CASE DIGEST
PNOC-EXPLORATION CORP.
V. COMMISSION ON AUDIT
G.R. No. 244461
[September 28, 2021]
EN BANC, LOPEZ, M.V
Prohibition of Hiring
Private Counsels by GOCC and its exceptions; Conformitity of OSG; COA's written
concurrence on disbursment of legal fees
As a rule, a government agency is
provided by law with a legal officer or office who or which can handle its
legal requirements or cases in courts. It may not be allowed to hire the
services of private lawyers for a fee, chargeable against public funds, unless
exceptional or extraordinary circumstances obtain with the written concurrence
of the Commission on Audit secured before the employment of a private lawyer or
law firm.
PNOC-Exploration Corporation (PNOC-EC)
engaged in a dispute with Wilson International Trading Private Limited over
demurrage charges and losses amounting to US$1,392,064.53 regarding a steam
coal purchase. Wilson initiated arbitration in Singapore, prompting PNOC-EC to
seek legal representation in the arbitration proceedings.
PNOC-EC, facing the urgent need for an international legal counsel experienced in arbitration and Singapore law, engaged Baker Botts LLP without securing prior written concurrence from the Commission on Audit (COA). COA suspended the legal fees paid to Baker Botts due to the lack of COA's written concurrence and required PNOC-EC to settle or face disallowance of the amount paid. PNOC-EC post-facto requested COA's written concurrence, but it was denied for being filed more than a year after engaging Baker Botts.
Whether the COA gravely abused its discretion
in denying PNOC-EC's belated request for COA's written concurrence in hiring
private counsels and the suspension of legal fees.
NO. Government-owned or controlled
corporations (GOCCs) are generally prohibited from hiring private counsels, but
exceptions exist under COA Circulars 86-255 and 95-011, requiring written
concurrence from the COA in exceptional cases. COA Circular 2021-003,
recognizing the impracticality of rigid compliance in urgent situations,
exempts GOCCs from the written concurrence requirement under certain
conditions. The case was remanded to COA for determination whether PNOC-EC meets
the criterion for such exemption, since COA was still in its "initial
review" of the retainer agreement when the request for concurrence was
denied. The
propriety of exempting PNOC-EC from the written concurrence requirement entails
the evaluation of purely factual and evidentiary matters, not available on
record and beyond the purview of this judicial review.
On the suspension of legal fees, the
Court held that compliance or non-compliance with COA's written concurrence is
not the sole factor in determining disallowance of legal fees, and liabilities
arising from disallowance are subject to post-audit based on existing rules and
regulations. The COA Chairperson Aguinaldo mandates for a further post-audit to
ascertain the proper disallowance and liabilities.
Therefore, the petition was dismissed
without prejudice to COA's determination of exempting PNOC-Exploration
Corporation from the written concurrence requirement and conducting a
post-audit in accordance with COA Circular 2021-003.
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