Denying the existence of a law
The country’s vaccine czar, Gen. Carlito Galvez Jr., declared last Dec. 14, 2020: “RA 9184 (procurement law) does not allow advance market commitment. We found that there is a way to secure advance market commitment thru ADB xxx. When we presented this to the President in early November, he immediately approved it.”
Both President Duterte and General Galvez continue to hold that Philippine law does not allow the government to pay from congressional appropriations more than 15 percent advance payment that Western vaccine suppliers are demanding. For the President and General Galvez, only loans from the Asian Development Bank or World Bank can be used for advance payment of Western vaccines but not appropriations from Congress.
This goes against the clear opinion of Justice Secretary Menardo Guevarra, who stated in a Memorandum to the President on PhilHealth payments to Red Cross for swab testing, that “under auditing rules, advance payments for goods or services not yet delivered are not allowed, unless with prior approval of the President.” Secretary Guevarra is, of course, correct. Section 88 of Presidential Decree No. 1445 (Government Auditing Code) expressly provides, “Except with the prior approval of the President (Prime Minister) the government shall not be obliged to make an advance payment for services not yet rendered or for supplies and materials not yet delivered under any contract therefor.” There is no limit as to the amount of advance payment that the President can authorize.
Section 88 of PD 1445 was actually invoked by the Office of the President in Memorandum Order No. 48 dated April 20, 2020, signed by Executive Secretary Salvador Medialdea, approving the request of the Government Procurement Policy Board for 30 percent advance payment on the purchase of goods needed to address the COVID-19 pandemic. On Sept. 14, 2020, the President ranted against Western pharmaceutical companies: “Kung sabihin mo na, sige wala pa ’yung vaccine, there is nothing with finality and you want us to make the reservation by depositing money, you must be crazy.” However, four months before the President’s rant, his own Office of the President had approved advance payment of more than 15 percent for the purchase of goods needed to fight the COVID-19 pandemic.
The requirements under the procurement law have expressly been made inapplicable under RA 11494 (Bayanihan II) to the purchase of goods, including vaccines, in the fight against the COVID-19 pandemic. Under Section 4(u) of RA 11494, the procurement of supplies, goods, and equipment constitutes “exemptions from the provisions on bidding process required under Republic Act No. 9184 or the Government Procurement Reform Act.” Incidentally, the procurement law itself does not even prohibit advance payment as the 15 percent limit on advance payment is found only in its Implementing Rules.
Philippine law is very clear: The rule prohibiting advance payment in the procurement of goods, materials, and services is found not in the procurement law but in Section 88 of the Government Auditing Code. This same Section 88, however, authorizes the President to allow advance payment for any amount, without limit, as an exception to the rule. The President is authorized by law to make this exception in cases of national emergencies or calamities. The COVID-19 pandemic is precisely the kind of calamity that should prompt the President to exercise his authority under Section 88. The President, however, is not only disinclined to allow advance payment for Western vaccines, he also even denies he has the authority under the law to allow such advance payment.
If the Philippines refuses to make advance payment from congressional appropriations for Western vaccines, then the vaccines that can be injected on the vast majority of the Filipino people will have to come from China. President Duterte has stated that only China and Russia are not demanding advance payment for their vaccines. Russia, however, requires a purchasing country to put up its own manufacturing facility to make the Russian vaccine, making the Russian vaccine more costly. Thus, under the policy of President Duterte, Filipinos will have to accept the Chinese vaccine, even if the Chinese vaccine is more expensive than the most expensive Western vaccine. And unlike Western pharmaceutical companies, China up to now has not disclosed the efficacy data of its vaccines.
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