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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

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HOUSE BILL nB897

Introduced by Representatives CARLOS ISAGANI T. ZARATE,
EMMI A. DE JESUS, ANTONIO L. TINIO, ARIEL B, CASILAO,
ARLENE D. BROSAS, FRANCE L. CASTRO and SARAH JANE I. ELAGO

THE CONGRESSIONAL BUDGET AND IMPOUNDMENT CONTROL ACT

EXPLANATORY NOTE

This bill aims to strengthen the “Congressional power of the purse” as enshrined in the 1987
Constitution in light of current developments wherein massive corruption involving billions of
public funds happen right under our nose. The public is outraged by the news of the public
coffers being used by individuals for their own personal benefit, depriving the masses of the
people of basic services they desperately ned.

Article VI, Section 25 (5) of the 1987 Constitution states that “No law shall be passed
authorizing any transfer of appropriations ...” Further, Article VI, Section 24 of the 1987
Constitution also states that “Section 24. All appropriation, revenue or tariff bills, bills
authorizing increase of the public debt, bills of local application, and private bills, shall originate
exclusively in the House of Representatives, but the Senate may propose ot concur with
amendments.”

It was President Benigno S. Aquino III himself, during his term as a Senator in the Fourteenth
Congress, who introduced a bill seeking Congressional control over the power of the president
on budget impoundment. However, when he became the President, he must have forgotten this
bill that he himself submitted for Congress’ enactment, The President is now exercising the same
power he previously wanted Congress to control. As explained by then Sen. Aquino in his bill,
“Impoundment refers to the refusal of the President, for whatever reason, to release funds
appropriated by Congress, It is the failure to spend or obligate budget authority of any type.”
Yet, it appears that Pres, Aquino is now doing the same thing as was done by his predecessor.


Despite the provisions of the Constitution granting powers to the Congress to control the
appropriation of public fund, the President still wields considerable control over public spending
through the exercise of budget impoundment, The President and the Department of Budget and
Management are able to circumvent the General Appropriations Act by impounding the release
of public funds in the middle of a fiscal year, trampling upon the Congressional power over the
purse, As a result, billions of pesos in public funds are being spent on items not appropriated by
Congress, in violation of the provisions of the Constitution.

This bill, originally filed by the Makabayan bloc headed by Bayan Muna Reps. Neti J.
Colmenares and Carlos Isagani T. Zarate during the 16" Congress, will protect the public fund
from unbridled and arbitrary realignment of funds for activities that are not authorized by
Congress.

In this light, the passage of this bill is earnestly sought.

Approved,

CARLOS Sac eo

* Bayan Muna Party-list + +

ARIEL/B. CASILAO,
Anakpawis Party-list

” BROSAS SARAH JANE I. ELAGO
fabriela Women's Party Kabataan Party-list


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

"3897

HOUSE BILL No,

Introduced by Representatives CARLOS ISAGANI T. ZARATE,
EMMI A, DE JESUS, ANTONIO L. TINIO, ARIEL B, CASILAO,
ARLENE D. BROSAS, FRANCE L, CASTRO and SARAH JANE I. ELAGO

THE CONGRESSIONAL BUDGET AND IMPOUNDMENT CONTROL ACT

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

SECTION 1. Title. - This is Act shall be known as “The Congressional Budget and
Impoundment
Control Act.”

SECTION 2. Declaration of Policy. - It is the policy of the State to formulate and implement a
National Budget that is truly an instrument of national development, The National Budget, as
approved and enacted by Congress through the General Appropriations Act, should be faithfully
executed to the letter. No amount of money coming from the public fund should be spent on
activities that are not authorized by Congress.

‘Towards this end, all appropriations, except those which shall be deferred, rescinded, reserved,
or otherwise withheld in the General Appropriations Act, shall be released within the first
semester of the year through the issuance of advices of allotment in accordance with approved
work and financial plans, and shall be utilized according to the purposes provided in the General
Appropriations Act, Any deferral, rescission or reservation of appropriations in the General
Appropriations Act shall be in accordance with this Act.

SECTION 3. The Congress declares that it

is essential -
1) to assure effective congressional control over the budgetary process;

2) to provide for the congressional determination each year of the appropriate level of
national revenues and expenditures;


3) to provide a system of impoundment control;
4) to establish national budget priorities; and

5) that Congress be provided by the executive branch with full and detailed information for
Congress to effectively discharge its duties.

SECTION 4. Definition of Terms. - For purposes of this Act:

a) Lump sum - means funds allocated without being broken down into detailed purpose,
program, activity or project.

b)_Rescission - means cancellation of all or part of an enacted appropriation, which has not
yet been spent or obligated.

©) Reserve - means the amount set aside from a particular appropriation to provide for
contingencies and emergencies which may arise later in the calendar year.

d) Reservation - means imposition of reserves on appropriated amounts for government
expenditures.

©) Deferral of releases - means withholding or delayingthe release of appropriated amounts
provided for projects or activities.

1) Impoundment resolution - means a joint resolution of bothHouses of Congress expressing
its approval of a rescission, reservation or deferral of an appropriation or several
appropriation items as proposed by the President.

2) Advice of allotment - the formal document issued by the Department of Budget and
Management, which contains authorizations, conditions, and amount of obligations that
an agency can incur pursuant to a legislative appropriation,

h) Unobligated allotment - means the portion of allotment that has not yet been incurred or
paid by the department, agency or any instrumentality of the government upon which the
allotment was issued.

i) Work-and-financial plan -means the monthly breakdown of financial requirements and
physical performance targets of an agency.

j) Appropriations - unless otherwise described or specified herein, the term
appropriations refers to. the appropriations included in the annual General
Appropriations Act and as defined in the Administrative Code of 1987.


k) Unreleased appropriation - means the portion of appropriation that has not yet been made
available for allotment to the department, agency or instrumentality of Government upon
which an appropriation was authorized by Congress.

SECTION 5. Submission of Proposed National Budget by the President to Congress. -
Whenever the President submits to Congress the proposed National Budget, it must include a
detailed enumeration of items for appropriation including but not limited to the, special purpose
funds, unprogrammed funds, the automatic appropriations and debt-service payments.

SECTION 6. Lump Sum Appropriations..No lump sum amounts, upon which its
disbursement shall be under the discretion of the President or head of any agency/department of
the government, that does not contain specific items enumerated for allocation shall be included
in any annual General Appropriations Act. Each item in the proposed budget shall contain the
detailed purpose for which funds will be appropriated.

Lump sum amounts for Calamity Funds shall be appropriated by Congress, Provided, That
expenditures for this particular appropriation shall require a report by the recipient
agency/department to the House of Representatives and the Senate, in the event of its
disbursement. Lump sum appropriation to cover for contingencies may be authorized by
Congress, Provided, That the amount to be set aside for contingency funds shall not exceed one
percent (1%) of the total appropriations for a calendar year.

SECTION 7. Automatic and Debt-Servicing Appropriations.- Provisions for automatic
appropriations and debt-service amortizations shall indicate the institutions, banks ot lending
corporations from where the loans are obtained and the principal amounts and interests obligated
for each loan.

SECTION 8. Rescission and Reservation of a Budget Appropriation, -Whenever the
President, upon the recommendation of the Secretary of the Department of Budget and
Management, determines that all or part of any budget appropriation will not be required to carry
out the full objectives or scope of programs for which it is provided, or that such budget
appropriation should be rescinded for fiscal policy or other reasons, including the termination of
authorized projects or activities, or whenever all or part of any budget appropriation for the
current fiscal year is to be reserved from obligation for such fiscal year, the President shall
transmit to both Houses of Congress a special message specifying:

1. ‘The amount of budget appropriation which he proposes to be rescinded or which is to be
so reserved;

2. Any account, department, agency or instrumentality of the government to which such
budget appropriation is available for obligation, and the specific projects or governmental
functions involved;

3. The reasons why the budget appropriations should be rescinded or is to be so reserved;


4, The estimated fiscal, economic and budgetary effect of the proposed rescission or
reservation; and

5, All facts, circumstances and considerations relating to or bearing upon the proposed
rescission or reservation, and the estimated effect of the proposed rescission or
reservation upon the purposes, programs, activities and projects for which such
appropriation is provided.

SECTION 9. Approval of Rescission or Reservation, - Both Houses of Congress shalll act on
the proposed rescission or reservation within sixty (60) calendar days after the receipt of such
proposal from the President by issuing a joint impoundment resolution approved in Plenary:
Provided, ‘That if the President's special message is received within a period of less than sixty
(60) calendar days before the end of a regular session, the President's message shall be deemed
to have been submitted on the first day of the succeeding regular session of Congress and the
sixty (60) day period referred to in this Section shall commence on the first day of such
succeeding regular session. If Congress does not issue an impoundment resolution within the
specified period, the President shall not proceed with the rescission or reservation procedures.
Provided, however, that in the event of a Congressional approval to rescind, the funds
corresponding to the rescinded appropriations shall revert to the General Fund and shall not be
made available for expenditure for any purpose except as provided for by a subsequent
legislative enactment.

SECTION 10. Use of Reserves. - When changes in conditions during the year, as determined by
Congress, justify the use of the reserved appropriations which have been imposed under this Act
or under the General Appropriations Act, the amount involved shall be allocated back for the use
by, and upon the request of the Department, office or agency on whose appropriation the reserve
was originally imposed.

SECTION 11. Deferral of Releases.

a) Whenever the President, the Secretary of Budget and Management, the head of any
department, agency or instrumentality of the Government proposes to defer the release of any
appropriation for a specific purpose, program, activity, or project, the President shall transmit to
the House of Representatives and the Senate a special message specifying

(1) The amount of the appropriation proposed to be deferred;

(2) Any account, department, agency or instrumentality of the Government to which such
appropriation is available for obligation, and the specific projects or governmental
functions involved;

(3) The period of time during which the appropriation is proposed to be deferred;

(4) The reasons for the proposed deferral, including any legal authority invoked by him to
justify the proposed deferral;

6


(5) The estimated fiscal, economic and budgetary effect of the proposed deferral;

(6) All facts, circumstances and considerations relating to or bearing upon the proposed
deferral and the decision to effect the proposed deferral, including an analysis of such
facts, circumstances and considerations in terms of their application to any legal
authority and specific elements of legal authority invoked by him to justify such
proposed deferral, and the estimated effect of the proposed deferral upon the objects,
purposes, program, activities and projects for which such appropriation is provided.

b) A deferral may not be proposed for any period of time extending beyond the end of the fiscal
year.

SECTION 12. Approval of Release Deferral, - Both Houses of Congress shall act on the
proposed deferral within sixty (60) calendar days after the receipt of the proposal from the
President: Provided, ‘That if the President's special message is received within a period of less
than sixty (60) calendar days before the end of a regular session, the President's message shall
be deemed to have been submitted on the first day of the succeeding regular session of
Congress and the sixty (60) day period referred to in this Section shall commence on the first day
of such succeeding regular session. If Congress does not issue an impoundment resolution within
the specified period, the President shall not proceed with the deferral procedures.

SECTION 13. Submission of Quarterly Reports. - Within thirty (30) days after the end of
each quarter, the Secretary of the Department of Budget and Management shall submit to the
Committee on Appropriations of the House of Representatives and the Committee on Finance of
the Senate, a list of releases made out of reserved and deferred appropriations, and comparative
statements showing the annual general appropriations, the annual program of continuing and
automatic appropriations, and the corresponding releases of allotments and cash allocations for
each department, agency, corporation and fund: Provided, That the releases from each lump-
sum or special purpose funds shall be supported with schedules indicating the specific
departments/agencies, corporations or entities which received the fund releases and the purposes
of such releases, The quarterly reports shall also include a cumulative summary of all
appropriations rescinded, deferred or reserved.

SECTION 14, Mode of Transmittal of the Special Message of the President. - The President
shall transmit to Congress at any time during the budget year but not later than the fifteenth day
of October of the budget year the special message which may include one or more proposals for
impoundment, reservation, or deferral on one or more appropriation items through the
Committee on Finance of the Senate and the Committee on Appropriations of the House of
Representatives.

SECTION 15, Withdrawal of Unobligated Allotments. - The President, through the
recommendation of the Secretary of Budget and Management, may withdraw unobligated
allotments whenever a program, activity or project from which an allotment was made has been
discontinued or abandoned with finality. The withdrawn unobligated allotments shall revert to
the General Fund and shall not thereafter be made available for expenditure except by
subsequent legislative enactment,


SECTION 16. Unreleased Appropriation. - All unreleased appropriation and unexpended
balances of appropriations shall revert to the General Fund and shall not thereafter be made
available for expenditure except by subsequent legislative enactment or authorization.

SECTION 17, Penal Provision. - Any violation of the provisions of this Act shall be punished
by a fine not exceeding Five Hundred Thousand Pesos (P500,000.00) and the penalty of
perpetual special disqualification,

SECTION 18. Repealing Clause.-The provisions in the annual General Appropriations Act,
specifically, but not limited to, the provisions on impoundment, retention or deduction of
allotment, and lump sum appropriations and 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 19. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) national newspapers of general
circulation, whichever comes earlier.

Approved,