SURVEY OF SUPREME
COURT DECISIONS ON
PUBLIC PROCUREMENT
(Jurisprudence on Public Procurement)
CAPACITY DEVELOPMENT DIVISION
Government Procurement Policy Board
Technical Support Office (GPPB-TSO)
Valid JV Agreement
Harry Roque, et al. vs. COMELEC
G.R. No. 188456 , September 10, 2009
•“Contrary to what the petitioners posit, the duly notarized JVA, as
couched, explained the nature and the limited purpose of the joint
venture and expressly defined, among other things, the composition,
scope, and the 60-40 capital structure ...”
•Separate Concurring Opinion of Justice Renato Corona cited NPM 982004 (July 23, 2004) – RA 9284 and its IRR does not prescribe the
standard form nor does it spell out the specific terms and conditions
that should be included in the JVA. But for purposes of eligibility check,
the JVAs are required to be notarized to be binding against third
persons.
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Section 3 (a) R.A. 9184
Guingona, et al. vs. COMELEC
G.R. No. 191846 , May 6, 2010
•Procurement of PCOs machines by the COMELEC for the automated
elections.
•Section 7 Article III
“The right of the people to information on matters of
public concern shall be recognized. Access to official
records, and to documents, and papers pertaining to
official acts, transactions, or decisions…”
•Section 3 (a) RA 9184
“Transparency in the procurement process and in the
implementation of procurement contracts.”
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Procurement Contract: Option to
Purchase
Capalla vs. COMELEC
G.R. No. 201112 , June 13, 2012
•A reading of the other provisions of the contract would show that the
parties are given the right to amend the contract which may include the
period within which to exercise the option. There is likewise no
prohibition on the extension of the period, provided that the contract
was still effective.
•The COMELEC still retains P50M of the amount due Smartmatic-TIM
as performance security, which indicated that the contract is still
effective and not yet terminated.
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Section 4, R.A. 9184
Abaya vs. Ebdane
G.R. No. 167919 , February 14, 2007
– Loan Agreement, through Exchange of Notes, executed by the
President with an IFI is an “Executive Agreement” and must be
observed pursuant to “pacta sunt servanda.”
•DBM-PS vs. Kolonwel Trading
G.R. No. 17560, June 8, 2007
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Nature of Public Bidding
National Power Corporation vs. Pinatubo Commercial, represented by
Alfredo A. Dy
G.R. No. 176006, March 26, 2010
The bidding process was not a “free-for-all” where any and all interested
parties, qualified or not, could take part. RA 9184 categorically mandates that
prospective bidders are subject to eligibility screening, and as earlier stated,
bidding rules may specify other conditions or order that the bidding process be
subjected to certain reservations or qualifications.
The competitiveness policy of a bidding process presupposes the eligibility and
qualification of a contestant; otherwise, it defeats the principle that only
“responsible” and “qualified” bidders can bid and be awarded government
contracts. Our free enterprise system is not based on a market of pure and
unadulterated competition where the State pursues a strict hands-off policy and
follows the let-the-devil-devour-the-hindmost rule.
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Technical Specifications
COA vs. Link Worth Int’l., Inc.
G.R. No. 182559 March 13, 2009
•Procuring entity must verify, inspect and test whether the technical
specifications comply with its requirements
•It does not give occasion for procuring entity to arbitrarily exercise its
discretion and brush aside the very requirements it specified
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Determination of the Nature of the
Subject Matter of Procurement
Department of Foreign Affairs and Bangko Sentral ng Pilipinas vs.
Hon. Franco T. Falcon and BCA International Corporation
G.R. No. 176657 September 1, 2010
•The e-Passport Project cannot be considered as "engineering works or
a service contract" or as "related and necessary activities" under
Republic Act No. 8975 which may not be enjoined.. Under Republic
Act No. 8975, a "service contract" refers to "infrastructure contracts
entered into by any department, office or agency of the national
government with private entities and nongovernment organizations
for services related or incidental to the functions and operations of the
department, office or agency concerned."
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Determination of the Nature of the
Subject Matter of Procurement
•Indeed, the reference to Section 30.4 of the IRR of Republic Act No.
9184 (a provision specific to the procurement of goods) in the BSP’s
request for interest and to bid confirms that the e-Passport Project is a
procurement of goods and not an infrastructure project. Thus, within
the context of Republic Act No. 9184 – which is the governing law for
the e-Passport Project – the said Project is not an infrastructure project
that is protected from lower court issued injunctions under Republic
Act No. 8975, which, to reiterate, has for its purpose the expeditious
and efficient implementation and completion of government
infrastructure projects.
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Splitting of Contracts
Balderbin v. Sandiganbayan
G.R. Nos. 144950-71, March 22, 2007
•A BAC member, aware of the splitting of transactions of accounts,
proceeded with signing the Abstract of Bids claiming that the same
was done in good faith and that he did not participate in said splitting
of accounts.
•The BAC member cannot claim good faith and avoid criminal liability.
He knew of the splitting of contracts and the same cannot be ignored.
•Supreme Court cited COA Circular No. 76-41 in defining and
identifying forms of splitting of contracts.
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Discretion to Accept or Reject A
Bid
Albay Accredited Constructors Association v. Ombudsman
G.R. No. 13351, January 30, 2006
•The bidder was required to submit a Contractor’s Confidential Prequalification Statement.
•In the evaluation of bids, Government reserves the right to waive
consideration of minor deviations which do not affect the substance
and validity of the bids. The discretion given to authorities to accept
or reject a bid is of such wide latitude that courts will not interfere,
unless it is apparent that it is exercised arbitrarily, or, used as a shield
to a fraudulent award.
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Effect of Reservation Clause
National Power Corporation Vs. Philipp Brothers Oceanic, Inc.
G.R. No. 126204 November 20, 2001
NAPOCOR was not bound under any contract to approve PHIBRO's
pre-qualification requirements.
Where the right to reject is so reserved, the lowest bid or any bid for
that matter may be rejected on a mere technicality.
Where the government as advertiser, availing itself of that right,
makes its choice in rejecting any or all bids, the losing bidder has no
cause to complain nor right to dispute that choice unless an unfairness
or injustice is shown.
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Effect of Reservation Clause
•Verily, a reservation of the government of its right to reject any bid,
generally vests in the authorities a wide discretion as to who is the
best and most advantageous bidder. The exercise of such discretion
involves inquiry, investigation, comparison, deliberation and decision,
which are quasi-judicial functions, and when honestly exercised, may
not be reviewed by the court.
13
COA’s Presence in Public
Bidding
Villanueva v. COA
G.R. No. 151987. March 18, 2005
•Upon the agency that called for the bidding, therefore, rests the
burden of ensuring that the process undertaken is above-board and
that the outcome thereof is most advantageous to the government.
The presence of the COA representative, as witness or observer, on
the other hand, is fundamental only to the extent of guaranteeing
documentary integrity and transparency in the bidding process.
14
Perfection of Contract
The Insular Life Assurance Company, Ltd. Vs. Asset Builders
Corporation,
G.R. No. 147410 February 5, 2004
•The effect of giving the Notice of Award … would have been the
perfection of the contract. No such acceptance was communicated to
respondent; therefore, no consent was given. Without that express
manifestation, as required by the terms of its proposal, there was no
contract.
15
Importance of Bid Security
The Insular Life Assurance Company, Ltd. Vs. Asset Builders
Corporation
G.R. No. 147410 February 5, 2004
The "bid bond is an indispensable requirement for the
validation of a bid proposal. This requisite ensures the good faith of
bidders and binds them to enter into a contract with the owner,
should their proposal be accepted. One who submits a bid not only
signifies assent to the terms and conditions of a proposal, but
impliedly binds oneself to them, if and when the bid is considered.
The Invitation to Bidders even provided that incomplete proposals
might be sufficient cause for their rejection. If mere insufficiency of a
bond required of a bidder is a ground for rejection, a fortiori, all the
more so is the total want thereof.
16
Honoraria
Sison vs. Tablang
G.R. No. 177011, June 5, 2009
–Section 15 of R.A. 9184 authorizing grant of honoraria is not
self-executing. It still needs an implementing guideline.
–Honorarium is something given not as a matter of obligation
but in appreciation for services rendered. Section 15 uses the
word “may”.
NOTE: DBM Circular No. 2004-5A, as amended by DBM
Circurlar 2007-3
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Protest
Phil. Pharmawealth, Inc. v. Phil. Children’s Medical Center BAC, et.
al.
GR No. 167806 26 June 2006
•The doctrine of exhaustion of administrative remedies calls for resort
first to the appropriate administrative authorities to accord them the
prior opportunity to decide controversies within their competence
before the same may be elevated to the courts of justice for review.
•Protest Mechanism under R.A. 9184 and its IRR must be observed.
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Protest
LRA v. Lanting Security and Watchman Agency
GR No.181735 July, 20, 2010
•Sec. 55 of RA 9184, the Government Procurement Reform Act, sets
three requirements that must be met by a party desiring to protest the
decision of the Bids and Awards Committee (BAC): (1) the protest must
be in writing, in the form of a verified position paper; (2) the protest
must be submitted to the head of the procuring entity; and (3) the
payment of a non-refundable protest fee.
•Respondent’s letter of November 19, 2004 to the LRA Chair of the
BAC-Procurement of Goods, Services and Materials (BAC-PGSM)
cannot be considered as the protest required under sec. 55 of RA 9184
as it was not verified and the protest fee was not paid.
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Protest
First United Constructors Corp. vs. Poro Point Management Corp.
G.R. No. 178799, January 19, 2009
•Petitioner violated doctrine of judicial hierarchy in directly filing its
petition for Certiorari before the Supreme Court
– One must first invoke special and important reasons
20
Negotiated Procurement: Delay in
the Use of Funds
Nava vs. Palattao
G.R. No. 16021
August 28, 2006
The head of the procuring entity persuaded his 7 Schools Division
Superintendents to ignore Circular No. 85-55 (public bidding). As
allegedly time was of the essence in making the purchases and if not
done before the calendar year 1990, the funds allotted will revert back
to the general fund.
There was no showing of any immediate and compelling justification
for dispensing with the requirement of public bidding.
Unsubstantiated reasoning that a public bidding would unnecessarily
delay the purchase is unacceptable.
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Allied Supreme Court
Decisions
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Macalintal vs. COMELEC
G.R. No. 157013 July 10, 2003
Facts:
Congress enacted R.A. 9189 (The Overseas Absentee Voting Act
of 2003). The petitioner Macalintal questions, among others, the
constitutionality Section 19 of R.A. 9189 which provides for the creation
of a Joint Congressional Oversight Committee with the power to review,
revise, amend and approve the implementing rules and regulations
promulgated by the COMELEC. He contends that R.A. 9189 intrudes
into the independence of the COMELEC which, as a constitutional
body, is not under the control of either the executive nor the legislative
departments of government; that only the COMELEC itself can
promulgate rules and regulations which may be changed or revised
only by the majority of its members.
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Macalintal vs. COMELEC
G.R. No. 157013 July 10, 2003
Issue:
Whether or not Section 19 of R.A. 9189 is constitutional?
Ruling:
The Commission on Elections is a constitutional body. It is
intended to play a distinct and important part in our scheme of
government. In the discharge of its functions, it should not be hampered
with restrictions that would be fully warranted in the case of a less
responsible organization. The Commission may err, so may this court also.
By vesting itself with the powers to approve, review, amend, and
revise the IRR for The Overseas Absentee Voting Act of 2003, Congress
went beyond the scope of its constitutional authority. Congress trampled
upon the constitutional mandate of independence of the COMELEC.
Under such a situation, the Court is left with no option but to withdraw
from its usual reticence in declaring a provision of law unconstitutional.
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G & S Transport Corporation Vs. Court
of Appeals, G.R. No. 120287 May
28, 2002
Facts:
MIAA initiated proceedings for public bidding to choose two
(2) concessionaires of the coupon taxi services at the NAIA. Five (5)
firms pre-qualified to join the bidding including petitioner G & S and
respondents Two Thousand (2000) Transport Corporation (2000
TRANSPORT) and Nissan Car Lease Philippines, Inc. (NISSAN), after
complying with the terms of reference, the instructions to bidders and
the invitation to bid.
MIAA selected 2000 TRANSPORT and NISSAN as the winning
bidders and issued in their favor the respective notice of awards of the
coupon taxi service concession.
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G & S Transport Corporation Vs. Court
of Appeals, G.R. No. 120287 May
28, 2002
Issue:
Whether or not permanent injunction to bar the award of the
concession to 2000 Transport and Nissan is proper?
Ruling:
- Indeed the determination of the winning bidders should be left to the sound
judgment of the MIAA which is the agency in the best position to evaluate the
proposals and to decide which bid would most complement the NAIA's
services. The Terms of Reference for Coupon Taxi Service Concession
observed, "[t]he professional transport service plays a very important role in
enhancing and maintaining a good image of the country that will speak of
trust, honesty, efficiency and modernity."
- In this regard only the most advantageous bids would be selected on the
basis of the best bid offer in relation to the bidders' existing facilities, financial
standing, organizational set-up, relevant experience, quality, capability and
kind of services offered.
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Commission on Elections Vs. Judge
Ma. Luisa Quijano-Padilla (G. R.
No. 151992 September 18,
2002)
Facts:
PHOTOKINA won in a public bidding with a bid in the
amount of P6.5 billion pesos. Both parties proceeded to formalize the
contract. However, the budget appropriated for the modernization
project under RA 8760 was only P1 billion and actual available funds
under the CAF was only P1.2 billion.
Ruling:
There is no way that a government agency could enter into a
contract with a bidder whose accepted bid was way beyond the
amount appropriated by law for the project. The BAC should have
rejected the bid for being excessive or should have withdrawn the
Notice of Award on the ground that in the eyes of the law, the same is
null and void.
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Julius G. Froilan vs. The
Honorable Sandiganbayan
G.R. No. 115221 March 17, 2000
Facts:
Bohol Agricultural College purchased chemicals priced at
P10,633.00 from JDS Traders, which was one of the three suppliers
requested by the College for quotations. Accused Froilan of the JDS
Traders signed a certification stamped on the purchase order that he
will refund the difference if the prices are found to be overpriced.
Three years after, COA demanded the settlement from Froilan of a
refund of the amount found to have been overpriced, P5,233.17.
Notwithstanding the refund made by Froilan, an information for
violation of Sec 3(g) of RA 3019 was filed against him.
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Julius G. Froilan vs. The
Honorable Sandiganbayan
G.R. No. 115221 March 17, 2000
Ruling:
It was not disputed that when the COA found an overprice in
the amount of P5,232.87 and sought a refund thereof, petitioner, true
to his promise, did actually make a refund.
When the government is amply protected in a procurement
transaction, the contract is not grossly and manifestly
disadvantageous to it.
29
Rodolfo Madrid, Jr. vs. Hon. Aniano A.
Desierto,
G.R. No. 143684 July 31, 2000
Facts:
The City Government of Legazpi City invited bidders to
participate in the development and construction of the Legazpi City
Public Market. The project was awarded to Liberty Commercial
Center. A renewable 50-year contract of lease with Liberty was entered
into by the city government. Liberty will construct a public market on
the property of the government and thereafter pay the latter P5.5
million annually for the lease of the property. Transfer of ownership of
the public market will be transferred to the city government at the end
of the 50-year lease.
Complaint was filed against respondents before the Office of
the Ombudsman on violations of Sec. 3(e), (g) and (j) of Republic Act
No. 3019, which was dismissed.
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Rodolfo Madrid, Jr. vs. Hon. Aniano A.
Desierto,
G.R. No. 143684 July 31, 2000
Ruling:
The requirements under R.A. 6957 on approval from the ICC of
NEDA Board refer to transaction under the build-operate-transfer
scheme of the government and not to contract involving lease of
property just like the one involved in the instant case.All the elements
of a contract of lease are present in the transaction.(A transaction that
would now fall under general procurement law or RA 9184, comment
ours)There is a subject matter, the use of the property of the Legazpi
City; a cause or consideration which is the amount of rental that shall
be paid by the LCC; and consent among the parties. The mere
provision in the contract that the building shall belong to the city
government of Legazpi at the termination of the contract will not be
sufficient to classify the transaction under the BOT scheme. This kind
of provision is ordinary in long-term lease agreement.
31
Rodolfo Madrid, Jr. vs. Hon. Aniano A.
Desierto,
G.R. No. 143684 July 31, 2000
The option given to LCC to pay rent on a monthly basis
(instead on an annual basis) is not prejudicial to the government.
Whether the rent is paid monthly or annually would result in the
same thing – the receipt by the government of the same sum of money.
Mere reference made in the contract that the amount of rent shall be
such amount annually does not necessarily mean that payment
should be made in an annual basis.
32
Facts:
ANTONIO J. VILLEGAS vs. THE
AUDITOR GENERAL
G.R. No. L-21352 November 29,
1966
During the rebidding conducted by the Committee on Bids
(composed of City Mayor, Treasurer and Auditor), it was alleged that
the Mayor was represented by someone else. There was contention
that the Committee on Bids was illegally convened as the law does not
allow substitution.
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Issue:
ANTONIO J. VILLEGAS vs. THE
AUDITOR GENERAL
G.R. No. L-21352 November 29,
1966
Whether or not there can be valid substitution in the
Committee on Bids.
Ruling:
Well established is the principle that judicial or quasi-judicial
powers may not be delegated. In the absence of constitutional or
statutory authority, an administrative officer may not alienate or
surrender his discretionary power or power's which require exercise
of judgment, or deputize another for him with respect thereto. For,
when a public official is granted discretionary power, it is so be
presumed that so much is reposed on his integrity, ability, acumen,
judgment.
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