State auditors from the Commission on Audit (COA) raised their brows on the magnanimity of the Government Service Insurance System (GSIS) to condone P14.04 billion which the Department of Education (DepEd) was supposed to pay as interest for its failure to remit on time the monthly deduction that teachers see on their pay slips.
On top of this, GSIS also offered a 5-percent discount worth P346 million to DepEd.
“The [memorandum of agreement]to implement a realistic and equitable solution to settle the overdue premiums on contributions exceeded the maximum limit of condonation rates resulting in losses of fund amounting to P14.387 billion,” an audit report of the COA read.
The Audit agency referred to the tripartite agreement between the GSIS, DepEd and the Department of Budget and Management.
As of 2012 yearend, the outstanding dues of DepEd stood at P20.96 billion, P6.92 of which was required remittance while P14.04 billion reflected accrued interest.
However, since the dues already covered 14 years, from 1997 to 2010, and already seemed unsalvageable, GSIS, DepEd and the Budget department entered into a MOA “to condone the entire interest of DepEd [amounting to]P14.041 billion.”
A five percent discount worth P346 million out of the P6.92 billion was also given to DepEd, making the total condoned remittance reach P14.38 billion.
COA said that DepEd should be entitled to only 30-percent condonation: 20 percent base condonation rate for its account representing 37 to 60 months in arrears based on the oldest due month; and a 10-percent discount since DepEd, through the memorandum of agreement (MOA), paid at least 20 percent as down payment for its backlog.
Auditors said that the GSIS Board of Trustees “contradicted its own policy” by granting a 105-percent rate “or 75 percent in excess of what was previously allowed.”
They commented that the P14.38 billion of condonation “is deemed not [for]the best interest of GSIS.”
COA also disclosed that DepEd has not yet remitted P4.51 billion from its teaching and non-teaching staff from 1997 to 2010, “which was not included in the MOA for the condonation.”
“Non-remittance of the amounts affects the Creditable Service of the retiring members and deprived GSIS of resources to invest and fund the retirement claims and other benefits of the member-retirees,” COA said.
Auditors reiterated that employers should remit directly to the GSIS the employees’ and employers’ contributions within the first 10 days of the calendar month following the month these were deducted.
COA asked the GSIS to strictly implement the collection and remittance of premiums stipulated in the Revised GSIS Act of 1977 and to revisit its policy on condonation.
GSIS replied that prior to the tripartite agreement, teachers were not able to enjoy the benefits of their contributions because of DepEd’s outstanding arrearages.
“The Tripartite Agreement addressed this concern and paved the way for teachers to be able to avail of loan windows and retire with full benefits,” GSIS said, adding that nothing in the agreement is prejudicial to the GSIS Fund that COA should be concerned about.
However, COA rebutted that “condonation, if any, should be consistent with the intent of the law.”
“[Condonation] should only be done as a last resort after the penal provisions under the GSIS charter have been exercised,” COA said.