1hyp Investigation Report on the p690 Million Bsf, June 26, 2010

8/4/2019 1hyp Investigation Report on the p690 Million Bsf, June 26, 2010

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COMMISSION ON ELECTIONS PANEL OF

INVESTIGATORS

0628

2010

BALLOT SECRECY

FOLDERINVESTIGATION

REPORT[Procurement Anomaly Findings]

Ferdinand Rafanan

Adolfo Ibanez

Divina Blas-Perez
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BALLOT SECRECY FOLDER INVESTIGATION REPORT

INVESTIGATION REPORT ON

THE P690 MILLION

BALLOT SECRECY FOLDERJune 28, 2010

BY THE PANEL OF INVESTIGATORS1:

1. ATTY. FERDINAND T. RAFANAN, Director IV, Law Department

2. ATTY. ADOLFO A. IBANEZ, Director IV, Personnel Department

3. ATTY. DIVINA E. BLAS-PEREZ, Director III, Election & Barangay

Affairs Department

I.BACKGROUND

The BALLOT SECRECY FOLDER (BSF) is

an ordinary office folder, 14.5 inches long

and 9 inches wide, where one can put

some papers inside, but which is

marked in front with the words

BALLOT SECRECY FOLDER with a

Comelec logo at the middle top,

intended for the voter to cover

his ballot while voting on election

day.

CHAIRMAN MELO: We needsomething to cover it. It can be apiece of paper; it can be a bananaleaf. (PARTIAL TRANSCRIPT OFSTENOGRAPHIC NOTES OF THE SPECIALEN BANC MEETING HELD ON APRIL 5,2010, PANEL 45)

In many elections, this is the folder that we have been using. Except for

the specific markings, the folder is available at any bookstore.

1 The Panels staff consists of Head Executive Assistant Corazon Danao, EA II Buena Grace

C. Miranda, EA II Romulo Rabaino, EA II Aggy Christine Glindo, Noel Daya, Ryan Alburo, and

Dorothy Anne Angco.

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A JUST KING GIVES

STABILITY TO HIS NATION,

BUT ONE WHO DEMANDS

BRIBES DESTROYS IT.

Proverbs 29:4
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For the May 2004 presidential elections, the winning bidder was Grand C

Graphics for 3,000,000 pieces at P5 per piece for a total amount of

P15,000,000. For the May 2007 national and local elections, the winning

bidder was Lamco Paper Products Co., Inc. for 3,060,000 pieces at P3.33

per piece for a total amount of P10,189,800. For the barangay elections

in October 2007, the winning bidder was Holy Family Printing Corp. for

3,000,000 pieces at P3.12 per piece for a total amount of P9,360,000.

There was bidding for the Ballot Secrecy Folder in every election.

Surprisingly, there was no

bidding for the BSF for use in

the May 10, 2010 automated

elections! As a result, we

almost used a folder double

in length, different material,

with the same markings, but

more than a hundred times

the cost at P380 per piece for

a total price of SIX

HUNDRED EIGHTY-NINE

MILLION SEVEN HUNDRED

THOUSAND PESOS

(P689,700,000) for 1,815,000

pieces.

A graphic presentation of the unit cost and total price of the ballot secrecy

folders in four (4) consecutive elections is shown below:

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OTC PAPER SUPPLYS BSF


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ELECTION UNITCOST

QUANTITY PURPOSE TOTAL PRICE

MAY 2004 P5.00 3,000,000 COVERBALLOT

P15,000,000


P10,189,800

OCT. 2007 P3.12 3,000,000 COVERBALLOT

P9,360,000


P13,576,200

MAY 2010CANCELLED

P380.00 1,815,000 COVERBALLOT

P689,700,000

II. CHRONOLOGY OF EVENTS

On March 15, 2010, Atty. Melchor Magdamo of the Office of Chairman

Jose Melo sent an email2 to Dr. Arwin Serrano of the Parish Pastoral

Council. He wrote:

The Commission on Elections (COMELEC) is also anotherfavourite hunting ground of large scale corruption. Its ExecutiveDirector, Jose Marundan Tolentino, does not seem to care aboutredeeming his name or at least deodorizing the stench of hisstinking reputation. Recently, he orchestrated another scam bypersuading the COMELEC en banc to approve a tailor-fitted design for a ballot secrecy folder. On 17 February2010, the En Banc promulgated Resolution3 10-0251, thereinapproving Tolentinos design and directing the Bids & AwardsCommittee (BAC) to take appropriate action withoutmentioning the price.

2 Panel 28

3 Panel 21

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X x x sometime in the second week of March 2010, a certainEmily G. Cam Bacoto came with documents showing thatTolentinos secrecy folder is the sole participant in a lightning

speed bidless bidding at a Goliath price of 380 pesos per folderfor an astronomical budget of 689 million pesos! That canqualify in the Guinness World Records as the most expensivefolder in human history! (PANEL 28)

One week later, or on March 22, 2010, the recipient of the email, Dr.

Arwin Serrano, went to the Office of Atty. Ferdinand T. Rafanan, Director

of the Law Department and presented said letter which at that time was

still unsigned. Director Rafanan asked Atty. Magdamo to appear at his

office and right away the latter arrived and signed his email. That same

morning, Dr. Arwin Serrano himself, in reaction to the email, also

wrote a letter in his own handwriting addressed to Director

Rafanan, stating among other things, as follows:

Im writing this letter to express my sentiment regarding theapproval of the contract for Ballot Secrecy Folder (Resolution No.8795) which was awarded to OTC Paper Supply for the 1,815,000

pieces of ballot secrecy folder for use in the May 10, 2010National and Local Elections at a price of P380.00 per piece.

My personal view is that it is not advantageous to Comelec, thebidding procedure is not in accordance to the GPRA and theamount is too much for an item that will be used one-time only.

I would like to express my objection and would like to requestfor an evaluation and re-examination so that we could have aBallot Secrecy Folder that was bidded properly and the ceilingprice would be at a more acceptable amount. I would like to

comment also on the material and some specifications that wecould do with hard carton and it could be non-expandable.(PANEL 31)

Acting on these two letters, Director Rafanan wrote Memorandum No.

10-12764 dated March 23, 2010 addressed to Chairman Jose Melo. Said

Memorandum was received by the Chairmans office on March 26, 2010.

It states:

I am enclosing the letter of Dr. Arwin Serrano5, Parish PastoralCouncil for Responsible Voting representative in the COMELEC

4 Panel 32

5 Panel 31

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Bids and Awards Committee dated March 22, 2010. He wrote asfollows:

I am writing this letter to express my sentiment regardingthe approval of the Contract for Ballot Secrecy Folder

(Resolution No. 8795) which was awarded to OTC PaperSupply for the 1, 815, 000 pieces of ballot secrecy folderfor use in the May 10, 2010 National and Local Elections ata price of Php380.00 per piece.

I join Dr. Arwin Serrano in the shock at the obviously exorbitantprice of Php380.00 per piece of folder. Could it be that this isjust a typographical error in placing the decimal point sothat the real price is only Php3.80, or three pesos and eightycentavos? He is curious that nowhere in the quoted Bids andAwards Committee Resolution 85-2010 is the amount in words

written and neither does Resolution No. 8795 dated March 15,2010 show the amount in words.

This is very critical and suspicious considering that theamount translates to Php 689,700,000.00. Please consideralso the allegations in his letter that the indelible ink can beeasily removed by zonrox. I make this Memorandum because Istill believe that preparations for the coming May 2010Automated Elections are in good faith, untainted by any possiblegraft and corruption. (PANEL 32)

Meantime, PURCHASE ORDER6 NO. 10-03-020BAC dated March 23, 2010

covering the said Ballot Secrecy Folders, indicating mode of procurement

as "public bidding", for P689,700,000 remained unsigned by Chairman

Jose Melo. On March 29, 2010, Director Ferdinand T. Rafanan, then at the

airport on his way to Bangkok, Thailand to attend an international seminar

on Electoral Justice, issued Memorandum No. 10-14317 dated March 29,

2010. In said memorandum, he recommended that "the purchase of

1,815,000 BSF (Ballot Secrecy Folder) at P380 per piece be

cancelled". He also recommended "that ordinary ballot secrecy folders

with the same specifications used in the past elections with a size of 9.5

inches (width) by 28 inches (length) with the Comelec seal and marking

'Ballot Secrecy Folder' be purchased"8.

6 Panel 33

7 Panel 35

8 He finally recommended that "the right side of the folder where the ballot will be placed by

the voter needs only to be a little bit thicker and harder to allow the heavy weight when

shading."

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Said Memorandum was supported by a Memorandum for the Commission

En Banc dated March 29, 20109 signed by General Gurrea, Renato

Garcia, Atty. Melchor Magdamo, and Ramon Aquino (all in the staff

of Chairman Jose Melo). They found merit in, and recommended approval

of the aforesaid recommendations of Director Rafanan for cancellation of

the purchase of the Ballot Secrecy Folder from OTC Paper Supply.

Surprisingly, on the following day, there was a letter from Henry Young of

OTC Paper Supply dated March 30, 2010 (PANEL NO. 37) addressed

to Chairman Melo indicating, in an unsolicited and anticipated self-

defense, the "comparative" cost analysis of its own ballot secrecy

folder. The fact, however, is that there was nothing at all in said

letter to show comparison with any price from any other supplier.

The Commission En Banc treated the matter on March 30, 2010. A partial

transcript of stenographic notes of the regular en banc hearing on the

BSF on that day shows the following:

Executive Director Tolentino: "x x and I don't think he isquestioning the procedure, it's just the price.

Comm. Velasco: 700! Almost 10% of the total amount ofautomation! Automation is 7B and this one is 700. Mostcumbersome. x x x.

E. D. Tolentino: "negotiate for a lower price but not tocancel it kasi nag notice of award most probably nag

order na iyan, and the only reason hindi nakaka-deliver isbecause of the requirement that the purchase order mustfirst be issued before delivery." (PANEL 40)

The discussion went further as follows:

COMM. SARMIENTO: Ang total amount ay P689,700,000 di pakasama yong delivery. Now ang concern natin ito ay gagamitin

isang araw lang baka maging issue sa atin ito, napakalakingamount, oo, umabot ng 700 lumalabas iyung 380 baka Junmasyadong malaki x x x

CHAIRMAN MELO: Baka isang gamit lang iyan ano, that in theeyes of the public it's just a folder to keep your choice a

9 Panel 36

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secret but you are spending so big an amount iyon ang ano,baka pag suspetsahan tayong lahat. Ayon! So what is the desireof the ano?

COMM. YUSOPH: We have to cancel it, we might be criticized forthat, that would be another fertilizer scam.

COMM. TAGLE: Baka ma headline tayo.

COMM. SARMIENTO: I am sure 703 lang yon eh ito 689 plusdelivery baka lalo pang, mga 700 yan.

COMM. LARRAZABAL: The BAC was the one who made therecommendation.

CHAIRMAN MELO: At saka hindi bidding ito eh.

COMM. TAGLE: Ah hindi, direct.

COMM. SARMIENTO: Procurement without public bidding.So Chair I would join Comm. Yusoph Chair and Comm. Nick . . .Cancellation. (PANEL 40)

The Commission En Banc again tackled the problem in its next meeting on

March 31, 2010. The partial transcript of stenographic notes shows that

Chairman Jose Melo thinks the specifications of the BSF came from the

Committee on Specifications, not from a friend. Commissioner

Nicodemo Ferrer thinks there was a comparison of prices. Executive

Director Jun Tolentino confirms the BSF stocks are already in the Customs.

Bids and Awards Committee (BAC) Chair Ma. Leah Alarkon says the

contract award for the procurement of the ballot boxes was a precedent

for the BSF award by reason of patent application.

The transcript reveals the following discussion:

ALARKON: For comparison sabi ko nga iyung Filefix ngdineliberate ng TWG . . . Ng paper P320 tatlo ang canvass pricenamin noon: P500, P400, P330. Ganito kalaki iyon ating,dalawang long matigas rin po. Iyung secrecy folder natin halospareho rin ang materyales. Kung sinabi na may comparison angprice actually kung iyong Filefix nga na sinabi na ng TWG naP320 na pinakamura, ito dalawang long P380. So for comparisonng price, so sa tingin namin ang sabi lang namin kung i-aatras ngCommission ang ano is whatever expenses they had under thelaw we should pay. x x x

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ALARKON: Sir tapos tinatanong kasi application for patent,application lang daw so bakit hindi naman pala siya regularpatent. Tapos sabi ko ang premise na ginamit namin noonpareho ng ballot box iyung provider natin application for patent

lang yon na inaward natin sa kanila kahit na certification lang ngIPO office na ano lang, so kung may precedent na kung bakitganito ang procedure natin, na sinunod natin. x x x

CHAIRMAN MELO: Sino ang nag ano ng design na iyan?

ALARKON: Meron po tayong Committee na nag e-specs ngkung ano ang bagay sa needs natin.

CHAIRMAN MELO: Oh, ayon ang anohin mo, that the design didnot come from us. It came from ano nga lang.

ALARKON: Meron tayong . . .

CHAIRMAN MELO: Kanya we had to approve it. There must beproper staff work, hindi tayo tayo lang nagsasabi ng ganyan.

ALARKON: And the process order way back January 19 pa po.

CHAIRMAN MELO: Kaya i-emphasize mo sa report mo hinditayo oy ito kaibigan ko ito itong design niya. No, it wasdone by staff work, nagcanvass sila what's the best ano

nga lang, what's the best design di ba?

COMM FERRER: May specs that . . . and in comparison of pricesx x x

CHAIRMAN MELO: Pero dapat ipakita natin dito that we were allthe time, these were all staff work di tayo ang naglagay niyan.There was a team which looked at the design and they saidand they have it approved by us, etc, etc. (PARTIAL TRANSCRIPTOF STENOGRAPHIC NOTES OF REGULAR EN BANC HEARING ONTHE BSF DATED MARCH 31, 2010, PANEL 42).

On the same day (March 31, 2010), the Commission En Banc promulgated

COMELEC RESOLUTION NO. 10-0442 dated March 31, 2010 "IN THE

MATTER OF THE MEMORANDUM OF THE LAW DEPARTMENT ON THE

PRICING OF 1,815,000 PIECES OF BALLOT SECRECY FOLDER FOR USE IN

CONNECTION WITH THE MAY 10, 2010 ELECTIONS10. It quoted Director

Rafanan's memorandum dated March 23, 2010, and required him "to be

present during the next en banc meeting on April 06, 2010 in order to

elucidate on matters raised in his instant Memorandum".

10 Panel 44

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Before the April 6, 2010 hearing however, there was one more hearing on

the BSF on April 5, 2010, where Exec. Dir. Tolentino presented documents

for discount of P250 million. It transpired as follows:

COMM. LARRAZABAL: Chair, the specifications are over andbeyond, are over and above that required . . .

CHAIRMAN MELO: Required needs, and that the specificationsand the kind of secrecy folders are beyond the ordinary needs.

COMM. SARMIENTO: Di natin naperceive to be exorbitant. Walana ito.

EXEC. DIR. TOLENTINO: Inapprove ninyo yan eh, babalikat babalik sa inyo yan Sir!

COMM. FERRER: But you . . . ! (pointing to the support staff)

CHAIRMAN MELO: We are not afraid of that. Sa akin, bad.That's why we denied it. We are recalling them.

COMM. LARRAZABAL: Over and above.

CHAIRMAN MELO: Ako I'm not afraid. That error . . . that's whywe are correcting it x x x

EXEC. DIR. TOLENTINO: Sir but still we need a folder just tomake . . .

CHAIRMAN MELO: We need something to cover it. It can be apiece of paper; it can be a banana leaf.

X x x EXEC. DIR. TOLENTINO: Sir in fairness naman to the BAC,the quantity that they caused to be procured came from theAllocation Committee, hindi naman sila magpapa procure Sir ngbasta bastang walang basis. So it was based on the submissionof the Allocation Committee which I even think was approved bythe En Banc. That's why iyon ang pinabili nila x x x

EXEC DIR. TOLENTINO: Ang sunod naman Sir is iyong theconclusion that the price ofP380 isexorbitant. Just like thestatement of Dr. Serrano and Ferdie, there was no statementor study11 made to show that this is indeed exorbitant. It'sjust a subjective . . .

CHAIRMAN MELO: Ako akala ko P3.80.

x x x EXEC. DIR. TOLENTINO: Sir, at 10:20 Sir, Dir. Alarkonsubmitted to my office a transmittal of the offer of OTC Paper na

11 There was a canvass of prices made by Head Executive Assistant Corazon Danao during

the Investigation

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nanalo dyan Sir, because if we recall last En Banc meeting, di basinabi mahal ang presyo so you asked for price reduction.

CHAIRMAN MELO: Oh, that was last Wednesday.

EXEC. DIR. TOLENTINO: That was before the Holy Week. So maymemo dito si Leah dated today transmitting the offer of OTCdated today also. Ang sinasabi nila that binigyan sila ngdiscount of P137.74 per piece.

CHAIRMAN MELO: 137.

EXEC. DIR. TOLENTINO: .74 per piece. Which translates to atotal discount of 250 million. (PANEL 45)

The Comelec En Banc then promulgated RESOLUTION NO. 8814 dated

April 5, 2010 "IN THE MATTER OF THE CANCELLATION OF THE

CONTRACT FOR THE SUPPLY AND DELIVERY OF 1,815,000 PCS OF THE

BALLOT SECRECY FOLDER FOR THE MAY 10, 2010 NATIONAL AND LOCAL

ELECTIONS"12. It declared as follows:

This pertains to Comelec Resolution No. 8795 dated March 15,2010 awarding13 the contract for the supply and delivery of ONEMILLION EIGHT HUNDRED FIFTEEN THOUSAND (1,815,000)pieces of ballot secrecy folder for the use in the May 10, 2010National and Local Elections to OTC PAPER SUPPLY.

Whereas, on March 8, 2010, the Bids and Awards Committeesubmitted a recommendation14 to award the contract for thesupply and delivery of ONE MILLION EIGHT HUNDRED FIFTEENTHOUSAND (1,815,000) pieces of ballot secrecy folder for the usein the May 10, 2010 National and Local Elections to OTC PAPERSUPPLY;

WHEREAS, the Commission relying heavily on the regularityof the procedure conducted by the Bids and AwardsCommittee, approved the said recommendation;

WHEREAS, upon closer review of Comelec Resolution No. 879515

dated March 15, 2010, it was discovered that the Bids andAwards Committee recommendation was a product ofincomplete staff workfor the reason that the total number ofballot secrecy folders recommended to be purchased (1,815,000)

12 Panel 46

13 Panel 27

14 Panel 23

15 Panel 27

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exceeds the total number of ballot secrecy folders that mayactually be used during the elections;

WHEREAS, upon review, the computation used by the Bids and

Awards Committee was based on twenty-two (22) ballot secrecyfolders per precinct multiplied by eighty two thousand fivehundred (82,500) clustered precincts considering that theactual total clustered precincts are only seventy six thousandthree hundred forty (76,340);

WHEREAS, the Commission was insufficiently informed ofsuch computation;

WHEREAS, it was also discovered after re-deliberation that thepurchase price of THREE HUNDRED EIGHTY PESOS (Php 380.00)

per ballot secrecy folder is extravagant beyond the ordinaryneeds of the Commission;

WHEREAS, Chairman Jose A.R. Melo has declined to sign thePurchase Order16; WHEREFORE, the Commission, by virtue of thepowers vested in it by the Constitution, RESOLVED, as itRESOLVES to recall the award to OTC PAPER SUPPLY.(PANEL 46)

The cancellation is also based on the following provisions of RA 9184:

SEC. 41. Reservation Clause. - The Head of the Agency reservesthe right to reject any and all Bids, declare a failure of bidding,or not award the contract in the following situations:

(a) If there is prima facie evidence ofcollusion betweenappropriate public officers or employees of theProcuring Entity, or between the BAC and any of thebidders, or if the collusion is between or among the

bidders themselves, or between a bidder and a third party,including any act which restricts, suppresses ornullifies or tends to restrict, suppress or nullifycompetition;

(b) If the BAC is found to have failed in following theprescribed bidding procedures; or

(c) For any justifiable and reasonable ground where theaward of the contract will not redound to the benefit ofthe government as defined in the IRR.

On the same day, the Bids & Awards Committee, apparently expecting

the cancellation of the award, promulgated BAC RESOLUTION NO. 99-

2010 on April 5, 2010 (PROCUREMENT REPORT ON THE SUPPLY AND

16 Panel 33

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DELIVERY OF THE 1,815,000 PIECES BALLOT SECRECY FOLDERS FOR THE

MAY 10, 2010 NATIONAL AND LOCAL ELECTIONS), in self-defense. It

reads as follows:

WHEREAS, the BAC recommended the said award on thefollowing basis:

1. Comelec Minute Resolution No. 10-025117, dated 17 February2010, directed the procurement of 1,815, 000 pieces of BallotSecrecy Folders, the approved design and specifications providedin the same directive, are: XXXXX

2. On 27 February 2010, OTC Paper Supply submitted itsproposal18 to supply said folders at the rate of Php 380.00 perpiece. It also submitted proof of its claim ofcopyright overapproved design and specifications. Said supplier submitted aCertification issued by the Intellectual Property Office of thePhilippines wherein it is stated that the date of their applicationfor patent is 10 February 2010.

3. There being no alternative supplier from which to comparethe offer considering the claim for patent, the canvass price19

submitted by the ASD in the procurement of DocumentBinders was used as reference, copy of the said quotationsare herein attached. The Binders, made of modified densityfiberboard, and more or less half the size of the required BallotSecrecy Folders, is priced at Php 320.00.

4. Adopting the same procedure20 used in the procurement ofthe Ballot Box, wherein the supplier SMARTMATIC Internationalalso had an application for copyright, the BAC submitted itsrecommendation on the basis of Section 50 of RevisedImplementing Rules and Regulations of Republic Act No. 9184which provides for the alternative mode of procurement ofDIRECT CONTRACTING, to wit: Direct Contracting or Single

Source Procurement is a method of procurement of goods thatdoes not require elaborate Bidding Documents. The supplier issimply asked to submit a price quotation or a pro-formainvoice together with the conditions of sale. The offer may beaccepted immediately or after some negotiations. xxxprocurement of goods of proprietary nature which can beobtained only from a proprietary source, i.e. when patents, tradesecrets, and copyrights prohibit others from manufacturing thesame item xxx.

17 Panel 21

18 Panel 22

19 Requested by BAC Chair Alarkon for document binders on February 9, 2010 but she

officially learned about application for patent offolder only on February 27, 2010.

20 Act of the same BAC headed by Atty. Alarkon

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WHEREAS, on basis of the approved design andspecifications by the Commission en Banc and the claim ofcopyright by the provider, using the foregoing provision of law,the BAC recommended the award of the said contract.

WHEREFORE, in view of the foregoing, the BAC hereby submitsthis summary report for purposes of record. SIGNED, by theundersigned Chairman, Vice-Chairman and all its Members, this5th April 2010, in the City of Manila, Philippines. (PANEL 57E)

Paragraph 3 above ofBAC RESOLUTION NO. 99-2010 refers to a "Request

for Price Quotation" for "outer document holder/binder", not for a

Ballot Secrecy Folder. The specifications are therefore different from

those of a BSF. There are 3 such forms attached to the BAC RESOLUTION,

apparently filled out and signed by Faustino F. Dan, Jr. of Best Forms on

February 24, 2010, by Emily C. Bacoto of Filefix, undated, and by Mary

Dawn D. Sy of Ernest Printing Corp. on March 3, 2010. All alleged

requests are unsigned by Director Rey Doma or any employee of

the ASD, and without any transmittal memo shown by the BAC.

On the same day, April 5, 2010, the BAC issued a 2nd defensive resolution:

BAC RESOLUTION NO. 101-2010 dated April 5, 2010, declaring:

"Wherefore, in view of the foregoing, the BAC, most respectfully deems

that the Honorable Commission En Banc, was fully informed of the

basis on the requested allocation and the BAC regularly performed its

duties in accordance with the requirements provided by law." Its

premises for this conclusion are as follows:

WHEREAS, the Commission En Banc, on 5 April 2010, promulgatedResolution No. 8814, stating among others that:

1. Upon closer review of Comelec Resolution No. 8795 datedMarch 15, 2010, it was discovered that the Bids and AwardsCommittee recommendation was a product of incompletestaff work for the reason that the total number of ballotsecrecy folders recommended to be purchased (1,815,000)exceeds the total number of ballot secrecy folders that mayactually be used during elections;2. The Commission was insufficiently informed of such

computation;

WHEREAS, the Commission, in Minute Resolution Number 10-0066,promulgated on 19 January 2010, provided for the Adjusted QuantityRequirements of Election Forms and Supplies for the May 10, 2010National and Local Election and approving therein therecommendations of Engineer Vergil Juan S. Soriano, Chairman,

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Allocation Committee, providing among others for the quantityrequirements of the Ballot Secrecy Folders, (page 2 of approvedquantity requirements of the allocation of election forms and supplies),copy of which is herein attached as Annex A;

WHEREAS, the Bids and Awards Committee (BAC), after submitting arequest, was furnished by the ASD copy of the approved and signedpurchase request of the Allocation Committee, the end-user of theaforesaid procurement, for purposes of completing the preparation ofthe Bid Documents, copy of said Purchase Request is herein attachedas Annex B;

WHEREFORE, in view of the foregoing, the BAC, most respectfullydeems that the Honorable Commission en Banc, was fullyinformed of the basis on the requested allocation and the BACregularly performed its duties in accordance with the requirementsprovided by law.

SIGNED by the undersigned Chairman, and its Members, this 5 April

2010, in the City of Manila, Philippines. (PANEL 47)

Then in the En Banc meeting on April 6, 2010, it was decided that we

use ordinary ballot secrecy folders for the May 10, 2010 elections. It

transpired as follows:

BAC CHAIR ALARKON: Kung kailangan po Your Honor ngalternative dapat meron po ulit ibibigay po sa amin na basis forbuying.

CHAIRMAN MELO: Ano, ano?

COMM. SARMIENTO: Basis for buying.

ALARKON: Basis for buying katulad po nung sa resolution po

dati, na nagbigay po ng specs. So di ba sabi po ninyo na, ng enbanc yesterday, we will find, we will look for alternative . . . yongparameters . . .

CHAIRMAN MELO: Ordinary folder. (PANEL 48)

On the same day, Atty. Alarkon wrote a letter dated April 6, 2010

addressed to OTC Paper Supply notifying it that the Notice of Award "is

hereby recalled21

." It was received by Henry Young on April 7, 2010.Also on the same day, BAC Chair Alarkon issued a Memorandum dated

April 6, 2010 addressed to the Commission En Banc thru Executive

Director Jose Tolentino, transmitting BACs Board Resolution No. 101-

21 Panel 57A

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2010 dated April 5, 2010, earlier quoted above, "providing for the

BACs reply on En Banc Resolution No. 8814 for the procurement of ballot

secrecy folders." (PANEL NO. 57E) The gist is that the BAC most

respectfully deems that the Honorable Commission en Banc, was

fully informed of the basis on the requested allocation x x x. BAC Chair

Alarkon also issued a memorandum to Director James Jimenez dated April

6, 2010, transmitting to him copy of the BACs report "for purposes of

record and information." (PANEL NO. 57B)

Still on the same day, the Comelec En Banc promulgated COMELEC

MINUTE RESOLUTION 10-0455 dated April 6, 2010 "IN THE MATTER OF

CREATING A PANEL TO INVESTIGATE THE PROCUREMENT OF THE

BALLOT SECRECY FOLDER" on the basis of the recommendation of the

Bids and Awards Committee (BAC Resolution No. 85-2010). (PANEL

NO. 50) It designated as members Director Ferdinand T. Rafanan of

the Law Department, Director Adolfo A. Ibanez of the Personnel

Department, and Director Divina E. Blas-Perez of the Election and

Barangay Affairs Department.

Hence, on April 9, 2010, Director Ferdinand T. Rafanan issued Panels

Memorandum No. 10-156022 addressed to Director Adolfo A. Ibanez and

Director Divina Blas-Perez, stating: Pursuant to En Banc Resolution No.

10-0445 In the matter of creating a panel to investigate the procurement

of the Ballot Secrecy Folder, we shall convene as a Panel to discuss our

procedures and tasks in the conduct of investigation in the LawDepartment at 10:00 am of Monday (April 12, 2010). He also issued

Panel Memorandum No. 10-156123 addressed to all members of the BAC

and the Head of the BAC Secretariat Atty. Jocelyn Postrado, as well as

Executive Director Jose Tolentino, Jr.24, directing them to submit to the

undersigned all documents pertinent to the procurement of the Ballot

Secrecy Folder (BSF) leading to the issuance of Notice of Award to OTC

Paper Supply. They were likewise enjoined to submit all memoranda

and other documents relative thereto.

22 Panel 51

23 Panel 52

24 Panel 53

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On April 9, 2010, OTC Paper Supply, as single proprietorship of Willy

Young, filed a Motion for Reconsideration25, alleging that the Commission

effectively terminated an existing contract; that a valid contract exists;

that on March 16, 2010, it received a Notice of Award26 for the supply and

delivery of 1,815,000 pieces of ballot secrecy folder through the BAC; that

it submitted a performance bond27 on March 19, 2010; and that on

March 27, 2010 or ten days after receipt of the Notice of Award, the

Commission by operation of law is deemed to have approved the

contract. It also alleged that it has already invested a significant

amount of capital in order to deliver the goods covered by the subjectcontract and will suffer serious financial losses if the termination thereof

will not be set aside. It further alleged as follows:

7.01. Under the terms of the Notice of Award, x x x movantOTC is obliged to deliver thirty percent (30%) of the 1,815,000ballot secrecy folder on April 7, 2010, another thirty percent(30%) on April 14, 2010 and the remaining forty percent (40%)on April 21, 2010;

7.02. On account of the proximity of the delivery dates of thegoods covered by the contract, movant OTC Paper Supply, underpain of being penalized for delayed delivery under Section 68 ofthe Implementing Rules and Regulations, proceeded to procurethe needed raw materials and to manufacture the aforesaidgoods.

It seeks to be compensated for the sum of money that it has used for

the manufacture of ready for delivery ballot secrecy folders. Such

amount of capital, financial losses, sum of money, performance

bond, etc. could be the injury in RA 3019, but Henry Young, Willy

Young, and OTC Paper Supply did not cooperate28 in this investigation. It

filed on April 12, 2010 a Supplement to the Motion for Reconsideration29

moving that the Commission in the meantime cease and desist from

purchasing ordinary folders from other supplier.

25

Panel 5426 Annex A to the Motion

27 Annex B to the Motion showing Comelec receipt for the amount of P34,485,000 check

28 Please see Panel 192

29 Panel 58

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III. I S S U E S

The issues found by the PANEL OF INVESTIGATORS are:

1. DID THE BAC AND OTHER OFFICERS INVOLVED IN THE

PROCUREMENT PROCESS FAITHFULLY COMPLY WITH THE RULES

AND PROCEDURES MANDATED UNDER RA 9184 FOR

PROCUREMENT OF THE BALLOT SECRECY FOLDER WITHOUT

PUBLIC BIDDING?

SUB-ISSUE: DOES OTC PAPER SUPPLY HAVE LEGAL,FINANCIAL AND TECHNICAL ELIGIBILITYTO PROVIDE A P690MILLION PROJECT?

2. DID HENRY YOUNG OF OTC PAPER SUPPLY, BY HIMSELF OR IN

CONNIVANCE WITH THE BAC AND OTHER OFFICERS INVOLVED IN

THE PROCUREMENT PROCESS, EMPLOY SCHEMES WHICH TEND TO

RESTRAIN THE NATURAL RIVALRY OF THE PARTIES OR OPERATE

TO STIFLE OR SUPPRESS COMPETITION AND THUS PRODUCE A

RESULT DISADVANTAGEOUS TO THE PUBLIC?

3. WAS THE PRICE OF P380 PER PIECE OF THE BALLOT SECRECY

FOLDER FOR A TOTAL COST OF P689,700,000 VALID,

APPROPRIATE, AND MOST ADVANTAGEOUS PRICE FOR THE

GOVERNMENT?

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IV. F I N D I N G S

A. ON ISSUE NO. 1: DID THE BAC AND OTHEROFFICERS INVOLVED IN THE PROCUREMENTPROCESS FAITHFULLY COMPLY WITH THERULES AND PROCEDURES MANDATEDUNDER RA 9184 FOR PROCUREMENT OFTHE BALLOT SECRECY FOLDER WITHOUTPUBLIC BIDDING?

Republic Act No. 9184, otherwise known as the Government Procurement

Reform Act provides the general rule that all government procurement

shall be done only through public bidding. This is the standard:

SEC. 7. Procurement Planning and Budgeting Linkage. All procurement should be within the approved budget of theProcuring Entity and should be meticulously and judiciouslyplanned by the Procuring Entity concerned. Consistent withgovernment fiscal discipline measures, only those consideredcrucial to the efficient discharge of governmental functions shallbe included in the Annual Procurement Plan to be specified in theIRR.

No government Procurement shall be undertaken unlessit is in accordance with the approved Annual ProcurementPlan of the Procuring Entity. The Annual ProcurementPlan shall be approved by the Head of the ProcuringEntity and must be consistent with its duly approvedyearly budget.

The Annual Procurement Plan shall be formulated and revisedonly in accordance with the guidelines set forth in the IRR.

The Annual Procurement Plan (APP)30 of Comelec for 2010 covering the

procurement of the ballot secrecy folder (breakdown of other supplies)

shows "BALLOT SECRECY FOLDER: 960,000 PIECES, P4.80

ESTIMATED UNIT COST, TOTAL AMOUNT OF P4,608,000". Was this

revisedin accordance with the guidelines set forth in the IRR? Not at

all. Hence, above cited section of RA 9184 and the guidelines set forth

below were violated by the BAC and other officers involved in the

30 Panel 112

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procurement process. The Implementing Rules and Regulations of RA

9184 as amended, provides the guidelines as follows:

RULE II PROCUREMENT PLANNINGSection 7. Procurement Planning and Budgeting Linkage7.1. All procurement should be within the approvedbudget of the procuring entity and should be meticulously and judiciously planned by the procuring entity concerned. Nogovernment procurement shall be undertaken unless it is inaccordance with an approved Annual Procurement Plan (APP).In the case of projects funded from lump-sum appropriations, thehead of the procuring entity shall immediately update the APP toinclude such projects or contracts. X x x The ABC for thecontract shall be at all times consistent with the appropriationsfor the project authorized in the GAA and/or continuingappropriations, in the case of NGAs; the corporate budgetapproved by the governing boards, pursuant to E.O. 518, in thecase of GOCCs; and the budget approved by the Sanggunian inthe case of LGUs.7.2. Each procuring entity shalljudiciously prepare, maintainand update an APP for all its procurement, that shall include,for each individual project, a Project Procurement ManagementPlan (PPMP)31. The APP shall bear the approval of the head ofthe procuring entity or second-ranking official designated by thehead of the procuring entity to act on his behalf, and must beconsistent with its duly approved yearly budget. Consistent withgovernment fiscal discipline measures, only those consideredcrucial to the efficient discharge of governmental functions shallbe included in the APP. For purposes of this IRR-A, a procurementshall be considered crucial to the efficient discharge ofgovernmental functions if it is required for the day-to-dayoperations or is in pursuit of the principal mandate of theprocuring entity concerned. X x x7.4. The preparation and updating of the PPMPs shall be theresponsibility of the respective Project Management

Offices (PMOs) or end-user units of the procuring entities,while the consolidation of these PPMPs into an APP shall belodged with the BAC Secretariat of that procuring entity. Theseunits may avail of the services of technical experts to review theindividual PPMPs.7.5. Updating of the individual PPMPs and the consolidated APPfor each procuring entity shall be undertaken every six (6)months or as often as may be required by the head of theprocuring entity. Implementation of any project not

31 7.3. The PPMP shall include: a) the type of contract to be employed; b) the extent/size ofcontract scopes/packages; c) the procurement methods to be adopted, and indicating if the

procurement tasks are to be outsourced as provided in Section 53(e) of this IRR-A; d) the

time schedule for each procurement activity; and e) the estimated budget for the general

components of the contract e.g., civil works, goods and consultancy services. The APP shall

include provisions for foreseeable emergencies based on historical records.X x x

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included in the procuring entitys APP shall not beallowed.

Prudence dictates that the BAC et al. should have scrutinized more

judiciously the propriety ofdeparting from the unit price of P4.80 as

budgeted and provided for in the APP and ABC to embrace the

astronomical unit price of P380 as presented by OTC Paper Supply.

Another standard or principle in government procurement which is basic

and fundamental is competitive bidding. RA 9184 provides:

SEC. 10. Competitive Bidding. - All Procurement shall bedone through Competitive Bidding, except as provided forin Article XVI of this Act.

Competitive bidding is required for all procurement. The Bids and Awards

Committee did not follow this standard. It dispensed with it. But

competitive bidding can be dispensed with only in accordance with Article

XVI of RA 9184 which provides as follows:

ARTICLE XVI, ALTERNATIVE METHODS OF PROCUREMENT

SEC. 48. Alternative Methods. - Subject to the prior approvalof the Head of the Procuring Entity or his duly authorizedrepresentative, and whenever justified by the conditions

provided in this Act, the Procuring Entity may, in order topromote economy and efficiency, resort to any of the followingalternative methods of Procurement:

(a) Limited Source Bidding, otherwise known as SelectiveBidding x x x(b) Direct Contracting32, otherwise known as SingleSource Procurement a method of Procurement that

32How Can Direct Contracting be Justified?

To justify the need to procure through the Direct Contracting method, the BAC should

conduct a survey of the industry and determine the supply source. This survey shouldconfirm the exclusivity of the source of goods and services to be procured. In all cases

where Direct Contracting is contemplated, the survey must be conducted prior to the

commencement of the procurement process. Moreover, the Procuring Entity must justify the

necessityfor an item that may only be procured through Direct Contracting, and it must be

able to prove that there is no suitable substitute in the market that can be obtained at more

advantageous terms.x x x

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does not require elaborate Bidding Documentsbecause the supplier is simply asked to submit aprice quotation or a pro-forma invoice together withthe conditions of sale, which offer may be accepted

immediately or after some negotiations;(c) Repeat Order x x x(d) Shopping x x x or(e) Negotiated Procurement33 a method of Procurement that may be resorted under the extraordinarycircumstances provided for in Section 53 of this Act andother instances that shall be specified in the IRR, wherebythe Procuring Entity directly negotiates a contract with atechnically, legally and financially capable supplier,contractor or consultant.

In all instances, the Procuring Entity shall ensure that themost advantageous price for the Government is obtained.

X x x x

SEC. 50. Direct Contracting. Direct Contracting may beresorted to only in any of the following conditions:

(a) Procurement of Goods of proprietary nature,which can be obtained only from the proprietarysource, i.e. when patents, trade secrets and

copyrights prohibit others from manufacturing thesame item;(b) When the Procurement of critical components from aspecific manufacturer, supplier or distributor is a conditionprecedent to hold a contractor to guarantee its projectperformance, in accordance with the provisions of hiscontract; or,(c) Those sold by an exclusive dealer or manufacturer,which does not have sub-dealers selling at lower prices andfor which no suitable substitute can be obtained at moreadvantageous terms to the Government.

The MANUAL OF PROCEDURES FOR THE PROCUREMENT OF GOODS AND

SERVICES (VOL. 2), GPPB, JUNE 2006, discusses how Direct Contracting

must be conducted:

33 SEC. 53. Negotiated Procurement. Negotiated Procurement shall be allowed only inthe following instances:(a) In cases of two failed biddings, as provided in Section 35 hereof;(b) In case of imminent danger to life or property during a state of calamity, or when time

is of the essence arising from natural or man-made calamities or other causes whereimmediate action is necessary to prevent damage to or loss of life or property, or torestore vital public services, infrastructure facilities and other public utilities; X X XIRR-A, SECTION 54. d) For item (b) of Section 53 of the Act and this IRR-A, the negotiationshall be made with a previous supplier, contractor or consultant of good standing of theprocuring entity concerned, or a supplier, contractor or consultant of good standing situatedwithin the vicinity where the calamity or emergency occurred. The award of contractshall be posted at the G-EPS website, website of the procuring entity, if any, andin conspicuous place within the premises of the procuring entity.

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The following steps are undertaken in conducting DirectContracting:

1. The method of procurement to be used shall be asindicated in the approved APP. If the original mode ofprocurement recommended in the APP was Public Bidding butcannot be ultimately pursued, the BAC, through a resolutionshall justify and recommend the change in the mode ofprocurement to be approved by the Head of ProcuringEntity.2. For information purposes, the BAC through the BACSecretariat shall post the notice of direct contracting in thefollowing:

a) The PhilGEPS;b) The website of the Procuring Entity and its electronic

procurement service provider, if any, andc) Any conspicuous place in the premises of the Procuring

Entity.3. The BAC, through the TWG and the BAC Secretariat,prepares the Request for Quotation, technical specifications,and draft contract in accordance with the procedures laiddown in this Manual, in the IRR-A and in the PBDS.4. The BAC, through the Secretariat, identifies the supplierfrom whom the goods will be procured.5. If the pre-procurement conference is required or deemednecessary, as previously discussed in this Manual, the BACholds such conference. If a pre-procurement conference isheld, the participants should confirm the existence ofconditions required by law for procurement through DirectContracting.6. The BAC, through Secretariat, posts for informationpurposes the Request for Quotation for a period of seven (7)calendar days prior to sending the request for quotation, in:

a) The PhilGEPS;b) The website of the Procuring Entity and its electronic

procurement service provider, if any, and

c) Any conspicuous place in the premises of theProcuring Entity.7. The BAC sends the Request for Quotation to the selectedsupplier. If necessary, negotiations are conducted to ensurethat the Government is able to procure the goods at the mostadvantageous terms.8. The BAC proceeds with contract signing and approval.

RA 9184 expressly provides that there must be prior approval of the

Commission En Banc to resort to alternative methods. The purpose of

resorting to alternative methods of procurement is in order to promote

economy and efficiency. In all instances of alternative methods,

the Procuring Entity shall ensure that the most advantageous price

for the Government is obtained. In DIRECT CONTRACTING, which the BAC

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adopted, the supplier is supposed to be asked to submit a price

quotation or a pro-forma invoice. The BAC claims34 that the Ballot

Secrecy Folder (BSF) that we must use in the May 10, 2010 elections was

goods of proprietary nature, which can be obtained only from

the proprietary source, which is the OTC Paper Supply, because its

patents, trade secrets and copyrights prohibit others from

manufacturing the same item.

Was there compliance with the legal requirements to resort to the

alternative method of procurement which we call direct contracting?The legal requirements are:

1. prior approval of the Commission En Banc to resort to

alternative methods;

2. to promote economy and efficiency;

3. the most advantageous price for the Government is

obtained;

4. the supplier is supposed to be asked to submit a price

quotation or a pro-forma invoice;

5. the Ballot Secrecy Folders (BSF) are goods of proprietary

nature, which can be obtained only from the

proprietary source, which is the OTC Paper Supply;

6. The supplier had patents, trade secrets and copyrights

(which) prohibit others from manufacturing the same

item; and

7. Survey of the industry to determine the exclusivity of the

source.

None of these requirements were complied with by the BAC. First, instead

of obtaining from the Commission En Banc a prior approval to resort to

34 Panel 57E

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Direct Contracting (without public bidding), Executive Director Jose

Tolentino, Jr. made the Commission to believe that there would be public

bidding, as follows:

EXEC. DIR. TOLENTINO: Yes sir ang sa akin if we agree to thisdesign we can say ok, agreed iyung design and then we will letthe BAC take appropriate action for the procurement x x x

CHAIRMAN MELO: Ano, ano, mag papa-bid tayo niyan, ohindi na?

EXEC DIR TOLENTINO: YES x x x sir ito sir, ah, we'll just directthe BAC to proceed with the procurement process and thenbahala na ang BAC kung ano ang gagawin nila x x x Approve

the design and then let the BAC proceed with theprocurement. (PARTIAL TRANSCRIPT OF STENOGRAPHICNOTES OF THE REGULAR EN BANC MEETING HELD ON FEBRUARY17, 2010 AM, PANEL 20)

Moreover, the first BAC document submitted to the En Banc relative to

BSF procurement appears to be the one submitted on March 5, 201035

which is BAC Resolution No. 85-2010 recommending the award of the

contract to OTC Paper Supply. (PANEL NO. 23) Therein, the BAC was

justifying this procurement through direct contracting without asking for,

or referring at all to, a prior authorization from the Head of the Procuring

Entity.

Second, economy and efficiency were not promoted. Third, the evidence

does not show that the most advantageous price for the Government

is obtained. It shows the contrary instead. Everybody except Executive

Director Tolentino, the BAC, and the OTC Paper Supply is amazed that a

material whose sole purpose is to cover ones vote while voting should

cost P380 and that the total cost to the country would be

P689,700,000.00! Another evidence that it is not the most advantageous

price to the government is the suppliers belated offer of a big discountwhen it attempted through Executive Director Tolentino to save the

contract on April 5, 2010, as follows:

35 Please note that as of March 5, 2010, there wasno patent right yetto speak of

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EXEC DIR. TOLENTINO: Ang sunod naman Sir is iyong theconclusion that the price of P380 is exorbitant. Just like thestatement of Dr. Serrano and Ferdie, there was no statement orstudy made to show that this is indeed exorbitant. It's just a

subjective . . .

CHAIRMAN MELO: Ako akala ko P3.80. x x x

EXEC. DIR. TOLENTINO: Sir, at 10:20 Sir, Dir. Alarkon submittedto my office a transmittal of the offer of OTC Paper na nanalodyan Sir, because if we recall last En Banc meeting, di ba sinabimahal ang presyo so you asked for price reduction.

CHAIRMAN MELO: Oh, that was last Wednesday.

EXEC. DIR. TOLENTINO: That was before the Holy Week. So maymemo dito si Leah dated today transmitting the offer of OTCdated today also. Ang sinasabi nila that binigyan sila ngdiscount of P137.74 per piece.

CHAIRMAN MELO: 137.

EXEC. DIR. TOLENTINO: .74 per piece. Which translates to atotal discount of 250 million. (PARTIAL TRANSCRIPT OFSTENOGRAPHIC NOTES OF THE SPECIAL EN BANC MEETING HELDON APRIL 5, 2010, PANEL 45).

Who is the businessman in his right mind who would readily let go P250

million in the form of a discount, given in a cavalier manner, if his original

offer was not atrociously overpriced?

As early as March 30, 2010 when this matter was first brought up to the

Commission En Banc, Commissioner Armand Velasco already expressed

astonishment at the inordinate price:

E.D. TOLENTINO: "And I don't think he is questioning theprocedure, it's just the price.

COMM. VELASCO: 700! Almost 10% of the total amount ofautomation. Automation is 7B and this one is 700. Mostcumbersome. X X X

TOLENTINO: "Negotiate for a lower price but not to cancel it kasinag notice of award most probably nag order na iyan, and theonly reason hindi nakaka-deliver is because of the requirementthat the Purchase Order must first be issued before delivery."(PARTIAL TRANSCRIPT OF STENOGRAPHIC NOTES OF REGULAREN BANC HEARING ON THE BSF DATED MARCH 30, 2010,PANEL 38).

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Fourth, no document shows that the supplier OTC Paper Supply was

asked to submita price quotation or a pro-forma invoice by ExecutiveDirector Tolentino or the BAC. On the contrary, it was OTC Paper Supply

which unilaterally (unless it was asked behind the scenes to submit)

submitted its price quotation in a letter dated February 27, 2010

addressed to BAC Chair Alarkon as follows: We would like to respectfully

submit for your consideration our proposal for 1,815,000 pcs Plastic Ballot

Secrecy Folders at Php380.00/pc with the following specifications: X X X

(PANEL 22) The offer was accepted immediately notafter some

negotiations.

Fifth and sixth, the Ballot Secrecy Folders (BSF) are NOT goods of

proprietary nature, which can be obtained only from the

proprietary source, which is the OTC Paper Supply. It had no

copyright; it had no patent. It had no right whatsoever on March 5,

2010 which the BAC should recognize, much less protect. Director

Epifanio M. Evasco of the Bureau of Patents submitted to the Panel a

Certification36 dated June 8, 2010 stating:

4. Also, it must be noted that this UM application is deemedregistered as of March 15, 2010 as much as no opposition oradverse information was received by our Office within the periodof two (2) months from its date of publication on March 15,2010 . . .

The grand deception in this procurement culminated when the BAC issued

its BAC RESOLUTION NO. 85-2010 dated March 5, 2010 recommending37

to the Comelec En Banc the award of the BSF contract to OTC Paper

Supply, invoking emergency and proprietary nature as well as "the

accompanying eligibility documents", as follows:

WHEREAS, on 17 February 2010, the Honorable Commission en

Banc issued Comelec Minute Resolution No. 10-0251 approvingthe design presented by Executive Director Jose M. Tolentino x x x on 27 February 2010, OTC PAPER SUPPLYsubmitted to the BAC its proposal x x x whose technical

36 Panel 177

37 Panel 23

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specifications are very much in UNISON with the designapproved x x x immediate action is necessary to restore vitalpublic services, x x x direct contracting is applicable in caseof procurement involving goods of proprietary nature which can

be obtained only from a proprietary source, x x xafter acareful evaluation of the proposal and the accompanyingeligibility documents, as well as its application for copyright,the BAC finds that only OTC PAPER SUPPLY can supply anddeliver the necessary ballot secrecy folder x x x by virtue of itsclaim of copyright over the design x x x WHEREFORE, x xx the BAC hereby recommends to the HonorableCommission En Banc to award the contract for the Supplyand Delivery of the 1,815,000 pieces of Ballot Secrecy Folders xx x at the rate of P380.00 per piece to OTC PAPER SUPPLY;(Emphasis supplied).

Are you wondering how come OTC Paper Supply submitted a proposal

whose technical specifications are very much in unison with the design

presented by Exec. Dir. Tolentino and approved by the Commission En

Banc? Are you wondering how come exactly the same specifications

approved by the En Banc on February 11, 2010 are the specifications also

which OTC Paper Supply applied for registration in the Bureau of Patents

on February 10, 2010? One mastermind was orchestrating the design

and specifications for approval by the Commission En Banc on February

11, 2010 and for application for registration of the same design and

specifications in the Bureau of Patents on February 10, 2010. The

exactness (very much in unison) cannot be by coincidence.

Seventh, there was no survey of the industry conducted by the BAC to

justify direct contracting with the OTC Paper Supply. This survey should

confirm the exclusivity of the source of the BSF to be procured and it

must be able to prove that there is no suitable substitute in the market

that can be obtained at more advantageous terms. The absence of the

survey of industry to justify procurement through direct contracting is

evident from the wordings of BAC Resolution No. 85-2010 recommending

the award of the contract to OTC Paper Supply: 38

38WHEREAS, after a careful evaluation of theproposaland the accompanying eligibility

documents as well as its application for copyright, the BAC finds that only OTC Paper

Supply can supply and deliver the necessary ballot secrecy folder for the May 10, 2010

National and Local Elections by virtue of its claim of copyright over the design of the ballot

secrecy folder.

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The BAC based its decision to award the contract to OTC Paper Supply

only upon three things: 1) its proposal; 2) its eligibilitydocuments; and

3) its application for copyright. There was no mention that the BAC

conducted a survey of the industry to determine the supply source of

goods and the exclusivity of the source of goods to be procured. The BAC

also failed to prove that there was no suitable substitute at more

advantageous terms for the government.

SUB-ISSUE:DOES OTC PAPER SUPPLY HAVE

LEGAL, FINANCIAL AND TECHNICAL ELIGIBILITY

TO PROVIDE A P690 MILLION PROJECT?

It has none. The PANEL'S MEMORANDUM NO. 10-1600 dated April 13,

2010 addressed to BAC CHAIR ALARKON requested for "DOCUMENTS

SUBMITTED BY OTC PAPER SUPPLY IN ITS BID FOR THE INDELIBLE

INK OR LATEST BID, SHOWING ITS LEGAL ELIGIBILITY, FINANCIAL

ELIGIBILITY AND TECHNICAL ELIGIBILITY. We need this to determine its

competitive capacity to provide P690,000,000 worth of supplies, among

others". (PANEL NO. 67)

This was immediately followed by PANEL'S MEMORANDUM NO. 10-1600

(same number) dated April 14, 2010 addressed to BAC CHAIR ALARKON

requesting for ELIGIBILITY "DOCUMENTS SUBMITTED BY OTC PAPER

SUPPLY IN ITS BID FOR UV LAMPS, STAMP PADS, AND/OR OTHER BIDS,

SHOWING ITS LEGAL ELIGIBILITY, FINANCIAL ELIGIBILITY AND TECHNICAL

ELIGIBILITY". (PANEL NO. 67)

BAC Chair Alarkon replied and stated in her Memorandum dated April 14,

2010: "Anent your Memorandum dated April 13, 2010 requiring the BAC

to submit the eligibility documents of OTC Paper Supply in its bid for

the indelible ink or latest bid, please be informed that OTC Paper Supply

has not participated in the aforesaid procurement." (PANEL NO. 69)

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Again, the PANEL'S MEMORANDUM NO. 10-2222 (2122) dated April 26,

2010 (PANEL NO. 94) addressed to BAC Chair Alarkon and BAC

Secretariat Head Postrado reiterated 3 previous memoranda (dated April

9, 13, 14, 2010) requesting for submission of the eligibility documents of

OTC PAPER SUPPLY.

The PANELS MEMORANDUM No. 10-2214 dated April 29, 2010 (PANEL

NO. 108) declared:

Further, in your BAC Resolution No.85-201039

dated March 5,2010, promulgated on March 15, 2010, it was clearly statedtherein that:

WHEREAS, after a careful evaluation of the proposal andthe accompanying eligibility documents as well as itsapplication for copyright, the BAC finds that only OTCPaper Supply can supply and deliver the necessary ballotsecrecy folder for the May 10, 2010 National and LocalElections by virtue of its claim of copyright over the designof the ballot secrecy folder;

No OTC PAPER SUPPLY eligibility documents can be found onthe records transmitted to the PANEL OF INVESTIGATORS. This isthe reason why in a series of Memoranda sent to you forcompliance, the latest of which was Memorandum No.10-2222dated April 26, 2010 copy attached, the PANEL kept onrequesting for the said eligibility documents pertaining to theBallot Secrecy Folder or if none, even for other biddingsparticipated in by OTC PAPER SUPPLY.

For the fifth time, the PANEL requests for the submission ofthe eligibility documents of OTC PAPER SUPPLY and explanation

for your failure to submit said documents, not later than 12 noonof April 30, 2010. We note your stubborn blocking of theprocess of investigation.

On April 30, 2010, BAC Chair Ma. Leah Alarkon wrote a memorandum

(PANEL NO. 121) stating:

2. As to the requirement of submitting the eligibility documentsof OTC for subject procurement, PLEASE KNOW THAT THE

ELIGIBILITY DOCUMENTS MENTIONED IN THE RESOLUTIONPERTAIN TO the letter-proposal of the provider in subjectprocurement, the certification from the intellectual propertyoffice, and the specifications on the design of the offered BallotSecrecy Folder, which were among those already transmitted toyour good office. Aside from these, no other eligibility

39 Panel 23

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documents were submitted considering that the BAC appliedthe procedure provided under Section 50, of the RevisedImplementing Rules and Regulations of Republic Act 9184 (RlRR,R.A. 9184), which states, to wit:

Section 50. Direct Contracting or single sourceprocurement is a method of procurement of goods thatdoes not require ELABORATE Bidding Documents.The supplier is simply asked to submit a price quotationor a pro-forma invoice together with the conditions ofsale. The offer may be accepted immediately or aftersome negotiations. (Emphasis supplied)

Fundamentally, as a lawyer, BAC Chair Alarkon, and the entire BAC should

know that ELIGIBILITY under RA 9184 has a technical

meaning/signification. It does not refer to the letter-proposal of the

provider, the certification from the Intellectual Property Office of a

pending application, and the specifications on the design of the BSF.

HENCE, IT IS CLEAR THAT THE BAC AND ITS SECRETARIAT LIED TO THE

COMMISSION EN BANC THROUGH BAC RESOLUTION No. 85-201040 DATED

MARCH 5, 2010, AND REFUSED TO SUBMIT ANY LEGAL, FINANCIAL AND

TECHNICAL ELIGIBILITY DOCUMENTS OF OTC PAPER SUPPLY, EITHER IN

THE DIRECT CONTRACTING BSF PROCUREMENT OR IN THE OTHER

PROCUREMENTS. IT IS ALSO CLEAR THAT OTC PAPER SUPPLY DID NOT

SUBMIT ANY ELIGIBILITY DOCUMENTS FOR THE BSF.

In view thereof, the Panel, in its Memorandum No. 10-2217 dated April 30,

2010 wrote to the En Banc:

Premises considered, the undersigned recommend thetemporary relief of Dir. Ma. Leah Alarkon as Chairman ofthe BAC so as to enable us unhampered access to documentspending investigation and so that she may not use said positionto hinder a thorough investigation. We also recommend thedesignation of Dir. Esmeralda Amora Ladra as Acting BAC

Chairman. (PANEL NO. 123)

The Panel has not been informed of any action taken on said

recommendation.

40 Panel 23

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OTCs legal and financial eligibility is important to show that it was eligible

to provide a P690 million project and could compete with other bidders if

a public bidding were held. On the other hand, if it did not have that

eligibility then this is another circumstance to show connivance to

enable it, bereft of the requisite eligibility, to get the direct contract

without any competition or rivalry, since direct contracting does not

require ELABORATE Bidding Documents. It is also another evidence

of giving unwarranted preference. Rule 131, Section 3 of the Rules of

Court provides the disputable presumption (e) That evidence willfully

suppressed would be adverse if produced. True enough, according to

Henry Young in his media interviews OTC had already incurred a P500million peso bank loan to manufacture its expensive ballot secrecy

folders. Clearly, it does not possess the financial eligibility to

carry out a P690 million peso project. The suppression of

evidence to this effect is in consonance with the intent of

connivance and it is one of the many spokes of circumstantial

evidence proving it.

Non-submission of the required eligibility documents and/or not being

eligible is a violation of Section 23 of RA 9184 which provides:

SEC. 23. Eligibility Requirements for the Procurement ofGoods and Infrastructure Projects. - The BAC or, underspecial circumstances specified in the IRR, its duly designatedorganic office shall determine the eligibility of prospectivebidders for the procurement of Goods and Infrastructure Projects,based on the bidders compliance with the eligibilityrequirements within the period set forth in the Invitation to Bid. The eligibility requirements shall provide for fair and equalaccess to all prospective bidders.

The documents submitted in satisfaction of the eligibilityrequirements shall be made under oath by the prospectivebidder or by his duly authorized representative certifying to thecorrectness of the statements made and the completeness andauthenticity of the documents submitted.

A prospective bidder may be allowed to submit his eligibilityrequirements electronically. However, said bidder shall later oncertify under oath as to correctness of the statements made andthe completeness and authenticity of the documents submitted.

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The Panel gave OTC Paper Supply the opportunity to present its side. It

issued PANEL'S LETTER TO HENRY YOUNG (MEMO NO.1873) dated April

17, 2010 requesting him to submit:

1. AUDITED FINANCIAL STATEMENT FOR THE YEAR 2008-2009;2. DTI BUSINESS NAME REGISTRATION;3. VALID AND CURRENT MAYORS PERMIT;4. BIR REGISTRATION CERTIFICATION, WHICH CONTAINS THETAXPAYERS IDENTIFICATION NUMBER;6. TAX CLEARANCE CERTIFICATE ISSUED BY THE BIR MAINOFFICE AND INCOME OR BUSINESS TAX RETURNS FILEDTHROUGH THE EFPS;7. BANK LOAN CERTIFICATE OR ANY PROOF TO THE AMOUNT OFFIVE HUNDRED MILLION (500,000,000) PESOS MORE OR LESS

YOU ALREADY INCURRED TO CARRY OUT THE BALLOT SECRECYFOLDER TRANSACTION AS YOU CLAIMED BEFORE THE MEDIA;8. REASON FOR SUBMISSION ON MARCH 30, 2010 LETTERADDRESSED TO CHAIRMAN JOSE AR MELO, SUBMITTING THECOMPARATIVE COST ANALYSIS OF YOUR PRODUCT, BALLOTSECRECY FOLDER; AND9. CONFIRMATION ON WHETHER OR NOT YOU SUBMITTED ANYLEGAL DOCUMENTS AND FINANCIAL STATEMENTS TO THE BIDSAND AWARDS COMMITTEE (BAC) RELATIVE TO THE BALLOTSECRECY FOLDER TRANSACTION. (PANEL NO. 84)

Neither OTC Paper Supply nor Henry Young nor Willy Young responded.

On June 16, 2010, we wrote another letter to Henry Young as follows:

We are the Panel of Investigators designated by theCommission on Elections through En Banc Resolution No. 10-0455 dated April 6, 2010 to investigate the matter on the BallotSecrecy Folders.

We would like to know the exact number/quantity of the ballot

of secrecy folders ready for delivery at the time of thecancellation of the Notice of Award on April 5, 2010. Kindlysubmit to us one (1) sample of the said ballot secrecy folders.In the interest of justice and fair play, we reiterate ourrequest in our letter dated April 17, 2010. (PANEL NO.188)

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OTC Paper Supply did not cooperate. The Affidavit of Service41 signed

by the messenger of the Panel of Investigators, Mr. Rodolfo Espinosa

shows that OTC Paper Supplys office refused to receive our letter.

Hence, it is clear that THE BAC AND OTHER OFFICERS INVOLVED IN

THE PROCUREMENT PROCESS DID NOT FAITHFULLY COMPLY WITH

THE RULES AND PROCEDURES MANDATED UNDER RA 9184 FOR

PROCUREMENT OF THE BALLOT SECRECY FOLDER WITHOUT

PUBLIC BIDDING. There was neither factual nor legal basis at all for

direct contracting. This fact violates so many provisions of RA 9184. Butis there any penal provision for such violations? Yes, definitely! They all

constitute the spokes of a wheel or a centripetal web whose

vortex is CONNIVANCE defined in Section 65(b.4) of RA 9184 as an

offense, as follows:

RA 9184, SEC. 65. Offenses and Penalties. X X X(b) Private individuals who commit any of the following

acts, including any public officer, who conspires with them,shall suffer the penalty of imprisonment of not less than six(6) years and one (1) day but not more than fifteen (15)years: X X X

(4) When a bidder, by himself or in connivancewith others, employ schemes which tend torestrain the natural rivalry of the parties oroperates to stifle or suppress competition andthus produce a result disadvantageous to thepublic.

41 1. On June 16,2010 at around 5:30pm, I arrived at 451M. dela Cruz St., Sta. Quiteria,Caloocan City with the intent to personally serve a letter of the Panel of Investigators dated

June 16,2010 address to Mr. Henry Young. However, I was told by the guard on duty that hecannot receive the letter because it is already beyond office hours and that he was notauthorized to receive it. So, I decided to go back to the office and report what transpired toDirector Ferdinand T. Rafanan, the Head of the Panel of Investigator