Cebu City eyes staggered refund plan for COA-disallowed bonuses

CEBU City employees may soon be allowed to repay bonuses or allowances disallowed by the Commission on Audit (COA) in installments, easing potential financial hardship while ensuring the city recovers public funds.

The proposed ordinance, filed by Councilor Alvin Arcilla, allows the Cebu City Government to deduct disallowed amounts from employees’ salaries over a period not exceeding 12 months.

12-month repayment cap

Under the measure, monthly deductions cannot reduce take-home pay below legally mandated minimums. Arcilla acknowledged that sudden refund requirements can cause financial hardship for employees and adverse administrative consequences for officials.

Deductions would take effect only after a COA Notice of Disallowance becomes final and executory.

Employees must also receive written notice detailing the total amount to be refunded and the corresponding repayment schedule.

Liability of approving officials

The ordinance clarifies that approving or certifying officials remain liable under COA rules, civil service laws and the Anti-Graft and Corrupt Practices Act..

Implementation will be overseen by the City Treasurer’s Office, City Accounting Office, Human Resource Management Office, and City Legal Office.

Arcilla said the measure aims to create a fair and humane process that balances regulatory compliance with employee welfare, preventing sudden lump-sum deductions that could disrupt household finances.

Arcilla noted that the City Government often grants bonuses, allowances or financial assistance out of generosity, for humanitarian considerations, or in response to calamities and extraordinary circumstances.

He added that the ordinance recognizes that many benefits were granted in good faith but were later flagged due to technical or legal deficiencies.

COA disallows expenditures that lack legal basis or violate accounting rules.

Fiscal pressures mount

The proposed measure comes amid growing fiscal and legal pressures, particularly the non-allocation of the 2026 Charter Day Bonus for City Hall employees.

Councilor Dave Tumulak, chair of the Committee on Budget and Finance, explained that funding for additional bonuses was cut after COA flagged the city’s 2023 and 2024 payouts through audit observation memoranda and notices of suspension.

Mayor Nestor Archival had previously warned that releasing more bonuses under these conditions could trigger formal disallowances, forcing employees to return payments and exposing approving officials to administrative liability.

The financial strain adds urgency to the measure, as Cebu City reportedly posted a P91-million deficit from January to December 2025, limiting funds for new expenditures.

The proposed ordinance, now referred to the Committee on Laws, Styling, and Ordinances, seeks to streamline the recovery process while protecting employees from undue hardship. / EHP