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-private joint venture agreement. The proposal guaranteed the BCDA secured payments amounting to PhP 15,985/sqm or a total of PhP 8.1 billion.

Barely three months later, the initial proposal was followed by a second one with guaranteed secured payments of PhP 31,139/sqm, totaling PhP 20 billion. On May 4, 2010, however, SMLI submitted its third unsolicited proposal with guaranteed secured payments amounting to PhP 32,501/sqm for a total of PhP 22.6 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 PhP 25.9 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 committed 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 PhP 187 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 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 letter^[4] 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 PhP 22.436 billion in over fifteen (15) years with an upfront payment of PhP 3 billion. SMLI likewise proposed to increase the net present value of the property to PhP 38,500.00/sqm. 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 PhP 9.289 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 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.

In the meantime, the BCDA issued in favor of SMLI Philippine National Bank Check No. 11-634-610001-0 in the amount of  PhP 188,508,466.67 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 Resolution^[8] 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 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.

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 agreements^[10] or negotiated projects,^[11] on the other hand, comes about as an end result of an unsolicited proposal^[12] 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 direct 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 scheme^[15] 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 government 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
Stage One^[18] 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 non-acceptance notice of the proposal.
   
   
   1. 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.
      
   2. In case of non-acceptance, the private sector entity shall be informed of the reasons/grounds for such action.

Stage Two
Detailed Negotiations
Stage Two^[19] 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 pre-set 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.
   
   1. 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.
      
   2. 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.
      
   
   
4. After an agreement is reached, the contract documents, including the selection documents for the competitive challenge, are prepared.

Stage Three
Competitive Challenge
In Stage Three,^[20] 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 pre-selection 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.
   
   
   1. If the GE determines that an offer made by a comparative private sector participant is more advantageous to the government than the original proposal, the original proponent shall be given the right to match such superior or more advantageous offer.
      
   2. Should no matching offer be received, the JV activity shall be awarded to the comparative private sector participant submitting the most advantageous proposal.
      
   3. 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 covered by the JV Guidelines^[26] can validly stray from the mandatory procedures set forth therein, even if the other party acquiesced therewith^[27] or not.

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
   
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 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 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 [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)

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 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 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:

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, meaningless, 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.

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.

x x x x

1. GENERAL INFORMATION
   
   x x x x
   
   
   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
      
      x x x x
      
      
   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 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
      
      x x x x
   
   
   
   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.
      
      x x x x
   
   
2. 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 non-refundable fee x x x, a PSE shall be 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.

      x x x x
      
      
   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:
   
   x x x x
   
   
3. 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 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
   
   
4. CHANGE IN MEMBERSHIP OF AN ELIGIBLE PSE.
   
   x x x x
   
   
5. 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.
      
      
   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 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 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. 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?

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.

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 government^[45] 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 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]

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 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 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 duty enjoined by law^[52] 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 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 petitioner'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.

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N O T I C E OF J U D G M E N T

Sirs/Mesdames:

Please take notice that on ___August 13, 2014___ a Decision, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on August 29, 2014 at 3:34 p.m.


Very truly yours,
(SGD)
WILFREDO V. LAPITAN
Division Clerk of Court

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^* Acting member per Special Order No. 1691 dated May 22, 2014.

^[1] Rollo, p. 71.

^[2] Id. at 74-88.

^[3] Id. at 108.

^[4] Id. at 109.

^[5] Id. at 635.

^[6] Id. at 63.

^[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.

^[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:

1. When a Government Entity receives an unsolicited proposal;
   
2. 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
   
3. 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 proponent 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.

^[17] Id.

^[18] Rollo, p. 373.

^[19] Id. at 373-374.

^[20] Id. at 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).

^[22] Rollo, p. 534. Article VIII, Annex "A," NEDA JV Guidelines.

^[23] Id. at 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.

^[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 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 by the 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 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.

^[29] NEDA JV Guidelines.

^[30] Item 4, Stage Two, Annex "C," NEDA JV Guidelines.

^[31] Annex "C," NEDA JV Guidelines.

^[32] Regalado v. Go, G.R. No. 167988, February 6, 2007, 514 SCRA 616.

^[33] Rollo, pp. 64-65.

^[34] Id. at 71.

^[35] Id. at 87.

^[36] Bouvier's Law Dictionary, 3rd ed.

^[37] Black's Law Dictionary, 2nd ed.

^[38] Philippine Health Care Providers, Inc. v. CIR, G.R. No. 167330, September 18, 2009, 600 SCRA 413.

^[39] Rollo, p. 74.

^[40] Id. at 74-88.

^[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.

^[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.

^[45] Rollo, p. 635, BCDA's February 13, 2012 Memorandum to the President.

^[46] Id. at 580-581.

^[47] Id. at 115.

^[48] Id. at 635.

^[49] Leca Realty Corporation v. Republic, G.R. No. 155605, September 27, 2006, 503 SCRA 563.

^[50] Id.

^[51] See Central Bank of the Philippines v. Court of Appeals, supra note 42.

^[52] See Ligeralde v. Patalinghug, G.R. No. 168796, April 15, 2010, 618 SCRA 315.

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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 development 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 'petition^[6] 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 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 o.f 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 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 letter^[8] 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 negotiations 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 activity^[11] 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 SMLJ'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 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:

. . . .

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 P 18.7 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 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 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 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 SMLL 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 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 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.

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. 722^[17] 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^[18] 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

1.5 Conversiort 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, build­operate-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) pre-qualified 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 matters^[19] 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 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 priv te 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:

(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. 423^[21] provides that guidelines dssued by the National Economic and Development 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. 40^[22] states:

Sec. 2. Statement of Policy. It is the policy of the government that procurement shall be competi ive 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.

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 Guidelines^[23] 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 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 sliall 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 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 awafded 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 Sl;lbjected 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.

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 Venttire 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- . . .

. . . .

4. 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. (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 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 that effect. However, granting that there is such provision, that provision should be considered void because BCDA has no authority to agree tq 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 admittd its obligation to return it upon teqnination 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.

---

^[1] Rollo. p. 416.

^[2] Id. at 494.

^[3] Id. at 857-858.

^[4] ld. at 63.

^[5] Id. 6

^[6] Id. at 3-62.

^[7] Id. at 25-56.

^[8] Id. at 351-352.

^[9] Id. at 351.

^[10] Id.

^[11] Id. at 65.

^[12] Id. at 70.

^[13] Id. at 64-71.

^[14] Id. at 74-87.

^[15] CIVIL CODE, art. 1373.

^[16] CIVIL CODE, art. 1373.

^[17] Bases Conversion and Development Act of 1992.

^[18] Prescribing Policies and Guidelines to Implement Republic Act No. 7227 (1993).

^[19] Rep. Act No. 7227 (1992), sec. 17.

^[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 Act No. 9184, Otherwise Known as "The Government Procurement Reform Act" (2005).

^[22] Exec. Order No. 40, Csmsolidating Procurement Rules and Procedures for All National Government Agencies, Government-owned or -controlled Corporations and Government Financial Institutions, and Requiring the Use ofthe Government Electronic Procurement System (2001).

^[23] Guidelines and Procedures for Entering Into Joint Venture (JV) Agreements Between Government and Private Entities (2008).

^[24] Cf. Ponencia, p. 10.

^[25] Rollo, pp. 74-75.

^[26] Cf. Ponencia, p. 18.

^[27] Cf. Ponencia, pp. 14 and 18.

^[28] Rollo, p. 77.

^[29] Id. at 510.

^[30] Id. at 118.