COA to GSIS: ‘Refund P260.5-M illegal incentives to employees’

/ 03:23 PM June 27, 2019
COA to GSIS: 'Refund P260.5-M illegal incentives to employees'

Commission on Audit. (INQUIRER FILE PHOTO)

MANILA, Philippines — The Commission on Audit (COA) has asked the state-run Government Service Insurance System (GSIS) to refund some P260.530 million worth of “illegal” incentives given to 90 percent of its 2,689 employees in 2018.

In its 2018 audit report, the COA said the “GSIS GALING Pagkilala Incentive” worth P100,000 was given to 2,615 employees of the government insurance firm without the required approval of the Office of the President and the Department of Budget and Management. 


This move, COA said, is in violation of Sections 5 and 6 of Presidential Decree No. 1597, Section 9 of Joint Resolution No. 4 s. 2009, and Section 12 of Republic Act No. 6758, as amended, or the Salary Standardization Law.

“These resulted in both illegal expenditure and erroneous computation of incentives which are not allowed in audit,” the COA said, despite acknowledging that the incentive was aimed to “encourage creativity, innovativeness, efficiency, integrity, and productivity in the public service.”


The COA then said it would “disallow” this and ask for a refund of the incentive if GSIS would not secure the requisite recommendation and approval from the DBM and the President.

The GSIS management “invoked that they were in good faith,” and that it “firmly disagreed to refund the incentives already given in… 2018 and prior years,” according to COA.

“However, management committed to review the provisions pertaining to Pagkilala Incentive, and strictly comply with our observation on the proper computation of savings to be considered as the basis of the grant thereof,” COA noted.

As a rejoinder, the COA cited the case of the Development Academy of the Philippines v. Pulido-Tan, G.R. No. 203072, October 18, 2016, where the Supreme Court ruled that “there is no room… for the indiscriminate grant of an incentive package to all employees, or the en masse payment of the Financial Performance Award…”

“To use the Employee Suggestions and Incentive Award System to grant incentive packages to all employees (except those with disciplinary liabilities) is to run afoul of its very nature,” COA said.

Pensions, benefits

Meanwhile, the state auditor has also flagged GSIS over its “accounts for clearing” amounting to P3.393 billion and P6.216 billion in 2018 and 2017, respectively. This, COA said, represents collections of premiums and loans, “which have not yet been posted to the individual member’s accounts… ultimately delaying the processing of benefits of members/pensioners. ”


The GSIS told COA that the cleansing of their transactions is ongoing.

COA further pointed out that GSIS’ compulsory life insurance benefits representing death claims of 39 sample members were underpaid by P423,395.

COA stressed this is contrary to Sections 18.3 and 19.1 of the implementing rules and regulations of RA No. 8291 or the GSIS Act “thus, depriving the beneficiaries of the deceased members the correct amount of benefits due them.” (Editor: Jonathan P. Vicente)

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