Cebu port execs, employees told to refund P31.7-million perks

MANILA, Philippines - The Commission on Audit (COA) is ordering the Cebu Ports Authority (CPA) to cause the refund of over P31.7 million in traditional cash gifts illegally granted to its officials and employees in 2009 and 2010.

State auditors said the grant of mid-year and year-end bonuses along with gift checks to executives and personnel of the government-owned and controlled corporation (GOCC) during the past two years was in violation of Republic Acts 6686 and 8441, the laws that allow government employees to receive cash gifts during Christmas.

In its 2010 audit report, COA said the CPA failed to secure the approval of the Department of Budget and Management (DBM) before giving out additional benefits and also violated the law on how state-owned institutions should prepare and approve its operational budget as well as the Government Auditing Code of the Philippines.

“The grant of traditional mid-year and year-end benefits and gift checks in the total amount of P31,790,466.42, of which P15,261,903.46 was paid in 2009, and P16,528,562.96 in 2010, was unauthorized,” COA said.

The concerned CPA officers and employees, according to state auditors, should be required to refund the bonuses and cash gifts they received and that the grant of these benefits should be stopped.

Records show that CPA officials and personnel received more than P4.9 million in mid-year bonuses, over P11.4 million in year-end bonuses, and more than P15.3 million in cash gifts in 2009 and 2010.

These benefits were supposedly granted in compliance with an order issued by Branch 5 of the Cebu City regional trial court (RTC), 7th Judicial Region directing the CPA “to immediately release to the petitioners, their co-employees and/or officers, their traditional one-month mid-year and two months’ year-end benefits, including gift checks of P10,000 to each employee and/or officer for the years 2003 and 2004, and to continue every year thereafter.”

The COA, however, believes that the CPA should not follow the court’s order based on an opinion by its Office of the General Counsel (OGC) of the Legal Service Sector dated April 24, 2009.

“The foregoing elucidation abundantly provides reasonable bases for declaring the continuous grant of traditional year-end incentives to be legally infirm,” the legal opinion read.

As to the payment of traditional benefits by virtue of a decision issued by the RTC 7th Judicial Region Branch 5 in Cebu City, the General Counsel cited a Supreme Court (SC) ruling: “The erroneous application and enforcement of the law by public officers does not estop the Government from making a subsequent correction of such errors.”

“More specifically, where there is an express provision of law prohibiting the grant of certain benefits, the law must be enforced even if it prejudices certain parties due to an error committed by public officials in granting benefit. Practice, without more, no matter how long continued, cannot give rise to any vested right if it is contrary to law,” further stated the SC decision in the case of Baybay Water District versus COA dated Jan. 23, 2002.

On such basis, COA said the P31.7 million in traditional cash gifts granted to the CPA officials and employees should be refunded and the practice should be stopped.

Despite the directive, state auditors said the CPA management is refusing to heed COA’s recommendations, saying “they will abide with the ruling of the (RTC) to pay the traditional benefits and gift checks” for fear of being cited in contempt.