Querubin v.

COMELEC
G.R. No. 218787 – Dec. 8, 2015
En Banc | J. Velasco, Jr.

Digest Author: Mozo, Miguel

Topic: Special Civil Actions

Par. 1 – 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 to be used in the 2016
National and Local Elections. 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.

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.

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. The amendments adopted
as early as November 12, 2014 were approved by the SEC on December 10, 2014. 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. 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. Meanwhile, Indra was disqualified for submitting a
non-responsive bid. Subsequently, for purposes of post-qualification evaluation, the BAC required Smartmatic
JV to submit additional documents and a prototype sample of its OMR. The prototype was subjected to testing
to gauge its compliance with the requirements outlined in the project's Terms of Reference (TOR).

After the conduct of post-qualification, the BAC, through Resolution No. 9 dated May 5, 2015, disqualified
Smartmatic JV on two grounds, viz.:
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, auditlog, statistics and ballot images simultaneously in at least two (2) data storages.
3.
The ruling prompted Smartmatic JV to move for reconsideration. In denying the motion, the BAC, through
Resolution No. 10 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 disqualified as it still failed to comply with the technical
requirements of the project.
Par. 2 - Case Trail - MTC/RTC/CA + arguments

Aggrieved, Smartmatic JV filed a Protest to the COMELEC seeking permission to conduct another technical
demonstration. 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). 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.
COMELEC en banc then ruled that the instant Protest is hereby GRANTED and to RETURN to prospective
bidders their respective payments made for the purchase of Bidding Documents pertaining to the Second Round
of Bidding.
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. 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. They further contend that
SMTC is the biggest shareholder in the bidding joint venture at 46.5%, making the joint venture less than 60%
Filipino-owned.

Par. 3 - Relevant Issue + SC Held

The issue is WoN Smartmatic JV misrepresented itself by leading the BAC to believe that it is a Philippine
corporation when it is 100% foreign owned and the SC ruled in the negative.

Clause 5 of the Instruction to Bidders provides that the following may participate in the bidding process:

5.1. Unless otherwise provided in the BDS, the following persons shall be eligible to participate in the bidding:
xxx xxx xxx

(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 noncompliance, 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. 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.

Perusing SMTC's GIS proves useful in applying the control test. Upon examination, SMTC's GIS reveals that it
has an authorized capital stock of P226,000,000.00, comprised of 226,000,000 common stocks 116 at P1.00 par
value, of which 100% is subscribed and paid. Applying the control test, 60% of SMTC's 226,000,000 shares,
that is 135,600,000 shares, must be Filipino-owned. Based on the GIS, it is clear that SMTC reached this
threshold amount to qualify as a Filipino-owned corporation.

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 rule since the test is only employed when the 60% Filipino
ownership in the corporation is in doubt. 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. Hence, there is no other 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.

Doctrines/Laws Involved: 

 In relation to Rule 64 of the RoC, 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. 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.
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.