Only rank-and-file employees in government or those who are members of the collective negotiating unit (CNU) are entitled to the collective negotiation agreement (CNA) incentive.

Thus, the Supreme Court (SC) said the grant of “counterpart” CNA incentive to confidential, coterminous and contractual employees, lawyers and executives is not allowed under existing laws and regulations.

With the ruling, the SC affirmed the 2014 Commission on Audit (COA) decision that disallowed the grant of more than P6.1 million in counterpart benefit to the CNA incentive given in 2005 by the Social Security System (SSS) to its officials and employees who were not members of the agency’s CNU.

The SC directed non-CNU members -- confidential, coterminus and contractual employees, lawyers and executives -- to return the amount of P20,000 they each received from the SSS.

The unanimous full court decision, written by Associate Justice Ricardo R. Rosario and made public last Oct. 8, dismissed SSS’s petition as it affirmed the May 8, 2014 and Nov. 20, 2014 COA rulings.

Case records showed that SSS issued on July 6, 2005 Resolution No. 259 that granted P20,000 CNA incentive to each of CNU-covered employees who were members as of Dec. 31, 2004. The resolution also granted the same benefit to non-CNU members.

On Jan. 9, 2009, the SSS supervising auditor issued a notice of disallowance on the P6,180,000 counterpart CNA incentive given to non- CNU members for violation of Section 3(b) of Administrative Order No. 103 dated Aug. 31, 2004, and Section 3 of Executive Order No. 180, dated June 1, 1987.

The administrative orders, the SSS supervising auditor said, prohibit the grant of CNA benefits to high-level and confidential employees, and to those who are not eligible to join the organization of rank-and-file government employees for purposes of collective negotiation (CN) for benefits that arise out of their CNU membership.

SSS appealed the disallowance. It cited the contributions of confidential, coterminous and contractual employees, lawyers and executives to the overall efficiency of the agency. But the Legal Services Sector (LSS) of the COA denied the appeal on Aug. 5, 2010.

The issue was elevated to the commission proper of COA on Jan. 3, 2011. COA proper denied the appeal and reinstated the LSS ruling. When its motion for reconsideration was dismissed, SSS elevated the case to the SC.

After resolving some technicalities raised in the petition, the SC said:

“In ruling that only rank-and-file employees are entitled to the benefits and/or incentives arising from the execution of the CNA, and that high-level employees -- such as lawyers, managers, executives, coterminous and highly confidential employees, who are not parties-in-interest to the CNA -- are not entitled thereto, the COA applied the following laws and regulations: (1) Presidential Decree No. 1597; (2) Executive Order No. 180; (3) Administrative Order No. 103 s. 2004; (4) PSLMC Resolution No. 4 s. 2002 and PSLMC Resolution No. 2 s. 2003; (5) Administrative Order No. 135; and (6) DBM Budget Circular 2006-1.

“Section 3 of Executive Order No. 180, issued by Former President Corazon C. Aquino on 1 June 1987, specifically states that high-level employees, whose functions are normally considered as policy-making or managerial or whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-and-file government employees.

“PSLMC (Public Sector Labor-Management Council) Resolutions 4 and 2 provide for the grant of CNA Benefits only to rank-and-file employees of government-owned and controlled corporations, government financial institutions, national government agencies, local government units, and state universities and colleges.

“Section 2 of Administrative Order No. 135, issued on 27 December 2005 by former President Gloria Macapagal-Arroyo, reiterates the limit of the grant of CNA Benefits only to rank-and-file employees of the government.

“Section 4.2 of Department of Budget and Management (DBM) Budget Circular 2006-1, dated 1 February 2006, defines rank-and-file employees as those who are not managerial employees; not coterminous employees; and not highly confidential employees.

“Taking all the foregoing provisions together, the inescapable conclusion is that high-level managerial and confidential employees are not entitled to CNA benefits because they cannot become members of the negotiating unit.

“It is of no moment that high-level managerial and confidential employees also contributed to the efficiency of the agency. The laws are very clear in stating that only rank-and-file employees who are members of the negotiating unit are entitled to CNA benefits.

“Moreover, the Court finds that the grant of ‘counterpart’ CNA incentives in the fixed amount of P20,000 is contrary to Section 5.6 of DBM Budget Circular No. 2006-1 insofar as the same prescribes that no incentive amount shall be predetermined in the CNAs since the amount of incentive ought to be dependent on the cost-cutting measures specified under the CNA or its supplements.

“For all the foregoing reasons, the Court finds that the COA committed no grave abuse of discretion in upholding the disallowance of the grant of CNA ‘counterpart’ incentives to highly confidential and coterminous employees of the SSS who are not members of the negotiating unit, including lawyers and executives.

“Applying the law, and the cases of SSS 2020 and Madera to the instant case, the Court finds that the approving and certifying officers of SSS who authorized the payment of the disallowed amounts and the employees who received the same are liable to return them.

“While there is a presumption that the approving and certifying officers granted the disallowed benefits acted in good faith in the performance of their official duties, this presumption of good faith fails when an explicit law, rule, or regulation has been violated.

“The recipient employees are clearly disqualified from receiving the disallowed CNA incentives and prejudice to the government would result if they do not return what they unduly received.

“WHEREFORE; the petition is DISMISSED. The 8 May 2014 Decision and the 20 November 2014 Resolution of the Commission on Audit in Decision No. 2014-069, respectively, are AFFIRMED. SO ORDERED.”