FIRST DIVISION
G.R. No. 184666, June 27, 2016
REPUBLIC OF THE PHILIPPINES, Petitioner, v. MEGA PACIFIC ESOLUTIONS, INC., WILLY U. YU, BONNIE S. YU, ENRIQUE T. TANSIPEK, ROSITA Y. TANSIPEK, PEDRO O. TAN, JOHNSON W. FONG, BERNARD I. FONG, AND *LAURIANO A. BARRIOS, Respondents.
D E C I S I O N
SERENO, C.J.:
The instant case is an offshoot of this Court's Decision dated 13 January 2004 (2004 Decision) in a related case entitled Information Technology Foundation of the Philippines v. Commission on Elections.1chanrobleslaw
In the 2004 case, We declared void the automation contract executed by respondent Mega Pacific eSolutions, Inc. (MPEI) and the Commission on Elections (COMELEC) for the supply of automated counting machines (ACMs) for the 2004 national elections.
The present case involves the attempt of petitioner Republic of the Philippines to cause the attachment of the properties owned by respondent MPEI, as well as by its incorporators and stockholders (individual respondents in this case), in order to secure petitioner's interest and to ensure recovery of the payments it made to respondents for the invalidated automation contract.
At bench is a Rule 45 Petition assailing the Amended Decision dated 22 September 2008 (Amended Decision) issued by the Court of Appeals (CA) in CA-G.R. SP No. 95988.2 In said Amended Decision, the CA directed the remand of the case to the Regional Trial Court of Makati City, Branch 59 (RTC Makati) for the reception of evidence in relation to petitioner's application for the issuance of a writ of preliminary attachment. The CA had reconsidered and set aside its previous Decision dated 31 January 2008 (First Decision)3 entitling petitioner to the issuance of said writ.
Summarized below are the relevant facts of the case, some of which have already been discussed in this Court's 2004 Decision:
chanRoblesvirtualLawlibrary
As a consequence of the nullification of the automation contract, We directed the Office of the Ombudsman to determine the possible criminal liability of persons responsible for the contract.9 This Court likewise directed the Office of the Solicitor General to protect the government from the ill effects of the illegal disbursement of public funds in relation to the automation contract.10chanrobleslawAll in all, Comelec subverted the essence of public bidding: to give the public an opportunity for fair competition and a clear basis for a precise comparison of bids.8 (Emphasis supplied)
- By a formal Resolution, it awarded the project to "Mega Pacific Consortium," an entity that had not participated in the bidding. Despite this grant, Comelec entered into the actual Contract with "Mega Pacific eSolutions, Inc." (MPEI), a company that joined the bidding process but did not meet the eligibility requirements.
- Comelec accepted and irregularly paid for MPEI's ACMs that had failed the accuracy requirement of 99.9995 percent set up by the Comelec bidding rules. Acknowledging that this rating could have been too steep, the Court nonetheless noted that "the essence of public bidding is violated by the practice of requiring very high standards or unrealistic specifications that cannot be met, x x x only to water them down after the award is made. Such scheme, which discourages the entry of bona fide bidders, is in fact a sure indication of fraud in the bidding, designed to eliminate fair competition."
- The software program of the counting machines likewise failed to detect previously downloaded precinct results and to prevent them from being reentered. This failure, which has not been corrected x x x, would have allowed unscrupulous persons to repeatedly feed into the computers the results favorable to a particular candidate, an act that would have translated into massive election fraud by just a few key strokes.
- Neither were the ACMs able to print audit trails without loss of data - a mandatory requirement under Section 7 of Republic Act No. 8436. Audit trails would enable the Comelec to document the identities of the ACM operators responsible for data entry and downloading, as well as the times when the various data were processed, in order to forestall fraud and to identify the perpetrators. The absence of audit trails would have posed a serious threat to free and credible elections.
- Comelec failed to explain satisfactorily why it had ignored its own bidding rules and requirements. It admitted that the software program used to test the ACMs was merely a "demo" version, and that the final one to be actually used in the elections was still being developed. By awarding the Contract and irregularly paying for the supply of the ACMs without having seen — much less, evaluated — the final product being purchased, Comelec desecrated the law on public bidding. It would have allowed the winner to alter its bid substantially, without any public bidding.
The above-mentioned incidents are discussed in more detail below.
- Private respondents in the 2004 case moved for reconsideration of the 2004 Decision, but the motion was denied by this Court in a Resolution dated 17 February 2004 (2004 Resolution).11chanrobleslaw
- The COMELEC filed a "Most Respectful Motion for Leave to Use the Automated Counting Machines in the Custody of the Commission on Elections for use in the 8 August 2005 Elections in the Autonomous Region for Muslim Mindanao" dated 9 December 2004 (Motion for Leave to Use ACMs), which was denied by this Court in its Resolution dated 15 June 2005 (2005 Resolution).
- Atty. Romulo B. Macalintal (Macalintal) filed an "Omnibus Motion for Leave of Court (1) to Reopen the Case; and (2) to Intervene and Admit the Attached Petition in Intervention," which was denied by this Court in its Resolution dated 22 August 2006 (2006 Resolution); and cralawlawlibrary
- Respondent MPEI filed a Complaint for Damages12 (Complaint) with the RTC Makati, from which the instant case arose.
We stress once again that the Contract entered into by the Comelec for the supply of the ACMs was declared VOID by the Court in its Decision, because of clear violations of law and jurisprudence, as well as the reckless disregard by the Commission of its own bidding rules and procedure. In addition, the poll body entered into the Contract with inexplicable haste, without adequately checking and observing mandatory financial, technical and legal requirements. As explained in our Decision, Comelec's gravely abusive acts consisted of the following:
chanRoblesvirtualLawlibraryx x x x
To muddle the issue, Comelec keeps on saying that the "winning" bidder presented a lower price than the only other bidder. It ignored the fact that the whole bidding process was VOID and FRAUDULENT. How then could there have been a "winning" bid?22 (Emphasis supplied)
Section 1. Grounds upon which attachment may issue. At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:For a writ of preliminary attachment to issue under the above-quoted rule, the applicant must sufficiently show the factual circumstances of the alleged fraud.65 In Metro, Inc. v. Lara's Gift and Decors, Inc.,66 We explained:ChanRoblesVirtualawlibrary
chanRoblesvirtualLawlibraryx x x x(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof. (Emphasis supplied)
An amendment to the Rules of Court added the phrase "in the performance thereof" to include within the scope of the grounds for issuance of a writ of preliminary attachment those instances relating to fraud in the performance of the obligation.67chanrobleslawTo sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. x x x.The applicant for a writ of preliminary attachment must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation. (Emphasis supplied)
On the question of the identity and the existence of the real bidder, respondents insist that, contrary to petitioners' allegations, the bidder was not Mega Pacific eSolutions, Inc. (MPEI), which was incorporated only on February 27, 2003, or 11 days prior to the bidding itself. Rather, the bidder was Mega Pacific Consortium (MPC), of which MPEI was but a part. As proof thereof, they point to the March 7, 2003 letter of intent to bid, signed by the president of MPEI allegedly for and on behalf of MPC. They also call attention to the official receipt issued to MPC, acknowledging payment for the bidding documents, as proof that it was the "consortium" that participated in the bidding process.These findings found their way into petitioner's application for a writ of preliminary attachment,75 in which it claimed the following as bases for fraud: (1) respondents committed fraud by securing the election automation contract and, in order to perpetrate the fraud, by misrepresenting the actual bidder as MPC and MPEI as merely acting on MPC's behalf; (2) while knowing that MPEI was not qualified to bid for the automation contract, respondents still signed and executed the contract; and (3) respondents acted in bad faith when they claimed that they had bound themselves to the automation contract, because it was not executed by MPC—or by MPEI on MPC's behalf—but by MPEI alone.76chanrobleslaw
We do not agree. 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" — and without any further proof, does not by itself prove the existence of the consortium. It 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. The letter is purely self-serving and uncorroborated.
Neither does an official receipt issued to MPC, acknowledging payment for the bidding documents, constitute proof that it was the purported consortium that participated in the bidding. Such receipts are issued by cashiers without any legally sufficient inquiry as to the real identity or existence of the supposed payor.
To assure itself properly of the due existence (as well as eligibility and qualification) of the putative consortium, Comelec's BAC should have examined the bidding documents submitted on behalf of MPC. They would have easily discovered the following fatal flaws.
x x x x
The Eligibility Envelope was to contain legal documents such as articles of incorporation, x x x to establish the bidder's financial capacity.
In the case of a consortium or joint venture desirous of participating in the bidding, it goes without saying that the Eligibility Envelope would necessarily have to include a copy of the joint venture agreement, the consortium agreement or memorandum of agreement — or a business plan or some other instrument of similar import — establishing the due existence, composition and scope of such aggrupation. Otherwise, how would Comelec know who it was dealing with, and whether these parties are qualified and capable of delivering the products and services being offered for bidding?
In the instant case, no such instrument was submitted to Comelec during the bidding process. x x x
x x x x
However, there is no sign whatsoever of any joint venture agreement, consortium agreement, memorandum of agreement, or business plan executed among the members of the purported consortium.
The only logical conclusion is that no such agreement was ever submitted to the Comelec for its consideration, as part of the bidding process.
It thus follows that, prior the award of the Contract, there was no documentary or other basis for Comelec to conclude that a consortium had actually been formed amongst MPEI, SK C&C and WeSolv, along with Election.com and ePLDT. Neither was there anything to indicate the exact relationships between and among these firms; their diverse roles, undertakings and prestations, if any, relative to the prosecution of the project, the extent of their respective investments (if any) in the supposed consortium or in the project; and the precise nature and extent of their respective liabilities with respect to the contract being offered for bidding. And apart from the self-serving letter of March 7, 2003, there was not even any indication that MPEI was the lead company duly authorized to act on behalf of the others.
x x x x
Hence, had the proponent MPEI been evaluated based solely on its own experience, financial and operational track record or lack thereof, it would surely not have qualified and would have been immediately considered ineligible to bid, as respondents readily admit.
x x x x
At this juncture, one might ask: What, then, if there are four MOAs instead of one or none at all? Isn't it enough that there are these corporations coming together to carry out the automation project? Isn't it true, as respondent aver, that nowhere in the RFP issued by Comelec is it required that the members of the joint venture execute a single written agreement to prove the existence of a joint venture. x x x
x x x x
The problem is not that there are four agreements instead of only one. The problem is that Comelec never bothered to check. It never based its decision on documents or other proof that would concretely establish the existence of the claimed consortium or joint venture or agglomeration.
x x x x
True, copies of financial statements and incorporation papers of the alleged "consortium" members were submitted. But these papers did not establish the existence of a consortium, as they could have been provided by the companies concerned for purposes other than to prove that they were part of a consortium or joint venture.
x x x x
In brief, despite the absence of competent proof as to the existence and eligibility of the alleged consortium (MPC), its capacity to deliver on the Contract, and the members' joint and several liability therefor, Comelec nevertheless assumed that such consortium existed and was eligible. It then went ahead and considered the bid of MPC, to which the Contract was eventually awarded, in gross violation of the former's own bidding rules and procedures contained in its RFP. Therein lies Comclec's grave abuse of discretion.Sufficiency of the Four Agreements
Instead of one multilateral agreement executed by, and effective and binding on, all the five "consortium members" — as earlier claimed by Commissioner Tuason in open court — it turns out that what was actually executed were four (4) separate and distinct bilateral Agreements. Obviously, Comelec was furnished copies of these Agreements only after the bidding process had been terminated, as these were not included in the Eligibility Documents. x x x
x x x x
At this point, it must be stressed most vigorously that the submission of the four bilateral Agreements to Comelec after the end of the bidding process did nothing to eliminate the grave abuse of discretion it had already committed on April 15, 2003.Deficiencies Have Not Been "Cured"
In any event, it is also claimed that the automation Contract awarded by Comelec incorporates all documents executed by the "consortium" members, even if these documents are not referred to therein. x x x
x x x x
Thus, it is argued that whatever perceived deficiencies there were in the supplementary contracts - those entered into by MPEI and the other members of the "consortium" as regards their joint and several undertakings — have been cured. Better still, such deficiencies have supposedly been prevented from arising as a result of the above-quoted provisions, from which it can be immediately established that each of the members of MPC assumes the same joint and several liability as the other members.
The foregoing argument is unpersuasive. First, the contract being referred to, entitled "The Automated Counting and Canvassing Project Contract," is between Comelec and MPEI, not the alleged consortium, MPC. To repeat, it is MPEI - not MPC - that is a party to the Contract. Nowhere in that Contract is there any mention of a consortium or joint venture, of members thereof, much less of joint and several liability. Supposedly executed sometime in May 2003, the Contract bears a notarization date of June 30, 2003, and contains the signature of Willy U. Yu signing as president of MPEI (not for and on behalf of MPC), along with that of the Comelec chair. It provides in Section 3.2 that MPEI (not MPC) is to supply the Equipment and perform the Services under the Contract, in accordance with the appendices thereof; nothing whatsoever is said about any consortium or joint venture or partnership.
x x x xEligibility of a Consortium Based on the Collective Qualifications of Its Members
Respondents declare that, for purposes of assessing the eligibility of the bidder, the members of MPC should be evaluated on a collective basis. Therefore, they contend, the failure of MPEI to submit financial statements (on account of its recent incorporation) should not by itself disqualify MPC, since the other members of the "consortium" could meet the criteria set out in the RFP.
x x x x
Unfortunately, this argument seems to assume that the "collective" nature of the undertaking of the members of MPC, their contribution of assets and sharing of risks, and the "community" of their interest in the performance of the Contract entitle MPC to be treated as a joint venture or consortium; and to be evaluated accordingly on the basis of the members' collective qualifications when, in fact, the evidence before the Court suggest otherwise.
x x x x
Going back to the instant case, it should be recalled that the automation Contract with Comelec was not executed by the "consortium" MPC - or by MPEI for and on behalf of MPC - but by MPEI, period. The said Contract contains no mention whatsoever of any consortium or members thereof. This fact alone seems to contradict all the suppositions about a joint undertaking that would normally apply to a joint venture or consortium: that it is a commercial enterprise involving a community of interest, a sharing of risks, profits and losses, and so on.
x x x x
To the Court, this strange and beguiling arrangement of MPEI with the other companies does not qualify them to be treated as a consortium or joint venture, at least of the type that government agencies like the Comelec should be dealing with. With more reason is it unable to agree to the proposal to evaluate the members of MPC on a collective basis. (Emphases supplied)
What needs to be determined therefore is whether or not the element of defraudation by means of deceit has been established beyond reasonable doubt.For example, in People v. Comila,81 both accused-appellants therein represented themselves to the complaining witnesses to have the capacity to send them to Italy for employment, even as they did not have the authority or license for the purpose. It was such misrepresentation that induced the complainants to part with their hard-earned money for placement and medical fees. Both accused-appellants were criminally held liable for estafa.
In the case of People v. Menil, Jr., the Court has defined fraud and deceit in this wise:ChanRoblesVirtualawlibraryFraud, in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidence justly reposed, resulting in damage to another, or by which an undue and unconscientious advantage is taken of another. It is a generic term embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to secure an advantage over another by false suggestions or by suppression of truth and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated. On the other hand, deceit is the false representation of a matter of fact, whether by words or conduct, by false or misleading allegations, or by concealment of that which should have been disclosed which deceives or is intended to deceive another so that he shall act upon it to his legal injury. (Emphases supplied)
No reasonable mind would argue that documents showing the very existence of a joint venture need not be included in the bidding envelope showing its existence, qualification, and eligibility to undertake the project, considering that the purpose of prequalification in any public bidding is to determine, at the earliest opportunity, the ability of the bidder to undertake the project.87chanrobleslawINVITATION TO APPLY FOR ELIGIBILITY AND TO BID
The Commission on Elections (COMELEC), pursuant to the mandate of Republic Act Nos. 8189 and 8436, invites interested offerers, vendors, suppliers or lessors to apply for eligibility and to bid for the procurement by purchase, lease, lease with option to purchase, or otherwise, supplies, equipment, materials and services needed for a comprehensive Automated Election System, consisting of three (3) phases: (a) registration/verification of voters, (b) automated counting and consolidation of votes, and (c) electronic transmission of election results, with an approved budget of TWO BILLION FIVE HUNDRED MILLION (Php2,500,000,000) Pesos.
Only bids from the following entities shall be entertained:
x x x x
d. Manufacturers, suppliers and/or distributors forming themselves into a joint venture, i.e., a group of two (2) or more manufacturers, suppliers and/or distributors that intend to be jointly and severally responsible or liable for a particular contract, provided that Filipino ownership thereof shall be at least sixty percent (60%); and cralawlawlibrary
e. Cooperatives duly registered with the Cooperatives Development Authority.86 (Emphases supplied)
We are unconvinced, PBAC was guided by the rules, regulations or guidelines existing before the bid proposals were opened on November 10, 1989. The basic rule in public bidding is that bids should be evaluated based on the required documents submitted before and not after the opening of bids. Otherwise, the foundation of a fair and competitive public bidding would be defeated. Strict observance of the rules, regulations, and guidelines of the bidding process is the only safeguard to a fair, honest and competitive public bidding.All these circumstances, taken together, reveal a scheme on the part of respondent MPEI to perpetrate fraud against the government. The purpose of the scheme was to ensure that MPEI, an entity that was ineligible to bid in the first place, would eventually be awarded the contract. While respondent argues that it was merely a passive participant in the bidding process, We cannot ignore its cavalier disregard of its participation in the now voided automation contract.
In underscoring the Court's strict application of the pertinent rules, regulations and guidelines of the public bidding process, We have ruled in C & C Commercial vs. Menor (L-28360, January 27, 1983, 120 SCRA 112), that Nawasa properly rejected a bid of C & C Commercial to supply asbestos cement pressure which bid did not include a tax clearance certificate as required by Administrative Order No. 66 dated June 26, 1967. In Caltex (Phil.) Inc., et. al. vs. Delgado Brothers, Inc. et. al., (96 Phil. 368, 375), We stressed that public biddings are held for the protection of the public and the public should be given the best possible advantages by means of open competition among the bidders.
x x x x
INTER TECHNICAL's failure to comply with what is perceived to be an elementary and customary practice in a public bidding process, that is, to enclose the Form of Bid in the original and eight separate copies of the bidding documents submitted to the bidding committee is fatal to its cause. All the four pre-qualified bidders which include INTER TECHNICAL were subject to Rule IB 2.1 of the Implementing Rules and Regulations of P.D. 1594 in the preparation of bids, bid bonds, and pre-qualification statement and Rule IB 2.8 which states that the Form of Bid, among others, shall form part of the contract. INTER TECHNICAL's explanation that its bid form was inadvertently left in the office (p. 6, Memorandum for Private Respondent, p. 355, Rollo) will not excuse compliance with such a simple and basic requirement in the public bidding process involving a multi-million project of the Government. There should be strict application of the pertinent public bidding rules, otherwise the essential requisites of fairness, good faith, and competitiveness in the public bidding process would be rendered meaningless. (Emphases supplied)
After respondent "consortium" and the other bidder, TIM, had submitted their respective bids on March 10, 2003, the Comelec's BAC — through its Technical Working Group (TWG) and the DOST — evaluated their technical proposals.The above-mentioned findings were further echoed by this Court in its 2006 Resolution with a categorical conclusion that the bidding process was void and fraudulent.91chanrobleslaw
x x x x
According to respondents, it was only after the TWG and the DOST had conducted their separate tests and submitted their respective reports that the BAC, on the basis of these reports formulated its comments/recommendations on the bids of the consortium and TIM.
The BAG, in its Report dated April 21, 2003, recommended that the Phase II project involving the acquisition of automated counting machines be awarded to MPEI. x x x
x x x x
The BAC, however, also stated on page 4 of its Report: "Based on the 14 April 2003 report (Table 6) of the DOST, it appears that both Mega-Pacific and TIM (Total Information Management Corporation) failed to meet some of the requirements. x x x
x x x xFailure to Meet the Required Accuracy Rating
The first of the key requirements was that the counting machines were to have an accuracy rating of at least 99.9995 percent. The BAC Report indicates that both Mega Pacific and TIM failed to meet this standard.
The key requirement of accuracy rating happens to be part and parcel of the Comelec's Request for Proposal (RFP). x x x
x x x x
x x x Whichever accuracy rating is the right standard — whether 99.995 or 99.9995 percent — the fact remains that the machines of the so-called "consort him" failed to even reach the lesser of the two. On this basis alone, it ought to have been disqualified and its bid rejected outright.
At this point, the Court stresses that the essence of public bidding is violated by the practice of requiring very high standards or unrealistic specifications that cannot be met — like the 99.9995 percent accuracy rating in this case — only to water them down after the bid has been award.[sic] Such scheme, which discourages the entry of prospective bona fide bidders, is in fact a sure indication of fraud in the bidding, designed to eliminate fair competition. Certainly, if no bidder meets the mandatory requirements, standards or specifications, then no award should be made and a failed bidding declared.
x x x x
Failure of Software to Detect Previously Downloaded Data
Furthermore, on page 6 of the BAC Report, it appears that the "consortium" as well as TIM failed to meet another key requirement — for the counting machine's software program to be able to detect previously downloaded precinct results and to prevent these from being entered again into the counting machine. This same deficiency on the part of both bidders reappears on page 7 of the BAC Report, as a result of the recurrence of their failure to meet the said key requirement.
That the ability to detect previously downloaded data at different canvassing or consolidation levels is deemed of utmost importance can be seen from the fact that it is repeated three times in the RFP. x x x.
Once again, though, Comelec chose to ignore this crucial deficiency, which should have been a cause for the gravest concern. x x x.
x x x xInability to Print the Audit Trail
But that grim prospect is not all. The BAC Report, on pages 6 and 7, indicate that the ACMs of both bidders were unable to print the audit trail without any loss of data. In the case of MPC, the audit trail system was "not yet incorporated" into its ACMs.
x x x x
Thus, the RFP on page 27 states that the ballot counting machines and ballot counting software must print an audit trail of all machine operations for documentation and verification purposes. Furthermore, the audit trail must be stored on the internal storage device and be available on demand for future printing and verifying. On pages 30-31, the RFP also requires that the city/municipal canvassing system software be able to print an audit trail of the canvassing operations, including therein such data as the date and time the canvassing program was started, the log-in of the authorized users (the identity of the machine operators), the date and time the canvass data were downloaded into the canvassing system, and so on and so forth. On page 33 of the RFP, we find the same audit trail requirement with respect to the provincial/district canvassing system software; and again on pages 35-36 thereof, the same audit trail requirement with respect to the national canvassing system software.
x x x x
The said provision which respondents have quoted several times, provides that ACMs are to possess certain features divided into two classes: those that the statute itself considers mandatory and other features or capabilities that the law deems optional. Among those considered mandatory are "provisions for audit trails"! x x x.
In brief, respondents cannot deny that the provision requiring audit trails is indeed mandatory, considering the wording of Section 7 of RA 8436. Neither can Respondent Comelec deny that it has relied on the BAC Report, which indicates that the machines or the software was deficient in that respect. And yet, the Commission simply disregarded this shortcoming and awarded the Contract to private respondent, thereby violating the very law it was supposed to implement.90 (Emphases supplied)
Scheme: Rigged specifications. In a competitive market for goods and services, any specifications that seem to be drafted in a way that favors a particular company deserve closer scrutiny. For example, specifications that are too narrow can be used to exclude other qualified bidders or justify improper sole source awards. Unduly vague or broad specifications can allow an unqualified bidder to compete or justify fraudulent change orders after the contract is awarded. Sometimes, project officials will go so far as to allow the favored bidder to draft the specifications.102chanroblesvirtuallawlibraryIn Our 2004 Decision, We identified a red flag of rigged bidding in the form of overly narrow specifications. As already discussed, the accuracy requirement of 99.9995 percent was set up by COMELEC bidding rules. This Court recognized that this rating was "too high and was a sure indication of fraud in the bidding, designed to eliminate fair competition."103 Indeed, "the essence of public bidding is violated by the practice of requiring very high standards or unrealistic specifications that cannot be met...only to water them down after the bid has been award(ed)."104chanrobleslaw
Questionable evaluation and unusual bid patterns may emerge in the BER. After the completion of the evaluation process, the Bid Evaluation Committee should present to the implementing agency its BER, which describes the results and the process by which the BEC has evaluated the bids received. The BER may include a number of indicators of bid rigging, e.g., questionable disqualifications, and unusual bid patterns.105chanroblesvirtuallawlibraryThe Handbook lists unjustified recommendations and unjustified winning bidders as red flags of a rigged bidding.106chanrobleslaw
Scheme: Failure to meet contract terms. Firms may deliberately fail to comply with contract requirements. The contractor will attempt to conceal such actions often by falsifying or forging supporting documentation and bill for the work as if it were done in accordance with specifications. In many cases, the contractors must bribe inspection or project personnel to accept the substandard goods or works, or supervision agents are coerced to approve substandard work. x x x107chanroblesvirtuallawlibraryAs mentioned earlier, this Court already found the ACMs to be below the standards set by the COMELEC. We reiterated their noncompliant status in Our 2005 and 2006 Resolutions.
Fictitious companies are by definition fraudulent and may also serve as fronts for government officials. The typical scheme involves corrupt government officials creating a fictitious company that will serve as a "vehicle" to secure contract awards. Often, the fictitious—or ghost— company will subcontract work to lower cost and sometimes unqualified firms. The fictitious company may also utilize designated losers as subcontractors to deliver the work, thus indicating collusion.MPEI qualifies as a shell or fictitious company. It was nonexistent at the time of the invitation to bid; to be precise, it was incorporated only 11 days before the bidding. It was a newly formed corporation and, as such, had no track record to speak of.
Shell companies have no significant assets, staff or operational capacity. They pose a serious red flag as a bidder on public contracts, because they often hide the interests of project or government officials, concealing a conflict of interest and opportunities for money laundering. Also, by definition, they have no experience.110chanroblesvirtuallawlibrary
At this juncture, it bears stressing that MPEI was incorporated only on February 27, 2003 as evidenced by its Certificate of Incorporation. This goes to show that from the time the COMELEC issued its Invitation to Bid (January 28, 2003) and Request for Proposal (February 17, 2003) up to the time it convened the Pre-bid Conference (February 18, 2003), MPEI was literally a non-existent entity. It came into being only on February 27, 2003 or eleven (11) days prior to the submission of its bid, i.e. March 10, 2003. This poses a legal obstacle to its eligibility as a bidder. The Request for Proposal requires the bidder to submit financial documents that will establish to the BAC's satisfaction its financial capability which include:ChanRoblesVirtualawlibraryRespondent MPEI was formed to perpetrate the fraud against petitioner.(1) audited financial statements of the Bidder's firm for the last three (3) calendar years, stamped "RECEIVED" by the appropriate government agency, to show its capacity to finance the manufacture and supply of Goods called for and a statement or record of volumes of sales;As correctly pointed out by petitioners, how could MPEI comply with the above requirement of audited financial statements for the last three (3) calendar years if it came into existence only eleven (11) days prior to the bidding?
(2) Balance Sheet;
(3) Income Statement; and cralawlawlibrary
(4) Statement of Cash Flow.
To do away with such complication, MPEI asserts that it was MP CONSORTIUM who submitted the bid on March 10, 2003. It pretends compliance with the requirements by invoking the financial capabilities and long time existence of the alleged members of the MP CONSORTIUM, namely, Election.Com, WeSolv, SK CeC, ePLDT and Oracle. It wants this Court to believe that it is MP CONSORTIUM who was actually dealing with the COMELEC and that its (MPEI) participation is merely that of a "lead company and proponent" of the joint venture. This is hardly convincing. For one, the contract for the supply and delivery of ACM was between COMELEC and MPEI, not MP CONSORTIUM. As a matter of fad, there cannot be found in the contract any reference to the MP CONSORTIUM or any member thereof for that matter. For another, the agreements among the alleged members of MP CONSORTIUM do not show the existence of a joint-venture agreement. Worse, MPEI cannot produce the agreement as to the "joint and several liability" of the alleged members of the MP CONSORTIUM as required by this Court in its Resolution dated October 7, 2003.111chanroblesvirtuallawlibrary
The general proposition that a corporation is to be regarded as a legal entity, existing separate and apart from the natural persons composing it, is not disputed; but that the statement is a mere fiction, existing only in idea, is well understood, and not controverted by any one who pretends to accurate knowledge on the subject. It has been introduced for the convenience of the company in making contracts, in acquiring property for corporate purposes, in suing and being sued, and to preserve the limited liability of the stockholder by distinguishing between the corporate debts and property of the company and of the stockholders in their capacity as individuals. All fictions of law have been introduced for the purpose of convenience, and to subserve the ends of justice. It is in this sense that the maxim in fictione juris subsistit aequitas is used, and the doctrine of fictions applied. But when they are urged to an intent and purpose not within the reason and policy of the fiction, they have always been disregarded by the courts. Broom's, Legal Maxims 130. "It is a certain rule," says Lord Mansfield, C.J., "that a fiction of law never be contradicted so as to defeat the end for which it was invented, but for every other purpose it may be contradicted." Johnson v. Smith, 2 Burr, 962.113chanroblesvirtuallawlibraryThe main effect of disregarding the corporate fiction is that stockholders will be held personally liable for the acts and contracts of the corporation, whose existence, at least for the purpose of the particular situation involved, is ignored.114chanrobleslaw
The foregoing argument is unpersuasive. First, the contract being referred to, entitled "The Automated Counting and Canvassing Project Contract," is between Comelec and MPEI, not the alleged consortium, MPC. To repeat, it is MPEI - not MPC - that is a party to the Contract. Nowhere in that Contract is there any mention of a consortium or joint venture, of members thereof much less of joint and several liability. Supposedly executed sometime in May 2003, the Contract bears a notarization date of June 30, 2003, and contains the signature of Willy U. Yu signing as president of MPEI (not for and on behalf of MPC), along with that of the Comelec chair. It provides in Section 3.2 that MPEI (not MPC) is to supply the Equipment and perform the Services under the Contract, in accordance with the appendices thereof; nothing whatsoever is said about any consortium or joint venture or partnership. x x x (Emphasis supplied)That his signature appears on the automation contract means that he agreed and acceded to its terms.116 His participation in the fraud involves his signing and executing the voided contract.
30. Also, inasmuch as MPEI is in truth a mere shell corporation with no real assets in its name, incorporated merely to feign eligibility for the bidding of the automated contract when it in fact had none, to the great prejudice of the Republic, plaintiffs individual incorporators should likewise be made liable together with MPEI for the automated contract amount paid to and received by the latter. The following circumstances altogether manifest that the individual incorporators merely cloaked themselves with the veil of corporate fiction to perpetrate a fraud and to eschew liability therefor, thus:In response to petitioner's allegations, respondents Willy and Bonnie stated in their Reply and Answer (Re: Answer with Counterclaim dated 28 June 2004):118
chanRoblesvirtualLawlibraryx x x x
f. From the time it was incorporated until today, MPEI has not complied with the reportorial requirements of the Securities and Exchange Commission; g. Individual incorporators, acting fraudulently through MPEI, and in violation of the bidding rules, then subcontracted the automation contract to four (4) other corporations, namely: WeSolve Corporation, SK C&C, ePLDT and election.com, to comply with the capital requirements, requisite five (5)-year corporate standing and the technical qualifications of the Request for Proposal;
x x x x117chanroblesvirtuallawlibrary
3.3 As far as plaintiff MPEI and defendants-in-counterclaim are concerned, they dealt with the COMELEC with full transparency and in utmost good faith. All documents support its eligibility to bid for the supply of the ACMs and their peripheral services, were submitted to the COMELEC for its evaluation in full transparency. Pertinently, neither plaintiff MPEI nor any of its directors, stockholders, officers or employees had any participation in the evaluation of the bids and eventual choice of the winning bidder.119chanroblesvirtuallawlibraryRespondents Johnson's and Bernard's denials were made in paragraphs 2.17 and 3.3 of their Answer with Counterclaim to the Republic's Counterclaim, to wit:120
2.17 The erroneous conclusion of fact and law in paragraph 30 (f) and (g) of the Republic's answer is denied, having been pleaded in violation of the requirement, that only ultimate facts arc to be stated in the pleadings and they are falsehoods. The truth of the matter is that there could not have been fraud, as these agreements were submitted to the COMELEC for its evaluation and assessment, as to the qualification of the Consortium as a bidder, a showing of transparency in plaintiffs dealings with the Republic.121chanrobleslawAs regards Enrique and Rosita, the relevant paragraphs in the Answer with Counterclaim to the Republic's Counterclaim123 are quoted below:ChanRoblesVirtualawlibrary
3.3 As far as plaintiff MPEI and defendants-in-counterclaim are concerned, they dealt with the COMELEC with full transparency and in utmost good faith. All documents support its eligibility to bid for the supply of the automated counting machines and its peripheral services, were submitted to the COMELEC for its evaluation in full transparency. Pertinently, the plaintiff or any of its directors, stockholders, officers or employees had no participation in the evaluation of the bids and eventual choice of the winning bidder.122chanroblesvirtuallawlibrary
2.17. The erroneous conclusion of fact and law in paragraph 30 (F) and (G) of the Republic's answer is denied, having been pleaded in violation of the requirement, that only ultimate facts are to be stated in the pleadings and they are falsehoods. The truth of the matter is that there could not have been fraud, as these agreements were submitted to the COMELEC for its evaluation and assessment, as to the qualification of the Consortium as a bidder, a showing of transparency in plaintiffs dealings with the Republic.124chanrobleslawPedro and Laureano offer a similar defense in paragraph 3.3 of their Reply and Answer with Counterclaim to the Republic's Counterclaim126 dated 28 June 2004, which reads:ChanRoblesVirtualawlibrary
3.3. As far as the plaintiff and herein answering defendants-in-counterclaim are concerned, they dealt with the Commission on Elections with full transparency and in utmost good faith. All documents in support of its eligibility to bid for the supply of the automated counting machines and its peripheral services were submitted to the Commission on Elections for its evaluation in full transparency. Pertinently, the plaintiff or any of its directors, stockholders, officers or employees had no participation in the evaluation of the bids and eventual choice of the winning bidder.125chanroblesvirtuallawlibrary
3.3. As far as plaintiff MPEI and defendants-in-counterclaim are concerned, they dealt with the COMELEC with full transparency and in utmost good faith. All documents support its eligibility to bid for the supply of the ACMs and their peripheral services, were submitted to the COMELEC for its evaluation in full transparency. Pertinently, neither plaintiff MPEI nor any of its directors, stockholders, officers or employees had any participation in the evaluation of the bids and eventual choice of the winning bidder.127chanroblesvirtuallawlibraryIt can be seen from the above-quoted paragraphs that the individual respondents never denied their participation in the questioned transactions of MPEI, merely raising the defense of good faith and shifting the blame to the COMELEC. The individual respondents have, in effect, admitted that they had knowledge of and participation in the fraudulent subcontracting of the automation contract to the four corporations.
The reason for this, as explained by the lawmakers, is to avoid the confusion and/or ambiguities arising in a situation under the old corporation law where there exists one set of incorporators who are not even shareholders and another set of directors/incorporators who must all be shareholders of the corporation. The people who deal with said corporation at such an early stage are confused as to who are the persons or group really authorized to act in behalf of the corporation. (Proceedings of the Batasan Pambansa on the Proposed Corporation Code). Another reason may be anchored on the presumption that when an incorporator has pecuniary interest in the corporation, no matter how minimal, he will be more involved in the management of corporate affairs and to a greater degree, be concerned with the welfare of the corporation.128chanroblesvirtuallawlibraryAs incorporators and businessmen about to embark on a new business venture involving a sizeable capital (P300 million), the remaining individual respondents should have known of Willy's scheme to perpetrate the fraud against petitioner, especially because the objective was a billion peso automation contract. Still, they proceeded with the illicit business venture.
Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.The term "grave abuse of discretion" has a specific meaning. An act of a court or tribunal can only be considered to have been committed with grave abuse of discretion when the act is done in a "capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction."132 The abuse of discretion must be so patent and gross as to amount to an "evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility."133 Furthermore, the use of a petition for certiorari is restricted only to "truly extraordinary cases wherein the act of the lower court or quasi-judicial body is wholly void."134 From the foregoing definition, it is clear that the special civil action of certiorari under Rule 65 can only strike down an act for having been done with grave abuse of discretion if the petitioner could manifestly show that such act was patent and gross.135chanrobleslaw
The second concept — conclusiveness of judgment — states that a fact or question which was in issue in a former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit (Nabus v. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not required but merely identity of issue.The foregoing disquisition finds application to the case at bar.
Justice Fcliciano, in Smith Bell & Company (Phils.), Inc. v. Court of Appeals (197 SCRA 201, 210 [1991]), reiterated Lopez v. Reyes (76 SCRA 179 [1977]) in regard to the distinction between bar by former judgment which bars the prosecution of a second action upon the same claim, demand, or cause of action, and conclusiveness of judgment which bars the relitigation of particular facts or issues in another litigation between the same parties on a different claim or cause of action.The general rule precluding the re-litigation of material facts or questions which were in issue and adjudicated in former action are commonly applied to all matters essentially connected with the subject matter of the litigation. Thus, it extends to questions necessarily implied in the final judgment, although no specific finding may have been made in reference thereto and although such matters were directly referred to in the pleadings and were not actually or formally presented. Under this rule, if the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself.141 (Emphases supplied)
No other procedural law principle is indeed more settled than that once a judgment becomes final, it is no longer subject to change, revision, amendment or reversal, except only for correction of clerical errors, or the making of nunc pro tunc entries which cause no prejudice to any party, or where the judgment itself is void. The underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and thus make orderly the discharge of judicial business, and (2) to put judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to drag on indefinitely and the rights and obligations of every litigant must not hang in suspense for an indefinite period of time. As the Court declared in Yau v. Silverio,In the instant case, adherence to respondents' position would mean a complete disregard of the factual findings We made in the 2004 Decision, and would certainly be tantamount to reversing the same. This would invariably cause further delay in the efforts to recover the amounts of government money illegally disbursed to respondents back in 2004.Litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be, not through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them.Indeed, just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his case by the execution and satisfaction of the judgment. Any attempt to thwart this rigid rule and deny the prevailing litigant his right to savor the fruit of his victory must immediately be struck down. x x x. (Emphasis supplied)145chanroblesvirtuallawlibrary
Endnotes:
* Laureano A. Barrios in some part of the records.
1 G.R. No. 159139, 464 Phil. 173 (2004) [the 2004 case].
2Rollo, pp. 31-36; In the case entitled Republic of the Philippines v. Hon. Winlove M. Dumayas written by Associate Justice Japar B. Dimaampao, and concurred in by Associate Justices Mario L. Guariña III and Sixto C. Marella, Jr.
3 Id. at 293-302.
4 Id. at 82.
5 Id. at 84-106.
6 The dispositive portion of this Court's Decision in the 2004 case is stated as follows:
chanRoblesvirtualLawlibraryWherefore, the PETITION is GRANTED. The Court hereby declares NULL and VOID Comelec Resolution No. 6074 awarding the contract for Phase II of the CAES to Mega Pacific Consortium (MPC). Also declared null and void is the subject Contract executed between Comelec and Mega Pacific eSolutions (MPEI). Comelec is further ORDERED to refrain from implementing any other contract or agreement entered into with regard to this project.
Let a copy of this Decision be furnished the Office of the Ombudsman which shall determine the criminal liability, if any, of the public officials (and conspiring private individuals, if any) involved in the subject Resolution and Contract. Let the Office of the Solicitor General also take measures to protect the government and vindicate public interest from the ill effects of the illegal disbursements of public funds made by reason of the void Resolution and Contract.
7 Resolution dated 22 August 2006; Rollo (G.R. No. 159139), Vol. V, pp. 4127-4137.
8 Id.
9 Supra note 6.
10 Id.
11Rollo (G.R. No. 159!39), Vol. IV, pp. 3324-3339.
12Rollo, pp. 153-169; Pertaining to the case entitled Mega Pacific eSolutions, Inc. v. Republic of the Philippines, docketed as Civil Case No. 04-346.
13 Supra note 11.
14Rollo, pp. 822-825; The four (4) cases are as follows:
chanRoblesvirtualLawlibrary(1) "Kilosbayan Foundation and Bantay Katarungan Foundation, represented by Atty. Emilio C. Capulong, Jr. v. Benjamin Santos Abalos, Resurreccion Zante Borra, Florentino Aglipay Tuason, Rufino San Buenaventura Javier, Mehol Kiram Sadain, Luzviminda Gaba Tancangco, Pablo Ralph Cabatian Lantion, Willy U. Yu, Bonnie S. Yu, Enrique T. Tansipek, Pedro O. Tan, Johnson W. Fong and Laureano A. Barrios," docketed as OMB-L-C-04-0922-J, for violation of Sec. 3(e) and (g) of R.A. 3019 and Sec. 2 of R.A. 7080;
(2) "Sen. Aquilino Q. Pimentel, Jr., Field Investigation Office (FIO) Office of the Ombudsman, represented by Atty. Maria Olivia Elena A. Roxas v. Benjamin Santos Abalos, Resurreccion Zante Borra, Florentino Aglipay Tuason, Rufino San Buenaventura Javier, Mehol Kiram Sadain, Luzviminda Gaba Tancangco, Pablo Ralph Cabatian Lantion, Eduardo Dulay Mejos, Gideon Gillego de Guzman, Jose Parel Balbuena, Lamberto Posadas Llamas, Bartolome Javillonar Sinocruz, Jr., Jose Marundan Tolentino, Jr., Jaime Zita Paz, Zita Buena-Castillon, Rolando T. Viloria, Willy U. Yu, Bonnie S. Yu, Enrique T. Tansipek, Pedro O. Tan, Johnson W. Fong and Laureano A. Barrios," docketed as OMB-L-C-04-0983-J, for violation of Sec. 3(e) and (g) of R.A. 3019;
(3) "Sen. Aquilino Q. Pimentel, Jr. v. Luzviminda Gaba Tancangco, Pablo Ralph Cabatian Lantion," docketed as OMB-C-C-04-0011-A for violation of Sec. 3(e) and (g) of R.A. 3019; and cralawlawlibrary
(4) "Sen. Aquilino Q. Pimentel, Jr., Field Investigation Office (FIO) Office of the Ombudsman, represented by Atty. Maria Olivia Elena A. Roxas v. Eduardo Dulay Mejos, Gideon Gillego de Guzman, Jose Parel Balbuena, Lamberto Posadas Llamas, Bartolome Javillonar Sinocruz, Jr., Jose Marundan Tolentino, Jr., Jaime Zita Paz, Zita Buena-Castillon, Rolando T. Viloria," docketed as OMB-L-A-04-0706-J for dishonesty, grave misconduct and conduct prejudicial to the best interest of service.
15 Except Rosita Y. Tansipek and Bernard I. Fong, who have not been impleaded.
16Rollo (G.R. No. 174777), Vol. I, pp. 88-122; The pertinent portions of the fallo are quoted below:
chanRoblesvirtualLawlibraryWHEREFORE, premises considered, it is respectfully recommended that:
chanRoblesvirtualLawlibrary1. An Information for Violation of Section 3 (e) of Republic Act No. 3019, be filed before the Sandiganbayan against respondents EDUARDO MEJOS, GIDEON G. DE GUZMAN, JOSE P. BALBUENA, LAMBERTO P. LLAMAS and BARTOLOME J. SINOCRUZ, JR. in conspiracy with private respondents WILLY U. YU, BONNIE YU, ENRIQUE TANSIPEK, ROSITA Y. TANSIPEK, PEDRO O. TAN, JOHNSON W. FONG, BERNARD L. FONG and LAUREANO BARRIOS;
x x x x
5. That further fact-finding investigation be conducted by this Office on the following matters:
chanRoblesvirtualLawlibrarya. Charges involving violation of Section 3 (g) of Republic Act 3019 and other pertinent laws;
b. On the criminal liability of all persons who may have conspired with public officials in the subject contract;
c. On the culpability of other individuals who were not originally charged in the complaints, but may have participated and benefited in the awarding of the subject Contract; and cralawlawlibrary
d. the disbursement of public funds made on account of the void Resolution and Contract.
17 Including Rosita Y. Tansipek and Bernard I. Fong.
18Rollo, pp. 825-826.
19 Id. at 822-876; The dispositive portion states:
chanRoblesvirtualLawlibraryWHEREFORE, the Office recommends the following:20 See rollo (G.R. No. 174777), Vol. I. p. 3; Entitled Sen. Aquilino Q. Pimentel, Jr. v. Omb. Ma. Merceditas N. Gutierrez.
- That the Resolution dated 28 June 2006 be REVERSED and SET ASIDE.
- That the criminal complaints against public and private respondents be DISMISSED for lack of probable cause.
- That the administrative complaint against public respondents be DISMISSED.
- That the matter of the editorial article appearing in the July 2006 issue of Kilosbayan by Former Senator Jovito R. Salonga be REFERRED to the Internal Affairs Board for investigation.
21 Id.; Including Sen. Aquilino Q. Pimentel, Jr., Sergio L. Osmena III, Pamfilo M. Lacson, Alfredo S. Lim, Jamby A.S. Madrigal, Luisa P. Ejercito-Estrada, Jinggoy E. Estrada, Rodolfo G. Biazon and Richard F. Gordon.
22 Supra note 7 at 4132-4134.
23Rollo, pp. 161-163.
24 Id. at 170-195.
25cralawred Id. at 185-187.
26 Id. at 190-192.
27 Id. at 191-192 & 196-200.
28 Id. at 201-211.
29 Order dated 28 March 2006; id at 213-214.
30 Id. at 215-226.
31 Id. at 227.
32 Id. at 293-302.
33 Id. at 299-300.
34 Id. at 300.
35 Id. at 301.
36 Id. at 303-330 & 331-352.
37 Id. at 31-36.
38 Id. at 36.
39 Id. at 32.
40 Id. at 33.
41 Id.
42 Id.
43 Id.
44 Id. at 34.
45 Id. at 10-30.
46 Id. at 19.
47 Id. at 22.
48 Id. at 23.
49 Id. at 24.
50 Id.
51 Id. at 793-821.
52 Id. at 795-796.
53 Id. at 801-803.
54 Id. at 817-819.
55 Id. at 807-808.
56 Id. at 884-886
57 Id. at 906-915.
58 Id. at 897-903.
59 Id. at 902.
60 Id. at 924-934.
61Virata v. Aquino, 152 Phil. 405 (1973).
62Adlawan v. Tomol, 262 Phil. 893 (1990).
63 Id.
64 Id.
65Metro, Inc. v. Lara's Gift and Decors, Inc., 621 Phil. 162 (2009).
66 Id., citing Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405, 13 May 1993 222 SCRA 37, 45.
67Liberty Insurance Corporation v. Court of Appeals, supra, citing old Sec. 1(d). Rule 57 of the Rules of Court:
chanRoblesvirtualLawlibrary"In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought, Section 1(d) of Rule 57 authorizes the plaintiff or any proper party to have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered therein. Thus:
chanRoblesvirtualLawlibrary'Rule 57, Sec. 1. Grounds upon which attachment may issue. —'(d): "In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought;"'
68 37 AM. JUR. 2D Fraud and Deceit § 1 (1968).
69International Corporate Bank v. Gueco, 404 Phil. 353 (2001).
70Ortega v. People, 595 Phil. 1103 (2008).
71Republic v. Estate of Alfonso Lim, Sr., 611 Phil. 37 (2009).
72Sps. Godinez v. Alano, 362 Phil. 597 (1999).
73 37 AM. JUR. 2D Fraud and Deceit § 439 (1968).
74Information Technology Foundation of the Philippines v. COMELEC, 464 Phil. 173, 209-226 (2004).
75Rollo, pp. 201 -211.
76 Id. at 203-205, 211; Petitioner's allegations in its application for the issuance of a writ of preliminary attachment are as follows:
chanRoblesvirtualLawlibrary4. Indeed, plaintiff and dcfendants-in-counterclaim committed fraud by securing the election automation contract even if MPEI (plaintiff) was not qualified to bid for the said contract. To perpetrate the said fraud, plaintiff and defendants-in-counterclaim misrepresented that the actual bidder was Mega Pacific Consortium, and that MPEI (plaintiff) was only acting on behalf of MPC. x x x. Anent plaintiffs claim that the MPC members bound themselves under the election automation contract, suffice it to say that the Supreme Court held that "the automation Contract with Comelec was not executed by the 'consortium' MPC—or by MPEI (plaintiff) for and in behalf of MPC—but by MPEI (plaintiff), period. The said Contract contains no mention whatsoever of any consortium or members thereof."
5. Both plaintiff and defendants-in-counterclaim knew that plaintiff was not qualified to bid for the election automation contract. In fact, the Supreme Court clearly declared that had the proponent MPEI (plaintiff) been evaluated based solely on its own experience, financial and operational track record or lack thereof, it would surely not have qualified and would have been immediately considered ineligible to bid, as respondents readily admit. This notwithstanding, plaintiff still bidded for the election automation contract; signed the same; and implemented, albeit partially, the provisions thereof.
x x x x
4. Plaintiff Mega Pacific eSolutions, Inc. and defendants-in-counterclaim Willy Yu, et. al. committed fraud in securing the automation contract even if the bid for the same was not awarded to them, but to an ineligible consortium Mega Pacific Consortium; and that said plaintiff, while it was the one which signed the voided automation contract, was ineligible to bid for the same. (Emphases supplied)
77 Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud. (NEW CIVIL CODE, Art. 1339)
78Rural Bank of Sta. Maria, Pangasinan v. Court of Appeals, 373 Phil. 27 (1999).
79Cathay Pacific Airways Ltd v. Spouses Vasquez, 447 Phil. 306 (2003).
80 581 Phil. 612 (2008).
81 545 Phil. 755 (2007).
82 37 Am Jur 2d Fraud and Deceit § 50 citing Union Co. v. Cobb, 73 Ohio L. Abs. 155, 136 N.E. 2d 429 (Ct. App. 10th Dist. Franklin County 1955) and Raser v. Moomaw, 78 Wash. 653, 139 P. 622 (1914).
83 73 Ohio L. Abs. 155, 136 N.E. 2d 429 (Ct. App. 10th Dist. Franklin County 1955).
84 78 Wash. 653; 139 P. 622 (1914).
85 Id.
86Information Technology Foundation of the Philippines v. COMELEC, 464 Phil. 173, 193-194 (2004).
87Agan, Jr. v. PIATCO, Inc., 450 Phil. 744 (2003).
88Information Technology Foundation of the Philippines v. COMELEC, supra, at 215-216.
89Republic of the Philippines v. Judge Capulong, 276 Phil. 136, 152-153 (1991).
90Information Technology Foundation of the Philippines, Inc. v. COMELEC, supra note 90 at 227, 232-238.
91 We stress once again that the Contract entered into by the Comelec for the supply of the ACMs was declared VOID by the Court in its Decision because of clear violations of law and jurisprudence, as well as the reckless disregard by the Commission of its own bidding rules and procedure:
chanRoblesvirtualLawlibrary"To muddle the issue, Comelec keeps on saying that the 'winning' bidder presented a lower price than the only other bidder. It ignored the fact that the whole bidding process was VOID and FRAUDULENT. How then could there have been a "winning" bid? x x x" (Supra note 7 at 4132-4134.)
92Rollo, pp. 201 -211.
93 Id. at 208.
94JG Summit Holdings, Inc. v. Court of Appeals, 458 Phil. 581 (2003).
95Malaga v. Penachos, Jr., G.R. No. 86695, 3 September 1992, 213 SCRA 516.
96 Id. at 797-801 & 906-915.
97 Id. at 798.
98 Id. at 800.
99 The general rule is that a corporation has a separate juridical personality distinct from the persons composing it. Remo, Jr. v. Intermediate Appellate Court, 254 Phil. 409, 411 (1989). One implication of the doctrine is that corporate creditors may not reach the personal assets of the shareholders, who are liable only to the extent of their subscription under the related doctrine of limited liability. (Philippine National Bank v. Hydro Resources Contractors Corp., G.R. Nos. 167530, 167561, 167603, 13 March 2013, 693 SCRA 294)
100 See Black's Law Dictionary, 1147-1148 (6th ed. 2008). See also Kukan International Corp. v. Reyes, 646 Phil. 210 (2010) and Cesar Lapuz Villanueva and Teresa S. Villanueva-Tiansay, Philippine Corporate Law, p. 105 (2013).
101 International Bank for Reconstruction and Development/The World Bank, 2013, Fraud and Corruption Awareness Handbook: A Handbook for Civil Servants Involved in Public Procurement, 1 (last visited 15 November 2015) <http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/04/25/000456286_20140425150639/Rendered/PDF/877290PUB0Frau00Box382l47B00PUBLIC0.pdf> (Fraud and Corruption Awareness Handbook).
102 Id. at 17-18.
103 Supra note 7.
104 Supra note 1.
105 Supra note 101 at 30.
106 Id.
107 Supra note 101 at 39.
108 This Court in its 2005 Resolution in 2004 case ruled as follows:
chanRoblesvirtualLawlibraryThe Motion has not at all demonstrated that these technical requirements have been addressed from the time our Decision was issued up to now. In fact, Comelec is merely asking for leave to use the machines, without mentioning any specific manner in which the foregoing requirements have been satisfactorily met.
Equally important, we stressed in our Decision that "[n]othing was said or done about the software — the deficiencies as to detection and prevention of downloading and entering previously downloaded data, as well as the capability to print an audit trail. No matter how many times the machines were tested and retested, if nothing was done about the programming defects and deficiencies, the same danger of massive electoral fraud remains."
Other than vaguely claiming that its four so-called "experts" have "unanimously confirmed that the software development which the Comelec undertook, [was] in line with the internationally accepted standards (ISO/IEC 12207) [for] software life cycle processes," the present Motion has not shown that the alleged "software development" was indeed extant and capable of addressing the "programming defects and deficiencies" pointed out by this Court.
At bottom, the proposed use of the ACMs would subject the ARMM elections to the same dangers of massive electoral fraud that would have been inflicted by the projected automation of the 2004 national elections.
109 This Court in its 2006 Resolution in 2004 case ruled thus:
chanRoblesvirtualLawlibraryLike the earlier Comelec Motion, however, the present one of Atty. Macalintal utterly fails to demonstrate - nay, even slightly indicate - what "certain supervening and legal circumstances [have] transpired" to justify the reliefs it seeks. In fact, after the Court had ruled, among others, that the ACMs had failed to pass legally mandated technical requirements, they have admittedly been simply stored.
In other words, they have merely remained idle and unused since their last evaluation in which they failed to hurdle the crucial tests. Thus, again we say, the ACMs were not good enough for either the 2004 national elections or for the 2005 ARMM polls; why should they be good enough for the 2007 elections, considering that nothing has been done to correct the legal, jurisprudential and technical flaws underscored in our final and executory Decision? Likewise, we repeat that no matter how many times the machines were retested, if nothing was done about the programming defects and deficiencies, the same danger of massive electoral fraud remains. (Emphases supplied)
110 Fraud and Corruption Awareness Handbook, p. 40.
111 Supra note 1 at 277-278.
112 Jose C. Campos Jr., and Maria Clara Lopez-Campos. The Corporation Code, Volume I, p. 149 (1990).
113State ex rel. Attorney General v. Standard Oil Co., Supreme Court of Ohio, 49 Ohio St., 137, N.E. 279 (1892), cited in Campos, Note 112, at 154. (Emphases supplied)
114 Supra Note 111.
115Koppel Philippines, Inc. v. Yatco, 77 Phil. 496 (1946); Laguna Transportation Co., Inc. v. Social Security System, 107 Phil. 833 (1960), Francisco v. Mejia, G.R. No. 141617 (14 August 2001); Yao, Sr. v. People, 552 Phil. 195 (2007).
116See Traders Royal Bank v. Cuison Lumber Co., Inc., 606 Phil. 700 citing People's Industrial and Commercial Corp. v. Court of Appeals, 346 Phil. 189:ChanRoblesVirtualawlibrary"The clear and neat principle is that the offer must be certain and definite with respect to the cause or consideration and object of the proposed contract, while the acceptance of this offer — express or implied — must be unmistakable, unqualified, and identical in all respects to the offer. The required concurrence, however, may not always be immediately clear and may have to be read from the attendant circumstances; in fact, a binding contract may exist between the parties whose minds have met, although they did not affix their signatures to any written document." (Emphasis supplied)117Rollo, pp. 181-182.
118 Records, Vol. 2, pp. 866-884.
119 Id. at 877.
120 Id. at 853-865.
121 Id. at 889.
122 Id. at 877.
123 Id. at 885-897.
124 Id. at 889.
125 Id. at 892.
126 Id. at 900-918.
127 Id. at 911.
128 Lopez, Rosario N., The Corporation Code of the Philippines (Annotated), Volume 1 (1994), p. 170.
129Rollo, pp. 892-897.
130 Id. at 804.
131 Id. at 803-804.
132Ganaden v. Court of Appeals, 665 Phil. 261 (2011).
133Yu v. Reyes-Carpio, 667 Phil. 474 (2011), citing 2 JOSE Y. FERIA & MARIA CONCEPCION S. NOCHE, CIVIL PROCEDURE ANNOTATED 463 (2001).
134J.L. Bernardo Construction v. Court of Appeals, 381 Phil. 25 (2000).
135Yu v. Reyes-Carpio, supra.
136 Sec. 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
chanRoblesvirtualLawlibraryx x x x
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and cralawlawlibrary
(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which actually and necessarily included therein or necessary thereto.
137Reforzado v. Sps. Lopez, 627 Phil. 294 (2010).
138Alamayri v. Pabale, 576 Phil. 146 (2008).
139Sps. Noceda v. Arbizo-Directo, 639 Phil. 483 (2010).
140 G.R. Nos. 76265 and 83280, 11 March 1994, 231 SCRA 88.
141 Id. at 99-100.
142Malayang Samahan ng Munggagawa sa Balanced Food v. Pinakamasarap Corporation, 464 Phil. 998 (2004).
143AGG Trucking v. Yuag, 675 Phil. 108 (2011).
144 612 Phil. 462, 471 (2009).
145 Id. at 471.
146Rollo, pp. 897-903.
147 Id. at p. 902.
148 Justices Renato C. Corona, Adolfo S. Azcuna and Dante O. Tinga registered their dissent. Justice Dante O. Tinga wrote a dissenting opinion.
149 Justices Hilario G. Davide, Jr. and Jose C. Vitug wrote their separate opinions voting for dismissal of the Petition.
150 The 2004 Decision was penned by Justice Artemio V. Panganiban, with Justices Antonio T. Carpio, Ma. Alicia Austria-Martinez, Conchita Carpio-Morales and Romeo J. Callejo, Sr. concurring therein.
151 Justices Consuelo Ynares-Santiago and Justice Angelina Sandoval-Gutierrez.
152 Justice Leonardo A. Quisumbing.
153 Justice Reynato S. Puno joins in opinion of Justice Consuelo Ynares-Santiago.
154Rollo, p. 32.
155 Id. at 306-307.
156Rollo, pp. 801-803.
157Secretary of Finance v. Ora Maura Shipping Lines, 610 Phil. 419 (2009).
158 Supra note 6.
159 31 C.J.S. Estoppel §1 (1964).
160Rollo, pp. 893-897.
161 Id. at pp. 807-808.
162 Chapter 2, Article 5(1), United Nations Convention Against Corruption. 2349 U.N.T.S. 41 (in force 14 Dec. 2005) (signed by the Philippines on 09 Dec. 2003 and ratified on 8 Nov. 2006).
163 Chapter 2, Article 5(2), United Nations Convention Against Corruption. 2349 U.N.T.S. 41 (in force 14 Dec. 2005) (signed by the Philippines on 09 Dec. 2003 and ratified on 8 Nov. 2006).
164 Chapter 5, Article 51, United Nations Convention Against Corruption. 2349 U.N.T.S. 41 (in force 14 Dec. 2005) (signed by the Philippines on 09 Dec. 2003 and ratified on 8 Nov. 2006).
165 United Nations Convention Against Corruption. 2349 U.N.T.S. 41 (in force 14 Dec. 2005) (signed by the Philippines on 09 Dec. 2003 and ratified on 8 Nov. 2006).
166 Chapter 2, Article 9, United Nations Convention Against Corruption. 2349 U.N.T.S. 41 (in force 14 Dec. 2005) (signed by the Philippines on 09 Dec. 2003 and ratified on 8 Nov. 2006).
167 Most Common Red Flags of Fraud and Corruption in Procurement (available at <http://siteresources.worldbank.org/INTDOII/Resources/Red_flags_reader_friendly.pdf> (last visited on 8 January 2016).