P27 million disallowance vs PhilSOC upheld

MANILA, Philippines — The Commission on Audit has upheld the validity of a Notice of Disallowance (ND) covering a P27.22-million fund transferred by the Philippine Sports Commission (PSC) to the Philippine Southeast Asian Games Organizing Committee (PhilSOC) in preparation for the 2005 Southeast Asian Games.

In an eight-page decision, the COA denied the petition for review with prayer for relief from judgment and exclusion from liability filed by former PhilSOC president Jose “Peping” Cojuangco Jr. and three other former PhilSOC officials, namely secretary-general Stephen Hontiveros, deputy secretary-general Jose Capistrano Jr. and treasurer Ernesto Ortiz Luis.

The state auditors issued the ND on Nov. 11, 2015 after finding out that PhilSOC’s expenditures amounting to P27.224 million included transactions without the required approval of PhilSOC officials, while others had no supporting receipts or documents.

The money used for the expenditures was drawn from the funds transferred by the PSC to PhilSOC for the country’s hosting of the 23rd SEA Games held on Nov. 27 to Dec. 5, 2005.

COA records showed that prior to the issuance of the ND, its auditors first issued a Notice of Suspension (NS) regarding the questionable expenditure in November 2009. As the PhilSOC officials failed to settle the NS, an ND was issued on Nov. 11, 2015.

As no appeal was filed within the reglementary period, the ND became final and executory and thus, the COA issued a Notice of Finality of Decision (NFD) on Aug. 4, 2016 and a COA Order of Execution (COE) on Sept. 6, 2016.

In their petition, Cojuangco and the other former PhilSOC officials said they were denied due process as the notices of COA were served to the PSC chairman who forwarded the same to PhilSOC.

The petitioners said they were not able to accurately comprehend the directives of the auditors because of the “defective” serving of the notices.

The petitioners also argued that the auditors should not have applied government accounting standards on the PhilSOC’s liquidation of its expenditures as it is a private, non-government organization that has its own accounting principles and was bound by its Memorandum of Agreement with the PSC.

In its decision, however, the COA said the issuance of the NS, ND and NFD prior to the order of execution already amply gave the petitioners the opportunity to exercise their right to be heard, thus “their contention that they were denied due process is misplaced.”

As to the government accounting standards applied by the auditors on PhilSOC’s expenditures, the COA said this was because the transactions involved government funds.

“The fund involved is a government fund transferred to PhilSOC for the 2005 SEA Games; hence, the government accounting standards shall apply,” the COA’s decision read.