Agan vs lA1CC

lssue WCn lA1CC ls a quallfled bldder

Peld no

8aLlo ubllc respondenLs argue LhaL Lhe alrcargo ConsorLlum lA1CC's predecessor was noL a duly pre
quallfled bldder on Lhe unsollclLed proposal submlLLed by ALuC as Lhe alrcargo ConsorLlum falled Lo meeL Lhe
flnanclal capablllLy requlred under Lhe 8C1 Law and Lhe 8ld uocumenLs 1hey allege LhaL ln compuLlng Lhe ablllLy
of Lhe alrcargo ConsorLlum Lo meeL Lhe mlnlmum equlLy requlremenLs for Lhe pro[ecL Lhe enLlre neL worLh of
SecurlLy 8ank a member of Lhe consorLlum should noL be consldered
lA1CC relles on Lhe oLher hand on Lhe sLrengLh of Lhe Memorandum daLed CcLober 14 1996 lssued by
Lhe uC1C undersecreLary rlmlLlvo C Cal sLaLlng LhaL Lhe alrcargo ConsorLlum ls found Lo have a comblned neL
worLh of 390000000000 sufflclenL Lo meeL Lhe equlLy requlremenLs of Lhe pro[ecL 1he sald Memorandum was
ln response Lo a leLLer from Mr AnLonlo Penson of ALuC Lo resldenL lldel v 8amos quesLlonlng Lhe flnanclal
capablllLy of Lhe alrcargo ConsorLlum on Lhe ground LhaL lL does noL have Lhe flnanclal resources Lo puL up Lhe
requlred mlnlmum equlLy of 270000000000 1hls conLenLlon ls based on Lhe resLrlcLlon under 8A no 337 as
amended or Lhe Ceneral 8anklng AcL LhaL a commerclal bank cannoL lnvesL ln any slngle enLerprlse ln an amounL
more Lhan 13 of lLs neL worLh
1he mlnlmum amounL of equlLy Lo whlch Lhe proponenL's flnanclal capablllLy wlll be based shall be LhlrLy
percenL (30) of Lhe pro[ecL cosL lnsLead of Lhe LwenLy percenL (20) speclfled ln SecLlon 364 of Lhe 8ld
uocumenLs 1hls ls Lo correlaLe wlLh Lhe requlred debLLoequlLy raLlo of 7030 ln SecLlon 201a of Lhe drafL
concesslon agreemenL 1he debL porLlon of Lhe pro[ecL flnanclng should noL exceed 70 of Lhe acLual pro[ecL cosL
Accordlngly based on Lhe above provlslons of law Lhe alrcargo ConsorLlum or any challenger Lo Lhe
unsollclLed proposal of ALuC has Lo show LhaL lL possesses Lhe requlslLe flnanclal capablllLy Lo underLake Lhe
pro[ecL ln Lhe mlnlmum amounL of 30 of Lhe pro[ecL cosL Lhrough (l) proof of Lhe ablllLy Lo provlde a mlnlmum
amounL of equlLy Lo Lhe pro[ecL and (ll) a leLLer LesLlmonlal from repuLable banks aLLesLlng LhaL Lhe pro[ecL
proponenL or members of Lhe consorLlum are banklng wlLh Lhem LhaL Lhey are ln good flnanclal sLandlng and LhaL
Lhey have adequaLe resources
As Lhe mlnlmum pro[ecL cosL was esLlmaLed Lo be uS$33000000000 or roughly 9183630000 Lhe
alrcargo ConsorLlum had Lo show Lo Lhe saLlsfacLlon of Lhe 8AC LhaL lL had Lhe ablllLy Lo provlde Lhe mlnlmum
equlLy for Lhe pro[ecL ln Lhe amounL of aL leasL 273309300000
alrcargo's AudlLed llnanclal SLaLemenLs as of 1993 and 1994 lndlcaLed LhaL lL had a neL worLh of
278339200 and 312331300 respecLlvely ACS' AudlLed llnanclal SLaLemenLs as of 1993 lndlcaLe LhaL lL has
approxlmaLely 26733700 Lo lnvesL as lLs equlLy for Lhe pro[ecL SecurlLy 8ank's AudlLed llnanclal SLaLemenLs as
of 1993 show LhaL lL has a neL worLh equlvalenL Lo lLs caplLal funds ln Lhe amounL of 3323304377
We agree wlLh publlc respondenLs LhaL wlLh respecL Lo SecurlLy 8ank Lhe enLlre amounL of lLs neL worLh
could noL be lnvesLed ln a slngle underLaklng or enLerprlse wheLher allled or nonallled ln accordance wlLh Lhe
provlslons of 8A no 337 as amended or Lhe Ceneral 8anklng AcL
Sec 218 1he provlslons ln Lhls or ln any oLher AcL Lo Lhe conLrary noLwlLhsLandlng Lhe MoneLary 8oard whenever lL shall deem
approprlaLe and necessary Lo furLher naLlonal developmenL ob[ecLlves or supporL naLlonal prlorlLy pro[ecLs may auLhorlze a commerclal bank a
bank auLhorlzed Lo provlde commerclal banklng servlces as well as a governmenLowned and conLrolled bank Lo operaLe under an expanded
commerclal banklng auLhorlLy and by vlrLue Lhereof exerclse ln addlLlon Lo powers auLhorlzed for commerclal banks Lhe powers of an
lnvesLmenL Pouse as provlded ln resldenLlal uecree no 129 lnvesL ln Lhe equlLy of a nonallled underLaklng or own a ma[orlLy or all of Lhe
equlLy ln a flnanclal lnLermedlary oLher Lhan a commerclal bank or a bank auLhorlzed Lo provlde commerclal banklng servlces rovlded 1haL
(a) Lhe LoLal lnvesLmenL ln equlLles shall noL exceed flfLy percenL (30) of Lhe neL worLh of Lhe bank (b) Lhe equlLy lnvesLmenL ln any one
enLerprlse wheLher allled or nonallled shall noL exceed flfLeen percenL (13) of Lhe neL worLh of Lhe bank (c) Lhe equlLy lnvesLmenL of Lhe
bank or of lLs wholly or ma[orlLyowned subsldlary ln a slngle nonallled underLaklng shall noL exceed LhlrLyflve percenL (33) of Lhe LoLal
equlLy ln Lhe enLerprlse nor shall lL exceed LhlrLyflve percenL (33) of Lhe voLlng sLock ln LhaL enLerprlse and (d) Lhe equlLy lnvesLmenL ln
oLher banks shall be deducLed from Lhe lnvesLlng banks neL worLh for purposes of compuLlng Lhe prescrlbed raLlo of neL worLh Lo rlsk asseLs
lurLher Lhe 1993 Manual of 8egulaLlons for 8anks provldes
SLC1lCn x383 CLher LlmlLaLlons and 8esLrlcLlons 1he followlng llmlLaLlons and resLrlcLlons shall also apply
regardlng equlLy lnvesLmenLs of banks
a ln any slngle enLerprlse 1he equlLy lnvesLmenLs of banks ln any slngle enLerprlse shall noL exceed aL any Llme flfLeen percenL (13) of Lhe
neL worLh of Lhe lnvesLlng bank as deflned ln Sec x106 and Subsec x1213
1hus Lhe maxlmum amounL LhaL SecurlLy 8ank could valldly lnvesL ln Lhe alrcargo ConsorLlum ls only
32832363633 represenLlng 13 of lLs enLlre neL worLh 1he LoLal neL worLh Lherefore of Lhe alrcargo
ConsorLlum afLer conslderlng Lhe maxlmum amounLs LhaL may be valldly lnvesLed by each of lLs members ls
33838487133 or only 608 of Lhe pro[ecL cosL an amounL subsLanLlally less Lhan Lhe prescrlbed mlnlmum
equlLy lnvesLmenL requlred for Lhe pro[ecL ln Lhe amounL of 273309300000 or 30 of Lhe pro[ecL cosL
1he purpose of prequallflcaLlon ln any publlc blddlng ls Lo deLermlne aL Lhe earllesL opporLunlLy Lhe
ablllLy of Lhe bldder Lo underLake Lhe pro[ecL 1hus wlLh respecL Lo Lhe bldder's flnanclal capaclLy aL Lhe pre
quallflcaLlon sLage Lhe law requlres Lhe governmenL agency Lo examlne and deLermlne Lhe ablllLy of Lhe bldder Lo
fund Lhe enLlre cosL of Lhe pro[ecL by conslderlng Lhe maxlmum amounLs LhaL each bldder may lnvesL ln Lhe
pro[ecL aL Lhe Llme of prequallflcaLlon
1he 8AC has deLermlned LhaL any prospecLlve bldder for Lhe consLrucLlon operaLlon and malnLenance of
Lhe nAlA l1 lll pro[ecL should prove LhaL lL has Lhe ablllLy Lo provlde equlLy ln Lhe mlnlmum amounL of 30 of Lhe
pro[ecL cosL ln accordance wlLh Lhe 7030 debLLoequlLy raLlo prescrlbed ln Lhe 8ld uocumenLs 1hus ln Lhe case
of alrcargo ConsorLlum Lhe 8AC should deLermlne Lhe maxlmum amounLs LhaL each member of Lhe consorLlum
may commlL for Lhe consLrucLlon operaLlon and malnLenance of Lhe nAlA l1 lll pro[ecL aL Lhe Llme of pre
quallflcaLlon WlLh respecL Lo SecurlLy 8ank Lhe maxlmum amounL whlch may be lnvesLed by lL would only be 13
of lLs neL worLh ln vlew of Lhe resLrlcLlons lmposed by Lhe Ceneral 8anklng AcL ulsregardlng Lhe lnvesLmenL
celllngs provlded by appllcable law would noL resulL ln a proper evaluaLlon of wheLher or noL a bldder ls pre
quallfled Lo underLake Lhe pro[ecL as for all lnLenLs and purposes such celllng or legal resLrlcLlon deLermlnes Lhe
Lrue maxlmum amounL whlch a bldder may lnvesL ln Lhe pro[ecL
lurLher Lhe deLermlnaLlon of wheLher or noL a bldder ls prequallfled Lo underLake Lhe pro[ecL requlres
an evaluaLlon of Lhe flnanclal capaclLy of Lhe sald bldder aL Lhe Llme Lhe bld ls submlLLed based on Lhe requlred
documenLs presenLed by Lhe bldder 1he 8AC should noL be allowed Lo speculaLe on Lhe fuLure flnanclal ablllLy of
Lhe bldder Lo underLake Lhe pro[ecL on Lhe basls of documenLs submlLLed 1hls would open doors Lo abuse and
defeaL Lhe very purpose of a publlc blddlng 1hls ls especlally Lrue ln Lhe case aL bar whlch lnvolves Lhe lnvesLmenL
of bllllons of pesos by Lhe pro[ecL proponenL 1he relevanL governmenL auLhorlLy ls duLybound Lo ensure LhaL Lhe
awardee of Lhe conLracL possesses Lhe mlnlmum requlred flnanclal capablllLy Lo compleLe Lhe pro[ecL 1o allow Lhe
8AC Lo esLlmaLe Lhe bldder's fuLure flnanclal capablllLy would noL secure Lhe vlablllLy and lnLegrlLy of Lhe pro[ecL
A resLrlcLlve and conservaLlve appllcaLlon of Lhe rules and procedures of publlc blddlng ls necessary noL only Lo
proLecL Lhe lmparLlallLy and regularlLy of Lhe proceedlngs buL also Lo ensure Lhe flnanclal and Lechnlcal rellablllLy of
Lhe pro[ecL lL has been held LhaL
1he baslc rule ln publlc blddlng ls LhaL blds should be evaluaLed based on Lhe requlred documenLs
submlLLed before and noL afLer Lhe openlng of blds CLherwlse Lhe foundaLlon of a falr and compeLlLlve publlc
blddlng would be defeaLed SLrlcL observance of Lhe rules regulaLlons and guldellnes of Lhe blddlng process ls Lhe
only safeguard Lo a falr honesL and compeLlLlve publlc blddlng
1hus lf Lhe maxlmum amounL of equlLy LhaL a bldder may lnvesL ln Lhe pro[ecL aL Lhe Llme Lhe blds are
submlLLed falls shorL of Lhe mlnlmum amounLs requlred Lo be puL up by Lhe bldder sald bldder should be properly
dlsquallfled Conslderlng LhaL aL Lhe prequallflcaLlon sLage Lhe maxlmum amounLs whlch Lhe alrcargo
ConsorLlum may lnvesL ln Lhe pro[ecL fell shorL of Lhe mlnlmum amounLs prescrlbed by Lhe 8AC we hold LhaL
alrcargo ConsorLlum was noL a quallfled bldder 1hus Lhe award of Lhe conLracL by Lhe 8AC Lo Lhe alrcargo
ConsorLlum a dlsquallfled bldder ls null and vold