Interim Performance-Based Incentive (PBI) System for the Officers and Employees of GOCCs Covered by R.A. No. 10149

December 6, 2012

GCG MEMORANDUM CIRCULAR NO. 2012-11 (RE-ISSUED)

 

WHEREAS, on 20 July 2012, PRESIDENT BENIGNO S. AQUINO III formally issued EXECUTIVE ORDER No. 80, 1 (E.O. 80, s. 2012) in order to drive the performance in the bureaucracy and reward exemplary performance,which in Section 1 thereof formally adopted a Performance-Based Incentive (PBI) system for the National Government beginning Fiscal Year (FY) 2012, consisting of the following:

(a) Productivity Enhancement Incentive (PEI) — "in the amount of P5,000 shall continually be granted across-the-board, in accordance with the guidelines to be issued by DBM." 2

(b) Performance-Based Bonus (PBB) — "which is a top-up bonus . . . given to personnel of bureaus or delivery units in accordance with their contribution to the accomplishment of their Department's overall targets and commitments." 3

WHEREAS, Section 6 of E.O. 80 provides that it only covers "all departments, agencies, SUCs, andGOCCs that remain under the jurisdiction of DBM," 4and in fact Section 7 thereof encourages the GCG "to adopt the policies and principles contained in this EO and issue the necessary guidelines for GOCCs under its jurisdiction, pending the implementation of the Compensation and Position Classification System (CPCS) for GOCCs as mandated under RA 10149." Section 4 thereof provides that "Government-Owned or -Controlled Corporations (GOCCs), with existing authorized performance-based incentive or bonus systems shall harmonize the same with the PBB scheme." CcAESI

WHEREAS, Section 8 of R.A. No. 10149, formally designated as the "GOCC Governance Act of 2011", mandates the Commission to "develop a Compensation and Position Classification System [CPCS] which shall apply to all officers and employees of the GOCCs whether under the Salary Standardization Law or exempt therefrom and shall consist of classes of positions grouped into such categories as the GCG may determine, subject to the approval of the President."

WHEREAS, in addition, Section 10 (Additional Incentives) of the Act provides that "The GCG may recommend to the President, incentives for certain position titles in consideration of the good performance of the GOCC: Provided, That no incentives shall be granted unless the GOCC has fully paid all taxes for which it is liable, and the GOCC has declared and paid all the dividends required to be paid under its charter or any other laws";

WHEREAS, the Commission is currently rolling-out the workplan for the development of the CPCS for GOCCs which shall include a performance-based incentive system for Directors, Officers and Employees of the GOCC Sector, which is expected to be completed and submitted for approval of the President of the Philippines during the last quarter of FY 2013;

WHEREAS, there is a substantial distinction between National Government Agencies and GOCCs in that the latter are generally engaged in competitive industries, operate under market conditions, and thus directly compete with the private sector in attracting, retaining, and motivating a corps of competent personnel; EaCSTc

WHEREAS, there are GOCCs that have adopted, prior to R.A. No. 10149, their own performance-based incentive systems on the basis of their respective charters having granted them a corporate autonomy over their respective compensation systems;

WHEREAS, considering the limited period remaining for FY 2012, the Commission considered it prudent to adopt an interim PBI that is partially patterned after the policies and principles under E.O. 80, s. 2012 with the view of harmonizing and/or standardizing, as far as practicable, the performance based incentive system for GOCCs covered by R.A. No. 10149.

NOW, THEREFORE, in compliance with His Excellency's directive, the Commission in its en banc meeting held on 18 September 2012, resolved to formally adopt an INTERIM PERFORMANCE-BASED INCENTIVE (PBI) SYSTEM FOR THE OFFICERS AND EMPLOYEES OF THE GOCC SECTOR covered by R.A. No. 10149, pending the formal issuance and approval by the President of the final CPCS for GOCCs, as follows:

I. Adhering to the policies and principles contained in E.O. 80, s. 2012, a copy of which is attached hereto and made an integral part hereof as Annex A;

II. Subject to the following Guidelines provided in INTER-AGENCY TASK FORCE ON THE HARMONIZATION OF NATIONAL GOVERNMENT PERFORMANCE, MONITORING, INFORMATION AND REPORTING SYSTEMS Memorandum Circular No. (IATF M.C.) 2012-1 (13 August 2012), 2012-02, 2012-02 A (16 and 31 October 2012) and 2012-03 (12 November 2012) copies of which are attached hereto and made an integral part hereof as Annexes B, B-1 and C; HAaScT

HOWEVER, CLARIFIED AND/OR AMENDED TO PARTICULARLY COVER THE GOCC SECTOR AS FOLLOWS:

1. On the PEI. — The PEI, in the amount of P5,000, shall be granted across-the-board to covered officers and employees.

2. On the PBB.

A. For Profitable GOCCs — The grant of PBB shall be based on the performance of the individual officers and employees with the rate of incentive as a multiple of an officer's/employee's basic monthly salary based on the table below, but not to exceed an amount computed by using the same multiple to twice the basic monthly salary of the comparable NG position as provided in Annex D. A system of forced ranking shall be adopted.

 Thus, the PBB for Profitable GOCCs shall be distributed as follows:

Performance Category	Multiple Maximum
Distribution
Exceeded Expectations	(Best) 2.50 10%
Met All Expectations	(Better) 1.50 60%
Met Most Expectations	(Good) 1.25 20%
Below Expectations	(Below 0.00 10%
	Satisfactory)

 Provided, That the total cost of the PBB shall not result in a net loss before subsidy and after income tax in the GOCC's actual audited financial statements for FY2012. THCSAE

B. For Losing GOCCs — The grant of PBB shall also be based on the performance of the individual officers and employees with the following fixed rate of incentive. A system of forced ranking shall also be adopted.

 Thus, the PBB for Losing GOCCs shall be distributed as follows:

Performance Category	Amount Maximum
Distribution
Exceeded Expectations	(Best) P25,000 10%
Met All Expectations	(Better) P13,500 60%
Met Most Expectations	(Good) P7,000 20%
Below Expectations	(Below 0.00 10%
	Satisfactory)

C. Flexibility — The multiples and amounts provided herein are intended to provide a cap on the PBB that may be distributed by GOCCs. Nothing herein shall be construed as limiting the business judgment or authority of the Governing Boards to reduce the amounts to be distributed when giving due regard to the financial condition and existing policies of a particular GOCC. TCDcSE

3. Determination of Profitability. — The basis for a GOCC's profitability will be the projected net income for FY2012 (using actual January-November 2012 figures plus December 2012 estimate) before subsidy and after income tax.

4. Submission of GOCC Programs, Projects and Targets. — Adopting Guideline 8.0 of the IATF M.C. No. 2012-1, the Governing Boards of each GOCC, through their Chairpersons and CEOs, shall submit to the Commission the accomplished Forms A, A-1, and B on or before 30 October 2012, based on the GOCC's approved Corporate Plan for 2012 and/or Corporate Operating Budget for FY2012.

4.1. Effect of Non-Submission. — Pursuant to Guideline 9.0 of the IATF MC No. 2012-1, non-submission of the required forms shall render the GOCC ineligible for the Performance-Based Bonus for FY2012.

5. Required Rating on Major Final Outputs (MFOs) and Priority Program/Project Targets under the Five (5) Key Result Areas. — The PBB shall only be granted for GOCCs which have achieved at least 90% rating in their MFOs and their priority program/project targets under the 5 Key Result Areas as of 30 November 2012, which shall be validated pursuant to Certifications issued by the particular GOCC under the signatures of the Chairperson and President to be submitted to GCG on 12 December 2012 or as soon as the GOCC is in a position to provide such Certification. TaDAIS

6. Compliance with Good Governance Conditions. — Each GOCC, acting through its Governing Board, must satisfy 100% of the four (4) Good Governance Conditions mandated under IATF M.C. 2012-02 and 2012-02A (Annex B-1) as a condition to qualify their officers and employees to the PBB Scheme, which shall be validated pursuant to Certifications and submission to the GCG similar to Section 6 hereof.

7. Funding for the Interim PBI System. — Pursuant to Section 5 (b) of E.O. 80, the funding to support the Interim PBI System covered in this Circular shall be charged by GOCCs from their respective corporate funds, subject to the approval of their respective Governing Boards in accordance with applicable laws, rules and regulations.

8. Employee Coverage. 5—

8.1 Coverage. — Employees who occupy regular, casual or contractual positions shall be entitled to the PEI and PBB, provided:

a. They are still in service as of 30 November 2012; and

b. They have rendered at least four (4) months of service for the year to be entitled to the full amount of the PEI and the PBB. Those who have rendered less than four (4) months of service shall be entitled to the PEI in pro-rated amounts, but shall not be entitled to the PBB.

8.2 Exclusions. — Excluded from the grant of the PEI and PBB are those hired without employer-employee relationships and paid from non-Personal Services appropriations/budgets, as follows: CEDScA

a. Consultants and experts hired to perform specific activities or services with expected outputs;

b. Laborers hired through job contracts (pakyaw) and those paid on piecework basis;

c. Student laborers and apprentices; and

d. Individuals and groups of people whose services are engaged through job orders, contracts of service, or others similarly situated.

9. Period Covered. — The Interim PBI System shall cover FY 2012.

10. Date of Grant. — The grant of the PBI shall be paid not earlier than 17 December 2012.

This Circular shall take effect immediately upon its publication in the Commission's website www.gcg.gov.ph. SIDEaA

(SGD.) CESAR L. VILLANUEVAChairman

(SGD.) CESAR V. PURISIMADOF Secretary

(SGD.) MA. ANGELA E. IGNACIOCommissioner

(SGD.) FLORENCIO B. ABADDBM Secretary

(SGD.) RAINIER B. BUTALIDCommissioner

Footnotes

1. Entitled "DIRECTING THE ADOPTION OF A PERFORMANCE-BASED INCENTIVE SYSTEM FOR GOVERNMENT EMPLOYEES."

2. Sec. 1, E.O. 80.

3. Sec. 1, E.O. 80.

4. Emphasis supplied.

5. Adopted from DBM Circular No. 2011-04 entitled "Guidelines on the Grant of Productivity Enhancement Incentive (PEI) to Government Employees for Fiscal Year (FY) 2011 (05 December 2011).