Historical Background of Provident Fund

The Provident Fund was organized at the Philippine Postal Corporation pursuant to Administrative Order No. 279 which prescribed the rules and regulations for the establishment and administration of a Provident Fund of Agencies covered by Sec. 41 of the General Provisions of R.A. 7180. Board Resolution No. 93-116 dated October 15, 1993, approved the creation of Provident Fund in the Philippine Postal Corporation including the rules and regulations for its establishment and administration. The primary objective of its establishment and operation is to maximize the payment of benefits to PPC employees and officials as a fitting reward for their faithful and dedicated service, in addition to the usual retirement benefits under the existing laws, rules and regulations. The Provident Fund is a source of quick funds to cover the unexpected financial needs of postal employees, thereby discouraging them from going to

private financiers and preserve their dignity as PHILPOST employees. To initially fund its operation, the Philippine Postal Corporation, through Board Resolution NO. 93-125 dated 10 November 1993, has appropriated and released the amount of Thirty Million Pesos (P30,000,000.00) to serve as Seed Money of the Fund. Under the Funds implementing rules, PPC is required to make contributions in the amount equivalent to 10% of each member-employees basic salary and correspondingly, member-employees contribution is equivalent to (5%) of the monthly basic salary as his share to the Fund. The initial members contribution and Corporations share started in June 1994. In 1997, the Commission on Audit (COA) has ordered the discontinuance of the payment of the 10% corporate share to the fund for lack of legal basis on its creation which subsequently resulted to disallowance by the Department of Budget and Management. As a result, the PPC Board of Directors has suspended the payment of its corporate shares to the Fund effective January 1998 but the

collection of the member-employees share to the Fund has stopped only in May 1998. Although there was a temporary suspension of the collection of both corporate and employees contributions, the Fund has continued its business of granting Multi-Purpose Loan, Educational Loan and Calamity Loan to its members. Subsequently, PPC Board Resolution No. 2000-38 authorized the management to terminate the existence of the Fund on the weight of the recommendation by the Joint Board and Management Committee which endorsed its termination for the following reasons: (1) Its creation has no legal basis; (2) Disapproval by DBM of the corporate share in the PPC corporate budget for CY No. 1997 and 1998; and (3) By reason of its tight financial condition, PPC cannot sustain payment of its share to the Fund, among others. However, in the view of a diffused position of labor and upon popular clamor of various labor organizations, the Board suspended the implementation of the said resolution and, instead, created an Ad Hoc committee tasked to integrate the collective sentiments and to unify position of various labor unions.

On October 3, 2002, former Postmaster and CEO Nicasio P. Rodriguez, Jr. requested the Office of the President of the Republic of the Philippines for a Post Facto approval of the Philippine Postal Corporation Provident Fund Office. However, the request was denied through a letter from the then Department of Budget and Management Secretary Emilia T. Boncodin stating that the creation of the Fund and the Commitment of government resources thereto have no sufficient legal basis. PPC Board has not yet adopted the advice of DBM pending study of other options, which will be both amenable to the employee-members and the corporation. On November 03, 2003, during the 105th Anniversary Celebration of the Philippine Postal Corporation, the President of the Republic of the Philippines, Her Excellency Gloria MacapagalArroyo granted the Post Facto approval of the creation of the Philippine Postal Corporation Provident Fund Office.