COA Auditors Barred From Agency Benefits: Nacion v. COA

The Supreme Court, in Nacion v. Commission on Audit (G.R. No. 204757, March 17, 2015), affirmed the power of the Commission on Audit (COA) to discipline its own personnel for accepting benefits from government agencies under their audit jurisdiction. The case clarifies that the prohibition on COA auditors receiving extra compensation is rooted in the constitutional mandate to preserve the COA's independence and integrity.

The ruling serves as a stern reminder that auditors must maintain not only actual independence but also the appearance of it, and that good faith or the absence of an express prohibition at the time may not be enough to escape administrative liability.

The Case of Director Janet D. Nacion

From October 2001 to September 2003, Atty. Janet D. Nacion was assigned by the COA to the Metropolitan Waterworks and Sewerage System (MWSS) as State Auditor V. Years later, in 2011, while she was already a Director IV, the COA formally charged her with grave misconduct and violation of reasonable office rules and regulations for acts committed during her MWSS assignment.

The charges stemmed from three acts: (1) receiving bonuses and benefits from MWSS totaling P73,542.00 from 1999 to 2003; (2) availing of the MWSS Housing Project, which awarded her a 300-square-meter lot; and (3) availing of the MWSS Multi-Purpose Loan Program for a car loan.

Nacion admitted to the housing and car loan availments but claimed honest belief that she was not prohibited from doing so, noting that COA Resolution No. 2004-005, which expressly prohibited such availments, was issued only in 2004. She denied receiving the bonuses and offered to restitute the amount and return the lot.

The COA's Ruling and the Issue Before the Court

The COA found Nacion guilty of grave misconduct and violation of reasonable office rules and regulations, imposing a one-year suspension without pay, ordering the refund of P73,542.00, and requiring the return of the housing lot. The COA cited Section 18 of Republic Act No. 6758 (Compensation and Position Classification Act of 1989), which prohibits COA personnel from receiving salaries, honoraria, bonuses, allowances, or other emoluments from any government entity, except those paid directly by the COA.

Before the Supreme Court, Nacion raised two main arguments: first, that she was denied due process because the investigation of her case was not covered by a specific office order; and second, that the documentary evidence against her did not constitute substantial evidence.

The Supreme Court's Ruling

The Court dismissed the petition, finding no grave abuse of discretion on the part of the COA.

On due process. The Court held that the essence of due process in administrative proceedings is the opportunity to explain one's side and submit evidence. Nacion was formally charged, given the chance to file an answer, and offered a formal investigation, which she declined. The lack of a separate fact-finding team or a specific office order did not violate her rights, as the COA Chairperson could initiate administrative proceedings motu proprio under Section 2 of COA Memorandum No. 76-48.

On substantial evidence. The Court reiterated that administrative cases require only substantial evidence—"that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." The COA's findings were supported by claims control indices, journal vouchers, and other public records. The Court noted that requiring Nacion's signature on payrolls would be impractical, as "recipients of unauthorized sums would, after all, ordinarily evade traces of their receipt of such amounts."

On the prohibition itself. The Court emphasized that Section 18 of R.A. No. 6758 was designed to insulate COA personnel from unwarranted influences. Citing Villareña v. Commission on Audit (455 Phil. 908 [2003]), the Court explained that auditors who expect extra benefits from audited agencies would have reason to accord special treatment or close their eyes to irregular expenditures.

The Court rejected Nacion's defenses:

• Good faith was not a valid defense, as the prohibition's purpose is to prevent even the appearance of impropriety.
• The housing project's private cooperative status did not help, since MWSS officials governed the cooperative's affairs, making it a "conduit or adjunct" of MWSS.
• The absence of an express prohibition before 2004 did not excuse her, as the prohibition was already implicit in Executive Order No. 292 (Administrative Code of 1987) and the Code of Ethics for Government Auditors (COA Resolution No. 86-50).

Practical Takeaways

• COA auditors cannot receive any benefit from audited agencies. Section 18 of R.A. No. 6758 is a blanket prohibition covering salaries, bonuses, allowances, and other emoluments, regardless of the amount or the auditor's good faith.
• The prohibition applies to indirect benefits. Availing of loans, housing projects, or other programs of an audited agency—even through affiliated cooperatives—can constitute prohibited additional compensation.
• Good faith is not a defense. An auditor's honest belief that an act was not prohibited does not excuse the violation, especially given the high standard of integrity demanded of COA personnel.
• Substantial evidence is sufficient. Administrative liability may be based on documentary evidence like claims control indices and journal vouchers, even without the employee's signature on payrolls.
• The COA's disciplinary authority is broad. The COA Chairperson may initiate cases motu proprio, and the Court will not interfere absent grave abuse of discretion.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.