789 Phil. 260

EN BANC

[ G.R. No. 213660, July 05, 2016 ]

DR. WENIFREDO T. OÑATE, PETITIONER, VS. COMMISSION ON AUDIT, RESPONDENT.

D E C I S I O N

PERALTA, J.:

This is a petition for certiorari under Rule 64, in relation to Rule 65, of the Rules of Court (Rules), to reverse the Commission on Audit (COA) Decision No. 2014-126[1] dated June 20, 2014, which ruled that the payment of the legal sevices of Atty. Alex A. Arejola shall be the personal liability of petitioner Dr. Wenifredo T. Oñate (Dr. Oñate).

Sometime in June 2009, a retainership contract[2] was entered into by and between Atty. Alex A. Arejola and Camarines Notte State College (CNSC), as represented by its President, Dr. Oñate. Pursuant thereto, Atty. Arejola was engaged to act as the legal counsel of CNSC for a period of one (1) year,[3] renewable every year, at a monthly retainer fee of P10,000.00 net of tax and appearance fee of P500.00 and P1,500.00 for every hearing attended within and outside, respectively, "of Camarines Norte. The terms of reference of the legal consultant were as follows:

1. To prosecute the administrative case(s) against erring CNSC faculty or staff before the CSC and/or Committee designated for the purpose of hearing the Administrative Case; to draft the formal charge, pleadings, memoranda; to appear and actively prosecute the case, in case of appeal to the Civil Service Commission or Court of Appeals;

2. To represent, appear and submit pleadings, if necessary, in behalf of the CNSC in all cases, administrative or court cases pending in any judicial or quasi-judicial agency;

3. To give legal advise (sic) in all matters referred to him by the President or Vice President at appropriate instances subject to consultation, verification or clarification with the Legal Service of the Commission on Higher Education;

4. To represent the President in case's against him, in action or cases inherently related to his performance of his functions; and

5. To perform such other functions inherently related to his function as Legal Counsel of CNSC, and submit monthly work accomplishment reports to justify payment of compensation as legal consultant and counsel.[4]

In a letter[5] dated July 8, 2010, the Office of the Solicitor General (OSG) granted the request for deputation of Atty. Arejola as special attorney of the OSG authorized to represent CNSC and/or its officials and employees in all.civil, criminal and administrative cases, but subject to the existing rules and regulations of the Department of Budget and Management (DBM) and respondent COA. However, in COA Legal Retainer Review (LRR) No. 2010-1586 dated December 2, 2010, Dr. Oñate's request for written concurrence was denied for violation of COA Circular No. 86-255[7] dated April 2, 1986, as amended by COA Circular No. 95-011[8] dated December 4, 1995, which was espoused in Polloso v. Hon. Gangan[9] Accordingly, on February 15, 2011, the COA issued a Notice of Disallowance,[10] which found the following persons liable for the disallowed amount of P184,649.25:

Atty. Alex A. Arejola
-
Claimant/Legal Counsel
Arthur Z. Elizes
-
Acountant III
Madelon B. Lee
-
Acountant III
Yodelito Icaro
-
MAA III
Ela Regondola
-
VP for Admin
Emma Sumaway
-
Budget Officer
YolandaGahol
-
Budget Officer
Dr. Wenifredo T. Ofiate
-
CollegePresident[11]

Dr. Oñate moved to reconsider the decision,[12] but the COA Commissioners affirmed the questioned LRR. Relying on Polloso v. Hon. Gangan and Santayana v. Alampay,[13] it was held that the payment for the legal services of Atty. Arejola shall be the personal liability of Dr. Ofiate as the official concerned who secured and who actually benefited therefrom. Hence, this petition praying that the COA Decision finding him solely liable be set aside.

The petition is granted.

Camarines Norte State College was created by Republic Act No. 7352.[14] Under Executive Order (E.O.) No. 292, or the Administrative Code of 1987, a state college is classified as, a chartered institution.[15] As such, only the OSG is authorized to represent CNSC and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers.[16]

COA Circular No. 95-011 stresses that public funds shall not be utilized for the payment of services of a private legal counsel or law firm to represent government agencies in court or to render legal services for them. Despite this, the same circular provides that in the event that such legal services cannot be avoided or is justified under extraordinary or exceptional circumstances, the written conformity and acquiescence of the OSG or the Office of the Government Corporate Counsel (OGCC), as the case may be, and the written concurrence of the COA shall first be secured before the hiring or employment of a private lawyer or law firm. The prohibition covers the hiring of private lawyers to render any form of legal service - whether or not the legal services to be performed involve an .actual legal controversy or court litigation.[17] The purpose is to curtail the unauthorized and unnecessary disbursement of public funds to private lawyers for services rendered to the government, which is in line with the COA's constitutional mandate to promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures or uses of government funds and properties.[18]

The Court has invariably sustained the statutory authority of the OSG and the OGCC as well as the necessity of COA concurrerice in the cases of government-owned and/or controlled corporations,[19] local government units,[20] and even a state college[21] like the CNSC. We see no legal justification to deviate from the settled jurisprudence. Here, the COA noted, and Dr. Oñate never disputed, that while the OSG authorization was obtained the CNSC belatedly requested for the COA's concurrence on May 27, 2010,[22] which is less than a week prior to the expiration of the contract on June 1, 2010. The rule is absolute; partial compliance or honest mistake due to ignorance of the law[23] is not and can never be a valid defense.

Nonetheless, petitioner must not be entirely accountable for the refund of the disallowed amount. Evidence on record indubitably shows that he was properly armed with the necessary CNSC Board approval before he secured the legal services of Atty. Arejola. Consistent with COA Circular No. 86-255, as amended, in relation to Section 103 of Presidential Decree-No. 1445 (Government Auditing Code of the Philippines)[24] as well as Section 52,[25] Chapter 9, Title I-B, Book V and Section 43,[26] Chapter V, Book VI of the Administrative Code, the board of trustees who approved Board Referendum No. 2, s. 2009,[27] which granted authority to Dr. Oñate to enter into a retainer's contract with Atty. Arejola but did not require the prior conformity of the OSG and written concurrence of the COA, should also be held liable for the unauthorized disbursement of public funds.[28] Indeed, when a government entity engages the legal services of private counsel or law firm, it must do so with the necessary authorization required by law; otherwise, its officials bind themselves to be personally liable for compensating such legal services. Moreover, while the private counsel or law firm, in this case Atty. Arejola, is likewise responsible for receiving the subject amount, such liability is without prejudice to the filing an action, if necessary, against the parties involved in the unlawful release of public funds.[29]

WHEREFORE, the petition is GRANTED. COA Decision No. 2014-126 dated June 20, 2014 is AFFIRMED WITH MODIFICATION.

Petitioner Dr. Wenifredo T. Oñate, the CNSC Board of Trustees, and the other persons found liable for the disavowed amount of P184,649.25 in LRR No. 2010-158 dated December 2, 2010, are personally and solidarity liable for the reimbursement of the amount paid for the legal services rendered by Atty. Alex A. Arejola.

In the interest of due process, however, considering that the board of trustees were not impleaded in the case, the Commission on Audit is DIRECTED to ORDER them to file a memorandum and/or call a hearing to allow the presentation of evidence that may exempt them from any liability.

SO ORDERED.

Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Bersamin, Del Castillo, Perez, Reyes, Perlas-Bernabe, Leonen, Jardeleza, and Caguioa, JJ., concur.
Sereno, C.J., and Mendoza, J., on official leave.





NOTICE OF JUDGMENT


Sirs/Mesdames:

Please take notice that on July 5, 2016 a Decision/Resolution, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on July 18, 2016 at 1:45 p.m.

Very truly yours,

(SGD)
FELIPA G. BORLONGAN-ANAMA

Clerk of Court



[1] Rollo, pp. 59-62.

[2] Rollo, pp. 20-23.

[3] The inclusive dates were actually longer since it was stipulated that the contract shall be effective from June 1, 2009 up to June 30, 2010, or thirteen (13) months.

[4] Rollo, p. 24.

[5] The authority superseded the deputation issued on May 19, 2010 and retroacted to the period Jun 1, 2009 to June 30, 2010 (Id. at 25-26).

[6] Rollo, pp. 28-29, 45-46.

[7] Inhibition against employment by government agencies and instrumentalities, including government-owned or controlled corporations, of private lawyers to handle their legal cases.

[8] Prohibition against employment by government agencies and instrumentalities, including government-owned or controlled corporations, of private lawyers to handle their legal cases.

[9] 390 Phil. 1101 (2000).

[10] Rollo, pp. 30-40

[11] Id. at 40.

[12] Id. at 47.

[13] 494 Phil. 1 (2005).

[14] AN ACT CONVERTING THE PRESENT CAMARINES NORTE NATIONAL HIGH SCHOOL IN THE MUNICIPALITY OF DAET INTO A STATE COLLEGE TO BE KNOWN AS THE CAMARINES NORTE STATE COLLEGE, INTEGRATING FOR THE PURPOSE THE ABANO PILOT ELEMENTARY SCHOOL IN DAET, MERCEDES SCHOOL OF FISHERIES IN MERCEDES, CAMARINES NORTE NATIONAL AGRICULTURAL SCHOOL IN LABO AND THE CAMARINES NORTE NATIONAL SCHOOL OF ARTS AND TRADES IN JOSE PANGANIBAN, ALL IN THE PROVINCE OF CAMARINES NORTE, AND APPROPRIATING FUNDS THEREFOR (Enacted on April 2. 1992).

[15] Section 2 of the Introductory Provisions of E.O No. 292 provides:

(12) Chartered institution - refers lo any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities and colleges and the monetary authority of the State. (Emphasis supplied)

[16] Chapter 12, Title III, Book IV of E.O. No. 292 states:

Section 35. Powers and Functions. - The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers. When authorized by the President or head of the office concerned, it shall also represent government-owned or controlled corporations. The Office of the Solicitor General shall constitute the law office of the Government and, as such, shall discharge duties requiring the services of lawyers, x x x

[17] Polloso v. Hon. Gangan, supra note 9, at l>09.

[18] The Law Firm of Laguesma Magsalin Consulta and Gastardo v. COA, OR. No. 185544, January 13, 2015, 745 SCRA 269, 292, citing Polloso v. Hon. Gangan. supra note 9, at 1111.

[19] See National Power Corporation in Polloso v. Hon. Gangan, supra note 9; Phividec Industrial Authority in Phividec Industrial Authority v. Capitol Steel Corporation, 460 Phil. 493 (2003); San Jose Water District in San Jose Water District v. Corpus, G.R. No. 164334, August 3, 2004 (En Banc Resolution); National Electrification Administration in Santayana v. Alampay, 494 Phil. 1 (2005); Land Bank of the Philippines in land Bank of the Philippines v. Panlilio-Luciano, G.R. No. 165428, July 13, 2005 (2nd Division Resolution), Land Bank of the Philippines v. Heirs of Fernando Ahua, G.R. No. 167361, July 27, 2005 (2nd Division Resolution), Land Bank of the Philippines v. Martinez, 556 Phil. 809 (2007), and Hernandez-Nievera, et al. v. Hernandez, et al., 658 Phil. 1 (2011); Koronadal Water District in Vargas , et al. v. Atty. Ignes, et al., 637 Phil. 1 (2010); Clark Development Corporation in The Law Firm of Laguesma Magsalin Consulta and Gastardo v. COA, supra; and Isabela Water District in Almadovar v. Pulido-Tan, G.R. No. 213330, November 16, 2015. However, see also GSIS v. Hon. Court of Appeals (8th Div.), et al.: 603 Phil. 676 (2009).

[20] See Municipality of Bauan (Province of Batangas) v. Grand Asian Shipping Lines, Inc., G.R. No. 179094, September 7, 2011 (3rd Division Resolution).

[21] See Gumaru v. Quirino State College, 552 Phil. 481 (2007).

[22] Rollo, p. 27.

[23] Allegedly, petitioner did not know or was not duly advised of the COA rule (See Rollo, p. 8).

[24] SEC. 103. General liability for unlawful expenditures. - Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor.

[25] SECTION 52. General Liability for Unlawful Expenditures. - Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor.

[26] SECTION 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received, x x x

[27] Entitled GRANTING AUTHORITY TO CNSC PRESIDENT DR. WENIFREDO T. OÑATE TO ENTER INTO A RETAINER'S CONTRACT BETWEEN THE CAMARINES NORTE STATE COLLEGE AND ATTY. ALEX A. AREJOLA and presented on July 2, 2009 (Rollo, pp. 13-14).

[28] The members of the CNSC Board were: Nenalyn P. Defensor (Chairperson-designate and Presiding Officer), Wenifredo T. Oñate (Vice-Chairperson), Mar A. Roxas (Member), Cynthia A. Villar (Member), Romeo C, Escandor (Member), Jose V. Dayao (Member), Rene N. Abrera (Member), Elmer Nagera (Member), Benjamin C. Dimaano (Member), and Ramon C. Belante, Sr. (Member) (Rollo, p. 14.)

[29] See The Law Firm of Laguesma Magsalin Consulta and Gastardo v. COA, supra note 18.



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