MEMORANDUM

FOR : LANIE H. GAMOS

HR, Chief of Division

THROUGH : ATTY. MARIA ROSALIE RICHA A. TAGUIAN

Vice-President for Legal and Loan Processing for Visayas and
Mindanao Group

FROM : ATTY. LEO B. DEOCAMPO

OIC-Manager, Legal Department

SUBJECT : REQUEST FOR LEGAL OPINION ON THE RELEASE OF

PRODUCTIVITY INCENTIVE BONUS FOR FY 2013

DATE : 2 FEBRUARY 2015

The issue is whether the Performance Based Bonus (PBB) and Performance Incentive
Bonus (PIB) are of similar nature, thus the release of one precludes the release of the
other.

In a letter dated 10 December 2014, you sought our opinion regarding the nature of
PBB and PIB. You mentioned that on July 2014 the PBB for Fiscal Year 2013 was
released. In addition, clarification was sought whether PIB should still be released
notwithstanding the earlier release of PBB, taking into consideration the seemingly
similar nature of the two.

DISCUSSION:

The grant of PBB bars the release of PIB.

In a letter dated 21 July 2014 received from the Governance Commission for
Government Owned or Controlled Corporation (GCG) clearly states that the release
of any other bonus on the basis of performance precludes the release of PBB. One of
the conditions established prior to the grant of PBB for FY 2013 is that no incentive
based on performance has been received by the employee, viz:

“We respectfully remind the Governing Board to ensure that SHFC’s grant of FY
2013 PBB should observe the following conditions:
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 4. No other performance-based bonus or its equivalent has been released
or will be released for FY 2013 in addition to the PBB scheme provided
under GCG MC No. 2013-05 (Re-issued).”

It can be inferred from the foregoing letter from GCG that a performance-based bonus
can be availed only once. This conclusion is found in the unequivocal language in the
aforementioned letter of GCG for SHFC’s information and guidance. Had they allowed
several form of performance-based compensation, they should not have explicitly stated
the condition precedent to the release of PBB.

Thus, the release of PBB on July 2014 bars the release of PIB, which according to
Human Resources Department, representation is based on performance of employees
for the annual rating period. In the same manner, when PIB is released, there can be no
additional bonus in the form PBB.

Additionally, the prohibition of the release of PIB once PBB is granted, finds its raison
d’etre in GCG Memorandum Circular No. 2013-05, the 2013 Interim Performance –
Based Bonus (PBB). The said Circular categorically stated that Executive Order No. 80,
s. 2012 entitled, “Directing the Adoption of a Performance-Based Incentive System for
Government Employees”, was issued to provide incentives that support and encourage
performance-driven and efficient GOCCs. This incentive is geared towards the best
interest of productive employees. It is a form of reward for the praiseworthy services the
employees rendered which by far exceeds the conventional requisite of the corporation.

Similarly, in Circular Letter No. 2001-6 of the Department of Budget and Management,
guidelines were set regarding the Grant of Productivity Incentive Benefit, to wit:

“3. Agency heads are, however, prohibited from establishing and authorizing a
separate productivity and performance incentive award or any form of the same
and similar nature.”

The implication, carefully teased out, reveals the PIB may only be released provided no
other performance incentive award be given. In the same manner, the touchstone of the
Circular No. 2001-6 is recognizing the services by the employees which surpass the
customary requirement.

To further cement the foregoing arguments, Provision No. _____ of the Collective
Bargaining Agreement (CBA) between SHFC and SOHEIA lucidly states that the grant
of PIB is subject to the actual performance of the employees for the annual rating
period.

It cannot be denied that the guidelines established for the release of incentives have
reached a critical juncture in the seemingly baffling nature of PIB and PBB. Both are
designed to fortify employees in the form of financial remuneration to put forth best
services they can possibly render.

However, the abovementioned Circulars and Letter defined the sharp limits on the
application of PBB and PIB. These two forms of incentive has its own standards which
are unyielding and exact. In fact there is a ringing emphasis in the languages used as
conditions for the release of the award, that there are no other incentive received. The
bottom line is that the release of PIB precludes the release of PBB, and vice versa.

In the truest sense of the words, a laudable act need not be twice compensated. Truly,
quality of work must rightfully be acknowledged and recognized, but guidelines must
govern this situation.

RECOMMENDATION

The better part of wisdom right now is not to release the PIB because of the prior
release of PBB.

With conformity:

______________________________________
ATTY. MARIA ROSALIE RICHA A. TAGUIAN