Remedial Law

The Law Firm of LAGUESMA MAGSALIN CONSULTA and GASTARDO v. COA G.R. No. 185544 January 13, 2015 J. Leonen. Special Civil Actions, Rule 64 and Rule 65 of the Rules of Court, Relaxation of the Procedural Rules, GOCC’s and the Office of the Government Corporate Counsel

FACTS:

Sometime in 2001, officers of Clark Development Corporation, a government-owned and controlled corporation, approached the law firm of Laguesma Magsalin Consulta and Gastardo (the law firm) for its possible assistance in handling the corporation’s labor cases.

Clark Development Corporation, through its legal officers and after the law firm’s acquiescence, “sought from the Office of the Government Corporate Counsel [‘OGCC’] its approval for the engagement of [Laguesma Magsalin Consulta and Gastardo] as external counsel.”

The OGCC denied the request. Clark Development then filed a request for reconsideration.

On May 20, 2002, the OGCC reconsidered the request and approved the engagement of the law firm. It also furnished Clark Development Corporation a copy of a pro-forma retainership contract containing the suggested terms and conditions of the retainership. It instructed Clark Development to submit a copy of the contract to the OGCC after all the parties concerned have signed it.

In the meantime, the law firm commenced rendering legal services to Clark Development. At this point, Clark Development had yet to secure the authorization and clearance from the OGCC or the concurrence of the COA of the retainership contract. According to the law firm, Clark Development Corporation’s officers assured the law firm that it was in the process of securing the approval of the COA.

On June 28, 2002, Clark Development, through its Board of Directors, approved the law firm’s engagement as private counsel. In 2003, it also approved the assignment of additional labor cases to the law firm.

On July 13, 2005, Clark Development requested the COA for concurrence of the retainership contract it executed with the law firm. According to the law firm, it was only at this point when Clark Development informed them that the COA required the clearance and approval of the OGCC before it could approve the release of Clark Development Corporation’s funds to settle the legal fees due to the law firm.

On August 5, 2005, Clark Development Corporation was informed that its request for clearance could not be acted upon until the OGCC approves the retainership contract with finality.

On August 10, 2005, Clark Development sent a letter request to the OGCC for the final approval of the retainership contract, in compliance with the COA’s requirements.

On December 22, 2005, Clark Development Corporation’s request for approval was denied by the OGCC on the ground that the proforma retainership contract given to them was not “based on the premise that the monthly retainer’s fee and concomitant charges are reasonable and could pass in audit by COA”; that Clark Development adopted instead the law firm’s proposals concerning the payment of a retainer’s fee on a per case basis without informing the OGCC. However, the law firm was entitled to payment under the principle of quantum meruit and subject to Clark Development Corporation Board’s approval and the usual government auditing rules and regulations.

Clark Development Corporation relayed letter to the Commission’s Audit Team Leader, highlighting the portion on the approval of payment to the law firm on the basis of quantum meruit.

The COA denied Clark Development Corporation’s request for clearance, citing its failure to secure a prior written concurrence of the COA and the approval with finality of the OGCC and that its request for concurrence was made three (3) years after engaging the legal services of the law firm.

Laguesma Magsalin Consulta and Gastardo appealed to the COA. Clark Development Corporation also filed a motion for reconsideration.

The COA rendered the assailed decision denying the appeal and motion for reconsideration. It also ruled that it was not the government’s responsibility to pay the legal fees already incurred by Clark Development Corporation, but rather by the government officials who violated the regulations on the matter.

Clark Development Corporation and Laguesma Magsalin Consulta and Gastardo separately filed motions for reconsideration, which the Commission on Audit denied in the assailed resolution.

ISSUE:

Whether the Commission on Audit erred in disallowing the payment of the legal fees to Laguesma Magsalin Consulta and Gastardo as Clark Development Corporation’s private counsel.

RULING:

The petition is denied.

The petition was filed out of time.

Ordinarily, a petition for certiorari under Rule 65 of the Rules of Court has a reglementary period of 60 days from receipt of denial of the motion for reconsideration. The Constitution, however, specifies that the reglementary period for assailing the decisions, orders, or rulings of the constitutional commissions is thirty (30) days from receipt of the decision, order, or ruling. For this reason, a separate rule was enacted in the Rules of Court.

Rule 64 of the Rules of Civil Procedure provides the guidelines for filing a petition for certiorari under this rule. Section 2 of the rule specifies that “[a] judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65, except as hereinafter provided.”

The phrase, “except as hereinafter provided,” specifies that any petition for certiorari filed under this rule follows the same requisites as those of Rule 65 except for certain provisions found only in Rule 64. One of these provisions concerns the time given to file the petition.

Section 3 of Rule 64 of the Rules of Civil Procedure states:

SEC. 3. Time to file petition. — The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of denial.(Emphasis supplied)

Under this rule, a party may file a petition for review on certiorari within 30 days from notice of the judgment being assailed. The reglementary period includes the time taken to file the motion for reconsideration and is only interrupted once the motion is filed. If the motion is denied, the party may file the petition only within the period remaining from the notice of judgment.

The difference between Rule 64 and Rule 65 has already been exhaustively discussed by this court in Pates v. Commission on Elections:

Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the latter rule. They exist as separate rules for substantive reasons as discussed below. Procedurally, the most patent difference between the two – i.e., the exception that Section 2, Rule 64 refers to – is Section 3 which provides for a special period for the filing of petitions for certiorari from decisions or rulings of the COMELEC en banc. The period is 30 days from notice of the decision or ruling (instead of the 60 days that Rule 65 provides), with the intervening period used for the filing of any motion for reconsideration deductible from the originally granted 30 days (instead of the fresh period of 60 days that Rule 65 provides).

In this case, petitioner received the decision of the COA on October 16, 2007. It filed a motion for reconsideration on November 6, 2007, or after 21 days. It received notice of the denial of its motion on November 20, 2008.56 The receipt of this notice gave petitioner nine (9) days, or until November 29, 2008, to file a petition for certiorari. Since November 29, 2008 fell on a Saturday, petitioner could still have filed on the next working day, or on December 1, 2008. It, however, filed the petition on December 19, 2008, which was well beyond the reglementary period.

This petition could have been dismissed outright for being filed out of time. This court, however, recognizes that there are certain exceptions that allow a relaxation of the procedural rules.

Considering that the issues in this case involve the right of petitioner to receive due compensation on the one hand and respondents’ duty to prevent the unauthorized disbursement of public funds on the other, a relaxation of the technical rules is in order.

The general rule is that government-owned and controlled corporations must refer all their legal matters to the Office of the Government Corporate Counsel. It is only in “extraordinary or exceptional circumstances” or “exceptional cases” that it is allowed to engage the services of private counsels.

The labor cases petitioner handled were not of a complicated or peculiar nature that could justify the hiring of a known expert in the field. On the contrary, these appear to be standard labor cases of illegal dismissal and collective bargaining agreement negotiations,70 which Clark Development Corporation’s lawyers or the Office of the Government Corporate Counsel could have handled.

Commission on Audit Circular No. 86-255 dated April 2, 1986 and Office of the President Memorandum Circular No. 9 also require that “before the hiring or employment”of private counsel, the “written conformity and acquiescence of the [Government Corporate Counsel] and the written concurrence of the Commissionon Audit shall first be secured. . . .”

In this case, Clark Development Corporation had failed to secure the final approval of the Office of the Government Corporate Counsel and the written concurrence of respondent before it engaged the services of petitioner.

When Government Corporate Counsel Valdez granted Clark Development Corporation’s request for reconsideration, the approval was merely conditional and subject to its submission of the signed pro-forma retainership contract provided for by the OGCC.

The concurrence of respondents was also not secured by Clark Development Corporation prior to hiring petitioner’s services. 

The cases that the private counsel was asked to manage are not beyond the range of reasonable competence expected from the Office of the Government Corporate Counsel. Certainly, the issues do not appear to be complex or of substantial national interest to merit additional counsel.

Respondents, therefore, correctly denied Clark Development Corporation’s request for clearance in the disbursement of funds to pay petitioner its standing legal fees.

It cannot be denied that petitioner rendered legal services to Clark Development Corporation. 

It assisted the corporation in litigating numerous labor cases90 during the period of its engagement. It would be an injustice for petitioner not to be compensated for services rendered even if the engagement was unauthorized.

The fulfillment of the requirements of the rules and regulations was Clark Development Corporation’s responsibility, not petitioner’s.

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