April 23, 2003

REPUBLIC ACT NO. 9206

AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND THREE, AND FOR OTHER PURPOSES

SECTION 1.  Appropriation of Funds.— The following sums, or so much thereof as may be necessary, are hereby appropriated out of any funds in the National Treasury of the Philippines not otherwise appropriated, for the operation of the Government of the Republic of the Philippines from January one to December thirty-one, two thousand three, except where otherwise specifically provided herein:

BUDGETS OF DEPARTMENT OF ENERGY ATTACHED CORPORATIONS

SECTION 2.  Approval of Annual Budgets of Corporations under R.A. No. 7638. — Pursuant to Section 13, Chapter III of Republic Act No. 7638, the FY 2003 annual budgets of the National Electrification Administration (NEA), the National Power Corporation (NPC) and the Philippine National Oil Company (PNOC) are hereby approved as follows:

I. NATIONAL ELECTRIFICATION ADMINISTRATION

SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003
(In Thousand Pesos)
SUMMARY
			Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1	General Administration and Support	P112,621	P24,238	P2,797	P139,656
2	Support to Operations	167,710	36,356	4,196	208,262
3	Operations	188,414	40,396	4,662	233,472
4.	Locally-Funded Projects	350,000	100,000	450,000
				—————	—————	—————
	4.1	Rural Electrification		350,000	100,000	450,000
5.	Debt Servicing		756,027		756,027
				—————		—————
	5.1	Loan Repayment		756,027		756,027
6.	Conversion of Interest on NG advances		500,000		500,000
7.	Social Security Benefits		823,100		823,100
8.	Others			9,225	9,225
			—————	———————	—————	—————
	TOTAL	P468,745	P2,530,117 a/	120,880	P3,119,742
			=========	============	=========	=========
a/ MOOE, not of allowance for depreciation of P19.897 Million
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003		Schedule I
(In Thousand Pesos)
NATIONAL GOVERNMENT EQUITY AND/OR SUBSIDY
			Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	Locally-Funded Project		P350,000	P100,000	P450,000
				—————	—————	—————
	1.1	Rural Electrification		350,000	100,000	450,000
2.	Conversion of Interest on NG advances		500,000	500,000
				—————	—————	—————
	TOTAL		P850,000	P100,000	P950,000
				=========	=========	=========
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003		Schedule II
(In Thousand Pesos)
CORPORATE BORROWINGS
			Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	Debt Servicing		P229,654		P229,654
				—————		—————
	1.1	Loan Repayment		229,654		229,654
				—————		—————
	TOTAL		P229,654		P229,654
				=========		=========
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003		Schedule III
(In Thousand Pesos)
CORPORATE FUNDS
			Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	General Administration and Support	P112,621	P24,238	P2,797	P139,656
2.	Support to Operations	167,710	36,356	4,196	208,262
3.	Operations	188,414	40,396	4,662	233,472
4.	Debt Servicing		526,373		526,373
				—————	—————	—————
	4.1 Loan Repayment		526,373		526,373
5.	Social Security Benefits		823,100		823,100
6.	Others		9,225	9,225
			—————	—————	—————	—————
	TOTAL	P468,745	P1,450,463	P20,880	P1,940,088
			=========	=========	=========	=========

Special Provisions

 

1.  Budget Flexibility and Report.The National Electrification Administration (NEA),through its Board of Administrators, is authorized to realign programs and projects and reallocate the corresponding budgetary requirements herein approved, as well as augment the requirements which may arise from factors beyond the Corporation's control. These may include, but shall not be limited to, currency depreciation, inflation, change in interest rate, substitute projects and programs, and schedule of project implementation should conditions warrant: PROVIDED, That augmentation funds shall not be used for the acquisition of motor vehicles and payment of travelling, representation and discretionary expenses: PROVIDED, FURTHER, That the Personal Services shall not be augmented by savings from Maintenance and Other Operating Expenses as well as, Capital Outlays, or by new funding sources.

A comprehensive financial and narrative report on the aforesaid budgetary adjustments shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance, including the Department of Budget and Management, within thirty (30) days after such adjustments are made.

2.  NEA Staffing Requirements. The staffing summary and personal services cost shall be subject to adjustments upon the approval of a restructuring plan by the NEA Board of Administrators and the President of the Philippines, pursuant to R.A. No. 9136.

3.  Grant of Separation Benefits. NEA employees displaced or separated from the service as a result of the restructuring of the NEA pursuant to R.A. No. 9136 shall be entitled to either a separation pay and other benefits in accordance with existing laws, rules and regulations or the privileges provided under a separation plan which shall be one and one-half months salary for every year of service in the government: PROVIDED, That funds necessary to cover the separation pay of NEA employees shall be provided either by the Government Service Insurance System or from corporate funds pursuant to Section 4, Rule 33 of the IRR of the EPIRA: PROVIDED, FURTHER, That those who avail of such privileges shall start their government service anew if absorbed by any government agency.

II. NATIONAL POWER CORPORATION

SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003
(in Thousand Pesos)
SUMMARY
			Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1	General Administration and Support	P928,226	P1,551,766	P594,016	P3,074,008
			—————	—————	—————	—————
	a.	Head Office Support Group	928,226	1,551,766	594,016	3,074,008
2	Support to Operations	5,954	3,774,613		3,780,567
				—————	—————	—————
	a.	Other Expenses	5,954	3,774,613		3,780,567
3	Operations	2,337,362	124,537,106	13,653,865	140,528,333
			—————	—————	—————	—————
	a.	Utility/Systems Operations	1,825,320	3,439,885	9,492,681	14,757,886
	b.	Strategic Power Utilities Group	512,042	522,008	3,292,726	4,326,776
	c.	Spares			868,458	868,458
	d.	Production of Goods a/		120,575,213		120,575,213
4.	Foreign-Assisted Projects			1,362,597	1,362,597
					—————	—————
	a.	Generation			40,280	40,280
	b.	Transmission Lines and Substations			414,947	414,947
	c.	Others			634,266	634,266
	d.	Interest during Construction			273,104	273,104
5.	Debt Servicing		47,742,784		47,742,784
6.	Other Expenditures		18,917,768	261,105	19,178,873
			—————	—————	—————	—————
	Total		P3,271,542	P196,524,037 b/	15,871,583	P215,667,162
			========	===========	==========	=========
a/ Includes capacity fee payments and NatGas requirement
b/ Excludes non-cash items i.e.,depreciation of P48,799 Million			Schedule I
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003
(In Thousand Pesos)
CORPORATE BORROWINGS
		Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	General Administration and Support	P	P	P464,016	P464,016
					—————	—————
	a.	Head Office Support Group			P464,016	P464,016
2.	Operations		9,137,069	10,361,139	19,498,208
				—————	—————	—————
	a.	Utility/Systems Operations			9,492,681	9,492,681
	b.	Spares			868,458	868,458
	c.	Production of Goods		9,137,069		9,137,069
4.	Foreign-Assisted Projects			1,362,597	1,362,597
					—————	—————
	a.	Generation			40,280	40,280
	b.	Transmission Lines and Substations			414,947	414,947
	c.	Others			634,266	634,266
	d.	Interest during Construction			273,104	273,104
5.	Debt Servicing		47,742,784		47,742,784
6.	Other Expenditures		18,917,768	261,105	19,178,873
				—————	—————	—————
	TOTAL			P75,797,621	P12,448,857	P88,246,478
				=========	=========	=========
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003		Schedule II
(In Thousand Pesos)
CORPORATE FUNDS
			Current Operating Expenditures
				Maintenance
				and Other
			Personal	Operating	Capital
			Services	Expenses	Outlays	Total
1.	General Administration and Support	P928,226	P1,551,766	P130,000	P2,609,992
			—————	—————	—————	—————
	a.	Head Office Support Group	P928,226	P1,551,766	P130,000	P2,609,992
2.	Support to Operations	5,954	3,774,613		3,780,567
			—————	—————	—————	—————
	a.	Other Expenses	5,954	3,774,613		3,780,567
3.	Operations	2,337,362	115,400,037	3,292,726	121,030,125
			—————	—————	—————	—————
	a.	Utility/Systems Operations	1,825,320	3,439,885		5,265,205
	b.	Strategic Power Utilities Group	512,042	522,008	3,292,726	4,326,776
	c.	Production of Goods a/		111,438,144		111,438,144
			—————	—————	—————	—————
		TOTAL	P3,271,542	P120,726,416 b/	3,422,726	P127,420,684
			=========	============	==========	==========
a/ Includes capacity fee payments and NatGas requirement
b/ Excludes non-cash items i.e.,depreciation of P48,799 Million

Special Provisions

1.  Budget Flexibility and Report.The National Power Corporation (NPC) through its of Board of Directors, is authorized to realign programs and projects and reallocate the corresponding budgetary requirements herein approved, as well as augment the requirements which may arise from factors beyond the Corporation's control. These may include, but shall not be limited to, increase in oil/steam/coal/natural gas prices, currency depreciation, inflation, change in generation mix and demand, interest rate, substitute programs and projects, change in generation/transmission system plan, purchased power program, project implementation and schedule and correction, transfer, or elimination at NPC's expense of projects or installations that are hazard to the health or safety of inhabitants, and reorganization, subsidiarization or privatization should conditions warrant: PROVIDED, That augmentation funds shall not be used for the acquisition of motor vehicles and payment of travelling, representation and discretionary expenses: PROVIDED, FURTHER, That the Personal Services shall not be augmented by savings from Maintenance and Other Operating Expenses (MOOE) as well as Capital Outlays or by new funding sources.

 

A comprehensive financial and narrative report on the aforesaid budgetary adjustments shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance, including the Department of Budget and Management, within thirty (30) days after such adjustments are made.

2.  Review on the Payment of the CBK-BROT Projects.The National Power Corporation (NPC) shall make a thorough study and review of the overpayments to the contractor, or its assigns or successors-in-interest, for capacity recovery fees, operation and maintenance fees, and all other charges in connection with the rehabilitation or operation of Kalayaan Hydropower Plant Units 1 and 2 under CBK-BROT project and submit said study to both Houses of Congress within 30 days from the enactment of this law. No amount herein authorized shall be used as payment for the said plant rehabilitation unless the NPC submits the report on time and the Build-Rehabilitate-Operate-Transfer Agreement with the contractor is amended to provide for NPC's recovery of the overpayments: PROVIDED, That the payments to the contractor, or its assigns or successors-in-interest, for capacity recovery fees, and all other charges in connection with the advance construction of Kalayaan Hydropower Plant Units 3 and 4 shall be authorized only upon the amendment of the Build-Rehabilitate-Operate-Transfer Agreement to specifically provide for the said advance construction: PROVIDED, FURTHER, That no special provision herein shall be deemed in any way construed as a relinquishment or waiver of any right or remedy that the government of the Philippines or NPC has or may have in connection with any agreement pertaining to the Caliraya-Botocan-Kalayaan Build-Rehabilitate-Operate-Transfer-Project.

3.  Restriction on the Grant of New/Additional Compensation.No amount herein authorized shall be used to cover payment of new/additional cash compensation such as salaries and allowances, unless approved by Congress: PROVIDED, That the grant of new/additional non-cash and other economic benefits shall be subject to existing laws, rules and regulations.

III. PHILIPPINE NATIONAL OIL COMPANY

SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003
(In Thousand Pesos)
SUMMARY
		Current Operating Expenditures
			Maintenance
			and Other
		Personal	Operating	Capital
		Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	General Administrative and Support	P42,078	P166,254	P19,359	227,691
2.	Operations	9,675	483,950	3,170,750	3,664,375
3.	Others		2,841,443		2,841,443
			—————		—————
	Debt Servicing
	Principal		1,231,044 a/		1,231,044
	Interest Expense		1,610,399 a/		1,610,399
		—————	—————	—————	—————
	TOTAL	P51,753	P3,491,647 b/	3,190,109	P6,733,509
		========	==========	========	========
a/ Inclusive of subsidiaries' share
b/ MOOE, net of allowance for depreciation of P23.010 Million
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003			Schedule I
(In Thousand Pesos)
CORPORATE BORROWINGS
		Current Operating Expenditures
			Maintenance
			and Other
		Personal	Operating	Capital
		Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	Operations			P1,447,000	P1,447,000
				—————	—————
	TOTAL			P1,447,000	P1,447,000
				=========	=========
SOURCES AND USES OF FUNDS BY EXPENSE CLASS, FY 2003		Schedule II
(In Thousand Pesos)
CORPORATE FUNDS
		Current Operating Expenditures
			Maintenance
			and Other
		Personal	Operating	Capital
		Services	Expenses	Outlays	Total
A.	PROGRAM/ACTIVITY/PROJECT
1.	General Administration and Support	P42,078	P166,254	P19,359	P227,691
2.	Operations	9,675	483,950	1,723,750	2,217,375
3.	Others		2,841,443		2,841,443
			——————		——————
	Debt Servicing
	Principal		1,231,044 a/		1,231,044
	Interest Expense		1,610,399 a/		1,610,399
		——————	——————	——————	——————
	TOTAL	P51,753	P3,491,647 b/	1,743,109	P5,286,509
		==========	==========	==========	=========
a/ Inclusive of subsidiaries' share
b/ MOOE, net of allowance for depreciation of P23.010 Million

Special Provisions

1.  Budget Flexibility and Report.The Philippine National Oil Company (PNOC),through its Board of Directors, is authorized to realign programs and projects, and reallocate the corresponding budgetary requirements herein approved, as well as augment the requirements which may arise from factors beyond the Company's control. These may include, but shall not be limited to, increase in costs associated with the privatization of subsidiaries, changes in foreign exchange rate, taxes, inflation, change in interest rates, payment of obligations as a result of final judgment of the court, and changes in programs/projects: PROVIDED, That augmentation funds shall not be used for the acquisition of motor vehicles and for payment of travelling, representation and discretionary expenses: PROVIDED, FURTHER, That the Personal Services shall not be augmented by savings from Maintenance and Other Operating Expenses (MOOE),as well as, Capital Outlays, or by new funding sources.

A comprehensive financial and narrative report on the aforesaid budgetary adjustments shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance, including the Department of Budget and Management, within thirty (30) days after such adjustments are made.

2.  Funds for Capital Outlays.The provisions of paragraph 1 above notwithstanding, Capital Outlays, provided herein under Operations, Program 2, whether or not funded from internally generated funds, budgetary support or authorized borrowings, shall be utilized for the primary purposes of exploration, exploitation and development of indigenous energy resources: PROVIDED, That an amount not exceeding One Billion Pesos (P1,000,000,000) in the aggregate may be invested in entities not engaged in the said primary purpose: PROVIDED, FURTHER, That consistent with the privatization program of the government, such equity investment shall not exceed thirty six percent (36%) of the outstanding capital stock of any one such entity concerned: PROVIDED, FINALLY, That such Capital Outlays shall not be used as loans or advances to entities not engaged in the primary purposes herein defined. This provision shall apply to the Philippine National Oil Company and all its subsidiaries.

A comprehensive financial and narrative report on the implementation of this section shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance.

3.  Augmentation Beyond Approved Corporate Operating Budget.The Corporation is hereby authorized to augment and disburse funds beyond the total approved in CY 2003 for the refinancing of its loan facility for the Malampaya Deepwater Gas-to-Power Project, additional CAPEX requirement for the project and related expenses including interest expenses, taxes, fees and other expenses pertaining to financial and legal advisory services to the peso equivalent up to an amount not exceeding US$212.5 Million.

Special Provisions Applicable to NEA, NPC, and PNOC

1.  Payment of Compensation. Payment of salaries, wages, and allowances or other forms of compensation shall be in accordance with Republic Act No. 6758, otherwise known as the "Compensation and Position Classification Act of 1989", and Joint Resolution No. 1, s. 1994 of Congress, Corporate Compensation Circular No. 10, Memorandum Order (M.O.) No. 20 dated June 25, 2001 and other pertinent implementing rules and regulations: PROVIDED, That the compensation of NPC shall be in accordance with M.O. No. 198 dated March 24, 1994, implementing R.A. No. 7648, and M.O. No. 20.

2.  Remittance of Cash Dividends. Cash dividends equivalent to at least fifty percent (50%) of annual net earnings shall be remitted to the National Treasury pursuant to Republic Act No. 7656 as income of the General Fund.

3.  Acquisition of Equipment.The acquisition of equipment, funded from internally generated funds, budgetary support or authorized borrowings, shall be subject to Corporate Budget Circular No. 17, s. 1996, National Budget Circular No. 446, s. 1995 as supplemented by the National Budget Circular No. 446-A, s. 1998, and other applicable Presidential issuances and other existing statutory requirements.

4.  Audit of Government Funds. Government funds authorized herein to be invested as equity by the corporation to its subsidiaries, as well as the grant of subsidy, loan contribution or any kind of financial assistance to end-user entities both in private or public sector shall be subject to audit by the Commission on Audit pursuant to P.D. No. 1445, as amended.

GENERAL PROVISIONS

RECEIPTS AND INCOME

SECTION 3.  Fees, Charges and Assessments. — All fees, charges, assessments, and other receipts or revenues collected by departments, bureaus, offices or agencies in the exercise of their functions, at such rates as are now or may be approved by the Secretary concerned, shall be deposited with the National Treasury and shall accrue to the General Fund pursuant to Section 44, Chapter 5, Book VI of E.O. No. 292 and Section 65 of P.D. No. 1445: PROVIDED, That departments, bureaus, offices or agencies shall ensure that fees, charges and assessments collected cover the costs of services delivered to the public and shall be allowed to raise their fees and charges accordingly pursuant to Section 2 of B.P. Blg. 325: PROVIDED, HOWEVER, That certain receipts may be recorded as a Special Account in the General Fund or a Fiduciary or a Trust Fund, or a fund other than the General Fund, when authorized by law and following such rules and regulations as may be issued by the Permanent Committee created under Section 45, Chapter 5, Book VI of E.O. No. 292: PROVIDED, FURTHER, That all revenues or income accruing to Special Accounts in the General Fund may be made available for expenditure, subject to the Special Provision in this Act for the agencies concerned, if any, and to Special Budgets required under Section 35, Chapter 5, Book VI of E.O. No. 292: PROVIDED, FURTHERMORE, That whenever practicable and taking into account the cost reduction program of the government, when an agency contracts with another government office for fabrication of furniture or equipment, or for computer, printing or other services, the agency rendering such services may assess the requesting agency for the cost of production and services rendered and may utilize the proceeds thereof, subject to Section 35, Chapter 5, Book VI of E.O. No. 292, except as otherwise provided is this Act: AND PROVIDED, FINALLY, That the schedule of fees, charges and assessments collectible by any government agency including government-owned and/or controlled corporations shall be posted in big bold characters in a conspicuous place in said government agency or corporation, including its branches or extension offices and that the updating and continuous display of said schedule shall be the responsibility of the head of the agency or corporation concerned.

 

SECTION 4.  Revolving Fund. — Revolving funds shall be established and maintained only in cases where said funds are expressly created and authorized by law. Revolving funds already in existence shall continue their operations. Receipts derived from business-type activities of departments, bureaus, offices or agencies which are authorized by law to be constituted into a Revolving Fund shall be separately recorded and deposited in an authorized government depository bank and may be made available for operational expenses of the said activity of the agency concerned, subject to the conditions prescribed under the special provision of the agency concerned, if any, and the rules and regulations as may be prescribed by the Permanent Committee created under Section 45, Chapter 5, Book VI of E.O. No. 292. The Revolving Fund shall be considered self-perpetuating and self-liquidating and all obligations or expenditures incurred by virtue of said business-type activities shall be charged against the Revolving Fund: PROVIDED, That no amount of the Revolving Funds authorized in this Act shall be used for the payment of discretionary and representation expenses. The agency concerned shall submit to the Department of Budget and Management (DBM), copy furnished the House Committee on Appropriations and the Senate Committee on Finance, separate quarterly reports of income and of expenditure from this Fund. In case of failure to comply with said requirement, no withdrawal in the subsequent quarter shall be allowed in audit except upon certification of the DBM that said report was submitted.

SECTION 5.  Trust Receipts. — Receipts from non-tax sources authorized by law for specific purposes which are collected/received by a government office or agency acting as a trustee, agent or administrator, or which have been received as guaranty for the fulfillment of an obligation, and all other collections classified by law or regulations as trust receipts shall be booked as trust liability account of the agency concerned and deposited with the National Treasury in accordance with E.O. No. 338, series of 1996 and pertinent guidelines, subject to the conditions prescribed under the Special Provisions of the agency concerned, if any, and to the rules and regulations as determined by the Permanent Committee created under Section 45, Chapter 5, Book VI of E.O. No. 292. Disbursement out of such funds shall be made in accordance with the purpose for which the fund is created and subject to accounting and auditing regulations.

SECTION 6.  Receipts Arising from Build-Operate-Transfer Transaction and Its Variant Schemes. — Notwithstanding the provision of Section 5, General Provisions of this Act, receipts, such as toll fees, charges and other revenues arising from public sector projects implemented through build-operate-transfer arrangement and other variants pursuant to R.A. No. 6957, as amended by R.A. No. 7718, collected by an office or agency of the National Government but which shall accrue to the proponent private companies or individuals in accordance with the contract entered into by said government office or agency and the project proponent(s), shall be deposited with any authorized government depository bank and shall be utilized exclusively for the fulfillment of obligations as stipulated and prescribed under the contract: PROVIDED, That the government share out of the collections from said projects, if any, including interest earned thereon, shall accrue to the General Fund and shall be remitted to and deposited with the National Treasury.

The implementation of this Section shall be in accordance with the guidelines issued jointly by the Department of Finance (DOF),DBM, National Economic and Development Authority (NEDA) and the Coordinating Council for Private Sector Participation, is coordination with the Commission on Audit (COA).

SECTION 7.  Performance Bonds and Deposits. — Performance bonds and deposits filed or posted by private persons or entities with agencies of the government shall be deposited with the National Treasury as trust receipts under the name of the agency concerned. Upon faithful performance of the undertaking or termination of the obligation for which the bond or deposit was required, any amount due shall be returned to the filing party by the office or agency concerned, withdrawable in accordance with accounting and auditing rules and regulations: PROVIDED, That any interest accruing on deposits and any forfeited amounts on performance bonds and deposits shall be deposited with the National Treasury and shall accrue to the General Fund pursuant to Section 44, Chapter 5, Book VI of E.O. No. 292.

This provision shall apply to bonds posted in cash, such as bidders bond, guaranty bonds, bail bonds, judicial deposits for the benefit of clients, cash under litigation deposited in courts or quasi-judicial bodies and other refundable and judicial bonds, and all bonds and deposits required by law, rules and regulations to be posted to ensure the faithful performance of an activity or undertaking.

SECTION 8.  Seminar and Conference Fees. — Departments, bureaus, offices or agencies which conduct training programs in relation to their mandated functions are authorized to collect seminar and conference fees from government and private agency participants, at such standard rates as the DBM and the Civil Service Commission (CSC) shall deem appropriate. The proceeds derived from such seminars or conferences may be made available for the conduct of seminars and conferences and for defraying the cost of training facilities, subject to pertinent budget, accounting and auditing rules and regulations: PROVIDED, That upon the conclusion of the seminar or conference, the office authorized to conduct the same shall submit to the DBM a report of the fees collected and of the expenses incurred: PROVIDED, FURTHER, That any excess therefrom shall be deposited with the National Treasury and shall accrue to the General Fund pursuant to Section 44, Chapter 5, Book VI of E.O. No. 292.

SECTION 9.  Sale of Products. — Departments, bureaus, offices or agencies are hereby authorized to sell products out of their agricultural, industrial or other projects. The proceeds derived therefrom shall be deposited with the National Treasury and shall accrue to the General Fund, pursuant to Section 44, Chapter 5, Book VI of E.O. No. 292, unless otherwise provided by law or by Special Provisions in this Act.

SECTION 10.  Sale of Official Publications. — Departments, bureaus, offices or agencies are hereby authorized to sell their official publications. The proceeds derived from such sale may be made available to defray the cost of printing such official publications, subject to pertinent budget, accounting and auditing rules and regulations: PROVIDED, That the office concerned shall submit to the DBM a report of the proceeds from the subject sale and of the expenses incurred: PROVIDED, FURTHER, That any excess therefrom shall be remitted to the National Treasury and shall accrue to the General Fund pursuant to Section 44, Chapter 5, Book VI of E.O. No. 292.

SECTION 11.  Sale of Non-Serviceable, Obsolete or Unnecessary Equipment. — Departments, bureaus, offices or agencies are hereby authorized to sell non-serviceable, obsolete, or unnecessary equipment including cars, vans and the like pursuant to the provisions of Section 79 of P.D. No. 1445 and E.O. No. 309 dated March 8, 1996. The proceeds from the sale of such equipment shall be deemed automatically appropriated for the purchase of new ones, and for the repair or rehabilitation of existing vital equipment, subject to a Special Budget pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292: PROVIDED, That the purchase of such new cars and vans shall be subject to prior authority pursuant to pertinent laws, rules and regulations: PROVIDED, FURTHER, That the agency concerned shall submit to the DBM, the House Committee on Appropriations and the Senate Committee on Finance a report on the types of equipment sold and the utilization of the sales proceeds.

SECTION 12.  Donations. — Departments, bureaus, offices or agencies may accept donations, contributions, grants, bequests or gifts, in cash or in kind, from various sources, domestic or foreign, for purposes relevant to their functions: PROVIDED, That in cases of donations from foreign governments, acceptance thereof shall be subject to the prior clearance and approval of the President of the Philippines upon recommendation of the Secretary of the Department of Foreign Affairs: PROVIDED, FURTHER, That the Department of Agriculture through the National Agricultural and Fishery Council and in coordination with the DBM and the NEDA, is hereby authorized to determine the utilization of the RP-Japan Increased Food Production Program Grant for agriculture and fishery projects in accordance with the objectives of R.A. No. 8435, otherwise known as the "Agriculture and Fisheries Modernization Act of 1997."

Receipts from donations shall be accounted for in the books of the recipient government agency in accordance with pertinent accounting and auditing rules and regulations. Such donations, whether in cash or in kind, shall be deemed automatically appropriated for purposes specified by the donor. The receipts from cash donations and proceeds from sale of donated commodities shall be remitted to the National Treasury and recorded as a Special Account in the General Fund and shall be available to the implementing agency concerned through a Special Budget pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292. The agency concerned shall submit to the DBM, the Senate Committee on Finance, the House Committee on Appropriations, and to the COA a quarterly report of all donations whether in cash or in kind, and a quarterly report of expenditures or disbursements of the amount released.

In case of violation of this Section, the erring officials and employees shall be subject to disciplinary action under the provisions of Section 43, Chapter 5 and Section 80, Chapter 7, Book VI of E.O. No. 292 and to appropriate criminal action under existing penal laws.

SECTION 13.  National Internal Revenue Taxes and Import Duties.— National internal revenue taxes and import duties payable by national government agencies to the National Government arising from foreign donations, grants and loans are deemed automatically appropriated. In addition, tax expenditure subsidy to the following entities shall likewise be deemed automatically appropriated:

(a)  Bureau of the Treasury for Documentary Stamp Taxes on domestic securities issued;

(b)  Light Rail Transit Authority (LRTA) Line I Capacity Expansion Phase 2 and Metro Manila Strategic Mass Rail Transit Development (Line 2);

(c)  Specialty Hospitals, Department of National Defense (DND) and Philippine National Police (PNP) importations of military hardwares, software, munitions, arms and equipment and the Armed Forces of the Philippines Commissary and Exchange Service (AFPCES);

(d)  National Food Authority (NFA) for the importation of rice and corn as recommended by the NFA Council and approved by the President of the Philippines, in case of calamities or fortuitous event or shortfall in production;

(e  )Department of Transportation and Communications (DOTC) for the Metro Rail Transit Line 3 System, incurred starting FY 1997 in accordance with the provisions of the Build-Lease-Transfer Agreement executed thereon; and

(f)  PHIVIDEC Industrial Authority (PIA) for the Mindanao Container Terminal Project on importations of materials and equipment for the project.

PROVIDED, That the tax expenditure subsidy to the LRTA, NFA, and Specialty Hospitals, PIA and the AFPCES shall be subject to approval by the Fiscal Incentives Review Board pursuant to Executive Order No. 93, s. of 1986, as amended: PROVIDED, FURTHER, That the amounts pertaining to such taxes and duties covered by this Section shall be considered as revenue and expenditure of the government.

The implementation of this Section shall be in accordance with guidelines jointly issued by the DOF and the DBM.

SECTION 14.  Loan Agreements.— Departments, bureaus, offices or agencies, including government-owned and/or controlled corporations, shall is no case enter into foreign or domestic loan agreements, whether in cash or in kind, except upon concurrence of the Secretary of DBM with respect to peso requirements and implications on expenditure ceilings and prior approval of the President of the Philippines, with the prior concurrence of the Monetary Board, subject to such limitations as may be provided by law: PROVIDED, That the Monetary Board, shall within thirty (30) days from the end of every quarter of the calendar year, submit to the Congress of the Philippines a report of its decisions on applications for loans to be contracted or guaranteed by the government or government-owned and/or controlled corporations which have the effect of increasing the foreign debt. Loan agreements shall not be signed by agencies of the national government unless the full amount of the loan is covered by a Forward Obligational Authority issued by the Secretary of DBM. For this purpose, the budgetary implications of foreign-assisted projects shall be explicitly considered by the Secretary of Budget and Management and the office or agency concerned at the time of project design and financing negotiations. The project study shall specify the cash flow requirements of the project among others, for: (a) payment of principal and interest; (b) peso component of capital costs and project preparation; (c) infrastructure and support facilities needed to be directly financed by government; (d) operating and other expenditures which will be ultimately required for general fund support when the project is implemented; and (e) peso requirements needed as counterpart. SEIDAC

EXPENDITURES

SECTION 15.  Restrictions on the Use of Government Funds.— No government funds shall be utilized for the following purposes:

a.  To purchase motor vehicles, except: (a) medical ambulances, military and police patrol vehicles, motorcycles, other utility vehicles, road construction equipment, motorized bancas and those used for mass transport when necessary in the interest of the public service, upon authority of the department or agency head and the Secretary of DBM; and (b) those authorized by the President, the Senate President, the Speaker of the House of Representatives, or the Chief Justice of the Supreme Court;

b.  To defray foreign travel expenses of any government official or employee, except in the case of training, seminar or conference abroad when the officials and other personnel of the foreign mission cannot effectively represent the country therein and travels necessitated by international commitments: PROVIDED, That no official or employee, including uniformed personnel of the Department of the Interior and Local Government (DILG) and Department of National Defense (DND) will be sent to foreign training, conference or attend to international commitments when they are due to retire within one year after the said foreign travel;

c.  To provide fuel, parts, repair and maintenance to any government vehicle not properly identified as a government vehicle and does not carry its official government plate number, except official vehicles assigned to the President, Vice-President, Senate President, Speaker of the House of Representatives, Chief Justice of the Supreme Court and Chairmen of the Constitutional Commissions and those used by personnel performing intelligence and national security functions: PROVIDED, That in case of transport crisis, such as that occasioned by street demonstrations, welgang bayan, floods, typhoons and other emergencies, all government vehicles of any type shall be made available to meet the emergency and utilized to transport for free the commuters on a round-the-clock basis;

d.  To pay honoraria, allowances or other forms of compensation to any government official or employee, except those specifically authorized by law; and

e.  To be invested in non-government securities, money market placements and similar investments or deposited in private banking institutions.

The provisions of this Section shall also apply to government-owned and/or controlled corporations.

The implementation of this Section shall be in accordance with the rules and regulations issued by the DBM, is coordination with the COA.

SECTION 16.  Mandatory Expenditures.— The amounts released, particularly for, but not limited to, petroleum, oil and lubricants as well as for water, illumination and power services, telephone and other communication services, rent, retirement gratuity and terminal leave requirements shall be disbursed solely for such items of expenditures: PROVIDED, That any savings generated from these items may be realigned only in the last quarter.

The use of funds in violation of this Section shall be null and void, and shall subject the erring officials and employees to disciplinary action under the provisions of Section 43, Chapter 5 and Section 80, Chapter 7, Book VI of E.O. No. 292 and to appropriate criminal action under existing penal laws.

SECTION 17.  Authority to Identify Funds for Mandatory Expenditures. — Out of the agency appropriations authorized in this Act, the DBM may identify in the fund release documents the amounts due all government service agencies and government service corporations to cover prior years' mandatory expenditures as certified by the COA. In the case of government-owned and/or controlled corporations without budgetary support from the National Government, funds for the purpose shall be indicated in the approval of their Corporate Operating Budgets.

The implementation of this Section shall be subject to the guidelines issued by the DBM in coordination with the DOF and the COA.

SECTION 18.  Intelligence and Confidential Funds. — No amount in this Act shall be released or disbursed for confidential and intelligence activities unless approved by the President of the Philippines or specifically identified and authorized as such intelligence or confidential fund in this Act.

Intelligence and confidential funds provided for in the budgets of departments, bureaus, offices or agencies of the National Government, including amounts from savings authorized by Special Provisions to be used for intelligence and counter-intelligence activities, shall be released only upon approval of the President of the Philippines: PROVIDED, That at least eighty percent (80%) of intelligence and confidential funds shall be used for field operations.

All departments, bureaus, offices or agencies shall submit to the President of the Senate, Speaker of the House of Representatives and the Chairman of the COA, a quarterly report on the accomplishments in the use of intelligence and confidential funds copy furnished the Senate Committee on Finance and House Committee on Appropriations.

SECTION 19.  Purchase of Supplies, Materials and Equipment Spare Parts for Stock.— The stock on hand of supplies, materials and equipment spare parts to be acquired through ordinary purchase out of appropriations herein provided shall at no time exceed the moral three month requirement, subject to pertinent rules and regulations issued by competent authority: PROVIDED, That heads of departments, bureaus, offices or agencies and other instrumentalities of the government may approve the build-up of stocks on hand of critical supplies and materials as defined or specified by the DBM in anticipation of cost increases, or requirement of a national emergency, or of an impending shortage in the items concerned, specifying maximum quantities of individual items. Unless otherwise approved by the President of the Philippines, upon the joint recommendation of the Secretary concerned and the Chairman of the COA, these stocks shall not exceed one year's need.

SECTION 20.  Emergency Purchases. — Unless otherwise provided is this Act, departments, bureaus, offices or agencies of the National Government are authorized to make emergency purchases of supplies, materials and spare parts of motor transport equipment that are urgently needed for the repair of ambulances, motor vehicles, vessels and aircrafts or to meet an emergency which may involve the loss of, or danger to, life and/or property, or are to be used in connection with a project or activity which cannot be delayed without causing detriment to the public service, in a monthly amount not exceeding four percent (4%) of the annual agency expenditure program for supplies and materials out of the appropriations allotted for maintenance and other operating expenses of the agency concerned, except as may be authorized by the President of the Philippines upon the joint recommendation of the DBM and the COA.

 

SECTION 21.  Domestic Purchases and Foreign Importation. — All appropriations for the procurement of equipment, supplies and materials and other products and services authorized in this Act shall be used only for the purchase of equipment, parts, accessories, medicines and drugs, supplies and materials and other products and services locally available. For this purpose, in the utilization of the amounts herein appropriated for infrastructure projects of the various departments and agencies, priority shall be given to the purchase of locally-produced and manufactured materials in all projects undertaken either by administration or by contract, including foreign-assisted projects whose covering loan agreement expressly allow or which does not prohibit the same: PROVIDED, That importation may be made when:

(a)  none of the desired quality or standard is available in the market or when the price of the local product or service is more than fifteen percent (15%) of that of a similar product offered by an enterprise other than a domestic entity pursuant to Section 4 of the Flag Law (C.A. No. 138, as amended) as certified by the Department of Trade and Industry;

(b)  the quality of the locally-produced and manufactured material is sub-standard compared with its imported counterpart as determined by the Department of Science and Technology; and

(c)  no locally-produced and manufactured material is available as certified by the Department of Trade and Industry.

PROVIDED, FURTHER, That purchases under foreign military sales agreements, heavy equipment imports for infrastructure projects and other importations of agencies which are financed by foreign borrowings may be made, subject to the requirements of LOI No. 880 and to pertinent budgeting, accounting and auditing laws, rules and regulations.

SECTION 22.  Cultural and Athletic Activities. — Out of the appropriations authorized in this Act for maintenance and other operating expenses for each department, bureau, office or agency, an amount not exceeding One Thousand Two Hundred Pesos (P1,200.00) may be used for the purchase of costume or uniform for each participant and other related expenses in the conduct of cultural and athletic activities.

SECTION 23.  Extraordinary and Miscellaneous Expenses.— Appropriations herein authorized may be used for extraordinary expenses of the following officials and those of equivalent rank as may be authorized by the DBM not exceeding:

a.  P180,000 for each Department Secretary;

b.  P65,000 for each Department Undersecretary;

c.  P35,000 for each Department Assistant Secretary;

d.  P30,000 for each head of bureau or organization of equal rank to a bureau and for each Department Regional Director;

e.  P18,000 for each Bureau Regional Director; and

f.  P13,000 for each Municipal Trial Court Judge, Municipal Circuit Trial Court Judge, and Shari'a Circuit Court Judge.

In addition, miscellaneous expenses not exceeding P50,000 for each of the offices under the above named officials are herein authorized.

For the purpose of this Section, extraordinary and miscellaneous expenses shall include, but shall not be limited to, expenses incurred for:

a.  meetings, seminars and conferences;

b.  official entertainment;

c.  public relations;

d.  educational, athletic and cultural activities;

e.  contributions to civic or charitable institutions;

f.  membership in government associations;

g.  membership in national professional organizations duly accredited by the Professional Regulations Commissions;

h.  membership in the Integrated Bar of the Philippines;

i.  subscription to professional technical journals and informative magazines, library books and materials;

j.  office equipment and supplies; and

k.  other similar expenses not supported by the regular budget allocation.

No portion of the amounts herein authorized shall be used for salaries, wages, allowances, intelligence and confidential expenses. In case of deficiency, the requirements for the purpose may be charged against savings of the agency.

These expenditures shall be subject to accounting and auditing rules and regulations.

SECTION 24.  Information Outlay.— The appropriation pertaining to information activities of various departments, bureaus, offices or agencies shall be released upon presentation of an appropriate program of activities prepared by their respective Heads, copies of which shall be furnished the House Committee on Appropriations and the Senate Committee on Finance.

SECTION 25.  Science and Technology Research. — The appropriations of departments, bureaus, offices or agencies for research and development (R & D) in the natural, agricultural, technological and engineering sciences shall be released upon recommendation of the Department of Science and Technology and/or the Department of Agriculture in pursuance of the Agriculture and Fisheries Modernization Act of 1997, with the primary objective of coordinating research agenda and optimizing the use of research funds and encouraging private sector participation in R & D activities: PROVIDED, That research efforts shall be geared towards achieving a wider commercialization of new discoveries, accelerating technology transfer and integrating agricultural and fisheries plans and programs: PROVIDED, FURTHER, That the said government agencies shall submit an annual report to the House Committee on Appropriations and the Senate Committee on Finance. The report shall include the list of recipient private entities, status of research being undertaken, and the amount released and utilized for each project and the commercialization activities and technology transfer made. SEIDAC

SECTION 26.  Human Resources Development and Training Programs. — Departments, bureaus, offices or agencies shall review and formulate their human resource development and training programs to make the same responsive to the organizational needs and manpower requirements of agencies and the need to train personnel in appropriate skills and attitudes. Such training programs shall be consistent with the rules and regulations issued by the Training Coordination Committee created under LOI No. 754, which shall review and evaluate training activities.

SECTION 27.  Programs/Projects Related to Gender and Development. — In consultation with the National Commission on the Role of Filipino Women (NCRFW), all departments including their attached agencies, offices, bureaus, state universities and colleges, government owned and/or controlled corporations and other instrumentalities, shall formulate a Gender and Development (GAD) Plan, with the active participation of women's groups, designed to empower women and address gender issues, in accordance with R.A. No. 7192 and the Philippine Plan for Gender-Responsive Development (PPGD), 1995-2025. The cost of implementation of the GAD Plan shall be at least five percent (5%) of the agency's total FY 2003 budget appropriations: PROVIDED, That a gender analysis of the agency's policies and programs with sex-disaggregated data and massive information campaign are given priority allocation for the full implementation of the Framework Plan for Women, 2001-2004: Promoting Women's Economic Empowerment, Protecting and Fulfilling Women's Human Rights and Promoting Gender-Responsive Good Governance.

All concerned government entities shall submit their GAD Plan to the NCRFW for review. They shall likewise submit annual reports to Congress, the DBM, and the NCRFW, indicating the accomplishments and amounts utilized to implement programs/projects/activities through gender mainstreaming addressing gender issues and women empowerment. The evaluation of agencies' utilization of the GAD budget shall be performance-based.

In addition to Joint Circular No. 2001-01 issued by the NEDA, the DBM and NCRFW, additional sets of guidelines as may be deemed necessary, shall be formulated, for the implementation of GAD-related programs/projects/activities.

SECTION 28.  Projects Related to Youth.— The NEDA and the DBM, in coordination with the National Youth Commission shall formulate a set of guidelines for the implementation of projects related to youth.

All departments, bureaus, offices, agencies, government-owned and/or controlled corporations and local government units shall, in implementation of their plans, programs and projects, provide skills training and employment for the out-of-school youth as well as create summer jobs for students, which shall in no case exceed two (2) months duration.

SECTION 29.  Programs/Projects Related to Senior Citizen and the Disabled.— In support of the Philippine Plan of Action for Older Persons, 1999-2004, all executive departments, bureaus, offices, agencies, commissions and state universities and colleges shall set aside at least one percent (1%) of their total FY 2003 budget appropriations as cost of implementation thereof, in coordination with the Department of Social Welfare and Development. SEIDAC

SECTION 30.  Human and Ecological Security Concerns.— All departments, bureaus, offices and agencies shall set aside an amount out of their FY 2003 appropriations to be used for projects designed to address human and ecological security concerns. This Section shall be implemented in accordance with the guidelines jointly issued by the Department of Environment and Natural Resources, DILG and the Commission on Population in coordination with the DBM.

SECTION 31.  Disability-Related Projects/Facilities for the Differently-Abled. — All government facilities, including infra, non-infra and civil works projects of the government as well as office buildings, streets and highways, shall provide architectural facilities or structural features and designs as shall reasonably enhance the mobility, safety and welfare of differently-abled persons pursuant to B.P. Blg. 344 and R.A. No. 7277.

SECTION 32.  Disaster Prevention, Mitigation and Preparedness Projects. — Except for the Office of Civil Defense, Philippine Atmospheric, Geophysical and Astronomical Services Administration and Philippine Institute of Volcanology and Seismology whose basic concerns are disaster prevention, mitigation and preparedness projects, all concerned departments, bureaus, offices and agencies are authorized to use their appropriation to implement projects designed to address their disaster prevention, mitigation and preparedness concerns pursuant to P.D. No. 1566. This Section shall be implemented in accordance with the guidelines issued by the National Disaster Coordinating Council in coordination with the DBM.

 

SECTION 33.  Contracting Multi-Year Projects.— In the implementation of multi-year projects, no agency shall enter into a multi-year contract without a Multi-Year Obligational Authority issued by the DBM for the purpose. Notwithstanding the issuance of the Multi-Year Obligational Authority, the obligation to be incurred in any given calendar year, shall in no case exceed the amount programmed for implementation during said calendar year.

PERSONNEL AMELIORATION

SECTION 34.  Funding of Personnel Benefits.— The personnel benefits costs of government officials and employees shall be charged against the funds from which their compensations are paid. All authorized supplemental or additional compensation, fringe benefits and other personal services costs of officials and employees whose salaries are drawn from special accounts or special funds, such as salary increases, step increment for length of service, incentive and service fees, commutation of vacation and sick leaves; retirement and life insurance premiums, compensation insurance premiums, health insurance premiums, Home Development Mutual Fund (HDMF) contributions, hospitalization and medical benefits, scholarship and educational benefits, training and seminar expenses, all kinds of allowances, whether commutable or reimbursable, in cash or in kind, and other personnel benefits and privileges authorized by law, including the payment of retirement gratuities, separation pay and terminal leave benefits, shall similarly be charged against the corresponding fund from which their basic salaries are drawn and in no case shall such personnel benefits costs be charged against the General Fund of the National Government. Officials and employees on detail with other offices, including the representatives and support personnel of auditing units assigned to serve other offices or agencies, shall be paid their salaries, emoluments, allowances and the foregoing supplemental compensation, fringe benefits and other personal services costs from the appropriations of their parent agencies, and in no case shall such be charged against the appropriations of the agencies where they are assigned or detailed, except when authorized by law.

SECTION 35.  Personnel Benefits Fund. — The provisions of Letter of Instructions No. 1102 notwithstanding, the government shares in the compulsory contributions mandated by R.A. No. 8291, R.A. No. 6111; P.D. No. 626, as amended, and R.A. No. 7875, shall be remitted directly by departments, bureaus, offices and agencies, including local government units, to the Government Service Insurance System (GSIS), the HDMF, or the Philippine Health Insurance Corporation (PHIC), as the case may be.

SECTION 36.  Authorized Deductions. — Deductions from salaries, emoluments or other benefits accruing to any government employee chargeable against the personal services appropriation authorized in this Act may be allowed for the payment of obligations due the GSIS, HDMF, PHIC, AFPMBAI and other Government Financial Institutions, the Bureau of Internal Revenue, those specifically allowed by existing laws and the Mutual Benefits Associations (MBAs) duly operating under existing laws managed by and for the benefit of government employees not covered by compulsory membership in the GSIS, and associations/cooperatives organized and managed by government employees for their benefit and welfare: PROVIDED, That such deductions shall not reduce the employee's monthly net take home pay to an amount lower than Three Thousand Pesos (P3,000.00), after all authorized deductions.

SECTION 37.  Service Fees.— Departments, bureaus, offices and agencies which collect service fees for the payment of any obligation through authorized deductions under Section 36 hereof, shall deposit said service fees with the National Treasury, to be recorded in its books of accounts as trust receipts. Said service fees shall be used exclusively for a Provident Fund that may be established by the agency in favor of all its employees is accordance with existing rules and regulations. The Provident Fund shall be used for loaning operations and other purposes beneficial to all members as may be approved by its governing board except for the payment of additional personnel allowances.

SECTION 38.  Year-End Bonus and Cash Gift. — The appropriations herein provided for the year-end bonus and cash gift equivalent to one (1) month basic salary and additional cash gift of Five Thousand Pesos (P5,000.00) provided under R.A. No. 6686 as amended by R.A. No. 8441 shall be granted to all national government officials and employees whether under regular, temporary, casual or contractual status, on full-time or part-time basis, who have rendered at least a total of four (4) months of service including leaves of absence with pay in the government from January 1 to October 31 of each year and who are still in the service as of October 31 of the same year: PROVIDED, That one half (1/2) of the amount of said year-end bonus and cash gift may be paid not earlier than May 1 subject to the implementing rules and regulations issued by the DBM.

SECTION 39.  Travelling Expenses. — Officials and employees of the government may be allowed full payment of claim for reimbursement of travelling and related expenses incurred in the course of official travel, certified by the head of the agency concerned as absolutely necessary in the performance of an assignment and supported by receipts, chargeable to the allotment for travelling expenses, subject to the provisions of E.O. Nos. 248 and 248-A, both series of 1995.

SECTION 40.  Representation and Transportation Allowances.— The following officials and those of equivalent rank as may be determined by the DBM while in the actual performance of their respective functions are hereby granted monthly commutable representation and transportation allowances payable from the programmed appropriations provided for their respective offices not exceeding the rates indicated below, which shall apply to each type of allowance:

a.  At P7,350 for Department Secretaries;

b.  At P5,700 for Department Undersecretaries;

c.  At P4,875 for Department Assistant Secretaries;

d.  At P4,150 for Bureau Directors and Department Regional Directors;

e.  At P3,575 for Assistant, Bureau Directors, Department Assistant Regional Directors, Bureau Regional Directors, and Department Service Chiefs;

f.  At P2,950 for Assistant Bureau Regional Directors; and SEIDAC

g.  At P2,675 for Chief of Divisions, identified as such in the Personal Services Itemization and Plantilla of Personnel.

The transportation allowance herein authorized shall not be granted to officials who use government motor transportation. Unless otherwise provided by law, no amount appropriated in this Act shall be used to pay for representation and/or transportation allowances, whether commutable or reimbursable, which exceed the rates authorized under this Section. Previous administrative authorizations not consistent with the rates and conditions herein specified shall no longer be valid and payment shall not be allowed.

SECTION 41.  Official Vehicles and Transport.— Government motor transportation may be used by the following officials with costs chargeable to the appropriations authorized for their respective offices:

a.  The President of the Philippines;

b.  The Vice-President;

c.  The President of the Senate;

d.  The Speaker of the House of Representatives;

e.  The Chief Justice and Associate Justices of the Supreme Court;

f.  The Presiding Justice of the Court of Appeals;

g.  The Secretaries, Undersecretaries, Assistant Secretaries and Officials of equivalent rank;

h.  Ambassadors, Ministers Plenipotentiary and Consuls in charge of Consulates, in their respective stations abroad;

i.  The Chief of Staff, the Vice-Chief of Staff and the Commanding Generals of the major services of the Armed Forces of the Philippines;

j.  The Heads of Constitutional Commissions, Bureau Regional Directors, Bureau Directors and Department Regional Directors; and

k.  Those who may be specifically authorized by the President of the Philippines, the President of the Senate with respect to the Senate, the Speaker, with respect to the House of Representatives, and the Chief Justice, in the case of the Judiciary.

SECTION 42.  Honoraria. — Departments, bureaus, offices, or agencies, are only authorized to use their respective appropriations for payment of honoraria in the following cases: (a) Teaching personnel of the Department of Education, Commission on Higher Education, Technical Education and Skills Development Authority, State Universities and Colleges and other educational institutions engaged in actual classroom teaching whose teaching load is outside of the regular office hours and/or is excess of the regular load; (b) Those who act as lecturers, resource persons, coordinators and facilitators in seminars, training programs and other similar activities in training institutions; and (c) Chairs and members of Commissions/Boards/Councils and other similar entities including the personnel thereof who are not paid salaries but compensated in the form of honoraria as provided by law, rules and regulations.

SECTION 43.  Employment of Contractual Personnel. — Heads of departments, bureaus, offices or agencies, when authorized in their respective appropriations provided is this Act, may hire contractual personnel as part of the organization to perform regular agency functions and specific vital activities or services which cannot be provided by the regular or permanent staff of the hiring agency.

The contractual personnel employed pursuant to this Section shall be considered as an employee of the hiring agency, limited to the year when their services are reasonably required.

SECTION 44.  Uniform and Clothing Allowance.— The appropriations herein provided for each department, bureau, office or agency may be used for uniform and clothing allowance of employees at not more than Four Thousand Pesos (P4,000.00) each per annum which may be given in cash or in kind. In case of deficiency, or in the absence of appropriation for the purpose, the requirements may be charged against savings in the appropriations of each department, bureau, office or agency. The implementation of this Section shall be in accordance with the guidelines issued by the DBM.

 

SECTION 45.  Special Counsel Allowance.— Lawyer-personnel, including those designated to assume the duties of a legal officer and those deputized by the Office of the Solicitor General in the legal staff of departments, bureaus, offices or agencies of the National Government to appear in Court as special counsel in collaboration with the Solicitor General or Prosecutors concerned are hereby authorized an allowance of Five Hundred Pesos (P500.00) for each appearance, chargeable to savings in the appropriations of their respective offices, but not exceeding Three Thousand Pesos (P3,000.00) per month.

SECTION 46.  Quarters Allowance.— Except as may be authorized by law, government officials and employees who, by virtue of their positions, are provided free quarters, furnished quarters, or are charged only nominal rate for the use of government-owned buildings such as dormitories or living quarters in state colleges and universities, schools, offices and elsewhere, shall forfeit their entitlement to any quarters allowance. Directors or their equivalent who are transferred from one station to another by virtue of agency policies on reshuffling or rotation of personnel and do not own rooms, houses or units therein shall be provided free quarters within their office premises. Where there is not enough space to be used as quarters, the agency concerned may rent buildings or rooms which shall serve as quarters for the officials and employees concerned: PROVIDED, That quarters allowance shall only be paid where the office has no quarters available.

For those who desire more extensive quarters other than those rented by their agencies, such preferred quarters may be secured provided that the difference between the rental cost and the amount authorized therefor shall be paid by the officials and employees concerned. Those officials and employees who enjoy free quarters in government-owned buildings but are not entitled to quarters privileges, shall be charged the corresponding cost of rentals therefor subject to the guidelines issued by the DBM for the purpose.

SECTION 47.  Entitlement to Personnel Economic Relief Allowance (PERA).— The Personnel Economic Relief Allowance (PERA) in the amount of Five Hundred Pesos (P500.00) per month shall be granted to the following, except those exempted therefrom: all appointive national and local government employees occupying itemized plantilla positions, to casual and contractual employees and to uniformed personnel of the Armed Forces of the Philippines (AFP),Department of the Interior and Local Government (DILG) and the National Mapping and Resource Information Authority (NAMRIA):PROVIDED, That employees of government-owned and/or controlled corporations (GOCCs) shall be paid from their respective corporate fund: PROVIDED, FURTHER, That appointive local government employees shall be paid from their respective internal revenue allotment and local funds: PROVIDED, HOWEVER, That Local Government Units (LGUs) which can afford to pay higher than the rates authorized in the schedule below for their particular income class, but not exceeding Five Hundred Pesos (P500.00) per month, shall be allowed to do so at a rate uniformly applied to all their respective personal entitled to this benefit:

	Provinces/Cities	Municipalities
Special Cities and 1st class	100%	90%
2nd Class and 3rd Class	90%	80%
4th Class, 5th Class and 6th Class	80%	70%

SECTION 48.  Additional Compensation of P500.00 Per Month. — The additional compensation in the amount of Five Hundred Pesos (P500.00) per month authorized under A.O. No. 53 dated May 17, 1993 shall be granted to all government personnel whether elective or appointive, who are under regular, temporary or casual status including contractual personnel whose employment are in the nature of a regular employee, chargeable against the appropriations provided for the purpose under this Act: PROVIDED, That personnel of GOCCs or LGUs shall be paid from their respective corporate or local funds.

SECTION 49.  Use of Appropriations for Retirement Gratuity and Terminal Leave. — Appropriations authorized in this Act to cover retirement gratuity benefit claims shall be released directly to the offices and agencies concerned. In no case shall payment be made except on the basis of creditable services as computed by the GSIS in accordance with the provisions of existing retirement laws. Unless otherwise authorized by law, no amount appropriated in this Act shall be used for payment of retirement gratuity under the provisions of Section 12(c) of C.A. No. 186, as amended by R.A. No. 1616 and terminal leave benefits of retiring officials and employees which include in the computation thereof additional compensation as defined under retirement laws such as bonuses, per diems, allowances and overtime pay, or salary, pay or compensation given in addition to the base pay of the position or rank as fixed by law or regulation.

Savings generated in one department, bureau, office or agency shall be used to augment deficient funds in other departments, bureaus, offices or agencies.

The implementation of this Section shall be in accordance with the rules and regulations jointly issued by the CSC and the DBM.

SECTION 50.  Unauthorized Pre-Retirement Promotions and Salary Increases. — No portion of the appropriations provided in this Act shall be used for automatic promotions or for salary increases and adjustments granted to retiring officials and employees, which are not authorized by law and duly formalized in an appropriate issuance by the DBM.

The implementation of this Section shall be in accordance with the rules and regulations jointly issued by the CSC and the DBM.

SECTION 51.  Personal Liability of Officials or Employees for Payment of Unauthorized Personal Services Cost. — No official or employee of the National Government, the Local Government and the GOCCs, shall be paid any unauthorized personal services benefits charged against the appropriations in this Act, other appropriations laws or income of the government.

The payment of any unauthorized personal services benefit in violation of this Section is null and void. The erring officials and employees as determined by the COA and other competent authority shall be subject to disciplinary action under the provisions of Section 43, Chapter 5 and Section 80, Chapter 7, Book VI of E.O. No. 292 and to appropriate criminal action under existing penal laws.

SECTION 52.  Modification of Expenditure Components. — Unless specifically authorized in this Act, no change or modification shall be made in the expenditure items authorized in this Act and other appropriations laws unless in cases of augmentations from savings in appropriations as authorized under Section 25(5), Article VI of the 1987 Philippine Constitution.

SECTION 53.  Fiscal Discipline Measures in Government Operations. — All National Government Agencies, shall implement fiscal discipline measures and review their respective expenditure programs approved pursuant to Section 34, Chapter 5, Book VI of E.O. No. 292, in order to minimize the implementation of ineffective programs and the undertaking of low priority projects and activities. Likewise, GOCCs and the LGUs are encouraged to implement the same.

The rules and regulations to implement this Section shall be issued by the DBM, subject to the approval of the President.

The judicial and legislative branches of government may institute their respective fiscal discipline measures.

SECTION 54.  Use of Savings. — The President of the Philippines, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions under Article IX of the 1987 Philippine Constitution, the Ombudsman, and the Chairman of the Commission on Human Rights are hereby authorized to augment any item in this Act for their respective offices from savings in other items of their respective appropriations.

SECTION 55.  Meaning of Savings and Augmentation. — Savings refer to portions or balances of any programmed appropriation in this Act free of any obligation or encumbrance still available: (1) after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; (2) from balances of appropriation arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay; and (3) from remaining balance of appropriation realized from the implementation of the collective negotiation agreement which resulted to improved systems and efficiencies and thus enabled an agency to meet and deliver the required or planned targets, programs and services approved in this Act at a lesser cost.

Augmentation implies the existence in this Act of an item, project, activity or purpose with an appropriation which upon implementation or subsequent evaluation of needed resources is determined to be deficient. In no case, therefore, shall a non-existent item, project, activity, purpose or object of expenditure be funded by augmentation from savings or by the use of appropriations authorized otherwise in this Act.

SECTION 56.  Priority in the Use of Savings. — In the use of savings, priority shall be given to the augmentation of the amounts set aside for compensation, year-end bonus and cash gift, retirement gratuity, terminal leave benefit, old-age pension of veterans and other personnel benefits authorized by law and those expenditure items authorized in agency Special Provisions and in Section 16 and in other Sections of the General Provisions of this Act.

SECTION 57.  Implementation of R.A. No.7305 and R.A.8439. — The implementation of R.A. No. 7305 otherwise known as the "Magna Carta of Health Workers" and R.A. No. 8439 or the "Magna Carta for Scientists, Engineers, Researchers, and Other Science and Technology Personnel" shall be drawn from the appropriation provided in this Act for the purpose and where available, savings from the year's appropriation may be used to augment deficiencies in the payment of benefits under the said laws.

 

SECTION 58.  Augmentation of Maintenance and Other Operating Expenses (MOOE) Items.— Agencies may augment an item of expenditure within MOOE, except intelligence and confidential fund, from savings in other items of MOOE without prior approval of the DBM.

SECTION 59.  Realignment/Relocation of Capital Outlays. — The amount appropriated in this Act for acquisition, construction, replacement, rehabilitation and completion of various capital outlays may be realigned/relocated in cases of imbalanced allocation of projects within the district, duplication of projects, overlapping of funding source and similar cases: PROVIDED, That such realignment/relocation of capital outlays shall be done only upon prior consultation with the representative of the legislative district concerned.

SECTION 60.  Realignment of Foreign-Assisted Projects. — The amount appropriated in this Act for the implementation of foreign-assisted projects, including loan proceeds and local counterpart, shall not be realigned except to other foreign-assisted projects.

SECTION 61.  Implementation of Executive Order No. 36, Series of 2001 and Executive Order No. 103, Series of 2002. — The appropriations provided in this Act for the regional/field offices in Regions IX, X, XI and XII, may be realigned as may be necessary to regions IX, X, XI, XII and ARMM to implement E.O. No. 36, s. 2001.

Likewise, the appropriations provided in this Act for the regional/field offices in Region IV may be realigned as may be necessary to Regions III, IV-A and IV-B to implement E.O. No. 103, s. 2002.

SECTION 62.  Electronic Interconnection Through the Internet and E-Commerce Application. — Departments, bureaus, offices, agencies and instrumentalities of the government, including GOCCs, may use existing appropriations to install an electronic "on-line" network to facilitate the open, speedy and efficient electronic "on-line" transmission conveyance and use of electronic data messages or electronic documents consistent with R.A. No. 8792, the E-Commerce Act. The appropriations to be made available for the E-Commerce application may be used in the acquisition of computer equipment, preferably on a lease basis whenever applicable and more cost efficient, and for additional upgrading of hardware components, peripherals and software, subject to the provisions of E.O. No. 262, s. 2000: PROVIDED, That such acquisition shall be consistent with the approved Information Systems Strategic Plan of the agency.

SECTION 63.  Requirement Under the Electronic Procurement System (EPS). — Departments, bureaus, offices, agencies and instrumentalities of the government, including GOCCs and LGUs, shall use the electronic procurement system (EPS) as the primary source of information on government procurement of common-use supplies, goods, materials, equipment, civil works and consulting services pursuant to E.O. No. 40 s. 2001. All notices and certifications to be issued by the bids and awards committee with respect to procurement shall be done through EPS.

SECTION 64.  Availability of Appropriations. — Appropriations for maintenance and other operating expenses and capital outlays authorized in this Act shall be available for release and obligation for the purpose specified and under the same special provisions applicable thereto for a period extending to one fiscal year after the end of the year in which such items were appropriated: PROVIDED, That a report of these releases and obligations shall be submitted to the Senate Committee on Finance and to the House Committee on Appropriations.

RELEASE AND USE OF FUNDS

SECTION 65.  Schedule of Fund Releases Based on Expenditure Category. — The schedule of releases of the appropriations authorized in this Act shall be in accordance with the Allotment System established under Section 33, Book VI of E.O. No. 292, subject to the Expenditure Categories and the Preference of Expenditures as indicated hereunder, to wit:

(a)First Preference Expenditures — shall consist of urgent programs for education, food security, poverty alleviation, health, peace and order, and other vital social services and mandatory expenditures.

(b)Second Preference Expenditures — shall consist of new programs, projects and activities and other regular operating expenses of Agencies, including urgent programs rolled-over to Second Preference due to inadequacy or deficiency of the available operational cash budget or cash resources for program implementation.

SECTION 66.  Prohibition Against Impoundment of Appropriations. — No appropriations authorized in this Act shall be impounded through deduction or retention, unless in accordance with the guidelines for the imposition and release of reserves and the rules and regulations for deduction, retention or deferral of releases shall have been issued by the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and activities authorized in this Act, except those covered by Special Provision No. 1 of the Unprogrammed fund shall be released pursuant to Sec. 33 (3), Chapter 5, Book VI of E.O. No. 292.

SECTION 67.  Unmanageable National Government Budget Deficit. — Retention or reduction of appropriations authorized in this Act shall be effected only in cases where there is unmanageable national government budget deficit.

Unmanageable national government budget deficit as used in this Section shall be construed to mean that the actual national government budget deficit has exceeded the quarterly budget deficit targets consistent with the full-year target deficit as approved by Congress pursuant to Article VI of the Constitution or there are clear economic indications of an impending occurrence of such condition, as determined by the Development Budget Coordinating Committee as approved by the President.

SECTION 68.  Establishment of E-Government Fund. — The Secretary of Budget and Management is authorized to establish the E-Government Fund to finance major information and communication technology projects of the government as may be determined by the Information Technology and E-Commerce Council. Said fund may be sourced from appropriations authorized in this Act, subject to the approval of the President of the Philippines.

SECTION 69.  Appropriations of Agencies Vested with Fiscal Autonomy. — Any provision of law to the contrary notwithstanding, the appropriations authorized in this Act for the Judiciary, Congress of the Philippines, the Commission on Human Rights, the Office of the Ombudsman, the Civil Service Commission, the Commission on Audit and the Commission on Elections shall be automatically and regularly released. SEIDAC

SECTION 70.  Direct Release of Funds to Regional Offices.— Funds allotted for regional offices but included in the budgets of their central offices or which are specifically allocated for the different regions shall automatically be released directly to said regional offices. For this purpose, the DBM shall identify by region the expenditure programs of agencies in the national government budget and shall release funds intended for them in accordance with the approved regional distribution of expenditures specifying the region of destination. Copies of fund releases to the said Regional offices shall be furnished the House Committee on Appropriations and the Senate Committee on Finance.

SECTION 71.  Prohibition Against Deduction/Retention of Allotment. — Fund releases from appropriations provided in this Act shall be transmitted intact or in full to the office or agency concerned and no retention or deduction as reserves or overhead shall be made, except as authorized by law, or upon direction of the President of the Philippines. The COA shall ensure compliance with this provision to the extent that sub-allotments by agencies, to their subordinate offices are in conformity with the release documents issued by the DBM.

SECTION 72.  Utmost Priority to Priority Provinces and Cities.— All departments, bureaus, offices and agencies shall give utmost priority in the utilization of their funds for basic services to all provinces and all cities with the poorest families as setforth in the National Anti-Poverty Program.

SECTION 73.  Notice of Release of Funds.— Release of funds for construction, repair and maintenance, rehabilitation, replacement, completion, betterment or improvement of roads and bridges, port works, flood control, waterworks/supply and government buildings and structures as well as for Internal Revenue Allotment and other financial support to local government units shall be made with at least ten (10) days prior written notice of the release to the Representative of the district concerned.

Failure to comply with this Section shall be considered negligence in the performance of duty subject to appropriate administrative sanction.

SECTION 74.  Certification of Availability of Funds. — Before entering into contracts involving the expenditure of public funds, all departments, bureaus, offices or agencies shall secure a certification of availability of funds for the purpose from the agency Chief Accountant, subject to Section 40, Chapter 5 and Section 58, Chapter 7, Book VI of E.O. No. 292: PROVIDED, That the certification of availability of funds sufficient to cover the cost of the contracted activities shall be contained in and made part of the contract duly signed by the Chief Accountant of the contracting agency, as provided for by LOI No. 968.

Departments, bureaus, offices or agencies, before entering into contracts for delivery of goods or services against future payment, shall likewise first secure a certification of the availability of funds out of the agency's appropriations to cover the full contract price or the contracted amount for such goods or services. No contracts shall be entered into nor work undertaken without such certification of fund availability.

SECTION 75.  Disbursement of Funds.— All appropriated funds shall be disbursed only through the National Treasury and/or authorized servicing banks under the Modified Disbursement Scheme. SEIDAC

 

SECTION 76.  Limitations on Cash Advance/Reportorial Requirements.— Any provision of law to the contrary notwithstanding, it is hereby declared a policy of the government that no cash advances shall be granted until such time that the earlier cash advances availed of by the officials or employees concerned shall have been already liquidated pursuant to pertinent accounting and auditing rules and regulations as certified by the Head of the Agency concerned and the COA Auditor.

For this purpose, the Head of the Agency and the COA Auditor shall be jointly responsible for the preparation and submission to the House Committee on Appropriations and Senate Committee on Finance of the Annual Report of Cash Advances indicating the names of the recipients, the items of expenditures for which said cash advances were disbursed and the dates of liquidation as reflected in the Agency Books of Accounts.

ADMINISTRATIVE PROCEDURES

SECTION 77.  Organizational and Staffing Pattern Changes. — Unless otherwise provided by law or directed by the President of the Philippines, no organizational units or changes in key positions in any department or agency shall be authorized in their respective organizational structures and staffing patterns and funded from appropriations provided by this Act.

SECTION 78.  Institutional Strengthening and Productivity Improvement in Agency Organization and Operations and Implementation of Organization/Reorganization Mandated by Law.— The Government shall adopt institutional strengthening and productivity improvement measures to improve service delivery and enhance productivity in the government, as directed by the President of the Philippines. The heads of departments, bureaus, offices, agencies, and other entities of the Executive Branch shall accordingly conduct a comprehensive review of their respective mandates, missions, objectives, functions, programs, projects, activities and systems and procedures; identify areas where improvements are necessary; and implement corresponding structural, functional and operational adjustments that will result in streamlined organization and operations and improved performance and productivity: PROVIDED, That actual streamlining and productivity improvements in agency organization and operations, as authorized by the President of the Philippines for the purpose, including the utilization of savings generated from such activities, shall be in accordance with the rules and regulations to be issued by the DBM, upon consultation with the Presidential Committee on Effective Governance: PROVIDED, FURTHER, That in the implementation of organizations/reorganizations, or specific changes in agency structure, functions and operations as a result of institutional strengthening or as mandated by law, the appropriation, including the functions, projects, purposes and activities of agencies concerned may be realigned as may be necessary: PROVIDED, FINALLY, That any unexpended balances or savings in appropriations may be made available for payment of retirement gratuities and separation benefits to affected personnel, as authorized under existing laws.

SECTION 79.  Performance Monitoring and Evaluation.— Within the context of the Medium Term Expenditure Framework, all departments, bureaus, offices and agencies of the National Government, including GOCCs shall conduct/implement a monitoring and evaluation system which includes data collection and reporting system, to monitor performance and improve the results of government policies and programs: PROVIDED, That performance indicators used in the system shall be in accordance with the Organization Performance Indicator Framework wherein government, agencies shall identify the specific outputs and outcomes to be produced by their programs and services which are aligned with strategic goals of the government and set indicators and corresponding targets therefor.

For this purpose, the DBM, in coordination with agencies concerned, shall be primarily responsible for the formulation/design of an integrated program and project monitoring and evaluation system, which shall report program results of departments/agencies/GOCCs regularly and publicly.

SECTION 80.  Service Contracts.— Departments, bureaus, offices or agencies of the National Government, as well as GOCCs, are hereby authorized to enter into service contracts, with other government agencies, private firms or individuals and non-governmental organizations for services related or incidental to their respective functions and operations, whether on part-time or full-time basis.

Service contracts may be entered into by the agency for professional consultancy services, which may include contracts with individual consultants. For this purpose, an individual professional consultant is an expert in a field of special knowledge or training who is contracted to render particular outputs or services primarily advisory in nature requiring highly specialized or technical expertise which cannot be provided by the regular staff of the agency. Such hiring creates no employer-employee relationship between the individual professional consultant and the agency. The DBM, in coordination with other agencies concerned, shall issue the necessary guidelines governing professional consultancy services.

Service contracts may also be entered into by the agency for janitorial, security and other related services, whenever practicable and cost-effective for the government.

Service contracts shall be entered into by the agency through public bidding or negotiated contracts, subject to pertinent accounting and auditing rules and regulations.

SECTION 81.  Implementation of Infrastructure Projects. — In the hiring of workers needed for the implementation of infrastructure projects as authorized in this Act, priority shall be given to the socially disadvantaged and financially incapable inhabitants of the LGU where the project is located.

SECTION 82.  Lease-Rental of Computers and Other Information Technology (IT) Equipment.— As integral part of the fiscal discipline measures mandated by Section 53 hereof, it is hereby declared the policy of the government to "scale-down" expenditures on the acquisition and maintenance of computers and other information technology (IT) equipment as well as in the implementation of the computerization programs of government offices and agencies.

For this purpose, appropriations in this Act of all departments, bureaus, offices and agencies for computerization programs, purchase of computers, or for the acquisition of any other IT equipment, may instead be used for the lease-rental of said computers and IT equipment consistent with the cost-benefit analysis: PROVIDED, That the appropriations authorized in this Act for purchase of computers intended for distribution to public schools and any other approved beneficiaries of IT equipment shall be exempted from the coverage of this Section.

The rules and regulations to implement this Section shall be issued by the Secretary of Budget and Management in consultation with the National Computer Center and the Chairman, Commission on Audit.

SECTION 83.  Funding of National Government Agencies in the Autonomous Region in Muslim Mindanao. — National government offices and agencies in the Autonomous Region in Muslim Mindanao which are not excluded under paragraph (9), Section 2, Article V of R.A. No. 6734, as amended by Section 3, Article IV of R.A. No. 9054, together with their personnel, equipment, properties and budgets shall be placed under the control and supervision of the Regional Government, pursuant to a schedule prescribed by the Oversight Committee in accordance with the mandate under the provisions of R.A. No. 6734, as amended by R.A. No. 9054: PROVIDED, That all locally-funded programs, projects or activities of national government offices and agencies to be implemented in the ARMM shall be undertaken and implemented by the national government office or agency concerned through their respective regional offices and/or district offices upon prior consultation with the representative concerned.

Prior to said transfer, the said agencies of the National Government shall continue their operations and the discharge of their respective functions.

SECTION 84.  Transfer of Funds to ARMM. — The appropriations provided in this Act for Basilan and Marawi City included in the budget of the various departments, bureaus, offices or agencies shall be transferred to the Autonomous Regional Government in Muslim Mindanao.

SECTION 85.  Strict Adherence to Procurement Procedures, Laws, Rules and Regulations. — In the procurement of civil works, goods and supplies, all departments, bureaus, offices and agencies, including state universities and colleges, GOCCs and other instrumentalities, shall strictly adhere to the provisions of P.D. No. 1594 and its revised Implementing Rules and Regulations (IRR) and E.O. No. 40, s. 2001 and its IRR: PROVIDED, That the EPS shall be used as the primary source of information on government procurement of commonly-used supplies, goods and equipment, pursuant to E.O. No. 322, s. 2000, as amended by E.O. No. 40, s. 2001.

SECTION 86.  Construction Standards and Guidelines. — Construction projects funded from capital outlays authorized in this Act under the various departments, bureaus, offices or agencies of the National Government, including the construction of buildings for state universities and colleges, schools, hospitals, sanitaria, health centers and health stations, roads and bridges, shall be implemented only in accordance with the appropriate standards and specifications for the planning, survey, design and construction of the project as prescribed by the Department of Public Works and Highways or the DOTC, as the case may be. In addition, land use and zoning guidelines as prescribed by existing laws, rules and regulations shall be strictly observed.

In the implementation of the construction projects, Sections 2, 3, 4, 5, 6, 7, 9, 10 & 12 of E.O. No. 182, entitled "Rationalizing Public Works Measures, Appropriating Funds for Public Works, and for Other Purposes", and other legislations on public works shall be strictly complied with, except as otherwise provided in this Act.

SECTION 87.  Implementing Agency for Nationally Funded Projects. — Pursuant to Sec. 17(c) of R.A. No. 7160, the Local Government Code of 1991, projects, facilities, programs and services funded under the General Appropriations Act shall be implemented by the appropriate national government department or agency irrespective of the nature and location of such projects, facilities, programs and services: PROVIDED, That upon consultation with the concerned Members of Congress, a memorandum of agreement may be entered into with the implementing national government agency and the beneficiary LGU, designating the latter or any other LGU with demonstrated capability to undertake the project or activity by themselves.

SECTION 88.  Report on Compliance with COA Audit Findings and Recommendations.— All departments, bureaus, offices, agencies and instrumentalities of the government, including GOCCs and LGUs, shall within sixty (60) days from their receipt of the COA annual audit report, submit a status report on the actions they have taken on the audit findings and recommendations to the COA, copy furnished the DBM, the House Committee on Appropriations and the Senate Committee on Finance.

SECTION 89.  Submission of Quarterly Financial and Narrative Accomplishment Reports.— Within thirty (30) days after the end of each quarter, each department, bureau, office or agency shall submit a quarterly financial and narrative accomplishment report to the House Committee on Appropriations and the Senate Committee on Finance, copy furnished the DBM, the COA and the appropriate Committee Chairman of the House of Representatives. The financial report shall show the cumulative allotments, obligations incurred/liquidated, total disbursements, unliquidated obligations, unobligated and unexpected balances and the results of expended appropriations.

The quarterly report shall also include detailed statements on the disbursements and utilization of appropriations for the purchase of motor vehicles and equipment, capital investment outlays, as well as appropriations earmarked and released for rentals, travels, petroleum, oil and lubricants, water, illumination and power services, telephone and other communication services.

Likewise, the DBM shall submit to the House Committee on Appropriations and the Senate Committee on Finance a quarterly report on releases made from the lump-sum Special Purpose Funds, Supplemental Appropriations, Continuing Appropriations and Automatic Appropriations, and, as applicable, the unreleased balances of such appropriations.

SECTION 90.  Applicability of the Special Provisions of the First Preference Expenditures.— The Special Provisions governing the First Preference Expenditures as prescribed under Section 65 hereof, insofar as pertinent and legally applicable, shall likewise govern the Second Preference Expenditures.

SECTION 91.  Fund Releases Made Prior to the Approval of this Act. — Fund releases to departments, bureaus, offices and agencies on the basis of R.A. No. 9162, the FY 2002 General Appropriations Act as reenacted in FY 2003, pursuant to Sec. 25(7), Article VI of the Constitution, shall be considered as "Advance Releases" chargeable against their corresponding appropriations under this Act. Releases in excess of the agency authorized appropriations prior to the passage of this Act are deemed valid and are hereby ratified.

SECTION 92.  Separability Clause. — If for any reason, any section or provision of this Act is declared unconstitutional or invalid, other sections or provisions hereof which are not affected thereby shall continue to be in full force and effect.

SECTION 93.  Effectivity. — The provisions of this Act shall take effect on January one, Two Thousand Three, unless otherwise provided herein.

Approved: April 23, 2003

Source: CDAsia Online