SPECIAL EN BANC
Agenda of June
13, 2012
Item No. 1
G.R. No. 201112 (ARCHBISHOP FERNANDO R.
CAPALLA, OMAR SOLITARIO ALI and MARY ANNE L. SUSANO, Petitioners, -versus- THE
HONORABLE COMMISSION ON ELECTIONS, Respondent.)
G.R. No. 201121 (SOLIDARITY FOR SOVEREIGNTY
(S4S), represented by Ma. Linda Olaguer, RAMON PEDROSA, BENJAMIN PAULINO, SR.,
EVELYN CORONEL, MA. LINDA OLAGUER MONTAYRE and NELSON T. MONTAYRE, Petitioners, -versus- COMMISSION ON
ELECTIONS, 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, -versus- 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, -versus- COMMISSION
ON ELECTIONS and SMARTMATIC-TIM CORPORATION, Respondents.)
Promulgated:
June 13,
2012
X----------------------------------------------------------------------------------------X
SEPARATE
CONCURRING
REYES,
J.:
Barely
a year left before May 2013, past the supposed initial stage in the timeline for
choosing suppliers for goods and services for the elections and when
preparations for the orderly conduct of this constitutional exercise is
expected to have started, the Commission on Elections (COMELEC) is now before
this Court with a serious undertaking
of justifying its resolve to proceed
with the purchase of Precinct Count Optical Scan (PCOS) Machines from
Smartmatic International Corporation and Total Information Management
Corporation (Smartmatic-TIM). Justices
of this Court are called upon to decide whether the transaction should be
annulled for supposedly having violated the procurement law or to recognize the
same as a valid exercise of the option to purchase incorporated in the
Automated Election System Contract (AES Contract) between the COMELEC and
Smartmatic-TIM. With all the legal
reservations and technical objections some of my esteemed colleagues may have
against the action of the COMELEC, I would like to place the intent and spirit
of the law at the heart of this reflection.
Requirement for a
public bidding satisfied
Republic
Act No. 9184 (R.A. No. 9184) otherwise known as the Government Procurement Reform Act was signed into law on January
10, 2003. The crux of the legislation is
the promotion of good governance in all branches of the government, its
departments, agencies, subdivisions and instrumentalities, including
government-owned and controlled corporations and local government units.[1] Section 3 of the law states the overriding
principles on government procurements, to wit:
Section 3. Governing Principles on Government
Procurement.
All procurement of the national government, its
departments, bureaus, offices and agencies, including state universities and
colleges, government-owned and/or-controlled corporations, government financial
institutions and local government units, shall, in all cases, be governed by
these principles:
(a) Transparency in the procurement process and in the
implementation of procurement contracts.
(b) Competitiveness by extending equal opportunity to enable
private contracting parties who are eligible and qualified to participate in
public bidding.
(c) Streamlined procurement process that will uniformly
apply to all government procurement. The
procurement process shall be simple and made adaptable to advances in modern
technology in order to ensure an effective and efficient method.
(d) System of accountability where both the public
officials directly or indirectly involved in the procurement process as well as
in the implementation of procurement contracts and the private parties that
deal with government are, when warranted by circumstances, investigated and
held liable for their actions relative thereto.
(e) Public monitoring of the procurement process and the
implementation of awarded contracts with the end in view of guaranteeing that
these contracts are awarded pursuant to the provisions of this Act and its
implementing rules and regulations, and that all these contracts are performed
strictly according to specifications.
Essentially, R.A. No.
9184 seeks to foster good governance by implementing transparency in government
transactions, specifically by making mandatory the conduct of a public bidding
in all procurements of any government agency, branch or instrumentality. By requiring a public bidding, the government
is expected to maximize its resources because the competition will prompt
potential bidders to put forward their best possible offer in order that they
will be awarded with the contract. It
will also curtail indecent efforts of some prospective bidders who, in the hope
of securing a deal, employ extraneous means to earn the grantors favor.
In
Manila International Airport Authority v.
Olongapo Maintenance Services, Inc.,[2]
we emphasized that a public bidding secures the government of the optimum
benefits and services out of a contract which ultimately redound to the benefit
of the public which stands as the final recipient of the object of the
contract, viz:
The rationale behind the requirement of
a public bidding, as a mode of awarding government contracts, is to ensure that
the people get maximum benefits and quality services from the contracts. More
significantly, the strict compliance with the requirements of a public bidding
echoes the call for transparency in government transactions and accountability
of public officers. Public biddings are intended to minimize occasions for
corruption and temptations to abuse of discretion on the part of government
authorities in awarding contracts.[3]
Further, in Gov. Garcia v. Hon. Burgos,[4]
we ratiocinated:
In the award of government contracts,
the law requires a competitive public bidding. This is reasonable because
"[a] competitive public bidding aims to protect the public interest by
giving the public the best possible advantages thru open competition. It is a mechanism that enables the government
agency to avoid or preclude anomalies in the execution of public
contracts." x x x[5] (Citation omitted)
Pursuant
to the mandate of R.A. No. 9184, the COMELEC published an invitation to apply for
eligibility and to bid for the 2010 Poll Automation Project in March 2009. The
COMELEC described the prospective bid as one for lease, with an option to
purchase, of an automated election system.
Specifically stated in Section 28, Part V of the Request for Proposal
(RPF) are the following:
28. The offer shall be for a one-time lease basis
for Component 1-A, I-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.
Out
of the seven (7) prospective bidders who submitted their proposal, only two (2)
passed the eligibility requirements and qualified for further evaluation of
their technical and financial proposals Indra Sistemas/Strategic Alliance
Holdings/Hart InterCivic (Indra) and Smartmatic-TIM. Upon evaluating the
financial proposals of the two (2) remaining bidders, however, Indra failed to
qualify.
The
Technical Working Group (TWG) of the COMELEC's Special Bids and Awards
Committee (SBAC) subjected the Precinct Count Optical Scan (PCOS) Machines of
Smartmatic-TIM to several tests and was satisfied with the functionalities of
the equipment. The process culminated to the COMELEC's issuance of Resolution
No. 8608, awarding the contract for the Poll Automation Project to
Smartmatic-TIM.
It
is beyond question that Smartmatic-TIM underwent the tedious bidding process
and satisfied all the eligibility requirements imposed by COMELEC as, in fact,
it was awarded with the AES Contract. It is also undisputed that the AES
contract contained an option to purchase the object of the contract which the
COMELEC may exercise until December 31, 2010. Said contract was unilaterally
extended by Smartmatic-TIM to which COMELEC signified its acceptance through
Resolution No. 9377 issued on March 29, 2012. On the following day, March 30,
2012, COMELEC and Smartmatic-TIM executed an Agreement on the Extension of the
Option to Purchase under the Contract for the Provision of an Automated
Election System for the May 10, 2010 Synchronized National and Local Elections
(Extension Agreement) and the corresponding Deed of Sale was signed. Considering the antecedent circumstances, the
COMELEC could not have violated R.A. No. 9184 when it proceeded with the
purchase of the PCOS machines without conducting another competitive bidding. The
option to purchase the PCOS machines was an integral part of the AES Contract
awarded to Smartmatic-TIM. As a public bidding was already conducted before the
main contract of lease was awarded to Smartmatic-TIM, there is no need to
conduct another bidding for the exercise of an option which forms part of the
principal contract. To require anew the conduct of a public bidding, for the
same purpose and requirements already covered by the bidding in 2009, is a
superfluity not intended under R.A. No. 9184.
Certainly, the law could not have contemplated an interpretation which
is inconsistent to what is reasonable and logical.
The extension of
the option to purchase is valid
It
is the considered opinion of those who voted against the majority decision that
upon the expiration of the period to exercise the option to purchase, the same
is automatically extinguished. It is however my humble belief that the
extension of the period within which COMELEC could exercise its option to
purchase was validly made. The Extension Agreement entered into by COMELEC and
Smartmatic-TIM on March 30, 2012 qualified as an amendment of the AES Contract,
allowed under Article 19 thereof which reads:
ARTICLE
19
AMENDMENTS
This Contract
and its Annexes may be amended by mutual agreement of the parties. All such
amendments shall be in writing and signed by the duly authorized
representatives of both parties.
The COMELEC's retention of the Performance Security
under the AES Contract has prevented the contract's termination. Article 2 on
Effectivity of the AES Contract provides, [t]he Term of this Contract begins
from the date of effectivity until the release of the Performance Security,
without prejudice to the surviving provisions of this Contract, including the
warranty provision as prescribed in Article 8.3 and the period of the option to
purchase. In view of this clause, the parties were not yet precluded from
entering into the Extension Agreement in March 2012, especially as it did not
involve substantial or material amendments that would require a separate
bidding. The determination of whether or not a modification or amendment of a
contract bidded out constitutes substantial amendment rests on whether the
contract, when taken as 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 entirely
different contract from the one that was bidded upon.[6]
Here, the option to purchase and its conditions were already required in the
bid documents submitted during the public bidding held in 2009. All that the
Extension Agreement of March 30, 2012 changed was the period within which the
option can be exercised, without varying the technical specifications required
for the bids in 2009. No modification or alteration as ever made on the
essential terms and conditions of the main contract which can qualify as a
substantial or material amendment.
The exercise of
the option to purchase is the only workable option for the COMELEC considering
time and financial constraints
I
believe that if COMELEC only had the complete freedom to decide, it could have
opted for the purchase of brand new machines, at a number sufficient to address
its ambition of a voter-to-precinct ratio of 600:1. It could have effortlessly
elected for the easier path, that is, to buy new machines and other necessaries
of the elections and then just simply wait for the big day. Unfortunately, it
does not have the luxury to do so.
First. The COMELEC does not have
sufficient budget to acquire new machines, or even to lease a new set of
machines. In its budget proposal submitted to the Department of Budget and
Management (DBM), the COMELEC requested for a budget of P12,854,731,547.00
for the 2013 elections, with the amount of P10,436,300,399.00 thereof
allotted for the lease of PCOS machines. However, when the DBM released its
National Expenditure Program (NEP) for the Fiscal Year 2012, the COMELEC was
given only a measly budget of P7,962,220,229.00.
In
2009, the winning lowest calculated responsive bid was at P7,191,484,739.48
by Smartmatic-TIM. Out of this amount, P4,327,876,279.86 was spent on
the lease of approximately 82,200 PCOS machines, 1,684 Consolidation/Canvassing
System (CCS) machines and the necessary software for these machines, while the
remaining P2,863,608,459.62 went to the costs of allied goods and
services under the AES Contract. On top
of the mentioned costs, the COMELEC spent another P5,000,000,000.00 for
fixed costs. Deducting these fixed costs from the allotted budget of the
COMELEC of P7,962,220,229.00 for 2012, will leave only the amount of P2,962,220,229.00
for the lease of the necessary hardware and software for the 2013 elections,
which is substantially lesser than the amount of P4,327,876,279.86
actually spent on the same components for the May 2010 elections.
Second.
With only eleven (11) months left before the 2013 elections, it is
hardly conceivable how the COMELEC will manage to make the necessary preparations
when it has to slip back to square one and begin the entire process anew. The
nullification of the assailed COMELEC Resolutions and Deed of Sale between COMELEC
and Smartmatic-TIM will require another public bidding, preparations and
establishment of an entire system, which process will require several months,
even more than a year, to complete. For this reason, it is more likely that an
automated election system will not be completed in time for the 2013 national
and local elections. There is merit to COMELEC's claim of logistical
impossibility, when it pointed out:
165. For the 2010 Poll Automation Project, the
bidding process took four (4) months. The Invitation to Bid was published as
early as March 13, 2009. The AES Contract was signed only on July10, 2009. Thereafter, Smartmatic-TIM delivered the
first twenty (20) units for customization. The fully customized hardware and
software were not delivered until January 15, 2010 or more than six (6) months
after the AES Contract was signed. Because of the length of time necessary to
source the raw materials and to manufacture the machines, the actual delivery
of the bulk of the machines did not begin until December 11, 2009. The last of
the machines finally arrived on February 21, 2010. Consequently, the testing of
the machines in their actual configuration with the ballots did not begin until
January 25, 2010 and only finished on April 25, 2010.
166.
The COMELEC is deeply concerned with the limited time left to bid out
the supply of the AES for the 2013 Elections. Even if the COMELEC published the
invitation to bid on May 15, 2012, and based on the experience with the 2010
Elections, the notice to proceed will likely be issued only on September 15,
2012. In the preparations for the 2010 Elections, by the middle of September
2009, the customization of the software was already well underway. With the
schedule in 2009 as yardstick, this means that all the tests designed to ensure
that the AES will be ready in time for the 2013 Elections will all be delayed
and maybe even condensed.[7]
It bears emphasizing
that in the event that the Deed of Sale dated March 30, 2012 is nullified, the
COMELEC will not simply resume from where it has gone before the sale was
consummated. The nullification of the sale does not entail a mere resumption of
business for the COMELEC by easily taking one step back and carrying on from
that point onwards. Quite the contrary, the COMELEC will have to abandon what
has been done, revert to the earliest stage of the undertaking and redo the
entire process. It will have to start with the difficult task of lobbying for
additional funds in order that it can set the ceiling in formulating the
acceptable bid prices which investors should find profitable and reasonable
considering the complexity of the undertaking involved. Without sufficient
funding, the chance for a successful conclusion of a public bidding is nil
since no investor will participate in a business venture without expectation of
a reasonable return.
Surely,
the prospect of an adequate and orderly preparation of the elections could not
simply be charged on the fact that the COMELEC is composed of brilliant minds,
as the petitioners supposed, who will take care of the shambles should this
Court finally decide to nullify the Deed of Sale dated March 30, 2012. There
are factors, far more compelling than the breed of individuals composing the
COMELEC, which should draw the attention of the Court, like time and financial
considerations which will take a toll on the conduct of the second automated
elections in this country if we shrug them off as secondary. In the face of
limitations in time and budget, the COMELEC made a bold but well-calculated
step of opting for the most feasible choice at the moment the exercise of the
option to purchase.
The COMELEC
acted in obedience to its mandate and in observance of the intent of R.A. No.
9184
Under
Section 2, Article IX-C of the Constitution, the COMELEC is specifically tasked
to enforce and administer all laws relating to the conduct of elections to
public office and to ensure free, orderly and honest, peaceful and credible
elections. In the discharge of this responsibility, COMELEC has been afforded
enough latitude in devising means and methods that would enable it to
accomplish the great objective for which it was created.[8]
Consistent
with its constitutional mandate, the COMELEC gathered all its resources and
made a calculated measure of electing the course of action most viable to
pursue and completely dismissed the temptation to yield to time and financial
restrictions. The COMELEC made a good judgment of exercising the option to
purchase under the AES Contract, instead of pursuing the ambitious path of
buying brand new machines which is hardly within its capacity to acquire. For
the COMELEC, it is not a simple task of ascertaining the best option from a
predetermined enumeration, rather, it involves a gruelling effort of
determining the only workable option
available.
The
exercise of the option to purchase conforms to the spirit of R.A. No. 9184,
which aims to secure the government the best possible advantages out of a
contract. The option to purchase benefits the government as it allows the
purchase of the object of the lease contract, which has undergone a competitive
bidding, at a conscionable price. The rental fees paid for the lease of the
goods and the services provided under the AES Contract was considered a part of
the purchase price, hence, the government is required only to shell out a
manageable sum of P2,130,635,048.15 to own the leased equipment. This
squarely addresses time and financial difficulties of the COMELEC and permits
it to carry on with the necessary preparations for the elections without
further delay.
On the other hand, if
we agree to invalidate the COMELECs exercise of the option to purchase and
annul the Deed of Sale dated March 30, 2012, what good will it bring the
government and the public? Surely, in the event that this Court finds for the
petitioners, the government will have to assume the burden of heavier costs for
the lease of another set of PCOS machines.
A contract with another supplier, or even with Smartmatic-TIM should it
again prevail in the new bidding, will require a higher expense even for merely
a lease of the PCOS machines needed for the automated elections. Further, if we disapprove of the only
workable option left for the COMELEC, which is already in the midst of a
struggle with time and financial constraints, how soon can they revive
themselves and come up with a better solution than the best they had? Clearly,
the proposed action of the petitioners is not too promising. It puts the
electoral process even closer to jeopardy.
If we succumb to
petitioners contention and invalidate the exercise of the option to purchase
for supposedly having violated R.A. No. 9184, without considering the
repercussions of the same on the very purpose of the existence of said law,
then we commit a deplorable mistake of sacrificing the spirit of R.A. No. 9184
for the sake of blind adherence to its letter. If the aim in this quagmire is
relegated to a mere desire to annul an official undertaking of the COMELEC
because an act was performed, not exactly as defined by the law but
nevertheless within its contemplation, then we become ordinary evaluators who
lean purely on the objective, rather than judges who reconcile the letter of
the law with its spirit, from which the former derived its life.
In Obosa v. CA,[9]
we underscored:
Truly,
law must be understood not by the letter that killeth but by the spirit that
giveth life. Law should not be read and interpreted in isolated academic
abstraction nor even for the sake of logical symmetry but always in [the]
context of pulsating social realities and specific environmental facts.[10]
At
this juncture, I would like to lay emphasis on the fact that a law is not a mere
concoction of the visionary. Neither is it a measly futuristic creation of the
ingenious lawmaker. Rather, it is a response to a social reality or a present
demand of the community; a panacea to a social ill or difficulty. Thus, a law must be construed always within the context of its
creation.
IN VIEW OF THE
FOREGOING DISQUISITIONS, I respectfully vote for the
dismissal of the petitions on the grounds that (1) the requirement for public
bidding under Republic Act No. 9184 was satisfied; (2) the extension of the
option to purchase constitutes a valid amendment to the contract, and; (3) the
exercise of the option to purchase is consistent with the constitutional
mandate of the COMELEC and the intent of Republic Act No. 9184.
BIENVENIDO L. REYES
Associate Justice
[1] Section
2, Article I, R.A. No. 9184.
[2] G.R.
No. 146184-85, January 31, 2008, 543 SCRA 269.
[3]
[4] 353
Phil. 740 (1998).
[5]
[6] Agan,
Jr. v. Philippine International Air Terminals Co., Inc., 450 Phil 744,
816 (2003).
[7] Consolidated
Memorandum of the COMELEC, pp. 71-72.
[8] Roque, Jr. v. Commission on Elections, G.R. No.
188456, February 10, 2010, 612 SCRA 178, 186.
[9] 334 Phil. 253
(1997).
[10]