Public Bidding

The grant of the right of first refusal in this case did not only substantially amend the terms of the contract bidded upon, so that resultantly, the other bidders thereto were deprived of the terms and opportunities granted to respondent after it won the public auction, it so altered the bid terms – the very admission by all parties that the disposal of fly ash must be through public bidding – by effectively barring any and all true biddings in the future. The grant of first refusal was a grant to respondent of the right to buy fly ash in all coal-fired plants of NPC. Proceeding from the afore-cited jurisprudence, the Batangas Contract is, consequently, a nullity.

As adverted to above, the disposal of NPC power plants’ fly ash is governed by COA Circular Nos. 86-264 and 89-296. These circulars direct that public auction shall be the primary mode of disposal of assets of the government and sale through negotiation shall be resorted to only in case of failure of public auction. For failure to abide by the requirement of a public bidding in the disposal of government assets, this Court is left with no option but to likewise declare the Sual and Masinloc Contracts null and void.

In conclusion, this Court stresses that although a right of first refusal is a contractual prerogative recognized by both law and jurisprudence, the grant of such right in this case is invalid for being contrary to public policy.