MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), former SECRETARY JESUS B. GARCIA, in his capacity as the Secretary of the Department of Transportation and Communication (DOTC), and GEN. FRANCISCO E. ATAYDE (RET.), in his capacity as the General Manager of the Ninoy Aquino International Airport, petitioners, vs. HON. SERGIO D. MABUNAY, Presiding Judge, Regional Trial Court of Manila, Branch 24 and LANTING SECURITY AND WATCHMAN AGENCY, respondents. ULANDU

In their petition for review on certiorari under Rule 45 of the Rules of Court, the Manila International Airport Authority (MlAA), former Secretary Jesus B. Garcia, in his capacity as the Secretary of the Department of Transportation and Communication (DOTC), and Gen. Francisco E. Atayde (Ret.) in his capacity as the General Manager of the Ninoy Aquino International Airport, assail the decision dated August 30, 1996 of respondent Judge Sergio D. Mabunay, Presiding Judge Regional Trial Court of Manila, Branch 24, insofar as it ruled that under the laws and regulations, it is necessary for the Manila International Airport Authority to contract for security services through public bidding. The petitioners claim that the ruling interferes with "the absolute prerogative" of the petitioners to award security services either through negotiated contract or public bidding.

Private respondent Lanting Security and Watchman Agency ("Lanting" for brevity) is a bonded security agency, which entered into an Agreement with the Manila International Airport Authority to render security services on a month-to- month basis to commence on April 31, 1987 renewable at the sole option of the MIAA. The contract was renewed by MIAA from 1988 to 1995. In 1995, upon the recommendation of the MIAA’s former General Manager for the privatization of the Aviation Security Services of MIAA, a subsidiary company, the Philippine Aviation Security Services Corporation (PASSCOR) was formed, and the MIAA Board of Directors approved the award of security services in favor of PASSCOR effective September l, 1995. Having been informed that PASSCOR would take over the operations and management of the security of the MIAA, and that the security services contract that MIAA entered into with Lanting would be terminated by August 31, 1995, Lanting filed a complaint for injunction, which was docketed as Civil Case No. 95-75048 with the respondent Regional Trial Court of Manila, Branch XXIV, challenging the "highly irregular" awarding by MIAA of the security services contract to PASSCOR without going through public bidding, as being not only contrary to law, but likewise against public policy. The respondent Regional Trial Court issued a writ of preliminary injunction ordering MIAA not to terminate the security services of Lanting and not to award the security contract in favor of PASSCOR. Lexjuris

On August 30, 1996, the parties formulated and submitted a Compromise Agreement, which was approved by the Regional Trial Court and which contained the following terms and conditions:

On the issue defined in 6.2 above, which was left to the Court for resolution, the court ruled as follows:

The following grounds are invoked to support the instant petition for certiorari:

Petitioners allege that the "only issue to be resolved in this petition refers to the right of MIAA to award security services through negotiated contract or public bidding". Petitioners submit that the option to make such award is addressed to the exclusive and sole discretion of the MIAA, and the awarding of the contract to PASSCOR cannot be branded as highly irregular despite the fact that no public bidding was conducted. The petitioners point out that the Philippines is a signatory to the convention for international civil aviation, and the selection of an airport security agency is of paramount importance involving as it does national security and safety.

Petitioners contend that the applicable law is Section 68 of R.A. 7845, whereunder the government agency concerned has the option to resort to public bidding or negotiated contract wherever it is impractical or more expensive for the government to directly undertake certain functions and operations.

In its Comment, private respondent Lanting alleges that Section 68 of R.A. 7845 does not give government agencies the unqualified discretion to choose by what manner they may contract out services which they themselves cannot directly undertake. Lanting submits that the applicable legal provision is Section 62, referring to public bidding of contracts and the exceptions thereto, is applicable. Since none of the exceptional circumstances provided under Section 62 is present to justify an award by negotiated contract, the award should go through a public bidding. Respondent Lanting also points to Section 417 of the Government Auditing Rules and Regulations of the COA, which lays down the criteria for evaluating offers for security and janitorial services.

The only legal question posed herein is whether the court a quo erred in ruling that under existing laws and regulations the contract for security services should be awarded through public bidding.

We hold that it did not. The petition must perforce be dismissed.

Section 68 of R. A. 7845 which is the General Appropriations Act for 1995, specifically refers to contracts for services related to the functions and operations of the government and its agencies. It reads: Jjjuris

Petitioners’ position that the above-quoted section gives the government agency concerned the sole option to resort to public bidding or to negotiated contract whenever it is impractical or more expensive for the government to directly undertake a certain function or operation, is not tenable. There is nothing in said provision which does away with the general requirement of public bidding in the award of government contract. This was the ruling in National Food Authority vs. Court of Appeals,3 [253 SCRA 470.] involving the award of a contract for security services by the National Food Authority wherein the said government agency relied on Section 31 of Republic Act No.7645, which is the counterpart provision of Section 78 of Republic Act No.7845. This Court held:

Indeed, public bidding in government contracts has been observed in this jurisdiction since the time of the Philippine Commission:

As early as 1936, then President Quezon declared as a matter of general policy that Government contracts for public service or for furnishing supplies, materials and equipment to the Government should be subjected to public bidding.5 [The same requirement of public bidding is imposed for public works of construction or repair, pursuant to Sections 1917 and 1919, Rev. Adm. Code and more recently Section 62 of the Administrative Code of 1987 and Section 4 of P. D. 1594.] There were a number of amendments,6 [E. O. No. 98, S. 1937; E. O. No. 298, S. 1940; E. O. No. 146, dated December 27, 1938; E. O No. 212, dated November 6, 1956; E. O. No. 318 dated September 17, 1958, and E. O. No. 358, dated September 23, 1959.] the latest of which, Executive Order No. 40 dated June l, 1963 of President Diosdado Macapagal, reiterated the directive that no government contract for public service or for furnishing supplies, materials and equipments to the government or any of its branches, agencies or instrumentalities, shall be entered into without public bidding except for very extraordinary reasons to be determined by a Committee constituted thereunder. Of more recent date is Executive Order No. 301, S. 1987, issued by President Corazon Aquino, which prescribed the guidelines for decentralization of negotiated contracts. Section 1 of this issuance reiterated the legal requirement of public bidding for the award of contracts for public services and for furnishing supplies, materials and equipment to the government, and expressly specified the exceptions thereto.

By positive provision of the annual General Appropriations Acts7 [Sec. 21, R. A. 6831, GAA for 1990; Section 31, R.A. 7078, GAA for 1991; Section 31, GAA for 1993; Section 78, GAA for 1995.] government offices and agencies are authorized to enter into contracts for services related or incidental to their respective functions and operations, either through public bidding or negotiated contract, whenever it is impractical or more expensive for the government to directly undertake such functions and operation, subject to accounting or auditing rules and regulations. As earlier stated, these provisions are not to be construed as doing away with the general requirement of public bidding. Indeed, public bidding is the accepted method for arriving at a fair and reasonable price and it ensures that overpricing and favoritism, and other anomalous practices are eliminated or minimized8 [Tantuico, Jr. State Audit Code of the Philippines, 1982 ed. p. 450.] and we reiterate that Section 68 of the General Appropriations Act has not dispensed with such requirement for contracts for services awarded thereunder. Although the legislature in making appropriations under its exclusive jurisdiction leaves largely to administrative discretion the choice of ways and means to accomplish the object of appropriation, that administrative discretion may not transcend the statutes.9 [Tantuico, Jr., supra, at p. 448.]

WHEREFORE, the petition is denied for lack of merit.

Melo, (Chairman), Vitug, Panganiban, and Purisima. JJ., concur.2/17/00 9:50 AM