RA 9184 is the current law on government procurement. This law still requires public bidding as a preferred mode of award. However, it allows exceptions to public bidding rule in certain instances, conditions, or extraordinary circumstances

Exceptions in EO 301 apply to purchase of supplies, materials and equipment not to contracts for public services

We cannot agree with the contention of MIAA and Gana that the exceptions to the public bidding rule in Sec. 1 of EO 301 cover both contracts for public services and for supplies, material, and equipment.  Their reliance on Sec. 1(e) of EO 301 for the award of a service contract for janitorial and maintenance services without public bidding is misplaced.

For clarity, we quote in full Sec. 1 of EO 301:

Section 1.         Guidelines for Negotiated Contracts.  Any provision of the law, decree, executive order or other issuances to the contrary nothwithstanding, no contract for public services or for furnishing supplies, materials and equipment to the government or any of its branches, agencies or instrumentalities shall be renewed or entered into without public bidding, except under any of the following situations:

a.         Whenever the supplies are urgently needed to meet an emergency which may involve the loss of, or danger to, life and/or property;

b.         Whenever the supplies are to be used in connection with a project or activity which cannot be delayed without causing detriment to the public service;

c.         Whenever the materials are sold by an exclusive distributor or manufacturer who does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms to the government;

d.         Whenever the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive times, either due to lack of bidders or the offers received in each instance were exorbitant or non-conforming to specifications;

e.         In cases where it is apparent that the requisition of the needed supplies through negotiated purchase is most advantageous to the government to be determined by the Department Head concerned; and

  1. Whenever the purchase is made from an agency of the government.  (Emphasis supplied.)

In Andres v. Commission on Audit, this Court explained the rationale behind EO 301, upholding the general rule that contracts shall not be entered into or renewed without public bidding, thus:

Executive Order No. 301 explicitly permits negotiated contracts in particular identified instances.  In its preamble, it adverted to the then existing set-up of “a centralized administrative system . . . for reviewing and approving negotiated contracts . . .,” and to the unsatisfactory character thereof in that “such centralized administrative system is not at all ‘facilitative’ particularly in emergency situations, characterized as it is by red tape and too much delay in the processing and final approval of the required transaction or activity;” hence, the “need to decentralize the processing and final approval of negotiated contracts . . . ” It then laid down, in its Section 1, “guidelines for negotiated contracts” thenceforth to be followed.  While affirming the general policy that contracts shall not be entered into or renewed without public bidding, x x x.  (Emphasis supplied.)[50]

It is only in the instances enumerated above that public bidding may be dispensed with and a contract closed through negotiations.

MIAA and Gana posit the view that Sec. 1(e) of EO 301 includes contracts for public services and is not limited to supplies, materials, or equipment, and applies to all forms of contracts.

We are not convinced.

In Kilosbayan,[51] we ruled that Sec. 1 of EO 301 “applies only to the contracts for the purchase of supplies, materials, and equipment.  It does not cover contracts of lease of equipment like the [Equipment Lease Agreement].” While the lease of equipment was the subject of Kilosbayan, the ruling therein can very well apply to the cases at bar.  We agree with the apt observation of OMSI and TCSI that Sec. 1 of EO 301 and the exceptions to the bidding rule enumerated therein only pertain to contracts for the procurement of supplies, materials, and equipment. Thus, corollarily, this express enumeration excludes all others in accord with the elemental principle in legal hermeneutics, expressio unius est exclusio alterius or the express inclusion of one implies the exclusion of all others.  A contract for janitorial and maintenance services, like a contract of lease of equipment, is not included in the exceptions, particularly Sec. 1(e) relied upon by MIAA and Gana.

Moreover, in Kilosbayan, in denying Kilosbayan Incorporated’s motion for reconsideration and debunking its contention that EO 301 covers all types of contracts for public services, this Court, in a Resolution, reiterated its original ruling and held that EO 301 was promulgated merely to decentralize the system of reviewing negotiated contracts of purchase for the furnishing of supplies, materials, and equipment as well as lease contracts of buildings.  We concluded:

In sum, E.O. No. 301 applies only to contracts for the purchase of supplies, materials and equipment, and it was merely to change the system of administrative review of emergency purchases, as theretofore prescribed by E.O. No. 298, that E.O. No. 301 was issued on July 26, 1987.  Part B of this Executive Order applies to leases of buildings, not of equipment, and therefore does not govern the lease contract in this case. (Emphasis supplied.) [52]

It is thus clear that the contention of MIAA and Gana that the exceptions in EO 301, particularly Sec. 1(e), include contracts for public services cannot be sustained.

Further, suffice it to say that Sec. 9 of EO 903,[53] Sec. 82 of RA 8522 or the General Appropriations Act for 1998, and Sec. 417 of the GAAM, likewise relied upon by MIAA and Gana for grant of authority to negotiate service contract, do not do away with the general rule on public bidding. In Mabunay, we ruled that RA 7845 or the General Appropriations Act for 1995 cannot be construed to eliminate public bidding in the award of a contract for security services, as RA 7845 “is not the governing law on the award of the service contracts by government agencies nor does it do away with the general requirement of public bidding”[54] and that “administrative discretion may not transcend the statutes”[55] that require public bidding.  Thus, RA 8522, particularly its Sec. 82, does not dispense with the requirement of public bidding to award a contract for janitorial and maintenance services.

Furthermore, our ruling in National Food Authority, cited in Mabunay, is still valid.  It directly applies to the legal issue in the instant consolidated cases that public bidding is required for the award of service contracts.

RA 9184 provides for alternative procurement procedures

In sum, we reiterate the legal requirement of competitive public bidding for all government public service contracts and procurement of materials, supplies, and equipment.  Competitive public bidding may not be dispensed with nor circumvented, and alternative modes of procurement for public service contracts and for supplies, materials, and equipment may only be resorted to in the instances provided for by law.  In the instant case, no express provision of law has granted MIAA the right to forego public bidding in negotiating the award of contracts for janitorial and maintenance services.

In Abaya v. Ebdane,[56] this Court outlined the history of Philippine procurement laws from the introduction of American public bidding through Act No. 22, enacted on October 15, 1900, and the subsequent laws and issuances. On October 8, 2001, President Arroyo issued EO 40 which repealed, amended, or modified all executive issuances, orders, rules and regulations, or parts inconsistent with her EO.[57]

On January 10, 2003, President Arroyo signed into law RA 9184,[58] which expressly repealed, among others, EO 40, EO 262, EO 301, EO 302, and Presidential Decree No. 1594, as amended, and is the current law on government procurement. This law still requires public bidding as a preferred mode of award. However, RA 9184 allows exceptions to public bidding rule in certain instances, conditions, or extraordinary circumstances. Sec. 53[59] of RA 9184 in particular authorizes negotiated procurement, while other alternative methods of procurement are set forth under Art. XVI[60] of RA 9184. Thus, under the present law, MIAA can enter into negotiated contracts in the exceptional situations allowed by RA 9184.

With regard to the prayer for a mandatory preliminary injunction, OMSI and TCSI have amply demonstrated their right to require the holding of a public bidding for the service contracts with MIAA.  While we have previously explained that OMSI and TCSI have no right to a writ of mandatory injunction to have their service contracts extended by the courts beyond the fixed term, the situation is different with respect to their right to participate in the public bidding prescribed by law.  Since they were the previous service contractors of MIAA and have manifested their desire to participate in the public bidding for the new contracts, then they have satisfactorily shown that they have material and substantial rights to be protected and preserved by a mandatory injunctive writ against MIAA.  Considering that the negotiated contract is contextually illegal under EO 301, EO 903, Sec. 82 of RA 8522, and Sec. 417 of the GAAM, then MIAA can be directed to conduct a public bidding instead of resorting to a negotiated contract.

MIAA, however, eventually discarded the negotiation of new contracts with prospective service contractors and has decided to hire personnel to render janitorial and messengerial services starting July 31, 2005.  Clearly, the employment of said personnel is within the realm of management prerogatives of MIAA allowed under its charter, EO 903, and other existing laws.  Since the hiring of said employees dispensed with the need for getting service contractors, then the relief of requiring MIAA to conduct public bidding is already unavailing and has become moot and academic.

On the claim of OMSI and TCSI that their rights to equal protection of laws were violated by the negotiation of the contracts by MIAA with other service contractors, the Court finds no law that is discriminatory against them in relation to their expired service contracts.  EO 301, EO 903, RA 8522, and the GAAM are not discriminatory against them precisely because, as the Court ruled, there has to be public bidding where OMSI and TCSI are allowed to participate.  At most, what can be discriminatory is the intended negotiation of the new service contracts by MIAA which prevents OMSI and TCSI from participating in the bidding.  We find such act illegal and irregular because of the wrong application of the laws by MIAA and not because the pertinent laws are discriminatory against them.

We stressed in Genaro R. Reyes Construction, Inc. v. CA:

[A]lthough the law be fair on its face, and impartial in appearance, yet if applied and administered by the public authorities charged with their administration x x x with an evil eye and unequal hand so as to practically make unjust and illegal determination, the denial of equal justice is still within the prohibition of the Constitution.[61]

Given the antecedent facts of these consolidated cases, we agree with the courts a quo that the constitutional right of OMSI and TCSI to equal protection is violated by MIAA and Gana when no public bidding was called precisely because the latter were going to award the subject service contracts through negotiation. Worse, the acts of MIAA and Gana smack of arbitrariness and discrimination as they not only did not call for the required public bidding but also did not even accord OMSI and TCSI the opportunity to submit their proposals in a public bidding.  What OMSI and TCSI got was a terse reply that their contracts will not be renewed and that MIAA would negotiate contracts lower than those of OMSI and TCSI without granting them the opportunity to submit their own bids or proposals.  On the ground of uneven protection of law, we could grant the prayer for an order directing a public bidding.  Unfortunately, such action is already foreclosed by the decision of MIAA not to hire any service contractor.

http://sc.judiciary.gov.ph/jurisprudence/2008/jan2008/146184-85.htm

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About Erineus

Ernesto O. Bendita. Born on December 28, 1965, Surallah, South Cotabato, Southern Mindanao, Philippines.
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One Response to RA 9184 is the current law on government procurement. This law still requires public bidding as a preferred mode of award. However, it allows exceptions to public bidding rule in certain instances, conditions, or extraordinary circumstances

  1. nini deleon says:

    i attended a bidding at dep ed r-2, on the procurement of the officiating officials uniform for cavraa, there were only 2 bidders who paticipated, upon opening of the original tecnical envelope of the first bidder there was no bid security. and the bidder accepted that she misplace it at at financial. i was disgusted with the decision of the bac chairman. and that should be mark non responsive.

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