Case Summary (G.R. No. 142244)
Background of the Agreement
On February 13, 1986, the Philippine Government entered into an agreement with SGS for the CISS, which mandates pre-shipment inspection of imports to ensure compliance with customs regulations. The primary goal is to prevent undervaluation and misdeclaration of imported goods, thereby protecting government revenue. The CISS was initially limited to three countries but later expanded to include several others in Asia.
Bidding Process Overview
Before the expiration of SGS's contract, the CISS Subcommittee published an invitation for pre-qualification and public bidding to select a pre-shipment inspection service provider. Various firms, including Bureau Veritas and SGS, participated in the bidding process, which emphasized the government's right to accept or reject bids.
Bid Submission and Tax Rate Discrepancies
During the bidding, the different bidders quoted varying assumptions regarding tax rates. Bureau Veritas did not specify an assumed tax rate in its original bid but indicated reliance on a BIR ruling suggesting tax exemption, while SGS included a 35% tax rate in its bid calculations. Later, Bureau Veritas attempted to revise its bid by excluding alleged taxes to align with other bidders.
CISS Subcommittee's Evaluation and Changes in Bidding Rules
The CISS Subcommittee decided to evaluate bids on a net basis, which meant considering fees exclusive of taxes. This change prompted objections from Bureau Veritas and protests from competing bidders against its revised bid due to alleged alterations after the opening of bids. Bureau Veritas argued it had no taxes to deduct since its original fees were based on an assumption of tax exemption.
Public Respondents' Decision-Making and Subsequent Contract Award
On August 16, 1991, after thorough evaluation, the Secretary of Finance awarded the CISS contract to SGS, leading to the signing of the agreement on August 23, 1991. Bureau Veritas subsequently filed a petition questioning the validity of the award and the process that led to this decision, alleging grave abuse of discretion on the part of public respondents.
Judicial Analysis of Alleged Abuse of Discretion
The Supreme Court observed that the evaluation of bids and the execution of contracts are within the discretion of government agencies, emphasizing that there was no indication of arbitrary or capricious action by the CISS Subcommittee in awarding the contract to SGS. The court noted the necessity of a uniform basis for comparison among bidders to ensure equitable evaluation.
Consideration of Bid Differentiations and Tax Assumptions
The court concluded that there were clear differences in how taxes were treated by the various bi
...continue readingCase Syllabus (G.R. No. 142244)
Case Overview
- The case involves a Petition for Certiorari and Mandamus filed by Bureau Veritas against various government officials and Societe Generale de Surveillance S.A. (SGS) regarding the Agreement for Comprehensive Import Supervision Scheme (CISS).
- The petition challenges the validity of the CISS Agreement executed on August 23, 1991, and the subsequent Memorandum Order No. 391 issued on September 2, 1991, approving said Agreement.
Background Facts
- On February 13, 1986, the Philippine Government entered into an agreement with SGS for a CISS that mandated pre-shipment inspections of imports to prevent under- and overvaluation.
- A Clean Report of Finding (CRF) is required for Letters of Credit, allowing beneficiaries to draw funds.
- Initially covering only three countries (Japan, Hongkong, and Taiwan), the CISS later expanded to include several Southeast Asian nations.
- In August 1990, an invitation for pre-qualification and bidding for inspection services was published, with four bidders participating: Bureau Veritas, SGS, Cotecna-International Limited, and Specialist Services International Limited (SSI).
Bidding Process
- Bids were opened on November 6, 1990, with discrepancies in tax rates among bidders: Bureau Veritas did not specify a tax rate, while SGS