POLILAWREV SARMIENTO 143THE LEGISLATIVE DEPARTMENTCOMELEC V. JUDGE QUIJANO-PADILLA and PHOTOKINA MARKETING CORP. (2002 Justice Sandoval-Gutierrez)CASE SUMMARY

Pursuant to the Voters Registration Act of 1996, COMELEC issued invitations to pre-qualify and bid for the supply and installation of information technology equipment and ancillary services for the Voters Registration and Identification System Project. The said Project envisioned a computerized database system or the May 2004 Elections. PHOTOKINAs winning bid amounted to 6.588 Billion Pesos. COMELEC issued a Notice of Award to PHOTOKINA. However, under the General Appropriations Act FY 2000, the budget appropriated by Congress for the COMELECs modernization project was only 1 Billion Pesos and that the actual available funds under the Certificate of Availability of Funds were only 1.2 Billion Pesos. COMELEC did not formalize the contract with PHOTOKINA. Subsequently, PHOTOKINA filed a petition for mandamus with the RTC. The RTC sided with PHOTOKINA. The Supreme Court held that mandamus does not lie. The Constitution clearly provides that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law. Since the bid is beyond the amount appropriated by Congress for the project, the proposed contract is not binding upon the COMELEC and is considered void.Facts

RA 8189 (Voters Registration Act of 1996) was passed providing for the modernization and computerization of the voters registration list and the appropriation of funds thereof. Pursuant thereto, COMELEC promulgated a Resolution approving in principle the Voters Registration and Identification System Project (VRIS Project). The VRIS Project evisioned a computerized database system for the May 2004 elections. The COMELEC issued invitations to prequalify and bid for the supply and installation of information technology equipment for the VRIS Project. Private respondent PHOTOKINA pre-qualified. PHOTOKINA, with its bid in the amount of 6.588 Billion Pesos, was declared the winning bidder. The parties proceeded to formalize the contract, with Commissioner Sadain and Atty. Sta. Ana, acting as negotiators for the COMELEC and PHOTOKINA, respectively. However, under RA 8760, the budget appropriated by Congress for COMELECs modernization projectwas only 1 Billion Pesos and the actual available funds issued by the Chief Accountant of COMELEC was only 1.2 Billion Pesos. Subsequently, the term of COMELEC Chairman Demetriou and Commissioners Desamito and Dy-Liacco expired. Appointed their successors were Chairman Benipayo and Commissioners Borra and Tuason, Jr. Chairman Benipayo announced that the VRIS Project has been set aside. He further announced his plan to re-engineer the entire modernization project of the COMELEC. Commissioner Sadain submitted a draft of the contract providing a price that would not exceed the certified available appropriation but covering only Phase 1 of the VRIS Project issuance of registration cards for 1,000,000 voters in certain areas only. Under the draft, the subsequent completion of the whole project shall be agreed upon in accordance with the bid Documents and annual funds available for it. PHOTOKINA wrote several letters to the COMELEC requiring formal execution of their contract, but to no avail. It filed a petition for Mandamus, Prohibition and Damages against COMELEC and all its Commissioners. The RTC ruled in favour of PHOTOKINA.Issue

1) Is a petition for mandamus the proper remedy to enforce contractual obligations? NO.

2) May a successful bidder compel a government agency to formalize a contract with it notwithstanding that its bid exceeds the amount appropriated by Congress for the project? NO.Held/RatioIssue 1 Mandamus does not lie to enforce the performance of contractual obligations. Mandamus never lies to enforce the performance of private contracts. The remedy, if any, is by an original action in the CFI to compel the city to pay the agreed price or to pay damages for breach of contract. (Quiogue v. Romualdez)

In the present case, what PHOTOKINA sought to enforce are its rights under the accepted bid proposal. It is worth stressing that mandamus applies as a remedy only where petitioners right is founded clearly in law and not when it is doubtful. Here, the alleged contract is being disputed, not only on the ground that it was not perfected but also because it is illegal and against public policy.

While there may be cases where the writ of mandamus has been used to compel public officers to perform certain acts, it will be observed that in these cases, the contracts have been completely performed and nothing remained to be done except for the government to make compensation (Isada v. Bocar). In the present case, the alleged contract has not yet been fully performed by PHOTOKINA; and though it avers readiness to perform, COMELEC raised serious questions as to its validity.

COMELEC cannot be compelled by a writ of mandamus to discharge a duty that involves the exercise of judgment and discretion, especially where disbursement of public funds is concerned.

Issue 2

The contact is patently void and unenforceable. Sec. 29 (1), Art. VI of the Constitution states that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law. Thus, in the execution of government contracts, various agencies must limit their expenditure within the appropriations made by law for each fiscal year. Complementary to this constitutional provision are pertinent provisions of law and administrative issuances that are designed to effectuate the said Constitutional mandate. (See Secs. 46 and 47, Chap. 8, Subtitle B, Title I, Book V of the Admin Code.)

The existence of appropriation and the availability of funds are indispensible prerequisites to or conditions sine qua non for the execution of government contracts.

The SC cannot accede to PHOTOKINAs contention that there is already a perfected contract. While the SC, in MMDA v. Jancom, held that the effect of an unqualified acceptance of the offer of the bidder is to perfect the bidder, however such statement would be inconsequential in a government where the acceptance referred to is yet to meet certain conditions. To hold otherwise is to allow a public officer to execute a binding contract that would obligate the government in an amount in excess of the appropriations for the purpose for which the contract was attempted to be made. This is a dangerous precedent.

In the present case, there seems to be an oversight of the legal requirements as early as the bidding stage.

The first step of a Bids and Awards Committee is to determine whether the bids comply with the requirements. The amount of PHOTOKINAs bid is 6.588 Billion Poses. However under the Appropriations Act for that year, the only fund appropriated was 1 Billion Pesos and under the Certification of Available Funds only 1.2 Billion pesos was available. There is no way that the COMELEC could enter into a contract with PHOTOKINA whose accepted bid was beyond the amount appropriated by law. The Committee should have rejected the bid right away.

The draft contract submitted by Commissioner Sadain that provides for a contract price of 1.2 Billion Pesos covers only the Phase 1 of the VRIS Project (issuance of identification cards for only 1,000,000 voters in specified areas). In effect, the implementation of the contract will be segmented into several phases. This arrangement is disallowed by the budgetary laws and practices. It is also disadvantageous to the COMELEC because of the uncertainty that will loom over its modernization project for an indefinite period of time. The completion of Phase 1 of the VRIS Project would do no good. Entering into a multi-year contract without a multi-year obligational authority is prohibited by law.

The contract is inexistent and void ab initio. It cannot be validated either by lapse of time or ratification.

PHOTOKINAs remedy is found in Sec. 48 of EO 292, which explicitly provides that any contract entered into contrary to the legal requirements shall be void, and the officers entering into the contract shall be liable to the Government or other contracting party for any consequent damage to the same as if the transaction had been wholly between private parties.

When the contracting officer acts beyond the scope of his legitimate powers, the Government is not bound under the contract. It would be as if the contract were a private one, where the officer binds only himself, and thus, assumes personal liability thereunder. The proposed contract is unenforceable as to the Government.

Procedural Issues

1. COMELEC contends that OSG has no standing to file a petition since its legal position is contrary to that espoused by COMELEC Commissioners. (Note: OSG filed the present petition for certiorari in behalf of then Chairman Benipayo and Commissioners Borra and Tuason, Jr.)

SC: The OSG is an independent institution. Its hands are not shackled to the cause of its client agency. In the discharge of its task, it must see to it that the interest of the government is upheld. Furthermore, petitions are also public officials entitled to be represented by the OSG, The OSG is the lawyer of the government, its agencies and instrumentalities, and its officials or agents.

2. The present petition violated the doctrine of hierarchy of courts.

SC: The said doctrine is not an iron-clad dictum. In cases of national interest and of serious implications, the SC never hesitated to set aside the rule and proceed with the judicial determination of the case. The present case is of national interest involving the disbursement of public funds and the modernization of the countrys election process.

LINDAIN SEC. 46. Appropriation Before Entering into Contract. - (1) No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure;

SEC. 47. Certificate Showing Appropriation to Meet Contract. - Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three (3) months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current calendar year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished.

SECTION 33, RA 8760. Contracting Multi-Year Projects. - In the implementation of multi-year projects, no agency shall enter into a multi-year contract without a multi-year Obligational Authority issued by the Department of Budget and Management for the purpose. Notwithstanding the issuance of the multi-year Obligational Authority, the obligation to be incurred in any given calendar year, shall in no case exceed the amount programmed for implementation during said calendar year.