NPM 065-2007

Requesting Entity: Armed Forces of the Philippines

Issues Concern: Lease-to-Own of Motor Vehicles



Whether Section 46 of the IRR-A of R.A. 9184 is applicable to the purchase of motor vehicles under lease-to-own arrangement.

While lease-to-own of motor vehicles is not contemplated under Section 46 of the IRR-A which specifically relates to construction and office equipment, Section 5 (k) of the IRR-A expressly defines goods as including "related" or "analogous services," such as, lease or purchase of office space, media advertisements, health maintenance services, and other services essential to the operation of the procuring entity. Undoubtedly, motor vehicles are essential in the operations of the procuring entity. In addition, a lease-to-own arrangement is a variant of lease which involves procurement as defined under Sections 4 and 5 (p) of the IRR-A.

Based on the foregoing, the procurement of motor vehicles under lease-to-own arrangement is subject to the general rule of competitive bidding under Section 5 (k) in relation to Section 4 of the IRR-A.