SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B. NO. 1864 
'13 ocr 16 P5 :41 
Introduced by SENATOR FERDINAND R. MARCOS, .JR. 
Explanatory Note 
The National Budget is invested with the public interest. Not only is the 
national budget a major instrument of national development and is essential to 
the operations of the government and the delivery of public services to the 
Filipino people, it is also composed no less of taxpayers' hard-earned money, 
which have been taken away from them by the government, more or less 
involuntarily. Nothing demoralizes and enrages our Filipino citizens more than 
the thought that their hard-earned money, collected through the State's power of 
taxation and entrusted to the government for utilization and administration, is 
improperly used, siphoned off and lost 10 graft and corruption. Worse, the loss 
and wastage more often than not escape notice of the authorities and never 
reach public knowledge or scrutiny, whether deliberately or naively. Worst of all, 
public service is not visibly improved and poverty not tangibly alleviated. 
Thus, the State not only has the legal but also the moral obligation to its 
citizens and taxpayers to ensure that the public funds composing the national 
budget are strictly utilized for public purposes, and the operations funded by 
taxpayers' money be conducted, and accounted for, effectively, economically and 
efficiently. 
First, this proposal seeks to "codify", so to speak, recognize and 
harmonize, and adopt by reference the related provisions of the Constitution as 
well as the various existing laws that are in pari materia and that touch upon, 
control and direct all the phases of the national budget cycle. Through this 
proposed legislation, the public shall be made aware of the entire process of the 
national budget cycle and the agencies and offices involved in the process. 
Belter yet, the public is given the opportunity and the right to participate and 
monitor the entire budget process as to ensure transparency and accountability. 
To safeguard the national budget process, the entire system should be 
strengthened and improved. The entire budget process-from budget preparation, 
legislation or authorization, execution, up to accountability-must be made airtight 
and the linkages made stronger and more efficient. The role and functions of the 
essential government regulatory agencies and offices involved in all the phases 
of the budget process should be properly defined and refined, with marked 
emphasis on the requirements of accountability and tram.parency. All agencies of 
the government should install and maintain internal control or monitoring systems 
and should be required to regularly report to the Department of Budget and 
Management. 
Being vested with public interest and an instrument of national 
development, the national budget process should be non-political in nature. Both 


" 
the Department of Budget and Management shall exercise its mandate timely, 
completely, objectively and effectively, notwithstanding its nature as an executive 
office. Likewise should the Commission on Audit, an independent Constitutional 
Commission, do the same and exercise its audit function with impartiality, without 
fear or favor, and without political bias or leanings. This is to ensure that there is 
a final check on the Department of Budget and Management, ·theagency that 
controls the releases on the national budget, which is under the President. 
The budget accountability phase necessarily covers collection and 
enforcement of liabilities, whether civil, administrative, or criminal. The primary 
oversight agencies, the Department of Budget and Management and the 
Commission on Audit, being the last bulwarks of accountability in the national 
budget shall always ensure that systems, rules and processes are in place so 
that every centavo of the public funds is properly used and accounted for. In case 
of irregularities and violations, they should immediately endorse and recommend 
to the Department of Justice or the Office of the Ombudsman, without prejudice 
to the exercise of their respective mandates under this Act and existing laws. 
Recovery and collection is a very important aspect of budget 
accountability, aside from enforcement of liabilities. In this connection, this bill 
seeks to also emphasize and ensure that all.unauthorized, irregular and improper 
fund releases and disbursements shall immediately be recovered and collected 
at the instance of the government agencies concerned, or upon the order and 
recommendation of the Commission on Audit with the assistance of the Office of 
the Solicitor General. 
In the same way that participation of private citizens and groups is herein 
recognized and promoted, this proposal likewise seeks h? institute that all private 
individuals and entities-like non-government organizations, community-based 
and sectoral organizations, which are recognized by the Article II, Section 23 of 
the 1987 Constitution, and presently accredited and allowed by the Department 
of Budget and Management to be recipients and beneficiaries of public funds-are 
strictly regulated and held to high and exacting standards of monitoring, 
accounting and audit by our oversight agencies. This way, we are also able to 
address and improve the pressing problems and issues of the day involving 
alleged irregularities in the budget process. 
Continuous status monitoring througliout all the phases of the national 
budget process should likewise be institutionalized and ensured, and fortified by 
strengthened public participation and information. Ultimately, it is hoped that our 
Filipino citizens can be assured and assuaged that all public funds to be used for 
the national budget, which are collected from the hard-earned money of the 
citizens, are disbursed, used, and accounted for properly and efficiently. 
In view of thereof, the passage of this bill is earnestly requested. 
) 
R.. MARCOS, JR 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
. SENATE 
SENATE BILL No1864 
Introduced by Senator FERDINAND R. MARCOS, JR. 
.§\tlwh' 
!Il}ff.;, "I lit' }:'rrr,bru 
'13 
OCT 16 P5 :41 
AN ACT STRENGTHENING THE NATIONAL BUDGETING PROCESS, 
CREATING INTERNAL CONTROL SYSTEMS OR PROJECT MANAGEMENT 
AND MONITORING OFFICES IN ALL IMPLEMENTING AGENCIES AND 
OFFICES, STRENGTHENING THE RECOVERY AUDIT PROCESS OF THE 
GOVERNMENT, AND APPROPRIATING FUNDS THEREFOR, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress Assembled: 
SECTION 1. Title. - This Act shall be known as "Strong National Budget 
Process Act of 2013." 
SECTION 2. Declaration of Policies and Principles. - a) The National 
Budget is an instrument of national development, reflective of national objectives, 
strategies and plans. It should be supportive of and consistent with the socio-
economic development plan and shall be oriented towards the achievement of 
explicit objectives and expected results. To this end, the State should not only 
ensure that funds are utilized and operations are conducted effectively, 
economically and efficiently, but also ensure that the auditing, management and 
monitoring institutions and accountability processes are likewise prompt, timely, 
strong, effective, efficient, neutral, independent and insulated from corruption and 
political pressures. To do this, the working relationships and institutional linkages 
between and among the vital agencies and institutions involved in the national 
budget process, the Department of Budget and.Management, the implementing 
agencies and local government units, the non-government· institutions, and the 
Commission on Audit should be made stronger, more effective and efficient, 
notwithstanding the institutional independences and autonomies of the agencies 
and offices involved and the departmental separation between and among them. 
b) Budget accountability. is essential to a responsjble .,and responsive 
national budget process. The accounting, auditing, management and monitoring 
of government projects and expenditures are as much inherent parts of the 
budget process, as budget preparation, authorization and execution. 
c) All resources of the government shall be managed, expended or utilized 
in accordance with law and regulations and with extraordinary diligence, and 
safeguarded against loss or wastage through illegal or improper disposition, with 
a view to ensuring efficiency, economy and effectiveness in the operations of 
government. 
d) Fiscal responsibility in budget execution and accountability rests directly 
with the chief or head of the government agency, subdivision, instrumentality or 
office. Government agencies, subdivision·s, instrumentalities or offices shall 
establish and institute internal control systems, management and monitoring 


mechanisms that shall ensure proper and effective implementation of the national 
budget and expenditure of public funds and monies. 
e) All monies officially received by a public official in any capacity or on 
any occasion shall be accounted for as local funds, unless otherwise provided by 
law. Every public official whose duties permit or require the possession or 
custody of public funds shall be properly bonded, and such officer shall be 
accountable and responsible for said funds and for the safekeeping thereof in 
conformity with the provisions of law. 
f) The role of the Commission on Audit, an independent Constitutional 
Commission, is to impartially, apolitically, promptly and timely determine whether 
such fiscal responsibility has been properly and effectively discharged, and to 
ensure the swift recovery and collection by the government of funds, monies and 
other receivables owing to it as a result of the improper and ineffective discharge 
of the fiscal responsibility of any government agency, subdivision, instrumentality 
or office. In the exercise of its official mandate, the independence of the 
Commission shall be respected, protected and preserved. 
g) In all phases of the National Budget Process, public or citizen's 
participation and information shall always be encouraged and prolT'oted. 
h) It is likewise the policy of the State to integrate and codify all existing 
laws, policies and guidelines, rules and regulations relevant to the national 
budget process in order to present a rational, cohesive and comprehensive 
national budget process framework or system, which shall be strictly in 
accordance with the Constitution. 
SECTION 3. National Budget Process. - The national budget process 
consists of four (4) major interrelated phases: 
a) Budget preparation - This phase commences with the budget call of the 
President, through the Department of Budget and Management, to a\1 
government agencies, subdivisions, instrumentalities and offices, and ends with 
the submission of the proposed national budget to the Congress, in accordance 
with Section 22 of Article VII of the 1987 Constitution. 
b) Budget authorization or legislation - This phase commences with the 
receipt by the House of Representatives of the proposed national budget from 
the President, and ends with the enactment by Congress of the General 
Appropriation Act. 
c) Budget execution -
This phase concerns the execution and 
implementation of the General Appropriations Act (GAA) by the President, 
through the Department of Budget"and Management, which issues the guidelines 
on the releases and utilizations of the appropriations authorized by the GAA. It 
ends with the actual expenditure or disbursement of public funds and monies. 
d) Budget accountability - This phase involves the monitOring, accounting 
and auditing of the ethical and efficient utilization of the allocated and disbursed 
public funds and monies of government agencies, subdivisions, instrumentalities 
and offices, and also the review and assessment of the physical and financial 
performance 
targets 
and 
outcomes 
of 
such 
agencies, 
subdivision, 
instrumentalities and offices. The President, th~ough the Department of Budget 
and Management, and the Commission on Audit are the· primary government 
agencies tasked with the enforcement of budget accountability. 


SECTION 4. Concurrent Application and Adoption by Reference of 
Relevant Laws. - Presidential Decree No. 1445, Presidential Decree No. 1177, 
Republic Act No. 7226, as well as the relevant provisions of Presidential Decree 
No. 1376, the Administrative Code of 1987, Republic Act Nos. 7160, with regard 
to the share of the local government units in the internal revenues and in the 
national wealth, and of other related laws, rules and regulations, insofar as not 
they are not inconsistent with the provisions of this Act, are hereby adopted by 
reference in and made integral parts of this Act. 
I. BUDGET PREPARATION 
SECTION 5. Budget Formulation and Preparation. - The formulation and 
preparation of the budget proposal shall be in accordance with the rules and 
procedures to be' promulgated by the President, through the Department of 
Budget and Management, and other existing laws, such as the Administrative 
Code of 1987, and in accordance with the policy guidelines and parameters set 
by the Development Budget Coordination Committee within the National 
Economic Development Authority. 
SECTION 6. Budget Proposal. - Within thirty (30) days from the opening of 
the regular session, the President shall submit to the Congress the proposed 
national budget, which shall be the basis of the general appropriations bill. The 
President's proposed budget shall contain his message to Congress, the budget 
of expenditures and sources of financing, including receipts from existing and 
proposed revenue measures, the national expenditure program and the details of 
specific plans and programs, and the staffing summary of each department, 
agency and office of the government. Within the same period, the President, 
through the Department of Budget and Management, shall also submit to 
Congress reports of its assessment of organizational effectiveness, and other 
legislative proposals having budgetary or organizational implications. 
II. BUDGET AUTHORIZATION 
SECTION 7. General Appropriations Bill. - The general appropriations bill 
shall originate exclusively with the House of Representatives, but the Senate 
may propose or concur with amendments. Upon receipt of the proposed national 
budget from the President, the House of Representatives shall immediately 
prepare and file the general appropriations bill and refer the same to the 
Committee on Appropriations for committee hearings ancj deliberations. 
SECTION 8. Approval by the House of Representatives. - After due 
hearing, the House of Representatives shall consider the general appropriations 
bill in plenary discussion, interpellations and amendments, and proceed to vote 
on the same for third reading. After approval, the House shall transmit the 
approved General Appropriations Bill to the Senate for the latter's concurrence or 
amendments. 
SECTION 9. Transmission to the Senate. - The Senate may propose or 
concur with amendments to the General Ap'propriations Bill. For this purpose, the 
Senate shall prepare and file its own general appropriations bill, and shall 
immediately conduct its own committee and plenary hearings and deliberations. 
Then, the Senate shall approve its own version. 
SECTION 10. Bicameral Conference Committee. - After approval by the 
Senate of its own version of the general appropriations bill, the House of 
Representatives and the Senate' shall convene a bicameral" conferenCe 
committee for the purpose of deliberating on and harmonizing the disagreeing 


provisions of the two versions. The two Houses shall then ratify the harmonized 
version of the committee. 
SECTION 11. Enrolled General Appropriations Bill; Submission to the 
President. - After ratification by the two Houses of the harmonized versions, the 
heads of each House of Congress shall sign their final approved version and 
proceed to submit the same to the President for his approval. 
SECTION 12. Approval by the President of the General Appropriations 
Act; Veto. - Upon submission of the enrolled 'general appropriations bill, the 
President shall indicate his approval by signing it, otherwise he shall veto it and 
return the same to Congress with his objections. The President shall have the 
power to veto any particular item or items in the general appropriations bill, but 
the veto shall not affect the item or items to which he does not object. 
III. BUDGET EXECUTION 
SECTION 13. Release and Disbursement of Funds. - The President, 
through the Department of Budget and Management, shall prescribe and 
promulgate the guidelines for the release and disbursements of the funds 
authorized by the General Appropriations Act. The guidelines to be promulgated 
should enforce transparency and accountability in the release and disbursement 
of funds. 
SECTION 14. General Appropriations Act as Primary Release Document. 
- As far as may be practicable, the funds appropriated shall be released to the 
agencies and offices upon enactment of the' General Appropriations Act without 
need of further release or clearance documents. 
IV. BUDGET ACCOUNTABILITY 
SECTION 15. Primary Oversight Agencies, - The Department of Budget 
and Management and the Commission on Audit are the primary oversight 
agencies on the enforcement of accountability in the national budget process. 
The Department of Budget and Management and the Commission on 
Audit shall work in close coordination and consultation in order to achieve the 
objectives of accountability and prevention and swift recovery of irregular, 
unnecessary, excessive, or extravagant expenditures or uses of government 
funds or property, in accordance with their respective mandates. For this 
purpose, they shall prescribe and promUlgate the rules, guidelines and 
procedures to enforce accountability for the funds released and disbursed to, and 
utilized by government agencies, offices and other covered entities, as well as to 
strengthen their inter-agency reporting and coordination. 
SECTION 16. Independence, Completeness, Impartiality, Objectivity, and 
Non-political and Non-sensational nature of the Audit Process. - The Department 
of Budget and Management and the Commission on Audit shall exercise their 
functions of auditing and enforcement of accountability in an impartial, objective, 
complete, and timely manner. 
The accounting and auditing function shall neither be used to 
sensationalize political rivalries or partisanships nor be used as a tool for political 
propaganda and persecution. 
SECTION 17. Jurisdiction; Covered agencies, oftices and other entities. -
The oversight functions and jurisdiction of the Department of Budget and 


The Office of the Solicitor-General, the Office of the Government 
Corporate Counsel, the legal and prosecution divisions of the covered agencies 
and offices shall have primary responsibility for the prosecution of collection and 
recovery cases that are referred to it by the Commission on Audit or instituted by 
the covered agencies and offices themselves. 
Amounts recovered and collected under this Section are public funds and 
shall be returned to the National Treasury. Recovery of the amounts and public 
funds under'this 'Section 'shall be without prejudice' to other causes of action or 
criminal or administrative liabilities under existing laws and rules. 
SECTION 21. Liabilities of Private Persons and Entities: - Private persons 
and entities, including non-government organizations, community-based and 
sectoral organizations and like institutions, dealing and entering into agreements 
with the government agencies and offices shall strictly comply with their 
obligations with extraordinary dilige'nce and shall be deemed to hold in trust the 
public funds paid and delivered to them until they shall have satisfactorily 
complied and completed their obligations, and properly accounted for the fund 
releases to them. For this purpose, they shall be accredited, sufficiently bonded, 
and shall be subjected to the same monitoring, accounting, audit and clearance 
requirements under this Act, as well as to liabilities under existing laws and rules. 
Government agencies and offices dealing with private persons and entities 
shall exercise extraordinary diligence in ensuring a priori that such persons and 
entities are strictly compliant with existing laws, rules and regulations. 
. . 
SECTION 22. Endorsement to the Department of Justice and/or the Office 
of the Ombudsman. - The Department of Budget and Management, the 
Commission on Audit, as well 'as the covered agencies and offices themselves, 
and private citizens and civil society groups and organizations alike, shall 
immediately report and endorse to the Department of Justice or the Office of the 
Ombudsman Clny and all irregularities and violations under this Act for concurrent 
investigation and prosecution of criminal liabilities. 
SECTION 23. Citizens' Participation and Information, - The right of the 
public to information and participation on all matters involving the national budget 
process in all its phases shall be recognized, and shall be defined in accordance 
with Section 25 hereof. 
. 
SECTION 24. Mandatory Continuing Program of Improvement of Public 
Financial Management. - The Department of Budget and Management, the 
Department of Finance, and the Commission on Audit are mandated to regularly 
analyze and evaluate the systems and procedures involved in and the inter-
agency transactional relationships and linkages of all phases of the national 
budget process, perform risk assessment studies, and re-engineer the same in 
order to prevent graft and corruption, eliminate risks thereof, as well as irregular 
and improper payments and disbursements, improve fiscal discipline and the 
efficiency of allocation and uiilization of public funds. 
SECTION 25. Annual Report to Congress. - The Department of Budget 
and Management and the Commission on Audit shall submii a yearly report to 
Congress about the public financial management efficiency of all the covered 
agencies hereunder as well as the status of the actions, collections and 
recoveries made by the all covered agencies in pursuance of this Act. 
.. 
SECTION 26. Implementing Rules and Regulations. - Within sixty (60) 
days from effectivity of this Act, the Department of Budget and M~nagement, the 


Management and the Commission on Audit shall extend to all departments, 
bureaus or offices of the national government, or any of its branches and 
instrumentalities, including both Houses of Congress, the Supreme Court, 
constitutional bodies, commissions and offices' that have been granted fiscal 
autonomy under the Constitution, local government units and other political 
subdivisions, as well as any government-owned or controlled corporation, 
including its subsidiaries, or other self-governing boards or commissions of the 
government, non-governmental entities receiving subsidy or equity directly or 
indirectly from or through the government, those funded by donations through the 
government, those required to pay levies or government share, and those for 
which the government has put up a counterpart fund or those partly funded by 
the government. 
. 
SECTION 18. Budget Accountability Reports; "No Report, No Release" 
Policy. - The Department of Budget and Management and the Commission on 
Audit shall regularly require the government agencies, offices and other covered 
entities to submit budget accountability reports. In the event of failure to submit 
the reports required hereunder, the Commission on Audit shall recommend to the 
Department of Budget and Management, or the Department of Budget and 
Management shall motu proprio immediately cause, the immediate withholding 
further budget releases to the non-compliant agencies and offices until they shall 
have satisfactorily complied with the said requirement, without prejudice to other 
consequences and liabilities under existing laws and rules. 
SECTION 19. Institution of Internal Control Systems; Annual Reports. - All 
covered agencies, offices and other entities are mandated to create, install and 
maintain a sound and effective system of internal control and fiscal and financial 
management of its programs and projects, operations, general administration, 
and other expenditures and payments, including personnel services, maintaining 
and other operating expenses, financial expenses, and capital outlays. They shall 
also conduct regular risk assessments with regard to susceptibility to fund 
leakages and improper payments or corrupt practices. 
Aside from the reports required to be submitted under this Act, the 
covered agencies shall also submit to the Department of Budget and 
Management and the Commission on Audit a yearly report with regard to the 
efficiency of their internal control systems. These reports must include: 1) areas 
susceptible to and amount estimates of improper payments and fund leakages in 
the agency; 2) causes of improper payments and fund leakages; 3) evaluation of 
their internal controls systems to address the problems; 4) reduction targets; and 
5) actions planned and actions taken to detect, prevent, and recover improper 
payments and fund leakages; and such other related matters to be required by 
the Department of Budget and ManagelT)ent and·the Commission on Audit. 
SECTION 20. Recovery or Recapture Audits; Prompt and Expeditious 
Recovery of Public Funds. - Covered agencies and offices are required to take 
prompt, expeditious and appropriate legal actions to recover amounts lost to 
improper and irregular payments or to fund leakages, which are detected, 
discovered or found through the :internal control system or audit of the agency or 
office or through the exercise of the oversight functions of the Department of 
Budget and Management or the Commission on Audit. 
' 
The Commission on Audit shall have primary responsibility to monitor, 
ensure and assist in the swift and expeditious collection and enforcement of all 
debts and claims, and the restitution of all public funds and properties found to be 
lost to improper or irregular payments or disbursements or to fund leakages. 


, . 
Department of Finance, the Legislative Budget Research and Monitoring Office 
(LBRMO) of the Senate of the Philippines and the Congressional Policy and 
Budget Research Department (CPBRD) of the House of Representatives, the 
Commission on Audit, the Department of Justice, and the Office of the 
Ombudsman 
shall 
issue the 
rules 
and 
regulations 
for 
the 
effective 
implementation of the provisions this Act: 
SECTION 27. Separability Clause. - The provisions of this Act are hereby 
declared to be separable and if any clause, sentence, provision or section of this 
Act or its application thereof to any person or circumstance should, for any 
reason, be held invalid or unconstitutional, such invalidity or unconstitutionality 
shall not affect the other provisions or application of this Act which can be given 
force and effect. 
SECTION 28. Repealing Clause. - All laws, decrees, charters, executive 
orders, administrative orders, proclamations: rules and regulations, or parts 
thereof insofar as they are inconsistent with the provisions of this Act are hereby 
repealed or modified accordingly. 
SECTION 29. Effectivity. - This Act shall take effect fifteen (15) days after 
completion of publication in the Official. Gazette or in a newspaper of general 
circulation. 
Approved, 
I ,