Annually, each local government unit frames their respective budget that will be used for their operations for the succeeding year and such budget is divided into two classifications, the 80% generally is for the Maintenance and Operating Expenses, wages for the employees, and other contractual obligations and more, otherwise known as the General Fund while the remaining 20% is addressed to projects identified, loans payables (though this can also be charged to the 80%) and other programs. This is what we call as Annual Investment Plan or the 20% Development Fund. Investments because, it should bear an ROI (return of investment) if the local officials are bent on freeing themselves from their dependence on the Internal Revenue Allotment from the national government.

This has been the age old problem of most LGUs in the province, dependence on the IRA. Almost all of the money budgeted and used by the LGUs are from their annual IRAs and not so much of their own earnings from local taxations and other local economic enterprises like markets, slaughterhouses, water supply and other economic ventures.

The said 20% appropriation should cover itemized projects. Section 287 of R.A. No. 7160 provides that each LGU shall appropriate in its annual budget no less than 20% of its annual IRA for development projects. Article 384 of its IRR provides further that the local development projects to be funded are those embodied or contained in the local development plans. 

Article 410 further provides that the “LDCs shall submit to the local finance committee a copy of the local development plan and annual investment program prepared and approved during the fiscal year before the calendar for budget preparation in accordance with applicable laws, specifying therein projects proposed for inclusion in the local government budget…. x x x.  The local finance committee shall use the plan to ensure that projects proposed for local funding are included in the budget.”

Where do Intelligence Funds come from?

The general welfare clause under Section 16 of R.A. No. 7160 states, among others, that, LGUs shall “maintain peace and order, and preserve the comfort and convenience of their inhabitants."

Accordingly, the DILG in its capacity and general supervisory authority over LGUs as delegated by the President pursuant to Administrative Order (A.O.) No. 267 series of 1992 issued Memorandum Circular (MC) No. 99-65 dated April 23, 1999 providing policies and guidelines relative to the utilization of funds for intelligence or confidential purposes. These guidelines were further supplemented by DILG MC No. 99-100 dated June 15, 1999. 

The Commission on Audit (COA) has strengthened, but failed dismally, as to why we shall discuss later, the use of public funds for intelligence and/or confidential purposes when it issued COA Circular No. 92-385 dated October 1, 1992 and COA Circular No. 2003-003 dated July 30, 2003 relative to the audit and liquidation guidelines and documentary requirements of Intelligence and/or Confidential Funds. It further prescribed separate accounts in the Revised New Government Accounting System (NGAS) Chart of Accounts under COA Circular No. 2003-001 dated June 17, 2003. Hence, the General Fund Books of Accounts of LGUs have separate accounts for Confidential Expenses (881) and Intelligence Expenses (882) under a common heading, “Confidential, Intelligence, Extraordinary and Miscellaneous Expenses”.

The guidelines in the allocation and use of public funds for intelligence and/or confidential purposes are prescribed under DILG MC No. 99-65 as supplemented by DILG MC No. 99-100. The following provisions thereof may be emphasized:

a.               An allocation for peace and order concerns may be provided in the annual budget of an LGU. Provided, that peace and order is a priority investment area.

b.        The total annual amount appropriated for intelligence or confidential undertakings shall not exceed thirty percent (30%) of the total annual amount allocated for peace and order efforts or three percent (3%) of the total annual appropriations, whichever is lower.

          For example:

A.            Total Allocation for Peace and Order                                               P10M 
Multiply by 30%                                                             30%
                                         Allocation for Intelligence/Confidential Fund                 P 3M

      B.                   Total Appropriations (Annual Budget)                                    P200M
                             Multiply by 3%                                                                             3%
                                  Allocation for Intelligence/Confidential Fund                      P 6M
In this case, the computation yielding the lower amount (i.e., letter A) shall be used as basis in the allocation for intelligence/confidential purposes.

The funds appropriated for Intelligence and/or Confidential activities shall be used purposely for the conduct of intelligence and/or confidential operations and shall be limited to the following:

·          purchase of information;
·          payment of rewards;
·          rental and other incidental expenses relative to the maintenance of safehouses; and
·          purchase of supplies and ammunitions, provision of medical and food aid, as well as, payment of incentives or travelling expenses relative to the conduct of intelligence or confidential operations.

How are these funds disbursed?

The amounts shall be released to the Local Chief Executives (mayors and governors) as cash advances. The particulars written in the disbursement voucher is “used as intelligence funds” and it is expected that the expenses shall be in accordance to the items stated above. NOW COMES THE MONEY.

How is it treated by the Commission on Audit?

In accordance to the COA Circular related to the intelligence funds, here are the rules which the local chief executives should have followed:
1.         The liquidation report shall not be coursed through the Agency Auditor or Regional/Cluster Director, but shall be submitted in a sealed envelope with a visible label "CONFIDENTIAL – For COA Chairman Only" directly to the Chairman’s Office, COA thru any of the following modes:
  a)  registered mail
  b)  courier
  c)  authorized liaison officers
2.         The address appearing in the envelope shall be as follows:
  Commonwealth Avenue
          Quezon City
3.         The report should have a covering transmittal letter itemizing the documents being submitted.
4.         If the liquidation vouchers and supporting papers are in order, the COA Chairman or authorized representative shall issue a credit advice addressed to Head of the Agency, Attention the Chief Accountant, copy furnished the auditor of the government agency/office concerned.
5.         Subsequent cash advances shall be granted only after the issuance of credit advice from the Chairman or the submission of liquidation vouchers/reports for the previous cash advance to the COA Chairman. One copy of the transmittal letter, for the purpose, duly received by the Chairman or his authorized representative, must be forwarded to the Accountant of the agency and the auditor concerned for reference. (THIS IS NOT FOLLOWED)
6.         All liquidation vouchers and supporting papers shall be retained by the COA Chairman for safekeeping in his confidential file. However, duplicate copies of all these record and documents must be retained and filed by the accountable officer of the agency concerned.

Documentary Requirements:
1.         The liquidation vouchers duly signed by the authorized signatories must be supported by the following documents:
a.         Certified Xerox copy of the paid disbursement voucher of the cash advance being liquidated.
b.         Certification of the Agency Head concerned for the utilization of the Intelligence and Confidential Expense. (ONLY? WHAT ABOUT RECEIPTS, PROJECT PROFILES, OTHER JUSTIFICATIONS TO SECURE THE MONEY?)

Any disbursement from the intelligence/confidential funds shall be accounted for solely on the certification of the Head of Agency responsible for the intelligence, confidential, national security mission project or undertaking.
This certification is worded like this:



We hereby certify that the amount of ______________________________
(P________) was incurred by the undersigned in connection with PROJECT _________________________ (File Code No.).

We further certify that the aforementioned Project is a highly confidential operation/mission, the details of which cannot be divulged without posing a threat to national security.  We certify however, that the details and supporting documents are in our custody and kept in our confidential file and may be audited if the circumstances so demand.

We certify further that the funds were not used to pay salaries and wages of employees or any elected official nor for overtime, additional compensation, allowance or other fringe benefits and for the purchase of equipment, and that the expenditures were necessary and utilized for legal purposes.



Now, there are a lot of justifications in the spending of the intelligence expenses which can be abused by our politicians. Have you heard of people who supply intelligence information issuing receipts after receiving their payments for their tips, if any or paying their rewards? Would the items declare the operations of the law enforcers?

There are a lot of loopholes in this process. There are a lot in the English language that can justify on paper the millions for intelligence expenses but in reality, there was no expense at all.

If these monies are used religiously for anti-crime measures such as dependable communication facilities for the law enforcers, purchase of motor vehicles from the pockets of the LGUs and not only from those given by the DILG and the PNP National Office. Have you seen a PNP vehicle maintained by LGUs? They equal those that run in the 1970s, dilapidated and cannot be used for its purpose.

Light facilities can also be bought for those streets and dark alleys. We all want criminality to diminish, not increase.

Most certifications are for sure, gasoline expense which everyone can get receipts for their favourite gasoline stations, information and rewards to fictitious people without a crime solved, and other worthy expenses if those heads of agencies are moral and upright which is a rare breed in government service, especially local government units.

The government must scrap intelligence expenses as there is already the existence of Peace and Order Initiatives which are audited in the usual manner, though not a safeguard against corruption but to say the least, more detailed and more rigorous in justification.

The COA must revise their memo on the funds, make it more realistic and make it work, as the provision on the advise is not really followed. That is why our local officials spend it like it is their very own.

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