In party-list elections, votes cast for organizations that are subsequently disqualified for failing to meet the statutory and jurisprudential requirements must be deducted from the "total votes cast for the party-list system" for the purpose of determining the two-percent threshold required to win a seat in the House of Representatives, as mandated by Section 10 of RA 7941, which states that votes for those "not entitled to be voted for shall not be counted."

The case emerged from the complexities of the 2001 party-list elections, following the Supreme Court's June 26, 2001 Decision that established eight-point guidelines for party-list qualification. Numerous party-list groups participated, leading to disputes over qualification, the computation of votes, the determination of the two-percent threshold, and the allocation of seats, necessitating further clarification from the Court on how to apply the party-list law (RA 7941) and its previous rulings.

• Following the Court's June 26, 2001 Decision setting guidelines for party-list qualification, COMELEC submitted several Compliance Reports, initially disqualifying numerous party-list groups, including BUHAY and COCOFED.
• The OSG, representing COMELEC, later argued for the qualification of BUHAY (contesting claims it was an extension of El Shaddai, a religious group) and COCOFED (clarifying it was not an adjunct of government as a problematic bylaw was deleted and seeking government aid is not per se disqualifying). The Court accepted these arguments, qualifying BUHAY and COCOFED.
• This brought the total number of qualified party-list groups to 46 (42 from COMELEC reports plus APEC, CIBAC, BUHAY, and COCOFED added by Court action).
• Various party-list participants filed motions for proclamation, arguing that the disqualification of many other groups reduced the "total number of votes cast for the party-list elections," thereby lowering the vote count needed to meet the two-percent threshold for winning a seat.
• The total votes cast for all participating party-list groups in the May 14, 2001 elections was 15,118,815. The votes for the 116 groups ultimately deemed disqualified by the Court amounted to 8,595,630.
• A separate motion by BAYAN MUNA challenging the entitlement to additional seats for APEC, AKBAYAN, BUTIL, and CIBAC (who were previously proclaimed with one seat each) was pending completion at the time of this Resolution.

• Movants for proclamation (various party-list groups) argued that votes cast for party-list organizations subsequently disqualified should be deducted from the "total votes cast for the party-list system," which would enable them to meet the two-percent threshold for winning seats.
• BAYAN MUNA contended that deducting votes obtained by party-list candidates disqualified after the elections would result in instability in the party-list system, as it would encourage disqualification suits solely to attain the required percentage.

• The OSG, on behalf of COMELEC, argued that COMELEC's initial disqualification of BUHAY and COCOFED in the First Compliance Report was not supported by substantial evidence and should be reconsidered, leading to their qualification.
• The OSG opined that COMELEC acted correctly in later revising its Party-List Canvass Report to reflect the correct number of votes for qualified parties and supported the proclamation of parties like BUHAY, COCOFED, SANLAKAS, and PM if they met the threshold based on valid votes.
• The OSG contended that NCIA, not being qualified per the First Partial Compliance Report, could not be proclaimed a winner despite being added by COMELEC in Resolution No. NBC-02-001.

• Whether party-list groups BUHAY and COCOFED, initially disqualified by COMELEC, should be deemed qualified.
• Whether the votes cast for party-list organizations that were subsequently disqualified for failing to meet the eight-point guideline should be deducted from the "total votes cast for the party-list system" in determining the two-percent threshold.
• Whether the rulings in Labo v. Comelec and Grego v. Comelec regarding votes for disqualified candidates in regular elections are applicable to party-list elections.
• Which party-list organizations are entitled to be proclaimed winners in the 2001 party-list elections and how many seats are they entitled to.

• The Court ruled that BUHAY and COCOFED are qualified party-list groups, overturning COMELEC's initial disqualification, finding the OSG's arguments for their qualification convincing and the earlier COMELEC findings lacking substantial evidence. This increased the number of qualified groups to 46.
• The Court held that votes cast for party-list organizations subsequently disqualified must be deducted from the "total votes cast for the party-list system." This is based on the clear language of Section 10 of RA 7941, which states that "a vote cast for a party, sectoral organization, or coalition not entitled to be voted for shall not be counted."
• The rulings in Labo v. Comelec and Grego v. Comelec are not applicable to party-list elections because they pertain to regular elections for single local offices, interpret a different statutory provision (Section 6 of RA 6646), and RA 7941 is a special law that specifically governs party-list elections and provides its own rule for votes cast for non-entitled parties.
• Subtracting the 8,595,630 votes for the 116 disqualified groups from the initial total of 15,118,815 votes resulted in a new base of 6,523,185 valid votes cast for the 46 qualified parties. The two-percent threshold is 130,464 votes.
• Based on this, 12 party-list groups met the two-percent threshold: BAYAN MUNA, APEC, AKBAYAN!, BUTIL, CIBAC, BUHAY, AMIN, ABA, COCOFED, PM, SANLAKAS, and ABANSE! PINAY.
• Applying the seat allocation formula from Veterans Federation Party v. Comelec, BAYAN MUNA, having garnered 26.19% of the valid votes, is entitled to three seats (one qualifying and two additional).
• BUHAY, AMIN, ABA, COCOFED, PM, SANLAKAS, and ABANSE! PINAY were each declared elected with one nominee, as their computed additional seats were less than one whole seat. The TRO was partially lifted for their proclamation.
• The determination of additional seats for APEC, AKBAYAN!, BUTIL, and CIBAC was deferred due to a pending separate motion by BAYAN MUNA challenging their entitlement.

• Statutory Construction (Plain Meaning Rule / Verba Legis) — When the language of the law is clear and unambiguous, there is no room for interpretation, only for application. This was applied to Section 10 of RA 7941, which explicitly states that votes for a party "not entitled to be voted for shall not be counted," making it mandatory to deduct such votes from the total.
• Special Law Prevails Over General Law (Lex Specialis Derogat Generali) — RA 7941, being a special statute governing party-list elections, is the controlling law over general election laws or prior rulings (like Labo v. Comelec interpreting RA 6646) concerning matters specifically addressed by RA 7941. This doctrine supported the non-applicability of Labo and Grego to the treatment of votes for disqualified party-list groups.
• Proportional Representation in Party-List System — The party-list system aims to achieve the broadest possible representation of marginalized and underrepresented sectors through a system of proportional representation. The Court's decision to deduct votes of disqualified parties was seen as furthering this policy by making it more attainable for qualified groups to meet the threshold and secure representation. The formulas from Veterans ensure seat allocation conforms to this principle.
• Eight-Point Guideline for Party-List Qualification (from Ang Bagong Bayani-OFW Labor Party v. COMELEC, June 26, 2001) — This earlier decision in the same consolidated cases established specific criteria for a party-list group to be registered and participate in elections. The current resolution deals with the consequences of failing these guidelines post-election.
• Four Parameters of the Philippine Party-List System (from Veterans Federation Party v. Comelec) — These parameters (twenty percent allocation, two percent threshold, three-seat limit, proportional representation) guide the determination of winners and seat allocation. The current ruling applies these parameters after establishing the correct base of "total valid votes cast."
• Judicial Review of COMELEC Factual Findings — While generally respecting COMELEC's factual findings, the Court will overturn them if they are not supported by substantial evidence or are tainted by arbitrariness, abuse, or negligence. This was applied in qualifying BUHAY and COCOFED based on the OSG's submissions which contradicted COMELEC's initial report.

• "a vote cast for a party, sectoral organization, or coalition not entitled to be voted for shall not be counted."
• "[T]he dismal result of the first election for party-list representatives should serve as a challenge to our sectoral parties and organizations. It should stir them to be more active and vigilant in their campaign for representation in the State's lawmaking body. It should also serve as a clarion call for innovation and creativity in adopting this novel system of popular democracy."
• "With adequate information and dissemination to the public and more active sectoral parties, we are confident our people will be more responsive to future party-list elections. Armed with patience, perseverance and perspicacity, our marginalized sectors, in time, will fulfill the Filipino dream of full representation in Congress under the aegis of the party-list system, Philippine style."

• Veterans Federation Party v. Comelec (342 SCRA 244, October 6, 2000) — Referenced extensively for establishing the four parameters of the Philippine party-list system and the formulas for computing the number of seats (including additional seats) for winning party-list groups. Its principles on proportional representation were foundational to the seat allocation in this case.
• Labo v. Comelec (211 SCRA 297, July 3, 1992) — Cited by parties but distinguished and held inapplicable by the Court. Labo ruled that the ineligibility of a candidate with the highest votes in a regular election does not automatically entitle the second-placer to be elected, unless the disqualification was notorious. The Court found it inapplicable to party-list elections governed by the specific provisions of RA 7941.
• Grego v. Comelec (340 Phil. 591, June 19, 1997) — Also cited by parties and distinguished as inapplicable. Grego reiterated Labo regarding votes for disqualified candidates in regular elections. The Court held it inapplicable for the same reasons as Labo and because RA 7941 is the controlling special law for party-list.
• Ang Bagong Bayani-OFW Labor Party v. COMELEC (Decision of June 26, 2001 in the same consolidated cases, G.R. Nos. 147589 & 147613) — This is the parent decision that laid down the eight-point guidelines for party-list qualification, the implementation and consequences of which are being resolved in the current Resolution.
• Sunga v. Comelec (351 Phil. 310, March 25, 1998) — Cited in support of the plain meaning rule for statutory construction (regarding RA 7941, Sec. 10).
• Republic v. CA (359 Phil. 530, November 25, 1998) — Cited in support of the principle that no recourse to extrinsic aids is warranted when the law is plain and unambiguous (regarding RA 7941, Sec. 10).

• RA 7941 (Party-List System Act), Section 2 (Declaration of Policy) — Cited to emphasize the state policy of promoting proportional representation and enabling marginalized sectors to become members of the House of Representatives. The ruling to deduct votes of disqualified parties was framed as furthering this policy.
• RA 7941 (Party-List System Act), Section 10 (Manner of Voting) — This was the cornerstone statutory provision for the primary holding. The Court heavily relied on its proviso: "Provided, That a vote cast for a party, sectoral organization, or coalition not entitled to be voted for shall not be counted."
• RA 7941 (Party-List System Act), Section 11(b) (Number of Party-List Representatives) — Referenced for the two-percent threshold requirement for a party-list to be entitled to one seat, and the provision for additional seats for those garnering more than two percent, up to a maximum of three seats.
• RA 7941 (Party-List System Act), Section 12 (Procedure in Allocating Seats for Party-List Representatives) — Mentioned as the basis for conducting a new tally and ranking of qualified party-list candidates after deducting votes of disqualified groups.
• RA 6646 (Electoral Reforms Law of 1987), Section 6 (Effect of Disqualification Case) — This provision, interpreted in Labo and Grego, was deemed inapplicable to party-list elections because RA 7941 has its own specific rule (Sec. 10) for votes cast for non-entitled parties.

• Justice Jose C. Vitug — Justice Vitug reiterated his dissenting opinion promulgated along with the ponencia on June 26, 2001 (359 SCRA 698, 733-741). The current Resolution does not detail the substance of this earlier dissent, only noting his reiteration.