EDITORIAL

Is Paying Signing Bonus Legal?

Is the granting of the Signing Bonus legal? The answer to this question can be gleaned in this Commission on Audit (COA) Decision No. 2001 – 123. The decision is published here in whole.

It will also serve as ready reference of government offices, and government owned and controlled corporation officials such as NFA and MKWD in case similar matter is brought to their tables for decision.

Moreover, this is a good resource material to resolve the case of Mrs. Corteza Dela Cruz Macahilig, Accountant of the DPWH, Aklan who has been objecting to the payment of the Signing Bonus to Aklan DPWH employees and officials.

Reading this decision will bring good understanding for the officials and employees regarding the matter on Collective Negotiation Agreement (CNA).

Commission On Audit Decision No. 2001–123
July 5, 2001

This is a "Petition for review of Mr. Leopoldo S. Veroy and Ms. Carolina M. Basilio, Executive Vice President and President of Alert and Concerned Employees for Better SSS (ACCESS), respectively, Social Security System, Quezon City, of CAO I Decision No. 2000-003 affirming the disallowance on the Signing Bonus granted to SSS officials and employees in the amount of P5,000 each.

DECISION

The Social Security System (SSS) entered into a Collective Negotiation Agreement (CNA) with the Alert and Concerned Employees for Better SSS (ACCESS) on July 10, 1996, upon which the SSS granted its officials and employees the amount of P5,000 as Signing Bonus. The former SSS Corporate Auditor, however, disallowed the grant under ND No. 97-002-0101 (96) dated July 7, 1997 for lack of legal basis based on the letter dated February 18, 1997 of the then Secretary, Department of Budget and Management (DBM), to the effect that the subject Signing Bonus is an allowance in the form of additional compensation prohibited by the Constitution.

In a letter-appeal dated September 29, 1999, notably filed more than two years from the date of the disallowance, the following matters were manifested:

1. The grant of the Signing Bonus was approved by the Social Security Commission (SSC) under Resolution No. 528 on July 3, 1996 pursuant to Article XIII of the CNA which took effect on July 10, 1996;

2. The SSC, which directs and controls the SSS, is by law vested with the power to grant Signing Bonus as provided in R.A. No. 1161, as amended;

3. The Civil Service Commission (CSC), in its letter dated May 21, 1996 to the ACCESS President, opined that Section 3[c] of R. A. No. 1161 authorizes the grant of Signing Bonus upon the conclusion of the CNA and that the word "compensation" without any qualification should be taken to mean gross compensation as distinguished from net compensation or from basic pay or salary, citing the definition found in Title II of the National Internal Revenue Code and the case of Manila Taxicab and Garage, Inc., vs. Court of Industrial Relations, 120 Phil. 1099, and;

4. The Public Sector Labor Management Council (PSLMC), the body created by law to implement Executive Order No. 180, which provided for the Guidelines for the Exercise of the Right to Organization of Government Employees, Creating a Public Sector Labor – Management Council, and For Other Purposes, ruled on the legality of granting Signing Bonus after the conclusion of the collective negotiation agreement in the case of the National Housing Authority (Resolution, dated September 22, 1995).

Under CAO I Decision No. 2000-003 dated January 27, 2000, it was stressed that the DBM had the sole power and discretion to administer the compensation and position classification system of the national government, citing the case of Cruz vs. Court of Appeals, et. al., G.R. No. 119155, January 30, 1996. Thus, the opinion that Section 16 of R.A. No. 6758 has repealed all laws, decrees, etc., that exempt agencies from its coverage should be respected. Likewise, it was added that the DBM took exception to the grant of Signing Bonus to the NHA rank-and-file employees pursuant to the signing of NHA’s CNA on July 31, 1995 and the fact that E.O. No. 180 has enumerated all items covered by the negotiation, excepting therefrom financial or monetary benefits which only Congress can grant.

The issue that poses itself for resolution dwells on the legality of granting the amount of P5,000 Signing Bonus to the SSS officials and employees pursuant to the CNA.

After evaluation, this Commission deems it wise not to solely concentrate on the procedural matter of timeliness in the filing of this petition. The substantive and more important issue to be resolved as presented herein must be addressed. It has been the stand of this Commission, as it adheres to the position enunciated under CAO I Decision No. 2000-2003, that the DBM has the sole discretion to administer the compensation and position classification of the National government. It is clear that Section 16 of RA No. 6758 has expressly repealed all "laws, decrees, executive orders, corporate charters, and other issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classification, salaries, pay rates or allowances of specified positions, or groups of officials and employees or of agencies, which are inconsistent with the System xxx." This provision of law negates, as it does, the power of government–owned and controlled corporations to determine the rates of allowances or to fix compensation for that matter.

The SSC anchored the issuance of its Resolution authorizing the grant of the Signing Bonus on its power provided under Section 3[c] of R.A. No. 1161, which provides that "the Commission, upon the recommendation of the Administrator xxx; fix their compensation; xxx." A precedent in the grant of Signing Bonus is NHA’s case and the reply of the CSC upholding the legality of the grant under Section 3[c] of R.A. No. 1161 were cited as explanations. Analyzing the above considerations, this Commission rules that the SSC Resolution and the CSC opinion were issued without regard to the provisions of R.A. No. 6758, particularly Section 16, supra. Similarly, the PSLMC’s ruling in the NHA case is based on P.D. No. 757, the law creating the National Housing Corporation which authorizes "the General Manager, subject to the approval of the Board to determine rate of allowances, honoraria or such additional compensation." To reiterate, these powers of government corporations to fix compensation to determine rates of allowances have been undoubtedly repealed by R.A. No. 6758.

WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of legal basis. Decision is signed by GUILLERMO N. CARAGUE, Chairman, and RAUL C. FLORES and EMMANUEL M. DALMAN, Commissioners.

It is very clear that the DBM has the sole discretion to administer the compensation and position classification of the national government. Section 16 of RA No. 6758 has been repealed and the provision of law negates the power . . .to determine the rates of allowances or to fix compensation.

Hence, the petition of SSS employees to approve on audit the payment of Signing Bonus was denied for lack of legal basis. /MP