THE MANDATE OF THE

OGCC

In Land Bank of the Philippines v. Teresita Panlilio-Luciano,[1] the

Supreme Court’s Second Division issued a surprisingly lengthy
Resolution dated 13 July 2005 in order to clarify and set right what
was described to be as “years of wrong practice” which never
translated into a statutory right. Despite arguments grounded on
convenience, the Supreme Court was unmoved and unwilling to set
aside decades-old legal precept behind the Administrative Code of
1987’s categorical designation of the OGCC as the principal law
office of GOCCs and the absolute requirement for the latter to
exercise control and supervision over legal departments of GOCCs.
According to the Court, “the correlative advantage of the OGCC
might not necessarily be derived from years of experience, but
putatively from its vantage point as overseer of all legal processes
emanating from and involving all GOCCs.”

To serve as the principal law office

The Supreme Court held that the primary function of the GOCC
is to serve as the principal law office of all GOCCs, their
subsidiaries, other corporate offsprings and government acquired
asset corporations. This has wide repercussions since this primary
obligation spawns further specific obligations imposed upon lawyers.
First, as distinguished from the “people’s tribune” character of the
Office of the Solicitor General, it is the inescapable duty of the
OGCC to represent GOCCs in cases for or against them, regardless
of the nature of the cases and/or the strength of the legal position of
the GOCC.
 As counsel, it is the duty of the OGCC to advocate the GOCCs
cause, leaving to the judge the duty to determine the merits of a
case. Furthermore, as the primary law office, the OGCC is the
recognized source of legal advice on major legal issues as well as
day-to-day matters affecting GOCCs. Second, in performing their
duties in OGCC, the lawyers of the OGCC are bound to observe the
Code of Professional Responsibility and the Canons of Professional
Ethics in relation to the corporations serviced by it, and the GOCCs
as well as the taxpayers can demand the observance thereof by the
OGCC lawyers. This means that, in connection with the primary
responsibility of the OGCC for the handling of the legal affairs of the
GOCCs, the OGCC is also responsible for the manner by which the
legal affairs are handled. Third, a derivative obligation is imposed
upon OGCC (and legal departments and external counsel) to
recognize and come to terms with a hierarchy, insofar as the legal
affairs of GOCCs are concerned, that places the OGCC above legal
departments and external counsel of GOCCs. Thus, the OGCC is
ultimately responsible for the legal advice given to management as
well as the handling of cases for or against GOCCs, and should
assert its authority in order to properly discharge their responsibility.
(Administrative Code of 1987).

To control and supervise the legal department

The next obligation of the OGCC is corollary to the

acknowledged benefits of having a legal department in a GOCC –
the control and supervision of the GOCCs’ legal department. Indeed,
the in-house lawyer is an important component of a GOCC since he
is more focused on the particular GOCC’s legal affairs and is
continually exposed to the various factual and legal issues faced by
the corporation. Accordingly, the Supreme Court admits that “x x x
there are permissible levels of delegation of authority the OGCC may
cede to the legal department it supervises.” (Land Bank case, supra)
 In administrative law, supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their
duties. If the latter fail or neglect to fulfill them, the former may take
such action or step as prescribed by law to make them perform such
duties. Control, on the other hand, means the power of an officer to
alter or modify or nullify or set aside what a subordinate officer had
done in the performance of his duties and to substitute the judgment
of the former for that of the latter. (Mondano v. Silvosa)[1]

However, as the Supreme Court pointed out, there are limits

to the delegation of authority to the legal departments (and external
counsel) and that any delegation of authority “cannot be construed in
such a manner that would result in a surrender or abdication of
powers by the office charged with its performance.” Thus, the
engagement of external counsel has been limited to situations of
manifest necessity, and the preconditions for which have been
provided for by law. (Landbank case, supra)

On 27 August 1998, President Joseph Estrada issued

Memorandum Circular No. 9. Section 3 of which provides that “in
exceptional cases, the written conformity and acquiescence of the
Solicitor General or the Government Corporate Counsel, as the case
may be, and the written concurrence of the Commission on Audit
shall first be secured before the hiring or employment of a private
lawyer or law firm.”

To ensure harmony of legal positions

The OGCC is likewise mandated to ensure consistence

and/or harmony of the legal positions of the various GOCCs. This
invariably stems from the peculiar characteristic of in-house
lawyering that makes in-house lawyers an important component of
GOCCs.
 While admittedly they are more focused on the particular GOCC’s
legal affairs and are continually exposed to the various factual and
legal issues faced by the GOCC, it may also prove to be a handicap
considering that it prevents them from harmonizing the legal
positions of various GOCCs. Hence, the necessity for the OGCC to
act as overseer and ensure consistency and/or harmony.
Presumably, as the Supreme Court so eloquently puts it, “since the
jurisdiction of the OGCC includes all GOCCs, its perspective is less
myopic than that maintained by a particular legal department of a
GOCC.” (supra)

This obligation to oversee is most readily manifested in the various

legal positions of legal departments pertaining to the application of
the Salary Standardization Law as it relates to the grant of benefits
and allowances.

To arbitrate issues between GOCCs

To arbitrate issues that may arise between GOCCs is yet

another obligation entrusted to the OGCC under its charger. When
GOCCs bring to the OGCC certain issues for resolution, the OGCC is
bound to conduct arbitration proceeding in order to facilitate the
resolution of the issues. It is an administrative process designed to
be speedy, inexpensive and necessary to unclog the dockets of
regular courts. In Philippine Veterans Investment Development Corp.
v. Alejandro M. Velez[1] the Supreme Court sustained the
constitutionality of Presidential Decree (PD) No. 242, which
prescribes the procedure for the administrative settlement and
adjudication of disputes, claims and controversies between or among
GOCCs. It further characterized the process as a necessary adjunct
to the regular court processes, describing it “an alternative to, or a
substitute for, traditional litigation in court with the added advantage
of avoiding the delays, vexations and expense of court proceedings.”
 In fact, it cannot be gainsaid that the administrative procedure
provided under PD No. 242 would “emasculate” the jurisdiction of
courts since provisions of the Rules of Court make a pre-trial
mandatory so that the parties to a suit may meet in conference to
consider, among other matters, “the possibility of xxx a submission
to arbitration.”

To issue rules and regulations

The power given to the OGCC to issue rules and regulations is a

necessary adjunct to the power of supervision and control. Section
10 of the Administrative Code of 1987 expressly grants the OGCC
the power to issue rules and regulations. However, this power must
be properly characterized as a right rather than an obligation—
GOCCs may not demand from the OGCC the exercise of this
privilege. Rather, the OGCC retains the discretion to exercise this
power from time to time as if may see fit.

To assess fees and to receive attorney’s fees adjudged

in favor of GOCCs

The right of the OGCC to make assessments on GOCCs is

expressly provided for in its Charter. This is a necessary part of the
funding requirements of the OGCC. In fact, part of the reason for the
Supreme Court’s unwillingness, in the Landbank case supra, to
dispense with the participation of the OGCC in the legal affairs of
GOCCs stems from the fact that the OGCC would eventually be
deprived of its due funding as sourced from possible attorney’s fees
that may rightly be awarded to it.