October 14, 2009

COA DECISION NO. 2009-094

SUBJECT

:
Motion for Reconsideration Dated 23 March 2009 of Clark Development
Corporation (CDC) of COA Decision No. 2009-008 dated 12 February 2009 relative to
the money claim of NTM-Jin Hung Joint Venture Representing Bid Security in the
Amount of P26M

RESOLUTION

FACTS OF THE CASE

This instant Motion for Reconsideration moves to set aside this Commission's order embodied in COA
Decision No. 2009-008 dated 12 February 2009 for Respondent Clark Development Corporation (CDC) to
refund the amount of P26M to NTM-Jin Hung Joint Venture (claimant) which the latter posted as bid security
as the winning bidder of the privatization of the former Mimosa Leisure Estate. The dispositive portion of
COA Decision No. 2009-008 reads:
"WHEREFORE, premises considered, the instant money claim is hereby GIVEN due course.
Accordingly, CDC is hereby ordered to refund the bid security amounting to P26 million to NTM-JIN
HUNG Joint Venture."

In ruling for the claimant, this Commission found no justication for CDC to further withhold the P26M bid
security since a failure of bidding was declared. Firstly, this Commission brushed aside the assigned
technical inrmities of the claim, particularly on the prematurity of claimant's action, holding that
adherence to the procedures suggested by CDC would only delay the disposition of the claim. It was pointed
out that in its Answer, CDC had the opportunity to categorically state, but opted not to do so, whether or not
it is willing to refund the bid security. Thus, to avoid acting on a similar claim in the future, as for sure,
claimant would le the same claim with the Commission in the event that CDC denies the subject money
claim should the same be referred to it, resolution on the merits was deemed appropriate. Secondly, it was
also observed that there was absence of any circumstance that would warrant forfeiture of the bid security
in accordance with Section 40.1 of the Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No.
9184.
It bears stressing that it was CDC that stopped the privatization process and that claimant had not signied
its refusal to enter into contract with it. On the contrary, claimant was steadfast in pursuing its interest to
sign the MOU, despite the revocation of the Notice of Award (NOA), as shown by its oer to deposit 10% of
the total investment commitment or P142M. It ruled that to allow CDC to forfeit the bid security would be to
condone an act violative of Article 22 of the Civil Code and tantamount to unjust enrichment at the expense
of another.
Hence, the instant motion for reconsideration contending, yet again, that the claim was led prematurely
and, therefore, this Commission should have not entertained the same, CDC, submitted that the proper
action would have been for COA to dismiss the claim rst and then to give CDC the opportunity to act on the
same. Nevertheless, CDC justied the revocation of the NOA and the subsequent forfeiture of the bid
security on the ground that claimant failed to comply with its obligations under the Terms of Reference
(TOR), particularly on its undertaking to enter into and execute a Lease Agreement within ten (10) calendar
days from the receipt of the NOA (instead of the MOU). It is averred that since claimant failed to post the
required nancial consideration or the "Bid Oer" that would necessitate the signing of the Lease
Agreement, CDC had to declare the bidding a failure and the consequent forfeiture of the bid security.
ISSUE
Whether or not there was valid reason for CDC to forfeit the bid security of NTM-Jin Hung Joint Venture
amounting to P26M.
DISCUSSION
This Commission agrees that the subject claim for refund should have been led rst before the CDC. As
cited by CDC, the prematurity of the action of the claimant was impliedly recognized by this Commission in
the assailed decision. However, the action of the Commission was justied not only by practicality but more
so in keeping with the dictate of speedy disposition of any matter or case before it with little regard to the
rigid technical rules of procedure as enshrined in Section 3 of Rule I of the 1997 COA Rules of Procedure.
Thus, as cited in the assailed decision, the Supreme Court in a certain case, held:
"Let it be emphasized that the rules of procedure should be viewed as mere tools designed to
facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be
eschewed." (Ginete vs. Court of Appeals, G.R. No. 127596, 24 September 1998, Italics supplied.)

Accordingly, this Commission found it appropriate to directly resolve the merits of the claim as warranted
by the evidence on record, instead of referring it to CDC, for it could reasonably be expected that claimant
would later on le the same claim in the event that CDC would deny it. In the same manner that adherence
to the procedures at this stage, as invoked by CDC in the instant motion for reconsideration, would merely
duplicate the actions that had been taken so far. And since the issue of prematurity was rendered moot and
academic when CDC raised as another issue the merits of claimant's claim, resolution of the instant motion
on the merits may now proceed.

CDC claimed that the letters of claimant dated 31 May 2006 requesting additional time of one to three
months to secure certain requirements of the Korean Government and 15 June 2006 requesting CDC to
defer "any further conclusion or any further contract because claimant was still securing the required
documents," demonstrated its inability to comply with the undertakings provided in the TOR, namely: (1) to
enter into a contract with CDC, and (2) to furnish the required performance security, within ten (10)
calendar days from its receipt of the NOA. Thus, the forfeiture of the bid security was warranted under the
circumstances.
This Commission disagrees. Section 40.1 of the Implementing Rules and Regulations (IRR) of R.A. No. 9184
puts aside the forfeiture of the bid security where the failure, refusal or inability to comply with the required
undertakings is through no fault of the winning bidder. Section 40 of R.A. No. 9184 called such instances as
justiable causes. In the case at bar, records would bear out that claimant was without fault or, at the very
least, was impelled by justiable causes for its failure to enter into a contract with CDC and to furnish the
performance security. If at all, there was merely a temporary inability on the part of claimant to comply with
the undertakings due to extraordinary but justifiable causes beyond its effective control.
Even before the issuance of the NOA, claimant had already informed the CDC of its predicaments. In its
letter dated 31 May 2006, claimant informed CDC that it needed one to three months to completely submit
the necessary documents. Thus, additional time, within which to comply was requested. After the issuance
of the NOA, claimant wrote another letter on 15 June 2006, the date the period of the signing of contract
was supposed to end, requesting deferment of any conclusion of any contract because, apparently, the
Philippine Senate was posed to investigate the alleged anomaly tainting the bidding process of the project.
Claimant's representative, Mr. Kim Hyun Joo, in his letter dated 06 July 2006 said that in two occasions he
met with CDC ocials for the purpose of signing the MOU; rst at the BCDA Oce on 13 June 2006 and
second on 15 June 2006 at the CDC Chairman's Oce. For whatever reasons, however, the MOU was not
signed on both occasions. Nevertheless, in the absence of evidence to the contrary, this shows that claimant
was, indeed, serious about the project.
At any rate, even if the signing of the MOU proceeded on the 15th of June 2006 as required under the NOA,
the same would have not served its purpose because, as opined by the Oce of the Government Corporate
Counsel (OGCC) in its Contract Review No. 187, s. 2006, the MOU was not the contract to be entered into by
the parties under the TOR and that it would be a deviation therefrom should the signing of the same be
pursued. This observation was brought to the attention of claimant only on 19 June 2006 where claimant
was advised of the immediate need of signing the Lease Agreement instead of the MOU. However, it is
observed that CDC informed claimant of the referral of its letter of 15 June 2006 to OGCC. It would appear,
therefore, that as of 19 July 2006, claimant could not have complied with the advice of CDC considering that
the justications on its request for deferment were still under consideration by the OGCC. In other words,
claimant was justied not to heed the advice of CDC because its request for deferment could have been
found meritorious. Unfortunately, though, under OGCC's Contract Review No. 210, s. 2006, dated 03 July
2006, the justications were found unmeritorious, hence, the order for the parties to proceed with the
execution of the Lease Agreement.
Be that as it may, it was unfair for CDC to revoke right away the NOA and to declare the bidding process a
failure two days after the OGCC opined, that there was no legal grounds to defer the signing of the lease
agreement on 05 July 2006, without priorly apprising the claimant of the same and on the basis alone of the
alleged inability by claimant to comply with its undertakings under the TOR as allegedly demonstrated in
the latter's letters of 31 May 2006 and 15 June 2006, thereby denying claimant of the opportunity to make
good its obligations under the TOR. More importantly, the declaration of failure of bidding was attended by
abuse of rights on the part of CDC. Such declaration was not in accordance with Section 41 of R. A. No. 9184
an d Section 41.1 of its IRR. Therein, the right to declare a failure of bidding is reserved to CDC as the
procuring entity: (1) if there is a prima facie evidence of collusion; (2) if the BAC is found to have failed in
following the prescribed bidding procedures; and (3) for any justiable and reasonable ground where the
award of the contract will not redound to the benet of the government. But as the records of the case will
show, there is not an indication, much less, an allegation that any of such situations was obtaining when the
bidding was declared a failure.
In all of these, the apparent inequity on the part of CDC should not cost claimant its P26M bid security.
Clearly, to allow CDC to keep for itself the P26M by way of forfeiting claimant's bid security where under the
circumstances claimant was unilaterally and unjustly declared non-compliant of the provisions of the TOR
would be to allow CDC to enrich itself at the expense of claimant. As cited in COA Decision No. 2009-008,
"there is unjust enrichment when a person unjustly retains a benefit to the loss of another or where a person
retains money or property of another against the fundamental principle of justice, equity and good
conscience." (David Reyes vs. Jose Lim, et al., G.R. No. 134241, August 11, 2003)
RULING
WHEREFORE, premises considered, the instant Motion for Reconsideration is hereby DENIED. Accordingly,
COA Decision No. 2009-008 dated 12 February 2009 is armed; and CDC is hereby ordered to refund the
bid security amounting to P26M to claimant NTM-JIN HUNG Joint Venture.

(SGD.) REYNALDO A. VILLAR

Chairman
(SGD.) JUANITO G. ESPINO, JR.
Commissioner
Copy furnished:

Copy furnished:
MR BENIGNO RICAFORTE
President and CEO
Clark Development Corporation
Bldg. 2122 Elpidio Quirino St.,
Clark Special Economic Zone
MR. KIM HYUN JOO
Authorized Representative
NTM-JUN HUNG Joint Venture
Makati City
ATTY. ALBERTO H. HABITAN
Counsel for NTM-JIN HUNG Joint Venture
G/F Senor Ivan de Palacio Bldg.,
Malakas St., Diliman, Quezon City
The Supervising Auditor
Clark Development Corporation
Bldg. 2122 Elpidio Quirino St.,
Clark Special Economic Zone
The Regional Director
COA Regional Office No. III
San Fernando, Pampanga
This Commission
The Assistant Commissioners
Corporate Government Sector
Legal Services Sector
Both of this Commission