Case Summary (G.R. No. 247924)
Engagement Request and Initial Actions
In May 2011, PSALM sought concurrences from COA and the Office of the Government Corporate Counsel (OGCC) to hire two legal advisors, John T. K. Yeap and Atty. Michael B. Tantoco, for legal consultancy regarding its privatization mandate under RA 9136 (EPIRA). PSALM indicated the necessity of a timely response due to impending deadlines related to the privatization requirements. Despite receiving the OGCC's concurrence rapidly, COA did not respond by the requested deadline, prompting PSALM to proceed with the engagement after a protracted waiting period.
COA's Decision on Concurrence
After a prolonged duration of three years, COA responded to PSALM’s request for legal engagement through LRR No. 2014-174, denying the request based on the assertion that PSALM engaged the consultants without prior approval from COA, violating established Circulars (Nos. 86-255 and 95-011). COA maintained that prior written concurrence was a requisite, insisting that these circulars applied even to advisory legal services.
Legal Grounds and Rationale
PSALM's position centered on the argument that COA's concurrence should not apply to legal advisory services, particularly since these did not involve court representation and were essential for fulfilling PSALM’s legislative mandate. The argument expressed that COA's extended inaction effectively denied PSALM the ability to secure necessary legal expertise within statutory timeframes, framing the urgency of legal advice in the context of imminent public service obligations and investor confidence in the energy sector.
Responses and Support from OSG
The Office of the Solicitor General (OSG) contended that while exceptions can allow government entities to hire private counsel, established protocols requiring prior concurrences of both OGCC and COA must still be adhered to, regardless of the nature of the legal services sought. It emphasized that PSALM was aware of the procedural prerequisites, arguing that their failure to fulfill them constituted grounds for personal liability on the part of those approving the fees.
COA's Justifications and Procedural Delays
COA rationalized its approach, maintaining that its checks were meant to safeguard public funds from excessive or unnecessary legal expenditures. However, scrutiny indicated that COA took an excessively long time—over three years—to act on PSALM’s request, raising concerns over the delay’s implications on PSALM’s operational capabilities and the fulfillment of its statutory mandates.
Judicial Considerations and Findings
The court found that the requirement for COA's prior written concurrence constituted a form of pre-audit, essential for determining the reasonableness of legal fees before engagement. However, the court also highlighted the need for efficiency in government operations, emphasizing the inconsistency in applying such measures after significant delays caused by COA itself.
Rulings and Directions
The court ruled in favor of PS
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Antecedents
- On May 9, 2011, PSALM Corporation sent letters to COA and OGCC seeking approval for the engagement of legal advisors, Mr. John T. K. Yeap and Atty. Michael B. Tantoco, for the privatization of NPC assets.
- The proposed contracts detailed the scope of services and fees, with Mr. Yeap set at USD580.00/hour and Atty. Tantoco at PhP11,858.94/hour.
- Legal services were strictly advisory, not involving court representation, in compliance with EPIRA mandates.
- PSALM requested a response by May 30, 2011, due to urgent privatization timelines.
- COA did not respond by the deadline, after which PSALM proceeded with the engagement on August 29, 2011.
COA's Actions and Subsequent Developments
- COA's inaction continued for three years until November 6, 2014, when it denied PSALM's request for concurrence, citing violations of COA Circulars.
- The denial was based on the lack of prior approval for the engagement of the consultants, which COA deemed necessary.
- PSALM filed a motion for reconsideration, arguing the urgency and necessity of the legal advisors for its privatization efforts.
Ruling by the Commission on Audit
- COA denied the motion for reconsideration on Jul