Querubin V COMELEC

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Republic of the Philippines
SUPREME COURT
Manila
EN BANC
LEO Y. QUERUBIN~ MARJA G.R. No. 218787

CORAZON M. AKOL, and
AUGUSTO C. LAGMAN Present:
Petitioners,
SERENO, CJ,
CARPIO,
- versus - VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,*
COMMISSION ON ELECTIONS PERALTA,
EN BANC, represented by BERSAMIN,
Chairperson J. ANDRES D. DEL CASTILLO,
BAUTISTA, and JOINT VILLARAMA, JR.,
VENTURE OF SMARTMATIC- PEREZ,
TIM CORPORATION, TOTAL MENDOZA,
INFORMATION MANAGEMENT REYES,
CORPORATION, SMARTMATIC PERLAS-BERNABE,
INTERNATIONAL HOLDING LEONEN,
B.V. and JARLTECH JARDELEZA, JJ
INTERNATIONAL
CORPORATION, represented by
partner with biggest equity share,
SMARTMATIC-TIM
CORPORATION, its general
manager ALASTAIR JOSEPH
JAMES WELLS, Smartmatic
Chairman LORD MALLOCH-
BROWN, Smartmatic-Asia Pacific
President CESAR FLORES, and
any or all persons acting for and on Promulgated:
behalf of the Joint Venture, ·
Respondents. December 8, 2015
x-------------------------------------------------------~~~°""'-~-----x
DECISION
VELASCO, JR., J.:
• On official leave.
Decision 2 G.R. No. 218787
Nature of the Case
Before the Court is a petition for certiorari or prohibition under Rule

64 of the Rules of Court, with prayer for injunctive relief, assailing the
validity and seeking to restrain the implementation of the Commission of
Elections (COMELEC) en banc’s June 29, 2015 Decision1 for allegedly
being repugnant to the provisions of Batas Pambansa Blg. 68 (BP 68),
otherwise known as the Corporation Code of the Philippines, and Republic
Act No. 9184 (RA 9184) or the Government Procurement Reform Act.
The Facts
On October 27, 2014, the COMELEC en banc, through its Resolution

No. 14-0715, released the bidding documents for the “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.”2 Specified in the published Invitation to Bid3 are the
details for the lease with option to purchase, through competitive public
bidding, of twenty-three thousand (23,000) new units of precinct-based
OMRs or OP-SCAN Systems, with a total Approved Budget for Contract of
₱2,503,518,000,4 to be used in the 2016 National and Local Elections.5 The
COMELEC Bids and Awards Committee (BAC) set the deadline for the
submission by interested parties of their eligibility requirements and initial
technical proposal on December 4, 2014.6
The joint venture of Smartmatic-TIM Corporation (SMTC),

Smartmatic International Holding B.V., and Jarltech International
Corporation (collectively referred to as “Smartmatic JV”) responded to the
call and submitted bid for the project on the scheduled date. Indra Sistemas,
S.A. (Indra) and MIRU Systems Co. Ltd. likewise signified their interest in
the project, but only Indra, aside from Smartmatic JV, submitted its bid.7
1
Rollo, pp. 61-72. Rendered by Chairman J. Andres D. Bautista and Commissioners Christian
Robert S. Lim, Al A. Parreño, Luie Tito F. Guia, Arthur D. Lim, Ma. Rowena Amelia V. Guanzon and
Sheriff M. Abas.
2
Id. at 213-329. The bid documents are divided into eight (8) sections, namely: the Invitation to
Bid, Instruction to Bidders, Bid Data Sheet, General Conditions of Contract, Special Conditions of
Contract, Schedule of Requirements, Technical Specifications, and Bidding Forms.
3
Id. at 216-218.
4
Id. at 216.
COMPONENT QUANTITY UNIT COST TOTAL
1 – Voting Machines 23,000 units Php 90,000.00 Php 2,070,000,000.00
2 – Ballots 16,500,000 pieces Php 20.00 Php 330,000,000.00
3 – Ballot Boxes 20,406 units Php 3,000.00 Php 61,218,000.00
4 – Technical Support 4,550 Technicians Php 42,300,000.00
(Polling Centers)
150 Technicians
(National Technical
Support Group)
APPROVED BUDGET FOR THE CONTRACT (ABC) Php 2,503,518,000.00
5
Id. at 61-62.
6
Id. at 217-218.
7
Id. at 621.
During the opening of the bids, Smartmatic JV, in a sworn

certification, informed the BAC that one of its partner corporations, SMTC,
has a pending application with the Securities and Exchange Commission
(SEC) to amend its Articles of Incorporation (AOI), attaching therein all
pending documents.8 The amendments adopted as early as November 12,
2014 were approved by the SEC on December 10, 2014.9 On even date,
Smartmatic JV and Indra participated in the end-to-end testing of their initial
technical proposals for the procurement project before the BAC.
Upon evaluation of the submittals, the BAC, through its Resolution

No. 1 dated December 15, 2014, declared Smartmatic JV and Indra eligible
to participate in the second stage of the bidding process.10 The BAC then
issued a Notice requiring them to submit their Final Revised Technical
Tenders and Price proposals on February 25, 2015, to which the eligible
participants complied. Finding that the joint venture satisfied the
requirements in the published Invitation to Bid, Smartmatic JV, on March
26, 2015, was declared to have tendered a complete and responsive Overall
Summary of the Financial Proposal.11 Meanwhile, Indra was disqualified
for submitting a non-responsive bid.12
Subsequently, for purposes of post-qualification evaluation, the BAC

required Smartmatic JV to submit additional documents and a prototype
sample of its OMR.13 The prototype was subjected to testing to gauge its
compliance with the requirements outlined in the project’s Terms of
Reference (TOR).14
After the conduct of post-qualification, the BAC, through Resolution

No. 9 dated May 5, 2015, disqualified Smartmatic JV on two grounds, viz:15
1. Failure to submit valid AOI; and

2. The demo unit failed to meet the technical requirement that
the system shall be capable of writing all data/files, audit
log, statistics and ballot images simultaneously in at least
two (2) data storages.
The ruling prompted Smartmatic JV to move for reconsideration.16 In

denying the motion, the BAC, through Resolution No. 1017 dated May 15,
2015, declared that Smartmatic JV complied with the requirements of Sec.
23.1(b) of the Revised Implementing Rules and Regulations of RA 9184
(GPRA IRR), including the submission of a valid AOI, but was nevertheless
8
Id. at 623; see also BAC Resolution No. 10, Memorandum of Divida Blaz-Perez, id. at 433.
9
Id. at 546.
10
Id. at 623, 437.
11
Id. at 624.
12
Id. at 624, 441-442.
13
Id. at 624, 447-448.
14
Id. at 900-901.
15
Id. at 62, 449-451.
16
Id. at 452-468.
17
Id. at 424-429.
disqualified as it still failed to comply with the technical requirements of the

project.18
Aggrieved, Smartmatic JV filed a Protest,19 seeking permission to

conduct another technical demonstration of its SAES 1800 plus OMR
(OMR+), the OMR Smartmatic JV presented during the public bidding
before the COMELEC en banc.20 Accordingly, on June 19, 2015,
Smartmatic JV was allowed to prove compliance with the technical
specifications for the second time, but this time before the electoral
tribunal’s Technical Evaluation Committee (TEC).21 This was followed, on
June 23, 2015, by another technical demonstration before the Commission
en banc at the Advanced Science and Technology Institute (ASTI) at the
University of the Philippines, Diliman, Quezon City.22
Ruling of the COMELEC en banc
Though initially finding that the OMR+’s ability to simultaneously

write data in two storage devices could not conclusively be established,23 the
TEC, upon the use of a Digital Storage Oscilloscope (DSO) during the
second demonstration,24 determined that the OMR+ complied with the
requirements specified in the TOR.25 Adopting the findings of the TEC as
embodied in its Final Report, the COMELEC en banc, on June 29, 2015,
promulgated the assailed Decision granting Smartmatic JV’s protest. The
dispositive portion of the Decision reads:26
WHEREFORE, the instant Protest is hereby GRANTED.

Accordingly, the Commission hereby declares the Joint Venture of
Smartmatic-TIM Corporation, Total Information Management
Corporation, Smartmatic International Holding B.V., and Jarltech
International Corporation, as the bidder with the lowest calculated
responsive bid in connection with the public bidding for the lease with
option to purchase of 23,000 new units of precinct-based Optical Mark
Reader or Optical Scan System for use in the May 9, 2016 national and
local elections. Corollarily, the scheduled opening of financial proposal
and eligibility documents for the Second Round of Bidding is hereby
CANCELLED, with specific instruction for the Bids and Awards
Committee to RETURN to the prospective bidders their respective
payments made for the purchase of Bidding Documents pertaining to the
Second Round of Bidding.
Let the Bids and Awards Committee implement this Decision.
18
Id. at 428.
19
Id. at 469-506.
20
Id. at 62-63.
21
Id. at 63.
22
Id. at 64.
23
Id. at 63.
24
Id. at 23. The DOS was used to visualize the electrical signals sent to the memory cards without
modifying the OMR+ hardware and software. During the June 23, 2015 demonstration, the DSO displayed
waveforms of time dimension and electrical voltage, which were then analyzed by the electronics design
engineers of the ASTI.
25
Id. at 23-26.
26
Id. at 26.
SO ORDERED.
The seven-man commission was unanimous in holding that

Smartmatic JV’s OMR+ sufficiently satisfied the technical requirements
itemized in the TOR, reproducing in the assailed Decision, verbatim and
with approbation, the entirety of the TEC’s Final Report, thusly:27
This is to report on the result of the public test conducted on 23 June of the
claim of Smartmatic TIM (SMTT) that their proposed SAES 1800
(PCOS+) has the capability to write ballot images, audit logs, and
elections results on two separate storage (devices) simultaneously.
Technical discussion, demonstrations, and design reviews were conducted

over two day period before the actual demonstration to the Comelec En
Banc. These reviews were conducted between SMTT engineers and a
team of embedded electronics design engineers from the Advanced
Science and Technology Institute of the Department of Science and
Technology.
Though these reviews are important to validate the behavior and

functionality of the PCOS+, the best way to validate the claim of SMTT is
to use a specialized test instrument connected to the actual electrical inputs
of both storage cards.
To visualize the electrical signals being sent to the memory cards, an

Agilent DSO7054A Digital Storage Oscilloscope (DSO) from ASTI
connected to the same data input line on two SD card adapters with a
micro SD card inside. This was done to simulate an actual SC card and to
make the DSO probe connections accessible and secure without modifying
anything in the PCOS+ hardware or software. x x x
During normal operation such as on Election day, when the PCOS+ is

accepting ballots from voters, the PCOS+ is designated to write data on
both SD cards after the ballots has been determined to be valid and the
voter choices have been shown to the voter for verification.
The data being written on the storage devices consist mainly of the
scanned ballots image of the front and back of the ballot at 200 dots per
inch in both the horizontal and vertical dimension with each dot encoded
into a 4 bit value corresponding to 16 shades of gray. The other data saved
on the storage device consists of the vote interpretation and updates to the
audit log. Each time that data is written on the two storage device, the date
is encrypted and a verification step is done to check that identical data is
written on both devices. The entire write process lasts a few seconds for
each ballot.
xxxx
The DSO display the time dimension on the horizontal axis and the
electrical voltage in the vertical axis, the display is generated left to right
over time (earlier events are on the left). The yellow line on top shows the
electrical signal on the Data 2 pin of the main storage card and the green
line shows the electrical signal on the Data 2 pin of the backup storage
27
Id. at 69-71.
card. The orange dashed horizontal and vertical lines are used for
measuring the differences in time and voltage.
The vertical dashed line on the left marks the start of the data being
written on the main and backup storage card and the vertical dashed line
on the right marks the ends of the writing operation for one ballot. The
time difference in this case is about 2.616 seconds as shown near the
bottom left corner of the display.
The yellow and green vertical lines in between the two vertical dashed
lines represent the digital ones and zeros being written on both storage
cards. The yellow and green traces are not exactly identical because the
main car also contains the operating system of the PCOS+ and additional
data operations are being performed on it. Because the time scale is the
same on both probes, we conclude that the PCOS+ is writing on both
cards simultaneously during this time interval.
Notwithstanding Smartmatic JV’s compliance with the technical

requirements in the TOR, Commissioner Luie Tito F. Guia (Guia) would
nonetheless dissent in part, questioning the sufficiency of the documents
submitted by the Smartmatic JV.28 Taking their cue from Commissioner
Guia’s dissent, petitioners now assail the June 29, 2015 Decision of the
COMELEC through the instant recourse.
The Issues
Petitioners framed the issues in the extant case in the following wise:29
A. Procedural Issues
I. WHETHER OR NOT THE PETITION IS THE PROPER

REMEDIAL VEHICLE TO ASSAIL THE SUBJECT DECISION
OF THE COMELEC EN BANC;
II. WHETHER OR NOT THE SUPREME COURT HAS THE

RIGHT AND DUTY TO ENTERTAIN THIS PETITION;
III. WHETHER OR NOT A JUSTICIABLE CASE OR

CONTROVERSY EXISTS;
IV. WHETHER OR NOT THE CASE OR CONTROVERSY IS RIPE

FOR JUDICIAL ADJUDICATION;
V. WHETHER OR NOT UNDER THE CIRCUMSTANCES, THE

RULE ON “HIERARCHY OF COURTS” MAY BE DISPENSED
WITH;
VI. WHETHER OR NOT THE PETITIONERS POSSESS LOCUS

STANDI;
28
Id. at 74-76.
29
Id. at 32-34.
B. Substantive Issues
VII. WHETHER OR NOT THE COMELEC EN BANC ACTED

WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN GRANTING THE
PROTEST AS WELL AS IN DECLARING THE JOINT
VENTURE OF SMARTMATIC-TIM CORPORATION, TOTAL
INFORMATION MANAGEMENT CORPORATION,
SMARTMATIC INTERNATIONAL HOLDING B.V. AND
JARLTECH INTERNATIONAL CORPORATION AS THE
BIDDER WITH THE LOWEST CALCULATED RESPONSIVE
BID IN CONNECTION WITH THE PUBLIC BIDDING FOR
THE LEASE WITH OPTION TO PURCHASE OF 23,000 NEW
UNITS OF PRECINCT-BASED OPTICAL MARK READER OR
OPTICAL SCAN SYSTEM FOR USE IN THE MAY 9, 2016
NATIONAL AND LOCAL ELECTIONS
VIII. WHETHER OR NOT A WRIT OF PRELIMINARY

INJUNCTION OR TEMPORARY RESTRAINING ORDER
SHOULD ISSUE
In challenging the June 29, 2015 Decision, petitioners, filing as

taxpayers, alleged that the COMELEC en banc acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in declaring
Smartmatic JV as the bidder with the lowest calculated responsive bid.30
According to petitioners, Smartmatic JV cannot be declared eligible, even
more so as the bidder with the lowest calculated responsive bid, because one
of its proponents, SMTC, holding 46.5% of the shares of Smartmatic JV, no
longer has a valid corporate purpose as required under Sec. 14 of BP 68,
which pertinently reads:
Section 14. Contents of the articles of incorporation. – All corporations

organized under this code shall file with the Securities and Exchange
Commission articles of incorporation in any of the official languages duly
signed and acknowledged by all of the incorporators, containing
substantially the following matters, except as otherwise prescribed by this
Code or by special law:
xxxx
2. The specific purpose or purposes for which the corporation is being

incorporated. Where a corporation has more than one stated purpose, the
articles of incorporation shall state which is the primary purpose and
which is/are the secondary purpose or purposes: Provided, That a non-
stock corporation may not include a purpose which would change or
contradict its nature as such x x x.
As proof, petitioners cite the primary purpose of SMTC as stated in

the company’s AOI, which was submitted to the COMELEC on December
4, 2014 as part of the joint venture’s eligibility documents. To quote
SMTC’s primary purpose therein:31
30
Id. at 34.
31
Id. at 75, 532.
To do, perform and comply with all the obligations and

responsibilities of, and accord legal personality to, the joint venture of
Total Information Management Corporation (“TIM”) and Smartmatic
International Corporation (“Smartmatic”) arising under the Request for
Proposal and the Notice of Award issued by the Commission on Elections
(“COMELEC”) for the automation of the 2010 national and local
elections (“Project”), including the leasing, selling, importing and/or
assembling of automated voting machines, computer software and other
computer services and/or otherwise deal in all kinds of services to be used,
offered or provided to the COMELEC for the preparations and the
conduct of the Project including project management services. (emphasis
added)
In concurrence with Commissioner Guia’s opinion, petitioners argue

that the foregoing paragraph readily evinces that SMTC was created solely
for the automation of the 2010 National and Local Elections, not for any
other election.32 Having already served its purpose, SMTC no longer has
authority to engage in business, so petitioners claim. To allow SMTC then
to have a hand in the succeeding elections would be tolerating its
performance of an ultra vires act.
Petitioners hasten to add that without a valid purpose, the company

could not have submitted a valid AOI, a procurement eligibility requirement
under Sec. 23.1 (b) of the IRR of RA 9184. For them, the SEC’s subsequent
approval, on December 10, 2014, of the amendments to SMTC’s AOI
cannot cure the partner corporation’s ineligibility because eligibility is
determined at the time of the opening of the bids, which, in this case, was
conducted on December 4, 2014.33
Finally, petitioners contend that SMTC misrepresented itself by

leading the BAC to believe that it may carry out the project despite its
limited corporate purpose, and by claiming that it is a Philippine corporation
when it is, allegedly, 100% foreign-owned.34 They add that
misrepresentation is a ground for the procuring agency to consider a bidder
ineligible and disqualify it from obtaining an award or contract.35
In its Comment,36 public respondent COMELEC, through the Office

of the Solicitor General (OSG), refuted the arguments of petitioners on the
main postulation that the sole issue raised before the COMELEC en banc
was limited to the technical aspect of the project.37 According to the OSG,
the sufficiency of the documents submitted was already decided by the BAC
on May 15, 2015 when it partially granted Smartmatic JV’s motion for
reconsideration through BAC Resolution No. 10. Anent the procedural
32
Id. at 48.
33
Id. at 46.
34
Id. at 46.
35
Id. at 49.
36
Id. at 587-618.
37
Id. at 593-596.
issues, the OSG, in its bid to have the case dismissed outright, questioned
petitioners’ locus standi and failure to observe the hierarchy of courts.38
Meanwhile, private respondents, in their Comment/Opposition,39

countered that the BAC has thoroughly explained and laid down the factual
and legal basis behind its finding on Smartmatic JV’s legal capacity to
participate as bidder in the project procurement; that the issue on SMTC’s
AOI has been rendered moot by the SEC’s subsequent approval on
December 10, 2014 of the AOI’s amendment broadening the company’s
primary purpose;40 that SMTC’s primary purpose, as amended, now reads:41
To sell, supply, lease, import, export, develop, assemble, repair and

deal with automated voting machines, canvassing equipment, computer
software, computer equipment and all other goods and supplies, and /or to
provide, render and deal in all kinds of services, including project
management services for the conduct of elections, whether regular or
special, in the Philippine(s) and to provide Information and
Communication Technology (ICT) goods and services to private and
government entities in the Philippines.
that the alleged defect in SMTC’s AOI is of no moment since neither the law
nor the bidding documents require a bidder to submit its AOI;42 that even
assuming for the sake of argument that SMTC’s primary purpose precludes
it from further contracting for the automation of the Philippine elections
beyond 2010, its secondary purposes43 and Sec. 42 of BP 6844 authorize the
38
Id. at 596-604.
39
Id. at 619-663.
40
Id. at 647.
41
Id. at 549.
42
Id. at 637-639.
43
Id. at 533-534. Its secondary purposes read: a. to acquire by purchase, lease, contract,
concession or otherwise, within the limits allowed by law, any and all real and/or personal properties of
every kind and description whatsoever, whether tangible or intangible, which the Corporation may deem
necessary or appropriate in connection with the conduct of any business in which the Corporation may
lawfully engage, and, within the limits allowed by law, to own, hold, operate, improve, develop, manage,
grant, lease, sell, assign, convey, transfer, exchange, or otherwise dispose of the whole or any part thereof;
xxxx
h. To carry out any of the above-mentioned purposes as principal, agent, factor, licensee,
concessionaire, contractor, or otherwise, either alone or on conjunction with any other person, firm,
association, corporation, or entity, whether public or private;
i. To enter into contracts and arrangements of every kind and description for any lawful purpose
with any person, firm, association, corporation, municipality, body politic, country, territory, province,
state, or government, and to obtain from any government or authority such rights, privileges, contracts and
concessionaires which the Corporation may deem desirable.
44
Section 42. Power to invest corporate funds in another corporation or business or for any other
purpose. – Subject to the provisions of this Code, a private corporation may invest its funds in any other
corporation or business or for any purpose other than the primary purpose for which it was organized when
approved by a majority of the board of directors or trustees and ratified by the stockholders representing at
least two-thirds (2/3) of the outstanding capital stock, or by at least two thirds (2/3) of the members in the
case of non-stock corporations, at a stockholder’s or member’s meeting duly called for the purpose. Written
notice of the proposed investment and the time and place of the meeting shall be addressed to each
stockholder or member at his place of residence as shown on the books of the corporation and deposited to
the addressee in the post office with postage prepaid, or served personally: Provided, That any dissenting
stockholder shall have appraisal right as provided in this Code: Provided, however, That where the
investment by the corporation is reasonably necessary to accomplish its primary purpose as stated in the
articles of incorporation, the approval of the stockholders or members shall not be necessary.
company to do so;45 and that the COMELEC, in fact, has already dealt with
SMTC numerous times after the 2010 elections.46
Private respondents would likewise debunk petitioners’ allegation that

SMTC misrepresented its nationality. They argue that based on its General
Information Sheet (GIS), SMTC is a Filipino corporation, not a foreign one
as petitioners alleged. Moreover, what is only required under RA 9184 is
that the nationality of the joint venture be Filipino, and not necessarily that
of its individual proponents.47 In any event, so private respondents claim, the
COMELEC, under the law, is not prohibited from acquiring election
equipment from foreign sources, rendering SMTC and even Smartmatic
JV’s nationality immaterial.48
Lastly, private respondents pray for the petition’s outright dismissal,

following petitioner Akol and Lagman’s alleged failure to comply with the
rules on verifications, on the submission of certifications against forum-
shopping, and on the efficient use of paper.49
The Court’s Ruling
The petition lacks merit.
Rule 64 is not applicable in assailing

the COMELEC en banc’s Decision
granting Smartmatic JV’s protest
In arguing for the propriety of the remedial vehicle chosen, petitioners

claim that under Rule 64, Sec. 2 of the Rules of Court, “[a] judgment or
final order or resolution of the Commission on Elections x x x may be
brought by the aggrieved party to the Supreme Court
on certiorari under Rule 65.”50 They postulate that the June 29, 2015
Decision of the COMELEC en banc declaring Smartmatic JV as the eligible
bidder with the lowest calculated responsive bid is a “judgment” within the
contemplation of the rule, and is, therefore, a proper subject of a Rule 64
petition.
The argument fails to persuade.
a. Rule 64 does not cover rulings of the

COMELEC in the exercise of its
administrative powers
45
Rollo, pp. 640-646.
46
Id. at 646-647. Contract dated January 14, 2013 for the supply of 82,000 CF Cards Main,
Contract dated January 28, 2013 for the supply of 82,000 CF Cards WORM, Contract dated January 18,
2013 for the Electronic Transmission of Election Results of the May 13, 2013 elections, Contract dated
May 14, 2013 for the supply of 15,000 MTD Modems, and Contract dated March 22, 2013 for the National
Support Center.
47
Id. at 647-648.
48
Id. at 648-652.
49
Id. at 652-657.
50
Id. at 34.
The rule cited by petitioners is an application of the constitutional

mandate requiring that, unless otherwise provided by law, the rulings of the
constitutional commissions shall be subject to review only by the Supreme
Court on certiorari. A reproduction of Article IX-A, Section 7 of the 1987
Constitution is in order:
Section 7. Each Commission shall decide by a majority vote of all its

Members, any case or matter brought before it within sixty days from the
date of its submission for decision or resolution. A case or matter is
deemed submitted for decision or resolution upon the filing of the last
pleading, brief, or memorandum required by the rules of the Commission
or by the Commission itself. Unless otherwise provided by this
Constitution or by law, any decision, order, or ruling of each
Commission may be brought to the Supreme Court on certiorari by
the aggrieved party within thirty days from receipt of a copy thereof.
(emphasis added)
Though the provision appears unambiguous and unequivocal, the

Court has consistently held that the phrase “decision, order, or ruling” of
constitutional commissions, the COMELEC included, that may be brought
directly to the Supreme Court on certiorari is not all-encompassing, and that
it only relates to those rendered in the commissions’ exercise of
adjudicatory or quasi-judicial powers.51 In the case of the COMELEC,
this would limit the provision’s coverage to the decisions, orders, or rulings
issued pursuant to its authority to be the sole judge of generally all
controversies and contests relating to the elections, returns, and
qualifications of elective offices.52
Consequently, Rule 64, which complemented the procedural

requirement under Article IX-A, Section 7, should likewise be read in the
same sense––that of excluding from its coverage decisions, rulings, and
orders rendered by the COMELEC in the exercise of its administrative
functions. In such instances, a Rule 65 petition for certiorari is the proper
remedy. As held in Macabago v. COMELEC:53
[A] judgment or final order or resolution of the COMELEC may

be brought by the aggrieved party to this Court on certiorari under Rule
65, as amended, except as therein provided. We ruled in Elpidio M. Salva,
et al. vs. Hon. Roberto L. Makalintal, et al. (340 SCRA 506 (2000)) that
Rule 64 of the Rules applies only to judgments or final orders of the
COMELEC in the exercise of its quasi-judicial functions. The rule does
not apply to interlocutory orders of the COMELEC in the exercise of its
quasi-judicial functions or to its administrative orders. In this case, the
assailed order of the COMELEC declaring private respondents petition to
be one for annulment of the elections or for a declaration of a failure of
elections in the municipality and ordering the production of the original
copies of the VRRs for the technical examination is administrative in
nature. Rule 64, a procedural device for the review of final orders,
resolutions or decision of the COMELEC, does not foreclose recourse to
51
Garces v. Court of Appeals, G.R. No. 114795, July 17, 1996, 259 SCRA 99, 107.
52
Bedol v. Comelec, G.R. No. 179830, December 3, 2009, 606 SCRA 554.
53
G.R. No. 152163, November 18, 2002, 392 SCRA 178.
this Court under Rule 65 from administrative orders of said Commission

issued in the exercise of its administrative function.
As applied herein, recall that the instant petition revolves around the
issue on whether or not Smartmatic JV is eligible to participate in the
bidding process for the COMELEC’s procurement of 23,000 units of optical
mark readers. The case does not stem from an election controversy involving
the election, qualification, or the returns of an elective office. Rather, it
pertains to the propriety of the polling commission’s conduct of the
procurement process, and its initial finding that Smartmatic JV is eligible to
participate therein. It springs from the COMELEC’s compliance with the
Constitutional directive to enforce and administer all laws and regulations
relative to the conduct of an election.54 Specifically, it arose from the
electoral commission’s exercise of Sec. 12 of RA 8436, otherwise known as
the Automated Elections Law, as amended by RA 9369,55 which authorized
the COMELEC “to procure, in accordance with existing laws, by
purchase, lease, rent or other forms of acquisition, supplies, equipment,
materials, software, facilities, and other services, from local or foreign
sources free from taxes and import duties, subject to accounting and
auditing rules and regulation.”
The subject matter of Smartmatic JV’s protest, therefore, does not

qualify as one necessitating the COMELEC’s exercise of its adjudicatory or
quasi-judicial powers that could properly be the subject of a Rule 64
petition, but is, in fact, administrative in nature. Petitioners should then have
sought redress via a petition for the issuance of the extraordinary writ of
certiorari under Rule 65 to assail the COMELEC en banc’s June 29, 2015
Decision granting the protest. As a caveat, however, the writ will only lie
upon showing that the COMELEC acted capriciously or whimsically, with
grave abuse of discretion amounting to lack or excess of jurisdiction in
issuing the Decision, such as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility. The abuse of
discretion must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law.56 Mere abuse of discretion will not suffice.
It goes without saying that petitioners’ action, having been lodged

through an improper petition, is susceptible to outright dismissal. As the
Court held in Pates v. COMELEC,57 a Rule 64 petition cannot simply be
equated to Rule 65 even if it expressly refers to the latter rule.58 The clear
54
CONSTITUTION, Art. IX-C, Sec. 2(1).
55
An Act Amending Republic Act No. 8436, Entitled “An Act Authorizing the Commission on
Elections to Use an Automated Election System in the May 11, 1998 National or Local Elections and in
Subsequent National and Local Electoral Exercises, To Encourage Transparency, Credibility, Fairness and
Accuracy of Elections, Amending for the Purpose Batas Pampansa Blg. 881, As Amended, Republic Act
No. 7166 and Other Related Elections Laws, Providing Funds Therefor and for Other Purposes.”
56
Duco v. Comelec, G.R. No. 183366, August 19, 2009, 596 SCRA 572.
57
G.R. No. 184915, June 30, 2009, 591 SCRA 481.
58
Pates v. Comelec, id. They exist as separate rules for substantive reasons as discussed below.
Procedurally, the most patent difference between the two – i.e., the exception that Section 2, Rule 64 refers
to – is Section 3 which provides for a special period for the filing of petitions for certiorari from decisions
or rulings of the COMELEC en banc. The period is 30 days from notice of the decision or ruling (instead of
distinction between the instant petition and Pates, however, is that in Pates,
therein petitioner failed to present an exceptional circumstance or any
compelling reason that would have warranted the liberal application of the
Rules of Court. In stark contrast, herein petitioners, as will later on be
discussed, were able to establish a meritorious case for the relaxation of the
rules, relieving them from the rigid application of procedural requirements.
We therefore treat the instant recourse as one filed not merely in relation to,
but under Rule 65.
This brings us now to the question on where the petition ought to have
been filed.
b. Jurisdiction of the RTC over rulings

of the head of the procuring entity
relating to procurement protests
Guilty of reiteration, the COMELEC en banc was not resolving an

election controversy when it resolved the protest, but was merely performing
its function to procure the necessary election paraphernalia for the conduct
of the 2016 National and Local Elections. This power finds statutory basis in
Sec. 12 of RA 8436,59 as amended, which reads:
SEC.12. Procurement of Equipment and Materials. - To achieve the

purpose of this Act, the Commission is authorized to procure, in
accordance with existing laws, by purchase, lease, rent or other forms
of acquisition, supplies, equipment, materials, software, facilities, and
other service, from local or foreign sources free from taxes and import
duties, subject to accounting and auditing rules and regulation. With
respect to the May 10, 2010 election and succeeding electoral exercises,
the system procured must have demonstrated capability and been
successfully used in a prior electoral exercise here or board. Participation
in the 2007 pilot exercise shall not be conclusive of the system's fitness.
In determining the amount of any bid from a technology, software or

equipment supplier, the cost to the government of its deployment and
implementation shall be added to the bid price as integral thereto. The
value of any alternative use to which such technology, software or
equipment can be put for public use shall not be deducted from the
original face value of the said bid. (emphasis added)
In Pabillo v. COMELEC,60 the Court held that the “existing laws”

adverted to in the provision is none other than RA 9184. The law is designed
to govern all cases of procurement of the national government, its
departments, bureaus, offices and agencies, including state universities and
colleges, government-owned and/or-controlled corporations, government
financial institutions and local government units.61 It mandates that as a
the 60 days that Rule 65 provides), with the intervening period used for the filing of any motion for
reconsideration deductible from the originally-granted 30 days (instead of the fresh period of 60 days that
Rule 65 provides).
59
Formerly Section 8 of RA 8436, the provision was renumbered to Section 12 by RA 9369
60
G.R. Nos. 216098 & 216562, April 21, 2015.
61
RA 9184, Sec. 3.
general rule, all government procurement must undergo competitive

bidding62 and for purposes of conducting the bidding process, the procuring
entity convenes a BAC.
The BAC is tasked to oversee the entire procuring process, from

advertisement of the project to its eventual award.63 It is the first to rule on
objections or complaints relating to the conduct of the bidding process,
subject to review by the head of the procuring entity via protest. As outlined
in RA 9184, the protest mechanism in procurement processes is as follows:
ARTICLE XVII
PROTEST MECHANISM
Section 55. Protests on Decisions of the BAC.- Decisions of the BAC in

all stages of procurement may be protested to the head of the procuring
entity and shall be in writing. Decisions of the BAC may be protested by
filing a verified position paper and paying a non-refundable protest fee.
The amount of the protest fee and the periods during which the protests
may be filed and resolved shall be specified in the IRR.
Section 56. Resolution of Protests. - The protest shall be resolved strictly

on the basis of records of the BAC. Up to a certain amount to be specified
in the IRR, the decisions of the Head of the Procuring Entity shall be final.
Section 57. Non-interruption of the Bidding Process.- In no case shall any

protest taken from any decision treated in this Article stay or delay the
bidding process. Protests must first be resolved before any award is made.
Section 58. Resort to Regular Courts; Certiorari.- Court action may be

resorted to only after the protests contemplated in this Article shall have
been completed. Cases that are filed in violation of the process
specified in this Article shall be dismissed for lack of jurisdiction. The
regional trial court shall have jurisdiction over final decision of the
head of the procuring entity. Court actions shall be governed by Rule 65
of the 1997 Rules of Civil Procedure.
This provision is without prejudice to any law conferring on the Supreme

court the sole jurisdiction to issue temporary restraining orders and
injunctions relating to Infrastructure Projects of Government. (emphasis
added)
Thus, under Sec. 58, the proper remedy to question the ruling of the
head of the procuring entity is through a Rule 65 petition for certiorari with
the Regional Trial Court (RTC). The term “procuring entity” is defined
under the RA 9184 as “any branch, department, office, agency, or
instrumentality of the government, including state universities and
colleges, government-owned and/or - controlled corporations,
government financial institutions, and local government units procuring
Goods, Consulting Services and Infrastructure Projects.”64 This statutory
definition makes no distinction as to whether or not the procuring entity is a
62
Id., Sec. 10.
63
Id., Sec. 12.
64
Id., Sec. 5(o).
constitutional commission under Article IX of the Constitution. It is broad

enough to include the COMELEC within the contemplation of the term.
Hence, under the law, grievances relating to the COMELEC rulings in
protests over the conduct of its project procurement should then be
addressed to the RTC.
The mandatory recourse to the RTC in the appeal process applicable

to COMELEC procurement project is not a novel development introduced
by RA 9184. Even prior to the advent of the government procurement law,
the requirement already finds jurisprudential support in Filipinas
Engineering and Machine Shop v. Ferrer,65 wherein the Court expounded
this way:
[I]t has been consistently held that it is the Supreme Court, not the Court
of First Instance, which has exclusive jurisdiction to review on certiorari
final decisions, orders or rulings of the COMELEC relative to the conduct
of elections and enforcement of election laws.
We are however, far from convince[d] that an order of the COMELEC

awarding a contract to a private party, as a result of its choice among
various proposals submitted in response to its invitation to bid comes
within the purview of a "final order" which is exclusively and directly
appealable to this court on certiorari. What is contemplated by the term
"final orders, rulings and decisions" of the COMELEC reviewable by
certiorari by the Supreme Court as provided by law are those rendered in
actions or proceedings before the COMELEC and taken cognizance of by
the said body in the exercise of its adjudicatory or quasi-judicial powers.
xxxx
[T]he order of the Commission granting the award to a bidder is not an

order rendered in a legal controversy before it wherein the parties filed
their respective pleadings and presented evidence after which the
questioned order was issued; and that this order of the commission was
issued pursuant to its authority to enter into contracts in relation to election
purposes. In short, the COMELEC resolution awarding the contract in
favor of Acme was not issued pursuant to its quasi-judicial functions
but merely as an incident of its inherent administrative functions over
the conduct of elections, and hence, the said resolution may not be
deemed as a "final order" reviewable by certiorari by the Supreme
Court. Being non-judicial in character, no contempt may be imposed by
the COMELEC from said order, and no direct and exclusive appeal by
certiorari to this Tribunal lie from such order. Any question arising from
said order may be well taken in an ordinary civil action before the
trial courts. (emphasis added)
Additionally, even if the Court treats the protest proceeding as part of

the procuring agency’s adjudicatory function, the Court notes that Sec. 58 of
RA 9184 would nevertheless apply, and the RTC would still have
jurisdiction, pursuant to the proviso “unless otherwise provided by law” as
appearing in Article IX-A, Section 7 of the Constitution. In this case, the
pertinent law provides that insofar as rulings of the COMELEC in
65
No. L-31455, February 28, 1985, 135 SCRA 25.
procurement protests are concerned, said rulings can be challenged through a

Rule 65 certiorari with the RTC.
c. The protest mechanism under RA

9184 can only be availed of by a
losing bidder
Nevertheless, the application of Sec. 58 of RA 9184 has to be

qualified. It cannot, in all instances, be the proper remedy to question the
rulings of the heads of procuring entities in procurement protests. As in the
prior case of Roque v. COMELEC,66 which similarly dealt with
COMELEC procurement of OMRs the Court held that only a losing bidder
would be aggrieved by, and ergo would have the personality to challenge,
the head of the procuring entity’s ruling in the protest. This is bolstered by
the GPRA IRR, which fleshed out the provisions of RA 9184 thusly:
RULE XVII – PROTEST MECHANISM
Section 55. Protests on Decisions of the BAC
55.1. Decisions of the BAC at any stage of the procurement process may
be questioned by filing a request for reconsideration within the three (3)
calendar days upon receipt of written notice or upon verbal notification.
The BAC shall decide on the request for reconsideration within seven (7)
calendar days from receipt thereof.
If a failed bidder signifies his intent to file a request for

reconsideration, the BAC shall keep the bid envelopes of the said failed
bidder unopened and/or duly sealed until such time that the request for
reconsideration has been resolved.
55.2. In the event that the request for reconsideration is denied, decisions
of the BAC may be protested in writing to the Head of the Procuring
Entity: Provided, however, That a prior request for reconsideration should
have been filed by the party concerned in accordance with the preceding
Section, and the same has been resolved.
55.3. The protest must be filed within seven (7) calendar days from
receipt by the party concerned of the resolution of the BAC denying its
request for reconsideration. A protest may be made by filing a verified
position paper with the Head of the Procuring Entity concerned,
accompanied by the payment of a non-refundable protest fee. The non-
refundable protest fee shall be in an amount equivalent to no less than one
percent (1%) of the ABC.
55.4. The verified position paper shall contain the following information:
a) The name of bidder;
b) The office address of the bidder;
c) The name of project/contract;
d) The implementing office/agency or procuring entity;
e) A brief statement of facts;
f) The issue to be resolved; and
66
G.R. No. 188456, September 10, 2009, 599 SCRA 69.
g) Such other matters and information pertinent and relevant to the proper
resolution of the protest.
The position paper is verified by an affidavit that the affiant has read and
understood the contents thereof and that the allegations therein are true
and correct of his personal knowledge or based on authentic records. An
unverified position paper shall be considered unsigned, produces no legal
effect, and results to the outright dismissal of the protest.
xxxx
Section 58. Resort to Regular Courts; Certiorari
58.1. Court action may be resorted to only after the protests

contemplated in this Rule shall have been completed, i.e., resolved by
the Head of the Procuring Entity with finality. The regional trial court
shall 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
Civil Procedure. (emphasis added)
Evidently, the remedy of certiorari filed before the RTC under Sec. 58
of RA 9184 is intended as a continuation of the motion for reconsideration
filed before the BAC, and of the subsequent protest filed with the head of the
procuring entity. This is confirmed by the condition sine qua non completion
of the process under Rule XVII, Secs. 55-57 of the GPRA IRR before
recourse to the trial courts become available.
It is obvious under Sec. 55.1 of Rule XVII that only a failed bidder
can turn the cogs of the protest mechanism by first moving for
reconsideration of the assailed BAC ruling. The party concerned, the
bidder adversely affected by the resolution of the motion, shall then have
seven (7) days to file a protest with the head of the procuring entity. The pre-
requisite that a protestant should likewise be a bidder is emphasized by Sec.
55.4 which requires that the “name of the bidder” and the “office address
of the bidder” be indicated in its position paper. Accordingly, only the
bidder against whom the head of the procuring entity ruled, if it would
challenge the ruling any further, is required to resort to filing a petition
for certiorari before the trial courts under Sec. 58. Ego, there is neither
rhyme nor reason for petitioners herein, who are non-participants in the
procurement project, to comply with the rules on protest under RA 9184,
part and parcel of which is the exclusivity of the jurisdiction of the RTC
under Sec. 58 thereof. Stated in the alternative, there is no legislative
enactment requiring petitioners to seek recourse first with the RTC to
question the COMELEC en banc’s June 29, 2015 Decision. Thus, if
circumstances so warrant, direct resort to the Court will be allowed.
d. Hierarchy of courts and the

exceptions to the doctrine
The expanded concept of judicial power under Article VIII, Section 1

of the Constitution67 includes the duty of the judiciary not only “to settle
actual controversies involving rights which are legally demandable and
enforceable” but also, as an instrument of checks and balances, “to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.”68 Under Rule 65 of the Rules of Court,
the special civil actions for certiorari and prohibition are the available
remedies for determining and correcting such grave abuses of discretion.
The power is wielded not by the Court alone, but concurrently with
the Court of Appeals and the Regional Trial Courts, as provided by law.
With respect to the Court of Appeals, Section 9 (1) of Batas Pambansa Blg.
129 (BP 129) gives the appellate court original jurisdiction to issue, among
others, a writ of certiorari, whether or not in aid of its appellate jurisdiction.
For the RTCs, the power to issue a writ of certiorari, in the exercise of their
original jurisdiction, is provided under Section 21 of BP 129.69 Additionally,
the Court has already held that the CTA, by constitutional mandate, is
likewise vested with jurisdiction to issue writs of certiorari.70 So too has the
Sandiganbayan been vested with certiorari powers in aid of its appellate
jurisdiction.71
Notwithstanding the non-exclusivity of the original jurisdiction over

applications for the issuance of writs of certiorari, however, the doctrine of
hierarchy of courts dictates that recourse must first be made to the lower-
ranked court exercising concurrent jurisdiction with a higher court.72 The
rationale behind the principle is explained in Bañez, Jr. v. Concepcion73 in
the following wise:
The Court must enjoin the observance of the policy on the hierarchy of
courts, and now affirms that the policy is not to be ignored without serious
consequences. The strictness of the policy is designed to shield the Court
from having to deal with causes that are also well within the competence
of the lower courts, and thus leave time to the Court to deal with the more
fundamental and more essential tasks that the Constitution has assigned to
it. The Court may act on petitions for the extraordinary writs of certiorari,
prohibition and mandamus only when absolutely necessary or when
serious and important reasons exist to justify an exception to the policy.
67
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
68
See also Araullo v. Aquino III, G.R. Nos. 209287 etc., July 1, 2014.
69
City of Manila v. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014.
70
Id.
71
PD 1606, Sec. 4(c), as amended by RA 8249, Sec. 4.
72
Bonifacio v. Gimenez, G.R. No. 184800, May 5, 2010.
73
G.R. No. 159508, August 29, 2012, 679 SCRA 237.
Petitioners do not have the absolute and unrestrained freedom of

choice of the court to which an application for certiorari will be directed.74
Indeed, referral to the Supreme Court as the court of last resort will simply
be empty rhetoric if party-litigants are able to flout judicial hierarchy at will.
The Court reserves the direct invocation of its jurisdiction only when there
are special and important reasons clearly and especially set out in the
petition that would justify the same.75
In the leading case of The Diocese of Bacolod v. Comelec,76 the Court

enumerated the specific instances when direct resort to this Court is allowed,
to wit:
(a) When there are genuine issues of constitutionality that must be

addressed at the most immediate time;
(b) When the issues involved are of transcendental importance;
(c) Cases of first impression;
(d) When the constitutional issues raised are best decided by this
Court;
(e) When the time element presented in this case cannot be
ignored;
(f) When the petition reviews the act of a constitutional organ;
(g) When there is no other plain, speedy, and adequate remedy in
the ordinary course of law;
(h) When public welfare and the advancement of public policy so
dictates, or when demanded by the broader interest of justice;
(i) When the orders complained of are patent nullities; and
(j) When appeal is considered as clearly an inappropriate remedy.
The Court finds the second and fifth, and sixth grounds applicable in
the case at bar. Much has already been said of the “compelling significance
and the transcending public importance” of the primordial issue
underpinning petitions that assail election automation contracts: the success–
–and the far-reaching grim implications of the failure––of the nationwide
automation project.77 So it is that the Court, in the growing number of cases
concerning government procurement of election paraphernalia and services,
has consistently exhibited leniency and dispensed of procedural
requirements for petitioners to successfully lodge certiorari petitions.78
Technicalities should not stand in the way of resolving the substantive issues
petitioners raised herein. On this same ground of transcendental importance,
the Court may opt to treat the instant petition as one for certiorari under, not
merely in relation to, Rule 65.
74
Macapagal v. People, G.R. No. 193217, February 26, 2014.
75
Id.
76
G.R. No. 205728, January 21, 2015.
77
Roque v. COMELEC, supra note 66; citing Marabur v. Comelec, G.R. No. 169513, February 26,
2007, 516 SCRA 696.
78
Id.; Pabillo v. COMELEC, G.R. Nos. 216098 & 216562, April 21, 2015; Capalla v. COMELEC,
G.R. No. 201112, June 13, 2012.
As regards the fifth ground, the time element, it is sufficient to state

that with the 2016 polls visible in the horizon, the post-haste resolution of
this case becomes all the more imperative. It would be the height of
absurdity to require petitioners to undergo scrutiny through the lens of the
RTC first, considering that the acquisition of 23,000 OMRs would, at the
minimum, affect the clustering of precincts. Without the finalized list of
clustered precincts, the polling place for the registered voters could not yet
be ascertained. Needless to state, this would impede the preparations for the
conduct of the polls and its unmitigated effects could very well lead to mass
disenfranchisement of voters.
Lastly, the sixth ground is indubitably applicable. The rulings of the

COMELEC, as a constitutional body, can immediately be reviewed by the
Court on proper petition. As quoted in The Diocese of Bacolod v.
COMELEC,79 citing Albano v. Arranz,80 “it is easy to realize the chaos that
would ensue if the Court of First Instance of each and every province
were [to] arrogate itself the power to disregard, suspend, or contradict
any order of the Commission on Elections: that constitutional body
would be speedily reduced to impotence.”
In sum, there exist ample compelling reasons to justify the direct

resort to the Court as a departure from the doctrine of hierarchy of courts not
in relation to but under Rule 65 of the Rules of Court on certiorari and
prohibition, and to brush aside the procedural issues in this case to focus on
the substantive issues surrounding the procurement of the 23,000 additional
OMRs for the 2016 elections.
The submission of an AOI

is not an eligibility criterion
It bears stressing on the outset that no issue has been brought forth
questioning the technical capability of Smartmatic JV’s OMR+. Instead, the
pivotal point to be resolved herein is whether or not the COMELEC acted
with grave abuse of discretion in declaring Smartmatic JV eligible in spite of
the alleged nullity of, or defect in, SMTC’s AOI.
Petitioner would first insist that the submission of an AOI is an

eligibility requirement that Smartmatic JV cannot be deemed to have
complied with. In addressing this assertion, a discussion of the qualification
process is apropos.
a. The submission of an AOI was not

a pre-qualification requirement
It is a basic tenet that except only in cases in which alternative

methods of procurement are allowed, all government procurement shall be
79
G.R. No. 205728, January 21, 2015.
80
No. L-19260, January 31, 1962, 4 SCRA 386.
done by competitive bidding. This is initiated by the BAC, which publishes

an Invitation to Bid for contracts under competitive bidding in order to
ensure the widest possible dissemination thereof.81
Answering the invitation, interested participants submit their bids

using the forms specified in the bidding documents in two (2) separate
sealed bid envelopes submitted simultaneously. The first contains the
technical component of the bid, including the eligibility requirements under
Section 23.1 of GPRA IRR, while the second contains the financial
component of the bid.82
The BAC then sets out to determine the eligibility of the prospective
bidders based on their compliance with the eligibility requirements set forth
in the Invitation to Bid and their submission of the legal, technical and
financial documents required under RA 9184 and the GPRA IRR.83 The first
screening is done via the pre-qualification stage as governed by Sec. 30.1 of
RA 9184’s IRR, which pertinently reads:
Section 30. Preliminary Examination of Bids
30.1. The BAC shall open the first bid envelopes of prospective bidders in
public to determine each bidder’s compliance with the documents required
to be submitted for eligibility and for the technical requirements, as
prescribed in this IRR. For this purpose, the BAC shall check the
submitted documents of each bidder against a checklist of required
documents to ascertain if they are all present, using a nondiscretionary
“pass/fail” criterion, as stated in the Instructions to Bidders. If a bidder
submits the required document, it shall be rated “passed” for that
particular requirement. In this regard, bids that fail to include any
requirement or are incomplete or patently insufficient shall be considered
as “failed”. Otherwise, the BAC shall rate the said first bid envelope as
“passed.” (emphasis added)
For the procurement of highly technical goods wherein the two-stage

bidding process is employed, such as the subject of procurement in this case,
the same procedure for pre-qualification outlined above is followed in the
first stage, except that the technical specifications are only in the form of
performance criteria, and that the technical proposals will not yet include
price tenders.84
81
Commission on Audit v. Linkworth International, G.R. No. 182559, March 13, 2009, 518 SCRA
501.
82
Sec. 25.1, RA 9184 IRR.
83
Commission on Audit v. Linkworth International, supra note 81.
84
Revised Implementing Rules and Regulations, RA 9184, Sec. 30.3. –– For the procurement of
goods where, due to the nature of the requirements of the project, the required technical
specifications/requirements of the contract cannot be precisely defined in advance of bidding, or where the
problem of technically unequal bids is likely to occur, a two (2)-stage bidding procedure may be employed.
In these cases, the procuring entity concerned shall prepare the Bidding Documents, including the technical
specification in the form of performance criteria only. Under this procedure, prospective bidders shall be
requested at the first stage to submit their respective eligibility requirements if needed, and initial technical
proposals only (no price tenders). The concerned BAC shall then evaluate the technical merits of the
proposals received from eligible bidders vis-à-vis the required performance standards. A
meeting/discussion shall then be held by the BAC with those eligible bidders whose technical tenders meet
the minimum required standards stipulated in the Bidding Documents for purposes of drawing up the final
Based on the rule, the BAC’s function in determining the eligibility of

a bidder during pre-qualification is ministerial in the sense that it only needs
to countercheck the completeness and sufficiency of the documents
submitted by a bidder against a checklist of requirements. It cannot,
therefore, declare a bidder ineligible for failure to submit a document which,
in the first place, is not even required in the bid documents.
Citing Sec. 23.1 (b) of the GPRA IRR, petitioners contend that an
AOI is one of such mandatory documentary requirements and that the failure
of a bidder to furnish the BAC a valid one would automatically render the
bidder ineligible.
We are not convinced.
Sec. 23 of the adverted GPRA IRR reads:
Section 23. Eligibility Requirements for the Procurement of Goods

and Infrastructure Projects
23.1. For purposes of determining the eligibility of bidders using the

criteria stated in Section 23.5 of this IRR, only the following documents
shall be required by the BAC, using the forms prescribed in the Bidding
Documents:
a) Class “A” Documents
Legal Documents
i) Registration certificate from SEC, Department of Trade and

Industry (DTI) for sole proprietorship, or CDA for
cooperatives, or any proof of such registration as stated in the
Bidding Documents.
ii) Mayor’s permit issued by the city or municipality where the

principal place of business of the prospective bidder is located.
iii) Tax clearance per Executive Order 398, Series of 2005, as

finally reviewed and approved by the BIR.
Technical Documents
iv) Statement of the prospective bidder of all its ongoing

government and private contracts, including contracts awarded but
not yet started, if any, whether similar or not similar in nature and
complexity to the contract to be bid; and Statement identifying the
bidder’s single largest completed contract similar to the contract to
be bid, except under conditions provided for in Section 23.5.1.3 of
this IRR, within the relevant period as provided in the Bidding
revised technical specifications/requirements of the contract. Once the final revised technical specifications
are completed and duly approved by the concerned BAC, copies of the same shall be issued to all the
bidders identified in the first stage who shall then be required to submit their revised technical tenders,
including their price proposals in two (2) separate sealed envelopes in accordance with this IRR, at a
specified deadline, after which time no more bids shall be received. The concerned BAC shall then proceed
in accordance with the procedure prescribed in this IRR.
Documents in the case of goods. All of the above statements shall

include all information required in the PBDs prescribed by the
GPPB.
v) In the case of procurement of infrastructure projects, a valid

Philippine Contractors Accreditation Board (PCAB) license and
registration for the type and cost of the contract to be bid. Financial
Documents
vi) The prospective bidder’s audited financial statements, showing,

among others, the prospective bidder’s total and current assets and
liabilities, stamped “received” by the BIR or its duly accredited
and authorized institutions, for the preceding calendar year which
should not be earlier than two (2) years from the date of bid
submission.
vii) The prospective bidder’s computation for its Net Financial

Contracting Capacity (NFCC).
b) Class “B” Document
Valid joint venture agreement (JVA), in case the joint venture is

already in existence. In the absence of a JVA, duly notarized
statements from all the potential joint venture partners stating
that they will enter into and abide by the provisions of the JVA in
the instance that the bid is successful shall be included in the bid.
Failure to enter into a joint venture in the event of a contract award
shall be ground for the forfeiture of the bid security. Each partner of
the joint venture shall submit the legal eligibility documents. The
submission of technical and financial eligibility documents by any of
the joint venture partners constitutes compliance. (emphasis added)
Clearly, the quoted provisions, as couched, do not require the

submission of an AOI in order for a bidder to be declared eligible. The
requirement that bears the most resemblance is the submission by each
partner to the venture of a registration certificate issued by the Securities and
Exchange Commission, but compliance therewith was never disputed by the
petitioners. Moreover, it was never alleged that Smartmatic JV was remiss in
submitting a copy of its joint venture agreement pursuant to Sec. 23.1(b),
which petitioners specifically invoked.
It may be that the procuring entity has the option to additionally

require the submission of the bidders’ respective AOIs in order to
substantiate the latter’s claim of due registration with the government
entities concerned. However, a perusal of the bidding documents would
readily reveal that the procuring entity, the COMELEC in this case, did not
impose such a requirement. As can be gleaned in the Instruction to
Bidders,85 only the following documents were required for purposes of
determining a bidder’s eligibility:
12. Documents Comprising the Bid: Eligibility and Technical

Components
85
Rollo, pp. 231-233.
12.1. Unless otherwise indicated in the BDS, the first envelope shall
contain the following eligibility and technical documents:
(a) Eligibility Documents –
Class “A” Documents:
(i) Registration certificate from the Securities and Exchange

Commission (SEC), Department of Trade and Industry (DTI)
for sole proprietorships, and Cooperative Development
Authority (CDA) for cooperatives, or any proof of such
registration as stated in the BDS;
(ii) Mayor’s permit issued by the city or municipality where the

principal place of business of the prospective bidder is located;
(iii) Statement of all its ongoing and completed government and

private contracts within the period stated in the BDS, including
contracts awarded but not yet started, if any. The statement
shall include, for each contract, the following:
(iii.1) name of the contract;
(iii.2) date of the contract;
(iii.3) kinds of Goods;
(iii.4) amount of contract and value of outstanding contracts;
(iii.5) date of delivery; and
(iii.6) end user’s acceptance or official receipt(s) issued for the

contract, if completed.
(iv) Audited financial statements, stamped “received” by the

Bureau of Internal Revenue (BIR) or its duly accredited and
authorized institutions, for the preceding calendar year, which
should not be earlier than two (2) years from the bid
submission;
(v) NFCC computation or CLC in accordance with ITB Clause

5.5; and
(vi) Tax clearance per Executive Order 398, Series of 2005, as

finally reviewed and approved by the BIR.(Updated pursuant
to GPPB Resolution No. 21-2013 dated July 30, 2013)
Class “B” Document:
(vii) If applicable, the JVA in case the joint venture is already in

existence, or duly notarized statements from all the potential
joint venture partners stating that they will enter into and abide
by the provisions of the JVA in the instance that the bid is
successful;
(viii) Social Security Clearance (SSS);

(ix) Department of Labor and Employment Clearance (DOLE);
(x) Court Clearance (Regional Trial Court) (emphasis omitted)
The non-requirement of an AOI is further made evident by the Bid

Data Sheet (BDS)86 which provides a “complete list”87 of eligibility
proposal documents to be submitted during the first stage of the bidding
process. As outlined in the BDS:88
TAB CLASS “A” DOCUMENTS

I. LEGAL DOCUMENTS:
(In case of a Joint Venture, each member of the JV shall submit the
required Documents mentioned in Tabs “A”, “B”, “C” and “I”)
A. Registration Certificate Form
Securities and Exchange Commission from the Securities
and Exchange Commission (SEC) for Corporation or
Partnership; or its equivalent documents in case of foreign
bidder.
Department of Trade and Industry (DTI) for sole
proprietorship; or its equivalent documents in case of foreign
bidder.
Cooperative Development Authority, for Cooperatives or its
equivalent documents in case of foreign bidder.
B. Mayor’s Permit issued by the city or municipality where the
principal place of business of the prospective bidder is
located or its equivalent document in case of a foreign
corporation.
C. Tax Clearance per Executive Order 398, Series of 2005, as
finally reviewed and approved by the BIR.
II. TECHNICAL DOCUMENTS
D. Statement of all ongoing and completed government and
private contracts, within the last six (6) years from the date
of submission and receipt of bids, including contracts
awarded but not yet started, if any, using the prescribed
form. Please refer to Section VIII. Bidding Forms.
E. Statement of at least one similar completed largest contract
within six (6) years from the date of the opening bids
equivalent to at least 50% of the ABC, using the prescribed
form. Please refer to Section VIII. Bidding Forms.
F. Bid security in the form, amount and validity in accordance
with ITB Clause 18.
III. FINANCIAL DOCUMENTS
G. Audited financial statements, stamped received by the
Bureau of Internal Revenue (BIR) or its duly accredited and
authorized institutions, for the preceding calendar year,
which should not be earlier than two (2) years from bid
submission; or equivalent documents in case of foreign
bidder, provided that the same is in accordance with
International Financial Reporting Standards.
H. NFCC Computation in accordance with ITB clause 5.
TAB CLASS “B” ELIGIBILITY REQUIREMENTS
I. Valid Joint Venture Agreement (JVA), in case the Joint
86
Id. at 254-264.
87
Id. at 258.
88
Id. at 258-259.
Venture is already in existence at the time of the submission

and opening of bids, OR duly notarized statements from all
potential joint venture partners stating that they will enter
into and abide by the provisions of the JVA if the bid is
successful;
IV. OTHER DOCUMENTS
J. Conformity with the Schedule of Requirements and Initial
Technical Proposal (approved TOR), as enumerated and
specified in Sections VI and VII of the Bidding Documents,
using the prescribed form.
K. Certification from the Election Authority or Election
Management Body that the system has demonstrated
capability and has been successfully used in a prior electoral
exercise here or abroad.
L. Omnibus Sworn Statement using the prescribed form in
Section VIII.
Even the furnished Schedule of Requirements89 does not mandate the

submission of an AOI:90
CORPORATION/ JOINT
REQUIREMENTS SP/PARTNERSHIP VENTURE
PASSED FAILED PASSED FAILED
xxx
ELIGIBILITY DOCUMENTS
1. LEGAL DOCUMENTS
I. Class “A” Documents
a. Original/Certified true copy of
Registration Certificate from the
Securities and Exchange
Commission (SEC), Department of
Trade and Industry (DTI) for sole
proprietorship, or Cooperative
Development Authority (CDA) for
Cooperatives or any proof of such
registration as stated in the BDS;
(In case of a JV, this requirement must be
complied with by all the JV partners)
b. Original/Certified true copy of valid
and current Mayor’s/Business
Permit/License issued by the city or
municipality where the principal
place of business of the prospective
bidder is located;
c. Original/Certified true copy of valid
Tax Clearance per Executive Order
398, Series of 2005
2. TECHNICAL DOCUMENTS
d. Sworn Statement of all its on-going
and completed government and
89
Id. at 325-329.
90
Id. at 326-328.
private contracts within the last six

(6) years prior to the deadline for
the submission and opening of bids,
including contracts awarded but not
yet started, if any. The statement
shall include, for each of the
contract, the following: x x x
e. Sworn Statement of the bidder’s
single largest contract completed
within six (6) YEARS prior to the
deadline for the submission and
opening of bids, with a value of
FIFTY (50%) per cent of the ABC.
f. The bid security (Payable to
COMELEC) shall be in the
following amount: x x x
3. FINANCIAL DOCUMENTS
g. Audited Financial Statements
(AFS), stamped “received” by the
Bureau of Internal Revenue (BIR)
or its duly accredited and authorized
institutions, for the preceding
calendar year x x x
h. NFCC computation which shall be
based only on the current assets and
current liabilities submitted to the
BIR, through Electronic Filing and
Payment System (EFPS)
4. OTHERS
i. Conformity with Section VI:
Schedule of Requirements of the
Bidding Documents
j. Conformity with Section VII.
Technical Specifications of the
Bidding Documents. If proposal is
the same with the initial technical
requirements, just put “COMPLY”
k. Certification from the Election
Authority or Election management
Body that the system has
demonstrated capability and has
been successfully used in a prior
electoral exercise here or abroad.
l. OMNIBUS AFFIDAVIT in
accordance with Section 25.2(a)(iv)
of the IRR of RA 9184 and using
the form prescribed in Section VIII
of the Philippine bidding
Documents. Shall include: x x x
Verily, based on Sec. 23.1(b) of the GPRA IRR, the Instruction to

Bidders, the BDS, and the Checklist of Requirements, the non-submission of
an AOI is not fatal to a bidder’s eligibility to contract the project at hand.
Thus, it cannot be considered as a ground for declaring private respondents
ineligible to participate in the bidding process. To hold otherwise would
mean allowing the BAC to consider documents beyond the checklist of

requirements, in contravention of their non-discretionary duty under Sec.
30(1) of the GPRA IRR.
b. Neither is the AOI a post-

qualification requirement
After the preliminary examination stage, the BAC opens, examines,

evaluates and ranks all bids and prepares the Abstract of Bids which
contains, among others, the names of the bidders and their corresponding
calculated bid prices arranged from lowest to highest. The objective of the
bid evaluation is to identify the bid with the lowest calculated price or the
Lowest Calculated Bid. The Lowest Calculated Bid shall then be subject to
post-qualification to determine its responsiveness to the eligibility and bid
requirements.91
During post-qualification, the procuring entity verifies, validates, and

ascertains all statements made and documents submitted by the bidder with
the lowest calculated or highest rated bid using a non-discretionary criteria
as stated in the bidding documents.92If, after post-qualification, the Lowest
Calculated Bid is determined to be post-qualified, it shall be considered the
Lowest Calculated Responsive Bid and the contract shall be awarded to the
bidder.93
To recall, the BAC, on December 15, 2014, declared that only

Smartmatic JV and Indra were eligible to participate in the second stage of
the bidding process. Of the two, only Smartmatic JV submitted a complete
and responsive Overall Summary of the Financial Proposal and was thus
subjected to post-qualification evaluation. Initially, the BAC post-
disqualified Smartmatic JV for allegedly failing to submit a valid AOI. It is
this preliminary finding that petitioners want reinstated.
We disagree.
Even on post-qualification, the submission of an AOI was not

included as an added requirement. The Instruction to Bidders pertinently
provides:94
29. Post-Qualification
29.1. The Procuring Entity shall determine to its satisfaction whether the
Bidder that is evaluated as having submitted the Lowest Calculated Bid
(LCB) complies with and is responsive to all the requirements and
conditions specified in ITB Clauses 5, 12 and 13.
xxxx
91
92
Sec. 34.3, Revised Implementing Rules and Regulations, R.A. No. 9184.
93
94
Rollo, pp. 247-248.
29.3. The determination shall be based upon an examination of the

documentary evidence of the Bidder’s qualifications submitted
pursuant to ITB Clauses 12 and 13, as well as other information as the
Procuring Entity deems necessary and appropriate, using a non-
discretionary “pass/fail” criterion. (emphasis added)
Clauses 12 and 13 of the Instruction to Bidders pertain to the

eligibility documents, technical documents, and the financial component of a
participant’s bid.95 Meanwhile, the Clause 5 adverted to is an enumeration of
persons or entities who may participate in the bidding.96 Nowhere in these
clauses does it appear that an AOI is a mandatory requirement even for post-
qualification. Even the BAC’s March 27, 2015 Notice addressed to
Smartmatic JV supports this finding:97
x x x [F]or purposes of post-qualification proceedings, please submit

copies of the following documents to the Bid and Awards Committee
(BAC), through the BAC Secretariat, as stated in Clause 29.2 (a) of
Section III, Bid Data Sheet of the Bidding Documents, within three (3)
calendar days from receipt of this Notice:
a) Latest Income and Business Tax Returns. x x x
b) Certificate of PhilGEPS Registration.
c) ISO 9001:2008 Certification of the Optical Mark/reader or Optical

Scan manufacturer for OMR.
In addition, the following certifications must be submitted:
a) That all system requirements for customization as stated in the Terms

of Reference and RA 9369 shall be fully complied with, subject to the
application of applicable penalties for non-compliance; and
b) That it shall not demand for additional payment from COMELEC to

procure additional OMR system requirements during Project
Implementation for items that it may have overlooked in its Bid
Proposal.
The bidder is also required to submit the machines, including the

software and hardware, back-up power supply and other equipment and
peripherals necessary for the conduct of the testing during post-
qualification, including the prototype sample of the ballot box based on
what is required in the Terms of Reference (TOR) for the OMR on April
6, 2015 as per instruction from the Technical Working Group (TWG).
From the foregoing, the inescapable result is that mere failure to file
an AOI cannot automatically result in the bidder concerned being declared
ineligible, contrary to petitioners’ claim.
95
Id. at 231-234.
96
Id. at 225-226.
97
Id. at 447-448.
Smartmatic JV may validly

undertake the project sought
to be procured
a. SMTC still has the authority to

conduct business even after the
conduct of the 2010 national and
local elections
A thorough reading of petitioners’ contention, however, would show

that it is not only assailing Smartmatic JV’s ineligibility based on the alleged
incompleteness of its documentary requirements(i.e. for non-submission of a
valid AOI), but also because they considered the subject of the procurement
beyond the ambit of SMTCs corporate purpose. Petitioners postulate that
SMTC’s authority to conduct business ceased upon fulfillment of its primary
purpose stated in its AOI– that of automating the 2010 National and Local
Elections, and this allegedly rendered SMTC’s subsequent involvement in
the subject procurement project an ultra vires act.
Petitioners’ myopic interpretation of SMTC’s purpose is incorrect.
While it is true that SMTC’s AOI made specific mention of the

automation of the 2010 National and Local Elections as its primary purpose,
it is erroneous to interpret this as meaning that the corporation’s authority to
transact business will cease thereafter. Indeed, the contractual relation
between SMTC and the COMELEC has been the subject of prior
controversies that have reached the Court, and We have on these occasions
held that even beyond the 2010 election schedule, the parties remain to have
subsisting rights and obligations relative to the products and services
supplied by SMTC to the COMELEC for the conduct of the 2010 polls.
For instance, the Court, in the landmark case of Capalla v.

COMELEC (Capalla),98 upheld the validity of the March 30, 2012 Deed of
Sale by and between SMTC and COMELEC when the latter exercised the
option to purchase (OTP) clause embodied in their 2009 Automated Election
System Contract (AES Contract). Even though the original deadline for the
option was only until December 31, 2010, We ruled that the parties to the
AES Contract, pursuant to Art. 19 thereof,99 can still validly extend the same
by mutual agreement. The Court ratiocinated that Art. 19 of the AES
Contract may still be invoked even after December 31, 2010, for the
agreement subsisted in view of the COMELEC’s failure to return SMTC’s
performance security, a condition for the contract’s termination. As provided
under Art. 2 of the AES Contract:100
98
G.R. Nos. 201112 etc., October 23, 2012.
99
“This contract and its Annexes may be amended by mutual agreement of the parties. All such
amendments shall be in writing and signed by the duly authorized representatives of both parties.” As cited
in Capalla v. COMELEC, id.
100
Id.
Article 2
EFFECTIVITY
2.1. This Contract shall take effect upon the fulfillment of all of the
following conditions:
(a) Submission by the PROVIDER of the Performance

Security;
(b) Signing of this Contract in seven (7) copies by
the parties; and
(c) Receipt by the PROVIDER of the Notice to Proceed.
2.2. The Term of this Contract begins from the date of effectivity until the
release of the Performance Security,without prejudice to the surviving
provisions of this Contract, including the warranty provision as
prescribed in Article 8.3 and the period of the option to
purchase. (emphasis supplied)
Based on Our ruling in Capalla, the cessation of SMTC’s business

cannot be assumed just because the May 10, 2010 polls have already
concluded. For clearly, SMTC’s purpose––the “automation of the 2010
national and local elections”––is not limited to the conduct of the election
proper, but extends further to the fulfillment of SMTC’s contractual
obligations that spring forth from the AES Contract during the lifetime of
the agreement (i.e. until the release of the performance security), and even
thereafter insofar as the surviving provisions of the contract are concerned.
In other words, regardless of whether or not SMTC’s performance security
has already been released, establishing even just one surviving provision of
the AES Contract would be sufficient to prove that SMTC has not yet
completed its purpose under its AOI, toppling petitioners’ argument like a
house of cards.
Unfortunately for petitioners, one such surviving provision has

already been duly noted by the Court in the recent case of Pabillo v.
COMELEC (Pabillo).101 In Pabillo, the Court cited Art. 8.8 of the AES
Contract, which significantly reads:
8.8 If COMELEC opts to purchase the PCOS and Consolidation and

Canvassing System (CCS), the following warranty provisions indicated in
the RFP shall form part of the purchase contract:
1) For PCOS, SMARTMATIC shall warrant the availability of parts,

labor and technical support and maintenance to COMELEC for ten
(10) years, if purchased (Item 18, Part V of the RFP), beginning May
10, 2010. Any purchase of parts, labor and technical support and
maintenance not covered under Article 4.3 above shall be subject to the
prevailing market prices at the time and at such terms and conditions as
may be agreed upon. (emphasis added)
101
Supra note 60.
Pertinently, We have interpreted the foregoing contractual provision

in Pabillo in the following wise:102
Smartmatic-TIM warrants that its parts, labor and technical support

and maintenance will be available to the COMELEC, if it so decides to
purchase such parts, labor and technical support and maintenance
services,within the warranty period stated, i.e., ten (10) years for the
PCOS, reckoned from May 10, 2010, or until May 10, 2020. Article 8.8
skews from the ordinary concept of warranty since it is a mere warranty
on availability, which entails a subsequent purchase contract, founded
upon a new consideration, the costs of which (unlike in the first warranty)
are still to be paid. With Article 8.8 in place, the COMELEC is assured
that it would always have access to a capable parts/service provider in
Smartmatic-TIM, during the 10-year warranty period therefor, on
account of the peculiar nature of the purchased goods. (emphasis added)
Indubitably, the vinculum juris between COMELEC and SMTC

remains solid and unsevered despite the 2010 elections’ inevitable
conclusion. Several contractual provisions contained in the 2009 AES
Contract, as observed in a review of our jurisprudence, continue to subsist
and remain enforceable up to this date. Pabillo, in effect, at least guaranteed
that SMTC’s purpose under its AOI will not be fulfilled until May 10, 2020.
Therefore, petitioners’ theory––that SMTC no longer has a valid purpose––
is flawed. Otherwise, there would be no way of enforcing the subsisting
provisions of the contract and of holding SMTC to its warranties after the
conduct of the May 10, 2010 elections.
Having resolved the continuity of SMTC’s business, We now proceed

to determine whether its participation in the bidding process is an authorized
or an ultra vires act.
b. The issue is mooted by the subsequent

approval of the amendment to
SMTC’s AOI
Commissioner Guia, in his dissent, opines that a bidder should be

authorized to participate in the bidding as early as the time the pre-
qualification was conducted, which in this case was held on December 4,
2014. Thus, the December 10, 2014 approval of SMTC’s amended AOI, to
Commissioner Guia’s mind, cannot cure the alleged vice attending SMTC’s
submission of its bid, as a partner in Smartmatic JV, for a project that it was,
at that time, unauthorized to undertake.
The argument fails to persuade.
As earlier discussed, the function of the BAC, in making an initial

assessment as to the eligibility of the bidders during pre-qualification, is
ministerial and nondiscretionary. It merely counterchecks the documents
submitted by the bidder against the checklist of requirements included in the
102
Id.
bid documents disseminated by the procuring agency. It cannot consider

documents not listed in the checklist for purposes of ascertaining a bidder’s
eligibility during pre-qualification.
The only time the procuring agency can go beyond the checklist is
during post-qualification wherein it is allowed to check to its satisfaction the
veracity of the information submitted to it by the bidder. To recall, Sec. 29.3
of the Invitation to Bid provides that on post-qualification, the procuring
entity may utilize any “other information as [it] may deem necessary and
appropriate” in order to test the accuracy of the information provided in the
bidder’s eligibility documents and bid proposal. In the end, notwithstanding
the dispensability of the AOI insofar as compliance with documentary
requirements is concerned, the procuring entity may nevertheless consider
the same in ultimately determining a bidder’s eligibility.
Stated in the alternative, the procuring entity, for purposes of post-

qualification, cannot be faulted for, as it is not precluded from, considering
information volunteered by the bidder with the highest bid. Bearing in mind
the non-discretionary function of the BAC during pre-qualification, it is then
understandable that it is only on post-qualification, when it is allowed to
consider other documents, during which an extensive inquiry will be made
to detect any defect in the bidder’s capacity to contract. Hence, even though
the submission of an AOI was not required for either pre or post-
qualification purposes, the COMELEC and BAC, on post-qualification, may
still consider the same in determining whether or not the project is in line
with the bidder’s corporate purpose, and, ultimately, in ascertaining the
bidder’s eligibility.
In the case at bar, We take note that during the opening of the bids on
December 4, 2014, Smartmatic JV already informed the BAC that SMTC
was already in the process of amending its AOI. The contents of the AOI, at
that time, were immaterial since the AOI is not an eligibility requirement
that can be considered by the BAC on pre-qualification. By post-
qualification, however, the time the BAC can validly consider extraneous
documents, SMTC’s AOI has already been duly amended, and the
amendments approved by the SEC on December 10, 2014, for its updated
primary purpose to read:103
To sell, supply, lease, import, export, develop, assemble, repair and

deal with automated voting machines, canvassing equipment, computer
software, computer equipment and all other goods and supplies, and /or to
provide, render and deal in all kinds of services, including project
management services for the conduct of elections, whether regular or
special, in the Philippine(s) and to provide Information and
Communication Technology (ICT) goods and services to private and
government entities in the Philippines.
103
Rollo, p. 549.
Hence, any doubt on SMTC’s authorization to continue its business

has already been dispelled by December 10, 2014. It matters not that the
amendments to the AOI took effect only on that day104 for as long as it
preceded post-qualification.
c. SMTC’s participation in the bidding

is not an ultra vires act but one that is
incidental to its corporate purpose
In any event, there is merit in private respondents’ argument that

SMTC’s participation in the bidding is not beyond its declared corporate
purpose; that, in the first place, there was no impediment in SMTC’s AOI
that could have prevented Smartmatic JV from participating in the project.
To elucidate, an ultra vires act is defined under BP 68 in the following

wise:
Section 45. Ultra vires acts of corporations. – No corporation under this

Code shall possess or exercise any corporate powers except those
conferred by this Code or by its articles of incorporation and except such
as are necessary or incidental to the exercise of the powers so
conferred. (emphasis added)
The language of the Code appears to confine the term ultra vires to an
act outside or beyond express, implied and incidental corporate powers.
Nevertheless, the concept can also include those acts that may ostensibly be
within such powers but are, by general or special laws, either proscribed or
declared illegal.105 Ultra vires acts or acts which are clearly beyond the
scope of one’s authority are null and void and cannot be given any effect.106
In determining whether or not a corporation may perform an act, one

considers the logical and necessary relation between the act assailed and the
corporate purpose expressed by the law or in the charter, for if the act were
one which is lawful in itself or not otherwise prohibited and done for the
purpose of serving corporate ends or reasonably contributes to the promotion
of those ends in a substantial and not merely in a remote and fanciful sense,
it may be fairly considered within corporate powers.107 The test to be
applied is whether the act in question is in direct and immediate
furtherance of the corporation’s business, fairly incident to the express
104
Section 16. Amendment of Articles of Incorporation. – x x x The amendments shall take effect
upon their approval by the Securities and Exchange Commission or from the date of filing with the said
Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to
the corporation.
105
Concurring opinion of Justice Vitug
<http://www.lawphil.net/judjuris/juri2000/feb2000/gr_137686_2000.html>.
106
Gancayco v. City Government of Quezon City, G.R. Nos. 177807 & 177933, October 11, 2011,
658 SCRA 853.
107
<http://sc.judiciary.gov.ph/jurisprudence/2000/feb2000/137686_Concur.htm>.
powers and reasonably necessary to their exercise. If so, the corporation has
the power to do it; otherwise, not.108
In the case at bar, notwithstanding the specific mention of the 2010

National and Local Elections in SMTC’s primary purpose, it is not, as earlier
discussed, precluded from entering into contracts over succeeding ones.
Here, SMTC cannot be deemed to be overstepping its limits by participating
in the bidding for the 23,000 new optical mark readers for the 2016 polls
since upgrading the machines that the company supplied the COMELEC for
the automation of the 2010 elections and offering them for subsequent
elections is but a logical consequence of SMTC’s course of business, and
should, therefore, be considered included in, if not incidental to, its corporate
purpose. A restricted interpretation of its purpose would mean limiting
SMTC’s activity to that of waiting for the expiration of its warranties in
2020. How then can the company be expected to subsist and sustain itself
until then if it cannot engage in any other project, even in those similar to
what the company already performed?
In the final analysis, We see no defect in the AOI that needed to be

cured before SMTC could have participated in the bidding as a partner in
Smartmatic JV, the automation of the 2016 National and Local Elections
being a logical inclusion of SMTC’s corporate purpose.
Smartmatic JV cannot be declared

ineligible for SMTC’s nationality
In a desperate last ditch effort to have Smartmatic JV declared

ineligible to participate in the procurement project, petitioners question the
nationality of SMTC. They direct the Court’s attention to the 2013 Annual
Report and Consolidated Financial Statements109 of Smartmatic Limited to
prove that SMTC is 100% foreign owned. They then contend that SMTC is
the biggest shareholder in the bidding joint venture at 46.5% share, making
the joint venture less than 60% Filipino-owned and, hence, ineligible.
The argument is specious.
Clause 5 of the Instruction to Bidders provides that the following may

participate in the bidding process:110
5.1. Unless otherwise provided in the BDS, the following persons shall be
eligible to participate in the bidding:
xxxx
108
Concurring opinion of Justice Vitug in
<http://www.lawphil.net/judjuris/juri2000/feb2000/gr_137686_2000.html>; see also
<http://www.lawphil.net/judjuris/juri1962/may1962/gr_l-15092_1962.html>.
109
Rollo, pp. 79-128.
110
Id. at 225-226.
(e) Unless otherwise provided in the BDS, persons/entities forming

themselves into a JV, i.e., group of two (2) or more persons/entities that
intend to be jointly and severally responsible or liable for a peculiar
contract: Provided, however, that Filipino ownership or interest of the
joint venture concerned shall be at least sixty percent (60%).
While petitioners are correct in asserting that Smartmatic JV ought to

be at least 60% Filipino-owned to qualify, they did not adduce sufficient
evidence to prove that the joint venture did not meet the requirement.
Petitioners, having alleged non-compliance, have the correlative burden of
proving that Smartmatic JV did not meet the requirement, but aside from
their bare allegation that SMTC is 100% foreign-owned, they did not offer
any relevant evidence to substantiate their claim. Even the 2013 financial
statements submitted to Court fail to impress for they pertain to the financial
standing of Smartmatic Limited,111 which is a distinct and separate entity
from SMTC. It goes without saying that Smarmatic Limited’s nationality is
irrelevant herein for it is not even a party to this case, and even to the joint
venture.
Aside from the sheer weakness of petitioners’ claim, SMTC

satisfactorily refuted the challenge to its nationality and established that it is,
indeed, a Filipino corporation as defined under our laws. As provided in
Republic Act No. 7042 (RA 7042), otherwise known as the Foreign
Investments Act, a Philippine corporation is defined in the following wise:
Section 3. Definitions. - As used in this Act:
a) The term “Philippine national” shall mean a citizen of the Philippines or

a domestic partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital stock
outstanding and entitled to vote is owned and held by citizens of the
Philippines; or a trustee of funds for pension or other employee retirement
or separation benefits, where the trustee is a Philippine national and at
least sixty (60%) of the fund will accrue to the benefit of the Philippine
nationals: Provided, That where a corporation and its non-Filipino
stockholders own stocks in a Securities and Exchange Commission (SEC)
registered enterprise, at least sixty percent (60%) of the capital stocks
outstanding and entitled to vote of both corporations must be owned and
held by citizens of the Philippines and at least sixty percent (60%) of the
members of the Board of Directors of both corporations must be citizens
of the Philippines, in order that the corporations shall be considered a
Philippine national.
In Narra Nickel Mining and Development, Corp. v. Redmont

Consolidated Mines, Corp.,112 the Court held that the “control test” is the
prevailing mode of determining whether or not a corporation is Filipino.
Under the “control test,” shares belonging to corporations or partnerships at
least 60% of the capital of which is owned by Filipino citizens shall be
111
Smartmatic International’s United Kingdom office.
112
G.R. No. 195580, April 21, 2014.
considered as of Philippine nationality.113 It is only when based on the

attendant facts and circumstances of the case, there is, in the mind of the
Court, doubt in the 60-40 Filipino-equity ownership in the corporation, that
it may apply the “grandfather rule.”114
Perusing SMTC’s GIS115 proves useful in applying the control test.

Upon examination, SMTC’s GIS reveals that it has an authorized capital
stock of ₱226,000,000.00, comprised of 226,000,000 common stocks116 at
₱1.00 par value, of which 100% is subscribed and paid.117 The GIS further
provides information on the stockholders as follows:118
NAME NATIONALITY AND SHARES SUBSCRIBED AMOUNT

CURRENT RESIDENTIAL TYPE NUMBER AMOUNT % OF PAID
ADDRESS OWNERSHIP
1920 Business Inc. Common 135,599,997 135,599,997.00 60% 677,999,997.00
Filipino “A”
King’s Court 2, 2129 Don Chino
Roces Ave., Makati, Metro Manila TOTAL 135,599,997 135,599,997.00
Smartmatic International, Corp. Common 90,399,998 90,399,998.00 40% 451,999,998.00
Barbadian “B”
4 Stafford House, Garisson St.,
Michael, Barbados TOTAL 90,399,998 90,399,998.00
Juan C. Villa, Jr. Common 1 1.00 0% 1.00
Filipino “B”
No. 74, Jalan Setiabakti,
Damansara Heights, Kuala Lumpur TOTAL 1 1.00
Jacinto R. Perez, Jr. Common 1 1.00 1.00
Filipino “A”
1211 Consuelo St., Singalong,
Manila TOTAL 1 1.00
Alastair Joseph James Wells Common 1 1.00 0% 1.00
British “B”
1405 Spanish Bay, Bonifacio
Ridge, 1st Avenue, Bonifacio TOTAL 1 1.00
Global City, Taguig
Marian Ivy F. Reyes-Fajardo Common 1 1.00 0% 1.00
Filipino “A”
71-B Tindalo St., MonteVista,
Subdivision, Marikina Total 1 1.00
Salvador P. Aque Common 1 1.00 0% 1.00
Filipino “A”
2250 P. Burgos, Pasay City
Total 1 1.00
Applying the control test, 60% of SMTC’s 226,000,000 shares, that is

135,600,000 shares, must be Filipino-owned. From the above-table, it is
clear that SMTC reached this threshold amount to qualify as a Filipino-
owned corporation. To demonstrate, the following are SMTC’s Filipino
investors:
113
Id.; citing DOJ Opinion No. 20 s. 2005.
114
Id.
115
Rollo, pp. 567-573.
116
Common stocks are voting shares.
117
Rollo, p. 568.
118
Id. at 570.
NAME OF SHAREHOLDER TYPE OF SHARE NUMBER OF SHARES

1920 Business Inc. Common “A” 135,599,997
Juan C. Villa, Jr. Common “B” 1
Jacinto R. Perez, Jr. Common “A” 1
Marian Ivy F. Reyes-Fajardo Common “A” 1
Salvador P. Aque Common “A” 1
TOTAL 135,600,001
Indeed, the application of the control test would yield the result that
SMTC is a Filipino corporation. There is then no truth to petitioners’ claim
that SMTC is 100% foreign-owned. Consequently, it becomes unnecessary
to confirm this finding through the grandfather rule119 since the test is only
employed when the 60% Filipino ownership in the corporation is in doubt.120
In this case, not even the slightest doubt is cast since the petition is severely
wanting in facts and circumstances that raise legitimate challenges to
SMTC’s 60-40 Filipino ownership. The petition rested solely on petitioners’
vague assertions and baseless claims. On the other hand, SMTC countered
by furnishing the Court a copy of its GIS providing its shareholders’ stock
ownership details, and by submitting a copy of its AOI, which reserved all of
SMTC’s 135,600,000 class A common shares to Filipinos121 in a bid to
guarantee that when all of its shares are outstanding, foreign ownership will
not exceed 40%.
Anent the nationality of the other joint venture partners, the Court
defers to the findings of the COMELEC and the BAC, and finds sufficient
their declaration that Smartmatic JV is, indeed, eligible to participate in the
bidding process, and is in fact the bidder with the lowest calculated
responsive bid.122 If petitioners would insist otherwise by reason of
Smartmatic JV’s nationality, it becomes incumbent upon them to prove that
the aggregate Filipino equity of the joint venture partners––SMTC, Total
Information Management Corporation, Smartmatic International Holding
B.V., and Jarltech International Corporation––does not comply with the 60%
Filipino equity requirement, following the oft-cited doctrine that he who
alleges must prove.123 Regrettably, one fatal flaw in petitioners’ posture is
that they challenged the nationality of SMTC alone, which, after utilizing the
control test, turned out to be a Philippine corporation as defined under RA
7042. There was no iota of evidence presented or, at the very least, even a
claim advanced that the remaining partners are foreign-owned. There are, in
fact, no other submissions whence this Court can inquire as to the
nationalities of the other joint venture partners. Hence, there is no other
119
Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing
Corporation and the Investee Corporation must be traced (i.e., “grandfathered”) to determine the total
percentage of Filipino ownership; see Narra Nickel Mining and Development, Corp. v. Redmont
Consolidated Mines, Corp., supra note 112.
120
Id. The Grandfather Rule applies only when the 60-40 Filipino-foreign equity ownership is in
doubt (i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with less
than 60% Filipino stockholdings [or 59%] invests in other joint venture corporation which is either 60-40%
Filipino-alien or the 59% less Filipino). Stated differently, where the 60-40 Filipino-foreign equity
ownership is not in doubt, the Grandfather Rule will not apply.
121
Rollo, p. 554. Seventh Article in SMTC’s Articles of Incorporation.
122
Id. at 26.
123
Lim v. Equitable PCI Bank, G.R. No. 183918, January 15, 2014.
alternative for this Court other than to adopt the findings of the COMELEC
and the BAC upholding Smartmatic JV' s eligibility to participate in the
bidding process, subsumed in which is the joint venture and its individual
partners' compliance with the nationality requirement.
WHEREFORE, in view of the foregoing, the petition is hereby

DISMISSED for lack of merit. The June 29, 2015 Decision of the
COMELEC en bane is hereby AFFIRMED.
SO ORDERED.
PRESBITERO J. VELASCO, JR.

WE CONCUR:
MARIA LOURDES P. A. SERENO

Chief Justice
~~h&dMf
TERESITA J. LEONARDO-DE CASTRO
Acting Chief Justice Associate Justice
(On Official Leave)

ARTURO D. BRION .PERALTA
Associate Justice Justice
~;
MARIANO C. DEL CASTILLO
Associate Justice
~ s. v·.l..L.J.a...J.l""'-.H1"~°'"H.J.r"""' J EZ
Associate Ju~
NDOZA
Associate Justice
I 1·l)Lt.~ -IJlt. A-cf.1~ ~~ i

Sll~~MJI
}· ~f\Uv 0
ESTELA M. ~~ERNABE
Associate Justice
Associate Justice
I
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby

certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court.
MARIA LOURDES P. A. SERENO

Chief Justice

Querubin V COMELEC

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/.!J).

LEO Y. QUERUBIN~ MARJA G.R. No. 218787

VELASCO, JR., J.:

Nature of the Case

Before the Court is a petition for certiorari or prohibition under Rule

On October 27, 2014, the COMELEC en banc, through its Resolution

The joint venture of Smartmatic-TIM Corporation (SMTC),

During the opening of the bids, Smartmatic JV, in a sworn

Upon evaluation of the submittals, the BAC, through its Resolution

Subsequently, for purposes of post-qualification evaluation, the BAC

After the conduct of post-qualification, the BAC, through Resolution

1. Failure to submit valid AOI; and

The ruling prompted Smartmatic JV to move for reconsideration.16 In

disqualified as it still failed to comply with the technical requirements of the

Aggrieved, Smartmatic JV filed a Protest,19 seeking permission to

Ruling of the COMELEC en banc

Though initially finding that the OMR+’s ability to simultaneously

WHEREFORE, the instant Protest is hereby GRANTED.

Let the Bids and Awards Committee implement this Decision.

The seven-man commission was unanimous in holding that

Technical discussion, demonstrations, and design reviews were conducted

Though these reviews are important to validate the behavior and

To visualize the electrical signals being sent to the memory cards, an

During normal operation such as on Election day, when the PCOS+ is

Notwithstanding Smartmatic JV’s compliance with the technical

I. WHETHER OR NOT THE PETITION IS THE PROPER

II. WHETHER OR NOT THE SUPREME COURT HAS THE

III. WHETHER OR NOT A JUSTICIABLE CASE OR

IV. WHETHER OR NOT THE CASE OR CONTROVERSY IS RIPE

V. WHETHER OR NOT UNDER THE CIRCUMSTANCES, THE

VI. WHETHER OR NOT THE PETITIONERS POSSESS LOCUS

VII. WHETHER OR NOT THE COMELEC EN BANC ACTED

VIII. WHETHER OR NOT A WRIT OF PRELIMINARY

In challenging the June 29, 2015 Decision, petitioners, filing as

Section 14. Contents of the articles of incorporation. – All corporations

2. The specific purpose or purposes for which the corporation is being

As proof, petitioners cite the primary purpose of SMTC as stated in

To do, perform and comply with all the obligations and

In concurrence with Commissioner Guia’s opinion, petitioners argue

Petitioners hasten to add that without a valid purpose, the company

Finally, petitioners contend that SMTC misrepresented itself by

In its Comment,36 public respondent COMELEC, through the Office

Meanwhile, private respondents, in their Comment/Opposition,39

To sell, supply, lease, import, export, develop, assemble, repair and

Private respondents would likewise debunk petitioners’ allegation that

Lastly, private respondents pray for the petition’s outright dismissal,

The Court’s Ruling

The petition lacks merit.

Rule 64 is not applicable in assailing

In arguing for the propriety of the remedial vehicle chosen, petitioners

The argument fails to persuade.

a. Rule 64 does not cover rulings of the

The rule cited by petitioners is an application of the constitutional

Section 7. Each Commission shall decide by a majority vote of all its

Though the provision appears unambiguous and unequivocal, the

Consequently, Rule 64, which complemented the procedural

[A] judgment or final order or resolution of the COMELEC may

this Court under Rule 65 from administrative orders of said Commission