The Supreme Court affirmed the Commission on Audit’s (COA) decision to suspend Atty. Janet D. Nacion for one year without pay, due to grave misconduct and violation of office rules. Nacion, while assigned to the Metropolitan Waterworks Sewerage System (MWSS), received unauthorized benefits, including bonuses, housing, and car loans. This ruling reinforces the principle that COA personnel must remain independent and avoid conflicts of interest, ensuring they can impartially audit government agencies. The decision highlights the importance of adhering to ethical standards and legal prohibitions designed to maintain the integrity of public service.

Auditor’s Dilemma: Balancing Benefits and Impartiality at MWSS

Atty. Janet D. Nacion, formerly a State Auditor V assigned to the Metropolitan Waterworks Sewerage System (MWSS), faced administrative charges for actions taken during her tenure there. The charges stemmed from her acceptance of benefits and allowances from MWSS, including bonuses totaling P73,542.00, participation in the MWSS Housing Project, and availment of the Multi-Purpose Loan Program – Car Loan. These actions were deemed violations of rules designed to maintain the independence and integrity of COA personnel. The central legal question was whether the COA committed grave abuse of discretion in finding Nacion guilty, considering her defense of honest belief and lack of explicit prohibition at the time.

The Commission on Audit (COA) found Nacion guilty of grave misconduct and violation of reasonable rules and regulations, citing Section 18 of Republic Act (R.A.) No. 6758, also known as the Compensation and Position Classification Act of 1989. This law specifically prohibits COA personnel from receiving additional compensation from government entities other than direct payments from COA appropriations. COA emphasized that this prohibition extended to all forms of loans, predating COA Resolution No. 2004-005, based on Executive Order No. 292 and the Code of Ethics for Government Auditors. The court had to evaluate whether COA had exceeded its authority in its application of the rules and assessing the evidence.

Nacion argued that her actions were taken under an honest belief that they were permissible, as no explicit prohibition existed at the time. She also contended that the evidence presented against her was insufficient to prove her receipt of bonuses and benefits from MWSS. She claimed a due process violation because the audit team investigated records prior to an office order being issued by the COA Chairman. In response, the COA asserted its authority to discipline its officials to protect against conflicts of interest. They emphasized the importance of maintaining auditor independence as stated by the Villareña vs COA case:

The primary function of an auditor is to prevent irregular, unnecessary, excessive or extravagant expenditures of government funds. To be able properly to perform their constitutional mandate, COA officials need to be insulated from unwarranted influences, so that they can act with independence and integrity.

The Supreme Court upheld the COA’s decision, finding no grave abuse of discretion. It emphasized that in administrative proceedings, due process requires only that the parties be given an opportunity to be heard. Nacion was given this opportunity through the formal charge and her subsequent answer and motion for reconsideration. The Court also found that substantial evidence supported the COA’s findings, even without documentary evidence bearing Nacion’s signature. The claims control indices, journal vouchers, and entries were deemed sufficient to prove the receipt of unauthorized benefits. As the court further elaborated:

For the receipt of allowances and bonuses amounting to P73,542.00, which she denied receiving for lack of conclusive proof, it must be emphasized that administrative offenses only require substantial, not conclusive, evidence. x x x It was not a stroke of accident that her name appeared on these documents. Auditors can certainly explain the appearance of specific names in the indices of payment and other documents presented herein.

The Court rejected Nacion’s argument that her availment of the housing and car programs was in good faith, emphasizing that prohibited acts cannot be justified simply because other government officials engaged in similar actions. It clarified that the prohibition on additional compensation is mandatory to prevent COA personnel from being influenced in their duties. The Court also addressed Nacion’s argument that the housing project was managed by a private entity, emphasizing that the MWSS maintained control over the cooperative, making it an adjunct of the agency. The court needed to ascertain that those safeguards are upheld to prevent a deterioration of trust in the auditing process.

The ruling in Atty. Janet D. Nacion v. Commission on Audit reinforces the vital principle of auditor independence. The decision serves as a reminder to all COA personnel of the importance of avoiding any situation that could create a conflict of interest or compromise their impartiality. By strictly enforcing these ethical and legal standards, the COA can maintain public trust and effectively fulfill its mandate to prevent irregular expenditures of government funds. The consequences of failing to do so can affect not just individual auditors but also the confidence in the entire governmental financial control system.

FAQs

What was the key issue in this case?	Whether the Commission on Audit (COA) committed grave abuse of discretion in finding Atty. Janet D. Nacion guilty of grave misconduct and violation of reasonable office rules and regulations for receiving unauthorized benefits while assigned to MWSS.
What benefits did Atty. Nacion receive from MWSS?	Atty. Nacion received bonuses totaling P73,542.00, availed of the MWSS Housing Project, and participated in the Multi-Purpose Loan Program – Car Loan. These benefits were deemed unauthorized because they created a conflict of interest.
What is the legal basis for prohibiting COA personnel from receiving extra benefits?	Section 18 of Republic Act No. 6758 (Compensation and Position Classification Act of 1989) prohibits COA personnel from receiving salaries, honoraria, bonuses, allowances, or other emoluments from any government entity, except those paid directly by the COA.
What was Atty. Nacion’s defense?	Atty. Nacion claimed she acted under an honest belief that the benefits were permissible, as no explicit prohibition existed at the time. She also argued that the evidence was insufficient to prove her receipt of bonuses.
What standard of evidence is required in administrative cases?	Administrative cases require substantial evidence, which is that amount of relevant evidence a reasonable mind might accept as adequate to justify a conclusion. This is a lower standard than the proof beyond a reasonable doubt required in criminal cases.
Why was the MWSS housing project considered a prohibited benefit?	The MWSS Employees Housing Project was deemed an adjunct of the MWSS, as its operations were controlled by MWSS officials. Allowing COA personnel to participate would create a conflict of interest.
What penalty did Atty. Nacion receive?	Atty. Nacion was suspended for one year without pay and ordered to refund the amount of P73,542.00 and return the lot acquired under the MWSS housing program. This penalty was mitigated by her long years of service and admission of availing the housing project and car loan.
What is the practical implication of this ruling?	The ruling reinforces the importance of maintaining the independence and integrity of COA personnel by strictly enforcing prohibitions on receiving additional compensation from audited entities. It protects the entire governmental financial control system.

In conclusion, this case underscores the critical role of ethical conduct and legal compliance in ensuring the integrity of government auditing processes. By upholding the COA’s decision, the Supreme Court has reinforced the principle that COA personnel must avoid any situation that could compromise their impartiality, thereby safeguarding public trust in the government’s financial oversight mechanisms.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ATTY. JANET D. NACION VS. COMMISSION ON AUDIT, G.R. No. 204757, March 17, 2015