BAC has no discretion in determining eligible bidders

The Office of the Ombudsman ruled that “the BAC exercised its discretion in accepting their (referring to the six corporations that formed the consortium) collective bid as advantageous to the government in ruling MPCs eligibility to bid.”

It likewise points to the ruling in NPC vs Philip Brothers Oceanic Inc, (369 SCRA 629) in saying that “discretion given to the authorities to accept or reject a bid is of such latitude that (courts) should not interfere with unless it is shown that it is used as a shield to a fraudulent award.”

It further relied in GS Transport Corp. vs CA, (382 SCRA 262) to point out that “the determination of the winning bidder should therefore be left to the sound judgment of the agency which is in the best position to evaluate the proposals and to decide which bid would most complement the needed services. The exercise of the discretion to choose the best bid is a policy decision.”

In stressing the discretion of the BAC in accepting MPC’s bid, the Office of the Ombudsman showed an utter disregard of the IRR of EO 40, which were the applicable rules at the time of the bidding.

In the definition of terms in the IRR, eligibility check is defined as follows: “Eligibility Check refers to a simplified form of pre-qualification based on non-discretionary pass/fail criteria, as specified in Sections 16 and 17 of these IRR.”

The Office of the Ombudsman, then, is disregarding the applicable rules which clearly prescribe a “non-discretionary pass/fail criteria” in the determination of the eligibility of the bidders.

The IRR further states:

“16.4. In relation to Section 18 on submission of bids, and subject to the provisions of Section 14.6 of these IRR, the BAC shall determine if each prospective bidder is eligible to participate in the bidding by examining the completeness of each prospective bidder’s eligibility requirements or statements against a checklist of requirements, using a non-discretionary “pass/fail” criteria, as stated in the Invitation to Apply for Eligibility and to Bid, and shall be determined as either “eligible” or “ineligible.” If a prospective bidder is rated “passed” for all the eligibility requirements, it shall be considered eligible to participate in the bidding, and the BAC shall mark the set of eligibility documents of the prospective bidder concerned as “eligible.” If a prospective bidder is rated “failed” in any of the eligibility requirements, it shall be considered ineligible to participate in the bidding, and the BAC shall mark the set of eligibility documents of the prospective bidder concerned as “ineligible.” In either case, the markings shall be countersigned by the BAC chairperson or duly designated authority, and the documents shall be submitted to the head of the agency or his duly authorized representative for review and approval.”

The Eligibility Check is specified in Section 16.7 of the IRR”

“16.7. Eligibility Check for the Procurement of Goods and Civil Works
The determination of eligibility shall be based on the submission of the following documents to the BAC, utilizing the forms prepared by the BAC and using the criteria stated in Section 16.2:

1 BAC certification of the official registration of the prospective bidder, referred to in Section 16.1.1 of these IRR.

2 Technical Documents
a) Valid joint venture agreement, in case of a joint venture.
b) Letter authorizing the BAC or its duly authorized representative/s to verify any or all of the documents submitted for the eligibility check.
c) Statement of the prospective bidder that it is not “blacklisted” or barred from bidding by any government agency, office or corporation, including, in the case of procurement of civil works, non-inclusion in the “blacklist” of contractors issued by the Construction Industry Authority of the Philippines.
d) Statement of the prospective bidder of all its completed contracts in the last three (3) calendar years or more. The statement shall state for each contract whether said contract is:
d.1. Completed: in the last three (3) calendar years or more, as prescribed by the agency in the Invitation to Apply for Eligibility and to Bid; and
d.2. Similar in nature and complexity to the contract to be bid. The term ìSimilarî shall be defined by the concerned agency in the in the Invitation to Apply for Eligibility and to Bid. The statement shall include, for each contract, the following:
d.2.1. For the procurement of goods:
(i) the name of the contract;
(ii) date of the contract;
(iii) kinds of goods sold;
(iv) amount of contract;
(v) date of delivery;
(vi) end userís acceptance; and
(vii) specification whether prospective bidder is a manufacturer, supplier or distributor.”


Take note of the requirement of a valid joint venture agreement for joint ventures.

The fact that the consortium did not submit a valid joint venture agreement should have prompted the BAC to declare it “ineligible.” The BAC is given no discretion in determining the eligibility of the bidders when the IRR specified the use of a “non-discretionary pass/fail criteria.”

The fact that BAC exercised discretion in holding MPC eligible to bid when it was not given any discretion in the determination of eligible bidders, renders its act invalid as it acted without authority. It is not an abuse of discretion but an invalid act that BAC has committed in ruling MPC to be an eligible bidder.

Ombudsman Misreading a Legal Provision

In justifying the BAC’s finding that MPC is qualified to bid, the Ombudsman ratiocinated:

In any case, section 7 (23) (sic) of Republic Act No. 8436 provides that the BAC may disregard or allow certain deviations or deficiencies in weighing the demonstrable capability of the bidders.

Thus, “In the procurement of this system, the Commission shall adopt an equitable system of deductions or demerits for deviations or deficiencies in meeting all the above stated features and standards.”


This is a clear misreading of the law.

The “equitable system of deductions or demerits for deviations or deficiencies” contained in Paragraph 4 of Sec. 7 (and not Sec 7 (23) as stated in the Ombudsman Supplemental Resolution) pertains to the twenty-three features and standards enumerated in the preceding paragraph of said Section which reads:
“In addition, the System shall as far as practicable have the following features:
1. It must be user-friendly and need not require computer-literate operators;
2. The machine security must be built-in and multi-layer existent on hardware and software with minimum human intervention using latest technology like encrypted coding system;
3. The security key control must be embedded inside the machine sealed against human intervention;
4. The Optical Mark Reader (OMR) must have a built-in printer for numbering the counted ballots and also for printing the individual precinct number on the counted ballots;
5. The ballot paper for the OMR counting machine must be of the quality that passed the international standard like ISO-1831, JIS-X- 9004 or its equivalent for optical character recognition;
6. The ballot feeder must be automatic;
7. The machine must be able to count from 100 to 150 ballots per minute;
8. The counting machine must be able to detect fake or counterfeit ballots and must have a fake ballot rejector;
9. The counting machine must be able to detect and reject previously counted ballots to prevent duplication;
10. The counting machine must have the capability to recognize the ballot's individual precinct and city or municipality before counting or consolidating the votes;
11. The System must have a printer that has the capacity to print in one stroke or operation seven (7) copies (original plus six (6) copies) of the consolidated reports on carbonless paper;
12. The printer must have at least 128 kilobytes of Random Access Memory (RAM) to facilitate the expeditious processing of the printing of the consolidated reports;
13. The machine must have a built-in floppy disk drive in order to save the processed data on a diskette;
14. The machine must also have a built-in hard disk to store the counted and consolidated data for future printout and verification;
15. The machine must be temperature-resistant and rust-proof;
16. The optical lens of the OMR must have a self-cleaning device;
17. The machine must not be capable of being connected to external computer peripherals for the process of vote consolidation;
18. The machine must have an Uninterrupted Power Supply (UPS);
19. The machine must be accompanied with operating manuals that will guide the personnel of the Commission the proper use and maintenance of the machine;
20. It must be so designed and built that add-ons may immediately be incorporated into the System at minimum expense;
21. It must provide the shortest time needed to complete the counting of votes and canvassing of the results of the election;
22. The machine must be able to generate consolidated reports like the election return, statement of votes and certificate of canvass at different levels; and
23. The accuracy of the count must be guaranteed, the margin of error must be disclosed and backed by warranty under such terms and conditions as may be determined by the Commission.”

Nowhere does the law say that "the system of deductions or demerits for deviations or deficiencies" applies to the “demonstrable capability of bidders” as the Office of the Ombudsman would want us to believe.

Factual Determinations in the Mega-Pacific COMELEC Case: Ombudsman vs. SC

The Ombudsman totally disregarded the findings of the Supreme Court in the Infotech case. Instead, it came up with its own determination on matters that have already been passed upon by the Supreme Court.


On the identity, existence and eligibility of Mega Pacific Consortium as a bidder, the Supreme Court already determined the following:

1. Documents submitted by Mega Pacific Consortium to the BAC failed to establish the identity, existence and eligibility of the alleged consortium as a bidder.
a. The March 7, 2003 letter, signed by only one signatory, “Willy U. Yu, President, Mega Pacific eSolutions, Inc. (Lead Company/Proponent) For: Mega Pacific Consortium” does not by itself prove the existence of the consortium.
b. The letter does not show that MPeI or its president have been duly pre-authorized by the other members of the putative consortium to represent them, to bid on their collective behalf, and more important, to commit them jointly and severally to the bid undertakings.
c. The letter is purely self-serving and uncorroborated.

2. The COMELEC never bothered to check and concretely establish the existence of the claimed consortium or joint venture.

3. The four Agreements namely: Memorandum of Agreement between MPeI and SK C&C; Memorandum of Agreement between MPeI and WeSolv; “Teaming Agreement” between MPeI and Election.com Ltd.; and “Teaming Agreement” between MPeI and ePLDT are not sufficient to establish the joint venture between the MPEI, SK C&C WeSolv, Election.com Ltd and ePLDT.

a. The two MOAs are very similar in wording.
b. Neither of them contains any specifics or details as to the exact nature and scope of the parties’ respective undertakings, performances and deliverables under the Agreement with respect to the automation project.
c. The two agreements are quite bereft of pesos-and-centavos data as to the amount of investments each party contributes, its respective share in the revenues and/or profit from the Contract with COMELEC.
d. The ‘teaming agreements’ specifically ascribed to Election.com Ltd and ePLDT the role of subcontractors but are completely devoid of any pricing data or payment terms.

4. The contract entered into by COMELEC with MPeI never mentioned any consortium or joint venture, of members thereof, much less of joint and several liability.

5. There are no definite indicators as to the amount of investments to be contributed by each party, disbursements for expenses, the parties’ respective shares in the profits, and the like that will make it difficult for COMELEC to enforce the supposed joint and several liabilities of the members of the consortium.

6. The eligibility of the consortium should not have been based on the collective qualifications of its members as the IRR of RA 6957 as amended by RA 7718 or the Build Operate Transfer Law is not applicable.

Despite these findings of the Supreme Court, the Office of the Ombudsman, in its Supplemental Resolution had these to say:

1. The five (5) consortium members advised BAC that MPeI will be their lead proponent for Phase II of the project.

2. Their respective eligibility documents submitted to BAC were all coursed through MPeI as the lead proponent and they were submitted to show that each of them had the qualification to comply with their respective undertakings.

3. The only objection against MPeI was its inability to submit its financial records.

4. To the mind of the BAC this deficiency was supplied by the submission of the financial documents of SK C&C, ePLDT and WeSolve which taken collectively would undoubtedly establish the financial capability of the group as a whole.

5. MPeI’s Articles of Incorporation and Bank Certificate of Deposit show that it has a fully subscribed and paid up capital of Php 300 million pesos, an amount that is over and above the 10% RFP required equity base of the total project cost.

6. The respective undertakings of the parties in the project as shown by the bid documents are as follows:

a) MPeI, a Philippine corporation as the lead proponent of the consortium shall install and maintain integration services and project leadership for the Automated Counting and Canvassing Project of COMELEC.

b) SK C&C, a Korean corporation in good standing is the primary technology proponent and manufacturer of the automated counting machines (ACMs). It has a track record for having supplied counting machines in two (2) Korean national elections with more than 20 million voters.

c) Election.com, a US corporation in good standing, incorporated in the State of Delaware, USA with experience in the USA and Europe shall be responsible for the development of the election canvassing software for COMELEC.

d) WeSolv, which is responsible for the rollout, training, maintenance functions of MPC is a Philippine corporation in good standing since 1996.

e) ePLDT, a wholly owned subsidiary of PLDT shall provide computer security and encryption services.

7. BAC evaluated and ruled that Mega Pacific Consortium had the legal, financial and technical capability to comply with the contract and therefore eligible to bid.


The Supreme Court is not a trier of facts but it does so when facts are needed to pass upon the legality of an act. When facts are essential for the determination of the legality of an act, then the highest court of the land must perforce gather the facts from the documents submitted before it and presented before it during the oral arguments.

When the Supreme Court itself has made factual determinations, such determination must be respected.

When the decisions of lower courts are challenged before the highest tribunal, the Supreme Court itself rarely disturbs the factual findings of these lower courts unless they fall under certain exceptional circumstances.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goidrock Construction and Development Corp.:
“Among the exceptional circumstances where a reassessment of facts found by the lower courts is allowed are when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; when the inference made is manifestly absurd, mistaken or Impossible; when there is grave abuse of discretion in the appreciation of facts; when the judgment is premised on a misapprehension of facts; when the findings went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee.”
The directive of the Supreme Court to the Ombudsman was to determine the probable criminal liabilities of those involved in the transaction. While the Ombudsman is an independent constitutional body, it does not mean it can totally set aside the factual determinations made by any court, much less, the Supreme Court in the cases that come before it for adjudication.

In the supplemental resolution of the Office of the Ombudsman, however, the Ombudsman disregarded the factual determinations of the Supreme Court and substituted it with its own findings to justify the exoneration of the officials and private individuals involved in the highly anomalous transaction.

Can these factual determinations of the Ombudsman stand the mettle when the supplemental resolution is questioned before the Supreme Court?