FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
H.B.No.__ 4647

Introduced by HON. LORENZO R. TANADA IIT

AN ACT
DEFINING “UNVROGRAMMED FUNDS” AND PROHIBITING LEGISLATORS
FROM APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.

EXPLANATORY NOTE

As the national government continues to strengthen its campaign for accountability, it
utilizes the logic of a sound budget management system which follows the principles of public
expenditure management ~ a combination of fiscal discipline, allocative efficiency, and effective
use of resourees. With this in mind, strict adherence to such fiscal policies is deemed necessary
to optimize the use of public funds and safeguard it from abuse and/or misuse.

‘The government also provides for standby appropriation under “Unprogrammed Funds”
which gives legislators some funds to undertake pro-active measures in urgent situations
involving priority projects and/or programs but only in cases where extra revenues are collected
within the fiscal year. This has been justified by the Department of Budget and Management,
citing that providing for such funds in the General Appropriations Act (GAA) is necessary since
the national budget takes quite a long period to prepare. Similarly, the disparity between the
conditions at the time of preparation and at the time of implementation is also taken into
consideration.

However, despite the good intentions and seeming practicality of such funds, they are
more often than not susceptible to abuse and/or misuse. A prime example would be the release
of unprogrammed funds to legislators in the opposition who have not received their Priority
Development Assistance Fund allegedly due to “lack of funds.” The Executive Department is also
guilty of misusing said funds when they are deployed as short-cut strategies to avoid the
appropriations procedure as provided for by law, ultimately circumventing the basic principle
that the power of the purse lies in the hands of Congress. When this mishandling is committed,
the Executive Department has no need of submitting a supplemental budget when it decides to
spend additional funds over and above the approved appropriations. Consequently, with the
absence of concrete provisions and administration of funds this, practice creates instability in
the budget system and makes it prone to fraud, wastage and abuses as there is a huge amount
involved.


Similarly, when the use of unprogrammed funds as part of the budget strategy remains
unchecked, a huge budget deficit will surface as evidenced by the 2007 budget where a total of
P1i4 Billion was placed under unprogrammed funds. The government was not able to recover
from the deficit as the economy fell and tax relief was given to minimum wage earners that same
year.

If the government is all for maintaining a stable economy that banks on a secure
budgetary system, its money should no longer be appropriated under unprogrammed funds as
to avoid abuse and/or misuse which will consequently result to budget deficits that the
government can no longer afford to fall into. Additionally, in the case of higher-than-expected
revenue collection and additional foreign project loan proceeds during the fiscal year, said
amount should only be spent upon submission of a supplemental budget to Congress.

In view of the foregoing, the immediate enactment of this measure is earnestly

sought.

R Tose
Lo “ERIN” R. TANADA IIT

epresentative
4™ District of Quezon


FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES}
First Regular Session )

HOUSE OF REPRESENTATIVES

H.B.No.__ 4647

Introduced by HON. LORENZO R. TANADA IT

AN ACT
DEFINING “UNPROGRAMMED FUNDS” AND PROHIBITING LEGISLATORS
FROM APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.

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

SECTION 1, Short Title. — This Act shail be known as the “Unprogrammed Funds
Prohibition Act of 2010”.

SEC. 2. Declaration of Policy. — 1 is hereby declared the policy of the State to
formulate and implement a national budget that is within the framework of accountability,

lransparency, stability, performance and participation and is an instrument of national

development, reflective of national objectives, strategies and plans,

SkC. 3. Definition of Unprogrammed Funds. - For purposes of this Act,
“Uuprogrammed Funds" shall refer to standby appropriations that legislators have been
including in the General Appropriations Act (GAA) that are not supported by a specific source of
linaneing at the time the GAA is approved.

SEC. 4. Prohibition. ~ The Executive Department, through the Department of Budget
and Managemnent, and any member of the Legislature shall be prohibited from appropriating for
"Unprogrammed Funds". Any amount realized from higher-than-expected revenue collection
and additional foreign project loan proceeds during the fiscal year shall only be spent upon

submission of a supplemental budget to Congress


SEC. 5. Separability. — If, for any reason, any section or provision of this Act is held
unconstitutional or invalid, no other section or provision shall be affected.

SEC. 6. Repealing Clause. ~ Al laws, decrees, executive orders, rules and regulations,
issuances or any part thereof inconsistent with the provisions of this Act are hereby repealed or
amended accordingly

Sec. 7. Effectivity. - This Act shall take effect fifteen (15) days after its publication in
at least two (2) national newspapers of general circulation.

Approved,