Budget Secretary Benjamin E. Diokno was referenced by former Chief of the Office of the Government Corporate Counsel (OGCC), Rudolf Jurado in an interview on September 3, 2018, claiming that he, along with Finance Secretary Sonny Dominguez, “removed bidding process on [the] Nayong Pilipino contract.”

“We should not distract ourselves from the main issue here.” Secretary Ben remarked. “Ultimately, it is the GOCC governing board that has full responsibility and accountability for its decisions.”

The controversy stemmed from the Contract Review by the OGCC where Jurado cited GCG Memorandum Circular (MC) No. 2018-02 as the basis for allowing the Nayong Pilipino Foundation Incorporated (NFPI) to lease the land even without public bidding.

A review of the facts and law on the matter contradicts Jurado’s position. In fact, an investigation by the Department of Justice (DOJ) has concluded that the NFPI lease contract with Landing Resorts Philippines Development Corporation (LRPDC) is void ab initio or has no legal effect from the beginning.

According to the DOJ report, the contract is a build-operate-transfer (BOT) contract disguised as a lease contract, the implication of which is that the same should comply with the BOT law, which includes public bidding.

In the interview, Jurado cited GCG MC 2018-02 which revoked a prior MC No. 2013-03 (Re-Issued), which specifically provides for the public bidding requirement for land bigger than a hectare to be leased for more than 10 years.

The revocation of which was misconstrued by Jurado to mean that public bidding is no longer necessary. On the contrary, it only emphasized the applicability of Executive Order No. 301, s 1987 on the lease of government property for private use, which authorizes the heads of the agency, to determine the reasonableness of the terms of the lease and the rental rates and enter into such lease contracts.

This was reiterated in GCG MC 2018-02, which expressly recognized that though the proposed Major Development Projects and Contracts of GOCCs lie within the sound business judgment of the respective governing boards of the GOCCs, they are still mandated by existing laws, rules, and regulations to exercise extraordinary diligence in the conduct of business and in dealing with the properties of their respective GOCCs.  

In fact, the Governing Boards of GOCCs are constituted under Republic Act No. 10149, or the GOCC Governance Act of 2011, as “fiduciaries of the State,” with the “legal obligation and duty to always act in the best interest of the GOCC, with utmost good faith” and who “must exercise extraordinary diligence of a very cautious person with due regard for all the circumstances.”

Moreover, GOCCs are required to secure a favorable legal opinion/contract review by the OGCC before entering into the said agreements and not merely rely on GCG MC No. 2018-02. As such, there is no such blame to be shifted in this instance; the NFPI Board and OGCC have the last say on the matter.

(30)