PAM 10-01

PHILIPPINE ARMY MANUAL 10-01

ARMY RESOURCE MANAGEMENT

OPERATIONS

Proponent: Army Resource Management Office

Issued: ____________

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ARMY RESOURCE MANAGEMENT OPERATIONS

Philippine Army Manual 10-01 (PAM 10-01)) dated ___________is promulgated

on authority of the Commanding General, Philippine Army

LTGEN EDUARDO M AÑO AFP

Commanding General, Philippine Army

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PREFACE

1. This Manual provides a doctrinal basis about the general operation of the
office; the general and specific framework; and internal systems and processes in
the implementation of PPBS in the PA. This shall be complemented by the
implementation of PA SMS, specifically on the aspect of budget development
(appropriation), APB development, resource allocation, resource generation
(Non-Appropriation and other sources), and resource monitoring.

2. This manual is divided into several topics on evolution of Army Resource

Management Office i.e. general functions, tasks and organization; general
framework of the Defense System of Management (DSOM); general concepts
and principles of Defense Resource Management System (DRMS); basic
concepts and principles of Planning, Programming, and Budgeting System
(PPBS); general concepts of Performance Governance System (PGS); general
concepts of PA SMS; the PA Budgeting System - budget development processes
and Annual Plan and Budget (APB) development processes, performance review,
and, other important topics on Non-Appropriated/Inter-Agency Transferred
Funds.

3. This manual will be used as reference of educating present and future aspiring
Resource Managers whose primary interest are on concept that they can apply in
the performance of their duties as Resource Managers and program directors of
the Philippine Army. It is also suitable for use of all training institution of the
Philippine Army.

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CONTENTS
Page
Chapter I – Evolution of Army Rresource Management Office.................................... 1
Introduction .............................................................................................................. 1
Army (Financial) Resource Management Evolution ............................................... 1
Function ................................................................................................................... 3
Organization............................................................................................................. 4
Office Administration and Support.......................................................................... 5

Chapter II – General Concept of the Defense System of Management (DSOM) and Its
Componnent, and Philippine Army Strategic Management System (PA SMS) ………...11
Defense System of Management ........................................................................... 11
Philippine Army Strategic Management System (PA SMS) ................................ 14
PA Budgeting System and Development Process Framework ............................. 16

Chapter III – Budget Development - Planning & Programming ................................. 18

Government Budgeting Systems and Approaches ................................................ 18
Planning, Programming, and Budgeting System (PPBS) ..................................... 19
PA Budget Development Framework ................................................................... 20
Inputs for Budget Development ............................................................................. 20
Phases of Budget Preparation based on PBDG...................................................... 23
Presentation of the Budget Proposal ...................................................................... 26

Chapter IV – Annual Plan and Budget (APB) Development - Budgeting .................. 31

General ................................................................................................................... 31
APB Development Process Framework................................................................. 32
Preliminary, Initial, and Final APB ...................................................................... 37
ARMO Management Information System (ARMO MIS) .................................... 38

Chapter V – Resource Allocation – Implementation ........................................................40

The Comprehensive Army Resource Management System and the Authority to
Release Funds ...................................................................................................... .40
Stages of Fund Releases (Appropriations) ............................................................ 42
Stages of Fund Releases (NAF and Other Sources) ............................................. 46

Chapter VI – Resource Monitoring, Analysis, and Evaluation.................................... 50

Appendix A – Budget and APB Development Timeline ............................................ 56

Appendix B – Budget and APB Development Flowchart .......................................... 59
Appendix C – Authority to Release Fund (ATRF) Format ....................................... 63
Appendix D – Specific Purpose Fund (SPF) Programming and Implementation ..... 65
Appendix E – Review, Evaluation, Monitoring and Reporting of Funds Table
Formats ........................................................................................................................ 67
Glossary ........................................................................................................................70
Acronyms and Abbreviations ........................................................................................80
Figure List
Figure 1.1 – ARMO Organizational Structure......................................................... 4
Figure 2.1 – The DSOM Framework ..................................................................... 12
Figure 2.2 – PA Strategic Management System ................................................... 14
Figure 2.3 – The PA Budget Development Process Framework .......................... 17
Figure 3.1 – The PPBS Cycle ............................................................................... 20
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Figure 4.1 – APB/APP Link ................................................................................. 33

Figure 4.2 – Identification of PAPs and Objectives ............................................. 34
Figure 4.3 – Flow of ARMOMIS in the Philippine Army .................................... 39
Figure 4.4 – Sample Report Generated from ARMOMIS .................................... 39
Figure 6.1 – Request for Program Change ............................................................ 54

Table List
Table 3.1 – General Timeline of Budget Preparation Phases ................................ 26
Table 4.1 – General Timeline of Annual Plan and Budget Process ...................... 37
Table 5.1 – Sample Specific Purpose Fund (SPF) ................................................ 44
Table 5.2 – Fund Release Flowchart for PAMUs – Basic MOOE and APF ........ 45
Table 5.3 – Fund Release Flowchart for PA – Wide Funds and SPF ................... 45
Table 5.4 – Fund Release Flowchart for Trust Receipt ........................................ 48
Table 6.1 – Reporting Format for PAWAF .......................................................... 51
Table 6.2 – Reporting Format for SPF Not Needing POE ................................... 52
Table 6.3 – Reporting Format for SPF Needing POE .......................................... 52
Table 6.4 – Reporting Format for NAF ................................................................ 52

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Chapter I
Evolution of Army Resource Management
Office
“There is no such thing as “shortcuts” to proper financial
management.”
Lt Gen Delfin N Bangit

Introduction

0101. Army (Financial) Resource Management (then Army Comptrollership) refers

to the command and staff function of managing army fund resources wherein the
functions of programming, budgeting, fiscal operations, accounting operations, internal
auditing, inspections, and management analysis are consolidated. Its goal is to achieve
a correct translation of army thrusts, objectives and functional programs, activities into
monetary terms to accomplish its mandate. It aims to integrate plans and programs with
balance and proportionate allocation of fund resources, account for funds allocated,
review and analyze the results for cost effectiveness and efficiency in executions.

Army (Financial) Resource Management Evolution

0102. During Pre-World War II era, there existed a “Budget Statistics and Legislative
Section” of the Headquarters Philippine Army. Its main function was to prepare the
budget of the Philippine Army for submission to the Legislature, defend and justify the
budget, and control expenditures of the appropriated funds.

0103. Post-World War II, Budget Division, Army was created as a Special Division
at Headquarters Philippine Army, and placed directly under the Chief of Staff, PA.

0104. In 1950, Pursuant to Section 20, Executive Order No 389 dated 23 December
1950, the Philippine Army was reorganized and formed part of the Armed Forces of
the Philippines; as such, the Secretary of National Defense, Hon. Ruperto Kangleon
transferred the Budget Division to the Office of the Secretary of National Defense.

0105. In 1957, Pursuant to General Orders No 562, GHQ, AFP dated 01 July 1957;
the Philippine Army Comptroller Division was again organized at the HPA level.

0106. In 1970, the AFP Comptroller was re-designated as one of the Joint Staff of the
AFP until it was finally renamed as the Office of the Deputy Chief of Staff for
Comptrollership, J6, AFP in July 1973. Accordingly, Philippine Army Comptroller
Division was re-designated as G6 Division, PA.

0107. Under Presidential Decree No 1, as implemented by LOI, GHQ, AFP dated 8

Aug 1973, the Chief of Staff, AFP issued additional guidelines for the reorganization
of the Comptroller Offices with the objective of achieving the integration of

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comptrollership functions of budgeting, accounting, management evaluation,

management information and fund disbursement service in the AFP. Likewise, the
Comptroller was to exercise functional supervision over the Finance Centers.

0108. In 1999-2003, the Joint Defense Assessment (JDA), conducted by the RP-US
team, determined and evaluated the country’s defense capability and allowed the
presence of an external observer to aptly and accurately recognize deficiencies and to
dependently evaluate them. Through this bilateral assessment, the US, an ally of the
Philippines, works closely to understand and align mutual interests to better address
current and emerging threats. In September of 2003, the JDA was completed and
concluded that the AFP’s capability to execute its missions was rated as Generally
Minus (-) Partial Mission Capable, a vital indicator of the critical condition of the
Philippine military’s capability to perform mandates. The JDA revealed deficiencies in
the following specific areas: systematic approach to policy planning, personnel
management and leadership, defense expenditure and budgeting, acquisition, supply
and maintenance, quality assurance for existing industrial base, and infrastructure
support. Also included in the JDA findings were critical operational/near-term
deficiencies in the following capabilities: Operations and Training; Intelligence;
Logistics; Communications; Civil-Military Operations; and Information Operations.
Lastly, the JDA results also indicated deficiencies in critical supporting functional
areas, as follows: Medical Support, Engineering, Finance, Acquisition, Manpower,
Inspector General System, and Infrastructure. In view of these findings, the JDA
recommended the establishment of institutionalization of an effective and efficient
accounting and financial management system that supports the planning, programming
and execution of modernization and other multi-year capability development program.

0109. In 2003, as an aftermath of the Oakwood Mutiny, the Feliciano Commission

was created to conduct investigation and inquiries about the group’s grievances and to
recommend how the government shall address them. On the Feliciano Fact Finding
Commission Report, the recommendation concerning issues on the AFP Procurement
System (conversion and other problem) were: simplify AFP procurement procedures,
control commander’s discretionary power over the Centrally Managed Fund (CMF),
reduce the amount of CMF in GHQ/Major Service HQ hands, strictly implement
control measures over supplies, set tenure limits for AFP finance and procurement
officers, and establish an autonomous Internal Affairs Office (IAO).

0110. In 2004, in compliance to the recommendation of the JDA, the Army Resource
Management Office (ARMO) was activated effective 01 Sept 2004 pursuant to General
Orders Nr 431 dated 15 September 2004 with personnel and equipment coming from
within the existing resources of the Philippine Army (Budget Branch, G6 Division).
G6, PA was allowed to exist until it was formally deactivated in 2005. Pursuant to
GHQ, AFP Letter Directive dated 20 Dec 2004, OJ6 (AFP Comptroller) was
deactivated and GHQ RMO, OTIA, GHQ MFO and GHQ Accounting were
subsequently activated.

0111. In 2005, pursuant to HPA Letter Directive dated 25 Jan 2005, OG6 PA was
dissolved and subsequently gave birth to the existence of the three (3) separate offices.
These are the Office of the Army Internal Audit (OAIA), Management Fiscal Office,
PA (MFO, PA) and Accounting Service, PA (ASPA).

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Function
0112. General Function. The Army Resource Management Office (ARMO) is the
Personal Staff of the Commanding General, PA (CG, PA), advising on matters
pertaining to an effective, efficient, responsive, and transparent financial resource
management system of Program 1 Funds following the Planning, Programming, and
Budgeting System (PPBS) through proper and deliberate program and budget
development, based on the first 3-years of the annual Program and Objective
Memorandum (POM), in consonance with the strategic objectives of the Army
Transformation Roadmap (ATR) and other priorities of the CG, PA. It is also primarily
responsible in the allocation and issuance of the Authority to Release Funds (ATRF) of
appropriated and non-appropriated funds, policy formulation, monitoring, budget
analysis and assessment of financial resources, in order to enhance and sustain the
readiness and operations of the Army in the accomplishment of its mission1 .

0113. In particular, the functions of the office are the following:

a. Assists the CG, PA in the justification of PA’s yearly budget proposal before
the Chief of Staff, Armed Forces of the Philippines (CSAFP), Secretary of
National Defense (SND), DBM and members of the Philippine Congress.

b. Formulates and prepares PA’s Annual Budget Proposal for submission to

Department of Budget and Management (DBM).

c. Conducts resource management forum in preparation of the development and

formulation of PA Budget Proposal and PA Annual Plan and Budget (APB).

d. Formulates and develops PA’s APB, using the ARMO Management

Information System (ARMO – MIS), and submits the same to the DND in
conformity with PA’s requirements for the year.

e. Operationalizes the Program and Budget Advisory Committee-Working Group

(PBAC-WG), Junior Program and Budget Advisory Committee (JPBAC), and
Philippine Army Program and Budget Advisory Committee (PA PBAC), in
collaboration with other functional staff depending on the required deliverables
or output.

f. Prepares, reviews, and submits all budgetary requirements to the DBM,

Committee on Appropriations (House of Representative), and Committee on
Finance (Senate).

g. Maintains inter-agency coordination with General Headquarters (GHQ),

Department of National Defense (DND), DBM, House of Representatives, and
the Senate.

h. Provides fiscal ceilings during cost data updates in the Force Oriented Costs
Information System (FOCIS) database upon publication of Defense Planning
Guidance (DPG), Program Objective Memorandum (POM), Program Decision

1 HPA Staff Memo no._____________ dtd _____________

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Memorandum (PDM), National Expenditure Program (NEP), and General

Appropriations Act (GAA), and validates data in collaboration with the
concerned functional staff.

i. Reviews and formulates policies, systems and procedures relative to budgeting,

programming, allocation and reallocation of financial resource management of
appropriated and non-appropriated funds, in coordination with the G-Staff.

j. Prepares, reviews, and submits all budgetary requirements to the DBM relative
to army’s request of any supplemental budget within the current year, in
coordination with the concerned Staff.

k. Formulates budgetary requirements of near (annual) and mid-term (3-year)

plans and programs of the Army in coordination with other concerned Program
Director based on the approved PA Program Objective Memorandum (POM)
consistent with SND-approved Defense Program as stated in the Budget
Development Guidance (BDG).

Organization
0114. The ARMO is organized as follows:

a. Executive Section (ES)

b. Administrative Branch (AB)

c. Resource Allocation Branch (RAB)

d. Budget Development Branch (BDB)

e. Plans and Programs Development Branch (PPDB)

f. Analysis and Evaluation Branch (AEB)

ARMY RESOURCE MANAGEMENT OFFICE

ES

AB BDB PPDB RAB AEB

Figure 1.1 – ARMO Organizational Structure

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Office Administration and Support

Executive Section

0115. The Executive Section is composed of the following:

a. Chief, ARMO. Responsible in the following: 1. Assists and advises the CG,
PA on matters pertaining to financial resource management of Program 1
Funds; 2. Presides over JPBAC deliberations of specific deliverables under
the purview of the Office; and 3. Perform duties and responsibilities in his
capacity as Chairman/Member of any committee, and/or board of financial
institution, whichever is applicable, as approved and directed by the CG,
PA.

b. Deputy Chief, ARMO. Responsible in the following: 1. Act as the principal

assistant to C, ARMO in the administrative and operation functions of the
Office; 2. Assists and advises the C, ARMO in carrying out his functions;
3. Presides over PBAC-WG deliberations pertaining to programming and
budgeting of Program 1 funds; and 4. Assumes and performs memberships
as directed by the C, ARMO and/or by the CG, PA.

c. Executive Officer, ARMO. Responsible in the following: 1. Assists the C,

ARMO in the internal administration of the Office by directing, supervising
and coordinating the activities of all branches; 2. Integrates, directs,
supervises, and coordinates the activities of the functional branches of
ARMO; 3. Keeps the C, ARMO informed on all matters concerning the
operations of the Office; 4. Oversees the efficient and effective operations
of the Office and the performance of the prescribed duties of all Office
personnel; 5. Presides over PBAC-Working Group deliberations of specific
deliverables under the purview of the Office; and 6. Assumes and performs
memberships as directed by the C, ARMO and/or by the CG, PA.

Administrative Branch

0116. The Administrative Branch has the following functions:

a. Performs staff coordination and supervises all personnel and administrative

matters of the office;

b. Provides administrative and logistical support to functional branches;

c. Formulates and prepares the office APB and APP;

d. Formulates and develops plans for the realization of office initiatives in the
Army Transformation Roadmap (ATR) relative to the Institutionalization of the
Army Financial Resource Management System

e. Administers the Maintenance and Other Operating Expenses (MOOE) of the

office in accordance with the approved office APB and APP;

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f. Ensures the continuous conduct and/or attendance of personnel in career

development trainings and seminars;

g. Attends to all administrative communications and routine matters not pertinent

to any other branch;

h. Enforces office decorum and observance of discipline and regulations among

ARMO personnel as well as the necessary sanctions to erring personnel in
accordance to existing rules and regulations; and,

i. Manages the conduct of MOWEL activities of the Office.

0117. The Administrative Branch has two sections: The Personnel Administration
Section and the Service Support Section.

0118. The Personnel Administration Section has the following functions:

a. Prepares, updates and formulates plans and administrative systems for more
efficient use of time, improved work flow and proper motivation of personnel;

b. Programs and implements continuing education and training programs for all
ARMO personnel;

c. Plans, programs and implements the appropriate morale and welfare programs
for both military and civilian personnel of the Office; and,

d. Prepares recommendations for the issuance of appropriate awards and

decorations to deserving personnel, as well as the necessary sanctions to erring
personnel in accordance with AFP and Civil Service Commission (CSC) Rules
and Regulations;

0119. The Service Support Section has the following functions:

a. Maintains proper utilization of supplies, equipment and facilities;

b. Maintains efficient records management and manages the proper storage,

security, and classification of office records as well as their timely disposition
in accordance with published policies and procedures;

c. Operates the message center to ensure proper handling of all documents, prompt
recording and delivery/dispatch of outgoing communications, and receipt of
incoming communications;
d.
e. Coordinates financial services for pay and allowances, collateral entitlements
and other related benefits of organic personnel; and

f. Facilitates all repairs and maintenance of all organic vehicles, office equipment
and facilities of the office.

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Budget Development Branch

0120. The Budget Development Branch (BDB) has the following functions:

a. Supervises and manages the development and revision of the PA Annual

Budget;

b. Assists the CG, PA during deliberation of the PA Annual Budget Proposal

before the CSAFP, SND, DBM and legislative bodies;

c. Acts as the secretariat of the PBAC-WG, JPBAC and PA PBAC for Budget
Development.

0121. The Budget Development Branch has two sections: The Budget Analysis
Section and the Budget Development Section.

0122. The Budget Analysis Section has the following functions:

a. Provides analysis, and justifications of the Army Forward Estimates (FEs) for
the budget preparation phase of the budget cycle;

b. Prepares congressional justification of PA annual Budget Proposal in

collaboration with concerned Program Directors;

c. Analyzes all budgetary guidelines issued by the DBM and DND as basis for
budget preparation;

0123. The Budget Development Section has the following functions:

a. Prepares the PA FEs and Annual Budget Proposal before the CSAFP, SND,
DBM and legislative bodies;

b. Prepares and consolidates the budgetary requirements to be submitted to GHQ,

DND, DBM, House of Representatives and the Senate;

c. Conducts liaising with regards to the submission of budgetary requirements to

the DND, DBM, House of Representatives and the Senate; and

d. Act as secretariat of PBAC during budget development.

Plans and Programs Development Branch

0124. The Plans and Programs Development Branch (PPDB) has the following
functions:

a. Provides inputs to the budgetary requirements as basis in the development of

the Mid-Term Capability Development Plan (CDP) based on the recurring
annual PA appropriation, in coordination with G5 and other concerned Program
Directors.

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b. Evaluates the requests for Program Change of units and offices prior to its
approval and implementation;

c. Manages information and systems plans and budgeting;

d. Conducts research and prepares staff studies or position papers on matters

related to planning and programming of budget; and

e. Acts as the secretariat of the PBAC-WG, JPBAC, and PA PBAC for APB
development and NAF Programming.

0125. The Plans and Program Development Branch has two sections: The Plans and
Programs Section and the Information Management Section.

0126. The Plans and Programs Section has the following functions:

a. Conducts APB Seminar-Workshops and the Resource Management Forum for

PA units;

b. Provides inputs to OG5 in the preparation of Program Proposal and Program

Objective Memorandum (POM);

c. Provides inputs to OG3 on the preparation of the annual PA Program and

Budget Development Guidance (PBDG);

0127. The Information Management Section has the following functions:

a. Consolidates and analyzes the proposed Preliminary and Final APB of PA

units and offices;

b. Conduct data analysis and provides inputs for adjustment to PA units and
offices during development and formulation of APB;

c. Provides and generates APB programming and execution reports;

d. Prepares and Published PA-Wide APB for implementation; and

e. Manage and maintain APB information system.

Resource Allocation Branch

0128. The Resource Allocation Branch has the following functions:

a. Facilitates the release of all PA funds base on the approved documents provided
by the concerned Program Director;

b. Monitors all sources of funds and provides direction in the overall allocation;

c. Fiscalizes, rationalizes, and monitors the utilization of Program 1 financial

resources and recommends necessary adjustments to ensure efficiency in its use;

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d. Maintains, on a regular basis, an updated analysis and overall status of Program

1 financial resources for reference of C, ARMO and CG, PA;

e. Recommends adjustment and monitors the annual financial plan of Program 1

based on current Command Guidance and changes in the organization’s thrusts
and priorities;

f. Evaluates the requests of Program 1 units and offices for the release of their
respective Appropriated and Non-Appropriated Funds, in coordination with the
concerned Program Director;

g. Conducts research and prepares staff studies or position papers on matters

related to budget execution of both regular appropriation and NAF of Program
1;

h. Promulgates Resource Management Directives for the execution and obligation

of funds in accordance with budgeting issuances of higher headquarters, DND,
and DBM;

i. Provides inputs and recommendations in the formulation of financial resource

management policies undertaken by the Analysis and Evaluation Branch
(AEB); and

j. Acts as the secretariat of the PBAC-WG, JPBAC, and PA PBAC for resource
allocation, execution, and monitoring of all PA funds.

0129. The Resource Allocation Branch has two sections: The Appropriated Fund
Section and the Non-Appropriated Fund Section.

0130. The Appropriated Fund Section has the following functions:

a. Monitors the implementation of the approved APB of Program 1 units and

offices for the current fiscal year;
b. Provides inputs in the allocation of resources in the preparation of the overall
APB;
c. Evaluates requests of PA units and offices for the release of funds that needs
clearance prior endorsement of such to CS, PA or the CG, PA for approval;
d. Facilitates requests of PA units and offices for the change of their respective
programs and/or account codes prior to its implementation;
e. Authorizes the releases of appropriated funds and monitors its utilization; and
f. Generates, prepares and monitors status of appropriated funds for reference and
recording purposes;

0131. The Non-Appropriated Fund Section has the following functions:

a. Establishes financial projections from sources other than appropriations ;

b. Reviews and evaluates the request for the utilization of non-appropriated funds
(NAF) such as Trust Receipt and Trust Liabilities, Inter-Agency Transfer
Funds, UN Funds, and other similar financial resources falling under this

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category, and recommend necessary adjustments to ensure its efficient

utilization;

c. Authorizes the releases of NAF and monitors its utilization; and

d. Generates and prepares an updated status of NAF for reference and recording
purposes.

Analysis and Evaluation Branch

0132. The Analysis and Evaluation Branch (AEB) has the following functions:

a. Analyzes all budgetary guidelines issued by the DBM, COA Circular, and other
governing laws, policies, rules and regulations as basis of Program 1 Funds
implementation;

b. Formulates and develops plans for the realization of strategic initiatives in the
ATR relative to the Institutionalization of the Financial Resource Management
System of the PA.

c. Reviews policies, systems and procedures relative to resource management in

coordination with the different Staff;

d. Formulates and develops plans and policies to improve the financial resource
management system;

e. Provides assessments, inputs, and recommendations in the formulation and

preparation of PA annual budget proposal undertaken by the BDB;

f. Gathers data needed during the development of Program 1 Fund, APB

Development, and execution; and

g. Conducts research and study on various laws, policies, rules regulations related
to financial planning, programming, budget development and execution.

h. Acts as a member in all PBAC-WGs.

0133. The Analysis and Evaluation Branch has two sections: The Analysis and
Evaluation Section and the Research and Special Studies Section.

0134. The Analysis and Evaluation Section has the following functions:

a. Provides FOCIS based analytical data related to resource management to

facilitate and enhance decision making process;

b. Provides inputs and recommendations to PPDB, ARMO for the six (6) year
budget planning and programming based on FOCIS analysis;

c. Manages, populates and updates POM/PDM cost data in the FOCIS database in
collaboration with the concerned functional staff;

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d. Conducts program and budget assessment and cost-budget trade-off analysis;

e. Provides the required financial data on past and current operations; and

f. Provides data to MFO, PA during the conduct of Program Performance and

Budget Execution Review (PPBER) and Budget Execution Process Review
(BEPR) during execution phase of the budget process.

0135. The Research and Special Studies Section has the following functions:

a. Formulates and revises policies, procedures, and regulation on matters related

to the management of PA’s financial resources;

b. Conducts research and prepares staff studies of position papers on matters

related to resource management;

c. Prepares position papers/staff actions affecting the cost effectiveness of PA fund

resources; and

d. Researches/gathers data for the justification of requests for release of funds from
the DBM.

e. Provides inputs/related financial studies and policy guidelines to concerned

staff during the development and formulation of their respective HPA policy
and directives that have an effect to the management of financial resources.

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Chapter II
General Concepts of the Defense System of
Management (DSOM) and its component, and
Philippine Army Strategic Management System
(PA SMS)
“A good financial plan is a road map that shows us exactly how
the choices we make today will affect our future”.
Alexa Von Tobel

Defense System of Management (DSOM)

0201. As part of the Philippine Defense Reform the DSOM was established as the
objective end-state system of management systems for the Department of National
Defense (DND). As such, it builds and extends the capability-based planning process
and institutionalizes the reforms implemented under the Multi-Year Capability
Planning System (MYCaPS). It links key function areas and provides the SND, CSAFP,
and other DND and AFP senior leaders with a systematic basis that determines the
Republic’s defense needs and priorities, develops capability plans as well as fiscally
constrained plans together with budget requests that meet the most important needs,
and explains to the President and Congress the logic of these plans and budget requests
and the risk that these entail2 .

0202. As an all-encompassing system of the DND, the DSOM framework is

comprised of four (4) mutually supporting systems:

2 AFP Resource Management Manual 2013 p. 1-4, 3-1; DRMS Guidebook 2013, Chapter 1, p. 3

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Defense Defense
Strategic Capability
Planning Assessment and
Defense
Defense System of Defense
Acquisition Resource
System Management

Planning Financial
Programmin Manageme
g& nt System
Figure 2.1 – The DSOM Framework

Defense Strategic Planning System (DSPS)

0203. The DSPS is a system that develops strategic assessments that address current
and emerging threats, future concerns and strategic plans that address national-level
challenges requiring “whole-of-nation” and “whole-of-government” inter-agency
approaches. The strategic assessment highlights security environments and scenarios of
concern from a national security and defense planning perspective, and identifies broad
planning options that could be taken to address the environments and emerging and
potential challenges of utmost concern identified by the SND. The Philippine Army,
through OG5, PA, provides inputs to the strategic assessment that include
organizational and capability risks and challenges to Philippine national interests which
the PA will be made to address. OG5, PA also develops the operational concepts and
designs and reviews the PA force structure.

Defense Capability Assessment and Planning System (DCAPS)

0204. The DCAPS is a system that critically evaluates the adequacy of capabilities
that are programmed in the most recent SND-approved six-year (6) Defense Program
and identifies high priority capability shortfalls and capabilities of potential declining
relevance that warrant senior leader attention. In the Philippine Army, it develops
detailed capability plans that support approved strategic plans, SND-directed tasks, and
operationally - oriented mission area assessments and capability planning proposals. It
basically determines capability shortfalls using the Doctrine– Organization – Training
– Materiel – Leadership – Personnel – Facilities (DOTMLPF) framework and proposes
corresponding solutions to address these shortfalls. Non-material solutions are
transmitted to the Defense Resource Management System for resource allocation

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undertaken by ARMO while material solutions must pass through the Defense
Acquisition System through OG4, PA.

0205. OG5, PA is primarily responsible within PA for supporting the centralized

DCAPS process in accordance with the directions provided by the SND and ensure that
PA-related DCAPS requirements are complied with in a timely manner and in
accordance with the intent of DSOM. It also recommends PA members to the ad hoc
assessment teams that will complete the mission area assessment and capability
planning proposal processes of DCAPS. 3

Defense Acquisition System (DAS)

0206. The DAS is a system that provides a coherent framework for conducting and
managing the AFP, Civilian Bureaus, and DND Proper’s acquisition and investment
effort. It also develops acquisition assessments and financially realistic procurement
plans. The PA through OG4, PA, develops affordable acquisition proposals that meet
operational needs in a timely manner and at a reasonable price while OG5, PA provides
the assessment needs of the DAS process. These acquisition proposals are subsequently
transmitted to the Defense Resource Management System for resource allocation.

0207. OG4, PA is primarily responsible within the PA for supporting the centralized
DAS process and recommends PA members to the ad hoc assessment teams that will
complete the materiel-related studies that have been directed by the SND as a result of
the DCAPS and PPBS process or other processes as appropriate3 .

Defense Resource Management System (DRMS)

0208. The DRMS is a system composed of two (2) symbiotic component systems, the
Planning, Programming, and Budgeting System (PPBS) and the Financial Management
System (FMS)3 . PPBS is a system that integrates the results of the DSPS, DCAPS, and
DAS into a six-year (6) Defense Program with a corresponding Defense Program and
Budget Proposal to the President. Whereas FMS is a system involved in implementing
the President’s-approved Defense Program and Budget, conducting quarterly SND-
CSAFP Program Performance and Budget Execution Report (PPBER) and PPBER
Reviews, and submitting recurring programmatic financial reports to the President,
DBM, and the COA, and also, feedbacks to the DSPS, DCAP, and DAS. It is in the
FMS that the Defense Program and Budget is executed, and where funds are utilized
for the resources needed by Programs, Activities, and Projects (PAPs). These lead to
the attainment of the DND Major Final Outputs (MFOs) and the actual delivery of
services to the people in return of the funds provided by the government.

0209. The two (2) main components of DRMS incorporate specific and quantifiable
performance indicators connected to a timeline with baseline data, and periodic
assessments of projects and program performance against defined targets. These
components provide a coherent, analytically oriented framework for issuing defense
policy and resource planning direction by the SND, allocate limited resources among
competing priorities across the spectrum of defense activities, and evaluate results

3 HPA Circular Nr 01 dated 18 January 2012, Annex G.

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achieved against established programmatic and financial management objectives. In the

PA, ARMO focuses mainly on the PPBS, while MFO, PA focuses on the FMS.

Philippine Army Strategic Management System (PA SMS)

0210. As a background, the PA SMS is the overarching framework that integrates and
governs the Philippine Army’s planning and operating systems in order to achieve its
long-term, medium-term, and annual goals. Specifically, this system aims to reconcile
the two (2) strategic management systems adopted by the Philippine Army: the DSOM
and the PGS. Both systems have peculiar processes and deliverables that need to be
harmonized so that the PA can function with utmost efficiency and effectiveness.
However, compliance to DSOM deliverables takes precedence over the PGS for it is
the DND-prescribed strategic management tool. The PGS, on the other hand, will act
as a supplemental system in support to the DSOM4 .

STRAT
EGIC
PERFOR PLANN CAPABILI
MANCE ING TY
REVIEW DEVELO
AND PMENT
ASSESS PLANNI
MENT
DS NG
PROGRA
OM
ORGANIZA
M TIONAL
EXECUTI DEVELOP
ON AND PGS MENT
PLANNIN
MONITO RESOUR
RING G
CE
MANAG
EMENT
Figure 2.2 – PA Strategic Management System

0211. The Performance Governance System (PGS). In the pursuit of organizational

reform, the PA embraces a journey of transformation from traditional to a modern day
Army, in collaboration with the stakeholder who advocates Performance Governance
System (PGS) as a reform system. The PGS is the principal mechanism through which
the Institute of Solidarity in Asia (ISA) works to help reform its partner organizations
and local governments. The PGS is based on the methodology of the “balanced
scorecard” a management reform and evaluation tool developed by a management
consultant and a professor at Harvard Business School. The balanced scorecard process
translates organizational strategy into concrete and quantifiable outcomes by measuring

4 HPA SOP no. 4 dtd 12 Feb 2013: Sec. 2 & 7, Annex B

15
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whether the operational activities of an organization are aligned with its larger-scale
and longer-term objectives and strategies5 .

0212. The PA adopted the PGS as part of its reform process to ensure optimal
performance, good governance, promote transparency, and public accountability at par
with civilian counterparts, both in the public and corporate worlds. The Army’s outputs
as a government unit can now be quantified and evaluated to show its effectiveness and
efficiency in carrying out its mandate and tasks in nation building. Adopting best
practices in resource management from stakeholders shall form part of the
institutionalization of the Army’s long-term strategies in the planning, programming,
and budgeting process that will lead to the realization and delivery of its Major Final
Outputs (MFOs) and the accomplishment of its mission and tasks.

0213. The Army Transformation Roadmap (ATR). With the Army’s adoption of
the PGS, it also developed a long-term strategic program called the ATR. It embodies
the Army’s sincere commitment to pursue genuine reform and transformation founded
on good governance and performance excellence. It provides a rational basis for the
Army’s medium and long-term policies, plans and programs to develop capabilities to
support the Philippine Development Plan, Philippine Defense Reform (PDR) Program,
Armed Forces of the Philippines Transformation Roadmap (AFPTR), and Internal
Peace and Security Plan (IPSP) Bayanihan6 .

0214. Its primary purpose is to transform the Army into a more capable, responsive,
reliable, and professional organization. It promotes an Army that focuses on the
institution rather than personalities, considers long-term strategies, and approaches all
matters from a systems perspective to address interconnected priorities rather than
single issues.

0215. The strategy is being cascaded down to the level of units, offices, and
individuals and subsidiary performance scorecards being aligned with that of the
enterprise. This is done through various projects and activities, frameworks, systems,
and processes designed to institutionalize the PGS, sustain strategy alignment, drive
results, and reward performance.

0216. The ATR drives the ARMO to develop its programs and projects with the
objective of ensuring adequate resources are available to be utilized by the whole
Philippine Army (PA) and to adopt an effective and efficient management of resources
by indoctrinating a Resource Management System for the PA. As such, all PAPs in the
APB are aligned with the objectives of ATR.

0217. Being the fundamental operating guide of the Philippine Army, the PA SMS
framework mirrors the basic elements of a generic strategic management construct,
which is composed of the following sub-systems:

a. Strategic Planning: describes the strategic environment, defines the strategic

direction, and outlines PA’s capability, force, and sustainment goals.

5 CIPE Economic Reform Feature Service 2010: PGS p. 3

6 Army Transformation Roadmap 2028: A Quick Look Pamphlet; Retrieved from: ATR2028.wordpress.com

16
 PAM 10 - 01

b. Capability Development Planning: describes the manner by which the

outlined capability, force, and sustainment goals shall be received over time.

c. Organizational Development Planning: describes how PA organizations,

systems, and processes shall be designed, synchronized, and aligned to achieve
the strategy and the desired capability, force, and sustainment goals.

d. Resource Management: translates the PA strategy into programs with

corresponding budgets. It is basically concerned with programming and
budgeting.

e. Program Execution and Monitoring: actual implementation of the programs

outlined for a specific planning cycle.

f. Performance Review and Assessment: measures the impact of the programs

vis-à-vis the objectives set. It also determines the performance level and the
factors affecting and leading to such, which essentially validates the strategy.
This sub-system is an indispensable input to the next strategic planning, thus
completing the cycle.

0218. The PA SMS encompasses the PA Budget Budgeting System, which identifies
the process on how the Army’s budget is being formulated, from the development of
the APB and Budget Proposal for inclusion in the GAA.

0219. The resource management element translates the PA strategy into programs
with a corresponding budget. It is basically concerned with programming and
budgeting, and it is practically where the PA POM development process comes in. The
process itself traverses both the planning and programming phase of both the resource
management element of the PA SMS and the DRMS of DSOM 7 .

PA Budgeting System and Development Process Framework

0220. The PA Budgeting System is primarily designed to provide the funds needed by
the Command and to determine how they are obtained, programmed, allocated,
controlled, and facilitated to the intended recipients, purpose and objectives.

0221. The PA Budget Development Process Framework fundamentally defines the

process on how the Army’s budget is being formulated up to its implementation. It
provides the basic tasks of the PAMUs and HPA staff offices in the formulation of the
Annual Plan and Budget (APB) vis-à-vis formulation of the Annual Procurement Plan
(APP).

7 PA POM Development Process Guide, p.3

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 PAM 10 - 01

Y-Y APB EXPENSE

CEILING FOR
(Fisca Implementation
APB IMPLEMENTA

T
l
Year)
B (Issuance
Finalization
of GAA B TION F
U ATRF)
Adjusted U ADJU
U
I D Chang
PA’s PBDG Publica
D
STED

M Y
G es in
Initial APB
(NEP-based)
tion of
NEP G
MOOE
CEILI
N
-
E 1 E PAMU Adjusted E NG D
s PA’s PBDG CURRE

F T Operat (if
Chang
es in
T NT C
Preliminary MOOE
D ional necessary) PDM D E
R Enviro
Prelimina
E rynment
APB
PA’s Prelimina
and E
CEILIN
G

A Y V
APB PBDG ry APB
BDM
V
CURRE
NT
I
M - PA Major Units Headquarters, PA
TProgram & Budget PA’s Program & BudgetT MOOE
CEILIN
L
E
2
Estimate (PBE) PBE Estimate (PBE) G I
Efficient & Effective Management of N
Resources G
Figure 2.3 – The PA Budget Development Process Framework

0222. The Framework begins in the fourth quarter of Year minus 2 (Y-2) period and
progresses with the PA Budget Development Process and APB Development Process
until the implementation of the APB for the current Fiscal Year. (See Appendix A –
Budget and APB Development Timeline)

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Chapter III
Budget Development - Planning &
Programming
“The budget is not just a collection of numbers, but an expression
of our values and aspirations”.
Jacob Lew

0301. Government budgeting is made up of methods and practices of the government

planning, programming, and budgeting that is responsive to current economic
conditions of the country in order to cope with national development. Continuity must
be used to ensure planning, programming, and budgeting resources are used in nation
building and boost the country’s goals to promote economic growth through modest
self-reliant industry8 .

Government Budgeting Systems and Approaches

0301. Incremental Budgeting. Incremental budgeting is evaluating and analyzing
only the additional budgetary requirements of an existing budget. It begins with the
prior year’s budget as its base and directs decision-making to incremental changes in
various sections of the budget.

0302. Line Item Budgeting. The line item budgeting is the listing of all activities and
every single position and pieces of equipment on a separate line in the expenditure
estimate with little emphasis on objectives. It shows the budget amount for the
preceding year/s compared with the amount requested for the forthcoming period.
Decisions for the next year’s budget are based on the current level of current
expenditures.

0303. Zero-Based Budgeting. Zero-based budgeting is providing the objectives,

policies, and guidelines useful for developing the criteria in ranking decision packages
on the concept that the budget for the following year is zero and every expenditure must
be justified on the basis of its cost and benefit.

0304. Capital Budgeting. The capital budgeting system is a two-tiered strategy which
consists of setting of a baseline budget which corresponds to the minimum level of
operating requirements at which each agency of the National Government can perform
its basic functions and prioritization of the balance left of the budget ceiling after
deducting the baseline budget among the proposed projects and programs of the
agencies.

0305. Performance-Informed Budgeting. 9 Performance-informed budgeting is using

performance information to inform Congress and the public about the outputs and
outcomes an agency is committing to deliver in exchange for its budget. The
8 AFP Manual 11 – 00 Series 2013: pp 3-8 – 3-9
9 NBM Nr 123 dtd 28 Jan 2015

19
 PAM 10 - 01

performance information is presented alongside the budget in the National Expenditure

Program (NEP) and includes the purpose/objectives for which the funds are required,
outputs that would be produced or the services that would be rendered, and the quantity,
quality and timeliness targets for the outputs and/or services.

0306. Program Budgeting. Program budgeting facilitating and providing incentives

for inter-agency collaboration to ensure that priority programs are planned, budgeted
and implemented in a coordinated manner.

0307. Bottom-up Budgeting. Bottom-up budgeting is ensuring that the prioritized list
of programs and projects required by poor cities/municipalities are incorporated into
the indicative budget levels of participating agencies. It promotes responsiveness of
agencies to and ensures convergence of the services of departments/agencies/ GOCCs
to the needs of the poorest LGUs and communities.

0308. Grassroots Participatory Budgeting. Grassroots participatory budgeting is

preparing the budget proposal of agencies, taking into consideration the development
needs of cities/municipalities as identified in their respective local poverty reduction
action plans that shall be formulated with strong participation of basic sector
organizations and other civil society organizations. (DBM-DILG-DSWD-NAPC Joint
Memo Circular 5 dated Oct 1 2014)

Planning, Programming, and Budgeting System (PPBS)

0309. The PPBS as one component under DRMS, is a systematic approach to establish
goals and develop programs for its accomplishment. It considers the costs and benefits
of various alternative approaches and utilizes a budgetary process that reflects program
activities over the long run, rather than on a yearly basis. It is a continuous process
with no exact starting and ending points. It represents a comprehensive process for
creating a more effective decision-making system for public agencies 10 .

0310. While OG5, PA leads the planning and programming phases of PPBS to ensure
that the PA budget proposals are consistent with the first year of the SND-approved
Defense Program, ARMO is primarily responsible for the PA budget development in
collaboration with concerned functional staff11 .

10 AFP Resource Management Manual, Chapter 3

11 HPA Circular Nr 01 dated 18 January 2012, Annex G.

20
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PROGRAMMING

PP
PLANNING
BS PREPARATION

ACCOUNTABILITY LEGISLATION
BUDGE
TING
EXECUTION

Figure 3.1 – The PPBS Cycle

0311. The preliminary output of the strategically driven PPBS is the SND-approved
six-year (6) Defense Program as embodied in the PA Program Objective (POM)
Memorandum, and the Defense Program and Proposed Budget that contains the SND
Programmatic and Financial Objectives for the first year of the Defense Program. The
DND Defense Program and Proposed Budget undergo the Authorization process and
later form part of the current Administration’s program and the General Appropriations
Act (GAA). The final outputs of the PPBS are the Annual Plan and Budget (APB) and
the Budget Execution Documents (BEDs) that are based on the President’s approved
programs and the GAA.

PA Budget Development Process

0312. The PA Budget Development Process is a fundamental component of the PA
Strategic Management System (SMS). The process will develop the PA Budget
Proposal in accordance with the SND’s Budget Development Guidance and based on
Year 1 of the Army’s POM and consistent with the SND’s approved Defense Program
as stipulated in the PDM and the Indicative Ceiling published by DBM as proposed
through the submission of Forward Estimates (FEs). The PA proposed budget in turn
should be part of the National Expenditure Program (NEP) and the General
Appropriations Act (GAA). (See Appendix B – Budget and APB Development
Flowchart)

Inputs for Budget Development

DBM Budget Memos
0313. The Department of Budget and Management (DBM) issues Budget Memos to
national government agencies, which outline the priority areas of government activity

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applicable to the budget year, with the scope of a year and one (1) month. It likewise
reiterates the fiscal limits and approximate rate of increase in government ceilings
applicable to the budget year and appearing in the development plan, as updated in the
long-term fiscal projection in the latest Budget Message12 .

0314. These memos are issued in the DBM’s annual Budget Call, which is usually
scheduled in the first quarter of Year minus one (Y-1) period. Prior to the budget call,
DBM requests preliminary forward budget estimates from agencies using the current
ceiling price per unit/office as the reference for the budget memos. For Program 1, the
Budget Development Branch (BDB, ARMO) is tasked to consolidate these forward
estimates of HPA Offices and PAMUs to be submitted to the Department of National
Defense (DND), with the concurrence of higher authorities. In addition, the Plans and
Programs Development Branch (PPDB, ARMO) aids the BDB, ARMO by providing
analyses and justifications in consolidating the budget estimates 13 .

0315. With the release of DBM’s budgetary guidelines, BDB, ARMO analyzes and
interprets the budget stipulations of both DBM and DND to jumpstart the budget
preparation phase.

PA Program Objective Memorandum (POM)

0316. Before initializing the Programming Phase through the formulation of the
Program Objective Memorandum (POM), this phase requires the issuance of the
Defense Planning Guide (DPG) and the Programs Preparation Instructions (PPI) from
the Assistant Secretary for Plans and Programs (ASPP), DND. These documents
provide fiscal guidance limits and definitive directions and requirements; thus,
becoming the main building block of PA in formulating its program proposal14 .

0317. The POM contains a Resource Manager’s proposed six (6) year program for
accomplishing the direction provided in the DPG as well as the resources required to
recruit, train, maintain, sustain, modernize, and as appropriate, reconstitute the
organization. It must comply with the fiscal limit established by the SND and may
identify priority unfunded requirements for SND’s consideration. For the Philippine
Army, OG5 is the Office Primary Responsible (OPR) in the formulation the POM along
with the guidance of other HPA Offices.

0318. The continual review and assessment of the POM by the Resource Managers, the
SND, the Chief of Staff of the Armed Forces of the Philippines (CSAFP), and other
key DND-AFP senior officials, aid in the finalization of program proposals that are then
reflected in the Program Decision Memorandum (PDM). In this PDM, it establishes the
SND-approved Defense Program, and thus provides the basis for revisions of Resource
Managers’ Program Proposals that are electronically uploaded and updated in the Force
Oriented Cost Information System (FOCIS) database to conform to SND’s
programmatic and financial decisions. The development phase of the POM is usually
organized at the last quarter of Year minus Two (Y-2) period.

12 AFP Resource Management Manual 2013, pp. 3-9

13 ARMO Staff Memo 2013, p. 5, Sec. E, Par. 4 and 7
14 DRMS Guidebook 2013, p. 40 onwards; AFP Resource Management Manual 2013, p. 3-4; DRMS Key Products Preparation Manual 2008, p. 6; HPA SOP no. 4

2013; ARMO Staff Memo 2013, p. 7 Sec. F, Par. 4 and 5

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0319. Force Oriented Cost Information System (FOCIS) is a database that is used
to develop, submit and analyze program proposals and record the programmatic and
financial decisions of the SND. It is updated and cleansed to suit emerging needs and
to provide reliable and real time information in either perspective of financial or
programmatic objectives. It is updated at least five (5) times during an annual DRMS
process to coincide with submission of POM, PDM adjustments, budget proposals,
President’s budget, and the signing of the General Appropriations Act (GAA).

0320. While OG5, PA has the responsibility of managing the FOCIS Database at the
PA level and supervises the encoding of the PA POM, ARMO, in turn, has the
following tasks and responsibilities:

a. Primarily responsible for populating and updating the Program 1 cost data in the
FOCIS database in collaboration with the concerned functional staff.

b. Identifies proposed changes to FOCIS set up data and cost factors that are
needed to support Program 1’s use of FOCIS.

c. Sets standards for service-specific cost data, which will be the basis of the
encoders of concerned offices in updating.

d. Counterchecks if PA Programs, as reflected in the FOCIS database, are within

fiscal limits.

e. Updates the FOCIS database in sync with the Program 1’s Budget Proposal,
then with the National Expenditure Program, and then finally, with what the
General Appropriations Act dictates.

Budget Development Guidance (BDG)

0321. DND issues the BDG, which is developed by Assistant Secretary for Financial
Management (ASFM) in collaboration with ASPP, and is distributed to the respective
Resource Managers shortly after receipt of the National Budget Call. This guidance is
based on the budget memos that include time horizons and information formats issued
by DBM and the first year of the SND-approved six-year (6) Defense Program
established by the PDM. It also provides authoritative direction to Resource Managers
regarding the development of their Annual Budget Proposals.

0322. For Program 1, the BDB, ARMO is in charge of crafting the PA Budget Proposal.
This process roughly takes about three (3) months, from January to April of Year minus
one (Y-1) period.

Operation Planning & Guidance (Procedures)

a. The BDB, ARMO consolidates budget estimates of HPA Offices and PAMUs
to be submitted to DND, to be forwarded to DBM.

b. The PPDB, ARMO confers with OG5 on the finalization of the POM.

23
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c. By the 1st week of January, the DBM issues the Budget Memos through the
Budget Call

d. Upon receipt of the Budget Call from DBM, the ASFM, in collaboration with
the ASPP, develops and submits the BDG for SND’s approval.

e. DND’s issuance of the BDG to all major units triggers the finalization of the
Program and Budget Development Guidance (PBDG).

f. The BDB, ARMO and PPDB, ARMO acquire the revised PDM to aid in the
finalization of the PBDG, and in the preparation for the budget development
process.

g. By the 2nd to 3rdweek of January, the publication of the PBDG commences the
development of the Initial Budget Proposal.

h. The BDB develops the Budget Proposal following the stipulations of the BDG
and also considers the regulations imposed by the Budget Memos.

i. The formulated budget proposal shall be reviewed and assessed by HPA, AFP,
DND, DBM, and other key agencies.

Phases of Budget Preparation based on PBDG

0323. On developing the Budget Proposal, the integration of the planning and budgeting
process can be accomplished more effectively through the development of the budget
on a program basis. A program budget allocates efforts toward long run goal setting
and planning away from emphasis upon financial controls. Accordingly, the budget
documents would be based upon the stipulation of the major program results. The
emphasis on the program budget would be on forward planning rather than fiscal
control of expenditures. Hence, the primary goal is to develop the routine of preparing
a budget into a conscious appraisal and formulation of future programs.

0324. Being a process under the PPBS, the generation of future programs should be
done during the planning-programming phases and then made available in usable form
for the budgeting phase. This should be the document that shall indicate the amount of
resources required to accomplish the plans developed during the planning-
programming phases. Furthermore, the program should be extended from the current
annual period to include, long term projections of expenditures on a program basis.

0325. The formulation of the Initial Budget Proposal is triggered by the publication of
the PBDG. But before this, the publication requires the issuance of the PDM, and
subsequently the issuance of the PBDG, which usually takes place by mid-January15 .

0326. The PBDG plays a vital role in BDB, ARMO’s development of Program 1’s
Budget Proposal since it reflects the Commanding General, PA’s (CG, PA) priorities
and guidance on the utilization of Army resources from a specific year of the POM, but

15 HPA SOP no. 4 2013, p. 6, Sec. 2; DRMS Guidebook p. 23

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it must conform to the provisions of the PDM. However, to make it more responsive to
the actual developments on the ground, the PBDG must also reflect GHQ’s Operational
Planning Guidance (OPG) as well as the programs/measures that would address the
deficiencies and discrepancies noted in the just concluded fiscal year as reflected in the
Annual Accomplishment Report (AAR) and Annual Strategic Review (ASR).

0327. The following sections will provide the basic timeline in the preparation of the
PA Budget Proposal, harmonizing the inputs required for budget development, key
deliverables of each phase, up to the presentation of the proposed Budget Proposal to
higher authorities16 .

Phase 1 – Determination of Objectives, Thrust, Priorities, and

Programs, Activities and Projects (PAPs)
0328. Phase 1 begins in conjunction with the development of the Army’s POM and
ends with the publication of the PBDG which reflects the CG, PA’s priorities and
guidance on the programming and utilization of Army’s resources based on the specific
year (Year 1) in the POM. Moreover, this phase begins in the 4 th quarter of Year minus
2 (Y-2) period based on the SMS Master Planning Calendar. Below are the sub-phases
under Phase 1:

b. Determine the PA Fiscal Year (FY) Thrusts, Objectives, and Priorities. The
Plans and Programs Working Group (PPWG), which is composed of the
Planning Officers of HPA Staff Offices, is responsible for the formulation of
the PBDG. OG3, PA is the OPR in the formulation of the PBDG. Moreover, the
PBDG must reflect what the Army intends to do and accomplish in the FY,
taking into consideration the guidance and financial limits imposed by DBM
(Indicative Budget Ceiling/Hard Ceiling), DND, and GHQ, AFP.

c. Determine PAPs, Targets, and Budget Estimates. With the completion of the
PBDG, this will clearly establish the Army’s FY Thrusts, Objectives and
Priorities, and shall serve as a major input in the determination of the Army’s
FY PAPs to be implemented with the identification of corresponding targets.
The setting of targets shall guide in phasing the activities on a monthly and
quarterly basis. Moreover, upon determining the FY PAPs and targets, the major
category of expenses (cost) can be established for each PAP in order to come-
up with the initial budget estimate consistent with the Year 1 of the POM.

0329. Upon completion of Phase 1 the following key deliverables are expected to be
achieved:

a. FY PBDG: Describes what the PA intends to do and accomplish in the FY,

taking into consideration the guidance and financial limits imposed by DBM,
DND, and GHQ, AFP. The major inputs in crafting the PBDG include the
following: the PA POM; GHQ’s operational thrusts as reflected in its
Operational Planning Guidance; the PA Support Plan to IPSP “Bayanihan”; PA
Annual Accomplishment Report; Annual ATR Strategy Review/Assessment;
and the PA Organizational Performance Indicator Framework (OPIF).

16 ARMO Budget – APB Preparation Process Lecture, November 2013, HPA (AAG/ARMO), subj: BDP

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b. Initial Budget Estimate: Contains the initial budget level of the PA consistent
with the programs embodied in the year 1 of the POM.

Phase 2 – Analysis of the Budget Preparation Guidelines

0330. Phase 2 begins upon issuance of the DBM and DND Budget Memos. After
which, necessary adjustments shall be made on the PBDG and the initial budget
estimate with the end view that it is consistent with the indicative budget ceiling/hard
ceiling issued by DBM and in accordance with the guidance set forth in the PDM, BDG
and Budget Decision Memorandum (BDM) issued by DND. This phase ends with the
publication of the adjusted PBDG (if applicable) and crafting of the initial Budget
Proposal. Moreover, Phase 2 begins in the middle of 4 th quarter of Year minus 2 (Y-2)
up to the 1st month of the 1st quarter of Year minus 1 (Y-1). The following are the sub-
phases:

a. Analysis of the PDM & BDG issued by DND. With the issuance of the PDM,
the PA will now determine the specific and implied instructions and tasks for
incorporation in the revised POM, which shall serve as basis in the publication
of the adjusted PBDG (if applicable). Likewise, with the subsequent issuance
of BDG by the DND, this shall provide an additional perspective in the
refinement of the Army’s FY PAPs and the initial budget estimate based on the
Year 1 of the POM. The BDG basically provides administrative instructions and
guidelines in the preparation of the PA’s Budget Proposal.

b. Determine the FY Program and Budget Development Guidance. After the

review of the PBDG, and incorporating the requirements of the PDM and the
guidelines set forth in the BDM, the PA will now publish the FY PBDG. The
completion of the FY PBDG will subsequently drive the crafting of the
preliminary APB of all PAMUs and HPA offices to serve as basis in the
development of the initial PA’s Budget Proposal.

0331. Key deliverables: Adjusted FY PBDG (if applicable): The adjusted PBDG (if
applicable) is a reflection of the PDM and conforms to the guidelines set forth in the
BDG and BDM issued by the SND. Likewise, it must be consistent with the budget
memos and the indicative budget ceiling/hard ceiling issued by DBM.

Phase 3 – Preparation of the PA Budget Proposal

0332. Phase 3 begins with the publication of the PA PBDG and consolidation of the
preliminary APB of all PAMUs and HPA Offices anchored in the submitted Project
Procurement Management Plans (PPMPs). Likewise, the preliminary APB will serve
as basis to refine and finalize the IBE based on Year 1 of the POM. This phase ends in
the development of PA’s FY Budget Proposal. Moreover, Phase 3 begins from 1 st
quarter up to 2nd quarter of Year minus 1 (Y-1).

0333. Also in this phase, the BDB, ARMO prompts the PPDB, ARMO to consult and
consolidate feedback of PAMUs regarding the initial budget formulated. Feedback
collected shall be reviewed and considered in the formulation of the final PA Budget

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Proposal to be submitted and presented to GHQ, AFP, DND, and DBM, which signals
the end of Phase 3 with the following key deliverables:
a. Preliminary APB of PAMUs and HPA Offices: The preliminary APB primarily
depicts how the Army units propose to spend the resources consistent with the
published FY PBDG and the financial limits set by HPA. Basically, the APB
encapsulates the “Top-Down; Bottom-up” budgeting approach being
implemented by the Command and this is subject to the approval of the CG, PA.

b. PA’s FY Budget Proposal: The Budget Proposal contains the proposed budget
of the PA for the FY and must be consistent with the guidelines set forth in the
SND’s BDG and align with the PDM and BDM. Moreover, it conforms to the
procedures stipulated in the DBM budget memos and reflects the fiscal level
based on the published indicative budget ceiling/hard ceiling. It must also
comply with the reportorial requirements in support of the submitted budget
proposal.

TIMELINE
PHASES OF
Year – 2 Year – 1
BUDGET
PREPARATION 4th Quarter 1st Quarter 2nd Quarter
MA MA JU
OCT NOV DEC JAN FEB APR
R Y N
PHASE 1 –
Determination of
FY Objectives,
Thrusts, Priorities,
and PAPs
PHASE 2 –
Analysis of the
Budget
Preparation
Guidelines
PHASE 3 –
Preparation of the
PA Budget
Proposal

Table 3.1 - General Timeline of Budget Preparation Phases

Presentation of the Budget Proposal

0334. The BDB, ARMO is the preliminary body in-charge for the preparation and
presentation of Program 1’s Budget Proposal to DND and legislative bodies. Hence,
this branch also prepares and consolidates the budgetary requirements to be submitted
to GHQ, DND, DBM, House of Representatives, and the Senate. The duration of the
whole presentation to concerned authorities usually takes about eight (8) months,
beginning from the second quarter up to the fourth quarter of Year minus 1 (Y-1)
period17 .

17 ARMO Staff Memo 2013, p. 7, Sec. E, Par. 5

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PA Budget Review

0335. Before the PA Budget Proposal is submitted to DND for consolidation and
approval, it must first undergo the review and perusal of the different levels of Program
and Budget Advisory Committees (PBACs).

0336. The PBAC is the primary body that oversees the implementation and
administration of the Defense Resource Management System (DRMS) in the Philippine
Army. In particular, the evaluation and assessment comprises of three (3) stages:

a. The PBAC-Working Group (PBAC-WG). The PBAC-WG is the lowest

advisory committee at the HPA that works out the details of the Army’s 6-Year
Medium – Term Plans and Programs. Particularly, this committee works out the
specific details of the Army’s plans, programs, and budget for a particular fiscal
year. The Chairmanship of the Working Group depends on the specific
deliverables being deliberated: Deputy OG5 for OPIF, PP, and POM; Deputy
OG3 for PA, PBDG and ATS; Deputy ARMO for Appropriated Funds (PS,
MOOE, CO) and Non-Appropriated Funds; and Deputy MFO for PPBER.
Members are usually composed of Budget Support Officers and other key
officers of the HPA G-Staff, AGSMO, OAGAD, and ASPA.

b. The Junior PBAC (JPBAC). The JPBAC is the second highest advisory
committee at HPA that assists the PA PBAC in overseeing the formulation of
the PPBS in the Philippine Army. The Chairmanship of the JPBACs also
depends on the specific deliverables being deliberated: G5 for OPIF, PP, and
POM; G3 for PA, PBDG and ATS; C, ARMO for Appropriated Funds (PS,
MOOE, CO) and Non-Appropriated Funds; and C, MFO for PPBER. Other
members are the deputies of the HPA G-Staff, AGSMO, OAGAD, ASPA
representative and the secretaries of Working Groups.

c. The PA PBAC. The PA PBAC is the highest advisory committee at HPA. This
is headed by the Chief of Staff, PA while the Chairman of the different JPBACs
acts as the Vice-Chairman depending on the deliverables being deliberated.
Other members are the HPA G-Staff, Chiefs, AGSMO, OAGAD and ASPA and
the secretaries of Working Groups18 .

Presentation of PA Budget Proposal

0337. After the PA Budget Proposal has been reviewed and deliberated, the CG, PA
as Resource Manager of Program 1, will present the FY Budget Proposal to CSAFP
along with the other Major Service Commanders. This will aid the CSAFP to come up
with his budget assessment, which will be forwarded to DND thru the ASFM.

0338. After the presentation to CSAFP, the CG, PA will present the FY PA Budget
Proposal to the SND together with the other Major Service Commanders. The output
of the presentation will be discussed through the Major Issues resolution that will

18 HPA SOP 2 dated 25 January 2016.

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 PAM 10 - 01

trigger the issuance of the SND’s BDM. The BDM will provide the guidance in
finalizing the Army’s proposed budget and the Budget Preparation (BP) Forms, which
will be submitted to DND and for subsequent endorsement of SND to Bureau D of
DBM.

0339. From this memorandum, Resource Managers revise their respective budget
proposals in accordance to the BDM. To ensure the linkage between plans, programs,
and budget, Program 1’s Resource Manager shall require the ARMO, led by the C,
ARMO, G5, and G3 to collaborate in developing the budget and jointly endorse all
budget forms included in the submission to DBM.

Online Submission of Budget Proposal

0340. The revised budget proposals that are in tune with the instructions issued by
ASFM are then submitted to DBM physically and electronically through the DBM’s
Online Submission of Budget Proposal System (OSBPS). The budget submission to
DBM translates the programmatic view of the proposals into the format of the
Congressional appropriation structure, along with the associated budget justification
documents19 .

0341. Through the use of the Force Oriented Cost Information System (FOCIS), a
database of real time information in either perspective of financial or programmatic
objectives, the uploaded budget proposals are continually reviewed and revised so as to
suit the emerging needs and to also provide reliable and real time information. For
Program 1, ARMO is in charge of updating revisions done for the budget proposal
specific to the PA.

Technical Budget Hearing (TBH)

0342. Once the budget proposals are submitted, the Director, Bureau D of DBM
conducts a Technical Budget Hearing (TBH) together with the Undersecretary of
National Defense, ASFM, Resource Managers, and other resource personnel to review
and validate the budgetary proposals. The TBH shall provide the opportunity for
explanation and defense of the submitted budget proposal. Moreover, C, ARMO along
with selected HPA G-Staff shall be responsible in defending the Army’s budget in the
TBH20 .

0343. The Preliminary and Final Evaluation Review Board (PERB/FERB) technical
staff, headed by the DBM Secretary, familiarizes themselves with the agencies’ plans
and programs. This is to aid the different agencies of the government (including the
AFP) to decisively integrate their respective objectives to the total national goals with
the help of the PERB/FERB.

DBM Budget Review

0344. After reconciling the fiscal goals of national agencies with the administration,
DBM reviews the budget proposals. The purpose of the review is to ensure that

19 DRMS Guidebook 2013 p. 45, no. 7, FOCIS P. 24

20 AFP Resource Management Manual 2013, p. 3-10

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 PAM 10 - 01

programs are funded in accordance with the current financial policies and are properly
and reasonably priced. The review also ensures that the budget documentation is
adequate in order to justify the programs presented to the President, and then to the
Congress.

Development Budget Coordinating Committee (DBCC) Deliberations

0345. Upon completion of final adjustments to the budget submission, DBM forwards
the budget documents to the DBCC, which is composed of the Secretary of DBM as
the Chairman, the Director-General of National Economic and Development Authority
(NEDA) as the Secretariat and as Co-Chairman, the Executive Secretary of the
Department of Finance (DOF) and lastly, the Governor of the Central Bank of the
Philippines (Bangko Sentral ng Pilipinas /BSP).

0346. The DBCC deliberates and recommends to the President the level of annual
government expenditures and the ceiling of government spending for economic and
social development, national defense, and government debt service. It also advises the
proper allocation of expenditures for each development activity between current
operating expenditures and capital outlays. Further deliberations of the budget
submission by the DBCC contribute to the formulation of the President’s Budget, or
commonly known as the National Expenditure Program (NEP) 21 .

Submission of President’s Budget to Congress

0347. The end output of DBCC’s deliberations is the NEP. The defense budget
included in the NEP reflects the President’s defense budget proposal to Congress.
Program changes in the first year of the Future Years Defense Program (FYDP), if any,
are entered into the FOCIS database by resource managers shortly after the NEP is
submitted to Congress in accordance with the instructions provided by the ASPP.

Publication of the NEP

0348. After the presentation of the National Budget during the President’s State of the
Nation Address (SONA), the DBM formalizes the President’s budget appropriations
through the publication of the NEP. All concerned agencies are provided copies of the
NEP so as to prepare for the examination in the Congressional Budget Hearings.
Moreover, the NEP is submitted to the legislative body within thirty (30) days from the
beginning of the regular session to comply with the constitutional timetable. Primarily,
this is to prepare the Congress for the formulation of the General Appropriations Bill
(GAB).

0349. Immediately after the publication of the NEP, the PA will finalize the FY
Budget Proposal based on the NEP. The revised budget proposal will be submitted
physically and electronically through the DBM’s OSBPS through the DND for SND’s
endorsement to DBM.

21 NEDA Board of Authority Website; DRMS Guidebook 2013, p. 53

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Congressional Budget Hearings

0350. To provide Legislative Authorization to the NEP through the enactment of the
GAB, the provisions of the Expenditure Program must be reviewed and deliberated by
the members of the Congress. Prior to presentation, numerous meetings with the
Congressional Sponsors will be conducted to coordinate the DND-Wide proposed
budget. After the meetings, the SND together with the CSAFP and Resource Managers
(Program 1-4) presents the DND-Wide proposed budget per NEP to the Committee on
Appropriations of the House of Representatives and Committee on Finance of the
Senate. On the other hand, the Congressional sponsors present the proposed budget per
NEP to both houses of Congress in the plenary hearings. Once approved by the House
of Representatives, the proposed budget will then be presented to the Senate for further
deliberation and if necessary, a bicameral meeting may be conducted to resolve issues
or any disagreement between both houses of Congress. The final approved budget will
then form part of the GAB being formulated.

Publication of the General Appropriations Act (GAA)

0351. Finally, pursuant to the provisions of Section 29 (a) of Article VII of the 1987
Constitution, the President’s approval of the GAB will lead to the enactment of the Bill
into an Appropriations Act. The GAA will provide the legal authorizations for all
government agencies to implement their approved PAPs.

0352. Upon the approval of the GAA, the ASFM and the DBM become liaisons for
the publication and distribution of the GAA to all concerned national agencies.

0353. In line with the publication of GAA, the DBM also issues an Agency Budget
Matrix (ABM) based on the submitted financial plan of the AFP for the year.

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Chapter IV
Annual Plan and Budget (APB) Development -
Budgeting
“Balanced budget requirements seem more likely to produce
accounting ingenuity than genuinely balanced budgets”.
Thomas Sowel

General
0401. The Philippine Army (PA) adopted the Annual Plan and Budget (APB) in
response to DBM’s introduction of the Organizational Performance Indicator
Framework (OPIF) to improve the way budget is allocated, reported, and spent towards
greater accountability and transparency in the delivery of public service 22 .

0402. The APB acts as the instruction-manual for the detailed implementation of an
agency’s Programs, Activities, and Projects (PAPs), and utilization of funds for the
ensuing fiscal year. It asserts the mandate, pronounces the organizational structure, and
enumerates and describe the PAPs together with the corresponding performance
indicators, targets, schedules, results and allocated funds of the agency. As a document,
it is a key deliverable of the PA Strategic Management System (PA SMS), and is also
one of the final products of the Planning, Programming, and Budgeting System (PPBS),
which is handed over as a guidebook to the Financial Management System (FMS) for
the PA’s Budget Execution. In turn, the APB serves as the basis of the Annual
Procurement Plan (APP), the release of funds to subordinate units and offices, and the
monitoring of program execution and utilization of funds.

0403. Essentially, the APB is an agency’s Service Package or Project Management

Plan; hence, it also serves as a guide for financial and programmatic performance
evaluation. As an Activity-Based Costing (ABC) tool, it provides accurate cost
measures that help improve the PA’s programming and planning strategy. Program 1
uses this tool particularly in the allocation of its limited resources for activities that
necessitate high priority. These activities are parallel with the thrusts stated in the
Defense Planning Guide (DPG) and Program Decision Memorandum (PDM) of the
SND.

0404. Moreover, the APB considers the uncertainty of the future where the probable
failure of the budget is a possibility. Because of this, the APB is structurally developed
to become adequately flexible and adaptable to inevitable changes brought about by
policy shifts and reprioritization of activities.

0405. To ensure the holistic quality of the APB, it is crafted through the “Top-Down
and Bottom-Up Process”. This means that the required budget of a unit/office is based

22 DRMS Guidebook 2013, pp.28-28

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on its respective requirements, but is guided by higher headquarters regarding its

prioritization23 .

0406. Top-Down–Upon the issuance of the Program and Budget Development

Guidance (PBDG), PPDB, ARMO conducts the Resource Management Forum 24 to
advise HPA Offices and PA Major Units to comply with the PBDG and begin the APB
Development Process. This guidance is patterned and modified according to the
directives and limitations imposed by DBM, DND, and GHQ, AFP. It is signed by CG,
PA for the guidance and information of all concerned in the development of their
respective APB in accordance to the PA thrusts and objectives.

0407. Bottom-Up– Units shall start to prepare their respective programs and activities
with the corresponding costs or the APB. As soon as the APB is duly accomplished and
widely disseminated, it will be submitted to the concerned authorities for consolidation
and consideration. The APB proposals will eventually form part of the AFP Budget,
and of the DND Wide Budget, and eventually the President’s Budget or the NEP. In
between these activities are series of consultations that properly orchestrate the
direction of all units and offices toward the accomplishment of the thrusts set forth in
the PBDG and other pertinent documents.

0408. Generally, the echelon shall provide guidance and direction for the offices/units
to follow. On the other hand, using the guidance and directions, the units in turn, shall
determine their programs, activities and projects with corresponding costs in order to
meet the requirements of the top-level management.

APB Development Process Framework

0409. The APB Development Process is an integral part of the PA SMS. The process
hereunder develops the PA APB based on the PA PBDG and the
indicative/proposed/approved budget of the Philippine Army. The APB, in turn, shall
serve as the basis in the formulation of the APP, the release of funds to subordinate
units and offices, and the monitoring of program execution and utilization of funds.
(See Appendix B – Budget and APB Development Flowchart)

0410. The APB Development is a three-step process that is triggered by the issuance
of the PA PBDG initiated by the Office of G3, PA. The first step is the APB Preparation,
followed by the APB Deliberation at the different levels of the Program and Budget
Advisory Committees (PBACs), and finally the APB Approval by CG, PA as Resource
Manager of Program 1. In the development of APB, the critical element in the
determination of cost – requirements of PAPs is the proper and deliberate establishment
and formulation of the unit/office Project Management Procurement Plan (PPMP) that
serve as a basis of PAPs cost analysis for programming and budgeting.

23 DRMS Key Products Preparation Manual 2008, pp. 54-63; HPA Letter Directive: FY 2015 APB Development
24 HPA Letter Directive dated 01 April 2015, Annex C.

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 PAM 10 - 01

Figure 4.1 – APB/APP Link

Phase 1 – APB Preparation

0411. The APB Preparation Phase entails a four-step process wherein a workshop is
initiated to ascertain that the crafting of the APB will be deliberately done and
consultations with other staff will be made. Since the ARMO is the Office Primary
Responsible (OPR) in the formulation of the APB for Program 1, the Office conducts
the APB Preparation Seminar-Workshop/Consultation to HPA Offices and PA Major
Units (division level down to brigades and battalions) in order to capture actual
requirements and to develop an APB that is responsive to the needs of PA as a whole.

0412. A Mobile Training Team (MTT), headed by the Deputy Chief, ARMO, is
organized to conduct the APB Preparation Seminar Workshop/Consultation. Along
with the Deputy Chief, ARMO are:

a. ARMO Officers and Support Personnel

b. MFO, PA Representative

c. G1 Representative

d. G3 Representative

e. G4 Representative

f. G6 Representative

g. G8 Representative

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 PAM 10 - 01

h. AGSMO Representative

i. ASPA Representative

0413. The respective Vice-Chairmen and Secretaries of PAMU PBACs, including

their respective encoders, shall participate in these MTT-conducted seminars.

0414. The sub-phases under the APB Preparation phase are as follows:

a. Sub-Phase 1A – Determine Unit Objectives, Major PAPs, and specific PAPs.

1) The first step in the APB Preparation process/phase is the determination of
the unit/office objectives so that the major programs and specific activities to
be made will be guided by these set objectives. Thereafter, major programs and
specific activities will be identified that will contribute to the achievement of
the set unit/office objectives. 2) PAMUs/HPA Offices shall review the PA
PBDG, campaign plan of the Unified Command to which they belong (if
applicable), and their respective unit performance scorecards and IMPLAN as
inputs in order to determine their respective unit objectives.3) While the
objectives of the PAMUs are anchored on the objectives stated in the PBDG
and that of the Unified Command’s Campaign Plan (if applicable), their
respective subordinate units’ objectives are likewise anchored on theirs
(PAMUs). Particularly, the specific objectives of the PAMUs become the broad
objectives of their respective subordinate units in order to ensure alignment of
objectives.4) In identifying the major programs and specific activities of the unit
that will help achieve their set objectives, the guidance of the commander/chief
of office must be taken into account.

Broad Specific Major PAPs Suggested PAPs

Objectives Objectives (4th level PAPs) (6th level PAPs)
A.1.1
Suggested
A.1. Major
A.1.2
I. A. Suggested
Specific A.2.1
Suggested
A.2. Major
A.2.2
Suggested
I. Broad
B.1.1
Suggested
B.1. Major
B.1.2
I. B. Suggested
Specific B.2.1
Suggested
B.2. Major
B.2.2
Suggested

Figure 4.2 – Identification of PAPs and Objectives

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 PAM 10 - 01

b. Sub-Phase 1B – Establish Key Measurement Areas (KMAs) and Operational

Tempo (OPTEMPO) Baselines and Targets. 1) In determining the KMA
baselines, HPA Offices/PAMUs and their subordinate units shall review the
immediate previous year’s Operational Readiness Evaluation (OPREVAL)
reports including the current year’s APB programmed targets. These data,
together with the set minimum requirement/target per PBDG and respective unit
scorecard, shall be the basis in identifying the targets for the ensuing year. 2)
The definition for each readiness condition is patterned from the interpretation
being observed during the PPBER since the units are being evaluated by these
standards. Below are the definitions for each readiness condition 25 : (a)
Personnel Readiness– Evaluation of a unit’s personnel actually assigned based
on its Table of Organization; (b) Training Readiness – Evaluation of a unit’s
required training based on its core missions; (c) Equipment Readiness –
Evaluation of a unit’s available mission essential equipment based on its Table
of Equipment; (d) Maintenance Readiness – Evaluation of the operational status
of equipment and facilities based on the programmed resources for
maintenance; (e) Facilities Readiness – Evaluation of available facilities critical
to the attainment of assigned and designed missions based on the Table of
Organization and Equipment. 3) Meanwhile, in determining the OPTEMPO
baselines, the HPA Offices/PAMUs and their subordinate units shall review the
previous year’s accomplishment report including the current year’s APB
programmed targets. These data, along with the set minimum requirement per
campaign plan/IMPLAN, shall be the basis in identifying the targets for the
ensuing year. With this, the OPTEMPO baselines must be activity-based and
mission-driven, and are categorized into the different Mission Areas (MAs) as
defined in the Defense Planning Guidance of DND25 . Thereafter, targets will be
placed on PAPs identified in sub-phase 1A based on the identified targets above.

c. Sub-Phase 1C – Identifying the Phasing of PAPs Targets and the Costs for each
PAP. 1) Since PAPs and their corresponding targets were already determined in
the previous sub-phases, the phasing of the identified annual targets of PAPs
will now be determined. From the determined annual targets, these will now be
divided into parts and distributed by month/quarter. 2) Under this sub-phase,
the initial cost requirements or major category of expenses for each identified
PAPs shall likewise be determined. Included in the requirement determination
is the identification of the appropriate account names/codes to be used in each.
Relatedly, programming for combat expense must be in accordance with PA
Management and Fiscal Letter Number 2013-02 dated 15 March 2013, Subject:
Revised Guidelines in the Implementation of Combat Expense through the
Special Disbursing Officer (SDO). Additionally, units/offices must adhere to
HPA Letter Directive dated 30 Jul 2012, Subject: Management and Utilization
of Additional Programmable Fund (APF), and Addendum to Published Letter
Directives on the Management and Utilization of Additional Programmable
Fund (APF) dated 12 Feb 2015.

d. Sub-Phase 1D – Craft Preliminary APB. Under this sub-phase, the PAPs targets
and corresponding costs shall be refined based on the set Maintenance and Other
Operating Expenses (MOOE) limit of the PAMUs and Offices; based on the set

25 AFP SOP Nr 20 dtd 11 Aug 2014, pp. 4-5

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Personnel Services (PS) limit managed by OG1, OG3 and OG9, PA; and, based
on the set Capital Outlay (CO) limit managed by the concerned Program
Directors (normally OG4 and OG6, PA). If the targets exceed the set limits,
prioritization of PAPs will be made, setting aside the lesser priorities. The lesser
priority PAPs will form part of the unit’s/office’s unfunded requirements.

Phase 2 – APB Deliberation

0415. The APB will be deliberated at the different levels of PBAC to ascertain its
soundness that it is indeed reflective of what the unit/office needs to accomplish and
prioritize for the ensuing year. It will initially be deliberated at the subordinate units’
PBAC (battalion level). Thereafter, it will be endorsed to their respective mother units
(PAMUs) to be deliberated upon by the PAMU’s PBAC.

0416. After which, the respective APBs of PAMUs will be endorsed to HPA and will
be deliberated initially by the PBAC-WG, then by the JPBAC, and eventually by the
PA PBAC.

0417. Meanwhile, the APB of HPA Offices (both MOOE and PA-wide Activities
Fund, if applicable) will be deliberated by their respective Office PBACs, then by the
PBAC-WG, JPBAC, and PA PBAC. Likewise, concerned Office PBAC, then by the
three (3) PBACs at HPA shall also deliberate the PS and CO funds

0418. Administrative Officers of HPA Offices and Chief, MFOs of PAMUs will be
the one presenting to PBAC-WG while the Chief of Staff of PAMUs will be the one to
present their respective APBs to PA PBAC. In the case of PAWAF, it is the
responsibility of the different Program Directors to present their respective APB before
the PA PBAC. Invited resource persons during APB deliberations who are not members
of PBAC are representatives from ASPA, OAIA and OTIG, PA.

0419. Once the Initial APB and Final APB have been crafted, they will also undergo
deliberation by the three (3) PA PBACs for every adjustment made (based on NEP and
GAA, respectively).

Phase 3 – APB Approval

0420. Upon the deliberation of the APB, a communication will be initiated by the
Army Resource Management Office (ARMO) for the approval of the proposed
Philippine Army APB to the CG, PA as Resource Manager.

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Preliminary, Initial, and Final APB

HPA
TIMELINE REFERENCES
DELIVERABLE
OCT Preliminary PBDG
Resource
Year - 2 4TH Qtr. NOV Management
Forum
DEC
JAN Preliminary APB
Adjusted PBDG
1ST Qtr. FEB and Indicative
Budget Ceiling APB Preparation
MAR Seminar –
Workshop/
APR
Consultation
2ND Qtr. MAY
JUN
Year - 1 JUL National Initial APB
Expenditure
3RD Qtr. AUG Program (NEP)
SEP
OCT
NOV
4TH Qtr. Signing of General
DEC Appropriations Act
Final APB
(GAA)
JAN
Budget
1ST Qtr. FEB
Year
MAR

Table 4.1 – General Timeline of Annual Plan and Budget Process

Progression of APB
0421. Preliminary APB (based on previous year’s budget or indicative budget
ceiling). The preliminary APB of the units and offices for the ensuing year shall be
based on their respective previous year’s MOOE limit. Relatedly, a preliminary APB
should be crafted by January of Y-1, in time with the budget call for the ensuing year.
In this manner, the Command will be able to deliberately identify our budget structure
for the ensuing year, which will form part of our budget proposal to the DBM and
subsequently, to Congress. During the six (6) month APB Preparation Seminar, further
refinement of the consolidated APB will be done by PPDB, ARMO in close conjunction
with BDB, ARMO and DBM to be able to adjust the APB accordingly in case of any
budget changes.

0422. Initial APB (based on NEP). Upon submission of the President's Budget or
NEP to Congress, an adjusted MOOE limit of PA units and offices will be published
by this Headquarters, and another APB of PAMUs and HPA Offices will be submitted.
Since the President’s Budget is customarily presented to congress in July of Y-1, the

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initial APB of the different units/offices should be consolidated at HPA in August of

Y-1.

0423. Final APB (based on GAA). Once the GAB is enacted into law and becomes
a General Appropriations Act (GAA), the Initial APB will be reviewed and if there are
changes, adjustments will be made followed by the deliberation of the PBAC at the
different levels then finally, the approval of CG, PA. With this, the Final APB will be
published and submitted to DND a week after the signing of GAA.

Classes/Categories of APB
0424. APB for Appropriated Funds. The operating program of the units/offices that
contains PAPs supported by the appropriated funds.

a. APB for MOOE. The operating program of the units/offices that contains PAPs
that is supported by the basic MOOE funds with Additional Programmable
Funds (APF), including PA-wide Activities Fund (PAWAF) and the Specific
Purpose Funds (SPF) being managed by the different Program Director.

b. APB for PS. The operating program of the Army that contains PAPs that is
supported by the PS funds managed by OG1, OG3 and OG9, PA.

c. APB for CO. The operating program of the Army that contains PAPs that is
supported by the CO funds managed by the concerned program directors
(normally OG4 and OG6, PA).

0425. APB for Non-Appropriated Funds. The operating program of the units/offices
that contains PAPs that is supported by funds other than appropriated. Its programming
is based on the projected collections of units/offices.

ARMO Management Information System (ARMO MIS)

0426. The ARMO MIS is one of the tools used for the PA APB development process.
It is a cloud based application that is designed to provide accurate and reliable data
relative to planning, programming, and budgeting system in the Philippine Army to
support the accomplishment of its objectives and thrusts. It is a web–based program
that captures the specific PAPs of PA Major Units down to its organic brigades and
battalions and systemizes programming with HPA thereby delivering easier and faster
budget consolidation, faster budget reporting and analysis, quicker generation of
reporting requirements, and enhanced control of ARMO records.26

26 HPA STL dated 28 September 2015;

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Figure 4.3 – Flow of ARMOMIS in the Philippine Army

Figure 4.4 – Sample Report Generated from ARMOMIS

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Chapter V
Resource Allocation - Implementation
“Only those who are ideologically opposed to military programs
think of the defense budget as the first and best place to get resources for
social welfare needs”.
Herman Kahn

The Comprehensive Army Resource Management System

and the Authority to Release Funds
0501. The institution of the Comprehensive Army Financial Resource Management
of all Appropriated and Non-Appropriated Funds (NAF) aims to promote the efficient
and effective resource management in the Philippine Army. In this system, the release
and implementation of the said funds shall be subject to the General Appropriations Act
(GAA) provisions, DBM National Budget Circulars (NBCs), Government Procurement
Law, Government Accounting and Auditing Rules and Regulations, other specific laws
governing such funds.

a. Appropriated Funds (Regular appropriations) – all funds defined under the

General Appropriations Act (GAA) that are directly appropriated and allotted
to the Philippine Army.

b. NAF and Other Sources of Funds – all funds not appropriated directly to PA,
Income derived from generating assets and income producing activities (Trust
Receipts), Special Purpose Funds established and governed by specific laws for
a specific purpose (AFPMTF, BCDA Funds, etc.), Donations, and Inter-Agency
Transferred Funds (IATF), and Official Development Assistance (ODA) both
local and foreign.

0502. Government funds shall be utilized in accordance with the appropriations

authorized for the purpose. Any use of savings, realignment of funds within expenditure
class and/or from one (1) expenditure class to another for payment of deficiencies shall
comply with the applicable laws, rules and regulations as provided.

0503. The Program and Budget Advisory Committees shall deliberate the
management, administration, policies, programming and utilization of both
Appropriated and NAF prior to the approval of CG, PA 27 , except those that are
sanctioned by specific governing boards and councils.

0504. All unit/office plans and programs within a six (6) - year horizon to increase
military capability that require funding shall be communicated to OG5 duly endorsed
by concerned Program Director that fall within their purview for inclusion in the
Program Objective Memorandum (POM), subject to PBAC deliberation for evaluation
and prioritization. Said requirements can either be included in the budget proposal of
ARMO to DBM for regular appropriation and/or to GHQ/DND through the AFP

27 HPA SOP Nr 02 dated 25 January 2016

41
 PAM 10 - 01

Modernization Trust Fund or other special fund releases. Concerned unit/office who
owns the proposal shall come up with a prepared comprehensive concept and study,
including funding requirements, timelines, and rationale to justify such proposal.

0505. All funds shall be programmed in the unit/office APB based on the Program and
Budget Development Guidance (PBDG) provided for by Headquarters Philippine
Army (HPA) and shall be executed based on government procurement law for the
approval of CG, PA. All financial transactions shall be subject to existing Government
Accounting and Auditing Rules and Regulations, Government Procurement Law, and
submission of pertinent reportorial requirements.

0506. All Units/Offices shall ensure at least five percent (5%) programming of GAD
PAPs in their unit/office GAD Plans and Budget/APB, either directly or through
attributions in compliance to law 28 . The monitoring of utilization of such allocated
funds for the purpose and the submission of the required reports shall be the
responsibility of OAGAD.

0507. All concerned Units/Offices shall ensure programming of PAPs for Disabled
Persons and Elderly in their APB as required by law, and in coordination with
concerned Program Directors 29 . Monitoring of implementation and reporting of these
PAPs shall be the responsibility of OG1.

0508. All requests for additional funds from subordinate units must be properly
endorsed in writing by the PA Major Unit Commander/Chief of Office and shall be
coursed through the cognizant staff/program director for endorsement depending on the
identity of the particular requirements requested chargeable against the funds managed
by the concerned Program Director. This shall then be coursed through ARMO for
PBAC evaluation and concurrence of C, ARMO prior to approval depending on the
level of CG, PA’s delegated approving/signing authority, except in cases that need CG,
PA attention. Once approved, concerned staff shall initiate the request for release of
such funds to ARMO.

0509. The release of additional funds shall require the issuance of an Authority to
Release Funds (ATRF) from ARMO based on the duly approved SDF with notated
ATRF request. This shall then be the basis of MFO for the issuance of its corresponding
Advice of Sub-Allotment (ASA) or fund transfers. Reconciliation of records may be
done between the two offices for recording, monitoring, and reprogramming purposes
only.

0510. For Programs/Projects of the Command funded out of appropriations that will
pass through the procurement process for advanced bidding, ARMO shall issue a
Certificate of Availability of Funds (CAF) to concerned Program Director/PAMU
Commander as the basis in initiating and preparing all the pertinent pre-procurement
documents i.e. SAPP/PPMP, Engineering Plans and Architectural Designs for
Infrastructure Project, Technical Specification for Equipment Projects, etc. for CG,
PA’s approval. At PAMU level, the PAMU MFO issues the Certificate of Fund
Chargeability (CFC) to the Project Administrator once the source of funds has been

28 PA Letter Directive No. 02 dtd 09 Jul 2014; PA Letter Directive No. 05 dtd 27 Aug 2014
29 PA Letter Directive No. 08 dtd 18 Nov 2014.

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 PAM 10 - 01

identified and established 30 . Once approved, ARMO shall issue the ARTF to MFO for
the issuance of ASA to concerned PAMU Commander as the basis in undertaking the
actual procurement.

0511. For Programs/Projects funded out of Trust Receipts Funds, ASPA shall issue
the CAF to concerned Program Director/Unit/Office managing such funds as the basis
in initiating and preparing documents for releases and utilization. 31 Once approved by
the CG, PA, ARMO shall issue the ATRF to MFO for the issuance of ASA to concerned
Program Director/Unit/Office as the basis in undertaking the actual procurement.

0512. For Programs/Projects funded out of Inter-Agency Transferred Funds (IATF),

MFO, PA shall issue the ASA to the PAMU Commander and the MFO, PAMU in turn,
shall issue the Notice of Fund Allocation (NFA) to concerned Project Administrator for
implementation.

0513. All NAF and other sources of funds received in the form of Allotment Advice
(AA) shall be recorded and monitored by ARMO copy furnished CG, PA for his
perusal. Utilization of such fund shall be through ATRF issued by ARMO and
subsequent issuance of ASA by MFO for purposes of which the funds was received.
All other funds received, booked and recorded by the Army shall be released and
utilized based on specific laws, policies, rules and regulations that govern it.

0514. Requests for supplemental budget and other financial concerns within or outside
of the Army shall be initiated by the concerned Program Director subject for review
and evaluation by the PBAC, then for concurrence of C, ARMO and C, MFO for
approval of CG, PA.

Stages of Fund Releases (Appropriations)

0515. Personnel Services (PS) Funds. All fund releases for various PS programs
shall be based and governed by applicable laws and duly approved policies.

a. Military and Civilian Personnel. The programming, management,

administration, and utilization of PS funds are initiated by OG1. The PBAC
deliberates the programming and utilization, with OG1 as Secretariat prior to
the approval of CG, PA. All requests for various payments and claims are
endorsed by OG1 with concurrence of C, MFO and C, ARMO prior to approval,
depending on the level of CG, PA’s delegated approving/signing authority with
the attached ATRF request for notation. Once approved, ARMO issues the
ATRF to MFO for subsequent issuance of ASA to implementing unit.

b. CAFGU Active Auxiliary (CAA). The programming, management,

administration, and utilization of PS funds are initiated by OG3. The PBAC
deliberates the programming and utilization, with OG3 as Secretariat prior to
the approval of CG, PA. All requests for various payments and claims are
endorsed by OG3 with concurrence of C, MFO and C, ARMO prior to approval
depending on the level of CG, PA’s delegated approving/signing authority with

30 AFP MF Letter 2006-07 dated 07 September 2006;

31 AFP MF Letter 2012-09 dated 25 October 2012;

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 PAM 10 - 01

the attached ATRF request for notation. Once approved, ARMO issues the
ATRF to MFO for subsequent issuance of ASA to implementing PAMU.

c. Reservists Personnel. The programming, management, administration, and

utilization of PS funds are initiated by OG9. The PBAC deliberates the
programming and utilization, with OG9 as Secretariat prior to the approval of
CG, PA. All requests for various payments and claims are endorsed by OG9
with concurrence of C, MFO and C, ARMO prior to approval depending on the
level of CG, PA’s delegated approving/signing authority with the attached
ATRF request for notation. Once approved, ARMO issues the ATRF to MFO
for subsequent issuance of ASA to implementing PAMU.

0516. Maintenance and Other Operating Expenses (MOOE). All releases and
utilizations of MOOE funds shall be based on the approved Annual Plan and Budget
(APB) and Annual Procurement Plan (APP). As a matter of financial resource and
logistics policy, “no APB means no release of funds” and “no APP means no
procurement”. 32

a. Mandatory Expenditures. The amount programmed for Petroleum, Oil and

Lubricants (POL) as well as water, illumination and power services, telephone
and other communication services, and rent requirements is disbursed
exclusively for such items of expenditure, provided that any available allotment
from these items after accounting the Philippine Army’s full year requirements
may be realigned only in the last quarter and subject to the provisions of
applicable laws. Funds for these purposes are managed by OG4 and OG6. All
requests for utilization are endorsed by OG4/OG6 with concurrence of C, MFO
and C, ARMO prior to approval depending on the level of CG, PA’s delegated
approving/signing authority. Once approved, OG4/OG6 requests for the release
of funds to ARMO for the issuance of ATRF and subsequent issuance of ASA
by MFO.

b. Unit/Office Basic MOOE. The release of Unit MOOE is initiated by ARMO

based on the approved unit APB and MOOE ceiling every quarter through the
issuance of the ATRF to MFO for issuance of ASA to concerned units.
Utilization of unit MOOE is based on their approved and published APB subject
to Accounting and Auditing requirements, and Government Procurement Law,
and other approved applicable HPA policy and guidance.

c. Additional Programmable Fund (APF). To address the fund requirements of

different PAMUs during operational exigencies, APF is allotted to PAMUs to
give Commanders the ability to provide additional support to subordinate units
tasked to undertake activities in focus areas or acting as main efforts of the
administrative and operational thrusts of the units. 33

d. Specific Purpose Funds (SPF). To address specific, administrative, logistical,

and operational requirements of the different units/offices based on command
priority thrusts and objectives, operational exigencies, for focused military
operations, and as determined by the CG, PA, the SPF forms part of the MOOE

32 HPA Letter Directive dated 01 April 2015,

33 HPA Letter Directives dated 30 July 2012 and 12 February 2015;

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ceiling of units/offices or inclusion in the formulation of their respective APB.

The programming of the SPF shall be initiated and determined by the concerned
Program Director before the PBAC and form part of the SPF lists for the
approval of the CG, PA.34

Table 5.1 – Sample of Specific Purpose Fund (SPF)

Program Needing POE Not Needing POE
Director PAPs Cost PAPs Cost
Repair of Band And Medical Support to
OG1 Combo Facilities-Div 150,000.00 Students Of 1,000,000.00
Hqs TRADOC
Maintenance of
OG2 2,000,000.00
IMINT
TOC Sustainment
for Infantry
OG3 1,000,000.00
Divisions @
100/Divs
Payment of 280,160,092.0
OG4 Repair & Utilities 41,880,015.39
Electricity 0
Cable Facility
OG6 10,500,000.00 300,000.00
Enhancement Web Hosting
Sustainment of
Philippine
OG7 268,000.00 Division Press 500,000.00
Independence Day
Corps
Officer Candidate Coy Sustainment
OG8 5,390,000.00
Course 4,000,000.00 Training
ROTC Centralized
OG9 150,000.00
RAATI
Monthly Programs
AGSMO 1,620,000.00
Review
GAD Summit ICOW
OAGAD Women’s Month 1,285,875.00
Celebration

e. PA - Wide Activity Fund (PAWAF). The programming of PAWAF is initiated

by the concerned Program Director before PBAC deliberation and shall be
included in their respective APB. All requests for release and utilization of
PAWAF are initiated by the concerned Program Director through Summary
Disposition Forms chargeable to their respective PAWAF as programmed,
including the attached ATRF request for notation with concurrence of C, MFO
and C, ARMO prior to approval depending on the level of CG, PA’s delegated
approving/signing authority. Once approved, ARMO issues the ATRF to MFO
for subsequent issuance of ASA to implementing unit.

34 HPA Letter Directive dated 27 October 2015

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Table 5.2 – Fund Release Flowchart for PAMUs – Basic MOOE and APF
Unit Basic MOOE & APF
ACTIVITIES Subordinate PAMUs MFO,
ARMO CG, PA
Units HQs PA

1. Formulate respective APB

2. Consolidate APBs

3.Approval of APBs

4.Issue ATRF

5.Release ASA to PAMUs MFO

6.MFOs to Issue NFA to

Subordinate Units SDOs

7.Undertake the PAPs

Table 5.3 – Fund Release Flowchart for PA – Wide Funds and SPF
PAWAF & SPF
Requesting
CTIVITIES Program MFO,
Unit/Office ARMO CG, PA
Directors PA

1.Prepare and submit POE (if

necessary) to cognizant staff

2.Endorse requests for

concurrence

3.Concur

4.Approve

5.Furnish copy of approved

request/Request for Issuance of
ATRF

6.Issue ATRF

7.Release ASA to unit

8.Undertake project

0517. Capital Outlay (CO). The release of funds is initiated by the concerned
Program Director who has ownership of the CO Projects with the concurrence of C,
ARMO and C, MFO for approval of CG, PA with the attached ATRF request for
notation. Once approved, ARMO issues the ATRF to MFO for subsequent issuance of
ASA to concerned Program Administrator to undertake the project.

0518. Other Releases for Specific Projects/For Later Releases/Special Releases .

Requests for Special Allotment Release Order (SARO) to DBM are initiated by MFO,
in coordination with the concerned Program Director for the preparation of pertinent
documentary requirements, while furnishing a copy for ARMO. Once the SARO is
available, the release of funds is initiated by the concerned Program Director depending
on the nature of the Programs/Projects with the concurrence of C, ARMO and C, MFO

46
 PAM 10 - 01

for approval of CG, PA with the attached ATRF request for notation. Once approved,
ARMO issues the ATRF to MFO for subsequent issuance of ASA to concerned
Program Administrator for implementation. The utilization of funds shall be based on
the purpose of appropriation as stated in the GAA.

Stages of Fund Releases (NAF and Other Sources)

0519. AFP Modernization Act Trust Fund (AFPMATF). All projects and activities
for recommendation to Higher Headquarters, which are to be funded out of the Revised
AFP Modernization Act Trust Fund (AFPMATF) shall be identified and established by
the Technical Working Group (TWG) on Capability, Materiel and Technology
Development, to be presented to Conference Group “C” by OG5, and for subsequent
approval of CG, PA. The project lists will be presented by CG, PA to SND during the
conduct of Senior Leaders Roundtable Discussions, which will then be endorsed for
approval of the President of the Republic of the Philippines. The approved project lists
shall then be provided to OG4 for the Defense Acquisition System (DAS) process
through the DAS Teams for PA Project at the Defense Acquisition Office of DND.
OG4 shall be responsible in providing OG5, ARMO, and MFO the quarterly status of
PA Projects with their corresponding Approved Budget for the Contract (ABC) and
updated status of procurement/acquisition for monitoring and recording consolidation
purposes.

0520. BCDA R/R Fund. All projects and activities to be funded out of BCDA R/R
Fund shall be identified and evaluated by BCDA R/R Board and endorsed by OG4 for
further endorsement of CG, PA to CSAFP for approval. OG4, as Program Director, is
responsible for the release, utilization, implementation, management, administration,
and monitoring of all BCDA Funds and Projects in the Philippine Army. Release and
utilization of BCDA RR funds is initiated by OG4, with concurrence of C, MFO and
C, ARMO for approval of the CG, PA.

0521. Philippine Defense Reform (PDR) Funds. All projects under PDR Funds shall
be endorsed by the concerned staff, which in turn shall request for its release and
utilization thru ARMO. Concerned staff shall be responsible in providing ARMO thru
OG5, the quarterly status of said funds and projects for monitoring purposes.

0522. Official Defense Assistance (ODA)/Foreign Military Financing (FMF)

Funds. All projects and activities to be funded out of ODA/FMF i.e. Foreign Military
Sales (FMS), Military Assistance Program (MAP), Excess Defense Article (EDA), etc.
shall be determined by OG4, with the concurrence of OG5 and ARMO, in order to
synchronize materiel acquisition for the entire PA.

0523. Inter-Agency Transferred Fund (IATF). All IATF in the form of Cash/Check
from source agency shall be collected and deposited by designated Collecting Officer
of FCPA/FSFO to Authorized Government Depository Bank (AGDB) and furnish
ASPA/FAU a copy of deposits for booking, and ARMO for recording and monitoring.
IATF in the form of Allotment Advice (AA) from MFOs of other KBUs of DND/AFP
shall be received by MFO, PA. IATF in the form of bank transfers shall be the
responsibility of FCPA/FSFO and shall furnish ARMO and ASPA a copy of the
transaction for booking, recording and monitoring purposes. Likewise, all units with
IATF remittances shall prepare requests for the utilization to be endorsed by the

47
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concerned Program Director, with the concurrence of C, ARMO and C, MFO for
approval of CG, PA with the attached ATRF request for notation. Once approved,
ARMO shall issue the ATRF to MFO for issuance of NFA to concerned PAMU
Commander for implementation. 35

0524. Title X Reimbursement or Developing Countries Combined Exercise

Program (DCCEP) and other Bilateral Exercises Funds. All projects and activities
to be funded out of Title X Fund, such as US Bilateral Exercises, and other Bilateral
Exercises Funds with other countries, shall be identified, evaluated and endorsed by the
concerned staff, while the request for fund release and utilization shall be prepared by
OG8 with the concurrence of C, MFO and C, ARMO.36

0525. UN Reimbursable Fund (UNRF). All projects and activities to be funded out
of UNRF shall be identified, evaluated, and endorsed by the concerned staff. Likewise,
all requests for its release and utilization shall be prepared by OG3 with the concurrence
of C, ARMO.37

0526. 72-100 Reimbursable Fund (RF). OG4 shall be directly responsible in

supervising and monitoring the operations of 72-100 RF Unit. Likewise, OG4 will
provide ARMO the quarterly list of stock status and procurement activities for
monitoring purposes.

0527. Trust Receipts (TR). All requests for the utilization of TR shall be prepared by
the units with TR remittances to be endorsed by the concerned functional staff
overseeing such TR Collection. OG4 endorses the same for the purpose of facilitating
the review of their Supplemental Procurement Plan (SPP) intended for the request for
fund utilization, with the concurrence of C, MFO and C, ARMO for CG, PA’s approval.
38

0528. Trust Liabilities (TL). Utilization of funds generated from the Trust Liabilities
shall be prepared by the units with TL remittances to be endorsed by the concerned
PAMU Commander to HPA, with the further endorsement of OG4 and duly concurred
by C, MFO and C, ARMO for CG, PA’s approval.

0529. PA Provident Fund. Collections and deposits of service fees from financial
institutions is the responsibility of the Collecting Officer, FCPA/FSFOs, copy furnished
ASPA/FAUs for booking and recording. Administration, management, and utilization
of all provident funds shall be the responsibility of the PA Provident Fund Board. 39

0530. PA Housing Fund. Collection and deposit of quarter allowances and RSBS
housing fees share/Retention Fees from different PAMUs with on-base housing is the
responsibility of the Collecting Officer, FCPA/FSFOs, copy furnished ASPA/FAUs for
booking and recording. Administration, management, and utilization of all PA Housing
Funds shall be the responsibility of the PA Housing Board. 40

35 AFP MF Letter Directive No. 2005-12 dated 12 July 2005.

36 AFP MF Letter Directive No. 2011 – 08 dated 03 Oct 2011.
37 HPA Letter Directive dated 22 Jun 2009.
38 AFP MF Letter Directive No. 2012 – 09 dated 25 Oct 2012.
39 HPA SOP No. 12 dated 22 Oct 2012.
40
HPA MF Letter Directive No. 2013 – 01 dated 11 Mar 2013.

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Table 5.4 – Fund Release Flowchart for Trust Receipt

HPA
Requesting
ACTIVITIES OG4, MFO, CG, OJ4,
Unit/Office ASPA ARMO CSAFP
PA PA PA GHQ

1.Issue certification from

BTr on Availability of
Funds

2.Prepare and submit

request for utilization of
TR/transmittal letter for
approval of CG, PA

3. Review and Evaluate

4.Evaluate and recommend

Approval of CG, PA

5.Evaluate POE, confirm

availability of fund and
recommend approval of
CG, PA

6.Sign/approve letter for

CSAFP

7.Process for approval of

SDF

8.Approve POE

9.Transmit the approved

POE to requesting unit &
MFO for NCA processing,
request ATRF from ARMO

10.Issue ATRF to Units

11.Prepare SDF to CG, PA

to DBM thru SND for
issuance of NCA
12.Issue AA to
implementing units

13.Implement procurement

0531. PA and PAMU Golf Courses/Officer Clubhouses/Transient Facilities.

Collections and deposits of fees and charges from operations of these facilities shall be
the responsibility of the designated Collecting Officer. Administration, management,
and utilization of all funds under this shall be the responsibility of the respective
governing council for approval of the CG, PA. Collections and deposits of rental fees
from concessionaires and other miscellaneous revenues from these facilities shall be
the responsibility of the Collecting Officer, FCPA/FSFOs, copy furnished ASPA/FAUs
for booking and recording, and shall be treated as trust receipts. Administration,
management, and utilization of said funds shall be based on the trust receipt policy.

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 PAM 10 - 01

0532. Donations. All requests and acceptance of donations by PA units shall be

coursed through OG4 for board deliberation and resolution to screen and/or conduct an
inquiry on the legality, suitability, and acceptability of the donation for CG, PA’s
approval. 41

0533. The utilization of all other funds not mentioned above which needs the approval
of the CG, PA shall be coursed thru the CS, PA and VC, PA with the concurrence of C,
MFO and C, ARMO.

41 HPA SOP No. 11 dated 15 Aug 2011.

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Chapter VI
Resource Monitoring, Analysis, and Evaluation
“The lesson of history is that you do not get a sustained economic
recovery as long as the financial system is in crisis”.
Ben Bernanke

0601. As a background, It has been observed that during the 4 th quarter of each year,
PA Program Directors incur unreleased balances from 1 st to 3rd quarter of their approved
PA-Wide Activity Funds (PAWAF), and other Sources of Funds (i.e. Inter-Agency
Transferred Funds, etc.) for various reasons. Said balances add up to the releases of
funds for the 4th quarter of the current year. Likewise, accumulated available trust
receipt funds in our accounting records, which are substantial enough to be used for
capital equipment requirements of the Army, are also not being utilized immediately.
As a result, unutilized trust receipt funds and slow obligations and disbursement of PA
appropriated funds leading to the reversions of unused cash allocations for the period
affect the Army’s position in leveraging for additional funds for the PA budget.

0602. During the 4th quarter of the year releases, obligations and disbursements are at
its peak considering the huge requirements for Personnel Services and other mandatory
programs. Thus, the releases and obligations of accrued balances from the 1 st to 3rd
quarter or the 4th quarter may cause problems on the availability of cash allocations for
the period considering the imposed ceiling and validity of the DBM issued Notices of
Cash Allocation (NCA). Not following the timeline of PAPs implementation may result
to the reversion of unused cash allocation for the period covered. Moreover, late
reprogramming of accrued balances may lead to the implementation of less relevant
Programs/Activities/Projects (P/A/Ps) in the 4 th quarter to avoid the reversion of
unobligated balances to the general funds. Furthermore, low obligation and
disbursement within the period as programmed reflects inefficiency and ineffectiveness
of the Army in the management and utilization of its available resources. Thus, it also
affects our position in leveraging for funds from DBM.

0603. Programs and their corresponding budgets are regularly reviewed vis-à-vis the
approved Annual Plan and Budget (APB) through: the management audits by the Office
of the Army Internal Auditor (OAIA); Annual General Inspections (AGIs) of the Office
of the Inspector General, PA; and the Program Performance and Budget Execution
Reviews (PPBER) and submission of the Budget and Financial Accountability Reports
(BFARs) by the Management and Fiscal Office, PA (MFO, PA) to the Department of
National Defense (DND).

0604. The Army Internal Auditor, as a personal staff of CG, PA, is responsible on
matters pertaining to an independent and efficient internal control in support to the
Philippine Army mission. It prepares the following reports on resource monitoring:
terminal audit reports which apprise incoming commanders on the status of resources
to be received; resource management audit reports which determine how a unit manages
its resources to accomplish its mission and functions; compliance audit reports which
ascertain and validate the compliances of a unit on previous audit recommendations;

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and finally, system audit reports which ascertain whether the systems and procedures
being implemented are responsive and cost effective.

0605. Inspection, being one of the basic duties and responsibilities of the CG, PA
entails the CG, PA employing an Inspector General in order for him to know firsthand
information on the factual situation in the ground, the state of discipline, morale and
welfare of personnel, and the overall operational capability of his Command to achieve
the given mission. To systematize information being observed and detailed for the CG,
PA, the Inspector General, PA conducts general and special inspections 42 . On financial
matters, the paramount interest of the Inspector is whether the financial resources
utilized are where it is intended, if there is transparent record, and if all stakeholders
are well aware of its usage.

0606. It is during the crafting of the PPBER that the Army Resource Management
Office (ARMO) provides valuable inputs to determine the significance of the level of
accomplishments towards the attainments initially of the Major Final Outputs and then
of the Capability Development achieved, Mission-Area Readiness Level established,
and Defense Services provided. Essentially, the PPBER provides a periodic status of
program and budget execution that allows management to channel appropriate
resources in support of priority PAPs.

0607. To promote a more judicious programming, responsive implementation of

P/A/Ps, and well-focused supervision on the part of the Program Directors in the
administration, management and utilization of PAWAFs, SPF, TR Funds and Other
Funds, it is crucial for ARMO to conduct periodic review, evaluation, monitoring and
reporting of all PA funds.

Table 6.1 – Reporting Format for PAWAF

42 AIG Manual (PAM1-0055): Chapter 1, Sec. 3

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Table 6.2 – Reporting Format for SPF-Not Needing POE

Table 6.3 – Reporting Format for SPF-Needing POE

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 PAM 10 - 01

Table 6.4 – Reporting Format for NAF

0608. Review and Evaluation. All Program Directors, through their respective
Budget/Fiscal Officer, shall review the implementation of their respective PAPs for the
current quarter and determine the issues and concerns that affect implementation as
programmed. They should also evaluate the current quarterly PAPs based on released
and unreleased funds, as well as PAPs for implementation in the succeeding quarter,
whether said PAPs should be retained and still valid for implementation or may be
programmed to new/unfunded priority PAPs. They will also recommend appropriate
measures for the Command to improve efficiency, effectiveness, and responsiveness in
the management and utilization of PA funds. They shall submit to ARMO an updated
quarterly status of their respective funds for review, evaluation, monitoring, and
reporting.

0609. Should there be eventual program changes from the approved APB during
execution, it should be communicated to HPA (through ARMO) accompanied with the
required justification for review and evaluation prior to the necessary approval of CG,
PA.

0610. Any program change in the major PAPs (4th level in the hierarchy of PAPs) and
amendment of Sub-Major Account Group of the Revised Chart of Accounts
(RCA)/Account Code used in the APB must be requested and justified in writing by the
concerned PAMU Commander/HPA Chief of Office to C, ARMO the approval
depending on the level of CG, PA’s delegated approving/signing authority of CG, PA.
At no instance shall MFO provide releases to requesting units/offices without the
concurrence of ARMO. For PAMU activities supported through PAWAF, request for
amendment of account code or change in purpose must be coursed through the
concerned Program Director for their appropriate action. On the other hand, changes in
PAPs of unit/office within their respective APB, after the 4 th level PAPs (i.e., 5th , 6th /,
and suggested/7th level PAPs) must be justified by the requesting unit for review and

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evaluation of the PAMU/HPA Office level PBAC before approval of the PAMU

Commanders & HPA Chiefs of Offices at their level. 43

Figure 6.1 – Request for Program Change

0611. Moreover, amendment of account codes and purpose will likewise be

communicated to HPA with the necessary justification, but will be approved on the
level of C, ARMO.

0612. All requests for utilization of resources that entail withdrawal of previous ASA
and require release of new ASA, in part or as a whole, shall be prepared by the
requesting unit or office and submit the same directly to C, ARMO, except when the
management of said fund requires concurrence of concerned Staff as Program Director.
C, ARMO shall then communicate to C, MFO said request for the withdrawal and
reissuance of the new ASA.

0613. Budget/Fiscal Officers shall do review and evaluation through oral presentation
to the PBAC-WG every last week of the current quarter, which would then be presented
to JPBAC and to the PA PBAC for final deliberation.

0614. For financial resources being managed by existing Boards and other Boards to
be created later within the Philippine Army, C, ARMO or his duly authorized
representative as financial adviser shall be a member with voting power in the said
Board/Council.

0615. All Project Administrators implementing various Programs/Projects of the

Command shall provide the concerned Program Director an updated status for the
purpose of evaluation and monitoring.

43 HPA Letter Directive dated 16 September 2015;

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0616. Monitoring and Reporting. After PBAC deliberation, all Program Directors,
through their respective Budget/Fiscal Officer, shall submit to ARMO reconciled
released and unreleased funds vis-à-vis approved APB in order to expedite releases and
implementation of PAPs. They shall facilitate the immediate release of funds for PAPs
to be implemented and the reprogramming of funds of justified un-implementable PAPs
to support unfunded high impact requirements of the Command.

0617. Monitoring and reporting shall be done through oral presentation by

Budget/Fiscal Officers to the PBAC-WG every last week of the current quarter
regarding the status of released and unreleased funds, as well as provide
recommendations to fast track implementation of the succeeding quarter. A written
report shall be submitted to ARMO every last week of the current quarter in review
using the prescribed format for the consolidation of reports for CG, PA’s perusal. 44

0618. For recording and monitoring purposes, the designated Collecting Officer of
FCPA/FSFO shall furnish ARMO a copy of all IATF in the form of Cash/Check
deposits to Authorized Government Depository Bank (AGDB); MFO, PA shall furnish
ARMO a copy of all IATF in the form of Allotment Advice (AA) from MFOs of other
KBUs of DND; FCPA/FSFO shall furnish ARMO a copy of the transactions of all IATF
in the form of bank transfers.

0619. MFO, PA shall also provide ARMO a copy of releases of all CG, PA-approved
requests for Change of PAPs, and utilization of resources that entail withdrawal of
previous ASA and require release of new ASA, in part or as a whole, for recording and
monitoring purpose. 45 Reconciliation of records may be done between the two offices
for recording, monitoring, and re - programming purposes only.45

0620. ASPA, through MFO, PA shall furnish ARMO a copy of all official Budget and
Financial Accountability Reports (BFARs) submitted to DND/DBM and other reports
required, generated, and prepared for the purpose of monitoring and reference.

0621. All NAF and other sources of funds received in the form of Allotment Advice
(AA) shall be recorded and monitored by ARMO copy furnished CG, PA for his
perusal, while Collecting Officers of FCPA/FSFOs will always furnish ASPA/FAUs of
their collections for booking and recording.

0622. OG4 shall be responsible in providing OG5, ARMO, and MFO the quarterly
status of PA Projects funded out of the AFP Modernization Act Trust Fund, with their
corresponding Approved Budget for the Contract (ABC) and updated status of
procurement/acquisition for monitoring and recording consolidation purposes.

44 HPA STL dated 11 December 2015;

45 HPA STL dated 4 March 2016

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Appendix A – Budget and APB Development Timeline

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Appendix A – Budget and APB Development Timeline

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Appendix A – Budget and APB Development Timeline

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Appendix B – Budget and APB Development Flowchart

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Appendix B – Budget and APB Development Flowchart

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Appendix B – Budget and APB Development Flowchart

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Appendix B – Budget and APB Development Flowchart

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Appendix C – Authority to Release Fund (ATRF) Format

Convention in designating ATR control number:

A B C D E
_ _ _ _ - _ A_ - _ _ _ _ - _ _ _ _- _ _ _ _
A – Year

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B – Month
C – Program Directors/Office/Units (OG1-OG9, HPA Offices, PAMUs/Sub-
Units)
D – Fund Type (PSPER, PSCAA, PSRRA, MOOE, CO, PAWF, Mandatories,
BCDA, AFPMTF, PATRF, IATF, Donation, DNDQRF, Program 2-4MFO,
Special Releases, etc.)
E – Sequence of ATR number within fund type

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Appendix D – SPF Programming and Implementation

HPA Office/PAMU Concerned Program Director ARMO CG

Step 1 (Before end of Step 2 (Before end of May Y-1) Step 3 (June FY-1) Step 4 (June
March FY-1) FY-1)
- Determine PAPs that are regularly - Deliberate, through
- Submits Unfunded provided to HPA Offices/PAMUs to form PBAC, the lists of SPF - Approves the
Priority Requirements part of the primary SPF Lists (includes - Recommend approval of lists of SPF for
(PPMP based) APP/PPMP) lists of SPF implementation
- Evaluates and determines Unfunded PAPs
of HPA Offices/PAMUs for inclusion in the
SPF lists.
- Categorize the SPF lists as “Needing
POE” or “Not Needing POE”
- Set timeline of implementation of the SPF
lists
Step 5 (June FY-1)

- Provides Program
Directors copy of the
approved SPFLists
Step 6 (Before end of June FY-1)

- Include approved SPF PAPs lists in the funds ceiling during the
development of APB

Procedure of Implementation (Not Needing POE)

Concerned Program Approving Authority
PAMU/HPA Office ARMO MFO
Director (CG, VC, CS)
Step 1 Step 2 Step 3

- Validates the - Concur - Approves the Release

Request in the APB of Funds depending on
- Recommend for the the delegated level of
semestral release of approving authority
consolidated SPF, - Notation on the ATRF
including ATRF for
notation
Step 4

- Releases the
Funds (ASA)
Step 5 Step 6

- Implements PAPs - Evaluates the FUR, if

- Submits After PAPs necessary
Implementation - Maintains database
Report and FUR, if
necessary

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Appendix D – SPF Programming and Implementation

Procedure of Implementation (Needing POE)

Concerned Program Approving Authority
PAMU/HPA Office MFO ARMO
Director (CG, VC, CS)
Step 1 Step 2 Step 3 Step 4 Step 5

- Requests for the - Evaluates the Request - Fiscalizes - Validates the - Approves the Release
release of Funds - Recommends for the the POE Request in the of Funds depending on
- Includes POE Release of Funds - Endorses APB the delegated level of
- Attached Request for the request - Endorses the approving authority
ATRF request - Notation on the ATRF
Step 6

- Issue ATRF
Step 7

- Releases
the Funds
(ASA)
Step 8 Step 9

- Implements PAPs - Evaluates the FUR

- Submits After PAPs - Maintains database
Implementation
Report and FUR

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Appendix E – Review, Evaluation, Monitoring and Reporting of Funds Table

Formats

Office of the Assistant Chief of Staff for Personnel (OG1)

(Program Director)

Status of Appropriated Funds

(as of 30 September 2015)

Allocation Releases Balances

Period Remarks
PAWAF SPF PAWAF SPF PAWAF SPF
1st Quarter 61,234,358.10 59,482,456.42 1,751,901.68
2nd Quarter 64,376,337.30 35,093,187.62 29,283,149.68
3rd Quarter 31,277,886.55 30,219,814.18 1,058,072.37
4th Quarter 44,523,241.89 22,905,572.66 21,617,669.23
Total 201,411,823.84 - 147,701,030.88 - 53,710,792.96 -

Prepared by: Noted by:

(Budget Officer) (Chief of Office)

Office of the Assistant Chief of Staff for Personnel (OG1)

(Program Director)

Status of Trust Receipts and Other Sources of Funds

(as of 30 September 2015)

Funds Received/Collection Releases Balances

Source Remarks
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Sub-Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Sub-Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Sub-Total
Hospital Income 74,431,074.49 - - - 74,431,074.49 - - -
PA Identification Card 3,967,575.00 - - - 3,967,575.00 - - -
Dental Fund 34,741.00 - - - 34,741.00 - - -
PA Golf Club 5,897,308.35 - - - 5,897,308.35 - - -
PA Officers Clubhouse 670,024.00 - - - 670,024.00 - - -
Total 85,000,722.84 - - - - - - - 85,000,722.84 - - -
Notes: * income derived from income generating assets and income producing activities. The amount reflected for the first quarter is the ending balance of Dec 31 of previous year plus the collection for the
period. However, the amount reflected on subsequent quarters are the actual collections of the said period.
** GHQ/KBU/DND Releases, IATF, Donations, and other Non-Appropriated Sources

Prepared by: Noted by:

(Budget Officer) (Chief of Office)

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Appendix E – Review, Evaluation, Monitoring and Reporting of Funds Table

Formats

Army Resource Management Office

Consolidated Status of SPF

(as of 30 September 2015)

Allocation Releases Balances

Program Directors Remarks
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
OG1 - - - - - - -
OG2
OG3
OG4
OG5
OG6
OG7
OG8
OG9
AGSMO
MFO
ARMO
OAGAD
GRAND TOTAL

Prepared by: Noted by:

_________________________
C, ARMO Chairman, PBAC

Army Resource Management Office

Consolidated Status of PAWAF

(as of 30 September 2015)

Allocation Releases Balances

Program Directors Remarks
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
OG1
OG2
OG3
OG4
OG5
OG6
OG7
OG8
OG9
AGSMO
MFO
ARMO
OAGAD
GRAND TOTAL

Prepared by: Noted by:

_________________________
C, ARMO Chairman, PBAC

Army Resource Management Office

Consolidated Status of Trust Receipts and Other Sources

(as of 30 September 2015)

Allocation/Collection Releases Balances

Program Directors Remarks
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
OG1 74,431,074.49 - - - 74,431,074.49 - - -
OG4
OG5
OG7
OG8
Grand Total 74,431,074.49 - - - - - - - 74,431,074.49 - - -

Prepared by: Noted by:

___________________________
C, ARMO Chairman, PBAC

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Appendix E – APF Flow Chart

PRO GRAMM IN G IM PLEM EN TATIO N

Major Units
HPA
DETERMINES ANNUAL DISTRIBUTION
(THROUGH MU PBAC)
DETE RMI NE S Cbt and CS HQS and CSS
OPCON
Sub-Units Units
APF Limits APF Limits Non-Organic
(Organic) (Organic)
(Organic) (Non- organic) (100%)
(75%) (25%)
SUBMIT FOR RELEASE

Major Units
APF Program in APB HPA Evaluates
(Organic and
RELEASE (by Quarter)
non-organic)

Major Units
Major Major Units
Submit FUR
PA APB Units Implement
to HPA

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Glossary
Account Code (or Revised Chart of Accounts)
Code assigned to account groups to facilitate location of accounts in the general and
subsidiary ledgers and to provide systematic arrangement and classification of accounts
and facilitate preparation of the consolidated financial reports.

Activity
A work process that contributes to the implementation of a program, sub-program or
project.

Additional Programmable Fund (APF)

A part of the MOOE that is intended to provide Major Unit Commanders the ability to
provide additional support to subordinate units tasked to undertake activities in focus
areas or acting as main efforts of the administrative and operational thrusts of the Major
Unit.

Advise of Sub-Allotment (ASA)

A specific authority issued by HPA to PAMUs and HPA Offices to incur obligations
not exceeding a given amount during a specific period for the purpose indicated therein.

Allotments
Authorization issued by the DBM to all agencies, which allow it to incur obligations
within a legislative appropriation.

Annual Plan and Budget (APB)

A document that depicts how a Resource Manager proposes to spend the resources
approved by the President and reflected in the GAA to accomplish SND-established
programmatic and financial management objectives. It refers to the operating program
of the unit that contains programs, activities and projects that can be implemented
within a year and supported with appropriations. It is as detailed as required to facilitate
traceability and ensure alignment of PAPs to broad and specific objectives.

It is a key deliverable of the PA Strategic Management System (PA SMS) and serves
as the basis of the Annual Procurement Plan (APP), the release of funds to subordinate
units and offices, and the monitoring of program execution and utilization of funds.

Annual Procurement Plan (APP)

A plan that contains all logistics requirements of units or offices within their proposed
or approved budget. These logistics requirements include but not limited to supplies
and materials, services, equipment, and construction projects.

Appropriations
An authorization made by law or other legislative enactment, directing the payment of
goods and services out of government funds under specified conditions or for a
specified purpose.

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Approved Budget
The defense budget included in the GAA and approved by the President that
appropriates funds by budget category46 . It also contains funds for special purposes47 .

Army Resource Management Office (ARMO)

Office primarily responsible for planning and objectives setting, program costing and
integration, budgeting, accounting analysis of performance against approved plans, cost
effectiveness evaluation of resource management of the PA.

Authorized Troops Strength (ATS)

Document approved by the SND that prescribes the number of military personnel
allocated to the General Headquarters, AFP, Unified Commands, AFP Wide Support
and Separate Units, Technical and Administrative Services, and Major Services by
officer and enlisted personnel grades.

Budget
The fiscally constrained proposal that identifies the resources required accomplishing
the first year of the SND-approved Defense Program. The budget proposal includes
both General Appropriation Act (GAA) funds and the funds from special budgets such
as the AFP Modernization Act Trust Fund.

Budgeting
Process of converting the goals, programs, and projects into monetary estimates
covering a definite period of time.

Budget and Financial Accountability Reports (BFARs)

Consolidated reports on an agency’s actual physical performance and physical
accomplishments, and income for a given period.

Budget Call for Estimates

A document reminding agencies to prepare budget in accordance with approved over-
all budget ceilings and parameters from the DBM.

Budget Decision Memorandum (BDM)

A document of the SND’s decisions regarding the Resource Managers (RMs) budget
proposals and establishes the SND-approved budget request being developed by
Assistant Secretary for Financial Management (ASFM) in collaboration with Assistant
Secretary for Plans and Program (ASPP), Assistant Secretary for Acquisition,
Installations, and Logistics (ASAIL), and other senior DND-AFP officials.

Budget Development Guidance (BDG)

The SND BDG provides authoritative direction to resource managers regarding the
development of their annual budget proposals. The proposed guidance is based on the
PDM and the national budget call instruction of DBM regarding time horizons and
information formats. The current DBM budget development instructions, for example,
require compliance with the Medium-Term Expenditure Framework, which addresses
three years. The proposed BDG, which is developed by the Assistant Secretary for
Financial Management (ASFM) in collaboration with the Assistant Secretary for Plans

46 Categories: personnel services, maintenance and other operating ex penses, capital outlays, etc.
47 Special purposes: AFP Modernization, National Disaster ad Risk Reduction Fund, pensions, etc.

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and Programs (ASPP) and transmitted through the Undersecretary for Finance,
Munitions, Installations and Materiel (USFMIM) to the SND for approval and
signature, is provided to Resources Managers shortly after receipt of the DBM National
Budget call and may vary in length.

Budget Estimates
Submitted request of appropriations of government agencies to DBM that is in
accordance with the budget calendar, format, and other rules and regulations. These
budget estimates must include the following information:
 Objectives, functions, activities, programs and projects showing the general
character and relative importance of the work to be accomplished or the services
to be rendered, and the principal elements of costs involved;
 Linkage of the work and financial proposals to approved development plans;
 Estimated current operating expenditures and capital outlays with comparative
data for the preceding (Y-2) and current (Y-1) budget years;
 Identification by region, pursuant to policies on the regionalization of
government operations;
 Financial sources, reflecting all revenues, proceeds of foreign and domestic
borrowings, and other sources, particularly those which accrue to the General
Funds;
 Contingent liabilities, including national government guarantees of obligations
of government-owned or controlled corporations and their subsidiaries;
 Brief description of the major thrusts and priority programs and projects for the
budget year, results expected for each budgetary program and project, the nature
of work to be performed, estimated costs per unit of work measurement,
including the various objects of expenditure for each project;
 Organization charts and staffing patterns indicating the list of existing and
proposed positions with corresponding salaries, and proposals for position
classification and salary changes, duly supported by adequate justification.

Budget Execution Documents (BEDs)

Annual documents required at the onset of the budget execution phase, which contains
the PA’s targets and plans for the current year.

Budget Performance Review (BPR)

The process of monitoring and evaluating the performance of a department/agency in
delivering its Major Final Outputs with respect to the budget provided, and reporting
evaluation results to the President and Congress.

Budget Proposals
Budget proposals contain the budget recommendations of CG, PA. The budget
proposals submitted to DBM must comply with DBM provided budget development
and fiscal guidance. The current guidance requires that all budget proposals relate
resources requested to performances objectives.

PA Budgeting System
The PA Budgeting System is primarily designed to provide the funds needed by the
Command, to determine how they are obtained, programmed, allocated, controlled, and
facilitated to the intended recipients, purpose and objectives.
Capability
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An organization’s ability to preplan and accomplish an objective and achieve the effects
desired in a specified time period. The capability components are: doctrine,
organization, training, maintenance, leadership, personnel and facilities or DOTMLPF.

Capital Outlay (CO)

Capital Outlay (CO), or Capital Expenditures (CE), refer to appropriations for the
purchase of goods and services, the benefits of which extends beyond the fiscal year
and which add to the assets of the government, including investments in the capital
stock of government-owned and controlled corporations and their subsidiaries.

Comprehensive Army Resource Management System

A coordinated and integrated system for the management of funds for monitoring,
reporting, and accounting purposes.

Defense Budget Proposal

The Defense Budget Proposal submitted to DBM relates resources requested to
performance objectives and must comply with DBM-provided budget development and
fiscal guidance.

The defense budget included in the NEP reflects the President’s defense budget
proposal to Congress. Program changes in the first year of the FYDP, if any, are entered
into the FOCIS database by CG, PA shortly after the NEP is submitted to Congress in
accordance with the instructions provided by the ASPP.

Defense Planning Guide (DPG)

Addresses a six-year program planning horizon and provides the SND’s direction
regarding defense policy and strategy, and establishes force and resource priorities,
programming objectives, and financial planning limits for each Resource Manager. It
may also direct the initiation of studies and analyses on high interest issues as well as
the development of specific capability plans.

Defense System of Management (DSOM)

System of management in the AFP, which builds upon a capability-based planning
process and institutional reforms. DSOM links key functions and areas to provide the
leadership with a systematic basis for determining defense needs and priorities;
developing fiscally constrained plans; and explaining the logic of the plans and budget.

DSOM Planning, Programming, and Accountability Structure

a) Program 1: Philippine Army (PA) with CG, PA as Resource Manager

Provides the necessary land force requirements within their resources.

b) Program 2: Philippine Air Force (PAF) with CG, PAF as Resource Manager
Provides the necessary air force requirements within their resources.

c) Program 3: Philippine Navy (PN) with FOIC, PN as Resource Manager

Provides the necessary maritime force requirements within their resources.
d) Program 4: General Headquarters (GHQ) with VCSAFP as Resource Manager
The campaign planner/manager/force employer; determines the force
requirements of the different programs.

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e) Program 5: DND Civilian Bureaus with USDA as Resource Manager

Fiscal Guidance
The Fiscal Guidance is forwarded to each of the services and defense agencies in
conjunction with the DPG. This guidance provides the individual organization’s topline
funding extended over the FYDP years and notes variations from the prior adjustments.
ASF prepares the Fiscal Guidance based on budget guidance provided by the DBM.

Force Oriented Cost Information Systems (FOCIS)

The FOCIS is an information system of integrated force and cost database used as
management tool on relative force capability and sustainability at different levels of
fund support and budget.

Future Years Defense Program (FYDP)

The FYDP represents the authoritative statement of the SND with regard to projected
DND-AFP resources and capabilities for the next six years (the H-1 planning horizon).
It is an aggregation of all the resources (personnel, equipment, training, and facilities
and associated funding) that are allocated to each Resource Manager to maintain,
improve, or establish the capability to accomplish assigned missions, tasks, and
performance objectives.

The FYDP reflects the decisions made by the SND, after consultation with the CSAFP
and DND-AFP senior officials. These decisions are entered into the FOCIS database
by CG, PA shortly after the PDM Is signed in accordance with the instructions provided
by the ASPP.

Funds
A sum of money set aside for the purpose of carrying on specific activities or attaining
certain objectives in accordance with special regulations, restrictions, or limitations and
constituting an independent fiscal and accounting entity.

General Appropriations Act

A legislative act that presents the form of budgetary programs and projects for each
agency of the government, with the corresponding appropriations for each program and
project, including statutory provisions of specific agency or general applicability. It
refers to the official (and approved) budget of the entire National Government.

Joint Readiness
Combatant Commander’s ability to integrate and synchronize ready combat and
support forces to execute his assigned missions.

Joint Readiness Reporting System

Uniform system for reporting the current readiness of AFP units to carry out its assigned
mission or task. Focus is on near-term operational issues not long-term requirements.
Key Measurement Areas (KMAs)
A unit’s capability to perform its mandated tasks and capacity to carry out its mission
is manifested in the unit’s operational readiness status. It refers to the functional areas
of personnel, equipment, training, facilities and maintenance, which are the object for
evaluation to determine a unit’s operational status. It is also referred to as a fixed cost

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or expense that does not vary in the short run with the quantity of output being
produced.

Legislative Authorization
The second phase of the budget process that is relative to the enactment of the General
Appropriations Bill (GAB).

Major “Budget” Issue Papers on Budget Proposals (BIP)

After the Review of CG, PA’s budget proposal, Major Issues are outlined and
developed by the DND Proper Staff, Resource Managers, Commanders of Unified
Commands, and the Joint Staff that have broad policy force, program or resource
implications.

Major Final Outputs (MFOs)

MFOs are either goods or services that an agency is mandated to deliver to external
clients through the implementation of programs, activities, and projects. It may be a
single output or a group of outputs that are similar in nature, targeted at the same
organization/sector outcome and capable of being summarized by a common
performance indicator.

Major “Program” Issue Papers on POM Submission (PIP)

After the Review of CG, PA’s program proposal, Major Issues are outlined and
developed by the DND Proper Staff, CG, PA and other Resource Managers,
Commanders of Unified Commands, and the Joint Staff who have broad policy force,
program or resource implications.

Maintenance and Other Operating Expenses (MOOE)

MOOE refers to expenditures to support the operations of government agencies such as
expenses for supplies and materials, transportation and travel utilities (power, water,
etc.), repairs, etc.

Notice of Cash Allocation (NCA)

NCAs are issued by DBM for the fund requirement of agencies. These are treated as a
common fund, which can be availed of for payment of obligations incurred during the
current year.

Obligations
Amounts which are committed to be paid by the government which arise from an act
of a duly authorized administrative officer that binds the government to the immediate
or eventual payments of a sum of money.

Operational Tempo (OpTEMPO)

Rate of military actions or missions; factors that affect the increase and decrease in Op-
Tempo include among others, the desired objectives as it relates to time, space and
purpose.

Operations
Activities directed towards fulfilling the department/agency’s mandate. It consists of
programs and corresponding expenditures, which involve the production of goods,
delivery of public services, regulation of societal activities, regulation of other agencies,

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conduct of basic governance, or provision of general management and supervision to

the entire government bureaucracy, which the agency has been specifically mandated
to perform and accomplish as its main purpose for existence. Activities under
operations drive the MFOs.

Operational Planning Guidance (OPG)

CSAFP approved document towards the strategic direction of the Unified Commands
for the current/near-term operations planning.

Organizational Performance Indicator Framework (OPIF)

An approach to expenditure management that directs resources for Major Final Outputs
(MFOs) toward results and measures performance by key quality, quantity, timeliness,
and cost indicators.

PA-Wide Activity Fund (PAWAF)

Expenditures that support the operations of units/offices and HPA command activities
that are being centrally managed by the different HPA Staff as Program Directors.

Performance
In budgeting, a system or action which measures quantitatively actual or estimated
results in terms of the services, and products or benefits accruing to the public and their
relationship to the funds and other resources used to bring about the results.

Performance Report
A performance report integrates both programmatic and financial performance
information so that Resource Managers and key stakeholders can clearly relate results
achieved and money spent to established programmatic and financial objectives.

Personnel Services (PS)

Personnel Services refer to the provisions for the payment of salaries, wages and other
compensation (e.g., merit, salary increase, cost-of-living-allowances) of permanent,
temporary, contractual and casual employees of the government.

Planning, Programming, and Budgeting System (PPBS)

At DND level, it is a system that integrates the results of DSPS, DCAPS and DAS into
a Defense Program with a corresponding Defense Budget Proposal. It is also the cyclic
process for allocating resources within DND. It provides resource decision-making
mechanisms focused on providing the best mix of structures, people, equipment, and
support attainable within established fiscal constraints. Further, it is a performance
budgeting system with a planning orientation.

At AFP/PA level, it is the main vehicle for resource allocation. It links planning to
budget through the programming of resources to accomplish specific objectives.
Therefore, inputs and outputs of programs are linked to the objectives.

Planning
Determination of the basic goals of the organization, the evaluation of alternative
courses of action and selection of the programs best calculated to achieve these goals.

Program

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A homogeneous group of activities necessary for the performance of a major purpose

for which a government agency is established, for the basic maintenance of the agency’s
administrative operations or for the provision of staff support to the agency’s line
operations.

Program, Activities, Projects (PAPs)

Collectively, activities undertaken by a unit/office to achieve the purpose for which it
is established or created or to deliver its Major Final Outputs (MFOs).

Program Advice
The Program Advice highlights the recommendations of a Resource Manager regarding
programming objectives, priorities, and initiatives. The CSAFP also submits his
recommendations on these matters for programs 1 to 4, and for also to program 5 that
support the AFP. His submission incorporates the priorities and requirements of the
unified commands.

Program And Budget Advisory Committee

A committee composed of higher authorities of agencies that oversees the integration
and synchronization of programs and activities.

Program And Budget Development Guidance (PBDG)

PBDG serves as a guide to HPA and PA Major Units in the development of their
respective APB. This document sets the specific direction that must be followed in
allocating PA’s resources and determining the PAPs for the next fiscal year based on
the ATR strategic objectives; targets set in the Army Performance Scorecard;
assessment and recommendations from the previous year’s Annual Accomplishment
Report, Program Performance and Budget Execution Review, and Annual Strategy
Review; and operational thrusts, guidelines and fiscal limits set by higher headquarters.

Program Change
A change in the program of the units and offices that was indicated as major PAPs in
their approved APB.

Program Decision Memorandum (PDM)

Documents the SND’s decision regarding the POM proposals and establishes the SND
approved Defense Program. The proposed PDM, which is developed by the ASPP and
endorsed by the Undersecretary for Defense Affairs (USDA) for transmittal to the SND
for approval and signature, documents the SND’s decisions regarding the POM
proposals and established the SND-approved Defense program.

Program of Expenditures (POE)

POE is the list of program of activities being prepared by units with Trust Receipt based
on the actual amount collected and deposited in the BTr. The POE shall be geared
towards activities and projects, which are deemed crucial to the efficient discharge of
the unit’s mandate that are not amply supported by regular appropriations.

Program Objective Memorandum (POM)

The POM contains a Resources Manager’s proposed six years program for
accomplishing the direction provided in the DPG as well as the resources that are
required to recruit, train, maintain, sustain, modernize and, as appropriate, reconstitute

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the organization. The proposed program submitted must comply with the fiscal
guidance limits established by the SND and may identify high priority unfunded
requirements for SND consideration.

Program Performance and Budget Execution Reports/Reviews (PPBERs)

Quarterly reports submitted by Resource Managers to ASFM. Periodic SND-CSAFP
reviews are conducted to assess results achieved and money spent against SND-
established programmatic and financial management objectives. These reviews shall
provide the basis for making timely, informed decisions on resource alignments during
budget execution.

Program Preparation Instruction (PPI)

The PPI is developed by the ASPP in collaboration with ASFM. It provides detailed
instructions for submitting the POMs. It is concise, and is developed in one month or
less, shortly after the DPG is issues, and is distributed to all concerned DND-AFP senior
officials by the ASPP.

Program Proposal
The planning priorities and programming recommendations for mid-term capability
acquisition through the Programming Advice document. This includes the option for
capability integration, trade-off, and the integration of the requirements and priorities
of the unified commands.

Programming
Programming is a decision-making process of planning the schedule of activities and
estimating its corresponding resource requirements to achieve the established goals and
objectives. It also entails the scheduling and execution as efficiently as possible, of the
specific projects required to implement this program.

Projects
Means a component of a program covering a homogenous group of activities that results
in the accomplishment of an identifiable output. Particularly, these area special
undertakings of a department or agency that are carried out within a definite time frame
and intended to result in some pre-determined measure of goods and services.

Readiness Condition
Current state and level of preparedness of a unit based on the evaluation conducted.

Resource Manager
A designated senior executive appointed by the SND who is directly accountable to the
SND for developing financially realistic program, budget, and spending plan proposals
that comply with the centralized policy and planning direction provided by the SND,
accomplishing established programmatic and financial management objectives
established by the SND, and reporting performance against SND established objectives.
The Resource Manager has the primary responsibility for recommending Medium-
Term Capability Plans/Programs Objective Memorandum and if approved, for the
implementation of such.

Resource Manager’s Program Proposal

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The document through which Resource Managers submit their recommendations on the
content of the DPG regarding their respective programs. RM’s Programming Proposal
represents their proposal for Medium-Term Capability to meet SND’s capability
intentions. Particularly, we have the CG, PA as the Resource Manager for Program 1
(Land Forces).

Resources
The structures (units and their associated personnel, material and facilities), investment
(new equipment and facilities), and readiness (training, maintenance, supplies, facilities
upkeep and sustainment, and operations) required in accomplishing a task.

PA Strategic Management System (PA SMS)

The PA SMS is the overarching framework that integrates and governs the Philippine
Army’s planning and operating systems in order to achieve its long-term, medium-term,
and annual goals.

Special Allotment Release Order (SARO)

A specific authority issued to one or more identified agencies to incur obligations not
exceeding a given amount during a specified period for the purpose indicated.

Specific Objective
Specific statement of the outputs expected of an activity in terms of goods, products, or
services for a given level of funding for the budget year and which contribute to the
realization of the major objective.

Strategic Plans
Both an art and a science associated with planning and the conduct of war, strategy is
also the art and science of developing plans of action to attain a set of strategic
objectives. Also, it is the art of distributing and applying military means to fulfill the
ends of a policy. The determination of strategic mission, vision, strategic objectives,
and policies that will put an organization in a favorable situation in the near, medium,
and long term.

Support to Operations (STO)

STOs are defined as activities that provide technical and substantive support to the
operations and projects of the agency. Funds provided under the STO classification are
also overhead expenses, or indirect costs of delivering the agency’s MFO.

System
A combination of organization, organized entity, unit set-up that cooperates in
performing one of the fundamental vital functions for the accomplishment of its
assigned task.

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Acronyms and Abbreviations

AAR Annual Accomplishment Report
AB Administrative Branch, ARMO
ABC Activity Based Costing
ABM ABM – Agency Budget Matrix
ACS Assistant Chief of Staff
AEB, ARMO Analysis and Evaluation Branch
AFP Armed Forces of the Philippines
AFPRMO Armed Forces of the Philippines Resource Management Office
AGDB Authorized Government Depository Bank
AGSMO Army Governance and Strategic Management Office
APB Annual Plan and Budget
APP Annual Procurement Plan
ARMO Army Resource Management Office
ASA Advice of Sub-Allotment
ASAIL Assistant Secretary for Acquisition, Installation and Logistics
ASFM Assistant Secretary for Financial Management (Formerly
ASCOM)
ASPA Accounting Service, Philippine Army
ASPP Assistant Secretary for Plans and Programs
ASR Annual Strategic Review
ATR Army Transformation Roadmap
ATR Authority To Release
BDB, ARMO Budget Development Branch
BEDs Budget Execution Documents
BES Budget Estimate Submission
BFAR Budget and Financial Accountability Report
BDG Budget Development Guidance
BDM Budget Decision Memorandum
BIR Bureau of Internal Revenue
BSP/CB Central Bank of the Philippines (BSP – Bangko Sentral ng
BTr Pilipinas)
Bureau of Treasury
C, ARMO Chief, Army Resource Management Office
CDC Cash Disbursement Ceiling
CG, PA Commanding General, Philippine Army
CMF Centrally Managed Fund
CO Capital Outlay
COA Commission on Audit
CSAFP Chief of Staff, Armed Forces of the Philippines
DAS Defense Acquisition System
DBCC Development Budget Coordinating Committee
DBM Department of Budget and Management
DCAPS Defense Capability and Planning System
DF Disposition Form
DND Department of National Defense
DOF Department of Finance
DPG Defense Planning Guide
DRMS Defense Resource Management System

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DSF Direct Support Fund

DSOM Defense System of Management
DSPS Defense Capability Strategic Planning System
EIR Estimated Income Revenue
EO Executive Order
ES Executive Section
FERB Final Evaluation Review Board
FMS Financial Management System
FOCIS Force Oriented Cost Information System
FPBG Final Program and Budget Guidance
FUR Fund Utilization Report
FYDP Future Year Defense Plan
GAA General Appropriations Act
GAB General Appropriations Bill
GASS General Administration and Support Services
GHQ General Headquarters, Armed Forces of the Philippines
GOCCs Government Owned and/or Controlled Corporations
HADR Humanitarian Assistance and Disaster Responses
HPA Headquarters of the Philippine Army
IAO Internal Affairs Office
IATF Inter-Agency Transferred Funds
IATF Inter-Agency Task Force (PBB related)
IBE Initial Budget Estimate
IEPSO International Engagement and Peace Support Operations
IMPLAN Implementing Plan
JDA Joint Defense Assessment
KDPs Key Document Products
KMAs Key Measurement Areas
MA Mission Areas
MFO Major Final Output
MFO, PA Management and Fiscal Office, Philippine Army
MLSA Mutual Logistics Support Agreement
MOOE Maintenance and Other Operating Expenses
MSUs Major Subordinate Units
MTCAPs Medium Term Capability Assessment Planning System
MYCaPS Multi-Year Capability Planning System
NAF Non-Appropriated Funds
NCA Notice of Cash Allocation
NEDA National Economic Development Authority
NEP National Expenditure Program
OAIA Office of the Army Internal Audit
OG1 Office of the Assistant Chief of Staff for Personnel
OG2 Office of the Assistant Chief of Staff for Intelligence
OG3 Office of the Assistant Chief of Staff for Operations
OG4 Office of the Assistant Chief of Staff for Logistics
OG5 Office of the Assistant Chief of Staff for Plans
OG6 Office of the Assistant Chief of Staff for Communications,
Electronics Information System (CEIS)
OG7 Office of the Assistant Chief of Staff for Civil-Military
Operations

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OG8 Office of the Assistant Chief of Staff for Education and Training
OG9 Office of the Assistant Chief of Staff for Reservist Affairs
OPB Operating Program and Budget
OPG Operational Planning and Guidance
OPIF Organizational Performance Indicator Framework
OPR Office Primary Responsible
OPREVAL Operational Readiness Evaluation
OPTEMPO Operational Tempo
OR Official Receipts
OTIG Office of the Inspector General
PA Philippine Army
PAMUs Philippine Army Major Units
PAPs Program, Activities, and Projects
PBAC Program and Budget Advisory Committee
PBD Program Budget Decision
PDM Program Decision Memorandum
PDR Philippine Defense Reform
PERB Preliminary Evaluation Review Board
PGS Performance Governance System
POE Program of Expenditure
POM Program Objective Memorandum
PPBER Program Performance and Budget Execution Review/Report
PPBS Planning Programming and Budgeting System
PPDB Plans and Programs Development Branch
PPI Program Preparation Instruction
PPMP Project Procurement Management Plan
PPR Physical Performance Report
PRO Physical Report of Operation
RAB, ARMO Resource Allocation Branch
RM Resource Manager
RMPP Resource Manager Program Proposal
SALN Statement of Assets, Liabilities, and Net Worth
SARO Special Allotment Release Order
SDF Summary Disposition Form
SMS Strategic Management System
SND Secretary of National Defense
STO Support to Operations
TDSS Territorial Defense and Security Services
TL Trust Liabilities
TR Trust Receipts
TWG Technical Working Group
UNRF United Nations Reimbursement Fund
USF Unit Sustainment Fund
VC, PA Vice Commander, Philippine Army
WG Working Group
Y-1 Current year, Budget year minus (–) 1 year
Y-2 Budget year minus (-) 2 years
If, Budget year = 2015,
Then, Y-1 Current year = 2014
Y-2 = 2013

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