G.R. No. L-2623 - People vs. Banayad

Case Summary (G.R. No. L-2623)

Procedural Posture

Petitioner sought relief by Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court to annul COA rulings that sustained ND No. 14-001-100-(13). COA disallowed payment of wages and PERA to Macalino on the ground that his engagement contravened Article IX-B, Section 6 of the 1987 Constitution and Section 94(b) of Republic Act No. 7160 (Local Government Code). COA Regional Office and COA Proper affirmed the disallowance; the petition before the Court contested those affirmances.

Undisputed Factual Background

Macalino lost the May 2013 vice mayoralty election. On July 1, 2013, the Municipal Government of Mexico, Pampanga entered into a Contract of Service engaging him as Legal Officer II for the period June 1, 2013 to July 30, 2014 with monthly salary PHP 26,125.00. The ND asserted that payments covering July 1 to December 31, 2013 were prohibited because a losing candidate cannot be appointed to any government office within one year after the election. COA identified the municipal officers who participated in hiring and payment processes and directed those liable to return the disallowed amount.

Central Legal Issue

Whether the one-year prohibition in Article IX-B, Section 6 of the 1987 Constitution (and the parallel statutory provision, Section 94(b), RA 7160) bars the appointment or hiring of a candidate who lost an election within one year after that election, irrespective of the form of engagement (i.e., contract of service/job order/consultancy), and whether the payments made to Macalino must therefore be disallowed and returned.

Applicable Constitutional and Statutory Provisions

1987 Constitution, Article IX-B, Section 6: “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.”
RA 7160 (Local Government Code), Section 94(b): mirrors the constitutional prohibition for losing candidates (except barangay elections) — no appointment within one year after such election to any government office or GOCC/subsidiary.

Court’s Approach to Construction of the Prohibition

The Court applied the plain-meaning rule (verba legis), treating constitutional and statutory text according to its ordinary meaning unless technical terms require otherwise. The absence of any qualifying language in the constitutional and statutory provisions was taken to indicate that the prohibition is unqualified and broad: it reaches “any office in the Government,” without limiting the form, permanence, or jurisdictional location of that office. The maxim ubi lex non distinguit was invoked to underscore that courts should not create distinctions where the lawmaker did not.

Petitioner's Arguments and Court’s Responses

Petitioner argued that his engagement under a Contract of Service was not an “appointment” within the constitutional/statutory ban because (a) contracts of service or consultancy are not plantilla or permanent appointments, (b) such engagements do not require taking an oath of office, and (c) the engagement was in a different municipality than where he ran and lost.
The Court rejected these arguments. It emphasized that the constitutional and statutory language is general and unqualified; therefore, distinctions based solely on form (contract versus plantilla), permanence, or jurisdiction are not sustainable where the law contains no such distinctions. The Court found the argument that the contract circumvented the one-year bar to be inconsistent with the clear constitutional and statutory prohibition.

Contract of Service, Civil Service Rules, and Nature of the Engagement

The Court examined CSC issuances (CSC Memorandum Circular No. 38, series of 1993; CSC Resolution No. 020790, June 5, 2002) and jurisprudence (Dr. Posadas v. Sandiganbayan) distinguishing legitimate consultancy engagements from services that perform duties of vacant regular plantilla positions. CSC MC No. 38 and CSC Resolution 020790 prohibit hiring under contract of service or job order for functions pertaining to vacant regular plantilla positions. The Court observed that Macalino’s Contract of Service substantially mirrored duties described for a municipal legal officer under Section 481 of RA 7160, indicating that his engagement performed plantilla-like functions and therefore violated CSC policy.

COA Circular No. 98-002 and Employment of Private Lawyers

COA Circular No. 98-002 prohibits local government units from employing private lawyers using public funds to represent the LGU or render legal services, except in limited instances specified in Section 481(b), paragraph 3(1) of RA 7160, and only upon securing written conformity of the Solicitor General or Government Corporate Counsel and written concurrence of the COA. The Court noted absence of any record showing compliance with these requisites, and further observed that Macalino’s contractual duties exceeded the narrow allowances in Section 481(b)(3)(1).

Application of Torreta Guidelines on Return of Disallowed Amounts

Because Macalino’s payments were made pursuant to a contract of service rather than a regular plantilla appointment, the Court applied the return-of-disallowed-amounts framework articulated in Torreta v. Commission on Audit. The adopted guidelines provide that: (1) if an ND is upheld, approving and certifying officers who acted in good faith are not civilly liable (Administrative Code Sec. 38); (2) approving and certifying officers who acted with bad faith, malice, or gross negligence are solidarily liable with recipients (Administrative Code Sec. 43); and (3) the civil liability of recipients may be reduced by applying quantum meruit to account for reasonable value of services rendered.

Quantum Meruit and Its Limited Application in This Case

While Torreta and related jurisprudence permit reduction of liability under quantum meruit to avoid unjust enrichment where equitable circumstances warrant, the Court explained that quantum meruit is not intended to remedy or validate manifest constitutional violations. The Court distinguished prior cases where quantum meruit was applied (often complex engagements or innocent contractors) from the present facts, which showed a deliberate circumvention of the one-year prohibition by a licensed lawyer. Because the contract contravened a clear constitutiona

Case Syllabus (G.R. No. L-2623)

Procedural History

Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court filed by petitioner Raul F. Macalino seeking reversal and setting aside COA Proper Decision No. 2019-305 (August 9, 2019) and COA Proper Resolution (January 21, 2020).
Those COA Proper rulings affirmed the November 12, 2014 Decision of COA Regional Office No. III which sustained Notice of Disallowance (ND) No. 14-001-100-(13) dated March 28, 2014 disallowing payment of wages and PERA to petitioner for July 1, 2013 to December 31, 2013 totaling PHP 149,015.00.
Macalino initially filed an appeal before COA Regional Office No. III; after adverse ruling, he filed an appeal before the Adjudication and Settlement Board of COA which the COA Commission Proper treated as a petition for review.
COA Proper denied the petition on August 9, 2019 (Decision No. 2019-305) and issued a Resolution dated January 21, 2020; these were the subject of the instant certiorari petition.
The Supreme Court, en banc, dismissed the Petition for Review on Certiorari and affirmed the COA Proper decision and resolution; Atty. Raul F. Macalino was held solidarily liable (excluding the disbursing officer Miranda) for return of PHP 149,015.00.

Undisputed 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, entered into a Contract of Service with Macalino to perform the duties of Legal Officer II from June 1, 2013 to July 30, 2014, with a monthly salary of PHP 26,125.00.
The disputed payments comprise wages and the Personnel Economic Relief Assistance (PERA) paid to Macalino for the period July 1, 2013 to December 31, 2013, amounting to PHP 149,015.00.
ND No. 14-001-100-(13) dated March 28, 2014 (addressed to Mayor Manalastas) disallowed this amount on the ground that the payee was a losing candidate in the May 2013 elections and thus the payments violated Article IX-B, Section 6 of the Constitution and Section 94 of the Local Government Code.
The ND identified eight persons determined liable to settle the disallowance (including Macalino), listing each person’s position/designation and nature of participation in the transaction.
COA Regional Office No. III affirmed the ND in its Decision dated November 12, 2014; on COA Proper review, the disallowance was affirmed but the disbursing officer Maritess B. Miranda was excluded from liability.

Texts of Constitutional and Statutory Provisions Applied

Article IX-B, Section 6, Constitution: “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): “Except for losing candidates in barangay elections, no candidate who lost in any election shall, within one (1) 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.”

Notice of Disallowance: Content and Administrative Consequence

ND No. 14-001-100-(13) disallowed PHP 149,015.00 paid to a losing candidate (Macalino) as wages and PERA for the stated period.
The ND named eight persons as liable to settle the disallowance: Leonila S. Ignacio (Human Resource Officer — prepared appointment), Alice A. Reyes (Municipal Budget Officer — signed Obligation Request), Perlita T. Lagman (Municipal Accountant — signed DV as to complete documentation), Emmanuel R. Manalo (Municipal Administrator — signed Obligation Request), Roy D. Manalastas (Municipal Mayor — approved appointment, payrolls, Obligation Request), Maritess B. Miranda (Disbursing Officer — paid wages and certified payrolls), Avelina P. Reyes (Municipal Treasurer — signed payrolls and DV as to availability of funds), and Atty. Raul F. Macalino (Legal Officer II (JO) — received payment of wages).
ND warned that audit disallowance not appealed within six months from receipt shall become final and executory as prescribed under Sections 48 and 51 of P.D. 1445.

Issues Presented to the Court

Whether the payments to Macalino (a losing candidate in May 2013) violated Article IX-B, Section 6 of the Constitution and Section 94 of the Local Government Code.
Whether a Contract of Service, job order, or consultancy engagement falls outside the constitutional and statutory prohibition on appointment of losing candidates within one year after election.
Whether the hiring contravened civil service rules (including CSC resolutions and memoranda) and COA circulars governing payments for legal services.
Whether the COA committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing and affirming the ND.
Whether Macalino and certain municipal officers are civilly liable for return of the disallowed amount and if the principle of quantum meruit should apply to reduce liability.

Petitioner’s Principal Contentions

The one-year prohibition does not apply because his engagement was under a Contract of Service and thus not an “appointment” to public office.
Taking an oath of office is a qualifying requirement for appointment; because his contract did not require oath-taking, he was never appointed to public office.
There was no circumvention of the one-year ban because he ran and lost in San Fernando City while his appointment (contract) was in the Municipality of Mexico, Pampanga (different jurisdiction).
Distinction between contracts of service/job orders and plantilla appointments: contractual engagements are non-governmental services not covered by certain civil service approval requirements.
Relied on CSC Resolution No. 93-1881 (May 25, 1993) and CSC Memorandum Circular No. 38, series of 1993 to argue consultancy services are not covered by Civil Service Law and ther