NPM 086-2012

Requesting Entity: JVF Commercial and Project - Development Support Service (JVF)

Issues Concern: Competitive Public Bidding and Refund of the Cost of Bidding Documents



1. Whether the requirement of one brand only for all the equipment in the ITB provided obstacles for a competitive open public bidding and unduly favored one prospective supplier.

Section 18 of RA 9184 and the IRR mandates that: "Specifications for the Procurement of Goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed."

Under the law, procuring entities may prepare and craft detailed technical specifications in their bidding documents; and it is incumbent upon them to show that the specifications or conditions set forth are based on relevant characteristics and/or performance requirements.

[I]nclusion in the IB and bidding documents of such conditions, detailed design or technical descriptions that are not couched on the procuring entity's needs, which leaves the procuring entity with no option but to procure from a particular brand or supplier, defeats the essence, nature and purpose of public bidding.

The Supreme Court in the case of Information Technology Foundation of the Philippines vs. COMELEC stressed that "[p]ublic bidding is violated by the practice of requiring very high standards or unrealistic specifications that cannot be met -- like the 99.9995 percent accuracy rating in this case -- only to water them down after the bid has been awarded. Such scheme, which discourages the entry of prospective bona fide bidders, is in fact a sure indication of fraud in the bidding, designed to eliminate fair competition."

2. Whether JVF can request for a refund of the amount paid for the bidding documents after the terms and conditions of the first bidding documents originally purchased were materially changed.

[T]he Philippine Bidding Documents for Goods specify under the IB and the Instruction to Bidders (ITB) that Bidders are to pay the non-refundable fee for bidding documents to be able to participate in the bidding.

[F]ees charged for the bidding documents must always be reasonable and conscionable, and not unjust, excessive, oppressive, or confiscatory, based on the fundamental principle governing the exercise of the taxing and other revenue-raising powers of local government units provided in Section 130(b)(2) of Republic Act No. 7160, otherwise known as the Local Government Code; and, the Civil Code provision on unjust enrichment. The principle of unjust enrichment under Article 22 requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at another's expense or damage.

From the foregoing, if JVF finds reason in claiming a refund based on legal remedies available under the Local Government Code on the collection of unjust, excessive, oppressive, or confiscatory fees; and the principle of unjust enrichment, it may raise the matter in an appropriate proceeding in a proper court, quasi-judicial or administrative agencies of competent jurisdiction.