Case Digest (G.R. No. L-18751)
Facts:
The case involves A.C. Esguerra & Sons, a registered partnership operating warehouses in the customs zone of the Bureau of Customs. The company secured the right to operate these warehouses through a contract with the Commissioner of Customs on August 22, 1956, which was later extended on July 25, 1957. As the contract's expiration approached, the Secretary of Finance directed the Commissioner of Customs on February 8, 1960, to conduct a public bidding for the operation of the warehouses. An invitation to bid was published in local newspapers on March 14, 21, and 28, 1960. Several bids were submitted, including those from Veloso Brothers (46%), A.C. Esguerra & Sons (35%), D.I. Cruz & Enterprises (85%), A.R. Reyes & Co. (30% if gross income does not exceed P35,000.00, and 55% if it exceeds that amount), and B.E. Berkenkotter (a guaranteed minimum share of P200,000.00 per annum).
A bidding committee evaluated the proposals and recommended accepting A.R. R...
Case Digest (G.R. No. L-18751)
Facts:
Background of the Case
A.C. Esguerra & Sons, a registered partnership, operated warehouses in the customs zone of the Bureau of Customs under a contract with the Commissioner of Customs dated August 22, 1956. The contract was extended on July 25, 1957. As the contract period neared its end, the Secretary of Finance directed the Commissioner of Customs to conduct a public bidding for the operation of the warehouses on February 8, 1960.
Public Bidding Process
The Commissioner of Customs issued an invitation to bid, published in local newspapers on March 14, 21, and 28, 1960. The following bids were received:
- Veloso Brothers: 46%
- A.C. Esguerra & Sons: 35%
- D.I. Cruz & Enterprises: 85%
- A.R. Reyes & Co.: 30% if gross income does not exceed P35,000.00; 55% if it exceeds that amount.
- B.E. Berkenkotter: Guaranteed minimum share of P200,000.00 per annum.
Evaluation and Award
A bidding committee evaluated the bids and recommended A.R. Reyes & Co. as the most favorable bidder. The Secretary of Finance approved the recommendation but imposed a condition: the contract should stipulate a 55% government share irrespective of the gross income. A.C. Esguerra & Sons was notified of the award and requested reconsideration, but the contract was executed on June 22, 1960, before the reconsideration was acted upon.
Legal Action
A.C. Esguerra & Sons filed a certiorari case in the Court of First Instance of Manila, seeking to nullify the contract and restrain its enforcement. The court issued a preliminary injunction and later declared the award null and void, making the injunction permanent. Respondents appealed.
Issue:
- Whether the Secretary of Finance exceeded his authority by altering the terms of the bid submitted by A.R. Reyes & Co.
- Whether the trial court erred in declaring the award null and void and making the injunction permanent.
- Whether the government’s decision to reject A.C. Esguerra & Sons’ bid was justified.
Ruling:
The Supreme Court reversed the decision of the trial court, holding that the Secretary of Finance did not exceed his authority. The modification of the bid terms was justified as the 30% clause was a surplusage given the historical gross income of the warehouses. The award to A.R. Reyes & Co. was deemed the most favorable to the government, and the losing bidder, A.C. Esguerra & Sons, had no cause to complain.
Ratio:
- Authority of the Secretary of Finance: The Secretary of Finance has the discretion to modify bid terms if such changes are in the best interest of the government. The elimination of the 30% clause was reasonable, as historical data showed that the gross income of the warehouses consistently exceeded P35,000.00.
- Validity of the Award: The award to A.R. Reyes & Co. was valid as it was the most advantageous to the government. The government has the right to reject any or all bids, and the courts will not interfere unless there is evidence of unfairness or injustice.
- Disqualification of A.C. Esguerra & Sons: The bidding committee found that A.C. Esguerra & Sons was disqualified due to a conflict of interest, as one of the bidders was the son-in-law and employee of A.C. Esguerra. This violated the bidding instructions.
The Supreme Court emphasized that the government’s discretion in awarding contracts is broad, and courts should not interfere unless there is a clear violation of rights or abuse of discretion.