327 Cases Penned by Associate Justice Amy Lazaro-Javier: 2025 Bar Examination
Can the Power Sector Assets and Liabilities Management
Corporation (PSALM) proceed with the engagement of private legal advisors
without the prior written concurrence of the Commission on Audit (COA), despite
a delay of over three years in COA's response, and hold PSALM officials
personally liable for payments made without COA approval?
Power Sector Assets and Liabilities Management Corporation vs. Commission on Audit, G.R. No. 247924, November 16, 2021
Facts of the Case:
In 2011, PSALM engaged two legal advisors—Mr. John T. K.
Yeap (international legal advisor) and Atty. Michael B. Tantoco (Philippine
legal advisor)—to assist in the privatization of the National Power
Corporation’s (NPC) generation assets and Independent Power Producer (IPP)
contracts. The advisors' contracts were subject to the written concurrence of
both the Office of the Government Corporate Counsel (OGCC) and COA, as required
under COA Circular Nos. 86-255 and 95-011.
PSALM urgently requested COA’s concurrence, specifying May
30, 2011, as the deadline for a response, which was crucial for the timely
execution of its privatization projects. Although the OGCC promptly approved
the contracts, COA remained silent. After waiting an additional 91 days without
receiving COA’s concurrence, PSALM decided to proceed with the legal advisors'
contracts on August 29, 2011, due to the need to meet the statutory
requirements under the Electric Power Industry Reform Act (EPIRA) of 2001.
Three years later, on November 6, 2014, COA finally
responded by denying PSALM's request for concurrence, citing PSALM's failure to
obtain prior approval. COA disallowed payments made to the legal advisors and
held the PSALM officials personally liable, stating that the engagement
violated COA Circular Nos. 86-255 and 95-011. PSALM filed a motion for
reconsideration, arguing that the delayed engagement was necessary to avoid
further setbacks in its privatization projects and that the legal services
provided were merely advisory in nature, not involving court appearances.
Despite these arguments, COA denied PSALM’s reconsideration in its 2019 ruling.
PSALM elevated the matter to the Supreme Court, contending
that COA’s three-year delay in issuing its concurrence effectively amounted to
grave abuse of discretion and that the hiring of the advisors was indispensable
to comply with the EPIRA mandate.
Primary Legal Issue:
Was the engagement of private legal advisors by PSALM
without COA’s prior written concurrence valid, given COA’s inaction for over
three years, and should PSALM officers be held personally liable for the
payments made?
Supreme Court Decision:
The Supreme Court ruled in favor of PSALM, finding that COA
committed grave abuse of discretion in delaying its decision for more than
three years. The Court emphasized that PSALM had acted in good faith, waiting
for a reasonable period and ultimately making a judgment call to avoid further
delays in its privatization projects. The Supreme Court ruled that COA’s denial
of concurrence based on technicalities, without considering the merits of the
necessity and urgency of the engagement, was unjustified.
The Court further held that the PSALM officers who
authorized the payment for the legal services should not be held personally
liable, as they acted without malice and solely in pursuit of fulfilling
PSALM’s statutory mandate under EPIRA. The legal services rendered were crucial
in achieving the privatization goals set by law, and the COA’s delayed response
was deemed unreasonable.
Dispositive Portion:
The petition was granted. COA’s Decision No. 2017-215 and
Resolution-Decision No. 2019-004 were nullified. The Supreme Court directed COA
to allow the payment of the legal advisors, Mr. Yeap and Atty. Tantoco, for
services rendered under their respective contracts.
Should government agencies be given more autonomy in hiring
specialized legal advisors when faced with critical deadlines, even if it means
bypassing COA’s concurrence? How can government auditing processes balance
oversight with efficiency?
Important Doctrines:
- Pre-Audit
Requirement (COA Circular Nos. 86-255 and 95-011): Even when legal
services are purely advisory, COA's prior concurrence is mandatory, unless
exempted under extraordinary circumstances.
- Grave
Abuse of Discretion (Article III, Section 16, 1987 Constitution): The
right to a speedy disposition of cases applies to all judicial,
quasi-judicial, and administrative bodies. COA’s inordinate delay of over
three years constituted a violation of this constitutional right.
- Good
Faith and Public Officials' Liability: Public officers are not liable
for damages when acting in good faith in the performance of their duties,
especially when their decisions aim to fulfill statutory mandates in the
absence of malice.
This case is classified under Remedial Law due to its
focus on procedural matters and the remedies available to PSALM against COA's
actions.
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🎓 Welcome, future lawyers
and legal professionals! This educational content will guide you through a
landmark Supreme Court jurisprudence involving government auditing powers,
contractual legality, and constitutional rights. Our focus: Power
Sector Assets and Liabilities Management Corporation (PSALM) v. Commission on
Audit (COA), G.R. No. 247924, promulgated November 16, 2021.
This case explores the legality of hiring private legal
consultants without COA's prior written concurrence, despite OGCC approval, and
whether COA’s 3-year delay amounts to grave abuse of discretion. The
Supreme Court ruled in favor of PSALM, citing the constitutional right to speedy
disposition of cases and excused the absence of concurrence due to COA’s
inaction.
👉 This video is
designed for law students, Bar examinees, and legal enthusiasts who want a fast
but solid recall of essential doctrines in remedial and administrative law.
🧠 Should government
agencies be penalized for bypassing audit protocols when delays from the
auditor cripple national projects? Share your thoughts below! 💬
📚 TOP 10 DOCTRINES
FROM THE CASE (Based on the attached SC Decision)
- COA
Concurrence Is Required Even for Advisory Services
Hiring private lawyers by GOCCs still needs COA’s prior written concurrence—even when the services are non-litigious. (COA Circular Nos. 86-255, 95-011) - COA
Concurrence is a Form of Pre-Audit
The Court classified COA's written concurrence as a pre-audit measure under its constitutional authority to safeguard public funds. - Delay
Violates Right to Speedy Disposition of Cases
COA's 3-year delay in resolving PSALM’s request violated the constitutional right to a speedy disposition under Art. III, Sec. 16. - Grave
Abuse of Discretion Defined
COA committed grave abuse by denying concurrence solely due to its own delay, acting arbitrarily and oppressively. - Personal
Liability of Officers Requires Bad Faith
Government officers are only personally liable if there’s clear malice, bad faith, or gross negligence. Here, PSALM officers acted in good faith. - Quantum
Meruit is Not Automatically Applicable
The Court ruled that while COA generally bars payment without prior concurrence, it may not apply when public interest and equity demand otherwise. - Pre-audit
May Be Reinstated by COA at Its Discretion
Despite circulars lifting pre-audit, COA retains the discretion to re-implement it under exceptional circumstances. - Doctrine
of Primary Jurisdiction of COA
COA has exclusive jurisdiction to determine its audit scope, including whether to require pre- or post-audit. Courts respect this unless grave abuse is shown. - Compliance
with OGCC Does Not Substitute COA Concurrence
Even with OGCC approval, COA concurrence is still separately required, unless exempted by later circulars. - 60-Day
Rule to Resolve Requests
Under PD 1445 and COA’s own rules, audit requests should be resolved within 60 days. Non-compliance without valid justification constitutes neglect.
⚖️ CASE TITLE: Power
Sector Assets and Liabilities Management Corporation (PSALM) vs. Commission on
Audit (COA)
G.R. No. 247924 | Date: November 16, 2021
Nature: Remedial Law / Administrative Law –
Government Audit and Public Funds
🛡️ DISCLAIMER:
This content is for educational purposes only. It does not
guarantee legal accuracy or infallibility. Generated using premium artificial
intelligence.
📌 FREQUENTLY ASKED
QUESTIONS (FAQs)
- Q:
Can COA deny payment just because it wasn't consulted first?
A: Normally yes, but not when its own inaction caused the lack of concurrence. - Q:
Does COA concurrence apply to all legal services?
A: Yes, including non-litigious or advisory services, unless exempted by COA Circular 2021-003. - Q:
Can PSALM officers be sued for the disallowed payments?
A: Not in this case. The Supreme Court ruled they acted in good faith. - Q:
Is COA’s delay a legal defense?
A: Yes. Inordinate delay may amount to grave abuse of discretion, excusing technical non-compliance. - Q:
Is pre-audit mandatory for all transactions?
A: No. COA may impose or lift it, depending on internal control deficiencies.
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thoughts, Save this post, and Subscribe for more Bar Review content and
latest SC decisions!
📚 Nature of the Case:
This is a Remedial Law and Administrative Law case focusing on
government audit, public accountability, and the procedural safeguards when
hiring legal consultants using public funds.
🧾 Brief Case Summary:
PSALM hired private legal consultants to assist in its
privatization mandate under the EPIRA. While it obtained approval from the
OGCC, it did not receive prior written concurrence from COA—due to COA’s delay
of over three years. COA later disallowed the payments and held PSALM officers
personally liable. The Supreme Court reversed COA’s rulings, declaring that COA
committed grave abuse of discretion and upheld the officials’ good
faith.
📌 The answer key will be
provided at the end of the video, so stay tuned and test your understanding of
this landmark case.
📝 10 HOTS (Higher
Order Thinking Skills) Multiple Choice Questions – EASY DIFFICULTY
- What
was the main legal issue in the PSALM vs. COA case?
A. Whether PSALM’s officers had the proper legal education
B. Whether PSALM needed OGCC approval to engage private lawyers
C. Whether COA’s delayed response justified the lack of prior concurrence
D. Whether PSALM's contracts violated procurement laws - Why
did PSALM decide to proceed with hiring the legal consultants?
A. It was instructed to do so by the President
B. OGCC and COA gave immediate concurrence
C. There was an urgent need to comply with privatization timelines
D. The consultants were already under government payroll - What
type of legal services did the hired consultants provide?
A. Court litigation and representation
B. Criminal defense
C. Advisory services on privatization documents
D. Public bidding for government contractors - Which
of the following best describes COA’s error, according to the Supreme
Court?
A. COA failed to draft a new circular
B. COA improperly reduced the consultancy fees
C. COA gravely abused its discretion due to inordinate delay
D. COA failed to report the consultants to the Ombudsman - What
constitutional right did the Court say was violated by COA’s delay?
A. Right to due process
B. Right to privacy
C. Right to a speedy disposition of cases
D. Right to information - Under
the Supreme Court ruling, when may public officials be personally liable
for payments?
A. Only when they are late in remitting taxes
B. If they are proven to have acted with bad faith or malice
C. When COA disallows a transaction regardless of reason
D. If they ignore the recommendation of the Ombudsman - Which
government body initially approved PSALM's engagement of the private
legal consultants?
A. Civil Service Commission
B. Office of the Government Corporate Counsel
C. Commission on Human Rights
D. Supreme Court - According
to the Court, what was the nature of COA’s written concurrence
requirement?
A. It was purely ceremonial
B. It had no legal basis
C. It was equivalent to a pre-audit control
D. It only applied to criminal cases - What
justification did PSALM offer for proceeding without COA's concurrence?
A. The consultants had worked pro bono
B. COA had permanently lifted all pre-audit controls
C. COA failed to respond within the time requested
D. The lawyers were also employed by other government agencies - What
doctrine did the Supreme Court emphasize when excusing PSALM’s
non-compliance?
A. The doctrine of stare decisis
B. The principle of separation of powers
C. The doctrine of quantum meruit
D. The principle of speedy public service
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