Republic Vs Drugmakers Laboratories

2/4/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 753
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.
Civil Law; Contracts; Words and Phrases; Article 1305 of the

New Civil Code defines a contract as “a meeting of minds between
two (2) persons whereby one (1) binds himself, with respect to the
other, to give something or to render some service.”—Article 1305
of the New Civil Code defines a contract as “a meeting of minds
between two (2) persons whereby one (1) 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 fulfilment of a prestation to give, to
do, or not to do.” 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.
Same; Same; Consent; Words and Phrases; The first requisite,
consent, is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute
the contract.—The first requisite, consent, is manifested by the
meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. 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. 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
http://www.central.com.ph/sfsreader/session/0000016160065cc3b26330af003600fb002c009e/t/?o=False 1/36
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* SPECIAL THIRD DIVISION.
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SM Land, Inc. vs. Bases Conversion and Development
Authority
Annex C x x x, 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 x x x.
Same; Same; Cause; Words and Phrases; Cause 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.—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.
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.
Same; Same; Object Certain; Words and Phrases; Object
certain refers to the subject matter of the contract. It is the thing to
be delivered or the service to be performed.—Object certain refers
to the subject matter of the contract. It is the thing to be delivered
or the service to be performed. Here, when the BCDA Board
issued, on August 6, 2010, the Certification of Successful
Negotiations, 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.”
Moreover, said Certification provides that “the BCDA shall,
thus, commence the activities for the solicitation for
comparative proposals x x x starting on August 10, 2010, on
which date [SMLI] shall post the required Proposal Security

x x x.”
Administrative Orders; Under the Administrative Code of
1987, acts of the President providing for rules of a general or
permanent character in implementation or execution of
constitutional or statu-
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tory powers shall be promulgated in Executive Orders (EOs).

—Under the Administrative Code of 1987, 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). 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.
Same; Delegation of Powers; Through Section 5 of Executive
Order (EO) No. 109, Section 8 of EO No. 109-A and now Section 8
of EO No. 423, the President effectively delegated her inherent
executive power to issue rules and regulations on procurement to
her subordinate executive officials, her alter egos.—Amidst the
changes effected on procurement rules, the NEDA’s duty to issue
a JV Guidelines under the said executive orders remained
unaffected. Through Section 5 of EO No. 109, Section 8 of EO No.
109-A and now Section 8 of EO No. 423, the President effectively
delegated her inherent executive power to issue rules and
regulations on procurement to her subordinate executive officials,
her alter egos, the most recent of which reads in this wise:
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. 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.
Doctrine of Equitable Estoppel; The doctrine of equitable
estoppel may be invoked against public authorities as well as
against private individuals.—Respondents cannot also find solace
in the general rule that the State is not barred by estoppel by the
mistakes
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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. (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.
Leonen, J., Dissenting Opinion:
Presidency; View that 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.—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.” Republic Act

No. 7227 provides for our policy to enhance the benefits derived
from respondent BCDA-administered properties. Respondent
BCDA’s projects should be implemented in a manner that would
“maximize the use of military camps[.]” 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.
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Civil Law; Contracts; View that respondent Bases Conversion

and Development Authority (BCDA) has no authority to agree to a
provision that is inconsistent with law or public policy.—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, the Certificate of Successful
Negotiation, and the Terms of Reference contained no provision to
that effect. 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.
Competitive Challenge; View that 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.—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. 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.
MOTION FOR RECONSIDERATION of a decision of the

Supreme Court.
The facts are stated in the resolution of the Court.
Puno & Puno for petitioner SM Land, Inc.
Julio Ma. Edmundo D. Maningat for intervenors DND
and AFP.
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RESOLUTION

VELASCO, JR., J.:

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 fulfilment 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:
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1 14 Sanchez Roman 148-149, cited in Pineda, Obligations and

Contracts (2000).
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(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.
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 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
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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 x x x.] (emphasis ours)
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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 x x x, 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
x x x.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
per-
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4 Id., at p. 65. Certification of Successful Negotiations, p. 2.
5 Basic Books (Phil.), Inc. v. Lopez, No. L-20753, February 28, 1966, 16
SCRA 291.
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formed.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 x x x
starting on August 10, 2010, on which date [SMLI] shall
post the required Proposal Security x x x.”9
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 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 x x x
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6 Pineda, Obligations and Contracts, p. 372 (2000).

7 Rollo, p. 64.
8 Id., at p. 71.
9 Id.
10 Id.
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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
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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 pp. 374-375.
14 Dissenting Opinion, p. 646, per J. Leonen.
15 Executive Order No. 292.
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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
For government contracts and procurement in the
Philippines, then President Gloria Macapagal-Arroyo,
adopting the recommendation of the NEDA, issued EO No.
10918 on May 27, 2002. As its title indicates, EO No. 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 No. 109-A,19 to conform to
_______________
16 Administrative Code of 1987 (EO No. 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, 562 SCRA 251, citing Section 17, Article VII, Constitution; See
also Biraogo v. Philippine Truth Commission of 2010, G.R. Nos. 192935
and 193036, December 7, 2010, 637 SCRA 78, 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
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RA No. 9184 which was enacted barely two months after

the issuance of EO No. 109.20 Two years later, or on April
30, 2005, EO No. 42321 was issued, repealing EO No. 109-A
and simplifying the procurement process. Section 4 of EO
No. 423 was later amended by EO No. 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
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Act No. 9184, otherwise known as the Government Procurement

Reform Act. EO 109-A was issued on September 18, 2003.
20 RA No. 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 No. 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 No. 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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No. 109, Section 8 of EO No. 109-A and now Section 8 of

EO No. 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 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:
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EO No. 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, supra note 17, citing
Section 17, Article VII, Constitution.
25 Eslao v. COA, G.R. No. 108310, September 1, 1994, 236 SCRA 161,
cited in Atlas Consolidated Mining and Development v. Commissioner of
Internal Revenue, G.R. No. 159490, February 18, 2008, 546 SCRA 150.
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x x x 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 Articles III
(on General Information) and VIII (on Qualifications and
Waivers) of the TOR Volume 1, which read:
III. GENERAL INFORMATION

x x x x
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 x x x 27
x x x x
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 the PSEs, except the
obligation to return the Proposal Security.28 (emphasis added)
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26 Rollo, p. 988.
27 Id., at p. 78.
28 Id., at p. 87 [Article VIII (Qualifications and Waivers), Terms of
Reference Volume 1].
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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:
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 preselection
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.
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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.
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
_______________
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.
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and privatization of [the] subject Property

through JV with BCDA has been accepted by the
latter, 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.
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 pretermination 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,
_______________
31 Id., at p. 76.
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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 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.
Respondents cannot also find solace in the general rule
that the State is not barred by estoppel by the mistakes or
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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:
_______________
32 Republic v. Court of Appeals, G.R. No. 116111, January 21, 1999,

301 SCRA 366.
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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.
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 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
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dated February 13, 2012, respondents themselves

recommended to the President that the selection proceedings be
terminated. To reiterate:
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. x x x

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.
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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 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 com-
_______________
33 The Philippine Star, February 2, 2015, B-9.
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pany’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.
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.
_______________
34 The Manila Bulletin, February 7, 2015, B-3.
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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.

DISSENTING OPINION

LEONEN, J.:

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.
The Certificate of Successful Negotiation1 and the Terms
of Reference2 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
_______________
1 Rollo, pp. 64-72.

2 Id., at pp. 74-88.
3 Id., at p. 65.
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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

....
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,
_______________
4 Id., at pp. 64-65.

Certification of Successful Negotiation
....
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)
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the JV-SC shall inform and send Supplemental Notices to all

PSEs. . . .
....
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 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.
_______________
5 Id., at pp. 77-87.
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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
_______________
6 Id., at p. 1049. Respondents BCDA and Casanova stated in their

Motion to Resolve with Motion for Reconsideration that:
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:

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.
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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 noncompliance 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
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
_______________
9 Id., at pp. 1039 and 1048.

10 Id., at p. 1040.
11 Id., at p. 1041.
12 Id.
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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
_______________
13 Id., at p. 1042.
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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

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 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.
....
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.
_______________
14 Id., at p. 1043.
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....
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
_______________
15 Id., at pp. 1043-1045.

16 Id., at p. 1046.
17 Const., Art. VII, Sec. 5.
18 Rep. Act No. 7227 (1992), Sec. 2.
19 Exec. Order No. 62 (1993), Sec. 1.4.
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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
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
properties24 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 disadvan-
_______________
20 Rollo, p. 574.

21 Id., at pp. 633-635.
22 Id., at p. 635.
23 Id., at p. 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.
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tageous 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 Reference29 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.
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
_______________
26 J. Leonen, Dissenting Opinion in SM Land, Inc. v. Bases

Conversion and Development Authority, G.R. No. 203655, August 13, 2014,
733 SCRA 68, 126 [Per J. Velasco, Jr., Third Division].
27 Rollo, p. 351. The letter was dated May 12, 2010.
28 Id., at pp. 65 and 70.
29 Id., at pp. 74-87.
30 J. Leonen, Dissenting Opinion in SM Land, Inc. v. Bases
Conversion and Development Authority, supra at pp. 113-117.
31 Id.
646

Authority
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 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
_______________
32 Const., Art. XI, Sec. 1.

33 Rollo, p. 1049.
34 Id.
35 Supra note 26 at pp. 123-124.
36 Id., at p. 124.
647
VOL. 753, MARCH 18, 2015 647

Authority
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 ongoing and future
joint ventures with the government3737 (Citation omitted)
_______________
37 Rollo, pp. 1031-1032.
648

Authority
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 Court38 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:
....
(l) Division cases where the subject matter has a huge financial
impact on businesses or affects the welfare of a community[.]

Respondents BCDA and Casanova, therefore, properly

filed a Motion39 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
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.
Judgment affirmed, motion for reconsideration denied

with finality.
_______________
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 p. 860B.
649
VOL. 753, MARCH 18, 2015 649

Authority
Notes.—While it may be true that estoppel does not

operate against the State or its agents, deviations have
been allowed; 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; Subject to its
limitations, the doctrine of equitable estoppel may be
invoked against public authorities as well as against
private individuals. (Estate of the Late Jesus S. Yujuico vs.
Republic, 537 SCRA 513 [2007])
The concurrence of the following requisites is necessary
for the principle of equitable estoppel to apply: (a) conduct
amounting to false representation or concealment of
material facts or at least calculated to convey the
impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently
attempts to assert; (b) intent, or at least expectation that
this conduct shall be acted upon, or at least influenced by
the other party; and (c) knowledge, actual or constructive,

of the actual facts. (Planters Development Bank vs. Lopez,
708 SCRA 481 [2013])
——o0o——
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2/4/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 753

G.R. No. 203655. March 18, 2015.*

Civil Law; Contracts; Words and Phrases; Article 1305 of the

* SPECIAL THIRD DIVISION.

614 SUPREME COURT REPORTS ANNOTATED

Annex C x x x, reached an agreement on the purpose,

which date [SMLI] shall post the required Proposal Security

VOL. 753, MARCH 18, 2015 615

tory powers shall be promulgated in Executive Orders (EOs).

duly promulgated pursuant to the rule-making power

616 SUPREME COURT REPORTS ANNOTATED

or errors of its officials or agents. As jurisprudence elucidates,

Leonen, J., Dissenting Opinion:

Presidency; View that it would be a violation of the President’s

“consecrate [himself] to the service of the Nation.” Republic Act

VOL. 753, MARCH 18, 2015 617

Civil Law; Contracts; View that respondent Bases Conversion

diminish the benefits that may be obtained for legitimate

MOTION FOR RECONSIDERATION of a decision of the

618 SUPREME COURT REPORTS ANNOTATED

1 14 Sanchez Roman 148-149, cited in Pineda, Obligations and

VOL. 753, MARCH 18, 2015 619

(1) Consent of the contracting parties;

2 Article 1319, New Civil Code.

simultaneously ascertained the eligibility of SMLI in accordance with

620 SUPREME COURT REPORTS ANNOTATED

where the meeting of the parties’ minds was reflected in

NOW, THEREFORE, for and in consideration of the foregoing,

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

VOL. 753, MARCH 18, 2015 621

formed.6 Here, when the BCDA Board issued, on August

BCDA and SMLI have agreed to subject SMLI’s Original

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

622 SUPREME COURT REPORTS ANNOTATED

This agreement is the law between the contracting

VOL. 753, MARCH 18, 2015 623

SM Land, Inc. vs. Bases Conversion and Development

powers shall be promulgated in Executive Orders

624 SUPREME COURT REPORTS ANNOTATED

RA No. 9184 which was enacted barely two months after

Act No. 9184, otherwise known as the Government Procurement

VOL. 753, MARCH 18, 2015 625

No. 109, Section 8 of EO No. 109-A and now Section 8 of

Section 8. Joint Venture Agreements.—The NEDA, in

EO No. 423, Section 8 [Section 8. Joint Venture Agreements.—The

626 SUPREME COURT REPORTS ANNOTATED

x x x Being an issuance in compliance with an executive

III. GENERAL INFORMATION

VOL. 753, MARCH 18, 2015 627

On this point, it is well to emphasize that the TOR

3. The Private Sector Entity shall post the proposal security

628 SUPREME COURT REPORTS ANNOTATED

Pursuant to the above quoted provisions from the NEDA

Consequently, per the reservation clause, should the

29 See schedule for determination of the amount of the proposal

VOL. 753, MARCH 18, 2015 629

and privatization of [the] subject Property

the JV Guidelines, including the right to the conduct and

A review of the outlined three-stage framework reveals that

630 SUPREME COURT REPORTS ANNOTATED

acceding to the interpretation of the TOR offered by

designed and imposed for the implementation of the same, the

VOL. 753, MARCH 18, 2015 631