Title
Bureau of Customs vs. Gallegos
Case
G.R. No. 220832
Decision Date
Feb 28, 2018
The Supreme Court upheld the RTC’s injunction, ruling the cancellation of the PNSW 2 bidding process arbitrary and unjustified, violating procurement laws and the bidder’s rights.

Case Summary (G.R. No. 220832)

Key Dates and Documentary Milestones

ASEAN Single Window Protocol signed December 20, 2006; PNSW 1 completed October 2010. DBM-PS issued Request for Expression of Interest on October 15, 2014. Notice of Highest Rated Bid (HRB) and Invitation to Negotiate issued April 13, 2015; contract negotiation commenced April 17, 2015. Commissioner Lina appointed April 23, 2015; he wrote his May 6, 2015 letter requesting discontinuance of procurement. DBM-PS issued Notice of Cancellation on May 7, 2015. Private respondent’s reconsideration filed May 22 and denied by BOC on July 31, 2015. RTC issued TRO July 28, 2015 and Omnibus Order with writ of preliminary injunction on August 24, 2015. Supreme Court decision affirmed the RTC order and dismissed the petition on February 28, 2018.

Applicable Statutory and Regulatory Framework

Primary statutes and rules applied: Republic Act No. 9184 (Government Procurement Reform Act) and its Implementing Rules and Regulations (IRR), in particular Section 38 (period for action on procurement activities) and Section 41 and Section 41.1 (reservation clause and justifiable grounds for rejecting bids). Jurisdictional basis for the RTC’s original power to issue writs derives from Section 21 of Batas Pambansa Blg. 129. The 1987 Constitution is the relevant constitutional framework for judicial authority because the decision was rendered in 2018.

Nature and Objective of the PNSW 2 Project

The PNSW 2 project was an IT consulting-services procurement aimed at integrating existing electronic and mobile customs systems and PNSW 1 into a single, paperless, electronic customs processing and single-window system. The project scope included design, implementation, operation, maintenance and consulting services and was classified in bidding documents as consulting services governed by RA No. 9184 and its IRR. Approved budget for contract: P650 million.

Bidding Sequence, Shortlisting and Alleged Irregularities

Prospective bidders included the Omniprime–Intrasoft joint venture (private respondent) and E-Konek & ILS & FS JV (whose largest shareholder was Commissioner Lina). Evaluation and shortlisting were delayed by an interview of private respondent’s project team members requested by a former deputy commissioner, an interview that was not required by law or regulation. DBM-PS later issued the HRB notice and invited negotiation with private respondent as highest-rated bidder; financial negotiation processes followed.

Cancellation by the Head of the Procuring Agency

Upon his appointment, Commissioner Lina sent a May 6, 2015 letter asking that the procurement be discontinued pursuant to Section 41(c) of RA No. 9184 (reserve right to reject bids for justifiable reasons). Acting on that letter, DBM-PS Executive Director Syquia issued a Notice of Cancellation dated May 7, 2015, aborting the bidding process. Private respondent’s administrative motion for reconsideration was denied, and it filed an original action in the RTC seeking certiorari and mandamus and praying for injunctive relief to prevent cancellation and compel continuation of procurement.

RTC Relief: Temporary Restraining Order and Omnibus Order

The RTC issued a TRO on July 28, 2015 and, by Omnibus Order of August 24, 2015, granted a writ of preliminary injunction. The court (a) denied the petitioners’ motion to dismiss; (b) enjoined petitioners from implementing Lina’s May 6 letter and Syquia’s May 7 Notice of Cancellation; (c) enjoined petitioners from initiating any alternate procurement for the same purpose; (d) ordered petitioners to proceed with signing the contract and issuing Notice to Proceed to private respondent; and (e) required the private respondent to post an injunction bond of P500,000.

Petition to the Supreme Court and Issues Presented

BOC and DBM-PS filed a petition for certiorari under Rule 65 contesting the RTC’s Omnibus Order and alleging grave abuse of discretion by the respondent judge in issuing the injunction. The primary issues addressed by the Supreme Court were (1) whether the petition was procedurally proper given the absence of a motion for reconsideration and the direct resort to the Supreme Court instead of intermediate remedies, and (2) whether the RTC judge gravely abused his discretion in granting injunctive relief.

Procedural Ruling: Failure to Exhaust or Invoke Ordinary Remedies; Hierarchy of Courts

The Supreme Court held the petition procedurally infirm for failure to first file a motion for reconsideration in the RTC to allow correction of the trial court’s decision. Certiorari under Rule 65 requires, except in concrete, compelling, and valid circumstances, a prior motion for reconsideration of the challenged order. Petitioners’ bare allegation that the case raised pure questions of law did not justify bypassing the required motion. The Court also stressed the doctrine of hierarchy of courts; although the Supreme Court has concurrent certiorari jurisdiction with the Court of Appeals and RTC, direct resort is permitted only when special or compelling reasons exist. Petitioners failed to show such reasons, rendering the petition dismissible on procedural grounds.

Substantive Ruling: Standard for Grave Abuse of Discretion

On the merits, the Supreme Court confirmed that certiorari lies only when a lower court acts with grave abuse of discretion—arbitrary, despotic, or in contemplation of law. The Court found no grave abuse by the respondent judge in issuing the Omnibus Order and WPI. The RTC’s exercise of injunctive power rested on legal and factual considerations recognized in jurisprudence and the Rules of Court governing preliminary injunctions.

RTC Jurisdiction to Issue Writs and Applicability of RA No. 8975

The Court affirmed the RTC’s original jurisdiction to issue writs under Section 21 of BP 129. Petitioners’ contention that RA No. 8975 (which limits TROs and preliminary injunctions in infrastructure projects) applied was rejected because PNSW 2 was a consulting-services procurement and not an “infrastructure project” or civil-works component as contemplated by RA No. 8975. The Court relied on the bidding documents’ classification of the project as consulting services and precedent distinguishing civil-works components from non-civil-works IT components.

Private Respondent’s Rights under RA No. 9184: Section 38 and Deemed Approval

The Court emphasized private respondent’s entitlement under RA No. 9184 and its IRR once declared the highest-rated bidder: Section 38 mandates that the procurement process from bid opening to award shall not exceed three months and provides that inaction by the head of the procuring entity within the prescribed period results in the contract being deemed approved. In this case, more than three months had passed without appropriate action, and DBM-PS’s inaction coupled with subsequent cancellation effectively triggered the deemed-approval principle favoring private respondent.

Reservation Clause under Section 41 and Its IRR: Limits on Cancellation

Although Section 41(c) reserves to the head of the procuring entity the right to reject bids or cancel bidding for justifiable grounds, Section 41.1 of the IRR qualifies those grounds (changes in feasibility, project no longer necessary, or funding withheld/reduced). The Court found that Commissioner Lina’s stated ground—an intent to conduct “a thorough review” of project details—did not constitute a justifiable reason under the IRR. Director Syquia’s Notice of Cancellation lacked evidentiary support that conditions had materially changed or that

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