SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
) 
) 
) 
First Regular Session 
SENATE 
S. No. __ 1.QL 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
, 
"';;,:; t"l',', ; 
-' ~ 
'1.3 
JUL -] p 7 .:13 
The 1987 Constitution, Article 6, Section 25 (I) provides that: "Congress may not 
increase the appropriations recommended by the President for the operation of the Government 
as specified in the budget. The form, content and manner of preparation of the budget shall be 
prescribed by law," 
While it is the President who proposes the national budget, it is the Congress that 
prescribes the form, content and manner of budget preparation albeit subject to the limitations 
found in the Constitution. 
In practice, however, the past presidents wielded considerable control over public 
spending through the exercise of budget impoundment. Impoundment refers to the refusal of the 
President, for whatever reason, to release funds appropriated by Congress.· It is the failure to 
spend or obligate budget authority of any type. 
While its constitutional conferment is not expressed, the Administrative Code has given 
the President specific authority, when in his judgment the public interest requires and upon due 
notice to the head of office concerned, to suspend or otherwise stop further expenditure of funds 
allotted for any agency (E.O. No. 292, Book 6, Chapter 5, Section 38). 
Of recent times, however, this presidential prerogative has been allegedly misused and 
abused, and has emasculated Congress' authority to check the President's discretionary power to 
spend public funds. In effect, the President seems to have a vast and unbridled control over the 
national budget. 
This bill seeks to increase congressional oversight and to limit executive influence over 
specific appropriations in the General Appropriations Act. This undertaking is urgently needed 
1 


in the light of the cutTent economic crisis confronting the whole world, the consequences of 
which are deemed to severely affect our country in the coming years. 
Congress included some provisions of this bill in the General Appropriations Act (GAA) 
of 2010. However, the proper way of introducing the budget impoundment reform is not as a 
special provision in the arumal GAA; but by introducing it as a separate piece of legislation so 
that a full and open discussion may ensue. I 
Lw,-
4iv·~---A,.t;ed 
. MIRIAM DE~NSOR 11\NTI/GO 
,o!H 
I This bill was originally filed by President Benigno S. Aquino III during the Fourteenth Congress. 
2 


SIXTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. No. 
404 
Introduced by Senator Miriam Defensor Santiago 
1 
AN ACT 
2 
LIMITING THE POWER OF THE PRESIDENT TO IMPOUND APPROPRIATIONS 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
3 
SECTION 1. Short Title. - This is Act shall be known as "The Budget Impoundment 
4 
Control Act." 
5 
SECTION 2. Declaration of Policy. - It is the policy of the State to formulate and 
6 
implement a National Budget that is truly an instrument of national development. Towards this 
7 
end, all appropriations, except those which shall be deferred, rescinded, reserved, or otherwise 
8 
withheld in the General Appropriations Act, shall be released within the first semester of the year 
9 
through the issuance of advices of allotment in accordance with approved work and financial 
10 
plans, and shall be utilized according to the purposes provided in the General Appropriations 
11 
Act. Any deferral, rescission or reservation of appropriations in the General Appropriations Act 
12 
shall be in accordance with this Act. 
13 
SECTION 3. Definition of Terms. - For purposes of this Act: 
14 
(a) "Rescission" means cancellation of all or part of an enacted appropriation, which has 
15 
not yet been spent or obligated. 
16 
(b) "Reservation" means imposition of reserves on appropriated amounts for government 
17 
expenditures. 
18 
(c) "Deferral of releases" means withholding or delaying the release of appropriated 
19 
amounts provided for projects or activities. 
1 


1 
(d) "Impoundment resolution" means a joint resolution of both Houses of Congress 
2 
expressing its approval of a rescission, reservation or deferral of an appropriation or several 
3 
appropriation items as proposed by the President. 
4 
(e) "Advice of allotment" refers to the formal document issued by -the Department of 
5 
Budget and Management containing authorizations, conditions, and amount of obligations that 
6 
an agency can incur pursuant to a legislative appropriation. 
7 
(f) "Work-and-financial plan" refers to the monthly breakdown of financial requirements 
8 
and physical performance targets of an agency. 
9 
(g) "Appropriations" refer to the appropriations included in the annual General 
10 
Appropriations Act, unless otherwise described or specified in this Act. 
11 
SECTION 4. Rescission and Reservation of a Budget Appropriation. -- Whenever the 
12 
President, upon the recommendation of the Secretary of Budget and Management, determines 
13 
that all or part of any budget appropriation will not be required to carry out the full objectives or 
14 
scope of programs for which it is provided, or that such budget appropriation should be rescinded 
15 
for fiscal policy or other reasons, including the termination of authorized projects or activities, or 
16 
whenever all or part of any budget appropriation for the current fiscal year is to be reserved from 
17 
obligation for such fiscal year, the President shall transmit to both Honses of Congress a special 
18 
message specifying: 
19 
(a) The amonnt of budget appropriation which he proposes to be rescinded or which is to 
20 
be so reserved; 
21 
(b) Any account, department, agency or instrumentality of the government to which such 
22 
budget appropriation is available for obligation, and the specific projects or governmental 
23 
functions involved; 
24 
(c) The reasons why the budget appropriations should be rescinded or is to be so 
25 
reserved; 
26 
(d) The estimated fiscal, economic and budgetary effect of the proposed rescission or 
27 
reservation; and 
2 


1 
(e) All facts, circumstances and considerations relating to or bearing upon the proposed 
2 
rescission or reservation, and the estimated effect of the proposed rescission or reservation upon 
3 
the purposes, programs, activities and projects for which such appropriation is provided. 
4 
SECTION 5. Approval of Rescission or Reservation. - Both Houses of Congress shall act 
5 
on the proposed rescission or reservation within sixty (60) calendar days after the receipt of such 
6 
proposal from the President by issuing a joint impoundment resolution: Provided, That if the 
7 
President's special message is received within the period of less than sixty (60) calendar days 
8 
before the end of a regular session, the President's message shall be deemed to have been 
9 
submitted on the first day of the succeeding regular session of Congress and the sixty (60) day 
10 
period referred to in this Section shall commence on the day after such first day. If Congress 
11 
does not issue an impoundment resolution within the specified period, the President shall not 
12 
proceed with the rescission or reservation procedures. Provided, however, that in the event of a 
13 
Congressional approval to rescind, the funds corresponding to the rescinded appropriations shall 
14 
revert to the unappropriated surplus of the general fund and shall not be made available for 
15 
expenditure for any purpose except as provided for by a subsequent legislative enactment. 
16 
SECTION 6. Use of Reserves. - When changes in conditions during the year justify the 
17 
use of the reserved appropriations which have been imposed under this Act or under the General 
18 
Appropriations Act, the anlount involved shall be allocated back for the use by, and upon the 
19 
request of the department, office or agency on whose appropriation the reserve was originally 
20 
imposed. 
21 
SECTION 7. Deferral of Releases.-
22 
(a) Whenever the President, the Secretary of Budget and Management, the head of any 
23 
department, agency or instrumentality of the Government proposes to defer the release of any 
24 
appropriation for a specific pmpose, program, activity, or project, the President shall transmit to 
25 
the House of Representatives and the Senate a special message specifying: 
26 
(1) The amount of the appropriation proposed to be deferred; 
3 


1 
(2) Any account, depaliment, agency or instrumentality of the Government to which such 
2 
appropriation is available for obligation, and the specific projects or govemmental 
3 
functions involved; 
4 
(3) The period oftime during which the appropriation is proposed to be deferred; 
5 
(4) The reasons for the proposed deferral, including any legal authority invoked by him 
6 
to justifY the proposed deferral; 
7 
(5) The estimated fiscal, economic and budgetary effect of the proposed deferral; 
8 
(6) All facts, circumstances and considerations relating to or bearing upon the proposed 
9 
deferral and the decision to effect the proposed deferral, including an analysis of such 
10 
facts, circumstances and considerations in terms of their application to any legal 
11 
authority and specific elements of legal authority invoked by him to justify such 
12 
proposed deferral, and the estimated effect of the proposed deferral upon the objects, 
13 
purposes, program, activities and projects for which such appropriation is provided. 
14 
(b) A deferral may not be proposed for any period of time extending beyond the end of 
15 
the fiscal year in which the special message proposing the deferral was transmitted to the House 
16 
of Representatives and the Senate. 
17 
SECTION 8. Approval of Release Deferral. - Both Houses of Congress shall act on the 
18 
proposed deferral within sixty (60) calendar days after the receipt of the proposal from the 
19 
President: Provided that if the President's special message is received within a period of less than 
20 
sixty (60) calendar days before the end of a regular session, the President's message shall be 
21 
deemed to have been submitted on the first day of the succeeding regular session of Congress 
22 
and the sixty (60) day period referred to in this Section shall commence on the day after such 
23 
first day. If Congress does not issue an impoundment resolution within the specified period, the 
24 
President shall not proceed with the deferral procedures. 
25 
SECTION 9. Submission of Quarterly Reports. - Within thirty (30) days after the end of 
26 
each quarter, the Secretary of Budget and Management shall submit to the Committee on 
27 
Appropriations of the House of Representatives and the Committee on Finance of the Senate, a 
4 


1 
list of releases made out of reserved and deterred appropriations, and comparative statements 
2 
showing the annual general appropriations, the annual program of continuing and automatic 
3 
appropriations, and the con'esponding releases of allotments and cash allocations for each 
4 
department, agency, corporation and fund: Provided that the releases from each lump-sum or 
5 
special-purpose 
fund 
shall 
be 
supported 
with 
schedules 
indicating 
the 
specific 
6 
departments/agencies, corporations or entities which received the fund releases and the purposes 
7 
of such releases. The quarterly reports shall also include a cumulative summary of all 
8 
appropriations rescinded, deferred, or reserved. 
9 
SECTION 10. Mode of Transmittal of the Special Message of the President. - The 
10 
President shall transmit to Congress at any time during the budget year but not later than the 
11 
fifteenth day of October of the budget year the special message which may include one or more 
12 
proposals for impoundment, reservation, or deferral on one or more appropriation items through 
13 
the Committee on Finance of the Senate and the Committee on Appropriations of the House of 
14 
Representatives. 
15 
SECTION 11. Penal Provision. - Any violation of the Sections 2,4,5,6,7,8, and 9 of this 
16 
Act shall be punished by a fine of not exceeding Five Hundred Thousand Pesos (P500,OOO.OO), 
17 
and the penalty of perpetual special disqualification. 
18 
SECTION 12. Separability Clause. - If any provision of this Act or part hereof is 
19 
declared unconstitutional or invalid, the other sections or provisions which are not affected 
20 
thereby shall continue to be in full force and effect. 
21 
SECTION 13. Repealing Clause. - All laws, decrees, executive orders, letters of 
22 
instructions, lettcrs ofimplementation, rules and regulations or parts thereofinconsislent with the 
23 
provisions of this Act are hereby repealed, moditied, superseded or amended accordingly. 
5 


1 . 
SECTION 14. lJDectivity Clause. -- This Act shall take effect fifteen (15) days after its 
2 
complete publication in at least two (2) national newspapers of general circulation. 
Approved, 
6