REPUBLIC OF THE PHILIPPINES
COMMISSION ON AUDIT
REGIONAL OFFICE NO. V
National Government Audit Sector (NGAS)
Cluster 7 – Public Works, Transport and Energy
Audit Team R5-35
DPWH Sorsogon 1st and 2nd DEO, PCG and LTO
Official Station: DPWH 1st DEO, Guinlajon, Sorsogon City
Office of the Auditor
AOM No. 2025-008-(2024)
Date: March 6, 2025
AUDIT OBSERVATION MEMORANDUM (AOM)
FOR
Jorge F. Gurimbao
OIC - District Engineer
DPWH Sorsogon 2nd District Engineering Office
Payawin, Gubat, Sorsogon
ATTN:
Levi D. Pura, Jr.
Chief, Administrative Section
Mildred E. Frilles
Chief, Finance Section
Ana Liza Y. Callos
AO / Budget Officer II
SUBJECT:
Reiteration of AOM No. 2024-008 (2023) Dated February 27, 2024 and Review of DPWH
Department Order No. 146 Series of 2023 Dated December 06, 2023(DO 146) re: Revised
Guidelines on Hiring and Rehiring of Contract of Service/Job Order(COS and JO’s) Personnel in
the DPWH vis-à-vis COA-DBM Joint Circular No. 2 s. 20201 dated October 12, 2020(JC No. 2)
and Pursuant to Item 10² Thereof.
We have reviewed the pertinent provisions of DO 146 specifically the propriety and validity of
service fees paid to COS and JO’s of DPWH Sorsogon 1st DEO during CY 2024 vis-à-vis JC
No. 2 pursuant to Item 10.0 thereof and NGAS Cluster 7 General Audit Instructions re:
“Conduct of CY 2024 Audit and Submission and Transmittal of the Audit Report Thereon”
and observed that:
The COS and JO’s were underpaid for their services rendered during CY 2024 and prior
years because the agency misapplied the daily-rate provision under Item IV.3 of DO
146;thereby economically depriving the said workers of just, fair and lawful wages as
prescribed under the JC No. 2.
1. Generally, the basis of the service fees to be paid to COS and JO’s hired by government
agencies should have been the equivalent daily wage/salary of comparable positions in
the government as provided under JC No. 2. Thus for discussion purposes, it is important
to revisit the prescribed tranches of salary schedule under the salary standardization law.
Background of the Base Pay
2. At the very outset, it is Republic Act(RA) No. 11466³ otherwise known as the “Salary
Standardization Law of 2019” which provides the modification of the salary schedule for
civilian personnel and authorities in the government and the grant of additional benefits.
3. Said Act specifies the graduated salary schedule to be implemented in four(4) tranches i.e
from FY 2020 to FY 2023.
4. After its full implementation as of December 31, 2023, Executive Order No. 64 s. 2024
dated August 2, 2024⁴ (EO 64) was subsequently issued to similarly update and provide
for retrospective increases in salaries effective January 1, 2024 until December 31, 2027.
5. By way of illustration, let us consider the base pay for Salary Grade 1(SG-1), Step
Increment 1, under the four(4) tranches of RA 11466 and the first two(2) tranches of EO
64 from FY 2020 to FY 2025. Therefore, the daily wage/salary of said COS and JO’s in
the government should be the following:
Equivalent Daily
Implementing Salary Step Base
Year Tranche Wage in 22
DBM⁴ Grade Increment Pay
Working Days
2020 First NBC No. 579 1 1 11,551 525.05
2021 Second NBC No. 584 1 1 12,034 547.00
2022 Third NBC No. 588 1 1 12,517 568.95
2023 Fourth NBC No. 591 1 1 13,000 590.91
Executive
Order No. 64 s.
2024
2024 First NBC No. 594⁵ 1 1 13,530 615.00
2025 Second NBC No. 597 1 1 14,061 639.14
6. Based from the above table, the equivalent daily wage/salary for the position of SG-1,
Step Increment 1 in the government is represented under the last column. Thus, every
comparable position in the government for which a COS or JO may be hired has its
equivalent daily wage/salary which is based on the applicable tranche for the year.
7. Therefore, the daily rate equivalent for every comparable position is well established by
the applicable tranche for that given year. For example, a COS or JO hired in FY 2024 as
Administrative Aide I with SG-1, step increment 1, shall have an equivalent daily
wage/salary of ₱615, and shall be increased to ₱639.14 when rehired to same position in
FY 2025.
The COA-DBM Joint Circular No. 2 s. 2020 dated October 12, 2020 (JC No. 2)
8. We reiterate herein the same provision as what was cited in the prior year(2023) AOM;
thus,
“11.5. Services of individuals engaged through COS basis, excluding persons or entities
engaged through RA No. 9184, and JO shall be paid wages equivalent to the daily wage/salary
of comparable position in government.
Subject to the availability of funds, the COS and JO workers may also be granted a premium of
up to 20% of their respective wage/salary.” (underscoring ours)
9. Pointedly, the phrase “subject to the availability of funds” in the above-quoted provision
applies only as regards the payment of the 20% premium.
10. With reference to the basic pay or daily rate, however, the regulation uses the word
“SHALL”, which term is interpreted to mean a command that is mandatory and
obligatory in character.
The DPWH Standardized Contracts for Hired COS and JO
11. The comparability of position in the government, for which the COS and JO’s may be
hired, is expressly indicated under Item 4 of the standardized contracts for COS and JO’s
adopted by DPWH; thus,
“4. In view hereof, the SECOND PARTY is hereby contracted as Position Title (with
Parenthetical, if applicable) - (SG-) in the Division, Office, with compensation at a daily rate
of ₱__ to be paid on a 15/30 basis, effective Contract Period.”
12. Under Item 4, the position and the corresponding salary grade are indicated, which mean,
the appropriate comparable position for the applicant-employee after considering his/her
skills and qualifications by the DPWH-hiring agency. Thus, the determination of
appropriate comparable position for the applicant is purely management’s discretion.
The DPWH Department Order No. 146 Series of 2023 Dated December 06,
2023(DO 146)
13. The original provisions on compensation of COS and JO’s can be traced from DO 050
series of 2015, DO 260 series of 2022, and from DO 07 series of 2023. The compensation
provision were almost the same; thus,:
“16. The service fees of the COS/JO personnel shall be commensurate to Step 1 of the Salary
Grade(SG) of the equivalent regular plantilla positions to which they are being hired/rehired.
The minimum service fees or daily rate of these personnel shall not be less than Php ______, the
minimum daily rate of positions allocated to Step 1, SG-1.”
14. Until the issuance of DO 146, the above provision was amended under Item IV.3 with the
insertion of the highlighted phrase(s); thus,
“Due to limited funds and the number of existing COS/JO personnel in the Department,
service fees shall be based on the First Tranche of Modified Salary Schedule for
Civilian Government Personnel under Salary Standardization Law V and shall be
commensurate to Step 1 of the Salary Grade(SG) of the equivalent plantilla positions
to which they are being hired/rehired, subject to availability of funds. The minimum
service fees of daily rate of these personnel shall not be less than Php 525.04, the
minimum daily rate of positions allocated to Step 1, SG-1, of civilian personnel, as
prescribed under DBM NBC No. 579 dated 24 January 2020, subject to adjustments, if
any. Exemption to this are JO personnel charged to maintenance fund such as
gatekeeper and other similar positions.” (emphasis supplied)
15. It can be observed in the amendatory DO 146 that DPWH has FIXED the daily
wage/salary of COS and JO’s exclusively to the base pay of step 1 increment provided
under the first tranche of RA 11466 which was, legally speaking, effective only for FY
2020. From the effectivity of DO 146 and onwards, DPWH has applied the following
fixed daily rates to its COS and JO’s:
SG Base Pay – Step 1 Daily Rate SG Base Pay – Step 1 Daily Rate
1 11,551 525.04 7 16,458 748.09
2 12,276 558.00 8 17,505 795.68
3 13,019 591.77 9 18,784 853.84
4 13,807 627.59 10 20,219 919.05
5 14,641 665.50 11 22,316 1,014.36
6 15,524 705.64 12 24,495 1,113.40
16. As regards the payment of the 20% premium, from DO 260 to DO 146, DPWH did not
implement said provision due to 1.) uniform applicability across the Department; 2.)
sustainability/continuity of implementation; and, 3.) In view of the limited funds of the
Department.
Effect of Fixing the Daily Wage/Salary Rates to that Provided Under the 2020
Tranche
17. The JC No. 2 speaks about COMPARABILITY of positions and EQUIVALENCE of
daily wage/salary of COS and JO’s. While comparability is management prerogative,
being the one who evaluates the qualifications and determines the appropriate
comparable position for the applicant; however, the duty to provide them of the
equivalent daily wage/salary is MANDATORY and OBLIGATORY as discussed in
paragraph 10 above.
18. Nailing the daily wage/salary of COS and JO’s to the 2020 salary tranche distorts the
concept of EQUIVALENCE contrary to what is envisioned by JC No. 2. In short, while
the COS and JO’s renders service using their skills and potentials required by positions
comparable
to plantilla positions.
The Main Issue
19. CAN D.O. 146 VALIDLY AMEND THE COMPENSATION PROVISION ON COS
AND JO’s UNDER J.C. NO. 2 BY LIMITING AND/OR FIXING THEIR DAILY
WAGE/SALARY USING THE 2020 FIRST TRANCHE UNDER R.A. 11466?
20. The Audit Team is not persuaded. First, DPWH was not one of the signatories to the JC
No. 2. Thus, it cannot substitute its own judgement or rule-making power to that of COA
and DBM⁷. In fact, the latter agencies are more authoritative on the matter to the
exclusion of other administrative bodies.
21. Second, to sustain DO 146 would create injustice to all COS and JO’s in the government,
not just to DPWH, for it may result in a dangerous precedent in the bureaucracy.
22. And third, it is constitutionally enshrined that the State shall protect labor and safeguard
the rights of workers to a living wage. Otherwise put, to frustrate the COS and JO’s of
their right to a just, fair and lawful wage may result into decreased motivation, low
morale, reduced productivity and negative impact on the reputation of the hiring agency.
23. We recommend to management the following courses of action:
1.) to implement the audit recommendation(s) stated in prior year AOM No. 2024-008 (2023)
dated February 27, 2024;
2.) to adjust the daily wage/salary rate of COS and JO personnel hired effective January 1, 2025
and onwards; and,
3.) to elevate the issue to its top management for comment, and for resolution of any issue,
should there be budgetary constraints on the matter.
May we have your comments on the foregoing audit observation within fifteen (15) days from
receipt hereof.
AMAR BENJAMIN B. BARBANTE
State Auditor IV/Audit Team Leader
MAMERTO A. SANTELICES
State Auditor V
Regional Supervising Auditor
¹ As amended by COA-DBM JC No. 2 s. 2022 dated November 10, 2022 amending Item 11.1
thereof and thereafter by COA-DBM JC No. 2 s. 2024 dated July 19, 2024 extending the
transition period until December 31, 2025.
² 10.0 Monitoring – The COA shall monitor the compliance of agencies with the provisions of
this Joint Circular
. ³ An Act Modifying the Salary Schedule of Civilian Government Personnel and Authorizing the
Grant of Additional Benefits and For Other Purposes.
⁴ Issued in January of year of Implementation.
⁵ Dated August 12, 2024
**of civilian personnel, as prescribed under DBM NBC No. 579 dated 24 January 2020⁶,
subject to adjustments, if any.” (underscoring supplied)
⁶ DO 050 s. 2015 made reference to DBM NBC No. 540 dated 10 May 2012.
______________________
RESPONSE: Republic of the Philippines
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
SORSOGON SECOND
DISTRICT ENGINEERING OFFICE
Pawidwin, Gubat, Sorsogon
March 7, 2024
MARIO L. AGUILAR
State Auditor V
Regional Supervising Auditor
Commission on Audit RO V
National Government Sector-Cluster 7
Rawis, Legazpi City
Attention:
MARY JENALYN C. AZURAN
State Auditor IV, Audit Team Leader
This has reference to your Audit Observation Memorandum (AOM) No. 2024-008 (2023) dated
February 27, 2024, directed to Mr. Levi D. Pura, Jr., Chief of the Administrative Section with the
following observations;
1. The District’s non-compliance to the requirements provided under Item 11.5 of COA-
DBM (COA-DBM) Joint Circular No. 1 s. 2017 to compensate JO workers with wages
equivalent to the daily wage/salary of comparable positions in government and a
premium of up to twenty per cent
a) Listed under item 3 of the audit findings- the use of daily rate provided under DPWH
DO No. 7 issued on January 19, 2023 and DO 146 dated December 6, 2023 instead of the
rate of the comparable position in the government in the above quoted Joint circular;
b) Item number no. 4 of the audit findings- the JO rate the agency follows in the salary
schedule prescribed under DBM NBC No. 579 dated January 24, 2020 specifically the
first Tranche of the Modified Salary Schedule compared with the required salary
inclusive of 20 percent premium for the existing 225 workers had a total discrepancy of
53, 926 per day
2. Need for adherence to establish regulations ensuring equitable treatments to JO workers;
3. Need to coordinate with the higher authority of the DPWH for the compliance of the
CSC-COA-DBM.
In response to your directive order mentioned in your Audit Observation Memo, the District
complies with the rates specified in DPWH Department Order No. 146 series of 2023: Revised
Guidelines in Hiring and Rehiring of Contract of Service/Job Order Personnel in the DPWH and
these applies to all District Engineering Offices nationwide.
Please rest assured that the management adheres to established regulations and shall resolve this
issue by coordinating with higher authority in the DPWH as you have directed.
Thank you.
JORGE F. GURIMBAO
OIC – District Engineer
R05.23.5 LDP/ACL
Website: https://www.dpwh.gov.ph
