The Commission on Audit (COA) questioned the magnanimity of the Government Service Insurance System (GSIS) in writing off the P14.38-billion interest on overdue remittances of the Department of Education (DepEd).
DepEd was docked P14.04 billion as interest for failing to remit on time the monthly deduction that teachers see in their payslips.
On top of this, GSIS also offered a five-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,” the audit report read.
COA referred to the tripartite agreement between GSIS, DepEd and the Department of Budget and Management.
As of 2012 yearend, DepEd’s outstanding dues stood at P20.96 billion, of P6.92 billion is required remittance and P14.04 billion is interest.
Because the dues covered 14 years, from 1997 to 2010, and seemed unsalvageable, GSIS, DepEd and the Budget department entered into a MOA “to condone the entire interest of DepEd [amounting]P14.041 billion.”
A five-percent discount worth P346 million out of the P6.92 billion was also granted DepEd, bringing the total condoned remittance to P14.38 billion.
COA said DepEd should have been granted only 30 percent condonation: 20-percent base condonation rate for its account had 37 to 60 months in arrears; and a 10-percent discount since DepEd, through the MOA, paid at least 20 percent as downpayment for its backlog.
Instead, GSIS wrote off DepEd’s unpaid remittances and allowed it to pay five percent of the unrealized interest.
COA said 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.”
It said the P14.38 billion condonation “is deemed not to the best interest of GSIS.”
COA also disclosed that DepEd has not 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.
GSIS replied that prior to the tripartite agreement, teachers were not able to enjoy the benefits of their contributions because of DepEd’s outstanding debts.
“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.
But COA said 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,” it said.
JOHN CONSTANTINE G. CORDON