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2020-249
COA Issuances >> Decisions of the Commission Proper >> COA DECISION NO. 2020-249
DECISION
WHEREFORE, premises considered, ND No. 12-101 dated January 9, 2013 is REVERSED for
being issued not in accordance with the 2009 Rules and Regulations in the Settlement of Accounts
(RRSA). The Incumbent Team Leader assigned at the Municipality of San Rafael, Iloilo is directed to
identify whether or not the excess PS [Personal Services] of P775,629.37 were caused by new or
additional PS cost for the budget year 2010 that warrants the issuance of a Notice of Disallowance
pursuant to Section 325(a) of RA No. 7610 and Local Budget Circular No. 98 dated October 14, 2011
and to issue the appropriate notices of suspensions/disallowances as warranted.
The Audit Team Leader (ATL) and the Supervising Auditor (SA) of the Municipal Government of San Rafael,
Province of Iloilo, issued Notice of Disallowance (ND) No. 12-101 dated January 9, 2013 in the amount of P775,629.37.
The disallowance pertains to the excess salaries, allowances and other personnel benefits of the officials and employees of
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the municipality over the PS limitation provided under Section 325(a) of Republic Act (RA) No. 7160. The following
persons were held liable for the disallowance:
In a letter/appeal dated July 29, 2013 addressed to the Regional Director (RD), COA RO No. VI, Mayor Belleza
argued that he could not take action on the ND since the disbursement vouchers (DVs) on the disallowance were not
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9/8/2020 COA DECISION NO. 2020-249
identified. Since the signatories were not identified, there could be no basis in naming the persons liable.
In the Answer dated December 5, 2013, the ATL and the SA recommended that the ND be recalled for not being in
the prescribed form and for failure to state the details of the reference documents covered by the disallowance.
Consequently, the RD reversed ND No. 12-101 dated January 9, 2013, for being issued not in accordance with the
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2009 Rules and Regulations in the Settlement of Accounts (RRSA). However, the ATL of the municipality was directed to
identify whether the excess PS of P775,629.37 is caused by new or additional PS cost for the year 2010, and to issue an
ND, if warranted.
Meanwhile, in order to provide guidance in the review of the RD’s decision, the Director, Claims and Adjudication
Office-Local, Commission Proper Adjudication and Secretariat Support Services Sector (CPASSSS) this Commission, in
her 1st Indorsement dated July 18, 2016, requested the ATL to clarify the discrepancy in the PS cap computation prepared
by the MBO amounting to P775,629.37 as against the computation of the Municipal Accountant which resulted in an
excess of PS cost amounting to P1,867,793.92.
In her 4th Indorsement dated November 10, 2016, the ATL, clarified that the disallowed amount of P775,629.37 was
based on the computation of the MBO which pertains to the difference between the PS limitation and the total annual PS
budget. On the other hand, the amount of P1,867,793.92, represents the excess of the actual PS cost over the PS limitation.
ISSUE
The issue to be resolved is whether or not COA RO No. VI Decision No. 2014-008 dated July 17, 2014 is in order.
DISCUSSION
The RD, in this decision under review, reversed ND No. 12-101 for not being issued in accordance with the 2009
RRSA. The checks, DVs and the corresponding payrolls for salaries, wages and other personnel benefits were not
identified. According to the RD, the auditors should have, at least, identified the transactions that caused the excess in the
PS computation and not only rely on the PS cap computation prepared by the MBO.
This Commission finds the decision under review partly in order. The account that was audited in this case was the
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PS Budget for year 2012, which is not a proper subject of disallowance. Under the RRSA, disallowance must be based on
actual disbursements/expenditures and not on budgeted amounts. In this case, the ND in the amount of P775,629.37 was
issued because the total PS Budget in the amount of P19,792,265.00, covering the salaries, allowances and other personnel
benefits of the officials and employees of the municipality, exceeded the PS limitation, as shown in the following
computation:
As clarified by the ATL in her 4th Indorsement dated November 10, 2016, the municipality’s actual PS expenditures,
net of waived items, amounted to P20,297,727.55, which exceeded the PS limitation of P18,429,933.63 by P1,867,793.92.
This excess would now become the proper subject of the disallowance, in lieu of the excess PS budget of P775,629.37 over
the PS limitation originally stated in the ND.
This Commission is not limited in its review of transactions to the grounds determined by the auditor. The authority
of this Commission to expand the basis of the disallowance apart from those stated in the ND has been upheld in the case of
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Ramon R. Yap vs. COA, where the Supreme Court ruled that:
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COA is not required to limit its review only to the grounds relied upon by a government’s agency
auditor with respect to disallowing certain disbursements of public funds. In consonance with its
general audit power, respondent COA is not merely legally permitted, but is also duty-bound to make
its own assessment of the merits of the disallowed disbursement and not simply restrict itself to
reviewing the validity of the ground relied upon by the auditor of the government agency concerned.
To hold otherwise would render COA’s vital constitutional power unduly limited and thereby useless
and ineffective.
As to the issue on whether the ND could be recalled, this Commission agrees with the RD that nothing in the
provisions of the 2009 Revised Rules of Procedure of the COA gives the RD the authority to issue an order or decision
recalling an ND. The RD is only authorized to affirm, reverse, modify or alter the decision of the Auditor and, if in case the
RD reverses, modifies or alters the decision of the Auditor, the case shall be elevated directly to the COA Commission
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Proper for automatic review.
RULING
WHEREFORE, premises considered, Commission on Audit Regional Office No. VI Decision No. 2014-008 dated
July 17, 2014 is hereby PARTIALLY APPROVED. Accordingly, Notice of Disallowance No. 12-101 dated January 9,
2013, is LIFTED. However, the Audit Team Leader and the Supervising Auditor, Municipal Government of San Rafael,
Province of Iloilo, are directed to
validate the amount of P1,867,793.92, representing the excess of actual Personal Services (PS) cost over the PS limitation
and issue an ND, if warranted.
Attested by:
Copy furnished:
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9/8/2020 COA DECISION NO. 2020-249
Budget Officer
The Director
Information Technology Office
Systems and Technical Services Sector
CPCN 2014-349
ESZ/EEL/ERD/LRP
1 Pursuant to Section 7, Rule V, 2009 Revised Rules of Procedure of the Commission on Audit (COA) (RRPC).
2 General Limitations. - The use of the provincial, city, and municipal funds shall be subject to the following limitations:
(a) The total appropriations, whether annual or supplemental, for personal services of a local government unit for one (1) fiscal year shall not exceed forty-five
percent (45%) in the case of first to third class provinces, cities and municipalities, and fifty-five percent (55%) in the case of fourth class or lower, of the total
annual income from regular sources realized in the next preceding fiscal year. x x x.
3 COA Circular No. 2009-006 dated September 15, 2009.
4 4.16 Disallowance - the disapproval in audit of a transaction, either in whole or in part. The term applies to the audit of disbursements as distinguished from
"charge" which applies to the audit of revenues/receipts.
5 G.R. No. 158562, April 23, 2010.
6 Section 7, Rule V, 2009 RRPC.
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