COMMISSION ON AUDIT CIRCULAR NO.

82-180 March 31, 1982

TO : All Heads of Ministries, Chiefs of Bureaus and Offices; Managing Heads of

Government-Owned of Controlled Corporations, Self-Governing Boards,
Commissions an Agencies; Provincial Governors; City Mayors; Provincial City
and Municipal Treasurers; Chief Accountants; Ministry, Bureau, Corporate,
Provincial and City Auditors; and All Others Concerned.

SUBJECT : Procedural guidelines for the implementation of Section 47 of PD No. 1445,

entitled "Constructive distraint of property of accountable officer".

1.0 PURPOSE

This Circular is issued to prescribe procedural guidelines for the implementation of

Section 47, Presidential Decree No. 1445, otherwise known as the "Government Auditing Code
of the Philippines", which provides as follows:

"SECTION 47. Constructive distraint of property of accountable officer. -

(1) Upon discovery in audit of a shortage in the accounts of any accountable
officer and upon a finding of a prima facie case of malversation of public funds or
property against him, in order to safeguard the interest of the Government, the
Commission may place under constructive distraint personal property of the
accountable officer concerned where there is reasonable ground to believe that
the said officer is retiring from the government service or intends to leave the
Philippines or remove his property therefrom or hide or conceal his property.

"The constructive distraint shall be effected by requiring the accountable

officer concerned or any other person having possession or control of the
property to accomplish a receipt, in the form prescribed by the Commission,
covering the property distraint and obligate himself to preserve the same intact
and unaltered and not to dispose of it in any manner whatever without the
express authority of the Commission.

"(2) In case the said accountable officer or other person having the
possession and control of the property sought to be placed under constructive
distraint refuses or fails to accomplish the receipt herein referred to the
representative of the Commission effecting the constructive distraint shall
proceed to prepare a list of such property and in the presence of two witnesses
leave a copy thereof in the premises where the property distraint is located, after
which the said property shall be deemed to have been placed under the
constructive distraint."

and thereby operationalize the scheme of administrative remedy now made available to the
Commission on Audit which furnishes the assurance that the government would not be left
without any recourse in the situations contemplated therein, at the same time serving as a
deterrent to malversation of public funds or property.
2.0 DEFINITION OF TERMS

As used in this Circular, the following terms shall be taken and understood in the sense
indicated hereunder:

2.1 "Distraint" refers to the seizure by the government of personal property to enforce
the restitution of the amount malversed by an accountable officer.

2.2 "Constructive Distraint" is a summary process whereby the distraining officer

does not take actual possession of the properties distrained but leaves them,
under receipt, with the defalcating accountable officer who shall be obligated to
preserve the same intact and unaltered and not to dispose of the same in any
manner whatsoever without the express authority of the Commission on Audit.

2.3 "personal property" includes goods, chattels or effects, and other movable
property of whatever character, tangible and intangible, including stocks and
other securities, debts, credits, bank accounts, and interest in and rights to
personal property.

2.4 "Distraining officer" refers to the examining auditor or other auditing officials who
discovered the shortage of an accountable officer and is directed to serve the
warrant of constructive distraint.

3.0 CIRCUMSTANCES UNDER WHICH CONSTRUCTIVE DISTRAINT IS EFFECTED

The constructive distraint contemplated under Section 47 of PD 1445, supra, may be

effected under the following circumstances:

a. A shortage in the accounts of an accountable officer is discovered in audit;

b. The amount of the shortage has not been restituted despite demand;

c. A prima facie case of malversation of public funds or property is found against

him;

d. There is reasonable ground to believe that he is retiring from the government

service; or intends to leave the Philippines; or intends to remove his personal
property from the Philippines; or intends to hide or conceal such property; and

e. The interest of the Government has to be safeguarded.

4.0 HOW CONSTRUCTIVE DISTRAINT IS EFFECTED

The standard operating procedure in effecting constructive distraint under the

circumstances specified in the preceding paragraph shall be as follows:

4.1 The examining Auditor or other auditing official who discovered the shortage
shall immediately submit a report to the Commission Proper, thru the COA
Regional Director concerned, embodying his findings and recommendation to
 place the personal property of the defalcating accountable officer under
constructive distraint, choosing such quantity of said property as is sufficient to
satisfy the shortage.

4.2 Upon evaluation of such report and findings a need for the constructive distraint
as recommended therein, the Commission Proper shall forthwith prepare a
warrant of constructive distraint (sample form attached as Annex "A"), to be
signed by the Chairman, which shall show clearly the name and address of the
defalcating accountable officer, the amount of shortage incurred, and the fact of
prior demand made for the restitution thereof. The warrant thus issued shall be
transmitted to the COA Regional Director concerned for service.

4.3 The Auditor or other auditing official directed to serve the warrant of constructive
distraint shall serve the same personally on the defalcating accountable officer
himself. In case, however, where the said accountable officer refuses to receive
the warrant or is absent from his given address, the warrant shall be served upon
someone of suitable age and discretion in the premises or upon the person in
possession or occupancy of the personal property of the accountable officer who
shall acknowledge and sign all copies of the warrant. In case actual service of
the warrant upon the accountable officer or upon either of the two other persons
just mentioned cannot be made, a copy thereof shall be left in the premises or in
the office of the accountable officer or in the place of the person in possession or
occupancy of the said property of the accountable officer which fact shall be
attested to in said copy and in all the other copies of the warrant by the
distraining officer in the presence of at least two credible witnesses, whereupon
the warrant is deemed properly served. A copy of the warrant thus served shall
be furnished the accountable officer with a notation thereon that a copy of the
same was left with the person who is in possession or occupancy of his personal
property.

4.4 Upon service of the warrant, the distraining officer shall require the defalcating
accountable officer or any other person having possession or control of the
personal property in question to accomplish a receipt (sample form attached as
Annex "B") covering the property distrained and to obligate himself to preserve
the same intact and unaltered and not to dispose of it in any manner whatever
without the express authority of the Commission on Audit.

4.5 In case the said accountable officer or other person having the possession
and/or control of the property sought to be placed under constructive distraint,
refuses or fails to accomplish the receipt herein referred to or lists only a number
of such personal property not sufficient to cover the amount of the shortage, the
distraining officer shall proceed to prepare a complete list of the property and in
the presence of two witnesses leave a copy thereof in the premises where the
property distrained is located, after which the said property shall be deemed to
have been placed under constructive distraint.

4.6 Where some of the property distrained consists of stocks and other securities, a
copy each of the warrant of constructive distraint and the receipt or list
hereinabove mentioned shall be served upon the president, manager, treasurer,
or other responsible officer of the corporation, company, or association which
issued the said stocks or securities. In case of debts and credits, copies of such
 documents shall be left with the person owing the debts or having in his
possession or under his control such credits, or with his agent. The warrant of
constructive distraint and the receipt or list shall be sufficient authority to the
person owing the debts or having in his possession or under his controls any
credits belonging to the accountable officer to desist from the settlement thereof
without the written authority of the Commission on Audit. In case of bank
accounts, the copies of the warrant and receipt or list shall be served upon the
president, manager, treasurer, or other responsible officer of the bank
concerned, whereupon, the bank shall desist from allowing withdrawals
therefrom or so much thereof as may be sufficient to satisfy the shortage of the
accountable officer without the written authority of the Commission on Audit.

4.7 If the properties distrained are registered with any government office, the
distraining officer shall notify in writing the government official concerned of the
fact of the constructive distraint, furnishing him a copy each of the warrant and
the receipt or list hereinabove mentioned. The notification shall contain the
following data:

a. nature and description of the property distrained;

b. date of the distraint;

c. name of the owner and/or actual possessor thereof; and

d. nature and amount of the shortage for which the distraint was effected.

A copy of such notice shall be mailed to or served upon the accountable

officer or his agent or to the occupant or possessor of the property in question.

5.0 FURTHER DISTRAINT

The summary remedy by constructive distraint of personal property may be repeated

until the full amount of the shortage of the defaulting accountable officer, including the expenses
of the distraint, is satisfied.

6.0 REPORT ON DISTRAINT EFFECTED

A report on any constructive distraint effected pursuant to Section 47, PD 1445, supra,
shall be submitted by the distraining officer to the Chairman of the Commission on Audit, thru
the COA Regional Director concerned, furnishing a copy thereof to the Legal Office of said
Commission. Such report shall form part of the supporting documentation of the complaint for
malversation to be initiated against the defalcating accountable officer pursuant to COA
Memorandum No. 78-81-A dated March 22, 1978. It shall provide the Tanodbayan or other
government prosecutor with basis to apply with the proper court for the attachment of the
property distrained in accordance with the Rules of Court.

7. RELEASE OF PROPERTY FROM DISTRAINT

If at any time after the constructive distraint has been effected the accountable officer
restitutes the full amount of the shortage, his personal property placed under such distraint shall
be released therefrom and restored to him.
8.0 VIOLATION OF WARRANTY

Any violation of the conditions imposed in the warranty of constructive distraint shall
constitute contempt of the Commission on Audit in accordance with Section 40 of Presidential
Decree No. 1445.

This Circular shall take effect immediately.

(SGD.) SILVESTRE D. SARMIENTO, Commissioner

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman