Villareña vs. COA

Section 18 of RA 6758 is not impliedly repealed by the Local Government Code; the prohibition on COA personnel receiving allowances from local government units operates as an exception to the LGC's authority to grant additional benefits to national government officials.

Petitioner Atty. Rudy M. Villareña is a State Auditor IV of the COA who was assigned as Auditor of Marikina on December 1, 1994, and became City Auditor when Marikina became a city on December 6, 1996. Section 18 of RA 6758 prohibits COA officials and employees from receiving salaries, honoraria, bonuses, allowances or other emoluments from any government entity, local government unit, government-owned and controlled corporation, or government financial institution, except those paid directly by the COA out of its appropriations and contributions. Against this prohibition, Sections 447 and 458 of RA 7160, the Local Government Code of 1991, authorize local legislative bodies to provide additional allowances and other benefits to judges, prosecutors, public elementary and high school teachers, and other national government officials stationed in or assigned to the municipality or city.

Petitioner Atty. Rudy M. Villareña, a State Auditor IV of the COA, assumed the position of Auditor of Marikina on December 1, 1994, and later became City Auditor when Marikina became a city on December 6, 1996. Pursuant to RA 7160, the Local Government Code of 1991, the legislative body of Marikina passed Ordinance No. 21, series of 1995; Ordinance No. 9, series of 1996; and Ordinance No. 200, series of 1996, which approved the budget allocations for Marikina for calendar years 1995, 1996 and 1997, respectively. Allotted in each of these were allowances and benefits granted to COA personnel assigned to Marikina, including petitioner.

In line with COA Assignment Orders No. 97-006 and No. 97-051, a Special Audit Team was constituted by the COA to conduct an examination of the cash and accounts of the City Treasurer of Marikina, as well as to audit selected financial transactions of the city. In the course of the examination and audit, the Special Audit Team learned of the allowances given to COA personnel by the City of Marikina and declared these to have been received in violation of Section 18 of RA 6758, COA Memorandum No. 89-584, and the COA Chairman's Indorsement dated March 23, 1995.

In its Confidential Report dated June 19, 1997, the Special Audit Team recommended that the COA personnel be ordered to stop receiving additional fringe benefits, honoraria, allowances and other forms of compensation from the City of Marikina and to refund all those previously received, and stated that under COA Memorandum No. 89-584 the COA may apply appropriate administrative sanctions to the concerned COA personnel. On July 15, 1997, a formal charge was initiated against petitioner for grave misconduct, gross neglect of duty, and conduct grossly prejudicial to the best interest of the service and/or violation of office rules and regulations.

In his Answer, petitioner averred that he received the benefits fully believing that Section 18 of RA 6758 and COA Memorandum No. 89-584 had been repealed and/or superseded by the Local Government Code, which authorizes local government units to give additional compensation to national government officials.

On August 4, 1998, COA Decision No. 98-359 was rendered finding petitioner guilty of neglect of duty, simple misconduct and violation of reasonable office rules and regulations, fining him an amount equivalent to four months' salary, and ordering him to refund the sums he received from the City of Marikina in the amount of ₱227,092.50. Petitioner moved for reconsideration; the motion was partially granted in that the fine was reduced to one month and one day's salary, but the decision was affirmed in all other respects. Petitioner then filed the present consolidated Special Civil Actions for Certiorari and Prohibition.

• Local Government Code Authority: Petitioner argued that he validly received the allowances, honoraria and benefits by virtue of the ordinances enacted by the legislative council of Marikina under the authority of the Local Government Code, particularly Sections 447 and 458, which authorize local legislative bodies to provide additional allowances and other benefits to judges, prosecutors, public elementary and high school teachers, and other national government officials stationed in or assigned to the municipality or city; as a COA employee stationed in Marikina, he claimed to fall under the phrase "other national government officials."
• Implied Repeal: Petitioner argued that Section 18 of RA 6758 and COA Memorandum No. 89-584 were necessarily repealed by the later Local Government Code, citing the repealing clause in Section 534(f) thereof, and that the adoption of RA 7160 modified RA 6758 and COA Memorandum No. 89-584 insofar as these do not conform thereto.
• Equal Protection: Petitioner argued that Section 18 of RA 6758 violates the equal protection clause of the Constitution.
• Good Faith: Petitioner alleged good faith in receiving the amounts from the City of Marikina.
• Due Process: Petitioner claimed he was denied due process when the Special Audit Team allegedly openly disregarded the procedures set by the Manual on Certificate of Settlement and Balances, which requires the issuance to him of a Notice of Disallowance.
• Amount of Refund: Petitioner claimed that the annexes attached to the confidential report would add up to only ₱76,989.50.

• Special vs. General Law: Respondent, through the Office of the Solicitor General, pointed out that RA 6758 is a special law while RA 7160 is a general law, and that a general law does not operate to modify or repeal a special law unless it has been so expressly provided.
• Reconciliation: Respondent maintained that any apparent inconsistency should be reconciled by regarding the prohibition stated in RA 6758 as an exception or limitation to the authority of local legislative bodies under RA 7160.

• Implied Repeal and Validity of the Ordinances: Whether RA 6758 was impliedly repealed by RA 7160, and whether the Marikina ordinances granting allowances and benefits to COA personnel are valid.
• Equal Protection: Whether Section 18 of RA 6758 violates the equal protection clause of the Constitution.
• Good Faith: Whether petitioner's good faith in receiving the amounts is a valid defense.
• Due Process: Whether petitioner was denied due process by the Special Audit Team's alleged failure to issue a Notice of Disallowance.
• Amount of Refund: Whether the amount to be refunded is correct.

• Implied Repeal and Validity of the Ordinances: No. Implied repeals are not lightly presumed; RA 6758 and RA 7160 can be harmonized by reading the RA 6758 prohibition as an exception to the LGC's grant of authority, so the ordinances are invalid insofar as they contravene RA 6758.
• Equal Protection: No. The equal protection clause permits classification where reasonable and not arbitrary, and there are valid reasons to treat COA officials differently from other national government officials.
• Good Faith: No. Good faith is not relevant, since neglect of duty, simple misconduct, and violation of reasonable office rules and regulations can be committed even if the offender was in good faith.
• Due Process: No. The audit was a routine procedure, and petitioner was formally charged and given the opportunity to present evidence and refute the findings after the audit.
• Amount of Refund: No. The stated figure was derived from an incomplete audit, so the case must be remanded to the COA for the sole purpose of ascertaining the exact amount of refund.

• Implied Repeal and Validity of the Ordinances: The SC noted that petitioner cited only paragraph (f) of the LGC's repealing clause and left out the other provisions that meticulously enumerate the specific laws or parts thereof repealed or modified. Since RA 6758 was not expressly repealed by RA 7160, the question was whether it was impliedly repealed. Implied repeals are not lightly presumed; the rule is that instead of placing one law against another in a destructive confrontation, courts must exert every effort to reconcile the statutes. In case of conflict, the proper action is not to uphold one and annul the other but, if possible, to give effect to both by harmonizing them. The SC relied on Magtajas vs. Pryce, where a conflict between the Local Government Code and the PAGCOR charter was resolved not by annulling one law but by declaring the PAGCOR charter an exception to the Local Government Code. Here, the two statutes can easily be harmonized: under the LGC, local legislative bodies may provide for additional allowances and other benefits to national government officials stationed or assigned to their municipality or city, but this authority is not without limitation, as it does not include the grant of benefits that runs in conflict with other statutes such as RA 6758. The exception stated in these laws must be read together with the LGC so as to make both the Code and these laws equally effective and mutually complementary. By allocating a portion of the local budget for financial assistance to the auditing office of Marikina City, the legislative council acted in excess of its powers under the LGC; consequently, the three ordinances, insofar as they contravene the prohibition in RA 6758, are declared invalid.
• Equal Protection: The SC held that petitioner ignored the well-accepted meaning of the equal protection clause, which does not preclude classification of individuals who may be accorded different treatment under the law as long as the classification is reasonable and not arbitrary, citing Basco vs. PAGCOR. There are valid reasons to treat COA officials differently from other national government officials. The primary function of an auditor is to prevent irregular, unnecessary, excessive or extravagant expenditures of government funds, citing Arias vs. Sandiganbayan. To properly perform their constitutional mandate, COA officials need to be insulated from unwarranted influences so that they can act with independence and integrity. As extensively discussed in Tejada vs. Domingo, the prohibition under Section 18 of RA 6758 was designed precisely to serve this purpose; the removal of the temptation and enticement the extra emoluments may provide is designed to be an effective way of vigorously and aggressively enforcing the constitutional provision mandating the COA to prevent or disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties. COA personnel who have nothing to look forward to or expect from their assigned offices in terms of extra benefits would have no reason to accord special treatment to the latter by closing their eyes to irregular or unlawful expenditures or conducting a perfunctory audit.
• Good Faith: The SC held that the argument is not relevant, considering that petitioner was found guilty of neglect of duty, simple misconduct and violation of reasonable office rules and regulations, and these infractions can be committed even if the offender was in good faith.
• Due Process: The SC held the contention untenable. During the audit no charges had yet been brought against petitioner and he was not the focus of the investigation; the audit was merely a routine procedure to conduct an examination of the cash and accounts of the City Treasurer of Marikina and to audit selected financial transactions of the city. What is important is that after the audit, petitioner was formally charged and given the opportunity to present evidence and refute the findings of the Special Audit Team.
• Amount of Refund: The SC found the stated figure of ₱221,092.50 inaccurate. Petitioner claimed that the annexes attached to the confidential report would add up to only ₱76,989.50, while the records indicated that petitioner had custody of other vouchers, payrolls, and other documents which were not submitted during the audit despite repeated requests to do so; according to the COA, if these were included in the audit the amount to be refunded may increase. It appeared, therefore, that the amount was derived from an incomplete audit, making it necessary to remand the case to the COA for the sole purpose of ascertaining the exact amount that petitioner must refund to the City of Marikina.

• Implied Repeal — Implied repeals are not lightly presumed; instead of placing one law against another in a destructive confrontation, courts must exert every effort to reconcile the statutes. In case of conflict, the proper action is not to uphold one and annul the other but, if possible, to give effect to both by harmonizing them. Applied: RA 6758 and RA 7160 were harmonized rather than one being struck down.
• Harmonization by Reading One Statute as an Exception — Where two statutes appear to conflict, one may be read as an exception to the other so that both are given effect. Applied: the RA 6758 prohibition on COA personnel receiving allowances from LGUs was read as an exception to the LGC's grant of authority to local legislative bodies to provide additional benefits to national government officials.
• Equal Protection — Reasonable Classification — The equal protection clause does not preclude classification of individuals who may be accorded different treatment under the law as long as the classification is reasonable and not arbitrary. Applied: COA officials are validly treated differently from other national government officials.
• Independence and Integrity of the COA — The prohibition under Section 18 of RA 6758 is designed to insulate COA officials from unwarranted influences so they can act with independence and integrity, and to remove the temptation and enticement that extra emoluments may provide, thereby enabling them to vigorously and aggressively enforce the constitutional mandate to prevent or disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties.
• Good Faith as Defense in Administrative Offenses — Good faith is not a defense to the administrative infractions of neglect of duty, simple misconduct, and violation of reasonable office rules and regulations, which can be committed even if the offender was in good faith.

• "Implied repeals are not lightly presumed. The rule is that instead of placing one law against another, in a destructive confrontation, courts must exert every effort to reconcile the statutes." — States the governing rule on implied repeal that anchors the SC's refusal to strike down either RA 6758 or RA 7160.
• "In the case at bar, the two statutes can easily be harmonized. Under the Local Government Code, local legislative bodies may provide for additional allowances and other benefits to national government officials stationed or assigned to their municipality or city. This authority, however, is not without limitation, as it does not include the grant of benefits that runs in conflict with other statutes, such as Republic Act No. 6758." — The core harmonization holding that resolves the conflict between the two statutes.
• "By allocating a portion of the local budget for financial assistance to the auditing office of Marikina City, the legislative council of Marikina acted in excess of its powers under the Local Government Code. Consequently, Ordinance No. 21, series of 1995; Ordinance No. 9, series of 1996; and Ordinance No. 200, series of 1996, insofar as these contravene the prohibition contained in Republic Act No. 6758, are declared invalid." — The operative holding invalidating the ordinances.
• "These infractions can be committed even if the offender was in good faith." — Disposes of the good faith defense in a single line.

• Magtajas vs. Pryce, 234 SCRA 255 (1994) — Controlling precedent on harmonization; the SC read the PAGCOR charter (PD 1869) as an exception to the Local Government Code rather than annulling one law.
• Basco vs. PAGCOR, 197 SCRA 52 (1991) — Cited for the equal protection rule that classification is permissible if reasonable and not arbitrary.
• Arias vs. Sandiganbayan, 180 SCRA 309 (1989) — Cited for the primary function of an auditor to prevent irregular, unnecessary, excessive or extravagant expenditures of government funds.
• Tejada vs. Domingo, 205 SCRA 138 (1992) — Cited for the purpose of the prohibition under Section 18 of RA 6758, i.e., to insulate COA officials from unwarranted influences.

• Section 18, Republic Act No. 6758 — Prohibits COA officials and employees from receiving salaries, honoraria, bonuses, allowances or other emoluments from any government entity, local government unit, government-owned and controlled corporation, or government financial institution, except those paid directly by the COA out of its appropriations and contributions; also prohibits government entities from assessing or billing other government entities for services rendered by their officials and employees as part of their regular functions for purposes of paying additional compensation. Applied: the basis for declaring the Marikina ordinances invalid and for holding petitioner administratively liable.
• Sections 447 and 458, Republic Act No. 7160 (Local Government Code of 1991) — Authorize the sangguniang bayan and sangguniang panlungsod to provide additional allowances and other benefits to judges, prosecutors, public elementary and high school teachers, and other national government officials stationed in or assigned to the municipality or city. Applied: petitioner's claimed authority for receiving the allowances; the SC held this authority is limited and does not include benefits that conflict with RA 6758.
• Section 534(f), Republic Act No. 7160 — Repealing clause providing that all general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or parts thereof, inconsistent with the Code are repealed or modified accordingly. Applied: petitioner's cited basis for implied repeal; the SC held RA 6758 was not expressly repealed and the clause did not operate to impliedly repeal it.
• Section 2(2), Article IX-D, 1987 Constitution — Mandates the COA to prevent or disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties. Applied: the constitutional basis for the prohibition's purpose of insulating COA personnel.
• COA Memorandum No. 89-584 — Directs that effective January 2, 1989, the receipt of all forms of additional benefits, honorarium, allowances or other forms of compensation by auditing personnel shall be considered illegal and shall subject the employee concerned to administrative disciplinary action. Applied: basis for the administrative charge and sanction.
• COA Chairman's Indorsement dated March 23, 1995 — Denied the request of Mr. Arnulf E. Lancin, City Auditor, Cagayan de Oro, for authority to collect allowances in the form of honoraria chargeable against local funds, for want of merit. Applied: cited as one of the issuances violated.