THE BUDGET AND THE

BUDGET SYSTEM
THE TERM “BUDGET” ORIGINATED FROM THE MIDDLE ENGLISH
WORD BOUGET THAT HAD DERIVED FROM THE LATIN WORD BULGA (WHICH
MEANS BAG OR PURSE).

IN THE PHILIPPINE SETTING, COMMONWEALTH ACT (CA) NO. 246 (BUDGET ACT)
DEFINED “BUDGET” AS THE FINANCIAL PROGRAM OF THE NATIONAL
GOVERNMENT FOR A DESIGNATED FISCAL YEAR, CONSISTING OF THE
STATEMENTS OF ESTIMATED RECEIPTS AND EXPENDITURES FOR THE FISCAL
YEAR FOR WHICH IT WAS INTENDED TO BE EFFECTIVE BASED ON THE
RESULTS OF OPERATIONS DURING THE PRECEDING FISCAL YEARS. THE TERM
WAS GIVEN A DIFFERENT MEANING UNDER REPUBLIC ACT NO. 992 (REVISED
BUDGET ACT) BY DESCRIBING THE BUDGET AS THE DELINEATION OF THE
SERVICES AND PRODUCTS, OR BENEFITS THAT WOULD ACCRUE TO THE
PUBLIC TOGETHER WITH THE ESTIMATED UNIT COST OF EACH TYPE OF
SERVICE, PRODUCT OR BENEFIT. FOR A FORTHRIGHT DEFINITION, BUDGET
SHOULD SIMPLY BE IDENTIFIED AS THE FINANCIAL PLAN OF THE
GOVERNMENT, OR “THE MASTER PLAN OF GOVERNMENT.”
AMERICAN ECONOMIST PROF. PHILIP E. TAYLOR HAS TENDERED THE
FOLLOWING UNDERSTANDING OF THE TERM BUDGET

THE BUDGET IS THE MASTER PLAN OF GOVERNMENT. IT BRINGS TOGETHER

ESTIMATES OF ANTICIPATED REVENUES AND PROPOSED EXPENDITURES,
IMPLYING THE SCHEDULE OF ACTIVITIES TO BE UNDERTAKEN AND THE MEANS
OF FINANCING THOSE ACTIVITIES. IN THE BUDGET, FISCAL POLICIES ARE
COORDINATED, AND ONLY IN THE BUDGET CAN A MORE UNIFIED VIEW OF THE
FINANCIAL DIRECTION WHICH THE GOVERNMENT IS GOING TO BE OBSERVED.
THE CONCEPT OF BUDGETING HAS NOT BEEN THE PRODUCT OF RECENT
ECONOMIES. IN REALITY, FINANCING PUBLIC GOALS AND ACTIVITIES WAS AN
IDEA THAT EXISTED FROM THE CREATION OF THE STATE. TO PROTECT THE
PEOPLE, THE TERRITORY AND SOVEREIGNTY OF THE STATE, ITS GOVERNMENT
MUST PERFORM VITAL FUNCTIONS THAT REQUIRED PUBLIC EXPENDITURES. AT
THE BEGINNING, ENORMOUS PUBLIC EXPENDITURES WERE SPENT FOR WAR
ACTIVITIES, PRESERVATION OF PEACE AND ORDER, SECURITY, ADMINISTRATION
OF JUSTICE, RELIGION, AND SUPPLY OF LIMITED GOODS AND SERVICES. IN
ORDER TO FINANCE THOSE EXPENDITURES, THE STATE RAISED REVENUES
THROUGH TAXES AND IMPOSITIONS. THUS, BUDGETING BECAME NECESSARY TO
ALLOCATE PUBLIC REVENUES FOR SPECIFIC GOVERNMENT FUNCTIONS. THE
STATE’S BUDGETING MECHANISM EVENTUALLY DEVELOPED THROUGH THE
YEARS WITH THE GROWING FUNCTIONS OF ITS GOVERNMENT AND CHANGES IN
ITS MARKET ECONOMY. (G.R. NO. 209287, JULY 01, 2014)
THE PHILIPPINE BUDGET SYSTEM HAS BEEN GREATLY INFLUENCED BY WESTERN
PUBLIC FINANCIAL INSTITUTIONS. THIS IS BECAUSE OF THE COUNTRY’S PAST AS A
COLONY SUCCESSIVELY OF SPAIN AND THE UNITED STATES FOR A LONG PERIOD OF
TIME. MANY ASPECTS OF THE COUNTRY’S PUBLIC FISCAL ADMINISTRATION, INCLUDING
ITS BUDGET SYSTEM, HAVE BEEN NATURALLY PATTERNED AFTER THE PRACTICES AND
EXPERIENCES OF THE WESTERN PUBLIC FINANCIAL INSTITUTIONS. AT ANY RATE,
THE PHILIPPINE BUDGET SYSTEM IS PRESENTLY GUIDED BY TWO PRINCIPAL
OBJECTIVES THAT ARE VITAL TO THE DEVELOPMENT OF A PROGRESSIVE
DEMOCRATIC GOVERNMENT,
NAMELY: (1) TO CARRY ON ALL GOVERNMENT ACTIVITIES UNDER A COMPREHENSIVE
FISCAL PLAN DEVELOPED, AUTHORIZED AND EXECUTED IN ACCORDANCE WITH THE
CONSTITUTION, PREVAILING STATUTES AND THE PRINCIPLES OF SOUND PUBLIC
MANAGEMENT; AND
(2) TO PROVIDE FOR THE PERIODIC REVIEW AND DISCLOSURE OF THE BUDGETARY
STATUS OF THE GOVERNMENT IN SUCH DETAIL SO THAT PERSONS ENTRUSTED BY
LAW WITH THE RESPONSIBILITY AS WELL AS THE ENLIGHTENED CITIZENRY CAN
DETERMINE THE ADEQUACY OF THE BUDGET ACTIONS TAKEN, AUTHORIZED OR
PROPOSED, AS WELL AS THE TRUE FINANCIAL POSITION OF THE GOVERNMENT.
THE BUDGET PROCESS IN THE PHILIPPINES EVOLVED FROM THE EARLY YEARS OF THE
AMERICAN REGIME UP TO THE PASSAGE OF THE JONES LAW IN 1916. A BUDGET
OFFICE WAS CREATED WITHIN THE DEPARTMENT OF FINANCE BY THE JONES LAW TO
DISCHARGE THE BUDGETING FUNCTION, AND WAS GIVEN THE RESPONSIBILITY TO
ASSIST IN THE PREPARATION OF AN EXECUTIVE BUDGET FOR SUBMISSION TO THE
PHILIPPINE LEGISLATURE.

AS EARLY AS UNDER THE 1935 CONSTITUTION, A BUDGET POLICY AND A BUDGET

PROCEDURE WERE ESTABLISHED, AND SUBSEQUENTLY STRENGTHENED THROUGH
THE ENACTMENT OF LAWS AND EXECUTIVE ACTS.[61] EO NO. 25, ISSUED BY
PRESIDENT MANUEL L. QUEZON ON APRIL 25, 1936, CREATED THE BUDGET
COMMISSION TO SERVE AS THE AGENCY THAT CARRIED OUT THE PRESIDENT’S
RESPONSIBILITY OF PREPARING THE BUDGET. CA NO. 246, THE FIRST BUDGET LAW,
WENT INTO EFFECT ON JANUARY 1, 1938 AND ESTABLISHED THE PHILIPPINE BUDGET
PROCESS. THE LAW ALSO PROVIDED A LINE-ITEM BUDGET AS THE FRAMEWORK OF
THE GOVERNMENT’S BUDGETING SYSTEM, WITH EMPHASIS ON THE OBSERVANCE OF A
“BALANCED BUDGET” TO TIE UP PROPOSED EXPENDITURES WITH EXISTING
REVENUES. 
CA NO. 246 GOVERNED THE BUDGET PROCESS UNTIL THE PASSAGE ON JUNE 4, 1954
OF REPUBLIC ACT (RA) NO. 992, WHEREBY CONGRESS INTRODUCED PERFORMANCE-
BUDGETING TO GIVE IMPORTANCE TO FUNCTIONS, PROJECTS AND ACTIVITIES IN
TERMS OF EXPECTED RESULTS. RA NO. 992 ALSO ENHANCED THE ROLE OF THE
BUDGET COMMISSION AS THE FISCAL ARM OF THE GOVERNMENT

THE 1973 CONSTITUTION AND VARIOUS PRESIDENTIAL DECREES DIRECTED A SERIES

OF BUDGETARY REFORMS THAT CULMINATED IN THE ENACTMENT OF PD NO. 1177
THAT PRESIDENT MARCOS ISSUED ON JULY 30, 1977, AND OF PD NO. 1405, ISSUED ON
JUNE 11, 1978. THE LATTER DECREE CONVERTED THE BUDGET COMMISSION INTO
THE MINISTRY OF BUDGET, AND GAVE ITS HEAD THE RANK OF A CABINET MEMBER.
THE MINISTRY OF BUDGET WAS LATER RENAMED THE OFFICE OF BUDGET AND
MANAGEMENT (OBM) UNDER EO NO. 711. THE OBM BECAME THE DBM PURSUANT TO
EO NO. 292 EFFECTIVE ON NOVEMBER 24, 1989. (G.R. NO. 209287, JULY 01, 2014)
 BUDGET PROCESS IN THE NATIONAL GOVERNMENT

Philippine Budgetary Process – Legal Basis

- Section 22, Article VII of the 1987 Constitution sets the tone for the budgetary process.

- The procedure in the preparation of the national budget is regulated by the law. On of before October
20 of each year, each department secretary submits to Department of Budget the estimated income and
expenditures of the bureaus and offices under his department for the next fiscal year.

- Upon receipt of all budget estimates of income and expenditures, the Department of Budget and
Management prepares the national budget.

- Prior to this, however, the Budget secretary can investigate, revise, examine, assemble, coordinate, and
reduce or increase the budget estimates of the different departments, bureaus and offices of the
government.

- After preparing the budget, the budget secretary submits it to the President, who in turn submits it to
Congress within 30 days before the opening of the regular session.

- The 1987 Constitution specifically provides that the President “shall submit to the congress within
thirty days from the opening of every regular session, as the basis of the general appropriations bill,
budget of expenditures and sources of financing, including receipts from existing and proposed revenue
measures” (sec. 22, Art.VI). Congress uses the budget submitted by the president as the basis for the
annual appropriation.

- According to the 1987 Philippine Constitution, Congress “may not increase the appropriation
recommended by the President for the operation of the Government as specified in the budget” (Sec.
25(1), Art. VI).
 -
- Section 21, 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
Representative, 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 prescribe 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.
- Section 25(4) Article VI: “ A special appropriations bill shall specify the purpose for which it
is intended, and shall be supported by funds actually available as certified by the National
Treasurer, or to be raised by a corresponding revenue proposal therein.
- Section 25(5), Article VI “ No law shall be passed authorizing any transfer of appropriations,
however, the president, president of the senate, speaker of the House of Representatives,
Chief Justice of the Supreme Court, and the Heads of the Constitutional Commissions may,
by law, be authorized to augment any Item in the general appropriations law for there
respective offices from savings and other items of their respective appropriations.
- Section 25(7), Article VI: “ If by the end of the fiscal year, the congress shall have failed to
pass the General appropriation Bill of the ensuing fiscal year, the General appropriations law
for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect
until the General appropriations bill is passed by the Congress.
 -
- Section 21, 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
Representative, 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 prescribe 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.
- Section 25(4) Article VI: “ A special appropriations bill shall specify the purpose for which it
is intended, and shall be supported by funds actually available as certified by the National
Treasurer, or to be raised by a corresponding revenue proposal therein.
- Section 25(5), Article VI “ No law shall be passed authorizing any transfer of appropriations,
however, the president, president of the senate, speaker of the House of Representatives,
Chief Justice of the Supreme Court, and the Heads of the Constitutional Commissions may,
by law, be authorized to augment any Item in the general appropriations law for there
respective offices from savings and other items of their respective appropriations.
- Section 25(7), Article VI: “ If by the end of the fiscal year, the congress shall have failed to
pass the General appropriation Bill of the ensuing fiscal year, the General appropriations law
for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect
until the General appropriations bill is passed by the Congress.
 REFERENCES

HTTPS://
WWW.PROJECTJURISPRUDENCE.COM/2020/10/THE-PHILIPPINE-BUDGET-SYSTEM.HTM
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HTTPS://WWW.SLIDESHARE.NET/STEPHENGRANATIN/BUDGETARY-PROCESS