G.R. No. L-18751. April 28, 1962
A.C. ESGUERRA & SONS, PETITIONER AND APPELLEE, VS. DOMINADOR R. AYTONA, ET AL., RESPONDENTS AND APPELLANTS.
BAUTISTA ANGELO, J.:
warehouses located in the customs zone of the Bureau of Customs. It acquired the
right to operate them by virtue of a contract entered into between said company
and the Commissioner of Customs on August 22, 1956. It was extended on July 25,
1957 for reasons stated in the letter of said Commissioner bearing the same
date. As the period of said firm’s operation was coming to an end, the Secretary
of Finance, in an indorsement sent to the Commissioner of Customs on February 8,
1960, directed the latter to conduct a public bidding for the operation of said
warehouses, and pursuant to said directive, the Commissioner of Customs issued
an invitation to bid, with corresponding instructions, which was published in
some local newspapers on March 14, 21, and 28, 1960.
In response to the invitation, the following bids or proposals were received:
Veloso Brothers, 46%; A. C. Esguerra & Sons, 35%; D. I. Cruz &
Enterprises, 85%; A. R. Reyes & Co., if gross income does not exceed
P35,000.00, 30%, and if it exceeds that amount, 55%; and B. E. Berkenkotter, a
guaranteed minimum share of P200,000.00 per annum.
A bidding committee was created to evaluate the bids submitted which in due
time submitted its report to the Commissioner of Customs. This report was in
turn submitted to the Secretary of Finance who expressed his conformity to the
findings and recommendations made therein. The bidding committee recommended
that the bid of A. R. Reyes & Co. be accepted, since the terms and
conditions thereof are most favorable to the government.
The Secretary of Finance, in approving the recommendation of the bidding
committee, stated, however, that the award should be made subject to the
following condition:
“That being the case, the offer in the bid of R. A. Reyes & Company to
give 30% government snare if the total gross income does not exceed P35,000
should not be incorporated in the contract between the Government and the said
firm. Instead, the contract should contain the stipulation that 55% shall be the
government share in any case and irrespective of the amount of the total gross
income that may be derived from whatever source in connection with the operation
of the old and new warehouses.”
A. C. Esguerra & Sons was notified of the award made in favor of A. R.
Reyes & Co., and was advised that it, should be prepared to effect the
transfer of the operation of the warehouses to the latter within 15 days from
notice. Upon receipt of this advice, A. C. Esguerra & Sons asked for a
reconsideration of the award, but before any action could be taken thereon the
Secretary of Finance instructed the Commissioner of Customs to execute the
corresponding contract with the winning firm and, accordingly, the Commissioner
and A. R. Reyes & Co. executed the operation contract on June 22, 1960.
Having learned of the execution of the contract before its motion for
reconsideration was acted upon, A. C. Esguerra & Sons commenced the present
action of certiorari before the Court of First Instance of Manila against the
Secretary of Finance and the Commissioner of Customs with a prayer that the
latter officials be restrained from enforcing the contract for the operation of
the warehouses awarded to A. R. Reyes & Co., as well as from disturbing the
operation thereof by petitioner pending termination of the case. The petition,
was amended by including a paragraph praying that the contract be declared null
and void, and before the trial could be completed, it was ordered that A. R.
Reyes & Co. be included as party-respondent. In the meantime, the court
issued a preliminary injunction as prayed for.
Respondents filed a motion to dismiss the injunction calling attention to the
fact that while petitioner is paying only 25% of the gross income on the
operation of the customs warehouses, the successful bidder would pay 55% of the
gross income, or a difference of 30%, and considering that the yearly gross
income of the warehouses exceeds P1,000,000.00, the government stands to lose
about P300,000.00 a year if the writ is not lifted. Action on the motion was
deferred until after the parties had submitted their evidence. In the meantime,
respondents filed their answer sustaining the validity of the award and setting
up a counterclaim for losses. Petitioner filed its reply to this answer and
counterclaim.
The parties held a pre-trial to thresh out certain inci. dental issues.
Thereafter, they submitted a stipulation of facts, which was supplemented by
testimonial evidence. And after the trial was completed, the court rendered
judgment declaring the award in favor of A. R. Reyes & Co. null and void and
making the injunction permanent. Respondents have appealed.
The trial court, in sustaining the plea of petitioner, ruled that the power
of the Secretary of Finance relative to public biddings is only to approve or
disapprove the recommendation of the Commissioner of Customs and not to alter or
modify it. Since the bid of A. R. Reyes & Co. is 30% of the gross income if
the same does not exceed P35,000.00 a month, and 55% of the gross income if it
exceeds that amount, and the Secretary of Finance has approved that bid as the
most favorable to the government subject to the condition that the contract
should contain a stipulation that 55% shall be the government’s share
irrespective of the amount of the total gross income that may be derived from
the operation of the warehouses, it is contended that said official has exceeded
his authority and so his approval of the bid is improper and illegal.
Respondents controvert this ruling contending that what the Secretary of
Finance did was merely to eliminate what he considered to be a mere
surplusage because of the proven fact that during the previous years the
operation of the warehouses has always yielded a monthly gross income between
P90,000.00 to P110,000.00.
We share this view. In fact, this is supported by the report of the bidding
committee wherein the following appears: “From the report of the monthly gross
income of the present operator based On their monthly remittances of the
government share, as reported by the Chairman of the Special Committee now
auditing the books of the operator, it is evident that during the past four
years, from 1956 to 1959, the monthly gross income of the operator always exceed
P35,000.00. In fact, during the past three years, the average monthly gross
income was between P90,000.00 to P110,000.00.” With this finding, it would
appear that the offer of 30% if the gross income does not exceed P35,000.00
would indeed be a surplusage for, as the figures show, there would never be an
occasion where such average monthly income would be less than P35,000.00 if the
operation be given to the winning bidder. It is for this reason that that
portion of the bid was disregarded and was stipulated in lieu thereof that the
rate of 55% be charged irrespective of the total gross income that may be
derived from the operation of the bonded warehouses. It is, therefore, clear
that there has been no substantial change in the bid as submitted. If at all,
the change is negligible, or of no legal consequence. At any rate, if the change
can be considered of some consequence, the same operated to the advantage of the
government, and the bidder has not complained.
It is true that upon the taking over of the warehouses by the new bidder the
latter has to start its operation with the first ton to be delivered for
storage for the warehouses are filled with cargoes handled by the old operator
whose unloading or removal will have to be awaited before the warehouses could
be operated at their maximum capacity, and so, as petitioner contends, “it is
highly possible that the monthly income of the new operator may go lower than
P35,000.00 a month” during that period of transition. But this situation is
merely temporary. According to Rolando Geotina, Acting Commissioner of Customs,
who was called as a witness of petitioner, the complete turn over can be
effected about one or two months considering that the average
monthly delivery to consignees is about 13,500 tons. And this testimony is
binding on petitioner because it was said petitioner who presented said official
as its own witness. Moreover, even’ during that transition period, the
government will not stand to lose for it will get just the same its 55% share
from the new operator and at the same time its 25% share from the old operator
until the whole cargoes had been completely removed.
Another factor that the trial court has overlooked is the fact that in the
invitation to bid there is a condition imposed upon the bidders to the effect
that the bidding shall be subject to the right of the government to reject any
and all bids subject to its discretion. Here the government has made its choice,
and unless an unfairness or injustice is shown, the losing bidders have no cause
to complain, nor right to dispute that choice. This is a well-settled doctrine
in this jurisdiction and elsewhere (Ocampo vs. Municipal Council, G.R. No.
L-9393, May 31, 1957; Leoquinco vs. Postal Savings Bank, 47 Phil., 772).
“Frequently, either by statute or by the terms of the advertisement for bids,
the right to reject any or all bids is reserved. Such a reservation is generally
held to vest in the authorities a wide discretion as to who is the best as well
as the lowest bidder, and this involves inquiry, investigation, comparison,
deliberation, and decision; which are quasi-judicial functions, and, when
honestly exercised, may not be reviewed by the courts. In these cases there is
no binding obligation to award the contract to any bidder, and although all bids
are rejected and the enterprise abandoned, if in good faith, or all bids are
rejected and new bids asked for, the courts will seldom, if ever, interfere. It
has been held that where the rights to reject is reserved, the lowest bid or any
bid may be rejected on a mere technicality, that all bids may be rejected, even
if arbitrarily and unwisely, or under a mistake, and that in the exercise of a
sound discretion, the award may be made to another than the lowest bidder.” (43
Am. Jur., 788)
Since petitioner does not claim that its right has been violated or
jeopardized by the acceptance of the bid of A. R. Reyes & Co., for it is
apparent that its bid is less favorable than that of the latter, while, on the
other hand, the winning bid is undisputably the best and most advantageous to
the government, petitioner has no cause to complain against the decision of the
Secretary of Finance. This is more so when it appears that petitioner is
disqualified because one of the bidders is the son-in-law and employee of A. C.
Esguerra, as found by the bidding committee. This is in violation of the
instructions attached to the invitation to bid.
Wherefore, the decision appealed from is reversed, with costs against
petitioner.
Bengzon, C. J., Concepcion, Reyes, J. B. L., Barrera, and Paredes,
JJ., concur.