G.R. No. 201112

EN BANC

G.R. No. 201112 -- Archbishop Fernando R. Capalla, et al., Petitioners, versus The Honorable Commission on Elections, Respondent.

G.R. No. 201121 -- Solidarity for Sovereignty (S4S), et al., Petitioners, versus Commission on Elections, Respondent.

G.R. No. 201127 -- Teofisto T. Guingona, et al., Petitioners, versus Commission on Elections, et al., Respondents.

G.R. No. 201413 -- Tanggulang Demokrasya (Tan Dem), Inc., et al., Petitioners, versus Commission on Elections, et al., Respondents.

Promulgated:

June 13, 2012

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SEPARATE OPINION

ABAD, J.:

This case is about the circumstances that will justify a government agencys negotiated procurement of equipment and supplies.

The Facts and the Case

In 1997 Congress enacted Republic Act 8436 (R.A. 8436), otherwise known as the Election Modernization Act, which authorized the Commission on Elections (COMELEC) to adopt an Automated Election System (AES) for the processes of voting, counting of votes, and canvassing or consolidation of results of the national and local elections. [1] The law also authorized COMELEC to procure the supplies, equipment, materials, and services that it needed for holding an AES through an expedited public bidding. A decade later, Congress enacted Republic Act 9369 (R.A. 9369) which amended R.A. 8436 and declared it the policy of the law to use an AES in all national and local elections.[2]

Following the requirements of the Government Procurement Act,[3] the COMELEC published and posted from March 13 to16, 2009, an invitation to interested parties to apply for eligibility and to bid for the procurement of counting machines, including the supply of ballot paper; electronic transmission services using public telecommunications networks; training; technical support; warehousing; deployment; installation; pull-out; systems integration; and overall project management, to be used in the automation of counting, transmission, and canvassing of votes for the May 10, 2010 synchronized national and local elections. The COMELEC also approved and issued a request for proposal (RFP) that would enable its Bids and Awards Committee (BAC) to accept bids for the lease of an AES, with an option to purchase.[4]

Ten prospective bidders paid for an RFP but only seven submitted bid proposals. Of the seven, only two bidders, Indra Consortium and SMARTMATIC-TIM, met the eligibility requirements. The COMELEC Special Bids and Awards Committee (SBAC) examined their technical proposals and found these acceptable. Upon opening of their financial proposals, however, Indra did not qualify with the result that SBAC issued Omnibus SBAC Resolution 09-007 declaring SMARTMATIC-TIM as the single complying calculated bid.[5]

The COMELEC Technical Working Group (TWG) also reported that SMARTMATIC-TIMs proposed AES passed all tests as required in the 26-item criteria specified in the RFP.[6] The COMELEC Advisory Council (CAC) submitted its observations to the COMELEC noting that SMARTMATIC-TIMs Precinct Count Optical Scan (PCOS) machines had a 100% accuracy rating. As a result, COMELEC awarded the contract for the 2010 AES to SMARTMATIC-TIM.[7] The following day, COMELEC and SMARTMATIC-TIM entered into an AES contract that included an Option to Purchase (OTP) Clause that read:

4.3 OPTION TO PURCHASE

In the event COMELEC exercises its option to purchase the Goods as listed in Annex L, COMELEC shall pay the PROVIDER an additional amount of Two Billion One Hundred Thirty million Six Hundred Thirty Five Thousand Forty Eight Pesos and Fifteen Centavos (Php2,130,635,048.15) as contained in the Financial Proposal of the joint venture partners SMARTMATIC and TIM.

...

6.6 COMELEC shall notify the PROVIDER on or before 31 December 2010 of its option to purchase the Goods as listed in Annex L.[8]

On May 10, 2010 the Philippines held its first fully-automated nationwide elections, using SMARTMATIC-TIM automated system. Four months later on September 23, 2010 the COMELEC, exercising its option to purchase, acquired 920 PCOS machines for the special elections in certain areas in the Philippines.[9]

On December 18, 2010, as the deadline for exercising the option to purchase was nearing, SMARTMATIC-TIM wrote COMELEC a letter, unilaterally extending the period for the option to purchase from December 31, 2010 to March 31, 2011. Subsequently, on April 1, 2011 SMARMATIC wrote COMELEC another letter, offering a Revised Extended Option to Purchase. On April 28, 2011 the COMELEC and SMARTMATIC signed a Term Sheet in connection with SMARTMATICs April 1, 2011 letter. This Term Sheet included various items not covered by the original option to purchase. Months later, however, COMELEC cancelled the Term Sheet.

Apparently, COMELEC was hopeful in getting Congress to provide it the budget it needed for acquiring or leasing a new AES for the 2013 elections. Indeed, it asked Congress for P 10,436,300,399.00 for the lease of a new AES for the elections. On September 23, 2011 SMARTMATIC wrote COMELEC, inquiring about the status of the option to purchase the equipment and systems that were used in the 2010 elections. Evidently trying to put pressure on COMELEC to exercise the option, SMARTMATIC informed it that the price increase of 10% would remain in effect until September 30, 2011.[10] SMARTMATIC later recanted and offered to retain the original price until December 31, 2011 under certain conditions.[11] Yet again, the OTP was revised and COMELEC was warned that instead of the 10% increase, a 20% increase would be in effect from October 1 December 31, 2011.[12]

In October 2011 Congress passed the General Appropriations Act of 2012, allocating to COMELEC a budget of only P 7,962,221,000.00 for the 2013 elections,[13] ruling out the possibility of acquiring or leasing a new AES from other providers.

On February 6, 2012, the COMELEC Law Department expressed the view in a memorandum that COMELEC could still legally exercise its option to purchase from SMARTMATIC provided the period of the extension had not yet expired and that its offer was identical to that contained in their AES Contract. The CAC expressed the view, however, that COMELEC should not exercise its option to purchase if, as a consequence, the rest of the system must come from the same vendor.[14] With the little money allocated to it and time running out, the COMELEC resolved to seriously consider exercising that option subject to certain conditions.[15] The next day, the CAC advised COMELEC to ensure that it would have full control of the election process.[16]

Eventually, COMELEC accepted SMARTMATIC-TIMs March 31, 2012 offer to extend the period of its option to purchase.[17] On March 30, 2012 COMELEC entered into a contract with SMARTMATIC-TIM for the purchase of the PCOS machines and related systems used in the 2010 elections for P 1,833,274,457.09. COMELECs intention was to directly manage the operation of the AES for the 2013 elections using those machines and systems.

On April 10, 2012 petitioners Archbishop Fernando R. Capalla, et al. came to this Court by a petition for certiorari, prohibition, and mandamus with prayer for temporary restraining order (TRO) against COMELEC, seeking the annulment of COMELECs March 30, 2012 contract with SMARTMATIC-TIM. On April 24, 2010 the Court issued a TRO enjoining the implementation of the contract of sale pending hearing of the case. The Court likewise ordered the consolidation of the three petitions that sought identical relief and directed the COMELEC and SMARTMATIC-TIM to file their comment.

Question Presented

The central question presented in this case is whether or not COMELEC gravely abused its discretion in entering into a contract with SMARTMATIC-TIM for the purchase of its PCOS machines and related systems in connection with the forthcoming 2013 elections.

Discussion

The country made many attempts in the past to replace the manual elections that had been in use from the time of the founding of the Philippine government.[18] But circumstances did not permit the change even when at last Congress enacted the election modernization law. The bidding for the needed equipment and processes in connection with the 2001 elections was found riddled with irregularities and so had to be set aside.[19] Only in connection with the 2010 elections did the COMELEC succeed in meeting all that the law required, overcoming the objections of the cynics who cried mightily for a return to fully manual voting. The automated elections took place, producing results that were generally accepted by the electorates.

Then, the need to prepare for the 2013 elections came. Evidently, the COMELEC was open to using a new AES since it applied with Congress for the amount of money this will require and held out for as long as it could on its option to purchase from SMARTMATIC-TIM the equipment and systems used in the 2010 elections. When the money did not come, COMELEC settled for buying the latter equipment and systems under an extended option that the owners gave it.

But petitioners filed the present actions to block COMELECs purchases basically on two grounds: 1) since its option period already expired, COMELEC actually bought SMARTMATIC-TIMs equipment and systems without the benefit of public bidding; and 2) these equipment and systems suffered from defects and glitches.

Petitioners are right that COMELECs option to purchase under the AES contract for the 2010 elections already expired when it did not exercise the same on or before December 31, 2010, the deadline set in that contract. But COMELEC is also right that it bought SMARTMATIC-TIMs equipment and systems based on the terms of the option to purchase. These positions are not exactly incompatible. They can actually be reconciled.

True, COMELECs original option had already expired when it made its purchase. The original contract was gone and the parties rights and obligations under the same had in fact been extinguished. But SMARTMATIC-TIM made an offer to COMELEC for it to purchase the 2010 equipment and systems based on the terms provided in the expired option to purchase. And COMELEC accepted the offer, giving it a new option to purchase that it eventually exercised.

Petitioners are of course also right that COMELECs purchase could not as a rule be made without the benefit of a public bidding where other parties can make offers to supply COMELEC with the equipment and systems that it needs for the 2013 elections. But R.A. 9184, the Government Procurement Act, allows certain exceptions to such requirement. It provides that the procuring government agency may, in order to promote economy and efficiency, resort to any of the alternative methods of procurement, including negotiated procurement, provided the procuring agency ensures the most advantageous price for the government.

Negotiated procurement is allowed, says the law, when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.[20] The infrastructures needed to enable the people to exercise their right to vote is of course a public service that is as vital if not more vital than some roads and bridges.

Here, the following circumstances gave COMELEC no choice but to enter into what amounts to a negotiated purchase:

First. The Constitution vests in Congress the power to make laws, including election laws.[21] Thus --

Section 1. The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives, except to the extent reserved to the people by the provision on initiative and referendum.[22]

In the exercise of such power, Congress alone can determine the process by which elections are to be conducted. It alone can prescribe the use of a more advanced technology for enabling the people to exercise their fundamental right to vote.[23]

On the other hand, it is in the COMELEC that Constitution vests the power and duty to enforce all laws relative to the conduct of the elections.[24] Thus --

Sec. 2. The Commission on Elections shall exercise the following powers and functions :

(1) Enforce and administer all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall.[25]

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The COMELEC has no power to hold elections that are not in accord with the Election Modernization Act (R.A. 8436, as amended). Indeed, that Act is entitled An Act Authorizing the Commission on Elections to Use an Automated Election System in the May 11, 1998 National or Local Elections and in Subsequent National and Local Electoral Exercises In this regard, Section 12 of the Act directs the COMELEC to procure a tested and successfully used AES for use in the 2010 election and succeeding electoral exercises Thus

SEC.12. Procurement of Equipment and Materials. - To achieve the purpose of this Act, the Commission in authorized to procure, in accordance with existing laws, by purchase, lease, rent or other forms of acquisition, supplies, equipment, materials, software, facilities, and other service, from local or foreign sources free from taxes and import duties, subject to accounting and auditing rules and regulation. With respect to the May 10, 2010 election and succeeding electoral exercises, the system procured must have demonstrated capability and been successfully used in a prior electoral exercise here or board. Participation in the 2007 pilot exercise shall not be conclusive of the system's fitness. (Emphasis supplied.)

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Although it is true that when the Court declared void the 2003 Purchase Contract for election automation machines (EAMs), COMELEC had valid recourse to the old system for the conduct of the 2007 elections. But the situation then was different. The AES that the original RA 8436 authorized had yet to be elevated to a compulsory mechanism. The failed implementation of an AES in the 1998 ARMM elections prevented COMELEC from a forward implementation of the AES under Section 6,[26] sending the process back to the drawing board.[27]

With the amendment of the Election Modernization Act, however, a return to the old system is no longer legally possible. To be faithful to its constitutional duty to enforce that law, COMELEC has to come up with an AES for the 2013 elections with whatever resources are available to it. The law does not contemplate any other system of elections.

With the functions of Congress and the COMELEC so clearly delineated by the Constitution, the Court must tread carefully when, as in this case, the mechanism for executing the preferred system of elections is assailed as invalid and its implementation, sought to be enjoined.[28] The Court must give the COMELEC substantial latitude to enforce the Election Modernization Act.[29] For, otherwise, the Court must assume responsibility for the consequences of meddling in something beyond its competence.[30]

Second. Although COMELEC has the duty to enforce and implement the law prescribing an AES for the 2013 national and local elections, it does not have the money to acquire or lease new equipment and systems for those elections.

Petitioners of course point out that the circumstances are not so extraordinary as to permit negotiated procurement since COMELEC had faced the same problems in 2009 yet was able to overcome them. COMELEC cannot use as an excuse its time and budgetary constraints since it should be able to convince Congress to grant what it needs for the 2013 automated elections.

But unlike the problems that it faced in connection with the 2010 elections, the solutions to its problems with respect to the 2013 elections are not up to COMELEC. Those solutions largely depend on the Executive Department and Congress. COMELEC requested the Department of Budget and Management (DBM) under the Office of the President for a P 12 billion budget to enable the election body to acquire or lease a new AES for the 2013 elections. But the DBM turned this down and allocated only P 7 billion for the automation of the 2013 elections. Of the P 7 billion, only P 2.2 billion has been earmarked for the acquisition of the machines needed for an AES.

In the 2010 elections, the COMELEC spent P 4.3 billion for the lease of 82,200 PCOS machines. If the COMELEC is to pursue its goal of achieving the 600:1 ratio or the same number of machines last elections, then it must have at least P 4.2 billion or even more, giving allowance for inflation, to be able to purchase machines of the same kind. If new biddings were held with the money it actually got, COMELEC would get only half of the desired number of machines. This result would cause pandemonium in the election precincts and dampening of the enthusiasm of voters.

COMELEC could of course plead with Congress to give it more money for the elections. But it had already done that. Unfortunately, Congress was not sympathetic and did not swell the amount of its budget. Although there is always a possibility that Congress may relent as some suggest can happen, that is a risk that the COMELEC, charged with making do with the resources given it, cannot afford. It could not postpone preparations at the risk of failed elections if Congress does not soon change its mind.

Third. Assuming that some funds would be available for acquiring or leasing a new AES for the 2013 elections, COMELEC does not have the time for holding a competitive bidding, evaluating the bids, and making an award with the expectations that the new AES will be in place by May 2013 for the national and local elections.

COMELEC cannot afford to procrastinate. There are less than twelve months between today and the May 2013 elections. Based on the 2010 elections timeline a new bidding for the 2013 elections would result in a logistical impossibility. The bidding process alone will take about four months. This means that the earliest COMELEC can make an award for the 2013 elections will be in mid-October. Since it would take based on experience about seven months from the signing of the AES Contract to complete the delivery of the fully customized hardware and software, delivery would be completed about mid-May 2013, already past the election Day. There would be no elections since it would take an additional three months more or less for testing the machines in their actual configuration with the ballots. Super human efforts could of course cause a miracle, but reasonableness in the exercise of discretion is not judged by the standards of miracles.

Fourth. COMELECs negotiated purchase meets the last requirement, ensuring that the most advantageous price for the government is obtained. Here, the procurement will enable the government to reap the following advantages:

a. The COMELEC needs to pay only 1/3 of the price of the PCOS machines, a saving of 2/3 of what it would cost COMELEC to lease machines of the same kind in a new bidding;

b. The COMELEC will spend less for voter education because the people are already familiar with the system;

c. The costs for training COMELEC personnel will also be reduced since they are already familiar with the handling and operation of the PCOS machines;

d. The purchase will promote standardization since the COMELEC already acquired 980 units of those PCOS machines; and

e. The usual glitches in new machines are unavoidable, whereas the glitches in the PCOS machines have been identified and could be addressed.

Petitioners would also have the sale of the PCOS machines to COMELEC nullified because of the alleged failure of the machines to comply with the minimum technical requirements of an AES and the glitches that occurred. Particularly, petitioners point to the absence of digital signatures, the existence of open console port in the machines, and the lack of a voter verified paper audit trail.

Based on the records and the admissions made during oral arguments, the disabling of the digital signatures and the lack of a voter verified paper audit trail cannot be attributed to the machines. This was done on orders of the COMELEC due to shortage of funds. These concerns are, therefore, not intrinsic to the machines itself. It is up to COMELEC, based on its best judgment, if there is a need to activate these features of the system. The presence of the open console port has not been a problem in the past election as this was covered and sealed on the election day to avoid unauthorized access.

More importantly, these alleged problems are not irremediable. As admitted by the parties, these can be rectified by simply activating these inherent features of the machines. Suffice it to say that the Court had already resolved the allegations regarding the failure of the machines to meet the requirements of the law in Roque v. COMELEC.[31] The Court determined that the COMELEC has adopted a rigid technical evaluation mechanism, a set of 26-item/check list criteria to ensure compliance with the above minimum system capabilities. Also, the PCOS meets the minimum capabilities standards.

Lastly, the petitioners failed to substantiate their claims that the alleged defects in the PCOS machines resulted in cheating or fraud in the 2010 elections. Petitioners have been unable to cite even one decision rendered based on evidence that this was so. Petitioners claim are, to borrow the language of the COMELEC, anecdotal.

Consequently, I vote to DISMISS the consolidated petitions.

ROBERTO A. ABAD

Associate Justice

[1] An Act Authorizing the Commission on elections to Use an Automated Election System in the May 11, 1998 National or Local elections and in Subsequent National and Local Electoral Exercises, Providing Funds Therefor and for Other Purposes, Republic Act No. 8436 6 (Dec. 22, 1997).

[2] An Act Amending Republic Act No. 8436, entitled An Act Authorizing the Commission on elections to Use an Automated Election System in the May 11, 1998 National or Local elections and in Subsequent National and Local Electoral Exercises, Providing Funds Therefor and for Other Purposes, Republic Act no. 9369 1 (Jan. 23, 2007)

[3] An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for Other Purposes, Republic Act No. 9184 art. VII, 21 (Jan. 10, 2003).

[4] Office of the Solicitor General (OSG), Consolidated Comment, Annex 1 (April 30, 2012); Commission on Elections, Request for Proposal (Mar. 11, 2009).

[7] Id.; Commission on Elections, Resolution No. 8608 (June 9, 2009).

[8] Solidarity for Sovereignty (S4S), Petition, Annex A 24 (April 3, 2012); Contract for the Provision of an Automated Election System for the May 10, 2010 Synchronized National and Local Elections 8 & 12 (July 10, 2009).

[9] S4S, Petition, Annex C; Contract of Sale (Sep. 23, 2010).

[10] Guigona, Memorandum, Annex A (May 18, 2012); Cesar Flores, Re: Final Extension of option to purchase (Mar. 23, 2011).

[11] Id. Annex B; Cesar Flores, Re: Final Extension of Option to Purchase (April 1, 2011).

[12] Id. Annex C; Cesar Flores, Re: Option to Purchase, PCOS Machines (Sep. 23, 2011).

[13] General Appropriations Act, Republic Act No. 10155 (Dec. 15, 2011).

[18] The first attempt was in 1995. RA 8046 authorized a computerized election system. An Act Authorizing the Commission on Elections to Conduct a Nationwide Demonstration of a Computerized Election System and Pilot-test it in the March 1996 Elections in the Autonomous Region in Muslim Mindanao (ARMM) and for Other Purpose, Republic Act No. 8046 (1995).

[19] Information Technology Foundation of the Philippines v. COMELEC, G.R. No. 159139, Jan. 13, 2004

[21] R.A. No. 9369, 1; See Bush v. Gore, 121 S. Ct. 525, 529 (2000).

[22] Section 1, Article VI, 1987 Constitution.

[23] See Matter of Municipal Election Held on May 10, 1994, for Three Positions on Sparta Tp. Council, 139 N.J. 553, 656 A.2d 5 (1995).

[24] Paragraph 1, Section 2, Article IX of the 1987 Constitution of the Philippines

[25] Section 2, Article IX, 1987 Constitution of the Philippines.

[26] Requiring the unconditional full automation in of elections.

[27] Loong v. COMELEC, G.R. No. 133676, April 14, 1999.

[28] See Burdick v. Takushi, 504 U.S. 428, 112 S. Ct. 2059, 119 L. Ed. 2D 245 (1992).

[29] See John Doe No. 1 v. Reed, 130 S. Ct. 2811 (2010).

[30] See Washington State Grange v. Washington State Republican Party, 128 S. Ct. 1184, 170 L. Ed. 2d 151 (U.S. 2008).