October 20, 2017, 8:44 am
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NTA clarification

THIS refers to the news article “P728 paid in invalid bonuses, allowances” that appeared in Malaya Business Insight on November 2, 2016, and carried online on the same date by your news website http:www.malaya.com.ph/business-news.

We would like to draw your attention to the inaccurancy of said news article, as it does not speak the truth or is misleading as far as the National Tobacco Administration is concerned.

According to the news article, NTA is one of those government-owned or –controlled corporations (GOCCs) who paid their personnel in “questionable compensation” or “invalid bonuses and allowances.”

While it is true that we received a notice of disallowance from the Commission on Audit (COA) amounting to P2.012 million, we want to clarify that said disallowance is not a case of illegal bonuses for our personnel, as the news article suggests, but for incentives given to our tobacco farmers in the form of farm implements, which COA deemed to be “extravagant expenses,” per Letter of Disallowance dated June 24, 2016 by Divina M. Telan, COA OIC Supervising Auditor.

The source of the news report, the 2015 Financial Report of GOCCs submitted by COA to President Rodrigo Duterte and Congress, does not say a word attributing to NTA any act, directly or by implication of issuing illegal bonuses of unauthorized personnel compensation to its personnel.

Allow me to give an overview on the basis of COA’s findings. In tobacco crop year 2013-2014, NTA awarded farm implements, such as water hose, sprayer, rake, tool box set, among others, to the farmer-cooperators of its flagship project the tobacco Contract Growing System (TCGS) as incentives for religiously following Good Agricultural Practices (GAP). COA disallowed the transaction in its audit, declaring the incentive awards as an “extravagant” expenditure as defined under COA Circular No. 2012-13 (dated October 29, 2012). Item 6.1 of said circular defines “extravagant” as an expenditure which signifies those incurred without restraint, judiciousness and economy. “Extravagant” means exceeding the bound of propriety, and “extravagant expenditures” are immoderate, prodigal, lavish, grossly excessive and injudicious.

COA disallowed the subject expenditure on the premise that certain criteria in the grant of awards to our TCGS as embodied in the project proposal and the qualifications of contestants in the Tobacco Grower of the Year (TGY) contest for the same period are almost parallel. The auditors concluded that the awarding  of incentives is deemed no longer necessary since the TCGS could have just participated in the TGY contest.

We note in this regard that TCGS farmers are given incentives to encourage adoption of the prescribed production practices, for them to excel in the production of quality tobacco and earn higher income, which may qualify them as contestant to the TGY contest, which is a competition among the farmer-cooperators who have already proven their excellence in tobacco production years before.

On August 12, 2016, we filed an appeal before the Commission on Audit’s Office of the Cluster Director, Corporate Government Sector (Cluster 5), to seek the reversal of the COA’s Notice of Disallowance. Here we explained with emphasis that the disbursement for grant of incentives awards for our tobacco farmers was not made for personal or selfish ends.

The incentive that NTA gave our farmers would cost an average of only P1,000 per farmer-cooperator, in the form of farm implements, which were purchased through a public bidding and approved by the Governing Board, and without findings of overpricing irregularities in the bidding process. – EDGARDO D. ZARAGOZA, Administrator, National Tobacco Administration
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