The Commission on Audit (COA) has ordered the Social Security System (SSS) to refund P5.59 million deducted from the supplier of its Unified Multi-Purpose Identification (UMID) card, ruling that there was no legal basis for the liquidated damages imposed.

The ruling, issued by the COA En Banc on 5 March 2026, partially granted a money claim filed by Allcard Plastics Philippines Inc., which sought the refund of the deducted amount.

COA said the SSS erroneously deducted P5.59 million from Allcard.

The supplier had questioned the deductions, arguing that the SSS had no legal or contractual basis to impose the amount as “liquidated damages.”

The deductions were originally made by the SSS due to alleged delays by the supplier in developing and customizing UMID card chip applications for a contract that was bid out in 2015.

Auditors determined that there was no sufficient basis for the penalties, and the withheld funds must therefore be returned to the petitioner.

It said the imposition of liquidated damages by the SSS against the petitioner had no sufficient legal basis.

“Hence, all the foregoing being considered, the amount of P5,590,812.63 … deducted by the SSS should be refunded to the petitioner,” the ruling said.

Allcard contested the deductions and submitted copies of Certificates of Acceptance issued by the SSS dated 22 January 2018 to support its contention that it had successfully demonstrated the actual personalization using the complete program.

Documents were also submitted by the supplier confirming its compliance with the second component of the agreement and acknowledging receipt of the source codes for the program used to load and personalize the Security Access Management Module applet.

COA noted in its ruling the certificates of acceptance issued by the SSS confirming that Allcard had fulfilled its obligations regarding the conduct of acceptance tests and the turnover of the UMID card chip applications.

It said that by issuing these certificates, the SSS acknowledged and accepted the petitioner’s compliance with its obligations.

However, Allcard’s claim for interest and attorney’s fees was not allowed due to lack of jurisdiction since the amount involved cannot be established simply by arithmetical processes.

The joint venture of Allcard and Stradcom Corporation had earlier won the bid for the UMID project.