Idiotic practice of hiring foreign law firms

The previous administration of Benigno Simeon Aquino III knew beforehand that the petition which the government filed against China with respect to our claim in the South China Sea before the Permanent Court of Arbitration (PAC) would not, as the saying goes, even touch first base, for the fact that China, at the outset, manifested it would not recognize or participate in the hearing.    

China’s non-recognition of the PAC should have served as an advance warning that nothing will happen in bringing our case to the arbitration court. That should have put us on guard whether or not to continue hiring the services of international lawyers to argue our position before a court that would only listen to our side. Even if we win, as in fact won, such cannot be enforced as it has no power to enforce its decision.  

Rather, many suspected the Noynoy Aquino administration collaborated and confederated with those foreign lawyers in mulcting our government to argue on a case it can never hope to enforce, but only to bill us an unprecedented fee that no lawyer in this country ever received for a single case. As revealed by the COA, the Philippine government hired Folet Hoag from 2013 to 2017 to defend our position for which we paid P149,060,125.6. Even non- lawyers know they were hired to represent us on a case that would end up to nothing, except that their client, the Republic of the Philippines, would be paying a huge amount for legal services. In fact, it elicited accusation from China’s Vice Foreign Minister Liu Zhenmin who raised a question as to “who was paying the wages of the judges that rendered the decision?”

Because of frivolities of our officials, often rooted on political vengeance to disallow projects involving foreign contractors, such as the decision of Noynoy to unilaterally cancel in 2011 the P18-billion flood-control project, awarded to Belgium’s Baagerwerken Decloedt En Zoon (BDZ), has resulted in the Philippines being required to pay P800 million to a Belgian dredging firm for the cancellation of the Laguna Lake Rehabilitation Project (LLRP), which decision came out during President Duterte’s administration.

For canceling the project contracted during the Arroyo administration allegedly for being graft-ridden, the Noynoy government had to hire an American law firm, White & Case, to defend the government before the World Bank’s International Center for Investment Disputes (ICSID). Said foreign law firm billed the government P417,853 million for its lost legal services. Amazingly, the amount billed was more than one-half of the P800-million damages which the government was ordered to pay to Belgium’s BDZ.

Another is the case filed against the Department of Transportation by the Metro Rail Transportation Corp. (MRTC) for unpaid rentals before the Singapore-base International Chamber of Commerce-Court Arbitration. MRTC alleged that DOTr violated the Built-Lease-and-Transfer (BLT) agreement which it claims is valid up to 2025. Government’s decision to withhold payment of rentals was prompted after DOTr filed a graft case against former transportation secretary Joseph Emilio Abaya and Busan Universal Rail Inc. (BURI), the maintenance provider of Metro Rail Transit Line 3 (MRT 3) on Oct. 23, 1915. The complaint alleged that the Abaya-led agency facilitated the creation of BURI, which then took over the maintenance of the rail. Busan won the P3.8-billion contract to provide system maintenance, signaling systems, and overhauling services to the MRT 3 but resulted in glitches caused by BURI’s underperformance.    

The OSG and the DOTr commissioned Paul Hastings, Janofsky for the legal dispute with MRT Corp. For the same case, the government also engaged the services of Gibson, Dunn and Crutcher and is now billing the government P200.809 million also for a lost case that had its origin with the Noynoy administration.

The COA is right in questioning the OSG for paying over P767.72 million in attorney’s fees for foreign law firms that represented the country in the three international cases during the term of that lackluster Noynoy Aquino administration. What is ironic is that that foreign law firms are  free to sue our government in venues of their choice  while Filipinos of have difficulty in suing to enforce their valid own claim.

Carefully looking at the issue, one is reminded of Section 3, Article XVI of the hypocritically laden 1987 Constitution drafted during the time of Mrs. Aquino that inculcated into the minds of would-be lawyers the  principle that “[T]he State may not be sued without its consent,” which provision is based on the generally  accepted principle of law. While we are not saying the government cannot be sued for any wrongdoing; there are exceptions, if it enters into a contract with a private business entity. However, to minimize this possibility of foreign law firms seeking enormous damages for alleged violation of  contract, they should first be required to seek the consent of our government, and only if it refuse could it seek the assistance of the local court until it is finally decided by the High Court. Only after this procedure has been observed by the aggrieved foreign party can it be allowed to seek the  adjudication of its claim in a foreign arbitration court.  

Besides, foreign businesses should be reminded that when they entered into contract with the government, that already constitutes their concurrence to exhaust all local remedies before going to a foreign arbitration courts. This explains why COA declared the engagement of private lawyers and the fees for the legal services and professional fees unauthorized in the absence of prior acquiescence  by the OSG  and its written concurrence is pursuant of COA Circular No. 95-011, as amended by COA Circular No. 980002 dated June 9, 1998.” State auditors also decried B.S. Aquino’s Solicitor General Florin Hilbay’s failure to submit the contracts for foreign legal services within five working days from its implementation.  

The ugly fact about this extortion-like charges brought against the government is we are also compelled to hire foreign law firms and pay them millions to defend us and only to lose the case, yet forbidding our own lawyer to appear before their chosen court for the flimsy reason that they do not have the license to appear in the court of their chosen turf.  Thus, whichever way one would look at it, we are bound to lose because even if we win, we will still have to pay the huge amount of attorney’s fees for our defense. 

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Topics: Benigno Simeon Aquino III , South China Sea , Permanent Court of Arbitration , Folet Hoag
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