G.R. No. 145383-84 - Villarena vs. Commission on Audit

Petitioner: Atty. Rudy M. VillareAa, State Auditor IV of the Commission on Audit (COA), who was assigned as Auditor of Marikina on December 1, 1994, and later became City Auditor when Marikina attained city status on December 6, 1996.
Respondent: The Commission on Audit (COA), which found petitioner guilty of neglect of duty, simple misconduct, and violation of reasonable office rules and regulations.

Ordinance No. 21, series of 1995; Ordinance No. 9, series of 1996; and Ordinance No. 200, series of 1996 were enacted by the legislative body of Marikina.
These ordinances provided allowances and benefits to COA personnel stationed in the city, including the petitioner.

Section 18 of Republic Act No. 6758 prohibits COA personnel from receiving extra emoluments from any government entity except those paid directly by the COA.
COA Memorandum No. 89-584 (effective January 2, 1989) declared all forms of additional benefits, honoraria, and allowances received by auditing personnel as illegal.
The COA Chairman’s Indorsement dated March 23, 1995 reinforced that requests for local allowances were disapproved for want of merit.

In line with COA Assignment Orders No. 97-006 and No. 97-051, a Special Audit Team was constituted to examine the cash and accounts of the City Treasurer of Marikina and audit selected financial transactions.
During the audit, the team discovered that petitioner, along with other COA personnel, received allowances from the City of Marikina in violation of Section 18 of RA 6758 and related COA memoranda.

The Special Audit Team’s Confidential Report dated June 19, 1997, recommended that COA personnel stop receiving these unauthorized benefits and refund all previously received amounts.
The Report explicitly stated that disciplinary measures could be pursued under COA Memorandum No. 89-584.

On July 15, 1997, a formal charge was filed against petitioner for grave misconduct, gross neglect of duty, and conduct grossly prejudicial to the best interest of the service.
Petitioner contended that he received the allowances in good faith, believing that Section 18 of RA 6758 and COA Memorandum No. 89-584 had been repealed or superseded by the Local Government Code (RA 7160).

On August 4, 1998, COA Decision No. 98-359 found petitioner guilty and imposed a fine equivalent to four months’ salary, in addition to an order to refund P227,092.50.
A motion for reconsideration was filed within the reglementary period, resulting in a reduction of the imposed fine to one month and one day’s salary, while affirming the other findings.
The refund amount was later recalibrated to P221,092.50, though discrepancies in documentary evidence were noted.

Petitioner argued that the benefits and allowances were validly received under the Local Government Code, specifically Sections 447 and 458, which authorize local legislative bodies to provide additional allowances to national government officials.
He claimed that as a COA employee stationed in Marikina, he fell within the category entitled to such benefits.

Petitioner maintained that RA 6758 and COA Memorandum No. 89-584 had been effectively modified by the Local Government Code through its repealing clause in Section 534 (f).
He argued that the more recent Local Government Code should override the earlier prohibitions limiting additional compensation.

Petitioner contended that his due process rights were violated when the Special Audit Team did not follow the procedure (i.e., issuance of a Notice of Disallowance) as required by the Manual on Certificate of Settlement and Balances.

Petitioner claimed that the actual amounts, as evidenced by annexed documents, totaled only P76,989.50 contrary to the COA’s computed P221,092.50.
It was noted that additional documents (vouchers, payrolls, etc.) not submitted during the initial audit might have influenced the refund computation if included.

Whether the allowances and benefits conferred by the City of Marikina on COA personnel, as authorized by local ordinances and the Local Government Code, can override the prohibitions contained in Section 18 of Republic Act No. 6758 and COA Memorandum No. 89-584.
Whether the Local Government Code (RA 7160), by its repealing clause, impliedly repeals or modifies the restrictions imposed by RA 6758, noting that RA 6758 is a special law and RA 7160 is a general law.
Whether the alleged procedural irregularity in the audit process—specifically, not issuing a Notice of Disallowance prior to formal charges—violated petitioner’s right to due process.
Whether the equal protection clause of the Constitution is violated by expressly barring COA officials from receiving additional fringe benefits while allowing other national government officials to benefit from such allowances.
The proper determination of the exact refund amount given the discrepancies in documentary evidence, and whether the COA should recompute the figure.