Unauthorized GOCC bonuses? Blame Arroyo

Natashya Gutierrez

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The Governance Commission for GOCCs says it has not approved any increases in benefits or bonuses since September 2010 and most releases of GOCCs have legal basis

LEGAL? PhilHealth is accused of unauthorized releases of bonuses, benefits and allowances but GCG Chairman Cesar Villanueva says it has the legal basis to do so. PhilHealth logo

MANILA, Philippines – Unauthorized bonuses for government-owned and controlled companies (GOCCs)? Blame the past administration.

Following a Commission on Audit (COA) report which alleged 31 GOCCs granted unauthorized allowances, bonuses and benefits amounting to P2.3 billion, the Governance Commission for GOCCs (GCG) clarified that news reports claiming the GCG approved the generous compensation packages were “at the very least inaccurate.”

The GCG is an oversight and policymaking body in charge of GOCCs, created in October 2011 following controversies over hefty bonuses received by GOCC officials in the past administration.

At a Palace briefing on Friday, January 17, GCG Chairman Cesar Villanueva explained the GCG has not approved any increases in benefits or bonuses since 2010 after President Benigno Aquino III assumed office, but that most of the bonuses released still have a legal basis – as set during the Arroyo administration.

“We have reviewed again the COA report. We have evaluated the individual responses of the GOCCs covered….Our evaluation shows that since September 2010, no increases on new benefits were authorized within the GOCC sector as a result of President Aquino’s EO 7 mandating a moratorium on increases in salaries, allowances, incentives and other benefits within the GOCC sector saved in instances only when the President has authorized it himself and this would be covered the PBB (performance-based bonuses) and PBI (performance-based initiatives),” he said.

He added, “Therefore, the bulk of the COA reported unauthorized allowances, bonuses and benefits…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.”

Villanueva explained that for GOCCs such as PhilHealth, which the COA report said reached P1.6 billion in unauthorized grants, former President Gloria Macapagal-Arroyo had given the board autonomy to determine their compensation framework. Hence its bonuses – despite not being approved by GCG – had legal basis.

Whether these were excessive or not, he said, was another issue altogether.

COA report flaws

He said the GCG “stands by and respects the position of COA” and has refused to give clearances to those GOCCs that had received COA notices or those continuing with the compensation framework they had, but applied for the 2012 PBB and PBI.

“Because according to the COA, they already had notice of disallowances of incentives that they had. And the Executive Order of the President institutionalizing the PBB already said that you cannot have two performance based incentive,” he explained.

The GCG’s decision to clear these GOCCs, he said, is “why COA is able to report them.” GOCCs not approved by the GCG run the risk of receiving a notice of disallowance.

Yet despite its support for COA, Villanueva explained flaws in the commission’s document, saying when the COA report was issued in September 2013, many of the issues “were still in the process of being individually sorted out by the GOCCs with COA.”

He also mentioned other problems that skewed the results including a delay in some of the documentation, notices of disallowance that were still under appeal, and flat-out inaccuracies, citing 3 GOCCs – BCDA, TIEZA , or Tourism Infrastructure and Enterprise Zone Authority, and Veterans’ Federation of the Philippines – which were not itemized in the report.

“There is no amount in the COA report [for these 3 GOCCs]. So we instructed all of them to sit down with their COA resident auditor and ask why they are in the COA report in spite of the fact that it does not contain any item or any audit observation at all,” he said.

Non-diminution problem

While the bulk of the bonuses, benefits and allowances released may have legal basis however, concerns over the excessive amounts of these is yet another concern.

If GOCCs then have a legal basis for what many feel may be excessive bonuses, what can the GCG do?

Villanueva explained the GCG has been studying rates and the “proper mix of compensation and performance incentive” in order to come up with a compensation framework GOCCs can follow. But because of a non-diminution of benefits rule, Villanueva admitted the benefits and bonuses that have continued over from the Arroyo administration can no longer be decreased for those currently in position.

The best that can happen, he explained, is that when the posts are vacated and occupied by new people, that is only when the new compensation as dictated by the current government can be applied.

“The [GOCCs] cannot just go in and say, ‘We will decrease your pay. Your salary that you’ve been receiving and the benefits that you’re been receiving for six years, we will deduct.’ They’d find themselves criminally liable when you start to take deduct from payroll without their consent or without a legal basis,” he said.

“But these are recurring items. Because when a mistake is made in the past, it doesn’t mean that just because there’s a new administration, the legal repercussions of that don’t [roll over] — they will continue to reverberate. That’s why we’re very careful and make sure that this doesn’t reverberate because it has to be fixed well.”

He also said that for those found to have no legal basis for the release of their bonuses, COA can demand them to pay the money back.

Aside from discontinuing the GOCCs’ practices on unlawful stipends, COA also wants the GOCCs to reimburse the government for a total of P2,313,486,000. – Rappler.com

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Natashya Gutierrez

Natashya is President of Rappler. Among the pioneers of Rappler, she is an award-winning multimedia journalist and was also former editor-in-chief of Vice News Asia-Pacific. Gutierrez was named one of the World Economic Forum’s Young Global Leaders for 2023.