By Ben Rosario
The Commission on Audit (COA) has questioned the Office of the Solicitor General (OSG) for paying over P767.72 million in attorney’s fees for foreign law firms that represented the country in three international cases during the term of former President Benigno S. Aquino III.
“The engagement of private lawyers and law firms for legal services and professional fees was unauthorized due to the absence of prior acquiescence of the OSG and written concurrence of COA pursuant to COA Circular No. 95-011, as amended by COA Circular No. 980002 dated June 9, 1998,” COA said in the 2017 OSG annual audit report released recently.
COA said it was never informed about the engagement of the lawyers that were commissioned by OSG to represent the country in the arbitration cases filed by the Philippines against China in connection with the international law issues relative to the West Philippine Sea (WPS) dispute.
The same audit observation was raised against the OSG for hiring two other foreign private law firms for legal services in connection with two cases filed against the government before the International Centre for Settlement of Investment Disputes (ICSID).
The WSP case filed before the International Arbitral Tribunal cost the country P149,060,125.61 in attorneys fees paid to Foley Hoag LLP from 2013 to 2017. The Philippines stand on the legal issues on the United Nations Convention on the Law of the Sea was upheld by the tribunal.
On the other hand, the OSG and the Department of Transportationcommissioned the Paul Hastings, Janofsky for the legal dispute in the deal between government and the Metro Rail Transit Corporation.
For the same case, government also engaged the legal services of Gibson, Dunn, and Crutcher (GDC) LLP.
COA said government paid P200,809,586.84 to the two international law firms. It also questioned the termination of the legal services of Paul Hastings and the subsequent hiring of Gibson.
The largest professional fee for professional services paid by government was for White and Case LLP which received P417,853,362.24 to provide legal assistance in the international arbitration case filed by the BaggerwerkenDeCloedt En Zoon N.V. against the Philippines.
The Philippines was ordered to pay the Belgian investor at least $16 million as a result of the refusal of former President Aquino to honor a Laguna Lake dredging contract that his predecessor, former President Gloria MacapagalArroyo, entered into with Baggerwerken.
State auditors also decried the OSG’s failure to submit the contracts for legal services within five working days from its implementation.
“Likewise, the selection and termination processes in the engagements of private lawyers and law firms were not clearly recorded/transmitted to the COA office,” they added.
Reacting to the audit findings, the OSG stressed that it has the “exclusive authority” to engage the services of foreign counsels in international arbitral proceedings involving the Philippines.
The OSG assailed COA Circular No.95-011, saying that requirement of a written conformity and acquiescence of the OSG in hiring private lawyers or law firms “is not mandatory.”
The state counsel explained that it has to hire the foreign law firms because the OSG does not have the license to practice law in international tribunals.
In its rejoinder, COA pointed out that rules being promulgated by the audit body are in compliance to its constitutional mandate to make sure that all government expenditures are necessary, fair, and correct.
By issuing COA Circular No. 95-011, COA’s intention is to “curb unauthorized and unnecessary disbursement of public funds, thus, the nature of engagement of lawyers/law firms and he procuring agency is immaterial.”