BSP’s move to tweak card deal ‘legally infirm’–DOJ

THE Department of Justice (DOJ) has advised the Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla that proposed amendments to its memorandum of agreement (MOA) with the Philippine Statistics Authority and its contract with AllCard Inc. for the personalization of the Philippine Identification (PhilID) card are “legally infirm.”

In a 5-page legal opinion made public last November 9, Justice Secretary Jesus Crispin C. Remulla did not give weight to BSP’s position that the proposed amendment is not substantial or material and, thus, may be allowed under the Implementing Rules and Regulations (IRR) of Republic Act (RA) 9184 (Contract Implementation Guidelines for the Procurement of Goods, Supplies and Materials).

The BSP sought the DOJ’s legal opinion on whether the modification of the agreement’s technical specifications to indicate monochrome personalization and amendment of the terms of reference of the card personalization contract with AllCard may be legally undertaken.

The BSP’s letter to the DOJ stemmed from the recommendation of the National Economic and Development Authority to shift from the current digital colored printing (using drop-on-demand, or “DOD,” technology) to monochrome laser engraving of the PhilID’s front-facing photograph to enhance photo quality. The Neda also sought to replace the DOD printers with laser engraving printers to increase the capacity of card personalization.

Council resolution

THE Neda issued its recommendations by Neda to achieve the government target of 50 million PhilIDs issued by the end of the year.

Complying with the recommendation of the Neda, the PhilSys Policy and Coordination Council (PSPCC) issued a resolution approving the recommendation to shift from digital-colored printing to monochrome-laser engraving for the PhilID card at no additional cost to the government.

The council also approved the signing of the amended technical specifications indicating monochrome printing, which shall form part of the MOA.

Likewise, the PSPCC also allowed the BSP to amend its contract with AllCard for the replacement of the DOD machines with laser engraving machines and start the full implementation not later than October 1, 2022. In light of PSPCC’s resolution, the BSP sought the DOJ’s legal opinion on the said recommendations.

Responding to BSP’s letter-request, the DOJ said: “We are of the opinion that the proposed actions are legally infirm.”

It noted that RA 9184 provides that an amendment to order may be issued in “emergency cases or during fortuitous events.”

“In the case at hand, it may be inferred that the proposed changes in technical specifications and terms of reference are to ensure that the set [of] 50 million PhilIDs issued at the end of 2022 are achieved,” the DOJ said.

TOR proviso

“HOWEVER, it must be stressed that except in emergency cases of fortuitous events and in cases where necessary for the protection of the goods, it is our opinion that the provisions of the guidelines pertinent to amendment to order is not applicable as there is no emergency of fortuitous event existing that would warrant the changes,” the DOJ said.

Instead, the DOJ advised BSP that it may opt to utilize item XIV (Reservation Clause) of the terms of reference (TOR). This clause states that the “BSP reserves the right to require the contractor to provide additional equipment, at no additional cost to [the] BSP, in case target card personalization per day needs to be increased.”

The DOJ said applying the said provision would not require amendment or modification in the contract.

In can be recalled that on June 10, 2022, the PSA and BSP entered into a MOA for the production of 116 million pieces of cards for the period of four years to be used for the PhilIDs. The provision, management and maintenance of the personalization equipment will interface with the PSA System.

The PSA, for its part, will manage the PhilSys database and ensure the availability, confidentiality, integrity, accuracy and readiness of the data that would be personalized in the BSP-produced and pre-personalized cards.

The production and delivery of the cards were to be done from 2021 to 2023, with a total budget of P3.48 billion.


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I HAVE always enjoyed reading Dean West’s blogs, which are insightful and laced with a bit of humor. Dean is founder and president of Association Laboratory Inc., a US firm that provides quality information and strategic insights to association leaders.