FELIX UY v COA
1 MSPB further
21 March 2000 | Puno, J. | Notice and
Hearing when required
Petitioners: Felix Uy, Roman Cagatin,
James Enguito, and 57 others
Respondents: COA, represented by Chair
Celso Gangan and Commissions Sofronio
Ursal and Raul Flores
FACTS:
Petitioners were among the more than 60
permanent employees of the Provincial
Engineering Office of Agusan del Sur who
were dismissed from service by then Gov.
Ceferino Paredes, allegedly to scale down
the operations of said office.
(July 11, 1988) A petition for
reinstatement was filed by petitioners
before the Merit Systems Protection
Board (MSPB)
They alleged that Gov. Paredes
was motivated by political
vengeance when he dismissed
them and hired new employees
to replace them.
During the pendency of the petition, Gov.
Paredes issued Memorandum Order No.
3-A providing for the hiring of casual
employees to replace the dismissed
employees, allegedly due to exigency of
service.
Hearings were conducted by the Civil
Service Regional Office No. X, Cagayan
de Oro City, where both parties were
represented by their respective counsels
(last hearing held on June 29, 1990).
(January 29, 1993) MSPB held that the
reduction in work force was not done in
accordance with civil service rules and
regulations. The reinstatement of
petitioners were ordered.
explained that although the governor
may take measures to retrench or reduce
the work force, the 53 out of 106
employees in the office were terminated
without showing that they were
compared in terms of relative fitness,
efficiency and length of service. There
was no other basis for terminating them
except for lack of funds.
MSPB ordered the governor to reinstate
the dismissed employees which the
governor refused to implement.
MSPB then directed the
governor to show cause why he
should not be declared in
contempt.
The matter was brought before the Civil
Service Commission (CSC) which issued
an Order (Dec. 14, 1993) directing the
governor to reinstate the employees with
the caveat that should he fail to do so,
the CSC would be constrained to initiate
contempt proceedings against him and
other responsible officials.
(March 21, 1994) CSC initiated indirect
contempt proceedings against the
Provincial Governor who was by then,
Democrito Plaza.
1 Sec 29, EO 292. Reduction in Force. -
Whenever it becomes necessary for lack of
work or funds or due to change in the scope
or nature of an agency's program or as a
result of reorganization, to reduce the staff of
any department or agency, those in the
same group or class of positions in one or
more agencies within the particular
department or agency wherein the reduction
is to be effected, shall be reasonably
compared in terms of relative fitness,
efficiency and length of service, and those
found to be least qualified for the remaining
position shall be laid off.
 Gov. Plaza complied and
petitioners were reinstated to
their former positions.
However, a few months later, the
Provincial Administrator, wrote a letter to
COA, inquiring whether or not:
a. The MSPB CSC decision directing the
payment of back salaries and other
benefits of the reinstated 61 employees
is final and executory Later, COA held
that it has become final and executory
there being no appeal filed within the
reglementary period.
b. The COA is the only proper
authority to determine disbursement of
such is in order In DA v NLRC, the SC
held that pursuant to CA 327, as
amended by PD 1445, the money claim
should first be brought to the COA.
c. Former Provincial Governor
Paredes would be personally liable for
payment of back salaries and other
benefits Yes, illegal dismissal done in
bad faith.
In the meantime, the Provincial Treasurer
of Agusan del Sur made a partial
payment to the reinstated employees
representing back salaries (Php2.3M out
of the total Php3.3M).
When the CSC ruled that there was illegal
termination and subsequently ordered
their reinstatement, the settled rule is
that the government employee who was
illegally terminated such government
employee is considered as not having left
his office, so that he is entitled to all the
rights and privileges that accrue to him
by virtue of the office he held.
Because of the CSC ruling that the
payment of back salaries became the
personal liability of former Gov. Paredes
and not of the provincial government, the
Provincial Government of Agusan del Sur
refused to release the remaining back
salaries and other monetary benefits. MR
filed by petitioners with COA was denied.
ISSUE: W/N COA, in the exercise of its
power to audit, can disallow the payment
of back wages of illegally dismissed
employees which has been decreed
pursuant to a final decision of the CSC
NO.
RATIO:
COA is bereft of power to disallow the
payment of the backwages.
COA, in ruling that there is bad faith in
terminating the petitioners, relied solely
on the MSPB decision holding that the
dismissal was illegal because it violated
Sec 29 of EO 292 and Sec 14 of the Rules
on Personnel Action and Policies. MSPB
never made a categorical finding that
former Gov. Paredes acted in bad faith
and should be personally liable for the
payment of backwages.
COAs exercise of its power in deciding
administrative cases involving
expenditure of public funds involves the
quasi-judicial aspect of government
audit.2
The fundamental requirements of
procedural due process cannot be
violated in proceedings before the
COA. Gov. Paredes was never made a
party to nor served a notice of the
proceedings before the COA. While
admin agencies exercising quasi-
judicial powers are not bound by
technical procedures, they are not
free to disregard the basic demands
of due process. Notice to a party is
2 This pertains to the "examination, audit,
and settlement of all debts and claims of any
sort due from or owing to the Government or
any of its subdivisions, agencies and
instrumentalities.
an indispensable ingredient of due
process. It would be unfair for COA
to hold Gov. Paredes personally
liable without giving him an
opportunity to be heard and present
evidence in his defense. Public
officials are personally liable for
damages arising from illegal acts
done in bad faith provided that they
have been sued both in their official
and personal capacities.
The action taken by COA in disallowing
the further payment by the Provincial
Government of Agusan del Sur of
backwages due the petitioners amended
the final decision of the MSPB. The audit
authority of COA is intended to prevent
irregular, unnecessary, excessive,
extravagant or unconscionable
expenditures or uses of government
funds and properties. Payment of
backwages can hardly be described as
such.
Although estoppel will not lie against the
state, exceptions in the interest of justice
and fair play are admitted. Petitioners
sufferings started in 1988 when they
were illegally dismissed. Now, after more
than a decade, COA holds that petitioners
should run after Gov. Paredes in his
personal capacity. Social justice
legislation, to be truly meaningful and
rewarding to the workers, must not be
hampered in its application by long-
winded arbitration and litigation. To make
these workers suffer from the effect of a
judicial ruling, would be to disregard
what the social justice concept stands
for.