Unauthorized benefits paid sans Palace okay

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The DBP Data Center Inc. (DCI) made payments totaling P1.984 million for additional benefits or incentives without required approval of the Office of the President, state auditors said.

In a 2014 audit report on DBP Data Center Inc., a wholly-owned subsidiary of the state-run Development Bank of the Philippines (DBP), the Commission on Audit (COA) said that such payments ran against provisions of Presidential Decree (PD) 1597.

PD 1597 rationalizes the system of compensation and position classification in the national government and provides, “Allowances, honoraria and other fringe benefits which may be granted to government employees, whether payable by their respective offices or by other agencies of government, shall be subject to the approval of the President upon recommendation of the [Secretary of the Department of Budget and Management].”

The Budget secretary shall review on a continuing basis and prepare, “for the consideration and approval of the President, policies and levels of allowances and other fringe benefits applicable to government personnel, including honoraria or other forms of compensation for participation in projects which are authorized to pay additional compensation,” the  auditors said.


Upon review of calendar year (CY) 2014 financial statements and supporting schedules, journal and check vouchers, they found that the employees of DCI received additional allowances/benefits/incentives.

Based on the audit report, such include grocery allowance in the amount of P1,647,500 with 57 employee-recipients; optical/dental allowance in the amount of P53,479; hospitalization benefit in the amount of P117,767 with 8 employee-recipients; and anniversary bonus in the amount of P165,000 with 55 employee-recipients – for a total of P1,983,746.

These payments, the report said, were covered by DCI Board Resolution 0010 dated November 21, 2012, approving the budget for CY 2013.

“Under the Classification of GOCCs by Sector as classified by the Governance Commission for GOCCs [GCG], DCI functions mainly as a support unit of its parent GOCC, the DBP, with no independent mandate or business. DCI is also exempt from the SSL,” the auditors said.

SSL is the Salary Standardization Law and GOCCs refers to government-operated and -controlled corporations.

“Being exempt from RA [Republic Act] 6758 or the SSL, prior approval of the Office of the President or other specific authority is required. In the absence of said approval, the amount of P1, 983,746 is disallowable in audit,” the state auditors said.

The audit team then told DCI to submit documents showing prior approval by the Office of the President in order to support the expenditures for the allowances/benefits/incentives.

Meanwhile, DCI said  the benefits given have legal basis because COA Circular 2013-003 requires prior approval by the Office of the President or a specific authority from the agency charter.

“Since DCI was organized under the Corporation Code and the Articles of Incorporation and By-Laws are the charter of the Company, the Board of Directors is the specific authority of DCI. Expenditures of P1.984 million for additional benefits / incentives of employees were approved by the DCI Board of Directors,” it added.

As a reply, auditors pointed out that all heads of government offices/agencies, including GOCCs and their governing boards, are prohibited from granting any allowance or benefit without the President’s prior approval and authorization through an Administrative Order.

“Henceforth, anyone found violating any of the mandates in this order, including all officials/agency found to have taken part thereof, shall be accordingly and severely dealt with in accordance with the applicable provisions of existing administrative and penal laws,” they quoted Section 2 of Administrative Order 103 of 1994.

COA said it is reviewing a similar prior-year transaction of DCI that was disallowed by the previous auditor.

“In the absence of prior approval by the Office of the President, a notice of disallowance was issued for the CY 2014 payments for additional benefits,” it added.

A notice of disallowance informs those concerned of their participation in transactions disapproved in audit and that they have to refund the amount indicated in the notice.

DBP Data Center Inc. (DCI), founded in 1982, was known as Development Bank Data Center Inc.

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