SEC execs cleared on ‘unauthorized’ provident fund disbursement

SEC execs cleared on ‘unauthorized’ provident fund disbursement

MANILA – The Supreme Court (SC) cleared officials of the Securities and Exchange Commission (SEC) on a ruling that declared the latter’s disbursement of provident fund to employees unauthorized.

In a 24-page decision written by Associate Justice Amy Lazaro-Javier and recently published online, the tribunal “affirmed with modification” the Commission on Audit’s (COA) en banc decision on January 2018.

COA disallowed SEC employees and officials’ share in the provident fund contribution of its employees, amounting to PHP19.72 million.

Among other reasons, COA said the disbursement of the amount from retained income is not in accordance with rules since the purpose of the provident fund is to augment the maintenance and other operating expenses and capital outlays of SEC.

“When it comes to the determination of whether or not a disbursement is in accordance with accounting and auditing laws, the COA, not the Office of the President or the Department of Budget and Management, should be granted primary jurisdiction,” COA stated in February 2020 when it junked SEC’s appeal.

SEC elevated the case to the SC.

The SC modification on the COA decision said the approving, certifying and authorizing officers of SEC are absolved from refunding the disallowed amount.

“It is erroneous (and) unfair to conclude that only the SEC officers benefitted from the agency’s unauthorized counterpart contributions to their provident fund accounts,” the court said, noting that the other SEC provident fund members benefitted from contribution under the account of its officers, albeit indirectly.

The court said that since these members had already been absolved from liability, “it would therefore be unfair to hold the SEC officers liable to pay for the benefits which these other members indirectly received”.

The tribunal also said that since payees-recipients contribute an equivalent of 3 percent of their monthly salary, to order them to answer for the 15 percent counterpart contribution of the SEC would, in effect, make their total contribution equivalent to 18 percent of their monthly salaries.

“By ordering payees-recipients to return the amounts in effect increasing their provident fund contributions to 18 percent, low-ranked employees may already have a take home pay of less than PHP3,000,” the SC ruled. (PNA)

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