TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE 
S. No.
25 AUG-6 A10:54
RKCE1”'D ii'.
Introduced by Senator Jinggoy Ejercito Estrada
AN ACT
INSTITUTIONALIZING THE CASH BUDGETING SYSTEM, AND FOR OTHER 
PURPOSES
EXPLANATORY NOTE
The country's budget system is plagued with various issues that seriously 
affect the delivery of efficient and effective public service. As emphasized by the 
Philippine Institute for Development Studies, the "long-standing" issues in the 
budget process include "delays in the procurement process; revisions and 
modification in project designs; billing issues such as late or incomplete submission 
of billing claims; unresolved right-of-way acquisition; and structural weaknesses in 
the agencies".1
These were attributed to the loopholes in the formulation and implementation 
of various budget reforms that were adopted by various administrations over the 
years, including the Obligation-Based Budgeting System. In particular, Obligation- 
Based Budgeting allows the delivery of contracts awarded, inspection, verification, 
and payment even after the end of the year, thus resulting to unnecessary delays.
Executive Order No. 91, "Adopting the Cash Budgeting System Beginning 
Fiscal Year 2019, and for Other Purposes" was signed by President Rodrigo R.
1 PIPS to DBM: Revisit cash-based budgetinR (neda.gov.ph)
1


Duterte as a response to the "need to improve the fiscal planning of government 
agencies through the implementation of an operational cash budget and by setting 
deadlines for obligation of funds and execution of projects during the fiscal year, in 
order to speed up the implementation of programs and to promptly deliver goods 
and services to our people." This is premised on the administration's goal to ramp 
up the economic growth of the country, push the country into upper-middle income 
status by 2022 and reduce poverty incidence by the same year. To achieve this, the 
government massively invested in public infrastructure and human capital 
development.
The Annual Cash-Based Appropriations that was implemented in Fiscal Year 
2019 "limit incurring obligations and disbursing payments for goods delivered and 
services rendered, inspected, and accepted within the fiscal year." As a result, 
contracts intended to be implemented for the fiscal year should be fully delivered by 
the end of the fiscal year, and payment is done within the fiscal year and up to a 
three-month Extended Payment Period (EPP) after the fiscal year for goods and 
services accepted by December 31 of the fiscal year.
As highlighted by economist and incumbent Secretary of the Department of 
Finance Benjamin Diokno in his paper, "Recent Philippine budget reforms: separating 
the chaff from the grain, the whimsical from the real" published in June 2014, "Major 
public sector reforms, including budget reforms, do not happen overnight. They 
must be well designed, carefully sequenced, and properly implemented. For reforms 
to be preserved, they must be cast into appropriate laws. This is to guarantee the 
perpetuation of reforms notwithstanding changes in administration. Reforms that 
are not anchored on a new law or an amendment of existing laws tend to be weak 
and would likely not endure."2
The "Cash Budgeting System Act' seeks to institutionalize the current cash 
budgeting system through legislation. Through this measure, it is hoped that the
1 https://econ.upd.edu.ph/pre/index.php/pre/article/download/903/803
2


government will be able to optimize its limited resources and utilize it for the 
genuine development and progress of the country.
In view of the foregoing, the immediate passage of this bill is highly 
recommended.
lY EJERCITO ESTRADA


TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE
S. No. 1021
of
25 AUG-6 A10 54
RKEiV'fD QV
Introduced by Senator Jinggoy Ejercito Estrada
AN ACT
INSTITUTIONALIZING THE CASH BUDGETING SYSTEM, AND FOR OTHER 
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. Short Title. - This Act shall be known as the "Cash Budgeting
2 
System Act.
3 
Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State to
4 
formulate and implement a national budget that is an instrument of national
5 
development, reflective of national objectives, strategies and plans. In line with this,
6 
the State shall implement an operational cash budget that will ensure the availability
7 
of cash resources for priority development projects and to establish a sound basis
8 
for determining the level, type and timing of public borrowings.
9 
Sec. 3. Cash Budgeting System. - The government hereby adopts the Cash
10 
Budgeting System (CBS). Accordingly:
11 
(a) All authorized appropriations shall be available for obligation and
12 
disbursement only until the end of each fiscal year (FY);
13 
(b) Obligations incurred by the National Government within each FY shall be
14 
implemented during the same FY. Goods and services corresponding to
15 
said obligations shall be delivered or rendered, inspected and accepted by
16 
the end of each FY; and.


1 
(c) Payments for obligations incurred shall be made until the end of the
2 
extended payment period (EPP), which shall be three (3) months after the
3 
end of the validity of appropriations against which they were obligated,
4 
unless another period has been determined by the Department of Budget
5 
and Management (DBM), upon consultation with relevant agencies.
6 
Appropriations covering financial subsidy to local government units (LGUs)
7 
shall be available for obligation and disbursement until the end of the succeeding FY,
8 
On the other hand, appropriations for the statutory shares of LGUs shall be available
9 
for obligation and disbursement until fully expended.
10 
All funds transferred between or among government agencies and LGUs shall
11 
not be considered disbursed under this Section, until the transferred amounts have
12 
been actually utilized to pay for goods delivered and services rendered, inspected
13 
and accepted.
14 
Sec. 4. Reversion of Unexpended Balances of Appropriation. — Any
15 
unreleased appropriations and unobligated allotments at the end of the FY, as well
16 
as unpaid obligations and undisbursed funds at the end of the EPP shall revert to the
17 
National Treasury and shall not thereafter be available for expenditure, except by
18 
subsequent legislative enactment. For financial subsidies to LGUs, reversion shall be
19 
made to the National Treasury after the end of the succeeding FY. Departments,
20 
bureaus and offices of the National Government, including constitutional offices
21 
enjoying fiscal autonomy, state universities and colleges, government-owned or -
22 
controlled corporations (GOCCs) and LGUs, shall strictly observe the validity of
23 
appropriations and comply with the reversion of funds.
24 
Sec. 5. Multi-Year Projects. - Multi-year procurement projects, or those with
25 
an implementation period exceeding twelve (12) months, shall require the issuance
26 
of a Multi-Year Contractual Authority (MYCA) by the DBM for national government
27 
agencies (NGAs) and qualified GOCCs prior to the conduct of procurement. The
28 
MYCA or equivalent authority shall cover the full project cost, and shall be the basis
29 
of the approved budget for the contract.
30 
A MYCA may likewise be issued for single-year procurement projects or those
31 
with an implementation period of twelve (12) months or less, that are either


1 
research or scientific in nature, and by design necessitate implementation covering
2 
two (2) FYs.
3 
Multi-year Public-Private Partnership projects with government undertakings
4 
authorized under Republic Act No. 6957, as amended by Republic Act No. 7718, shall
5 
require the issuance by the DBM of a letter of commitment to cover the National
6 
Government funding commitment.
7 
Sec. 6. Early Procurement Activities of Government Agencies. - Government
8 
agencies are hereby authorized to undertake procurement activities short of award,
9 
to the extent consistent with Republic Act No. 9184, or the "Government
10 
Procurement Reform Act" and its Revised Implementing Rules and Regulations.
11 
For this purpose. Early Procurement Activities (EPA) shall cover goods to be
12 
delivered, infrastructure projects to be implemented and/or consulting services to be
13 
rendered in the following FY pending approval of the corresponding GAA. EPA shall
14 
commence from the posting of the procurement opportunity, if required, until
15 
recommendation to the Head of the Procuring Entity as to the award of the contract.
16 
Sec. 7. Implementing Rules and Regulations. - Within thirty (30) days from
17 
the approval of this Act, the DBM shall issue the necessary rules and regulations for
18 
the effective implementation of this Act.
19 
Sec. 8. Separability Clause. - If any provision or part hereof is held invalid or
20 
unconstitutional, the remainder of the law or the provision or part not otherwise
21 
affected shall remain valid and subsisting.
22 
Sec. 9. Repealing Clause. - Any law, presidential decree or issuance,
23 
executive order, letter of instruction, administrative order, rule, or regulation
24 
contrary to or inconsistent with the provisions of this Act are hereby repealed,
25 
modified, or amended accordingly.
26 
Sec. 10. Effectivity. - This Act shall take effect fifteen (15) days after its
27 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,