G.R. No. L-29171 April 15, 1988
INDUSTRIAL POWER SALES, INC., petitioner-appellant, vs. HON. DUMA SINSUAT etc., et al., respondents-appellees.

FACTS

The Bureau of Supply Coordination advertised an invitation to bid for eight line construction trucks for the Bureau of Telecommunications. The initial invitation limited offers to foreign-made products on a CIF Manila basis. Upon suggestion from Industrial Power Sales, Inc. (IPSI), a subsequent amended invitation allowed bids for both foreign-made (CIF) and locally manufactured (FOB Manila) trucks. The Committee on Awards, with the concurrence of the requisitioning bureau’s representatives, recommended the award to IPSI as the lowest complying bidder. A Letter-Order was issued in favor of IPSI. Delta Motor Corporation (DELTA) protested, claiming IPSI’s trucks were not “special factory built” as per the original requisition. The Acting Director of Supply Coordination denied the protest, upholding the award to IPSI as conforming to the advertised specifications.
Despite this, the Secretary of General Services, Duma Sinsuat, sustained DELTA’s protest and revoked IPSI’s award. The Secretary ruled that the requisition called for “special factory built” trucks, which IPSI’s locally assembled units purportedly did not meet. IPSI filed a petition for certiorari and prohibition with the Court of First Instance of Rizal to nullify the Secretary’s orders. The trial court dismissed the petition, prompting IPSI’s appeal to the Supreme Court.

ISSUE

Whether the Secretary of General Services acted with grave abuse of discretion in revoking the award to IPSI and whether IPSI was required to exhaust administrative remedies before seeking judicial relief.

RULING

The Supreme Court reversed the trial court and nullified the Secretary’s orders. The Court held that the Secretary committed grave abuse of discretion. The amended invitation to bid, which governed the bidding, expressly allowed FOB Manila quotations for locally manufactured units. The term “special factory built” was not included in the final advertised specifications; therefore, it could not be validly imposed post-bidding to disqualify IPSI. The award to IPSI was made in strict compliance with the published terms by the Committee on Awards, which included the requisitioner’s representatives. The Secretary’s subsequent imposition of an unadvertised requirement violated established bidding rules and the principle that all bidders must be judged on equal footing based on the same published criteria.
On the exhaustion of administrative remedies, the Court ruled that the doctrine admits exceptions, such as when the controverted act is patently illegal or done in excess of jurisdiction, which was present in this case. Furthermore, IPSI, as a domestic entity, was entitled to preference under the Flag Law over DELTA, which was acting merely as an agent for a foreign manufacturer. The Secretary’s decision was therefore set aside, and DELTA was ordered to pay attorney’s fees and costs to IPSI.