No retirement perks for ex-DBP execs

MANILA, Philippines - The Commission on Audit (COA) has affirmed the findings of its supervising auditor, which disallowed a retirement program of the Development Bank of the Philippines (DBP) implemented from 2003 to 2008, effectively ordering affected bank retirees to refund more than P747 million in benefits.

COA chair Maria Gracia Pulido-Tan also denied the petition for review filed by former DBP executives and
employees questioning the agency’s May 17, 2007 Notice of Disallowance of the Early Retirement Incentive Program IV (ERIP IV).

State auditors earlier said the payment of retirement benefits granted to DBP officials and employees under ERIP IV should be refunded because the program lacked the approval of the President and the Secretary of Finance as required by Memorandum Order No. 20 and Executive Order No. 81.

MO 20 requires the approval of the President any increase in the salary or compensation of officials and employees of government financial institutions while EO 81 mandates that any supplementary retirement plan adopted by DBP has to have prior approval of the finance secretary.

DBP officials and employees objected to the grounds cited in the COA notice as it consequently sought the lifting of the disallowance by the COA Director for Corporate Government Sector (CGS) for Cluster A.

In their appeal, DBP presented a copy of the letter of approval from then Finance Secretary Margarito Teves dated Jan. 14, 2009.

However, on Dec. 28, 2010, the COA CGS Cluster A not only affirmed the original Notice of Disallowance, it also said the retirement plan is illegal because it violated the prohibition on the creation of supplementary retirement or pension plan as stipulated in Section 10 of Republic Act No. 4968 or the law amending the Government Service Insurance Act.

The DBP appealed the case before the COA main office on Feb. 16, 2011 alleging that CGS Cluster violated DBP’s right to due process when the former not only affirmed the original COA findings but also provided additional grounds for disallowance.

DBP also submitted a written approval for the retirement program that former DBP president and chief executive officer Reynaldo David secured from then President Gloria Macapagal-Arroyo on April 22, 2010.

DBP contended that ERIP IV is not a supplementary retirement plan, which was prohibited under RA 4968.

It said the DBP board has the authority to fix compensation, remuneration, and emoluments of its employees, including adoption of the early retirement program.

It added DBP employees and officers should not be ordered to refund the disallowed amount on account of good faith.