TL;DR
The Supreme Court affirmed the disallowance of salaries paid by the Bureau of Investments (BOI) to private lawyers hired as ‘technical assistants’ without prior approval from the Office of the Solicitor General (OSG) and the Commission on Audit (COA). This case reiterates the strict rules against government agencies hiring private lawyers using public funds unless exceptional circumstances are justified and proper approvals are secured. While the disallowance was upheld, the BOI officials who approved the payments were relieved of personal liability, acknowledging that the lawyers did provide services, preventing unjust enrichment of the government. This ruling underscores the importance of adhering to COA Circular No. 86-255 and its amendments to avoid disallowances in government spending on legal services.
Hiring Outside Counsel: When Government Needs Private Lawyers
Can government agencies hire private lawyers and pay them with public funds? This question lies at the heart of Ricalde v. Commission on Audit. The Bureau of Investments (BOI) engaged three private lawyers, classifying them as technical assistants, to provide various services, including legal reviews and opinions. However, the Commission on Audit (COA) disallowed the salaries paid to these lawyers, citing the BOI’s failure to secure prior written conformity from the Office of the Solicitor General (OSG) and concurrence from the COA, as required by COA Circular No. 86-255. The BOI argued that the lawyers were hired as technical assistants, not as legal counsels in the traditional sense, and that the circular was therefore inapplicable. This case thus examines the scope and applicability of COA Circular No. 86-255 and the conditions under which government agencies can engage private legal services.
The Supreme Court began its analysis by reiterating the established principle that government agencies are generally prohibited from hiring private lawyers to handle legal services using public funds. This prohibition aims to prevent unnecessary expenditure, as the OSG is mandated to provide legal representation to the government. However, exceptions exist under extraordinary circumstances, subject to stringent conditions. COA Circular No. 86-255, as amended by Circular No. 95-011, outlines these conditions, requiring both the OSG’s written conformity and the COA’s written concurrence before a government agency can hire a private lawyer. The Court emphasized that these requirements are indispensable to ensure proper oversight and prevent misuse of public funds.
Petitioners argued that COA Circular No. 86-255 did not apply because the hired lawyers were ātechnical assistantsā and not legal counsels handling court cases. They further contended that there was a ādire needā for these services due to staff shortages. However, the Court rejected this argument, citing Polloso v. Gangan, which clarified that the prohibition in COA Circular No. 86-255 extends to any form of legal service, not just litigation. The Court quoted Polloso:
Contrary to the view espoused by petitioner, the prohibition covers the hiring of private lawyers to render any form of legal service. It makes no distinction as to whether or not the legal services to be performed involve an actual legal controversy or court litigation.
The Court underscored that the purpose of COA Circular No. 86-255 is to curb unauthorized and unnecessary disbursement of public funds for private legal services. The BOIās claim of ādire needā was deemed insufficient justification for bypassing the circular’s requirements, especially since the OSG, the government’s principal law officer, had not given its conformity. The Court found no grave abuse of discretion on the part of the COA in upholding the disallowance, as the BOI clearly failed to comply with the mandatory requirements of COA Circular No. 86-255.
Regarding the liability of the approving and certifying officers, the Court applied the principles outlined in Madera v. Commission on Audit and Torreta v. Commission on Audit. While Section 43 of the Administrative Code generally holds officials solidarily liable for illegal expenditures, the Court recognized exceptions, particularly when payees are allowed to retain payments based on quantum meruit ā the principle of fair value for services rendered. In this case, the COA Proper had already excluded the hired lawyers from liability, implicitly acknowledging that they had provided services to the BOI. Therefore, the Supreme Court modified the COA decision, ruling that the approving and certifying officers should not be held personally liable to refund the disallowed amounts. The Court reasoned that holding the officers liable when the payees were excused from refunding would unjustly enrich the government, which had benefited from the lawyers’ services. The liability framework can be summarized as:
| Liability | Condition |
|---|---|
| Payees (Lawyers) | Generally liable to return, but may be excused if services were rendered in good faith (quantum meruit) |
| Approving/Certifying Officers | Solidarily liable with payees if shown to have acted in bad faith, malice, or gross negligence. Liability reduced by amounts payees are excused from returning. |
Finally, the Court addressed procedural issues raised by the OSG, such as the petitioners’ direct resort to the Court and alleged procedural lapses. The Court relaxed procedural rules in the interest of substantial justice, recognizing that the core issues had been thoroughly ventilated in the COA proceedings. However, the Court clarified that its decision was without prejudice to any administrative or criminal actions that might be pursued against responsible officers concerning the illegal procurement.
FAQs
| What is COA Circular No. 86-255? | It’s a regulation issued by the Commission on Audit (COA) that restricts government agencies from hiring private lawyers using public funds, unless certain conditions are met. |
| What are the conditions for hiring private lawyers under COA Circular No. 86-255? | Exceptional circumstances must justify the hiring, and written conformity from the Office of the Solicitor General (OSG) and written concurrence from the COA must be obtained before hiring. |
| Does the prohibition only apply to lawyers handling court cases? | No, the prohibition covers hiring private lawyers for any form of legal service, not just litigation. |
| What is ‘quantum meruit’ in this context? | It’s the principle of being paid fairly for services rendered. In disallowance cases, it can allow payees to retain some or all of the disallowed amount if they provided services in good faith. |
| Were the BOI officials held personally liable in this case? | No, the Supreme Court modified the COA decision and relieved the approving and certifying BOI officials from personal liability to refund the disallowed amounts, as the lawyers were allowed to keep the payments. |
| What is the practical takeaway from this case? | Government agencies must strictly comply with COA Circular No. 86-255 when hiring private lawyers to avoid disallowances. Proper documentation and prior approvals are crucial. |
For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.
Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Ricalde v. Commission on Audit, G.R No. 253724, February 15, 2022