Court battle

Over the next few weeks, we will be rushing headlong into the political season. The vital 2016 presidential contest looms on the horizon. But the preparations for the conduct of the polls could be mired in court battles.

The lawyer for Indra Systems SA, a company trying to sell automated elections equipment to the Comelec, warns of a prolonged legal tangle that could derail preparations for the next polls. His company is challenging the possible award of the contract for supplemental PCOS machines to Smartmatic, the firm that supplied the original batch of such machines used in the 2010 and 2013 polls.

Indra is basically questioning Smartmatic’s claim that it owns the technology used in the present automated elections set-up. Unless that claim is debunked, Smartmatic will have a firm grip on supplying our equipment needs.

Another group questioning Smartmatic’s ownership of the technology is the Citizens for Clean and Credible Elections (C3E). The group earlier tried to have Smartmatic blacklisted for the bidding to supply additional PCOS machines. Last Dec. 3, however, the Comelec bids and awards committee ruled that C3E was not an authorized observer and had no legal personality to initiate blacklisting.

Smartmatic, for its part, claims majority ownership of Jaltech Inc., the company that actually manufactures the machines used in our automated elections.   On that basis, Smartmatic claims intellectual property rights for the technology currently in use.  

The Comelec now has 81,000 PCOS machines acquired by exercising its option to buy the system after the 2010 elections. The poll body intends to supplement this by purchasing an additional 23,000 units of the Optical Media Reader to facilitate voting in the 2016 elections. The contract for that amounts to P2 billion.

An additional P1.6 billion is available for refurbishing the existing 81,000 machines in preparation for the 2016 elections. The Comelec appears inclined to pay out this amount to  Smartmatic as part of the latter’s warranty for maintenance and repair of the existing equipment. Comelec chairman Sixto Brilliantes, however, insists the matter awaits a final en banc resolution.

As for the P2 billion available for buying additional machines, the Comelec qualified both Smartmatic and Indra for the second stage of a two-stage bidding process.  The two companies now seem to be locked in a legal and propaganda war ahead of the final bidding decisions.

Lawyers for Smartmatic, for their part, warned that if the additional hardware is purchased from any other supplier other than the original, that new supplier can only resort to reverse engineering. This, warns Smartmatic’s lead counsel, will be patently illegal. The Comelec could be held liable for “breach of intellectual property clauses” implied in the poll body’s decision to purchase the used PCOS stock.

Both parties in this bidding exercise appear bent on using every other avenue beyond the bids and awards committee to apply pressure on the poll body and sway public opinion their way. This is a tricky situation for the Comelec, which must arrive at a procurement decision soon enough.

Port battle

Yet another legal tangle also threatens to disrupt port operations, aggravating the already serious problems we have with congestion.

A few weeks ago, a band of armed men were intercepted in the waters near the Manila port. The first theory that emerged was that terrorists may be out to aggravate the already debilitating situation at our main port.

Now it seems, the goons might be part of an increasingly antagonistic conflict between father and son.

Reghis Romero II on March 2, 2011, signed two separate deeds of assignment that completely transferred 403,799 shares held by R-II Holdings and 285,459 shares held by R-II Builders in favor of Harbor Centre Port Terminal, Inc. (HCPTI). Michael L. Romero, son of Reghis, controls HCPTI.

Way before Reghis transferred shares in favor of his son’s company, HCPTI entered into a services contract on Jan. 2, 2017 with One Source Port Services (One Port). Again, on June 5, 2014, HCPTI executed a “Port Services Management Contract” to one source, expressing satisfaction with the quality of services the firm provided.

Then things began to go awry.

Reghis, the father, started insisting he had majority control of HCPTI — even in the absence of any competent court ruling reversing his earlier transfer of shares. He wanted to revoke the services contract with One Source and began muscling his way into the port facility.

To protect its interests, One Source sought protection from the courts. On Dec. 1, 2014 the Court issued a TRO against Reghis and his companies, directing them to “cease and desist from further disrupting and interfering with the plaintiff’s peaceful management, control, operations and possession of the Terminal Facility located at Manila Harbor Center.”

The Court ruled that Reghis and his companies “were unable to convince this Court that they now own and control majority shares at Harbor Center Port Terminal Inc.” At any rate, the contract with One Source was independent of the ownership dispute between father and son.

In related cases, the suits qualified theft filed by father against son were dismissed for lack of merit in the three separate jurisdictions in which they were filed. That reinforces Michael’s control of HCPTI.

On Dec. 18, 2014 the Court issued a Writ of Preliminary Injunction against Reghis and his companies. The Court observed that the transfer of R-II Holdings and R-II Builders shares “have not been validly revoked, rescinded and annulled. Hence, the same is considered as valid and subsisting.”

For as long as Reghis Romero respects the various rulings of the Court and desists from muscling his way back in, there might be peace at this vital facility.