Republic of the Philippines

COMMISSION ON AUDIT
OFFICE OF THE AUDITOR
Veterans Golf Club
Gate 2 Mindanao Avenue, Diliman, Quezon City
FAX No. 929-28-54 Tel. No. 927-64-26 local 269/252/338

AOM No. 2014-002

June 2, 2014

AUDIT OBSERVATION MEMORANDUM

For:

USEC EDUARDO G. BATAC

Chairman
Veterans Golf Club Council
Quezon City

Thru: CDR. JAIME T. LUCAS (RET)

General Manager
Veterans Golf Club

Attention:

MS. MERLINA A. MAALA

Accountant

Non- compliance with Section 2 of Department of Budget and Managements (DBM)

Budget Circular No. 2003-6 dated September 29, 2003 and Section 7, Executive Order No.
24 dated February 10, 2011, Section 4.1 of DBM Budget Circular No 2003-06 and Section
2.78.1 of BIR Revenue Regulation No. 10-008 dated July 8, 2008 cast doubt in the accuracy
and veracity of the recorded per diem amounted to P890,750.00 in Other Maintenance and
Operating Expenses.
Section 2 of DBM Budget Circular No. 2003-6 dated September 29, 2003 and Section 7,
Executive Order No. 24 dated February 10, 2011 state that: Department Secretaries.
Undersecretaries, Assistant Secretaries and other government officials, who are Ex-Officio
Board Members, including their Authorized Alternates/Representatives, shall not be entitled to
any additional compensation for their services as such;
Sec. 2.2 of the same circular disclosed that Members of collegial bodies who are regularly
appointed thereto and received salaries and other compensation thereof.
Section 3 - Veterans Golf Club By-Laws The VGCC shall meet at least once a month. Xxxx
The members of the Golf Club Council shall be entitled to such allowances for their attendance

and participation in every meeting subject to existing laws and regulations. (underscoring
provided).
Sec. 4.1 DBM Budget Circular No. 2003-6 disclosed that Chairperson and members of
collegial bodies shall be entitled to per diems at rates not exceeding the following:
Chairpersons

Members

amount equivalent to 25% of the monthly RATA of the chief

operating officer of the collegial body for every meeting actually
attended but not to exceed four (4) paid meeting in a month.
amount equivalent to 25% of the monthly RATA of the second
ranking official of the collegial body for every meeting actually
attended but not to exceed four (4) paid meeting in a month.

Sec. 2.78.1: Withholding of Income Tax on Compensation Income

Compensation Income Defined In general, the term compensation means all
remuneration for services performed by an employee for his employer under an employeremployee relationship, unless specifically excluded by the Code.
The name by which the remuneration for services is designated is immaterial. Thus, salaries,
wages, emoluments and honoraria, allowances, commissions (e.g. transportation,
representation, entertainment and the like) x x x constitute compensation income.
Sec. 2.79 Income Tax collected at Source on Compensation Income
Use of withholding tax tables In general, every employer making payment of compensation
shall deduct and withhold from compensation a tax determined in accordance with
prescribed Revised Withholding Tax Tables
For the year 2013 the council had twelve (12) Regular Council Meetings, two (2) Membership
Committee Meetings, five (5) Finance and Audit Committee Meetings and four (4) Legal
Committee Meetings in which all Councils/Committee Members and Secretariat.
The council approved VGC Resolution No. 18-2010 states: WHEREFORE, the members of the
Council after thorough deliberation agreed to approve reduce the honorarium/per diem of the
members of the Veterans Golf Council:
Chairman
Members
Secretary

P8,500.00
P6,000.00
P1,500.00

Further, VGC Council Resolution No. 006-2011 dated June 8, 2011 disclosed that the Head and
Deputy Head of the Secretariat shall receive an Honoraria of Four Thousand Pesos
(PHP4,000.00) and the members Two Thousand Pesos (PHP2,000.00) for every Council
meeting.

During the year VGC granted per diem in the total amount of P890,750.00 to the members of
VGC Regular Council, three Committees and Council Secretariat as follows:
Regular
Council
Meeting

Membership
Committee
Meeting

Finance &
Audit
Committee
Meeting

Legal
Committee
Meeting

Total

USEC EDUARDO G. BATAC

97,750.00

97,750.00

USEC ERNESTO CAROLINA

69,000.00

69,000.00

DRA. NONA G. LEGASPI

69,000.00

69,000.00

ASEC ERNESTO BOAC

69,000.00

5,000.00

ATTY. CHERRIE B. BELMONTE LIM

69,000.00

1,000.00

DR. FRANKLIN GALI

69,000.00

2,000.00

MR. MANOLO DE LEON

69,000.00

1,000.00

70,000.00

MGEN ROMEO ALAMILLO (RET)

69,000.00

BGEN. ANTONIO I. SUPNET AFP (RET)

69,000.00

1,000.00

70,000.00

CDR JAIMET. LUCAS PN (RET

63,000.00

2,000.00

74,000.00
4,000.00

5,000.00

76,000.00
69,000.00

5,000.00

4,000.00

2,000.00

DAN DENNIS ESPIRITU

74,000.00

2,000.00
5,000.00

ESTELITA ESTABILLO

74,000.00
5,000.00

COUNCIL SECRETARIAT
COL EFREN ESTOESTA (RET)

22,500.00

ATTY. ANGELITO C. CASTILLO

48,500.00

RHEA C. MADDATU

48,500.00

MERLINA A. MAALA

25,500.00

LAARNI R. VIRTUDAZO

25,500.00

25,500.00

JUVELYN D. CRUZADO

25,500.00

25,500.00

TOTAL

845,750.00

22,500.00
3,000.00

1,000.00

52,500.00
48,500.00

4,000.00

8,000.00

28,000.00

29,500.00

9,000.00

890,750.00

These per diems were granted thru cash advances of the Special Disbursing Officer (SDO)
There was no approved payroll attached corresponding such cash advances in violation of
Section 1.2.1 of COA Circular No. 2012-001 dated June 14, 2014.
The SDO submitted the list of personnel who received the per diems with their corresponding
signatures to acknowledge their receipt.
Audit of the disbursement vouchers pertaining thereto reveals the following:
1. Included among in the list of acknowledging the receipt of per diems are the
Undersecretaries, Assistant Secretary from the Department of National Defense, the

Administrator of the Philippine Veterans Affairs Office and VGC General Manager
contrary to Section2 of DBM Budget Circular No. 2003-6.
2. Payment was not made thru a payroll sheet but thru a list of payees with corresponding
amount and signature of the claimant. Scrutiny of the signatures on the said lists revealed
that the signature of some payees differ from one month to another and there are times
other person received the per diem in behalf of the other without authority to receive such
per diem
3. The following Council Secretariats received per diem but were not included in the VGC
Council Resolution No. 006-2011 Re: Creation of a Council Secretariat:
1) Col. Efren Estoesta (Ret)
2) Ms. Juvelyn D. Cruzado
4. Attendance sheet or any proof that the above officials attended said meetings were not
attached as supporting documents.
5. The rates of per diem are more than the required rates under Section 4.1 of DBM Budget
Circular No 3003-6.
6. Council Secretariat each received additional P2,500.00 Cash Gift as of December 31,
2014 without authority attached.
7. There was no tax deduction withheld upon payment of such per diems.

In view of the foregoing, it is recommended that VGC Management submit the following:
1. authority or legal basis of inclusion of Undersecretaries and Assistant Secretary in the
grant of per diem as well as for those members and secretaries who received their salaries
and other compensation at VGC;
2. justification/explanation on the different signatures of the claimant. Refrain from making
a list of personnel who received per diem instead of payroll as a basis of payment;
3. authority of the two Council Secretariat to receive per diem;
4. proof that the above officials attended said meetings such as attendance sheet/minutes of
the meetings;
5. legal basis as to laws and regulations as to the rate of diem as well as the additional
allowance/ cash gift for the secretariat;
6. authority to grant additional cash gift to the Council Secretariat; and

7. proof or evidence that the taxes are withheld and remitted to BIR and are included at
year-end, members annual compensation income.

May we have your comments on the foregoing audit observations within five (5) calendar days
from receipt hereof.

CYNTHIA B. FERRER
Audit Team Leader

LUCENA D. GANA
Supervising Auditor

Proof of Receipt of AOM:

VGC Chairmans Office: _______________________

Date: _____________

Signature over Printed Name

General Managers Office: ______________________

Date: _____________

Signature over Printed Name

Accounting Office:

______________________

Date: _____________

Signature over Printed Name

Copy Furnished:
VMMC Directors Office: _______________________

Date: _____________

Signature over Printed Name

VMMC Accounting Section: _______________________ Date: _____________

Signature over Printed Name