SPECIAL THIRD DIVISION

[G.R. No. 203655. March 18, 2015.]

SM LAND, INC., petitioner, vs. BASES CONVERSION AND

DEVELOPMENT AUTHORITY and ARNEL PACIANO D.
CASANOVA, ESQ., in his official capacity as President and
CEO of BCDA, respondents.

RESOLUTION

VELASCO, JR., J : p

For reconsideration is the Decision of this Court dated August 13, 2014, which
granted the petition for certiorari filed by SM Land, Inc. (SMLI) and directed
respondent Bases Conversion Development Authority (BCDA) and its president
to, among other things, subject SMLI's duly accepted unsolicited proposal for the
development of the Bonifacio South Property to a competitive challenge.
The gravamen of respondents' motion is that BCDA and SMLI do not have a
contract that would bestow upon the latter the right to demand that its
unsolicited proposal be subjected to a competitive challenge. Assuming arguendo
the existence of such an agreement between the parties, respondents contend
that the same may be terminated by reasons of public interest.
We are not convinced.
There exists a valid agreement
between SMLI and BCDA
Article 1305 of the New Civil Code defines a contract as "a meeting of minds
between two persons whereby one binds himself, with respect to the other, to
give something or to render some service." It is a "juridical convention
manifested in legal form, by virtue of which one or more persons bind
themselves in favor of another or others, or reciprocally, to the fulfillment of a
prestation to give, to do, or not to do." 1 The succeeding Article 1318 of the Code
lays down the essential requisites of a valid contract, to wit:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract; and
(3) Cause of the obligation which is established. ITaESD

In the case at bar, there is, between BCDA and SMLI, a perfected contract — a
source of rights and reciprocal obligations on the part of both parties.
Consequently, a breach thereof may give rise to a cause of action against the
erring party.
The first requisite, consent, is manifested by the meeting of the offer and the
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 acceptance upon the thing and the cause which are to constitute the contract. 2
In the case at bar, when SMLI submitted the first Unsolicited Proposal to BCDA on
December 14, 2009, the submission constituted an offer to undertake the
development of the subject property. BCDA then entered into negotiations with
SMLI until the BCDA finally accepted the terms of the final unsolicited proposal.
3 Their agreement was thereafter reduced into writing through the issuance of
the Certification of Successful Negotiations where the meeting of the parties'
minds was reflected in this wise:
NOW, THEREFORE, for and in consideration of the foregoing, BCDA and
SMLI have, after successful negotiations pursuant to Stage II of
Annex C . . ., reached an agreement on the purpose, terms and
conditions on the JV development of the subject property, which shall
become the terms for the Competitive Challenge pursuant to Annex C of
the JV Guidelines . . . . 4 (emphasis ours)

Then, to manifest their assent to the terms thereof and their respective
obligations, both parties — BCDA and SMLI, represented by Gen. Narciso L. Abaya
and Ms. Ana Bess Pingol, respectively — affixed their signatures on the
Certification of Successful Negotiations and had it notarized on August 6, 2010.
Cause, on the other hand, is the essential reason which moves the parties to
enter into the contract. It is the immediate, direct and proximate reason which
justifies the creation of an obligation through the will of the contracting parties. 5
Complementing this is Article 1350 of the New Civil Code which provides that
"[i]n onerous contracts the cause is understood to be, for each contracting party,
the prestation or promise of a thing or service by the other." As such, the cause of
the agreement in the case at hand is their interest in the sale or acquisition and
development of the property and their undertaking to perform their respective
obligations, among others, as reflected in the Certificate of Successful
Negotiations and in the Terms of Reference (TOR) issued by BCDA.
Lastly, object certain refers to the subject matter of the contract. It is the thing to
be delivered or the service to be performed. 6 Here, when the BCDA Board issued,
on August 6, 2010, the Certification of Successful Negotiations, 7 it not only
accepted SMLI's Unsolicited Proposal and declared SMLI eligible to enter into the
proposed JV activity. It also "agreed to subject [SMLI]'s Original Proposal to
Competitive Challenge pursuant to Annex C [of the NEDA JV Guidelines],
which competitive challenge process shall be immediately implemented
following the [TOR] Volumes 1 and 2." 8 Moreover, said Certification provides
that "the BCDA shall, thus, commence the activities for the solicitation
for comparative proposals . . . starting on August 10, 2010, on which date
[SMLI] shall post the required Proposal Security . . . ." 9 TAEDcS

The elements of a valid contract being present, there thus exists between
SMLI and BCDA a perfected contract, embodied in the Certification of
Successful Negotiations, upon which certain rights and obligations
spring forth, including the commencement of activities for the solicitation
for comparative proposals. Thus, as evinced in the Certification of Successful
Negotiation:
BCDA and SMLI have agreed to subject SMLI's Original Proposal
to Competitive Challenge pursuant to Annex C — Detailed Guidelines
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 for Competitive Challenge Procedure for Public-Private Joint Ventures of
the NEDA JV guidelines, which competitive challenge process shall be
immediately implemented following the Terms of Reference (TOR) Volumes
1 and 2. 10 . . .

This agreement is the law between the contracting parties with which they are
required to comply in good faith. 11 Verily, it is BCDA's subsequent unilateral
cancellation of this perfected contract which this Court deemed to have been
tainted with grave abuse of discretion. BCDA could not validly renege on its
obligation to subject the unsolicited proposal to a competitive challenge in view
of this perfected contract, and especially so after BCDA gave its assurance that it
would respect the rights that accrued in SMLI's favor arising from the same. 12
The NEDA JV Guidelines has
the force and effect of law
Aside from the agreement between the parties, the ruling in favor of SMLI is
likewise based on the NEDA JV Guidelines. As mandated by the rules, the Joint
Venture activity, upon the successful completion of the detailed negotiation
phase, shall be subjected to a competitive challenge. 13 While it is not disputed
that respondents failed to comply with the pertinent provisions of the NEDA JV
Guidelines, the dissent postulates that it is justifiable since it is a mere guideline
and not law. 14
We regretfully disagree.
Under the Administrative Code of 1987, 15 acts of the President providing for
rules of a general or permanent character in implementation or execution of
constitutional or statutory powers shall be promulgated in Executive Orders
(EOs). 16 In other words, it is through these orders that the President ensures
that laws are faithfully executed, by handing out instructions to subordinate
executive officials and the public, in the form of implementing rules and
regulations, on how the law should be executed by subordinate officials and
complied with by the public. 17 CHaDIT

For government contracts and procurement in the Philippines, then President

Gloria Macapagal-Arroyo, adopting the recommendation of the NEDA, issued EO
109 18 on May 27, 2002. As its title indicates, EO 109 streamlined the rules and
procedures on the review and approval of all contracts of departments, bureaus,
offices and agencies of the government, including government-owned and
controlled corporations and their subsidiaries. This executive issuance was,
however, later amended by EO 109-A, 19 to conform to RA 9184 which was
enacted barely two months after the issuance of EO 109. 20 Two years later, or on
April 30, 2005, EO 423 21 was issued, repealing EO 109-A and simplifying the
procurement process. Section 4 of EO 423 was later amended by EO 645. 22
Amidst the changes effected on procurement rules, the NEDA's duty to issue a JV
Guidelines under the said executive orders remained unaffected. 23 Through
Section 5 of EO 109, Section 8 of EO 109-A and now Section 8 of EO 423, the
President effectively delegated her inherent executive power to issue rules and
regulations on procurement to her subordinate executive officials, 24 her alter
egos, the most recent of which reads in this wise:
Section 8. Joint Venture Agreements. — The NEDA, in consultation with
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 the GPPB, shall issue guidelines regarding joint venture
agreements with private entities with the objective of promoting
transparency, competitiveness, and accountability in government
transactions, and, where applicable, complying with the requirements of
an open and competitive public bidding.

Pursuant to said repeated directives from no less than the Chief Executive, the
NEDA issued the JV Guidelines providing the procedures for the coagulation of
joint ventures between the government and a private entity. In this regard,
attention must be drawn to the well-established rule that administrative
issuances, such as the NEDA JV Guidelines, duly promulgated pursuant
to the rule-making power granted by statute, have the force and effect
of law. 25 As elucidated in the August 13, 2014 Decision:
. . . Being an issuance in compliance with an executive edict, the
NEDA JV Guidelines, therefore, has the same binding effect as if
it were issued by the President himself, who parenthetically is a
member of NEDA. As such, no agency or instrumentality covered by the
JV Guidelines can validly deviate from the mandatory procedures set
forth therein, even if the other party acquiesced therewith or not. 26

Articles III (4) and VIII (3) only refer to

Private Sector Entities (PSEs), effectively
excluding the Original Proponent
The dissent would next draw our attention to Article III (on General Information)
and VIII (on Qualifications and Waivers) of the TOR Volume 1, which read: DHIaTS

III. GENERAL INFORMATION

xxx xxx xxx

4. Amendment of these TOR. The information and/or procedures
contained in these TOR may be amended or replaced at any time, at the
discretion of the BCDA Board, without giving prior notice or providing for
any reason. Should any of the information and/or procedures contained
in these TOR be amended or replaced, the JV-SC shall inform and send
Supplemental Notices to all PSEs . . . . 27
xxx xxx xxx
VIII. QUALIFICATIONS AND WAIVERS

3. BCDA further reserves the right to call off this disposition prior to

acceptance of the proposal(s) and call for a new disposition process
under amended rules, and without any liability whatsoever to any or all of
t h e PSEs, except the obligation to return the Proposal Security. 28
(emphasis added)

On this point, it is well to emphasize that the TOR containing the said
provisions details the requirements for eligibility to qualify as a PSE that
may submit its technical and financial proposals for the JV, and does not
encompass the entire Swiss Challenge procedure. This is bolstered by the
provisions' perfect consonance with the procedure for Stage Three per Annex C of
the Guidelines, thus: SDHETI

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 3. The Private Sector Entity shall post the proposal security at the date of
the first day of the publication of the invitation for comparative proposals
in the amount and form stated in the tender documents.
4. The procedure for the determination of eligibility of comparative
proponents/private sector participants, issuance of supplemental
competitive selection bulletins and pre-selection conferences, submission
and receipt of proposals, opening and evaluation of proposals shall follow
the procedure stipulated under Annex A hereof. In the evaluation of
proposals, the best offer shall be determined to include the original
proposal of the Private Sector Entity. If the Government Entity determines
that an offer made by a comparative private sector participant other than
the Original Proponent is superior or more advantageous to the
government than the original proposal, the Private Sector Entity who
submitted the original proposal shall be given the right to match such
superior or more advantageous offer within thirty (30) calendar days
from receipt of notification from the Government Entity of the results of
the competitive selection. Should no matching offer be received within the
stated period, the JV activity shall be awarded to the comparative private
sector participant submitting the most advantageous proposal. If a
matching offer is received within the prescribed period, the JV activity
shall be awarded to the Original Proponent. If no comparative proposal is
received by the Government Entity, the JV activity shall be immediately
awarded to the original private sector proponent.

Pursuant to the above-quoted provisions from the NEDA JV Guidelines, the

interested PSEs, in order to be able to participate in the competitive challenge,
must first post their respective proposal securities before submitting their
comparative proposals for evaluation and consideration. Consequently, per the
reservation clause, should the government entity (GE) decide to make material
changes in the TORs issued, it must do so before it accepts the comparative
proposals from the interested PSEs. This deadline is intended to protect the
participating PSEs from alterations in the benchmarks set forth in the TOR after
their proposals have already been seen and reviewed by the GE. Furthermore,
should modifications be validly made, such may affect the computation for the
amount of the proposal security to be posted by the comparative proponents, 29
hence the need for the GE to return the PSEs' proposal securities should it decide
to pre-terminate the competitive challenge.
As to SMLI's proposal security, suffice it to state that it is not covered by the
clauses — hence will not be returned even if the competitive challenge is
terminated — because SMLI cannot be considered as a PSE within the
context of the TOR and the JV Guidelines. aEHTSc

It must be emphasized that while an Original Proponent necessarily comes from

the private sector, the term "Private Sector Entity" has a definite meaning in the
Swiss Challenge procedure. Under the TOR, a "Private Sector Entity"
means "the party/ies that shall have submitted proposals in compliance
with the requirements specified in Article V, Volume 1 of these TOR for
the privatization and development of the property." 30 On the other hand,
under the same document, an "Original Proponent" means "SMLI, whose
unsolicited proposal for the development and privatization of [the]
subject Property through JV with BCDA has been accepted by the latter,
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 subject to certain conditions, and is now being subjected to a
competitive challenge." 31
To be sure, the Original Proponent, as duly noted in the assailed Decision herein,
is bestowed several rights under the JV Guidelines, including the right to the
conduct and completion of a competitive challenge and the right to match a
superior or more advantageous offer, among others. As such, it is clear that SMLI,
being the Original Proponent, cannot be considered as a Private Sector Entity to
which the reservation clause applies. THEDcS

Moreover, pertinent to our reading of the above-cited provisions in the TOR is

Article 1373 of the Civil Code, which provides that "[i]f some stipulation of any
contract should admit of several meanings, it shall be understood as bearing that
import which is most adequate to render it effectual." For this purpose, an
interpretation which renders every word operative is preferred over that which
makes some words idle and nugatory.
Applying the doctrine in the case at bar, a contrary reading — that the adverted
provisions in the TOR entitle BCDA to cancel the entire Swiss Challenge — would
violate the NEDA JV Guidelines, which, as earlier explained, has the force and
effect of law. As elucidated in the main Decision:
A review of the outlined three-stage framework reveals that there are
only two occasions where pre-termination of the Swiss Challenge process
is allowed: at Stage One, prior to acceptance of the unsolicited proposal;
and at Stage Two, should the detailed negotiations prove unsuccessful.
In the Third Stage, the BCDA can no longer withdraw with impunity from
conducting the Competitive Challenge as it became ministerial for the
agency to commence and complete the same. Thus, acceding to the
interpretation of the TOR offered by BCDA will, in effect, result
not only in the alteration of the agreement between the parties
but also of the NEDA JV Guidelines itself, both of which has the
force and effect of law.
The interpretation offered by BCDA is, therefore, unacceptable. Between
procedural guidelines promulgated by an agency pursuant to its rule-
making power and a condition unilaterally designed and imposed for the
implementation of the same, the former must prevail. BCDA does not
wield any rule-making power such that it can validly alter or abandon a
clear and definite provision in the NEDA JV Guidelines under the guise of a
condition under the TOR. As We have time and again harped, the ones
duty-bound to ensure observance with laws and rules should not be the
ones to depart therefrom. A contrary rule would open the floodgates to
abuses and anomalies more detrimental to public interest. For how can
others be expected to respect the rule of law if the very persons or
entities tasked to administer laws and their implementing rules and
regulations are the first to violate them, blatantly or surreptitiously?

Estoppel can be invoked

against herein respondents
Respondents cannot plausibly shift the blame on what it perceived to be a bad
bargain on the previous administration by arguing that the latter was negligent
in its actions or that it entered into questionable transactions, for as can be
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 gleaned, the negotiations and agreement between BCDA and SMLI was
authorized by the BCDA's Board through Resolution No. 2010-05-100. Acting as a
collegial body, the BCDA's Board could still validly authorize its president to enter
into transactions over the protestation of some of its members through a
democratic vote. cCHETI

Respondents cannot also find solace in the general rule that the State is not
barred by estoppel by the mistakes or errors of its officials or agents. As
jurisprudence elucidates, the doctrine is subject to exceptions, viz.:
Estoppels against the public are little favored. They should not be invoked
except [in rare] and unusual circumstances, and may not be invoked
where they would operate to defeat the effective operation of a policy
adopted to protect the public. They must be applied with circumspection
and should be applied only in those special cases where the interests of
justice clearly require it. Nevertheless, the government must not
be allowed to deal dishonorably or capriciously with its citizens,
and must not play an ignoble part or do a shabby thing; and
subject to limitations . . ., the doctrine of equitable estoppel may be
invoked against public authorities as well as against private individuals. 32
(emphasis added)

Clearly, estoppel against the government can be invoked in this case. This is in
view of the fact that despite BCDA's repeated assurances that it would respect
SMLI's rights as an original proponent, and after putting the latter to
considerable trouble and expense, BCDA went back on its word to comply with
its obligations under their agreement and instead ultimately cancelled the same.
BCDA's capriciousness becomes all the more evident in its conflicting statements
as regards whether or not SMLI's proposal would be advantageous to the
government. As enunciated in the assailed Decision:
Noticeably, in its November 8, 2010 Memorandum, the BCDA posited that
competitive challenge is more advantageous to the government than
straight bidding, to wit:
The price of the Bonifacio South properties has already been set by
the winning price in the bidding for the joint venture development of
the JUSMAG property (P31,111/sq.m.). Thus, BCDA has established
the benchmark for the price of the remaining Bonifacio South
properties, of which the JUSMAG property is the most prime.
Logically the minimum bid price under straight bidding for the
BNS/PMC/ASCOM/SSU property, which is a far less inferior
property, would be P31,111/sq.m. However, with SM's submission
of a revised unsolicited proposal at P31,732/sq.m. and later further
revised to P32,500/sq.m., BCDA saw the opportunity to negotiate
for better terms and eventually arrived at a higher price of
P36,900/sq.m. In this case, BCDA deemed that going into
Competitive Challenge was more advantageous to the
government than Competitive Selection (straight bidding)
because of the opportunity to increase the price. HASDcC

Furthermore, subjecting the price to subsequent price challenge will

possibly drive up the price even higher than P38,900/sq.m. These
opportunities cannot be taken advantage of under a straight
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 bidding where failure of bidding would likely ensue if in case BCDA
immediately sets the price of the property too high. The
competition in the real estate industry and as experienced by BCDA
is such that the other developers will usually challenge the original
proposal to "up the ante" as they cannot allow the original
proponent to get the property easily.
Despite this testament, the BCDA, over a year later, made a complete
turnaround stating that straight bidding will be best for the Government.
As can be gleaned from the BCDA's Memorandum to the President dated
February 13, 2012, respondents themselves recommended to the
President that the selection proceedings be terminated. To reiterate: IcEACH

In view of the foregoing, may we respectfully recommend the

President's approval for BCDA to terminate the proceedings for the
privatization and development of the BNS/PMC/ASCOM/SSU
Properties in Bonifacio South through Competitive Challenge and
proceed with the bidding of the property.
The BCDA offered no explanation to reconcile its opposing positions. It
also neglected to inform SMLI of the provisions in its proposal that it
deemed disadvantageous to the government. . . .

Respondents harp on the alleged dubiousness of the proceeding that led to the
perfection of the agreement, but to rule now that irregularities marred the
actions of BCDA's board and officers, as respondents would have us believe,
would be tantamount to prematurely exposing its former officers to potential
administrative liability without due process of law. If respondent would insist on
such argument, it could have at least shown that the proper disciplinary cases
have been initiated as evidence that BCDA reasonably believed that its previous
officers indeed deviated from lawful procedure.
The perceived government
losses remain speculative
The alleged adverse economic impact on the government, in finding for SMLI,
does not constitute, under the premises, a valid cause for the reversal of the
assailed Decision. To clarify, Our ruling did not award the project in petitioner's
favor but merely ordered that SMLI's proposal be subjected to a competitive
challenge. Consequently, any alleged disadvantage the government would suffer
is speculative at most as there is no final award for the project as of yet.
Lest it be misunderstood, the perceived low floor price for the project,
based on SMLI's proposal, remains just that — a floor price. There is, thus,
an opportunity to increase the price, the government share as it were, through
competitive challenge, as respondents themselves previously observed. Such
offers can even surpass the property's current market value and, in which case,
constitute sufficient consideration for the project. Without first subjecting SMLI's
proposal to a competitive challenge, no bid can yet be obtained from PSEs and,
corollarily, no determination can be made at present as to whether or not the
final bid price for the project is, indeed, below the property's fair market value.
Public bidding may generally be more preferred than a competitive challenge for
reasons explained in the dissent. However, there must be a careful balance
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 between what is best for the government and what is fair to the persons it deals
with. Otherwise, any and all unsolicited proposal can be cancellable, despite its
acceptance, by the mere allegation that straight bidding is what public interest so
requires. Worse, the government can very well ignore, at will, its contractual
obligations by invoking that familiar mantra — public interest.
To be sure, the government has not strayed from accepting suo moto proposals
from private entities and subjecting said proposals to a Swiss Challenge. In fact,
the recent "Price Challenge" as regards Metro Pacific Investment Corporation's
(MPIC's) proposal for the expansion of the North Luzon Expressway as well as its
integration with the Subic-Clark-Tarlac Expressway was undertaken by none
other than BCDA itself. 33 Thereafter, the BCDA board, in its February 4, 2015
meeting, adopted the result of the concluded Price Challenge, wherein no firm
has tried to match MPIC's proposal, and, consequently, approved the notice of
award in the company's favor. 34 Curiously enough, if straight bidding is, indeed,
more beneficial, more transparent, and would yield a better offer for the
government, then there is no reason for respondents not to have cancelled the
process instead of awarding the project to MPIC. Otherwise stated, if public
interest requires the conduct of a straight bidding instead of a Swiss Challenge,
then MPIC can never rest easy, thinking the contract it entered into with the
government can be terminated at any time. DAETHc

It is, thus, recognized that there are instances wherein the agreement stemming
from faithful negotiations of the parties should be upheld, especially so when, as
in this case, the alleged adverse effects on the government remain speculative at
best. Respondents should, therefore, honor its commitment with petitioner, not
as a message conveying the coddling of PSEs, and not only pursuant to its
contractual and legal obligations under the TOR and the NEDA JV Guidelines, but
also as a balancing mechanism between the tangible benefits the government
stands to reap in terms of contract consideration, and its intangible benefits
including improved public confidence in the government in terms of ease of doing
business with. Moreover, and guilty of reiteration, it is worth emphasizing that
SMLI's offer, which was duly accepted by the BCDA, only serves as the
floor price and does not foreclose better offers that can even surpass
the property's current market value. This being said, the government is not
without protection for it is not precluded from availing of safeguards and
remedies it is entitled to after soliciting comparative proposals, as provided under
the TOR and the NEDA JV Guidelines.
WHEREFORE, in view of the foregoing, the Court's August 13, 2014 Decision is
hereby AFFIRMED. Respondents' Motion for Reconsideration is accordingly
DENIED with FINALITY.
No further pleadings, motions, letters or other communications shall be
entertained in this case. Let entry of judgment be issued.
SO ORDERED.
Peralta and Mendoza, JJ., concur.
Villarama, Jr., J., I join J. Leonen in his dissent.
Leonen, J., I dissent. See separate opinion.
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 Separate Opinions
LEONEN, J., dissenting:

I dissent.
There was no valid agreement that gave petitioner SM Land, Inc. (petitioner
SMLI) a right to a completed competitive challenge. Respondent Bases
Conversion and Development Authority (respondent BCDA) did not and may not
give consent to any provision that limits the process for selecting respondent
BCDA's joint venture partner to competitive challenge especially when it was
shown that such process would be against public interest. DEAaIS

The Certificate of Successful Negotiation 1 and the Terms of Reference 2 do not

show a clear meeting of the minds to limit the whole selection process to a
completed competitive challenge. While these documents state that petitioner
SMLI and respondent BCDA had "reached an agreement on the purpose, terms
and conditions on the [joint venture] development . . . which shall become the
terms for the Competitive Challenge[,]" 3 respondent BCDA did not make a
binding commitment to enter into a joint venture agreement with petitioner
SMLI or to limit the selection process to a completed competitive challenge. The
Certificate of Successful Negotiation was worded in a manner that implied that
the terms agreed upon by petitioner SMLI and respondent BCDA shall apply only
if they decided to proceed with the joint venture development and the
competitive challenge. 4
Similarly, the Terms of Reference contained no such commitment. It only
described the competitive challenge procedure should both parties decide to
proceed with it. It even contained provisions that confirmed respondent BCDA's
authority to reconsider and terminate the selection process and later adopt other
selection processes.
III. GENERAL INFORMATION

xxx xxx xxx

4. Amendment of these TOR. The information and/or procedures
contained in these TOR may be amended or replaced at
any time, at the discretion of the JV-SC, subject to the
approval/confirmation of the BCDA Board, without giving
prior notice or providing any reason. Should any of the
information and/or procedures contained in these TOR be amended
or replaced, the JV-SC shall inform and send Supplemental Notices
to all PSEs. . . .
xxx xxx xxx
VIII. QUALIFICATIONS AND WAIVERS
xxx xxx xxx

3. BCDA further reserves the right to call off this disposition

prior to acceptance of the proposal(s) and call for a new
disposition process under amended rules, and without any
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 liability whatsoever to any or all the PSEs, except the
obligation to return the Proposal Security. 5 (Emphasis
supplied)

Petitioner SMLI cannot invoke the principle of estoppel against respondent BCDA.
This is not just because of the principle that the government is not bound by its
agents' mistakes. This is because the principle of estoppel presupposes that false
representations were made — which is not the case. The Certificate of Successful
Negotiation and the Terms of Reference do not state that respondent BCDA shall
limit the process of selecting the joint venture partner to a completed
competitive challenge. The existence of qualifications and waivers in the Terms
of Reference further negates allegations that there was such a representation.
However, even granting that there was such representation, respondent BCDA
was not acting out of capriciousness when it decided to terminate the
competitive challenge. It terminated the competitive challenge because
petitioner SMLI's offer was incompatible with public interest and, therefore, void.
Moreover, the whole process that led to the issuance of a Certificate of Successful
Negotiation was highly irregular.
Respondents BCDA and its President, Arnel Paciano D. Casanova (Casanova),
point to the alleged dubious process that led to the naming of petitioner SMLI as
the original proponent. They formally submit that as much as P13 billion pesos
may be lost to the government. 6
According to respondents BCDA and Casanova, the Joint Venture Selection
Committee's recommendation and BCDA Board's approval of using competitive
challenge, instead of the usual public bidding process, 7 are themselves
questionable. Respondents BCDA and Casanova cited the April 28, 2010 minutes
of respondent BCDA's special Board meeting to show that the choice of
disposition process had already been a concern within respondent BCDA even
before petitioner SMLI was declared the original proponent:
5.1.3. Vice Chairman Abaya expressed concern that BCDA might be
questioned later on why it opted to go via Annex 'C' and not the Annex 'A'
mode of disposition. In order to justify BCDA going via Annex 'C' mode, it
should be made clear to the interested proponents that there are already
offers higher than the JUSMAG property. . . . 8

Petitioner SMLI was not the first developer that submitted a proposal
to respondent BCDA. Robinsons Land Corporation had submitted its
proposal as early as October 8, 2009 or more than two (2) months
before petitioner SMLI submitted its initial proposal of
P16,350.00/square meter on December 14, 2009. 9 Both proposals
were already rejected by respondent BCDA for non-compliance with
the set parameters for disposition. 10 Instead of terminating the
disposition through competitive challenge, however, the Joint Venture
Selection Committee "remained in contact with the proponents and
even actively solicited their submission of 'Unsolicited Proposals.'" 11
This, respondents BCDA and Casanova argue, gave Robinsons Land
Corporation and petitioner SMLI ". . . an unfair advantage over all
other developers as it effectively limited the selection process to the
two invitees." 12 ACaEcH

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 Respondents BCDA and Casanova also implied that there was an irregularity
when the Joint Venture Selection Committee was able to make an evaluation
and come up with a recommendation only within three hours from petitioner
SMLI's submission of its unsolicited proposal:
DEAL RUSHED DURING THE ELECTION PERIOD
On 4 May 2010, merely six days before the Presidential Elections , SMLI
submitted its 3 May 2010 Unsolicited Proposal to BCDA. This Unsolicited
Proposal was opened at 9:00 a.m. during the BCDA Business
Development Board Committee Meeting in the presence of SMLI
representatives. The 3 May 2010 Unsolicited Proposal was thereafter
forwarded to BCDA's Reception Desk where it was stamped as having
been received at 9:25 a.m. and then endorsed for inclusion in the Agenda
of the BCDA Board Meeting set at 12:00 noon of the same day.

In a span of about three hours, the JV-SC received, opened,

evaluated and recommended the acceptance of SMLI's
Unsolicited Proposal for the privatization and development of
the 33.1 hectare subject Property for Php32,501/sq.m. in Net
Present Value (NPV) using a 10% discount rate; and the pursuit
of detailed negotiations on the terms and conditions of the Joint
Venture under Annex "C" of the NEDA JV Guidelines. This
circumstance was not lost to some BCDA Directors. As reflected in the
Minutes of the Board Meeting:
5.2.23. Director Sangil said that the Board was only given a few
hours to evaluate the revised proposal by SLI, considering
that copies of the same were given only shortly before the
Board Meeting started. As such, the Board may not be able
to come up with a wise decision on the matter. 13 (Emphasis
and underscoring in the original, citations omitted)

Respondents BCDA and Casanova also mentioned that before the issuance of a
Certificate of Successful Negotiation, there had been concerns about the
disregard of other more favorable offers to the government for the property.
Respondent BCDA quoted a letter from Ayala Land, Inc.:
We now formally request that you reconsider your decision and conduct
a bidding for the property consistent with the precedent set by BCDA for
the Bonifacio South lots with its disposition of the JUSMAG site in
February on account of its receipt of a number of offers from various
proponents including ours. We believe that BCDA should pursue the best
price for the property to uphold public interest and avoid the loss of
public funds and revenues. The sudden change in BCDA's disposition
mode as our government transcends to a new administration might also
be questionable. 14 SCEDAI

Respondents BCDA and Casanova also quoted the July 20, 2010 minutes of the
regular BCDA Board meeting, showing the same concerns from some BCDA
directors over the disposition of the property:
4.4.31. Director Valencia recalled that in the disposition of the JUSMAG
property, the Board could not decide on whether or not to declare
ALI as the original proponent. However, subsequent proposals
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 came along which compelled BCDA to dispose of the property
through public bidding over a period of two years. Given this
example, he suggested that the Board could perhaps defer its
decision on the matter until such time that the new administration
appoints new BCDA Board Members. He also expressed his
concern about the ALI letter which alleges that the BCDA's mode of
disposition might be questionable.
xxx xxx xxx

4.4.40 Director Valencia said that the ALI offer for the subject property
was reduced to its present value, same with the SMLI offer.
Regardless of the underlying assumptions for the offers, the value
of the property is the same and the peso represented today is the
same as that being represented by other proponents. Given this
fact, it is prudent for BCDA to wait until new BCDA Directors are
appointed by the new administration to avoid the suspicion that
BCDA is rushing the disposition of the subject property.
xxx xxx xxx

4.4.52 Director Seno suggested the possibility of elevating the matter to

the Office of the President (OP) as far as the Board's decision is
concerned, explaining the process involved and the actions of the
Board every step of the way. The professionalism of the BCDA
Board will be questioned if it does not exercise prudence on the
matter. 15 (Underscoring in the original)

Instead of deciding whether to declare Ayala Land, Inc. as the original proponent,
the Joint Venture Selection Committee asked petitioner SMLI to give an offer that
was better than Ayala Land, Inc.'s. Petitioner SMLI submitted its improved offer.
The BCDA Board of Directors, upon recommendation of the Joint Venture
Selection Committee, declared petitioner SMLI as the original proponent. 16
These are allegations of possible irregularities that should not be dismissed so
easily. They involve the conduct of persons entrusted to operate respondent
BCDA. They also involve the government's and our taxpayers' money.
The President, who exercises control and supervision over respondent BCDA,
should be able to correct errors and address irregularities whenever they come to
his attention. He took an oath to faithfully execute our laws and to "consecrate
[himself] to the service of the Nation." 17 Republic Act No. 7227 provides for our
policy to enhance the benefits derived from respondent BCDA-administered
properties. 18 Respondent BCDA's projects should be implemented in a manner
that would "maximize the use of military camps[.]" 19 It would be a violation of
the President's oath and a grave abuse of discretion on his part if, despite his
knowledge, he disregards the irregularities, causing losses to the government.
Inaction on his part is, in effect, allowing the government and the taxpayers to
suffer the losses.
Thus, the President decided to refer the disposition of BCDA-administered
property to the Office of the Chief Presidential Legal Counsel for study. 20
Respondent BCDA also conducted a new evaluation of petitioner SMLI's proposal.
21 This resulted in a finding that petitioner SMLI's proposal would not yield the
best value for the government and a recommendation to terminate the
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 competitive challenge and proceed with the usual bidding process. 22 Eventually,
the President decided to subject the BCDA-administered property to public
bidding instead. 23 This decision is consistent with our policy to maximize the
benefits that can be derived from BCDA-administered properties 24 and our policy
in favor of public bidding. 25 I reiterate:
BCDA's acceptance of SMLI's unsolicited proposal, the issuance of the
certificate of successful negotiations, and terms of reference, should be
read in light of the preference given to public bidding, the policy in favor
of maximized use of properties, and national interest. Any person who
deals with the government also accepts the condition that the
government is not bound by any provision or interpretation that is
against the law, government policies, and national interest. The
government may not agree to contract stipulations that are
disadvantageous to it. These are conditions that are deemed incorporated
in dealings with BCDA. 26

Even the government may not renege on its contractual obligations. However,
there was no clear contractual provision in this case that could limit the
President's power to terminate the competitive challenge procedure. Respondent
BCDA's acceptance letter of petitioner SMLI's proposal, 27 the Certificate of
Successful Negotiation, 28 and the Terms of Reference 29 contained no provision to
that effect. 30 Meanwhile, the procedure for competitive challenge under Annex C
of the Joint Venture Guidelines is a mere guideline. It is not law. It is subject to
modifications that should be consistent with law and public policy. It applies only
if the parties clearly and validly agreed to adopt competitive challenge as a
procedure. Any modification or contractual provision that is marred by any form
of illegality will not vest any right. Respondent BCDA has no authority to agree
to a provision that is inconsistent with law or public policy. TAIDHa

A decision to accommodate petitioner SMLI's interest at the expense of the

government might give the wrong message that we advocate coddling of private
interest. It also gives a wrong message that the President may turn a blind eye
on irregularities in actions of government representatives to the detriment of
public interest. This is especially true since there is even no clear agreement that
the disposition process is limited to a specific procedure or that petitioner SMLI is
entitled to the completion of that procedure. 31 "Public office is a public trust." 32
We expect the President and all persons in public service to uphold the public
interest. We, therefore, expect the President to act whenever irregularities and
actions that are detrimental to the public interest come to his attention.
The public interest involved in this case is the P13 billion (approximation) that
the government stands to lose if it is forced to dispose respondent BCDA-
administered property at the price proposed by petitioner SMLI. 33 This value is
not speculative. According to respondents BCDA and Casanova, the property's
value is already pegged at P100,000.00/square meter, P78,000.00/square meter,
and P500,000.00/square meter by the Bureau of Internal Revenue, Cuervo
Appraisers, and the Government Service Insurance System, respectively. 34
Petitioner SMLI's offer of P38,500.00/square meter is way below the property's
market value. It is true that through competitive challenge, this price can be
increased. However, proceeding with the competitive challenge at this floor price
means that the government will be bound by a winning offer that, though higher
than P38,500.00/square meter, is below the property's market value. Unlike
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 competitive challenge, "public bidding allows the government to set the
minimum contract price[,]" 35 which could more or less ensure that the
government will get the maximum benefits from the disposition of its properties.
We are not saying that government properties can be disposed exclusively
through public bidding. We are saying that this is the general rule, and other
processes are exceptions. Competitive challenge may apply if there are no other
parties interested in the government property or if there is a great need to
attract the interest of private sector entities. 36 It may also apply if there is a
clear showing that it would be the process that would provide more benefits to
the government. The figures above show that competitive challenge would not
be the most beneficial in this case. Proceeding with the less advantageous
procedure would diminish the benefits that may be obtained for legitimate
government purposes.
Since Section 8 of Republic Act No. 7227 provides that portions of revenues
obtained from the privatization of Metro Manila military camps shall go to the
Armed Forces of the Philippines' modernization program, the housing loan
program for the homeless, and other projects, this case will have an impact on
community welfare including public security. Respondents BCDA and Casanova
also raised a possible business implication of this case:
The Honorable Court's Decision will likewise affect the manner and way by
which the government and the private sector conduct joint ventures. The
current administration advocates Public-Private Partnership, one of the
models of which is a joint venture, and it is to the people's best interest
that the Court determines pressing issues on the construction of NEDA
JV Guidelines such as this one that BCDA presents.

In its 13 August 2014 Decision, the Court stated that "the issue in this
case boils down to whether or not the BCDA gravely abused its discretion
in issuing Supplemental Notice 5, in unilaterally aborting the Competitive
Challenge, and in subjecting the development of the project to public
bidding."
A definitive ruling as to the extent of applicability of the NEDA JV
Guidelines, which is the governing law for joint ventures with the
government, will affect not only the Bonifacio South Property subject of
this Petition but also the conduct of on-going and future joint ventures
with the government. 37 (Citation omitted)

These are matters and concerns that could have been acted upon by this court En
Banc. Rule 2, Section 3 of the Internal Rules of the Supreme Court 38 provides
that this court En Banc shall act on matters involving "huge financial impact on
businesses or [affecting] the welfare of a community[.]" Thus:
SEC. 3. Court en banc matters and cases. — The Court en banc shall act
on the following matters and cases:

xxx xxx xxx

(1) Division cases where the subject matter has a huge financial
impact on businesses or affects the welfare of a
community[.]

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 Respondents BCDA and Casanova, therefore, properly filed a Motion 39 dated May
14, 2013, asking for leave of court to refer the case to this court En Banc.
However, on June 3, 2013, the Third Division denied respondents BCDA and
Casanova's Motion on the ground that "the Court en banc is not an appellate
court to which decisions or resolutions of a Division may be appealed pursuant to
SC Circular No. 2-89 dated February 7, 1989, as amended by Resolution dated
November 18, 1993." 40 HATEDC

The issues raised in this case should have been properly addressed and could
have been sufficiently deliberated by this court had the case been elevated to
this court En Banc.
ACCORDINGLY, I vote to GRANT the Motion for Reconsideration.
Footnotes
1. 14 Sanchez Roman 148-149, cited in Pineda, Obligations and Contracts (2000).

2. Article 1319, New Civil Code.

3. See Certification of Successful Negotiations, rollo, p. 64. [WHEREAS, after
evaluation of the unsolicited proposal submitted by SMLI in accordance with the
provisions of Annex "C" of the Guidelines, the [JV-SC] created by BCDA for the
selection of a private partner for the [project] recommended to the BCDA
Board, and the BCDA Board approved, per Board Resolution No. 2010-05-100,
the acceptance of the unsolicited proposal, subject to the condition that such
acceptance shall not bind BCDA to enter into a JV activity, but shall mean that
authorization is given to proceed with detailed negotiations on the terms and
conditions of the JV activity;

WHEREAS, pursuant to the authorization granted by the Board and issued pursuant
to Annex "C", Part III, Stage One of the JV Guidelines, BCDA went into
detailed negotiations with SMLI. The JV-SC simultaneously ascertained the
eligibility of SMLI in accordance with Annex "C", Part III, Stage 2 (2) of the JV
Guidelines . . . .] (emphasis ours)

4. Id. at 65. Certification of Successful Negotiations, p. 2.

5. Basic Books [Phils.], Inc. v. Lopez, et al., No. L-20753, February 28, 1966.

6. Pineda, Obligations and Contracts (2000), p. 372.

7. Rollo, p. 64.
8. Id. at 71.

9. Id.

10. Id.
11. See Article 1159. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith. (New Civil
Code)
12. Rollo, p. 109.

13. Id. at 374-375.

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 14. Dissenting Opinion, p. 5, per J. Leonen.
15. Executive Order No. 292.

16. Administrative Code of 1987 (EO 292), Book III (Office of the President), Title I
(Powers of the President), Chapter 2 (Ordinance Power), Section 2 (Executive
Orders).
17. See Associate Justice Antonio T. Carpio's Separate Concurring Opinion in Abakada
Guro Partylist v. Purisima, G.R. No. 166715, August 14, 2008, citing Section 17,
Article VII, Constitution; See also Biraogo v. Philippine Truth Commission of
2010, G.R. Nos. 192935 and 193036, December 7, 2010 where the Court
upheld the creation by the President of the Philippine Truth Commission by way
of an Executive Order, ruling that such creation is an exercise by the President
of his duty to ensure that laws are faithfully executed (Sec. 17, Article VII, 1987
Constitution), thus, the issuance of the EO does not have to be backed by a
statute.

18. Streamlining the Rules and Procedures on the Review and Approval of all
Contracts of Departments, Bureaus, Offices and Agencies of the Government,
including Government-Owned and Controlled Corporations and their
Subsidiaries. Published in the Philippine Star on June 7, 2002.

19. Amending Executive Order No. 109 Dated May 27, 2002 Prescribing the Rules and
Procedures on the Review and Approval of all Government contracts to
Conform with Republic Act No. 9184, otherwise known as the Government
Procurement Reform Act EO 109-A was issued on September 18, 2003.

20. RA 9184 was enacted on July 22, 2002 and signed into law by then President
Arroyo on January 10, 2003. It was then published on January 11, 2003 in two
(2) newspapers of general nationwide circulation and took effect fifteen (15)
days thereafter, or on January 26, 2003.
21. Repealing Executive Order No. 109-A dated September 18, 2003 Prescribing the
Rules and Procedures on the Review and Approval of All Government Contracts
to conform with Republic Act No. 9184, otherwise known as the "Government
Procurement Reform Act."
22. Amending Section 4 of Executive Order No. 423 dated 18 September 2003 which
prescribes the rules and procedures on the review and approval of all
government contracts to conform with Republic Act No. 9184 otherwise known
as the "Government Procurement Reform Act."

23. See: EO 109, Section 5 [SECTION 5. Joint Venture Agreements. — NEDA shall, in
consultation with the Department of Justice issue guidelines regarding joint
venture agreements with private entities with the objective of promoting
transparency, impartiality, and accountability in government transactions and,
where applicable complying with the requirement of an open and competitive
public bidding.];

EO 109-A, Section 8 [SECTION 8. Joint Venture Agreements. — The NEDA, in

consultation with the GPPB, shall issue guidelines regarding joint venture
agreements with private entities with the objective of promoting transparency,
competitiveness, and accountability in government transactions and, where
applicable, complying with the requirements of an open and competitive public
bidding.];
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 EO 423, Section 8 [Section 8. Joint Venture Agreements. — The NEDA, in consultation
with the GPPB, shall issue guidelines regarding joint venture agreements with
private entities with the objective of promoting transparency, competitiveness,
and accountability in government transactions, and, where applicable,
complying with the requirements of an open and competitive public bidding.]

24. See Associate Justice Antonio T. Carpio's Separate Concurring Opinion in Abakada
Guro Partylist v. Purisima, G.R. No. 166715, August 14, 2008, citing Section 17,
Article VII, Constitution.

25. Eslao v. COA, G.R. No. 108310, September 1, 1994, cited in Atlas Consolidated
Mining and Development v. Commissioner of Internal Revenue, G.R. No.
159490, February 18, 2008.
26. Rollo, p. 988.

27. Id. at 78.

28. Id. at 87 [Article VIII (Qualifications and Waivers), Terms of Reference Volume 1].

29. See schedule for determination of the amount of the proposal security, Section VI,
Item 1.a.6., Annex A, NEDA JV Guidelines.
30. Rollo, p. 77.

31. Id. at 76.

32. Republic v. Court of Appeals , G.R. No. 116111, January 21, 1999.
33. The Philippine Star, February 2, 2015, B-9.

34. The Manila Bulletin, February 7, 2015, B-3.

LEONEN, J., dissenting:

1. Rollo, pp. 64-72.

2. Id. at 74-88.
3. Id. at 65.

4. Id. at 64-65.

CERTIFICATION OF SUCCESSFUL NEGOTIATION

xxx xxx xxx

NOW THEREFORE, for and in consideration of the foregoing, BCDA and SMLI have,
after successful negotiations pursuant to Stage II of Annex C — Detailed
Guidelines for Competitive Challenge Procedure for Public-Private Joint Ventures
of the NEDA JV Guidelines, reached an agreement on the purpose, terms and
conditions on the JV development of the subject property, which shall
become the terms for the Competitive Challenge pursuant to Annex C of the JV
Guidelines, as follows: . . . . (Emphasis supplied)

5. Id. at 77-87.
6. Id. at 1049. Respondents BCDA and Casanova stated in their Motion to Resolve
with Motion for Reconsideration that:

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 The proposal of SMLI juxtaposed with the Cuervo appraisal shows the
relative value of the offer vis-à-vis market prices to be as follows:

Per Square Meter Value for the Entire Property

SMLI Tender Php38,500 Php12,743,500,000

Cuervo Appraisal Php78,000 Php25,843,537,000

7. Exec. Order No. 62 (1993) provides that "[a]s a general rule, the privatization
process should be conducted through public bidding."
8. Rollo, p. 1040.

9. Id. at 1039 and 1048.

10. Id. at 1040.

11. Id. at 1041.

12. Id.

13. Id. at 1042.

14. Id. at 1043.

15. Id. at 1043-1045.

16. Id. at 1046.

17. CONST., art. VII, sec. 5.

18. Rep. Act No. 7227 (1992), sec. 2.

19. Exec. Order No. 62 (1993), sec. 1.4.

20. Rollo, p. 574.

21. Id. at 633-635.

22. Id. at 635.

23. Id. at 637.

24. Rep. Act No. 7227 (1992), sec. 2; Exec. Order No. 62 (1993), secs. 1.4 and 1.5.

25. Exec. Order No. 62 (1993), sec. 4.3; Rep. Act No. 9184 (2002), secs. 3 (a), 3 (b),
and 10; Exec. Order No. 423 (2005), secs. 1 and 8; Exec. Order No. 40 (2001),
sec. 2.
26. J. Leonen, Dissenting Opinion in SM Land, Inc. v. Bases Conversion and
Development Authority, G.R. No. 203655, August 13, 2014
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/august2014/203655_leonen.pdf> 12 [Per J. Velasco,
Jr., Third Division].
27. Rollo, p. 351. The letter was dated May 12, 2010.
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 27. Rollo, p. 351. The letter was dated May 12, 2010.

28. Id. at 65 and 70.

29. Id. at 74-87.

30. J. Leonen, Dissenting Opinion in SM Land, Inc. v. Bases Conversion and

Development Authority, G.R. No. 203655, August 13, 2014
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/august2014/203655_leonen.pdf> 3-8 [Per J. Velasco,
Jr., Third Division].

31. See J. Leonen, Dissenting Opinion in SM Land, Inc. v. Bases Conversion and
Development Authority, G.R. No. 203655, August 13, 2014
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/august2014/203655_leonen.pdf> 3-8 [Per J. Velasco,
Jr., Third Division].
32. CONST., art. XI, sec. 1.

33. Rollo, p. 1049.

34. Id.

35. J. Leonen, Dissenting Opinion in SM Land, Inc. v. Bases Conversion and

Development Authority, G.R. No. 203655, August 13, 2014
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/august2014/203655_leonen.pdf> 10 [Per J. Velasco,
Jr., Third Division].

36. Id. at 10-11.

37. Rollo, pp. 1031-1032.

38. As amended in the Resolutions dated July 6, 2010, August 3, 2010, and
September 18, 2012.

39. Rollo, pp. 854-859.

40. Id. at 860-B.

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