G.R. No. L-30577 - People vs. Obedoza

Case Summary (G.R. No. L-30577)

Factual Background

Petitioner Raul F. Macalino ran and lost as vice mayor of San Fernando City, Pampanga, in the May 2013 elections. On July 1, 2013, the Municipal Government of Mexico, Pampanga, through Mayor Roy D. Manalastas, engaged Macalino under a Contract of Service to perform the duties of a Legal Officer II from June 1, 2013 to July 30, 2014, with a monthly salary of PHP 26,125.00. The municipality paid wages and Personnel Economic Relief Assistance (PERA) to Macalino covering July 1, 2013 to December 31, 2013, amounting in total to PHP 149,015.00.

Administrative Proceedings and Notice of Disallowance

On March 28, 2014, the Office of the Audit Team Leader, COA Audit Group H Team 6, issued Notice of Disallowance No. 14-001-100-(13) addressed to Mayor Manalastas, disallowing the PHP 149,015.00 paid to Macalino on the ground that the payment violated Article IX-B, Section 6, Constitution and Section 94, Local Government Code, which prohibit appointment to any government office within one year by persons who lost in an election. The ND named the municipal approving and certifying officers and Macalino as liable to return the disallowed amount.

COA Regional Office and COA Proper Decisions

Macalino appealed to COA Regional Office No. III, which in its November 12, 2014 Decision sustained the ND, finding the designation violative of the Constitution, the Local Government Code, and CSC Memorandum Circular No. 40-98. The matter proceeded to the COA Proper, which treated Macalino’s filing as a petition for review and, by Decision No. 2019-305 dated August 9, 2019 (and subsequent January 21, 2020 Resolution), denied the petition and affirmed the regional decision. The COA Proper excluded the disbursing officer, Maritess B. Miranda, from liability.

Supreme Court Petition and Issues Presented

Petitioner invoked Rule 64 in relation to Rule 65 of the Rules of Court by filing a petition for certiorari seeking to set aside the COA Proper’s affirmance of the ND. The core issues were whether the hiring of a losing candidate under a Contract of Service constitutes an appointment prohibited under Article IX-B, Section 6, Constitution and Section 94, R.A. No. 7160, whether the engagement was a consultancy or otherwise exempt from civil service and COA prohibitions, and whether petitioner and the municipal officers are civilly liable for the return of the disallowed amount.

Petitioner’s Contentions

Petitioner argued that his engagement was a mere Contract of Service and not an appointment to public office; that no oath of office was required and he was therefore not an appointee within the constitutional and statutory prohibition; that consultancy and contract arrangements fall outside the coverage of Civil Service rules under CSC Resolution No. 93-1881 and CSC Memorandum Circular No. 38, series of 1993; and that his service was rendered in a different local government unit from where he ran and lost, such that the one-year ban did not apply.

Legal Analysis and Reasoning on the One-Year Prohibition

The Court applied the plain-meaning or verba legis rule to Article IX-B, Section 6, Constitution and Section 94(b), R.A. No. 7160, emphasizing that both provisions prohibit a losing candidate from being appointed to “any office in the Government or any government-owned or controlled corporations or in any of their subsidiaries” within one year after the election. The Court held that where the law uses a general term without qualification, no judicial distinction may be inserted (Ubi lex non distinguit, nec nos distinguere debemus). Consequently, the absence of a limiting qualification in the constitutional and statutory text foreclosed the argument that contracts of service, job orders, or consultancies are outside the one-year ban.

Application of Civil Service and COA Rules to the Contract of Service

The Court examined the express duties in petitioner’s Contract of Service and found them substantially similar to the duties and functions of a regular plantilla legal officer as described in Section 481, R.A. No. 7160. The Court therefore concluded that the engagement contravened CSC Resolution No. 020790, which prohibits hiring under contract of services or job orders to perform functions pertaining to vacant regular plantilla positions, and that petitioner’s role could not be characterized as a mere consultant. The Court further found noncompliance with COA Circular No. 98-002, which restricts the employment of private lawyers by local government units except in narrowly defined circumstances and subject to prior written concurrence of the Solicitor General or Government Corporate Counsel and COA; no such conformities were shown.

Doctrine on Return of Disallowed Amounts and Torreta Guidelines

On civil liability for return, the Court applied the guidelines adopted in Torreta v. Commission on Audit. The Court reiterated that approving and certifying officers who acted in good faith and with due diligence are not civilly liable absent a clear showing of bad faith, malice, or gross negligence pursuant to Section 38, Administrative Code of 1987; where bad faith, malice, or gross negligence is shown, officers may be solidarily liable with recipients under Section 43, Administrative Code. The Court recited the principle that quantum meruit may equitably reduce liability in cases involving unlawful or irregular government contracts to prevent unjust enrichment, but stressed that quantum meruit does not apply to sanction manifest violations of constitutional prohibitions or clear public policy.

Application of Torreta and Equity in the Present Case

The Court distinguished this case from precedents where quantum meruit reduced liability, noting that the present facts involved an obvious circumvent

Case Syllabus (G.R. No. L-30577)

Parties and Procedural Posture

Raul F. Macalino filed a Petition for Certiorari under Rule 64 in relation to Rule 65 seeking to set aside Commission on Audit rulings disallowing his wages and allowances.
Commission on Audit issued Notice of Disallowance No. 14-001-100-(13) dated March 28, 2014 and the COA Regional Office No. III rendered Decision No. 2014-91 dated November 12, 2014 affirming the disallowance.
The COA Proper denied Macalino’s petition in Decision No. 2019-305 dated August 9, 2019 and issued a Resolution dated January 21, 2020 affirming the regional decision.
The Supreme Court, En Banc, resolved the instant petition in G.R. No. 253199 and promulgated its decision on November 14, 2023.

Key Factual Allegations

Macalino ran and lost as vice mayor of San Fernando City, Pampanga, in the May 2013 elections.
The Municipal Government of Mexico, Pampanga, through Mayor Roy D. Manalastas, engaged Macalino by a Contract of Service dated July 1, 2013 as a "Legal Officer II" for the period June 1, 2013 to July 30, 2014 at a monthly salary of PHP 26,125.00.
The COA disallowed wages and Personnel Economic Relief Assistance paid to Macalino covering July 1, 2013 to December 31, 2013 in the total amount of PHP 149,015.00.
The Notice of Disallowance named municipal approving and certifying officers and Atty. Raul F. Macalino as liable to return the disallowed sum and warned that an unappealed disallowance would become final under Sections 48 and 51 of P.D. 1445.

Statutory Framework

Article IX-B, Section 6, 1987 Constitution provides that no candidate who has lost in any election shall, within one year after such election, be appointed to any office in the Government or any government-owned or controlled corporations or in any of their subsidiaries.
Section 94(b), Republic Act No. 7160 (Local Government Code) reiterates the one-year prohibition on appointing losing candidates to any government office except for barangay elections.
COA Circular No. 98-002 prohibits the use of public funds to pay private lawyers except in narrow instances specified in Section 481(b), R.A. 7160 and requires prior written conformity and concurrence in exceptional cases.
CSC Memorandum Circular No. 38 (s. 1993), CSC Resolution No. 93-1881 (May 25, 1993), and CSC Resolution No. 020790 (June 5, 2002) address the classification and prohibitions relating to contracts of service, job orders, consultancy engagements, and filling of vacant plantilla positions.
Torreta v. Commission on Audit supplied the adopted guidelines on return of disallowed amounts in cases involving unlawful or irregular government contracts.

Issues Presented

Whether the COA committed grave abuse of discretion in disallowing payments made to Macalino under a Contract of Service within one year of his electoral loss.
Whether a Contract of Service or consultancy engagement falls outside the prohibition in Article IX-B, Section 6 and Section 94(b), R.A. 7160.
Whether the principle of quantum meruit should reduce or excuse Macalino’s civil liability for the disallowed amount.

Contentions of the Parties

Macalino contended that his engagement was a Contract of Service or consultancy not amounting to an appointment to public office, that no oath was required, that n