Ex-SEC officials, staff cleared of ‘unauthorized’ salary increase

MANILA, Philippines — Former officials and employees of the Securities and Exchange Commission (SEC) will no longer have to return P92 million worth of funds allotted for salary increases, which the Commission on Audit (COA) previously flagged as unauthorized, the Supreme Court ruled.

With 12 votes, the SC unanimously “granted in part” the petitions of SEC and its former chairperson, Teresita Herbosa, which sought to reverse the COA’s notice of disallowance in 2014 that invalidated the grant of salary increase to SEC’s officials and employees in 2012.

“The authorizing, approving and certifying officers of the Securities and Exchange Commission, namely, Securities and Exchange Commission Chairperson Teresita Herbosa, Commissioner Eladio Jala, Director Adelaida Navarro-Banaria, Thoureth dela Cruz and Renato Santos, are absolved from returning the disallowed amount,” said the 46-page ruling issued by SC Associate Justice Amy Lazaro-Javier and promulgated in Jan. 28. 

It added, “The 440 employees named in the Notice of Disallowance (in 2014) ...  are excused from returning the amounts they respectively received totaling P92,740,109.10.” 

The high court also “nullified” COA’s January 2022 resolution that required the petitioners to return the amount used for salary increase.

According to court records, the SEC, then headed by Herbosa, implemented a salary increase within the agency in 2012, invoking provisions of the Securities Regulation Code (SRC) that allowed using its retention income for the salary increase even without the approval of the Office of the President.

The SC maintained the COA was right in issuing the notice of disallowance since SEC “has no authority to grant any salary adjustment to its officials and employees without securing the prior recommendation of the DBM (Department of Budget and Management) and the approval of the President.”

It cited pertinent laws and presidential orders, past jurisprudence and even a provision of the SRC that “merely exempts the SEC from any laws, rules and regulations on compensation, position classification and qualification standards.”

“Jurisprudence has invariably recognized the role of the DBM to recommend the grant of the proposed increase in salary or compensation and its power to prescribe rules to regulate the payment of compensation to employees of the government. The Court has also ordained that without presidential approval and DBM recommendation, any salary adjustments granted to GOCCs (government-owned and controlled corporations) or GFls (government financial institutions) are considered unauthorized and irregular,” the SC added. 

The high court also sided with COA in ruling that SEC violated provisions of the 2012 General Appropriations Act (GAA) in using the latter’s retention income for the salary increase.