1.1 To update and clarify the guidelines in the grant of authority to GOCCs/GFIs to purchase equipment;

1.2 To simplify procedures in the grant of authority for the purchase of equipment incorporated in the corporate operating budgets of GOCCs/GFIs; and

1.3 To enable heads of GOCCs/GFIs to acquire the necessary equipment in time for the implementation of their respective programs and projects.

2.0 COVERAGE

All requests of GOCCs/GFIs for authority to purchase equipment , as incorporated in their respective corporate operating budgets submitted pursuant to Executive Order No. 518, dated 23 January 1979.

3.0 DEFINITION OF TERMS

For purposes of this Circular, the following terms shall mean:

3.1 Budgetary Support to Government Corporations - The National Government (NG) assistance to GOCCs in the form of equity, subsidy, relent loan proceeds or advances for servicing of debts guaranteed by the national government.

3.2 Borrowings - funds obtained from repayable sources including relent loans and/or advances for debt servicing from NG, from financial institutions and other sources , both domestic and external, to finance development projects and corporate programs.

3.3 Communication Equipment - electrical or electoracoustic device used to transmit data/ information/facts or a device that transmits data thru electromagnetic waves.

3.4 Budget Estimates - refers to the budget proposal of the GOCC/GFI for the ensuing year pursuant to the Annual Corporate Budget Call issued by DBM.

3.5 Budget of Expenditures and Sources of Financing (BESF) - refers to budget proposals of the National Government submitted by the President to Congress pursuant to Article VII Section 22 of the Constitution.

3.6 Corporate Funds - include the following:

3.6.1 Corporate Income - operating receipts earned during the year in the course of business transactions.

3.6.2 Equity Contribution from Private Sector and other Government Entity - capital contribution by private individuals or institutions and by public entities other than the national government as mandated by the respective charters of concerned GOOCs/GFIs.

3.6.3 Others - receipts from other sources not included but not limited to, collections of prior years ™ receivables, beginning cash balance, other non-operating receipts and retirement of investments.

3.7 Corporate Operating Budget (COB) - refers to the estimates of revenues, expenditures and other funding sources of the GOCC/GFI of a particular budget year as recommended by the Governing Board of the corporation and approved by the President pursuant to E.O. No. 518.

3.8 Equipment - those items provided under Section 378 of the COA Standard Government Chart of Accounts, 1992 Revised Edition, specifically categorized under the account code 4-36-000 which includes furniture, fixtures, equipment, and books, the cost of which shall not be lower than P1,500 as prescribed by COA, with serviceable life of more than one year and which add to the assets of the government.

3.9 Furniture and Fixtures - movable or immovable articles/equipment of necessity/convenience or decoration used to furnish living quarters, offices and public buildings.

3.10 Information Technology Equipment - totality of means employed to systematically collect, process, store, present and share information in support of human intellectual activities. It encompasses the use of computer technology and telecommunication as well as any technology that deals with modern application of computers or of telecommunications or both.

4.0 GENERAL GUIDELINES

4.1 GOCCs/GFIs are hereby authorized to purchase equipment proposed for the calendar year under the following conditions:

4.1.1 The annual equipment procurement program^* (AEPP) has been included in the budget estimates submitted to the Department of Budget and Management (DBM) in compliance with the Corporate Budget Call.

4.1.2 The said budget estimate is part of the consolidated Financial Statements of GOCCs/GFIs as reflected in the BESF submitted by the President to Congress.

4.1.3 The same amount has been incorporated in the COB of the corporation duly approved by their respective Board.

4.1.4 The proposed purchase will be funded from corporate funds.

4.2 The authority granted under Section 4.1 excludes the purchase of motor vehicles and/or transport/construction equipment. The grant of authority for motor vehicles and/or transport/construction equipment shall be governed by National Budget Circular No. 446, series of 1995 dated 24 November 1995.

4.3 In addition, the purchase of the following equipment shall be subject to clearance from the agency concerned:

4.3.1 Computers and other Information Technology (IT) equipment costing more than P2,000,000 - National Computer Center;

4.3.2 Communications equipment - National Telecommunications Commission;

4.3.3 Firearms and other explosive equipment - Firearms and Explosives Unit of the Philippine National Police; and

4.3.4. Reference books, encyclopedia , magazines and other reading materials in excess of five (5) copies per title - Office of the President.

4.4 GOCCs/GFIs are likewise authorized to realign or modify amounts, quantities, and/or items of equipment previously approved by the DBM for the year provided that the change is within the approved COB and subject to the following:

4.4.1 Authority from the concerned agency shall be secured in the case of items enumerated under Sections 4.2 and 4.3 above, copy furnished DBM.

4.4.2 In case the modification will entail a supplemental budget, a separate authority from DBM must be obtained. On the other hand, in case the modification will result to savings, such savings may be used to purchase other equipment items.

4.5 Proposed purchases of equipment not in accordance with Sections 4.1 and 4.4 above shall be subjected to the usual review and evaluation. A separate letter of authority shall be issued for the purpose.

4.6 Previous authority granted by DBM in 1995 for the purpose of equipment embodied in the respective COBs of GOCCs/GFIs for CYs 1993 and 1994 shall continue to be valid and enforceable until December 31, 1996.

5.0 PROCEDURAL GUIDELINES

5.1 GOCCs/GFIs shall submit the AEPP in the format shown in Annex A^* to the DBM together with other forms as called for under the Corporate Budget Call.

5.2 In addition, GOCCs/GFIs whose equipment outlay are to be funded from national government support shall submit the following supporting documents:

5.2.1 For special or technical equipment - a brief description of its use or special capability, and the number of existing positions in the corporation, authorized and qualified to operate the proposed equipment;

5.2.2 For replacement items - a properly accomplished Inventory and Inspection Report certified by the COA Resident Auditor; and

5.2.3 Other information which would establish the need, suitability and reasonableness of the requested equipment.

5.3 DBM shall approve the AEPP on or before the beginning of the current year. This shall serve as the authority for heads of GOCCs/GFIs to purchase furniture and equipment for the current year chargeable against the corporate funds provided that the same amount are incorporated in the COBs of the concerned corporation duly approved by their Boards of Directors.

6.0 SUBMISSION REQUIREMENTS

The requirement for GOCCs/GFIs to submit complete equipment inventories pursuant to Circular Letter No. 80-3 dated 14 February 1980 is hereby reiterated using Annex B^* hereof. Thereafter, only the list of actual equipment purchases shall be submitted to DBM using the attached Annex C^* form.

7.0 EXEMPTION

GOCCs/GFIs whose equipment program for the year is P100,000.00 or less shall be exempted from the AEPP requirement provided that GOCCs/GFIs shall comply to the submission requirement of 6.0 above.

8.0 RESPONSIBILITY

Heads of Corporation shall have the principal responsibility for the purchase of equipment in excess of what has been approved under this Circular. Likewise, they shall see to it that the above guidelines are complied with in accordance with existing accounting, auditing and budgeting rules and regulations.

9.0 SAVING CLAUSE

Cases not covered by of this Circular shall be referred to the Department of Budget and Management for resolution.

10.0 REPEALING CLAUSE

All budget circulars/guidelines inconsistent herewith are hereby repealed and/or modified accordingly. DACTSH

11.0 APPLICABILITY

The provisions of this Circular shall apply beginning 01 January 1996.

Adopted: 09 Feb. 1996

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^* Text available at Office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City.