COA: P248 million in pay increases for Pag-IBIG fund employees illegal

Adrian Ayalin, ABS-CBN News

Posted at Jun 19 2019 02:56 PM | Updated as of Jun 19 2019 07:31 PM

MANILA (UPDATE) - The Commission on Audit (COA) has flagged pay hikes of Home Development Mutual Fund (HDMF or Pag-IBIG Fund) officers and employees as illegal as these were not approved by the Office of the President (OP).

In its 2018 annual audit report, the state audit agency said salary increases amounting to P248.319 million were illegal disbursements and called on Pag-IBIG Fund or the Home Development Mutual Fund to stop the payment of pay hikes.

Government auditors cited the Marcos-era Presidential Decree No. 1597, a COA circular, and a Department of Budget and Management rule to justify that the grant of salary increases for Pag-IBIG Fund workers not approved by the President is considered as an illegal expenditure.

The COA said the institution’s board approved a P255.527 supplemental budget to cover salaries and wages, year-end bonuses, 13th-month pay, as well as contributions to the Government Service Insurance System, PhilHealth and Employees' Provident Program for 3,561 employees and officials, excluding presidential appointees. 

“Thus, the implementation of the general increase in salaries for the officers and employees in the absence of approval from the OP constitute illegal disbursements,” the COA report said. 

A copy of the audit report was received by Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy Moti on June 6, 2019.

Pag-IBIG Fund for its part told the audit team that the additional compensation represented “step increments” in its 2009 Compensation Plan.

“Moreover, HDMF’s Compensation Plan does not require presidential approval since HDMF’s charter expressly exempted it from laws and rules on salaries and compensation which is unlike any other government agencies,” the COA report said.

The audit team, however, insisted that the Supreme Court has already ruled that Government Owned and/or Controlled Corporations, such as HDMF, are covered by Presidential Decree No. 1597 in decisions such as Philippine Economic Zone Authority vs. COA, among others.

Lawyer Karin-Lei Franco-Garcia, vice president for public relations of Pag-IBIG Fund, insisted Wednesday that the agency does not need the President's approval for the salary increases.

"For example, under the salary standardization law, every government employee that stays for 3 years in the government agency automatically gets a step level increase, a step level increment. They never get approval from the Office of the President
so, in the same way, we're saying we don't need presidential approval," she told ANC's "Top Story."

She also clarified that COA is not assailing the amount of the increase but is rather flagging the procedure. 

If COA stands firm on its decision, Pag-IBIG Fund would simply need to get the President's approval, Franco-Garcia said.

"This is just a mere bump in the road. We're still in discussion with COA and we'll see how it goes," she said.

"If COA stands firm on its decision, the remedy will really be just to go up to the Office of the President to get presidential approval," she said.

The full audit report can be downloaded on the COA website