Are Calida’s security contracts legal?

The most accurate legal response on the government contracts of Solicitor General Jose Calida’s security agency was the first, by new Justice Secretary Menardo Guevarra. He opined that these are legal, assuming public bidding rules were followed.

Guevarra’s predecessor entered into two of the contracts. The solicitor general is autonomous, but attached solely for budget purposes to the Department of Justice.

This is a learning moment on framing conflict of interest laws. Different rules apply to different officials, such as legislators, judges and the Cabinet. The key is to identify which applies.

There are two policy goals that compete: Broadening conflict prohibitions beyond what is in the law imposes financial burdens on, and could deter, those who wish to serve in government.

In Calida’s case, the tricky nuance is that the solicitor general has Cabinet rank, but is not legally a member of — and not subject to the strict prohibitions on — the Cabinet.

Calida confirmed the facts to Pinky Webb on CNN Philippines’ “The Source” last May 31.

Vigilant Investigative and Security Agency Inc. (Visai) was formed in 2001. Calida, his wife and children own it. It won government contracts even before Calida took office in 2016. Calida stated he resigned as its chair and president before assuming office, and disclosed his ownership.

Visai now has government contracts worth P261 million. Calida could not recall if this total substantially increased in 2016, but reminded that an agency’s profit is far lower than the gross contract amount, after paying for guards’ salaries, guns and equipment.

President Duterte weighed in: “Bakit, wala na ba tayong katuwirang magnegosyo? (Why, don’t we have rights to have businesses?)” He said Calida was “good” and there was no problem “as long as you do not participate.”

The logical legal starting point is the Constitution’s Article VII, Section 13, prohibiting “the Members of the Cabinet” from being “financially interested in any contract with” any government body.

The tricky part begins with Executive Order No. 473 (1976): “The Solicitor General shall be a member of the Cabinet.” The 1992 Supreme Court decision Gonzales vs Chavez explained: “President Ferdinand E. Marcos leaned heavily on his Solicitor General” and gave him “tremendously enhanced power.”

But this changed after Marcos.

The 2013 Funa vs Agra decision, quoting the 1991 Elma decision, reiterated: “Public officials given the rank equivalent to a Secretary, Undersecretary, or Assistant Secretary are not covered by the prohibition [in Art. VII, Sec. 13], nor is the Solicitor General affected thereby.” Republic Act No. 9417, today, gives the solicitor general Cabinet rank, but does not make him part of the Cabinet.

Thus, Art. VII, Sec. 13 does not apply.

One moves to the general conflict rules under RA 6713 (1989), the Code of Conduct and Ethical Standards for Public Officials.

This law defines “conflict of interest” as including “a substantial interest in a business, and the interest of such corporation … may be opposed to or affected by the faithful performance of official duty.”

Calida argues this cannot apply. The solicitor general neither approves contracts with nor regulates security agencies. On TV, he promised to divest should an actual conflict arise, such as a government agency suing Visai.

The other general law is RA 3019 (1960), the Anti-Graft and Corrupt Practices Act. This punishes using one’s office to influence a government contract or having “pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity.”

Calida argues he never intervened, and Visai, in fact, lost three recent public biddings.

So how is black letter law invoked here?

One would check if a blanket prohibition applies, such as the one in the Constitution’s Art. VII, Sec. 13. If not, one might be more specific on what the claimed conflict and overlap with official duty is, or present more evidence beyond owning a business.

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