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MARIA ELENA MALAGA v. MANUEL R. PENACHOS

FACTS:

The case revolves around the application of P.D. 1818, a law that restricts the issuance of injunctions in cases involving government infrastructure projects. The Iloilo State College of Fisheries (ISCOF) issued an Invitation to Bid for the construction of a Micro Laboratory Building. The petitioners, who were denied participation in the bidding, claimed that their pre-qualification documents were submitted on time but were unreasonably refused by ISCOF's Pre-qualification, Bids and Awards Committee (PBAC). They sought to reschedule the bidding or, if it had already taken place, to prevent the project's award. The trial court initially issued a restraining order but the defendants moved to have the order lifted by invoking the prohibition under P.D. 1818. Subsequently, the court lifted the restraining order, established the building as a government infrastructure project, and ruled against the plaintiffs' request for a preliminary injunction on the grounds that the PBAC had already concluded and closed the bidding before they were served with the order. The plaintiffs contended that P.D. 1818 did not apply to ISCOF and referred to a prior case where the court permitted the issuance of a preliminary injunction despite the same prohibition.

ISSUES:

  1. Whether the petitioners have the right to question the bidding process despite their disqualification

  2. Whether the violation of the rule on the issuance of plans, specifications, and proposal book forms would invalidate the bidding process

  3. Whether the irregularities in the notice and scheduling of the bidding process rendered the contract void

  4. Whether the private respondents are liable for their questionable acts and irregularities

  5. Whether the chairman and members of the PBAC board of trustees are guilty of malfeasance in office.

  6. Whether Maria Elena Malaga and Josieleen Najarro are entitled to nominal damages.

RULING:

  1. The petitioners cannot question the bidding process because they failed to take immediate action to compel the Procurement and Bids and Awards Committee (PBAC) to pre-qualify them after their disqualification. They cannot question a bidding process in which they did not participate.

  2. The violation of the rule on the issuance of plans, specifications, and proposal book forms does not invalidate the bidding process. The court ruled that P.D. No. 605, which prohibits the issuance of injunctions against administrative acts, does not prevent courts from restraining or prohibiting administrative acts on issues involving questions of law. The court found that there were irregularities committed by PBAC in setting deadlines for the filing of pre-qualification documents and the opening of bids without prior notice to prospective participants, which justified the injunction of the bidding and award of the project.

  3. The irregularities in the notice and scheduling of the bidding process rendered the contract void. Non-compliance with the requirement of previous advertisement before government contracts can be awarded will render the same void and of no effect. The fact that an invitation for bids has been communicated to some bidders is not sufficient if other possible bidders have not been similarly notified. The purpose of the rules on bidding is to secure competitive bidding and prevent favoritism, collusion, and fraud in the award of contracts.

  4. The private respondents are liable for their questionable acts and irregularities. Although no actual loss was suffered by the petitioners, the private respondents acted in evident bad faith by irregularly announcing the bidding and attempting to persuade the ISCOF president to award the project despite the restraining order. They are therefore liable for nominal damages under Article 2221 of the Civil Code.

  5. The chairman and members of the PBAC board of trustees are found guilty of malfeasance in office.

  6. Maria Elena Malaga and Josieleen Najarro are entitled to nominal damages of P10,000.00 each.

PRINCIPLES:

  • The court interpreted P.D. No. 605 and P.D. No. 1818 to allow courts to exercise their power to restrain or prohibit administrative acts on issues involving questions of law.

  • The violation of procedural rules in the bidding process may justify the injunction of the bidding and award of the project.

  • Non-compliance with the requirement of previous advertisement before government contracts can render the same void and of no effect.

  • The purpose of the rules on bidding is to secure competitive bidding and prevent favoritism, collusion, and fraud in the award of contracts.

  • The three principles in public bidding are the offer to the public, an opportunity for competition, and a basis for exact comparison of bids.

  • Contractors should be placed on an equal footing when submitting their bids, and the purpose of competitive bidding is negated if some contractors are informed ahead of others regarding the plans and specifications.

  • P.D. 1818 does not shield irregularities committed by administrative agencies and does not prevent judicial scrutiny.

  • A contract granted without the competitive bidding required by law is void, and the party to whom it is awarded cannot benefit from it.

  • Liability for irregularities in the bidding process shall attach only to the private respondents if they were not induced or participated in by any of the contractors.

  • Malfeasance in office refers to the unlawful and wrongful act committed by a public officer in the performance of his or her official duties.

  • Nominal damages are awarded to a plaintiff simply to recognize his or her right that has been violated or invaded, even though the violation has resulted in no actual or substantial harm.