G.R. No. 210940. September 06, 2016
SOCIAL SECURITY SYSTEM, PETITIONER, VS. COMMISSION ON AUDIT, RESPONDENT.

FACTS

The Social Security Commission (SSC), the governing board of the Social Security System (SSS), approved resolutions granting its members various benefits, including Extraordinary and Miscellaneous Expenses (EME), medical benefits, rice allowance, and provident fund contributions. These were incorporated into the SSS personnel manual. The Commission on Audit (COA) subsequently issued a Notice of Disallowance for these payments totaling ₱4,314,683.99. COA held that the SSC members had no legal authority to claim EME as they were not included in the General Appropriations Act’s enumeration of officials entitled to such. It also disallowed the other benefits, ruling that SSC members, as high-level policy-making officials, were not rank-and-file employees entitled to benefits under a Collective Negotiation Agreement.
The SSS sought reconsideration, arguing that its charter (Republic Act No. 8282) granted the SSC fiscal autonomy and the power to fix compensation and adopt its own budget. It contended that the SSC’s authority to grant these benefits emanated from its specific charter, not the GAA, placing it beyond the ambit of COA circulars that applied to entities dependent on the national budget. The SSS emphasized it was self-funded and exempt from the Salary Standardization Law.

ISSUE

Whether the Commission on Audit correctly disallowed the payment of Extraordinary and Miscellaneous Expenses, medical benefits, rice allowance, and provident fund to the members of the Social Security Commission.

RULING

The Supreme Court DENIED the petition and AFFIRMED the COA’s disallowance. The legal logic centered on the principle that a government-owned or controlled corporation’s (GOCC) charter must expressly authorize the grant of specific allowances and benefits. The Court held that while RA 8282 grants the SSC fiscal autonomy and the power to fix compensation for SSS personnel, it contains no explicit provision authorizing the SSC to grant EME, rice allowance, medical benefits, or a provident fund to its own members. The power to fix compensation under Section 3(c) of the law pertains to personnel appointed by the Commission, not to the commissioners themselves.
For EME, the Court ruled that such allowances for officials of GOCCs are primarily governed by the annual General Appropriations Act (GAA). Since the SSC members were not among the officials specifically authorized by the GAA to receive EME, and their charter did not provide an independent grant, the payments were correctly disallowed. Regarding the other benefits (medical, rice, provident fund), the Court found they were essentially additional compensation. Without a clear and specific statutory grant in the SSS charter for these benefits for SSC members, and considering the constitutional prohibition against increasing the compensation of officials during their tenure, the payments were illegal. The SSC’s fiscal autonomy does not grant it unbridled discretion to create benefits for itself absent a direct legislative mandate. The disallowance stood, but the Court noted the application of the good faith rule for recipients who relied on the board resolutions, potentially affecting the obligation to refund.