GOCC engagement of private lawyers

As a rule, the Office of the Government Corporate Counsel (OGCC) acts as the legal adviser of government-owned or -controlled corporations (GOCCs).

Although GOCCs have in-house lawyers, they seek the assistance of the OGCC on issues that involve, among others, novel questions of law that relate to their official functions or that which would result in lengthy court proceedings.

Referral to the OGCC can be dispensed with if the GOCC’s charter or the president of the Philippines authorizes it to engage the services of private lawyers to the exclusion of the OGCC.

But if a GOCC does not come under any of those exceptions and wants to engage the services of private lawyers, it has to get the conformity or approval of the GOCC and the Commission on Audit (COA) of that action.

Those approvals are aimed at ensuring that the referral to private lawyers is justified or necessary because public funds would be spent for that purpose.

Incidentally, it is standard practice for GOCCs to set aside a certain sum of money in their budget for the OGCC lawyers assigned to them as a gesture of goodwill to them.

That “retainer fee” serves as an incentive to the assigned OGCC lawyers to make themselves immediately available when their GOCC client calls for assistance.

A similar arrangement is practiced by government offices whose legal needs are attended to by the Office of the Solicitor General (OSG).

Based on past experiences, GOCCs secure private counsel if the transaction or legal matter involved is, for example, complex and would require immediate or close attention.

Note that the OGCC attends to the legal issues of some 106 GOCCs so it cannot be faulted, on account of its heavy workload, for sometimes agreeing to their clients seeking assistance from private law offices.

In a recent decided case (Power Sector Assets and Liabilities Management or PSALM vs. Commission on Audit) which relates to the engagement by PSALM of private lawyers for the privatization of the generation assets of the National Power Corporation, the Supreme Court upheld PSALM’s action despite the COA’s opposition.

The high court ruled that PSALM cannot be faulted for pushing through with that engagement because the COA took three years to act on its request for approval without any justifiable reason for the delay.

In addition, the court approved the payment of the private lawyers’ legal fees because the COA failed to show that they were “irregular, unnecessary, excessive, extravagant or unconscionable expenditure of government funds.”

In what may be viewed as a veiled rebuke of the COA on the subject of the case, the court directed it to adopt appropriate measures to prevent disapprovals of engagement of private lawyers due to its inaction or delay.

For starters, the COA should approve or deny the request for hiring of private lawyers within 60 calendar days from receipt of that request. If it decides to deny it, the reasons for the denial should be spelled out.

The period to act is premised on the government agency submitting its request at least 60 calendar days prior to the date of the engagement of the private lawyers, together with the written conformity of the OGCC or OSG, as the case may be.

That 60-day submission period, however, may be reduced by the COA in exceptional cases as justified by the requesting government entity.

In case the COA fails to act within 60 calendar days from receipt of the request, the request shall be deemed approved.

This time frame, which is similar to the rule on legislative bills lapsing into law if the president fails to act on them within 30 days from their receipt, puts pressure on the COA to act with dispatch.

With this directive from the court, GOCCs and other government entities that may find themselves in a situation similar to that of PSALM are now assured of prompt action in case they opt to engage the service of private lawyers in lieu of OGCC or OSG lawyers. INQ

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