Signing bonuses are disallowed in gov’t – COA

The grant of signing bonuses, no matter what amount, as incentives to workers for the success of a collective negotiations agreement with government is a prohibited expenditure.

The COA-Commission Proper made this clear as it dismissed with finality a motion for reconsideration sought by officials of the Maritime Industry Authority (Marina) who were ordered to return a total 12,040,000 they distributed to employees as signing bonus for the successful and peaceful completion of a CNA in 2004.

In its decision on the appeal for the reversal of a notice of disallowance (ND) issued by COA, the audit agency’s three highest officials headed by Chairman Michael Aguinaldo cited a Supreme Court decision that ruled that grant of CNA signing bonuses is considered an “unreasonable compensation.”

The three-man panel recalled that the SC stressed that the conduct of a peaceful collective negotiations “among civil servants should not come with a price tag.”

The case stemmed from COA’s earlier decision upholding the ND issued by the COA team in Marina for the distribution of 18,000 for every employe of the agency after they reached a CNA in 2004.

COA, however, reduced the amount it disallowed to P2.04 million and limited the liability to be directed only against MARINA officials.

Officials of the agency appealed the ruling by pointing out to the COA-CP the SC ruling on SSS vs COA cannot be applied in the MARINA case because in the SSS case, the fund used to grant employees signing bonuses was sourced from its trust funds.

The petitioners stressed that fund paid to employees came from the savings of Marina.

MARINA officials also explained that the grant of signing bonus is supported by Department of Budget and Management National Budget Circular No. 487 2001-04 which provides for the source of funds in the grant of CNA incentives.

In its ruling, the COA CP referred anew to the SSS vs COA ruling that declared CNA signing bonuses as prohibited expenditure. It stressed that the same ruling came out in the Manila INternational Airport Authority vs COA.

“The SC’s ruling effectively abolished the grant of CNA Signing Bonus and payment thereof was declared illegal per se,” the body stated.

The COA CP explained: “It must be emphasized that the principal consideration in the disallowance of the CNA Signing Bonus is the nature of the benefit. The source of fund used to pay the said Signing Bonus is only incidental to the disallowance and is not the controlling ground for the grant thereof.”

Responding to the petitioner’s defense that DBM NBC No. 487 authorizes the disbursement, the COA panel said the budget memorandum merely “provides the source of fund for the payment” of CAN incentive and not the signing bonuse that was declared illegal by the High Court.

“Hence, it cannot also be used as basis in the grant of the CNA Signing Bonus” the COA ruling stated.

“The SC’s rulings which declare that CNA Signing Bonus is illegal are enough bases to disallow the grant thereof by MARINA,” the state audit body added.