The Supreme Court has provided remedial measures which the Commission on Audit (COA) may adopt in cases where COA fails to act, within the mandatory 60-day review period, on government agencies’ requests for authority to hire private lawyers.
In a 31-page Decision penned by Justice Amy C. Lazaro-Javier, the Court granted the petition for affirmative relief under Rule 65 filed by the Power Sector Assets and Liabilities Management (PSALM) Corporation to overturn the COA’s denial of PSALM’s request to engage private lawyers for the privatization of generation assets of the National Power Corporation (NPC). The SC also ordered COA to allow payment of the total compensation due the private lawyers hired by PSALM.
On May 9, 2011, PSALM requested approval from the Commission on Audit and the Office of the Government Corporate Counsel (OGCC) as prior requirements for PSALM’s engagement of private legal advisors on the NPC privatization projects. PSALM also asked that the request be released on or before May 30, 2011 as the hiring of the legal advisors was urgently needed. OGCC approved the engagement on May 31, 2011. PSALM waited for notice from COA but to no avail. After more than three months with no word from COA, PSALM proceeded to hire the legal advisors on August 29, 2011.
It was not until three years later, on November 6, 2014, when COA’s Legal department disposed of PSALM’s request, disapproving the engagement because it was entered into without COA’s prior approval, in violation of COA guidelines. PSALM asked for reconsideration before the COA, but was denied, ordering that PSALM officers who approved and recommended the contract should themselves pay the fees of the private lawyers.
In ruling in favor of PSALM, the Supreme Court found that COA was at fault and gravely abused its discretion when it took three years to act on PSALM’s request without any justifiable reason for the delay. The Court ruled that COA’s inaction violated PSALM’s constitutional right to a speedy disposition of its case, a right which is not limited to the accused in criminal proceedings, but extends to all parties in all cases, civil or administrative, and in all proceedings, judicial or quasi-judicial.
The Court also held that PSALM cannot be blamed for proceeding with the engagement without COA’s prior concurrence given PSALM’s mandate to privatize under the Electronic Power Industry Reform Act (EPIRA). Neither should payment for the services of the private lawyers be disallowed in the absence of findings from COA that the payment for the services of the external counsels constituted irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of government funds.
The Court pointed out that the COA is mandated not only by law but by its own procedural rules to evaluate a request for concurrence of retainer contract of private lawyers specifically within 60 days from submission of the request for concurrence. At the same time, the Court recognized that the period within which the COA has to finalize its pre-audit for the prior written concurrence “is a policy determination over which we have no jurisdiction to review unless done with grave abuse of discretion, as in this case.”
The Court thus prescribed the following remedial measures which COA may adopt to prevent disapprovals of engagement of private lawyers due to COA’s inordinate delay or inaction:
- At least 60 calendar days before the estimated date of engagement or retainer, government agencies must submit to COA complete requests for written concurrence, together with the written conformity of the OGCC or the Office of the Solicitor General.
- From receipt of the request, COA has 60 calendar days to either deny or affirm the request. In cases of denial, the reasons should be indicated.
- If COA fails to act within the 60-day period, the request is deemed approved.
- COA may also allow, in exceptional cases as justified by the government agency, for requests to be submitted less than 60 calendar days prior to the engagement.
The Court adds that these guidelines “are not black-letter law but are matters of best practice.” The Court also reminded COA of its commitment to formulate more policy issuances on written concurrences to avoid unnecessary delay and to improve efficiency in government operations.
In the same decision, the Court likewise ruled that the prior concurrence by COA in the hiring of private lawyers constitutes as pre-audit given its purpose of determining the reasonableness of the legal fees of the lawyer, which is consistent with the goal of a pre-audit to identify suspicious transactions on their face in order to avoid the wastage of public funds before implementation and disbursement.
The Court added, however, that while the general rule is that pre-audit is disallowed, there are certain exceptions, as determined by COA under its exclusive mandate as the government’s only auditing firm. Among these exceptions is COA’s prior concurrence in hiring private lawyers.
The Court also noted that the concurrence requirement in the hiring of private counsels covers all types of legal services and not only those involving an actual legal controversy or court litigation.
FULL TEXT of G.R. No. 247924 at: https://sc.judiciary.gov.ph/28043/