GR 216098 So; (April, 2015) (Digest)
G.R. No. 216098 , April 21, 2015
Bishop Broderick S. Pabillo, et al. and Integrated Bar of the Philippines v. Commission on Elections and Smartmatic-TIM Corporation
FACTS
Petitioners sought to nullify the Extended Warranty Contract entered into by the Commission on Elections (COMELEC) with Smartmatic-TIM Corporation for diagnostics, preventive maintenance, repair, and replacement of the PCOS machines. COMELEC resorted to direct contracting under Sec. 50 of Republic Act No. 9184 (GPRA), claiming that Smartmatic-TIM had proprietary rights over the PCOS machines’ hardware and software, making it the exclusive source. The ponencia (majority opinion) found that COMELEC failed to comply with two key preconditions for direct contracting: the conduct of an initial industry survey and a pre-procurement conference.
ISSUE
Whether the Extended Warranty Contract should be nullified due to COMELEC’s failure to comply with the procedural requirements for direct contracting under the GPRA.
RULING
The Concurring and Dissenting Opinion of Justice Velasco, Jr. concurs in the result that the Extended Warranty Contract should be nullified. The sole ground for nullification is COMELEC’s failure to comply with the mandatory procedural requirements for direct contracting, specifically the conduct of an initial industry survey and a pre-procurement conference. The initial industry survey is crucial to determine if the services are indeed proprietary to Smartmatic-TIM and if no suitable substitute exists on more advantageous terms. Absent this survey, it is impossible to validate COMELEC’s claim that the services fall under the conditions of Sec. 50 of the GPRA. However, the Opinion dissents from the ponencia’s discussion regarding Articles 9 and 10 of the 2009 AES Contract. It argues that the rights granted to COMELEC to alter and modify the source code are non-transferable and exclusive to COMELEC itself. Therefore, if an initial industry survey later reveals that the auxiliary services cannot be performed by a third party without altering the source code, then COMELEC cannot contract out these services except to Smartmatic-TIM, to avoid violating the contract and Smartmatic-TIM’s intellectual property rights. The disposition does not preclude COMELEC from entering into a new direct contracting arrangement, provided it complies with all GPRA conditions and procedures.