Audit Report on cowd 3

HERE'S the third part of the Commission on Audit's findings and report on the Cagayan de Oro Water District (COWD). Read on:

The team observed that there was no valid reason cited by the contractor to transfer the take-off point. In as much as the COWD personnel conducted comprehensive technical studies in locating the take-off point most beneficial to the concessionaires of the district, it would be disadvantageous and unfair to the COWD which made adjustments just to accommodate the proposal of the contractor for no valid reason, which in the first place, accepted and signed the original contract specifying the take-off point at the Lumbia airport.

The transfer of the take-off point apparently resulted in the widening of the (beginning of Page 11) prospective service area of the contractor. The areas where RVWCI water pipes passes through would become their probable service areas since it owns the pipes. The coming up of subdivisions and villages in the area can happen in the near future. In the event of termination of the contract between COWD and RVWCI, the latter has already laid its pipes strategically for its advantage. In analyzing the situation, RVWCI preferred to invest larger pipes in anticipation of future benefits, the widening of its prospective service areas.

A very glaring example that the FAIO Team noted was the existence of a water purifying station during inspection near the area of the RVWCI. It can be safely inferred that the water came from Rio Verde and not from COWD considering that said water station cannot purify water without undergoing treatment, and it is only the RVWCI which treats water in the area.

In G.R. No. L-5439 dated December 29, 1954, Caltex (Philippines), Inc. vs. Delgado Brothers, Inc., the court ruled that the due execution of a contract after public bidding is a limitation upon the right of the contracting parties to alter or amend it without another public bidding, for otherwise what would a public bidding be good for if after the execution of a contract after bidding, the contracting parties may alter or amend the contract, or even cancel it, at their will?

Public biddings are held for the protection of the public, and to give the public the best possible advantage by means of open competition between bidders. He who bids or offers the best term is awarded the contract subject of the bid, and it is obvious that such protection and best possible advantage to the public will disappear if the parties to a contract executed after the public bidding may alter or amend it without another previous public bidding. The court took into consideration not only the evidence adduced but also the detrimental effect upon the consuming public.

Ben Contreras

In Agan, Jr. vs. PIATCO (Philippine International Air Terminals, Co. G.R. No.155001 dated January 21, 2004, the court again bright-lined the principle that in public bidding, bids are submitted in accord with the prescribed terms, conditions and parameters laid down by government and pursuant to the requirements of the project bidded upon.

In light of these parameters, bidders formulate competing proposals which are evaluated to determine the bid most favorable to the government. Once the contract based on the bid most favorable to the government is awarded all that is left to be done by the parties is to execute the necessary agreements and implement them. There can be no substantial or material change to the parameters of the project, including the essential terms and conditions of the contract bidded upon, after the contract award. If there were changes and the contracts end up unfavorable to government, the public bidding becomes a mockery and the modified contract must be struck down. The contracts which made a mockery of the bidding process cannot be upheld and must be annulled in their entirety for violating law and public policy.

As can be noted, the contracts were substantially amended after their award to the non-responsive bidder on terms more beneficial to the contractor, RVWCI, and prejudicial to public interest. If this flawed process would be allowed, public bidding will cease to be competitive and worse, government would not be favored with the best bid. Bidders will no longer bid on the basis of the prescribed terms and conditions in the bid documents but will formulate their bid in anticipation of the execution of a future contract containing new and better terms and conditions that were not previously available at the time of the bidding. Such a public bidding will not inure to the public good. The resulting contract cannot be given half a life but must be struck down as totally lawless.