Case Summary (G.R. No. L-26490)
Applicable Law and NPC Circular No. 99-75 Provisions
NPC Circular No. 99-75 established the guidelines for disposing of scrap ACSRs to decongest NPC installations and generate additional income. Items 3 and 3.1 specifically limited qualified bidders exclusively to partnerships or corporations that directly use aluminum as a raw material in manufacturing finished products, either entirely or partly made of aluminum. These bidders could be local or foreign, but this classification effectively excluded traders like Pinatubo Commercial.
Facts About the Petition and Proceedings
In April 2003, NPC invited bidders for its scrap ACSR cables. Pinatubo Commercial submitted a pre-qualification form but was denied qualification. Upon denial and unsuccessful reconsideration, Pinatubo filed a petition with the RTC to annul the circular and sought a temporary restraining order or preliminary injunction. The RTC ruled in favor of Pinatubo, holding that items 3 and 3.1 of the circular were unconstitutional for violating substantive due process, equal protection, and restraining free trade by limiting participation in the bidding process.
Issue for Review
The Supreme Court framed the primary issue as whether the RTC gravely erred in declaring items 3 and 3.1 of NPC Circular No. 99-75 unconstitutional under the due process and equal protection clauses of the 1987 Constitution and whether the circular unlawfully restrained competitive trade and commerce.
Requirement of Publication and Binding Effect of Administrative Rules
Citing TaAada v. Tuvera, the Court emphasized that statutes and administrative rules that enforce or implement laws must be published to have binding effect. However, interpretative or internal regulations directed solely to agency personnel need not be published. The circular was held to be an internal directive regulating NPC personnel responsible for scrap disposal, not a rule affecting the general public's rights directly.
Nature of Bidding and NPC’s Discretion
The Court underscored that participation in government bidding is a privilege conditioned on meeting eligibility or qualification standards established by the government. NPC retained wide discretion to determine qualified bidders, which courts should not interfere with absent clear evidence of arbitrariness or fraud. Limiting bidders to direct manufacturers was an exercise of such discretion aiming to maintain control over scrap disposition.
Equal Protection Analysis
Under the equal protection clause, reasonable classification is permissible if it is not arbitrary. The circular’s classification between manufacturers and traders was justified on the grounds of implementing Republic Act No. 7832 (Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act), which penalizes theft and unauthorized possession of ACSR wires. Restricting qualified bidders to direct manufacturers facilitated easier market monitoring and enforcement, reducing the probability that these materials would be diverted to illegal channels.
Legitimacy of the Classification
The Court found the classification valid and rationally related to a legitimate government purpose—preserving the integrity of government property and supporting anti-theft laws. Traders, who often resell materials, posed a greater risk of co-mingling stolen ACSRs into the market, justifying their exclusion from direct bidding unless allied with manufacturers.
Competition and Free Trade Considerations
Pinatubo contested that the circular violated the competitiveness principle under Republic Act No. 9184 (Government Procurement Reform Act), which promotes equal opportunity for eligible and quali
...continue readingCase Syllabus (G.R. No. L-26490)
Facts of the Case
- The National Power Corporation (NPC) issued Circular No. 99-75 on October 8, 1999, providing guidelines for the disposal of scrap Aluminum Conductor Steel-Reinforced (ACSR) wires to decongest NPC installations and generate income.
- Items 3 and 3.1 of this Circular limited qualified bidders to partnerships or corporations that directly use aluminum as raw material to produce finished products purely or partly of aluminum.
- In April 2003, NPC invited pre-qualification of bidders for its scrap ACSR cables.
- Pinatubo Commercial, a trader in scrap materials, applied but was denied pre-qualification based on the Circular’s restrictions.
- Pinatubo sought reconsideration, which NPC denied.
- Subsequently, Pinatubo filed a petition for annulment of NPC Circular No. 99-75 in the RTC, claiming it was unconstitutional for violating due process, equal protection, and government policy on competitive public bidding.
- The RTC ruled in favor of Pinatubo, declaring items 3 and 3.1 unconstitutional for violating substantive due process, equal protection, and restraining free trade and commerce.
- NPC moved for reconsideration, which the RTC denied.
- NPC elevated the case to the Supreme Court, questioning whether items 3 and 3.1 of the Circular were unconstitutional.
Issues Presented for Review
- Whether NPC Circular No. 99-75 must be published before effectivity.
- Whether items 3 and 3.1 of NPC Circular No. 99-75:
- Violated the substantial due process and equal protection clause of the Constitution.
- Restrained free trade and competition.
Nature and Purpose of NPC Circular No. 99-75
- The Circular was intended to guide the proper disposal and sale of scrap ACSR wires.
- It provided internal administrative rules for NPC personnel regarding responsibility and procedure in bidding, award, payment, and delivery of scrap ACSRs.
- Items 3 and 3.1 qualified bidders as only those manufacturers or processors who directly use aluminum, excluding traders.
On the Requirement of Publication
- Generally, statutes, administrative rules, and regulations must be published to have binding effect.
- However, interprative and purely internal administrative regulations not affecting the public do not require publication.
- NPC Circular No. 99-75 was deemed an internal rule regulating personnel and procedures within NPC