MANILA, Philippines?Officials of the Social Security System (SSS) sitting on the boards of private companies are barred from pocketing bonuses and profit share given by these firms, the legal department of the state-run pension fund said.

?The SSS-nominated director is precluded from receiving and appropriating for himself the proceeds of a profit-sharing scheme and/or the grant of bonus by the company where he is appointed as the said share and/or bonus also partake the nature of compensation,? Joselito Vivit, manager of the SSS legal department, said in a memorandum.

The three-page memorandum, a copy of which was obtained by the Inquirer, was addressed to Rizaldy Capulong, vice president for the SSS capital markets division, who had sought legal opinion on the ?appropriate practice and policy? on the matter.

The memo was dated July 1?or more than three weeks before no less than President Benigno Aquino III made the questionable practice public in his State of the Nation Address.

The issue ostensibly covered the likes of former SSS president Romulo Neri, ex-chair Thelmo Cunanan and ex-commissioner Sergio Apostol, who all got a combined amount of P46.3 million in director?s fees by sitting on the board of Union Bank in 2009 alone. In addition, each of the three officers received P15.4 million in profit share from Union Bank.

Vivit cited a Supreme Court ruling covering ex-officio officials, a setup not unrelated to the case of SSS officials on the boards of private corporations where the pension fund has investments.

?The ex-officio position being actually and in legal contemplation part of the principal office, it follows that the official concerned has no right to receive additional compensation for his services in the said position,? he quoted the high court as saying.

?The reason is that these services are already paid for and covered by the compensation attached to his principal office,? the Supreme Court said.

Prohibited by law

The high tribunal added: ?By whatever name it is designated, such additional compensation is prohibited by the Constitution.?

Vivit said Section 54 of the Government Accounting and Auditing Manual (GAAM) also included a related prohibition.

?Except as may otherwise be specifically provided by law or competent authority,? it said, ?all moneys and property officially received by the public officer in any capacity or upon any occasion must be accounted for as government funds and government property.?

Government fund

Going by the GAAM, Vivit said an SSS official on a private company?s board ?must account for whatever money he received in his capacity as director of the company since the money is considered a government fund.?

?Hence, the director must necessarily remit the same to the SSS,? he pointed out, way before Cunanan and company?s enormous compensations were made public.

At Philex Mining Corp., Cunanan, Neri and two other SSS officials received a total of P127.4 million in bonuses and compensation, the bulk of which came after they exercised their stock options in the firm in the last three years.

Cunanan alone collected P66.6 million from stock options from 2007 to 2010. But he later clarified that he got only P15.3 million. He said he had used his own money to purchase the stocks made available to him.

Vivit pointed out that a ?public officer?s designation or nomination to the company as director is only due to his being an SSS official and not because of his ownership of any share of stocks in the company.?

?He is merely representing the interest of the SSS as an institutional investor,? Vivit said. ?He cannot appropriate the money he receives from the company as the same is government fund.?