executive order no. 292 s. 1987

7/31/2019 Executive Order No. 292 s. 1987

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EXECUTIVE ORDER NO. 292INSTITUTING THE "ADMINISTRATIVE CODE OF 1987"

Book VINational Government Budgeting

CHAPTER 1GENERAL PROVISIONS

Section 1. Constitutional Policies on the Budget. - (1) All appropriations, revenue or tariff bills, bills authorizingincrease of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives but the Senate may propose or concur with amendments.

(2) The Congress may not increase the appropriations recommended by the President for the operation of theGovernment as specified in the budget. The form, content and manner of preparation of the budget shall beprescribed by law.

(3) No provision or enactment shall be embraced in the general appropriations bill unless it relates specifically tosome particular appropriation to which it relates.

(4) The procedures in approving appropriations for the Congress shall strictly follow the procedure for approvingappropriations for other departments and agencies.

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

(6) No law shall be passed authorizing any transfer of appropriations. However, the President, the President of theSenate, 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 laws fortheir respective offices from savings in other items of their respective appropriations.

(7) Discretionary funds appropriated for particular official shall be disbursed only for public purposes to besupported by appropriate vouchers and subject to such guidelines as may be prescribed by law.

(8) If, by the end of any fiscal year, the Congress shall have failed to pass the general appropriations bill for theensuing fiscal year, the general appropriations law for the preceding fiscal year shall be deemed reenacted and shallremain in force and effect until the general appropriations bill is passed by the Congress.

(9) Fiscal autonomy shall be enjoyed by the Judiciary, Constitutional Commissions, Office of the Ombudsman,Local Government and Commission on Human Rights yczlZoPN9.

Section 2. Definition of Terms. - When used in this Book:

(1) "Appropriation" refers to an authorization made by law or other legislative enactment, directing payment out of

government funds under specified conditions or for specified purposes.

(2) "Allotment" refers to an authorization issued by the Department of the Budget to an agency, which allows it toincur obligation for specified amounts contained in a legislative appropriation.

(3) "Budget" refers to a financial plan required to be prepared pursuant to Section 16 (1) , Article VIII of theConstitution, reflective of national objectives, strategies and programs.

(4) "Current operating expenditures" refers to appropriations for the purchase of goods and services for currentconsumption or for benefits expected to terminate within the fiscal year.


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(5) "Capital outlay" or "capital expenditures" refers to an appropriation for the purchase of goods and services, thebenefits of which extend beyond the fiscal year and which add to the assets of the Government, includinginvestments in the capital of government-owned or controlled corporations and their subsidiaries.

(6) "Continuing appropriation" refers to an appropriation available to support obligations for a specified purpose orproject, even when these obligations are incurred beyond the budget year.

(7) "Expected result" means service, product, or benefit that will accrue to the public, estimated in terms of performance measures or targets.

(8) "Fiscal year" refers to the period beginning with the first day of January and ending with the thirty-first day of December of each calendar year.

(9) The "Government" means the National Government, including the Executive, the Legislative and the JudicialBranches, and the Constitutional Commissions.

(10) "Department and agency" and "department or agency" include all departments, bureaus, offices, boards,commissions, courts, tribunals, councils, authorities, administrations, centers, institutes, state colleges anduniversities, and all other establishments and instrumentalities of the National Government as defined in thepreceding paragraph.

(11) "Obligation" refers to an amount committed to be paid by the Government for any lawful act made by anauthorized officer for and in behalf of the Government.

(12) "Program" refers to the functions and activities necessary for the performance of a major purpose for which agovernment agency is established.

(13) "Project" means a component of a program covering a homogenous group of activities that results in theaccomplishment of an identifiable output.

CHAPTER 2BUDGET POLICY AND APPROACH

Section 3. Declaration of Policy. - It is hereby declared the policy of the State to formulate and implement aNational Budget that is an instrument of national development, reflective of national objectives, strategies and plans.The budget shall be supportive of and consistent with the socio-economic development plan and shall be orientedtowards the achievement of explicit objectives and expected results, to ensure that funds are utilized and operationsare conducted effectively, economically and efficiently. The national budget shall be formulated within the contextof a regionalized government structure and borrowings of all levels of government and of government-owned orcontrolled corporations. The budget shall likewise be prepared within the context of the national long-term plan andof a long-term budget program.

Section 4. Planning and Budgeting Linkage. - The budget shall be formulated as an instrument for the attainment of national development goals and as part of the planning-programming-budgeting continuum. Levels of revenue,

expenditure and debt shall be established in relation to macro-economic targets of growth, employment levels, andprice level change, and shall be developed consistent with domestic and foreign debt, domestic credit and balance of payments objectives for the budget period. The aggregate magnitudes of the budget shall be determined in closeconsultation among the planning and fiscal agencies of government. Budgetary priorities shall be those specified inthe approved national plans, keeping in mind the capability and performance of the implementing agenciesconcerned. Agency budget proposals shall explicitly state linkage to approved agency plans.

Section 5. National Resource Budget. - The finances of government shall be analyzed and determined as theaggregate of revenue, expenditure and debt of all units of government, including the national government and itsagencies and instrumentalities, local government units and government-owned or controlled corporations. The


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national government budget shall be evolved within the framework of the total impact of government activity on thenational economy. The budgets of government corporations and local governments shall be consistent in form andtiming with that of the national government, to facilitate comprehensive evaluation StAmBl.

Section 6. Regional Budgeting. - The budgets of national government agencies shall take into full and explicitconsideration the goals, plans and requirements of their respective regional offices, in the interest of full governmentresponse to local thinking and initiative. The budget preparation process shall originate at regional and local levels,and shall be consolidated and reviewed by the central offices of the various national agencies. The regionaldevelopment strategies and plans, including physical framework and resource-use plans, shall be considered in thepreparation of the budget.

Section 7. Long Term Budgeting. - The annual budgets of the national government shall be prepared as an integralpart of a long-term budget picture. The long-term economic and physical framework plans of government, multi-year requirements of approved programs and projects, organizational and personnel development strategies, andother commitments entered into or otherwise assumed by government shall be specified in the budget process.

Section 8. Development Projects. - The development process requires the implementation of major developmentprojects of such size as to significantly affect the infrastructure program, debt ceilings, the balance of payments,domestic credit, and government expenditure levels. The budget process shall formally consider the timing of majornational projects, in order to ensure the observance of established fiscal, monetary, international payments, and otherconstraints.

Section 9. Performance and Financial Review. - The analysis of agency operating performance, the evaluation of performance, the evaluation of performance relative to costs incurred and the review of agency operating systemsand procedures are inherent parts of the budget process. Agencies shall therefore design and implement (1)management information systems yielding both performance and financial information which will adequatelymonitor and control budget implementation, and (2) improvements in operating systems, procedures and practices,so as to ensure that the targets approved in budget authorization are in fact attained at minimum cost.

Section 10. Compensation and Position Classification. - The size of personnel services expenditures relative to thetotal budget and the number of agencies and personnel in government call for an effective national compensationand position classification policy. The Constitutional principle of a single compensation scheme for the governmentand its instrumentalities is one of the bases of the government budget process AI2Ghe.

CHAPTER 3BUDGET PREPARATION

Section 11. Submission of the Budget. - The President shall, in accordance with Section 22 (1), article VII of theConstitution, submit within thirty (30) days from the opening of each regular session of the Congress as the basis forthe preparation of the General Appropriations Act, a national government budget estimated receipts based onexisting and proposed revenue measures, and of estimated expenditures 1jdPrYd.

The President shall include in the budget submission the proposed expenditure level of the Legislative and JudicialBranches and of Constitutional bodies, which shall have undergone the same process of evaluation and which shallhave been subject to the same budgetary policies and standards applicable to agencies in the Executive Branch.

The President may transmit to the Congress from time to time, such proposed supplemental or deficiencyappropriations as are, in his judgment, (1) necessary on account of laws enacted after the transmission of the Budget,or (2) otherwise needed in the public interest.

Section 12. Form and Content of the Budget. - The budget proposal of the President shall include current operatingexpenditures and capital outlays. It shall comprise such funds as may be necessary for the operation of the programs,projects and activities of the various departments and agencies. The proposed General Appropriations Act and otherAppropriations Acts necessary to cover the budget proposals shall be submitted to the Congress to accompany thePresident's budget submission.


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The budget shall be presented to the Congress in such form and content as may be approved by the President andmay include the following:

(1) A budget message setting forth in brief the government's budgetary thrusts for the budget year, including theirimpact on development goals, monetary and fiscal objectives, and generally on the implications of the revenue,expenditure and debt-proposals; and

(2) Summary financial statements setting forth:

(a) Estimated expenditures and proposed appropriations necessary for the support of the Government for the ensuingfiscal year, including those financed from operating revenues and from domestic and foreign borrowings;

(b) Estimated receipts during the ensuing fiscal year under laws existing at the time the budget is transmitted andunder the revenue proposals, if any, forming part of the year's financing program;

(c) Actual appropriations, expenditures, and receipts during the last completed fiscal year;

(d) Estimated expenditures and receipts and actual or proposed appropriations during the fiscal year in progress;

(e) Statements of the condition of the National Treasury at the end of the last completed fiscal year, the estimatedcondition of the Treasury at the end of the fiscal year in progress and the estimated condition of the Treasury at theend of the ensuing fiscal year, taking into account the adoption of financial proposals contained in the budget andshowing, at the same time, the unencumbered and unobligated cash resources;

(f) Essential facts regarding the bonded and other long-term obligations and indebtedness of the Government, bothdomestic and foreign, including identification of recipients of loan proceeds; and

(g) Such other financial statements and data as are deemed necessary or desirable in order to make known inreasonable detail the financial condition of the government.

Section 13. Budget Levels. - The ordinary income of government shall be used primarily to provide appropriationsfor current operations, except in case of a national emergency or serious financial stress, the existence of which has

been duly proclaimed by the President.

The level of aggregate revenue expenditure and debt shall be jointly recommended to the President by theDepartment of Budget and Management, the Department of Finance, the National Economic and DevelopmentAuthority and the Central Bank of the Philippines, acting within the Development Budget Coordination Committeeof the National Economic and Development Authority.

No appropriations for current operations and capital outlays of the Government shall be proposed unless the amountinvolved is covered by the ordinary income, or unless it is supported by a proposal creating additional sources of funds or revenue, including those generated from domestic and foreign borrowings, sufficient to cover the same.Likewise, no appropriation for any expenditure, the amount of which is not covered by the estimated income fromthe existing sources of revenue or available current surplus, may be proposed, unless it is supported by a proposalcreating an additional source of funds sufficient to cover the same.

Proposals creating additional sources of funds shall be prepared in the form of revenue bills.

The provisions of this section shall not be construed as impairing in any way the power of the Congress to enactrevenue and appropriation bills, nor the authority of the President to propose special revenue and appropriation billsafter the submission of the budget.

Section 14. Budget Estimates. - Each head of department, office or agency of the National Government, includingthe Legislative and Judicial Branches, and including government owned or controlled corporations, shall submit hisrequest for appropriations to the Department of Budget in accordance with the budget calendar, format, and such


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rules and regulations as may be issued in implementation of this Decree 73jY1YDW.

The budget estimates of agencies shall include the following information:

(1) 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 cost involved;

(2) Linkage of the work and financial proposals to approved development plans;

(3) Estimated current operating expenditures and capital outlays, with comparative data for the preceding andcurrent budget years;

(4) Identification by region, pursuant to policies on the regionalization of government operations;

(5) Financial sources, reflecting all revenues, proceeds of foreign and domestic borrowings, and other sources,particularly those which accrue to the General Funds;

(6) Contingent liabilities, including national government guarantees of obligations of government-owned orcontrolled corporations and their subsidiaries;

(7) Brief description of the major thrusts and priority programs and projects for the budget year, results expected foreach 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;

(8) Organization charts and staffing patterns indicating the list of existing and proposed positions withcorresponding salaries, and proposals for position classification and salary changes, duly supported by adequate

justification.

Section 15. Regional Budget. - The Budgets of national government agencies shall be prepared taking into full andcareful consideration the opportunities and requirements specific to the various regions of the country. Where theyare organized, regional offices shall originate agency budget proposals, in accordance with approved priorities andguidelines.

Agencies which are not regionalized shall nonetheless estimate the amounts planned to be spent for each region of the country.

The Secretary shall identify by region the expenditure programs of the national government agencies in the nationalgovernment budget, and release funds to national government agencies in accordance with the approved regionaldistribution of expenditures, specifying the region of destination.

Departments and agencies shall sub-allot in full and without the imposition of reserves, the approved budgetallocation of their various regional offices, except as may be authorized by the Secretary, in case realignment of expenditures prove to be necessary in the course of budget execution. The Secretary shall issue the rules andregulations needed to implement the provisions of this section.

Section 16. Budget Evaluation. - Agency proposals shall be reviewed on the basis of their own merits and not on the

basis of a given percentage or peso increase or decrease from a prior year's budget level, or other similar rule of thumb that is not based on specific justification. Proposed activities, whether new or ongoing, shall be evaluatedusing a zero-base approach and on the basis of (1) relationship with the approved development plan, (2) agencycapability as demonstrated by past performance, (3) complemental role with related activities of other agencies, and(4) other similar criteria. The realization of savings in a given budget year and the consequent non-utilization of funds appropriated or released to a given agency shall not be a negative factor in the budget evaluation for asubsequent year oVGbBoT05.

Section 17. Foreign-Assisted Projects. - The budgetary implications of foreign-assisted projects shall be explicitlyconsidered at the time of project design and financing negotiation. The project study shall specify the cash flow


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appropriation of any project or program of any department, bureau, agency or office of the Government over theamount submitted by the President in his budget proposal. In case of any reduction in the proposed appropriation fora project or program, a corresponding reduction shall be made in the total appropriation of the department, office oragency concerned and in the total of the General Appropriations Bill.

Section 25. Prohibition Against Enactment of Additional Special Provisions. - The Congress shall not add specialprovisions in the budget earmarking the use of appropriations for specific programs or activities nor shall it increasethe amounts specified in special provisions beyond those proposed by the President.

Section 26. Automatic Appropriations. - All expenditures for (1) personnel retirement premiums, governmentservice insurance, and other similar fixed expenditures, (2) principal and interest on public debt, (3) nationalgovernment guarantees of obligations which are drawn upon, are automatically appropriated: provided , that noobligations shall be incurred or payments made from funds thus automatically appropriated except as issued in theform of regular budgetary allotments.

Section 27. Supplemental Appropriations. - All appropriation proposals shall be included and considered in thebudget preparation process. After the President shall have submitted the Budget, no supplemental appropriationmeasure supported from existing revenue measures shall be passed by the Congress. However, supplemental ordeficiency appropriations involving the creation of new offices, programs or activities may be enacted if accompanied and supported by new revenue sources.

Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations. - Unexpendedbalances of appropriations authorized in the General Appropriation Act shall revert to the unappropriated surplus of the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure except bysubsequent legislative enactment: Provided , that appropriations for capital outlays shall remain valid until fullyspent or reverted: provided, further , that continuing appropriations for current operating expenditures may bespecifically recommended and approved as such in support of projects whose effective implementation calls formulti-year expenditure commitments: provided, finally , that the President may authorize the use of savings realizedby an agency during given year to meet non-recurring expenditures in a subsequent year bs5u0o.

The balances of continuing appropriations shall be reviewed as part of the annual budget preparation process and thepreparation process and the President may approve upon recommendation of the Secretary, the reversion of funds nolonger needed in connection with the activities funded by said continuing appropriations.

Section 29. Loan Proceeds. - Expenditures funded by foreign and domestic borrowings shall be included within theexpenditure program of the agency concerned. Loan proceeds, whether in cash or in kind, shall not be used withoutthe corresponding release of funds through a Special Budget as herein provided 573q83OAjr.

Section 30. Contingent Liabilities. - Government agencies, particularly government-owned or controlledcorporations, shall periodically report to the Secretary of Finance and the Secretary of Budget on the status of obligations they have entered into and which are the subject of government guarantees x06QJFroH7.

Section 31. Liability for Unauthorized Printing Press Revisions. - It shall be unlawful for any person to make anyunauthorized revision of any figure, text or provision in the General Appropriations Act and in the other budgetdocuments during or in the process of the printing. Any unauthorized change made either by addition, modificationor deletion, shall be null and void.

Persons who, in violation of this section, make any unauthorized revision in the budget documents, shall becriminally liable for falsification of legislative documents under the Revised Penal Code. When the offender is agovernment official or employee, he shall, in addition to criminal prosecution, be dismissed from the serviceINY9BO8g.

CHAPTER 5BUDGET EXECUTION


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Section 32. Use of Appropriated Funds. - All moneys appropriated for functions, activities, projects and programsshall be available solely for the specific purposes for which these are appropriated.

Section 33. Allotment of Appropriations. - Authorized appropriations shall be allotted in accordance with theprocedure outlined hereunder:

(1) Appropriations authorized for any Department or agency of the Government may be made available forexpenditure when the head of each Department or agency submits to the Secretary a request for allotment of fundsshowing the estimated amounts needed for each function, activity or purpose for which the funds are to be expendedduring the applicable allotment period. The form and the time of submission of the request for allotment showing theproposed quarterly allotments of the whole authorized appropriation for the department or agency, shall beprescribed by the Secretary.

(2) In the administration of the allotment system herein provided, each calendar year shall be divided into fourquarterly allotment periods beginning, respectively, on the first day of January, April, July and October. In any casewhere the quarterly allotment period is found to be impractical or otherwise undesirable, the Secretary may prescribea different period suited to the circumstances.

(3) Request for allotment shall be approved by the Secretary who shall ensure that expenditures are covered byappropriations both as to amount and purpose and who shall consider the probable needs of the department oragency for the remainder of the fiscal year or period for which the appropriation was made.

(4) At the end of every quarter, each department or agency shall report to the Secretary the current status of itsappropriations, the cumulative allotments, obligations incurred or liquidated, total disbursements, unliquidatedobligations and unexpended balances and the results of expended appropriations.

(5) Releases of funds appropriated for a given agency may be made to its regional offices if dictated by the need andurgency of regional activities.

(6) The Secretary shall have authority to modify or amend any allotment previously issued. In case he shall find atany time that the probable receipts from taxes or other sources of any fund will be less than anticipated and that as aconsequence the amount available for the remainder of the term of the appropriations or for any allotment periodwill be less than the amount estimated or allotted therefor, he shall, with the approval of the President and after

notice to the department or agency concerned, reduce the amount or amounts allotted so as to conform to thetargeted budgetary goals.

(7) The Secretary shall maintain a control record showing quarterly by funds, accounts, and other suitableclassifications, the amounts appropriated; the estimated revenues, the actual revenues or receipts, the amountsallotted and available for expenditures, the unliquidated obligations, actual balances on hand, and the unencumberedbalance of the allotments for each department or agency of the Government.

Section 34. Program of Expenditure. - The Secretary of Budget shall recommend to the President the year's programof expenditure for each agency of the government on the basis of authorized appropriations. The approvedexpenditure program shall constitute the basis for fund release during the fiscal period, subject to such policies, rulesand regulations as may be approved by the President.

Section 35. Special Budgets for Lump-Sum Appropriations. - Expenditures from lump-sum appropriationsauthorized for any purpose or for any department, office or agency in any annual General AppropriationsAct or other Act and from any fund of the National Government, shall be made in accordance with a specialbudget to be approved by the President, which shall include but shall not be limited to the number of eachkind of position, the designations, and the annual salary proposed for which an appropriation is intended.This provision shall be applicable to all revolving funds, receipts which are automatically made available forexpenditure for certain specific purposes, aids and donations for carrying out certain activities, or depositsmade to cover to cost of special services to be rendered to private parties. Unless otherwise expressly providedby law, when any Board, head of department, chief of bureau or office, or any other official, is authorized toappropriate, allot, distribute or spend any lump-sum appropriation or special, bond, trust, and other funds,


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Section 42. Adjustment of Appropriations for Reorganization. - When under authority of law, a function or anactivity is transferred or assigned from one agency to another, the balances of appropriations which are determinedby the head of such department to be available and necessary to finance or discharge the function or activity sotransferred or assigned may, with the approval of the President, be transferred to and be made available for use bythe agency to which said function or activity is transferred or assigned for the purpose for which said funds wereoriginally available. Balances so transferred shall be credited to any applicable existing appropriation account or tonew appropriation accounts which are hereby authorized to be established, and shall be merged with any fundalready in the applicable existing or newly established appropriation account or accounts and thereafter accountedfor as one fund.

The funding requirement of agencies reorganized in accordance with approved reorganization plans or reorganizedpursuant to law enacted after the approval of the General Appropriations Act, are deemed appropriated and shall beavailable for expenditure as soon as the reorganization plans are approved. The Secretary of Budget is herebyauthorized to make necessary adjustments in the appropriations to carry out the provisions of this section. Thedepartment head concerned, with the approval of the Secretary of Budget, is hereby authorized to make necessarysalary adjustments resulting from final selection of personnel to fill the positions in the staffing patterns of reorganized agencies, to make necessary salary adjustments resulting from new appointments, promotions or salaryincreases, subject to the provisions of Presidential Decree No. 985.

Section 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violationof the provisions of this Code or of the general and special provisions contained in the annual General or otherAppropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and everyofficial or employee authorizing or making such payment, or taking part therein, and every person receiving suchpayment shall be jointly and severally liable to the Government for the full amount so paid or received.

Any official or employee of the Government knowingly incurring any obligation, or authorizing any expenditure inviolation of the provisions herein, or taking part therein, shall be dismissed from the service, after due notice andhearing by the duly authorized appointing official. If the appointing official is other than the President and should hefail to remove such official or employee, the President may exercise the power of removal sq8M.

Section 44. Accrual of Income to Unappropriated Surplus of the General Fund. - Unless otherwise specificallyprovided by law, all income accruing to the departments, offices and agencies by virtue of the provisions of existinglaws, orders and regulations shall be deposited in the National Treasury or in the duly authorized depository of the

Government and shall accrue to the unappropriated surplus of the General Fund of the Government: Provided , Thatamounts received in trust and from business-type activities of government may be separately recorded and disbursedin accordance with such rules and regulations as may be determined by the Permanent Committee created under thisAct.

Section 45. Special, Fiduciary and Trust Funds. - Receipts shall be recorded as income of Special, Fiduciary orTrust Funds or Funds other than the General Fund, only when authorized by law and following such rulesand regulations as may be issued by a Permanent Committee consisting of the Secretary of Finance asChairman, and the Secretary of the Budget and the Chairman, Commission on Audit, as members. The sameCommittee shall likewise monitor and evaluate the activities and balances of all Funds of the nationalgovernment other than the General fund and may recommend for the consideration and approval of thePresident, the reversion to the General fund of such amounts as are (1) no longer necessary for the attainmentof the purposes for which said Funds were established, (2) needed by the General fund in times of emergency,

or (3) violative of the rules and regulations adopted by the Committee: provided , that the conditions originallyagreed upon at the time the funds were received shall be observed in case of gifts or donations or otherpayments made by private parties for specific purposes.

Section 46. Service Fees and Honoraria. - Agencies are authorized to charge fees, including honoraria and otherreasonable allowances, as compensation for consultation, seminars or training programs, or technical servicesrendered to other government agencies or private parties. Such fees or honoraria shall be recorded as income of thegovernment and subject to the usual accounting, auditing and other pertinent requirements.

Section 47. Administration of Lump Sum Funds. - The Department of Budget shall administer the Lump-Sum Funds


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appropriated in the General Appropriations Act, except as otherwise specified therein, including the issuance of Treasury Warrants covering payments to implementing agencies or other creditors, as may be authorized by thePresident.

Section 48. Cost Reduction. - Each head of a department bureau, office or agency shall implement a cost reductionprogram for his department bureau, office or agency for the purpose of reducing cost of operations and shall submitto the President reports on the results of the implementation thereof. The Department of Budget shall providetechnical and other necessary assistance in the design and implementation of cost reduction activities. An incentiveaward not exceeding one month's salary may be granted to any official or employee whose suggestion for costreduction has been adopted and shall have actually resulted in cost reduction, payable from the saving resultingtherefrom.

Section 49. Authority to Use Savings for Certain Purposes. - Savings in the appropriations provided in the GeneralAppropriations Act may be used for the settlement of the following obligations incurred during a current fiscal yearor previous fiscal years as may be approved by Secretary in accordance with rules and procedures as may beapproved by the President:

(1) Claims of officials, employees and laborers who died or were injured in line of duty, including burial expenses asauthorized under existing law;

(2) Commutation of terminal leaves of employees due to retirement, resignation or separation from the servicethrough no fault of their own in accordance with the provisions of existing law, including unpaid claims forcommutation of maternity leave of absence;

(3) Payment of retirement gratuities or separation pay of employees separated from the service due to governmentreorganization;

(4) Payment of salaries of employees who have been suspended or dismissed as a result of administrative ordisciplinary action, or separated from the service through no fault of their own and who have been subsequentlyexonerated and reinstated by virtue of decisions of competent authority;

(5) Cash awards to deserving officials and employees in accordance with civil service law;

(6) Salary adjustments of officials and employees as a result of classification action under, and implementation of,the provisions of the Compensation and Position Classification Act, including positions embraced under the CareerExecutive Service;

(7) Peso support to any undertaking that may be entered into by the government with international organizations,including administrative and other incidental expenses;

(8) Covering any deficiency in peso counterpart fund commitments for foreign assisted projects, as may be approvedby the President;

(9) Priority activities that will promote the economic well being of the nation, including food production, agrarianreform, energy development, disaster relief, and rehabilitation.

(10) Repair, improvement and renovation of government buildings and infrastructure and other capital assetsdamaged by natural calamities;

(11) Expenses in connection with official participation in trade fairs, civic parades, celebrations, athleticcompetitions and cultural activities, and payment of expenses for the celebration of regular or special officialholidays;

(12) Payment of obligations of the government or any of its departments or agencies as a result of final judgment of the Courts; and


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(13) Payment of valid prior year's obligations of government agencies with any other government office or agency,including government-owned or controlled corporations.

Section 50. Appointment of Budget Officers. - No person shall be appointed as budget officer in any department,bureau, office or agency unless he meets the qualification and training requirements established by the BudgetCommission as prerequisite to appointment, in addition to other qualification requirements prescribed by the CivilService Commission for the position.

CHAPTER 6BUDGET ACCOUNTABILITY

Section 51. Evaluation of Agency Performance. - The President, through the Secretary shall evaluate on a continuingbasis the quantitative and qualitative measures of agency performance as reflected in the units of work measurementand other indicators of agency performance, including the standard and actual costs per unit of work.

Section 52. Budget Monitoring and Information System. - The Secretary of Budget shall determine accounting andother items of information, financial or otherwise, needed to monitor budget performance and to assess effectivenessof agencies operations and shall prescribe the forms, schedule of submission, and other components of reportingsystems, including the maintenance of subsidiary and other recording which will enable agencies to accomplish andsubmit said information requirements: provided , that the Commission on Audit shall, in coordination with theSecretary of Budget, issue rules and regulations that may be applicable when the reporting requirements affectaccounting functions of agencies: provided, further , that the applicable rules and regulations shall be issued by theCommission on Audit within a period of thirty (30) days after the Department of Budget and Managementprescribes the reporting requirements.

Section 53. Monitoring of Expenditures. - Expenditures of national government agencies shall be recorded so as toidentify expenditures as classified into such categories as may be determined by the Department of Budget andManagement, including but not limited to the following: (1) agency incurring the obligation, (2) program, projectand activity, (3) object of expenditure, including personal services, operating and maintenance expenditures,equipment, and capital outlays, (4) region or locality of use, (5) economic or functional classification of theexpenditure, (6) obligational authority and cash transactions arising from fund releases, and such otherclassifications as may be necessary for the budget process. The Secretary of Budget shall determine the data and

information requirements thus needed and the Commission on Audit shall formulate the accounting rules andregulations, including changes in the Chart of Accounts and the general or subsidiary accounting records, as may benecessary to generate the desired data and information. The Chief Accountants of agencies and where necessary,accountants of regional offices, shall submit the data needed by the Department of Budget and Management inaccordance with such rules and regulations as it may formulate N6zIL.

Section 54. Standard Costs. - The Department of Budget and Management shall develop standard costs for dulyapproved units of work measurement for each agency's budgetary projects or activities. These standard costs shall becompared with actual unit costs and utilized in the evaluation of agency budgetary performance.

Section 55. Review of Budgetary Programs. - The Secretary of Budget shall conduct a continuing review of thebudgetary program and project structure of each department, office or agency, the result of which shall be the basisfor modifying or amending such structure for incorporation in the President's budget proposals to the Congress.

Section 56. Semi-Annual Report on Accomplishments of Government Agencies. - The heads of departments, bureaus,offices or agencies of the government shall submit a semi-annual report of their accomplishments, both work andfinancial results, in accordance with such content and format as may be prescribed by the Secretary. These reportsshall be designed and use for the purpose of monitoring the efficiency and effectiveness with which budgeted fundsare being utilized, and generally for verifying the attainment of goals established in the budget process.

Section 57. Failure to Submit Reports. - Failure on the part of agency heads, chief accountants, budget officers,cashiers, disbursing officers, administrative and personnel officers, and responsible officers of departments, bureaus,offices and agencies to submit trial balances, work and financial plans, special Budgets, reports of operation and


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income, plans, special budgets, reports of operation and income, current agency plantilla of personnel and such otherreports as may be necessary and required by the Department of Budget shall automatically cause the suspension of payment of their salaries until they have complied with the requirements of the Department of Budget. Noappropriation authorized in the General Appropriations Act shall be made available to pay the salary of any officialor employee who violates the provisions of this section, in addition to any disciplinary action that may be institutedagainst such erring official or employee.

CHAPTER 7EXPENDITURE OF APPROPRIATED FUNDS

Section 58. Contracting of Activities. - Agencies may enter into contracts with individuals or organizations, bothpublic and private, subject to provisions of law and applicable guidelines approved by the President: provided, thatcontracts shall be for specific services which cannot be provided by the regular staff of the agency, shall be for aspecific period of time, and shall have a definite expected output: provided, further, that implementing, monitoringand other regular and recurring agency activities shall not be contracted for, except for personnel hired on anindividual and contractual basis and working as part of the organization, or as otherwise may be approved by thePresident: Provided, finally, that the cost of contracted services shall not exceed the amount that would otherwise beincurred had the work been performed by regular employees of government, except as may be authorized under thissection.

Section 59. Authority to Receive Additional Compensation. - Officials and employees who are duly appointed bycompetent authority to any position in another government office or agency in a concurrent capacity, may, in thediscretion of the President, be allowed to receive additional compensation in the form of allowance or honorarium atsuch rates he shall fix and subject to such conditions as he may prescribe. Such additional compensation shall bepaid from the appropriations of the office or agency benefitting from the concurrent service.

Section 60. Restrictions on Salary Increases. - No portion of the appropriations provided in the GeneralAppropriations Act shall be used for payment of any salary increase or adjustment unless specifically authorized bylaw or appropriate budget circular nor shall any appropriation for salaries authorized in the General AppropriationsAct, save as otherwise provided for under the Compensation and Position Classification Act, be paid unless thepositions have been classified by the Budget Commission.

Section 61. Merit Increases. - The budgets of national government agencies may provide for a lump-sum for meritincreases, subject to such terms and conditions as may be approved by the President. Such lump-sum shall be usedto fund salary increases approved by the head of agency in recognition of meritorious performance: Provided , Thatthe Civil Service Commission and the Department of Budget shall jointly issue the rules and regulations governingthe granting of such merit increases.

Section 62. Salary for Substitutionary Service. - When an official or employee is issued a duly approvedappointment in a temporary or acting capacity to take the place and perform the duties of another who is temporarilyabsent from his post with pay, savings in the appropriations of the department, bureau or office may be used for thepayment of his salary or differential, subject to the approval of the Secretary.

Section 63. Additional Compensation for Overtime Service. - Officials and employees of the National Government,when required to work overtime after regular working hours during ordinary days, during half-day sessions, or on

Saturdays, Sundays and holidays, by the heads of departments concerned, to finish work that must be completedwithin a specified time, may be paid overtime compensation from any unexpected balance of the appropriation forsalaries and wages authorized in the General Appropriations Act and under such guidelines as may be issued by thePresident.

Section 64. Compensation of Persons Receiving Pension. - A person receiving life pension, annuity, or gratuity as aresult of service in the national government or any local government unit, or from any government-owned orcontrolled corporation, who is reappointed to any position, the appropriation for the salary of which is provided fromfunds of the office, shall have the option to receive either the compensation for the position, or the pension, gratuityor annuity, but in no case shall he receive both.


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Section 65. Prohibition of Voluntary Service. - Unless otherwise specifically approved by the President, no personshall be employed or appointed in the government under the guise of voluntary service, with compensation belowthe authorized hiring rate for the position, but with privilege of transportation and/or representation expenses in anyform, or of receiving per diems, allowances, honoraria, subsistence, quarters in cash or in kind, payable fromgovernment funds: provided , that the application of this provisions may be waived to authorize voluntary service inthe Armed Forces of the Philippines or in connection with relief operations.

Section 66. Additional Compensation for School Faculty Members. - Professors, instructors, teachers, or members of the faculty of government schools, colleges and universities, when required to teach more than their regular teachingloads may be paid additional compensation not exceeding seventy-five percentum of their basic salary.

Section 67. Laundry. - At the discretion of the department head concerned, any official or employee of the nationalgovernment serving in any hospital, penal institution, or other similar institution, who is required to wear a uniformduring the performance of his duties, may be granted laundry allowance in kind, or which may be commuted at suchrates as may be authorized by the Department of Budget zQYQYlGT.

Section 68. Hazard Pay. - Upon recommendation of the department head concerned and approval of the Secretary,hazard pay may be allowed to employees who are actually assigned to danger or strife-torn areas, disease-infestedplaces, or in distressed or isolated stations and camps, which expose them to great danger of contagion or peril tolife. Such hazard pay shall be paid from savings of the department concerned at such rates, terms and conditions asthe Secretary may prescribe.

Section 69. Subsistence. - No official or employee of the national government shall be given subsistence, the cost of which is payable from any fund, except the following and only when an appropriation therefor is specificallyprovided:

(1) Marine officers, engineers and crew of government vessels, launches, and motorboats, who shall take their mealson the mess when aboard the said vessels, launches, or motorboats;

(2) Lightkeepers and other employees in light stations duly authorized by the head of the department to receivesubsistence, who shall be furnished raw canned, or preserved food supplies;

(3) Officials and employees who are required to render service within the premises of hospitals, penal institutions,leper institutions, military installations, and other similar institutions, for a continuous period that includes mealtime, may be allowed full subsistence when required to live in said premises to make their services available at anyand all times;

(4) Laborers temporarily fielded to isolated or unsettled districts shall be furnished the usual rations or the equivalentin cash, at the expense of the government.

In hospitals and leper institutions where there are no mess halls or whenever these are inadequate, personnel entitledto subsistence allowance in kind may commute such subsistence upon request of the personnel concerned subject tothe approval of the department head at authorized rates chargeable against the appropriations for supplies andmaterials authorized in the General Appropriations Act qoGZYe7C.

Section 70. Subsistence of Crew of Government Vessels. - The subsistence allowance for the officers and crew of thecoast guard and revenue cutters and lighthouse tenders and other large vessels operated by the Government shall bespent for conducting a mess under the charge and administration of one or more members of the complement in eachvessel to be designated by the corresponding head of department, and in accordance with regulations to be issued byhim. The person or persons so designated shall keep an account of the advances of funds received and expendituresmade therefrom for the operation of the mess and shall render such report to the corresponding Accounting Officerpromptly at the end of each month.


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Section 71. Furnished Quarters. - When the position of any official or employee is provided with "furnishedquarters", such official or employee shall be entitled to the use of such government-owned furniture and equipmentas are necessary for his board and lodging and those for his family including children below twenty-one years of ageYnXUf.

Section 72. Per Diems of Government Officials and Employees. - When a government official or employee isauthorized to travel on official business outside of his permanent station, he shall be entitled to per diems to coverhis board and lodging in accordance with his schedule: provided, that in addition to per diems, the official oremployee may be entitled to transportation expenses in going to and coming from his destination and to a dailyallowance while in the field: provided, further, that officials and employees on travel status whose expenses forboard and lodging are paid directly or indirectly by government may not be entitled to receive the per diems andallowances corresponding to such payments.

Department secretaries, heads of Constitutional bodies, undersecretaries and all other positions of equivalent rank are authorized the reimbursement of actual expenses supported by receipts, within such limits as may be imposedunder the provisions of this section.

Officials and employees authorized to travel abroad may be granted clothing allowance: provided, that no official oremployee shall be granted such clothing allowance oftener than once every twenty-four (24) months.

The rates of per diems and other allowances as authorized in this section shall be determined by the President. Therates may be changed from time to time upon recommendation of a Travel Rates Committee which is herebycreated, consisting of the Secretary of Budget as Chairman and the Secretary of Foreign Affairs, the Secretary of Tourism and the Chairman, Commission on Audit, or their representatives, as members.

The Committee shall review travel rates and shall recommend to the President for consideration and approvalmodification in rates and policy when found to be warranted by actual domestic or foreign travel costs, as the casemay be.

Government-owned or controlled corporations shall observe the rates established under this section: provided, thatprofit making corporations may adopt their own scales as may be provided by law. The Travel Rates Committeeshall issue the necessary rules and regulations to enforce the provisions of this section.

Section 73. Additional Conditions for Payment of Travel Expenses. - When travel is done by water and subsistenceis not included in the transportation cost, the amount actually and necessarily spent for subsistence during suchtravel time shall be paid, and no per diems shall be allowed in lieu thereof.

Per diems and travel allowances shall not be granted to members of field parties or others for whom subsistence andallowances in kind are supplied or other special provision made to cover travel expenses.

The travel expenses of a government official or employee who is assigned to render a special service to any privateperson or entity, the expenses for which are payable by the latter, shall be paid from a deposit which the privateparty shall be required to make before the performance of the special service is commenced, subject to thelimitations and requirements herein provided for travel expenses payable from government funds.

No official or employee of the Government who remains temporarily at one station for a period longer than one (1)month shall be paid per diems in excess of one (1) month, except upon the approval of the head of department, and,in case his temporary stay in any one place exceeds three (3) months, payment of per diems in excess of three (3)months shall be made only upon the previous approval of the Secretary FtWu.


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Section 74. Transportation of Members of Family of an Employee Transferred from One Station to Another. -Whenever, due to the exigencies of the service and not at his own request, an official or employee is transferredfrom one station to another, said official or employee and his spouse and children below twenty-one years of ageshall be entitled to transportation and freight for reasonable and necessary baggage and household effects, at theexpense of the Government, to be paid from the appropriation for traveling expenses of the bureau or officeconcerned.

Section 75. Purchase, Use, Operation and Maintenance of Motor Transport Equipment. - No appropriation forequipment authorized in the General Appropriations Act shall be used directly or indirectly for the purchase of automobiles, jeeps, jitneys, station wagons, motorcycles, trucks, launches, speedboats, airplanes, helicopters andother types of motor transport equipment unless otherwise specifically authorized by the President.

All departments, bureaus, offices and agencies authorized to purchase motor transport equipment including thoseacquired through donations, gifts or gratuitous title are likewise authorized to use, operate and maintain them forpurposes of carrying out the official functions and activities of the agency. These motor vehicles shall be usedstrictly for official business, bear government plates only, and after office hours kept in garage provided therefor by

the office or agency to which they belong, except, when in use for official business outside office hours. ThePresident, however, may authorize exceptions from these provisions for officials of government who work underextended hours or whose activities call for special security arrangements. Any violation of the provisions of thissection shall subject the erring official or employee to administrative disciplinary action and he shall be personallyliable for any loss or damage caused to the government or third persons.

The Commission on Audit shall issue rules and regulations governing the use, operation and maintenance of government motor transport equipment.

Section 76. Limitation of Rental of Motor Vehicles. - No appropriations authorized in the General AppropriationsAct shall be used for renting motor transport equipment for a continuous period of more than fifteen days, except asmay be authorized by the Secretary.

Section 77. Limitation of Purchase of Supplies, Materials, and Equipment Spare Parts. - Except as otherwiseprovided in the General Appropriations Act, the stock on hand of supplies, materials and equipment spare parts,acquired through ordinary and emergency purchase, shall at no time exceed normal three-month requirements,subject to the pertinent rules and regulations issued by competent authority: Provided , That department heads mayapprove the build-up of stocks on hand of critical supplies and materials, in anticipation of cost increases orrequirements of a national emergency, and specifying maximum quantities of individual items, but in no case shallthese stocks exceed more than one year's supply, unless otherwise approved by the President.

Section 78. Purchase of Locally Manufactured Products. - All appropriations for the purchase of equipment,supplies and materials authorized in the General Appropriations Act shall be available only for locally manufactured

equipment; parts, accessories, medicines and drugs, supplies and materials, except when none is available in themarket or when the price of the locally manufactured article exceed those determined by the Flag Law.

Section 79. Availability of Appropriations for Rental of Building and Grounds. - Any appropriation authorized inany Act for rental of buildings and grounds for any department, bureau, office or agency shall be available forexpenditure only when authorized by the department head concerned. Such appropriation may also be used forlease-purchase arrangements.

With the concurrence of the Secretary of Budget and Management and the Secretary of Finance, the head of the


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department may contract with any government financial institution for loans intended for the acquisition of land forthe construction of an office building for any of the agencies under the department. Annual amortization of the loansshall be taken from the appropriation for rental authorized under any Act for the department, bureau or officeconcerned.

Section 80. Misuse of Government Funds and Property. - Any public official or employee who shall apply anygovernment fund or property under his administration or control to any use other than for which such fund orproperty is appropriated by laws, shall suffer the penalty imposed under the appropriate penal laws. .

PRESIDENTIAL DECREE No. 1445ORDAINING AND INSTITUTING A GOVERNMENT AUDITING CODE OF THE

PHILIPPINES

TITLE IIGOVERNMENT AUDITING

CHAPTER 1BASIC POLICIES AND STANDARDS

Section 53. Definition of government auditing. Government auditing is the analytical andsystematic examination and verification of financial transactions, operations, accounts, andreports of any government agency for the purpose of determining their accuracy, integrity, andauthenticity, and satisfying the requirements of law, rules and regulations.

The conduct of government audit shall conform with the auditing standards set forth in thefollowing three sections.

Section 54. General standards. - 1. The audit shall be performed by a person possessed withadequate technical training and proficiency as auditor.

2. In all matters relating to the audit work, the auditor shall maintain complete independence,impartiality and objectivity shall avoid any possible compromise of his independence or any actwhich may create a presumption of lack of independence or the possibility of undue influence inthe performance of his duties.

3. The auditor shall exercise due professional care and be guided by applicable laws, regulationsand the generally accepted principles of accounting in the performance of the audit work as wellas in the preparation of audit and financial reports.

Section 55. Examination and evaluation standards. - 1. The audit work shall be adequatelyplanned and assistants shall be properly supervised.

2. A review shall be made of compliance with legal and regulatory requirements.


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3. An evaluation shall be made of the system of internal control and related administrativepractices to determine the extent they can be relied upon to ensure compliance with laws andregulations and to provide for efficient, economical and effective operations.

4. The auditor shall obtain through inspections, observation, inquiries, confirmation and other

techniques, sufficient competent evidential matter to afford himself a reasonable basis for hisopinions, judgments, conclusions, and recommendations.

Section 56. Reporting standards. - 1. Audit reports shall be dated, signed manually and shall beissued and distributed in the manner provided by regulations of the Commission.

2. Audit reports shall contain basically the transmittal statement, scope and objectives of theaudit and time period examined highlights, financial information, findings, recommendations andconclusions as well as other data that may provide the management of the audited agency withthe necessary input for the decision-making process. Tables, charts, graphs and other data todetail the conditions and facts shall be used in proper cases.

3. Audit reports shall meet the following reporting criteria:

(a) Factual matter must be accurately, completely and fairly presented.

(b) Findings must be presented objectively and in language as clear and simple as the subjectmatter permits.

(c) Findings must be adequately supported by evidence in the audit working papers.

(d) Reports must be concise yet complete enough to be readily understood by the users.

(e) Information on underlying causes of problems must be included so as to assist inimplementing or devising corrective actions.

4. Audit reports shall:

(a) Put primary emphasis on improvement; critical comments shall be presented in balancedperspective, recognizing unusual difficulties or circumstances faced by officials concerned.

(b) Identify and explain issued and questions needing further study and consideration by theauditor, the agency or others.

(c) Include recognition or noteworthy accomplishments particularly when managementimprovements in one area or activity may be applied elsewhere.

(d) Include recognition of the views of responsible officials of the agency audited on the auditorsfindings, conclusions and recommendations. Except where the possibility of fraud or othercompelling reason may require different treatment, the auditor's tentative findings andconclusions should be reviewed with officials. When possible, without undue delay, their viewshould be obtained in writing and objectively considered and presented in the final report.


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(e) State whether any significant pertinent information has been omitted because it is deemedconfidential. The nature of such information should be described and the law or other basis underwhich it is withheld should be stated.

5. Audit reports accompanying financial reports shall:(a) State whether the audit was made in accordance with generally accepted auditing standards,and shall disclose the omission of any auditing procedure generally recognized as normal ordeemed necessary by him under the circumstances of a particular case, as well as the reasons forthe omission. Nothing in this section, however, shall be construed to imply authority for theomission of any procedure which auditors would ordinarily employ in the course of audit.

(b) Express the auditor's opinion with respect to

i. whether the financial report have been presented fairly in accordance with applicable laws andregulations and the generally accepted accounting principles applied on a consistent basis.

ii. material changes in accounting principles and practices and their effect on the financialreports.

(c) Identity any matter to which he takes exception and shall specifically and clearly state hisexceptions together with a statement on the effect thereof, to the extent practicable, on the relatedfinancial report.

(d) Contain appropriate supplementary explanatory information about the contents of thefinancial report as may be necessary for full and informative disclosure about the financialoperations of the agency audited.

(e) Explain violations of legal or other regulatory requirements, including instances of non-compliance.

CHAPTER 2AUDIT OBJECTIVES

Section 57. Determination of audit procedures. In the determination of auditing procedures andtechniques to be followed and the extent of examination of vouchers and other documents bygovernment auditors, the Commission shall give due regard to generally accepted principles of auditing and accounting organizations and systems, including consideration of the effectivenessof internal control and related administrative practices of the audited agencies.

Section 58. Audit of assets. The examination and audit of assets shall be performed with a viewto ascertaining their existence ownership, valuation and encumbrances as well as the propriety of items composing the respective asset accounts, determining their agreement with records,proving the accuracy of such records; ascertaining if the assets were utilized economically,efficiently and effectively; and evaluating the adequacy of controls over the accounts.


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Section 59. Audit of Liabilities. In his audit of liabilities the auditor shall seek to establish that allobligations of the agency have been accurately recorded; only bona fide obligations of theagency have been included; the obligations incurred are properly authorized; all provisions of trust indentures or mortgages are complied with; and mortgages and other encumbrances are

fully disclosed.

Section 60. Audit of revenue accounts. The examination and audit of revenue accounts shall beperformed with a view to ascertaining that earned revenues have been duly recorded; and allrecorded revenues have been earned and appropriate classifications of revenues have beenconsistently followed o3UbU.

Section 61. Audit of expense accounts. The examination of expense accounts shall be undertakento ascertain that all expenses incurred have been duly authorized; adequately funded anddocumented; properly recorded; all recorded expenses have been actually incurred; and theclassifications of expenses are appropriate and have been consistently followed.

Section 62. Audit of surplus or networth. The audit of surplus or networth shall seek to determinethe nature of the surplus, whether current or invested surplus; the amount of current surplusavailable to cover appropriations for the operational expenses of the government, the propriety of the ledger accounts and balance sheet presentation account; and the proper authority andrecording of changes in the capital structure made during the period under audit.

CHAPTER 3RECEIPT AND DISPOSITION OF FUNDS AND PROPERTY

Section 63. Accounting for moneys and property received by public officials. Except as mayotherwise be specifically provided by law or competent authority all moneys and propertyofficially received by a public officer in any capacity or upon any occasion must be accountedfor as government funds and government property. Government property shall be taken up in thebooks of the agency concerned at acquisition cost or an appraised value.

Section 64. Designation of collecting officers for government agencies. The head of an agencymay designate such number of collecting officers or agents may be deemed necessary. They shallrender reports of their collections, under the regulations of the Commission, to be submittedpromptly to the auditor concerned who shall conduct the necessary examination land audit withinthirty days from receipt thereof.

Section 65. Accrual of income to unappropriated surplus of the General Fund. (1) Unlessotherwise specifically provided by law, income accruing to the agencies by virtue of theprovisions of law, orders and regulations shall be deposited in the National Treasury or in anyduly authorized government depository, and shall accrue to the unappropriated surplus of theGeneral Fund of the Government.

(2) Amounts received in trust and from business-type activities of government may be separatelyrecorded and disbursed in accordance with such rules and regulations as may be determined by a


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Permanent Committee composed of the Secretary (Minister) of Finance as Chairman, and theCommissioner of the Budget and the Chairman, Commission of Audit, as members.

Section 66. Special, Fiduciary and Trust Funds. Receipts shall be recorded as income of SpecialFiduciary of Trust Funds or Funds other than the General Fund only when authorized by law as

implemented by rules and regulations issued by the Permanent Committee created in thepreceding section xabF5dhm4.

Section 67. Warrants and checks receivables in payment for taxes or other indebtedness to thegovernment. - 1. An office charged with the collection of revenue or the receiving of moneyspayable to the government shall accept payment for taxes, dues or other indebtedness to thegovernment in the form of checks and warrants issued in payment of government obligations,upon proper indorsement and identification of the payee or indorsee. Checks drawn in favor of the government in payment of any such indebtedness shall likewise be accepted by the officerconcerned.

2. When a check drawn in favor of the government is not accepted by the drawee bank for anyreason, the drawer shall continue to be liable for the sum due and all penalties resulting fromdelayed payment. Where the reason for non-acceptance by the drawee bank is insufficiency of funds, the drawer shall be criminally liable therefore.

3. At no instance should money in the hands of the collecting officer be utilized for the purposeof encashing private checks D0eeSI9z2Q.

Section 68. Issuance of Official receipt. - 1. No payment of any nature shall be received by acollecting officer without immediately issuing an official receipt in acknowledgment thereof Thereceipt may be in the form of postage, internal revenue or documentary stamps and the like, orofficially numbered receipts, subject to proper custody, accountability, and audit.

2. Where mechanical devices are used to acknowledge cash receipts, the Commission mayapprove, upon request, exemption from the use of accountable forms.

Section 69. Deposit of moneys in the treasury. - 1. Public officers authorized to receive andcollect moneys arising from taxes, revenues, or receipts of any kind shall remit or deposit intactthe full amounts so received and collected by them to the treasury of the agency concerned andcredited to the particular accounts to which the said moneys belong. The amount of thecollections ultimately payable to other agencies of the government shall thereafter be remitted tothe respective treasuries of these agencies, under regulations which the Commission and theDepartment (Ministry) of Finance shall prescribe BgcC.

2. When exigencies of the service so require, under such rules and regulations as theCommission and the Department (Ministry) of Finance may prescribe, postmasters may beauthorized to use their collections to pay money orders, telegraphic transfer and withdrawalsfrom the proper depository bank whenever their cash advance funds for the purpose have beenexhausted. The amount of collections so used shall be restored upon receipt by the postmaster of the replenishment of his cash advance WqcCYXP.


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3. Pending remittance to the proper treasury, collecting officers may temporarily depositcollections received by them with any treasury, subject to regulations of the Commission.

4. The respective treasuries of those agencies shall in turn deposit with the proper government

depository the full amount of the collections not later than the following banking day.

Section 70. Acknowledgment of receipt for funds. Under such rules and regulations as theCommission and the Department (Ministry) of Finance may prescribe, the Treasurer of thePhilippines and all authorized depository banks shall acknowledge receipt of all funds receivedby them, the acknowledgment bearing the date of actual remittance or deposit and indicatingfrom whom and on what account it was received.

Section 71. Creditors' unclaimed balances. - 1. There shall be maintained in the books of theCommission an account designated "Creditors' Unclaimed Balances" to the credit of which shallbe deposited all moneys for which there is no present rightful claimant. Money accruing to this

account shall be held exclusively for the payment of pertinent obligations against it, whencertified by the Commission, not in excess of the respective amounts which accrued to thataccount by reason of these obligations.

2. After remaining unclaimed for a period of ten years, money in this account shall revert astreasury funds, to the agency that made the deposit, or, in the absence thereof to the nationalgovernment Hq7eTn2.

Section 72. Shipment of government funds or property by carrier; notation of evidence of loss.When government funds or property are transported from one place to another by carrier, it shallbe upon proper bill of lading or receipt from the carrier, it shall be the duty of the consignee orhis representative to make full notation of any evidence of loss, shortage, or damage, upon thebill of lading or receipt before accomplishing it.

Section 73. Credit for loss occurring in transit or due to casualty or forces majeure. - 1. When aloss of government funds or property occurs while they are in transit or the loss is caused by fire,theft, or other casualty or force majeure , the officer accountable therefore or having custodythereof shall immediately notify the Commission or the auditor concerned and, within thirty daysor such longer period as the Commission or auditor may in the particular case allow, shallpresent his applicable for relief, with the available supporting evidence. Whenever warranted bythe evidence credit for the loss shall be allowed. An officer who fails to comply with thisrequirement shall not be relieved of liability or allowed credit for any loss in the settlement of hisaccounts.

2. The Commission shall promulgate rules and regulations to implement the provisions of thissection.

Section 74. Monthly reports of depositories to agency head. At the close of each month,depositories shall report to the agency head, in such from as he may direct, the condition of theagency account standing on their books. The head of the agency shall see to it that a


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reconciliation is made between the balance shown in the reports and the balance found in thebooks of the agency.

Section 75. Transfer of funds from one officer to another. Transfer of government funds fromone officer to another shall, except as allowed by law or regulation, be made only upon prior

direction or authorization, of the Commission or its representative.

Section 76. Transfer of property between government agencies. Any government property that isno longer serviceable or needed by the agency to which it belongs may be transferred withoutcost, or at an appraised value, to other agencies of the government upon authority of therespective heads of agencies in the national government, or of the governing bodies of government-owned or controlled corporations, other self-governing boards or commissions orthe government, or of the local legislative bodies for local government units concerned hgy2UU.

Section 77. Invoice and receipt upon transfer of funds or property. When government funds orproperty are transferred from one accountable officer to another, or from an outgoing officer to

his successor, it shall be done upon properly itemized invoice and receipt which shall invariablysupport the clearance to be issued to the relieved or out-going officer, subject to regulations of the Commission.

Section 78. Disposition of funds or property held by deceased, incapacitated, absconding, or superseded accountable officer. - 1. When an officer, accountable for government funds orproperty absconds with them dies, or becomes incapacitated in the performance of his duties, theproper agency head shall designate a custodian to take charge of the funds or property until asuccessor shall have been appointed and qualified. The agency head may appoint a committee tocount the cash and take an inventory of the property for which the officer was accountable and todetermine the responsibility for any shortage therein. One copy of the inventory and of the reportof the Committee duly certified shall be filed with the Commission but the findings of thecommittee shall not be conclusive until approved by the Commission or its duly authorizedrepresentative.

2. If the absconding, deceased, incapacitated, or superseded officer is accountable for funds orproperty of a province or city, the custodian and committee shall be designated by the Minister(Secretary) of Finance, and if accountable for municipal or barrio (barangay) funds or property,by the provincial treasurer. In all other respects, the above-prescribed proceedings shall beobserved.

3. If the absconding, deceased, incapacitated, or superseded officer is responsible to another whois accountable, the latter may himself designate the committee or take other lawful measures forthe protection of his interest.

Section 79. Destruction or sale of unserviceable property. When government property hasbecome unserviceable for any cause, or is no longer needed, it shall, upon application of theofficer accountable therefor, be inspected by the head of the agency or his duly authorizedrepresentative in the presence of the auditor concerned and, if found to be valueless or unsalable,it may be destroyed in their presence. If found to be valuable, it may be sold at public auction to


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the highest bidder under the supervision of the proper committee an award or similar body in thepresence of the auditor concerned or other duly authorized representative of the Commission,after advertising by printed notice in the Official Gazette, or for not less than three consecutivedays in any newspaper of general circulation, or where the value of the property does not warrantthe expense of publication, by notices posted for a like period in at least three public places in the

locality where the property is to be sold. In the event that the public auction fails, the propertymay be sold at a private sale at such price as may be fixed by the same committee or bodyconcerned and approved by the Commission xrNSV50.

Section 80. Final report of accountable officers. - 1. An accountable officer, upon ceasing to actin his official capacity as such, shall submit to the auditor of the agency concerned a report of hisaccountability.

2. Any remaining balance of such accountability shall be deposited in the proper treasury withoutunnecessary delay.

Section 81. Auditor's certificate of balance. Auditors of all government agencies, shall certify thebalances arising in the accounts settled by them to the Commission and to the proper treasurer,collecting officer, or disbursing officer, in such form as the Commission may prescribe, withinsixty days from the date of receipt of those accounts from the treasurer, collecting officer, ordisbursing officer concerned.

Section 82. Auditor's notice to accountable officer of balance shown upon settlement. Theauditor concerned shall, at convenient intervals, send a written notice under a certificate of settlement to each officer whose accounts have been audited and settled in whole or in part byhim, stating the balances found due thereon and certified, and the charges or differences arisingfrom the settlement by reason of disallowances, charges, or suspensions. The certificate shall beproperly itemized and shall state the reasons for disallowance, charge, or suspension of credit. Acharge of suspension which is not satisfactorily explained within ninety days after receipt of thecertificate or notice by the accountable officer concerned shall become a disallowance, unless theCommission or auditor concerned shall, in writing and for good cause shown, extend the time foranswer beyond ninety days.

Section 83. Transcript of auditor's record as evidence of liability. In any criminal or civilproceeding against an officer for the embezzlement or misappropriation of government funds orproperty, or to recover an amount due the government from an accountable officer it shall besufficient, for the purpose of showing a balance against him, to produce the working papers of the auditor concerned. A showing in this manner of any balance against the officer shall be

prima facie evidence of the misappropriation of the funds or property unaccounted for or of civilliability of the officer as the case may be. The existence or contents of bonds, contracts, or otherpapers relating to or connected with the settlement of any account may be proved by theproduction of certified copies thereof but the court may require the production of the originalwhen this appears to be necessary for the attainment of justice.

CHAPTER 4APPLICATION OF APPROPRIATED FUNDS


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Section 84. Disbursement of government funds. - 1. Revenue funds shall not be paid out of anypublic treasury or depository except in pursuance of an appropriation law or other specificstatutory authority.

2. Trust funds shall not be paid out of any public treasury or depository except in fulfillment of the purpose for which the trust was created or funds received, and upon authorization of thelegislative body, or head of any other agency of the government having control thereof, andsubject to pertinent budget law, rules and regulations.

3. National revenue and trust funds shall not be withdrawn from the National Treasury exceptupon warrant or other instruments of withdrawal approved by the Minister (Secretary) of Financeas recommended by the Treasurer of the Philippines.

4. Temporary investment of investible cash in the National Treasury in any securities issued by

the National Government and its political subdivisions and instrumentalities includinggovernment-owned or controlled corporations as authorized by the Secretary (Minister) of Finance, shall not be construed as disbursements of funds.

Section 85. Appropriation before entering into contract. - 1. No contract involving theexpenditure of public funds shall be entered into unless there is an appropriation therefor, theunexpended balance of which, free of other obligations, is sufficient to cover the proposedexpenditure.

2. Notwithstanding this provision, contracts for the procurement of supplies and materials to becarried in stock may be entered into under regulations of the Commission provided that whenissued, the supplies and materials shall be charged to the proper appropriation account.

Section 86. Certificate showing appropriation to meet contract. Except in the case of a contractfor personal service, for supplies for current consumption or to be carried in stock not exceedingthe estimated consumption for three months, or banking transactions of government-owned orcontrolled banks no contract involving the expenditure of public funds by any governmentagency shall be entered into or authorized unless the proper accounting official of the agencyconcerned shall have certified to the officer entering into the obligation that funds have beenduly appropriated for the purpose and that the amount necessary to cover the proposed contractfor the current fiscal year is available for expenditure on account thereof, subject to verificationby the auditor concerned. The certificate signed by the proper accounting official and the auditorwho verified it, shall be attached to and become an integral part of the proposed contract, and thesum so certified shall not thereafter be available for expenditure for any other purpose until theobligation of the government agency concerned under the contract is fully extinguished.

Section 87. Void contract and liability of officer. Any contract entered into contrary to therequirements of the two immediately preceding sections shall be void, and the officer or officersentering into the contract shall be liable to the government or other contracting party for anyconsequent damage to the same extent as if the transaction had been wholly between private


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parties.

Section 88. Prohibition against advance payment on government contracts. - 1. Except with theprior approval of the President (Prime Minister) the government shall not be obliged to make anadvance payment for services not yet rendered or for supplies and materials not yet delivered

under any contract therefor. No payment, partial or final, shall be made on any such contractexcept upon a certification by the head of the agency concerned to the effect that the services orsupplies and materials have been rendered or delivered in accordance with the terms of thecontract and have been duly inspected and accepted.

2. Notwithstanding the foregoing paragraph, any government agency, with the approval of theproper department head, may furnish supplies and materials to any party who has a contract withthat agency if the supplies and materials are needed in the performance of the services beingcontracted for and the value thereof does not exceed in any one month ten percent of the value of the services already rendered due and unsettled as computed by the agency concernedu4gND79t4.

Section 89. Limitations on cash advance. No cash advance shall be given unless for a legallyauthorized specific purpose. A cash advance shall be reported on and liquidated as soon as thepurpose for which it was given has been served. No additional cash advance shall be allowed toany official or employee unless the previous cash advance given to him is first settled or a properaccounting thereof is made.

Section 90. Payment of rewards. When a reward becomes payable by authority of law forinformation given relative to any offense or for any act done in connection with the apprehensionof the offender, the reward shall, in the absence of special provisions, be paid in such manner asshall be prescribed by executive order. The final determination by the proper administrativeauthority pursuant to law or any such order, as to whether or not the persons concerned areentitled to any reward and the amount thereof, shall be conclusive upon the executive agenciesconcerned as regards the liability of the government.

Section 91. Payments to creditors. Payments to creditors shall be made only upon the specificapproval of the head of the agency concerned or his duly authorized representative, or if there beno such officer, upon the approval of the department head endorsed upon the warrant or check orvouche

executive order no. 292 s. 1987

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