2018-02-05

NPM No. 007-2018

Requesting Entity: Supreme Court Of The Philippines

Issues Concern: SEC Registration of Foreign Bidders and Inclusion of Ordering Agreements in the Statement of All Ongoing Contracts

 

Details

Whether an ordering agreement is required to be included in the Statement of All Ongoing Contracts.


The 2016 IRR is silent on whether an Ordering Agreement is required to be declared in the Statement of the prospective bidder of all its ongoing government and private contracts under Section 23.1(a)(iv), granting its nature as an option contract. However, it is our considered view that existing Ordering Agreements, being mere option contracts between bidders and Procuring Entities, need not be declared in the said Statement because the contracts contemplated in Section 23.1(a)(iv) refers to procurement contracts involving actual sale of goods and services.


On the other hand, it is the Delivery Order Contract that triggers the exercise by the procuring entity of the option to purchase, it shall constitute the actual purchase by the PE, and there already exists an effective contract of sale to speak of, and thus, can be considered an ongoing contract once issued until the goods or equipment are fully delivered.


The Procuring Entity may require in the Bidding Documents or supplemental/bid bulletin, the disclosure of Option Contracts in the Statement of all ongoing contracts, for purposes of transparency, as one of the governing principles on government procurement.


Whether the requirement of Securities and Exchange Commission (SEC) Registration for foreign consulting firms applies to goods procurement in terms of foreign suppliers.


Although the registration requirement in the SEC by foreign firms is only expressly provided in the procurement of consulting services, it would still apply to foreign suppliers and contractors in the procurement of goods and services, and infrastructure projects, respectively.


In the case of Hutchison Ports Philippines Limited v. Subic Bay Metropolitan Authority, the Supreme Court held that:


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.


Thus, even though 2016 IRR of RA 9184 does not expressly provide for this requirement, for the procurement of goods, foreign bidders are still required to register with the SEC as mandated by the Corporation Code and jurisprudence. This license shall be required as a post-qualification requirement under Section 34.2 of the IRR where the bidder is mandated to submit “other appropriate licenses and permits required by law and stated in the Bidding Documents”.