Public Fiscal by Doc Mojica

NATIONAL COLLEGE OF BUSINESS AND ARTS
994 Aurora Blvd., Cubao, Quezon City  Tel. Nos.: 913-87-87 Loc.160 to 163  Loc.112 Zipcode 1109
MASTER IN PUBLIC ADMINISTRATION SY:
2021-2022
COMPILATION OF REPORTS IN PUBLIC
FISCAL ADMINISTRATION
SUBMITTED TO:
MARCIAL V. MOJICA, DPA
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TABLE OF CONTENTS
Session 1
Overview of Public Fiscal Administration 1
First Case Analysis
Ivy Nessa Pajaroja 7
Ronald Lodo 10
Session 2
The NGAs Public Fiscal Administration Overview 14
First Case Analysis
Eduardo Borela 17
Daniel Julius Tumaneng 25
Session 3
Expenditure 29
First Case Analysis
Sunday-Ann Regio 41
Session 4
The National Government Accounting System 46
First Case Analysis
Roy Marion J. Revellame 52
Kervy Ann F. Barlis 61
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Session 5
Auditing 68
First Case Analysis
Catherine N. Anito 74
Reynavi M. Olivares 84
Session 6
The Local Government Units Public Fiscal Administration 87
First Case Analysis
Jasmine Quintas 89
Chrisel T. Gallardo 97
Ricardo R. Nilo 104
Session 7
Expenditure 107
Second Case Analysis
Ivy Nessa Pajaroja 110
Ronald Lodo 117
Session 8
Accounting 121
Daniel Julius Tumaneng 125
Eduardo Borela 132
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Session 9
Auditing 135
Sunday-Ann Regio 149
Session 10
The GOCCs Public Fiscal Administration Overview 154
Roy Marion J. Revellame 157
Kervy Ann F. Barlis 166
Session 11
Expenditures 172
Reynavi M. Olivares 178
Catherine N. Anito 187
Session 12
Public Debt 195
Jasmine Quintas 200
Chrisel T. Gallardo 208
Ricardo R. Nilo
215
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994 Aurora Blvd., Cubao, Quezon City  Tel. Nos.: 913-87-87 Loc.160 to 163  Loc.112 Zipcode 110
SESSION No. 1
TOPIC : OVERVIEW OF PUBLIC FISCAL ADMINISTRATION
PRESENTED BY : Ivy Nessa P. Pajaroja
What is Public Finance?

• According to Hugh Dalton (a British Economist) Public Finance the subject as one which
concerns itself with the income and expenditure of public authorities and the adjustment of one
to the other.
• According to Professor Bastable (an English Economist) Public Finance is a subject that deals
with expenditure and income of the public authorities of the state. Both the aspects (income and
expenditure) relate to the state’s financial administration and control.
• In simple layman’s terms, Public Finance is the study of finance related to government entities.
It revolves around the role of government income and expenditure in the economy.
The Need To Study Public Finance

How Is Public Finance Important?
• Constant Economic Growth: To ensure constant economic growth, the government relies on
fiscal tools like taxes, public debt, and expenditure, etc. These tools help to boost both the demand
and supply of a product in the market.
• Rigid Prices: Public finance has proved to be an essential tool used by the government to
overcome the challenges of inflation and deflation. In the case of inflation, it minimizes the indirect
taxes and expenditures along with; it also maximizes direct tax and capital expenditure. On the
contrary to this, in the case of deflation, the policy is reversed.
• Economic Balance: To maintain financial stability, utilization of fiscal tools is most popular among
the governments of various nations. As a common practice, the government levies a high tax
raising the internal public debt used to repay foreign debt. In the case of a recession in an
economy, the complete procedure is reversed.
• Even Distribution of Resources: To reduce disparity in an economy, the most common tool
used by the government is revenue and expenditure. In the case of high discrepancy, the
government ensures to levy a high tax on income and valuable assets of wealthy people. Thus,
the capital generated through this is used to support the disabled population living in the economy.
To do so, the government is dedicated to launching various schemes like subsidies, allowances,
and different direct and indirect benefits.
• Proportionate Development: For an outgrowing economy, it is imperative for the government to
wipe out the gap between agricultural and industrial sectors. To ensure this, the government
needs to direct the funds towards the personal interest of the population residing in the rural area.
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• Organic Evolution: All the revenue generated by the government is invested in the planning and
development of the evolution of infrastructures. Thus, to ensure socio-economic reforms and
infrastructural development, it becomes imperative for the government to rely on revenues and
expenditures.
Scope of Public Finance
Prof. Dalton classifies the scope of public finance into four areas as follows –
1. Public Income - As the name suggests, public income refers to the income of the government.
The government earns income in two ways – tax income and non-tax income. Tax income is
easy to recognize, it’s the tax paid by people of the country in the form of income tax, sales tax,
duties, etc. On the other hand non-tax income includes interest income from lending money to
other countries, rent & income from government properties, donations from world organizations,
etc.
This area studies methods of taxation, revenue classification, methods of increasing
government revenue and its impact on the economy as a whole, etc.
2. Public Expenditure - Public expenditure is the money spent by government entities. Logically,
the government is going to spend money on infrastructure, defense, education, healthcare, etc.
for the growth and welfare of the country.
This area studies the objectives and classification of public expenditure, effects of expenditure
in different areas, effects of public expenditure on various factors such as employment,
production, growth, etc.
3. Public Debt - When public expenditure exceeds public income, the gap is filled by borrowing
money from the public, or from other countries or world organizations such as The World Bank.
These borrowed funds are public debt.
This area of public finance explains the burden of public debt, why it is necessary and its effect
on the economy. It also suggests methods to manage public debt.
4. Financial Administration - As the name suggests this area of public finance is all about the
administration of all public finance i.e. public income, public expenditure, and public debt.
Financial administration includes preparation, passing, and implementation of government
budget and various government policies. It also studies the policy impact on the social-
economic environment, inter-governmental relationships, foreign relationships, etc.
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Public Finance Vs Private Finance
BASIS FOR
PRIVATE FINANCE PUBLIC FINANCE
COMPARISON
Meaning Private finance is the study of Public finance is concerned

income and expenditure, with the revenue/incomes
borrowings, etc. of individuals, and expenditure,
households and business firms. borrowings, etc. of the
economy or government.
Adjustments Individuals adjust their spending Government adjust the

as per their income. income, according to the
size of expenditure on
different segments.
Objective To maximize profit. To promote social welfare.
Financial Transactions are kept secret. Transactions are open and

Transaction known to all.
Time Horizon No fixed period One year
Elasticity Less Comparatively more
Roles of Government In Public Finance
1. Maintain the Legal and Social

Framework
2. Maintain Competition
3. Provide Public Goods and
Services
4. Correct for Externalities
5. Stabilize the Economy
6. Redistribute Income
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Mercantilism
- The word comes from the Latin word mercari, which means “to run a trade” • It
was dominant in Europe from the 16th to the mid 18th century.
- Bullionism, was a term referred to the economic policies pursued by the
mercantilists, such as governmental control over the use and exchange of
precious metals.
- ADAM SMITH coined the term “mercantile system” to describe the system of
political economy that sought to enrich the country by restraining imports and
encouraging exports.
The Basic Concept Of Mercantilism In Terms Of Trade

- The approach assumes that the wealth of a nation depends primarily on the
possession of previous metals such as gold and silver.
- By exporting goods, the countries could earn therefore maximize the amount
of gold and silver.
- Conversely, importing goods from other countries resulted in an outflow of gold
and silver to those countries thus reducing the government reserves..
Physiocracy
- an economic theory developed by a group of 18th-century Age of
Enlightenment French economist who believed that the wealth of nations
derived solely from the value of "land agriculture" or “land development" and
that agricultural products should be highly priced.
- The physiocracy or physiocratic school was an economic theory that affirmed
that the rules of the economy were given by the laws of nature, and that the
earth was the only source of wealth by which a country could develop.
- Physiocrats were a group of economists who believed that the wealth of nations
was derived solely from agriculture. Their theories originated in France and
were most popular during the second half of the 18th century.
- Francois Quesnay, a physician who is considered the founding father of
physiocracy
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Characteristics of Physiocracy
1. Natural Order
2. Laissez-faire
3. Emphasis on Agriculture
4. Taxation of Landowner
5. Natural Order
6. Laissez-faire
7. Emphasis on Agriculture
8. Taxation of Landowner
The Great Depression
• The Great Depression of the late 1920s and ’30s remains the longest and most
severe economic downturn in modern history. Lasting almost 10 years (from late
1929 until about 1939) and affecting nearly every country in the world, it was
marked by steep declines in industrial production and in prices (deflation),
mass unemployment, banking panics, and sharp increases in rates of poverty and
homelessness.
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Causes Of Great Depression
1. The stock market crash of 1929

2. Banking panics and monetary contraction.
3. The go/ld standard
4. Decreased international lending and tariffs
Keynesian Economics
- Keynesian economics gets its name, theories, and principles from British
economist John Maynard Keynes (1883–1946), who is regarded as the founder
of modern macroeconomics.
- a macroeconomic economic theory of total spending in the economy and its
effects on output, employment, and inflation.
- Keynesian economics was developed by the British economist John Maynard
Keynes during the 1930s in an attempt to understand the Great Depression.
Three Principal Tenets In The Keynesian Description

Of How The Economy Works
1. Aggregate demand is influenced by many economic decisions—public and
private
2. Prices, and especially wages, respond slowly to changes in supply and
demand
3. Changes in aggregate demand, whether anticipated or unanticipated, have
their greatest short-run effect on real output and employment, not on prices.
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Case Analysis 1 Bureau of Internal Revenue
Point of View
- Commissioner Caesar Dulay
Time Context
- July 1, 2016 to present
(Comm. Caesar Dulay’s assumption of office to present)
Background of the Study

Taxes are a bitter subject in almost every country, and the Philippines has a big problem
concerning taxes. Philippines has one of the most complicated tax systems in the world,
and it grows more complex every year.
Tax is a compulsory contribution to state revenue, levied by the government on worker's
income, business profit and added to the cost of some goods, services and transactions
To raise revenue by collecting funds or property for the support of the government in
promoting the general welfare and protecting its inhabitants.
BIR’s Mandate
The Bureau of Internal Revenue shall be under the supervision and control of the
Department of Finance and its powers and duties shall comprehend the assessment and
collection of all national internal revenue taxes, fees, and charges, and the enforcement
of all forfeitures, penalties, and fines connected therewith, including the execution of
judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary
courts. The Bureau shall give effect to and administer the supervisory and police powers
conferred to it by this Code or other laws. (Section 2 of the National Internal Revenue
Code of 1997)
BIR’s Mission
We collect taxes through just enforcement of tax laws for nation-building and the
upliftment of the lives of Filipinos
BIR’s Vision
The Bureau of Internal Revenue is an institution of service excellence and integrity.
Statement of the Problem
How can the BIR improve and be more efficient in its collection to finance
government expenditures?
Objectives
 To identify ways to enhance voluntary compliance and strengthen enforcement.
 To identify the existing tax collection system that can still be improved.
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 To formulate and implement policies that will strengthen the collection of the
agency.
SWOT Analysis
Alternative Courses of Action
ACA1. The BIR must hold outreach programs to improve registration

Advantages:
 This will create a huge potential number of taxpayers that could improve
collection.
 This intensifies tax awareness and education
Disadvantages:
 Costly
 May have a few/limited audience
ACA2. The BIR must hire additional competitive collection officers

Advantages:
 The more competitive employees or collection officers hired, the more taxpayers
will be assisted. It is easier for the company to reach potential taxpayer by
conducting door to door interview.
Disadvantages:
 Costly, since the BIR needs to hire employees, which must be trained to collect
effectively.
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ACA3. The BIR must lower user criteria for eFPS (Electronic Filing and Payment
System)
Advantages:
 Lessen the administrative paperwork, processing time and staff expense
 Improve the customers’ satisfaction by ensuring that their taxes are conveniently,
reliably and automatically paid
Disadvantages:
 Some taxpayer may find it hard to access the eFPS machine specially those who
have no knowledge to computers.
 Taxpayers sometimes preferred to pay at the BIR office
Conclusion
Taxes are necessary not only to sustain the government’s operations but also to fund
projects to help promote economic growth and welfare of its citizens. Without taxes, the
government would be paralyzed because absent of the needed funds, the government,
no matter how formidable, may not be able to perform its functions effectively.
Recommendation
Based on the suggested Alternative Courses of Actions, ACAs 1 and 2 are strongly
recommended courses of actions for the BIR to improve its collection target every year.
Though it may be difficult to hire competitive, dedicated and honest employee and though
it is costly to improve the BIR’s databases, in return, they can be of great help in targeting
the BIR’s yearly collection.
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Case Analysis 1
PHILHEALTH’S MEASURE ON FRAUDULENT CLAIMS
HISTORICAL BACKGROUND:
1. The National Health Insurance Program (NHIP) administered by the Philippine

Health Insurance Corporation was established in 1995 with the passage of
Republic Act No. 7875. PhilHealth took over the Medicare functions previously
administered by the Philippine Medical Care Commission since 1972.
2. In 1997, it assumed Medicare functions for government workers from the

Government Service Insurance System and a year later, for the private workers,
which was previously administered by the Social Security system.
3. In the same year, PhilHealth started the Indigent Program.
4. In 1997, PhilHealth started covering self-employed and the informal sector
5. In 2005, PhilHealth assumed Medicare functions from the Overseas Workers

Welfare Administration (OWWA) for overseas Filipino workers.
6. Now, PhilHealth improved the way health services are delivered, financed and
regulated. It has introduced a primary and catastrophic benefit package as it has
shifted to an all case rates system from the previous inflationary and ineffective fee
for service which has been in place since medicare.
7. PhilHealth endeavors to cover the financing of every filipino’s health needs, from
preventive primary to hospital care including catastrophic conditions.
TIME CONTEXT
2016-Present
BACKGROUND OF THE STUDY
In the past few years, PhilHealth was dragged into various controversies. In a 2007
report, Dr. Eduardo Gonzalez estimated that since 1995, PHIC has lost PhP 4 billion from
claims on unnecessary operations, overpriced medicine, and even ghost patients. On the
other hand, in the case of two ophthalmology practices charging PhP 325 million worth of
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claims for cataracts done prematurely became highly publicized. Adding other types of
fraudulent activities like upcoding and filing of claims for ghost patients, PHIC estimated
that a total of PhP 2 billion were made in improper payments to potentially fraudulent
benefits claims in 2015.
The latest was the “ghost” dialysis scandal reported against WellMed Dialysis
Center in Quezon City. Sen. Panfilo Lacson who exposed that Philippine Health
Insurance Corporation (PhilHealth) incurred a net operating loss of PhP 29.1 billion in
2013-2017 due to fraudulent benefit claims and other misdeeds by senior health officials.
STATEMENT OF THE PROBLEM

How can PhilHealth effectively detect, minimize and prevent health insurance
fraud?
OBJECTIVES
To minimize financial losses incurred by PhilHealth due to payment of fictitious or

questionable Claims filed by Health Care Providers.
To deter health care providers in committing fraudulent acts by imposing stiffer

penalty in every violation of the Implementing Rules and Regulations of PhilHealth
SWOT
1. STRENGTHS
a. It has the power to suspend, revoke or withdraw the accreditation of the HCPs
b. It can file administrative, civil and/or criminal case in other administrative
agencies, quasi-judicial bodies and/or Courts.
c. The only health insurance financed by the government.
2. WEAKNESES
a. Lack of mechanism or tool to prevent the occurrence of fraud;

b. Lack of political will to go after the fraudster
c. Lack of competent personnel to do the job
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3. OPPORTUNITIES
a. Imposing stiffer penalties against erring health care providers as a warning to
others.
b. Provide incentives to whistleblowers
c. Update the member’s database system in coordination with the PCA to avoid
“ghost patients”
4. THREATS
a. Frequent change of leadership in PhilHealth

b. Divisiveness among third level officers
c. Padrino system
ALTERNATIVE COURSES OF ACTION

1. Creation of an anti-fraud body that will manage, strengthen, and integrate anti-
fraud mechanism
Pros: fraudulent activity of Hospitals and doctors can be detected immediately

through continuous monitoring.
Cons: needs additional personnel and funds.
2. Third party/outsourced pre-authorization for all claims payment
Pros: reduces the filing of illegitimate claims.
Cons: Causes the delay in the availment of PhilHealth benefits/ not available
during emergency
3. Change of payment mechanism (from fee for service to case rate)
Pros: provides mechanism to prevent the commission of fraudulent acts
Cons: hospitals/doctors may resort to other illegal acts (upcasing/upcoding to

gain higher benefit payment.)
4. Publication of the Decision that has attained finality against health care
providers and members.
Pros: Effective deterrent for further commission of the prohibited acts under
the Rules.
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Cons: Not all violators (hospitals/doctors) are prosecuted and penalized.
RECOMMENDATION:
The creation of anti-fraud body that will manage, strengthen, enhance, and
integrate the anti-fraud mechanism in prevention, detection, and investigation of cases of
hospitals and doctors, and conduct of regular medical audit, monitoring and verification
to determine red flagging of providers is the best recommended alternative course of
action, which can immediately address the prevalence of fraud and the increase of
amount involved in the health care insurance.
CONCLUSIONS:
The increasing demand to address the prevalence of fraud calls for a long-term
and holistic approach to address the issue. There is a need to examine the inherently
interrelated issues of health care insurance system, planning, and operation, demand
management, fraud and abuse internal control, and fund protection.
Enhance/intensify the existing mechanism in prevention, detection and
investigation of cases of hospitals and doctors; conduct regular medical audit, monitoring,
and verification to determine red flagging of providers can immediately help to lessen
fraud, if not fully to prevent it.
References:
▪ Revised Implementing Rules and Regulation of National Health Insurance Act of
2013 (R.A 7875, as amended by R.A. 9241 and R.A. 10606)
▪ Canoy, J.K.M. (2019, June 6). Hit by 'ghost dialysis' scandal, PhilHealth
hires fraudinvestigators. Retrieved August 2019, 1, from ABS-CBN news :
https://news.abs-cbn.com/news/06/06/19/hit-by-ghost-dialysis-scandal-
PhilHealth-hires-fraud-investigators
▪ Ramos-Araneta, M. (2015). PhilHealth president details eye surgery scam. Manila
Standard. 02July 2015. Retrieved from: manilastandard.net/mobile/article/181336.
Date retrieved: 18 October 2019.
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SESSION No. 2
TOPIC : THE NATIONAL GOVERNMENT AGENCIES PUBLIC
FISCAL ADMINISTRATION OVERVIEW
THE LEGISLATIVE-EXECUTIVE RELATIONSHIP ON
PUBLIC ADMINISTRATION
TAXATION/REVENUES OF THE NATIONAL
GOVERNMENT WITH CURRENT ISSUES (Part 1)
PRESENTED BY : Eduardo Borela
Overview of Public Fiscal Administration

Public Fiscal Administration – generally refers to the processes involved in the revenue
generation, allocation, and expenditures of the government.
Role of Public Fiscal Administration – Among the key responsibilities that help people in
management roles include budgeting, public revenue management, public revenue
expenditure, and the knowledge of block grants and bonding and debt management and
budget interactions among government agencies.
Fiscal Policy
Fiscal – relating to government revenue, especially taxes.
Fiscal Policy – the use of government revenue collection and expenditure to influence a
country’s economy (economics and political science). It is the means by which a
governmenet adjusts its spending levels and tax rates to monitor and influence a nation’s
economy (https://Investopedia.com).
What are the components of public fiscal administration?
1. Public Expenditure
2. Public Revenue
3. Public Debt
4. Public Budgeting
Fiscal year – End of any quarter.

Goals of fiscal management – is to maintain fiscal records and procedures of the Agency
that provides protection for the resources of the Agency as well as records and
procedures which generate economy, effectiveness and efficiency of the operation.
Five major sources of the government?
- Total revenues
- Individual Income Tax
- Corporate Tax
- Social Insurance Taxes
- Federal Taxes
- (in the Phils., taxes, non-tax revenue, (to finance fiscal deficit and debt, relies on both
domestic and external sources).
Major activities in Public Fiscal Administration
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1. Fiscal Public Formulation
2. Taxation and Revenue Administration
3. Budgeting and Expenditure
4. Public Borrowing and Debt Management
5. Accounting and Auditing
Taxation – is the process by which the government collects money from people to use for
government purposes. It is also the power by which an independent State, through its
law-making body, raises and accumulates revenue from its inhabitants to pay the
necessary expenses of the government.
Nature of Taxation Power:
1. Inherent Power of Sovereignty
2. Essentially a Legislative Function
3. For Public Purposes
4. Territorial in Nature
5. Tax Exemption by the Government
6. The Strongest among the Inherent Powers
7. Subject to Constitutional and Inherent Limitations
Tax Principles & Theories

1. Principle of Necessity Theory
2. Lifeblood Doctrine or Theory
3. Principle of Benefits-Received or Benefits-protection Theory
Tax Principles (Sound Tax System)

1. Fiscal Adequacy
2. Equality or Theoretical Justice
3. Administrative feasibility
The Philippine Tax System

- RA 8424 (NIRC) – An Act Amending the National Internal Revenue Code (NIRC) – Signed
on December 11, 1997.
- RA 10963 (Train Law) – The Tax Reform for Acceleration and Inclusion. Initial package of
the Comprehensive Tax Reform Program (CTRP). Singed on December 19, 2017.
Personal Income Tax

Taxable Income (Php) Tax Rates
0 - 10,000 5%
10,000 - 30,000 10%
30,000 - 70,000 15%
70,000 - 140,000 20%
140,000 - 250,000 25%
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250,000 - 500,000 30%
500,000 - and above 32%
Corporate Tax - 30%
Withholding Tax - 20%
Value Added Tax - 12%
Tax incentives for SMEs

1. Direct Tax – tax incentives for importers and exporters
2. Indirect Tax – incentives for the SME owners.
References:
- Public fiscal administration-overview of public fiscal administration – google (5/9/2021)
- Philippine Laws and Jurisprudence Databank (RA 8424)
- Taxation meaning – Google Search
- General principles of income taxation in the Philippines – google search
- Taxation-Investopedia
- Legislative-executive relationship on public administration-google search
- The national government agencies public fiscal admin-google search
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CASE ANALYSYS 1
1. The Senate of the Philippines

2. The Senate of the Philippines is the upper house of congress composed of 24 senators
who are elected at-large (the country forms one district in its election) under plurality-at-
large voting.
Aside from having its concurrence on every bill in order to be passed for the president’s
signature to become a law, the Senate is the only body that can concur with treaties, and
can try impeachment cases. The Senate Presidency, which is elected by senator from
among them, is currently held by Senator Tito Sotto III.
3. This is study considers the information provided from the 18 th Congress of the Philippines.
4. Background:
The Senate had its roots in the Philippine Commission of the Insular Government. Under
the Philippine Organic Act, from 1907 to 1916, the Philippine Commission headed by the
Governor-General of the Philippines served as the upper chamber of the Philippines
Legislature, with the Philippine Assembly as the elected lower house.
In August 1916, the United State Congress enacted the Philippine Autonomy Act or the
“Jones Law”, which created an elected bicameral Philippine Legislature with the Senate
as the upper chamber and the House of Representatives as the lower chamber.
The composition of the Senate is smaller as compared to the House of Representatives.
The members of this chamber are elected at large by the entire electorate. The rationale
for this rule intends to make the Senate a training ground for national leaders and possibly
a springboard for the presidency.
It follows also that a Senator, having a national rather than only a district constituency,
will have a broader outlook of the problems of the country, instead of being restricted by
narrow viewpoints and interests. With such perspective, the Senate is likely to be more
circumspect, or at least less impulsive, than the House of Representatives.
5. Statement of the Problem:
What should be the fiscal policies and other economic reforms that the Senate of the
Philippines should address and prioritize in order to help the Philippine economy to
recover amidst the Pandemic?
6. SWOT Analysis:
Strength: Majority Controlled, A powerful Body
Weakness: Limited personal attendance of Senators during hearings.
Opportunity: The Presidency
Threats: The Pandemic, Opposition Bloc
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7. Alternative Courses of Actions:
1. The Senate should amend RA 10351 or the Sin Tax Law.
Advantages: It will provide additional revenues to be used in the health related
programs such as the purchase of covid-19 vaccines and other related needs to ensure
the strengthening of the health care system of the country. Also, increasing the Sin
Taxes will result to saving more lives.
Disadvantage: It will increase the inflation rate on products covered by the Sin Tax
Law.
2. The Senate shall propose to increase the Value Added Tax to 15%.
Advantage: It will greatly help in increasing the revenues for the government to
ensure the payment of loans/debts.
Disadvantages: it will result to the increase of the inflation rate. Poor people will be
affected by this measure and this is a very unpopular measure that will cause outrages
from the general public.
3. The Senate should have effective collaboration with the Executive Department on the
issues of Fiscal Policies and proposed economic reforms.
Advantage: It will result to efficient realization of the required measures in addressing
the fiscal limitations of the government.
Disadvantage: it may affect the independence of the Senate from the control of the
Executive Department.
8. Conclusion:
The Philippine economy has been greatly affected by the more than a year of lockdowns,
causing the closure of businesses and job displacements. Accordingly, the Philippine
economy is “sinking” and this will create more serious consequences, including the
increase of crimes, extreme poverty, hunger and more joblessness.
There is an urgent need that the Senate of the Philippines should identify fiscal policies
and other economic reforms to address this issue.
And it also require the collaborative efforts of the Legislative Body and the Executive
Department of the government to effectively address and provide fast economic recovery
and institute the needed fiscal discipline and measures.
9. Recommendations:
1. I am recommending ACA 1 in order to have an available funds for the government’s
use in the purchase of the covid-19 vaccines that will cover the majority of the
population.
2. I am also recommending ACA 3 for the Executive Department and the Legislative Body
to effectively address the issue of the covid-19 vaccines acquisition and in order to
ensure the funding and fast recovery of the Philippine Economy.
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3. Lastly, it is recommended that the vaccination of at least 50% of the total population
of the country shall be attained before the end of the last quarter of 2021 in order to
establish a partial “herd immunity” against the existing pandemic.
Reference:
- Senate of the Philippines - Wikipedia
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SESSION No. 2
TOPIC : THE NATIONAL GOVERNMENT AGENCIES PUBLIC
FISCAL ADMINISTRATION OVERVIEW
THE LEGISLATIVE-EXECUTIVE RELATIONSHIP ON
PUBLIC ADMINISTRATION
TAXATION/REVENUES OF THE NATIONAL
GOVERNMENT (Part 2)
PRESENTED BY : DANIEL JULIUS TUMANENG
1. TAX/REVENUE POLICY MAKERS

NATIONAL TAX LAW
The 1987 Philippine Constitution sets limitations on the exercise of the power to
tax. The rule of taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation.
The Congress may, by law, authorize the President to fix within specified limits,
and subject to such limitations and restriction 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.
The Supreme Court shall have the power to 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 all cases involving the legality of any tax,
impost, assessment, or toll or any penalty imposed in relation thereto.
National Internal Revenue Code - This code underwent substantial revision with
passage of the Tax Reform Act of 1997. This law took effect on January 1, 1998.
The chief executive of the Bureau of Internal Revenue is the Commissioner who
has exclusive and original jurisdiction to interpret the provisions of the code and other
tax laws. The commissioner also has the powers to decide disputed assessments, grant
refunds of taxes, fees and other charges and penalties, modify payment of any internal
revenue tax and abate or cancel a tax liability.
TREATIES
The Philippines has entered into several tax treaties for the avoidance of double
taxation and prevention of fiscal evasion with respect to income taxes. At present, there
are 31 Philippine Tax Treaties in force. Copies are available at the BIR Library and the
International Tax Affairs Division of the BIR, which is under the Deputy Commissioner
for Legal and Inspection Group.
ADMINISTRATIVE MATERIAL
The Secretary of Finance, upon the recommendation of the Commissioner,
promulgates needful rules and regulations for the effective enforcement of the
provisions of the Tax Code (Section 244, Tax Code of 1997). The Commissioner of
Internal Revenue, however, has the exclusive and original power to interpret the
provisions of the Tax Code, but subject to review by the Secretary of Finance.
Revenue Regulations (RRs) - are issuances signed by the Secretary of Finance, upon
recommendation of the Commissioner of Internal Revenue, that specify, prescribe or
define rules and regulations for the effective enforcement of the provisions of the
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National Internal Revenue Code (NIRC) and related statutes.
Revenue Memorandum Orders (RMOs) - are issuances that provide directives or
instructions; prescribe guidelines; and outline processes, operations, activities,
workflows, methods and procedures necessary in the implementation of stated policies,
goals, objectives, plans and programs of the Bureau in all areas of operations, except
auditing.
Revenue Memorandum Rulings (RMRs) - are rulings, opinions and interpretations of the
Commissioner of Internal Revenue with respect to the provisions of the Tax Code and
other tax laws, as applied to a specific set of facts, with or without established
precedents, and which the Commissioner may issue from time to time for the purpose of
providing taxpayers guidance on the tax consequences in specific situations. BIR
Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null
and void ab initio.
Revenue Memorandum Circular (RMCs) - are issuances that publish pertinent and
applicable portions, as well as amplifications, of laws, rules, regulations and precedents
issued by the BIR and other agencies/offices.
BIR Rulings - are the official position of the Bureau to queries raised by taxpayers and
other stakeholders relative to clarification and interpretation of tax laws.
NATIONAL TAX RESEARCH CENTER (NTRC)
Constituted under Presidential Decree 74, the NTRC is mandated to conduct
continuing research in taxation to restructure the tax system and raise the level of tax
consciousness among the Filipinos, to achieve a faster rate of economic growth and to
bring about a more equitable distribution of wealth and income.
2. TAX/REVENUE ADMINISTRATION AND ORGANIZATION
Tax Administration
- A system of collecting taxes in accordance with the
country’s tax policies
- It involves enforcement of taxes through the following aspects of taxation
a. Assessment
b. Collection
Tax Administrative Agencies

1. Bureau of Internal Revenue (BIR) – the government agency primarily in charge to
assess and collect all taxes and charges imposed by the NIRC, other tax laws and
regulations.
Every time the government prepares the national budget, attention is focused on
the BIR because it is responsible for raising the bulk of the country’s total government
revenues.
2. Bureau of Customs (BC) and Tariff Commission (TC) – the main agencies tasked to
enforce the Tariff and Customs Code (TCC). The BC also collects the taxes on imports
embodied in the NIRC.
3. Land Transportation Office (LTO) – the office responsible to collect registration fees
and motor vehicle tax.
4. Dully and lawfully authorized collectors – these are persons, agencies or duly
accredited banks authorized by the BIR, BC, TC, and LTO to collect taxes.
5. Local offices in charge in charge to enforce local taxation, such as:
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a. Provincial, City, Municipal and Barangay Treasurers
b. Provincial and City Assessors
c. Provincial and City Board of Assessment Appeals
d. Central Board of Assessment Appeals
Other Tax enforcers
1. Secretary of Justice
Chief Legal Officer of the government
Has the authority to ascertain the validity of tax laws subject to review by the Courts of
Justice
2. Various offices that indirectly provide assistance in
the collection of taxes are the following:
a. The Courts
b. Register of Deeds
c. Secretary of Public Works and Highways Offices
d. Philippine Economic Zone Authority (PEZA)
e. Board of Investments
f. City Fiscals
g. Notaries Public
3. The head of the appropriate government office and his subordinates, with respect to
the collection of energy tax.
4. Banks duly accredited by the BIR Commissioner with respect to receipt of payments
of internal revenue taxes.
Any officer or employee of an authorized agent bank assigned to receive internal
revenue tax payments and transmit tax returns or documents to the BIR shall be subject
to the same sanctions and penalties prescribed for violations committed by government
enforcement officers.
BUREAU OF INTERNAL REVENUE (BIR)
Tasked with the enforcement of the NIRC. Sections 2, 9, 10, 13, and 14 of the NIRC list
the following BIR officers:
 The Commissioner of the Internal Revenue
 Deputy Commissioners of Internal Revenue
 Revenue Regional Director
 Revenue District Officer
 Revenue Examiners and Officers
 Division Chiefs of the BIR
 BIR Collection Agents
Administrative Provisions
For purposes of effectively and efficiently performing tax collection, the Tax Code
provides the following requirements for compliance by the Tax payer employed or
engaged in business as the case may be:
 Registration
 Printing of receipts or sales or commercial invoices
 Issuance of receipts or sales or commercial invoices
 Exhibition of certificate of payment at place of business
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 Requirements for continuance of business of deceased person
 Transfer of business to another location
(CURRENT ISSUE AND DEVELOPMENT) PHILIPPINES: TAX DEVELOPMENTS IN
RESPONSE TO COVID-19
Republic Act (RA) No. 11494, referred to as the “Bayanihan II Act” (An Act
Providing For Covid-19 Response And Recovery Interventions And Providing
Mechanisms To Accelerate The Recovery And Bolster The Resiliency Of The Philippine
Economy, Providing Funds Therefor, And For Other Purposes) took effect on 14
September 2020.
The salient TAX features of the Bayanihan II Act are as follows:
1. Exemption from income tax, and subsequently withholding taxes (when applicable),
for:
 “COVID-19 special risk allowance” for all publicly and privately employed health
workers
 Provision of compensation to public and private health workers who have
contracted COVID-19 in the line of duty
 Actual hazard duty pay received by all medical and allied medical staff from the
government, who are temporarily hired to complement or supplement the current
health workforce or to man the temporary medical facilities, serving in the front
line during the state of national emergency
 Retirement benefits received by officials and employees of private firms, whether
individual or corporate, from 05 June 2020 until 31 December 2020
2. Exemption from import duties, taxes, and other fees for manufacture or importation of
critical equipment or essential goods
3. Moving of statutory deadlines and timelines for the filing and submission of any
document, the payment of taxes, fees, and other charges required by law, and the grant
of any benefit, in order to ease the burden on individuals under community quarantine
(CQ).
4. Exemption from documentary stamp tax (DST) on loan term extensions or
restructuring of loans for (but not limited to) salary, personal, housing, commercial, and
motor vehicle loans, amortizations, financial lease payments and premium payments, as
well as credit card payments, but the exemption from DST will not be applicable to
interbank loans and bank borrowings.
5. Exemption from donor’s tax, and exemption from import duties and taxes, on the
donation or importation (for donation) of personal computers, laptops, tablets, or similar
equipment appropriate for use in schools, donated for distribution to public schools
regardless of level, including state universities and colleges and vocational institutions
under the Technical Education and Skills Development Authority (TESDA).
6. Allowing the net operating loss of the business or enterprise for taxable years 2020
and 2021 to be carried over as a deduction from gross income for the next five (5)
consecutive taxable years immediately following the year of such loss.
7. Removal of the percentage tax on shares of stock sold or exchanged through Initial
Public Offering (IPO).
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Income from Employment
Under the effective tax treaties of the Philippines with other countries, the
residence State has an exclusive right to tax the employment income derived by its
resident taxpayers except when the employment is exercised in another Contracting
State, in which case, the latter State may tax the employment income subject to the
provision of relief by the former State.
Special Tax Residency Rules
Where an individual is prevented from leaving the Philippines on his or her
scheduled day of departure as a result of the travel restrictions imposed by the
government as a safety measure to contain COVID-19, the individual will not be
regarded as being present in the Philippines for tax residence purposes for the period
after the scheduled day of departure. The BIR will consider this as "force majeure" for
the purpose of establishing such individual's tax residence, provided that he or she
leaves the Philippines as soon as the circumstances would permit, such as when the
travel restrictions and/or quarantine measures have been lifted.
References:
 https://www.bir.gov.ph/index.php/legal-matters/guide-to-philippines-tax-law-
research.html?fbclid=IwAR3bV1qWb8hk7nyhXZEReSU181ls1YrxcVZ2n6TIAHc
K0QMnhsINoHoLNq0
 https://home.kpmg/xx/en/home/insights/2020/04/philippines-tax-developments-in-
response-to-covid-
19.html?fbclid=IwAR1TpLTTjYjROt7Tgn0Y1yZZdli7iEuxVnz5Uajz6WSr19XL5bS
DuvwKPME
24
Case Analysis 1
TIME CONTEXT
The problem is still occurring at the present (2020 up to present). It is a
continuous challenge for the staff and employees of the hospital as they continue to
fight the Covid-19 pandemic and provide good health care services.
POINT OF VIEW
“The Quirino Memorial Medical Center (QMMC) - which has the highest number
of cases in the whole Philippines - will get a P305.48 million funding reduction. Most of
these hospitals are in emerging, if not current, hotspot areas. We should provide
reinforcement when the treat is rising. We don't know when this pandemic will end, so
our hospitals have to be ever-ready to deal with the influx of patients”
– Senator Risa Hontiveros (2021)
SHORT HISTORICAL BACKGROUND

More popularly known as "Labor Hospital", the QMMC formally opened its doors
to the public on August 15, 1953. It was the only government hospital of its kind in
Quezon City when it was first established. Its beginning forty years ago can be traced
from its name which bears identification with the working force as the major beneficiary
of its medical services. Its primary purpose of reaching out to the sick and infirm was
achieved in line with the late President Elpidio Quirino’s social amelioration program.
On June 22, 1959, the hospital was designated as a teaching/training hospital
per Department Order No. 23, series of 1959.
On August 15, 1964, during the hospital’s 11th Anniversary, the renaming of
Labor Hospital to Quirino Memorial General Hospital was announced by virtue of
Republic Act 3965 through a bill introduced by Congressman Labrido of Iloilo. The
name was a well deserved tribute to the late President Elpidio Quirino whose
compassion for the poor and working force has made possible the establishment of this
hospital. The old name "Labor Hospital" was often times misconstrued by the general
public as catering exclusively to laborers and maternity cases, thus, the most welcome
change in name.
On June 10, 1983, by virtue of Batas Pambansa Blg. 442, this hospital became a
tertiary regional hospital.
The hospital has expanded to a 250-bed capacity medical center with an-increasing out-
patient cases averaging to 400 daily. True to its objectives, the Quirino Memorial
Medical Center, being a government-supported institution, is committed to serve all
patients regardless of creed, color or socio-economic status.
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How can QMMC sustain its budget despite of emerging patients due to COVID
19?
OBJECTIVES
This case study aims to identify the augmentation needed in the hospital for
covid and non covid patients despite of budget cuts in order to attain the goals of UHC
in terms of:
- Better health outcomes with no major disparity among population groups;
- Financial risk protection for all especially the poor, marginalized and
vulnerable; and
- A responsive health care system which makes Filipino feel respected,
valued and empowered
SWOT ANALYSIS
Strength
 Advantages of professional skill and knowledge training: the whole hospital has
excellent communication and training networks; daily morning session has been
set up to conduct knowledge and skills training and assessment of COVID-19
cases. Before receiving the task of integration, the department staff members
acquired sufficient relevant knowledge and passed the training examination
proctored by the hospital and Department of Health.
 Emergency hiring of health personnel to expand the country’s response to the
COVID-19 health emergency.
 On going construction of a new building/facility for Covid-19 patients
Weaknesses
 Rotation of staff – doctors nurses getting infected of the disease
 Sudden rise of covid patients due to the new variant.
 Sudden closure of Out Patient Department - GCQ
 Absence of proper facility for companions of the patients.
Opportunity
 For the prevention and control of COVID-19, the hospital put an isolation ward
that will contribute to the prevention and control of the disease. It will provide
valuable experiences for the establishment of similar departments in the future.
 Various forms of online education activities have been developed. This provides
great opportunities for the construction of online network information-based
telemedicine in the hospital.
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 Due to the rise of covid cases, bed capacity exceeds. The use of the nearsest
school may be needed to loosen the influx of covid patients with mild to
moderate cases.
Threat
 P2.04 Billion budget cut in DOH’s budget covers the cost of "utilities, medicine,
diagnostic procedures, IV fluids and other expenses essential to patient care.“
 Due to the increase of patients with Covid-19 and other illnesses there is are
hidden risks such as potentially increased nosocomial infection and spreading
infection.
 Fatigue - because of continuous rising covid cases

ACA 1
Establishment of Additional Isolation Ward for the Patients
Pros
 Multi-occupancy bedrooms have a higher bed-capacity compared to single
patient rooms in a comparable building surface (cohort)
 Clear overview on all patients as doors are open or the ward has an open design
Cons
 Multi occupancy rooms are a risk factor for nosocomial transmission
 Allocation of patients depends on the accuracy of PCR or other test result
ACA 2
Invest in Capacity Building of the Personnel for Telemedicine and other online
Transaction in the Hospital
Pros
 Patient can get convenient healthcare from the comfort of their own home.
 Great tool for helping patients feel more in charge of their health, a confidence
vital for lifetime good health.
Cons
 Physical examination is limited. Telemedicine may not seem enough to diagnose
or treat a patient.
 Geriatric patients may have difficult time in accessing gadgets and smartphones
for teleconsultation.
 Low speed internet or no access to internet to some patients.
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ACA 3
Partnership with the nearest school or establishment (private sector) to cater the
patients when the hospital exceeds its full bed capacity and to prevent overwhelming of
hospital facilities.
Pros
 Treating severe covid patients well enough in hospitals who are in need on
medical attention.
Cons
 Not properly manned by healthcare workers.
 Lack of equiptment.
CONCLUSION
Quirino Memorial Medical Center is one of the recognized government hospitals
in the Philippines and dealing with this pandemic, they can consider that with new
approaches the unmet needs and unsolved gaps of the emerging COVID-19 case will
be addressed. The lack of facility, capacity development to the personnel, and
partnership to other agency will help the hospital to operate efficiently to achieve the
goals of UHC.
RECOMMENDATION
 Based on the formulated SWOT Analysis regarding this, I recommend ACA 3
because ACA 3 is needed to adapt in new normal set up during pandemic.
REFERENCES:
https://www.frontiersin.org/articles/10.3389/fpubh.2021.558565/full
https://evisit.com/resources/pros-and-cons-telehealth-for-doctors
https://www.cambridge.org/core/journals/infection-control-and-hospital-
epidemiology/article/isolation-of-covid19-patients-in-cohorted-wards-or-singlepatient-
rooms-advantages-and-disadvantages-to-take-into-
consideration/270D1FA552CED8E5082F742B2180C984
28
SESSION No. 3
TOPIC : EXPENDITURE (NATIONAL GOVT. LEVEL)
PRESENTED BY : Sunday-Ann G. Regio
I. EXPENDITURE
This includes all charges against the fund of the agency for current
operating expenditures, capital outlays, and provisions for payment of a long-term
obligation.
And what is a fund?
The word "fund" in government has taken several meanings or

connotations.
To have a common definition of fund for this topic.
FUND
It is sometimes used to refer an appropriation which is a legislative

authorization to spend or an allotment which is an authorization by the Department of
Budget and Management (DBM) to obligate, or as actual cash available.
II. CLASSIFICATION OF EXPENDITURE
a. Entity/Agency incurring the obligation;

b. Program, Activity and Project (PAP);
c. Object of expenditures, including Personnel Services (PS),
Maintenance and Other Operating Expenditures (MOOE), Financial Expenses (FE), and
Capital Outlays (CO);
d. Region or locality of use;
c. Economic or functional classification of the expenditures;
d. Obligational authority and cash transactions arising from fund
releases; and
e. Such other classifications as may be necessary for the budget
process.
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III. EXPENDITURE POLICY AND ADMINISTRATION
What basis law governs the use of government funds?
Art. VI, Sec. 29 of the Philippine Constitution

The following provision of the Philippines Constitution sets the basic rule for
the use of government funds: "Art. VI, Sec. 29.
It states that “no money shall be paid by the Treasury except in
pursuance of an appropriation made by law.”
The aforequoted provision of the Constitution also establishes the need for
all government entities to undergo the budgeting process to secure funds for use in
carrying out their mandated functions, programs and activities.
Before I proceed, let us first define what is a government budget?
GOVERNMENT BUDGET
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.
The government budget also refers to the income, expenditures and
sources of borrowings of the National Government (NG) that are used to achieve national
objectives, strategies and programs.
And under the Section 22, Article VII of the Constitution states that: "The
President shall submit to the Congress within 30 days from the opening of every regular
session, as the basis of the general appropriation bill (GAB), a budget of expenditures
and sources of financing including receipts from existing and proposed revenue measures
“
In the Budget Cycle, the start is the Budget Call.
IV. BUDGETING OF EXPENDITURE AT THE NATIONAL

GOVERNMENT LEVEL
To better understand the next topic, the Budgeting Expenditure at the

National Level, are the important documents that pertains to how the national budget is
generated, its purpose and how it will be spent.
 THE PRESIDENT’S BUDGET DOCUMENTS
1. National Expenditure Program (NEP)
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First is the National Expenditure Program or commonly called NEP.
This contains the details of spending for each department and agency by
program, activity or project, and is submitted in the form of a proposed General
Appropriations Act
It has three volumes, three volumes because NEP contains a very
comprehensive details and information about the expenditure program. Herein are the
details of the actual obligation, current year budget and the proposed level including the
performance information such as actual physical accomplishments and targets for the
current and proposed year.
2. President’s Budget Message
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This is where the
president explains the rationale of the expenditure program.
This is where the President Explains the Policy framework and priorities for
the budget.
The Proposed National Budget of the Philippine Government for Fiscal Year
2021 is PhP 4.506 Trillion.
This budget is bigger by 9.9% than the 2020 National Budget of PhP 4.100
Trillion and is equivalent to 21.8% of our Gross Domestic Product (GDP).
Without setting aside the basic priorities of responsive and dynamic

governance, we have anchored the Proposed National Budget for the forthcoming 2021
Fiscal Year on the most urgent priority – to reset our momentum and action, rebound from
the debilitating effects of the pandemic on the health and economy, and fully recover from
current and continuing impacts of the crisis.
It is guided by the principles:

1. Support for Strong Economic Recovery
2. Providing Recovery and Rehabilitation
3. Continued Adoption of the Cash Budgeting System (CBS)
4. Enabling Stronger Partnership with Local Government Units (LGUs)
5. Promoting Greater Coordination with Stakeholders
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3. Staffing Summary
This contains a summary of the staffing complement of each department

and agency including number of positions and amounts allocated for the same.
This document contains two (2) tables:
Table I. Staffing Summary of the National Government, FYs 2019, 2020 and
2021; Staffing Summary by Department or Agency
This contains the overall staffing summary of the national government from
FYs 2019 to 2021.
While in Table II. Distribution of Permanent Positions in the National
Government by Salary Grade, FY2020
It also reflects the staffing summary of each national government agency.

These staffing summaries indicate the number and salaries of permanent filled and
unfilled positions.
The total number of permanent positions for FY 2021 is 1,862,543*, of

which, 1,684,669 positions are filled and 177,874 items are unfilled.
This includes both the civilian and the military/uniformed personnel of the
Department of National Defense, Department of the Interior and Local Government,
Department of Justice, Department of Transportation, and the Department of
Environment and Natural Resources.
These positions are generally categorized into the following:
1. Key Positions - refer to executive, managerial, and chief of division
or equivalent positions;
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2. Technical Positions - refer to positions directly performing the
substantive and/or front-line services/functions of the agency prescribed in its mandate;
3. Support to Technical Positions - refer to positions which provide staff
or technical support functions to key and technical positions but do not directly perform
front-line services/functions; and
4. Administrative Positions - refer to positions performing general
services, clerical, human resource management, financial management, records
management, custodial, and other related functions.
The distribution of permanent positions by salary grade in the national
government plantilla for FY 2021 is likewise indicated in Table II of this document.
* Excludes Ex-Officio positions
4. Budget of Expenditures and Sources of Financing (BESF)
The fourth and what actually the constitution requires is the budget of
expenditures and the sources of financing.
Mandated by the Constitution, this contains the macroeconomic
assumptions, public sector context (including overviews of LGU and GOCC financial
positions), breakdown of the expenditures and funding sources for the fiscal year and the
two previous years.
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5. Proposed Peoples Budget
The last Budget Document of the President is the People’s Proposed

Budget, for FY 2021, it focuses on the government’s recovery efforts to once again
strengthen the Philippine economy.
Health, infrastructure, food security, social welfare, and employment will
continue to be prioritized in order to help everyone bounce back stronger from this
temporary crisis, while leading better and healthier lives.
This document is just a summary of the annual budget.
Any government can include additional budgetary documents as the need
arises.
Nice to know: The cover design depicts a magnified map of the Philippines
with a developed society, clearly illustrating that despite the problems that the country
faces due to the COVID-19 pandemic, the Filipinos’ collective hope and desire for a more
progressive and resilient nation with a sustainable economy never faltered.
35
V. BUDGET PROCESS
It is a series of steps or actions taken in order to achieve a particular end.

So in this topic are those steps used ….to achieve a particular end which is
to promote the sound, efficient and effective management and utilization of government
resources.
THE BUDGET CYCLE
The budget and management reforms implemented since 2010 have
strengthened the manner by which the government prepares, authorizes, implements,
and accounts for the use of the national budget.
As provided in Book VI of the Administrative Code of 1987, the budget
process has four distinct phases, namely:
(1) preparation, (2) legislation, (3) execution, and (4) accountability.
The four phases of the Budget Cycle overlap in continuing cycles. While the
Executive implements the Budget for the current year, it also prepares the Budget for the
next fiscal year or defends it before Congress. At the same time, the government
monitors, evaluates, and reports on actual performance year-round.
To ensure checks and balances in government spending, or prevent
abuses in the power, responsibilities for the various phases of the budget are assigned
to different branches of the government.
The executive branch is primarily responsible for budget preparation, while
Congress is in charge of budget authorization or legislation. Budget implementation is
vested on the executive branch, while budget accountability is entrusted to the
Commission on Audit and Congress, as part of the latter’s oversight functions.
We will be discussing these phases one by one.
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1) BUDGET PREPARATION
The first major step in the budget process
Responsibility of the executive branch
Determination of budgetary priorities and activities based on national
development plan and available resources and borrowing limits
1. Budget Call
Jan of Prior Fiscal Year (FY)1
1. A Fiscal Year is a period of twelve months for which a government plans
its management of money.
Budget preparation starts with the Budget Call2, which sets the parameters
and procedures to guide agencies in preparing their respective proposed budgets. 2. The
DBM issues the National Budget Call for NGAs, including SUCs; and the Corporate
Budget Call for GOCCs.
2. Citizen or stakeholder Engagement and RDC Consultations
Before Tier 1 & 2 Proposals3
Agencies engage citizens as they prepare their proposed budgets, through
the Budget Partnership Agreements with civil society organizations (CSOs), and other
participatory budgeting mechanisms.
Agencies consult with Regional Development Councils (RDCs) to make
sure that their respective budget proposals are aligned with the regions’ development
needs and priorities.
3. Program Convergence or program budgeting
Before Tier 1 & 2 Proposals3
Lead and contributing agencies for each program priority of the government
(for example, tourism) meet and synergize their proposed budgets to meet target
outcomes.
3Citizen engagement, consultation with RDCs, and Program Convergence
Budgeting do not happen sequentially. Rather, these must be conducted before agencies
submit their proposals for Tier 1 (February) and Tier 2 (May).
4. Agency Tier 1 Proposals
February of Prior FY4
Agencies prepare the forward estimates (FEs) or current costs of their
ongoing programs and projects and submit these for the “Tier 1” stage of 2TBA.
4. Before the 2TBA was adopted, agencies submit their proposed budgets—
both for ongoing programs as well as new or expanded expenditures—once.
5. Tier 1 Deliberations
March of Prior FY
Agencies prepare the forward estimates (FEs) or current costs of their
ongoing programs and projects and submit these for the “Tier 1” stage of 2TBA.
6. Budget Priorities Framework
April of Prior FY
This document spells out the economic forecasts and fiscal targets for the
budget year, the total cost of ongoing spending under Tier 1, and identifies the fiscal
space: the available resources for new programs and projects or the expansion of existing
ones. The Framework defines priority sectors and locations, and other guidelines that
agencies must comply with in preparing their Tier 2 budget proposals.
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7. Agency Tier 2 Proposals
May of Prior FY
After undertaking further consultations with CSOs, RDCs, and other
agencies, agencies prepare their proposals for new programs and projects or the
expansion of existing ones. Agencies submit both their proposed Tier 1 and Tier 2
budgets through the Online Submission of Budget Documents System.
8. Tier 2 Deliberations
June to July of Prior FY
Like in Tier 1, the DBM conducts TBH and ERB to review the Tier 2
proposals of agencies. Other government bodies are also involved in reviewing such
proposals: the NEDA Investment Coordination Committee (ICC) for capital projects
costing P1 billion or more and for PPP-related proposals; the NEDA Infrastructure
Committee (InfraComm) for all infrastructure projects in line with the Three-Year Rolling
Infrastructure Program (TRIP); the GCG and DOF for the proposals of GOCCs; and the
MITHI committee for ICT projects.
9. Presentation to the President and the Cabinet
July of Prior FY
The DBM, DOF, and NEDA, with the BSP (as the DBCC) present the
proposed Budget before the President and the Cabinet for discussion and approval.
10. Consolidation, Validation, and Confirmation
July of Prior FY
The DBM validates the approved budgets and consolidates these into the
Budget of Expenditures and Sources of Financing (BESF) and other budget documents.
11. The President’s Budget
July to August of Prior FY
Flash the next PPT
If you can notice it will start and end in august because under the:
The 1987 Constitution mandates the President to submit the Proposed
Budget to Congress within 30 days from the opening of the regular session of Congress.
The proposed Budgets for 2012 to 2019 had been consistently submitted one working
day after the opening of the regular session. In addition, the comprehensiveness and level
of detail of the Proposed Budget had been improved also.
2) BUDGET LEGISLATION
What is the role of the legislative branch in the budget process? It reviews
and deliberates the budget.
The second phase of the budget process. It begins when Congress
receives from the President the proposed national budget.
The legislative branch of government reviews, deliberates and enacts into
law the national budget proposal of the President.
Appropriation - an authorization made by law or other legislative enactment,
directing payment out of government funds under specified conditions or for specified
purposes.
BUDGET LEGISLATION
1. House Deliberations
August to October of Prior FY
38
The Budget bill is tackled by Congress like any legislation. Thus, the
Committee on Appropriations of the House of Representatives holds public hearings on
the proposed Budget. The Committee then sponsors the recommended General
Appropriations Bill (GAB) before the House in plenary. Once approved, the House
transmits the GAB to the Senate.
2. Senate Deliberations
September to November of Prior FY
Unlike normal legislation, the Constitution first requires the House to
approve the GAB before the Senate considers the same. However, to expedite the
process, the Senate Committee on Finance usually starts hearings on the President’s
Budget well before the House formally transmits the GAB. Like in the House, the
Committee on Finance sponsors the GAB in plenary, which then approves the Senate
version of the GAB.
3. Bicameral Deliberations
Nov-Dec of Prior FY
After the House and the Senate approve their versions of the GAB, they
each form a panel of lawmakers that will constitute the Bicameral Conference Committee
or Bicam.
4. Ratification and Enrolment
December of Prior FY
The Harmonized or “Bicam” version of the GAB is then submitted back to
both Houses, which then vote to ratify the final GAB. Both Houses then submit or “enrol”
the ratified GAB to the President.
5. Enactment
December of Prior FY
Budget legislation ends when the President signs the GAA into law.
3) BUDGET EXECUTION
Budget Execution Documents
❑ Issuance by DBM of budget authorities to agencies:
o Obligational authorities
o Disbursement authorities
❑ Program/project implementation by agencies out of the

authorities issued by DBM
o Plans and Targets - Budget Execution
Documents (BEDs)
o Obligations, Commitments, Payables,
Disbursements
39
4) BUDGET ACCOUNTABILITY
In this phase:
❑ Submission of Budget and Financial Accountability Reports
(BFARs) by the agencies
❑ Validation of accomplishments per BFARs versus planned

targets/plans per Budget Execution Documents (BEDs)
❑ Conduct of the periodic performance review by DBM
❑ Disclosure of budget information to the public by DBM
As a recap: process flow on budget implementation is basically this.

1. Approval of the budget
2. Issuance by DBM of budget authorities
3. Agency recording of obligations or entering into
commitments/contracts
4. Agency liquidation of due and demandable payables for
goods and services delivered/rendered, out of the NCAs issued by DBM.
In the payment of payables or liquidation of obligations, agencies issue an MDS
Check or an ADA (checkless).
With the allotments already released to the agencies (thru the ABM and SAROs),
agencies can start implementing their projects and programs.
Agencies need another authority (the NCA) to be able to settle their payables to
suppliers, contractors, creditors for the value of goods/services/projects
delivered/completed/accepted.
REFERENCES
National Government Issuances/Documents

• Admin Orders / Executive Orders
• Circulars (DBM, DND, BTR, etc)
• Powerpoint Presentation and Lectures (DBM)
• Wikipedia
• Google
• AFP Policies, Directives, Guidelines, Manuals, Presentations
40
Case Analysis 1
The Armed Forces of the Philippines (AFP) is responsible for upholding the sovereignty
of the country, supporting its Constitution, and defending its territory against all enemies.
It has three (3) Major Services.
It is composed of the Philippine Army, the Philippine Navy, and the Philippine Air Force.
AFP Vision 2028: A World-class Armed Forces, Source of National Pride.

Mission: Protecting the People, Securing the State
Core Values: Honor, Service, Patriotism
41
Command Guidance
Mandate:
The AFP being the
protector of the people, plays a
crucial role in preserving peace
and harmony by defending the
country against terrorism and
GENERAL CIRILITO E
SOBEJANA PA other forms of threats, whether
Chief of Staff, AFP
of civilian or military nature.
Time Context:
During the pandemic COVID-19
Background:
The nation is currently experiencing a health crisis that is going-on now for more
than a year. The AFP personnel, aside from the performance of its traditional role as the
protector of the state, are performing functions as one of the front liners and are very
much prone to contracting COVID-19.
Statement of the Problem:

To be able to carry out its mission and other function, the personnel must remain
healthy and in good shape by sustaining the medical requirements to include but not
limited to PPEs, multivitamins and other food supplement.
Additional funds are needed without sacrificing the allocation for the performance
of its main function.
SWOT ANALYSIS
Strengths
Personnel are being educated on the symptoms of the virus, proper

handling and care once infected
42
The AFP has its own military hospitals
One of the agencies being prioritized during the vaccination
Personnel are trained to multi-task
Weaknesses
Personnel are also humans and are prone to virus infection
Limited supply of PPE and
Military hospitals need to accommodate not only COVID-19 cases of its

personnel and its dependents
Not all personnel are vaccinated already, due to limited supply and some
have comorbidities
Performing duties beyond the capacity which are supposedly functions of
LGUs, health care workers, law enforcers
Opportunities
Recipient of vaccine and PPE donations
Personnel to be prioritized for the vaccination
Accomplishment for the AFP for being able to contribute in the crisis
Dependents of its personnel will be vaccinated also
43
Threats
Dependents are still waiting for the availability of vaccine
Mission related functions may be sacrificed
Performing duties beyond the capacity which are supposedly functions of

LGUs, health care workers, law enforcers
Resources intended primarily for the performance of mandate were
realigned

ACA 1:
Realignment of funds
 Advantage
There are existing AFP issuances of policies and directives prohibiting conducts
of social gatherings.
Can resort to small value procurement
 Disadvantage
Duration of the approval of the realignment of funds can’t be predetermined
ACA 2:
Procurement thru Capital Outlay of unprogrammed expenses
 Advantage
Programming of unfunded PAPs of the AFP and its subordinate units will be
based on the determined much needed requirements and not on ceiling amount.
 Disadvantage
Approval of Capital Outlay is as the DBM level/National level
It will be generated from the surplus funds or recouped funds
ACA 3:
Source out thru donation from private entities, partner agencies and other
countries
 Advantage
The Philippines has allied countries or forces
 Disadvantage
There is no assurance as to the timeliness of donation, by quantity and quality
Recommendation:
ACA 1 and ACA 3:
Realignment of funds and source out thru donation from private entities, partner
44
agencies and other countries
Conclusion:
The AFP and its subordinate units will have a choice as to what PAPs be
realigned according to its priority.
Likewise, units Commanders can obligate these funds and procure items based
on the requirements needed.
Budget Officers of each subordinate units have the flexibility on the programming
and budgeting of their own funds.
However, due to unprogrammed expenditures, the AFP still needs the support of
private entities, partner agencies and allied countries
45
SESSION No. 4
TOPIC : NATIONAL GOVERNMENT ACCOUNTING SYSTEM
(NGAs) for NATIONAL GOVERNMENT AGENCIES (Part 1)
PRESENTED BY : Roy Marion J. Revellame
■ The implementation of the Government Accounting Manual (GAM) for National
Government Agencies is a milestone in the Philippine Government in so far as
public sector accounting is concerned. The GAM will supersede the New
Government Accounting System (NGAS) Manual that national government
agencies have been using since 2002 when the COA, based on the authority
granted under Sec. 2 (2), Art.IX-D of the 1987 Constitution, prescribed the use of
the NGAS effective 1 January 2002.
■ GOVERNMENT ACCOUNTING DEFINED (Title III, Chapter 1, Section 109 of PD

1445) Government Accounting encompasses the processes of analyzing,
recording, classifying, summarizing and communicating all transactions involving
the receipt and disposition of government funds and property and interpreting the
results thereof.
■ BASIC FEATURES OF GOVERNMENT ACCOUNTING: (Accounting Policies,

Section 4)
■ a. ACCRUAL ACCOUNTING – under this method, all expenses shall be

recognized when incurred and reported in the financial statements in the period to
which they relate. Income shall be on accrual basis.
■ b. ONE FUND CONCEPT – Separate fund accounting shall be done only when
specifically required by law or by a donor agency or when otherwise necessitated
by circumstances subject to prior approval of the Commission
■ c. CHART OF ACCOUNTS AND ACCOUNT CODES – A new chart of accounts

and coding structure with a three-digit account numbering system shall be
adopted.
■ d. BOOKS OF ACCOUNTS – All national agencies shall maintain two sets of

books:
46
■ Regular Agency (RA) Books
■ 2. National Government (NG) Books
■ e. FINANCIAL STATEMENTS
■ f. TWO-MONEY COLUMN TRIAL BALANCE – showing the account balances

shall be used.
■ g. ALLOTMENT AND OBLIGATION – Separate registries shall be maintained to

control the allotments and obligations for each of the four classes of allotments
namely: Capital Outlay, Maintenance and Other Operating Expenses, Personal
Services and Financial Expenses
■ h. NOTICE OF CASH ALLOCATION (NCA) – Authority issued by the DBM to

central, regional and provincial offices and operating units to cover the cash
requirements of the agencies.
■ i. FINANCIAL EXPENSES – Such as bank charges, interest expenses and other

related expenses shall be separately classified from Maintenance and other
Operating Expenses (MOOE).
■ j. PERPETUAL INVENTORY OF SUPPLIES AND MATERIALS – Supplies and

materials purchased for inventory purpose shall be recorded using the perpetual
inventory system. Regular purchases shall be coursed thru the inventory account.
■ k. VALUATION OF INVENTORY – Cost of ending inventory of supplies and

materials shall be computed thru the moving average method.
■ l. MAINTENANCE OF SUPPLIES AND PROPERTY, PLANT & EQUIPMENT

LEDGER CARDS – For appropriate check and balance, the Accounting units of
agencies, as well as the Property Offices, shall maintain Supplies Ledger
Cards/Stock Cards by stock number and Property Plant & Eqpt. Ledger cards/
Property cards by category of property, plant & eqpt. Respectively.
■ m. CONSTRUCTION OF ASSETS – For assets under construction, the

construction period Theory shall be applied for costing purposes. Bonus paid to
47
the contractor for completing the work ahead of time shall be added to the total
cost of the project. Liquidated damages charged and paid for by the contractor
shall be deducted from the total cost of the project.
■ n. REGISTRY OF PUBLIC INFRASTRUCTURES – Summary shall be maintained

for each classification of projects. Examples are: Registry of Public Infrastructures
– Bridges/ Roads and Parks. A schedule of Public Infrastructures/ Reforestation
Projects shall be prepared at year end and included in the Notes to Financial
Statements.
■ o. DEPRECIATION – The straight-line method of depreciation shall be used.

Depreciation shall start on the 2nd month after purchase of the property, plant &
equipment, and a residual value equivalent to 10% of the purchase cost shall be
set up.
■ p. RECLASIFFICATION OF ASSETS – Serviceable assets no longer being used

shall be reclassified to “Other Assets” account and shall not be subject to
Depreciation.
■ q. ALLOWANCE FOR DOUBTFUL ACCOUNTS – An allowance for doubtful

accounts shall be set up for estimated uncollectible trade receivables to allow for
their fair valuation.
■ r. ELIMINATION OF CONTINGENT ACCOUNTS – Contingent accounts shall no

longer be used. All financial transactions shall be recorded using the appropriate
accounts. Cash shortages shall be recorded under receivable accounts “Due from
Officer and Employees”.
■ s. RECOGNITION OF LIABILITY – Shall be recognized at the time goods and

services are accepted and supplier/creditor bills are received.
■ t. INTEREST ACCRUAL – Interest income and/or expense shall be accrued and

recognized in the books of accounts. u. ACCOUNTING FOR BORROWINGS AND
LOANS – All borrowing and loans incurred shall be recorded to the appropriate
liability accounts.
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■ v. ELIMINATION OF NEGATIVE JOURNAL ENTRIES – It shall be stopped.
Acquisition/Disposition of assets shall be debited/credited to the appropriate
assets’ accounts. If an error is committed, correcting entry to adjust the original
entry shall be prepared.
■ w. PETTY CASH FUND – Shall be maintained under the imprest system. All
replenishment shall be directly charged to the expense account and at all times,
the petty cash fund shall be equal to the total cash on hand.
■ x. FOREIGN CURRENCY ADJUSTMENT – Cash deposits in foreign currency and

outstanding foreign loans shall be computed at the exchange rate prescribed by
the Bangko Sentral ng Pilipinas at balance sheet date.
■ ACCOUNTING RESPONSIBILITY
■ Under PD 1445, accounting responsibility for all government funds and property is
entrusted, immediately and primarily to the:
■ 1. HEAD OF THE GOVERNMENT AGENCY – To minimize losses and

other types of irregularities in the utilization of all government resources, and the
periodic reporting to concern authorities. Shall exercise the diligence of a good
father or a family in supervising accountable officers to prevent incurrence of loss
of government funds and property.
■ 2. ACCOUNTABLE OFFICERS – They are the persons entrusted with the actual
possession or custody of government funds or property. As such he shall be
properly bonded. Accounting responsibilities in the government by virtue of the
provision of the Constitution of the Philippines, laws, Presidential Decrees and
other issuances are shared primarily by:
■ 3. COMMISSION ON AUDIT – (COA)
■ 4. Department of Budget and Management (DBM)
■ 5. Department of Finance (Bureau of Treasury)
■ 6. National Government Agencies (NGAS)
49
■ GENERALLY ACCEPTED (STATE) ACCOUNTING PRINCIPLES
■ ACCOUNTING PRINCIPLES are propositions, a general law or rule adopted,

which on the basis of reasons, demonstrated usefulness and general acceptance
as the best way of carrying out the function and achieving the objectives of financial
accounting.
■ TWO SOURCES OF SUPPORT:
■ PRIMARY SOURCES:
■ a. Pronouncement of the Commission on Audit – COA is mandated by the Phil.

Constitution to promulgate accounting rules and regulations to facilitate the
keeping and enhance the international value of the accounts of the government.
■ b. Provision of Law – Sec 112 of the PD 1445, provides that generally accepted
accounting principles should be observed in government accounting entities as
provided they do not contravene existing laws and regulations
■ SECONDARY SOURCE
■ The principles to be followed by government entities includes the following:
■ a. The Accounts of the Agency shall be kept in such detail and at the same time
be adequate to furnish the information needed by fiscal or control agencies of the
government.
■ b. The highest standard of honesty, objectivity and consistency shall be

observed in the keeping of accounts to safeguard against inaccurate or misleading
information.
■ c. The government accounting system shall be on Double-Entry Basis with the

general ledger in which all financial transactions are recorded. Subsidiary record
shall be kept where necessary.
■ d. The Chart of Accounts has three-digit coding system and provides for
responsibility accounting.
50
■ e. The Chart of Accounts categorizes Personal Services, Maintenance and
Other Operating Expenses and Financial Expenses as Expenses, obligation
charged to capital outlay are recorded.
■ f. Matching Principles – The principle that requires the matching of revenues and
expenses is adopted.
■ Modified accrual method is used.
■ Depreciation accounting for property, plant and equipment using the straight-line
method.
■ Allowance for doubtful accounts is taken up.
■ Asset method is followed for prepaid expenses
■ g. On Financial Statement:
■ Fairness of Presentation – this refers to the overall propriety of disclosing

financial information. Full disclosures in financial aspects requires observance of
the standards of reporting.
■ Compliance – This report shall be in accordance with prescribed government

requirements and international accounting standard of reporting.
■ Timeliness – all needed reports shall produce promptly to be of maximum

usefulness.
■ Usefulness – Financial reports shall be carefully designed to present information

that is needed and useful to report users.
REFERENCES
■ https://www.coa.gov.ph
■ https://www.scribd.com/
■ https://www.academia.edu/
■ https://www.myaccountingcourse.com/
■ https://www.lawphil.net/
51
Case Analysis 1
NATIONAL IRRIGATION ADMINISTRATION

TIME CONTEXT
2018 to Present
The National Irrigation Administration (NIA) is a government-owned and controlled
corporation primarily responsible for irrigation development and management. It was
created under Republic Act (RA) no. 3601on 22 June 1963. Its charter was amended
by Presidential Decree no. 552 on 11 September 1974 and PD 1702 on 17 July 1980.
Both increased the capitalization and broadened the authority of the Agency.
NIA's forerunner was the Irrigation Division of the defunct Bureau of Public Works. NIA
was placed under the Office of the President (OP) upon its creation. It was attached to
the Department of Public Works, Transportation, and Communication under PD No.1,
dated 23 September 1972. The issuance also integrated all irrigation activities under the
Agency. The Administrative Code of 1987, dated 25 July 1987, attached NIA to both the
Department of Public Works and Highways (DPWH), and Department of Agriculture
(DA). But NIA remained attached to DPWH. It was transferred to OP pursuant to
Executive Order No. 22, dated 14 September 1992. Then, it was attached to DA
under Administrative Order No. 17, dated 14 October 1992.
Executive Order no. 165, Transferring the National Food Authority, National Irrigation
Administration, Philippine Coconut Authority, and Fertilizer and Pesticide Authority to
the Office of the President, 5 May 2014. Memorandum order no. 70, Providing for the
functions of the Presidential Assistant for Food Security and Agricultural Modernization,
5 May 2014.
Memorandum from the Executive Secretary - Office of the President, the Secretary of
the Office of the Cabinet Secretary was designated Acting Chairperson of the NIA
Board of Directors, 3 November 2016.
How can National Irrigation Administration (NIA) cope up with National Government
Agencies (NGAs) in terms of accounting system?
• OBJECTIVE OF THE STUDY

This case study aims to help National Irrigation Administration in coping up with the
National Government in minimizing paper works through online transactions.
STRENGTHS
• Fast Transaction
• Easy to Learn
• Organized Documentation
• Prompt Accessibility
WEAKNESSES
• Dependable on Internet Access
• Accuracy of Data
52
• Storage Capacity
OPPORTUNITIES
• Favorable Work Arrangement
• Limit Margin of Errors
• Efficient exchange of data.
THREATS
• Computer literacy for personnel.
• Data breach.
• Limited storage capacity.
Alternative Course of Action 1 (ACA 1)
Buy higher capacity for data storage.
Advantage
Can store huge quantities of data.
Disadvantage
Costly.

Wait for National Government to develop a system exclusively for GOCC’s.
Advantage
Official system to be used by National Irrigation Administration.
Disadvantage
No assurance as to when will it be finalized.
Hire Information Technology (IT) experts.
Advantage
Temporary system for National Irrigation Administration to use.
Disadvantage
Can be replaced when the system of National Government fully develops.
CONCLUSION/RECOMMENDATION
With the emergence of online systems from the National Government Agencies (NGAs)
and Local Government Units (LGUs). The Government Owned and Controlled
Corporations (GOCC’s) were outdated. For National Irrigation Administration to cope up
with the LGU’s and NGA’s the researcher would like to recommend Alternative Course
of Action 1 (ACA 1). Purchasing of higher capacity for data storage. It may be costly but
it will be faster to implement than to wait for the official system to be developed by the
National Government and cheaper than hiring IT experts.
REFERENCES
https://www.nia.gov.ph/
https://coa.gov.ph/
https://www.thesaurus.com/
https://www.dictionary.com/
53
SESSION No. 4
TOPIC : NATIONAL GOVERNMENT ACCOUNTING SYSTEM
(NGAs) for NATIONAL GOVERNMENT AGENCIES (Part 2)
PRESENTED BY : Kervy Ann F. Barlis
Government Accounting Manual (GAM)
It superseded the New Government Accounting System Manual that National

Government Agencies have been using since 2002.
▪ The revision was prompted by the implementation of the Philippine Public Financial
Management Reform Roadmap, which includes the development of the Philippine Public
Sector Accounting Standards (PPSAS) that are harmonized with International Public
Sector Accounting Standards (IPSAS)
▪ Consists of three (3) volumes and contains 81 Accounting Books, Registries, Records,
Forms and Reports and 1,221 Account Titles
Related Laws and Issuances:
The implementation of GAM is in accordance with the following laws and issuances:
1. 1987 Constitution Article 9-D, Sec. 2 (2) which outlined the authority of COA to define
the scope of its audit, establishment of techniques and methods, and promulgation of
accounting and auditing rules and regulations.
2. COA Circular 2015-007 dated October 22, 2015 prescribing the Government
Accounting Manual for Use of all National Government Agencies.
3. COA Circular 2013-002 dated January 30, 2013 mandating the adoption of the Revised
Chart of Accounts for all National Government Agencies effective Jan. 1, 2014.
Revised Chart of Accounts for

National Government Agency
Sec. 1. Definition. The Chart of Accounts provides the framework within which the
accounting records are constructed. It is defined as a list of general ledger accounts
consisting of real and nominal accounts.
Sec. 2. Basis. The Chart of Accounts is prescribed for use by all national
government agencies and local government units. The descriptions of all the accounts
and the instructions as to when these are to be debited and credited are provided to
achieve uniformity in the recording of government financial transactions.
54
The Revised Chart of Accounts is under Volume III of the Government Accounting Manual
(updated 2015). During the initial implementation of the PPSAS and the Unified Accounts
Code Structure (UACS), and during the finalization of the Government Accounting Manual
(GAM) for NGAs, the need to provide additional accounts for some financial transactions
and to modify some existing account codes and description came about.
The purpose of the revisions is to enable the agencies to properly recognize and present
their financial transactions.
Sec. 3. Elements of Financial Statements.
Elements of financial statements of government agencies are those elements that relate
to the status or measurement of financial position and measurement of performance of
government agencies, which are relevant to decisions that would require the commitment
of resources.
Those elements directly related to the measurement of financial position as shown in the
Balance Sheet are assets, liabilities and equity. The elements directly related to the
measurement of performance which are shown in the Statement of Income and Expenses
are revenue/income and expenses.
The definitions of the different elements are as follows:
a. Assets – economic resources of an agency that are recognized and measured in

conformity with generally accepted accounting principles.
Assets also include certain deferred charges that are not resources but that are
recognized and measured in conformity with generally accepted accounting principles.
b. Liabilities – economic obligations of an agency that are recognized and measured

in conformity with generally accepted accounting principles. Liabilities also include
certain deferred credits that are not obligations but that are recognized and
measured in conformity with generally accepted accounting principles.
c. Equity – residual interest of the government in an agency which is the excess of

the agency’s assets over its liabilities.
d. Revenue/Income – increase in economic benefits during the accounting period in

the form of inflows or enhancements of assets or decrease of liabilities that results
in increases in equity.
e. Expenses – decrease in economic benefits during an accounting period in the form

of outflows or depletions of assets or incurrence of liabilities that results in
decreases in equity.
55
Sec. 4. Balance Sheet Accounts.
The balance sheet accounts consist of assets, liabilities and equity.

These are classified into the following:
Assets
Current Assets / Cash / Receivables / Marketable Securities
Inventories / Prepaid Expenses / Other Current Assets
Long-Term Investments / Property, Plant and Equipment / Other Assets
Liabilities
Current Liabilities
Long-Term Liabilities
Other Liabilities
Equity
Government Equity
Sec. 5. Revenue/Income and Expense Accounts.
The revenue/income and expenses consist of the following:
Revenue/Income
General Income Accounts
Specific Income Accounts
Expenses
Personal Services
Maintenance and Other Operating Expenses
Financial Expenses
Sec. 6. Classification of Revenue/Income
a. General Income Accounts - This account classification encompasses all types of

revenue/income generated by government agencies in the exercise of their administrative
and regulatory function, income from public enterprises/investments, and income from
grants and donations including subsidies.
b. Specific Income Accounts - This account classification encompasses all taxes

imposed on taxable income, properties, and use or sale of goods and services, taxes on
international trade and transactions and other taxes including fines and penalties. Also
included under these accounts are income generated from local government, schools and
hospital operations.
56
Sec. 7. Classification of Expenses
a. Personal Services (PS) - include basic pay, all authorized allowances, bonus, cash
gifts, incentives and other personnel benefits of officials and employees of the
government.
b. Maintenance and Other Operating Expenses (MOOE) - These accounts include

expenses necessary for the regular operations of an agency like, among others, traveling
expenses, training and seminar expenses, etc.
c. Financial Expenses (FE) - These accounts include bank charges, interest

expense, commitment charges, documentary stamp expense and other financial charges.
Sec. 8. Intermediate Accounts
These are accounts which are closed ultimately to the Government Equity account at the
end of the accounting period.
These include Cost of Goods Sold, Income and Expense Summary, Prior Years’
Adjustments, Retained Operating Surplus, Subsidy to Regional Offices/Staff Bureaus and
Subsidy to Operating Units, among others.
Sec. 9. Account Codes
Account Codes. The Chart of Accounts consists of three-digit codes grouped as follows:
57
Sec. 10. The Chart of Accounts
The Chart of Accounts is prescribed for use of the national government agencies and
local government units.
Coding Scheme
Codes are assigned to account groups to facilitate location of accounts in the general and
subsidiary ledgers, to provide systematic arrangement and classification of accounts and
facilitate preparation of the consolidated financial reports.
Financial Statements
What are Financial Statements?
Financial statements are a structured representation of the financial position and financial
performance of an entity. The objectives of general-purpose financial statements are to
provide information about the financial position, financial performance, and cash flows of
an entity that is useful to a wide range of users in making and evaluating decisions about
the allocation of resources.
The General Purpose of Financial Statements are:
• providing information about the sources, allocation, and uses of financial resources;
58
• providing information about how the entity financed its activities and met its cash
requirements;
• providing information about the financial condition of the entity and changes in it;
Components of Financial Statements

a) Statement of Financial Position
b) Statement of Financial Performance
c) Statement of Changes in Net Assets/Equity
d) Statement of Cash Flows
e) Statement of Comparison of Budget and Actual Amount
f) Notes to Financial Statements

The Statement of Financial Position is a formal statement which shows the financial
condition of the entity as at a certain date.
It includes information on the three elements of financial position, namely, assets,
liabilities and equity.
b.) Statement of Financial Performance

The Statement of Financial Performance shows the results of operation/performance of
the
entity at the end of a particular period.
c.) Statement of Changes in Net Assets/Equity

The Statement of Changes in Net Assets/Equity shows the changes in equity between
two
accounting periods reflecting the increase or decrease in the entity’s net assets during
the
year.
d.) Statement of Cash Flows

The Statement of Cash Flows summarizes the cash flows from operating, investing and
financing activities of an entity during a given period. It identifies the sources of cash
inflows,
the items on which cash was expended during the reporting period, and the cash balance
as
at the reporting date.
e.) Statement of Comparison of Budget and Actual Amount

A comparison of budget and actual amounts will enhance the transparency of financial
reporting in government. This shall be presented by government agencies as a separate
additional financial statement.
f.) Notes to Financial Statements

Notes to financial statements are integral parts of the financial statements. Notes provide
additional information and help clarify the items presented in the financial statements. It
59
provides narrative description or disaggregation of items in the financial statements and
information about them that do not qualify for recognition.
Responsibility for Financial Statements
a. for individual entity/department FSs – the head of the entity/department central office
(COf) or regional office (RO) or operating unit (OU) or his/her authorized representative
jointly with the head of the finance/accounting division/unit; and
b. for department/entity FSs as a single entity – the head of the entity/department central
office (Cof) jointly with the head of the finance unit.
The Statement of Management Responsibility for Financial Statements shall serve as the
covering letter in transmitting the entity financial statements to the COA, and other
regulatory agencies and other entities. It shows the entity’s responsibility for the
preparation and presentation of the financial statements.
REFERENCES:
www.coa.gov.ph
60
Case Analysis 1 LANDBANK OF THE PHILIPPINES
Landbank of the Philippines as a government banking agency strictly follow the rules and
regulations of Government Accounting Manual (GAM) (prescribed by COA) for its
accounting and auditing standards to effectively implement its programs, projects, and
activities.
1. Name of Company / Association
The Land Bank of the Philippines is a government financial institution that strikes a
balance in fulfilling its social mandate of promoting countryside development while
remaining financially viable.
LANDBANK is by far the largest formal credit institution in the rural areas.
It also ranks among the top five commercial banks in the country in terms of deposits,
assets and loans.
Major Roles of LANDBANK:
• An implementing agency of CARP involved in land evaluation, compensation to

owners of private agricultural lands, and collection of amortizations from CARP farmer-
beneficiaries.
• Provision of credit assistance to small farmers and fisherfolk and ARBs.
• An official depository of government funds.
• A government bank with a social mandate to spur countryside development.
2. Time Context
The study analyses the present situation / status of the Landbank in the country. It is a
continues challenge for a bank as they continue to maintain its rank in the market.
3. Point of View
Evaluating the status of Landbank in the present market is necessary to develop strategy
and market changes to deal with the commercial threats. The bank company should offer
something new or implement new strategies to maintain its clients.
4. Short Historical Background
LandBank was created when Republic Act 3844 also known as the Agricultural Land
Reform Code was passed on August 8, 1963 to finance the acquisition and distribution of
61
agricultural estates for division and resale to small landholders as well as the purchase
of the landholding by the agricultural lessee.
In 1965, LandBank’s by-laws were approved and its first board of directors was formed
with the Secretary of Finance as chairman. In 1973, by virtue of Presidential Decree 251,
the Bank was granted with a universal banking license (the first bank in the Philippines to
be issued such a license) with a social mission to spur countryside development.
This charter granted the Bank to expand lending to non-agricultural activities such as
industrial, real estate development and other commercial activities. Expanded
commercial banking powers were granted to support the Bank’s land reform function and
credit assistance to small farmers.
At present, LandBank has taken broader and more dynamic role in supporting the
government’s initiatives geared towards nation building and poverty alleviation.
VISION AND MISSION
LandBank’s vision is to be the premier countryside development financial institution of the

country. It commits itself to highest standards of ethics and excellence in service.
LandBank’s development goal is centered on promoting sustainable growth and
development in the countryside.
The priority client sectors have been defined by LandBank as composing of: small farmers
and fisherfolk; micro, small and medium enterprises; local government units; and other
agricultural based industries.
5. Statement of the Problem
The bank company needs to scale up the performance of its organization and address
issues that cause its clients to lose their trust in them. They need to find out exactly what
the clients want and to try to satisfy that.
Can Landbank catch up with the Changing Market?
6. OBJECTIVES
The objectives for this case study are:
To determine the problems faced by emerging or developing farmers, who are clients of,
or are /funded by the Land Bank
• To improve and enhance service strategies especially during the new normal
• To create more opportunities for market share and global positioning
62
• To adapt to new trends and the changing environment
RANKING
7. Area of Consideration
SWOT Analysis
STRENGTHS
• It is easy to do business with LBP as they have 395 Branches strategically

located nationwide. LandBank remains as the only bank present in each of the
country’s 81 provinces.
• Offer various banking services for free or at low costs.
• Guaranteed availability of capital.
• It's one of a few banks that still offer an ATM savings account with a maintaining
balance requirement of only 500 pesos.
• Its mandate is to help farmers and agricultural businesses.
• Market or clients are guaranteed.
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WEAKNESSES
• Landbanks’s clients are mostly farmers and government employees but they lack
branches at Rural Locations.
Inconvenience to clients because of limited ATMs locations and limited banking
hours (Mon-Fri).
• The LBP as the Top 2 bank in terms of assets an deposits has a lot of clients
but most clients complains of poor customer service.
• The technology that is used by the company is of the low cheaper quality which
directly imposes effect on the factors of service.
• No prestigious awards received compared to other banks.
• No good advertising
OPPORTUNITIES
• New innovations and strategies can improve customer service.

• More ATM/branches to reach out to a bigger market.
• More investments can land LBP at the Top spot.
• The LBP can be the best bank if improvement would be prioritize.
THREATS
• Increasing competition in the industry.

• Poor technological innovations can change customer motivation from one
driven by low cost to the one driven by quality and convenience.
• The government intervention and economic disasters affect the performance and
leads the agency in the declining position.
8. Alternative Courses of Action (ACA)
1. System Improvements - To implement new technological innovations in its

operations and to adopt current banking trends
Advantages
• Clients would not take the idea of shifting to other banks
• Better and faster transactions in the banks
• More clients would be served
• More accessible and secure banking system
• Complaints from clients would diminish
• Maximize long-term financial performance and value of the business
Disadvantages
• It will require additional expenses on part of the company budget.
• Clients, particularly those from rural areas may need time to adjust to new
technological innovations .
64
2. Staff Development - To strictly promote professionalism and integrity and to
provide its employees a work environment that encourages growth and rewards
excellence
Advantages
• Better performance and quality service would be given by bank employees
• More clients would be served and be satisfied
• More compensation package will boost the morale of personnel
Disadvantages
• Employees misunderstand and ignore changes and new processes
• Rewards may cause unhealthy competition and disputes in the office
3. Establishing more branches in areas with high demand and adding ATM even
in
Rural Areas
Advantages
• More farmers or those blue-collar workers can be served and be encouraged to
save money
• Bank would be more accessible
• Create more employment
Disadvantages
• Success and stability of bank in some rural areas would not be guaranteed
4. Provide more secure and effective ATM Supervision, Operation,

Maintenance Service
Advantages
• Clients would not take the idea of shifting to other banks because of unavailability
of ATM
• More clients would be served
• More secure banking system
• Predictive maintenance helps prevent ATM service outages so more customers
would have successful transactions
• Avoid ATM skimming
• Lessen expenses on broken ATM and repairs
• Maximize long-term financial performance and value of the business
Disadvantages
9. Conclusion
65
From its initial role as the financing arm of the governments agrarian reform program,
LANDBANK has evolved into a full-service commercial bank.
LANDBANK is faced with many challenges not only in its own operation but also in the
sustenance of its social mandate - to promote countryside development.
Changes in the macroenvironment social, economic, political, and technological have

greatly changed the complexity of competition in the industry and have given rise to new
opportunities and threats.
LANDBANK has already developed a good stand in the banking industry and started its
modern approach to its system. However, due to the pandemic, the Bank is currently in
a default position and unable to focus on its development.
LANDBANK therefore has to re-examine existing processes and strategies and formulate
new solutions to adapt to the changes in the environment.
10. Recommendation
Based from my conclusion, I recommend the following for LBP’s implementation:
ACA #1
System Improvements - To implement new technological innovations in its operations and
to adopt current banking trends
ACA #2
Staff Development - To strictly promote professionalism and integrity and to provide its
employees a work environment that encourages growth and rewards excellence
ACA #4
Provide more secure and effective ATM Supervision, Operation, Maintenance Service
Because not one bank offers all the services that we want, capable people usually have
accounts in more than one bank. These banks offer a lot of services, including Internet
banking, investment options and private and corporate banking.
For LANDBANK, there are many things that could be done in order for them to compete
in competitive market conditions and stabilize their market status. The proposed ACAs
are based on the limitations, strengths, opportunities and observations from the clients.
These solutions would enhance the service and sustain the Banks competitive
advantages.
Accordingly, these factors might help the company become sustainable, beneficial to
people and deliver economic profit.
66
REFERENCES:
https://www.landbank.com/sites/default/files/basic/MANUAL%20OF%20ACCOUNTING
%20UNIT_1.
https://www.dbm.gov.ph/wpcontent/uploads/Issuances/2018/Circular%20Letter/CIRCUL
AR-LETTER-NO-2018-14.pdfhttps://www.officialgazette.gov.ph/section/briefing-
room/local-government-units/
https://www.landbank.com/about-us
https://www.glassdoor.com/Reviews/Land-Bank-of-the-Philippines-Reviews-
E580451.htm
https://toughnickel.com/personal-finance/BPI-Philippines-BDO-Philippines-Banks
67
SESSION 5
TOPIC : AUDITING – National Govt. Agencies (Part 1)
PRESENTED BY : Catherine N. Anito
Definition of Auditing
 The word ‘audit’ comes from the Latin word “audire” which means “to hear” and
during the earlier times was considered synonymous with control, check, revise or
inspect
 Auditing typically refers to a financial statement audits or also an objective
examination and evaluation of a company’s financial statements that is usually
being performed by an external third party
 Auditing is also regarded as an important term usually used in accounting that
describes the examination and verification of a company’s financial records and
statements
 The main aim of the conduct of auditing is to ensure that the financial information
are presented fairly and accurately and in accordance with the relevant accounting
standards
 Auditing was usually being conducted to the three (3) primary financial statements
such as the income statement, balance sheet, and cash flow statement
 Auditing was usually conducted internally by the employees of an organization or
externally by an outside Certified Public Accountant from a particular accounting
firm
 Auditing can also be defined as an on-site verification activity much like similar to
an inspection or examination, of the process or quality system in order to ensure
compliance to requirements and standards established
 Auditing can be applied to an entire organization or can also only be specific to a
certain function, process and system
 Auditing can also be referred to as a systematic examination of the books and
records of a particular business or any other organization with an aim to ascertain
or verify and also to report upon the facts that is related to the financial operations
and also its results thereof
 Auditing is also considered as one of the most dynamic areas of accounting
sciences
 The main aim/objective of auditing is to enable the auditor to express an opinion
as to where the financial statements are prepared and by an applicable financial
reporting framework
 Auditing or government auditing was defined under the Presidential Decree No.
1445 or otherwise known as the State Audit Code of the Philippines, specifically
under Section 53 – “Government auditing is the analytical and systematic
examination and verification of financial transactions, operations, accounts, and
reports of any government agency for the purpose of determining their accuracy,
68
integrity, and authenticity, and satisfying the requirements of law, rules and
regulations”
Other Definitions of Auditing by Authors and Organizations

 An audit is the independent examination of financial information of any entity,
whether profit-oriented or not and irrespective of its size, or legal form when such
an examination is conducted to express an opinion thereon – by the International
Federation of Accountants (IFAC)
 Audit is an independent examination of the financial books and records of some
person or persons responsible or accountable to the third party with a view of
verifying the accountancy of statement prepared by or for the accounting party –
by R.R. Comber
 Audit is examination of the books, accounts, and voucher of a business, as will
enable the auditor to satisfy himself that the balance sheet is properly drawn up,
to give a true and fair view of the State of the affairs of the business, and whether
the Profit and loss Account gives a true and fair view of profit or loss for the financial
period, according to the best of his information and the explanations given to him
and -as shown by the books; and if not, in what respect he is not satisfied.– Spicer
& Pegler
 Auditing is a systematic examination of the books and records of a business or the
organization to ascertain or verify and to report upon the facts regarding the
financial operation and the result thereof – Montgomery
Classification of Audit
There are different classifications of audit and this includes the following:
 Compliance Audit – a classification of audit which pertains to a comprehensive
review of an organization’s adherence to regulatory guidelines. The main objective
of this type of audit is to evaluate the strength and thoroughness of compliance
preparations, security policies, user access controls and also the differing risk
management procedures for strict compliance of a company or organization.
 Construction Audit – a classification of audit that is involved in various aspects
of a certain project in order to ensure that it is operating effectively and
appropriately and aligned with the contract provided. This was usually being
conducted by a construction company and is often requested by a project
stakeholder or government officials especially on certain public projects such as in
infrastructure.
 Financial Audit – this was usually referred to as an accounting process that is
often being applied in the business aspect. Its process involved the use of an
individual body in order to evaluate the various financial transactions and
69
statements of a business in order to present a more accurate amount of business
transactions of a certain company.
 Information Systems Audit – usually a general financial audit that is involved in
verifying an organization’s accounting records and their financial statements and
in order to make sure that every financial transaction made can be traced.
 Investigative Audit – this classification of audit is highly involved in the
examination of accounts and also the use of accounting procedures in order to
discover financial irregularities and also to follow the movement of funds and also
the in and out flow of assets in organizations.
 Operational Audit – refers to a classification of audit which is involved in the
systematic review of the effectiveness, efficiency and also the economy of
operation. Some of the key characteristics of this audit is that it is systematic,
future-oriented, and independent evaluation of various organizational activities and
is also considered to be a more comprehensive form of an internal audit.
 Tax Audit – pertains to the official examination or auditing usually conducted by
the tax department or agency to the tax return that was being declared by
taxpayers in accordance to the law.
THE COMMISSION ON AUDIT

What is the Commission on Audit?
 The Commission on Audit (COA) is an independent constitutional commission
which was established by the Constitution of the Philippines Importance of the
Commission on Audit and which maintained the independence of the Commission
on Audit as the “supreme auditing arm of the Philippine government”
 The following showed the logo for the Commission on Audit of the Philippines:
Figure 1. The Official Logo of the Commission on Audit
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Organizational Structure of the Commission on Audit
 The following showed organizational structure of the Commission on Audit
 The Commission Proper – promulgated under the Presidential Decree No. 1445
Section 6 indicated that “The Commission Proper shall sit as a body to determine
policies, promulgate rules and regulations, and prescribe standards governing the
performance by the Commission of its power and functions”
 Further, under the Presidential Decree Section 13 for the National Government
Audit Office – it will have the following functions:
1. Formulate and develop plans, programs, operating standards and other
administrative techniques for the implementation of auditing rules and
regulations in different departments, regions, bureau and offices of the
National Government
2. Formulate accounting rules and regulations for departments, regions,
bureaus, and offices of the National Government
3. Advise and assist the Chairman on matters pertaining to the audit of the
department, regions, bureaus, and offices of the National Government
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Key Services and Functions of COA
The following are the principal duties of the commission include the following as
according to Article IX-D of the 1987 Philippine Constitution:
1. 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.
2. 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.
3. Submit annual reports to the President and the Congress on the financial condition
and operation of the government.
4. Recommend measures to improve the efficiency and effectiveness of government
operations.
5. Keep the general accounts of government and preserve the vouchers and
supporting papers pertaining thereto.
6. Decide any case brought before it within 60 days.
7. Performs such other duties and functions as may be provided by law.
COA Auditing Framework

The COA Audit Framework includes the Financial Audit, Compliance Audit and
Performance Audit:
Figure 2. COA Audit Framework
 Presented is a graphical presentation of the COA framework common to all audit

streams – the financial, compliance, and performance audit. The orange box
shows the strategic audit planning and risk identification which is comprised of the
preliminary engagement, planning, execution, and reporting. The blue box on the
other hand, shows the four stages of the audit and which gives greater emphasis
72
or consideration on quality control that also encompasses or integrated in the four
stages
References:
ASQ. (2018). What is auditing? ASQ. Retrieved from

https://asq.org/quality-resources/auditing
Corporate Finance Institute. (2019). Auditing. CFI. Retrieved from

https://corporatefinanceinstitute.com/resources/knowledge/accounting/what-is-
an-audit/
IEduNote. (2020). Audit: definition, objectives, features, origin, limitations.

IEduNote. Retrieved from https://www.iedunote.com/audit
Gomez, Maria Corazon P., Sacorum, Roselle Marie A., Lipana, Rica Angela M.,
Barawid, Geneva Leecea M. and Tugas, Florenz C. (2020). An analysis of
factors that affect audit opinions: the case of the local government units in the
Metro Luzon Urban Beltway. DLSU Business & Economics Review Vol. 30 No.1.
Retrieved from https://www.dlsu.edu.ph/wp-content/uploads/2020/08/5tugas.pdf
Roshanali, B. (2018). Classification of audit. Accounting Notes. Retrieved from

https://www.accountingnotes.net/auditing/classification/classification-of-audit-
company-india-auditing/14813
The Institute of Internal Auditors – North America. (2019). Definition of internal

auditing. The Institute of Internal Auditors. Retrieved from
https://na.theiia.org/standards-guidance/mandatory-guidance/pages/definition-of-
internal-auditing.aspx
Tuovila, Alicia. (2020). Audit. Investopedia. Retrieved from

https://www.investopedia.com/terms/a/audit.asp
https://www.coa.gov.ph/
https://www.coa.gov.ph/phocadownloadpap/userupload/Issuances/Manual/Financial_Au
dit_Manual.pdf
73
Case Analysis 1 The Case of the Local Government Units in the Metro Luzon Urban
Beltway
Time Context
 2020 – Covid-19 Pandemic
Point of View
 Local Government Units (LGUs) in the Metro Luzon Urban Beltway

 Audit is often performed with an intention to give an assurance to the public that
financial statements are being fairly presented. Moreover, in the process of
auditing, this was also concerned on the way in which accurate issuances of audit
opinions show how compliant firms are keeping up with the expected or
established auditing standards and the way in which firms are becoming more
open on the open receiving of an unfavorable audit opinion, this can become a
signal for them to better improve internal control. Given the importance that was
placed on providing audit opinions, it is only right for top management officials to
better assess the different factors that can lead to the misinterpretation of financial
statements and other public documents and can also often result to some adverse
opinions and its application. The present study, thus, was performed with an aim
to better investigate the influences of qualitative and quantitative factors on audit
opinions received by local government units (LGUs) specifically those in the Metro
Luzon Urban Beltway.
 The present study was conducted with an aim to better investigate the influences
of qualitative and quantitative factors on audit opinions received by local
government units (LGUs) specifically those in the Metro Luzon Urban Beltway.
Objectives
 The specific objective of the present study was focused on the investigating the
influences of qualitative and quantitative factors on audit opinions received by local
government units (LGUs) specifically those in the Metro Luzon Urban Beltway.
74
Areas of Consideration (SWOT Analysis)
Table 1
SWOT Analysis – Audit Opinion
STRENGTHS WEAKNESSES
 Provides assurance on the  Time-consuming

accuracy of financial statements  Discrepancies
 Improved integrity  Deficiencies
 Abides to law and regulations  Misstatements
 Helps stakeholders to
understand about the financial
and operational situation
OPPORTUNITIES THREATS
 Staff and personnel can be  Lack of adequate evidence

trained obtained
 Stricter adherence to law and  Implemented but yielded
regulations negative effects
 Improved quality service  Misinterpreted
provided to the public
 Based from the information presented in Table 1, it can be noted that this included
the SWOT analysis of the integration of audit opinions – for its strength – this
includes the providing of assurance on the accuracy of financial statements,
improved integrity, can help in abiding with the law and also can be used in order
to help the stakeholders to better understand the financial and operational situation
involved. For its weakness, there is the tendency that it can be time-consuming
since this will involve the collection of a larger group of data; as such, there are
also the tendencies of discrepancies, deficiencies, and misstatements that can
affect the accuracy of the reporting of the financial statements involved. On the
other hand, there are also some threats involved which can include the lack of
adequate evidence obtained which can affect the accuracy of the financial
statements and also the tendency of such audit opinions to be misinterpreted and
thus can be implemented but can definitely yield only negative implications in the
future. As such, for its opportunities, this involved the way in which the staff and
personnel can be trained in better receiving and interpreting of audit opinions;
having to be stricter adherence to the law and regulations and also in providing
them with an opportunity to have improved quality service to be provided for the
public.
75
Alternative Courses of Action (ACAs)
The following are the alternative courses of action that was seen by the researcher
as something that can be helpful in solving the problems concerning with the audit
opinions received.
 ACA #1: Regular Implementation of the Rotation of Auditors
The regression results show that the rotation of auditors among LGUs is significant
concerning the audit opinion that they will receive. With COA’s attempt to improve
auditor independence by reducing the number of years for auditor rotation, audit
quality is improved.
ADVANTAGES  Can help improve auditor independence and

can help improve
 Accurately issue audit opinions that show the
real representation of LGUs’ financial
performance.
 Creating more options
 Can have a regular and diverse type of

DISADVANTAGES opinions coming from different auditors –
and thus creating more options but can
affect the decision-making stage
 ACA #2: Strengthen safeguards to reduce threats that can hinder regular
auditor rolling-out and opinion
COA may utilize the results to ensure that the auditors practice independence from
the LGU assigned to them. It is possible to retain the mandatory three-year auditor
rotation, but the need to strengthen safeguards to reduce threats should be
recognized. One safeguard that the COA may implement is to require the auditors to
submit an annual declaration of auditor independence.
 Stronger measures implemented towards

ADVANTAGES safeguarding and reducing threats that can
be recognized in audit opinions
 May take a lot of time needed for

DISADVANTAGES adjustment period for the auditors and local
government units (LGUs)
76
 ACA #3: Improving the submitted existing Independent Auditor’s Report
It was asserted that aside from the existing Independent Auditor’s Report,
submitting a sworn declaration will help mitigate potential inaccuracies in audit opinion
issuances as the risks associated with misrepresentation are higher.
ADVANTAGES  Can help mitigate potential inaccuracies in

audit opinion issuances
 Higher risks associated with

DISADVANTAGES misrepresentation
Conclusions and Recommendations

 Based from the analysis of the data that was gathered based from the chosen case
study, it is necessary to take in consideration the benefits of integrating the regular
rotation of auditors in order to establish accuracy and also in minimizing the
tendency of auditors being too familiar with their environment and can be grounds
for malice and deficiencies to public trust. With this, the following course of action
was recommended:
 ACA #2: Strengthen safeguards to reduce threats that can hinder regular
auditor rolling-out and opinion
COA may utilize the results to ensure that the auditors practice independence from
the LGU assigned to them. It is possible to retain the mandatory three-year auditor
rotation, but the need to strengthen safeguards to reduce threats should be
recognized. One safeguard that the COA may implement is to require the auditors to
submit an annual declaration of auditor independence.
 Stronger measures implemented towards

ADVANTAGES safeguarding and reducing threats that can
be recognized in audit opinions
 May take a lot of time needed for

DISADVANTAGES adjustment period for the auditors and local
government units (LGUs)
77
Reference:
Gomez, Maria Corazon P., Sacorum, Roselle Marie A., Lipana, Rica Angela M.,
Barawid, Geneva Leecea M. and Tugas, Florenz C. (2020). An analysis of factors that
affect audit opinions: the case of the local government units in the Metro Luzon Urban
Beltway. DLSU Business & Economics Review Vol. 30 No.1. Retrieved from
https://www.dlsu.edu.ph/wp-content/uploads/2020/08/5tugas.pdf
78
SESSION 5
TOPIC : AUDITING (Part 2)
PRESENTED BY : Reynavi M. Olivares
COA CONSTITUTIONAL MANDATES (Article IX-D of the 1987 Philippine

Constitution)
● 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. [Section 2(1)]
● 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.
[Section 2(2)]
● Submit annual reports to the President and the Congress on the financial
condition and operation of the government. (Section 4)
● Recommend measures to improve the efficiency and effectiveness of
government operations. (Section 4)
● Keep the general accounts of government and preserve the vouchers and
supporting papers pertaining thereto. [Section 2(1)]
COA is mandated by the Phililippine Constitution to promulgate accounting rules and

regulations to facilitate the keeping and enhance the international value of the accounts
of the government.
Framework of COA Audit- National Government Agencies
● Planning
i. Sector Audit Planning – attended by Assistant Commissioners of the 3
Audit Sectors and Clusters/Regional Directors of the sectors. General
Audit Instructions containing the audit foci thrust shall be issued based on
the result of the Sector Audit Planning. (Conducted annually)
79
ii. Cluster/Regional Audit Planning- attended by Supervising Auditors, Audit
Team Leaders (ATL) and Audit Team Members (ATM) . Output of this are
OPCR, Operational Plan and Specific Audit Instructions.
iii. Audit Group Planning- Supervising Auditors/Regional supervising Auditors
shall conduct Audit Group Planning
● Audit Execution- This involves the gathering of evidence, evaluation of

appropriateness and sufficiency of obtained evidence and obtaining management
justification as necessary
● Conclusions and Reporting – The results of the audits conducted are
communicated to the agency and oversight bodies. Accumulated results of financial,
compliance and performance audits are summarized at the end of the audit.
Significant findings, issues and observations including the misstatements are
summarized and discussed with the agency
● Follow-up- The auditees are responsible to act upon the audit observation and
recommendations provided by the COA during the conduct of audit.
● Monitoring and Quality Control on Audit Services- to provide quality control on
the delivery of audit services by the audit groups/teams, the Cluster Director
undertakes review of the conduct of audit process using quality inspection tool and
review of the draft audit report prior to transmittal to Management using review
checklist.
AUDITING NGAs
1. Audit Observation Memorandum (AOM)
● The AOM is issued to inform the auditee of deficiencies noted in audit related to
financial/operational matters which do not involve pecuniary/monetary loss.
● It is issued when the audit decision cannot yet be made due to incomplete
documentation or information.
2. Notice of Suspension (NS)
● A Suspension is a temporary disallowance of a transaction which is of doubtful
legality/validity/propriety or may result to pecuniary loss to the government and
appears illegal, improper or irregular unless —
(a) satisfactorily explained/justified by the responsible officers; or
(b) until additional documentation or the requirements on matters raised in
the course of audit are submitted or complied with.
● Once received, the NS should be settled within 90 calendar days from date of
receipt by the responsible officers; otherwise, the transaction shall be
disallowed/charged after the Auditor shall have satisfied himself that such action
is appropriate and consequently, issue the ND/NC.
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3. Notice of Disallowance (ND)
● The Auditor shall issue an Notice of Disallowance for transactions which are found
to be illegal, irregular, excessive, extravagant, unnecessary and unconscionable
(IIEEUU).
● Disallowances shall be settled within 6 months reckoned from date of receipt by
the person liable or his authorized representatives.
4. Notice of Charge (NC)
● There is a charge against a revenue transaction when the correct amount of
revenue/receipt due the government is not billed/assessed/collected resulting to
under-appraisal/assessment/ collection. An NC should be issued for the
uncollected amount.
● A Charge shall be settled within 6 months from date of receipt of the NC by the
persons liable. Such date of receipt shall likewise be the reckoning period for
counting the 6-month period to appeal.
5. Notice of Settlement of Suspension/Disallowance/Charge (NSSDC)
● Whenever a Suspension, Disallowance, or Charge is settled, the Auditor shall
issue the Notice of Settlement of Suspension/ Disallowance/Charge (NSSDC).
● A suspension is settled when the Auditor is satisfied that the transaction is
regular/legal/proper upon examination of the justification/explanation and/or
documentation submitted by persons responsible in compliance w/ requirements.
● A disallowance or charge may be settled by the person(s) liable either by:
a) payment of the amount disallowed; restitution; or such other applicable
modes of extinguishment of obligation (e.g.: compensation, dation in payment,
condonation), w/c the Auditor may refer to the Government Cluster, for
evaluation and advice as to propriety of the settlement; or
b) a decision of the Director or the Commission Proper, lifting the same.
6. Statement of Audit Suspensions, Disallowances and Charges (SASDC)
• The SASDC is prepared by the Auditor to summarize the total S/D/C for the
current period, indicating the following:
a. beginning balance of NS/ND/NC issued;
b. the NS/ND/NC for the period;
c. NSSDC for the period; and
d. ending balance of the total SDC.
7. Notice of Finality of Decision (NFD)
• The NFD is a notice issued to the agency head to inform that a decision of the
Auditor, Director or Commission Proper has become final and executory, there
being no appeal or motion filed within the reglementary period.
8. COA Order of Execution (COE)
• The COE is issued to enforce the settlement of disallowance/charge, whenever
the persons liable refuse or fail to settle them after the decision become final &
executory.
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New Audit Approaches for National Government Agencies
● Government-wide and Sectoral Performance Audits-are new approaches

adopted by the Commission under COA Resolution No. 98-005 dated March 3,
1998. While these types of audits were introduced in 1998, it was only in 2002 that
these approaches were operationalized under the COA-UNDP AusAID Project
entitled "Enhancing the Public Accountability Program of the Philippine
Commission on Audit”.
● Government-wide audit- is the simultaneous examination of a management
function or activity in a number of government agencies.
● Sectoral Audit refers to an audit of programs or activities that are delivered by
more than one government agency.
Current Issues and Development
Amid COVID-19 restrictions, COA looking to modernize auditing process
● According to COA Chairperson Michael Aguinaldo, they are currently working

towards modernizing their audit program, while at the same time monitoring money
and projects intended for the COVID-19 response like government funds,
reallocated budget, and local and foreign donations.
● During an online webinar initiated by the Stratbase Albert del Rosario Institute,
Aguinaldo revealed that they have created a task force that would focus on audit
modernization. As of now, it is still under an initial testing phase.
● The COA developed an Audit Modernization Program to enhance its resilience in
times of crises or emergency, by optimizing the use of science, technology, and
innovation. A Task Force for Audit Modernization has been created and as a
starter, is now testing with a government financial institution, the use of artificial
intelligence to detect statistical anomalies in transactions
● Under Project Machine Intelligence, Knowledge-based Audit, and Experience
Learning — or Project MIKA-EL — an artificial intelligence (AI) is seen to assist
state auditors by going through massive government records to scan documents
faster, thereby helping COA officers segregate clean documents from anomalous
ones.
COA flags OCD's ₱4.7-M hazard pay to janitors beyond ECQ period
● The Commission on Audit (COA) has flagged the hazard pay granted by the Office
of Civil Defense (OCD) to contractual janitors beyond the enhanced community
quarantine (ECQ) period last year worth ₱4,708,525.
● However, state auditors said over ₱4 million in hazard pay were granted to janitors
provided by Stellar 167 Manpower Recruitment and Services, Inc. (SMRSI) from
May 17 to September 18, 2020.
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● Out of the ₱4,929,025.00, the amount of ₱4,708,525.00 was incurred for the period
beyond the duration of ECQ. Thus, payments of hazard pay to janitors after ECQ
has no legal basis
● The COA also flagged the lack of detailed technical specifications of the service to
be rendered in the work order, which served as contract between the OCD and the
manpower agency.
● Among COA's recommendations is for the OCD to require SMRSI to refund the
hazard pay granted after May 15, 2020, or offset the amount against the unpaid
billing of the contractor.
● Following the audit findings, COA said the OCD has already sent a letter to SMRSI
- through a certain James Christopher Verano - stating that the amount of
₱4,708,525 will be offset against the OCD's unpaid billings to the company.
References:
COA QMS Manual. Retrieved June 2021 from
https://www.coa.gov.ph/phocadownload/userupload/transparency/QMS/COA_QMS_Poli
cies_and_Procedures/COA_QMS_Manual.pdf
Lalu Gabriel. (2021). Amid COVID-19 restrictions, COA looking to modernize auditing
process. Retrieved June 2021 from https://newsinfo.inquirer.net/1365738/amid-covid-19-
restrictions-coa-looking-to-modernize-auditing-process
COA flags OCD's ₱4.7-M hazard pay to janitors beyond ECQ period. Retrieved June
2021 from https://cnnphilippines.com/news/2021/6/3/COA-flags-OCD-hazard-pay-
janitors-beyond-ECQ-period-.html
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Case Analysis 1 The DICT and the COA Audits
I. Introduction
The Department of Information and Communications Technology is the lead
implementing agency of the government in all of its ICT-related efforts such as
industry development, policy formulation, ICT infrastructure development,
research and development, ICT capacity building for the public sector, and
administration of E-governance.
It was created by virtue of Republic Act 10844, with the following as its
attached agencies:
o National Telecommunications Commission;
o National Privacy Commission; and
o Cybercrime Investigation and Coordinating Council
On 01 July 2019, President Rodrigo Roa Duterte appointed Secretary
Gregorio B. Honasan II as the Secretary replacing its former Acting Secretary
Eliseo M. Rio Jr.
Since its creation, the DICT has implemented various programs and
projects that are in line with its mandate to promote and develop ICT in the country.
Among its programs are the National Broadband Plan, National Government
Portal, Free Wifi in Public Places, National Government Data Center, Tech4Ed
Project, Government Cloud, etc.
In order to implement these programs, the DICT has procured equipment,
software subscriptions and licenses, etc., which are now subject of COA Notice of
Suspension, Disallowance, etc.
II. Time Context
This case study is referenced on the various transaction and COA audits of
the DICT from 2019-2021
III. Point of View
DICT Employees, specifically the personnel with direct involvement in the
projects being subject to COA Audits and transacts with the finance and
procurement arms of the agency
IV. Historical Background
The law creating the DICT, Republic Act No. 10844 or "An Act Creating
the Department of Information and Communications Technology", was signed on
May 20, 2016 during the administration of President Benigno Aquino III
The law took effect on June 9, 2016 which marked the establishment of
the DICT.
The functions of the following government agencies have been transferred to
the DICT:
• Information and Communications Technology Office (ICTO)
• National Computer Center (NCC)
• National Computer Institute (NCI)
• Telecommunications Office (TELOF)
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• National Telecommunications Training Institute (NTTI)
• All operating units of the DOTC with functions and responsibilities
dealing with communications
V. Statement of the Problem

How can the Department of Information and Communications Technology
improve its processes and procedures to adhere with COA’s auditing rules and
regulations?
VI. Objectives
● To identify the issues and areas of improvements of the DICT in terms of
its financial transactions; and
● To provide recommendations on how the DICT can improve its processes
to adhere to PH procurement, and auditing rules and regulations
VII. Areas of Consideration: SWOT Analysis for DICT

Strengths
• Primary policy, planning, coordinating, implementing, and administrative
entity of the Executive Branch of the government that will plan, develop,
and promote the national ICT development agenda.
Weaknesses
• The DICT is one of the youngest departments
• Unfinished personnel placement
• Inefficient record keeping, document tracking,etc.
• Politics
Opportunities
• COA Audits as learning experience
• Significant budget approved by legislators to implement its programs,
activities, and projects
Threats
• Increasing COA Audit Observations, Suspensions, Disallowances, etc.
• Habitual noncompliance to the provisions of RA 9184 in most of its
procurement processes
VIII. Recommendations
It is highly recommended that the DICT adopt all of the three Alternative
Courses of Action - that is to strengthen its manpower by hastening its placement
process, revisiting its existing internal processes and amending as necessary and
providing necessary training for its personnel.
IX. Conclusions
Auditing is a cornerstone of good governance. By providing unbiased,
objective assessments of whether public resources are managed responsibly and
effectively to achieve intended results, the COA help agencies, like the DICT, to
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achieve accountability and integrity, improve operations, and instill confidence
among citizens and stakeholders.
With the repetitive areas of improvement and procedural deficiencies
reflected in the many COA observations for the DICT, the agency needs to urgently
revisit its processes and establish a prompter and efficient procedure for its various
transactions. To do this, the DICT needs to have an adequate number of
competent and experienced personnel especially for its internal audit, accounting,
and procurement offices. The DICT further needs to strengthen and organize its
record keeping and document tracking mechanisms.
The DICT should take each COA audit as a learning experience to improve
its processes and fill in its lapses.
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SESSION 6
TOPIC : THE LOCAL GOVERNMENT UNITS PUBLIC FISCAL
ADMINISTRATION (Part 1)
PRESENTED BY : Jasmine Quintas
a) Overview
Fiscal Administration is the* branch of economics that deals with the revenues
and expenditures and their impact on the economy. It is manner of collecting something
from the constituents and spending it also for the constituents.
-it is the act of* managing incoming and outgoing monetary transactions and
budgets for governments, educational institutions, nonprofit organizations, and other
public service entities. It *refers to systems, processes, resources, and the policy,
environment, government, the inter-governmental and inter-local fiscal relations,
affecting among others.
Major Activities in Public Fiscal Administration:
a. Fiscal Policy Formulation;
b. Taxation and revenue administration;
c. Budgeting and expenditure;
d. Public Borrowings and Debt Management;
ed .Accounting and auditing
Public Fiscal Administration is about public finance which pertains to the raising
and spending revenue for the functions of the state. These functions have been
changing with the development of the society.
It is about how a government raises money, how that money is spent and the
effects of these activities on the economy and society. It studies how governments at all
levels-national, state and local- provide the public with desires services and how they
secure the financial resources to pay for these services.
The performance of these functions leads to expenditure. The expenditure is
incurred from funds raised through taxes, fees sale of goods and services and loans.
The different sources constitute the revenue of the public authorities. Public finance
studies the manner in which revenue is raised; the expenditure in incurred. Thus, public
finance deals with the income and expenditure of public authorities and principles,
problems and policies relating to these matters.
Public Finance is an enquiry into the facts, techniques, principles, theories, rules
and policies which shape, direct influence and govern the use of scarce resources, with
alternative uses, of the government.
Importance of public fiscal admin and public finance:
1. Provision of public goods. For providing public goods like roads, military services,
street lights and etc, public finance is needed. Business firms will have no incentive yo
produce such goods, as they get no payment from private individuals.
2. Public finance enables governments to tackle or offset undesirable side effects of a
market economy. The side effects are called spills over or externalities. For example,
pollution. The governments can introduce recycling programs to lessen pollution or they
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can make laws to restrict pollution or impose pollution charges or taxes on activities that
bring about pollution.
3. It helps governments to redistribute income. To reduce the inequality in the economy,
the governments can impose taxes on the richer people and provide goods and
services for the needy ones.
4. It provides programs for moderating the incomes of the rich and the poor. Such
programs include social security, welfare and other social programs. -vaccination
5. As the scope of state participation in the economic activity is widening, the scope of
public finance has also been increasing. Generation of employment opportunities,
control of economic fluctuations like boom and depression, maintaining economic
stability etc. are some of the thrust areas of the government through fiscal operations.
b) Organizational Responsibilities on LGUs Public Fiscal Administration

Public Expenditure: It deals with the principles and problems relating to the allocation
of public spending. We study the fundamental principles governing the flow of public
funds in to different channels, classification and justification of public expenditure;
expenditure policies of government and the measures adopted for welfare state etc.
Public Revenue: The income of the state in referred to the Public Revenue. In this
branch, we study the various ways of raising revenue by the public bodies. We also
Study principles and effects of taxation and how the burden of taxation is shared among
the various classes of society etc
Public Debt: The government borrows when its revenue falls short of its expenditure.
Public debt is a study of various principles and methods of raising debts and their
economic effects. It also deals with the methods of repayments and managements of
public debts.
Public Budgeting: It deals with the methods of Budget preparation, authorization,
execution and accountability of budgets. Government budgeting is the critical exercise
of allocating revenues and borrowed funds to attain the economic and social goals of
the country. It also entails the management of government expenditures in such a way
that will create the most economic impact from the production and delivery of goods and
services while supporting a healthy fiscal position
Economic Stabilization The use of Public revenue and Public expenditure to secure
the stability in levels of prices by controlling inflationary as well as deflationary
pressures is studied. Similarly, the income and expenditure policies adopted by the
government so as to attain full employment, optimum use of resources, equitable
distribution of income etc are also studied.
c) Taxation/Revenue
1. Major sources of Revenue
2. Tax Collection Sharing and Assignment
3. Tax Administration and Organization
4. Current Issues and Development
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Case Analysis 1 THE PHILIPPINE GOVERNMENT POLICY RESPONSE TO THE
COVID-19
Topic THE PHILIPPINE GOVERNMENT POLICY RESPONSE

TO THE COVID-19
Time Context March 2020 (March 23 2020)
Point of View President Rodrigo Duterte
Short Historical Following the confirmation of the first localized
Background transmission of COVID 19 on March 7, 2020, the DOH
raised its alert to Code Red Sub-Level 1. President
Rodrigo Duterte later issued Proclamation No. 922 on
March 9, formally declaring a public health emergency,
authorizing local government units to employ their local
disaster risk reduction management funds.
The Department of Trade and Industry (DTI) on March 9

issued a directive ordering retailers to only allow the sale
of two bottles of each type of disinfectant per person as a
measure against hoarding. In line with the public health
emergency declaration, the department imposed a 60-
day price freeze on basic commodities.
On March 16, the president signed Proclamation No. 929

declaring a state of calamity throughout the country for
six months, bringing into effect the following:
 price control of basic needs and commodities,

 granting interest-free loans,
 distribution of calamity funds,
 authorization of importation and receipt of
donations, and
 hazard allowance for public health workers and
government personnel in the fields of science and
technology.
President Duterte signed administrative orders providing

daily hazard pay and additional special risk allowance to
front line government officials and employees including
health workers. The office of Vice President Leni Robredo
for its part raised funding for personal protective
equipment.
The Department of Labor and Employment and the

Department of Social Welfare and Development started
their own emergency cash subsidy programs.
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On 17 March, the President declared a state of calamity
throughout the Philippines which allows the national
government and LGUs to
utilize appropriate funds, including the Quick Response
Fund. On 24 March the President signed the “Bayanihan
To Heal as One” Act (Republic Act 11649) into law,
providing him with emergency powers to further
strengthen the government response during the COVID-
19 State of National Emergency.
Statement of the Problem This study focuses on the policy of the government in
response to COVID 19 pandemic specifically to evaluate
the policy and answer the following questions
1. When to lift the Community Quarantine being
implemented in the country?
2. What can be the possible future disaster
management policy can the Philippines implement in
case another pandemic happen again
Objectives To determine if Community Quarantine can be lifted as
soon as possible and to see the possible the future
management policy can the Philippines implement in
case another pandemic happen again.
Area of Consideration
Strength  LGU and Government Agencies are utilized to
distribute relief goods and services (like free
rides)
 An agency with the inter-sectoral collaboration of
various government agencies in the collective
fight against COVID-19 was created (IATF-EID
Inter-Agency Task Force for the management of
Emerging Infectious Disease)
 Molecular labs where created
 Crime rate decreases (61% drop in crime rate
since start of ECQ Source: pna.gov.ph May 2
2020 )
Weakness  The Emergency Subsidy Program (ESP)/Social
Amelioration Program(SAP) was too slow and too
politicized
 The policies where not strictly implemented
 Department of Health unorganized/inconsistent
policies implemented
 Foreigners from other country are allowed to
enter the country with proper screening
Opportunity  BALIK PROBINSYA, BAGONG PAG-ASA
PROGRAM should be advocate for displaced
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people, indigenous population and marginalized
communities particularly vulnerable to the
pandemic.
Threats  Corruption
 People are stubborn and hard headed to abide
the law causing the rapid spread of virus
 Mishandling of the country’s education program
leading to wasting of funds, and unorganized
system.
Alternative Course of Action
ACA 1 a modification of the current policy based on the
PESTEM (political domestic and international,
economic, socio-cultural, techno-scientific, environment,
and military but more focused on defense and security
sector) approach
ACA 2 Philhealth system should be revamped
ACA 3 Recommend to Congress to enact the Bill formulated by
the late Senator Miriam Defensor Santiago filed : Senate
Bill No. 1573 or the Pandemic and All-Hazards
Preparedness Act. The bill called for the creation of a
national health strategy in cases of pandemics and
national emergencies.
Recommendation I would like to recommend the ACA 3, which to consider
the Senate Bill 1573 or the Pandemic and All-Hazards
Preparedness Act. The bill would have solved the
deficiencies we are experiencing today.
Under Santiago’s bill, the DOH will create a pandemic

strategy, and will be the lead agency that will issue
directives to the Department of the Interior and Local
Government or DILG, the Philippine Red Cross, and the
National Disaster Risk Reduction and Management
Council or NDRRMC.
The bill also calls for the creation of an emergency fund

every fiscal year for pandemics and other emergencies.
If this were in effect today, the president would not have
needed to realign and reallocate budgets or unspent
money that has already been earmarked for various
government agencies.
The bill also provides the creation of a Medical Reserve

Corps that will be composed of volunteer health
professionals who will be called into duty if a national
health emergency arises.
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SESSION 6
PRESENTED BY : Chrisel Gallardo
First let me define what Revenue means. Revenue refer to all cash inflows of the national
government treasury which are collected to support government expenditures but do not
increase the liability of the NG. Revenues consist of tax and non-tax collections. Tax, A
tax is a compulsory financial charge or some other type of levy imposed on a taxpayer
(an individual or legal entity) by a governmental organization in order to fund government
spending and various public expenditures. Taxation is defined in many ways, commonly
heard definitions include: It Is the process by which the sovereign, through its law making
body, races revenues use to defray expenses of government; It Is a means of government
in increasing its revenue under the authority of the law, purposely used to promote welfare
and protection of its citizenry. And it Is the collection of the share of individual and
organizational income by a government under the authority of the law.
Tax revenue means Compulsory charges or levies imposed by government on goods,

services, transactions, individuals, entities, and others, arising from the sovereign power
of state. A government needs funds to provide goods and services. The methods of
financing public expenditure have changed over time but there is no escape from the fact
that in the end somebody has to foot the bill. Theory and Concept of Taxation. Concept
of Taxation, taxation is the inherent power of the state to impose and demand
contribution upon persons, properties, or rights for the purpose of generating revenues
for public purposes. The power of taxation upon necessity and its inherent/characteristic
in every government or sovereignty. The economists have put forward many theories or
principles of taxation at different times to guide the state as to how justice or equity in
taxation can be achieved. The primary purpose of taxation is to provide funds or
property to a country with which to promote the general welfare of its citizens and to
enable it to finance its different activities. And in addition the secondary purposes of
the taxation are: To strengthen weak enterprises by giving tax exemptions; To protect
local industries against foreign competition through imposition of high customs duties on
imported goods; to reduce inequalities in wealth and income by imposing progressively
higher taxes and to prevent inflation by increasing taxes or ward off depression by
decreasing taxes.
Here are the types of tax in the Philippines based on Bureau on Internal Revenue. Capital
Gains Tax is a tax imposed on the gains presumed to have been realized by the seller
from the sale, exchange, or other disposition of capital assets located in the Philippines,
including pacto de retro sales (seller has the right to repurchase the subject matter or the
property being sold) and other forms of conditional sale. Documentary Stamp Tax is a
tax on documents, instruments, loan agreements and papers evidencing the acceptance,
assignment, sale or transfer of an obligation, rights, or property incident thereto (example
Notarization). Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous
transfer of property between two or more persons who are living at the time of the transfer.
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her
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lawful heirs and beneficiaries at the time of death and on certain transfers which are made
by law as equivalent to testamentary disposition. Income Tax is a tax on all yearly profits
arising from property, profession, trades or offices or as a tax on a person’s income,
emoluments, profits and the like. Percentage Tax is a business tax imposed on persons
or entities who sell or lease goods, properties or services in the course of trade or
business whose gross annual sales or receipts do not exceed P550,000 and are not VAT-
registered. Value-Added Tax is a business tax imposed and collected from the seller in
the course of trade or business on every sale of properties (real or personal) lease of
goods or properties (real or personal) or vendors of services. It is an indirect tax, thus, it
can be passed on to the buyer. Withholding Tax on Compensation is the tax withheld
from individuals receiving purely compensation income. There are 3 kinds of withholding
tax. Expanded Withholding Tax is a kind of withholding tax which is prescribed only for
certain payors and is creditable against the income tax due of the payee for the taxable
quarter year. Next is the Final Withholding Tax is a kind of withholding tax which is
prescribed only for certain payors and is not creditable against the income tax due of the
payee for the taxable year. Income Tax withheld constitutes the full and final payment of
the Income Tax due from the payee on the said income. Withholding Tax on
Government Money Payments is the withholding tax withheld by government offices
and instrumentalities, including government-owned or -controlled corporations and local
government units, before making any payments to private individuals, corporations,
partnerships and/or associations.
Now lets go to the Non-Tax Revenue. Non-tax revenue is a major source of financing
of the national government budget. Non-tax revenues are fees collected in relation to
direct services of government agencies to the public and those arising from the
government’s regulatory and investment activities. Major sources of non-tax collections
are Bureau of Treasury (BTr) Income, Government Fees and Charges, Privatization and
others. The Bureau of Treasury (BTr) manages the finances of the government, by
attempting to maximize revenue collected and minimize spending. The bulk of non-tax
revenues comes from the BTr's income. Under Executive Order No.449, the BTr collects
revenue by issuing, servicing and redeeming government securities, and by controlling
the Securities Stabilization Fund (which increases the liquidity and stabilizes the value of
government securities through the purchase and sale of government bills and bonds. Next
is government fees and charges. This refers to levies imposed by national government
agencies (NGAs) and government-owned or controlled corporations (GOCCs) on the
direct recipients of public goods and services they render in the exercise of their
mandated regulatory and service delivery functions. They are also known as user
charges. Common examples of fees collected by NGAs are permits, licenses,
registration/accreditation fees, clearance and certification fees, as well as fees collected
for specific services such as medical and laboratory examinations. Next is the
Privatization. To raise additional funds for the government, some government agency that
provides public services is converted into a privately owned organization. Services often
remain, they can be delivered on for profit basis than strictly operated for public benefit.
Example of which are: Philippine Long Distance Telephone Company (PLDT); Philippine
Post Corporation (Philpost); National Power Corporation (NAPOCOR); Philippine
Airlines; Metropolitan Waterworks and Sewerage System (MWSS); Petron. The
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government's Privatization Program is handled by the inter-agency Privatization Council
and the Privatization and Management Office, a sub-branch of the Department of
Finance. Last is the Foreign Grants/Aid. Foreign aid refers to the international movement
of money, services, or goods from governments or international institutions for the benefit
of the receiving country or its citizens. Foreign aid can be fiscal, military, or humanitarian
and is considered one of the significant sources of foreign exchange.
I. Major Sources of Revenue of Local Governments

a. Taxes on Real Property
The real property tax (RPT) is an ad valorem tax on real properties such as lands,
buildings, and other improvements, and machineries imposed by provinces, cities and
municipalities within the Metropolitan Manila Area
b. Other Local Taxes:
b.1 Provincial Taxes:
•Tax on business of printing and publication
•Tax on a business enjoying franchise
•Tax on sand, gravel and other quarry resources
•Professional tax on each person engaged in the exercise or practice of his/her profession
requiring government examination
•Amusement tax payable by proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses, boxing stadia, and other places of amusement
•Annual fixed tax not exceeding PhP500.00 for every delivery truck or van
b.2 Municipal Taxes

Business Taxes: (combination of a graduated-fixed and percentage business taxes)
•Manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and
compounders of liquors, distilled spirits, and wines or manufacturers of any article of
commerce of whatever kind or nature
•Wholesalers, distributors, or dealers in any article of commerce of whatever kind or
nature, exporters, and manufacturers, millers, producers, wholesalers, distributors,
dealers or retailers of essential commodities
•Contractors and other independent contractors
(Percentage taxes are imposed on the following)
•Retailers,
•Banks and other financial institutions
•Annual tax on peddlers engaged in the sale of any merchandise or article of commerce
b.3 City Taxes

The city government may impose and collect any of the taxes, fees and charges imposed
by the province or municipality. The rates of taxes may exceed the maximum rates
allowed for the province or municipality by not more than 50% except the rates of
professional and amusement taxes which are already fixed
b.4 Barangay Taxes
•Taxes-On stores or retailers
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b.5 Community Tax
•Individual
•Corporations
c. Other Revenue-Raising Powers of Local Governments

a. Service Fees and Charges LGUs may impose and collect such reasonable fees and
charges
b. Public Utility Charges LGUs may fix the rates for the operation of public utilities owned,
operated and maintained by them within their jurisdiction.
c. Toll Fees and Charges LGUs may prescribe the terms and conditions and fix the rates
for the imposition of toll fees or charges for the use of any public road, pier or wharf,
waterway, bridge, ferry or telecommunication system funded and constructed by the LGU
concerned.
Tax Collection Sharing and Assignment
⊸All local taxes, fees and charges shall accrue on the first day of January of each year.
However, new taxes, fees or charges, or changes in the rates thereof, shall accrue on the
first (1st) day of the quarter next following the effectivity of the ordinance imposing such
new levies or rates. All local taxes, fees and charges shall be paid within the first twenty
(20) days of January or of each subsequent quarter, as the case maybe. The payments
maybe made in quarterly installments.
Internal Revenue Allotment

LEGAL BASIS
 Section 284 of RA No. 7160 which provides that LGUs shall have a 40% share from the
national internal revenue taxes on collection of the third (3rd) fiscal year preceding the
current fiscal year; and Section 285 which provides the manner of allocation to the LGUs.
 Section 286 of RA No. 7160 provides that the share of each local government units shall
be released without need of any further action, directly to the provincial, city, municipal
or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after
the end of each quarter, and which shall not be subject to any lien or holdback that may
be imposed by the national government for whatever purpose
 Section 4 of RA No. 9358 or the Supplemental Appropriation for FY 2006 provides that
future local government share in the national internal revenue taxes or IRA shall
henceforth be automatically appropriated.
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Computation:
Distribution of shares
Barangay Share:
References:
https://www.dbm.gov.ph/index.php/programs-projects/internal-revenue-allotment-ira
https://www.dilg.gov.ph/PDF_File/reports_resources/dilg-reports-resources-
2016120_271dafdd99.pdf
https://ntrc.gov.ph/images/Publications/guide-to-philippine-taxes-2016/local-taxes.pdf
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Case Analysis 1 Public-Private Partnership
Name of the Agency: Public-Private Partnership Center of the Philippines
POV: Director - Project Development and Monitoring Facility Service (PDMFS)
Time Context: From the agency’s inception in 2010 to present
Background:
 By virtue of the Executive Order No. 8 series of 2010, as amended by Executive

Order No. 136 series of 2013, the PPP Center is mandated to facilitate the
implementation of the country’s PPP Program and Projects.
 The PPP Center is the main driver of the PPP Program. It serves as the central
coordinating and monitoring agency for all PPP projects in the Philippines. It
champions the country’s PPP Program by enabling implementing agencies in all
aspects of project preparation, managing of the Project Development and
Monitoring Facility (PDMF), providing projects advisory and facilitation services,
monitoring and empowering agencies through various capacity building activities.
 The PPP Center provides technical assistance to national government agencies

(NGAs), government-owned-and controlled corporations (GOCCs), government
financial institutions (GFIs), state universities and colleges (SUCs), and local
government units (LGUs) as well as to the private sector to help develop and
implement critical infrastructure and other development projects.
 The PPP Center is also advocating policy reforms to improve the legal and
regulatory frameworks governing PPPs in order to maximize the great potentials
of these infrastructure and development projects in the country
• The global effect of the pandemic on economy is largely driven by the fall of
demand caused primarily by the significant reductions in income, a rise in
unemployment, and disruptions in the transportation, service, and manufacturing
industries, quarantine restrictions, mitigation measures that have been
implemented in many countries. Given the following constraints, how can PPP help
the government earn a revenue?
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Areas of Consideration:
Strengths:
 It is the government’s solutions in accelerating the country’s infrastructure

development that can sustain economic growth.
 Appropriate project identification
 PPP projects on the pipeline can deliver viable and well-structured proposals that
will attract investors to bring their business to the country
Weaknesses:
 Budgetary Restrictions
 There are only a limited number of private entities that have the capability to
complete a project
 Waiving fees, costs and other payments which would otherwise have to be paid by
the private sector
Opportunities:
 Use of private funds
 Investment opportunities
 Increase in employment opportunities
 Transfer of the risk and/or risk sharing
Threats:
 Inflation Rate
 Private sectors/investors seeking higher Return of Investment (ROI)
 If the expertise in the partnership lies heavily on the private sector, the government
is at an inherent disadvantage
Alternative Course of Action-1
• Approval of the House Bill 77 or the proposed “Public-Private Partnership (PPP)

Rationalization Act that aims to ensure better transparency in transactions, make
the PPP Center more efficient, and intensify the cooperation between the public
and private sector.
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• One of the major reforms is providing clearer and simpler rules for faster project
implementation to foster competition, which is what the government needs as it
rolls out big-ticket projects.
• Immediate and Fast screening of projects eligible for PDMF support, the fund of
which is sourced from the Government of the Philippines, development partners,
Cost Recovery Fee and reimbursement of expenses incurred for the preparation
and conduct of business case, pre-feasibility and feasibility studies, preparation of
tender documents and other activities in the preparation of PPP projects, and
monitoring of PPP project implementation
• Mainstreaming PPP as the major driver of infrastructure in the Build Build Build
project by the current Administration
Recommendation:
• The presented Alternative Courses of Action are all beneficial in the attainment of
a successful PPP implementation.
Conclusion:
• Because of the economic impact brought about by the pandemic, the PPP plays a
vital role in the promotion of economic progress . It addresses the limited funding
resources for local infrastructure or development projects of the public sector
thereby allowing the allocation of public funds for other local priorities. The projects
in the pipeline generates revenue by making the country more competitive in terms
of its infrastructure therefore attracting investors.
References:
• https://ppp.gov.ph
• https://ppp.worldbank.org/public-private-partnership/overview/ppp-objectives
• https://www.linkedin.com/pulse/public-private-partnership-pros-cons-benefits-
ppp-amirmehdi-asghari/
• https://library.pppknowledgelab.org/documents/2384/download
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SESSION 6
PRESENTED BY : Ricardo R. Nilo
TAX ADMINISTRATION ANDORGANIZATION
PD 477 June 3, 1974 THE DECREE ON LOCAL FISCAL ADMINISTRATION
This Decree shall govern the conduct and management of the financial affairs,
transaction, and operations of provinces, cities, municipalities and barrios, and shall
provide the organization for local administration in the local government.
Sec. 1
FUNDAMENTAL PRINCIPLE
1. No money shall be paid out of the treasury except in pursuance of a lawful
appropriation or other specific statutory authority
2. Public funds and monies shall be spent solely for public purposes
3. Revenue is obtainable only from sources expressly authorized by law
4. All monies officially received by a public officer in any capacity or upon any
occasion shall be accounted as for govt fund
5. Trust funds shall not be paid out of the treasury except in fulfillment of the
purpose for which the trust was created or fund created
6. Every officer of the government whose duties permit or custody of government
funds shall be properly bonded Sec. 2
Supervisory Authority of the Department of Finance
Sec.3
Responsibilities of Department of Finance
formulate and execute fiscal policies that will promote stability and growth of the local
government provide the LGU with policy guidelines adopt and enforce the necessary
measure that will improve local treasury operation ensure the proper use,custody and
safekeeping of public funds
The Local Funds and Other Special Fund
Kinds of Local Funds

 The General Fund
 The Infrastructure Fund
 Special Education Fund
 Trust Funds
Depository Account
Local treasurers shall maintain the depository accounts with Banks duly designated as
government depositories by the Central Bank of the Philip
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BUDGETING
ANNUAL BUDGET- a financial plan embodying the estimates of income certified as a

reasonably collectible by the treasurer
SUPPLEMENTAL BUDGET- is a supplementary financial plan embodying changes

during the fiscal year in the annual estimates of income and appropriations.
CAPITAL OUTLAY OR CAPITAL EXPENDITURES- refers to the purchase of goods
and services of a life-expectancy extending beyond the fiscal year
APPROPRIATIONS – refers to the estimates of expenditures in a budget when finally
approved by the appropriate authorities.
PREPARATION OF THE BUDGET BY THE LOCAL CHIEF EXECUTIVE

Sec. 18
BUDGETARY REQUIREMENTS
The aggregate amount appropriated shall not exceed the estimated income
certified collectible by the local treasurer Full provisions shall be made for all statutory
and contractual obligations of the local government concern
20% of the IRA shall be appropriate for development project aid to legally
constituted barrios shall be provided in the
amount not exceeding P500.00 per barrio
20% estimated revenue from regular sources, shall be set up as a yearly un-
appropriate reserve to cover unforeseen expenditures arising from occurrence of natural
calamities Sec. 27
GENERAL LIMITATIONS
SALARIES AND WAGES

-1ST & 2ND CLASS Provinces, Cities, Municipalities 45% of the annual income
-lower than 2nd Class 55% of the annual income
The Secretary of Finance, may authorize appropriation in excess of the percentage, but
in no case be more than 25% of the maximum expandable amount. Sec.28
REVIEW OF THE BUDGET
Provincial and City Budget- by Secretary of Finance

Municipal Budget- by Provincial Treasurer
Barrio Budget- by Municipal Treasurer
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AUDITORIAL VISITATION
The book, account, paper and cash of any local treasurer of other accountable officer
shall at all times be open to the inspection of the COA or its duly authorized
representative.
In case an examination of a local treasurer discloses a shortage in cash which should be

on hand, it shall be the duty of the examining officer to seize the office and its contents,
notify the COA and the local chief executive, and thereupon take possession of the office
and its content, close and render his accounts to the date of taking possession, and
temporarily continue the public business of such office.
ORGANIZATION FOR LOCAL FISCAL ADMINISTRATION

Provincial or City Treasurer- appointed by the President
-Filipino citizen
-college degree (law, commerce)
-first grade CS illegible
Sub-provincial Treasurer- appointed by Provincial Treasurer
Assistant Provincial or City Treasurer- appointed by Provincial/City Treasurer
Administrative Deputy-appointed by local chief executive
Municipal or Municipal District Treasurer appointed by Provincial Treasurer
Assistant Municipal or Assistant Municipal District Treasurer appointed by Provincial

Treasurer
CURRENT ISSUE AND DEVELOPMENT
The MANDANAS RULING

The Mandanas Doctrine clarifies that the share from the Internal Revenue
Allotment (IRA) of the local government units(LGUs) does not exclude other national
taxes like custom duties from the base for determining the just share of the LGUs
contravened the express constitutional edict in Sec. 6 Art.X1 of the 1987 Constitution.
The MANDANAS RULING

Shall not be limited to
 The national internal revenue taxes enumerated in Sec.21
 NIR code collected by BIR and Bureau of Custom
 Tariff and custom duties collected by Bureau of Custom
 50% of VAT collected in the Bangsamoro Autonomous
 Region and 30% of all national tax collected in Bangsamoro Autonomous Region
 60% of the national taxes collected from exploitation & development of the
national wealth
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 85% of the excise taxes collected from locally manufactured Virginia-type
cigarettes and other tobacco product the entire 50% of the national taxes
collected under Sec.106, Sec.108 and Sec 116 of the NIRC
 5% of the 25% franchise taxes given to the National Government under Sec. 6
RA 6632 and sec 8 RA 6632
References: https://constitutionalreform.gov.ph
://pia.gov.ph
https://dbm.gov.ph
PD 477
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Case Analysis 1 Land Registration Authority
TIME CONTEXT
2009-PRESENT
HISTORICAL BACKGROUND
On November 6, 1902, the Philippine Commission enacted Act 496, known as Land
Registration Law, that created the Court of Land Registration (CLR) and the office of the
Registers of Deeds. The Law institutionalized the Torrens System of registration whereby
real estate ownership may be judicially confirmed and recorded in the archives of the
government. The system took effect on February 1, 1903.
Five judges were appointed by the Governor-General with the advice and consent of the
Philippine Commission. One Judge was designated Judge of Court; the rest were
assigned Associate Judges. Other members of the court were a clerk and assistant clerk,
both appointed by the Attorney General with the approval of the Secretary of Finance and
Justice. Along with the court were established the Registries of Deeds.
Upon the effectivity of Act No. 2374, the Court of Land Registration was replaced by the
General Land Registration Office (GRLO), and on June 17, 1954 upon the effectivity of
Republic Act No. 1151 was also replaced by the Land Registration Commission (LRC).
The Commissioner of Land Registration took over the powers and functions of the GLRO
who was in direct control of the Registers of Deeds (RDs) as well as the Clerks of Court
of First Instance in land registration. It was then that registry of deeds was established in
every city and every province and branch registry was put up wherever else possible at
the time.
On February 9, 1981, the President of the Philippines issued Executive Order No. 649
reorganizing the LRC into the National Land Titles and Deeds Registration Administration
(NLTDRA). This agency extended effective assistance to the Ministry of Agrarian Reform,
the Land Bank of the Philippines, and other agencies in line with the Land Reform
Program.
In a Presidential Memorandum Circular of September 30, 1988, the NLTDRA was

changed into the Land Registration Authority. This was in line with Executive Order No.
292 dated July 25, 1987, instituting the Administrative Code of 1987, which took effect on
November 23, 1989.
Thus, the Authority has grown through the years. It started as the Court of Land
Registration, later as General Land Registration Office, it became the Land Registration
Commission, reorganized as National Land Titles and Deeds Registration Administration,
and presently as the Land Registration Authority.
Presently, the LRA is headed by an administrator who, pursuant to Executive Order 649,
shall have a judicial rank of an Associate Justice of a Collegiate Court. He is assisted by
deputy administrators who, pursuant to said law and LRA Rationalization Plan, shall have
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the same rank of a Department Assistant Secretary.

How the LRA enhance its revenue collection and how to prevent the corruption in the
Registry of Deeds with regards to registration fees.
OBJECTIVE OF THE STUDY

This study aims to minimize if not totally eliminate the practice in the Registry of Deeds in
handling the registration fees.
STRENGTH
 INCOME GENERATING AGENCY
 QUASI-JUDICIAL
WEAKNESS
 PRONE TO CORRUPTION
 OPPORTUNITY
 PROTECTION OF RECORDS THRU INFORMATION TECHNOLOGY
THREAT
 MERGING WITH LMB, LMS, NAMRIA
ALTERNATIVE COURSE OF ACTION
ACA1- established a new section or unit that will be assigned to monitor all the
transactions in the Registry of Deeds in a day to day basis using a Management
Information System.
Advantage- there will be strict compliance by the Registry of Deeds.
Disadvantage- it requires an additional personnel and expenses.
ACA2- request to congress to increase the registration fees by way of amending the
existing schedule of fees considering the registration fees are already obsolete.
Advantage- it will raise the income of the office.
Disadvantage- it will take so long and the difficulty to look for the sponsor of the bill.
ACA3- conduct training for personal development and professionalism, enhanced

criminal prosecution.
Advantage- personnel will be educated and corrupt personnel will be penalized
Disadvantage- it requires a special panel of attorney to focus on the prosecution aspect.
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I hereby recommend ACA-1 and ACA-3. Although ACA-1 requires new personnel but it
is not necessarily a new personnel. Personnel from Information, Computer and
Technology Division will be assigned to the new unit or section for its purpose and some
And for ACA-3, the LRA have so many lawyers, it is easy to create a panel of prosecution.
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SESSION 7
TOPIC : EXPENDITURE – Local Gov’t. Unit (Part 1)
PRESENTED BY : Ivy Nessa P. Pajaroja
Expenditure
- Expenditure is the total amount of money that a government or person spends
- An expenditure represents a payment with either cash or credit to purchase goods
or services.
- An expenditure is money spent on something.
Classification of Expenditure
1. Revenue Expenditures
- Revenue expenditures are short-term expenses used in the current period or
typically within one year.
- Revenue expenditures include the expenses required to meet the ongoing
operational costs of running a business, and thus are essentially the same as
operating expenses
- Examples:
 Salaries and employee wages
 Purchase of Stationery
 Repairs of Furniture
2. Capital Expenditures
- Capital expenditures represent significant investments of capital that a
company makes to maintain or, more often, to expand its business and
generate additional profits.
- Capital expenditures consist of the purchase of long-term assets, which are
assets that last for more than one year but typically have a useful life of many
years.
- Examples:
 A facility or factory, including an upgrade or expansion
 Computers
 Manufacturing equipment
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Revenue Expenditure
vs
Capital Expenditure
BASIS FOR
REVENUE EXPENDITURE CAPITAL EXPENDITURE
COMPARISON
Meaning Expenditures that provide Expenditures for noncurrent

benefits to the business for assets that provide benefits to
only the current accounting the business for more than one
period accounting period
Nature They are regular and recurring. They are irregular and non-
recurring.
Term Short-term Long-term
Examples Payments of salaries, Repayment of loans, purchase of

maintenance of roads, street machinery
lights, etc.
Fiscal Autonomy
- Fiscal autonomy means that governments have the power to create their own sources
of revenue in addition to their equitable share in the national taxes released by the
National Government, as well as the power to allocate their resources in accordance
with their own priorities.
- Fiscal autonomy is a guarantee given by the Constitution to certain units of the
government. It is intended as a guarantee of separation of powers and of
independence from political agencies. The units that have been given fiscal
autonomy are the constitutional commissions, the ombudsman and the judiciary.
Units That Have Been Given Fiscal Autonomy
1. Judiciary
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2. Office of the Ombudsman
3. Constitutional Commissions
 Commission on Election
 Commission on Audit
 Human Rights Commission
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Case Analysis 2 Bureau of Internal Revenue
Point of View
- Employees of the BIR
Time Context
- 2018 to present

The BIR is the country’s premier tax administration agency. It is mandated by law
to assess and collect all national internal revenue taxes, fees and charges. Below is the
organizational structure, approved per Executive Order no. 366.
Bids and Awards Committee
Chairman
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BIR Procurement System
Vice-Chairman
Members
Technical Working Group
Head
Members
Secretariat
Head
Members
Process of Procurement of Goods and Services
How can the BIR be more stringent in its procurement process?
Objectives
- To formulate and implement policies that will strengthen the procurement process in
the BIR.
- To find out how the policies of procurement can be improved to facilitate the
procurement function
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- To remedy whatever deficiencies, the Commission on Audit has identified in the
procurement process of the BIR
SWOT Analysis
ACA1. The BIR must invest in the professional development of their employees.
Advantages:
1. Increases employee effectiveness in performing their task.
2. Employees will become better workers. By learning the right skills for their
career, employees will be more productive and efficient, thus helping the BIR
procurement process.
Disadvantages:
1. Costs time and money
ACA2. The BIR must build a solid procurement strategy.
Advantages:
1. Faster and more efficient flow of the procurement process.
2. Reduces waste and efficiencies.
Disadvantages:
1. Time consuming
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ACA3. The BIR must establish a feedback system.
Advantages:
1. Improves the contractors’ satisfaction by ensuring that their insights are
considered and incorporated in the formulation of new procurement policies.
2. Improves the procurement process and practices.
Disadvantages:
-
Conclusion
Effective procurement is one of the core ingredients to creating a successful

organization. As such, it is important to make sure that this aligns with the agencies’
specific needs and goals to make sure that it has the products or services at its disposal
to thrive and grow – without breaking the budget.
Recommendation
Based on the suggested Alternative Courses of Actions, ACA 2 is strongly

recommended course of action because a more solid and structured procurement
strategy can highlight new approaches that could deliver cost savings and process
efficiencies.
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SESSION 7
TOPIC : EXPENDITURE – Local Gov’t. Unit (Part 2)
PRESENTED BY : Ronald B. Lodo
The Budget Process in the Philippines
First, the Budget Preparation, this phase involves the formulation of estimates of
revenues and expenditures by the Executive Departments and Agencies. In preparing the
annual budget proposal; the said department makes an estimation of government
revenues. It then determines the budget priorities within available revenues and
borrowing limits. Finally, it translates these approved priorities into expenditures.
The second phase is the Budget Legislation/Authorization; this pertains to the whole
range of legislative action on the budget, leading to the enactment of a General
Appropriations Law for the year. The Philippine House of Representatives first conducts
hearings/debates on the budget.
The House then approves the budget, for submission to the Senate. Senate hearings and
debates are conducted on the budget, which is finally approved. A Bicameral Conference
Committee composed of representatives of the Philippine House of Representatives and
the Senate is convened. After approval by the Bicameral Conference Committee, the
President enacts the budget which is known as the General Appropriations Act.
To discuss thoroughly the Legislative Budget Process; the main unit of the Philippine
House of Representatives involved in the budget process is the Committee Affairs
Department (CAD) composed of the Standing Committees and Sub-Committees. The
CAD’s activities during budget legislation are:
1. Committee Budget Hearings Standing Committees (sometimes referred to as the

Mother Committee/Committee Proper) are responsible for conducting budget
hearings. During these hearings, macroeconomic assumptions/plans are presented
during the Committee budget hearings on a department-wide level. All the heads of
the Executive Departments are invited to these hearings. Sub-Committees are also
responsible for conducting these budget hearings. Budget hearings are conducted
by the Sub-Committees on an agency by agency level. Bureaus and other offices
under the various departments of the national government are invited to these
hearings.
2. Printing of General Appropriations Bill (GAB) on 1st Reading a National
Expenditure Program is formulated and a copy of the GAB on 1st Reading is printed
by the Committee Technical Staff, based on the National Expenditure Program. The
GAB is filed in the plenary session for 1st Reading. In addition to this, during the first
reading, only the title of the GAB or the proposed law will be read during the first
hearing.
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3. Executive Meeting of the Committee: The Committee meets in executive session
to discuss and approve proposed committee amendments to the GAB. Committee
Reports are prepared and filed to the Bills and Index Division.
4. Sponsorship and Plenary Deliberations General principles and macroeconomic
assumptions are sponsored and debated in the plenary session. Deliberations on the
budgets of each department, agency, office, including Government-Owned and
Controlled Corporations.
5. Approval on 2nd Reading of the GAB: Turno en contra speeches are delivered on
the Floor. The turno en contra is a legislative tradition allowing opponents of a bill an
opportunity to explain at length their position, in the same manner, that a bill’s
sponsor delivers a sponsorship speech. After the Turno en Contra, the Philippine
House Members vote on the approval of the GAB on 2nd Reading.
6. Amendments, Finalization & Printing of the GAB for 3rd Reading Inclusion of
possible amendments to the GAB for 3rd Reading are submitted to the Floor.
Amendments are approved for inclusion in the proposed copy of the GAB on 3rd
Reading, which is subsequently printed for deliberation.
7. Approval of the GAB on 3rd Reading: the GAB is distributed to the Philippine
House Members who vote on the approval of the bill on 3rd Reading. The GAB is
then approved on 3rd Reading.
8. Transmittal of the 3rd Reading Copy of the GAB to the Philippine Senate: The
GAB, as approved on 3rd Reading, is transmitted to the Senate for consideration in
a similar manner as deliberated upon by the House.
9. Bicameral (Bicam for short) Conference Committee: The Conferees or
representatives from both the Philippine House and Senate convene as a
Conference Committee in order to settle and reconcile differing provisions of each
Chamber’s version of the bill.
10. Approval of the Bicam Report: During this stage of the budget process, the
Conference Committee Report is ratified by each Chamber.
11. Finalization and Printing of the Enrolled Copy of the GAB: All amendments as
approved in the Committee Report are incorporated into the enrolled copy of the
GAB. The enrolled copy is finally printed.
12. Signing of the Enrolled Copy of the GAB: The enrolled copy of the GAB is
forwarded to the President for signing. Veto powers of the President are exercised in
the enactment of the GAB. The signed appropriations bill is finally enacted into a law
which is termed as the General Appropriations Act. If the GAA isn’t signed by the
President or no vetoes were done, the president is given 30days upon receipt
of the GAA and shall be considered to be implemented after the 30days is
consummated.
The third phase shall be the Budget Execution/Implementation: Budget execution

covers the allotment of appropriations by the central budget authority to and the
incurrence of obligations by, the spending departments and agencies of government. The
steps in the execution of the budget are:
115
1. Release of the funds by the Department of Budget and Management (DBM), once
the GAA is signed therefore we are already authorized to get the budget from the
National Treasury, we formulate the GAA for the transparency since it was
scrutinized by the executive officer down the line so if any malpractice of certain
group of people is intended, the session and plenary activities are the boundaries
and will see to it that all the budget to be acted shall be appropriated properly.
2. Implementation of the various programs and activities by the different government
agencies involves the formulation of allotment and cash programs and Government
Programs/Projects/Activities can now be implemented due to funding release.
Fourth and final phase is the Budget Accountability & Review, This involved the
reporting of actual performance against plans or targets, and it involves the
Monitoring of agency budgetary performance, Comparison and evaluation of actual
performance with the initially-approved work targets, A summary list of checks issued
is submitted on a monthly basis and the Physical & Financial Report of operations is
submitted on a quarterly basis in the form of a trial balance.
References:
https://www.coa.gov.ph/phocadownload/userupload/ABC-
Help/Jurisprudence_B/Ruling11.htm
https://blogginghands.wordpress.com/2020/03/17/the-four-phases-of-the-budget-
cycle-in-the-philippines-as-well-as-the-problems-encountered-during-each-
https://www.straitstimes.com/asia/unhealthy-philippines-2021-budget-has-skewed-
priorities-inquire
116
Case Analysis 2 Increase of PhilHealth Premium Contribution despite Pandemic
Situation
Historical Background:
1. The National Health Insurance Program (NHIP) administered by the Philippine Health
Insurance Corporation was established in 1995 with the passage of Republic Act No.
7875. PhilHealth took over the Medicare functions previously administered by the
Philippine Medical Care Commission since 1972.
2. In 1997, it assumed Medicare functions for government workers from the Government
Service Insurance System and a year later, for the private workers, which was previously
administered by the Social Security system.
3. In the same year, PhilHealth started the Indigent Program.
4. In 1997, PhilHealth started covering self-employed and the informal sector
5. In 2005, PhilHealth assumed Medicare functions from the Overseas Workers Welfare
Administration (OWWA) for overseas Filipino workers.
6. Now, PhilHealth improved the way health services are delivered, financed and
regulated. It has introduced a primary and catastrophic benefit package as it has shifted
to an all case rates system from the previous inflationary and ineffective fee for service
which has been in place since medicare.
7. PhilHealth endeavors to cover the financing of every filipino’s health needs, from
preventive primary to hospital care including catastrophic conditions.
Background of the study:

The Philippine Health Insurance Corporation (PhilHealth) is implementing the
scheduled contribution rate and adjustment to ensure sufficient funding for the healthcare
benefits of its 110 million members as mandated by Republic Act No. 11223 or the
Universal Health Care (UHC) Law. PhilHealth fully recognizes the current pandemic
situation that is taking its toll on many businesses and livelihood of many Filipinos.
However, it is bound to implement the UHC Law which has been the beacon and source
of hope for the country that is aiming for better healthcare services even as it battles the
Coronavirus Disease 2019.
The premium adjustment is provided for in Section 10 of the UHC Law and its
implementing rules and regulations, the guidelines of which are contained in Circular
2020-005 published by PhilHealth on March 5, 2020.
Point of view:
The interim arrangement will be good until congress is able to pass a new law
allowing the deferment of the scheduled premium adjustment in the Universal Health Care
Act of 2019. Should there be no new legislation passed for the purpose, the state health
insurer will proceed with the scheduled premium rate and ceiling as provided for in the
UHC Law.
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Atty. Dante A. Gierran, CPA
President and Chief Executive Officer
PhilHealth
Time context:
2020-Present
Statement of the problem:

How can PhilHealth effectively implement the adjusted premium contribution in
accordance with UHC Law during the pandemic?
Objective:
To determine if the implementation of higher premium contribution is feasible amidst the
pandemic.
SWOT Analysis
Strengths
1. Legally enforceable
2. Financial sustainability
3. Immediate availment of PhilHealth benefits.
Weaknesses
1. Untimely due to pandemic
2. Additional burden to members/employers
Opportunities
1. Provide New health benefit package to entice members to pay their monthly
premium on time and/or embrace the new rate.
2. Implement the “no balance billing policy” to all members’ category.
3. Formulate policies to improve collections and prevent insurance fraud.
Threats
1. Non-implementation by the government due to pandemic.
2. Resistance from the general public/conduct of protests against increase of
premium contribution.
3. Amendment by the congress.

1. Full implementation of the adjusted premium contribution pursuant to UHC Law.
Advantages:
1. New PhilHealth benefits under the UHC law will be implemented and
enjoyed by the members.
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2. Attainment of universal health coverage
3. No qualifying contributions.
Disadvantages:
1. Untimely due to pandemic;
2. Additional burden to the members of PhilHealth.
2. Suspension of the implementation of higher premium contribution during

pandemic.
Advantages:
1. Members/employers will be relieved from additional financial obligation.
2. PhilHealth will not rely on the perceived increase of collection due to higher
premium, instead, it will improve its collection effort to finance its programs.
3. It can still be implemented as soon as the pandemic is over
Disadvantages:
1. New benefit package under the UHC law will not be immediately
implemented
2. Not all Filipinos will be covered by PhilHealth.
3. Qualifying contribution is needed to avail PhilHealth benefits.
4. Needs a law to defer the increase of monthly premiums
3. Status quo
Advantage:
1. The same monthly contribution will be paid by the members; hence, they
will be eager to pay their premium on time to avail PhilHealth benefits under
the Program.
Disadvantage:
1. No additional PhilHealth benefits shall be enjoyed by the members.
Recommendation and Conclusion:

While there is a need to suspend the increase in members’ monthly premiums in
response to the government’s directive of managing the impact of the covid-19 pandemic;
however, in the absence of enabling law for the suspension of said increase, the
impending payment of a higher monthly premiums by the members should be fully
implemented.
This is in consonance with the provisions under the Universal Health Care Law
and reiterated in PhilHealth Circular No. 2020-005. Consequently, those with monthly
basic salary of P10,000 and below will pay a fixed rate of P350 per month and those with
monthly basic salary of P70,000 and above will pay a fixed rate of P2,450.
In the current situation, PhilHealth is collecting a fixed rate of P300 per month to
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those with basic monthly salary of P10,000 and a fixed rate of P1800 to those with basic
salary of P60,000. Some or if not all may disagree, the recommended alternative course
of action in this case study is ACA 1.
This is so because there is a need to increase the contributions of members to
ensure enough funding for the various reforms under the UHC Law, including automatic
membership into the National Health Insurance Program; immediate eligibility to
PhilHealth benefit; assignment of every Filipino to a primary care provider; no copayment
for confinements in basic or ward accommodations; and lifetime PhilHealth coverage.
Thus, it is concluded that these reforms under the UHC Law are more than
sufficient to justify the minimal increase in premium contributions despite the presence of
pandemic in the country.
References:
1. Republic Act No. 7875, as amended by RA 9241 and 10606
2. Republic Act No. 11223
3. PhilHealth Circular No. 2020-005
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SESSION 8
TOPIC : ACCOUNTIING – Local Gov’t. Units (Part 1)
PRESENTED BY : Daniel Julius S. Tumaneng
NGAS for Local Government Units
COA Circular No. 2002-003
In line with COA Circular No. 2001-005 dated October 30, 2001, prescribing the
New Government Accounting System (NGAS) in all local government units except
barangays, effective January 1, 2002, this manual on the NGAS (manual version) is
hereby prescribed to ensure the proper accounting of all financial transactions of the
Local Governments.
The eNGAS is an accounting software developed by the COA to promote
correctness, reliability, completeness and timeliness in recording government financial
transactions and to generate financial reports in accordance with the policies and
procedures of the New Government Accounting System (NGAS).
eNGAS Platforms
It runs on: Microsoft SQL Server and Sybase Adaptive Server Enterprise (ASE)
environments with extension security features to ensure adequate internal control.
eNGAS - Major Beneficiaries
Agency Management
Ensures more efficient operations and effective controls
Serves as tool for sound management decision making
Pinpoints responsibility and accountability
Ensures compliance with regulatory requirements
Agency Personnel
Ensures speedy processing and recording of voluminous government financial
transactions
Generates prompt and accurate outputs/reports
Government Oversight and Regulatory Agencies
Affords up-to-date monitoring of agency operations
Facilitates responsive exercise of regulatory functions
General Public
Provides transparent operations and well-defined accountability
Speeds up delivery of services
Feedbacks on the Implementation of NGAS

Simplified government accounting.
Conform to international accounting standards.
Generate periodic and relevant financial reports for better monitoring of
performance.
Basic Features
Accrual Accounting
A modified accrual basis of accounting is used. Under this method, all expenses
shall be recognized when incurred. Income shall be on accrual basis (e.g. Share from
Internal Revenue Collections) except for transactions where accrual basis is impractical
(e.g. Market Fees) or when other methods may be required by law.
One Fund Concept
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This system adopts the one fund concept. Separate fund accounting shall be
done only when specifically required by law or by a donor agency or when otherwise
necessitated by circumstances subject to prior approval of the Commission.
Special Accounts in the General Fund
Special accounts in the General Fund complete with subsidiary ledgers, shall be
maintained for the following:
• Public utilities and other economic enterprises;
• Loans, interests, bonds issued, and other contributions for specific purposes;
• Development projects funded from the Share in the Internal Revenue Collections; and
such other special accounts which may be created by law or ordinance.
Chart of Accounts and Account Codes
A new coding structure and a new chart of accounts with a three-digit account
numbering system shall be adopted.
Trial Balance
The two money-column trial balance shall be used.
Appropriations, Allotments and Obligations

Journal entry shall no longer be prepared to record the appropriations, receipt of
allotments and incurrence of obligations. In lieu of this, separate registries shall be
maintained by the Accounting Unit to control the appropriations, allotments and
obligations for each of the four classes of expenditures, namely:
1. Registry of Appropriations, Allotments and Obligations – Capital Outlay (RAAOCO)
2. Registry of Appropriations, Allotments and Obligations – Maintenance and Other
Operating Expenses (RAAOMO)
3. Registry of Appropriations, Allotments and Obligations – Personal Services
(RAAOPS)
4. Registry of Appropriations, Allotments and Obligations – Financial Expenses
(RAAOFE)
Financial Expenses
Financial expenses such as bank charges, interest expenses, commitment fees
and other related expenses shall be separately classified from Maintenance and Other
Operating Expenses (MOOE).
Valuation of Inventory
Cost of ending inventory of supplies and materials shall be computed using the
moving average method.
Perpetual Inventory of Supplies and Materials
Supplies and materials purchased for inventory purpose shall be recorded using
the perpetual inventory system. Regular purchases shall be coursed thru the inventory
account and issuances thereof shall be recorded as they take place except those
purchased out of petty cash fund which shall be for immediate use and not for stock.
Maintenance of Supplies and Property, Plant and Equipment Ledger Cards
The Accounting Unit shall maintain Supplies Ledger Cards by stock number and
Property, Plant and Equipment Ledger Cards by category of assets.
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Depreciation
The straight-line method of depreciation shall be used. A residual value
equivalent to ten percent (10%) of the cost shall be set-up and depreciation shall start
on the second month after purchase/completion of the property, plant and equipment.
Public infrastructures shall not be charged any depreciation.
Construction of Assets
For assets under construction, the Construction Period Theory shall be applied
for costing purposes. Bonus paid to the contractor for completing the work ahead of
time shall be added to the total cost of the project. Liquidated damages charged and
paid for by the contractor shall be deducted from the total cost of the asset. Any related
expenses incurred during the construction of the project, such as, license fees, permit
fees, clearance fees, etc. shall be capitalized.
Public Infrastructures
Public infrastructures are assets for use of the general public, such as roads,
bridges, waterways, railways, plazas, monuments, etc. A Registry of Public
Infrastructures (RPI) shall be maintained according to classification to record all
infrastructures for use of the general public. The following are the Registries to be
maintained, classified by category of property, plant and equipment.
Reclassification of Obsolete and Unserviceable Assets, as well as Assets No Longer
Used by the Agency to “Other Assets” Account
Assets declared by proper authorities as obsolete and unserviceable, including
assets of the agency no longer used, shall be reclassified to “Other Assets” account
from the corresponding inventory and property, plant and equipment accounts.
Allowance for Doubtful Accounts
An Allowance for Doubtful Accounts shall be set up for estimated uncollectible
receivables. This will allow for a fair valuation of receivables. Allowance for Doubtful
Accounts shall be provided only for trade receivables.
Elimination of Contingent Accounts
Contingent accounts shall no longer be used. All financial transactions shall be
recorded using the appropriate accounts. Cash shortages and disallowed payments
shall be recorded under receivable accounts “Due From Officers and Employees” and
“Receivables– Disallowances/Charges”, as the case may be.
Recognition of Liability
Liability shall be recognized at the time goods and services are accepted or
rendered and supplier/creditor bills are received.
Interest Accrual
Whenever applicable and appropriate, interest income and/or expense shall be
accrued and recognized in the books of accounts.
Accounting for Borrowings and Loans
All borrowings and loans incurred shall be recorded direct to the appropriate
liability accounts.
Elimination of corollary and negative entries
The use of corollary and negative entries shall be stopped.
Acquisition/Disposition of assets shall be debited/credited direct to the appropriate asset
accounts. If an error is committed, a correcting entry shall be prepared to adjust the
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original entry.
Books of Accounts
What are the Books of Account?
All business establishments and taxpayers are required to keep a record of their
day to day business transactions in order to know the result of their operations. The said
record is referred to as “book of accounts”.
Whenever a business establishment or taxpayer applies for certificate of
registration (COR) with the BIR, it also required to register the book of accounts. Also,
the books of account should also be registered annually on or before January 31 of
each year.
Registration of book of accounts can be any of the following type:
Manual books of account - are the traditional journal, ledger and columnar books you
can buy in the book and office supplies store. Recording in the manual books of account
is handwritten. This is the most of popular type of books of account for small enterprises
since it is less costly and easy to register with the BIR.
Loose-leaf books of account - are printed and bounded journals and ledgers. Recording
can be done using Microsoft Excel.
Computerized book of account - is an accounting program that facilitate efficient and
fast record keeping.
Books of Accounts – Minimum Requirements

The type of books the business will maintain depends on many factors such as the size
of the business and financial capacity. However, regardless of the type of book of
accounts the company would maintain, below are the minimum requirement:
General journal - is referred to as the book of original entry. It records business
transaction in order of date using the principle of “debit and credit”.
General ledger - is referred to as the book of final entry. It summarized all the journal
entries of an account to get the ending balances.
Cash receipt journal - is a special journal used to record cash sales and/or collection of
receivables.
Cash disbursement journal - is a special journal used to record cash payments of
expenses and/or payables.
Sales journal - is a special journal used to record sales on credit (receivable from
customer)
Purchase journal - is a special journal used to record purchases on credit (payable to
supplier)
References:
https://mpm.ph/what-are-the-books-of-account/
https://slideplayer.com/slide/7806868/
https://coa.gov.ph/index.php/2013-06-19-13-06-41/manuals/category/163-for-local-
government-units
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Case Analysis 2 QUIRINO MEMORIAL MEDICAL CENTER
TIME CONTEXT The problem is still occurring at the present (2020 up to present).
POINT OF VIEW We are taking the issue of delayed benefits very seriously. When
matters like this come to our attention, we conduct thorough investigations and concerned
offices are made to answer to the Secretary and develop solutions to improve the delivery
of services and expedite processes. As health workers, many of us in the DOH—including
members of our Executive Committee—have experienced working on the ground, in our
health facilities, which is why we understand the challenges in the frontline —being
overworked, underpaid, demoralized, and in this pandemic, even more vulnerable.
Administrative Order (AO) No. 361 dated November 16, 2020 authorizes the grant of a
COVID-19 Special Risk Allowance (SRA) not exceeding P5,000 per month to public and
private health workers (HWs) who are directly catering to or are in contact with COVID-
19 patients in recognition of the heroic and invaluable contributions of HWs throughout
the country who bravely and unselfishly risk their lives and health by being at the forefront
of the national effort to address the public health emergency.
AO No. 36 is in line with Republic Act (RA) No. 11494 or the "Bayanihan to Recover as
One Act", which affirmed the existence of a continuing national emergency in view of the
unabated spread of the COVID-19 virus and the ensuing economic disruption therefrom.
Among others, Section 4(h) of RA No. 11494 authorized the national government to grant
SRA to all public and private HWs directly catering to or in contact with COVID-19 patients
for every month that they are serving during the state of national emergency as declared
by the President.
In the case of the public HWs, the SRA shall be in addition to the Hazard Pay granted
under RA No. 7305 or the "Magna Carta of Public Heaith Workers" and the COVID-19
Active Hazard Duty Pay provided under AO No. 35.
Moreover, the SRA for the public and private HWs shall be exempt from income tax.
STATEMENT OF THE PROBLEM How does QMMC acted in the delay of claims of
SRA and other monetary benefits for their frontliners?
Objective of the Study
 To identify the assistance to QMMC Healthcare workers so that they can

immediately help their own families
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 Identify the lacking of qualification for the grant of SRA to the employees of
QMMC.
 Identify the basis of qualification of SRA for frontliners.
SWOT ANALYSIS
Strength
 Presence of guidelines/ circulars/ Aos from DOH, DBM and Malacanang regarding
grant of SRAs to the Health workers.
 Malacanang supports the grant of SRA and monetary benefits for the front liners.
 QMMC is an income generating institution. It provides various assistance/support
for the frontliners until the claim of SRA and other benefits were given to them.
Weaknesses
 Hospital and healthcare facilities were unable to understand those guidelines

and circulars.
 Delay of distribution of allocated budget for the different DOH hospitals.
 Lack of manpower to do payroll of various benefits.
Opportunity
 Collaboration with different companies.

 Willingness of the hospital provide necessary requirements for the grant of SRA.
Threat
 Employees will be buried in debt because of getting loan assistance.

 QMMC will going to have budget exhaustion because of the free food,
transportation, loans and other services that will be provided to the employees.
 Pressure to reduce costs while meeting the expectations and needs of
employees.
ACA 1 Provision of various assistance of QMMC to their frontliners
Pros
 It will make employees increase their eagerness to go to work and to their job
properly
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Cons
 Employees tend to spend excessively.

 Employees tend to use their leave credits.
ACA 2 Conduct orientation and discussion on the guidelines on the grant of SRA
Pros
 Employees will understand the guidelines properly

 Government hospitals will have a uniformed computation in SRA.
Cons
 Employees will tend to complain.
ACA 3 Additional manpower for the preparation of payroll and validation of data gathered
for the of various benefits
Pros
 New employees can also bring new ideas and perspectives to the table by
encouraging your staff to innovate.
 The more people are available to work, the faster projects can be completed or the
more projects a company can take on.
 When a company employees a sufficient number of workers, workers generally do
not need to work a high number of overtime hours. As a result, workers usually are
less stressed and more rested and alert.
Cons
 Hiring top talent can be a challenge
Conclusion
Quirino Memorial Medical Center is one of the recognized government hospitals in the
Philippines and dealing with this pandemic, the employees specially the health care
workers risking their lives in taking care of patients especially the covid-19 patients to the
point that they were infected by the virus. By granting them such compensation like SRA
is a motivating factors for them and to make them feel that government recognizes their
hardships during this time of pandemic. Therefore, this kind of compensation must be
continued as an acknowledgement and appreciation of their sacrifices.
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References:
https://www.kff.org/policy-watch/funding-for-health-care-providers-during-the-pandemic-
an-update/
https://newsinfo.inquirer.net/1418747/health-workers-send-dialogue-request-to-duterte
https://www.dbm.gov.ph/wp-content/uploads/Issuances/2020/Joint-Circular/DBM-DOH-
JOINT-CIRCULAR-NO-2-s-2020.pdf
https://doh.gov.ph/press-release/DOH-statement-on-the-delayed-benefits-of-health-
care-workers
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SESSION 8
TOPIC : ACCOUNTIING – Local Gov’t. Units (Part 2)
PRESENTED BY : Eduardo B. Borela
Illustrative Accounting Entries. This can be found at Section 28 of the Government

Accounting Manual for LGUs. That includes the illustration of the Annual Budget, Estimate
Income, Appropriation, Obligation, Consummated obligations, Pre-costing trial balance,
Adjustment of overestimated and underestimated income, Reversions of non-continuing
appropriations and allotments, Recognition of continuing appropriation and allotments
from current year appropriation, Closing Entries and Post-closing trial balance.
Financial Statements
Financial Statements are a structured representation of the financial position and
financial performance of an entity.
The objectives and general purpose of financial statements:
- Providing information about the sources, allocation, and uses of financial
resources.
- Providing information about how the entity financed its activities and met its
cash requirements.
- Providing information about the financial condition of the entity and changes in
it.
Components of Financial Statements

b) Statement of Financial Performance
c) Statement of Changes in Net Assets/Equity
d) Statement of Cash Flows
e) Statement of Comparison on Budget and Actual Amount
f) Notes to Financial Statements
a. Statement of Financial Position

- Is a formal statement which shows the financial condition of an entity at a
certain date.
- It includes information on the three elements of financial position, namely
assets, liabilities and equity.
Information to be presented on the face of Financial Position: Cash and cash

equivalents; receivables from exchange transactions; Recoverable from non-exchange
transactions (taxes and transfers); financial assets; Inventories; Property, Plant and
Equipment; Intangible assets; Taxes and transfer payable; Payable under exchange
transactions; Provisions; Financial liabilities and Net equity.
b. Statement of Financial Performance
The Statement of Financial Performance shows the results of operation/performance
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of the entity at the end of a particular period.
Information to be presented in the Statement of Financial Performance:
- Revenue
- Finance Costs
- Gain or loss recognized on the disposal of assets or settlement of liabilities
attributable to discontinuing operations; and
- Surplus or deficit.
c. Statement of Changes in Net Assets/Equity
The Statement of Changes in Net Assets/Equity shows the changes in equity between
two accounting periods reflecting the increase or decrease in the entity’s net assets during
the year.
d. Statement of Cash Flows
The Statement of Cash Flows summarizes the cash flows from operating, investing
and financing activities of an entity during a given period. It identifies the sources of cash
inflows, the items on which cash was expended during the reporting period, and the cash
balance as at the reporting date.
Presentation of Statement of Cash Flows:
1. Operating Activities
2. Investing Activities
3. Financing Activities
e. Statement of Budget and Actual Amount
A comparison of budget and actual amounts will enhance the transparency of financial
reporting in government. This shall be presented by government agencies as a
separate additional financial statement.
f. Notes to Financial Statements
- Notes to financial statements are integral parts of the financial statements.
- Provide additional information and help clarify the items.
- Provides narrative description or disaggregation of items.
- Include brief entity information, significant accounting policies, a statement of
compliance with PPSAs, summary of significant accounting policies.
- Measurement basis used in preparing the financial statements.
- And accounting policies used.
PPSAs – means the Philippine Public Sector Accounting Standards.

Responsibilities of Fiscal Authorities of LGUs on Financial Statements.
Section 320. Responsibility for Financial Statements. The responsibility for the fair
presentation and reliability of financial statements rests with the management of the
reporting entity, particularly the head of finance/accounting office and the head of entity
or his authorized representative. The Statement of Management Responsibility for
Financial Statements (Annex 3) discloses the entity’s responsibility for the preparation of
the financial statements.
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Annex 3/ Sample:
The Management of the ______(name of LGU)_____is responsible for all the
informal and representations contained in the accompanying Statement of Financial
Position as of or “as of December 31, ___ and the related Statement of Financial
Performance, Statement of Cash Flows and the Notes to the Financial Statements for the
year then ended. The financial statements has been prepared in conformity with the
International Public Sector Accounting Standards and retained amounts that are based
on best estimated and informed judgement of management with the appropriate
consideration to materiality.
In this regard, management maintains a system of accounting and reporting which
provides for the necessary internal controls to ensure that transactions are properly
authorized and recorded, as are safeguarded against unauthorized use or disposition and
liabilities are recognized.
Signatures of Local Accountant and the Local Chief Executive with the dates.
Transforming local government is critical to developing countries like the Philippines Local
government units (LGUs) grapple with problems related to poverty, peace and order,
social vices, as well as environmental change and natural disasters. Many LGUs are
burdened by bureaucracy or red tape, limited financial and human resources, as well as
corruption. On top of these, apathy from external (community) as well as internal
(employees) stakeholders continue to challenge the LGUs.
(This is retrieved from the Multi case study of LGUs in the Philippines (Mendiola Teng-
Calleja, 06/07/2018). “Facing the challenges of local government transformation in the
Philippines.”
References:
- www.coa.gov.ph
- Government Accounting Manual for Local Government Units (Accounting Policies
Volume I).
- Squaring the circle: Facing the challenges of local government transformation in
the Philippines I INLOGOV Blog (6/10/2021).
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Case Analysis 2 Silvino Lobos, one of the poorest Municipality in the Philippines
Introduction
Silvino Lobos is one of the poorest municipalities in the Philippines and the poorest
in Eastern Visayas. It is a 4th class municipality in the province of Northern Samar.
According to the 2015 census, it has a population of 15,299 people. It is hoped
that this study will try to identify some measures for the growth and development of Silvino
Lobos.
I am considering the viewpoint of the Mayor of the municipality in this study. The
time context considered the year 2015 to 2019.
Background
Silvino Lobos is a former barrio of the town of Pambujan. Its former name is Barro
Suba until it became a town in 1965.
As a fourth class municipality, its poverty incidence is 78.47% as of 2015. But
according to the 2018 report, 65% of the population is still considered poor.
The municipality has a revenue of P70,823,420.37 per year as of 2015. It has a
tropical rainforest climate and the natives speaks Waray and Tagalog. Its population
growth rate is only + 1.29% per year as of 2015 census data.
Silvino Lobos economy is agriculture and timber-based since it is surrounded with
forests. Recently, tourism-based activities is starting to develop as its cool weather
condition with the town’s temperature condition comparable to Baguio and the rugged
terrain comparable to Sagada.
Camping tour organizers have been bringing tourists to the site as a new road
paved the way for motor vehicles to reach Silvino Lobos overland on a much shorter time
compared to motorized boats that ply the Pambujan River to reach the town in a much
longer time. Prior to discovery of river cruise, the town was reachable only by hiking
through mountain trails from the nearest transport access point.
Statement of the Problem:
How can the municipality of Silvino Lobos increase its sources of income, achieve
developments and reduce its poverty incidence or threshold?
SWOT Analysis:
Strength Agriculture Rainforest Cool Weather
Weaknesses Poor road Poor economy Poor sour es of
condition income
Opportunities A potential source A potential for the Has a huge
for vegetables development of a potential for
and other Hydro-electric tourism.
agricultural plant.
products for the
province.
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Threats NPA Corruption Typhoons and
other calamities.
Alternative Courses of Actions (ACA):

ACA 1. Appeal to the National Government for the construction of roads and bridges to
allow vehicle entry and bring their agricultural produce to the nearby potential markets.
Advantages:
 This will allow access to the municipality.
 Will also allow efficient transport of their agricultural products to the potential
markets outside the municipality.
 This encourage and produce more potential tourists in the municipality.
Disadvantage:
 Will affect its rainforest due to road constructions and other related developments.
ACA 2. Introduce and encourage vegetable planting and production as well as flowers
and other potential plants that grow in a cool weather condition.
Advantages:
 Will result to make the locals more productive.
 Will result as a major source of income.
Disadvantage:
 Will cause the cutting of some trees in some areas.
ACA 3. Explore the tourism potential of the municipality.

Advantages:
 Will be a new source of income for the locals.
 Will cause an aggressive economic activity in the municipality.
 Will be a major source of income for the municipality.
Disadvantage:
 Will cause pollution and other environmental concerns.
ACA 4. Allow the presence of the military in the municipality and its territory.
Advantages:
 Will promote a safe and peaceful environment.
 Will ensure the protection of the tourists.
Disadvantage:
 Will result into a potential conflict with the NPA.
ACA 5. Explore the opportunity of developing a Hydro-electric power plant in the area.
Advantages:
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 Will be a major source of income for the municipality.
 Will create many jobs.
 Will cause more developments for the municipality.
Disadvantage:
 A major environmental concern.
Conclusion:
Based on the strength of the municipality of Silvino Lobos, there are opportunities
that can be explored in order for this 4th class municipality to increase its sources of
income, achieve developments, and reduce its poverty threshold. Particularly, the
municipality can increase its agricultural output that would include vegetables and other
agricultural products that can be marketed to the nearby towns and cities or even to the
whole province of Samar. It has also the huge potential as a tourist attraction and
destination. But this can only be attained when the roadway going to the municipality
will be improved and make it passable to all kind of transportation.
It is therefore concluded that there is a need to improve the roadways and ask
the attention and funding from the national government for this purpose. This will bring a
significant economic growth and development for the municipality.
Recommendations:
ACA 1, 2, 3, & 4 are recommended.
ACA 1 will bring economic activity for the municipality since it will cause an increased
income for the inhabitants of this 4th class municipality. ACA 2 will make the inhabitants
more productive with diverse products like Baguio City and Tagaytay. ACA 3 will
encourage more investors, therefore, will be an engine of growth for the municipality. And
ACA 4 will ensure the safe implementation of the projects of the government and the
protection of the people and its future tourists and other investors.
ACA 5 will require huge investment, and therefore, maybe considered in the future as a
major source of income.
References:
- Poverty situation in Eastern Visayas (First Semester 2018) PSA-Eastern Visayas
– Google Search
- Silvino Lobos - Wikipedia
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SESSION 9
TOPIC : AUDITING – Local Gov’t. Units
PRESENTED BY : Sunday-Ann G. Regio
Organizational Set-Up of COA on LGU Audit
COA ORGANIZATIONAL STRUCTURE
The Commission Proper
The Commission Proper is composed of a Chairperson and two Commissioners

who shall together be known as the Commission Proper. The Commission Proper sits as
a body to determine policies, promulgate rules and regulations, and prescribe standards
governing the performance by the Commission of its powers and functions.
The Chairperson acts as the presiding officer of the Commission Proper and the
chief executive officer of the Commission. As such chief executive officer, he/she shall be
responsible for the general administration of the Commission.
The Assistant Commissioners
The Assistant Commissioners compose the executive management committee of

the Commission which is known as the Assistant Commissioners’ Group (ACG).
An Assistant Commissioner heads a sector, numbering nine, as follows:
Audit Sectors
1. Corporate Government Sector
2. Local Government Sector
3. National Government Sector
4. Special Services Sector
Support Sectors
1. Administration Sector
2. Government Accountancy Sector
3. Legal Services Sector
4. Planning, Finance and Management Sector
5. Professional Development Sector
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Audit Sectors
Pursuant to COA Resolution No. 2012-019 dated December 20, 2012, the four
audit sectors have the following clusters/offices:
1. National Government Sector with audit jurisdiction over national

government agencies
2. Local Government Sector with audit jurisdiction over local government units
and stand-alone agencies outside of the National Capital Region
3. Corporate Government Sector (CGS) responsible for the audit of

government owned/controlled corporations
4. Special Services Sector
The 16 COA Regional Offices shall be responsible for the audit of local
government units, water districts and stand-alone agencies which are based in
their respective territorial jurisdiction.
Cluster – NCR
COA Regional Office – CAR, La Trinidad, Benguet
COA Regional Office No. I, San Fernando City, La Union
COA Regional Office No. II, Tuguegarao City, Cagayan
COA Regional Office No. III, San Fernando City, Pampanga
COA Regional Office No. IV-A – CALABARZON, Quezon City
COA Regional Office No. IV-B – MIMAROPA, Quezon City
COA Regional Office No. V, Legazpi City, Albay
COA Regional Office No. VI, Iloilo City
COA Regional Office No. VII, Cebu City
COA Regional Office No. VIII, Candahug, Palo, Leyte
COA Regional Office No. IX, Zamboanga City
COA Regional Office No. X, Cagayan de Oro City
COA Regional Office No. XI, Davao City
COA Regional Office No. XII, Cotabato City
COA Regional Office No. XIII, Butuan City
COA Regional Office – ARMM, Cotabato City
Audit Groups/Teams
Audit Groups and Teams under each of the clusters in the Corporate, Local and
National Government Sector and under each of the 16 COA Regional Offices are
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deployed to the government agencies. They hold office at the government agencies
identified as their official stations.
An audit group is headed by a Supervising Auditor holding a plantilla position of

State Auditor V while an Audit Team is headed by an Audit Team Leader holding a
plantilla position of State Auditor IV.
COA KEY SERVICES
Audit Services
The Commission is the country’s Supreme Audit Institution (SAI), mandated by the
Constitution to audit government agencies/entities. The audit consists of several types
and is performed by various offices in the Commission.
1. Regular Audits
An Audit Team composed of Audit Team Leader and Team Members is

assigned to audit specific government agency/entity. This Team is under the direct and
immediate supervision of a Supervising Auditor who heads an audit group composed of
more than one audit team.
The Audit Team conducts the following audits:
a. Financial and Compliance Audits - to determine (a) whether their financial

operations are properly conducted, (b) whether their financial reports are fairly presented,
and (c) whether they have complied with applicable laws, regulations, policies and
procedures in handling operations. The primary objective of these audits is to express an
opinion on the fairness with which the financial condition and results of operations are
presented.
b. Performance Audit- concerned with the review of management efficiency

with the end in view of eliminating waste and promoting efficient use of public funds and
resources and the ascertainment of the agency’s effectiveness by determining whether
desired results have been achieved and programs have accomplished their purposes and
objectives.
2. Special Audits
The Special Audits Office (SAO) of the Special Services Sector (SSS) is
tasked to conduct performance audits which is concerned with the review of management
efficiency with the end in view of eliminating waste and promoting efficient use of public
funds and resources and the ascertainment of the agency’s effectiveness by determining
137
whether desired results have been achieved and programs have accomplished their
purposes and objectives.
The SAO uses three approaches in the conduct of VFM audits:
a. Agency-based approach - An audit of a particular program, project or activity

of a selected agency.
b. Government-wide audit is the simultaneous examination of a management
function or activity in a number of government agencies which is expected to provide:
 basic data for comparing practices and operations between and among
government agencies in the same sector or with the whole government;
 collated data of practices in various government agencies that could show
the magnitude or insignificance of deficiencies in the system;
 audit criteria which are supported by best practices;
 awareness on the part of auditors and the auditees of how their agency
compares with other government agencies in terms of objectives, functions, operations,
internal and administrative controls, and output; and
 opportunities to the audited agency for benchmarking with other government
agencies.
c. Sectoral Audit refers to an audit of programs or activities that are delivered

by more than one government agency and is expected to provide:
 an overall picture of how various segments of a program are implemented
and possibly lead to the identification of areas where improvements can be introduced;
 audit criteria or benchmark for future audits of government programs by
various government agencies;
 basis for auditors to realize that program difficulties may not lie with a single
agency but possibly with the way the agencies involved in the program work together;
 an arena for airing program difficulties by audited agencies; and
 opportunity for making changes in the program, if necessary.
The SAO is also tasked to conduct other special audits, as follows:
a. Rate Audit – pertains to the examination and audit of the books, records and
accounts of public utilities in connection with the fixing of rates of every nature.
b. Levy Audit – pertains to the audit of non-government entities required to pay

levies or government share.
c. Subsidy Audit – pertains to the audit of non-government entities subsidized
by the government or government authority.
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3. Fraud Audits
The Fraud Audit Office (FAO) of the Special Services Sector conducts
audits of government agencies with probable fraudulent transactions to safeguard
government assets against abuse and fraud and to respond to the increasing public
demand for fidelity in the use of government funds and properly.
Legal and Adjudication Services

The Commission renders legal and adjudication services on matters pertaining to
the following:
1. Appeal on audit disallowances (Disapproval in the audit of

transactions/disbursements); and on audit charges (inclusion or addition to an
accountability pertaining to the assessment, appraisal or collection of revenues, receipts
and other incomes such as those arising from under-appraisal, underassessment or
under-collection);
2. Money claim (a demand for payment of a sum of money, reimbursement or

compensation arising from law, or contract due from or owing to a government agency)
due from or owing to any government agency);
3. Request for relief from accountability for losses due to acts of man, i.e. theft,
robbery, arson, etc.;
4. Request for approval for negotiated sale of property pursuant to Section 380
of the Local Government Code;
5. Request for concurrence in the hiring of legal retainers by government

agency; and
6. Request for legal opinion relative to government transaction involving
disbursement of public funds or issues within the jurisdiction of the Commission.
Technical Services
The Commission is manned by technical personnel such as civil engineers,

mechanical engineers, electrical engineers, IT specialists, etc.to provide technical
assistance to auditors in the determination of the reasonableness of prices of goods,
consulting services and infrastructure projects, and on matters pertaining to other
technical evaluation, including the conduct of fraud audit. They likewise assist in the
settlement/adjudication activities requiring technical expertise.
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Training Services
The Commission thru its Professional Development Sector conduct training

programs for personnel of other government agencies, as well as undertake the sale of
COA-issued books and manuals to the other government agencies.
Other Services
The Commission also provides copies of audit reports and certified copies of
documents in the custody of the Audit Teams and Clusters/Regional Offices, and in
other offices of the Commission, upon request of any government agency, or any
concerned citizen.
New Audit Approaches for LGUs

While local government units have an Internal Audit Manual for LGUs, issued
through Local Budget Circular No. 110, s. 2016, they may adopt applicable provisions of
the RPGIAM as the same may also be applicable to them.
PHILIPPINE GOVERNMENT INTERNAL AUDIT MANUAL (PGIAM)

 The PGIAM was first issued by the Department of Budget and Management (DBM)
through Circular Letter No. 2011-5 dated 19 May 2011 pursuant to its mandate
under Executive Order No. 292, s. 1987
 Administrative Order (AO) No. 119, S. 19892, as amended by AO No. 278, s. 1992
and AO No. 70, s. 2003; Memorandum Order No. 277, S. 1990; and Memorandum
Circular No. 89, s. 20056.
 The PGIAM complements the DBM-issued National Guidelines on Internal Control
Systems (NGICS)7, which serves as a guide to the heads of agencies in
strengthening their respective internal control systems to better respond to the
requirements of the publics they serve.
 Section 124 of Presidential Decree No. 1445, s. 19788, as amended, stipulated
that the direct responsibility to install, implement and monitor a sound system of
internal control rests with the agency head.
Accordingly, all heads of government agencies were directed under the aforecited
OP issuances to strengthen their respective internal control systems, and establish an
Internal Audit Service/Unit (IAS/IAU) as may be necessary to be a key part thereof.
After nine (9) years after the issuance of the 2011 PGIAM, the Department of
Budget and Management (DBM) issued Circular Letter No. 2020-8 dated May 26, 2020,
to inform government agencies of the issuance of the Revised Philippine Government
Internal Audit Manual (RPGIAM).
After nine (9) years since its issuance, the 2011 PGIAM has been revised to clarify
and address various emerging issues and concerns that are relevant in the effective and
efficient conduct of internal audit in the government.
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Such issues and concerns were gathered from internal auditors during the series
of internal audit fora for departments and GOCCs that were conducted by the DBM in
2019, as well as the focus group discussions with departments concerned during the
implementation of the DBM project under the Budget Reform Program entitled,
"Assessment of Internal Control and Internal Audit in National Government Agencies" in
2018 and 2019.
The RPGIAM aims to assist government agencies concerned in the Executive
Branch in establishing and thereafter strengthening their internal audit function to promote
effective, efficient, economical and ethical operations in government, among other
objective.
Moreover, the Manual has been revised to have certain provisions clarified and/or
harmonized with pertinent laws, rules, regulations, guidelines and standards on the
matter, including the Commission on Audit's (COA) Internal Audit Standards for the
Philippine Public Sector (IASPPS)9.
These provisions of the IASPPS were previously coordinated by the DBM with the
COA so as to clarify and/or address the matter.
The RPGIAM shall serve as a generic guide for internal auditors in government to
help them:
o understand the legal bases, nature and scope of the internal audit function in the
Philippine public sector, including the institutional arrangements, protocols and
processes for the conduct of the same;
o identify and prioritize potential audit areas for appraisal as they progress in the
internal audit activity; and
o describe the procedures logically to facilitate a structured and systematic approach
in internal auditing.
Among the changes that were integrated in the RPGIAM are the following:
o Inclusion of good practices by the lAS of certain departments in the Executive
Branch relative to organizing the IA, as well as certain phases of the IA process;
141
o Clarification on the distinction between internal audit and internal quality audit, the
latter of which is being conducted as part of the implementation of an Iso 9001
certified quality management system;
o Clarification on certain provisions of the COA IASPPS, which include the following:
o Authority, purpose and functions of an IAS/IAU;
o Involvement of internal auditors in the improvement of operations, and the
provision of assistance on the effectiveness of governance, risk management and
control processes;
o Appropriate series of actions to be taken by the IAS/IAU when it receives a request
from internal and external parties for a copy of internal audit plans, reports and
other related/supporting documents; and
o Exhaustion of administrative remedies in the case of non-resolution of certain
issues within the agency.
On the other hand, the Judicial and Legislative Branches and the Constitutional
Offices are also encouraged to utilize the revised PGIAM in the operationalization of their
internal audit function.
The revised PGIAM is divided into two (2) parts:

o Part I: Guidelines - outlines the basic concepts and principles of internal audit and
the internal control system, as well as the policies and standards that will guide
government agencies in organizing, managing, and conducting an effective
internal audit; and
o Part II: Practices - contains the approaches, tools and techniques that could be
used to facilitate the conduct of internal audit activities by the IAS/IAU, to assist
the agency head in undertaking a separate evaluation of the internal control
system to determine if controls are well designed and properly implemented.
The content of the revised PGIAM is consistent with existing national laws, rules
and regulations, as well as international best practices to the extent allowed by Philippine
jurisprudence.
Hence, the same is applicable to all departments and agencies of the Executive
Branch, including GOCCs/GFIs and SUCs.
While the PGIAM is also applicable to LGUs, an Internal Audit Manual for LGUs
was issued through Local Budget Circular No. 110, s. 2016 to serve as a practical guide
in establishing and operationalizing internal audit in the Philippine local government
setting.
Pending the revision of the Internal Audit Manual for LGUs to harmonize the same
with the changes made in the revised PGIAM, the LGUs shall adopt the applicable
provisions of the latter to further strengthen their respective internal control systems
through the conduct of internal audit.
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143
144
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COA conducts online training on the Handbook on SK Financial Transactions
Published: 12 April 2021
The Commission on Audit (COA) conducted the first batch of the Online Training
on the Handbook on the Financial Transactions of the Sangguniang Kabataan (HFTSK)
on 26 February 2021 to help youth civil leaders realize financial independence in the
management of their funds.
A total of 45 SK officials from different barangays in Metro Manila, Baguio City,
Rizal, Batangas, Pangasinan, Zambales, Tarlac, Quezon, Mindoro, Eastern Samar,
Southern Leyte, Sorsogon and Davao Oriental participated in the training conducted by
the Commission’s Government Accountancy Sector (GAS) and the Professional and
Institutional Development Sector
The session proper covers the specific rules, policies and procedures relating to
the proper accounting, monitoring and documentation of the SK financial transactions,
including SK budget, receipts/collections and deposits of SK Funds,
disbursements/payments of SK Funds, supplies and materials, and property and
equipment, and the SK financial statements and other reports. The course also provides
a brief discussion on how to utilize the online facilities and introduced the use of GAS
eLearning System, an online portal from which the asynchronous sessions are being
facilitated.
DBM Releases P9.02 Billion Funds for Special Risk Allowance of Public
and Private Health Workers
Acting on the request received from the Department of Health (DOH) last June 23,
2021, the Department of Budget and Management (DBM) has released the Special
Allotment Release Order (SARO) and the Notice of Cash Allocation (NCA) amounting to
P9.02-billion to the DOH to cover the payment of the Special Risk Allowances (SRA) of
public and private health workers.
The said funds covers the payment of the SRA not exceeding P5,000.00 per month
from December 20, 2020 to June 30, 2021, pursuant to Administrative Order No. 42, s.
2021, dated June 01, 2021, as implemented thru DBM-DOH Joint Circular No.1 dated
June 16, 2021.
With the funds now made available to the DOH, qualified public and private health
workers can expect the payment of the SRA not later than June 30, 2021.
The DBM is committed to fulfill its mandate of promoting the efficient and effective
management of the national budget to support its budget priorities while also ensuring
that the needs of the Filipino people are met, especially of healthcare workers in this time
of pandemic.
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DBM Welcomes Decision to Upgrade Nurse II Salary Grade
and Retain Nursing Position
The Department of Budget and Management (DBM) welcomes the decision of the
Office of the President (OP) to upgrade the salary grade (SG) of Nurse II from SG 15 to
SG 16 and to retain the position titles of Nurse III to Nurse VII with their corresponding
SGs.
For this purpose, the DBM is currently in the process of crafting the procedural
guidelines to implement this decision and to ensure that the same will be implemented,
consistent with existing rules and regulations. Consultations with the Department of
Health (DOH) and the OP are also scheduled by the DBM to ensure the availability of
funds for the purpose.
The DBM wishes to clarify that it is not its intention to deceive our nurses as we
have been consistent in saying that absent of any legal basis to effect the upgrading of
the salary grade of the Nurse II position, the provisions of Budget Circular No 2020-4 will
continue to take effect consistent with the decision of the Supreme Court in Ang NARS
Party-List, et. al. vs. the Executive Secretary, et. al (G.R. No. 215746).
DBM Releases P646.97 Billion for COVID-19 Initiatives Under the Bayanihan Laws
As of April 15, 2021, the Department of Budget and Management (DBM) has
released a total of P646.97 Billion to support the implementation of various projects,
activities and programs (P/A/Ps) in response to the COVID-19 pandemic under the
Bayanihan Laws.
Of this amount, P387.17 Billion was released pursuant to Republic Act (RA) No.
11469 or the Bayanihan to Heal as One Act (or Bayanihan I). Implementing agencies
reported that they have already obligated P358.24 Billion and disbursed P339.65 Billion,
thus corresponding to a 92.53% obligation rate and 94.81% disbursement rate,
respectively.
Releases under RA No. 11465 or the Bayanihan to Recover as One Act (or
Bayanihan II), meanwhile, has amounted to P259.80 Billion. Of this, P132.65 Billion has
been obligated with only P93.31 Billion disbursed based on agency reports submitted to
the DBM. This translates to a 51.06% obligation rate and 70.34% disbursement rate.
In addition to the releases made to support the Bayanihan Laws, the DBM has also
released P6.46 Billion for various COVID-19 P/A/Ps upon the expiration of Bayanihan I,
with P4.17 Billion already obligated (64.56%) and P3.22 Billion disbursed (77.28%) as of
April 15, 2021. Said releases were charged against regular funds under the FY 2020
GAA.
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Meanwhile, fund releases charged against Section 10 of RA No. 11465 are still
valid for obligation and disbursement until June 30, 2021 by virtue of RA No. 11519 which
extended the availability of appropriations authorized under the Bayanihan II Law. Upon
the expiration of the Bayanihan Laws, all unreleased appropriations shall lapse while
undisbursed funds shall revert to the unappropriated surplus of the General Fund.
REFERENCES:
 https://dbm.gov.ph/wp-content/uploads/Issuances/2020/Circular-
Letter/CIRCULAR-LETTER-NO-2020-8.pdf
 https://gabotaf.com/2020/06/01/update-revised-philippine-government-internal-
audit-manual-pgiam-dbm-circular-letter-no-2020-8/
 https://newsinfo.inquirer.net/1365738/amid-covid-19-restrictions-coa-looking-to-
modernize-auditing-process
 Commission on Audit
 Department of Budget and Management
 COA_Key_Services_Procedural_Flow.pdf
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Case Analysis Reform of AFP Pension Fund Set-Up
Time Context
 This is an ongoing discussion on the AFP Retirement Law PD 1638 as
amended by PD1650 and proposal was passed accordingly due to the alarming situation
on the fiscal burden and difficulty in the payment of pensions of existing and incoming
MUP Retirees.
Point of View
Senator Imee Marcos on Sunday cited the urgency of replacing a deactivated

pension fund for military and uniformed personnel even as she called for a Senate probe
to clarify the financial status of the Retirement and Separation Benefits System (RSBS)
and its ability to reimburse members’ contributions.
Marcos noted that the MUPs’ salary contributions used to earn at a higher interest
rate than most banks can offer.
“No pension fund has yet replaced the RSBS which stopped collecting member
contributions since it shut down in 2016 due to gross mismanagement,” said Marcos,
chairperson of the Senate committee on economic affairs.
Marcos said the RSBS interest payments also keep growing, in effect depleting
the retained resources of GOCCs (government-operated and -controlled corporations).
Although RSBS has said it remains debt-free and far from bankrupt, Marcos cited
findings by the Commission on Audit that the pension fund had overstated its total assets
by P2.54 billion and Ph63 billion in the two years prior to its deactivation.
Historical Background
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 There is a need to set-up a new Pension Fund System for the Military
Uniformed Personnel
SWOT Analysis
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Strength Weaknesses Opportunity Threat
There are lessons

It is hard to This can also be
learned from the This will be
convince MUPs form of
mismanagement of another venue of
that such system investment on the
RSBS that can be corruption
will work part of the MUP
avoided
National National
Government Government will
Contributions of There are trust
Spending will have to allocate
MUPs shall generate issues on the part
decrease if huge amount as
interest of the MUPs
implemented its starting
properly operational fund
There are existing This cannot be This might trigger

facilities that can be implemented early retirement
used immediately of MUPs
Alternative Course of Action 1

Continuation of RSBS
Advantages
 There are existing facilities ready for operational use
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 There is a current organizational set-up
 There are employees ready for utilization
 Records of members are already established
 Systems are ready for continuation of operation
Disadvantages
 There is a need to amend MO
 RSBS is still liquidating all its fixed assets
 Department Heads and personnel who have involvement on the mismanagement
might still be employed with the RSBS
 MUPs have trust issue on the security o their contributions
 The mismanagement of fund might happen again
 System can easily be hacked or manipulated

Creation of New Enhanced Pension Fund System
Advantages
 There will be new set of Management and personnel as well
 There will be new set of systems that are more secured
 There will be new organizational set-up that is appropriate
Disadvantages
 Construction of new facilities will take long
 MUPs have trust issue on the security on their contributions
 This will create panic on the MUPs and might trigger increase in the numbers of
MUPs availing the early retirement
 Setting up of new system will take time and will incur huge cost
 It will take time in hiring and training of new personnel
 The mismanagement of fund might happen again
Continuation of the current AFP Pension System (PD 1638)
Advantages
 The current pension system will continue
 There will be less worries on the part of the MUPs
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 There will be enough time to further study the proposal
 There will be no confusion on the pensioners/veterans
 This will further result to better plan and execution to attain its objective
Disadvantages
 Projection of increase in the budget allocation for the pension of the retired MUPs
 MUPs might not avail early retirement and mostly will continue to serve until
compulsory age retirement
Conclusion/Recommendation
 With the experience of the MUPs on the mismanagement of their contributions

under the AFP RSBS, it won’t be easy to convince them on the continuation of the
concept of the pension fund system.
 However, if there will be enough study, appropriate plans and qualified managers
the proposal might be successful.
 COA 3 is highly recommended
 COA 2 will be recommended only when appropriate study/research was conducted
and necessary considerations were considered on the proposal.
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SESSION 10
TOPIC : GOVERNMENT OWNED OR CONTROLLED
CORPORATIONS (Part 1)
PRESENTED BY : Roy Marion J. Revellame
GOVERNMENT- OWNED OR -CONTROLLED CORPORATIONS (GOCC)

• refers to any agency organized as a stock or nonstock corporation, vested with
functions relating to public needs whether governmental or proprietary in nature,
and owned by the Government of the Republic of the Philippines directly or through
its instrumentalities either wholly or where applicable as in the case of stock
corporations, to the extent of at least a majority of its outstanding capital stock
HISTORY OF GOCC IN THE PHILIPPINES

• Mid 50’s and 60’s GOCC disastrous financial performance.
• 37 GOCC in 195
• During President Ferdinand Marcos first 10 years, GOCC reach up to 120 in 1975.
• 303 GOCC in 1984.
• In 2010 there is 604 GOCC’s in which 446 are operational water districts.
• There is no central agency tasked to monitor and supervise the activities of the
government corporate sector or the GOCC’s.
EXECUTIVE ORDER NO. 936

• Creation of GCMC (Government Corporate Monitoring Committee.)
• Presidential Proclamation no. 50
Authorized the Privatization of GOCC’s (that resulted to only 158 GOCC’s today
Government Financial Institutions (GFIs)
• refer to financial institutions or corporations in which the government directly or
indirectly owns majority of the capital stock and. which are either:
1. Registered with or directly supervised by the Bangko Sentral ng Pilipinas;

2. Collecting or transacting funds or contributions from the public and places them
154
in financial instruments or assets such as deposits, loans, bonds and equity
including, but not limited to, the Government Service Insurance System and the
Social Security System
Government Instrumentalities with Corporate Powers (GICP)/Government
Corporate Entities (GCE)
refer to instrumentalities or agencies of the government, which are neither
corporations nor agencies integrated within the departmental framework, but
vested by law with special functions or jurisdiction, endowed with some if not all
corporate powers, administering special funds, and enjoying operational autonomy
usually through a charter including, but not limited to, the following:
• Manila International Airport Authority (MIAA)
• Philippine Ports Authority (PPA)
• Philippine Deposit Insurance Corporation (PDIC)
• Metropolitan Waterworks and Sewerage System (MWSS),
• Laguna Lake Development Authority (LLDA)
• Philippine Fisheries Development Authority (PFDA)
• Bases Conversion and Development Authority (BCDA)
• Cebu Port Authority (CPA)
• Cagayan de Oro Port Authority
• San Fernando Port Authority
• Local Water Utilities Administration (LWUA)
• Asian Productivity Organization (APO)
CHARTERED AND NON-CHARTERED GOCC
Chartered GOCC
• It refers to a GOCC, including Government Financial Institutions, created and vested
with functions by special law
Non- Chartered GOCC
• It refers to a GOCC organized and operating under Batas Pambansa Bilang 68 or “The
Corporation Code of the Philippines”.
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• THE GOVERNANCE COMMISSION FOR GOVERNMENT-OWNED OR -
CONTROLLED CORPORATIONS (GCG)
was constituted under Republic Act No. 10149 (RA No. 10149), otherwise known
as the “GOCC Governance Act of 2011”
central advisory, monitoring, and oversight body with authority- to formulate,
implement and coordinate policies
which shall be attached to the Office of the President
REVENUE ADMINISTRATION
• Example: CIVIL AVIATION AUTHORITY OF THE PHILIPPINES
REFERENCES
https://caap.gov.ph/
https://gcg.gov.ph/
https://officialgazette.gov.ph/
https://dbm.gov.ph/
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Case Analysis 2 NATIONAL IRRIGATION ADMINISTRATION
• TIME CONTEXT
Present
• SHORT HISTORICAL BACKGROUND
The National Irrigation Administration (NIA) is a government-owned and controlled
corporation primarily responsible for irrigation development and management. It was
created under Republic Act (RA) no. 3601on 22 June 1963. Its charter was amended
by Presidential Decree no. 552 on 11 September 1974 and PD 1702 on 17 July 1980.
Both increased the capitalization and broadened the authority of the Agency.
NIA's forerunner was the Irrigation Division of the defunct Bureau of Public Works. NIA
was placed under the Office of the President (OP) upon its creation. It was attached to
the Department of Public Works, Transportation, and Communication under PD No.1,
dated 23 September 1972. The issuance also integrated all irrigation activities under the
Agency. The Administrative Code of 1987, dated 25 July 1987, attached NIA to both the
Department of Public Works and Highways (DPWH), and Department of Agriculture
(DA). But NIA remained attached to DPWH. It was transferred to OP pursuant to
Executive Order No. 22, dated 14 September 1992. Then, it was attached to DA
under Administrative Order No. 17, dated 14 October 1992.
Executive Order no. 165, Transferring the National Food Authority, National Irrigation
Administration, Philippine Coconut Authority, and Fertilizer and Pesticide Authority to
the Office of the President, 5 May 2014. Memorandum order no. 70, Providing for the
functions of the Presidential Assistant for Food Security and Agricultural Modernization,
5 May 2014.
Memorandum from the Executive Secretary - Office of the President, the Secretary of
the Office of the Cabinet Secretary was designated Acting Chairperson of the NIA
Board of Directors, 3 November 2016.
• STATEMENT OF THE PROBLEM
How can the National Irrigation Administration (NIA) increase its revenue?
• OBJECTIVE OF THE STUDY
This case study aims to help National Irrigation Administration (NIA) on the growth of its
revenue.
STRENGTHS
• Fast and Organized Transaction
• More Revenue.
• Improvement of Services.
WEAKNESSES
• Few Private Sectors.
• Liability
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OPPORTUNITIES
• Job Opportunities.
• Efficient quality of Infrastructure.
THREATS
• Corruption.
• Loss of Control.
• Compromise Quality.
More partnership with Private Sectors (e.g., SN Aboitiz Power-MAGAT)
Advantage
Revenue.
Disadvantage
Few private corporations that could satisfy the criteria of NIA.
Bring back Irrigation Service Fee.
Advantage
Significant Increase of Revenue for NIA.
Disadvantage
Farmers will protest to the government.

Cost-saving
Advantage
Increase in Revenue.
Disadvantage
Short term solution.
The researcher would like to choose ACA 1 or more partnership with the Private
Sectors merely because the transactions are easy to establish and the start-up cost are
low and high caliber employees can be partners. Unlike ACA 2 which can trigger the
farmers to protest against the government. And ACA 3 which can take away jobs from
the people.
REFERENCES
• https://www.nia.gov.ph/
• https://coa.gov.ph/
• https://www.thesaurus.com/
• https://www.dictionary.com/
• https://newsinfo.inquirer.net/
• https://aboitizpower.com/
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SESSION 10
TOPIC : GOVERNMENT OWNED OR CONTROLLED
CORPORATIONS (Part 2)
PRESENTED BY : Kervy Ann F. Barlis
▪ Government-owned or controlled corporation refers to any agency organized as a stock

or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government.
▪ Legal entities that are government-owned corporations that conduct both commercial
and non-commercial activity.
Sources of Funds
1. Government Subsidies – financial aid to cover the day-to-day operations of the GOCCs
when revenues are insufficient.
2. Program funds – it is given to profitable GOCCs to pay for a specific program or project.
3. Borrowings – Under Republic Act No. 4860,

the President of the Philippines is, likewise, hereby authorized, in behalf of the Republic
of the Philippines,
to guarantee, upon such terms and conditions as may be agreed upon, foreign loans
extended directly to, or bonds for sale in international markets issued by, corporations
owned or controlled by the Government of the Philippines for industrial, agricultural or
other economic development purposes or projects authorized by law.
4. Operating Income – Each agency has its functions and goals that can earn income.
These profits can be used for the day-to-day operation of the agency.
Samples:
GSIS – collect dues (loans)
NIA – collect irrigation fees, irrigation certificate fee
LBP- collect banking fees, loan interests
NWRB – collect application fees for permits
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Governing Body of GOCC
SEC. 5. Creation of the Governance Commission for Government-Owned or -

Controlled Corporations.
— There is hereby created a central advisory, monitoring, and oversight body with
authority- to formulate, implement and coordinate policies to be known as the Governance
Commission for Government-Owned or -Controlled Corporations, hereinafter referred to
as the GCG, which shall be attached to the Office of the President.
Governance Commission for Government-Owned or -Controlled Corporations
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.
Towards this end, it empowered the Governance Commission to:

• oversee the selection and nomination of directors/trustees and maintain the quality
of Board Governance;
• institutionalize transparency, accountability, financial viability and responsiveness
in corporate performance by monitoring and evaluating GOCCs’ performance;
• rationalize the Sector through streamlining, reorganization, merger, as well as
recommending to the President of the Philippines the privatization or abolition of a
GOCC; and
• establish compensation standards to ensure reasonable and competitive
remuneration schemes that attract and retain the right talent.
Powers and Functions of GCG
The GCG shall have the following powers and functions:
(a) Evaluate the performance and determine the relevance of the GOCC, to
ascertain whether such GOCC should be reorganized, merged, streamlined,
abolished or privatized, in consultation with the department or agency to which a
GOCC is attached.
For this purpose, the GCG shall be guided by any of the following standards:
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(1) The functions or purposes for which the GOCC was created are no longer relevant to
the State or no longer consistent with the national development policy of the State;
(2) The GOCC’s functions or purposes duplicate or unnecessarily overlap with functions,
programs, activities or projects already provided by a Government Agency;
(3) The GOCC is not producing the desired outcomes, or no longer achieving the
objectives and purposes for which it was originally designed and implemented, and/or
not cost efficient and does not generate the level of social, physical and economic
returns vis-à-vis the resource inputs;
(4) The GOCC is in fact dormant or nonoperational;
(5) The GOCC is involved in an activity best carried out by the private sector; and
(6) The functional, purpose or nature of operations of any group of GOCCs require
consolidation under a holding company.
(b) Classify GOCCs into:

(1) Developmental/Social Corporations;
(2) Proprietary
Commercial Corporations;
(3) Government Financial, Investment and Trust Institutions;
(4) Corporations with Regulatory Functions; and
(5) Others as may be classified by the GCG, without prejudice to further sub
classifications in each category and/or any other classification based on parameters as
it may find relevant or . material such as, but not limited to, industry type. The
classification shall guide the GCG in exercising its powers and
functions as provided herein;
Examples of GOCCs under each classification:
(1) Developmental/Social Corporations;

GSIS, SSS, HDMF, PHIC
(2) Proprietary Commercial Corporations;

PAGCOR, Duty Free Philippines Corporation, Manila International Airport Authority
(3) Government Financial, Investment and Trust Institutions;

Land Bank of the Philippines, Development Bank of the Philippines, Philippine
Deposit Insurance Corporation
(4) Corporations with Regulatory Functions; and

National Water Resources Board, Energy Regulatory Commission, Local Water
Utilities Administration, National Power Corporation
(5) Others as may be classified by the GCG, without prejudice to further sub
classifications
in each category and/or any other classification based on parameters as it may find
relevant
161
or material such as, but not limited to, industry type.
(c) In consultation with the relevant government agencies and stakeholders, adopt
within one hundred eighty (180) days from its constitution, an ownership and
operations manual and the government corporate standards governing GOCCs:
Provided, That the government corporate governance standards applicable to
GOCCs shall be no less rigorous than those required by the Philippine Stock
Exchange or the Securities. and Exchange Commission of listed companies, or
those required by the Bangko Sentral ng Pilipinas or the Insurance Commission
for banking institutions and insurance companies, as the case may be. The manual
shall be consistent with the Medium-Term Philippine Development Plan issued by
the National Economic and Development Authority (NEDA) and shall include:
(1) Objectives of State ownership;

(2) Role of national government in the governance of GOCCs;
(3) Modes of implementation of the ownership policy;
(4) Guidelines on the monitoring of the operations of all GOCCs including their
Related Corporations. These shall include Strategy Maps, Charter Statements,
Performance Commitments and such other mechanisms;
(5) The roles, relationships and responsibilities of the State, the Government
Agencies to which the GOCC is attached, and the GOCC;
(6) Disclosure and transparency requirements;
(7) Code of Ethics of Directors and Officers;
(8) Creation of board committees and similar oversight bodies;
(9) Integrated corporate reporting system;
(10) Statement of the social responsibilities of the GOCC; and
(11) Such other matters as the GCG may deem proper to include in the ownership
policy
(d) Without prejudice to the filing of administrative and criminal charges,

recommend to the Board of Directors or Trustees the suspension of any member
of the Board of Directors or Trustees who participated by commission or omission
in the approval of the act giving rise to the violation or noncompliance with the
ownership manual for a period depending on the nature and extent of damage
caused, during which period the director or trustee shall not be entitled to any
emolument;
(e) In addition to the qualifications required under the individual charter of the
GOCCs and in the bylaws of GOCCs. without original charters, the GCG shall
identify necessary skills and qualifications required for Appointive Directors and
recommend to the President a shortlist of suitable and qualified candidates for
Appointive Directors;
(f) Establish the performance evaluation systems including performance

scorecards which shall apply to all GOCCs in general and to the various GOCC
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classification;
(g) Conduct periodic study, examination, evaluation and assessment of the

performance of the GOCCs, receive, and in appropriate cases, require reports on
the operations and management of the GOCCs including, but not limited to, the
management of the assets and finances of the GOCCs;
(h) Conduct compensation studies, develop and recommend to the President a

competitive compensation and remuneration system which shall attract and retain
talent, at the same time allowing the GOCC to be financially sound and sustainable;
(i) Provide technical advice and assistance to the government agencies to which
the GOCCs are attached in setting performance objectives and targets for the
GOCCs and in monitoring GOCCs performance vis-a-vis established objectives
and targets;
(j) Coordinate and monitor the operations of GOCCs, ensuring alignment and
consistency with the national development policies and programs.
It shall meet at least quarterly to:
(1) Review Strategy Maps and Performance Scorecards of all GOCCs;

(2) Review and assess existing performance-related policies including the
compensation/remuneration of Board of Directors/ Trustees and Officers and
recommend appropriate revisions and actions; and
(3) Prepare performance reports of the GOCCs for submission to the President.
(k) Prepare a semi-annual progress report to be submitted to the President and the
Congress. In its report, the GCG will provide its performance assessment of the
GOCCs and recommend clear and specific actions. Within one hundred twenty
(120) days from the close of the year, the GCG shall prepare an annual report on
the performance of the GOCCs and submit it to the President and the Congress;
and
(l) Review the functions of each of the GOCC and, upon determination that there is
a conflict between the regulatory and commercial functions of a GOCC,
recommend to the President in consultation with the Government Agency to which
such GOCC is attached, the privatization of the GOCCs commercial operations, or
the transfer of the regulatory functions to the appropriate government agency, or
such other plan of action to ensure that the commercial functions of the GOCC do
not conflict with such regulatory functions.
SEC. 6. Composition of the GCG. —The GCG shall be composed of five (5)
members. The Chairman with the rank of Cabinet Secretary and two (2) members
with the rank of Undersecretary shall be appointed by the President. The Secretaries
of the Department of Budget and Management and the Department of Finance shall sit
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as ex officio members.
SEC. 7. Powers and Functions of the Chairman. —The management of the GCG
shall be vested in the Chairman who shall have the following powers and duties:
(a) Preside over the meetings of the GCG;

(b) Direct and manage the day-to-day affairs and business of the GCG;
(c) With the approval of the GCG, determine the staffing pattern and the number of
personnel of the GCG and define their duties and responsibilities;
(d) With the approval of the GCG, to appoint, remove, suspend, or otherwise discipline
for cause, any employee of the GCG; and
(e) Perform such other duties as may be delegated or assigned to him by the GCG from
time to time.
Current Issues
Hike in GOCC dividend rate eyed to fund proposed Bayanihan 3
Retrieve from : https://www.pna.gov.ph/articles/1138050 /April 26, 2021, 5:35 pm
The Department of Finance (DOF) is proposing the 75 percent increase of government-

owned and controlled corporations’ (GOCCs) mandated dividend to the national
government to boost financing for economic revitalization programs.
“To raise more funds for our economic recovery, we are proposing to increase the
mandated dividend remittances of GOCCs to the National Treasury from the current 50
percent to at least 75 percent of their net earnings,” DOF Secretary Carlos Dominguez III
said in his speech during the virtual “Sulong Pilipinas: pre-SONA of the Economic
Development and Infrastructure Clusters” forum on Monday.
Aside from hiking the minimum dividend remittances, Dominguez is also proposing that
the remittance be in cash form, and not stock or property dividend.
Current Developments
GOCC dividends to Bureau of Treasury hit record P157 billion
Retrieved from : https://businessmirror.com.ph/2021/02/02
CASH dividends remitted by government-owned and -controlled corporations (GOCCs)

reached P157 billion, the highest amount ever collected since the implementation of the
Dividends Law in 1994, the Department of Finance said.
In a report to Finance Secretary Carlos G. Dominguez III, DOF’s Corporate Affairs Group
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(CAG) said P156.97 billion in cash dividends were remitted last year 2020 by 57 GOCCs
to the Bureau of the Treasury.
“This is also more than twice of the P69.17-billion dividend collection in 2019, inclusive of
the dividend foregone.
Of the P157-billion total cash dividends remitted by GOCCs in 2020, three-fourths or

P119.1 billion partly funded the social amelioration program (SAP) that the government
implemented to cushion the economic impact of the Covid-19 pandemic on the country’s
poorest household and other vulnerable sectors. This amount also contributed to the
government’s unprogrammed revenues, Finance Undersecretary Antonette Tionko said.
REFERENCES:
Republic Act No. 10149, “GOCC Governance Act of 2011” retrieved from
www.officialgazette.gov.ph
Governance Commission for GOCCs (GCG) Corporate Website

https://gcg.gov.ph
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Case Analysis
1. Name of Company / Association
Philippine Crop Insurance Corporation (PCIC)
OUR CORPORATE MANDATE
As the implementing agency of the agricultural insurance program of the government

under P.D. 1467, as amended by R.A. 8175, PCIC is mandated to provide insurance
protection to the country’s agricultural producers particularly the subsistence farmers,
against: Loss of their crops and/or non-crop agricultural assets on account of natural
calamities such as typhoons, floods, droughts, earthquakes and volcanic eruptions, plant
pests and diseases, and/or other perils.
MISSION
PCIC, as an agricultural insurer, is committed to help stabilize the income of agricultural
producers and promote the flow of credit in the countryside by:
Providing insurance protection to qualified farmers and other agricultural stakeholders
against losses of their crops and produce, including their livestock, farm machineries and
equipment, transport facilities and other related infrastructure arising from natural
calamities, pests and diseases, and other perils beyond their effective control;
Extending innovative and client-responsive insurance packages and other services thru
people’s organization including farmers’ cooperatives, agricultural lenders and service
providers.
VISION
By 2020, the PCIC will have broadened the availability and increased the effectiveness
of its crop insurance programs for managing farm losses while at same time ensuring
their visibility and sustainability.
Office:
Head Office at 7/F Building A, NIA Complex, EDSA, Diliman, Quezon City 1101
13 Regional Offices
62 Provincial Offices
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2. Time Context
The study analyses the present situation / status of the PCIC in the country.
3. Point of View
For a farmer/beneficiary, evaluating the status of PCIC in the present market is necessary
for them to be involve in their projects and programs and for the agency to develop
strategy to deal with the changing environment.
4. Short Historical background of the Company
• Philippines is vulnerable to natural disasters which cause devastation on crops and

miseries to agricultural producers and lenders of agricultural credit. Because of the
marginality of most landholdings, the result of these losses is devastating to the
finances of the farmers.
• In 1976, an Interagency Committee for the Development of Crop Insurance
undertook a nine-month full-blown feasibility study on the creation of a crop
insurance program in the Philippines.
• Created by virtue of PD 1467 (June 11, 1978), later on amended by PD 1733
(October 21, 1980) and further amended by RA 8175 (December 29, 1995)
• PCIC is an attached agency of the Department of Agriculture
• The PCIC’s principal mandate is to provide insurance protection to farmers against
losses arising from natural calamities, plant diseases and pest infestations of their
palay and corn crops as well as other crops.
• The PCIC also provides protection against damage to/loss of non-crop agricultural
assets including but not limited to machineries, equipment, transport facilities and
other related infrastructures due to peril/s insured against.
Insurance Programs
1. Rice Crop Insurance

2. Corn Crop Insurance
3. High-Value Commercial Crop Insurance
4. Non-Agricultural Asset Insurance
5. Livestock Insurance
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6. Term Insurance
-Agricultural Producers Protection Plan
-Loan Repayment Protection Plan
-Accident and Dismemberment Security Scheme
7. Fisheries Insurance
5. Statement of the Problem
1. Can the agency scale up their performance and address issues that cause its
clients to not avail their programs?
2. How can they find out exactly what the clients want and how can they satisfy
that?
3. Can PCIC catch up with the changing environment?
6. Objectives
 To assess the PCIC Agency Performance

 To identify the issues that cause farmers/clients to not avail the PCIC Programs
 To determine the factors/strategy that can help the agency widen their market
7. Area of Consideration (SWOT Analysis)
Strengths
 They have 13 regional offices all over the country

 Offer various insurance programs at low costs
 Guaranteed availability of capital from the government
 Its mandate is to help farmers and agricultural businesses
 Target market is certain
 Crop insurance can be used as a collateral to bank loans
 Crop insurance make farmers to be more productive and invest more in farming
activities
 Accredited ISO 9001:2015 agency (quality management system)
 Office’ internal operation and performance is very satisfactory (received award
from GCG)
 It has accessible delivery channel of insurance, the LandBank of the Philippines
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Weaknesses
 PCIC clients are mostly farmers and fishermen but they lack offices at Rural
locations
 Clients hesitate to avail their programs because of inconvenience, due to limited
office locations
 Lengthy process of applications
 Insurance coverage and beneficiaries have limitations (clients must be listed
under the Registry System for Basic Sectors in Agriculture (RSBSA), a list of
farmers, farm workers and fisherfolk )
 The agency has a best rating award in performance but not in remittance
 The technology that is used by the agency is of the low cheaper quality which
directly imposes effect on the factors of service
 No good advertising and campaign
 Clients are mostly farmers with big landholdings / agricultural property
Opportunities
 New innovations and strategies can improve agencies performance and

remittance
 More branches to reach out to a lot of clients
 More extensive insurance programs can help a lot of poor farmers/clients
 The PCIC can be the top GOCC if improvement would be prioritized
 Stronger partnership with the LGU in the future
Threats
 Reduction of budget affect the organization's operation

 Conflicts among farmers and irrigators associations can affect target market
 Lack of interest of new generation to do farming activities
 Low remittances can stop the agency’s operation
 Climate Change can cause more expenses to the agency
 The economic disasters affect the performance and leads the agency in the
declining position.
8. Alternative Courses of Action (ACA)
 ACA #1
1. LGU Partnerships – To sustain efforts to inform, educate and
communicate the farmers on the advantages and benefits of insurance
programs
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Advantages
Clients would be encourage to apply to their programs
Better and faster transactions with the help of the LGUs
More clients would be served and be helped
More effective LGU and PCIC performance
Maximize long-term financial performance and value of the business
Disadvantages
It will require additional expenses on part of the PCIC and LGU’s budget.
LGUs, particularly those in rural areas may need time to adjust or participate
LGUs may not cooperate fully
 ACA #2
2. Increase visibility of PCIC - Establishing more offices in rural areas
with high numbers of farmers/fishermen
Advantages
More farmers or fishermen can be served and encouraged
Office would be more accessible
PCIC programs can be more advertise
Create more employment
Encourage more agricultural productivity to the area
Disadvantages
It will require additional expenses on part of the company budget.
Success and stability of offices in rural areas would not be guaranteed
 ACA #3
3. More attractive packages – Create more secure and effective insurance
programs
Advantages
More clients would be served
More available/accessible programs (expand the limitations)
Better remittance for PCIC if more clients would avail the programs
Disadvantages
It will require additional budget on part of the company budget.
Clients may take advantage of the program that may cause inefficiency
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9. Conclusion
PCIC is faced with many challenges not only in its own operation but also in the
sustenance of its mandate - to provide insurance protection to the country’s agricultural
producers. They need better campaign.
Changes in the market environment have given rise to new opportunities and threats to
the agency and to its clients.
Agricultural insurance is crucial in assisting farmers during calamities.
PCIC and LGU partnerships may give opportunities for the strengthening of agriculture
insurance programs.
Claims have to be settled expeditiously to augment farmers’ funds and enable them to
replant as soon as conditions become favorable. With this, farmers would be more
productive and food sustainability would be achieved.
10. Recommendation
Based from my conclusion, I recommend all the following ACAs.
ACA #1
LGU Partnerships – To sustain efforts to inform, educate and
communicate the farmers on the advantages and benefits of insurance programs
ACA #2
Increase visibility of PCIC - Establishing more offices in rural areas with high numbers of
farmers/fishermen
ACA #3
More attractive packages – Create more secure and effective insurance programs
Accordingly, these factors might help the agency become sustainable, beneficial to
people and deliver more economic profit. These ACAs may bring the PCIC programs
closer to its farmer-clienteles and enables it to immediately respond to local needs
especially in times when calamities struck.
Better operation and improve system can help the organization excel as a GOCC.
REFERENCES:
https://www.da.gov.ph/
https://pcic.gov.ph/
https://pcic.gov.ph/goccs-awarded-for-excellence-on-corporate-governance-scorecard/
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SESSION 11
TOPIC : EXPENDITURES - GOCCs (Part 1)
PRESENTED BY : Reynavi M. Olivares
Government-owned and Controlled Corporations or GOCCs are 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 a
subsidiary corporation.
Expenditures
Expenditures are obligations that the government incurs that must be paid during or after
the year when they were incurred. The term expenditure is more generic than "expense"
in that the latter refers to items of expenditure that are current.
Expenditures are classified in various ways:

1. By expense class and object of expenditures;
2. By sector;
3. By recipient entities;
4. By region
Importance of Public Expenditure

1. To promote rapid economic development.
2. To promote trade and commerce.
3. To promote rural development.
4. To promote balanced regional growth
5. To develop agricultural and industrial sectors
6. To build socio-economic overheads (roadways, railways, power)
7. To exploit and develop mineral resources like coal and oil.
8. To provide collective wants and maximize social welfare
9. To promote full-employment and maintain prices stability.
10. To ensure an equitable distribution of income
Classification of expenditures:
1. Maintenance and Other Operating Expenses (MOOE) refers to recurring
expenses to cover day-to-day requirements of agencies (traveling expenses,
supplies and materials, water, illumination and power Services, rent, etc.;
2. Personnel Services (PS) are payments for salaries and wages, social security
contributions, overtime pay
3. Capital Outlay (CO) are appropriations for goods and services, the benefits of
which extend beyond the budget year and which add to the assets of the
government. They cover investments in the capital stock of government-owned
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and controlled corporations and their subsidiaries, as well as loan outlays and
investments in public utilities.
4. Financial Expenses refer to management supervision/trusteeship fees, interest

expenses, guarantee fees, bank charges, commitment fees and other financial
charges incurred in owning or borrowing an asset property.
5. Infrastructure - investment in transport (roads, rail airports), health (water

collection and distribution, sewage systems, communication (telephone, radio and
TV) and research spending (defense, space, genetics) .
Policy on Expenditures
 No money shall be paid out of any public treasury or depository except in

pursuance of an appropriation law or other specific statutory authority.
THE PHILIPPINE BUDGETARY PROCESSS
Government budgeting is the critical exercise of allocating revenues and borrowed

funds to attain the economic and social goals of the country It also entails the
management of government expenditures in such a way that will create the most
economic impact from the production and delivery of goods and services while supporting
a healthy fiscal position
Government budgeting is important because it enables the government to plan and
manage its financial resources to support the implementation of various programs and
projects that best promote the development of the country. Through the budget, the
government can prioritize and put into action its plants, programs and policies within the
constraints of its financial capability as dictated by economic conditions.
Section 22, Article VII of the 1987 Constitution sets the tone for the budgetary process.
Under this Article, the President submits to the Congress within thirty 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.
 To meet the Constitutional requirement for the submission of the President's
budget with 30 days from the opening of each regular session of Congress, the
budget preparation phase is guided by a budget calendar.
 The preparation of the annual budget involves a series of steps that begins with
the determination of the overall economic targets, expenditure levels, revenue
projection and the financing plan by the Development Budget Coordinating
Committee ( The DBCC is an inter agency body composed of the DBM Secretary
as Chairman and the Bangko Sentral Governor, the Secretary of the Department
of Finance, the Director General of the National Economic and Development
Authority and a representative of the Office of the President as members.
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The Budget Cycle
 Budgeting for the national government involves four (4) distinct processes or
phases : budget preparation, budget authorization, budget execution and
accountability.
 While distinctly separate, these processes overlap in the implementation during a
budget year.
 Budget preparation for the next budget year proceeds while government agencies
are executing the budget for the current year and at the same time engaged in
budget accountability and review of the past year's budget.
BUDGET PREPARATION
 The budget preparation phase is commenced through the issuance of a Budget
Call by the DBM. The Budget Call contains budget parameters earlier set by the
Development Budget Coordination Committee (DBCC) as well as policy guidelines
and procedures to aid government agencies in the preparation and submission of
their budget proposals. The Budget Call is of two kinds, namely: (1) a National
Budget Call, which is addressed to all agencies, including state universities and
colleges; and (2) a Corporate Budget Call, which is addressed to all government-
owned and -controlled corporations (GOCCs) and government financial institutions
(GFIs).
 The various departments and agencies submit their respective Agency Budget
Proposals to the DBM.
 The DBM next consolidates the recommended agency budgets into the National
Expenditure Program (NEP) and a Budget of Expenditures and Sources of
Financing (BESF). The NEP provides the details of spending for each department
and agency by program, activity or project (PAP), and is submitted in the form of
a proposed GAA.
 The NEP and BESF are thereafter presented by the DBM and the DBCC to the
President and the Cabinet for further refinements or reprioritization. Once the NEP
and the BESF are approved by the President and the Cabinet, the DBM prepares
the budget documents for submission to Congress. The budget documents consist
of: (1) the President’s Budget Message, through which the President explains the
policy framework and budget priorities; (2) the BESF, mandated by Section 22,
Article VII of the Constitution, which contains the macroeconomic assumptions,
public sector context, breakdown of the expenditures and funding sources for the
fiscal year and the two previous years; and (3) the NEP.
BUDGET LEGISLATION
 The Budget Legislation Phase covers the period commencing from the time
Congress receives the President’s Budget, which is inclusive of the NEP and the
BESF, up to the President’s approval of the GAA. This phase is also known as the
Budget Authorization Phase, and involves the significant participation of the
Legislative through its deliberations.
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 Initially, the President’s Budget is assigned to the House of Representatives’
Appropriations Committee on First Reading. The Appropriations Committee and
its various Sub-Committees schedule and conduct budget hearings to examine the
PAPs of the departments and agencies. Thereafter, the House of Representatives
drafts the General Appropriations Bill (GAB).
 The GAB is sponsored, presented and defended by the House of Representatives’
Appropriations Committee and Sub-Committees in plenary session. As with other
laws, the GAB is approved on Third Reading before the House of Representatives’
version is transmitted to the Senate.
 The Senate’s Finance Committee and its Sub-Committees may submit the
proposed amendments to the GAB to the plenary of the Senate only after the
House of Representatives has formally transmitted its version to the Senate. The
Senate version of the GAB is likewise approved on Third Reading.
 The House of Representatives and the Senate then constitute a panel each to sit
in the Bicameral Conference Committee for the purpose of discussing and
harmonizing the conflicting provisions of their versions of the GAB. The
“harmonized” version of the GAB is next presented to the President for approval.
 The President reviews the GAB, and prepares the Veto Message where budget
items are subjected to direct veto, or are identified for conditional implementation.
 If, by the end of any fiscal year, the Congress shall have failed to pass the GAB
for the ensuing fiscal year, the GAA for the preceding fiscal year shall be deemed
re-enacted and shall remain in force and effect until the GAB is passed by the
Congress.
BUDGET EXECUTION
 The Budget Execution Phase is primarily the function of the DBM, which is tasked
to perform the following procedures, namely: (1) to issue the programs and
guidelines for the release of funds; (2) to prepare an Allotment and Cash Release
Program; (3) to release allotments; and (4) to issue disbursement authorities.
 The various departments and agencies are required to submit Budget Execution
Documents (BED) to outline their plans and performance targets by laying down
the physical and financial plan, the monthly cash program, the estimate of monthly
income, and the list of obligations that are not yet due and demandable.
 Thereafter, the DBM prepares an Allotment Release Program (ARP) and a Cash
Release Program (CRP). The ARP sets a limit for allotments issued in general and
to a specific agency. The CRP fixes the monthly, quarterly and annual
disbursement levels.
 Allotments, which authorize an agency to enter into obligations, are issued by the
DBM. Allotments are lesser in scope than appropriations, in that the latter embrace
the general legislative authority to spend. Allotments may be released in two forms
– through a comprehensive Agency Budget Matrix (ABM), or, individually, by
SARO.
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 In order to settle the obligations incurred by the agencies, the DBM issues a
disbursement authority so that cash may be allocated in payment of the
obligations. A cash or disbursement authority that is periodically issued is referred
to as a Notice of Cash Allocation (NCA),
 Which issuance is based upon an agency’s submission of its Monthly Cash
Program and other required documents. The NCA specifies the maximum amount
of cash that can be withdrawn from a government servicing bank for the period
indicated. Apart from the NCA, the DBM may issue a Non-Cash Availment
Authority (NCAA) to authorize non-cash disbursements, or a Cash Disbursement
Ceiling (CDC) for departments with overseas operations to allow the use of income
collected by their foreign posts for their operating requirements.
 Actual disbursement or spending of government funds terminates the Budget
Execution Phase and is usually accomplished through the Modified Disbursement
Scheme under which disbursements chargeable against the National Treasury are
coursed through the government servicing banks.
ACCOUNTABILITY
 Accountability is a significant phase of the budget cycle because it ensures that
the government funds have been effectively and efficiently utilized to achieve the
State’s socio-economic goals. It also allows the DBM to assess the performance
of agencies during the fiscal year for the purpose of implementing reforms and
establishing new policies.
 An agency’s accountability may be examined and evaluated through
(1) performance targets and outcomes – agencies are held accountable not
only for how they use public funds ethically, but also on how they attain
performance target and outcomes using available resources.
(2) budget accountability reports – Submitted by agencies on a monthly and
quarterly basis, BARs are required reports to show how agencies used their
funds and identify their corresponding physical accomplishments.
(3) review of agency performance – Agency Performance Reviews (APRs)
are conducted quarterly or every semester. An annual Budget Performance
Assessment Review (BPAR) is conducted to determine each agency’s
accomplishments and performance by the year-end. The DBM regularly
reports the result to the President.
(4) audit conducted by the Commission on Audit (COA). Ensuring the
accountability in the use of public funds.
How does the budget become a law?

 In accordance with the requirements of the Constitution, the President submits
his/her proposed annual budget in the form of Budget of Expenditure and Sources
of Financing (supported by details of proposed expenditures in the form of a
National Expenditure Program (and the President's Budget Message which
summarizes the budget policy thrusts and priorities for the year.
176
 While budget hearings are ongoing in the House of Representatives, the Senate
Finance Committee, through its different subcommittees also starts to conduct its
own review and scrutiny of the proposed budget and proposes amendments to the
House Budget Bill to the Senate body for approval.
 To thresh out differences and arrive at a common version of the General
Appropriations Bill, the House and the Senate creates a Bicameral Conference
Committee that finalizes the General Appropriations Bill
 The Appropriation Committee together with the other House Sub Committee
conduct hearings on the budgets of departments/agencies and scrutinize their
respective programs/projects Consequently, the amended budget proposal is
presented to the House body as the General Appropriations Bill
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Case Analysis 2 Philippine Charity Sweepstakes Office (PCSO)
I. Introduction
The Philippine Charity Sweepstakes Office (PCSO) is the principal

government agency for raising and providing funds for health programs, medical
assistance and services, and charities of national character.
The PCSO holds and conducts charity sweepstakes, races, and lotteries
and engages in health and welfare-related investments, projects, and activities to
provide for permanent and continuing sources of funds for its programs. It also
undertakes other activities to enhance and expand such fund-generating
operations as well as strengthen the agency’s fund-management capabilities.
The main products of the PCSO are the sweepstakes and the lottery games.
The Sweepstakes game has steadily been evolving through the years to be able
to conform with the changing times, to keep the game interesting to all
Sweepstakes enthusiasts and to hopefully attract more clients, and to maintain a
variety of Sweepstakes products readily available in the market. Various game
types have been introduced and other game innovations are constantly being
conceptualized, particularly of the traditional and scratch and match variety.
The PCSO holds three 6-pick number games, the Lotto 6/42, MegaLotto
6/45 and the SuperLotto 6/49. All of these number games can be played using the
system play (systems 7 to 12), 5 Roll, and Lucky Pick. The Lotto 6/42 is drawn on
Tuesdays and Saturdays and has a minimum jackpot prize of P3,000,000.00. The
MegaLotto 6/45 is drawn on Mondays, Wednesdays, and Fridays, with a minimum
jackpot prize of P4,500,000.00. Lastly, the SuperLotto 6/49, which has a minimum
jackpot prize of P16,000,000.00, is drawn on Thursdays and Sundays. and
Sundays.
The agency also conducts the 6-digit (6D), 4-digit (4D), Suertres Lotto and
the EZ2 Lotto games. The 6D game is played only in Luzon. Draw days for this
game are Tuesdays, Thursdays, and Saturdays with a minimum guaranteed
amount (MGA) of P150,000.00 per ten-peso play. The 4D game is played in Luzon,
Visayas and Mindanao on the same days as that of the MegaLotto 6/45, which are
on Mondays, Wednesdays, and Fridays. The minimum guaranteed amount for this
game is set at P10,000.00 per ten-peso play. The Suertres Lotto Mid-Day Draw
game is only played in Visayas and Mindanao while the Suertres Lotto Evening
Edition is played in Luzon, Visayas and Mindanao. The Suertres Lotto games are
drawn everyday with a first prize of P4,500.00 per ten peso play. While, the EZ2
game is also drawn everyday in Luzon, Visayas and Mindanao with P4,000.00 as
first prize per ten peso play.
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II. Time Context
 The time context of this case study is the current year, 2021.
III. Point of View
 Royina Garma, PCSO General Manager
IV. Historical Background
 Lotteries were introduced in the Philippines in 1833, as the company called
Real Renta de Loteria was founded on January 29, 1850 and the first draw
was held on January 21, 1851
 National Charity Sweepstakes – during the American Insular government
 On March 1935, then President Manuel L. Quezon approved Act No. 301 –
the law passed by the Philippine Legislature in October 30, 1934 creating the
Philippine Charity Sweepstakes, replacing the then National Charity
Sweepstakes.
 Under this law, the new organization was authorized to secure from the
National Treasury a loan amounting to ₱250,000.00, the minimum amount
required for organizing the office and printing the tickets for the draw. On
September 8, 1935, the new agency held its first Sweepstakes draw. The
loan was paid back in less than two months and shortly after the note was
signed, proceeds from the sales started coming in
PCSO Organizational Structure
Mandatory Contributions of the PCSO as Enacted by Law

 RA 6847 — Six (6) Sweepstakes Draws as contribution to the Philippine Sports
Commission Program
 RA 7722 — 1% of lotto gross sales to the Commission on Higher Education
 RA 7660 — Documentary Stamp Tax – 10% of the gross sales
 RA 7835 — 10% of Charity Fund to the Comprehensive and Integrated Shelter
and Urban Development Financing Program (National Shelter Program)
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 RA 8042 — Sec.20 and 77 of the Omnibus Rules provides for the appropriation
of Php10 million for the Shared Government Information System on Migration
(SGISM) under the Department of Foreign Affairs
 RA 8175 — 10% of net income for the Crop Insurance Program
 RA 8313 — Php100 million from lotto agents for the upgrading of the Quirino
Memorial Medial Center
 RA 8371 — Php 50 million contribution to the National Commission on
Indegenous Peoples for the Ancestral Domain Find
 RA 8492 — Php 250 million from the annual net earnings from lotto for the
Museum Endowment Fund
 RA 9165 — 10% share on forfeited prizes as special account in the general
fund of Dangerous Drugs Board
 E.O. 201 — Php 1 billion Standby Fund for the financial requirement for Severe
Acute Respiratory Syndrome (SARS) awareness and health promotion
campaign
 E.O. 218 — Php 1 billion Standy Fund for the operations and programs of the
Philippine Drug Enforcement Agency
 E.O. 280 — Php 250 million standy Fund for the financial requirements of the
Avian Influenza or Bird Flu Viruses
 E.O. 357 — 5% Lotto share of local government units from the Charity Fund
V. Statement of the Problem

How can the Philippine Charity Sweepstakes Office (PCSO) maximize its
revenue in their Small Town Lottery (STL) Games?
VI. Objectives
● To identify the issues and areas of improvements of the PCSO in terms of
its STL operations; and
● To provide recommendations on how the PCSO can improve its
processes to maximize generation of revenue in its STL games.
VII. Areas of Consideration: SWOT Analysis for DICT

Strengths
 The PCSO, as the charity fund-generating arm of the government,
continues to generate huge amount of revenue through its different products
and game operations; and
 The PCSO charter mandates that 30% of its income goes to charity fund.
Thus, it has various programs that help Filipino citizens such as the
Individual Medical Assistance Program (IMAP), Endowment Fund Program
(EFP), Calamity Assistance Program.
 The Small Town Lottery operations is the legal counterpart of jueteng and
is a promising revenue-generating scheme of the organization.
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Weaknesses
 Corruption as part of the organization’s culture especially in the STL
operation
 STL operations are conducted manually just like ‘jueteng’, thus there is no
digital trail and makes it susceptible to under-declaration of sales
Opportunities
 STL operations as a good source of revenue especially in the provinces
Threats
 Corrupt officials remain in the organization
 Charity assistance / allocation drops due to budget limitations (e.g.
Revenue falls short during the COVID-19 pandemic – people tends to
realign their money to more important needs)
VIII. Alternative Courses of Action
ACA 1 : Digitize the operations of STL employing digital trail and e-payments
Advantages: Digitization of its operations can help make the STL more
transparent and efficient. The PCSO would be able to account for revenues
better, and prevent under-declaration of sales.
Disadvantages: Digitization may require a significant amount to develop the

systems and procure necessary equipment. It may also require resources for
sustaining its operations.
ACA 2 : The PCSO to conduct regular audits of the 56 STL operators in the
country
Advantages: The PCSO would have a better grasp of the operations the STL
operators in the country and could better formulate strategies and policies that
are more efficient and harder to defraud.
Disadvantages: Audits can be easier conducted if data are digitized.
IX. Recommendations
It is recommended that the PCSO adopts both ACA 1 and ACA2.
X. Conclusions
The manual collection done by agents makes it easier for rogue ones to
undervalue their remittances and pocket other earnings from daily bets, as the
government has no way of tracing these transactions unlike the fully-computerized
lotto betting. Thus, it would be better if the PCSO could digitize its STL operations
so they can have better digital trail of all of their transactions. This would mean that
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they would be able to account for all their revenues and prevent under-declaration
of sales. Further, establishing e-payment scheme for the STL would ensure
continuous operations of the game even during the pandemic.
Executing necessary reforms on their operations would entail conduct of
regular audits of the their STL operators in order to ensure transparency and to
make sure that all transactions are properly accounted for.
SESSION 11
TOPIC : EXPENDITURES - GOCCs (Part 2)
PRESENTED BY : Catherine N. Anito
Responsibilities of GOCC’s Authorities over the Financial Statements

According to the 2016 Annual Financial Report by the Government-Owned or
Controlled Corporations (2016), the following are the known responsibilities of GOCCs
authorities over financial statements:
1. It is the responsibility of the respective management of GOCCs to prepare and
present the financial statements in accordance with the adopted applicable
financial reporting framework
2. The GOCC authorities are also responsible for the installation and
implementation of internal controls necessary to ensure that the financial
reports are free from material misstatements
3. To ensure that the audit of the financial statements of GOCCs include the
conduct of compliance or regularity audit to determine that all transactions and
operations are carried out and completed in accordance with the applicable
rules, laws, and regulations particularly on the prevention of any illegal,
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irregular, excessive, unnecessary, extravagant or unconscionable
expenditures
4. To also ensure that the operations of GOCCs in pursuit in its mandate are
carried out in an economical, efficient and effective manner
5. To ensure that the financial statements can accommodate the independent
auditor’s opinions on the financial statements and the disclosure of audit
findings and observations.

Over the years, despite of the large and significant contribution that was being
made by GOCCs to the national government and to the Filipino people, there are still
some issues and developments that are being connected with GOCCs:
Issues
 There are not enough strict monitoring of GOCCs
 Some agencies or GOCCs are facing numerous problems such as high debts, poor
management, excessive bonuses of employees and also ‘fat’ paychecks of its
officials and board members
 Suspicious high payroll and additional cash benefits
Developments
 Was instructed to review the way GOCCs are being headed or managed
 Improved financial reporting framework for GOCCs
 Creation of the GCG or Governance Commission to implement protocols on
submitting requests, applications and other documents requiring approval,,
resolution or opinion
COA Structure on Audit of GOCCs

The following presented the COA structure on the auditing process that was being
conducted for GOCCs:
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Figure 1. COA Structure on the Auditing of GOCCs
On the other hand, as shown in Figure 2, this presented the COA Audit Framework
that was being applied for the auditing of GOCCs.
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Figure 2. COA Audit Framework
Audit Approaches for GOCCs

 Application of the Integrated Results and Risk-Based Audit approach that aims to
integrate the different COA audit services such as – financial, compliance audit
and also the agency-based performance audit
 The application of this approach aims to be consistent with a set of different audit
processes that reduces redundant activities and also eliminate duplication in the
audit of an agency
 The main focus of the IRRBA was on both the critical and high-risks procedures
and processes and also ensure the implementation of various ways that can help
to control and better manage the existence of these risks
 This provides a more consistent set of processes that aim to guide the COA
auditors in the performance of its audit services as based on the Government Risk
Model
 There is also the use of the Government Risk Model which pertains to a
comprehensive list of risks that a particular government may encounter and that
could have the capacity to threaten the achievement of its mandates, goals and
objectives
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The following are the current issues and developments that are related to the
auditing process conducted for GOCCs:
Issues (that required auditing action)
 Audit reports exposing excessive spending for salaries, allowances, benefits
 Some projects and initiatives were found to be overpriced or overpaid by millions
 Failure to strictly observe pertinent laws, rules and regulations that resulted in the
incurrence of irregular, unnecessary, extravagant and excessive expenses
 Non-submission of accomplishment reports and attached payrolls, work plans and
programs for the justification of the grant of OT services with pay
 Unsettled accountabilities that includes foreign and local travels, payroll and other
operating expenses
 Delays in the submission of liquidation documents
 Irregular transfers to some questionable non-governmental organizations or NGOs
Developments
 Strict implementation of the Presidential Decree No. 1445 (“Ordaining and
Instituting a Government Auditing Code of the Philippines”) and also the provisions
of the Philippine Public Sector Standards on Auditing – standards mandate that
the audit of GOCCs comply with the ethical requirements, and are planned and
performed to obtain reasonable assurance that the financial statements produced
by GOCCs are free from material misstatements
 Recommendation to implement disciplinary or administrative actions against erring
personnel primary “for the loss of government fund thru their fault of negligence”
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Case Analysis 2 Home Guaranty Corporation (HGC)
Time Context
 December 2008 up to present
Point of View
 Philippine national government who is considered as the ‘owner’ of the various
Government-Owned and Controlled Corporations (GOCCs) all over the country
specifically the Home Guaranty Corporation (HGC)
 Is also the one in charge of creating and implementing the appropriate laws, rules,
policies and regulations for monitoring and managing GOCCs and ensure their
contribution for the growth and development of the Philippine society and economy
 The Home Guaranty Corporation (HGC) is a government-owned and controlled
corporation that is under the administrative supervision of the Housing and Urban
Development Coordinating Council or HUDCC
Short Background of the Organization/Association

 GOCC stands for Government-Owned and Controlled Corporations under the
Republic Act No. 10149 or otherwise known as the GOCC Governance Act of
2011. Moreover, under the Republic Act No. 10149 – it focuses on 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. As such, the GOCC was tasked with conducting both
commercial and non-commercial activities and are expected to receive or
accommodate subsidies and program funds directly from the national
government, and return it to the national government by means of remittances or
dividends. Other sources of revenue that was being generated from GOCCs are
guarantee fees, foreign exchange risk cover, and interest on national
government’s advances extended to GOCC loans. Moreover, there are currently
over 200 GOCCs in the Philippines as of 2020.
 The Home Guaranty Corporation (HGC) is a government-owned and controlled
corporation that is under the administrative supervision of the Housing and Urban
Development Coordinating Council or HUDCC. It was created in 1950 and known
as the Home Financing Commission and known to institutionalized a viable
system of credit guaranties that was considered to be an integral component of
the national government’s shelter program
 The HGC was also known to provide risk covers and fiscal incentives to housing
credits that were extended to developers, banks and other financing institutions
 Under the enactment of the Republic Act No. 8763 or otherwise known as the
Home Guaranty Corporation Act of 2000, the authorized capital of HGC was
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increased from P2.5 billion to at least P50 billion and an extension of additional 50
years for its corporate life.

The presented case study was conducted by the Asian Development Bank (ADB)
through its technical assistance group with an aim to seek answers to the following
question:
 What are the functions of the Home Guaranty Corporation (HGC) as a form of
Government Owned and/or Controlled Corporations (GOCCs)?
 What are the ways to improve the monitoring and management of the Government
Owned and/or Controlled Corporations (GOCCs) specifically the Home Guaranty
Corporation (HGC)?
 What are the key challenges that can become a hindrance for HGC to fulfill its
mandate and adhere to the rules, policies and regulations intended for its
monitoring and effective management to enable it to contribute better to the
development and growth of the Philippine national economy?
Objectives of the Study

The following are the specific objectives of the case study presented:
 To improve the monitoring and management of the Government Owned and/or
Controlled Corporations (GOCCs) specifically the specifically the Home Guaranty
Corporation (HGC)
 To highlight the key challenges that can become a hindrance for GOCCs such as
the Home Guaranty Corporation (HGC) to fulfill its mandate and adhere to the
rules, policies and regulations intended for its monitoring and effective
management particularly at the sectoral and HGC level
 To provide support to the Government’s fiscal consolidation through reforms in the
monitoring/auditing and financial performance of Home Guaranty Corporation
(HGC)
Areas of Consideration (SWOT Analysis)

 In better understanding the existence and role of GOCCs specifically the Home
Guaranty Corporation (HGC)in the Philippines, the following SWOT analysis was
presented below for the general overview of GOCCs in the country:
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Table 1
SWOT Analysis – Government Owned and/or Controlled Corporations (GOCCs)
STRENGTHS WEAKNESSES
 Contributes to the annual net  Involvement in various issues

earnings of the Philippine of corruption and excessive
government spending
 Contributes to the growth of  Poor management
national economy  Increasing debts
 Provide essential services to the  Not enough strict monitoring
Filipino people
OPPORTUNITIES THREATS
 Improved financial reporting  Increased in the number of

framework for GOCCs erring personnel
 Creation and monitoring by  ‘Under-the-table’ transactions
Governance Commission  Persistent corruption practices
 Improved auditing approaches in the GOCCs
for GOCCs by COA
 As shown in Figure 1, the following are the SWOT analysis for Government Owned
and/or Controlled Corporations (GOCCs) and it can be noted that for its strengths
– this includes the way that GOCCs are considered significant particularly for its
contribution to the national economy in the form of dividends and remittances and
thus can be accumulated by means of providing essential services to the Filipino
people and consequently, helping to improve the Filipinos’ lives. On the other
hand, there are still some weaknesses present such as the continuous involvement
of several GOCCs in corruption scandals which can tarnish its image/reputation
and was noted to be due to poor management, not enough strict monitoring and
increasing debts of these GOCCs.
 On the other hand, there are also the opportunities which are needed to be taken
in consideration such as the application of an improved financial reporting
framework especially for GOCCs; the creation of the Governance Commission to
189
monitor the progress and functions of GOCCs and also the application of improved
auditing approaches of COA for GOCCs. Lastly, there are also some threats that
should be addressed immediately and such includes the following – the increased
number of erring personnel, the persistence of corruption practices in some
GOCCs that should be monitored more closely by the national government and its
concerned specific agencies.
Alternative Courses of Action (ACAs)

 The following are the alternative courses of action that was seen by the researcher
as something that can be helpful in addressing the needs for the better
management and functioning of GOCCs specifically the Home Guaranty
Corporation (HGC):
ACA #1: Considering Reforms to be Implemented for the Overall Housing Policy
 It was recommended that at the sectoral level, with the spearheading of the
national government and adherence of the Home Guaranty Corporation (HGC) to
take in consideration the following recommendations for considering instruments
and engaging the coordination of relevant government offices and agencies
involved in housing to review the overall housing policy and determine key
challenges that needs immediate action and reform.
 Determine the key areas that need

ADVANTAGES improvement
 Review the overall housing policy and its
objectives and goals
 Enable to discover and take in consideration
key alternative instruments that can allow the
spur of private sector financing of socialized
and low-cost housing
 Enable to focus subsidies clearly at target
beneficiaries
DISADVANTAGES  Time-consuming
 Differences in opinions or point of views
coming from different offices and agencies
related to housing services and development
ACA #2: Key Improvement Options at the HGC (Internal) Level
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 The HGC may also take in consideration key options for its internal improvement
such as its privatization and merging with other housing agency that is currently
performing complementary functions such as the Social Housing Finance
Corporation (SHFC) and consider sectoral reforms for its better functioning.
 Improved and ensured efficiency of the

operation of HGC for the next five years
ADVANTAGES and more
 Expedite the disposition of non-performing
acquired assets by outsourcing this function
to an external specialized private sector firm
 Strengthen the institutional capacity by
means of hiring new staff and training of
existing staff
 Improve risk management procedures
through carrying out proper due-diligence
on guarantee operations, risk sharing with
clients and debt management
 Can help improve the profitability by
modifying premium levels corresponding
with risk, and keeping the default rates low
and improving margins
 Can cost a lot for the national government

particularly for the consideration of merging
DISADVANTAGES and privatization – as this can include cost
of operations, NG equity, cost of equity and
foregone taxes
ACA #3: Developing/Creating an Effective Monitoring Mechanism for HGC

 The need for the proper management and monitoring of Home Guaranty
Corporation (HGC) was considered essential over the years particularly with its
constant entanglement in different corruption scandals and delays in completion
targets that tend to tarnish its image and reputation and also that of the Philippine
national government in the eyes of the Filipino public and such can be done in the
enactment of some implementing guidelines for improved monitoring and auditing
of GOCCs specifically the Home Guaranty Corporation (HGC); creation of a
Corporate Governance Council (CGC) to ensure coordination and support from
other concerned departments and strengthening staff capacity.
191
 Ensure that the staff are consisted of well-
educated, professional, and competent
ADVANTAGES individuals
 Can pave the way for providing vigorous
training
 Can help to establish adequate and
effective IT infrastructure support
 Provision of adequate budget support
 Increased morale in HGC and adherence to
ethical standards
 Hiring process can tend to be tedious and

can affect the time-sensitive deadlines
DISADVANTAGES needed for the completion of housing
projects
 Time-consuming for the creation and
implementation of monitoring mechanisms
and frameworks
 Massive adjustment especially on the part
of the employees and management
Conclusions and Recommendations

 Key reforms are needed to be taken in consideration in order to ensure the
continuous effective and improved functioning and contribution of GOCCs
specifically the Home Guaranty Corporation (HGC) for the growth and
development of the Philippine economy as well as for improving the quality of life
of many Filipinos by means of providing essential services such as providing
affordable housing opportunities for Filipinos. However, much like any branches
and departments in the government, the Home Guaranty Corporation (HGC) and
other GOCCs are still facing some massive challenges concerning on the way it
can be able to fulfill its mandate and to stray away from any illegal and irregular
practices such as breaches of contract and agreements and unable to meet
deadlines and completion projects that can permanently damage its image or
reputation to the public. Thus, the following alternative course of action was
recommended:
ACA #2: Key Improvement Options at the HGC (Internal) Level

 The HGC may also take in consideration key options for its internal improvement
such as its privatization and merging with other housing agency that is currently
192
performing complementary functions such as the Social Housing Finance
Corporation (SHFC) and consider sectoral reforms for its better functioning.
 Improved and ensured efficiency of the

operation of HGC for the next five years
ADVANTAGES and more
 Expedite the disposition of non-performing
acquired assets by outsourcing this function
to an external specialized private sector firm
 Strengthen the institutional capacity by
means of hiring new staff and training of
existing staff
 Improve risk management procedures
through carrying out proper due-diligence
on guarantee operations, risk sharing with
clients and debt management
 Can help improve the profitability by
modifying premium levels corresponding
with risk, and keeping the default rates low
and improving margins
 Can cost a lot for the national government

particularly for the consideration of merging
DISADVANTAGES and privatization – as this can include cost
of operations, NG equity, cost of equity and
foregone taxes
References:
Bantug, Jinkee. (2014). A critique of recent governance reforms of state-owned

enterprises in the Philippines and their proposed improvements. Arellano Law
and Public Policy Journal. Retrieved from
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2373049
Buan, Lian. (2019). Corruption red flags: excesses in government spending.

Rappler. Retrieved from https://www.rappler.com/newsbreak/in-depth/excesses-
goverment-agencies-spending-travel-ghosts-coa-reports-2017-part-2
Gonzales, Iris. (2010). Special report: the problem with the GOCCs. PhilStar
193
Global. Retrieved from
https://www.philstar.com/business/2010/09/08/609636/special-report-problem-
goccs
Respicio-Alejo, Aileen S. (2019). A big boost to Philippine economy. The Manila

Times. Retrieved from https://www.manilatimes.net/2019/06/28/supplements/a-
big-boost-to-philippine-economy/575901
https://gcg.gov.ph/about-
us/#:~:text=10149%20(RA%20No.,the%20needs%20of%20the%20public.
https://www.gppb.gov.ph/laws/laws/PD_1445.pdf
https://gcg.gov.ph/#home_slideshow
https://www.coa.gov.ph/phocadownloadpap/userupload/Annual-Financial-
Report/gocc/2016/2016_AFR_GOCCs_Volume_I.pdf
https://en.wikipedia.org/wiki/Government-owned_and_controlled_corporation
https://www.coa.gov.ph/phocadownloadpap/userupload/Issuances/Manual/Financial_Au
dit_Manual.pdf
https://www.adb.org/sites/default/files/project-document/67490/39606-phi-tacr.pdf
http://www.hgc.gov.ph/abouthgc.html
194
SESSION 12
TOPIC : NATIONAL GOVERNMENT PUBLIC DEBT (Part 1)
PRESENTED BY : Jasmine Quintas
1 DEFINITION: is the total amount of money that the government owes, including what
it borrowed from national creditors – internal debt – and foreign creditors – external or
foreign debt. The money borrowed is used to finance public expenditure. The national
debt also includes how much local government has borrowed.
It is all the money the government has ever borrowed and still owes, which is not the
same as the annual public-sector budget deficit, which is the difference between how
much a government receives in taxes and how much it spends in a single year. A
government may have a massive budget surplus one year, but still have a sizable
national debt.
The national debt, also known as the government debt, public interest or sovereign
debt, is frequently described as a burden, even though the money borrowed typically
has economic benefits.
2 TOTAL PUBLIC DEBT PICTURE

INTERNAL AND EXTERNAL
internal debt or domestic debt is the component of the total government debt in a
country that is owed to lenders within the country. Internal government debt is
complement is external government debt. The main sources of funds for internal debts
are commercial banks and other financial institutions.
Internal public debt owed by a government (money a government borrows from its
citizens) is part of the country's national debt. It is a form of fiat creation of money, in
which the government obtains finance not by creating it de novo, but by borrowing it.
The money created is in the form of treasury securities or securities borrowed from
the central bank.
These may be traded but will only rarely be spent on goods and services. In this way,
the expected increase in inflation due to the increase in national wealth is lower than if
the government had simply created the money de novo and increased the more liquid
forms of wealth (i.e., the money supply).
external debt (or foreign debt) is the component of the total government debt which is
owed to foreign creditors; its complement is internal debt, which is owed to domestic
lenders. The debtors can be the government, corporations or citizens of that country.
The debt includes money owed to private commercial banks, foreign governments,
or international financial institutions such as the International Monetary Fund (IMF)
and World Bank. Note that the use of gross-liability figures greatly distorts the ratio for
countries which contain major money-centers, such as the United Kingdom due
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to London's role as a financial capital. (Contrast with net international investment
position.)
The external debt is irrelevant to the underlying currency. The state debt is split
between debt denominated in the national currency and debt denominated in any
foreign currency
3. TREASURY BILL
Treasury Bills are government securities which mature in less than a year. There are
three tenors of Treasury Bills: (1) 91 day (2) 182-day (3) 364-day Bills. The number of
days are based on the universal practice around the world of ensuring that the bills
mature on a business day.
Treasury Bills are quoted either by their yield rate, which is the discount, or by their
price based on 100 points per unit. Treasury Bills which mature in less than 91-days are
called Cash Management Bills (e.g. 35-day, 42-day).
Where to buy treasury bills in the Philippines?
Here in the Philippines, you can buy treasury bills in the banks. It is being offered in
almost every local banks here in the Philippines.
4. DIRECT AND GUARANTEED DEBT

Public debt management is the process of establishing and executing a strategy
for managing the government’s debt in order to raise the required amount of
funding at the lowest possible cost over the medium to long term, consistent with
a prudent degree of risk. It should also meet any other public debt management goals
the government may have set, such as developing and maintaining an efficient market
for government securities.
5. DEBT MANAGEMENT POLICY
Debt management policies are written guidelines, allowances, and requirements
that guide the debt issuance practices of state or local governments, including the
issuance process, management of a debt portfolio, adherence to various laws and
regulations
A debt management policy should improve the quality of decisions, articulate policy
goals, provide guidelines for the structure of debt issuance, and demonstrate a
commitment to long-term capital and financial planning
Adherence to a debt management policy signals to rating agencies and the capital
markets that a government is well managed and therefore is likely to meet its debt
obligations in a timely manner.
Debt management policies should be written with attention to the issuer's specific
needs and available financing options and are typically implemented through more
specific operating procedures.
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Finally, debt management policies should be approved by the issuer’s governing body
to provide credibility, transparency and to ensure that there is a common understanding
among elected officials and staff regarding the issuer’s approach to debt financing.
6. DEBT MANAGEMENT MACHINERY
the organization or structure of something.
There are many components of a successful debt management policy. At a minimum, it

should include:
Debt Limits. The Policy should consider setting specific limits or acceptable ranges for
each type of debt. Limits generally are set for legal, public policy, and financial
restrictions and planning considerations
Debt Structuring Practices. The Policy should include specific guidelines regarding
the debt structuring practices for each type of bond, including:
 Maximum term (often stated in absolute terms or based on the useful life
of the asset(s)),
 Average maturity,
 Debt service pattern such as equal payments or equal principal
amortization,
 Use of optional redemption features that reflect market conditions and/or
needs of the government,
 Use of variable or fixed-rate debt, credit/liquidity enhancements,
derivatives, short-term debt, and limitations as to when, and to what
extent, each can be used, and
 Other structuring practices should be considered, such as capitalizing
interest during the construction of the project and deferral of principal,
and/or other internal credit support, including general obligation pledges.
Debt Issuance Practices. The Policy should provide guidance regarding the issuance
process, which may differ for each type of debt.
Use of Derivatives. The Debt Management Policy should clearly state whether or not
the entity can or should use derivatives.
7. CURRENT ISSUES AND DEVELOPMENT
1. Transparency
The ff has contributed to a lack of transparency in the Phil. Corporate bond
market:
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• Exemptions from rating and listing requirements.
• Absence of competitive pricing information using benchmark gov’t debt
prices.
• No readily accessible monitoring and surveillance methods for use by
regulators.
• Absence of data consolidation on complete transactions.
• No access to reliable information on credit-worthiness of issuers, except
for sophisticated institutional investors.
2. Outdated bankruptcy laws
There are significant gaps between existing bankruptcy laws and investor
protection. The current corporate rehabilitation law is obsolete and does not
ensure the ability of investors to immediately recover investments in the event of
default.
3. Need for increased regulatory supervision
There is a need for increased supervision of corporate bond issuance. Publication of
post-trade information and other market data is required not only to promote trading in
the secondary market, but also to ensure proper market monitoring and surveillance,
4. No organized trading
The corporate bond market in the Phil. Is bilateral and conducted Over-the-Counter.
Currently, there is no true picture of secondary market liquidity, and it is not clear
whether there are repo or derivative markets. The lack of pricing and distribution
information has dampened the demand for corporate bonds.
5. High issuance cost
Total Public Debt Picture

a. Internal b. External
3. The Treasury Bill Program (2004 and 2005)
4. Direct and Guaranteed Debt
5. Debt Management Policy
6. Debt Management Machinery

7. Current Issues and Development
198
References
https://marketbusinessnews.com/financial-glossary/national-debt-definition-
meaning/#:~:text=Definition%20and%20meaning.%20National%20debt%20is%20the%
20total,also%20includes%20how%20much%20local%20government%20has%20borro
wed.
https://www.infobloom.com/what-is-public-debt.htm
https://en.wikipedia.org/wiki/Internal_debt
https://www.thinkpesos.com/how-to-invest-in-treasury-bills-in-the-philippines/
https://www.elibrary.imf.org/view/books/069/22254-9781498330664-en/ch02.xml
https://www.gfoa.org/materials/debt-management-policy
https://grit.ph/bonds/
https://www.dbp.ph/corporate-and-institutional-banking/treasury-products/government-
securities/
7. https://www.slideshare.net/nikitapandey20/bond-market-in-philippines
199
Case Analysis 2 Philippine Institute for Development Studies
Name of Company Philippine Institute for Development

Studies
Time Context Apr 2013
Point of View Dr Josef T. Yap -President for Project
Services and Development
and Dr Ruperto P. Majuca-Senior

Researcher
DISCUSSION PAPER SERIES NO. April

2013
Short Historical Background of the Among the countries in Southeast Asia,
Company the Philippines has the most profound
development puzzle. With its abundant
natural resources, relatively high
educational standards, fairly advanced
civil institutions, and democratic system
of government, it is quite surprising that
the Philippine economy has lagged
considerably behind those of many of its
neighbors. It has never outgrown the
moniker “the sick man of Asia.
Statement of the Problem This study is concern about the Policy
recommendations for a standard reforms
related to expanding fiscal space and
improving infrastructure of the Philippines
Objectives  To recommend standard reforms
related to expanding fiscal space
and improving infrastructure of the
Philippines
 The main goal for 2030 is to
achieve BRISK growth and
development. That is, growth and
development that is balanced,
rapid, inclusive, sustainable and
propelled by (physical, human,
and knowledge) capital.
Area of consideration SWOT

-Strength 1. Educated workforce with good
English skills
2. Natural resources
3. Macroeconomic stability
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4. Vibrant services sector
5. Vigilant civil society
6. Gateway to the Pacific
7. Overseas remittances
-Weaknesses 1. Lack of entrepreneurship and
low investment
2. Poor infrastructure
3. Weak institutions and
oligarchy
4. Limited economic
transformation
5. Inequitable access to basic
services
6. Lack of demographic
transition
7. Tight fiscal situation
-Opportunities 1. Dynamic region
2. Rebalancing in East Asia
3. Closer regional cooperation
4. Deeper regional integration
-Threats 1. Slow economic growth in
industrialized economies
2. Regional Economic growth
concentrated in Asian
heartland
3. Long-running insurgency and
secessionist movements
4. Border conflicts particularly
with regard to West Philippine
Sea
5. Environmental vulnerability
including climate change
Alternative Course of Action Improve Fiscal
Management
-Advantages(Pros) increase government fees and
user charges, including those for
roads and highways
-Disadvantages (Cons) People will complain for an additional

burden because on increase of
government fee
Funds collected can be mismanaged
Alternative Course of Action Increasing Access and Opportunities to
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Lower Income Classes
-Advantages(Pros) Conditional cash transfers (CCT) which
provides cash transfers to the poor
conditioned upon (a) their children
attending school and (b) their use of
preventive health care and nutrition
services. In short, the cash transfer is
linked to the poor’s investment in human
capital (education and health), which
makes the program very effective in
reducing poverty both immediately and
longer term.
-Disadvantages (Cons) CCT transfers are envisioned to stop
after a certain period (e.g. 5 years) in
order to prevent the creation of the so-
called “moral hazard”, that is, to prevent
a poor household’s dependency on the
program.
Dependent/Receiver will be dependent

with the CCT.
Conclusion/Recommendation I therefore recommend ACA 1 which is
“Improvement Fiscal Management”, this
shall help the economy of the Philippines
creating infrastructure to help deliver the
goods and services needed by the
country.
Sources:
Aspirations and Challenges for Economic and Social Development in the Philippines
Toward 2030 DISCUSSION PAPER SERIES NO. 2013-2
https://dirp4.pids.gov.ph/ris/dps/pidsdps1327.pdf
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SESSION 12
PRESENTED BY : Chrisel T. Gallardo
Debt Management Policies at LGU level

Linkages of LGU with National Government on Public Debt
Responsibilities and Accountabilities of LGU on Public Debt
How does LGU avail of borrowings
Legal Framework: Section 295-303 of the Local Government Code of 1991

 It shall be the basic policy that any local government unit may create
indebtedness, and avail of credit facilities to finance local infrastructure and other
socio-economic development projects in accordance with the approved local
development plan and public investment program.
 PRESIDENTIAL DECREE No. 752 July 25, 1975 - to be known as the Decree on
Credit Financing for Local Governments
 PRESIDENTIAL DECREE No. 1195 –Sept 8, 1977 Amending certain provisions
of PD 752
Main Purpose:
 A local government unit may avail of credit lines from government or private
banks and lending institutions for the purpose of stabilizing local finances.
 A local government unit may contract loans, credits, and other forms of
indebtedness with any government or domestic private bank and other lending
institutions to finance the construction, installation, improvement, expansion,
operation, or maintenance of public facilities, infrastructure facilities, housing
projects, the acquisition of real property, and the implementation of other capital
investment projects.
 A local government unit may likewise secure from any government bank and
lending institution short, medium and long-term loans and advances against
security of real estate or other acceptable assets for the establishment,
development, or expansion of agricultural, industrial, commercial, house
financing projects, livelihood projects, and other economic enterprises.
Deferred-Payment and other Financial Schemes
 Provincial, city and municipal governments may likewise acquire property, plant,
machinery, equipment, and such necessary accessories under a supplier's credit,
deferred payment plan, or other financial scheme.
Bonds and Other Long-Term Securities
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 Subject to the rules and regulations of the Central Bank and the Securities and
Exchange Commission, provinces, cities, and municipalities are hereby
authorized to issue bonds, debentures, securities, collaterals, notes and other
obligations to finance self-liquidating, income-producing development or
livelihood projects pursuant to the priorities established in the approved local
development plan or the public investment program.
Inter-Local Government Loans, Grants, and Subsidies
 Provinces, cities and municipalities may, upon approval of the majority of all
members of the sanggunian concerned and in amounts not exceeding their
surplus funds, extend loans, grants, or subsidies to other local government units
under such terms and conditions as may be agreed upon by the contracting
parties.
Loans from Funds Secured by the National Government from Foreign
Sources.
 The President, or his duly authorized representative, may, through any
government financial or other lending institution, relend to any province, city,
municipality, or barangay, the proceeds of loans contracted with foreign financial
institutions or other international funding agencies
 The President may likewise authorize the relending to local government units the
proceeds of grants secured from foreign sources, subject to the provisions of
existing laws and the applicable grant agreements.
 Repayment or amortization of loans including accrued interest thereon, may be
financed partly from the income of the projects or services and from the regular
income of the local government unit, which must be provided for and
appropriated regularly in its annual budget until the loan and the interest thereon
shall have been fully paid.
Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector
 Local government units may enter into contracts with any duly prequalified
individual contractor, for the financing, construction, operation, and maintenance
of any financially viable infrastructure facilities, under the build-operate-and-
transfer agreement, subject to the applicable provisions of Republic Act
Numbered Sixty-nine hundred fifty-seven (R.A. No. 6957)
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LGU Loan Application Process
Under Section 324 of the LGC, the ceiling of LGU borrowing was defined allowing them
to incur an appropriation for debt service amounting to 20% of its annual regular
income.
Documentary Requirement per DOF DO No. 054s.2016

 Letter request from the Local Chief Executive indicating the specific/s:
a. Lending Institution (LI);
b. Terms and condition of proposed loan; and
c. The purpose/s of the loan
 Certification of existing loan/s duly certified by the Local Treasurer indicating the
following:
a. Types and purpose of loans and other obligations contracted;
b. Name of LI;
c. Date of approval and maturity;
d. Terms and conditions;
e. Remaining balances of loan/s and other obligations; and
f. Annual amortization schedules from LI.
 Commission on Audit (COA) Annual Audit Certificate for the most recent year
shall be supported by the year-end financial reports for the past 3 years:
a. Pre-closing trial balance; and
b. Detailed Statement of Financial Performance.
 Certification issued by the Lending Institution stating that it shall not require LGU
deposits as compensating balance for the loan (for nonauthorized government
depository banks.)
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 REPORTORIAL REQUIREMENTS:
 Post-Borrowing Reports (PBR)

The borrowing LGU shall submit to BSP, through a letter addressed to the Director,
Department of Economic Research or through electronic mail addressed to
mbopinion_der@bsp.gov.ph, a post-borrowing report (PBR) that will indicate the actual
amount of loan, the final terms and conditions, and utilization of the proceeds of the
borrowing within Thirty (30) calendar days after the final release of loan proceeds
 Post-Loan release Report (PLRR)
The lending institution shall submit to BSP, through a letter addressed to the Director,
Department of Economic Research or through electronic mail addressed to
mbopinion_der@bsp.gov.ph, a semestral post-loan release report on LGU loans
granted in full within the last six months that will indicate the actual amount of loan
released as well as the final terms and conditions thereof, within thirty (30) calendar
days after the end of each semester.
 Sworn Certification on Lending to Local Government Units (LGUs)
The BSFIs shall submit, through a letter addressed to the appropriate department of the
SES, within fifteen (15) banking days after every semester, a duly notarized certification
on loan releases to LGUs signed by the president or an officer of equivalent rank and
the chief compliance officer. Such certification shall be considered as a Category A-2
report for purposes of imposing fines on the delayed submission of required reports
pursuant to existing regulations.
 Statement of Indebtedness, Payments, and Balances (SIPB)
The Province/City/Municipality, through the Provincial/City/Municipal Treasurer, shall
report annually through a duly completed Statement of Indebtedness, Payments, and
Balances (SIPB), to inform this Office of the status of the loan application/s, releases,
and payments.
Current Issues and Development:
LGU borrowings nearly double in 2020 for pandemic
Of all local government units in the Philippines, Cavite loans the most in the second half
of 2020, with P4.64 billion Borrowings of local government units (LGUs) almost doubled
to P60.5 billion ($1.26 billion) in 2020 from P31.7 billion in 2019 to fund pandemic-
related expenses, latest figures from the Bangko Sentral ng Pilipinas (BSP) showed.
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The BSP said LGUs had a total of 218 requests in 2020, with 160 of these processed in
the second half, mostly for isolation facilities, health centers, and COVID-19 testing
facilities.
In the second half of 2020, Cavite loaned the most at P4.64 billion. Of the amount, P2.5
billion will be used for constructing a government complex, while P2.14 billion will be for
a broadband network project.
Batangas came next with borrowings in the second half reaching P4 billion, most of
which will be used to finance COVID-19-related projects like medical and laboratory
equipment, as well as water infrastructure projects.
Nueva Ecija borrowed P3 billion to finance its palay price support program and a
commercial complex.
Marikina City was fourth on the list with P1.72 billion in second-half loans, used to
refinance its loan with the Philippine National Bank, as well as construct a market and
improve roads.
The BSP is mandated to render its opinion on proposed borrowings of LGUs.
This enables the central bank to monitor trends in public sector debt and assess their
impact on the economy. – Rappler.com
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Case Analysis 2 Public-Private Partnership
POV: Capacity Building and Knowledge Management Service
Time Context: June 30, 2016 to present
Background:
 By virtue of the Executive Order No. 8 series of 2010, as amended by Executive

Order No. 136 series of 2013, the PPP Center is mandated to facilitate the
implementation of the country’s PPP Program and Projects.
 The PPP Center is the main driver of the PPP Program. It serves as the central
coordinating and monitoring agency for all PPP projects in the Philippines. It
champions the country’s PPP Program by enabling implementing agencies in all
aspects of project preparation, managing of the Project Development and
Monitoring Facility (PDMF), providing projects advisory and facilitation services,
monitoring and empowering agencies through various capacity building activities.
 The PPP Center provides technical assistance to national government agencies

(NGAs), government-owned-and controlled corporations (GOCCs), government
financial institutions (GFIs), state universities and colleges (SUCs), and local
government units (LGUs) as well as to the private sector to help develop and
implement critical infrastructure and other development projects.
 The PPP Center is also advocating policy reforms to improve the legal and
regulatory frameworks governing PPPs in order to maximize the great potentials
of these infrastructure and development projects in the country
• How can the center encourage the LGU’s to enter into Public-Private Partnership?
Objectives:
 Stimulate growth and development by providing many essential and basic

infrastructure services within the local government.
Areas of Consideration:
Strengths:
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 Entering into PPP is based on RA 6957 as amended by RA 7718 known as the
BOT law
 PPP’s encourages the injection of the private sector capital.
 It make projects affordable
 PPP’s encourages innovation
 The projects were tailored based on the needs of the LGU
Weaknesses:
 Project preparations are rigorous, hence, time consuming

 The process will consume a large amount of cost.
 PPP is not yet proactively marketed to LGU’s and private sector
 LGU’s are often perceived to have a poor credit position.
Opportunities:
 PPP can finance big ticket projects such as railway transport system, roads,
airports etc
 Increase in employment opportunities
 The detailed process enables the chosen PPP modality to grow as time passes
Threats:
 PPP deliver value for money

 Tedious process caused delay in developments
 It may lead to waste of resources from both the government and private sector
 Marketing of PPPs to LGUs and their potential private sector partners can be
facilitated by adding more content to the PPP Center website. More videos,
PowerPoint presentations, and papers on the PPP concept and modalities can
be uploaded. Links to other websites with such materials as well as case studies
on PPP projects of LGUs can also be added to the PPP Center website t to the
website of the PPP center.
 This can result to additional expense to the center due to additional manpower
and technology needed.
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 A database of present and potential private sector partners for PPP projects at
both the national and local levels and a geographic information system-based
database of all LGU’s must be created and maintained.
 It needs coordination with the Department of Trade and Industry to identify these
potential partners so an undertaking between theses agencies need to be
established. The database on the different LGU’s financial capacity as determined
by BLGF.
 LGUs should be encouraged to adopt their own PPP code. This will help to make
more stable and transparent the rules of the game to be followed in bidding out
and awarding contracts to private sector partners. Fiscal and other investment
incentives can also be included in the Code.
 The LGU’s will have to secure a portion of their resources because this will entail
additional learnings and trainings.
Conclusion and Recommendation :
With the implementation of the all the ACA’s and the full support of the national
government agencies and LGUs concerned and potential private sector investors,
LGU’s will be able to take advantage of the PPP option in delivering basic and
infrastructure services to their constituents in a reliable and sustainable manner at
the least possible cost.
References:
• https://ppp.gov.ph
• https://www.adb.org/sites/default/files/publication/213606/philippines-ppp-
lgus.pdf
• https://www.adb.org/sites/default/files/publication/213606/philippines-ppp-
lgus.pdf
• https://pppknowledgelab.org/guide/sections/22-ppp-program-objectives
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SESSION 12
PRESENTED BY : Ricardo R. Nilo
 Public Debt Policy of GOCCs

 Linkages of GOCCs with the National Government on Borrowing
 How does a GOCC avail of borrowings?
 Current Issues and Development
Republic Act 4860

Section 1. The President of the Philippines is hereby authorized in behalf of the Republic of the Philippines
to contract such loans, credits and indebtedness with foreign governments, agencies or instrumentalities of
such foreign governments, foreign financial institutions, or other international organizations, with whom, or
belonging to countries with which, the Philippines has diplomatic relations, as may be necessary and upon
such terms and conditions as may be agreed upon, to enable the Government of the Republic of the
Philippines to finance, either directly or through any government office, agency or instrumentality or any
government-owned or controlled corporation.
Section 2. The total amount of loans, credit and indebtedness, excluding interest, which the President of
the Philippines is authorized to incur under this Act shall not exceed one billion United States dollars.
All loans, credits and indebtedness under the precedent section shall be incurred only for particular projects
with the approved economic program of the government recommended by the National Economic Council
and Monetary Board of the Central Bank of the Philippines.
Section 3. The President of the Philippines is likewise, herby authorized, in behalf of the Republic of the
Philippines, to guarantee, upon such term and conditions as may be agreed upon, foreign loans extended
directly to, bonds for sale in international markets issued by corporations owned or controlled by the
Government of the Philippines for industrial, agricultural or other economic development purposes or
project authorized by law such as:
 Modernization of Philippine National Railways
 Cash Capital of the Land Bank
 Electrification, Irrigation, river control and drainage, telecommunication
 Housing, construction and/or improvement of highways, airport, port and harbor
 School building, waterworks and artesian well, air navigation,
 Development of the fishing industry,
 Iron and nickel exploitation and development
Section 5. It shall be the duty of the President, within thirty days after the opening of every regular session,
to report to the Congress the amount of loan credits and indebtedness contracted, as well as the
guarantees extended, and the purpose and the project for which the loans, credits and indebtedness were
incurred, and guarantees extended, as well as such loans which may be reloaned to Filipino-owned or
controlled corporation.
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LETTER OF INSTRUCTION NO. 158 S. 1974
1. All foreign borrowing proposal of the government, Government Agencies and government financial
institutions shall be submitted to the Central bank for approval in principle by the Monetary Board
as to purpose and credit terms among others before commencement of actual negotiations.
2. Actual negotiations for such foreign credits and/or accommodations shall be conducted by the
Secretary of Finance and/or Central Bank Governor or their duly authorized representatives as
chief or co-chief negotiator, together with the representatives of the Government, government
agencies, government institution or entities concerned.
ADMINISTRATIVE ORDER NO. 99 s. 1993

All government agencies, instrumentalities, political subdivision, financial institutions, and corporation as
well as local government, shall submit to the Bangko Sentral ng Pilipinas their request for approval-in-
principle by the Monetary Board of their foreign borrowing proposals even before issuing a mandate or
commitment to foreign funder/arranger. The request shall include, among others, information on the
undertaking/project to be financed, magnitude and timing of funding requirements, indicative terms, as well
as timetable/target date for entry into the capital markets.
LINKAGES OF GOCCS WITH THE NATIONAL GOVERNMENT BORROWING

GCG Memorandum Circular 2018-02
4.1 Major Development Project and Major Contracts of GOCCs shall continue to fall under the review and
decision-making process of the NEDA, NEDA ICC, and/or the NEDA Board, pursuant to all applicable
existing laws, rules and regulations, including any amendments and changes therein in the future.
GOCC Submission to GCG
 Description of the Project/Contract
 Enumeration of funding source
 Location map
 Favorable legal opinion and/or contract review by the OGCC
 Other aspect deemed important
Office of Government Corporate Counsel Rules and Regulations

RULE 3 Powers of the OGCC
Section 1.1 (b) Review and if necessary, recommend revisions or modifications on contract referred by
GOCCs, as required by law, and/or prepare such contracts when so requested in appropriate cases in
accordance with Rule 6 of these rules
RULE 6
Opinion and Contract Review
Section 1. Request for Legal Opinion and Contract Review – All GOCCs, through their duly authorized
officer, shall refer to the OGCC for review all proposed contracts or agreement.
RA 7656 GOCCs Dividend Law

Section 3. Dividends – All government owned or controlled corporations shall declare and remit at least
fifty percent (50%) of their annual net earnings as cash, stock or property dividends to the National
212
Government.
Recently, Department of Finance Secretary presented amendments on RA 7656 in a letter to House
Speaker Lord Allan Velasco dated April 15, 2021 to increase the dividend law on GOCC from 50% to 75%
of their annual net income to finance Bayanihan 3.
Administrative Order No. 99 s.1993

Approval-in-principle by the Monetary Board of their foreign borrowing proposal even before issuing a
mandate or commitment to foreign funder/arranger.
BSP LOAN APPROVAL PROCESS

The BSP approval involves the evaluation of loan proposals to determine the implications of financial/credit
proposals on
 Monetary aggregates,
 Balance of payments,
 International reserves,
 Key debt indicator
 FX market.
Approval of the public sector foreign loan comes into two (2) stages:
1. Monetary Board Approval-in-Principle (before the signing of the agreement)
- Purpose and credit term
2. Monetary Board Final Approval (after the signing of the agreement)
- To check the consistency of the final loan agreement
CURRENT ISSUES AND DEVELOPMENT

Executive Order No. 142 Approving the merger of the Landbank of the Philippines (LBP) and the United
Coconut Planters Bank (UCPB) and the acquisition by the LBP of the special preferred shares of the
Philippine Deposit Insurance Corporation (PDIC) in the UCPB.
Sec. 1 Merger of UCPB with LBP.
The merger of the UCPB with the LBP is hereby approved, with the LBP as surviving entity, subject to the
requisite approvals from the SEC, to the conditions and limitations under RA11524 and RA 11232 or the
Revised Corporation Code of the Philippines.
ASSETS:
Landbank = 2,034,861,11
UCPB = 338,272.86
In million pesos
LIABILITIES:
Landbank = 1,885,943,95
UCPB = 318,012.32
In million pesos
Section 4. Reorganization.
The LBP may adopt and implement a reorganization plan as may be approved by the LBP Board of
213
Director, subject to the requirements of RA 10149 and the rules and regulations of GCG. LBP personnel
who may separated from the service as consequence of the reorganization may be entitled to such
separation incentives as may be fixed by the LBP Board of Directors.
The personnel of the UCPB who may be separated from service as a consequence of the merger, shall be
paid separation benefits by the UCPB pursuant to the guidelines it may adopt and applicable laws and
regulations. Whenever applicable, such personnel may be hired by the LBP, subject to the possession of
the necessary civil service eligibility, and other requirements prescribed for the position.
References:
GCG Memorandum Circular No. 2018-02
Administrative Order No. 99 s.1993
Letter of instruction No. 158 s.1974
www.bsp.gov.ph/regulations/fx.asp
Republic Act No. 11211
Republic Act No. 4860 Aug. 8, 1966
Republic Act 7656
Executive Order No. 142 June 25, 2021
https://ogcc.gov.ph
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Case Analysis 2 Jeepney Modernization Program
Time Context: 2017 – present
HISTORICAL BACKGROUND
During the American colonial period, and shortly after World War II, jeepneys were known as ‘auto calesa’
(or “AC” for short), named after the horse-drawn calesas of Manila, or simply “jitney” or “baby bus.” The
term “auto calesa” was first attested in 1910, and originally referred to relatively cheap imported cars that
were used as share taxis by local drivers for ₱2 an hour. The first automobile to be modified for seating
more passengers was introduced in 1932 by a Filipino entrepreneur, using cheap imported German DKW
vehicles with side-entry carriages attached. These were operated by the DKW-AC Company.
By the mid-1930s, Emil Bacrach, a Russian American Jewish entrepreneur in the Philippines (who also
owned the Ford Motor Co. franchise in the country, as well as Manila’s first bus company), started the
Bacharach Motor Company (BMC). They began manufacturing similar vehicles known as the BMC-AC.
Unlike the DKW-ACs, they had a back-entry carriage-style (a tartanilla) that was joined seamlessly with the
chassis. It seated two people on each side. The automobile used were cheap imported British Austin 7s
and later on, American Bantams, both of which are the direct precursors of the Jeep. They later expanded
to seat eight to ten people, but were still much shorter than modern jeepneys. Most of these vehicles were
destroyed in World War II.
When American troops began to leave the Philippines at the end of World War II, hundreds of surplus
Jeeps were sold or given to the Filipinos. An American soldier named Harry Stonehill was involved in the
disposal of military surplus, and reportedly created a black market for the surplus including jeeps. The
Jeeps were stripped down and altered locally: metal roofs were added for shade; and the vehicles
decorated in vibrant colors with chrome-plated ornaments on the sides and hood. The back part was
reconfigured with two long parallel benches with passengers facing each other to acoomodate more
passengers. The size, length and passenger capacity has increased as it evolved through the years. These
were classified as passenger-type jeeps. The non-extended, original-seat configuration jeeps were labeled
owners, short for owner-type jeeps, and are used non-commercially. The original Jeepneys were
refurbished military Jeeps by Willysand Ford. Modern jeepneys are now produced with engines and other
parts from Japan or South Korea.
Sarao Motors, Inc, is a Filipino automotive manufacturing company headquartered in Brgy. Pulang Lupa in
Las Pinas in Metro Manila, Philippines. The company designs, engineers, manufactures and distributes the
jeepney, the most popular form of transportation in the country, labeled as the ‘king of the road’ in the
Philippines.
The company was first established as a small automotive shop in 1953 by starting entrepreneur Leonardo
Sarao, a mechanic and a former calesa driver. From an initial budget of ₱700, the company grew into a
multimillion corporation. At its peak, the ratio of Sarao jeepneys rolling the streets of Manila outnumbered
other names by nearly 7 to 1, the name Sarao became synonymous with the vehicle.
Sarao promoted the jeepney as a symbol of Philippine culture. A Sarao was exhibited as the Philippine
pavilion at the 1964 New York World’s Fair as a national image for the Filipinos. In 1971, a Sarao jeepney
traveled from Manila to London and all over Europe as the Philippine icon of the London-Manila Express, a
roadshow sponsored by the Philippine Tourism and Travel Association to boost the country’s tourism and
215
industry to European countries.

How do we modernize the Philippine jeepney without burdens to the operators and drivers?
OBJECTIVE OF THE STUDY

To modernize the Philippine Jeepney with the compliance of the international standard and to help
operators and drivers for easy acquisition of the units.
SWOT ANALYSIS
Strength – Minimum maintenance
- Cheapest way to commute
Weakness – unsafe
- Uncomfortable
Opportunity – Upgrading of design and features
Threat – Phase out
ALTERNATIVE COURSE OF ACTION

ACA-1.
Establish a jeepney manufacturing company by the Philippine government with adherence to the
international standard for motor vehicle.
Advantage – The company will produce cheap original Philippine made vehicle that can easily be acquired
by the operators and drivers.
Disadvantage – Requires a huge amount for capital investment.
ACA-2.
Designate a financial institution to provide financial assistance to the operators for the mandatory trade-in
of their jeepneys with equivalent value as the downpayment and with easy, affordable monthly
amortization.
Advantage – Operators will automatically surrender aging jeepneys.
Disadvantage – Requires a space for the disposal.
CONCLUSION
The Modernization Program of the government is based on the principle of business opportunity for the
vehicle manufacturing company in the world. The design of the program is to cater the products of the
existing vehicle company and to boost their market opportunity.
Although the ideal is to cope up with the international standard for motor vehicle, however these standards
can also be done by local producers. The government set aside the financial difficulty of the operators and
drivers. The program has taken away the livelihood of the small operators and drivers.
RECOMMENDATION
ACA1 and ACA2
Considering the program is unadoptable to small operators and drivers because of the millions worth of a
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new unit, it is important that the government re-study its implementation and its impact to the drivers and
operators.
Modernization is very timely appropriate and important because aging jeepneys are becoming unsafe. On
the other hand, the government should also protect our history and culture. Phasing out the so called “king
of the road” is phasing out our showcase to the world. The design of the new units should preserve the
iconic design of the jeepney, for it is the only vehicle recognized as Philippine made.
Reference:
https://en.m.wikipedia.org
www.caranddriver.com
217

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NATIONAL COLLEGE OF BUSINESS AND ARTS

MASTER IN PUBLIC ADMINISTRATION SY:

COMPILATION OF REPORTS IN PUBLIC

MARCIAL V. MOJICA, DPA

Overview of Public Fiscal Administration 1

First Case Analysis

Ivy Nessa Pajaroja 7

The NGAs Public Fiscal Administration Overview 14

First Case Analysis

Daniel Julius Tumaneng 25

First Case Analysis

The National Government Accounting System 46

First Case Analysis

Roy Marion J. Revellame 52

Kervy Ann F. Barlis 61

First Case Analysis

The Local Government Units Public Fiscal Administration 87

First Case Analysis

Ricardo R. Nilo 104

Second Case Analysis

Ivy Nessa Pajaroja 110

Ronald Lodo 117

Second Case Analysis

Daniel Julius Tumaneng 125

Eduardo Borela 132

Second Case Analysis

Sunday-Ann Regio 149

The GOCCs Public Fiscal Administration Overview 154

Second Case Analysis

Roy Marion J. Revellame 157

Kervy Ann F. Barlis 166

Second Case Analysis

Reynavi M. Olivares 178

Catherine N. Anito 187

Public Debt 195

Second Case Analysis

Jasmine Quintas 200

Chrisel T. Gallardo 208

PRESENTED BY : Ivy Nessa P. Pajaroja

What is Public Finance?

The Need To Study Public Finance

Scope of Public Finance

Meaning Private finance is the study of Public finance is concerned

Adjustments Individuals adjust their spending Government adjust the

Objective To maximize profit. To promote social welfare.

Financial Transactions are kept secret. Transactions are open and

Time Horizon No fixed period One year

Elasticity Less Comparatively more

Roles of Government In Public Finance

1. Maintain the Legal and Social

The Basic Concept Of Mercantilism In Terms Of Trade

1. The stock market crash of 1929

Three Principal Tenets In The Keynesian Description

Background of the Study

Statement of the Problem

Alternative Courses of Action

ACA1. The BIR must hold outreach programs to improve registration

ACA2. The BIR must hire additional competitive collection officers

PHILHEALTH’S MEASURE ON FRAUDULENT CLAIMS

1. The National Health Insurance Program (NHIP) administered by the Philippine