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Group Number: __4___

ASYNCHRONOUS ACTIVITY FOR TOPIC __2_____

Case 1

The Department of Electricity (DOE), a national government agency, awarded the Contract for
the Supply of 3 Units of Two-Megawatt Generator Sets to Generator Philippines Inc. (GTI). The
Notice of Award was issued to GTI on January 19, 2014. During the post-qualification of GTI
(which happened from January 5 to 11, 2014), GTI has ordered for the said generator sets
from its principal in the US. Deliveries from its principal usually take 3-4 weeks from order. GTI
knew from the bidding documents (Schedule of Requirements) that delivery is expected by the
DOE within 60 days from the effectivity of contract as stated in the Notice to Proceed (NTP).

As expected by GTI, the generator sets arrived at the Port of Manila on February 1, 2014. GTI
received the NTP from DOE on January 30, 2014. The NTP states that the contract is effective
on February 1, 2014. Thus, GTI has until April 2, 2014 to complete the deliveries to DOE’s main
building.

GTI has immediately contacted its custom broker to process the release of the generator sets
from the Bureau of Customs. GTI’s hauler service is also on stand-by and ready to transport the
generator sets to DOE once released by Customs. Days have passed, but the generator sets
could not be released. GTI learned that there was an unusual congestion of cargoes in the
Bureau of Customs, and at the Port of Manila in view of the truck-ban imposed by the City
Government of Manila from Mondays to Saturdays.

Unloading of deliveries from the cargo vessels for checking and processing in the Bureau of
Customs could not be fast-tracked as the entire Port is crowded with containers of undelivered
cargoes. These all resulted from the truck-ban issued by the City Government of Manila since
January 30, 2014. Finally, on April 2, 2014, two of the three units of generator sets, subject of
the awarded contract were transported and delivered at the DOE’s main building. The
remaining third unit was only delivered on April 5, 2014.

Questions:

 Should GTI be liable for liquidated damages (LD) for the delayed delivery?

1. If GTI is liable for LD, how much LD should be charged against it?

Answer:
 Under Section 68 of the 2016 Revised IRR of RA 9184 “For the procurement of Goods,
Infrastructure Projects and Consulting Services, the amount of the liquidated damages
shall be at least equal to one-tenth of one percent (0.001) of the cost of the
unperformed portion for every day of delay.”

The GTI is only liable for LD the 3rd unit, the undelivered unit, which was only delivered
on April 5, 2014.

Computation: 1 x unit cost of the equipment x 0.001 x 3 days (number of delayed days)

2. If GTI is not liable for LD, please explain why.

While Group 4 believes that GTI is liable to for liquidated damages, if only it was able to
notify the Procuring Entity in writing to request for an extension of delivery, then it
would be exempted from liability.

3. Would you consider any force majeure or fortuitous event in the problem? Explain your
answer.

Answer:

On the case of GTI, they should have anticipated any risk that would hamper the delivery. And
undertaken steps such as analyzing all the risk in the delivery schedule or submitting a letter
request for an extension of delivery.

Every business venture involves risks. In this case, our group views the delay is unforeseeable
as congestion in the port could happen at any point in time.

Force majeure, as expressed in the General Conditions of the Contract in every Bidding
Documents, are those consequences that the supplier could not have foreseen, or which though
foreseen, was unavoidable. These conditions shall not include any ordinary unfavorably weather
conditions, and any other cause the effects of which could have been avoided with the exercise
of reasonable diligence by the supplier/creditor.

To exempt GTI from liability for a breach of an obligation due to force majeure, the following
requisites must likewise concur: (a) the cause of the breach of the obligation must be
independent of the will of the debtor; (b) the event must be eirther unforeseeable or
unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfull his
obligation in a normal manner; and (d) the debtor must be free from any participation in, or
aggravation of the injury to the creditor.
Case Analysis No. 2

Scope and Coverage

⮚ The Land Registration Authority (LRA) entered into a six-month security service contract
with Lanting Security and Watchman Agency (Lanting) from July 1, 2002 to December
31, 2002. After several extensions of the contract or in the second quarter of 2004, LRA
issued an invitation to bid for the award of a new security service contract.  Respondent
and 15 other prospective bidders, including Quiambao Risk Management Specialist
(Quiambao), submitted their respective letters of intent to bid.  Of the16 bidders, six
qualified including Lanting and Quiambao. 

⮚ Lanting then requested Edilberto R. Feliciano, LRA Chairman of the Bids and Awards
Committee-Procurement of Goods, Services and Materials (BAC-PGSM), for it to be
declared as the winning bidder.

⮚ Before any award could be made, Lanting, alleging that BAC-PGSM committed bidding
irregularities, lodged a complaint before the Philippine Association of Detective and
Protective Agency Operator, Inc. (PADPAO) which thereupon requested LRA to hold in
abeyance the awarding of the contract for security service to any of the bidder’s pending
investigation of Lanting’s complaint.

⮚ By letter of November 24, 2004, LRA informed Lanting that its contract was extended on
a “day to day” basis.  By a subsequent letter of December 6, 2004, it advised Lanting to
pull out its security personnel from the LRA premises to give way to “the lowest
calculated responsive bidder” which would take over on December 16, 2004.

⮚ Before any award could be made, Lanting, alleging that BAC-PGSM committed bidding
irregularities, lodged a complaint before the Philippine Association of Detective and
Protective Agency Operator, Inc. (PADPAO) which thereupon requested LRA to hold in
abeyance the awarding of the contract for security service to any of the bidder’s pending
investigation of Lanting’s complaint.

⮚ By letter of November 24, 2004, LRA informed Lanting that its contract was extended on
a “day to day” basis.  By a subsequent letter of December 6, 2004, it advised Lanting to
pull out its security personnel from the LRA premises to give way to “the lowest
calculated responsive bidder” which would take over on December 16, 2004.

Question

Whether the trial court has jurisdiction over the complaint despite Lanting’s failure to
comply with the protest mechanism provided under RA 9184.  

Answer:

The trial court has NO jurisdiction over the complaint.

As stated and provided in RA 9184 Art. XVII Sect. 55:

“Protests on Decisions of the BAC. – Decisions of the BAC in all stages

of procurement may be protested to the head of the procuring entity
and shall be in writing. Decisions of the BAC may be protested by filing
a verified position paper and paying a non-refundable protest fee. The
amount of the protest fee and the periods during which the protests
may be filed and resolved shall be specified in the IRR.”

Further, Sect. 58 states:

“Report to Regular Courts; Certiorari. – Court action may be resorted to

only after the protests contemplated in this Article shall have been
completed. Cases that are filed in violation of the process specified in
this Article shall be dismissed for lack of jurisdiction. The regional trial
court shall have jurisdiction over final decisions of the head of the
procuring entity. Court actions shall be governed by Rule 65 of the 1997
Rules of Civil Procedure.”
This is the doctrine of exhaustion of administrative remedies, that when an administrative
remedy is provided by law, relief must be sought by exhausting this remedy before judicial
intervention may be availed of.

Submitted by:

Francisco, Evangeline – DPWH

Fuentes, Mildred Q. – Metro Kalibo Water District
Fuertes, Isidro -
Fujas, Nikki C – Metro Kalibo Water Districk
Ganancial, Laarni Yazmin B – DepEd, Division of Leyte
Garcera, Nina V. - UP Philippine General Hospital
Gariando, Apollo –
Garrido, Richard R. – ITRMC
Gilo, Alma Bella M. – CAAP
Hakim, Judith P. – Department of Budget and Management
Hernandez, Maria Teresa M. – UP Philippine General Hospital
Hidalgo, Kathlin-Kaye T. – UP Manila
Invencion, Ethel Joy D. - MMSU
Jaynario, Patrick Lenard V. – Department of Budget and Management
Lacod, Mohamad Jardy I. - DepEd
Lambonao, Dominador L. – DepEd, Division of Leyte
Landrito, Nika - RITM

Group 4
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