BOOK VI

NATIONAL GOVERNMENT BUDGETING

Chapter 1
GENERAL PROVISIONS
Sec. 1. Constitutional Policies on the Budget. - (1) All appropriations,
revenue or tariff bills, bills authorizing increase of the public debt, bills of
local application, and private bills shall originate exclusively in the House
of Representatives but the Senate may propose or concur with
amendments.
Chapter 2 - BUDGET POLICY AND APPROACH
Sec. 3. Declaration of Policy. - It is hereby declared the policy of the
State to formulate and implement a National Budget that is an
instrument of national development, reflective of national objectives,
strategies and plans. The budget shall be supportive of and consistent
with the socio-economic development plan and shall be oriented towards
the achievement of explicit objectives and expected results, to ensure
that funds are utilized and operations are conducted effectively,
economically and efficiently. The national budget shall be formulated
within the context of a regionalized government structure and
borrowings of all levels of government and of government-owned or
controlled corporations. The budget shall likewise be prepared within the
context of the national long-term plan and of a long-term budget
program.
Chapter 3
BUDGET PREPARATION
Sec. 11. Submission of the Budget. - The President shall, in accordance
with Section 22 (1), article VII of the Constitution, submit within thirty
(30) days from the opening of each regular session of the Congress as
the basis for the preparation of the General Appropriations Act, a

national government budget estimated receipts based on existing and

proposed revenue measures, and of estimated expenditures.

Chapter 4
BUDGET AUTHORIZATION
Sec. 23. Content of the General Appropriations Act. - The General
Appropriations Act shall be presented in the form of budgetary programs
and projects for each agency of the government, with the corresponding
appropriations for each program and project, including statutory
provisions of specific agency or general applicability. The General
Appropriations Act shall not contain any itemization of personal services,
which shall be prepared by the Secretary after enactment of the General
Appropriations Act, for consideration and approval of the President.
Chapter 5
BUDGET EXECUTION
Sec. 32. Use of Appropriated Funds. - All moneys appropriated for
functions, activities, projects and programs shall be available solely for
the specific purposes for which these are appropriated.
Chapter 6
BUDGET ACCOUNTABILITY
Sec. 51. Evaluation of Agency Performance. - The President, through
the Secretary shall evaluate on a continuing basis the quantitative and
qualitative measures of agency performance as reflected in the units of
work measurement and other indicators of agency performance,
including the standard and actual costs per unit of work.
Chapter 7
EXPENDITURE OF APPROPRIATED FUNDS
Sec. 58. Contracting of Activities. - Agencies may enter into contracts
with individuals or organizations, both public and private, subject to
provisions of law and applicable guidelines approved by the President:
provided, that contracts shall be for specific services which cannot be

provided by the regular staff of the agency, shall be for a specific period
of time, and shall have a definite expected output: provided, further, that
implementing, monitoring and other regular and recurring agency
activities shall not be contracted for, except for personnel hired on an
individual and contractual basis and working as part of the organization,
or as otherwise may be approved by the President: Provided, finally, that
the cost of contracted services shall not exceed the amount that would
otherwise be incurred had the work been performed by regular
employees of government, except as may be authorized under this
section.
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Sec. 59. Authority to Receive Additional Compensation. - Officials

and employees who are duly appointed by competent authority to
any position in another government office or agency in a concurrent
capacity, may, in the discretion of the President, be allowed to
receive additional compensation in the form of allowance or
honorarium at such rates he shall fix and subject to such conditions
as she may prescribe. Such additional compensation shall be paid
from the appropriations of the office or agency benefitting from the
concurrent service.
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Sec. 60. Restrictions on Salary Increases. - No portion of the

appropriations provided in the General Appropriations Act shall be
used for payment of any salary increase or adjustment unless
specifically authorized by law or appropriate budget circular nor
shall any appropriation for salaries authorized in the General
Appropriations Act, save as otherwise provided for under the
Compensation and Position Classification Act, be paid unless the
positions have been classified by the Budget Commission.
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Sec. 61. Merit Increases. - The budgets of national government

agencies may provided for a lump-sum for merit increases, subject
to such terms and conditions as may be approved by the President.
Such lump-sum shall be used to fund salary increases approved by
the head of agency in recognition of meritorious performance:
Provided, That the Civil Service Commission and the Department of
Budget shall jointly issue the rules and regulations governing the
granting of such merit increases.
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Sec. 62. Salary for Substitutionary Service. - When an official or

employee is issued a duly approved appointment in a temporary or
acting capacity to take the place and perform the duties of another
who is temporarily absent from his post with pay, savings in the

appropriations of the department, bureau or office may be used for

the payment of his salary or differential, subject to the approval of
the Secretary.
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Sec. 63. Additional Compensation for Overtime Service. - Officials

and employees of the National Government, when required to work
overtime after regular working hours during ordinary days, during
half-day sessions, or on Saturdays, Sundays and holidays, by the
heads of departments concerned, to finish work that must be
completed within a specified time, may be paid overtime
compensation from any unexpected balance of the appropriation for
salaries and wages authorized in the General Appropriations Act
and under such guidelines as may be issued by the President.
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Sec. 64. Compensation of Persons Receiving Pension. - A person

receiving life pension, annuity, or gratuity as a result of service in
the national government or any local government unit, or from any
government-owned or controlled corporation, who is reappointed to
any position, the appropriation for the salary of which is provided
from funds of the office, shall have the option to receive either the
compensation for the position, or the pension, gratuity or annuity,
but in no case shall he receive both.
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Sec. 65. Prohibition of Voluntary Service. - Unless otherwise

specifically approved by the President, no person shall be employed
or appointed in the government under the guise of voluntary
service, with compensation below the authorized hiring rate for the
position, but with privilege of transportation and/or representation
expenses in any form, or of receiving per diems, allowances,
honoraria, subsistence, quarters in cash or in kind, payable from
government funds: provided, that the application of this provisions
may be waived to authorize voluntary service in the Armed Forces
of the Philippines or in connection with relief operations.
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Sec. 66. Additional Compensation for School Faculty Members. Professors, instructors, teachers, or members of the faculty of
government schools, colleges and universities, when required to
teach more than their regular teaching loads may be paid additional
compensation not exceeding seventy-five percentum of their basic
salary.
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Sec. 67. Laundry. - At the discretion of the department head

concerned, any official or employee of the national government

serving in any hospital, penal institution, or other similar

institution, who is required to wear a uniform during the
performance of his duties, may be granted laundry allowance in
kind, or which may be commuted at such rates as may be
authorized by the Department of Budget.
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Sec. 68. Hazard Pay. - Upon recommendation of the department

head concerned and approval of the Secretary, hazard pay may be
allowed to employees who are actually assigned to danger or strifetorn areas, disease-infested places, or in distressed or isolated
stations and camps, which expose them to great danger of
contagion or peril to life. Such hazard pay shall be paid from
savings of the department concerned at such rates, terms and
conditions as the Secretary may prescribe.
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Sec. 69. Subsistence. - No official or employee of the national

government shall be given subsistence, the cost of which is payable
from any fund, except the following and only when an appropriation
therefor is specifically provided:
(1) Marine officers, engineers and crew of government vessels,
launches, and motorboats, who shall take their meals on the mess
when aboard the said vessels, launches, or motorboats;
(2) Lightkeepers and other employees in light stations duly
authorized by the head of the department to receive subsistence,
who shall be furnished raw canned, or preserved food supplies;
(3) Officials and employees who are required to render service
within the premises of hospitals, penal institutions, leper
institutions, military installations, and other similar institutions, for
a continuous period that includes meal time, may be allowed full
subsistence when required to live in said premises to make their
services available at any and all times;
(4) Laborers temporarily fielded to isolated or unsettled districts
shall be furnished the usual rations or the equivalent in cash, at the
expense of the government.
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In hospitals and leper institutions where there are no mess halls

or whenever these are inadequate, personnel entitled to
subsistence allowance in kind may commute such subsistence upon
request of the personnel concerned subject to the approval of the

department head at authorized rates chargeable against the

appropriations for supplies and materials authorized in the General
Appropriations Act.
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Sec. 70. Subsistence of Crew of Government Vessels. - The

subsistence allowance for the officers and crew of the coast guard
and revenue cutters and lighthouse tenders and other large vessels
operated by the Government shall be spent for conducting a mess
under the charge and administration of one or more members of
the complement in each vessel to be designated by the
corresponding head of department, and in accordance with
regulations to be issued by him. The person or persons so
designated shall keep an account of the advances of funds received
and expenditures made therefrom for the operation of the mess and
shall render such report to the corresponding Accounting Officer
promptly at the end of each month.
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Sec. 71. Furnished Quarters. - When the position of any official or

employee is provided with "furnished quarters", such official or
employee shall be entitled to the use of such government-owned
furniture and equipment as are necessary for his board and lodging
and those for his family including children below twenty-one years
of age.
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Sec. 72. Per Diems of Government Officials and Employees. When a government official or employee is authorized to travel on
official business outside of his permanent station, he shall be
entitled to per diems to cover his board and lodging in accordance
with his schedule: provided, that in addition to per diems, the
official or employee may be entitled to transportation expenses in
going to and coming from his destination and to a daily allowance
while in the field: provided, further, that officials and employees on
travel status whose expenses for board and lodging are paid
directly or indirectly by government may not be entitled to receive
the per diems and allowances corresponding to such payments.
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Department secretaries, heads of Constitutional bodies,

undersecretaries and all other positions of equivalent rank are
authorized the reimbursement of actual expenses supported by
receipts, within such limits as may be imposed under the provisions
of this section.
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Officials and employees authorized to travel abroad may be

granted clothing allowance: provided, that no official or employee

shall be granted such clothing allowance oftener than once every
twenty-four (24) months.
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The rates of per diems and other allowances as authorized in this

section shall be determined by the President. The rates may be
changed from time to time upon recommendation of a Travel Rates
Committee which is hereby created, consisting of the Secretary of
Budget as Chairman and the Secretary of Foreign Affairs, the
Secretary of Tourism and the Chairman, Commission on Audit, or
their representatives, as members.
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The Committee shall review travel rates and shall recommend to

the President for consideration and approval modification in rates
and policy when found to be warranted by actual domestic or
foreign travel costs, as the case may be.
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Government-owned or controlled corporations shall observe the

rates established under this section: provided, that profit making
corporations may adopt their own scales as may be provided by
law. The Travel Rates Committee shall issue the necessary rules
and regulations to enforce the provisions of this section.
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Sec. 73. Additional Conditions for Payment of Travel Expenses. When travel is done by water and subsistence is not included in the
transportation cost, the amount actually and necessarily spent for
subsistence during such travel time shall be paid, and no per diems
shall be allowed in lieu thereof.
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Per diems and travel allowances shall not be granted to members

of field parties or others for whom subsistence and allowances in
kind are supplied or other special provision made to cover travel
expenses.
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The travel expenses of a government official or employee who is

assigned to render a special service to any private person or entity,
the expenses for which are payable by the latter, shall be paid from
a deposit which the private party shall be required to make before
the performance of the special service is commenced, subject to the
limitations and requirements herein provided for travel expenses
payable from government funds.
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No official or employee of the Government who remains

temporarily at one station for a period longer than one (1) month
shall be paid per diems in excess of one (1) month, except upon the
approval of the head of department, and, in case his temporary stay
in any one place exceeds three (3) months, payment of per diems in
excess of three (3) months shall be made only upon the previous
approval of the Secretary.
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Sec. 74. Transportation of Members of Family of an Employee

Transferred from One Station to Another. - Whenever, due to the
exigencies of the service and not at his own request, an official or
employee is transferred from one station to another, said official or
employee and his spouse and children below twenty-one years of
age shall be entitled to transportation and freight for reasonable
and necessary baggage and household effects, at the expense of
the Government, to be paid from the appropriation for traveling
expenses of the bureau or office concerned.
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Sec. 75. Purchase, Use, Operation and Maintenance of Motor

Transport Equipment. - No appropriation for equipment authorized
in the General Appropriations Act shall be used directly or indirectly
for the purchase of automobiles, jeeps, jitneys, station wagons,
motorcycles, trucks, launches, speedboats, airplanes, helicopters
and other types of motor transport equipment unless otherwise
specifically authorized by the President.
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All departments, bureaus, offices and agencies authorized to

purchase motor transport equipment including those acquired
through donations, gifts or gratuitous title are likewise authorized
to use, operate and maintain them for purposes of carrying out the
official functions and activities of the agency. These motor vehicles
shall be used strictly for official business, bear government plates
only, and after office hours kept in garage provided therefor by the
office or agency to which they belong, except, when in use for
official business outside office hours. The President, however, may
authorize exceptions from these provisions for officials of
government who work under extended hours or whose activities
call for special security arrangements. Any violation of the
provisions of this section shall subject the erring official or
employee to administrative disciplinary action and he shall be
personally liable for any loss or damage caused to the government
or third persons.
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The Commission on Audit shall issue rules and regulations

governing the use, operation and maintenance of government

motor transport equipment.
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Sec. 76. Limitation of Rental of Motor Vehicles. - No

appropriations authorized in the General Appropriations Act shall
be used for renting motor transport equipment for a continuous
period of more than fifteen days, except as may be authorized by
the Secretary.
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Sec. 77. Limitation of Purchase of Supplies, Materials, and

Equipment Spare Parts. - Except as otherwise provided in the
General Appropriations Act, the stock on hand of supplies, materials
and equipment spare parts, acquired through ordinary and
emergency purchase, shall at no time exceed normal three-month
requirements, subject to the pertinent rules and regulations issued
by competent authority: Provided, That department heads may
approve the build-up of stocks on hand of critical supplies and
materials, in anticipation of cost increases or requirements of a
national emergency, and specifying maximum quantities of
individual items, but in no case shall these stocks exceed more than
one year's supply, unless otherwise approved by the President.
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Sec. 78. Purchase of Locally Manufactured Products. - All

appropriations for the purchase of equipment, supplies and
materials authorized in the General Appropriations Act shall be
available only for locally manufactured equipment; parts,
accessories, medicines and drugs, supplies and materials, except
when none is available in the market or when the price of the
locally manufactured article exceed those determined by the Flag
Law.
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Sec. 79. Availability of Appropriations for Rental of Building and

Grounds. - Any appropriation authorized in any Act for rental of
buildings and grounds for any department, bureau, office or agency
shall be available for expenditure only when authorized by the
department head concerned. Such appropriation may also be used
for lease-purchase arrangements.
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With the concurrence of the Secretary of Budget and

Management and the Secretary of Finance, the head of the
department may contract with any government financial institution
for loans intended for the acquisition of land for the construction of
an office building for any of the agencies under the department.

Annual amortization of the loans shall be taken from

appropriation for rental authorized under any Act for
department, bureau or office concerned.

the
the

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Sec. 80. Misuse of Government Funds and Property. - Any public

official or employee who shall apply any government fund or
property under his administration or control to any use other than
for which such fund or property is appropriated by laws, shall suffer
the penalty imposed under the appropriate penal laws.

BOOK VII
ADMINISTRATIVE PROCEDURE
Chapter 1
GENERAL PROVISIONS
Sec. 1. Scope. - This Book shall be applicable to all agencies as defined
in the next succeeding section, except the Congress, the Judiciary, the
Constitutional Commissions, military establishments in all matters
relating exclusively to Armed Forces personnel, the Board of Pardons and
Parole, and state universities and colleges.
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Chapter 2
RULES AND REGULATIONS
Sec. 3. Filing. - (1) Every agency shall file with the University of the
Philippines Law Center three (3) certified copies of every rule adopted by
it. Rules in force on the date of effectivity of this Code which are not filed
within three (3) months from that date shall not thereafter be the basis
of any sanction against any party or persons.
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Chapter 3
ADJUDICATION
Sec. 10. Compromise and Arbitration. - To expedite administrative
proceedings involving conflicting rights or claims and obviate expensive
litigations, every agency shall, in the public interest, encourage amicable
settlement, comprise and arbitration.

Chapter 4
ADMINISTRATIVE APPEAL INCONTESTED CASES
Sec. 19. Appeal. - Unless otherwise provided by law or executive
order, an appeal form a final decision of the agency may be taken to the
Department head.
FINAL PROVISIONS
Sec. 27. Repealing Clause. - All laws, decrees, orders, rules and
regulations, or portions thereof, inconsistent with this Code are hereby
repealed or modified accordingly.
DONE in the City of Manila, this 25th day of July, in the year of Our
Lord,
nineteen
hundred
and
eighty-seven.
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