March 18, 2015

G.R. No. 203655

SM LAND, INC., Petitioner,

vs.
BASES CONVERSION AND DEVELOPMENT AUTHORITY and ARNEL PACIANO D.
CASANOVA, ESQ., in his official capacity as President and CEO of
BCDA, Respondents.

VELASCO, JR., J.:

Facts:

1. The BCDA opened for disposition and development its Bonifacio South
Property. Petitioner SM Land, Inc. (SMLI), submitted to the BCDA an
unsolicited proposal for the development of the lot through a public-private
joint venture agreement.
2. The BCDA created a Joint Venture Selection Committee (JV-SC) following the
prescribed procedures of the Detailed Guidelines for Competitive Challenge
Procedure for Public Private Joint Ventures (NEDA JV Guidelines).
3. Through a letter, the BCDA communicated to petitioner its acceptance of the
unsolicited proposal. Afterwards, upon arriving at mutually acceptable terms
and conditions, a Certification of Successful Negotiations was issued by the
BCDA and signed by both parties.
4. The BCDA set the Pre-eligibility Conference and invitations to apply for
eligibility and to submit comparative proposals. The BCDA repeatedly
postponed the deadline of eligibility requirements until two years have already
elapsed from the signing of the Certification without the Competitive Challenge
being completed.
5. Then, instead of proceeding with the Competitive Challenge, BCDA sent a
memorandum to the Office of the President recommending the termination of
the Competitive Challenge.
6. Alarmed by this development, SMLI, in a letter, urged the BCDA to proceed
with the Competitive Challenge as agreed upon. However, the BCDA, via the
assailed Supplemental Notice No. 5, terminated the Competitive Challenge
altogether.
 7. BCDA informed SMLI of the Office of the President’s (OP) decision to subject
the development of the subject property to public bidding. When asked by
SMLI, the JV-SC manifested its conformity with the actions thus taken by the
BCDA and OP. The BCDA caused the publication of an “Invitation to Bid” for
the development of the subject property. This impelled SMLI to file an Urgent
Manifestation with Reiterative Motion to Resolve SMLI’s Application for
Temporary Restraining Order (TRO) and Preliminary Injunction on the same
day. By Resolution of January 9, 2013, the Court issued the TRO prayed for by
petitioner and enjoined respondent BCDA from proceeding with the new
selection process for the development of the property.

Issue/s:

1. Whether or not the BCDA gravely abused its discretion in issuing Supplemental
Notice No. 5, in unilaterally aborting the Competitive Challenge, and in
subjecting the development of the project to public bidding.
2. WON SMLI has the right to a competitive challenge.

Held:

1. Yes. In the present case, the Court finds that BCDA gravely abused its
discretion for having acted arbitrarily and contrary to its contractual
commitment to SMLI, to the damage and prejudice of the latter. It veritably
desecrated the rules the Government itself set in the award of public contracts.
(Even though the language of Supplemental Notice No. 5 at first blush appears to limit its application
to the Third Stage of the framework, BCDA’s actuations say otherwise. Worthy of reiteration at this
point is the fact that after BCDA issued the assailed notice, the agency also returned through
registered mail the security posted by SMLI. Coupled with the fact that BCDA subjected the property
instead to straight bidding, it becomes obvious that BCDA no longer intends to comply with its
obligations to SMLI and that it abandoned the Swiss Challenge process altogether, in contravention
of its statutory and contractual obligations.)
2. Yes. SMLI has the right to a completed competitive challenge pursuant to the
NEDA JV Guidelines and the Certification issued by the BCDA. The reservation
clause adverted to by the respondent cannot, in any way, prejudice said right.

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed

Supplemental Notice No. 5 dated August 6, 2012 issued by the BCDA is hereby ANULLED and
SET ASIDE. The Temporary Restraining Order issued by this Court on January 9, 2013 is
hereby made PERMANENT.

Respondent Bases Conversion and Development Authority and Arnel Paciano D. Casanova, or
whoever assumes the position of president of BCDA, are hereby ORDERED to conduct and
complete the Competitive Challenge pursuant to the Certification, TOR, and NEDA JV
Guidelines.