Did the Nayong Pilipino board comply with requirements to protect the State’s interests?

I write in response to the statements made by Department of Finance Undersecretary Bayani Agabin, which were cited in the article of Mr. Julito G. Rada entitled “Nayong Pilipino subject to bidding” and posted on Sept. 7, 2018.

My comments on Mr. Agabin’s statements:

That the governing board of the GOCC (I.e, Nayong Pilipino Foundation’s Board) is still required to ensure that contracts are not grossly disadvantageous to the government:

This is correct. Regardless of whether there was public bidding or not, being government officers and employees, the governing board of the GOCC (ie, Nayong Pilipino Foundation) are duty-bound to protect the State’s interests over the corporation’s private interests.

On 9 March 2017 (after the issuance of GCG Memo Circular 2018-02), I, as then Government Corporate Counsel, issued a Contract Review No. 102 Series of 2018 stated that lease can only go so far as twenty five (25) years and not seventy five (75) years, as intended by Nayong Pilipino Foundation.

I, through said Contract Review, also imposed twelve (12) conditions precedent before Nayong Pilipino Foundation can enter into its intended lease, which conditions include, among others that:

a. Nayong Pilipino Foundation should further negotiate the increase of rental rates and ensure that the same is fair, reasonable, and most importantly, not disadvantageous to the government.

b. Before executing the Contract of Lease, the lessee, should be compliant with relevant laws such as, Republic Act. No. 9593 and Republic Act No. 7652;

Ensure that the property or part thereof will be utilized as a cultural park;

Value Added Tax is assumed by the lessee;

e. To include an annual escalation clause of the monthly rent based on the inflation rate;

f. To include a standard lease provision allowing Nayong Pilipino Foundation to repossess the property without the need of judicial suit;

g. To require the lessee to pay the correct amount of national and local taxes.

Unfortunately, however, I do not know if the Nayong Pilipino Foundation’s Board complied with these requirements to protect the State’s interests.

With regard to Undersecretary Agabin’s statements that the GCG Memo Circular 2018-02 (“MC 2018-02”) did not revoke GCG Memo Circular (“MC 2013-03”), because (1) the latter did not require public bidding as a mode of procurement (insofar as the Nayong Pilipino Foundation’s intended lease is concerned) in the first place; and (2) MC 2018-02 never stated that public bidding should no longer be requirement as a method of procurement for lease contracts of GOCCs:

Paragraph 4.1 (b) (i) of the MC 2013-03 very clearly states that lease agreements exceeding ten (10) years and involving at least one (1) hectare of land should undergo public bidding, thus:

“4.1 xxx

(b) Lease agreements exceeding ten (10) years entered into pursuant to the business model/primary purpose of the GOCC, subject to the following guidelines:

I. Leasing of areas involving at least one (1) hectare shall be bidded out”1

Since Nayong Pilipino Foundation’s intended lease involved an area of 9.5 hectares for more than ten (10) years, I, as the then Government Corporate Counsel (“GCC”) issued a letter legal opinion dated 29 November 2017 requiring Nayong Pilipino Foundation to undergo public bidding.

Because MC 2018-02 revoked (a word which literally means “to put an end to the validity or operation of”) MC 2013-03, it goes without saying that paragraph MC 2013-03’s paragraph 4.1 (b)(i), which required public bidding for intended lease, was likewise revoked.



Former Government Corporate Counsel

Topics: Bayani Agabin , Julito Rada , Nayong Pilipino , Department of Finance
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