I. GOCCs/GFIs Ordered
GENERAL SANTOS CITY (MindaNews / 22 January 22) – President Benigno Simeon C. Aquino III opened his first State of the Nation Address in July 2010, with a revelation of empty coffers and of the abuse of public money by his immediate predecessor, President Gloria Macapagal-Arroyo. He used the excessive bonuses and allowances at the MWSS (Metropolitan Waterworks and Sewerage System) to illustrate how high government officials enriched themselves at the sacrifice of public welfare.
The abuse of MWSS funds was repulsive. People in Metro Manila were short of water; MWSS retirees were unpaid; but the officials and employees, especially the board trustees, were awash in salaries, per diems, bonuses, allowances and other perks. Of the ordinary workforce, the President said: “The average worker receives up to 13th month pay plus a cash gift. In the MWSS, they receive the equivalent of over thirty months pay if you include all their additional bonuses and allowances.”
The abuse of the “board of trustees is even more shocking”, the President reported. “All in all, each member of the board receives two and a half million pesos a year exclusive of car service, technical assistance, and loans. Let me repeat. They award themselves all of these while being in arrears for the pensions of their retired employees.”
This practice, true in different extents to all Government-Owned and -Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), was among the objects of the Aquino III government’s campaign to stop corruption under his daang matuwid (straight path) policy. Within a year three remedial measures – embodied in Executive Orders 7 and 24 and RA 10149 – were instituted.
- Executive Order No. 7 – Directing the Rationalization of the Compensation and Position Classification System in the Government-Owned and -Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), and for Other Purposes – was issued on September 10, 2010. It created the Task Force on Corporate Compensation to oversee the implementation of the Oder.
- Executive Order No. 24 – Prescribing Rules to Govern Compensation of Members of the Board of Directors/Trustees in Government-Owned or -Controlled Corporations including Government Financial Institutions – was issued on February 10, 2011. This is the regulatory instrument of the GCG which RA No. 10149 later created.
- · Republic Act No. 10149 – An Act to Promote Financial Viability and Fiscal Discipline in Government-Owned or -Controlled Corporations and to Strengthen the Role of the State in its Governance and Management to Make Them More Responsive to the Needs of Public Interest and for Other Purposes – was signed by the President on June 6, 2011. To implement the law, it created the Governance Commission on GOCCs which was constituted on October 20, 2011.
Has the Aquino III government been able to stop the exorbitant and lavish per diems, bonuses, allowances and other perks in GOCCs and GFIs?
31 GOCCs/GFIs Ordered
Evidently, for all the “daang matuwid” hyping and the measures put in place, the Aquino III government has failed to. The Commission on Audit (COA) found that 31 GOCCs and GFIs in 2012 paid out bonuses and allowances totaling P2.313 billion the payment of which it deemed unauthorized – “without or in excess of legal basis or proper authority”. The COA ordered the officials and employees of the GOCCs and GFIs to refund the government all that had been paid to them. (Philippine Daily Inquirer, January 15, 2014; Return bonuses, gov’t execs told; COA issues order to 31 GOCCs)
The top 10 with what they have to refund: (1) Philippine Health Insurance Corp. (PhilHealth), P1,651,084,000; (2) Development Bank of the Philippines (DBP), P216,801,000; (3) Region 7 water districts, P186,584,000; (4) Philippine Charity Sweepstakes Office, P54,829,000; (5) Philippine Economic Zone Authority, P48,500,000; (6) Home Development Mutual Fund, P37,636,000; (7) Butuan City Water District, P28,243,000; (8) Development Academy of the Philippines, P23,838,000; (9) Philippine National Oil Co. Exploration Corp., P14,518,000; (10) Mactan-Cebu International Airport Authority, P14,406,000.
Besides using its long-established auditing system, COA must have referred to EO 7 and EO 24 which were in operation in 2012 in auditing the GOCCs and GFIs. From media reports, it can be inferred that these had either been ignored or circumvented. For instance DBP had been granted authority to allocate P224.228 million for personal service expenditures but COA found it to have spent P2.501 billion – overspending by P2.276772 billion, of which P216.801 million it had paid for per diems, bonuses, etc.
PhilHealth invoked a 2007 directive which should have been repealed by RA 10149. From other reports, it is inferred that besides the P2.313 billion, there were other unauthorized payments of bonuses, allowances, etc. in previous years reported – as far back as 2001. Long enjoyed, the benefits – by an established doctrine – are claimed to be immutable.
Expect much of the same in 2013 when COA posts its report on its website in 2015.
The liberality of PhilHealth over its funds is repulsive. It is a service-centered institution funded with subsidy from the government and membership contributions for the health insurance of its members – indigents, low-salaried, small-time earners. Primarily, it is tasked to manage its funds and to regulate the dispensation of health benefits. Incidentally, it is allowed to invest part of its excess funds as provided in Sec. 27 of RA 7875, the PhilHealth Law.
The COA ruled that “PhilHealth is fiduciary in nature … a trust fund intended for the welfare and benefit of the members who pay contributions in exchange for the entitlement to healthcare benefits”. As such, it “is legally bound to manage the fund in a responsible and productive manner, and is under an absolute obligation to act for the benefit of the beneficiaries. Charging the trust fund with illegal and unreasonable fees is a betrayal of that trust and confidence reposed by the members to the petitioner”. (Philippine Daily Inquirer, January 18, 2014: COA rejects PhilHealth plea on P88-M bonuses, says it’s grave abuse of authority)
This ruling is obviously pursuant to Sec. 27 of RA 7875 providing that funds in excess of the actual reserve for two-year projected expenditures should be used (a) to increase benefits of members or (b) to decrease contributions of members. The Corporation has a maximum limit of 12 percent of its funds and three percent of earnings from investments for its operational expenses including salaries, per diems, bonuses, etc.
Could it be that the P1.6 billion “unauthorized payments” were within the legal limit? If so, the Corporation must be earning windfalls from its investments. If so, benefits of members should have been increased and more indigents beyond the capacity of government to subsidize should have been enrolled – not a reason for the board trustees to justify their scandalous benefits as well as those of other officials and employees.
Who Can Disagree?
In his column article, “Even if legal, GOCC bonuses are immoral” (As I See It, Philippine Daily Inquirer, January 17, 2014), Neal H. Cruz deplored the COA exposé:
First: As a common public knowledge: “Actually, we do not need the Commission on Audit to tell us that the officials of government-owned and -controlled corporations (GOCCs) abused their authority by giving themselves lavish bonuses.”
Second: As unconscionable: “Imagine, these officials gave themselves million-peso bonuses when the ordinary Filipino, who pays the premiums that the GOCCs spend, can hardly make both ends meet from the salary that he receives. To make matters worse, some of these GOCCs, like the Social Security System and Philhealth, are increasing the premiums that their members have to pay without increasing their benefits. It is the officials who get all the benefits.”
Third: As ironic: “Consider the irony. The topnotcher among the 31 GOCCs mentioned by the COA is Philhealth. It paid P1.651 billion in bonuses in 2012. Yet it gives only a pittance to members who get sick. And Philhealth has the longest justification for the extravagant bonuses. SSS officials got million-peso bonuses, but it pays members, who spent almost a lifetime paying SSS premiums, retirement benefits they cannot survive on.”
To second Cruz: The SSS should have long adjusted pensions according to inflation since it has the money earned by investing the contributions of the members.
Cruz has only recapitulated the common knowledge – feeding the cynics. President Aquino III denounced the scandalous practice during the Arroyo regime – the monster of insatiable rapacity from past governments. As the COA had found out four years into the Aquino III administration, the monster only had contempt for the daang matuwid.
It appears that the Aquino III government officials concerned cannot put their acts together and may compromise legality to keep the peace and save face. Cruz’s question in reference to the scandalous payments is crucial: “But what about their morality? Is it moral to pay officials extravagant bonuses when members who pay the premiums get peanuts in benefits? Is it moral to tell members to pay higher premiums when officials give themselves million-peso bonuses?”
There are many Cruzes in the Philippines today. Who can disagree with them? But who in the government really care for morality. In a news report today, PCOO (Communications) Secretary Herminio Coloma admitted that the benefits of the strong economy have not trickled down to the people. Where is the morality there – the investors getting all the manna without even crumbs for the people?
On Acid Test
The GOCCs and GFIs are questioning the COA order and justifying the payments questioned. Philhealth, the most vocal of them all in the media, has given notice it will take its case to the Supreme Court. The COA is firm. The GCG, appearing ambivalent and indecisive, has advised the GOCCs and CFIs to settle the controversy with the COA.
Will President Aquino III succeed in slaying this monster – the scandalous per diems, bonuses, allowances, etc. in the GOCC and GFIs? Will the executives of the GOCCs and GFIs take the daang matuwid or continue regarding it in contempt?
(To Be Concluded)
(“Comment” is Mr. Patricio P. Diaz’ column for MindaViews, the opinion section of MindaNews. The Titus Brandsma Media Awards recently honored Mr. Diaz with a “Lifetime Achievement Award” for his “commitment to education and public information to Mindanawons as Journalist, Educator and Peace Advocate.” You can reach him at email@example.com.)