CA affirms ruling allowing DND to rebid P1-B arms procurement

MANILA, Philippines - The Department of National Defense (DND) can now hold another bidding for the procurement of P1-billion worth of ammunition after the Court of Appeals (CA) dismissed the petition of the winning bidder to stop then Defense Secretary Gilbert Teodoro Jr. from going through another process to look for a new contractor.

The CA stood firm on its ruling that Judge Marie Christine Jacob of Quezon City Regional Trial Court Branch 100 erred in stopping implementation of the memorandum issued on March 31 last year after Teodoro declared a failure of bidding and ordered the DND bids and awards committee (BAC) to conduct a re-bidding.

“We had exhaustively discussed the rationale of our decision and the same stands as a perusal of the grounds raised in the above motion reveal that they are mere rehash of the issues that have been passed upon and exhaustively considered by this Court when we issued the assailed decision,” read the CA decision. “Indubitably, the court a quo acted even in the absence of jurisdiction. As pointed out by petitioner herein, the court is without jurisdiction to entertain the suit. 

“Private respondent is a foreign business entity which is not entitled by law to file or maintain an action in court.

“Be that as it may, after a thorough review of the arguments, pleadings submitted by the parties as well as its supporting documents, this court is inclined to grant the instant petition and further dismiss the petition filed before the court a quo (Quezon City Regional Trial Court).“ The CA said under Republic Act 9184, the Government Procurement Reform Act, the head of the agency has the right to reject any and all bids, declare a failure of bidding, or not award the contract for three reasons: If there is prima facie evidence of collusion between any of the bidders; if the BAC is found to have failed in implementing prescribed procedures; and for any justifiable ground where the award of the contract will not be beneficial to the government.

The CA also said the Supreme Court has ruled that unlicensed foreign non-resident corporations cannot file suits in the Philippines. A corporation has a legal status only within the state or territory in which it was organized, the CA added.

The winning bidder, Talon Security Consulting and Trade Limited, is a foreign corporation not doing business in the Philippines.

Records show Talon initially won the bidding for the project after passing eligibility tests over two other bidders, Dolarian Capital Inc. and Dynamit Nobel Balkan. Dolarian and Dynamit were disqualified for failing to comply with the legal and technical requirements for the bidding process.

On Jan. 9, 2009, the DND-BAC issued a resolution declaring Talon as the winning bidder. On Feb. 13, 2009, DND-BAC recommended to Teodoro the issuance of a notice of award in favor of Talon.

However, upon review of the bidding records, Antonio Romero II, defense undersecretary for finance and Armed Forces modernization, found out that the DND-BAC violated established bidding procedures in considering Talon’s documents as “passed.” Romero recommended further review of the bidding process conducted for the subject ammunition to identify lapses.                            – With Jaime Laude

Acting on Romero’s recommendations, Teodoro scrapped the contract with Talon.

The decision was written by Presiding Justice Andres Reyes. Concurring were Associate Justices Japar Dimaampao and Jane Aurora Lantion.