On Calax and the DAP

The bidding for the Cavite-Laguna Expressway (Calax) has become very controversial, with the San Miguel Corp. Group, which had the highest bid of P20.1 billion premium payment to the government, appealing its disqualification at the Office of the President. The SMC Group’s bid premium is substantially higher than that of the winner Team Orion, a 50-50 joint venture between Ayala’s AC Infrastructure Holdings Corp. and Aboitiz Land’s bid of P11.65 billion.

However, the real issue with respect to this major infrastructure project is not really whether the SMC Group should have been disqualified or not. As some media reports and one concerned citizen, Marcelo L. Tecson, pointed out in his paper which he e-mailed to the government officials concerned, as well as to the country’s top business and influential leaders, there is one major problem with the project itself which few people have noticed. The bidding process itself is flawed and potentially violates the Government Procurement Act (Republic Act No. 9184). The problem is that the project is intended to be awarded to the highest bidder rather than the lowest bidder. That is, the project will go to the bidder that makes the highest payment to the government, which consequently translates to the highest cost to the toll road users. Certainly, this is not what was contemplated by RA 9184.

In my previous column “Hidden taxes” (Opinion, 3/15/14), I mentioned a number of payments (e.g., senior citizen’s discount, electricity charges, water/utility charges, association dues, etc.) being made by citizens and/or business establishments that are in the nature of tax payments to the government but are not labeled as such. This Calax bid premium payment to the government is another example of such hidden taxes. What the winning bidder is going to pay to the government as premium on top of the estimated cost of constructing the toll road of P35.4 billion, as predetermined by the Department of Public Works and Highways, is nothing more than an advance payment of taxes which the toll road users will absorb by way of higher toll fees!

This runs counter to the very reason for putting government infrastructure projects to a bid, which is to provide basic government services to the public at the least cost but with a reasonable and commensurate return to the investor. It is precisely projects like Calax that increase the cost of doing business in the Philippines, thereby adversely affecting our competitiveness and pushing our cost of living higher.

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One of the bases of the P-Noy administration’s motion for reconsideration of the Supreme Court’s decision on the unconstitutionality of certain aspects of the Disbursement Acceleration Program (DAP) is the doctrine of operative fact, which fundamentally says that acts made on the basis of a law that was subsequently declared unconstitutional, operates on a prospective basis. Thus, acts prior to the finding of unconstitutionality would not be deemed illegal because these were based on a law (the Administrative Code) that is presumed operative then.

My layman’s view here is that under the system of checks and balances enshrined in the Constitution involving the three coequal branches of the government, this is the principle that should prevail to avoid situations where the three branches would clash, with one usurping the power of another (for example: Is the term “savings” for the Supreme Court or Congress to define?). Regularity and good faith should be presumed unless and until the act is deemed and found irregular by a coequal branch of government.

If the situation worsens, a constitutional crisis might ensue, and the economic gains that this administration has achieved could reverse and the Filipino people would suffer the most. Be it the DAP or the Priority Development Assistance Fund, the issue should be whether the funds were indeed properly spent for the identified projects, or stolen and misappropriated. Under the latter, the perpetrators should be swiftly charged and punished for the plunder/misappropriation of public funds.

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The Securities and Exchange Commission’s Memorandum Circular No. 9, Series of 2014, issued last May 6, mandates the amendment of Manuals of Corporate Governance of listed companies to include provisions on stakeholders, thus implicitly recognizing that these corporations also have responsibilities not only to their stockholders but also to their employees, suppliers, customers, creditors, as well as the government, the environment, the community in which it operates, and other key stakeholder groups.

This memorandum circular is intended not only to align us with the practice/trend in other Asean countries but also to categorically recognize and mandate the expanded responsibility and constituencies of listed companies. Put into practice, this should contribute to the better filtering down of the GDP growth to a broader sector of our society, thus partially addressing the concern that the growth in the economy has not really improved the conditions of the poor.

David L. Balangue (davidlbalangue@yahoo.com.ph) is a former chair and country managing partner of SyCip Gorres Velayo & Co., and chair of the Coalition Against Corruption.