Findings No.1 COA Annual Audit Report 2006

July 25, 2008

1. The agency incurred irregular expenditures totaling P54.7 Million (Annexes A to D) representing extra cash gift ranging from P40,000.00 to P100,000.00 and additional extra cash gift ranging from P10,000.00 to P20,000.00 each to its provincial officials and employees, exceeding the maximum amount of P5,000.00 per employee as fixed in RA 6686, as amended; thus, unreasonably impairing its liquidity.

Republic Act No. 6686, AN ACT AUTHORIZING ANNUAL CHRISTMAS BONUS TO NATIONAL AND LOCAL GOVERNMENT OFFICIALS AND EMPLOYEES STARTING CY 1988, allows, other than the Christmas bonus equivalent to one month basic salary, the payment of additional cash gift of One thousand pesos (P1,000.00). Subsequently, R. A. No. 8441, which was approved in December 22, 1997, increased the subject additional cash gift to Five thousand pesos (P5,000.00) starting the Christmas Year 1997. The increase was implemented over a period of three (3) years, the full implementation of which was for the Christmas Year 1999 and thereafter.

On November 2, 2002, the President initially authorized the grant of extra year-end bonus for CY 2002 to all government personnel in agencies covered by or following Republic Act (RA) No. 6758, the Salary Standardization Law, and in entities exempt from RA 6758. The grant was implemented by way of Budget Circular No. 2002-3 dated November 8, 2002 at a maximum amount of P5,000.00 per personnel, subject to the compliance by the agencies of the conditions set therein. The same maximum amount of P5,000.00 was fixed under Budget Circular No. 2003-7 dated December 5, 2003 for the grant of the same benefit for CY 2003. Subsequent budget circulars issued by the Department of Budget and Management implementing Presidential approval for the grant of the same benefit no longer mentioned the maximum amount afore-stated.

In 2006, the Sangguniang Panlalawigan of Bukidnon enacted Ordinance No. 2006-060(9th SP) appropriating, among others, the lump-sum amount of P33,120,000.00 in the general fund for extra cash gift as follows:

Provincial Governor – P40,000.00

Vice-Governor – P100,000.00

Sangguniang Panlalawigan Members – 13 x P80,000.00

Chief of Offices, Employees, Casual & Contractual – P40,000.00 each

The same sanggunian further enacted Ordinance No. 2006-064(9th SP) appropriating, among other items of appropriations, the amount of P8,260,000.00 in the general fund for extra cash gift. In the same year, the local legislative council similarly enacted Ordinance No. 2006-061(9th SP) appropriating, among others, the total amount of P19 Million in economic enterprise fund for extra cash gift to regular/contractual/casual – 475 officials and employees at P40,000.00 each. Another supplemental appropriations of P4,760,000.00 was also appropriated in the economic enterprise fund thru Ordinance No. 2006-065(9th SP) for extra cash gift. These appropriations are exclusive of the total amount of P16 Million in the general fund for extra cash gift for national officials and employees and DepED personnel, and the total appropriations of P18,865,000.00 in the general fund and economic enterprise fund for wages differentials of job-order personnel of the province, but in substance the appropriations amounted to the provision of extra cash gift. The wages differentials were paid in two (2) installments: firstly, at P20,000.00 per person; and, secondly, at P5,000.00 each.

The local legislative body of the province committed conflict of interest by passing Ordinance No. 2006-060(9th SP) allocating cash gift of P100,000.00 for the Vice-Governor and P80,000.00 for each member of the sanggunian, amounts at great disparity with those granted to the Provincial Governor and other provincial officials and employees for similar benefits.

The examination of the disbursement vouchers and/or payrolls covering payment of the subject benefits disclosed that the Agency had indeed paid extra cash gift of P100,000.00 to the Provincial Vice-Governor, P80,000.00 each to the members of its Sangguniang Panlalawigan, and P40,000.00 each to the Provincial Governor and to its other regular and casual officials and employees as well as consultants. It was noted further that the province had likewise paid additional extra cash gift of P20,000.00 each to the members of its sanggunian, and P10,000.00 each to the Provincial Governor and to its other regular and casual officials and employees as well as consultants.

The grant of the subject extra cash gift and additional extra cash gift on top of the regular extra cash gift of P5,000.00 per employee, as categorically authorized and established in prior issuances of the Department of Budget and Management, is bereft of legal basis, it being contrary to the principal law – RA 6686, as amended by RA 8441 - authorizing payment of cash gift. In effect, the Agency incurred irregular expenditures totaling to P54.7 Million (Annexes A to D) and, therefore, unnecessarily impairing its liquidity.

Management Comment

The Honorable Provincial Governor, in his comments to our similar observations in the year 2005, argued as follows:

“The Provincial Government of Bukidnon has been granting extra bonus/cash gift to its Sangguniang Panlalawigan members, regular and job-order employees after first securing Presidential approval. For instance, in Calendar Year 2003, I wrote President Gloria Macapagal Arroyo, x x x, and sought her approval for the grant of additional bonus for the personnel of the Provincial Government of Bukidnon. The president then categorically signified her approval by writing in the same letter that she has no objection, and then affixed her signature thereon. In Calendar Year 2004, I wrote the president a letter, x x x., again requesting for the grant of additional bonus to the Provincial Government of Bukidnon personnel. This time the approval of the president was signified through Local Budget Memorandum No. 2004-45, x x x. You will notice however that said local budget memorandum was addressed to ALL local officials nationwide, perhaps, so as not to burden the president of requiring her to signify her individual approval which would be too taxing on her part. ”

In all instances that the Provincial Government of Bukidnon granted additional bonuses to its personnel, the conditions set in the budget memorandum were strictly followed. The extra bonuses where charged against the savings of the Provincial Government of Bukidnon and the PS limitations were not violated.”

The Provincial Governor has won the support of the Regional Director of DBM Region X, Cagayan de Oro City, who opined that: “ x x x, LGUs are given wide discretion on the amount to be granted each personnel and as to what scheme/method of implementation to adopt on the grant of ECB as long as it is within the requirements provided in LBM No. 2005-48 and the Local Government Code of 1991, to wit: (a) availability of funds (savings) and (b) must be within the PS limitation.”

Auditor’s Rejoinder

The amount of additional benefit/extra cash gift authorized to be paid to eligible local government personnel is neither fixed nor hinted in the Local Budget Memorandum No. 2005-48 dated December 7, 2005, or in Local Budget Memorandum No. 2006-51 dated December 18, 2006, covering the grant of additional benefit/extra cash gift to personnel of local government units for FY 2006.

Rules and regulations issued by executive or administrative officers pursuant to, and as authorized by, law have the force and effect of laws. And, it bears emphasis that where the law speaks in clear and categorical language, there is no room for interpretation thereof. It must be applied as it is written, or it must be taken exactly what it says. The omission in LBM No. 2006-51 of the maximum amount that could be granted as additional extra cash gift to local government personnel in the year 2006 should have been gathered from the statutes relating to the same subject matter, or the statutes in pari materia. On the presumption that whenever the legislature enacts a provision it has in mind the previous statutes relating to the same subject matter, it is held that in the absence of express repeal or amendment therein, the new provision was enacted in accord with the legislative policy embodied in those prior statutes, and should be construed together. Beside, the provisions of local budget memoranda governing the grant of the subject benefits cannot be above its source, the RA 6686, as amended. Suffice it to say, accessories follow the principal.

Recommendation

Grant benefits only in full accord with the express provision or otherwise the legislative intent of the law or regulation authorizing the grant of the same.

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Written by admin · Filed Under Bukidnon, Commission on Audit