COA: Customs men received too much in overtime pay

Bureau of Customs personnel assigned to Duty Free Philippines Corporation received excessive overtime pay in 2010, as well as other allowances which government employees are not entitled to, the Commission on Audit (COA) said.

The COA pointed out that a Department of Budget and Management (DBM) circular states that overtime pay must not exceed 50 percent of an employee’s annual salary.

But it was found that the overtime work rendered by customs employees often exceeded this limit. For instance, a duty collector at the Fiestamall Store had 1,944 total working hours for 2010, but rendered 3,960 hours of overtime work. This worker’s overtime pay amounted to P328,680, which was more than half his annual basic salary of P534,924.

A customs guard who worked overtime for 3,580 hours received total overtime pay of P236,280, which was even more than the employee’s annual basic salary of P210,228.

The customs employees who worked overtime on transactions involving duty-free merchandise also received meal and transportation allowances, which they were also not entitled to, the  COA noted.

In all, the irregular disbursements for BOC personnel at Duty Free amounted to P16.75 million, it said.

The COA also said some of the overtime pay should have been shouldered by the private concessionaires and not the government.

In response to COA’s findings, Duty Free said that it would implement the DBM circular on overtime services for transactions involving its merchandise.

It would also adopt a mechanism to allocate overtime costs for public workers to private concessionaires.

In its 2010 report on Duty Free Philippines, the audit agency said Duty Free should follow the DBM circular that computes overtime pay at hourly rates based on actual salary, and not the customs administrative order that computes overtime pay at hourly rates based on the employee’s position.

The COA noted that the receipt and transfer of merchandise for which the customs employees worked overtime concerned items on concession.

Given this, it was the opinion of the COA that the concessionaires should have shouldered the overtime pay. Duty Free could have saved P33.829 million by doing so, it added.

“We believe that overtime pay attributed to the merchandise of the concessionaire should be borne by them as the expense is a component of the storage and warehousing expenses of DFPC,” it said.

It said that under Duty Free’s standards on supply and delivery of merchandise, the supplier should shoulder all other costs pertaining to the delivery of merchandise covered by the purchase order to the selling area. The concessionaires supply and delivery agreement with Duty Free states that the concessionaire should commit to adhere to Duty Free’s operating standards.

It noted that since Duty Free does not have the practice of allocating overtime pay, there is no mechanism in place to apportion the overtime pay among the concessionaires.

The COA also noted that a customs circular allowed its personnel to collect meal and traveling allowances, which are not allowed by the DBM.

It said Duty Free, a government corporation should follow the DBM circular on overtime pay.

It said Duty Free should also consider the annual savings that it could get in following the DBM circular and getting concessionaires to pay for their portion of overtime services. The savings could be used for expansion projects, it added.