Polloso v. Gangan
REITERATIONFacts
The Antecedents: The National Power Corporation (NPC), represented by its President Dr. Francisco L. Viray, entered into a service contract with Atty. Benemerito A. Satorre in 1994. Atty. Satorre was to provide services for the Leyte-Cebu and Leyte-Luzon Interconnection Projects, including administrative and legal matters, facilitation between offices, and direction of right-of-way activities. His compensation was a monthly salary of P21,749.00 plus representation and transportation allowance of P5,300.00. Procedural History: On January 12, 1995, the COA Unit Auditor issued Notice of Disallowance No. 95-0001-135-94 for P283,763.39, representing payments for Atty. Satorre's services from March to December 1995. The reasons cited were the lack of written conformity of the Solicitor General or Corporate Counsel and concurrence of the COA, as required by COA Circular No. 86-255, and the absence of a Certificate of Availability of Funds as required by P.D. 1445. Several NPC officials, including petitioner Dante M. Polloso (Project Manager II), were held personally liable. Petitioner Polloso's letter-explanation and subsequent appeals to the COA Regional Director and the Commission Proper were denied. The COA, in its decision dated October 29, 1999, affirmed the disallowance. The Petition: Petitioner Dante M. Polloso filed a petition for review, raising issues regarding the applicability of COA Circular No. 86-255 to right-of-way matters, its constitutionality, his personal liability, and the application of quantum meruit.
Issue(s)
Whether the prohibition under COA Circular No. 86-255 and Section 212 of the Government Accounting and Auditing Manual on government agencies hiring private lawyers to handle their legal cases applies to a lawyer hired by service contract for right-of-way matters, excluding court cases. Whether COA Circular No. 86-255 and Section 212, Volume I of the Government Accounting and Auditing Manual operate to restrict the practice of the law profession and are repugnant to Section 5, Article VII of the 1987 Philippine Constitution. Whether Section 38, Chapter 9, Book I of Executive Order No. 292 (Administrative Code of 1987) applies to the petitioner who acted in good faith and merely implemented a valid contract entered into by the NPC President. Whether the principle of quantum meruit applies to the services rendered by Atty. Satorre, which benefited the National Power Corporation.
Ruling
The petition is denied for lack of showing that the respondents committed a reversible error. The disallowance of P283,763.39 is affirmed.
Ratio Decidendi
On the applicability of COA Circular No. 86-255 to right-of-way matters: The Court held that the prohibition under COA Circular No. 86-255 covers the hiring of private lawyers to render any form of legal service, not just those involving actual court litigation. The circular's purpose is to prevent the disbursement of public funds to private lawyers without the required conformity and concurrence. To limit the interpretation to 'handling of legal cases' as stated in the title would defeat the circular's intent and allow circumvention. The phrase 'retainer fees' in the circular should be interpreted broadly to mean any 'fee' paid for any legal service rendered, as the core concern is the outlay of public funds for private legal services. The Court emphasized that the intent of the law must prevail over the letter thereof to avoid absurdity and injustice, citing Peralta vs. Civil Service Commission. On the constitutionality of COA Circular No. 86-255: The Court found no merit in the petitioner's claim that the circular is an invalid restriction on the practice of law. The Government has its own legal counsel (Solicitor General and Government Corporate Counsel), and the engagement of private lawyers is allowed only in special cases, subject to reasonable safeguards. The circular merely sets forth prerequisites for hiring private lawyers, which are reasonable measures to prevent irregular expenditures of public funds, and does not curtail the legal profession's practice. The Court reiterated the constitutional mandate of the COA to promulgate rules for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures. On the petitioner's personal liability: The Court ruled that petitioner Dante M. Polloso's liability arose from his act of approving the claim for payment as Project Manager. His assertion that refusal to certify payment would subject him to liabilities was dismissed, as it was his duty to refuse payment for claims found to be irregular or in contravention of COA Circular No. 86-255. The Court stressed that officials have a duty to ensure compliance with auditing and accounting rules to safeguard public funds. On the application of quantum meruit: The Court denied the prayer for compensation based on quantum meruit. While acknowledging that Atty. Satorre rendered legal services, allowing payment without the requisite consent from the Solicitor General or Government Corporate Counsel would permit circumvention of COA Circular No. 86-255. The Court clarified that it is not Atty. Satorre who is liable to return money already paid, but rather the officials concerned, including the petitioner, who are responsible for the disallowed disbursement.
Main Doctrine
The hiring of private lawyers by government agencies requires the prior written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, and the written concurrence of the Commission on Audit, regardless of whether the services involve handling court cases or other legal matters, to prevent irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of public funds.