GOCC officials liable for giving selves many perks

8/7/2019 GOCC officials liable for giving selves many perks

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GOCC officials liable for giving selves many perksBy Neal Cruz

Philippine Daily InquirerFirst Posted 23:36:00 08/12/2010

Filed Under: Government, Congress, Laws

THE HOUSE of Representatives is set to investigate the excessive bonuses, allowances and

other perks that the members of the boards of government-owned or controlled corporations(GOCCs) have given themselves. But after all the publicity has been wrung dry in the hearings, I

doubt that anything will come out of it. In the first place, the hearings will take so long and theenactment of remedial laws even longer, during which time the officials will continue collecting

their extravagant perks, so that by the time the laws are passed, billions of pesos of governmentmoney will already have been paid out, with the offending officials laughing all the way to the

bank.

During the hearings, the GOCC officials will most likely tell the congressmen, Look whostalking, and point to the lawmakers own extravagant perks such as the pork barrel and their

various allowances. They will say that they, the GOCCs, earn what they are paying themselves(though most GOCCs are losing) while the pay and perks of members of Congress come from

the taxpayers. And most likely, the generous bonuses would be forgotten when the media loseinterest.

They will also argue that the pay of GOCC officials must be kept at par with the pay of privatecorporations to be able to attract talented executives. Thats a lot of bull! In the first place, those

appointed to GOCCs are not talented executives recruited from private corporations but failedpoliticians, protgs of politicians, and camp followers with little or no knowledge of the

business they are going into. Example: Administrator Armand Arreza of the Subic BayMetropolitan Authority, the highest paid among the GOCC officials, is just a protg of former

Sen. Richard Gordon. What does he know about running a free port? During his stint, the SBMAdid not progress. On the contrary, several locators left and some of those who were left are

complaining. Moreover, the Subic environment was ravaged. Now some SBMA directors, whoshould have been fired a long time ago, are challenging in court the Presidents executive order

terminating the services of all midnight appointees.

The GOCCs will also say that their charters give their boards of directors authority to fix theirpay. Thats another load of bull! These charters also set limits to the perks of directors.

A time-consuming investigation is also unnecessary as existing laws can already limit the

extravagance and punish the greedy ones who abuse their authority.

Let us take as example the Metropolitan Waterworks and Sewerage System (MWSS) which

President Aquino singled out in his State of the Nation Address. The authority of the MWSSboard of trustees to fix the amount of per diems and transportation, representation and other

allowances of its members is in Section 6 of its charter:


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Sec. 6 For actual attendance at meetings the Chairman, the Vice Chairman and the membersof the Board shall each receive a per diem of not less than five hundred pesos (P500) for every

regular or special Board meeting. Provided, That the total number of said meetings shall notexceed five a month. Provided further, That all members of the Board shall be entitled to

REASONABLE transportation, representation and/or other allowances as shall be fixed by the

Board.

Members of the MWSS Board now receive P14,000 (not P500) for each meeting five times a

month. And while the charter said the allowances should be reasonable, the various allowancesof the trustees at present are excessive. Aside from that, the trustees gave themselves various

bonuses (productivity, incentive, anniversary, Christmas, etc., etc.) The bonuses stopped onlywhen the dictionary ran out of words to describe bonuses.

The amounts of bonuses and allowances set by the board violate the standards of reasonableness

explicitly incorporated into the law. The grant of such extravagant bonuses is therefore beyondthe authority of the board. Considering the ultra vires nature of the bonuses, any payment of the

same to its members is illegal and void.

Moreover, it is an established principle in the law of public officers that the wrongful acts or

omissions of public officers may simultaneously give rise to civil, criminal and administrativeliability and that an action for each may proceed independently of those for the others. Applying

this principle, if the act of the MWSS board of trustees of granting its members substantialbonuses is shown to be in violation of existing laws, its members could be held civilly,

criminally and administratively liable.

Although the act of the MWSS board of trustees falls within its authority under the MWSScharter, it may still give rise to criminal liability under special laws applicable to public officers.

In particular, their act of granting themselves extravagant bonuses and incentive may give rise toliability under Section 3(e) of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act

which provides:

SECTION 3. Corrupt practices of public officersIn addition to acts or omissions of publicofficers already penalized by existing law, the following shall constitute corrupt practices of any

public officers and are hereby declared to be unlawful:

(e) Causing any undue injury to any party, including the government, or giving any private

party any unwarranted benefits, advantage or preference in the discharge of his officialadministrative or judicial functions through manifest partiality, evident bad faith or gross

inexcusable negligence. This provision shall apply to officers and employees of offices orgovernment corporations charged with the grant of licenses or permits or other concessions. (To

be continued)

Criminal and other liabilities of GOCCsBy Neal Cruz

Philippine Daily InquirerFirst Posted 05:05:00 08/16/2010


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Filed Under: Government offices & agencies, Crime

THIS IS a continuation of last Fridays column on the criminal, civil and administrative

liabilities of the boards of directors (they shouldnt be called trustees because they cannot be trusted) of

government-owned or -controlled corporations (GOCCs) who gave themselves excessivebonuses and allowances. The Metropolitan Waterworks and Sewerage System (MWSS) whichPresident Benigno Aquino III singled out in his State of the Nation address, is used here as an

example, but the same laws and liabilities apply to other GOCCs as well.

Besides being held liable for violation of the Anti-Graft and Corrupt Practices Act, the MWSSdirectors may also be criminally liable for violating RA 6713 or the Code of Conduct and Ethical

Standards for Public Officials and Employees:

Section 4. Norms of Conduct of Public Officials and Employees(A) Every public official and

employee shall observe the following as standards of personal conduct in the discharge and

execution of official duties:

(9) ProfessionalismPublic officials and employees shall perform and discharge their duties with

the highest degree of excellence, professionalism, intelligence and skill. They shall enter publicservice with utmost devotion and dedication to duty. They shall endeavor to discourage wrong

perceptions of their roles as dispensers or peddlers of undue patronage.

(c) Justness and sincerityPublic officials and employees shall remain true to the people at alltimes. They must act with justness and sincerity and shall not discriminate against anyone,

especially the poor and underprivileged. They shall at all times respect the rights of others, andshall refrain from doing acts contrary to law, good morals, good customs, public policy, public

order, public safety and public interest. They shall not dispense or extend undue favors onaccount

of their office to their relatives whether by consanguinity or affinity except with respect to

appointments of such relatives to positions considered strictly confidential or as members of theirpersonal staff whose terms are coterminous with theirs.

(h) Simple livingPublic officials and employees and their families shall lead modest livesappropriate to their positions and income. They shall not indulge in extravagant or ostentatious

displays of wealth in any form.

The MWSS directors are also civilly liable for damages arising from the performance of officialduties where there is a showing of bad faith.

Section 103 of the Government Auditing Code of the Philippines declares expenditures which

are disallowed and found to be unlawful as personal liabilities of the official or employeeresponsible for such expenditure:

SECTION 103. General Liability


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for Unlawful ExpendituresExpenditures of government funds or uses of government propertyin violation of law or regulations shall be a personal liability of the official or employee found to

be directly responsible therefore.

As previously discussed, the authority of the MWSS directors to fix bonuses and other incentives

is subject to the requirement that such amounts be reasonable, failing which, such expenditureswould be void. Applying these requirements, it may be argued that the act of the MWSS board offixing extravagant bonuses renders its members personally liable for the amounts in excess of

what is deemed reasonable and allowable by the COA.

The COA is empowered to define what constitutes irregular, unnecessary, excessive orextravagant expenditures or use of funds or property. A COA circular defines extravagant

expenditures as those which appear to be imprudent and which are not responsive to the demandsof government service:

Unnecessary expenditures are those not supportive of the implementation of the objectives and

mission of the agency relative to the nature of its operation. This could also include incurrence ofexpenditure not dictated by the demands of good government, and those the utility of whichcannot be ascertained at a specific time. An expenditure that is not essential or that which can be

dispensed with without loss or damage to property is considered unnecessary. The mission andthrust of the agency incurring the expenditure must be considered in determining whether or not

the expenditure is necessary.

The term extravagant expenditures signifies those incurred without restraint, judiciousnessand economy. Extravagant expenditures exceed the bounds of propriety. These expenditures are

immoderate, prodigal, lavish, luxurious, wasteful, grossly excessive and injudicious.

Applying the foregoing, the exorbitant bonuses and allowances declared by the MWSS directorsmay be deemed as extravagant and unnecessary and disallowed by the COA. The directors may

then be held personally liable for the amounts in the bonuses and incentives.

While the MWSS directors may have the authority to fix the amounts of incentives they receive,

an abuse in the exercise of such authority gives rise to civil liability under the expandedprovisions on human relations in our Civil Code, as the same constitutes a species of abuse of

right under Article 19 of the Civil Code.

The MWSS directors may also be civilly liable under Section 31 of the corporation Code whichimposes the penalty on directors found guilty of bad faith in directing the affairs of the

corporation.

While the MWSS is governed primarily by its charter, the Corporation Code nevertheless appliesto GOCCs where their directors act in bad faith.

Likewise, erring directors may be liable administratively for misconduct under Section 46,Chapter 6, Subtitle A (Civil Service Commission), Title I, Book V of the Revised Administrative

Code of 1987.


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Dont forget, these also apply to other GOCCs.

GOCC officials liable for giving selves many perks

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