THE LEGAL BASES OF
FISCAL ADMINISTRATION
Ma. Abegail C. Carangan
PhD - EM
Dr. Jaime P. Pulumbarit
Professor
The justification for or
reasoning behind something.
What is This is a law-based explanation
a legal how or why things are carried
out in a certain manner.
basis?
The underlying support or
foundation for an idea, argument,
or process.
What are the main aspects?
BUDGETING
ACCOUNTING
TAXATION AND AUDITING
What is Taxation?
Taxation is the inherent power of
the sovereign, exercised through
the legislature, to impose burdens
upon subjects and objects within
its jurisdiction for the purpose of
raising revenues to carry out the
legitimate objects of government.
Theoretical Bases of Taxation
Lifeblood Theory of Taxation
Social Contract Theory
Benefits Received Principle
Theoretical Basis of Taxation
Lifeblood Theory of Taxation
The existence of government is a necessity;
that government cannot continue without
means to pay its expenses; and that for these
means it has a right to compel its citizens and
property within its limits to contribute.
Theoretical Basis of Taxation
Social Contract Theory
There is a contractual relationship between
the government and its citizens. The
contract requires the government to
provide certain services for the population.
In return, citizens agree to pay their taxes
and obey the laws.
Theoretical Basis of Taxation
Benefits Received Principle
It is a theory of income tax fairness
that says people should
pay taxes based on
the benefits they receive from the
government.
Sources of Taxation
Administrative
Rules and Judicial Rulings or
Regulations Jurisprudence
Special Laws Administrative Rulings
or Statutes and Opinions
Constitution
NIRC
Kinds of Taxes
Income Tax
It is levied on an individual's wages, salaries, Other Taxes
and other types of income
Estate and Donor’s Taxes Documentary Stamp Taxes
Estate tax is charged when assets are It is a tax on documents, instruments, loan agreements
distributed to someone's heirs after they die. and papers evidencing the acceptance, assignment, sale
Donor’s tax is a tax on money or property or transfer of an obligation
that one living person gives to another.
Value-Added Tax Excise Tax
It is a type of consumption tax It is a business tax imposed on persons, entities, or
which is levied on different kinds of transactions
goods and services
Other Percentage Taxes
What is Budgeting?
In general, a government budget
is the financial plan of a
government for a given period,
usually for a fiscal year, which
shows what its resources are, and
how they will be generated and
used over the fiscal period. The
budget is the government's key
instrument for promoting its socio-
economic objectives.
Constitutional Basis of Budgeting
Section 24, Article VI Section 25 (2), Article VI
which states that all appropriations, states that no provision or enactment
revenue or tariff bills increase of the shall be embraced in the General
public debt, bills of local application and Appropriations Bill unless it relates
private bills shall originate in the House specifically to some appropriation therein.
of Representatives, but the Senate may Any such provision or enactment shall be
limited in its operation to the appropriations
propose or concur with amendments
to which it relates.
Section 25 (1), Article VI, Section 25 (4), Article VI:
states that the Congress may not “A special appropriations bill shall specify
increase the appropriations recommended the purpose for which it is intended and
by the President for the operation of the shall be supported by funds actually
government as specified in the budget. The available as certified by the National
form, content, and manner of preparation of Treasurer, or to be raised by a
the budget shall be prescribed by law. corresponding revenue proposal therein.”
Constitutional Basis of Budgeting
Section 25 (5), Article VI: Section 25 (7), Article VI:
“No law shall be passed authorizing any “If, by the end of the fiscal year, the [Philippine]
transfer of appropriations, however, the President , the Congress shall have failed to pass the General
President of the Senate, the Speaker of the House of Appropriations Bill for the ensuing fiscal year, the
Representatives, the Chief Justice of the Supreme General Appropriations Law for the preceding fiscal
Court, and the Heads of Constitutional Commissions year shall be deemed reenacted and shall remain in
may, by law, be authorized to augment any item in the force and effect until the General Appropriations
general appropriations law for their respective e offices
Bill is passed by [the Philippine] Congress.”
from savings in other items of their respective
appropriations.”
Section 22, Article VII:
“The President shall submit to the Congress
within thirty (30) days from the opening of every regular session, as the basis of the General
Appropriations Bill, a budget of receipts and expenditures and sources of financing, including
receipts from existing and proposed revenue measures.
What is Accounting and Auditing?
• Accounting is defined as "the art of recording, classifying and summarizing, in a
significant manner and in terms of money, transactions and events which are, in
part at least of a financial character and interpreting the results thereof.“
• Auditing on the other hand is the examination of information by a third party than
the preparer or user with the intention of establishing its reliability, and the
reporting of the results of this examination with the expectation of increasing the
usefulness of the information of the user.
Justification of Accounting and Auditing (COA)
The Commission has the power, authority and duty to examine,
audit and settle all accounts and expenditures of the funds and
properties of the Philippine government. Towards that end, it
has the exclusive authority to define the scope, techniques and
methods of its auditing and examination procedures. It also
may prevent and disallow irregular, unnecessary, excessive,
extravagant or unconscionable expenditures, or uses of
government funds and properties
Constitutional Provision and Legal Basis
• Article IX (D), Section 2 of the
1987 Constitution is the prime
basis of accounting and auditing of
public finance
• The Audit Code of the Philippines
(P.D. 1445)
THANK YOU
