D E C I S I O N

Extant records disclose that the COA employees assigned at the Department of Education, Culture and Sports - Office of the Secretary (DECS-OSEC) and its staff bureaus and the DECS Payroll Services Division (DECS-PSD) used to be granted Service Incentive Fees (SIF) beginning 1987. However, the payment of SIF to these COA employees was stopped effective January 2, 1989 when all benefits and other allowances granted by the management of auditing agencies were discontinued under COA Memorandum No. 89-584 dated January 9, 1989. Then Decision No. 1900, dated July 29, 1991, was rendered by this Commission allowing COA personnel assigned at the DECS-PSD to receive SIF. Hence, this request for exception from the coverage of COA Memorandum No. 89-584.

It is contended in the instant request that COA Memorandum No. 89-584 may not apply to the COA employees assigned at the DECS-OSEC and its staff bureaus because what the said Memorandum prohibits is the grant of allowances and fringe benefits which partake of the nature of additional compensation without any specific authority of law. It is further alleged that since the subject COA employees are directly involved in the collection, recording, remittance and availment of service fees, they are entitled to the payment of SIF upon authority and sanction of Section 31 of Republic Act (RA) No. 7845, the General Appropriations Act (GAA) of 1995, which provides as follows:

"Service fees collected shall be deposited with the National Treasury or any public financial institutions and shall accrue to the General Fund, pursuant to Section 44 of Book VI, E.O. No. 292. Such fees may be made available for payment of incentive or service fees to employees who are actually and directly involved in the collection. Provided, however, that such payment to any employee may not, in the aggregate, exceed fifty percent (50%) of his annual salary."

Parenthetically, the foregoing provision is an item common in pertinent sections of the annual appropriations law since 1989 [Sec. 33, RA No. 6688 (GAA of 1989), Sec. 39, RA No. 6831 (GAA of 1990), Sec. 41, RA No. 7078 (GAA of 1991), Sec. 41, RA No. 7180 (GAA of 1992), Sec. 41, RA No. 7645 (GAA of 1993), and Sec. 41, RA No. 7663 (GAA of 1994)].

To show the actual and direct involvement of the subject COA personnel in the collection of service fees, it is represented in the within letter, dated July 7, 1997, of the DECS Auditor that the auditing office in both the DECS-PSD and DECS-OSEC performs such audit activities as hereunder indicated:

Moreover, it is the COA personnel at the DECS-OSEC who record the transactions at the DECS-PSD since the latter does not have separate books of accounts.

This Commission finds merit in the present request and so holds that the pertinent provision in the GAAs of 1989 up to at least 1995 constitutes the legal basis for the payment of SIF. Thus the subject COA personnel could be entitled to such payment provided that the conditions/limitations precedent thereof are complied with.

As part of their audit activities, indeed, the COA employees assigned at the DECS-PSD and DECS-OSEC post-audit the collections of loans amortizations, payments or remittances to government lending institutions such as government banks, the Government Service Insurance System, duly licensed insurance companies, savings and loan associations, and those organized for, and managed by government employees. Such an audit undertaking has, in fact, been instrumental in the early remittance of subject collections, for which reason the DECS remits to the National Treasury for the account of this Commission a predetermined portion of the service fees collected from the aforementioned lending institutions and entitles representing funds available for the payment of SIF to the employees who are actually and directly involved in the collection. Further, the Office of the Auditor, DECS-OSEC exercises operational supervision over the auditing staff of the DECS-PSD, the latter being a division of the former.

Premises considered, and consistent with COA Decision No. 1900 dated July 29, 1991, the herein request for exception from the purview of COA Memorandum No. 89-854 dated January 9, 1989, is hereby granted.

Accordingly, the payment of SIF to the COA personnel assigned at the DECS-OSEC and DECS-PSD may now be allowed retroactive to January 1989 chargeable against available funds remitted by the DECS, subject to compliance with existing rules and regulations and subject further to the Memorandum, dated February 19, 1993, issued by then Secretary Armand V. Fabella, DECS, to the effect that the personnel listed as actually and directly involved in the payroll deduction system "may be given incentive pay out of the service fees paid up to fifty (50) percent of current basic pay for employees at salary grade 15 and below," while "employees at salary grade 16 and above shall have a percentage incentive pay that is one (1) percent less for each grade over 15."