SM Land v. BCDA

10/27/21, 7:54 PM SUPREME COURT REPORTS ANNOTATED VOLUME 733
G.R. No. 203655. August 13, 2014.*

SM LAND, INC., petitioner, vs. BASES CONVERSION
AND DEVELOPMENT AUTHORITY and ARNEL
PACIANO D. CASANOVA, ESQ., in his official capacity as
President and CEO of BCDA, respondents.
Government Contracts; Procurement Process; To streamline

the procurement process and expedite the acquisition of goods and
services, Executive Order No. (EO) 423 was issued on April 30,
2005, which prescribed the rules and procedures on the review and
approval of government contracts.—To streamline the
procurement process and expedite the acquisition of goods and
services, Executive Order No. (EO) 423 was issued on April 30,
2005, which prescribed the rules and procedures on the review
and approval of government contracts. The EO, in part, provides:
Section 8. Joint Venture Agreements.—The NEDA, in consultation
with the GPPB, shall issue guidelines regarding joint venture
agreements with private entities with the objective of promoting
transparency, competitiveness, and accountability in government
transactions, and, where applicable, complying with the
requirements of an open and competitive public bidding. Taking
its cue from the above quoted provision, the NEDA promulgated
the NEDA JV Guidelines, which detailed two (2) modes of
selecting a private sector JV partner: by competitive selection
or through negotiated agreements.
Joint Ventures; “Competitive Selection” and “Negotiated
Agreements,” Distinguished.—Competitive selection involves a
selection process based on transparent criteria, which should not
constrain or limit competition, and is open to participation by any
interested and qualified private entity. Selection by negotiated
agreements or negotiated projects, on the other hand, comes about
as an end result of an unsolicited proposal from a private sector
proponent, or if the government has failed to identify an eligible
private sector partner for a desired activity after subjecting the
same to a competitive selection.
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* THIRD DIVISION.
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SM Land, Inc. vs. Bases Conversion and Development
Authority
Same; Negotiated Agreements; Swiss Challenge Method;

Relevant to the case at bar is the selection modality by negotiated
agreement arising from the submission and acceptance of an
unsolicited proposal, known as the Swiss Challenge method, in
esse a hybrid mechanism between the direct negotiation approach
and the competitive bidding route.—Relevant to the case at bar is
the selection modality by negotiated agreement arising from the
submission and acceptance of an unsolicited proposal, known as
the Swiss Challenge method, in esse a hybrid mechanism between
the direct negotiation approach and the competitive bidding route.
With the availability of the Swiss Challenge method for
utilization by those in the private sector, PSEs have studied,
formulated, and submitted numerous suo moto or unsolicited
proposals with the ultimate goal of assisting the public sector in
elevating the country’s place in the global economy, as in the case
herein.
Administrative Issuances; Well-established is the rule that
administrative issuances –– such as the National Economic
Development Authority Joint Ventures (NEDA JV) Guidelines,
duly promulgated pursuant to the rule-making power granted by
statute — have the force and effect of law.—Deviation from the
procedure outlined cannot be countenanced. Well-established is
the rule that administrative issuances –– such as the NEDA JV
Guidelines, duly promulgated pursuant to the rule-making power
granted by statute –– have the force and effect of law. Being an
issuance in compliance with an executive edict, the NEDA JV
Guidelines, therefore, has the same binding effect as if it were
issued by the President himself. As such, no agency or
instrumentality covered by the JV Guidelines can validly stray
from the mandatory procedures set forth therein, even if the other
party acquiesced therewith or not.
Statutory Construction; It is elementary that the word “shall”
underscores the mandatory character of the rule. It is a word of
command, one which always has or must be given a compulsory
meaning, and is generally imperative or mandatory.—It is
elementary that the word “shall” underscores the mandatory
character of the rule. It is a word of command, one which always
has or must be given a compulsory meaning, and is generally
imperative or mandatory. Considering the compulsory tenor of the
order, the rule could not be any clearer –– that once the
negotiations at Stage Two shall have been successfully
completed, it becomes mandatory for the
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GE to subject the JV activity to a competitive

challenge. By the Guidelines’ explicit order, proceeding to Stage
Three of the process is compulsory, conditioned only on the
successful conclusion of Stage Two. The GE is not given any
discretion to decide whether it will proceed with the competitive
challenge or not.
Same; It is a cardinal rule in statutory construction that no
word, clause, sentence, provision or part of a statute shall be
considered surplusage or superfluous, meaningless, void and
insignificant.—To anchor the real import of the clause on the
basis only of a single word may, however, result in a deviation
from its true meaning by rendering all the other terms
unnecessary or insignificant. Such an interpretation would run
afoul Article 1373 of the Civil Code, which states that “[i]f some
stipulation of any contract should admit of several meanings, it
shall be understood as bearing that import which is most
adequate to render it effectual.” It is a cardinal rule in statutory
construction that no word, clause, sentence, provision or part of a
statute shall be considered surplusage or superfluous,
meaningless, void and insignificant. For this purpose, an
interpretation which renders every word operative is preferred
over that which makes some words idle and nugatory.
Grave Abuse of Discretion; Words and Phrases; “Grave abuse
of discretion” implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction.—“Grave abuse of
discretion” implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. It must be so
patent and gross as to amount to an evasion of positive duty or to
a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law. While it is the general policy of the Court to
sustain the decisions of administrative authorities, not only on
the basis of the doctrine of separation of powers but also for their
presumed expertise in the laws they are entrusted to enforce,
when said decisions and orders are tainted with unfairness or
arbitrariness that would amount to grave abuse of discretion, the
Courts are duty-bound to entertain petitions questioning the
former’s rulings or actions.
Estoppel; The government cannot be estopped by the mistakes
or errors of its agents.—Respondents argue that the government
cannot be estopped by the mistakes or errors of its agents,
implying that when it issued the Certification, it committed a
lapse of judgment as
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it later discovered that the terms of the proposal allegedly

turned out to be disadvantageous to the Government. Thus,
according to them, it cannot be compelled to proceed with the
Competitive Challenge. We are very much aware of the time-
honored rule that “the government cannot be estopped by the
mistakes or errors of its agents.” Suffice it to state, however, that
this precept is not absolute. As jurisprudence teaches, this rule on
estoppel cannot be used to perpetrate an injustice.
Contracts; Government Contracts; The failure of the
government to abide by the rules it itself set would have
detrimental effects on the private sector’s confidence that the
government will comply with its statutory and contractual
obligations to the letter.—Needless to say, allowing government
agencies to retract their commitments to the project proponents
will essentially render inutile the incentives offered to and have
accrued in favor of the private sector entity. Without securing
these rights, the business community will be wary when it comes
to forging contracts with the government. Simply put, the failure
of the government to abide by the rules it itself set would have
detrimental effects on the private sector’s confidence that the
government will comply with its statutory and contractual
obligations to the letter.
LEONEN, J., Dissenting Opinion:
Civil Law; Contracts; View that the documents used by SM

Land, Inc. (SMLI) as bases for its alleged right to a completed
competitive challenge do not show that the parties had a clear
meeting of the minds to give SMLI a right to a completed
competitive challenge or to restrict the selection process to
competitive challenge.—Neither BCDA’s acceptance of SMLI’s
unsolicited proposal, its issuance of the certification of successful
negotiation, nor the terms of reference did create a contract that
could give rise to a right on the part of SMLI and an obligation on
the part of BCDA to adhere to a specific selection process. Article
1318 of the Civil Code provides the requisites of a contract: Art.
1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties; (2) Object certain which is
the subject matter of the contract; (3) Cause of the obligation
which is established. The documents used by SMLI as bases for
its alleged right to a completed competitive challenge do not show
that the parties had a clear meeting of the minds to give SMLI a
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right to a completed competitive challenge or to restrict the

selection process to competitive challenge. BCDA’s acceptance of
SMLI’s unsolicited proposal shows no commitment on the part of
BCDA to restrict its options for the selection process.
Same; Statutory Construction; View that when the terms
admit different interpretations, the Civil Code requires the use of
an interpretation “bearing that import which is most adequate to
render it effectual.”—When the terms admit different
interpretations, the Civil Code requires the use of an
interpretation ‘‘bearing that import which is most adequate to
render it effectual.” When the government enters into agreements
or terms, it does so only in accordance with the law and to carry
out the policies and purposes of the law. These laws and the
corresponding policies are incorporated in terms entered into by
the government. The presumption when terms are ambiguous,
therefore, should be that which is consistent with the law,
government policies, and its purposes. That would be the import
that is “most adequate to render [the terms of a government deal
or understanding] effectual.”
Bases Conversion and Development Act of 1992 (R.A. No.
7227); View that Section 2 of Republic Act (RA) No. 7227 provides
for the government’s policy to enhance the benefits from the
conversion of Bases Conversion and Development Authority
(BCDA)-administered properties.—Section 2 of Republic Act No.
7227 provides for the government’s policy to enhance the benefits
from the conversion of BCDA-administered properties, thus: Sec.
2. Declaration of Policies.—It is hereby declared the policy of the
Government to accelerate the sound and balanced conversion into
alternative productive uses of the Clark and Subic military
reservations and their extension (John Hay Station, Wallace Air
Station, O’Donnell Transmitter Station, San Miguel Naval
Communications Station and Capas Relay Station), to raise funds
by the sale of portions of Metro Manila military camps, and to
apply said funds as provided herein for the development and
conversion to productive civilian use of the lands covered under
the 1947 Military Bases Agreement between the Philippines and
the United States of America, as amended. It is likewise the
declared policy of the Government to enhance the benefits to be
derived from said properties in order to promote the economic and
social development of Central Luzon in particular and the country
in general. (Emphasis supplied) Executive Order No. 62
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provides for BCDA’s duty to ensure maximized use of Metro

Manila military camps. It also provides that public bidding is the
general rule in determining the privatization process to be used.
Other processes may be considered only when the exigencies
demand it and in accordance with national interest.
Bids and Bidding; View that as opposed to competitive
challenge, public bidding — allows the government to set the
minimum contract price and set contract terms known — to and
applied to all interested private entities.—As opposed to
competitive challenge, public bidding allows the government to
set the minimum contract price and set contract terms known to
and appfied to all interested private entities. It is the more
transparent and competitive mode of awarding government
contracts because no one is given a preferred status. Competitive
challenge may only be applicable should there be no interested
party or there is need to entice interest among other private
sector entities. Certainly, it should not be availed to give
advantage to any party without any clear basis. In this case,
petitioner has not shown why competitive challenge is more
advantageous from the public policy standpoint. Competitive
challenge is the exception. Open competitive bidding is the
general rule.
Same; Government Contracts; View that any person who deals
with the government also accepts the condition that the
government is not bound by any provision or interpretation that is
against the law, government policies, and national interest.—
BCDA’s acceptance of SMLI’s unsolicited proposal, the issuance of
the certificate of successful negotiations, and terms of reference,
should be read in light of the preference given to public bidding,
the policy in favor of maximized use of properties, and national
interest. Any person who deals with the government also accepts
the condition that the government is not bound by any provision
or interpretation that is against the law, government policies, and
national interest. The government may not agree to contract
stipulations that are disadvantageous to it. These are conditions
that are deemed incorporated in dealings with BCDA.
Same; View that public bidding provides more transparency,
competitiveness, and benefit to the government.—In this case, the
government policies and purposes are best served through public
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bidding. Public bidding provides more transparency,

competitiveness, and benefit to the government.
SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari, Prohibition and Mandamus.
The facts are stated in the opinion of the Court.
Puno & Puno for petitioner SM Land, Inc.
Julio Ma. Edmundo D. Maningat for Intervenors DND
and AFP.
VELASCO, JR., J.:

The Case

Before Us is a Petition for Certiorari, Prohibition and
Mandamus under Rule 65 of the Rules of Court, with
prayer for injunctive relief, seeking to nullify and set aside
the Bases Conversion and Development Authority (BCDA)
Supplemental Notice No. 5 as well as all other acts pursued
in furtherance thereof, and to order respondents to
immediately conduct and complete the Competitive
Selection Process on petitioner’s duly accepted unsolicited
proposal.

The Facts

As culled from the records, the facts are simple and
undisputed.
Pursuant to Republic Act No. (RA) 7227 or the “Bases
Conversion and Development Act of 1992,” the BCDA
opened for disposition and development its Bonifacio South
Property, a 33.1-hectare expanse located at Taguig City
that was once used as the command center for the country’s
military forces. Jumping on the opportunity, petitioner SM
Land, Inc. (SMLI), on December 14, 2009, submitted to the
BCDA an unsolicited proposal for the development of the
lot through a public-
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private joint venture agreement. The proposal

guaranteed the BCDA secured payments amounting to
Php15,985/sq.m. or a total of Php8.1 billion.
Barely three months later, the initial proposal was
followed by a second one with guaranteed secured
payments of Php31,139/sq.m., totaling Php20 billion. On
May 4, 2010, however, SMLI submitted its third unsolicited
proposal with guaranteed secured payments amounting to
Php32,501/sq.m. for a total of Php22.6 billion.
Thereafter, the BCDA created a Joint Venture Selection

Committee (JV-SC) following the procedures prescribed
under Annex “C” of the Detailed Guidelines for Competitive
Challenge Procedure for Public-Private Joint Ventures
(NEDA JV Guidelines) promulgated by the National
Economic Development Authority (NEDA). The said
committee recommended the acceptance of the unsolicited
proposal, which recommendation was favorably acted upon
by the BCDA.
Through a letter dated May 12, 2010, the BCDA
communicated to petitioner its acceptance of the
unsolicited proposal. Despite its acceptance, however, the
BCDA clarified that its act should not be construed to bind
the agency to enter into a joint venture agreement with the
petitioner but only constitutes an authorization granted to
the JV-SC to conduct detailed negotiations with petitioner
SMLI and iron out the terms and conditions of the
agreement.
Pursuant to this authorization, the JV-SC and SMLI
embarked on a series of detailed negotiations, and on July
23, 2010, SMLI submitted its final revised proposal with
guaranteed secured payments amounting to a total of
Php25.9 billion. Afterwards, upon arriving at mutually
acceptable terms and conditions, a Certification of
Successful Negotiations (Certification) was issued by the
BCDA and signed by both parties on August 6, 2010.
Through the said Certification, the BCDA undertook to
“subject SMLI’s Original Proposal to Competitive
Challenge pursuant to Annex C” and com-

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mitted itself to “commence the activities for the
solicitation for comparative proposals.”1
In an attempt to comply with its obligations, the BCDA
prepared for the conduct of a Competitive Challenge to
determine whether or not there are other Private Sector
Entities (PSEs) that can match the proposal of SMLI, and
concurrently ensure that the joint venture contract will be
awarded to the party that can offer the most advantageous
terms in favor of the government. In furtherance thereof,
the agency issued Terms of Reference (TOR),2 which
mapped out the procedure to be followed in connection with
the Competitive Challenge. Consequently, SMLI was
required, as it did, to post a proposal security in the
amount of Php187 million, following the prescribed

procedure outlined in the TOR and the NEDA JV
Guidelines.
Afterwards, the BCDA set the Pre-eligibility Conference
on September 3, 2010. Invitations to apply for eligibility
and to submit comparative proposals were then duly
published on August 12, 16 and 20, 2010. Hence, the pre-
eligibility conference was conducted as scheduled. The
companies that participated in the conference included
SMLI, as the Original Proponent, and three (3) PSEs,
namely Ayala Land, Inc., Rockwell Land Corp., and
Filinvest Land, Inc.
On Ayala Land, Inc.’s request, the deadline for
submission of Eligibility Documents was scheduled on
October 20, 2010 through Supplemental Notice No. 1.
However, the deadline was again moved to November 19,
2010 to allow the BCDA, in conjunction with other national
agencies, to resolve issues concerning the relocation and
replication of facilities located in the subject property. For
this purpose, the BCDA issued Supplemental Notice No. 2.
Following a conference, the BCDA, on November 18,
2010, issued Supplemental Notice No. 3, again
rescheduling the
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1 Rollo, p. 71.
2 Id., at pp. 74-88.
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submission deadline this time to an unspecified future

date “pending final results of the policy review by the Office
of the President on the lease versus joint venture/sale mode
and other issues.”3 Henceforth, the BCDA repeatedly
postponed the deadline of eligibility requirements until two
(2) years have already elapsed from the signing of the
Certification without the Competitive Challenge being
completed.
Then, instead of proceeding with the Competitive
Challenge, the BCDA addressed a letter4 to Jose T.
Gabionza, Vice President of SMLI, stating that it will
welcome any “voluntary and unconditional proposal” to
improve the original offer, with the assurance that the
BCDA will nonetheless respect any right which may have
accrued in favor of SMLI. SMLI, through a letter dated
December 22, 2011, replied by increasing the total secured
payments to Php22.436 billion in over fifteen (15) years

with an upfront payment of Php3 billion. SMLI likewise
proposed to increase the net present value of the property
to Php38,500.00/sq.m. With this accelerated terms of
payment, the total inflow to be received by the BCDA from
the project after five (5) years would amount to Php9.289
billion. In the same letter, SMLI clarified that its improved
offer is tendered on reliance of the BCDA’s previous
commitment to respect SMLI’s status as the Original
Proponent.
Without responding to SMLI’s new proposal, the BCDA
sent a memorandum to the Office of the President (OP)
dated February 13, 2012, categorically recommending the
termination of the Competitive Challenge. The
memorandum, in part, reads:
In view of the foregoing, may we respectfully recommend the

President’s approval for BCDA to terminate the proceedings for
the privatization and development of the BNS/PMC/ASCOM/SSU
Properties in Bonifacio South
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3 Id., at p. 108.
4 Id., at p. 109.
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through Competitive Challenge and proceed with the bidding

of the property.5
Alarmed by this development, SMLI, in a letter dated

August 10, 2012, urged the BCDA to proceed with the
Competitive Challenge as agreed upon. However, the
BCDA, via the assailed Supplemental Notice No. 5,
terminated the Competitive Challenge altogether. Said
Supplemental Notice pertinently reads:
This Supplemental Notice No. 05 is issued to inform the [PSEs]

that the Competitive Challenge for the Selection of BCDA’s
Private Sector Partner for the Privatization and Development of
the approximately 33.1-hectare BNS/PMC/ASCOM/SSU
Properties in Bonifacio South is hereby terminated. BCDA shall
not dispose the property through Competitive Challenge.6
To support its position, the BCDA invoked Article

VIII of the TOR on the subject “Qualifications and
Waivers,” to wit:
The BCDA reserves the right to call off [the] disposition prior
to acceptance of the proposal(s) and call for a new disposition
process under amended rules and without any liability
whatsoever to any or all the PSEs, except the obligation to return
the Proposal Security.
Thereafter, the BCDA informed SMLI of the OP’s

decision to subject the development of the subject property
to public bidding. When asked by SMLI, the JV-SC
manifested its conformity with the actions thus taken by
the BCDA and OP.
The JV-SC’s declaration proved to be the last straw that
fractured SMLI’s patience as it lost no time in interposing
the instant recourse.
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5 Id., at p. 635.
6 Id., at p. 63.
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In the meantime, the BCDA issued in favor of SMLI

Philippine National Bank Check No. 11-634-610001-0 in
the amount of Php188,508,466.67 dated September 28,
2012. The check was sent through registered mail with no
explanation whatsoever accompanying the same, although
the BCDA admitted that its value corresponds to the
proposal security posted by SMLI, plus interest in an
unspecified rate. SMLI attempted to return the check but
to no avail.
The BCDA likewise caused the publication of an
“Invitation to Bid” for the development of the subject
property in the December 21, 2012 issue of the Philippine
Star.7 This impelled SMLI to file an Urgent Manifestation
with Reiterative Motion to Resolve SMLI’s Application for
Temporary Restraining Order (TRO) and Preliminary
Injunction on the same day. By Resolution8 of January 9,
2013, the Court issued the TRO prayed for by petitioner
and enjoined respondent BCDA from proceeding with the
new selection process for the development of the property.

The Issue

Without a doubt, the issue in this case boils down to

whether or not the BCDA gravely abused its discretion in
issuing Supplemental Notice No. 5, in unilaterally aborting
the Competitive Challenge, and in subjecting the
development of the project to public bidding.
For its part, SMLI alleged in its petition that the
Certification issued by the BCDA and signed by the parties
constituted a contract and that under the said contract,
BCDA cannot renege on its obligation to conduct and
complete the Competitive Challenge. The BCDA, on the
other hand, relies chiefly on the reservation clause in the
TOR, which allegedly
_______________
7 The invitation was also published in the January 2 and 9, 2013

issues of the Financial Times and Philippine Daily Inquirer.
8 Rollo, pp. 218-222.
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authorized the agency to unilaterally cancel the

Competitive Challenge. Respondents add that the terms
and conditions agreed upon are disadvantageous to the
government, and that it cannot legally be barred by
estoppel in correcting a mistake committed by its agents.

The Court’s Ruling

The petition is impressed with merit. SMLI has the
right to a completed competitive challenge pursuant to the
NEDA JV Guidelines and the Certification issued by the
BCDA. The reservation clause adverted to by the
respondent cannot, in any way, prejudice said right.

The Procurement Process under the NEDA JV
Guidelines

In resolving the case, discussing the procedure outlined
under the NEDA JV Guidelines and a brief backgrounder
thereof is apropos.
To streamline the procurement process and expedite the
acquisition of goods and services, Executive Order No. (EO)
423 was issued on April 30, 2005, which prescribed the
rules and procedures on the review and approval of
government contracts. The EO, in part, provides:
Section 8. Joint Venture Agreements.—The NEDA, in

consultation with the GPPB, shall issue guidelines regarding joint
venture agreements with private entities with the objective of
promoting transparency, competitiveness, and accountability in
government transactions, and, where applicable, complying with
the requirements of an open and competitive public bidding.
Taking its cue from the above quoted provision, the

NEDA promulgated the NEDA JV Guidelines, which
detailed two (2) modes of selecting a private sector JV
partner: by competitive selection or through negotiated
agreements.
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Competitive selection involves a selection process

based on transparent criteria, which should not constrain
or limit competition, and is open to participation by any
interested and qualified private entity.9 Selection by
negotiated agreements10 or negotiated projects,11 on the
other hand, comes about as an end result of an unsolicited
proposal12 from a private sector proponent, or if the
government has failed to identify an eligible private sector
partner for a desired activity after subjecting the same to a
competitive selection.
Relevant to the case at bar is the selection modality by
negotiated agreement arising from the submission and
acceptance of an unsolicited proposal, known as the Swiss
Challenge method,13 in esse a hybrid mechanism between
the di-
_______________
9 Item 5.6, NEDA JV Guidelines.

10 Item 7.3.(b), NEDA JV Guidelines provides:
7.3 Modes of Selecting a JV Partner
x x x x
b. Negotiated Agreements. — Negotiated agreements may be entered
under the following circumstances:
i. When a Government Entity receives an unsolicited proposal;
ii. When there is failure of competition when no proposals are received
or no private sector participant is found qualified and the Government
Entity decides to seek out a JV partner; and
iii. When there is failure of competition, i.e., there is only a single
interested party remaining as defined under VIII(6) of Annex A.
11 Item 5.9, JV Guidelines.
12 An Unsolicited Proposal refers to “project proposals submitted by

the private sector to undertake Infrastructure or Development Projects
without a formal solicitation issued by a Government Entity. These
projects may be entered into by the Government Entity on a negotiated
basis, provided, however, that there shall be no direct government
guarantees for JVs resulting from an unsolicited proposal.” (NEDA JV
Guidelines)
13 The Swiss Challenge is a system where “[a] third party can bid on a
project during a designated period but the original propo-
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rect negotiation approach and the competitive bidding

route.14 With the availability of the Swiss Challenge
method for utilization by those in the private sector, PSEs
have studied, formulated, and submitted numerous suo
moto or unsolicited proposals with the ultimate goal of
assisting the public sector in elevating the country’s place
in the global economy, as in the case herein.
The development and adoption by several countries of
the Swiss Challenge scheme15 is attributed to the
recognition that the private sector can be an important
source of technical and managerial expertise, as well as
financing, as evidenced by private companies’ practice of
directly approaching governments with new and innovative
project ideas through unsolicited proposals.16 Some states,
however, frown on the practice since transparency is
allegedly compromised when the gov-
_______________
nent can counter match any superior offer. x x x” From Toolkit for
Public-Private Partnerships in Roads & Highways. Available at
http://www.ppiaf.org/sies/ppiaf.org/files/documents/toolkits/highwaystoolkit/6/pdf-
version/5-42/pdf. Last accessed March 11, 2013. See also Osmeña III v.
Social Security System, G.R. No. 165272, September 13, 2007, 533 SCRA
313. [Under the Swiss Challenge format, one of the bidders is given the
option or preferential “right to match” the winning bid.]
14 Joshi, Piyush and Anuradha, R.V., Study on Competition Concerns
in Concession Agreements in Infrastructure Sectors, Clarus Law
Associates, June 2009. Available at http://www.cci.gov.in/images/

media/completed/ConAgreInfraSect_20100401141506.pdf. Last accessed

March 14, 2013.
15 Ravi Development v. Shree Krishna Prathisthan & Ors., Civil
Appeal No. of 2009, May 11, 2009. Available at www.indiankoon.

org/doc/544860/. Last accessed March 14, 2013; See also Verma, Roopam,
Swiss Challenge System for Infra Projects (2007). Available at
http://www.projectsmonitor.com/detailnews.asp?newsid=13923. Last
accessed March 13, 2013.
16 See Hodges, John and Dellacha, Georgina, Unsolicited
Infrastructure Proposals: How some countries introduce competition and
transparency, Gridlines, Note No. 19, March 2007. Available at
http://www.ppiaf.org/. Last accessed March 14, 2013.
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ernment directly negotiates with a proponent. In this

method, the Original Proponent, who first submitted and
secured acceptance of the unsolicited proposal, is given the
right to match the successful bid received in the
competitive bid process for the said project.17
Item III, Annex “C” of the NEDA JV Guidelines, where
the Swiss Challenge format is tucked in, maps out a three-
stage framework, to which Negotiated JV Agreements are
to be mandatorily subjected, as summarized below:

Stage One
Submission and the Acceptance
or Rejection of the Unsolicited Proposal

18
Stage One of the process involves the submission,
evaluation, and the acceptance of unsolicited proposals
from private entities. The steps involved are:
1. A PSE submits an unsolicited proposal to the
government entity (GE) or the GE seeks out a JV partner
after a failed competition (open bidding) for a JV activity or
project.
2. The GE, through its JV-SC, undertakes the initial
evaluation of the proposal.
3. The head of the GE shall then either issue an
acceptance or nonacceptance notice of the proposal.
a. An acceptance shall not bind the GE to enter into the
JV activity, but shall mean that authorization is given to
proceed with detailed negotiations on the terms and
conditions of the JV activity.
b. In case of nonacceptance, the private sector entity
shall be informed of the reasons/grounds for such action.
_______________
17 Id.
18 Rollo, p. 373.
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Stage Two
Detailed Negotiations

19
Stage Two entails negotiation on the terms and
conditions of the JV activity. Below is a summary of the
parameters adhered to in detailed negotiations, and the
preparation of the proposal documents in case of successful
negotiations:
1. The parties shall negotiate on, among other things,
the scope as well as all legal, technical, and financial
aspects of the JV activity.
2. The JV-SC shall determine the eligibility of the PSE
to enter into the JV activity in accordance with preset
rules.
3. Negotiations shall comply with the process,
requirements and conditions as stipulated under Sections 6
(General Guidelines) and 7 (Process for Entering into JV
Agreements) of the JV Guidelines.
a. If successful, the GE head and the representative of
the PSE shall issue a signed certification of successful
negotiation to the effect that:
a) an agreement has been reached;
b) the PSE is eligible to enter into the proposed JV
activity; and
c) the GE shall commence the activities for the
solicitation for comparative proposals.
b. If an acceptable agreement is not reached, the GE
may:
a) reject the proposal and thereafter accept a new one
from private sector participants; or
b) pursue the proposed activity through alternative
routes other than a joint venture.
_______________
19 Id., at pp. 373-374.
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4. After an agreement is reached, the contract

documents, including the selection documents for the
competitive challenge, are prepared.

Stage Three
Competitive Challenge

20
In Stage Three, upon the successful completion of the
detailed negotiation phase, the JV activity shall be
subjected to a competitive challenge,21 which includes the
observance of the following procedure:
1. Preparation and approval of all tender documents
including the draft contract before the invitation for
comparative proposals is published.
2. Publication of the invitation for comparative proposals
followed by the posting by the PSE of the proposal security.
3. Determination of the eligibility of comparative
proponents/PSEs, issuance of supplemental competitive
selection bulletins and preselection conferences,
submission, opening and evaluation of comparative
proposals.
4. In the evaluation of the comparative proposals as a
prelude to determine the best offer, the original proposal of
the original proponent shall be considered.
a. If the GE determines that an offer made by a
comparative private sector participant is more
advantageous to the government than the origi
_______________
20 Id., at pp. 374-375.

21 Competitive Challenge is an alternative selection process wherein
third parties shall be invited to submit comparative proposals to an
unsolicited proposal. Accordingly, the private sector entity that submitted
the unsolicited proposal is accorded the right to match any superior offers
given by a comparative private sector participant. (Item 5.8, NEDA JV
Guidelines)
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nal proposal, the original proponent shall be given the

right to match such superior or more advantageous offer.
b. Should no matching offer be received, the JV activity
shall be awarded to the comparative private sector
participant submitting the most advantageous proposal.
c. If a matching offer is received, or if there is no
comparative proposal, the JV activity shall be awarded to
the original proponent.
5. After the completion of the competitive challenge, the
JV-SC shall submit the recommendation of award to the
head of the GE.22
6. Embarking on activities leading to the execution of

the Final Agreement.23
Deviation from the procedure outlined cannot be
countenanced. Well-established is the rule that
administrative issuances –– such as the NEDA JV
Guidelines, duly promulgated pursuant to the rule-making
power granted by statute –– have the force and effect of
law.24 Being an issuance in compliance with an executive
edict, the NEDA JV Guidelines, therefore, has the same
binding effect as if it were issued by the President
himself.25 As such, no agency or instrumentality
_______________
22 Rollo, p. 534. Article VIII, Annex “A,” NEDA JV Guidelines.

23 Id., at p. 537. Article X, Annex “A,” NEDA JV Guidelines.
24 Atlas Consolidated Mining and Development v. Commissioner of
Internal Revenue, G.R. No. 159490, February 18, 2008, 456 SCRA 150,
citing Eslao v. COA, G.R. No. 108310, September 1, 1994, 236 SCRA 161.
25 See Constantino, Jr. v. Cuisia, Jr., G.R. No. 106064, October 13,
2005, 472 SCRA 505, where the Court affirmed the exercise by the
Secretary of Finance, acting as the President’s alter ego, of the President’s
power to formulate a scheme for the implementation of a policy publicly
expressed by the President herself. There, the Court pronounced, “As it
was, the backdrop consisted of a major policy
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covered by the JV Guidelines26 can validly stray from

the mandatory procedures set forth therein, even if the
other party acquiesced therewith27 or not.
_______________
determination made by then President Aquino that sovereign debts

have to be respected and the concomitant reality that the Philippines did
not have enough funds to pay the debts. Inevitably, it fell upon the
Secretary of Finance, as the alter ego of the President regarding ‘the sound
and efficient management of the financial resources of the Government,’ to
formulate a scheme for the implementation of the policy publicly
expressed by the President herself.”
26 See Item 4, NEDA JV Guidelines
[4.0 Coverage.
4.1 These guidelines shall apply to all government-owned and/or -
controlled corporations (GOCCs), government corporate entities (GCEs),
government instrumentalities with corporate powers (GICPs), government
financial institutions (GFIs), state universities and colleges (SUCs), as
defined under Section 5.0 and which are expressly authorized by law or
their respective charters to enter into JV Agreements. Local Government
Units (LGUs) are not covered by these Guidelines.
4.2 Transactions of GFIs in the ordinary course of business as part of
their normal and ordinary banking, financial or portfolio management
operations shall not be covered bythe provisions of these Guidelines.]
27 See Article 1306, New Civil Code. [The contracting parties may
establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.]; See also Information Technology
Foundation of the Philippines v. COMELEC, G.R. No. 159139, January 13,
2004, 419 SCRA 141, where the Court held that the COMELEC flagrantly
desecrated the public policy on public biddings when it violated RA 9184
(Government Procurement Reform Act); See also Power Sector Assets and
Liabilities Management Corporation v. Pozzolanic Philippines, Inc., G.R.
No. 183789, August 24, 2011, 656 SCRA 214, where the Court, citing
Ongsiako v. Gamboa, 86 Phil. 50 (1950), declared that an agreement is
against public policy if it is injurious to the interest of the public,
contravenes some established interest of society, violates some public
statute, is
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SMLI’s rights as an Original Proponent and BCDA’s
correlative duty under the NEDA JV Guidelines and
the parties’ agreement
It is well to point out that after BCDA accepted the
unsolicited proposal of SMLI and after both parties herein
successfully concluded the detailed negotiations on the
terms and conditions of the project, SMLI acquired the
status of an Original Proponent. An Original Proponent,
per the TOR, pertains to the party whose unsolicited
proposal for the development and privatization of the
subject property though JV with BCDA has been accepted
by the latter, subject to certain conditions, and is now being
subjected to a competitive challenge.28
In this regard, SMLI insists that as an Original
Proponent, it obtained the right to a completed competitive
challenge. On the other hand, the BCDA argues that it can,
at any time, withdraw from the disposition process as it is
not bound to enter into the proposed JV activity with
SMLI.
Petitioner’s argument holds water.
A scrutiny of the NEDA JV Guidelines reveals that
certain rights are conferred to an Original Proponent. As
correctly pointed out by SMLI, these rights include:
1. The right to the conduct and completion of a

competitive challenge;
2. The right to match the superior or more advantageous
offer, if any;
3. The right to be awarded the JV activity in the event
that a matching offer is submitted within the prescribed
period; and
_______________
against good morals, tends to interfere with the public welfare of

safety, or, as it is sometimes put, if it is at war with the interests of society
and is in conflict with the morals of the time.
28 Rollo, p. 76.
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4. The right to be immediately awarded the JV activity

should there be no comparative proposals.29 (emphasis
added)
Material to the present case is the right to the conduct
and completion of a Competitive Challenge. Based on the
NEDA JV Guidelines, it is necessary that Stages One and
Two of the Swiss Challenge shall have been fruitful for this
right to arise.
To recall, Stages One and Two of the framework deal
with the submission and evaluation of the unsolicited
proposal and the conduct of the detailed negotiations.
Should the parties productively conclude the in-depth
negotiations, the guidelines require the preparation of the
contract and selection documents for the competitive
challenge.30 Following this, Stage Three of the same rules
provides that the GE shall subject the terms agreed upon
to a Competitive Challenge. Thus:
Stage Three — Once the negotiations have been successfully

completed, the JV activity shall be subjected to a competitive
challenge, as follows:
1. The [GE] shall prepare the tender documents pursuant to
Section II (Selection/Tender Documents) of Annex A hereof. The
eligibility criteria used in determining the eligibility of the [PSE]
shall be the same as those stated in the tender documents. x x x
The Head of the [GE] shall approve all tender documents
including the draft contract before the publication of the
invitation for comparative proposals.
2. Within seven (7) calendar days from the issuance of the
Certification of a successful negotiation referred to in Stage Two
above, the JV-SC shall publish the invitation for comparative
proposals in accordance with Section
_______________
29 NEDA JV Guidelines.
30 Item 4, Stage Two, Annex “C,” NEDA JV Guidelines.
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III.2. (Publication of Invitation to Apply for Eligibility and to

Submit Proposal) under Annex A hereof.
3. The [PSE] shall post the proposal security at the date of the
first day of the publication of the invitation for comparative
proposals in the amount and form stated in the tender documents.
4. The procedure for the determination of eligibility of
comparative proponents/private sector participants, issuance of
supplemental competitive selection bulletins and preselection
conferences, submission and receipt of proposals, opening and
evaluation of proposals shall follow the procedure stipulated
under Annex A hereof. In the evaluation of proposals, the best
offer shall be determined to include the original proposal of the
[PSE]. If the [GE] determines that an offer made by a
comparative private sector participant other than the original
proponent is superior or more advantageous to the government
than the original proposal, the [PSE] who submitted the original
proposal shall be given the right to match such superior or
more advantageous offer x x x. Should no matching offer be
received within the stated period, the JV activity shall be
awarded to the comparative private sector participant submitting
the most advantageous proposal. If a matching offer is received
within the prescribed period, the JV activity shall be awarded to
the original proponent. If no comparative proposal is received by
the [GE], the JV activity shall be immediately awarded to the
original private sector proponent.
5. Within seven (7) calendar days from the date of completion of
the Competitive Challenge, the JV-SC shall submit the
recommendation of award to the Head of the [GE]. Succeeding
activities shall be in accordance with Sections VIII. (Award and
Approval of Contract) and X (Final Approval) of Annex A hereof.31
(emphasis added)
_______________
31 Annex “C,” NEDA JV Guidelines.
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Anent the above quoted directives, emphasis must be

given to the repeated use of the word “shall.” It is
elementary that the word “shall” underscores the
mandatory character of the rule. It is a word of command,
one which always has or must be given a compulsory
meaning, and is generally imperative or mandatory.32
Considering the compulsory tenor of the order, the rule
could not be any clearer –– that once the negotiations at
Stage Two shall have been successfully completed, it
becomes mandatory for the GE to subject the JV
activity to a competitive challenge. By the Guidelines’
explicit order, proceeding to Stage Three of the process is
compulsory, conditioned only on the successful conclusion
of Stage Two. The GE is not given any discretion to decide
whether it will proceed with the competitive challenge or
not.
Furthermore, there is no question in the case at hand
that the unsolicited proposal for the development of the
subject property passed through scrutiny under the first
two stages, resulting in the issuance and signing of the
Certification. As a matter of fact, this is clearly evinced in
the whereas clauses of the Certification, to wit:
WHEREAS, on 04 May 2010, BCDA received from [SMLI] an

unsolicited proposal for the development of [the subject
property]. x x x
WHEREAS, after evaluation of the unsolicited proposal
submitted by SMLI in accordance with the provisions of Annex
“C” of the JV Guidelines, the [JV-SC] created by BCDA x x x
recommended to the BCDA Board, and the BCDA Board
approved, per Board Resolution No. 2010-05-100, the
acceptance of the unsolicited proposal, subject to the
condition that such acceptance shall not bind BCDA to enter into
a JV activity, but shall mean that authorization is given to
proceed
_______________
32 Regalado v. Go, G.R. No. 167988, February 6, 2007, 514 SCRA 616.
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with detailed negotiations on the terms and conditions of the

JV activity;
WHEREAS, pursuant to the authorization granted by the Board
and issued pursuant to Annex “C,” Part III, Stage One of the JV
Guidelines, BCDA went into detailed negotiations with
SMLI. The JV-SC simultaneously ascertained the eligibility of
SMLI in accordance with Annex “C,” Part III, Stage 2(2) of the JV
Guidelines;
WHEREAS, this Certification is issued pursuant to Annex “C”
Part III, Stage 2(2) of the JV Guidelines;
NOW, THEREFORE, for and in consideration of the foregoing,
BCDA and SMLI, after successful negotiations pursuant to
Stage II of Annex C x x x reached an agreement on the
purpose, terms and conditions of the JV development of
the subject property, which shall become the terms for the
Competitive Challenge pursuant to Annex C of the JV
Guidelines x x x.33 (emphasis added)
Moreover, the Certification further discloses that the

BCDA has the obligation to subject SMLI’s unsolicited
proposal to a Competitive Challenge, to which SMLI
assented. As provided:
BCDA and SMLI have agreed to subject SMLI’s Original

Proposal to Competitive Challenge pursuant to Annex C —
Detailed Guidelines for Competitive Challenge Procedure
for Public-Private Joint Ventures of the NEDA JV
Guidelines, which competitive challenge process shall be
immediately implemented following the Terms of Reference (TOR)
Volumes 1 and 2. BCDA shall, thus, commence the activities for
the solicitation for comparative proposals with the publication of
the Invitation to Apply for Eligibility and to Submit Comparative
Proposals (IAESCP) thrice for two (2) consecutive weeks in three
(3) major newspapers
_______________
33 Rollo, pp. 64-65.
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starting on 10 August 2010, on which date SMLI shall post the

required Proposal Security as stated above. Pursuant to Annex C
of the NEDA JV Guidelines, if, after solicitation of comparative
proposals, BCDA determines that an offer by a comparative PSE
is found to be superior to SMLI’s Original Proposal, SMLI shall be
given the right to match such superior offer within the period
prescribed in the attached TOR Volumes 1 and 2. If SMLI is able

to match such superior offer, SMLI shall be issued the Notice of
Award, subject to Item No. 19 above. In the event, however, that
SMLI is unable to match the superior offer, the comparative PSE
which submitted such superior offer shall be awarded the
contract, subject to Item No. 19 above.34 (emphasis added)
By their mutual consent and in signing the

Certification, both parties, in effect, entered into a
binding agreement to subject the unsolicited
proposal to the Competitive Challenge. Evidently, the
certification partakes of a contract wherein BCDA
committed itself to proceed with the Third Stage of the
process and simultaneously grants SMLI the right to
expect that the BCDA will fulfill its obligations under the
same. The preconditions to the conduct of the Competitive
Challenge having been met, what is left, therefore, is to
subject the terms agreed upon to a Competitive Challenge
pursuant to Stage Three, Annex “C” of the NEDA JV
Guidelines.
The Reservation Clause only covers the Third Stage
and cannot prejudice SMLI’s rights stemming from
the first two stages
In an attempt to advance its claim, BCDA invokes the
reservation clause in Article VIII of the TOR on
“Qualifications and Waivers.” To reiterate, said provision
reads:
_______________
34 Id., at p. 71.
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3. BCDA further reserves the right to call off this

disposition prior to acceptance of the proposal(s) and call
for a new disposition process under amended rules, and
without any liability whatsoever to any or all of the PSEs,
except the obligation to return the Proposal Security.35 (emphasis
ours)
The BCDA insists that the “disposition process” to

which the reservation clause refers is the entire Swiss
Challenge, and not merely Stage Three thereof regarding
the Competitive Challenge. This interpretation does not
come as a surprise considering the term’s technical
meaning, that is, alienation of property;36 the transfer of
the property and possession of lands, tenements, or other

things from one person to another; or the voluntary
resignation of title to real estate by one person to another
and accepted by the latter, in the forms prescribed by
law.37 On the basis of said definition, indeed, the
reservation clause seemingly refers to the Swiss Challenge
itself since in the case at bar, it is the Swiss Challenge, not
the competitive challenge, that is the avenue for the
disposition.
To anchor the real import of the clause on the basis only
of a single word may, however, result in a deviation from
its true meaning by rendering all the other terms
unnecessary or insignificant. Such an interpretation would
run afoul Article 1373 of the Civil Code, which states that
“[i]f some stipulation of any contract should admit of
several meanings, it shall be understood as bearing that
import which is most adequate to render it effectual.” It is
a cardinal rule in statutory construction that no word,
clause, sentence, provision or part of a statute shall be
considered surplusage or superfluous, mean-
_______________
35 Id., at p. 87.
36 Bouvier’s Law Dictionary, 3rd ed.
37 Bouvier’s Law Dictionary, 2nd ed.
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ingless, void and insignificant.38 For this purpose, an

interpretation which renders every word operative is
preferred over that which makes some words idle and
nugatory.
We find that the reservation clause cannot justify the
cancellation of the entire procurement process. Respondent
cannot merely harp on the lone provision adverted to
without first explaining the context surrounding the
reservation clause. The said provision cannot be
interpreted in a vacuum and should instead be read in
congruence with the other provisions in the TOR for Us to
fully appreciate its import.
At this juncture, it is worthy to point out that the TOR
containing the reservation clause details the requirements
for eligibility to qualify as a PSE that may submit its
proposal for the JV,39 as well as the procedure to be
followed in the assessment of the eligibility requirements
submitted and in the conduct of the Competitive Challenge.
It basically governs only part and parcel of Stage

Three of the Swiss Challenge Process, that is, the
requirements for and the determination of an
interested PSE’s eligibility to participate in the
Competitive Challenge. This conclusion is deduced from
the very provisions of the TOR, viz.:
These [TOR] describe the procedures that shall be followed in

connection with the disposition of the approximately Three
Hundred Thirty-one Thousand Three Hundred Twenty-seven
square meters (331,327 sq.m.) or 33.1-hectare Bonifacio Naval
Station (BNS)/Philippine Marine Corps (PMC)/Army Support
Command (ASCOM)/Service Support Unit (SSU) Properties in
Bonifacio South (the “Property”), located along Lawton Avenue,
Fort Bonifacio, Taguig City, Metro Manila, Philippines.
_______________
38 Philippine Health Care Providers, Inc. v. CIR, G.R. No. 167330,

September 18, 2009, 600 SCRA 413.
39 Rollo, p. 74.
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These TOR are issued in two (2) volumes: Volume 1 — Eligibility

Documents; and Volume 2 — Tender Documents. This first
volume details the requirements for eligibility to qualify
as a Private Sector Entity (PSE) that may submit Technical
and Financial Proposals for the Joint Venture (JV) Privatization
and Development of [the] subject Property, and the procedures
involved in the entire Competitive Challenge procedure.
[PSEs] which shall be declared eligible shall be issued the second
volume of the TOR which details the requirements and
procedures for the submission of Technical and Financial
Proposals, with the end-view of determining a Winning PSE
for subject JV development.
xxxx
I. GENERAL INFORMATION
xxxx
2. Publication of Invitation for Comparative Proposals.
BCDA shall publish x x x the “Invitation to Apply for Eligibility
and to Submit a Comparative Proposal” (IAESCP). This shall
serve to inform and to invite the prospective PSEs to the
Competitive Challenge procedure at hand. x x x
3. Joint Venture Agreement. x x x the ultimate objective of
BCDA in qualifying prospective PSEs to be eligible to submit
Technical and Financial Proposals is to select a partner in the

unincorporated/contractual [JV] for the privatization and
development of the subject Property. x x x
xxxx
4. Amendment of these TOR. x x x Should any of the
information and/or procedures contained in these TOR be
amended or replaced, the JV-SC shall inform and send
Supplemental Notices to all PSEs. To ensure all PSEs are
informed of any amendments, all PSEs
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are requested to inform BCDA of their contact [details]. In

addition, receipt of all Supplemental Notices shall be duly
acknowledged by each PSE prior to the submission of eligibility
documents and/or proposals and shall be so indicated therein.
5. Pre-Eligibility Conference. Interested parties are invited
to attend a Pre-Eligibility Conference for prospective PSEs
x x x.
6. One-on-One Meetings. Prospective PSEs may request
for one-on-one meetings with the JV-SC or its duly authorized
representatives. x x x
xxxx
9. Due Diligence. x x x
The PSE shall investigate x x x [and] carefully examine [the]
conditions of and at the Property and its surrounding vicinities
affecting the actual execution and such other information as to
allow the PSE to make a competitive estimate. The PSE, by
the act of submitting its proposal, acknowledges that it has
inspected the Property and accepted all the terms and
conditions for this competitive challenge as set in TOR
Volumes 1 and 2.
xxxx
V. APPLICATION FOR ELIGIBILITY
1. Eligibility Requirements. Only eligible PSEs shall be
allowed to submit comparative Technical and Financial Proposals,
or collectively, the Tender Documents x x x. Hence, interested
PSEs are invited to apply for eligibility and to participate in the
Competitive Challenge procedure. Aside from being required to
purchase the [TOR] — Volume 1, for a nonrefundable fee x x x, a
PSE shall be
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considered eligible if it satisfies all of the following requirements:

1.1. Legal Requirements. The PSE must be a duly
registered and existing corporation authorized by Philippine Laws
to own, hold or develop lands in the Philippines. x x x
1.2. Technical Requirements.
1.2.1. Firm Experience. The PSE x x x shall have
completed within a period of ten (10) years from the date of
submission and receipt of Proposals, a similar or related
development project x x x.
1.2.2. Key Personnel. x x x
1.3. Financial Capability. The PSE x x x must have
adequate capability to sustain the financing requirements for the
proposed development of the Property. This shall be measured in
terms of:
1.3.1. Net Worth. x x x
1.3.2. Good financial standing. x x x
1.3.3. No Arrears. x x x
1.3.4. Timely and complete Payment of Taxes. x x x
1.3.5. Financial Capacity to Undertake the Project.
xxxx
2. Required Eligibility Documents. The PSEs x x x that
wish to be considered for eligibility are required to submit
x x x the following documents:
xxxx
VI. EVALUATION OF ELIGIBILITY
1. Opening of Eligibility Documents. x x x
2. Evaluation Process. Eligibility Documents submitted by
the PSE shall be evaluated on a
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pass or fail basis to determine if the PSE x x x complies with or

satisfies all of the requirements specified in Article V hereof. x x x
3. Motion for Reconsideration/Appeal on Eligibility. A
prospective PSE determined as “Ineligible” has seven (7)
calendar days upon written notice within which to file a motion
for reconsideration to the JV-SC. x x x
4. No Eligible [PSEs]. In the event that no PSE be found
eligible or no PSE submitted itself to eligibility check for the
Competitive Challenge procedure, BCDA shall proceed to the
issuance of Notice of Award to SMLI, as the original proponent for
the subject JV project.
x x x x.
VII. CHANGE IN MEMBERSHIP OF AN ELIGIBLE PSE
xxxx
VIII. QUALIFICATIONS AND WAIVERS
1. BCDA reserves the right to reject any or all Eligibility

Documents, to waive any defect or informality thereon or minor
deviations, which do not affect the substance and validity of the
proposal.
2. BCDA reserves the right to review other relevant
information affecting the PSE or its Eligibility Documents before
its declaration as eligible to participate further in the selection
process, and be allowed to submit a Final Proposal. Should such
review uncover any misrepresentations made in the eligibility
documents, or any change in the situation of the PSE, which
affects its eligibility, BCDA may disqualify the PSE from
obtaining any award/contract.
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3. BCDA further reserves the right to call of this disposition

prior to acceptance of the proposal(s) and call for a new
disposition process under amended rules, and without any
liability whatsoever to any or all the PSEs, except the obligation
to return the Proposal Security x x x.40 (emphasis ours; citation
omitted)
A cursory reading of the TOR, as couched, readily

shows that it focuses only on the eligibility requirements
for PSEs who wish to challenge SMLI’s proposal as well as
the procedure to be followed by the BCDA JV-SC in the
evaluation of the PSEs’ submittals. We thus find merit in
SMLI’s thrust that since the TOR governs the eligibility
requirements for PSE’s, the “disposition process”
referred to in the reservation clause could only refer
to the eligibility process in Stage Three of the Swiss
Challenge and not the entire Swiss Challenge
process itself. We are convinced that the said provision
does not authorize BCDA to abort the entire procurement
process and cannot impair any of SMLI’s statutorily and
contractually-conferred rights stemming from the first two
stages’ conclusion. To rule otherwise would grant the GE
unbridled authority to thrust aside the agreement between
the parties after successful detailed negotiations. It would
disregard the fact that through the said covenant, the GE
bound itself to conduct and complete the
Competitive Challenge pertaining to SMLI’s proposal.
Provisions of the TOR cannot prevail over the
NEDA JV Guidelines
In the same vein, We cannot also agree with
respondents’ contention that the term “disposition” in the
assailed reservation clause refers to the entire Swiss

Challenge itself and authorizes the BCDA to abandon the
negotiations even at
_______________
40 Id., at pp. 74-88.
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Stage Three of the process for this would result in an

interpretation that is antagonistic with the NEDA JV
Guidelines.
A review of the outlined three-stage framework reveals
that there are only two occasions where pretermination of
the Swiss Challenge process is allowed: at Stage One,
prior to acceptance of the unsolicited proposal; and at
Stage Two, should the detailed negotiations prove
unsuccessful. In the Third Stage, the BCDA can no longer
withdraw with impunity from conducting the Competitive
Challenge as it became ministerial for the agency to
commence and complete the same. Thus, acceding to the
interpretation of the TOR offered by BCDA will, in
effect, result not only in the alteration of the
agreement between the parties but also of the NEDA
JV Guidelines itself, both of which has the force and
effect of law.
The interpretation offered by BCDA is, therefore,
unacceptable. Between procedural guidelines promulgated
by an agency pursuant to its rule-making power and a
condition unilaterally designed and imposed for the
implementation of the same, the former must prevail.
BCDA does not wield any rule-making power such that it
can validly alter or abandon a clear and definite provision
in the NEDA JV Guidelines under the guise of a condition
under the TOR. As We have time and again harped, the
ones duty-bound to ensure observance with laws and rules
should not be the ones to depart therefrom.41 A contrary
rule would open the floodgates to abuses and anomalies
more detrimental to public interest.42 For how can others
be expected to respect the rule of law if the very persons or
entities tasked to administer laws and their implementing
rules and regulations are the first to violate them,
blatantly or surreptitiously?
_______________
41 See Re: Problem of Delays in Cases Before the Sandiganbayan, A.M.

No. 00-8-05-SC, November 28, 2001, 370 SCRA 658.
42 See Central Bank of the Philippines v. Court of Appeals, No. L-
33022, April 22, 1975, 63 SCRA 431.
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BCDA gravely abused its discretion when it issued

Supplemental Notice No. 5 in breach of its
contractual obligation to SMLI
“Grave abuse of discretion” implies such capricious and
whimsical exercise of judgment as is equivalent to lack of
jurisdiction. It must be so patent and gross as to amount to
an evasion of positive duty or to a virtual refusal to perform
the duty enjoined or to act at all in contemplation of law.43
While it is the general policy of the Court to sustain the
decisions of administrative authorities, not only on the
basis of the doctrine of separation of powers but also for
their presumed expertise in the laws they are entrusted to
enforce, when said decisions and orders are tainted with
unfairness or arbitrariness that would amount to grave
abuse of discretion, the Courts are duty-bound to entertain
petitions questioning the former’s rulings or actions.44
In the present case, the Court finds that BCDA gravely
abused its discretion for having acted arbitrarily and
contrary to its contractual commitment to SMLI, to the
damage and prejudice of the latter. It veritably desecrated
the rules the Government itself set in the award of public
contracts.
To review, We have demonstrated that the BCDA is
duty-bound to proceed with and complete the competitive
challenge if the detailed negotiations proved successful.
Afterwards, it becomes mandatory for the competitive
challenge to proceed. Whatever rights and obligations that
may have accrued to the parties by that time can no longer
be altered by a new disposition process. At most, the
reservation clause in the TOR can only serve to alter the
rules of the eligibility process under the Competitive
Challenge.
_______________
43 Domondon v. Sandiganbayan, G.R. No. 129904, March 16, 2000,

328 SCRA 292.
44 Cuerdo v. COA, No. L-84592, October 27, 1988, 166 SCRA 657.
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In the case at bar, however, BCDA, in its mistaken

reliance on the reservation clause, aborted not just the
eligibility process of the Competitive Challenge but the
entire Swiss Challenge. Even though the language of
Supplemental Notice No. 5 at first blush appears to limit
its application to the Third Stage of the framework,
BCDA’s actuations say otherwise. Worthy of reiteration at
this point is the fact that after BCDA issued the assailed
notice, the agency also returned through registered mail
the security posted by SMLI. Coupled with the fact that
BCDA subjected the property instead to straight bidding, it
becomes obvious that BCDA no longer intends to comply
with its obligations to SMLI and that it abandoned the
Swiss Challenge process altogether, in contravention of its
statutory and contractual obligations.
Moreover, the asseveration of the BCDA in its last ditch
effort to salvage its position –– that the withdrawal is
justified since it allegedly found that the revised SMLI
proposal shall not yield the best value for the government45
–– deserves scant consideration. On the contrary, the
BCDA’s statements have been inconsistent when it comes
to identifying the procurement process that would best
serve the interest of the state.
Noticeably, in its November 8, 2010 Memorandum, the
BCDA posited that competitive challenge is more
advantageous to the government than straight bidding, to
wit:
The price of the Bonifacio South properties has already been set
by the winning price in the bidding for the joint venture
development of the JUSMAG property (P31,111/sq.m.). Thus,
BCDA has established the benchmark for the price of the
remaining Bonifacio South properties, of which the JUSMAG
property is the most prime. Logically the minimum bid price
under straight bidding for the BNS/PMC/ASCOM/SSU property,
which
_______________
45 Rollo, p. 635, BCDA’s February 13, 2012 Memorandum to the

President.
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is a far less inferior property, would be P31,111/sq.m. However,

with SM’s submission of a revised unsolicited proposal at
P31,732/sq.m. and later further revised to P32,500/sq.m., BCDA
saw the opportunity to negotiate for better terms and eventually
arrived at a higher price of P36,900/sq.m. In this case, BCDA
deemed that going into Competitive Challenge was more
advantageous to the government than Competitive
Selection (straight bidding) because of the opportunity to
increase the price.
Furthermore, subjecting the price to subsequent price
challenge will possibly drive up the price even higher than
P38,900/sq.m. These opportunities cannot be taken advantage of
under a straight bidding where failure of bidding would likely
ensue if in case BCDA immediately sets the price of the property
too high. The competition in the real estate industry and as
experienced by BCDA is such that the other developers will
usually challenge the original proposal to “up the ante” as they
cannot allow the original proponent to get the property easily.46
Despite this testament, the BCDA, over a year later,

made a complete turnaround stating that straight bidding
will be best for the Government.47 As can be gleaned from
the BCDA’s Memorandum to the President dated February
13, 2012, respondents themselves recommended to the
President that the selection proceedings be terminated. To
reiterate:
In view of the foregoing, may we respectfully recommend the

President’s approval for BCDA to terminate the proceedings for
the privatization and development of the BNS/PMC/ASCOM/SSU
Properties in Bonifacio South through Competitive Challenge and
proceed with the bidding of the property.48
_______________
46 Id., at pp. 580-581.
47 Id., at p. 115.
48 Id., at p. 635.
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The BCDA offered no explanation to reconcile its

opposing positions. It also neglected to inform SMLI of the
provisions in its proposal that it deemed disadvantageous
to the government. The sweeping statement of the BCDA
that the terms are disadvantageous cannot be accepted at
face value, bearing in mind that a fruitful in-depth
negotiation necessarily implies that BCDA found the terms
offered by SMLI acceptable. Consider also that should the

Competitive Challenge prove to be unsuccessful, it has no
other recourse but to award the project to SMLI, the
Original Proponent. This caveat forces BCDA to ensure
that the terms agreed upon during the detailed
negotiations are advantageous to it, lest it run the risk of
being bound to a project that is not beneficial to the
government in the first place.
Overall, the foregoing goes to show that the BCDA failed
to establish a justifiable reason for its refusal to proceed
with the Competitive Challenge and for canceling the
entire Swiss Challenge. Because of BCDA’s mistaken
reliance on the TOR provision, and by changing its stand
on the conduct of the Competitive Challenge without
pointing out with specificity the so-called unfavorable
terms, We are left to believe that the cancellation of the
Swiss Challenge was only due to BCDA’s whims and
caprices.
Acceptance of Unsolicited Proposal vis-à-vis Estoppel
Lastly, respondents argue that the government cannot
be estopped by the mistakes or errors of its agents,
implying that when it issued the Certification, it committed
a lapse of judgment as it later discovered that the terms of
the proposal allegedly turned out to be disadvantageous to
the Government. Thus, according to them, it cannot be
compelled to proceed with the Competitive Challenge.
We are very much aware of the time-honored rule that
“the government cannot be estopped by the mistakes or
errors of
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its agents.”49 Suffice it to state, however, that this

precept is not absolute. As jurisprudence teaches, this rule
on estoppel cannot be used to perpetrate an injustice.50
In the case at bar, it is evident that to allow BCDA to
renege on its statutory and contractual obligations would
cause grave prejudice to petitioner, who already invested
time, effort, and resources in the study and formulation of
the proposal, in the adjustment thereof, as well as in the
negotiations. To permit BCDA to suddenly cancel the
procurement process and strip SMLI of its earlier
enumerated rights as an Original Proponent at this point
–– after the former has already benefited from SMLI’s
proposal through the acquisition of information and ideas
for the development of the subject property –– would
unjustly enrich the agency through the efforts of petitioner.
What is worse, to do so would be contrary to BCDA’s

representations and assurances that it will respect SMLI’s
earlier acquired rights, which statements SMLI reasonably
and innocently believed.
All told, the BCDA’s acceptance of the unsolicited
proposal and the successful in-depth negotiation cannot be
written off as mere mistake or error that respondents claim
to be reversible and not susceptible to the legal bar of
estoppel. The subsequent cancellation of the Competitive
Challenge on grounds that infringe the contractual rights
of SMLI and violate the NEDA JV Guidelines cannot be
shrouded with legitimacy by invoking the above cited rule.
Conclusion
To increase government prospects, participation in joint
ventures has been incentivized by granting rights and
advantages to the Original Proponent in the Competitive
Challenge
_______________
49 Leca Realty Corporation v. Republic, G.R. No. 155605, September

27, 2006, 503 SCRA 563.
50 Id.
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phase of a Swiss Challenge. Faithful observance of these

provisions of law that grant the aforesaid rights, may it be
sourced from a bilateral contract or executive edict, aids in
improving government reliability. This, in turn, heavily
correlates with greater availability of options when
entering into future joint venture agreements with private
sector entities via public-private enterprises as it will
attract investors to contribute in formulating a roadmap
towards a nationwide infrastructure development.
Needless to say, allowing government agencies to retract
their commitments to the project proponents will
essentially render inutile the incentives offered to and have
accrued in favor of the private sector entity. Without
securing these rights, the business community will be wary
when it comes to forging contracts with the government.
Simply put, the failure of the government to abide by the
rules it itself set would have detrimental effects on the
private sector’s confidence that the government will comply
with its statutory and contractual obligations to the letter.
In the case at bench, considering the undisputed facts
presented before Us, We cannot sustain the BCDA’s
arguments that its withdrawal from the negotiations is

permissible and was not done with grave abuse of
discretion. Being an instrumentality of the government, it
is incumbent upon the BCDA to abide by the laws, rules
and regulations, and perform its obligations with utmost
good faith. It cannot, under the guise of protecting the
public interest, disregard the clear mandate of the NEDA
JV Guidelines and unceremoniously disregard the very
commitments it made to the prejudice of the SMLI that
innocently relied on such promises.51 It is in instances such
as this — where an agency, instrumentality or officer of the
government evades the performance of a positive
_______________
51 Supra note 42.
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duty enjoined by law52 –– wherein the exercise of

judicial power is warranted. Consistent with Our solemn
obligation to afford protection by ensuring that grave
abuses of discretion on the part of a branch or
instrumentality of the government do not go unchecked,
the Petition for Certiorari must be granted and the
corresponding injunctive relief be made permanent.
As a final note, it is worth mentioning that the
foreseeable repercussion of a contrary ponencia
encompasses the reduction of the number of interested
private sector entities that would be willing to submit suo
moto proposals and invest in government projects. After all,
what would be the point of developing ideas and allocating
resources in the formulation of PPP projects when one’s
rights as an Original Proponent, under the NEDA JV
Guidelines and the agreement between the parties, can
easily be wiped out should the agency decide to level the
playing field and conduct straight bidding instead?
Evidently, this would not attract but would, in contrast,
repel investors from tendering offers. In addition, even if
potential investors do submit unsolicited or comparative
proposals, the terms therein might be driven to become less
competitive due to the adjustment in the balance of risks
and returns on investment. Taking into account the
increased possibility of the development project not
pushing through, investors might not be too keen in
guaranteeing a high amount of secured payments for the
same. These considerations further validate the need to
secure the private sector’s trust and confidence in the

government.
WHEREFORE, premises considered, the petition is
hereby GRANTED. The assailed Supplemental Notice No.
5 dated August 6, 2012 issued by the BCDA is hereby
ANULLED and SET ASIDE. The Temporary Restraining
_______________
52 See Ligeralde v. Patalinghug, G.R. No. 168796, April 15, 2010, 618
SCRA 315.
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Order issued by this Court on January 9, 2013 is hereby

made PERMANENT.
Respondent Bases Conversion and Development
Authority and Arnel Paciano D. Casanova, or whoever
assumes the position of president of BCDA, are hereby
ORDERED to conduct and complete the Competitive
Challenge pursuant to the Certification, TOR, and NEDA
JV Guidelines.
Specifically, the BCDA and/or the JV-SC are
DIRECTED to carry out the following:
1. Publish, within seven (7) calendar days from finality
of this Decision, the “Invitation to Apply for Eligibility and
to Submit a Comparative Proposal” (IAESCP) in three (3)
newspapers of general nationwide circulation for two (2)
consecutive weeks, and in the BCDA website
(www.bcda.gov.ph), in accordance with Section III.2.
(Publication of Invitation to Apply for Eligibility and to
Submit Proposal), Section III (Project Rationale), Item 5 of
the TOR, and Section III (General Information), Item 2
(Publication of Invitation for Comparative Proposals) of the
TOR;
2. Immediately make the necessary adjustments to the
timetable of activities set forth in Supplemental Notice No.
1, considering that the periods specified therein have
already lapsed, without awaiting the lapse of the period for
publication;
3. Strictly adhere to the TOR, Supplemental Notice No.
1, as adjusted, the Certification of Successful Negotiations,
and the NEDA JV Guidelines, in the conduct and
completion of the Swiss Challenge procedure on SM Land
Inc.’s unsolicited proposal accepted by the BCDA; and
4. Perform any and all acts necessary to carry out and
complete Stage Three of the Swiss Challenge pursuant to
the provisions of the TOR and NEDA JV Guidelines,

including, but not limited to, subjecting peti-
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tioner’s unsolicited proposal to a competitive challenge.

In the event that SM Land, Inc. already obtained from
BCDA the amount representing its Proposal Security, SM
Land, Inc. is hereby DIRECTED to re-post the Proposal
Security, in the same amount as the previous one, on the
first day of the publication of the invitation for comparative
proposals, per the NEDA JV Guidelines.
SO ORDERED.
Peralta, Villarama, Jr.** and Mendoza, JJ., concur.

Leonen, J., See Dissenting Opinion.
DISSENTING OPINION
LEONEN, J.:
SM Land, Inc. (SMLI) offered to pay the Bases
Conversion and Development Authority (BCDA)
P38,500.00 per square meter for the development of
BCDA’s 33.1-hectare BNS/PMC/ASCOM/SSU properties in
Fort Bonifacio.1
BCDA claimed that SMLI’s offer would be “prejudicial to
government’s interest for . . . it will not yield the best value
for the government.”2 BCDA estimates that it could get a
minimum bid of P40,000.00 per square meter through
public bidding.3
This case arose from BCDA’s issuance of Supplemental
Notice No. 05,4 which terminated the competitive challenge
for the selection of BCDA’s joint venture partner for the
devel-
_______________
* * Acting member per Special Order No. 1691 dated May 22, 2014.
1 Rollo, p. 416.
2 Id., at p. 494.
3 Id., at pp. 857-858.
4 Id., at p. 63.
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opment of a portion of Fort Bonifacio. A pertinent

portion of BCDA’s Supplemental Order No. 05 reads:
Supplemental Notice No. 05

06 August 2012
This Supplemental Notice No. 05 is issued to inform the Private
Sector Entities (PSEs) that the Competitive Challenge for the
Selection of BCDA’s Private Sector Partner for the Privatization
and Development of the approximately 33.1-hectare
BNS/PMC/ASCOM/SSU Properties in Bonifacio South is hereby
terminated. BCDA shall not dispose the property through
Competitive Challenge.
Article VIII. Qualifications and Waivers of the Terms of
Reference provides that BCDA reserves the right to call off this
disposition prior to acceptance of the proposal(s) and call for a
new disposition process under amended rules and without any
liability whatsoever to any or all the PSEs, except the obligation
to return the Proposal Security.
BCDA will notify and invite interested Proponents to the next
scheduled selection process for BCDA’s partner for the
privatization and development of the subject property.5
SMLI now challenges the supplemental order

through a petition6 for certiorari, prohibition, and
mandamus. Its main argument is that BCDA’s unilateral
termination of the competitive challenge is a violation of
SMLI’s rights as an original proponent and constitutes
abandonment of BCDA’s contractual obligations based on
BCDA’s acceptance of petitioner’s unsolicited proposal, the
certification of successful negotiation, the terms of
reference, and the National Economic and
_______________
5 Id.
6 Id., at pp. 3-62.
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Development Authority Joint Venture Guidelines and

Procedures (Joint Venture Guidelines).7
The issue here is not whether the Joint Venture
Guidelines should apply. Rather, the issue is whether the
government is contractually bound to complete the
competitive challenge initiated by its acceptance of SMLI’s

unsolicited proposal.
I dissent from the conclusion of the majority.
The government is not clearly contractually bound to a
specific selection and disposition process.
In a situation where there can be many possible bidders,
competitive challenge where the first offer is lower than the
potential floor for open competitive bidding may be
disadvantageous to the public’s interest.
I
BCDA did not consent to a provision that limits the
selection process to competitive challenge
SMLI’s arguments arise from the premise that there
was a contract between the parties, providing that the
selection process should be restricted to competitive
challenge.
Neither BCDA’s acceptance of SMLI’s unsolicited
proposal, its issuance of the certification of successful
negotiation, nor the terms of reference did create a contract
that could give rise to a right on the part of SMLI and an
obligation on the part of BCDA to adhere to a specific
selection process.
Article 1318 of the Civil Code provides the requisites of a
contract:
Art. 1318. There is no contract unless the following requisites

concur:
_______________
7 Id., at pp. 25-56.
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(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
The documents used by SMLI as bases for its alleged

right to a completed competitive challenge do not show that
the parties had a clear meeting of the minds to give SMLI a
right to a completed competitive challenge or to restrict the
selection process to competitive challenge. BCDA’s
acceptance of SMLI’s unsolicited proposal shows no
commitment on the part of BCDA to restrict its options for
the selection process.
Based on BCDA’s letter8 dated May 12, 2010, the

acceptance contained only a declaration that SMLI’s
proposal was accepted for purposes of subjecting it to a
procedure.9 BCDA did not make a binding commitment on
any matter, including the completion of the procedure, in
favor of any person. Pertinent provisions in the acceptance
letter are reproduced as follows:

12 May 2010
....
We are pleased to inform you that the Bases Conversion and
Development Authority (BCDA) has, after initial evaluation,
decided to accept your proposal, finding it substantially compliant
and responsive to the plans and requirements of BCDA, for the
purpose of subjecting the same to Competitive Challenge Procedure
(Annex “C”) of the 2008 Guidelines and Procedures for Entering
into Joint Venture Agreements issued by the National Economic
and Development Authority (NEDA) on 02 May 2008.
Please note that this acceptance shall mean only that
authorization is given to proceed with detailed ne-
_______________
8 Id., at pp. 351-352.

9 Id., at p. 351.
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gotiations on the terms and conditions of the JV activity

and shall not bind BCDA to enter into a JV agreement, nor
to the terms of your unsolicited proposal.10 (Emphasis
supplied)
Meanwhile, the certification of successful negotiation

merely stated that SMLI and BCDA had reached an
agreement as to the terms and conditions of the joint
venture activity11 and that SMLI was eligible to enter into
a joint venture activity with BCDA.12 It does not contain a
commitment on the part of BCDA a) to enter into a joint
venture activity; b) to subject SMLI’s proposal to a
completed competitive challenge; or c) to limit BCDA’s
options of the selection process to competitive challenge only.
Neither does it vest the right upon SMLI to the award of the
joint venture agreement. The terms agreed upon are merely
drafts of what would be the joint venture agreement terms.
These are documents preparatory to the joint venture
agreement. Pertinent provisions of the certification are

quoted as follows:
Certification of Successful Negotiation

WHEREAS, under Republic Act No. 7227, the Bases Conversion
and Development Authority (BCDA) is mandated to accelerate the
sound and balanced conversion into alternative productive uses of
the Clark and Subic military reservations and their extensions, to
raise funds by the sale of portions of Metro Manila military
camps, and to apply said funds for the development and
conversion to productive civilian use of the said military base
lands;
....
WHEREAS, after evaluation of the unsolicited proposal submitted
by SMLI in accordance with the provisions of
_______________
10 Id.
11 Id., at p. 65.
12 Id., at p. 70.
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Annex “C” of the JV Guidelines, the Joint Venture Selection

Committee (JV-SC) created by BCDA for the selection of a private
partner for the BNS/PMC/ASCOM/SSU Property recommended to
the BCDA Board, and the BCDA Board approved, per Board
Resolution No. 2010-05-100, the acceptance of the unsolicited
proposal, subject to the condition that such acceptance shall not
bind BCDA to enter into a JV activity, but shall mean that
authorization is given to proceed with detailed negotiations on the
terms and conditions of the JV activity;
....
NOW THEREFORE, for and in consideration of the foregoing,
BCDA and SMLI have, after successful negotiations pursuant to
Stage II of Annex C — Detailed Guidelines for Competitive
Challenge Procedure for Public-Private Joint Ventures of the
NEDA JV Guidelines, reached an agreement on the purpose, terms
and conditions on the JV development of the subject property,
which shall become the terms for the Competitive Challenge
pursuant to Annex C of the JV Guidelines, as
follows:chanRoblesvirtualLawlibrary
....
FURTHERMORE, BCDA hereby declares SMLI eligible to
enter into the proposed JV activity. Based on the eligibility
documents submitted by SMLI, BCDA determined that SMLI (i)
is a duly registered and existing corporation with Filipino

ownership of more than sixty (60%) and is authorized by
Philippine laws to own, hold or develop lands in the Philippines;
(ii) it has completed within a period of ten (10) years from the
date of submission of and receipt of its Proposal a similar or
related development Project with a total cost of at least fifty
percent (50%) of the minimum investment requirement, which in
this case is P18.7 billion; and (iii) it has the financial capability to
undertake the Project.
BCDA and SMLI have agreed to subject SMLI’s Original
Proposal to Competitive Challenge pursuant to Annex C —
Detailed Guidelines for Competitive Challenge Procedure for
Public Private Joint Ventures of the NEDA JV Guidelines, which
competitive challenge process shall be
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immediately implemented following the Terms of Reference (TOR)

Volumes 1 and 2. BCDA shall, thus, commence the activities for
the solicitation for comparative proposals, with the publication of
the Invitation to Apply for Eligibility and to Submit Comparative
Proposals (IAESCP) thrice for two (2) consecutive weeks in three
(3) major newspapers starting on 10 August 2010, on which date
SMLI shall post the required Proposal Security as stated above.
Pursuant to Annex C of the NEDA JV Guidelines, if, after
solicitation of comparative proposals, BCDA determines that an
offer by a comparative PSE is found to be superior to SMLI’s
Original Proposal, SMLI shall be given the right to match such
superior offer within the period prescribed in the attached TOR
Volumes 1 and 2. If SMLI is able to match such superior offer,
SMLI shall be issued the Notice of Award, subject to Item No. 19
above. In the event, however, that SMLI is unable to match the
superior offer, the comparative PSE which submitted such
superior offer shall be awarded the contract, subject to Item No.
19 above.13 (Emphasis supplied)
Similarly, the terms of reference only described the

procedural aspects of the competitive challenge. It
contained no provision limiting BCDA’s selection process
options to competitive challenge, thus:
TERMS OF REFERENCE
for the Competitive Challenge for the Selection
of BCDA’s Joint Venture Partner
for the Privatization and Development of the
Approximately 33.1-Hectare NS/PMC/ASCOM/SSU Properties
in Bonifacio South
Volume 1: Eligibility Documents

These Terms of Reference (TOR) describe the procedures that
shall be followed in connection with the disposition of the
approximately . . . 33.1-hectare Bonifacio Naval
_______________
13 Id., at pp. 64-71.
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Station (BNS)/Philippine Marine Corps (PMC)/Army Support

Command (ASCOM)/Service Support Unit (SSU) Properties in
Bonifacio South (the “Property”), located along Lawton Avenue,
Fort Bonifacio, Taguig City, Metro Manila, Philippines.
These TOR are issued in two (2) volumes: Volume 1 — Eligibility
Documents; and Volume 2 — Tender Documents. This first
volume details the requirements for eligibility to qualify as a
Private Sector Entity (PSE) that may submit Technical and
Financial Proposals for the Joint Venture (JV) Privatization and
Development of subject Property, and the procedures involved in
the entire Competitive Challenge procedure. Private sector
entities (PSEs) which shall be declared eligible shall be issued the
second volume of the TOR which details the requirements and
procedures for the submission of Technical and Financial
Proposals, with the end-view of determining a Winning PSE for
subject JV development.
BCDA reserves the right to amend or supplement Volume 1 of
these TOR at any time prior to the submission of the Eligibility
Documents.
These TOR shall be administered by the Joint Venture Selection
Committee (JV-SC) that has been duly constituted for the purpose
pursuant to BCDA Board Resolution No. 2010-03-057. Any
decision of and/or action taken by the JV-SC is recommendatory
and is subject to the approval/ratification/confirmation of the
BCDA Board. Prior to BCDA’s execution of the Joint Venture
Agreement (JVA) with the Winning PSE, the Office of the
Government Corporate Counsel (OGCC), as BCDA’s statutory
counsel, shall issue the corresponding Counsel’s Opinion.
I. PROJECT RATIONALE
1. Under Republic Act No. 7227, BCDA is mandated to accelerate
the sound and balanced conversion into alternative productive
uses of the Clark and Subic military reservations and their
extensions, to raise funds by the sale of portions of Metro Manila
camps, and to apply said funds for the development
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and conversion to productive civilian use of said military base

lands.
2. The overall legal basis and framework for the selection of
BCDA’s joint venture partner for the privatization and
development of the Property are R.A. 7227, as amended by R.A.
7917, Executive Order No. 40, the NEDA JV Guidelines issued
pursuant to E.O. No. 423 S. 2005, R.A. 9184 and its Implementing
Rules and Regulations to the extent applicable, and other
relevant laws, Executive Orders, and rules and regulations to the
extent applicable.
3. On 04 May 2010, BCDA received from SM Land, Inc. (SMLI) an
unsolicited proposal for the development of the said Property. The
‘‘Guidelines and Procedures for Entering into Joint Venture (JV)
Agreements Between Government and Private Entities” (JV
Guidelines), issued by the National Economic and Development
Authority (NEDA) in consultation with the Government
Procurement Policy Board (GPPB) and the OGCC pursuant to
Executive Order No. 423 S. 2005, were published last 17 April
2008 (Philippine Star) and had taken full force and effect on 02
May 2008. Annex C thereof, or the “Detailed Guidelines for
Competitive Challenge Procedure for Public-Private Joint
Ventures,” provides the bases for BCDA’s consideration of the
unsolicited proposal of SMLI. . . .
....
4. Hence, in accordance with Annex C of the JV Guidelines, BCDA
proceeded with the consideration of the unsolicited proposal
submitted by SMLI. Upon recommendation by the BCDA JV-SC,
the BCDA Board approved, per Board Resolution No. 2010-05-
100, the acceptance of the unsolicited proposal. Subject to the
condition that such acceptance shall not bind BCDA to enter into
a JV activity, but shall mean that authorization is given to
proceed with detailed negotiations on the terms and conditions of
the JV activity, BCDA went into detailed
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negotiations with SMLI. The JV-SC ascertained the eligibility of

SMLI, in accordance with Article III.2 of Annex C of the JV
Guidelines, and reached an agreement with the same on the
purpose, terms and conditions of the JV development of subject

Property on _________ 2010.
Therefore, BCDA, under Stage 3 of the Annex C Guidelines on
Competitive Challenge, is now seeking comparative proposals
from PSEs for the JV privatization and development of the
Property, located along Lawton Avenue, Fort Bonifacio, Taguig
City, on an “AS-IS, WHERE-IS” basis, to challenge the SMLI
proposal. . . .
....
III. GENERAL INFORMATION
1. Applicable Laws. All laws governing the operation and
implementation of these TOR shall be deemed to be those of the
Republic of the Philippines, such as, but not limited to, Republic
Act No. 7227, as amended by Republic Act No. 7917, and the
“Guidelines and Procedures for Entering into Joint Venture
Agreements Between Government and Private Entities” issued by
the NEDA pursuant to Executive Order No. 423, which took effect
on 02 May 2008, as well as Executive Order No. 62 and Republic
Act No. 9184, its Implementing Rules and Regulations and its
amendments, to the extent applicable, where applicable.
2. Publication of Invitation for Comparative Proposals. BCDA
shall publish in three (3) newspapers of general nationwide
circulation. . . the “Invitation to Apply for Eligibility and to
Submit a Comparative Proposal” (IAESCP). This shall serve to
inform and to invite prospective PSEs to the Competitive
Challenge procedure at hand. . . .
3. Joint Venture Arrangement. As laid out in Article 1 above, the
ultimate objective of BCDA in qualifying prospective PSEs to be
eligible to submit
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Technical and Financial Proposals is to select a partner in the

unincorporated/contractual joint venture (JV) for the privatization
and development of the subject Property. . . .
....
4. Amendment of these TOR. The information and/or
procedures contained in these TOR may he amended or
replaced at any time, at the discretion of the JV-SC, subject
to the approval/confirmation of the BCDA Board, without
giving prior notice or providing for any reason. Should any
of the information and/or procedures contained in these TOR be
amended or replaced, the JV-SC shall inform and send
Supplemental Notices to all PSEs. . . .
VIII. QUALIFICATIONS AND WAIVERS
....
3. BCDA further reserves the right to call off this

disposition prior to acceptance of the proposal(s) and call
for a new disposition process under amended rules, and
without any liability whatsoever to any or all the PSEs,
except the obligation to return the Proposal Security.
. . . .14 (Emphasis supplied)
The inclusion of Article III.4 and Article VIII.3 in the

terms of reference Confirms BCDA’s authority to
reconsider the selection process. These sections confirm
BCDA’s power to unilaterally terminate the selection
procedure.
Article III.4 provides for unilateral amendment of the
information and procedures. This is a window for BCDA
alter the procedures to adopt other selection processes.
_______________
14 Id., at pp. 74-87.
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Meanwhile, Article VIII.3 expressly bestows upon BCDA

the power to terminate the disposition process without
incurring any liability to the private sector entities.
II
BCDA cannot consent to a provision that limits the
selection process to competitive challenge
Not only is it unclear from the above documents that
BCDA consented to restricting its choice of selection
process to competitive challenge; it would also be grave
abuse of discretion on the part of BCDA to agree to that
restriction. This is because the law requires that it adhere
to certain policy considerations.
When the terms admit different interpretations, the
Civil Code requires the use of an interpretation ‘‘bearing
that import which is most adequate to render it
effectual.”15 When the government enters into agreements
or terms, it does so only in accordance with the law and to
carry out the policies and purposes of the law. These laws
and the corresponding policies are incorporated in terms
entered into by the government. The presumption when
terms are ambiguous, therefore, should be that which is
consistent with the law, government policies, and its
purposes. That would be the import that is “most adequate
to render [the terms of a government deal or
understanding] effectual.”16
Section 2 of Republic Act No. 722717 provides for the

government’s policy to enhance the benefits from the
conversion of BCDA-administered properties, thus:
_______________
15 Civil Code, Art. 1373.

16 Id.
17 Bases Conversion and Development Act of 1992.
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Sec. 2. Declaration of Policies.—It is hereby declared the policy

of the Government to accelerate the sound and balanced
conversion into alternative productive uses of the Clark and Subic
military reservations and their extension (John Hay Station,
Wallace Air Station, O’Donnell Transmitter Station, San Miguel
Naval Communications Station and Capas Relay Station), to raise
funds by the sale of portions of Metro Manila military camps, and
to apply said funds as provided herein for the development and
conversion to productive civilian use of the lands covered under
the 1947 Military Bases Agreement between the Philippines and
the United States of America, as amended.
It is likewise the declared policy of the Government to enhance the
benefits to be derived from said properties in order to promote the
economic and social development of Central Luzon in particular
and the country in general. (Emphasis supplied)
Executive Order No. 6218 provides for BCDA’s duty to

ensure maximized use of Metro Manila military camps. It
also provides that public bidding is the general rule in
determining the privatization process to be used. Other
processes may be considered only when the exigencies
demand it and in accordance with national interest, thus:
SEC. 1. POLICY FRAMEWORK.—The BCDA shall be guided

by the following policy framework in its conversion program:
....
1.4 The BCDA shall plan and implement fund generating
projects which will maximize the use of the military camps in
Metro Manila that shall be sold pursuant to Section 8 of the Act
with the funds generated therefrom to be strictly utilized as
provided for in the Act; and
_______________
18 Prescribing Policies and Guidelines to Implement Republic Act No.

7227 (1993).
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1.5 Conversion projects must be financially self-sustaining in the

long term and should contribute significantly to national economic
development.
....
SEC. 4. PRIVATIZATION.—The BCDA hereby adopts the
following policy guidelines in pursuing privatization,
commercialization or divestment projects:
4.1 Privatization shall be the basic thrust of the conversion and
development of the baselands. Privatization modes shall include,
among others, leasing, joint ventures, management contract,
build-operate-transfer (BOT) and its variants;
....
4.3 As a general rule, the privatization process should be
conducted through public bidding. However, in the exigency of
public service and national interest, and consonant with existing
laws, rules and regulations on negotiated contracts, simplified
bidding through sealed canvass of at least three (3) prequalified
investors, or direct negotiation, may be resorted to. The process of
selecting the prospective lessees and private investors shall be
transparent, where procedures and selection processes adapted
are made public through newspaper advertisements and similar
other means; . . . . (Emphasis supplied)
BCDA issued Supplemental Notice No. 05 only after

finding that the competitive challenge would be
disadvantageous to the government and, therefore, against
national interest. Unless BCDA was determined in
deviating from government policies, it had no choice but to
recommend to the President who had control and
supervision over BCDA on policy matters19 that the
privatization be done through public bidding.
As opposed to competitive challenge, public bidding
allows the government to set the minimum contract price
and set
_______________
19 Rep. Act No. 7227 (1992), Sec. 17.
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contract terms known to and appfied to all interested

private entities. It is the more transparent and competitive
mode of awarding government contracts because no one is
given a preferred status. Competitive challenge may only
be applicable should there be no interested party or there is
need to entice interest among other private sector entities.
Certainly, it should not be availed to give advantage to any
party without any clear basis. In this case, petitioner has
not shown why competitive challenge is more advantageous
from the public policy standpoint. Competitive challenge is
the exception. Open competitive bidding is the general rule.
Our laws abide by the principles of transparency and
competitiveness in awarding government contracts.
Republic Act No. 9184,20 for example, provides:
Sec. 3. Governing Principles on Government Procurement.

—All procurement of the national government, its departments,
bureaus, offices and agencies, including state universities and
colleges, government-owned and/or -controlled corporations,
government financial institutions and local government units,
shall, in all cases, be governed by these
principles:chanRoblesvirtualLawlibrary
(a) Transparency in the procurement process and in the
implementation of procurement contracts.
(b) Competitiveness by extending equal opportunity to enable
private contracting parties who are eligible and qualified to
participate in public bidding.
. . . . (Emphasis supplied)
Section 8 of Executive Order No. 42321 provides that

guidelines dssued by the National Economic and
Development
_______________
20 Government Procurement Reform Act (2002).

21 Repealing Exec. Order No. 109-A dated September 18, 2003
Prescribing the Rules and Procedures on the Review and Approval of All
Government Contracts to Conform with Republic
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Authority
Authority regarding joint venture agreements with

private entities should adhere to the objective of
“promoting transparency and competitiveness,” thus:
Sec. 8. Joint Venture Agreements.—The NEDA, in

consultation with the GPPB, shall issue guidelines regarding joint
yenture agreements with private entities with the objective of

promoting transparency, competitiveness, and accountability in
government transactions, and, where applicable, complying with
the requirements of an open and competitive public bidding.
(Emphasis supplied)
Because of the level of transparency and

competitiveness in public bidding, it is considered the
preferred mode of awarding government contracts. Section
2 of Executive Order No. 4022 states:
Sec. 2. Statement of Policy.—It is the policy of the government

that procurement shall be competitive and transparent and
therefore shall be through public bidding, except as otherwise
provided in this Executive Order.
Republic Act No. 9184 provides:
Sec. 10. Competitive Bidding.—All Procurement shall be

done through Competitive Bidding, except as provided for in
Article XVI of this Act.
_______________
Act No. 9184, Otherwise Known as “The Government Procurement

Reform Act” (2005).
22 Exec. Order No. 40, Consolidating Procurement Rules and
Procedures for All National Government Agencies, Government-owned or -
controlled Corporations and Government Financial Institutions, and
Requiring the Use of the Government Electronic Procurement System
(2001).
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Executive Order No. 423 confirmed public bidding’s

preferred status as a mode of awarding government
contracts:
Sec. 1. Policy Requiring Public Bidding.—It is the policy of

this Administration that all Government contracts of Government
Agencies shall be awarded through open and competitive public
bidding, save in exceptional cases provided by law and applicable
rules and regulations. . . .
BCDA’s acceptance of SMLI’s unsolicited proposal, the

issuance of the certificate of successful negotiations, and
terms of reference, should be read in light of the preference
given to public bidding, the policy in favor of maximized
use of properties, and national interest. Any person who
deals with the government also accepts the condition that

the government is not bound by any provision or
interpretation that is against the law, government policies,
and national interest. The government may not agree to
contract stipulations that are disadvantageous to it. These
are conditions that are deemed incorporated in dealings
with BCDA.
In this case, the government policies and purposes are
best served through public bidding. Public bidding provides
more transparency, competitiveness, and benefit to the
government.
The ponencia is correct in reading the word “shall” in
Stage Three of Annex C of the applicable Joint Venture
Guidelines23 as mandatory:
Stage Three — Once the negotiations have been successfully

completed, the JV activity shall be subjected to a competitive
challenge, as follows:
1. The Government Entity shall prepare the tender documents
pursuant to Section II (Selection/Tender
_______________
23 Guidelines and Procedures for Entering Into Joint Venture (JV)
Agreements Between Government and Private Entities (2008).
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Documents) of Annex A hereof. The eligibility criteria used in

determining the eligibility of the private sector entity shall be the
same as those stated in the tender documents. Proprietary
information shall, however, be respected and protected, and
treated with confidentiality. As such, it shall not form part of the
tender and related documents. The Head of the Government
Entity shall approve all tender documents including the draft
contract before the publication of the invitation for comparative
proposals.
2. Within seven (7) calendar days from the issuance of the
Certification of a successful negotiation referred to in Stage Two
above, the JV-SC shall publish the invitation for comparative
proposals in accordance with Section III.2. (Publication of
Invitation to Apply for Eligibility and to Submit Proposal) under
Annex A hereof.
3. The private sector entity shall post the proposal security at
the date of the first day of the publication of the invitation for
comparative proposals in the amount and form stated in the
tender documents.

private sector entity. If the Government Entity determines that
an offer made by a comparative private sector participant other
than the original proponent is superior or more advantageous to
the government than the original proposal, the private sector
entity who submitted the original proposal shall be given the
right to match such superior or more advantageous offer within
thirty (30) calendar days from receipt of notification from the
Government Entity of the results of the competitive
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selection. Should no matching offer be received within the stated

period, the JV activity shall be awarded to the comparative
private sector participant submitting the most advantageous
proposal. If a matching offer is received within the prescribed
period, the JV activity shall be awarded to the original proponent.
If no comparative proposal is received by the Government Entity,
the JV activity shall be immediately awarded to the original
private sector proponent.
5. Within seven (7) calendar days from the date of completion
of the Competitive Challenge, the JV-SC shall submit the
recommendation of award to the Head of the Government Entity.
Succeeding activities shall be in accordance with Sections VIII.
(Award and Approval of Contract) and X (Final Approval) of
Annex A hereof.
However, this only applies when the parties have

contractually agreed to abide by the procedure outlined in
Annex C of the Joint Venture Guidelines.
The procedure in Annex C are guidelines. They do not
have the same standing as law. It may be modified by the
parties in their contract, provided that the modifications
are consistent with the law. The rights of the parties are
determined by a valid agreement or, in this case, by Annex
C, if it was agreed upon and only so long as it is still
consistent with the law. In that case, private sector entities
may expect that the competitive challenge be done in
accordance with it.
Hence, contrary to what was stated in the ponencia, the
word, “shall,” in “Stage Three — Once the negotiations
have been successfully completed, the JV activity shall be

subjected to a competitive challenge. . .” should not be
interpreted to vest upon private sector entities the right to
proceed to the competitive challenge after the completion of
Stages One and Two, once it is determined that proceeding
with competitive challenge would be against the law and
government policy.
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First, the Joint Venture Guidelines does not vest upon

the original proponent “[t]he right to the conduct and
completion of a competitive challenge.”24 Based on the
Joint Venture Guidelines and the terms of reference, the
extent of protection given to an original proponent is
limited to the right to match the proposals of comparative
private sector entities or PSEs. It becomes effective only
upon submission of proposals from other PSEs, thus:

TERMS OF REFERENCE
for the Competitive Challenge for the Selection
of BCDA’s Joint Venture Partner
for the Privatization and Development of the
Approximately 33.1-Hectare NS/PMC/ASCOM/SSU
Properties in Bonifacio South

Volume 1: Eligibility Documents
....
II. DEFINITION OF TERMS
....
Competitive Challenge means an alternative selection process, as
defined under the “Guidelines and Procedures for Entering into
Joint Venture Agreements Between Government and Private
Entities’’ issued by the NEDA, wherein third parties shall be
invited to submit comparative proposals to an unsolicited
proposal; the PSE that submitted the unsolicited proposal is
accorded the right to match any superior offers given by a
comparative PSE.25
Annex C of the National Economic and Development

Authority Joint Venture Guidelines reads as follows:
....
Stage Three — . . .
....
_______________
24 Cf. Ponencia, p. 88.

25 Rollo, pp. 74-75.
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private sector entity. If the Government Entity determines that
an offer made by a comparative private sector participant other
than the original proponent is superior or more advantageous to
the government than the original proposal, the private sector
entity who submitted the original proposal shall be given the right
to match such superior or more advantageous offer within thirty
(30) calendar days from receipt of notification from the
Government Entity of the results of the competitive selection.
Should no matching offer be received within the stated period, the
JV activity shall be awarded to the comparative private sector
participant submitting the most advantageous proposal. If a
matching offer is received within the prescribed period, the JV
activity shall be awarded to the original proponent. If no
comparative proposal is received by the Government Entity, the
JV activity shall be immediately awarded to the original private
sector proponent. (Emphasis supplied)
Second, if Stage Three is read in conjunction with

Executive Order No. 62 and other laws, it is not the
completion of Stages 1 and 2 of the competitive challenge
procedure under Annex C of the Joint Venture Guidelines
that gives private sector entities rights. Whatever rights
that may have accrued to private sector entities under
Annex C of the Joint Venture Guidelines exist only as long
as competitive challenge remains the operating process for
the selection of a joint venture partner.
Commencement of the procedures under Annex C of the
Joint Venture Guidelines cannot be interpreted as binding
the
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government to adhere to a specific selection process,

regardless of policy and national interest considerations.
The documents issued by BCDA, therefore, should be
considered as effective only if the choice of selection process
is competitive challenge. At any time prior to the execution
of the joint venture agreement and after finding that
national interest and government policies should be best
served through other processes, BCDA and the government
should not be limited in their choice of selection process for
a joint venture partner.
It is for this reason that BCDA is not prohibited from
aborting the entire process. Contrary to the ponencia’s
position, there is no vested right to impair. Neither is there
an obligation to renege on. Thus, any issue that may have
arisen regarding the interpretation of the term
“disposition” in Section VIII.3 of the terms of reference is
rendered immaterial.26 For clarity, however, the term
“disposition” cannot be interpreted as anything other than
the entire competitive challenge process.27 The terms of
reference define “privatization” as “the disposition of the
Property through joint venture.”28 In the context of SMLI
and BCDA’s dealings, the object of disposition is always the
33.1-hectare property of BCDA in Fort Bonifacio, and the
disposition of that property is privatization. Privatization is
an entire process that starts from selection and ends with
the actual transfer of ownership of property.
This is not to say that the government may at any time
renege on its contractual obligations. In this instance,
however, there is no contractual obligation to speak of that
limits BCDA’s power to change the selection process because
it is not allowed to consent to such a provision. The
documents used by SMLI to support its argument that
BCDA has the obligation to complete the competitive
challenge contain no provision to
_______________
26 Cf. Ponencia, pp. 100-101.

27 Cf. Ponencia, pp. 94 and 100.
28 Rollo, p. 77.
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that effect. However, granting that there is such

provision, that provision should be considered void because
BCDA has no authority to agree to it. For this reason alone,
BCDA did not gravely abuse its discretion in issuing

Supplemental Notice No. 05.
Finally, there would be no unjust enrichment on the
part of BCDA or injustice on the part of SMLI if the
competitive challenge is terminated. BCDA offered to
return the value of SMLI’s security plus interest and
admitted its obligation to return it upon termination of the
process.29 As shown in the letter dated August 15, 2012,
BCDA even “invite[d] SMLI to participate in the bidding
for the subject property.”30 SMLI is, therefore, not
precluded from participating in the subsequent disposition
process that may be selected by BCDA. SMLI will be given
an equal opportunity and chance to become BCDA’s
partner.
Any advantage given to SMLI now, arising from
ambiguous terms and from an erroneous interpretation of
the Joint Venture Guidelines, may have unnecessary and
undesirable effects.
It is partiality in favor of one company that has deterred
investors. Fairness and transparency have always been an
expectation for those who would wish to participate in our
economy.
Accordingly, I vote to deny the petition.
Petition granted, Supplemental Notice No. 5 annulled

and set aside. Temporary Restraining Order made
permanent.
Notes.—It has been held that the three principles in

public bidding are: (1) the offer to the public; (2) an
opportunity for competition; and (3) a basis for the exact
comparison of bids. (Power Sector Assets and Liabilities
Management Corporation vs. Pozzolanic Philippines,
Incorporated, 656 SCRA 214 [2011])
_______________
29 Id., at p. 510.

30 Id., at p. 118.
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An essential element of a publicly bidded contract is that

all bidders must be on equal footing, not simply in terms of
application of the procedural rules and regulations imposed
by the relevant government agency, but more importantly,
on the contract bidded upon. Each bidder must be able to

bid on the same thing. (Id.)
——o0o——
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10/27/21, 7:54 PM SUPREME COURT REPORTS ANNOTATED VOLUME 733

G.R. No. 203655. August 13, 2014.*

Government Contracts; Procurement Process; To streamline

VOL. 733, AUGUST 13, 2014 69

Same; Negotiated Agreements; Swiss Challenge Method;

70 SUPREME COURT REPORTS ANNOTATED

SM Land, Inc. vs. Bases Conversion and Development

GE to subject the JV activity to a competitive

VOL. 733, AUGUST 13, 2014 71

it later discovered that the terms of the proposal allegedly

LEONEN, J., Dissenting Opinion:

Civil Law; Contracts; View that the documents used by SM

72 SUPREME COURT REPORTS ANNOTATED

right to a completed competitive challenge or to restrict the

VOL. 733, AUGUST 13, 2014 73

provides for BCDA’s duty to ensure maximized use of Metro

74 SUPREME COURT REPORTS ANNOTATED

bidding. Public bidding provides more transparency,

SPECIAL CIVIL ACTION in the Supreme Court.

VELASCO, JR., J.:

VOL. 733, AUGUST 13, 2014 75

private joint venture agreement. The proposal

Thereafter, the BCDA created a Joint Venture Selection

76 SUPREME COURT REPORTS ANNOTATED

amount of Php187 million, following the prescribed

VOL. 733, AUGUST 13, 2014 77

submission deadline this time to an unspecified future

payments to Php22.436 billion in over fifteen (15) years

In view of the foregoing, may we respectfully recommend the

78 SUPREME COURT REPORTS ANNOTATED

through Competitive Challenge and proceed with the bidding

Alarmed by this development, SMLI, in a letter dated

This Supplemental Notice No. 05 is issued to inform the [PSEs]

To support its position, the BCDA invoked Article

Thereafter, the BCDA informed SMLI of the OP’s

VOL. 733, AUGUST 13, 2014 79

In the meantime, the BCDA issued in favor of SMLI

Without a doubt, the issue in this case boils down to

7 The invitation was also published in the January 2 and 9, 2013

80 SUPREME COURT REPORTS ANNOTATED

authorized the agency to unilaterally cancel the

Section 8. Joint Venture Agreements.—The NEDA, in

Taking its cue from the above quoted provision, the

VOL. 733, AUGUST 13, 2014 81

Competitive selection involves a selection process

9 Item 5.6, NEDA JV Guidelines.

12 An Unsolicited Proposal refers to “project proposals submitted by

82 SUPREME COURT REPORTS ANNOTATED

rect negotiation approach and the competitive bidding

media/completed/ConAgreInfraSect_20100401141506.pdf. Last accessed

VOL. 733, AUGUST 13, 2014 83

ernment directly negotiates with a proponent. In this

84 SUPREME COURT REPORTS ANNOTATED

19 Id., at pp. 373-374.

VOL. 733, AUGUST 13, 2014 85

4. After an agreement is reached, the contract

20 Id., at pp. 374-375.

86 SUPREME COURT REPORTS ANNOTATED

nal proposal, the original proponent shall be given the

6. Embarking on activities leading to the execution of

22 Rollo, p. 534. Article VIII, Annex “A,” NEDA JV Guidelines.

VOL. 733, AUGUST 13, 2014 87

covered by the JV Guidelines26 can validly stray from

determination made by then President Aquino that sovereign debts