GR 243278; (November, 2020) (Digest)
G.R. No. 243278 , November 03, 2020
Social Security System, Petitioner, vs. Commission on Audit, Respondent.
FACTS
The Social Security System (SSS) proposed its 2010 Corporate Operating Budget (COB), including a budget for Personal Services (PS), to the Department of Budget and Management (DBM). The DBM approved the COB but reduced the PS amount and explicitly stated that its approval did not authorize specific expenditure items. The DBM emphasized that allowances not in accordance with the Salary Standardization Law required prior Presidential approval upon DBM recommendation, citing relevant laws and executive issuances. Nevertheless, the SSS proceeded to disburse various allowances and benefits to its employees for Calendar Year 2010.
Upon audit, the Commission on Audit (COA) found that a significant portion of these disbursements, specifically for Special Counsel Allowance, Overtime Pay, and certain Incentive Awards, were in excess of the DBM-approved budget. Consequently, COA issued a Notice of Disallowance (ND No. 2012-07) for the amount pertaining to SSS NCR branches. The ND held the approving/certifying officers and the payees liable for the return of the disallowed amounts. The SSS appealed, arguing its charter granted it autonomy to fix compensation.
ISSUE
Whether the COA Commission Proper committed grave abuse of discretion in affirming the disallowance of the subject allowances and benefits for lack of required Presidential approval.
RULING
The Supreme Court ruled that the COA did not commit grave abuse of discretion. While the SSS is exempt from the Salary Standardization Law (SSL) and its charter authorizes it to fix reasonable compensation for its personnel, this authority is not absolute. Government-owned and controlled corporations (GOCCs) like the SSS remain under the President’s supervisory control. Jurisprudence consistently holds that the exemption from the SSL does not automatically exempt a GOCC from the requirement of securing Presidential approval for the grant of additional allowances and benefits, as mandated by Presidential Decree No. 1597 and subsequent executive issuances.
The Court cited precedents, such as Philippine Economic Zone Authority (PEZA) v. COA, which established that the power to fix compensation under a GOCC’s charter is subject to the overarching requirement of Presidential approval for additional benefits. The SSS’s disbursements for Special Counsel Allowance, Overtime Pay, and Incentive Awards were precisely the type of additional benefits requiring such prior approval, which was not obtained. Therefore, the disbursements were properly disallowed for being illegal and in excess of authority. The approving officers were correctly held liable for their failure to observe this mandatory requirement, constituting gross negligence. However, the Court affirmed the COA’s modification excusing the passive payee-recipients from refunding the amounts received in good faith.