SM Land vs BCDA

GR 203655 March 18, 2015 En Banc

GR 203655 August 13, 2014
Facts:
When BCDA opened for disposition its Bonifacio South Property pursuant to RA 7227, SMLI
offered to undertake the development of said property by submitting a succession of unsolicited
proposals to BCDA. BCDA then entered into negotiations with SMLI until the BCDA finally
accepted the terms of the final unsolicited proposal. Their agreement was thereafter reduced
into writing through the issuance of the Certification of Successful Negotiations in 2010.
It was agreed that BCDA accepted SMLIs unsolicited proposal and declared SMLI eligible to enter
into the proposed Joint Venture activity. It also agreed to subject SMLIs Original Proposal to
Competitive Challenge pursuant to NEDA Joint Venture Guidelines, which competitive challenge
process shall be immediately implemented following the Terms of Reference. Moreover, said
Certification provides that the BCDA shall commence the activities for the solicitation for
comparative proposals. Years later however, the BCDA through the issuance of Supplemental
Notice No. 5 terminated the competitive challenge for the selection of BCDAs joint venture
partner for the development of a portion of Fort Bonifacio.
SMLI, through a petition for CPM, argued that BCDAs unilateral termination of the competitive
challenge is a violation of SMLIs rights as an original proponent and constitutes abandonment of
BCDAs contractual obligations. BCDA, on the other hand, responded that it is justifiable since
NEDA JV Guidelines is a mere guideline and not a law, and that the Government has a right to
terminate the competitive challenge when the terms are disadvantageous to public interest.
Issue 1: W/N the NEDA JV Guidelines has the binding effect and force of law
Yes. Administrative issuances, such as the NEDA JV Guidelines, duly promulgated pursuant to the
rule-making power granted by statute, have the force and effect of law. Being an issuance in
compliance with an executive edict, the NEDA JV Guidelines has the same binding effect as if it
were issued by the President himself, who parenthetically is a member of NEDA. As such, no
agency or instrumentality covered by the JV Guidelines can validly deviate from the mandatory
procedures set forth therein, even if the other party acquiesced therewith or not.
Under the Administrative Code of 1987, acts of the President providing for rules of a general or
permanent character in implementation or execution of constitutional or statutory powers shall
be promulgated in Executive Orders. It is through these orders that the President ensures that
laws are faithfully executed, by handing out instructions to subordinate executive officials and
the public, in the form of implementing rules and regulations, on how the law should be executed
by subordinate officials and complied with by the public.
For government contracts and procurement in the Philippines, then President Gloria MacapagalArroyo, adopting the recommendation of the NEDA, issued EO 10918 on May 27, 2002. As its
title indicates, EO 109 streamlined the rules and procedures on the review and approval of all
contracts of departments, bureaus, offices and agencies of the government, including GOCCs
and their subsidiaries. This executive issuance was, however, later amended by EO 109-A, to
conform to RA 9184 which was enacted barely two months after the issuance of EO 109. Two
years later, or on April 30, 2005, EO 42321 was issued, repealing EO 109-A and simplifying the
procurement process. Section 4 of EO 423 was later amended by EO 645.
Amidst the changes effected on procurement rules, the NEDAs duty to issue a JV Guidelines
under the said executive orders remained unaffected. Through Section 5 of EO 109, Section 8 of
EO 109-A and now Section 8 of EO 423, the President effectively delegated her inherent
executive power to issue rules and regulations on procurement to her subordinate executive
officials, her alter egos. Pursuant to said repeated directives from no less than the Chief
Executive, the NEDA issued the JV Guidelines providing the procedures for the coagulation of
joint ventures between the government and a private entity.
Issue 2: W/N BCDA committed grave abuse of discretion in issuing Supplemental Notice No. 5
Yes. Being an instrumentality of the government, it is incumbent upon the BCDA to abide by the
laws, rules and regulations, and perform its obligations with utmost good faith. It cannot, under
the guise of protecting the public interest, disregard the clear mandate of the NEDA JV Guidelines

and unceremoniously disregard the very commitments it made to the prejudice of the SMLI that
innocently relied on such promises.
It is in instances such as thiswhere an agency, instrumentality or officer of the government
evades the performance of a positive duty enjoined by lawwherein the exercise of judicial power
is warranted. Consistent with the Courts solemn obligation to afford protection by ensuring that
grave abuses of discretion on the part of a branch or instrumentality of the government do not
go unchecked, the Petition for Certiorari must be granted and the corresponding injunctive relief
be made permanent.
Issue 3: W/N the BCDA is in estoppel
Yes. Although as a general rule, the government cannot be estopped by the mistakes or errors of
its officials or agents, such will not apply if injustice is perpetrated.
To allow BCDA to renege on its statutory and contractual obligations would cause grave prejudice
to petitioner, who already invested time, effort, and resources in the study and formulation of the
proposal, in the adjustment thereof, as well as in the negotiations. To permit BCDA to suddenly
cancel the procurement process and strip SMLI of its earlier-enumerated rights as an Original
Proponent at this pointafter the former has already benefited from SMLIs proposal through the
acquisition of information and ideas for the development of the subject propertywould unjustly
enrich the agency through the efforts of petitioner. What is worse, to do so would be contrary to
BCDAs representations and assurances that it will respect SMLIs earlier acquired rights, which
statements SMLI reasonably and innocently believed. All told, the BCDAs acceptance of the
unsolicited proposal and the successful in-depth negotiation cannot be written off as mere
mistake or error that respondents claim to be reversible and not susceptible to the legal bar of
estoppel. The subsequent cancellation of the Competitive Challenge on grounds that infringe the
contractual rights of SMLI and violate the NEDA JV Guidelines cannot be shrouded with legitimacy
by invoking the estoppel rule. ##