Guidelines to Implement Special Provision 1 (d), XLIII. Unprogrammed Appropriations of Republic Act No. 11975

February 27, 2024 DOF DEPARTMENT CIRCULAR NO. 003.2024 TO : All Heads of Government-Owned or -Controlled Corporations; Budget Officers; Heads of Accounting; Department of Budget and Management; Bureau of the Treasury; COA Auditors; and All Others Concerned SUBJECT : Guidelines to Implement Special Provision 1 (d), XLIII. Unprogrammed Appropriations of Republic Act No. 11975 Entitled the General Appropriations Act for Fiscal Year 2024 SECTION 1. Legal Basis . These Guidelines are being issued in line with the Special Provision 1 (d), XLIII. Unprogrammed Appropriation of Republic Act (R.A.) No. 11975, entitled the "General Appropriations Act for FY 2024," which directs the Department of Finance ("DOF") to issue guidelines to implement the collection of Unprogrammed Appropriation sourced from the "[F]und balance of the Government-Owned or -Controlled Corporations (GOCCs) from any remainder resulting from the review and reduction of their reserve funds to reasonable levels taking into account the disbursement from prior years." HTcADC Under the Administrative Code of 1987 and Executive Order (E.O.) No. 127, series of 1987, the DOF is mandated to ensure sound and efficient management of the financial resources of the Government, its subdivisions, agencies, and instrumentalities. In addition, the DOF is mandated to ensure that the financial resources of the GOCCs are managed judiciously and in a manner supportive of development objectives and attainment of the socio-economic objectives of the national development program. Consistent with the Medium-Term Fiscal Framework, the National Government aims to consolidate the resources of the government so that these are mobilized and utilized to gain the maximum benefit and high multiplier effects for the economy. SECTION 2. Coverage . These Guidelines shall cover all GOCCs, as defined herein, and their respective Fund Balances as of 31 December 2023, as determined in Section 4 of these Guidelines. SECTION 3. Definition of Terms . For purposes of these Guidelines, the following definitions shall apply: 3.1 Fund Balance refers to the unrestricted fund in the form of (i) cash on hand, (ii) cash in banks ( e.g. , savings account, current account, or time deposits), (iii) investment in government securities, private institutions ( e.g. , corporate securities and Unit Investment Trust Funds), and other securities, and (iv) other fund balances, including government funds and balances created for specific purposes ( e.g. , subsidy releases from the National Government and fund transfers from other national government agencies), financial assets ( e.g. , Treasury Bills, marketable securities, money market funds) and other cash equivalents/investments that are classified under other accounts in the Financial Statements ( e.g. , Other Assets), subject to the factors as provided in Sections 4.2 and 4.3. CAIHTE 3.2 Government Financial Institutions ("GFI") refer to financial institutions or corporations in which the government directly or indirectly owns majority of the capital stock and which are either: (1) registered with or directly supervised by the Bangko Sentral ng Pilipinas; or (2) collecting or transacting funds or contributions from the public and places them in financial instruments or assets such as deposits, loans, bonds and equity including, but not limited to, the Government Service Insurance System and the Social Security System. 3.3 Government Instrumentalities with Corporate Powers ("GICP")/Government Corporate Entities ("GCE") refer to instrumentalities or agencies of the government, which are neither corporations nor agencies integrated within the departmental framework, but vested by law with special functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter including, but not limited to, the following: the Manila International Airport Authority (MIAA), the Philippine Ports Authority (PPA), the Philippine Deposit Insurance Corporation (PDIC), the Metropolitan Waterworks and Sewerage System (MWSS), the Laguna Lake Development Authority (LLDA), the Philippine Fisheries Development Authority (PFDA), the Bases Conversion and Development Authority (BCDA), the Cebu Port Authority (CPA), the Cagayan de Oro Port Authority, the San Fernando Port Authority, the Local Water Utilities Administration (LWUA) and the Asian Productivity Organization (APO). 3.4 Government-Owned or -Controlled Corporation ("GOCC") refers to any agency organized as a stock or nonstock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock; provided, that for purposes of these Guidelines, the term "GOCC" shall also include GICP/GCE and GFI as defined herein. SECTION 4. General Guidelines in Determining Fund Balance . 4.1 In order to determine the Fund Balance for the purpose of the Special Provision 1 (d), all GOCCs shall submit both in hard and electronic format to the DOF-Corporate Affairs Group (CAG) the following documents on or before March 27, 2024: aScITE a. Computation of the GOCC of its Fund Balance; b. Report of the GOCC's cash and investment balances as of December 31, 2023, which is submitted monthly to the DOF by the GOCC; c. Latest detailed trial balances as of 31 December 2023; d. Historical cash flow for the fiscal years (FYs) 2020 to 2023 including the information in pars. (e) (ii) and (e) (iii) below; e. Projected cash flow for the FYs 2024 to 2025, showing the following information: i. Monthly projected cash flow; ii. Operating and capital expenditures; and iii. Reserve fund requirements. f. Other documents which the CAG may require in order to compute and verify the Fund Balance of the GOCC. The information should be detailed, exhaustive, and complete. The information and assumptions used in computing the Projected Cash Flow should be supported with verifiable documents and schedules. The Projected Cash Flow should also be submitted in electronic format with traceable formula. 4.2 In computing the Fund Balance, a reasonable level of Reserve Funds must be maintained by the GOCC considering the disbursements from FYs 2020 to 2023. 4.3 The reasonable level of Reserve Funds shall be computed by the DOF on a case-by-case basis; considering the following factors, such as but not limited to: a. historical performance including absorptive capacity which presents the actual financial performance versus the approved budget; b. regular and recurring operating expenses, excluding non-cash expenses such as but not limited to depreciation, amortization, bad-debts, and impairment expenses; c. dividend arrears and estimated dividend for net earnings for dividend year 2023, as applicable; DETACa d. employee-related expenses, such as but not limited to, government contributions, benefits, and retirement pay; e. debt servicing requirements; f. capital expenditures; g. trust liabilities and security deposits; h. legal claims and obligations; i. regulatory requirements and restrictions of Bangko Sentral ng Pilipinas and other regulatory agencies; j. mandatory contributions of funds to other agencies; k. unutilized subsidies and fund transfers for programs and projects; and l. other factors that may be identified during the course of CAG's review of the Reserve Funds of the GOCCs. SECTION 5. Procedure for the Collection and Remittance of Fund Balance . 5.1 The DOF shall notify in writing the GOCC regarding the Fund Balance to be remitted to the Bureau of the Treasury (BTr). The date of the electronic transmission shall be considered as the date of receipt. 5.2 The GOCC shall remit to the BTr the Fund Balance within fifteen (15) calendar days from the receipt of such notice. Upon remittance, the GOCC shall inform the DOF of such remittance including the proof thereof. 5.3 Upon remittance, the BTr shall issue to the DBM a certification stating the amount of the Fund Balance remitted to the BTr by the GOCC in accordance with these Guidelines and copy furnishing DOF. The certification shall become the basis of the DBM in the release of funds chargeable against unprogrammed appropriations under R.A. 11975, subject to applicable budgeting, accounting and auditing rules and regulations. 5.4 Any remitted Fund Balance shall not be considered as a payment of any dividend arrears or advance dividend payment for the succeeding dividend years pursuant to R.A. 7656, entitled as "An Act Requiring Government-Owned Or -Controlled Corporations to Declare Dividends under Certain Conditions to the National Government, and for Other Purposes." SECTION 6. Sanctions . GOCCs shall be responsible for the compliance of these Guidelines without prejudice to criminal and/or administrative liability in accordance with existing laws, rules, and regulations. HEITAD SECTION 7. Resolution of Related Issues . Any clarification and those not covered by the provisions of these Guidelines shall be referred to the DOF for appropriate action. SECTION 8. Separability . If any provision of these Guidelines is declared invalid or unconstitutional by a court of competent jurisdiction, such provision shall not affect the validity of the rest of the provisions which shall remain in full force and effect. SECTION 9. Applicability Clause . These Guidelines shall be in full force and effect for the purposes of Special Provision 1 (d) and during the effectivity of R.A. 11975. SECTION 10. Effectivity . These Guidelines shall take effect immediately after publication in the Official Gazette or a newspaper of general circulation. (SGD.) RALPH G. RECTO Secretary of Finance