PHILIPPINE ASSOCIATION OF GENERAL SERVICES OFFICERS (PAGSO) 7 TH Annual Convention Bacolod Pavilion Hotel, B acolod City May 23-26, 2012. Department of Budget and Management Government Procurement Policy Board Technical Support Office. NON-POLICY MATTER OPINIONS (Updates).
PHILIPPINE ASSOCIATION OF
GENERAL SERVICES OFFICERS (PAGSO)
7TH Annual Convention
Bacolod Pavilion Hotel, Bacolod City
May 23-26, 2012
Department of Budget and Management Government Procurement Policy BoardTechnical Support Office
NON-POLICY MATTER OPINIONS (Updates)
“Permanent” (Section 11, RA 9184)
The term does not refer to whether the person holding the plantilla position is contractual, regular, or appointed; rather, this refers to whether the position exists within the organizational structure of the procuring entity or not. Therefore, a third ranking officer occupying a position, albeit in temporary capacity, is eligible to become the Chairman of the BAC for as long as the office he is currently occupying is an existing plantilla position.
The same rule applies to the designation of alternate members.
“Approving Authority” (Section 11.2.5, IRR)
The prohibition stated in Section 11.2.5 of the IRR is intended to avoid any conflict of interest between the person who takes part in a procurement activity and the one approving the resulting transactions. Consequently, such prohibition does not apply to approving authorities where this conflict of interest is not present.
The operations of the BAC will be hampered by the re-assignment of a member, whether provisional or regular, if such re-assignment results in the reduction of the BAC composition to less than five (5) members.
It is imperative for the HOPE to immediately replace any vacant BAC position to maintain a valid constitution of the BAC and avoid a lull in its operation.
Under Section 73 of RA 9184, in relation to the indemnification package of BAC members, the judgment contemplated therein, is a final, non-appealable and executory judgment.
The procuring entity shall, to the fullest extent permitted, indemnify a BAC member and/or any of its support staff who was or is a party to a pending or a completed action, suit or proceeding whether civil, criminal, or administrative in nature brought against him in the performance of his official functions as BAC member or support staff. (Section 4.1.1, Guidelines for Legal Assistance and Indemnification of Bids and Awards Committee and its Support Staff)
The funds to be used for the grant of the free legal assistance, liability insurance, or medical assistance shall be taken from the agency’s annual appropriation, and augmented by other funds resulting from protest fees, sale of bidding documents, and other income-generating activities of the agency. (Section 6, Guidelines)
Members of the BAC – Technical Working Group need not come from the procuring agency itself, as Section 12.1 merely mentions that the members of the TWG come from a pool of technical, financial and/or legal experts. Nowhere is it mentioned that members of the TWG should exclusively belong to the procuring entity itself.
Aside from the required advertisement in one (1) newspaper of general nationwide circulation and posting at any conspicuous place reserved for the purpose in the premises of the procuring entity, the Invitation to Bid/Request for Expression of Interest shall be posted continuously in the PhilGEPS website, the website of the procuring entity concerned, if available, and the website prescribed by the foreign government/foreign or international financing institution, if applicable, for seven (7) calendar days starting on date of advertisement.
Non-compliance thereto is a material defect in the procurement process.
Postponing the opening of bids through the bid bulletin, without postponing the deadline for submission of bidding documents, is contrary to the bidding procedures prescribed by RA 9184 and its IRR.
The opening of bids should be conducted within the same day as, and immediately after, the deadline for the submission and receipt of bids.
While the BAC erred in changing the date for the opening of bid documents, nowhere is it stated in RA 9184 and its IRR that the re-scheduling of the opening of bids automatically results to the re-scheduling of the deadline for the submission of bids.
In instances where the procuring entity sees the need to introduce any modifications or amendments to the bidding documents, it may do so motu proprio through the issuance of a supplemental/bid bulletin pursuant to Section 22.5.2 of the same IRR.
Although the technical specifications were not discussed during the pre-bid conference, the procuring entity concerned is not precluded from requiring the same, provided the appropriate supplemental/bid bulletin is issued within the prescribed time frame.
The creation of an accreditation system is not in accordance with the mandate of the present procurement law because it contravenes the very basic principles of competitive bidding.
The establishment of an accreditation system within the agency would limit the participation of bidders only to the accredited suppliers, to the exclusion and prejudice of the bidders in the market.
The attendance of the bidders in the bid opening is optional. The proof of authorization is not necessary whenever a bidder’s representative, other than the one authorized in the Omnibus Sworn Statement,attends the bid opening.
NPM 28-2011, NPM 09-2012
The IRR allows the submission of a copy of the original documents required, provided that the bidder certifies through the Omnibus Sworn Statement that the document submitted is an authentic copy of the original, that it is complete, and that the information and statements therein are true and correct.
It must be stressed, however, that the authenticity of the submitted copy must be verified, validated, and ascertained by the procuring entity during the post-qualification as prescribed in Section 34 of the IRR of RA 9184.
“The minutes of the bid opening shall be made available to the public upon written request and payment of a specified fee” (Section 29, RA 9184).
Participants or non-participants to the bidding may be given a copy of the minutes of the opening of bids upon compliance with the conditions provided by law.
Procuring entities are proscribed from requiring additional eligibility requirements. The list of minimum eligibility requirements under the Implementing Rules and Regulations (IRR) of Republic Act (RA) 9184 has been streamlined/simplified, such that only those requirements enumerated in Section 23.1, 24.1, and 25.1 of the IRR are necessary for purposes of determining bidder’s eligibility.
The documents to be submitted and evaluated should be those of the actual Joint Venture (JV) partners. In case one of the JV partners is also a JV, only the technical experience/capability and financial standing attributable to the JV shall be considered, and should not include those of its individual member entities.
Strict compliance with the eligibility, technical and financial requirements enumerated in the bidding documents must be observed. Bidders are left with no option but to provide an offer that complies with all the requirements. Compliance must be certain and absolute, otherwise, it takes the form of a counter-offer which is not allowed under RA 9184 and its IRR.
It is the the task of the procuring entity to ensure that in adopting an ABC, the contract cost or estimate must not be excessively high or unreasonably low to the detriment of government interest.
It is not necessary to have many bidders in order to receive the most advantageous bid considering that any bid that is equal or lower than the ABC, and is technically and legally compliant, is deemed most advantageous to the Government.
II. NPM 038-2011 –Requiring a minimum number of bidders.
Requiring a minimum number of bidders to participate in a public bidding is contrary to the mandate of Section 36 on Single Calculated/Rated and Responsive Bid (SCRB). The provision instructs a Procuring Entity to consider for award a bid submitted by the lone bidder if it successfully complied with and is responsive to bidding requirements. Hence, there is no need to have a minimum, so as long as the conditions under Section 36 are met.
The SLCC criterion is so required in order to ensure that the Government is contracting with an entity that has accomplished at least one project with a value no less than fifty percent (50%) of the contract to be bid. This eligibility requirement cannot be dispensed with.
Ongoing contracts cannot substitute for the requirement of completed contracts of similar nature to the contract subject for bidding.
Although procuring entities are given leeway in formulating the specifications in the terms of reference, they cannot limit the origin of goods to their preferred countries of origin to the exclusion of other countries.
Thus, procuring entities are precluded from requiring a specific country of origin as part of the technical specification for the project. Rather, the specifications shall be based on the performance requirements and recognized industry standards and not on the basis of country of origin.
The “no contact rule” under Sec. 32.1 applies only to those whose bids are being evaluated by the BAC after passing the preliminary examination of bids.
On the other hand, a disqualified bidder may provide valid, reasonable and lawful information on matters pertaining to the bids being evaluated, provided that such bidder has no pending request for reconsideration or protest relative to his/her disqualification.
Financial statements audited by CPAs not accredited by the Board of Accountancy (BOA) cannot be considered for purposes of Sec. 23.1(a)(v) and Sec. 24.1(a)(v) of the IRR of RA 9184.
Sections 26 and 28 of the IRR of RA 9298 (Phil. Accountancy Act of 2004) provides that no person shall engage in the practice of accountancy unless he/she is a CPA and possesses a certificate of accreditation from BOA.
I.NPM 23-2011 - Forfeiture
Forfeiture of bid security grounded on non-compliance with the requirements under Sec. 34.2 of the IRR is mandatory and is not subject to the discretion of the procuring entity.
Bidders have the option to choose from any of the acceptable forms of bid security enumerated under the IRR of RA 9184, and procuring entities may not limit the allowable forms of bid security nor prohibit bidders from submitting any of the acceptable forms of bid security.
The BAC may not likewise require the same through verbal instructions during pre-bid conference. After all, no changes or modifications to the bidding documents may take effect unless identified in writing and issued through a Supplemental/Bid Bulletin.
The validity of the bid security is material at the time of the issuance of the NOA since the validity of the bid security signifies that the bidder’s bid or offer still stands at the time the procuring entity awarded the contract.
The validity of the bid or offer is vital because the NOA or the act of acceptance by the procuring entity will be rendered nugatory and ineffectual when there is no longer an “offer” to accept.
If the NOA was issued and the winning bidder has submitted a performance security within the three-month period, the requirement that the bid security should remain valid no longer finds application considering that the act, i.e. the offer, which it guarantees has already been accepted.
The certification which must be submitted together with the surety bond must:
I.Bidders are not precluded from submitting the post-qualification documents during the submission of bids.
However, in case there is delay in the conduct of post-qualification, it is prudent for the Procuring Entity to request for the latest and current legal documents during post-qualification to ascertain, validate and verify the authenticity and currency of the documents and establish the eligibility and responsiveness of the bidder.
II.The BAC cannot require submission of the Original Articles of Incorporation (AIs). Section 29.2 (d) speaks of licenses and permits required by law and stated in the Bidding Documents. Clearly, AIs do not fall in either type of documents since this is a corporate document submitted to the Securities and Exchange Commission as part of the registration requirements.
Accordingly, if the requirement is merely to aid the Procuring Entity or the BAC in verifying the eligibility documents submitted, the bidder may simply submit copies of the AOI that is material to the post-qualification proceedings being conducted.
Awarding of contracts beyond the prescribed period of action may be recognized for justifiable causes. (Section 65.1 (b), RA 9184)
Although the periods of action under RA 9184 and its IRR are mandatory in character, penal sanctions or liability will not set in against the concerned public officers provided that valid, reasonable, and justifiable causes exist to warrant a delay.
The acceptable forms of warranty security in the procurement of goods are limited to retention money and special bank guarantee (Section 62.1, IRR).
Surety bond, as a form of warranty, is acceptable only in case of infrastructure projects. Thus, following the principle “expressiounius estexclusioalterius”, a surety bond cannot be considered an acceptable form of warranty security for the procurement of goods.
Procuring entities are allowed to extend the duration or effectivity of an ongoing contract about to expire subject to the condition that the contract extension shall not exceed one (1) year. (Section 4.1 GPPB Revised Guidelines on the Extension of Contracts for General Support Services)
Sec. 62.2 of the IRR, insofar as it requires the posting of warranty security, does not apply to the procurement of consulting services.
Procuring entities can require in consultancy contracts that the consultants warrant or ensure that they shall be liable in case of structural defects/failures under Sec. 184.108.40.206 and/or pecuniary civil liability and damages.
NPM 01-2012, NPM 25-2012
The amount of the liquidated damages shall be at least equal to one-tenth of one percent (0.1%) of the cost of the unperformed portion for every day of delay for the procurement of goods, infrastructure projects, and consulting services.(Section 68, IRR, RA 9184)
In order to properly use the “Guidelines for Blacklisting of Manufacturers, Suppliers, Distributors and Consultants, as basis for Blacklisting”, the act committed should be of the same kind as those enumerated therein. Considering that the violation of the rules and procedure on the protest mechanism under RA 9184 and its IRR does not amount to an act tending to defeat the purpose of competitive bidding, the premature resort to judicial intervention will not be considered as a ground for blacklisting.
A newly registered sole proprietorship may use the experience of another sole proprietorship owned by the same individual.
If one of the sole proprietorships is blacklisted, such blacklisting will extend to all sole proprietorships owned by the same individual.
It is beyond the power of the GPPB to grant exemptions from Republic Act No. 9184 and its Implementing Rules and Regulations as it does not have the power to legislate nor determine the coverage of the law. At most, the GPPB may only render contemporaneous construction of the provisions of the law pursuant to its quasi-legislative fiat, and issue rules and regulations pursuant to its rule-making power.
There is nothing in the rules prohibiting bidders disqualified from previous failed biddings from participating in the same procurementactivity, albeit conducted through Negotiated Procurement (Two Failed Biddings).
Competitive bidding is the primary mode of procurement. Exceptions are allowed only if there is prior approval of the Head of the Procuring Entity (HOPE) and whenever it is justified by the conditions as well as to promote economy and efficiency.
Prior approval of the GPPB in order to resort to alternative methods is not required under RA 9184 and its IRR.
Section 53.4 of the IRR clearly states that it applies to infrastructure projects and consulting services. Said provision does not qualify or limit the term “consulting service” to those involving infrastructure projects. Hence, Negotiated Procurement (Adjacent or Contiguous) may be used to procure all types of consulting services as defined in Section 5(i) of the IRR.
I.NPM 26-2011, NPM 16-2012, NPM 30-2012
In cases where procurement from another agency of the government is more efficient and economical, Negotiated Procurement (Agency-to-Agency) may be used. This rule allows a government entity to procure from another government entity without need of public bidding, subject to compliance with the prescribed conditions and procedures under existing rules and the guidelines on Agency-to-Agency Agreements.
The government entity to be engagedmust have the mandate to deliver the required goods and services or to undertake the infrastructure project or consultancy required. In addition, it should have the necessary tools and equipment required for the project.
NPM 34-2011, NPM 30-2012
In the event that a BAC cannot be created for lack of qualified personnel, Section 53.6 of the IRR of RA 9184 gives procuring entities the option, as determined by the HOPE,
(1) to request other government agencies to undertake such procurement for them; or
(2) to engage procurement agents to assist them directly and/or train their staff in the management of procurement function.
NPM 36-2011, NPM 34-2012
Small Value Procurement is allowed where the procurement does not fall under Shopping in Section 52 of the IRR, and the amount of the procurement must be within the threshold amount prescribed under Annex “H” of the IRR, subject to the procedural requirements under the Guidelines for Shopping and Small Value Procurement.
However, if the goods to be purchased can be considered as “ordinary or regular office supplies” not available in the Procurement Service, then the alternative method of Shopping can be used subject to the prescribed thresholds and guidelines.
NPM 05-2012, NPM 14-2012
Since the general rule is public bidding, the procuring entity is not precluded from applying such method regardless of the existence of conditions warranting the use of any of the alternative methods of procurement.
Section 53.2 of the IRR allows procuring entities to directly negotiate with a technically, legally and financially capable supplier or contractor in emergency cases, provided that the required conditions or instances are present. The determination of existence of these instances lies within the discretion of the procuring entity.
Accordingly, if the project was not included in the APP of the procuring entity, then it is essential that a BAC resolution recommending the use of alternative method be made; and a supplemental APP or an amendment thereto be issued before proceeding with the procurement.
In case of Infrastructure Projects by Administration, the procuring entity acts as the contractor, hence, it is tasked to prepare the Program of Work, as provided under the Revised Guidelines for the Implementation of Infrastructure Projects by Administration.
However, the cost of rental of construction equipment and tools to be used in the project should not form part of the Program of Work as it is a condition precedent that the procuring entity must own it.
I.NPM 040-2011 - Coverage
Section 2 of the Guidelines clearly indicates that it shall apply to all government agencies, without any distinction or qualification. Thus, following the well-recognized rule “ubi lex non distinguit, nec nos distinguire debemus”, the Guidelines also applies to GOCCs.
The Guidelines on the Procurement of Security and Janitorial Services, does not make any categorical pronouncement that multi-year contracts may be availed of only in the case of janitorial and security services contracts; rather, said Guidelines simply state that it shall be applicable to the procurement of janitorial and security services.
All private security agencies participating in the bidding for government contracts may offer different bid prices, provided that they do not go below the standard salaries and benefits and the mandated taxes in the minimum cost distribution formula. (Section 4, GPPB Circular 02-2006)
Government agencies are likewise advised to require bidders to indicate in their financial proposal the itemized components of the minimum cost distribution formula to facilitate the evaluation of bids. (Section 5, GPPB Circular 02-2006)
Hence, the requirement under Section 19 (a)(5) of the IRR of RA 5487, requiring private security agencies, to ensure that separation and retirement pay benefits due their security personnel are duly paid, cannot be omitted by procuring entities from the detailed cost breakdown of the financial bid form used for the procurement of security services.
The Philippine Association of Detective and Protective Agency Operators (PADPAO) Rate includes three components – Total Amount to Guard and Government, Agency Fee and VAT.
A Philippine Security Agency (PSA) bidding for government contracts may offer different bid prices below the PADPAO rate without being charged of cut-throat competition or violating the provisions of the IRR of RA 5487, provided that they do not go below the standard salaries and benefits for the guards and the mandated taxes in the minimum cost distribution formula in conformity with existing wage laws. Impliedly, the PSA can offer an amount lower than the PADPAO rate by reducing the agency fee covering operational and administrative expenses in computing for its bid price.
The administrative cost or agency fee is included in the PADPAO rate.
NPM 046-2011, NPM 047-2011
Despite the exclusion of GOCCs incorporated under BP 68 in the definition of Servicing Agency in GPPB Resolution 05-2010, and the fact that APO is a GOCC incorporated under BP 68, APO is nevertheless allowed to be engaged as a Servicing Agency only for the printing of Accountable Forms and Sensitive high Quality/Volume Requirements by virtue of the recognition accorded to it by RA 9970 and RA 10147 as a Recognized Government Printer.
The burden of proving the occurrence of extraordinary circumstances that will allow for price escalation rests with the entity requesting for such escalation.
NEDA shall only respond to such request after receiving the proof and the necessary documentation.
Along this line, the review and approval process under Section 5 of the Guidelines provide that the HOPE shall endorse the request for price escalation to NEDA upon determination that such request is valid and justified.
Survey of Supreme Court Decisions on
G.R. No. 167919 , February 14, 2007
G.R. No. 17560, June 8, 2007
National Power Corporation vs. Pinatubo Commercial, represented by Alfredo A. Dy G.R. No. 176006, March 26, 2010
G.R. No. 182559 March 13, 2009
Department of Foreign Affairs and BangkoSentralngPilipinas vs. Hon. Franco T. Falcon and BCA International CorporationG.R. No. 176657 September 1, 2010
G.R. Nos. 144950-71, March 22, 2007
G.R. No. 13351, January 30, 2006
National Power Corporation Vs. Philipp Brothers Oceanic, Inc.G.R. No. 126204 November 20, 2001
G.R. No. 151987. March 18, 2005
The Insular Life Assurance Company, Ltd. Vs. Asset Builders Corporation,G.R. No. 147410 February 5, 2004
The Insular Life Assurance Company, Ltd. Vs. Asset Builders CorporationG.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.
G.R. No. 177011, June 5, 2009
NOTE: DBM Circ. No. 2004-5A, as amended by DBM Circ. 2007-3
GR No. 167806 26 June 2006
G.R. No. 17560, June 8, 2007
G.R. No. 178799, January 19, 2009
Nava vs. PalattaoG.R. No. 16021 August 28, 2006
Allied Supreme Court Decisions
The BAC awarded a bidder an infrastructure project despite knowledge that the bidder (a construction firm) was not qualified for not being accredited by the Philippine Contractor’s Accreditation Board (PCAB). Hence, BAC members were accused of violating RA 3019 for “knowingly approving or granting a license of any person not qualified for or not legally entitled to such license”.
A BOT project proponent is not a contractor to undertake actual construction for the project and thus it need not register with and be accredited by the PCAB.
The requirement of public bidding, as well as the process and procedures thereof, mandated by the BOT law do not apply to unsolicited proposals for projects. Projects to be implemented under unsolicited proposals need not comply with the requirements, process and procedures of public bidding.
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.
Whether or not Section 19 of R.A. 9189 is constitutional?
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.
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.
Whether or not permanent injunction to bar the award of the concession to 2000 Transport and Nissan is proper?
- 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.
Pursuant to RA 8189 or the Voters Registration Act of 1996, COMELEC promulgated Resolution No. 00-0315 on the VRIS Project. PHOTOKINA won the public bidding conducted for the project for the bid amount of P6.588 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. The contract was not executed because former Chairman Demetriou objected to the contract. Her successor, Chairman Benipayo, scrapped the project.
Whether or not the contract between PHOTOKINA and COMELEC is valid and binding upon the unqualified acceptance of the bid?
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.
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.
Whether or not Froilan was guilty of causing damage to the government in terms of overpricing when he guaranteed the refund of whatever overprice the COA will find later on?
Conspiracy in this case could not have existed in the criminal act of causing damage to the government in terms of overpricing the goods bought by the latter from petitioner when, in reality, petitioner gave his guarantee to refund whatever overpricing the Commission on Audit will find out later on. 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. Conspiracy could not exist in the criminal act of causing damage to the government in terms of overpricing the goods bought by the government from a private entity when the latter gave its guarantee to refund whatever overpricing the Commission on Audit will find out later on.
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.
Whether or not the lease transaction falls under the BOT law or RA 9184?
Whether or not the payment of rent on an annual basis is prejudicial to the government?
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.
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.
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.
Whether or not there can be valid substitution in the Committee on Bids.
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.
The Governor issued a memorandum to approve purchase orders in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the SangguniangPanlalawigan. The Vice- Governor, and head of presiding officer of the SangguniangPanlalawigan, claims that he is the one authorized to approve the purchase orders invoking the principle of separation of powers between the executive and legislative branches of government. The Governor on the other hand, insists on the application of the last clause in Section 344 (Local Government Code) which states that the approval of the disbursement by the local chief executive is required whenever local funds are disbursed.
Whether or not the Governor (as local chief executive) is authorized to approve purchase orders issued in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the SangguniangPanlalawigan.
The Supreme Court held that it is the Vice-Governor who has such authority. Under Rep. Act No. 7160, local legislative power for the province is exercised by the SangguniangPanlalawigan and the Vice-Governor is its presiding officer. Being vested with legislative powers, the SangguniangPanlalawiganenacts ordinances, resolutions and appropriates funds for the general welfare of the province in accordance with the provisions of Rep. Act No. 7160.
Since it is the Vice-Governor who approves disbursement vouchers and approves the payment for the procurement of the supplies, materials and equipment needed for the operation of the SangguniangPanlalawigan, then he also has the authority to approve the purchase orders to cause the delivery of the said supplies, materials or equipment.
Indeed, the authority granted to the Vice-Governor to sign all warrants drawn on the provincial treasury for all expenditures appropriated for the operation of the SangguniangPanlalawigan as well as to approve disbursement vouchers relating thereto is greater and includes the authority to approve purchase orders for the procurement of the supplies, materials and equipment necessary for the operation of the SangguniangPanlalawigan.
Sec. 22(c) of R.A. No. 7160 provides:
Sec. 22. Corporate Powers.—(a) Every local government unit, as a corporation, shall have the following powers:
(c) Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of the local government unit without prior authorization by the Sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.
As it clearly appears from the foregoing provision [Sec. 22(c)], prior authorization by the sanggunian concerned is required before the local chief executive may enter into contracts on behalf of the local government unit.
The requirement was deliberately added as a measure of check and balance, to temper the authority of the local chief executive, and in recognition of the fact that the corporate powers of the local government unit are wielded as much by its chief executive as by its council.
And so, to give life to the obvious intendment of the law and to avoid a construction which would render Sec. 22(c) of R.A. No. 7160 meaningless, disbursement, as used in Sec. 346, should be understood to pertain to payments for statutory and contractual obligations which the sanggunian has already authorized thru ordinances enacting the annual budget and are therefore already subsisting obligations of the local government unit. Contracts, as used in Sec. 22(c) on the other hand, are those which bind the local government unit to new obligations, with their corresponding terms and conditions, for which the local chief executive needs prior authority from the sanggunian.
Atty. Dennis S. Santiago
Executive Director III