LEGAL SERVICES SECTOR

Legal Affairs Office

6 December 2017

MS. NORMA BARBASA

MS. MARDELYN B. BARROGO
MS. ZENAIDA EXCLAMADO
Aurora State College of Technology
Sitio Dicaloyungan, Brgy. Zabali
Baler, Aurora

Dear Ms. Barbasa /Ms. Barrogo/Ms. Exclamado:

We refer to your letter dated February 4, 2017 requesting for clarification on

the authority of the College President to order the refund of the overpaid loyalty cash
award (LCA) through monthly salary deductions.

We asked assistance from the auditing unit assigned in your college, Aurora
State College of Technology (ASCOT), and we were informed that there had been
an overpayment of the LCA for the years 2009 to 2015 in the amount of
Php985,000.00, as follows:

Amount Paid
Year No. of Actual Should be Overpayment
Employees 15th year 20th year 15th year 20th year
2009 10 ₱70,000.00 - ₱50,000.00 - ₱20,000.00
2010 23 345,000.00 - 115,000.00 - 230,000.00
2011 7 105,000.00 - 35,000.00 - 70,000.00
2012 13 195,000.00 - 65,000.00 - 130,000.00
2013 8 120,000.00 - 40,000.00 - 80,000.00
2014 9 - ₱180,000.00 - ₱45,000.00 135,000.00
2015 22 30,000.00 400,000.00 10,000.00 100,000.00 320,000.00
Total ₱865,000.00 ₱580,000.00 ₱315,000.00 ₱145,000.00 ₱985,000.00
 However upon review of CSC Memorandum Circular No. 06, Series of 2002,1
and COA Circular 2013-003A,2 we are of the view that the overpayment was
calculated wrongly.

We take notice that CSC MC No. 06, S.2002, which took effect on January 1,
2002, provides that a cash gift xxx shall not be less than Php500.00 but not more
than Php1,000.00 for every year of service. This was later modified by COA Circular
2013-003A, which took effect on September 18, 2013, by providing the following
revised LCA rates:

10th year – from P5,000.00 to P10,000.00

15th year – from P2,500.00 to P5,000.00
20th year – from P2,500.00 to P5,000.00
25th year – from P2,500.00 to P5,000.00
30th year – from P2,500.00 to P5,000.00
35th year – from P2,500.00 to P5,000.00
40th year – from P2,500.00 to P5,000.00

Following the above guidelines, we disregard the alleged overpayment made

in the years 2009 to 2012, where ASCOT merely followed the import of CSC MC
No. 06, S.2002 and provided its loyal employees the amount of P1,000.00 for every
year of service. The overpayment for the years 2013 to 2015 stands because COA
Circular 2013-003A was then already in effect. Thus, the amount to be refunded
should be reduced to P535,000.00 only.

Taking into account that P306,600.00 had already been refunded as of

September 2017, the College President may only enforce the refund of the amount
of P228,400.00.

As to the issue of the College President’s authority to order a refund, the same
is sanctioned by Republic Act No. 7664 or An Act Establishing the Aurora State
College of Technology and Authorizing the Appropriation of Funds Therefor. It
provides:

Sec. 6 a) The President – The administration of the State

College shall be vested in the President. x x x

To administer means to manage or supervise the affairs of the College. In connection

therewith, Section 2 of PD 1445 provides that:

1
Revised Policies on the Grant of Loyalty Award
2
Amendment to COA Circular No. 2013-003 dated January 30, 2013 Re: Reiteration of Audit Disallowance of
Payments Without Legal Basis of Allowances, Incentives, and Other Benefits of Government Officials and
Employees in the NGAs, LGUs, and GOCCs and their Subsidiaries
 Section 2. Declaration of Policy. It is the declared policy of the State that all
resources of the government shall be managed, expended or utilized in
accordance with law and regulations, and safeguarded against loss or wastage
through illegal or improper disposition, with a view to ensuring efficiency,
economy and effectiveness in the operations of government. The
responsibility to take care that such policy is faithfully adhered to rests directly
with the chief or head of the government agency concerned. (Emphasis
supplied)

From the above therefore, the College President is well within the ambit of the law
in ordering the refund of the overpaid LCA by means of salary deductions.

We hope the above fully clarifies your queries.

Very truly yours,

EDNA P. FORTO
Director IV

ESZ/EPF/DHT/HBM-S/SMO
LSS-OGC-2017-12-002934
LAO 2017-684/Letter