S>puatc
of iijp © f nPtai7’
NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
23 MAR 23 PI :10
RECEIVED B''..
SE
S.B. No W45
Introduced by SENATOR IMEE R. MARCOS
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, 
INCREASING BUDGET TRANSPARENCY AND PARTICIPATION, AND FOR 
OTHER PURPOSES
EXPLANATORY NOTE
It is extremely vital and necessary for a country to carefully design and 
properly implement an up-to-date, comprehensive, and efficient Public Financial 
Management (PFM) system to hasten the nation's goal of poverty eradication, 
address the weakness in budget credibility and transparency, strengthen delivery of 
government services to adequately respond to the needs of the general public, and 
devise strategic plans geared towards the attainment of predetermined goals and 
objectives set by the government.
The most crucial blueprint for the annual national socio-economic policy of 
the government and its main tool for carrying out its policy objectives is the national 
budget. With Executive Order No. 91, s. 2019, the Budget Modernization Act seeks 
the institutionalization of the Cash-based Budgeting System (CBS) to strengthen 
fiscal discipline in the allocation and use of budget resources. Provided that we are 
looking into an expanded national budget, the government must ensure that every 
peso will be utilized and reflected in the programs and projects to be delivered.1 
Initially, the primary objective of the government was to increase the economic 
growth rate of the country from 7% in 2018 to 8% in 2022 to advance the nation's 
income level to upper middle class by 2022 while lowering the prevalence of poverty 
from 21.6% to 14%. According to projections, the said rate of economic growth will 
encourage regional development and bring down the poverty rate.
Parrocha, A. (2023). DBM Still Pushing For Passage of Budget Modernization Bill. Philippine 
News Agency. Acccessed online through through https://www.pna.gov.ph/articles/1191945


The government's expansionary fiscal strategy is projected to be reinforced 
by this Budget Reform legislation. Investments in public infrastructure escalated 
from 5.4% of GDP in 2017 to 7.3% in 2022 with the Build Build Build Program. 
Consequently, spending on social protection, healthcare, and education increased 
from 8.5% of GDP in 2017 to 9.2% in 2022 in the same way that government 
spending on public infrastructure jumped from 5.4% of GDP in 2017 to 7.3% in 
2022 for the purpose of achieving these targets.2
Having an effective Public Financial Management system will subsequently 
yield stronger financial efficiency, transparency, and accountability.3 However, there 
are several pertinent issues pertaining to the Public Financial Management (PFM) 
system of the country which may cause the ineffectiveness of the national budget. 
Hence, the manner of its preparation and execution must conform to the reforms 
contained in this measure. In the Philippines, budget reforms had a long record that 
can be traced back in the past administrations where a few successfully progressed 
while some of which were completely abandoned.4 Although efficient programs were 
crafted to ensure fiscal discipline and civic accountability, the Public Financial 
Management (PFM) system of the country is not exempted from public criticism and 
constitutional scrutiny. One of the fundamental concerns being emphasized with the 
country's Public Financial Management (PFM) system is that the legal framework 
that governs the said budget process is already outdated, if not unresponsive.
The timely monitoring and delivery of budget outcomes promised to the 
legislature during the budget authorization process have been compromised by the 
failure of government agencies to develop adequate internal control mechanisms. 
In the case where the legislature seem to have a weak capacity to effectively 
monitor and assess the performance of government agencies in the same way that 
their budget information and accounting systems are being observed, it will result 
them to becoming ineffective at overseeing and facilitating the accomplishment of 
the promised budget outcomes.
This bill was written to address this issue by enforcing the authority of 
Congress to authorize all appropriations and holding the government responsible for 
the utilization and proper allocation of public funds. This ensures that all government 
agencies are accountable for proposing, carrying out, and delivering committed 
results in a timely, predictable, and cost-effective manner. Furthermore, this bill 
strengthens the integration of planning, programming, budgeting, accounting, 
disbursement, reporting, and performance management and ensures ample 
safeguards in managing public finances.
Budget Reform Act to Modernize Public Budgeting in the Philippines. May 02, 2018. 
Department of Budget and Management. Accessed through
https://www.dbm.gov.ph/index.php/secretary-s-corner/press-releases/list-of-press-
releases/945-budget-reform-act-to-modernize-public-budgeting-in-the-philippines.
Zhang, W. (2016). Global Trends in Public Financial Management. Asian Development Bank 
Diokno, B. (2014). Recent Philippine Budget Reforms: Separating The Chaff From The Crain, 
The Whimsical From The Real. The Philippine Review of Economics.


Another purpose of this bill is the institutionalization of increased budget 
reliability and the role of accountability in the budget process as the final stage after 
budget preparation, authorization, and execution. Additionally, the proposed action 
will ensure not only a strong sense of accountability and transparency but also the 
efficient and effective provision of public services while promoting fiscal 
sustainability and strengthening the oversight powers of the Congress in the national 
budget. To make sure that public resources are in line with national priorities, this 
measure improves the budget development process.
More importantly, considering the significant repercussions and negative 
effects brought about by the Covid-19 pandemic, now, more than ever, there seems 
to have an urgent need for a budgetary framework to extensively restructure and 
develop the management of public resource that will aid in providing proactive and 
efficient service to the people especially when they need it the most.
In view of aforementioned considerations, the passage of this bill is earnestly
sought.
^EE R. MARCOS


NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SE
S.B. No.
of tljp tielarp
23 HAR 23 PI :10
RECEIVED BY:
Introduced by SENATOR IMEE R. MARCOS
1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22 
23
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, 
INCREASING BUDGET TRANSPARENCY AND PARTICIPATION, AND FOR 
OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
Chapter 1
Preliminary Provisions
Act'.
Sec. 1. Short Title. - This Act shall be known as the "Budget Modernization
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, accounting, reporting 
and review of public finances, wherein internal controls are embedded within these 
processes.
In pursuit of these policies and 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 in the appropriations act in a timely, predictable, and 
economic manner;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
(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
(c) 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 revenues, expenditures, financing arrangements, and assets and 
liabilities of national government agencies (NGAs), government-owned or - 
controlled corporations (GOCCs), and local government units (LGUs) to the extent 
provided herein.
Sec. 4. Definition of Terms. - The following terms when used in this Act and 
the implementing rules and regulations (IRR) should be understood, as follows:
(a) Activity refers to a recurring work process that contributes to the 
implementation of a program or sub-program;
{b) Allotment refers to the authorization issued to Government Agencies 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;
(c) Allotment Class refers to the classification of expenditures under an item of 
appropriation with the following categories: Personnel Services, Maintenance 
and Other Operating Expenses, Financial Expenses, and Capital Outlays;
(d) Appropriations refers to an authorization pursuant to laws directing the 
disbursement of public funds under specified conditions or for specified 
public purposes;
(e) Appropriations Law refers to either a general or special appropriations law;
(f) Cabinet refers to the Executive Secretary and the Secretaries of the 
Departments under the Executive Branch;
(g) Cash Budgeting System refers 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,


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
(h) Development Budget Coordination Committee (DBCC) refers to the body 
primarily responsible for the review and approval of the macroeconomic 
targets, revenue projections, borrowing level, aggregate budget level and 
expenditure priorities and the recommendation to the Cabinet and the 
President of the consolidated public sector financial position and the National 
Government fiscal program. The Secretary of Budget and Management leads 
the DBCC, with the Secretary of Finance, the Director General of the National 
Economic and Development Authority (NEDA) Secretariat and a 
representative from the Office of the President as members, and the 
Governor of the Bangko Sentral ng Pilipinas (BSP) as resource person;
(i) Disbursement refers to settlement of government obligations either in the 
currency, check or constructive cash such as the issuance of Tax Remittance 
Advice for the remittance to BIR of taxes withheld from employees and 
suppliers and Non-Cash Availment Authority for direct payments made by 
international financial institutions to suppliers and consultants of foreign 
assisted projects;
(j) Extended Payment Period refers to the first 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 
delivered and services rendered, inspected and accepted by the end of the 
previous fiscal year;
(k) Fiscal Kearrefers to a period of twelve (12) months commencing on January 
1 until December 31;
(l) Government Agencies collectively refer to all NGAs, GOCCs and LGUs;
(m) 
Government-Owned or -Controlled Corporations refer to agencies 
with corporate powers, organized as a stock or non-stock corporation, vested 
with functions relating to public needs whether governmental or proprietary 
in nature, and owned by the Government of the Republic of the Philippines 
directly or through its instrumentalities 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, 
government instrumentalities with corporate powers, government corporate 
entities and related corporations;
(n) Government Financial Institutions refer to financial institutions or 
corporations in which the government directly or indirectly owns the majority


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
of the capital stock and which are either: (i) registered with, or directly 
supervised by, the Bangko Sentral ng Pilipinas, or (ii) authorized to collect 
or transact funds or contributions from the public and place them in financial 
instruments or assets such as deposits, loans, bonds and equity;
(o) Head of Agency refers to the head of the department or agency in the case 
of NGAs, the Board of Directors or Trustees or its duly authorized officials in 
the case of GOCCs, State Universities and Colleges (SUCs) and local water 
districts, and the local chief executive in the case of LGUs;
(p) Item of Appropriation refers to the amount of appropriations for an activity 
or project in the Appropriations Law;
(q) Locai Government Units refer to provinces, cities, municipalities, and 
barangays, as well as autonomous regions created by law pursuant to the 
Constitution;
(r) Multi-Year Contracting Authority (MYCA) refers to the authority issued by 
DBM to agencies, covering the full contract cost, for the procurement of 
multi-year projects;
(s) Multi-year Projects refer to projects undertaken by agencies covering a 
period of more than one fiscal year and exceeding twelve months;
(t) National Government Agencies 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, 
Commission on Human Rights and the Office of the Ombudsman;
(u) Program refers to a group of activities and projects that contribute to a 
common particular outcome;
(v) Project refers to a special undertaking carried out within a definite time 
frame and intended to result in some pre-determined measure of goods and 
services;
(w) 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, pursuant to Section 22 of Article VII of the Constitution;
(x) Public Officials and Employees refer to elective and appointive officials and 
employees, in a permanent or temporary capacity, whether in the career or


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
non-career service, including military and uniformed personnel, regardless 
of the rank, form or amount of compensation;
(y) 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;
(z) Spill-over Projects refer to contracts authorized and undertaken in the 
immediately preceding General Appropriations Act (GAA) which were not 
fully implemented;
{3di)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 or more intermediaries, by a GOCC; and
(bb) Treasury Single Account (TSA) refers to the account maintained by the 
Bureau of the Treasury (BTr) with the BSP or agent bank for a unified 
structure of government bank accounts to enable consolidation and optimum 
utilization of government cash resources.
In this Act, the singular may be read as the plural and the plural may be
read as the singular, as the context requires.
Chapter 2
Budget Preparation, Execution, and Adjustment
Sec. 5. Governing Principles in Budget Preparation. - There is hereby 
established a set of governing principles to be observed by the 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;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
(c) 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;
(d) 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 be determined by the DBM. The performance shall be 
evaluated based on the actual disbursements and contractual commitments 
as compared to the appropriations;
(e) All appropriations in the GAA shall be valid for one Fiscal Year, reckoned from 
the effectivity thereof until the end of the Fiscal Year concerned. When 
necessary or appropriate, a three-month Extended Payment Period in 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;
(f) For evaluating the performance of an agency, programs, activities and 
projects shall be presented in such a way as to identify the entity responsible 
for the expenditure and the intended results from the use of the 
appropriations;
(g) Both the financial and non-financial performance of agencies shall be 
presented in the Proposed National Budget to ensure a performance 
informed budget; and
(h) Programs, activities and projects shall be reflected by department, agencies, 
bureaus, and offices, and shall be presented for information purposes, by 
region and province, and eventually, by city or municipality.
Sec. 6. Planning-Programming-Budgeting Linkage. - Development 
strategies identified in the Philippine Development Plan (PDP) shall be the 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 multi-year Public Investment Program (PIP), which in turn will be considered in 
the formulation of the annual agency budgets that conform to the annual budget 
ceilings approved by the President.
The PIP shall be reflective of the Regional Development Investment Programs 
that, in turn, also take into consideration the intra-regional and inter-provincial


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
development plans and investment programs of the local government units within 
each region.
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 
and/or poor absorptive capacities. The results of the project valuation shall inform 
the assessment of subsequent plans and budget proposals of agencies.
Sec. 7. Budget Priorities Framework. - The DBCC shall submit to the 
President and Cabinet, not later than March of each year, a Budget Priorities 
Framework to guide the formulation of the Proposed National Budget for the 
following year. It shall contain the 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. 8. The Budget Preparation Process. - The DBM shall determine the 
budget preparation process and calendar. The budget preparation process shall 
cover: (i) NGAs; (ii) GOCCs with respect to their impact on revenue, expenditure, 
assets, and liabilities and risks of the government; and (iii) LGUs as to their impact 
on revenue and expenditure of the government.
Sec. 9. The Proposed Nationai Budget. - The President shall submit to 
Congress, within thirty (30) days from the opening of every regular session, the 
Proposed National Budget, which shall be the basis of the General Appropriations 
Bill (GAB).
The President shall determine the form and content of the Proposed National 
Budget which shall include, but not limited to, the following:
(a) President'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 (BESF) - contains the 
macroeconomic parameters; dimensions of three-year (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 multi-year projects, including the project duration, the 
total project cost and contractual authorities issued as well as the other 
items listed in the IRR;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
(c) National Expenditure Program (NEP) - includes the strategic objectives, 
details of the three-year (3-year) expenditure program, performance 
information, such as key strategies, outputs and outcomes for agencies in 
relation to their budgets; and
(d) Staffing summary;
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. 10. Program Classification. - The Proposed National Budget shall adopt 
a structure based on a program classification that groups line items under the 
objectives or outcomes to which they contribute to. Performance information shall 
be provided for each program to facilitate the evaluation of its cost effectiveness 
and provide better information for analysis and feedback for planning and 
prioritization of expenditures.
In addition, the performance information and targets contained in the 
Proposed National Budget shall be updated after the passage of the GAA taking into 
consideration the amount appropriated for each program. For this purpose, NGAs 
and GOCCs shall propose adjustments in its outputs and outcomes for the 
consideration and approval of the DBM.
Sec. 11. 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: (1) the NDRRMF; (2) the 
Contingent Fund; (3) Statutory Shares of LGUs; and (4) 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 set in the IRR.
Sec. 12. National Disaster Risk Reduction and Management Fund. - The 
NDRRMF shall be used for: (1) disaster risk reduction or mitigation, prevention and 
preparedness activities, such as, but not limited to, training of personnel, 
procurement of equipment, and capital expenditures; and (2) 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.
Of the amount appropriated for the NDRRMF, there shall be specific allocation 
as Quick Response Fund (QRF), as may be provided under existing law, which shall 
be used as a standby fund in order that the situation and living conditions of people


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
in communities or areas stricken by natural or human induced calamities, epidemics, 
crises, and catastrophes may be normalized as quickly as possible.
The NDRRMF and QRF shall also be used for obligation and payment of 
Spillover Projects approved or funded from the NDRRMF or QRF of the immediately 
preceding Fiscal Year.
Releases from the NDRRMF, except for QRF and Spill-over Projects, 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. 13. Contingent Fund -The Contingent Fund shall cover the funding 
requirements of new or urgent projects or activities of NGAs, GOCCs, and LGUs that 
need to be implemented or paid during the year, such as: (i) legal obligation of the 
government arising from the final and executory decisions of competent authorities, 
including arbitration awards, mediation settlement, or compromise agreements; (ii) 
requirements of newly created offices; or (iii) 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 final and executory 
decisions of competent authorities, which shall be released by the DBM subject to 
availability of funds.
Sec. 14. Mandatory Reporting. -The DBM shall submit reports to Congress 
of all releases from the Special Purpose Funds in the quarterly and annual fiscal 
reports including information on the date of release, the amount covered, 
corresponding purpose/s and recipient agency.
Sec. 15. 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. 16. Unprogrammed Appropriations. - Congress may authorize standby 
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 GA that requires implementation during the year. The Unprogrammed 
Appropriations shall indicate the purposes from which the amount authorized therein 
may be used. The Unprogrammed Appropriations shall not exceed three percent 
3% of the total proposed expenditure, net of contractual, statutory and other legal 
obligations in the programmed component of the GAA.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Expenditures to be funded under the Unprogrammed Appropriations may be 
authorized only when supported by: (i) excess revenue collections in any one of the 
particular non-tax revenue sources from its corresponding revenue collections target 
in the BESF as certified by the BTr; (ii) new revenue collections or those arising from 
new tax or non-tax revenues which are not part of the original revenue sources in 
the BESF; or (iii) when there are approved loan proceeds for new and ongoing FAPs.
In no case shall the Unprogrammed Appropriations be activated or released 
when the DBCC determines that there is a risk of breaching the fiscal objectives set 
forth in the Statement of Fiscal Policy.
Releases from the Unprogrammed Appropriations shall be subject to the prior 
approval of the President of the Philippines, other than the final and executory 
decisions of competent authorities, including arbitration awards, mediation 
settlement, or compromise agreements.
The DBM shall include information on releases from releases from the 
Unprogrammed Appropriations in the quarterly and annual reports submitted to 
Congress.
Sec. 17. Budget with Accounts Codes. - All items of appropriations in the 
Appropriations Law shall 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. Provided that, such shall be given after 
the signing of the GAA by the President.
Sec. 18. Re-enacted Budget. - If, by the end of any Fiscal Year, Congress 
has failed to enact a GAA for the ensuing Fiscal Year, the GAA of the preceding 
Fiscal Year shall be deemed re-enacted and shall remain in force and effect until a 
GAA for the ensuing Fiscal Year is passed by the Congress.
Consistent with the Fiscal Responsibility Principles, the re-enacted budget 
shall be enforced as follows:
(a) The aggregate level of the re-enacted budget shall be limited to the total 
amount appropriated in the preceding year's GAA, but shall in no case exceed 
the level of the sources of financing under the BESF of the Proposed National 
Budget for the year;
(b) The appropriations for the following shall be limited to the amount authorized 
under the re-enacted budget, but in no case exceed the amount in the 
Proposed National Budget:
1. Ongoing programs, projects and activities;
10


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
2. Personnel benefits, including retirement gratuities, pensions, terminal 
leave pays and related expenses;
3. NDRRMF, Contingent Fund, Statutory Shares of LGUs, and other SPFs;
4. Budgetary support to GOCCs for their operational requirements and 
ongoing programs, activities or projects; and
5. Newly-approved FAPs.
(c) In no case shall the following items of the re-enacted budget be considered
for release, disbursement, and utilization:
1. Completed programs, projects and activities funded in the GAA of the 
preceding Fiscal Year; and
2. Equity contribution of the National Government to GOCCs.
The DBM shall issue guidelines on the aggregate and agency levels of 
appropriations authorized under the re-enacted budget in accordance with the 
foregoing, supporting requirements to determine actual needs, and other pertinent 
rules in the implementation of the re-enacted budget.
Upon enactment of the GAA anytime during the current Fiscal Year, all 
releases under a re-enacted 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 GAA for the current Fiscal Year.
The enacted GAA shall be valid from its effectivity until the end of the current 
Fiscal Year.
Sec. 19. Special Appropriations Bill. - A Special Appropriations Bill is a 
proposal submitted by the 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 purpose/s for 
which it is intended and the validity period which shall not exceed one (1) year from 
its enactment.
Cash-based estimates shall be adopted in the proposed special appropriations 
bills to promote faster and more effective delivery of services.
A Special Appropriations Bill shall be supported by funds actually available as 
certified by the National Treasurer, or to be raised by a corresponding revenue 
measure proposed therein.
11


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
No Special Appropriations Bill shall be passed during a re-enacted budget, 
except for the following: (1) disaster-related purposes; (2) urgent projects and/or 
activities; and (3) unforeseen requirements of the government.
Sec. 20. Release of Public Funds. - The government shall commence 
releases of Public Funds covered by an Appropriations Law as soon as it 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 the cash budgeting system, the 
Appropriations Law shall be considered the authority of the agencies to contract out 
and disburse funds, except for the following instances: (i) when provided in the 
Appropriations Law; and (ii) when the appropriations have requirements before 
release, such as work and financial plan, feasibility study, pre-feasibility study, and 
preliminary and detailed engineering.
Sec. 21. Cash Budgeting System. - Appropriations authorized in the GAA for 
NGAs, budgetary support to GOCCs, national projects implemented by LGUs, and 
SPFs, shall be available for obligation only until the end of each Fiscal Year unless 
release of funds was made during the last quarter of the year, the allotment is 
available for obligation until the first semester of the succeeding year. Obligations 
incurred by the National Government within each Fiscal Year shall be implemented 
during the same Fiscal Year. Goods and services corresponding to said obligations 
shall be delivered or rendered, inspected and accepted by the end of each Fiscal 
Year. Payments for obligations incurred shall be made until the end of the Extended 
Payment Period. Payments during the Extended Payment Period shall be chargeable 
against the GAA of the preceding Fiscal Year.
Appropriations covering financial subsidy to LGUs shall be available for 
obligation and disbursement until the end of the succeeding Fiscal Year. On the 
other hand, appropriations for the statutory shares of LGUs shall be available for 
obligation and disbursement until fully expended.
All funds transferred between or among Government Agencies shall not be 
considered disbursed until the transferred amounts have been actually utilized to 
pay for goods delivered and services rendered, inspected and accepted.
Any unreleased appropriations at the end of the Fiscal Year shall lapse, while 
unobligated allotments and unexpended or undisbursed funds at the end of the 
Extended Payment Period shall revert to the unappropriated surplus of the General 
Fund in accordance with Section 28, Chapter 4, Book VI of E.O. No. 292 and shall 
not thereafter be available for expenditure except by subsequent legislative 
enactment. For financial subsidies to LGUs, reversion shall be made to the National 
Treasury after the end of the succeeding Fiscal Year.
12


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Sec. 22. 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 Certification 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.
For Multi-year Projects, the CAF shall be issued annually based on the annual 
budget for the year. In case of Multi-year Projects with no funding requirement on 
any given year, the CAF shall be the certification of the chief accountant that no 
fund is needed for the year as indicated in the approved MYCA.
The CAF shall be stamped or appended to the contract and shall become an 
integral part thereof.
Sec. 23. Muiti-Year Contracts. - The issuance of a MYCA or any similar 
document shall be required before agencies may enter into multi-year contracts, 
subject to the requirements and guidelines prescribed by the DBM. Provided, That 
for foreign-assisted projects funded by foreign loans, the issuance of a MYCA shall 
no longer be necessary.
In the procurement of multi-year projects, the MYCA or any similar document 
shall be required prior to commencement of any procurement activity.
In the case of GOCCs, they shall secure prior authority from their respective 
governing boards before entering into multi-year contracts.
For LGUs, they shall secure any equivalent document issued by their 
respective sanggunian authorizing them to enter into multi-year contracts.
For the multi-year Public-Private Partnership projects with government 
undertakings authorized under R.A. No. 6957, as amended by R.A. No. 7718, the 
same shall be covered by a letter of commitment issued in accordance with the 
guidelines issued by the DBM.
The implementing agency shall ensure that the annual funding requirements 
for the multi-year 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. In the case of NGAs and qualified GOCCs, the DBM shall 
ensure that the funding requirement for the multi-year projects are included in the 
National Expenditure Program to be submitted to Congress who shall give due 
consideration of the said proposal. In the case of GOCCs and LGUs, due 
consideration shall be given by the governing board of GOCCs and the sanggunian 
of the LGUs, respectively.
13


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
In all instances, the disbursements to be incurred for multi-year contracts 
shall in no case exceed the appropriations for the purpose during the year. 
Procurement of multi-year projects shall be subject to the provisions of R.A. No. 
9184 and its IRR and GPPB guidelines.
Sec. 24. 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.
In exceptional circumstances where the early procurement activity was 
delayed, agencies shall undertake only the procurement of goods, infrastructure and 
consulting services to the extent that may be delivered or rendered, inspected, and 
accepted during the Fiscal Year consistent with the cash budgeting system.
For FAPs, agencies may undertake early procurement activities based on the 
amount proposed by the agency in the NEP including those under the 
Unprogrammed Appropriations and shall be awarded only upon approval of the loan 
agreement.
For multi-year 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.
Notwithstanding the mandatory procurement timelines, 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. 25. Timely Implementation of Activities or Projects. - Government 
Agencies shall ensure that all activities or projects are fully delivered, inspected, and 
accepted by the end of the Fiscal Year.
In exceptional circumstances where the implementation of an activity, or a 
project has been delayed due to force majeure or other justifiable reasons as 
determined by the agency or decided by a competent authority, and in both 
instances without the fault of the contractor, the funding requirements for its 
completion shall be chargeable against any available fund in the succeeding Fiscal 
Year, upon approval of DBM.
Sec. 26. 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 Heads of the Civil
14


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Service Commission, the Commission on Elections, and the Commission on Audit are 
hereby authorized to declare and use savings in their respective appropriations in 
the current year to augment actual deficiencies incurred for the current year in any 
item of their respective appropriations.
Sec. 27. Meaning of Savings. - Savings refer to portions or balances of any 
released appropriations in the Appropriations Law which have not been obligated as 
a result of any of the following:
(a) 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.
In 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 or negligence of the 
agency concerned shall not be considered savings.
Sec. 28. Ruies 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 for their respective offices.
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/es is 
sufficient for the purpose of augmentation.
In no case shall a non-existent item of appropriation be funded by 
augmentation from savings.
Sec. 29. Ruies on Modification in the Aiiotment - Limited flexibility shall be 
given to NGAs to modify or change the allotment within an existing item of 
appropriation. Such modification shall not entail any augmentation of the amount 
appropriated for the said item of appropriation during budget execution.
The DBM shall issue rules and procedure to govern modification in the 
allotment, specifying the cases or circumstances when such modifications maybe 
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.
15


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Chapter 3
Financial Management
Sec. 30. 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. Monies 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 (SAGF) shall be established by law 
only under exceptional circumstances to recognize taxes, fees, charges, penalties, 
income, dividend, interest earnings, grants, and donations collected, earned or 
received by NGAs for specified purposes. All laws authorizing the establishment of 
SAGFs shall specify the period of use thereof, or if no period is specified, it shall be 
deemed to be until the fulfilment 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 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 Fiscal Year, 
shall be treated as Trust Funds and recorded as trust 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 (EO) No. 292, s. 
1987, composed of the Secretary of Finance as Chairperson, the Secretary of Budget 
and Management and the Chairperson of the COA as members, 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. 31. Special Funds. - In exceptional cases when an 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 from identified revenue sources and other receipts 
by NGAs or Public Officials or Employees acting as trustees, agents, or 
administrators for the fulfilment of commitments or accomplishment of 
specified purposes. Trust Funds shall be deposited in the TSA;
16


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(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 are considered self-perpetuating and selfliquidating. 
Revolving Funds shall be deposited in the TSA or in an Authorized 
Government Depository Bank (AGDB) upon authority of the National 
Treasurer; and
(c) Retained Fund - constituted from taxes, fees, charges, penalties, income, 
dividends, or interest earnings collected, cared 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.
Any interest earned by Special Funds shall accrue to the General Fund unless 
otherwise authorized by law.
Sec. 32. Review by the Permanent Committee. - Upon the effectivity of this 
Act and every three years thereafter, the Permanent Committee shall review all 
existing SAGF's and Special Funds to validate their compliance with the requirements 
under Sections 46 and 47 and to determine whether these Funds should be 
modified, terminated, or continued. The Permanent Committee shall recommend for 
the approval of the President, the modification or termination of any of the said 
funds based on any of the following grounds: (i) when there is no legal basis for its 
creation; (ii) when its terms have expired; (iii) when the purpose for its creation has 
been attained or no longer exist, (iv) when it is no longer necessary for the 
attainment of the purposes for which said Funds were established; (v) when needed 
by the General Fund in times of calamities and emergencies; (vi) when it is used in 
violation of the rules and regulations issued by the Committee; or (vi) when they 
have remained dormant for an unreasonable length of time.
The Permanent Committee shall issue guidelines for the establishment, 
review and evaluation, accounting and reporting, and termination of SAGFs and 
Special Funds.
Sec. 33. 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. Any interest 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. 34. 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 law. All 
waivers, abatements, refunds or compromise agreements made by an NGA shall be
17


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
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. 35. Grants. - NGAs may accept, upon prior coordination with the DOF, 
grants, in cash or in kind, from domestic sources, for purposes relevant to their 
functions. In the case of grants, in cash or in kind, from foreign sources or 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 and the Secretary of Foreign Affairs.
The provisions of this Section shall not apply to: (1) any grant received by 
LGUs or GOCCs, except where the grant is received by them on behalf of the 
National Government (NG); or (2) 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 recipient agency of the National Government.
Sec. 36. 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 NGAs 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, Escrow Funds, Letters of Credit 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; or
(c) 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 laws, rules and regulations.
Sec. 37. Oversight on Government Bank Accounts. - Notwithstanding any 
provision of law to the contrary, the BTr shall undertake any of the following in case
18


1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
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/or
(c) 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. 38. Treasury Cash Management - The BTr shall issue orders for the 
conduct of cash management including the requirement to provide projections on 
the timing of future transactions 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 35 of this Act.
Sec. 39. 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. Investments are authorized to be made in any of the 
following:
(a) Bank deposit with any highly reputable bank following a selection criteria to 
be issued by the BTr and money market instruments with well recognized 
and established financial institution;
(b) Sovereign-issued securities with an investment grade rating; or
(c) Other fixed income securities with an AAA credit rating issued by at least two 
(2) reputable international credit rating agencies.
The BTr may appoint a fund manager as an agent of the National Government 
to undertake the investment of the funds. Fund Manager refers to person 
responsible for implementing a fund's investing strategy and managing its portfolio 
trading activities.
Interest earned and other income from investments shall accrue to the 
General Fund, unless otherwise provided by law.
Sec. 40. Management of National Government Borrowings. - Borrowings by 
the National Government shall be for purposes provided by law including any of the 
following:
19


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(a) Financing budget deficits and liquidity shortfalls;
(b) Refinancing and pre-financing maturing debts;
(c) Undertaking liability and risk management transactions;
(d) Supporting the BSP in maintaining external and monetary stability;
(e) On-lending to an approved entity;
(f) Financing all sums of money paid to fulfill guarantees;
(g) Increasing liquidity and promoting stability of the government securities 
market;
(h) Financing developmental activities and projects of the National Government;
(i) Providing financing to address or remedy the effects or impacts of natural or 
human- induced disasters; or
(j) Defraying expenditures covered by appropriations.
Borrowing under this Act should adhere to the Fiscal Responsibility Principles 
and measurable fiscal objectives in the Statement of Fiscal Policy.
Sec. 41. Borrowings by Government -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 borrowing programs 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 DOF for 
information, and published in the concerned GOCC website.
GOCCs shall seek DOF approval and monetary board concurrence for foreign 
borrowings or the latter's opinion for domestic borrowing activities as provided 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. 42. Local Government Borrowings. - An LGU may borrow funds from 
domestic sources in accordance with the Local Government Code of 1991 and other
20


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
applicable laws. LGUs may also be allowed to access foreign sources for major 
infrastructure projects, through multilateral financial institutions, subject to the 
guidelines to be issued by the DOF.
LGUs shall develop their borrowing programs, as part of their comprehensive 
development and annual investment plans, which shall be published in the LGU 
website.
Sec. 43. Debt Reporting. - The DOF, through the BTr, shall ensure that the 
records include information on the principal, terms of repayment, amounts drawn, 
interests, penalties 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.
Sec. 44. Debt Audit - Upon the effectivity of this Act, the COA shall conduct 
a debt audit of all loans contracted or guaranteed by the National Government. For 
those loans contracted or guaranteed after the passage of this Act, the COA shall 
review the said loans five (5) years from the date of consummation or guarantee.
Sec. 45. Guarantees. - Guarantee, indemnity or security shall be provided 
to an NGA or a GOCC, as provided by 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.
In 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. 46. Limitation on the Liabiiity of the Nationai 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, Home Development Mutual Fund, Philippine 
Health Insurance Corporation, and the Social Security System in their respective 
charters.
Sec. 47. Payments Made for Contingent Liabiiities. - Any money paid by the 
DOF pursuant to any guarantee, indemnity, or security authorized by law and the
21


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
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. 48. 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 and Congress with a report on contingent 
liabilities. Subject to existing laws, rules, and regulations, the DOF shall have the 
power to compel any national government agency and instrumentality, including 
GOCCs, to submit documents and other pertinent information necessary for the 
completion of such registry.
Chapter 4
Accountability and Reporting
Sec. 49. 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 internal controls shall be 
ensured, while an internal audit function shall be maintained, as may be applicable.
Sec. 50. Integrated Financial Management Information System. — There 
shall be an integrated financial management information system (IFMIS), 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.
The IFMIS shall be managed by the National Accounting and Finance Office 
under the DBM, which was established under EO No. 292, s. 1987, to take charge 
of the maintenance of the data bank of financial information and to provide the 
necessary data required by the President, fiscal agencies and international financial 
institutions, analyze and evaluate the accounts and overall financial performance of 
the government, and supervise the management of the accounts of government 
agencies and instrumentalities.
The development and implementation of IFMIS shall be in coordination with 
other key oversight agencies, that is, DOF and COA, and in accordance with EO No. 
55, s. 2011, directing the integration and automation of government financial 
management systems.
Electronic and digital authorizations within the IFMIS including, but not 
limited to, certification on availability of fund as well as general and application 
information technology (IT) controls done through, and resulting in, the 
implementation of IT systems shall be valid for all legal intents, as well as for 
auditing purposes.
22


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Sec. 51. NGA Annual Plans and Proposed Budgets. — The Head of each NGA 
shall produce an 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, both the national and regional level, consistent with the 
Philippine Development Plan; 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 issuances 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 a Department shall incorporate the Annual Plans of its 
attached NGAs and GOCCs subject to guidelines prescribed in the IRR.
Sec. 52. Submission of Post Fiscal Year Budget Status. - The DBM shall 
submit to the Speaker of the House of Representatives, the President of the Senate 
of the Philippines, the House Committee on Appropriations and the Senate 
Committee on Finance a post Fiscal Year budget status report not later than May 31 
of the current year.
Sec. 53. Internal Audit Standards. - The Commission on Audit shall 
formulate and issue the guidelines and standards for internal audit in the NGAs, 
GOCCs and LGUs.
Chapter 5
Transparency and Participation
Sec. 54. 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 
of release 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 Act and its IRR 
shall automatically be made available electronically in the government website. 
Current and historical data on government revenues, expenditures, and borrowings, 
shall be made available electronically, in open data format, on the government 
website, subject to guidelines established in the IRR.
Sec. 55. The People's Budget - The DBM shall, for every Fiscal Year, publish 
citizen-friendly summaries of the following, subject to guidelines and other 
specifications in the IRR:
23


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(a) 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;
(c) The annual GAA and special appropriations laws, to be published in 
electronic format in the government website within thirty (30) days from its 
effectivity; and
(d) The Annual Fiscal Report of the preceding fiscal year, to be published in 
electronic format in the government website on the last working day of the 
current year.
Sec. 56. 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 and DILG, together with other relevant agencies, shall formulate policies 
and programs, activities, and projects to enhance participation in the planning, 
budgeting and accountability processes.
Such participatory mechanisms may include (i) consultations with the Local 
Development Councils in the formulation of the national and local government 
budgets; and (ii) partnerships with civil society organizations (CSOs), academic 
institutions and experts on programs that monitor and help improve agency or local 
government preparation, execution, and monitoring of the budget. Capacity 
development of CSOs to participate under the principles of constructive engagement 
with government may also be conducted.
Chapter 6 
Enforcement
Sec. 57. Sanctions and Penaities. -
(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 or 
any modification in the allotment nor recommend the use of savings 
by the President until such time as the non-compliant agency has 
submitted the report/s required under this Act;
24


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
2. The COA may suspend or disallow 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 of the responsible officer to report on the income and/or funds 
retained at the end of a reporting period shall be considered a neglect 
of duty, subject to the penalty provided under existing laws; and
4. The Congress may motu proprio, through its appropriate oversight 
committee compel the head of the non-compliant agency, under pain 
of contempt, to produce the required report/s and to explain reasons 
for failure to submit and disclose said report/s.
(b) 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 
shall jointly and severally be held 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 Public 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 (PI,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 from the act or
25


1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
acts in question, or both, at the discretion of the courts, in addition to 
possible administrative liability; and
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 same 
penalties as the Public Officials or Employees and shall be tried jointly 
with them.
Chapter 7 
Final Provisions
Sec. 58. Implementing Rules and Regulations. - The DBM, in consultation 
with the DOF, BTr, N EDA and CO A, and in coordination with agencies concerned, 
shall issue the rules and regulations necessary for the proper implementation of this 
Act within ninety (90) days from its effectivity. The IRR may be amended by the 
DBM, in consultation with the DOF, BTr, NEDA and COA and in coordination with 
the agencies concerned, as the need arises, and in accordance to the provisions of 
this Act.
Sec. 59. 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. 60. Separability Clause. - If for any reason, any section or provision of 
this Act is declared unconstitutional or invalid, other sections or provisions which are 
not affected thereby shall continue to be in full force and effect.
Sec. 61. Effectivity Clause. - This Act shall take effect fifteen (15) days 
following its publication in the Official Gazette or in two (2) newspapers of general 
circulation.
Approved,
26