This document discusses key concepts in public finance administration such as legal basis, taxation, budgeting, accounting, and auditing. It defines these terms and outlines their theoretical foundations and constitutional basis under Philippine law. Taxation involves imposing burdens on citizens and property to raise government revenue, and has its basis in theories of necessary government services and social contract. Budgeting establishes the government's financial plan through a process outlined in the constitution. Accounting and auditing measure and verify financial information, ensuring proper use of public funds.

2. What is a legal basis?
 the justification for or reasoning behind
something.
 A law based explanation how or why
things are carried out in a certain
manner
 the underlying support or foundation for
an idea, argument, or process.

3. What are the main aspects of
Public Finance Administration
 Taxation
 Budgeting
 Accounting and Auditing

4. 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.

5. What is the essence of
Taxation?
 The power of taxation proceeds upon
the theory that the existence of a
government is a necessity; that it cannot
continue without means to pay its
expenses; and that for those means it
has the right to compel all citizens and
property within its limits to contribute.

6. Theoretical Basis of
Taxation
 Life Blood Theory of Taxation
 Social Contract Theory
 Benefit Received Principle

7. Sources of Taxation
 Constitution
 Special laws or Statutes
 NIRC
 Administrative Rules and Regulations
 Administrative Rulings and Opinions
 Judicial Rulings or Jurisprudence

8. Kinds of taxes
1. Income Tax
2. Estate and donor's taxes
3. Value-Added tax
4. Other percentage taxes
5. Excise taxes
6. Documentary Stamp taxes
7. Such other taxes as are or hereafter
may be imposed and collected by the
Bureau of Internal Revenue

9. Limitations of the Power to Tax
 Limitation means a legally specified period
beyond which an action may be defeated
or a property right is not to continue
 Two Classes of tax limitations
 Inherent Limitations
 Constitutional Limitations

10. Constitutional Limitations
 Due process of law (sec. 1Art. III)
 Rule of uniformity and equity in taxation (sec 28(1)Art VI)
 No imprisonment for non-payment of poll tax (sec. 20, Art III)
 Non-impairment of obligations and contracts (sec 10, Art III)
 Prohibition against infringement of religious freedom (Sec 5, Art III)
 Prohibition against appropriations for religious purposes (sec 29, (2)
Art. VI)
 exemption of all revenues and assets of non-stock, non-profit
educational institutions used actually, directly, and exclusively for
educational purposes from income, property and donor’s taxes and
custom duties (sec. 4 (3 and 4) art. XIV.)
 Concurrence by a majority of all members of Congress in the
passage of a law granting tax exemptions. (Sec. 28 (4) Art. VI.)

11. Inherent Limitations
 Purpose. Taxes may be levied only for public
purpose;
 Territoriality. The State may tax persons and
properties under its jurisdiction;
 International Comity. the property of a foreign
State may not be taxed by another.
 Exemption. Government agencies performing
governmental functions are exempt from
taxation
 Non-delegation. The power to tax being
legislative in nature may not be delegated.
(subject to exceptions)

12. The process of Taxation
 Taxation is a Legislative function since a Statute is
required to enable the Executive branch to initiate tax
collection.
 However, it is the Executive department who issues the
recommendations to Congress regarding the effectiveness
of the tax statutes.
 All aspects of tax policy formulation and implementation is
principally handled by the Department of Finance.
 The Secretary of Finance is the key recommendatory
position to the President when it comes to concerns about
the tax policies.
 With such, the Executive formulates its recommendations
to the Congress for it legislate statutes which will be
implemented by the Department of Finance through the
Bureau of Internal Revenue and the Bureau of Customs.

13. 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.

14. Formulation of Budget

15. Constitutional Basis of
Budgeting
 Section 24, Article VI, which states that all appropriations,
revenue or tariff bills increase of the public debt, bills of local
application and private bills shall originate in the House of
Representatives, but the Senate may propose or concur with
amendments
 Section 25 (1), Article VI, states that 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.
 Section 25 (2), Article VI states that 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 appropriations to which it relates.

16.  Section 25 (4), Article VI: “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.”
 Section 25 (5), Article VI: “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 e offices from savings
in other items of their respective appropriations.”
 Section 25 (7), Article VI: “If, by the end of the fiscal year, the
[Philippine] 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 Philippine] Congress.”
 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.

17. Restrictions on Budgeting
 The President has exclusive right to propose a budget.
 Congress can only reduce or reallocate appropriations in
the proposed budget.
 The President can use a line-item veto.
 The previous year’s budget is automatically “re-enacted” if
the budget is not passed prior to the start of the fiscal
year.
 The President can impose restrictions on the
disbursement of funds appropriated by Congress.
 The President can augment any appropriations from
savings in other appropriations.
 Highest allocation to Education
 Separation of Church and State
 Special Funds are for Special funds only

18. 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." Its primary function is to measure and
communicate financial and business data as it
gives meaning to financial reports by explaining
the results of transactions in terms of profit and
loss and current financial positions.

19.  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.

20. 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

21. 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)

22. References
Books
Hector De Leon, Text Book on Philippine 1987 Constitution
Hector De Leon, The Law on Income Taxation
Leonor M. Briones, Philippine Public Fiscal Administration, Fiscal Administration Foundation Inc.
Mandaluyong, 1996
Online References
http://www.gov.ph/the-philippine-constitutions/the-1987-constitution-of-the-republic-of-the-philippines
http://www.gov.ph/1987/07/25/executive-order-no-292
http://www.transparencyreporting.net/index.php
http://hrepreflibrarian.wordpress.com/2013/03/07/the-budget-process-the-philippine-congress/
https://ideas.repec.org
http://www.oecd.org/countries/philippines/48170279.pdf
http://www.dbm.gov.ph
http://www.lawphil.net/administ/coa/coa.html
http://tax71.blogspot.com/2009/06/limitations-on-power-of-taxation.html