State auditors have told the National Electrification Administration (NEA) to require the refund of P2.9 million representing Performance-Based Incentive (PBI) that it granted to its officers and employees for 2015.
The recommendation was made in the 2015 audit report on NEA, wherein the Commission on Audit (COA) questioned the legal basis for the payment of the incentive referred to as PRAISE (Program on Awards and Incentives for Service Excellence).
Based on the audit report, NEA granted PBI (mid-year incentive) to its officers and employees totaling P10,000 each or a total of P2,931,667 pursuant to the Board of Administrator’s approval under Resolution No. 93 and NEA’s PRAISE chargeable against corporate savings for 2015.
The auditors cited Section 9 of Executive Order (EO) No. 7, providing a moratorium on increases in the rates of salaries and the grant of new or increases in the rates of allowances, incentives and other benefits.
They also pointed out that Congress’ Joint Resolution No. 4 issued in 2009 limits the incentives given to government officials and employees as follows: loyalty incentive, anniversary bonus, Collective Negotiation Agreement (CNA) incentive, Productivity Enhancement Incentive, and other existing benefits to be categorized by the Department of Budget and Management as incentives.
The auditors also cited the Governance Commission for Government Owned and Controlled Corporations’ (GCG) ruling last March on their query regarding NEA’s grant of PRAISE incentives including PBI (mid-year incentive).
The GCG explained that under JR No. 4, the PBI and Productivity Incentive (PI) are not among the enumerated benefits under the Total Compensation Framework.
The GCG added that PRAISE is a system that aims to encourage and reward employees for their contributions to the improvement of government operations which lead to organizational productivity, while the grant of PBI (mid-year and year-end) and PI are performance-based.
“In sum, the PBI and PI should not be granted under PRAISE but should be governed by E.O. No. 80 which provides for the adoption of a PBI system for Government Employees,” COA maintained.
The auditors then said, “Anchored on GCG’s ruling, NEA’s payment of PBI (Mid-year Incentive) totaling P2,931,6667 for CY 2015 was without legal basis as it was not among the incentives authorized under Item 4 (h) of the Senate and House of Representatives Joint Resolution No. 4 or the Performance Based Incentive System (PBIS) under Executive Order No. 80 as previously discussed above,”
They recommended NEA to stop the grant of PBI (mid-year incentive) to its employees.
It was also told to “Require the refund of the PBI amounting to P2.932 million granted to officers and employees.”
For its part, NEA disagreed with COA’s finding that the grant of the mid-year incentive supposedly lacked legal basis.
“NEA posited the view that when the NEA Board Resolution No. 93, dated 14 August 2015, was passed and approved granting the PBI to its officers and employees, the compliance by NEA with Section 9 of EO No. 7 was validly made,” the audit report said.
NEA noted that EO No. 7 recognized and considered the provisions of JR No. 4.
“It is therefore logical for NEA to comply not only with the provisions of the Joint Resolution but also that with EO No. 7 when it passed and approved NEA Board Resolution No. 93, dated 14 August 2015. This only goes to show that the NEA’s compliance to EO No. 7 cannot be held as invalid,” NEA said.
It added that it was the submission of the audit team that the grant of the PBI was validly and legally based on PRAISE that was approved for implementation by the Civil Service Commission (CSC) in 2005.
“The PBI or Mid-Year Incentive is the terminology that was adopted by NEA under the said PRAISE which is not based on the PBI system under E.O. No. 80,” NEA said, noting that the legality of the CSC-approved PRAISE incentive is recognized in EO No. 203 issued in March.
But the auditors maintained that the grant of PBI was without legal basis and that EO No. 7 “was not a valid legal basis.”
They added that NEA’s contention on the GCG ruling was misplaced.
“The GCG ruling to our letter query whether the grant of PRAISE incentives which include PBI (Mid-Year Incentive) is authorized, it has no effect whether it was made after the grant of incentive or not as this is a letter ruling by GCG which gives advice to our specific request/query,” the auditors said.
While they agreed that EO No. 203 recognized the legality of the CSC-approved PRAISE, the auditors said that “the contention presented is irrelevant as this Order was not yet issued when the subject incentive was granted.”
They added that the CSC emphasized, in a letter-reply to NEA’s query on the validity of the NEA PRAISE, that PBI and PI are governed by relevant existing guidelines.
Thus, according to the audit report, all productivity incentive or performance based award shall be made in accordance with Administrative Order 25.
“Based on this Order, NEA was already given Performance Based Bonus and Performance Enhancement Incentive. Hence, the grant of PIB under PRAISE was not valid,” they auditors said.
“We will issue the necessary Notice of Disallowance,” they closed.