Hon. F 8 PRESENT ATIVES

ROCENVED
Republic of the Philippine 1
HOUSE OF REPRESENTATI oave,_10 AUG 2016
Quezon City
SEVENTEENTH CONG!
First Regular Session REDICTR ATION UNIT
2832 | BILLS AND IWOEX SERVICE

House Bill No.

Introduced by AKBAYAN Representative Tomasito S. Villarin

EXPLANATORY NOTE

Every year, the national government goes through the meticulous process of
setting its goals and priorities, identifying programs and projects, and
putting the required budgetary allocations for the programs and projects it
has identified. In the end, the preparation of the government’s annual
appropriation ensures that its work plan promotes efficiency, generates
more revenues for the government.and responds effectively to national
development requirements.

All government instrumentalities depend on the allocations made on the
approved General Appropriations Act to realize set objectives, programs and
projects. Each government instrumentality’s efficiency lies in the regular
availability of budgetary support to oil its machinery and accomplish its
mandate

The Local Government Code provided the impetus of local governments to
chart their own destiny by allowing each local government to identify
significant and necessary development initiatives for its respective localities.
‘This is important for the progress and development of its citizenry.

In most cases, however, due to the uncertainty in the releases of allotment,
government instrumentalities and local governments all prey to the
whimsical exercise of deferment, rescission or even reversion of
appropriations. Such frustrates expectations of their respective
constituencies, leaving them with false promises of implementing
development programs that may never be realized.

This proposed legislation was also filed by Akbayan’s representatives during
the 16" Congress. Essentially, this bill seeks to ensure that proper limits
and procedures are put in place in the exercise of the President’s authority
to defer, rescind or reserve expenditures that have already been approved by
Congress through the General Appropriations Act.


In addition, this proposed law safeguards the the authority of the President
so that succumbing to pressures and other influences that negate the very
reason for the enactment of the General Appropriations Act is avoided.

In the end, the objective of this proposed legislation is make both the
national government and the local government units to work better for the
citizenry towards national development.

In view of the foregoing, the passage of this bill is earnestly sought.

ITO S. VILLARIN


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

2832

House Bill No.

Introduced by AKBAYAN Representative Tomasito S. Villarin

AN ACT
REGULATING THE POWER OF THE PRESIDENT TO DEFER,
RESCIND, OR RESERVE EXPENDITURE OF APPROPRIATIONS
AUTHORIZED BY CONGRESS

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

SECTION 1. Title —This Act shall be known as the “Impoundment
Control and Regulation Act of 2016.”

SECTION 2. Declaration of Policy.—It is the policy of the State to
formulate and implement a National Budget that is anchored on a
meticulous assessment of the Government's budgetary requirements
based on clearly-defined national priorities, that promotes efficiency
and resolve in the Government’s revenue generation efforts, and is
truly responsive to the needs of national development. Towards this
end, all appropriations, except those which shall be expressly
deferred, rescinded, reserved, or provided for otherwise, in the General
Appropriations Act, shall be automatically released within the first
semester of the year through the issuance of advices of allotment in
accordance with approved work and financial plans, and shall be
utilized according to the corresponding purposes provided for in the
General Appropriations Act. Any other deferral, rescission, or
reservation of appropriations in the General Appropriations Act shall
ba made in accordance with this Act.

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

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


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

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

3. “Advice of allotment” refers to the formal
document _issued_by the Department_of
Budget and Management which contains the
authorizations, conditions, and amount of
obligations that __an__agency__can__incur
pursuant to a legislative appropriation.

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

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

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

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


8. “Deferra?’ means withholding or
delaying the release of appropriated amounts
provided for projects or activities.

9. “Expected result? means _ service,
product, or benefit that will accrue to the
public, estimated in terms of performance
measurers or targets.

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

li. The “Government” means the National
Government, including the Executive, the
Legislative and the Judicial branches, and the
Constitutional Commissions.

12. “Department and — agency’ and
“department or agency’ include __ alll
departments, bureaus, offices, boards,
commissions, courts, tribunals, councils,

authorities, administrations, centers,
institutes, state colleges and universities, and
all other establishments and

instrumentalities of the National Government
as defined in the preceding paragraph.

13. “Impoundment _ Resolution” _means _a
joint resolution of both Houses of Congress
expressing approval or disapproval of a
rescission. reservation deferral, or
suspension of an appropriation or several
appropriation items as proposed by the
President.

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

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

16. “Project? means a component of a
program covering a homogenous group of

3


activities which results in the
accomplishment of an identifiable output.

17. “Rescission” means cancellation of all or
parts of an enacted appropriation which has
not yet been spent or obligated.

18. “Reservation” means __ imposition _of
reserves on an appropriated amount _for
government expenditures.

SECTION 4. Section 37 of Chapter 5, Book VI of Executive Order No.
292 otherwise known as the “Administrative Code of 1987,” is hereby
repealed and replaced with the following provision:

“Section 37. Rescission and Reservation _of
Appropriation.—Whenever___the__ President
determines that_all_or part of any budget
appropriation will not be required to carry out
the full objectives or scope of programs for
which it is provided, or that such budget
appropriation should be rescinded for fiscal
policy or other reasons, including _ the
termination of authorized __projects _or
activities, or whenever all or part of any
budget appropriation for the current _fiscal
year is to be reserved from obligation for such
fiscal_year, the President_shall_transmit_to
both Houses of Congress a Special Message
specifying:

he. The _amount_of budget appropriation
which the President proposes to be rescinded
or which is to be so reserved;

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

3. The reasons why the _budget
appropriation should be rescinded, or is to be
so reserved;

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

reservation; and



5. All facts, circumstances and
considerations relating to the proposed
rescission or reservation including its bearing
upon the purposes, programs, activities and

projects for which such appropriation _is

provide

SECTION 5. There shall be incorporated into Chapter 5, Book VI of
Executive Order No. 292 otherwise known as the “Administrative Code
of 1987” four (4) new provisions after Section 37, to read as follows:

“Section _37-A. Approval _of Rescission _or
Reservation.—Both Houses of Congress shall
act_on the proposed rescission or reservation
within forty-five (45) calendar days after the
receipt_of the Special Message from the
President_made_ pursuant to Section 37 by
issuing a_joint_Impoundment Resolution,
approving or disapproving the _ proposal:
Provided, That if the President’s Special
Message is received within a period of less
than forty-five (45) calendar days before the
end_of a regular session, the President’s
Special Message shall be deemed to have
been submitted on the first_day of the
succeeding regular session of Congress, and
the forty-five (45) day period referred to_in
this Section shall commence on the day after
such first_day: Provided, further, That_if
Congress does not _issue_an_Impoundment
Resolution within the _specified_period, the
proposed rescission or reservation shall be
deemed_disapproved: Provided, finally, That
funds corresponding to the rescinded
appropriations shall revert to _the
unappropriated surplus of the general fund
and__shall not _be made available _ for
expenditure for any purpose except as may be
provided for in a subsequent law enacted b
Congress.

“Section _37-B.__Use__of _Reserves.—When
changes in conditions during the year justify
the use of the reserved appropriations which
have been _imposed_under_this Book, as
amended, or the General Appropriations Act,
the amount involved shall be allocated back
for the use by, and upon the request of, the
department, office _or agency on whose



appropriation the reserve was __originalh
imposed.

“Section _37-C. Deferral _of __ Releases. —
Whenever _the President, the Secretary of
Budget _and_ Management, the head of any
department, agency or instrumentality of the
Government proposes to defer the release of a
specific_appropriation, the President shall
transmit to the House of Representatives and
the Senate a Special Message specifying:

1, The amount of the appropriation proposed
to be deferre:

Is

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

Ie

. The period of time during which the
appropriation is proposed to be deferred;

Is

. The reasons for the proposed_deferral,
including any legal authority invoked by
him to justify the proposed deferral;

In

. The estimated fiscal, economic _and
budgetary effect of the proposed deferral;

Toy

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

A deferral may not be proposed for any period
of time extending beyond the end of the fiscal
year in which the Special Message proposing
the deferral was transmitted to the House of
Representatives and the Senate.

6


“Section 37-D. Approval of Release Deferral—
Both Houses of Congress shall _act_on_ the
proposed _deferral__within forty-five (45)
calendar days after the receipt of the Special
Message from the President made pursuant to
Section 37-C: Provided, That if the President’s
Special Message is received within a period of
less than forty-five (45) calendar days before
the end of a regular session, the President’s
Special Message shall be deemed to have
been _submitted_on the first day of the
succeeding regular session of Congress and
the forty-five (45) day period referred _to_in
this Section shall commence on the day after
such_first_day: Provided, further, That_if
Congress does not issue _an_Impoundment
Resolution within the specified period, the
President shall proceed _with the deferral
procedures.”

SECTION 6. Section 38 of Chapter 5, Book VI of Executive Order No.
292 otherwise known as the “Administrative Code of 1987,” is hereby
repealed and replaced with the following provision:

“Section 38. Mode of Transmittal of the Special
Message of the President—The President
shall transmit to Congress at any time during
the budget _year_but not later _than the
fifteenth (15th) day of October of the budget
year_the Special Message referred to in
Section 37 and Section 37-C of this Book,
which may include one or more proposals for
rescission, reservation, or deferral on one or
more appropriation items, through _ the
Committee on Finance of the Senate and the
Committee on Appropriations of the House of
Representatives.”

SECTION 7. There shall be incorporated into Chapter 5, Book VI of
Executive Order No. 292 otherwise known as the “Administrative Code
of 1987” a new provision after Section 38, to read as follows:

“Section _38-A. Submission _ of _ Quarterly
Reports.—Within thirty (30) days after the end
of each quarter, the Secretary of Budget and
Management shall submit to the Committee
on Appropriations _and_the Committee _on
Finance, of the House of Representatives and

7


the Senate, respectively, a_list_of releases
made out of reserved _and___deferred
appropriations, and comparative statements
showing the annual general appropriations.
the annual program of continuing _and
automatic appropriations, and the
corresponding releases of allotments and
cash allocations for each department, agency,
corporation and fund: Provided, That the
Teleases_from_each_lump-sum_or special
purpose fund shall _be supported __with
schedules indicating the specific
departments, agencies, corporations, or
entities which received the fund releases and
the purpose of such releases. The quarterly
reports shall also_include__a__cumulative
summary of all appropriations rescinded.
deferred, or reserved, including, where
applicable, the corresponding Impoundment
Resolutions approving such ___rescissions.
deferrals, or reservations.”

SECTION 8. Section 33(6) of Chapter 5, Book VI of Executive Order
No. 292 otherwise known as the “Administrative Code of 1987” is
hereby amended to read as follows:

“Section 33. Allotment of Appropriations.
Authorized appropriations shall be allotted in
accordance with the procedure outlined
hereunder:

XXX XXX XXX

6. Pursuant to Sections 37, 37-A, 37-B, 37-C
and_37-D of this Book, the Secretary shall
have no authority to modify or amend any
allotment previously issued. In case he shail
find, at any time, that the probable receipts
from taxes or other sources of any fund will
be less than anticipated and that as a
consequence the amount available for the
remainder of the term of the appropriations or
for any allotment period will be less than the
amount estimated or allotted therefor, he

shall with-the-approval_of the President-and

after—notice—to—_the—department—of—agency
eoneerned recommend to the President the
reduee reduction of the amount or amounts
allotted he deems necessary to conform to the



targeted budgetary goals. The President, in
turn, shall follow the procedure prescribed in
Sections 37, 37-A, 37-B, 37-C, 37-D and 38
of this Book for the approval of requests for
authority for the suspension of expenditures
of appropriations.”

SECTION 9. There shall be incorporated into Chapter 5, Book VI of
Executive Order No. 292 otherwise known as the “Administrative Code
of 1987” a new provision after Section 50, to read as follows:

“Section 50-A. Penal Provision.—Any violation
of Sections 33, 37, and 38, as amended, and
Sections 37-A, 37-B, 37-C, 37-D, and 38-A,
as incorporated, shall be considered_misuse
of government funds and illegal expenditures
and_punished_as_such in accordance with
Sections 80 and 43 of Book VI.”

SECTION 10. Separability Clause.—If any provision of this Act, or
any part thereof, is declared unconstitutional, the same shall not
affect the validity and effectivity of the other provisions and portions of
this Act.

SECTION 11. Repealing Clause.—All laws, decrees, executive orders,
letters of instructions, letters of implementation, rules and regulations
or parts thereof inconsistent with the provisions of this Act are hereby
repealed, modified, superseded, or amended accordingly.

SECTION 12. Effectivity Clause—This Act shall take effect fifteen
(15) days after its complete publication in the Official Gazette or in at
least two (2) national newspapers of general circulation, whichever
comes earlier.

Approved,