DBM-PS vs. Kolonwel Trading; Vibal Publishing vs. Kolonwel; DepEd vs.

Kolonwel
GR No. 175609, 175616, 175659; 8 June 2007

Topic: Treaty
Facts:
- DepEd requested DBM-PS to procure 17.5M Makabayan textbooks and teachers manuals which
are to be funded by World Bank (WB) and ADB.
- The Govt Procurement Policy Boards said that the procurement where funds will come from
WB shall be governed by WB guidelines.
- DBM-PS Inter Agency Bids and Awards Committee (IABAC) called for a bidding divided into 3
lots. Lot 1 for Sibika Grades 1-3, Lot 2 for HeKaSi Grades 4-6, and Lot 3 for Araling
Panlipunan Yrs. 1-4.
- 11 bidders submitted their bidding documents including Watana Phanit Printing, Vibal
Publishing, Daewoo, and Kolonwel.
- IABAC in its first resolution recommended to WB and ADB a failure to bid for all lots due to
disqualifications like conflict of interest for Watana and Vibal and failure in cover stock testing
for Kolonwel.
- However, WB disagreed w/ the conflict of interest regarding Vibal and Watana.
- Meanwhile, Kolonwel requested that its disqualifications be reconsidered.
- IABAC agreed w/ WBs position and in its second resolution recommended the contract award
to Vibal of Sibika 1&3 & HeKaSi 5; Watana of Sibika 2 and HeKaSi 4&5; Daewoo of Sibka 3.
- WB did not object and notices of award and execution of the corresponding purchaser-supplier
contracts were issued.
- IABAC informed Kolonwel that its request was denied.
- Kolonwel filed w/ RTC a special civil action for certiorari and prohibition w/ prayer for TRO
and/or writ of preliminary injunction.
- The petition sought to nullify the 2 resolutions of IABAC and set aside the contract awards.
- RTC granted a 20-day TRO.
- Meanwhile, Vibal filed an urgent motion to dismiss Kolonwels petition on grounds of want of
jurisdiction and lack of cause of action. Vibal alleged that Kolonwel did not first comply w/ the
protest procedure in the Govt Procurement Reform Act. DepEd also filed MtD.
- RTC did not conduct a hearing on the dismissal motions although it heard the parties on their
opposing claims respecting the propriety of issuing a writ of preliminary injunction.
- RTC declared valid the first resolution but annulled the second as well as subsequent actions
from it. RTC also granted a final injunction stopping the parties from proceeding.

Issue & Ruling:

1) Whether the WB Guidelines are superior over local laws regarding procurement. YESs.

All bidders were notified that procurement will be in accordance w/ the provisions of the
Guidelines for Procurement under IBRD Loans. RA 9184 provide that any treaty or international
executive agreement affecting the subject matter of this Act to which the Philippine government
is a signatory shall be observed. Foreign loan agreements w/ international financial institutions
such as in this case are considered executive or international agreement for the purpose of RA
9184.
 Under the fundamental international law principle of pacta sunt servanda which is embodied
in RA 9184, Philippines, as borrower, bound itself to perform in good faith its duties and
obligations under the loan. IABAC was legally obliged to comply w/ or accord primacy to the
WB Guidelines on the conduct and implementation of the bidding/procurement process.

2) Whether RTC erred in assuming jurisdiction despite Kolonwels failure to observe the protest
mechanism. YES.

RA 9184 or the Govt Procurement Act provides that decisions of the Bids and Awards
Committee in all stages may be protested to the head of the procuring entity by filing a verified
position paper and paying a protest fee. Court action may be resorted to only after the protest is
complete. Cases filed in violation of the process shall be dismissed from lack of jurisdiction.
RTC has jurisdiction over final decisions.
Kolonwels 2 letters requesting reconsideration of its disqualification cannot be considered
protests under RA 9184. It was not addressed to the head of the procuring entity, unverified, and
no protest fee was paid. Kolonwel went to the RTC despite not filing and completing a protest.
An IRR for foreign-funded procurement was not needed because RA 9184 already provided
for the process. All that is left for the IRR is to fix the amount of the protest fee and the periods
during which protest may be filed and resolved. Kolonwel could have first filed a protest, and
just pay the proper amount once the IRR fixed the protest fee. Kolonwel even admitted before
RTC that it did not comply w/ the protest requirement.
There is also an IRR-A that covers domestically funded procurement and in another case SC
held that it also applies to foreign-funded procurement. IRR-A provides that it is only after a
MfR is filed and eventually denied by BAC that a protest may be filed.
RTC also proceeded with the case even w/o acquiring jurisdiction over Watana as it was not
served w/ summons.