Public bidding not needed for some government property leases – DOJ

MANILA, Philippines – Public bidding was not required to make the P1.2 billion lease agreement between Nayong Pilipino Foundation (NPF) and West Side City Incorporated, previously known as Resorts World Bayshore City Incorporated (RWBCI), valid.

In a legal opinion, Department of Justice (DOJ) Undersecretary Nicholas Ty stated that there is no law requiring public bidding to be carried out for the lease of government property – something that has been already tackled in older legal opinions.

In this particular case, NPF Executive Director Gertudes Duran-Batocabe asked the DOJ whether public bidding was needed to make the lease agreement between NPF and RWBCI valid. The agreement, dated August 20, 2014, covers 5.43 hectares of NPF’s property, which was leased out to RWBCI for an upfront advance rental of P1.2 billion. 

Duran-Batocabe said the funds were used for the development of the Nayong Pilipino Cultural Park and NPF’s operations, given that the NPF didn’t receive any allocation of government funds under the budget.

(READ: Duterte fires Nayong Pilipino board members)

Before carrying out the lease agreement, the NPF also consulted with the Office of the Government Corporate Counsel (OGCC), which also said that the lease agreement didn’t need to undergo public bidding since it didn’t qualify as procurement under the Government Procurement Reform Act.

The OGCC also said the NPF may carry out lease agreements with parties like the RWBCI, as long as the conditions of the agreement are deemed most advantageous to the government. After reviewing the contract, the OGCC gave the green light to the proposed lease agreement between the NPF and RWBCI.

Why seek the DOJ’s opinion?

If the NPF already consulted with a government agency about the contract before, why did it seek a legal opinion again? Duran-Batocabe said that one of its contracts with a different private entity was flagged as illegal for non-compliance with the Build Operate Transfer Law.

After this, a memorandum issued by the Office of the President on September 25, 2018 directed the Department of Tourism to review similar lease agreements that may have violated laws or other regulations, especially with respect to the requirement of a public bidding.

However, in this case, the DOJ deemed the lease by the NPF of its property to RWBCI as a “straightforward lease,” meaning public bidding was not required. 

In a 2022 legal opinion, the DOJ also said that a head of agency has the authority “to determine the reasonableness of the terms of the lease and the rental rates thereof and to enter into such lease contracts without need of prior approval by higher authorities subject to guidelines issued by the Commission on Audit and the Department of Public Works and Highways.” – Rappler.com