2005-06-21

NPM 030-2005

Requesting Entity: Land Bank of the Philippines

Issues Concern: Request for a written response on the legality of the action of the Land Bank of the Philippines (LBP) Bids and Awards Committee (BAC) on the procurement of a contract for a Two-Year Lease Rental of Thirty Three (33) Brand New Copier Machines for Head Office Units

 

Details

Whether contracts for outright purchase may be considered similar to lease or rental contracts in light of Section 23.6(f.2) of the Implementing Rules and Regulations Part A (IRR-A) of Republic Act 9184 (R.A. 9184)

The project involves the lease or rental of several brand new copying machines which undertaking is properly considered as procurement of goods under R.A. 9184. Lease contracts strictly involve rendition or use services rather than the transfer of goods. In contracts, procurement of tangible goods where the intention is to acquire a specific item for use or consumption involves the purchase of certain items of supplies, materials, or equipment. Without an express qualification, one cannot be considered as similar from the other. Thus, we are of the opinion that contracts for outright purchase cannot be considered as similar in nature and complexity to lease or rental contracts. The nature or complexity of lease or rental services necessarily differs from sale or purchase inasmuch as the objects of both contracts are not the same.

However, it should be noted that this opinion does not effectively prohibit the LBP-BAC from exercising discretion and opting to consider contracts of outright purchase as similar to contracts of lease or rental; provided, such decision should be clearly provided in the bidding documents or identified through a supplemental/bid bulleting in accordance with the IRR-A.