10 gov’t firms fail to remit P68B in dividends – COA

MANILA, Philippines – Ten government-owned or controlled corporations (GOCCs) have failed to remit or declare dividends amounting to P68.663 billion over a decade, depriving the treasury of its rightful share, state auditors found.

The 2015 annual financial report released by the Commission on Audit (COA) last week showed that, from 2004 to 2014, these GOCCs shortchanged the government through non-declaration, failure to record, failure to remit, or under-remittance of dividends. 

These government firms should have remitted the following amounts to the treasury, but paid much less: 

• Power Sector Assets and Liabilities Management Corporation (Psalm) – P27.279 billion
• Philippine Deposit Insurance Corporation (PDIC) – P23.817 billion
• Philippine Amusement and Gaming Corporation (Pagcor) – P15.401 billion
• National Food Authority (NFA) – P937.602 million
• Philippine Sugar Corporation (Philsucor) – P441.256 million
• Philippine Postal Corporation (PPC) – P356.4 million
• Local Water Utilities Administration (LWUA) – P343.191 million
• Philippine Rice Research Institute (PRRI) – P82.274 million
• Philippine Aerospace Development Corporation (PADC) – P6.84 million
• Civil Aviation Authority of the Philippines (CAAP) – no dividend declared

The 10 GOCCs violated provisions of Republic Act 7656, which requires them to declare their annual income after tax and other deductions, and to remit 50% of their net income to the Bureau of Treasury (BTr). 

How much Psalm, PDIC, Pagcor owe

The top 3 non-remitters were Psalm, PDIC, and Pagcor, according to the 2015 audit report. 

Psalm had a net income of P58.783 billion from from 2004 to 2014. It should have remitted P29.392 billion to the government, but actually paid only P2.113 billion.

PDIC, meanwhile, declared a net income of P12.97 billion from 2004 to 2015, after it excluded “reserves for insurance losses” from its declared earnings. Its reserves for insurance losses totaled P37.305 billion.

Government auditors said that if the reserves for insurance were not excluded from the earnings, PDIC should have paid the BTr dividends of P25.137 billion. Instead, it transmitted only P6.485 billion to the treasury.

“The Dividends Law and its Revised Implementing Rules and Regulations required that the dividend base should be computed by adding back to the net income the amount of reserves,” the COA said.

Pagcor, from 2011 to 2015, under-remitted to the national treasury. It declared an income of only P153,388 billion, based on gaming revenues. It excluded income from “related services,” including collections from concessionaires and foreign exchange totalling P51.924 billion.

However, a June 29, 2015, memorandum by the Office of the General Counsel, COA Legal Services Sector, said that the GOCC Dividends Law does not distinguish what constitutes aggregate gross earnings.

COA said: “Pagcor lacks the authority to make any distinction and must construe the words in its general sense consistent with the principle. Where the law does not distinguish, neither do we distinguish.”

Under-declared incomes

The other agencies on the list under-declared their incomes at different periods over the last 10 years or so.

For example, Philsucor’s “remittance was understated by P441.256 million,” according to COA, because it only remitted P78.36 million. Its audited net income, however, was P1.039 billion, and its 50% was therefore P519.616 million.

PPC, on the other hand, had accumulated P356.4 million in unrecorded and unpaid dividends from 2002 to December 2015. It did not reply to any of the demand letters sent by the Department of Finance (DOF) between June 2015 and March 2016.

LWUA paid the government P680.82 million in dividends from 1998 to 2014, but auditors found that the equivalent of 50% of its net income during the period was P994.011 million. The finance department is still studying the request of LWUA’s management to reduce the back dividends. – Rappler.com