SECOND DIVISION
G.R. No. 237486, July 03, 2019
PHILCO AERO, INC.,* PETITIONER, v. DEPARTMENT OF TRANSPORTATION SECRETARY ARTHUR P. TUGADE, BASES CONVERSION AND DEVELOPMENT AUTHORITY, VIVENCIO B. DIZON, MEGAWIDE CONSTRUCTION CORP., AND GMR INFRASTRUCTURE LTD., DOING BUSINESS AS JOINT VENTURERS UNDER THE NAME AND STYLE OF MEGAWIDE-GMR, RESPONDENTS.
D E C I S I O N
REYES, J. JR., J.:
Before us is a Petition for Certiorari, Prohibition, and Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order (TRO)1 filed by Philco Aero, Inc. (petitioner).
The Clark International Airport Corporation (CIAC) which is authorized to operate and manage the Clark Aviation Complex, was created by virtue of Executive Order No. 192, Series of 1994 (E.O. No. 192).
Under E.O. No. 192, the CIAC shall be a wholly-owned subsidiary corporation of the Clark Development Corporation (CDC) and shall be formed in accordance with the Corporation Code and existing rules and regulations promulgated by the Securities and Exchange Commission (SEC).2
The CIAC shall be subject to the policies, rules and regulations promulgated by the Bases Conversion Development Authority (BCDA)/CDC.3
Sometime in 2008, CIAC declared its invitation to qualified entities to participate in the design, financing, construction, and operation of the Diosdado Macapagal International Airport (DMIA) Passenger Terminal 2 in the Clark Freeport Zone.4
In response, petitioner submitted to CIAC its expression of interest and unsolicited proposal.5 Upon CIAC's acknowledgment of the receipt of such proposal, it advised the petitioner that it shall conduct detailed negotiations with it to determine petitioner's eligibility and to discuss the technical and financial aspects of its unsolicited proposal.6
Pursuant to such advice, CIAC and petitioner underwent a series of negotiations. On July 31, 2010, the CIAC signified its approval of the advancement of the negotiations to Stage Two, as defined in the Annex C of the 2008 Joint Ventures Guidelines issued by the National Economic and Development Authority (NEDA).7
Negotiations continued until July 19, 2011 when CIAC informed petitioner, in a letter, of its intent to cease in participating in any negotiation.8
Petitioner sought the reconsideration of the same, which was denied by the CIAC.
The project was eventually awarded to Megawide Construction Corp., and GMR Infrastructure Ltd. (collectively as Megawide-GMR) as joint venturers by the Department of Transportation (DOTr) and BCDA.9
Aggrieved, petitioner filed a Petition for Certiorari, Prohibition, and Mandamus with a Prayer for the Issuance of a Writ of Preliminary Injunction and/or TRO before this Court.
Petitioner contends that said award to Megawide-GMR was illegal and violative of its right to due process because its unsolicited proposal for the engineering, procurement, and construction of the DMIA Passenger Terminal 2 was duly approved and already partially made the subject of a series of negotiations.
I.
WHETHER OR NOT THE AWARD OF THE CONTRACT TO MEGAWIDE-GMR WAS ILLEGAL; andII.
WHETHER OR NOT SAID AWARD VIOLATES PETITIONER'S RIGHT TO DUE PROCESS.
Stage One – A private sector entity submits an unsolicited proposal to the Government Entity, or the Government Entity seeks out a JV partner after failed competition for a JV activity deemed manifestly advantageous to Government. The private sector entity submits a proposal to the Government Entity for a projected JV activity/undertaking. The Government Entity, through its JV-SC, is tasked with the initial evaluation of the proposal. Upon completion of the initial evaluation, the Head of the Government Entity, upon recommendation of the JV-SC, shall either issue an acceptance or non-acceptance of the proposal. The Government Entity concerned shall act on the proposal within ten (10) working days upon submission of complete documents by the private sector entity. An acceptance shall not bind the Government Entity 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. In case of non-acceptance, the private sector entity shall be informed of the reasons/grounds for non-acceptance.
Stage Two – The parties negotiate and agree on the terms and conditions of the JV activity. The following rules shall be adhered to in the conduct of detailed negotiations and the preparation of the proposal documents in case of successful negotiations:
- Both parties shall negotiate on, among others, the purpose, terms and conditions, scope, as well as all legal, technical, and financial aspects of the JV activity.
- The JV-SC shall determine the eligibility of the private sector entity to enter into the JV activity in accordance with Sec. IV.2 (Eligibility Requirements) under Annex A hereof.
- 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 Guidelines. Once negotiations are successful, the Head of the Government Entity and the authorized representative of the private sector entity shall issue a signed certification that an agreement has been reached by both parties. Said certification shall also state that the Government Entity has found the private sector participant eligible to enter into the proposed JV activity and shall commence the activities for the solicitation for comparative proposals. However, should negotiations not result to an agreement acceptable to both parties, the Government Entity shall have the option to reject the proposal by informing the private sector participant in writing stating the grounds for rejection and thereafter may accept a new proposal from private sector participants, or decide to pursue the proposed activity through alternative routes other than JV. The parties shall complete the Stage Two process within thirty (30) calendar days upon acceptance of the proposal under Stage One above.
- After an agreement is reached, the contract documents, including the selection documents for the competitive challenge are prepared.
Stage Three – Once the negotiations have been successfully completed, the JV activity shall be subjected to a competitive challenge, as follows:
- The Government Entity 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 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.
- 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.
- 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.
- The procedure for the determination of eligibility of comparative proponents/private sector participants, issuance of supplemental competitive selection bulletins and pre-selection 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 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.
- 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.11
A review of the outlined three-stage framework reveals that there are only two occasions where pre-termination 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. x x x
In view of the new DMIA Land Use Plan and current policy pronouncement of the National Government to conduct public bidding for the Public-Private Partnership (PPP) projects, please be informed that the CIAC Board of Directors has directed the Joint Venture Selection Committee (JVSC) to terminate the joint venture negotiation process under the NEDA JV Guidelines.13
Stage Two – The parties negotiate and agree on the terms and conditions of the JV activity. The following rules shall be adhered to in the conduct of detailed negotiations and the preparation of the proposal documents in case of a successful negotiations:
x x x x
x x x However, should negotiations not result to an agreement acceptable to both parties, the Government Entity shall have the option to reject the proposal by informing the private sector participant in writing stating the grounds for rejection and thereafter may accept a new proposal from private sector participants, or decide to pursue the proposed activity through alternative routes other than JV. The parties shall complete the Stage Two process within thirty (30) calendar days upon acceptance of the proposal under Stage One above. (Emphasis supplied)
x x x x
In fact, may we point out that the CIAC did not whimsically reject your proposal. Based on CIAC's evaluation, Philco Aero's proposal was found to be non-feasible with the change in plans and requirements of the airlines as well as the change in government policy to bid our PPP projects. The truth of the matter is, Philco Aero's unsolicited proposal was rejected based on its own shortcomings and weaknesses, x x x (Emphasis in the original)
Endnotes:
* Also referred to as "Philco Aero Consortium" in some parts of the rollo.
1Rollo, pp. 3-21.
2 Executive Order No. 192 (1994), Sec. 1.
3 Id.
4Rollo, p. 4.
5 Id. at 22-50.
6 Id. at 52.
7 Id. at 149.
8 Id.
9 Id. at 150.
10
AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION OF GOVERNMENT INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER COURTS FROM ISSUING TEMPORARY RESTRANING ORDERS. PRELIMINARY INJUNCTIONS OR PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES.
11 Guidelines and Procedures for Entering into Joint Venture Agreements Between Government and Private Entities < www.neda.gov.ph/references/Guidelines.pdf > (visited June 28, 2019).
12 741 Phil. 269, 305 (2014).
13Rollo, p. 170.
14 Id. at 84-86.
15 Id.
16Australian Professional Realty Inc, v. Municipality of Padre Garcia, Batangas, 684 Phil. 283, 289 (2012).
17Spouses Lim v. Court of Appeals, 763 Phil. 328, 337 (2015).