COA flags SC's P241-M tax deficiency, IT equipment purchase

Tax deficiency on the Supreme Court's Judiciary Development Fund on additional allowances has reached P241.865 million due to non-withholding of taxes to employees, according to the Commission on Audit (COA).

In its report, COA said as of June 30, 2017, the deficiency represents additional cost of living allowances granted to employees in 2017 and 2016 worth P82.571 million and P159.294 million, respectively.

Incidentally, taxes for the allowances received by SC justices, lower court judges, and some employees were withheld and transmitted to the Bureau of Internal Revenue.

"Despite our recommendation in prior years to withhold taxes from all employees' allowances/benefits in accordance with BIR rules and regulations, management continued the same practice of not withholding the appropriate tax in 2017, except those paid to justices, judges and some personnel," the COA said.

SC opted not to withhold the taxes of court employees due to a petition filed by various government agencies questioning the regularity of BIR Revenue Memorandum Order No. 23-2014, according to COA.

The assailed BIR order requires a withholding tax for the cost of living allowance granted to employees of the judiciary.

The COA, however, said it stands by its previous recommendation for the SC chief accountant to withhold the taxes of all officials and employees.

"We reiterated our recommendation that management direct the chief accountant to withhold the appropriate taxes from the subject allowance granted not only to the SC justices, judges and other selected personnel but to all SC officials and employees, and to remit the same to the BIR," it said.

The chief of the Financial Management and Budget Office (FMBO) told the COA audit team that the petition is still pending at the SC, but the recommendations included in the 2017 report will be forwarded to the high court.

The COA said it also has yet to receive a comment from the FMBO on the SC resolution ordering the chief accountant to withhold taxes of cost of living allowances and remit them to BIR.

Procurement activities

Meanwhile, the COA questioned the SC's "shopping" or "small value procurement" of computers and printers worth P7.987 million from three suppliers.

The COA said this alternative mode of procurement is contrary to the Government Procurement Reform Act which requires all contracts to undergo public bidding.

The commission also found that some laptop computers and automatic voltage regulators were purchased from a supplier with a higher price, thus putting the contract more expensive by P1.3 million.

SC management explained the urgency of acquiring the equipment as it embarks on several judiciary reform programs, saying the "much-needed IT equipment through bidding will contribute delay in the dispensation of their duties and therefore compromise the administration of justice."

These projects include the e-Subpoena Project, automated hearings, and improvement in the equipment of lower courts.

The SC, nonetheless, said it obtained three price quotations for the equipment to ensure the price will be more advantageous to the government.

The COA said bulk purchases should have been made to widen competition instead of limiting the contract to only three suppliers.

The COA also said the disbursement vouchers lacked supporting documents such as requests for quotation and proposals, notice of award and purchase orders, and the supplier recommendation of the Bids and Awards Committee. It said these documents are required to justify an alternative mode of procurement.

The audit team recommended for SC management to "avoid splitting of procurement and conduct public bidding in the acquisition of goods costing more than P1 million."

The COA said the SC must impose internal measures to ensure checks and balances on the conduct of procurement activities and designate an approving authority for purchase orders following the release of different orders. —KBK, GMA News