EN BANC

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

INFORMATION TECHNOLOGY FOUNDATION OF THEPHILIPPINES, MA. CORAZON M. AKOL, MIGUEL UY, EDUARDOH. LOPEZ, AUGUSTO C. LAGMAN, REX C. DRILON, MIGUELHILADO, LEY SALCEDO, and MANUEL ALCUAZ JR., petitioners, vs.COMMISSION ON ELECTIONS; COMELEC CHAIRMAN BENJAMINABALOS SR.; COMELEC BIDDING and AWARD COMMITTEECHAIRMAN EDUARDO D. MEJOS and MEMBERS GIDEON DEGUZMAN, JOSE F. BALBUENA, LAMBERTO P. LLAMAS, andBARTOLOME SINOCRUZ JR.; MEGA PACIFIC eSOLUTIONS, INC.;and MEGA PACIFIC CONSORTIUM, respondents.

D E C I S I O N

PANGANIBAN, J p:

There is grave abuse of discretion (1) when an act is done contrary to theConstitution, 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 thesubject Contract not only in clear violation of law and jurisprudence, but also inreckless disregard of its own bidding rules and procedure. For the automation of thecounting and canvassing of the ballots in the 2004 elections, Comelec awarded theContract to "Mega Pacific Consortium" an entity that had not participated in thebidding. Despite this grant, the poll body signed the actual automation Contractwith "Mega Pacific eSolutions, Inc.," a company that joined the bidding but had notmet the eligibility requirements.

Comelec awarded this billion-peso undertaking with inexplicable haste, withoutadequately checking and observing mandatory financial, technical and legalrequirements. It also accepted the proferred computer hardware and software evenif, at the time of the award, they had undeniably failed to pass eight criticalrequirements designed to safeguard the integrity of elections, especially thefollowing three items:

• They failed to achieve the accuracy rating criteria of 99.9995 percentset-up by the Comelec itself

• They were not able to detect previously downloaded results at variouscanvassing or consolidation levels and to prevent these from being

inputted again

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

Because of the foregoing violations of law and the glaring grave abuse of discretioncommitted by Comelec, the Court has no choice but to exercise its solemn"constitutional duty" 3 to void the assailed Resolution and the subject Contract. Theillegal, imprudent and hasty actions of the Commission have not only desecratedlegal and jurisprudential norms, but have also cast serious doubts upon the pollbody's ability and capacity to conduct automated elections. Truly, the pith and soulof democracy — credible, orderly, and peaceful elections — has been put in jeopardyby 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 declarenull and void Resolution No. 6074 of the Commission on Elections (Comelec), whichawarded "Phase II of the Modernization Project of the Commission to Mega PacificConsortium (MPC);" (2) to enjoin the implementation of any further contract thatmay have been entered into by Comelec "either with Mega Pacific Consortiumand/or Mega Pacific eSolutions, Inc. (MPEI);" and (3) to compel Comelec to conduct are-bidding of the project.

The Facts

The following facts are not disputed. They were culled from official documents, theparties' pleadings, as well as from admissions during the Oral Argument on October7, 2003.

On June 7, 1995, Congress passed Republic Act 8046, 5 which authorized Comelec toconduct a nationwide demonstration of a computerized election system and allowedthe poll body to pilot-test the system in the March 1996 elections in theAutonomous Region in Muslim Mindanao (ARMM).

On December 22, 1997, Congress enacted Republic Act 8436 6 authorizing Comelecto use an automated election system (AES) for the process of voting, counting votesand canvassing/consolidating the results of the national and local elections. It alsomandated the poll body to acquire automated counting machines (ACMs), computerequipment, devices and materials; and to adopt new electoral forms and printingmaterials.

Initially intending to implement the automation during the May 11, 1998presidential elections, Comelec — in its Resolution No. 2985 dated February 9, 19987 — eventually decided against full national implementation and limited theautomation to the Autonomous Region in Muslim Mindanao (ARMM). However, dueto 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 beenacquired for that electoral exercise allegedly because of time constraints.

On October 29, 2002, Comelec adopted in its Resolution 02-0170 a modernizationprogram for the 2004 elections. It resolved to conduct biddings for the three (3)phases of its Automated Election System; namely, Phase I — Voter Registration andValidation System; Phase II — Automated Counting and Canvassing System; andPhase 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, 2004elections. Upon the request of Comelec, she authorized the release of an additionalP500 million.

On January 28, 2003, the Commission issued an "Invitation to Apply for Eligibilityand to Bid," which we quote as follows:

"INVITATION TO APPLY FOR ELIGIBILITY AND TO BID

The Commission on Elections (COMELEC), pursuant to the mandate ofRepublic Act Nos. 8189 and 8436, invites interested offerors, vendors,suppliers or lessors to apply for eligibility and to bid for the procurement bypurchase, lease, lease with option to purchase, or otherwise, supplies,equipment, materials and services needed for a comprehensive AutomatedElection System, consisting of three (3) phases: (a) registration/verificationof voters, (b) automated counting and consolidation of votes, and (c)electronic transmission of election results, with an approved budget of TWOBILLION 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 Philippinesand of which at least sixty percent (60%) of the interest belongsto citizens of the Philippines;

c. Corporations duly organized under the laws of the Philippines,and of which at least sixty percent (60%) of the outstandingcapital stock belongs to citizens of the Philippines;

d. Manufacturers, suppliers and/or distributors formingthemselves into a joint venture, i.e., a group of two (2) or moremanufacturers, suppliers and/or distributors that intend to bejointly and severally responsible or liable for a particularcontract, provided that Filipino ownership thereof shall be atleast sixty percent (60%); and

e. Cooperatives duly registered with the CooperativesDevelopment Authority.

Bid documents for the three (3) phases may be obtained starting 10February 2003, during office hours from the Bids and Awards Committee(BAC) Secretariat/Office of Commissioner Resurreccion Z. Borra, 7th Floor,Palacio del Governador, Intramuros, Manila, upon payment at the CashDivision, Commission on Elections, in cash or cashier's check, payable to theCommission on Elections, of a non-refundable amount of FIFTEENTHOUSAND PESOS (Php15,000.00) for each phase. For this purpose,interested offerors, vendors, suppliers or lessors have the option toparticipate in any or all of the three (3) phases of the comprehensiveAutomated Election System.

A Pre-Bid Conference is scheduled on 13 February 2003, at 9:00 a.m. at theSession Hall, Commission on Elections, Postigo Street, Intramuros, Manila.Should there be questions on the bid documents, bidders are required tosubmit their queries in writing to the BAC Secretariat prior to the scheduledPre-Bid Conference.

Deadline for submission to the BAC of applications for eligibility and bidenvelopes for the supply of the comprehensive Automated Election Systemshall 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 qualifications of the biddersafter the bidding and before the contract is executed. Should such reviewuncover any misrepresentation made in the eligibility statements, or anychanges in the situation of the bidder to materially downgrade the substanceof such statements, the COMELEC shall disqualify the bidder upon duenotice without any obligation whatsoever for any expenses or losses thatmay be incurred by it in the preparation of its bid." 9

On February 11, 2003, Comelec issued Resolution No. 5929 clarifying certaineligibility criteria for bidders and the schedule of activities for the project bidding, asfollows:

"1.) Open to Filipino and foreign corporation duly registered and licensedto do business and is actually doing business in the Philippines, subjectto Sec. 43 of RA 9184 (An Act providing in the ModernizationStandardization and Regulation of the Procurement Activities of theGovernment and for other purposes etc.)

2.) 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 verification of voters — the reference site of an existingdata base installation using Automated Fingerprint IdentificationSystem (AFIS) with at least Twenty Million.

3.) Ten percent (10%) equity requirement shall be based on the totalproject 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 ofthe Bid documents shall be released at the same time, and thememorandum of Comm. Resurreccion Z. Borra dated February 7,2003, the documents to be released on Friday, February 14, 2003 at2:00 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 March5, 2003.

2) The aforementioned documents will be available at the followingoffices:

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) toprocure the election automation machines. The Bids and Awards Committee (BAC)of Comelec convened a pre-bid conference on February 18, 2003 and gaveprospective bidders until March 10, 2003 to submit their respective bids.

Among others, the RFP provided that bids from manufacturers, suppliers and/ordistributors forming themselves into a joint venture may be entertained, providedthat the Philippine ownership thereof shall be at least 60 percent. Joint venture isdefined in the RFP as "a group of two or more manufacturers, suppliers and/ordistributors that intend to be jointly and severally responsible or liable for aparticular contract." 11

Basically, the public bidding was to be conducted under a two-envelope/two stagesystem. The bidder's first envelope or the Eligibility Envelope should establish thebidder's eligibility to bid and its qualifications to perform the acts if accepted. On theother hand, the second envelope would be the Bid Envelope itself. The RFP outlinesthe bidding procedures as follows:

"25. Determination of Eligibility of Prospective Bidders

"25.1 The eligibility envelopes of prospective Bidders shall be openedfirst to determine their eligibility. In case any of the requirements specified inClause 20 is missing from the first bid envelope, the BAC shall declare saidprospective 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 usingsimple 'pass/fail' criteria and shall be determined as either eligible or ineligible.If the prospective Bidder is rated 'passed' for all the legal, technical andfinancial requirements, he shall be considered eligible. If the prospectiveBidder is rated 'failed' in any of the requirements, he shall be consideredineligible.

"26. Bid Examination/Evaluation

"26.1 The BAC will examine the Bids to determine whether they arecomplete, whether any computational errors have been made, whetherrequired securities have been furnished, whether the documents have beenproperly signed, and whether the Bids are generally in order.

"26.2 The BAC shall check the submitted documents of each Bidderagainst the required documents enumerated under Clause 20, to ascertain ifthey are all present in the Second bid envelope (Technical Envelope). In caseone (1) or more of the required documents is missing, the BAC shall rate theBid concerned as 'failed' and immediately return to the Bidder its Third bidenvelope (Financial Envelope) unopened. Otherwise, the BAC shall rate thefirst bid envelope as 'passed'.

"26.3 The BAC shall immediately open the Financial Envelopes of theBidders whose Technical Envelopes were passed or rated on or above thepassing score. Only Bids that are determined to contain all the bidrequirements for both components shall be rated 'passed' and shallimmediately be considered for evaluation and comparison.

"26.4 In the opening and examination of the Financial Envelope, the BACshall announce and tabulate the Total Bid Price as calculated. Arithmeticalerrors will be rectified on the following basis: If there is a discrepancybetween words and figures, the amount in words will prevail. If there is adiscrepancy between the unit price and the total price that is obtained bymultiplying the unit price and the quantity, the unit price shall prevail and thetotal price shall be corrected accordingly. If there is a discrepancy betweenthe Total Bid Price and the sum of the total prices, the sum of the totalprices prevail and the Total Bid Price shall be corrected accordingly. HcSaAD

"26.5 Financial Proposals which do not clearly state the Total Bid Priceshall be rejected. Also, Total Bid Price as calculated that exceeds theapproved 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 andfees 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 Bidderselected as having submitted the lowest calculated bid is qualified tosatisfactorily perform the Contract.

"29.2 The determination will take into account the Bidder's financial,technical and production capabilities/resources. It will be based upon anexamination of the documentary evidence of the Bidder's qualificationsubmitted by the Bidder as well as such other information as the BAC deemsnecessary and appropriate.

"29.3 A bid determined as not substantially responsive will be rejectedby the BAC and may not subsequently be made responsive by the Bidder bycorrection of the non-conformity.

"29.4 The BAC may waive any informality or non-conformity orirregularity in a bid which does not constitute a material deviation, providedsuch waiver does not prejudice or affect the relative ranking of any Bidder.

"29.5 Should the BAC find that the Bidder complies with the legal,financial and technical requirements, it shall make an affirmativedetermination which shall be a prerequisite for award of the Contract to theBidder. Otherwise, it will make a negative determination which will result inrejection of the Bidder's bid, in which event the BAC will proceed to the nextlowest calculated bid to make a similar determination of that Bidder'scapabilities to perform satisfactorily." 12

Out of the 57 bidders, 13 the BAC found MPC and the Total InformationManagement Corporation (TIMC) eligible. For technical evaluation, they werereferred to the BAC's Technical Working Group (TWG) and the Department ofScience and Technology (DOST).

In its Report on the Evaluation of the Technical Proposals on Phase II, DOST saidthat both MPC and TIMC had obtained a number of failed marks in the technicalevaluation. Notwithstanding these failures, Comelec en banc, on April 15, 2003,promulgated Resolution No. 6074 awarding the project to MPC. The Commissionpublicized this Resolution and the award of the project to MPC on May 16, 2003.

On May 29, 2003, five individuals and entities (including the herein PetitionersInformation Technology Foundation of the Philippines, represented by its president,Alfredo M. Torres; and Ma. Corazon Akol) wrote a letter 14 to Comelec ChairmanBenjamin 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 beenconducted." Citing therein the noncompliance with eligibility as well as technicaland procedural requirements (many of which have been discussed at length in thePetition), they sought a re-bidding.

In a letter-reply dated June 6, 2003, 15 the Comelec chairman — speaking throughAtty. Jaime Paz, his head executive assistant — rejected the protest and declaredthat 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 inthe RFP. Notwithstanding, such failure was ignored. In effect, theCOMELEC changed the rules after the bidding in effect changing thenature of the contract bidded upon.

"3. Petitioners have locus standi.

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

In the main, the substantive issue is whether the Commission on Elections, theagency vested with the exclusive constitutional mandate to oversee elections,gravely abused its discretion when, in the exercise of its administrative functions, itawarded to MPC the contract for the second phase of the comprehensive AutomatedElection System.

Before discussing the validity of the award to MPC, however, we deem it proper tofirst pass upon the procedural issues: the legal standing of petitioners and thealleged 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 theyare not challenging the validity or constitutionality of RA 8436. Moreover,petitioners supposedly admitted during the Oral Argument that no law had beenviolated by the award of the Contract. Furthermore, they allegedly have no actualand material interest in the Contract and, hence, do not stand to be injured orprejudiced on account of the award.

On the other hand, petitioners — suing in their capacities as taxpayers, registeredvoters and concerned citizens — respond that the issues central to this case are "oftranscendental importance and of national interest." Allegedly, Comelec's flawedbidding and questionable award of the Contract to an unqualified entity would

impact directly on the success or the failure of the electoral process. Thus, any tainton the sanctity of the ballot as the expression of the will of the people wouldinevitably affect their faith in the democratic system of government. Petitionersfurther argue that the award of any contract for automation involves disbursementof public funds in gargantuan amounts; therefore, public interest requires that thelaws governing the transaction must be followed strictly.

We agree with petitioners. Our nation's political and economic future virtuallyhangs in the balance, pending the outcome of the 2004 elections. Hence, there canbe no serious doubt that the subject matter of this case is "a matter of publicconcern and imbued with public interest"; 18 in other words, it is of "paramountpublic interest" 19 and "transcendental importance." 20 This fact alone would justifyrelaxing the rule on legal standing, following the liberal policy of this Courtwhenever a case involves "an issue of overarching significance to our society." 21Petitioners' legal standing should therefore be recognized and upheld.

Moreover, this Court has held that taxpayers are allowed to sue when there is aclaim of "illegal disbursement of public funds," 22 or if public money is being"deflected to any improper purpose"; 23 or when petitioners seek to restrainrespondent from "wasting public funds through the enforcement of an invalid orunconstitutional law." 24 In the instant case, individual petitioners, suing astaxpayers, assert a material interest in seeing to it that public funds are properlyand lawfully used. In the Petition, they claim that the bidding was defective, thewinning bidder not a qualified entity, and the award of the Contract contrary to lawand regulation. Accordingly, they seek to restrain respondents from implementingthe Contract and, necessarily, from making any unwarranted expenditure of publicfunds pursuant thereto. Thus, we hold that petitioners possess locus standi.

Second Procedural Issue:

Alleged Prematurity Due to Non-Exhaustionof Administrative Remedies

Respondents claim that petitioners acted prematurely, since they had not firstutilized the protest mechanism available to them under RA 9184, the GovernmentProcurement Reform Act, for the settlement of disputes pertaining to procurementcontracts.

Section 55 of RA 9184 states that protests against decisions of the Bidding andAwards Committee in all stages of procurement may be lodged with the head of theprocuring entity by filing a verified position paper and paying a protest fee. Section57 of the same law mandates that in no case shall any such protest stay or delaythe 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 onlyafter the protests contemplated by the statute shall have been completed. Casesfiled in violation of this process are to be dismissed for lack of jurisdiction. Regional

trial courts shall have jurisdiction over final decisions of the head of the procuringentity, and court actions shall be instituted pursuant to Rule 65 of the 1997 Rules ofCivil Procedure. cECTaD

Respondents assert that throughout the bidding process, petitioners neverquestioned the BAC Report finding MPC eligible to bid and recommending the awardof the Contract to it (MPC). According to respondents, the Report should have beenappealed to the Comelec en banc, pursuant to the aforementioned sections of RA9184. In the absence of such appeal, the determination and recommendation of theBAC 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 toissue its written report and recommendation on April 21, 2003. Thus, how couldpetitioners have appealed the BAC's recommendation or report to the head of theprocuring entity (the chairman of Comelec), when the Comelec en banc had alreadyapproved the award of the contract to MPC even before petitioners learned of theBAC recommendation?

It is claimed 25 by Comelec that during its April 15, 2003 session, it received andapproved the verbal report and recommendation of the BAC for the award of theContract to MPC, and that the BAC subsequently re-affirmed its verbal report andrecommendation by submitting it in writing on April 21, 2003. Respondents insistthat the law does not require that the BAC Report be in writing before Comelec canact thereon; therefore, there is allegedly nothing irregular about the Report as wellas the en banc Resolution.

However, it is obvious that petitioners could have appealed the BAC's report andrecommendation to the head of the procuring entity (the Comelec chair) only upontheir discovery thereof, which at the very earliest would have been on April 21,2003, when the BAC actually put its report in writing and finally released it. Eventhen, what would have been the use of protesting/appealing the report to theComelec chair, when by that time the Commission en banc (including the chairmanhimself) had already approved the BAC Report and awarded the Contract to MPC?

And even assuming arguendo that petitioners had somehow gotten wind of theverbal BAC report on April 15, 2003 (immediately after the en banc session), at thatpoint the Commission en banc had already given its approval to the BAC Reportalong with the award to MPC. To put it bluntly, the Comelec en banc itself made itlegally impossible for petitioners to avail themselves of the administrative remedythat the Commission is so impiously harping on. There is no doubt that they had notbeen accorded the opportunity to avail themselves of the process provided underSection 55 of RA 9184, according to which a protest against a decision of the BACmay be filed with the head of the procuring entity. Nemo tenetur ad impossible, 26to 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, wewould just want to put forward a few observations regarding the BAC Report andthe Comelec en banc's approval thereof.

First, Comelec contends that there was nothing unusual about the fact that theReport submitted by the BAC came only after the former had already awarded theContract, because the latter had been asked to render its report andrecommendation orally during the Commission's en banc session on April 15, 2003.Accordingly, Comelec supposedly acted upon such oral recommendation andapproved the award to MPC on the same day, following which the recommendationwas subsequently reduced into writing on April 21, 2003. While not entirely outsidethe realm of the possible, this interesting and unique spiel does not speak well ofthe process that Comelec supposedly went through in making a critical decisionwith respect to a multi-billion-peso contract.

We can imagine that anyone else standing in the shoes of the HonorableCommissioners would have been extremely conscious of the overarching need forutter transparency. They would have scrupulously avoided the slightest hint ofimpropriety, preferring to maintain an exacting regularity in the performance oftheir duties, instead of trying to break a speed record in the award of multi-billion-peso 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 nevercared to explain the nature of the Commission's dire need to act immediatelywithout awaiting the formal, written BAC Report.

In short, the Court finds it difficult to reconcile the uncommon dispatch with whichComelec acted to approve the multi-billion-peso deal, with its claim of having beenimpelled by only the purest and most noble of motives.

At any rate, as will be discussed later on, several other factors combine to lendnegative credence to Comelec's tale.

Second, without necessarily ascribing any premature malice or premeditation onthe part of the Comelec officials involved, it should nevertheless be conceded thatthis cart-before-the-horse maneuver (awarding of the Contract ahead of the BAC'swritten report) would definitely serve as a clever and effective way of averting andfrustrating any impending protest under Section 55.

Having made the foregoing observations, we now go back to the question ofexhausting administrative remedies. Respondents may not have realized it, but theletter addressed to Chairman Benjamin Abalos Sr. dated May 29, 2003 28 serves toeliminate the prematurity issue as it was an actual written protest against thedecision of the poll body to award the Contract. The letter was signed by/for, interalia, two of herein petitioners: the Information Technology Foundation of thePhilippines, represented by its president, Alfredo M. Torres; and Ma. Corazon Akol.

Such letter-protest is sufficient compliance with the requirement to exhaustadministrative 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 thatpetitioners need not exhaust administrative remedies in the light of Paat v. Court ofAppeals. 29 Paat enumerates the instances when the rule on exhaustion ofadministrative remedies may be disregarded, as follows:

"(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 orexcess of jurisdiction,

(4) when there is estoppel on the part of the administrative agencyconcerned,

(5) when there is irreparable injury,

(6) when the respondent is a department secretary whose acts as analter ego of the President bears the implied and assumed approval ofthe latter,

(7) when to require exhaustion of administrative remedies would beunreasonable,

(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 adequateremedy, and

(11) when there are circumstances indicating the urgency of judicialintervention." 30

The present controversy precisely falls within the exceptions listed as Nos. 7, 10 and11: "(7) when to require exhaustion of administrative remedies would beunreasonable; (10) when the rule does not provide a plain, speedy and adequateremedy, and (11) when there are circumstances indicating the urgency of judicialintervention." As already stated, Comelec itself made the exhaustion ofadministrative remedies legally impossible or, at the very least, "unreasonable."

In any event, the peculiar circumstances surrounding the unconventional renditionof the BAC Report and the precipitate awarding of the Contract by the Comelec enbanc — plus the fact that it was racing to have its Contract with MPC implementedin time for the elections in May 2004 (barely four months away) — have combinedto bring about the urgent need for judicial intervention, thus prompting this Courtto 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 isinvalid, since Comelec gravely abused its discretion when it did the following:

1. Awarded the Contract to MPC though it did not even participatein the bidding

2. Allowed MPEI to participate in the bidding despite its failure tomeet the mandatory eligibility requirements

3. Issued its Resolution of April 15, 2003 awarding the Contract toMPC despite the issuance by the BAC of its Report, which formedthe basis of the assailed Resolution, only on April 21, 2003 31

4. Awarded the Contract, notwithstanding the fact that during thebidding process, there were violations of the mandatoryrequirements of RA 8436 as well as those set forth in Comelec'sown Request for Proposal on the automated election system IHaECA

5. Refused to declare a failed bidding and to conduct a re-biddingdespite the failure of the bidders to pass the technical testsconducted by the Department of Science and Technology

6. Failed to follow strictly the provisions of RA 8436 in the conductof the bidding for the automated counting machines

After reviewing the slew of pleadings as well as the matters raised during the OralArgument, the Court deems it sufficient to focus discussion on the following majorareas of concern that impinge on the issue of grave abuse of discretion:

A. Matters pertaining to the identity, existence and eligibility ofMPC as a bidder

B. Failure of the automated counting machines (ACMs) to pass theDOST technical tests

C. Remedial measures and re-testings undertaken by Comelec andDOST 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, respondentsinsist that, contrary to petitioners' allegations, the bidder was not Mega PacificeSolutions, Inc. (MPEI), which was incorporated only on February 27, 2003, or 11days prior to the bidding itself. Rather, the bidder was Mega Pacific 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 onbehalf of MPC. They also call attention to the official 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 Pacific eSolutions, Inc., (Lead Company/Proponent) For: MegaPacific Consortium" — and without any further proof, does not by itself prove theexistence of the consortium. It does not show that MPEI or its president have beenduly pre-authorized by the other members of the putative consortium to representthem, to bid on their collective behalf and, more important, to commit them jointlyand severally to the bid undertakings. The letter is purely self-serving anduncorroborated.

Neither does an official receipt issued to MPC, acknowledging payment for thebidding documents, constitute proof that it was the purported consortium thatparticipated in the bidding. Such receipts are issued by cashiers without any legallysufficient 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 qualification)of the putative consortium, Comelec's BAC should have examined the biddingdocuments submitted on behalf of MPC. They would have easily discovered thefollowing fatal flaws.

Two-Envelope, Two-Stage System

As stated earlier in our factual presentation, the public bidding system designed byComelec under its RFP (Request for Proposal for the Automation of the 2004Election) mandated the use of a two-envelope, two-stage system. A bidder's firstenvelope (Eligibility Envelope) was meant to establish its eligibility to bid and itsqualifications and capacity to perform the contract if its bid was accepted, while thesecond envelope would be the Bid Envelope itself.

The Eligibility Envelope was to contain legal documents such as articles ofincorporation, business registrations, licenses and permits, mayor's permit, VATcertification, and so forth; technical documents containing documentary evidence toestablish the track record of the bidder and its technical and production capabilitiesto perform the contract; and financial documents, including audited financialstatements 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 toinclude a copy of the joint venture agreement, the consortium agreement ormemorandum of agreement — or a business plan or some other instrument ofsimilar import — establishing the due existence, composition and scope of suchaggrupation. Otherwise, how would Comelec know who it was dealing with, andwhether these parties are qualified and capable of delivering the products andservices being offered for bidding? 32

In the instant case, no such instrument was submitted to Comelec during thebidding process. This fact can be conclusively ascertained by scrutinizing the two-inch 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 file purports to replicate the eligibility documents originally submitted toComelec by MPEI allegedly on behalf of MPC, in connection with the biddingconducted in March 2003. Included in the file are the incorporation papers andfinancial statements of the members of the supposed consortium and certaincertificates, licenses and permits issued to them.

However, there is no sign whatsoever of any joint venture agreement, consortiumagreement, memorandum of agreement, or business plan executed among themembers of the purported consortium.

The only logical conclusion is that no such agreement was ever submitted to theComelec for its consideration, as part of the bidding process.

It thus follows that, prior the award of the Contract, there was no documentary orother basis for Comelec to conclude that a consortium had actually been formedamongst MPEI, SK C&C and WeSolv, along with Election.com and ePLDT. 33 Neitherwas there anything to indicate the exact relationships between and among thesefirms; their diverse roles, undertakings and prestations, if any, relative to theprosecution of the project, the extent of their respective investments (if any) in thesupposed consortium or in the project; and the precise nature and extent of theirrespective liabilities with respect to the contract being offered for bidding. And apartfrom the self-serving letter of March 7, 2003, there was not even any indicationthat 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 atall for determining that the alleged consortium really existed and was eligible andqualified; and that the arrangements among the members were satisfactory andsufficient to ensure delivery on the Contract and to protect the government'sinterest.

Notwithstanding such deficiencies, Comelec still deemed the "consortium" eligibleto participate in the bidding, proceeded to open its Second Envelope, and eventuallyawarded the bid to it, even though — per the Comelec's own RFP — the BAC shouldhave declared the MPC ineligible to bid and returned the Second (Bid) Envelopeunopened.

Inasmuch as Comelec should not have considered MPEI et al. as comprising aconsortium or joint venture, it should not have allowed them to avail themselves ofthe provision in Section 5.4 (b) (i) of the IRR for RA 6957 (the Build-Operate-Transfer Law), as amended by RA 7718. This provision states in part that a jointventure/consortium proponent shall be evaluated based on the individual orcollective experience of the member-firms of the joint venture or consortium and ofthe contractor(s) that it has engaged for the project. Parenthetically, respondentshave uniformly argued that the said IRR of RA 6957, as amended, have suppletoryapplication to the instant case.

Hence, had the proponent MPEI been evaluated based solely on its own experience,financial and operational track record or lack thereof, it would surely not havequalified and would have been immediately considered ineligible to bid, asrespondents readily admit.

At any rate, it is clear that Comelec gravely abused its discretion in arbitrarily failingto 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 FlorentinoTuason Jr., given in open court during the Oral Argument last October 7, 2003. Thegood commissioner affirmed 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 thatit 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 effect admitted that, while he was thecommissioner-in-charge of Comelec's Legal Department, he had never seen, evenup to that late date, the agreement he spoke of. 37 Under further questioning, hewas likewise unable to provide any information regarding the amounts investedinto the project by several members of the claimed consortium. 38 A short whilelater, he admitted that the Commission had not taken a look at the agreement (ifany). 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 IIModernization Project Team did look into the aspect of the composition of theconsortium.

It seems to the Court, though, that even if the BAC or the Phase II Team had takencharge of evaluating the eligibility, qualifications and credentials of the consortium-bidder, still, in all probability, the former would have referred the task toCommissioner Tuason, head of Comelec's Legal Department. That task was theappreciation and evaluation of the legal effects 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 ofthese was available at the time. The fact that Commissioner Tuason was barelyaware of the situation bespeaks the complete absence of such document, or theutter failure or neglect of the Comelec to examine it — assuming it was available atall — at the time the award was made on April 15, 2003. TIaDHE

In any event, the Court notes for the record that Commissioner Tuason basicallycontradicted 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 ornone at all? Isn't it enough that there are these corporations coming together tocarry out the automation project? Isn't it true, as respondent aver, that nowhere inthe RFP issued by Comelec is it required that the members of the joint ventureexecute 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 bya single joint venture agreement, but also by supplementary documents executedby 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 problemis that Comelec never bothered to check. It never based its decision on documentsor other proof that would concretely establish the existence of the claimedconsortium or joint venture or agglomeration. It relied merely on the self-servingrepresentation in an uncorroborated letter signed by only one individual, claimingthat his company represented a "consortium" of several different corporations. Itconcluded forthwith that a consortium indeed existed, composed of such and suchmembers, and thereafter declared that the entity was eligible to bid.

True, copies of financial statements and incorporation papers of the alleged"consortium" members were submitted. But these papers did not establish theexistence of a consortium, as they could have been provided by the companiesconcerned for purposes other than to prove that they were part of a consortium orjoint venture. For instance, the papers may have been intended to show that thosecompanies were each qualified to be a sub-contractor (and nothing more) in a majorproject. Those documents did not by themselves support the assumption that aconsortium or joint venture existed among the companies.

In brief, despite the absence of competent proof as to the existence and eligibility ofthe alleged consortium (MPC), its capacity to deliver on the Contract, and themembers' joint and several liability therefor, Comelec nevertheless assumed thatsuch consortium existed and was eligible. It then went ahead and considered the bidof MPC, to which the Contract was eventually awarded, in gross violation of theformer's own bidding rules and procedures contained in its RFP. Therein liesComelec's grave abuse of discretion.

Sufficiency of the Four Agreements

Instead of one multilateral agreement executed by, and effective and binding on, allthe five "consortium members" — as earlier claimed by Commissioner Tuason inopen court — it turns out that what was actually executed were four (4) separateand distinct bilateral Agreements. 42 Obviously, Comelec was furnished copies ofthese Agreements only after the bidding process had been terminated, as thesewere 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 different and separate bilateral Agreements is valid andbinding only between MPEI and the other contracting party, leaving the other"consortium" members total strangers thereto. Under this setup, MPEI dealtseparately 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 dealingonly with MPEI.

Respondents assert that these four Agreements were sufficient for the purpose ofenabling the corporations to still qualify (even at that late stage) as a consortium orjoint venture, since the first two Agreements had allegedly set forth the joint andseveral undertakings among the parties, whereas the latter two clarified the parties'respective roles with regard to the Project, with MPEI being the independentcontractor and Election.com and ePLDT the subcontractors.

Additionally, the use of the phrase "particular contract" in the Comelec's Request forProposal (RFP), in connection with the joint and several liabilities of companies in ajoint venture, is taken by them to mean that all the members of the joint ventureneed not be solidarily liable for the entire project or joint venture, because it issufficient that the lead company and the member in charge of a particular contractor aspect of the joint venture agree to be solidarily liable.

At this point, it must be stressed most vigorously that the submission of the fourbilateral Agreements to Comelec after the end of the bidding process did nothing toeliminate 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 Comelecincorporates all documents executed by the "consortium" members, even if thesedocuments are not referred to therein. The basis of this assertion appears to be thepassages 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 anyone of them is not referred to or mentioned in the Contract as forming apart thereof. Each of the Contract Documents shall be mutuallycomplementary and explanatory of each other such that what is noted inone although not shown in the other shall be considered contained in all, andwhat is required by any one shall be as binding as if required by all, unlessone item is a correction of the other.

"The intent of the Contract Documents is the proper, satisfactory and timelyexecution and completion of the Project, in accordance with the ContractDocuments. Consequently, all items necessary for the proper and timelyexecution and completion of the Project shall be deemed included in the

Contract."

Thus, it is argued that whatever perceived deficiencies there were in thesupplementary contracts — those entered into by MPEI and the other members ofthe "consortium" as regards their joint and several undertakings — have beencured. Better still, such deficiencies have supposedly been prevented from arising asa result of the above-quoted provisions, from which it can be immediatelyestablished that each of the members of MPC assumes the same joint and severalliability as the other members.

The foregoing argument is unpersuasive. First, the contract being referred to,entitled "The Automated Counting and Canvassing Project Contract," is betweenComelec and MPEI, not the alleged consortium, MPC. To repeat, it is MPEI — notMPC — that is a party to the Contract. Nowhere in that Contract is there anymention of a consortium or joint venture, of members thereof, much less of jointand several liability. Supposedly executed sometime in May 2003, 43 the Contractbears a notarization date of June 30, 2003, and contains the signature of Willy U. Yusigning as president of MPEI (not for and on behalf of MPC), along with that of theComelec chair. It provides in Section 3.2 that MPEI (not MPC) is to supply theEquipment and perform the Services under the Contract, in accordance with theappendices thereof; nothing whatsoever is said about any consortium or jointventure or partnership.

Second, the portions of Section 1.4 of the Contract reproduced above do not havethe effect of curing (much less preventing) deficiencies in the bilateral agreementsentered into by MPEI with the other members of the "consortium," with respect totheir joint and several liabilities. The term "Contract Documents," as used in thequoted passages of Section 1.4, has a well-defined meaning and actually refers onlyto 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 BidBulletins

• The Tender Proposal submitted by MPEI

In other words, the term "Contract Documents" cannot be understood as referringto or including the MOAs and the Teaming Agreements entered into by MPEI withSK C&C, WeSolv, Election.com and ePLDT. This much is very clear and admits of nodebate. The attempt to use the provisions of Section 1.4 to shore up the MOAs andthe 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 ofthe 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 jointand several undertakings among the parties; whereas the two Teaming Agreementsclarified the parties' respective roles with regard to the Project, with MPEI being theindependent contractor and Election.com and ePLDT the subcontractors.

Obviously, given the differences in their relationships, their respective liabilitiescannot be the same. Precisely, the very clear terms and stipulations contained in theMOAs 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 withone another and are, as such, assuming the same joint and several liability. IHTASa

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

Enforcement of Liabilities Problematic

Next, it is also maintained that the automation Contract between Comelec and theMPEI confirms the solidary undertaking of the lead company and the consortiummember concerned for each particular Contract, inasmuch as the position of MPEIand anyone else performing the services contemplated under the Contract isdescribed therein as that of an independent contractor.

The Court does not see, however, how this conclusion was arrived at. In the firstplace, the contractual provision being relied upon by respondents is Article 14,"Independent Contractors," which states: "Nothing contained herein shall beconstrued as establishing or creating between the COMELEC and MEGA therelationship of employee and employer or principal and agent, it being understoodthat the position of MEGA and of anyone performing the Services contemplatedunder this Contract, is that of an independent contractor."

Obviously, the intent behind the provision was simply to avoid the creation of anemployer-employee or a principal-agent relationship and the complications that itwould produce. Hence, the Article states that the role or position of MPEI, or anyoneelse performing on its behalf, is that of an independent contractor. It is obvious tothe Court that respondents are stretching matters too far when they claim that,because of this provision, the Contract in effect confirms the solidary undertaking ofthe lead company and the consortium member concerned for the particular phase ofthe 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, reasoningthat MPEI et al. represented themselves as partners and members of MPC forpurposes of bidding for the Project. They are, therefore, liable to the Comelec to theextent that the latter relied upon such representation. Their liability as partners issolidary with respect to everything chargeable to the partnership under certainconditions.

The Court has two points to make with respect to this argument. First, it must berecalled that SK C&C, WeSolv, Election.com and ePLDT never representedthemselves as partners and members of MPC, whether for purposes of bidding or forsomething else. It was MPEI alone that represented them to be members of a"consortium" it supposedly headed. Thus, its acts may not necessarily be heldagainst the other "members."

Second, this argument of the OSG in its Memorandum 44 might possibly apply in theabsence of a joint venture agreement or some other writing that discloses therelationship of the "members" with one another. But precisely, this case does notdeal 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 fallingback on the rules on partnership. For, again, the terms and stipulations of the MOAsentered into by MPEI with SK C&C and WeSolv, as well as the Teaming Agreementsof MPEI with Election.com and ePLDT (copies of which have been furnished theComelec) are very clear with respect to the extent and the limitations of the firms'respective liabilities.

In the case of WeSolv and SK C&C, their MOAs state that their liabilities, while jointand several with MPEI, are limited only to the particular areas of work wherein theirservices are engaged or their products utilized. As for Election.com and ePLDT, theirseparate "Teaming Agreements" specifically ascribe to them the role ofsubcontractor vis-a-vis MPEI as contractor and, based on the terms of their particularagreements, neither Election.com nor ePLDT is, with MPEI, jointly and severallyliable to Comelec. 45 It follows then that in the instant case, there is no justificationfor 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, themembers of MPC should be evaluated on a collective basis. Therefore, they contend,the failure of MPEI to submit financial statements (on account of its recentincorporation) 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 themembers of MPC, their contribution of assets and sharing of risks, and thecommunity of their interest in the performance of the Contract lead to thesereasonable conclusions: (1) that their collective qualifications should be the basis forevaluating their eligibility; (2) that the sheer enormity of the project renders itimprobable 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 theOSG, the RFP allows bids from manufacturers, suppliers and/or distributors thathave formed themselves into a joint venture, in recognition of the virtualimpossibility of a single entity's ability to respond to the Invitation to Bid.

Additionally, argues the Comelec, the Implementing Rules and Regulations of RA6957 (the Build-Operate-Transfer Law) as amended by RA 7718 would beapplicable, as proponents of BOT projects usually form joint ventures orconsortiums. Under the IRR, a joint venture/consortium proponent shall beevaluated based on the individual or the collective experience of the member-firmsof the joint venture/consortium and of the contractors the proponent has engagedfor the project.

Unfortunately, this argument seems to assume that the "collective" nature of theundertaking of the members of MPC, their contribution of assets and sharing ofrisks, and the "community" of their interest in the performance of the Contractentitle MPC to be treated as a joint venture or consortium; and to be evaluatedaccordingly on the basis of the members' collective qualifications when, in fact, theevidence before the Court suggest otherwise.

This Court in Kilosbayan v. Guingona 46 defined joint venture as "an association ofpersons or companies jointly undertaking some commercial enterprise; generally, allcontribute assets and share risks. It requires a community of interest in theperformance of the subject matter, a right to direct and govern the policy inconnection therewith, and [a] duty, which may be altered by agreement to shareboth in profit and losses."

Going back to the instant case, it should be recalled that the automation Contractwith Comelec was not executed by the "consortium" MPC — or by MPEI for and onbehalf of MPC — but by MPEI, period. The said Contract contains no mentionwhatsoever of any consortium or members thereof. This fact alone seems tocontradict all the suppositions about a joint undertaking that would normally applyto a joint venture or consortium: that it is a commercial enterprise involving acommunity of interest, a sharing of risks, profits and losses, and so on.

Now let us consider the four bilateral Agreements, starting with the Memorandumof 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 wouldeasily fit in one page! It reads as follows:

"1. The parties agree to cooperate in successfully implementing theProject in the substance and form as may be most beneficial to both partiesand other subcontractors involved in the Project.

"2. Mega Pacific shall be responsible for any contract negotiations andsigning with the COMELEC and, subject to the latter's approval, agrees togive WeSolv an opportunity to be present at meetings with the COMELECconcerning WeSolv's portion of the Project.

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

"4. Each party shall bear its own costs and expenses relative to thisagreement unless otherwise agreed upon by the parties.

"5. The parties undertake to do all acts and such other things incidentalto, necessary or desirable or the attainment of the objectives and purposesof this Agreement.

"6. In the event that the parties fail to agree on the terms and conditionsof the supply of the products and services including but not limited to thescope of the products and services to be supplied and payment terms,WeSolv shall cease to be bound by its obligations stated in theaforementioned paragraphs.

"7. Any dispute arising from this Agreement shall be settled amicably bythe parties whenever possible. Should the parties be unable to do so, theparties hereby agree to settle their dispute through arbitration in accordancewith the existing laws of the Republic of the Philippines." (Emphasissupplied.)

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, whichwe quote: IDCHTE

"1. All parties agree to cooperate in achieving the Consortium's objectiveof successfully implementing the Project in the substance and form as maybe most beneficial to the Consortium members and in accordance with thedemand of the RFP.

"2. Mega Pacific shall have full powers and authority to represent theConsortium with the Comelec, and to enter and sign, for and in behalf of itsmembers any and all agreement/s which may be required in theimplementation of the Project.

"3. Each of the individual members of the Consortium shall be jointly andseverally liable with the Lead Firm for the particular products and/or servicessupplied by such individual member for the project, in accordance with theirrespective undertaking or sphere of responsibility.

"4. Each party shall bear its own costs and expenses relative to thisagreement unless otherwise agreed upon by the parties.

"5. The parties undertake to do all acts and such other things incidentalto, necessary or desirable for the attainment of the objectives and purposesof 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, theparties hereby agree to settle their dispute through arbitration in accordancewith the existing laws of the Republic of the Philippines." (Emphasissupplied.)

It will be noted that the two Agreements quoted above are very similar in wording.Neither of them contains any specifics or details as to the exact nature and scope ofthe parties' respective undertakings, performances and deliverables under theAgreement with respect to the automation project. Likewise, the two Agreementsare quite bereft of pesos-and-centavos data as to the amount of investments eachparty contributes, its respective share in the revenues and/or profit from theContract with Comelec, and so forth — all of which are normal for agreements ofthis nature. Yet, according to public and private respondents, the participation ofMPEI, WeSolv and SK C&C comprises fully 90 percent of the entire undertaking withrespect to the election automation project, which is worth about P1.3 billion.

As for Election.com and ePLDT, the separate "Teaming Agreements" they enteredinto with MPEI for the remaining 10 percent of the entire project undertaking areironically much longer and more detailed than the MOAs discussed earlier. Althoughspecifically ascribing to them the role of subcontractor vis-a-vis MPEI as contractor,these Agreements are, however, completely devoid of any pricing data or paymentterms. Even the appended Schedules supposedly containing prices of goods andservices are shorn of any price data. Again, as mentioned earlier, based on the termsof their particular Agreements, neither Election.com nor ePLDT — with MPEI — isjointly and severally liable to Comelec.

It is difficult to imagine how these bare Agreements — especially the first two —could be implemented in practice; and how a dispute between the parties or a claimby Comelec against them, for instance, could be resolved without lengthy anddebilitating litigations. Absent any clear-cut statement as to the exact nature andscope of the parties' respective undertakings, commitments, deliverables andcovenants, one party or another can easily dodge its obligation and deny or contestits liability under the Agreement; or claim that it is the other party that should havedelivered but failed to.

Likewise, in the absence of definite indicators as to the amount of investments to becontributed by each party, disbursements for expenses, the parties' respectiveshares in the profits and the like, it seems to the Court that this situation couldreadily give rise to all kinds of misunderstandings and disagreements over moneymatters.

Under such a scenario, it will be extremely difficult for Comelec to enforce thesupposed joint and several liabilities of the members of the "consortium." The Courtis not even mentioning the possibility of a situation arising from a failure of WeSolvand MPEI to agree on the scope, the terms and the conditions for the supply of theproducts and services under the Agreement. In that situation, by virtue of paragraph6 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 couldforthwith disengage from the project. Effectively, WeSolv could at any time

unilaterally exit from its MOA with MPEI by simply failing to agree. Where wouldthat outcome leave MPEI and Comelec?

To the Court, this strange and beguiling arrangement of MPEI with the othercompanies does not qualify them to be treated as a consortium or joint venture, atleast 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 ofMPC on a collective basis.

In any event, the MPC members claim to be a joint venture/consortium; andrespondents 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 ofconsortium members. Surprisingly, considering these facts, respondents have notdeemed it necessary for MPC members to comply with Section 5.4 (a) (iii) of the IRRfor RA 6957 as amended.

According to the aforementioned provision, if the project proponent is a jointventure or consortium, the members or participants thereof are required to submita sworn statement that, if awarded the contract, they shall bind themselves to bejointly, severally and solidarily liable for the project proponent's obligationsthereunder. This provision was supposed to mirror Section 5 of RA 6957, asamended, which states: "In all cases, a consortium that participates in a bid mustpresent proof that the members of the consortium have bound themselves jointlyand severally to assume responsibility for any project. The withdrawal of anymember of the consortium prior to the implementation of the project could be aground for the cancellation of the contract."

The Court has certainly not seen any joint and several undertaking by the MPCmembers that even approximates the tenor of that which is described above. Wefail to see why respondents should invoke the IRR if it is for their benefit, but refuseto 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: theACM's failure to pass the tests of the Department of Science and Technology(DOST).

After respondent "consortium" and the other bidder, TIM, had submitted theirrespective bids on March 10, 2003, the Comelec's BAC — through its TechnicalWorking Group (TWG) and the DOST — evaluated their technical proposals.Requirements that were highly technical in nature and that required the use ofcertain 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 MEGA-PACIFIC TOTAL INFORMATION

[QUESTIONS] CONSORTIUM MANAGEMENT

YES NO YES NO1. Does the machine have

an accuracy rating of atleast 99.995 percent?

At COLD ü üenvironmentalconditions

At NORMAL ü üenvironmentalconditions

At HARSH ü üenvironmentalconditions

2. Accurately records and ü üreports the date and timeof the start and end ofcounting of ballots perprecinct?

3. Prints election returns ü üwithout any loss of dateduring generation ofsuch reports?

4. Uninterruptible back-up ü üpower system, that willengage immediately toallow operation of atleast 10 minutes afteroutage, power surge orabnormal electricaloccurrences?

5. Machine reads two- ü üsided ballots in one Note: Thispass? particular

requirement needs further verification

6. Machine can detect ü üpreviously countedballots and preventpreviously countedballots from beingcounted more thanonce?

7. Stores results of counted ü üvotes by precinct in Note: Thisexternal (removable) particularstorage device? requirement

needs further verification

8. Data stored in external ü ümedia is encrypted? Note: This

particular requirement needs further verification

9. Physical key or similar ü üdevice allows, limits, orrestricts operation of themachine?

10. CPU speed is at least ü ü400mHz? Note: This

particular requirement needs further verification

11. Port to allow use of ü üdot-matrix printers?

12. Generates printouts ofthe election returns in aformat specified by theCOMELEC?

Generates printouts ü ü In format specified by ü üCOMELEC

13. Prints election returns ü ü without any loss of dataduring generation ofsuch report?

14. Generates an audit trailof the countingmachine, both hard copyand soft copy?

Hard copy ü ü Soft copy ü ü

Note: This particular requirement needs further

verification15. Does the ü ü

City/Municipal Note: ThisCanvassing System particularconsolidate results from requirementall precincts within it needs furtherusing the encrypted soft verificationcopy of the datagenerated by thecounting machine andstored on the removabledata storage device?

16. Does the ü üCity/Municipal Note: This Note: ThisCanvassing System particular particularconsolidate results from requirement requirementall precincts within it needs further needs furtherusing the encrypted soft verification verificationcopy of the datagenerated by thecounting machine andtransmitted through anelectronic transmissionmedia?

17. Does the system output ü üa Zero City/Municipal Note: ThisCanvass Report, which particularis printed on election requirementday prior to the conduct needs furtherof the actual canvass verificationoperation, that showsthat all totals for all thevotes for all thecandidates and otherinformation, are indeedzero or null?

18. Does the system ü üconsolidate results from Note: Thisall precincts in the particularcity/municipality using requirementthe data storage device needs furthercoming from the verificationcounting machine?

19. Is the machine 100% ü üaccurate? Note: This

particular requirement needs further

verification20. Is the Program able to ü ü

detect previously Note: Thisdownloaded precinct particularresults and prevent these requirementfrom being inputted needs furtheragain into the System? verification

21. The System is able toprint the specifiedreports and the audittrail without any loss ofdata during generationof the above-mentionedreports?

Prints specified reports ü ü Audit Trail ü ü

Note: This particular requirement needs further verification

22. Can the result of the ü ücity/municipal Note: Thisconsolidation be stored particularin a data storage device? requirement

needs further verification

23. Does the system ü üconsolidate results from Note: Thisall precincts in the particularprovincial/district/ requirementnational using the data needs furtherstorage device from verificationdifferent levels ofconsolidation?

24. Is the system 100% ü üaccurate? Note: This

particular requirement needs further verification

25. Is the Program able to ü üdetect previously Note: Thisdownloaded precinct particularresults and prevent these requirementfrom being inputted needs furtheragain into the System? verification

26. The System is able toprint the specifiedreports and the audittrail without any loss ofdata during generationof the abovementionedreports?

Prints specified reports ü ü Audit Trail ü ü

Note: This particular requirement needs further verification

27. Can the results of the ü üprovincial/district/ Note: Thisnational consolidation particularbe stored in a data requirementstorage device? needs further

verification

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

The BAC, in its Report dated April 21, 2003, recommended that the Phase II projectinvolving the acquisition of automated counting machines be awarded to MPEI. Itsaid:

"After incisive analysis of the technical reports of the DOST and the TechnicalWorking Group for Phase II — Automated Counting Machine, the BACconsiders adaptability to advances in modern technology to ensure aneffective and efficient method, as well as the security and integrity of thesystem.

"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-Pacificover the other competitor, TIM.

"The BAC further noted that both Mega-Pacific and TIM obtained some 'failedmarks' in the technical evaluation. In general, the 'failed marks' of TotalInformation Management as enumerated above affect the counting machineitself which are material in nature, constituting non-compliance to the RFP.On the other hand, the 'failed marks' of Mega-Pacific are mere formalities oncertain documentary requirements which the BAC may waive as clearlyindicated in the Invitation to Bid.

"In the DOST test, TIM obtained 12 failed marks and mostly attributed to thecounting machine itself as stated earlier. These are requirements of the RFP

and therefore the BAC cannot disregard the same.

"Mega-Pacific failed in 8 items however these are mostly on the softwarewhich can be corrected by reprogramming the software and therefore canbe readily corrected.

"The BAC verbally inquired from DOST on the status of the retest of thecounting machines of the TIM and was informed that the report will beforthcoming after the holy week. The BAC was informed that the retest is ona different parameters they're being two different machines being tested.One purposely to test if previously read ballots will be read again and theother for the other features such as two sided ballots.

"The said machine and the software therefore may not be considered thesame machine and program as submitted in the Technical proposal andtherefore may be considered an enhancement of the original proposal.

"Advance information relayed to the BAC as of 1:40 PM of 15 April 2003 byExecutive Director Ronaldo T. Viloria of DOST is that the result of the test inthe two counting machines of TIM contains substantial errors that may leadto the failure of these machines based on the specific items of the RFP thatDOST has to certify.

OPENING OF FINANCIAL BIDS

"The BAC on 15 April 2003, after notifying the concerned bidders openedthe 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 Pacific is the lowestcalculated responsive bid, and therefore, the Bids and Awards Committee(BAC) recommends that the Phase II project re Automated CountingMachine be awarded to Mega Pacific eSolutions, Inc." 48

The BAC, however, also stated on page 4 of its Report: "Based on the 14 April 2003report (Table 6) of the DOST, it appears that both Mega-Pacific and TIM (TotalInformation Management Corporation) failed to meet some of the requirements.Below is a comparative presentation of the requirements wherein Mega-Pacific orTIM 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 biddershad failed to meet them.

Failure to Meet the Required Accuracy Rating

The first of the key requirements was that the counting machines were to have anaccuracy rating of at least 99.9995 percent. The BAC Report indicates that bothMega Pacific and TIM failed to meet this standard.

The key requirement of accuracy rating happens to be part and parcel of theComelec's Request for Proposal (RFP). The RFP, on page 26, even states that theballot counting machines and ballot counting software "must have an accuracyrating of 99.9995% (not merely 99.995%) or better as certified by a reliableindependent testing agency."

When questioned on this matter during the Oral Argument, Commissioner Borratried to wash his hands by claiming that the required accuracy rating of 99.9995percent had been set by a private sector group in tandem with Comelec. He addedthat the Commission had merely adopted the accuracy rating as part of the group'srecommended bid requirements, which it had not bothered to amend even afterbeing 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 publishedbidding rules, as well as to see to it that the consortium indeed meets the accuracystandard. Whichever accuracy rating is the right standard — whether 99.995 or99.9995 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 oughtto have been disqualified and its bid rejected outright.

At this point, the Court stresses that the essence of public bidding is violated by thepractice of requiring very high standards or unrealistic specifications that cannot bemet — like the 99.9995 percent accuracy rating in this case — only to water themdown after the bid has been award. Such scheme, which discourages the entry ofprospective bona fide bidders, is in fact a sure indication of fraud in the bidding,designed to eliminate fair competition. Certainly, if no bidder meets the mandatoryrequirements, standards or specifications, then no award should be made and afailed bidding declared.

Failure of Software to Detect Previously Downloaded Data

Furthermore, on page 6 of the BAC Report, it appears that the "consortium" as wellas TIM failed to meet another key requirement — for the counting machine'ssoftware program to be able to detect previously downloaded precinct results and toprevent these from being entered again into the counting machine. This samedeficiency 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 different canvassing orconsolidation levels is deemed of utmost importance can be seen from the fact thatit is repeated three times in the RFP. On page 30 thereof, we find the requirementthat the city/municipal canvassing system software must be able to detectpreviously downloaded precinct results and prevent these from being "inputted"again into the system. Again, on page 32 of the RFP, we read that theprovincial/district canvassing system software must be able to detect previouslydownloaded city/municipal results and prevent these from being "inputted" againinto the system. And once more, on page 35 of the RFP, we find the requirementthat the national canvassing system software must be able to detect previouslydownloaded provincial/district results and prevent these from being "inputted"again into the system.

Once again, though, Comelec chose to ignore this crucial deficiency, which shouldhave been a cause for the gravest concern. Come May 2004, unscrupulous personsmay take advantage of and exploit such deficiency by repeatedly downloading andfeeding 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 scaleby 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 thatthe ACMs of both bidders were unable to print the audit trail without any loss ofdata. In the case of MPC, the audit trail system was "not yet incorporated" into itsACMs.

This particular deficiency is significant, not only to this bidding but to the cause offree and credible elections. The purpose of requiring audit trails is to enable Comelecto trace and verify the identities of the ACM operators responsible for data entry anddownloading, as well as the times when the various data were downloaded into thecanvassing 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 ballotcounting software must print an audit trail of all machine operations fordocumentation and verification purposes. Furthermore, the audit trail must bestored on the internal storage device and be available on demand for future printingand verifying. On pages 30–31, the RFP also requires that the city/municipalcanvassing system software be able to print an audit trail of the canvassingoperations, including therein such data as the date and time the canvassingprogram was started, the log-in of the authorized users (the identity of the machineoperators), the date and time the canvass data were downloaded into thecanvassing system, and so on and so forth. On page 33 of the RFP, we find the sameaudit trail requirement with respect to the provincial/district canvassing systemsoftware; and again on pages 35–36 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 bythe BAC or Comelec itself as a mere formality or technicality can be readily gleanedfrom the provisions of Section 7 of RA 8436, which authorizes the Commission touse an automated system for elections.

The said provision which respondents have quoted several times, provides thatACMs are to possess certain features divided into two classes: those that the statuteitself considers mandatory and other features or capabilities that the law deemsoptional. Among those considered mandatory are "provisions for audit trails"!Section 7 reads as follows: "The System shall contain the following features: (a) useof appropriate ballots; (b) stand-alone machine which can count votes and anautomated system which can consolidate the results immediately; (c) withprovisions for audit trails; (d) minimum human intervention; and (e) adequatesafeguard/security measures." (Italics and emphases supplied.)

In brief, respondents cannot deny that the provision requiring audit trails is indeedmandatory, considering the wording of Section 7 of RA 8436. Neither canRespondent Comelec deny that it has relied on the BAC Report, which indicates thatthe machines or the software was deficient in that respect. And yet, theCommission simply disregarded this shortcoming and awarded the Contract toprivate respondent, thereby violating the very law it was supposed to implement.

C.Inadequacy of Post Facto Remedial Measures

Respondents argue that the deficiencies relating to the detection of previouslydownloaded data, as well as provisions for audit trails, are mere shortcomings orminor deficiencies in software or programming, which can be rectified. PerhapsComelec simply relied upon the BAC Report, which states on page 8 thereof that"Mega Pacific failed in 8 items[;] however these are mostly on the software whichcan be corrected by re-programming . . . and therefore can be readily corrected."

The undersigned ponente's questions, some of which were addressed toCommissioner Borra during the Oral Argument, remain unanswered to this day.First of all, who made the determination that the eight "fail" marks of Mega Pacificwere on account of the software — was it DOST or TWG? How can we be sure thesefailures were not the results of machine defects? How was it determined that thesoftware could actually be re-programmed and thereby rectified? Did a qualifiedtechnical expert read and analyze the source code 49 for the programs and concludethat these could be saved and remedied? (Such determination cannot be done byany other means save by the examination and analysis of the source code.)

Who was this qualified technical expert? When did he carry out the study? Did heprepare 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 rectified, and theprograms saved. In the information technology sector, it is common knowledge that

there are many badly written programs, with significant programming errorswritten into them; hence it does not make economic sense to try to correct theprograms; instead, programmers simply abandon them and just start from scratch.There's no telling if any of these programs is unrectifiable, unless a qualifiedprogrammer reads the source code.

And if indeed a qualified expert reviewed the source code, did he also determinehow much work would be needed to rectify the programs? And how much time andmoney would be spent for that effort? Who would carry out the work? After therectification process, who would ascertain and how would it be ascertained that theprograms have indeed been properly rectified, and that they would work properlythereafter? And of course, the most important question to ask: could therectification be done in time for the elections in 2004?

Clearly, none of the respondents bothered to think the matter through. Comelecsimply took the word of the BAC as gospel truth, without even bothering to inquirefrom DOST whether it was true that the deficiencies noted could possibly beremedied by re-programming the software. Apparently, Comelec did not care aboutthe software, but focused only on purchasing the machines.

What really adds to the Court's dismay is the admission made by CommissionerBorra during the Oral Argument that the software currently being used by Comelecwas merely the "demo" version, inasmuch as the final version that would actuallybe used in the elections was still being developed and had not yet been finalized.

It is not clear when the final version of the software would be ready for testing anddeployment. It seems to the Court that Comelec is just keeping its fingers crossedand hoping the final 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 andthe Contract awarded to the Consortium. Why is it that the machines are alreadybeing brought in and paid for, when there is as yet no way of knowing if the finalversion of the software would be able to run them properly, as well as canvass andconsolidate the results in the manner required?

The counting machines, as well as the canvassing system, will never work properlywithout the correct software programs. There is an old adage that is still valid to thisday: "Garbage in, garbage out." No matter how powerful, advanced andsophisticated the computers and the servers are, if the software being utilized isdefective or has been compromised, the results will be no better than garbage. Andto think that what is at stake here is the 2004 national elections — the very basis ofour democratic life.

Correction of Defects?

To their Memorandum, public respondents proudly appended 19 Certificationsissued by DOST declaring that some 285 counting machines had been tested andhad passed the acceptance testing conducted by the Department on October 8–18,2003. Among those tested were some machines that had failed previous tests, buthad undergone adjustments and thus passed re-testing.

Unfortunately, the Certifications from DOST fail to divulge in what manner and bywhat standards or criteria the condition, performance and/or readiness of themachines were re-evaluated and re-appraised and thereafter given the passingmark. Apart from that fact, the remedial efforts of respondents were, notsurprisingly, apparently focused again on the machines — the hardware. Nothingwas said or done about the software — the deficiencies as to detection andprevention of downloading and entering previously downloaded data, as well as thecapability to print an audit trail. No matter how many times the machines weretested and re-tested, if nothing was done about the programming defects anddeficiencies, the same danger of massive electoral fraud remains. As anyone whohas 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 chairas saying that the new automated poll system would be used nationwide in May2004, even as the software for the system remained unfinished. It also reportedthat a certain Titus Manuel of the Philippine Computer Society, which was helpingComelec test the hardware and software, said that the software for the countingstill had to be submitted on December 15, while the software for the canvassingwas due in early January.

Even as Comelec continues making payments for the ACMs, we keep askingourselves: who is going to ensure that the software would be tested and wouldwork properly?

At any rate, the re-testing of the machines and/or the 100 percent testing of allmachines (testing of every single unit) would not serve to eradicate the grave abuseof discretion already committed by Comelec when it awarded the Contract on April15, 2003, despite the obvious and admitted flaws in the bidding process, the failureof the "winning bidder" to qualify, and the inability of the ACMs and the intendedsoftware to meet the bid requirements and rules.

Comelec's Latest "Assurances" Are Unpersuasive

Even the latest pleadings filed by Comelec do not serve to allay our apprehensions.They merely affirm and compound the serious violations of law and gravely abusiveacts it has committed. Let us examine them.

The Resolution issued by this Court on December 9, 2003 required respondents toinform it as to the number of ACMs delivered and paid for, as well as the totalpayment made to date for the purchase thereof. They were likewise instructed tosubmit a certification from the DOST attesting to the number of ACMs tested, thenumber found to be defective; and "whether the reprogrammed software has beentested and found to have complied with the requirements under Republic Act No.8436." 50

In its "Partial Compliance and Manifestation" dated December 29, 2003, Comelecinformed the Court that 1,991 ACMs had already been delivered to the Commission

as of that date. It further certified that it had already paid the supplier the sum ofP849,167,697.41, which corresponded to 1,973 ACM units that had passed theacceptance testing procedures conducted by the MIRDC-DOST 51 and which hadtherefore been accepted by the poll body. ICTcDA

In the same submission, for the very first time, Comelec also disclosed to the Courtthe following:

"The Automated Counting and Canvassing Project involves not only themanufacturing 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 first type of software was to be developed solely for the purposeof enabling the evaluation of the bidder's technical bid. Comelec explained thus: "Inaddition to the presentation of the ACM hardware, the bidders were required todevelop 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 actualsoftware program to be employed on election day, there being two (2) other typesof software program that will still have to be developed and thoroughly tested priorto actual election day use, defects in the 'base' software that can be readilycorrected by reprogramming are considered minor in nature, and may therefore bewaived."

In short, Comelec claims that it evaluated the bids and made the decision to awardthe Contract to the "winning" bidder partly on the basis of the operation of theACMs running a "base" software. That software was therefore nothing but a sampleor "demo" software, which would not be the actual one that would be used onelection day. Keeping in mind that the Contract involves the acquisition of not justthe ACMs or the hardware, but also the software that would run them, it is noweven clearer that the Contract was awarded without Comelec having seen, muchless evaluated, the final product — the software that would finally be utilized comeelection day. (Not even the "near-final" product, for that matter).

What then was the point of conducting the bidding, when the software that was thesubject of the Contract was still to be created and could conceivably undergoinnumerable changes before being considered as being in final form? And that is notall!

No Explanation for Lapses in the Second Type of Software

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

Comelec is claiming that this second type of software is also to be developed anddelivered by the supplier in connection with the "testing and acceptance" phase ofthe acquisition process. The previous pleadings, though — including the DOSTreports submitted to this Court — have not heretofore mentioned any statement,allegation or representation to the effect that a particular set of software was to bedeveloped and/or delivered by the supplier in connection with the testing andacceptance of delivered ACMs.

What the records do show is that the imported ACMs were subjected to the testingand acceptance process conducted by the DOST. Since the initial batch deliveredincluded a high percentage of machines that had failed the tests, Comelec asked theDOST to conduct a 100 percent testing; that is, to test every single one of the ACMsdelivered. Among the machines tested on October 8 to 18, 2003, were some unitsthat 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 ortype of software pertaining to the testing and acceptance process.

In any event, apart from making that misplaced and uncorroborated claim, Comelecin the same submission also professes (in response to the concerns expressed by thisCourt) that the reprogrammed software has been tested and found to havecomplied with the requirements of RA 8436. It reasoned thus: "Since the softwareprogram is an inherent element in the automated counting system, the certificationissued by the MIRDC-DOST that one thousand nine hundred seventy-three (1,973)units passed the acceptance test procedures is an official recognition by the MIRDC-DOST that the software component of the automated election system, which hasbeen reprogrammed to comply with the provisions of Republic Act No. 8436 asprescribed in the Ad Hoc Technical Evaluation Committee's ACM Testing andAcceptance Manual, has passed the MIRDC-DOST tests."

The facts do not support this sweeping statement of Comelec. A scrutiny of theMIRDC-DOST letter dated December 15, 2003, 52 which it relied upon, does notjustify its grand conclusion. For clarity's sake, we quote in full the letter-certification, 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 Certifications representing 11 lotsand covering 158 units of automated counting machines (ACMs) that wehave tested from 02–12 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 these18 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 ofanything that would remotely support Comelec's contention that the "softwarecomponent of the automated election system . . . has been reprogrammed tocomply with" RA 8436, and "has passed the MIRDC-DOST tests." There is nomention at all of any software reprogramming. If the MIRDC-DOST had indeedundertaken the supposed reprogramming and the process turned out to besuccessful, that agency would have proudly trumpeted its singular achievement.

How Comelec came to believe that such reprogramming had been undertaken isunclear. In any event, the Commission is not forthright and candid with the factualdetails. If reprogramming has been done, who performed it and when? Whatexactly did the process involve? How can we be assured that it was properlyperformed? Since the facts attendant to the alleged reprogramming are stillshrouded in mystery, the Court cannot give any weight to Comelec's bareallegations.

The fact that a total of 1,973 of the machines has ultimately passed the MIRDC-DOST tests does not by itself serve as an endorsement of the soundness of thesoftware program, much less as a proof that it has been reprogrammed. In the firstplace, nothing on record shows that the tests and re-tests conducted on themachines were intended to address the serious deficiencies noted earlier. As amatter of fact, the MIRDC-DOST letter does not even indicate what kinds of tests orre-tests were conducted, their exact nature and scope, and the specific objectives

thereof. 53 The absence of relevant supporting documents, combined with the uttervagueness of the letter, certainly fails to inspire belief or to justify the expansiveconfidence displayed by Comelec. In any event, it goes without saying that remedialmeasures such as the alleged reprogramming cannot in any way mitigate the graveabuse 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: "Thereprogrammed software that has already passed the requirements of Republic ActNo. 8436 during the MIRDC-DOST testing and acceptance procedures will requirefurther customization since the following additional elements, among other things,will have to be considered before the final software can be used on election day: 1.Final Certified List of Candidates . . . 2. Project of Precincts . . . 3. Official BallotDesign and Security Features . . . 4. Encryption, digital certificates and digitalsignatures . . . The certified list of candidates for national elective positions will befinalized on or before 23 January 2004 while the final list of projects of precincts willbe prepared also on the same date. Once all the above elements are incorporated inthe software program, the Test Certification Group created by the Ad Hoc TechnicalEvaluation Committee will conduct meticulous testing of the final software beforethe same can be used on election day. In addition to the testing to be conducted bysaid Test Certification Group, the Comelec will conduct mock elections in selectedareas nationwide not only for purposes of public information but also to further testthe final election day program. Public respondent Comelec, therefore, requests thatit be given up to 16 February 2004 to comply with this requirement."

The foregoing passage shows the imprudent approach adopted by Comelec in thebidding and acquisition process. The Commission says that before the software canbe 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 suchdata will become available only in January 2004 anyway, there is therefore noperceived need on Comelec's part to rush the supplier into producing the final (ornear-final) version of the software before that time. In any case, Comelec arguesthat the software needed for the electoral exercise can be continuously developed,tested, adjusted and perfected, practically all the way up to election day, at thesame time that the Commission is undertaking all the other distinct and diverseactivities pertinent to the elections.

Given such a frame of mind, it is no wonder that Comelec paid little attention to thecounting and canvassing software during the entire bidding process, which tookplace in February–March 2003. Granted that the software was defective, could notdetect and prevent the re-use of previously downloaded data or produce the audittrail — aside from its other shortcomings — nevertheless, all those deficiencies couldstill be corrected down the road. At any rate, the software used for bidding purposeswould not be the same one that will be used on election day, so why pay anyattention to its defects? Or to the Comelec's own bidding rules for that matter? HcTIDC

Clearly, such jumbled ratiocinations completely negate the rationale underlying thebidding process mandated by law.

At the very outset, the Court has explained that Comelec flagrantly violated thepublic policy on public biddings (1) by allowing MPC/MPEI to participate in thebidding even though it was not qualified to do so; and (2) by eventually awardingthe Contract to MPC/MPEI. Now, with the latest explanation given by Comelec, it isclear that the Commission further desecrated the law on public bidding bypermitting the winning bidder to change and alter the subject of the Contract (thesoftware), in effect allowing a substantive amendment without public bidding.

This stance is contrary to settled jurisprudence requiring the strict application ofpertinent rules, regulations and guidelines for public bidding for the purpose ofplacing each bidder, actual or potential, on the same footing. The essence of publicbidding is, after all, an opportunity for fair competition, and a fair basis for theprecise comparison of bids. In common parlance, public bidding aims to "level theplaying field." That means each bidder must bid under the same conditions; and besubject to the same guidelines, requirements and limitations, so that the best offeror lowest bid may be determined, all other things being equal.

Thus, it is contrary to the very concept of public bidding to permit a variancebetween the conditions under which bids are invited and those under whichproposals are submitted and approved; or, as in this case, the conditions underwhich the bid is won and those under which the awarded Contract will be compliedwith. The substantive amendment of the contract bidded out, without any publicbidding — after the bidding process had been concluded — is violative of the publicpolicy on public biddings, as well as the spirit and intent of RA 8436. The wholepoint in going through the public bidding exercise was completely lost. The veryrationale of public bidding was totally subverted by the Commission.

From another perspective, the Comelec approach also fails to make sense. Grantedthat, before election day, the software would still have to be customized to eachprecinct, municipality, city, district, and so on, there still was nothing at all toprevent Comelec from requiring prospective suppliers/bidders to produce, at thevery start of the bidding process, the "next-to-final" versions of the software (thebest software the suppliers had) — pre-tested and ready to be customized to thefinal list of candidates and project of precincts, among others, and ready to bedeployed thereafter. The satisfaction of such requirement would probably haveprovided far better bases for evaluation and selection, as between suppliers, thanthe so-called demo software.

Respondents contend that the bidding suppliers' counting machines were previouslyused in at least one political exercise with no less than 20 million voters. If so, itstands to reason that the software used in that past electoral exercise wouldprobably still be available and, in all likelihood, could have been adopted for use inthis instance. Paying for machines and software of that category (already tried andproven in actual elections and ready to be adopted for use) would definitely makemore 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 isreprehensible. It rides on the perilous assumption that nothing would go wrong; andthat, come election day, the Commission and the supplier would have developed,adjusted and "re-programmed" the software to the point where the automatedsystem could function as envisioned. But what if such optimistic projection does notmaterialize? What if, despite all their herculean efforts, the software now beinghurriedly developed and tested for the automated system performs dismally andinaccurately or, worse, is hacked and/or manipulated? 54 What then will we do withall the machines and defective software already paid for in the amount of P849million of our tax money? Even more important, what will happen to our country incase of failure of the automation?

The Court cannot grant the plea of Comelec that it be given until February 16, 2004to be able to submit a "certification relative to the additional elements of thesoftware that will be customized," because for us to do so would unnecessarily delaythe resolution of this case and would just give the poll body an unwarranted excuseto postpone the 2004 elections. On the other hand, because such certification willnot cure the gravely abusive actions complained of by petitioners, it will be utterlyuseless.

Is this Court being overly pessimistic and perhaps even engaging in speculation?Hardly. Rather, the Court holds that Comelec should not have gambled on theunrealistic optimism that the supplier's software development efforts would turnout well. The Commission should have adopted a much more prudent and judiciousapproach to ensure the delivery of tried and tested software, and readied alternativecourses of action in case of failure. Considering that the nation's future is at stakehere, it should have done no less.

Epilogue

Once again, the Court finds itself at the crossroads of our nation's history. At stakein this controversy is not just the business of a computer supplier, or a questionableproclamation by Comelec of one or more public officials. Neither is it about whetherthis country should switch from the manual to the automated system of countingand canvassing votes. At its core is the ability and capacity of the Commission onElections to perform properly, legally and prudently its legal mandate to implementthe transition from manual to automated elections.

Unfortunately, Comelec has failed to measure up to this historic task. As stated atthe start of this Decision, Comelec has not merely gravely abused its discretion inawarding the Contract for the automation of the counting and canvassing of theballots. It has also put at grave risk the holding of credible and peaceful elections byshoddily accepting electronic hardware and software that admittedly failed to passlegally mandated technical requirements. Inadequate as they are, the remedies itproffers 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 May2003 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 finds it totally unacceptable and unconscionable toplace its imprimatur on this void and illegal transaction that seriously endangers thebreakdown of our electoral system. For this Court to cop-out and to close its eyes tothese illegal transactions, while convenient, would be to abandon its constitutionalduty of safeguarding public interest.

As a necessary consequence of such nullity and illegality, the purchase of themachines and all appurtenances thereto including the still-to-be-produced (or inComelec's words, to be "reprogrammed") software, as well as all the paymentsmade therefor, have no basis whatsoever in law. The public funds expendedpursuant to the void Resolution and Contract must therefore be recovered from thepayees and/or from the persons who made possible the illegal disbursements,without prejudice to possible criminal prosecutions against them.

Furthermore, Comelec and its officials concerned must bear full responsibility forthe failed bidding and award, and held accountable for the electoral mess wroughtby 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 first have a diligent and competent electoral agencythat can properly and prudently implement a well-conceived automated electionsystem.

At bottom, before the country can hope to have a speedy and fraud-free automatedelection, it must first be able to procure the proper computerized hardware andsoftware legally, based on a transparent and valid system of public bidding. As inany democratic system, the ultimate goal of automating elections must be achievedby a legal, valid and above-board process of acquiring the necessary tools and skillstherefor. Though the Philippines needs an automated electoral process, it cannotaccept just any system shoved into its bosom through improper and illegal methods.As the saying goes, the end never justifies the means. Penumbral contracting willnot produce enlightened results.

WHEREFORE, the Petition is GRANTED. The Court hereby declares NULL and VOIDComelec Resolution No. 6074 awarding the contract for Phase II of the CAES toMega Pacific Consortium (MPC). Also declared null and void is the subject Contractexecuted between Comelec and Mega Pacific eSolutions (MPEI). 55 Comelec isfurther ORDERED to refrain from implementing any other contract or agreemententered into with regard to this project.

Let a copy of this Decision be furnished the Office of the Ombudsman which shalldetermine the criminal liability, if any, of the public officials (and conspiring privateindividuals, if any) involved in the subject Resolution and Contract. Let the Office ofthe Solicitor General also take measures to protect the government and vindicate

public interest from the ill effects of the illegal disbursements of public funds madeby 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 OpinionsDAVIDE, JR., C.J.:

I join Mr. Justice Jose C. Vitug in his separate opinion and strongly recommend, forthe reasons therein stated, that this case be DISMISSED.

Let me further add other compelling reasons which strengthen my view that thiscase should be dismissed.

The Court did not issue a Temporary Restraining Order in this case. This showed aninitial finding that on its face the allegations in the petition were insufficient tojustify or warrant the grant of a temporary restraining order. In the meantime thenthe parties were not barred from performing their respective obligations under thecontract. As of today, the COMELEC has already paid a large portion of its contractedobligation and the private respondent has delivered the contracted equipment forautomation. It is to be reasonably presumed that during the same period theCOMELEC focused its attention, time and resources toward the full and successfulimplementation of the comprehensive Automated Election System for the May2004 elections. Setting aside the contract in question at this late hour may haveunsettling, disturbing and even destabilizing effect. For one, it will leave theCOMELEC insufficient time to prepare for a non-automated electoral process, i.e.,the manual process, which would necessarily include the acquisition of the securitypaper and the purchase of a "dandy roll" to watermark the ballot paper, printing ofother election forms, as well as the bidding and acquisition of the ballot boxes. Foranother, the law on Automated Election System (R.A. 8436) and Executive OrderNo. 172 (24 January 2003) which allocated the sum of P2.5 Billion, and ExecutiveOrder No. 175 (10 February 2003) which allocated the additional sum of P500Million 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 re-bidding.

Finally, there is no suggestion that graft and corruption attended the biddingprocess, or that the contract price is excessive or unreasonable. All that thepetitioners claim is that "the bidding and the award process was fatally flawed. Thepublic respondents acted without or excess of its jurisdiction or with grave abuse ofdiscretion amounting to lack or excess of jurisdiction when it [sic] awarded theproject." 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 certiorariand prohibition (along with petitions for prohibition, mandamus, quo warranto,habeas corpus and injunction), that jurisdiction, however, is not exclusive. 1 A directrecourse to the Supreme Court, for the issuance of these writs, in disregard of therule on hierarchy, should be appropriate only when, besides the attendance ofclearly exceptional and compelling reasons clearly set out in the petition, 2 there areno contentious factual assertions of the parties that need to be threshed out beforeany objective and definitive conclusion can be reached.

What appears to be a significant issue in the instant petition is the legality ofrespondent COMELEC's award of the contract relative to the procurement ofautomated counting machines to respondent Mega Pacific under allegedquestionable circumstances. The Supreme Court is not a trier of facts; indeed, areview of the evidence is not the proper office of a petition for certiorari, prohibitionor mandamus. 3 These proceedings are availed of only when there can be no otherplain, adequate and speedy remedy in the ordinary course of law.

In certiorari or prohibition, issues affecting the jurisdiction of the tribunal, board andofficers involved may be resolved solely on the basis of undisputed facts. 4 Theenormity of the factual disputes in the instant petition, among which include theeligibility of Mega Pacific to participate in the bidding process, the veracity andeffectivity of the testing, and the technical evaluation conducted by the Departmentof Science and Technology (DOST) on the automated counting machine of thebidders, would essentially require an extensive inquiry into the facts. An insistencethat it be resolved despite unsettled factual points would be inadequate to allow anintrusion by the Court. 5

The Supreme Court is not expected, whenever one is simply minded, to passjudgment on an action of a government agency upon which authority, as well ascorresponding duty, devolves. The Court neither controls nor supervises the exerciseof authority and the discharge of function by another government office. If it wereotherwise, the act of governance and the responsibility that thereto attaches arethen effectively 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 itswisdom and salutariness, and to strike it down only when constitutionalproscriptions are disregarded. It is what the fundamental law mandates, and it iswhat the Court must do.

The electoral process, it is true, should be of paramount and immediate concern toevery Filipino. It is also probably true that the computerization/automation of ourelectoral 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, toprecipitately take on the case; after all, we have been without it for decades. Theopinions expressed by my colleagues, collectively and individually, should indeedgive compelling reasons for the Commission on Elections to perhaps take noticeand, on its own, to forthwith reexamine the assailed bidding process.

Accordingly, at this stage, I am constrained to vote against the Court's takingcognizance of the case.

YNARES-SANTIAGO, J., concurring:

I am mindful of our ruling, expressed only recently in Makalintal v. COMELEC, 1 thatthe Commission on Elections ("COMELEC"), being an independent constitutionalbody, ought to be given considerable latitude in the discharge of its functions. Thekey point to be remembered is the fundamental objective which all of theCOMELEC's actuations should be destined to achieve, i.e. the accomplishment offree, orderly and honest elections. If the means adopted by the COMELEC runclearly contrary to its fundamental objective, it is our right — more, our duty — tonullify the COMELEC's actuations.

Our experience during the May 11, 1998 regular elections held in the AutonomousRegion in Muslim Mindanao (ARMM) 2 should have taught us that the Philippinesmay be unprepared for the use of automated counting machines. Whereas it issuccessfully adopted in many countries around the world, this sophisticatedtechnological advancement seems beyond the reach of the Philippines at this stagein 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 ownlaws demand, we would be tampering with the conduct of free, orderly and honestelections, 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, thisCourt is not a trier of facts, and a review of the technical evidence is not the properoffice 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, aresquarely within the purview of this Court in this case.

In my opinion, there are three main grounds which warrant granting the instantpetition. First, I believe that the special circumstances availing in this case warrantthe relaxation of the rule on exhaustion of administrative remedies. Second, theCOMELEC gravely abused its discretion when it clearly contracted with a non-eligible entity, and therefore the contract for the second phase of the automatedcounting system is null and void. Finally, even assuming the eligibility of the othercontracting party, the COMELEC gravely abused its discretion when it changed thetechnical 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 notinterfere in matters which are addressed to the sound discretion of governmentagencies entrusted with the regulation of activities coming under the specialtechnical knowledge and training of such agencies. 4 The underlying principle of therule on exhaustion of administrative remedies rests on the presumption that whenthe administrative body, or grievance machinery, is afforded a chance to pass uponthe matter, it will decide the same correctly. 5

The principle of exhaustion of administrative remedies is not an ironclad rule. Thisdoctrine is relative, and its flexibility is called upon by the peculiarity anduniqueness 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 dueprocess; 7 (2) the issue involved is purely a legal question; 8 (3) the administrativeaction is patently illegal amounting to lack or excess of jurisdiction; 9 (4) there isestoppel on the part of the administrative agency concerned; 10 (5) there isirreparable injury; 11 (6) the respondent is a department secretary whose acts, as analter 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 nullification of a claim; 14 (9) the subject matter is a privateland in land case proceedings; 15 (10) the rule does not provide a plain, speedy andadequate remedy; and (11) there are circumstances indicating the urgency ofjudicial intervention, 16 as when public interest is involved. 17

There is no plainer example of a case in which the issues are of transcendentalimportance. The preservation of an honest, upright system of electing our nation'spublic officers bears urgent public interest considerations. More, as I will discussbelow, the administrative action involved here is patently illegal, amounting to lackor excess of jurisdiction.

These two reasons warrant the relaxation of the rule of exhaustion ofadministrative 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 individualagreements executed with MPEI, and that these separate agreements suffice toconstitute an eligible "joint venture" under the Request For Proposal ("RFP")promulgated by the COMELEC. The fact that WeSolv, SK C & C, Election.Com andePLDT 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 definition. To beeligible to submit a bid, the following criteria must be met:

Manufacturers, suppliers and/or distributors forming themselves into a jointventure, 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 qualifications for eligibility under the RFP. First, themanufacturers, suppliers and/or distributors must expressly form themselves into ajoint venture. Second, this joint venture must demonstrate an intent that theindividual 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 asingle document to constitute the joint venture, there must be sufficient evidencethat such a joint venture was indeed formed, whether this evidence is a singledocument, or a multiplicity of documents. It is plain that the "joint venture" mustbe formed as a single entity, responsible for the entirety of the contract, even ifseparate agreements among the individual members of the joint venture would layout the specific tenor of their obligations to each other; otherwise, it would beimpossible to evaluate the nationality of this joint venture, which nationality is thethird requirement for eligibility.

Conspicuously absent from the records of this case are documents that demonstratethat the individual members of the so-called "Consortium" actually formed orconstituted themselves into a joint venture. Jurisprudence discussing a joint venturelays out the rule that such an entity "presupposes generally a parity of standingbetween the joint co-ventures or partners, in which each party has an equalproprietary interest in the capital or property contributed, and where each partyexercises equal rights in the conduct of the business." 19

I n Aurbach, et al. v. Sanitary Wares Manufacturing Corporation, et al . , 20 weexpressed 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 noprecise legal definition, but it has been generally understood to mean anorganization formed for some temporary purpose. It is hardlydistinguishable from the partnership, since their elements are similar —community of interest in the business, sharing of profits and losses, and amutual right of control. The main distinction cited by most opinions incommon law jurisdiction is that the partnership contemplates a generalbusiness with some degree of continuity, while the joint venture is formedfor the execution of a single transaction, and is thus of a temporary nature.This observation is not entirely accurate in this jurisdiction, since under theCivil Code, a partnership may be particular or universal, and a particularpartnership may have for its object a specific undertaking. It would seemtherefore that under Philippine law, a joint venture is a form of partnershipand should thus be governed by the law of partnerships. The Supreme

Court has however recognized a distinction between these two businessforms, and has held that although a corporation cannot enter into apartnership 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 thejoint venture bind themselves, jointly, to perform a common undertaking orundertakings. The definition of a "joint venture" under the RFP is in line with thislegal definition.

There is nothing in the records that would indicate that any such entity was createdby the individual members of the so-called "Consortium". In the absence of anyevidence, we must conclude that no such agreement exists.

Since we are unable to conclude that the "joint venture" has any legal existence, itis impossible to evaluate whether or not the third criterion — setting out thenationality requirement for an eligible joint venture — has been met by the so-called "Consortium". The so-called "Consortium", therefore, has failed to meet thefirst and third criteria.

There is also a gross failure on the part of the private respondents to meet thesecond criterion. There is a marked absence of intent that the individual members ofthe so-called "Consortium" be jointly and severally liable for the contract.

The records contain particular individual agreements that MPEI entered into withother entities. A perusal of the individual agreements that MPEI entered into withthe other entities readily demonstrates that it was always the intent of MPEI tohave direct and primary liability for any breach of the Contract with COMELEC.

Part of the records are so-called "Teaming Agreements" which MPEI entered intowith Election.Com Ltd. 21 and ePLDT Inc., 22 both dated March 3, 2003. Anexamination of the language of these "Teaming Agreements" would once moredemonstrate that it was MPEI, and MPEI alone, which intended to bid for theContract 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 "TeamingAgreements" acknowledges that the agreements were entered into in theexpectation that COMELEC would award the Contract to the Contractor, MPEI. 24Absent from either of these "Teaming Agreements" is any reference to thepossibility that COMELEC would contract with the so-called "Consortium".

Moreover, both of these agreements state that the obligation of the Subcontractorwas the delivery of equipment or provision of services to the Contractor, MPEI, 25and indeed expressly limit the Subcontractor's role in the entire project to be merelythat of a provider of the equipment and services. 26 Liability for failure to performthese obligations is expressly limited. The Subcontractors would be liable only toMPEI, and not to the COMELEC.

Also part of the records is the "Memorandum of Agreement" entered into betweenMPEI and WeSolv Open Computing, Inc. 27 The very first preambulatory clausethereof reads:

WHEREAS, pursuant to an open competitive bidding to be conducted by theCommission on Elections ("COMELEC") of the Philippine Government, MegaPacific intends to submit a bid for Phase II: Automated Counting andCanvassing System (the "Project") of the Modernization Program of thePhilippine Electoral System; 28 (emphasis supplied)

"Mega Pacific", the entity referred to, is defined as "Mega Pacific eSolutions, Inc." 29and not the so-called "Consortium". In other words, MPEI and WeSolv understoodthat MPEI would be bidding for the Contract, and MPEI alone would be contractingwith COMELEC.

The expression of "joint and several liability" of "WeSolv" does not transform theagreement 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 Pacific only for theparticular products and/or services supplied by the former for the Project.30

The very first reference to any so-called "Consortium" is in the "Memorandum ofAgreement" dated March 9, 2003, between MPEI and SK C & C, "a corporationorganized and existing under and by virtue of the laws of the Republic of Korea". 31The initial preambulatory clause reads:

WHEREAS, pursuant to an open competitive bidding to be conducted by theCommission on Elections ("COMELEC") of the Philippine Government, theMega Pacific Consortium shall bid for Phase II: Automated Counting andCanvassing System (the "Project") of the Modernization Program of thePhilippine Electoral System; . . . 32

That Memorandum of Agreement also contains the following clause:

Each of the individual members of the Consortium shall be jointly andseverally liable with the Lead Firm for the particular products and/or servicessupplied by such individual member for the project, in accordance with theirrespective undertaking or sphere of responsibility. 33

Three things are significant about this Memorandum of Agreement.

First, whereas there is reference to a "Consortium", the specific composition of the"Consortium" is not specified. Thus, the records are bereft of any evidence thatwould demonstrate which entities, if any, would be parties to this "Consortium". Itis therefore impossible to make a factual determination as regards whether the"Consortium" would meet the strict requirements for a qualified bidder outlined inthe RFP.

Second, the Memorandum of Agreement specifically limits the liability of eachmember of this "Consortium" only in accordance with their respective undertakingor sphere of responsibility. Thus, the "joint and several" liability of each member ofthe Consortium would again be only within a very limited application, i.e., only tothe extent of its individual undertaking.

Third, and most significant, the Memorandum of Agreement is only between MPEIand 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. Thejoint and several liability referred to in the quoted paragraph, therefore, wouldpertain only to MPEI and SK C & C, since these are the only two parties to thisparticular contract, and not to any other member of the Consortium, if any. In theabsence of evidence, it is impossible to conclude that there are other members ofthe Consortium, and equally impossible to determine the extent of their liability, ifany.

In sum, therefore, there is a conspicuous dearth of evidence to demonstrate thatthere was, indeed, a Consortium; if there was a Consortium, the specificcomposition thereof; and, if there was a Consortium, the liability of its individualmembers, 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 withthe 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, wouldper se be ineligible to bid. A plain reading of the contract denominates the parties tobe:

COMMISSION ON ELECTIONS, the government institution charged with theenforcement and administration of laws relative to the conduct of elections,with principal office 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 existingunder and by virtue of the laws of the Republic of the Philippines, withprincipal office address at Suite 707, Tower One & Exchange Plaza, AyalaTriangle, Ayala Avenue, Makati City, Philippines, represented in this act by itsPresident, 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 ContractDocuments, are hereby incorporated and made integral parts of the

Contract:

(1) this Contract together with its Appendices;

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

(3) Tender Proposal as submitted by Mega.

All Contract Documents shall form part of the Contract even if they or anyone of them is not referred to or mentioned in the Contract as forming apart thereof. Each of the Contract Documents shall be mutuallycomplementary and explanatory of each other such that what is noted inone 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 timelyexecution and completion of the Project in accordance with the ContractDocuments. Consequently, all items necessary for the proper and timelyexecution and completion of the Project shall be deemed included in theContract.

Again, conspicuously absent from this contractual definition of a "ContractDocument" is any mention of any subsidiary agreement between a purported"Consortium" and the COMELEC. Indeed, a plain reading of the definition of the"Contract Document" would indicate that, insofar as the parties to the contractwere concerned, the bid itself was submitted by MPEI and not the "Consortium".

Moreover, the definition of "Contract Document" could easily have integrated thesubsidiary 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. Theappendices to the main contract are: "Products and Services to be Acquired from,and Provided by, Mega Pacific Solutions, Inc., and Technical Specifications"; 35"Ballot Counting System"; 36 "Canvassing of Votes System/Software"; 37 "ProjectManagement Approach"; 38 "Implementation and Roll-Out Plan"; 39 "Timelines"; 40"List of Goods"; 41 "List of Documentation"; 42 "Training Summary"; 43 "List ofServices"; 44 "Schedule of Communication/Information Dissemination Materials"; 45and "Global Price Summary". 46

Moreover, an examination of the various obligations in the contract readilydemonstrates that all those obligations pertain only to either COMELEC or MPEI.None of the other entities under the so-called "Consortium" has any obligations toCOMELEC under the Contract. It is apparent that only COMELEC and MPEI arebound thereunder. The argument that the "Consortium", as an entity, bound itselfto perform particular obligations under the contract is easily debunked by anexamination 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'sCertificate, dated March 5, 2003, executed by Enrique T. Tansipek, the CorporateSecretary of MPEI, which attests to the corporate authority given by the MPEI boardto enable MPEI (not the so-called "Consortium") to participate in the bidding, in itsown behalf, and not in behalf of any so-called "Consortium". 47 There are various"Affidavits of Undertaking" dated March 7, 2003, executed by Willy U. Yu, Presidentof MPEI, which attest that (1) MPE I (not any so-called "Consortium") will beparticipating 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", 48a 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 eligibleentity, it appears that the counting machines and ballot-counting softwaresubmitted by the so-called "Consortium" simply failed to meet the accuracy ratingrequired by the RFP.

In the RFP, the COMELEC required that both the counting machines and ballot-counting software should have an accuracy rating of 99.9995 or better.

After the bids were submitted, the accuracy criteria were suddenly changed to99.995 percent.

Only very recently, in the Piatco 49 case, we held:

An essential element of a publicly bidded contract is that all bidders must beon equal footing. Not simply in terms of application of the procedural rulesand regulations imposed by the relevant government agency, but moreimportantly, on the contract bidded upon. Each bidder must be able to bidon the same thing. The rationale is obvious. If the winning bidder is allowedto later include or modify certain provisions in the contract awarded suchthat the contract is altered in any material respect, then the essence of faircompetition in the public bidding is destroyed. A public bidding would indeedbe a farce if after the contract is awarded, the winning bidder may modifythe contract and include provisions which are favorable to it that were notpreviously made available to the other bidders.

It is inherent in public biddings that there shall be a fair competition among thebidders. The specifications in such biddings provide the common ground or basis forthe bidders. The specifications should, accordingly, operate equally orindiscriminately upon all bidders. 50

To change the eligibility requirements mid-stream, and after bids had already beensubmitted, completely subverts the integrity of the bidding process and warrantsthe nullification of the award of the contract, whether the other contracting partywas MPEI or the so-called "Consortium".

In sum, the serious defects in the bidding process indicate a grave abuse ofdiscretion on the part of public respondent COMELEC, which seemed to display amarked bias in favor of awarding the contract to the private respondent MPEI or theso-called "Consortium". Whereas automated counting might greatly speed up ourelection process, we should take great pains to make certain that the machines usedare not flawed. To my mind, the subversion of the bidding process already makesthe automation of the 2004 elections inherently suspect, which will have apotential negative effect on the integrity of the results. At this stage in our nation'shistory, we should all strive toward restoring the public's faith in the stability of ourgovernment institutions, and the use of suspect machines in counting votes cannotbut subvert that faith.

IN VIEW WHEREOF, I CONCUR with the majority opinion and vote to GRANT thepetition, specifically, to: (1) declare NULL and VOID Resolution No. 6074 of theCOMELEC awarding the contract for the second phase of the automated countingand canvassing system of the Modernization Program of the Philippine ElectoralSystem to either Mega Pacific eSolutions, Inc. or the Mega Pacific Consortium; (2)PROHIBIT the COMELEC from implementing any contract entered into with eitherMega Pacific eSolutions, Inc. or the Mega Pacific Consortium for the second phase ofthe automated counting and canvassing system of the Modernization Program ofthe Philippine Electoral System; and (3) COMPEL the COMELEC to conduct a re-bidding of the second phase of the automated counting and canvassing system ofthe Modernization Program of the Philippine Electoral System.

SANDOVAL-GUTIERREZ, J., concurring:"Hasty and adventurous schemes are at first view flattering, in executiondifficult, and in the issue disastrous." 1

Election is indeed the bedrock of every democratic institution. Thus, when it comesto automating the election system, the standards must be as high as the stakes. Thegovernment and the suppliers of the voting machines carry the burden of proof thatthe machines are working correctly and that the election results will be accurate. Allof democracy is founded on the idea that the loser of an election understands thathe lost fair and square and that the election represents the will of the electorate. Ifwe get into elections with outcomes that people do not believe in, where thecandidates challenge the integrity of the machine, people are going to feel less andless 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 theautomated voting machines intended for the May 2004 Elections. The matterstrikes at the heart of our democratic system. If the system fails, there again loomsa threat to our country's stability. More than any other time, what we need today isa system that will bolster the legitimacy of our government.

With the foregoing premise, I vote to grant the petition and declare ComelecResolution No. 6074 null and void.

The facts are undisputed.

On December 22, 1997, Congress enacted Republic Act No. 8436 3 authorizing theCommission on Election (COMELEC) to use an automated election system for theprocess of voting, counting of votes and consolidating results of the national andlocal 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, invitinginterested bidders to apply for eligibility and to bid for the supply and delivery of theACM with an estimated budget of P2,500,000,000.00. 5

On February 17, 2003, the COMELEC released to the public the "Request forProposal" providing that bids from manufacturers, suppliers and/or distributorsforming themselves into a joint venture may be entertained as long as the Filipinoownership thereof shall be at least 60%. For this purpose, a joint venture wasdefined as "a group of two (2) or more manufacturers, suppliers and/or distributorsthat 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) conveneda pre-bid conference and gave prospective bidders until March 10, 2003 to submittheir bid proposals.

On March 10, 2003, Mega Pacific Consortium (MP CONSORTIUM) submitted its bid.Enclosed in it bidding documents was a letter dated March 7, 2003 expressing thatMega Pacific eSolutions, Inc. (MPEI), Election.Com, Ltd. (Election.Com), WeSolvOpen 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 sameletter, MPEI, through its President, made known its role as the lead company andproponent of MP CONSORTIUM.

Of more than 57 bidders, the BAC found MP CONSORTIUM and Total InformationManagement Corporation (TIMC) eligible to bid. Their bid proposals were thereafterreferred to the BAC's Technical Working Group (TWG) and the Department ofScience and Technology (DOST) for technical evaluation.

Thereafter, the TWG prepared a Technical Evaluation Form listing the minimumrequirements for the Project with columns to indicate whether the bidder "passed"or "failed" to meet certain requirements. Requirements that were highly technicalin nature and called for technical equipment for evaluation were referred to theDOST.

Based on the findings of the TWG and the DOST, the BAC submitted a Report 7noting that both MP CONSORTIUM and TIMC obtained some failed marks in thetechnical evaluation. Regardless thereof, the COMELEC en banc, in Resolution No.6074 awarded the Project to MP CONSORTIUM on April 15, 2003. It publicized thisResolution on May 16, 2003.

Unsatisfied with the COMELEC's bidding process, five individuals and entities

(including petitioner Information Technology Foundation of the Philippines) wrote aletter dated May 29, 2003 to COMELEC Chairman Benjamin Abalos, Sr. protestingthe award of the contract to MP CONSORTIUM. They cited MP CONSORTIUM's non-compliance with eligibility as well as technical requirements.

On June 6, 2003, COMELEC Chairman Abalos rejected the protest and declared thatthe award "would stand up to strictest scrutiny."

Undaunted, Information Technology Foundation of the Philippines (ITFP), MaCorazon M. Akol, Miguel Uy, Eduardo H. Lopez, Augusto C. Lagman, Rex C. Drilon,Miguel Hilado, Ley Salcedo and Manuel Alcuaz, Jr., petitioners herein, filed thepresent petition for prohibition and mandamus seeking (1) to declare null and voidCOMELEC's Resolution No. 6074; (2) to enjoin the implementation of the contractthat may have been entered into by COMELEC either with MP CONSORTIUM orMPEI; and (3) to compel COMELEC to conduct a re-bidding of the Project.

After carefully reviewing the records of this case, I find the exhaustive ponencia ofMr. 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 isargued that the recourse taken is improper. It is a well established rule, particularlyin public biddings, that courts cannot compel an agency to do a particular act or toenjoin such act within its prerogative or discretion. This is not an iron-clad rule. Onenoted exception is when in the exercise of its authority it gravely abuses or exceedsits jurisdiction. 8 Judicial review may be justified on the grounds of grave abuse ofdiscretion, arbitrary rejection of bids, and lack of freedom of competition amongbidders. 9 In the case at bar, petitioners alleged in their petition that publicrespondents "acted without or in excess of its jurisdiction or with grave abuse ofdiscretion" 10 when they awarded the Project to MPEI. Thus, the followingpronouncement of this Court in JG Summit Holdings, Inc. vs. Court of Appeals 11deserves reiteration:

Be that as it may, the Court of Appeals erred when it dismissed the petitionon the sole ground of the impropriety of the special civil action ofmandamus. It must be stressed that the petition was also one for certiorari,seeking to nullify the award of the sale to private respondent of thePHILSECO shares. Verily, the petition alleges that 'respondents COP and APThave committed such a grave abuse of discretion tantamount to lack orexcess of their jurisdiction in insisting on awarding the bid to Philyards, forthe various reasons stated herein, particularly since the right of first refusaland the right to top the bid are unconstitutional, contrary to law and publicpolicy.' Petitioner's failure to include certiorari in its caption should not negatethe fact that the petition charged public respondent with grave abuse ofdiscretion in awarding the sale to private respondent. Well-settled is the rulethat it is not the caption of the pleading but the allegations therein thatdetermine the nature of the action and the Court shall grant relief warrantedby 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 standingto file the present case and that the petition should be dismissed for their failure toexhaust administrative remedies.

Section 7 of R.A. No. 8436 provides that the COMELEC, in the procurement of anautomated election system, shall create an "Advisory Council to be composed oftechnical experts from the Department of Science and Technology (DOST), theInformation Technology Foundation of the Philippines (ITFP) , the University of thePhilippines (UP) and two (2) representatives form the private sector recommendedby the Philippine Computer Society (PCS)."

Obviously, petitioner ITFP is a member of the Advisory Council mandated to aid theCOMELEC in the procurement of the ACM. As such, it has "actual and materialinterest" to ensure that in the procurement of the ACM, the bidding procedures arefollowed and the technical requirements are complied with. The same interestredounds to petitioners who are members of the ITFP and who, in addition, aresuing as "taxpayers, registered voters and concerned citizens of the Philippines." InDel Mar vs. Philippine Amusement and Gaming Corporation, 12 we ruled thattaxpayers are allowed to sue (1) where there is a claim of illegal disbursement ofpublic funds, (2) or that public money is being deflected to any improper purpose,(3) or where petitioners seek to restrain respondent from wasting public fundsthrough the enforcement of an invalid or unconstitutional law. Considering that theassailed award involves the disbursement of billions of pesos from the publictreasury, I must say that petitioners possess the required locus standi.

Anent petitioners' failure to exhaust administrative remedies, suffice it to say thattheir letter dated May 29, 2003 to COMELEC Chairman Abalos objecting to theprocess which led to the award of the contract to MPEI satisfies the aboveprocedural condition. Certainly, petitioners could not be expected to follow theprotest mechanisms outlined in Section 55, 13 Rule XVII of Republic Act No. 9184 14considering 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 waspromulgated. Respondents would argue that under the subsequent provision,Section 58 15 of the same Rule, the court which has jurisdiction over final decisionsof the head of the procuring entity is the Regional Trial Court. This is not really alegal 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 instanceswhere this Court was confronted with cases of national interest and of seriousimplications, it never hesitated to set aside the rule and proceed with the judicialdetermination of the case. 17 The case at bar is of similar import. It is in the interestof the State that questions relating to government contracts be settled withoutdelay. This is more so when the alleged contract involves the disbursement of publicfunds and the modernization of our country's election process."

The substantive issues in this case may be reduced into two queries: first, Did theComelec abuse its discretion when it allowed MPEI to actively participate in the

bidding despite its failure to meet the mandatory eligibility requirement?; andsecond, Did the COMELEC abuse its discretion when it awarded the contract toMPEI?

At this juncture, it bears stressing that MPEI was incorporated only on February 27,2003 as evidenced by its Certificate of Incorporation. 18 This goes to show that fromthe time the COMELEC issued its Invitation to Bid (January 28, 2003) and Requestfor 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 beingonly 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 Requestfor Proposal requires the bidder to submit financial documents that will establish tothe BAC's satisfaction its financial capability which include:

"(1) audited financial statements of the Bidder's firm for the last three (3)calendar years, stamped "RECEIVED" by the appropriate governmentagency, to show its capacity to finance the manufacture and supply ofGoods 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 aboverequirement of audited financial statements for the last three (3) calendar years if itcame into existence only eleven (11) days prior to the bidding?

To do away with such complication, MPEI asserts that it was MP CONSORTIUM whosubmitted the bid on March 10, 2003. It pretends compliance with the requirementsby invoking the financial capabilities and long time existence of the allegedmembers of the MP CONSORTIUM, namely, Election.Com, WeSolv, SK CeC, ePLDTand Oracle. It wants this Court to believe that it is MP CONSORTIUM who wasactually dealing with the COMELEC and that its (MPEI) participation is merely thatof 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 andMPEI, not MP CONSORTIUM. 19 As a matter of fact, there cannot be found in thecontract any reference to the MP CONSORTIUM or any member thereof for thatmatter. 20 For another, the agreements among the alleged members of MPCONSORTIUM do not show the existence of a joint-venture agreement. Worse, MPEIcannot produce the agreement as to the "joint and several liability" of the allegedmembers of the MP CONSORTIUM as required by this Court in its Resolution datedOctober 7, 2003.

What is apparent from the four (4) agreements I gathered is the existence of eithera "contractor-subcontractor" or "buyer-supplier" relationship between MPEI on theone hand and the alleged members of the MP CONSORTIUM. There was noassumption 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 onlyagreed to be one of its suppliers. Contrary to MPEI's asseveration that it was MPCONSORTIUM which bid for the project, the Memorandum clearly states that MPEI"will undertake negotiations with the COMELEC for the purpose of finalizing thecontract for the said Project in the event that it [MPEI] is declared as the winningbidder and the Project is awarded in its [MPEI] favor." As if to emphasize theabsence of "joint and several liability" over the entire Project, the Memorandumexpressly provides that WeSolv shall be jointly and severally liable with MPEI "onlyfor 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 thesupply of the products and services including but not limited to the scope of theproducts and services to be supplied and payment terms, WeSolv shall cease to bebound by its obligations." The same provisions are to be found in the "Memorandumof Agreement" between MPEI and SK C & C. 21

The "Teaming Agreement " between MPEI and Election.Com 22 also negates MPEI'sassertion that it was MP CONSORTIUM that bid for the Project. Here, MPEI is singledout as the one who intended to submit a proposal to the COMELEC. Under theTeaming Agreement, MPEI "has identified the subcontractor [Election.Com] as oneof its suppliers." It was stipulated therein that "the parties shall each be individuallyliable 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 indata or, non-performance of products and/or services supplied." The same limitationon 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 billionworth 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 ourcountry's election system. From a brief survey of the four (4) agreements, I amconvinced that the COMELEC, and ultimately the people, stand on the losing endshould the Project fail because of the obvious difficulty in determining where theculpability lies.

It bears reiterating for the consumption of our public officers that in the exercise oftheir contracting prerogative, they should be the first judges of the legality,propriety and wisdom of the contract they entered into. They must exercise a highdegree of caution so that the Government may not be the victim of ill-advised orimprovident action. 24 Prudence should be their primordial virtue. Thus, eventhough they have broad discretion to determine the qualifications of the bidders, itmay not act arbitrarily and they must conform to statutory requirements governingthe awarding of public contracts. 25 Reason must govern the acts of such officials,and courts will not hesitate to interfere when it is clearly made to appear that theyhave acted arbitrarily, dishonestly or beyond the reasonable limits of the discretionconferred 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 Mega-Pacific or TIM or both of them failed.

KEY REQUIREMENTS BIDDER/S THAT FAILEDDoes the machine have anaccuracy rating of at least99.995 percent? (Item No. 1,Table 6, DOST Report)

At normal environment Mega TIM

At harsh environment MegaUninterruptible back-up powersystem, that will engageimmediately to allow operation ofat least 10 minutes after outrage,power surge or abnormalelectrical occurrences? (Item No. TIM4, Table 6, DOST Report)

Machines read two sided ballots TIM*in one pass? (Item No. 5,Table 6, DOST Report)

Machine can detect previouslycounted ballots and preventpreviously counted ballots from TIMbeing counted more than once?(Item No. 6, Table 6, DOSTReport)

Store results of counted votes byprecinct in external (removable) TIMstorage device? (Item No. 7,Table 6, DOST Report)

Data stored in external media is TIMencrypted? (Item No. 8, Table 6,DOST Report)

CPU speed is at least 400 mHz? TIM(Item No. 10, Table 6, DOSTReport)

Generates printouts of theelection returns in a formatspecified by the Comelec?(Item No. 12, Table 6, DOST Mega TIMReport)

Generates an audit trail of thecounting machine, both hard andsoft copy? (Item No. 14, Table 6,DOST Report) TIM*

Soft copy

Does the city/municipalcanvassing system consolidatesresults from all precincts within itusing the encrypted soft copy ofthe data generated by thecounting machine and stored onthe removable data storagedevice? (Item No. 15, Table 6, TIM*DOST Report)

Does the city/municipalitycanvassing system consolidate TIM*results from all precincts withinit using the encrypted soft copyof the data generated bycounting machine andtransmitted through anelectronic transmission media? Mega(Item No. 16, Table 6, DOSTReport)

Note: No facilities/resourcesavailable to test the transmissionof data through electronic means.

Does the system output a ZeroCity/Municipal Canvass Report, TIM*which is printed on election dayprior to the conduct of the actualcanvass operation, that showsthat all totals for all the votes forall the candidates and otherinformation are indeed zero ornull? (Item No. 17, Table 6, DOSTReport)

Does the system consolidateresults from all precincts in thecity/municipality using the data TIM*storage device coming from thecounting machine? (Item No. 18,Table 6, DOST Report)

Is the machine 100% accurate?(Item No. 19, Table 6, DOST TIM*Report)

Is the Program able to detectpreviously downloadedprecinct results and preventthese from being inputted again Mega Megainto the System? (Item No. 20,Table 6, DOST Report)

The System is able to print thespecified reports and the audittrail without any loss of dataduring generation of theabovementioned reports? (ItemNo. 21, Table 6, DOST Report)

Print specified reports

Audit trail Mega TIM*

(Note: Audit TIM* trail not yet incorporated)

Can the result of thecity/municipal consolidation bestored in a data storage device? TIM*(Item No. 22, Table 6, DOSTReport)

Does the System consolidateresults from all precincts in theprovincial/district/national usingthe data storage device fromdifferent levels of consolidation?(Item No. 23, Table 6, DOSTReport) TIM*

Is the System 100% accurate?(Item No. 24, Table 6, DOSTReport)

Is the Program able to detectpreviously downloaded precinctresults and prevent these frombeing imported again into theSystem? (Item No. 25, Table 6,DOST Report)

The System is able to print thespecified reports and the audittrail without any loss of dataduring generation of theabovementioned reports? (ItemNo. 26, Table 6, DOST Report)

Print specified reports?

Audit trail? TIM*

Mega TIM*

(Audit trail not yet incorporated)

Can the results of the provincial/district/national consolidation bestored in a data storage device? TIM*(Item No. 27, Table 6, DOSTReport)

Notwithstanding the above failed marks the COMELEC still awarded the contract toMPEI. This is highly irregular. The above requirements where MPEI failed cannot beconsidered as insubstantial. They have a bearing on the required features of theautomated election system under Section 7 of R.A. No. 8436, such as (1) use ofappropriate ballots, (2) stand-alone machine which can count votes and anautomated system which can consolidate the results immediately, (c) withprovisions for audit trails, (d) minimum human intervention, and (e) adequatesafeguard/security measures.

COMELEC's stance that it can waive certain requirements is misplaced in thepresent case because what it waives are those which concerns the integrity andaccuracy of the ACM and thus, affect the substance and the validity of the bids.Statutory or regulatory mandatory requirements with respect to bidding on publiccontracts cannot be waived. Presidential Decree No. 1594, 26 for one, expresslystates that the Government, in the evaluation of bid received, "reserves the right towaive the consideration of minor deviations in the bids received which do not affectthe substance and validity of the bids." Thus, while a reservation in theadvertisement of the right to reject any bid generally vests in the authorities a widediscretion as to who is the best and most advantageous bidder, however, it may notbe used as a shield to a fraudulent award. 27 Should this be the case, judicialinterference would be justified.

WHEREFORE, I vote to GRANT the Petition. COMELEC Resolution No. 6074 isdeclared 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 therespondent Commission on Elections (COMELEC) in the exercise of itsadministrative powers granted by the Constitution in relation to the conduct ofelections. Apparently, the Court has opted to trudge the trail it blazed recently inthe Amari 1 and PIATCO 2 cases. Amari voided the Manila Bay reclamation project onconstitutional grounds 3 and PIATCO struck down the NAIA Terminal III contract forviolations 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 havebeen violated. The Court nullified the contract for an automated election system("AES") simply on the ground that in making the award the COMELEC has allegedlyviolated its bidding rules and an unfounded apprehension that the countingmachines would not work on election day. On the other hand, not one of the losingbidders has joined the petition, as neither they nor the petitioners questioned thefairness of the price tag for the machines.

The year 2004 could have well been marked in the annals of the Philippines by themaiden use of the automated election. But the country was deprived of the goldenchance to join the growing roster of states with modern election systems whichinclude developing countries such as Kenya, Mali, Zambia, Romania, Albania, Mexicoand Argentina because of the Decision of the Court.

In the process, the Court has disregarded the fundamental postulates by which thiscase should have been decided. They are the following:

First. The instant original petition is one for prohibition and mandamus under Rule65 of the 1997 Rules of Civil Procedure. Prohibition is an extraordinary writ directedagainst any tribunal, corporation, board, officer or person, whether exercisingjudicial, quasi-judicial or ministerial functions, commanding the respondent to desistfrom further proceedings when said proceedings are without or in excess of therespondent's jurisdiction or are attended with grave abuse of discretion amountingto 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 otherhand, is an extraordinary writ commanding a tribunal, corporation, board, officer orperson, immediately or at some other specified time, to do the act required to bedone, when the respondent unlawfully neglects the performance of an act whichthe law specifically enjoins as a duty resulting from an office, trust, or station, orwhen the respondent excludes another from the use and enjoyment of a right oroffice to which such other is entitled, and there is no other plain, speedy andadequate remedy in the ordinary course of law. 7

Second. In deciding the instant case, the Court shall consider only the undisputed oradmitted facts and resolve only the specific questions raised by the parties. 8 TheCourt is not a repository of remedies or a "super-legal-aid bureau." 9 We cannotgrant relief for every perceived violation of the law or worse, on the basis ofprophetic wisdom. Paraphrasing an old decision, Mr. Justice Felix Frankfurter wrote:"Judicial power, however large, has an orbit more or less strictly defined by well-

recognized presuppositions regarding the kind of business that properly belongs tocourts. Their business is adjudication, not speculation. They are concerned withactual, living controversies, and not abstract disputation." 10

Third. The Court does not, as indeed it cannot, guarantee the success of theautomation or the integrity of the coming elections. It is not the Court's function toactively ensure that the automation is successfully implemented or that theelections are made free of fraud, violence, terrorism and other threats to thesanctity of the ballot. This duty lies primarily with the COMELEC. 11

Fourth. The Court has constantly underscored the importance of giving theCOMELEC considerable latitude in adopting means and methods that will insure theaccomplishment of the objective for which it was created — to promote free,orderly, honest, peaceful and credible elections. Thus, in the past we have prudentlydeclined to interfere with the COMELEC's exercise of its administrative functionsabsent any showing of grave abuse of discretion. 12 As luminously stated inSumulong v. COMELEC, 13 "[I]n the matter of the administration of the lawsrelative to the conduct of elections, as well as in the appointment of electioninspectors, we must not by any excessive zeal take away from the Commission onElections the initiative which by constitutional and legal mandates properly belongsto it. Due regard to the independent character of the Commission, as ordained inthe Constitution, requires that the power of this court to review the acts of thatbody should, as a general proposition, be used sparingly, but firmly in appropriatecases." 14

For the reasons I shall discuss hereunder, I find myself unable to subscribe to theponencia and join the ranks of my colleagues in the majority.

Let me first mention that at the opening part of the Decision, the Court opined thatthere is grave abuse of discretion when the assailed act is contrary to"jurisprudence." Yet, the 99-page Decision failed to mention a single Court decisionwhich the respondents have defied.

Petitioners failed to exhaust administrative remedies

I agree with the respondents that the petitioners failed to exhaust, or better stillavail of, the administrative remedies outlined in R.A. 9184, as follows:

"SEC. 55. Protests on Decisions of the BAC. — Decisions of the BAC in allstages of procurement may be protested to the head of the procuring entityand shall be in writing. Decisions of the BAC may be protested by filing averified position paper and paying a non-refundable protest fee. The amountof the protest fee and the periods during which the protests may be filedand resolved shall be specified in the IRR.

SEC. 56. Resolution of Protests. — The protests shall be resolved strictlyon the basis of the records of the BAC. Up to a certain amount to bespecified in the IRR, the decisions of the Head of the Procuring Entity shallbe final.

SEC. 57. Non-interruption of the Bidding Process. — In no case shall anyprotest taken from any decision treated in this Article stay or delay thebidding process. Protests must first be resolved before any award is made.

SEC. 58. Resort to Regular Courts; Certiorari. — Court action may beresorted to only after the protests contemplated in this Article shall be havebeen completed. Cases that are filed in violation of the process specified inthis Article shall be dismissed for lack of jurisdiction. The regional trial courtshall have jurisdiction over final decisions of the head of the procuring entity.Court actions shall be governed by Rule 65 of the 1997 Rules of CivilProcedure.

This provision is without prejudice to any law conferring on the SupremeCourt the sole jurisdiction to issue temporary restraining orders andinjunctions relating to Infrastructure Projects of Government." [Emphasissupplied]

As correctly pointed out by the respondents, at no time during the entire biddingprocess did the petitioners question the determination of the COMELEC Bids andAwards Committee (BAC) finding Mega Pacific 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, adoptedsubsequently by the COMELEC, became final.

The doctrine of exhaustion of administrative remedies requires that when anadministrative remedy is provided by law, relief must be sought by exhausting thisremedy before the courts will act. No recourse can be had until all such remedieshave been exhausted and special civil actions against administrative officers shouldnot be entertained if superior administrative officers 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 administrativeremedies is a sound practice and policy. It ensures an orderly procedurewhich favors a preliminary sifting process, particularly with respect tomatters peculiarly within the competence of the administrative agency,avoidance of interference with functions of the administrative agency bywithholding judicial action until the administrative process had run its course,and prevention of attempts to swamp the courts by a resort to them in thefirst instance. The underlying principle of the rule rests on the presumptionthat the administrative agency, if afforded a complete chance to pass uponthe matter, will decide the same correctly. There are both legal and practicalreasons for this principle. The administrative process is intended to provideless expensive and more speedy solutions to disputes. Where the enablingstatute indicates a procedure for administrative review, and provides asystem of administrative appeal, or reconsideration, the courts, for reasonsof law, comity and convenience, will not entertain the case unless theavailable administrative remedies have been resorted to and the appropriateauthorities 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 initiatethe prescribed administrative procedure to obtain relief, but also pursue it toits appropriate conclusion before seeking judicial intervention in order to givethe administrative agency an opportunity to decide the matter by itselfcorrectly and prevent unnecessary and premature resort to the court. 17[Emphasis supplied]

Moreover, under the Rules of Court, judicial review of administrative decisions maybe availed of only through special civil actions. Such proceedings cannot lie if thereis an appeal, or any other plain, speedy, and adequate remedy in the ordinarycourse of law. 18

In Paat vs. Court of Appeals, 19 the Court enumerated the instances when the ruleon exhaustion of administrative remedies may be disregarded:

. . . (1) when there is a violation of due process, (2) when the issue involvedis purely a legal question, (3) when the administrative action is patently illegalamounting to lack or excess of jurisdiction, (4) when there is estoppel on thepart of the administrative agency concerned, (5) when there is irreparableinjury, (6) when the respondent is a department secretary whose acts as analter ego of the President bear the implied and assumed approval of thelatter, (7) when to require exhaustion of administrative remedies would beunreasonable, (8) when it would amount to a nullification of a claim, (9) whenthe subject matter is a private land in land case proceedings, (10) when therule does not provide a plain, speedy and adequate remedy, and (11) whenthere are circumstances indicating the urgency of judicial intervention. 20

The petitioners' allegations do not bring their case within the jurisprudentiallyrecognized exceptions to the rule on exhaustion of administrative remedies. It isnoteworthy that the protest mechanism outlined in R.A. 9184, in allowing protestsof decisions of the BAC "in all stages of procurement," 21 reinforces and eveninstitutionalizes 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 determinedMPC eligible to bid, failing which, they could have filed a protest with the COMELECen banc itself.

Petitioners did neither. Instead they sat in waiting until the final hour and nowinsist that the Court disregard the rule on exhaustion of administrative remedies onthe puerile reason that there was no opportunity for the protest mechanisminstituted in R.A. 9184 to apply because the BAC rendered its report andrecommendation in open session on April 15, 2003, the same day and on the sameoccasion that the COMELEC issued the assailed Resolution No. 6074 awarding theContract to MPC.

The majority opinion posits that it would have been futile for petitioners toprotest/appeal the BAC report to the COMELEC chair since by the time they couldhave made the move the COMELEC had already approved the report. Not

necessarily so. The petitioners could have, or better still, should have appealeddirectly to the COMELEC en banc. After all, matters of this nature have to be decidedby the COMELEC as a collegial body. To state that the poll body would not act on theappeal is to uncharitably state that it would disregard its duty to respond as requiredby the Code of Ethical Conduct. 22 Thus, the Court's statement that the COMELECen banc made it impossible for petitioners to make use of the administrativeremedy is simply baseless.

Be it noted that the petitioners wasted nearly five (5) months from the time theBAC Report was released on April 21, 2003 before they filed the instant Petition onAugust 6, 2003. The significant time gap precludes the availability of the exceptionsto the exhaustion doctrine. Specifically, the petitioners cannot successfully claimthat to require exhaustion of administrative remedies would be unreasonable, orthat the rule does not provide a plain, speedy and adequate remedy, or that judicialintervention has become urgent because of the circumstances.

Considering the circumstances, it is my view that the premature invocation of thisCourt's judicial power is fatal to the petitioners' cause of action.

MPC, the consortium, participated in the bidding

According to the Court, the first major concern which bears on the issue of graveabuse of discretion relates to the identity and existence of the MPC as a bidder.Petitioners claim that the real bidder was Mega Pacific eSolutions, Inc. (MPEI). Onthe other hand, the respondents insist that the bidder was MPC of which MPEI wasthe 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 Projectcorresponding to the various phases which are as follows:

Phase I : Voters Registration – Voters Validation System

Phase II : Vote Counting and Canvassing — AutomatedCounting/Canvassing

Phase III : Transmission & Dissemination of Results —Electronic Transmission/Consolidation &

Dissemination of Result

The following companies listed below have agreed to form a consortium tobid 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 between 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 between MPEI 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 onMarch 9, 2003.

These documents all bear execution and notarization dates prior to the submissionby MPC of its bid documents on March 10, 2003.

Contrary to the Court's assessment, the fair assumption to make is that the letter ofMPEI's President on behalf of MPC and the agreements between MPEI and themembers of the consortium had already been submitted to the COMELEC when theBAC evaluated the bids and the poll body acted upon the BAC's recommendationand accordingly resolved to award the Contract to MPC.

On the basis of the bid documents submitted by MPEI on behalf MPC, including theconsortium agreements, the COMELEC awarded Phase II of the AES (Project) to MPCper 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 CountingMachine) 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 Commissionsought the assistance of Department of Science and Technology in thetechnical evaluation on identified key requirements, outlined in the Requestfor Proposal (RFP) and Section 7 of the aforecited law, mainly coveringvarious parameters pertaining to vote counting accuracy,consolidation/canvassing accuracy, ballot counting speed, security features(both hardware and software), and system reliability of the AutomatedCounting Machines (ACMs).

Upon receipt of the test results on the ACMs provided by the twoprospective suppliers, the BAC proceeded with the evaluation of theirfinancial bids, and thereafter made a recommendation to the Commissionwhile the same was in session on 15 April 2003.

After a thorough deliberation on the matter, the Commission had solid basisto award the project.

Earlier the Chairman was given authority by the Commission in ResolutionNo. 5989 promulgated 27 March 2003 to award to the winning bidders thethree (3) phases of the modernization program. However, considering thepresent discussion, with the members of the BAC in attendance andrecommending award of the project to Mega Pacific, the Chairman have thematter passed upon by the Commission.

Meantime, Commissioner Mehol K. Sadain submitted a memorandum statedin this wise:

"xxx xxx xxx

With regard to the Automated Counting Machines award of thecontract, undersigned would have preferred to register his vote,however, the BAC report which is the basis for the award, has not yetbeen submitted to the Commissioners as of this writing.

At this juncture, undersigned would just like to inform the bank that, incase of a vote, he will be voting on the basis of the results of the firsttest participated by both bidders as called for under the terms of thebid."

In view of the foregoing, the Commission RESOLVED, as it herebyRESOLVES, to award Phase II of the Modernization Project of theCommission to Mega Pacific Consortium, having been declared as the bidderthat submitted the lowest calculated responsive bid for the AutomatedCounting Machines. [Emphasis supplied]

Yet, the Court disputes the authority of MPEI or its President to represent theconsortium.

In the Memorandum of Agreement (MOA) between MPEI and WeSolv dated March5, 2003, which was reproduced in the Decision, the following stipulations are found:

2. Mega Pacific shall be responsible for any contract negotiations andsigning with the COMELEC and, subject to the latter's approval, agrees togive WeSolv an opportunity to be present at meetings with the COMELECconcerning WeSolv's portion of the Project.

3. WeSolv shall be jointly and severally liable with Mega Pacific only forthe particular products and/or services supplied by the former for theProject. [Emphasis supplied]

The MOA between MPEI and SK C&C dated March 9, 2003, also reproduced in theDecision, contains similar provisions:

2. Mega Pacific shall have full powers and authority to represent theConsortium with the Comelec, and to enter and sign, for and in behalf of itsmembers any and all agreement/s which may be required in theimplementation of the Project.

3. Each of the individual members of the Consortium shall be jointly andseverally liable with the Lead Firm for the particular products and/or servicessupplied by such individual member for the project, in accordance with theirrespective undertaking or sphere of responsibility. [Emphasis supplied]

It appears that the Court assumed that the documents which establish theexistence of the consortium were not with the COMELEC and it had no basis fordetermining that the consortium had existence 23 during the bidding process simplybecause the documents were not included in the "Eligibility Requirements" folder itsubmitted to the Court on October 9, 2003. 24 With due respect, let me statenothing is farther from the truth.

The Court required the submission of the documents bearing on the existence of theconsortium only after the oral arguments on October 7, 2003. The directive iscontained in the Court's Resolution of even date quoted below:

In open court, Atty. Lazaro, counsel for private respondent Mega Pacific

eSolutions, Inc., was DIRECTED by the Court to submit the followingdocuments, a day after the hearing:

(a) contract executed between consortium represented by MegaPacific 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 membersof 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 orif the software has been reprogrammed successfully toeliminate the defects or failing marks.

Clearly, the directive was addressed to Atty. Alfredo Lazaro, Jr. So, it was he whohad to submit the documents and he did so on October 10, 2003. The COMELEC wasnot required to submit any document. But since the DOST status report which isamong 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 theconsortium agreements during the bidding process, the majority picked onCommissioner Florentino Tuason, Jr. and portions of his answers to the questionsasked of him during the oral arguments. Although he was evidently not theCommissioner assigned to speak on behalf of the COMELEC but CommissionerResureccion Borra, Commissioner Tuason deferred to the Court and responded tothe questions as best as he could. To put the answers in context, I quote them in fullalong with the questions.

JUSTICE QUISUMBING:

May I know if somebody from the Commission on Elections who knowsthe elements of the so-called verbal agreement on solidary liability of allthe parties of this Mega Pacific, whatever it is?

Do you know anybody from the COMELEC who knows the elements ofthis 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 onthe questions profounded (sic) by Justice Vitug and the request ofJustice 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 bean 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 In-charge of the phase 2, which is the Modernization Program, I am herebecause I am in-charge of the Legal Department and I oversee thelegal activities of COMELEC.

CHIEF JUSTICE:

Who is in-charge then?

COMMISSIONER TUASON:

Insofar as a written agreement among the members of the consortiumthere is Your Honor, I was privy to the fact that when we were havingconferences with the legal counsel of the private respondent there isindeed an agreement among the members of the consortium. That ismy personal knowledge, Your Honor.

CHIEF JUSTICE:

Writing or (interrupted)

COMMISSIONER TUASON:

In writing, Your Honor, because the so-called agreement amongst themembers of the consortium is of course an internal affair or aninternal matter between the members of the consortium. But I do, Iam aware of the fact that there is indeed a written agreement, YourHonor. And I am sure that when the time that the counsel for theprivate respondent will argue before this Honorable Court he will bepresenting the written agreement amongst the members of theconsortium.

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 theBAC, I am not the Commissioner-in-charge of the Phase II but I amaware that there is such agreement, Your Honor, which will bepresented 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 thesedocuments including the joint venture agreement or consortiumagreement or agreement among the parties were taken intoconsideration.

JUSTICE PANGANIBAN:

You took the word of the BAC?

COMMISSIONER TUASON:

Of course, your Honor, because they are the ones mandated at thatparticular time, Your Honor, I did not personally.

JUSTICE PANGANIBAN:

All right, did you also look at the joint and several undertaking of theconsortium members?

COMMISSIONER TUASON:

The condition under the request for proposal Your Honor is thatmanufacturers, suppliers and/or distributors forming themselves intoa joint venture, a group of two or more manufacturers, suppliers, andor distributors that intend to be jointly and severally responsible orliable for a particular contract provided that Filipino ownership is 60%.

In other words, it is not a mandatory requirement that they be jointlyand severally liable, Your Honor.

JUSTICE PANGANIBAN:

Now, That is interesting because you are contracting with a consortiumthat 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 agreementand 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 thePetition did not raise any question about the joint and several undertaking of themembers of the consortium. It was only during the oral arguments that the Courtsaw the need to secure copies of the documents. Thus, the Court issued theResolution of October 7, 2003.

All told, MPEI as lead member of MPC submitted as part of the bid documents notonly the letter dated March 7, 2003 but the following agreements, to wit:

(a) Memorandum of Agreement between MPEI and WeSolv dated March 5, 2003and notarized on March 7, 2003;

(b) Memorandum of Agreement between MPEI and SK C&C dated March 9, 2003and notarized on March 9, 2003;

(c) Teaming Agreement between MPEI and Election.Com dated March 3, 2003and notarized on March 9, 2003; and

(d) Agreement between MPEI and ePLDT dated March 3, 2003 and notarized onMarch 9, 2003.

before the deadline for submission of bids. Any contrary conclusion is baseless infact and founded on pure conjecture.The consortium agreements are sufficient

The majority opinion, nonetheless, insinuates that it is not sufficient that a jointventure be formed, but that the members of the joint venture all bind themselvesjointly and severally liable for the performance of the Contract. It asserts that therewas no joint venture agreement, much less a joint and several undertaking, amongthe members of the alleged consortium. Thus, the BAC should not have found MPCeligible to bid.

I cannot subscribe to this position. The RFP specifically defines a joint venture as agroup of two (2) or more manufacturers, suppliers and/or distributors that intend tobe jointly and severally responsible or liable for the contract. 28 Nowhere in the RFPis it required that the members of the joint venture execute a single writtenagreement to prove the existence of a joint venture. Indeed, the intention to bejointly and severally liable may be evidenced not only by a single joint ventureagreement but by supplementary documents executed by the parties signifyingsuch 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 onthe other. The Memorandum of Agreement 29 between MPEI and WeSolv and MPEIand SK C&C set forth the joint and several undertakings among the parties. On theother hand, the Teaming Agreements 30 between MPEI and Election.Com and MPEIand ePLDT clarified their respective roles with regard to the Project, with MPEI beingthe "independent contractor" and Election.Com and ePLDT the "subcontractors".

The ponencia mistakenly attributes to the respondents the argument that thephrase "particular contract" in the RFP should be taken to mean that all themembers of the joint venture need not be solidarily liable for the entire project, itbeing sufficient that the lead company and the member in charge of a "particularcontract" or aspect of the joint venture agree to be solidarily liable. Nowhere in anyof the respondents' pleadings was this argument ever raised. If it was, inestimablegain goes to the respondents because this contention is ultimately logical andcoherent.

The RFP itself lays down the organizational structure of the joint venture and theliability dynamics of the members thereof. It reads:

"d. Manufacturers, suppliers and/or distributors forming themselves intoa joint venture, i.e., a group of two (2) or more manufacturers, suppliersand/or distributors that intend to be jointly and severally responsible orreliable for a particular contract, provided that Filipino ownership thereofshall 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 signification is that all the members of the joint venture need not besolidarily liable for the entire Project or joint venture; it is sufficient that the leadcompany and the member in charge of a particular contract or aspect of the jointventure agree to be solidarily liable.

In any case, the Contract 32 incorporates all documents executed by the consortiummembers 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) this Contract together with its Appendices;

(2) the Request for Proposal (also known as 'Terms of Reference')issued by the Comelec including the Tender Inquiries and BidBulletins;

(3) Tender Proposal submitted by Mega.

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

a part thereof. Each of the Contract Documents shall be mutuallycomplementary and explanatory of each other such that what is noted inone although not shown in the other shall be considered contained in all, andwhat is required by any one shall be as binding as if required by all, unlessone item is a correction of the other.

The intent of the Contract Documents is the proper, satisfactory and timelyexecution and completion of the Project, in accordance with the ContractDocuments. Consequently, all items necessary for the proper and timelyexecution and completion of the Project shall be deemed included in theContract." 33 [Emphasis supplied]

Clearly, whatever perceived deficiencies there are in the supplementary contractsentered into by MPEI and the other members of the consortium as regards theirjoint and several undertaking were cured, or better still prevented from arising, bythe above-quoted provisions from which it can be immediately established that eachof the members of MPC is solidarily liable with the lead company, MPEI, albeit onlyfor 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 incase 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 Article12.2 hereof, COMELEC may exercise any or all of the following remedies:

12.5.1 Procure the facilities from another supplier, charging theamount over an (sic) above the contract price stipulated in thisContract, 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 undelivereditem(s);

12.5.3 Terminate this Contract;

12.5.4 Execute on MEGA's Performance Security." 34

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

COMELEC is protected under the contract and the Civil CodeBut the Court dismisses the respondents' use of the Contract as basis for theenforcement of the claims of COMELEC against the consortium on the premisethat the Contract is between the COMELEC and MPEI, not MPC. 36 That is sobecause MPEI, as lead member of the consortium, is empowered by WeSolv andSK C&C, which along with MPEI itself, represent 90% of the total consortiuminterest, to represent them. This is clear from the stipulations in their MOAs. 37Thus, as the Contract was executed by MPEI as the authorized representative ofthe key members of the MPC, it is the same as if MPC itself was the named partythereto.

From the foregoing, it is clear that the absence of a single formal joint ventureagreement among all the members of the joint venture does not preclude theCOMELEC from enforcing their liability in case of breach. In any event, theCOMELEC may still enforce the liability of the consortium members under thegeneral provisions of the Civil Code on partnership as correctly pointed out by theOSG in its Memorandum, 38 thus:

"Respondent COMELEC is not and will not be precluded from asserting thesolidary liability of all consortium members who represented themselves tobe 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 co-partners and of the partnership in respect of all partnership transactions(Article 1803, Civil Code), private respondent's members acted as agents ofeach other and are as such solidarily bound by their own and the othermembers' undertaking. Further, the rule is that when a person, by wordsspoken or written or by conduct, represents himself, or consents toanother representing him to anyone, as a partner in an existing partnershipor with one or more persons not actual partners, he is liable to any suchpersons to whom such representation has been made, who has, on thefaith of such representation, given credit to the actual or apparentpartnership, and if [he] has made such representation or consented to itsbeing made in a public manner he is liable to such person, whether therepresentation has or has not been made or communicated to such personso giving credit by or with the knowledge of the apparent partner makingthe representation or consenting to its being made. When a partnershipliability results, he is liable as though he was an actual member of thepartnership. (Article 1825, Civil Code)"

It should be recalled that MPEI, SK C&C, WeSolv, Election.Com and ePLDTrepresented themselves and/or allowed themselves to be represented as partnersand 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 thepartnership under certain conditions. The Civil Code provides:

"Art. 1822. Where, by any wrongful act or omission of any partneracting in the ordinary course of the business of the partnership or with theauthority of his co-partners, loss or injury is caused to any person, notbeing a partner in the partnership, or any penalty is incurred, thepartnership is liable therefore to the same extent as the partner so acting oromitting to act.

Art. 1823. The partnership is bound to make good the loss:

(1) where one partner acting within the scope of his apparentauthority receives money or property of a third person andmisapplies it; and

(2) Where the partnership in the course of its business receivesmoney or property of a third person and the money or propertyso received is misapplied by any partner while it is in the custodyof the partnership.

Art. 1824. All partners are liable solidarily with the partnership foreverything 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 theCivil Code.

The consortium is eligible

The ponencia further echoes the petitioners' objection to the BAC's conclusion,finding M P C eligible to bid notwithstanding the absence of some financialdocuments of its member corporations, particularly MPEI which was incorporatedonly on February 27, 2003.

Under the RFP, the bidder shall furnish, as part of its bid, an eligibility envelope,consisting of legal, technical and financial documents, which should establish thebidder's eligibility to bid and its qualifications to perform the Contract if its bid isaccepted. The documentary evidence of the bidder's eligibility to bid shall establishto the BAC's satisfaction that the bidder, at the time of submission of its bid, iseligible to bid. 40 The eligibility envelope shall include the bidder's legal, technicaland financial documents, viz:

"(a) Legal Documents which shall include:

(1) Articles of Incorporation issued by the Securities andExchange Commission, Business Registration, current licensesand permits, DTI Certificate of Registration, Mayor's Permit, orby appropriate government agencies and VAT certification, ifapplicable;

(2) Approval of the Board of Directors for the Bidder to participateand enter into a contract with the COMELEC;

(3) Waiver of execution by its President under the authority of itsBoard that it is submitting to the jurisdiction of the Philippinegovernment and thereby waives its right to question thejurisdiction of Philippine courts;

(4) Waiver executed by the President under the authority of itsBoard, to seek and obtain writ of injunctions (sic) or prohibitionor restraining order against Purchaser to prevent and restrainthe bidding procedures related thereto, the holding of biddingand any procedure related thereto, the negotiating and award ofa contract to a successful bidder, and the carrying out of theawarded contract;

(5) Certificate issued by bidder's duly authorized representativethat, it has no record of suspension and that it is not presentlysuspended nor blacklisted by any Philippine government agencyor by any international institution, whether in its individualcapacity or as a member of a Joint Venture/Consortium;

(6) Certificate that the Bidder is licensed by the Bidder's country toexport the goods to be supplied under the contract.

(b) Technical Documents which shall contain documentary evidence toestablish to the BAC's satisfaction the Bidder's technical andproduction capabilities necessary to perform the Contract. It shallinclude:

(1) Single sale/lease transaction with a contract value of at leastONE HUNDRED MILLION PESOS (Php100,000,000.00) for sameand similar type of equipment for the last three (3) years. Biddershall be required to submit contracts and/or certificate/s ofacceptance by the concerned Purchaser indicating therein thecontract value;

(2) ISO 9000 Certificate or its equivalent;

(3) Literature and brochures describing the equipment, themanufacturer's factory, manufacturing facilities, products andservice centers;

(4) Certification from the Environmental Protection Agency (EPA)or similar government agency of the country of origin that theproduct meets the environment protection requirementstherein;

(5) Certificate that if awarded the project, Bidder will submit awarranty for a minimum of two (2) years from date of deliveryfor units found to be imperfect or damaged due to factorydefect.

(c) Financial Documents shall contain documentary evidence to establishto the BAC's satisfaction the Bidder's financial capability. Suchevidence shall include:

(1) audited financial statements of the Bidder's firm for the lastthree (3) calendar years, stamped "RECEIVED" by theappropriate government agency, to show its capacity to financethe manufacture and supply of Goods called for and astatement 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 andstability. The company's current assets should be more than its currentliabilities. Its long term assets should be more than its long term liabilities.The BAC may disqualify companies that are having financial difficulty andthus, making its long term prospects dim. This will eventually affect theirability to deliver and meet the requirements for the election automatedmachines."

On the other hand, the Bid Envelope shall contain the technical specifications andthe bid price. 41

According to the documents it submitted to substantiate eligibility, M PE I wasincorporated only on February 27, 2003. Thus, it was not able to submit therequired financial 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 financial documents due to its newly-acquired corporate personality should not by itself disqualify MPC. It should bepointed out that the purpose of the RFP in requiring the submission of the financialdocuments of the bidder is to determine the financial soundness of the latter and itscapacity to perform the Contract if its bid is accepted. This purpose may well beattained by examining the financial documents submitted by the other members ofthe joint venture. In this regard, the respondents emphasized that SK C&C, ePLDTand WeSolv submitted the required financial documents. Moreover, MPEI has a paidin capital of P300,000,000.00, an amount which is substantially over and above the10% equity based on the total project cost required by the RFP. 42 Thus, I cannotsubscribe to the majority's myopic interpretation of the RFP that each of themembers of MPC must comply with all the requirements thereunder.

I n Kilosbayan v. Guingona, 43 we defined a joint venture as "an association ofpersons or companies jointly undertaking some commercial enterprise; generally allcontribute assets and share risks. It requires a community of interest in theperformance of the subject matter, a right to direct and govern the policy inconnection therewith, and duty, which may be altered by agreement to share bothin profit and losses." 44

The collective nature of the undertaking of the members of MPC, their contributionof assets and sharing of risks, and the community of their interest in theperformance of the Contract all lead to the reasonable conclusion that theircollective qualifications should be the basis for evaluating their eligibility. Practicalwisdom dictates this to be so because the sheer enormity of the Project renders itimprobable to expect any single entity to be able to comply with all the eligibilityrequirements and undertake the Project by itself. As emphasized by the OSG, theRFP precisely allowed bids from manufacturers, suppliers and/or distributors formingthemselves into a joint venture in recognition of the virtual impossibility that asingle 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 orconsortiums. Under said IRR, "[A] joint venture/consortium proponent shall beevaluated based on the individual or collective experience of the member-firms ofthe joint venture/consortium and of the contractor(s) that it has engaged for theproject." 47

On another point, the RFP provides that the documentary evidence of the bidder'squalifications to perform the contract if its bid is accepted shall establish to thesatisfaction of the BAC that in case a bidder offering to supply goods under thecontract did not manufacture or otherwise produce the goods itself, the bidder mustshow that it is an established dealer of the goods for at least five (5) years and shallproduce documentary evidence to show that he has been duly authorized by thegoods' manufacturer or producer to supply the goods to the Philippines. 48

The RFP also requires that the documents submitted shall show that the biddershave the financial, technical and production capability necessary to perform thecontract. For this purpose, the primary technology proponent, i.e., the manufacturerof the counting machine itself, and the creator of the consolidation software, shouldhave a minimum of five (5) years corporate existence in good standing, whereas themembers of the consortium providing ancillary services, i.e., project managementand human resources training, should show documentary evidence that theirservices have been contracted for at least one (1) political exercise with at least20,000,000 voters and their companies have been issued an ISO certification.Finally, the ACMs should have been used in at least one (1) political exercise withno less than 20,000,000 voters. 49

The Comment 50 of the OSG and Memorandum 51 submitted by MPC detailed thequalifications and track record of the members of MPC, viz: SK C&C, the primarytechnology proponent and manufacturer of the ACMs, is a corporation in goodstanding in South Korea since 1991. The ACMs have been used in two (2) Koreannational elections with more than 20,000,000 voters. Election.Com, which shall beresponsible 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 maintenancefunctions of MPC, is a Philippine corporation in good standing since 1994. Oracle,which shall provide complete information solutions, is a Philippine corporation ingood 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 integrationservices and project leadership, is a Philippine corporation incorporated on February27, 2003. Clearly, all these show that M P C has the financial, technical andproduction capability necessary to perform the Contract.

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

financial documents required by the RFP, seemingly concedes that the members ofthe 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 withsufficient information to enable it to judiciously gauge MPC's eligibility andqualifications. The strict and inflexible adherence to the bidding requirements byeach and every component of the consortium advanced by the petitioners wouldnegate the salutary purpose of R.A. 8436 and frustrate the long-anticipatedmodernization 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 MPCfailed the technical evaluation conducted by the DOST. Hence, the COMELEC shouldhave disqualified MPC.

It should be recalled that the COMELEC required prospective suppliers/bidders tosubmit a certified accuracy rating for both the vote counting and consolidationsystem from the DOST for each model of counting machine and canvassing systemthat they intend to offer. The machine must be certified by the DOST that it willoperate properly and accurately under various working conditions. For this purpose,the COMELEC identified key requirements for evaluation, namely: vote countingaccuracy, consolidation/canvassing accuracy, ballot counting speed, security featuresfor both the hardware and software, and system reliability. 52

In its Report, the BAC noted the results of the evaluation conducted by its TechnicalWorking Group (TWG) and by the DOST as follows:

"The BAC further noted that both Mega-Pacific and TIM obtained some 'failedmarks' in the technical evaluation. In general, the 'failed marks' of TotalInformation Management as enumerated above affect the counting machineitself that are material in nature, constituting non-compliance to (sic) theRFP. On the other hand, the 'failed marks' of Mega-Pacific are mereformalities 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 thecounting machine itself as stated earlier. These are requirements of the RFPand therefore the BAC cannot disregard the same.

Mega-Pacific in 8 items however these are mostly on the software, whichcan be corrected by reprogramming the software and therefore can bereadily corrected." 53 [Emphasis supplied]

Parenthetically, in his sponsorship remarks on R.A. No. 8436, 54 Rep. Abuegunderscored the salient features which must be found in the AES. He said:

"a. The system shall utilize appropriate technology for voting andelectronic devices for counting of votes and canvassing of results;

b. A stand-alone machine that is not hooked to any centralized computeror other device through which data may be manipulated. The machinewill admit no data or input source other than from a valid, officialballot. This feature is different from the computer networking systemsof banks, cellular phones, radios and from machines employing othervoting systems where keyboards and other devices are used preciselyto input data or modify that previously inputted;

c. Utilizes visible light technology that allows the scanner to read markssimilar 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 officer presses one buttonon the keypad and the precinct report is instantly generated. Multiplecopies of the results/report are also available;

h. Accumulation of totals in seconds — At the counting center, totals areread in seconds, providing precincts detail reports, cumulativereports, and the official canvass. Reports may be displayed inmonitors or large screen TV for the media, candidates or generalpublic." 55

Accordingly, R.A. 8436 categorized into mandatory and optional the features whichthe AES must contain, thus:

"Sec. 7. Features of the System. — The System shall utilize appropriatetechnology for voting, and electronic devices for counting of votes andcanvassing of results. For this purpose, the Commission shall acquireautomated counting machines, computer equipment, devices and materialsand adopt new forms and printing materials. The System shall contain thefollowing features: (a) use of appropriate ballots, (b) stand-alone machinewhich can count votes and an automated system which can consolidate theresults immediately, (c) with provisions for audit trails, (d) minimum humanintervention and (e) adequate safeguard/security measures. In addition, theSystem shall as far as practicable have the following features:

1. It must be user-friendly and need not require computer-literateoperators;

2. The machine security must be built-in and multi-layer existent onhardware and software with minimum human intervention using latesttechnology like encrypted coding system;

3. The security key control must be embedded inside the machine sealedagainst human intervention;

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

numbering the counted ballots and also for printing the individualprecinct number on the counted ballots;

5. The ballot paper for the OMR counting machine must be of the qualitythat passed the international standard like ISO-1831, JIS-X 9004 or itsequivalent for optical character recognition;

6. The ballot feeder must be automatic;

7. The machine must be able to count from 100 to 150 ballots perminute;

8. The counting machine must be able to detect fake or counterfeitballots and must have a fake ballot rejector;

9. The counting machine must be able to detect and reject previouslycounted ballots to prevent duplication;

10. The counting machine must have the capability to recognize theballot's individual precinct and city or municipality before counting orconsolidating the votes;

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

12. The printer must have at least 128 kilobytes of Random AccessMemory (RAM) to facilitate the expeditious processing of the printingof the consolidated reports;

13. The machine must have a built-in floppy disk drive in order to savethe processed data on a diskette;

14. The machine must also have a built-in hard disk to store the countedand 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. The machine must not be capable of being connected to externalcomputer peripherals for the process of vote consolidation;

18. The machine must have an Uninterrupted Power Supply (UPS);

19. The machine must be accompanied with operating manuals that willguide the personnel of the Commission on the proper use andmaintenance of the machine;

20. It must be so designed and built that add-ons may immediately beincorporated 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 theelection return, statement of votes and certificate of votes at differentlevels; and

23. The accuracy of the count must be guaranteed, the margin of errormust be disclosed and backed by warranty under such terms andconditions as may be determined by the Commission. . . ." [Emphasissupplied]

It is well to note that all the 1,991 ACMs supplied by MPC under the Contract werefound to have satisfied the mandatory requirements of the AES, to wit: (a) use ofappropriate ballots, (b) stand-alone machine 56 which can count votes and anautomated system which can consolidate the results immediately, (c) withprovisions for audit trails, (d) minimum human intervention and (e) adequatesafeguard/security measures. As stated in the BAC Report, the failed marks of MPCwere mere formalities in certain documentary requirements. Further, these failedmarks were attributable to the software which can be readily corrected byreprogramming. The failed marks, therefore, were not material in nature and were,at worst, mere optional features of the System. 57 The RFP clearly authorizes theBAC to waive any informality, non-conformity or irregularity in a bid which does notconstitute a material deviation, provided that such waiver does not prejudice oraffect the relative ranking of any bidder. 58

As regards the issue relating to the accuracy rating of 99.9995% mandated for thecounting machine by the RFP, right off I observe that the petitioners madepronounced changes in their position at every turn. In the Petition, they simplyalleged that the COMELEC had erred when it "failed to declare a failed bidding andto conduct a re-bidding of the project despite the failure of the bidders to pass thetechnical tests," including the test on the accuracy rating of the machine. 59 At theoral arguments, however, they claimed that the COMELEC had "waived theaccuracy requirement." 60 Finally, in their Memorandum they accused the poll bodyof having "changed the accuracy criteria from 99.9995 percent to only 99.995percent." 61

However, there is no competent evidence on record that the COMELEC had waivedor changed the prescribed accuracy rating. In fact, in the Contract betweenCOMELEC and MPEI, the same accuracy rating of 99.9995 percent was required.Also in the letter dated October 24, 2003 of DOST, it clarified its Report 62 statingthat upon further verification, it found that "except for 1 ACM (with an accuracyrating of 99.998%), all of the 456 machines (including the retested 9 units) thatwere 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 theright orientation." 63 Notably, the DOST Report itself states that the machines are100% accurate. 64 This official evaluation has mooted the petitioners' challenge andrendered the pursuit thereof an inconsequential exercise.

Harping on the requirement for audit trail, the ponencia proceeds to conclude thatthe 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 testedACM of MPC generates audit trails which reflect the exact date and time of the startand end of counting of ballots per precinct. 66 The ACM was also able to generatehard and soft copies of the audit trail of the counting machine, with hard copiesgenerated regularly. 67 Moreover, R.A. 8436 itself merely requires that the AES shallhave "provisions for audit trail," which the ACM, as tested, has complied with.

Anent the inability of the machine to detect previously downloaded data andprevent these from being inputted again into the system, suffice it to state that thisis neither a mandatory nor an optional feature of the AES under R.A. 8436. In anycase, it is deemed satisfied with DOST's final favorable evaluation.

In compliance with the Resolution dated December 9, 2003, the COMELEC filed itsPartial Compliance and Manifestation dated December 24, 2003 informing theCourt that 1,991 units of ACMs have already been delivered to the Commission. Ofthese, a total of P849,167,697.41, corresponding to 1,973 ACMs which have passedDOST testing, has been paid to MPC.

The misgivings regarding the alleged deficiencies in the software are largelyexplained 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 andacceptance 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 basesoftware is not the actual software to be used on election day. Hence, the softwaredefects were considered minor in nature, and accordingly, waived.

On the other hand, for purposes of the technical and acceptance procedures, aTesting and Acceptance Manual (Manual) was prepared by the Ad Hoc TechnicalEvaluation Committee, which ensured compliance of the Manual with the Terms ofReference approved by the COMELEC and the provisions of R.A. 8436. The softwareused for the ACMs was reprogrammed to comply with the Manual. Upon testing, theDOST 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 finalcertified list of candidates, project of precincts, official ballot design and securityfeatures, and encryption, digital certificates and digital signatures have to beintegrated into the software. Understandably, because of the timeline followed withregard to these additional elements, the software has not yet been finalized. Theponencia, however, chooses to view these circumstances with insularity. It evenholds suspect the certifications issued by the DOST declaring that the ACMs hadpassed 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 justification for a contrary stance. Reckoned fromthe standpoint of the established legal presumptions of validity of official acts andregularity in the performance of official duty, I find it unjustified to speculate, astheponencia does, on the good or bad motives that impelled the COMELEC to awardthe Contract to MPC.

Epilogue

In view of the foregoing, the majority's position that the COMELEC should haveconducted a re-bidding of the Project is plainly injudicious. The procedure iswarranted only if no bid is received or qualified as the lowest calculated andresponsive bid. It is not amiss to mention again that there were more than 50bidders 69 for the Project, out of which MPC was qualified as the lowest calculatedand responsive bid. A re-bidding of the Project would not serve any further purposebecause the bidding had actually drawn the participation of as many bidders asrealistically possible and that considering the enormity of the Project, a new biddingwould not reasonably attract new bidders. There is therefore no basis to concludethat there was a failure of bidding, and the contract should be re-advertised and re-bid. 70 Remarkably besides, none of the losing bidders questioned the processundertaken by the BAC. The logical conclusion is that the losing bidders haveconceded MPC's eligibility and qualifications and deferred to the decision of theCOMELEC to award the Contract to MPC.

It is also to the COMELEC's credit that its award of the Contract to MPC has resultedin substantial savings for the government. The paramount objective of publicbidding is to ensure that the government obtains the lowest and best price in themarket. 71 This objective was undoubtedly attained by the award of the Contract toMPC. As emphasized in the respondents' pleadings and in newspaperadvertisements, 72 MPC's bid covering nationwide automation was P49,000,000.00lower than that submitted by TIMC, with its coverage restricted to Mindanao andthe National Capital Region. 73

As stated at the outset, the Court has unfailingly stressed the importance of givingthe COMELEC considerable latitude in adopting means and methods that will insurethe accomplishment of the objective for which it was created — to promote free,orderly, honest, peaceful and credible elections — and perforce prudently declined tointerfere with COMELEC's exercise of its administrative functions absent anyshowing of grave abuse of discretion. I see no justification for the departure fromthis principle in the instant case.

Let it be noted that R.A. No. 8436 was precisely intended as an initial step towardsthe modernization of the Philippine electoral system which seeks to ensure free,orderly, honest, peaceful and credible elections. The COMELEC must be givenenough 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 advertedto it no less than five times. But the assertion which is one of fact is debunked bythe consortium agreements themselves which were notarized not later than March9, 2003, or before the bidding deadline. To ignore the public character of thedocuments is to unfairly ascribe bad faith to COMELEC.

As for the fact that MPEI was made the party to the Contract with COMELEC, thiswas so simply because M PE I was authorized to sign in behalf of the otherconsortium members.

Seemingly, the ultimate resolution of this case has narrowed down to the questionof which prognostication of the technical performance of the counting machines onelection day is accurate: That of the COMELEC's or this Court's? But that would leadthe Court to tread on unfamiliar waters. More fundamentally, the question was notraised in the Petition.

In closing, I refer to the definition of "grave abuse of discretion" which the Courtmade in Tañada v. Angara, 74 cited at the opening of the Decision: 75

By grave abuse of discretion is meant such capricious and whimsicalexercise of judgment as is equivalent to lack of jurisdiction. Mere abuse ofdiscretion is not enough. It must be grave abuse of discretion as when thepower is exercised in an arbitrary or despotic manner by reason of passionor personal hostility, and must be so patent and so gross as to amount toan evasion of a positive duty or to a virtual refusal to perform the dutyenjoined or to act at all in contemplation of law. Failure on the part of thepetitioner to show grave abuse of discretion will result in the dismissal of thepetition.

In rendering this Decision, this Court never forgets that the Senate, whoseact is under review, is one of two sovereign houses of Congress and is thusentitled to great respect in its actions. It is itself a constitutional bodyindependent and coordinate, and thus its actions are presumed regular anddone in good faith. Unless convincing proof and persuasive arguments arepresented to overthrow such presumptions, this Court will resolve everydoubt in its favor. Using the foregoing well-accepted definition of graveabuse of discretion and the presumption of regularity in the Senate'sprocesses, this Court cannot find any cogent reason to impute grave abuseof discretion to the Senate's exercise of its power of concurrence in theWTO 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, Irespectfully submit, the COMELEC deserves the same degree of deferentialtreatment given its status as a constitutional body. But quite lamentably, theDecision would bring disrepute to and even cause havoc on the COMELEC as aninstitution. 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. Tañada 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 prohibitionand mandamus, its allegations qualify it also as one for certiorari.

5. An act authorizing the Commission on Elections to conduct a nationwidedemonstration of a computerized election system and pilot-test it in the March1996 elections in the Autonomous Region in Muslim Mindanao (ARMM) and forother purposes.

6. An act authorizing the Commission on Elections to use an automated electionsystem in the May 11, 1998 national or local elections and in subsequent nationaland local electoral exercises, providing funds therefor and for other purposes.

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

8. Loong v. Comelec, 365 Phil. 386, April 14, 1999; see also Panganiban, Leadershipby 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 thisCourt's receipt of Private Respondent MPC/MPEI's Memorandum, which was signedby Attys. Alfredo V. Lazaro Jr., Juanito I. Velasco Jr. and Ma. Concepcion V. Murilloof the Lazaro Law Firm. On October 27, 2003, the Court received petitioners'Memorandum, which was signed by Atty. Alvin Jose B. Felizardo of Pastelero LawOffice, and Public Respondent Comelec's Memorandum, signed by ComelecComm. Florentino A. Tuason Jr. Apart from these, the Office of the SolicitorGeneral (OSG) filed another Memorandum on behalf of Comelec, also on October27, 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 casewas initially raffled to Justice Dante O. Tinga. However, during the Court'sdeliberations, the present ponente's then "Dissenting Opinion" to the draft reportof Justice Tinga was upheld by the majority. Hence, the erstwhile Dissent wasrewritten 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 remediesfor failure to avail of protest mechanisms; and (3) validity of the award and theContract 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 anexact date of execution (except that it was allegedly done on the "____ day ofMay,") but it was apparently notarized on June 30, 2003.

32. In connection with this, public respondents, in their Memorandum madereference to the Implementing Rules and Regulations of RA 6957 as amended byRA 7718 (the Build-Operate-Transfer Law), and considered said IRR as beingapplicable to the instant case on a suppletory basis, pending the promulgation ofimplementing rules for RA 9184 (the Government Procurement Act). For ourpurposes, it is well worth noting that Sec. 5.4 of the IRR for RA 6957 as amended,speaks of prequalification requirements for project proponents, and in sub-section(b)(i), it provides that, for purposes of evaluating a joint venture or consortium, itshall submit as part of its prequalification statement a business plan which shallamong others identify its members and its contractor(s), and the description ofthe respective roles said members and contractors shall play or undertake in theproject. If undecided on a specific contractor, the proponent may submit a shortlist of contractors from among which it will select the final contractor. Short listedcontractors are required to submit a statement indicating willingness to participatein the project and capacity to undertake the requirements of the project. Thebusiness plan shall disclose which of the members of the joint venture/consortiumshall be the lead member, the financing arm, and/or facility operator(s), and thecontractor(s). In other words, since public respondents argue that the IRR of RA6957 as amended would be suppletorily applicable to this bidding, they could nothave been unaware of the requirement under Sec. 5.4 (b)(i) thereof, in respect ofsubmission of the requisite business plan by a joint venture or consortiumparticipating in a bidding.

33. Now, what would prevent an enterprising individual from obtaining copies of theArticles of Incorporation and financial statements of, let us say, San MiguelCorporation and Ayala Corporation from the SEC, and using these to supportone's claim that these two giant conglomerates have formed a consortium withone's own penny-ante company for the purpose of bidding for a multi-billion pesocontract? 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, filed with this Court onOctober 27, 2003, Comm. Tuason himself signed this pleading in his capacity ascounsel 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 lastOctober 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 Comelecwas aware that not all the members of the "consortium" had agreed to be jointlyand 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, aprogrammer 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 itinto machine language, the language that the computer understands. Source codeis the only format that is readable by humans. When you purchase programs, youusually receive them in their machine-language format. This means that you canexecute them directly, but you cannot read or modify them. Some softwaremanufacturers provide source code, but this is useful only if you are anexperienced programmer.

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

51. Metals Industry Research and Development Center (MIRDC) of the Departmentof 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 11Test Certifications of the DOST (covering 11 lots or 158 ACMs) which werepurportedly attached to this letter, have not been reproduced and submitted tothe Court, for reasons known only to respondents.

53. For example, one can conduct tests to see if certain machines will tip over andfall on their sides when accidentally bumped, or if they have a tendency to collapseunder their own weight. A less frivolous example might be that of conducting thesame 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 whichthe 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 transmitthe results to headquarters, along with CDs of the data. Yet, with only five monthsto go, the application software packages for that crucial democratic exercise —several hundred thousand lines of obscure and opaque code — has not yet evenbeen delivered in its final form, Comelec Chairman Benjamin Abalos admitted lastweek.

"My jaw dropped in amazement. Having built software for General Electric Co.'smedical systems business and military aircraft engines division (in another lifetime),I have learned the hard and painful way that 90 percent of unintended fatalproblems 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 eventhe people furiously writing that software know whether it will actually work asintended on May 10, much less guarantee it. Simply put, the proposed software-hardware combination has neither been tested completely nor verified to complywith 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.

3 . People v. Chavez, 358 SCRA 810.

4 . Matuguina Integrated Wood Products, Inc. vs. Court of Appeals, 263 SCRA 490;Mafinco Trading Corp. vs. Ople, et al., 70 SCRA 139.

5. 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, 18October 1990, 190 SCRA 673; Concerned Officials of MWSS v. Vasquez , 310 Phil.549 (1995). See SEVERIANO S. TABIOS, Annotation on Failure to ExhaustAdministrative Remedies as a Ground for Motion To Dismiss, 165 SCRA 352, 357-362 (1988).

5. Union Bank of the Philippines v. Court of Appeals, 352 Phil. 808 (1998); Universityof 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 toExhaust Administrative Remedies as a Ground for Motion to Dismiss, 165 SCRA352, 357-362 (1988).

8. Eastern Shipping Lines v. POEA, G.R. No. L-76633, 18 October 1988, 166 SCRA533; 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 SCRA19.

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. Courtof 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 GOVERNMENTCONTRACTS 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, 20October 2003.

3. An act authorizing the Commission on Elections to use an automated electionsystem in the May 11, 1998 national or local elections and in subsequent nationaland 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. Toaugment this amount, the President issued EO No. 175 on February 10, 2003,allocating an additional P500,000,000.00 for the Project. The COMELECreconfigured the modernization program into the three (3) phases mentionedabove and reallocated the budget as follows: (a) P1 Billion for Phase I; (2) P1.7Billion 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 SCRA280, 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 beprotested in writing to the head of the procuring entity; Provided, however, That aprior motion for reconsideration should have been filed by the party concernedwithin the reglementary periods specified in this IRR-A and the same has beenresolved. The protest must be resolved filed within seven (7) calendar days fromreceipt by the party concerned of the resolution of the BAC denying its motion forreconsideration. A protest may be made by filing a verified position paper with thehead of the procuring agency concerned, accompanied by the payment of a non-refundable protest fee. The non-refundable protest fee shall be in an amountequivalent to no less than one percent (1%) of the ABC.

14. An Act Providing for the Modernization, Standardization, and Regulation of theProcurement Activities of the Government and for Other Purposes.

15. 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 procuringentity with finality. The regional trial court shall have jurisdiction over final decisionsof the head of the procuring entity. Court actions shall be governed by Rule 65 ofthe 1997 Rules of Civil Procedure.

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

17. 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.

18. Rollo, Vol. IV at 1784.

19. In open court, Atty. Lazaro, counsel for private respondent Mega PacificeSolutions, Inc. was directed by this Court to submit the following documents:

(a) contract executed between consortium represented by Mega PacificeSolutions, 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 theconsortium; status report of the Department of Science and Technology (DOST)as to whether the machines are already free of the eight (8) defects or failingmarks. (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 for GovernmentInfrastructure Contracts; Promulgated June 11, 1978.

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

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 notbefore the Court.

9. Dissenting opinion of Mr. Justice Felix Frankfurter, Uveges v. Commonwealth ofPennsylvania, 335 U.S. 437.

10. Frankfurter, Felix Frankfurter on the Supreme Court Extra Judicial Essays on theCourt 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' educationprogram 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 Officialsand 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 OfInfrastructure Projects By The Private Sector And For Other Purposes." It isotherwise known as the BOT Law.

46. "An Act Amending Certain Sections Of Republic Act No. 6957, Entitled "An ActAuthorizing The Financing, Construction, Operation And Maintenance OfInfrastructure 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. Report on the Testing and Technical Evaluation of Automated Counting Machinesby the DOST, April 1-3, 2003, p. 1.

53. Supra, note 28 at 2431-2432.

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

55. Id. at 10-11.

56. During the oral arguments, Com. Borra asserted that the ACMs are stand alonemachines in that they do not have inputs or outputs that enable them to benetworked. 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 Chairmanof the DOST Technical Evaluation Committee, Mr. Rolando Viloria, addressed toCom. 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 EvaluationCommittee states that the DOST tested a total of 1,991 ACMs. Of these, 18 unitsfailed 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 than50 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.