Republic of the Philippines
HOUSE OF REPRESENATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House BiLLNO.__ 2923

Introduced by AKBAYAN Representatives Walden F. Bello and Kaka J. Bag-ao

EXPLANATORY NOTE

‘The annual appropriations law having gone through review and approval by Congress
should be followed religiously. But however meticulous the process may be,
augmentation of certain budgetary allocation may be necessary and this situation finds
support from Section 25 (5) of the Philippine Constitution, to wit:

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5. No law shall be passed authorizing any transfer of appropriations; however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to
‘augment any item in the general appropriations law for their respective offices from savings in
other items of their respective appropriations,

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Such situations oftentimes result to unscrupulous use of the budget devoting amounts
to certain items inconsistent with the objectives for which the annual appropriations
was based that in the end disregard the bases and the very thorough processes
undertaken in the enactment of the General Appropriations Act.

The proposed Savings and Augmentation Act of 2010 seeks to regulate the proper use of
savings as well as to set the limits in the augmentation of budget provided in the annual
appropriations law. It seeks to ensure that the executive implements the budget as
specified in the General Appropriations Act.

The proposed bill highlights that the use of savings as defined in this proposed bill shall
be subject to the limits set by existing law as well as the General Appropriations Act and
subject to the review and approval by Congress may be disallowed if the use of the
savings does not conform to existing guidelines, conditions and limits

This proposed legislation further defines unexpended amounts that shall revert back to
the general fund.

In the end, the objective of this proposed legislation is to make sure that government
remains efficient and effective in the use and generation of revenues that will certainly
attain the goals of national development for the country.

KLE

WALDEN F. BELLO



Republic of the Philippines
HOUSE OF REPRESENATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

2923

HOUSE BILE NO.

Introduced by AKBAYAN Representatives Walden F. Bello and Kaka J. Bag-ao

AN ACT
DEFINING THE CONCEPT OF SAVINGS AND REGULATING THE PROCESS
OF AUGMENTATION BY THE PRESIDENT IN IMPLEMENTATION OF
ARTICLE VI, SECTION 25 (5) OF THE CONSTITUTION

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled.

SECTION 1. Title. — This Act shall be known as the “Savings and Augmentation Act of
2010”.

SECTION 2. Declaration of Policy. — It is the policy of the State to ensure that the
Executive Branch of the Philippine Government implements the budget as specified in
the General Appropriations Act, duly enacted by Congress pursuant to its constitutional
authority to prescribe all government appropriations.

SECTION. 3. Definition of Terms. — Section 2, Chapter 1, Book VI of Executive Order No.
292 (s. 1987) otherwise known as the Administrative Code of 1987, is hereby amended
to read as follows:

“Section 2. Definition of Terms. — When used in this Book:

1. “Appropriation” refers to an authorization made by law or other
legislative enactment, directing payment out of government funds under
specified conditions or for specified purposes.

2. “Allotment” refers to an authorization issued by the Department
of the Budget to an agency, which allows it to incur obligation for
specified amounts contained in a legislative appropriation.

3. “Augment” is the power to transfer savings from one
appropriation to cover deficits in another as exercised by the President,
Senate President, Speaker of the House, Chief Justice, and Heads of the
Constitutional Commissions within their respective branches and agencies
as provided in this Book.

4. “Deficit” means an insufficiency in the appropriated amount for
the completion of a particular program, project or activity or the
fulfillment of current operating expenditures and capital outlays not
arising from causes such as overpricing or other factors which could have
been reasonably foreseen in order to complete the program, project or
activity or fulfill current operating expenditures and capital outlays within
the given appropriation specified in the General Appropriations Act for


said program, project or activity, current operating expenditures and
capital outlays.

5. “Budget” refers to a financial plan required to be prepared
pursuant to Section 16 (1), Article Vill of the Constitution, reflective of
national objectives, strategies and programs.

6. “Current operating expenditures” refers to appropriations for the
purchase of goods and services for current consumption or for benefits
expected to terminate within the fiscal year.

7. “Capital outlay” or “capital expenditures” refers to an
appropriation for the purchase of goods and services, the benefits of
which extend beyond the fiscal year and which add to the assets of the
Government, including investments in the capital of government-owned
or controlled corporations and their subsidiaries.

8. “Continuing appropriation” refers to an appropriation available to
support obligations for a specified purpose or project, even when these
obligations are incurred beyond the budget year.

9. “Deferral” means withholding or delaying the release of
appropriated amounts provided for projects or activities.

10. “Expected result” means service, product, or benefit that will
accrue to the public, estimated in terms of performance measures or
targets.

11. “Fiscal year” refers to the period beginning with the first day of
January and ending with the thirty-first day of December of each calendar
year.

12. The "Government" means the National Government, including the
Executive, the Legislative and the Judicial Branches, and the
Constitutional Commissions.

13. “Department and agency” and “department or agency” include all
departments, bureaus, offices, boards, commissions, courts, tribunals,
councils, authorities, administrations, centers, institutes, state colleges
and universities, and all other establishments and instrumentalities of the
National Government as defined in the preceding paragraph.

14. “Obligation” refers to an amount committed to be paid by the
Government for any lawful act made by an authorized officer for and in
behalf of the Government.

15. “Program” refers to the functions and activities necessary for the
performance of a major purpose for which a government agency is
established.

16. “Project” means a component of a program covering a
homogenous group of activities that results in the accomplishment of an
identifiable output.

17. “Savings” means any unexpended portion or amount of money for
an appropriation as specified in the General Appropriations Act resulting
from the completion of a program, project or activity or fulfillment of the
purpose for which the appropriation was specified at a cost below the
amount appropriated therefor due to lower-than expected expenditures.
This shalll not refer to unexpended amounts resulting from the President's
exercise of the power to impound under Section 38 of this Book. In
addition, this shall not refer to unexpended items in a re-enacted budget
under Article V1, Section 25 (7) of the 1987 Constitution.”

SECTION 4. Section 28 of Chapter 5, Book VI of Executive Order No. 292 (s. 1987)
otherwise known as the Administrative Code of 1987, is hereby amended to read as
follows:


“Section 28. Reversion of Unexpended Balances of Appropriations,
Continuing Appropriations. - Unexpended balances of appropriations
authorized in the General Appropriation Act shall revert to the
unappropriated surplus of the General Fund at the end of the fiscal year
and shall not thereafter be available for expenditure except by
subsequent legislative enactment: Provided, that appropriations for
capital outlays shall remain valid until fully spent or reverted: provided,
further, that continuing appropriations for current operating
expenditures may be specifically recommended and approved as such in
support of projects whose effective implementation calls for multi-year
expenditure commitments: provided, finally, that the President may
authorize the use of savings realized by an agency during a given year to
meet non-recurring expenditures in a subsequent year under guidelines,
conditions and limits to be prescribed by Congress in the General
Appropriations Act and subject to its review and disallowance if the use of
savings does not conform with said prescribed guidelines, conditions and
limits.

Appropriations for capital outlay shall in no case be realigned for personal
services and current operating expenditures. The balances of continuing
appropriations shall be reviewed as part of the annual budget
preparation process and the President may approve upon
recommendation of the Secretary, the reversion of funds no longer
needed in connection the activities funded by said continuing
appropriations.”

SECTION S. Section 39 of Chapter 5, Book VI of Executive Order No. 292 (s. 1987)
otherwise known as the Administrative Code of 1987, is hereby amended to read as
follows:

“Section 39. Authority to Use Savings in Appropriations to Cover
Deficits. - Except as otherwise provided in the General Appropriations
Act, any savings in the regular appropriations authorized in the General
Appropriations Act for programs and projects of any department, office
or agency, may, with the approval of the President, be used to cover a
deficit in any other item of the regular appropriations: provided, that the
creation of new positions or increase of salaries shall not be allowed to
be funded from budgetary savings except when specifically authorized by
law: provided, further, that whenever authorized positions are
transferred from one program or project to another within the same
department, office or agency, the corresponding amounts appropriated
for personal services are also deemed transferred, without, however
increasing the total outlay for personal services of the department, office
or agency concerned.

Under no circumstances shall savings be used for programs, projects and
activities, or any other purpose not appropriated for in the General
Appropriations Act pursuant to Article VI, Section 29 (1) of the 1987
Constitution. Any act to the contrary shall constitute misuse of
government funds and illegal expenditures as provided in Sections 80 and
43 of this Book, including use of savings on unprogrammed expenditures
beyond the limits prescribed in the General Appropriations Act. In
addition, any use of savings on expenditures subject to limitations


provided in the General Appropriations Act shall be reviewed and may be
disallowed by Congress for being made in violation of said limitations.

In addition, unexpended amounts of any lump sum appropriations made
by Congress shall under no circumstances be considered and used as
savings but shall automatically revert back to the General Fund at the end
of the fiscal year pursuant to Section 28 of this Book. Any act to the
contrary shall likewise be considered misuse of government funds and
illegal expenditures as provided in Sections 80 and 43 of this Book.”

SECTION 6. Section 49 of Chapter 5, Book VI of Executive Order No. 292 (s. 1987)
otherwise known as the Administrative Code of 1987, is hereby amended to read as
follows:

“Section 49. Authority to Use Savings for Certain Purposes. — Savings in
the appropriations provided in the General Appropriations Act may be
used for the settlement of the following obligations incurred during a
current fiscal year or previous fiscal years as may be approved by the
President in accordance with specific guidelines, conditions and
limitations that shail be prescribed in the General Appropriations Act:”

SECTION 7. Separability Clause. - If any provision of this Act, or any part thereof, is
declared unconstitutional, the same shall not affect the validity and effectivity of the
other portions.

SECTION 8. Repealing Clause. —~ All laws, decrees, executive orders, letters of
instructions, letters of implementation, rules and regulations or parts thereof
inconsistent with the provisions of this Act are hereby repealed, modified, superseded,
or amended accordingly.

SECTION 9. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
complete pul ition in the Official Gazette or in at least two (2) national newspapers of
general circulation, whichever comes earlier.

Approved,