Press Release
August 17, 2010


It is obvious that there is need for remedial legislation in order to stop these abusive practices that we have seen in the GOCCs. To start with the DBM the past leadership has failed to exercise its power under existing policies that could have prevent these abuses. Also the fact that there are already 157 GOCCs that are existing made the task difficult specially considering out of these 158, 26 are exempted from the salary standardization law. That is why we would propose legislation at the end of these hearings which would impose proper control on these compensation packages. We will not impose a gap but we will delegate to the President the power to fix the compensation package of the GOCCs. I repeat, the congress will delegate to the president the power to fix the compensation of the GOCCs upon the recommendation of the DOF, DBM but on the basis of reasonable standards that we will put in the law. Reasonable standards such as whether or not the GOCCs would be receiving subsidies fro the national government, whether or not they losing and other standards that the law may set. As of principle setting compensation and salaries is a function of congress but this function can be delegated as long as there are reasonable standards for the exercise by the president of such as delegated authority. Because we have seen the abuses that has happened, SBMA per the report of the DOF is one of the losing GOCCs and yet their executives are the highest paid in the entire bureaucracy. Of course subject to their further explanation, it would appear that their administrator was paid P26 million in 2009, P30 million in 2008 and P14 million in 2007. The same thing with the Clard development authority which they paid million of pesos. So we will come with the proposed legislation that will prevent such further abuses from taking place because we cannot allow this to go on. There are 158 fifthdoms existing which appears to be just appropriate public funds without mandate from anyone and not even would checked by the DBM and the president. This is the expense side. On the revenue side, it would appear that the present law which would require 50 percent of the dividends of the net earnings of the corporation should be remitted as form dividends is not being complied faithfully. RA 7657 provides that all GOCCs shall declare and remit at least 50 percent of their annual net earnings. This apparently not being complied with if we are to judge the dividends that be received by the national government. We would like in the next hearing to get accurate data of the amount of dividends that the GOCCs are remitting for the national government as the DOF appears to be at a lose as to exactly how much the dividends are due to government if the law is followed to the later. So we will continue the meeting on Tuesday august 24. At that time we will call on the executives concerns (GOCCs) in order to clarify and to explain such allowances and salaries they received which appears on the surface to be excessive and abuse of their discretion to set the compensation package for their own GOCCs. (including armand ariza) including him and that would give him opportunity explain. We also summon the SSS commissioners, DBP, MWSS and other corporations that we may decide to call.

Your are leaving it to the president to put a cap to this excessive?

We leaving to the president the matter of setting the compensation based on reasonable standards that we will put in the law. There is not cap because that depends on the discretion of the president based on the standards that the law will set. I will repeat, as a matter of principle, setting salaries is a function of the congress because congress appropriate funds but this power to appropriate funds for salaries can be delegated to the president as long as you provide for reasonable standards that should be followed because one of the things that we will require into is the amount of compensation of these members of GOCCs boards which do not appear at all anywhere and what are these: with the GOCCs would invest in private corporations as when SSS and GSIS invest in private corporations, members of their board would sit in the board of these private companies. These private companies would declare profit sharing in the form of bonuses at the end of the year. These bonuses which now the trustees GSIS and the commissioners of the SSS or the board of the DBP would receive is not reflected anywhere but is appropriated as part of compensation of these members of the boards. We will inquire into these because this would not appear in the COA. I know that certain members of the board of GFIs would sit in private corporations representing the GFIs equity in those corporations and yet the bonuses that they receive by virtue of their representing these funds in the different private companies are not turned over the trust funds much less reported into the COA. Nobody knows this.

Does remedial legislation will include per coa?

Yes that will be included in the legislation. At this point, I do not know yet in what matter. Maybe we will include in the delegated power of the president to fix the compensation package.

What's the liability of the GOCCs for appropriating these funds for themselves without any mandate?

Off hand and subject for further research. As a lawyer when a member of the board of directors of the GOCC would sit in a private corporation as member of the board by virtue of the equity investment of the fund, all bonuses should accrue to the fund that this board member represent and if they failed to remit this, there can be a case of malversation. (They can be made to refund?) in my view they can be made to refund and I must declare that these are bonuses that they receive while they are members of the board of private corporations where they sit by virtue of the equity investment of the GOCCs which the represent. For example, board juan dela cruz of the GSIS or the SSS would sit in the board of PLDT, SMC and these corporations would declare profit sharing to the board of directors in the form of the bonuses. In my view they should pertain to the trust fund which they represent specially if it is a trust funds because they sit in these boards not by their own investment but by the investments of the funds they represent. And therefore, the bonuses and the profit sharing that they receive as members of the board of directors pertain to the trust funds to the funds that they represent. And failure to remit can constitute malversation of public funds.

The dbm says they are having difficulty if imposing their policy on the GOCCs because of the many exemptions passed by congress , exempt from the SLL, would you remove all these exemptions?

The abuses are not necessarily on the salary. The salary could be within reasonable limits given the salary scale outside. What are being abused are the allowances which is not covered by the SSL. That's the problem and therefore, when we set reasonable standards, we should take into account all of these allowances that they would receive. The abuses that we saw is not necessarily rooted in their exemption from their SSL. It is from the fact that they have an untrammeled authority to set their own compensation schemes and it comes in the form of allowances other than salaries. In other words, the salary could be reasonable if you consider all factors but it is in the allowances that u see the abuses.

Part by the remedial legislation the abolition of the non-performing GOCCs?

We will look into that. I have not decided on that. First we will be requiring them to submit the list of the GOCCs which are being subsidized and therefore losing and the GOCCs which are profitable. In fact the subsidy that is found in the 2011 proposed budget is less than 50 percent of the level in the 2010 general appropriation act. From P14 billion to about P7 billion. We will craft a law which will cover this situation and plug the loopholes that we have seen.


...In the past they have tolerated it. They failed to exercise supervision either deliberately or through neglect or it's also possible that the GOCCs defied the action of the President by just doing what they are doing without regard to the limits that the President make. All of these are factual circumstances which we will look at further.

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