G.R. No. 195105 - Metropolitan Waterworks and Sewerage System vs. Commission on Audit

The MWSS (Metropolitan Waterworks and Sewerage System) had long granted various benefits to its employees, such as the mid-year financial assistance, bigay-pala, meal/medical allowance, productivity bonus, year-end financial assistance, and longevity pay.
These benefits were authorized by resolutions of the Board of Trustees prior to the enactment of Republic Act No. 6758 (Compensation and Position Classification Act of 1989).
With the enactment of RA No. 6758, the MWSS, as a government-owned and controlled corporation (GOCC), was brought under a centralized compensation and position classification system, repealing its previous special corporate charter provisions.

Following the implementation of RA No. 6758, the MWSS faced scrutiny as the benefits were delivered without proper basis under the new statutory scheme.
Lakambini Q. Razon, then the Resident Auditor of MWSS, issued a Notice of Disallowance (ND) on August 15, 2000, covering benefits from January to November 2000.
The Commission on Audit (COA) subsequently issued several NDs disallowing various benefits by referencing specific violations such as:

Mid-Year and Year-End Financial Assistance for CY 2000 based on breach of Section 12 of RA 6758.
Bigay-pala anniversary bonus and other benefits exceeding prescribed amounts.
Specific disallowances also covered allowances such as the Medical Allowance, PIB, and RATA, based on established administrative orders and prior COA memoranda.

On October 3, 2001, the MWSS moved for the reconsideration of the issued NDs.
As a result, the COA Legal and Adjudication Office modified its decisions to allow payment of certain benefits to employees employed as of June 30, 1989 while limiting or disallowing others according to administrative guidelines and the effectivity of RA No. 6758.
An appeal was subsequently filed by MWSS but was denied on September 1, 2009, affirming the disallowance and ordering that approving officers refund the total disallowed amount.

On August 6, 2015, COA issued COE 2015-174, identifying specific MWSS officials – including petitioners Darlina T. Uy, Leonor C. Cleofas, Ma. Lourdes R. Naz, Jocelyn M. Toledo, Loida G. Ceguerra, and Miriam S. Fulgueras – as personally liable to refund the disallowed benefits.
The COE further directed that salaries or amounts due to these officials be withheld to cover the disallowed amounts.
On August 20, 2015, the identified officials filed a motion to set aside the COE on the grounds that they were not responsible for the approval of the benefits.

In G.R. No. 195105, MWSS contested the COA’s disallowance of the benefits, arguing that the benefits were validly approved by its Board of Trustees and that the benefits had proper legal basis.
In G.R. No. 220729, the petitioners (the identified MWSS officials) sought relief from being declared personally liable, contending that:

They did not participate in the decision to approve or disburse the benefits.
Their signatures and certifications were based on good faith relying on board resolutions and confirmations from higher authorities.
The retroactive application of COA’s Resolution No. 2011-006, which rendered the decision final and executory despite pending petitions, was unjust.

COA’s Resolution No. 2011-006, which amended its Revised Rules of Procedure, deems decisions final after 30 days from notice, a rule applied retroactively in this case.
The retroactive application of this amended procedure became a central contention before the Supreme Court, particularly regarding its fairness to petitioners whose actions were governed by the prior procedural rule.
The dispute also touched on the limits of MWSS’s Board power under RA No. 6758, the integration of allowances in the standardized salary, and the conditions under which public officials could be held personally liable for disallowed benefits.

Whether the COA gravely abused its discretion in affirming the disallowance of the benefits and allowances granted by the MWSS.
Whether the actions of the MWSS Board in approving the benefits were ultra vires due to RA No. 6758 effectively repealing the MWSS Charter provisions authorizing such benefits.

Whether the retroactive application of COA Resolution No. 2011-006, which rendered its decisions final and executory and precluded a stay pending judicial review, constituted a grave abuse of discretion.
The fairness and impact of applying the amended procedural rules to petitions filed under the previous regime.

Whether the petitioners, who were merely involved in day-to-day operations and not in policy or decision-making regarding the approval of benefits, should be held personally liable to refund the disallowed amounts.
Whether the petitioners’ reliance on confirmations from higher authorities and board resolutions establishes their good faith, thereby excusing them from liability.

Whether withholding salaries and enforcing the refund, as prescribed in COE 2015-174, violates the petitioners’ right to due process given that their alleged bad faith and liabilities were never properly discussed or established.