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 Board
Technical Support Office

NON-POLICY MATTER
OPINIONS (Updates)

BAC Composition
I.

NPM 024-2011, NPM 034-2011, NPM 035-2011,

NPM 28-2012

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.

BAC Composition
II.

NPM 024-2011

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.

Re-assignment of
BAC member
NPM 19-2012

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.

Indemnification for
BAC Members
NPM 044-2011

finally adjudged

Under Section 73 of RA 9184, in

relation to the indemnification package of
BAC
members,
the
judgment
contemplated therein, is a final, nonappealable and executory judgment.

Legal Assistance and

Indemnification Package
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 agencys 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)

Technical Working Group for

the Bids and Awards
Committee
NPM 26-2012

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.

Advertising and Posting

Requirements
NPM 032-2011

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.

Supplemental/Bid Bulletin
I.

NPM 021-2011 - Bid Opening and Supplemental/Bid

Bulletin

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.

Supplemental/Bid Bulletin
II. NPM 028-2011 - Modification of Bidding Documents

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.

Accreditation System for

Bidders
NPM 033-2011

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.

Attendance of Bidders or their

Duly Authorized Representative
During Bid Opening
NPM 07-2012

The attendance of the bidders in the

bid opening is optional. The proof of
authorization is not necessary whenever a
bidders representative, other than the one
authorized
in
the
Omnibus
Sworn
Statement, attends the bid opening.

Submission of Photocopy of
Documentary Requirements
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.

Who may request for a copy of the

Minutes of the Opening of Bids?
NPM 030-2011

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.

Additional Eligibility Requirements in

Bidding Documents
NPM 21-2012

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 bidders eligibility.

Eligibility Requirements for

Joint Venture Agreements
NPM 24-2012

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.

Counter-Offer/
Counter-Proposal
NPM 29-2012

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.

Single Calculated and

Responsive Bid
I. NPM 022-2011 - most advantageous prevailing price

for the Government

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.

Single Calculated and

Responsive Bid
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.

Single Largest Completed

Contract
NPM 20-2012

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.

Nationality Preference
NPM 15-2012

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.

No Contact Rule
NPM 03-2012

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.

Audited Financial Statements

NPM 12-2012

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.

Bid Security
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.

Bid Security
II.

NPM 043-2011 -

Acceptable Forms

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.

Validity of Bid Security after Issuance of

Notice of Award
NPM 18-2012

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 bidders 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.

Certification issued by the

Insurance Commission
NPM 17-2012

The certification which must

together with the surety bond must:

be

submitted

1. unequivocally state that the surety or

insurance company is specifically authorized
to issue surety bonds callable on demand;
2. must be issued by the Insurance Commission;
and,
3. must be project specific. (Sections 27 and 39,
IRR)

Submission of
Post-qualification Documents
NPM 09-2012

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.

Submission of
Post-qualification Documents
NPM 09-2012

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.

Offenses and Penalties

Contract Award
NPM 10-2012

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.

Surety Bond as Warranty

Security
NPM 29-2011

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
expressio unius est exclusio alterius, a surety bond cannot be
considered an acceptable form of warranty security for the
procurement of goods.

Extension of Contracts for

General Support Services
NPM 031-2011

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)

Warranty Security for

Consulting Services
NPM 11-2012

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. 62.2.3.1 and/or
pecuniary civil liability and damages.

Computation of Liquidated Damages and

Net Amount of Retention Money
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)

Blacklisting
NPM 33-2012

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.

Availment of Track Record

under a Newly Registered
Business Name
NPM 37-2011

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.

ALTERNATIVE METHODS
1.

SHOPPING

Exemption from Obtaining Three (3) Price

Quotations
NPM 25-2011

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.

NEGOTIATED PROCUREMENT
2.

Two Failed Biddings

NPM 41-2011

There is nothing in the rules prohibiting

bidders disqualified from previous failed biddings
from participating in the same procurement activity,
albeit conducted through Negotiated Procurement
(Two Failed Biddings).

3. Emergency Cases
NPM 045-2011

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.

4. Adjacent or Contiguous
NPM 22-2012

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.

5.

Agency-to-Agency Agreements

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.

Agency-to-Agency Agreements
II.

NPM 04-2012

The government entity to be engaged

must 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.

6.

Procurement Agent

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.

7. Small Value Procurement

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.

NEGOTIATED PROCUREMENT
Exemption from Resort to
Negotiated Procurement
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.

NEGOTIATED PROCUREMENT
Resolution of the BAC
When necessary?
NPM 027-2011
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.

Infrastructure Projects by
Administration
NPM 32-2012

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.

Procurement of Security and

Janitorial Services and
Multi-Year Contracts
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.

Procurement of Security and

Janitorial Services and
Multi-Year Contracts
II.

NPM 08-2012 Applicability

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.

Procurement of Security Services

NPM 042-2011
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.

PADPAO Rate
NPM 13-2012
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.

Procurement of Printing Services (GPPB

Resolution No. 05-2010)
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.

Request for Price Escalation

NPM 02-2012

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.

THANK YOU
Comments Questions

Survey of Supreme Court

Decisions on
Public Procurement

Section 4, R.A. 9184

Abaya vs. Ebdane
G.R. No. 167919 , February 14, 2007

DBM-PS vs. Kolonwel Trading

G.R. No. 17560, June 8, 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.

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.

Technical Specifications
COA vs. Link Worth Intl., 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

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."

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 BSPs 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 ePassport 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.

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.
61

Discretion to Accept or Reject A Bid

Albay Accredited Constructors Association v.
Ombudsman
G.R. No. 13351, January 30, 2006
The discretion to accept or reject a bid and award
contracts is vested in the government agencies
entrusted with that function. 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.
62

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.

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.

COAs 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.

64

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.

65

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.

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 Circ. No. 2004-5A, as amended by DBM Circ. 2007-3

Protest
Phil. Pharmawealth, Inc. v. Phil. Childrens
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.

68

Protest
LRA
v.
Lanting
Security
GR No.181735 July, 20, 2010

and

Watchman

Agency

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.

Respondents letter of November 19, 2004 to the LRA Chair of

the BAC-Procurement of Goods, Services and Materials (BACPGSM) 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.

Protest
DBM-PS vs. Kolonwel Trading
G.R. No. 17560, June 8, 2007
Three elements of a Protest:
In writing, in the form of a verified position paper
Submitted to the head of the procuring entity
Payment of a non-refundable protest fee

Protest mechanism applies to foreign-funded

projects

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

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.

Allied Supreme Court

Decisions

People of the Philippines vs. Sandiganbayan

G.R. Nos. 162748-50 March 28, 2006

Facts:
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 Contractors 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.

Issue:
Whether or not a BOT project proponent needs to register with and
be accredited by the PCAB
Whether or not a MOA under the BOT scheme is valid without
public bidding

People of the Philippines vs. Sandiganbayan

G.R. Nos. 162748-50 March 28, 2006
Ruling:

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.

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.

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.

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.

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.

Commission on Elections Vs. Judge Ma. Luisa Quijano-Padilla

G. R. No. 151992 September 18, 2002

Facts:
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.

Commission on Elections Vs. Judge Ma. Luisa Quijano-Padilla

G. R. No. 151992 September 18, 2002

Issue:
Whether or not the contract between PHOTOKINA
and COMELEC is valid and binding upon the unqualified
acceptance of the bid?
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.

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.

Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No.

115221 March 17, 2000

Issue:
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?

Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No.

115221 March 17, 2000

Ruling:
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.

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.

Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto, G.R. No. 143684
July 31, 2000

Issues:
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?

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.
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.

ANTONIO J. VILLEGAS vs. THE AUDITOR GENERAL

G.R. No. L-21352 November 29, 1966

Facts:
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.

ANTONIO J. VILLEGAS vs. THE AUDITOR GENERAL

G.R. No. L-21352 November 29, 1966

Issue:

Whether or not there can be valid substitution in the

Committee on Bids.
Ruling:
Well established is the principle that judicial or quasijudicial 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.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA

G.R. No. 161081 May 10, 2005

Facts:

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 Sangguniang Panlalawigan. The ViceGovernor, and head of presiding officer of the Sangguniang
Panlalawigan, 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.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA

G.R. No. 161081 May 10, 2005

Issue:
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
Sangguniang Panlalawigan.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA

G.R. No. 161081 May 10, 2005

Ruling:
The Supreme Court held that it is the ViceGovernor who has such authority. Under Rep. Act
No. 7160, local legislative power for the province is
exercised by the Sangguniang Panlalawigan and
the Vice-Governor is its presiding officer. Being
vested with legislative powers, the Sangguniang
Panlalawigan enacts ordinances, resolutions and
appropriates funds for the general welfare of the
province in accordance with the provisions of Rep.
Act No. 7160.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA

G.R. No. 161081 May 10, 2005

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
Sangguniang Panlalawigan, 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 Sangguniang Panlalawigan 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 Sangguniang Panlalawigan.

Quisumbing v. Garcia, G.R. 175527, December 8, 2008

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.

THANK YOU
Atty. Dennis S. Santiago
Executive Director III
Comments, Questions?

Telephone/Fax: (+632) 900-6741 to 44

Website: http://www.gppb.gov.ph
Email: gppb@gppb.gov.ph