G.R. No. 247924 - Power Sector Assets and Liabilities Management Corporation vs. Commission on Audit

On May 9, 2011, PSALM (Power Sector Assets and Liabilities Management Corporation) requested concurrences from both the Commission on Audit (COA) and the Office of the Government Corporate Counsel (OGCC) for hiring two legal advisors.
The legal advisors—John T. K. Yeap (international advisor) and Atty. Michael B. Tantoco (Philippine advisor)—were engaged for the privatization of National Power Corporation’s (NPC) generation assets and for handling Independent Power Producer (IPP) contracts.
The engagement was urgently needed to meet strict timelines under Republic Act No. 9136 (EPIRA), which mandates privatization targets and open access in the energy sector.

Mr. Yeap was to provide international legal advisory on selection and appointment processes for Independent Power Producer Administrators (IPPAs) at an hourly fee with additional travel and out‐of‐pocket expenses.
Atty. Tantoco was engaged as the Philippine legal advisor for the privatization projects, also compensated on an hourly basis with aggregate fee caps and reimbursement provisions for expenses.
The engagements were strictly advisory and did not involve representation in court proceedings.

PSALM transmitted the request for concurrence to COA twice (May 11 and May 13, 2011) and informed that action was needed on or before May 30, 2011.
While OGCC promptly approved the contracts since they had been used in similar past engagements, COA did not respond by the designated deadline.
PSALM, facing urgent deadlines and after waiting for a total of 110 days, proceeded with the engagement on August 29, 2011 without COA’s written concurrence.
For over three years thereafter, PSALM’s request for COA concurrence remained unacted upon until COA eventually denied the request via Legal Retainer Review (LRR) No. 2014-174 on November 6, 2014, citing failure to secure prior written concurrence as mandated by COA Circular Nos. 86-255 and 95-011.

COA Circular Nos. 86-255 and 95-011 mandate that prior written concurrence for the hiring of private counsel is required to safeguard against irregular, excessive, or unnecessary disbursement of public funds.
The concurrence requirement has been viewed by some as a form or instance of “pre-audit”—a review before the consumption or payment of funds—to ensure compliance with statutory authority, availability of funds, and the reasonableness of expenditure.
Over the years, COA issued various circulars (from Circular No. 82-195 in 1982 to Circular No. 2011-002) that altered or lifted pre-audit procedures for many government transactions; however, the hiring of private legal counsel remained subject to the written concurrence requirement under the older circulars.

PSALM argued that the required COA concurrence should not apply given that the services were purely advisory and did not involve court representations.
PSALM contended that its officers acted in good faith in the pursuit of its mandated privatization projects and that the delay by COA was the sole cause of the failure to secure the prior concurrence.
The Office of the Solicitor General (OSG) argued that irrespective of the nature of the legal services, the statutory and circular requirements for obtaining COA’s written concurrence must be observed.

Does the requirement for COA’s prior written concurrence amount to an instance of pre‑audit?
Is imposing such a requirement as a prerequisite for the validity of engaging private legal services ultra vires?

Are the contracts for the legal advisors subject to the concurrence requirement under these circulars even though the services rendered were advisory and did not involve litigation?

Did COA commit grave abuse of discretion by taking over three years to act on PSALM’s request for concurrence?
Does the delay violate PSALM’s constitutional right to a speedy disposition of cases?

Are the PSALM officers who approved and implemented the contracts personally liable for the consultants’ fees even though they acted in good faith to fulfill operational mandates?