. -  This Act shall be known as the “Budget Reform
Section 2. 
D eclaratio n  o f Policy a n d  Objectives. -  It is hereby declared 
the policy of the State to ensure accountability and integrity in the use of 
public resources by ensuring transparency, fiscal responsibility, results- 
orientation, efficiency, and effectiveness. This shall be upheld through the 
establishm ent of an integrated system  of planning, budgeting, m anagem ent, 
internal control, accounting, reporting and review of public finances. In light 
of these requirem ents, the State shall pursue the following specific 
objectives:
(a) To enforce the power of Congress to authorize all appropriations and 
hold governm ent accountable in the use of public resources, as well 
as the responsibility of all governm ent agencies to propose, execute 
and deliver com m itted results in the appropriations acts in a timely, 
predictable, and economic m anner;
(b) To promote people’s empowerm ent in the m anagem ent of public 
resources by enforcing their right to access inform ation on, and to 
contribute in the form ulation and im plem entation of, the financial 
affairs of the government; and


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(c) To strengthen the integration of planning, budgeting, and perform ance 
m anagem ent and ensure ample safeguards in m anaging public 
finances, including through internal controls, accounting, reporting, 
and risk m anagem ent.
S ection 3. Scope a n d  Coverage. -  The provisions of this Act shall apply to 
the m anagem ent of revenues, expenditures, financing arrangem ents, and 
assets and liabilities of national governm ent agencies (NGAs), government- 
owned or -controlled corporations (GOCCs), and local governm ent units 
(LGUs) to the extent provided herein.
S ection 4. D efinition o f Term s. -  The following term s when used in this 
Act and the im plem enting rules and regulations (IRR) shall be understood, 
as follows:
(a) A llotm ent refers to the authorization issued by the D epartm ent of 
Budget and M anagem ent (DBM) for releases needing clearance in 
order for NGAs, GOCCs, or LGUs to incur contractual com m itm ents 
and disburse funds up to a certain am ount, for a specified public 
purpose, and within a specified period of time, in accordance with the 
Appropriations Law;
(b) A p p ro p riatio n s Law  refers to the legislative authorization for the 
contractual com m itm ents incurred by NGAs, GOCCs, or LGUs and 
actual disbursem ent of Public Funds for specific public purposes 
covering a specified period of time. This may refer to either a general 
or special appropriations law;
(c) C abinet refers to the Executive Secretary and the Secretaries of the 
D epartm ents under the Executive Branch;
(d) E x ten d ed  P ay m en t P eriod refers to the three m onth period in the 
following fiscal year when paym ents can be processed and disbursed 
for goods and services received by the end of the previous year and 
such paym ent shall be chargeable against the Appropriations Law of 
the previous fiscal year;
(e) F iscal Y ear refers to a period of twelve m onths commencing on 
Jan u ary  1 until December 31;
(f) G overnm ent A gencies collectively refer to NGAs, GOCCs and LGUs;


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(g) G overnm ent-O w ned o r -C ontrolled C o rp o ratio n s refer to agencies 
with corporate powers, w hether or not organized as a stock or non­
stock corporation, vested with functions relating to public needs 
w hether governm ental 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 instrum entalities and 
related corporations;
(h) G overnm ent F in a n c ia l In stitu tio n s refer to financial institutions in 
which the governm ent 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 instrum ents or assets such as deposits, loans, 
bonds and equity;
(i) H ead  o f A gency refers to the head of the departm ent or agency in the 
case of NGAs, the Board of Directors or T rustees in the case of GOCCs 
as well as certain agencies which are structured as such, and the 
local chief executive in the case of LGUs;
(j) In te rn a l A u d it is an independent and objective assurance in NGAs, 
GOCCs and LGUs which is designed to add value, improve operations 
and accom plish objectives by bringing in a system atic and disciplined 
approach to evaluate the effectiveness of risk m anagem ent, control 
and governance processes;
(k) L ocal G overnm ent U nits refer to provinces, cities, m unicipalities, 
and barangays, as well as autonom ous regions authorized to be 
created in the Constitution;
(l) N atio n al G overnm ent A gencies refer to units of the national 
government, as distinguished from GOCCs and LGUs, which include 
any of the departm ents, bureaus, offices or instrum entalities of the 
Executive, Judicial and Legislative branches of governm ent, as well 
as 
the 
C onstitutional 
Commissions, 
and 
the 
Office 
of 
the 
Om budsm an;
(m) 
P rogram /A ctivity/P roject refers to an item of appropriation in 
the GAA which refer to any of the following:


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Program -  an integrated group of activities th at contributes to an 
agency’s continuing objective. These are grouped under 3 m ain cost 
structures: General Adm inistration and 
Support, Support to Operations, and Operations.
Activity -  is a work process that contributes to the fulfillment of a 
program, sub-program  or project.
Project -  is a special agency undertaking within a definite timeframe 
and which is designed to produce pre-determ ined goods or services;
(n) P roposed N a tio n a l B udget refers to a financial plan of annual 
revenue and expenditures to be subm itted by the President to 
Congress th at reflect national policies;
(o) Public O fficials refer to elective and appointive officials and 
employees, in a perm anent or tem porary capacity, w hether in the 
career or non-career service, including military and uniformed 
personnel, regardless of the rank, form or am ount of com pensation;
(p) Public F u n d s refer to the monies of all Government Agencies received, 
collected, 
receivable from taxes, fees, charges, penalties, income, 
dividends, interest earnings, domestic loan proceeds, external loans 
and grants, proceeds from the sale of assets, th at the Government has 
a legal right to retain and use and shall not include any money 
received in error;
(q) S u b sid iary  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 interm ediaries, by a GOCC; and
(r) T reasu ry  S ingle A ccount (TSA) refers to the account m aintained by 
the B ureau of the Treasury with the BSP or agent bank for a unified 
structure of governm ent bank accounts to enable consolidation and 
optim um  utilization of government cash resources.
In this Act, the singular may be read as the plural and the plural may be 
read as the singular, as the context requires.


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PART II
ADDITIONAL ROLES AND RESPONSIBILITIES
Section 5. C ongress, -  The Congress shall, in addition to its powers under 
the Constitution and existing laws, perform the following:
(a) Monitor and review governm ent perform ance against the requirem ents 
of appropriations and related laws, and hold Government Agencies 
accountable for their financial and non-financial perform ance;
(b) Review reports on planned and actual perform ance, including the 
Statem ent of Fiscal Policy, the Medium Term Fiscal Strategy, fiscal 
reports, annual plans of governm ent agencies, periodic and annual 
reports on governm ent performance and perform ance of government 
agencies; and
(c) Consider the consolidated annual financial statem ents of government 
prepared by the Office of the Comptroller General (OCG) and the 
audited governm ent agency reports by the COA.
Congress shall undertake the foregoing through any of its existing 
committees, support offices or one created for the purpose to strengthen the 
oversight role of Congress.
Section 6. P resid en t. -  The President shall, in addition to h is/h e r powers 
under the Constitution and existing laws, perform the following:
(a) Approve the Statem ent of Fiscal Policy, and the M edium-term Fiscal 
Strategy for subm ission to Congress;
(b) Approve the 
Budget Priorities Framework 
to identify the priority 
areas for governm ent spending and guide the budget preparation 
exercise; and
(c) Authorize changes in the functional, operational and organizational 
structure within and am ong the DBM, D epartm ent of Finance (DOF), 
and National Economic and Development Authority (NEDA), as may be 
necessary, to ensure the effective im plem entation of this Act.
Section 7, 
Office o f th e  C om ptroller G e n e ra l -  To enhance the 
m anagem ent of public finances, there is hereby created an OCG under the 
supervision and control of the Office of the President (OP) which shall 
perform the following functions:
(a) Monitor the perform ance of the annual cash appropriations of NGAs 
in term s of in-year and end-of-year appropriation reports that 
compare disbursem ents to appropriations;


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(b) Form ulate m easures on effective internal controls including internal 
audit, for the im plem entation by Heads of Government Agencies, to 
ensure the integrity, accuracy, com pleteness, and reliability of 
governm ent financial and m anagem ent system s;
(c) Oversee the operation of an integrated internal control framework 
across Government Agencies;
(d) Oversee the im plem entation of, and Governm ent Agencies’ compliance 
with, accounting and auditing rules and regulations prom ulgated by 
the GOA;
(e) Oversee and m anage the financial reporting of Governm ent Agencies, 
including 
(1) to m onitor the periodic and annual m anagem ent and 
financial accounts with regard to accuracy, tim eliness, com pleteness, 
and compliance with this Act, standards, rules and regulations; and 
(2) to consolidate the financial reports for subm ission to the President, 
Congress, and GOA;
(f) Oversee the operationalization of an integrated financial m anagem ent 
information system;
(g) Form ulate com petency-based hum an resource policies for positions in 
PFM and oversee the capacity development requirem ents on PFM 
form ulated by the OCG and other agencies;
(h) Coordinate with counterpart agency officials to ensure compliance 
with the foregoing functions; and
(i) Perform such other functions as may be necessary to properly 
im plem ent the provisions under this Section.
The OCG shall be headed by the Comptroller General who shall be of the 
same rank as a Secretary, and with the structure and staff com plem ent as 
may be approved by the DBM. The Heads of Government Agencies shall 
designate 
a 
Comptroller 
in 
their 
respective 
offices 
to 
oversee 
the 
im plementation of the above-mentioned functions at the agency level in 
coordination with the Comptroller General.
Section 8. C om m ission on A udit. -  The COA shall, in addition to its 
powers under the C onstitution and existing laws, coordinate with the OCG 
for the proper enforcem ent of timely accounting and reporting of public 
finances.
Section 9. D ep artm en t o f B udget a n d  M anagem ent. -  The DBM shall, in
addition to its m andates and functions under existing laws, perform the 
following:


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(a) Prepare, in coordination with the agencies concerned, DOF, NEDA and 
OP in the Development Budget Coordination Committee (DBCC), the 
Statem ent of Fiscal Policy, the M edium-term Fiscal Strategy, the 
Budget Priorities Framework, and the 
Mid-year and Annual Fiscal 
Reports as required in this Act;
(b) Monitor and evaluate the financial and non-financial perform ance of 
NGAs;
(c) Evaluate and review the financial and non-financial perform ance 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 B ureau of Local Government 
Finance (BLGF) under the DOF and D epartm ent of the Interior and 
Local Government (DILG), the financial and non-financial performance 
of LGUs; and
(e) Assess, together with the BLGF under the DOF and DILG, the PFM 
system s of LGUs and assist them  in designing and im plem enting PFM 
improvement m easures.
To ensure the effective form ulation and execution of fiscal policies, the 
Secretary of Budget and M anagem ent shall lead the DBCC, with the 
Secretary of Finance, the Director General of the NEDA Secretariat and a 
representative from the OP as m em bers, and the Governor of the BSP as 
resource person.
Section 10. 
D ep artm en t o f F inance. -  The DOF shall, in addition to its 
m andates and functions under existing laws, perform the following:
(a) Monitor and m anage fiscal risks to the governm ent, including those 
from public-private partnerships;
(b) Compile and publish governm ent fiscal statistics in accordance with 
international standards; and
(c) Form ulate policies and standards for the acquisition and m anagem ent 
of fixed assets by NGAs.
The B ureau of the Treasury (BTr) shall, in addition to its m andates and 
functions under existing laws, perform the following:


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(a) Manage the TSA m aintained at the BSP or an agent bank, with the 
prior approval of the Secretary of Finance;
(b) Put in place arrangem ents for the execution of duly authorized 
paym ents from the TSA, which may include the appointm ent of banks 
to operate as agents of the National Government with the prior 
approval of the Secretary of Finance;
(c) Manage the financial assets and liabilities of the government, 
including: (i) banking arrangem ents for, and bank accounts of, the 
government; 
(ii) 
hedging and other risk m anagem ent activities 
associated with debt m anagem ent, cash m anagem ent and financial 
investm ent; (iii) appointm ent of dealers, assets m anagers and other 
agents to support debt, cash and investm ent m anagem ent activities; 
(iv) m aintenance of an accurate record of the stock and flow of 
financial assets and liabilities; (v) tracking and reporting on fiscal 
risks related to the m anagem ent of financial assets and liabilities; and 
(vi) preparation of in-year disbursem ent reports based on the TSA for 
subm ission to the OCG.
(d) Issue instructions on the m anagem ent and recording of financial 
assets and liabilities of the government;
(e) Authorize the opening and closing of bank accounts of NGAs;
(f) Assist the NGAs in providing credible cash forecast for timely and 
accurate cash programming;
(g) Administer the release of cash requirem ents covering all types of 
transfers to LGUs; and
(h) Establish and m aintain a consolidated registry of fixed assets of the 
National Government.
Section 11. N atio n al E conom ic a n d  D evelopm ent A uthority. -  The
NEDA shall, in addition to its m andates and functions under existing laws, 
perform the following:
(a) Coordinate with the Regional Development Councils (RDCs), on the 
formulation of regional development plans and policies th at are 
consistent with the established national priorities;
(b) Coordinate the form ulation and im plem entation of an annual and 
m edium -term  
public 
investm ent 
program  
consistent 
with 
the 
approved M edium-term Fiscal Strategy and in the context of the 
preparation of the National Budget;


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(c) Set standards for Government Agencies in proposing, assessing, 
monitoring and evaluating development policies, plans and projects 
including those financed by grants and concessional loans; and
(d) Assist and support the capacity building of RDCs and LGUs in 
development planning and investm ent programming.
Section 12. 
H ead s o f G overnm ent A gencies. -  The heads of NGAs, 
GOCCs and LGUs shall, in addition to responsibilities provided under 
existing laws, be responsible for the following:
(a) Keep the DBM and DOF informed of significant changes, issues, and 
risks that could im pact on the finances of the government;
(b) Participate in the processes to develop the M edium-term Fiscal 
Strategy, the Budget Priorities Framework, and the Proposed National 
Budget as required by the DBM;
(c) Manage their respective agencies, including GOCCs, and other 
resources placed under their supervision, in an efficient, effective and 
economic m anner in order to deliver the outputs and attain the 
outcom es set in their respective budgets;
(d) Monitor the physical and financial im plem entation of their program s, 
activities and projects;
(e) Take appropriate m easures to ensure th at cash disbursem ents and 
contractual com m itm ents do not exceed the am ounts appropriated in 
their respective budgets;
(1) Ensure 
th at 
their 
respective 
agencies 
settles 
all 
contractual 
com m itm ents or approves paym ent thereon within the time prescribed 
by law;
(g) Institute effective and efficient m anagem ent system s, procedure and 
practices for assets, 
liabilities, and personnel, including internal 
controls, risk m anagem ent, and perform ance review;
(h) Dem onstrate th at due regard has been taken on the recom m endations 
provided in internal and external audit evaluation reports, to the 
extent authorized in their respective budgets;
(i) Provide 
credible 
cash 
forecast 
for 
timely 
and 
accurate 
cash 
programming; and
(j) Provide accounting and reporting of public finances through the 
integrated financial m anagem ent information system  an d /o r other 
preparatory online information system s as required in this Act.


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Section 13. C ap acity  D evelopm ent R eq u irem ents on P ublic F in a n cial 
M anagem ent. -  The foregoing agencies shall continue to form ulate capacity 
development requirem ents on PFM and conduct trainings on the same. In 
this regard, the OCG shall oversee the form ulation of the said capacity 
development requirem ents to ensure alignm ent of the objectives.
PART III
FISCAL RESPONSIBILITY
Section 14. F isca l R esp o n sibility P rinciples. -  The State shall pursue its 
policy objectives in accordance with the following Fiscal Responsibility 
Principles:
(a) Implement 
fiscal 
policies 
and 
strategies 
consistent 
with 
the 
achievem ent of macroeconomic stability and inclusive economic 
development;
(b) Manage resources in a fiscally and environm entally sustainable way;
(c) M aintain prudent levels of public debt;
(d) M aintain an appropriate balance between governm ent revenues and 
expenditures; and
(e) Manage fiscal risks in a prudent m anner.
Section 15. S ta te m e n t o f F iscal Policy. -  The DBM, in coordination with 
DOF, NEDA and OP in the DBCC, shall prepare, subject to the approval of 
the President, the Statem ent of Fiscal Policy which shall contain m easurable 
m edium -term  macroeconomic and fiscal objectives and forecasts consistent 
with the Fiscal Responsibility Principles and the Long-Term Vision Report.
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The President shall subm it for information of Congress, the Statem ent of 
Fiscal Policy not later than ninety (90) days upon com m encem ent of h is/h er 
term of office and update the m easurable fiscal objectives set forth therein 
three (3) years thereafter.
Section 16. M edium -term  F iscal S tra te g y .- The DBM, in coordination 
with the DOF, NEDA, and OP in the DBCC, shall prepare, subject to 
approval of the President, a M edium-term Fiscal Strategy and its annual 
updates. The Strategy and its updates shall be consistent with the approved 
Statem ent of Fiscal Policy and Long-Term Vision Report. It shall include a 
sum m ary of the fiscal policies for revenue, debt, deficit, expenditure, and 
fiscal risk m anagem ent, supported by a m edium -term  fiscal sustainability 
analysis, consistent with the m easurable fiscal objectives established in the 
approved Statem ent of Fiscal Policy. The IRR of this Act shall detail the 
other specifications for the M edium-term Fiscal Strategy and its updates.
The President shall subm it for the information of Congress, the Medium- 
term Fiscal Strategy for the following fiscal year not later than March 15 of 
the current year and shall publish the said report on a government website 
not later than seven (7) days after it is subm itted to Congress.
Section 17. F iscal R eports. -  The DBM, in coordination with the DOF, 
NEDA, and OP in the DBCC, shall produce a Mid-year Fiscal Report (MFR),' 
covering the first half of the current fiscal year and an A nnual Fiscal Report 
(AFR) on the governm ent s macroeconomic and fiscal perform ance covering 
the preceding fiscal year.
The MFR and AFR shall include information on m acroeconomic and fiscal 
outturns for the period covered as com pared against forecasts and objectives 
stated in the M edium-term Fiscal Strategy; as well as reporting on budget 
execution, at least in the aggregate and by agency level, com pared against 
approved appropriations and other spending authorities. The IRR of this Act 
shall detail the other specifications for the contents of the MFR and AFR.
The President shall subm it the MFR to Congress not later than 
Septem ber 30 of each year while the AFR shall be subm itted together with 
the Proposed National Budget. Said reports shall be published on a
government website not later than seven (7) days after they are subm itted to 
Congress.
Section 18. Long-term  Vision R eport. -  The NEDA, in coordination with 
the DOF, DBM and OP in the DBCC, shall subm it a Long-term Vision 
Report to the President and Cabinet, and Congress not later than October 
31 and November 30, respectively. Said Report shall assess the long-term 
sustainability of existing governm ent policies over the next twenty-five (25) 
years, taking into account demographic, environm ental, and other changes.
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The first Long-term Vision Report shall be subm itted to the President and 
Cabinet, and Congress within two (2) years from the effectivity of this Act, to 
be updated every six (6) years thereafter.
The NEDA shall cause the publication of the Long-term Vision Report on 
a government website not later than seven (7) days upon subm ission to 
Congress.
Section 19. D eviations fro m  F iscal Objectives. — The governm ent may 
deviate from the m edium -term  fiscal objectives in the approved Statem ent of 
Fiscal Policy on a tem porary basis, where such deviation is due to a major 
natural disaster, unanticipated severe economic shock, or other significant 
unforeseeable event that cannot be accom m odated through accessing the 
Contingent Fund a n d /o r the National D isaster Risk Reduction and 
M anagement Fund, 
as may be applicable or prudent fiscal 
policy 
adjustm ents, or the use of other flexibilities provided in this Act.
The President shall subm it a report to the Congress, stating the reasons 
for any such deviations, the plans and the expected time to address such 
deviations, as part of the 
succeeding M edium-term Fiscal Strategy or its 
annual update, or in the Mid-year or Annual Fiscal Report, whichever is the 
next report due and within the prescribed period under this Act.
S ection 20. S h a re d  F iscal D iscipline. -  All proposed revenue eroding and 
expenditure bills shall include a Financial and Budgetary Information Sheet 
upon filing of the bill containing an estim ate of the financial and budgetary 
implications of said proposal for the initial year of im plem entation and the 
next five (5) years. Expenditure bills refer to those which will result in a 
reduction of revenue collections or an increase in national government 
expenditures, 
including 
those 
m andating 
the 
creation 
of recurring 
expenditures.
Each House of Congress shall provide guidelines prescribing the form, 
content of the Financial and Budgetary Information Sheet, as well as the 
appropriate offices from which such information shall be acquired, and the 
implications of non-com pliance with said subm ission.
PART IV
BUDGET PREPARATION, EXECUTION, AND ADJUSTMENT
Section 21. G overning P rin cip les in B udget P re p a ra tio n . -  There is 
hereby established a set of governing principles to be observed by the NGAs, 
GOCCs, and LGUs in the preparation of their annual budget proposals, and 
by the DBM in the preparation, and the presentation to Congress, of the 
Proposed National Budget:
(a) C ash-based estim ates 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 governm ent for a given fiscal 
year shall be included, identifying those requiring approval by 
Congress and those authorized under existing laws;
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(c) All sources of funds and authorized uses available to the agency shall 
be considered in the evaluation of agency proposals and determ ination 
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, m aster plan or road map, agency capability as 
dem onstrated by previous years’ perform ance, its contribution to 
projects 
and 
activities of other agencies, 
utilization 
of funds 
appropriated or released, and such other criteria as may be 
determ ined by the DBM. The performance shall be evaluated based on 
the actual disbursem ents and contractual com m itm ents as compared 
to the appropriations;
(e) All appropriations shall be valid for one fiscal year i.e., from the 
effectivity of the appropriations act until the end of the fiscal year 
concerned with no provision for carryover, except for a three m onth 
Extended Paym ent Period in the following fiscal year to allow agencies 
to settle paym ents for goods and services delivered during the 
previous fiscal year;
(f) Items of appropriations shall be presented in such a way as to identify 
both the entity responsible for the expenditure and the intended 
results from the use of the appropriation in order to evaluate the 
perform ance of the agency;
(g) Both the financial and non-financial perform ance of agenciesshall be 
presented 
in 
the 
Proposed 
National 
Budget and 
the 
General 
Appropriations Act to ensure a perform ance-inform ed budget; and
(h) Items of appropriations shall be reflected by departm ent, agencies, 
bureaus, and offices, and shall be presented for information purposes, 
by region and province, and eventually, by city or municipality.
Section 22. P lannin g -B u d geting L inkage. -  Development strategies 
identified in the Philippine Development Plan (PDP) shall be a primary 
consideration in the form ulation of the budget priorities framework. These 
shall also be the basis for drawing up strategic and prioritized program s and 
projects in the m ulti-year public investm ent program , which in turn will be 
considered in the form ulation of the annual agency budgets th at conform to 
the annual budget ceilings approved by the President.
The im plem entation of program s and projects funded under the annual 
agency budgets shall be monitored to ensure economy, efficiency, and 
effectiveness in the use of public funds. Monitoring and evaluation of these 
projects shall cover, am ong others, the planned and actual perform ance of 
agencies, citing reasons for deviation a n d /o r poor absorptive capacities. The 
results of the project evaluation shall inform the assessm ent of subsequent 
plans and budget proposals of agencies.
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S ection 23. B u d g et P rio ritie s Fram ew ork. -  The DBM, in coordination 
with the DOF, NEDA and OP in the DBCC, shall present to the President 
and Cabinet, on or before April of each year, a Budget Priorities Framework 
which shall guide the form ulation of the Budget for the following year by 
containing the m edium -term  fiscal strategy and targets underlying the 
budget; the priority areas for governm ent spending reflected in the PDP, 
estim ated am ount and planned allocation of the fiscal space; and other 
requirem ents laid down in the IRR.
S ection 24. The B u d g et P re p a ra tio n  Process. -  The DBM shall determ ine 
the budget preparation process and calendar. The budget preparation 
process shall cover: (i) NGAs; (ii) GOCCs with respect to their im pact on 
revenues, expenditures, assets, and liabilities and risks of the government;
and (iii) LGUs as to their im pact on revenues and expenditures of the 
government.
S ection 25. The P ro p o sed  N atio n al B udget. -  The President shall subm it 
to Congress, not later than thirty (30) days from the fourth Monday of July 
of every year, the Proposed National Budget, which shall be the basis of the 
General Appropriations Bill.
The President shall determ ine the form and content of the Proposed 
National Budget which shall include, but not limited, to the following:
(a) President’s Budget Message -provides a preview of the Proposed 
National Budget, explaining the principles, objectives and policy 
framework adopted and the spending priorities for the fiscal year;
(b) Budget of Expenditures and Sources of Financing (BESF) -contains 
the macroeconomic param eters; dim ensions of three-year (3-year) 
expenditure program , revenues, 
financing, and outstanding debt; 
overview of the financial positions of GOCCs, LGUs, and public-private 
partnership projects, as well as the other item s listed in the IRR;
(c) National 
Expenditure 
Program 
(NEP) 
-  
includes 
the 
strategic 
objectives, details of the three-year (3-year) expenditure program, 
perform ance information, 
such as key strategies, outputs and 
outcom es for agencies in relation to their budgets, and staffing 
sum m ary;
(d) Fiscal Risk Statem ent -  presents a consolidated statem ent of the fiscal 
risks that the national governm ent faces, including those from the 
contingent liabilities of Government Agencies and other item s listed in 
the IRR.
As required under Section 17 of this Act, the President shall likewise 
subm it for consideration of Congress, the Annual Fiscal Report for the 
preceding fiscal year not later than the abovem entioned date, and the Mid-
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year Fiscal Report for the current year not later than Septem ber 30 of every 
year.
Congress may not increase the appropriations recom m ended by the 
President for the operations of governm ent as specified in the Proposed 
National Budget.
The President shall publish the Proposed National Budget on a 
Government website on the sam e day as it is presented to Congress.
Section 26. P ro g ram  C lassificatio n . -  The Proposed National Budget shall 
adopt a structure based on a program classification th at groups line items 
under the objectives or outcom es to which they contribute to. Performance 
information shall be provided for each program  to facilitate the evaluation of 
the cost effectiveness of the program s and provide better information for 
analysis and feedback for planning and prioritization of expenditures.
S ection 27. Lum p Sum  A p p ro p riatio n s. -  To promote the transparent and 
detailed disclosure of all proposed governm ent spending, lum p sum 
appropriations and special purpose funds (SPFs) in the Proposed National 
Budget shall be limited to: (1) the National D isaster Risk Reduction and 
M anagement Fund (NDRRMF); (2) the Contingent Fund; (3) Statutory Shares 
of LGUs; and (4) other SPFs not falling under any of the preceding purposes 
and the details of which could not be determ ined during the budget 
preparation stage.
S ection 28. N atio n al D isa ste r Risk. R eduction a n d  M anagem ent Fund.
-T h e  NDRRMF shall be used for: (1) disaster risk reduction or mitigation, 
prevention and preparedness activities, such as, but not limited to, training 
of personnel, procurem ent of equipm ent, and capital expenditures; and (2) 
relief, recovery, reconstruction and other work or services in connection with 
natural or hum an induced calam ities which may occur during the budget 
year or those that occurred in the preceding two (2) years.
The NDRRMF may include the Quick Response Fund (QRF) of agencies, 
which shall be used as a standby fund in order that the situation and living 
conditions of people in com m unities or areas stricken by calamities, 
epidemics, crises, and catastrophes may be normalized as quickly as 
possible. The QRF shall be released directly to the agencies concerned upon 
approval of the DBM.
Releases from the NDRRMF, other than the QRF, shall be subject to the 
prior approval of the President, who may take into consideration the 
recom m endation of the National D isaster Risk Reduction and M anagem ent 
Council and the appropriate agency for local and international disasters and 
calamities.
Section 29. C o n tin g en t Fund. -  The Contingent Fund shall cover the 
funding requirem ents of new an d /o r urgent projects and activities of
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national governm ent agencies and GOCCs th at need to be im plemented or 
paid during the year, such as, legal obligation of the governm ent arising 
from final and executory decisions by com petent authority, including 
arbitration aw ards, m ediation settlem ent, or comprom ise agreem ents, 
requirem ents of newly created offices, or deficiencies in the appropriations 
for local and external travels of the President of the Philippines.
Releases from the Contingent Fund shall be subject to approval by the 
President of the Philippines, other than paym ent resulting from final and 
executory decisions prom ulgated by com petent authorities, which shall be 
subject to approval by the DBM.
The DBM shall inform Congress of all releases from the Contingent Fund 
in the quarterly and annual fiscal reports including inform ation on the date 
of release, the am ount covered, corresponding p u rp o se/s and recipient 
agency.
Section 30. S ta tu to ry  S h a re s o f L ocal G overnm ent Units. -  The shares 
of LGUs in the proceeds from national taxes and other transfers to LGUs 
authorized by law shall be released to the LGUs in accordance with the 
provisions on the use, allocation, and release of the funds as may be 
provided in pertinent laws, rules and regulations.
Section 31. U nprogram m ed A ppro p riatio n s. -  Congress may authorize 
standby appropriations to cover the funding requirem ents of other priority 
projects and activities or contingencies, as well as provide appropriations 
cover for foreign-assisted projects (FAPs) not specifically included in the 
programmed com ponent of the Appropriations Law. 
The Unprogramm ed 
Appropriations shall have the sam e level of details as in the programmed 
com ponent of the Appropriations Law. 
The am ount authorized under the 
Unprogrammed Appropriations shall not exceed two percent (2%) of the total 
proposed expenditure in the program m ed com ponent of the Appropriations 
Law.
The Unprogram m ed Appropriations shall take effect only when supported 
by excess collections generated in any one of the particular tax or non-tax 
revenue source from its corresponding revenue collections target in the 
BESF as certified by the BTr, or when there are new loan agreem ents for 
FAPs. In no case shall the Unprogrammed Appropriations be activated or 
released when there is a risk of breaching the m easurable fiscal objectives 
for the budget balance (including a deficit) or debt for the financial year or 
future years as provided in the Statem ent of Fiscal Policy and M edium-term 
Fiscal Strategy or if there is a risk of breaching any of the Fiscal 
Responsibility Principles.
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Priority projects 
and 
activities or contingencies 
shall 
pertain 
to 
expenditures, the paym ent of which are not covered under the Contingent 
Fund and could not be delayed until the succeeding budget years without 
harm ing public interest or arising from the governm ent’s legal obligation 
such as compliance with a governm ent guarantee or settlem ent of final and 
executory decisions by com petent authorities.
Releases from the Unprogramm ed Appropriations shall be subject to the 
prior approval of the President of the Philippines, other than final and 
executory decisions, which shall be subject to approval of the DBM.
The DBM shall inform Congress of all releases from the Unprogrammed 
Appropriations in the quarterly and annual reports including information on 
the date of release, the am ount covered, corresponding pu rp o se/s and 
recipient agency.
Section 32. B u d g et w ith A ccount Codes. -  All item s of appropriations in 
the Appropriations Law shall be given account codes p u rsu an t to the Unified 
Account Code Structure th at applies to all the assets, liabilities, equities, 
income, and expenses of the government. This account code structure shall 
be used in the release of the appropriations in the Appropriations Law for a 
unified accounting, auditing and reporting of all the financial transactions of 
the government.
S ection 33. Re e n a c te d  B udget. -  If, by the end of any fiscal year. 
Congress shall have failed to enact the General Appropriations Bill for the 
ensuing fiscal year, the General Appropriations Law for the preceding fiscal 
year shall be deemed re-enacted and shall rem ain in force and effect until 
the said General Appropriations Bill is passed by the Congress.
C onsistent 
with 
the 
Fiscal 
Responsibility 
Principles, 
the 
Re­
enacted Budget shall be enforced as follows:
(a) The aggregate level of the Re-enacted Budget shall be limited to the 
total am ount appropriated in the preceding year’s Appropriations 
Law, but shall in no case exceed the level of the sources of financing 
under the BESF of the Proposed National Budget;
(b) The appropriations for the following shall be limited to the am ount 
authorized under the Re-enacted Budget, but in no case exceed the 
am ount proposed by the President in the Proposed National Budget:
1.
2.
3.
Ongoing program s, projects and activities;
Personnel benefits, including retirem ent gratuities, pensions, 
term inal leave pays and related expenses;
NDRRMF, Contingent Fund, Statutory Shares of LGUs, and 
other SPFs; and
Budgetary support to GOCCs for their operational requirem ents.
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(c) 
In no case shall the following be considered part of the Re-enacted 
Budget:
1. Completed program s, projects and activities funded in the 
General Appropriation Law for the preceding fiscal year;
2. Budgetary 
support 
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activities or projects; and
3. Equity contribution of the National Government to GOCCs.
The item s a n d /o r am ount of appropriations not covered under the Re­
enacted Budget as provided above shall not be released, disbursed, 
or utilized for the purpose previously authorized.
The DBM shall issue guidelines on the aggregate and agency levels of 
appropriations authorized under the Re-enacted Budget in accordance wi:h 
the foregoing, supporting requirem ents to determ ine actual needs, and other 
pertinent rules in the im plem entation of the Re-enaeted Budget.
Upon enactm ent of the General Appropriations Law anytim e during the 
current fiscal year, all releases under a Re-enacted Budget consistent with 
this Section shall be deemed to have been im plem ented p u rsu an t to, and 
charged against, for account recording purposes, the General Appropriations 
Law for the current fiscal year.
S ection 34. S p ecial A p p ro p riatio n s Bill. -  A Special Appropriations Bill 
is a proposal subm itted by the President, as recom m ended by the DBM, 
before Congress to provide authorization for expenditures for a specific 
purpose not included or not covered under the annual appropriations laws. 
It shall specify the p u rp o se/s for which it is intended and be valid until the 
end of the fiscal year of its enactm ent.
A Special Appropriations Bill shall be supported by funds actually 
available or those which are not included in the fiscal year’s sources of 
financing under the BESF as certified by the National Treasurer, or to be 
raised by a corresponding revenue m easure proposed therein. The am ount 
to be authorized by Congress in a Special Appropriations Bill may be more 
than that originally proposed for as long as the sam e is supported by any or 
a combination of the above sources and is consistent with the Fiscal 
Responsibility Principles and the M edium-term Fiscal Strategy. 
A Special 
Appropriations Bill may only be proposed after the passage of the General 
Appropriations Law, except for the following: (1) disaster-related purposes;
(2) urgent projects a n d /o r activities; and (2) unforeseen requirem ents of the 
government.
A Special Appropriations Bill may likewise refer to a proposal subm itted 
by the President, as recom mended by the DBM, before Congress for 
additional appropriations for existing or new program s, activities or projects 
of an NGA or GOCC with fast in-year disbursem ent rate. In this case, the 
bill may be supported by the current fiscal year’s sources of financing as
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certified by the National T reasurer due to reversion of funds of NGAs or 
GOCCs resulting from slow im plem entation of program s, activities or 
projects.
Section 35. R elease a n d  E x p en d itu re o f P ublic F unds. — The government 
shall commence releases of Public Funds covered by an Appropriations Law 
as soon as such Law comes into force to ensure timely and efficient 
disbursem ent by 
the appropriate im plementing agencies, 
subject to 
pertinent 
budgeting and 
auditing rules 
and 
regulations. 
Upon 
the 
im plementation of cash-based appropriations, the Appropriations Law shall 
be considered the authority of the agencies to contract out and disburse 
funds, except for instances provided in the IRR.
Section 
36. 
A v ailab ility  
o f 
C ash-B ased 
A p p ro p riatio n s. 
-  
All
appropriations shall be available for release, contractual com m itm ent and 
disbursem ent until the end of the fiscal year. However, Government 
Agencies may still disburse funds not later than the three (3) m onths 
Extended Paym ent Period from the end of the fiscal year for goods or 
services which have already been delivered or rendered within the fiscal 
year. 
Said 
paym ents 
shall 
be 
chargeable 
against 
the 
authorized 
appropriations of the said preceding fiscal year.
Section 
37. M ulti-year 
C ontracts. -  The 
DBM 
shall 
identify 
the 
requirem ents a n d /o r prescribe guidelines before agencies may enter into 
m ulti-year contracts such as the issuance of a M ulti-year C ontractual 
Authority (MYCA).
In the case of GOCCs, they shall secure prior authority from their 
respective governing boards before entering into m ulti-year contracts.
For solicited m ulti-year Public-Private Partnership projects approved 
under Republic Act (R.A.) No. 6957, as am ended by R.A. No. 7718, the 
National Governm ent responsibility shall be covered by a letter of 
comm itm ent issued in accordance with the guidelines issued by the DBM.
In all instances, the disbursem ents to be incurred for m ulti-year 
contracts shall in no case exceed the cash appropriations for the purpose 
during the year. Procurem ent of m ulti-year projects shall be subject to the 
provisions of R.A. No. 9184 and its IRR and the guidelines issued by the 
Government Procurem ent Policy Board (GPPB).
S ection 38. E a rly  P ro cu rem en t A ctivities. -  To ensure full budget 
utilization, timely contract im plem entation and efficient delivery of services, 
agencies are authorized to undertake procurem ent activities from pre­
procurem ent conference until post-qualification of bids based on their 
proposed budget in the NEP, COBs or Appropriations Ordinance, in 
accordance with the guidelines issued by the GPPB.
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For m ulti-year projects, the issuance of a MYCA by the DBM is required 
prior to com m encem ent of any procurem ent activity. All existing Multi-Year 
Obligational Authority shall be understood to refer to MYCA.
Agencies may only proceed with the awarding of contract upon approval 
or enactm ent of their respective appropriations or budget authorization
docum ent, as the case may be, and based on the am ount authorized 
therein.
Section 39. Im p o u n d m en t o f A ppro p riatio n s. -  The President of the 
Philippines, upon recom m endation of the DBM may propose the rescission 
of appropriations from both houses of Congress, under any of the following;
(a) If the appropriations are no longer required to fulfill the objectives 
originally sought to be achieved by the program s, activities and 
projects covering the same; or
(b) In case of an unm anageable National Government budget deficit.
Unm anageable National Government budget deficit as used in this
section shall be construed to m ean that: (i) the actual National Government 
budget deficit has exceeded the quarterly budget deficit targets consistent 
with the full-year target deficit as indicated in the BESF subm itted by the 
President to Congress p u rsu an t to Section 22, Article Vll of the Constitution; 
or (ii) there are clear economic indications of an im pending occurrence of 
such condition, as determ ined by the DBCC and approved by the President.
Both Houses of Congress shall act on the proposed rescission within 
forty-five (45) days after the receipt of the im poundm ent proposal from the 
President by issuing a joint Im poundm ent Resolution. Within the same 
period of forty-five (45) calendar days, the appropriations covered by the 
Im poundm ent Proposal shall not, in any way, be rescinded in relation to the 
purposes and objectives for which it was appropriated. Congressional 
inaction after the 45-day period, is equivalent to an approval of the 
im poundm ent proposal.
Im pounded funds shall revert to the National Treasury and shall not 
thereafter be available for expenditure except by subsequent legislative 
enactm ent.
S ection 40. A u th o rity  to D eclare a n d  Use S avings. -  The President of the 
Philippines, the President of the Senate of the Philippines, the Speaker of 
the House of Representatives, the Chief Justice of the Suprem e Court, the 
O m budsm an, the Heads of the Civil Service Commission, the Commission 
on Elections, and the COA are hereby authorized to declare and use savings 
in their respective appropriations to augm ent actual deficiencies incurred for 
the current year in any item of their respective appropriations. 
An item of 
appropriation shall pertain to the am ount appropriated for a program, 
activity or project in the Appropriations Law. In the case of program s with 
several activities a n d /o r projects, each activity a n d /o r project shall be 
considered an item of appropriation.
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The foregoing constitutional officers authorized to use savings shall be 
responsible for ensuring th at a sem estral and annual report on their 
respective use of savings shall be subm itted to the President of the Senate of 
the Philippines and the Speaker of the House of the Representatives, copy 
furnished the DBM. The report shall indicate am ong others, the am ount of 
savings generated, the sources and grounds used therefor, and the existing 
program, activity or project in their respective appropriations augm ented.
They shall likewise ensure th at said reports are posted on their respective 
websites.
The DBM shall determ ine the procedure, as well as the supporting
docum ents needed in the declaration and use of savings authorized in this 
Act.
Section 41. M eaning o f Savings. -  Savings refer to portions or balances of 
any released appropriations in this Act which have not been obligated as a 
result of any of the following:
(a) Completion, final discontinuance, or abandonm ent of a program, 
activity or project for which the appropriation is authorized; or
(b) Im plem entation of m easures resulting in improved system s and 
efficiencies and th u s enabled an agency to m eet and deliver the 
required or planned targets, program s and services approved in this 
Act at a lesser cost.
In case final discontinuance or abandonm ent is used as basis in the 
declaration of savings, such discontinued or abandoned program , activity or
project shall no longer be proposed for funding in the next two (2) fiscal 
years.
Allotments that were not obligated due to the fault of the agency 
concerned shall not be considered savings.
S ection 42. R ules on A ugm entation. -  Augm entation is the act of the 
constitutional officers authorized to use 
savings in 
their respective 
appropriations to cover a deficiency in any existing program , activity or 
project within their respective offices. A deficiency in a program , activity or 
project may result from:
(a) Unforeseen modifications or adjustm ents in the program , activity or 
project; or
(b) R e-assessm ent in the use, prioritization a n d /o r distribution of 
resources.
The particulars of the expenditures to be funded from savings should be 
within the scope of, or covered by an existing program , activity or project. 
The existence of a program , activity or project regardless of the availability of 
allotm ent class/es is sufficient for the purpose of augm entation.
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In no case shall a non-existent program, activity or project be funded by 
augm entation from savings or by the use of an appropriations otherwise in 
this Act.
Section 43. R ules on M odification in th e  A llotm ent. -  Modification in the 
allotment is the limited flexibility given to NGAs to modify or change the 
allotm ent within an existing program, activity or project which shall not 
entail any augm entation of the am ount appropriated for the said program, 
activity or project during budget execution. 
In the case of program s will" 
several activities a n d /o r projects, modification may only be undertaken 
within each activity a n d /o r project.
Modification in the allotm ent may be undertaken in any of the cases 
specified in the rules and regulations issued by the DBM to ensure the 
uniform im plem entation am ong the various branches of government, the 
proper recording of modifications, and the timely subm ission of reports by 
all the offices concerned.
PART V
FINANCIAL MANAGEMENT
Section 44. 
G eneral Fund. 
-  All monies received by NGAs, w hether 
coming from taxes, fees, charges, penalties, income, dividends, interest 
earnings, loan proceeds, grants, donations, asset sale proceeds and such 
other receivables, shall accrue to the General Fund and be rem itted to the 
National Treasury, unless otherwise provided by law or stipulated by 
covering loan or grant agreem ents. Monies under the General Fund shall be 
made available to support the requirem ents of the National Government 
authorized in an Appropriations Law.
A Special Account in the General Fund (SAGF) shall be established by 
law only under exceptional eircum stanees to record taxes, fees, charges, 
penalties, income, dividend, interest earnings, grants, and donations 
collected, earned or received by NGAs for specified purposes. All laws 
authorizing the establishm ent of SAGFs shall specify the period of use 
thereof which shall not exceed three (3) years, or if no period is specified, 
shall be deemed to be until the fulfilment of the purpose for which the SAGF 
was authorized or for three years, whichever comes earlier. All interests 
earned by SAGFs shall accrue to the General Fund. The balance of SAGFs 
upon their term ination shall form part of the General Fund.
All earm arked revenues with significant inflows, a large portion of which 
are not or not expected to be program m ed for disbursem ent during the year 
shall be treated as T rust Funds and recorded as tru st receipts. 
Proceeds 
from these T rust Funds shall be recorded only as revenue inflow in the 
General Fund when program m ed to be spent for the year.
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The Perm anent Committee created under Executive Order No. 292, s. 
1987 shall recom m end for approval of the President the change in the 
treatm ent of existing SAGFs that shall be converted into T rust Funds by 
virtue of the foregoing. The recording of revenue inflows from these SAGF's 
shall be governed by the guidelines to be issued by the Perm anent 
Committee.
S ection 45. S p ecial F unds. -  In exceptional cases when a SAGF is not 
suitable for the operations of a fund, Special Funds shall be authorized by 
law and limited to the following:
(a) T rust Fund -  constituted from identified revenue sources and other 
receipts by NGAs or public officials acting as trustees, agents, or 
adm inistrators for the fulfillment of com m itm ents or accom plishm ent 
of specified purposes. T rust Funds shall be deposited in the TSA;
(b) Revolving Fund -  constituted from receipts derived from business-type 
activities of NGAs to be used for the operating requirem ents of said 
business-type activities and as such are considered self-liquidating 
Revolving Funds shall be deposited in the TSA or in an Authorized 
Government Depository Bank (AGDB) upon authority of the National 
Treasurer; and
(c) Retained Fund — constituted from taxes, fees, charges, penalties, 
income, dividends, or interest earnings collected, earned or received 
by NGAs which are expressly authorized by law to be retained by 
NGAs and utilized for specified purposes. Retained Funds shall be 
deposited in the TSA or in an AGDB upon authority of the National 
Treasurer.
Notwithstanding the provisions of laws to the contrary. Special Funds 
may only be established after evaluation by the Perm anent Committee, as to 
their proper category and compliance with the foregoing conditions. Any 
interest earned by Special Funds shall accrue to said Funds.
Section 46. Review by th e  P e rm an e n t C om m ittee. -  The Perm anent 
Committee shall review all existing SAGFs and Special Funds to validate 
their compliance with the foregoing requirem ents. 
Upon evaluation, the 
Perm anent Committee shall recom mend for approval of the President the 
modification a n d /o r term ination of said funds as may be necessary.
It shall likewise review all SAGFs created upon the passage of this Act 
and may recom m end to extend their validity period, but in no case shall the 
extension exceed three (3) years at any one time, subject to approval of the 
President.
The 
Perm anent Committee 
shall Jointly issue guidelines for the 
establishm ent, review and evaluation, accounting and reporting, and 
term ination of SAGFs and Special Funds.
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S ection 47. E scrow  Fund. -  Escrow Funds are constituted from funds for 
which the governm ent’s legal right to use is contingent upon a future event 
which may or may not occur. Escrow Funds shall be deposited in the TSA or 
an AGDB upon authority of the National Treasurer, and shall subsequently 
be part of the General Fund upon the occurrence of the future contingent 
event. Any interest earned by an Escrow Fund shall accrue to the said 
Fund. The am ounts under escrow, including interest earned shall form part 
of the General Fund upon the occurrence of the future contingent event.
S ection 48. W aiver, A batem ent, R efund a n d  C om prom ise A greem ents. -
No public official shall waive, abate, refund, or enter into a compromise 
agreem ent on a tax liability or the paym ent of fees or charges except in 
accordance with law. All waivers, abatem ents, refunds or compromise 
agreem ents made by an NGA shall be properly accounted for and reported. 
Refund of taxes and other revenues shall be treated as a reduction in 
revenue collections.
Section 49. G rants. -  NGAs may accept, with prior coordination with DOF, 
grants, in cash or in kind, from dom estic or foreign sources, for purpos(js 
relevant to their functions. In the case of grants, in cash or in kind, from 
governm ents of foreign countries, their agencies and instrum entalities and 
international or m ultilateral institutions or organizations, acceptance 
thereof shall be subject to the prior clearance and approval by the President 
or his authorized representative based on the recom m endation of the 
Secretary of Finance.
The provisions of this Section shall not apply to: (1) any grant received by 
LGUs or GOCCs, except where the grant is received by them  on behalf of the 
NG; or (2) any grant authorized or covered in accordance with existing law.
G rants received in kind shall be valued and registered in the proper 
registry of the National Government.
Section 50. T reasu ry  S ingle A ccount. -  The TSA refers to the banking 
arrangem ent m anaged by the BTr wherein the governm ent transacts all 
monies collected, received or paid by NGAs in one bank account or a set of 
linked bank accounts and gets a consolidated view of its cash position on at 
least, a daily basis.
The TSA shall cover rem ittances, releases or disbursem ents from the 
General Fund, SAGFs, Special Funds, and any other fund m anaged by the 
BTr, except in any of the following instances:
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(a) When monies under the General Fund are placed under investm ents;
(b) When the BTr is required to hold foreign currency accounts; or
(c) When authorized by the Secretary of Finance.
The BTr, in coordination with NGAs authorized by law to undertake 
revenue 
collection 
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adm inistration, 
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m ake 
the 
necessary 
arrangem ents with authorized agent banks (AABs) to facilitate the collection 
and transfer of said revenues to the TSA. AABs shall deposit said collections 
to TSA within the period and in the m anner prescribed by laws, rules and 
regulations.
S ection 51. O versight on G overnm ent B an k  A ccounts. -N otw ithstanding 
any provision of law to the contrary, the BTr shall undertake any of the 
following in case of violation of a provision in this Act and guidelines issued 
on the im plem entation of the TSA:
(a) Transfer balances of NGA bank accounts to the TSA;
(b) Close any NGA bank account; an d /o r
(c) Revoke the authority to open any NGA bank account.
The NGA or GOCC which has opened a bank account, as well as the 
bank concerned shall 
promptly disclose information regarding such 
account to the BTr.
Section 52. T reasu ry  C ash M anagem ent. -  The BTr shall issue orders for 
the conduct of cash m anagem ent including the requirem ent to provide 
projections on the timing of future transactions of NGAs taking into 
consideration th at the appropriations law is considered the authority of the 
agencies to contract out and disburse funds, except for instances provided 
in the IRR.
Section 53. Investm ents. -  The BTr may invest portions of the funds held 
in the TSA for such periods as the BTr may deem prudent considering cash 
m anagem ent requirem ents and based on term s and conditions as may be 
set by the IRR of this Act. Investm ents are authorized to be m ade in any of 
the following:
(a) Deposit with any highly reputable bank following a selection criteria to 
be issued by the Secretary of Finance in consultation with the BSP;
(b) Sovereign-issued securities with an investm ent grade rating; or
(c) Other fixed income securities with an AAA credit rating issued by at 
least two (2) reputable international credit rating agencies acceptable 
to the Secretary of Finance.
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The 
BTr may appoint a fund m anager as an agent of the National 
Government to undertake the investm ent of the funds.
Interest earned and other income from investm ents shall accrue to the 
General Fund, unless otherwise provided by law.
S ection 54. 
M an ag em en t o f N atio n al G overnm ent B orrow ings. -
Borrowings by the National Government shall be for any of the following 
purposes:
1. Financing budget deficits and liquidity shortfalls;
2. Refinancing and pre-financing m aturing debts;
3. Obtaining foreign currency on behalf of the BSP;
4. On-lending to an approved entity;
5. Financing all sum s of money paid to fulfill guarantees;
6. Regulating internal m onetary conditions should the necessity arise;
7. Providing financing to remedy the effects of natural calam ities; or
8. Defraying expenditures covered by appropriations.
Borrowing under this Act should adhere to the Fiscal Responsibility 
Principles and m easurable fiscal objectives in the Statem ent of Fiscal Policy.
Section 
55. 
B orrow ings 
by 
G overnm ent 
-Owned 
o r 
-C ontrolled 
C orporations. 
-  Before the end of each fiscal year, the Head of a GOCC 
shall prepare a borrowing program for the following fiscal year which shall 
support the COB and for the medium term, both of which shall include a 
full financial plan with the details of the loans, refinancing and repaym ent 
that the GOCC intends to take. Said borrowing program , including changes 
thereon, shall be subject to the approval of the Head of the NGA overseeing 
the GOCC, and shall be subm itted to DOF for information, and shall be 
published in the concerned GOCC website.
GOCCs shall seek approval of DOF for their borrowing activities as 
defined in the IRR.
Nothing in this Section shall be construed as creating a government 
guarantee on any borrowing, loans or refinancing and repaym ent that the 
GOCC intends to take.
Section 56. L ocal G overnm ent B orrow ings. -  An LGU may borrow funds 
from domestic and foreign sources in accordance with the Local Government 
Code of 1991 or any other applicable law. The financial plan including 
borrowing program  shall be published in the appropriate government 
website within seven (7) days after the borrowing program  has been 
approved.
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Section 57. D ebt R eporting. -  The DOF, through the BTr, shall ensure that 
the records include information on the principal, term s of repaym ent, 
am ounts drawn, interests and service charges accrued, principal and 
interests paid, and the balance outstanding, and shall m ake the records 
available in a timely way to the President, Congress and COA when 
requested and in accordance with the reporting requirem ents in this Act.
Each LGU and GOCC shall m aintain records and provide reports to the 
DOF on loans as required by relevant laws, rules and regulations.
S ection 58. G u aran tees. -  G uarantee, indem nity or security shall be 
provided to an NGA or a GOCC as provided by law, and subject to the 
annual guarantee ceiling prescribed in the General Appropriations Law, and 
upon such term s and conditions as the Secretary of Finance may 
recommend consistent with relevant laws, rules and regulations. The overall 
level of guarantee, indem nity or security shall adhere to the Fiscal 
Responsibility Principles laid down in this Act and the fiscal objectives in the 
Statem ent of Fiscal Policy.
The DOF shall charge a risk-based fee for any guarantee, indemnity, 
security, relending or sim ilar financial accom m odation it may extend to a 
GOCC.
In no case shall the National Government be liable for any borrowings by 
any agency of the governm ent except for explicit guarantees as provided by 
law.
S ection 59. L im itatio n  on th e  L iability o f th e  N atio n al G overnm ent For 
D ebts o f O th er E n tities. -  The National Government shall not be liable for 
any implied guarantees asserted by any person or entity, but only for 
explicit guarantees extended in accordance with existing laws, and 
guarantees in favor of the Government Service Insurance System, Home 
Development M utual Fund, Philippine Health Insurance Corporation, and 
the Social Security System in their respective charters.
S ection 60. P ay m en ts M ade fo r  C ontingent L iabilities. -  Any money paid 
by the DOF p u rsu an t to any guarantee, indemnity, or security authorized by 
law and the expenses associated with the sam e shall constitute a debt due 
the National Government from the entity for whose benefit the paym ent on 
the guarantee, indemnity, or security was made.
Section 61. In fo rm atio n  on C ontingent L iabilities. -  The DOF shall keep 
a complete and updated registry of all contingent liabilities of the National 
Government, and provide the OCG with a report on contingent liabilities as 
of the fiscal year.
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PART VI
ACCOUNTABILITY AND REPORTING
Section 62. F in a n c ia l M anagem ent a n d  In te rn a l C ontrol. -  The Head of 
Agency shall be responsible and accountable for the financial m anagem ent 
of the agency which shall include meeting perform ance targets, controlling 
costs, m itigating adverse risks to agency operations, and ensuring that 
budgets are m anaged with integrity and in compliance with applicable laws. 
Adequate internal controls shall be ensured and an internal audit function 
shall be m aintained.
Section 63. 
In te g ra te d  F in a n c ia l M anagem ent In fo rm a tio n  System . -
There shall be an integrated financial m anagem ent inform ation system, 
which shall be the single portal of all financial transactions and reports to 
be used by NGAs, GOCCs and LGUs to integrate budgeting, cash 
m anagem ent, accounting and auditing processes.
Section 64. NGA A n n u al P la n s a n d  P roposed B udgets. -  The Head of 
each NGA shall produce an Annual Plan which shall have a m edium  term 
scope, with details for the following fiscal year, and shall include information 
on the strategic priorities for the m edium -term , consistent with the 
Philippine Development Plan; perform ance information; sum m ary proposed 
budget 
including 
financial 
forecasts 
assum ptions 
and 
highlighting 
significant capital projects; and other information as required in the IRR, as 
well as the Budget Call and other related orders from the DBM. The Annual 
Plan shall be subm itted to DBM during the budget preparation process 
consistent with the tim etable and other guidelines in the Budget Call.
The Annual Plan of a D epartm ent shall incorporate the A nnual Plans of 
its attached NGAs and GOCCs subject to guidelines prescribed in the IRR.
S ection 65. 
NGA R ep o rtin g R equirem ents. -  For greater transparency 
and accountability, each Head of an NGA shall:
(a) Subm it m onthly and quarterly reports on the agency’s financial and 
non-financial perform ance to the DBM and OCG, not later than thirty 
(30) days after the end of every m onth and quarter in the format 
specified by the DBM and shall publish the sam e on a government 
website within the sam e reglementary period;
(b) Prepare an Annual Report which shall include year-end financial 
statem ents, reporting on non-financial perform ance com pared against 
the Annual Plan, and other information as required in the IRR; subm it 
the said Report to the DBM, OCG, and Congress no later than six (6) 
m onths after the end of the fiscal year; and publish the said Report in 
a governm ent website no later than seven (7) days after its subm ission 
to Congress.
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The monthly, quarterly, and annual reports of a D epartm ent shall 
incorporate the reports of its attached NGAs and GOCCs subject to 
guidelines prescribed in the IRR.
Section 66. Service A greem ents. -  The Head of an NGA may enter into a 
service a n d /o r perform ance agreem ent with another agency for the latter to 
provide services charged against the budget of said principal agency.
Section 67. C o rp o rate O p eratin g  B udget. — The Board of Directors or 
Trustees of a GOCC shall prepare and subm it a COB to the Head of the NGA 
overseeing said GOCC, the DBM, and the DOF, not later than ninety (90) 
days prior to the com m encem ent of the fiscal year, which shall include, the 
objectives of the GOCCs and its subsidiaries, the activities to be undertaken, 
performance targets and risks; forecasts of financial statem ents for the next 
three (3) years; and other information as may be required in the IRR.
The Head of the NGA overseeing said GOCC shall endorse the Board- 
approved COB to the DBM, for the latter’s approval. The Head of a GOCC 
shall publish the DBM-approved COB of the GOCC on the official website of 
the Corporation not later than fourteen (14) days after the approval of the 
COB.
Section 68. GOCC R ep o rtin g  R equirem ents. -  For greater transparency 
and accountability, each Head of GOCCs shall:
(a) Provide quarterly reports on financial and non-financial perform ance 
to the DOF, 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 
statem ents, reporting on non-financial perform ance com pared against 
the COB, and other information as required in the IRR; subm it the 
sam e to the overseeing NGA, DBM, GCG, DOF and Congress no later 
than six (6) m onths after the end of the fiscal year; and publish the 
said Report in a governm ent website no later than seven (7) days after 
its subm ission to Congress.
GOCCs with subsidiaries shall reflect in its quarterly and annual reports 
the aforem entioned required information for the whole corporate group, 
consistent with guidelines prescribed in the IRR.
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S ection 69. Service A greem ent f o r  a  GOCC. -  Where GOCCs im plem ent 
government non-com m ercial 
program s, 
such as housing provision, 
irrigation and electrification, and receive governm ent funding, a service 
agreem ent with the NGA overseeing said GOCC shall specify the term s of 
delivery of goods or services that the GOCC m ust provide, and the funds 
that the governm ent will pay. Program funds shall be under the budget of 
the NGA overseeing said GOCC.
S ection 70. L ocal G overnm ent Units. -  The Local Chief Executives (LCEs) 
shall ensure that adequate internal controls and an internal audit function 
are m aintained.
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LCEs 
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provide 
financial 
and 
non-financial 
performance 
information of their respective LGUs to the OCG, DILG, and the BLGF under 
the DOF, subject to the guidelines to be issued thereon.
Section 71. A p p licatio n  o f A ccounting a n d  A u d itin g  R equirem ents. -
Any expenditure of public money, including governm ent assets or liabilities 
incurred by and for the Government regardless of the source of funding, 
shall be subject to accounting and auditing rules and regulations 
promulgated by the COA.
S ection 72. A ccounting S ta n d a rd s. -  The OCG shall specify the basis, 
standards and guidelines for appropriations reporting while the COA shall 
continue to set the basis, standards and guidelines for financial accounting 
for use by the NGAs, GOCCs and LGUs.
The Heads of Agencies shall ensure that full, accurate and proper records 
are kept for their respective agencies on financial m atters and for 
performance in the production of goods and services.
The DBM, OCG and COA shall ensure th at complete, accurate and 
appropriate records of the governm ent are kept on both financial and non- 
financial perform ances.
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Section 73. G overnm ent C o n solidated R eporting. -  The OCG shall 
subm it a quarterly report on the consolidated financial perform ance of the 
government 
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performance against the Appropriations Law, not later than sixty (60) days 
after the end of each quarter. This report shall be published in a government 
website within seven (7) days after the report is subm itted to the President.
The OCG shall prepare the consolidated annual financial statem ents, not 
later than six (6) m onths after the end of the fiscal year, for subm ission to 
the President, Congress and COA.
Section 74. In te rn a l A u d it S ta n d a rd s. — The OCG, in coordination with 
COA, shall specify the standards for internal audit in the NGAs, GOCCs 
and LGUs.
PART VII
TRANSPARENCY AND PARTICIPATION
Section 75. P eo p le’s A ccess to Public F in a n c ia l In fo rm atio n . -  Before 
the start of each fiscal year, the DBM shall prom ulgate a Calendar of 
Disclosures, and shall publish this on the governm ent website and such 
calendar shall contain the schedule of release of all budget docum ents and 
information required by this Act and its IRR. The DBM shall m onitor and 
periodically report to Congress and the public on the compliance of agencies 
with the C alendar of Disclosures and other fiscal transparency requirem ents 
under this Act and its IRR.
All docum ents and reports required to be published by this Act and its 
IRR shall autom atically be made available electronically in a government 
website. C urrent and historical data on governm ent revenues, expenditures, 
and borrowings, shall be m ade available electronically, in open data format, 
on a government website, subject to guidelines in the IRR.
Section 76. The P eo p le’s B udget. -  The DBM shall, for every fiscal year, 
publish citizen-friendly sum m aries of the following, subject to guidelines 
and other specifications in the IRR;
(a) The Statem ent of Fiscal Policy in the year of the President’s election 
and any updates thereafter within thirty (30) days from subm ission to 
Congress;
(b) The Proposed National Budget, to be published in electronic format 
within thirty (30) days from subm ission to Congress of the Proposed 
National Budget;
(c) The General Appropriations Law, to be published in electronic format 
in a governm ent website within thirty (30) days from its effectivity; and
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(d) The A nnual Fiscal Report, to be published in electronic form at in a 
governm ent website within thirty (30) days from subm ission i:o 
Congress;
S ection 77. P eo p le’s P a rtic ip a tio n  in th e  B udget Process. -  The
government shall establish and im plement suitable participatory budget 
m echanism s to facilitate the open, inclusive, and m eaningful engagem ent of 
citizens throughout the budget process—from budget preparation, to 
legislation, to execution, and to accountability and audit. Such participatory 
m echanism s may include consultations and partnerships with civil society 
organizations (CSOs), academ ics and experts, and other individual and 
organized stakeholders throughout the annual budget process.
To aid the em pow erm ent of grassroots organizations and com m unities in 
the national budget process, the DBM, DILG, and other relevant agencies 
shall facilitate a process wherein CSOs, com m unity organizations and LGUs 
can jointly identify local priority poverty reduction and development needs 
which will serve as input to the formulation of the Proposed National 
Budget. Such process shall consider the pursuit of m eaningful local 
devolution and local accountability, as well as the strengthening of regional 
and local development councils’ roles in the national budget process.
Policies and regulations for the establishm ent of participatory budgeting 
m echanism s established by laws shall be form ulated and enforced by:
(a) The DBM, together with other relevant agencies of the executive, when 
it comes to participation in budget preparation, execution, and 
accountability;
(b) The House of Representatives and the Senate, through their relevant 
committees, when it comes to participation in budget legislation; and
(c) The COA, when it comes to participation in the conduct of audit.
PART VIII 
ENFORCEMENT
Section 78. 
S a n c tio n s a n d  P en alties. -  W ithout prejudice to the 
provisions of other laws, the following sanctions and liabilities in case of 
failure to comply with the reporting and posting requirem ents under this 
Act, shall be imposed:
(a) The DBM shall not approve any request for release of allotm ents for 
items of appropriations covered in the negative list or modification in 
the allotm ent nor recom mend the use of savings by the President undl 
such time as the non-com pliant agency has subm itted the rep o rt/s 
required under this Act;
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(b) The COA may disallow any expenditure charged against augm entation 
using savings, and any expenditure due to modification in the 
allotment, which were m ade within the period succeeding the 
reporting period when the agency failed to comply with the reporting 
requirem ents under this Act;
(c) Failure to report on the income a n d /o r funds retained at the end of a 
reporting period shall render all disbursem ents against such income 
or funds in subsequent reporting periods as void, and will render the 
responsible official liable under existing laws; and
(d) The Congress may motu proprio or upon the request of COA a n d /o r 
DBM through its appropriate oversight committee compel the head of 
the non-com pliant agency, under pain of contem pt, to produce the 
required rep o rt/s and to explain reasons for failure to subm it and 
disclose said report/s.
W ithout prejudice to the provisions of other laws:
(a) Every contractual com m itm ent, expenditure or paym ent authorized or 
incurred in violation of the provisions of this Act shall be void and 
shall render the public official an d /o r employee authorizing or m aking 
such paym ent and every person in collusion with said official or 
employee shall jointly and severally be held liable to the governm ent 
for the full am ount so paid or received. The public official or employee 
who knowingly incurs any contractual com m itm ent or authorizes any 
expenditure in violation of the provisions of this Act or takes part 
therein shall likewise be removed or dism issed from office, after due 
notice and hearing, even if no criminal charge is instituted against 
him;
(b) Any public official or employee, holding office or employm ent in a 
casual, tem porary, holdover, perm anent or regular capacity, who shall 
cause the inclusion of fraudulent information in any accountability 
report, shall be penalized 
with im prisonm ent not exceeding five (5) 
years, or a fine not exceeding One Million Pesos (PI,000,000.00), or 
both, w ithout prejudice to disallowances that may be m ade by COA 
against expenditures related to such fraudulent information, provided, 
that this fine is reviewed and adjusted periodically to be reasonable;
(c) A conviction under this Act shall carry with it civil liability, which may 
either consist of restitution for the damage done or forfeiture in favor 
of the governm ent of any unw arranted benefit derived from the act or 
acts in question, or both, at the discretion of the courts, in addition to 
possible adm inistrative liability; and
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(d) Private individuals who shall conspire with the erring Public 
Officials or Employees, w hether as co-principals, accomplices or 
accessories, in the commission of any violation of this Act shall be 
subject to the sam e penalties as the Public Officials or Employees 
and shall be tried jointly with them.
Section 79. Ju risd ic tio n . -  Actions under this Act shall be cognizable by 
the courts, tribunals, bodies, agencies or authorities with appropriate 
jurisdiction under existing laws.
PART IX
FINAL PROVISIONS
Section 80. Im p lem en tin g  R ules a n d  R eg u latio n s. -  The DBM in
consultation with the DOF, BTr, NEDA and COA, and in coordination with 
agencies concerned, 
shall 
issue 
the 
IRR 
necessary for the 
proper 
im plementation of this Act, within ninety (90) days from the effectivity of this 
Act. The IRR may be am ended by the DBM, in coordination with the 
agencies concerned, as the need arises.
S ection 81. T ran sito ry  Provisions. -  The DBM, DOF, BTr, NEDA and COA 
shall produce and subm it within thirty (30) days from prom ulgation of the 
IRR, a Transitory Plan for information, to the Joint Congressional Oversight 
Committee on Public Expenditures to ensure the proper im plem entation of 
the provisions of this Act, presenting the Sections that will not be 
implemented on the passing of this Act and those requiring compliance with 
certain conditions or the happening of events before the provisions herein 
may be implemented.
Section 82. R ep ealin g  C lause. -  Any law, presidential decree or issuance, 
executive order, letter of instruction, adm inistrative order, proclamation, 
charter, rule or regulation a n d /o r parts thereof contrary to or inconsistent 
with the provisions of this Act is hereby repealed, modified or amended 
accordingly.
Section S 3 .S e p a ra b ility  C lause. -  If for any reason, any section or 
provision of this Act is declared unconstitutional or invalid, other sections or 
provisions which are not affected thereby shall continue to be in full force 
and effect.
Section 84. E ffectivity C lause. -  This Act shall take effect fifteen (15) days 
following its publication in the Official Gazette or in two (2) new spapers of 
general circulation.
Approved,
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