President has power to rationalize GOCC perks

MANILA, Philippines - Budget Secretary Florencio Abad defended yesterday President Aquino’s power to rationalize the pay and perks of officers and employees of government-owned and controlled corporations (GOCC) and government financial institutions (GFI).

“It is clear that the petition filed before the Supreme Court against Executive Order 7 only seeks to stifle President Aquino’s platform (of good governance),” Abad said.

Through EO 7 issued on Sept. 8, the President ordered the suspension of all allowances, incentives and other perks except reasonable per diems of board members until Dec. 31 of this year, pending the issuance of new policies and guidelines on the compensation of these board members.

The President also directed a moratorium on increases in the rates of salaries and grant of new or increases in the rates of allowances, incentives and other benefits of officers and employees of GOCCs and GFIs, until specifically authorized by the Chief Executive, except salary adjustments as directed by the previous president through earlier orders.

Abad said the arguments of the petition that was filed on Oct. 22 by Jelbert Galicto, an employee of the Philippine Health Insurance Corp., against EO 7 were problematic and based on wrong facts.

For one, he said that Joint Resolution 4, contrary to what the petition said, was already part of the laws of the land as it has been published on June 20, 2009 in the Manila Times and the Manila Standard-Today, per the records of the Office of the President.

Joint Resolution 4, which amends Republic Act 6758 (Compensation and Position Classification Act of 1989), ordered GOCCs and GFIs to observe policies, parameters and guidelines governing position classification, salary rates, categories and rates of allowances, benefits and incentives that are prescribed by the President.

The resolution also states that any increase in existing salary rates and the grant of new or increase in allowances and other perks of GOCCs and GFIs shall be subject to the President’s approval.

“Already, this is clear basis in law that the President has the power to review and rationalize the salaries and perks of officers and employees of GOCCs and GFIs. And the President has this prerogative, especially now that the people are aware about these obscenely generous perks,” he said.

Abad also said the petition erroneously stated that Presidential Decree 985 (“The Budgetary Reform Decree on Compensation and Position Classification of 1976”) has been repealed by PD 1597 and RA 6758.

Contrary to the petitioner’s claim, Abad explained that none of these laws granted the boards of GOCCs and GFIs fiscal autonomy in determining the fringe benefits, allowances, bonuses and other financial packages for their officials and employees, as erroneously interpreted by the petition.

“In short, the President’s order to review and rationalize the salaries and perks of officers and employees of GOCCs and GFIs, as it is clearly rooted in the Constitution and the laws of the land, is not ‘a derogation of congressional prerogative’ as the petition claims,” he said.

“By twisting the facts and the law, the petition seeks to stonewall crucial reforms in this area that has become a burden on government coffers. That GOCC board members swim in these bonuses and perks is an injustice to ordinary Filipinos who deal with poverty on a ‘per-diem’ basis,” Abad added.

Drilon files bill on good governance

Abad also expressed support to Senate Bill 2566 or GOCC Governance Act of 2010 that was filed by Senate finance committee chairman Franklin Drilon.

“This bill essentially seeks to enact measures to reform GOCCs and GFIs that we in the Aquino administration seek to pursue. We’re happy that members of the Senate are one with the executive in taking the cudgels for good governance in GOCCs and GFIs,” he said.

One of the main reasons for EO 7 was to respond to Senate Resolution 17, urging the President to issue an order to suspend the perks of GOCC and GFI board members until such time that these were restructured. This resolution came after the Senate finance committee’s inquiry into GOCCs and GFIs that exposed the “ridiculously lavish perks of board members in some government firms.”

Aside from suspending the perks of GOCC board members and ordering a moratorium on increases on the salaries and perks of GOCC officers and employees, EO 7 also creates a Task Force on Corporate Compensation that will undertake the review of the compensation granted to board members, officers and employees of GOCCs and GFIs. – With Marvin Sy