COA: P93-M PEZA pay hike in 2nd half of 2010 unauthorized

Officials of the Philippine Economic Zone Authority (PEZA) gave themselves unauthorized salary increases in the last half of 2010 amounting to P93.65 million, state auditors said in their 2010 yearend report. The Commission on Audit (COA) said aside from failure to secure prior approval from the Office of the President, which is mandated under 1994 Congress Joint Circular No. 1, the PEZA officials also received salary increases despite having been issued notices of suspensions. The 1994 Congress Joint Circular No. 1 gives the President the sole authority to approve salary adjustments for officials of government-owned and -controlled corporations (GOCCs) that are not covered by the Salary Standardization Law. This policy was upheld by the Supreme Court en banc in a Feb. 15, 2002 decision. PEZA is one of about 20 GOCCs that are exempted from the Salary Standardization Law based on their charters. Those exempted include the Bangko Sentral ng Pilipinas (BSP), Land Bank of the Philippines (LBP), Social Security System (SSS), Government Service Insurance System (GSIS), Development Bank of the Philippines (DBP), and the Securities and Exchange Commission (SEC). In its 2010 yearend report, the auditors noted that notices of disallowances, suspensions and charges were already served upon PEZA based on unauthorized pay hikes received during the period covering July 2009 to May 2010 amounting to P154.52 million. “Review of the expenditures for personal services of PEZA-HO (Head Office) and its branches for the calendar year 2010 disclosed that, despite the NS (notices of suspensions) earlier issued, the Authority continuously paid to PEZA officers and employees the questionable transactions totaling P93,651,135 more or less for the period June to December 2010," auditors said. During the exit conference with the COA team, PEZA management made a commitment to secure said approval from the Office of the President. A breakdown of PEZA’s personnel services expenses in 2010 showed that officials and employees received salaries amounting to P277.94 million in addition to “other personnel compensation" of P108.88 million and “other personnel benefits" totaling P144.6 million and “personnel benefits contribution" amounting to P33.89 million. Auditors said PEZA’s declared potential income listed under “accounts receivable" appears to have been bloated by the inclusion of P82.01 million supposed collectibles from companies/locators that have already ceased operations. “(T)he account includes receivables at the Cavite EZ (economic zone) of P36,500,255 and Mactan EZ of P45,510,565, or a total of P82,010,820, which have remained outstanding for several years. Records show that these dormant/inactive accounts pertain to various locators/enterprises whose operations have stopped for an unreasonable length of time, and whose owners or their authorized representatives could no longer be located," COA pointed out. — KBK, GMA News