COA questions Pag-IBIG's purchase of 21 cars for officers sans OP's approval

The Commission on Audit (COA) has questioned the purchase of 21 cars by the Home Development Mutual Fund (HDMF) or Pag-IBIG Fund for its officers last year without the approval from the Office of the President (OP).

In its 2020 audit report on the state-run firm, state auditors said Pag-IBIG disbursed a total of P36.355 million in line with its 2015 Car Plan.

“This is composed of the P34.298 million cost of the 21 vehicles purchased for its officers and other expenses, specifically repairs and maintenance, insurance and registration of the subject vehicles totaling P2.057 million,” the COA said.

The car plan benefitted 21 officers ranging from area heads up to vice presidents.

The prices of the cars range from as low as P800,000 to as high as P1.8 million.

The cost of the vehicles were 50% shouldered by the Pag-IBIG Fund while the remaining half would be paid by the officers deductible from their salaries, allowances and/or bonuses.

“Of the total disbursement for the 2015 Car Plan, P18.182 million is for the account of HDMF and P18.173 million is for the officers who availed of the Plan. The officers shall reimburse the HDMF in accordance with the scheme provided in HDMF Office Order No. 2015-009 presented in Paragraph 13.6 hereof,” the COA said.

State auditors, however, flagged the purchase since it was implemented in the absence of the required approval by the OP, “thus, contrary to Presidential Decree No. 1597, OP Memorandum Order No. 20, s. 2001 and OP Executive Order No. 7, s. 2010.  This condition affects the legality and propriety of the grant of the said benefit.”

The COA said the absence of the corresponding approval by the OP affects the legality and propriety of the grant of the benefit.

In particular, the COA said Sections 5 and 6 of PD No. 1597 states that granting of fringe benefits by state-owned firms shall be subject to the approval of the President upon recommendation of the Commissioner of the Budget.

Likewise, Section 1 of Memo Order No. 20 suspended the grant of any salary increases and new or increased benefits such as, but not limited to, allowances; incentives; reimbursement of expenses; intelligence, confidential or discretionary funds, extraordinary expenses, and such other benefits.

The suspension covers senior officer level positions, including Members of the Board of Directors or Trustees.

Executive Order No. 7, on the other hand, imposed a moratorium on increases in salaries, allowances, incentives and other benefits.

“Should the grant of the Car Plan benefit be approved by the OP, such would be subject to fringe benefit tax as required under Item No. 5 of Section 2.33 (B) of the Bureau of Internal Revenue-Rules and Regulations (BIR-RR) No. 3-98,” the COA said.

No need for OP approval

Sought for comment, Pag-IBIG Fund vice president for public relations Kalin Franco-Garcia said, “Pag-IBIG Fund maintains that there is no need for Presidential approval because what we implemented is a reduction in the car plan benefits.”

“The laws cited by COA require Presidential approval only in case of new benefits or when there is an increase in benefits,” she told GMA News Online.

“In our case, the car plan is not a new benefit. It has been in place since 1983. It is also not an increase in benefits. On the contrary, it is a reduction in benefits that we implemented following COA’s recommendation in 2014,” Franco-Garcia added.

The Pag-IBIG Fund official said the firm continues to work with the COA “so we can reach a resolution.”

“We recognize them as a partner in our drive for good governance,” Franco-Garcia said.

Highest audit rating

“In fact, we must also emphasize that in the very same COA Report, COA awarded us their highest audit rating. This makes it nine straight years that Pag-IBIG Fund has received the highest rating from COA. This is proof that Pag-IBIG Fund’s financial records have been and continue to be transparent, fair, and accurate,” she said.

COA, meanwhile, said Pag-IBIG must secure a post facto approval for HDMF’s 2015 Car Plan from the OP.

It recommended to “stop the grant of additional Car Plan benefits until the issuance of the required approval by the OP.”

“Management commented that the cited violations of EO No. 7 and other rules are not applicable since they pertain to increases in benefits,” state auditors said.

“The 2015 Car Plan did not increase but rather reduced the benefits therein, thus, no violation was committed. Further, Management reiterated that the car plan has been an integral part of HDMF’s benefits since 1983 as approved by the then BOT (Board of Trustees),” it said.

“As auditor’s rejoinder, we maintain our recommendation that Management should secure a post facto approval from the OP for the grant of the car plan benefit,” it said. —KBK, GMA News