Legality of bonuses suspension defended

MANILA, Philippines - Sen. Franklin Drilon has defended the legality of Executive Order 7 suspending the bonuses and allowances of the governing boards of state enterprises until the end of the year, saying it was meant to stop the bleeding of government funds.

“The governing boards of various GOCCs have abused their power even more and granted themselves obscene allowances if not for the executive order,” Drilon, chairman of the Senate Finance Committee, said.

It was the committee that uncovered the widespread misuse of state funds by members of the governing boards of government-owned or controlled corporations or GOCCs.

“Without the EO, the abuses will continue unabated and public interest will continue to suffer,” he added.

Drilon was reacting to a personal petition filed by Jelbert Galicto, a legal officer of Philippine Health Insurance Corp. in Butuan City, assailing EO 7. He said the EO is “unconstitutional” because it encroaches on the power of the legislative to set pay scale for GOCCs.

The EO only covers the directors and trustees of GOCCs, Drilon stated.

While the directors or trustees of state enterprises have the power to fix the compensation of employees under their respective charters, Drilon said the governing boards should not have granted themselves unwarranted bonuses.

The senator noted that Memorandum Order 20 issued by former President Gloria Macapagal-Arroyo in 2001 imposed a ceiling on the compensation of the heads of GOCCs, equivalent to twice the salary of their counterparts in the Cabinet.

Drilon also introduced Senate Bill 2566 or the GOCC Governance Act of 2010 aimed at checking abuses in the granting of remuneration.

The proposal seeks to establish a new remuneration system for directors, trustees and employees of GOCCs, which would be recommended by a monitoring body to be known as the Governance Council for GOCCs.

There will be no exemptions from the coverage of the proposed compensation scheme.

Meanwhile, PhilHealth president and CEO Rey Aquino said Galicto, in filing his personal petition, “was acting on his own and did not seek any form of clearance from me as the head of the agency.”

“While PhilHealth is a government-owned and controlled corporation with a mandate that allows it to set its own salary structure, it still abides by pertinent policies and regulations governing fiscal administration and management,” Aquino said in a statement. “We have always been adhering to government rules and regulations especially those on observing fiscal prudence and as a responsible corporate citizen, we will continue to abide by what the government calls for,” he said.

“We reiterate our support for President Aquino’s direction to rationalize the compensation and position classification system in GOCCs and government financial institutions, including the moratorium on increases in salaries, and the grant of new increases in the allowances, incentives and other benefits of government officials and employees,” he said.