G.R. No. 53585 February 15, 1990
ROMULO VILLANUEVA, petitioner, vs. HON. FRANCISCO TANTUICO, JR., and EMILIANA CRUZ, respondents.

FACTS

Petitioner Romulo Villanueva, a Bureau of Records Management officer, was designated Administrative Officer and Training Coordinator for two government seminars. He was entrusted with seminar fees totaling P43,000.00, collected from participants pursuant to the President’s Memorandum Circular No. 830, which charged the fees against the appropriations of the participants’ respective government offices. Villanueva authorized disbursements from these funds for legitimate seminar expenses such as food, transportation, honoraria, and supplies. After the seminars, the remaining balance was properly deposited with the Bureau’s cashier.
Subsequently, Auditor Emiliana Cruz discovered that some participants had already collected transportation and per diem allowances from their home offices. Cruz disallowed the corresponding disbursements Villanueva had authorized, totaling P31,949.15, and deemed this amount an indebtedness of Villanueva to the government. Relying on Section 624 of the Revised Administrative Code, Cruz issued a certificate of permanent disallowance, causing the withholding of Villanueva’s salaries, terminal leave benefits, and other monetary claims to offset the alleged debt. The Tanodbayan earlier dismissed a malversation case against Villanueva, finding the seminar fees were not public funds and that he acted in good faith, but the Commission on Audit sustained Cruz’s actions.

ISSUE

Whether respondent Auditor Cruz and the Commission on Audit committed grave abuse of discretion in holding Villanueva indebted to the government and in withholding his monetary benefits under Section 624 of the Revised Administrative Code.

RULING

Yes, the respondents acted with grave abuse of discretion. The Supreme Court granted the petition for certiorari. First, the seminar fees were public funds, as they were drawn from government agency appropriations under a presidential circular, making the audit proper. However, the auditor’s conclusion that Villanueva was indebted to the government was untenable. Section 624 permits set-off only for a liquidated debt due to the government. Here, the alleged indebtedness arose from a disallowance that was not a final, liquidated obligation. A debt subject to compensation under the Civil Code must be liquidated and demandable, and not subject to any controversy. Villanueva’ liability was disputed and not established by a competent court judgment.
Moreover, the disbursements Villanueva authorized were for legitimate seminar purposes as outlined in the approved operation plans. There was no evidence he knew participants had received duplicate allowances from their offices. Any liability for duplicate payments should fall on the participating employees, not on Villanueva, who acted in good faith in performing his duties. Thus, the withholding of his salaries and benefits based on a mere disallowance, without a final adjudication of indebtedness, constituted grave abuse of discretion. The Court annulled the certificate of disallowance and ordered the immediate payment of all withheld amounts to Villanueva.