G.R. No. 253724 . February 15, 2022.
PELAGIO T. RICALDE, OLIVER B. BUTALID, EFREN V. LEAÑO, BOBBY G. FONDEVILLA, AND ESTELLA F. JIMENEZ, PETITIONERS, VS. COMMISSION ON AUDIT, COMMISSIONER MICHAEL G. AGUINALDO, COMMISSIONER JOSE A. FABIA, COMMISSIONER ROLAND C. PONDOC, DIRECTOR MA. CORAZON S. GOMEZ, SUPERVISING AUDITOR MANUEL A. BAES, AND AUDIT TEAM LEADER LIBRADA R. SANTELICES, RESPONDENTS.

FACTS

The Bureau of Investments (BOI) entered into service agreements with lawyers Atty. Dennis R. Gascon, Atty. Francesca R. Custodio-Manzano, and Atty. Madonna N. Clarino. Atty. Gascon and Atty. Manzano were assigned to the offices of BOI Governors Oliver B. Butalid and Pelagio T. Ricalde, respectively, to perform services such as reviewing documents, preparing draft schemes for investment incentives, and rendering legal opinions. Atty. Clarino was assigned to the office of BOI Executive Director Efren V. Leaño to provide technical and logistical support for legislative matters, represent BOI before judicial bodies under OSG supervision, attend meetings, and provide legal advice. They received monthly salaries of P25,000.00 (Gascon and Manzano) and P23,001.60 (Clarino). Upon post-audit, the Commission on Audit (COA) issued Notices of Disallowance (NDs) covering the aggregate salaries of P797,790.77, on the ground that their engagement violated COA Circular No. 86-255 for lack of the required written conformity and acquiescence of the Office of the Solicitor General (OSG) and written concurrence of COA. Liable persons included the lawyers (payees), the approving/certifying officers (Butalid, Ricalde, Leaño, Estella F. Jimenez, Bobby D. Fondevilla, and others). The BOI officers appealed, arguing the circular was inapplicable as the lawyers were hired as technical assistants, not legal counsels, and that Atty. Clarino was not a private law practitioner. The COA NGS-Cluster 8 Director denied the appeal, ruling the circular applied to any legal service. After procedural developments, including a corrected disallowance amount and a belatedly filed petition for review, the COA Proper, in Decision No. 2020-263, affirmed the disallowances with modification, excluding the lawyers from liability. The COA Proper’s decision became final as to Fondevilla for failure to timely appeal. Petitioners filed this Rule 64 petition, reiterating their arguments and invoking good faith. Butalid and Ricalde later intervened.

ISSUE

Whether the COA Proper correctly sustained the disallowance of the payments for the services of the three lawyers for violation of COA Circular No. 86-255.

RULING

Yes, the COA Proper correctly sustained the disallowance. The Court upheld the COA’s finding that the engagement of the lawyers required compliance with COA Circular No. 86-255, as their contracted services were predominantly legal in nature. The circular mandates the written conformity and acquiescence of the OSG and the written concurrence of the COA for the hiring of private lawyers by government agencies. The BOI’s failure to secure these approvals rendered the disbursements illegal. The Court rejected the argument that the lawyers were merely technical assistants, as their specified duties involved legal review, opinion, and representation. The defense of “dire need” and good faith was unavailing, as ignorance of the circular does not excuse compliance. However, following jurisprudence and the principle of solutio indebiti, the lawyers, as payees who received the salaries in good faith, are not liable to return the disallowed amounts. The approving and certifying officers, having failed to ensure compliance with a clear regulation, are liable for the disallowed amount, solidarily. The Court noted that the COA Proper’s decision had already become final and executory as to petitioner Fondevilla due to his failure to timely appeal.