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G.R. No.

201112 October 23, 2012

ARCHBISHOP FERNANDO R. CAPALLA, OMAR SOLITARIO ALI and MARY ANNE L.


SUSANO, Petitioners,
vs.
THE HONORABLE COMMISSION ON ELECTIONS, Respondent.

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G.R. No. 201121

SOLIDARITY FOR SOVEREIGNITY (S4S) represented by Ma. Linda Olaguer; RAMON PEDROSA,
BENJAMIN PAULINO SR., EVELYN CORONEL, MA. LINDA OLAGUER MONTAYRE, and
NELSON T. MONTAYRE, Petitioners,
vs.
COMMISSION ON ELECTIONS represented by its Chairman, Commissioner SIXTO S.
BRILLANTES, JR.,Respondent.

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G.R. No. 201127

TEOFISTO T. GUINGONA, BISHOP BRODERICK S. PABILLO, SOLITA COLLAS MONSOD,


MARIA CORAZON MENDOZA ACOL, FR. JOSE DIZON, NELSON JAVA CELIS, PABLO R.
MANALASTAS, GEORGINA R. ENCANTO and ANNA LEAH E. COLINA, Petitioners,
vs.
COMMISSION ON ELECTIONS and SMARTMATIC TIM CORPORATION, Respondents.

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G.R. No. 201413

TANGGULANG DEMOKRASYA (TAN DEM), INC., EVELYN L. KILA YKO, TERESITA D.


BALTAZAR, PILAR L. CALDERON and ELITA T. MONTILLA, Petitioners,
vs.
COMMISSION ON ELECTIONS and SMARTMATIC-TIM CORPORATION, Respondents.

FACTS

On July 10, 2009, the 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). 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 September 2010, the COMELEC
partially exercised its OTP 920 units of PCOS machines with corresponding canvassing/consolidation
system (CCS) for the special elections in certain areas in the provinces of Basilan, Lanao del Sur and
Bulacan. In a letter dated December 18, 2010, Smartmatic-TIM, through its Chairman Flores, proposed a
temporary extension of the option period on the remaining PCOS machines until March 31, 2011,
waiving the storage costs and covering the maintenance costs. The COMELEC did not exercise the option
within the extended period. Several extensions were given for the COMELEC to exercise the OTP until
its final 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 and to authorize Chairman Brillantes
to sign for and on behalf of the COMELEC the Agreement on the Extension of the OTP Under the AES
Contract (Extension Agreement). COMELEC again issued a Resolution resolving to approve the Deed of
Sale between the COMELEC and Smartmatic-TIM to purchase the latters PCOS machines to be used in
the upcoming May 2013 elections and to authorize Chairman Brillantes to sign the Deed of Sale for and
on behalf of the COMELEC. The Deed of Sale was forthwith executed.
Petitioners assail the constitutionality of the COMELEC Resolutions on the grounds that the
option period provided for in the AES contract had already lapsed; that the extension of the option period
and the exercise of the option without competitive public bidding contravene the provisions of RA 9184;
and that the COMELEC purchased the machines in contravention of the standards laid down in RA 9369.
On the other hand, respondents argue on the validity of the subject transaction based on the grounds that
there is no prohibition either in the contract or provision of law for it to extend the option period; that the
OTP is not an independent contract in itself, but is a provision contained in the valid and existing AES
contract that had already satisfied the public bidding requirements of RA 9184; and that exercising the
option was the most advantageous option of the COMELEC.

ISSUE
Whether or not there was grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of the COMELEC in issuing the assailed Resolutions and in executing the assailed Extension Agreement
and Deed.
RULING
NO. There was no grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the COMELEC in issuing the assailed Resolutions and in executing the assailed Extension
Agreement and Deed.
. 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. The
COMELEC still retains P50M of the amount due Smartmatic-TIM as performance security, which
indicates that the AES contract is still effective and not yet terminated. Consequently, pursuant to Article
19 of the contract, the provisions thereof may still be amended by mutual agreement of the parties
provided said amendment is in writing and signed by the parties. 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. 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 conclusions held by the Court in Power Sector Assets and Liabilities Management
Corporation (PSALM) v. Pozzolanic Philippines Incorporated and Agan, Jr. v. Philippine International
Air Terminals Co., Inc., (PIATCO) cannot be applied in the present case. First, Smartmatic-TIM was not
granted additional right that was not previously available to the other bidders. The bidders were apprised
that aside from the lease of goods and purchase of services, their proposals should include an OTP the
subject goods. Second, the amendment of the AES contract is not substantial. The approved budget for
the contract was P11,223,618,400.00 charged against the supplemental appropriations for election
modernization. Bids were, therefore, accepted provided that they did not exceed said amount. The
competitive public bidding conducted for the AES contract was sufficient. A new public bidding would
be a superfluity. Lastly, the amendment of the AES contract is more advantageous to the COMELEC and
the public because the P7,191,484,739.48 rentals paid for the lease of goods and purchase of services
under the AES contract was considered part of the purchase price. For the COMELEC to own the subject
goods, it was required to pay only P2,130,635,048.15. If the COMELEC did not exercise the option, the
rentals already paid would just be one of the government expenses for the past election and would be of
no use to future elections.

DOCTRINE
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.