Republic of the
Supreme Court
THIRD DIVISION
|
PHILIPPINE
SPORTS COMMISSION, CESAR PRADAS, NOEL ELNAR, EMERENCIANA SAMSON, CESAR
ABALON, JULIA LLANTO, EDGARDO MATEO AND ERIC BUHAIN, Petitioners, - versus - DEAR JOHN
SERVICES, INC., Respondent. |
|
G.R. No.
183260 Present: VELASCO, JR., J., Chairperson, PERALTA, REYES,* and PERLAS-BERNABE,
JJ. Promulgated: July
4, 2012 |
X --------------------------------------------------------------------------------------
X
DECISION
MENDOZA, J.:
Before the Court is a petition for review under Rule
45 of the Rules of Court seeking the reversal of the April 17, 2008 Decision[1] and the
June 11, 2008 Resolution[2] of the
Court of Appeals (CA) in CA-G.R. CV No. 88606, which reversed and set
aside the November 29, 2006 Decision[3] of the
Regional Trial Court, Branch 196, Paraaque City (RTC), in Civil
Case No. 02-0212, entitled Dear John Services, Inc. v. Philippine Sports
Commission.
The
Facts:
In December 2001, respondent Philippine Sports
Commission (PSC) published an Invitation to Bid for its
janitorial and security services. Pursuant thereto, respondent Dear John
Services, Inc. (Dear John Services) submitted its letter[4]
signifying its intent to participate in the bidding and subsequently paid the
bidding fee.[5]
On
When the review was completed, the Invitation to
Apply for Eligibility and to Bid was re-advertised in order to comply with
the requirements set forth in Executive Order (E.O.) No. 40, Series of
2001 and in its Implementing Rules and Regulations.[7] The pre-bidding and bidding dates were then
scheduled to
Among the bidders who qualified and submitted the
necessary documents for prequalification were Dear John Services[8] and
Consolidated Building Maintenance, Inc.[9] (CBMI).
A procedure for the conduct of the public bidding, entitled Instruction to
Bidders,[10]
was given to the qualified bidders.
The bidding was held as scheduled and the sealed
bids were opened. Dear John Services bid amounted to ₱18,560,078.00
while that of CBMI amounted to ₱27,419,097.00. PSC, however, awarded the
contract to CBMI because Dear John Services allegedly failed to reach the 60%
lower limit of the Approved Agency Estimate (AAE).[11]
Dear John Services sent a letter,[12] dated
Subsequently, Dear John Services filed a Complaint[13]
against PSC for injunction before the RTC praying, among others, that a
temporary restraining order (TRO) be issued enjoining PSC and its
officers (petitioners) from awarding the janitorial services to CBMI;
that a preliminary injunction be issued restraining PSC from availing of CBMIs
janitorial services; and that after the hearing, the injunction be made
permanent.
On
Thereafter, the prayer for the extension of the TRO
and the request for the issuance of the writ of preliminary mandatory
injunction were denied in the RTC Order,[16] dated
The Complaint was later on amended to include Buhain,
in his capacity as Chairman of PSC, and the chairman and members of the Bids
and Awards Committee (BAC), namely, Cesar Pradas, Eugene De Vera, Noel
Elnar, Emerenciana Samson, Cesar Abalon, Julia Llanto, and Edgardo Mateo.[17]
After the trial on the merits, the RTC dismissed the
complaint, in its
On appeal, the CA, in the subject decision, reversed
and set aside the RTC decision, as it disposed:
WHEREFORE, premises considered,
the present appeal is hereby GRANTED. The appealed Decision dated November 29,
2006 of the Regional Trial Court of Paraaque City, Branch 196 in Civil Case
No. 02-0212 is hereby REVERSED and SET ASIDE. A new judgment is hereby entered
ordering the individual defendants-appellees, jointly and severally, to pay
plaintiff-appellant the sum of Two Hundred Thousand Pesos (₱200,000.00) as nominal damages.
Needless to reiterate, the Amended
Complaint as against defendant-appellee Philippine Sports Commission is
dismissed.
No pronouncement as to costs.
SO ORDERED.[18]
In coming up with the said decision, the CA
explained:
x x x
The controversy revolved around
the so-called Agency Approved Estimate which is nowhere found or mentioned in
EO 40 or its IRR. What EO 40 mandates is the use of the lowest calculated and
responsive bid intended to be transparent, objective and non-discretionary
criteria, and the approved budget contract (ABC) as the ceiling of the
bid price. It is significant to note that appellees are mandated to disclose
the approved budget for the contract in the Invitation to Bid pursuant to
Sec. 14 of EO 40, another feature of the law aimed at ensuring transparency and
objectivity in the bidding process. Records do not show compliance with said
requirement. While Sec. 27, bids tendered must be post-qualified to determine
if they satisfied all the conditions and requirements in the bidding documents,
specifically the condition imposed in the Instructions to Bidders that the bid
amount should not be lower that 60% of the AAE, this lower limit violates the
rule laid down in EO 40 which prohibits such lower limit to the contract
amount. Sec. 25 of the IRR reiterated the rule that there shall be no lower
limit to or floor on the amount of the award.
Moreover, the non-disclosure of
the AAE prior to the bidding contravenes the policy of transparency, on the assumption
that such AAE is equivalent to ABC since the latter amount is required to be
disclosed in the Invitation to Bid. Neither can the AAE be equated with the
Lowest Calculated and Responsive Bid considering the admission in the
testimony of BAC Chairman Cesar Pradas that the AAE was determined even prior
to the bidding held on April 26, 2002, or more precisely as early as April 18,
2002. The imposition of the 60% below AAE ceiling for the bids therefore has no
legal basis and contrary to the prohibition against a floor price for the
amount of the award under EO 40.
4.2 Award of Contract
Award of Contract will be made in
accordance with the provisions of EO 40 and its implementing Rules and
Regulations (IRR). The PSC, however, is not bound to accept the lowest bid or
any bid nor will be responsible for or pay any expenses which maybe incurred by
any Bidder in the preparation or submission of its Bid. The PBAC-BAC also
reserves the right to award the contract to the bidder whose Bid is evaluated
to be the most advantageous to the government.
No award of contract shall be made
to a Bidder whose bid price is higher than the allowable government estimate
(AGE) or the Approved Agency Estimate (AAE) whichever is higher, or lower than
seventy percent (70%) of the AGE, for the purpose of these implementing rules
and regulations, the AGE shall be equal to one-half (1.5) of all responsive
bids. For purpose of determining the average of all responsible bids, bids
higher than One Hundred Twenty Percent (120%) of the AAE or lower than sixty
percent (60%) of the AAE shall not be considered.
Upon careful and thorough
evaluation of Bids, the winning Bidder shall be informed through written Notice
of Award.
The PSC is not bound to justify
the selection of the successful Bidder to any Bidder or other interested party.
The above conditions in the
Instruction to Bidders does not comply with the requirements of EO 40 and its
IRR, and are offensive to due process as they contravene the principles of
transparency, objectivity and non-discretionary criteria established therein.
The fact that appellant voluntarily accepted these conditions and submitted its
bid without any question regarding the existence of or amount of the AAE is of
no moment, in view of the irregular bidding procedure. Appellees had not been
transparent and objective about the so-called AAE as to whether it represents
the approved budget contract or the lower calculated and responsive bid
provided in EO 40. Thus, although it is conceded that there is no evidence of
collusion or that the conditions imposed by appellees were made the basis of a
fraudulent award, it cannot be gainsaid that the bidding instructions were
arbitrarily issued and the entire bidding procedure did not comply with EO 40
and its IRR.
Appellees reliance on the
following reservation clause in the Instruction to Bidders, likewise holds no
water.
1.4
Rejection of Bids, Disqualification of Bidder and other sanctions
The office of the PSC reserves the
right to reject any or all bids and waives any required formality in the bids
received. The right is also reserved to reject the bid of any bidder (a) that
is above AAE or AGE (b) who had previously failed to satisfactorily perform or
complete any contract services undertaken by him/her or was eligible on the
basis of suppressed or false information.
The PSC assumes no obligation
whatsoever to compensate or indemnify bidders for any expenses or loss that may
be incurred in the preparation of the bids nor does it guarantee that an award
will be made.
The PSC will reject any
non-complying Bid, i.e., a Bid that fails to meet any requirement, terms or
condition set forth in the Tender Documents as well as relevant laws, rules and
regulations.
Notwithstanding the eligibility of
any contractor to submit Bids for the proposed contract, PSC reserves the right
to review its Eligibility requirements, statements and other relevant
information before and/or after the submission and before award of the
Contract. Should such review uncover any misrepresentation made in the
Eligibility statement, the BAC shall disqualify the contractor from submitting
a Bid or shall not make any award to prospective Contracting Agencies.
Under Sec. 29 of EO 40, such
reservation clause is essential.
Sec. 29. Reservation Clause. The
government reserves the right to reject any all bids, or declare a failure of
bidding, or not award the contract for any justifiable reason including among
others, if there is evidence of collusion between relevant public officers or
employees of the agency or the BAC and any of the which restricts, suppresses
or nullifies competition, or if the BAC is found to have failed to follow the
prescribed bidding procedures.
The Supreme Court has ruled in National
Power Corporation vs. Philipp Brothers Oceanic, Inc. where the right to
reject is so reserved, the lowest bid or any bid for that matter may be
rejected on a mere technicality. And 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. Accordingly, a bidder has no ground
of action to compel the Government to award the contract in his favor, nor
compel it to accept his bid. Even the lowest bid or any bid may be rejected.
Generally, the discretion to
accept or repea[l] a bid and award contract is of such wide latitude that the
Court will not interfere therewith, unless it is apparent that it is used as a
shield to a fraudulent award. The exercise of the discretion is a policy
decision vested in the government agencies entrusted with that function. The
exercise of that discretion is a policy decision that necessitates prior
inquiry, investigation, comparison, evaluation, and deliberation. This task can
best be discharged by the concerned government agencies, not by the courts. The
role of the courts is to ascertain whether a branch or instrumentality of the
government has transgressed its constitutional boundaries. Courts will not
interfere with executive or legislative discretion exercised within those
boundaries.
This policy has been reiterated in
a more recent case, thus:
Further, LWUA made a reservation
to reject bids as the Invitation to Prequalify and Bid published in the
LWUA reserves
the right to reject any or all the bids, to waive any formality found
therein and to accept such bid or a part thereof as may be deemed most
advantageous to LWUA. (Empahsis and underscoring supplied)
The discourse
in his A TREATISE ON GOVERNMENT CONTRACT UNDER PHILIPPINE LAW of former
Commissioner of the Commission on Audit Bartolome C. Fernandez, Jr. is
enlightening:
It is a settled rule that where the invitation to bid contains a
reservation for the Government to reject any or all bids, the lowest or highest
bidder, as the case may be, is not entitled to an award as a matter of right
for it does not become the ministerial duty of the Government to make such
award. Thus, it has been held that where the right to reject is so reserved,
the lowest bid or any bid for that matter may be rejected on a mere
technicality, that all bids may be rejected, even if arbitrarily and unwise, or
under a mistake, and that in the exercise of a sound discretion, the award may
be made to another than the lowest bidder. And so, 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. Accordingly, he has no
ground of action to compel the Government to award the contract in his favor,
nor to compel it to accept his bid.
Verily, a reservation in the advertisement for bids of the 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 performed, may not be reviewed
by the courts. In such cases, there is no binding obligation to award the
contract to any bidder and in the exercise of such discretion the award may be
made validly to whoever among the participating bidders has submitted the most
advantageous bid.
Contrary then
to the assertion of petitioner, the
bidding was carried out in accordance with its purpose of protecting public
interest by giving the public the best possible advantages through open
competition.
However, a
reading of the decisional rule on reservation of right to reject cautions
against injustice, unfairness, arbitrariness, fraudulent acts or grave abuse of
discretion. A contrary conclusion would be anathema to the purposes for which
public biddings are founded to give the public the best possible advantages
through open competition as it would give the unscrupulous a plain escape to
rig the bidding process. Grave abuse of discretion is committed when an act is:
1) done contrary to the Constitution, the law or jurisprudence, or 2) executed
whimsically or arbitrarily in a manner so patent and so gross as to amount to
an evasion of a positive duty, or to a virtual refusal to perform the duty
enjoined. The bidding conducted by the appellees is clearly tainted with
irregularity and grave abuse, resulting in prejudice and material loss to
appellant.[19]
x x x.
Petitioners filed their motion for reconsideration
but was denied in the
GROUNDS
RELIED UPON IN THE PETITION
THE HONORABLE
COURT OF APPEALS GRAVELY ERRED IN REVERSING THE JUDGMENT OF THE
I
RESPONDENT
FAILED TO REACH THE 60% LOWER LIMIT OF THE AAE.
II
PETITIONER PSC
HAD BASIS TO REJECT RESPONDENTS BID BECAUSE OF THE RESERVATION CLAUSE IN THE
INSTRUCTION TO BIDDERS.[20]
Petitioners point out that the Instruction to
Bidders clearly provides that the bid price should not be less than 60% of
the AAE. When Dear John Services submitted its bid, it expressed its assent in
the Instruction to Bidders and so it was bound by the terms and
conditions stated therein.
They explain that the condition that the bid amount
should not be lower than 60% of the AAE is necessary in order to ensure
compliance with the minimum wage, 13th month pay, state insurance
and other benefits imposed by statutes, and to guarantee efficient and
effective performance by the winning bidder.
Petitioners further aver that there is nothing in E.O.
No. 40 that mandates the disclosure of the AAE to bidders. Besides, Dear John
Services never demanded its disclosure during the opening of the bids.
The Court finds no merit in the petition.
Public bidding, as a method of government
procurement, is governed by the principles of transparency, competitiveness,
simplicity, and accountability.[21] By
its very nature and characteristic, a competitive public bidding aims to
protect the public interest by giving the public the best possible advantages
thru open competition and in order to avoid or preclude suspicion of favoritism
and anomalies in the execution of public contracts.[22] Except
only in cases in which alternative methods of procurement are allowed, all
government procurement shall be done by competitive bidding.[23]
In the case of Agan, Jr. v. Philippine
International Air Terminals Co, Inc.,[24] the
Court held:
Competition must be legitimate,
fair and honest. In the field of government contract law, competition requires,
not only bidding upon a common standard, a common basis, upon the same thing,
the same subject matter, the same
undertaking, but also that it be legitimate, fair and honest; and not
designed to injure of defraud the government.
It has been held that the three principles in bidding
are the offer to the public, opportunity for competition, and a basis for the
exact comparison of bids. A regulation of the matter which excludes any of
these factors destroys the distinctive character of the system and thwarts the
purpose of its adoption.[25]
As pointed out in the case of Power Sector Assets
and Liabilities Management Corporation v. Pozzolanic Philippines Incorporated,[26] an essential
element of a publicly bidded contract is that all bidders must be on equal
footing, not simply in terms of application of the procedural rules and
regulations imposed by the relevant government agency, but more importantly, on
the contract bidded upon.
In the case at bench, PSC-BAC failed to comply with
the requirements and procedures for competitive bidding specified under E.O.
No. 40.
Section 14 of E.O. No. 40 provides:
Section 14. Invitation to Bid. The
invitation to bid shall contain, among others: a brief description of the items
to be procured; the eligibility requirements; the place, date and time of the
deadlines for receipt of eligibility requirements and bids; the approved
budget for the contract to be bid; time and place of the opening of bids;
and the contract duration or delivery. [Underlining supplied]
Section 14 of the Implementing Rules and Regulations (IRR) of E.O.
No. 40 specifically mandates the BAC to include in the Invitation to Apply for Eligibility and to Bid the following information to guide the prospective bidders, to wit:
Section 14. Invitation to Bid
14.1. Contents of the Invitation to Apply for Eligibility and to Bid
x x x x
1. The name, address, telephone number, facsimile number, e-mail and
website addresses of the concerned agency, as well as its designated contact
person;
2. For the procurement of:
a) Goods, the name of the contract to be bid and a brief description of
the goods to be procured;
b) Civil works, the name and location of the contract to be bid, the
project background and other relevant information regarding the proposed
contract works, including a brief description of the type, size, major items,
and other important or relevant features of the works; and
c) Consulting services, the name of the contract to be bid, a general
description of the project and other important or relevant information;
3. The criteria to be used by the agency in the following: (i)
eligibility check of prospective bidders; (ii) examination and evaluation of
bids; and (iii) post qualification; which shall be on a non-discretionary
pass/fail basis;
4. The approved budget for the contract to be bid and the source of
funding;
5. The period of availability of the bidding documents, the place where
the bidding documents may be secured and, where applicable, the price of the
bidding documents;
6. The date, time and place of the deadline for the submission and
receipt of the eligibility requirements, the pre-bid conference if any, the
submission and receipt of bids, and the opening of bids; and
7. The contract duration or delivery schedule. [Emphasis supplied]
Essentially, the procurement process involves the
following steps: (1) pre-procurement
conference; (2) advertisement of the invitation to bid; (3) pre-bid conference;
(4) eligibility check of prospective bidders; (5) submission and receipt of bids;
(6) modification and withdrawal of bids; (7) bid opening and examination; (8)
bid evaluation; (9) post qualification; (10) award of the contract; and (11) notice
to proceed.[27] Parenthetically, from the first step of the
procurement procedure, E. O. No. 40 and its implementing rules are clear to the
effect that the approved budget for the contract and the source of the funding
should be divulged to prospective bidders.
Under the Rules Implementing E.O. No. 40, the BAC
shall indicate in the Invitation to Bid relevant information regarding the
proposed project and the standards that would be used in determining the
pre-qualification and post-qualification of the prospective bidders and in the
evaluation of bids. It shall indicate, among others, a brief description of the
project to be bid; the approved budget
for the contract to be bid; the criteria to be used by the agency
concerned for the eligibility check; the availability of the bidding documents;
and the date, time and place of the deadline for the submission of the
eligibility requirements. In other words, the BAC shall furnish all information on
the projects necessary for prospective bidders to properly prepare their bids in
order to give them fair and equal opportunity to bid.
Admittedly, PSC-BAC did not disclose in any of the
bidding documents the amount of the AAE. The Bid Bulletin which was posted in
conspicuous places and the Instruction to Bidders that was distributed
to qualified bidders did not indicate the amount of the AAE. Petitioners
contention, that they were not bound to disclose the AAE and that Dear John
Services never demanded its disclosure, is untenable. Under the law, the PSC-BAC
is mandated to disclose not only the description of the items to be procured, and
the eligibility requirements, among others, but also the approved budget of the
project. Competitive bidding is an essential element of a public bidding. Thus,
it should be conducted fairly and openly with full and free opportunity for
competition among bidders. It has been held in a long line of cases that a
contract granted without the competitive bidding required by law is void and
the party to whom it is awarded cannot benefit from it.[28] Had Dear
John Services and CBMI known all the information regarding the bidding, a
different set of bids might have emerged.
Moreover, Section 25 of E.O. No. 40 and its IRR
prohibit the BAC from imposing a minimum amount to be offered in the bid. It
states:
Section 25. Ceiling for Bid Price.
The approved budget for the contract shall be the upper limit or ceiling for
the bid price. Bid prices which exceed this ceiling shall be disqualified
outright from further participating in the bidding. There shall be no lower
limit to the amount of the award. For this purpose, the approved budget for
the contract shall be that approved by the head of the agency. [Underscoring
supplied]
Consequently, the provision in the Instruction
to Bidders stating that no award of the contract shall be made to a bidder
whose bid price is lower than the allowable government estimate (AGE) or
AAE is not valid. The rule on the matter is clear. The PSC-BAC is obliged to
observe and enforce the same in the procurement of goods and services for the
project. The law on public bidding is not an empty formality.[29] A
strict adherence to the principles, rules and regulations on public bidding
must be sustained if only to preserve the integrity and the faith of the
general public on the procedure.[30]
WHEREFORE, the petition is DENIED. The April 17, 2008 Decision and the June 11, 2008
Resolution of the Court of Appeals in CA-G.R. CV No. 88606 are AFFIRMED.
SO ORDERED.
JOSE CATRAL
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate
Justice
Chairperson
DIOSDADO M.
PERALTA BIENVENIDO L.
REYES
Associate Justice Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
A T T E S T A T
I O N
I attest that
the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.
PRESBITERO J. VELASCO, JR.
Associate
Justice
Chairperson, Third Division
C E R T I F I C
A T I O N
Pursuant to
Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
ANTONIO
T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. No. 296,
The Judiciary Act of 1948, as amended)
*
Designated Acting Member in lieu of Associate Justice Roberto A. Abad, per
Special Order No. 1244 dated
[1] Rollo, pp. 52-67. Penned
by Associate Justice Martin S. Villarama, Jr. (now member of this Court) and
concurred in by Associate Justice Noel G. Tijam and Associate Justice Myrna
Dimaranan Vidal.
[2]
[3] Records,
pp. 580-587.
[4] Annex A, records,
p. 496.
[5] Annex B, id. at 498-499.
[6] Annex E, id. at 501.
[7] Annex G, id. at 503.
[8] Annex I, id. at 505.
[9] Records,
p. 515.
[10] Annex J, records, pp. 506-514.
[11] Annex K, id. at 515.
[12] Annex L, id. at 516.
[13] Records,
pp. 49-58.
[14]
[15]
[16]
[17]
[18] Rollo,
p. 66.
[19]
[20]
[21] Commission on Audit v. Link
Worth International, Inc., G.R. No. 182559,
[22]
[23] Commission on Audit v. Link
Worth International, Inc., supra note 21.
[24] 450 Phil.
744, 814 (2003).
[25]
[26] G.R. No. 183789,
[27] Sections 13-30 of E.O. No. 40.
[28]
[29] Nava v.
Palattao,
531 Phil. 345, 367 (2006).
[30] Agan, Jr.
v. PIATCO, 450 Phil. 744, 812-813.