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COA rejects PhilHealth plea on P88-M bonuses

Says it’s grave abuse of authority
/ 02:35 AM January 18, 2014

The Commission on Audit (COA) is standing pat on its decision disallowing the extra compensation, bonuses and allowances that officials and employees of the Development Bank of the Philippines (DBP) and the Philippine Health Insurance Corp. (PhilHealth) rewarded themselves between 2003 and 2006.

The COA declared as “grave abuse of authority” the P87.79 million in bonuses, allowances and reimbursements that the PhilHealth board granted officials and employees in 2003 and 2004 instead of giving these funds to member benefits.

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“The funds kept by the petitioner (PhilHealth) are fiduciary in nature; it is a trust fund intended for the welfare and benefit of the members who pay contributions in exchange for the entitlement to healthcare     benefits,” the COA said in its order rejecting PhilHealth’s appeal that was signed late Thursday by COA Chair Ma. Gracia M. Pulido Tan and commissioners Heidi L. Mendoza and Rowena V. Guanzon.

Betrayal of trust

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“As a trustee, [PhilHealth] 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,” the ruling said.

The COA disallowed the P54.9 million in welfare support assistance; P27.398 million in labor management relations gratuity; P4.12 million as signing bonus for the collective negotiation agreement;

P1.281 million in cost of living allowance  granted from  1988 to 1995; P64,490 for reimbursements of seminar and conference fees; and P18,383.55 for  excessive fuel consumption of service vehicles.

PhilHealth’s power to fix its compensation scheme was “not all-encompassing… unbridled discretion to determine compensation of its officers and employees,” the commission said.

DBP board’s whim

In the case of the DBP, the COA canceled P151.7 million in extra compensation given to the officials of the state-owned bank.

In separate decisions, Tan, Mendoza and Guanzon said these perks given from 2005 to 2006 had no legal basis and should not have been granted solely on the whim of the bank’s board of directors.

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These perks consisted of P54.154 million in economic allowance (EA), P45.1 million in amelioration allowance, P38.26 million in officers’ allowance (OA) and P14.185-million merit increase.

The COA ruled that not even former President Gloria Macapagal-Arroyo’s subsequent approval of the DBP board’s powers to peg salaries and bonuses of its officials and employees was enough to negate the COA’s notice of disallowances.

“The grant of additional compensation to the DBP officers and employees clearly lacks legal basis. The contention that the subsequent confirmation by the President on the [board’s] authority to formulate and adopt a compensation plan rendered the issue moot,” the COA said.

“What is required … is the approval of the President on the grant of additional compensation or allowance [and] not merely the authority of its board to fix the compensation of DBP officials and employees,” it said.

Arroyo approval illegal

The COA noted that Arroyo’s memorandum was issued on April 22, 2010, or only 17 days before the national elections in May that year.

“The post facto approval of then President Arroyo … falls within the election period ban and is clearly proscribed under the above provision. Hence, since the approval was illegal, there was thus no approval at all,” the COA said.

The perks were originally disallowed by the DBP supervising auditor in 2007 but the management appealed the decision. The COA’s corporate government sector division upheld the disallowances on the OA, EA and the merit increase but the DBP management reinstated the amelioration allowance claiming the employees deserved them.

The COA then reaffirmed its original notice of disallowance for the amelioration allowance because the Department of Budget and Management (DBM) Circular No. 2001-03 had already prohibited the practice of granting inflation-pegged perks.

“[The] DBP’s patent disregard of [the] DBM circular … and indifference on the settled decision of the executive secretary that the [amelioration allowance] is already considered integrated into the basic salary … were acts contrary to good faith,” the COA said.

Refund ordered

The COA earlier ordered officials and employees of 31 GOCCs to refund the government P2.313 billion in bonuses and allowances that they illegally received in 2012.

The 31 GOCCs were found to have paid the “bonuses, allowances and benefits to the board of directors and employees without or in excess of legal basis or proper authority,” the COA said.

The 10 GOCCs and the corresponding amounts to be returned were: PhilHealth, P1.65 billion; DBP, P216.8 million; Central Visayas water districts, P186.6 million; Philippine Charity Sweepstakes Office,

P54.8 million; Philippine Economic Zone Authority, P48.5 million; Home Development Mutual Fund, P37.6 million; Butuan City Water District, P28.2 million; Development Academy of the Philippines, P23.8 million; Philippine National Oil Co. Exploration Corp.,  P14.5 million; and Mactan-Cebu International Airport Authority, P14.4 million.

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First posted 12:53 am | Saturday, January 18th, 2014

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TAGS: bonuses, Commission On Audit, DBP, Development Bank of the Philippines, health-care benefits, Heidi L. Mendoza, Ma. Gracia M. Pulido-Tan, Philhealth, Philippine Health Insurance Corporation, Rowena V. Guanzon
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