The Importance of Upholding Integrity and Independence in Government Auditing

Cabibihan v. Allado, G.R. No. 230524, September 01, 2020

Imagine a government auditor receiving lavish bonuses and benefits from the very agency they are tasked to scrutinize. This scenario, far from hypothetical, was at the heart of a significant legal battle that reached the Philippine Supreme Court. The case of Atty. Norberto Dabilbil Cabibihan against the Metropolitan Waterworks and Sewerage System (MWSS) and the Commission on Audit (COA) brought to light the critical issue of maintaining the integrity and independence of government auditors. The central legal question was whether a COA auditor could legally accept fringe benefits from the audited agency, and the Supreme Court’s ruling provided a clear answer.

In this case, Atty. Cabibihan, a state auditor assigned to MWSS, was found guilty of receiving unauthorized allowances, participating in the MWSS Car Assistance Plan, receiving honoraria from the Bids and Awards Committee, and availing of the MWSS Housing Project. These actions were deemed violations of the legal prohibition against COA personnel receiving any form of compensation from government entities other than the COA itself.

Legal Context: The Prohibition on Fringe Benefits for COA Personnel

The legal framework surrounding this case is rooted in Republic Act No. 6758, commonly known as the Compensation and Position Classification Act of 1989. This law aims to standardize salary rates across government positions and explicitly prohibits COA officials and employees from receiving salaries, honoraria, bonuses, allowances, or other emoluments from any government entity, including government-owned or controlled corporations and government financial institutions. The relevant section states:

Section 18. Additional Compensation of Commission on Audit Personnel and of Other Agencies. – In order to preserve the independence and integrity of the Commission on Audit (COA), its officials and employees are prohibited from receiving salaries, honoraria, bonuses, allowances or other emoluments from any government entity, local government unit, and government-owned and controlled corporations, and government financial institution, except those compensation paid directly be the COA out of its appropriations and contributions.

This prohibition is further reinforced by COA Memorandum No. 89-584 and COA Memorandum No. 99-066, which reiterate the policy against COA personnel receiving any form of fringe benefits or additional compensation from audited entities. The rationale behind this rule is to ensure that auditors remain unbiased and free from any influence that could compromise their audit findings.

In the case of Villareña v. COA, the Supreme Court upheld the constitutionality of this prohibition, emphasizing that it serves to maintain the independence and integrity of COA personnel. The Court reasoned that auditors must be insulated from temptations and enticements that could affect their impartiality and dedication to their duties.

Case Breakdown: The Journey of Atty. Cabibihan’s Case

The case began with a letter from Diosdado Jose M. Allado, then MWSS Administrator, to COA Chairman Reynaldo A. Villar, highlighting unrecorded checks related to cash advances used for bonuses and benefits for COA-MWSS personnel. This led to a fact-finding investigation by the COA’s Fraud Audit and Investigation Office, which uncovered evidence against Atty. Cabibihan and other COA-MWSS personnel.

The investigation revealed that Atty. Cabibihan had received unauthorized allowances totaling P9,182,038.00, availed of the MWSS Car Assistance Plan amounting to P1,200,000.00, received Bids and Awards Committee honoraria of P27,000.00, and was an awardee of the MWSS Housing Project valued at P419,005.40. These findings led to formal charges against him by the COA.

Atty. Cabibihan contested these charges, claiming a lack of evidence and alleging harassment. However, the COA found him guilty of grave misconduct, serious dishonesty, conduct prejudicial to the best interest of the service, and violation of reasonable office rules and regulations. The COA ordered the forfeiture of his retirement benefits, cancellation of eligibility, perpetual disqualification from holding public office, and the refund of the amounts he received.

On appeal, the Civil Service Commission (CSC) modified the COA’s decision, dismissing the charge of serious dishonesty due to insufficient evidence and ordering Atty. Cabibihan to refund only the BAC honorarium and the car loan benefit. The Court of Appeals upheld the CSC’s decision, leading Atty. Cabibihan to bring his case to the Supreme Court.

The Supreme Court, in its decision, affirmed the findings of the lower courts. The Court emphasized that Atty. Cabibihan’s actions violated the clear prohibition under Section 18 of R.A. No. 6758. The Court stated:

In availing himself of the CAP-MEWF, no amount of good faith can be attributed to petitioner. Good faith necessitates honesty of intention, free from any knowledge of circumstances that ought to have prompted him to undertake an inquiry.

Regarding the BAC honoraria, the Court noted that COA representatives are only observers and not entitled to honoraria. The Court also confirmed Atty. Cabibihan’s involvement in the MWSS Housing Project, despite his claim of having transferred ownership.

Practical Implications: Ensuring Integrity in Government Auditing

The Supreme Court’s ruling in this case reaffirms the strict prohibition on COA personnel receiving fringe benefits from audited entities. This decision serves as a reminder to all government auditors of the importance of maintaining their independence and integrity. For similar cases in the future, this ruling sets a precedent that violations of this prohibition will be met with severe penalties, including the forfeiture of retirement benefits and perpetual disqualification from public office.

For businesses and government agencies, this case highlights the need to ensure that their interactions with COA personnel are strictly within legal bounds. It is crucial to avoid any actions that could be perceived as attempts to influence auditors. Individuals working in government auditing should be aware of the legal consequences of accepting unauthorized benefits and should report any attempts at bribery or undue influence.

Key Lessons:

• COA personnel must strictly adhere to the prohibition on receiving fringe benefits from audited entities.
• Agencies and businesses must maintain transparency and avoid any actions that could compromise the independence of auditors.
• Any violations of this prohibition can lead to severe penalties, including the forfeiture of retirement benefits and perpetual disqualification from public office.

Frequently Asked Questions

What is the legal basis for prohibiting COA personnel from receiving fringe benefits?
The legal basis is Section 18 of Republic Act No. 6758, which aims to preserve the independence and integrity of COA personnel by prohibiting them from receiving any form of compensation from government entities other than the COA itself.

Can COA personnel receive any benefits at all from audited entities?
No, COA personnel are strictly prohibited from receiving any salaries, honoraria, bonuses, allowances, or other emoluments from any government entity, including government-owned or controlled corporations and government financial institutions.

What are the consequences for COA personnel who violate this prohibition?
Violators may face severe penalties, including the forfeiture of retirement benefits, cancellation of eligibility, and perpetual disqualification from holding public office.

How can government agencies ensure compliance with this prohibition?
Agencies should maintain transparent financial dealings and avoid any actions that could be perceived as attempts to influence auditors. They should also report any attempts at bribery or undue influence to the appropriate authorities.

What should individuals do if they suspect that a COA auditor is receiving unauthorized benefits?
Individuals should report such suspicions to the COA or other relevant authorities, providing any evidence they may have to support their claims.

Can COA personnel participate in government programs like housing or car loans?
COA personnel can only participate in programs that are directly funded by the COA out of its appropriations and contributions. Any participation in programs funded by other government entities is prohibited.

ASG Law specializes in administrative and government law. Contact us or email hello@asglawpartners.com to schedule a consultation.