Contract of Lease between PAGCOR and PAL Covering a 10-Hectare Property to Be Developed and Used by PAL as Aircraft Parking Facility

DOJ OPINION NO. 001, s. 2017 December 7, 2016 Ms. Andrea D. Domingo Chairman and Chief Executive Officer Philippine Amusement and Gaming Corporation (PAGCOR) 1330 Roxas Boulevard Ermita, Manila 1000 Dear Chairman Domingo : This refers to your request for opinion on the query stated therein relating to the Contract of Lease ("Contract") between PAGCOR and Philippine Airlines ("PAL") entered into in August 2014 and covers ten hectares of property to be developed and utilized by PAL as an aircraft parking facility ("Facility"). You state that on March 2015, PAGCOR reminded PAL about the Facility which should be operational by November 2015 in time for the Asia Pacific Economic Cooperation Summit, which was the "underlying rationale" for the Contract; and that it was only in March 2016 that PAL's contractor requested for possession of the site to start preliminary activities for construction. You also state that payment of monthly rental started on 5 May 2015 with the payment by PAL of one-month advance rental and five-months security deposit; PAGCOR put on hold billing PAL of the monthly rental pending direction from management; and that on April 2016, PAGCOR's Board instructed the referral of the Contract to the Office of the Government Corporate Counsel (OGCC) for legal opinion. You further state that PAGCOR's management believes that the terms and conditions of the Contract, particularly, the rental rate and the one-year rental-free period, are disadvantageous to PAGCOR and the Government. Hence, the request for opinion. Specifically, you inquire on the propriety of rescinding the Contract due to PAL's failure to comply with its obligations therein. With regret, we are constrained to decline the rendition of the requested opinion for the reasons below. First, the resolution of the issue raised involves substantive rights of a private party, i.e., PAL. Please note that the opinion of the Secretary of Justice is merely advisory in nature. This will not be binding upon private parties who may adversely be affected thereby and contest the same before the courts. Therefore, the Secretary of Justice refrains from rendering opinions on questions that are justiciable in nature or may be the subject of litigation before the courts. 1 Second, the resolution of the issue will also necessarily involve a review and interpretation of the Contract and the underlying agreement between PAGCOR and PAL. As a matter of policy, the Secretary of Justice does not render legal opinion or advice on issues which necessitate interpretation of contracts or agreements because a review of such calls for the legal examination of the contract on a general basis. The mandate of the Secretary of Justice is to render opinion only on specific legal questions arising from the performance of powers and functions by the national government functionary requesting the opinion. 2 Third, a determination whether the terms and conditions of the Contract are disadvantageous to the Government is a not a pure question of law, but also of fact. As discussed above, this Department is limited to dealing only with specific legal questions. Finally, we also note that PAGCOR has referred the matter to the OGCC. By explicit provisions of law, the OGCC is the principal law office of all government-owned and controlled corporations, and "to enable it to discharge its functions as such, it shall be the duty of all said corporations to refer to it all important legal questions for opinion, advice and determination; all proposed contracts; and all important court cases for its services." 3 Accordingly, please find herewith attached a copy of our 1st Indorsement of even date, referring the matter to the OGCC for its instruction and appropriate action. Please be guided accordingly. Very truly yours, (SGD.) VITALIANO N. AGUIRRE II Secretary Footnotes 1. DOJ Opinion Nos. 47, 52, 51 and 77, series of 2006. 2. Id ., Nos. 16, 29 and 50, series of 2010. 3. Section 1 of Republic Act No. 2327 n , as amended; Section 1 of Presidential Decree No. 1415; Section 10, Chapter 3, Title III, Book IV of Executive Order No. 292. n Note from the Publisher: Written as Republic Act No. 1227 in the original document.