You are on page 1of 3

recent j uri sprudence

116
ust law law re vi e w, vol lvi i , no. 1, november 2012
the operational aspects of the cycle including the allocation and release of funds
earmarked for various projects. Simply put, from the regulation of fund releases,
the implementation of payment schedules and up to the actual spending of the
funds specifed in the law, the Executive takes the wheel. The DBM lays down
the guidelines for the disbursement of the fund. The Members of Congress are
then requested by the President to recommend projects and programs which may
be funded from the PDAF. The list submitted by the Members of Congress is
endorsed by the Speaker of the House of Representatives to the DBM, which
reviews and determines whether such list of projects submitted is consistent
with the guidelines and the priorities set by the Executive. This demonstrates
the power given to the President to execute appropriation laws and therefore, to
exercise the spending per se of the budget.
In Philconsa, the Court upheld the authority of individual Members
of Congress to propose and identify priority projects because this was merely
recommendatory in nature and it also recognized that individual members of
Congress far more than the President and their congressional colleagues were
likely to be knowledgeable about the needs of their respective constituents and
the priority to be given each project.
As applied to this case, the petition is seriously wanting in establishing
that individual Members of Congress receive and thereafter spend funds out of
PDAF. Although the possibility of this unscrupulous practice cannot be entirely
discounted, surmises and conjectures are not suffcient bases for the Court to
strike down the practice for being offensive to the Constitution.
ARCHBISHOP FERNANDO CAPALLA, et al. v.
THE HONORABLE COMMISSION ON ELECTIONS
G.R. Nos. 201112, 201121, 201127, and 201413, 13 June 2012,
EN BANC (Peralta, J.)
A winning bidder is not precluded from modifying or amending certain provisions of
the contract bidded upon. However, such changes must not constitute substantial or material
amendments that would alter the basic parameters of the contract and would constitute a denial
to the other bidders of the opportunity to bid on the same terms.

Pursuant to its authority to use an Automated Election System (AES), the
Commission on Elections (COMELEC) posted and published an invitation to
apply for eligibility and to bid for the 2010 Poll Automation Project.

COMELEC
poli ti cal law
117
ust law law re vi e w, vol lvi i , no. 1, november 2012
awarded the contract for the project to respondent Smartmatic-TIM. Thereafter,
COMELEC and Smartmatic-TIM entered into a Contract for the Provision of an
Automated Election System for the May 10, 2010 Synchronized National and Local
Elections (AES Contract, for brevity). The contract between the COMELEC and
Smartmatic-TIM was one of lease of the AES with option to purchase (OTP)
the goods listed in the contract. In said contract, the Comelec was given until
December 31, 2010 within which to exercise the option.
In a letter, Smartmatic-TIM, through its Chairman Cesar Flores (Flores),
proposed a temporary extension of the option period to buy the PCOS machines
until March 31, 2011. The COMELEC did not exercise the option within the
extended period. Several extensions were given for the COMELEC to exercise
the OTP until its fnal extension on March 31, 2012. On March 29, 2012, the
COMELEC issued a resolution resolving to accept Smartmatic-TIMs offer to
extend the period to exercise the OTP until March 31, 2012.
Archbishop Capalla, et al. thus assailed the validity and constitutionality
of the COMELEC Resolutions for the purchase of the subject PCOS machines
as well as the Extension Agreement and the Deed of Sale covering said goods
mainly on the ground that the option period provided for in the AES contract
between the COMELEC and Smartmatic-TIM had already lapsed and, thus, could
no longer be extended, such extension being prohibited by the contract.
ISSUE:
Whether or not the unilateral extension of the option period which
Smartmatic-TIM granted to COMELEC and which the latter accepted constitutes
circumvention of the law on public bidding
HELD:
It is a basic rule in the interpretation of contracts that an instrument
must be construed so as to give effect to all the provisions of the contract. In
essence, the contract must be read and taken as a whole. While the contract indeed
specifcally required the COMELEC to notify Smartmatic-TIM of its OTP the
subject goods until December 31, 2010, a reading of the other provisions of
the AES contract would show that the parties are given the right to amend the
contract which may include the period within which to exercise the option. There
is, likewise, no prohibition on the extension of the period, provided that the
contract is still effective.
recent j uri sprudence
118
ust law law re vi e w, vol lvi i , no. 1, november 2012
Considering, however, that the AES contract is not an ordinary contract
as it involves procurement by a government agency, the rights and obligations
of the parties are governed not only by the Civil Code but also by RA 9184.
In this jurisdiction, public bidding is the established procedure in the grant of
government contracts. The award of public contracts, through public bidding, is
a matter of public policy. The parties are, therefore, not at full liberty to amend or
modify the provisions of the contract bidded upon.
A winning bidder is not precluded from modifying or amending certain
provisions of the contract bidded upon. However, such changes must not constitute
substantial or material amendments that would alter the basic parameters of the
contract and would constitute a denial to the other bidders of the opportunity to
bid on the same terms. The determination of whether or not a modifcation or
amendment of a contract bidded out constitutes a substantial amendment rests on
whether the contract, when taken as a whole, would contain substantially different
terms and conditions that would have the effect of altering the technical and/or
fnancial proposals previously submitted by the other bidders. The modifcations
in the contract executed between the government and the winning bidder must be
such as to render the executed contract to be an entirely different contract from
the one bidded upon.
Smartmatic-TIM was not granted additional right that was not previously
available to the other bidders. Admittedly, the AES contract was awarded to
Smartmatic-TIM after compliance with all the requirements of a competitive
public bidding. Although the AES contract was amended after the award of the
contract to Smartmatic-TIM, the amendment only pertains to the period within
which the COMELEC could exercise the option because of its failure to exercise
the same prior to the deadline originally agreed upon by the parties.