Can Comelec take over the role of TIM?

This is a follow-up re the ongoing controversy relating to the contract for poll automation that was awarded by Comelec to a “consortium” involving TIM and Smartmatic.  Apparently, a joint venture of TIM and Smartmatic has not yet been incorporated, and Comelec is dealing in effect with two promoters rather than with an existing corporation or partnership (see my earlier post on the difficulties raised by the situation).

The Daily Inquirer reports that Comelec would like to  replace TIM in the intended joint venture .  Is this legal?

I think not. If Comelec partners with Smartmatic, Comelec would deal with an entity that is 40% owned by a foreign corporation (Smartmatic) and 60% owned by the government. But this is a circumvention of the nationality requirement.  The government would be dealing with itself (under a non-viable autocontract) and with a foreign entity (which is not allowed).

This is also a situation where a piercing of the corporate veil is warranted.  Here, the corporate veil is being used to violate the laws on nationalization, and under the so-called alter ego doctrine, shareholders will be treated as real parties in interest when this is necessary to prevent fraud or to do justice.  Certainly, “doing justice” includes the enforcement of the laws on nationalization.

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One thought on “Can Comelec take over the role of TIM?

  1. But suppose TIM and Smartmatic do go ahead and register a joint venture. Can the Comelec award still be questioned? Yes, because Comelec violated the equal protection clause by not requiring a juridical entity to exist when it “awarded” the contract to a still nonexistent entity. Comelec set up a non level playing field for the bidders who already had personality. Please tell Harry Roque et al.

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