Case Digest: Social Security System v. Commission on Audit G.R. No. 222217, July 27, 2021 Supreme Court, En Banc Ponente: Justice Ricardo R. Rosario

 

FACTS

The Social Security System (SSS) challenged the Commission on Audit (COA) Decision and Resolution affirming Notices of Disallowance (ND Nos. 2012-01 and 2012-02) involving ₱7,198,182.96 representing the payment of various allowances and benefits to officials and employees of the SSS Western Mindanao Division (SSS-WMD). The disallowed benefits included Special Counsel Allowance, Short-Term Variable Pay, Bank/Christmas Gift Certificates, and Rice Subsidy. COA found that these benefits exceeded the 2010 Corporate Operating Budget (COB) approved by the Department of Budget and Management (DBM) and were granted without the approvals required by law.

SSS appealed the Notices of Disallowance before the COA Regional Director, arguing that the allowances were neither new nor increased benefits and that, under the Social Security Act, it possessed fiscal autonomy to determine the compensation and benefits of its employees. The COA Regional Director denied the appeal, citing Presidential Decree No. 1597, Republic Act No. 6758 (Salary Standardization Law), Joint Resolution No. 4 (2008), Administrative Order No. 103, and related jurisprudence, and ordered the responsible officers and recipients to refund the disallowed amounts. SSS then sought review before the COA Proper.

The COA Proper dismissed the Petition for Review for having been filed beyond the 180-day reglementary period. SSS elevated the case to the Supreme Court under Rule 64 in relation to Rule 65, arguing that its appeal had been timely filed because the period should have been reckoned from the receipt of the COA Regional Director's decision by its Corporate Legal Department rather than by its branch office. SSS likewise maintained that the disallowed allowances were valid and that the COA erred in requiring their refund.

ISSUE

Whether or not the Petition for Review before the COA Proper was timely filed, considering the manner by which the COA Regional Director's decision was served upon the SSS.

Whether or not the allowances and benefits granted by SSS were valid despite the absence of the approvals required under P.D. No. 1597, R.A. No. 6758, Joint Resolution No. 4 (2008), and related DBM and Presidential issuances.

Whether or not the approving officers, certifying officers, and recipients should be required to refund the disallowed amounts, applying the doctrines laid down in Madera v. Commission on Audit.

HELD

The Supreme Court GRANTED the petition IN PART. The Court first held that, in the interest of substantial justice, the procedural rules should be relaxed and SSS's Petition for Review before the COA Proper should be treated as timely filed. Since SSS was already represented by counsel, the period to appeal should be reckoned from the receipt of the decision by its counsel. Although there was confusion regarding the proper reckoning date, the Court found that SSS acted without intent to delay the proceedings and promptly pursued its available remedies. Accordingly, the Court proceeded to resolve the merits of the case rather than dismiss it on technical grounds.

On the merits, the Court sustained the Notices of Disallowance. It ruled that although the Social Security Act grants SSS authority over the compensation of its personnel, such authority is not absolute and remains subject to Presidential Decree No. 1597, Republic Act No. 6758 (Salary Standardization Law), Joint Resolution No. 4 (2008), and other laws requiring approval by the President, through the DBM, before granting new or increased allowances and benefits. The records showed that SSS failed to prove that the questioned benefits had obtained the necessary approvals. Consequently, the COA correctly disallowed the payment of the allowances and benefits.

The Court, however, modified the COA ruling regarding the liability of the officers. Applying the doctrine in Madera v. Commission on Audit, it held that the approving and certifying officers should be absolved from solidary liability because they acted in good faith. At the time the allowances were granted, there was no definitive Supreme Court ruling clarifying the extent of SSS's authority vis-à-vis the requirement of prior Presidential or DBM approval. Good faith therefore exempted the responsible officers from personal liability to refund the disallowed amounts.

Nevertheless, the Court ruled that the recipients of the disallowed benefits, whether approving officers, certifying officers, or passive recipients, must each return the amounts they actually received, consistent with the Rules on Return established in Madera v. Commission on Audit. Accordingly, the Supreme Court affirmed the COA Decision and Resolution with modification, absolving the approving and certifying officers from solidary liability on account of good faith while requiring each recipient to individually refund the disallowed benefits that he or she personally received.