A government agency cannot legally extend hazard pay to workers who provide administrative support services if they are not on the agency payroll but are workers of a service provider or manpower supplier.
In a 13-page en banc decision, the Commission on Audit affirmed notices of disallowance issued against the Philippine Ports Authority – Ports Management Offices (PPA-PMO) of four provinces for releasing hazard pay to personnel of a private services provider company who supplied security guards and administrative duty workers during the COVID-19 pandemic.
Covered by the ruling were PPA-PMOs of Surigao, Agusan, Panay/Guimaras, and Lanao del Norte/Iligan.
Records showed the PPA issued Memorandum Order No. 04-2020 dated March 27, 2020 authorizing the release of hazard pay to agency personnel.
The PPA also requested manpower provider LSERV Corporation grant hazard pay to its employees assigned at the PPA-PMOs every week, which was in turn reimbursed by the agency.
However, the audit team declared the practice invalid on the ground that hazard pay was not supposed to be extended to “institutional contract of service (ICOS)” personnel, as they are not agency hires but are employees of LSERV.
In its letter to the PPA on January 20, 2021, the Department of Budget and Management (DBM) sided with the COA view that “ICOS workers remain to be employees of the private contractor or service provider and are not included in the coverage of Administrative Order No. 26 and DM Budget Circular No. 2020-1 which authorized the payout of hazard pays.
In response to the COA findings and DBM’s opinion, the PPA-PMOs requested LSERV to refund the reimbursement of hazard pays to its workers.
LSERV said while it is willing to help PPA recover the total amount of P743,040, it sought the lifting of the refund order invoking humanitarian considerations. It also argued that its personnel deployed to the PPA-PMOs were covered by the AO No. 26 of former President Duterte.
The COA en banc said the argument had no merit.
“The personnel who received the Hazard Pay performed administrative support services, such as utility workers, driver mechanics, clerical and information technology staff, as well as management staff. They were directly hired by LSERV. Being ICOS personnel, they remain employees of LSERV and their compensation and other benefits remain the responsibility of LSERV,” the Commission said.
Likewise, it declared that the officials of PPA-PMO’s who approved and certified the payment of the disallowed benefit cannot claim good faith and are thus, also liable for the refund.
“They cannot claim good faith on their failure to observe clear provisions of law. Clearly, the approving and certifying officers are solidarily liable for the amount disallowed,” the COA added.
