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EN BANC

[G.R. No. 159139. January 13, 2004.]


INFORMATION
TECHNOLOGY
FOUNDATION
OF
THE
PHILIPPINES, MA. CORAZON M. AKOL, MIGUEL UY, EDUARDO
H. LOPEZ, AUGUSTO C. LAGMAN, REX C. DRILON, MIGUEL
HILADO, LEY SALCEDO, and MANUEL ALCUAZ JR., petitioners, vs.
COMMISSION ON ELECTIONS; COMELEC CHAIRMAN BENJAMIN
ABALOS SR.; COMELEC BIDDING and AWARD COMMITTEE
CHAIRMAN EDUARDO D. MEJOS and MEMBERS GIDEON DE
GUZMAN, JOSE F. BALBUENA, LAMBERTO P. LLAMAS, and
BARTOLOME SINOCRUZ JR.; MEGA PACIFIC eSOLUTIONS, INC.;
and MEGA PACIFIC CONSORTIUM, respondents.
DECISION
PANGANIBAN, J :
p

There is grave abuse of discretion (1) when an act is done contrary to the
Constitution, the law or jurisprudence; 1 or (2) when it is executed whimsically,
capriciously or arbitrarily out of malice, ill will or personal bias. 2 In the present case,
the Commission on Elections approved the assailed Resolution and awarded the
subject Contract not only in clear violation of law and jurisprudence, but also in
reckless disregard of its own bidding rules and procedure. For the automation of the
counting and canvassing of the ballots in the 2004 elections, Comelec awarded the
Contract to "Mega Pacic Consortium" an entity that had not participated in the
bidding. Despite this grant, the poll body signed the actual automation Contract
with "Mega Pacic eSolutions, Inc.," a company that joined the bidding but had not
met the eligibility requirements.
Comelec awarded this billion-peso undertaking with inexplicable haste, without
adequately checking and observing mandatory nancial, technical and legal
requirements. It also accepted the proferred computer hardware and software even
if, at the time of the award, they had undeniably failed to pass eight critical
requirements designed to safeguard the integrity of elections, especially the
following three items:

They failed to achieve the accuracy rating criteria of 99.9995 percent


set-up by the Comelec itself

They were not able to detect previously downloaded results at various


canvassing or consolidation levels and to prevent these from being

inputted again

They were unable to print the statutorily required audit trails of the
count/canvass at different levels without any loss of data

Because of the foregoing violations of law and the glaring grave abuse of discretion
committed by Comelec, the Court has no choice but to exercise its solemn
"constitutional duty" 3 to void the assailed Resolution and the subject Contract. The
illegal, imprudent and hasty actions of the Commission have not only desecrated
legal and jurisprudential norms, but have also cast serious doubts upon the poll
body's ability and capacity to conduct automated elections. Truly, the pith and soul
of democracy credible, orderly, and peaceful elections has been put in jeopardy
by the illegal and gravely abusive acts of Comelec.

The Case
Before us is a Petition 4 under Rule 65 of the Rules of Court, seeking (1) to declare
null and void Resolution No. 6074 of the Commission on Elections (Comelec), which
awarded "Phase II of the Modernization Project of the Commission to Mega Pacic
Consortium (MPC);" (2) to enjoin the implementation of any further contract that
may have been entered into by Comelec "either with Mega Pacic Consortium
and/or Mega Pacific eSolutions, Inc. (MPEI);" and (3) to compel Comelec to conduct a
re-bidding of the project.

The Facts
The following facts are not disputed. They were culled from ocial documents, the
parties' pleadings, as well as from admissions during the Oral Argument on October
7, 2003.
On June 7, 1995, Congress passed Republic Act 8046, 5 which authorized Comelec to
conduct a nationwide demonstration of a computerized election system and allowed
the poll body to pilot-test the system in the March 1996 elections in the
Autonomous Region in Muslim Mindanao (ARMM).
On December 22, 1997, Congress enacted Republic Act 8436 6 authorizing Comelec
to use an automated election system (AES) for the process of voting, counting votes
and canvassing/consolidating the results of the national and local elections. It also
mandated the poll body to acquire automated counting machines (ACMs), computer
equipment, devices and materials; and to adopt new electoral forms and printing
materials.
Initially intending to implement the automation during the May 11, 1998
presidential elections, Comelec in its Resolution No. 2985 dated February 9, 1998
7 eventually decided against full national implementation and limited the
automation to the Autonomous Region in Muslim Mindanao (ARMM). However, due
to the failure of the machines to read correctly some automated ballots in one town,
the poll body later ordered their manual count for the entire Province of Sulu. 8
In the May 2001 elections, the counting and canvassing of votes for both national

and local positions were also done manually, as no additional ACMs had been
acquired for that electoral exercise allegedly because of time constraints.
On October 29, 2002, Comelec adopted in its Resolution 02-0170 a modernization
program for the 2004 elections. It resolved to conduct biddings for the three (3)
phases of its Automated Election System; namely, Phase I Voter Registration and
Validation System; Phase II Automated Counting and Canvassing System; and
Phase III Electronic Transmission.
On January 24, 2003, President Gloria Macapagal-Arroyo issued Executive Order No.
172, which allocated the sum of P2.5 billion to fund the AES for the May 10, 2004
elections. Upon the request of Comelec, she authorized the release of an additional
P500 million.
On January 28, 2003, the Commission issued an "Invitation to Apply for Eligibility
and to Bid," which we quote as follows:
"INVITATION TO APPLY FOR ELIGIBILITY AND TO BID
The Commission on Elections (COMELEC), pursuant to the mandate of
Republic Act Nos. 8189 and 8436, invites interested oerors, vendors,
suppliers or lessors to apply for eligibility and to bid for the procurement by
purchase, lease, lease with option to purchase, or otherwise, supplies,
equipment, materials and services needed for a comprehensive Automated
Election System, consisting of three (3) phases: (a) registration/verication
of voters, (b) automated counting and consolidation of votes, and (c)
electronic transmission of election results, with an approved budget of TWO
BILLION FIVE HUNDRED MILLION (Php2,500,000,000) Pesos.
EICDSA

Only bids from the following entities shall be entertained:


a.

Duly licensed Filipino citizens/proprietorships;

b.

Partnerships duly organized under the laws of the Philippines


and of which at least sixty percent (60%) of the interest belongs
to citizens of the Philippines;

c.

Corporations duly organized under the laws of the Philippines,


and of which at least sixty percent (60%) of the outstanding
capital stock belongs to citizens of the Philippines;

d.

Manufacturers, suppliers and/or distributors forming


themselves into a joint venture, i.e., a group of two (2) or more
manufacturers, suppliers and/or distributors that intend to be
jointly and severally responsible or liable for a particular
contract, provided that Filipino ownership thereof shall be at
least sixty percent (60%); and

e.

Cooperatives duly registered


Development Authority.

with

the

Cooperatives

Bid documents for the three (3) phases may be obtained starting 10
February 2003, during oce hours from the Bids and Awards Committee
(BAC) Secretariat/Oce of Commissioner Resurreccion Z. Borra, 7th Floor,
Palacio del Governador, Intramuros, Manila, upon payment at the Cash
Division, Commission on Elections, in cash or cashier's check, payable to the
Commission on Elections, of a non-refundable amount of FIFTEEN
THOUSAND PESOS (Php15,000.00) for each phase. For this purpose,
interested oerors, vendors, suppliers or lessors have the option to
participate in any or all of the three (3) phases of the comprehensive
Automated Election System.
A Pre-Bid Conference is scheduled on 13 February 2003, at 9:00 a.m. at the
Session Hall, Commission on Elections, Postigo Street, Intramuros, Manila.
Should there be questions on the bid documents, bidders are required to
submit their queries in writing to the BAC Secretariat prior to the scheduled
Pre-Bid Conference.
Deadline for submission to the BAC of applications for eligibility and bid
envelopes for the supply of the comprehensive Automated Election System
shall be at the Session Hall, Commission on Elections, Postigo Street,
Intramuros, Manila on 28 February 2003 at 9:00 a.m.
The COMELEC reserves the right to review the qualications of the bidders
after the bidding and before the contract is executed. Should such review
uncover any misrepresentation made in the eligibility statements, or any
changes in the situation of the bidder to materially downgrade the substance
of such statements, the COMELEC shall disqualify the bidder upon due
notice without any obligation whatsoever for any expenses or losses that
may be incurred by it in the preparation of its bid." 9

On February 11, 2003, Comelec issued Resolution No. 5929 clarifying certain
eligibility criteria for bidders and the schedule of activities for the project bidding, as
follows:
"1.)

2.)

3.)

Open to Filipino and foreign corporation duly registered and licensed


to do business and is actually doing business in the Philippines, subject
to Sec. 43 of RA 9184 (An Act providing in the Modernization
Standardization and Regulation of the Procurement Activities of the
Government and for other purposes etc.)
Track Record:
a)

For counting machines should have been used in at least one


(1) political exercise with no less than Twenty Million Voters;

b)

For verication of voters the reference site of an existing


data base installation using Automated Fingerprint Identication
System (AFIS) with at least Twenty Million.

Ten percent (10%) equity requirement shall be based on the total


project cost; and

4.)

Performance bond shall be twenty percent (20%) of the bid offer.

RESOLVED moreover, that:


1) A.

Due to the decision that the eligibility requirements and the rest of
the Bid documents shall be released at the same time, and the
memorandum of Comm. Resurreccion Z. Borra dated February 7,
2003, the documents to be released on Friday, February 14, 2003 at
2:00 o'clock p.m. shall be the eligibility criteria, Terms of Reference
(TOR) and other pertinent documents;

B.

Pre-Bid conference shall be on February 18, 2003; and

C.

Deadline for the submission and receipt of the Bids shall be on March
5, 2003.

2)

The aforementioned documents will be available at the following


offices:
a)

Voters Validation: Office of Comm. Javier

b)

Automated Counting Machines: Office of Comm. Borra

c)

Electronic Transmission: Office of Comm. Tancangco" 10

On February 17, 2003, the poll body released the Request for Proposal (RFP) to
procure the election automation machines. The Bids and Awards Committee (BAC)
of Comelec convened a pre-bid conference on February 18, 2003 and gave
prospective bidders until March 10, 2003 to submit their respective bids.
Among others, the RFP provided that bids from manufacturers, suppliers and/or
distributors forming themselves into a joint venture may be entertained, provided
that the Philippine ownership thereof shall be at least 60 percent. Joint venture is
dened in the RFP as "a group of two or more manufacturers, suppliers and/or
distributors that intend to be jointly and severally responsible or liable for a
particular contract." 11
Basically, the public bidding was to be conducted under a two-envelope/two stage
system . The bidder's rst envelope or the Eligibility Envelope should establish the
bidder's eligibility to bid and its qualications to perform the acts if accepted. On the
other hand, the second envelope would be the Bid Envelope itself. The RFP outlines
the bidding procedures as follows:
"25.

Determination of Eligibility of Prospective Bidders

"25.1
The eligibility envelopes of prospective Bidders shall be opened
rst to determine their eligibility. In case any of the requirements specied in
Clause 20 is missing from the rst bid envelope, the BAC shall declare said
prospective Bidder as ineligible to bid. Bid envelopes of ineligible Bidders shall

be immediately returned unopened.


"25.2
The eligibility of prospective Bidders shall be determined using
simple 'pass/fail' criteria and shall be determined as either eligible or ineligible.
If the prospective Bidder is rated 'passed' for all the legal, technical and
nancial requirements, he shall be considered eligible. If the prospective
Bidder is rated 'failed' in any of the requirements, he shall be considered
ineligible.
"26.

Bid Examination/Evaluation

"26.1
The BAC will examine the Bids to determine whether they are
complete, whether any computational errors have been made, whether
required securities have been furnished, whether the documents have been
properly signed, and whether the Bids are generally in order.
"26.2
The BAC shall check the submitted documents of each Bidder
against the required documents enumerated under Clause 20, to ascertain if
they are all present in the Second bid envelope (Technical Envelope). In case
one (1) or more of the required documents is missing, the BAC shall rate the
Bid concerned as 'failed' and immediately return to the Bidder its Third bid
envelope (Financial Envelope) unopened. Otherwise, the BAC shall rate the
first bid envelope as 'passed'.
"26.3
The BAC shall immediately open the Financial Envelopes of the
Bidders whose Technical Envelopes were passed or rated on or above the
passing score. Only Bids that are determined to contain all the bid
requirements for both components shall be rated 'passed' and shall
immediately be considered for evaluation and comparison.
"26.4
In the opening and examination of the Financial Envelope, the BAC
shall announce and tabulate the Total Bid Price as calculated. Arithmetical
errors will be rectied on the following basis: If there is a discrepancy
between words and gures, the amount in words will prevail. If there is a
discrepancy between the unit price and the total price that is obtained by
multiplying the unit price and the quantity, the unit price shall prevail and the
total price shall be corrected accordingly. If there is a discrepancy between
the Total Bid Price and the sum of the total prices, the sum of the total
prices prevail and the Total Bid Price shall be corrected accordingly.
HcSaAD

"26.5
Financial Proposals which do not clearly state the Total Bid Price
shall be rejected. Also, Total Bid Price as calculated that exceeds the
approved budget for the contract shall also be rejected.
27.

Comparison of Bids

"27.1
The bid price shall be deemed to embrace all costs, charges and
fees associated with carrying out all the elements of the proposed Contract,
including but not limited to, license fees, freight charges and taxes.
"27.2

The BAC shall establish the calculated prices of all Bids rated

'passed' and rank the same in ascending order.


xxx xxx xxx
"29.

Postqualification

"29.1
The BAC will determine to its satisfaction whether the Bidder
selected as having submitted the lowest calculated bid is qualied to
satisfactorily perform the Contract.
"29.2
The determination will take into account the Bidder's nancial,
technical and production capabilities/resources. It will be based upon an
examination of the documentary evidence of the Bidder's qualication
submitted by the Bidder as well as such other information as the BAC deems
necessary and appropriate.
"29.3
A bid determined as not substantially responsive will be rejected
by the BAC and may not subsequently be made responsive by the Bidder by
correction of the non-conformity.
"2 9 . 4
The BAC may waive any informality or non-conformity or
irregularity in a bid which does not constitute a material deviation, provided
such waiver does not prejudice or affect the relative ranking of any Bidder.
"29.5
Should the BAC nd that the Bidder complies with the legal,
nancial and technical requirements, it shall make an armative
determination which shall be a prerequisite for award of the Contract to the
Bidder. Otherwise, it will make a negative determination which will result in
rejection of the Bidder's bid, in which event the BAC will proceed to the next
lowest calculated bid to make a similar determination of that Bidder's
capabilities to perform satisfactorily." 12

Out of the 57 bidders, 13 the BAC found MPC and the Total Information
Management Corporation (TIMC) eligible. For technical evaluation, they were
referred to the BAC's Technical Working Group (TWG) and the Department of
Science and Technology (DOST).
In its Report on the Evaluation of the Technical Proposals on Phase II, DOST said
that both MPC and TIMC had obtained a number of failed marks in the technical
evaluation. Notwithstanding these failures, Comelec en banc, on April 15, 2003,
promulgated Resolution No. 6074 awarding the project to MPC. The Commission
publicized this Resolution and the award of the project to MPC on May 16, 2003.
On May 29, 2003, ve individuals and entities (including the herein Petitioners
Information Technology Foundation of the Philippines, represented by its president,
Alfredo M. Torres; and Ma. Corazon Akol) wrote a letter 14 to Comelec Chairman
Benjamin Abalos Sr. They protested the award of the Contract to Respondent MPC
"due to glaring irregularities in the manner in which the bidding process had been
conducted." Citing therein the noncompliance with eligibility as well as technical
and procedural requirements (many of which have been discussed at length in the
Petition), they sought a re-bidding.

In a letter-reply dated June 6, 2003, 15 the Comelec chairman speaking through


Atty. Jaime Paz, his head executive assistant rejected the protest and declared
that the award "would stand up to the strictest scrutiny."
Hence, the present Petition. 16

The Issues
In their Memorandum, petitioners raise the following issues for our consideration:
"1.

The COMELEC awarded and contracted with a non-eligible entity; . . .

"2.

Private respondents failed to pass the Technical Test as required in


the RFP. Notwithstanding, such failure was ignored. In eect, the
COMELEC changed the rules after the bidding in eect changing the
nature of the contract bidded upon.

"3.
"4.

Petitioners have locus standi.


Instant Petition is not premature. Direct resort to the Supreme Court
is justified." 17

In the main, the substantive issue is whether the Commission on Elections, the
agency vested with the exclusive constitutional mandate to oversee elections,
gravely abused its discretion when, in the exercise of its administrative functions, it
awarded to MPC the contract for the second phase of the comprehensive Automated
Election System.
Before discussing the validity of the award to MPC, however, we deem it proper to
rst pass upon the procedural issues: the legal standing of petitioners and the
alleged prematurity of the Petition.

This Court's Ruling


The Petition is meritorious.

First Procedural Issue:


Locus Standi of Petitioners
Respondents chorus that petitioners do not possess locus standi, inasmuch as they
are not challenging the validity or constitutionality of RA 8436. Moreover,
petitioners supposedly admitted during the Oral Argument that no law had been
violated by the award of the Contract. Furthermore, they allegedly have no actual
and material interest in the Contract and, hence, do not stand to be injured or
prejudiced on account of the award.
On the other hand, petitioners suing in their capacities as taxpayers, registered
voters and concerned citizens respond that the issues central to this case are "of
transcendental importance and of national interest." Allegedly, Comelec's awed
bidding and questionable award of the Contract to an unqualied entity would

impact directly on the success or the failure of the electoral process. Thus, any taint
on the sanctity of the ballot as the expression of the will of the people would
inevitably aect their faith in the democratic system of government. Petitioners
further argue that the award of any contract for automation involves disbursement
of public funds in gargantuan amounts; therefore, public interest requires that the
laws governing the transaction must be followed strictly.

We agree with petitioners. Our nation's political and economic future virtually
hangs in the balance, pending the outcome of the 2004 elections. Hence, there can
be no serious doubt that the subject matter of this case is "a matter of public
concern and imbued with public interest"; 18 in other words, it is of "paramount
public interest" 19 and "transcendental importance." 20 This fact alone would justify
relaxing the rule on legal standing, following the liberal policy of this Court
whenever a case involves "an issue of overarching signicance to our society." 21
Petitioners' legal standing should therefore be recognized and upheld.
Moreover, this Court has held that taxpayers are allowed to sue when there is a
claim of "illegal disbursement of public funds," 22 or if public money is being
"deected to any improper purpose"; 23 or when petitioners seek to restrain
respondent from "wasting public funds through the enforcement of an invalid or
unconstitutional law." 24 In the instant case, individual petitioners, suing as
taxpayers, assert a material interest in seeing to it that public funds are properly
and lawfully used. In the Petition, they claim that the bidding was defective, the
winning bidder not a qualied entity, and the award of the Contract contrary to law
and regulation. Accordingly, they seek to restrain respondents from implementing
the Contract and, necessarily, from making any unwarranted expenditure of public
funds pursuant thereto. Thus, we hold that petitioners possess locus standi.

Second Procedural Issue:


Alleged Prematurity Due to Non-Exhaustion
of Administrative Remedies
Respondents claim that petitioners acted prematurely, since they had not rst
utilized the protest mechanism available to them under RA 9184, the Government
Procurement Reform Act, for the settlement of disputes pertaining to procurement
contracts.
Section 55 of RA 9184 states that protests against decisions of the Bidding and
Awards Committee in all stages of procurement may be lodged with the head of the
procuring entity by ling a veried position paper and paying a protest fee. Section
57 of the same law mandates that in no case shall any such protest stay or delay
the bidding process, but it must first be resolved before any award is made.
On the other hand, Section 58 provides that court action may be resorted to only
after the protests contemplated by the statute shall have been completed. Cases
led in violation of this process are to be dismissed for lack of jurisdiction. Regional

trial courts shall have jurisdiction over nal decisions of the head of the procuring
entity, and court actions shall be instituted pursuant to Rule 65 of the 1997 Rules of
Civil Procedure.
cECTaD

Respondents assert that throughout the bidding process, petitioners never


questioned the BAC Report nding MPC eligible to bid and recommending the award
of the Contract to it (MPC). According to respondents, the Report should have been
appealed to the Comelec en banc, pursuant to the aforementioned sections of RA
9184. In the absence of such appeal, the determination and recommendation of the
BAC had become final.
The Court is not persuaded.
Respondent Comelec came out with its en banc Resolution No. 6074 dated April 15,
2003, awarding the project to Respondent MPC even before the BAC managed to
issue its written report and recommendation on April 21, 2003. Thus, how could
petitioners have appealed the BAC's recommendation or report to the head of the
procuring entity (the chairman of Comelec), when the Comelec en banc had already
approved the award of the contract to MPC even before petitioners learned of the
BAC recommendation?
It is claimed 25 by Comelec that during its April 15, 2003 session, it received and
approved the verbal report and recommendation of the BAC for the award of the
Contract to MPC, and that the BAC subsequently re-armed its verbal report and
recommendation by submitting it in writing on April 21, 2003. Respondents insist
that the law does not require that the BAC Report be in writing before Comelec can
act thereon; therefore, there is allegedly nothing irregular about the Report as well
as the en banc Resolution.
However, it is obvious that petitioners could have appealed the BAC's report and
recommendation to the head of the procuring entity (the Comelec chair) only upon
their discovery thereof, which at the very earliest would have been on April 21,
2003, when the BAC actually put its report in writing and nally released it. Even
then, what would have been the use of protesting/appealing the report to the
Comelec chair, when by that time the Commission en banc (including the chairman
himself) had already approved the BAC Report and awarded the Contract to MPC?
And even assuming arguendo that petitioners had somehow gotten wind of the
verbal BAC report on April 15, 2003 (immediately after the en banc session), at that
point the Commission en banc had already given its approval to the BAC Report
along with the award to MPC. To put it bluntly, the Comelec en banc itself made it
legally impossible for petitioners to avail themselves of the administrative remedy
that the Commission is so impiously harping on. There is no doubt that they had not
been accorded the opportunity to avail themselves of the process provided under
Section 55 of RA 9184, according to which a protest against a decision of the BAC
may be led with the head of the procuring entity. Nemo tenetur ad impossible , 26
to borrow private respondents' favorite Latin excuse. 27

Some Observations on the BAC Report to the Comelec

We shall return to this issue of alleged prematurity shortly, but at this interstice, we
would just want to put forward a few observations regarding the BAC Report and
the Comelec en banc's approval thereof.

First, Comelec contends that there was nothing unusual about the fact that the
Report submitted by the BAC came only after the former had already awarded the
Contract, because the latter had been asked to render its report and
recommendation orally during the Commission's en banc session on April 15, 2003.
Accordingly, Comelec supposedly acted upon such oral recommendation and
approved the award to MPC on the same day, following which the recommendation
was subsequently reduced into writing on April 21, 2003. While not entirely outside
the realm of the possible, this interesting and unique spiel does not speak well of
the process that Comelec supposedly went through in making a critical decision
with respect to a multi-billion-peso contract.
We can imagine that anyone else standing in the shoes of the Honorable
Commissioners would have been extremely conscious of the overarching need for
utter transparency. They would have scrupulously avoided the slightest hint of
impropriety, preferring to maintain an exacting regularity in the performance of
their duties, instead of trying to break a speed record in the award of multi-billionpeso contracts. After all, between April 15 and April 21 were a mere six (6) days.
Could Comelec not have waited out six more days for the written report of the BAC,
instead of rushing pell-mell into the arms of MPC? Certainly, respondents never
cared to explain the nature of the Commission's dire need to act immediately
without awaiting the formal, written BAC Report.
In short, the Court nds it dicult to reconcile the uncommon dispatch with which
Comelec acted to approve the multi-billion-peso deal, with its claim of having been
impelled by only the purest and most noble of motives.
At any rate, as will be discussed later on, several other factors combine to lend
negative credence to Comelec's tale.

Second, without necessarily ascribing any premature malice or premeditation on


the part of the Comelec ocials involved, it should nevertheless be conceded that
this cart-before-the-horse maneuver (awarding of the Contract ahead of the BAC's
written report) would denitely serve as a clever and eective way of averting and
frustrating any impending protest under Section 55.
Having made the foregoing observations, we now go back to the question of
exhausting administrative remedies. Respondents may not have realized it, but the
letter addressed to Chairman Benjamin Abalos Sr. dated May 29, 2003 28 serves to
eliminate the prematurity issue as it was an actual written protest against the
decision of the poll body to award the Contract. The letter was signed by/for, inter
alia, two of herein petitioners: the Information Technology Foundation of the
Philippines, represented by its president, Alfredo M. Torres; and Ma. Corazon Akol.
Such letter-protest is sucient compliance with the requirement to exhaust
administrative remedies particularly because it hews closely to the procedure

outlined in Section 55 of RA 9184.


And even without that May 29, 2003 letter-protest, the Court still holds that
petitioners need not exhaust administrative remedies in the light of Paat v. Court of
Appeals. 29 Paat enumerates the instances when the rule on exhaustion of
administrative remedies may be disregarded, as follows:
"(1)
(2)

when there is a violation of due process,


when the issue involved is purely a legal question,

(3)

when the administrative action is patently illegal amounting to lack or


excess of jurisdiction,

(4)

when there is estoppel on the part of the administrative agency


concerned,

(5)

when there is irreparable injury,

(6)

when the respondent is a department secretary whose acts as an


alter ego of the President bears the implied and assumed approval of
the latter,

(7)

when to require exhaustion of administrative remedies would be


unreasonable,

(8)

when it would amount to a nullification of a claim,

(9)

when the subject matter is a private land in land case proceedings,

(10)

when the rule does not provide a plain, speedy and adequate
remedy, and

(11)

when there are circumstances indicating the urgency of judicial


intervention." 30

The present controversy precisely falls within the exceptions listed as Nos. 7, 10 and
11: "(7) when to require exhaustion of administrative remedies would be
unreasonable; (10) when the rule does not provide a plain, speedy and adequate
remedy, and (11) when there are circumstances indicating the urgency of judicial
intervention." As already stated, Comelec itself made the exhaustion of
administrative remedies legally impossible or, at the very least, "unreasonable."
In any event, the peculiar circumstances surrounding the unconventional rendition
of the BAC Report and the precipitate awarding of the Contract by the Comelec en
banc plus the fact that it was racing to have its Contract with MPC implemented
in time for the elections in May 2004 (barely four months away) have combined
to bring about the urgent need for judicial intervention, thus prompting this Court
to dispense with the procedural exhaustion of administrative remedies in this case.

Main Substantive Issue:


Validity of the Award to MPC
We come now to the meat of the controversy. Petitioners contend that the award is
invalid, since Comelec gravely abused its discretion when it did the following:
1.

Awarded the Contract to MPC though it did not even participate


in the bidding

2.

Allowed MPEI to participate in the bidding despite its failure to


meet the mandatory eligibility requirements

3.

Issued its Resolution of April 15, 2003 awarding the Contract to


MPC despite the issuance by the BAC of its Report, which formed
the basis of the assailed Resolution, only on April 21, 2003 31

4.

Awarded the Contract, notwithstanding the fact that during the


bidding process, there were violations of the mandatory
requirements of RA 8436 as well as those set forth in Comelec's
own Request for Proposal on the automated election system
IHaECA

5.

Refused to declare a failed bidding and to conduct a re-bidding


despite the failure of the bidders to pass the technical tests
conducted by the Department of Science and Technology

6.

Failed to follow strictly the provisions of RA 8436 in the conduct


of the bidding for the automated counting machines

After reviewing the slew of pleadings as well as the matters raised during the Oral
Argument, the Court deems it sucient to focus discussion on the following major
areas of concern that impinge on the issue of grave abuse of discretion:
A.

Matters pertaining to the identity, existence and eligibility of


MPC as a bidder

B.

Failure of the automated counting machines (ACMs) to pass the


DOST technical tests

C.

Remedial measures and re-testings undertaken by Comelec and


DOST after the award, and their effect on the present controversy
A.

Failure to Establish the Identity, Existence and Eligibility


of the Alleged Consortium as a Bidder
On the question of the identity and the existence of the real bidder, respondents
insist that, contrary to petitioners' allegations, the bidder was not Mega Pacic
eSolutions, Inc. (MPEI), which was incorporated only on February 27, 2003, or 11
days prior to the bidding itself. Rather, the bidder was Mega Pacic Consortium

(MPC), of which MPEI was but a part. As proof thereof, they point to the March 7,
2003 letter of intent to bid, signed by the president of MPEI allegedly for and on
behalf of MPC. They also call attention to the ocial receipt issued to MPC,
acknowledging payment for the bidding documents, as proof that it was the
"consortium" that participated in the bidding process.
We do not agree. The March 7, 2003 letter, signed by only one signatory "Willy U.
Yu, President, Mega Pacic eSolutions, Inc., (Lead Company/Proponent) For: Mega
Pacic Consortium" and without any further proof, does not by itself prove the
existence of the consortium. It does not show that MPEI or its president have been
duly pre-authorized by the other members of the putative consortium to represent
them, to bid on their collective behalf and, more important, to commit them jointly
and severally to the bid undertakings. The letter is purely self-serving and
uncorroborated.
Neither does an ocial receipt issued to MPC, acknowledging payment for the
bidding documents, constitute proof that it was the purported consortium that
participated in the bidding. Such receipts are issued by cashiers without any legally
sufficient inquiry as to the real identity or existence of the supposed payor.
To assure itself properly of the due existence (as well as eligibility and qualication)
of the putative consortium, Comelec's BAC should have examined the bidding
documents submitted on behalf of MPC. They would have easily discovered the
following fatal flaws.

Two-Envelope, Two-Stage System


As stated earlier in our factual presentation, the public bidding system designed by
Comelec under its RFP (Request for Proposal for the Automation of the 2004
Election) mandated the use of a two-envelope, two-stage system. A bidder's rst
envelope (Eligibility Envelope) was meant to establish its eligibility to bid and its
qualications and capacity to perform the contract if its bid was accepted, while the
second envelope would be the Bid Envelope itself.
The Eligibility Envelope was to contain legal documents such as articles of
incorporation, business registrations, licenses and permits, mayor's permit, VAT
certication, and so forth; technical documents containing documentary evidence to
establish the track record of the bidder and its technical and production capabilities
to perform the contract; and nancial documents, including audited nancial
statements for the last three years, to establish the bidder's financial capacity.
In the case of a consortium or joint venture desirous of participating in the bidding,
it goes without saying that the Eligibility Envelope would necessarily have to
include a copy of the joint venture agreement, the consortium agreement or
memorandum of agreement or a business plan or some other instrument of
similar import establishing the due existence, composition and scope of such
aggrupation. Otherwise, how would Comelec know who it was dealing with, and
whether these parties are qualied and capable of delivering the products and
services being offered for bidding? 32

In the instant case, no such instrument was submitted to Comelec during the
bidding process. This fact can be conclusively ascertained by scrutinizing the twoinch thick "Eligibility Requirements" file submitted by Comelec last October 9, 2003,
in partial compliance with this Court's instructions given during the Oral Argument.
This le purports to replicate the eligibility documents originally submitted to
Comelec by MPEI allegedly on behalf of MPC, in connection with the bidding
conducted in March 2003. Included in the le are the incorporation papers and
nancial statements of the members of the supposed consortium and certain
certificates, licenses and permits issued to them.
However, there is no sign whatsoever of any joint venture agreement, consortium
agreement, memorandum of agreement, or business plan executed among the
members of the purported consortium.
The only logical conclusion is that no such agreement was ever submitted to the
Comelec for its consideration, as part of the bidding process.
It thus follows that, prior the award of the Contract, there was no documentary or
other basis for Comelec to conclude that a consortium had actually been formed
amongst MPEI, SK C&C and WeSolv, along with Election.com and ePLDT. 33 Neither
was there anything to indicate the exact relationships between and among these
rms; their diverse roles, undertakings and prestations, if any, relative to the
prosecution of the project, the extent of their respective investments (if any) in the
supposed consortium or in the project; and the precise nature and extent of their
respective liabilities with respect to the contract being oered for bidding. And apart
from the self-serving letter of March 7, 2003, there was not even any indication
that MPEI was the lead company duly authorized to act on behalf of the others.
So, it necessarily follows that, during the bidding process, Comelec had no basis at
all for determining that the alleged consortium really existed and was eligible and
qualied; and that the arrangements among the members were satisfactory and
sucient to ensure delivery on the Contract and to protect the government's
interest.
Notwithstanding such deciencies, Comelec still deemed the "consortium" eligible
to participate in the bidding, proceeded to open its Second Envelope, and eventually
awarded the bid to it, even though per the Comelec's own RFP the BAC should
have declared the MPC ineligible to bid and returned the Second (Bid) Envelope
unopened.
Inasmuch as Comelec should not have considered MPEI et al. as comprising a
consortium or joint venture, it should not have allowed them to avail themselves of
the provision in Section 5.4 (b) (i) of the IRR for RA 6957 (the Build-OperateTransfer Law), as amended by RA 7718. This provision states in part that a joint
venture/consortium proponent shall be evaluated based on the individual or
collective experience of the member-rms of the joint venture or consortium and of
the contractor(s) that it has engaged for the project. Parenthetically, respondents
have uniformly argued that the said IRR of RA 6957, as amended, have suppletory
application to the instant case.

Hence, had the proponent MPEI been evaluated based solely on its own experience,
nancial and operational track record or lack thereof, it would surely not have
qualied and would have been immediately considered ineligible to bid, as
respondents readily admit.
At any rate, it is clear that Comelec gravely abused its discretion in arbitrarily failing
to observe its own rules, policies and guidelines with respect to the bidding process,
thereby negating a fair, honest and competitive bidding.

Commissioners Not Aware of Consortium


In this regard, the Court is beguiled by the statements of Commissioner Florentino
Tuason Jr., given in open court during the Oral Argument last October 7, 2003. The
good commissioner armed that he was aware, of his own personal knowledge,
that there had indeed been a written agreement among the "consortium"
members, 34 although it was an internal matter among them, 35 and of the fact that
it would be presented by counsel for private respondent. 36

However, under questioning by Chief Justice Hilario G. Davide Jr. and Justice Jose C.
Vitug, Commissioner Tuason in eect admitted that, while he was the
commissioner-in-charge of Comelec's Legal Department, he had never seen, even
up to that late date, the agreement he spoke of. 37 Under further questioning, he
was likewise unable to provide any information regarding the amounts invested
into the project by several members of the claimed consortium. 38 A short while
later, he admitted that the Commission had not taken a look at the agreement (if
any). 39
He tried to justify his position by claiming that he was not a member of the BAC.
Neither was he the commissioner-in-charge of the Phase II Modernization project
(the automated election system); but that, in any case, the BAC and the Phase II
Modernization Project Team did look into the aspect of the composition of the
consortium.
It seems to the Court, though, that even if the BAC or the Phase II Team had taken
charge of evaluating the eligibility, qualications and credentials of the consortiumbidder, still, in all probability, the former would have referred the task to
Commissioner Tuason, head of Comelec's Legal Department. That task was the
appreciation and evaluation of the legal eects and consequences of the terms,
conditions, stipulations and covenants contained in any joint venture agreement,
consortium agreement or a similar document assuming of course that any of
these was available at the time. The fact that Commissioner Tuason was barely
aware of the situation bespeaks the complete absence of such document, or the
utter failure or neglect of the Comelec to examine it assuming it was available at
all at the time the award was made on April 15, 2003.
TIaDHE

In any event, the Court notes for the record that Commissioner Tuason basically
contradicted his statements in open court about there being one written agreement

among all the consortium members, when he subsequently referred 40 to the four
(4) Memoranda of Agreement (MOAs) executed by them. 41
At this juncture, one might ask: What, then, if there are four MOAs instead of one or
none at all? Isn't it enough that there are these corporations coming together to
carry out the automation project? Isn't it true, as respondent aver, that nowhere in
the RFP issued by Comelec is it required that the members of the joint venture
execute a single written agreement to prove the existence of a joint venture.
Indeed, the intention to be jointly and severally liable may be evidenced not only by
a single joint venture agreement, but also by supplementary documents executed
by the parties signifying such intention. What then is the big deal?
The problem is not that there are four agreements instead of only one. The problem
is that Comelec never bothered to check. It never based its decision on documents
or other proof that would concretely establish the existence of the claimed
consortium or joint venture or agglomeration. It relied merely on the self-serving
representation in an uncorroborated letter signed by only one individual, claiming
that his company represented a "consortium" of several dierent corporations. It
concluded forthwith that a consortium indeed existed, composed of such and such
members, and thereafter declared that the entity was eligible to bid.
True, copies of nancial statements and incorporation papers of the alleged
"consortium" members were submitted. But these papers did not establish the
existence of a consortium, as they could have been provided by the companies
concerned for purposes other than to prove that they were part of a consortium or
joint venture. For instance, the papers may have been intended to show that those
companies were each qualied to be a sub-contractor (and nothing more) in a major
project. Those documents did not by themselves support the assumption that a
consortium or joint venture existed among the companies.
In brief, despite the absence of competent proof as to the existence and eligibility of
the alleged consortium (MPC), its capacity to deliver on the Contract, and the
members' joint and several liability therefor, Comelec nevertheless assumed that
such consortium existed and was eligible. It then went ahead and considered the bid
of MPC, to which the Contract was eventually awarded, in gross violation of the
former's own bidding rules and procedures contained in its RFP. Therein lies
Comelec's grave abuse of discretion.

Sufficiency of the Four Agreements


Instead of one multilateral agreement executed by, and eective and binding on, all
the ve "consortium members" as earlier claimed by Commissioner Tuason in
open court it turns out that what was actually executed were four (4) separate
and distinct bilateral Agreements. 42 Obviously, Comelec was furnished copies of
these Agreements only after the bidding process had been terminated, as these
were not included in the Eligibility Documents. These Agreements are as follows:

A Memorandum of Agreement between MPEI and SK C&C

A Memorandum of Agreement between MPEI and WeSolv

A "Teaming Agreement" between MPEI and Election.com Ltd.

A "Teaming Agreement" between MPEI and ePLDT

In sum, each of the four dierent and separate bilateral Agreements is valid and
binding only between MPEI and the other contracting party, leaving the other
"consortium" members total strangers thereto. Under this setup, MPEI dealt
separately with each of the "members," and the latter (WeSolv, SK C&C,
Election.com, and ePLDT) in turn had nothing to do with one another, each dealing
only with MPEI.
Respondents assert that these four Agreements were sucient for the purpose of
enabling the corporations to still qualify (even at that late stage) as a consortium or
joint venture, since the rst two Agreements had allegedly set forth the joint and
several undertakings among the parties, whereas the latter two clarified the parties'
respective roles with regard to the Project, with MPEI being the independent
contractor and Election.com and ePLDT the subcontractors.
Additionally, the use of the phrase "particular contract" in the Comelec's Request for
Proposal (RFP), in connection with the joint and several liabilities of companies in a
joint venture, is taken by them to mean that all the members of the joint venture
need not be solidarily liable for the entire project or joint venture, because it is
sucient that the lead company and the member in charge of a particular contract
or aspect of the joint venture agree to be solidarily liable.
At this point, it must be stressed most vigorously that the submission of the four
bilateral Agreements to Comelec after the end of the bidding process did nothing to
eliminate the grave abuse of discretion it had already committed on April 15, 2003.

Deficiencies Have Not Been "Cured"


In any event, it is also claimed that the automation Contract awarded by Comelec
incorporates all documents executed by the "consortium" members, even if these
documents are not referred to therein. The basis of this assertion appears to be the
passages from Section 1.4 of the Contract, which is reproduced as follows:
"All Contract Documents shall form part of the Contract even if they or any
one of them is not referred to or mentioned in the Contract as forming a
part thereof. Each of the Contract Documents shall be mutually
complementary and explanatory of each other such that what is noted in
one although not shown in the other shall be considered contained in all, and
what is required by any one shall be as binding as if required by all, unless
one item is a correction of the other.
"The intent of the Contract Documents is the proper, satisfactory and timely
execution and completion of the Project, in accordance with the Contract
Documents. Consequently, all items necessary for the proper and timely
execution and completion of the Project shall be deemed included in the

Contract."

Thus, it is argued that whatever perceived deciencies there were in the


supplementary contracts those entered into by MPEI and the other members of
the "consortium" as regards their joint and several undertakings have been
cured. Better still, such deciencies have supposedly been prevented from arising as
a result of the above-quoted provisions, from which it can be immediately
established that each of the members of MPC assumes the same joint and several
liability as the other members.
The foregoing argument is unpersuasive. First, the contract being referred to,
entitled "The Automated Counting and Canvassing Project Contract," is between
Comelec and MPEI, not the alleged consortium, MPC. To repeat, it is MPEI not
MPC that is a party to the Contract. Nowhere in that Contract is there any
mention of a consortium or joint venture, of members thereof, much less of joint
and several liability. Supposedly executed sometime in May 2003, 43 the Contract
bears a notarization date of June 30, 2003, and contains the signature of Willy U. Yu
signing as president of MPEI (not for and on behalf of MPC), along with that of the
Comelec chair. It provides in Section 3.2 that MPEI (not MPC) is to supply the
Equipment and perform the Services under the Contract, in accordance with the
appendices thereof; nothing whatsoever is said about any consortium or joint
venture or partnership.

Second, the portions of Section 1.4 of the Contract reproduced above do not have
the eect of curing (much less preventing) deciencies in the bilateral agreements
entered into by MPEI with the other members of the "consortium," with respect to
their joint and several liabilities. The term "Contract Documents," as used in the
quoted passages of Section 1.4, has a well-dened meaning and actually refers only
to the following documents:

The Contract itself along with its appendices

The Request for Proposal (also known as "Terms of Reference")


issued by the Comelec, including the Tender Inquiries and Bid
Bulletins

The Tender Proposal submitted by MPEI

In other words, the term "Contract Documents" cannot be understood as referring


to or including the MOAs and the Teaming Agreements entered into by MPEI with
SK C&C, WeSolv, Election.com and ePLDT. This much is very clear and admits of no
debate. The attempt to use the provisions of Section 1.4 to shore up the MOAs and
the Teaming Agreements is simply unwarranted.

Third and last, we fail to see how respondents can arrive at the conclusion that,
from the above-quoted provisions, it can be immediately established that each of
the members of MPC assumes the same joint and several liability as the other

members. Earlier, respondents claimed exactly the opposite that the two MOAs
(between MPEI and SK C&C, and between MPEI and WeSolv) had set forth the joint
and several undertakings among the parties; whereas the two Teaming Agreements
claried the parties' respective roles with regard to the Project, with MPEI being the
independent contractor and Election.com and ePLDT the subcontractors.
Obviously, given the dierences in their relationships, their respective liabilities
cannot be the same. Precisely, the very clear terms and stipulations contained in the
MOAs and the Teaming Agreements entered into by MPEI with SK C&C, WeSolv,
Election.com and ePLDT negate the idea that these "members" are on a par with
one another and are, as such, assuming the same joint and several liability.
IHTASa

Moreover, respondents have earlier seized upon the use of the term "particular
contract" in the Comelec's Request for Proposal (RFP), in order to argue that all the
members of the joint venture did not need to be solidarily liable for the entire
project or joint venture. It was sucient that the lead company and the member in
charge of a particular contract or aspect of the joint venture would agree to be
solidarily liable. The glaring lack of consistency leaves us at a loss. Are respondents
trying to establish the same joint and solidary liability among all the "members" or
not?

Enforcement of Liabilities Problematic


Next, it is also maintained that the automation Contract between Comelec and the
MPEI conrms the solidary undertaking of the lead company and the consortium
member concerned for each particular Contract, inasmuch as the position of MPEI
and anyone else performing the services contemplated under the Contract is
described therein as that of an independent contractor.
The Court does not see, however, how this conclusion was arrived at. In the rst
place, the contractual provision being relied upon by respondents is Article 14,
"Independent Contractors," which states: "Nothing contained herein shall be
construed as establishing or creating between the COMELEC and MEGA the
relationship of employee and employer or principal and agent, it being understood
that the position of MEGA and of anyone performing the Services contemplated
under this Contract, is that of an independent contractor."
Obviously, the intent behind the provision was simply to avoid the creation of an
employer-employee or a principal-agent relationship and the complications that it
would produce. Hence, the Article states that the role or position of MPEI, or anyone
else performing on its behalf, is that of an independent contractor. It is obvious to
the Court that respondents are stretching matters too far when they claim that,
because of this provision, the Contract in eect conrms the solidary undertaking of
the lead company and the consortium member concerned for the particular phase of
the project. This assertion is an absolute non sequitur.

Enforcement of Liabilities Under the Civil Code Not Possible


In any event, it is claimed that Comelec may still enforce the liability of the

"consortium" members under the Civil Code provisions on partnership, reasoning


that MPEI et al. represented themselves as partners and members of MPC for
purposes of bidding for the Project. They are, therefore, liable to the Comelec to the
extent that the latter relied upon such representation. Their liability as partners is
solidary with respect to everything chargeable to the partnership under certain
conditions.
The Court has two points to make with respect to this argument. First, it must be
recalled that SK C&C, WeSolv, Election.com and ePLDT never represented
themselves as partners and members of MPC, whether for purposes of bidding or for
something else. It was MPEI alone that represented them to be members of a
"consortium" it supposedly headed. Thus, its acts may not necessarily be held
against the other "members."

Second, this argument of the OSG in its Memorandum 44 might possibly apply in the
absence of a joint venture agreement or some other writing that discloses the
relationship of the "members" with one another. But precisely, this case does not
deal with a situation in which there is nothing in writing to serve as reference,
leaving Comelec to rely on mere representations and therefore justifying a falling
back on the rules on partnership. For, again, the terms and stipulations of the MOAs
entered into by MPEI with SK C&C and WeSolv, as well as the Teaming Agreements
of MPEI with Election.com and ePLDT (copies of which have been furnished the
Comelec) are very clear with respect to the extent and the limitations of the rms'
respective liabilities.
In the case of WeSolv and SK C&C, their MOAs state that their liabilities, while joint
and several with MPEI, are limited only to the particular areas of work wherein their
services are engaged or their products utilized. As for Election.com and ePLDT, their
separate "Teaming Agreements" specically ascribe to them the role of
subcontractor vis-a-vis MPEI as contractor and, based on the terms of their particular
agreements, neither Election.com nor ePLDT is, with MPEI, jointly and severally
liable to Comelec. 45 It follows then that in the instant case, there is no justication
for anyone, much less Comelec, to resort to the rules on partnership and partners'
liabilities.

Eligibility of a Consortium Based on the Collective Qualifications of Its Members


Respondents declare that, for purposes of assessing the eligibility of the bidder, the
members of MPC should be evaluated on a collective basis. Therefore, they contend,
the failure of MPEI to submit nancial statements (on account of its recent
incorporation) should not by itself disqualify MPC, since the other members of the
"consortium" could meet the criteria set out in the RFP.
Thus, according to respondents, the collective nature of the undertaking of the
members of MPC, their contribution of assets and sharing of risks, and the
community of their interest in the performance of the Contract lead to these
reasonable conclusions: (1) that their collective qualifications should be the basis for
evaluating their eligibility; (2) that the sheer enormity of the project renders it
improbable to expect any single entity to be able to comply with all the eligibility

requirements and undertake the project by itself; and (3) that, as argued by the
OSG, the RFP allows bids from manufacturers, suppliers and/or distributors that
have formed themselves into a joint venture, in recognition of the virtual
impossibility of a single entity's ability to respond to the Invitation to Bid.
Additionally, argues the Comelec, the Implementing Rules and Regulations of RA
6957 (the Build-Operate-Transfer Law) as amended by RA 7718 would be
applicable, as proponents of BOT projects usually form joint ventures or
consortiums. Under the IRR, a joint venture/consortium proponent shall be
evaluated based on the individual or the collective experience of the member-rms
of the joint venture/consortium and of the contractors the proponent has engaged
for the project.
Unfortunately, this argument seems to assume that the "collective" nature of the
undertaking of the members of MPC, their contribution of assets and sharing of
risks, and the "community" of their interest in the performance of the Contract
entitle MPC to be treated as a joint venture or consortium; and to be evaluated
accordingly on the basis of the members' collective qualications when, in fact, the
evidence before the Court suggest otherwise.
This Court in Kilosbayan v. Guingona 46 defined joint venture as "an association of
persons or companies jointly undertaking some commercial enterprise; generally, all
contribute assets and share risks. It requires a community of interest in the
performance of the subject matter, a right to direct and govern the policy in
connection therewith, and [a] duty, which may be altered by agreement to share
both in profit and losses."
Going back to the instant case, it should be recalled that the automation Contract
with Comelec was not executed by the "consortium" MPC or by MPEI for and on
behalf of MPC but by MPEI, period. The said Contract contains no mention
whatsoever of any consortium or members thereof. This fact alone seems to
contradict all the suppositions about a joint undertaking that would normally apply
to a joint venture or consortium: that it is a commercial enterprise involving a
community of interest, a sharing of risks, profits and losses, and so on.
Now let us consider the four bilateral Agreements, starting with the Memorandum
of Agreement between MPEI and WeSolv Open Computing, Inc., dated March 5,
2003. The body of the MOA consists of just seven (7) short paragraphs that would
easily fit in one page! It reads as follows:
"1.
The parties agree to cooperate in successfully implementing the
Project in the substance and form as may be most benecial to both parties
and other subcontractors involved in the Project.
"2.
Mega Pacic shall be responsible for any contract negotiations and
signing with the COMELEC and, subject to the latter's approval, agrees to
give WeSolv an opportunity to be present at meetings with the COMELEC
concerning WeSolv's portion of the Project.

"3.
WeSolv shall be jointly and severally liable with Mega Pacic only for
the particular products and/or services supplied by the former for the
Project.

"4.
Each party shall bear its own costs and expenses relative to this
agreement unless otherwise agreed upon by the parties .
"5.
The parties undertake to do all acts and such other things incidental
to, necessary or desirable or the attainment of the objectives and purposes
of this Agreement.
"6.
In the event that the parties fail to agree on the terms and conditions
of the supply of the products and services including but not limited to the
scope of the products and services to be supplied and payment terms,
WeSolv shall cease to be bound by its obligations stated in the
aforementioned paragraphs.
"7.
Any dispute arising from this Agreement shall be settled amicably by
the parties whenever possible. Should the parties be unable to do so, the
parties hereby agree to settle their dispute through arbitration in accordance
with the existing laws of the Republic of the Philippines." (Emphasis
supplied.)

Even shorter is the Memorandum of Agreement between MPEI and SK C&C Co. Ltd.,
dated March 9, 2003, the body of which consists of only six (6) paragraphs, which
we quote:
IDCHTE

"1.
All parties agree to cooperate in achieving the Consortium's objective
of successfully implementing the Project in the substance and form as may
be most benecial to the Consortium members and in accordance with the
demand of the RFP.
"2.
Mega Pacic shall have full powers and authority to represent the
Consortium with the Comelec, and to enter and sign, for and in behalf of its
members any and all agreement/s which may be required in the
implementation of the Project.
"3.
Each of the individual members of the Consortium shall be jointly and
severally liable with the Lead Firm for the particular products and/or services
supplied by such individual member for the project, in accordance with their
respective undertaking or sphere of responsibility.
"4.
Each party shall bear its own costs and expenses relative to this
agreement unless otherwise agreed upon by the parties .
"5.
The parties undertake to do all acts and such other things incidental
to, necessary or desirable for the attainment of the objectives and purposes
of this Agreement.
"6.

Any dispute arising from this Agreement shall be settled amicably by

the parties whenever possible. Should the parties be unable to do so, the
parties hereby agree to settle their dispute through arbitration in accordance
with the existing laws of the Republic of the Philippines." (Emphasis
supplied.)

It will be noted that the two Agreements quoted above are very similar in wording.
Neither of them contains any specics or details as to the exact nature and scope of
the parties' respective undertakings, performances and deliverables under the
Agreement with respect to the automation project. Likewise, the two Agreements
are quite bereft of pesos-and-centavos data as to the amount of investments each
party contributes, its respective share in the revenues and/or prot from the
Contract with Comelec, and so forth all of which are normal for agreements of
this nature. Yet, according to public and private respondents, the participation of
MPEI, WeSolv and SK C&C comprises fully 90 percent of the entire undertaking with
respect to the election automation project, which is worth about P1.3 billion.
As for Election.com and ePLDT, the separate "Teaming Agreements" they entered
into with MPEI for the remaining 10 percent of the entire project undertaking are
ironically much longer and more detailed than the MOAs discussed earlier. Although
specically ascribing to them the role of subcontractor vis-a-vis MPEI as contractor,
these Agreements are, however, completely devoid of any pricing data or payment
terms. Even the appended Schedules supposedly containing prices of goods and
services are shorn of any price data. Again, as mentioned earlier, based on the terms
of their particular Agreements, neither Election.com nor ePLDT with MPEI is
jointly and severally liable to Comelec.
It is dicult to imagine how these bare Agreements especially the rst two
could be implemented in practice; and how a dispute between the parties or a claim
by Comelec against them, for instance, could be resolved without lengthy and
debilitating litigations. Absent any clear-cut statement as to the exact nature and
scope of the parties' respective undertakings, commitments, deliverables and
covenants, one party or another can easily dodge its obligation and deny or contest
its liability under the Agreement; or claim that it is the other party that should have
delivered but failed to.
Likewise, in the absence of denite indicators as to the amount of investments to be
contributed by each party, disbursements for expenses, the parties' respective
shares in the prots and the like, it seems to the Court that this situation could
readily give rise to all kinds of misunderstandings and disagreements over money
matters.
Under such a scenario, it will be extremely dicult for Comelec to enforce the
supposed joint and several liabilities of the members of the "consortium." The Court
is not even mentioning the possibility of a situation arising from a failure of WeSolv
and MPEI to agree on the scope, the terms and the conditions for the supply of the
products and services under the Agreement. In that situation, by virtue of paragraph
6 of its MOA, WeSolv would perforce cease to be bound by its obligations
including its joint and solidary liability with MPEI under the MOA and could
forthwith disengage from the project. Eectively, WeSolv could at any time

unilaterally exit from its MOA with MPEI by simply failing to agree. Where would
that outcome leave MPEI and Comelec?
To the Court, this strange and beguiling arrangement of MPEI with the other
companies does not qualify them to be treated as a consortium or joint venture, at
least of the type that government agencies like the Comelec should be dealing with.
With more reason is it unable to agree to the proposal to evaluate the members of
MPC on a collective basis.
In any event, the MPC members claim to be a joint venture/consortium; and
respondents have consistently been arguing that the IRR for RA 6957, as amended,
should be applied to the instant case in order to allow a collective evaluation of
consortium members. Surprisingly, considering these facts, respondents have not
deemed it necessary for MPC members to comply with Section 5.4 (a) (iii) of the IRR
for RA 6957 as amended.
According to the aforementioned provision, if the project proponent is a joint
venture or consortium, the members or participants thereof are required to submit
a sworn statement that, if awarded the contract, they shall bind themselves to be
jointly, severally and solidarily liable for the project proponent's obligations
thereunder. This provision was supposed to mirror Section 5 of RA 6957, as
amended, which states: "In all cases, a consortium that participates in a bid must
present proof that the members of the consortium have bound themselves jointly
and severally to assume responsibility for any project. The withdrawal of any
member of the consortium prior to the implementation of the project could be a
ground for the cancellation of the contract."
The Court has certainly not seen any joint and several undertaking by the MPC
members that even approximates the tenor of that which is described above. We
fail to see why respondents should invoke the IRR if it is for their benet, but refuse
to comply with it otherwise.
B.

DOST Technical Tests Flunked by the Automated Counting Machines


Let us now move to the second subtopic, which deals with the substantive issue: the
ACM's failure to pass the tests of the Department of Science and Technology
(DOST).
After respondent "consortium" and the other bidder, TIM, had submitted their
respective bids on March 10, 2003, the Comelec's BAC through its Technical
Working Group (TWG) and the DOST evaluated their technical proposals.
Requirements that were highly technical in nature and that required the use of
certain equipment in the evaluation process were referred to the DOST for testing.
The Department reported thus:

TEST RESULTS MATRIX

47

[Technical Evaluation of Automated Counting Machine]

KEY REQUIREMENTS
[QUESTIONS]
YES
1.

MEGA-PACIFIC
CONSORTIUM

NO

YES

TOTAL INFORMATION
MANAGEMENT

NO

Does the machine have


an accuracy rating of at
least 99.995 percent?
At COLD

environmental
conditions

At NORMAL
environmental
conditions
At HARSH
environmental
conditions

2.

Accurately records and


reports the date and time
of the start and end of
counting of ballots per
precinct?

3.

Prints election returns


without any loss of date
during generation of
such reports?

4.

Uninterruptible back-up
power system, that will
engage immediately to
allow operation of at
least 10 minutes after
outage, power surge or
abnormal electrical
occurrences?

5.

Machine reads two


sided ballots in one
pass?
particular
requirement
needs further
verification

6.

Machine can detect


previously counted
ballots and prevent
previously counted
ballots from being
counted more than
once?

Note: This

7.

Stores results of counted

votes by precinct in
Note: This
external (removable)
particular
storage device?
requirement
needs further
verification

8.

Data stored in external

media is encrypted?
particular
requirement
needs further
verification

Note: This

9.

Physical key or similar


device allows, limits, or
restricts operation of the
machine?

10.

CPU speed is at least

400mHz?
Note: This
particular
requirement
needs further
verification

11.

Port to allow use of


dot-matrix printers?

12.

Generates printouts of
the election returns in a
format specified by the
COMELEC?
Generates printouts

In format specified by
COMELEC

13.

Prints election returns


without any loss of data
during generation of
such report?

14.

Generates an audit trail


of the counting
machine, both hard copy
and soft copy?
Hard copy
Soft copy

Note: This
particular
requirement
needs further

verification
15.

Does the

City/Municipal
Canvassing System
consolidate results from
all precincts within it
using the encrypted soft
copy of the data
generated by the
counting machine and
stored on the removable
data storage device?

16.

Does the

City/Municipal
Note: This
Note: This
Canvassing System
particular
particular
consolidate results from
requirement
requirement
all precincts within it
needs further
needs further
using the encrypted soft
verification
verification
copy of the data
generated by the
counting machine and
transmitted through an
electronic transmission
media?

17.

Does the system output


a Zero City/Municipal
Canvass Report, which
is printed on election
day prior to the conduct
of the actual canvass
operation, that shows
that all totals for all the
votes for all the
candidates and other
information, are indeed
zero or null?

18.

Does the system

consolidate results from


all precincts in the
city/municipality using
the data storage device
coming from the
counting machine?

19.

Note: This
particular
requirement
needs further
verification

Note: This
particular
requirement
needs further
verification

Note: This
particular
requirement
needs further
verification

Is the machine 100%

accurate?
Note: This
particular
requirement
needs further

verification
20.

Is the Program able to


detect previously
downloaded precinct
results and prevent these
from being inputted
again into the System?

21.

The System is able to


print the specified
reports and the audit
trail without any loss of
data during generation
of the above-mentioned
reports?
Prints specified reports
Audit Trail

Note: This
particular
requirement
needs further
verification

Note: This
particular
requirement
needs further
verification

22.

Can the result of the

city/municipal
Note: This
consolidation be stored
particular
in a data storage device?
requirement
needs further
verification

23.

Does the system

consolidate results from


all precincts in the
provincial/district/
national using the data
storage device from
different levels of
consolidation?

Note: This
particular
requirement
needs further
verification

24.

Is the system 100%

accurate?
Note: This
particular
requirement
needs further
verification

25.

Is the Program able to


detect previously
downloaded precinct
results and prevent these
from being inputted
again into the System?

Note: This
particular
requirement
needs further
verification

26.

The System is able to


print the specified
reports and the audit
trail without any loss of
data during generation
of the abovementioned
reports?
Prints specified reports
Audit Trail

27.

Note: This
particular
requirement
needs further
verification

Can the results of the

provincial/district/
national consolidation
be stored in a data
storage device?
verification

Note: This
particular
requirement
needs further

According to respondents, it was only after the TWG and the DOST had conducted
their separate tests and submitted their respective reports that the BAC, on the
basis of these reports formulated its comments/recommendations on the bids of the
consortium and TIM.
HaTSDA

The BAC, in its Report dated April 21, 2003, recommended that the Phase II project
involving the acquisition of automated counting machines be awarded to MPEI. It
said:
"After incisive analysis of the technical reports of the DOST and the Technical
Working Group for Phase II Automated Counting Machine, the BAC
considers adaptability to advances in modern technology to ensure an
eective and ecient method, as well as the security and integrity of the
system.
"The results of the evaluation conducted by the TWG and that of the DOST
(14 April 2003 report), would show the apparent advantage of Mega-Pacic
over the other competitor, TIM.
"The BAC further noted that both Mega-Pacic and TIM obtained some 'failed
marks' in the technical evaluation. In general, the 'failed marks' of Total
Information Management as enumerated above aect the counting machine
itself which are material in nature, constituting non-compliance to the RFP.
On the other hand, the 'failed marks' of Mega-Pacic are mere formalities on
certain documentary requirements which the BAC may waive as clearly
indicated in the Invitation to Bid.
"In the DOST test, TIM obtained 12 failed marks and mostly attributed to the
counting machine itself as stated earlier. These are requirements of the RFP

and therefore the BAC cannot disregard the same.


"Mega-Pacic failed in 8 items however these are mostly on the software
which can be corrected by reprogramming the software and therefore can
be readily corrected.
"The BAC verbally inquired from DOST on the status of the retest of the
counting machines of the TIM and was informed that the report will be
forthcoming after the holy week. The BAC was informed that the retest is on
a dierent parameters they're being two dierent machines being tested.
One purposely to test if previously read ballots will be read again and the
other for the other features such as two sided ballots.
"The said machine and the software therefore may not be considered the
same machine and program as submitted in the Technical proposal and
therefore may be considered an enhancement of the original proposal.
"Advance information relayed to the BAC as of 1:40 PM of 15 April 2003 by
Executive Director Ronaldo T. Viloria of DOST is that the result of the test in
the two counting machines of TIM contains substantial errors that may lead
to the failure of these machines based on the specic items of the RFP that
DOST has to certify.

OPENING OF FINANCIAL BIDS


"The BAC on 15 April 2003, after notifying the concerned bidders opened
the financial bids in their presence and the results were as follows:
Mega-Pacific:
Option 1 Outright purchase: Bid Price if Php1,248,949,088.00
Option 2 Lease option:
70% Down payment of cost of hardware or Php642,755,757.07
Remainder payable over 50 months or a total of Php642,755,757.07
Discount rate of 15% p.a. or 1.2532% per month.
Total Number of Automated Counting Machine 1,769 ACMs (Nationwide)
TIM:
Total Bid Price Php1,297,860,560.00
Total Number of Automated Counting Machine 2,272 ACMs
(Mindanao and NCR only)
"Premises considered, it appears that the bid of Mega Pacic is the lowest
calculated responsive bid, and therefore, the Bids and Awards Committee
(BAC) recommends that the Phase II project re Automated Counting
Machine be awarded to Mega Pacific eSolutions, Inc." 48

The BAC, however, also stated on page 4 of its Report: " Based on the 14 April 2003
report (Table 6) of the DOST, it appears that both Mega-Pacic and TIM (Total
Information Management Corporation) failed to meet some of the requirements.
Below is a comparative presentation of the requirements wherein Mega-Pacic or
TIM or both of them failed: . . .." What followed was a list of "key requirements,"
referring to technical requirements, and an indication of which of the two bidders
had failed to meet them.

Failure to Meet the Required Accuracy Rating


The rst of the key requirements was that the counting machines were to have an
accuracy rating of at least 99.9995 percent. The BAC Report indicates that both
Mega Pacific and TIM failed to meet this standard.
The key requirement of accuracy rating happens to be part and parcel of the
Comelec's Request for Proposal (RFP). The RFP, on page 26, even states that the
ballot counting machines and ballot counting software "must have an accuracy
rating of 99.9995% (not merely 99.995%) or better as certied by a reliable
independent testing agency."
When questioned on this matter during the Oral Argument, Commissioner Borra
tried to wash his hands by claiming that the required accuracy rating of 99.9995
percent had been set by a private sector group in tandem with Comelec. He added
that the Commission had merely adopted the accuracy rating as part of the group's
recommended bid requirements, which it had not bothered to amend even after
being advised by DOST that such standard was unachievable. This excuse, however,
does not in any way lessen Comelec's responsibility to adhere to its own published
bidding rules, as well as to see to it that the consortium indeed meets the accuracy
standard. Whichever accuracy rating is the right standard whether 99.995 or
99.9995 percent the fact remains that the machines of the so-called
"consortium" failed to even reach the lesser of the two. On this basis alone, it ought
to have been disqualified and its bid rejected outright.
At this point, the Court stresses that the essence of public bidding is violated by the
practice of requiring very high standards or unrealistic specications that cannot be
met like the 99.9995 percent accuracy rating in this case only to water them
dow n after the bid has been award. Such scheme, which discourages the entry of
prospective bona de bidders, is in fact a sure indication of fraud in the bidding,
designed to eliminate fair competition. Certainly, if no bidder meets the mandatory
requirements, standards or specications, then no award should be made and a
failed bidding declared.

Failure of Software to Detect Previously Downloaded Data


Furthermore, on page 6 of the BAC Report, it appears that the "consortium" as well
as TIM failed to meet another key requirement for the counting machine's
software program to be able to detect previously downloaded precinct results and to
prevent these from being entered again into the counting machine. This same
deciency on the part of both bidders reappears on page 7 of the BAC Report, as a

result of the recurrence of their failure to meet the said key requirement.

That the ability to detect previously downloaded data at dierent canvassing or


consolidation levels is deemed of utmost importance can be seen from the fact that
it is repeated three times in the RFP. On page 30 thereof, we nd the requirement
that the city/municipal canvassing system software must be able to detect
previously downloaded precinct results and prevent these from being "inputted"
again into the system. Again, on page 32 of the RFP, we read that the
provincial/district canvassing system software must be able to detect previously
downloaded city/municipal results and prevent these from being "inputted" again
into the system. And once more, on page 35 of the RFP, we nd the requirement
that the national canvassing system software must be able to detect previously
downloaded provincial/district results and prevent these from being "inputted"
again into the system.
Once again, though, Comelec chose to ignore this crucial deciency, which should
have been a cause for the gravest concern. Come May 2004, unscrupulous persons
may take advantage of and exploit such deciency by repeatedly downloading and
feeding into the computers results favorable to a particular candidate or candidates.
We are thus confronted with the grim prospect of election fraud on a massive scale
by means of just a few key strokes. The marvels and woes of the electronic age!

Inability to Print the Audit Trail


But that grim prospect is not all. The BAC Report, on pages 6 and 7, indicate that
the ACMs of both bidders were unable to print the audit trail without any loss of
data. In the case of MPC, the audit trail system was "not yet incorporated" into its
ACMs.
This particular deciency is signicant, not only to this bidding but to the cause of
free and credible elections. The purpose of requiring audit trails is to enable Comelec
to trace and verify the identities of the ACM operators responsible for data entry and
downloading, as well as the times when the various data were downloaded into the
canvassing system, in order to forestall fraud and to identify the perpetrators.
CTIDcA

Thus, the RFP on page 27 states that the ballot counting machines and ballot
counting software must print an audit trail of all machine operations for
documentation and verication purposes. Furthermore, the audit trail must be
stored on the internal storage device and be available on demand for future printing
and verifying. On pages 3031, the RFP also requires that the city/municipal
canvassing system software be able to print an audit trail of the canvassing
operations, including therein such data as the date and time the canvassing
program was started, the log-in of the authorized users (the identity of the machine
operators), the date and time the canvass data were downloaded into the
canvassing system, and so on and so forth. On page 33 of the RFP, we nd the same
audit trail requirement with respect to the provincial/district canvassing system
software; and again on pages 3536 thereof, the same audit trail requirement with

respect to the national canvassing system software.


That this requirement for printing audit trails is not to be lightly brushed aside by
the BAC or Comelec itself as a mere formality or technicality can be readily gleaned
from the provisions of Section 7 of RA 8436, which authorizes the Commission to
use an automated system for elections.
The said provision which respondents have quoted several times, provides that
ACMs are to possess certain features divided into two classes: those that the statute
itself considers mandatory and other features or capabilities that the law deems
optional. Among those considered mandatory are "provisions for audit trails"!
Section 7 reads as follows: "The System shall contain the following features: (a) use
of appropriate ballots; (b) stand-alone machine which can count votes and an
automated system which can consolidate the results immediately; (c) with
provisions for audit trails; (d) minimum human intervention; and (e) adequate
safeguard/security measures." (Italics and emphases supplied.)
In brief, respondents cannot deny that the provision requiring audit trails is indeed
mandatory, considering the wording of Section 7 of RA 8436. Neither can
Respondent Comelec deny that it has relied on the BAC Report, which indicates that
the machines or the software was decient in that respect. And yet, the
Commission simply disregarded this shortcoming and awarded the Contract to
private respondent, thereby violating the very law it was supposed to implement.
C.

Inadequacy of Post Facto Remedial Measures


Respondents argue that the deciencies relating to the detection of previously
downloaded data, as well as provisions for audit trails, are mere shortcomings or
minor deciencies in software or programming, which can be rectied. Perhaps
Comelec simply relied upon the BAC Report, which states on page 8 thereof that
"Mega Pacic failed in 8 items[;] however these are mostly on the software which
can be corrected by re-programming . . . and therefore can be readily corrected."
The undersigned ponente's questions, some of which were addressed to
Commissioner Borra during the Oral Argument, remain unanswered to this day.
First of all, who made the determination that the eight "fail" marks of Mega Pacic
were on account of the software was it DOST or TWG? How can we be sure these
failures were not the results of machine defects? How was it determined that the
software could actually be re-programmed and thereby rectied? Did a qualied
technical expert read and analyze the source code 49 for the programs and conclude
that these could be saved and remedied? (Such determination cannot be done by
any other means save by the examination and analysis of the source code.)
Who was this qualied technical expert? When did he carry out the study? Did he
prepare a written report on his findings? Or did the Comelec just make a wild guess?
It does not follow that all defects in software programs can be rectied, and the
programs saved. In the information technology sector, it is common knowledge that

there are many badly written programs, with signicant programming errors
written into them; hence it does not make economic sense to try to correct the
programs; instead, programmers simply abandon them and just start from scratch.
There's no telling if any of these programs is unrectiable, unless a qualied
programmer reads the source code.
And if indeed a qualied expert reviewed the source code, did he also determine
how much work would be needed to rectify the programs? And how much time and
money would be spent for that eort? Who would carry out the work? After the
rectication process, who would ascertain and how would it be ascertained that the
programs have indeed been properly rectied, and that they would work properly
thereafter? And of course, the most important question to ask: could the
rectification be done in time for the elections in 2004?
Clearly, none of the respondents bothered to think the matter through. Comelec
simply took the word of the BAC as gospel truth, without even bothering to inquire
from DOST whether it was true that the deciencies noted could possibly be
remedied by re-programming the software. Apparently, Comelec did not care about
the software, but focused only on purchasing the machines.
What really adds to the Court's dismay is the admission made by Commissioner
Borra during the Oral Argument that the software currently being used by Comelec
was merely the "demo" version, inasmuch as the nal version that would actually
be used in the elections was still being developed and had not yet been finalized.
It is not clear when the nal version of the software would be ready for testing and
deployment. It seems to the Court that Comelec is just keeping its ngers crossed
and hoping the nal product would work. Is there a "Plan B" in case it does not?
Who knows? But all these software programs are part and parcel of the bidding and
the Contract awarded to the Consortium. Why is it that the machines are already
being brought in and paid for, when there is as yet no way of knowing if the nal
version of the software would be able to run them properly, as well as canvass and
consolidate the results in the manner required?
The counting machines, as well as the canvassing system, will never work properly
without the correct software programs. There is an old adage that is still valid to this
day: "Garbage in, garbage out." No matter how powerful, advanced and
sophisticated the computers and the servers are, if the software being utilized is
defective or has been compromised, the results will be no better than garbage. And
to think that what is at stake here is the 2004 national elections the very basis of
our democratic life.

Correction of Defects?
To their Memorandum, public respondents proudly appended 19 Certications
issued by DOST declaring that some 285 counting machines had been tested and
had passed the acceptance testing conducted by the Department on October 818,
2003. Among those tested were some machines that had failed previous tests, but
had undergone adjustments and thus passed re-testing.

Unfortunately, the Certications from DOST fail to divulge in what manner and by
what standards or criteria the condition, performance and/or readiness of the
machines were re-evaluated and re-appraised and thereafter given the passing
mark. Apart from that fact, the remedial eorts of respondents were, not
surprisingly, apparently focused again on the machines the hardware. Nothing
was said or done about the software the deciencies as to detection and
prevention of downloading and entering previously downloaded data, as well as the
capability to print an audit trail. No matter how many times the machines were
tested and re-tested, if nothing was done about the programming defects and
deciencies, the same danger of massive electoral fraud remains. As anyone who
has a modicum of knowledge of computers would say, "That's elementary!"

And only last December 5, 2003, an Inq7.net news report quoted the Comelec chair
as saying that the new automated poll system would be used nationwide in May
2004, even as the software for the system remained unnished. It also reported
that a certain Titus Manuel of the Philippine Computer Society, which was helping
Comelec test the hardware and software, said that the software for the counting
still had to be submitted on December 15, while the software for the canvassing
was due in early January.
Even as Comelec continues making payments for the ACMs, we keep asking
ourselves: who is going to ensure that the software would be tested and would
work properly?
At any rate, the re-testing of the machines and/or the 100 percent testing of all
machines (testing of every single unit) would not serve to eradicate the grave abuse
of discretion already committed by Comelec when it awarded the Contract on April
15, 2003, despite the obvious and admitted aws in the bidding process, the failure
of the "winning bidder" to qualify, and the inability of the ACMs and the intended
software to meet the bid requirements and rules.

Comelec's Latest "Assurances" Are Unpersuasive


Even the latest pleadings led by Comelec do not serve to allay our apprehensions.
They merely arm and compound the serious violations of law and gravely abusive
acts it has committed. Let us examine them.
The Resolution issued by this Court on December 9, 2003 required respondents to
inform it as to the number of ACMs delivered and paid for, as well as the total
payment made to date for the purchase thereof. They were likewise instructed to
submit a certication from the DOST attesting to the number of ACMs tested, the
number found to be defective; and "whether the reprogrammed software has been
tested and found to have complied with the requirements under Republic Act No.
8436." 50
In its "Partial Compliance and Manifestation" dated December 29, 2003, Comelec
informed the Court that 1,991 ACMs had already been delivered to the Commission

as of that date. It further certied that it had already paid the supplier the sum of
P849,167,697.41, which corresponded to 1,973 ACM units that had passed the
acceptance testing procedures conducted by the MIRDC-DOST 51 and which had
therefore been accepted by the poll body.
ICTcDA

In the same submission, for the very rst time, Comelec also disclosed to the Court
the following:
"The Automated Counting and Canvassing Project involves not only the
manufacturing of the ACM hardware but also the development of three (3)
types of software, which are intended for use in the following:
1.

Evaluation of Technical Bids

2.

Testing and Acceptance Procedures

3.

Election Day Use."

Purchase of the First Type of Software Without Evaluation


In other words, the rst type of software was to be developed solely for the purpose
of enabling the evaluation of the bidder's technical bid. Comelec explained thus: "In
addition to the presentation of the ACM hardware, the bidders were required to
develop a 'base' software program that will enable the ACM to function properly.
Since the software program utilized during the evaluation of bids is not the actual
software program to be employed on election day, there being two (2) other types
of software program that will still have to be developed and thoroughly tested prior
to actual election day use, defects in the 'base' software that can be readily
corrected by reprogramming are considered minor in nature, and may therefore be
waived."
In short, Comelec claims that it evaluated the bids and made the decision to award
the Contract to the "winning" bidder partly on the basis of the operation of the
ACMs running a "base" software. That software was therefore nothing but a sample
or "demo" software, which would not be the actual one that would be used on
election day. Keeping in mind that the Contract involves the acquisition of not just
the ACMs or the hardware, but also the software that would run them, it is now
even clearer that the Contract was awarded without Comelec having seen, much
less evaluated, the nal product the software that would nally be utilized come
election day. (Not even the "near-final" product, for that matter).
What then was the point of conducting the bidding, when the software that was the
subject of the Contract was still to be created and could conceivably undergo
innumerable changes before being considered as being in nal form? And that is not
all!

No Explanation for Lapses in the Second Type of Software


The second phase, allegedly involving the second type of software, is simply
denominated "Testing and Acceptance Procedures." As best as we can construe,

Comelec is claiming that this second type of software is also to be developed and
delivered by the supplier in connection with the "testing and acceptance" phase of
the acquisition process. The previous pleadings, though including the DOST
reports submitted to this Court have not heretofore mentioned any statement,
allegation or representation to the eect that a particular set of software was to be
developed and/or delivered by the supplier in connection with the testing and
acceptance of delivered ACMs.
What the records do show is that the imported ACMs were subjected to the testing
and acceptance process conducted by the DOST. Since the initial batch delivered
included a high percentage of machines that had failed the tests, Comelec asked the
DOST to conduct a 100 percent testing; that is, to test every single one of the ACMs
delivered. Among the machines tested on October 8 to 18, 2003, were some units
that had failed previous tests but had subsequently been re-tested and had passed.
To repeat, however, until now, there has never been any mention of a second set or
type of software pertaining to the testing and acceptance process.
In any event, apart from making that misplaced and uncorroborated claim, Comelec
in the same submission also professes (in response to the concerns expressed by this
Court) that the reprogrammed software has been tested and found to have
complied with the requirements of RA 8436 . It reasoned thus: "Since the software
program is an inherent element in the automated counting system, the certication
issued by the MIRDC-DOST that one thousand nine hundred seventy-three (1,973)
units passed the acceptance test procedures is an ocial recognition by the MIRDCDOST that the software component of the automated election system, which has
been reprogrammed to comply with the provisions of Republic Act No. 8436 as
prescribed in the Ad Hoc Technical Evaluation Committee's ACM Testing and
Acceptance Manual, has passed the MIRDC-DOST tests."
The facts do not support this sweeping statement of Comelec. A scrutiny of the
MIRDC-DOST letter dated December 15, 2003, 52 which it relied upon, does not
justify its grand conclusion. For clarity's sake, we quote in full the lettercertification, as follows:
"15 December 2003
"HON. RESURRECCION Z. BORRA
Commissioner-in-Charge
Phase II, Modernization Project
Commission on Elections
Intramuros, Manila
Attention: Atty. Jose M. Tolentino, Jr.
Project Director

"Dear Commissioner Borra:


"We are pleased to submit 11 DOST Test Certications representing 11 lots
and covering 158 units of automated counting machines (ACMs) that we
have tested from 0212 December 2003.
"To date, we have tested all the 1,991 units of ACMs, broken down as follow:
(sic)
1st batch 30 units

4th batch 438 units

2nd batch 288 units

5th batch 438 units

3rd batch 414 units

6th batch 383 units

"It should be noted that a total of 18 units have failed the test. Out of these
18 units, only one (1) unit has failed the retest.
"Thank you and we hope you will find everything in order.
"Very truly yours,
"ROLANDO T. VILORIA, CESO III
Executive Director cum
Chairman, DOST-Technical Evaluation Committee"

Even a cursory glance at the foregoing letter shows that it is completely bereft of
anything that would remotely support Comelec's contention that the "software
component of the automated election system . . . has been reprogrammed to
comply with" RA 8436, and "has passed the MIRDC-DOST tests." There is no
mention at all of any software reprogramming. If the MIRDC-DOST had indeed
undertaken the supposed reprogramming and the process turned out to be
successful, that agency would have proudly trumpeted its singular achievement.
How Comelec came to believe that such reprogramming had been undertaken is
unclear. In any event, the Commission is not forthright and candid with the factual
details. If reprogramming has been done, who performed it and when? What
exactly did the process involve? How can we be assured that it was properly
performed? Since the facts attendant to the alleged reprogramming are still
shrouded in mystery, the Court cannot give any weight to Comelec's bare
allegations.
The fact that a total of 1,973 of the machines has ultimately passed the MIRDCDOST tests does not by itself serve as an endorsement of the soundness of the
software program, much less as a proof that it has been reprogrammed. In the rst
place, nothing on record shows that the tests and re-tests conducted on the
machines were intended to address the serious deciencies noted earlier. As a
matter of fact, the MIRDC-DOST letter does not even indicate what kinds of tests or
re-tests were conducted, their exact nature and scope, and the specic objectives

thereof. 53 The absence of relevant supporting documents, combined with the utter
vagueness of the letter, certainly fails to inspire belief or to justify the expansive
confidence displayed by Comelec. In any event, it goes without saying that remedial
measures such as the alleged reprogramming cannot in any way mitigate the grave
abuse of discretion already committed as early as April 15, 2003.

Rationale of Public Bidding Negated by the Third Type of Software


Respondent Comelec tries to assuage this Court's anxiety in these words: " The
reprogrammed software that has already passed the requirements of Republic Act
No. 8436 during the MIRDC-DOST testing and acceptance procedures will require
further customization since the following additional elements, among other things,
will have to be considered before the nal software can be used on election day: 1.
Final Certied List of Candidates . . . 2. Project of Precincts . . . 3. Ocial Ballot
Design and Security Features . . . 4. Encryption, digital certicates and digital
signatures . . . The certied list of candidates for national elective positions will be
nalized on or before 23 January 2004 while the nal list of projects of precincts will
be prepared also on the same date. Once all the above elements are incorporated in
the software program, the Test Certication Group created by the Ad Hoc Technical
Evaluation Committee will conduct meticulous testing of the nal software before
the same can be used on election day. In addition to the testing to be conducted by
said Test Certication Group, the Comelec will conduct mock elections in selected
areas nationwide not only for purposes of public information but also to further test
the nal election day program. Public respondent Comelec, therefore, requests that
it be given up to 16 February 2004 to comply with this requirement."

The foregoing passage shows the imprudent approach adopted by Comelec in the
bidding and acquisition process. The Commission says that before the software can
be utilized on election day, it will require "customization" through addition of data
like the list of candidates, project of precincts, and so on. And inasmuch as such
data will become available only in January 2004 anyway, there is therefore no
perceived need on Comelec's part to rush the supplier into producing the nal (or
near-nal) version of the software before that time. In any case, Comelec argues
that the software needed for the electoral exercise can be continuously developed,
tested, adjusted and perfected, practically all the way up to election day, at the
same time that the Commission is undertaking all the other distinct and diverse
activities pertinent to the elections.
Given such a frame of mind, it is no wonder that Comelec paid little attention to the
counting and canvassing software during the entire bidding process, which took
place in FebruaryMarch 2003. Granted that the software was defective, could not
detect and prevent the re-use of previously downloaded data or produce the audit
trail aside from its other shortcomings nevertheless, all those deficiencies could
still be corrected down the road. At any rate, the software used for bidding purposes
would not be the same one that will be used on election day, so why pay any
attention to its defects? Or to the Comelec's own bidding rules for that matter?
HcTIDC

Clearly, such jumbled ratiocinations completely negate the rationale underlying the
bidding process mandated by law.
At the very outset, the Court has explained that Comelec agrantly violated the
public policy on public biddings (1) by allowing MPC/MPEI to participate in the
bidding even though it was not qualied to do so; and (2) by eventually awarding
the Contract to MPC/MPEI. Now, with the latest explanation given by Comelec, it is
clear that the Commission further desecrated the law on public bidding by
permitting the winning bidder to change and alter the subject of the Contract (the
software), in effect allowing a substantive amendment without public bidding.
This stance is contrary to settled jurisprudence requiring the strict application of
pertinent rules, regulations and guidelines for public bidding for the purpose of
placing each bidder, actual or potential, on the same footing. The essence of public
bidding is, after all, an opportunity for fair competition, and a fair basis for the
precise comparison of bids. In common parlance, public bidding aims to "level the
playing eld." That means each bidder must bid under the same conditions; and be
subject to the same guidelines, requirements and limitations, so that the best oer
or lowest bid may be determined, all other things being equal.
Thus, it is contrary to the very concept of public bidding to permit a variance
between the conditions under which bids are invited and those under which
proposals are submitted and approved; or, as in this case, the conditions under
which the bid is won and those under which the awarded Contract will be complied
with. The substantive amendment of the contract bidded out, without any public
bidding after the bidding process had been concluded is violative of the public
policy on public biddings, as well as the spirit and intent of RA 8436. The whole
point in going through the public bidding exercise was completely lost . The very
rationale of public bidding was totally subverted by the Commission.
From another perspective, the Comelec approach also fails to make sense. Granted
that, before election day, the software would still have to be customized to each
precinct, municipality, city, district, and so on, there still was nothing at all to
prevent Comelec from requiring prospective suppliers/bidders to produce, at the
very start of the bidding process, the "next-to-nal" versions of the software (the
best software the suppliers had) pre-tested and ready to be customized to the
nal list of candidates and project of precincts, among others, and ready to be
deployed thereafter. The satisfaction of such requirement would probably have
provided far better bases for evaluation and selection, as between suppliers, than
the so-called demo software.
Respondents contend that the bidding suppliers' counting machines were previously
used in at least one political exercise with no less than 20 million voters. If so, it
stands to reason that the software used in that past electoral exercise would
probably still be available and, in all likelihood, could have been adopted for use in
this instance. Paying for machines and software of that category (already tried and
proven in actual elections and ready to be adopted for use) would denitely make
more sense than paying the same hundreds of millions of pesos for demo software

and empty promises of usable programs in the future.


But there is still another gut-level reason why the approach taken by Comelec is
reprehensible. It rides on the perilous assumption that nothing would go wrong; and
that, come election day, the Commission and the supplier would have developed,
adjusted and "re-programmed" the software to the point where the automated
system could function as envisioned. But what if such optimistic projection does not
materialize? What if, despite all their herculean eorts, the software now being
hurriedly developed and tested for the automated system performs dismally and
inaccurately or, worse, is hacked and/or manipulated? 54 What then will we do with
all the machines and defective software already paid for in the amount of P849
million of our tax money? Even more important, what will happen to our country in
case of failure of the automation?
The Court cannot grant the plea of Comelec that it be given until February 16, 2004
to be able to submit a "certication relative to the additional elements of the
software that will be customized," because for us to do so would unnecessarily delay
the resolution of this case and would just give the poll body an unwarranted excuse
to postpone the 2004 elections. On the other hand, because such certication will
not cure the gravely abusive actions complained of by petitioners, it will be utterly
useless.
Is this Court being overly pessimistic and perhaps even engaging in speculation?
Hardly. Rather, the Court holds that Comelec should not have gambled on the
unrealistic optimism that the supplier's software development eorts would turn
out well. The Commission should have adopted a much more prudent and judicious
approach to ensure the delivery of tried and tested software, and readied alternative
courses of action in case of failure. Considering that the nation's future is at stake
here, it should have done no less.

Epilogue
Once again, the Court nds itself at the crossroads of our nation's history. At stake
in this controversy is not just the business of a computer supplier, or a questionable
proclamation by Comelec of one or more public ocials. Neither is it about whether
this country should switch from the manual to the automated system of counting
and canvassing votes. At its core is the ability and capacity of the Commission on
Elections to perform properly, legally and prudently its legal mandate to implement
the transition from manual to automated elections.
Unfortunately, Comelec has failed to measure up to this historic task. As stated at
the start of this Decision, Comelec has not merely gravely abused its discretion in
awarding the Contract for the automation of the counting and canvassing of the
ballots. It has also put at grave risk the holding of credible and peaceful elections by
shoddily accepting electronic hardware and software that admittedly failed to pass
legally mandated technical requirements. Inadequate as they are, the remedies it
proffers post facto do not cure the grave abuse of discretion it already committed (1)
on April 15, 2003, when it illegally made the award; and (2) "sometime" in May
2003 when it executed the Contract for the purchase of defective machines and

non-existent software from a non-eligible bidder.


For these reasons, the Court nds it totally unacceptable and unconscionable to
place its imprimatur on this void and illegal transaction that seriously endangers the
breakdown of our electoral system. For this Court to cop-out and to close its eyes to
these illegal transactions, while convenient, would be to abandon its constitutional
duty of safeguarding public interest.
As a necessary consequence of such nullity and illegality, the purchase of the
machines and all appurtenances thereto including the still-to-be-produced (or in
Comelec's words, to be "reprogrammed") software, as well as all the payments
made therefor, have no basis whatsoever in law. The public funds expended
pursuant to the void Resolution and Contract must therefore be recovered from the
payees and/or from the persons who made possible the illegal disbursements,
without prejudice to possible criminal prosecutions against them.
Furthermore, Comelec and its ocials concerned must bear full responsibility for
the failed bidding and award, and held accountable for the electoral mess wrought
by their grave abuse of discretion in the performance of their functions. The State,
of course, is not bound by the mistakes and illegalities of its agents and servants.
True, our country needs to transcend our slow, manual and archaic electoral process.
But before it can do so, it must rst have a diligent and competent electoral agency
that can properly and prudently implement a well-conceived automated election
system.
At bottom, before the country can hope to have a speedy and fraud-free automated
election, it must rst be able to procure the proper computerized hardware and
software legally, based on a transparent and valid system of public bidding. As in
any democratic system, the ultimate goal of automating elections must be achieved
by a legal, valid and above-board process of acquiring the necessary tools and skills
therefor. Though the Philippines needs an automated electoral process, it cannot
accept just any system shoved into its bosom through improper and illegal methods.
As the saying goes, the end never justies the means. Penumbral contracting will
not produce enlightened results.

WHEREFORE, the Petition is GRANTED. The Court hereby declares NULL and VOID
Comelec Resolution No. 6074 awarding the contract for Phase II of the CAES to
Mega Pacic Consortium (MPC). Also declared null and void is the subject Contract
executed between Comelec and Mega Pacic eSolutions (MPEI). 55 Comelec is
further ORDERED to refrain from implementing any other contract or agreement
entered into with regard to this project.
Let a copy of this Decision be furnished the Oce of the Ombudsman which shall
determine the criminal liability, if any, of the public ocials (and conspiring private
individuals, if any) involved in the subject Resolution and Contract. Let the Oce of
the Solicitor General also take measures to protect the government and vindicate

public interest from the ill eects of the illegal disbursements of public funds made
by reason of the void Resolution and Contract.
SO ORDERED.

Carpio, Austria-Martinez, Carpio Morales and Callejo, Sr., JJ ., concur.


Davide, Jr., C.J ., Vitug and Ynares-Santiago, JJ ., see separate opinion.
Puno, J ., concur, and also joins the opinion of J . Ynares-Santiago.
Quisumbing, J ., concurs in the result.
Sandoval-Gutierrez, J ., see concurring opinion.
Corona and Azcuna, JJ ., join the dissent of J . Tinga.
Tinga, J ., please see dissenting opinion.

Separate Opinions
DAVIDE, JR., C.J.:
I join Mr. Justice Jose C. Vitug in his separate opinion and strongly recommend, for
the reasons therein stated, that this case be DISMISSED.
Let me further add other compelling reasons which strengthen my view that this
case should be dismissed.
The Court did not issue a Temporary Restraining Order in this case. This showed an
initial nding that on its face the allegations in the petition were insucient to
justify or warrant the grant of a temporary restraining order. In the meantime then
the parties were not barred from performing their respective obligations under the
contract. As of today, the COMELEC has already paid a large portion of its contracted
obligation and the private respondent has delivered the contracted equipment for
automation. It is to be reasonably presumed that during the same period the
COMELEC focused its attention, time and resources toward the full and successful
implementation of the comprehensive Automated Election System for the May
2004 elections. Setting aside the contract in question at this late hour may have
unsettling, disturbing and even destabilizing eect. For one, it will leave the
COMELEC insucient time to prepare for a non-automated electoral process, i.e.,
the manual process, which would necessarily include the acquisition of the security
paper and the purchase of a "dandy roll" to watermark the ballot paper, printing of
other election forms, as well as the bidding and acquisition of the ballot boxes. For
another, the law on Automated Election System (R.A. 8436) and Executive Order
No. 172 (24 January 2003) which allocated the sum of P2.5 Billion, and Executive
Order No. 175 (10 February 2003) which allocated the additional sum of P500
Million for the implementation in the May 2004 elections of the Automated Election

System would be put to naught as there is absolutely no more time to conduct a rebidding.
Finally, there is no suggestion that graft and corruption attended the bidding
process, or that the contract price is excessive or unreasonable. All that the
petitioners claim is that "the bidding and the award process was fatally awed. The
public respondents acted without or excess of its jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction when it [sic] awarded the
project." It may be precipitate for this Court to declare void the contract in question.
VITUG, J.:
While the Supreme Court exercises original jurisdiction over petitions for certiorari
and prohibition (along with petitions for prohibition, mandamus, quo warranto,
habeas corpus and injunction), that jurisdiction, however, is not exclusive. 1 A direct
recourse to the Supreme Court, for the issuance of these writs, in disregard of the
rule on hierarchy, should be appropriate only when, besides the attendance of
clearly exceptional and compelling reasons clearly set out in the petition, 2 there are
no contentious factual assertions of the parties that need to be threshed out before
any objective and definitive conclusion can be reached.
What appears to be a signicant issue in the instant petition is the legality of
respondent COMELEC's award of the contract relative to the procurement of
automated counting machines to respondent Mega Pacic under alleged
questionable circumstances. The Supreme Court is not a trier of facts; indeed, a
review of the evidence is not the proper oce of a petition for certiorari, prohibition
or mandamus. 3 These proceedings are availed of only when there can be no other
plain, adequate and speedy remedy in the ordinary course of law.
In certiorari or prohibition, issues aecting the jurisdiction of the tribunal, board and
ocers involved may be resolved solely on the basis of undisputed facts. 4 The
enormity of the factual disputes in the instant petition, among which include the
eligibility of Mega Pacic to participate in the bidding process, the veracity and
eectivity of the testing, and the technical evaluation conducted by the Department
of Science and Technology (DOST) on the automated counting machine of the
bidders, would essentially require an extensive inquiry into the facts. An insistence
that it be resolved despite unsettled factual points would be inadequate to allow an
intrusion by the Court. 5
The Supreme Court is not expected, whenever one is simply minded, to pass
judgment on an action of a government agency upon which authority, as well as
corresponding duty, devolves. The Court neither controls nor supervises the exercise
of authority and the discharge of function by another government oce. If it were
otherwise, the act of governance and the responsibility that thereto attaches are
then eectively shifted from where they belong over to where they should not be.
The Court is bound merely to construe and to apply the law, regardless of its
wisdom and salutariness, and to strike it down only when constitutional
proscriptions are disregarded. It is what the fundamental law mandates, and it is
what the Court must do.

The electoral process, it is true, should be of paramount and immediate concern to


every Filipino. It is also probably true that the computerization/automation of our
electoral process, as well as the progress that it brings, is just as important.
Nevertheless, it could also be unwise for the Court, for that sake alone, to
precipitately take on the case; after all, we have been without it for decades. The
opinions expressed by my colleagues, collectively and individually, should indeed
give compelling reasons for the Commission on Elections to perhaps take notice
and, on its own, to forthwith reexamine the assailed bidding process.
Accordingly, at this stage, I am constrained to vote against the Court's taking
cognizance of the case.
YNARES-SANTIAGO, J., concurring:
I am mindful of our ruling, expressed only recently in Makalintal v. COMELEC, 1 that
the Commission on Elections ("COMELEC"), being an independent constitutional
body, ought to be given considerable latitude in the discharge of its functions. The
key point to be remembered is the fundamental objective which all of the
COMELEC's actuations should be destined to achieve, i.e. the accomplishment of
free, orderly and honest elections. If the means adopted by the COMELEC run
clearly contrary to its fundamental objective, it is our right more, our duty to
nullify the COMELEC's actuations.
Our experience during the May 11, 1998 regular elections held in the Autonomous
Region in Muslim Mindanao (ARMM) 2 should have taught us that the Philippines
may be unprepared for the use of automated counting machines. Whereas it is
successfully adopted in many countries around the world, this sophisticated
technological advancement seems beyond the reach of the Philippines at this stage
in our country's development. If we persist in attempting the use thereof, even if
as in this case such machines do not meet the standards of accuracy that our own
laws demand, we would be tampering with the conduct of free, orderly and honest
elections, and thus we would be distorting the will of the electorate.
As pointed out by the Honorable Justice Jose C. Vitug in his Separate Opinion, this
Court is not a trier of facts, and a review of the technical evidence is not the proper
oce of a petition for certiorari, prohibition and mandamus. 3 The questions of law,
however, and the questions of the COMELEC's grave abuse of discretion, are
squarely within the purview of this Court in this case.
In my opinion, there are three main grounds which warrant granting the instant
petition. First, I believe that the special circumstances availing in this case warrant
the relaxation of the rule on exhaustion of administrative remedies. Second, the
COMELEC gravely abused its discretion when it clearly contracted with a noneligible entity, and therefore the contract for the second phase of the automated
counting system is null and void. Finally, even assuming the eligibility of the other
contracting party, the COMELEC gravely abused its discretion when it changed the
technical requirements for accuracy of the automated machines and software,
which warrants the nullification of the contract.

I.

On Non-Exhaustion of Administrative Remedies


A long line of cases establishes the basic rule that regular courts of justice should not
interfere in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special
technical knowledge and training of such agencies. 4 The underlying principle of the
rule on exhaustion of administrative remedies rests on the presumption that when
the administrative body, or grievance machinery, is aorded a chance to pass upon
the matter, it will decide the same correctly. 5

The principle of exhaustion of administrative remedies is not an ironclad rule. This


doctrine is relative, and its exibility is called upon by the peculiarity and
uniqueness of the factual and circumstantial settings of a case. 6
In the past, the principle has been disregarded when (1) there is a violation of due
process; 7 (2) the issue involved is purely a legal question; 8 (3) the administrative
action is patently illegal amounting to lack or excess of jurisdiction; 9 (4) there is
estoppel on the part of the administrative agency concerned; 10 (5) there is
irreparable injury; 11 (6) the respondent is a department secretary whose acts, as an
alter ego of the President, bear the implied and assumed approval of the latter; 12
(7) to require exhaustion of administrative remedies would be unreasonable; 13 (8)
it would amount to a nullication of a claim; 14 (9) the subject matter is a private
land in land case proceedings; 15 (10) the rule does not provide a plain, speedy and
adequate remedy; and (11) there are circumstances indicating the urgency of
judicial intervention, 16 as when public interest is involved. 17
There is no plainer example of a case in which the issues are of transcendental
importance. The preservation of an honest, upright system of electing our nation's
public ocers bears urgent public interest considerations. More, as I will discuss
below, the administrative action involved here is patently illegal, amounting to lack
or excess of jurisdiction.
These two reasons warrant the relaxation of the rule of exhaustion of
administrative remedies.
II.

On the Non-Eligibility of Private Respondents.


I am not persuaded by the argument that the individual members of the so-called
"Consortium" bound themselves to perform particular obligations under individual
agreements executed with MPEI, and that these separate agreements suce to
constitute an eligible "joint venture" under the Request For Proposal ("RFP")
promulgated by the COMELEC. The fact that WeSolv, SK C & C, Election.Com and
ePLDT bound themselves to MPEI does not mean that a joint venture was executed.
These individual entities are merely the sub-contractors of MPEI, and their liability

for any breach is only to MPEI.


Under the RFP, a "joint venture" has been given a very strict denition. To be
eligible to submit a bid, the following criteria must be met:
Manufacturers, suppliers and/or distributors forming themselves into a joint
venture, that intend to be jointly and severally liable for a particular contract,
provided Filipino ownership thereof shall be 60%. 18 (emphasis supplied)

There are therefore three qualications for eligibility under the RFP. First, the
manufacturers, suppliers and/or distributors must expressly form themselves into a
joint venture. Second, this joint venture must demonstrate an intent that the
individual members be jointly and severally liable for a particular contract. Finally,
the Filipino ownership of the joint venture must be 60%.
Whereas the RFP does not require the members of the joint venture to execute a
single document to constitute the joint venture, there must be sucient evidence
that such a joint venture was indeed formed, whether this evidence is a single
document, or a multiplicity of documents. It is plain that the "joint venture" must
be formed as a single entity, responsible for the entirety of the contract, even if
separate agreements among the individual members of the joint venture would lay
out the specic tenor of their obligations to each other; otherwise, it would be
impossible to evaluate the nationality of this joint venture, which nationality is the
third requirement for eligibility.
Conspicuously absent from the records of this case are documents that demonstrate
that the individual members of the so-called "Consortium" actually formed or
constituted themselves into a joint venture. Jurisprudence discussing a joint venture
lays out the rule that such an entity "presupposes generally a parity of standing
between the joint co-ventures or partners, in which each party has an equal
proprietary interest in the capital or property contributed, and where each party
exercises equal rights in the conduct of the business." 19
I n Aurbach, et al. v. Sanitary Wares Manufacturing Corporation, et al . , 20 we
expressed the view that a joint venture may be likened to a partnership, thus:
The legal concept of a joint venture is of common law origin. It has no
precise legal denition, but it has been generally understood to mean an
organization formed for some temporary purpose. It is hardly
distinguishable from the partnership, since their elements are similar
community of interest in the business, sharing of prots and losses, and a
mutual right of control. The main distinction cited by most opinions in
common law jurisdiction is that the partnership contemplates a general
business with some degree of continuity, while the joint venture is formed
for the execution of a single transaction, and is thus of a temporary nature.
This observation is not entirely accurate in this jurisdiction, since under the
Civil Code, a partnership may be particular or universal, and a particular
partnership may have for its object a specic undertaking. It would seem
therefore that under Philippine law, a joint venture is a form of partnership
and should thus be governed by the law of partnerships. The Supreme

Court has however recognized a distinction between these two business


forms, and has held that although a corporation cannot enter into a
partnership contract, it may however engage in a joint venture with others.
(citations omitted)

In other words, the legal concept of a "joint venture", since akin to a partnership,
involves a common agreement in which all individuals and entities party to the
joint venture bind themselves, jointly, to perform a common undertaking or
undertakings. The denition of a "joint venture" under the RFP is in line with this
legal definition.
There is nothing in the records that would indicate that any such entity was created
by the individual members of the so-called "Consortium". In the absence of any
evidence, we must conclude that no such agreement exists.
Since we are unable to conclude that the "joint venture" has any legal existence, it
is impossible to evaluate whether or not the third criterion setting out the
nationality requirement for an eligible joint venture has been met by the socalled "Consortium". The so-called "Consortium", therefore, has failed to meet the
first and third criteria.
There is also a gross failure on the part of the private respondents to meet the
second criterion. There is a marked absence of intent that the individual members of
the so-called "Consortium" be jointly and severally liable for the contract.
The records contain particular individual agreements that MPEI entered into with
other entities. A perusal of the individual agreements that MPEI entered into with
the other entities readily demonstrates that it was always the intent of MPEI to
have direct and primary liability for any breach of the Contract with COMELEC.
Part of the records are so-called "Teaming Agreements" which MPEI entered into
with Election.Com Ltd. 21 and ePLDT Inc., 22 both dated March 3, 2003. An
examination of the language of these "Teaming Agreements" would once more
demonstrate that it was MPEI, and MPEI alone, which intended to bid for the
Contract with the COMELEC, and intended to be bound thereby. First, both these
"Teaming Agreements" contain stipulations designating MPEI as the "Contractor"
and the other party as merely the "Subcontractor". 23 Each of these "Teaming
Agreements" acknowledges that the agreements were entered into in the
expectation that COMELEC would award the Contract to the Contractor, MPEI. 24
Absent from either of these "Teaming Agreements" is any reference to the
possibility that COMELEC would contract with the so-called "Consortium".
Moreover, both of these agreements state that the obligation of the Subcontractor
was the delivery of equipment or provision of services to the Contractor, MPEI, 25
and indeed expressly limit the Subcontractor's role in the entire project to be merely
that of a provider of the equipment and services. 26 Liability for failure to perform
these obligations is expressly limited. The Subcontractors would be liable only to
MPEI, and not to the COMELEC.

Also part of the records is the "Memorandum of Agreement" entered into between
MPEI and WeSolv Open Computing, Inc. 27 The very rst preambulatory clause
thereof reads:
WHEREAS, pursuant to an open competitive bidding to be conducted by the
Commission on Elections ("COMELEC") of the Philippine Government, Mega
Pacific intends to submit a bid for Phase II: Automated Counting and
Canvassing System (the "Project") of the Modernization Program of the
Philippine Electoral System; 28 (emphasis supplied)

"Mega Pacic", the entity referred to, is dened as "Mega Pacic eSolutions, Inc." 29
and not the so-called "Consortium". In other words, MPEI and WeSolv understood
that MPEI would be bidding for the Contract, and MPEI alone would be contracting
with COMELEC.
The expression of "joint and several liability" of "WeSolv" does not transform the
agreement into a joint venture. There is a clear limit to the extent of this liability.
As plainly stated in the Memorandum of Agreement:
WeSolv shall be jointly and severally liable with Mega Pacic only for the
particular products and/or services supplied by the former for the Project.
30

The very rst reference to any so-called "Consortium" is in the "Memorandum of


Agreement" dated March 9, 2003, between MPEI and SK C & C, "a corporation
organized and existing under and by virtue of the laws of the Republic of Korea". 31
The initial preambulatory clause reads:

WHEREAS, pursuant to an open competitive bidding to be conducted by the


Commission on Elections ("COMELEC") of the Philippine Government, the
Mega Pacic Consortium shall bid for Phase II: Automated Counting and
Canvassing System (the "Project") of the Modernization Program of the
Philippine Electoral System; . . . 32

That Memorandum of Agreement also contains the following clause:


Each of the individual members of the Consortium shall be jointly and
severally liable with the Lead Firm for the particular products and/or services
supplied by such individual member for the project, in accordance with their
respective undertaking or sphere of responsibility. 33

Three things are significant about this Memorandum of Agreement.

First, whereas there is reference to a "Consortium", the specic composition of the


"Consortium" is not specied. Thus, the records are bereft of any evidence that
would demonstrate which entities, if any, would be parties to this "Consortium". It
is therefore impossible to make a factual determination as regards whether the
"Consortium" would meet the strict requirements for a qualied bidder outlined in
the RFP.

Second, the Memorandum of Agreement specically limits the liability of each


member of this "Consortium" only in accordance with their respective undertaking
or sphere of responsibility. Thus, the "joint and several" liability of each member of
the Consortium would again be only within a very limited application, i.e., only to
the extent of its individual undertaking.
Third, and most signicant, the Memorandum of Agreement is only between MPEI
and SK C & C. There is no evidence of any similar Memorandum of Agreement,
referring to a Consortium, entered into between MPEI and any other entity. The
joint and several liability referred to in the quoted paragraph, therefore, would
pertain only to MPEI and SK C & C, since these are the only two parties to this
particular contract, and not to any other member of the Consortium, if any. In the
absence of evidence, it is impossible to conclude that there are other members of
the Consortium, and equally impossible to determine the extent of their liability, if
any.
In sum, therefore, there is a conspicuous dearth of evidence to demonstrate that
there was, indeed, a Consortium; if there was a Consortium, the specic
composition thereof; and, if there was a Consortium, the liability of its individual
members, for breach of the contract to COMELEC.
All this demonstrates that, even if the other contracting party were the so-called
"Consortium", this "Consortium" would be ineligible to enter into the contract with
the COMELEC.
However, it is plain that the COMELEC entered into a contract not with this
"Consortium", but rather with MPEI an entity which, it is acknowledged, would
per se be ineligible to bid. A plain reading of the contract denominates the parties to
be:
COMMISSION ON ELECTIONS, the government institution charged with the
enforcement and administration of laws relative to the conduct of elections,
with principal oce address at Postigo Street, Intramuros, Manila,
Philippines, represented in this act by its Chairman, Hon. Benjamin S. Abalos,
hereinafter referred to as the "COMELEC".
and
MEGA PACIFIC eSOLUTIONS, INC., a corporation duly organized and existing
under and by virtue of the laws of the Republic of the Philippines, with
principal oce address at Suite 707, Tower One & Exchange Plaza, Ayala
Triangle, Ayala Avenue, Makati City, Philippines, represented in this act by its
President, Willy U. Yu, hereinafter referred to as "MEGA". 34
The "Contract Documents" referred to are the following:
1.4.

Contract Documents

The following documents, referred to collectively as the Contract


Documents, are hereby incorporated and made integral parts of the

Contract:
(1)
(2)
(3)

this Contract together with its Appendices;


the Request for Proposal (also known as "Terms of Reference")
issued by the Comelec including Tender Inquiries and Bid Bulletins;
Tender Proposal as submitted by Mega.

All Contract Documents shall form part of the Contract even if they or any
one of them is not referred to or mentioned in the Contract as forming a
part thereof. Each of the Contract Documents shall be mutually
complementary and explanatory of each other such that what is noted in
one although not shown in the other shall be as binding as if required by all,
unless one item is a correction of the other.
The Intent of the Contract Documents is the proper, satisfactory, and timely
execution and completion of the Project in accordance with the Contract
Documents. Consequently, all items necessary for the proper and timely
execution and completion of the Project shall be deemed included in the
Contract.

Agai n , conspicuously absent from this contractual denition of a "Contract


Document" is any mention of any subsidiary agreement between a purported
"Consortium" and the COMELEC. Indeed, a plain reading of the denition of the
"Contract Document" would indicate that, insofar as the parties to the contract
were concerned, the bid itself was submitted by MPEI and not the "Consortium".
Moreover, the denition of "Contract Document" could easily have integrated the
subsidiary agreements, incorporating them by reference, in the same way that the
"Request for Proposal" and "Tender Proposal" were incorporated by reference.
These contracts were not even appended as annexes to the main contract. The
appendices to the main contract are: "Products and Services to be Acquired from,
and Provided by, Mega Pacic Solutions, Inc., and Technical Specications"; 35
"Ballot Counting System"; 36 "Canvassing of Votes System/Software"; 37 "Project
Management Approach"; 38 "Implementation and Roll-Out Plan"; 39 "Timelines"; 40
"List of Goods"; 41 "List of Documentation"; 42 "Training Summary"; 43 "List of
Services"; 44 "Schedule of Communication/Information Dissemination Materials"; 45
and "Global Price Summary". 46
Moreover, an examination of the various obligations in the contract readily
demonstrates that all those obligations pertain only to either COMELEC or MPEI.
None of the other entities under the so-called "Consortium" has any obligations to
COMELEC under the Contract. It is apparent that only COMELEC and MPEI are
bound thereunder. The argument that the "Consortium", as an entity, bound itself
to perform particular obligations under the contract is easily debunked by an
examination of the contract itself.
Various other documents also support the fact that only MPEI, not any so-called

"Consortium", contracted with COMELEC. For instance, there is the Secretary's


Certicate, dated March 5, 2003, executed by Enrique T. Tansipek, the Corporate
Secretary of MPEI, which attests to the corporate authority given by the MPEI board
to enable MPEI (not the so-called "Consortium") to participate in the bidding, in its
own behalf, and not in behalf of any so-called "Consortium". 47 There are various
"Adavits of Undertaking" dated March 7, 2003, executed by Willy U. Yu, President
of MPEI, which attest that (1) M P E I (not any so-called "Consortium") will be
participating in the bid for the contract; and (2) the other entities, such as WeSolv,
Oracle, and Election.com Ltd., are referred to merely as the "foreign suppliers", 48
a n d not as joint venture partners, or as individual members of a so-called
"Consortium".
III.

On the Failure of Private Respondents to Meet the Requirements for Eligible Bids.
Finally, even if we were to concede that the COMELEC contracted with an eligible
entity, it appears that the counting machines and ballot-counting software
submitted by the so-called "Consortium" simply failed to meet the accuracy rating
required by the RFP.
In the RFP, the COMELEC required that both the counting machines and ballotcounting software should have an accuracy rating of 99.9995 or better.
After the bids were submitted, the accuracy criteria were suddenly changed to
99.995 percent.
Only very recently, in the Piatco 49 case, we held:
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.

It is inherent in public biddings that there shall be a fair competition among the
bidders. The specications in such biddings provide the common ground or basis for
the bidders. The specications should, accordingly, operate equally or
indiscriminately upon all bidders. 50
To change the eligibility requirements mid-stream, and after bids had already been
submitted, completely subverts the integrity of the bidding process and warrants
the nullication of the award of the contract, whether the other contracting party
was MPEI or the so-called "Consortium".

In sum, the serious defects in the bidding process indicate a grave abuse of
discretion on the part of public respondent COMELEC, which seemed to display a
marked bias in favor of awarding the contract to the private respondent MPEI or the
so-called "Consortium". Whereas automated counting might greatly speed up our
election process, we should take great pains to make certain that the machines used
are not awed. To my mind, the subversion of the bidding process already makes
the automation of the 2004 elections inherently suspect, which will have a
potential negative eect on the integrity of the results. At this stage in our nation's
history, we should all strive toward restoring the public's faith in the stability of our
government institutions, and the use of suspect machines in counting votes cannot
but subvert that faith.

IN VIEW WHEREOF, I CONCUR with the majority opinion and vote to GRANT the
petition, specically, to: (1) declare NULL and VOID Resolution No. 6074 of the
COMELEC awarding the contract for the second phase of the automated counting
and canvassing system of the Modernization Program of the Philippine Electoral
System to either Mega Pacic eSolutions, Inc. or the Mega Pacic Consortium; (2)
PROHIBIT the COMELEC from implementing any contract entered into with either
Mega Pacic eSolutions, Inc. or the Mega Pacic Consortium for the second phase of
the automated counting and canvassing system of the Modernization Program of
the Philippine Electoral System; and (3) COMPEL the COMELEC to conduct a rebidding of the second phase of the automated counting and canvassing system of
the Modernization Program of the Philippine Electoral System.
SANDOVAL-GUTIERREZ, J., concurring:
"Hasty and adventurous schemes are at rst view attering, in execution
difficult, and in the issue disastrous ." 1

Election is indeed the bedrock of every democratic institution. Thus, when it comes
to automating the election system, the standards must be as high as the stakes. The
government and the suppliers of the voting machines carry the burden of proof that
the machines are working correctly and that the election results will be accurate. All
of democracy is founded on the idea that the loser of an election understands that
he lost fair and square and that the election represents the will of the electorate. If
we get into elections with outcomes that people do not believe in, where the
candidates challenge the integrity of the machine, people are going to feel less and
less confident in the results of elections run on these machines. 2
The petition before us raises a number of serious concerns about the viability of the
automated voting machines intended for the May 2004 Elections. The matter
strikes at the heart of our democratic system. If the system fails, there again looms
a threat to our country's stability. More than any other time, what we need today is
a system that will bolster the legitimacy of our government.
With the foregoing premise, I vote to grant the petition and declare Comelec
Resolution No. 6074 null and void.

The facts are undisputed.


On December 22, 1997, Congress enacted Republic Act No. 8436 3 authorizing the
Commission on Election (COMELEC) to use an automated election system for the
process of voting, counting of votes and consolidating results of the national and
local elections. It mandated the COMELEC to acquire automated counting machines
(ACM), computer equipment, devices and materials. 4
Accordingly, the COMELEC issued an Invitation to Bid on January 28, 2003, inviting
interested bidders to apply for eligibility and to bid for the supply and delivery of the
ACM with an estimated budget of P2,500,000,000.00. 5
On February 17, 2003, the COMELEC released to the public the "Request for
Proposal" providing that bids from manufacturers, suppliers and/or distributors
forming themselves into a joint venture may be entertained as long as the Filipino
ownership thereof shall be at least 60%. For this purpose, a joint venture was
dened as "a group of two (2) or more manufacturers, suppliers and/or distributors
that intend to be jointly and severally responsible or liable for the contract." 6
The next day, February 18, 2003, the Bids and Awards Committee (BAC) convened
a pre-bid conference and gave prospective bidders until March 10, 2003 to submit
their bid proposals.
On March 10, 2003, Mega Pacic Consortium ( MP CONSORTIUM ) submitted its bid.
Enclosed in it bidding documents was a letter dated March 7, 2003 expressing that
Mega Pacic eSolutions, Inc. ( MPEI ), Election.Com, Ltd. (Election.Com ), WeSolv
Open Computing, Inc. (WeSolv) , SK CeC, ePLDT and Oracle System (Philippines),
Inc. (Oracle) have agreed to form a consortium to bid for the Project. In the same
letter, MPEI, through its President, made known its role as the lead company and
proponent of MP CONSORTIUM.
Of more than 57 bidders, the BAC found MP CONSORTIUM and Total Information
Management Corporation (TIMC) eligible to bid. Their bid proposals were thereafter
referred to the BAC's Technical Working Group (TWG) and the Department of
Science and Technology (DOST) for technical evaluation.
Thereafter, the TWG prepared a Technical Evaluation Form listing the minimum
requirements for the Project with columns to indicate whether the bidder "passed"
or "failed" to meet certain requirements. Requirements that were highly technical
in nature and called for technical equipment for evaluation were referred to the
DOST.
Based on the ndings of the TWG and the DOST, the BAC submitted a Report 7
noting that both MP CONSORTIUM and TIMC obtained some failed marks in the
technical evaluation. Regardless thereof, the COMELEC en banc, in Resolution No.
6074 awarded the Project to MP CONSORTIUM on April 15, 2003. It publicized this
Resolution on May 16, 2003.
Unsatised with the COMELEC's bidding process, ve individuals and entities

(including petitioner Information Technology Foundation of the Philippines) wrote a


letter dated May 29, 2003 to COMELEC Chairman Benjamin Abalos, Sr. protesting
the award of the contract to MP CONSORTIUM. They cited MP CONSORTIUM's noncompliance with eligibility as well as technical requirements.
On June 6, 2003, COMELEC Chairman Abalos rejected the protest and declared that
the award "would stand up to strictest scrutiny."
Undaunted, Information Technology Foundation of the Philippines (ITFP), Ma
Corazon M. Akol, Miguel Uy, Eduardo H. Lopez, Augusto C. Lagman, Rex C. Drilon,
Miguel Hilado, Ley Salcedo and Manuel Alcuaz, Jr., petitioners herein, led the
present petition for prohibition and mandamus seeking (1) to declare null and void
COMELEC's Resolution No. 6074; (2) to enjoin the implementation of the contract
that may have been entered into by COMELEC either with MP CONSORTIUM or
MPEI; and (3) to compel COMELEC to conduct a re-bidding of the Project.
After carefully reviewing the records of this case, I nd the exhaustive ponencia of
Mr. Justice Artemio V. Panganiban worthy of my fullest concurrence.

First, I must deal with the procedural roadblocks.


Petitioners come to us via a petition for prohibition and mandamus, thus, it is
argued that the recourse taken is improper. It is a well established rule, particularly
in public biddings, that courts cannot compel an agency to do a particular act or to
enjoin such act within its prerogative or discretion. This is not an iron-clad rule. One
noted exception is when in the exercise of its authority it gravely abuses or exceeds
its jurisdiction. 8 Judicial review may be justied on the grounds of grave abuse of
discretion, arbitrary rejection of bids, and lack of freedom of competition among
bidders. 9 In the case at bar, petitioners alleged in their petition that public
respondents "acted without or in excess of its jurisdiction or with grave abuse of
discretion" 10 when they awarded the Project to MPEI. Thus, the following
pronouncement of this Court in JG Summit Holdings, Inc. vs. Court of Appeals 11
deserves reiteration:
Be that as it may, the Court of Appeals erred when it dismissed the petition
on the sole ground of the impropriety of the special civil action of
mandamus . It must be stressed that the petition was also one for certiorari,
seeking to nullify the award of the sale to private respondent of the
PHILSECO shares. Verily, the petition alleges that 'respondents COP and APT
have committed such a grave abuse of discretion tantamount to lack or
excess of their jurisdiction in insisting on awarding the bid to Philyards, for
the various reasons stated herein, particularly since the right of rst refusal
and the right to top the bid are unconstitutional, contrary to law and public
policy.' Petitioner's failure to include certiorari in its caption should not negate
the fact that the petition charged public respondent with grave abuse of
discretion in awarding the sale to private respondent. Well-settled is the rule
that it is not the caption of the pleading but the allegations therein that
determine the nature of the action and the Court shall grant relief warranted
by the allegations and the proof even if no such relief is prayed for.

Neither can I subscribe to respondents' view that petitioners have no legal standing
to le the present case and that the petition should be dismissed for their failure to
exhaust administrative remedies.
Section 7 of R.A. No. 8436 provides that the COMELEC, in the procurement of an
automated election system, shall create an "Advisory Council to be composed of
technical experts from the Department of Science and Technology (DOST), the
Information Technology Foundation of the Philippines (ITFP) , the University of the
Philippines (UP) and two (2) representatives form the private sector recommended
by the Philippine Computer Society (PCS)."
Obviously, petitioner ITFP is a member of the Advisory Council mandated to aid the
COMELEC in the procurement of the ACM. As such, it has "actual and material
interest" to ensure that in the procurement of the ACM, the bidding procedures are
followed and the technical requirements are complied with. The same interest
redounds to petitioners who are members of the ITFP and who, in addition, are
suing as "taxpayers, registered voters and concerned citizens of the Philippines." In
Del Mar vs. Philippine Amusement and Gaming Corporation, 12 we ruled that
taxpayers are allowed to sue (1) where there is a claim of illegal disbursement of
public funds, (2) or that public money is being deected to any improper purpose,
(3) or where petitioners seek to restrain respondent from wasting public funds
through the enforcement of an invalid or unconstitutional law. Considering that the
assailed award involves the disbursement of billions of pesos from the public
treasury, I must say that petitioners possess the required locus standi.

Anent petitioners' failure to exhaust administrative remedies, suce it to say that


their letter dated May 29, 2003 to COMELEC Chairman Abalos objecting to the
process which led to the award of the contract to MPEI satises the above
procedural condition. Certainly, petitioners could not be expected to follow the
protest mechanisms outlined in Section 55, 13 Rule XVII of Republic Act No. 9184 14
considering that the assailed award was made known to the public only on May 16,
2003 or more than one (1) month from the time Resolution No. 6074 was
promulgated. Respondents would argue that under the subsequent provision,
Section 58 15 of the same Rule, the court which has jurisdiction over nal decisions
of the head of the procuring entity is the Regional Trial Court. This is not really a
legal obstacle. In Commission on Elections vs. Quijano-Padilla , 16 we ruled that: "
[T]he doctrine of hierarchy of courts is not an iron-clad dictum. On several instances
where this Court was confronted with cases of national interest and of serious
implications, it never hesitated to set aside the rule and proceed with the judicial
determination of the case. 17 The case at bar is of similar import. It is in the interest
of the State that questions relating to government contracts be settled without
delay. This is more so when the alleged contract involves the disbursement of public
funds and the modernization of our country's election process."
The substantive issues in this case may be reduced into two queries: rst, Did the
Comelec abuse its discretion when it allowed MPEI to actively participate in the

bidding despite its failure to meet the mandatory eligibility requirement?; and
second, Did the COMELEC abuse its discretion when it awarded the contract to
MPEI?
At this juncture, it bears stressing that MPEI was incorporated only on February 27,
2003 as evidenced by its Certicate of Incorporation. 18 This goes to show that from
the time the COMELEC issued its Invitation to Bid (January 28, 2003) and Request
for Proposal (February 17, 2003 ) up to the time it convened the Pre-bid Conference
(February 18, 2003 ), MPEI was literally a non-existent entity. It came into being
only on February 27, 2003 or eleven (11) days prior to the submission of its bid, i.e.
March 10, 2003. This poses a legal obstacle to its eligibility as a bidder. The Request
for Proposal requires the bidder to submit nancial documents that will establish to
the BAC's satisfaction its financial capability which include:
"(1)
audited nancial statements of the Bidder's rm for the last three (3)
calendar years, stamped "RECEIVED" by the appropriate government
agency, to show its capacity to nance the manufacture and supply of
Goods called for and a statement or record of volumes of sales ;
(2)

Balance Sheet;

(3)

Income Statement; and

(4)

Statement of Cash Flow."

As correctly pointed out by petitioners, how could MPEI comply with the above
requirement of audited financial statements for the last three (3) calendar years if it
came into existence only eleven (11) days prior to the bidding?
To do away with such complication, MPEI asserts that it was MP CONSORTIUM who
submitted the bid on March 10, 2003. It pretends compliance with the requirements
by invoking the nancial capabilities and long time existence of the alleged
members of the MP CONSORTIUM, namely, Election.Com, WeSolv, SK CeC, ePLDT
and Oracle. It wants this Court to believe that it is MP CONSORTIUM who was
actually dealing with the COMELEC and that its (MPEI) participation is merely that
of a "lead company and proponent" of the joint venture. This is hardly convincing.
For one, the contract for the supply and delivery of ACM was between COMELEC and
MPEI, not MP CONSORTIUM. 19 As a matter of fact, there cannot be found in the
contract any reference to the MP CONSORTIUM or any member thereof for that
matter. 20 For another, the agreements among the alleged members of MP
CONSORTIUM do not show the existence of a joint-venture agreement. Worse, MPEI
cannot produce the agreement as to the "joint and several liability" of the alleged
members of the MP CONSORTIUM as required by this Court in its Resolution dated
October 7, 2003.
What is apparent from the four (4) agreements I gathered is the existence of either
a "contractor-subcontractor" or "buyer-supplier" relationship between MPEI on the
one hand and the alleged members of the MP CONSORTIUM. There was no
assumption of a "joint and several liability" over the entire Project of the COMELEC

nor an intention to enter directly into a contract with COMELEC.


In the "Memorandum of Agreement" between MPEI and WeSolv, the latter only
agreed to be one of its suppliers. Contrary to MPEI's asseveration that it was MP
CONSORTIUM which bid for the project, the Memorandum clearly states that MPEI
"will undertake negotiations with the COMELEC for the purpose of nalizing the
contract for the said Project in the event that it [MPEI] is declared as the winning
bidder and the Project is awarded in its [MPEI] favor." As if to emphasize the
absence of "joint and several liability" over the entire Project, the Memorandum
expressly provides that WeSolv shall be jointly and severally liable with MPEI " only
for the particular products and/or services supplied by the former for the Project"
and that "in the event that they failed to agree on the terms and conditions of the
supply of the products and services including but not limited to the scope of the
products and services to be supplied and payment terms, WeSolv shall cease to be
bound by its obligations." The same provisions are to be found in the "Memorandum
of Agreement" between MPEI and SK C & C. 21
The "Teaming Agreement " between MPEI and Election.Com 22 also negates MPEI's
assertion that it was MP CONSORTIUM that bid for the Project. Here, MPEI is singled
out as the one who intended to submit a proposal to the COMELEC. Under the
Teaming Agreement, MPEI "has identied the subcontractor [Election.Com] as one
of its suppliers." It was stipulated therein that "the parties shall each be individually
liable for any penalties or liabilities incurred by them in connection with the Project,
if it can be shown that the said penalties or liabilities are a direct result of errors in
data or, non-performance of products and/or services supplied." The same limitation
on liability is present in the "Teaming Agreement" between MPEI and ePLDT. 23
Surely, it is grave abuse of discretion on the part of the COMELEC to award a billion
worth of contract to an entity whose existence and eligibility is highly questionable.
It risks the accomplishment of a great undertaking such as the automation of our
country's election system. From a brief survey of the four (4) agreements, I am
convinced that the COMELEC, and ultimately the people, stand on the losing end
should the Project fail because of the obvious diculty in determining where the
culpability lies.
It bears reiterating for the consumption of our public ocers that in the exercise of
their contracting prerogative, they should be the rst judges of the legality,
propriety and wisdom of the contract they entered into. They must exercise a high
degree of caution so that the Government may not be the victim of ill-advised or
improvident action. 24 Prudence should be their primordial virtue. Thus, even
though they have broad discretion to determine the qualications of the bidders, it
may not act arbitrarily and they must conform to statutory requirements governing
the awarding of public contracts. 25 Reason must govern the acts of such ocials,
and courts will not hesitate to interfere when it is clearly made to appear that they
have acted arbitrarily, dishonestly or beyond the reasonable limits of the discretion
conferred upon them .
Another arbitrary act of the COMELEC is its awarding of the contract to MPEI despite

the fact that it failed in some of the technical requirements.


"Below is a comparative presentation of the requirements wherein MegaPacific or TIM or both of them failed.
KEY REQUIREMENTS

BIDDER/S THAT FAILED

Does the machine have an


accuracy rating of at least
99.995 percent? (Item No. 1,
Table 6, DOST Report)
At normal environment
At harsh environment

Mega

TIM

Mega

Uninterruptible back-up power


system, that will engage
immediately to allow operation of
at least 10 minutes after outrage,
power surge or abnormal
electrical occurrences? (Item No.
4, Table 6, DOST Report)
Machines read two sided ballots
in one pass? (Item No. 5,
Table 6, DOST Report)

TIM
TIM*

Machine can detect previously


counted ballots and prevent
previously counted ballots from
being counted more than once?
(Item No. 6, Table 6, DOST
Report)

TIM

Store results of counted votes by


precinct in external (removable)
storage device? (Item No. 7,
Table 6, DOST Report)

TIM

Data stored in external media is


encrypted? (Item No. 8, Table 6,
DOST Report)

TIM

CPU speed is at least 400 mHz?


(Item No. 10, Table 6, DOST
Report)

TIM

Generates printouts of the


election returns in a format
specified by the Comelec?
(Item No. 12, Table 6, DOST
Report)

Mega

TIM

Generates an audit trail of the


counting machine, both hard and
soft copy? (Item No. 14, Table 6,
DOST Report)
TIM*
Soft copy
Does the city/municipal
canvassing system consolidates
results from all precincts within it
using the encrypted soft copy of
the data generated by the
counting machine and stored on
the removable data storage
device? (Item No. 15, Table 6,
DOST Report)

Does the city/municipality


canvassing system consolidate
results from all precincts within
it using the encrypted soft copy
of the data generated by
counting machine and
transmitted through an
electronic transmission media?
(Item No. 16, Table 6, DOST
Report)

TIM*

TIM*

Mega

Note: No facilities/resources
available to test the transmission
of data through electronic means.

Does the system output a Zero


City/Municipal Canvass Report,
which is printed on election day
prior to the conduct of the actual
canvass operation, that shows
that all totals for all the votes for
all the candidates and other
information are indeed zero or
null? (Item No. 17, Table 6, DOST
Report)
Does the system consolidate
results from all precincts in the
city/municipality using the data
storage device coming from the
counting machine? (Item No. 18,
Table 6, DOST Report)

TIM*

TIM*

Is the machine 100% accurate?


(Item No. 19, Table 6, DOST
Report)

Is the Program able to detect


previously downloaded
precinct results and prevent
these from being inputted again
into the System? (Item No. 20,
Table 6, DOST Report)

TIM*

Mega

The System is able to print the


specified reports and the audit
trail without any loss of data
during generation of the
abovementioned reports? (Item
No. 21, Table 6, DOST Report)
Print specified reports
Audit trail
(Note: Audit
trail not yet
incorporated)

Mega

TIM*

TIM*

Can the result of the


city/municipal consolidation be
stored in a data storage device?
(Item No. 22, Table 6, DOST
Report)
Does the System consolidate
results from all precincts in the
provincial/district/national using
the data storage device from
different levels of consolidation?
(Item No. 23, Table 6, DOST
Report)
TIM*
Is the System 100% accurate?
(Item No. 24, Table 6, DOST
Report)
Is the Program able to detect
previously downloaded precinct
results and prevent these from
being imported again into the
System? (Item No. 25, Table 6,
DOST Report)

TIM*

Mega

The System is able to print the


specified reports and the audit
trail without any loss of data
during generation of the
abovementioned reports? (Item
No. 26, Table 6, DOST Report)
Print specified reports?
Audit trail?
Mega

TIM*
TIM*

(Audit trail not


yet incorporated)
Can the results of the provincial/
district/national consolidation be
stored in a data storage device?
(Item No. 27, Table 6, DOST
Report)

TIM*

Notwithstanding the above failed marks the COMELEC still awarded the contract to
MPEI. This is highly irregular. The above requirements where MPEI failed cannot be
considered as insubstantial. They have a bearing on the required features of the
automated election system under Section 7 of R.A. No. 8436, such as (1) use of
appropriate ballots, (2) stand-alone machine which can count votes and an
automated system which can consolidate the results immediately, (c) with
provisions for audit trails, (d) minimum human intervention, and (e) adequate
safeguard/security measures.
COMELEC's stance that it can waive certain requirements is misplaced in the
present case because what it waives are those which concerns the integrity and
accuracy of the ACM and thus, aect the substance and the validity of the bids.
Statutory or regulatory mandatory requirements with respect to bidding on public
contracts cannot be waived. Presidential Decree No. 1594, 26 for one, expressly
states that the Government, in the evaluation of bid received, "reserves the right to
waive the consideration of minor deviations in the bids received which do not aect
the substance and validity of the bids." Thus, while a reservation in the
advertisement of the right to reject any bid generally vests in the authorities a wide
discretion as to who is the best and most advantageous bidder, however, it may not
be used as a shield to a fraudulent award. 27 Should this be the case, judicial
interference would be justified.
WHEREFORE, I vote to GRANT the Petition. COMELEC Resolution No. 6074 is
declared NULL and VOID.
TINGA, J., dissenting:

Prologue

Once again, the Court availing of its extraordinary powers or so-called "certiorari"
jurisdiction has struck down a government contract, sealed no less by the
respondent Commission on Elections (COMELEC) in the exercise of its
administrative powers granted by the Constitution in relation to the conduct of
elections. Apparently, the Court has opted to trudge the trail it blazed recently in
the Amari 1 and PIATCO 2 cases. Amari voided the Manila Bay reclamation project on
constitutional grounds 3 and PIATCO struck down the NAIA Terminal III contract for
violations of the Constitution 4 and some other laws 5 to boot.

But in this case, no constitutional provision or letter of a statute was alleged to have
been violated. The Court nullied the contract for an automated election system
("AES") simply on the ground that in making the award the COMELEC has allegedly
violated its bidding rules and an unfounded apprehension that the counting
machines would not work on election day. On the other hand, not one of the losing
bidders has joined the petition, as neither they nor the petitioners questioned the
fairness of the price tag for the machines.
The year 2004 could have well been marked in the annals of the Philippines by the
maiden use of the automated election. But the country was deprived of the golden
chance to join the growing roster of states with modern election systems which
include developing countries such as Kenya, Mali, Zambia, Romania, Albania, Mexico
and Argentina because of the Decision of the Court.
In the process, the Court has disregarded the fundamental postulates by which this
case should have been decided. They are the following:

First. The instant original petition is one for prohibition and mandamus under Rule
65 of the 1997 Rules of Civil Procedure. Prohibition is an extraordinary writ directed
against any tribunal, corporation, board, ocer or person, whether exercising
judicial, quasi-judicial or ministerial functions, commanding the respondent to desist
from further proceedings when said proceedings are without or in excess of the
respondent's jurisdiction or are attended with grave abuse of discretion amounting
to lack or excess of jurisdiction and there is no appeal or any other plain, speedy,
and adequate remedy in the ordinary course of law. 6 Mandamus, on the other
hand, is an extraordinary writ commanding a tribunal, corporation, board, ocer or
person, immediately or at some other specied time, to do the act required to be
done, when the respondent unlawfully neglects the performance of an act which
the law specically enjoins as a duty resulting from an oce, trust, or station, or
when the respondent excludes another from the use and enjoyment of a right or
oce to which such other is entitled, and there is no other plain, speedy and
adequate remedy in the ordinary course of law. 7
Second. In deciding the instant case, the Court shall consider only the undisputed or
admitted facts and resolve only the specic questions raised by the parties. 8 The
Court is not a repository of remedies or a "super-legal-aid bureau." 9 We cannot
grant relief for every perceived violation of the law or worse, on the basis of
prophetic wisdom. Paraphrasing an old decision, Mr. Justice Felix Frankfurter wrote:
"Judicial power, however large, has an orbit more or less strictly dened by well-

recognized presuppositions regarding the kind of business that properly belongs to


courts. Their business is adjudication, not speculation. They are concerned with
actual, living controversies, and not abstract disputation." 10

Third. The Court does not, as indeed it cannot, guarantee the success of the
automation or the integrity of the coming elections. It is not the Court's function to
actively ensure that the automation is successfully implemented or that the
elections are made free of fraud, violence, terrorism and other threats to the
sanctity of the ballot. This duty lies primarily with the COMELEC. 11
Fourth. The Court has constantly underscored the importance of giving the
COMELEC considerable latitude in adopting means and methods that will insure the
accomplishment of the objective for which it was created to promote free,
orderly, honest, peaceful and credible elections. Thus, in the past we have prudently
declined to interfere with the COMELEC's exercise of its administrative functions
absent any showing of grave abuse of discretion. 12 As luminously stated in
Sumulong v. COMELEC, 13 "[I]n the matter of the administration of the laws
relative to the conduct of elections, as well as in the appointment of election
inspectors, we must not by any excessive zeal take away from the Commission on
Elections the initiative which by constitutional and legal mandates properly belongs
to it. Due regard to the independent character of the Commission, as ordained in
the Constitution, requires that the power of this court to review the acts of that
body should, as a general proposition, be used sparingly, but rmly in appropriate
cases." 14
For the reasons I shall discuss hereunder, I nd myself unable to subscribe to the
ponencia and join the ranks of my colleagues in the majority.
Let me rst mention that at the opening part of the Decision, the Court opined that
there is grave abuse of discretion when the assailed act is contrary to
"jurisprudence." Yet, the 99-page Decision failed to mention a single Court decision
which the respondents have defied.

Petitioners failed to exhaust administrative remedies


I agree with the respondents that the petitioners failed to exhaust, or better still
avail of, the administrative remedies outlined in R.A. 9184, as follows:
"SEC. 55.
Protests on Decisions of the BAC. Decisions of the BAC in all
stages of procurement may be protested to the head of the procuring entity
and shall be in writing. Decisions of the BAC may be protested by ling a
veried position paper and paying a non-refundable protest fee. The amount
of the protest fee and the periods during which the protests may be led
and resolved shall be specified in the IRR.
SEC. 56.
Resolution of Protests . The protests shall be resolved strictly
on the basis of the records of the BAC. Up to a certain amount to be
specied in the IRR, the decisions of the Head of the Procuring Entity shall
be final.

SEC. 57.
Non-interruption of the Bidding Process . In no case shall any
protest taken from any decision treated in this Article stay or delay the
bidding process. Protests must first be resolved before any award is made.
SEC. 58.
Resort to Regular Courts; Certiorari . Court action may be
resorted to only after the protests contemplated in this Article shall be have
been completed. Cases that are led in violation of the process specied in
this Article shall be dismissed for lack of jurisdiction. The regional trial court
shall have jurisdiction over nal decisions of the head of the procuring entity.
Court actions shall be governed by Rule 65 of the 1997 Rules of Civil
Procedure.
This provision is without prejudice to any law conferring on the Supreme
Court the sole jurisdiction to issue temporary restraining orders and
injunctions relating to Infrastructure Projects of Government." [Emphasis
supplied]

As correctly pointed out by the respondents, at no time during the entire bidding
process did the petitioners question the determination of the COMELEC Bids and
Awards Committee (BAC) nding Mega Pacic Consortium ( MPC) eligible to bid.
Under R.A. 9184, decisions of the BAC should be appealed to the COMELEC en banc.
Consequently, the determination of the BAC that MPC was eligible to bid, adopted
subsequently by the COMELEC, became final.
The doctrine of exhaustion of administrative remedies requires that when an
administrative remedy is provided by law, relief must be sought by exhausting this
remedy before the courts will act. No recourse can be had until all such remedies
have been exhausted and special civil actions against administrative ocers should
not be entertained if superior administrative ocers could grant relief. 15 I n Hon.
Carale v. Hon. Abarintos, 16 the Court enunciated the reasons for the doctrine, thus:
Observance of the mandate regarding exhaustion of administrative
remedies is a sound practice and policy. It ensures an orderly procedure
which favors a preliminary sifting process, particularly with respect to
matters peculiarly within the competence of the administrative agency,
avoidance of interference with functions of the administrative agency by
withholding judicial action until the administrative process had run its course,
and prevention of attempts to swamp the courts by a resort to them in the
rst instance. The underlying principle of the rule rests on the presumption
that the administrative agency, if aorded a complete chance to pass upon
the matter, will decide the same correctly. There are both legal and practical
reasons for this principle. The administrative process is intended to provide
less expensive and more speedy solutions to disputes. Where the enabling
statute indicates a procedure for administrative review, and provides a
system of administrative appeal, or reconsideration, the courts, for reasons
of law, comity and convenience, will not entertain the case unless the
available administrative remedies have been resorted to and the appropriate
authorities have been given an opportunity to act and correct the errors

committed in the administrative forum.


Accordingly, the party with an administrative remedy must not merely initiate
the prescribed administrative procedure to obtain relief, but also pursue it to
its appropriate conclusion before seeking judicial intervention in order to give
the administrative agency an opportunity to decide the matter by itself
correctly and prevent unnecessary and premature resort to the court. 17
[Emphasis supplied]

Moreover, under the Rules of Court, judicial review of administrative decisions may
be availed of only through special civil actions. Such proceedings cannot lie if there
is an appeal, or any other plain, speedy, and adequate remedy in the ordinary
course of law. 18
I n Paat vs. Court of Appeals, 19 the Court enumerated the instances when the rule
on exhaustion of administrative remedies may be disregarded:
. . . (1) when there is a violation of due process, (2) when the issue involved
is purely a legal question, (3) when the administrative action is patently illegal
amounting to lack or excess of jurisdiction, (4) when there is estoppel on the
part of the administrative agency concerned, (5) when there is irreparable
injury, (6) when the respondent is a department secretary whose acts as an
alter ego of the President bear the implied and assumed approval of the
latter, (7) when to require exhaustion of administrative remedies would be
unreasonable, (8) when it would amount to a nullication of a claim, (9) when
the subject matter is a private land in land case proceedings, (10) when the
rule does not provide a plain, speedy and adequate remedy, and (11) when
there are circumstances indicating the urgency of judicial intervention. 20

The petitioners' allegations do not bring their case within the jurisprudentially
recognized exceptions to the rule on exhaustion of administrative remedies. It is
noteworthy that the protest mechanism outlined in R.A. 9184, in allowing protests
of decisions of the BAC "in all stages of procurement," 21 reinforces and even
institutionalizes the exhaustion doctrine insofar as public bidding is concerned.
Hence, had petitioners intended to pursue the available administrative remedies,
they could have easily asked for a reconsideration the moment the BAC determined
MPC eligible to bid, failing which, they could have led a protest with the COMELEC
en banc itself.
Petitioners did neither. Instead they sat in waiting until the nal hour and now
insist that the Court disregard the rule on exhaustion of administrative remedies on
the puerile reason that there was no opportunity for the protest mechanism
instituted in R.A. 9184 to apply because the BAC rendered its report and
recommendation in open session on April 15, 2003, the same day and on the same
occasion that the COMELEC issued the assailed Resolution No. 6074 awarding the
Contract to MPC.
The majority opinion posits that it would have been futile for petitioners to
protest/appeal the BAC report to the COMELEC chair since by the time they could
have made the move the COMELEC had already approved the report. Not

necessarily so. The petitioners could have, or better still, should have appealed
directly to the COMELEC en banc. After all, matters of this nature have to be decided
by the COMELEC as a collegial body. To state that the poll body would not act on the
appeal is to uncharitably state that it would disregard its duty to respond as required
by the Code of Ethical Conduct. 22 Thus, the Court's statement that the COMELEC
en banc made it impossible for petitioners to make use of the administrative
remedy is simply baseless.
Be it noted that the petitioners wasted nearly ve (5) months from the time the
BAC Report was released on April 21, 2003 before they led the instant Petition on
August 6, 2003. The signicant time gap precludes the availability of the exceptions
to the exhaustion doctrine. Specically, the petitioners cannot successfully claim
that to require exhaustion of administrative remedies would be unreasonable, or
that the rule does not provide a plain, speedy and adequate remedy, or that judicial
intervention has become urgent because of the circumstances.
Considering the circumstances, it is my view that the premature invocation of this
Court's judicial power is fatal to the petitioners' cause of action.

MPC, the consortium, participated in the bidding


According to the Court, the rst major concern which bears on the issue of grave
abuse of discretion relates to the identity and existence of the M PC as a bidder.
Petitioners claim that the real bidder was Mega Pacic eSolutions, Inc. ( MPEI ). On
the other hand, the respondents insist that the bidder was MPC of which MPEI was
the lead member.
On record are the following documents:
1.

Letter of MPEI's President, Willy Yu, dated March 7, 2003, which states:
March 7, 2003
BIDS AND AWARDS COMMITTEE
Commission On Election
Intramuros, Manila
Sir:
In response to your Invitation to Bid for the COMELEC Modernization Project
corresponding to the various phases which are as follows:
Phase I
Phase II
Phase III

Voters Registration Voters Validation System


:

Vote Counting and Canvassing Automated


Counting/Canvassing
:

Transmission & Dissemination of Results


Electronic
Transmission/Consolidation
&

Dissemination of Result
The following companies listed below have agreed to form a consortium to
bid for the said project;
Mega Pacific eSolutions, Inc.
Election.Com Ltd
EPLDT
SK C & C
WeSolv Open Computing, Inc. (Subsidiary of Fujitsu Phils. Inc.)
Oracle System (Philippines) Inc.
Very truly yours,
(Sgd.) WILLY U. YU
President
MEGA PACIFIC eSOLUTIONS, INC.
(Lead Company/Proponent)
For: MEGA PACIFIC CONSORTIUM

2.

Agreements among the members of the consortium, namely:

(a)
Memorandum of Agreement betw een MPEI and WeSolv Open Computing,
Inc. (WeSolv) dated March 5, 2003 and notarized on March 7, 2003;
(b)
Memorandum of Agreement between MPEI and SK C&C Co. Ltd. (SK C&C)
dated March 9, 2003 and notarized on March 9, 2003;
(c)
Teaming Agreement betw een M PEI and Election.Com Ltd. (Election.Com )
dated March 3, 2003 and notarized on March 9, 2003; and
(d)
Agreement between MPEI and ePLDT dated March 3, 2003 and notarized on
March 9, 2003.
These documents all bear execution and notarization dates prior to the submission
by MPC of its bid documents on March 10, 2003.
Contrary to the Court's assessment, the fair assumption to make is that the letter of
MPEI 's President on behalf of M P C and the agreements between MPEI and the
members of the consortium had already been submitted to the COMELEC when the
BAC evaluated the bids and the poll body acted upon the BAC's recommendation
and accordingly resolved to award the Contract to MPC.

On the basis of the bid documents submitted by MPEI on behalf MPC, including the
consortium agreements, the COMELEC awarded Phase II of the AES (Project) to MPC
per Resolution No. 6074 dated April 15, 2003. The full text of the Resolution reads,
thus:

RESOLUTION NO. 6074


This pertains to the Award of the Contract for Phase II (Automated Counting
Machine) of Modernization Program of the Commission.
Two (2), out of the three, bidders passed the eligibility requirements, namely:
1.

MEGA Pacific Consortium

2.

Total Information Management Corporation (TIM)

In consonance with the mandate of Republic Act No. 8436, the Commission
sought the assistance of Department of Science and Technology in the
technical evaluation on identied key requirements, outlined in the Request
for Proposal (RFP) and Section 7 of the aforecited law, mainly covering
various
parameters
pertaining
to
vote
counting
accuracy,
consolidation/canvassing accuracy, ballot counting speed, security features
(both hardware and software), and system reliability of the Automated
Counting Machines (ACMs).
Upon receipt of the test results on the ACMs provided by the two
prospective suppliers, the BAC proceeded with the evaluation of their
nancial bids, and thereafter made a recommendation to the Commission
while the same was in session on 15 April 2003.
After a thorough deliberation on the matter, the Commission had solid basis
to award the project.
Earlier the Chairman was given authority by the Commission in Resolution
No. 5989 promulgated 27 March 2003 to award to the winning bidders the
three (3) phases of the modernization program. However, considering the
present discussion, with the members of the BAC in attendance and
recommending award of the project to Mega Pacic, the Chairman have the
matter passed upon by the Commission.
Meantime, Commissioner Mehol K. Sadain submitted a memorandum stated
in this wise:
"xxx xxx xxx

With regard to the Automated Counting Machines award of the


contract, undersigned would have preferred to register his vote,
however, the BAC report which is the basis for the award, has not yet
been submitted to the Commissioners as of this writing.

At this juncture, undersigned would just like to inform the bank that, in
case of a vote, he will be voting on the basis of the results of the rst
test participated by both bidders as called for under the terms of the
bid."
In view of the foregoing, the Commission RESOLVED, as it hereby
RESOLVES, to award Phase II of the Modernization Project of the
Commission to Mega Pacic Consortium , having been declared as the bidder
that submitted the lowest calculated responsive bid for the Automated
Counting Machines. [Emphasis supplied]

Yet, the Court disputes the authority of M PEI or its President to represent the
consortium.
In the Memorandum of Agreement (MOA) between MPEI and WeSolv dated March
5, 2003, which was reproduced in the Decision, the following stipulations are found:
2.
Mega Pacic shall be responsible for any contract negotiations and
signing with the COMELEC and, subject to the latter's approval, agrees to
give WeSolv an opportunity to be present at meetings with the COMELEC
concerning WeSolv's portion of the Project.
3.
WeSolv shall be jointly and severally liable with Mega Pacic only for
the particular products and/or services supplied by the former for the
Project. [Emphasis supplied]

The MOA between MPEI and SK C&C dated March 9, 2003, also reproduced in the
Decision, contains similar provisions:
2.
Mega Pacic shall have full powers and authority to represent the
Consortium with the Comelec, and to enter and sign, for and in behalf of its
members any and all agreement/s which may be required in the
implementation of the Project.
3.
Each of the individual members of the Consortium shall be jointly and
severally liable with the Lead Firm for the particular products and/or services
supplied by such individual member for the project, in accordance with their
respective undertaking or sphere of responsibility. [Emphasis supplied]

It appears that the Court assumed that the documents which establish the
existence of the consortium were not with the COMELEC and it had no basis for
determining that the consortium had existence 23 during the bidding process simply
because the documents were not included in the "Eligibility Requirements" folder it
submitted to the Court on October 9, 2003. 24 With due respect, let me state
nothing is farther from the truth.
The Court required the submission of the documents bearing on the existence of the
consortium only after the oral arguments on October 7, 2003. The directive is
contained in the Court's Resolution of even date quoted below:
In open court, Atty. Lazaro, counsel for private respondent Mega Pacic

eSolutions, Inc., was DIRECTED by the Court to submit the following


documents, a day after the hearing:
(a)

contract executed between consortium represented by Mega


Pacific eSolutions, Inc. and COMELEC;

(b)

agreement among the consortium members;

(c)

financial statements of the members of the consortium;

(d)

agreement as to the joint and several liability of the members


of the consortium;

(e)

status report of the Department of Science and Technology


(DOST) as to whether the machines are already free of the eight
(8) defects or failing marks it mentioned in a previous report or
if the software has been reprogrammed successfully to
eliminate the defects or failing marks.

Clearly, the directive was addressed to Atty. Alfredo Lazaro, Jr. So, it was he who
had to submit the documents and he did so on October 10, 2003. The COMELEC was
not required to submit any document. But since the DOST status report which is
among the documents mentioned in the Resolution was not in the custody of MPEI,
the COMELEC elected to submit it along with the "Eligibility Requirements" folder.
Obviously to prop up the hypothesis that the COMELEC was unaware of the
consortium agreements during the bidding process, the majority picked on
Commissioner Florentino Tuason, Jr. and portions of his answers to the questions
asked of him during the oral arguments. Although he was evidently not the
Commissioner assigned to speak on behalf of the COMELEC but Commissioner
Resureccion Borra, Commissioner Tuason deferred to the Court and responded to
the questions as best as he could. To put the answers in context, I quote them in full
along with the questions.
JUSTICE QUISUMBING:
May I know if somebody from the Commission on Elections who knows
the elements of the so-called verbal agreement on solidary liability of all
the parties of this Mega Pacific, whatever it is?
Do you know anybody from the COMELEC who knows the elements of
this oral agreement if any?
CHIEF JUSTICE:
Yes, would Commissioner Borra be willing to help the Assistant Sol.
Gen.?
ASG RAMOS:
Perhaps Commissioner Tuason could speak to this Court with regard to

that matter.
CHIEF JUSTICE:
Commissioner Tuason.
Yes, Commissioner Tuazon would you be able to enlighten the Court on
the questions profounded (sic) by Justice Vitug and the request of
Justice Quisumbing?
COMMISSIONER TUASON:
Good morning, Your Honors, I am sorry for my attire (interrupted)
CHIEF JUSTICE:
It is okay, we did not expect you really to argue but there seems to be
an orderly information for the enlightenment of the Court.
COMMISSIONER TUASON:
As far as I know, your Honor, I am not in-charge of the, I am not Incharge of the phase 2, which is the Modernization Program, I am here
because I am in-charge of the Legal Department and I oversee the
legal activities of COMELEC.
CHIEF JUSTICE:
Who is in-charge then?
COMMISSIONER TUASON:
Insofar as a written agreement among the members of the consortium
there is Your Honor, I was privy to the fact that when we were having
conferences with the legal counsel of the private respondent there is
indeed an agreement among the members of the consortium. That is
my personal knowledge, Your Honor.
CHIEF JUSTICE:
Writing or (interrupted)
COMMISSIONER TUASON:
In writing, Your Honor, because the so-called agreement amongst the
members of the consortium is of course an internal aair or an
internal matter between the members of the consortium. But I do, I
am aware of the fact that there is indeed a written agreement, Your
Honor. And I am sure that when the time that the counsel for the
private respondent will argue before this Honorable Court he will be
presenting the written agreement amongst the members of the
consortium.

JUSTICE VITUG:
Are you telling us that the COMELEC did not look into this matter?
COMMISSIONER TUASON:
I do think that they did, Your Honor, because I am not a member of the
BAC, I am not the Commissioner-in-charge of the Phase II but I am
aware that there is such agreement, Your Honor, which will be
presented today and I think that this was taken into consideration
(interrupted) 25
xxx xxx xxx
COMMISSIONER TUASON:
We did Your Honor because we asked the BAC on whether all these
documents including the joint venture agreement or consortium
agreement or agreement among the parties were taken into
consideration.
JUSTICE PANGANIBAN:
You took the word of the BAC?
COMMISSIONER TUASON:
Of course, your Honor, because they are the ones mandated at that
particular time, Your Honor, I did not personally.
JUSTICE PANGANIBAN:
All right, did you also look at the joint and several undertaking of the
consortium members?
COMMISSIONER TUASON:
The condition under the request for proposal Your Honor is that
manufacturers, suppliers and/or distributors forming themselves into
a joint venture, a group of two or more manufacturers, suppliers, and
or distributors that intend to be jointly and severally responsible or
liable for a particular contract provided that Filipino ownership is 60%.
In other words, it is not a mandatory requirement that they be jointly
and severally liable, Your Honor.
JUSTICE PANGANIBAN:
Now, That is interesting because you are contracting with a consortium
that does not by itself have an independent legal personality.
COMMISSIONER TUASON:

Yes, that is right, Your Honor.

26

The responses of Commissioner Tuason attest to the existence of the agreement


and in essence do not contradict the provisions thereof. So do the answers of Atty.
Lazaro, counsel for MPEI, who was queried quite extensively on the matter. 27

The consortium agreements were not submitted to the Court obviously because the
Petition did not raise any question about the joint and several undertaking of the
members of the consortium. It was only during the oral arguments that the Court
saw the need to secure copies of the documents. Thus, the Court issued the
Resolution of October 7, 2003.
All told, MPEI as lead member of MPC submitted as part of the bid documents not
only the letter dated March 7, 2003 but the following agreements, to wit:
(a) Memorandum of Agreement betw een MPEI an d WeSolv dated March 5, 2003
and notarized on March 7, 2003;
(b)
Memorandum of Agreement between MPEI and SK C&C dated March 9, 2003
and notarized on March 9, 2003;
(c)
Teaming Agreement between MPEI and Election.Com dated March 3, 2003
and notarized on March 9, 2003; and
(d)
Agreement between MPEI and ePLDT dated March 3, 2003 and notarized on
March 9, 2003.
before the deadline for submission of bids. Any contrary conclusion is baseless in
fact and founded on pure conjecture.

The consortium agreements are sufficient


The majority opinion, nonetheless, insinuates that it is not sucient that a joint
venture be formed, but that the members of the joint venture all bind themselves
jointly and severally liable for the performance of the Contract. It asserts that there
was no joint venture agreement, much less a joint and several undertaking, among
the members of the alleged consortium. Thus, the BAC should not have found MPC
eligible to bid.
I cannot subscribe to this position. The RFP specically denes a joint venture as a
group of two (2) or more manufacturers, suppliers and/or distributors that intend to
be jointly and severally responsible or liable for the contract. 28 Nowhere in the RFP
is it required that the members of the joint venture execute a single written
agreement to prove the existence of a joint venture. Indeed, the intention to be
jointly and severally liable may be evidenced not only by a single joint venture
agreement but by supplementary documents executed by the parties signifying
such intention.
As the respondents pointed out, separate agreements were entered into by and

between MPEI on the one hand and WeSolv, SK C&C, Election.Com , and ePLDT on
the other. The Memorandum of Agreement 29 between MPEI and WeSolv and MPEI
and SK C&C set forth the joint and several undertakings among the parties. On the
other hand, the Teaming Agreements 30 between MPEI and Election.Com and MPEI
and ePLDT claried their respective roles with regard to the Project, with MPEI being
the "independent contractor" and Election.Com and ePLDT the "subcontractors".
The ponencia mistakenly attributes to the respondents the argument that the
phrase "particular contract" in the RFP should be taken to mean that all the
members of the joint venture need not be solidarily liable for the entire project, it
being sucient that the lead company and the member in charge of a "particular
contract" or aspect of the joint venture agree to be solidarily liable. Nowhere in any
of the respondents' pleadings was this argument ever raised. If it was, inestimable
gain goes to the respondents because this contention is ultimately logical and
coherent.
The RFP itself lays down the organizational structure of the joint venture and the
liability dynamics of the members thereof. It reads:
"d.
Manufacturers, suppliers and/or distributors forming themselves into
a joint venture, i.e., a group of two (2) or more manufacturers, suppliers
and/or distributors that intend to be jointly and severally responsible or
reliable for a particular contract, provided that Filipino ownership thereof
shall be at least sixty percent (60%)." 31 [Emphasis supplied]

So, the RFP adverts to "particular contract." It does not speak of "entire Project" or
"joint venture," from which the phrase "particular contract" should be distinguished.
The clear signication is that all the members of the joint venture need not be
solidarily liable for the entire Project or joint venture; it is sucient that the lead
company and the member in charge of a particular contract or aspect of the joint
venture agree to be solidarily liable.
In any case, the Contract 32 incorporates all documents executed by the consortium
members even if the same are not referred to therein. It provides:
"1.4

Contract Documents

The following documents referred to collectively as the Contract Documents,


are hereby incorporated and made integral parts of the Contract:
(1)
(2)

(3)

this Contract together with its Appendices;


the Request for Proposal (also known as 'Terms of Reference')
issued by the Comelec including the Tender Inquiries and Bid
Bulletins;
Tender Proposal submitted by Mega.

All Contract Documents shall form part of the Contract even if they or any
one of them is (sic) not referred to or mentioned in the Contract as forming

a part thereof. Each of the Contract Documents shall be mutually


complementary and explanatory of each other such that what is noted in
one although not shown in the other shall be considered contained in all, and
what is required by any one shall be as binding as if required by all, unless
one item is a correction of the other.
The intent of the Contract Documents is the proper, satisfactory and timely
execution and completion of the Project, in accordance with the Contract
Documents. Consequently, all items necessary for the proper and timely
execution and completion of the Project shall be deemed included in the
Contract." 33 [Emphasis supplied]

Clearly, whatever perceived deciencies there are in the supplementary contracts


entered into by MPEI and the other members of the consortium as regards their
joint and several undertaking were cured, or better still prevented from arising, by
the above-quoted provisions from which it can be immediately established that each
of the members of MPC is solidarily liable with the lead company, MPEI, albeit only
for the particular contract or aspect of the joint venture of which it is in charge.
Moreover, the Contract provides several options which the COMELEC may take in
case of MPC's breach or non-performance of the material terms thereof. It provides:
"12.5.
In the event of termination of this Contract pursuant to Article
12.2 hereof, COMELEC may exercise any or all of the following remedies:
12.5.1
Procure the facilities from another supplier, charging the
amount over an (sic) above the contract price stipulated in this
Contract, if any, to the account of MEGA;
12.5.2
Impose penalty for late delivery at the rate of 1/10 of 1%
(0.001) for everyday of delay of the total value of the undelivered
item(s);
12.5.3

Terminate this Contract;

12.5.4

Execute on MEGA's Performance Security." 34

Signicantly, MPEI posted a performance bond which amounts to 20% of the bid
offer 35 against which the COMELEC may execute in case of breach.

COMELEC is protected under the contract and the Civil Code


But the Court dismisses the respondents' use of the Contract as basis for the
enforcement of the claims of COMELEC against the consortium on the premise
that the Contract is between the COMELEC and MPEI, n ot MPC. 36 That is so
because MPEI, as lead member of the consortium, is empowered by WeSolv and
SK C&C, which along with MPEI itself, represent 90% of the total consortium
interest, to represent them. This is clear from the stipulations in their MOAs. 37
Thus, as the Contract was executed by MPEI as the authorized representative of
the key members of the MPC, it is the same as if MPC itself was the named party
thereto.

From the foregoing, it is clear that the absence of a single formal joint venture
agreement among all the members of the joint venture does not preclude the
COMELEC from enforcing their liability in case of breach. In any event, the
COMELEC may still enforce the liability of the consortium members under the
general provisions of the Civil Code on partnership as correctly pointed out by the
OSG in its Memorandum , 38 thus:
"Respondent COMELEC is not and will not be precluded from asserting the
solidary liability of all consortium members who represented themselves to
be such. In the absence of a joint venture agreement, and in cadence with
[the] rule on partnership that a partner is considered as the agent of his copartners and of the partnership in respect of all partnership transactions
(Article 1803, Civil Code), private respondent's members acted as agents of
each other and are as such solidarily bound by their own and the other
members' undertaking. Further, the rule is that when a person, by words
spoken or written or by conduct, represents himself, or consents to
another representing him to anyone, as a partner in an existing partnership
or with one or more persons not actual partners, he is liable to any such
persons to whom such representation has been made, who has, on the
faith of such representation, given credit to the actual or apparent
partnership, and if [he] has made such representation or consented to its
being made in a public manner he is liable to such person, whether the
representation has or has not been made or communicated to such person
so giving credit by or with the knowledge of the apparent partner making
the representation or consenting to its being made. When a partnership
liability results, he is liable as though he was an actual member of the
partnership. (Article 1825, Civil Code)"

It should be recalled that MPEI, SK C&C, WeSolv, Election.Com and ePLDT


represented themselves and/or allowed themselves to be represented as partners
and members of MPC for purposes of bidding for the Project. They are, therefore,
liable to the COMELEC to the extent that the latter relied upon such representation.
39 Their liability as partners is solidary with respect to everything chargeable to the
partnership under certain conditions. The Civil Code provides:
"Art. 1822.
Where, by any wrongful act or omission of any partner
acting in the ordinary course of the business of the partnership or with the
authority of his co-partners, loss or injury is caused to any person, not
being a partner in the partnership, or any penalty is incurred, the
partnership is liable therefore to the same extent as the partner so acting or
omitting to act.

Art. 1823.
(1)

The partnership is bound to make good the loss:


where one partner acting within the scope of his apparent
authority receives money or property of a third person and
misapplies it; and

(2)

Where the partnership in the course of its business receives


money or property of a third person and the money or property
so received is misapplied by any partner while it is in the custody
of the partnership.

Art. 1824.
All partners are liable solidarily with the partnership for
everything chargeable to the partnership under Articles 1822 and 1823."
[Emphasis supplied]

Thus, the solidary liability of the members of the consortium is inescapable,


whether by the language of their own contracts inter se or the provisions of the
Civil Code.
The consortium is eligible
The ponencia further echoes the petitioners' objection to the BAC's conclusion,
n di n g M P C eligible to bid notwithstanding the absence of some nancial
documents of its member corporations, particularly MPEI which was incorporated
only on February 27, 2003.
Under the RFP, the bidder shall furnish, as part of its bid, an eligibility envelope,
consisting of legal, technical and nancial documents, which should establish the
bidder's eligibility to bid and its qualications to perform the Contract if its bid is
accepted. The documentary evidence of the bidder's eligibility to bid shall establish
to the BAC's satisfaction that the bidder, at the time of submission of its bid, is
eligible to bid. 40 The eligibility envelope shall include the bidder's legal, technical
and financial documents, viz:
"(a)

Legal Documents which shall include:


(1)

Articles of Incorporation issued by the Securities and


Exchange Commission, Business Registration, current licenses
and permits, DTI Certicate of Registration, Mayor's Permit, or
by appropriate government agencies and VAT certication, if
applicable;

(2)

Approval of the Board of Directors for the Bidder to participate


and enter into a contract with the COMELEC;

(3)

Waiver of execution by its President under the authority of its


Board that it is submitting to the jurisdiction of the Philippine
government and thereby waives its right to question the
jurisdiction of Philippine courts;

(4)

Waiver executed by the President under the authority of its


Board, to seek and obtain writ of injunctions (sic) or prohibition
or restraining order against Purchaser to prevent and restrain
the bidding procedures related thereto, the holding of bidding
and any procedure related thereto, the negotiating and award of
a contract to a successful bidder, and the carrying out of the
awarded contract;

(b)

(5)

Certicate issued by bidder's duly authorized representative


that, it has no record of suspension and that it is not presently
suspended nor blacklisted by any Philippine government agency
or by any international institution, whether in its individual
capacity or as a member of a Joint Venture/Consortium;

(6)

Certicate that the Bidder is licensed by the Bidder's country to


export the goods to be supplied under the contract.

Technical Documents which shall contain documentary evidence to


establish to the BAC's satisfaction the Bidder's technical and
production capabilities necessary to perform the Contract. It shall
include:
(1)

(2)

(c)

Single sale/lease transaction with a contract value of at least


ONE HUNDRED MILLION PESOS (Php100,000,000.00) for same
and similar type of equipment for the last three (3) years. Bidder
shall be required to submit contracts and/or certicate/s of
acceptance by the concerned Purchaser indicating therein the
contract value;
ISO 9000 Certificate or its equivalent;

(3)

Literature and brochures describing the equipment, the


manufacturer's factory, manufacturing facilities, products and
service centers;

(4)

Certication from the Environmental Protection Agency (EPA)


or similar government agency of the country of origin that the
product meets the environment protection requirements
therein;

(5)

Certicate that if awarded the project, Bidder will submit a


warranty for a minimum of two (2) years from date of delivery
for units found to be imperfect or damaged due to factory
defect.

Financial Documents shall contain documentary evidence to establish


to the BAC's satisfaction the Bidder's nancial capability. Such
evidence shall include:
(1)

audited nancial statements of the Bidder's rm for the last


three (3) calendar years, stamped "RECEIVED" by the
appropriate government agency, to show its capacity to nance
the manufacture and supply of Goods called for and a
statement or record of volume of sales;

(2)

Balance Sheet;

(3)

Income Statement; and

(4)

Statement of Cash Flow.

The bidders shall be evaluated according to their liquidity, solvency and


stability. The company's current assets should be more than its current
liabilities. Its long term assets should be more than its long term liabilities.
The BAC may disqualify companies that are having nancial diculty and
thus, making its long term prospects dim. This will eventually aect their
ability to deliver and meet the requirements for the election automated
machines."

On the other hand, the Bid Envelope shall contain the technical specifications and
the bid price. 41
According to the documents it submitted to substantiate eligibility, M P E I was
incorporated only on February 27, 2003. Thus, it was not able to submit the
required nancial documents, i.e., Audited Financial Statements for the last three
(3) years, Balance Sheet, Income Statement and Statement of Cash Flow .
However, the failure of MPEI to submit its nancial documents due to its newlyacquired corporate personality should not by itself disqualify MPC. It should be
pointed out that the purpose of the RFP in requiring the submission of the nancial
documents of the bidder is to determine the nancial soundness of the latter and its
capacity to perform the Contract if its bid is accepted. This purpose may well be
attained by examining the nancial documents submitted by the other members of
the joint venture. In this regard, the respondents emphasized that SK C&C, ePLDT
and WeSolv submitted the required nancial documents. Moreover, MPEI has a paid
in capital of P300,000,000.00, an amount which is substantially over and above the
10% equity based on the total project cost required by the RFP. 42 Thus, I cannot
subscribe to the majority's myopic interpretation of the RFP that each of the
members of MPC must comply with all the requirements thereunder.
I n Kilosbayan v. Guingona , 43 we dened a joint venture as "an association of
persons or companies jointly undertaking some commercial enterprise; generally all
contribute assets and share risks. It requires a community of interest in the
performance of the subject matter, a right to direct and govern the policy in
connection therewith, and duty, which may be altered by agreement to share both
in profit and losses." 44
The collective nature of the undertaking of the members of MPC, their contribution
of assets and sharing of risks, and the community of their interest in the
performance of the Contract all lead to the reasonable conclusion that their
collective qualications should be the basis for evaluating their eligibility. Practical
wisdom dictates this to be so because the sheer enormity of the Project renders it
improbable to expect any single entity to be able to comply with all the eligibility
requirements and undertake the Project by itself. As emphasized by the OSG, the
RFP precisely allowed bids from manufacturers, suppliers and/or distributors forming
themselves into a joint venture in recognition of the virtual impossibility that a
single entity would be able to respond to the Invitation to Bid.
Further, as pointed out by the COMELEC, the Implementing Rules and Regulations
("IRR") of R.A. No. 6957, 45 as amended by R.A. No. 7718, 46 is instructive since

proponents of Build-Operate-Transfer projects usually form joint ventures or


consortiums. Under said IRR, "[A] joint venture/consortium proponent shall be
evaluated based on the individual or collective experience of the member-rms of
the joint venture/consortium and of the contractor(s) that it has engaged for the
project." 47
On another point, the RFP provides that the documentary evidence of the bidder's
qualications to perform the contract if its bid is accepted shall establish to the
satisfaction of the BAC that in case a bidder oering to supply goods under the
contract did not manufacture or otherwise produce the goods itself, the bidder must
show that it is an established dealer of the goods for at least ve (5) years and shall
produce documentary evidence to show that he has been duly authorized by the
goods' manufacturer or producer to supply the goods to the Philippines. 48
The RFP also requires that the documents submitted shall show that the bidders
have the nancial, technical and production capability necessary to perform the
contract. For this purpose, the primary technology proponent, i.e., the manufacturer
of the counting machine itself, and the creator of the consolidation software, should
have a minimum of five (5) years corporate existence in good standing, whereas the
members of the consortium providing ancillary services, i.e., project management
and human resources training, should show documentary evidence that their
services have been contracted for at least one (1) political exercise with at least
20,000,000 voters and their companies have been issued an ISO certication.
Finally, the ACMs should have been used in at least one (1) political exercise with
no less than 20,000,000 voters. 49
The Comment 50 of the OSG and Memorandum 51 submitted by MPC detailed the
qualications and track record of the members of MPC, viz: SK C&C, the primary
technology proponent and manufacturer of the ACMs, is a corporation in good
standing in South Korea since 1991. The ACMs have been used in two (2) Korean
national elections with more than 20,000,000 voters. Election.Com , which shall be
responsible for system integration, is a corporation in good standing in Delaware,
U.S.A. since 1991 and has experience with more than 400 elections in the U.S.A.
and Europe. WeSolv, which is responsible for the rollout, training and maintenance
functions of MPC, is a Philippine corporation in good standing since 1994. Oracle,
which shall provide complete information solutions, is a Philippine corporation in
good standing since 1996. ePLDT, the provider of computer security and encryption,
is a wholly-owned subsidiary of Philippine Long Distance Telephone Company.
Finally, MPEI, which shall install and maintain the ACMs, provide system integration
services and project leadership, is a Philippine corporation incorporated on February
27, 2003. Clearly, all these show that M P C has the nancial, technical and
production capability necessary to perform the Contract.

Noticeably, the petitioners failed to contest the qualications of the members of the
consortium in any of their pleadings. The Decision, uncharacteristically silent on this
matter except for its general objection to the inability of MPEI to submit some of the

nancial documents required by the RFP, seemingly concedes that the members of
the consortium are eligible and qualified to perform the Contract.
In my opinion, these paper requirements should yield to the reality that,
collectively, the members of the consortium have furnished the COMELEC with
sucient information to enable it to judiciously gauge MPC's eligibility and
qualications. The strict and inexible adherence to the bidding requirements by
each and every component of the consortium advanced by the petitioners would
negate the salutary purpose of R.A. 8436 and frustrate the long-anticipated
modernization of the electoral system.

Counting machines supplied by MPC meet the features prescribed by law


Unfortunately, the ponencia's nitpicking did not stop there. It asserts that MPC
failed the technical evaluation conducted by the DOST. Hence, the COMELEC should
have disqualified MPC.
It should be recalled that the COMELEC required prospective suppliers/bidders to
submit a certied accuracy rating for both the vote counting and consolidation
system from the DOST for each model of counting machine and canvassing system
that they intend to oer. The machine must be certied by the DOST that it will
operate properly and accurately under various working conditions. For this purpose,
the COMELEC identied key requirements for evaluation, namely: vote counting
accuracy, consolidation/canvassing accuracy, ballot counting speed, security features
for both the hardware and software, and system reliability. 52
In its Report, the BAC noted the results of the evaluation conducted by its Technical
Working Group (TWG) and by the DOST as follows:
"The BAC further noted that both Mega-Pacic and TIM obtained some 'failed
marks' in the technical evaluation. In general, the 'failed marks' of Total
Information Management as enumerated above aect the counting machine
itself that are material in nature, constituting non-compliance to (sic) the
RFP. On the other hand, the 'failed marks' of Mega-Pacic are mere
formalities on certain documentary requirements, which the BAC may waive,
as clearly indicated in the Invitation to Bid.

In the DOST test, TIM obtained 12 failed marks mostly attributed to the
counting machine itself as stated earlier. These are requirements of the RFP
and therefore the BAC cannot disregard the same.
Mega-Pacic in 8 items however these are mostly on the software, which
can be corrected by reprogramming the software and therefore can be
readily corrected." 53 [Emphasis supplied]

Parenthetically, in his sponsorship remarks on R.A. No. 8436, 54 Rep. Abueg


underscored the salient features which must be found in the AES. He said:
"a.

The system shall utilize appropriate technology for voting and


electronic devices for counting of votes and canvassing of results;

b.

A stand-alone machine that is not hooked to any centralized computer


or other device through which data may be manipulated. The machine
will admit no data or input source other than from a valid, ocial
ballot. This feature is dierent from the computer networking systems
of banks, cellular phones, radios and from machines employing other
voting systems where keyboards and other devices are used precisely
to input data or modify that previously inputted;

c.

Utilizes visible light technology that allows the scanner to read marks
similar to the human eye;

d.

Can read 150 ballots per minute and accepts only valid ballots;

e.

Provides audit trail;

f.

Entails minimal human intervention;

g.

To get the result per precinct, the election ocer presses one button
on the keypad and the precinct report is instantly generated. Multiple
copies of the results/report are also available;

h.

Accumulation of totals in seconds At the counting center, totals are


read in seconds, providing precincts detail reports, cumulative
reports, and the ocial canvass. Reports may be displayed in
monitors or large screen TV for the media, candidates or general
public." 55

Accordingly, R.A. 8436 categorized into mandatory and optional the features which
the AES must contain, thus:
"Sec. 7.
Features of the System . The System shall utilize appropriate
technology for voting, and electronic devices for counting of votes and
canvassing of results. For this purpose, the Commission shall acquire
automated counting machines, computer equipment, devices and materials
and adopt new forms and printing materials. The System shall contain the
following features: (a) use of appropriate ballots, (b) stand-alone machine
which can count votes and an automated system which can consolidate the
results immediately, (c) with provisions for audit trails, (d) minimum human
intervention and (e) adequate safeguard/security measures. In addition, the
System shall as far as practicable have the following features:
1.

It must be user-friendly and need not require computer-literate


operators;

2.

The machine security must be built-in and multi-layer existent on


hardware and software with minimum human intervention using latest
technology like encrypted coding system;

3.

The security key control must be embedded inside the machine sealed
against human intervention;

4.

The Optical Mark Reader (OMR) must have a built-in printer for

numbering the counted ballots and also for printing the individual
precinct number on the counted ballots;
5.

The ballot paper for the OMR counting machine must be of the quality
that passed the international standard like ISO-1831, JIS-X 9004 or its
equivalent for optical character recognition;

6.

The ballot feeder must be automatic;

7.

The machine must be able to count from 100 to 150 ballots per
minute;

8.

The counting machine must be able to detect fake or counterfeit


ballots and must have a fake ballot rejector;

9.

The counting machine must be able to detect and reject previously


counted ballots to prevent duplication;

10.

The counting machine must have the capability to recognize the


ballot's individual precinct and city or municipality before counting or
consolidating the votes;

11.

The System must have a printer that has the capacity to print in one
stroke or operation seven (7) copies (original plus six (6) copies) of
the consolidated reports on carbonless paper;

12.

The printer must have at least 128 kilobytes of Random Access


Memory (RAM) to facilitate the expeditious processing of the printing
of the consolidated reports;

13.

The machine must have a built-in oppy disk drive in order to save
the processed data on a diskette;

14.

The machine must also have a built-in hard disk to store the counted
and consolidated data for future printout and verification;

15.

The machine must be temperature-resistant and rust-proof;

16.

The optical lens of the OMR must have a self-cleaning device;

17.
18.

The machine must not be capable of being connected to external


computer peripherals for the process of vote consolidation;
The machine must have an Uninterrupted Power Supply (UPS);

19.

The machine must be accompanied with operating manuals that will


guide the personnel of the Commission on the proper use and
maintenance of the machine;

20.

It must be so designed and built that add-ons may immediately be


incorporated into the System at minimum expense;

21.

It must provide the shortest time needed to complete the counting

of votes and canvassing of the results of the election;


22.

The machine must be able to generate consolidated reports like the


election return, statement of votes and certicate of votes at dierent
levels; and

23.

The accuracy of the count must be guaranteed, the margin of error


must be disclosed and backed by warranty under such terms and
conditions as may be determined by the Commission. . . ." [Emphasis
supplied]

It is well to note that all the 1,991 ACMs supplied by MPC under the Contract were
found to have satised the mandatory requirements of the AES, to wit: (a) use of
appropriate ballots, (b) stand-alone machine 56 which can count votes and an
automated system which can consolidate the results immediately, (c) with
provisions for audit trails, (d) minimum human intervention and (e) adequate
safeguard/security measures. As stated in the BAC Report, the failed marks of MPC
were mere formalities in certain documentary requirements. Further, these failed
marks were attributable to the software which can be readily corrected by
reprogramming. The failed marks, therefore, were not material in nature and were,
at worst, mere optional features of the System. 57 The RFP clearly authorizes the
BAC to waive any informality, non-conformity or irregularity in a bid which does not
constitute a material deviation, provided that such waiver does not prejudice or
affect the relative ranking of any bidder. 58
As regards the issue relating to the accuracy rating of 99.9995% mandated for the
counting machine by the RFP, right o I observe that the petitioners made
pronounced changes in their position at every turn. In the Petition, they simply
alleged that the COMELEC had erred when it "failed to declare a failed bidding and
to conduct a re-bidding of the project despite the failure of the bidders to pass the
technical tests," including the test on the accuracy rating of the machine. 59 At the
oral arguments, however, they claimed that the COMELEC had "waived the
accuracy requirement." 60 Finally, in their Memorandum they accused the poll body
of having "changed the accuracy criteria from 99.9995 percent to only 99.995
percent." 61
However, there is no competent evidence on record that the COMELEC had waived
or changed the prescribed accuracy rating. In fact, in the Contract between
COMELEC and MPEI, the same accuracy rating of 99.9995 percent was required.
Also in the letter dated October 24, 2003 of DOST, it claried its Report 62 stating
that upon further verication, it found that "except for 1 ACM (with an accuracy
rating of 99.998%), all of the 456 machines (including the retested 9 units) that
were tested by the DOST (as of October 20, 2003) have an accuracy rating of 100%
provided that the ballots are shaded correctly and fed into the ACMs following the
right orientation." 63 Notably, the DOST Report itself states that the machines are
100% accurate. 64 This ocial evaluation has mooted the petitioners' challenge and
rendered the pursuit thereof an inconsequential exercise.

Harping on the requirement for audit trail, the ponencia proceeds to conclude that
the ACMs are deficient because of their alleged inability to print the audit trail.
It should be emphasized that Table 6 of the DOST Report 65 shows that the tested
ACM of MPC generates audit trails which reect the exact date and time of the start
and end of counting of ballots per precinct. 66 The ACM was also able to generate
hard and soft copies of the audit trail of the counting machine, with hard copies
generated regularly. 67 Moreover, R.A. 8436 itself merely requires that the AES shall
have "provisions for audit trail," which the ACM, as tested, has complied with.
Anent the inability of the machine to detect previously downloaded data and
prevent these from being inputted again into the system, suce it to state that this
is neither a mandatory nor an optional feature of the AES under R.A. 8436. In any
case, it is deemed satisfied with DOST's final favorable evaluation.
In compliance with the Resolution dated December 9, 2003, the COMELEC led its
Partial Compliance and Manifestation dated December 24, 2003 informing the
Court that 1,991 units of ACMs have already been delivered to the Commission. Of
these, a total of P849,167,697.41, corresponding to 1,973 ACMs which have passed
DOST testing, has been paid to MPC.
The misgivings regarding the alleged deciencies in the software are largely
explained by the Commission in their Partial Compliance and Manifestation.
According to the Commission, the Project involved the development of three (3)
types of software for use during the evaluation of technical bids, testing and
acceptance procedures and on election day.
For purposes of the evaluation of technical bids, the bidders were asked to develop a
"base" software program that will enable the ACMs to function properly. The base
software is not the actual software to be used on election day. Hence, the software
defects were considered minor in nature, and accordingly, waived.
On the other hand, for purposes of the technical and acceptance procedures, a
Testing and Acceptance Manual (Manual) was prepared by the Ad Hoc Technical
Evaluation Committee, which ensured compliance of the Manual with the Terms of
Reference approved by the COMELEC and the provisions of R.A. 8436. The software
used for the ACMs was reprogrammed to comply with the Manual. Upon testing, the
DOST certified that 1,973 units passed the technical and acceptance procedures. 68
Anent the software to be used on election day, additional elements such as the nal
certied list of candidates, project of precincts, ocial ballot design and security
features, and encryption, digital certicates and digital signatures have to be
integrated into the software. Understandably, because of the timeline followed with
regard to these additional elements, the software has not yet been nalized. The
ponencia, however, chooses to view these circumstances with insularity. It even
holds suspect the certications issued by the DOST declaring that the ACMs had
passed the acceptance tests conducted by the Department.
It is not amiss to state at this juncture that these declarations should be accorded

full faith and credit there being no justication for a contrary stance. Reckoned from
the standpoint of the established legal presumptions of validity of ocial acts and
regularity in the performance of ocial duty, I nd it unjustied to speculate, as
theponencia does, on the good or bad motives that impelled the COMELEC to award
the Contract to MPC.

Epilogue
In view of the foregoing, the majority's position that the COMELEC should have
conducted a re-bidding of the Project is plainly injudicious. The procedure is
warranted only if no bid is received or qualied as the lowest calculated and
responsive bid. It is not amiss to mention again that there were more than 50
bidders 69 for the Project, out of which MPC was qualied as the lowest calculated
and responsive bid. A re-bidding of the Project would not serve any further purpose
because the bidding had actually drawn the participation of as many bidders as
realistically possible and that considering the enormity of the Project, a new bidding
would not reasonably attract new bidders. There is therefore no basis to conclude
that there was a failure of bidding, and the contract should be re-advertised and rebi d. 70 Remarkably besides, none of the losing bidders questioned the process
undertaken by the BAC. The logical conclusion is that the losing bidders have
conceded MPC's eligibility and qualications and deferred to the decision of the
COMELEC to award the Contract to MPC.
It is also to the COMELEC's credit that its award of the Contract to MPC has resulted
in substantial savings for the government. The paramount objective of public
bidding is to ensure that the government obtains the lowest and best price in the
market. 71 This objective was undoubtedly attained by the award of the Contract to
MPC. As emphasized in the respondents' pleadings and in newspaper
advertisements, 72 MPC's bid covering nationwide automation was P49,000,000.00
lower than that submitted by TIMC, with its coverage restricted to Mindanao and
the National Capital Region. 73
As stated at the outset, the Court has unfailingly stressed the importance of giving
the COMELEC considerable latitude in adopting means and methods that will insure
the accomplishment of the objective for which it was created to promote free,
orderly, honest, peaceful and credible elections and perforce prudently declined to
interfere with COMELEC's exercise of its administrative functions absent any
showing of grave abuse of discretion. I see no justication for the departure from
this principle in the instant case.
Let it be noted that R.A. No. 8436 was precisely intended as an initial step towards
the modernization of the Philippine electoral system which seeks to ensure free,
orderly, honest, peaceful and credible elections. The COMELEC must be given
enough latitude to bring into fruition this laudable purpose.
All the challenges, whether factual or legal, to the acts of COMELEC, to my mind,
have been adequately explained and clarified.
The most crucial point raised against the respondents is the alleged non-submission

of the consortium agreements before the bidding deadline. The ponencia adverted
to it no less than ve times. But the assertion which is one of fact is debunked by
the consortium agreements themselves which were notarized not later than March
9, 2003, or before the bidding deadline. To ignore the public character of the
documents is to unfairly ascribe bad faith to COMELEC.
As for the fact that MPEI was made the party to the Contract with COMELEC, this
was so simply because M P E I was authorized to sign in behalf of the other
consortium members.
Seemingly, the ultimate resolution of this case has narrowed down to the question
of which prognostication of the technical performance of the counting machines on
election day is accurate: That of the COMELEC's or this Court's? But that would lead
the Court to tread on unfamiliar waters. More fundamentally, the question was not
raised in the Petition.
In closing, I refer to the denition of "grave abuse of discretion" which the Court
made in Taada v. Angara, 74 cited at the opening of the Decision: 75
By grave abuse of discretion is meant such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of
discretion is not enough. It must be grave abuse of discretion as when the
power is exercised in an arbitrary or despotic manner by reason of passion
or personal hostility, and must be so patent and so gross as to amount to
an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law. Failure on the part of the
petitioner to show grave abuse of discretion will result in the dismissal of the
petition.
In rendering this Decision, this Court never forgets that the Senate, whose
act is under review, is one of two sovereign houses of Congress and is thus
entitled to great respect in its actions. It is itself a constitutional body
independent and coordinate, and thus its actions are presumed regular and
done in good faith. Unless convincing proof and persuasive arguments are
presented to overthrow such presumptions, this Court will resolve every
doubt in its favor. Using the foregoing well-accepted denition of grave
abuse of discretion and the presumption of regularity in the Senate's
processes, this Court cannot nd any cogent reason to impute grave abuse
of discretion to the Senate's exercise of its power of concurrence in the
WTO Agreement granted it by Sec. 21 of Article VII of the Constitution. 76

Like the Senate to which the Court graciously deferred in the cited ruling, I
respectfully submit, the COMELEC deserves the same degree of deferential
treatment given its status as a constitutional body. But quite lamentably, the
Decision would bring disrepute to and even cause havoc on the COMELEC as an
institution. It will never be the same.
I therefore vote to dismiss the instant Petition.

Footnotes

1.

Republic v. Cocofed, 372 SCRA 462, 493, December 14, 2001.

2.

Taada v. Angara, 272 SCRA 18, 79, May 2, 1997.

3.

Francisco v. House of Representatives , G.R. No. 160261 and consolidated cases,


November 10, 2003, per Morales, J .

4.

Rollo, Vol. I, pp. 3-48. While petitioners labeled their pleading as one for prohibition
and mandamus, its allegations qualify it also as one for certiorari.

5.

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 purposes.

6.

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.

7.

Section 6 of RA 8436 provides "[i]f in spite of its diligent eorts to implement this
mandate in the exercise of this authority, it becomes evident by February 9, 1998
that the Commission cannot fully implement the automated election system for
national positions in the May 11, 1998 elections, the elections for both national and
local positions shall be done manually except in the Autonomous Region in Muslim
Mindanao (ARMM) where the automated election system shall be used for all
positions."

8.

Loong v. Comelec , 365 Phil. 386, April 14, 1999; see also Panganiban, Leadership
by Example, 1999 ed., pp. 201-249.

9.

Annex "7" of the Comment of Private Respondents MPC and MPEI, rollo, Vol. II, p.
638.

10.

Annex "8" of the Comment of Private Respondents MPC and MPEI, rollo, Vol. II,
pp. 641-642.

11.

Annex "G" of the Petition, Request for Proposal, p. 12; rollo, Vol. I, p. 71.

12.

Id., pp. 21-23 & 80-82.

13.

According to Public Respondent Comelec's Memorandum prepared by the OSG,


p. 8; rollo, Vol. IV, p. 2413.

14.

Photocopy appended as Annex "B" of the Petition; rollo, Vol. I, pp. 52-53.

15.

Photocopy appended as Annex "C" of the Petition; rollo, Vol. I, pp. 54-55.

16.

The case was deemed submitted for decision on November 5, 2003, upon this
Court's receipt of Private Respondent MPC/MPEI's Memorandum, which was signed
by Attys. Alfredo V. Lazaro Jr., Juanito I. Velasco Jr. and Ma. Concepcion V. Murillo
of the Lazaro Law Firm. On October 27, 2003, the Court received petitioners'
Memorandum, which was signed by Atty. Alvin Jose B. Felizardo of Pastelero Law
Oce, and Public Respondent Comelec's Memorandum, signed by Comelec
Comm. Florentino A. Tuason Jr. Apart from these, the Oce of the Solicitor
General (OSG) led another Memorandum on behalf of Comelec, also on October
27, 2003, signed by Asst. Sol. Gen. Carlos N. Ortega, Asst. Sol. Gen. Renan E.
Ramos, Sol. Jane E. Yu and Asso. Sol. Catherine Joy R. Mallari, with a note that Sol.
Gen. Alfredo L. Benipayo "inhibited himself." The writing of the Decision in this case
was initially raed to Justice Dante O. Tinga. However, during the Court's
deliberations, the present ponente's then "Dissenting Opinion" to the draft report
of Justice Tinga was upheld by the majority. Hence, the erstwhile Dissent was
rewritten into this full ponencia.

17.

Page 11; rollo, Vol. IV, p. 2390. During the Oral Argument on October 7, 2003,
the Court limited the issues to the following: (1) locus standi of petitioners; (2)
prematurity of the Petition because of non-exhaustion of administrative remedies
for failure to avail of protest mechanisms; and (3) validity of the award and the
Contract being challenged in the Petition.

18.

Chavez v. Presidential Commission on Good Government , 360 Phil. 133,


December 9, 1998, per Panganiban, J .

19.

Kilosbayan, Inc. v. Morato, 320 Phil. 171, November 16, 1995, per Mendoza, J .

20.

Tatad v. Secretary of the Department of Energy , 346 Phil. 321, November 5,


1997, per Puno, J .

21.

Del Mar v. Philippine Amusement and Gaming Corporation , 346 SCRA 485,
November 29, 2000, per Puno, J .

22.

Kilosbayan, Inc. v. Morato, supra.

23.

Dumlao v. Comelec, 95 SCRA 392, January 22, 1980, per Melencio-Herrera, J.

24.

Philconsa v. Mathay, 124 Phil. 890, October 4, 1966, per Reyes J.B.L., J .

25.

Respondent Comelec's Memorandum, pp. 50-51.

26.

The law obliges no one to perform the impossible.

27.

See private respondents' Memorandum, p. 60.

28.

Photocopy appended as Annex "B" of the petition.

29.

334 Phil. 146, January 10, 1997.

30.

Id., p. 153, per Torres Jr., J .

31.

Although by its Resolution 6074, Comelec awarded the bid to MPC, the actual

Contract was entered into by Comelec with MPEI. The Contract did not indicate an
exact date of execution (except that it was allegedly done on the "____ day of
May,") but it was apparently notarized on June 30, 2003.
32.

In connection with this, public respondents, in their Memorandum made


reference to the Implementing Rules and Regulations of RA 6957 as amended by
RA 7718 (the Build-Operate-Transfer Law), and considered said IRR as being
applicable to the instant case on a suppletory basis, pending the promulgation of
implementing rules for RA 9184 (the Government Procurement Act). For our
purposes, it is well worth noting that Sec. 5.4 of the IRR for RA 6957 as amended,
speaks of prequalication requirements for project proponents, and in sub-section
(b)(i), it provides that, for purposes of evaluating a joint venture or consortium, it
shall submit as part of its prequalication statement a business plan which shall
among others identify its members and its contractor(s), and the description of
the respective roles said members and contractors shall play or undertake in the
project. If undecided on a specic contractor, the proponent may submit a short
list of contractors from among which it will select the nal contractor. Short listed
contractors are required to submit a statement indicating willingness to participate
in the project and capacity to undertake the requirements of the project . The
business plan shall disclose which of the members of the joint venture/consortium
shall be the lead member, the nancing arm, and/or facility operator(s), and the
contractor(s). In other words, since public respondents argue that the IRR of RA
6957 as amended would be suppletorily applicable to this bidding, they could not
have been unaware of the requirement under Sec. 5.4 (b)(i) thereof, in respect of
submission of the requisite business plan by a joint venture or consortium
participating in a bidding.

33.

Now, what would prevent an enterprising individual from obtaining copies of the
Articles of Incorporation and nancial statements of, let us say, San Miguel
Corporation and Ayala Corporation from the SEC, and using these to support
one's claim that these two giant conglomerates have formed a consortium with
one's own penny-ante company for the purpose of bidding for a multi-billion peso
contract? As far as Comelec is concerned, the answer seems to be: Nothing.

34.

TSN, October 7, 2003, p. 104.

35.

Ibid.

36.

Id., pp. 104-105.

37.

Id., pp. 103-108.

38.

Id., pp. 108-114.

39.

Id., pp. 142-145.

40.

On pp. 42-43 of the Memorandum of public respondents, led with this Court on
October 27, 2003, Comm. Tuason himself signed this pleading in his capacity as
counsel of all the public respondents.

41.

Copies of these four agreements were belatedly submitted to this Court by MPEI

through a Manifestation with Profuse Apologies filed on October 9, 2003.


42.

Copies of the four separate bilateral agreements were submitted to the Court last
October 9, 2003.

43.

The date was carelessly stated as "____ May, 2003."

44.

At p. 38.

45.

During the Oral Argument, counsel for public respondents admitted that Comelec
was aware that not all the members of the "consortium" had agreed to be jointly
and solidarily liable with MPEI.

46.

232 SCRA 110, 144, May 5, 1994, per Davide Jr., J . (now CJ).

47.

Culled from table 6, DOST Report; rollo, Vol. II, pp. 1059-1072.

48.

Annex "I" of the Petition, Vol. I, pp. 116-118.

49.

Source code is the program instructions in their original form. Initially, a


programmer writes a computer program in a particular programming language.
This form of the program is called the source program, or more generically,
source code. To execute the program, however, the programmer must translate it
into machine language, the language that the computer understands. Source code
is the only format that is readable by humans. When you purchase programs, you
usually receive them in their machine-language format. This means that you can
execute them directly, but you cannot read or modify them. Some software
manufacturers provide source code, but this is useful only if you are an
experienced programmer.

50.

The key passages of the Court's Resolution of December 9, 2003 were cited and
reproduced verbatim in the Comelec's Partial Compliance and Manifestation.

51.

Metals Industry Research and Development Center (MIRDC) of the Department


of Science & Technology (DOST).

52.

Photocopy of the MIRDC-DOST letter of Dec. 15, 2003 is attached as Annex "A"
to Respondent Comelec's Partial Compliance and Manifestation . However, the 11
Test Certications of the DOST (covering 11 lots or 158 ACMs) which were
purportedly attached to this letter, have not been reproduced and submitted to
the Court, for reasons known only to respondents.

53.

For example, one can conduct tests to see if certain machines will tip over and
fall on their sides when accidentally bumped, or if they have a tendency to collapse
under their own weight. A less frivolous example might be that of conducting the
same tests, but lowering the bar or passing mark.

54.

In the December 15, 2003 issue of the Philippine Daily Inquirer is an item titled
'Digital 'dagdag-bawas': a nonpartisan issue" by Dean Jorge Bocobo, from which
the following passages appear:
"The Commission on Elections will use automated counting machines to tally

paper ballots in the May elections, and a telecommunications network to transmit


the results to headquarters, along with CDs of the data. Yet, with only ve months
to go, the application software packages for that crucial democratic exercise
several hundred thousand lines of obscure and opaque code has not yet even
been delivered in its nal form, Comelec Chairman Benjamin Abalos admitted last
week.
"My jaw dropped in amazement. Having built software for General Electric Co.'s
medical systems business and military aircraft engines division (in another lifetime),
I have learned the hard and painful way that 90 percent of unintended fatal
problems with complex software lies in the last 10 percent of the code produced.
From experience, I can assure you now with metaphysical certainty that not even
the people furiously writing that software know whether it will actually work as
intended on May 10, much less guarantee it. Simply put, the proposed softwarehardware combination has neither been tested completely nor veried to comply
with specifications."

55.

Dated "____ May, 2003" but notarized on June 30, 2003.

VITUG, J.:
1.

People v. Cuaresma, 172 SCRA 415.

2.

Santiago v. Vasquez , 217 SCRA 633.

5.

People v. Chavez , 358 SCRA 810.


Matuguina Integrated Wood Products, Inc. vs. Court of Appeals , 263 SCRA 490;
Mafinco Trading Corp. vs. Ople, et al., 70 SCRA 139.
See Article VIII, Section 17 of the 1987 Constitution.

YNARES-SANTIAGO, J., concurring:


1.

G.R. No. 157013, 10 July 2003.

2.

See Loong v. Commission on Elections , 365 Phil. 386 (1999).

3.

Separate Opinion, Vitug, J., at p. 2.

4.

Sta. Ines Melale Forest Products Corporation v. Macaraig , 359 Phil. 831 (1998);
Felipe Ysmael, Jr. and Co. v. Deputy Executive Secretary , G.R. No. 79538, 18
October 1990, 190 SCRA 673; Concerned Ocials of MWSS v. Vasquez , 310 Phil.
549 (1995). See SEVERIANO S. TABIOS, Annotation on Failure to Exhaust
Administrative Remedies as a Ground for Motion To Dismiss, 165 SCRA 352, 357362 (1988).

5.

Union Bank of the Philippines v. Court of Appeals , 352 Phil. 808 (1998); University
of the Philippines v. Catungal, Jr., 338 Phil. 808 (1997).

6.

Paat v. Court of Appeals , 334 Phil. 146 (1997).

7.

Quisumbing v. Judge Gumban , G.R. No. 85156, 5 February 1991, 193 SCRA 520;
Salinas v. NLRC, G.R. No. 114671, 24 November 1999, 319 SCRA 54; Samson v.
NLRC, 32 Phil. 135 (1996). See SEVERIANO S. TABIOS, Annotation on Failure to
Exhaust Administrative Remedies as a Ground for Motion to Dismiss, 165 SCRA
352, 357-362 (1988).

8.

Eastern Shipping Lines v. POEA , G.R. No. L-76633, 18 October 1988, 166 SCRA
533; Paat v. Court of Appeals , 334 Phil. 146 (1997).

9.

Industrial Power Sales, Inc. v. Sinsuat , G.R. No. L-29171, 15 April 1988, 160 SCRA
19.

10.

Vda. De Tan v. Veterans Backpay Commission, 105 Phil. 377 (1959).

11.

De Lara v. Cloribel, 121 Phil. 1062 (1965).

12.

Demaisip v. Court of Appeals , 106 Phil. 237 (1959).

13.

Cipriano v. Marcelino, 150 Phil. 336 (1972).

14.

Alzate v. Aldana, 107 Phil. 298 (1960).

15.

Soto v. Jareno, G.R. No. L-38962, 15 September 1986, 144 SCRA 116.

16.

Quisumbing v. Judge Gumban , G.R. No. 85156, 5 February 1991, 193 SCRA 520;
Indiana Aerospace University v. Commission on Higher Education (CHED), G.R. No.
139371, 4 April 2001, 356 SCRA 367.

17.

Indiana Aerospace University v. Commission on Higher Education (CHED), G.R.


No. 139371, 4 April 2001, 356 SCRA 367, citing Liberty Insurance Corp. v. Court
of Appeals , 222 SCRA 37, 47 (1993); Alindao v. Joson, 264 SCRA 211, 220 (1996);
Tan v. Court of Appeals , 275 SCRA 568, 574-575 (1997); and Tan Jr. v.
Sandiganbayan, 292 SCRA 452, 457-458 (1998).

18.

RFP, at p. 12.

19.

Sevilla v. Court of Appeals , G.R. Nos. L-41182-83, 15 April 1988, 160 SCRA 171.

20.

G.R. No. 75875, 15 December 1989, 180 SCRA 130.

21.

Rollo, p. 2355.

22.

Id., p. 2364.

23.

Id., pp. 2355 and 2364.

24.

Id., pp. 2358 and 2367.

25.

Id., pp. 2355 and 2364.

26.

Id.

27.

Id., p. 2348.

28.

Id.

29.

Id.

30.

Id., p. 2349.

31.

Id., p. 2352.

32.

Id.

33.

Id., p. 2353.

34.

"Automated Counting and Canvassing Project Contract", Rollo, at p. 2198.

35.

Id., Appendix A, Rollo, at p. 2218.

36.

Id., Appendix B, Rollo, at p. 2238.

37.

Id., Appendix C, Rollo, at p. 2259.

38.

Id., Appendix D, Rollo, at p. 2275.

39.

Id., Appendix E, Rollo, at p. 2292.

40.

Id., Appendix F, Rollo, at p. 2310.

41.

Id., Appendix H, Rollo, at p. 2314. Appendix G, if any, is not part of the records.

42.

Id., Appendix I, Rollo, at p. 2322.

43.

Id., Appendix J, Rollo, at p. 2326.

44.

Id., Appendix K, Rollo, at p. 2335.

45.

Id., Appendix L, Rollo, at p. 2341.

46.

Id., Appendix M, Rollo, at p. 2344.

47.

Rollo, p. 1408.

48.

Id., pp. 1870; 1954; 2052.

49.

Lopez v. Piatco, G.R. No. 155661, 5 May 2003.

50.

A. Cobacha & D. Lucenario, LAW ON PUBLIC BIDDING AND GOVERNMENT


CONTRACTS 13 (1960).

SANDOVAL-GUTIERREZ, J., concurring:


1.

LIVY, History. Bk. XXXV, ch. 32.

2.

Electronic Voting: What You Need To Know , William Rivers Pitt, Interview of David

L. Dill, a Professor of Computer Science at Stanford University. Monday, 20


October 2003.
3.

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 therefore and for other purposes.

4.

Section 7.

5.

President Gloria Macapagal-Arroyo had earlier issued Executive Order (EO) No.
172 on January 24, 2003, allocating P2,500,000,000.00 to fund the AES. To
augment this amount, the President issued EO No. 175 on February 10, 2003,
allocating an additional P500,000,000.00 for the Project. The COMELEC
recongured the modernization program into the three (3) phases mentioned
above and reallocated the budget as follows: (a) P1 Billion for Phase I; (2) P1.7
Billion for Phase II; and (3) P300 Million for Phase III.

6.

Rollo at 124.

7.

Report on the Evaluation of the Technical Proposal on Phase II.

8.

Republic of the Philippines vs. Silerio , G.R. No. 108869, May 6, 1997, 272 SCRA
280, citing Provident Tree Farms, Inc. vs. Batario, Jr ., 231 SCRA 471 (1994); Lim,
Sr. v. Secretary of Agriculture and Natural Resources , 34 SCRA 751 (1970).

9.

50 SCRA 498-499 (1973).

10.

Petition at 39.

11.

G.R. No. 124293, November 20, 2000, 345 SCRA 143.

12.

G.R. No. 138298, November 29, 2000, 346 SCRA 485.

13.

Section 55. Protests on Decisions of the BAC


55.1
Decisions of the BAC with respect to the conduct of bidding may be
protested in writing to the head of the procuring entity; Provided, however, That a
prior motion for reconsideration should have been led by the party concerned
within the reglementary periods specied in this IRR-A and the same has been
resolved. The protest must be resolved led within seven (7) calendar days from
receipt by the party concerned of the resolution of the BAC denying its motion for
reconsideration. A protest may be made by ling a veried position paper with the
head of the procuring agency concerned, accompanied by the payment of a nonrefundable protest fee. The non-refundable protest fee shall be in an amount
equivalent to no less than one percent (1%) of the ABC.

14.
15.

An Act Providing for the Modernization, Standardization, and Regulation of the


Procurement Activities of the Government and for Other Purposes.
Section 58. Resort to Regular Courts: Certiorari.
58.1

Court action may be resorted to only after the protests contemplated

in this Rule shall have been completed, i.e., resolved by the head of the procuring
entity with nality. The regional trial court shall have jurisdiction over nal decisions
of the head of the procuring entity. Court actions shall be governed by Rule 65 of
the 1997 Rules of Civil Procedure.
16.
17.

18.
19.

G.R. No. 151992, September 18, 2002, 389 SCRA 353.


See Buklod ng Kawaning EIIB vs. Zamora, G.R. Nos. 142801-802, July 10, 2001;
Dario vs. Mison, G.R. No. 81954, August 8, 1989, 176 SCRA 84; Fortich vs.
Corona, G.R. No. 131457, April 24, 1998, 289 SCRA 624.

Rollo, Vol. IV at 1784.


In open court, Atty. Lazaro, counsel for private respondent Mega Pacic
eSolutions, Inc. was directed by this Court to submit the following documents:
(a)
contract executed between consortium represented by Mega Pacic
eSolutions, Inc. and COMELEC;
(b)

agreement among the consortium members;

(c)

financial statements of the members of the consortium;

(d)
agreement as to the joint and several liability of the members of the
consortium; status report of the Department of Science and Technology (DOST)
as to whether the machines are already free of the eight (8) defects or failing
marks. (Resolution dated October 7, 2003, Rollo, Vol. II at 1221-1222.)
20.

Rollo, Vol. IV at 2198.

21.

The MOA between MPEI and SK C & C was entered only on March 9, 2003.

22.

Rollo, Vol. IV at 2355-2363.

23.

Id. at 2364-2371.

24.

Rivera vs. Maclang, G.R. No. L-15948, January 31, 1963, 7 SCRA 57.

25.

64 Am Jur 2d 64.

26.

Prescribing Policies, Guidelines, Rules and Regulations


Infrastructure Contracts; Promulgated June 11, 1978.

27.

Fernandez, Jr., A Treatise on Government Contracts Under Philippine Law , 2001


at 30-31, citing Borromeo vs. City of Manila, 62 Phil. 512 (1960); Jalandoni vs.
NARRA, 108 Phil. 486 (1935); Filipinas Engineering vs. Ferrer , G.R. No. L-31455,
February 28, 1985, 135 SCRA 25.

TINGA, J., dissenting:


1.

G.R. No. 133250, July 9, 2002.

2.

G.R. No. 155001, May 5, 2003.

for

Government

3.

Secs. 2 & 3, Art. XII, 1987 CONST.

4.

Sections 17 & 19, Art. XII, 1987 CONST.

5.

BOT Law and its Implementing Rules and Regulations.

6.

Sec. 2.

7.

Sec. 3.

8.

For instance, issues covering Phase I (Voters' Registration and Validation System)
and Phase III (Electronic Transmission) which were raised in the media are not
before the Court.

9.

Dissenting opinion of Mr. Justice Felix Frankfurter, Uveges v. Commonwealth of


Pennsylvania, 335 U.S. 437.

10.

Frankfurter, Felix Frankfurter on the Supreme Court Extra Judicial Essays on the
Court and the Constitution, 1970, p. 339, citing United States v. Ferreira , 1 How.
40 (1851).

11.

E.g., the COMELEC has to promulgate new rules on casting of votes,


appreciation, counting and canvassing of ballots, conduct a voters' education
program on the automated system and train personnel who will operate the ACMs.

12.

Cauton v. COMELEC, G.R. No. L-25467, April 27, 1967, 19 SCRA 911.

13.

73 Phil. 288 (1942).

14.

Id. at 295-296.

15.

Gonzales, Administrative Law A text, 1979, p. 137.

16.

336 Phil. 126 (1997).

17.

Id. at 135-136.

18.

Sec. 1, Rule 65, 1997 Rules of Civil Procedure.

19.

334 Phil. 146, citations omitted.

20.

Id. at 153.

21.

Sec. 55.

22.

Pars. (a) & (d) Sec. 5, Code of Conduct and Ethical Standards for Public Ocials
and Employees.

23.

Decision, pp. 33 & 34.

24.

Resolution, p. 3.

25.

TSN, October 7, 2003, pp. 101-105.

26.

TSN, October 7, 2003, pp. 144-146.

27.

TSN, October 7, 2003, pp. 264-278.

28.

Rollo, p. 71.

29.

Id. at 2348-2351 and 2352-2354, respectively.

30.

Id. at 2355-2363 and 2364-2373, respectively.

31.

Id. at 71.

32.

Id. at 2199-2217.

33.

Id. at 2200.

34.

Id. at 2212.

35.

Id. at 72.

36.

Decision, p. 44.

37.

Supra, infra, p.15.

38.

Supra, note 28 at 2427.

39.

Art. 1825, Civil Code.

40.

Supra, note 28 at 77.

41.

Id. at 76-79.

42.

Id. at 72.

43.

G.R. No. 113375, May 5, 1994, 232 SCRA 110.

44.

Id. at 144.

45.

"An Act Authorizing The Financing, Construction, Operation And Maintenance Of


Infrastructure Projects By The Private Sector And For Other Purposes." It is
otherwise known as the BOT Law.

46.

"An Act Amending Certain Sections Of Republic Act No. 6957, Entitled "An Act
Authorizing The Financing, Construction, Operation And Maintenance Of
Infrastructure Projects By The Private Sector, And For Other Purposes."

47.

Sec. 5.4, b (i).

48.

Supra, note 28 at 74.

49.

Id. at 74-75.

50.

Id. at 384-385.

51.

Id. at 2598-2599.

52.
53.
54.
55.
56.

Report on the Testing and Technical Evaluation of Automated Counting Machines


by the DOST, April 1-3, 2003, p. 1.

Supra, note 28 at 2431-2432.


Sponsorship Remarks of Rep. Abueg at the House of Representatives, May 20,
1997; TSN, pp. 7-8.

Id. at 10-11.
During the oral arguments, Com. Borra asserted that the ACMs are stand alone
machines in that they do not have inputs or outputs that enable them to be
networked. TSN, October 7, 2003, pp. 176-179.

57.

Supra, note 28 at 2435.

58.

Id. at 81.

59.

Id. at 31-33.

60.

TSN, October 7, 2003, p. 26.

61.

Supra, note 28 at 2396.

62.

Supra note 52.

63.

Supra, note 28 at 2541-2542, letter from the Executive Director cum Chairman
of the DOST Technical Evaluation Committee, Mr. Rolando Viloria, addressed to
Com. Borra.

64.

Supra, note 28 at 1266.

65.

Id. at 1257.

66.

Id. at 1258.

67.

Id. at 1264.

68.

The letter dated December 15, 2003 addressed to Com. Borra from Rolando T.
Viloria, Executive Director and Chairman of the DOST-Technical Evaluation
Committee states that the DOST tested a total of 1,991 ACMs. Of these, 18 units
failed the test. Out of the 18 units, only one (1) unit failed the retest.

69.

The Memorandum of the OSG (Rollo, p. 2428) states that there were more than
50 prospective bidders for the Project.

70.

Supra, note 28 at 82.

71.

Cobacha and Lucenario, Law on Public Bidding and Government Contracts , 1960,

p. 7.
72.

Philippine Daily Inquirer, November 20, 2003.

73.

Supra, note 28 at 2503-2504.

74.

G.R. No. 118295, 272 SCRA 18.

75.

Decision, p. 2.

76.

Supra, note 77 at 79-80.