Legal basis and amending character
- The order amends regulations on fidelity bonding pursuant to Section 50, Chapter IX of Book V of the Administrative Code of 1987.
- The order amends Treasury Memorandum Circular No. 1-71.
Purpose and operative coverage
- The order provides revised regulations for the effective bonding of accountable government officials and employees.
- Officials and employees of National Government Agencies (NGAs) must be covered by a fidelity bond when their duties permit or require custody of funds or properly/accountable forms.
- Government Owned and/or Controlled Corporations (GOCCs) must cover their officials and employees by fidelity bonds under the same condition.
- Local Government Units (LGUs), Self Governing Boards and Commissions, and all others concerned must cover covered personnel by fidelity bonds under the same condition.
- The order applies to accountable officials and employees discharging duties in a foreign country.
- The order covers officials and employees accountable to others who are primarily accountable.
Accountable risks and remedies
- When a bonded official or employee, or an applicant for bonding, is not, in the judgment of Bureau of Treasury Fiscal Examiner IV (BTr FE IV), a safe and conservative risk due to character, associations, or habits, the fact must be reported to the respective head of the department, bureau, office, LGU, self governing board, or commission.
- The head must cause the removal or relief of the official or employee from duties requiring a bond.
- The judgment of BTr FE IV may be appealed to the Treasurer of the Philippines, through the BTr Regional Director (RD).
- The decision of the Treasurer of the Philippines through the BTr Regional Director (RD) is final.
- Officials with direct or general supervision over accountable officials must take steps to safeguard the government’s interests.
- Upon discovery of a shortage or total loss, agencies and/or COA must proceed against the accountable official or employee and his property, real or personal, where attachment and execution are levied as provided by law.
- The office that uncovers a malversation or shortage must promptly notify BTr FE IV by telegram and must keep BTr FE IV advised of the status of the case.
Bonding procedure and required forms
- Any person’s appointment or lawful accession to a bonded or bondable position must be notified immediately by the agency to BTr FE IV of the province or region where the appointee is assigned.
- Notifications, requests for application, increases, reductions, cancellations, or transfers of a bond must use three (3) copies of General Form No. 57(A).
- General Form No. 57(A) must be signed by the head of the agency concerned.
- Every applicant must accomplish General Form No. 58(A) in four (4) copies.
- General Form No. 58(A) must be subscribed and sworn to before an officer duly authorized by law.
- The completed General Form 58(A), with three (3) photographs affixed, must be endorsed by the head of the agency or office and submitted to BTr FE IV in the province or region together with the request for bonding and General Form No. 57(A) for approval.
- Bonding applications must be accompanied by:
- A Sworn Statement of Assets and Liabilities as of the date of application and request for bonding.
- The latest approved appointment to the bondable position.
- If the position is not bondable but the applicant is given bondable duties, an Office Order or Designation.
- Proof of payment of bond premium deposited with an Authorized Government Depository Bank (AGDB).
Cancellation, bond limits, and validity
- Accountable officials and employees no longer accountable due to retirement, separation from the service, promotion, transfer to another position or agency, suspension from office, or any other cause must submit immediately a bond cancellation request using General Form No. 57(A) items 14 to 18 only to BTr Fiscal Examiner IV in the relevant province or region.
- Agencies must not grant clearance from money and property accountability without proof of bond cancellation as required in the cancellation procedure.
- BTr FE IV must fix and approve bonds in its jurisdiction in accordance with the schedule in Annex A, which forms an integral part of the order.
- If an official/employee has both money and property accountability, the official/employee must be bonded only once, with the bond amount following the schedule, but the bond amount must not exceed PHP 4,000,000.00.
- If the maximum bond amount is exceeded, the accountable officer and immediate supervisor must immediately take steps to transfer the excess accountability to another official/employee who must then be covered by another bond.
- Fidelity bonds are valid for one (1) year.
- If bond premium for the continuing bondable official/employee is not paid on or before the expiry date, the bond is automatically cancelled.
- Renewal requires filing General Form 57(A) and General Form 58(A) and their attachments.
Bond premium requirements and payment rules
- Effective January 1, 1996, bonding applications must be issued an Authority to Accept Payment (ATAP) by BTr FE IV for payment of bond premium.
- The fidelity bond premium equals 1% of the amount of the bond.
- The premium covers one full year equivalent to twelve months.
- Cancellation of a bond during its validity does not make the premium refundable to the agency.
- Bond premium must be deposited by the applicant agency with an Authorized Government Depository Bank (AGDB).
- The ATAP submitted with the premium deposit must be accompanied by a list of bondable officials/employees accomplished in the form prescribed as Annex B, which is integral to the order.
- Proof of premium deposit must be presented to the FE IV of the province of NCR district where the bond applicant is assigned.
- Proof of deposit consists of the AGDB validated ATAP and the list of bondable officials/employees.
- Bond application processing must occur only after presentation of proof of deposit.
- If premium payments are centralized in an agency head office, the head office must notify BTr FE IV of the province or NCR district where the bonded official/employee is assigned.
- A bond is personal and not transferable.
- Increases in accountability that increase the bond amount are subject to increase premium payable for one year, requiring filing the appropriate application forms.
- Overpayment of bond premium must be credited to subsequent premium payments due.
Fidelity Fund operation and restrictions
- All bond premium collected by the Bureau of Treasury constitutes the Fidelity Fund.
- The Fidelity Fund answers for defalcations, shortages, and unrelieved accountability after all possible means of recovery from the accountable official/employee are exhausted or the accountable person’s insolvency is declared by a competent court.
- The Fidelity Fund may be used to pay court fees incident to civil proceedings to recover lost sums.
- The Fidelity Fund must not be used to:
- Replace fines imposed on a bonded official/employee resulting from criminal conviction for violation of the Revised Penal Code or any penal law.
- Answer for liability of a bonded official/employee convicted of Estafa through falsification of public documents in the capacity as a private individual.
- Refund accountability of a bonded official/employee found short when the official/employee was not removed or relieved of the duties.
Claims and approval process
- Claims against the Fidelity Fund, together with all related evidence, must be filed with the Bureau of Treasury Regional Director, who recommends appropriate action to the Treasurer of the Philippines.
- Approval of a claim constitutes a legal claim against the Fidelity Fund.
- Only approved claims may be paid from the Fidelity Fund.
Sanctions, repeal, and effect of compliance
- Failure to comply with the requirements and provisions of the order subjects the responsible official/employee to criminal and/or administrative action.
- Circulars, orders, and memoranda issued by the office that are inconsistent with the order are repealed and/or modified accordingly.
- Matters not covered by the order must be referred to the Bureau of Treasury Regional Director for appropriate resolution.