Alejandrino v. Commission on Audit
REITERATIONFacts
The Antecedents: The Philippine National Construction Corporation (PNCC), formerly the Construction and Development Corporation of the Philippines (CDCP), became a government-controlled entity after its unpaid obligations to Government Financing Institutions (GFIs) were converted into equity under Letter of Instruction (LOI) No. 1295. In 2011, PNCC engaged four private lawyers (Attys. Dulatas, Salazar, Salinas, and Almario) as members of its legal division and corporate secretary, paying them salaries totaling P911,580.96. These lawyers were hired under contracts of service stating that no employer-employee relationship existed. Procedural History: On August 9, 2012, the Commission on Audit (COA) Audit Team issued Notice of Disallowance (ND) No. 12-004-(2011), ruling the payments irregular because PNCC failed to secure the written conformity of the Office of the Government Corporate Counsel (OGCC) and the written concurrence of the COA, as required by COA Circular No. 95-011 and Memorandum Circular No. 9. The COA Director for Corporate Government Sector (CGS) and subsequently the COA Commission Proper affirmed the disallowance but excused the lawyer-payees from refunding the amounts. However, the COA maintained the liability of the PNCC officers, including petitioners Alejandrino (Human Resources Head) and Pasetes (Acting Treasurer). The Petition: Petitioners filed a Petition for Certiorari under Rule 64, arguing that PNCC is a private corporation (an acquired asset corporation) and not a GOCC, thus exempt from COA's audit jurisdiction. They further contended that the hiring was within management's authority, the principle of quantum meruit should apply, and that they acted in good faith while performing ministerial functions, thus they should not be held personally liable for the refund.
Issue(s)
Whether the Philippine National Construction Corporation (PNCC) is a Government-Owned or Controlled Corporation (GOCC) subject to the audit jurisdiction of the Commission on Audit (COA). Whether the hiring of private lawyers by PNCC without the prior written conformity of the Office of the Government Corporate Counsel (OGCC) and the written concurrence of the COA is valid. Whether the petitioners, as corporate officers who approved the payments, are personally liable to refund the disallowed amounts.
Ruling
The Petition is PARTIALLY GRANTED. The Decision and Resolution of the Commission on Audit are AFFIRMED with MODIFICATION. While the PNCC is a GOCC subject to COA jurisdiction and the hiring of lawyers was irregular, petitioners Janice Day E. Alejandrino and Miriam M. Pasetes are held NOT personally liable to refund the disallowed amount.
Ratio Decidendi
On the Status of PNCC and COA Jurisdiction: The Court ruled that PNCC is a GOCC without an original charter. Applying the ruling in Strategic Alliance v. Radstock Securities, the Court noted that the government owns 90.3% of PNCC, and it cannot be considered an 'autonomous entity' simply because it was incorporated under the Corporation Code. Under the 1987 Constitution, COA's audit jurisdiction extends to GOCCs without original charters, which refers to corporations created under the Corporation Code but owned and controlled by the government. The determining factor is government ownership or control, not the manner of creation. Therefore, PNCC is indisputably within the COA's audit authority. On the Hiring of Private Counsel: The Court held that the engagement of the four lawyers was irregular. Under the Administrative Code and COA Circular No. 95-011, the OGCC is the principal law office for all GOCCs. For a GOCC to hire private counsel, it must satisfy three indispensable conditions: (1) the case is exceptional; (2) the written conformity of the OGCC or Solicitor General is obtained; and (3) the written concurrence of the COA is secured. PNCC failed to meet these requirements. The Court rejected the argument that the lawyers were 'organic personnel,' noting their contracts specifically disclaimed an employer-employee relationship and their duties overlapped with the OGCC's mandate. On the Liability of Petitioners: The Court modified the COA's ruling, finding that petitioners Alejandrino and Pasetes are not personally liable. Following the principle in MWSS v. COA, the Court observed that petitioners' participation was limited to ministerial duties—Alejandrino for Human Resources administration and Pasetes for certifying fund availability and check vouchers. They were not involved in policy-making or the decision to hire the lawyers; they merely acted under the directives of PNCC's executive officers. Since they performed their assigned duties in good faith without evidence of bad faith or involvement in the illegal hiring decision, they should not be held personally liable for the refund.
Main Doctrine
The Supreme Court clarifies that the Philippine National Construction Corporation (PNCC) is a Government-Owned or Controlled Corporation (GOCC) without an original charter, subject to the audit jurisdiction of the Commission on Audit (COA) due to the government's majority ownership. Consequently, PNCC must comply with the mandatory requirements of obtaining written conformity from the Office of the Government Corporate Counsel (OGCC) and written concurrence from the COA before engaging private legal services. Failure to secure these approvals renders the payment of salaries to such lawyers irregular and subject to disallowance. However, corporate officers who perform purely ministerial duties in the payment process, without involvement in policy-making or the decision to hire, are not personally liable to refund the disallowed amounts if they acted in good faith.