<<<PRESS RELEASES

GCG RESPONSE TO THE COA REPORT ON GOCC ALLOWANCES

POSTED LAST 19 Jan 2014 - 11:00 am

We are holding this press conference pursuant to the commitment undertaken by GCG to report on the final responses of the GOCCs and the Commission’s own evaluation on the news item that covered the COA report that various GOCCs granted unauthorized allowances, bonuses and benefits amounting to P2.313 billion.

The process undertaken by GCG leading to this afternoon’s proceedings were to evaluate again the four month old COA report issued in September 2013 and direct GOCCs covered in the report to respond to the items pertaining to them.

GCG HAS NOT APPROVED ANY INCREASE IN COMPENSATION

We first like to cover various press statements to the effect that GCG has granted or approved generous compensation packages and bonuses for GOCC directors, officers and rank-and-file employees.

Apart from putting into effect the Performance-Based Bonus (PBB) for officers and employees directed by the President under E.O. No. 80, s. 2012, and the grant of Performance-Based Incentives (PBI) for Appointive Directors pursuant to E.O. No. 24, s. 2011, GCG has not granted or authorized, much less has it recommended to the President, any increase in the rates of compensation, bonuses, allowances, and other benefits within the GOCC Sector. In fact, it has consistently denied various applications made for such increase in rates, including those that resulted from collective bargaining processes. Such position is in line with the moratorium on any such increases provided by the President in E.O. No. 7.

GENERAL FRAMEWORK

Our evaluation of the items found in the COA report shows that since September 2010, no increases or new benefits were authorized within the GOCC Sector as a result of President Aquino’s E.O. No. 7 mandating a moratorium on increases in salaries, allowances, incentives and other benefits within the GOCC Sector, unless specifically authorized by the President himself.

Therefore, the bulk of the COA-reported unauthorized allowances, bonuses and benefits amounting to P2.313 billion granted to 30 GOCCs relate to practices or existing rates that were carried over from the previous administration, and were therefore inherited by the GOCC Governing Boards appointed by the current Administration.

The current GOCC Boards were confronted with a basic dilemma on how to discontinue the grant of the unauthorized salaries, benefits and bonuses of their officers and employees without disrupting public service. This situation was further exacerbated in a number of cases where the legal positions taken on the grants were contrary to the COA position.

When the GCG was constituted in October 2011, the work that it had to undertake in this area was to sort out the legal issues involved such as the claim of employees for non-diminution of benefits granted, resolution of the alleged fiscal autonomy that Governing Boards had over their compensation framework of their officers and employees, and firming up the proper application of the doctrine of good faith that favors non-restitution on the part of employees.

The COA report was issued in September 2013, when such issues were still in the process of being individually sorted out by GOCCs with COA. We note that there is not a single final notice of disallowance covered in the COA report.

Although no final notice of disallowance has yet been issued against the GOCCs mentioned in the report, GCG required all GOCCs in their 2013 Performance Agreements to submit concrete and time-bound action plans for addressing audit observations from COA in order that the fitness of the members of the Governing Boards may already be evaluated.

INDIVIDUAL GOCC EVALUATION

We will now proceed to address in brief the points raised in the news article, our evaluation of the COA report, as well as the responses we have received from the GOCCs and we affirm.

1. Philippine Health Insurance Corporation (PhilHealth)

The news report identified the unauthorized grant to be P1.45 billion, but our reading of the COA report indicates that it is a higher figure of P1.6 Billion, which covered increases in salaries, allowances and benefits pursuant to a formal resolution adopted by the PhilHealth Board.

A notice of disallowance was issued by COA, on the ground that such increases were done without presidential approval. The matter is under appeal on the ground that the PhilHealth Charter (R.A. No. 7875) grants to its Board the power to provide for a compensation framework.

PhilHealth has actually presented lately documents providing for presidential approval in the past administration to exercise autonomy in determining their compensation framework, which were also presented to COA. PhilHealth President, Atty. Alex Padilla, has issued a press statement that they will defend such legal position all the way to the Supreme Court.

We take this opportunity to deny the press statements to the effect that GCG has approved the increases in the rates of compensation, bonuses and allowances for PhilHealth officers and employees. Pursuant to the moratorium mandated under E.O. No. 7, it is not within the authority of GCG to approve any increase in the rates of compensation, bonuses and allowances on its own.

Under the circumstances, GCG is duty-bound to await the final decision of the courts on the matter.

2. Development Bank of the Philippines (DBP)

The news report that P216.801 million is consistent with the figure appearing in the COA report and covered by an Audit Observation. The amount actually pertained to the 2012 PBB, which according to the COA report does not follow the formula provided in GCG’s Memorandum Circular (GCG MC No. 2012-11).

DBP had an OP approved compensation framework that provided for a performance-based incentive system. The records will show that the GCG had in fact confirmed the grant. We had therefore directed the DBP Governing Board to resolve the matter with COA.

3. Philippine Charity Sweepstakes Office (PCSO)

The news report of P54.829 million actually refers to two figures in the COA report: P51.85 million pertaining to the grant of weekly draw allowances and Cost of Living Allowances to the Officers and Employees, and P2.53 million pertaining to salaries, allowances and benefits received by the Board contrary to E.O. No. 24.

The grants were actually a carry-over from the practices under the previous administration, and for which GCG had in fact refused to issue a post facto clearance. The records indicate that PCSO has appealed the COA Notice of Disallowance.

GCG respects the position of the COA on the matter, and that in fact it had denied the grant of PBI to the Board for 2012 for failing to comply with the Notice of Disallowance.

4. Home Development Mutual Fund (Pag-IBIG)

The news report of P37.636 Million pertains to the payment of the Early Retirement Incentive Plan (ERIP), which is contrary to the COA report that lumps it into the compensation bonuses and benefits received by Pag-IBIG officers and employees.

Although the ERIP was granted prior to the constitution of the GCG, we do confirm that it may constitute a valid separation package for officers and employees who are affected by a reorganization undertaken by a government agency.

Pag-IBIG’s management has been instructed to sort out and resolve the matter with COA.

5. Development Academy of the Philippines (DAP)

The news item amount of P23.838 million does not appear anywhere in the COA report, and instead, what appears therein is COA’s observation that certain positions filled-up by DAP were not the ones authorized by DBM in their plantilla.

DAP President Antonio Kalaw confirms that they have not received any COA audit observation, much less a notice of disallowance, for any unauthorized bonuses or allowances.

6. Philippine National Oil Company – Exploration Corp. (PNOC-EC)

The news item amount of P14.518 million pertains to the grant in 2012 of Performance Incentive Pay (PIP) to employees, and gasoline allowance to incumbent managers. The COA report states that the PIP granted since 2007 were in violation of Administrative Order No. 103, s. 2004, and Memorandum Order No. 20, s. 2001, which were austerity measures adopted for the government sector.

GCG denied the request of PNOC-EC to recommend post facto approval of the benefits, pursuant to the Commission’s policy not to grant requests for ex post facto approval from GOCCs.

7. Mactan Cebu International Airport Authority (MCIAA)

The news item amount of P14.406 million pertains to the release of 2011 CNA benefits, notwithstanding the absence of a duly approved CNA and non-compliance of the other requisites in the grant of the same.

GCG confirms that the grant of CNA incentives should be deferred until full compliance with the requirements for its release.

8. GOCCs Without News Item Amounts

The following GOCCs were included in the news report without specification of the amounts involved. Our verification confirms the following: 

  • Bases Conversion and Development Authority (BCDA)
  • Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
  • Veterans Federation of the Philippines (VFP)

For BCDA, TIEZA and VFP, there were no amounts in the COA report, and they confirmed that none of them are aware of any audit observation, much less have received a notice from disallowance from COA referring to compensation, bonuses or allowances.

GCG has directed their Governing Boards to clarify the matter with COA.

9. Civil Aviation Authority of the Philippines (CAAP)

The COA report indicates an amount of P125.092 million pertaining to the payment of performance enhancement allowances for CAAP officers and employees in 2012.

The grant was covered by a CAAP board resolution without the legally-required presidential approval. In their Performance Agreement with GCG, the CAAP Board was bound to undertake concrete and time-bound action plans to address COA audit observations.

10. Clark International Airport Corporation (CIAC)

The COA reports an amount of P1.212 million covering insurance premiums for medical coverage for 2012 – 2013. CIAC is asserting that it has been giving this group life insurance since 2002 and it forms part of their CBA. CIAC has appealed this audit observation with COA.

In their Performance Agreement with GCG, the CIAC Board was bound to undertake concrete and time-bound action plans to address COA audit observations.

11. Human Settlements Development Corporation (HSDC)

The COA report figure of P8.713 million pertains to the grant of rice subsidy, employees’ loans, financial assistance, and other allowances to officers and employees, effected without formal presidential approval.

By reason of the Notice of Disallowance, the management instructed all employees to refund the amounts received by them. Incidentally, HSDC has been approved for dissolution by the President.

12. National Dairy Authority (NDA)

The COA reports an amount of P7.279 million pertaining to the payment of Healthcard insurance and Christmas giveaways to officers and employees in 2012.

NDA Management confirmed that COA has issued a Notice of Suspension for the issuance of Healthcards to its officers and employees amounting to approximately P58,000 each. NDA has explained the matter to COA and the reply is being awaited.

It should be noted that, in the Performance Agreement signed with NDA, it was stipulated that that NDA must submit and execute concrete and time-bound action plans to address the observations of COA.

13. National Development Company (NDC)

The COA reports an amount of P1.37 million pertaining to the grant of corporate package to officers and employees and P614,000 pertaining to the grant of CNA incentives without legal bases.

NDC Management says that the amounts pertained to reorganizations effected in 2003, and that they are currently retrieving supporting documents from their archives to justify the legality of the grants.

14. Batangas Land Corporation , Inc

The COA reports an amount of P16 million under the item on unauthorized compensation, bonuses and allowances for Batangas Land Corporation, which is a land-holding company of NDC and does not maintain regular employees. Our verification of its 2012 audited financial statements do not indicate any COA observation.

15. NDC-Philippine Infrastructure Corporation

The COA reports an amount of P30,000 but with no observation or comment on what it pertains to. Since NDC-PIC is a non-operational company, we have directed NDC as the mother company to coordinate with COA on the matter.

16. Manila Gas Corporation

The COA reports an amount of P281,000 pertaining to purchase of 25 Skagen watches for the centennial anniversary and 10 Landbank gift checks in the amount of P10,000 each and other Christmas expenses. Manila Gas has been formally dissolved with the expiration of its term last September 2012. Part of the dissolution process is the turn-over of findings to the proper investigating authorities when warranted.