Banking&Finance Manila-Paris blended financing mode OK’d

By Joel R. San Juan @jrsanjuan1573

tH e Department of Justice in a 13-page legal opinion dated August 10, 2023, the Justice Department advised the Department of Finance (DoF) that the proposed blended financing mechanisms to be incorporated in the G2G agreement may be considered valid and binding between the parties. in the blended financing being proposed by the GFr , the G2G arrangement will be preparatory to the financing to be extended by the GFr through a loan from a private bank to be appointed by the latter with an export credit insurance from the ex port credit Agency Bpifrance Assurance ex port, the official export credit agency of GFr and through a sovereign loan from French treasury. in her letter to the DoJ requesting for a legal opinion, Finance Undersecretary Maria ed ita Z. tan, head of DoF-international Finance Group head, said the finance department is proposing to have both the private bank and the GFr , or its adjunct, as signatories to the loan agreement. on this, Justice secretary Jesus cr ispin c remulla reiterated the october 13, 2020 legal opinion of the DoJ, which held that “a contract between a putative commercial entity and another state may, under certain conditions, be considered a contract between states.” t he DoJ also expressed belief that the suggested procurement guidelines under the proposed G2G arrangement—similar to the limited competitive bidding upheld by the supreme court (sc) for the procurement of certain foreign-assisted projects—are “valid and consistent with the Philippine procurement laws and rules.” t he DoJ emphasized that the general rule for the procurement of infrastructure projects, goods and services, regardless of source of funds, whether local or foreign, is that this must be done through competitive bidding pursuant to republic Act (r A) 9184 (Government Procurement reform law).

(D o J ) has given its legal backing for the proposed government-to-government (G2G) arrangement between the Philippines (GPH) and France (GFr), including on the validity of the blended financing mechanisms and procurement guidelines that allow limited competitive bidding to be incorporated in the agreement.

However, an exception to the general rule is provided under section 4 of r A 9184, which states: “Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed.” in this case, for instance, item 8 of the Procurement Guidelines specifically provides that limited source bidding under the Philippine Procurement Law shall be undertaken, if possible. t hus, it is our position that the proposed G2G arrangement may still fall within the scope and applicability of r A 9184 and its 2016 r irr (revised implementing ru les and regulations),” the DoJ said. remulla also noted that the justice department nary see any legal issue over GFr s proposal to change the form of the instrument from a memorandum of understanding between the GPH and GFr to “Bilateral Agreement” or “Framework Agreement.” remulla explained that a G2G arrangement may still be established despite changing the form of the instrument from ‘Memorandum of Understanding’ to ‘Bilateral Agreement’ or ‘Framework Agreement’.

Furthermore, the DoJ noted that under the Foreign Borrowings Act and the of ficial Development Act, the President, has the limited power to waive certain aspects of public bidding such as on the existing rules on preferences on the nationality of bidders and to modify methods or procedures in the evaluation or comparison of bids.

But, the DoJ said, the President does not have the absolute right or privilege to waive the requirement of public bidding itself.

“on whether a G2G Arrangement in the form of a ‘Bilateral Agreement’ or a ‘Framework Agreement” is acceptable to this Department: we answer in the affirmative,” remulla said.

“GFr s proposal to change the form of the instrument to explore the possibility of executing a stronger legally-binding instrument is thus permissible,” the Justice secretary said.

However, remulla said it is not within the jurisdiction of the justice department to determine whether the proposed Bilateral Agreement” or “Framework Agreement” would require senate ratification and Presidential concurrence.

He said it is the Department of Foreign Affairs (DFA), pursuant to section 9 of executive order 459 series of 1997, which has the power to determine whether an agreement is to be considered as a treaty or as an executive agreement. t hus, as a matter of official courtesy, therefore, we respectfully refrain from further expressing our views on this issue. For us to rule on it would be tantamount to an intrusion into the jurisdiction of the DFA, whose decisions and determinations are not subject to the revisory authority of this Department,” the DoJ c hief pointed out.