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SUBJECT : Disallowance of claims for payment for services rendered in connection with the
settlement of war claims of provinces by the Treasurer of the Philippines.
With reference to the withholding of payment for serviced rendered in connection with
settlement of war claims of certain provinces by the Treasurer of the Philippines, which was the
subject matter of COA Circular No. 75-7 dated October 29, 1975, there is quoted in full
hereunder, for the information and guidance of all concerned, the self-explanatory 2nd
indorsement of the Office of the President, dated January 13, 1976, relative to said claims, to
wit:
"2nd Indorsement
Jan. 13, 1976
Respectfully returned to the Honorable, the Acting Chairman,Commission
on Audit, Quezon City.
This refers to the reimbursement by the United States (U.S.) Government
of advances made during World War II by eleven Philippines provinces to units of
the U.S. Armed Forces in the Far East (USAFFE) in the partial amount of some
P4.4 million, 20% of which--- or a total sum of P883,013.81--- is now being
claimed by Adelaida D. Banez as remuneration for alleged services rendered
leading to the refund in question.
Under several contracts executed during the period from May 4, 1964 to
November 18, 1969, eleven provinces, viz. Aklan, Batanes, Capiz, Ilocos Norte,
Ilocos Sur, La Union Nueva Vizcaya, Pangasinan, Romblon, Zamboanga del
Norte and Zamboanga del Sur as principals, appointed Banez as their common
agent to work for settlement of their respective claims for reimbursement of
advances made to USAFFE units during the last global war I the condition that
said agent would be paid a fee equivalent to 20% whatever amounts the U.S.
Government would refund pursuant to Article 5-a of the Agreement date
September 11, 1946, between the American and Philippine Government as
ratified by the now defunct Congress in its Republic Act No. 33 approved on
September 27, 1946, as amended by Republic Act No. 3149 approved on June
17, 1961. Of the claims confirmed by the U.S. Government for payment totalling
P5,858,084.63, the sum of P1,443,015.55 had already been released and
actually paid to date to claimant provinces.
Sometime in 1967, Banez received 20% of the initial payment of
P109,662.32 to the Province of Romblon on the strength of an opinion dated
August 4, 1967, of this Office sustaining the validity of her contract dated
February 4, 1965, with the province. In said opinion, this Office held that,
following precedent (Decision Re: Claim of Atilano Cinco against the Prov. of
Leyte dated March 5, 1963, Office of the President) on the matter, the Province
of Romblon could legally enter into contracts to protect its property rights (Sec.
2067 [g], Rev. Adm. Code [Act No. 2711]) and appropriate money for purposes
not specified by law if it would redound to its general welfare and that of its
inhabitants (Sec. 3 [a], Local Autonomy Act [Rep. Act No. 2264]), and that under
the equitable principle on quasi- contract that no one must be unjustly enriched at
the expense of another (Art. 2142, New Civil Code [Rep. Act No. 386]), the same
province was bound-after having been reimbursed-to make good its contractual
promise to remunerate Banez for services rendered and expenses incurred by
her in (1) researching the validity of the claim of the province against the
USAFFE fund; (2) collecting pertinent data and papers; (3) securing certified true
copies of supporting documents; (4) following-up the papers covering the claim in
the U.S. Embassy, Department of Finance, Office of the President and other
government offices; (5) conferring with appropriate government officials; (6)
making representations with various authorities to secure allotments for the
payment of the claim; and (7) performing other acts leading toward the
successful prosecution of said claim.
Having been appraised of the processing for release of the unpaid
balances aggregating P4,415,069.08 still due the eleven provinces involved,
Banez wrote the Treasurer of the Philippines in the early part of this year
requesting that her fees totalling P883,013.81 representing 20% of the
refundable amounts be deducted therefrom and paid directly to her. In his letterreply dated June 16, 1975, however, the Treasurer held that case involved
private transactions between Banez and the provinces concerned wherein the
Bureau of Treasury was not privy, and suggested that the request for settlement
of the fees be directed to the same provinces. In a separate letter dated May 30,
1975, the Treasurer sought the comment of the Acting Chairman, Commission on
Audit, on such contracts for enormous fees "in connection with the filing,
processing and approval of said claims" which he hinted to be unnecessary in the
light of his observation that, on the basis of Army and Treasury records, the
provincial officials, particularly the provincial treasurers and auditor, were the
ones who undertook the submission of documents supporting the claims of their
respective provinces, that the processing of said claims washandled and
confirmed by the Armed Forces of the Philippines Accountability Investigation
Board, and that the final approval of the same claims was undertaken by the
Department of Finance.
The case was thereafter elevated by Banez to this Office. Pending
resolution thereof, however, the Acting Chairman of the Commission on Audit
furnished this Office with his comment and recommendation thereon in his 1st
indorsement dated October 29, 1975. Noting that under Section 2 of Republic
Act No. 3149 which took effect on June 17, 1961, inserting Section 7-A between
Sections 7 and 8 of Republic Act No. 369 approved on June 10, 1949, the
amount of P5 million was turned over by the Development Bank of the
Philippines to the Treasurer of the Philippines for payment of the provincial
advances to USAFFE units, and that the Banez contracts were entered into after
June 17, 1961, the Acting Chairman opined that "the cause or object thereof
(contracts) no longer existed" at the time of their execution in as much as Banez
undertook thereunder to work for settlement of claims which were already
authorized for payment form funds already in the hands of, and held in trust for
claimant provinces by, the National Government, and which claims, therefore,