State auditors told the Food Terminal Inc. (FTI) to require concerned officers and employees to refund the P6.97 million they received as Profit Sharing Incentive (PSI) in 2014.
The recommendation was made in the 2015 audit report of the Commission on Audit (COA) on FTI, a subsidiary of the National Food Authority.
The auditors said the Profit Sharing Incentive (PSI) was given to officers and employees, including the Board of Directors (BOD), without the approval of President Benigno Aquino 3rd.
According to COA, Section 10 of RA No. 10149 states that the Governance Commission for Government-Owned or Controlled Corporations (GCG) may recommend to the President incentives for certain position titles in consideration of the good performance of the GOCC.
This law also provides that no incentives shall be granted unless the GOCC has fully paid taxes for which it is liable and declared and paid all the dividends required to be paid under its charter or any other laws.
“As specified in the aforesaid law, one of the pre-requisites before an incentive can be recommended for approval by the President of the Philippines is the declaration and payment of all the dividends required to be paid under the FTI’s charter or any other laws,” the auditors stressed.
“A review of the Cash Disbursement Journal (CDJ) for CY [Calendar Year] 2015 and payrolls for CY 2014 PSI which were submitted to the Audit Team only on February 9, 2016 and March 9, 2016 upon request from the Human Resource Department (HRD), showed that PSI for CY 2014 was granted to the Agency’s officers and employees amounting to P6.014 million and to the BOD in the amount of P0.960 million, or a total of P6.974 million,” they said.
“The PSI was granted without supporting documents and that the CY 2014 dividends had not been declared and paid,” the auditors pointed out.
Based on the audit report, two payments were initially made on February 25 and March 2, 2015 while the 2014 dividends were declared and paid only on April 17, 2015.
“There were no documents to show that the grant of PSI has been recommended by the GCG to the President of the Philippines for approval and the same had been approved by the latter,” the auditors said.
“Further review of the payrolls showed that both the President and the Vice-President for Corporate Affairs were paid PSI twice. They were paid P1.233 million as officers of FTI and P180,000 as member of the Board and Assistant Board Secretary, respectively, or a total of P1.413 million,” the auditors said.
FTI adopted the practice of giving PSI to rank-and-file employees pursuant to Article XVI, Section 16 of the Collective Bargaining Agreement (CBA) between the management and its workers’ union.
However, the auditors said that the Supreme Court held in a 1983 case (G.R. No. L-60403, Alliance of Government Workers vs. Minister of Labor and Employment) that it is the legislature and administrative heads that fix the terms and conditions of employment in the government.
According to COA, the issue on the grant of PSI was previously reported in its 2014 audit report on FTI and that the audit team issued a notice of disallowance dated December 15, 2015 and received by the FTI in January 2016 for the 2013 PSI.
For its part, the FTI commented that Executive Order (EO) No. 203 dated March 22, 2016 “Adopting a Compensation and position Classification System (CPCS) and a General Index of Occupational Services (IOS) for the GOCC Sector covered by RA No. 10149, and for Other Purposes” has clarified the application of Section 10 of RA No. 10149.
The FTI cited Section 5 of EO No. 203 which provides that there shall be no diminution in the authorized salaries as of year-end 2015 for incumbent officers and employees in the implementation of the CPCS.
It also cited Section 6 of the same EO which states that pursuant to Section 10 of RA No. 10149, the GCG may recommend incentives outside the CPCS for the President’s approval in consideration of the GOCC’s good performance provided that the GOCC has fully paid taxes for which it is liable and declared and paid all the dividends it is required to pay.
The auditors however disagreed with the FTI’s interpretation and conclusion regarding the provisions of Sections 5 and 6 of EO No. 203.
“PSI is very much different from salaries. The salary of a public officer is defined as the personal compensation to be paid to him for his services, and it is generally a fixed annual or periodical payment depending on the time and not on the amount of the services he may render. Moreover, the law intended to insert the word “authorized” to mean that it is allowed by law and not contrary to any existing rules and regulations of the government,” they said.