CONSTITUTIONAL AND LEGAL PROVISIONS FOR FISCAL ADMINISTRATION

Prepared by: Atty. Edcar T. Latauan

Objectives:
1. Understand the Constitutional and Legal Bases of Public Fiscal Administration;
2. Specifically, to familiarize and understand the Constitutional and Legal Provision on:
a. Taxation
b. Expenditures and Budgeting
c. Borrowing
d. Accounting and Auditing

ON TAXATION

Taxation

The power by which the sovereign, through its law-making body, raises revenue to defray
the necessary expenses of the government. It is merely a way of apportioning the costs of
government among those who in some measures are privileged to enjoy its benefits and must
bear its burdens (51 Am. Jur. 34)

Purposes and Objectives of Taxation

1. Revenue-Raising

2. Sumptuary Purposes
a. Promotion of General Welfare
Taxation may be used as an implement of Polic Power in order to promote the
general welfare of the people. Example, destructive tax on gambling.

b. Regulation
To discourage or regulate certain businesses. Example, higher tax on alcohol and
tobacco.

c. Reduction of Social Inequality/Compensatory

To implement the social justice provisions of the Constitution through the
progressive system of taxation. Higher income should have higher tax.

d. Encourage Economic Growth

Example, preferential tax treatment to business inside Freeport Areas.

e. Protectionism
 Example, higher tariff to protect local industries

Theory and Bases of Taxation

1. Life-Blood Theory
Taxation is the indispensable and inevitable price for civilized society;
without taxes, the government would be paralyzed for lack of the motive
power to activate and operate it (CIR v Algue, G.R. No. L-28896, February
17, 1988).

2. Necessity Theory
The existence of the government is a necessity. It cannot continue
without a means to pay its expenses and therefore has a right to compel
all citizens and property within its power to contribute (51 Am. Jur. 42)

3. Benefits-Protection/ Reciprocity Theory (Doctrine of Symbiotic Relationship)

Taxes are paid for the enjoyment of the benefits of organized society. (51
Am. Jur. 42-43). A person cannot object to or resist the payment of taxes
solely because no personal benefit to him can be pointed our arising from
the tax (Lorenzo v. Posadas, et.al., G.R. No. L-43082, June 18, 1937).

4. Jurisdiction over Subjects and Objects

The power to tax can only be exercised within the territorial jurisdiction
of a taxing authority, (51 Am. Jur. 88), except when there exists privity of
relationship between the taxing State and the object of tax.

Nature of Taxing Power

1. Inherent Attribute of Sovereignty

The power of Taxation is an incident of sovereignty as it is inherent in the
State, belonging as a matter of right to every independent government. It
does not need constitutional conferment. Constitutional Provisions do
not give rise to the power to tax but merely impose limitations on what
would otherwise be an invisible power (Dimaampao)

2. Legislative in Character
The power to tax is exclusively vested in the Legislature, except where the
Constitution provides otherwise (Art. VI, Section28 (2) of the 1987
Philippine Constitution).

As a general rule, the power to tax is plenary and unlimited in its range,
acknowledging in its very nature no limits, so that the principal check
 against its abuse is to be found only in the responsibility of the legislature
(which imposes the tax) to its constituency who are to pay it (CREBA Inc.
vs. Romulo, G.R. No. 160756, March 9, 2010).

Scope of Legislative Power to Tax:

1. Discretion as to:
a. Amount or Rate of Tax
b. Subject of Taxation
c. Purposes
Though it should be for public purpose only
d. Apportionment of the tax
Whether general or limited
e. Situs of Taxation
Place or authority that has the right to impose and
collect taxes
f. Manner, means and agencies of Collection

2. Granting of Tax Exemption and Condonation

3. Specify and Provide for the Administrative and Judicial

Remedies

Limitations on Taxation

A. Inherent Limitations
These limitations proceed from the very nature of the taxing power itself.

1. Public Purposes
Jurisprudence states that “public purpose should be given a broad
interpretation. It does not only pertain to those purposes which
are traditionally viewed as essentially government functions, such
as building roads and delivery of basic services, but also includes
those purposes designed to promote social justice (Planter
Productsm Inc. vs. Fertiphil Corporation, G.R. No. 166006, March
14, 2008)

Public Purpose is held synonymous to public interest, public

benefit, public welfare, and public convenience (CIR vs. Central
Luzon Drug Corporation, G.R. No. 159467, April 15, 2005)

The power to determine public purpose is a legislative

prerogative.

2. Exemption of the Government

 a. Government Entities (NOT SUBJECT TO TAX)
The Corporate Governmental Entity through which the
functions of the government are exercised throughout the
Philippines.

Reason: Properties of the national government as well as those of

the local government units are NOT subject to tax, otherwise, it
will result in the absurd situation of the government “taking
money from one pocket and putting it in another” (Board of
Assessment Appeals of Laguna v. CTA, G.R. No. L-18125, May 31,
1963).

b. Government Agencies
Any various units of the government, including a
department, bureau, office, instrumentality, or
government-owned or controlled corporations (GOCCs),
Local Government or District Unit.

Taxability:
i. Agencies performing governmental functions are
exempt from tax unless expressly taxed.
ii. Agencies performing proprietary functions are
subject to tax unless expressly exempted.

The Constitution is silent on whether Congress is

prohibited from taxing the properties of the agencies of
the Government (MCIAA v. Marcos, G.R. No. 120082,
September 11, 1996)

c. Government-Owned or Controlled Corporations (GOCCs)

Generally subject to tax, except:
i. Government Service Insurance System
(GSIS)
ii. Social Security System (SSS)
iii. Philippine Health Insurance Corporation
(PHIC)
iv. Philippine Charity Sweeptakes Office
(PCSO)

3. Non-Delegability of the Taxing Power

General Rule: Delegata potestas non potest delegare (a delegated
power cannot be further delegated). Since the power of taxation
is a power that is exercised by Congress as delegates of the
people, Congress could not re-delegate this power.
Exceptions:

a. Delegation to the President

i. Tariff Powers under Flexible Tariff Clause (Art. VI Sec.
28, Par. 2, 1987 Constitution)

“The Congress may, by law, authorize the President to fix

within specified limits, and subject to such limitations and
restrictions as it may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or
imposts within the framework of the national development
program of the Government.”

ii. Emergency Powers (Art. VI, Sec. 23, Par. 2, 1987,

Constitution)

“In times of war or other national emergency, the Congress

may, by law, authorize the President, for a limited period
and subject to such restrictions as it may prescribe, to
exercise powers necessary and proper to carry out a
declared national policy. Unless sooner withdrawn by
resolution of the Congress, such powers shall cease upon
the next adjournment thereof.”

b. Delegation to Administrative Agencies

Power of Subordinate Legislation, subject to:
i. Completeness Test
The law must be complete in all its essential
terms and conditions when it leaves the
legislature so that there will be nothing left
for the delegate to do when it reaches him
except to enforce it
ii. Sufficient Standard Test
The law must offer a sufficient standard to
specify the limits of the delegate’s
authority, announce legislative policy, and
specify conditions under which it is to be
implemented.

c. Delegation to the Local Governments and Autonomous

Regions

Article X, Section 5, 1987 Constitution

 “Each local government unit shall have the power to create its own
sources of revenues and to levy taxes, fees and charges subject to
such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy. Such taxes, fees,
and charges shall accrue exclusively to the local governments.”

Article X, Section 20, 1987 Constitution

“Within its territorial jurisdiction and subject to the provisions of

this Constitution and national laws, the organic act of autonomous
regions shall provide for legislative powers over:

x x x
2. Creation of sources of revenues;
x x x”

4. International Comity
A state must recognize the generally accepted tenets of
international law that limit the authority of the government to
effectively impose taxes on sovereign state and its
instrumentalities.

5. Situs or Territoriality
A state may not tax property lying outside its borders or lay an
exercise or privilege tax upon the exercise or enjoyment of a right
or privilege derived from the laws of another state and therein
exercised or enjoyed.

Example, the Philippines cannot tax economic activities outside its

jurisdiction. Exemption, Philippines taxed income of
Philippine/Domestic Corporation outside of the Philippines.

B. Constitutional Limitations

1. General or Indirect Limitations

a. Due Process Clause (Art. III, Section 1, 1987 Constitution)

Two Aspects:
1. Substantive – Tax statue must be within the
constitutional authority of the Congress and it must be
fair, just, and reasonable;
 2. Procedural – requires notice and hearing or at least an
opportunity to be heard

Due Process in Taxation:

1. It must be for public purpose
2. Imposed within the territorial jurisdiction
3. No arbitrariness or oppression in assessment and
collection

b. Equal Protection Clause (Art. III, Section 1, 1987 Constitution)

“Equal protection neither requires equal rates of taxation
on different classes of property, nor prohibits unequal
taxation so long as the inequality is not based upon
arbitrary classification. It merely requires that all persons
(or property) of the same class subjected to such
legislation shall be treated alike, under like circumstances
and conditions, both in the privileges conferred and, in the
liabilities, imposed (Sison, Jr. v. Ancheta, G.R. No. L-59431,
July 25, 1984)

c. Freedom of the Press (Art. III, Section 4, 1987 Constitution)

There is a curtailment of press freedom and freedom of
thought and expression if a tax is levied in order to
suppress this basic right and impose a prior restraint. A
license fee may not be imposed on the press because it
lays a prior restraint on the exercise of its right (Tolentino
v. Secretary of Finance, G.R. No. 115455, October 30,
1995).

d. Religious Freedom (Art. III, Section 5, 1987 Constitution)

A municipal license tax on the sale of bibles and religious
articles by a non-stock, non-profit missionary organization
at minimal profit constitutes curtailment of religious
freedom and worship, which is a guaranteed by the
Constitution (American Bible Society v. City of Manila, G.R.
No. L-9637, April 30, 1957).

But VAT, a revenue tax, not being a license tax, is allowed

(Tolentino v. Secretary of Finance, G.R. No. 115455,
October 30, 1995).
 e. No taking of Private Property without Just Compensation
(Eminent Domain)

CIR v. Central Luzon Drug Corp Manila Memorial Park, Inc.

G.R. No. 159647, April 15, 2005 v. Sec. of DSWD,
G.R. No. 175356, December 3, 2013
R.A. 7432 R.A. 9257
Tax Credit for the 20% Discount Tax Deductions for the 20% Discount
20% Discount was an exercise of 20% Discount was an exercise of Police
Eminent Domain Power
There must be just compensation Cannot demand full amount as there is no
need for just compensation

f. Non-Impairment Clause (Art. III, Section 10, 1987

Constitution)
“No law impairing the obligations of contracts shall be
passed”

Example, the tax payer entered into a contract with the

Government, with a stipulation in the contract for the
formers tax exemption for the said contract. Such
exemption cannot be revoked by a later taxing statute.

g. Law-Making Process (Art. VI, Section 26, 1987 Constitution)

“Section 26.

Every bill passed by the Congress shall embrace only one subject which
shall be expressed in the title thereof.

No bill passed by either House shall become a law unless it has passed
three readings on separate days, and printed copies thereof in its final
form have been distributed to its Members three days before its passage,
except when the President certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last reading
of a bill, no amendment thereto shall be allowed, and the vote thereon
shall be taken immediately thereafter, and the yeas and nays entered in
the Journal.

h. Presidential Power to Grant Reprieves, Commutations, and

Pardons, and Remit Fines and Forfeitures After Conviction by
Final Judgment (Article VII, Section 19, 1987 Constitution)

“Section 19. Except in cases of impeachment, or as otherwise provided in

this Constitution, the President may grant reprieves, commutations, and
 pardons, and remit fines and forfeitures, after conviction by final
judgment.

He shall also have the power to grant amnesty with the concurrence of a
majority of all the Members of the Congress.”

2. Specific and Direct Limitations

a. Uniformity and Equitability (Art. VI, Section 28 (1), 1987
Constitution)

Uniformity – all taxable articles or properties of the same class

shall be taxed at the same rate. (Valid classification is allowed)

Equitability – fair, just, reasonable and proportionate to one’s

ability to pay

b. Progressive System of Taxation (Art. VI, Section 28 (1), 1987

Constitution)
Progressive means as the resources of the taxpayer
become higher, his tax rate likewise increases. Example,
Income Tax.

VAT is admittedly regressive as it is imposed regardless of

income, however, “[t]he Constitution does not entirely
prohibit a regressive system but merely directs the
Congress to evolve a progressive system of taxation.”
(Abakada Guro Party List v. Ermita, G.R. No. 168056, April
15, 2009)

c. Non-imprisonment for Non-Payment of Poll Tax (Art. III, Section 20,

1987 Constitution)
Poll tax, a tax of fixed amount on individuals residing
within a specified territory, is not mandatory.

d. Origin of Revenue and Tariff Bills (Art VI, Section 24, 1987
Constitution)

“Section 24. All appropriation, revenue or tariff bills, bills authorizing

increase of the public debt, bills of local application, and private bills,
shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments.”

It is not the law, but the bill which is required to originate

exclusively from the House of Representatives. A bill
originating in the House may undergo such extensive changes
 in the Senate that the result may be a rewriting of the whole.
(Tolentino v. Secretary of Finance, G.R. No. 115455, October
30, 1995).

e. Veto Power of the President (Art. VI, Section 27, 1987

Constitution)

“Section 27.

Every bill passed by the Congress shall, before it becomes a law, be

presented to the President. If he approves the same he shall sign it;
otherwise, he shall veto it and return the same with his objections to the
House where it originated, which shall enter the objections at large in its
Journal and proceed to reconsider it. If, after such reconsideration, two-
thirds of all the Members of such House shall agree to pass the bill, it shall
be sent, together with the objections, to the other House by which it shall
likewise be reconsidered, and if approved by two-thirds of all the
Members of that House, it shall become a law. In all such cases, the votes
of each House shall be determined by yeas or nays, and the names of the
Members voting for or against shall be entered in its Journal. The President
shall communicate his veto of any bill to the House where it originated
within thirty days after the date of receipt thereof, otherwise, it shall
become a law as if he had signed it.

The President shall have the power to veto any particular item or items
in an appropriation, revenue, or tariff bill, but the veto shall not affect
the item or items to which he does not object.”

f. Flexible Tariff Clause (Article VI, Section 28(2), 1987

Constitution)

g. Tax Exemption of Religious, Charitable, and Educational

Entities (Art. VI, Section28 (3), 1987 Constitution)

“Section 28.

x x x

3. Charitable institutions, churches and personages or convents

appurtenant thereto, mosques, non-profit cemeteries, and all lands,
buildings, and improvements, actually, directly, and exclusively used
for religious, charitable, or educational purposes shall be exempt from
taxation.

x x x”

h. Voting Requirement for Tax Exemption (Art. VI, Section 28(4), 1987
Constitution)
 “Section 28.

x x x

4. No law granting any tax exemption shall be passed without the

concurrence of a majority of all the Members of the Congress.”

i. Supreme Court’s Power of Judicial Review (Art. VIII, Sections

1 and 5, 1987 Constitution)

Section 1. The judicial power shall be vested in one Supreme Court and in
such lower courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.

“Section 5. The Supreme Court shall have the following powers:

x x x

2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the

law or the Rules of Court may provide, final judgments and orders of lower
courts in:

x x x

b. All cases involving the legality of any tax, impost, assessment, or toll,
or any penalty imposed in relation thereto.

x x x”

For Local Government, please see LOCAL GOVERNMENT TAXATION, Title I, Book II of R.A.
7160 or the Local Government Code. Tax includes Real Property Tax and Amusement Tax (for the
Province), Business Tax (for the Municipality), and Barangay Clearance (for the Barangay), among
others)

ON BUDGETING AND EXPENDITURES

Power of the Purse is vested on the Legislative Department (Article VI, Section 29, 1987
Constitution)

“Section 29.

No money shall be paid out of the Treasury except in pursuance of an appropriation made
by law.”
Some Constitutional Limitations of the Power of the Purse

1. No Money to Support Religion (Article VI, Section 29, 1987 Constitution)

No public money or property shall be appropriated, applied, paid, or employed, directly or

indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian
institution, or system of religion, or of any priest, preacher, minister, other religious teacher,
or dignitary as such, except when such priest, preacher, minister, or dignitary is assigned to
the armed forces, or to any penal institution, or government orphanage or leprosarium.

2. Use of Special Tax is only for Special Purpose (Article VI, Section 29, 1987 Constitution)

“All money collected on any tax levied for a special purpose shall be treated as a special fund
and paid out for such purpose only. If the purpose for which a special fund was created has
been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of
the Government.”

Some Constitutional Provisions on Appropriations

1. President’s Duty for the General Appropriations Bill (Article VII, Section 22, 1987
Constitution)

Section 22. The President shall submit to the Congress, within thirty days from the opening
of every regular session as the basis of the general appropriations bill, a budget of
expenditures and sources of financing, including receipts from existing and proposed
revenue measures.

2. Origin of Revenue and Tariff Bills (Art VI, Section 24, 1987 Constitution)

“Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills, shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments.”

3. Article VI, Section 25, 1987 Constitution

The Congress may not increase the appropriations recommended by the President for the
operation of the Government as specified in the budget. The form, content, and manner of
preparation of the budget shall be prescribed by law.

No provision or enactment shall be embraced in the general appropriations bill unless it

relates specifically to some particular appropriation therein. Any such provision or
enactment shall be limited in its operation to the appropriation to which it relates.

The procedure in approving appropriations for the Congress shall strictly follow the
procedure for approving appropriations for other departments and agencies.
 A special appropriations bill shall specify the purpose for which it is intended, and shall be
supported by funds actually available as certified by the National Treasurer, or to be raised
by a corresponding revenue proposal therein.

No law shall be passed authorizing any transfer of appropriations; however, the President,
the President of the Senate, the Speaker of the House of Representatives, the Chief Justice
of the Supreme Court, and the heads of Constitutional Commissions may, by law, be
authorized to augment any item in the general appropriations law for their respective offices
from savings in other items of their respective appropriations.

Discretionary funds appropriated for particular officials shall be disbursed only for public
purposes to be supported by appropriate vouchers and subject to such guidelines as may
be prescribed by law.

If, by the end of any fiscal year, the Congress shall have failed to pass the general
appropriations bill for the ensuing fiscal year, the general appropriations law for the
preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until
the general appropriations bill is passed by the Congress.

4. Fiscal Autonomy of the Supreme Court, Ombudsman, and Constitutional Commissions.

Supreme Court (Article VIII, Section 3, 1987 Constitution)

Section 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not
be reduced by the legislature below the amount appropriated for the previous year and,
after approval, shall be automatically and regularly released.

Office of the Ombudsman (Article XI, Section 14, 1987 Constitution)

Section 14. The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved annual
appropriations shall be automatically and regularly released.

Constitutional Commission (Article IX, Section 5, 1987 Constitution)

Section 5. The Commission shall enjoy fiscal autonomy. Their approved annual
appropriations shall be automatically and regularly released.

NOTE:
1. Budget/Appropriations for the Ombudsman and the Constitutional Commissions may be decreased
by the Congress.

2. Constitutional Commission includes Civil Service Commission, the Commission on Elections, and
the Commission on Audit only. NO Commission on Human Rights.

5. Local Government Share in the National Tax and National Wealth (Article X, Sections 6
and 7, 1987 Constitution)
 Section 6. Local government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.

Section 7. Local governments shall be entitled to an equitable share in the proceeds of the
utilization and development of the national wealth within their respective areas, in the
manner provided by law, including sharing the same with the inhabitants by way of direct
benefits.

Some Constitutional Provisions on Expenditure

After the Appropriations, each Department may spend its respective appropriations in
accordance to their fiscal autonomy.

For the Executive Department (Article VII, 1987 Constitution)

Section 1. The executive power shall be vested in the President of the Philippines.

Section 17. The President shall have control of all the executive departments, bureaus,
and offices. He shall ensure that the laws be faithfully executed.

For Local Government, please see Sections 304-354 or R.A. 7160 or the Local Government Code

Constitutional Provision on SAVINGS (Article VI, Section 25(5), 1987 Constitution)

“The President, the President of the Senate, the Speaker of the House of Representatives,
the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may,
by law, be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations.”

NOTE: No Ombudsman and Local Government.

Belgica, et. al. versus Hon. Exec. Sec. Ochoa, etc.

(G.R. No. 208566, November 19, 2013)
FACTS:

"Pork Barrel" refers to an appropriation of government spending meant for localized

projects and secured solely or primarily to bring money to a representative's district. Some
scholars on the subject further use it to refer to legislative control of local appropriations. In the
Philippines, "Pork Barrel" has been commonly referred to as lump-sum, discretionary funds of
Members of the Legislature, although, as will be later discussed, its usage would evolve in
reference to certain funds of the Executive.

ISSUE: Is Pork Barrel (PDAF) Constitutional?

 HELD: No.

The Legislative branch of government, much more any of its members, should not cross
over the field of implementing the national budget since, as earlier stated, the same is properly
the domain of the Executive. Again, in Guingona, Jr., the Court stated that "Congress enters the
picture when it deliberates or acts on the budget proposals of the President. Thereafter, Congress,
"in the exercise of its own judgment and wisdom, formulates an appropriation act precisely
following the process established by the Constitution, which specifies that no money may be paid
from the Treasury except in accordance with an appropriation made by law." Upon approval and
passage of the GAA, Congress‘ law-making role necessarily comes to an end and from there the
Executive‘s role of implementing the national budget begins. So as not to blur the constitutional
boundaries between them, Congress must "not concern itself with details for implementation
by the Executive."

“From the moment the law becomes effective, any provision of law that empowers
Congress or any of its members to play any role in the implementation or enforcement of the law
violates the principle of separation of powers and is thus unconstitutional." It must be clarified,
however, that since the restriction only pertains to "any role in the implementation or
enforcement of the law," Congress may still exercise its oversight function which is a mechanism
of checks and balances that the Constitution itself allows. But it must be made clear that
Congress’ role must be confined to mere oversight. Any post-enactment-measure allowing
legislator participation beyond oversight is bereft of any constitutional basis and hence,
tantamount to impermissible interference and/or assumption of executive functions.

The Court hereby declares the 2013 PDAF Article as well as all other provisions of law
which similarly allow legislators to wield any form of post-enactment authority in the
implementation or enforcement of the budget, unrelated to congressional oversight, as violative
of the separation of powers principle and thus unconstitutional. Corollary thereto, informal
practices, through which legislators have effectively intruded into the proper phases of budget
execution, must be deemed as acts of grave abuse of discretion amounting to lack or excess of
jurisdiction and, hence, accorded the same unconstitutional treatment.

ON BORROWING

Constitutional Provision (Article VII, Section 20, 1987 Constitution)

Section 20. The President may contract or guarantee foreign loans on behalf of the Republic
of the Philippines with the prior concurrence of the Monetary Board, and subject to such
limitations as may be provided by law. The Monetary Board shall, within thirty days from the
end of every quarter of the calendar year, submit to the Congress a complete report of its
decision on applications for loans to be contracted or guaranteed by the Government or
government-owned and controlled corporations which would have the effect of increasing the
foreign debt, and containing other matters as may be provided by law.
For the National Government, please see R.A. 4860, R.A. 8182, and R.A. 8555
(https://www.coa.gov.ph/wp-content/uploads/ABC-Help/Foreign_Funding.pdf)

For the Local Government Unit, please see TITLE IX CREDIT FINANCING, Sections 295-303, R.A.
7160 or the Local Government Code.

ON ACCOUNTING AND AUDITING

THE COMMISSION ON AUDIT (COA)

Composition (Article IX (D), Section 1, 1987 Constitution)

1. Chairman; and
2. Two Commissioners

Qualification (Article IX (D), Section 1, 1987 Constitution)

1. Natural-born citizen of the Philippines
2. At the time of their appointment, at least thirty-five years of age;
3. Certified Public Accountants with not less than ten years of auditing experience, or
members of the Philippine Bar who have been engaged in the practice of law for at least
ten years;
4. Must not have been candidates for any elective position in the elections immediately
preceding their appointment.
5. At no time shall all Members of the Commission belong to the same profession.

Appointment Procedure (Article IX (D), Section 1, 1987 Constitution)

“The Chairman and the Commissioners shall be appointed by the President with the
consent of the Commission on Appointments for a term of seven years without
reappointment. Appointment to any vacancy shall be only for the unexpired portion of the
term of the predecessor. In no case shall any Member be appointed or designated in a
temporary or acting capacity.”

Powers (Article IX (D), Section 2, 1987 Constitution)

1. To examine, audit, and settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust by, or pertaining to,
the Government, or any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations with original charters, and on a post-
audit basis:

a) Constitutional bodies, commissions and offices that have been granted

fiscal autonomy under this Constitution;
 b) Autonomous state colleges and universities;

c) Other government-owned or controlled corporations and their

subsidiaries; and

d) Such non-governmental entities receiving subsidy or equity, directly or

indirectly, from or through the Government, which are required by law or
the granting institution to submit to such audit as a condition of subsidy or
equity. However, where the internal control system of the audited agencies
is inadequate, the Commission may adopt such measures, including
temporary or special pre-audit, as are necessary and appropriate to correct
the deficiencies. It shall keep the general accounts of the Government and,
for such period as may be provided by law, preserve the vouchers and other
supporting papers pertaining thereto.

2. Exclusive authority, subject to the limitations in this Article, to define the scope of its audit
and examination, establish the techniques and methods required therefor, and
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.

NO EXEMPTION TO THE SCOPE OF COA’S Jurisdiction (Article IX (D), Section 3, 1987

Constitution)

Section 3. No law shall be passed exempting any entity of the Government or its
subsidiaries in any guise whatever, or any investment of public funds, from the jurisdiction
of the Commission on Audit.

For Local Government, Sec. 348, Chapter IV, Title V, Book II, of R.A. 7160 or the Local Government
Code.

Section 348. Auditorial Visitation. - The books, accounts, papers, and cash of local treasurer,
accountant, budget officer, or other accountable officers shall at all times be open for
inspection of the Commission on Audit or its duly authorized representative.

Sources:
1987 Philippine Constitution
R.A. 7160 or the Local Government Code
San Beda Bar Operations’ Memory Aid in Taxation Law (2016)
Several Cases, as indicated above.