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SC upholds PCOS machine deal between Comelec, Smartmatic 

(Updated 8: 20 pm.) The Supreme Court (SC) on Wednesday ruled as legal the contract giving Smartmatic-Total Information Management the right to supply the Commission on Elections with vote counting machines for next year’s midterm polls.
The high court also lifted the order it issued last April preventing Comelec and Smartmatic from implementing the deal that involves 82,000 Precinct Count Optical Scan machines. The contract was worth P1.2 billion. 
"The Comelec is now free to implement the contract for the purchase of the PCOS machines," Supreme Court spokesperson Gleoresty Guerra said in a press conference.
The high court en banc convened in a special session Wednesday to tackle and eventually dismiss four separate complaints questioning the contract between government and Smartmatic-TIM.
The contract, signed last March 30, also covered the consolidation and canvassing system of Smartmatic-TIM at no cost to the Comelec.
The court said the contract was still valid and existing because the performance security bond posted by Smartmatic-TIM was not yet returned.
The bond was in the form of a letter of credit worth P360 million or 5 percent of the original P7.2-billion poll automation contract for the May 2010 polls.
The bond was meant to fund penalties for non-performance or should Smartmatic-TIM fail to deliver the equipment based on contract schedules.
"That was one expressly stated in the contract, that return of the performance bond will terminate the contract," Guerra said. Option to purchase
"The court found that the main contract for the automated election system between the Comelec and Smartmatic–containing an option to purchase–was still existing when Smartmatic extended the period and when the Comelec exercised said option," she said.
Among the petitioners were Automated Election System (AES) Watch, the Solidarity for Sovereignty (S4S), and the group of Davao City Archbishop Fernando Capalla. AES is led by former Vice President Teofisto Guingona Jr. and S4S by Ma. Linda Montayre, Ramon Pedrosa, Benjamin Paulino Sr., Evelyn Coronel, and Nelson Montayre.
Capalla was joined in his petition by former Marawi City Mayor Omar Ali, and former Quezon City Rep. Mary Anne Susano.
During oral arguments in May, the petitioners insisted the contract should be struck down because there was no proper bidding process when the Comelec chose to buy the machines it leased for the May 2010 automated polls.
According to the petitioners, Comelec should no longer be allowed to buy the PCOS machines because its "option to purchase" as provided under the original contract had expired on December 31, 2010, the petitioners said.
In April 2011, Smartmatic-TIM still offered a revised extended option to purchase, but the term sheet for it that was signed almost a month later was cancelled by Comelec in June of the same year.
AES Watch noted a Feb. 8, 2012 resolution of the Comelec Advisory Council reiterating its position to no longer exercise the poll body's option to purchase due to the glitches. Same machines for 2013
“For the May 2013 elections, the Comelec does not need to use the same PCOS machines... The Comelec would be better off not exercising the option to purchase the PCOS machines, so it can look for an even better solution for the May 2013 elections,” the CAC concluded in its resolution.
But the Comelec pushed through with its plan and decided to exercise its Option to Purchase the PCOS machines on March 21, 2012, and executed a deed of sale with Smartmatic-TIM on March 30. 
Lawyer Abraham Espejo, representing petitioner Capalla, said during oral arguments that  the "option to purchase" clause could be extended "provided it pertains to the same object," referred to in the contract as the 2010 automated polls. 
Smartmatic Philippines president Cesar Flores insisted there was nothing wrong when the Comelec exercised its "option to purchase" the precinct count optical scan (PCOS) machines, which were only initially leased by the government for the 2010 automated polls.
"The option to purchase was part of 2009 contract and that was the product of a competitive bidding, so why do you have to bid something that was already bidded out?" said Flores in May. 
Comelec chairman Sixto Brillantes also said they had intended all along to use the PCOS machines in subsequent elections.
"Ang alam ko ang object dito ay ang makina. Nirentahan namin ang mga ito para sa 2010 elections. May option to purchase para gagamitin namin sa next elections... sabi ng abugado ng petitioners, mali na raw 'pag gagamitin namin sa 2013. Talagang nahihilo na ako," Brillantes had said.
He insisted the Comelec did not need to explicitly state in the original contract whether or not it plans to use the same machines for the 2013 elections. —VVP/RSJ/VS, GMA News