Unpaid GOCC dividends
Five government-owned and -controlled corporations (GOCC) have failed to pay, since 2016, dividends to the government worth P110.23 billion.
Finance Secretary Carlos Dominguez III said these GOCCs and their dividend arrearages are: Philippine Deposit Insurance Corp. with P46.5 billion; Power Sector Assets and Liabilities Management Corp., P29.87 billion; National Power Corp., P20.66 billion; Philippine Charity Sweepstakes Office, P6.89 billion; and Civil Aviation Authority of the Philippines, P6.31 billion.
During the Aquino administration, the GOCCs’ annual remittance of dividends to the government was held in Malacañang with President Benigno Aquino III in attendance. The billions of pesos in dividends were showcased as proof of the efficiency and competence of the country’s then economic managers.
Under Republic Act 7656, GOCCs are required to “declare and remit at least 50 percent of their annual net earnings as cash, stock or property dividends to the national government.”
The rationale for this requirement is simple: Since GOCCs are engaged in commercial activities, it is only fair that they share their profits or earnings with the taxpayers who put up the capital for their operation.
In 2011, Congress enacted the GOCC Governance Act, which made the ability of a GOCC to meet its revenue targets and, in the process, able to remit dividends to the government as one of the criteria in measuring the performance of its directors.
The GOCCs named by Dominguez raised various reasons for their failure to meet their dividend obligations, which ranged from poor collections to exemption by their charter from such payout to questions about figuring out whether they incurred a surplus or a loss in their operations.
Whatever may be the excuse cited to explain their noncompliance, this issue should be resolved quickly and convincingly because the arrearages bring back memories of the past when GOCCs were used as milking cows by their officials.
Invoking their so-called financial autonomy, the officials awarded themselves perks and privileges that were not commensurate to their duties and responsibilities or relevant to their operation.
To make the employees “keep their mouths shut,” they were given, among others, cost of living allowance, amelioration allowance, anniversary bonus, hazard pay and what-have-you.
As a consequence, these expenses ate into the GOCCs’ income and impaired their ability to comply with their dividend obligation.
It is unfair to burden the people with the additional and new taxes proposed in the administration’s comprehensive tax reform program when billions of pesos in dividends are available for the asking by the government, as a matter of right, from GOCCs.
Understandably, the GOCCs concerned will fight tooth and nail and cite all legal arguments available, including invoking close ties with the powers-that-be, to justify their failure to comply with their dividend duties.
Through a deft application of accounting rules, revenues can be undercut, expenses bloated, reserves for contingencies exaggerated, and board resolutions manufactured to show that millions of pesos have been allocated for future projects.
Taken at their face value and without further inquiry, these actions can provide a good cover (no matter how disputable) for the GOCCs’ inability to share their earnings with the government.
It does not take rocket science to figure out where the appropriated funds would eventually wind up or who would be singing their way to the bank.
It is not farfetched that Dominguez may, for one reason or another, give credence to the reasons cited by the delinquent GOCCs for their failure to comply with their dividend obligation.
That’s perfectly within his authority. But the problem is, in government, when special treatment is given to one agency, expect the other offices to demand a similar treatment. The result? The exception becomes the rule.
Turning back the clock on the enforcement of the dividend requirement on GOCCs would be contrary to the principles of good corporate governance.
