Republic of the Philippines

DEPARTMENT OF JUSTICE
BUREAU OF CORRECTIONS
NBP Reservation, Muntinlupa City, Philippines 1776

Telefax: (632)809-8299

For : The Honorable Audit Team

From : The Chairman,

BAC, BuCor

Date : November 3, 2017

Re : Sur-rejoinder to Audit Observation Memorandum

In response to the Honorable Audit team’s rejoinder dated 24

October 2017 reiterating its stand that disbursement for catering services
amounting to Php 18,343,385.16 in favour of EDCT Food service were
illegal because the contract were awarded not strictly in accordance with
RA 9184 and its RIRR, submitted herewith is the sur-rejoinder of Dra.
Andrada in her capacity as BAC Chairman.

Previously, in Dra. Andrada’s answer to the Audit Observation

Memorandum dated September 15, 2017 she stated that:
“As can be gleaned from the Declaration of Failure of Bidding
signed by then Director General Atty. Benjamin C. Delos Santos dated 24
May 2017, the declaration of the failure of bidding stems out from the
following; as quoted in the Declaration “that the previous BAC (Attach
composition of the previous BAC as to form Annex B) failed to fix
despite previous instruction from this office (DG’s Office) to
rectify the same in the bidding documents”. It can be inferred from
the foregoing that a prima facie evidence of collusion (between the BAC
and any bidder) was found out by DG as HoPE of the BuCor.
 In the rejoinder of the Honourable Audit team, they stated that:
“They disagree with Dra. Andrada’s contention that there was a
prima facie evidence of collusion between the previous BAC as found out
by former Bureau of Corrections (BuCor) Director General (DG) Benjamin
Delos Santos as HoPE of the BuCor. They anchored their premise in the
contention that the prima facie evidence of collusion should be specified
in order to warrant such declaration; and that DG Delos Santos failed
to show the basis for the declaration of failure of bidding.”

As the previous BAC Chairman, and in compliance to the

Memorandum dated October 9, 2017 signed by the Honorable Audit team
Leader, Dr. Ernesto Tamayo in his answer to the said memorandum stated
that,
“To the best of our knowledge the then Director General Benjamin
Delos Santos did not instruct the previous BAC to use 25% and not
50% SLCC in the bidding in the Catering Services for inmates, DG Delos
Santos was aware of the legal opinion of DOJ Undersecretary Reynante B.
Orceo and the GPPB opinion.”

“The previous BAC exerted all effort for the reduction of

the SLCC, but legal opinion from the DOJ and GPPB maintain that the
SLCC catering services of inmates in 50% of the ABC, this form as the
basis of the previous BAC for setting the SLCC TO 50%.

“The previous BAC did not in any way committed any collusion
between any bidder for catering services nor of my personality in the
conduct of bidding for catering services of inmates or for any bidding
conducted. xxx”

It can be inferred from the premise above that DG Delos Santos’s

reason for declaring the failure of bidding was because the previous BAC’s
refusal to lower the SLCC from 50% to 25% and the reason why the
previous BAC refused to lower the SLCC was because of the DOJ and
GPBB’s opinion that the SLCC for catering service should be 50% and not
25% of the ABC.
 Hence, while DG Delos Santos is of the view that the SLCC should be
at least 25% of the ABC, the previous BAC Chairman, Dr. Tamayo view it
otherwise, he maintained that the SLCC should be at least 50% of the ABC
as provided by the legal opinion of the GPPB and the DOJ.

While the Honorable Audit Team adopted Dr. Tamayo’s view.

DG Delos Santos viewed Dr. Tamayo’s refusal to reduce the SLCC
to 25% as collusion between the previous BAC and the bidder.

On the second issue, the Honorable Audit Team contends that:

DG Delos Santos erred in giving the instruction to the previous BAC

that the percentage to be used must be 25% and not 50% in view of the
GPPB-TSO NPM 087-2016 dated November 15, 2016.

Again, it can be inferred from the aforementioned premise

that the issue on hand stems out whether 25%, as invoke by DG
Delos Santos, or 50% as espoused by the Honorable Audit Team
anchoring their contention to the NPM of GPPB-TSO.

On the third issue, the Honorable Audit Team harps on the issue
that:
The award of the contact to EDCT and AFS is illegal for violating
Section 23 of the RIRR of RA 9184 in the sense that EDCT and AFS’s
failure to meet the 50% SLCC requirement.

For the third time, the issue remains the same, that is; what
is the SLCC that should be complied with by the bidders.

In sum, the contention of both parties would rise or fall on whether

or not the SLCC should be 25% or 50% of the ABC.

The issue can be simplified as this.

If the procurement of catering service for the food subsistence of

PDL is classified as expendable the SLCC of the dibber must at least be
25% of the ABC, if classified as non-expendable the SLCC should be at
least 50% of the ABC.

Therefore, the ultimate issue would be;

Whether or not food subsistence for PDL is expendable

supplies or, otherwise stated, whether or not food subsistence for
PDL is non-expendable supplies.

DISCUSSION

It is of the opinion of the Honorable Audit Team that the food

subsistence is classified as non-expendable thus the SLCC should be 50%.
They have base their contention on the NPM of the GPBB and the Legal
Opinion of the DOJ.

However, it is settled in jurisprudence that in the hierarchy of laws,

the Legal opinion or NPM (non policy memorandum) although given great
weight, is of the bottom of the hierarchy. And, as against a clear provision
of the law, legal opinion or non policy memorandum must fail. In the words
of the Supreme Court “the stream cannot rise higher than its source”.

On the other hand, with all due respect to the legal opinion of the
GPBB or the DOJ we beg to disagree that the SLCC should be 50%. We
maintain our stand that the SLCC should be only 25% as will be discussed
below.

First, it is the contention of the Honorable GPPB-TSO that

procurement of catering service for food subsistence of inmates is neither
expendable nor non-expendable, but as a non-personal or
contractual services.

It is the stand of this officer that the GPPB-TSO did not in any
way answered whether or not food subsistence is expendable or
non expendable. What the GPPB-TSO made was to define food
subsistence as goods as provided in the definition of RA 9184, thus;

R) Goods. Refer to all items, supplies, materials and general support

services, except Consulting Services and infrastructure projects, which may
be needed in the transaction of public businesses or in the pursuit of any
government undertaking, project or activity, whether in the nature of
equipment, furniture, stationery, materials for construction, or personal
property of any kind, including non-personal or contractual services,
such as, the repair and maintenance of equipment and furniture, as well as
trucking, hauling, janitorial, security, and related or analogous services, as
well as procurement of materials and supplies provided by the Procuring
Entity for such services. The term “related” or “analogous services” shall
include, but is not limited to, lease of office space, media advertisements,
health maintenance services, and other services essential to the operation
of the Procuring Entity.

To repeat the contention of this officer, and for emphasis, the GPPB-
TSO did not categorically define catering services as non-expendable or
otherwise expendable. They only define it as non-personal or
contractual services which may be define as goods considering
the definition of goods under the law stated above.

Thus, the issue remains unsolved, that is, whether or not catering
services, as define as goods above, is expendable or non-expendable.

Next, the Honorable DOJ is of the same opinion and specifically

stated it in their opinion that:

“Considering that the catering service cannot be categorically

placed under the category of a good per se, or a service per se. It is
essentially considered as sui generis, being a class of its own. xxx”

Indubitably, the legal opinion of the DOJ, like the opinion of GPPB-
TSO, also did not; in any way classify food subsistence as expendable or
non-expendable. Instead of classifying catering service definitely and clear,
they add more ambiguity in the classification. What they did was to add
more confusion in the classification.

ARGUMENT OF THE PROPONENT

It is elementary in law and statutory construction that whenever

there is doubt in the provisions of the law, the intention of the framers
should be ascertained. And where can we see the best evidence to
ascertain of the intention of the framers of the law? The answer is in the
declaration of policy and the governing principles of the law.

Under RA 9184, the law specifically provide for the policy and
governing principles to look up to in case there is confusion in the
interpretation in any government procurement process, thus;

Section 2. Declaration of Policy

The provisions of this IRR are in line with the commitment of the GoP
to promote good governance and its effort to adhere to the principles of
transparency, accountability, equity, efficiency, and economy in its
procurement process. It is the policy of the GoP that procurement of
Goods, Infrastructure Projects and Consulting Services shall be competitive
and transparent, and therefore shall undergo competitive bidding, except
as provided in Rule XVI of this IRR.

Section 3. Governing Principles on Government Procurement

The procurement of the GoP shall be governed by these principles:

a) Transparency in the procurement process and in the implementation

of procurement contracts through wide dissemination of bid
opportunities and participation of pertinent non-government
organizations.
 b) Competitiveness by extending equal opportunity to enable
private contracting parties who are eligible and qualified to
participate in competitive bidding.

xxx

As can be gleaned from the above provisions, “it is the policy of the
GoP that procurement of Goods, xxx shall be competitive and
transparent,”, and what may be the best way to implement such
principle relative to the case at bar?

It is of the position of the undersigned that by using the

25% SLCC and not 50% the GoP may achieve such principle.

For a better clarity, applying the principles in the present case, DG

Delos Santos instructed the previous BAC to use the 25% SLCC in order
that other bidders may participate the bidding of food subsistence for PDL.
As DG Delos Santos stated in his Declaration of Failure of Bidding

“ It is evident on record that since 2008 up to present, MKCSI has

been BuCor’s catering provider which could be due to the fact that it is
the only bidder that could meet the required SLCC which should be
equivalent to 50% of the ABC. Hence, in this particular procurement, it
appears that despite being capable of submitting a more favourable price
bid offer (either by AFS or EDCT), the BAC might not possibly effect an
award for undoubtedly failing to meet the required percentage in their
SLCC which will render them ineligible/non responsive bidder unless, a
more open term of Reference (TOR) that conforms with the provision of
RA 9184 and its RIRR will be prepared to realize fair competition that
previous BAC failed to fix despite previous instruction from this office to
rectify the same in the bidding documents.”

Therefore, the instruction of DG Delos Santos to the previous BAC is

in harmony with the principle of competitiveness in the bidding process and
transparency for the widest dissemination of the bidding process. Thus, DG
Delos Santos did not fail to show the basis for the declaration of failure of
bidding.
 He knew that the only way to achieve this is to interpret the provision
of the law relative to the required SLCC in a manner that is most
advantageous to the GoP, that is to classify food subsistence as
expendable warranting the 25% SLCC of the ABC.

In this particular case, we cannot ignore that with this interpretation

of the law, the GoP did not incur any injury, on the contrary the principles
of competitive bidding and transparency was upheld.

As regards to the other issues, the instruction of DG Delos Santos to

the previous BAC to use the 25% SLCC instead of the 50% is justified in
view of the discussion above. Therefore, the award of contract to EDCT
and AFS, is sanctioned by the law and not in violation of the same.

PRAYER

Wherefore, premise considered this officer humbly request that the

Honorable Audit team reconsider their stand and that the Notice of
Disallowance be not issued.

DRA. CYNTHIA N. ANDRADA,

Chairperson,
Bids and Award Committee,
Bureau of Corrections