FIRST DIVISION

[G.R. No. 131367. August 31, 2000.]

HUTCHISON PORTS PHILIPPINES LIMITED , petitioner, vs . SUBIC BAY

METROPOLITAN AUTHORITY, INTERNATIONAL CONTAINER
TERMINAL SERVICES INC., ROYAL PORT SERVICES INC. and the
EXECUTIVE SECRETARY , respondents.

Fortun Narvasa & Salazar for petitioner.

The Solicitor General for public respondent.
Bautista Picazo Buyco Tan & Fider for respondent ICTSI.
Angara Abello Concepcion Regala & Cruz for respondent RPSI.

SYNOPSIS

Petitioner, a foreign corporation, was awarded by the Pre-Quali cation, Bids and
Awards Committee (PBAC) of Subic Bay Metropolitan Authority (SBMA) the
concession to develop and operate a modern marine container terminal within the
Subic Bay Freeport Zone. A resolution was issued declaring the immediate
commencement of negotiations with petitioner. Before the award, however, respondent
RPSI sought the setting aside of ICTSI's bid on the ground that ICTSI is legally barred
from operating a second port pursuant to Executive Order No. 212 and DOTC Order 95-
863 as it already operates the Manila International Container Port. The issue reached
the O ce of the President which originally mandated the re-evaluation of the bids but
later recommended that another bidding be conducted. SBMA was enjoined from
signing the concession contract with petitioner. Feeling aggrieved, petitioner resorted
to a judicial action with the RTC for speci c performance claiming that a binding and
legally enforceable contract had been established between petitioner and SBMA.
During the pendency of the case, SBMA opened the rebidding of the project. This was
sought to be enjoined by petitioner, but the trial court denied the same. It ruled that
under Section 21 of R.A. No. 7227, the implementation of projects shall not be
restrained or enjoined except by an order from the Supreme Court. Hence, the present
recourse, with petitioner seeking to obtain a prohibitory injunction.
For an injunction to be issued, applicant must show that it has a clear and
unmistakable right to be declared the winning bidder with nality. The SBMA Board of
Directors and other o cers are subject to the control and supervision of the O ce of
the President and all its projects require the approval of the President of the Philippines
who may overturn or reverse any award made by the SBMA. When the President set
aside the award previously declared by the SBMA in favor of petitioner and directing a
rebidding, petitioner acquired no clear and unmistakable right as the award was not
final and binding.
Petitioner, a foreign corporation, by participating in a bidding process is
considered as "doing business." It should have applied for a license to submit itself to
the jurisdiction of the courts of this state and to enable the government to exercise
jurisdiction over it for the regulation of its activities in this country. Having failed to
secure one, it is held that petitioner is incapacitated to bring this petition.
HSAcaE

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 SYLLABUS

1. REMEDIAL LAW; PROVISIONAL REMEDIES; INJUNCTION; REQUISITES. —

For an injunctive writ to be issued, the following requisites must be proven: First. That
the petitioner/applicant must have a clear and unmistakable right. Second. That there is
a material and substantial invasion of such right. Third. That there is an urgent and
permanent necessity for the writ to prevent serious damage.
2. ID.; ID.; ID.; ID.; REQUISITE OF HAVING A CLEAR AND UNMISTAKABLE
RIGHT, NOT PRESENT IN CASE AT BAR; AWARD MUST BE FINAL; AWARD MADE BY
SBMA SET ASIDE BY THE PRESIDENT OF THE PHILIPPINES, NOT FINAL. — To our
mind, petitioner HPPL has not su ciently shown that it has a clear and unmistakable
right to be declared the winning bidder with nality, such that the SBMA can be
compelled to negotiate a Concession Contract. Though the SBMA Board of Directors,
by resolution, may have declared HPPL as the winning bidder, said award cannot be
said to be nal and unassailable. The SBMA Board of Directors and other o cers are
subject to the control and supervision of the O ce of the President. All projects
undertaken by SBMA require the approval of the President of the Philippines under
Letter of Instruction No. 620, which places the SBMA under its ambit as an
instrumentality, de ned in Section 10 thereof as an "agency of the national government,
not integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering
special funds, and enjoying operational autonomy, usually through a charter. This term
includes regulatory agencies, chartered institutions and government owned and
controlled corporations." As a chartered institution, the SBMA is always under the direct
control of the O ce of the President, particularly when contracts and/or projects
undertaken by the SBMA entail substantial amounts of money. Speci cally, Letter of
Instruction No. 620 dated October 27, 1997 mandates that the approval of the
President is required in all contracts of the national government o ces, agencies and
instrumentalities, including government-owned or controlled corporations involving two
million pesos (P2,000,000.00) and above, awarded through public bidding or
negotiation. When the President issued the memorandum setting aside the award
previously declared by the SBMA in favor of HPPL and directing that a rebidding be
conducted, the same was within the authority of the President and was a valid exercise
of his prerogative. Consequently, petitioner HPPL acquired no clear and unmistakable
right as the award announced by the SBMA prior to the President's revocation thereof
was not nal and binding. There being no clear and unmistakable right on the part of
petitioner HPPL, the rebidding of the proposed project can no longer be enjoined as
there is no material and substantial invasion to speak of. Thus, there is no longer any
urgent or permanent necessity for the writ to prevent any perceived serious damage. In
ne, since the requisites for the issuance of the writ of injunction are not present in the
instant case, petitioner's application must be denied for lack of merit.
3. ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCIES; BIDDING OF
PROJECTS; DISCRETION TO ACCEPT OR REJECT ANY BID OR EVEN RECALL AWARD
THEREIN, GENERALLY NOT INTERFERED WITH BY THE COURTS. — It is well-
established that the discretion to accept or reject any bid, or even recall the award
thereof, is of such wide latitude that the courts will not generally interfere with the
exercise thereof by the executive department, unless it is apparent that such exercise of
discretion is used to shield unfairness or injustice.
4. REMEDIAL LAW; ACTIONS; CAPACITY TO SUE OF FOREIGN
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 CORPORATIONS; "DOING BUSINESS," CONSTRUED. — There is no general rule or
governing principle laid down as to what constitutes "doing" or "engaging in" or
"transacting" business in the Philippines. Each case must be judged in the light of its
peculiar circumstances. Thus, it has often been held that a single act or transaction may
be considered as "doing business" when a corporation performs acts for which it was
created or exercises some of the functions for which it was organized. The amount or
volume of the business is of no moment, for even a singular act cannot be merely
incidental or casual if it indicates the foreign corporation's intention to do business.
5. ID.; ID.; ID.; FOREIGN CORPORATION PARTICIPATING IN BIDDING
PROCESS, CONSIDERED AS "DOING BUSINESS" IN THE PHILIPPINES; LICENSE,
REQUIRED; CASE AT BAR. — Participating in the bidding process constitutes "doing
business" because it shows the foreign corporation's intention to engage in business
here. The bidding for the concession contract is but an exercise of the corporation's
reason for creation or existence. Thus, it has been held that "a foreign company invited
to bid for IBRD and ADB international projects in the Philippines will be considered as
doing business in the Philippines for which a license is required." In this regard, it is the
performance by a foreign corporation of the acts for which it was created, regardless
of volume of business, that determines whether a foreign corporation needs a license
or not. The primary purpose of the license requirement is to compel a foreign
corporation desiring to do business within the Philippines to submit itself to the
jurisdiction of the courts of the state and to enable the government to exercise
jurisdiction over them for the regulation of their activities in this country. If a foreign
corporation operates a business in the Philippines without a license, and thus does not
submit itself to Philippine laws, it is only just that said foreign corporation be not
allowed to invoke them in our courts when the need arises. "While foreign investors are
always welcome in this land to collaborate with us for our mutual bene t, they must be
prepared as an indispensable condition to respect and be bound by Philippine law in
proper cases, as in the one at bar." The requirement of a license is not intended to put
foreign corporations at a disadvantage, for the doctrine of lack of capacity to sue is
based on considerations of sound public policy. Accordingly, petitioner HPPL must be
held to be incapacitated to bring this petition for injunction before this Court for it is a
foreign corporation doing business in the Philippines without the requisite license. ECaHSI

DECISION

YNARES-SANTIAGO , J : p

On February 12, 1996, the Subic Bay Metropolitan Authority (or SBMA)
advertised in leading national daily newspapers and in one international publication, 1 an
invitation offering to the private sector the opportunity to develop and operate a
modern marine container terminal within the Subic Bay Freeport Zone. Out of seven
bidders who responded to the published invitation, three were declared by the SBMA as
quali ed bidders after passing the pre-quali cation evaluation conducted by the
SBMA's Technical Evaluation Committee (or SBMA-TEC) These are: (1) International
Container Terminal Services, Inc. (or ICTSI); (2) a consortium consisting of Royal Port
Services, Inc. and HPC Hamburg Port Consulting GMBH (or RPSI); and (3) Hutchison
Ports Philippines Limited (or HPPL), representing a consortium composed of HPPL,
Guoco Holdings (Phils.), Inc. and Unicol Management Services, Inc. All three quali ed
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 bidders were required to submit their respective formal bid package on or before July
1, 1996 by the SBMA's Pre-quali cation, Bids and Awards Committee (or SBMA-PBAC).
Thereafter, the services of three (3) international consultants 2 recommended by
the World Bank for their expertise were hired by SBMA to evaluate the business plans
submitted by each of the bidders, and to ensure that there would be a transparent and
comprehensive review of the submitted bids. The SBMA also hired the rm of Davis,
Langdon and Seah Philippines, Inc. to assist in the evaluation of the bids and in the
negotiation process after the winning bidder is chosen. All the consultants, after such
review and evaluation unanimously concluded that HPPL's Business Plan was "far
superior to that of the two other bidders." 3
However, even before the sealed envelopes containing the bidders' proposed
royalty fees could be opened at the appointed time and place, RPSI formally protested
that ICTSI is legally barred from operating a second port in the Philippines based on
Executive Order No. 212 and Department of Transportation and Communication
(DOTC) Order 95-863. RPSI thus requested that the nancial bid of ICTSI should be set
aside. 4
Nevertheless, the opening of the sealed nancial bids proceeded "under
advisement" relative to the protest signi ed by RPSI. The nancial bids, more
particularly the proposed royalty fee of each bidder, was as follows: HDIATS

ICTSI US$57.80 TEU

HPPL US$20.50 TEU
RPSI US$15.08 TEU
The SBMA-PBAC decided to suspend the announcement of the winning bid, however,
and instead gave ICTSI seven (7) days within which to respond to the letter-protest
lodged by RPSI. The HPPL joined in RPSI's protest, stating that ICTSI should be
disquali ed because it was already operating the Manila International Container Port
(or MICP), which would give rise to inevitable con ict of interest between the MICP and
the Subic Bay Container Terminal facility. 5
On August 15, 1996, the SBMA-PBAC issued a resolution rejecting the bid of
ICTSI because "said bid does not comply with the requirements of the tender
documents and the laws of the Philippines." The said resolution also declared that:
RESOLVED FURTHER, that the winning bid be awarded to HUTCHISON
PORTS PHILIPPINES LIMITED (HPPL) and that negotiations commence
immediately with HPPL (HUTCHISON) with a view to concluding an acceptable
agreement within 45 days of this date failing which negotiations with RPSI
(ROYAL) will commence with a view to concluding an acceptable agreement
within 45 days thereafter failing which there will be declared a failure of bids. 6
(Italics supplied)

The following day, ICTSI led a letter-appeal with SBMA's Board of Directors
requesting the nullification and reversal of the above-quoted resolution rejecting ICTSI's
bid while awarding the same to HPPL. But even before the SBMA Board could act on
the appeal, ICTSI led a similar appeal before the O ce of the President. 7 On August
30, 1996, then Chief Presidential Legal Counsel (CPLC) Renato L. Cayetano submitted a
memorandum to then President Fidel V. Ramos, containing the following
recommendations:

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 We therefore suggest that the President direct SBMA Chairman Gordon to
consider option number 4 — that is to re-evaluate the nancial bids submitted by
the parties, taking into consideration all the following factors:

1. Reinstate ICTSI's bid;

2. Disregard all arguments relating to "monopoly";

3. The re-evaluation must be limited to the parties' financial bids.

3.1 Considering that the parties' business have been accepted
(passed), strictly follow the criteria for bid evaluation provided for in
pars. (c) and (d), Part B (1) of the Tender Document.
4. In the re-evaluation, the COA should actively participate to determine which
of the financial bids is more advantageous.
5. In addition, all the parties should be given ample opportunity to elucidate or
clarify the components/justi cation for their respective nancial bids in
order to ensure fair play and transparency in the proceedings.

6. The President's authority to review the nal award shall remain." 8 (Italics
supplied)

The recommendation of CPLC Cayetano was approved by President Ramos, and

a copy of President Ramos' handwritten approval was sent to the SBMA Board of
Directors. Accordingly, the SBMA Board, with the concurrence of representatives of the
Commission on Audit, agreed to focus the reevaluation of the bids in accordance with
the evaluation criteria and the detailed components contained in the Tender Document,
including all relevant information gleaned from the bidding documents, as well as the
reports of the three international experts and the consultancy firm hired by the SBMA.
On September 19, 1996, the SBMA Board issued a Resolution, declaring:
NOW, THEREFORE, IT IS HEREBY RESOLVED that the bid that conforms to
the Invitation to Tender, that has a realistic Business Plan offering the greatest
nancial return to SBMA, the best possible offer and the most advantageous to
the government is that of HPPL and HPPL is accordingly selected as the winning
bidder and is hereby awarded the concession for the operation and development
of the Subic Bay Container Terminal. 9 (Italics supplied)

In a letter dated September 24, 1996, the SBMA Board of Directors submitted to
the Office of the President the results of the re-evaluation of the bid proposals, to wit:
SBMA, through the unanimous vote of all the Board Members, excluding
the Chairman of the Board who voluntarily inhibited himself from participating in
the re-evaluation, selected the HPPL bid as the winning bid, being: the conforming
bid with a realistic Business Plan offering the greatest nancial return to the
SBMA; the best possible offer in the market, and the most advantageous to the
government in accordance with the Tender Document. 1 0

Notwithstanding the SBMA Board's recommendations and action awarding the

project to HPPL, then Executive Secretary Ruben Torres submitted a memorandum to
the O ce of the President recommending that another rebidding be conducted. 1 1
Consequently, the O ce of the President issued a Memorandum directing the SBMA
Board of Directors to refrain from signing the Concession Contract with HPPL and to
conduct a rebidding of the project. 1 2
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 In the meantime, the Resident Ombudsman for the DOTC led a complaint
against members of the SBMA-PBAC before the O ce of the Ombudsman for alleged
violation of Section 3(e) of Republic Act No. 3019 for awarding the contract to HPPL.
On April 16, 1997, the Evaluation and Preliminary Investigation Bureau of the O ce of
the Ombudsman issued a Resolution absolving the members of the SBMA-PBAC of any
liability and dismissing the complaint against them, ruling thus:
After an assiduous study of the respective contentions of both parties, we
are inclined to hold, as it is hereby held, that there is no proof on record
pinpointing respondents to have acted in excess of their discretion when they
awarded the bid to HPPL. Records revealed that respondents, in the exercise of
their discretion in determining the nancial packages offered by the applicants,
were guided by the expert report of Davis, Langdon and Seah (DLS) that fairly
evaluated which of the bidders tender the greatest nancial return to the
government. There is no showing that respondents had abused their prerogatives.
As succinctly set forth in the DLS report it stated, among others, that, "in
assessing the full nancial return to SBMA offered by the bidders, it is necessary
to consider the following critical matters: TaCDIc

1. Royalty fees
2. Volume of TEU's as affected by:
a. Tariff rates;

b. Marketing strategy;
c. Port facilities; and
d. Efficient reliable services.
With the preceding parameters for the evaluation of bidder's business plan,
the respondents were fairly guided by, as they aligned their judgment in
congruence with, the opinion of the panel of experts and the SBMA's Technical
Evaluation Committee to the effect that HPPL's business is superior while that of
ICTSI's appeared to be unrealistically high which may eventually hinder the
competitiveness of the SBMA port with the rest of the world. Respondents averred
that the panel of World Bank experts noted that ICTSI's high tariff rates at U.S.
$119.00 per TEU is already higher by 37% through HPPL, which could further
increase by 20% in the rst two (2) years and by 5% hike thereafter. In short, high
tariffs would discourage potential customers which may be translated into low
cargo volume that will eventually reduce nancial return to SBMA. Respondents
asserted that HPPL's business plan offers the greatest nancial return which
could be equated that over the ve years, HPPL offers 1.25 billion pesos while
ICTSI offers P0.859 billion, and RPSI offers P.420 billion. Over the rst ten years
HPPL gives P2.430 billion, ICTSI tenders P2.197 billion and RPSI has P1.632
billion.
Viewed from this perspective alongside with the evidence on record, the
undersigned panel does not nd respondents to have exceeded their discretion in
awarding the bid to HPPL. Consequently, it could not be said that respondents'
act had placed the government at a grossly disadvantageous plight that could
have jeopardized the interest of the Republic of the Philippines. 1 3

On July 7, 1997, the HPPL, feeling aggrieved by the SBMA's failure and refusal to
commence negotiations and to execute the Concession Agreement despite its earlier
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 pronouncements that HPPL was the winning bidder, led a complaint 1 4 against SBMA
before the Regional Trial Court (RTC) of Olongapo City, Branch 75, for speci c
performance, mandatory injunction and damages. In due time, ICTSI, RPSI and the
O ce of the President led separate Answers-in-Intervention 1 5 to the complaint
opposing the reliefs sought by complainant HPPL.
Complainant HPPL alleged and argued therein that a binding and legally
enforceable contract had been established between HPPL and defendant SBMA under
Article 1305 of the Civil Code, considering that SBMA had repeatedly declared and
con rmed that HPPL was the winning bidder. Having accepted HPPL's offer to operate
and develop the proposed container terminal, defendant SBMA is duty-bound to
comply with its obligation by commencing negotiations and drawing up a Concession
Agreement with plaintiff HPPL. HPPL also pointed out that the bidding procedure
followed by the SBMA faithfully complied with existing laws and rules established by
SBMA itself; thus, when HPPL was declared the winning bidder it acquired the exclusive
right to negotiate with the SBMA. Consequently, plaintiff HPPL posited that SBMA
should be: (1) barred from conducting a re-bidding of the proposed project and/or
performing any such acts relating thereto; and (2) prohibited from negotiating with any
party other than plaintiff HPPL until negotiations between HPPL and SBMA have been
concluded or in the event that no acceptable agreement could be arrived at. Plaintiff
HPPL also alleged that SBMA's continued refusal to negotiate the Concession Contract
is a substantial infringement of its proprietary rights, and caused damage and prejudice
to plaintiff HPPL.
Hence, HPPL prayed that:
(1) Upon the ling of this complaint, hearings be scheduled to
determine the propriety of plaintiff's mandatory injunction application which
seeks to order defendant or any of its appropriate o cers or committees to
forthwith specify the date as well as to perform any and all such acts (e.g. laying
the ground rules for discussion) for the commencement of negotiations with
plaintiff with the view to signing at the earliest possible time a Concession
Agreement for the development and operation of the Subic Bay Container
Terminal.
(2) Thereafter, judgment be rendered in favor of plaintiff and against
defendant:
2.1. Making permanent the preliminary mandatory injunction it had
issued;
2.2. Ordering defendant to implement the Concession Agreement it
had executed with plaintiff in respect of the development and
operation of the proposed Subic Bay Container Terminal;
2.3. Ordering defendant to pay for the cost of plaintiff's attorney's fees
in the amount of P500,000.00, or as otherwise proven during the
trial.
Plaintiff prays for other equitable reliefs. 1 6

During the pre-trial hearing, one of the issues raised and submitted for resolution
was whether or not the O ce of the President can set aside the award made by SBMA
in favor of plaintiff HPPL and if so, can the O ce of the President direct the SBMA to
conduct a re-bidding of the proposed project.
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 While the case before the trial court was pending litigation, on August 4, 1997,
the SBMA sent notices to plaintiff HPPL, ICTSI and RPSI requesting them to declare
their interest in participating in a rebidding of the proposed project. 1 7 On October 20,
1997, plaintiff HPPL received a copy of the minutes of the pre-bid conference which
stated that the winning bidder would be announced on December 5, 1997. 1 8 Then on
November 4, 1997, plaintiff HPPL learned that the SBMA had accepted the bids of
ICTSI and RPSI who were the only bidders who qualified.
In order to enjoin the rebidding while the case was still pending, plaintiff HPPL
led a motion for maintenance of the status quo 1 9 on October 28, 1997. The said
motion was denied by the court a quo in an Order dated November 3, 1997, to wit: IaEScC

Plaintiff maintains that by voluntarily participating in this proceedings, the

defendant and the intervenors "have unquali edly agreed to submit the issue of
the propriety, legality and validity of the O ce of the President's directive that the
SBMA effect a rebidding" of its concession contract or the operation of the Subic
Bay Container Terminal. As such, the status quo must be maintained in order not
to thwart the court's ability to resolve the issues presented. Further, the ethics of
the profession require that counsel should discontinue any act which tends to
render the issues academic.
The Opposition is anchored on lack of jurisdiction since the issuance of a
cease-and-desist order would be tantamount to the issuance of a Temporary
Restraining Order or a Writ of Injunction which this Court cannot do in light of the
provision of Section 21 of R.A. 7227 which states:
SECTION 21. Injunction and Restraining Order. — The
implementation of the projects for the conversion into alternative
productive uses of the military reservations are urgent and necessary and
shall not be restrained or enjoined except by an order issued by the
Supreme Court of the Philippines.
During the hearing on October 30, 1997, SBMA's counsel revealed that
there is no law or administrative rule or regulation which requires that a bidding
be accomplished within a definite time frame.
Truly, the matter of the deferment of the re-bidding on November 4, 1997
rests on the sound discretion of the SBMA. For this Court to issue a cease-and-
desist order would be tantamount to an issuance of a Temporary Restraining
Order or a Writ of Preliminary Injunction. (Prado v. Veridiano II , G.R. No. 98118,
December 6, 1991).
The Court notes that the Office of the President has not been heard fully on
the issues. Moreover, one of the intervenors is of the view that the issue of
jurisdiction must be resolved first, ahead of all the other issues.

WHEREFORE, and viewed from the foregoing considerations, plaintiff's

motion is DENIED.

SO ORDERED. 2 0 (Italics supplied)

Hence, this petition filed by petitioner (plaintiff below) HPPL against respondents
SBMA, ICTSI, RPSI and the Executive Secretary seeking to obtain a prohibitory
injunction. The grounds relied upon by petitioner HPPL to justify the ling of the instant
petition are summed up as follows:

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 29. It is respectfully submitted that to allow or for this Honorable Court
to otherwise refrain from restraining SBMA, during the pendency of this suit, from
committing the aforementioned act(s) which will certainly occur on 5 December
1997 such action (or inaction) will work an injustice upon petitioner which has
validly been announced as the winning bidder for the operation of the Subic Bay
Container Terminal.
30. To allow or for this Honorable Court to otherwise refrain from
restraining SBMA, during the pendency of this suit, from committing the
aforementioned threatened acts would be in violation of petitioner's rights in
respect of the action it had led before the RTC of Olongapo City in Civil Case No.
243-0-97, and could render any judgment which may be reached by said Court
moot and ineffectual. As stated, the legal issues raised by the parties in that
proceedings are of far reaching importance to the national pride and prestige, and
they impact on the integrity of government agencies engaged in international
bidding of privatization projects. Its resolution on the merits by the trial court
below and, thereafter, any further action to be taken by the parties before the
appellate courts will certainly bene t respondents and the entire Filipino people.
21

WHEREFORE, petitioner HPPL sought relief praying that:

a) Upon the ling of this petition, the same be given due course and a
temporary restraining order and/or writ of preliminary injunction be issued ex
parte, restraining SBMA or any of its committees, or other persons acting under its
control or direction or upon its instruction, from declaring any winner on 5
December 1997 or at any other date thereafter, in connection with the rebidding
for the privatization of the Subic Bay Container Terminal and/or for any, some or
all of the respondents to perform any such act(s) in pursuance thereof, until
further orders from this Honorable Court;
b) After appropriate proceedings, judgment be rendered in favor of
petitioner and against respondents —
(1) Ordering SBMA to desist from conducting any rebidding or in
declaring the winner of any such rebidding in respect of the development and
operation of the Subic Bay Container Terminal until the judgment which the RTC
of Olongapo City may render in Civil Case No. 243-0-97 is resolved with finality;

(2) Declaring null and void any award which SBMA may announce or
issue on 5 December 1997; and

(3) Ordering respondents to pay for the cost of suit.

Petitioner prays for other equitable reliefs. 2 2

The instant petition seeks the issuance of an injunctive writ for the sole purpose
of holding in abeyance the conduct by respondent SBMA of a rebidding of the
proposed SBICT project until the case for speci c performance is resolved by the trial
court. In other words, petitioner HPPL prays that the status quo be preserved until the
issues raised in the main case are litigated and nally determined. Petitioner was
constrained to invoke this Court's exclusive jurisdiction and authority by virtue of the
above-quoted Republic Act 7227, Section 21.
On December 3, 1997, this Court granted petitioner HPPL's application for a
temporary restraining order "enjoining the respondent SBMA or any of its committees,
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 or other persons acting under its control or direction or upon its instruction, from
declaring any winner on December 5, 1997 or at any other date thereafter, in connection
with the rebidding for the privatization of the Subic Bay Container Terminal and/or for
any, some or all of the respondents to perform any such act or acts in pursuance
thereof." 2 3
There is no doubt that since this controversy arose, precious time has been lost
and a vital infrastructure project has in essence been "mothballed" to the detriment of
all parties involved, not the least of which is the Philippine Government, through its
o cials and agencies, who serve the interest of the nation. It is, therefore, imperative
that the issues raised herein and in the court a quo be resolved without further delay so
as not to exacerbate an already untenable situation. CaTSEA

At the outset, the application for the injunctive writ is only a provisional remedy, a
mere adjunct to the main suit. 2 4 Thus, it is not uncommon that the issues in the main
action are closely intertwined, if not identical, to the allegations and counter allegations
propounded by the opposing parties in support of their contrary positions concerning
the propriety or impropriety of the injunctive writ. While it is not our intention to
preempt the trial court's determination of the issues in the main action for speci c
performance, this Court has a bounden duty to perform; that is, to resolve the matters
before this Court in a manner that gives essence to justice, equity and good
conscience.
While our pronouncements are for the purpose only of determining whether or
not the circumstances warrant the issuance of the writ of injunction, it is inevitable that
it may have some impact on the main action pending before the trial court.
Nevertheless, without delving into the merits of the main case, our ndings herein shall
be confined to the necessary issues attendant to the application for an injunctive writ.
For an injunctive writ to be issued, the following requisites must be proven:
First. That the petitioner/applicant must have a clear and unmistakable right.
Second. That there is a material and substantial invasion of such right.
Third. That there is an urgent and permanent necessity for the writ to prevent
serious damage. 2 5

To our mind, petitioner HPPL has not su ciently shown that it has a clear and
unmistakable right to be declared the winning bidder with nality, such that the SBMA
can be compelled to negotiate a Concession Contract. Though the SBMA Board of
Directors, by resolution, may have declared HPPL as the winning bidder, said award
cannot be said to be nal and unassailable. The SBMA Board of Directors and other
o cers are subject to the control and supervision of the O ce of the President. All
projects undertaken by SBMA require the approval of the President of the Philippines
under Letter of Instruction No. 620, which places the SBMA under its ambit as an
instrumentality, de ned in Section 10 thereof as an "agency of the national government,
not integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering
special funds, and enjoying operational autonomy, usually through a charter. This term
includes regulatory agencies, chartered institutions and government owned and
controlled corporations." 2 6 (Italics supplied)
As a chartered institution, the SBMA is always under the direct control of the
O ce of the President, particularly when contracts and/or projects undertaken by the
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 SBMA entail substantial amounts of money. Speci cally, Letter of Instruction No. 620
dated October 27, 1997 mandates that the approval of the President is required in all
contracts of the national government o ces, agencies and instrumentalities, including
government-owned or controlled corporations involving two million pesos
(P2,000,000.00) and above, awarded through public bidding or negotiation. The
President may, within his authority, overturn or reverse any award made by the SBMA
Board of Directors for justi able reasons. It is well-established that the discretion to
accept or reject any bid, or even recall the award thereof, is of such wide latitude that
the courts will not generally interfere with the exercise thereof by the executive
department, unless it is apparent that such exercise of discretion is used to shield
unfairness or injustice. When the President issued the memorandum setting aside the
award previously declared by the SBMA in favor of HPPL and directing that a rebidding
be conducted, the same was within the authority of the President and was a valid
exercise of his prerogative. Consequently, petitioner HPPL acquired no clear and
unmistakable right as the award announced by the SBMA prior to the President's
revocation thereof was not final and binding.
There being no clear and unmistakable right on the part of petitioner HPPL, the
rebidding of the proposed project can no longer be enjoined as there is no material and
substantial invasion to speak of. Thus, there is no longer any urgent or permanent
necessity for the writ to prevent any perceived serious damage. In ne, since the
requisites for the issuance of the writ of injunction are not present in the instant case,
petitioner's application must be denied for lack of merit. 2 7
Finally, we focus on the matter of whether or not petitioner HPPL has the legal
capacity to even seek redress from this Court. Admittedly, petitioner HPPL is a foreign
corporation, organized and existing under the laws of the British Virgin Islands. While
the actual bidder was a consortium composed of petitioner, and two other
corporations, namely, Guoco Holdings (Phils.) Inc. and Unicol Management Services,
Inc., it is only petitioner HPPL that has brought the controversy before the Court,
arguing that it is suing only on an isolated transaction to evade the legal requirement
that foreign corporations must be licensed to do business in the Philippines to be able
to file and prosecute an action before Philippines courts.
The maelstrom of this issue is whether participating in the bidding is a mere
isolated transaction, or did it constitute "engaging in" or "transacting" business in the
Philippines such that petitioner HPPL needed a license to do business in the Philippines
before it could come to court.
There is no general rule or governing principle laid down as to what constitutes
"doing" or "engaging in" or "transacting" business in the Philippines. Each case must be
judged in the light of its peculiar circumstances. 2 8 Thus, it has often been held that a
single act or transaction may be considered as "doing business" when a corporation
performs acts for which it was created or exercises some of the functions for which it
was organized. The amount or volume of the business is of no moment, for even a
singular act cannot be merely incidental or casual if it indicates the foreign
corporation's intention to do business. 2 9
Participating in the bidding process constitutes "doing business" because it
shows the foreign corporation's intention to engage in business here. The bidding for
the concession contract is but an exercise of the corporation's reason for creation or
existence. Thus, it has been held that "a foreign company invited to bid for IBRD and
ADB international projects in the Philippines will be considered as doing business in the
Philippines for which a license is required." In this regard, it is the performance by a
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 foreign corporation of the acts for which it was created, regardless of volume of
business, that determines whether a foreign corporation needs a license or not. 3 0
The primary purpose of the license requirement is to compel a foreign
corporation desiring to do business within the Philippines to submit itself to the
jurisdiction of the courts of the state and to enable the government to exercise
jurisdiction over them for the regulation of their activities in this country. 3 1 If a foreign
corporation operates a business in the Philippines without a license, and thus does not
submit itself to Philippine laws, it is only just that said foreign corporation be not
allowed to invoke them in our courts when the need arises. "While foreign investors are
always welcome in this land to collaborate with us for our mutual bene t, they must be
prepared as an indispensable condition to respect and be bound by Philippine law in
proper cases, as in the one at bar." 3 2 The requirement of a license is not intended to put
foreign corporations at a disadvantage, for the doctrine of lack of capacity to sue is
based on considerations of sound public policy. 3 3 Accordingly, petitioner HPPL must
be held to be incapacitated to bring this petition for injunction before this Court for it is
a foreign corporation doing business in the Philippines without the requisite license.
WHEREFORE, in view of all the foregoing, the instant petition is hereby
DISMISSED for lack of merit. Further, the temporary restraining order issued on
December 3, 1997 is LIFTED and SET ASIDE. No costs. HTCIcE

SO ORDERED.
Puno, Kapunan, and Pardo, JJ., concur.
Davide, Jr., C.J., concurs in the result.

Footnotes
1. Annex "A"; Rollo, p. 16; February 12, 1996 issues of the Philippine Daily Inquirer, Business
World, Lloyd's List and 2 newspapers of local circulation in Olongapo City.

2. The consultants were:

(i) Mr. Gustave de Monie, former Operations and Commercial Manager, Noordnatie,
Port of Antwerp, Belgium;

(ii) Mr. W. Don Welch, Executive Director and CEO, South Carolina State Ports
Authority, USA;
(iii) Mr. Thong Yoy Chuan, General Manager for Operations, Container Terminal of
Penang, Malaysia.

3. Annexes "C", "D", "E", "F"; Rollo, pp. 22-80.

4. Annex "G"; Rollo, p. 82.

5. Supra., Rollo, p. 82.

6. Supra., Rollo, p. 84.
7. Annex "A"; Rollo, pp. 230-232.

8. Annex "B"; Rollo, pp. 233-236.

9. Annex "J"; Rollo, pp. 89-90.

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 10. Annex "17" of SBMA's Answer to the Complaint.
11. Annex "E"; Rollo, p. 240.

12. Annex "D"; Rollo, p. 239; Memorandum dated January 2, 1997.

13. Annex "2"; Rollo, pp. 304-312.

14. Annex "M"; Rollo, pp. 93-100, Civil Case No. 243-0-97.

15. Annex "P"; Rollo, pp. 113-121; Annex "13"; Rollo, pp. 427-433; Annex "14"; Rollo, pp. 435-
438.

16. Complaint, Rollo, p. 99.

17. Annex "Q"; Rollo, p. 122.

18. Annex "R"; Rollo, pp. 123-128.

19. Annex "S"; Rollo, pp. 129-132.

20. Annex "T"; Rollo, p. 133-134.

21. Petition, Rollo, p. 10.

22. Petition, Rollo, p. 11.

23. Supreme Court Resolution, Rollo, p. 144.

24. PAL, Inc. v. NLRC, 287 SCRA 672, 680 (1998).

25. Versoza v. CA, 299 SCRA 100, 108 (1998); Arcega v. CA, 275 SCRA 176, 180 (1997);
Teotico v. Agda, Sr., 197 SCRA 675, 696 (1991).
26. Rollo, pp. 633-634.
27. Inter-Asia Services Corp. (International) v. CA, 263 SCRA 408, 419 (1996).
28. Mentholatum Co. v. Mangaliman, 72 Phil. 524, 528 (1941).
29. Avon Insurance PLC v. CA, 273 SCRA 312, 321 (1997).
30. Granger Associates v. Microwave Systems, Inc., 189 SCRA 631, 640 (1990).
31. Eriks Pte., Ltd. v. CA, 267 SCRA 567, 580 (1997).
32. Granger Associates v. Microwave Systems, Inc., supra., p. 642.
33. National Sugar Trading Corp. v. CA, 246 SCRA 465, 470 (1995).
[G.R. No. 140359. June 19, 2000.]

HERMAN CANIETE and WILFREDO ROSARIO , petitioners, vs . THE

SECRETARY OF EDUCATION, CULTURE AND SPORTS , respondent.

Froilan M. Bacungan and Associates for petitioners.

The Solicitor General for respondent.
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 SYNOPSIS

Petitioners are public school teachers at the Juan Sumulong High School in Quezon
City. For having been absent on September 20 and 21, 1990, they were charged by then
Secretary Isidro Cariño of the Department of Education, Culture and Sports, for allegedly
participating in the mass action on said date. In his decisions dated May 28, 1991 and July
9, 1992, Secretary Cariño found petitioners guilty as charged and dismissed them from the
service effective immediately. Said decisions were, however, set aside by the Merit
Systems Protection Board (MSPB) when the case was brought on appeal. The case was
brought to the Civil Service Commission (CSC), and on August 30, 1994, the CSC modi ed
the decision of the MSPB declaring the petitioners guilty only for being absent without the
necessary leave of absence. Thereafter, petitioners moved for reconsideration of the CSC
resolution insofar as it disallowed the payment of their back salaries. The CSC denied
reconsideration. Aggrieved, petitioners elevated the case to the Court of Appeals, but the
latter a rmed the questioned decision of the CSC. The issue to be resolved is whether
petitioners are entitled to their back salaries upon their reinstatement after they were
found guilty only of violating reasonable o ce rules and regulations and penalized only
with reprimand.
The Court found the petition meritorious. The Court ruled that the ruling in Gloria vs.
Court of Appeals is squarely applicable in this case, wherein the Court a rmed the
payment of the teachers' back salaries when said teachers, who were under preventive
suspension pending appeal, were eventually found innocent from the charges. Accordingly,
the petition was given due course and the decision and resolution of the Court of Appeals
were reversed and set aside. aCIHcD

SYLLABUS

1. POLITICAL LAW; ADMINISTRATIVE LAW; CIVIL SERVICE LAW; EMPLOYEES

WHO ARE PREVENTIVELY SUSPENDED PENDING INVESTIGATION ARE NOT ENTITLED TO
COMPENSATION FOR THE SAID PERIOD EVEN IF THEY ARE EXONERATED; HOWEVER,
THEY ARE ENTITLED TO COMPENSATION DURING THE PERIOD OF SUSPENSION
PENDING APPEAL IF EVENTUALLY THEY ARE FOUND INNOCENT. — The ruling in Gloria vs.
Court of Appeals is squarely applicable in this case as the facts are substantially the same.
I n Gloria, the public school teachers therein were either suspended or dismissed for
allegedly participating in the strikes sometime in September and October 1990. They were
eventually exonerated of said charge and found guilty only of violation of reasonable o ce
rules and regulations by failing to le applications for leave of absence. Thus, the penalty
of dismissal earlier imposed on them was reduced to reprimand and their reinstatement
was ordered. Moreover, this Court a rmed the payment of back salaries of said teachers
explaining that although "employees who are preventively suspended pending investigation
are not entitled to the payment of their salaries even if they are exonerated, we do not
agree with the government that they are not entitled to compensation for the period of
their suspension pending appeal if eventually they are found innocent.
2. ID.; ID.; ID.; KINDS OF PREVENTIVE SUSPENSION. — There are two kinds of
preventive suspension of civil service employees who are charged with offenses
punishable by removal or suspension: (1) preventive suspension pending investigation
(§51) and (2) preventive suspension pending appeal if the penalty imposed by the
disciplining authority is suspension or dismissal and, after review, the respondent is
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 exonerated (§47[4]).
3. ID.; ID.; ID.; PUBLIC SCHOOL TEACHERS ARE ENTITLED TO BACK SALARIES
IN CASE AT BAR. — We held in Gloria that the employee who is placed under preventive
suspension pending investigation is not entitled to compensation because such
suspension "is not a penalty but only a means of enabling the disciplining authority to
conduct an unhampered investigation." Upon the other hand, there is right to
compensation for preventive suspension pending appeal if the employee is eventually
exonerated. This is because "preventive suspension pending appeal is actually punitive
although it is in effect subsequently considered illegal if respondent is exonerated and the
administrative decision nding him guilty is reversed. Hence, he should be reinstated with
full pay for the period of the suspension.

DECISION

KAPUNAN , J : p

Petitioners Herman Caniete and Wilfredo Rosario seek the reversal of the Decision,
dated 17 June 1999, of the Court of Appeals in CA-G.R. SP No. 46835 and its Resolution,
dated 6 October 1999, denying petitioners' motion for reconsideration. cdphil

Petitioners are public school teachers at the Juan Sumulong High School in Quezon
City. For being absent on 20 and 21 September 1990, they were charged by Secretary
Isidro Cariño, then Secretary of the Department of Education, Culture and Sports, with
alleged participation in the mass actions/strikes on said dates. Petitioners were placed
under preventive suspension on 21 September 1990. In his decisions, dated 28 May 1991
and 9 July 1992, Secretary Cariño found petitioners "guilty as charged" and dismissed
them from the service "effective immediately." The said decisions of Secretary Cariño,
however, were set aside by the Merit Systems Protection Board (MSPB) when the case
was brought to it on appeal. The MSPB found that petitioners were guilty only of Gross
Violation of Existing Civil Service Law and Rules and suspended them for three (3) months
without pay.
In its Resolution No. 94-4670, dated 30 August 1994, the Civil Service Commission
(CSC) modi ed the decision of the MSPB. The CSC found that petitioners were only guilty
of being absent on 20 and 21 September 1990 without the necessary leave of absence,
and not as charged by Secretary Cariño of participating in the mass actions/strikes on
said dates. Accordingly, petitioners were meted out the penalty of reprimand. The
dispositive portion of the CSC resolution reads:
WHEREFORE, foregoing premises considered, the Commission resolves to
nd Herman P. Caniete and Wilfredo A. Rosario guilty of Violation of Reasonable
O ce Rules and Regulations. The assailed decision is thus modi ed as they are
hereby meted out the penalty of reprimand. They are automatically reinstated in
the service without payment of back salaries. 1

Petitioners moved for a reconsideration of the CSC resolution insofar as it

disallowed the payment of their back salaries. The CSC denied their motion for
reconsideration. Petitioners then elevated the case to the CA but the latter a rmed the
decision of the CSC. In denying petitioners claim for back salaries, the CA cited City Mayor
of Zamboanga vs. CA, 2 where this Court held:
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 . . . back salaries may be ordered paid to an o cer or employee only if he
is exonerated of the charge against him and his suspension or dismissal is found
and declared to be illegal. In Sales vs. Mathay, Sr ., 129 SCRA 321, this Court held
that a postal clerk suspended for six months for gross neglect of duty is not
entitled to back salary if he cannot show that his suspension was unjusti ed or
that he is innocent of the charge.

Thus, the order of payment of full backwages in this case is without lawful
basis. Indeed, to allow private respondent to receive full back salaries would
amount to rewarding him for his misdeeds and compensating him for services
that were never rendered. 3

Petitioners led a motion for reconsideration of the above decision but the CA
denied the same in its Resolution, dated 6 October 1999. Hence, this appeal.
The singular issue that needs to be resolved in this case is whether petitioners, who
were earlier dismissed for allegedly participating in mass actions/strikes, are entitled to
their back salaries upon their reinstatement after they were found guilty only of violating
reasonable office rules and regulations and penalized only with reprimand.
The Court finds for the petitioners.
As correctly pointed out by petitioners, the ruling in Gloria vs. Court of Appeals 4 is
squarely applicable in this case as the facts are substantially the same. In Gloria, the public
school teachers therein were either suspended or dismissed for allegedly participating in
the strikes sometime in September and October 1990. They were eventually exonerated of
said charge and found guilty only of violation of reasonable o ce rules and regulations by
failing to le applications for leave of absence. Thus, the penalty of dismissal earlier
imposed on them was reduced to reprimand and their reinstatement was ordered.
Moreover, this Court a rmed the payment of back salaries of said teachers explaining
that although "employees who are preventively suspended pending investigation are not
entitled to the payment of their salaries even if they are exonerated, we do not agree with
the government that they are not entitled to compensation for the period of their
suspension pending appeal if eventually they are found innocent." 5
The pertinent provisions of the Civil Service Law (Book V, Title I, Subtitle A of the
Administrative Code) on preventive suspension are as follows: LexLib

SEC. 47. Disciplinary Jurisdiction.

xxx xxx xxx

(2) The Secretaries and heads of agencies and instrumentalities,

provinces, cities and municipalities shall have jurisdiction to investigate and
decide matters involving disciplinary action against o cers and employees under
their jurisdiction. Their decisions shall be nal in case the penalty imposed is
suspension for not more than thirty days or ne in an amount not exceeding thirty
days' salary. In case the decision rendered by a bureau or o ce head is
appealable to the Commission, the same may be initially appealed to the
department and nally to the Commission and pending appeal, the same shall be
executory except when the penalty is removal, in which case the same shall be
executory only after confirmation by the Secretary concerned.
xxx xxx xxx

(4) An appeal shall not stop the decision from being executory, and in
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 case the penalty is suspension or removal, the respondent shall be considered as
having been under preventive suspension during the pendency of the appeal in
the event he wins an appeal.
SEC. 51. Preventive Suspension. — The proper disciplining authority
may preventively suspend any subordinate o cer or employee under his
authority pending an investigation, if the charge against such o cer or employee
involves dishonesty, oppression or grave misconduct, or neglect in the
performance of duty, or if there are reasons to believe that the respondent is guilty
of charges which would warrant his removal from the service.
SEC. 52. Lifting of Preventive Suspension Pending Administrative
Investigation. — When the administrative case against the o cer or employee
under preventive suspension is not nally decided by the disciplining authority
within the period of ninety (90) days after the date of suspension of the
respondent who is not a presidential appointee, the respondent shall be
automatically reinstated in the service: Provided, That when the delay in the
disposition of the case is due to the fault, negligence or petition of the respondent,
the period of delay shall not be counted in computing the period of suspension
herein provided.

Thus, there are two kinds of preventive suspension of civil service employees who
are charged with offenses punishable by removal or suspension: (1) preventive suspension
pending investigation (§51) and (2) preventive suspension pending appeal if the penalty
imposed by the disciplining authority is suspension or dismissal and, after review, the
respondent is exonerated (§47[4]). 6
We held in Gloria that the employee who is placed under preventive suspension
pending investigation is not entitled to compensation because such suspension "is not a
penalty but only a means of enabling the disciplining authority to conduct an unhampered
investigation." 7 Upon the other hand, there is right to compensation for preventive
suspension pending appeal if the employee is eventually exonerated. This is because
"preventive suspension pending appeal is actually punitive although it is in effect
subsequently considered illegal if respondent is exonerated and the administrative
decision nding him guilty is reversed. Hence, he should be reinstated with full pay for the
period of the suspension." 8
The public school teachers in Gloria who were exonerated of the charge against
them, i.e., participating in the strike, and found guilty only of violating reasonable o ce
rules and regulations and reprimanded, were held to be entitled to back salaries. We ruled:
Private respondents were exonerated of all charges against them for acts
connected with the teachers' strike of September and October 1990. Although
they were absent from work, it was not because of the strike. For being absent
without leave, they were held liable for violation of reasonable o ce rules and
regulations for which the penalty is a reprimand. Their case thus falls squarely
within ruling in Bangalisan, which likewise involved a teacher found guilty of
having violated reasonable o ce rules and regulations. Explaining the grant of
salaries during their suspension despite the fact that they were meted out
reprimand, this Court stated:

"With respect to petitioner Rodolfo Mariano, payment of his

backwages is in order. A reading of the resolution of the Civil Service
Commission will show that he was exonerated of the charges which
formed the basis for his suspension. The Secretary of the DECS charged
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 him with and he was later found guilty of grave misconduct, gross neglect
of duty, gross violation of the Civil Service Law, rules and regulations and
reasonable o ce regulations, refusal to perform o cial duty, gross
insubordination, conduct prejudicial to the best interest of the service, and
absence without o cial leave, for his participation in the mass actions on
September 18, 20 and 21, 1990. It was his alleged participation in the mass
actions that was the basis of his preventive suspension and, later, his
dismissal from the service.
However, the Civil Service Commission, in the questioned resolution,
made a nding that Mariano was not involved in the "mass actions" but
was absent because he was in Ilocos Sur to attend the wake and interment
of his grandmother. Although the CSC imposed upon him the penalty of
reprimand, the same was for his violation of reasonable o ce rules and
regulations because he failed to inform the school of his intended absence
and neither did he file an application for leave covering such absences. cda

Under Section 23 of the Rules Implementing Book V of Executive

Order No. 292 and other pertinent civil service laws, in violations of
reasonable o ce rules and regulations, the rst offense is punishable by
reprimand. To deny petitioner Mariano his back wages during his
suspension would be tantamount to punishing him after his exoneration
from the charges which caused his dismissal from the service."

I n Jacinto v. Court of Appeals, a public school teacher who was found

guilty of violation of reasonable o ce rules and regulations for having been
absent without leave and reprimanded was given back salaries after she was
exonerated of the charge of having taken part in the strikes. 9

Given the substantial factual similarities of this case to Gloria, there is clearly no
reason for this Court to rule against the payment of back salaries to herein petitioners.
WHEREFORE, the petition is given DUE COURSE. The Decision, dated 7 June 1999,
and Resolution, dated 6 October 1999, of the Court of Appeals are REVERSED and SET
ASIDE. Respondent DECS is ORDERED to pay petitioners Herman Caniete and Wilfredo
Rosario their salaries from the time of their dismissal by the Department of Education,
Culture and Sports until their actual reinstatement, for a period not exceeding five years. cdrep

SO ORDERED.
Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.

Footnotes

1. Rollo, p. 39.
2. 182 SCRA 785 (1990).
3. Id., at 789-790.
4. 306 SCRA 287 (1997).

5. Id., at 302.
6. See Note 4, at 296.

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 7. Id., at 303.
8. Id.
9. Id., at 305-306.

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