G.R. No. 231391 - Social Security System vs. Commission on Audit

The case involves a Petition for Review on Certiorari under Rule 64 challenging the disallowance of certain payments made by the Social Security System (SSS).
The petition was filed by the SSS against the Commission on Audit’s (COA) Decision No. 2015-280 (dated November 23, 2015) and Notice No. 2017-014 (dated April 11, 2017), which upheld the disallowance.

The subject of the dispute is the payment amounting to P2,108,213.36 made from 2006 to 2009.
These payments were denominated as "Counterpart CNA Incentives" issued by the Social Security Commission (SSC) under Resolution No. 259 dated July 6, 2005.
The SSC’s resolution provided for two categories of incentives:

CNA Incentives for members of the collective bargaining unit (ACCESS, representing rank and file employees).
Counterpart CNA Incentives for other SSS personnel, including confidential, coterminous, and contractual employees; lawyers; executives; and SSC members.

In Notice of Disallowance No. 2010-004 (covering 2006-2009), the COA disallowed the payment on the ground that it was contrary to Section 3(b) of Administrative Order (AO) 103.
AO 103 mandates that benefits such as CNA Incentives be granted only if they strictly comply with the provisions of the Public Sector Labor-Management Council (PSLMC) Resolutions Nos. 04, S. 2002, and 02, S. 2003, or if expressly provided by a presidential issuance.
The disallowance was predicated on the fact that the payments were made to non-rank and file employees and did not possess the requisite executive approval as required under Section 3(b)(ii) of AO 103.

The payees appealed the disallowance at the COA Corporate Government Sector Cluster (COA-CGS), arguing that the payments were made under the SSC’s authority to fix compensation (as provided under Section 3(c) of Republic Act No. 1161) and that these were merely denominated as Counterpart CNA Incentives, not as bona fide CNA Incentives.
In Decision No. 2012-15 (dated September 24, 2012), the COA Director upheld the disallowance, emphasizing that:

Only bona fide CNA Incentives arising from a valid collective bargaining agreement can be granted under the provisions of AO 103.
The SSC had knowingly granted the incentives to ineligible employees, thus breaching the applicable laws and regulations.

The matter was elevated to the COA Proper, which affirmed the earlier decision in Decision No. 2015-280 and denied the petitioner’s motion for reconsideration.
Subsequent pleadings included the filing of a Comment by the respondent and a Reply to Comment by the petitioner.

Whether the payments denominated as Counterpart CNA Incentives are equivalent to CNA Incentives that are granted pursuant to a valid Collective Negotiation Agreement (CNA).
Whether the designation “Counterpart” creates a distinct category that is legally sufficient to bypass the limitations imposed on CNA Incentives.

Whether the SSC’s authority to fix the compensation, benefits, and allowances of its personnel under Section 3(c) of Republic Act No. 1161 is absolute, thereby justifying the grant of the Counterpart CNA Incentives without adhering to the directives of AO 103.
Whether such inherent authority exempts SSS management from obtaining the necessary executive approval, particularly under Section 3(b)(ii) of AO 103.