The Commission on Audit has upheld the decision of two state-run firms engaged in power management and distribution to spend US$ 2.69 million (approximately P134.5 million) in hiring foreign and local lawyers, together with expert witnesses, for legal representation in the arbitration proceedings initiated by the National Grid Corporation of the Philippines.
In a recent decision, the COA-Commission Proper (COA-CP) granted the Motion for Reconsideration of COA’s Legal Retainer Review (LRR) in connection with a previous ruling that denied as "extravagant and unnecessary" the hiring of two legal representations before the Singapore International Arbitration Center (SIAC).
The COA-CP is composed of Chairman Michael Aguinaldo and Commissioner Roland Pondoc.
In upholding the motion for reconsideration, the COA-CP saidthe National Transmission Corporation (TransCo) and the Power Sector Assets and Liabilities Management Corporation (PSALM) may engage the services of law firms Clifford Chance LLP and the Brattle Group for US$ 990,000 and US$ 600,000 for legal representation and as expert witness, respectively, before the SIAC.
In addition, both Transco and PSALM were authorized to spend US$ 100,000 for the “provision for another expert witness on Philippine and International Law." Previously, upon the approval of the Office of the Government Corporate Counsel (OGCC), the two state-run firms were granted the permission to be represented by the Romulo, Mabanta, Buenaventura, Sayoc & Delos Angeles (Romulo Law Firm) for S$ 1 million.
“Considering the significant amount involved and the complexity of the arbitration case that necessitated the collaboration between two law firms and the participation of an expert witness, the Commission finds the above engagement fees reasonable,” declared the COA-CP, referring to the total US$ 2.6 million professional fees to be paid by TransCo and PSALM.
The arbitration case stemmed from the petition filed by the NGCP seeking SIAC intercession in the controversy triggered by the concession agreement between the petitioner and TransCo in 2018.
NGCP filed a Statement Claim against TransCo and PSALM demanding an arbitral award of over P24 billion and US$ 19,828,235.61 from the government firms.
The Romulo Law Firm, which was hired as the respondents’ external counsel, recommended the engagement of a foreign counsel and expert witness, as it noted that NGCP intended to engage the services of a foreign law firm and present an expert witness.
In 2019, COA denied the request for the hiring of foreign lawyer as it noted that it had already commissioned the Romulo Law Firm for its legal representation. Thus, the state audit agency said the request is “unnecessary and extravagant.” In their motion fo reconsideration, TransCo and PSALM explained that Romulo Law Firm has no authority to represent them in local courts of Singapore.
“The hiring of a foreign counsel is advantageous to PSALM and TransCO considering its expertise and in-depth knowledge in Singapore law and jurisprudence not to kmention its authority to appear before the local courts of Singapore,” the petitioners said.
They also assured COA that there is no duplication in the scope of work of Romulo Law Firm and Clifford Chance LLP.
In granting the appeal of TranCo and PSALM, the COA-CP noted that it rejected the previous justifications aired by the two firms in deciding to hire a foreign counsel.
“Notwithstanding our observations against the initial justifications provided by PSALM and Transco,we recognize that their legal strategy may have changed and that they now deem it more advantageous to hire a foreign counsel,” the audit body explained.
“This Commission views the hiring of a foreign counsel and expert witness on accounting and economics as not extravagant and unconscionable,” the COA-CP stated.
It pointed out: “As the lead counsel, Romulo Law Firm is duty-bound to employ the best legal strategies to champion the case of its clients.” “As regards the hiring of an expert witness, the same may be considered as part of the legal strategies to strengthen the case for the client and increase the probability of obtaining a favorable ruling,” the two-man COA panel stressed.