COMMISSION ON AUDIT CIRCULAR NO.

76-25-A June 30, 1976

TO : All Heads of Departments, Bureaus and Offices, including self-governing boards,

commissions and agencies, Provincial Governors, City Mayors, Regional
Directors of the COA, Bureau, Provincial and City Auditors, Provincial and City
Treasurers, and Others Concerned.

SUBJECT : Restatement, with Amendments, of COA Circular No. 76-25, dated March 31,
1976, regarding service and/or incentive fees, remunerations, honoraria and all
other extra compensations paid to government officials and employees.

PURPOSE

This Circular is issued to restate with amendments COA Circular No. 76-25 dated March
31, 1976 setting a policy on the payment of extra or additional compensation to officials and
employees concerned, and to prescribe, a procedure for the accounting thereof. The Circular
also seeks to limit additional compensation where the law, presidential decree, executive order
or directive does not fix the amount of additional compensation for service-connected activities
being paid or compensated for.

SCOPE

The regulations prescribed in this Circular shall apply only to National and Local
Government Offices and are limited to payments of additional compensation the source of which
is derived from national and local funds as well as from private sources as authorized by law.

The provisions of this Circular shall not include (a) extra compensation which the law or
executive fiat has not only authorized but also specified as to amount, and (b) additional
compensation expressly agreed upon in existing contracts.

DEFINITIONS

Extra or additional compensation as envisioned in this Circular refers to service fees,

incentive fees, per diems, honoraria, and all other extra monetary remunerations paid by a
government office or private firm to a government official or employee for services rendered to
such office or firm which are service-connected, i.e., services which normally are rendered as
part of his regular duties or functions, and those for which he is contracted or engaged by virtue
of his office or position, including but not limited to the following:

1. Honorarium paid to a government official or employee requested to speak, lecture, or

act as resource person in seminars, in-service training courses, or classroom sessions. This
does not include payment for outside-of-office engagements or those performed on the personal
time of the official or employee, such as teaching at night or on Saturdays and Sundays or any
other engagement, such as consultancies, for which the official or employee has been
contracted because of his personal qualifications, expertise, skill, or specialization, or research
projects or contracts which are not service-connected;
 2. Honorarium, and all other allowances paid to a government official or employee by
another office to which he is on detail or special assignment, subject to the provisions of Item 5
under Statement of Policies of this Circular;

3. Honorarium and/or allowances paid to a government official or employee for his

membership in committees and/or special projects. This does not include remuneration of
government officials who, under provisions of law or executive fiat, are ex-officio members of
self-governing boards, commissions or agencies of the government with compensation in
amounts fixed and authorized by law;

4. Service fees, incentive fees or commissions given by government offices as

authorized by the Office of the President; and

5. Service fees paid by private companies for services rendered to them as provided
under Section 38 of the General Provisions of P.D. 733.

STATEMENT OF POLICIES

1. All extra compensation for service-connected undertakings by government officials or

employees paid from sources derived from nationally and locally appropriated funds as well as
private sources when authorized by law to be stipulated under the terms of future agreements or
service contracts shall be included in the computation of the total amount of extra compensation
as contemplated under Item 2 below for purposes of the 50% limitation.

2. The computation of the amounts of extra compensation as prescribed in this Circular

shall include those paid by other agencies to officials and employees of the national and local
governments and of self-governing boards, commissions, and agencies, as well as those paid
by the mother agency of such official or employee from sources derived from nationally and
locally appropriated funds, as well as private sources with the exception of those enumerated in
Item 1 above.

3. The total amount of extra or additional compensation shall be remitted by the paying
office to the collecting officer of the bureau or office of the recipient official or employee to be
deposited with the National Treasury or with the Provincial or City Treasurer as the case may be
in accordance with existing rules and regulations. However, in the case of extra compensation
paid by the mother agency to its own officials or employees, the same shall be paid directly to
the official or employee subject to the provisions of Item 4 below under this title.

4. The official or employee concerned shall be paid his extra compensation by his office
at the end of the month of collection or end of the period of undertaking, provided that in the
aggregate such extra compensation shall, in no case, exceed fifty percentum (50%) of his
annual salary and the purposes for which such extra compensation is paid have been
accomplished. Payments of allowances and the like on strictly reimbursement basis which
should be remitted as required under the next preceding item shall not, however, be subject to
the 50% limit as herein prescribed.

5. An official or employee on detail to, or on special assignment in, another government

office who is granted an honorarium or allowance by such office in connection with such detail
or assignment shall be paid such honorarium or allowance by his office in the manner and under
the conditions herein prescribed. However, if he is already collecting a similar compensation or
allowance for the same service or period in the
case of honorarium or allowance, respectively, for which payment is being claimed, he may
choose to collect whichever is higher but in no case shall he receive both.

ACCOUNTING TREATMENT

1. All collections received representing extra compensation of officials and/or

employees, shall be treated as trust liabilities (88) account under the general fund of the
national government office concerned and as other deposits and trusts (B-2-9) account under
the trust fund of the local
government office concerned.

2. The extra remunerations, allowances or honoraria of officials and/or employees

concerned shall be paid by payroll or voucher.

3. Any unallocated balance of such collections shall continue to be treated as trust

liabilities (88) or other deposits and trust (B-2-9) account and shall be used for further
strengthening the office of the recipient official or employee.

4. The provisions of COA Circular No. 76-26 dated April 6, 1976 shall apply in the
processing of the payment of the additional compensation contemplated in this Circular.

REPEALING CLAUSE

All circulars, orders, memoranda and existing rules and regulations in conflict herewith
are hereby revoked or amended accordingly.

EFFECTIVITY

This Circular shall take effect on July 1, 1976. Thus, the honorarium or additional
compensation received from July 1, 1976 to December 31, 1976, shall not exceed the salary for
the same six-months period. However, from January 1, 1977 to December 31, 1977 and
succeeding years, the 50% limitation shall be computed on the basis of the regular annual
salary of the grantee. Strict compliance with this Circular by all concerned is hereby enjoined.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman