The Supreme Court affirmed the Commission on Audit’s (COA) denial of the Department of Social Welfare and Development’s (DSWD) request for concurrence regarding a private legal retainer contract. The ruling underscores the critical importance of obtaining prior written approval from both the Solicitor General and the COA before hiring private legal counsel for government entities. This decision highlights the need for strict adherence to procedural requirements to prevent irregular expenditures, ensuring accountability and proper use of public funds. Government agencies must prioritize timely compliance to avoid personal liability for unauthorized contracts.

Outsourcing Justice: Did DSWD Jump the Gun on Hiring a Private Lawyer?

The heart of this case involves the Department of Social Welfare and Development’s (DSWD) decision to hire Atty. Melanie D. Ortiz-Rosete as a private legal retainer for its Field Office No. 10 (FO). This decision, made without securing the Commission on Audit’s (COA) concurrence before the contract took effect, became the focal point of legal contention. The COA ultimately denied DSWD’s request for concurrence, citing the agency’s failure to adhere to established procedures. This sparked a legal battle that reached the Supreme Court, raising crucial questions about the balance between agency autonomy and fiscal responsibility.

The factual backdrop reveals a series of actions taken by the DSWD. Initially, in 2015 and 2016, the DSWD successfully engaged Atty. Ortiz-Rosete with the approval of the Solicitor General and the concurrence of the COA. However, for the 2017 contract, DSWD executed the agreement first and then sought approval afterward. DSWD argued that rehiring Atty. Ortiz-Rosete was justified due to the central office’s limited legal manpower, the trust developed through prior services, the Solicitor General’s approval, a COA Director’s favorable recommendation, and the COA’s prior concurrences. However, these justifications failed to sway the COA, which emphasized the necessity of prior approval.

The COA’s decision was rooted in established regulations, particularly COA Circular No. 86-255, as amended by COA Circular No. 95-011. This circular explicitly states that public funds cannot be used to pay for private legal counsel unless the Solicitor General and the COA provide written concurrence before the hiring. The COA underscored that expenditures made without these prior approvals are considered irregular. The COA Proper also noted that the DSWD did not provide a sufficient reason to excuse its belated filing for concurrence.

In its defense, DSWD cited several factors, including the scarcity of lawyers at the DSWD Central Office, the injustice of not compensating Atty. Ortiz-Rosete for services rendered, and the trust developed over time. They also pointed to the Solicitor General’s deputization of Atty. Ortiz-Rosete as private legal counsel and a favorable recommendation from a COA Director. However, the COA Proper found these reasons insufficient to override the procedural requirements. These justifications did not relate to the core issue of non-compliance with the rules requiring prior approval; they merely explained the agency’s reasoning for wanting to hire a private lawyer in the first place.

The Supreme Court, in its analysis, emphasized that its review of COA decisions is limited to jurisdictional errors or grave abuse of discretion. The Court found that DSWD failed to establish a prima facie case of grave abuse, as its arguments pointed to mere errors of judgment rather than unauthorized, whimsical, or capricious acts by the COA. This highlights the high threshold required to overturn COA decisions, emphasizing the judiciary’s deference to the COA’s expertise in auditing government expenditures.

The Court further underscored the general prohibition against government entities securing private legal counsel, citing the exclusive authority of the Office of the Solicitor General (OSG) to represent the government. This principle reinforces the idea that the OSG is the primary legal arm of the government, and its services should be utilized first and foremost. Exceptions to this rule require strict adherence to the prescribed procedure to ensure accountability and prevent the misuse of public funds. According to the Court, government agencies may be allowed to engage a private lawyer, provided that they first comply with applicable rules and regulations. The prior written conformity and concurrence of the Solicitor General and COA, respectively, are indispensable. There must be strict compliance: it must be timely (i.e., obtained prior to the hiring or employment of private lawyer) and complete (i.e., approval/concurrence of both the Solicitor General and COA). Otherwise, the engagement of a private lawyer is deemed unauthorized.

The Supreme Court highlighted two critical shortcomings in DSWD’s actions: the lack of timeliness and completeness in securing the required approvals. The Court stated:

As to timeliness. The attempts to secure the required approvals were post facto. DSWD decided to secure the required approvals only after it already finalized its agreement to rehire Atty. Ortiz-Rosete. Its request for COA concurrence was overdue, so much so that the Contract period (i.e., 2017) had already ended by the time DSWD sent out its application to the COA.

Even the Solicitor General’s eventual approval did not rectify the situation, as it was granted after the contract had already become executory. Furthermore, the Court clarified that a COA Director’s favorable recommendation could not substitute for the required COA concurrence, which only the COA Proper is authorized to issue. This distinction is crucial, as it emphasizes the hierarchical structure within the COA and the specific authority vested in the COA Proper for decisions of this nature.

The Supreme Court addressed potential exemptions to the prior approval requirement, particularly in cases of inordinate delay by the COA. However, it distinguished the present case from situations where the government instrumentality had filed a timely request, but the COA’s inaction caused the delay. In DSWD’s case, the agency’s failure to seek approval before executing the contract was the primary issue, not any delay on the part of the COA. The Court distinguished it with this explanation:

In contrast, DSWD’s glaring misstep here lies in having executed and completed the Contract without even requesting for the COA’s conformity. Even its letter-request to the Solicitor General was sent only after it had already finalized the Contract.

The Court noted the COA’s recent recognition of the need to expedite the approval process, as evidenced by COA Circular No. 2021-003, which exempts certain agencies from the prior written concurrence requirement under specific conditions. However, this circular was not applicable to the present case, as DSWD’s actions did not meet the conditions for exemption, and the circular took effect after the events in question.

Finally, the Supreme Court clarified that its decision did not constitute a disallowance case, meaning it did not determine the validity of payments made to Atty. Ortiz-Rosete or assign liability for such payments. This distinction is important, as it leaves open the possibility of future proceedings to address the financial aspects of the unauthorized contract. The Court’s focus was solely on the procedural irregularity of DSWD’s actions and the COA’s authority to enforce compliance with established regulations.

FAQs

What was the key issue in this case?	The central issue was whether the DSWD violated regulations by hiring a private legal retainer without prior written concurrence from the Solicitor General and the COA. The Supreme Court upheld the COA’s decision, emphasizing the importance of obtaining prior approval.
What is COA Circular No. 86-255?	COA Circular No. 86-255, as amended, prohibits the use of public funds to pay for private legal counsel unless prior written conformity and concurrence from the Solicitor General and COA are secured. This regulation aims to ensure proper use of government resources.
Why did the COA deny DSWD’s request?	The COA denied DSWD’s request because DSWD sought concurrence after the contract with the private legal retainer had already been executed and was in effect. This violated the requirement for prior approval.
Can a COA Director’s recommendation substitute for COA concurrence?	No, a COA Director’s recommendation is merely advisory and cannot substitute for the required written concurrence from the COA Proper. Only the COA Proper has the authority to issue such concurrence.
What happens if a government agency hires a private lawyer without prior approval?	Expenditures arising from the hiring of private lawyers without prior written conformity from the Solicitor General and concurrence from the COA are considered irregular. The officials who approved or authorized the contract may be held personally liable.
Did the Supreme Court address the payments made to the private lawyer?	No, the Supreme Court clarified that its decision was not a disallowance case and did not determine the validity of payments made to the private lawyer or assign liability for such payments. This aspect may be subject to future proceedings.
What is the role of the Office of the Solicitor General in these cases?	The Office of the Solicitor General (OSG) is the primary legal arm of the government and has the exclusive authority to represent the government, its agencies, and its officials in legal matters. Government agencies must seek OSG’s approval before hiring private legal counsel.
Are there any exceptions to the prior approval requirement?	One exception is when the COA is guilty of inordinate delay in acting on a request for concurrence. In such cases, the government instrumentality may be excused from strict compliance. However, this exception did not apply to DSWD’s case.
What is COA Circular No. 2021-003?	COA Circular No. 2021-003 exempts national government agencies and government-owned or -controlled corporations from the prior written COA concurrence requirement subject to certain conditions.

In conclusion, the Supreme Court’s decision reinforces the principle that government agencies must strictly adhere to established procedures when engaging private legal counsel. The requirement for prior written approval from both the Solicitor General and the COA serves as a safeguard against irregular expenditures and ensures accountability in the use of public funds. This case serves as a reminder to government agencies to prioritize compliance with these regulations to avoid potential legal and financial repercussions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: DSWD vs. COA, G.R. No. 254871, December 06, 2022