Philippine Supreme Court Jurisprudence > Year 2021 > December 2021 Decisions > G.R. No. 211122 - HARBOUR CENTRE PORT TERMINAL, INC., Petitioner, v. HON. ARMAND C. ARREZA, ADMINISTRATOR OF SBMA AND/OR THE BOARD OF DIRECTORS OF SUBIC BAY METROPOLITAN AUTHORITY, AND SUBIC SEAPORT TERMINAL INC., Respondents. :

The ones duty-bound to ensure observance with laws and rules should not be the ones to depart therefrom.¹ The violation by the government of the rules it set for itself would stain the credibility of the investment environment. With the increasing role of private sector entities in development and economic growth, it behooves the Court to hold their public counterparts to account. Thus, when necessary, a writ of mandamus may issue to compel the performance of a government entity's legal duties.

The Case

This Petition for Review on Certiorari² seeks to reverse and set aside the Decision³ dated 08 August 2013 and Resolution⁴ dated 14 January 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 125330. The CA reversed the Decision⁵ dated 12 January 2012 of Branch 72, Regional Trial Court of Olongapo City (RTC) in Civil Case No. 108-0-2011, granting a writ of mandamus in favor of petitioner Harbour Centre Port Terminal, Inc. (petitioner) and directing respondent Hon. Armand C. Arreza (Arreza),⁶ and/or his successor as administrator of the Subic Bay Metropolitan Authority (SBMA), and respondent SBMA Board of Directors (SBMA Board) to issue a Notice of Award (NOA) and Notice to Proceed (NTP) to petitioner.

Antecedents

Petitioner is a bulk and break-bulk port operator in the Philippines.⁷ SBMA, on the other hand, is a government agency created under Republic Act (RA) No. 7227. It is tasked to operate, manage, administer, and develop all ports located in the Subic Special Economic and Freeport Zone (Zone).⁸chanRoblesvirtualLawlibrary

On 16 November 2009, SBMA received an unsolicited proposal from petitioner to enter into an unincorporated joint venture (JV) for the development, management, and operation of the Naval Supply Depot, Boton, Alava, Rivera, and Bravo Wharfs/Ports (joint venture areas).⁹ The proposed JV sought to consolidate break-bulk, bulk, and other essential port services to achieve efficiency and optimization of port resources.¹⁰ The unsolicited proposal was made pursuant to the 2008 Guidelines and Procedures for Entering into Joint Venture Agreements between Government and Private Entities (2008 JV Guidelines)¹¹ issued by the National Economic and Development Authority (NEDA).¹²chanRoblesvirtualLawlibrary

The SBMA Board of Directors (SBMA Board), on 20 November 2009, acting pursuant to the 2008 JV Guidelines, issued Resolution No. 09-11-3400,¹³ accepting in principle petitioner's unsolicited proposal. Simultaneously, the SBMA Board constituted the SBMA Joint Venture Selection Panel (SBMA-JVSP) to pursue negotiations with petitioner.¹⁴chanRoblesvirtualLawlibrary

Petitioner and SBMA-JVSP commenced further negotiations on the terms and conditions, as well as the legal, technical, and financial aspects of the proposal.¹⁵ The parties conducted a series of in-depth negotiations on six (6) different dates.¹⁶ The results of the negotiations were then embodied in the Terms of Reference that were to be used for the solicitation of comparative proposals.¹⁷chanRoblesvirtualLawlibrary

SBMA also evaluated and determined the eligibility of petitioner in accordance with the 2008 JV Guidelines.¹⁸ SBMA found petitioner eligible to undertake the project.¹⁹chanRoblesvirtualLawlibrary

Meanwhile, a similar unsolicited proposal was jointly submitted by Amerasia International Services, Inc. (Amerasia) and Mega Subic Terminal Services, Inc. (MSTSI).²⁰ However, the proposal was returned for being insufficient in form and substance, with the option of resubmitting a revised proposal.²¹ Instead of submitting a new proposal, Amerasia and MSTSI withdrew altogether their intention to submit any proposal.²²chanRoblesvirtualLawlibrary

On 05 February 2010, the SBMA-JVSP presented to the SBMA Board the results of the negotiations with petitioner. Through Resolution No. 10-02-3514, the SBMA Board accepted the terms and conditions negotiated by petitioner and SBMA-JVSP, and authorized the SBMA-JVSP to conduct the competitive challenge required by the 2008 JV Guidelines.²³chanRoblesvirtualLawlibrary

To formalize the negotiated terms and conditions, petitioner and SBMA executed the Joint Venture Agreement for the Development, Operation, and Management of the Naval Supply Depot, Boton, Alava, Rivera and Bravo Wharfs/Ports (JVA).²⁴ The JVA was to be used as basis for, and subjected to the results of,? the competitive challenge required under the 2008 JV Guidelines.²⁵chanRoblesvirtualLawlibrary

Meanwhile, respondent Subic Seaport Terminal Inc. (SSTI), a locator at the Zone, filed a case against SBMA before the RTC of Dinalupihan, Bataan. The action, docketed as Civil Case No. DH-1231-10 (Bataan Case),²⁶ was for injunction, breach of contract, and damages. Subsequently, however, SSTI filed an amended and supplemental complaint for declaration of nullity of the JVA.²⁷ Petitioner was not impleaded in the case.

Simultaneously, SBMA and petitioner progressed with the preparations for the competitive challenge. Petitioner posted the bid security for the project.²⁸ SBMA published in the Philippine Daily Inquirer an invitation to pre-qualify and submit comparative proposals.²⁹ This was also posted at SBMA's website and at a public and conspicuous place in the Zone.³⁰chanRoblesvirtualLawlibrary

A prospective bidder, Asian Terminals, Inc., purchased bid documents.³¹ However, on the date of the pre-proposal conference, no competitive challenge was interposed by any party.³² Also, SBMA did not receive any comparative proposal during the scheduled opening of eligibility documents and proposals.³³ Accordingly, the SBMA-JVSP issued a Resolution dated 22 April 2010, recommending the award of the project to petitioner.³⁴chanRoblesvirtualLawlibrary

Acting on the recommendation, on 07 May 2010, the SBMA Board issued Resolution No. 10-05-3646 (Approval Resolution).³⁵ The SBMA Board adopted the recommendation of the SBMA-JVSP to award the project to petitioner, without prejudice to the action of the Commission on Elections (COMELEC) on SBMA's request for election ban exemption (since the contract period coincided with the election ban) and subject to the favorable opinion of the Office of the Government Corporate Counsel (OGCC). The requirement of an election ban exemption was rendered functus officio after the election period lapsed without any further action on the JVA.³⁶chanRoblesvirtualLawlibrary

Meanwhile, SBMA-JVSP noticed an error in the computation of the bid security earlier posted by petitioner. Hence, it advised petitioner to post an additional bid security in the corrected amount of PhP100 Million, to which petitioner immediately complied.³⁷chanRoblesvirtualLawlibrary

On 12 July 2010, the SBMA, through Arreza, formally sought a legal opinion from the OGCC.³⁸ Pending receipt of the OGCC legal opinion, petitioner continuously renewed its bid security.³⁹chanRoblesvirtualLawlibrary

On 23 May 2011, NEDA informed SBMA that the JVA's compliance with the 2008 JV Guidelines "could not be ascertained" because: (1) there was no COMELEC exemption; (2) the JVA was executed as early as Stage Two of the process; (3) the bid security was inadequate; and (4) SBMA failed to submit the JVA to NEDA.⁴⁰chanRoblesvirtualLawlibrary

In its reply to NEDA's letter, SBMA countered that the COMELEC exemption requirement had been rendered inapplicable since the election period had lapsed for more than a year. No harm was done by the signing of the JVA during the Stage Two of the process, as the JVA itself provides that it was not a final and executory contract and was subject to the result of competitive challenge. The error on the value of the bid security was made in good faith and had already been corrected. SBMA also excused the non?-submission of the JVA to NEDA, arguing that the same was not yet executory.⁴¹chanRoblesvirtualLawlibrary

On 22 June 2011, SBMA received the OGCC's favorable legal opinion.⁴² The OGCC stated that the signed JVA complied with the 2008 JV Guidelines and is consistent with JV principles.⁴³ Nonetheless, the OGCC recommended certain revisions "to ensure clarity and avoid confusion", in light of the issues raised by the NEDA and SSTI's counsel, among others.⁴⁴ These proposed amendments were accepted by SBMA and petitioner in writing.⁴⁵chanRoblesvirtualLawlibrary

However, on 05 July 2011, NEDA withdrew its endorsement of the project based on alleged violations of the 2008 JV Guidelines, i.e., the execution of the JVA as early as Stage Two of the process and a supposed material change in the project cost from approximately PhP763.029 Million to around PhP5.537 Billion after the competitive challenge.⁴⁶chanRoblesvirtualLawlibrary

SBMA requested for reconsideration. Nonetheless, the SBMA Board issued Resolution No. 11-08-4080, deferring action on the award of the project to petitioner pending NEDA's response.⁴⁷chanRoblesvirtualLawlibrary

Due to SBMA's failure and refusal to issue the NOA and NTP, petitioner filed a petition for mandamus with the RTC of Olongapo City.⁴⁸ In the course of the proceedings, SSTI intervened.⁴⁹ It averred that it has leasehold rights over the lots adjacent to Boton Wharf and was designated as the exclusive fertilizer cargo handler for bulk and bagged cargoes.⁵⁰chanRoblesvirtualLawlibrary

During the pendency of the RTC proceedings, NEDA denied SBMA's request for reconsideration and reiterated its withdrawal on 30 September 2011.⁵¹ On 17 October 2011, the OGCC recommended that the issuance of the NOA be suspended in light of NEDA's withdrawal of its endorsement and pending further study of the JVA.⁵²chanRoblesvirtualLawlibrary

Ruling of the RTC

In its Orders dated 01 September 2011 and 20 September 2011, the RTC issued a temporary restraining order and a writ of preliminary injunction, respectively. These enjoined Arreza, or his successor as administrator of the SBMA, and the SBMA Board from further leasing out or entering into any form of contract, agreement, or arrangement over the join venture areas that will diminish those covered by the JVA.⁵³chanRoblesvirtualLawlibrary

After due proceedings, the RTC ruled in favor of petitioner and granted the petition for mandamus. The fallo of the Decision⁵⁴ dated 12 January 2012 reads:
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WHEREFORE, viewed from the foregoing premises, this Court hereby grants the Writ of Mandamus mandating the respondents Armand C. Arreza, and/or his successor as Administrator of the Subic Bay Metropolitan Authority, and the Board of Directors of SBMA, to immediately issue the Notice or Award and Notice to Proceed to Harbour Centre Port Terminal, Inc. for the development, operation and management of the Naval Supply Depot, Baton, Alava, Rivera and Bravo Wharfs/Ports pursuant to the Joint Venture Agreement dated 24 February 2010.

The writ of preliminary injunction granted by this Court on September 20, 2011 is hereby made permanent.

SO ORDERED.⁵⁵chanRoblesvirtualLawlibrary

The RTC found that, under the 2008 JV Guidelines and the terms of the JVA, if no comparative proposal is received by SBMA, the JV activity shall be immediately awarded to the original proponent. Since there was no challenger to petitioner's proposal, it already acquired a vested right to the project.⁵⁶ At such point, the issuance of the NOA became ministerial on the part of the SBMA Board.⁵⁷chanRoblesvirtualLawlibrary

The RTC further held that the issuance of the Approval Resolution effectively granted petitioner a vested right.⁵⁸ With the issuance of the favorable OGCC Opinion, all the conditions mentioned in the Approval Resolution had been complied with.⁵⁹ NEDA's subsequent withdrawal of its endorsement had no effect whatsoever. This is because NEDA was merely a member of the SBMA-JVSP and, thus, was only entitled to one (1) out of six (6) votes.⁶⁰chanRoblesvirtualLawlibrary

On petitioner's alleged failure to exhaust administrative remedies, the RTC found that the grave and irreparable injury that petitioner stood to suffer warranted immediate resort to the courts.⁶¹ Moreover, there appeared to be no legitimate dispute on the factual antecedents leading to the award; thus, the case involved purely legal questions.⁶²chanRoblesvirtualLawlibrary

The RTC also rebuffed SSTI's claims, finding that the JVA has sufficient provisions aimed at protecting the rights of existing locators.⁶³ Thus, SSTI has no interest that needs protection. As to petitioner's claim for damages, the same was denied for lack of basis.⁶⁴chanRoblesvirtualLawlibrary

Ruling of the CA

On appeal, the CA reversed the RTC. It held that SBMA has no legal duty to issue the NOA and NTP.⁶⁵ This is because SBMA has the discretion to either approve or reject the recommendation to award.⁶⁶ Mandamus will not issue to control the performance of discretionary duties.⁶⁷chanRoblesvirtualLawlibrary

According to the CA, petitioner has no vested right to the issuance of the NOA and the NTP. Until petitioner undergoes the required Swiss Challenge process, petitioner has no right enforceable by mandamus.⁶⁸chanRoblesvirtualLawlibrary

The CA further cited the Approval Resolution, which it found to be conditional.⁶⁹ The CA held that the requirement of a favorable OGCC Opinion had not been complied with because the OGCC recommended the suspension of the issuance of the NOA in light of NEDA's withdrawal of its endorsement.⁷⁰ Moreover, while the OGCC previously issued a favorable opinion, it proposed amendments to the terms of the JVA.⁷¹chanRoblesvirtualLawlibrary

Lastly, the CA emphasized that, in the absence of a NOA or an NTP, the JVA remains to be a proposal.⁷² As such, the JVA cannot be a source of any legal right.⁷³chanRoblesvirtualLawlibrary

Petitioner moved for reconsideration, but the same was denied by the CA in its Resolution⁷⁴ dated 14 January 2014.

Issues

Before the Court, petitioner raises the main issue of whether SBMA may be compelled through a writ of mandamus to issue the NOA and NTP in favor of petitioner.

In addition, however, respondents raise other issues that seek to defeat petitioner's claimed entitlement to the writ: (1) whether petitioner failed to exhaust administrative remedies before filing its petition for mandamus;⁷⁵ and (2) whether the JVA is null and void for violating the Constitution, as was held in the Bataan Case.⁷⁶chanRoblesvirtualLawlibrary

We resolve the preliminary issues before delving into the substantive merits of the case.

Ruling of the Court
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This case falls within the exceptions to the doctrine of exhaustion of administrative remedies

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Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention of the court, it should have availed itself of all the means of administrative processes afforded it.⁷⁷ The premature invocation of the intervention of the court is fatal to one's cause of action.⁷⁸chanRoblesvirtualLawlibrary

Nonetheless, there are exceptions to the rule. Among these are when the question raised is purely legal, when there is urgent need for judicial intervention, and when to require exhaustion of administrative remedies would be unreasonable.⁷⁹chanRoblesvirtualLawlibrary

The RTC correctly ruled that this case falls within the exceptions. There is no legitimate dispute on the factual antecedents relating to the unsolicited proposal. The only issue is whether, based on the undisputed facts, petitioner is entitled to the issuance of the NOA and NTP. This is a purely legal question that rests only on what the law provides on the given set of circumstances.⁸⁰chanRoblesvirtualLawlibrary

There was also urgent necessity for judicial intervention. Petitioner incurred expensive premiums for the repeated renewal of its bid security due to the non-issuance of the NOA and NTP. At that point, petitioner had already devoted substantial time and resources in pursuit of its proposal. Moreover, it would be unreasonable to expect petitioner to still go through the motions with SBMA, when it was evident that the parties had already reached an impasse and no NOA or NTP was forthcoming.

Thus, under the circumstances, resort to a petition for mandamus is justified.
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The constitutional issues raised may not be threshed out in this case

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SSTI and SBMA raise constitutional issues allegedly besetting the JVA, particularly the undue delegation of legislative powers and franchise to petitioner and the monopoly that will result from the implementation of the JVA.⁸¹ They rely on the Decision⁸² dated 10 September 2012 rendered in the Bataan Case. Said Decision declared the JVA null and void for allegedly contravening the Constitution, RA No. 7227, and the 2008 JV Guidelines.⁸³ The Decision was declared final as no appeal or motion for reconsideration was interposed.⁸⁴chanRoblesvirtualLawlibrary

This Court is not in a position to rule on the alleged constitutional infirmities. The Court observes a policy of constitutional avoidance. Hence, if the controversy can be settled on other grounds, We will stay Our hand from ruling on the constitutional issue.⁸⁵chanRoblesvirtualLawlibrary

Here, threshing out the constitutional questions presented is not essential to the disposition of the case. The petition may be resolved by applying the provisions of the 2008 JV Guidelines in relation to prevailing jurisprudence.

Besides, SSTI and SBMA failed to substantiate their arguments before the Court. They also failed to establish the requisites for judicial review, among which are the existence of an actual case and controversy and an absolute necessity for the determination of the constitutional issue.⁸⁶ The alleged constitutional defects are not supported by concrete facts, especially since the JVA has yet to be implemented. Any ruling on these issues would be premised on speculations and hypotheticals.

Moreover, SSTI and SBMA may not casually invoke the Decision in the Bataan Case. It is undisputed that SSTI did not implead petitioner in the case. As a contracting party to the JVA, petitioner was an indispensable party, without whom no final determination can be had of the action.⁸⁷chanRoblesvirtualLawlibrary

The joinder of all indispensable parties is a condition sine qua non for the exercise of judicial power.⁸⁸ The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.⁸⁹ Thus, the non-participation of an indispensable party precludes the judgment from attaining finality, and the decision may be ignored wherever and whenever it exhibits its head.⁹⁰chanRoblesvirtualLawlibrary

Since petitioner was not impleaded in the Bataan Case, the decision therein is null and void for want of authority. The pronouncement on the alleged nullity of the JVA has no effect whatsoever.
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Petitioner is entitled to the issuance of a writ of mandamus. Under the 2008 JV Guidelines, the award of the JV activity follows as a matter of course if no comparative proposal is received by the government entity

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On the substantive merits of the case, We rule in favor of petitioner.

For a writ of mandamus to issue, there must be a concurrence between a clear legal right accruing to petitioner and a correlative duty incumbent upon respondents to perform an act, this duty being imposed upon them by law.⁹¹chanRoblesvirtualLawlibrary

The duty subject of mandamus must be ministerial rather than discretionary.⁹² A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of his or her own judgment upon the propriety or impropriety of the act done.⁹³chanRoblesvirtualLawlibrary

In this case, all the requisites for the issuance of the NOA had already been complied with. The existence of these requisites gave rise to a clear legal right in favor of petitioner and a correlative ministerial duty upon SBMA.

For a clearer understanding of SBMA's discretion and duties in relation to negotiated JVs, a step-by-step overview of the 2008 JV Guidelines is in order.

The 2008 JV Guidelines, issued pursuant to EO No. 423,⁹⁴ was the controlling legal framework for JVs entered into by government entities. Specifically, it governed the process of selecting the JV partners of government entities.⁹⁵chanRoblesvirtualLawlibrary

The 2008 JV Guidelines was in effect during the period material to this case. It had since been superseded by the Revised Guidelines and Procedures for Entering Into Joint Venture (JV) Agreements Between Government and Private Entities that was approved on 03 May 2013 and published on 11 May 2013 (2013 JV Guidelines). Nonetheless, the 2008 JV Guidelines should be applied to this case because the JVA was executed prior to the effectivity of the 2013 JV Guidelines.⁹⁶ Moreover, the 2013 JV Guidelines may not impair vested rights that already accrued.⁹⁷chanRoblesvirtualLawlibrary

Going to the legal status and character of the 2008 JV Guidelines, its designation is actually a misnomer, as it is not a mere directive that the government may freely disregard whenever convenient. As laid down in SM Land, Inc. v. BCDA (SM Land, Inc.),⁹⁸ a government entity may be compelled to comply with the provisions of the 2008 JV Guidelines.

In said case, the Court held that the 2008 JV Guidelines is an administrative issuance promulgated in compliance with Executive Order No. 423, series of 2005. As such, the 2008 JV Guidelines has the force and effect of law:
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Deviation from the procedure outlined cannot be countenanced. Well-established is the 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. 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. As such, no agency or instrumentality covered by the JV Guidelines can validly stray from the mandatory procedures set forth therein, even if the other party acquiesced therewith or not.

Under the 2008 JV Guidelines, a JV partner may be selected through competitive selection or negotiated agreement.⁹⁹ Negotiated agreements may be entered into when the government entity receives an unsolicited proposal,¹⁰⁰ defined as a project proposal submitted by the private sector without any formal solicitation issued by the government entity.¹⁰¹chanRoblesvirtualLawlibrary

In all cases where the government entity directly negotiates with a private sector participant for a proposed JV undertaking, the negotiated terms shall be subjected to a competitive challenge.¹⁰² A competitive challenge is an alternative selection process where third parties are invited to submit comparative proposals to an unsolicited proposal.¹⁰³chanRoblesvirtualLawlibrary

Thus, negotiated agreements are subjected to a three-stage process. Throughout said procedure, the government entity is vested with discretion, but the last stage also imposes legal duties. Below is a summary of the steps together with respective characterizations:

1. Stage One involves the submission of an unsolicited proposal to the government entity for a projected JV activity or undertaking.¹⁰⁴ The government entity, through its Joint Venture Selection Committee (JVSC), is tasked with the initial evaluation of the proposal.¹⁰⁵ Upon completion of the initial evaluation, the head of the government entity, upon recommendation of the JVSC, shall either issue an acceptance or non-acceptance of the proposal.¹⁰⁶ This is discretionary. Should the government entity accept the proposal, it is not bound to enter into the JV activity; the acceptance only signifies authorization to proceed with detailed negotiations on the terms and conditions of the JV activity.¹⁰⁷chanRoblesvirtualLawlibrary
   
   
2. Stage Two pertains to negotiations on the terms and conditions of the JV activity.¹⁰⁸ The JVSC shall also determine the eligibility of the private sector entity to enter into the JV activity.¹⁰⁹ In the course of negotiations, the government entity is free to accept or reject the proposed terms. This is discretionary. If negotiations are successful, the head of the government entity and the authorized representative of the private sector shall issue a signed certification that an agreement has been reached by the parties.¹¹⁰ Thereafter, the contract documents, including the selection document for the competitive challenge, are prepared.¹¹¹chanRoblesvirtualLawlibrary
   
   
3. Stage Three refers to the conduct of a competitive challenge. The government entity prepares the tender documents,¹¹² which include the draft contract reflecting the negotiated terms and conditions.¹¹³ The head of the government entity shall approve all tender documents including the draft contract before the publication of the invitation for comparative proposals.¹¹⁴chanRoblesvirtualLawlibrary
   
   Within seven (7) calendar days from the issuance of the certification of a successful negotiation referred to in Stage Two above, the JVSC shall publish the invitation for comparative proposals.¹¹⁵ The private sector entity shall post the proposal security at the date of the first day of the publication.¹¹⁶chanRoblesvirtualLawlibrary
   

Once the proposal undergoes a competitive challenge, the original proponent is accorded certain rights, viz:

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.¹¹⁷chanRoblesvirtualLawlibrary

The use of the word "shall" in Stage Three underscores the mandatory character of the provision and disavows any notion of discretion.¹¹⁸ Thus, while the government entity has the discretion to accept or reject a proposal in the first two steps,¹¹⁹ the immediate award of the project becomes mandatory in Stage Three once certain conditions occur, i.e., the proposal underwent a competitive challenge and no comparative proposal was received by the government entity.

On a sound foundation rests the distinction between discretion and duty across the various stages. In the first two stages, the parties are still in the negotiations phase. Hence, either party is free to walk away from the bargaining table at any point. At these early stages, the government is afforded every opportunity to reject the proposal and its terms.

The success of the negotiations, therefore, signifies two things: (1) the government entity is satisfied with the negotiated terms and the qualifications of the proponent; and (2) the government entity is committed to pursue the project. It would not have accepted the terms if it were otherwise. Moreover, at that point, the government entity already had a hand in shaping the terms of the contract. Presumably, it already incorporated into the final terms all matters it deems necessary and beneficial.

Hence, once the negotiations are successfully concluded and the parties reach an agreement in the latter part of Stage Two, the original proponent is accorded duties, rights, and preferential status. The only issue that remains is whether another private entity can offer a proposal that is superior or more advantageous to the government than the negotiated terms. At Stage Three, the original proponent is now required to post the proposal security, which involves a substantial amount.¹²⁰ Conversely, it assumes the status of a default winner, unless another private entity outranks it.

In SM Land, Inc. v. BCDA,¹²¹ the Court laid down the rights conferred on the original proponent once it reaches Stage Three:
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A scrutiny of the NEDA JV Guidelines reveals that certain rights are conferred to an Original Proponent. As correctly pointed out by SMLI, these rights include:

1. The right to the conduct and completion of a competitive challenge;cralawlawlibrary
   
   
2. The right to match the superior or more advantageous offer, if any;cralawlawlibrary
   
   
3. The right to be awarded the JV activity in the event that a matching offer is submitted within the prescribed period; and
   
   
4. The right to be immediately awarded the JV activity should there be no comparative proposals.¹²²chanRoblesvirtualLawlibrary
   

In this case, petitioner had already undergone all three stages and complied with all the requisites for the immediate award of the JV activity. Petitioner submitted an unsolicited proposal, underwent negotiations, arrived at an agreement with SBMA, and completed the competitive challenge without contest.

Thus, the CA erred in ruling that petitioner has no right to the issuance of the NOA because the parties had yet to conduct a Swiss Challenge.¹²³ The competitive challenge under Annex C of the 2008 JV Guidelines is what was referred to as the Swiss Challenge, having been patterned after the Swiss Challenge method.¹²⁴chanRoblesvirtualLawlibrary

It is undisputed that petitioner and SBMA carried out the competitive challenge. SBMA published an invitation to submit comparative proposals. It also scheduled a pre-proposal conference and the opening of eligibility documents and proposals. No one submitted any proposal. Thus, the requirement of conducting a competitive challenge (or a Swiss Challenge) had already been complied with.

Moreover, contrary to respondents' contentions, the conditional character of the JVA upon its execution does not negate petitioner's entitlement to the issuance of the NOA after the conduct of the competitive challenge.¹²⁵ The conditions attached to the JVA are specified in its Whereas clauses, viz:
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xxx

WHEREAS, in order to formalize the agreements reached between the parties pending the result of the challenge process under the JV Guidelines issued by the NEDA, the parties have agreed to execute this Agreement;cralawlawlibrary

WHEREAS, pursuant to the JV Guidelines issued by the NEDA, the proposal of HCPTI will then be advertised for challenge by SBMA;cralawlawlibrary

WHEREAS, if no bidder will challenge the proposal of HCPTI within the prescribed period, then this Agreement shall become the final contract of SBMA and HCPTI for the Development, Management and Operation of the Joint Venture Areas;cralawlawlibrary

WHEREAS, if there will be qualified bidders who will challenge the offer of HCPTI, the bids (offers) will have to be reviewed by SBMA and if any offer/s is/are better than that of HCPTI, then HCPTI has the option to match the better or best offer;cralawlawlibrary

WHEREAS, should HCPTI fail to match the best/better offer within thirty (30) working days from the endorsement thereof by SBMA to HCPTI, the development, management and operation of the Joint Venture Areas will be awarded to the bidder with the best/better offer and this Agreement shall be deemed to have not at all been executed by the parties or had taken effect;cralawlawlibrary

WHEREAS, on the other hand, should HCPTI match the best/better offer, then this agreement will have to be revised accordingly to incorporate the necessary changes;cralawlawlibrary

NOW, THEREFORE, HCPTI hereby submits this Agreement with SBMA as its offer and proposal to develop, manage, and operate the Joint Venture Areas, and SBMA agrees to accept the same subject to challenge pursuant to the JV Guidelines issued by the NEDA.¹²⁶chanRoblesvirtualLawlibrary

To clarify, all contracts executed before Stage Three are indeed preliminary and not yet binding. As accurately stated in the JVA, Stage Two of the process results in the execution of a contract that formalizes the terms agreed upon by the parties. The 2008 JV Guidelines refer to this contract as a "draft contract."¹²⁷ The draft contract is part of the selection or tender documents that will be given to prospective challengers.¹²⁸chanRoblesvirtualLawlibrary

Thus, the conditional nature of the JVA is consistent with, and is in fact required by, the provisions of the 2008 JV Guidelines. It does not alter the legal duty of SBMA to award the project upon completion of the competitive challenge. As recognized in the Whereas clause of the JVA, if no bidder challenges the proposal of petitioner, then the JVA shall become the final contract between the parties.
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The suppletory application of rules on competitive selection should not contradict those specifically governing unsolicited proposals. The issuance of Resolution No. 10-05-3646 supports petitioner's entitlement to the issuance of a NOA

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The CA cited Section VIII, Annex A of the 2008 JV Guidelines to support its conclusion that the acceptance or rejection of the proposal is discretionary.¹²⁹ SSTI further argues that, since there is a choice involved, the award of the project is discretionary and not compellable by mandamus.¹³⁰chanRoblesvirtualLawlibrary

We do not agree.

The cited provisions read:
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VIII. Award and Approval of Contract

1. Recommendation to Award. Within seven (7) calendar days from the date the evaluation procedure adopted is completed, the JV-SC shall submit the recommendation of award to the Head of the Government Entity concerned. The JVSC shall include as part of its recommendation, a detailed evaluation/assessment report on its decision regarding the evaluation of the proposals, and explain in clear terms the basis of its recommendations.

2. Decision to Award. Within seven (7) calendar days from the submission by JV-SC of the recommendation to award, the Head of the Government Entity shall approve or reject the same. The approval shall be manifested by signing and issuing the "Notice of Award" to the winning private sector participant within seven (7) calendar days from approval thereof.¹³¹chanRoblesvirtualLawlibrary

It bears stressing, however, that the above-quoted provisions are in Annex A of the 2008 JV Guidelines. Annex A governs the procedure for proposals that underwent competitive selection, and not unsolicited proposals subject of competitive challenge. The procedure for unsolicited proposals is set forth in Annex C of the 2008 JV Guidelines.

While the provisions in Annex A are suppletory to those in Annex C,¹³² the provisions carried over from Annex A should not contradict those expressly provided in Annex C, including the requirement of immediate award in the absence of a comparative proposal. Otherwise, there would be absurdity and confusion.

In the context of a competitive selection, the head of the government entity retains discretion until the very end of the selection process. This is because competitive selection is akin to ordinary procurement, where the government entity publishes an invitation to apply and blindly receives proposals.¹³³ Similar to the first two stages of the three-part framework for unsolicited proposals, the government entity may reject or approve any of the proposals. It may even reject all of them.¹³⁴ The government entity is free to reject because it had not previously seen, studied, or revised the proposals prior to the scheduled date of proposal opening.¹³⁵ The proposals were not, and would not be, negotiated.

In contrast, in the three-part framework for unsolicited proposals, the proposal that is put up for competitive challenge had already been thoroughly studied, negotiated, and approved by the government entity. To stress, the proposal would not have reached Stage Three if it was not acceptable to the government entity. Indeed, it would be unjust to allow the proponent to undergo the arduous process only to reject the approved proposal in the end, even in the absence of a comparative proposal. To do so would be plainly capricious and whimsical. Hence, the government entity should not retain the same degree of discretion for unsolicited proposals that already reached Stage Three.

In any event, the undisputed facts show that the SMBA Board, the head of the government entity referred to in the 2008 JV Guidelines, already approved the SBMA-JSVP's recommendation to award the project. Hence, assuming further approval was in fact necessary, such approval had already been obtained.

The pertinent part of the Approval Resolution reads:
chanroblesvirtuallawlibrary

Resolution No. 10-05-3646

Resolve, as it is hereby resolved, upon the recommendation of Management, and without prejudice to COA regulations and pertinent laws on the matter, the Board hereby approves the Resolution adopted by the Joint Venture Selection Panel (JVSP) on 22 April 2010 awarding the Joint Venture Agreement for the Development, Operation and Management of the NSD Area, Boton, Alava, Rivera and Bravo Wharfs/Ports in favor of Harbour Centre Port Terminal, Inc. (HCPTI) without prejudice to whatsoever action the Commission on Elections (COMELEC) may take on the SBMA's request for the exemption from the ban in awarding contracts during the election period and subject to the favorable opinion of the Office of the Government Corporate Counsel (OGCC) on the legality and propriety of said Joint Venture Agreement.¹³⁶chanRoblesvirtualLawlibrary

That the approval was not reduced into a NOA does not diminish petitioner's right to its issuance, contrary to the CA's and respondents' position.¹³⁷ On the contrary, the Approval Resolution supports petitioner's right to have the NOA issued within seven (7) calendar days from approval, as mandated in the 2008 JV Guidelines.¹³⁸ The NOA is merely a manifestation of the approval by the SBMA Board.

SSTI further cites provisions and jurisprudence to the effect that government agencies possess the discretion to accept or reject a bid and award contracts.¹³⁹ However, the cited provisions and cases are inapplicable for they do not pertain to JVAs governed by the JV Guidelines. They refer to projects bidded out under R.A. No. 9184, or the Government Procurement Reform Act, and its preceding laws. The rules on procurement are distinct and separate from those on JVAs.

SSTI also relies on Asia's Emerging Dragon Corp. v. Department of Transportation and Communications¹⁴⁰ (Asia's Emerging Dragon), where the Court refused to issue a writ of mandamus to award a project to an original proponent. However, Asia's Emerging Dragon involved an unsolicited proposal made under Republic Act No. 6957 (BOT Law), not the JV Guidelines. As such, the proposal was subject to different rules and procedures.

Moreover, in that case, a more advantageous proposal was submitted during the Swiss Challenge. The original proponent failed to timely match it. Naturally, the original proponent lost its right to be awarded the project when it failed to submit an equally advantageous proposal. In contrast, no comparative proposal was submitted in this case. With such absence, petitioner already acquired a right to the award of the project.
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The condition of a favorable OGCC opinion had been met. Even assuming otherwise, the NOA must still be issued in favor of petitioner

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The CA cited the conditions imposed in the Approval Resolution as bases to conclude that petitioner has no vested right to the issuance of the NOA.¹⁴¹ In the Approval Resolution, the SBMA Board subjected the award of the project to two (2) conditions: a COMELEC exemption and a favorable OGCC opinion. According to the CA, since the OGCC's approval was not obtained, petitioner has no right enforceable by mandamus.¹⁴²chanRoblesvirtualLawlibrary

We do not agree.

It goes without saying that the requirement of a COMELEC exemption has been rendered functus officio upon the lapse of the election period. The only contentious issue is the obtainment of a favorable OGCC opinion.

Such condition had been complied with. The OGCC issued a favorable opinion affirming the legality of the JVA.¹⁴³ Contrary to the CA's conclusion, the OGCC's proposed changes did not affect the tenor of its opinion.¹⁴⁴ The suggested revisions were only made "to ensure clarity and avoid confusion;"¹⁴⁵ they did not materially affect the terms of the JVA. Besides, the proposed amendments had been formally adopted by SBMA and petitioner.¹⁴⁶chanRoblesvirtualLawlibrary

The OGCC's subsequent recommendation to suspend the issuance of the NOA does not erase the fact of prior compliance. The favorable OGCC opinion was not "revoked" or "amended", as posited by SSTI.¹⁴⁷ The OGCC merely deferred to the findings of the NEDA on the technical and financial aspects of the project, as was the usual practice.¹⁴⁸ The OGCC did not withdraw its findings on the legality of the JVA as reviewed.

Moreover, under the 2008 JV Guidelines, the favorable opinion of the OGCC is not a condition precedent to the issuance of the NOA; it is a condition precedent to the execution of the final JVA, which ordinarily follows after the issuance of the NOA.

For clarity, quoted below are the provisions of Annex A of the 2008 JV Guidelines that are suppletorily applicable to negotiated agreements. These enumerated in sequence the steps that should have been observed by the parties:
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xxx

2. Decision to Award. xxx The approval shall be manifested by signing and issuing the "Notice of Award" to the winning private sector participant within seven (7) calendar days from approval thereof.¹⁴⁹chanRoblesvirtualLawlibrary
   
   
3. Notice of Award. The "Notice of Award" to be issued by the Head of Government Entity concerned, shall contain among others, an instruction to the winning private sector participant to comply with conditions precedent for the execution of the JV Agreement and to submit compliance statements with regard thereto, within fifteen (15) calendar days from receipt of the "Notice of Award".
   
   Failure to comply with the conditions precedent for the execution of the contract within the prescribed fifteen (15)-calendar day period will result in confiscation of the proposal security. Within seven (7)-calendar days from receipt of the compliance statements from the winning private sector participant, the Head of the Government Entity shall determine the sufficiency of the same, and notify the winning private sector participant accordingly.
   
   
4. Validity of Proposals/Return of Proposal Security. The execution of the JV Agreement shall be made within the period of the validity of the proposal security. The required proposal security shall be valid for a reasonable period, but in no case beyond one hundred eighty (180) calendar days following the opening of the proposals. xxx
   

xxx

7. Execution/Approval of the JV Agreement. The authorized signatory(ies) of the winning private sector participant and the Government Entity concerned, shall execute and sign the JV Agreement, within seven (7) calendar days from receipt by the winning private sector participant of the notice [of award] referred to in VIII.3 above.
   
   Consistent with Article 1159 of the New Civil Code, said JV Agreement is considered the law between the parties, and the parties shall perform their respective prestations, obligations, and undertakings thereunder with utmost good faith, with a view to attaining the objective thereof. xxx
   
   xxx
   
   
8. Other Approvals for Contract. The entity tasked under the JV Agreement shall, as may be required under existing laws, rules and regulations, secure any and all other approvals for the contract, or the implementation thereof, from government agencies or bodies including the Regulator, in the case of Public Utility Projects. This includes securing the necessary and appropriate environmental clearances from the DENR prior to actual project implementation. The DENR shall act on the environmental clearance of the JV activity within the time frame prescribed and following the guidelines of the DENR Administrative Order No. 96-37 and subsequent guidelines as may be issued from time to time. The Government Entity may provide the necessary assistance to its JV partner in securing all the required clearances. The contract shall provide milestones in securing such other approvals required for the implementation of the contract.
   
   Prior to the execution of the JV Agreement, the OGCC, OSG or other entity prescribed by law/issuances as the statutory counsel of GOCCs, GCEs and GICPs, shall issue the corresponding Counsel's Opinion.¹⁵⁰chanRoblesvirtualLawlibrary
   

In summary, the conditions are not attached to the issuance of the NOA, but to the execution of the final JVA. Compliance with the conditions precedent shall be made after the issuance of the NOA. The absence of a favorable OGCC Opinion does not preclude the issuance of the NOA. Only the execution of the final JVA is deferred pending the issuance of the opinion.

In this regard, the Court notes that the parties adopted a different modality for the finalization of the JVA, albeit with the same legal effect. In the 2008 JV Guidelines, the parties will only prepare a draft contract prior to the competitive challenge. The draft contract shall only be signed after the issuance of the NOA and compliance with conditions precedent, including the submission of the OGCC opinion.

Here, the parties already signed the JVA, but made its effectivity subject to the outcome of the competitive challenge. In other words, the parties opted to impose a legal obstacle (i.e., suspensive condition) to defer the effectivity of the final JVA, as opposed to a physical hindrance (i.e., an unsigned contract).

Nonetheless, the legal effect is the same  the JVA shall not be effective until after all the conditions had been complied with. Hence, while the provisions of the 2008 JV Guidelines were not strictly complied with, their spirit and intent were observed. The same conclusion was correctly reached by the OGCC when it reviewed the JVA and found no irregularity in the execution of a JVA subject to a suspensive condition.¹⁵¹chanRoblesvirtualLawlibrary

In sum, assuming that the conditions precedent had not been complied with, this non-compliance only defers the effectivity of the JVA, not the issuance of the NOA.
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The 2008 JV Guidelines does not require a NEDA endorsement, much less approval

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There is no legal basis for the suspension of the issuance of the NOA due to NEDA's withdrawal of its endorsement. The 2008 JV Guidelines does not require NEDA's endorsement or approval.

Among the many differences between JVs and other government contracts was the requirement for the endorsement or approval of NEDA. For instance, certain projects falling under the BOT Law require approval by the NEDA Board or its Investment Coordination Committee (ICC).¹⁵² In contrast, in the 2008 JV Guidelines, the participation of NEDA is very limited: (1) one out of six voting members of the JVSC shall be a representative of NEDA;¹⁵³ and (2) the signed copy of the JVA shall be submitted to NEDA.¹⁵⁴ The endorsement or approval of NEDA is not required.

The JVSC, of which a NEDA representative is a member, is in charge of the pre-selection and selection processes,¹⁵⁵ but it only submits the recommendation of award to the head of the government entity (in this case, the SBMA Board).¹⁵⁶ The authority to approve JVAs is vested on the SBMA Board,¹⁵⁷ not the JVSC, much less the NEDA representative therein. In fact, the 2008 JV Guidelines expressly provides that, aside from the approval of the head of the government entity, no further approval is necessary.¹⁵⁸chanRoblesvirtualLawlibrary

Notably, the 2013 JV Guidelines now differentiates the approvals required, depending on the character and cost of the JV activity.¹⁵⁹ Certain projects require approval by the NEDA ICC, while others may be approved by the head of the government entity.¹⁶⁰ This distinction and the requirement for a NEDA approval are absent in the 2008 JV Guidelines.

NEDA itself appears to be aware of the limits of its authority. In its letter dated 18 January 2012 to then SBMA Chairman and Administrator Roberto V. Garcia,¹⁶¹ NEDA reiterated its refusal to reconsider the withdrawal of its endorsement. Nonetheless, it urged SBMA to "make its own assessment as to the propriety of the said JVA and to determine for itself whether it was entered into in strict compliance with the 2008 NEDA Joint Venture Guidelines."¹⁶² The OGCC reiterated NEDA's advice, stating that the presence or absence of a material deviation "is a matter that the SBMA Board can actually rule upon."¹⁶³chanRoblesvirtualLawlibrary

Unfortunately, SBMA did not exercise this authority. Instead, it suspended the issuance of the NOA pending NEDA's favorable endorsement. The OGCC also recommended such suspension, without citing any clear legal basis therefor.¹⁶⁴ In other words, SBMA, NEDA, and the OGCC passed the buck among themselves, leaving petitioner at their mercy.

The tentativeness displayed by all involved should not be tolerated, lest We drive away potential investors. Official actions must, at all times, be supported by clear legal bases. This is the primordial value that makes Us a government of laws, not of men.

Hence, SBMA and the OGCC may not make NEDA's endorsement a condition for the issuance of the NOA when there is no legal authority to that effect. Between procedural guidelines promulgated by an agency pursuant to its rule-making power and a condition unilaterally designed and imposed, the former must prevail.¹⁶⁵chanRoblesvirtualLawlibrary

Moreover, the withdrawal of the NEDA endorsement occurred more than a year after the SBMA Board issued the Approval Resolution. Hence, the withdrawal should not affect the petitioner's right that accrued long before said withdrawal. Otherwise, We would countenance unilateral withdrawal from contracts entered into by the government even without a clear legal basis.
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The reasons for NEDA's withdrawal of endorsement are unmeritorious

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Petitioner's entitlement to the writ is further highlighted by the fact that the reasons proffered by NEDA for the withdrawal of its endorsement are unmeritorious. Even the SBMA Board defended the JVA, stating that the NEDA "misconstrued and apparently did not fully understand the intricacies of the issues" it raised against the JVA.¹⁶⁶chanRoblesvirtualLawlibrary

As mentioned, the execution of a conditional JVA at Stage Two has the same legal effect as the preparation of a draft contract to be signed after the competitive challenge. The JVA expressly states that it is subject to the results of Stage Three, and may even be abandoned should SBMA receive a better proposal.¹⁶⁷ Thus, the intent of the 2008 JV Guidelines, i.e., to subject the terms of the proposal to a competitive challenge, had been achieved.

On the supposed "material change in the total contract cost," there is no evidence showing that the project cost was indeed changed from approximately Php763.029 Million to around Php5.537 Billion after the competitive challenge.¹⁶⁸ Records show that the project cost, revenue shares, and other material financial components of the JV were included in the tender documents, which were then used as basis for the competitive challenge.¹⁶⁹ The tender documents show that the estimated direct project cost was pegged at approximately PhP5.524 Billion.¹⁷⁰ There is thus no basis to the claim that the project cost was initially fixed at Php763.029 Million.

As correctly emphasized by the petitioner, there was never any change in the total cost of the JV activity, and the proposal stood consistently at around Php5.5 Billion.¹⁷¹ What was changed was the basis for the computation of the bid security.

The SBMA-JVSP fixed the bid security based on the total fixed and guaranteed revenue share of SBMA for 25 years amounting to USD32 Million. This basis was later on changed to Php5.537 Billion representing the total investments under the proposal.¹⁷² SBMA proffered the same reasons when it defended the project against NEDA.¹⁷³chanRoblesvirtualLawlibrary

Notably, the 2008 JV Guidelines requires a NEDA representative to sit as a voting member of the JVSP.¹⁷⁴ In this case, two (2) NEDA representatives were appointed as members of the SBMA-JVSP, the body that fixed the amount of the bid security.¹⁷⁵ Petitioner merely complied with the SBMA-JVSP's instructions.

In its Opinion dated 02 June 2011, the OGCC traced the origins of the change in bid security, which NEDA eventually interpreted as a material deviation in the project cost. The OGCC even remarked that the error in the computation of the bid security was attributable to SBMA:
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Then of course there's the allegation that HCPTI failed to comply with the required proposal security. This Office notes that the initial proposal security that the proponent posted was based on the tender documents. SBMA admits that it has initially excluded the respective equity of SBMA and HCPTI from its computation of the cost of the JV activity. Upon a re-evaluation, however, SBMA decided to include the value of HCPTI's total investment commitment prompting it to revise the figures leading to the JVSP's demand from HCPTI for an increased proposal security. HCPTI has since complied with this demand. It would be unfair to dismiss the proposal and deny HCPTI the chance to make good with its representation for this JV just because it belatedly gave a P100 million security proposal upon an error that is not of its own making.¹⁷⁶chanRoblesvirtualLawlibrary

The confusion on the components of the project cost is understandable. The 2008 JV Guidelines does not define or provide the formula for the "cost of JV activity." This absence gave the government agency leeway in defining what will be included in the project cost and the basis for the bid security. In contrast, the phrase is now defined in the 2013 JV Guidelines as "the total amount of the contributions of the parties to the JV activity/project in present value with discount rate as prescribed by the appropriate Approving Authority."¹⁷⁷ The inclusion of such definition is an implied acknowledgment of the ambiguity of the 2008 JV Guidelines.

In sum, there is no law justifying the non-issuance of the NOA due to the withdrawal of the NEDA endorsement. Petitioner has complied with all the legal requisites for the issuance of the NOA. As such, a writ of mandamus may issue to compel SBMA to perform its legal duty.
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There is no basis to withhold the issuance of the NTP

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As regards the NTP, the 2008 JV Guidelines neither refers to, nor lays the requirements for, the issuance of an NTP.

Nonetheless, in their JVA, the parties stipulated for the issuance of an NTP. The issuance of the NTP shall commence the period within which petitioner and SBMA shall procure conditions precedent to the effectivity of the JVA,¹⁷⁸ such as the obtainment of the necessary permits, licenses, and authorizations.¹⁷⁹ The JVA's effectivity date is also reckoned thirty (30) days from petitioner's receipt of the NTP.¹⁸⁰chanRoblesvirtualLawlibrary

It appears that there is no legal or contractual obstacle to the issuance of the NTP. Hence, the same must also be issued to petitioner in preparation for the implementation of the JVA, and so that the parties may start complying with other conditions precedent stipulated therein.

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated 08 August 2013 and Resolution dated 14 January 2014 of the Court of Appeals in CA-G.R. SP No. 125330 are REVERSED and SET ASIDE. The Decision dated 12 January 2012 of Branch 72, Regional Trial Court of Olongapo City in Civil Case No. 108-0-2011 is hereby REINSTATED.

SO ORDERED.

Rosario and Marquez, JJ., concur.
Leonen, J., (Chairperson), joined the dissenting opinion of J. Carandang.
Carandang, J., with dissenting opinion.

Endnotes:

---

¹ SM Land, Inc. v. BCDA, G.R. No. 203655, 13 August 2014 [Per J. Velasco, Jr.].

² Rollo, pp. 3-39.

³ Id. at 40-55; penned by CA Associate Justice Noel G. Tijam (now a retired Member of this Court) and concurred in by Associate Justices Romeo F. Barza and Ramon A. Cruz.

⁴ Id. at 57-60.

⁵ Id. at 61-77; penned by Presiding Judge Richard A. Paradeza.

⁶ Id. at 61; at the time the petition for mandamus was filed before the RTC, respondent Arreza was the Administrator and Chief Executive Officer of SBMA.

⁷ Id. at 4.

⁸ See Republic Act No. 7227, Sec. 13 (b).

⁹ Rollo, pp. 765-799.

¹⁰ Id. at 712.

¹¹ During the period material to this case, the 2008 version of the JV Guidelines was in effect. The 2008 JV Guidelines had since been superseded by the Revised Guidelines and Procedures for Entering Into Joint Venture (JV) Agreements Between Government and Private Entities approved on 03 May 2013 and published on 11 May 2013.

¹² Rollo, pp. 712 and 825.

¹³ Id. at 699.

¹⁴ Id.

¹⁵ Id. at 62.

¹⁶ Id.

¹⁷ Id. at 43.

¹⁸ Id. at 62.

¹⁹ Id.

²⁰ Id. at 43 and 63.

²¹ Id. at 43.

²² Id.

²³ Id. at 43-44.

²⁴ Id. at 710-864.

²⁵ Id. at 63 and 715.

²⁶ See id. at 346-359.
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²⁷ Rollo, p. 347.

²⁸ Id. at 63.

²⁹ Id. at 520.

³⁰ Id. at 8.

³¹ Id.

³² Id. at 9.

³³ Id.

³⁴ Id. at 63.

³⁵ Id. at 873.

³⁶ Id. at 64.

³⁷ Id.

³⁸ Id. at 10.

³⁹ Id. at 64.

⁴⁰ Id. at 502-503.

⁴¹ Id. at 65.

⁴² See id. at 504-516.

⁴³ Id. at 516.

⁴⁴ Id. at 514.

⁴⁵ Id. at 65.

⁴⁶ Id. at 305-306.

⁴⁷ Id. at 65-66.

⁴⁸ Id. at 66.

⁴⁹ Id.

⁵⁰ Id.

⁵¹ Id. at 517.

⁵² Id. at 300-301.

⁵³ Id. at 66.

⁵⁴ Id. at 61-77; penned by Presiding Judge Richard A. Paradeza.

⁵⁵ Id. at 77.

⁵⁶ Id. at 70.

⁵⁷ Id. at 71.

⁵⁸ Id. at 70.

⁵⁹ Id. at 70-71.

⁶⁰ Id. at 73.

⁶¹ Id. at 72.

⁶² Id. at 73.

⁶³ Id. at 75.

⁶⁴ Id. at 76.

⁶⁵ Id. at 51.

⁶⁶ Id.

⁶⁷ Id. at 52.

⁶⁸ Id. at

⁶⁹ Id. at 52-53.

⁷⁰ Id. at 53.

⁷¹ Id.

⁷² Id.

⁷³ Id.

⁷⁴ Id. at 57-60.

⁷⁵ Id. at 257.

⁷⁶ Id. at 483 and 1695.

⁷⁷ Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings, Inc., 645 Phil. 327, 22 September 2010 [Per J. Peralta].

⁷⁸ Id.

⁷⁹ Roxas & Co., Inc. v. Court of Appeals, 378 Phil. 727, 17 December 1999 [Per J. Puno]; Philippine Health Insurance Corp. v. Urdaneta Sacred Heart Hospital, G.R. No. 214485, 11 January 2021 [Per J. Hernando].

⁸⁰ Allied Banking Corp. v. Sia, G.R. No. 195341, 28 August 2019 [Per J. J.C. Reyes, Jr.].

⁸¹ Rollo, pp. 495-496 and 1704-1707.

⁸² Id. at 346-359; penned by Presiding Judge Jose Ener S. Fernando.

⁸³ Id. at 359.

⁸⁴ Id. at 521.

⁸⁵ See Palencia v. People, G.R. No. 219560, 01 July 2020 [Per J. Leonen].

⁸⁶ See Garin v. City of Muntinlupa, G.R. No. 216492, 20 January 2021 [Per J. Leonen].

⁸⁷ See Land Bank of the Phils. v. Cacayuran, 759 Phil. 145, 22 April 2015 [Per J. Perlas-Bernabe]; RULES OF COURT, Rule 3, Sec. 7: "SECTION 7. Compulsory Joinder of Indispensable Parties.  Parties-in-interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants."

⁸⁸ Technical Education and Skills Development Authority v. Abragar, G.R. No. 201022, 17 March 2021 [Per J. Hernando].

⁸⁹ Id.

⁹⁰ See Spouses Crisologo v. JEWM Agro-Industrial Corp., G.R. No. 196894, 03 March 2014 [Per J. Mendoza]; Macawadib v. PNP Directorate for Personnel and Records Management, 715 Phil. 484, 29 July 2013 [Per J. Peralta]; Technical Education and Skills Development Authority v. Abragar, G.R. No. 201022, 17 March 2021 [Per J. Hernando].

⁹¹ See Lihaylihay v. Tan, G.R. No. 192223, 23 July 2018 [Per J. Leonen].

⁹² Pangilinan v. Cayetano, G.R. Nos. 238875, 239483 & 240954, 16 March 2021 [Per J. Leonen].

⁹³ Development Bank of the Philippines v. Ronquillo, G.R. No. 204948, 07 September 2020 [Per J. Gaerlan].

⁹⁴ EXECUTIVE ORDER No. 423, Sec. 8 provides: "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."

⁹⁵ See 2008 JV Guidelines, Sec. 7.3.

⁹⁶ See 2013 JV Guidelines, Sec. 12:
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12.0 Transitory Provision. The following shall be governed by the old Guidelines (2008 JV Guidelines): (a) All negotiated JVs wherein a JV contract/agreement between the winning private sector participant and the Government Entity concerned has been executed prior to effectivity of the Revised JV Guidelines; and, (b) All JVs undertaken through competitive selection wherein the bid/s have already been opened prior to the effectivity of these Revised JV Guidelines.
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For JVs not covered under items (a) and (b) above, these Revised JV Guidelines shall govern, provided that the Revised Guidelines shall not, in any manner, operate to impair vested rights already accruing to a party.

⁹⁷ Id.
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⁹⁸ G.R. No. 203655, 13 August 2014 [Per J. Velasco, Jr.].
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⁹⁹ 2008 JV Guidelines, Sec. 7.3.

¹⁰⁰ Id. at Sec. 7.3.

¹⁰¹ Id. at Sec. 5.10.

¹⁰² Id. at Annex C, Sec. II.

¹⁰³ Id. at Sec. 5.8.

¹⁰⁴ Id. at Annex C, Sec. III.

¹⁰⁵ Id.

¹⁰⁶ Id.

¹⁰⁷ Id.

¹⁰⁸ Id.

¹⁰⁹ Id.

¹¹⁰ Id.

¹¹¹ Id.

¹¹² Id.

¹¹³ 2008 JV Guidelines, Annex A, Sec. II.

¹¹⁴ Id. at Annex C, Sec. III.

¹¹⁵ Id.

¹¹⁶ Id.

¹¹⁷ Emphasis supplied.

¹¹⁸ See In re: Yuhares Jan Barcelote Tinitigan, 815 Phil. 664, 07 August 2017 [Per J. Carpio]; SM Land, Inc. v. BCDA, supra at note 98.

¹¹⁹ See SM Land, Inc. v. BCDA, supra at note 98:
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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.

¹²⁰ 2008 JV Guidelines, Annex A, Sec. IV.

¹²¹ G.R. No. 203655, 13 August 2014 [Per J. Velasco, Jr.].

¹²² Emphasis supplied; emphasis in the original omitted.

¹²³ Rollo, p. 52.

¹²⁴ See SM Land, Inc. v. BCDA, supra at note 98. Strictly speaking, however, the term Swiss Challenge is used for projects falling under Republic Act No. 6957, as amended (See Revised Implementing Rules and Regulations of Republic Act No. 6957, Sec. 3.2.)

¹²⁵ See Rollo, p. 484.

¹²⁶ Rollo, p. 715.

¹²⁷ 2008 JV Guidelines, Annex A, Sec. II.

¹²⁸ Id. at Annex C, Sec. III.

¹²⁹ Rollo, p. 51.

¹³⁰ Id. at 485.

¹³¹ Emphasis and underscoring supplied.

¹³² 2008 JV Guidelines, Annex C, Sec. III.

¹³³ See id. at Annex A.

¹³⁴ 2008 JV Guidelines, Annex C, Sec. III.

¹³⁵ See 2008 JV Guidelines, Annex A, Sec. VII.

¹³⁶ Emphasis supplied.

¹³⁷ Rollo, pp. 486 and 1696.

¹³⁸ 2008 JV Guidelines, Annex A, Sec. VIII (2).

¹³⁹ Rollo, pp. 488-493, citing Republic Act No. 9184, Sec. 41; Implementing Rules and Regulations of RA No. 9184, Sec. 37.1.4; First United Constructors Corp. v. Poro Point Management Corp., 596 Phil. 334, 19 January 2009 [Per J. Nachura]; Bureau Veritas v. Office of the President, 282 Phil. 734, 03 February 1992 [Per J. Melencio-Herrera].

¹⁴⁰ 575 Phil. 59, 18 April 2008 [Per J. Chico-Nazario].

¹⁴¹ Rollo, pp. 52-53.

¹⁴² Id. at 53.

¹⁴³ Id. at 504-516.

¹⁴⁴ Id. at 53.

¹⁴⁵ Id. at 514.

¹⁴⁶ Id. at 65.

¹⁴⁷ Id. at 495.

¹⁴⁸ Id. at 203-204.

¹⁴⁹ Emphasis and underscoring supplied.

¹⁵⁰ Emphasis supplied.

¹⁵¹ Rollo, pp. 508-509:
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If this suspensive condition of subjecting the signed agreement to a challenge does not materialize, then the parties will stand as though the conditional obligation never existed. Thus, while on its face the JVA appears to have been executed before it can be challenged competitively, the very terms of the signed JVA readily refutes this. Evidently therefore, the required transparent and competitive process found in the JV Guidelines has not been sacrificed.

¹⁵² See Republic Act No. 6957, as amended, Sec. 4; Revised Implementing Rules and Regulations of Republic Act No. 6957, Sec. 2.7.

¹⁵³ 2008 JV Guidelines, Annex A, Sec. I (1) (f).

¹⁵⁴ Id. at Annex A, Sec. VIII (7).

¹⁵⁵ Id. at Annex A, Sec. I (2).

¹⁵⁶ Id. at Annex C. Sec. III (5).

¹⁵⁷ Id. at Annex A, Sec. VIII (7).

¹⁵⁸ Id. at Sec. X.

¹⁵⁹ 2013 JV Guidelines, Sec. 7.2.

¹⁶⁰ Id.

¹⁶¹ Rollo, p. 206.

¹⁶² Id. at

¹⁶³ Id. at 208.

¹⁶⁴ Id. at 300-301.

¹⁶⁵ SM Land, Inc. v. BCDA, supra at note 98.

¹⁶⁶ Rollo, p. 32.

¹⁶⁷ Id. at 715.

¹⁶⁸ Id. at 305-306.

¹⁶⁹ Id. at 710-864.

¹⁷⁰ Id. at 821.

¹⁷¹ Id.

¹⁷² Id.

¹⁷³ Id. at 969.

¹⁷⁴ 2008 JV Guidelines. Annex A, Sec. I (1).

¹⁷⁵ Rollo, pp. 302 and 305.

¹⁷⁶ Id. at 511.

¹⁷⁷ 2013 JV Guidelines, Sec. 5.4.

¹⁷⁸ JVA, Clause 7.2.1 (Rollo, p. 726).

¹⁷⁹ Id. at Clause 7.1.1 (Id.).

¹⁸⁰ Id. at Clause 7.1.2 (Id.).

---

CARANDANG, J.:

Before Us is a Petition for Review on Certiorari filed by Harbour Centre Port Terminal Inc. (petitioner) assailing the Decision¹ dated August 8, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 125330, which reversed the Decision² dated January 12, 2012 of the Regional Trial Court (RTC), Branch 72 of Olongapo City in Civil Case No. 108-0-2011 granting the writ of mandamus and directing respondent Armand C. Arreza (Arreza) and/or his successor as Administrator of the Subic Bay Metropolitan Authority (SBMA) to issue the Notice of Award and Notice to Proceed to petitioner.

Antecedents

Petitioner is a bulk and break-bulk port operator in the Philippines that currently operates the 15-hectare multi-purpose port terminal inside the 79-hectare port-city complex called the Manila Harbour Centre. On the other hand, respondent SBMA was created pursuant to Republic Act (R.A.) No. 7227.³ The SBMA is tasked to operate, manage, regulate, administer and develop the Subic Special Economic Zone also known as the Subic Bay Freeport Zone (SBFZ).

Upon the SBMA's determination of the need to consolidate all break?-bulk, bulk and other essential port services at the Naval Supply Depot, Boton, Alava, Rivera and Bravo Wharfs/Ports (joint venture areas) to achieve efficiency and optimization of port resources, the SBMA decided to undertake the development, management and operation of the joint venture areas through a Public-private partnership.⁴chanRoblesvirtualLawlibrary
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On November 16, 2009, SBMA received an unsolicited proposal from petitioner to enter into an unincorporated joint venture (JV) for the development, management and operation of the joint venture areas at the SBFZ.

On November 20, 2009, the SBMA Board of Directors (SBMA Board), acting pursuant to the 2008 Joint Venture Guidelines and Procedures for Entering into Joint Venture Agreements between Government and Private Entities (JV Guidelines), issued Resolution No. 09-11-3400 that "accepted in principle" petitioner's unsolicited proposal. The acceptance authorized the SBMA Management to commence further negotiations with petitioner on the terms, conditions and scope, as well as legal, technical and financial aspects of petitioner's unsolicited proposal. Consequently, the SBMA Board constituted the SBMA Joint Venture Selection Panel (SBMA-JVSP) which was tasked, among others, to pursue negotiations with petitioner. Since the JV guidelines required that a representative from NEDA shall sit as a voting member of the JVSP, the SBMA invited and requested the NEDA to appoint its representative to the same. Accordingly, the NEDA was duly represented before the SBMA-JVSP in all stages.

Thereafter, the SBMA-JVSP proceeded with the evaluation of petitioner's qualifications and proposal, which was found to be consistent and favorable to SBMA's objective of increasing revenues and maximizing its port resources. The SBMA-JVSP likewise found petitioner qualified in undertaking the proposed JV project. After a series of in-depth negotiations, the results of the negotiations were embodied in the Terms of Reference for the solicitation of comparative proposals. At the same time, the parties likewise exchanged pertinent documents, corporate records and formal inquiries relative to the proposed JV project.

Meanwhile, a similar unsolicited proposal was jointly submitted by Amerasia International Services, Inc. and Mega Subic Terminal Services, Inc. which was, however, returned for being insufficient in form and content, with the option of resubmitting a revised proposal. No revised proposal was however submitted.

On February 5, 2010, the SBMA-JVSP presented to the SBMA Board the results of the negotiations with petitioner on the latter's proposed JV. Thus, the SBMA Board issued Resolution No. 10-02-3514 approving the terms and conditions negotiated by the SBMA-JVSP.

On February 24, 2010, in order to formalize the agreements reached between the parties pending the result of the challenge process under the JV Guidelines, petitioner and SBMA executed the Joint Venture Agreement for the Development, Operation And Management of The Naval, Supply Depot, Boton, Alava, Rivera And Bravo Wharfs/Ports (JVA). Per the JV Guidelines in Stage Two of the process, SBMA started preparation of the contract and selection documents for the Competitive Challenge.
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On the same date, February 24, 2010, respondent Subic Seaport Terminal Inc. (SSTI) filed a case against SBMA before the RTC of Dinalupihan, Bataan for the Declaration of Nullity of the JVA. Petitioner was not impleaded in this case.

On February 26, 2010, petitioner submitted the required Bid Security for the project.

On March 3, 2010, SBMA sent petitioner a formal communication where it proposed certain measures/arrangements aimed at respecting all existing agreements/contracts which the SBMA may have with locators at the SBFZ. Petitioner replied in a letter dated March 19, 2010 expressing its commitment to abide by SBMA's existing contractual undertakings.

On March 5, 2010, SBMA published in the Philippine Daily Inquirer the "Invitation to Pre-qualify and to Submit Comparative Proposals" scheduled on April 22, 2010. This was also posted in SBMA's website and in conspicuous places in the SBFZ. In the same invitation, SBMA announced that prospective challengers to petitioner's proposal may purchase bid documents starting March 12, 2010 with the deadline for the submission of completed bids on or before April 12, 2010.

On March 12, 2010, Asian Terminals, Inc. (ATI) purchased bid documents indicating a possible challenger to petitioner.

The SBMA scheduled the pre-proposal conference on March 25, 2010. However due to lack of quorum on that day, the pre-proposal conference was re-scheduled to April 7, 2010 and the opening of eligibility documents and proposals to April 22, 2010. On the scheduled date of the pre-proposal conference, no competitive challenge was interposed by any party. Also, none had submitted bids or comparative proposals to challenge petitioner during the scheduled deadline and opening of eligibility documents and comparative proposals on April 22, 2010. Thus, the SBMA-JVSP issued a Resolution on April 22, 2010 recommending the award of the project to petitioner.

On May 7, 2010, the SBMA Board issued Resolution No. 10-05-3646 which resolved to adopt the recommendation of the SBMA-JVSP to award the project to petitioner subject only to the COMELEC exemption, and the favorable opinion of the Office of the Government Corporate Counsel (OGCC).

The request of SBMA for exemption from the COMELEC from the election ban of its priority projects and other related procurements, which included the proposed JV with petitioner was rendered functus officio since the election period lapsed without any award being given by SBMA.

Noting error in the computation of the bid security earlier posted by petitioner, the SBMA-JVSP on June 22, 2010, advised petitioner to post an additional bid security in the corrected amount of P100 million, to which petitioner immediately complied.

On July 12, 2010, the SBMA, through then Administrator and CEO, respondent Arreza, formally sought for the favorable legal opinion of the OGCC on the legality and propriety of the proposed JVA. Petitioner sought updates on the status of the project. However, SBMA in response, stated in a letter dated September 23, 2010 that per SBMA Board Resolution, the award of the JVA is subject to the favorable legal opinion of the OGCC and that SBMA has yet to receive such favorable legal opinion. Pending receipt of the OGCC favorable legal opinion, petitioner continuously renewed its Bid Security.

In the meantime, on May 23, 2011, NEDA informed SBMA through a letter that the JVA's compliance with the JV Guidelines and existing laws, rules and regulations "could not be ascertained" because: (1) there was no COMELEC exemption; (2) the JVA was executed as early as Stage Two of the process; (3) inadequate amount of the bid security; and 4) SBMA's failure to submit the JVA to NEDA.

On May 27, 2011, SBMA sent its reply to the NEDA refuting the allegations raised in its earlier letter. SBMA countered that: (i) the requirement of COMELEC exemption had been rendered inapplicable as this requirement applies only to cover award of contracts during an election period, the election period having lapsed for more than a year; (ii) no harm was done by the signing of the JVA during the Stage 2 as the JVA itself provides that it is not a final and executory contract being expressly made to subject to the result of the bidding or Swiss Challenge process; (iii) the error on value of the bid security was purely by reason of a good faith misinterpretation of the vague provisions of the JV guidelines, which was subsequently corrected and no harm may be said to have been because the lower bid security could have in fact encouraged more bidders; (iv) the non-submission of the JVA to the NEDA was precisely because the same is not yet executory.

Finally, on June 22, 2011, the SBMA received the OGCC's favorable legal opinion (Opinion No. 131, Series of 2011) dated June 2, 2011. The OGCC stated that the JVA was signed in compliance with the JV Guidelines and is consistent with the JV principles, as such the same may be given due course subject to the proposed amendments of the OGCC.

Acting on the OGCC favorable opinion, a meeting was held on July 8, 2011 between petitioner and SBMA to discuss the proposed changes/amendments raised in the OGCC opinion. In the said meeting, both parties manifested their willingness to conform to the proposed changes/amendments of the OGCC. Thus, thru a letter dated July 11, 2011, the SBMA formally sent its proposed amendments to the JVA to petitioner, which formally signified its conformity thereto on the same day of its receipt of the SMBA letter.

Meanwhile, on July 5, 2011, NEDA withdrew its endorsement of the project based on the alleged violations and/or deviations with the JV Guidelines. NEDA withdrew its endorsement mainly because of: (1) the execution of the JVA as early as the Stage Two of the Swiss challenge; (2) the total cost of the JV activity was changed from US$16.584 million (or P763.029 million at P46.01 exchange rate as of March 2010) to P5.537 billion after the competitive challenge. The change by at least P4 billion materially affects the substance of the competitive challenge; and (3) since the project cost has not been clearly established, the bid security was incorrect.⁵chanRoblesvirtualLawlibrary

In a letter dated August 5, 2011, SBMA wrote NEDA requesting for reconsideration, stating that the NEDA "misconstrued and did not fully understand the intricacies of the issues it raised against the JVA." Nonetheless, SBMA issued Resolution No. 11-08-4080 deferring action on the award of the project to petitioner pending NEDA's response to its letter.

Seeing that no Notice of Award and Notice to Proceed is forthcoming, petitioner filed a Petition for Mandamus on August 25, 2011 with the RTC of Olongapo City.

Thereafter, in a letter dated September 30, 2011, NEDA denied SBMA's request for reconsideration and reiterated its withdrawal. Then, on October 17, 2011, the OGCC recommended that the issuance of the Notice of Award be suspended in light of NEDA's withdrawal of its endorsement.

Ruling of the Regional Trial Court

On January 12, 2012, the RTC issued its Decision in favor of petitioner. The RTC found that petitioner can rightfully enforce the JVA against SBMA. The JVA clearly provides that if no bidder will challenge the proposal of petitioner within the prescribed period, the Agreement shall become the final contract of the parties for the development of the joint venture areas. The RTC also held that the JV Guidelines categorically provided that if no comparative proposal is received by the government entity, the JV activity shall be immediately awarded to the original proponent. Since there was no challenger to the proposal of petitioner, the latter already acquired a vested right to the said project. The award of the JVA was only made dependent on the issuance of OGCC's favorable opinion and with the subsequent favorable opinion, petitioner's vested right on the project is without dispute. Further, the mandatory wording of the JV Guidelines that the project shall be immediately awarded to the original proponent, takes away any form of discretion on the part of the SBMA. Thus,

WHEREFORE, viewed from the foregoing premises, this Court hereby grants the Writ of Mandamus mandating the respondents Armand C. Arreza, and/or his successor a Administrator of the Subic Bay Metropolitan Authority, and the Board of Directors of SBMA, to immediately issue the Notice or Award and Notice to Proceed to Harbour Centre Port Terminal, Inc. for the development, operation and management of the Naval Supply Depot, Boton, Alava, Rivera and Bravo Wharfs/Ports pursuant to the Joint Venture Agreement dated 24 February 2010.

The writ of preliminary injunction granted by this Court on September 20, 2011 is hereby made permanent.

SO ORDERED.

On appeal, the CA in its Decision dated August 8, 2013, reversed the Decision of the RTC. It held that the RTC erred in granting the petition for mandamus. Petitioner has not shown any cause for the issuance of the writ of mandamus. There appears no legal duty on the part of SBMA to issue the Notice of Award and Notice to Proceed. The JV Guidelines provide that the SBMA has the discretionary function to either approve or reject the recommendation to award. Thus,

WHEREFORE, the appeal is GRANTED. The Decision dated January 12,2012, of the Regional Trial Court of Olongapo City, Branch 72 in Civil Case No. 108-0-2011 is hereby reversed and set aside.

SO ORDERED.

Petitioner argues that the duty of SBMA to issue a Notice of Award is a ministerial act. As stated in the JV Guidelines, in the absence of a comparative proposal, the project shall be immediately awarded to the original proponent. SBMA-JVSP recommended the award to petitioner and SBMA approved the same in its Resolution No. 10-05-3646 subject only to the COMELEC exemption and the favorable opinion of the OGCC, which conditions had already been complied with. Thus, petitioner has a clear and unmistakable right over the project. The compliance with those conditions grant petitioner a vested right over the project.

Petitioner alleges that NEDA's withdrawal of its endorsement should have no significant effect on the award of the project to petitioner. NEDA is a mere member of the SBMA-JVSP. The JV Guidelines does not clothe NEDA of any sort of veto power. At most, NEDA's withdrawal of endorsement was a dissenting opinion that does not render the JVA void. Further, there is nothing in the JV Guidelines that show that the endorsement or approval of NEDA is necessary for the validity, enforceability and implementation of the JVA.

Arguments of SBMA

SBMA countered that the findings of NEDA on the validity of the JVA and the process of evaluating whether the JVA is fully compliant with the conditions imposed by law necessarily involves the exercise of discretion. As such, cannot be compelled by a writ of mandamus. Petitioner failed to establish the existence of a clear legal right to the issuance of the Notice of Award and Notice to Proceed. While the OGCC in its Opinion No. 131, series of 2011 held that the JVA was signed in compliance with the JV Guidelines, the OGCC subsequently held that the award of the project be suspended in light of the NEDA withdrawal, as such, petitioner's claim to a writ of mandamus is untenable. Further, the RTC of Dinalupihan, Bataan in Civil Case No. DH-1231-10 on September 10, 2012, rendered a Decision declaring the JVA as null and void. The said Decision became final and executory on October 4, 2012. Since the JVA has been declared null and void with finality, there can be no vested right to speak of.

Arguments of SSTI

The issuance of SBMA Resolution No. 10-05-3646 which approved the recommendation of the SBMA-JVSP to award the project to petitioner has not reduced the issuance of a Notice of Award and Notice to Proceed to a ministerial function. The JV Guidelines provide that the decision to award or the approval of the Head of the Government entity shall be manifested by signing and issuing the Notice of Award. A mere board resolution will not suffice to show that there was already an award.

Further, the award of the project is subject to the favorable opinion of the OGCC. However, the favorable opinion of the OGCC was also withdrawn by the latter in its subsequent letter. The OGCC recommended that the issuance of the Notice of Award and/or Notice to Proceed be suspended.

Also, the NEDA endorsement is vital to the validity of the JVA as it determined compliance with the relevant laws and regulations.

SSTI also argues that the petition for mandamus is premature because petitioner failed to exhaust all available remedies. Admittedly, petitioner did not send any demand to implement the JVA and issue a Notice of Award and/or Notice to Proceed. A writ of mandamus is not proper when there has been no refusal to act by the party against whom the writ is sought.

The critical issue to be resolved is whether SBMA can be compelled through a writ of mandamus to issue a Notice of Award and a Notice to Proceed in favor of petitioner.
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I hereby register my dissent from the majority opinion for the following reasons:

Preliminary Issues
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The doctrine of exhaustion of administrative remedies does not apply in the present case.

?

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. The rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of controversies.⁶ However, such rule is not inflexible as it admits exception, such as when the controversy involves is a purely legal question, as in the present case.

We rule that the doctrine of exhaustion of administrative remedies is not applicable in the present case since what is involved is a purely legal question. The facts in this case are undisputed the question merely lies as to whether, on the given state of facts, petitioner is entitled to a Notice of Award and/or to Proceed.
?

The constitutional issues, i.e., unfair competition, deprivation of property without due process of law, and violation on the undue delegation of legislative powers, are issues which should not be threshed out in the present case.

?

The issues raised by SSTI as to whether SBMA delegated to petitioner its legislative power to fix tariff rates, or whether SBMA abdicated its legislative franchise in favor of petitioner as port operator, whether the JVA violated the constitutional prohibition on unfair competition and whether the JVA deprives existing property rights without due process are issues properly threshed out in a case for the declaration of the JVA as null and void. While SSTI already filed a case to declare the JVA null and void, such decision does not bind nor prejudice petitioner since the latter was not made a party to such case. It is well-settled that no man should be prejudiced by any proceeding to which he is a stranger.⁷chanRoblesvirtualLawlibrary
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Substantive Issues

Mandamus is a remedy granted by law when any tribunal, corporation, board, officer, or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use or enjoyment of a right or office to which such other is entitled.⁸ In a petition for mandamus, it is essential that the petitioner has a clear legal right to the thing demanded and it must be the imperative duty of the respondent to perform the act required. The burden is on the petitioner to show that there is such a clear legal right to the performance of the act, and a corresponding compelling duty on the part of the respondent to perform the act.⁹ Thus, whether petitioner is entitled to the writ, it is necessary to determine if petitioner has a clear legal right to the award of the project and whether the issuance of the Notice of Award and/or to Proceed is a ministerial duty of the SBMA.

NEDA is the country's premier socioeconomic planning body, and the authority in macroeconomic forecasting and policy analysis and research, providing high-level advice to policy-makers in Congress and the Executive Branch. It is mandated to formulate continuing, coordinated and integrated social and economic policies, plans and programs.

Executive Order No. 423 mandated the NEDA to issue guidelines regarding joint venture agreements with private entities.¹⁰ Accordingly, the NEDA promulgated the "Guidelines and Procedures for Entering into Joint Venture Agreements between Government and Private Entities," or the JV Guidelines.

Under the JV Guidelines, a JV is a contractual arrangement whereby a private sector entity or a group of private sector entities on one hand, and a Government Entity or a group of Government Entities on the other hand, contribute money/capital, services, assets (including equipment, land or intellectual property), or a combination of any or all of the foregoing.¹¹chanRoblesvirtualLawlibrary

The JV Guidelines provides for two modes of selecting a private sector JV partner, by competitive selection or through negotiated agreements. Competitive selection involves a selection process based on transparent criteria, which should not constrain or limit competition, and is open to participation by any interested and qualified private entity. Under par. 5.9 of the JV Guidelines, negotiated projects refers to:
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5.9. Negotiated Projects. Refer to instances where the desired project is the result of an unsolicited proposal from a private sector proponent or, if the government has failed to identify an eligible private sector partner for a desired activity after subjecting the same to a competitive selection. (Emphasis supplied)

Also, paragraph 7.3(b) of the JV Guidelines, negotiated agreements may be entered under the following circumstances:
chanroblesvirtuallawlibrary

b. Negotiated Agreements - Negotiated agreements may be entered under the following circumstances:

1. When a Government Entity receives an unsolicited proposal;
   
2. When there is failure of competition when no proposals are received or no private sector participant is found qualified and the Government Entity decides to seek out a JV partner; and
   
3. When there is failure of competition, i.e., there is only a single interested party remaining as defined under VIII(6) of Annex A.
   

Thus, negotiated agreements arose from the submission and acceptance of an unsolicited proposal.¹² It comes about as an end result of an unsolicited proposal from a private sector proponent, or if the government has failed to identify an eligible private sector partner for a desired activity after subjecting the same to a competitive selection.¹³chanRoblesvirtualLawlibrary

Item III, Annex "C" Detailed Guidelines For Competitive Challenge Procedure For Public-Private Joint Ventures (Detailed Guidelines) of the JV Guidelines, where the Swiss Challenge format is tucked in, maps out a three?-stage framework, to which Negotiated JV Agreements are to be mandatorily subjected.¹⁴ A Swiss challenge is a hybrid mechanism between the direct negotiation approach and the competitive bidding route.¹⁵chanRoblesvirtualLawlibrary

Stage One involves the submission, evaluation and the acceptance or rejection of the unsolicited proposal from private entities. An acceptance though does not bind the government entity to enter into the JV activity, but shall mean that authorization is given to proceed with detailed negotiations on the terms and conditions of the JV activity.

Stage Two entails negotiation on the terms and conditions of the JV activity, including legal, technical, and financial aspects of the JV activity and the eligibility of the private sector entity to participate therein. If successful, the government entity head and the representative of the private sector entity shall issue a signed certification of successful negotiation indicating among others that an agreement has been reached. Thereafter, the contract documents, including the selection documents for the competitive challenge, are prepared.

Upon the successful completion of the detailed negotiation phase, Stage Three comes in where the JV activity shall be subjected to a competitive challenge, where interested parties are essentially given the right to match the terms offered by the original proponent. The Detailed Guidelines specifically provide that where there is no challenger during the Swiss challenge or if there is a challenger and the original proponent was able to match the offer of the challenger the JV activity shall be immediately awarded to the original private sector proponent.¹⁶chanRoblesvirtualLawlibrary

Petitioner claimed that the issuance of a Notice of Award and Notice to Proceed are ministerial acts of the SBMA since it already has a vested right on the project. Respondents, on the other hand, alleged that petitioner has no vested rights to the award of the project since the JVA was not a perfected contract and that the same is a mere proposal.

After a perusal of the records of the case, petitioner has clearly failed to demonstrate that it has a clear and unmistakable right to the writ of mandamus.
?

The JVA is not a perfected contract. The parties meant the JVA to still be subject to the Swiss Challenge and is a mere offer or proposal.

?

A vested right is one that is absolute, complete and unconditional and no obstacle exists to its exercise. It is immediate and perfect in itself and not dependent upon any contingency.¹⁷ It is some right or interest in property that had become fixed and established, and is no longer open to doubt or controversy.¹⁸chanRoblesvirtualLawlibrary

It is undisputed that petitioner submitted an unsolicited proposal for the development, operation and management of the joint venture areas. Upon initial evaluation, the SBMA-JVSP recommended the approval of the unsolicited proposal. Thus, on November 20, 2009, the SBMA Board accepted in principle the unsolicited proposal of petitioner. Thereafter, a series of in-?depth negotiations took place on the terms, conditions, and scope, as well as the legal, technical and financial aspects of petitioner's proposal. On February 5, 2010, the SBMA-JVSP presented to SBMA Board the Terms of Reference for the solicitation of comparative proposals. To formalize the approval of the Terms of Reference, the SBMA Board executed on February 24, 2010, the JVA together with the Terms of Reference. Then, on March 5, 2010, the proposal of petitioner was advertised for competitive challenge. After undergoing the Swiss Challenge, there was no challenger to the proposal of petitioner. Thus, on April 22, 2010, the SBMA-JVSP recommended the award of the project to petitioner. On May 7, 2010, the SBMA Board issued Resolution No. 10-05-3646 adopting the recommendation of SBMA-JVSP and thereby awarding the development, operation and management of the joint venture areas to herein petitioner subject to: (1) the COMELEC Exemption; and (2) the favorable opinion of the OGCC.

A perusal of the JVA would show that the same is still not a final and executory contract since the same is subject to numerous conditions, such as (1) the conduct of the Swiss Challenge; (2) the fact that there must be no challenger during the Swiss challenge; (3) the COMELEC exemption; (4) the favorable opinion of the OGCC; and (5) the approval of NEDA.

The JVA was executed by the parties with the intention that the same was not readily final and executory but is a mere offer or proposal to develop the joint venture areas, as evidenced by the Whereas clauses of the agreement, to wit:
chanroblesvirtuallawlibrary

x x x x

WHEREAS, in order to formalize the agreements reached between the parties pending the result of the challenge process under the JV Guidelines issued by the NEDA, the parties have agreed to execute this Agreement;cralawlawlibrary

WHEREAS, pursuant to the JV Guidelines issued by the NEDA, the proposal of HCPTI will then be advertised for challenge by SBMA;cralawlawlibrary

WHEREAS, if no bidder will challenge the proposal of HCPTI within the prescribed period, then this Agreement shall become the final contract of SBMA and HCPTI for the Development, Management and Operation of the Joint Venture Areas;cralawlawlibrary

x x x x

NOW, THEREFORE, HCPTI hereby submits this Agreement with SBMA as its offer and proposal to develop, manage, and operate the Joint Venture Areas, and SBMA agrees to accept the same subject to challenge pursuant to the JV Guidelines issued by the NEDA.^19]? (Emphasis supplied)

Since the JVA was not a final contract and was still subject to certain conditions, petitioner did not acquire any vested right to the joint venture project, nor does petitioner acquired a vested right to the issuance of a Notice of Award and/or Notice to Proceed from the mere fact that there was no challenger during the Swiss challenge, since SBMA is still given the discretion as to whether it will approve or reject the recommendation of the SBMA-JVSP to award the project to petitioner.

Petitioner cites the case of SM Land Inc., v. BCDA,²⁰ the said case however is not on all fours in the present case. For one, the SM Land case seeks to enjoin Bases Conversion and Development Authority (BCDA) to conduct the Swiss Challenge. In that case, selection committee created by the BCDA approved the detailed negotiations between the latter and SM Land. BCDA then committed itself to commence the Swiss challenge. In that case, the conduct of the Swiss challenge after the successful negotiations of the terms and conditions of the project is mandated by the 2008 JV Guidelines and even by the BOT Law. The conduct of the Swiss challenge is not a matter of discretion since BCDA is duty bound to commence the same upon successful negotiations of the terms and conditions of the project. Whereas in the present case, Harbour sought to enjoin SBMA to award the contract to the former. Undeniably, the decision to award or not to award a contract or a project is an exercise of discretion.?
?

The conditions contained in Resolution No. 10-05-3646 had not been complied with NEDA's withdrawal of its endorsement effectively forestalled the joint venture project.

?

SBMA Board Resolution No. 10-05-3646 which approved and adopted the recommendation of the JVSP-SBMA to award the joint venture project to petitioner was not couched in terms that unconditionally awards the joint venture project to petitioner, to wit:
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Resolution No. 10-05-3646

Resolve, as it is hereby resolved, upon the recommendation of Management, and without prejudice to COA regulations and pertinent laws on the matter, the Board hereby approves the Resolution adopted by the Joint Venture Selection Panel (JVSP) on 22 April 2010 awarding the Joint Venture Agreement for the Development, Operation and Management of the NSD Area, Baton, Alava, Rivera and Bravo Wharfs/Ports in favor of Harbour Centre Port Terminal, Inc. (HCPTI) without prejudice to whatsoever action the Commission on Elections (COMELEC) may take on the SBMA's request for the exemption from the ban in awarding contracts during the election period and subject to the favorable opinion of the Office of the Government Corporate Counsel (OGCC) on the legality and propriety of said Joint Venture Agreement.²¹ (Emphasis supplied)

SBMA Board Resolution No 10-05-3646 awarding the project to petitioner is subjected to two conditions, i.e., (i) COMELEC's grant of exemption in SBMA's favor; and (ii) the favorable opinion of the OGCC. The first condition indisputably became functus officio upon the lapse of the election period without the project being awarded to petitioner. The second condition which is the favorable opinion of the OGCC, while the latter at first rendered a favorable opinion when it issued its Opinion No. 131, series of 2011, dated June 2, 2011, the OGCC however later withdrew the said favorable opinion and recommended the suspension of the issuance of the Notice of Award in light of NEDA's withdrawal of its endorsement of the project. Therefore, with the OGCC's recommendation to suspend the issuance of the Notice of Award, the second condition had not been complied with.

NEDA withdrew its endorsement because: (1) there was no COMELEC exemption; (2) the JVA was executed as early as the second stage of the Swiss challenge; (3) inadequate amount of the bid security;²² and (4) material deviation from the parameters and terms and conditions set forth in the proposal and/or tender documents. As cited by NEDA in its letter dated July 5, 2011, there is a change to the total cost of the joint venture activity from US$16.584 million (or P763.029 million at P46.01 exchange rate as of March 2010) to P5.537 billion after the competitive challenge was held.²³ NEDA explained that a change in the total cost of the JV activity is not allowed if it will materially affect the substance of the competitive selection.

Be it noted that the COMELEC exemption has been rendered functus officio upon the lapse of the election period without the project being awarded to petitioner.

As to the reason of NEDA in withdrawing its endorsement on the ground that the JVA was executed as early as Stage Two of the process, is inconsequential since the execution of a draft contract is expressly allowed by the JV Guidelines. As provided, after an agreement is reached by the parties, the contract documents, including the selection documents for the competitive challenge are prepared.²⁴ Then, in Annex A, paragraph II of the JV Guidelines, the selection/tender documents for competitive challenge shall include the draft contract reflecting the terms and conditions in undertaking the JV activity.²⁵ The government entity is even given wide latitude to determine the form of contract that it will execute that will be subjected to a competitive challenge, it is given full discretion to select the appropriate provisions as they assess suitable for a particular contract/project. Further, as ruled upon earlier, the JVA was not meant to be a final and executory contract, since the same is still subject to the Swiss Challenge.

However, as regards the material change of the project cost and the insufficiency of the bid security, SBMA was not able to clarify and answer the same. Petitioner also failed to answer the material change in the total cost of the project, nor particularly proved that NEDA's approval of the project is not necessary for the award of the joint venture project.

Under paragraph 7.4²⁶ of the 2008 JV Guidelines, it is provided that the government entity, SBMA in the present case, shall not proceed with the award and signing of the contract if there are material deviations in the JV activity. In this case, SBMA is duty bound to suspend the award and signing of the contract in view of the material change in the total contact cost of the project. As pointed out by NEDA, the total cost of the joint venture activity changed from US$16.584 million (or P763.029 million at P46.01 exchange rate as of March 2010) to P5.537 billion after the competitive challenge was held.²⁷ To note, this was never refuted by petitioner. The substantial change in the total contract cost of at least P4 billion undeniably materially affects the substance of the competitive challenge.

Further, under the Implementing Rules and Regulations of the BOT Law,²⁸ the approval of the projects under the said law shall be as follows:
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a. National Projects - The projects must be part of the Agency's development programs, and shall be approved as follows:

1. projects costing up to PhP 300 million, shall be submitted to ICC for approval;
   
2. projects costing more than PhP 300 million, shall be submitted to the NEDA Board for approval upon the recommendation of ICC.; and
   
3. regardless of amount, negotiated projects shall be submitted to the NEDA Board for approval upon recommendation by the ICC.
   

b. Local Projects - Local projects to be implemented by the LGUs shall be submitted by the concerned LGU for confirmation, as follows:

1. to the municipal development council for projects costing up to PhP 20 million;
   
2. to the provincial development council for those costing above PhP 20 million up to PhP 50 million;
   
3. to the city development council for those costing up to PhP 50 million;
   
4. to the regional development council or, in the case of Metro Manila projects, the Regional Development Council for Metropolitan Manila, for those costing above PhP 50 million up to PhP 200 million; and
   
5. to the ICC for those costing above PhP 200 million.
   

Final approval of projects classified under b.i to b.iv of this section is vested on the Local Sanggunians per provisions of the Local Government Code.

Thus, NEDA's approval is required in national projects wherein: (1) the project costs up to P300 million, the same shall be submitted to the Investment Coordination Committee (ICC) of NEDA; (2) projects costing more than Php300 Million shall be submitted to the NEDA Board for approval upon the recommendation of the ICC; and (3) regardless of the amount, negotiated projects shall be submitted to the NEDA Board for approval upon recommendation of the ICC.²⁹chanRoblesvirtualLawlibrary

It is undisputed that negotiated agreements arose from the submission and acceptance of an unsolicited proposal from a private sector entity³⁰ , such as in this case. Therefore, regardless of the amount of the project cost, NEDA Board's approval upon the recommendation of the ICC is necessary. The argument of petitioner therefore that NEDA's withdrawal does not affect the award of the project to petitioner is untenable. Precisely, it is NEDA's approval of the contract that is necessary before the joint venture project can be validly awarded to petitioner.?
?

Mandamus cannot be availed by petitioner to command SBMA to issue a Notice of Award and/or to Proceed, as the same is not the ministerial duty of SBMA.

?

According to respondents, mandamus is unavailing in this case because the issuance of a Notice of Award and/or Notice to Proceed is actually discretionary and not ministerial on the part of SBMA.

The provision in the JV Guidelines relied upon by respondents read:
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VIII. Award and Approval of Contract

1. Recommendation to Award. Within seven (7) calendar days from the date the evaluation procedure adopted is completed, the JV-SC shall submit the recommendation of award to the Head of the Government Entity concerned. The JVSC shall include as part of its recommendation, a detailed evaluation/assessment report on its decision regarding the evaluation of the proposals, and explain in clear terms the basis of its recommendations.

2. Decision to Award. Within seven (7) calendar days from the submission by [Joint Venture Selection Committee] of the recommendation to award, the Head of the Government Entity shall approve or reject the same. The approval shall be manifested by signing and issuing the "Notice of Award" to the winning private sector participant within seven (7) calendar days from approval thereof.

The issuance of SBMA Resolution No. 10-05-3646 has not reduced the issuance of a Notice of Award and/or to Proceed to a ministerial function. The SMBA Resolution merely approved and adopted the recommendation of the JVSP-SBMA to award the project to petitioner. Be it noted that the same is not immediately executory since the same is conditional to the favorable opinion of the OGCC and the approval of the NEDA Board based on R.A. No. 6957, as amended by R.A. No. 7718.

To reiterate, the writ of mandamus is employed to compel the performance, when refused, of a ministerial duty and not a discretionary duty. When a decision has been reached in a matter involving discretion, a writ of mandamus may not be availed of to review or correct it.³¹ In the present case, SBMA cannot be compelled to issue a Notice of Award and/or Notice to Proceed to petitioner since the same is discretionary on the part of SBMA. Also, when SBMA exercised its discretion to suspend the issuance of the Notice of Award in view of NEDA's withdrawal of its endorsement, petitioner cannot also avail of a writ of mandamus to compel SBMA to change its decision.

Further, mandamus cannot be used to enforce purely private contractual obligations.³² Thus, petitioner cannot compel SBMA to enter into a joint venture partnership with the former and enforce the JVA since entering into a contract or joint venture partnership with petitioner is not mandated by law.

ACCORDINGLY, I vote to DENY the instant petition and to AFFIRM the Decision dated August 8, 2013 of the Court of Appeals in CA?-G.R. SP No. 125330. The Petition for Mandamus with prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction and Writ of Preliminary Mandatory Injunction filed by petitioner Harbour Centre Port Terminal Inc., before the Regional Trial Court, Branch 72 of Olongapo City docketed as Civil Case No. 108-0-2011 should be DISMISSED for lack of merit.

Endnotes:

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¹ Penned by Associate Justice Noel G. Tijam (Former Member of this Court), with the concurrence of Associate Justices Romeo F. Barza and Ramon A. Cruz; rollo, pp. 41-54.

² Penned by Judge Richard A. Paradeza; id. at 61-77.

³ Bases Conversion and Development Act of 1992.

⁴ Rollo, p. 62.

⁵ Id. at 305-306.

⁶ Spouses Gonzales v. Marmaine Realty Corporation, 778 Phil. 451 (2016).

⁷ Mu?oz v. Yabut, Jr., 665 Phil. 488 (2011).

⁸ Padilla v. Congress of the Philippines, 814 Phil. 344 (2017).

⁹ Umali v. Judicial and Bar Council, 814 Phil. 253 (2017).

¹⁰ Executive Order 423, Section 8.

¹¹ Clause 5.4 of the JV Guidelines.

¹² SM Land Inc. v. Bases Conversion and Development Authority, 741 Phil. 269, 287 (2014).

¹³ Id.

¹⁴ Id. at 289.

¹⁵ Alyansa Para sa Bagong Pilipinas, Inc., v. Energy Regulatory Commission, G.R. No. 227670, May 3, 2019.

¹⁶ Annex C, paragraph III Stage 3 (4) of the JV Guidelines - 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. (Emphasis supplied)

¹⁷ Campos v. Ortega, Sr., 734 Phil. 585 (2014).

¹⁸ Director of Lands v. Court of Appeals, 260 Phil. 477 (1990).

¹⁹ Rollo, p. 715.

²⁰ SM Land Inc. v. Bases Conversion and Development Authority, supra note 12.

²¹ Rollo, p. 506.

²² Id. at 502-503.

²³ Id. at 305-306.

²⁴ x x x Stage Two - The parties negotiate and agree on the terms and conditions of the JV activity. The following rules shall be adhered to in the conduct of detailed negotiations and the preparation of the proposal documents in case of a successful negotiations:
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1. Both parties shall negotiate on, among others, the purpose, terms and conditions, scope, as well as all legal, technical, and financial aspects of the JV activity.

2. The JV-SC shall determine the eligibility of the private sector entity to enter into the JV activity in accordance with Sec. IV.2 (Eligibility Requirements) under Annex A hereof.

3. Negotiations shall comply with the process, requirements and conditions as stipulated under Sections 6 (General Guidelines) and 7 (Process for Entering into JV Agreements) of the Guidelines. Once negotiations are successful, the Head of the Government Entity and the authorized representative of the private sector entity shall issue a signed certification that an agreement has been reached by both parties. Said certification shall also state that the Government Entity has found the private sector participant eligible to enter into the proposed JV activity and shall commence the activities for the solicitation for comparative proposals. However, should negotiations not result to an agreement acceptable to both parties, the Government Entity shall have the option to reject the proposal by informing the private sector participant in writing stating the grounds for rejection and thereafter may accept a new proposal from private sector participants, or decide to pursue the proposed activity through alternative routes other than JV. The parties shall complete the Stage Two process within thirty (30) calendar days upon acceptance of the proposal under Stage One above.

4. After an agreement is reached, the contract documents, including the selection documents for the competitive challenge are prepared. (Emphasis supplied)

²⁵ II. Selection/Tender Documents 1. Selection/Tender Documents. The Government Entity concerned shall prepare the selection/tender documents, which shall include the following:
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a. Instructions to Private Sector Participants;
b. Minimum Design, Performance Standards/Specifications, and other Financial and Economic Parameters, where applicable, among others;
c. Feasibility Study or a Business Case/Pre-feasibility Study of the Project;
d. Draft Contract reflecting the terms and conditions in undertaking the JV activity, including, among others, the contractual obligations of the contracting parties;
e. Selection Form reflecting the required information to properly evaluate the technical and financial proposal;
f. Forms of technical and financial proposals and performance securities;
g. Current applicable rules and regulations of the BSP, as applicable;
h. Other documents as may be required by the Government Entity concerned.

The documents enumerated above are just for guidance/reference. The Government Entity concerned is given full discretion to select the appropriate provisions as they assess suitable for a particular contract/project. (Emphasis supplied)

²⁶ 7.4 Deviations and Amendments to the JV Agreement. The concerned Government Entity shall not proceed with the award and signing of the contract if there are material deviations from the parameters and terms and conditions set forth in the proposal/tender documents that tend to increase the financial exposure, liabilities, and risks of government or any other factors that would cause disadvantage to government and any deviation that will cause prejudice to losing private sector participants. Said material deviations and amendments shall be subjected to the approval requirements under Sections 7.1 and 7.2 hereof. The Head of the Government Entity concerned shall be responsible for compliance with this policy. Violation of this provision shall render the award and/or the signed JV Agreement invalid.

Any amendment to a JV Agreement after award and signing of contract, which does not materially affect the substance of the competitive selection, shall be subjected to the requirements stipulated under Sections 7.1 and 7.2 hereof. Non-compliance with the corresponding approval process stated shall render the amendment null and void. (Emphasis supplied)

²⁷ Id. at 305-306.

²⁸ R.A. No. 6957, as amended by R.A. No. 7718. An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector and for Other Purposes.

²⁹ Section 2.6 of the Implementing Rules and Regulations of R.A. 6957, as amended by R.A. 7718.

³⁰ Section 7.3(b) of the 2008 JV Guidelines.

³¹ Esquivel v. Ombudsman, 437 Phil. 702 (2002).

³² Star Special Watchman and Detective Agency, Inc. v. Hagedorn, 733 Phil. 62 (2014).cralawredlibrary