BUDGET

Philippine Fiscal
Framework
 NATURE OF BUDGETING
BUDGET

 It is a plan expressed in financial terms which described the sources and uses of fund

 It is the blue print of the financial and policy decision that the local government will
implement during the fiscal year.
 It is also a document for establishing control over the direction of change and
determining the future

 It is a document indicating the economic significance of the government’s policies and

programs.
BUDGET FORMULATION

Creation of the Budget Commission

 The Budget Commission established on April 25, 1936 with the issuance of Executive Order
No. 25 by Commonwealth President Manuel L. Quezon.  The National Assembly certified the
creation of the Commission on September 30, 1936.

 First budget law.  Commonwealth Act No. 246, the first budget law (passed on December 17,
1937 and took effect on January 1, 1938), provided for a line-item budget as the framework of
the government’s budgeting system. Calling for a “balanced budget,” the system emphasized
the task of the Commission “to tie up the proposed expenditure with existing revenues.”
 Revised Budget Act of 1954.  It was not until the passage of Republic Act No. 992, or the
Revised Budget Act of 1954, that the practice of placing importance on control and itemization
of proposed expenditures of agencies, in effect for more than 15 years, gave way to budgetary
reforms.

 RA 992 introduced the performance budgeting system and put emphasis on budgetary
programs and activities and on expected results.  Its passage on June 4, 1954 abolished the
triumvirate under EO 25, replacing it with the Office of the Budget Commissioner.  The law
enhanced the role of the Budget Commission as the fiscal arm of the government.
 Reorganization Act of 1954.  The Reorganization Act of 1954 (RA 997) created the
Government Survey and Reorganization Commission (GSRC) to reorganize government.  It
defined the first major organizational structure of the Budget Commission.

 Integrated Reorganization Plan of  1972. Eighteen years later, Presidential Decree No. 1, or
the Integrated Reorganization Plan (IRP) of 1972, reorganized the Executive branch
extensively. The Budget Commission remained under the President for administrative policy
and program coordination.

 Budget Reform Decree of 1977 and other laws. A series of other laws followed PD 1, notably
PD 1177 or the Budget Reform Decree of 1977, which prescribed the “form, content, and
manner of preparing the budget.” PD 1177 strengthened the planning, programming, and
budgeting linkages; and introduced a regionalized budget supportive of a region-based
government structure.
 On June 11, 1978, Presidential Decree No. 1405 converted the Budget Commission into
the Ministry of the Budget  and gave its head the rank and status of a Minister and member of
the Cabinet. Under the parliamentary form of government, the Minister of the Budget
automatically chaired the Committee on Appropriations and Reorganization in the Batasang
Pambansa.

 Three years later, on July 28, 1981, Executive Order No. 711 was issued reclassifying/renaming
the Ministry of Budget into the Office of Budget and Management (OBM), its head retaining the
rank of a Cabinet member.
 Revised Administrative Code of 1987. Executive Order 292, or the Revised Administrative
Code of 1987, provided for major organizational subdivisions of the OBM which has been
converted into the Department of Budget and Management. It likewise stipulated the
Department’s responsibilities (formulating and implementing the National Budget and
ensuring the efficient and sound utilization of government resources to achieve the country’s
development objectives) which are still being followed to this day.

 Since the DBM’s conversion into a department, it had nine Secretaries, one of whom was the
late Emilia T. Boncodin, the only female DBM Secretary so far who served in 1998 and in 2001
to 2005. Other secretaries are Guillermo N. Carague (1987 to 1992), Salvador M. Enriquez, Jr.
(1992 to 1998),   Benjamin E. Diokno (1998 to 2001), Romulo L. Neri (2005 to 2006),  Rolando
G. Andaya, Jr. (2006 to 2010), Joaquin C. Lagonera (2010), and Florencio “Butch” Abad (2010-
2016).
 The Department is currently under the leadership of Secretary Benjamin E. Diokno.
THE BUDGET PROCESS FOR LGUs
Budget is also used to denote “appropriation”

Appropriation refers to an authorization made by law or other legislative enactment, directing the
payment of goods and services out of the government funds under specified conditions or for
specified purposes.

 When Constitution ordains that “no money shall be paid out of the Treasury except
in pursuance of an appropriation made by law. It means that all releases of
government funds must first be authorized by the Congress through the enactment
of appropriation by law.
TYPES OF APPRORIATION:
 GENERAL APPRORIATION
It is an authorization of the lawmaking body to take out from the national treasury
such as money, not set aside for another purpose, as is needed to pay for personal
services and operations of the government covering a certain period of time, the fiscal
year.

 SPECIAL APPOPRIATION

It is designed to supplement the items of appropriation authorized in the general

appropriation law or to authorized funds for new programs or activities which have not
been included in the budgetary act.
 CONSTITUTIONAL PROVISION:
 Section 24, Article VI, which states that all appropriations, revenue or tariff bills increase
of the public debt, bills of local application and private bills shall originate in the House
of Representatives, but the Senate may propose or concur with amendments

 Section 25 (1), Article VI, states that the Congress may not increase the appropriations
recommended by the President for the operation of the government as specified in the
budget. The form, content, and manner of preparation of the budget shall be prescribed
by law.
 Section 25 (2), Article VI states that no provision or enactment shall be embraced in
the General Appropriations Bill unless it relates specifically to some particular
appropriation therein. Any such provision or enactment shall be limited in its
operation to the appropriations to which it relates.
 3. The procedure in approving appropriations for the Congress shall strictly follow the procedure
for approving appropriations for other departments and agencies.

 4. A special appropriations bill shall specify the purpose for which it is intended, and shall be
supported by funds actually available as certified by the National Treasurer, or to be raised by a
corresponding revenue proposal therein.

 5. No law shall be passed authorizing any transfer of appropriations; however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to
augment any item in the general appropriations law for their respective offices from savings in
other items of their respective appropriations.
 6. Discretionary funds appropriated for particular officials shall be disbursed only for public
purposes to be supported by appropriate vouchers and subject to such guidelines as may be
prescribed by law.

 7. If, by the end of any fiscal year, the Congress shall have failed to pass the general
appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding
fiscal year shall be deemed reenacted and shall remain in force and effect until the general
appropriations bill is passed by the Congress.
Sec 26 Article VI
 1. Every bill passed by the Congress shall embrace only one subject which shall be
expressed in the title thereof.

 2. No bill passed by either House shall become a law unless it has passed three readings
on separate days, and printed copies thereof in its final form have been distributed to its
Members three days before its passage, except when the President certifies to the
necessity of its immediate enactment to meet a public calamity or emergency. Upon the
last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall
be taken immediately thereafter, and the yeas and nays entered in the Journal.
Sec 27 Article VI
1. Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he
approves the same, he shall sign it; otherwise, he shall veto it and return the same with his objections
to the House where it originated, which shall enter the objections at large in its Journal and proceed
to reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree
to pass the bill, it shall be sent, together with the objections, to the other House by which it shall
likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall
become a law. In all such cases, the votes of each House shall be determined by yeas or nays, and the
names of the Members voting for or against shall be entered in its Journal. The President shall
communicate his veto of any bill to the House where it originated within thirty days after the date of
receipt thereof; otherwise, it shall become a law as if he had signed it.

2. The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object.
RESTRICTIONS ON BUDGETING
 The President has exclusive right to propose a budget.
 Congress can only reduce or reallocate appropriations in the proposed budget.
 The President can use a line-item veto.
 The previous year’s budget is automatically “reenacted” if the budget is not passed prior to
the start of the fiscal year.
 The President can impose restrictions on the disbursement of funds
appropriated by Congress.

 Highest allocation to Education

 Separation of Church and State

 Special Funds are for Special funds only.
References:

 Philippine Fiscal Administration

 www.dbm.gov.ph

 Philippine Constitution of 1935

 Philippine Constitution of 1987

 Budget Operations Manual for LGUs