MARIA ELENA MALAGA, doing business under the name B.E. CONSTRUCTION;
JOSIELEEN NAJARRO, doing business under the name BEST BUILT
CONSTRUCTION; JOSE N. OCCE?A, doing business under the name THE FIRM OF
JOSE N. OCCE?A; and the ILOILO BUILDERS CORPORATION, petitioners, vs.
MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICO TICAR AND
TERESITA VILLANUEVA, in their respective capacities as Chairman and Members
of the Pre-qualification Bids and Awards Committee (PBAC)-BENIGNO
PANISTANTE, in his capacity as President of Iloilo State College of Fisheries, as.
well as in their respective personal capacities; and HON. LODRIGIO L. LEBAQUIN,
respondents.
1992-09-03 | G.R, No, 86695
DECISION
CRUZ, J
This controversy involves the extent and applicability of P.D. 1818, which prohibits any court from issuing
injunctions in cases involving infrastructure projects of the government.
The facts are not disputed.
The lloilo State College of Fisheries (henceforth ISCOF) through its Pre-qualification, Bids and Awards
Committee (henceforth PBAC) caused the publication in the November 25, 26, 28, 1988 issues of the
Wester Visayas Daily an Invitation to Bid for the construction of the Micro Laboratory Building at ISCOF.
The notice announced that the last day for the submission of pre-qualification requirements (PRE C-1) **
was December 2, 1988, and that the bids would be received and opened on December 12, 1988, 3
o'clock in the afternoon. 1
Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business under the name of
the B.E. Construction and Best Built Construction, submitted their pre-qualification documents at two
o'clock in the afternoon of December 2, 1988. Petitioner Jose Occefia submitted his own PRE-C1 on
December 5, 1988. All three of them were not allowed to participate in the bidding because their
documents were considered late, having been submitted after the cut-off time of ten o'clock in the
morning of December 2, 1988.
On December 12, 1988, the petitioners filed a complaint with the Regional Trial Court of lloilo against the
chairman and members of PBAC in their official and personal capacities. The plaintiffs claimed that
although they had submitted their PRE-C1 on time, the PBAC refused without just cause to accept them.
As a resull, they were not included in the list of pre-qualified bidders, could not secure the needed plans
and other documents, and were unable to participate in the scheduled bidding
In their prayer, they sought the resetting of the December 12, 1988 bidding and the acceptance of their
PRE-C1 documents. They also asked that if the bidding had already been conducted, the defendants be
directed not to award the project pending resolution of their complaint.
On the same date, Judge Lodrigio L. Lebaquin issued a restraining order prohibiting PBAC from
conducting the bidding and awarding the
MyLegalWhiz | Page 1 of 7project. 2
On December 16, 1988, the defendants filed a motion to lift the restraining order on the ground that the
Court was prohibited from issued restraining orders, preliminary injunctions and preliminary mandatory
injunctions by P.D. 1818.
The decree reads pertinently as follows’
Section 1, No Court in the Philippines shall have jurisdiction to issue any restraining order, preliminary
injunction, or preliminary infrastructure project, or a mining, fishery, forest or other natural resource
development project of the government, or any public utility operated by the government, including
among others public utilities for the transport of the goods and commodities, stevedoring and arrastre
contracts, to prohibit any person or persons, entity or government official from proceeding with, or
continuing the execution or implementation of any such project, or the operation of such public utility, or
pursuing any lawful activity necessary for such execution, implementation or operation.
The movants also contended that the question of the propriety of a preliminary injunction had become
moot and academic because the restraining order was received late, at 2 o'clock in the afternoon of
December 12, 1988, after the bidding had been conducted and closed at eleven thirty in the morning of
that date
In their opposition of the motion, the plaintiffs argued against the applicability of P.D. 1818, pointing out
that while ISCOF was a state college, it had its own charter and separate existence and was not part of
the national government or of any local political subdivision. Even if P.D. 1818 were applicable, the
prohibition presumed a valid and legal government project, not one tainted with anomalies like the
project at bar.
They also cited Filipinas Marble Corp. vs. IAC, 3 where the Court allowed the issuance of a writ of
preliminary injunction despite a similar prohibition found in P.D. 385. The Court therein stated that:
The government, however, is bound by basic principles of fairness and decency under the due process
clauses of the Bill of Rights. P.D. 385 was never meant to protect officials of government-lending
institutions who take over the management of a borrower corporation, lead that corporation to
bankruptcy through mismanagement or misappropriation of its funds, and who, after ruining it, use the
mandatory provisions of the decree to avoid the consequences of their misleads (p. 188, emphasis,
supplied).
On January 2, 1989, the trial court lifted the restraining order and denied the petition for preliminary
injunction. It declared that the building sought to be construed at the ISCOF was an infrastructure project
of the government falling within the coverage of P.D. 1818. Even ifit were not, the petition for the
issuance of a writ of preliminary injunction would still fail because the sheriff's return showed that PBAC.
was served a copy of the restraining order after the bidding sought to be restrained had already been
held. Furthermore, the members of the PBAC could not be restrained from awarding the project because
the authority to do so was lodged in the President of the ISCOF, who was not a party to the case. 4
In the petition now before us, itis reiterated that P.D. 1818 does not cover the ISCOF because of its
separate and distinct corporate personality. It is also stressed again that the prohibition under P.D. 1818
could not apply to the present controversy because the project was vitiated with irregularities, to wit:
1. The invitation to bid as published fixed the deadline of submission of pre-qualfication document on
December 2, 1988 without indicating any time, yet after 10:00 o'clock of the given late, the PBAC already
MyLegalWhiz | Page 2 0f7refused to accept petitioners’ documents
2. The time and date of bidding was published as December 12, 1988 at 3:00 p.m. yet it was held at
10:00 o'clock in the morning,
3. Private respondents, for the purpose of inviting bidders to participate, issued a mimeographed
"Invitation to Bid” form, which by law (P.D. 1594 and Implementing Rules, Exh. B-1) is to contain the
particulars of the project subject of bidding for the purpose of.
(i) enabling bidders to make an intelligent and accurate bids;
(ii) for PBAC to have a uniform basis for evaluating the bids;
(ii) to prevent collusion between a bidder and the PBAC, by opening to all the particulars of a project.
Additionally, the Invitation to Bid prepared by the respondents and the Itemized Bill of Quantities therein
were left blank. 5 And although the project in question was a “Construction,” the private respondents
used an Invitation to Bid form for "Materials." 6
The petitioners also point out that the validity of the writ of preliminary injunction had not yet become
moot and academic because even if the bids had been opened before the restraining order was issued,
the project itself had not yet been awarded. The ISCOF president was not an indispensable party
because the signing of the award was merely a ministerial function which he could perform only upon the
recommendation of the Award Committee, At any rate, the complaint had already been duly amended to
include him as a party defendant
In their Comment, the private respondents maintain that since the members of the board of trustees of
the ISCOF are all government officials under Section 7 of P.D. 1523 and since the operations and
maintenance of the ISCOF are provided for in the General Appropriations Law, it is should be considered
a government institution whose infrastructure project is covered by P.D. 1818.
Regarding the schedule for pre-qualification, the private respondents insist that PBAC posted on the
ISCOF bulletin board an announcement that the deadline for the submission of pre-qualifications
documents was at 10 o'clock of December 2, 1988, and the opening of bids would be held at 1 o'clock in
the afternoon of December 12, 1988. As of ten o'clock in the morning of December 2, 1988, B.E.
construction and Best Built construction had filed only their letters of intent. At two o'clock in the
afternoon, B.E., and Best Buill filed through their common representative, Nenette Garuello, their
pre-qualification documents which were admitted but stamped “submitted late.”
The petitioners were informed of their disqualification on the same date, and the disqualification became
final on December 6, 1988. Having failed to take immediate action to compel PBAC to pre-qualify them
despite their notice of disqualification, they cannot now come to this Court to question the binding proper
in which they had not participated
In the petitioners’ Reply, they raise as an additional irregularity the violation of the rule that where the
estimate project cost is from P1M to PSM, the issuance of plans, specifications and proposal book forms
should made thirty days before the date of bidding. 7 They point out that these forms were issued only
on December 2, 1988, and not at the latest on November 12, 1988, the beginning of the 30-day period
prior to the scheduled bidding.
In their Rejoinder, the private respondents aver that the documents of B.E. and Best Built were received
although filed late and were reviewed by the Award Committee, which discovered that the contractors
had expired licenses. B.E.'s temporary certificate of Renewal of Contractor's License was valid only until
September 30, 1988, while Best Buill’s license was valid only up to June 30, 1988.
MyLegalWhiz | Page 3 of 7The Court has considered the arguments of the parties in light of their testimonial and documentary
evidence and the applicable laws and jurisprudence. It finds for the petitioners.
The 1987 Administrative Code defines a government instrumentality as follows:
Instrumentality refers to any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a charter. This
term includes regulatory agencies, chartered institutions, and government-owned or controlled
corporations, (Sec, 2 (5) Introductory Provisions).
The same Code describes a chartered institution thus:
Chartered institution refers to any agency organized or operating under a special charter, and vested by
law with functions relating to specific constitutional policies or objectives. This term includes the state
universities and colleges, and the monetary authority of the state, (Sec. 2 (12) Introductory Provisions).
Itis clear from the above definitions that ISCOF is a chartered
1818,
itution and is therefore covered by P.D.
There are also indications in its charter that ISCOF is a government instrumentality. First, it was created
in pursuance of the integrated fisheries development policy of the State, a priority program of the
government of effect the socio-economic life of the nation, Second, the Treasurer of the Republic of the
Philippines also be the ex-officio Treasurer of the state college with its accounts and expenses to be
audited by the Commission on Audit or its duly authorized representative. Third, heads of bureaus and
offices of the National Government are authorized to loan or transfer to it, upon request of the president
of the state college, such apparatus, equipment, or supplies and even the services of such employees as
can be spared without serious detriment to public service. Lastly, an additional amount of P1.5M had
been appropriated out of the funds of the National Treasury and it was also decreed in its charter that the
funds and maintenance of the state college would henceforth be included in the General Appropriations
Law. 8
Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the said decree.
In the case of Datiles and Co. vs. Sucaldito, 9 this Court interpreted a similar prohibition contained in P.D.
605, the law after which P.D. 1818 was patterned. It was there declared that the prohibition pertained to
the issuance of injunctions or restraining orders by courts against administrative acts in controversies
involving facts o the exercise of discretion in technical cases. The Court observed that to allow the
courts to judge these matters would disturb the smooth functioning of the administrative machinery.
Justice Teodoro Padilla made it clear, however, that on issues definitely outside of this dimension and
involving questions of law, courts could not be prevented by P.D. No. 605 from exercising their power to
restrain or prohibit administrative acts.
We see no reason why the above ruling should not apply to P.D. 1818.
There are at least two irregularities committed by PBAC that justified injunction of the bidding and the
award of the project.
First, PBAC set deadlines for the filing of the PRE-C1 and the opening of bids and then changed these
deadlines without prior notice to prospective participants.
Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for government
MyLegalWhiz |Page 4 of7infrastructure contracts, PBAC shall provide prospective bidders with the Notice of Pre-qualification and
other relevant information regarding the proposed work. Prospective contractors shalll be required to file
their ARC-Contractors Confidential Application for Registration & Classifications & the PRE-C2
Confidential Pre-qualification Statement for the Project (prior to the amendment of the rules, this was
referred to as PRE-C1) not later than the deadline set in the published Invitation to Bid, after which date
no PRE-C2 shall be submitted and received. Invitations to Bid shall be advertised for at least three times
within a reasonable period but in no case less than two weeks in at least two newspapers of general
circulations. 10
PBAC advertised the pre-qualification deadline as December 2, 1988, without stating the hour thereof,
and announced that the opening of bids would be at 3 o'clock in the afternoon of December 12, 1988.
This schedule was changed and a notice of such change was merely posted at the ISCOF bulletin board.
The notice advanced the cut-off time for the submission of pre-qualification documents to 10 o'clock in
the morning of December 2, 1988, and the opening of bids to 1 o'clock in the afternoon of December 12,
1988,
The new schedule caused the pre-disqualification of the petitioners as recorded in the minutes of the
PBAC meeting held on December 6, 1988. While it may be true that there were fourteen contractors who
were pre-qualified despite the change in schedule, this fact did not cure the defect of the irregular notice.
Notably, the petitioners were disqualified because they failed to meet the new deadline and not because
of their expired licenses. ***
We have held that where the law requires a previous advertisement before government contracts can be
awarded, non-compliance with the requirement will, as a general rule, render the same void and of no
effect 11 The facts that an invitation for bids has been communicated to a number of possible bidders is
not necessarily sufficient to establish compliance with the requirements of the law if it is shown that other
public bidders have not been similarly notified. 12
Second, PBAC was required to issue to pre-qualified applicants the plans, specifications and proposal
book forms for the project to be bid thirly days before the date of bidding if the estimate project cost was
between P1M and P5M. PBAC has not denied that these forms were issued only on December 2, 1988,
or only ten days before the bidding scheduled for December 12, 1988. At the very latest, PBAC should
have issued them on November 12, 1988, or 30 days before the scheduled bidding.
It is apparent that the present controversy did not arise from the discretionary acts of the administrative
body nor does it involve merely technical matters. What is involved here is non-compliance with the
procedural rules on bidding which required strict observance. The purpose of the rules implementing P.D.
1594 is to secure competitive bidding and to prevent favoritism, collusion and fraud in the award of these
contracts to the detriment of the public. This purpose was defeated by the irregularities committed by
PBAC.
It has been held that the three principles in public bidding are the offer to the public, an opportunity for
competition and a basis for exact comparison of bids, A regulation of the matter which excludes any of
these factors destroys the distinctive character of the system and thwarts and purpose of its adoption. 13,
In the case at bar, it was the lack of proper notice regarding the pre-qualification requirement and the
bidding that caused the elimination of petitioners B.E. and Best Built. It was not because of their expired
licenses, as private respondents now claim. Moreover, the plans and specifications which are the
contractors’ guide to an intelligent bid, were not issued on time, thus defeating the guaranty that
contractors be placed on equal footing when they submit their bids. The purpose of competitive bidding
is negated if some contractors are informed ahead of their rivals of the plans and specifications that are
to be the subject of their bids.
MyLegalWhiz Page 5 of 7P.D. 1818 was not intended to shield from judicial scrutiny irregularities committed by administrative
agencies such as the anomalies above described. Hence, the challenged restraining order was not
improperly issued by the respondent judge and the writ of preliminary injunction should not have been
denied. We note from Annex Q of the private respondent's memorandum, however, that the subject
project has already been "100% completed as to the Engineering Standard.” This fait accompli has,
made the petition for a writ of preliminary injunction moot and academic.
‘We come now to the liabilities of the private respondents.
Ithas been held in a long line of cases that a contract granted without the competitive bidding required
by law is void, and the party to whom it is awarded cannot benefit from it. 14 It has not been shown that
the irregularities committed by PBAC were induced by or participated in by any of the contractors, Hence,
liability shall attach only to the private respondents for the prejudice sustained by the petitioners as a
result of the anomalies described above.
As there is no evidence of the actual loss suffered by the petitioners, compensatory damage may not be
awarded to them. Moral damages do not appear to be due either. Even so, the Court cannot close its
eyes to the evident bad faith that characterized the conduct of the private respondents, including the
irregularities in the announcement of the bidding and their efforts to persuade the ISCOF president to
award the project after two days from receipt of the restraining order and before they moved to lift such
order. For such questionable acts, they are liable in nominal damages at least in accordance with Article
2221 of the Civil Code, which states:
"Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant may be vindicated or, recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him,
These damages are to assessed against the private respondents in the amount of P10,000.00 each, to
be paid separately for each of petitioners B.E. Construction and Best Built Construction, The other
petitioner, Occefia Builders, is not entitled to relief because it admittedly submitted its pre-qualification
documents on December 5, 1988, or three days after the deadline.
WHEREFORE, judgment is hereby rendered: a) upholding the restraining order dated December 12,
1988, as not covered by the prohibition in P.D. 1818; b) ordering the chairman and the members of the
PBAC board of trustees, namely Manuel R. Penachos, Jr., Alfredo Matangga, Enrico Ticar, and Teresita
Villanueva, to each pay separately to petitioners Maria Elena Malaga and Josieleen Najarro nominal
damages P10,000.00 each; and c) removing the said chairman and members from the PBAC board of
trustees, or whoever among them is still incumbent therein, for their malfeasance in office. Costs against
PBAC.
Let a copy of this decision be sent to the Office of the Ombudsman.
SO ORDERED.
Grifio-Aquino, Medialdea and Bellosillo, JJ., concur.
Footnotes
** Implementing Rules and Regulations on PD 1594 (Prescribing Policies, Guidelines, Rules and
Regulations for Government Infrastructure Contracts) as amended. Official Gazette, Vol. 84, No. 23, p.
3340-3365, June 6, 1988.
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