Monthly Archives: March 2013


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: Budgetary Overview, the Constitutional Provisions and Related Laws in the Budget Process, and the Budget Process.
I. Budgetary Overview
First, we shall define the national budget which is the government’s estimate of its income and expenditures. It is what the government plans to spend for its programs and projects, as well as the sources of funds. The budget process involves budgeting and the budget. Budgeting refers to methods and practices of government planning, adopting and executing financial policies and programs. The budget refers to a plan of expressing in monetary terms the operating program and means of financing of a government for a definite period of time. The national budget is spent for the implementation of various government programs and projects, the operations of government offices such as the payment of salaries, construction of buildings.
II. Dimensions of the Budget
The budget possesses various dimensions. It can be classified according to the following: By Sector, By Cost Structure, By Expense Class and By Object, By Region, By Type of Appropriation.
A. By Sector
The budget contains various type of expenditures. They are for:
1. Social Services Expenditure;
2. Economic Services Expenditure;
3. Defense Expenditure;
4. General Public Services; and
5. Debt Burden
B. By Cost Structure
1. For General Administration & Support Services or Overhead Expenses
2. As Support to Operations for the facilitative functions and services, staff and technical support
3. For Operations of regular activities addressing agency mandate
Example: Production of goods, delivery of pubic services, and regulation, etc.
4. For Projects such as homogenous group of activities that result in the accomplishment of identifiable output within a designated period, whether foreign or locally funded
C. By Expense Class & By Object
1. Current Operating Expenditures for personal services, maintenance and other operative expenses (MOOE)
2. Capital Outlays for investments, loans, livestock and crops, land/land improvements, buildings/structures, furniture/fixtures
D. By Major Recipient of Government
The major recipients of the budget are:
1. The NGAs (National Government Agencies) – they include all agencies with the Executive, Legislative and Judicial Branches of government
2. The LGUs (Local Government Units) – funding is released in the form of IRAs (Internal Revenue Allotments), special shares in national proceeds, credit thru the MDF (municipal development fund), and premium subsidies for local insurance
3. The GOCCs (Government Owned and Controlled Corporations) – funding is though subsidies, equity and net lending
E. By Regional Allocation
The Budget is apportioned for each of the various regions of the country.
F. By Type of Appropriation
The budget is further classified into different types, namely:
1. General Appropriations
2. Supplemental Appropriations
3. Continuing Appropriations
4. Automatic Appropriations
The 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 size of the budget.
III. Sources of Funds for the National Budget
A. Revenues
1. Tax Revenues
2. Non-Tax Revenues such as fees to be collected
B. Borrowings
The government borrows to provide for the requirements of capital projects and to support priority programs and projects. Relying solely on domestic resources will limit government’s capability to provide the needed support. Domestic resources is insufficient to finance priority programs and projects.
C. Obligations Budget vs. Cash Budget
Obligations budget are for expenditures incurred for the year and is to be paid in said year. This can also be for expenditures incurred for the year to be paid next year. Aside from this, it is also allocated for interest payments.
Cash budgets are for expenditures incurred for next year. It can also be allocated for expenditures in previous years, and is also allocated for interest payments.

D. National Government Deficit vs. Consolidated Public Sector Deficit
The National Government Deficit is the shortfall or deficiency in revenues over expenditures due to its operations on a given period, usually one year. A Consolidated Public Sector Deficit covers the combined deficit of the National Government, the restructuring accounts of the Commercial Bank, the major non-financial Government Owned and Controlled Corporations, the Government Financial Institutions, the Local Government Units, the social security institutions such as the Government Service Insurance System & the Social Security System, the Oil Price Stabilization Fund and the Bangko Sentral ng Pilipinas (Central Bank of the Philippines).
E. Constitutional Provisions & Major Laws Affecting the Budget/Budget Process:
1. Philippine Constitution
The Constitutional provisions relative to the budget to wit are:

a. Section 24, Article VI, which states that all appropriations, revenue or tariff bills increase of the public debt, bills of local application and private bills shall originate in the House of Representatives, but the Senate may propose or concur with amendments
b. Section 25 (1), Article VI, states that the [Philippine]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.
c. Section 25 (2), Article VI states that no provision or enactment shall be embraced in the General Appropriations Bill 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. Section 25 (4), Article VI: “A special appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the National Treasurer, or to be raised by a corresponding revenue proposal therein.”
e. Section 25 (5), Article VI: “No law shall be passed authorizing any transfer of appropriations, however, the President [of the Philippines], the President of the [Philippine] Senate, the Speaker of the [Philippine] House of Representatives, the Chief Justice of the [Philippine] Supreme Court, and the Heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective e offices from savings in other items of their respective appropriations.”
f. Section 25 (7), Article VI: “If, by the end of the fiscal year, the [Philippine] Congress shall have failed to pass the General Appropriations Bill for the ensuing fiscal year, the General Appropriations Law for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the General Appropriations Bill is passed by [the Philippine] Congress.”
g. Section 22, Article VII: “The President shall submit to the Congress within thirty (30) days from the opening of every regular session, as the basis of the General Appropriations Bill, a budget of receipts and expenditures and sources of financing, including receipts from existing and proposed revenue measures.

2. Book VI of Executive Order No. 292 series 1987, or the Administrative Code of 1987 entitled National Government Budgeting
3. Presidential Decree No. 1177, as amended, or the Budget Reform Decree of 1977, insofar as not superseded by executive Order No. 292 series 1987 or the Administrative Code of 1987
4. Other Applicable Laws
F. The Budget Process
This involves four major steps namely:
1. Budget Preparation
Budget Preparation involves the formulation of estimates of revenues and expenditures by the Executive Departments and Agencies. In preparing the annual budget proposal, the said department makes an estimation of government revenues. It then determines the budget priorities within available revenues and borrowing limits. Finally, it translates these approved priorities into expenditures.

The main agency involved is the Development Budget Coordination Committee (DBCC) composed of the following agencies:

a. The Department of Budget and Management, the agency responsible for resource allocation and management;
b. The Department of Finance, the agency responsible for resource generation and debt management;
c. The National Economic and Development Authority, the agency responsible for overall economic activity;
d. The Bangko Sentral ng Pilipinas (Central Bank of the Philippines), the agency responsible for monetary measures and policies;
e. The Office of the President of the Philippines, the agency responsible for the approval and oversight of the budget

In the preparation of the budget, the DBCC 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 his Cabinet. The President thereby submits the budget to Congress for approval.

2. Budget Legislation/Authorization
a. Overview
This pertains to the whole range of legislative action on the budget, leading to the enactment of a General Appropriations Law for the year. The Philippine House of Representatives first conducts hearings/debates on the budget.

The House then approves the budget, for submission to the Senate of the Philippines. Senate hearings and debates are conducted on the budget, which is finally approved. A Bicameral Conference Committee composed of representatives of the Philippine House of Representatives and the Senate is convened. After approval by the Bicameral Conference Committee, the President enacts the budget which is known as the General Appropriations Act.

b. The Legislative Budget Process
The main unit of the Philippine House of Representatives involved in the budget process is the Committee Affairs Department (CAD) composed of the Standing Committees and Sub-Committees. The CAD’s activities during budget legislation are:

i.Committee Budget Hearings
Standing Committees (sometimes referred to as the Mother Committee/Committee Proper) are responsible for conducting budget hearings. During these hearings, macroeconomic assumptions/plans are presented during the Committee budget hearings on a department wide level. All the heads of the Executive Departments are invited to these hearings.
Sub-Committees are also responsible for conducting these budget hearings. Budget hearings are conducted by the Sub-Committees on an agency by agency level. Bureaus and other offices under the various departments of the national government are invited to these hearings.

ii.Printing of General Appropriations Bill (GAB) on 1st Reading
A National Expenditure Program is formulated, and a copy of the GAB on 1st Reading is printed by the Committee Technical Staff, based on the National Expenditure Program. The GAB is filed in the plenary session for 1st Reading.

iii. Executive Meeting of the Committee
The Committee meets in executive session to discuss and approve proposed committee amendments to the GAB. Committee Reports are prepared and filed to the Bills and Index Division.

iv.Sponsorship and Plenary Deliberations

General principles and macroeconomic assumptions are sponsored and debated in the plenary session. Deliberations on the budgets of each department, agency, office, including Government Owned and Controlled Corporations.

v. Approval on 2nd Reading of the GAB
Turno en contra speeches are delivered on the Floor. The turno en contra is a legislative tradition allowing opponents of a bill an opportunity to explain at length their position, in the same manner that a bill’s sponsor delivers a sponsorship speech. After the Turno en Contra, the Philippine House Members vote on the approval of the GAB on 2nd Reading.

vi.Amendments, Finalization & Printing of the GAB for 3rd Reading
Inclusion of possible amendments to the GAB for 3rd Reading are submitted to the Floor. Amendments are approved for inclusion in the proposed copy of the GAB on 3rd Reading, which is subsequently printed for deliberation.

vii. Approval of the GAB on 3rd Reading
The GAB is distributed to the Philippine House Members who vote on the approval of the bill on 3rd Reading. The GAB is then approved on 3rd Reading.

viii. Transmittal of the 3rd Reading Copy of the GAB to the Philippine Senate

The GAB, as approved on 3rd Reading, is transmitted to the Senate for consideration in a similar manner as deliberated upon by the House.

ix.Bicameral (Bicam for short) Conference Committee

The Conferees or representatives from both the Philippine House and Senate convene as a Conference Committee in order to settle and reconcile differing provisions of each Chamber’s version of the bill.

x. Approval of the Bicam Report
During this stage of the budget process, the Conference Committee Report is ratified by each Chamber.

xi. Finalization and Printing of the Enrolled Copy of the GAB

All amendments as approved in the Committee Report is incorporated into the enrolled copy of the GAB. The enrolled copy is finally printed.

xii. Signing of the Enrolled Copy of the GAB

The enrolled copy of the GAB is forwarded to the President for signing. Veto powers of the President are exercised in the enactment of the GAB. The signed appropriations bill is finally enacted into a law which is termed as the General Appropriations Act.

3. Budget Execution/Implementation

Budget execution covers the allotment of appropriations by the central budget authority to, and the incurrence of obligations by, the spending departments and agencies of government. The steps in the execution of the budget are:
a. Release of the funds by the Department of Budget and Management (DBM)
b. Implementation of the various programs and activities by the different government agencies
i.Involves the formulation of allotment and cash programs
ii.An Agency Budget Matrix (ABM) is prepared
iii.The ABM is validated/Confirmed for correctness and accuracy
iv.The General Allotment Release Order (GARO)/Special Allotment Release Order (SARO)/Notice of Cash Allotment is Released (NCA)
v.Government Programs/Projects/Activities can now be implemented due to fund release

4. Budget Accountability & Review

This 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 basis
d. Physical & Financial Report of Operations is submitted on a quarterly basis in the form of a trial balance

Related links:
1. Non-URL Source
Presented by the Honorable Rolando G. Andaya Jr., former Chairman,
Committee on Appropriations, 12th Congress, on July 24, 2001 at the
South Committee Rooms A & B, House of Representatives, Batasan
Complex, Quezon City

2. URL Source
a. The 1987 Philippine Constitution”

b. Book VI, Executive Order No. 292 series 1987 entitled National Government Budgeting


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