Case Summary (G.R. No. 85285)
Background Facts
The Philippine National Oil Company (PNOC) decided to sell its aged tanker, "T/T Andres Bonifacio," via public bidding due to high maintenance costs. A proper bidding process was initiated, wherein Danville Maritime, Inc., a lone bidder, submitted a bid significantly higher than the floor price. Following the bidding held on September 15, 1988, PNOC and Danville executed a Memorandum of Agreement contingent on obtaining requisite governmental approvals.
COA's Review and Disapproval
The COA intervened, stating that the proposed contract needed prior approval before execution. They identified a lack of competition because Danville was the only bidder, which they deemed a failure of the bidding process as per COA Circular No. 86-264. The COA’s memorandum made clear that a re-bid was required as there must be at least two competitive bidders to avoid any perception of impropriety.
Subsequent Developments
After the original bid, another entity, Fearnley Finans, expressed interest, providing an offer higher than Danville's bid. However, this offer was declined by PNOC, which raised further concerns about the propriety of awarding the contract solely to Danville. The COA, in light of these circumstances, directed PNOC to conduct a public rebidding.
Legal Arguments by Danville Maritime
Danville challenged the COA's directive, arguing that the single bid did not constitute a failure of competition as the bidding was conducted fairly and openly. They asserted that the relevant laws, P.D. No. 1445 and COA Circular No. 86-264, did not explicitly define a "failure" in terms of a bidding process where only one bid was received.
COA's Position Affirmed
The COA maintained that a lack of competition mandates a rebidding process under the law, emphasizing the importance of public transparency and the need to avoid favoritism in government transactions. The Court recognized the COA's authority and jurisdiction in defining bidding failures and confirmed its role in ensuring that public bidding was competitive and equitable.
Judicial Considerations
The case underscores the principle that public transactions should uphold integrity, with the Court finding no grave abuse of discretion on the part of the COA in calling for a rebid. The legal framework governing asset disposal mandates competitive bidding as a means of safeguarding public interest.
Forum Shopping Issue
Danville had simultaneously filed a complaint in the Regional Trial Court (RTC) seeking an i
...continue readingCase Syllabus (G.R. No. 85285)
Case Background
- The case involves two petitions: G.R. No. 85285 filed by Danville Maritime, Inc. against the Commission on Audit (COA) and G.R. No. 87150 filed by COA against the Regional Trial Court of Makati and Danville Maritime.
- The petitioner, Danville Maritime, Inc., seeks to overturn a COA directive that disapproved the sale of the tanker-vessel "T/T Andres Bonifacio" due to the lack of competition in the bidding process.
- The Philippine National Oil Company (PNOC) authorized the sale of the vessel, citing its age and maintenance costs as reasons for disposal.
Bidding Process
- The sale was initially set for September 1, 1988, with a floor price of US$14 million and a 10% bid deposit required.
- The bidding was postponed and conducted on September 15, 1988, with only one bidder, Danville Maritime, Inc., submitting a bid of US$14,158,888.88.
- Danville Maritime's bid was declared winning, leading to a Memorandum of Agreement stipulating the sale was conditional on obtaining necessary government approvals, including from COA.
COA's Directive
- COA issued a memorandum on September 20, 1988, highlighting the deficiencies in the bidding process due to the lack of competition and advising that the contrac