Social Security System v. Commission on Audit
REITERATIONFacts
The Antecedents: The Social Security Commission (SSC) passed Resolution No. 259 granting Collective Negotiation Agreement (CNA) incentives to members of Alert and Concerned Employees for Better SSS (ACCESS), the rank-and-file collective negotiation unit, and 'Counterpart CNA Incentives' to other SSS officers and employees, including confidential, coterminous, contractual, lawyers, executives, and members of the SSC, who were not members of the negotiating unit. The SSS paid these Counterpart CNA Incentives from 2006 to 2009, amounting to P2,108,213.36. Procedural History: The COA Supervising Auditor disallowed the payment in Notice of Disallowance No. (ND) 2010-004, citing violation of Section 3(b) of Administrative Order (AO) No. 103, Series of 2004, which suspends the grant of new or additional benefits except for CNA Incentives complying with PSLMC Resolutions and those expressly provided by presidential issuance. The COA Director upheld the disallowance, stating that Counterpart CNA Incentives were not legitimate CNA Incentives and thus AO 103 applied, and that prior executive approval was necessary. The COA Proper affirmed the Director's ruling and denied the motion for reconsideration. The Petition: The Social Security System (SSS) filed a Petition for Review on Certiorari under Rule 64 of the Rules of Court, seeking to annul the COA's decision. The SSS argued that the payment was authorized under Section 3(c) of Republic Act No. 1161, that the incentives were 'Counterpart CNA Incentives' and not CNA Incentives per se, and that the recipients acted in good faith.
Issue(s)
Whether payments denominated as 'Counterpart CNA Incentives' are the same as 'CNA Incentives' granted as a result of a valid CNA. Whether the SSC's authority to fix the compensation of SSS personnel is absolute and exempts it from complying with executive issuances. Whether the COA committed grave abuse of discretion in upholding the disallowance, and the liability of payees for the disallowed amount.
Ruling
The petition is dismissed. The Commission on Audit Decision No. 2015-280 and Notice No. 2017-014 are affirmed. All recipients of the disallowed amount are liable to return them through salary deduction or any other mode deemed just and proper by the COA. This is without prejudice to any other administrative or criminal liabilities of the officials responsible for the illegal disbursement.
Ratio Decidendi
On the nature of 'Counterpart CNA Incentives' and their relation to 'CNA Incentives': The Court held that the 'Counterpart CNA Incentives' are not the same as 'CNA Incentives' granted as a result of a valid CNA. The use of the word 'counterpart' signifies a separate category of incentives, distinct from those arising from a subsisting CNA. CNA Incentives are exclusively for rank-and-file employees who are members of the negotiating unit and must comply with PSLMC Resolutions. Since the 'Counterpart CNA Incentives' were granted to non-rank and file employees and non-ACCESS members, they could not be considered valid CNA Incentives under Section 3(b)(i) of AO 103, even if a valid CNA existed. The Court emphasized that benefits may only be regarded as valid CNA Incentives if they arose from an agreement entered into between the accredited employees' organization and the employer. On the SSC's authority to fix compensation and the requirement for executive approval: The Court ruled that the SSC's authority to fix employee compensation under Section 3(c) of RA 1161 is not absolute and does not exempt it from complying with relevant administrative issuances, such as AO 103 and PD 1597. These issuances require prior executive approval for the grant of certain benefits, including those for government-owned or controlled corporations (GOCCs) even if exempted from the Salary Standardization Law. The Court cited Intia, Jr. v. COA and Phil. Retirement Authority (PRA) v. Buñag to stress that prior executive approval is a condition precedent. The Court reiterated its pronouncement in Social Security System v. Commission on Audit that the SSC's power to fix employee compensation must be exercised within the limits prescribed by law and must conform to standards laid down by law, such as presidential approval required under Section 3(b)(ii) of AO 103. Therefore, the subject payment contravened Section 3(b)(ii) of AO 103 for lack of requisite executive approval. On the liability for disallowance and good faith: The Court affirmed the COA's ruling that the payees are liable to return the disallowed amount. The Court clarified that good faith in receiving the incentives is irrelevant in this case. Following the basic rule that a civil servant who received compensation and benefits by mistake has a quasi-contractual obligation to return it to the government, the recipients are liable to return the disallowed amount respectively received by them, unless they can show genuine consideration for services rendered or the Court excuses them based on undue prejudice, social justice, or bona fide exceptions. The Court cited Madera v. COA in support of this principle. The Court also noted that the SSS management should have been more prudent, especially since similar disallowances for Counterpart CNA Incentives in previous years had already occurred.
Main Doctrine
The grant of 'Counterpart CNA Incentives' to non-rank and file employees, who are not members of the collective negotiation unit, is unlawful if not supported by the requisite executive approval, even if the granting body has the authority to fix employee compensation. Such incentives are distinct from legitimate CNA Incentives which are exclusively for members of the negotiating unit and must comply with relevant PSLMC resolutions and AO 103.