COA flags 'illegal' P248.3-M salary hike of Pag-IBIG execs sans Duterte approval

The Commission on Audit (COA) has called out the Home Mutual Development (Pag-IBIG) Fund for its "illegal disbursement" of P248.3 million for the salary increase of its officers and employees despite the lack of approval from the Office of the President.

Based on its 2018 audit report, the COA said the increase represents a 21.67% hike compared to the salaries of Pag-IBIG personnel in 2017 and thus violated protocol in granting additional compensation.

"The implementation of the general increase in salaries for the officers and employees in the absence of approval from the OP constitutes illegal disbursements," state auditors said.

The COA said the Pag-IBIG Board of Trustees approved the P248.3-million supplemental budget for the general salary increase of all personnel and submitted it to the Department of Budget and Management (DBM) as part of its 2018 budget.

The DBM approved Pag-IBIG'S operating budget and stated that the government-owned corporation is exempted from the Salary Standardization Law, but the agency said this should not be construed as an authority for the increase.

The COA said this violates Section 6 of Presidential Decree No. 1597 and Memorandum Order No. 20, series of 2001. It said Pag-IBIG is also required to abide by Section of Executive Order No. 7, series of 2010.

EO 7 states the imposition of a "moratorium on increases in the rates of salaries, and the grant of new increases in the rates of allowances, incentives and other benefits, except salary adjustments, until specifically authorized by the President."

The Pag-IBIG Board granted the general increase in salaries on September 11, 2018 and took effect less than a month later on August 1. It had a "step increment," or wage increase, of five steps based on the Pag-IBIG compensation system, which COA said only allows a one-step increment, or 4% of the total salary.

The COA said P125.56 million of the P248.3 million went to the salaries and wages of plantilla personnel, followed by "EPP Employer's Contributions worth P56.5 million, year-end and 13th month bonuses worth P25 million each, GSIS contributions worth P15.5 million, and Pag-IBIG contributions amounting to P970,511.

"The HDMF implemented the general increase in salary effective on August 1, 2018, without the proper approval from the OP, through the Governance Commission for Government-owned or Controlled Corporations," it said.

The COA urged Pag-IBIG management to stop the payments and secure the approval of President Rodrigo Duterte first before implementing general salary increases.

Pag-IBIG comment

In its reply to the audit, Pag-IBIG management said salary adjustments for its personnel are exempted from presidential approval. It also emphasized that the salary rates of all positions were unchanged based on Pag-IBIG's compensation plan.

“The requirement of Presidential approval does not apply to salary step increments, such as the case of HDMF but only to increases in the rates of salaries or benefits and to the grant of new benefits,” the COA said, quoting the reply of Pag-IBIG.

The management also stressed that the Pag-IBIG Charter “expressly exempted it from laws and rules on salaries and compensation which is unlike any other government agencies.”

The COA, however, said the Supreme Court had ruled on several decisions that GOCCs such as Pag-IBIG are still covered by the provisions of PD 1597 and MO 20.

“Thus, the charters of those government entities exempt from the Salary Standardization Law is not without any form of restriction. They are still required to report to the Office of the President through the DBM,” the COA said, citing the 2016 SC ruling on Philippine Economic Zone Authority v. COA. —KBK, GMA News