Department of Budget and Management
The Department of Budget and Management (DBM) is the executive agency of the Republic of the Philippines tasked with leading public expenditure management to guarantee the equitable, prudent, transparent, and accountable allocation of government resources for socio-economic advancement.[1] Established initially as the Budget Commission through Executive Order No. 25 on April 25, 1936, it evolved into a full department under the Revised Administrative Code of 1987 (Executive Order No. 292), centralizing fiscal oversight to align expenditures with national priorities.[2] DBM's core functions encompass the formulation of the annual National Budget in coordination with socio-economic development plans, the authorization and monitoring of fund releases to national government agencies, local government units, and government-owned or controlled corporations, as well as the administration of a standardized system for government compensation, position classification, and organizational efficiency.[2] It conducts performance evaluations, develops fiscal policies, and ensures accountability through mechanisms like budget execution reports, aiming to foster productivity and results-oriented governance.[1] Headquartered in Manila with regional offices nationwide, the department operates under the Secretary of Budget and Management, who advises the President on fiscal matters.[3] While DBM has been instrumental in streamlining resource allocation to support infrastructure and social programs, it has encountered controversies, including allegations of procurement irregularities in its Procurement Service arm, such as those flagged by the Commission on Audit totaling billions in questionable transactions, and disputes over congressional insertions in national budgets that deviate from executive proposals.[4] These issues underscore ongoing challenges in maintaining transparency amid political pressures, though official mandates emphasize anti-corruption safeguards and performance-based budgeting.[1]Overview and Mandate
Legal Foundation and Core Responsibilities
The Department of Budget and Management (DBM) traces its origins to the Budget Commission, established on April 25, 1936, through Executive Order No. 25 issued by Commonwealth President Manuel L. Quezon to centralize budgeting functions amid growing fiscal demands during the transition to self-governance.[5][6] This executive order mandated the commission to assist in preparing, enacting, and implementing appropriations as authorized by law, marking the initial institutionalization of systematic budget oversight separate from treasury operations. Subsequent reorganizations, including its elevation to departmental status under the 1972 Integrated Reorganization Plan (Presidential Decree No. 74) and further refinements via Presidential Decree No. 1177 in 1977, expanded its scope while retaining the foundational emphasis on fiscal discipline. The 1987 Administrative Code (Executive Order No. 292) codified its contemporary framework in Book IV, Title I, affirming DBM's role as the executive branch's primary fiscal advisory body under the President's direction.[7] DBM's core mandate, as delineated in its establishing order and reinforced by later statutes, centers on promoting the sound, efficient, and effective management of government resources—including technological, manpower, physical, and financial assets—to advance national socioeconomic and political development objectives. This entails formulating resource allocation strategies aligned with macroeconomic policies, preparing medium-term expenditure frameworks that prioritize capital investments and operating needs against sectoral plans, and orchestrating the annual national budget process to ensure targeted fund distribution supporting governmental priorities. DBM also develops and enforces a unified national accounting system for fiscal oversight, conducts ongoing analyses of bureaucratic structures to recommend optimizations in size, composition, and operations, and sets standards for resource management, including work simplification to boost public sector efficiency.[7][8] Additional responsibilities encompass administering the government's compensation and position classification system to standardize personnel policies across agencies, as well as monitoring the physical and financial performance of local government units and government-owned or controlled corporations to enforce accountability and alignment with national goals. These functions position DBM as a gatekeeper for public expenditure, with authority to release appropriations only upon verified compliance with legal and programmatic requisites, thereby safeguarding against misuse while enabling adaptive fiscal responses to economic conditions.[8]Role in National Fiscal Governance
The Department of Budget and Management (DBM) serves as the primary executive agency responsible for formulating and executing the national budget, which functions as the key instrument of fiscal policy in the Philippines. It coordinates the preparation of the National Expenditure Program (NEP), integrating revenue projections, expenditure priorities, and borrowing levels to align with national development objectives and macroeconomic targets. Through its role in the Development Budget Coordinating Committee (DBCC), the DBM reviews and recommends fiscal policies on taxation, expenditures, and debt management to promote economic stability and growth.[9][10][11] In budget execution, the DBM enforces fiscal discipline by issuing allotments and cash allocations to government agencies, monitoring disbursements, and ensuring compliance with approved spending limits to prevent deficits and maintain debt sustainability. It implements release mechanisms, such as quarterly apportionments under the General Appropriations Act (GAA), and conducts performance evaluations to link expenditures with outcomes, thereby holding agencies accountable for efficient resource use. The department also advises on revenue-enhancing measures and expenditure rationalization, contributing to overall fiscal consolidation efforts, as evidenced by its oversight in reducing the national government's deficit-to-GDP ratio from 8.6% in 2020 to projected levels below 3% in subsequent years through targeted policy recommendations.[9][12][13] The DBM's governance extends to inter-agency coordination and regulatory functions, including the issuance of budgeting circulars and guidelines that standardize fiscal reporting across national government agencies, government-owned and controlled corporations (GOCCs), and local government units (LGUs). It promotes transparency by maintaining systems for real-time budget tracking and auditing interfaces with the Commission on Audit (COA), while enforcing procurement and savings remittance rules to curb wasteful spending. These mechanisms underpin causal links between fiscal decisions and economic outcomes, such as inflation control and infrastructure investment, without deference to unsubstantiated equity narratives often amplified in academic sources.[14][15]Historical Development
Origins in Colonial and Early Republican Budgeting
During the Spanish colonial period from 1565 to 1898, public finance in the Philippines relied on a decentralized and extractive system centered on tribute collections and trade monopolies rather than formalized budgeting. The colony received annual subsidies known as the situado from Mexico, amounting to approximately P250,000 per year between 1521 and 1821, as local revenues failed to cover administrative costs.[16] Primary revenue sources included the tributo, a capitation tax of eight reales imposed on males aged 18 to 50, supplemented by forced labor (polo y servicio) and fiscal monopolies on commodities like tobacco and betel nut, which expanded in the 19th century to bolster crown finances.[17][18] Tax farming through encomiendas and later alcabalas (sales taxes) was common, but oversight by the governor-general in Manila emphasized remittance to Spain over systematic allocation, rendering the system prone to corruption and inefficiency without annual budget cycles or legislative scrutiny.[19] The American colonial administration from 1898 onward introduced a more structured fiscal framework, establishing the Insular Treasury in 1901 to centralize revenue collection, currency management, and expenditure tracking, with the Philippine peso pegged to the U.S. dollar at parity.[20][21] Prior to the Jones Law of 1916, the governor-general exercised near-absolute control over appropriations via executive fiat, drawing on customs duties and internal revenue taxes reformed under U.S. oversight to promote fiscal balance.[22] The 1916 law shifted partial authority to a bicameral Philippine Legislature, enabling debates on estimates and fostering rudimentary performance-oriented allocations, though deficits persisted due to infrastructure investments and wartime echoes.[23] This era laid groundwork for obligation-based budgeting, emphasizing accountability through audits by the Insular Auditor, distinct from Spanish ad hoc disbursements.[24] In the First Philippine Republic (1899–1901), known as the Malolos Republic, budgeting emerged as a nationalist endeavor amid revolutionary warfare, with the Malolos Congress approving an annual budget of P6,324,792 on January 23, 1899, to fund military and administrative needs.[25] Facing revenue shortfalls, the government authorized a national loan and issued paper currency, reflecting influences from liberal economic ideas advocating self-reliance over colonial subsidies.[25][26] However, the short-lived regime's fiscal practices remained improvisational, relying on voluntary contributions, confiscations, and bonds rather than institutionalized taxation, as ongoing conflicts with U.S. forces precluded stable revenue streams or detailed appropriation laws. This transitional phase highlighted aspirations for sovereign budgeting but underscored the challenges of wartime finance without entrenched institutions.Establishment Under Commonwealth and Post-Independence Evolution
The Budget Commission, the precursor to the modern Department of Budget and Management, was established during the Philippine Commonwealth period through Executive Order No. 25, issued by President Manuel L. Quezon on April 25, 1936, and subsequently certified by the National Assembly on September 30, 1936.[6][5] This body centralized budget preparation, replacing an earlier Budget Office under the Department of Finance that had been created with the inception of the Commonwealth in 1935.[5] The Commission's initial structure operated as a triumvirate, with authority to prepare the national budget, propose appropriations, investigate departmental expenditures, and enforce fiscal discipline to achieve a balanced budget. Administrative Order No. 1, dated May 11, 1936, further organized a dedicated Budget Office within the Commission to handle day-to-day operations.[5] Commonwealth Act No. 246, enacted on December 17, 1937, and effective January 1, 1938, formalized the first comprehensive budget law, instituting a line-item budgeting approach that detailed expenditures by object and emphasized revenue-expenditure balance to promote fiscal stability amid limited resources.[5] This framework supported the Commonwealth's transition toward self-governance, with the Commission playing a pivotal role in scrutinizing agency requests and aligning spending with national priorities, though wartime disruptions from 1941 to 1945 interrupted regular operations. Following independence in 1946, the Budget Commission persisted under the Republic, retaining its core functions while adapting to expanded governmental responsibilities and economic reconstruction needs.[5] A significant evolution occurred with Republic Act No. 992, the Revised Budget Act, signed into law on June 4, 1954, which introduced performance budgeting principles, shifting focus from mere line-items to outcomes, programs, and activities to enhance efficiency and accountability.[27][5] This act restructured the Commission by abolishing the triumvirate in favor of a single Budget Commissioner, streamlining decision-making. Complementing this, Republic Act No. 997, the Reorganization Act of 1954, delineated the Commission's organizational framework through recommendations from the Government Survey and Reorganization Commission, integrating budgeting more closely with planning for post-war development.[5] These reforms marked a progression toward a more programmatic and results-oriented system, though challenges like inflation and fiscal deficits persisted into the 1960s.Reorganization Under Martial Law and Democratic Restoration
Following the declaration of martial law on September 21, 1972, President Ferdinand Marcos issued Presidential Decree No. 1 on September 24, 1972, adopting the Integrated Reorganization Plan (IRP) that extensively restructured the executive branch, including budgeting functions previously handled by the Budget Commission under the Office of the President.[5] The IRP retained the Budget Commission directly under presidential oversight for one year to centralize fiscal control amid the regime's emphasis on administrative efficiency and economic planning.[5] On October 31, 1973, Executive Order No. 518 reconstituted it as the Office of the Budget and Management, enhancing its role in budget preparation and execution while maintaining subordination to the President.[5] Further elevation occurred on March 11, 1976, via Presidential Decree No. 910, which transformed the Office into the cabinet-level Ministry of the Budget, granting it expanded authority over national expenditure management, resource allocation, and fiscal policy implementation to support Marcos-era development programs.[5] This ministerial status persisted until July 28, 1981, when Executive Order No. 711 reclassified it back to the Office of Budget and Management, ostensibly to streamline operations and align with post-martial law formalities after the official lifting of martial law earlier that year, though the authoritarian structure remained intact until 1986.[5] The 1986 EDSA People Power Revolution, which ousted Marcos on February 25, 1986, prompted rapid transitional reforms under President Corazon Aquino. On October 9, 1986, then-Minister Alberto G. Romulo issued Office Order No. 160-86, initiating the framework for departmental status by reorganizing internal structures to emphasize transparency and accountability in budgeting.[28] This culminated in the Administrative Code of 1987 (Executive Order No. 292, effective November 25, 1987), which formally renamed it the Department of Budget and Management (DBM), restoring its departmental designation from the pre-martial law era and integrating it into the restored democratic framework with mandates for equitable resource distribution and oversight of public funds.[5] The reorganization prioritized decentralizing some functions to regional offices while reinforcing congressional budget approval processes, marking a shift from centralized authoritarian control to constitutional checks and balances.[28]Organizational Framework
Central Bureaus and Divisions
The Central Office of the Department of Budget and Management houses key bureaus and services that execute the department's mandate in budget formulation, execution, and fiscal oversight. These units operate under functional groups supervised by undersecretaries, including the Legal and Legislative Group, Advocacy, Communications, and Education Service (ACES) Group, and Local Government and Regional Operations (LGRO) Group.[29] The primary operational bureaus are the Budget and Management Bureaus A through F, each assigned to specific clusters of national government agencies for budget preparation, release, and monitoring. Bureau A handles the Department of Finance (DOF), Department of Public Works and Highways (DPWH), Department of Tourism (DOT), Department of Trade and Industry (DTI), Department of Transportation (DOTr), National Economic and Development Authority (NEDA), Legislative-Executive Development Advisory Council (LEDAC), Mindanao Development Authority (MDA), and Anti-Red Tape Authority (ARTA), led by Director Maria Cresencia D. Sunga.[29] Bureau B oversees the Department of Health (DOH), Department of Labor and Employment (DOLE), Department of Social Welfare and Development (DSWD), Cultural and Film Language (CFL), and Movie and Television Review and Classification Board (MTRCB), among others, under Acting Director Benjieleth M. Zuñiga.[29] Bureau C manages allocations for Congress, Office of the President (OP), Office of the Vice President (OVP), DBM itself, Civil Service Commission (CSC), Commission on Audit (COA), Commission on Elections (COMELEC), and government-owned or controlled corporations (GOCCs), directed by Elena Regina S. Brillantes.[29] Bureau D covers the Department of Foreign Affairs (DFA), Department of the Interior and Local Government (DILG), Department of Justice (DOJ), Department of National Defense (DND), judiciary, and Autonomous Region in Muslim Mindanao (ARMM), with Acting Director Carlos M. Castro.[29] Bureau E addresses the Department of Agriculture (DA), Department of Agrarian Reform (DAR), Department of Energy (DOE), Department of Environment and Natural Resources (DENR), Department of Information and Communications Technology (DICT), National Centennial Commission (NCCC), and Energy Regulatory Commission (ERC), headed by Gemma G. Ilagan.[29] Bureau F focuses on the Department of Education (DepEd), Department of Science and Technology (DOST), Commission on Higher Education (CHED), University of the Philippines (UP) System, and Mindanao State University (MSU) System, directed by Vivien V. Labastilla.[29] Specialized bureaus support policy and technical functions. The Budget Technical Bureau provides technical support for budget processes, under Director Ma. Cecilia M. Narido.[29] The Fiscal Planning and Reforms Bureau develops medium-term fiscal frameworks and reform initiatives, led by Director Mary Joy O. De Leon.[29] The Local Government and Regional Coordination Bureau manages national tax allocation (NTA) shares and coordination with local government units (LGUs), directed by Atty. Ryan S. Lita.[29] The Organization, Position Classification and Compensation Bureau establishes staffing standards and compensation policies, headed by Director Gerald R. Janda.[29] The Systems and Productivity Improvement Bureau enhances operational efficiency through process improvements, under Director John Aries S. Macaspac.[29] Support services include the Administrative Service for general administration, Finance Service for financial management, Legal Service for legal advice, Internal Audit Service for compliance audits, Information and Communications Technology Systems Service for digital infrastructure, and Advocacy, Communications and Training Service for public engagement and capacity building.[29] These units ensure coordinated execution of budgeting across the national government, with divisions within bureaus handling granular tasks such as allotment releases and performance monitoring.[29]Attached Agencies and Regional Operations
The Procurement Service of the Department of Budget and Management (PS-DBM) serves as an attached agency responsible for centralized procurement of common-use supplies and equipment for government agencies, aiming to achieve economies of scale and ensure efficient use of public funds.[30] Established under Presidential Decree No. 1204 in 1977 and later integrated with DBM functions, PS-DBM operates the Philippine Government Electronic Procurement System (PhilGEPS), which facilitates online bidding and supplier registration to promote transparency in procurement processes.[31] In fiscal year 2023, PS-DBM handled procurement valued at over PHP 100 billion for various national government agencies.[30] The Government Procurement Policy Board-Technical Support Office (GPPB-TSO) is another key attached agency, providing administrative and technical support to the GPPB in formulating procurement policies and issuing guidelines under Republic Act No. 9184, the Government Procurement Reform Act.[32] Headquartered at the UP Diliman Campus in Quezon City, GPPB-TSO conducts capacity-building programs, issues advisory opinions on procurement disputes, and maintains the Philippine Procurement Reference Manual to standardize practices across procuring entities.[33] As of 2024, it has resolved over 500 procurement-related queries from local and national agencies.[34] DBM maintains a network of 17 regional offices, one in each administrative region from Region I (Ilocos) to the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), to decentralize budget operations and support local fiscal management.[35] These offices, such as DBM Region XI in Davao City, handle the release of Notices of Cash Allocation (NCAs) to regional line agencies and local government units (LGUs), totaling over PHP 1.5 trillion in releases to LGUs in fiscal year 2022.[36] Key functions include monitoring budget execution, conducting pre-audit reviews for expenditures exceeding PHP 500,000, and providing technical assistance on budgeting and financial planning to ensure compliance with national policies.[37] Regional operations emphasize capacity development, with offices organizing forums and training sessions; for instance, in 2025, DBM Regional Office XI trained over 230 internal auditors on procurement reforms.[38] They also coordinate with regional development councils to align budgets with local priorities, such as infrastructure and social services, while enforcing austerity measures during fiscal constraints.[39] This structure enhances responsiveness to regional needs, reducing delays in fund releases that previously plagued centralized processing.[36]Budgeting Processes
Formulation and Approval Cycle
The formulation and approval cycle of the Philippine national budget encompasses the preparation phase, where the executive branch develops the proposed budget, and the legislative authorization phase, where Congress reviews and enacts it into law.[9] This cycle operates within a structured timeline, typically spanning 18 months prior to the fiscal year (FY), to align expenditures with macroeconomic targets and policy priorities set by the Development Budget Coordinating Committee (DBCC), chaired by the Department of Budget and Management (DBM) Secretary.[9] [40] In the budget preparation phase, the DBM issues a Budget Call in January of the year preceding the FY, providing agencies with the Budget Priorities Framework (BPF), economic assumptions, and guidelines derived from DBCC deliberations on revenue projections, expenditure ceilings, and financing plans.[9] [40] Agencies then employ the two-tier budgeting approach: Tier 1 focuses on forward estimates for ongoing programs based on historical utilization rates, submitted via the Online Submission of Budget Proposals (OSBP) system by March; Tier 2 covers new or expanded initiatives, ranked by priority and submitted by May, emphasizing alignment with the Philippine Development Plan and implementation readiness.[40] DBM conducts technical budget hearings from February to May, verifying proposals and negotiating ceilings, after which the Executive Review Board (ERB) approves Tier 1 levels in March and Tier 2 additions post-review.[40] The DBM consolidates these into the National Expenditure Program (NEP) by June, incorporating the Budget of Expenditures and Sources of Financing (BESF), for Cabinet and presidential approval before submission to Congress.[9] The budget authorization phase begins when the President submits the NEP, BESF, and budget message to Congress within 30 days of the opening of its regular session on the fourth Monday of July, as mandated by Article VII, Section 22 of the 1987 Constitution.[41] [9] The House of Representatives' Appropriations Committee, aided by subcommittees, conducts hearings and amends the proposal into the General Appropriations Bill (GAB), followed by Senate Finance Committee review and proposed changes.[9] A Bicameral Conference Committee reconciles differences, producing the final GAB, which both houses ratify; the President then signs it into the General Appropriations Act (GAA) by December 31 to avoid reliance on a reenacted budget.[9] DBM provides technical support during congressional deliberations but holds no veto power over legislative amendments.[9] This process ensures fiscal discipline while accommodating congressional priorities, though delays have occurred, such as in FY 2024 when the GAA was enacted on December 28, 2023.[9]Execution, Monitoring, and Accountability Mechanisms
The budget execution phase commences upon the enactment of the General Appropriations Act, with the Department of Budget and Management (DBM) tasked with operationalizing the approved appropriations through the release of obligational and cash authorities to implementing agencies. DBM issues General Allotment Release Orders (GAROs) for automatic releases and Special Allotment Release Orders (SAROs) for items classified as "for later release," authorizing agencies to incur obligations up to specified amounts while ensuring alignment with the Allotment Release Program (ARP) and cash availability.[9][42] Concurrently, DBM provides Notices of Cash Allocation (NCAs) on a monthly or quarterly basis, coordinated with the Bureau of the Treasury for fund replenishment, under the Simplified Fund Release System to facilitate efficient disbursement while maintaining fiscal discipline.[9] Monitoring of budget execution is facilitated by DBM through performance-based frameworks and integrated systems that track financial and physical accomplishments against targets. The Organizational Performance Indicators Framework (OPIF) links appropriations to Major Final Outputs (MFOs), employing indicators for quantity, quality, timeliness, and cost to evaluate agency delivery, with variances analyzed in Budget Performance Reviews (BPRs) conducted midyear and annually.[43] The Budget Treasury and Management System (BTMS), implemented since 2017, enables real-time oversight of commitments, payments, and balances via a web-based platform, reducing redundancies and enhancing data accuracy across DBM and Treasury operations.[44] Agencies submit quarterly accomplishment reports, supplemented by digital platforms for major projects to promote transparency in implementation progress.[43] Accountability mechanisms require agencies to submit Budget and Financial Accountability Reports (BFARs), harmonized under joint DBM-Commission on Audit (COA) guidelines, detailing actual financial utilization, physical performance, and variances from targets on a quarterly and year-end basis.[45] DBM evaluates these reports for cost-effectiveness and compliance, feeding findings into BPRs that inform presidential and congressional oversight, while COA conducts independent audits to verify expenditures against authorized purposes.[9][43] Non-compliance or underperformance may result in funding adjustments in subsequent cycles, reinforcing results-oriented accountability.[43]Leadership and Administration
Secretaries of Budget and Management
The Secretary of the Department of Budget and Management (DBM) serves as the head of the agency, advising the President on fiscal matters and directing the preparation and execution of the national budget. Appointed by the President with the consent of the Commission on Appointments, the secretary coordinates with Congress on appropriations and ensures compliance with fiscal laws.[3] The role evolved from the pre-1987 Minister of the Budget under the martial law-era structure, transitioning to its current form following the 1987 Constitution and Executive Order No. 292.[28] Notable secretaries with verified tenures include:| Secretary | Term of Office | Appointing President(s) | Key Notes |
|---|---|---|---|
| Emilia T. Boncodin | 1998; 2001–2005 | Joseph Estrada; Gloria Macapagal Arroyo | First female DBM secretary; career official who joined DBM in 1978 and advanced through assistant and undersecretary roles before appointments. [46] |
| Benjamin E. Diokno | June 30, 2016 – June 30, 2022 | Rodrigo Duterte (initial); Ferdinand Marcos Jr. (continued) | Economist who previously served as DBM secretary (1998–2001) under Estrada; focused on fiscal reforms during second term amid economic recovery from COVID-19.[47] [48] |
| Amenah F. Pangandaman | June 30, 2022 – present | Ferdinand Marcos Jr. | First Muslim Filipina in the role; previously Bangko Sentral ng Pilipinas assistant governor; emphasizes climate budgeting and efficiency in allocations.[49] [48] |