Case Digest: Social Security System (SSS) v. Commission on Audit (COA) G.R. No. 217075, June 22, 2021 Supreme Court, En Banc Ponente: Justice Ricardo R. Rosario

 

FACTS

On July 6, 2005, the Social Security Commission (SSC) issued Resolution No. 259, Series of 2005, granting two benefits: (1) a ₱20,000.00 Collective Negotiation Agreement (CNA) Incentive to SSS employees who were members of the collective negotiating unit; and (2) a counterpart CNA benefit of the same amount to SSS personnel who were not members of the negotiating unit, including executives, lawyers, confidential, coterminous, and contractual employees. During post-audit, the Commission on Audit (COA) issued Notice of Disallowance (ND) No. SSS-2007-001 (2005) disallowing the counterpart CNA benefits totaling ₱6,180,000.00, on the ground that they violated Section 3(b) of Administrative Order No. 103 (2004) and Section 3 of Executive Order No. 180 (1987), which limit CNA benefits to employees belonging to the collective negotiating unit.

SSS appealed the Notice of Disallowance before the COA Legal Services Sector, contending that the counterpart benefit was intended to recognize the contributions of non-union personnel to the agency's performance and that denying them similar incentives would be inequitable. The COA denied the appeal, explaining that CNA incentives arise solely from collective negotiations and, by law, may be granted only to rank-and-file employees who are members of the negotiating unit. The COA Commission Proper affirmed the disallowance and later denied SSS's motion for reconsideration through a Notice issued pursuant to the 2009 Revised Rules of Procedure of the COA.

SSS then filed a Petition for Certiorari under Rule 64 before the Supreme Court. It argued that the COA gravely abused its discretion in sustaining the disallowance and in issuing only a notice denying its motion for reconsideration instead of furnishing a separate written resolution. SSS likewise maintained that the counterpart CNA benefits were validly granted and that the COA incorrectly interpreted the governing laws and regulations.

ISSUE

Whether or not the petition was timely filed under Rule 64 of the Rules of Court, considering the period within which SSS sought judicial review after the denial of its motion for reconsideration.

Whether or not the Commission on Audit committed grave abuse of discretion in denying SSS's motion for reconsideration through a Notice, instead of issuing a separate written resolution, allegedly in violation of due process.

Whether or not the counterpart CNA benefits granted to executives, lawyers, confidential, coterminous, contractual, and other non-union employees were valid notwithstanding Executive Order No. 180, Administrative Order No. 103, Administrative Order No. 135, Presidential Decree No. 1597, PSLMC Resolution Nos. 2 and 4, and DBM Budget Circular No. 2006-1, which limit CNA incentives to rank-and-file employees belonging to the collective negotiating unit.

HELD

The Supreme Court DISMISSED the petition. It first held that the petition was filed out of time. Under Rule 64 of the Rules of Court, a petition questioning a COA decision must be filed within thirty (30) days from notice of the judgment or final order. The Court ruled that the period should be reckoned from SSS's receipt of the Notice denying its motion for reconsideration, and not from the COA's subsequent explanatory letter. Consequently, the petition was filed beyond the reglementary period and was dismissible on that ground alone. The Court likewise ruled that the Notice denying the motion for reconsideration complied with the 2009 Revised Rules of Procedure of the COA, which expressly authorize the use of such form. Hence, there was no denial of due process.

The Court further held that the COA did not commit grave abuse of discretion in disallowing the counterpart CNA benefits. It explained that Executive Order No. 180 authorizes collective negotiations only for rank-and-file government employees, while Administrative Order No. 103, Administrative Order No. 135, PSLMC Resolution Nos. 2 and 4, and DBM Budget Circular No. 2006-1 uniformly provide that CNA incentives may be granted only to rank-and-file employees who are members of the collective negotiating unit. Executives, managers, lawyers, confidential, coterminous, and contractual employees are not parties to the Collective Negotiation Agreement and therefore have no legal entitlement to CNA incentives. The Court emphasized that the counterpart benefit granted by SSS had no legal basis under the applicable laws and regulations.

The Court also addressed the liability arising from the disallowance by applying the doctrines in Madera v. Commission on Audit and Social Security System v. Commission on Audit (2020). It ruled that the approving officers could not invoke good faith because the laws and regulations restricting CNA incentives to rank-and-file employees were already in force when the benefits were granted. Consequently, the approving officers were required to return the disallowed amounts. Likewise, the recipient employees were also ordered to refund the amounts they received under the principle of solutio indebiti, since they received benefits to which they were not legally entitled.

Accordingly, the Supreme Court AFFIRMED the May 8, 2014 Decision and the November 20, 2014 Resolution of the Commission on Audit. It upheld the disallowance of the counterpart CNA benefits granted to non-union employees and ordered both the responsible approving officers and the recipients to return the disallowed amounts in accordance with the governing auditing laws, Executive Order No. 180, Administrative Orders Nos. 103 and 135, Presidential Decree No. 1597, and the principles laid down in Madera v. Commission on Audit.