Constitutional and Legal Basis for Philippine Fiscal Administration

Lloyd Bautista 2009

Sovereignty: supreme power of the state to command and enforce obedience to its will from people within its jurisdiction. permanently occupying a definite territory. Government: aggregate of authorities that rule a society . to have freedom from foreign control. and corollarily. having a government o which a great body of inhabitants render obedience.Elements of the State State: community of people more or less numerous.

public safety. Police power: to enact laws and regulations in relation to persons and property to promote public health. public morals. Eminent domain: power to take private property for public use upon paying just compensation according to law. . 2.Three Inherent Powers Of the State 1. general welfare. and convenience of the people.

it has right to compel citizens to contribute to its upkeep. hence. . The power to tax is inherently a legislative power.Taxation 3. but government is powerless and the state cannot exist within taxes. Power of taxation: government is a necessity.

Laws and statutes (ex.Sources of Taxation 1. PD 1158 as amended or NIRC) 3. Administrative rulings and opinions on tax laws by BIR and BOC 5. Judicial decisions of the SC and CA . Administrative rules and regulations by the DoF 4. Congress 2.

Public purpose 2. Exemptions under the laws 4. Territorial jurisdication .Limitations on Power to tax 1. Observance of international comity 5. Non-delegation to a private person or entity 3.

No person shall be deprived of life. liberty or property without due process of law Equal protection and impartial application of the law prohibit class legislation. Everyone shall be treated equal under like circumstances and conditions both in the privileges conferred and liabilities imposed. . 2. Rule of taxation shall be uniform and equitable and Congress shall evolve a progressive system of taxation.Constitutional limitations 1.  Uniformity of application regardless of place and subject  Equality results when they are similarly situated  Equity implies reasonable classification 3.

and Non-taxation of non-stock. 2. Non-impairment of contractual obligations (no law can alter the relationship that results from a contract without the consent of the contracting parties) Non-imprisonment for debt or non-payment of the poll tax Non-infringement of religious freedom. 4. nonappropriation for religious purposes.Constitutional limitations 1. non-profit educational institutions . 3. non-taxation of religious or charitable entities and properties.

or educational purposes. tonnage and wharfage dues. upon authority from Congress. Grant of tax exemption privilege is not without limit and may be done only with the concurrence of Congress 3. to fix tariff rates. charitable. . 2. Section 28. churches and all lands. buildings. and improvements that are actually. Article VI.Constitutional Limitations 1. import and export quotas. numbers 1-4 of the 1987 Constitution envision a tax system that is uniform and equitable Section 28-2 gives authority to President. and other duties and imposts Section 28-3 grants tax exemptions of charitable institutions. directly and exclusively used for religious.

and Omnibus Investment Code . PD 1464 as amended (Tariff and Customs Code). Further. 5. and equitable share in the proceeds of the utilization of national wealth within their area 6. Book II of RA 7160 (LGC) governing LGU taxing powers. LGUs assured of two other revenue sources: IRA. Others: RA 8424 (Tax Reform Act or the New National Internal Revenue Code). Sections 5-6 devolved to LGUs power to generate revenues through taxes.Legal Basis 4. fees and charges. Article X. RA 1125 (creating Court of Tax Appeals).

25. revenue or tariff bills authorizing an increase in public debt must originate exclusively from House of Representatives but the Senate may propose or concur with amendments General Appropriations Act: annual budget which is the government·s financial plan Issue of re-enacted budget .Constitutional and Legal Provisions on Expenditure and Budgeting Article VI. 27 and 29 of 1987 Constitution: all appropriations. Sections 24.

Supreme Court. but may increase such appropriations . OP of the Senate. Office of HR Speaker. Offices authorized to use savings from other items: OP. Senate. Congress prohibited from reducing appropriations for the Judiciary below the amount appropriated for the previous year. Congress not allowed to raise total budget proposed by the President 2. and the 3 constitutional commissions 4. Congress not allowed to pass any law authorizing any transfer of appropriation with certain exemptions 3.Other Provisions: 1.

Programs not covered in GAA: special appropriations law is required specifying purpose .Other Provisions: 5. Once budget is approved. President has power to veto any particular item in GAA. but can be overridden by a 2/3 vote of two houses of Congress voting separately 6. money can be withdrawn from the National Treasury 7.

minister or other religious teacher or dignitary as such. orphanage. 9. of any public money or property for the benefit or support of any sect. or of any priest. But exempts priest or religious teacher assigned to the armed forces. Prohibition on use. church. sectarian institution.Other Provisions: 8. directly or indirectly. penal institution. or system of religion. denomination. preacher. etc. Constitution mandates that education shall have the highest budgetary priority14 .

Congress is limited to the designation of the members of the Monetary Board who are required to report regularly to Congress ‡ Constitution does not prescribe a limit on foreign debt nor does it provide for a limit on debt servicing ‡ PD 621 limited the total amount of loans. credits and indebtedness to not more than $5 billion all at one time ‡ PD 1177 (Budget Reform Decree of 1977) automatically appropriates debt service payments . and Section 2 of Article XII ‡ The incurrence of foreign debt is an authority vested on the President.Constitutional and Legal Provision on Borrowing Two sections governing public borrowing: Section 20 of Article VI.

The national government adopted laws governing debt ceilings and debt caps. the debt cap policy adopted during the Aquino administration was short-lived. having lasted for only three months. . However. All attempts by Congress to insert a debt cap provision in the annual GAA never passed the veto power of President Aquino.

agencies. b. authority and duty to examine. COA may adopt necessary and appropriate measures such as special pre-audit to correct deficiencies. . other GOCCs and their subsidiaries. including GOCCs. and d. constitutional bodies. In cases of inadequate internal control system of audited agency. and settle all accounts pertaining to the revenues and expenditures or uses of funds and property. or instrumentalities. and on a post-audit basis: a. non-governmental entities receiving subsidy or equity from NG. commissions and offices. autonomous SCUs. c. or any of its subdivisions. owned or held in trust by the government.Constitutional Provisions on Accounting and Auditing 1987 Constitution Article IX (D) Section 2 on COA: COA shall be vested with the power. audit.

unnecessary. or uses of government funds and properties. including those for the prevention and disallowance of irregular. . excessive.Constitutional Provisions on Accounting and Auditing COA further authorized to have exclusive authority. establish the techniques and methods required. and promulgate accounting and auditing rules and regulations. subject to certain limitations to define the scope of its audit and examination. extravagant. or unconscionable expenditures.

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