D E C I S I O N

Records reveal that Ms Louella C. Reguirre, State Auditor IV and Ms. Lourdes C. Hassan, State Auditor II, Unit Auditor and Staff, respectively, of the COA-DECS Region IX, Zamboanga City and Mr. Joselyn San Juan, State Auditor IV and Mr. Antonio de Vera, State Auditor II, Auditor-in-Charge and Staff, respectively, of the COA-DECS Region V, Legazpi City, request authority to collect service incentive fees on the basis of Section 37 of R.A. 8250, the General Appropriations Act of 1997 which reads thusly:

"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 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."

It appears that the aforequoted provision is an item common in pertinent sections of the Annual Appropriations laws since 1989 to 1997.

The Auditor, DECS, Regional Office No. IX, Zamboanga City, asserted that certain amounts are collected from government employees through monthly deduction from their salaries in payment of obligations due or owing government and private lending institutions. Under this scheme, the lending institutions pay the government agencies concerned service fees which may be made available by way of incentive to employees who are actually and directly involved in the collection of the corresponding loan payments and amortizations in behalf of said lenders. She also inferred that DECS Regional Office No. IX personnel are involved in the collection and remittance activities through the post-audit of vouchers and payables and tracing these to reports, journals and trial balance.

On the other hand, the Auditor of DECS Regional Office No. V, Legazpi City, cited the same authority in securing payment of service fees. In her letter dated June 18, 1998, she averred that the incentive and service fees are paid by government and/or private institutions and insurance companies for the remittance of the deductions due them from the salaries of the teachers and employees in the secondary education in the region.

By way of comment on the propriety of their entitlement to the collection of service fees, the Auditor, DECS-PSD, Vito Cruz, Manila, asserted that the amount of service fees, remitted by the GSIS and various lending companies to the DECS-Central Office does not include those granted to the different regional offices of DECS; the service fees granted to the DECS-Central Office are for the remittance of the deductions from the salaries of the public elementary school teachers and personnel in Regions I to XII, NCR, CAR, CARAGA and deductions from salaries of the public secondary school teachers and personnel of NCR, the payrolls of these teachers and personnel of which are processed by the DECS-PSD and that the processing and payment of payrolls for the public secondary school teachers and personnel are done in the Regional Offices/Division Offices (excluding NCR). Initial salaries of newly appointed elementary school teachers with permanent appointments and the salaries of substitute, temporary and provisional elementary teachers are also processed and paid in the Regional Office concerned. Furthermore, she said that the area of post audit of DECS-PSD in Manila is limited to payrolls of the public elementary school teachers/personnel in Regions III, IV, and NCR and public secondary school teachers/personnel in NCR, so that for the remaining regions, it is the COA personnel assigned in the Regions/Division who have the responsibility to post audit the payrolls and favorably recommends the grant of the request.

This Commission finds merit on the requests.

Indeed, as part of their audit activities, the COA personnel assigned at the DECS Regions V and IX post audit the collections of loan 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, those organized for, and managed by government employees. Such audit undertaking has, in fact, been instrumental in the early remittance of subject collections, for which reason the DECS remits to he National Treasury for the account of this Commission a predetermined portion of the service incentive fees collected from the aforementioned lending institutions and entities representing funds available for the payment of service incentive fees to the employees who are actually and directly involved in the collection.

Wherefore, premises considered, and consistent with COA Decision No. 97-550 dated November 4, 1997, the herein requests for authority to collect Service Incentive Fees are hereby granted.

Accordingly, the payment of service incentive fees to the COA personnel assigned at the DECS Regions V and IX may now be allowed against available funds remitted by he 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 percent (50%) of current basic pay for employees at salary grade 15 and below," while "(e) employees at salary grade 16 and above shall have a percentage incentive pay that is one (1) percent less for each grade over 15."