CASE DIGEST: Archbishop Capalla vs. COMELEC

G.R. No. 201112 : October 23, 2012



Comelec and Smartmatic-TIM entered into a Contract for the Provision of an Automated Election System for the May 10, 2010 Synchronized National and Local Elections (AES Contract) which is a Contract of Lease with Option to Purchase (OTP) the goods listed therein consisting of the Precinct Count Optical Scan (PCOS), both software and hardware. The parties agreed that the AES Contract shall remain effective until the release of the performance security posted by the Comelec. The Comelec was given until December 31, 2010 within which to exercise the option to purchase. The option was, however, not exercised within said period. The parties later entered into an extension agreement giving the Comelec until March 31, 2012 within which to exercise it.

Herein petitioners, however, assailed the validity of such agreement on the ground that the same requires another public bidding since it substantially amended the terms of the contract. They also averred that such extension to exercise the option will prejudice the governments interest.

In the assailed June 13, 2012 decision of the Supreme Court, the Court upheld the validity of the transaction. Hence, the petitioners moved for reconsideration.

ISSUE: Whether or not the extension of the OTP in favor of Comelec is valid?

HELD: The motions for reconsideration are denied.

CIVIL LAW: contracts

In our June 13, 2012 Decision, we decided in favor of respondents and placed a stamp of validity on the assailed resolutions and transactions entered into. Based on the AES Contract, we sustained the parties right to amend the same by extending the option period. Considering that the performance security had not been released to Smartmatic-TIM, the contract was still effective which can still be amended by the mutual agreement of the parties, such amendment being reduced in writing.

In this case, the contract is still effective because the performance security has not been released. Thus, not only the option and warranty provisions survive but the entire contract as well. In light of the contractual provisions, we, therefore, sustain the amendment of the option period. The amendment of a previously bidded contract is not per se invalid. For it to be nullified, the amendment must be substantial such that the other bidders were deprived of the terms and opportunities granted to the winning bidder after it won the same and that it is prejudicial to public interest.

Here, the extension of the option period means that the Comelec had more time to determine the propriety of exercising the option.With the extension, the Comelec could acquire the subject PCOS machines under the same terms and conditions as earlier agreed upon. The end result is that the Comelec acquired the subject PCOS machines with its meager budget and was able to utilize the rentals paid for the 2010 elections as part of the purchase price.

The motions for reconsideration are DENIED for lack of merit.

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