DECISION NO.

2014-136
July 18, 2014

Subject: Request for reconsideration of Atty. Cecilio

B. Gellada, Jr., Officer-in-Charge, Office of
the Vice President and General Counsel,
Power Sector Assets and Liabilities
Management Corporation, of Legal Retainer
Review No. 2011-004 dated January 12,
2011 denying concurrence to renew the
contracts of Atty. Michael B. Tantoco, Atty.
Angelito C. Imperio, Atty. Angelo C.
Anastacio, Atty. Maria Belen M. Nera and
Mr. John TK Yeap

DECISION

FACTS OF THE CASE

Before this Commission is the request for reconsideration of Atty. Cecilio B.

Gellada, Jr., Officer-in-Charge (OIC), Office of the Vice President and General Counsel,
Power Sector Assets and Liabilities Management Corporation (PSALM), of Legal
Retainer Review (LRR) No. 2011-004 dated January 12, 2011 denying concurrence to
renew the contracts of Atty. Michael B. Tantoco, Atty. Angelito C. Imperio, Atty. Angelo
C. Anastacio, Atty. Maria Belen M. Nera and Mr. John TK Yeap.

In LRR No. 2011-004 dated January 12, 2011, the COA General Counsel denied
the request for concurrence to the legal retainership contracts of these five legal advisors.

One reason for the denial was the overlapping in the periods covered in the
previous and renewal contracts of Atty. Imperio and Atty. Nera, which were from
December 9, 2009 to June 1, 2010 and January 1, 2010 to June 30, 2010, respectively.
However, their renewal contracts were from April 5, 2010 to October 5, 2010.

The main reason for the denial, however, was that the contracts were already
signed, executed and paid before they were submitted to the COA for concurrence in
violation of Memorandum Circular (MC) No. 9 of the Office of the President (OP) dated
August 27, 1998, COA Circular No. 95-011 dated December 4, 1995, and the Supreme
Court rulings in Polloso vs. Gangan , et al. (G.R. No. 140563, July 14,
2000), Salalima, et al. vs. Guingona, Jr ., et al. (G.R. No. 117589-92, May 22, 1996),
and Santayana vs. Alampaya (A.C. No. 587, March 21, 2005).
1

It was also noted in the said LRR No. 2011-004 that, while the contracts of Atty.
Anastacio and Atty. Tantoco started in January and February, 2010, respectively, and
those of Mr. Yeap, Atty. Nera and Atty. Imperio started on April 5, 2010, the PSALM
submitted their contracts to the Office of the Government Corporate Counsel (OGCC)
only on April 22, 2010, which the OGCC approved on May 6, 2010.

In this request for reconsideration dated March 17, 2011, the PSALM, through its
OIC, Office of the Vice President and General Counsel, Atty. Gellada, Jr., submitted the
same arguments and discussions contained in their request for reconsideration dated
January 27, 2011 of LRR No. 2010-138 dated November 4, 2010. In addition, PSALM
explained that the previous contracts of Atty. Imperio and Atty. Nera were automatically
terminated on March 25, 2010 upon the appointment of PSALM President Jose C.
Ibazeta (the appointing head) as Acting Secretary of the Department of Energy. The
termination was purportedly in line with Section 53.7 of the Revised Implementing Rules
and Regulations of Republic Act (RA) No. 9184, which provides that the services of
highly technical consultants shall in no case exceed the term of the appointing Head of
the Procuring Entity. Their new contracts were executed under the new appointing head,
PSALM Acting President Maria Luz L. Caminero. The same rationale was given for the
automatic termination and renewal of the contracts of Atty. Tantoco and Mr. Yeap.

ISSUE

The issue to be resolved is whether or not the request for concurrence to the legal
retainership contracts may be given due course.

DISCUSSION

This Commission rules in the negative.

In this instant request for reconsideration, PSALM attached its previous request
for reconsideration dated January 27, 2011 of LRR No. 2010-138, adopting the
arguments stated therein, quoted as follows:

1. The request for concurrence dated May 7, 2010 was submitted to

COA to comply in good faith with the directive of the Audit Team
Leader (ATL) after PSALM was furnished on April 20, 2010 with
a copy of Opinion No. 2010-020 dated March 15, 2010 of the COA
Legal Services Sector for strict compliance;

2. The OGCCs approval or its giving due course to the execution of

engagement contracts of PSALM legal advisors is a necessary

prerequisite to the request for COAs concurrence under OP MC
No. 9, and COA 98-002;
3

3. The OGCC, as the Legal Counsel of PSALM, was fully aware of

the urgency and priority given by the PSALM to implement the

privatization of generation assets, transmission business and IPP
contracts of NPC since the enactment of EPIRA in 2001;

4. Given the six-month term limitation of consultancy contracts under

R.A. No. 9184, the continuity and progress of legal advisory

services cannot be unduly stopped or suspended on the ground that
no prior OGCC conformity and acquiescence and written COA
concurrence were obtained by PSALM prior to renewal of said
contracts; and

5. The period within which to request OGCCs conformity and

acquiescence and COAs concurrence, being procedural, are to be

construed liberally in favor of PSALM if the objectives sought to
be attained are achieved.

On the first ground, PSALM avers that the rulings in Polloso,

Salalima and Santayana cases are applicable only to cases where the private lawyers
are hired to represent the government agency in juridical or quasi-judicial proceedings.

The averment is erroneous. Interpreting the applicability of COA Circular No. 95011, the Supreme Court, in the Polloso case, held:

Contrary to the view espoused by petitioner, the prohibition covers the

hiring of private lawyers to render any form of legal service. [COA
Circular No. 86-255 dated April 22, 1986] makes no distinction as to
whether or not the legal services to be performed involve an actual
legal controversy or court litigation. Petitioner insists that the
prohibition pertains only to handling of legal cases, perhaps because
this is what is stated in the title of the Circular. To rely on the title of

the circular would go against a basic rule in statutory construction that

a particular clause should not be studied as a detached and isolated
expression, but the whole and every part of the statute must be
considered in fixing the meaning of any of its part. (underscoring
supplied)

The requirements of prior acquiescence of the Solicitor General or the GCC, and
the written concurrence of COA before the hiring of a private lawyer, was provided under
COA Circular No. 86-255 dated April 22, 1986. The same requirements were reiterated
in COA Circular No. 95-011 dated December 4, 1995.
4

The second ground is a vain attempt at misdirection. Records clearly show that the
PSALM submitted the contracts to the OGCC only on April 22, 2010, after these
contracts were executed and signed by the parties on April 5, 2010. Plainly, the real cause
of the belated submission of the contracts to the COA was the belated submission by the
PSALM of the contracts to the OGCC.

The third and fourth grounds should be dismissed since urgency and priority of
privatization of generation and transmission business, or the necessity of continuing the
legal advisory services, are all within the control of the PSALM management. If only
they gave more than lip service to the requirements of OP MC No. 9 and COA Circular
No. 95-011, the belated submission of the contracts to the OGCC and COA would have
been avoided. PSALM could not be excused from complying with these issuances as they
have been in force in the 1990s.

The last argument is obviously contrary to the treatment by the SC of the

requirements under OP MC No. 9 and COA Circular No. 95-011. As can be gleaned from
the rulings in the Polloso, Salalima and Santayana cases, these are not merely
procedural but substantial requirements of law. Their unjustified violation rightly calls for
denial of COAs concurrence and payment based thereon appropriately assailed as
irregular and disallowable in audit.

RULING

WHEREFORE , the instant request of Atty. Cecilio B. Gellada, Jr. is

hereby DENIED and Legal Retainer Review No. 2011-004 dated January 12, 2011,
denying concurrence to the renewal contracts of Power Sector Assets and Liabilities
Management Corporation legal advisors, is SUSTAINED . Accordingly, the payments
under the Contract for Legal Services shall be disallowed in audit.

(SGD.) MA. GRACIA M. PULIDO TAN

Chairperson

(SGD.) HEIDI L. MENDOZA

Commissioner

(SGD.) JOSE A. FABIA

Commissioner

ATTESTED BY:
(SGD.) NILDA B. PLARAS
Director IV
Commission Secretariat

Copy furnished:

Mr. Cecilio B. Gellada, Jr.

Officer-in-Charge
Office of the VP General Counsel

Power Sector Assets and Liabilities Management Corporation

7 th Floor Bankmer Bldg.
6756 Ayala Avenue
Makati City

The Audit Team Leader

Power Sector Assets and Liabilities Management Corporation
7 th Floor Bankmer Bldg.
6756 Ayala Avenue
Makati City

The Director
Information Technology Office
Administration Sector

The Assistant Commissioners

Corporate Government Sector
Legal Services Sector

All of this Commission

ESZ/FED

ven:coadec-gellada

Footnote:
1 Prohibiting Government-Owned or Controlled Corporations (GOCC) from Referring their Cases and Legal
Matters to the Office of the Solicitor General, Private Legal Counsel or Law Firms and Directing the GOCCs to
Refer their Cases and Legal Matters to the Office of the Government Corporate Counsel, Unless Otherwise
Authorized Under Certain Exceptional Circumstances.
2 SUBJECT: Prohibition Against Employment by government agencies and instrumentalities, including
government-owned or controlled corporations, of private lawyers to handle their legal cases.
3 Should be COA Circular No. 95-011 dated December 4, 1995
4 SUBJECT: Inhibition ( sic ) against employment agencies and instrumentalities including government owned or
controlled corporations, of private lawyers to handle their legal cases.