Social Security System vs. Commission on Audit

A government-owned or controlled corporation's exemption from the Salary Standardization Law, and its statutory authority to fix the reasonable compensation of its personnel, do not dispense with the requirement of Presidential approval through the Department of Budget and Management before it may grant allowances and other fringe benefits; nevertheless, approving and certifying officers who acted in good faith in the regular performance of official functions are not civilly liable to return the disallowed amounts.

The Social Security System is a government-owned or controlled corporation created under the Social Security Law, Republic Act No. 8282, whose Section 3(c) empowers the Social Security Commission, upon the recommendation of the SSS President, to fix the reasonable compensation, allowances, and other benefits of its personnel, and whose final proviso expressly exempts the SSS from Republic Act No. 6758 and Republic Act No. 7430. That exemption, however, operates alongside a body of executive and legislative issuances — Presidential Decree No. 1597, Memorandum Order No. 20, s. 2001, Joint Resolution No. 4, s. 2009, and Executive Order No. 7, s. 2010 — which require government-owned or controlled corporations to secure the approval of the President, upon the recommendation of the Department of Budget and Management, for any increase in salary or compensation not in accordance with the Salary Standardization Law. The Commission on Audit, as the constitutional auditor of public funds, supervises the disbursements of such corporations through the audit of their Corporate Operating Budgets.

Pursuant to Board Resolution No. 185 dated March 9, 2010, the Social Security System proposed the amount of ₱5,384,737,000.00 for Personal Services in its 2010 Corporate Operating Budget and submitted the same to the Department of Budget and Management for approval. The DBM acted on the proposal only on April 12, 2011, approving the Corporate Operating Budget with modifications and reducing the Personal Services allocation to ₱4,934,200,000.00. In its approval, the DBM stressed that its action should not be construed as authorization for the specific items of expenditure for Personal Services, and that all allowances not in accordance with the Salary Standardization Law were subject to the approval of the President upon the recommendation of the DBM, pursuant to Sections 5 and 6 of Presidential Decree No. 1597, Sections 1 to 3 of Memorandum Order No. 20, s. 2001, Section 9 of Joint Resolution No. 4, s. 2009, and Sections 8 to 10 of Executive Order No. 7, s. 2010.

In the meantime, the SSS had already paid its employees benefits and allowances amounting to ₱554,109,362.03 for Calendar Year 2010. Upon audit, ₱335,594,362.03 of these payments was found to be in excess of the DBM-approved 2010 Corporate Operating Budget. The excess represented disbursements for Special Counsel Allowance in the amount of ₱6,784,050.00 and Overtime Pay in the amount of ₱20,244,099.73, both of which had no approved budget, and Incentive Awards consisting of short-term variable pay and Christmas bank or gift certificates, which likewise exceeded the approved allocation. The total approved budget for these items stood at ₱217,515,000.00 against actual disbursements of ₱553,109,362.03, leaving the disallowed excess of ₱335,594,362.03.

Several Notices of Disallowance were thereafter issued to the different branches of the SSS, one of which was Notice of Disallowance No. 2012-07, pertaining only to the SSS National Capital Region Branches in the total amount of ₱71,612,873.00. That notice found the Social Security Commissioners who approved the grant and payment of the allowances, the approving and certifying officers in the payrolls, and the payees themselves for the SSS National Capital Region Branches all liable to return the subject amount.

The SSS maintained that it had pegged the amounts of the subject benefits and allowances at the level of its actual disbursements from its 2009 budget. Its 2009 Corporate Operating Budget had also been confirmed by the DBM post facto the following year, on May 21, 2010, without disallowance or adjustment. The record further showed that the DBM made subsequent partial reconsiderations of its original disallowance on April 16 and July 27, 2012, approving additional confirmation ceilings for the grant of rice subsidy, hazard pay, medical benefits, and bank certificates for employees, which were no longer included in the Notice of Disallowance issued by the COA supervising auditor. The SSS also invoked Social Security Commission Resolution No. 523 dated July 17, 1997 as the basis for the Short-term Variable Pay, although no copy of that resolution was attached either to its Petition or to its Reply.

• Bad Faith: Petitioner maintained that the COA Commission Proper erred in concluding that the SSS officials who authorized the grant and payment of the subject benefits acted in bad faith, given that they did so in contravention of the laws and rules requiring prior approval from the President.
• Charter Authority to Fix Compensation: Petitioner argued that the Social Security Commission is authorized by Republic Act No. 8282 to fix the reasonable compensation, allowances, or other benefits of its officials and employees, and that the only qualification to the exercise of this power is that provided in Section 25 of the same law, which limits disbursements for administrative and operational expenses to twelve percent (12%) of total yearly contributions plus three percent (3%) of other revenues.
• Absence of Presidential Approval Requirement: Petitioner contended that nothing on the face of the Social Security Law imposes the requirement of Presidential approval upon the exercise of its right to fix reasonable compensation of its personnel, and that since neither Congress nor the President — who did not veto the law while it was still a bill pending his concurrence — intended such approval to be sought, it must be concluded that no such approval was required.
• Inapplicability of the Issuances: Petitioner asserted that P.D. 1597, Memorandum Order No. 20, s. 2001, Joint Resolution No. 4, s. 2009, and Executive Order No. 7, s. 2010 cannot apply to it because (a) these rules cover only the grant of new benefits, while the SSS employees and officers had been receiving the subject benefits and allowances even prior to Calendar Year 2010; (b) as regards Memorandum Order No. 20, s. 2001, it is only applicable to senior officials; and (c) as regards P.D. 1597 and Memorandum Order No. 20, s. 2001, the provisions of these two issuances mention only "salary compensation," without mention of benefits and allowances.
• Implied Repeal: Petitioner argued that the SSS charter supersedes the provisions of P.D. 1597, Memorandum Order No. 20, s. 2001, Joint Resolution No. 4, s. 2009, and Executive Order No. 7, s. 2010 as far as their applicability to the SSS is concerned.
• Good Faith Reliance on Prior Practice: Petitioner asserted that it had pegged the amounts of the subject benefits and allowances at the level of its actual disbursements from its 2009 budget, which had been confirmed by the DBM post facto without disallowance or adjustment, leading it to believe that its 2010 disbursements were in accordance with all applicable laws.

• Presidential Approval Requirement: Whether the SSS, notwithstanding its exemption from the Salary Standardization Law and its authority under its charter to fix the reasonable compensation of its personnel, must still obtain the approval of the President through the Department of Budget and Management before granting benefits and allowances to its officers and employees.
• Grave Abuse of Discretion and Liability of Approving and Certifying Officers: Whether the COA Commission Proper acted with grave abuse of discretion in affirming the COA CGS-2 Decision and in holding the approving and certifying officers of the SSS liable for the return of the disallowed amounts.

• Presidential Approval Requirement: Yes. Government-owned or controlled corporations such as the SSS remain subject to the President's power of control under Section 17, Article VII of the 1987 Constitution, and Section 5 of P.D. 1597 subjects allowances, honoraria, and other fringe benefits to the approval of the President upon the recommendation of the Commissioner of the Budget.
• Grave Abuse of Discretion and Liability of Approving and Certifying Officers: No grave abuse of discretion attended the disallowance, which was proper for lack of Presidential approval; but the approving and certifying officers, including the Board of Trustees, are excused from civil liability to return the disallowed amounts, having acted in good faith and in the regular performance of official functions.

• Presidential Approval Requirement: The Court began from the constitutional premise that under Section 17, Article VII of the 1987 Constitution, the President has control of all executive departments, bureaus, and offices, and that this power of control extends to government-owned or controlled corporations such as the SSS. Quoting Philippine Economic Zone Authority vs. Commission on Audit, the Court held that the charters of government entities exempt from the Salary Standardization Law are not without restriction: they are still required to report to the Office of the President, through the DBM, the details of their salary and compensation system, and to endeavor to make that system conform as closely as possible to the principles and modes of Republic Act No. 6758. That reporting requirement is the most apparent indication that the legislature did not divest the President of his power of control. Citing National Electrification Administration vs. COA, the Court reiterated that the constitutional vesture of the power of control in the President is self-executing, requires no statutory implementation, and may not be limited, much less withdrawn, by the legislature. Section 3 of Memorandum Order No. 20, s. 2001 — providing that any increase in salary or compensation of government-owned or controlled corporations and government financial institutions not in accordance with the Salary Standardization Law shall be subject to the approval of the President — was characterized as a mere reiteration of that power of control, notwithstanding the authority granted to the board of directors of such entities to establish and fix a compensation and benefits scheme. The Court likewise relied on Philippine Health Insurance Corporation vs. Commission on Audit, which held that the absence of an express requirement of DBM or Office of the President approval in a charter provision granting the power to fix compensation does not confer unbridled discretion to issue any and all kinds of allowances, and that to sustain such a claim would result in an invalid delegation of legislative power. Applying these principles, the Court concluded that the grant of authority to fix reasonable compensation, allowances, and other benefits under the SSS charter does not conflict with the President's power, exercised through the DBM, to review precisely how reasonable such compensation is and whether it complies with relevant laws and rules. On the claim of implied repeal, the Court found that nothing in the SSS charter explicitly repeals P.D. 1597, Memorandum Order No. 20, s. 2001, Joint Resolution No. 4, s. 2009, and Executive Order No. 7, s. 2010, and that no irreconcilable conflict exists between those issuances and the charter. Turning to the SSS's remaining arguments, the Court held that the claim that the subject benefits had been received even prior to Calendar Year 2010 was unsupported by any proof, the Reply's bare reference to Social Security Commission Resolution No. 523 dated July 17, 1997 being unaccompanied by a copy of the resolution, in violation of the rule that one who alleges a fact bears the burden of proving it by means other than mere allegations. As to the contentions that Memorandum Order No. 20, s. 2001 applies only to senior officials and that P.D. 1597 and Memorandum Order No. 20, s. 2001 mention only "salary compensation," the Court held that even if these were given credence, the SSS still could not evade compliance with Section 5 of P.D. 1597, which categorically subjects allowances, honoraria, and other fringe benefits granted to government employees to the approval of the President upon recommendation of the Commissioner of the Budget. The COA therefore did not err in finding that the SSS is subject to the requirement of Presidential approval through the DBM and that, as regards the Special Counsel Allowance, Overtime Pay, and Incentive Awards paid out in Calendar Year 2010, the requirement was not complied with; hence the disallowance was proper.

• Grave Abuse of Discretion and Liability of Approving and Certifying Officers: Although the disallowance was sustained, the Court found attendant circumstances exempting the SSS's officers and employees from returning the subject amounts. First, at the time the benefits and allowances were disbursed, there was no prevailing ruling by the Court specifically on the exemption of the SSS from the Salary Standardization Law, as well as its authority to determine the reasonable compensation of its personnel, vis-à-vis the requirement of approval by the President or the DBM prior to the grant of additional or increased benefits; in several cases the Court has considered the lack of knowledge of a similar ruling prohibiting a particular disbursement as a badge of good faith. The Court compared the position of the SSS officers to that of the PEZA in Philippine Economic Zone Authority vs. Commission on Audit, where the PEZA was found to have acted in good faith in granting an additional Christmas bonus without Presidential approval in reliance on its exemption from the Salary Standardization Law, the Court there declaring that good faith has always been a valid defense of public officials and that it is unfair to penalize public officials based on overly stretched and strained interpretations of rules which were not readily capable of being understood at the time they acted in good faith. Second, the DBM responded to the SSS's proposed 2010 Corporate Operating Budget only on April 12, 2011, more than a year after Board Resolution No. 185 dated March 9, 2010 was passed. While the DBM approval should ideally have been obtained prior to implementation, the SSS could not have been expected to do so in this instance, since the DBM's action came well beyond the calendar year during which the budget was supposed to be implemented; some of the disallowed amounts were in the nature of Special Counsel Allowance and Overtime Pay, forms of direct compensation paid in consideration of services rendered, and it would have been unreasonable for the SSS to put on hold the disbursement of these amounts, as well as virtually all expenditures and operations for Calendar Year 2010, while awaiting the DBM's response. At the time the SSS paid the benefits and allowances in 2010, the DBM's partial disallowance had not yet been issued. Third, the SSS had pegged the amounts of the subject benefits and allowances at the level of its actual disbursements from its 2009 budget, and its 2009 Corporate Operating Budget had also been confirmed by the DBM post facto on May 21, 2010 without disallowance or adjustment; taken together with its authority to set reasonable compensation under Section 3(c) of its charter, this led the SSS to believe that its 2010 disbursements were in accordance with all applicable laws. Fourth, the DBM made subsequent partial reconsiderations of its original disallowance on April 16 and July 27, 2012, approving additional confirmation ceilings for the grant of rice subsidy, hazard pay, medical benefits, and bank certificates for employees, which were no longer included in the Notice of Disallowance issued by the COA supervising auditor — circumstances suggesting that the amounts disbursed were not unreasonable and that, aside from the procedural lapse of lacking prior DBM or Presidential approval, the disbursements were not tainted by any other irregularities or ill intent. These circumstances, the Court held, do not paint a picture of malice and bad faith but are badges of good faith, there being no deliberate intent to disregard the applicable rules on the grant of benefits or to skirt the authority of the DBM to review the SSS's Corporate Operating Budget. The Court then applied Madera vs. Commission on Audit, which held that civil liability under Sections 38 and 39 of the Administrative Code of 1987, including the treatment of liability as solidary under Section 43, arises only upon a showing that the approving or certifying officers performed their official duties with bad faith, malice, or gross negligence, and which adopted the following badges for determining whether an authorizing officer exercised the diligence of a good father of a family: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code; (2) an in-house or Department of Justice legal opinion; (3) the absence of any precedent disallowing a similar case in jurisprudence; (4) that the practice is traditionally observed within the agency and no prior disallowance has been issued; and (5) with regard to the question of law, that there is a reasonable textual interpretation of its legality. The presence of any of these factors may uphold the presumption of good faith in the performance of official functions, which must always be examined relative to the circumstances attending the transaction. Madera distilled the rule into Part 2a of the Rules of Return, providing that approving and certifying officers who acted in good faith, in the regular performance of official functions, and with the diligence of a good father of a family are not civilly liable to return, consistent with Section 38 of the Administrative Code of 1987. Accordingly, the SSS officers who certified or approved the disbursement of the subject benefits were excused from civil liability for the disallowed amount. The Board of Trustees of the SSS, whom COA-CP Decision No. 2018-379 had found liable even though they were not included in the original Notice of Disallowance, were likewise excused, because the Board acted only as an approving authority acting in good faith. As for the passive payees, the COA-CP had already excused them from returning the disallowed amounts on the ground that they had received these in good faith; since the SSS no longer raised the matter as an issue in its Petition, the COA-CP's decision was considered final and immutable as far as that disposition was concerned.

• Presidential Power of Control Over Government-Owned or Controlled Corporations — Under Section 17, Article VII of the 1987 Constitution, the President has control of all executive departments, bureaus, and offices, and this power is self-executing, requires no statutory implementation, and may not be limited or withdrawn by the legislature. A government-owned or controlled corporation's exemption from the Salary Standardization Law, and its charter authority to fix the reasonable compensation of its personnel, do not divest the President of that power of control; the entity must still report its compensation system to the Office of the President through the DBM and secure Presidential approval for allowances and fringe benefits not in accordance with the Salary Standardization Law. The Court applied this doctrine to hold that the SSS remained bound to obtain Presidential approval through the DBM before granting the Special Counsel Allowance, Overtime Pay, and Incentive Awards, and that the failure to do so rendered the disbursements proper subjects of disallowance.
• Invalid Delegation of Legislative Power Arising from Unbridled Discretion in Fixing Compensation — A charter provision granting a government-owned or controlled corporation the power to fix the compensation of its personnel does not confer unbridled discretion to issue any and all kinds of allowances; to sustain such a claim would result in an invalid delegation of legislative power. The Court invoked this principle, drawn from Philippine Health Insurance Corporation vs. Commission on Audit, to reject the SSS's reading of its charter as placing its compensation structure beyond executive review.
• Implied Repeal — Repeal by implication is not favored; it requires either an express repeal or an irreconcilable conflict between the later and earlier laws. Because nothing in the SSS charter explicitly repealed P.D. 1597, Memorandum Order No. 20, s. 2001, Joint Resolution No. 4, s. 2009, and Executive Order No. 7, s. 2010, and no irreconcilable conflict existed between those issuances and the charter, the Court held that no implied repeal could be gleaned.
• Burden of Proof on the Party Alleging a Fact — One who alleges a fact has the burden of proving it by means other than mere allegations. The SSS's claim that it had been granting the subject benefits even before Calendar Year 2010 failed because the Social Security Commission Resolution it cited as basis was never attached to its pleadings.
• Good Faith as a Defense to Civil Liability for Disallowed Disbursements — Civil liability under Sections 38 and 39 of the Administrative Code of 1987, including solidary liability under Section 43, arises only upon a showing that the approving or certifying officers performed their official duties with bad faith, malice, or gross negligence. Good faith is a state of mind denoting honesty of intention and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The Court enumerated the badges of good faith and diligence adopted in Madera vs. Commission on Audit: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code; (2) an in-house or Department of Justice legal opinion; (3) the absence of any precedent disallowing a similar case in jurisprudence; (4) that the practice is traditionally observed within the agency and no prior disallowance has been issued; and (5) with regard to the question of law, that there is a reasonable textual interpretation of its legality. The presence of any of these factors may uphold the presumption of good faith, which must be examined relative to the circumstances of the case. Applying the rule, the Court excused the SSS's approving and certifying officers, its Board of Trustees, and the payees from civil liability to return the disallowed amounts.
• Prospective Application of Clarificatory Rulings — Where a rule is ambiguous and is clarified only years later, the clarification should be applied prospectively, and it is unfair to penalize public officials based on overly stretched and strained interpretations of rules that were not readily capable of being understood at the time they acted in good faith. The Court relied on this principle in finding that the SSS officers had acted in good faith when they disbursed the subject benefits before any categorical ruling on the matter had been issued.

• "GOCCs like the SSS are always subject to the supervision and control of the President. That it is granted authority to fix reasonable compensation for its personnel, as well as an exemption from the SSL, does not excuse the SSS from complying with the requirement to obtain Presidential approval before granting benefits and allowances to its personnel." — This passage states the ratio decidendi on the principal issue, resolving the conflict between the SSS's charter authority and the President's power of control in favor of the latter.
• "Nothing in its charter explicitly repeals these laws and regulations, and there is no irreconcilable conflict between the provisions of these laws on the one hand, and the SSS' charter on the other. Hence, no implied repeal can be gleaned therefrom." — This passage disposes of the SSS's implied-repeal theory and supplies the canonical formulation of the test applied when a corporate charter is pitted against general compensation issuances.
• "The foregoing circumstances do not paint a picture of malice and bad faith on the part of the SSS. On the contrary, these are badges of good faith which must be taken in its favor. There was clearly no deliberate intent to disregard the applicable rules on the grant of benefits nor to skirt the authority of the DBM to review the SSS' COB." — This passage marks the pivot of the decision from sustaining the disallowance to excusing liability, and is the basis for the modification of the dispositive portion.
• "Approving and certifying officers who acted in good faith, in regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return consistent with Section 38 of the Administrative Code of 1987." — Quoted from Madera vs. Commission on Audit, this is the operative rule of return applied to excuse the SSS officers, the Board of Trustees, and the payees from refund.

• Philippine Economic Zone Authority vs. Commission on Audit, G.R. No. 210903, October 11, 2016, 805 SCRA 618 — Controlling precedent relied upon for two propositions: that government entities exempt from the Salary Standardization Law remain subject to the President's power of control and must report their compensation systems to the Office of the President through the DBM, and that public officials who acted in good faith in reliance on their charter exemption may be absolved of liability to refund disallowed amounts.
• Philippine Health Insurance Corporation vs. Commission on Audit, G.R. No. 213453, November 29, 2016, 811 SCRA 238 — Followed for the holding that the absence of an express DBM or Office of the President approval requirement in a charter provision granting the power to fix compensation does not confer unbridled discretion to grant allowances, and that a contrary reading would amount to an invalid delegation of legislative power.
• Madera vs. Commission on Audit, G.R. No. 244128, September 8, 2020 — Controlling precedent on the liability of approving and certifying officers for disallowed amounts, supplying the badges of good faith and diligence and Part 2a of the Rules of Return, which the Court applied to excuse the SSS officers and the Board of Trustees from civil liability.
• National Electrification Administration vs. Commission on Audit — Cited within the PEZA excerpt for the holding that the President's constitutional power of control is self-executing, requires no statutory implementation, and may not be limited or withdrawn by the legislature.
• Philippine Charity Sweepstakes Office vs. Commission on Audit — Cited within the PHIC excerpt for the holding that even an explicit exemption from the rules of the Office of Compensation and Position Classification does not free a government-owned or controlled corporation's board from the standards laid down by applicable laws in fixing salaries and allowances.
• Republic vs. Catubag, G.R. No. 210580, April 18, 2018, 861 SCRA 687, 709 — Cited for the rule that one who alleges a fact has the burden of proving it by means other than mere allegations, applied against the SSS's unsubstantiated claim of prior receipt of the benefits.
• Zamboanga City Water District vs. Commission on Audit, 779 Phil. 225 (2016); Mendoza vs. Commission on Audit, 717 Phil. 491 (2013); Social Security System vs. Commission on Audit, 794 Phil. 387 (2016) — Cited collectively for the proposition that the lack of knowledge of a similar ruling prohibiting a particular disbursement constitutes a badge of good faith.

• Section 17, Article VII, 1987 Constitution — Provides that the President shall have control of all executive departments, bureaus, and offices and shall ensure that the laws be faithfully executed. The Court made this the constitutional foundation for holding that the SSS, as a government-owned or controlled corporation, remains subject to Presidential control notwithstanding its charter exemption from the Salary Standardization Law.
• Section 5, Presidential Decree No. 1597 — Provides that allowances, honoraria, and other fringe benefits granted to government employees, whether payable by their offices or by other agencies of government, shall be subject to the approval of the President upon recommendation of the Commissioner of the Budget. The Court held that this provision categorically covers the Special Counsel Allowance, Overtime Pay, and Incentive Awards disbursed by the SSS, and that the SSS could not evade compliance with it even if its arguments on the scope of the other issuances were credited.
• Section 6, Presidential Decree No. 1597 — Requires agencies, positions, or groups of officials and employees of the national government, including government-owned or controlled corporations, that are exempted by law from Office of Compensation and Position Classification coverage, to observe such guidelines and policies as the President may issue governing position classification, salary rates, levels of allowances, project and other honoraria, overtime rates, and other forms of compensation and fringe benefits, and to report to the President through the Budget Commission on their position classification and compensation plans, policies, and rates. Cited as part of the basis for the DBM's caveat in its approval of the 2010 Corporate Operating Budget.
• Sections 1 to 3, Memorandum Order No. 20, s. 2001 — Require the immediate suspension of the grant of any salary increases and new or increased benefits not in accordance with the Salary Standardization Law, the preparation of a Pay Rationalization Plan for senior officer positions, and the submission of any increase in salary or compensation of government-owned or controlled corporations and government financial institutions not in accordance with the Salary Standardization Law to the approval of the President. Section 3 was characterized as a mere reiteration of the President's power of control over such entities.
• Section 9, Joint Resolution No. 4, s. 2009 — Provides that exempt entities shall observe the policies, parameters, and guidelines governing position classification, salary rates, categories and rates of allowances, benefits and incentives prescribed by the President, and that any increase in existing salary rates as well as the grant of new allowances, benefits and incentives, or an increase in the rates thereof, shall be subject to the approval of the President upon recommendation of the DBM. Cited among the issuances the SSS failed to comply with.
• Item 4(f)(viii), Joint Resolution No. 4, s. 2009 — Defines the Special Counsel Allowance as an allowance for lawyer personnel in the legal staff of departments, bureaus, or offices of the national government deputized by the Office of the Solicitor General to appear in court as special counsel. Cited in relation to the nature of the disallowed Special Counsel Allowance as a form of direct compensation.
• Sections 8 to 10, Executive Order No. 7, s. 2010 — Require all government-owned or controlled corporations and government financial institutions to submit information on all salaries, allowances, incentives, and other benefits under both direct and indirect compensation; impose a moratorium on increases in the rates of salaries and the grant of new increases in the rates of allowances, incentives, and other benefits until specifically authorized by the President; and suspend the grant of allowances, bonuses, incentives, and other perks to members of the board of directors or trustees, except reasonable per diems, until December 31, 2010. Cited among the issuances governing the SSS's disbursements for Calendar Year 2010.
• Section 3(c), Republic Act No. 8282 (Social Security Law) — Empowers the Social Security Commission, upon the recommendation of the SSS President, to fix the reasonable compensation, allowances, and other benefits of its personnel, and expressly exempts the SSS from the provisions of Republic Act No. 6758 and Republic Act No. 7430. The Court construed this grant of authority as not conferring unbridled discretion and as remaining subject to Presidential review through the DBM.
• Section 25, Republic Act No. 8282 — Provides that all money paid to or collected by the SSS every year shall be deposited, administered, and disbursed in the same manner and under the same conditions and requirements as provided by law for other public special funds, with not more than twelve percent (12%) of the total yearly contributions plus three percent (3%) of other revenues to be disbursed for administrative and operational expenses such as salaries and wages, supplies and materials, depreciation, and the maintenance of offices. Invoked by the SSS as the only qualification on its power to fix compensation; the Court found the contention lacking in merit.
• Sections 38, 39, 40, and 43, Administrative Code of 1987 — Section 38 governs the liability of approving and certifying officers; Section 39 governs the liability of other officials; Section 40 requires a certificate of availability of funds before expenditure of public funds; and Section 43 treats the liability of responsible officers as solidary. The Court held, through Madera vs. Commission on Audit, that civil liability under Sections 38 and 39, including solidary liability under Section 43, arises only upon a showing of bad faith, malice, or gross negligence, and that approving and certifying officers who acted in good faith are not civilly liable to return.

Peralta, C.J., Perlas-Bernabe, Leonen, Gesmundo, Hernando, Carandang, Lazaro-Javier, Inting, Zalameda, Lopez, Delos Santos, Gaerlan, and Rosario, JJ., concur.