A video has emerged in which Villalobos, a member of the ruling Popular party, appears to be playing the highly addictive game on her tablet, while Spanish Prime Minister Mario Rajoy delivers his state of the nation address right in front of her.
Villalobos has the title of vice-president of the Congress of Deputies - a role equivalent to that of deputy speaker of the House of Commons in the UK. She had taken over the chair from the president of the house, Jesús Posada, for a short period during the debate on Tuesday afternoon.
In the video, released by online newspaper, La Marea, Villalobos is captured swiping her finger across the tablet screen, an action repeatedly used to move the candies in the popular video game.
Parliamentary sources quoted in Spanish daily newspaper, 20 minutos, denied the Spanish politician was playing Candy Crush, insisting instead that she was reading the newspaper.
Whether she was playing Candy Crush or not, Villalobos is now trending on social media in Spain, as is the popular puzzle game.
The opposition Socialist (PSOE) party said on Wednesday that Villalobos had set a "very bad example" to Spanish people, according to Spain's Huffington Post.
It is not the first time a politician has been caught out playing Candy Crush during an important meeting. In December 2014, British Conservative MP Nigel Mills was caught playing the popular puzzle game during a parliamentary committee meeting on work and pensions.
Norway's Prime Minister, Erna Solberg, is a confirmed Candy Crush fan, boasting that she had beaten level 300 of the addictive game.
Candy Crush was originally released for Facebook in 2012 by video game developers King, before being rolled out as an app for mobile devices. It is free to download but players can make in-app purchases, such as extra lives and boosters.
Spanish Prime Minister Mariano Rajoy used the annual state of the nation debate to credit the belt-tightening economic reforms his government put in place, delivering an optimistic speech that forcast half a million new Spanish jobs in 2015.
Are you a Candy Crush addict? Our Swedish sister site has published this handy guide - Candy Crush addiction: five signs and five cures.