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LAND BANK OF PHILIPPINES v. ATLANTA INDUSTRIES

FACTS:

Land Bank of the Philippines (Land Bank) and International Bank for Reconstruction and Development (IBRD) entered into a Loan Agreement for the implementation of the "Support for Strategic Local Development and Investment Project". Land Bank then entered into a Subsidiary Loan Agreement (SLA) with the City Government of Iligan to finance the development and expansion of the city's water supply system. The SLA required the procurement of goods for the supply of PE 100 HDPE pipes and fittings to be done in accordance with the IBRD Procurement Guidelines. Atlanta Industries, Inc. participated in the public bidding for the supply of water pipes but was disqualified due to non-compliance with documentary requirements. Atlanta sought reconsideration but the Bids and Awards Committee (BAC) declared the bidding a failure. Atlanta discovered that the BAC was using bidding documents that did not conform with the Philippine Bidding Documents for the Procurement of Goods prescribed by the Government Procurement Policy Board (GPPB) and not in accordance with Republic Act (RA) 9184 and its Implementing Rules and Regulations (IRR). Atlanta filed a Petition for Prohibition and Mandamus with an urgent prayer for an injunction to enjoin the re-bidding of the project. The Regional Trial Court of Manila (Manila RTC) declared the subject bidding null and void for being done contrary to RA 9184 and its IRR. Land Bank appealed to the Court, questioning the jurisdiction of the Manila RTC and asserting that the procurement of water pipes should be exempt from the application of RA 9184.

ISSUES:

  1. Whether the Manila RTC had jurisdiction to issue the writ of prohibition in this case.

  2. Whether the injunction issued by the CFI of Rizal to restrain acts outside the province of Rizal was null and void for want of jurisdiction.

  3. Whether Atlanta should have exhausted administrative remedies before resorting to court action.

  4. Whether the City Government of Iligan is exempt from the provisions of RA 9184.

  5. Whether the SLA between Land Bank and the City Government of Iligan is a valid exception to the application of RA 9184.

  6. Whether Loan Agreement No. 4833-PH between IBRD and Land Bank is an executive agreement governed by international law.

  7. Whether the terms and conditions of Loan Agreement No. 4833-PH were incorporated into the Service Level Agreement (SLA).

  8. Whether the procurement of goods for the Iligan City Water Supply System Development and Expansion Project should be subject to the procedure for competitive public bidding under RA 9184.

  9. Whether the writ of mandamus is the proper remedy to compel the respondent judge to resolve the pending motion.

  10. Whether the respondent judge committed grave abuse of discretion by failing to resolve the pending motion.

RULING:

  1. The Manila RTC did not have jurisdiction to issue the writ of prohibition in this case. A petition for prohibition should be filed in the Regional Trial Court that has territorial jurisdiction over the act or omission being challenged. In this case, since the act sought to be enjoined, the public bidding for the supply of water pipes, was beyond the territorial jurisdiction of the Manila RTC, the petition should have been filed in the appropriate Regional Trial Court.

  2. The injunction issued by the CFI of Rizal to restrain acts outside the province of Rizal was null and void for want of jurisdiction.

  3. Atlanta should have exhausted administrative remedies before resorting to court action. Failure to complete the protest process required by law results in the dismissal of the case for lack of jurisdiction.

  4. The City Government of Iligan is exempt from the provisions of RA 9184 under Loan Agreement No. 4833-PH, which is in the nature of an executive agreement.

  5. The SLA between Land Bank and the City Government of Iligan is valid and can provide for procurement procedures different from those required under RA 9184.

  6. Yes, Loan Agreement No. 4833-PH is an executive agreement governed by international law.

  7. Yes, the terms and conditions of Loan Agreement No. 4833-PH were incorporated into the SLA.

  8. No, the procurement of goods for the project should not be subject to the procedure for competitive public bidding under RA 9184.

  9. The petition is granted. The Decision of the Regional Trial Court (RTC) is reversed and set aside. The Petition for Prohibition and Mandamus filed before the RTC is dismissed.

PRINCIPLES:

  • A petition for prohibition should be filed in the Regional Trial Court that has territorial jurisdiction over the act or omission being challenged.

  • The power to administer justice conferred upon judges of the Regional Trial Courts can only be exercised within the limits of their respective districts.

  • Writs of injunction, certiorari, and prohibition affect only persons within the territorial jurisdiction of the issuing court.

  • Injunctions issued by a court must have jurisdiction over the acts being restrained.

  • The completion of the protest process is a condition precedent to the court's taking cognizance of an action that assails a bid process.

  • Loan agreements can be considered executive agreements and may exempt parties from certain provisions of RA 9184.

  • An SLA between government entities can provide for procurement procedures different from those required under RA 9184.

  • Pacta sunt servanda - the fundamental maxim of international law that requires parties to keep their agreement in good faith.

  • Incorporation clause - the provision in the 1987 Philippine Constitution that adopts the generally accepted principles of international law as part of the law of the land.

  • The accessory follows the principal - accessory contracts should not be read independently of the main contract.

  • Primacy of executive agreements - executive agreements, such as Loan Agreement No. 4833-PH, take precedence over domestic laws, such as RA 9184, if there is a conflict in provisions.

  • The writ of mandamus is the proper remedy to compel the performance of a ministerial duty.

  • Grave abuse of discretion is committed when a court acts in a capricious, arbitrary, and whimsical manner in a way that is so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined by law.