Social Security System v. Commission on Audit
REITERATIONFacts
The Antecedents: From January 2005 to December 2009, the Social Security System (SSS) Central Visayas Division granted Collective Negotiation Agreement (CNA) incentives to its employees totaling P41,311,073.83. These incentives were purportedly authorized by various Social Security Commission Resolutions. However, the Commission on Audit (COA) Central Visayas Division issued a Notice of Disallowance, citing several reasons: the incentives were not provided for in the Collective Negotiation Agreement for certain years, excessive accruals were used as a basis for payment, and no conclusive proof of generated savings from cost-cutting measures was presented. The COA also found the disbursements to be irregular or excessive, failing to meet conditions set by Public Sector Labor-Management Council (PSLMC) Resolution No. 2, s. 2003. Consequently, several officers were found liable for their participation in the transactions. Procedural History: The SSS Central Visayas Division received the Notice of Disallowance on June 26, 2012. The SSS filed an Appeal Memorandum on December 21, 2012, arguing the lawfulness of the incentives based on supplemental agreements and cost-cutting measures. The COA's Corporate Government Sector Cluster 2 (CGS-Cluster 2) denied this appeal in Decision No. 2015-003, affirming the disallowance and ruling that the grant of incentives lacked a legal basis and failed to comply with governing circulars. The SSS received this decision on March 5, 2015. Subsequently, the SSS filed a Petition for Review with the COA Proper on March 12, 2015. However, the COA Proper dismissed this petition in Decision No. 2015-450, dated December 29, 2015, deeming it filed out of time, and thus declared the CGS-Cluster 2 Decision final and executory. The Petition: The SSS filed this Petition for Certiorari under Rule 64 of the Rules of Court, assailing the COA Proper's Decision that dismissed its petition for review as tardy. The SSS contends that its petition for review was timely filed, arguing that the reckoning date for the appeal period should be when its Chief Legal Counsel received the CGS-Cluster 2 Decision, not when its President and Chief Executive Officer received it. Furthermore, the SSS maintains that the grant of incentives was a lawful exercise of its statutory prerogative under its Charter and within the bounds of the law, specifically Section 25 of the Social Security Act of 1997, and that Presidential Decree No. 1597 was repealed by the Social Security Act of 1997. The SSS argues that no presidential approval is needed for granting reasonable compensation, allowances, and benefits to its employees. The respondent, COA, counters that the petition was indeed filed out of time and reiterates its grounds for disallowing the incentives, asserting that the SSS failed to comply with the requirements of relevant circulars and resolutions, and that its decisions were not made with grave abuse of discretion.
Issue(s)
Whether the COA's CGS-Cluster 2 Decision became final and executory due to the petitioner's failure to file its Petition for Review on time. Whether the COA correctly disallowed the grant of Collective Negotiation Agreement incentives to petitioner's Central Visayas Division employees. Whether the approving and certifying officers, and the recipients of the Collective Negotiation Agreement incentives should return the amounts they received.
Ruling
The Supreme Court dismissed the Petition for Certiorari. It affirmed the COA's disallowance of the CNA incentives and held that the approving and certifying officers, as well as the recipients, are liable to return the disallowed amounts.
Ratio Decidendi
On the timeliness of the appeal: The Court held that the COA's CGS-Cluster 2 Decision became final and executory because the petitioner, SSS, failed to file its Petition for Review within the reglementary period. The Court noted that even if the reckoning date for receiving the decision was considered as March 5, 2015 (when the President and CEO received it) or March 9, 2015 (when the Corporate Legal Counsel received it), the petition filed on March 12, 2015, was still beyond the remaining two days of the six-month period allowed for appeal. The Court reiterated that decisions of the COA become final and executory if not properly appealed, and SSS failed to demonstrate grave abuse of discretion by the COA in dismissing the petition for being filed out of time. On the disallowance of CNA incentives: The Court affirmed the COA's disallowance, finding that SSS failed to comply with the conditions set forth in Public Sector Labor-Management Council (PSLMC) Resolution No. 2, s. 2003, Administrative Order No. 135, and Department of Budget and Management (DBM) Budget Circular No. 2006-01. Specifically, the Court noted the absence of a Supplemental CNA providing for the incentives, the failure to identify specific cost-cutting measures in the CNAs, the fact that actual operating income did not meet targeted income in certain years, and the violation of provisions regarding the source of funds and the timing of payment. The Court emphasized that SSS, as a trustee of funds for private sector workers, must strictly adhere to laws and regulations governing the disbursement of these funds, and its statutory prerogative to provide compensation is not absolute. On the liability for return of disallowed amounts: Applying the principles established in Madera v. Commission on Audit and subsequent cases, the Court held that the approving and certifying officers are jointly and severally liable for the disallowed amounts due to their patent disregard of existing rules and the lack of legal basis for granting the incentives. The recipient employees were also ordered to return the incentives they unduly received, based on the principles of unjust enrichment and solutio indebiti, as they had no valid claim to the benefits and received them at the expense of the government. The Court found no circumstances present that would absolve the officers or recipients from their obligation to return the disallowed amounts.
Main Doctrine
The grant of Collective Negotiation Agreement (CNA) incentives must strictly comply with existing laws and regulations, including Budget Circular No. 2006-01 and Public Sector Labor-Management Council Resolution No. 2, s. 2003. Failure to comply with these regulations renders the grant illegal and subject to disallowance by the Commission on Audit (COA). Furthermore, appeals from COA decisions must be filed within the reglementary period, and failure to do so renders the decision final and executory. Officers who approved and certified the disallowed incentives, as well as recipients, are liable to return the amounts received, unless exceptions based on good faith, services rendered, or social justice considerations are proven.