REPUBLIC OF THE PHILIPPINES COMMISSION ON ELECTIONS Manila Tntramuz0s, Office of the Comelec Secretary 038 MEMORANDUM No. 19 3 Reference No. 0468-19 FOR DIRECTOR ZITA BUENA-CASTILLON Finance Services Department MR. ALBERT G. SALAZAR. Cashier V, Cash Division, ASD’ SUBJECT : AsStated ! DATE April 5, 2019 Please find attached advance copy of the draft Resolution approving the request of the Finance Services Department on the payment of compensation to persons rendering election services for the May 13, 2019 National and Local Elections. For your information/guidance and appropriate action Thank you. ATTY. Lables, DIOLA ‘Acting Commission Secretary Ce: Chairman All CommissionersEXCERPT FROM THE MINUTES OF THE REGULAR EN BANC MEETING OF THE COMMISSION ON ELECTIONS HELD ON APRIL 3, 2019 Chairman Sheriff M. Abas ‘Commissioner Al A. Parrefio Commissioner Luie Tito F. Guia ‘Commissioner Ma. Rowena Amelia V. Guanzon ‘Commissioner Socorro B. Inting ‘Commissioner Marlon 8. Casquejo ‘Commissioner Antonio T. Kho, Jr XXX XXX XXX 19-, . IN THE MATTER OF THE PAYMENT OF COMPENSATION TO PERSONS RENDERING ELECTION SERVICES FOR THE MAY 13, 2019 NATIONAL AND LOCAL ELECTIONS This pertains to the Memorandum dated March 27, 2019 of Director Zita Buena-Castillon, Finance Services Department, as referred by Executive Director Jose M. Tolentirio, Jr., relative to the payment of compensation to persons rendering election services for the May 13, 2019 National and Local Elections. The Memorandum of Director. Buena-Castillon reads: “In connection with the payment ’of compensation to persons rendering election services (‘poll workers’ for brevity) in the 13 May 2019 National and Local Elections (2019NLE), Undersigned respectfully recommends that said pay-out be made through cash advance, to be issued to the Election Officers (EOs) who have no outstanding cash advances and are properly bonded, or to the Provincial Election Supervisor (PES), if EO is not qualified, due to the following reasons: 1. Reduced Outstanding Cash Advance Balance of the Commission on Elections as of 31 December 2018. The book balance of the Unliquidated Cash Advances (UCA) of the Commission has dramatically decreased from PhP3.2 Billion in FY2013 to P325 Million as of 31 December 2018, shown in the herein report: “AMOUNT BALANCE OF | POLICY ON NON- ‘MODES OF AUDIT DISBURSED FOR ACTIVITY UCA AS OF ‘SETTLEMENT OF PAYMENT OBSERVATION POLL WORKERS YEAR-END ‘casH apvance | POLL WORKERS /BSKE2018 | 74% Cash |P325Million | No ‘AOM | Minute Resolution|Based on R.A. Card; 26% pertaining to |No. 17-0383, 10756 (Election cash |UCA dated 18 July |Service Reform |Advance |2017; and COA |Act) Circular No. 97- PhP 2.7 Billion oo2 NLE2016 |60% Cash |P564Million |No AOM |COA Circular No, |Pre-ESRA Card; 30% lpertaining to |97-002 PhP1.7 Billion Cash |UCA but in ladvance; [August 2016, 10% ATM la news:Page 2 of 9 MLR. No. 19-. article declared that COMELEC, among the national lgovernment |agencies, topped as the agency with ithe biggest UCA per COA |report as of 37) |December 2015. |BSKE2013 | Cash |P3.2Billion {Item No. 2 of |COA Circular No. |PhP1.2Billion |Advance the CY2013 |97-002 |Annual Audit Report |NLE2013°|20% Cash |P3.2Billion COA Circular No. Cards; 80% 97-002 Cash Advance INLE2010 {Cash |P3.1Billion |COA Circular No. Advance 197-002 |NLE2007 |Cash |P1.2Billion |COA Circular No. Advance |97-002. |NLE 2004 |Cash |P5.3 Billion COA Circular No. Advance [97-002 2. Control and Monitoring Mechanisms in the grant, utilization and settlement of cash advances have been put in place. In addition, continuing education’ of COMELEC accountable officers (AO) through regular briefing on the grant, utilization, settlement and reporting of cash advance has strengthened their skills not only in proper handling of cash advance but also in the timely and proper submission of their liquidation report (LR)/report of disbursement (RD). Likewise, AOs are now religiously and continuously submitting their LR/RD for fear that their salaries and other benefits might be withheld in compliance to Minute Resolution No. 17-0383, dated 18 July 2017. 3. Increased cost of cash cards. Based on the price offers of the prospective servicing banks for the cash cards disbursement system, the Commission would entail an estimated cost of P37Million. This amount does not include the wages of encoders of enrolment forms and the travelling, vis-a-vis the training expenses in the conduct of the ‘Know-Your-Client’ and Anti-Money Laundering Act (AMLA) seminars as required by the Bangko Sentral ng Pilipinas. From the end of the Development Bank of the Philippines (DBP), the servicing bank which supplied the cash cards to the Commission during BSKE2018 (although DBP did riot formally submit its proposal for the NLE2019), a DBP representative intimated in one of the meetings held last year, that the cost per cash card would already be 150.00 from P50.00 per card it billed COMELEC for the product and services it rendered in the last Barangay polls. Below are the comparative prices and product/service proposals from the banks/government financial institutions (GFs);Page 3 of 9 MLR. No. 19 DEPOSIT OTHER ar SOST. COVERAGE! REQUIREMENT| FEATURES Land Bank|P150.00 card only:|Can supply| 60 days |EMV card lof the delivery to|up to 400,000! Philippines |provincial _ LBP|cards (LBP) | branches included, No mass enrolment forms required |397 branches United |P70.00++/card; (Can only| Not later than 10|- eMoney card! not|supply up to|days from the sign-|secured _with| Mass|80,000 cards|off of the| EMV chip enrolment forms|and _prefers| Agreement Accessible vial required INCR only |UCPB and| |Bancnet channels 188 branches nationwide (ATM/POS) [Developme |No proposal. nt Bank of the 1P150.00 based on| Philippines | the latest meeting] (DBP) held in 2018 4. No budget for cash cards was included in the FY2019 Annual Procurement Plan. 5. More simple to implement due to withholding of taxes. Based on ESRA and COMELEC rules and regulations the rates of compensation of the duly-appointed poll workers shail be as follows: “5, [HONORARIA/ TRAVEL POLL WORKERS: |pER DIEM | ALLOWANCE| TOTAL |ELECTORAL BOARD (EB) 6,000.00} 1,000.00] 7,000.00} CHAIRPERSON |EB POLL CLERK & THIRD 5,000.00] 1,000.00) 6,000.00) MEMBER: |EB SUPPORT STAFF 2,000.00] 1,000.00] 3,000.00! |DESO 4,000.00! 1,000.00) 5,000.00! [DESO SUPPORT STAFF 2,000.00! 1,000.00) 3,000.00) |DESO TECHNICAL SUPPORT 2,000.00! 1,000.00} 3,000.00) |STAFF (DTSS) |DTSS for VRVS3 500.00! 0.00) 500.00) |SEB-PDL (CHAIRPERSON) 6,000.00] 1,000.00) 7,000.00) |SEB-PDL (POLL CLERK & 5,000.00] 1,000.00} 6,000.00! MEMBER) |SEB-PDL SUPPORT STAFF 2,000.00! 1,000.00) 3,000.00! \SEB-IP (CHAIRPERSON) 6,000.00! 1,000.00) 7,000.00! [SEB-IP (POLL CLERK & ',000.00| 1,000.00] 6,000.00 MEMBER) 'SEB-IP SUPPORT STAFF 2,000.00| _1,000.00| 3,000.00 |EAPPs SUPPORT STAFF 2,000.00! 1,000.00) 3,000.00! BOC (CHAIRPERSON, 72,000.00 0.00} 42,000.00] VICE-CHAIR, MEMBER SECRETARY AND CCSO) |BOC-RCG 10,000.00) 0.00| _ 10,000.00) |BOC SUPPORT STAFF 5,000.00) 0.00} 5,000.00! [RMA (CHAIRPERSON) 6,000.00) 1,000.00) 7,000.00) RMA (SECRETARY & 5,000.00, 1,000.00} 6,000.00 |MEMBER) RMA-VT 2,000.00 000| 2,000.00 DICT/DOST (FTS) 3,000.00 {0.00| 5,000.00] |DICT/DOST (E-DAY) 3,000.00! 0.00) 3,000.00}Page 4 of 9 MLR. No. 19- However, the Bureau of Internal Revenue (BIR) Ruling No. 599-12, in response to the Commission's request for ‘legal opinion on whether or not the honoraria or allowances are subject to withholding tax’, rules that, ‘honoraria’ and ‘travel allowances’ no matter how negligible the amount, are wealth that flow into the hands of the recipient, hence, subject fo income tax and subsequently, to withholding tax on compensation. According to the BIR, this is further supported by BIR Ruling No. 003- 08, dated 14 April 2008, which was issued to rule that — ‘the name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments and honoraria, bonuses, allowances, (such as transportation, representation, entertainment, and the like), fringe benefits (monetary and nonmonetary), fees, including director's fees, taxable pensions, and retirement pay and other income of a similar nature constitute compensation income.’ (Emphasis supplied) In connection therewith, the BIR adds, Section 2.78 of Revenue Regulation 2-98, as amended, provides that ‘the withholding of tax on compensation income is a method of collecting the income tax at source upon receipt of the income. It. applies to all employed individuals whether citizens or aliens, deriving income from compensation for services rendered in the Philippines. The employer is constituted as the withholding agent.’ (Emphasis and underscoring provided) Thus, during the 14 May 2018 Barangay and Sangguniang Kabataan Elections, as withholding tax agent, the Commission paid the election workers their allowances net of taxes. However, poll workers who signified their tax-exempt status by executing BIR Form B-2, or Swom Declaration of Gross Receipts/Sales (For Self-Employed and or/Engaged in the Practice of Profession with Lone Income Payor) or BIR Form B-I, Swom Declaration of Gross Receipts/Sales (For Self- Employed and or/Engaged in the Practice of Profession with Several Income Payors), after validation by the Accounting Division, and tax refund made by the EOs, were paid in full. Resultantly, the withholding of tax on compensation has resulted to an amount due to poll workers of less than the rate mentioned-above (which is indivisible by 100's), thus, the net amount loadable to cash card is up to the nearest hundreds only and the ‘butal’ can only be paid to the poll workers via cash advance. 6. Most cost-effective, practical and convenient payment process for field disbursing officers. 7. No delivery/kitting requirement except for some BIR forms. For purposes of the 2079NLE, the total amount of poll workers allowances based on 85,768 clustered precincts and 37,921 polling centers is Two Billion Six Hundred Thirty-Five Million Twenty-Three Thousand (Php2,635,023,000.00), details are shown below:Page 5 of 9 M.R. No, 19- NO.OF: TRAVEL AMOUNT POLLWORKERS || POLL | HONORARIA | ai Gwance| ¢MoLeSiVE TAX) EB (CHAIRMAN) 85,768 | 514,608,000.00|_85,768,000.00| _ 600,376,000.00] [EB (POLL CLERK &| 171,536 857,680,000.00| 171,536,000.00| 1,029,216,000.00| MEMBER) EB SUPPORT STAFF 113,396 _| 226,792,000.00| 113,396,000.00| 340, 168,000.00 |DESO (37,921 151,684,000.00|_37,921,000.00| __189,605,000.00] DESO SUPPORT STAFF _| 37,921 | 75,842,000.00|_37,927,000.00| 113,763,000.00 |DESO TECHNICAL SS 41,022 82,044,000.00| 41,022,000.00| _ 123,066,000.00| [DESO TECHNICAL SS| 3,030 1,515,000.00| 1,515,000.00) |(VRVS) |SEB-PDL (CHAIRPERSON) | 719. %314,000,00| 779,000.00| _8,033,000.00) SEB-PDL {POLL CLERK &| 1,436 7, 190,000.00] 7,438,000.00| 8,628,000.00] |MEMBER) |SEB-PDL SUPPORT STAFF] __ 2,228 4,456,000.00| _ 2,228,000.00| 6,684,000.00| |SEB-IP (CHAIRPERSON) 22 132,000.00! 22,000.00) 154,000.00) |SEB-IP (POLL CLERK &| 44 220,000.00] 44,000.00) 264,000.00} IMEMBER) [SEB-IP SUPPORT STAFF _|__22 44,000.00| 22,000.00] 36,000.00) |EAPPs SUPPORT STAFF 8,125 16,250,000.00| _8,125,000.00| 24,375,000.00) |BOC (CHAIRPERSON, | 6,864 82,368,000.00| 82,368,000.00) VICE-CHAIRPERSON, |MEMBER SECRETARY &| ccso) |BOC-RCG 5,162 51,620,000.00| 51,620,000.00) [BOC SUPPORT STAFF 8,580 | _ 42,900,000.00 42,900,000.00] |RMAT (CHAIRPERSON) 715 4,290,000.00! 715,000.00| 5,005,000.00} IRMAT (SECRETARY &| 1,430 7,150,000.00| —1,430,000.00| 8,580,000.00| |MEMBER) RMAT-VT 75 7,430,000,00) 7,430,000.00 |DICT/DOST (FTS) 17 85,000.00) 85,000.00! |DICT/DOST (ELECTION| 34 102,000.00] 102,000.00) |DAY) TOTAL 526,709 _|2,132, 716,000.00] 502, 307,000.00| 2,635,023,000.00] Included in the above-mentioned amount is the compensation of the Board of Canvassers (BOC). The tabulation of the BOC allowances based on Resolution No, 10488 dated 23 January 2019 has resulted to the following computations: No. OF POLL TRAVEL | GROSS AMOUNT POPLIN ENERS: WORKERS HONORARIA |JALLOWANCE _| (INCLUSIVE OF TAX. ‘BOC (CHAIRPERSON, VICE 6,864 82,368,000.00} 0.00) 82,368,000.00| CHAIRPERSON, MEMBER | SECRETARY & CSO) |BOC-RCG_ 5,162 51,620,000.00| 0.00! 51,620,000.00} IBOC SUPPORT STAFF 8,580 | 42,900,000.00] 0.00| 42,900,000.00) TOTAL 20,606 P176,888,000.00| 0.00| _P176,888,000.00| Although payment of BOC honoraria is not covered by RA 10756 (ESRA Law), its payment to a non-COMELEC member, shall also be via cash advance to be issued to qualified accountable officers (EO or PES) upon submission to FSD of the following: 1. Minutes of Canvassing; and 2. Constitution of the BOC (Annex ‘A’). To this end, it is likewise requested that the hereunder guidelines procedures/protocols and documentary requirements in reporting the release, utilization and settlement, including the refund of excess cashPage 6 of 9 M.R. No. 19-. advance and the submission of a report of actual pay-out to poll workers within fifteen days from 13 May 2019, be considered by the Commission, to wit: The cash advance for payment of poll workers, except for the BOG, shall be released on or before 03 May 2019 to the 2" ATM accounts of the designated accountable officer (AO). The cash advance to defray expenses for the poll workers compensation to be released to the AO shall be in gross amount. The AO shall be designated as the withholding tax agent of the Commission. For tax-exempt poll workers, before making payment, the AO must require the poll worker to execute the following: a. BIR Form Bt, or Swom Declaration of Gross Receipts/Sales (For Self-Employed and or/engaged in the Practice of Profession with Several Income Payors); or b. BIR Form B-2, or Swom Declaration of Gross Receipts/Sales (For Self-Employed and’or/Engaged in the Practice of Profession with Lone Income Payor) To authorize the EOs to administer the oath on BIR Form B1 or B2. For payment made to poll workers who are not tax-exempt, the AO shall issue the following Certificates of Tax Withheld: a. BIR Form No. 2306, or Certificate of Final Tax Withheld at Source b. BIR Form No. 2307, or Certificate of Creditable Tax Withheld at Source Reproduction of forms (BIR Forms) and documentary stamp necessary for said pay-out and liquidation of expenses be authorized to be charged against the AO's mobilization fund Liquidation of cash advance a. Using the payroll prepared by FSD (Annex ‘B’), the AO shall fill out the necessary information, such as: a.1 Name of the Poll Workers .2 Position/Designation of the Poll Workers a.3 Tax ID Number (TIN) of the Poll Worker a.4 Gross Amount Due (Honoraria + Travel Allowance) a.5 Taxes Withheld (Contractor's Tax of 5% = 3% Percentage Tax + 2% Income Tax). Write N/A, ifno tax is withheld, a.6 Net Amount Due a.7 Signature of the Poll WorkersPage 7 of 9 M.R. No. 19. 10. b. Deposit of the excess amount of cash advance to Landbank of the Philippines COMELEC SA/CA Account 0012-1159- 38. ¢. Preparation and submission of the Report of Disbursement (RD) and Annexes ‘8-F’ to the Accounting Division (Cash Advance Liquidation Unit), Office of the Director Ill, FSD, Main Office, Manila on or before 30 June 2018, c.1 The AO shall: ¢.1.a Summarize payrolls in an RD (Annex ‘C’). Clearly indicate the following: 0.1.b first and last Names of Payees per Payroll (each page); total amount per payroll page; nature of payment, and responsibility center code (RCC) in the space provided for in the RD. List of RC Code is attached as Annex ‘D’. RD without RCC shall be returned for proper compliance. Attach to the RD the. following supportin documents: Payrolls duly signed by the poll workers (Annex ‘B); BIR Forms Bl or B2, whichever is applicable; BIR Forms 2306 and 2307; and Plantilla of Poll Workers duly prepared and signed by the EO, Certified Correct by PES and approved by RED (Annex ‘E’); and Deposit slip (original second copy), in case of excess cash advance. As regard the payment to Electoral Boards (EB), Special EBs, DESO and their support staff, to direct the AOs to submit immediately via fastest means available within fifteen (15) days after the 13 May 2019 National and Local Elections, or before 28 May 2019 the Report on Payment to Poll Workers (Annex ‘F’) as basis of the FSD to monitor the actual payment to the election service workers within the reglementary period. To augment the funds to cover the payment of compensation to poll workers amounting to PhP801,043,000.00. 2019 National Expenditure Program - Maintenance and Other Operating Expenses - Other Professional Services Php1,833,980.00.00 Funding Requirement of Poll Workers Compensation Deficiency 2,635,023,000.00 (PhP801,043,000.00)Page 8 of 9 M.R. No. 19- 11. To designate Mr. Albert Salazar to act as SDO and to release to him the cash advance to defray expenses for payment of the compensation to poll workers (RMATS). 12. To authorize the Finance Services Department to amend the procedures enumerated herein to more efficiently /effectively address any concems that may arise by reason of the implementation of the said mode of payments. 13. To likewise authorize the FSD to release additional funds in case of increase of poll workers to serve in the 13 May 2019 NLE. Lastly, Undersigned respectfully requests that FSD trainers on the subject: Grant, Utiization and Settlement of Cash Advances be authorized to lecture on the said subject during the training of BOC in the regions on 01 to 06 April 2019 and be allowed to claim allowable travelling and training expenses, subject to existing policy, COA rules and regulations. For your Honor’s consideration and approval.” The Commission RESOLVED, as it hereby RESOLVES, to approve the request of FSD Director Zita Buena-Castillon, as follows: 1. To approve the guidelines, procedures/protocols and documentary requirements in the release; utilization and settlement, including the refund of excess cash advance and the submission of report of the actual pay-out to poll workers within fifteen (15) days from 13 May 2019; 2. To augment the deficiency in the funds to cover the payment of compensation to poll workers in the amount of Eight Hundred One Million Forty Three Thousand Pesos (Php801,043,000.00); & . To designate Mr. Albert Salazar as Special Disbursing Officer (SDO) and to release to him the cash advance to defray expenses for payment of the compensation to poll workers (RMATs); 4. To authorize the Finance Services Department to amend the procedures enumerated herein to more. efficiently/effectively address any concerns that may arise by reason of the implementation of the said mode of payments; andPage 9 of 9IM.R.No. 19-_ 5. To authorize the Finance Services Department to release additional funds in case of increase of poll workers to serve in the 13 May 2019 NLE. RESOLVED, moreover, to authorize the Finance Services Department trainers on the subject: Grant, Utilization and Settlement of Cash Advances, to lecture on the said subject during the training of BOC in the regions on April 1 to 6, 2019, and be allowed to claim allowable travelling and training expenses, subject to existing policy, COA rules and regulations. Let the Finance Services Department, and the Cash Division, ASD implement this Resolution. SO ORDERED. SHERIFF M. ABAS Chairman ALA. PARRENO LUIE TITO F. GUIA Commissioner Commissioner (On Official Business) MA. ROWENA AMELIA V. GUANZON SOCORRO B. INTING Commissioner Commissioner (On Official Business) MARLON S. CASQUEJO ANTONIO T. KHO, JR. Commissioner Commissioner Ce: Chairman ‘All Commissioners Executive Director Deputy Executive Director for Operations Deputy Executive Director for Administration Finance Services Department Mr. Albert Salazar, Cash Division, ASD