G.R. No. 201112 ARCHBISHOP FERNANDO R. CAPALLA, OMAR SOLITARIO ALI and MARY ANNE L. SUSANO, Petitioners v. THE HONORABLE COMMISSION ON ELECTIONS, Respondent.

G.R. No. 201121 SOLIDARITY FOR SOVEREIGNTY (S4S), represented by MA. LINDA OLAGUER, ROMAN PEDROSA, BENJAMIN PAULINO SR., EVELYN CORONEL, MA. LINDA OLAGUER MONTAYRE, and NELSON T. MONTAYRE, Petitioners v. COMMISSION ON ELECTIONS, represented by its Chairman, COMMISSIONER SIXTO S. BRILLANTES, JR., Respondent.

G.R. No. 201127 TEOFISTO T. GUINGONA, BISHOP BRODERICK S. PABILLO, SOLITA COLLAS MONSOD, MARIA CORAZON MENDOZA ACOL, FR. JOSE DIZON, NELSON JAVA CELIS, PABLO R. MANALASTAS, GEORGINA R. ENCANTO and ANNA LEAH E. COLINA, Petitioners v. COMMISSION ON ELECTIONS and SMARTMATIC TIM CORPORATION, Respondents.

G.R. No. 201413 TANGGULANG DEMOKRASYA (TAN DEM), INC., EVELYN L. KILAYKO, TERESITA D. BALTAZAR, PILAR L. CALDERON and ELITA T. MONTILLA, Petitioners v. COMMISION ON ELECTIONS and SMARTMATIC TIM CORPORATION, Respondents.

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CONCURRING OPINION

 

BERSAMIN, J.:

 

The consolidated petitions for certiorari, prohibition, and mandamus (with prayer for the issuance of temporary restraining order and/or writ of preliminary injunction) assail the exercise by the Commission on Elections (COMELEC) of its option to purchase under Article 4.3 of the July 10, 2009 Contract for the Provision of an Automated Election System for the May 10, 2010 Synchronized National and Local Elections (2009 Automation Contract). They claim that Resolution No. 9376 and the Deed of Sale executed on March 30, 2012 by and between the COMELEC and SMARTMATIC-TIM Corporation to concretize the COMELECs exercise of its option to purchase under the 2009 Automation Contract were issued or done in grave abuse of discretion amounting to lack or excess of jurisdiction.

 

My personal persuasion is that all the petitions are inappropriate remedies against Resolution No. 9376 and the Deed of Sale executed on March 30, 2012. The Court should dismiss them for that reason.

 

Furthermore, I firmly urge that the Court outrightly dismiss the petitions for lack of jurisdiction over the subject matter.

 

But, even granting that the Court has jurisdiction over the subject matter of these actions, I respectfully submit that the COMELECs exercise of its option to purchase beyond December 31, 2010 without a new public bidding was valid and should be upheld.

 

I.

Certiorari, Prohibition and Mandamus

are inappropriate remedies

 

 

I harbor serious misgivings about the propriety of the petitions for certiorari, prohibition, and mandamus as remedies to challenge Resolution No. 9376 and the March 30, 2012 Deed of Sale.

 

As a premise for my misgivings, I categorize the issuance of the assailed Resolution No. 9376 and the execution of the Deed of Sale on March 30, 2012 in terms of what function the COMELEC thereby discharged.

 

The Court has classified the functions the COMELEC exercises into the quasi-judicial, quasi-legislative, and administrative in Bedol v. Commission on Elections,[1] to wit:

 

The powers and functions of the COMELEC, conferred upon it by the 1987 Constitution and the Omnibus Election Code, may be classified into administrative, quasi-legislative, and quasi-judicial. The quasi-judicial power of the COMELEC embraces the power to resolve controversies arising from the enforcement of election laws, and to be the sole judge of all pre-proclamation controversies; and of all contests relating to the elections, returns, and qualifications. Its quasi-legislative power refers to the issuance of rules and regulations to implement the election laws and to exercise such legislative functions as may expressly be delegated to it by Congress. Its administrative function refers to the enforcement and administration of election laws. In the exercise of such power, the Constitution (Section 6, Article IX-A) and the Omnibus Election Code (Section 52 [c]) authorize the COMELEC to issue rules and regulations to implement the provisions of the 1987 Constitution and the Omnibus Election Code.

 

The quasi-judicial or administrative adjudicatory power is the power to hear and determine questions of fact to which the legislative policy is to apply, and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The Court, in Dole Philippines Inc. v. Esteva, described quasi-judicial power in the following manner, viz:

 

Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative agency to adjudicate the rights of persons before it. It is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature. Since rights of specific persons are affected, it is elementary that in the proper exercise of quasi-judicial power due process must be observed in the conduct of the proceedings.

 

 

I emphasize without hesitation that in order to properly proceed against the COMELEC, an aggrieved party must choose the proper remedy. The choice depends on which function quasi-judicial, quasi-legislative, and administrative the COMELEC has discharged in doing the assailed

action. It is true that pursuant to Section 2,[2] Rule 64 of the Rules of Court,[3] the remedy of an aggrieved party against a judgment or final order or resolution of the COMELEC is a special civil action of certiorari under Rule 65 brought in the Supreme Court. In Macabago v. Commission on Elections,[4] however, the Court has clarified that Rule 64 applies only to the judgments or final orders or final resolutions rendered by the COMELEC in the exercise of its quasi-judicial function (that is, the power to resolve controversies arising from the enforcement of election laws, and to be the sole judge of all pre-proclamation controversies; and of all contests relating to the elections, returns, and qualifications). In this connection, the Court, upon noting that Rule 64 likewise extends to the judgments, final orders or final resolutions of the Commission on Audit, has said in Dela Llana v. Commission on Audit,[5] viz:

 

Public respondents aver that a petition for certiorari is not proper in this case, as there is no indication that the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions, as required in certiorari proceedings. Conversely, petitioner for his part claims that certiorari is proper under Section 7, Article IX-A of the 1987 Constitution, which provides in part:

 

Section 7. xxx. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof.

 

Petitioner is correct in that decisions and orders of the COA are reviewable by the court via a petition for certiorari. However, these refer to decisions and orders which were rendered by the COA in its quasi-judicial capacity.

 

 

While Rule 64 sets the procedure for reviewing the judgments, final orders or resolutions the COMELEC renders in its quasi-judicial capacity, Rule 65 provides another remedy to a party who is aggrieved by the act of the COMELEC in the exercise of its administrative function,[6] but the questioned act or issuance must have been attended by grave abuse of discretion amounting to lack or excess of jurisdiction.[7] Regardless of whether a petition is brought under Rule 64 or Rule 65, the following essential requisites must be attendant, namely: (a) the writ is directed against the COMELEC exercising its quasi-judicial functions, if the petition is for certiorari or prohibition, or exercising its ministerial function, if the petition is for prohibition or mandamus; (b) the COMELEC has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (c) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.

 

Evidently, the issuance of Resolution No. 9376 did not involve the investigation of facts, the conduct of hearings, or the weighing of evidence to resolve a controversy arising from the enforcement of election laws. As such, the resolution was not issued in the exercise of COMELECs quasi-judicial function. The resolution was not also promulgated in the exercise of the COMELECs administrative function, because it did not relate to the enforcement of election laws. Rather, the resolution resulted from the COMELECs exercise of its quasi-legislative function, its aim being to implement Republic Act (RA) No. 8436,[8] as amended by RA No. 9369, through the adoption of an automated election system for the 2013 elections.

 

Considering that the assailed Deed of Sale entered into on March 30, 2012 pursuant to Resolution No. 9376 was clearly not the product of the COMELECs quasi-judicial function, the Court cannot exercise its certiorari jurisdiction herein in order to review and set it aside.

 

Prohibition and mandamus are likewise inappropriate as remedies against Resolution No. 9376 and the Deed of Sale of March 30, 2012. In a special civil action for prohibition, the respondent tribunal, corporation, board, or person must exercise either judicial, quasi-judicial, or ministerial functions and must have acted without or in excess of jurisdiction or with grave abuse of discretion; the prohibition petitioner prays that judgment be rendered, commanding the respondent to desist from further proceeding in the action or matter specified in the petition.[9] In a special civil action for mandamus, the petitioner seeks to compel the performance of a ministerial duty.[10] The mandamus petitioner should show, on one hand, that he has a well-defined, clear and certain legal right in the performance of the act, and, on the other hand, that the respondent has the clear and imperative duty to do the act required to be done.[11] Without question, however, both remedies of prohibition and mandamus cannot review and correct the exercise by the COMELEC of its legislative or quasi-legislative function.[12]

 

I am constrained to find, therefore, that the consolidated petitions are inappropriate remedies. Upon that cause, I vote for their outright dismissal.

II.

The Court has no jurisdiction over

the subject matter of the actions

The visible objective of the consolidated petitions is to prevent the COMELEC from purchasing the PCOS machines and related election paraphernalia from SMARTMATIC-TIM. It is certain that the resolution of these cases would center on the validity and legality of the exercise by the COMELEC beyond December 31, 2010 of the option to purchase.

 

If that is certain, an ordinary civil action for the annulment of contract (i.e., Deed of Sale of March 30, 2012) is the appropriate and adequate remedy. Assailing the validity and legality of the exercise by the COMELEC beyond December 31, 2010 without a public bidding of the option to purchase is definitely an action whose subject matter is incapable of pecuniary estimation, considering that the basic issue is something other than the right to recover a sum of money, or xxx the money claim is purely incidental to, or a consequence of, the principal relief sought like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage.[13]

 

There is no question that the jurisdiction over an action whose subject matter is incapable of pecuniary estimation originally and exclusively pertains to the Regional Trial Court (RTC) by express provision of law.[14] The Court cannot arrogate unto itself the jurisdiction that it does not have under the Constitution and the laws on jurisdiction enacted by Congress. If the Court does so, its judgment will be void and ineffectual.

 

I humbly posit that the RTC still has exclusive and original jurisdiction notwithstanding that the petitioners theory is that the assailed Resolution No. 9376 was invalid and illegal for violating RA No. 9184 (The Government Procurement Reform Act). I deem it not amiss to point out that the Courts power to evaluate and pass upon the validity of an implementing rule or regulation like Resolution No. 9376 is generally only appellate in nature.[15]

 

I concede that exceptional and compelling circumstances, such as the involvement of the national interest in a controversy and the serious implications on the national life of the issue, may justify a direct resort to the Court through the extraordinary remedies for the writs of certiorari, prohibition and mandamus. Yet, the Court should still desist from giving due course to and resolving the consolidated petitions upon bare assertions of transcendental importance or the paramountcy of public interest. Verily, jurisdiction over the subject matter of any action is determined by the basic allegations of the initiating pleading, but such determinant allegations should not include conclusions of fact and law; otherwise, the laws on jurisdiction and pleadings will be easily thrown in disarray. The Court cannot arbitrarily ignore the statutory rules on jurisdiction in order to repose in itself an original authority that the Constitution and the statutes have not seen fit to repose in the Court.

 

III.

Petitions are bereft of merit and substance

 

Assuming that I am wrong about the RTC having the exclusive and original jurisdiction over the subject matter of the consolidated petitions, as well as about the petitions not being the appropriate remedies to assail Resolution No. 9376 and the Deed of Sale of March 30, 2012, I must now submit that the petitions are really bereft of merit and substance.

 

The issue is whether the COMELEC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in exercising the option to purchase beyond December 31, 2010. My submission is that the COMELEC did not.

 

The decisive query is: Was the extension of the period of the option to purchase beyond December 31, 2010 without another public bidding being first conducted pursuant to RA No. 9184 valid? In my view, it was.

 

I join Justice Peraltas persuasive showing that the COMELECs exercise of the option and its entering into the purchase of the PCOS machines did not contravene the letter and spirit of RA No. 9184. I give my full concurrence to his submission that the purchase was in fact favorable to the Government and to the public interest. Accordingly, I uphold Resolution No. 9376 and the ensuing Deed of Sale.

 

The existence of a binding option to purchase is not in dispute. The inclusion of the option to purchase was a requirement precisely mentioned in the Bid Bulletins and Section 28, Part V or Other Specifications of the request for proposal (RFP).[16] That option to purchase was irrevocable during its term because it was supported by a valuable consideration (that is, the contract price stipulated in the 2009 Automation Contract).[17]

 

The 2009 Automation Contract shows the following terms of the option to purchase, to wit:

 

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 as additional amount of Two Billion One Hundred Thirty Million Six Hundred Thirty Five Thousand Forty Eight Pesos and Fifteen Centavos (Php 2,130,635,048.15) as contained in the Financial Proposal of the joint venture partners SMARTMATIC and TIM.

 

In case COMELEC should exercise its option to purchase, a warranty shall be required in order to assure that: (a) manufacturing defects shall be corrected; and/or (b) replacements shall be made by the PROVIDER, for a minimum period of three (3) months, in the case of supplies, and one (1) year, in the case of equipment, after performance of this Contract. The obligation for the warranty shall be covered by retention money of ten percent (10%) of every option to purchase payment made.

 

The retention money will be returned within (5) working days after the expiration of the above warranty, provided however, that the goods supplied are in good operating condition free from patent and latent defects, all the conditions imposed under the purchase contract have been fully met, and any defective machines, except to those attributable to COMELEC, have been either repaired at no additional charge or replacement or deducted from the price under the Option to Purchase.

Explaining the nature of an option contract, the Court has declared in Eulogio v. Spouses Apeles,[18] viz:

 

An option is a contract by which the owner of the property agrees with another person that the latter shall have the right to buy the formers property at a fixed price within a certain time.  It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with certain terms and conditions; or which gives to the owner of the property the right to sell or demand a sale.  An option is not of itself a purchase, but merely secures the privilege to buy.  It is not a sale of property but a sale of the right to purchase.  It is simply a contract by which the owner of the property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time.  He does not sell his land; he does not then agree to sell it; but he does sell something, i.e., the right or privilege to buy at the election or option of the other party.  Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer.[19]

 

It is also sometimes called an unaccepted offer and is sanctioned by Article 1479 of the Civil Code:

 

Art. 1479.  A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

 

 An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.

 

Here, the option to purchase was the unilateral undertaking of SMARTMATIC-TIM. A unilateral contract gives rise to an obligation that binds only one of the parties, which sets a unilateral contract poles apart from a bilateral contract that contemplates reciprocity of obligations. Professor Corbin, an eminent commentator on the law of contracts,[20] has expounded on the distinction of a unilateral contract from a bilateral one in this wise:

 

xxx. A unilateral contract consists of a promise or a group of promises made by one of the contracting parties only, usually assented to by the other or by someone acting on his behalf. There are many cases in which such an assent is not required. A bilateral contract consists of mutual promises, made in exchange for each other by each of the two contracting parties. In the case of a unilateral contract, there is only one promisor; and the legal result is that he is the only party who is under an enforceable legal duty. The other party to this contract is the one to whom the promise is made, and he is the only one for whom the contract creates an enforceable legal right. In a bilateral contract both parties are promisors and both parties are promisees; and the legal effect of such a contract is that there are mutual rights and there are mutual duties. The distinction between these two classes of contracts is of importance in the analysis of a contractual transaction and in determining its validity and its exact legal operation. xxx[21]

 

As used in the law of sales, an option, according to Limson v. Court of Appeals,[22] is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. By its juridical nature, an option contract creates a mere entitlement, right, or privilege on the part of the offeree who retains the discretionary prerogative whether to exercise it or not. Considering that the option is unilateral in essence, the offeror in an option to purchase creates a burden upon himself not to dispose of the subject matter of the option within the specified time set forth in the contract for the purpose of obtaining exclusivity of parties in a future contract conditioned upon the acceptance of

 

 

the offer.[23] It is plain, then, that a valid option contract is not a mere expression of a willingness to enter into a future contract; rather, it is already a committed offer, definite in its terms, that effectively induces the offeree-optionee to reasonably believe that the choice or preference to generate such forthcoming covenant stems from him. In Carceller v. Court of Appeals,[24] the Court has said that

 

(a)n option is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or not to enter into a principal contract. It binds the party who has given the option, not to enter into the principal contract with any other person during the period designated, and, within that period, to enter into such contract with the one to whom the option was granted, if the latter should decide to use the option. It is a separate agreement distinct from the contract which the parties may enter into upon the consummation of the option.[25]

 

Given the foregoing, all that was left to be done in order to create a bilateral promise to buy and to sell between the COMELEC and SMARTMATIC-TIM was the act of acceptance on the part of COMELEC of SMARTMATIC-TIMs committed offer.

 

That SMARTMATIC-TIM unilaterally made several extensions of the period to exercise the option to purchase without the corresponding agreement of the COMELEC was inconsequential to the valid and effective exercise of the option by the COMELEC. I reiterate that an offeror like SMARTMATIC-TIM retained the exclusive power to extend the option; and that nothing could prevent SMARTMATIC-TIM as the offeror from extending the offer even without the offerees lack of consent. In point is Prof. Corbins following discourse, to wit:

 

At the time that he makes his offer, the offeror has full control of its terms, of the person who shall have power to accept, of the mode of acceptance, and of the length of time during which the power of acceptance shall last. When he makes the offer he shall specify in it the time within which acceptance must occur; if he does so, the power of acceptance is limited accordingly.

 

The offerors limitation of time is not operative if it is not communicated to the offeree so that he knows or should know of it; but if so communicated it operated with certainty. It makes no difference that the time specified is much less than a reasonable time. The offeror is the creator of the power; and it dies, just as it was born, by the will of its creator. He need make no offer at all; and he may so word his seeming offer that it is impossible of acceptance. x x x.[26]

 

xxx The time actually taken by the offeree may properly be held to be reasonable, if the offeror intended the power to last so long, even though on the facts known to him it was not at all reasonable for the offeree to think that he was accepting in time. A reasonable time may be longer than the offeror intended, but it can never be less. The primary and perhaps the sole purpose of limiting the power of acceptance to a reasonable time, is the protection of the offeror against results that he does not expect or foresee. If those results are caused by his own action, the law will compel him to abide by them for the protection of others; hence, an offeror may sometimes be bound by an acceptance that he did not expect. But he needs no protection against an acceptance that he in fact hoped for and meant to invite, even though he did not expressly state as long a time as intended.

x x x

The power of acceptance will last much longer than it otherwise would in case the conduct of the offeror reasonably leads the offeree to believe that the offer is still open. An offer is operative as long as the offeror says that it shall be; likewise it is operative as long as his conduct leads the offeree to believe that it is. x x x.[27]

 

 

In other words, the extension made by SMARTMATIC-TIM prior to December 31, 2010 (the expiration of the original period) as well as the extensions subsequent thereto effectively preserved the option to purchase and stretched the lifespan of the option. This signifies that the option was still subsisting when the COMELEC decided to exercise it on March 21, 2012. The COMELECs purchase of the PCOS machines and related paraphernalia through the Deed of Sale of March 30, 2012 thus only continued the covenants embodied in the 2009 Automation Contract, contrary to the petitioners contentions.

 

The usage of the words shall notify in Article 6.6 of the 2009 Automation Contract, which provides that COMELEC shall notify the PROVIDER on or before 31 December 2010 of its option to purchase the Goods as listed under Annex L, simply meant that the COMELEC should communicate its acceptance of the committed offer within the term stipulated, and did not refer to the consummation of the anticipated contract of sale. In that light, the communication by the COMELEC on March 21, 2012 of its acceptance was an act within the context of the 2009 Automation Contract.

 

Hence, I have no alternative except to reject the petitioners allegations of grave abuse of discretion committed by the COMELEC in issuing its Resolution No. 9376.

IV.

Extension of the period of the option

to purchase was not a material or substantial

amendment of the 2009 Automation Contract;

Hence, no new public bidding is required

 

 

 

RA No. 9184 requires that, subject to certain exceptions, all procurements by the Government should be through competitive bidding.[28] Procurement is defined as the acquisition of goods and consulting services, and the contracting for infrastructure projects, including the lease of goods and real estate.[29] A public bidding provides the occasion for an open and fair competition among all bidders, and is designed to secure for the Government the lowest possible price under the most favorable terms and conditions, to curtail favoritism in the award of government contracts, and to avoid suspicion of anomalies.[30] It is intended to minimize occasions for corruption and temptations to commit abuse of discretion in awarding contracts on the part of government authorities.[31]

 

All procurement contracts must undergo a public bidding before they may be awarded. A publicly-bidded contract, once executed, may no longer be amended; otherwise, the policy behind the requirement of competitive bidding may be subverted. According to Caltex (Phil.), Inc. v. Delgado Bros., Inc.: [32]

 

[T]he due execution of a contract after public bidding is a limitation upon the right of the contracting parties to alter or amend it without another public bidding, for otherwise what would a public bidding be good for if after the execution of a contract after public bidding, the contracting parties may alter or amend the contract, or even cancel it, at their will? Public biddings are held for the protection of the public, and to give the public the best possible advantages by means of open competition between the bidders. He who bids or offers the best terms is awarded the contract subject of the bid, and it is obvious that such protection and best possible advantages to the public will disappear if the parties to a contract executed after public bidding may alter or amend it without another previous public bidding.

 

Still, the Court has recognized that a publicly-bidded contract may be amended provided that the amendment is not material or substantial.[33]

 

When, then, is an amendment considered material or substantial as to demand another public bidding?

 

The leading case law on when an amendment of a publicly-bidded contract is material or substantial is Agan, Jr. v. Philippine International Air Terminals Co., Inc.,[34] which holds that an amendment is material if it permits a substantial variance between the terms and conditions under which the bids were invited and the terms and conditions of the contract executed after the bidding. Agan, Jr. fittingly elucidates as follows:

 

An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not simply in terms of application of the procedural rules and regulations imposed by the relevant government agency, but more importantly, on the contract bidded upon. Each bidder must be able to bid on the same thing. The rationale is obvious. If the winning bidder is allowed to later include or modify certain provisions in the contract awarded such that the contract is altered in any material respect, then the essence of fair competition in the public bidding is destroyed. A public bidding would indeed be a farce if after the contract is awarded, the winning bidder may modify the contract and include provisions which are favorable to it that were not previously made available to the other bidders.[35]

x x x

While we concede that a winning bidder is not precluded from modifying or amending certain provisions of the contract bidded upon, such changes must not constitute substantial or material amendments that would alter the basic parameters of the contract and would constitute a denial to the other bidders of the opportunity to bid on the same terms. Hence, the determination of whether or not a modification or amendment of a contract bidded out constitutes a substantial amendment rests on whether the contract, when taken as a whole, would contain substantially different terms and conditions that would have the effect of altering the technical and/or financial proposals previously submitted by other bidders. The alterations and modifications in the contract executed between the government and the winning bidder must be such as to render such executed contract to be an entirely different contract from the one that was bidded upon.[36]

x x x

[A]mendments to the contract bidded upon should always conform to the general policy on public bidding if such procedure is to be faithful to its real nature and purpose. By its very nature and characteristic, competitive public bidding aims to protect the public interest by giving the public the best possible advantages through open competition. It has been held that the three principles in public bidding are (1) the offer to the public; (2) opportunity for competition; and (3) a basis for the exact comparison of bids. A regulation of the matter which excludes any of these factors destroys the distinctive character of the system and thwarts the purpose of its adoption.[37]

 

In short, the prohibition against amending a publicly-bidded contract extends only to a change in vital and essential particulars of the agreement that results in a substantially new contract.[38]

 

An example illustrative of a material change is seen in Power Sector Assets and Liabilities Management Corporation v. Pozzolanic Philippines Inc..[39] The issue was whether the amendment made on a contract for the purchase of the fly ash produced by the Batangas Power Plant was valid or not. The contract had been amended after the bidding to include a right of first refusal to purchase the fly ash to be generated by power plants that would be put up by the National Power Corporation (NPC) in the future. The Court found that the amendment went beyond the scope of the original contract that had referred only to the Batangas Power Plant; and accordingly ruled that the amendment was material because it changed the terms of the bidding conducted; hence, the amendment was void. The Court further ruled that the amendment was especially repugnant because it also prejudiced biddings yet to be conducted as to the other power plants that NPC would be building later on, stating:

 

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 termsthe very admission by all parties that the disposal of fly ash must be through public biddingby 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.

 

 

Here, however, the extensions of the timeline for the option to purchase did not amount to a material or substantial amendment of the 2009 Automation Contract. For sure, the bid documents specifically included the option to purchase the goods to be leased by COMELEC, as reflected in the RFP, which states:

 

28. The offer shall be for a one-time lease basis for Component 1-A, 1-B and 1-C.

 

28.1 An offer for an option to purchase by component to be decided by COMELEC before December 31, 2010 shall be included by the bidder in its proposal.

 

28.2 The price of the option-to-purchase shall not exceed 50% of the lease price of the equipment.

 

Moreover, the change related only to the period of the option to purchase. That sort of change did not go beyond the subject of the contract that had been bidded out to the public because the price and other essential terms embodied in the 2009 Automation Contract remained the same; hence, the change was not material or substantial.

 

At any rate, extending the period of the option to purchase was entirely within the discretion of SMARTMATIC-TIM to make. There is no denying that the implementing rules and regulations of RA No. 9184 did provide that the terms stated in the bidding documents were only the minimum requirements of the procuring entity, and that the bidder was free to offer better terms.[40] In Bid Bulletin No. 13, the Special Bids and Awards Committee definitively stated that the option to purchase would not be considered in any way in determining the lowest calculated bid. Any better offer on the terms of the option to purchase would have had no bearing in determining the winning bidder because the winner would ultimately be determined based on the lowest price submitted.[41]

 

Understandably, there may be additional factors to consider in determining if an amendment is material. Thus, in Kenai Lumber Company, Inc. v. LeResche,[42] it was held that:

 

Not all amendments to competitively bid contracts are prohibited, only those regarded as material. The concept of materiality in this context has not been satisfactorily captured in a single phrase. One court has spoken of an essential change of such magnitude as to be incompatible with the general scheme of competitive bidding; another has phrased the question to be whether the amendment so varied from the original plan, was of such importance, or so altered the essential identity or main purpose of the contract, that it constitutes a new undertaking. These formulations simply recognize that the materiality concept prohibits those changes which tend to be subversive of the purpose of competitive bidding. In determining whether an amendment has this tendency, courts have found the following factors to be of importance:

 

(1)   the legitimacy of the reasons for the change;

 

(2)   whether the reasons for the change were unforeseen at the time the contract was made;

 

(3)   the timing of the change;

 

(4)   whether the contract contains clauses authorizing modifications;

 

(5)   the extent of the change, relative to the original contract.[43]

 

A consideration of these additional factors bolsters my conclusion that the extension of the period of the option to purchase was not a material amendment of the 2009 Automation Contract. I note, first of all, that the extension of the period of the option to purchase emanated from the apparent desire of SMARTMATIC-TIM to give to the COMELEC enough time to deliberate and to decide whether to avail itself of the option to purchase or not. The motivation for the extension was legitimate in view of the issues that arose even prior to the 2010 elections centering on the capability of SMARTMATIC-TIM to safeguard the votes as well as on the COMELECs budgetary concerns, difficult issues that the COMELEC had to address first. Secondly, the need for extending the time on account of such issues and concerns was evidently not foreseen prior to the bidding and the execution of the 2009 Automation Contract. Thirdly, there was also nothing suspicious about the timing of the change because more than a year had already elapsed following the implementation of the 2009 Automation Contract. Finally, the 2009 Automation Contract permitted amendments to be mutually agreed upon by the parties, and the extent of the amendment which only refers to the period of the option to purchase is not substantial.

 

In summary, the extension of the period of the option to purchase did not amount to a material amendment of the 2009 Automation Contract. The extension of the period did not give rise to a new contract that would have necessitated the conduct of another public bidding.

 

ACCORDINGLY, I vote to dismiss all the petitions for certiorari, prohibition and mandamus.

 

 

 

 

LUCAS P. BERSAMIN

Associate Justice


[1] G.R. 179830, December 3, 2009, 606 SCRA 554, 569-571.

[2] Section 2. Mode of review. A judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65, except as hereinafter provided. (n)

[3] Entitled Review Of Judgments And Final Orders Or Resolutions Of The Commission On Elections And The Commission On Audit.

[4] G.R. No. 152163, November 18, 2002, 392 SCRA 178, 183.

[5] G.R. No. 180989, February 7, 2012.

[6] Macabago v. Commission on Elections, G.R. No. 152163, November 18, 2002, 392 SCRA 178, 184; citing Canicosa v. Commission on Elections ,G.R. No.120318, December 5, 1997, 282 SCRA 512; and Cabagnot v. Commission on Elections, G.R. No. 124383, August 9, 1996, 260 SCRA 503.

[7] Macabago v. Commission on Elections, supra; citing Raymundo v. People Homesite and Housing Corp., No. L-38318, June 29, 1982, 114 SCRA 712; and Loong v. Commission on Elections, G.R. No. 133676, April 14, 1999, 305 SCRA 832.

[8] 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.

[9] Ongsuco v. Malones, G.R. No. 182065, October 27, 2009, 604 SCRA 499, 515; Perez v. Court of Appeals, No. L-80838, November 29, 1988, 168 SCRA 236, 243.

[10] Ongsuco v. Malones, supra; Heirs of Sps. Luciano and Consolacion Venturillo v. Quitain, G.R. No. 157972, 30 October 2006, 506 SCRA 102, 110; Cario v. Capulong, G.R. No. 97203, 26 May 1993, 222 SCRA 593, 602.

[11] Ongsuco v. Malones, supra; Social Justice Society v. Atienza, Jr., G.R. No. 156052, 7 March 2007, 517 SCRA 657, 664.

[12] Holy Spirit Homeowners Association, Inc. v. Defensor, G.R. No. 163980, August 3, 2006, 479 SCRA 581.

[13] Lapitan v. Scandia Inc., G. R. No. L-24668, July 31, 1968, 24 SCRA 479, 481; cited in subsequent cases like Singsong v. Isabela Sawmill, No. L-27343, February 28, 1979, 88 SCRA 623, 637; Russell v. Vestil, G.R. No. 119347, March 17, 1999, 304 SCRA 738, 744.

[14] Section 19(1), Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of 1980), which provides:

Section 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

xxx

[15] Section 5, Article VIII, 1987 Constitution.

[16] The Bid Bulletins and Section 28, Part V, of the request for proposal (RFP) specifically required prospective bidders to include in their respective proposals an option to purchase to be decided by COMELEC before December 31, 2010.

[17] In National Development Corporation v. Firestone Ceramics, Inc., G.R. No. 143590 (November 14, 2001), one of the issues pertains to the existence of a consideration in so far as it concerns the right of first option to purchase provision incorporated in the lease contract. In determining whether it is a paid-up option, this Court held that: xxx the right of first refusal is an integral and indivisible part of a contract of lease and is inseparable from the whole contract. The consideration for the right is built into the reciprocal obligations of the parties. Thus, it is not correct for the petitioners to insist that there was no consideration paid by FIRESTONE to entitle it to the exercise of the right, inasmuch as the stipulation is part and parcel of the lease making the consideration for the lease the same as that of the option.

[18] G.R. No. 167884, January 20, 2009, 576 SCRA 561, 572-573.

[19] Bold underscoring supplied for emphasis.

[20] Professor Arthur Linton Corbin (18741967) was a professor of law in Yale Law School and a scholar of contract law. He helped to develop the philosophy of law known as legal realism, and his work on contracts is one of the most celebrated legal treatises of the Twentieth Century.

[21] Corbin on Contracts, One Volume Edition, West Publishing Co., 1952:156-7. Ch. 1 21, p. 31.

[22] G.R. No. 135929, April 20, 2001, 357 SCRA 209, 215.

[23] To the same effect is Uniq Computer Corp. v. United States, 20 Cl. Ct. 222, 231 (Cl. Ct. 1990), where the US Supreme Court said:

Stated differently, a noted text writer explains that an option contract is an agreement to keep an offer open for a prescribed period of time during which that offer is irrevocable. 1 S. Williston, A Treatise on the Law of Contracts  61A (3d ed. 1957). An option is a unilateral contract whereby the optionor for valuable consideration grants the optionee a right to make a contract of purchase but does not bind the optionee to do so; the optionor is bound during the life of the option, but the optionee is not. Id. The power conferred on the option holder is called the power of acceptance, who therefore has the legal authority to consummate the contemplated transaction by merely exercising that contractual right. The option giver, on the other hand, is bound to execute the exchange for the duration of the agreement. 1A A. Corbin, Corbin on Contracts, A Comprehensive Treatise on the Working Rules of Contract Law  259 (1963).

[24] G.R. No. 124791, February 10, 1999, 302 SCRA 718.

[25] Carceller v. Court of Appeals and State Investment House, G.R. No. 124791, February 10, 1999, 302 SCRA 718, 724.

[26] Corbin on Contracts, Ch. 2, 35, p. 55.

[27] Id., pp. 56-58.

[28] RA No. 9184, Section 10.

[29] RA No. 9184, Section 5(n).

[30] Agan, Jr. v. Philippine International Air Terminals Co., Inc., G.R. No. 155001, May 5, 2003, 402 SCRA 612, 664.

[31] Manila International Airport Authority v. Olongapo Maintenance Services, Inc., G.R. Nos. 146184-85, January 31, 2008, 543 SCRA 269.

[32] Caltex (Phil.), Inc. v. Delgado Bros., Inc., et.al., 96 Phil. 368, 375 (1954).

[33] Supra, note 30; reiterated in Power Sector Assets and Liabilities Management Corporation v. Pozzolanic Philippines Incorporated, G.R. No. 183789, August 24, 2011, 656 SCRA 214.

[34] Supra, note 30.

[35] Id., pp. 654-655.

[36] Id., pp. 655-656 (bold underscoring supplied for emphasis).

[37] Id., pp. 663-664.

[38] Mata v. San Diego, No. L-30447, March 21, 1975, 63 SCRA 170, 178 (Emphasis supplied).

[39] G.R. No. 183789, August 24, 2011, 656 SCRA 214.

[40] 17.4. The specifications and other terms in the bidding documents shall reflect minimum requirements or specifications required to meet the needs of the procuring entity in clear and unambiguous terms. The bidder may submit an offer which provides for superior specifications and/or better terms and conditions to the Government at no extra cost. However, these shall not be given any bonus, credit or premium in the bid evaluation.

[41] 32.1. For the procurement of goods and infrastructure projects, the purpose of bid evaluation is to determine the Lowest Calculated Bid. This bid shall be subject to post-qualification in accordance with Rule X of this IRR-A to determine its responsiveness to the eligibility and bid requirements. If after post-qualification the Lowest Calculated Bid is determined to be post-qualified it shall be considered the Lowest Calculated Responsive Bid and the contract shall be awarded to the bidder.

32.2. For the procurement of goods and infrastructure projects, the Lowest Calculated Bid shall be determined in two steps:

a) The detailed evaluation of the financial component of the bids, to establish the correct calculated prices of the bids; and

b) The ranking of the total bid prices as so calculated from the lowest to the highest. The bid with the lowest price shall be identified as the Lowest Calculated Bid.

[42] 646 P.2d 215, 220 (1982 Alas).

[43] Kenai Lumber Company, Inc. v. LeResche, 646 P.2d 215, 220 (1982 Alas).