Requesting Entity: Office of the Senior Deputy Administrator for Support Services Subic Bay Metropolitan Authority
Issues Concern: Request for Exemption from the Limitations under Sections 52 (b) and 42.5 of IRR-A of R.A. 9184
1. Whether or not the Government Procurement Policy Board (GPPB) has the authority to exempt the Subic Bay Metropolitan Authority (SBMA) and allow it to procure through the alternative method of shopping at an increased threshold of One Million Pesos (P 1,000,000).
The method of procurement to be conducted does not depend on the amount of the project, rather on the circumstances attendant thereto. In addition, R.A. 9184 limited the amount of procurement to Fifty Thousand Pesos (P50,000) for unforeseen contingencies and Two Hundred Fifty Thousand Pesos (P250,000) for ordinary or regular office supplies and equipment not available in the Procurement Service. No exemptions from these requirements and limitations are allowed under R.A. 9184 and its IRR-A. Neither did R.A. 9184 and its IRR-A give the GPPB the authority to grant exemptions thereto. If at all, the authority given to the GPPB is to increase or decrease the amounts in order to reflect changes in economic conditions and for other justifiable reasons. Even then, under Section 74 of R.A. 9184 and its IRRA, such increase or decrease involves the amendment of the IRR-A, which necessitates the concerted act of the GPPB and the Joint Congressional Oversight Committee (JCOC).
Anent the foregoing, it must be stressed that the GPPB has no legal basis to exempt SBMA from the thresholds provided in Section 52 of R.A. 9184 and its IRR-A, more so in increasing the limit of the ceiling to One Million Pesos (P1,000,000).
2. Whether or not an exemption from the prohibition on the issuance of letters of credit under Section 42.5 of IRR-A may be granted.
A reading of Sec. 42.5 of IRR-A of R.A. 9184 will reveal that the prohibition on the issuance of a letter of credit applies only when it is in favor of the following: (i) a Philippine entity; or (ii) any of its foreign manufacturers or suppliers.
The issuance of a letter of credit in favor of a foreign manufacturer or supplier is not prohibited, what the provision disallows is the issuance of a letter of credit in favor of a foreign manufacturer or supplier of a Philippine entity. This contemplates a situation where, by being the distributor or local supplier for the foreign manufacturer or supplier, the Philippine entity acts as the agent and the foreign manufacturer or supplier is the principal.
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While it is true that IRR-A prohibits the issuance of a letter of credit in favor of a Philippine entity and its foreign manufacturer or supplier, the same is not true when a procuring entity directly contracts with a foreign manufacturer or supplier as in the case of importation. Consequently, unless SBMA is procuring directly from a foreign supplier or manufacturer, the exemption being sought for under Section 42.5 of IRR-A of R.A. 9184 cannot be granted to your office.