PABLO LORENZO vs. JUAN POSADAS, JR.
unpaid within 10 days after the date of notice and demand thereof by the Collector, there
G.R. No. 43082. June 18, 1937
FACTS:
May 27, 1922, Thomas Hanley died in Zamboanga, leaving a will and considerable amount of real
and personal properties.
June 14, 1922, proceedings for the probate of his will and the settlement and distribution of his
estate were begun in the Court of First Instance of Zamboanga.
The CFI considered it proper to appoint a trustee to administer the real properties which were to
pass to Matthew Hanley 10 years after the testator's death.
March 8, 1924, P. J. M. Moore, one of the two executors named in the will, was appointed trustee.
March 10, 1924, Moore took his oath of office and gave bond. He acted as trustee until February
29, 1932, when he resigned and Pablo Lorenzo was appointed in his stead.
The Collector of Internal Revenue, alleging that the estate left by the deceased consisted of realty
valued at P27,920 and personality valued at P1,465, and allowing a deduction of P480.81, assessed
against the estate an inheritance tax in the amount of P1,434.24 which, together with the penalties
for delinquency in payment consisting of a 1% monthly interest from July 1, 193,1 and a surcharge
of 25% on the tax, amounted to P2,052.74.
March 15, 1932, the defendant filed a motion in the testamentary proceedings pending before the
CFI praying that the trustee, be ordered to pay the said sum. The motion was granted.
September 15, 1932, the plaintiff paid this amount under protest, notifying the defendant that unless
the amount was promptly refunded, suit would be brought for its recovery. The defendant refused to
refund the said amount. His administrative remedies exhausted, plaintiff went to court.
October 4, 1932, Pablo Lorenzo, brought this action in the CFI against the defendant, Juan
Posadas, Jr., then the Collector of Internal Revenue, for the refund of the amount of P2,052.74,
paid by the plaintiff as inheritance tax on the estate of the deceased, and for the collection of interest
thereon at the rate of 6% per annum.
The defendant set up a counterclaim for P1,191.27 alleged to be interest due on the tax in question
and which was not included in the original assessment.
The Court of First Instance of Zamboanga dismissed both the plaintiff's complaint and the
defendant's counterclaim, both parties appealed to this court.
ISSUES and HELD:
1. When does the inheritance tax accrue and when must it be satisfied?
From the fact, however, that Thomas Hanley died on May 27, 1922, it did not follow that the
obligation to pay the tax arose as of that date. The time for the payment of inheritance tax is
clearly fixed by section 1544 of the Revised Administrative code as amended by Act No. 3031,
in relation to section 1543 of the same code.
SEC. 1543. Exemption of certain acquisitions and transmission. The following shall not
be taxed:
a. The merger of the usufruct in the owner of the naked title.
b. The transmission or delivery of the inheritance or legacy by the fiduciary heir or
legatee to the trustees.
c. The transmission from the first heir, legatee, or donee in favor of another beneficiary,
in accordance with the desire of the predecessor.
In the last two cases, if the scale of taxation appropriate to the new beneficiary is greater
than that paid by the first, the former must pay the difference.
SEC. 1544. When tax to be paid. The Tax fixed in this article shall be paid:
a. In the second and third cases of the next preceding section, before entrance into
possession of the property.
b. In other cases, within the 6 months subsequent to the death of the predecessor; but if
judicial testamentary or intestate proceedings shall be instituted prior to the expiration
of said period, the payment shall be made by the executor or administrator before
delivering to each beneficiary his share.
If the tax is not paid within the time hereinbefore prescribed, interest at the rate of twelve
per centum per annum shall be added as part of the tax; and to the tax and interest due and
shall be further added a surcharge of 25%.
A certified copy of all letters testamentary or of administration shall be furnished the
Collector of Internal Revenue by the Clerk of Court within 30 days after their issuance.
The instant case does not fall under subsection (a), but under subsection (b), of section 1544
above-quoted, as there is here no fiduciary heir, first heir, legatee or donee. Under that
subsection, the tax should have been paid before the delivery of the properties in question to P.
J. M. Moore as trustee on March 10, 1924.
The accrual of the inheritance tax is distinct from the obligation to pay the same. Section 1536
as amended, of the Administrative Code, imposes the tax upon "every transmission by virtue
of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of inheritance,
devise, or bequest." The tax therefore is upon transmission or the transfer or devolution of
property of a decedent, made effective by his death.
2. Should the inheritance tax be computed on the basis of the value of the estate at the time of the
testator's death, or on its value ten years later?
The plaintiff contends that the estate of Thomas Hanley, did not and could not legally pass to
the instituted heir, Matthew Hanley, until after the expiration of 10 years from the death of the
testator and, that the inheritance tax should be based on the value of the estate in 1932, or 10
years after the testator's death.
If death is the generating source from which the power of the state to impose inheritance taxes
takes its being and if, upon the death of the decedent, succession takes place and the right of
the state to tax vests instantly, the tax should be measured by the value of the estate as it stood
at the time of the decedent's death, regardless of any subsequent contingency affecting value of
any subsequent increase or decrease in value.
3. In determining the net value of the estate subject to tax, is it proper to deduct the compensation due
to trustees?
The plaintiff contends that the compensation and fees of the trustees, which aggregate
P1,187.28, should also be deducted under section 1539 of the Revised Administrative Code:
In order to determine the net sum which must bear the tax, when an inheritance is
concerned, there shall be deducted, in case of a resident, . . . the judicial expenses of the
testamentary or intestate proceedings,
A trustee, no doubt, is entitled to receive a fair compensation for his services. But from this it
does not follow that the compensation due him may lawfully be deducted in arriving at the net
value of the estate subject to tax.
There is no statute in the Philippines which requires trustees commission to be deducted in
determining the net value of the estate subject to inheritance tax.
Furthermore, though a testamentary trust has been created, it does not appear that the testator
intended that the duties of his executors and trustees should be separated.
4. What law governs the case at bar? Should the provisions of Act No. 3606 favorable to the taxpayer
be given retroactive effect?
It is well-settled that inheritance taxation is governed by the statute in force at the time of the
death of the decedent.
The taxpayer cannot foresee and ought not to be required to guess the outcome of pending
measures. Of course, a tax statute may be made retroactive in its operation. Liability for taxes
under retroactive legislation has been "one of the incidents of social life."
In the absence of clear legislative intent, we cannot give Act No. 3606 a retroactive effect

PHILIPPINE AIRLINES, INC v. ROMEO F. EDU and UBALDO CARBONELL
G.R. No. L-41383. August 15, 1988
FACTS:
The Philippine Airlines (PAL) is a corporation organized and existed under the laws of the
Philippines and engaged in the air transportation business under a legislative franchise, Act 4271, as
amended by RA 2360 and 2667. Under its franchise, PAL is exempt from the payment of taxes.
PAL has, since 1956, not been paying motor vehicle registration fees.
1971, Commissioner Romeo F. Edu, issued a regulation requiring all tax exempt entities, among
them PAL to pay motor vehicle registration fees, pursuant to Sec 8, RA 4136, otherwise known as
the Land Transportation and Traffic Code.
Despite PAL's protestations, the appellee refused to register the appellant's motor vehicles unless the
amounts imposed under RA 4136 were paid. The appellant thus paid, under protest, the amount of
P19,529.75 as registration fees of its motor vehicles.
May 19, 1971, PAL through counsel, wrote a letter to Commissioner Edu demanding a refund,
invoking the ruling in Calalang v. Lorenzo where it was held that motor vehicle registration fees are
in reality taxes of which PAL is exempt by virtue of its legislative franchise.
Edu denied the request basing his action on Republic v. Philippine Rabbit Bus Lines, Inc., to the
effect that motor vehicle registration fees are regulatory exactions and not revenue measures and,
therefore, do not come within the exemption granted to PAL under its franchise.
Hence, PAL filed the complaint against Land Transportation Commissioner Romeo F. Edu and
National Treasurer Ubaldo Carbonell with the Court of First Instance of Rizal, Branch 18.
Romeo F. Edu, in his capacity as LTC Commissioner, and Ubaldo Carbonell, in his capacity as
National Treasurer, filed a motion to dismiss alleging that the complaint states no cause of action.
They contended that while Act 4271 exempts PAL from the payment of any tax except two per cent
on its gross revenue or earnings, it does not exempt the plaintiff from paying regulatory fees, such as
motor vehicle registration fees
April 24, 1973, the trial court rendered a decision dismissing the PALs complaint.
From this judgment, PAL appealed to the Court of Appeals which certified the case to us.
ISSUE:
What is the nature of motor vehicle registration fees? Are they taxes or regulatory fees?
HELD:
Section 73. Disposal of moneys collected.
20% of the money collected under the provisions of this Act shall accrue to the road and bridge
funds of the different provinces and chartered cities in proportion to the cedula sales during the
next previous year and the remaining eighty per centum shall be deposited in the Philippine
Treasury to create a special fund for the construction and maintenance of national and provincial
roads and bridges, as well as the streets and bridges in the chartered cities to be allotted by the
Secretary of Public Works and Communications for projects recommended by the Director of
Public Works in the different provinces and chartered cities . . ."
It is clear from the provisions of Sec 73 of Act 123 and Sec 61 of the Land Transportation and
Traffic Code that the legislative intent and purpose behind the law requiring owners of vehicles to
pay for their registration is mainly to raise funds for the construction and maintenance of highways
and to a much lesser degree, pay for the operating expenses of the administering agency.
On the other hand, the Philippine Rabbit case mentions a presumption arising from the use of the
term "fees" which appears to have been favored by the legislature to distinguish fees from other
taxes such as those mentioned in Sec 13 of Act 4136 referring to taxes other than those imposed on
the registration, operation or ownership of a motor vehicle.
Fees may be properly regarded as taxes even though they also serve as an instrument of regulation.
Taxation may be made the implement of the state's police power. If the purpose is primarily revenue,
or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called
a tax. Such is the case of motor vehicle registration fees. The same provision appears as Sec 59(b) in
the Land Transportation Code. It is patent therefrom that the legislators had in mind a regulatory
tax as the law refers to the imposition on the registration, operation or ownership of a motor vehicle
as a "tax or fee."
Though nowhere in RA 4136 does the law specifically state that the imposition is a tax, Sec 59(b)
speaks of "taxes or fees . . . for the registration or operation or on the ownership of any motor
vehicle, or for the exercise of the profession of chauffeur . . ." making the intent to impose a tax more
apparent. Thus, even RA 5448 cited by the respondents, speak of an "additional tax," where the law
could have referred to an original tax and not one in addition to the tax already imposed on the
registration, operation, or ownership of a motor vehicle under RA 4136.
Simply put, if the exaction under RA 4136 were merely a regulatory fee, the imposition in RA 5448
need not be an "additional" tax. RA 4136 also speaks of other "fees" such as the special permit fees
for certain types of motor vehicles (Sec. 10) and additional fees for change of registration (Sec. 11).
These are not to be understood as taxes because such fees are very minimal to be revenue-raising.
Thus, they are not mentioned by Sec. 59(b) of the Code as taxes like the motor vehicle registration
fee and chauffeurs' license fee. Such fees are to go into the expenditures of the Land Transportation
Commission as provided for in the last proviso of Sec. 61
In view of the foregoing, we rule that motor vehicle registration fees as at present exacted pursuant
to the Land Transportation and Traffic Code are actually taxes intended for additional revenues of
government even if one fifth or less of the amount collected is set aside for the operating expenses of
the agency administering the program.
NOTE: Any registration fees collected between June 27, 1968 and April 9, 1979, were correctly
imposed because the tax exemption in the franchise of PAL was repealed during the period.
ARTURO M. TOLENTINO v. THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE (D)
G.R. No. 115455. August 25, 1994
FACTS:
The value-added tax (VAT) is levied on the sale, barter or exchange of goods and properties as well
as on the sale or exchange of services. It is equivalent to 10% of the gross selling price or gross
value in money of goods or properties sold, bartered or exchanged or of the gross receipts from the
sale or exchange of services.
RA 7716 seeks to widen the tax base of the existing VAT system and enhance its administration by
amending the National Internal Revenue Code.
ISSUES and HELD:
I. PROCEDURAL ISSUE
Does RA 7716 violate Art. VI, 24 of the Constitution when, although HB 11197 had
originated in the House of Representatives, it was not passed by the Senate but was simply
consolidated with the Senate version SB1630 in the Conference Committee?
o To begin with, it is not the law but the revenue bill which is required by the
Constitution to "originate exclusively" in the House of Representatives. It is important to
emphasize this, because a bill originating in the House may undergo such extensive changes
in the Senate that the result may be a rewriting of the whole. At this point, what is important
to note is that, as a result of the Senate action, a distinct bill may be produced. To insist that
a revenue statute and not only the bill which initiated the legislative process culminating
in the enactment of the law must substantially be the same as the House bill would be to
deny the Senate's power not only to "concur with amendments" but also to " propose
amendments." It would be to violate the coequality of legislative power of the two houses of
Congress and in fact make the House superior to the Senate.
o Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or
tax bills, bills authorizing an increase of the public debt, private bills and bills of local
application must come from the House of Representatives on the theory that, elected as they
are from the districts, the members of the House can be expected to be more sensitive to the
local needs and problems.
 II. SUBSTANTIVE ISSUE
The Philippine Press Institute question the law insofar as it has withdrawn the exemption
previously granted to the press under 103 (f) of the NIRC.
o We are unable to find a differential treatment of the press by the law, much less any censorial
motivation for its enactment. If the press is now required to pay a value-added tax on its
transactions, it is not because it is being singled out, much less targeted, for special treatment
but only because of the removal of the exemption previously granted to it by law. The
withdrawal of exemption is all that is involved in these cases. Other transactions previously
granted exemption, have been delisted as part of the scheme to expand the base and the scope
of the VAT system. The law would perhaps be open to the charge of discriminatory treatment if
the only privilege withdrawn had been that granted to the press. But that is not the case
o In the cases at bar, the statute applies to a wide range of goods and services. The argument that,
by imposing the VAT only on print media whose gross sales exceeds P480,000 but not more
than P750,000, that the law discriminates is without merit since it has not been shown that as a
result the class subject to tax has been unreasonably narrowed. The fact is that this limitation
does not apply to the press alone but to all sales. Nor is impermissible motive shown by the
fact that print media and broadcast media are treated differently. The press is taxed on its
transactions involving printing and publication, which are different from the transactions of
broadcast media. There is thus a reasonable basis for the classification
Whether or not the law also violates the rule that taxation must be progressive and that it denies
petitioners' right to due process and the equal protection of the laws
o Just as vigorously as it is asserted that the law is regressive, the opposite claim is pressed by
respondents that in fact it distributes the tax burden to as many goods and services as possible
particularly to those which are within the reach of higher-income groups, even as the law
exempts basic goods and services. It is thus equitable. The goods and properties subject to the
VAT are those used or consumed by higher-income groups. These include real properties held
primarily for sale to customers or held for lease in the ordinary course of business, the right or
privilege to use industrial, commercial or scientific equipment, hotels, restaurants and similar
places, tourist buses, and the like. On the other hand, small business establishments, with
annual gross sales of less than P500,000, are exempted. This, according to respondents,
removes from the coverage of the law some 30,000
o Indeed, regressivity is not a negative standard for courts to enforce. What Congress is required
by the Constitution to do is to "evolve a progressive system of taxation." This is a directive to
Congress, just like the directive to it to give priority to the enactment of laws for the
enhancement of human dignity and the reduction of social, economic and political inequalities
(Art. XIII, 1), or for the promotion of the right to "quality education" (Art. XIV, 1). These
provisions are put in the Constitution as moral incentives to legislation, not as judicially
enforceable rights
JOHN H. OSMEA, v. OSCAR ORBOS
G.R. No. 99886. March 31, 1993
FACTS:
October 10, 1984 President Ferdinand Marcos issued P.D. 1956 creating a Special Account in the
General Fund, designated as the Oil Price Stabilization Fund (OPSF).
o The OPSF was designed to reimburse oil companies for cost increases in crude oil and
imported petroleum products resulting from exchange rate adjustments and from increases in
the world market prices of crude oil.
o Subsequently the OPSF was reclassified into a "trust liability account," in virtue of E.O 1024,
and ordered released from the National Treasury to the Ministry of Energy. The same
Executive Order also authorized the investment of the fund in government securities, with the
earnings from such placements accruing to the fund.
February 27, 1987 President Corazon C. Aquino amended P.D. 1956. She promulgated EO 137
expanding the grounds for reimbursement to oil companies for possible cost under recovery incurred
as a result of the reduction of domestic prices of petroleum products the amount of the under
recovery being left for determination by the Ministry of Finance.
Petitioner alleges that the status of the OPSF as of March 31 1991 showed a "Terminal Fund
Balance deficit" of some P12.877 billion; that to abate the worsening deficit, "the Energy
Regulatory Board issued an Order on December 10, 1990, approving the increase in pump prices of
petroleum products," and at the rate of recoupment the OPSF deficit should have been fully covered
in a span of six (6) months, but this notwithstanding, the respondents are poised to accept process
and pay claims not authorized under P.D 1956."
Petitioner further avers that the creation of the trust fund violates 29(3), Article VI of the
Constitution, reading as follows:
"(3) All money collected on any tax levied for a special purpose shall be treated as a special fund
and paid out for such purposes only. If the purpose for which a special fund was created has been
ful3lled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government."
Petitioner also contends that the "delegation of legislative authority" to the ERB violates 28 (2)
Article VI of the Constitution and inasmuch as the delegation relates to the exercise of the power of
taxation, "the limits, limitations and restrictions must be quantitative, that is, the law must not only
specify how to tax, who (shall) be taxed (and) what the tax is for, but also impose a specific limit on
how much to tax
Petitioner does not suggest that a "trust account" is illegal per se, but maintains that the monies
collected, which form part of the OPSF should be maintained in a special account of the general
fund for the reason that the Constitution so provides, and because they are, supposedly, taxes levied
for a special purpose. He assumes that the Fund is formed from a tax undoubtedly because a portion
thereof is taken from collections of ad valorem taxes and the increases thereon.
ISSUE:
The invalidity of the "TRUST ACCOUNT" in the books of account of the Ministry of Energy
created pursuant to 8, paragraph 1, of P.D. No. 1956, as amended, said creation of a trust fund
being contrary to Section 29 (3) Article VI of the Constitution;
HELD:
To address this critical misgiving in the position of the petitioner on these issues, the Court recalls its
holding in Valmonte v. Energy Regulatory Board, et al
The OPSF was established precisely to protect local consumers from the adverse consequences
that such frequent oil price adjustments may have upon the economy. Thus, the OPSF serves as a
pocket, as it were, into which a portion of the purchase price of oil and petroleum products paid
by consumers as well as some tax revenues are inputted and from which amounts are drawn from
time to time to reimburse oil companies, when appropriate situations arise, for increases in, as
well as under recovery of, costs of crude importation. The OPSF is thus a buffer mechanism
through which the domestic consumer prices of oil and petroleum products are stabilized, instead
of fluctuating every so often, and oil companies are allowed to recover those portions of their
costs which they would not otherwise recover given the level of domestic prices existing at any
given time. To the extent that some tax revenues are also put into it, the OPSF is in effect a device
through which the domestic prices of petroleum products are subsidized in part. It appears to the
Court that the establishment and maintenance of the OPSF is well within that pervasive and non-
waivable power and responsibility of the government to secure, the physical and economic
survival and well-being of the community, that comprehensive sovereign authority we designate
as the police power of the State
Hence, it seems clear that while the funds collected may be referred to as taxes, they are exacted in
the exercise of the police power of the State. Moreover, that the OPSF is a special fund is plain from
the special treatment given it by E.O. 137. It is segregated from the general fund; and while it is
placed in what the law refers to as a "trust liability account," the fund nonetheless remains subject to
the scrutiny and review of the COA. The Court is satisfied that these measures comply with the
constitutional description of a "special fund." Indeed, the practice is not without precedent.
CALTEX PHILIPPINES, INC v. COMMISSION ON AUDIT
G.R. No. 92585. May 8, 1992

FACTS:
2 February 1989, the COA sent a letter to Caltex Philippines, Inc. (CPI), directing the latter to
remit to the OPSF its collection, of the additional tax on petroleum products authorized under the
aforesaid Section 8 of P.D. No. 1956 which, amounted to P335,037,649.00 and informing it that,
pending such remittance, all of its claims for reimbursement from the OPSF shall be held in
abeyance.
9 March 1989, the COA sent another letter to petitioner informing it that partial verification with the
OEA showed that the grand total of its unremitted collections of the above tax is P1,287,668,820.00
directing it to remit the same, with interest and surcharges thereon, within sixty (60) days from
receipt of the letter; advising it that the COA will hold in abeyance the audit of all its claims for
reimbursement from the OPSF; and directing it to desist from further offsetting the taxes collected
against outstanding claims in 1989 and subsequent period.
3 May 1989, petitioner requested the COA for an early release of its reimbursement certificates from
the OPSF covering claims with the Office of Energy Affairs since June 1987 up to March 1989,
invoking in support thereof COA Circular No. 89-299 on the lifting of pre-audit of government
transactions of national government agencies and government-owned or controlled corporations.
8 May 1989, the COA denied petitioner's request for the early release of the reimbursement
certificates from the OPSF and repeated its earlier directive to petitioner to forward payment of the
latter's unremitted collections to the OPSF to facilitate COA's audit action on the reimbursement
claims.
31 May 1989, petitioner submitted to the COA a proposal for the payment of the collections and the
recovery of claims, since the outright payment of the sum of P1.287 billion to the OEA as a
prerequisite for the processing of said claims against the OPSF will cause a very serious impairment
of its cash position.
7 June 1989, the COA, with the Chairman taking no part, handed down Decision No. 921 accepting
the above-stated proposal but prohibiting petitioner from further offsetting remittances and
reimbursements for the current and ensuing years
8 September 1989, petitioner filed an Omnibus Request for the Reconsideration of the decision
6 November 1989, petitioner filed with the COA a Supplemental Omnibus Request for
Reconsideration
16 February 1990, the COA, with Chairman Domingo taking no part and with Commissioner
Fernandez dissenting in part, handed down Decision No. 1171 affirming the disallowance for
recovery of financing charges, inventory losses, and sales to MARCOPPER and ATLAS, while
allowing the recovery of product sales or those arising from export sales.
28 March 1990 , unsatisfied with the decision, petitioner filed the present petition
to make the COA a toothless tiger, but rather envisioned a dynamic, effective, efficient and
independent watchdog of the Government
2. Whether or not the amounts due to the OPSF from petitioner may be offset against petitioner's
outstanding claims from said fund
Taxation is no longer envisioned as a measure merely to raise revenue to support the existence
of the government; taxes may be levied with a regulatory purpose to provide means for the
rehabilitation and stabilization of a threatened industry which is affected with public interest as
to be within the police power of the state. There can be no doubt that the oil industry is greatly
imbued with public interest as it vitally affects the general welfare. Any unregulated increase in
oil prices could hurt the lives of a majority of the people and cause economic crisis of untold
proportions. It would have a chain reaction in terms of, among others, demands for wage
increases and upward spiralling of the cost of basic commodities. The stabilization then of oil
prices is one of prime concern which the state, via its police power, may properly address.
It is settled that a taxpayer may not offset taxes due from the claims that he may have against
the government. Taxes cannot be the subject of compensation because the government and
taxpayer are not mutually creditors and debtors of each other and a claim for taxes is not such a
debt, demand, contract or judgment as is allowed to be set-off.
We may even further state that technically, in respect to the taxes for the OPSF, the oil
companies merely act as agents for the Government in the latter's collection since the taxes are,
in reality, passed unto the end-users the consuming public. In that capacity, the petitioner, as
one of such companies, has the primary obligation to account for and remit the taxes collected
to the administrator of the OPSF. This duty stems from the fiduciary relationship between the
two; petitioner certainly cannot be considered merely as a debtor

ISSUES and HELD:

1. Whether or not the Constitution gives the COA discretionary power to disapprove irregular or
unnecessary government expenditures.
Section 2, Subdivision D, Article IX of the 1987 Constitution expressly provides
The Commission on Audit shall have the power, authority, and duty to examine, audit, and
settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of
funds and property, owned or held in trust by, or pertaining to, the Government, or any of its
subdivisions, agencies, or instrumentalities, including government-owned and controlled
corporations with original charters, and on a post-audit basis: (a) constitutional bodies,
commissions and offices that have been granted fiscal autonomy under this Constitution; (b)
autonomous state colleges and universities; (c) other government-owned or controlled
corporations and their subsidiaries; and (d) such non-governmental entities receiving
subsidy or equity, directly or indirectly, from or through the government, which are required
by law or the granting institution to submit to such audit as a condition of subsidy or equity.
However, where the internal control system of the audited agencies is inadequate, the
Commission
The present powers, as provided, consistent with the declared independence of the
Commission, are broader and more extensive than that conferred by the 1973 Constitution.
Indeed, when the framers of the last two (2) Constitutions conferred upon the COA a more
active role and invested it with broader and more extensive powers, they did not intend merely