THE Supreme Court (SC) has affirmed a 2013 finding by the Commission on Audit (CoA) which concluded that the Securities and Exchange Commission (SEC) had no authority to apply its retained earnings in 2010 to pay for a P19.7-million contribution to the employee provident fund, but ruled that the officials involved did need to refund the disallowed disbursements.

In a decision dated April 27 and published on June 25, the court said CoA’s disallowance was valid because Section 75 of the Securities Regulation Code or Republic Act 8799 authorizes SEC to use its retained earnings “subject to the auditing requirements, standards and procedures under existing laws.”

The SC said one such law is the General Appropriations Act of 2010, which specifies that SEC’s retained earnings “shall be used to augment (its) MOOE (Maintenance and Other Operating Expenses) and Capital Outlay requirements,” with no provision for personnel costs.

However, the SC found that the SEC officials acted in good faith and were absolved from having to pay back the funds.

It found that the SEC had been using its retained earnings to pay its provident fund contribution for five years without having been flagged by CoA.

The SEC officers were also not found to have unduly benefited from the unauthorized disbursement. — Bianca Angelica D. Añago