G.R. No. 213660 - Onate vs. Commission on Audit

Dr. Wenifredo T. OAate, acting in his capacity as the President of Camarines Norte State College (CNSC), entered into a retainership contract in June 2009 with Atty. Alex A. Arejola.
CNSC, a state college created under Republic Act No. 7352 and classified as a chartered institution under Executive Order No. 292, is represented by its President, Dr. OAate.

The retainership contract engaged Atty. Arejola as legal counsel for CNSC for a period of one (1) year (effectively extending thirteen months from June 1, 2009 to June 30, 2010), renewable annually.
The compensation structure included a monthly retainer fee of P10,000.00 (net of tax) and appearance fees of P500.00 for hearings within Camarines Norte and P1,500.00 for hearings outside the province.
The terms of reference detailed a wide array of legal services:

Prosecution of administrative cases against erring CNSC faculty or staff before designated bodies.
Preparation and filing of formal charges, pleadings, memoranda, and other legal documents for both administrative and court cases.
Legal representation and advisory services for the CNSC President and officials, including acting on their behalf in legal actions directly related to their functions.
Submission of monthly work accomplishment reports to justify compensation.

On July 8, 2010, the OSG granted Atty. Arejola deputation as a special attorney authorized to represent CNSC and its officials in civil, criminal, and administrative cases, subject to rules and regulations of the Department of Budget and Management (DBM) and COA.
This deputation, however, did not override the necessity of securing proper written concurrence from the Commission on Audit (COA) as required by pertinent COA Circulars.

The COA, through Legal Retainer Review (LRR) No. 2010-1586 dated December 2, 2010, denied Dr. OAate’s request for a written concurrence on the contract, citing violation of COA Circular No. 86-255 (as amended by Circular No. 95-011).
A Notice of Disallowance was issued on February 15, 2011, finding several persons liable for the disallowed amount of P184,649.25, including Atty. Arejola, certain accounting personnel, and Dr. OAate as the official who secured and benefited from the legal services.

The COA’s ruling imposed personal and solidary liability on Dr. OAate because the legal services contracted from Atty. Arejola were paid with public funds without the necessary COA concurrence.
Despite having obtained CNSC Board approval for the contract, the belated request for COA concurrence (filed on May 27, 2010, very close to the contract’s expiration on June 1, 2010) led to the strict application of the rules.
The case was elevated to a petition for certiorari under Rule 64 (with relation to Rule 65) of the Rules of Court, challenging the COA decision.

COA Circular No. 95-011 mandates that public funds must not be utilized for engaging private legal counsel unless there is written conformity and acquiescence of either the OSG or the Office of the Government Corporate Counsel (OGCC) along with COA’s prior written concurrence.
The decision underscores the constitutional mandate of the COA to prevent irregular, unnecessary, excessive, or unconscionable disbursement of public funds.
The case also references governing rules under the Administrative Code, the Government Auditing Code of the Philippines (PD No. 1445), and relevant case law such as Polloso v. Hon. Gangan and Santayana v. Alampay.

The petition filed by Dr. OAate sought to have the COA Decision No. 2014-126, which found him solely liable for the payment of Atty. Arejola’s legal services, set aside.
Ultimately, the Supreme Court granted the petition, with modifications to the scope of liability, imposing personal and solidary liability on Dr. OAate, the CNSC Board of Trustees, and others involved for the disallowed amount.

Whether the payment for the legal services rendered by Atty. Alex A. Arejola, contracted under the retainership agreement with CNSC, should be treated as the personal liability of Dr. OAate or as an institutional obligation of the CNSC.

The legal controversy centers on the proper application of COA rules regarding the expenditure of public funds for private legal services.
Whether the lack of timely written concurrence from the COA, despite obtaining OSG’s deputation, automatically renders the contract unauthorized.

Whether partial compliance with procedural requirements (i.e., obtaining CNSC Board approval and OSG deputation) could mitigate or excuse the failure to secure prior written concurrence from the COA.

The case examines the impact of administrative approvals received from the CNSC Board on the personal liability of the official who initiated the contract.
It questions how adherence to internal administrative processes interacts with overarching COA regulations on public expenditure.

Whether the liability for the disallowed amount should be limited solely to Dr. OAate or extended to include the CNSC Board of Trustees and other persons involved in authorizing the expenditure.
Consideration is given to the solidarity of liability among the parties who benefited from or facilitated the unauthorized disbursement of funds.