Historical Background

The Provident Fund was created at the Philippine Postal Corporation together with its rules and regulations for its establishment and administration per Board Resolution No. 93-116 dated 14 October 1993.)

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 existing laws, rules and regulation.

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 November 10, 1993, has appropriated and released the amount of Thirty Million Pesos (P 30,000,000.00) to serve as “Seed Money” of the fund.  Under the Fund’s implementing rules, PPC is required to make contributions in the amount equivalent to 10% of each member- employee’s basic salary and correspondingly, member-employee’s contribution is equivalent to (5%) of the monthly basic salary as his share to the fund.  The initial member’s contribution and Corporation’s share started in June 1994. In 1996, Twenty Five Million (P25,000,000.00) of the “Seed Money” was used to pay the employer’s share.

In 1997, the Commission on Audit (COA) has ordered the discontinuance of the payment of 10% corporate share to the fund for lack of legal basis on its creation on the reason that Administrative Order No. 279 pertains to the establishment of Provident to Government Financial Institutions (GFIs) only. By reason of the said findings, the Department of Budget and Management disapproved the inclusion of the Corporate Share in the Corporate Budget for Calendar Year 1997 and 1998 which eventually not carried out in the succeeding years.  As a result, the PPC board of Directors has suspended the payment of its corporate shares to the Fund effective January 1998 but collection of the member-employee’s share to the Fund has stopped only in May 1998.

Although there was a temporary suspension of the collection of both corporate and employee’s 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. It’s creation has no legal basis;
  2. Disapproval by the DBM of the corporate share in the PPC corporate budget for CY 1997 and 1998; and
  3. By the 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 employees 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 Sec. 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 11, 2003, during the 105th Anniversary Celebration of the Philippine Postal Corporation, the President of the Republic of the Philippines, Her Excellency, Gloria Macapagal Arroyo granted the Post Facto approval of the creation of the Philippine Postal Corporation-Provident Fund Office. (Annex “B”)

To formalize the verbal announcement on the post facto approval of the PPC’s provident fund, the Executive Secretary, Alberto G. Romulo, in a letter to the Postmaster General, Mr. Diomedio P. Villanueva, dated November 3, 2003 stated that the President’s approval of the creation of the Provident Fund of The Philippine Postal Corporation was subject to the following conditions:

  1. The employers counterpart to the Fund should not exceed 5% of the employee’s basic salary;
  2. The employees shall be given the discretion to decide the amount of their contribution to the fund.
  3. The herein approval of the President shall be strictly effected in accordance with applicable budgeting, accounting and auditing rules and regulations.

In his letter of March 16, 2004 to Hon. Alberto G. Romulo, Executive Secretary, the PPC Corporate Officer-in-Charge Antonio Z. De Guzman requested a written confirmation on the status of the PPC’s 10% corporate share. Likewise, on September 13, 2004, PPC-Postmaster General Dario C. Rama wrote a follow-up letter to Hon. Eduardo R. Ermita, Executive Secretary requesting written confirmation whether the said 10% corporate share be treated as additional seed money or capital of PPC Provident Fund.

The above request of PPC-Postmaster General Dario C. Rama was referred by Senior Deputy Executive Secretary, Waldo Q. Flores on September 16, 2004 to Hon. Emilia T. Boncodin, Secretary, Department of Budget and Management.

In his comment to the letter-request dated September 13, 2004 of PPC-Postmaster General Dario C. Rama, Mr. Mario Relampagos, Acting Secretary of the Department of Budget and Management stated the following:

  1. Reiterates that the approval of the creation of the PPC Provident Fund is subject to the condition that the employer’s counterpart should not exceed 5% of the employee’s basic salary.
  2. It is their understanding that the employer’s counterpart contribution equivalent to 5% of the employee’s monthly basic salary is intended as additional capitalization of the Provident Fund.
  3. Said employer’s contribution shall not be automatically granted but should instead be based on the PPC’s attainment of its desired level of performance and profitability and shall be charged solely against corporate earnings.
  4. The operation of the fund shall also be governed by the by-laws being applied by PPC in the operation of PFO.

During the year 2008, the 50% of the outstanding corporate share was returned to Philippine Postal Corporation in compliance with the order of the Commission on Audit. The remaining 50% remained in the books of Provident Fund Office and lodged as additional capital of the fund amounting to P69,715,106.45.

Based on the foregoing, it can be concluded that the PPC-Provident Fund Office now legally exists.

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