Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83146:57172&catid=1585&Itemid=566
Timestamp: 2019-04-23 03:53:09+00:00

Document:
G.R. No. 193796, July 02, 2014 - LAND BANK OF THE PHILIPPINES, Petitioner, v. ATLANTA INDUSTRIES, INC., Respondent.
LAND BANK OF THE PHILIPPINES, Petitioner, v. ATLANTA INDUSTRIES, INC., Respondent.
Respondent Atlanta Industries, Inc. (Atlanta) participated in the said bidding and came up with the second to the lowest bid in the amount of P193,959,354.34.11 However, in a letter12 dated July 27, 2009, the BAC informed Atlanta that the bidding was declared a failure upon the recommendation of Land Bank due to the IBRD’s non-concurrence with the Bid Evaluation Report. Moreover, in a letter13 dated August 28, 2009, the BAC informed Atlanta of its disqualification from the bidding because it lacked several documentary requirements.
Apprehensive of the BAC’s use of bidding documents that appeared to be in contravention of RA 9184 and its IRR, Atlanta filed on December 10, 2009 a Petition for Prohibition and Mandamus22 with an urgent prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction to enjoin the re-bidding of the project against the City Government of Iligan, the BAC, and Land Bank before the Manila RTC, docketed as Civil Case No. 09-122643 (Petition for Prohibition).
3. Dong Won Plastics, Inc.
The main issues presented for the Court’s resolution are: (a) whether or not the Manila RTC has jurisdiction over the instant prohibition case and eventually issue the writ prayed for; and (b)whether or not the SLA between the Land Bank and the City Government of Iligan is an executive agreement similar to Loan Agreement No. 4833-PH such that the procurement of water pipes by the BAC of the City Government of Iligan should be deemed exempt from the application of RA 9184.
The Court first resolves the procedural issues of this case, then proceeds to its substantive aspects.
THE MANILA RTC’S LACK OF JURISDICTION TO ISSUE THE WRIT OF PROHIBITION SUBJECT OF THIS CASE; AND ATLANTA’S FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES.
The Court finds for Land Bank.
Sec. 2. Petition for Prohibition. - When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.
If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board, an officer or a person, it shall be filed with the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed with the Court of Appeals or with the Sandiganbayan, whether or not the same is in aid of the court’s appellate jurisdiction. If the petition involves an act or an omission of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed with and be cognizable only by the Court of Appeals.
The Court already ruled in numerous cases, beginning with the very early case of Castaño v. Lobingier,39 that the power to administer justice conferred upon judges of the Regional Trial Courts, formerly Courts of First Instance(CFI), can only be exercised within the limits of their respective districts, outside of which they have no jurisdiction whatsoever. Applying previous legislation similar to the present Section 21 of BP 129 and its complementary provision, i.e., Section 4, Rule 65 of the Rules, the Court held in said case that the CFI of Leyte had no power to issue writs of injunction and certiorari against the Justice of the Peace of Manila, as the same was outside the territorial boundaries of the issuing court. Also, in Samar Mining Co., Inc. v. Arnado,40a petition for certiorari and prohibition with preliminary injunction was filed in the CFI of Manila to question the authority of the Regional Administrator and Labor Attorney of the Department of Labor in Cebu City to hear a complaint for sickness compensation in Catbalogan, Samar and to enjoin said respondents from conducting further proceedings thereat. The Court affirmed the dismissal of the case on the ground of improper venue, holding that the CFI of Manila had no authority to issue writs of injunction, certiorari, and prohibition affecting persons outside its territorial boundaries. Further, in both Cudiamat v. Torres (Cudiamat)41and National Waterworks and Sewerage Authority v. Reyes42 (NAWASA), the losing bidders succeeded in securing an injunctive writ from the CFI of Rizal in order to restrain, in Cudiamat, the implementation of an award on a public bidding for the supply of a police call and signal box system for the City of Manila, and, in NAWASA, the conduct of the public bidding for the supply of steel pipes for its Manila and Suburbs Waterworks Project. The Court held in both cases that the injunction issued by the CFI of Rizal purporting to restrain acts outside the province of Rizal was null and void for want of jurisdiction.
Undoubtedly, applying the aforementioned precepts and pronouncements to the instant case, the writ of prohibition issued by the Manila RTC in order to restrain acts beyond the bounds of the territorial limits of its jurisdiction (i.e., in Iligan City) is null and void.
Also on a matter of procedure, the Court further discerns that the Manila RTC should have dismissed the case outright for failure of Atlanta to exhaust administrative remedies. Under RA 9184, the decisions of the BAC in all stages of procurement may be protested to the head of the procuring entity through a verified position paper and upon payment of a protest fee.43 The necessity for the complaining bid participant to complete the protest process before resorting to court action cannot be overemphasized. It is a condition precedent to the court’s taking cognizance of an action that assails a bid process.44 When precipitately taken prior to the completion of the protest process, such case shall be dismissed for lack of jurisdiction.45 While Atlanta may have written the BAC a letter objecting to some of the terms and conditions contained in the bidding documents to be used for the re-bidding, its action fell short of the required protest. It failed to follow through with its protest and opted instead to participate in the re-bidding with full knowledge that the IBRD Procurement Guidelines were to be followed throughout the conduct of the bid. Having failed to observe the protest procedure required by law, Atlanta’s case should not have prospered with the RTC altogether.
With the procedural matters having been resolved, the Court now proceeds to discuss the substantive aspect of this case concerning the SLA and Land Bank’s claimed exemption from the provisions of RA 9184.
THE APPLICABILITY OF THE BIDDING PROCEDURE UNDER RA 9184; AND THE NATURE OF LOAN NO. 4833-PH AND ITS RELATION TO THE SLA.
This IRR shall apply to all procurement of any branch, agency, department, bureau, office or instrumentality of the GOP, including government-owned and/or -controlled corporations (GOCCs), government financial institutions (GFIs), state universities and colleges (SUCs) and local government units (LGUs).
Any Treaty or International or Executive Agreement to which the GOP is a signatory affecting the subject matter of the Act and this IRR shall be observed. In case of conflict between the terms of the Treaty or International or Executive Agreement and this IRR, the former shall prevail.
Unless the Treaty or International or Executive Agreement expressly provides use of foreign government/foreign or international financing institution procurement procedures and guidelines, this IRR shall apply to Foreign-funded Procurement for goods, infrastructure projects, and consulting services by the GOP.
While Atlanta admits that there are exceptions to the application of RA 9184, it posits that the City Government of Iligan could not claim to be exempt under any of the enumerated instances because it is not a party to the IBRD Loan Agreement.46 It further asserts that a provision in the SLA between Land Bank and the City Government of Iligan providing for procurement procedures different from that required under RA 9184 would not be valid since it is not a treaty or an executive agreement in the way that Loan Agreement No. 4833-PH is.
As the parties have correctly discerned, Loan Agreement No. 4833-PH is in the nature of an executive agreement. In Bayan Muna v. Romulo47 (Bayan Muna) the Court defined an international agreement as one concluded between states in written form and governed by international law, “whether embodied in a single instrument or in two or more related instruments and whatever its particular designation,”48 and further expounded that it may be in the form of either (a) treaties that require legislative concurrence after executive ratification; or (b) executive agreements that are similar to treaties, except that they do not require legislative concurrence and are usually less formal and deal with a narrower range of subject matters than treaties.49Examining its features, Loan Agreement No. 4833-PH between the IBRD and the Land Bank is an integral component of the Guarantee Agreement executed by the Government of the Philippines as a subject of international law possessed of a treaty-making capacity, and the IBRD, which, as an international lending institution organized by world governments to provide loans conditioned upon the guarantee of repayment by the borrowing sovereign state, is likewise regarded a subject of international law and possessed of the capacity to enter into executive agreements with sovereign states. Being similar to a treaty but without requiring legislative concurrence, Loan Agreement No. 4833-PH – following the definition given in the Bayan Muna case –is an executive agreement and is, thus, governed by international law.Owing to this classification, the Government of the Philippines is therefore obligated to observe its terms and conditions under the rule of pacta sunt servanda, a fundamental maxim of international law that requires the parties to keep their agreement in good faith.50 It bears pointing out that the pacta sunt servanda rule has become part of the law of the land through the incorporation clause found under Section 2, Article II of the 1987 Philippine Constitution, which states that the Philippines “adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations.”Keeping in mind the foregoing attributions, the Court now examines the SLA and its relation with Loan Agreement No. 4833-PH.
As may be palpably observed, the terms and conditions of Loan Agreement No. 4833-PH, being a project-based and government-guaranteed loan facility, were incorporated and made part of the SLA that was subsequently entered into by Land Bank with the City Government of Iligan.51 Consequently, this means that the SLA cannot be treated as an independent and unrelated contract but as a conjunct of, or having a joint and simultaneous occurrence with, Loan Agreement No. 4833-PH. Its nature and consideration, being a mere accessory contract of Loan Agreement No. 4833-PH, are thus the same as that of its principal contract from which it receives life and without which it cannot exist as an independent contract.52 Indeed, the accessory follows the principal;53 and, concomitantly, accessory contracts should not be read independently of the main contract.54 Hence, as Land Bank correctly puts it, the SLA has attained indivisibility with the Loan Agreement and the Guarantee Agreement through the incorporation of each other’s terms and conditions such that the character of one has likewise become the character of the other.
The question as to whether or not foreign loan agreements with international financial institutions, such as Loan No. 7118-PH, partake of an executive or international agreement within the purview of Section 4 of R.A. No. 9184, has been answered by the Court in the affirmative in [Abaya v. Sec. Ebdane, Jr., 544 Phil. 645 (2007)]. Significantly, Abaya declared that the RP-JBIC loan agreement was to be of governing application over the CP I project and that the JBIC Procurement Guidelines, as stipulated in the loan agreement, shall primarily govern the procurement of goods necessary to implement the main project.
With the nature and treatment of Loan Agreement No. 4833-PH as well as its accessory SLA herein explained, the Court thus holds that the RTC committed reversible error in ruling that the provisions of RA 9184 were to be applied in this case. Quite the contrary, it is the IBRD Guidelines and the provisions of Schedule 4 which should govern. As such, the procurement of water pipes by the BAC of the City Government of Iligan – as Land Bank meritoriously submits in its petition – is beyond the purview of RA 9184, yielding as it should to the express stipulations found in the executive agreement, to which the latter’s accessory merely follows.
In view of all these errors, both on procedural and substantive counts, the Court is hereby bound to reverse the trial court’s decision and accordingly grant the present petition.
WHEREFORE, the petition is GRANTED. The Decision dated September 3, 2010 of the Regional Trial Court of Manila, Branch 21 (Manila RTC) in Civil Case No. 09-122643 is hereby REVERSED and SET ASIDE. The Petition for Prohibition and Mandamus filed before the Manila RTC is DISMISSED.
Carpio, (Chairperson), Brion, Del Castillo and Perez, JJ., concur.
2 Id. at 45-57. Penned by Judge Amor A. Reyes.
8 Id. at 75. See also id. at 14-15.
12 Id. at 141 and 359.
16 See Resolution No. 160, Series of 2009; id. at 152-153.
18 Id. at 189-193 and 533-537.
21 Id. at 126 and 333-334.
23 Id. at 17-18 and 49-50.
25 See Order dated December 10, 2009 issued by 1st Vice-Executive Judge Eduardo B. Peralta, Jr.; id. at 199.
27 See Order dated May 24, 2010; id. at 213. See also Memorandum for 1) Land Bank dated June 21, 2010 (id. at 235-254); 2) City Government of Iligan and its BAC dated June 21, 2010 (id. at 290-308); and 3) Atlanta dated June 22, 2010 (id. at 255-289).
28 See Order dated June 22, 2010; id. at 233-234.
36 See comment dated February 23, 2011; id. at 342-351.
39 7 Phil91, 93 (1906).
40 112 Phil. 678 (1961).
41 130 Phil. 720 (1968).
42 130 Phil. 939 (1968).
43 RA 9184, Sec. 55.
44 RA 9184, Sec. 58.
45Department of Budget and Management Procurement Service (DBM-PS) v. Kolonwel Trading, 551 Phil. 1030, 1043 (2007).
47 G.R. No. 159618, February 1, 2011, 641 SCRA 244, 258-259.
49 Id., citing B.A. Boczek, International Law: A Dictionary 346 (2005); emphasis supplied.
50 Secretary of Justice v. Hon. Lantion, 379 Phil. 165, 212 (2000).
53Palm Tree Estates, Inc. v. Philippine National Bank, G.R. No. 159370, October 3, 2012, 682 SCRA 194, 212.
54 See Prudential Guarantee and Assurance, Inc. v. Anscor Land, Inc., G.R. No. 177240, September 8, 2010, 630 SCRA 368, 376-377.
55 551 Phil. 1030 (2007).

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