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THE BUDGET PROCESS & THE
PHILIPPINE CONGRESS
Many people, especially students who take higher studies in Public Administration are unaware
of the role of Congress in the budget process. In this article, three main topics will be covered
under the budget process namely: udgetary !verview, the Constitutional Provisions and"elated #aws in the udget Process, and the udget Process.
I. udgetary !verview
$irst, we shall define the national budget which is the government%s estimate of its income ande&penditures. It is what the government plans to spend for its programs and pro'ects, as well as
the sources of funds. (he budget process involves budgeting and the budget. udgeting refers to
methods and practices of government planning, adopting and e&ecuting financial policies and
programs. (he budget refers to a plan of e&pressing in monetary terms the operating program and
means of financing of a government for a definite period of time. (he national budget is spent forthe implementation of various government programs and pro'ects, the operations of government
offices such as the payment of salaries, construction of buildings.II. )imensions of the udget
(he budget possesses various dimensions. It can be classified according to the following: y
*ector, y Cost *tructure, y +&pense Class and y !b'ect, y "egion, y (ype ofAppropriation.
A. y *ector
(he budget contains various type of e&penditures. (hey are for:
. *ocial *ervices +&penditure-. +conomic *ervices +&penditure-
/. )efense +&penditure-0. 1eneral Public *ervices- and2. )ebt urden
. y Cost *tructure
. $or 1eneral Administration 3 *upport *ervices or !verhead +&penses. As *upport to !perations for the facilitative functions and services, staff and technical support
/. $or !perations of regular activities addressing agency mandate
+&le: Production of goods, delivery of pubic services, and regulation, etc.0. $or Pro'ects such as homogenous group of activities that result in the accomplishment of
identifiable output within a designated period, whether foreign or locally funded
C. y +&pense Class 3 y !b'ect
. Current !perating +&penditures for personal services, maintenance and other operativee&penses 4M!!+5
. Capital !utlays for investments, loans, livestock and crops, land6land improvements,
buildings6structures, furniture6fi&tures). y Ma'or "ecipient of 1overnment
(he ma'or recipients of the budget are:
. (he 71As 47ational 1overnment Agencies5 8 they include all agencies with the +&ecutive,#egislative and 9udicial ranches of government
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. (he #1s 4#ocal 1overnment nits5 8 funding is released in the form of I"As 4Internal
"evenue Allotments5, special shares in national proceeds, credit thru the M)$ 4municipal
development fund5, and premium subsidies for local insurance/. (he 1!CCs 41overnment !wned and Controlled Corporations5 8 funding is though subsidies,
e;uity and net lending
+. y "egional Allocation(he udget is apportioned for each of the various regions of the country.
$. y (ype of Appropriation
(he budget is further classified into different types, namely:. 1eneral Appropriations
. *upplemental Appropriations
/. Continuing Appropriations
0. Automatic Appropriations(he budget may increase or decrease depending on the government%s policy of how much it will
infuse into the economy. Maturing of a country%s debt determines the si
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b. *ection 2 45, Article >I, states that the @PhilippineCongress may not increase the
appropriations recommended by the President for the operation of the government as specified in
the budget. (he form, content, and manner of preparation of the budget shall be prescribed bylaw.
c. *ection 2 45, Article >I states that no provision or enactment shall be embraced in the
1eneral Appropriations ill unless it relates specifically to some particular appropriation therein.Any such provision or enactment shall be limited in its operation to the appropriations to which it
relates.
d. *ection 2 405, Article >I: BA special appropriations bill shall specify the purpose for which itis intended, and shall be supported by funds actually available as certified by the 7ational
(reasurer, or to be raised by a corresponding revenue proposal therein.
e. *ection 2 425, Article >I: B7o law shall be passed authori
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management-
c. (he 7ational +conomic and )evelopment Authority, the agency responsible for overall
economic activity-d. (he angko *entral ng Pilipinas 4Central ank of the Philippines5, the agency responsible for
monetary measures and policies-
e. (he !ffice of the President of the Philippines, the agency responsible for the approval andoversight of the budget
In the preparation of the budget, the )CC approves the parameters, makes a budget call,
conducts budget hearings, makes a budget review then consolidates the budget. It then validates
and confirms the budget, which is finally approved by the President of the Philippines and hisCabinet. (he President thereby submits the budget to Congress for approval.
. udget #egislation6Authori
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(he enrolled copy of the 1A is forwarded to the President for signing. >eto powers of the
President are e&ercised in the enactment of the 1A. (he signed appropriations bill is finally
enacted into a law which is termed as the 1eneral Appropriations Act.
/. udget +&ecution6Implementation
udget e&ecution covers the allotment of appropriations by the central budget authority to, and
the incurrence of obligations by, the spending departments and agencies of government. (he
steps in the e&ecution of the budget are:a. "elease of the funds by the )epartment of udget and Management 4)M5
b. Implementation of the various programs and activities by the different government agencies
i.Involves the formulation of allotment and cash programsii.An Agency udget Matri& 4AM5 is prepared
iii.(he AM is validated6Confirmed for correctness and accuracy
iv.(he 1eneral Allotment "elease !rder 41A"!56*pecial Allotment "elease !rder
4*A"!567otice of Cash Allotment is "eleased 47CA5
v.1overnment Programs6Pro'ects6Activities can now be implemented due to fund release
0. udget Accountability 3 "eview
(his involved the reporting of actual performance against plans or targets, and it involves the
following process:a. Monitoring of agency budgetary performance
b. Comparison and evaluation of actual performance with the initially=approved work targets
c. A summary list of checks issued is submitted on a monthly basisd. Physical 3 $inancial "eport of !perations is submitted on a ;uarterly basis in the form of a
trial balance
*ource:
. 7on="# *ourcePresented by the ?onorable "olando 1. Andaya 9r., former Chairman,
Committee on Appropriations, th Congress, on 9uly 0, EE at the
*outh Committee "ooms A 3 , ?ouse of "epresentatives, atasan
Comple&, Hue
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RESIDENTI1L DECREE No. $$''
RE2ISING THE BUDGET PROCESS IN ORDER TO INSTITUTION1LI3E THE
BUDGET1R4 INNO21TIONS O5 THE NE6 SOCIET4
?+"+A*, the national budget is a ma'or instrument for development, re;uiring careful designof the preparation, legislation, e&ecution, and accountability phases of budgeting.
?+"+A*, the e&perience of the years has been reflected in various improvements in the
budget process, and embodied in C.A. 7o. 0J, ".A. 7o. FF, and P.). 7o. FFF-
?+"+A*, the budget process as implemented prior to *eptember , FD was not able tofully support national ob'ectives and plans-
?+"+A*, national interest calls for the institutionali
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4f5 K+&pected resultsK mean services, products or benefits that will accrue to the public, estimated
in terms of performance measures or targets.
4g5 K1overnment=owned or controlled corporationsK are corporations created by law as agenciesof the *tate for narrow and limited purposes, either owned wholly by the *tate or wherein the
1overnment is a ma'ority stockholder, in cases of stock corporations, or otherwise, agencies socreated where no stocks are issued but whose affairs are conducted by a duly constituted board
and which perform proprietary functions.
4h5 KContinuing appropriationsK refer to appropriations available to support obligations for a
specified purpose or pro'ect, even when these obligations are incurred beyond the budget year.
4i5 KAppropriationK is an authori
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continuum. #evels of revenue, e&penditure and debt shall be established in relation to macro=
economic targets of growth, employment levels, and price level change, and shall be developed
consistent with domestic and foreign debt, domestic credit and alance of Payments ob'ectivesfor the budget period. (he aggregate magnitudes of the budget shall be determined in close
consultation among the planning and fiscal agencies of government. udgetary priorities shall be
those specified in the approved national plans, keeping in mind the capability and performanceof the implementing agencies concerned. Agency budget proposals shall e&plicitly state linkage
to approved agency plans.
Se!. .National Resource Budget.(he finances of government shall be analy
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Se!tio $,.!ompensation and Position !lassification.(he si
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4b5 summary financial statements setting forth:
45 estimated e&penditures and proposed appropriations necessary for the support of the
1overnment for the ensuing fiscal year, including those financed from borrowings-
45 estimated receipts during the ensuing fiscal year under laws e&isting at the time the budget istransmitted and under the revenue proposals, if any, forming part of the yearLs financing program-
4/5 actual appropriations, e&penditures, and receipts during the last completed fiscal year-
405 estimated e&penditures and receipts and actual or proposed appropriations during the fiscal
year in progress-
425 statements of the condition of the 7ational (reasury at the end of the last completed fiscalyear, the estimated condition of the (reasury at the end of the fiscal year in progress and the
estimated condition of the (reasury at the end of the ensuing fiscal year, taking into account the
adoption of financial proposals contained in the budget and showing, at the same time, theunencumbered and unobligated cash resources-
4J5 essential facts regarding the bonded and other long=term obligations and indebtedness of the
1overnment, both domestic and foreign, including identification of recipients of loan proceeds-
and
4D5 such other financial statements and data as are deemed necessary or desirable in order tomake known in reasonable detail the financial condition of the government.
Se!tio $.Budget Levels.(he ordinary income of government shall be primarily to provide
appropriations for current operations, e&cept in case of a national emergency or serious financialstress, the e&istence of which has been duly proclaimed by the President.
(he level of aggregate revenue e&penditure and debt shall be 'ointly recommended to the
President by the udget Commission, the )epartment of $inance, the 7ational +conomic and
)evelopment Authority and the Central ank of the Philippines, acting within the )evelopmentudget Coordination Committee of the 7ational +conomic and )evelopment Authority.
7o appropriations for current operations and capital outlays of the 1overnment shall be proposed
unless the amount involved is covered by the ordinary income, or unless it is supported by a
proposal creating additional sources of funds or revenue, including those generated from
domestic and foreign borrowings, sufficient to cover the same. #ikewise, no appropriation forany e&penditure, the amount of which is not covered by the estimated income from the e&isting
sources of revenue or available current surplus, may be proposed, unless it is supported by aproposal creating an additional source of funds sufficient to cover the same.
Proposals creating additional sources of funds shall be prepared in the form of revenue bills.
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(he provisions of this section shall not be construed as impairing in any way the power of the
7ational Assembly to enact revenue and appropriation bills, nor the authority of the President to
propose special revenue and appropriation bills after the submission of the budget.
Se!tio $9.Budget &stimates.+ach head of department, office or agency of the 7ational
1overnment, including the #egislative and 9udicial ranches, and including government=ownedor controlled corporations, shall submit his re;uest for appropriations to the udget Commission
in accordance with the budget calendar, format, and such rules and regulations as may be issuedin implementation of this )ecree.
(he budget estimates of agencies shall include the following information:
4a5 !b'ectives, functions, activities, programs and pro'ects showing the general character and
relative importance of the work to be accomplished or the services to be rendered, and theprincipal elements of cost involved-
4b5 #inkage of the work and financial proposals to approved development plans-
4c5 +stimated current operating e&penditures and capital outlays, with comparative data for the
preceding and current budget years-
4d5 Identification by region, pursuant to policies on the regionaliIII, *ection J4/5 of the Constitution, theCommissioner shall review the budget estimates as herein provided, including those of the#egislative and 9udicial ranches and of the Constitutional bodies and shall submit his
recommendations to the President.
Se!tio $'.Regional Budgets.(he budgets of national government agencies shall be preparedtaking into full and careful consideration the opportunities and re;uirements specific to the
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various regions of the country. here they are organi
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budgets of coordinating bodies may include a lump=sum for purposes related to their assigned
functions, which lump=sum shall be sub=allotted to implementing agencies and not used by the
agency for its own operations: provided, further, that funds budgeted for a given agency fallingwithin the 'urisdiction of a coordinating body, may be sub'ect to release upon approval by the
coordinating agency of such release or of the agencyLs work program.
Se!. .Budgetary Re)uirement of *overnment-'ned or !ontrolled !orporations.(he internal
operating budgets of government=owned or controlled corporations and of chartered institutionsshall be approved by their respective governing boards in accordance with a budget calendar and
format as may be approved by the President: provided, that such budgets shall be sub'ect to
review and approval as part of the budget process in cases where national government budgetarysupport is needed, in terms of 4a5 capital or e;uity inputs, 4b5 operating contributions to support
specific activities undertaken by the institution as part of its regular functions, and 4c5 guarantee
of the national government for obligations or contracts entered into by the corporations:provided, further, that the submission of interim financial statements may be re;uired by the
Commissioner.
Se!. 7.Ta+ and Duty &+emptions.All units of government, including government=owned or
controlled corporations, shall pay income ta&es, customs duties and other ta&es and fees as areimposed under revenue laws: provided, that organi
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Se!. 9.Focus on Budget Policy.(he 7ational Assembly shall, during the discussion of the
budget, focus on policy, budgetary levels, thrusts and strategy. )etails of agency e&penditures
shall be considered as proper concerns of +&ecutive ranch decision and action.
Se!. '.Limitation of Budget De"ate.ithin seven 4D5 consecutive session days for the
submission of the budget, the 7ational Assembly shall, in plenary session, start the discussion ofthe budget, including both e&penditure and revenue proposal. )ebate shall be terminated on or
before the eighteenth consecutive session day from the beginning of the discussions and finalaction shall be taken within three 4/5 consecutive session days thereafter.
Se!. .Pro%i"ition ,gainst t%e ncrease of ,ppropriations.(he 7ational Assembly shall in no
case increase the appropriation of any pro'ect or program of any department, bureau, agency oroffice of the 1overnment over the amount submitted by the President in his budget proposal. In
case of any reduction in the proposed appropriation for a pro'ect or program, a corresponding
reduction shall be made in the total appropriation of the department, office or agency concerned
and in the total of the 1eneral Appropriations ill.
Se!. %.Pro%i"ition ,gainst &nactment of ,dditional $pecial Provisions. (he 7ational Assembly
shall not add special provisions in the budget earmarking the use of appropriations for specific
programs or activities nor shall it increase the amounts specified in special provisions, beyond
those proposed by the President.
Se!. 7,.!ontent of t%e *eneral ,ppropriations ,ct.(he 1eneral Appropriations Act shall be
presented in the form of budgetary programs and pro'ects for each agency of the government,
with the corresponding appropriations for each program and pro'ect, including statutoryprovisions of specific agency or general applicability. (he 1eneral Appropriations Act shall not
contain any itemi
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thereafter be available for e&penditure e&cept by subse;uent legislative enactment: provided, that
appropriations for capital outlays shall remain valid until fully spent or reverted: provided,
further, that continuing appropriations for such current operating e&penditures may bespecifically recommended and approved as such in support of pro'ects whose effective
implementation calls for multi=year e&penditure commitments: provided, finally, that the
President may authori
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proposed ;uarterly allotments of the whole authori
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Se!. 7%.Program of &+penditure.(he Commissioner shall recommended to the President the
yearLs program of e&penditure for each agency of the government on the basis of authori
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Se!. 88.,ut%ority to ,pprove Fund Transfers.(he President shall have the authority to transfer
any fund appropriated for the different departments, bureaus, offices and agencies of the
+&ecutive )epartment which are included in the 1eneral Appropriations Act, to any program,pro'ect, or activity of any department, bureau or office included in the 1eneral Appropriations
Act or approved after its enactment.
(he President shall, likewise, have the authority to augment any appropriation of the +&ecutive
)epartment in the 1eneral Appropriations Act, from savings in the appropriations of anotherdepartment, bureau, office or agency within the +&ecutive ranch, pursuant to the provisions of
Article >III, *ection J 425 of the Constitution.
Se!. 8.,ut%ority to se $avings in ,ppropriations to !over Deficits.+&cept as otherwiseprovided in the 1eneral Appropriations Act, any savings in the regular appropriations authori
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necessary to finance or discharge the function or activity so transferred or assigned may, with the
approval of the President, be transferred to and be made available for use by the agency to which
said function or activity is transferred or assigned for the purpose for which said funds wereoriginally available. alances so transferred shall be credited to any applicable e&isting
appropriation account or to new appropriation accounts which are hereby authori
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may recommend for the consideration and approval of the President, the reversion to the 1eneral
fund of such amounts as are 4a5 no longer necessary for the attainment of the purposes for which
said $unds were established, 4b5 needed by the 1eneral fund in times of emergency, or 4c5violation of the rules and regulations adopted by the Committee: provided, that the conditions
originally agreed upon at the time the funds were received shall be observed in case of gifts or
donations or other payments made by private parties for specific purposes.
Se!. .$ervice Fees and 0onoraria.Agencies are authori
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and who have been subse;uently e&onerated and6or reinstated by virtue of decisions of
competent authority.
4e5 Cash awards to deserving officials and employees in accordance with the civil service law-
4f5 *alary ad'ustments of officials and employees as a result of classification action under, andimplementation of, the provisions of the Compensation and Position Classification Act, including
positions embraced under the Career +&ecutive *ervice-
4g5 Peso support to any undertaking that may be entered into by the government with
international organi
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schedule of submission, and other components of reporting system, including the maintenance of
subsidiary and other records which will enable agencies to accomplish and submit said
information re;uirements: provided, that the Commission on Audit shall, in coordination with theudget Commission, issue rules and regulations that may be applicable when the reporting
re;uirements affect accounting functions of agencies: provided, further, that the applicable rules
and regulations shall be thus issued by the Commission on Audit within a period of thirty 4/E5days after the udget Commission prescribes the reporting re;uirements.
Se!. %.1onitoring of &+penditures. +&penditures of national government agencies shall be
recorded so as to identify e&penditures as classified into such categories as may be determined
by the udget Commission, including but not limited to the following: 4a5 agency incurring theobligation, 4b5 program, pro'ect and activity, 4c5 ob'ect of e&penditure, including personal
services, operating and maintenance e&penditures, e;uipment, and capital outlays, 4d5 region or
locality of use, 4e5 economic or functional classification of the e&penditure, 4f5 obligationalauthority and cash transactions arising from fund releases, and such other classifications as may
be necessary for the budget process. (he Commissioner of the udget shall determine the data
and information re;uirements thus needed and the Commission on Audit shall formulate theaccounting rules and regulations, including changes in the Chart of Accounts and the general or
subsidiary accounting records, as may be necessary to generate the desired data and information.
(he Chief Accountants of agencies and where necessary, accountants of regional offices, shall
submit the data needed by the udget Commission in accordance with such rules and regulationsas it may formulate.
Se!. 9,.$tandard !osts.(he udget Commission through the Management !ffice and 7ational
Accounting !ffice, shall develop standard costs for duly approved units of work measurement
for each agencyLs budgetary pro'ects or activities. (hese standards costs shall be compared withactual unit costs and utili
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payment of their salaries until they have complied with the re;uirements of the udget
Commission. 7o appropriation authori
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Se!. 9%.Pro%i"ition ,gainst Payment of $alaries or 2ages of 'fficials and &mployees on $trike
,gainst t%e *overnment.*ub'ect to e&isting civil service rules and regulations and the proper
administrative proceedings, no part of the funds of, or available for e&penditures by, anydepartment, office or agency of the 1overnment shall be used to pay the salaries or wages of any
official or employee engaging in a strike against the 1overnment of the "epublic of the
Philippines, or who is a member of any organi
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e&pose them to great danger of contagion or peril to life. *uch ha
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that in addition to per diems, the official or employee may be entitled to transportation e&penses
in going to and coming from his destination and to daily allowance while in the field: provided,
further, that officials and employees on travel status whose e&penses for board and lodging arepaid directly or indirectly by government may not be entitled to receive the per diems and
allowances corresponding to such payments.
)epartment secretaries, heads of Constitutional bodies, undersecretaries and all other positions
of e;uivalent rank are authori
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7o official or employee of the 1overnment who remains temporarily at one station for a period
longer than one month shall be paid per diems in e&cess of one month, e&cept upon the approval
of the head of department, and, in case his temporary stay in any one place e&ceeds three months,payment of per diems in e&cess of three months shall be made only upon the previous approval
of the Commissioner.
Se!. $.Transportation of 1em"ers of Family of an &mployee Transferred from 'ne $tation to
,not%er.henever, due to the e&igencies of the service and not at his own re;uest, an official oremployee is transferred from one station to another, said official or employee and his spouse and
children below twenty=one years of age shall be entitled to transportation and freight for
reasonable and necessary baggage and household effects, at the e&pense of the 1overnment, tobe paid from the appropriation for traveling e&penses of the bureau or office concerned.
Se!. .Purc%ase/ se/ 'peration and 1aintenance of 1otor Transport &)uipment.7o
appropriation for e;uipment authori
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)one in the City of Manila, this /Eth day of 9uly in the year of !ur #ord, nineteen hundred and
seventy=seven.