G.R. No. 27275. November 18, 1967
C & C COMMERCIAL CORPORATION, PLAINTIFF?APPELLEE, VS. NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, DEFENDANT-APPELLANT.
ANGELES, J.:
The main issue in this appeal is, whether or not the call for
bids for the supply of steel and centrifugal cast iron pipes for the waterworks
projects in Manila and suburbs, and in the cities of Davao
and Iloilo, the National Waterworks & Sewerage Authority (NAWASA) violated
the provisions of Republic Act No. 912, section 1 of which provides as follows:
“Section 1. In construction or repair work undertaken by the
Government, whether done directly or through contract awards, Philippine made
materials and products, whenever available, practicable and usable, and will serve
the purpose as equally well as foreign made products or materials, shall be
used in said construction or repair work, upon the proper certification of the
availability, practicability, usability and durability of said materials or
products by the Director of the Bureau of Public Works and/or his
assistants.”
In the decision appealed from the Court of First Instance of
Manila has permanently enjoined the NAWASA from the procurement of the
materials needed for the projects involved which, according to the appellant,
are designed to alleviate the sufferings of the millions of inhabitants in
said places where there is a crying need for more water – an item so vital to human existence –
and the delay occasioned by the injunctions complained of, has in no little
way, further aggravated the inconvenience of the consuming public in
said metropolitan areas where acute water crises have recurred through the
years. Nevertheless, it is vehemently
contended by the appellee that the declaration of an
economic national
policy as envisioned in the aforequoted provision of
the law which, like the original “Flag Law[1]” is impressed with the clear nationalistic policy of giving preference to
locally produced materials and products, has been violated; and if this is so,
no amount of public clamor could justify the acts of the NAWASA
complained of, for above all the supremacy of the law must be upheld. We have, therefore, examined the record of
this case with
these considerations foremost in Our minds.
It appears that the case, originally commenced in the Court of First Instance of Manila, on
July 7, 1965, as a petition for declaratory relief for the purpose of
securing a judicial pronouncement on the interpretation of the word
“practicable” as used in Republic Act No. 912, i.e., whether it means
that the cheapest materials among the locally produced or manufactured products
should be preferred and specified in construction and repair works undertaken
by the Government, was later converted into an action for prohibition with
preliminary injunction through the process of supplemental pleadings.
THE SAN PABLO WATERWORKS SYSTEM –
The corresponding complaint was filed on 19 July 1965, alleging
that the NAWASA had started to negotiate for direct purchase of centrifugally
cast iron pipes (CCI) for the improvement of the San Pablo Waterworks System in
violation of the provisions of Republic Act 912 and the law on public biddings,
excluding the C & C Commercial Company, the plaintiff, which can supply
instead asbestos cement pressure pipes which are available, practicable
and usable, and will serve the purpose of the said project at a much
lower cost.
On 6 August 1965,
the NAWASA filed its answer to the complaint.
On 10 August 1965,
the Filipino Pipe and Foundry Corporation, with leave of court, also filed its
answer in intervention.
On 16 August 1965,
as prayed for in the complaint, the court
issued a writ of preliminary injunction restraining the NAWASA from further
negotiating the purchase of the
CCI pipes from the intervenor.
On 23 September 1965, the plaintiff and the NAWASA entered into a partial
stipulation of facts, on the basis of which and the additional evidence adduced
at the hearing, the court rendered a partial decision on 31 January 1966,
dismissing the complaint insofar as the
San Pablo Waterworks System was concerned and dissolving the preliminary
injunction issued thereunder. This partial
decision has become final.
THE DAVAO METROPOLITAN WATERWORKS ?
On 22
January 1965, the
NAWASA called for bids for the furnishing of labor and the supply of
materials for the construction of the
proposed improvement of the Davao Metropolitan
Waterworks System. In the call for
bids, the bidders were required to submit proposals for the supply of 24-inch
steel pipes, asbestos cement pressure pipes, and cast iron pipes. The bidding was held on 23 February 1965. On 16
March 1965, the committee on award of the NAWASA recommended to the
board of directors that the bid be awarded to the lowest bidder, Tirso del Rosario, under his proposal to supply steel
pipes.
On 10 August 1965, the plaintiff filed a (First) supplemental
complaint seeking to restrain the NAWASA from proceeding with the award of
the project in Davao, alleging that in specifying
steel pipes for the project, which is admittedly imported material, without
giving preference to locally produced asbestos cement pressure pipes
manufactured by the plaintiff, violates the provisions of Republic Act
912. On 14 August 1965, the court admitted the supplemental
complaint; and as prayed for therein, on 17 September 1965, the Court issued a writ of preliminary
injunction.
THE ILOILO WATERWORKS SYSTEM –
As early as on 26
November 1962, the NAWASA called for bids for the supply of
18-inch steel pipes for the improvement of the Iloilo Waterworks
System. The bidding was conducted on 27 December 1962. C & C Commercial Co. participated in
the bidding offering to supply the
needed 18-inch steel pipes for the project, but lost in the bidding. The lowest bidder for the supply of the
specified 18-inch steel pipes was the Regal Trading Corporation, and the bid
was awarded to it.
On 8 September
1965, almost three (3) years after the date of the bidding, the C & C
Commercial Co. filed a (Second)
supplemental complaint seeking to restrain the NAWASA from
formalizing or implementing the award on the aforesaid Iloilo project for the supply of 18-inch steel pipes, alleging that in specifying steel pipes for
the particular project, the NAWASA has violated the provisions of Republic Act
912 which requires the purchase of Philippine made materials and products which
are available, practicable
and usable locally, like plaintiff’s product – asbestos cement
pressure pipes – in construction and repair undertaken by the government. On 24
September 1965, over the objection of the NAWASA, the second supplemental
complaint was admitted by the court. The
record is not clear when the restraining order under the second supplemental
complaint was issued, although the NAWASA alleges that a restraining order was
issued under date of 10 September 1965,
which fact has not been traversed by the plaintiff.
THE MANILA AND SUBURBS WATERWORKS SYSTEM –
On 13 September 1965,
the NAWASA advertised for bids for the supply of 30 to 42-inch steel pipes for the use and
improvement of the interim waterworks project in the City of Manila
and suburbs, the bidding to take place on 14 December 1965.
On 10 November 1965, the C & C Commercial Co. filed a (Third)
supplemental complaint seeking to restrain the NAWASA and its
representatives from holding the bidding under the aforementioned notice to
bid, averring
identical facts as those alleged in the previous supplemental complaints, that
the call for bid for steel pipes for the Manila project and suburbs violates
the provisions of Republic Act 912. Over
the objection of the defendant NAWASA, the supplemental complaint was admitted;
and as prayed for therein, on 20 November 1965,
a writ of preliminary injunction was issued restraining the NAWASA from holding
the bidding scheduled on 14 December
1965, or on any subsequent date, until further orders from the
court.
Pending the case in the court a quo, the NAWASA
filed three separate motions praying for the dissolution of the preliminary
injunctive writs issued in connection with the Davao,
Iloilo and Manila projects, pleading to the court to consider the crying need
for a more adequate supply of water in those cities, particularly in the City
of Manila and its suburbs, where the lack of adequate supply of potable water
has been a recurrent crisis which affected to a dangerous extent, the health and
the life of the inhabitants, and that the continuation of the injunctive writs
may bring about the cancellation of the $20,200,000.00 loan of the NAWASA from
the World Bank, which would result from the failure of the NAWASA to comply
with the formulated work schedule of the waterworks projects, which under the
agreement with the World Bank, has to be completed in the month of October
1967; but the court failed to take any action on the motions. Parodying Shakespeare, “Set honor in one
eye, and death in the other, and I will look on both indifferently.”
After a trial of the case, of 15 August 1966, the court rendered
a decision finding and concluding that the act of the NAWASA in specifying
steel pipes for the project of the City of Manila and its suburbs, and in
awarding the contracts for the supply of steel pipes in the cases of the Davao and Iloilo Waterworks System, constituted a violation
of the provisions of Republic Act 912; the dispositive
portion of the decision reads as follows:
“(a) On the supplemental complaint, making
permanent the preliminary injunction dated September 2, 1965, enjoining the
defendant or its representatives and agents from formalizing or implementing
the award for the construction of the Davao
Waterworks Project in respect of the award of pipes to be used therein;
rescinding the award made in favor of Tirso del
Rosario; and ordering the reappraisal of the bids with a view to complying
with the provisions of Republic Act No. 912;
“(b) On the second supplemental complaint ordering
the issuance of a permanent injunction to enjoin the defendants or its agents
and representatives from formalizing the award of the contract for the furnishing
of 18″ steel pipes for the Iloilo Waterworks System; ordering a new
bidding for the said project so as to include in the call for bids for the
supply and delivery of materials, asbestos cement pipes, as well as CCI pipes;
and rescinding the award of the contract in favor of the Regal Trading
Corporation;
“(c) On the third supplemental complaint, making
permanent the preliminary injunction dated December 14, 1965, or any other
subsequent date calling for imported steel pipes from 30″ to 42″ diameter
for the interim Development of Waterworks System for Manila and suburbs; and
ordering the defendant to specify asbestos cement pressure pipes for the said
project; and
“(d) Ordering the defendants to pay the
costs.”
From the decision, NAWASA appealed to this Court.
Appellant contends that the provisions of Republic Act 912, are
applicable only to construction or repair works undertaken by the
Government. It argues, that since the
NAWASA, tho a public corporation, is not a municipal
corporation or agency of the State empowered to regulate or administer the
local affairs of a town or city,[2]
nor one of the various arms of the government through which political authority
is made effective in the Islands, consequently, the NAWASA should not be
included within the meaning of the term “Government” as used in the
law.[3]
It is to be noted, however, that Section 2 of the Revised Administrative Code
defining the term “Government” which is heavily relied upon by the
appellant recognizes an exception:
“when a different meaning for the word or phrase is given a particular
statute or is plainly to be collected from the context or connection where the
term is used.” In this context of the law, the term “government”
without any qualification as used in Republic Act 912, should be construed in
its implied sense and not in the strict signification of the term
“Government of the Philippines” as the political entity through which
political authority is exercised. A
comparative analysis of Republic Act 912 and Commonwealth Act 138, otherwise known as the “Flag Law”, the
latter “An Act to Give Native Products and Domestic Entities the
Preference in the Purchase of Articles for the Government”, and the former
“An Act to Require the Use, Under Certain Conditions, of Philippine Made
Materials or Products in Government Projects or Public Works Construction,
Whether Done Directly by the Government or Awarded thru Contracts”,
discloses that both relate to the same subject matter and have the same
nationalistic purpose or object: to give
preference to locally produced materials in purchases, works or projects of the
Government. The observation that
Commonwealth Act 138 expressly includes purchases by Government-owned
companies, while Republic Act 912 merely relates to construction or repair work done by the Government, is no
argument for the proposition that government-owned or controlled corporations
have been excepted from the operation of the latter law, for it is clear that
Commonwealth Act 138 also ordains that the
Purchase and Equipment Division of government-owned companies authorized to
purchase or contract for materials and supplies for public use, buildings, or
public works, shall give preference to locally produced materials or products. Being statutes in pari
materia, they should be construed
together to attain the purpose of an expressed national policy. Thus, it has been aptly stated:
“On the presumption that whenever the legislature enacts a
provision it has in mind the previous statutes relating to the same subject
matter, it is held that in the absence of any express repeal or amendment
therein, the new provision was enacted in accord with the legislative policy
embodied in those prior statutes, and they
all should be construed together.
Provisions in an act which are omitted in another act relating to the
same subject matter will be applied in a proceeding under the other act, when
not inconsistent with its purpose. Prior
statutes relating to the same subject matter
are to be compared with the new provisions; and if possible by
reasonable construction, both are to be construed that effect is given to every
provision of each. Statutes in pari materia,
although in apparent conflict, are so far as reasonably possible construed to
be in harmony with each other.”[4]
The main objective of the Government is to develop our domestic
industries so that the country will be economically self-sufficient. And both Commonwealth Act 138 and Republic
Act 912 aim to contribute to the realization of the aforesaid nationalistic
policy by requiring the use of Philippine made products or materials, whenever available,
practicable and usable in government construction work or repair
projects. The alleged conflict between the
two laws is more apparent than real, and should not be allowed to defeat the
purpose of these laws. We have to
declare, therefore, that, the NAWASA, like any other corporation exercising proprietary or
governmental functions should be deemed embraced within the term
“Government” found in Republic Act 912, and in the repair or
construction of their works or projects or the purchase of materials
therefore, local materials should be given preference whenever available,
practicable and usable.
The next issue for consideration is: Did the NAWASA violate the provisions of
Republic Act 912?
Appellant vehemently denies the charge and decries the holding
of the lower court appealed from that in specifying steel pipes in the call for
bids for the supply of materials for the waterworks projects under
consideration it had defied the mandate of the law. Appellant insists that at the time it called
for bids for the Davao project, followed by the call
for the supply of materials for the Iloilo project, herein appellee’s
plant was only capable of producing asbestos cement pressure pipes up to 12
inches diameter; while at the time the call for bids for the supply of
materials for the Interim Project of Manila and suburbs was advertised, the
largest size of asbestos cement pipes available were of 24 inches being
produced at the time by another local manufacturer, the Eternit
Corporation, which never protested against the bids in question.
We have reexamined the record of the case with painstaking
solicitude and, indeed, We find the facts indubitable and conclusive that the C
& C Commercial Corporation had not theretofore and even up to the present
time ever produced pipes larger than 12 inches in diameter. Said appellee
corporation has implicitly admitted this as a fact; and although it claims to
have a complete plant that is equipped with the necessary machinery,
technicians and skilled laborers capable of producing pipes in the sizes called
for in those bids (18 to 42 inches in diameter) had the NAWASA specified them
in asbestos cement, the weakness of the argument is at once exposed by a mere
examination of the pertinent evidence adduced during the trial of the case on
this particular point. The claim is
belied by Leopoldo del Rosario, a staff civil
engineer of the NAWASA, who testified as follows:
“Q. – Engineer
Del Rosario,
what is the limitation of the local asbestos cement pressure pipes that are
locally manufactured in the Philippines?
A. – We based on NAWASA’s
experience, we have purchased only sizes up to 12 inches, but on certification
of the Bureau of Public Works, a report has been submitted to us that asbestos
cement pressure pipes (is) being
manufactured by one local manufacturing company in the Philippines, the Eternit Corporation, which is a pipe manufacturer, and we have recently purchased pipes for
the Manila interim project of sizes up to 24 inches non-pressure pipes.
Q. – Is there any other local manufacturer of
asbestos cement pressure pipes besides C & C Commercial Corporation?
A. – None,
sir, only the C & C Commercial Corporation.[5]
Q. – Engineer del Rosario, as staff civil engineer
and the specification engineer, member-secretary of the Pre-Qualifications Committee and the present chairman of all the
bidding committees of the NAWASA, do you know if C & C Commercial
Corporation, the plaintiff herein, is manufacturing asbestos cement pressure
pipes from sizes thirty inches and up in diameter?
A. – The company does not manufacture size beyond
twelve inches.
Q. – Why do you say that the C & C Commercial
Corporation is not manufacturing asbestos cement pressure pipes beyond twelve
inches?
A. – Because we had bi-yearly inspection of all
local plants here as a matter of policy of the committee to determine the
capacity or capability of the local manufactures to supply, and even to
bid. So every six months the
pre-qualifications committee in collaboration with the procurement inspects all
the facilities of the chemical producing plant, this cast iron and asbestos
plant, the galvanized iron pipe plant, these are regularly inspected every six
months and so the pre-qualifications would know what is available.”[6]
And the foregoing testimony relative to
the “non-availability” of appellee’s products in
sizes above 12 inches in diameter was corroborated by Mrs. Clara Reyes Pastor,
herein appellee corporation’s President, who declared
as follows:
“Q. – Is it not
a fact Mrs. Reyes, that the sizes of asbestos cement pressure pipes locally
manufactured by you and which you furnish the NAWASA is only 12 inches in
diameter? Yes or No?
A. – Yes,
sir, because that is the only pipe required at the time I delivered it.
Q. – And the asbestos cement pressure pipes from sizes 12 to 42 inches that you have supplied the NAWASA in the
past, they were all imported by you?
A. – Yes, sir.
Q. – I heard you testify Mrs. Reyes, that in case
you win in this particular bidding, you intend to import equipments from
abroad, is that correct?
A. – Not equipments, only mandril.
Q. – So that presently what is the biggest size of
mandril that you have?
A. – I have a 16-inch mandril,
the biggest of them all.”[7]
From the foregoing testimony of witnesses, and in the light of
other evidence submitted by the parties, the following may be deduced: that it is the practice of the NAWASA – which We find both practical and
logical – to send out its own men to the various local manufacturing plants for the purpose of knowing the availability of materials needed
for its projects; that at the
time it specified 18 and 24 inches diameter steel pipes for the Davao and Iloilo waterworks projects, there were no locally
produced materials in said sizes; and
that with respect to those sizes that
were already available, the NAWASA has actually specified and used them in
various other construction and
repair works even without the certification of the Director of Public Works. We really do not see Our way clear how herein
appellee could have charged that the NAWASA had
discriminated against its products under the circumstances when its own president
admits that it has supplied the NAWASA before
locally produced asbestos cement pressure pipes up to 12 inches diameter
only and all those with diameters above 12 inches were of foreign
manufacture. The evidence, therefore, is
conclusive that locally produced asbestos pipes above 12 inches in diameter
were not available for purposes of claiming any preference under the provisions
of Republic Act 912. And this conclusion
becomes even more cogent if We are to consider the fact that C & C Commercial Corporation
failed to produce the necessary certification from the Director of Public Works
to show that its products were already certified as available, practicable
and usable at the time that the call for bids for the supply of materials for
the Davao, Iloilo and Manila Interim projects were
made to give some semblance of the right it claims to have been violated.
Of course, appellee points out the fact
that it has subsequently secured the necessary certification from the Director
of Public Works certifying to the availability, practicability, usability and
durability of the asbestos cement pressure pipes produced from its plant. We agree, and there should be no quarrel at
all that with respect to pipes of 4 to 12 inches in diameter which it is actually
producing now, the preference claimed under the law may be allowed. Be that as it may, however, the certification
referred to did not in any way improve its position; for the stubborn fact
still remains that at the time said certification was issued on July 6, 1966, C
& C Commercial Corporation was actually producing asbestos pipes up to
12 inches only, which its existing equipment or machinery, when inspected by a
representative of the Office that issued the certification, was found capable
of producing. Hence, We cannot subscribe
to the holding of the court below that locally produced asbestos cement pipes
above 12 inches in diameter may be considered “available” within the
meaning of Republic Act 912 simply because the President of herein appellee corporation had manifested or promised that it can
procure bigger mandrils worth $25,000.00 from abroad
and will be able to produce pipes in the larger sizes called for in the
questioned bids shortly after their installation, for that would be giving the
term “available” a very strained meaning. It would really be unfair to require in
order to be “available” within the meaning of the law that herein appellee should have in stock the sizes of pipes called for
in the bids in the quantity needed
by the appellant; but We cannot also believe, by any stretch of the
imagination, that the Director of Public Works would certify to the availability,
practicability, usability and durability of certain products even before the
machinery, equipment or tools needed to produce said products are actually
bought from abroad and installed in its plant by the manufacturer.
Statutes granting advantages to private persons have in many
instances created special privileges or monopolies for the grantees and thus
have been viewed with suspicion and strictly construed. This is altogether appropriate in the
majority of situations, for if public advantage is gained by the grant, it
normally appears to be of secondary significance compared with the advantage
gained by the grantee.[8]
And rights which exist only by virtue of such statutes come into being only
after strict compliance with all the conditions found in those statutes.[9]
These rules should apply to the case at bar where the law invoked grants a
preference to locally produced products or materials. Since Republic Act 912 grants preference only
upon the certification of availability, practicability and usability of
locally produced materials by the Director of Public Works, that certification
must be existing and effective before any right arising therefrom
may be claimed to have been violated.
Notwithstanding the clear nationalistic policy of the law
aforementioned, We cannot, by any mistaken sympathy towards herein appellee, recognize the existence of its right under the
law alleged to have been violated, which C & C Commercial Corporation has
miserably failed to prove in this case.
With respect to the Interim Project for the City of Manila and
its suburbs, it would seem that the decision appealed from had virtually become
moot and academic by reason of the passage of Republic Act 4858 which
authorizes the President to allow the procurement of supplies necessary for the
rehabilitation of the project as an exception to the restrictions and
preferences provided for in Republic Act 912, and the President appears to have
authorized the General Manager of the NAWASA under the said statutory power to
purchase all the pipes and materials necessary for the project by negotiated
sales.
For all the foregoing, We find it unnecessary to discuss further
the other errors assigned by the appellant.
WHEREFORE, the decision appealed from is hereby set aside,
with costs against the appellee. The writs of preliminary injunctions issued
by the lower court are set aside, and declared null and void.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Bengzon, Zaldivar, Sanchez, and
Castro, JJ., concur.
[1]
Commonwealth Act No. 138, Nov. 7, 1936.
[2]
Citing NAWASA vs. NAWASA Consolidated Unions, et al. L-18938.
[3]
Citing Section 2, Rev. Adm. Code which provides, inter alia, as follows:
“The Government of the Republic of the Phil. is a term which
refers to the corporate governmental entity through which the functions of the
government are exercised throughout the Philippines, including, save as the
contrary appears from the context, the various arms through which political
authority is made effective in the Philippines,
whether pertaining to the central government or to the provincial or
municipal branches or other forms of local government.”
[4]
Sutherland & Statutory Construction, Vol. II, pp. 530-532.
[5]
T.S.N., June 27, 1966, pp.
54-55.
[6]
T.S.N., June 7, 1966, pp.
8-10.
[7]
T.S.N., June 27, 1966,
pp. 44-45.
[8]
Sutherland Statutory Construction, Vol. II, sec. 3404, p. 240.
[9]
Id., Vol. III, sec. 5812,
p. 94.