Macalino vs. Commission on Audit

The constitutional prohibition under Article IX-B, Section 6 against the appointment of losing candidates to any government office within one year after the election applies to all forms of government engagement—including contracts of service and consultancy arrangements—regardless of the place or jurisdiction of the office to which the losing candidate is appointed, and the principle of quantum meruit does not reduce the recipient's civil liability where the engagement blatantly circumvented a constitutional prohibition.

Macalino is a member of the Philippine Bar who ran for vice mayor of San Fernando City, Pampanga, in the May 2013 elections and lost. Article IX-B, Section 6 of the 1987 Constitution prohibits losing candidates from being appointed to any office in the Government or any government-owned or controlled corporation or their subsidiaries within one year after the election. Section 94(b) of Republic Act No. 7160, the Local Government Code of 1991, mirrors this prohibition, except for losing candidates in barangay elections. The Civil Service Commission has issued guidelines distinguishing between contracts of service and consultancy arrangements—which under CSC Resolution No. 93-1881 and CSC Memorandum Circular No. 38, series of 1993, are not covered by the Civil Service Law—and regular plantilla appointments, which require CSC approval. CSC Resolution No. 020790 further prohibits hiring personnel under a contract of service or job order to perform functions pertaining to vacant regular plantilla positions.

Macalino, a member of the Philippine Bar, ran for vice mayor of San Fernando City, Pampanga, in the May 2013 elections and lost. On July 1, 2013, barely two months after his electoral defeat, the Municipal Government of Mexico, Pampanga, through Mayor Roy D. Manalastas, entered into a contract of service with Macalino for him to perform the duties of Legal Officer II from June 1, 2013 to July 30, 2014, with a monthly salary of PHP 26,125.00. The contract designated Macalino's position as "Legal Officer II (JO)" and enumerated his duties: formulating measures for the Sanggunian and providing legal assistance to the Mayor; developing plans and strategies for legal services-related programs; performing other related legal services as directed by the Mayor or Sanggunian; standing for the protection of human rights and prosecuting violations in times of disaster and calamity; and exercising such other powers and performing such other duties as prescribed by law or ordinance.

On March 28, 2014, the Office of the Audit Team Leader of Audit Group H – Team 6, COA, issued Notice of Disallowance No. 14-001-100-(13) addressed to Mayor Manalastas, disallowing the PHP 149,015.00 representing wages and Personnel Economic Relief Assistance (PERA) received by Macalino for the period July 1 to December 31, 2013. The ND stated that the amount was paid to a losing candidate in the May 2013 elections in violation of Article IX-B, Section 6 of the Constitution and Section 94 of the Local Government Code. Eight persons were held liable for the return of the disallowed sum: Leonila S. Ignacio (Human Resource Officer), Alice A. Reyes (Municipal Budget Officer), Perlita T. Lagman (Municipal Accountant), Emmanuel R. Manalo (Municipal Administrator), Roy D. Manalastas (Municipal Mayor), Maritess B. Miranda (Disbursing Officer), Avelina P. Reyes (Municipal Treasurer), and Atty. Raul F. Macalino (Legal Officer II, JO).

Macalino appealed to the COA Regional Office No. III, which affirmed the ND in its Decision dated November 12, 2014, stating that his designation as Legal Officer II violated the Constitution, the Local Government Code, and CSC Memorandum Circular No. 40-98. On March 19, 2015, Macalino filed an appeal before the Adjudication and Settlement Board of COA, which the COA Proper treated as a petition for review. On August 9, 2019, the COA Proper denied the petition, affirming the ND but excluding Miranda, the disbursing officer, from liability. A Resolution dated January 21, 2020 denied reconsideration. Macalino then elevated the matter to the Supreme Court via a Petition for Certiorari under Rule 64 in relation to Rule 65, seeking to reverse and set aside the COA Proper's rulings.

• Nature of Appointment: Petitioner argued that his engagement was under a contract of service rather than a permanent appointment, and therefore fell outside the coverage of the one-year constitutional and statutory prohibition against appointing losing candidates.
• Oath of Office: Petitioner contended that taking an oath of office is a qualifying requirement for public office and a prerequisite to full investiture; since his contract of service did not require an oath, he was never appointed to a public office within the meaning of the prohibition.
• Different Jurisdiction: Petitioner maintained that there was no circumvention of the one-year ban because he ran and lost in San Fernando City, Pampanga, while he was appointed in Mexico, Pampanga—a different local government unit.
• Consultancy Status: Petitioner asserted that under CSC Resolution No. 93-1881 and CSC Memorandum Circular No. 38, series of 1993, a contract for consultancy services is not covered by the Civil Service Law and its rules; that no employer-employee relationship existed between him and the municipality; and that his engagement as a consultant was thus outside the one-year ban.
• Good Faith: Petitioner claimed he entered into the Contract of Service in good faith and should not be faulted for the appointment.

• Applicability of the One-Year Prohibition: Whether the constitutional and statutory prohibition against the appointment of losing candidates to any government office within one year after the election applies to a losing candidate hired under a contract of service in a different locality from where he ran and lost.
• Nature of Engagement: Whether Macalino's engagement as a contractual Legal Officer II constitutes an appointment to a government office or merely a consultancy arrangement outside the coverage of the Civil Service Law.
• Civil Liability and Quantum Meruit: Whether Macalino and the approving and certifying officers are civilly liable to return the disallowed amount, and whether the principle of quantum meruit should reduce such liability.

• Applicability of the One-Year Prohibition: Yes. The prohibition applies to all losing candidates regardless of the nature of the appointment and the place or jurisdiction of the office, the Constitution and the Local Government Code employing the broad phrase "any office in the Government" without distinction.
• Nature of Engagement: No, Macalino was not merely a consultant. His contractual duties were substantially similar to those of a regular plantilla Legal Officer under Section 481 of the Local Government Code, and the contract itself certified that his duties pertained to a vacant regular plantilla position, additionally violating CSC Resolution No. 020790.
• Civil Liability and Quantum Meruit: Yes. Macalino is solidarily liable with the erring approving and certifying officers, excluding Miranda, for the return of PHP 149,015.00. Quantum meruit does not apply because the contract blatantly circumvented a constitutional prohibition that a member of the bar is presumed to know.

• Applicability of the One-Year Prohibition: Article IX-B, Section 6 of the Constitution and Section 94(b) of the Local Government Code expressly prohibit losing candidates from being appointed to "any office in the Government or any government-owned or controlled corporations or in any of their subsidiaries" within one year after the election. Under the plain-meaning rule or verba legis, constitutional and statutory provisions that are clear, plain, and free from ambiguity must be given their literal meaning and applied without attempted interpretation. The maxim ubi lex non distinguit, nec nos distinguere debemus further dictates that no distinction should be made where the law makes none. The drafters' use of the general phrase "any office" without qualification evinces an intent to encompass all forms of government engagement. The raison d'être for the prohibition is two-fold: to thwart the pernicious practice of rewarding "political lame ducks" with government appointments, and to recognize political will—the electorate's rejection of the losing candidate means the people did not want that person to occupy public office. Allowing a losing candidate to be immediately appointed would flout the electorate's volition. The prohibition therefore applies regardless of whether the appointment is permanent or contractual, and regardless of whether the office is in the same or a different jurisdiction from where the candidate ran and lost.

• Nature of Engagement: Macalino's argument that he was merely a consultant fails on multiple grounds. First, the Contract of Service expressly listed duties—formulating measures for the Sanggunian, developing plans for legal services-related programs, performing related legal services as directed by the Mayor or Sanggunian, protecting human rights—that mirror those of a regular plantilla Legal Officer under Section 481 of the Local Government Code. The contract itself certified that "the specific duties to be performed by the hiree specified in his Contract of Service are those pertaining to the vacant regular plantilla position," which directly violates CSC Resolution No. 020790 prohibiting the hiring of personnel to perform functions pertaining to vacant regular plantilla positions under a contract of service. Second, the duties go beyond the scope of a consultant, as they involve active participation in the formulation and implementation of policies and programs, not merely providing professional advice. Third, even assuming Macalino could be engaged as a legal consultant, his appointment was invalid for failure to comply with COA Circular No. 98-002, which prohibits local government units from using public funds to pay for private legal counsel except in limited instances under Section 481(b)(3)(1) of the Local Government Code, and requires the written conformity of the Solicitor General and the written concurrence of COA before hiring private counsel—requirements not shown to have been satisfied.

• Civil Liability and Quantum Meruit: Under the Torreta guidelines on the return of disallowed amounts in cases involving unlawful or irregular government contracts, approving and certifying officers who acted in good faith are not civilly liable, while those shown to have acted with bad faith, malice, or gross negligence are solidarily liable with the recipients. The quantum meruit principle may reduce civil liability on a case-to-case basis. However, the Court declined to apply quantum meruit here. Unlike prior cases where the principle was applied to innocent parties in irregular government contracts, this case involves a blatant circumvention of a basic constitutional prohibition which any lawyer should know. Macalino, as a member of the bar, is presumed to know the law and cannot claim ignorance or good faith. The contracting parties were skirting the constitutional prohibition by entering into a contractual engagement in lieu of a government appointment. To allow recovery under a constitutionally infirm contract would sanction a breach of the fundamental law. Drawing from Frenzel vs. Catito and Beumer vs. Amores, the Court held that equity follows the law and will not permit indirectly what public policy prohibits directly; one who is a party to an illegal contract cannot seek equitable relief. The Torreta guidelines' adoption of quantum meruit was never intended to sanction manifest or palpable violations of law, especially constitutional ones or those involving clear public policy. The clean hands doctrine further bars relief, as Macalino's conduct was inequitable and dishonest.

• Plain-Meaning Rule (Verba Legis) — Where the language of the Constitution or a statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. The presumption is that the words employed correctly express the intent or will of the framers or legislature. Verba legis non est recedendum—from the words of a statute there should be no departure. The Court applied this to hold that the phrase "any office in the Government" in Article IX-B, Section 6 of the Constitution and Section 94(b) of the Local Government Code encompasses all forms of government engagement, including contractual ones.

• Ubi Lex Non Distinguit, Nec Nos Distinguere Debemus — Where the law does not distinguish, courts should not distinguish. No distinction should be made in the application of the law where none has been indicated by the lawgiver. The Court invoked this maxim to reject Macalino's arguments that the one-year prohibition should not apply to contracts of service or to appointments in a different jurisdiction from where the candidate lost.

• Torreta Guidelines on Return of Disallowed Amounts — In cases involving unlawful or irregular government contracts: (1) If the ND is set aside, no return is required from any person held liable. (2) If the ND is upheld: (a) approving and certifying officers who acted in good faith, in the regular performance of official functions, and with the diligence of a good father of the family are not civilly liable, consistent with Section 38 of the Administrative Code of 1987; (b) those clearly shown to have acted with bad faith, malice, or gross negligence are solidarily liable with the recipients, pursuant to Section 43 of the Administrative Code; (c) civil liability may be reduced by amounts due to the recipient based on quantum meruit on a case-to-case basis; (d) these rules are without prejudice to more specific provisions of law, COA rules, and accounting principles. The Court applied these guidelines but excluded quantum meruit relief where the contract blatantly circumvented a constitutional prohibition.

• Equity Follows the Law — Equity will not permit that to be done indirectly which, because of public policy, cannot be done directly. A party to a contract that violates the Constitution cannot recover under equitable doctrines such as quantum meruit or unjust enrichment. The Court applied this principle, drawing from Frenzel vs. Catito and Beumer vs. Amores, to deny Macalino any reduction of liability.

• Clean Hands Doctrine — He who seeks equity must do equity, and he who comes into equity must come with clean hands. A litigant may be denied equitable relief where his conduct has been inequitable, unfair, dishonest, fraudulent, or deceitful. The Court applied this to deny quantum meruit relief to Macalino, whose engagement constituted a deliberate circumvention of a constitutional prohibition.

• "It is the duty of the Court to apply the law as it is worded." — States the Court's foundational posture in this case, anchoring its refusal to carve out exceptions to the constitutional prohibition based on the nature of the appointment or the jurisdiction of the office.

• "The prohibition against losing candidates is a recognition of political will—it means that the people rejected the losing candidate and did not want him or her to occupy a public office. Thus, the electorate's volition will be flouted if a candidate is immediately appointed to an office in the government after losing an election bid." — Articulates the policy rationale behind the one-year prohibition, explaining why the rule must be applied broadly to all forms of government engagement.

• "To allow Macalino to recover under a constitutionally-infirm contract would effectively sanction a breach of our fundamental law which cannot be allowed." — The Court's key reasoning for denying quantum meruit relief, distinguishing this case from prior applications of the doctrine where innocent parties were involved.

• "Equity as a rule will follow the law and will not permit that to be done indirectly which, because of public policy, cannot be done directly." — The canonical formulation of the equity-follows-the-law principle, quoted from Frenzel vs. Catito, applied to bar recovery under a contract that circumvented the constitutional one-year prohibition.

• Francisco, Jr. vs. House of Representatives, 460 Phil. 830 (2003) — Followed for the principle that constitutional provisions are to be given their ordinary meaning, as the Constitution is not primarily a lawyer's document but that of the people. The Court relied on this to support its verba legis approach to interpreting Article IX-B, Section 6.

• Victoria vs. Commission on Elections, 299 Phil. 263 (1994) — Followed for the plain-meaning rule in statutory construction, holding that where a statute is clear, plain, and free from ambiguity, it must be given its literal meaning. Applied to Section 94(b) of the Local Government Code.

• Dr. Posadas vs. Sandiganbayan, 714 Phil. 248 (2013) — Followed for the explanation of the nature of appointments under CSC Resolution No. 93-1881 and CSC MC No. 38, series of 1993, regarding consultancy services and the absence of employer-employee relationship. The Court used this to distinguish consultancy from Macalino's actual duties.

• Torreta vs. Commission on Audit, G.R. No. 242925, November 10, 2020 — Controlling precedent. The Court adopted and applied the Torreta guidelines on the return of disallowed amounts in cases involving unlawful or irregular government contracts, including the rules on solidary liability and quantum meruit, but clarified that quantum meruit was never intended to sanction manifest violations of constitutional law.

• Frenzel vs. Catito, 453 Phil. 885 (2003) — Followed for the principle that equity follows the law and that a party to an illegal contract cannot recover, and that a contract violating the Constitution is null and void ab initio. Applied to deny quantum meruit relief to Macalino.

• Beumer vs. Amores, 700 Phil. 90 (2012) — Followed for the clean hands doctrine, holding that a litigant may be denied equitable relief where his conduct has been inequitable, unfair, dishonest, fraudulent, or deceitful. Applied to bar Macalino's claim for equitable reduction of liability.

• Article IX-B, Section 6, 1987 Constitution — Prohibits losing candidates from being appointed to any office in the Government or any GOCC or their subsidiaries within one year after the election. Applied to disallow Macalino's wages as a contractual Legal Officer II, the Court holding that the phrase "any office" encompasses contractual engagements.

• Section 94(b), Republic Act No. 7160 (Local Government Code of 1991) — Statutory counterpart of the constitutional prohibition, excepting only losing candidates in barangay elections. Applied alongside the constitutional provision to sustain the disallowance.

• Section 481, Local Government Code — Defines the qualifications, terms, powers, and duties of a legal officer of a local government unit. Used as the benchmark to compare with Macalino's contractual duties and demonstrate that they pertained to a regular plantilla position rather than a consultancy.

• CSC Resolution No. 020790 (June 5, 2002) — Prohibits hiring personnel to perform functions pertaining to vacant regular plantilla positions under a contract of service or job order. Applied to show that Macalino's hiring was additionally invalid, as the contract certified that his duties pertained to a vacant regular plantilla position.

• COA Circular No. 98-002 (June 9, 1998) — Prohibits the use of public funds for payment of private legal counsel without the written conformity of the Solicitor General and the written concurrence of COA, except in limited instances under Section 481(b)(3)(1) of the Local Government Code. Applied to show that even if Macalino were a consultant, his engagement was invalid for non-compliance with these requirements.

• Section 38, Administrative Code of 1987 (Executive Order No. 292) — Provides that public officers are not civilly liable for acts done in the performance of official duties absent a clear showing of bad faith, malice, or gross negligence. Applied under the Torreta guidelines to determine the civil liability of the approving and certifying officers.

• Section 43, Administrative Code of 1987 — Provides for solidary liability for illegal expenditures: every official or employee authorizing or making an illegal payment, and every person receiving such payment, shall be jointly and severally liable to the Government. Applied under the Torreta guidelines to hold Macalino and the erring officers solidarily liable.

Gesmundo, C.J., Leonen, SAJ., Caguioa, Hernando, Lazaro-Javier, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Dimaampao, and Kho, Jr., JJ., concurred. Inting, J., was on official leave. Singh, J., was on official business.

Justice Leonen concurred in the result but filed a concurring and dissenting opinion limited to the issue of civil liability, arguing that the principle of quantum meruit should have been applied to equitably reduce Macalino's civil liability and that the case should have been remanded to the COA for such determination.

• Justice Leonen — In a concurring and dissenting opinion, Justice Leonen agreed with the majority on the propriety of the disallowance but dissented on the issue of civil liability. Citing Torreta vs. Commission on Audit, he posited that the principle of quantum meruit should be applied to equitably reduce Macalino's civil liability and that the case should be remanded to the COA for such determination, consistent with the equitable purpose of the doctrine to prevent unjust enrichment by the government.