DOJ Opinion No. 043, s. 2001

DOJ OPINION NO. 043 , s. 2001 August 13, 2001 Secretary Vincent S. Perez Department of Energy Energy Center, Merritt Rd. Fort Bonifacio Metro Manila Sir : This Department is requested to render an opinion on certain issues relative to the bidding of the IPB-80 Project of the National Electrification Administration (NEA). Specifically, the issues raised are: "1. Given the findings of the NEA Resident Ombudsman and the SIC of falsification, forgery and misrepresentation by Nerwin in the submission of its bid and the subsequent recommendation by the Resident Ombudsman to disqualify and preclude Nerwin from being awarded the IPB-80 contract, can the NEA Board now be compelled by its external legal counsel, the Office of the Government Corporate Counsel (OGCC) to act in accordance with the recommendation made in its legal opinions? 2. Notwithstanding the issuance of said OGCC legal opinions, may the NEA Board declare a failure of bidding on the basis of the foregoing facts and consistent with all relevant laws, rules and regulations?" It appears that the issues raised above stemmed from the public bidding conducted by NEA (denominated as IPB-80) for the procurement of approximately 60,000 pieces of wood poles and 20,000 pieces of cross-arms for recipient electric cooperatives. IPB-80 which consisted of four (4) schedules or components PIA, PIB, PIC and P3, was to be funded by the proceeds of a loan from the Overseas Economic Cooperation Fund ("OECF"), hence, the approval of Japan Bank for International Cooperation (JBIC) is indispensable for the validity of the award of the IPB-80 contract. It is stated that of the thirteen (13) prospective bidders which signified their intention to participate in the bidding and submitted their respective pre-qualification documents and technical proposals, only four (4) bidders were found by the NEA Pre-qualification Bid and Award Committee ("PBAC') evaluators to have substantially qualified to join the Electronic Billboard Bidding, namely, (1) Tri-State Pole and Piling ("Tri-State"); (2) Goldpine Industries ("Goldpine"); (3) Koppers Timber Preservation Pty., Ltd. ("Koppers"); and (4) Nerwin Industries Corporation ("Nerwin"). Koppers, however, subsequently withdrew its bid, leaving Tri-State-Goldpine and Nerwin as the only pre-qualified bidders. It appears that Tri-State bidded only for schedules PIA, PIC and P3 while Goldpine bidded only for schedule PIB. Nerwin, on the other hand, tendered bids for all schedules. The respective bids of the three pre-qualified bidders are tabulated as follows: Tri-State Goldpine Nerwin Schedule PIA $7,951,476.00 No bid $6,139,644.00 Schedule PIB No bid $3,608,307.00 $3,289,916.00 Schedule PIC $2,377,638.00 No bid $11,826,748.50 Schedule P3 $921,539.00 No bid $446,637.00 Total $11,250,653.00 $3,608,307.00 $11,702,965.50 Finding the bid of Nerwin to be the lowest bid, the NEA board passed on December 19, 2000 Resolution No. 32 approving the award by the NEA PBAC of the four (4) material schedules under IPB-80 to Nerwin but only for the reduced amount of fifty percent (50%) of the quantity required for delivery and the allocated balance of the loan for repeat orders of additional 5 and 10 MVA Substation Transformers and Substation Packages. The modified award was based on the report of the external consultant of the NEA finding Nerwin incapable of producing the required quantity of materials under IPB-80. When this action of the NEA Board was communicated to JBIC in order to secure the latter's approval thereof, the JBIC replied in a letter dated January 29, 2001 that such modified approval was "totally not acceptable" to it. DICcTa In the meantime, in a letter also dated January 29, 2001, Tri-State reiterated the contents of a letter it had earlier written charging Nerwin with submitting forged or falsified documents to support its pre-qualification bid documents for the IPB-80 bidding process. Based on this letter, the NEA Deputized Resident Ombudsman conducted an investigation of the alleged misrepresentations by Nerwin and found evidence to support allegations of Nerwin's alleged misrepresentations regarding its financial statements, plant capacity and bank account. Based on her findings, the Deputized Resident Ombudsman recommended in her Memorandum dated February 16, 2001 "that NERWIN INDUSTRIES CORPORATION be disqualified and precluded obtaining any award of contract". A Special Investigating Committee ( "SIC" ) was then formed by the NEA Administrator on February 20, 2001 to investigate the said charge. In a report prepared on the matter dated March 12, 2001, the SIC found basis to the allegations that Nerwin submitted falsified documents in the technical bid such as (1) financial statements for the years 1996 and 1998; (2) Income Tax Returns for the years 1996 and 1998; (3) Articles of Incorporation; and (4) financial position as of December 1994 and December 1995. Acting on the SIC Report, the NEA Board passed on March 26, 2001 Resolution No. 5 invalidating, canceling and revoking Resolution No. 32 and disqualifying Nerwin from participating in future NEA projects. Nerwin's Motion for Reconsideration of Resolution No. 5 was denied by the NEA Board on April 10, 2001, and thru the NEA Administrator, officially informed Nerwin of the same. CaDSHE On March 17, 2001, the NER Administrator requested the Office of the Government Corporate Counsel ("OGCC") to opine if it was then bound to a) declare a failed bid considering Nerwin's disqualification/invalidation of its bid and b) if there is no failed bidding, whether Schedules PIA, PIC and P3 should be awarded to Tri-State and PIB to Goldpine, given that Nerwin's disqualification left them as the next lowest bidders for those segments or components of IPB-80. In response to the above request of NEA, the OGCC, in its Opinion No. 070, s. 2001, said that (a) the disqualification of Nerwin and subsequent cancellation of its award is not legally tenable; (b) there was no failure of bidding for IPB-80; (c) the IPB-80 contract cannot be awarded to the next lowest bidders; and (d) NEA cannot, thru negotiation, award the IPB-80 contract to Tri-State and Goldpine. The OGCC, in its Opinion No. 118, s. 2001, denied NEA's request for a revision of Opinion No. 070, s. 2001. The OGCC reiterated its earlier view that Nerwin's disqualification and subsequent cancellation of award is not legally tenable. It stated further that there was no legal impediment to award the IPB-80 contract in full to Nerwin. Hence, the instant request. The first query is answered in the negative. The OGCC opinion is not binding on NEA. In the case of Orocio vs . Commission on Audit , 213 SCRA 109 (1992) , the Supreme Court, resolving the issue as to whether the legal opinion of petitioner OIC, Office of the General Counsel of NPC, which was relied upon for the disbursement in question, preclude or bar the Commission on Audit from disallowing in post-audit such disbursement, said: "We find petitioner's proposition to be a bit outlandish; he overrates the power of the General Counsel of the NPC and belittles the authority of the COA. While it may be true that Section 15-A of R.A. No. 6395 (charter of the NPC) provides that all legal matters shall be handled by the General Counsel of the Corporation, it by no means follows that all legal opinions of the General Counsel are ex-cathedral and binding upon all . In short, said provision does not confer upon him any degree of infallibility . It would have been dangerous if it were otherwise for not only would he be able to inextricably and unjustly bind the corporation or compel it to abide by his legal opinion even if it were wrong , he would also subordinate this Court to such opinion even if this Court is the final authority on how the law should be read. Petitioner's theory destroys the very essence of the public trust character of a public office. . . .". (Emphasis supplied) SAEHaC Applying the ruling to the instant case, it would appear that while the OGCC acts as the principal law office of all government-owned or controlled corporations, its legal opinion on any matter, however, is at best merely advisory, for it is the courts that will finally determine what the law means. Relevantly, in the Orocio case, the Supreme Court found "no basis for directly holding petitioner liable" although the legal opinion he rendered was made the basis for the disbursement of funds. The Court said that ". . . while it may perhaps be true that the petitioner had rendered the opinion which was relied upon for the disbursement, it cannot be said that he was directly responsible therefor. His was only a legal opinion which the governing board of the NPC or any of its authorized officials could adopt or reject . . ." ( Ibid ., at p. 125) With regard to the second query, we regret to have to decline rendition of opinion thereon for the following reasons: One . Any opinion that may be rendered on the issue would necessitate the interpretation of the IPB-80 award/contract. As a matter of policy and practice, the Secretary of Justice does not render opinion or give legal advice on issues involving the interpretation of contracts. By law, the Secretary of Justice renders opinion only on specific questions of law arising in the performance of the powers and functions of national government functionaries, such as the Department Heads and chiefs of bureaus and offices of equivalent rank ( Secretary of Justice Opinion No . 99, s . 2000; No . 64, s . 1999 ; No . 18, 1998 and No . 10, 1979 ). HaSEcA Two . A resolution of the query would necessarily involve the substantive rights of private parties Tri-State, Goldpine and Nerwin in this case, and since the opinion of the Secretary of Justice is merely advisory in nature, such opinion would not be binding upon said private parties who, if adversely affected by such opinion, may take issue therewith and contest it before the courts. As a matter of policy, therefore, the Secretary of Justice has consistently refrained from rendering opinion on questions which are justiciable in nature or those which may be the subject of litigation before the courts ( Ibid . , Nos . 10, 11 and 13, s . 2000; No . 112, s . 1999; No . 2, s . 1997; No . 46, s . 1981 ; No . 108, s . 1978; Nos . 19 and 92, s . 1971 ; No . 91, s . 1957 ). Three . The Deputized Resident Ombudsman, the Special Investigation Committee created by NEA, and the OGCC have already expressed their respective positions/opinions on the matter. The Secretary of Justice has consistently desisted from passing upon issues which have already been the subject of official action by other officials/offices over whose actuations he possesses no revisory authority (Ibid . , No . 28, s . 2000 ; No . 204, s . 1989 ; No . 91, s . 1982 ; No . 19, s . 1981 ; No . 9, s . 1980 ; No . 99, s . 1978 ; No . 137, s . 1977 and No . 40, s . 1975) . With regard to the OGCC, while it is an office under this Department and, therefore, its opinions may be reviewed by the Secretary of Justice in the exercise of his power of supervision and control, nonetheless, as a matter of policy and sound administrative practice, this Department has sparingly exercised its power of review over OGCC opinions particularly on issues involving the contractual relations of government corporations with private parties, as in the instant case, in deference to OGCC's jurisdiction as conferred by law and its expertise and familiarity with the policy repercussions of the resolution of the legal questions involving government corporations ( Ibid ., No . 48 , s . 197 and No . 118, s . 1988 ). CHDTIS Four . It appears that the award of the IPB-80 contract is subject to the Guidelines for Procurement formulated by the JBIC, a foreign entity. The resolution of the issue would necessarily involve the interpretation of the said Guidelines of the JBIC and which interpretation would not be binding on the JBIC. Very truly yours, (SGD.) HERNANDO B. PEREZ Secretary