Government-Owned and/or Controlled

PA 204 Corporations: Issues, Problems and Policy

Decisions
Public Enterprise Reforms
-Group 7-
Jireh A. Albay Civil Services in the Philippines
Josef S. Salarda
REPORTERS Accountability and Ethics in the Public
Services
The Career Executive Service
Philippine Fiscal Policy and
Administration
G
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GOCC DEFINED

Government-Owned and/or Controlled Corporations

GOVERNMENT-OWNED AND CONTROLLED CORPORATION

PD No. 2029
“A government-owned or controlled corporation is a stock
or a non-stock corporation, whether performing
governmental or proprietary functions, which is directly
chartered by a special law or if organized under the general
corporation law is owned or controlled by the government
directly, or indirectly through a parent corporation or
subsidiary corporation, to the extent of at least a majority of
its outstanding capital stock or of its outstanding voting
capital stock.”
GOVERNMENT-OWNED AND CONTROLLED CORPORATION

Executive Order No. 64 of 1993 expanded the definition of GOCC as

follows: “... a corporation created by special law or incorporated and
organized under the Corporation Code and in which government,
directly or indirect, has ownership of the majority of the capital
stock.”

How many GOCCs are there?

Currently, there are 157 GOCCs

under the jurisdiction of the GCG.
Why GOCCs were created?

Government-owned and-controlled corporations were initially

created as solutions to market failures and correct imperfections.

Grounded on the idea that market failures do exist, and government

needs to intervene to protect public interest.

Market Failure is an economic situation defined by inefficient distribution of

goods and services in the free market
IMPORTANCE OF GOCC

GOCCs are important sources of income for the national

government (NG). Under Section 3 of Republic Act 7656,
all GOCCS are required to declare and remit at least 50
percent of their annual net earnings as cash, stock or
property dividends to the national government.
WHAT ARE THE PROBLEMS PERTAINING TO GOCCS?

1 There is lack of clarity in the government’s role as owner.

“Government” can mean the ministries, or parliament, or the general
public.

2 Many state-owned enterprises (SOEs) have multiple or conflicting

objectives..

3
Access to subsidies, transfers, and guaranteed loans create a
moral hazard problem such that there is no incentive to be efficient
since there is no threat of bankruptcy.
HOW TO ADDRESS PROBLEMS O WITH GOCCs?
Kennedy and Jones (2003) provide of a list of actions that can address the problem of
GOCCs, these include:
PRIVATIZATION
1 GOCCs can be sold to
private owners.
CORPORATE
GOVERNANCE REFORMS
4 This refers to improvements
in the supervisorial role of the
state over GOCCs.
PRIVATIZATION
OF MANAGEMENT
This implies that some
2 aspects of privatization can
be introduced without
changing GOCC ownership.
LIQUIDATION
GOCC can also be
5 dissolved with their assets
sold or transferred to other
uses.
RESTRUCTURING
Changes can be
3 introduced to the GOCCs’
structure, organization or
operations.
REFORMS EXTERNAL TO
GOCCS
The external environment
6 can be changed to provide
stronger incentives for the
SOEs to be efficient.
PUBLIC
ENTERPRISE
SECTOR
PES REFORM

Over the years, reforms have been in place to rationalize

and reengineer, instill financial discipline, and make the
Philippine public enterprises or the GOCCs more
accountable and performing.
The sector has been crowding out the private sector, has
been financial millstones and venues for corruption and
abuses, and has become irrelevant without any performance
to speak of.
What are the REFORM INITIATIVES undertaken by GOCCs?

*reshape *redefine *redirect

1. Policy Guidelines for the Creation/Definition of GOCCs

2. Ensuring Financial Discipline
3. Compensation/Salary Reforms
4. Performance Evaluation and Audit
5. Privatization
6. Rationalization
1. Policy Guidelines for the Creation/Definition of GOCCs

• The state is not to go into business, except in areas,

which are strategic and pioneering in nature, and in which
the private sector is either not willing or able to do.

ICE CANDY
FOR SALE
1. Policy Guidelines for the Creation/Definition of GOCCs

• P.D. 2029 reiterates that “…direct state intervention in the

economy is justified only when there exists a demonstrated
need for greater flexibility in its operations, and when
financial viability (capacity to support own operations) can
be reasonably expected.”
1. Policy Guidelines for the Creation/Definition of GOCCs

• P.D. 2030 and Proclamation 50 and 50-A (1987)

“The government has no business in business and has to privatize to:
a) reduce the financial burden of government due to losing and
inefficient GOCCs;
b) reduce involvement of government in economic activities;
c) promote greater efficiency in government operations; and
d) raise funds to finance major development projects like the
Comprehensive Agrarian Reform Program.
2. Ensuring Financial Discipline

• This aims to reduce the financial dependence of

GOCCs on the national government, make them
self-sufficient, expose them to competition by
withdrawing cushions not usually availed of by
private sector counterparts, and make them
financially shape up
2. Ensuring Financial Discipline

a) Imposing a ceiling on public sector investments and centralizing

investment fund allocation to all entities under the National
Economic and Development Authority (NEDA)
b) Issuance in 1983 of Letter of Instruction (LOI) No. 1340 “may
borrow only when the funds raised are used for activities or projects
that will yield the necessary return on investment and generate the
necessary cash flows in order to enable the prompt repayment of
interest and principal on the borrowings as they fall due.”
2. Ensuring Financial Discipline

c) LOI 1366. which limited the approval of foreign loans and other
foreign obligations to highly meritorious projects. “not to extend or
issue guarantees, counter-guarantees, standby letters of credit and
other forms of guarantees to secure foreign loans and other foreign
obligations of the private sector.”
2. Ensuring Financial Discipline

c) A series of cost-cutting measures

• Reduction of the number of government enterprises
• Granting of equity contribution only for start-up capitalization
requirements
• Restriction of subsidy support to the financing of operating and
maintenance requirements of non-profit GOCCs
• Elimination of tax exemptions enjoyed by GOCCs
• Imposition of interest charges on all government advances for the
servicing of re-lent or national government–guaranteed GOCC loans
• Enforcement of the requirement that public enterprises declare and
remit dividends to the national government of at least 10% to 50% of
their net income.
3. Compensation/Salary Reforms

These were complemented by policy initiatives

aimed at setting the internal operations of GOCCs
right, mainly through more appropriate
compensation and position classification systems.
These include the Salary Standardization Act (SSL)
of 1989 to 2012 and Memorandum Order (MO) 20,
2001
3. Compensation/Salary Reforms

a. Salary Standardization
1) provide compensation systems that would enable GOCCs to attract
and retain some of the best and competent resources; and
2) limit the packages so that they do not fall too far out of line with the
general level of compensation in the government bureaucracy.

“Before these measures, the salaries of the employees of GOCCs

were “50-80% higher than those received in the regular bureaucracy.”
3. Compensation/Salary Reforms

b. Perks and Pay

In 2001, Pres. Arroyo issued MO No.20 entitled, “Directing Heads
of Government Owned and Controlled Corporations (GOCCs),
Government Financial Institutions (GFIs) and Subsidiaries Exempted
from Or Not 9 Following the Salary Standardization Law (SSL) To
Implement Pay Rationalization in All Senior Officer Positions.”
4. Performance Evaluation and Audit

a. Performance Evaluation
The Government Corporate Monitoring and Coordinating
Committee (GCMCC) is the oversight body for the monitoring and
evaluation of GOCCs. It was created in 1984, reconstituted in 1986,
strengthened in 1987, transferred from the Department of Finance
(DOF) to the Office of the President/Presidential Management Staff
(PMS) in 1993 and back to the DOF before 2011
“to balance accountability and adequate operational flexibility
among the GOCCs.” (MC 64 1993).
4. Performance Evaluation and Audit

b. Audit
The performance and financial audit of all GOCCs and their
subsidiaries lie within the ambit of the Commission on Audit
(COA). A constitutional body with a dedicated Corporate
Group to oversee accounts of GOCCs and their subsidiaries,
it goes where government resources go.
4. Performance Evaluation and Audit

b. Audit
Performance audit or the three-E’s audit
• Economy and efficiency audits- determine whether agency
resources (men, money, machines, materials, methods and
management systems and control) were acquired at the lowest
possible cost to achieve the maximum output in terms of quantity and
quality.
• Effectiveness audit – determine the extent to which program or
agency achieves its objectives or intended effects or legislative
intents.
5. Privatization

World Bank defines privatization as:

“any action that moves an enterprise or an economy in
the direction of private ownership or that tends to
make the behavior of state enterprises more like that
of private entities. It is also the divestiture by the state
of enterprises, land or other assets.”
5. Privatization

Its four-fold objective include to:

1) Reduce the financial burden of the government due to losing and
inefficient public enterprises;
2) Reduce the involvement of government in economic activities;
3) Promote greater efficiency in government operations; and
4) Raise funds to finance major development programs like the CARP
(P.D. 2029, 2030, Proclamation No. 50, 50-A, 82 s. 1986, 1987).
6. Rationalization

The National Government implemented the

rationalization of GOCCs since 2001
This would restructure the organization and financial
systems of GOCCs and improve the delivery of their
services to the people and attain long-term
sustainability.
GOCC Governance Act of 2011:
Transformation to New Paradigm in Corporate Governance

Despite these reforms, the GOCCs and their executives

have remained embroiled in scandals after scandals
involving among others, graft for misappropriation of
government resources, dispensation of bloated salaries,
unauthorized purchase of assets, and abuse of power.
These seeming unconscionable abuses and the
mismanagement of the PES led to the enactment of RA
10149, otherwise known as the GOCC Governance Act of
2011.
GOCC Governance Act of 2011:
Transformation to New Paradigm in Corporate Governance

RA 10149 aims to provide greater transparency, periodic

disclosure and evaluation of operations and finances, creation
of appropriate remuneration schemes, and clear separation
between the regulatory and proprietary activities of GOCCs.
THE CREATION OF GOVERNANCE COMMISSION FOR GOCCS (GCG) 

The GOVERNANCE COMMISSION FOR GOCCS

(GCG) was created under Republic Act No. 10149 (RA No.
10149), otherwise known as the “GOCC Governance Act of
2011”, as the central policy-making and regulatory body
mandated to safeguard the State’s ownership rights and
ensure that the operations of GOCCs are transparent and
responsive to the needs of the public.
What are the duties of GCG?

1) Evaluation 5) Accountability
2) Streamlining 6) Nomination
3) Classification 7) Compensation
4) Manual 8) Adviser and Coordinator
Salient Points of the Effects of Public Enterprise Reforms

Problem or Before Reform After Reform

Concern (pre 1986) (1986- present)

Streamlined; back to the

philosophy of creating GOCCs
Legislated by Congress or Created
which are strategic in nature,
by Presidential Decree; no seeming
for national defense, public
Creation of philosophy or guidelines used during
interest and welfare, and for
GOCCs Martial Law (ML) but the tradition
which financial viability is
has been minimalist before and after
manifest; others are
ML
regularized, privatized,
reclassified
Salient Points of the Effects of Public Enterprise Reforms

Problem or Before Reform After Reform

Concern (pre 1986) (1986- present)

124 to 157 to 128 (of 181);

Number of
3 to 65 to 303
GOCCs Presently: there are 157
GOCCs
Salient Points of the Effects of Public Enterprise Reforms

Problem or Before Reform After Reform

Concern (pre 1986) (1986- present)

Still financially dependent on

the national government;
however, there is
Financially dependent on national consciousness now that they
Financial
government for subsidies, grants, should spend their resources
Discipline
guaranteed loans; more prudently and wisely;
also, they remit dividends to
the National Treasury more
regularly
Salient Points of the Effects of Public Enterprise Reforms

Problem or Before Reform After Reform

Concern (pre 1986) (1986- present)
Performance evaluation is
financial plus performance of
mandate sealed through a
Performance Agreement
Performance evaluation was only
Negotiation (PAN). A
done for financial compliance;
Accountability transparency seal and full
heavily indebted GOCCs were
disclosure policy is also in
monitored
place where websites of
GOCCs are supposed to
contain financial and other
information
Salient Points of the Effects of Public Enterprise Reforms

Problem or Before Reform After Reform

Concern (pre 1986) (1986- present)

In 2011, all GOCC concerns

are to be addressed by one
central advisory, monitoring,
Overall Addressed by different agencies of
and oversight body with
Concern the government
authority to formulate,
implement and coordinate
policies related to the sector
Civil Services in
the Philippines
What is CIVIL SERVICE?

Civil service is a service provided by the

government to all citizens. It is performed by civil
servants, highly skilled individuals who achieved
their positions for merit, who operate in the interest
of the general public.
What is CIVIL SERVICE?

Civil service allows the government to provide

basic services to all citizens and to run efficiently all
its various departments.
Some of the services provided for by civil
service include:

• Paying pensions and benefits;

• Running and managing prisons;
• Issuing driving licenses;
• Representing the government in international
organizations and in foreign countries; and
• Managing employment services.
Characteristics of Civil Service

• Permanency/security of tenure.
• Political neutrality.
• Anonymity.
• Hierarchy/classism.
• Merit system.
• Strict regulation/procedures.
• Impartiality.
• Expertise.
The Philippine Civil Service
HISTORY

• The Philippine Civil Service was established in 1900 by

the Second Philippine Commission during the American
colonial rule.
• Public Law No. 5 (September 19, 1900), An Act for the
Establishment and Maintenance of an Efficient and Honest
Civil Service in the Philippine Island, formally established
the civil service system in the Philippines by the Second
Philippine Commission, creating Civil Service Board which,
in 1905, was reorganized into a Bureau.
The Philippine Civil Service
HISTORY

• The Philippine Constitution of 1935 firmly established the

merit system as the basis for employment in government.

• Republic Act No. 2260 (June 19,1937), Civil Service Act of

1959, amended and revised the laws relative to the
Philippine Civil Service, and converted the Bureau of Civil
Service into the Civil Service Commission (CSC) with
department status
The Philippine Civil Service
HISTORY

• Presidential Decree No. 807 (October 6, 1975), Civil

Service Decree of the Philippines, redefined the role of the
Commission as the central personnel agency of the
government.
The Philippine Civil Service
HISTORY

• Executive Order No. 292 (July 25, 1987), Administrative

Code of 1987, effected the CSC’s constitutional mandate
(reiterated under Article IX-B of the Philippine Constitution
of 1987), recognizing for the first time the right of
government employees to self-organization and collective
negotiations under the framework of the 1987 Constitution
THE CIVIL SERVICE
COMMISSION

The Civil Service Commission (CSC) is the central

personnel agency of the Philippine government
responsible for the policies, plans, and programs
concerning all civil service employees. It has 16 regional
offices throughout the country.
THE CIVIL SERVICE
COMMISSION

Mandate:
The Civil Service Commission (CSC) promotes morale,
efficiency, integrity, responsiveness, progressiveness, and
courtesy in the Civil Service.
It adopts measures to strengthen the merit and reward
system, integrates all human resources development programs
for all level and ranks, and institutionalizes a management
climate conducive to public accountability.
MANDATE

The Civil Service Commission (CSC) promotes morale,

efficiency, integrity, responsiveness, progressiveness, and
courtesy in the Civil Service.
It adopts measures to strengthen the merit and reward
system, integrates all human resources development programs
for all level and ranks, and institutionalizes a management
climate conducive to public accountability.
Five HR initiatives:

1. Recruitment
2. Performance Management
3. HR Coaching
4. Learning and Development
5. Agency Accreditation
Five HR initiatives:

1. Recruitment
Hiring of high-performing, competent, and credible civil
servants through the Competency-Based Recruitment and
Qualification Standards (CBRQS);
2. Performance Management
Performance review and appraisal through the Strategic
Performance Management System (SPMS);
Five HR initiatives:

3. HR Coaching
Coaching to improve employee performance, as well as
develop leadership skills of supervisors and managers;

4. Learning and Development

Direct training and personnel development interventions in
the areas of governance and leadership, human resource and
organizational development, public service reforms, and values
and culture building through the Civil Service Institute;
Five HR initiatives:

5. Agency Accreditation
Accreditation of agencies for the establishment of their own
human resource management systems and standards through
the Program to Institutionalize Meritocracy and Excellence in
Human Resource Management (PRIME-HRM).
The CSC is tasked to generate roster of
eligible through these examinations:

 Career Service Examination (Professional and Sub-Professional)

 Career Service Examination for Foreign Service Officer (CSE-FSO)
 Fire Officer Examination (FOE)
 Penology Officer Examination (POE)
 Basic Competency on Local Treasury Examination (BCLTE)
 Intermediate Competency on Local Treasury Examination (ICLTE)
 Pre-employment Test
 Promotional Test
 Ethics-Oriented Personality Test (EOPT)
Eligibilities Granted under Special Laws
and CSC Issuances

 Bar/Board Eligibility (RA1080)  Foreign School Honor Graduate

 Barangay Health Worker Eligibility Eligibility (CSC Res. 1302714)
(RA7883)  Honor Graduate Eligibility (PD907)
 Barangay Nutrition Scholar Eligibility  Sanggunian Member Eligibility (RA
(PD1569) 10156)
 Barangay Official Eligibility (RA  Scientific and Technological
7160) Specialist Eligibility (PD 997)
 Electronic Data Processing  Skills Eligibility - Category II (CSC
Specialist Eligibility (CSC Res. 90- MC 11, s. 1996, as Amended)
083)  Veteran Preference Rating (EO
132/790)
Accountability and
Ethics in the Public
Service
 What is ETHICS?

In general, it is identified as “the branch of

philosophy that deals with issues of right and
wrong in human affairs”.
 Civil Service Code of Ethics

Any person in the services of the Republic of the Philippines should:

1. Respect and uphold the Constitution and Laws of the Republic of the
Philippines.
2. Observe the highest standard of morality, integrity, honesty, loyalty and devotion
to public wealth.
3. Perform his/her task or duty thoroughly, faithfully and efficiently.
4. Be physically and mentally fit for public service and live within his/her income.
5. Expose corrupt practices in the public service.
6. Serve the public courteously; justly and impartially regardless of kinship,
friendship, social standing, religious or political differences.
7. Discharge duties promptly without thoughts of gifts, benefits or any
remuneration which may influence the proper performance of official
functions.
8. Engage in no business with the government or with any private party,
either directly or indirectly, which will be inconsistent with his position as
public servant.
9. Divulge no confidential information coming to him by the nature of his
office or duties.
10. Uphold, respect, an observe these principles, ever conscious that public
office is a public trust which he should neither violate nor should he allow
suspicion to arise that such trust has been abused or betrayed.
RA 6713 also bears the eight (8) norms of
conduct
 Commitment to Public Interest
 Professionalism
 Justness and Sincerity
 Political Neutrality
 Responsiveness to the Public
 Nationalism and Patriotism
 Commitment to Democracy
 Simple Living.
Administrative and disciplinary cases stem from failure to
uphold ethical standards
o A public servant who does not spend all paid hours in official
work is already stealing from the Filipino people.
o Someone who does not report an anomalous transaction may
have just allowed something worse to happen.
o Sexual harassment in the workplace is also unethical and
wrong.

Today, we seem to be more and more lax on what we consider as unethical.

 Ethics and Public Administration

Public administrators are/should be neutral,

efficient implementers of laws and policies
adopted by elected officials.
The Seven-Step Path to Better
Decisions
 Stop and Think
 Clarify Goals
 Determine Facts
 Develop Options
 Consider Consequences
 Choose
 Monitor and Modify
 WHAT IS ACCOUNTABILITY?

- Implies responsibility and public trust. The

contemporary emphasis is on everybody’s
assuming responsibility and being accountable.
Public accountability involves three
interrelated groups:

1. The general public and particularly the recipients of public

services who are interested in service providers being
accountable to them;
2. Political leaders and supervisors of service providers to be
accountable for a mixture of public policy and private and
parochial interests; and
3. The service providers themselves whose objectives and
interests often differ from the first two.
 INDIVIDUAL VERSUS INSTITUTIONAL
ACCOUNTABILITY

Some people argue that it is the institution as a whole that

should be held responsible, not the individual. Conventional
wisdom has it, however, only individuals can be made
responsible and accountable because only they are entrusted
with specific responsibilities. If an institution is not as
accountable as it should be, it is because the individual or
individuals in charge prevent it from being so. That debate has
never been entirely resolved in a convincing manner.
 OBJECTIVE ACCOUNTABILITY VERSUS
SUBJECTIVE ACCOUNTABILITY
In objective accountability, someone is responsible for
something and accountable to some person or body in a formal
way, through clearly defined rules and mechanisms.
In subjective accountability, a person feels a duty towards the
profession of public service or a sense of the public good and the
nation which determines and defines conduct even though there
are no formal mechanisms through which the accountability can
be enforced.
 AUTONOMY AND ACCOUNTABILITY

Certain institutional arrangements, particularly in

government, have conferred a status of independence or
autonomy to particular agencies that have to be managed free of
political interference, or dealt with at arm’s length, given the
politically sensitive nature of their activities.
 DIMENSIONS OF ACCOUNTABILITY
Internal Accountability
a rendering of account from the lowest echelons to the top, in a hierarchy.
Objectives are defined at the top and transmitted to lower levels for
execution.
External Accountability
a rendering of account by management to their governing bodies. This
rendering of account is public when it takes place, for instance, at the
assembly of the people’s representatives, the elected body, or when it is
directed at stakeholders.
Political Accountability Legal Accountability
• Constitutional • Judicial
• Decentralized • Quasi-judicial
• Consultative • Regulatory

Managerial Accountability Procedural and Consequential

• Commercial Accountability
• Resource • Procedural
• Professional • Consequential
What is the importance of ethics and accountability
in public service?

In the absence of public ethics and accountability, corruption

and malpractice are able to thrive. The prioritization of public ethics
and accountability can help curb the worst excesses of power and
encourage more responsible and fairer decision-making by local
authorities.
The Career Executive Service
What is Career Executive Service?

The Career Executive Service is the ‘third level’ or

the managerial class in the group of career positions in
the Philippine civil service. The CES was created by
Presidential Decree No. 1 to "form a continuing pool of
well-selected and development-oriented career
administrators who shall provide competent and faithful
service."
The CES Concept

The CES operates on the ‘rank concept’. Career

Executive Service Officers (CESOs) are ‘appointed’ to
ranks and ‘assigned’ to CES positions. As such, they can
be re-assigned or transferred from one CES position to
another and from one office to another but not oftener
than once every two years.
Positions in the Career Executive Service

• Undersecretary
• Assistant Secretary
• Bureau Director
• Bureau Assistant Director
• Regional Director
• Assistant Regional Director
• Department Service Chief
• Other executive positions of equivalent rank as may
be classified by the CESB, all of whom are appointed
by the President.
THE FOUR-STAGE CAREER EXECUTIVE SERVICE
(CES) ELIGIBILITY EXAMINATION PROCESS

Presidential Decree No. 1 dated September 24,

1972 created the Career Executive Service Board
(CESB) to serve as the governing body of the
Career Executive Service (CES) and to
promulgate rules, standards and procedures on
the selection, classification, compensation and
career development of members of the CES.
THE FOUR-STAGE CAREER EXECUTIVE SERVICE
(CES) ELIGIBILITY EXAMINATION PROCESS

1. CES Written Examination;

* Accreditation of MNSA or MPSA
2. Assessment Center;
3. Performance Validation; and
4. Board Interview.
The Career Executive Service Board

The Career Executive Service Board is the

governing body of the CES.
The CESB is mandated to promulgate rules,
standards and procedures on the selection,
classification, compensation and career
development of members of the CES.
The Career Executive Service Board

The CESB is composed of eight (8) members,

namely: the Chairperson of the Civil Service
Commission (CSC) and the President of the
Development Academy of the Philippines (DAP)
as ex-officio members, and six (6) others
appointed by the President of the Philippines for a
term of six (6) years.
Five (5) Operating Divisions tasked
to handle specific program areas:

1. Eligibility and Rank Appointment Division

Administration of the Four (4)-stage CES Eligibility
Process
Processing of Appointment to CES Rank
Five (5) Operating Divisions tasked
to handle specific program areas:
2. Professional Development Division
Formulation of Career Development Standards and
conduct of Competency-Based Core Trainings

3. Performance Management and Assistance Division

Management of performance management system for
CES incumbents, dissemination of CES policies,
programs and projects
Five (5) Operating Divisions tasked
to handle specific program areas:
4. Policy, Planning and Legal Division
Formulation, implementation and monitoring of
policies, regulations, rulings or legal opinions on the CES

5. Finance and Administrative Division

Coordination of support services for the above said
operating divisions concerning financial management and
personnel administration
Frequently Asked Questions
Does a CESO automatically enjoy security of tenure upon
appointment by the President to a CES position?

A CESO may enjoy security of tenure after

meeting two (2) significant requisites, namely: (1)
CES eligibility; and (2) appointment to the
appropriate CES rank. (General v. Roco, G.R. No.
143366, 29 January 2001; CESB Resolution No.
719 dated 21 February 2008)
What are the implications and status of appointment of
CES eligibles, non-CESOs, and non-CES eligibles
appointed to CES positions?

As a general rule, the CES eligibility is the appropriate

eligibility requirement for appointment to a CES position. While
a CESO or a CES eligible shall be given priority in an
appointment to a CES position, the President of the Republic of
the Philippines, in exceptional cases, is authorized to appoint
any person to a CES position, provided that such appointee
subsequently takes the required CES eligibility examination.
 PHILIPPINE
FISCAL POLICY
AND ADMINISTRATION
 FISCAL ADMINISTRATION

is the act of managing incoming and

outgoing monetary transactions and budgets
for governments, educational institutions,
non profit organizations, and other public
service entities
FISCAL ADMINISTRATION STRUCTURE

TOP MANAGEMENT

MIDDLE LEVEL MANAGEMENT

RANK AND FILE

PHILIPPINE BUDGETARY PROCESS
Sec. 22, Article VII of the 1987 Constitution sets
the tone for the budgetary process. Under this article,
the president submits to congress within 30 days from
the opening of every regular session, a financial plan of
expenditures and sources of financing, including
receipts from existing and proposed revenue measures
as basis for a general appropriations bill.
FIVE MAJOR PHASES IN THE BUDGET PROCESS

1 2 3
BUDGET BUDGET BUDGET
PREPARATION AUTHORIZATION REVIEW

4 5
BUDGET BUDGET
EXECUTION ACCOUNTABILITY
FUNCTIONS OF LOCAL OFFICIALS IN FISCAL ADMINISTRATION

LOCAL CHIEF EXECUTIVE

• Executive direction and control

LOCAL SANGGUNIAN LOCAL FINANCE CLUSTER

• Taxing authority Composition:
• Enactment of policies, Assessor, Accountant, Budget Officer,
implementing rules and Treasurer, Planning and Development
regulations Officer
 HISTORICAL BACKGROUND
MARCH 17, 1897 – DEPARTMENT OF FINANCE WAS ESTABLISHED AND THE
REVOLUTIONARY GOVERNMENT WAS FOUNDED IN NAIC, CAVITE
1901 – THE DEPARTMENT OF FINANCE AND JUSTICE WAS FORMALLY
ORGANIZED BY VIRTUE OF AN ACT PASSED BY THE CIVIL SERVICE
COMMISSION WHICH WAS HEADED BY WILLIAM HOWARD TAFT
1916 – THROUGH THE REORGANIZATION ACT NO. 2666 OF THE PHILIPPINE
LEGISLATURE, THE DEPARTMENT OF FINANCE AND JUSTICE WAS SPLIT
INTO TWO INDEPENDENT DEPARTMENTS
1936 – DOF FUNCTIONS RELATIVE TO THE FORMULATION AND
PREPARATION OF THE GOVERNMENT’S BUDGET WERE TRANSFERRED TO
THE NEWLY CREATED BUDGET COMMISSION
 HISTORICAL BACKGROUND
1949 – CENTRAL BANK OF THE PHILIPPINES WAS ESTABLISHED,
SECRETARY, SECRETARY OF FINANCE MIGUEL CUADERNO
RELINQUISHED THE FINANCE PORTFOLIO PIO PEDROSA TO ENABLE HIM
TO SERVE AS GOVERNOR OF THE CENTRAL BANK
1987 – MINISTRY OF FINANCE WAS REVERTED TO A DEPARTMENT
FOLLOWING THE RATIFICATION OF THE 1987 CONSTITUTION
1988 – THE VALUE ADDED TAX WAS INTRODUCED AND REPLACED A
COMPLICATED TAX STRUCTURE
 Fiscal Policy
It takes off to influence income and consumption and
lead the economy towards growth and development. It
also has non-economic objectives which may conflict
with economic aims. It is the use of government
revenue collection (taxation) and expenditure
(spending) to influence the economy.
 Sources and Uses of Public Funds
a. Taxes
Include income taxes of individuals and businesses, property taxes,
residence taxes, import taxes, inheritance taxes, gift taxes and other
specific taxes. Two Collecting agencies: - Bureau of Internal Revenue -
Bureau of Customs
b. Non-tax revenues
Include collection of fines and fees, licenses and registration
charges and profits earned by government operated and controlled
corporations.
 Public Debt

Consists of all claims against our government which

may have resulted from loans or advances extended to
the Philippine government or as payment of goods or
services rendered to it.
 Where does the government borrow?

Government borrowing may be undertaken

from internal sources such as Central Bank, or
from external sources such as foreign
governments.
 What is Taxation as a tool?

Taxation as a tool is not just a source of

income of the government. It is also used as
an instrument to manipulate conditions in the
economy.
An increase in tax rates will lessen the
disposable income of the people and cause
their demand to decrease.
 Principles of Taxation
Direct Taxes are collected from people and are paid
directly to a tax collecting agency of the government.
Examples: Income taxes, inheritance and residence taxes

Indirect Taxes are collected against goods and services

and only indirectly on people.
Examples: Sales taxes and import duties
 TAX AS BURDEN: TYPES OF TAX BURDEN

Impact
It is the burden of the person who pays the tax for the
first time

Incidence
It is the burden of the person who ultimately has to pay for the
tax. For indirect taxes, the impact and the incidence of the tax fall
on different people.
 Uses of Fiscal Policy

Fiscal Policy may be used by the

government to stimulate and depress the
economy.

The deficit and balanced budget have an

expansionary effect while surplus budget
can depress the economy.
Fiscal policy can either be Expansionary or Contractionary.

It is expansionary or loose when taxation is reduced or

public spending is increased with the aim of stimulating total
spending in the economy, known as aggregate demand.
On the other hand, fiscal policy is contractionary or
tight when taxation is increased or public spending is
reduced in order to restrict demand and slow down the
economy.
 FISCAL POLICY OF THE PHILIPPINES

Fiscal Policy refers to the measures

employed by governments to stabilize the
economy, specifically by manipulating the
levels and allocations of taxes and
government expenditures.
PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

1. CONGRESS (LOWER HOUSE) and

HOUSE OF REPRESENTATIVES
OFFICIALS
➢ Responsible for revenue and expenditure
policies.
 PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

3. DEPARTMENT OF BUDGET AND

MANAGEMENT
➢Review of estimates and fiscal policy studies in close
consultation with the national economic development
authority.
➢Accountable for carrying out the president’s responsibility
of preparing the budget.
➢Formulate and implement the national budget and
ensuring the efficient and sound utilization of government
resources to achieve the country’s development objectives.
 PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

2. DEPARTMENT OF FINANCE
➢ Revenue generation and collection
➢ Fund Custody
➢ Disbursements
➢ Keeping of Accounts

Includes Bureau of Internal

Revenue, Bureau of Customs
and Bureau of Treasury
PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

4. COMMISSION ON AUDIT
➢Conducts fund and performance audit to see it that
expenditures are in accordance with the appropriation law
approved.
➢Promulgate accounting and auditing rules and regulations
including those for the prevention and disallowance of
irregular, unnecessary, excessive, extravagant or
unconscionable expenditures, or uses of government funds
and properties.
➢Submit annual reports to the president and the congress
on the financial condition and operation of the government
PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS
5. NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY
➢Provides high-level advice to policymakers in congress and
executive branch
➢review, evaluation, and monitoring of infrastructure projects
identified under the Comprehensive And Integrated Infrastructure
Program (CIIP) consistent with the government’s thrust of
increasing investment spending for the growing demand on quality
infrastructure facilities
➢undertaking of short-term policy reviews to provide critical
analyses of development issues and policy alternatives to
decision-makers
 PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

6. BANGKO SENTRAL NG PILIPINAS

➢ The BSP provides policy directions in the areas of money,
banking and credit. It supervises operations of banks and exercises
regulatory powers over non-bank financial institutions with quasi-
banking functions.
➢The BSP formulates and implements monetary policy aimed at
influencing money supply consistent with its primary objective to
maintain price stability
➢The BSP has the exclusive power to issue the national currency.
All notes and coins issued by the BSP are fully guaranteed by the
government and are considered legal tender for all private and
public debts.
PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

7. EXTERNAL FORCES
A. INTERNATIONAL MONETARY FUND
B. THE WORLD BANK
C. ASIAN DEVELOPMENT BANK
 PRINCIPAL AGENCIES TASKED WITH FISCAL FUNCTIONS

8. DEVELOPMENT BUDGET COORDINATION COMMITTEE

➢ The DBCC was created on may 14, 1970 through the executive order no. 232
creating the Presidential Development Budget Committee (PDBC).
➢Later, on march 1, 1972, the integrated reorganization plan renamed the PDBC to
its current appellation and attached it to the NEDA. In the same year on September
22, PD no. 136 was issued to reorganize the NEDA including the DBCC to its
composition today.