Case Summary (G.R. No. 218787)
Two-Stage Competitive Bidding Framework
COMELEC initiated a two-stage competitive bidding for leasing with option to purchase 23,000 new OMR units for the May 2016 elections, with an Approved Budget for Contract of ₱2,503,518,000. The first stage required submission of eligibility documents and initial technical proposals; the second stage involved final technical tenders and price proposals. Bidding rules were governed by R.A. No. 9184 and its IRR.
Smartmatic JV’s Initial Submission and AOI Amendment
Smartmatic JV, Indra Sistemas, S.A., and MIRU Systems Co. Ltd. purchased Bidding Documents. SMTC, holding 46.5% of Smartmatic JV, originally had in its Articles of Incorporation a primary purpose limited to automating the 2010 elections. On November 12, 2014, SMTC adopted amendments to expand its purposes to cover election‐related goods and ICT services for any elections, which the Securities and Exchange Commission approved on December 10, 2014—six days after bid submission. Smartmatic JV disclosed the pending amendment in a sworn certification.
Pre-Qualification Determination by the BAC
On December 4, 2014, BAC opened the eligibility envelopes. It applied a non-discretionary pass/fail checklist limited to documents explicitly required in the bidding documents, which did not list the Articles of Incorporation as a mandatory bid requirement. BAC Resolution No. 1 (December 15, 2014) declared Smartmatic JV and Indra eligible to proceed to the second stage. Indra later submitted a nonresponsive financial bid; Smartmatic JV’s financial proposal was deemed complete and responsive at that stage.
Post-Qualification and Grounds for Disqualification
For post-qualification, BAC requested additional documents and a prototype OMR unit. In Resolution No. 9 (May 5, 2015), BAC disqualified Smartmatic JV for:
- Alleged failure to submit a valid Articles of Incorporation at bid opening, and
- The demo unit’s inability to simultaneously write all required data to two storage devices.
Smartmatic JV moved for reconsideration (Resolution No. 10, May 15, 2015), which BAC partially granted by finding the AOI sufficient under Sec. 23.1(b) of the IRR but maintained disqualification on technical grounds.
Protest Before the COMELEC En Banc
Smartmatic JV filed a protest with the COMELEC en banc, seeking another technical demonstration. On June 19 and 23, 2015, Smartmatic JV conducted two more demonstrations before the Technical Evaluation Committee (TEC) and the en banc, respectively. The TEC used a Digital Storage Oscilloscope to confirm simultaneous writing and filed a Final Report (June 24, 2015) finding compliance with TOR specifications.
COMELEC En Banc Decision
On June 29, 2015, adopting the TEC’s findings verbatim, the COMELEC en banc granted Smartmatic JV’s protest, declared it the lowest calculated responsive bidder, and cancelled the second-round opening of financial bids. All seven commissioners voted in favor; Chairman Bautista issued a brief concurring and dissenting note advocating for reopening the bidding to more participants.
Petitioners’ Substantive Challenges
Petitioners argue that Smartmatic JV was ineligible because:
• SMTC’s corporate purpose (per its Articles of Incorporation at bid opening) was limited to the 2010 elections, rendering its participation in the 2016 procurement ultra vires;
• The BAC improperly considered SMTC’s amended AOI approved after bid opening;
• SMTC allegedly misrepresented its nationality, claiming Filipino ownership when it was purportedly 100% foreign.
Procedural Issues and Proper Remedy
The Court held that decisions of the COMELEC in administrative procurement matters fall under Rule 65’s certiorari to the Regional Trial Court (RTC), not Rule 64 directly to the Supreme Court. Under R.A. No. 9184 (Sec. 58) and established cases, protests of bids must exhaust the BAC and head-of-entity levels before RTC certiorari. As petitioners are non-bidders, they lack standing to invoke that protest mechanism. However, given the Election Act’s mandate and the case’s public importance, the Supreme Court entertained the petition as one under Rule 65 for certiorari and prohibition, bypassing the hierarchy of courts.
Eligibility Documents and AOI Requirement
The bid documents’ checklist (Instruction to Bidders, BDS, Schedule of Requirements) did not list submission of Articles of Incorporation as a mandatory eligibility requirement. The BAC accordingly could not declare Smartmatic JV ineligible for failure to submit AOI at the pre-qualification stage. Post-qualification rules (ITB Clause 29) allow “other information” but do not transform non-listed documents into mandatory criteria.
SMTC’s Corporate Purpose and Ultra Vires Analysis
SMTC’s initial corporate purpose (automation
...continue readingCase Syllabus (G.R. No. 218787)
Nature of the Case
- Petition for certiorari or prohibition under Rule 64 of the Rules of Court, with a prayer for injunctive relief
- Challenge to the validity and enforcement of the COMELEC en banc’s June 29, 2015 Decision
- Alleged repugnance of that Decision to Batas Pambansa Blg. 68 (Corporation Code) and Republic Act No. 9184 (Government Procurement Reform Act)
Relevant Legal Provisions
- BP 68 (Corporation Code):
• Sec. 14 (required contents of Articles of Incorporation)
• Sec. 42 (power to invest corporate funds)
• Sec. 45 (ultra vires acts) - RA 9184 (Government Procurement Reform Act):
• Art. II, Sec. 10 (competitive bidding as general rule)
• Art. XVII, Secs. 55–58 (protest mechanism; RTC jurisdiction under Sec. 58) - Rule 64, Sec. 2, and Rule 65 of the Rules of Court (certiorari; distinction between quasi-judicial and administrative acts)
- 1987 Constitution, Art. IX-A, Sec. 7 (COMMISSION decisions reviewable on certiorari)
- RA 8436, Sec. 12 as amended by RA 9369 (COMELEC’s power to procure election equipment)
Facts
- October 27, 2014: COMELEC en banc releases bidding documents for “Two-Stage Competitive Bidding for the Lease of Election Management System (EMS) and Precinct-Based Optical Mark Reader (OMR) or Optical Scan (OP-SCAN) System”
- ABC of ₱2,503,518,000 for 23,000 new OMR units, ballots, boxes, technical support
- December 4, 2014: deadline for eligibility requirements and initial technical proposals
- Joint venture of Smartmatic-TIM Corporation, Total Information Management Corporation, Smartmatic International Holding B.V. and Jarltech International Corporation (Smartmatic JV) and Indra Sistemas respond; MIRU Systems expresses interest but does not bid
- Smartmatic JV’s partner SMTC certifies pending amendment to its Articles of Incorporation (AOI) before the SEC; amendments approved December 10, 2014
- Both Smartmatic JV and Indra participate in end-to-end testing; BAC Resolution No. 1 (Dec. 15, 2014) declares both eligible for second stage
- Second stage bids submitted Feb. 25, 2015; Smartmatic JV’s financial proposal initially responsive, Indra disqualified for non-responsiveness
COMELEC BAC Proceedings
- Post-qualification requirements imposed on Smartmatic JV: additional documents, prototype OMR unit testing
- BAC Resolution No. 9 (May 5, 2015): disqualifies Smartmatic JV for (1) failure to submit valid AOI, and (2) demo unit failing simultaneous dual-storage writing requirement
- Motion for reconsideration by Smartmatic JV; BAC Resolution No. 10 (May 15, 2015) partially grants on AOI issue but re-affirms disqualification on technical grounds
- Smartmatic JV’s Protest to COMELEC en banc; permission granted for second technical demonstration before TEC and later before COMELEC en banc (June 19 & 23, 2015)
- TEC Final Report finds OMR+ compliant with TOR performance standards
COMELEC en banc Decision (June 29, 2015)
- Grants Smartmatic JV’s Protest; declares it as “bidder with the lowest calculated res