PS-DBM ‘operates independently’

Last Aug. 27, 2021, resigned DBM Secretary Wendel Avisado told the Senate Blue Ribbon Committee that the Procurement Service of the Department of Budget and Management (PS-DBM) “operates independently.” He explained that “we don’t interfere in their day-to-day operations.” Avisado pointed out that the Procurement Service was created in 1978 under Letter of Instructions No. 755, which placed the Procurement Service under the Office of the President. Subsequent issuances attached the Procurement Service to the DBM. In the website of the DBM, the PS-DBM belongs to “Other Offices/Attached Agencies.” This has ramifications on who has direct responsibility over the allegedly overpriced nine purchase contracts amounting to P8.7 billion entered into by the PS-DBM with Pharmally Pharmaceutical Corporation from April to June 2020.

First, under the Revised Administrative Code, the Department Secretary exercises administrative “supervision and control” over the Department. However, the Secretary only exercises administrative supervision, and not control, over agencies attached to his Department. Administrative supervision is the power to “generally oversee the operations” of the agency “without interference with day to day operations.” Administrative supervision does not include the power to review “contracts entered into by the agency in the pursuit of its objectives.” It does not also include the power to “review, reverse, revise or modify the decisions” of the attached agency.

Second, administrative control over an attached agency like PS-DBM remains with the President as head of the Executive branch of government. It is the President who can interfere in the day to day operations of the PS-DBM, and who can “review, reverse, revise or modify the decisions” of the PS-DBM. In case of conflict between the DBM Secretary and the head of the PS-DBM, the Secretary “shall bring the matter to the President for resolution and direction.” In short, the real boss of Lloyd Christopher Lao when he headed the PS-DBM was President Duterte, who legally exercised direct administrative control over Lao when Lao entered into the questioned purchase contracts with Pharmally.

Third, the Department Secretary has authority to designate an officer-in-charge in case of vacancy in an office arising from absence, resignation, or removal of an employee. However, the Secretary must designate as officer-in-charge “an officer or employee within the organization.” When Avisado designated Lao on Jan. 2, 2020, as Officer-in-Charge of the PS-DBM, Lao was not “within the organization” of PS-DBM since Lao’s last government position was Chief Executive Officer of the Housing and Land Use Regulatory Board. Thus, Lao’s designation was illegal, and Lao at most was merely the de facto and not the de jure head of the PS-DBM. Only the President can designate an officer-in-charge who is not “within the organization” but is “already in the government service.“ The President may also designate as officer-in-charge “any other competent person” even if not from the government service.

Fourth, Lao obviously enjoys the trust and confidence of President Duterte. In his 2019 State of the Nation Address, President Duterte told the nation that when the “Korean went to Malacañang just to complain why is it that there is no request for delivery” of the frigate, he instructed Bong Go, “Bong, ayusin mo yan.” Go’s office then sent a letter to Commodore Robert Empedrad requesting for a meeting in Malacañang. The letter was signed by Lao, a presidential appointee and Undersecretary in the “Office of the Special Assistant to the President,” the office of Bong Go. Clearly, Lao is part of the inner circle entrusted by President Duterte to handle sensitive matters.

Fifth, as a Palace insider Lao knew that the corporate officers of Pharmally, together with Michael Yang, had met President Duterte in Davao City in March 2017. The RTVM, the media arm of the Office of the President, had released photos and a video of that meeting. Undoubtedly, Pharmally officers have direct access to President Duterte through Yang, the Davao businessman and Chinese national whom President Duterte once officially appointed as his economic consultant.

Lastly, while Avisado has credibly washed his hands from responsibility for the P8.7 billion Pharmally contracts of PS-DBM, he has thrown President Duterte under the bus. President Duterte, as the official exercising direct administrative control over Lao, will have a harder time escaping responsibility for any overpriced purchase contract that Lao may have awarded to Pharmally.

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