DISPOSITIVE:

“ACCORDINGLY, Decision No. 2018-010 dated January 17, 2018 and Resolution No. 2020-180 dated January 29, 2020 of the Commission on Audit – En Banc are AFFIRMED with MODIFICATION. The approving, certifying, and authorizing officers of the Securities and Exchange Commission are absolved from refunding the disallowed amount solidarily and individually under Notice of Disallowance No. 11-003-101-(10) dated December 10, 2011.

So Ordered.“

SUBJECTS/DOCTRINES/DIGEST:

WHAT HAPPENED IN THIS CASE?

SEC INCREASED ITS COUNTERPART CONTRIBUTION TO THEIR PROVIDENT FUND BY 15% ACROSS THE BOARD. THEY SOURCED THE INCREASE FROM THEIR RETAINED INCOME. COA DISALLOWED THE INCREASE BECAUSE UNDER THE GENERAL APPROPRIATIONS ACT OF SAID YEAR (2010) RETAINED INCOME MUST ONLY BE USED FOR CAPITAL OUTLAY AND MAINTENANCE AND OTHER OPERATING EXPENSES. FURTHER COA REQUIRED THE SEC OFFICERS RESPONSIBLE FOR THE INCREASE TO RETURN SUCH DISALLOWED 15% INCREASE AS WELL AS WHAT THEY PERSONALLY RECEIVED AS A RESULT OF THE INCREASE. OTHER EMPLOYEES WERE NOT ORDERED TO REFUND WHAT THEY RECEIVED. SUPREME COURT SAID THE OFFICERS CANNOT BE COMPELLED TO RETURN THE DISALLOWED INCREASE BECAUSE THEY ACTED IN GOOD FAITH. THEY ARE NOT ALSO BE COMPELLED TO RETURN WHAT THEY PERSONALLY RECEIVED BECAUSE IT WILL RESULT TO UNDUE PREJUDICE AND BY REASON OF EQUAL PROTECTION OF THE LAW. IF OTHER EMPLOYEES ARE NOT ORDERED TO REFUND WHAT THEY RECEIVE, THE OFFICERS MUST NOT ALSO BE ORDERED TO REFUND.

Finally, undue prejudice would also occur if the payees-recipients, including the concerned SEC officers, are made to foot an additional 15% contribution which ought to have been shouldered by the SEC itself. To repeat, payees-recipients contribute an equivalent of 3% of their monthly salary. To order them to answer for the 15% counterpart contribution of the SEC would, in effect, make their total contribution equivalent to 18% of their monthly salary. Under Section 4342 of the General Provisions of GAA 2010, salary deductions for provident funds, among others, is allowed so long as an employee’s total take home pay will not fall below P3,000.00. By ordering payees-recipients to return the amounts in effect increasing their provident fund contributions to 18%, low-ranked employees may already have a take home pay of less than P3,000.00.

All told, the SEC officers would suffer undue prejudice should they be compelled to return the amounts paid under their names in the provident fund using SEC’s retained earnings. At any rate,.it could also disrupt the provident fund system and cause unforeseen damage and complications to its finances.

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