Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
‘Second Regular Session

HOUSE BILL No. 8308

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

EXPLANATORY NOTE

Over the years we have seen problems occurring in terms of our annual budget in the
country, This proposed Budget Reform in the Philippines aims to strengthen the institutions,
mechanisms and processes involved in budget preparation, authorization, execution and
accountability so that we will have faster, more efficient and reliable budget release in the future.

Several assessments over the country’s Public Financial Management (PFM) system
suggests issues that weaken the national budget which affects in attaining its policy goals. One
issue is the outdated PFM legal framework in order to prepare, authorize and execute budgets.
There is the need to address budget credibility and transparency, legislative oversight, internal
controls, financial and accounting reports. Updating the PFM is urgently needed to institutionalize
government reforms to address recurring problems and underspending of public funds as this will
also promote high performance and good accountability on every government agency.

Another issue is having weak budget information and systems for monitoring the promised
budget outcomes. There is a poor internal control system hence a need for faster racking of budget
execution.

Aside from that, is the weak power of the purse of the Congress. There is a need to stabilize
and strengthen the process of budget authorization and oversight by Congress to enhance the
monitoring and assessment of the performance of the government agencies as part of its oversight
powers.

In a bigger picture, the more that we have a great government spending, the more that it
will also fuel the economic growth of the country to be at par with other Asian countries in terms
of economic growth. The Budget Reform Act, calls for the efficient and effective delivery of
budget to public services to promote the sustainable fiscal and national government budgeting,

therefore, the passage of this bill is urgently sought.

LUIS RA’ “LRAY?” F. VILLAFUERTE JR

GAN 06 2021


Republic of the Bhilippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
‘Second Regular Session

House BILL No8308

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT TO REFORM THE BUDGET PROCESS BY ENFORCING GREATER
ACCOUNTABILITY IN PUBLIC FINANCIAL MANAGEMENT (PFM), PROMOTING
FISCAL SUSTAINABILITY, STRENGTHENING, CONGRESS POWER OF THE PURSE,
INSTITUTING AN INTEGRATED, PFM SYSTEM AND INCREASING BUDGET
TRANSPARENCY AND PARTICIPATION

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
PARTI
PRELIMINARY PROVISIONS
SEC. |. Short Title. - This Act shall be known as the “Budget Reform Act”

SEC. 2. Declaration of Policy and 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
establishment of an integrated system of planning, programming, budgeting, management, internal control,
accounting, reporting, and review of public finances. In light of these requirements, the State shall pursue
the following specific objectives:

(a) To enforce the power of Congress to authorize all appropriations and hold government accountable
in the use of public resources, as well as to ensure the responsibility of all government agencies to propose,
execute and deliver committed results mandated under appropriations laws in a timely, predictable, and

economic manner;

(b) To promote people’s involvement in the management of public resources by enforcing their right to
access information on, and to contribute in the formulation and implementation of, the financial affairs of

the government; and

JAN OT 2024


(©) To strengthen the integration of planning, programming, budgeting, accounting, disbursement,
reporting and performance management and ensure ample safeguards in managing public finances through
internal controls and risk management.

SEC. 3. Scope and Coverage - The provisions of this Act shall apply to the management of revenue,
expenditure, financing arrangements, and assets and liabilities of national government agencies (NGAS),
‘government-owned ot -controlled corporations (GOCCS), and local government units (LGUs) to the extent
provided herein.

SECTION 4. Definition of Terms - As used in this Act and the implementing rules and regulations
IRR) to be issued pursuant thereto:

(@) Activity refers to a recurring work process that contributes to the implementation of a program or
subprogram;

(b) Allotment refers to the authorization issued by the Department of Budget and Management (DBM)
in order for NGAs, GOCCs, or LGUs to incur contractual commitments and disburse funds up to a certain
amount, for a specified public purpose, and within a specified period of time, in accordance with the
Appropriations Law;

(©) Annual Cash-Based Appropriations refer to the annual appropriations that limit incurring obligations
and disbursing payments to goods delivered and services rendered, inspected and accepted within the
current fiscal year, payments, of which, may be settled within the Extended Payment Period;

@ Appropriations Law refers to the legislative authorization used as basis to incur contractual
commitments by NGAs, GOCCs, or LGUs and actual disbursement of public funds for specific public
purposes covering a specified period of time. This may refer to

cither a general or special appropriations law;

(© Cabinet refers to the Executive Secretary and the Secretaries of the Departments under the Executive
Branch;

(®) Extended Payment Period refers to the three (3)-month period in the following fiscal year when
payments, chargeable against the Appropriations Law of the previous fiscal year, can be processed and
disbursed for goods received and services rendered, inspected and accepted by the end of the previous fiscal

year;

(g) Fiscal Year refers to a period of twelve (12) months commencing on January 1 until December 31;



(h) Government Agencies refers to all NGAs, GOCCs and LGUs;

( Government-Owned or -Controlled Corporations refers to agencies with corporate powers whether
or not organized as stock or nonstock corporation, vested with functions related to public needs whether
governmental or proprictary 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 (GFls), government
instrumentalities with corporate powers/government corporate entities and related corporations;

( Government Financial Institutions refer to financial institutions in which the government directly or
indirectly owns the majority of the capital stock and which are either: registered with, or directly supervised
by, the Bangko Sentral ng Pilipinas (BSP); or authorized to collect or transact funds of contributions from
the public and place them in financial instruments or assets such as deposits, loans, bonds and equity;

(6) Head of Agency refers to the head of the department or agency in the case of NGAS, the Board of
Directors or Trustees in the case of GOCCs as well as certain agencies which are structured as such, and
the local chief executive in the case of LGUs;

(D) item of Appropriation refers to the amount of appropriated for an activity or project in the
Appropriation Law;

(m) Local Government Units (LGUs) refer to provinces, cities, municipalities and barangays, as well
as autonomous regions authorized to be created in the Constitution and by lew;

(n) Multi-Year Contracting Authority (MYCA) refers to the authority issued by the DBM to agencies,
covering the full contract cost, for the procurement of multiyear projects

(0) Multiyear Projects refer to the projects undertaken by agencies for a period of more than one (1)
fiscal year, or exceeding twelve (12) months;

(p) National Government Agencies (NGAs)) refer to units of the national government, as distinguished
from GOCCs and LGUs which include any of the departments, bureaus, offices, or instrumentalities of the
Executive, Judicial and Legislative branches of government, as well as the Constitutional Commissions,
and the Office of the Ombudsman;

(@) Program refers to a group of activities and projects that contribute to a common particular outcome;

(© Project refers to a special undertaking carried out within a definite time frame and intended to result

in some predetermined measures of goods and services;


(8) Proposed National Budget refers to a financial plan of annual revenue and expenditures to be
submitted by the President to Congress that reflect national policies;
( Public Officials and Employees refer to elective and Appointive officials and cmployees, in a

permanent or temporary capacity, whether in the career or non-career service, including military and
uniformed personnel, regardless of the ranks, form or

Amount of compensation;

(w) Public Funds 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, that the government has a legal right to retain and use and shall
not include any money received in error;

(¥) Subsidiary refers to a corporation where at least a majority of the outstanding capital stock is owned
or controlled, directly or indirectly and through one (1) or more intermediaries, by a GOCC; and

(w) Treasury Single Account (TSA) refers to the account Maintained by the Bureau of the Treasury (BT1)
with the BSP or agent bank for a unified structure of government bank accounts to enable consolidation
and optimum utilization of government cash

resources.
PARTIE
ADDITIONAL ROLES AND REPONSIBILITIES
SEC. 5. Congress - The Congress shall perform the following roles and responsibilities

(@ Monitor and review government performance against the requirements of appropriations and related
laws, and hold Government Agencies accountable for their financial and Nonfinancial performance;

(b) Review reports on planned and actual performance, including the State of Fiscal Policy the Medium
‘Term Fiscal Strategy, fiscal reports, annual plans of government agencies,

periodic and annual reports on government performance and Performance of government agencies; and

(© Consider the consolidated annual financial statements and the audited government agency reports,
by the Commission on Audit (COA). Congress shall undertake the foregoing through any of its existing
committees, support offices or such bodies as it may be created for the purpose to strengthen the oversight

role of Congress.


SEC. 6. President - The President shall perform the following roles and responsibilities:

(@) Approve the Statement of Fiscal Policy, and the Medium Term Fiscal Strategy for submission to
Congress;

(b) Approve the Budget Priorities Framework to identify the priority areas for government spending and
guide the budget preparation exercise; and

(©) Authorize changes and the functional, operational and organizational structure within and among the
DBM, Department of Finance (DOF), and National Economic and Development Authority (NEDA), as
may be necessary, to ensure the effective implementation of this Act and the additional roles of the
foregoing agencies.

SEC. 7. Commission on Audit (COA) - The COA shall ensure the proper enforcement of timely
accounting and reporting of public finances.

SEC. 8. Depariment of Budget and Management (DBM) - The DBM shall perform the following roles
and responsibilities:

(a) Formulate policies and develop standards and guidelines to enhance effectiveness and efficiency of
methods, management systems, procedures and processes, organizational structure and staffing
complement of agencies;

(b) Monitor and evaluate the financial and nonfinancial performance of NGAs;

(c) Evaluate and review the financial and nonfinancial performance of GOCCs with special laws and
charters, in coordination with the DOF and the Governance Commission for

GOCCs (GCG), and approve the annual corporate operating budgets (COBs) of the GOCCs,

(@ Monitor and review, together with the Bureau of Local Government Finance (BLGF) under the DOF
and the Department of the Interior and Local Government (DILG), the financial and nonfinancial
performance of LGUs;

(c) Assess, together with the BLGF under the DOF and the DILG, the Public Financial Management

(PFM) systems of LGUs and assist them in designing and implementing PFM improvement measures;

(8) Monitor the performance of the annual cash appropriations of NGAs in terms of in-year and end-of-
‘year appropriations reports that compare disbursements to appropriations

for management purposes;


(g Oversee the financial reporting of Government Agencies for fund management purposes, including:
(1) the monitoring of the periodic and annual management and financial accounts with regard to accuracy,
timeliness, completeness, and compliance with this Act, standards, rules and regulations; and (2) the
consolidation and provision of financial reports and necessary data required by the President, Congress and
COA;

(h) Lead, in collaboration with the DOF, BTr and COA, the integration of the government's financial
‘management information system; and
(@ Formulate, in coordination with the Civil Service Commission (CSC), a competency-based human

resource policy for positions in PFM and oversee the capacity development Requirements on PFM.

To ensure the effective formulation and execution of fiscal policies, the Secretary of Budget and
‘Management shall lead the Development Budget Coordination Committee (DBCC), with the Secretary of
Finance, the Director General of the NEDA Secretariat

and a representative from the Office of the President (OP) as members, and the Governor of the BSP as,

resource person.

SEC. 9. Department of Finance (DOF). - The DOF shall perform the following roles and responsibilities:

(a) Monitor and manage fiscal risks to the government, including those from public-private partuerships;
(b) Compile and publish government fiscal statistics in accordance with international standards; and

(©) Formulate policies and standards for the acquisition and management of nonfinancial assets by NGAs.
SEC. 10. Bureau of the Treasury (BT). - The BTR shall perform the following roles and responsibilities:

(@) Manage the TSA maintained at the BSP or an agent bank, with the prior approval of the Secretary of

Finance;
(b) Put in place arrangements for the execution of duly

authorized payments from the TSA, which may include the appointment of banks to operate as agents of
the National Government with the prior approval of the Secretary of Finance;

(© Manage the financial assets and liabilities of the goverament, including: (1) banking arrangements
for, and bank accounts of, the government; (2) hedging and other risk management activities associated
with debt management, cash management and financial investment; (3) appointment of dealers, assets
‘managers and other agents to support debt, cash and investment management activities; (4) maintenance of
accurate record of the stock and flow of financial assets and liabilities; (5) tracking and reporting on fiscal



risks related to the management of financial assets and liabilities; and (6) preparation of in-year

disbursement reports based on the TSA for submission to the DBM and the COA;

(@) Issue instructions on the management of financial assets and liabilities of the government;

(©) Authorize the opening and closing of bank accounts of NGAs;

(f) Assist the NGAs in providing credible and realistic cash forecast for timely and accurate cash
programming;

(g) Administer the release of cash requirements covering all types of transfers to LGUs; and

(h) Establish and maintain, in coordination with the DBM, a consolidated registry of nonfinancial assets

of the National Government.

SEC. 11. National Economic and Development Authority (NEDA). - The NEDA shall perform the
following roles and responsibilities:

(a) Coordinate with the Regional Development Councils (RDCs), through the NEDA Regional Offices,
on the formulation of regional development plans and policies that are consistent with the established

national priorities;
(b) Coordinate the formulation and implementation of an

annual and medium-term public investment program consistent with the approved Medium Term Fiscal
Strategy and in the context of the preparation of the National Budget;

(© 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
(@ Assist and support the capacity building of RDCs and LGUs in development planning and investment
programming,
SEC. 12. Heads of Government Agencies. - The heads of NGAs, GOCCs and LGUs shall perform the

following roles and responsibilities:

(a) Inform the DBM and DOF of significant changes, issues, and risks that could impact on the finances

of the government;

(b) Participate in the processes to develop the Medium Term Fiscal Strategy, the Budget Priorities
Framework, and the Proposed National Budget as required by the DBM;


(©) Manage their respective agencies and other resources placed under their supervision, in an efficient,
effective and economic manner in order to deliver the outputs and attain the

outcomes set in their respective budgets;
(@) Monitor the physical and financial implementation of their programs, activities and projects;

(©) Take appropriate measures to ensure that cash disbursements and contractual commitments do not
exceed the amounts appropriated in their respective budgets;

(® Ensure that their respective agencies settle all contractual commitments or approve payment thereon
within the time prescribed by law;

(g) Instinate effective and efficient management systems, procedures and practices for assets, liabilities
and personnel, including internal controls, risk management, and performance review to safeguard the

agency resources;

(h) Ensure that due regard has been taken on the recommendations provided in internal and external audit
evaluation reports, to the extent authorized in their respective budgets;

() Provide credible and realistic cash forecast for timely and accurate cash programming; and

@ Provide accounting and reporting of public finances through the integrated financial management
information system and/or other preparatory online information systems as required in this Act.

SEC. 13. Capacity Development Requirements on Public Financial Management. - The NGAs concerned.
shall continue to formulate capacity development requirements on PFM and conduct training programs on
the same. The DBM shall oversee the formulation of the said capacity development requirements to ensure

alignment of the objectives.
PART OI
FISCAL RESPONSIBILITY

SEC. 14, - Fiscal Responsibility Principles. - The State shall pursue its policy objectives in accordance
with the following Fiscal Responsibility Principles:

(a) Implement fiscal policies and strategies consistent with the achievement of macroeconomic stability
and inclusive economic development;

(b) Manage resources in a fiscally and environmentally sustainable way;

(c) Maintain prudent levels of public debt;


(@) Maintain an appropriate balance between government revenue and expenditure; and
(©) Manage fiscal risks in a prudent manner.

SEC. 15. Statement of Fiscal Policy - The DBCC shall prepare, subject to the approval of the President,
the Statement of Fiscal Policy which shall contain measurable medium-term

macroeconomic and fiscal objectives and forecasts consistent with the Fiscal Responsibility Principles and
the Intergenerational Report required under Section 18 hereof.

‘The President shall submit for the information of Congress, the Statement of Fiscal Policy not later than
ninety (90) days upon commencement of the President’s term of office and update the measurable fiscal
objectives set forth therein three (3) years thereafter.

SEC. 16. Medium Term Fiscal Strategy. - The DBCC shall prepare, subject to the approval of the
President, a Medium Term Fiscal Strategy and its annual updates. The Strategy and its updates shall be
consistent with the approved Statement of Fiscal Policy and Intergenerational Report. It shall include a
summary of the fiscal policies for revenue, debt, deficit, expenditure, and fiscal risk management, supported
by amedium-term fiscal sustainability analysis, consistent with the measurable fiscal objectives established
in the approved Statement of Fiscal Policy. The IRR of this Act shall detail the other specifications for the
Medium Term Fiscal Strategy and its updates.

The President shall submit 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 the
government website not later than seven 97) days after itis submitted to Congress.

SEC. 17. Fiscal Reports. - The DBCC shall produce a Mid-year Fiscal Report (MFR), covering the first
half of the current fiscal year and an Annual Fiscal Report (AFR) on the government's macroeconomic and
fiscal performance covering the preceding fiscal year.

‘The MER and AFR shall include information on macroeconomic and fiscal outtums for the period
covered as compared against forecasts and objectives stated in the Medium Term Fiscal Strategy, as well
as reporting on budget execution, at least in the aggregate and by agency level, compared 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 submit the MFR to Congress not later than September 30 of each year while the AFR
shall be submitted together with the Proposed National Budget. Said reports shall be published on a

government website not later than seven (7) days after submission to Congress.



SEC. 18. Inter-generational Report - The DBCC shall submit an Intergenerational 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 government policies over the next twenty-five (25) years,
taking into account demographic, environmental, and other changes.

‘The first Intergenerational Report shall be submnitted 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 Intergenerational Report on the government website not
later than seven (7) days upon submission to Congress.

SEC. 19. Deviations from Fiscal Objectives. -‘The government may deviate from the medium-term fiscal
objectives in the approved Statement of Fiscal Policy on a temporary basis, where such deviation is due to
a major natural or human-induced disaster, unanticipated and severe economic shock, or other significant
unforeseeable event that cannot be adequately

responded to, through the Contingent Fund and/or the National Disaster Risk Reduction and Management
Fund (NDRRMF), as may be applicable or prudent fiscal policy adjustments, or the use of other flexibilities
provided in this Act,

‘The President shall submit a report to Congress, stating the reasons for such deviations, the plans and the
expected time to address such deviations, as part of the succeeding Medium Term Fiscal Strategy or its
annual update, or in the MFR or AFR, whichever is the next report due and within the prescribed period
under this Act.

SEC. 20. Shared Fiscal Discipline. - As much as practicable, all proposed revenue eroding and
expenditure bills shall include a Financial and Budgetary Information Sheet containing an estimate of the
financial and budgetary implications of said proposal for the initial year of implementation. Expenditure
Dills refer to those which will resulting a reduction of revenue collections or an increase in national
government expenditures, including those mandating 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 Noncompliance with said submission.

PARTIV

BUDGET PREPARATION, EXECUTION, AND ADJUSTMENT



SEC. 21. Governing Principles in Budget Preparation. - There is hereby established a set of governing
principles to be observed by NGAs and GOCCs in the preparation of their annual budget proposals, and by
the DBM in the preparation, and the Presentation to Congress, of the Proposed Annual National Budget:

(a) Cash-based estimates shall be adopted in the proposed general and special appropriations bills to
promote faster and more effective delivery of services;

(b) The overall expenditure program of the government for a given fiscal year shall be included,
identifying those requiring approval by Congress and those authorized under existing laws;

(6) All sources of funds and authorized uses available to the agency shall be considered in the
evaluation of agency proposals and determination of agency budget levels, and shall likewise be disclosed
in the Proposed National Budget and reports;

(@ Evaluation of agency proposals may include the analysis of a development plan, master plan or
road map, agency capability as demonstrated by previous years’ performance, its contribution to projects
and activities of other agencies, utilization of funds, appropriated or released, and such other criteria as may
bbe determined by the DBM. Agency performance shall be evaluated based on the actual disbursements and
contractual commitments as compared to the appropriations.

(©) All appropriations shall be valid for one (1) fiscal year, reckoned from the effectivity of the
Appropriations Act until the end of the fiscal year concemed. When necessary or appropriate, a three (3)-
‘month Extended Payment Period into the following fiscal year may be availed of to allow agencies to settle
payments for goods and services delivered, inspected and accepted during the previous fiscal year;

(0 In evaluating the performance of an agency, programs, activities and projects shall be presented in
such a way that the entity responsible for the expenditure and the intended results from the use of the
appropriation are both identified;

(g) Both the financial and nonfinancial performance of agencies shall be presented in the Proposed
National Budget and the General Appropriations Act to ensure a performance-informed budget; and

(h) Programs, activities and projects shall be reflected by departments, agencies, bureaus, and offices,
and shall be presented for information purposes, by region and province, and eventually, by city or

municipality.

SEC. 22. Planning-Progranming-Budgeting Linkage - Development strategies identified in the
Philippine Development Plan (PDP) shall be a primary consideration in the formulation of the Budget
Priorities Framework. These shall also be the basis for drawing up strategic and prioritized programs and
projects in the multiyear Public Investment Program (PIP), which in tum will be considered in the
formulation of the annual agency budgets that conform to the annual budget ceilings approved by the
President. The implementation of programs 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, among others, the planned and actual performance of agencies,
citing reasons for deviation or poor absorptive capacities. The results of the project evaluation shall inform
the assessment of subsequent plans and budget proposals of agencies.

SEC. 23. Budget Priorities Framework. - The DBCC shall present to the President and Cabinet, on or
before April of each year, a Budget priorities Framework which shall guide the formulation of the Budget
for the following year by stating the Medium Term Fiscal Strategy and targets underlying the budget; the
priority areas for government spending reflected in the PDP and PIP, estimated amount and planned
allocation of the fiscal space; and other requirements laid down in the IRR.

SEC. 24, The Budget Preparation Process. - The DBM shall determine the budget preparation process
and calendar. The budget preparation process shall cover: (a) NGAs; (b) GOCCs with respect to their impact
on revenue, expenditure, assets, and liabilities, and risks of the government; (c) LGUs as to their impact on
revenue and expenditure of the government.

SEC. 25, The proposed National Budget. - The President shall submit to Congress, not later than thirty
(80) 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 determine the form and content of the Proposed.
‘National Budget which shall include the following:

(a) Presideat’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 (BESE) - contains the macroeconomic
parameters; dimensions of three (3)-year expenditure program, revenue, financing, and outstanding debt;
overview of the financial positions of GOCCS, LGUs, and public-private partnership projects, list of new
multiyear projects and contractual authorities issued, as well as the other items listed in the IRR;

(©) National Expenditure Program (NEP) - includes the strategic objectives, details of the three (3)-
‘year expenditure program, performance information, such as key strategies, outputs and outcomes for
agencies in relation to their budgets, and staffing summary; and

(@ Fiscal Risk Statement - presents a consolidated statement of the fiscal risks that may affect the
performance of the National Government, including those from the contingent liabilities of Government
‘Agencies and other items listed in the IRR. As required under Section 17 of this Act, the President shall
likewise submit for consideration of Congress, the AFR for the preceding fiscal year not later than thirty
(30) days from the fourth Monday of July of every year, and the MER for the current year not later than
September 30 of every year, Congress may not increase the appropriations recommended by the President
for the operations of government as specified in the Proposed National Budget. The President shall publish



the Proposed National Budget on the government website on the same day it is presented to Congress.

SEC. 26. Program Classification. - The Proposed National Budget shall adopt a structure based on a
program classification that groups line items under the objectives or outcomes which they contribute to.
Performance information shall be provided for each program to facilitate the evaluation of the cost
effectiveness of the programs and provide better information for analysis and feedback for planning
purposes and the prioritization of expenditures. In addition, the performance information and targets
contained in the Proposed National Budget shall be updated after the passage of the General Appropriations
‘Act, taking into consideration the approved appropriations for each program. For this purpose, Government
Agencies shall propose adjustments in its outputs and outcomes for the consideration and approval of the
DBM.

SEC. 27. Special Purpose Funds. - To promote the transparent and detailed disclosure of all proposed.
government spending, Special Purpose Funds (SPFs) in the Proposed National Budget shall be limited to:
(@ the NDRRMF; (b) the Contingent Fund; (c) Statutory Shares of LGUs; and (d) other SPFs not falling
‘under any of the preceding purposes, the details of which could not be determined during the budget
preparation stage, and based on the parameters to be sct in the IRR.

SEC. 28, National Disaster Risk Reduction Management Fund - The NDRRMF shall be used for: (a)
disaster risk reduction or mitigation, prevention and preparedness activities, such as training of personnel,
procurement of equipment, and capital expenditures; and (b) relief, recovery, reconstruction and other work:
or services in connection with natural or human-induced calamities which may occur during the budget
year or those that occurred in the preceding two (2) years. The NDRRMF shall 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 communities or areas stricken by calamities, epidemics, crises, and catastrophes
may be normalized as quickly as possible. ‘The QRF shall be provided in the budgets of the implementing
agencies in such amounts deemed appropriate based on prior years’ data to mect public
calamities/emergencies. 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 recommendation of the National Disaster Risk Reduction
and Management Council for local disasters and calamities and the appropriate agency for international

crises.

SEC. 29. Contingent Fund. - The Contingent Fund shall cover the funding requirements of new and/or
‘urgent projects and activities of NGAs and GOCCs that need to be implemented or paid during the year,
such as legal obligation of the government arising from the decisions of competent authorities which are
final and executory, including arbitration awards, mediation settlement, or compromise agreements,



requirements 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 payment resulting from the decisions of competent authorities which
are final and executory, which shall be subject to approval by the DBM. The DBM shall inform Congress
ofall releases from the Contingent Fund in the quarterly and annual fiscal reports including information of
the date of release, the amount covered, corresponding purposes and recipient agency.

SEC. 30. Statutory Shares of Local Government 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.

SEC. 31. Unprogrammed Appropriations. - Congress may authorize appropriations to cover the
funding requirements 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
component of the Appropriations Act. The Unprogrammed Appropriations shall have the same level of
detail as in the programmed component of the Appropriations Act. ‘The amount authorized under the
Unprogrammed Appropriations shall not exceed two percent (2%) of the total proposed expenditure in the
programmed component of the Appropriations Act,

Expenditures to be funded under the Unprogrammed Appropriations may be authorized only when
supported by: (a) excess revenue collections in any one of the particular nontax revenue resources from its
corresponding revenue collections target in the BESF as certified by the BTr; (b) new revenue collections
or those arising from new tax or nontax revenues which are not part of the original revenue sources in the
BESF; or (c) when there are approved loan proceeds for FAPs which were not included in the proposed
budget. In no case shall the Unprogrammed Appropriations be activated or released when there is a risk of
reaching the measurable fiscal objectives for the budget balance (including a deficit) or debt for the
financial year or future years as provided in the Statement of Fiscal Policy and Medium Term Fiscal
Strategy ot if there is a risk of breaching any of the Fiscal Responsibility Principles as determined by the
DBCC.

Released from the Unprogrammed Appropriations shall be subject to the prior approval of the
President of the Philippines, other than the decisions of competent authorities which are final and executory,
which shall be subject to approval of the DBM.

Priority projects and activities or contingencies shall pertain to expenditures, the payment of which
are not covered under the Contingent Fund and could not be delayed until the succeeding budget years



without harming public interest or those arising from the government's legal obligation such as compliance
with a government guarantee or settlement of final and executory decisions by competent authorities.

‘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 amount covered,
corresponding purpose/s and recipient agency.

Tano case shall be Unprogrammed Appropriations be released for purposes not specified in the annual
or special Appropriations Law.

SEC. 32. Budget with Accounts Codes. - All appropriations in the Appropriations Law shal be given
accounts codes by the DBM pursuant to the Unified Accounts Code Structure that applies to all the assets,
liabilities, equities, income, and expenses of the government. This accounts 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.

SEC. 33. Reenacted Budget. -If, by the end of any fiscal year, Congress shall have failed to enact the
General Appropriations Act for the ensuing fiscal year, the General Appropriations Act of the preceding
fiscal year shall be deemed reenacted and shall remain in force and effect until the said General

“Appropriations Act for the Fiscal Year is passed by Congress
Consistent with the Fiscal Responsibility Principles, the reenacted budget shall be enforced as follows:

(q) The aggregate level of the reenacted budget shall be limited to the total amount 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 amount authorized under the reenacted
‘budget, but in no case exceed the amount proposed by the President in the Proposed National Budget;

(1) Ongoing programs; projects and activities;

(2) Personnel benefits, including retirement gratuities, pensions, terminal leave pays and related
expenses;

(3) NDRRMF, Contingent Fund, Statutory Shares of LGUs, and other SPFs; and

(4) Budgetary support to GOCCs for their operational requirements;

(©) Inno case shall the following be considered part of the reenacted budget:

(1) Completed programs, projects and activities funded in the General Appropriations Law for the
preceding fiscal year;

(2) Budgetary support for GOCCs for support to programs, activities or projects; and


(3) Equity contribution of the National Government to GOCCs.
The items and/or amount of appropriations not covered under the reenacted 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 reenacted budget in accordance with the foregoing, supporting requirements to determine actual needs,
and other pertinent rules in the implementation of the reenacted budget.

Upon enactment of the General Appropriations Act anytime during the current fiscal year, all releases
under a reenacted budget consistent with this section shall be considered valid obligations and deemed to
have been implemented pursuant to, and charged against, for account recording purposes, the General
‘Appropriations Act for the current fiscal year.

SEC. 34. Special appropri
President, as recommended by the DBM, before Congress to provide authorization for expenditure for a
specific purpose not included or not covered under the annual Appropriations Laws. It shall specify the

ons Bill, - A Special Appropriations Bill is a proposal submitted by the

purpose/s for which it is intended and the validity period which shall not exceed one (1) year from its
enactment.

‘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 measure proposed herein. It may only be proposed after the passage
of the General Appropriations Act, except for the following: (a) disaster-related purposes; (b) urgent
projects and/or activities; and (c) unforeseen requirements of the government.

A Special Appropriations Bill may likewise refer to a proposal submitted by the President, as
recommended by the DBM, before Congress for additional appropriations for existing or new programs,
activities or projects of an NGA of GOCC with fast in-year disbursement rate. In this case, the bill may be
supported by the current fiscal year’s sources of financing as certified by the National Treasurer due to
reversion of unexpended balances of appropriations to the unappropriated surplus of the General Fund by
NGAs or GOCCs resulting from slow implementation of programs, activities or projects.

SEC. 35. Release and Expenditure of Public Funds, - 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 disbursement by the appropriate implementing agencies, subject to pertinent budgeting,
accounting and auditing rules and regulations. Upon the implementation of cash-based appropriations, the
Appropriations Law shall be considered the authority of the agencies to contract out and disburse funds,



except for: (a) appropriations that by virtue of law, general or special provisions in the Appropriations Act
have conditions or requirements before release; (b) those requiring special budget as may be provided in
the general and special provisions in the Appropriations Act; (c) in the case of authority to disburse funds,
‘until such time that agencies are able to provide credible and realistic cash forecast as may be determined
by the DBM and the BT.

SEC. 36. Availability of Annual Cash-Based Appropriations. - All annual appropriations, including
the GOCCs program subsidies, shall be available for release, contractual commitment and disbursement
until the end of the fiscal year. However, Government Agencies, may still disburse funds not later than the
three (3) months extended payment period from the end of the fiscal year for goods or services which have
already been delivered or rendered, inspected and accepted within the fiscal year. Said payment shall be
chargeable against the authorized appropriations of the said preceding fiscal year.

LGUs receiving budgetary support and/or assistance from the National Government shall utilize the
funds released to them for the purpose/s specified until the end of the following fiscal year reckoned from.
the year of receipt from the National Government. The LGUs statutory shares shall be valid until fully
expended, while funds downloaded to LGUs from NGA program components shall be valid until the end
of the fiscal year of receipt.

After the end of validity period, any unspent appropriations shall lapse, while unexpended balances of
funds shall revert to the unappropriated surplus of the General Fund.

SEC. 37. Government Funding Commitment, - In accordance with the constitution, no money shall be
paid out of the Treasury except in pursuance of an appropriation made by law.

Accordingly, a Cerlification of Availability of Funds (CAF) shall be required prior to entering into
contract. The CAF shall be issued by the chief accountant or the highest accounting officer in the agency.
In the case of multiyear projects, the CAF shall be issued annually based on the annual budget for the
purpose. The CAF shall be stamped or appended to the contract and shall become an integral part thereof.

SEC. 38. Multiyear Projects. - All multiyear projects, other than those undertaken pursuant to Republic
‘Act No. 6957, as amended by Republic Act No, 7718 or Public-Private Partnership (PPP) Projects, shall be
covered by a MYCA or an equivalent authority as issued by the following:

@ The DBM, in case of NGAs and qualified GOCC:
(b) The governing board for GOCCs, except those covered above; and
(© The Sanggunian for LGUs.



‘The MYCA and equivalent authorities shall cover the full cost of the multiyear project. It shall be
secured prior to the procurement of the multiyear project and shall be the basis of the Approved Budget for
the Contract.

‘Multiyear PPP projects shall require the issuance by the DBM ofa letter of commitment
to cover the National Government funding commitment.

‘The implementing agency shall ensure that the annual funding requirements for the multiyear projects
shall be included in its budget proposals for the covered years, consistent with the funding schedule in the
MYCA and equivalent authorities, and letter of commitment. Said proposals shall be given due
consideration by Congress in the case of NGAs and qualified GOCCs, the governing board for GOCCs, or
the Sanggunian for LGUs.

Disbursement to be incurred for all multiyear projects shall in no case exceed the cash-based

appropriations for the purpose during the fiscal year.

SEC. 39. Early Procurement Activities. - To ensure full budget utilization, timely contract
implementation and efficient delivery of services, agencies are authorized to undertake procurement
activities from pre-procurement conference until recommendation to the head of the procuring entity as to
the award of contract, based on their proposed budget in the NEP, COBs or Appropriations Ordinance, in
accordance with the guidelines issued by the Government Procurement Policy Board (GPPB).

For multiyear projects, the issuance of a MYCA by the DBM is required prior to commencement of
‘any procurement activity. All existing Multi-Year Obligational Authority shall be understood to refer to
MYCA.

Agencies may only proceed with the issuance of the notice of award of contract upon approval or
enactment of their respective appropriations or budget authorization document, as the case may be, and
based on the amount authorized therein,

SEC. 40. Jmpoundment of Appropriations. - The President of the Philippines, upon recommendation
of the DBM, may propose the rescission of appropriations from both House of Congress, under any of the

following circumstances:

(a) Ifthe appropriations are no longer required to fulfill the objectives originally sought to be achieved
by the programs, activities and projects covering the same; or

(b) In case of an unmanageable National Government budget deficit.


‘Unmanageable National Government budget deficit as used in this section shall be construed to mean
that; (1) 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 submitted by the President to Congress
pursuant to Section 22, Article VII of the Constitution; or (2) there are clear economic indications of an

impending occurrence of such condition, as determined by the DBCC.

Both Houses of Congress shall act on the proposed rescission within thirty (30) session days after the
receipt of an impoundment proposal from the President by issuing a Joint Impoundment Resolution. Within
the same period of thirty (30) session days, the appropriations covered by the Impoundment Proposal sball
not, in any way, be rescindend in relation to the purposes and objectives for which it was appropriated.
Congressional inaction after the thirty (30)-day period is equivalent to an approval of the impoundment
proposal.

‘Approved impounded appropriations shall not thereafter be available for expenditure except by
subsequent legislative enactment.

SEC. 41, Authority to Declare and Use Savings. - 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 Supreme
Court, the Ombudsman, and the Heads of the CSC, the Commission on Elections and the COA are hereby
authorized to declare and use savings in their respective appropriations to augment actual deficiencies
incurred for the current year in any item of their respective appropriations.

SEC. 42. Meaning of 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:

(@ Completion, final discontinuance, or abandonment of an activity or project for which the
appropriation is authorized; or

(b) Implementation of measures resulting in improved systems and efficiencies and thus enabled an
agency to meet and deliver the required or planned targets at a lesser cost.

Tn case final discontinuance or abandonment is used as basis in the declaration of savings, such
discontinued or abandoned 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.



SEC. 43, Rules on Augmentation, - Augmentation is the act of the constitutional officers authorized to
‘use savings in their respective appropriations to cover a deficiency in any existing item of appropriation
within their respective offices. A deficiency in an item of appropriation may result from;

(@) Unforescen modifications or adjustments in the item of appropriation; or

(b) Reassessment in the use, prioritization and/or distribution of resources.

‘The particulars of the expenditure to be funded from savings should be within the scope of, or be
covered by an existing item of appropriation. The existence of an item of appropriation regardless of the
availability of allotment class or classes is sufficient for the purpose of augmentation,

In no case shall a nonexistent item of appropriation to be funded by augmentation from savings or by
the use of an appropriations authorized in the General Appropriations Act or special Appropriations Laws.

SEC. 44, Rules on Modification in the Allotment. - Limited flexibility shall be given to NGAs in
modifying the allotment within an existing item of appropriation: Provided, That such modification shall
not entail any augmentation of the amount appropriation for the said item of appropriation during budget

execution.

‘The DBM shall issue rules and procedures to govern allotment modifications, specifying the cases or
circumstances when such modifications may be undertaken to ensure the uniform implementation among
the various branches of government, the proper recording of modifications, and the timely submission of
reports by all the offices concerned.

PARTIV
FINANCIAL MANAGEMENT.

SEC. 45. General Fund, - All monies received by NGAs, whether 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 remitted to the National Treasury, unless
otherwise provided by law or stipulated by covering loan or grant agreements. Monics under the General
Fund shall be made available to support the requirements of the National Government authorized in an
Appropriations Law.

‘A Special Account in the General Fund (SAGE) shall be established by law only under exceptional
circumstances to recognize taxes, fees, charges, penalties, income, dividends, interest earnings, grants, and
donations collected, eared or received by NGAs for specified purposes. All laws authorizing the
establishment of SAGEs shall specify the period of use for such accounts: Provided, That if no period is
specified, the period shall be deemed to be until the fulfillment of the purpose for which the SAGF was



authorized. All interests earned by SAGFs shall accrue to the General Fund. The balance of SAGFs upon
their termination shall form a part of the General Fund.

‘All earmarked revenues with significant inflows, a large portion of which are not or not expected to be
programmed for disbursement during the year, shall be treated as’ ‘Trust Funds and recorded as wust receipts.
Proceeds from these Trust Funds shall be recognized only as revenue inflow in the General Fund when
programmed to be spent for the year.

‘The Permanent Committee created under Executive Order No. 292, s. 1987, composed of the Secretary
of Finance as Chairperson, the Secretary Budget and Management and the Chairperson of the COA as
amembers, shall identify SAGFs that shall be converted into Trust Funds. The recognition of revenue inflows
from these SAGFs converted into Trust Funds shall be governed by the guidelines to be issued by the
‘Permanent Committee. In all cases, the authorized uses or purposes shall continue to be those specified in
the law creating the SAGFs.

SEC. 46. Special Funds. - 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) Trust Fund - constituted ftom identified revenue sources and other receipts by NGAs or public
officials or employees acting as trustees, agents, or administrators for the fulfillment of commitments or
accomplishment of specified purposes. Trust 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 requirements of said business-type activities and as such are considered self-
perpetuating and 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

(© Retained Fund - constituted from taxes, fees, charges, penalties, income, dividends, or interest
earnings collected, eamed 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 Permanent Committee, as to their proper category and compliance with the foregoing
conditions, Any interest earned by Special Funds shall accrue to the General Fund unless otherwise
authorized by law.

SEC. 47. Review by the Permanent Committee. - Tbe Permanent Committee shall review all existing
SAGFs and Special Funds to validate their compliance with the foregoing requirements. Upon evaluation,



the Permanent Committee shall recommend for the approval of the President, the modification or
termination of any of the said fiunds based on any of the following grounds:

(@) When there is no legal basis for its ereation;

(b) When its terms have expired;

(© When it is no longer necessary for the attainment of the purposes for which said Funds were
established;

(@ When it is needed to augment the General Fund in times of calamities and emergencies;

(©) When it is used in violation of the rules and regulations issued by the Committee; or

(© When it has remained dormant for an unreasonable length of time.

Ir shall likewise review all SAGFs created upon the passage of this Act and may recommend to extend
their validity period, subject to the approval of the President.

The Permanent Committee shall issue guidelines for the establishment, review and cvaluation,
accounting and reporting, and termination of SAGFs and Special Funds.

SEC. 48, Escrow Fund, - Escrow Funds are constituted from funds for which the government'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 sball subsequently be included in
the General Fund upon the occurrence of the future contingent event. Any interest eared by an Escrow
Fund shall accrue to the said Fund. The amounts under escrow, including interest earned shall form part of
‘the General Fund upon the occurrence of the future contingent event,

SEC. 49. Waiver, Abatement, Refund and Compromise Agreements. —No public official shall waive,
abate, refund, or enter into a compromise agreement on a tax liability or the payment of fees or charges
except in accordance with Iaw. All waivers, abatements, refuunds or compromise agreements made by an
NGA shall be properly accounted for and reported. Refund of taxes and other revenues shall be treated as
a reduction in current year’s revenue collections for budgeting and fiscal reporting purposes.

SEC. 50. Grants. - NGAs may accept, with prior coordination with the DOF, grants, in cash or in
ind, from domestic or foreign sources, for purposes relevant to their functions. In the case of grants, in
cash or in kind, from governments of foreign countries, their agencies and instrumentalities and
international or multilateral institutions or organizations, acceptance thereof shall be subject to the prior
clearance and approval by the President or the President's authorized representative, based on the
recommendation of the Secretary of Finance.



The provisions of this section shall not apply to: (a) any grant received by LGUs or GOCCs, except
where the grant is reccived by them on behalf of the National Government; or (b) any grant authorized or
covered in accordance with existing law.

Grants received shall be valued, in the case of grants received in kind, and recognized on the books
of the agency of the National Government.

SEC. 51. Treasury Single Account. — The TSA refers to the banking arrangement managed by the
BTr wherein the government transacts all monies collected, received or paid by NGA 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 remittances, releases or disbursements from the General Fund, SAGFs, Special
Funds, and any other fund managed by the BTr, except in any of the following instances:

(a) When monies under the General Fund are placed under investments;

(b) When the BTr is required to hold foreign currency accounts; and

(©) When authorized by the Secretary of Finance.

‘The BTr, in coordination with NGAs authorized by law to undertake revenue collection and
administration, shall make the necessary arrangements 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 manner prescribed by Jaws, rules and regulations.

SEC. 52. Oversight on the Government Bank Accounts. — Notwithstanding 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 implementation of the TSA:

(a) Transfer balances of bank accounts to the TSA;

(b) Close any bank account; and

(©) Revoke the authority to open any bank account.

‘The government agency which has opened a bank account, as well as the bank concerned, shall
promptly disclose information regarding such account to the BTr.

SEC. 53. Treasury Cash Management. ~ the BTr shall issue order for the conduct of cash
management including the requirement to provide projections on the timing of future transaction of NGAs,
taking into consideration that the Appropriations Law is considered the authority of the agencies to contract
out and disburse funds, except for those instances stated in Section of this Act.

SEC. 54, Investments, The BTr may invest portions of the funds held in the TSA for such periods
as the BTr may deem prudent considering cash management requirements and based on terms and



conditions as may be determined by the DOF. Investments are authorized to be made in any of the
following:

(@ Bank deposit with any highly reputable bank following a selection criterion to be issued by the
Secretary of Finance and money market instruments with well recognized and established financial
institutions;

(b) Sovereign-issued securities with an investment grade rating; and

(© Other fixed income securities with an AAA credit rating issued by least two (2) reputable
international credit rating agencies acceptable to the Secretary of Finance.

‘The BTr may appoint a fund manager as an agent of the National Government to undertake the
investment of the funds.

Interest earned and other income from investments shall accrue to the General Fund, unless otherwise
provided by law.

SEC. 55. Management of National Government Borrowings. — Borrowings by the National
Government shall be for purposes provided by law including any of the following:

(@) Financing budget deficits and liquidity shortfalls;

(b) Refinancing and pre-finaneing maturing debts;

(©) Undertaking liability and risk management transactions;

(@ Supporting the BSP in maintaining external and monetary stability;

(©) On-lending to an approved entity;

(®) Financing all sums money paid to fulfill guarantees;

(g) Increasing liquidity and promoting stability of the government securities market;

(h) Financing development activities and projects of the National Government;

(@ Providing financing to address or remedy the effects or impacts of natural or human-induced

disasters; or

(  Defraying expenditures covered by appropriations.

Borrowing under this Act should adhere to the Fiscal Responsibility Principles and measurable fiscal
objectives embodied in the Statement of Fiscal Policy.

SEC. 56, Borrowings by Goverament-Owned or Controlled Corporations. ~ 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 repayment 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,
shall be submitted to the DOF for information, and published in the concerned GOCC website.



GOCCs shall seek approval of the DOF and the opinion of the Monetary Board 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 repayment that the GOCC intends to take.

SEC. 57. Local Government Borrowings. — 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.

SEC. 58. Debt Reporting. ~ The DOF, through the BTr, shall ensure that the records include
information on the principal, terms of repayment, amounts drawn, interests and service charges accrued,
principal and interests paid, and the balance outstanding, and shall make the records available in a timely
way to the President, Congress, and COA and in accordance with the reporting requirements in this Act.

Each LGU and GOCC shall maintain records and provide reports to the DOF on loans as required
by relevant laws, rules and regulations. The DOF shall submit to Congress the status of LGU toans
contracted and the repayments made by cach LGU, upon the effectivity of the Act.

SEC. 59. Guarantees, — Guarantee, indemnity 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 terms and conditions as the Secretary of Finance may recommend consistent with
relevant laws, rules and regulations. The overall level of guarantee, indemnity or security shall adhere to
the Fiscal Responsibility Principles laid down in this Act and the fiscal objectives in the Statement of Fiscal
Policy.

‘The DOF shall charge a risk-based fee for any guarantee, indemnity, security, relending or similar
financial accommodation it may extend to a GOCC.

Tn no case shall the National Government be liable for any borrowing by any agency of the
government except for explicit guarantees as provided by law.

SEC. 60. Limitation on the Liability of the National Government for Debts of Other Entities. ~The
National Government shall not be liable for any implied guarantee 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 (GSIS), Home Development Mutual Fund (HDME), Philippine
Health Insurance Corporation (PhilHealth), and the Social Security System (SSS) in their respective
charters.



SEC. 61. Payments Made for Contingent Liabilities. - Any money paid by the DOF pursuant to any
guarantee, indemnity, or security authorized by law and the expenses associated with the same shall
constitute a debt due the National Government from the entity for whose benefit the payment on the
guarantee, indemnity, or security was made,

SEC. 62. Information on Contingent Liabilities. - The DOF shall keep a complete and updated
registry of all contingent liabilities of the National Government, and provide the DBM with a report on

contingent liabilities as of the fiscal year.

PART VI
ACCOUNTABILITY AND REPORTING

SEC. 63. Financial Management and Internal Control. ~ The Head of Agency shall be responsible
and accountable for the financial management of the agency which shall include meeting performance
targets, controlling costs, mitigating adverse risks to agency operations, and ensuring that budgets are
‘managed with integrity and in compliance with applicable laws. Adequate intemal controls shall be ensured
and an internal audit funetion shall be maintained.

SEC. 64, Integrated Financial Management Information System. — There shall be an integrated
financial management information 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 management and accounting

processes.

SEC. 65. NGA Annual Plans and Proposed Budgets. -~- The Head of each NGA shall produce a
Annual Plan which shall have a medium-term scope, with details for the following fiscal year, and shall
include information on the strategic priorities for the medium-term, consistent with the PDP; performance
information; summary proposed budget including financial forecast assumptions 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 submitted to DBM during the budget
preparation process consistent with the timetable and other guidelines in the Budget Call.

The Annual Plan of Department shall incorporate the Annual Plans ofits attached NGAs and GOCCs
subject to guidelines prescribed in the IRR.

SEC. 66. NGA Reporting Requirements. —For greater transparency and accountability, each Head of
an NGA shall:

(q) Submit monthly and quarterly reports on the agency’s financial and nonfinancial performance to



the DBM, not later than thirty (30) days after the end of every month and quarter in the format specified by
the DBM and shall publish the same on a government website within the sane reglementary period; and

(b)Prepare an Annual Report which shall include year-end financial statements, reporting on
nonfinancial performance compared against the Annual Plan, and other information as required in the IRR;
submit the said Repotto the DBM and Congress not later that six (6) months after the end of the fiscal year;
and to COA within the reglementary period and publish the said Report in a government website not later
that seven (7) days after its submission to Congress.

The monthly, quarterly, and annual reports of a Department shall incorporate the reports of its
attached NGAs and GOCCs subject to guidelines prescribed in the IRR.

SEC. 67. Report on Savings and Augmentation. ~ The DBM shall submit to the Committee to
Appropriations of the House of Representatives and the Committee on Finance of the Senate on or before
the 31* of January every year an annual report on the overall time or interval as may be required by said
committees.

SEC. 68. Service Agreements. ~ The Head of an NGA may enter into a service or performance
agreement with another agency for the provide services charged against the budget of said principal agency.

SEC. 69. Corporate Operating Budget. ~The Board of Directors or Trustees of a GOCC shall prepare
and submit a COB to the Head of the NGA overseeing said GOCC, the DBM, and the DOF not later that
ninety (90) days prior to the commencement of the fiscal year, which shall include, the objectives of the
GOCCs and its subsidiaries to e undertaken, performance targets and risks; forecasts of financial statements
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 COBs of the National Electrification Administration (NEA), National Power
Corporation (NPC) and Philippine National Oil Company (PNOC) shall be subject to further approval of
Congress in accordance with Republic Act No. 7638. The Head of a GOCC shall publish the DBM or
Congress approved COB, as the case may be, of the GOCC on the official website of the Corporation not
Jater than fourteen (14) days after the approval of the COB.

SEC. 70. GOCC Reporting Requirements. — For greater transparency and accountability, the Heads
of GOCCs shall:

(a) Provide quarterly reports on financial and nonfinaneial performance to the DOF, GCG, DBM and
COA, not later than thirty (30) days after the end of the quarter, in the format and time specified by the
DOF, GCG, DBM and COA, and shall publish it on their official website within the same period; and.

(b) Prepare an Annual Report, which shall include year-end financial statements, reporting on
nonfinancial performance compared against the COB, and other information as required in the IRR; submit
the same to the overseeing GNA, DBM, GCG, DOF and Congress not later than (6) months after the end



of the fiscal year; and to COA within the reglementary period; and publish the said Report in a government
‘website not later than sever (7) days after its submission to Congress.

GOCCs with subsidiaries shall reflect in its quarterly and annual reports the aforementioned required
information for the whole corporate group, consistent with guidelines prescribe in the IRR.

SEC. 71. Service Agreement for a GOCC. — Where GOCCs implement government noncommercial
programs, such as provision of housing, irrigation and clectrification services and facilities, and receive
government funding, a service agreement with the NGA overseeing said GOCC shall specify the terms of
delivery of goods or services that the GOCC must provide, and the funds that the government will pay.

SEC. 72. Local Government Units, — The Local Chief Executives (LCEs) shall ensure that adequate
internal controls and an internal audit function are maintained.

The LCEs shall provide financial and nonfinancial performance information of their respective LGUs
to the DBM, COA, DILG, and the BLGF under the DOF, subject to the guidelines to be issued thereon.

SEC. 73. Application of Accounting and Auditing Requirements. — Any expenditure of public money,
including government assets or liabilities incurred by and for the government regardless of the source of
funding, shall be subject to accounting and auditing rules and regulations promulgated by the COA.

SEC. 74. Accounting Standards. ~The DBM shall specify the basis, standards and guidelines for
appropriations reporting while the COA shall continne to set the basis, standards and guidelines for financial
accounting to be used by the NGAs, GOCCs and LGUs.

The Heads of Agencies shall ensure that full, accurate and proper records are kept for their respective
agencics on financial matters and for performance in the production of goods and services.

The DBM and COA shall keep complete, accurate and appropriate records on the financial and
nonfinancial performance of government.

SEC. 75. Government Consolidated Reporting. ~ The DBM shall submit to the President and the
COA a quarterly report on the consolidated financial performance of the government which shall inctude
information showing the performance of Government Agencies against the respective programs, activities
and projects mandated under 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
submitted to the President and COA.

PART VII

TRANSPARENCY AND PARTICIPATION

SEC. 76. People’s Access to Public Financial Information. — Before the start of each fiscal year, the
DBM shall promulgate a Calendar of Disclosures, and shall publish this on the government website. Such
calendar shall contain the schedule for the publication of all budget documents and information required by



this Act and its IRR. The DBM shall monitor and periodically report to Congress and the public on the
compliance of agencies with the Calendar of Disclosures and other fiscal transparency requirements under
this Act and its IRR,

‘All documents and reports required to be published by this Ant and its IRR, shall automatically be
made available electronically in the government website. Current and historical data on government
revenues, expenditures, and borrowing shall be made available electronically, in open data format, on the
government website, subject to guidelines established in the IRR.

SEC. 77. The People’s Budget. — The DBM shall, for every fiscal year, publish citizen-ftiendly

summaries of the following, subject to guidelines and other specifications in the IRR:
(@) The Statement of Fiscal Policy in the year of the President’s election and any updates thereafter

within thirty (30) days from submission to Congress;

(b) The Proposed National Budget, to be published in electronic format within thirty (30) days from
submission to Congress of the Proposed National Budget;

(©) The annual General Appropriations Act and special Appropriations Laws, to be published in the
clectronie format in the goverment website within thirty (30) days from its effectivity; and

(@ The Annual Fiscal Report, to be published in electronic format in the government website within
thirty (30) days from submission to Congress.

SEC. 78. Participatory Budget Process. — The government shall establish and implement suitable
participatory budget mechanisms to facilitate the open, inclusive, and meaningful engagement of citizens
throughout the budget process. The DBM, together with other relevant agencies, shall formulate policies
and regulations towards the implementation of a participatory budget process.

Such participatory mechanisms may include consultations and partnerships with civil society
organizations (CSOs), academics and experts, and other individual and organized stakeholders in the budget
process including collaboration with LGUs to jointly identify local priority poverty reduction and
development needs which will serve as input to the budget process.

PART VII

ENFORCEMENT



SEC. 79. Sanctions and Penalties. — (a) Without prejudice to the provisions of other laws, the
following sanctions and liabilities, in case of failure to comply with the reporting and posting requirements
under this Act, shall be imposed:

(1) The DBM shall not approve any request for release of allotments for items of appropriations
covered in the negative list or any modification in the allotment nor recommend the use of savings by the
President until such time as the noncompliant agency has submitted the report/s required under this Act;

(2) The COA may suspend or disallow any expenditure charged against augmentation using savings,
and any expenditure due to modification in the allotment, which were made within the period succeeding
the reporting period when the agency failed to comply with the reporting requirements under this Act;

(3) Failure to report on the income and/or funds retained at the end of a reporting period shall render
all disbursement against such income or funds in subsequent reporting periods as void, and will render the

responsible official liable under existing laws; and

(4) The Congress may motu proprio or upon the request of COA and DBM, through its appropriate
‘oversight commitice, compel the head of the noncompliant agency, under pain of contempt, To produce the
required report/s and I explain reasons for failure to submit and disclose said reports.

(©) Without prejudice to the provisions of other laws:

(1) Every contractual commitment, expenditure or payment authorized or incurred in violation of the
provisions of this Act shall be void and shall render the public official or employee authorizing or making
such payment and every person in collusion with said official or employee jointly and severally liable to
the government for the full amount so paid or received. The public official or employee who knowingly
delays the implementation of any contractual agreement shall be liable and imposed the appropriate
administrative sanctions based on existing laws and civil service rules. A public official or employee who
knowingly incurs any contractual commitment or authorizes any expenditure in violation of the provisions
of this Act or takes part therein shall likewise be removed or dismissed from office, after due notice and
hearing, even if no criminal charge is instituted against such public official or employee;

(2) Any publie official or employee holding office or employment in a casual, temporary, holdover,
permanent or regular capacity, who shall cause the inclusion of fraudulent information in any accountability
report, shall be penalized with imprisonment not exceeding five (5) years, or a fine not exceeding One
million pesos (P1,000,000.00), or both, without prejudice to disallowances by the COA. against
expenditures related to such fraudulent information: Provided, That this fine is reviewed and adjusted
periodically to be reasonable;


(3) 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 government of any unwarranted benefit derived
‘ort the abt or aets ih question, or both, at the discretion of the courts, ih addition'to possible administrative
liability; and

(4) Private individuals who shall conspire with the erring public officials or employees, whether as
co-principals, accomplices or accessories, in the commission of any violation of this Act shall be subject to
the’'santie"penullties a8 the public officials or employees and shall be tried jointly with them.

SEC. 80. Jurisdiction. — Actions under this Act shall be cognizable by the courts, tribunals, bodies,
‘agencies or authorities with eppropriate jurisdiction under existing laws.

PART IX
FINAL PROVISIONS

SEC. 81. Implementing Rules and Regulations. — The DBM, in consultation with the DOF, BTr,
NEDA, and COA, and in coordination with the agencies concerned, shall issue the rules and regulations
nééeisaty for the implemeritation of this Act'within ninety (90) days from the effectivity of this Act. The
IRR may be amended by the DBM, in consultation with the DOF, BTr, NEDA and COA and in coordination

with the agencies concemed, as the need arises.

SEC. 82. Transitory Provisions. The DBM, DOF, BT, NEDA and COA shall prepare and submit
to the Joint Congressional Oversight Committee on Public Expenditures within thirty (30) days from the
promulgation of the IRR, a Transitory Plan to ensure the proper implementation of the provisions of this
Act, presenting the sections that will not be implemented upon the passage of this Act or the IRR, and those
requiring compliance with certain conditions or events before the provisions herein may be implemented.
‘The Transitory Plan shall likewise include interim measures to ensure a smooth transition into a regime of
annual cash-based appropriations, In addition, for the initial year of implementation in FY 2019, the cash-
based appropriations for infrastructure projects shall be available for release, contractual commitment, and.
disbursement until December 31, 2020.

SEC. 83. Repealing Clause. — Any law, presidential decree or issuance, executive order, letter of
instruction, administrative order, proclamation, charter, rule or regulation, and/or parts thereof contrary to
or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly.

SEC. 84. Separability Clause. — If, for any reason, any section or provision of this Act is declared
unconstitutional or invalid, the other sections or provisions which are not affected hereby shall continue to
be in full force and affect.



SEC. 85. Effectivity. ~ This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or in two (2) newspapers of general circulation,

Approved,