Friday, October 10, 2008 CA voids Nampeidai property award
THE Court of Appeals (CA) on Thursday declared null and void the Department of Finance's (DOF) award of a project to a Japanese consortium for the construction of a building on a property of the Philippines in Nampeidai district in Tokyo, Japan.
The Nampeidai property is one of the three Philippine real estate properties in Japan that have been offered to investors under a build-operate-transfer (BOT) scheme. The development and lease agreement covers 50 years.
The property however became an eyesore in Japan after it was left unoccupied when the Philippine Embassy moved to Tokyo's Roponggi district during the time of former President Joseph Estrada.
The unoccupied lots were originally auctioned off in November 2003, but the Arroyo administration stopped the bidding following stiff opposition from those who believed that the properties should not be sold.
The CA Special Eighth Division granted the petition filed by Urban Corporation seeking the reinstatement of the Manila Regional Trial Court's (RTC) original decision dated August 22, 2007, which voided the bid award in favor of respondent-appellee Nagayama Taisei Corp. (NTC), a Japanese consortium that had been awarded the Nampeidai project.
It said the award of the project to NTC was attended with grave abuse of discretion and "suffered transparency issues" when respondents Finance Secretary Margarito Teves and the interagency bids and awards committee (BAC) created for the development of the Philippine properties in Japan "short-circuited" process in easing out Urban Corp., which clearly won the bidding.
"We do not subscribe to such insidious attempt at masking an otherwise losing bid through sheer intellectual sophistry. The parties have always been aware that Urban showed a greater Present Values (PV, for the project) at the outset. Changing NTC's period of payment from 30 to seven days is a substantial amendment, as it makes the PV of its financial proposal correspondingly greater," the court ruled.
The appellate court said public respondents violated the clear mandate of Republic Act (RA) 9184, or the Government Procurement Reform Act, as well as the rudimentary rules of fair play, due process and public nature of the award process by their failure to seasonably inform Urban Corp. about the turnaround in the project award, or in keeping the reasons for it secret.
Furthermore, the CA said the facts presented by Urban, especially as regards its receipt of notices and the lack of opportunity to avail of remedial modes, were not disputed nor denied by the respondent public officials.
It said the recommendation by the BAC as well as the award by the finance secretary to NTC of the Nampedai project, which procurement process went beyond the mandated period of three months contrary to the provisions of RA 9184, thus, should be declared null and void.
The CA also ordered that the Manila court's directive for the head of the procuring entity "to issue a notice of award of the Nampeidai project to petitioner Urban" is deleted.
The original decision of the Manila court ruled that the award by Secretary Teves to NTC of the Nampeidai project and the recommendation of the BAC are null and void for having been done with grave abuse of discretion amounting to excess of jurisdiction.
The RTC further ordered that Urban Corp. should be recognized and declared as the winning bidder for the Nampeidai property, and the head of the procuring entity was directed to issue a notice of award of the project to the petitioner, Urban Corp.
Court records showed that the House of Representatives on April 26, 1994 adopted a resolution urging the Office of the President, the Department of Foreign Affairs (DFA), and the Philippine Embassy in Japan to "immediately pursue the development of the five real estate properties in Japan" owned by the Philippines.
Among those properties subject of the resolution is the property at Nampeidai Machi, Shibuya-ku in Tokyo.
On November 11, 2002, President Gloria Macapagal-Arroyo issued Memorandum Order (MO) 79, constituting the BAC for the development of the Philippine properties in Japan, chaired by an undersecretary of the DOF, with the undersecretaries of the DFA, Department of Public Works and Highways, Department of Budget and Management and Department of Justice as members.
The BAC was mandated to: prepare appropriate forms for invitation to bid and stipulate the terms and conditions; conduct pre-qualification of developers for the Philippine properties in Japan; evaluate all proposals of participating developers; recommend the awarding of contract of service and development of the properties; and render a regular report to the executive secretary.
On November 28, 2003, several bidders submitted their development proposals to the BAC; but four companies were qualified, namely: Daiwa Jisyo-Mabuchi-Sakura, Urban Corp., NTC, and CHKEN Corp.
In calculating the bidders' PV, Urban Corp.'s proposal of lowest calculated responsive bid, as required under Section 37 of RA 9184 emerged to be more favorable to the government, with Y466.6-million with three months' maturity date or maximum period of payment, as opposed to NTC's Y464.2-million with a 30-day maturity. Thus, Urban was awarded the project.
However, neither the Office of the President nor the DOF as head of the procuring entity, officially acted on the recommendation of the BAC, in violation of Section 37 of RA 9184, which prescribes the proper action, either approval or disapproval, to be undertaken by the DOF.
Such inaction within 15 calendar days from determination and declaration by the BAC meant that the project shall be deemed as approved, pursuant to Section 37 and 38 of the procurement law.
In a letter dated March 1, 2006, Secretary Teves officially informed Urban that the project was already awarded to the NTC as early as June 16, 2005, prompting the aggrieved bidder to file a petition for certiorari before the Manila RTC.
The trial court initially awarded the bid to Urban, citing the lapse of the period wherein the DOF should take action on the recommendation of the BAC, but later reversed itself. (ECV/Sunnex)
