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the operational aspects of the cycle including the allocation and release of funds earmarked for various projects. Simply put, from the regulation of fund releases, the implementation of payment schedules and up to the actual spending of the funds specified in the law, the Executive takes the wheel. “The DBM lays down the guidelines for the disbursement of the fund. The Members of Congress are then requested by the President to recommend projects and programs which may be funded from the PDAF. The list submitted by the Members of Congress is endorsed by the Speaker of the House of Representatives to the DBM, which reviews and determines whether such list of projects submitted is consistent with the guidelines and the priorities set by the Executive.” This demonstrates the power given to the President to execute appropriation laws and therefore, to exercise the spending per se of the budget.

In Philconsa, the Court upheld the authority of individual Members of Congress to propose and identify priority projects because this was merely recommendatory in nature and it also recognized that individual members of Congress far more than the President and their congressional colleagues were likely to be knowledgeable about the needs of their respective constituents and the priority to be given each project.

As applied to this case, the petition is seriously wanting in establishing that individual Members of Congress receive and thereafter spend funds out of PDAF. Although the possibility of this unscrupulous practice cannot be entirely discounted, surmises and conjectures are not sufficient bases for the Court to strike down the practice for being offensive to the Constitution.

ARCHBISHOP FERNANDO CAPALLA, et al. v. THE HONORABLE COMMISSION ON ELECTIONSG.R. Nos. 201112, 201121, 201127, and 201413, 13 June 2012,

EN BANC (Peralta, J.)

A winning bidder is not precluded from modifying or amending certain provisions of the contract bidded upon. However, such changes must not constitute substantial or material amendments that would alter the basic parameters of the contract and would constitute a denial to the other bidders of the opportunity to bid on the same terms.

Pursuant to its authority to use an Automated Election System (AES), the Commission on Elections (COMELEC) posted and published an invitation to apply for eligibility and to bid for the 2010 Poll Automation Project. COMELEC

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awarded the contract for the project to respondent Smartmatic-TIM. Thereafter, 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, for brevity). The contract between the COMELEC and Smartmatic-TIM was one of “lease of the AES with option to purchase (OTP) the goods listed in the contract.” In said contract, the Comelec was given until December 31, 2010 within which to exercise the option.

In a letter, Smartmatic-TIM, through its Chairman Cesar Flores (Flores), proposed a temporary extension of the option period to buy the PCOS machines until March 31, 2011. The COMELEC did not exercise the option within the extended period. Several extensions were given for the COMELEC to exercise the OTP until its final extension on March 31, 2012. On March 29, 2012, the COMELEC issued a resolution resolving to accept Smartmatic-TIM’s offer to extend the period to exercise the OTP until March 31, 2012.

Archbishop Capalla, et al. thus assailed the validity and constitutionality of the COMELEC Resolutions for the purchase of the subject PCOS machines as well as the Extension Agreement and the Deed of Sale covering said goods mainly on the ground that the option period provided for in the AES contract between the COMELEC and Smartmatic-TIM had already lapsed and, thus, could no longer be extended, such extension being prohibited by the contract.

ISSUE:

Whether or not the unilateral extension of the option period which Smartmatic-TIM granted to COMELEC and which the latter accepted constitutes circumvention of the law on public bidding

HELD:

It is a basic rule in the interpretation of contracts that an instrument must be construed so as to give effect to all the provisions of the contract. In essence, the contract must be read and taken as a whole. While the contract indeed specifically required the COMELEC to notify Smartmatic-TIM of its OTP the subject goods until December 31, 2010, a reading of the other provisions of the AES contract would show that the parties are given the right to amend the contract which may include the period within which to exercise the option. There is, likewise, no prohibition on the extension of the period, provided that the contract is still effective.

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Considering, however, that the AES contract is not an ordinary contract as it involves procurement by a government agency, the rights and obligations of the parties are governed not only by the Civil Code but also by RA 9184. In this jurisdiction, public bidding is the established procedure in the grant of government contracts. The award of public contracts, through public bidding, is a matter of public policy. The parties are, therefore, not at full liberty to amend or modify the provisions of the contract bidded upon.

A winning bidder is not precluded from modifying or amending certain provisions of the contract bidded upon. However, such changes must not constitute substantial or material amendments that would alter the basic parameters of the contract and would constitute a denial to the other bidders of the opportunity to bid on the same terms. The determination of whether or not a modification or amendment of a contract bidded out constitutes a substantial amendment rests on whether the contract, when taken as a whole, would contain substantially different terms and conditions that would have the effect of altering the technical and/or financial proposals previously submitted by the other bidders. The modifications in the contract executed between the government and the winning bidder must be such as to render the executed contract to be an entirely different contract from the one bidded upon.

Smartmatic-TIM was not granted additional right that was not previously available to the other bidders. Admittedly, the AES contract was awarded to Smartmatic-TIM after compliance with all the requirements of a competitive public bidding. Although the AES contract was amended after the award of the contract to Smartmatic-TIM, the amendment only pertains to the period within which the COMELEC could exercise the option because of its failure to exercise the same prior to the deadline originally agreed upon by the parties.