G.R. No. 231391 , June 22, 2021
Social Security System, Petitioner, vs. Commission on Audit, Respondent.

FACTS

The Social Security Commission (SSC) passed Resolution No. 259 dated July 6, 2005, granting two types of incentives: (1) Collective Negotiation Agreement (CNA) Incentives to members of the rank-and-file employees’ union (ACCESS), and (2) “Counterpart CNA Incentives” to other SSS officers and employees who were not members of the negotiating unit (including confidential, coterminous, and contractual employees, lawyers, executives, and SSC members). Pursuant to this resolution, the SSS paid the Counterpart CNA Incentives from 2006 to 2009 amounting to P2,108,213.36. The Commission on Audit (COA) Supervising Auditor issued a Notice of Disallowance (ND) against this payment, finding it contrary to Section 3(b) of Administrative Order (AO) No. 103, which suspends the grant of new or additional benefits except for CNA Incentives given in strict compliance with Public Sector Labor-Management Council (PSLMC) resolutions or those expressly provided by presidential issuance. The COA held that the grant to non-rank-and-file employees violated PSLMC Resolution No. 02, s. 2003, which limits CNA Incentives to rank-and-file employees. The SSS appealed, arguing that the payment was made pursuant to the SSC’s power to fix compensation under the Social Security Law and was not a CNA Incentive per se but a “Counterpart” incentive, thus AO 103 did not apply. The COA Corporate Government Sector and the COA Proper affirmed the disallowance, ruling that the SSC’s authority is not absolute and is subject to relevant administrative issuances requiring prior executive approval for such benefits.

ISSUE

1. Whether payments denominated as “Counterpart CNA Incentives” are the same as CNA Incentives granted as a result of a valid CNA.
2. Whether the SSC’s authority to fix the compensation of SSS personnel is absolute.

RULING

The Supreme Court denied the petition and upheld the COA’s disallowance.
1. On the first issue, the Court ruled that the “Counterpart CNA Incentives” are not CNA Incentives within the meaning of Section 3(b)(i) of AO 103. The Court noted the deliberate use of the word “counterpart” to create a separate category of incentives for non-rank-and-file employees who were not parties to the Collective Negotiation Agreement. Since these incentives were not borne out of a CNA and were granted to individuals not covered by the negotiating unit, they cannot be considered as the CNA Incentives allowed as an exception under AO 103.
2. On the second issue, the Court ruled that the SSC’s authority to fix compensation under Section 3(c) of Republic Act No. 1161 is not absolute. This authority is subject to relevant laws and administrative issuances, such as Presidential Decree No. 1597 and AO 103, which require prior executive approval for the grant of new or additional benefits. The subject “Counterpart CNA Incentives” do not fall under the exceptions in AO 103, as they are not CNA Incentives (per Section 3(b)(i)) and are not expressly provided by a presidential issuance (per Section 3(b)(ii)). Therefore, the grant without the requisite executive approval was properly disallowed.
The Court also found that the petition merely raised errors of judgment, not grave abuse of discretion by the COA, and that the officials and employees who received the disallowed amounts were liable for reimbursement, as they could not invoke good faith given that similar disallowances had been issued in previous years.