G.R. No. 130685 - Uy vs. Commission on Audit

Petitioners were among over sixty permanent employees of the Provincial Engineering Office (PEO), Agusan del Sur.
They were dismissed by then Governor Ceferino S. Paredes, Jr. upon his assumption of office ostensibly to scale down the PEO's operations pursuant to Administrative Order No. 88-1 dated February 26, 1988.
A petition for reinstatement was filed on July 11, 1988, before the Merit Systems Protection Board (MSPB), docketed as MSPB Case No. 91-1739, alleging political vengeance by Governor Paredes in dismissing them and hiring new replacement employees.

During the pendency of the petition, Governor Paredes issued Memorandum Order No. 3-A on March 20, 1989 for the hiring of casual employees as replacements, citing exigency of service.
The MSPB required the Governor to comment, who denied the allegations of illegal dismissal on February 1, 1989.
Hearings were conducted by the Civil Service Regional Office No. X, with last hearing on June 29, 1990. Both parties submitted evidence and memoranda.
On January 29, 1993, the MSPB ruled that the reduction in force was not conducted in accordance with civil service rules—specifically Section 29 of EO 292 and Section 14 of the Rules on Personnel Actions and Policies—and ordered reinstatement of the petitioners.
The MSPB emphasized that:

Though lack of funds may justify reduction of workforce, it must comply with the law requiring comparison of employees’ relative fitness, efficiency, and length of service.
Fifty-three of 106 PEO employees were dismissed without such comparison; the replacements were hired illegally under the guise of exigency.

The MSPB issued an order on April 19, 1993 directing payment of back salaries and benefits; and on June 24, 1993, ordered reinstatement.

Governor Paredes refused to comply; MSPB issued a show-cause order on October 8, 1993.
The Civil Service Commission (CSC) intervened, issuing an order on December 14, 1993 directing reinstatement with a threat of contempt proceedings.
The CSC initiated indirect contempt proceedings against then-Governor Democrito Plaza (successor), leading to final compliance with reinstatement.

On July 9, 1994, the Provincial Administrator, representing Governor Plaza, requested COA’s opinion on:

Finality and executory nature of MSPB/CSC decision ordering payment of back salaries and benefits;
COA's authority on disbursement of such payments; and
Whether former Governor Paredes would be personally liable for back salaries and benefits.

Partial payment of back salaries amounting to P2,291,423.34 was made by the Provincial Treasurer on December 12, 1995.

The MSPB/CSC order was final and executory with no appeal filed.
COA held authority to audit claims against the government and disallow payments.
Payment of back wages was the personal liability of former Governor Paredes, citing alleged bad faith.

A motion for reconsideration by the petitioners was denied on August 28, 1997 (Decision No. 97-497).
The Provincial Government refused further payments.

Petitioners filed a special civil action for certiorari challenging COA’s disallowance and holding that COA unduly exercised jurisdiction and interfered with final and executory decisions.

Whether the COA committed grave abuse of discretion and acted beyond its jurisdiction in disallowing the payment of back salaries and declaring former Governor Paredes personally liable.
Whether COA has appellate authority over final and executory decisions of the MSPB and CSC.
Whether the MSPB/CSC decisions are final, executory, and binding upon the Provincial Government including their partial execution.
Whether the cited jurisprudence relied upon by COA is applicable in this case.
The scope and limitations of the COA’s authority to audit and disallow payments arising from final administrative rulings.