COMMENT: Repulsive! Let There Be Sense (3)

III. The Acid Test (2)

GENERAL SANTOS CITY (MindaNews / 29 January) – The COA has reported the payments by 31 GOCCs and GFIs to their board directors or trustees without presidential authority and legal basis for per diems, bonuses, etc. in 2012 to the tune of P2.313 billion. The auditors obviously factored in their examinations provisions of EO No. 7, EO No. 24 and R.A. No. 10149.

The GOCCs and GFIs are contesting the COA report and order to refund. From their statements in media reports, it appears that the P2.313 billion was paid to all officials and employees – not just to the board directors and trustees – with authority from the GCG (Governance Commission on GOCCs), the President and legal instruments other that EO No. 24 and R.A. No. 10149.

Did the COA err? Were the payments aboveboard as claimed? What does the GCG – the body created to “oversee” the implementation of R.A. No. 10149 and pertinent provisions of EO No. 24 – say?


Were the per diems, bonuses, and other benefits above board as some GOCCs and GFIs are contending? The GCG, the final arbiter, is ambivalent and evasive as seen in the statements of two GCG top officials in four reports: Philippine Daily Inquirer, January 16, 2014: GOCCs defend P2.3B bonuses for employees (PDI-1-16-14); Philippine Daily Inquirer, January 18, 2014: GOCC oversight body washes hands of bonuses (PDI-1-18-14); The Philippine Star, January 18, 2014: Governance body can’t scrutinize GOCC funds (Star-1-18-14); and, The Philippine Star, January 20, 2014: GOCCs urged: Settle bonus issue with COA (Star-1-20-14).

Lawyer Paolo Salvosa (PDI-1-16-14), GCG spokesperson, said the order of the COA to refund questionable bonuses and allowances was based on a four-month-old COA report and that the COA had not issued a final notice of disallowance to 31 GOCCs. GCG Chair Cesar Villanueva also noted the same when interviewed by The Philippine Star. Were they saying that the COA report and order were flawed and the GOCCs [and GFIs] can take it easy?

And he said, too: (1) the GOCCs had amply explained to the COA the bonuses and allowances; (2) all the GOCCs mentioned have been directed to submit to the GCG a concrete response and reply thereto within the next 24 hours; (3) the amounts in the report covered various items that were already being granted without legal basis before the Aquino administration came in 2010. By (1) and (2), did he mean that “proper actions” had been taken”? If so, are those enough?

Statement (3) admitted “illegality” but, having been the practice in the past, it can’t be blamed on the Aquino administration. This is image-shielding, kin of hand-washing! Every Filipino knows the practice and expects the GCG to show what it has done and to tell what more it will do – in particular with the COA order – to cleanse government of the dirt as mandated.

GCG Chair Cesar Villanueva had intriguing statements:

1. In (PDI-1-18-14): He parried reports that “fat bonuses and excessive allowances … in certain … GOCCs may have continued unnoticed by President Benigno Aquino III despite the creation of the … GCG in 2011” by insisting that “his office had nothing to do with the ‘unauthorized allowances, bonuses and benefits amounting to P2.313 billion’ granted to certain GOCCs in 2012, which had been disallowed by the Commission on Audit”.

Correct! GCG did not authorize the P2.313 billion payments. But GCG failed to preempt the unauthorized payments despite its vast powers as the central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies” intended for the promotion of “financial viability and fiscal discipline” in the GOCCs and GFIs. Sleeping on its job! Unbelievable, too! ow HHHhmmmHow could it be monitoring without discovering the intention to commit the scandal?


2. He apparently believes, as GCG head, he is powerless to undo the time-honored principle in both public and private sectors – the nondiminution of benefits. On top of that “certain GOCCs under the Aquino administration were still following a compensation framework including bonuses and allowances that was approved by the previous Arroyo administration.”

Unbelievable! IF GCD is that powerless, what is it for? Yes! There is that principle. R.A. No. 10149 (Chapter III, Section 11) upholds this for salaries only. May it apply to benefits? What if the benefits are excessive, unconscionable? President Aquino III denounced these benefits in his first SONA.

3. The bonuses are not salary increases. The GCG was not a lame duck commission for having no power to stop the grant of these bonuses, much less reverse an authorization issued by a previous president for the grant of new benefits. The GCG has not granted any increase in bonuses or new benefits for GOCC personnel.

Why the disclaimer?

Yet, he asserted: “Many of the GOCCs must come to us in order to avoid … receiving a notice of disallowance from the COA (which) usually means that they have to restitute. … They come to us to ask for authorization [to grant benefits under the Arroyo dispensation] so that they can get a clearance from the COA. We never grant it. That’s why the COA keeps on reporting it,”

Apparently, this is what he is saying: GCG is not a lame duck. GOCCs and GFIs need GCG for clearances under RA No. 10149 which GCG issues – but never clearances for benefits under the Arroyo dispensation. Still some GOCCs and GFIs pay banned benefits under cover of authentic GCG permits. So, they get in trouble with the COA.

The acid test: The COA has done its share of reporting the violations of EO No. 24 and R.A. No. 10149. Will the GCG do its mandate to discipline the erring GOCCs and GFIs?

4. In (Star-1-18-14), Villanueva admitted GCG’s hands are tied when it comes to fund disbursements of state-run financial institutions; …there’s no way that we can manage (GOCCs’) cash; … we can’t check on their cash, their checks before they release them; … if we do that, then their respective governing boards will be rendered inutile”. He emphasized, “GOCCs are run by their respective governing boards that have their own set of rules.”

Is GCG being asked to do that? That is not among its mandates. But if it does well the following – one of its vast powers: “Conduct periodic study, examination, evaluation and assessment of the performance of the GOCCs, receive, and in appropriate cases, require reports on the operations and management of the GOCCs including, but not limited to, the management of the assets and finances of the GOCCs(Chapter II, Section 5.g), [Emphasis supplied] it should be able to rid the government of the bonus scandal.

This is relevant to his clarification: GCG’s task is only to provide a benchmark for the emoluments of GOCC officials and employees to avoid excesses of perks like in past administrations.” GCG must be vigilant over that benchmark GCG through its power under Section 5.g. Corollary to that power is the prosecution of the violators.

5. While admitting GCG’s powerlessness, he also touted its powers: “When they don’t get a clearance they now face personal, criminal and administrative sanction.” The Star interpreted this to mean: “State-run institutions cannot pull a fast one on (the GCG) because they (GOCCs and GFIs) have to seek clearance before venturing into anything, aside from the fact that Aquino appointees know the new policy regarding fat bonuses.” Powerless, yet powerful!

6. In (Star-1-20-14), Villanueva advised the beleaguered GOCCs and GFIs to settle their problems with the COA, particularly DBP and the Home Development Mutual Fund (Pag-IBIG). Is this in line with the disciplinary function of GCG?

In reference to DBP, The Star reported: “As it turned out, the state-owned bank obtained ‘approval from the Office of the President’ on the compensation framework that provided for a performance-based incentive system.” And quoted Villanueva: “The records will show that the GCG had in fact confirmed the grant.”

Does this performance-based incentive system” refer to that approved by President Arroyo? If so, the Aquino III office and GCG honored the GMA authorization which should have been deemed repealed by EO 24. If referring to that under Aquino III, what did DBP violate?

According to COA, DBP exceeded by P216 million its allowable expenses. If so, what is there for DBP to settle with COA? DBP is answerable to GCG. Is GCG suggesting COA could have erred?

The case of Pag-IBIG is different. The P37.6 million COA directed the agency to return had been paid to its employees under its early retirement incentive plan (ERIP) which Pag-IBIG said was aboveboard. Villanueva thinks ERIP may be valid.

Instead of hand-washing and advising the 31 GOCCs and GFIs to settle with the COA, GCG should have investigated them and imposed sanctions where necessary. That would have been a warning to beware – GCG’s teeth are real! It was too mild just to tell them to submit reports.

The Burden

The President through the GCG with assistance from the COA carries the burden of ridding the country of the scandalous grants of benefits by GOCCs and GFIs to their officials and employees – particularly, to their board directors and board trustees – sanctioned by previous presidents. The President sets the standards, mechanisms and regulations; the COA audits. From the COA reports, the GCG determines the state of the burden and the actions to take.

Within the first year of the present presidency, the EO No. 7, EO No. 24 and R.A. No. 10149 were instituted as the laws to fight the scandal. These are the only laws that will govern the operations of the GOCCs and GFIs. R.A. 10149 made this very clear in:

“SEC. 32. Repealing Clause. – The charters of the GOCCs under existing laws and all other laws, executive orders including Executive Order No. 323, Series of 2000, administrative orders, rules, regulations, decrees and other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby revoked, repealed or modified accordingly.”

Yet, the COA audit shows that as of 2012 the monster was still very much alive – in that year, P2.313 billion was found to have been paid in benefits without authority, etc. The COA ordered a refund according to Section 24 of R.A. No. 10149. Under the same section, the legal sanction will apply upon failure by the GOCCs and GFIs to make restitution 30 days after receiving the order.

How did Government and the GCG take the COA report and order in the light the “only laws”?

As seen above, the GCG did not act; it only reacted and the reaction was unsatisfactory. President Aquino III did not act either; his reaction, as cited in one report, was that of an acknowledgment that corruption still existed in the government. He should have acted strongly and decisively.

The Palace communication team said: Palace puts P3M cap on GOCC execs’ pay, benefits (PDI-1-23-14) – lifted from EO No.24 and rehashing media reports; “Palace tosses GOCC bonus issue to courts” (Star-1-19-14) – rehashing PhilHealth’s press statement. Evidently, the Palace was caught by surprise; hence, the clumsy reactions.

From the Congress: “House bill revives move to limit GOCC perks” (GMANews 1-17-14) – Eastern Samar Rep. Ben Evardone’s House Bill 3683, also published in The Philippine Star of the same date; House to probe excessive allowances for GOCC execs” (Star-1-21-14) – to come up with guidelines for compensating executives of GOCCs. How the House leadership and members have forgotten that in 2011 they passed R.A. 10149! Are they going to amend this law because the Palace has not implemented it with strong determination?

The COA report and order is the acid test the GCG has failed. Will President Aquino III be able to slay for good the monster of scandalous GOCC and GFI benefits before he steps down on June 30, 2016?

(“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