Abaya v Ebdane Digest and Full Text

7/23/2019 Abaya v Ebdane Digest and Full Text

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Abaya, et. al. v Ebdane, et. al.

Facts:

• Based on the Exchange of Notes dated December 27, 1, the !overnment of "a#an and the

!overnment of the $h%l%##%nes, thro&gh the%r res#ect%ve re#resentat%ves, have reached anagreement concern%ng "a#anese loans to be extended to the $h%l%##%nes 'h%ch 'ere a%med at#romot%ng o&r co&ntry(s econom%c stab%l%)at%on and develo#ment efforts. *n accordance '%th sa%dagreement, the $h%l%##%nes obta%ned from and 'as granted a loan by the "a#an Ban+ for *nternat%onal oo#erat%on &nder -oan Agreement No. $/$20 dated December 2, 1.

• "B* agreed to lend the $h%l%##%ne !overnment an amo&nt not exceed%ng 314,5,000,000 63en

as #r%nc%#al for the %m#lementat%on of the Arter%al 8oad -%n+s Develo#ment $ro9ect 6$hase * onthe terms and cond%t%ons set forth %n the -oan Agreement and %n accordance '%th the relevantla's and reg&lat%ons of "a#an.

• ;he A##roved B&dget for the ontract 'as $75, 710, 4<5.<7. After the b%dd%ng #rocess, the B%ds

and A'ards omm%ttee of the D$= %ss&ed 8esol&t%on No. $"-/A/0/012 recommend%ng the

a'ard %n favor of #r%vate res#ondent h%na 8oad > Br%dge or#orat%on be%ng the lo'est b%dder. Aontract of Agreement 'as entered %nto by and bet'een the D$= and #r%vate res#ondent.

• $et%t%oners, as tax#ayers and F%l%#%no c%t%)ens f%led a #et%t%on for cert%orar% and #roh%b%t%on see+%ng

to set as%de and n&ll%fy sa%d 8esol&t%on and ontract of Agreement. ;hey cla%med that the a'ardof the contract to #r%vate res#ondent v%olates 8A 1 'h%ch #rov%des that all b%ds or a'ardssho&ld not exceed the ce%l%ngs or &##er l%m%ts? other'%se, the contract %s deemed vo%d and%nex%stent. $r%vate res#ondent(s b%d 'as more than $200 m%ll%on over#r%ced based on the AB. Ass&ch, the a'ard and the s&bse@&ent contract entered %nto are allegedly %llegal and&nconsc%onable.

• ;he #et%t%oners arg&e that the -oan Agreement %s ne%ther an exec&t%ve agreement nor a treaty

beca&se to be cons%dered as s&ch the #art%es sho&ld be the $h%l%##%nes as a tate and another

tate. ;he "B* %s a "a#anese ban+%ng agency '%th a se#arate 9&r%d%cal #ersonal%ty from the"a#anese !overnment.

• Both #&bl%c and #r%vate res#ondents ma%nta%n that the %m#os%t%on of ce%l%ngs or &##er l%m%ts on b%d

#r%ces %n 8A 1 does not a##ly beca&se the $ * #ro9ect f%nanced by -oan Agreement %sgoverned by the latter(s $roc&rement !&%del%nes 'h%ch #recl&des the %m#os%t%on of ce%l%ngs on b%d#r%ces. ;hey l%+e'%se aver that the -oan Agreement %s governed by 8A <0, 6Fore%gn Borro'%ngs

Act 'h%ch #rov%des that the $res%dent %s em#o'ered to 'a%ve the a##l%cat%on of any la' %m#os%ngrestr%ct%ons on the #roc&rement of goods and serv%ces #&rs&ant to s&ch loans. oreover, No.10 clar%f%ed that for #ro9ects s&##orted %n 'hole or %n #art by fore%gn ass%stance a'ardedthro&gh %nternat%onal or local com#et%t%ve b%dd%ng, the government agency concerned may a'ardthe contract to the lo'est eval&ated b%dder at h%s b%d #r%ce cons%stent '%th the #rov%s%ons of thea##l%cable loanCgrant agreement.

• 8es#ondents character%)ed fore%gn loan agreements, %ncl&d%ng -oan Agreement No. $/$20, as

exec&t%ve agreements. ;hey c%te ect%on 20 of Art%cle ** of the onst%t&t%on as g%v%ng the$res%dent the a&thor%ty to contract fore%gn loans. ;he onst%t&t%on recogn%)es the enforceab%l%ty of exec&t%ve agreements %n the same 'ay that %t recogn%)es generally acce#ted #r%nc%#les of %nternat%onal la' as form%ng #art of the la' of the land. Exec&t%ve agreements are essent%allycontracts govern%ng the r%ghts and obl%gat%ons of the #art%es. A contract, be%ng the la' bet'eenthe #art%es, m&st be fa%thf&lly adhered to by them. !&%ded by the f&ndamental r&le of #acta s&ntservanda, the $h%l%##%ne !overnment bo&nd %tself to #erform %n good fa%th %ts d&t%es and



obl%gat%ons &nder the -oan Agreement. oreover, the a##l%cat%on of 8A 1 on the b%dd%ng,not'%thstand%ng the terms and cond%t%ons of the -oan Agreement, allegedly v%olate theconst%t&t%onal #rov%s%on on non/%m#a%rment of obl%gat%ons and contracts, and destroy vested r%ghtsd&ly ac@&%red &nder the sa%d loan agreement.

*ss&es: =hether or not the -oan Agreement No. $/20 bet'een the "B* and the $h%l%##%ne!overnment %s an exec&t%ve agreement.

8&l%ng:

• ;he o&rt holds that -oan Agreement No. $/$20 ta+en %n con9&nct%on '%th the Exchange of

Notes bet'een the "a#anese !overnment and the $h%l%##%ne !overnment %s an exec&t%veagreement.

• ;he "B* may be cons%dered an ad9&nct of the "a#anese !overnment. F&rther, the -oan

Agreement %s %nd&b%tably an %ntegral #art of the Exchange of Notes s&ch that %t cannot be #ro#erlyta+en %nde#endent thereof.

• An exchange of notes %s def%ned %n the n%ted Nat%ons ;reaty ollect%on s a record of a ro&t%ne

agreement that has many s%m%lar%t%es '%th the #r%vate la' contract. ;he agreement cons%sts of theexchange of t'o doc&ments, each of the #art%es be%ng %n the #ossess%on of the one s%gned by there#resentat%ve of the other. nder the &s&al #roced&re, the acce#t%ng tate re#eats the text of theoffer%ng tate to record %ts assent. ;he s%gnator%es of the letters may be government %n%sters,d%#lomats or de#artmental heads.

• *t %s stated that treat%es, agreements, convent%ons, charters, #rotocols, declarat%ons, memoranda

of &nderstand%ng, mod&s v%vend% and exchange of notes all refer to %nternat%onal %nstr&mentsb%nd%ng at %nternat%onal la'. ;hey all have common feat&res and %nternat%onal la' has a##l%ed toall these %nstr&ments bas%cally the same r&les 'h%ch are the res&lt of long #ract%ce among thetates, 'h%ch have acce#ted them as b%nd%ng norms %n the%r m&t&al relat%ons. ;herefore, they areregarded as %nternat%onal c&stomary la'.

• An exchange of notes %s cons%dered a form of an exec&t%ve agreement, 'h%ch becomes b%nd%ng

thro&gh exec&t%ve act%on '%tho&t the need of a vote by the enate or ongress.

• =%th res#ect to the #roc&rement of the goods and serv%ces for the #ro9ects, as st%#&lated, the

!overnment of the 8e#&bl%c of the $h%l%##%nes '%ll ens&re that the #rod&cts andCor serv%cesment%oned #roc&red %n accordance '%th the g&%del%nes for #roc&rement of the Ban+. ;he "B*$roc&rements !&%del%nes forb%ds any #roced&re &nder 'h%ch b%ds above or belo' a#redeterm%ned b%d val&e assessment are a&tomat%cally d%s@&al%f%ed.

• nder the f&ndamental #r%nc%#le of %nternat%onal la' of #acta s&nt servanda, 'h%ch %s, %n fact,

embod%ed %n ect%on of 8A 1 as %t #rov%des that aGny treaty or %nternat%onal or exec&t%veagreement affect%ng the s&b9ect matter of th%s Act to 'h%ch the $h%l%##%ne government %s as%gnatory shall be observed, the D$=, as the exec&t%ng agency of the #ro9ects f%nanced by-oan Agreement No. $/$20, r%ghtf&lly a'arded the contract for the %m#lementat%on of c%v%l'or+s for the $ * #ro9ect to #r%vate res#ondent h%na 8oad > Br%dge or#orat%on.



8e#&bl%c of the $h%l%##%nesSUPREME COURT

an%la

;*8D D***HN

G.R. No. 167919 February 14, 2007

PLAR!EL M. A"A#A, COMMO!ORE PLAR!EL C. GARCA $re%&re'( a)' PMA *+9 FOUN!ATON,NC., re. by &%- Pre-&'e)%, COMMO!ORE CARLOS L. AGUSTN $re%&re'(, $et%t%oners,vs.ON. SECRETAR# ERMOGENES E. E"!ANE, /R., &) &- aa&%y a- Sere%ary o %e!EPARTMENT OF PU"LC 3ORS a)' G3A#S, ON. SECRETAR# EMLA T. "ONCO!N, &)er aa&%y a- Sere%ary o %e !EPARTMENT OF "U!GET a)' MANAGEMENT, ON.SECRETAR# CESAR 5. PURSMA, &) &- aa&%y a- Sere%ary o %e !EPARTMENT OF FNANCE,ON. TREASURER NORMA L. LASALA, &) er aa&%y a- Trea-urer o %e "ureau o Trea-ury,a)' CNA ROA! a)' "R!GE CORPORATON,8es#ondents.

D E * * H N

CALLE/O, SR., J.:

Before the o&rt %s the #et%t%on for cert%orar% and #roh%b%t%on &nder 8&le <4 of the 8&les of o&rt see+%ng toset as%de and n&ll%fy 8esol&t%on No. $"-/A/0/012 dated ay 7, 200 %ss&ed by the B%ds and A'ardsomm%ttee 6BA of the De#artment of $&bl%c =or+s and %gh'ays 6D$= and a##roved by thenD$= Act%ng ecretary Florante or%@&e). ;he assa%led resol&t%on recommended the a'ard to #r%vateres#ondent h%na 8oad > Br%dge or#orat%on of the contract for the %m#lementat%on of c%v%l 'or+s for ontract $ac+age No. * 6$ *, 'h%ch cons%sts of the %m#rovementCrehab%l%tat%on of the an Andres6odon/%rac/"ct. Bago/%ga road, '%th the length of 7.1 +%lometers, %n the %sland #rov%nce of atand&anes.

;he $ * #ro9ect %s one of the fo&r #ac+ages com#r%s%ng the #ro9ect for the %m#rovementCrehab%l%tat%on of the atand&anes %rc&mferent%al 8oad, cover%ng a total length of abo&t 20.414 +%lometers, 'h%ch %s thema%n h%gh'ay %n atand&anes $rov%nce. ;he road sect%on 6atand&anes %rc&mferent%al 8oad %s #art of the Arter%al 8oad -%n+s Develo#ment $ro9ect 6$hase * f&nded &nder -oan Agreement No. $/$20dated December 2, 1 bet'een the "a#an Ban+ for *nternat%onal oo#erat%on 6"B* and the!overnment of the 8e#&bl%c of the $h%l%##%nes.

Bac+gro&nd

Based on the Exchange of Notes dated December 27, 1,1 the !overnment of "a#an and the!overnment of the $h%l%##%nes, thro&gh the%r res#ect%ve re#resentat%ves, namely, r. 3osh%h%sa Ara,

Ambassador Extraord%nary and $len%#otent%ary of "a#an to the 8e#&bl%c of the $h%l%##%nes, and thenecretary of Fore%gn Affa%rs Dom%ngo -. %a)on, have reached an &nderstand%ng concern%ng "a#anese

loans to be extended to the $h%l%##%nes. ;hese loans 'ere a%med at #romot%ng o&r co&ntry(s econom%cstab%l%)at%on and develo#ment efforts.

;he Exchange of Notes cons%sted of t'o doc&ments: 61 a -etter from the !overnment of "a#an, s%gnedby Ambassador Ara, addressed to then ecretary of Fore%gn Affa%rs %a)on, conf%rm%ng the &nderstand%ngreached bet'een the t'o governments concern%ng the loans to be extended by the !overnment of "a#anto the $h%l%##%nes? and 62 a doc&ment denom%nated as 8ecords of D%sc&ss%on 'here the sal%ent terms of the loans as set forth by the !overnment of "a#an, thro&gh the "a#anese delegat%on, 'ere re%terated andthe sa%d terms 'ere acce#ted by the $h%l%##%ne delegat%on. Both Ambassador Ara and then ecretary

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%a)on s%gned the 8ecords of D%sc&ss%on as re#resentat%ves of the !overnment of "a#an and $h%l%##%ne!overnment, res#ect%vely.

;he Exchange of Notes #rov%ded that the loans to be extended by the !overnment of "a#an to the$h%l%##%nes cons%sted of t'o loans: -oan * and -oan **. ;he Exchange of Notes stated %n #art:

*

1. A loan %n "a#anese yen &# to the amo&nt of seventy/n%ne b%ll%on e%ght h&ndred and s%xty/onem%ll%on yen 637,<1,000,000 6here%nafter referred to as the -oan * '%ll be extended, %naccordance '%th the relevant la's and reg&lat%ons of "a#an, to the !overnment of the 8e#&bl%c of the $h%l%##%nes 6here%nafter referred to as the Borro'er * by the "a#an Ban+ for *nternat%onaloo#erat%on 6here%nafter referred to as the Ban+ to %m#lement the #ro9ects en&merated %n the-%st A attached hereto 6here%nafter referred to as the -%st A accord%ng to the allocat%on for each#ro9ect as s#ec%f%ed %n the -%st A.

2. 61 ;he -oan * '%ll be made ava%lable by loan agreements to be concl&ded bet'een theBorro'er * and the Ban+. ;he terms and cond%t%ons of the -oan * as 'ell as the #roced&re for %ts&t%l%)at%on '%ll be governed by sa%d loan agreements 'h%ch '%ll conta%n, %nter al%a, the follo'%ng

#r%nc%#les:

. . .

62 Each of the loan agreements ment%oned %n s&b/#aragra#h 61 above '%ll be concl&dedafter the Ban+ %s sat%sf%ed of the feas%b%l%ty, %ncl&d%ng env%ronmental cons%derat%on, of the#ro9ect to 'h%ch s&ch loan agreement relates.

5. 61 ;he -oan * '%ll be made ava%lable to cover #ayments to be made by the $h%l%##%neexec&t%ng agenc%es to s&##l%ers, contractors andCor cons&ltants of el%g%ble so&rce co&ntr%es &nder s&ch contracts as may be entered %nto bet'een them for #&rchases of #rod&cts andCor serv%cesre@&%red for the %m#lementat%on of the #ro9ects en&merated %n the -%st A, #rov%ded that s&ch#&rchases are made %n s&ch el%g%ble so&rce co&ntr%es for #rod&cts #rod&ced %n andCor serv%cess&##l%ed from those co&ntr%es.

62 ;he sco#e of el%g%ble so&rce co&ntr%es ment%oned %n s&b/#aragra#h 61 above '%ll beagreed &#on bet'een the a&thor%t%es concerned of the t'o !overnments.

65 A #art of the -oan * may be &sed to cover el%g%ble local c&rrency re@&%rements for the%m#lementat%on of the #ro9ects en&merated %n the -%st A.

. =%th regard to the sh%##%ng and mar%ne %ns&rance of the #rod&cts #&rchased &nder the -oan *,the !overnment of the 8e#&bl%c of the $h%l%##%nes '%ll refra%n from %m#os%ng any restr%ct%ons thatmay h%nder fa%r and free com#et%t%on among the sh%##%ng and mar%ne %ns&rance com#an%es.

x x x x2 1awphi1.net

$ert%nently, -%st A, 'h%ch s#ec%f%ed the #ro9ects to be f%nanced &nder the -oan *, %ncl&des the Arter%al 8oad-%n+s Develo#ment $ro9ect 6$hase *, to '%t:

-*; A

ax%m&m amo&nt %n m%ll%on yen






1. econdary Ed&cat%on Develo#ment and *m#rovement $ro9ect 7,210

2. 8&ral =ater &##ly $ro9ect 6$hase 41

5. Bohol *rr%gat%on $ro9ect 6$hase ** <,07

. Agrar%an 8eform *nfrastr&ct&re &##ort $ro9ect 6$hase ** 1<,0

4. Arter%al 8oad -%n+s Develo#ment $ro9ect 6$hase * 14,5

<. ord%llera 8oad *m#rovement $ro9ect 4,42

7. $h%l%##%nes/"a#an Fr%endsh%# %gh'ay %ndanao ect%on 8ehab%l%tat%on $ro9ect 6$hase **7,5

. 8ehab%l%tat%on and a%ntenance of Br%dges Along Arter%al 8oads $ro9ect 6$hase * 4,0<

. ar%t%me afety *m#rovement $ro9ect 6$hase ,71

10. $%nat&bo a)ard rgent %t%gat%on $ro9ect 6$hase ** ,015

11. $as%g/ar%+%na 8%ver hannel *m#rovement $ro9ect 6$hase * 1,1<7

;otal 7,<15

;he Exchange of Notes f&rther #rov%ded that:

***

x x x x

5. ;he !overnment of the 8e#&bl%c of the $h%l%##%nes '%ll ens&re that the #rod&cts andCor serv%cesment%oned %n s&b/#aragra#h 61 of #aragra#h 5 of $art * and s&b/#aragra#h 61 of #aragra#h of $art **are #roc&red %n accordance '%th the g&%del%nes for #roc&rement of the Ban+, 'h%ch set forth, %nter al%a, the#roced&res of %nternat%onal tender%ng to be follo'ed exce#t 'here s&ch #roced&res are %na##l%cable or %na##ro#r%ate.

x x x x

;he 8ecords of D%sc&ss%on, 'h%ch formed #art of the Exchange of Notes, also stated %n #art, th&s:

x x x x

1. =%th reference to s&b/#aragra#h 65 of #aragra#h 5 of $art * of the Exchange of Notes concern%ng thef%nanc%ng of el%g%ble local c&rrency re@&%rements for the %m#lementat%on of the #ro9ects ment%oned %n thesa%d s&b/#aragra#h, the re#resentat%ve of the "a#anese delegat%on stated that:

61 s&ch re@&%rement of local c&rrency as general adm%n%strat%ve ex#enses, %nterest d&r%ngconstr&ct%on, taxes and d&t%es, ex#enses concern%ng off%ce, rem&nerat%on to em#loyees of theexec&t%ng agenc%es and ho&s%ng, not d%rectly related to the %m#lementat%on of the sa%d #ro9ects, as'ell as #&rchase of land #ro#ert%es, com#ensat%on and the l%+e, ho'ever, '%ll not be cons%deredas el%g%ble for f%nanc%ng &nder the -oan *? and







62 the #roc&rement of #rod&cts andCor serv%ces '%ll be made %n accordance '%th the #roced&resof %nternat%onal com#et%t%ve tender%ng exce#t 'here s&ch #roced&res are %na##l%cable and%na##ro#r%ate.

x x x x4

;h&s, %n accordance '%th the agreement reached by the !overnment of "a#an and the $h%l%##%ne!overnment, as ex#ressed %n the Exchange of Notes bet'een the re#resentat%ves of the t'ogovernments, the $h%l%##%nes obta%ned from and 'as granted a loan by the "B*. -oan Agreement No.$/$20 dated December 2, 1, %n #art%c&lar, stated as follo's:

-oan Agreement No. $/$20, dated December 2, 1, bet'een "A$AN BANI FH8*N;E8NA;*HNA- HH$E8A;*HN and the !HE8NEN; HF ;E 8E$B-* HF ;E $*-*$$*NE.

*n the l%ght of the contents of the Exchange of Notes bet'een the !overnment of "a#an and the!overnment of the 8e#&bl%c of the $h%l%##%nes dated December 27, 1, concern%ng "a#anese loans tobe extended '%th a v%e' to #romot%ng the econom%c stab%l%)at%on and develo#ment efforts of the 8e#&bl%cof the $h%l%##%nes.

"A$AN BANI FH8 *N;E8NA;*HNA- HH$E8A;*HN 6here%nafter referred to as the BANI and ;E!HE8NEN; HF ;E 8E$B-* HF ;E $*-*$$*NE 6here%nafter referred to as the Borro'erhere'%th concl&de the follo'%ng -oan Agreement 6here%nafter referred to as the -oan Agreement, 'h%ch%ncl&des all agreements s&##lemental hereto.

x x x x<

nder the terms and cond%t%ons of -oan Agreement No. $/$20, "B* agreed to lend the $h%l%##%ne!overnment an amo&nt not exceed%ng F*F;EEN B*--*HN ;8EE ND8ED E*!;3/FH8 *--*HN"a#anese 3en 6314,5,000,000 as #r%nc%#al for the %m#lementat%on of the Arter%al 8oad -%n+sDevelo#ment $ro9ect 6$hase * on the terms and cond%t%ons set forth %n the -oan Agreement and %naccordance '%th the relevant la's and reg&lat%ons of "a#an. 7 ;he sa%d amo&nt shall be &sed for the#&rchase of el%g%ble goods and serv%ces necessary for the %m#lementat%on of the above/ment%oned #ro9ectfrom s&##l%ers, contractors or cons&ltants.

F&rther, %t 'as #rov%ded &nder the sa%d loan agreement that other terms and cond%t%ons generallya##l%cable thereto shall be set forth %n the !eneral ;erms and ond%t%ons, dated November 17, %ss&edby the Hverseas Econom%c oo#erat%on F&nd 6HEF and for the #&r#ose, reference to the HEF andF&nd there%n 6!eneral ;erms and ond%t%ons shall be s&bst%t&ted by the "B* and Ban+,res#ect%vely. #ec%f%cally, the g&%del%nes for #roc&rement of all goods and serv%ces to be f%nanced o&t of the #roceeds of the sa%d loan shall be as st%#&lated %n the !&%del%nes for $roc&rement &nder HEF -oansdated December 17 6here%n referred to as "B* $roc&rement !&%del%nes.10

As ment%oned earl%er, the #roceeds of -oan Agreement No. $/$20 'as to be &sed to f%nance the Arter%al 8oad -%n+s Develo#ment $ro9ect 6$hase *, of 'h%ch the atand&anes %rc&mferent%al 8oad

'as a #art. ;h%s road sect%on, %n t&rn, 'as d%v%ded %nto fo&r contract #ac+ages 6$:

$ *: an Andres 6odon/%rac/"ct. Bato/ %ga 8oad / 7.1 +ms

$ **: %ga/Bagamanoc 8oad / 10.0 +ms.

$ ***: Bagamanoc/$andan 8oad / 7.40 +ms.

$ *: $andan/aramoran/odon 8oad / <<.0 +ms.11


















&bse@&ently, the D$=, as the government agency tas+ed to %m#lement the #ro9ect, ca&sed the#&bl%cat%on of the *nv%tat%on to $re@&al%fy and to B%d for the %m#lementat%on of the $ * #ro9ect %n t'olead%ng nat%onal ne's#a#ers, namely, the an%la ;%mes and an%la tandard on November 22 and 2,and December 4, 2002.

A total of t'enty/three 625 fore%gn and local contractors res#onded to the %nv%tat%on by s&bm%tt%ng the%r

accom#l%shed #re@&al%f%cat%on doc&ments on "an&ary 25, 2005. *n accordance '%th the establ%shed#re@&al%f%cat%on cr%ter%a, e%ght contractors 'ere eval&ated or cons%dered el%g%ble to b%d as conc&rred by the"B*. Hne of them, ho'ever, '%thdre'? th&s, only seven contractors s&bm%tted the%r b%d #ro#osals.

;he b%d doc&ments s&bm%tted by the #re@&al%f%ed contractorsCb%dders 'ere exam%ned to determ%ne the%r com#l%ance '%th the re@&%rements asst%#&lated %n Art%cle < of the *nstr&ct%on to B%dders.12 After the la#se of the deadl%ne for the s&bm%ss%on of b%d #ro#osals, the o#en%ng of the b%ds commenced %mmed%ately. $r%or to the o#en%ng of the res#ect%ve b%d#ro#osals, %t 'as anno&nced that the A##roved B&dget for the ontract 6AB 'as %n the amo&ntof $75,710,4<5.<7.

;he res&lt of the b%dd%ng revealed the follo'%ng three lo'est b%dders and the%r res#ect%ve b%ds v%s/J/v%s the AB:15

Name of B%dder Hr%g%nal B%d As 8ead6$esos

As/orrected B%d Amo&nt6$esos

ar%ance

1 h%na 8oad And Br%dgeor#orat%on

$ 5,15,0. $42,4<,21.71 2.4K

2 av%te *deal *nt(l onst.Devt. or#.

$1,0,2<,4.11 $1,0,2<,4.11 .0K

5 *tal%an ;ha% Dev(t. $&bl%com#any, -td.

$1,124,022,074.5 $1,124,52,74.5< 42.54K

;he b%d of #r%vate res#ondent h%na 8oad > Br%dge or#orat%on 'as corrected from theor%g%nal $5,15,0. 6'%th var%ance of 5.4K from the AB to $42,4<,21.71 6'%th var%ance of 2.4K from the AB based on the%r letter clar%f%cat%on dated A#r%l 21, 200.1

After f&rther eval&at%on of the b%ds, #art%c&larly those of the lo'est three b%dders, r. ed%f&me E)a'a,$ro9ect anager of the atand&anes %rc&mferent%al 8oad *m#rovement $ro9ect 68*$, %n h%sontractor(s B%d Eval&at%on 8e#ort dated A#r%l 200, recommended the a'ard of the contract to #r%vateres#ondent h%na 8oad > Br%dge or#orat%on:

*n accordance '%th the !&%del%nes for the $roc&rements &nder HDA Hff%c%al Develo#ment Ass%stanceG-oans, the ons&ltant hereby recommends the a'ard of the contract for the constr&ct%on of $ *, an

Andres 6odon L %rac L "ct. Bato L %ga ect%on &nder the Arter%al 8oad -%n+s Develo#ment $ro9ects,

$hase *, "B* -oan No. $/$20 to the -o'est om#ly%ng B%dder, h%na 8oad and Br%dge or#orat%on,at %ts total corrected b%d amo&nt of N%ne &ndred F%fty/;'o %ll%on F%ve &ndred %xty/Fo&r ;ho&sandE%ght &ndred ;'enty/Hne > 71C100 $esos.14

;he BA of the D$=, '%th the a##roval of then Act%ng ecretary or%@&e), %ss&ed the assa%led8esol&t%on No. $"-/A/0/012 dated ay 7, 200 recommend%ng the a'ard %n favor of #r%vateres#ondent h%na 8oad > Br%dge or#orat%on of the contract for the %m#lementat%on of c%v%l 'or+s for $*, an Andres 6odon L %rac L "ct. Bato L %ga 8oad 6atand&anes %rc&mferent%al 8oad *m#rovement$ro9ect of the Arter%al 8oads -%n+s Develo#ment $ro9ect, $hase *, located %n atand&anes $rov%nce,












&nder "B* -oan Agreement No. $/$20.1< Hn e#tember 2, 200, a ontract of Agreement 'asentered %nto by and bet'een the D$= and #r%vate res#ondent h%na 8oad > Br%dge or#orat%on for the%m#lementat%on of the $ * #ro9ect.

;he $art%es

$et%t%oner $lar%del . Abaya cla%ms that he f%led the %nstant #et%t%on as a tax#ayer, former la'ma+er, and aF%l%#%no c%t%)en. $et%t%oner $lar%del . !arc%a l%+e'%se cla%ms that he f%led the s&%t as a tax#ayer, former m%l%tary off%cer, and a F%l%#%no c%t%)en. $et%t%oner $A (4 Fo&ndat%on, *nc., on the other hand, %s a non/stoc+, non/#rof%t cor#orat%on organ%)ed &nder the ex%st%ng $h%l%##%ne la's. *t cla%ms that %ts members areall tax#ayers and al&mn% of the $h%l%##%ne %l%tary Academy. *t %s re#resented by %ts $res%dent, arlos -.

Ag&st%n.

Named as #&bl%c res#ondents are the D$=, as the government agency tas+ed '%th the %m#lementat%onof government %nfrastr&ct&re #ro9ects? the De#artment of B&dget and anagement 6DB as thegovernment agency that a&thor%)es the release and d%sb&rsement of #&bl%c f&nds for the %m#lementat%onof government %nfrastr&ct&re #ro9ects? and the De#artment of F%nance 6DHF as the government agencythat acts as the c&stod%an and manager of all f%nanc%al reso&rces of the government. Also named as%nd%v%d&al #&bl%c res#ondents are ermogenes E. Ebdane, "r., Em%l%a ;. Boncod%n and esar . $&r%s%ma

%n the%r ca#ac%t%es as former ecretar%es of the D$=, DB and DHF, res#ect%vely. Hn the other hand,#&bl%c res#ondent Norma -. -asala 'as %m#leaded %n her ca#ac%ty as ;reas&rer of the B&rea& of ;reas&ry.

$r%vate res#ondent h%na 8oad > Br%dge or#orat%on %s a d&ly organ%)ed cor#orat%on engaged %n theb&s%ness of constr&ct%on.

;he $et%t%oners( ase

;he #et%t%oners ma%nly see+ to n&ll%fy D$= 8esol&t%on No. $"-/A/0/012 dated ay 7, 200, 'h%chrecommended the a'ard to #r%vate res#ondent h%na 8oad > Br%dge or#orat%on of the contract for the%m#lementat%on of the c%v%l 'or+s of $ *. ;hey also see+ to ann&l the contract of agreement s&bse@&entlyentered %nto by and bet'een the D$= and #r%vate res#ondent h%na 8oad > Br%dge or#orat%on

#&rs&ant to the sa%d resol&t%on.

;hey #ose the follo'%ng %ss&es for the o&rt(s resol&t%on:

*. =hether or not $et%t%oners have stand%ng to f%le the %nstant $et%t%on.

**. =hether or not $et%t%oners are ent%tled to the %ss&ance of a =r%t of ert%orar% revers%ng andsett%ng as%de D$= 8esol&t%on No. $"-/A/0/012, recommend%ng the a'ard of the ontract

Agreement for the %m#lementat%on of c%v%l 'or+s for $*, an Andres 6HDHN/*8A/";BA;H/*!A 8HAD 6A;ANDANE *8FE8EN;*A- 8HAD *$8HEEN; $8H"E;of the Arter%al 8oad -%n+s Develo#ment $ro9ect, $hase *, located %n atand&anes $rov%nce,&nder "B* -CA No. $/$20, to h%na 8oad > Br%dge or#orat%on.

***. =hether or not the ontract Agreement exec&ted by and bet'een the 8e#&bl%c of the$h%l%##%nes, thro&gh the De#artment of $&bl%c =or+s and %gh'ays, and the h%na 8oad >Br%dge or#orat%on, for the %m#lementat%on of c%v%l 'or+s for $*, an Andres 6HDHN/*8A/"; BA;H/*!A 8HAD 6A;ANDANE *8FE8EN;*A- 8HAD *$8HEEN;$8H"E; of the Arter%al 8oad -%n+s Develo#ment $ro9ect, $hase *, located %n atand&anes$rov%nce, &nder "B* -CA No. $/$20, %s vo%d ab %n%t%o.






*. =hether or not $et%t%oners are ent%tled to the %ss&ance of a =r%t of $roh%b%t%on #ermanently#roh%b%t%ng the %m#lementat%on of D$= 8esol&t%on No. $"-/A/0/012 and the ontract

Agreement exec&ted by and bet'een the 8e#&bl%c of the $h%l%##%nes 6thro&gh the De#artment of $&bl%c =or+s and %gh'ays and the h%na 8oad > Br%dge or#orat%on, and the d%sb&rsement of #&bl%c f&nds by the DGe#artment of BG&dget and Ganagement for s&ch #&r#ose.

. =hether or not $et%t%oners are ent%tled to a $rel%m%nary *n9&nct%on andCor a ;em#orary8estra%n%ng Hrder %mmed%ately en9o%n%ng the %m#lementat%on of D$= 8esol&t%on No. $"-/A/0/012 and the ontract Agreement exec&ted by and bet'een the 8e#&bl%c of the $h%l%##%nes6thro&gh the De#artment of $&bl%c =or+s and %gh'ays and the h%na 8oad > Br%dgeor#orat%on, and the d%sb&rsement of #&bl%c f&nds by the De#artment of B&dget andanagement for s&ch #&r#ose, d&r%ng the #endency of th%s case.17

$rel%m%nar%ly, the #et%t%oners assert that they have stand%ng or loc&s stand% to f%le the %nstant #et%t%on. ;heycla%m that as tax#ayers and concerned c%t%)ens, they have the r%ght and d&ty to @&est%on the ex#end%t&reof #&bl%c f&nds on %llegal acts. ;hey #o%nt o&t that the $h%l%##%ne !overnment allocates a #eso/co&nter#artfor $ *, 'h%ch amo&nt %s a##ro#r%ated by ongress %n the !eneral A##ro#r%at%ons Act? hence, f&nds thatare be%ng &t%l%)ed %n the %m#lementat%on of the @&est%oned #ro9ect also #arta+e of tax#ayers( money. ;he#resent act%on, as a tax#ayers( s&%t, %s th&s allegedly #ro#er.

;hey l%+e'%se character%)e the %nstant #et%t%on as one of transcendental %m#ortance that 'arrants theo&rt(s ado#t%on of a l%beral stance on the %ss&e of stand%ng. *t c%ted several cases 'here the o&rtbr&shed as%de #roced&ral techn%cal%t%es %n order to resolve %ss&es %nvolv%ng #aramo&nt #&bl%c %nterest andtranscendental %m#ortance.1 F&rther, #et%t%oner Abaya asserts that he #ossesses the re@&%s%te stand%ngas a former member of the o&se of 8e#resentat%ves and one of the #r%nc%#al a&thors of 8e#&bl%c Act No.1 68A 11 +no'n as the !overnment $roc&rement 8eform Act, the la' allegedly v%olated by the#&bl%c res#ondents.

Hn the s&bstant%ve %ss&es, the #et%t%oners anchor the %nstant #et%t%on on the content%on that the a'ard of the contract to #r%vate res#ondent h%na 8oad > Br%dge or#orat%on v%olates 8A 1, #art%c&larlyect%on 51 thereof 'h%ch reads:

E. 51. e%l%ng for B%d $r%ces. L ;he AB shall be the &##er l%m%t or ce%l%ng for the B%d #r%ces. B%d #r%cesthat exceed th%s ce%l%ng shall be d%s@&al%f%ed o&tr%ght from f&rther #art%c%#at%ng %n the b%dd%ng. ;here shallbe no lo'er l%m%t to the amo&nt of the a'ard.

*n relat%on thereto, the #et%t%oners c%te the def%n%t%on of the AB, th&s:

E. 4. Def%n%t%on of ;erms. L

x x x

6a A##roved B&dget for the ontract 6AB. L refers to the b&dget for the contract d&ly a##roved by theead of the $roc&r%ng Ent%ty, as #rov%ded for %n the !eneral A##ro#r%at%ons Act andCor cont%n&%ng

a##ro#r%at%ons, %n the case of Nat%onal !overnment Agenc%es? the or#orate B&dget for the contracta##roved by the govern%ng Boards, #&rs&ant to E.H. No. 41, ser%es of 17, %n the case of !overnment/H'ned andCor ontrolled or#orat%ons, !overnment F%nanc%al *nst%t&t%ons and tate n%vers%t%es andolleges? and the B&dget for the contract a##roved by the res#ect%ve angg&n%an, %n the case of -ocal!overnment n%ts.

x x x











;he #et%t%oners theor%)e that the forego%ng #rov%s%ons sho' the mandatory character of ce%l%ngs or &##er l%m%ts of every b%d. nder the above/@&oted #rov%s%ons of 8A 1, all b%ds or a'ards sho&ld not exceedthe ce%l%ngs or &##er l%m%ts? other'%se, the contract %s deemed vo%d and %nex%stent.

8esol&t%on No. $"-/A/0/012 'as allegedly %ss&ed '%th grave ab&se of d%scret%on beca&se %trecommended the a'ard of the contract to #r%vate res#ondent h%na 8oad > Br%dge or#orat%on 'hose

b%d 'as more than $200 m%ll%on over#r%ced based on the AB. As s&ch, the a'ard %s allegedly %llegal and&nconsc%onable.

*n th%s connect%on, the #et%t%oners o#%ne that the contract s&bse@&ently entered %nto by and bet'een theD$= and #r%vate res#ondent h%na 8oad > Br%dge or#orat%on %s vo%d ab %n%t%o for be%ng #roh%b%ted by8A 1. ;hey stress that ect%on 51 thereof ex#ressly #rov%des that b%d #r%ces that exceed th%s ce%l%ngshall be d%s@&al%f%ed o&tr%ght from #art%c%#at%ng %n the b%dd%ng. ;he &##er l%m%t or ce%l%ng %s called the ABand s%nce the b%d of #r%vate res#ondent h%na 8oad > Br%dge or#orat%on exceeded the AB for the $ *#ro9ect, %t sho&ld have been allegedly d%s@&al%f%ed from the b%dd%ng #rocess and sho&ld not, by la', havebeen a'arded the sa%d contract. ;hey %nvo+e Art%cle 10 of the %v%l ode:

A8;. 10. ;he follo'%ng contracts are %nex%stent and vo%d from the beg%nn%ng:

61 ;hose 'hose ca&se, ob9ect or #&r#ose %s contrary to la', morals, good c&stoms, #&bl%c order or #&bl%c #ol%cy?

62 ;hose 'h%ch are absol&tely s%m&lated or f%ct%t%o&s?

65 ;hose 'hose ca&se or ob9ect d%d not ex%st at the t%me of the transact%on?

6 ;hose 'hose ob9ect %s o&ts%de the commerce of men?

64 ;hose 'h%ch contem#late an %m#oss%ble serv%ce?

6< ;hose 'here the %ntent%on of the #art%es relat%ve to the #r%nc%#al ob9ect of the contract cannot

be ascerta%ned?

67 ;hose ex#ressly #roh%b%ted or declared vo%d by la'.

For v%olat%ng the above #rov%s%on, the contract bet'een the D$= and #r%vate res#ondent h%na 8oad >Br%dge or#orat%on %s allegedly %nex%stent and vo%d ab %n%t%o and can #rod&ce no effects 'hatsoever.

*t %s the content%on of the #et%t%oners that 8A 1 %s a##l%cable to both local/ and fore%gn/f&nded#roc&rement contracts. ;hey c%te the follo'%ng excer#t of the del%berat%ons of the B%cameral onferenceomm%ttee on the D%sagree%ng $rov%s%ons of enate B%ll No. 22 and o&se B%ll No. 0:20

8E$. ABA3A. r. ha%rman, can 'e 9&st #ro#ose add%t%onal amendmentsM an 'e go bac+ to ect%on ,r. ha%rmanM

;E A*8AN 6EN. AN!A8A. ect%onM ect%on ano, Del, M Def%n%t%on L def%n%t%on of terms.

8E$. ABA3A. a o&se b%ll, %t %s sa sco#e and a##l%cat%on.

;E A*8AN 6EN. AN!A8A. H+ay.





8E$. ABA3A. *t sho&ld read as follo's: ;h%s Act shall a##ly to the #roc&rement of goods, s&##l%es andmater%als, %nfrastr&ct&re #ro9ects and cons&lt%ng serv%ces regardless of f&nd%ng so&rce 'hether local or fore%gn by the government.

;E A*8AN 6EN. AN!A8A. H+ay, acce#ted. =e acce#t. ;he enate acce#ts %t. 21

xxx xxx xxx

;E A*8AN 6EN AN!A8A. "&st ta+e note of that ano. edyo nga #roblemat%c yan eh. No', 9&stfor the record Del, can yo& re#eat aga%n the 9&st%f%cat%on for %ncl&d%ng fore%gn f&nded contracts '%th%n thesco#e #ara mal%na' beca&se the =orld Ban+ da' m%ght ra%se some ob9ect%on to %t.

8E$. ABA3A. =ell, r. ha%rman, 'e sho&ld %ncl&de fore%gn f&nded #ro9ects +as% these are the b%g#ro9ects. ;o g%ve an exam#le, %f yo& allo' b%ds above government est%mate, let(s say ta+e the case of 400m%ll%on #ro9ect, %ncl&ded %n that 400 m%ll%on %s the 20 #ercent #rof%t. *f yo& allo' them to b%d abovegovernment est%mate, they '%ll add another say 2 #ercent of 6s%c 50 #ercent, 50 #ercent of 400 m%ll%on %sanother 140 m%ll%on. *to, th%s %s a r%ch so&rce of graft money, aregl&han na lang, 140 m%ll%on, f%vecontractors '%ll gather, H eto 20 m%ll%on, 20 m%ll%on, 20 m%ll%on. o, %t %s r%gged. 3&n ang #ract%ce nanangyayar%. *f 'e el%m%nate that, %f 'e have a ce%l%ng then, %t '%ll not be very tem#t%ng +as% 'alang extra

money na #'edeng %b%gay sa %bang contractor. o th%s #romote 6s%c coll&s%on among b%dders, of co&rse,'%th the coo#erat%on of %rres#ons%ble off%c%als of some agenc%es. o 'e sho&ld have a ce%l%ng to %ncl&defore%gn f&nded #ro9ects.22

;he #et%t%oners %ns%st that -oan Agreement No. $/$20 bet'een the "B* and the $h%l%##%ne!overnment %s ne%ther a treaty, an %nternat%onal nor an exec&t%ve agreement that 'o&ld bar the a##l%cat%onof 8A 1. ;hey #o%nt o&t that to be cons%dered a treaty, an %nternat%onal or an exec&t%ve agreement, the#art%es m&st be t'o sovere%gns or tates 'hereas %n the case of -oan Agreement No. $/$20, the#art%es are the $h%l%##%ne !overnment and the "B*, a ban+%ng agency of "a#an, 'h%ch has a se#arate

9&r%d%cal #ersonal%ty from the "a#anese !overnment.

;hey f&rther %ns%st on the a##l%cab%l%ty of 8A 1 contend%ng that 'h%le %t too+ effect on "an&ary 2<,200525 and -oan Agreement No. $/$20 'as exec&ted #r%or thereto or on December 2, 1, the

act&al #roc&rement or a'ard of the contract to #r%vate res#ondent h%na 8oad > Br%dge or#orat%on 'asdone after the effect%v%ty of 8A 1. ;he sa%d la' %s allegedly s#ec%f%c as to %ts a##l%cat%on, 'h%ch %s on theact&al #roc&rement of %nfrastr&ct&re and other #ro9ects only, and not on the loan agreements attached tos&ch #ro9ects. ;h&s, the #et%t%on only #rays for the ann&lment of 8esol&t%on No. $"-/A/0/012 as 'ell asthe contract bet'een the D$= and #r%vate res#ondent h%na 8oad > Br%dge or#orat%on. ;he#et%t%oners clar%fy that they do not #ray for the ann&lment of -oan Agreement No. $/$20. %nce thes&b9ect #roc&rement and a'ard of the contract 'ere done after the effect%v%ty of 8A 1, necessar%ly, the#roc&rement r&les establ%shed by that la' allegedly a##ly, and not $res%dent%al Decree No. 14 6$D142 and Exec&t%ve Hrder No. 0 6EH 0, ser%es of 2001, 24 as contended by the res#ondents. ;helatter la's, %ncl&d%ng the%r %m#lement%ng r&les, have allegedly been re#ealed by 8A 1. Even 8A <0,as amended, +no'n as the Fore%gn Borro'%ngs Act, the #et%t%oners #os%t, may have also been re#ealed or mod%f%ed by 8A 1 %nsofar as %ts #rov%s%ons are %ncons%stent '%th the latter.

;he #et%t%oners also arg&e that the *m#lement%ng 8&les and 8eg&lat%ons 6*88 of 8A 1, Hther'%seIno'n as the !overnment $roc&rement 8eform Act, $art A 6*88/A c%ted by the res#ondents %s nota##l%cable as these r&les only govern domest%cally/f&nded #roc&rement contracts. ;hey aver that the%m#lement%ng r&les to govern fore%gn/f&nded #roc&rement, as %n the #resent case, have yet to be draftedand %n fact, there are conc&rrent resol&t%ons drafted by both ho&ses of ongress for the 8econven%ng of the "o%nt ongress%onal Hvers%ght omm%ttee for the form&lat%on of the *88 for fore%gn/f&nded#roc&rements &nder 8A 1.
















;he #et%t%oners ma%nta%n that d%sb&rsement of #&bl%c f&nds to %m#lement a #atently vo%d and %llegalcontract %s %tself %llegal and m&st be en9o%ned. ;hey br%ng to the o&rt(s attent%on the fact that the 'or+s onthe $ * #ro9ect have already commenced as early as Hctober 200. ;hey th&s &rge the o&rt to %ss&e a'r%t of cert%orar% to set as%de 8esol&t%on No. $"-/A/0/012 as 'ell as to declare n&ll and vo%d thecontract entered %nto bet'een the D$= and #r%vate res#ondent h%na 8oad > Br%dge or#orat%on. ;heyalso #ray for the %ss&ance of a tem#orary restra%n%ng order and, event&ally, a 'r%t of #roh%b%t%on to#ermanently en9o%n the D$= from %m#lement%ng 8esol&t%on No. $"-/A/0/012 and %ts contract '%th#r%vate res#ondent h%na 8oad > Br%dge or#orat%on as 'ell as the DB from d%sb&rs%ng f&nds for thesa%d #&r#ose.

;he 8es#ondents( o&nter/Arg&ments

;he #&bl%c res#ondents, namely the D$=, DB and DHF, and the%r res#ect%ve named off%c%als, thro&ghthe Hff%ce of the ol%c%tor !eneral, &rge the o&rt to d%sm%ss the #et%t%on on gro&nds that the #et%t%onershave no loc&s stand% and, %n any case, 8esol&t%on No. $"-/A/0/012 and the contract bet'een theD$= and #r%vate res#ondent h%na 8oad > Br%dge or#orat%on are val%d.

Accord%ng to the #&bl%c res#ondents, a tax#ayer(s loc&s stand% 'as recogn%)ed %n the follo'%ng cases: 6a'here a tax meas&re %s assa%led as &nconst%t&t%onal?2< 6b 'here there %s a @&est%on of val%d%ty of elect%on

la's?27

6c 'here leg%slators @&est%oned the val%d%ty of any off%c%al act%on &#on the cla%m that %t %nfr%nges onthe%r #rerogat%ves as leg%slators?2 6d 'here there %s a cla%m of %llegal d%sb&rsement or 'astage of #&bl%cf&nds thro&gh the enforcement of an %nval%d or &nconst%t&t%onal la'? 2 6e 'here %t %nvolves the r%ght of members of the enate or o&se of 8e#resentat%ves to @&est%on the val%d%ty of a #res%dent%al veto or cond%t%on %m#osed on an %tem %n an a##ro#r%at%on b%ll?50 or 6f 'here %t %nvolves an %nval%d la', 'h%ch 'henenforced '%ll #&t the #et%t%oner %n %mm%nent danger of s&sta%n%ng some d%rect %n9&ry as a res&lt thereof, or that he has been or %s abo&t to be den%ed some r%ght or #r%v%lege to 'h%ch he %s la'f&lly ent%tled or that he%s abo&t to be s&b9ected to some b&rdens or #enalt%es by reason of the stat&te com#la%ned of. 51 None of the above cons%derat%ons allegedly obta%ns %n the #resent case.

*t %s also the v%e' of the #&bl%c res#ondents that the fact that #et%t%oner Abaya 'as a former la'ma+er 'o&ld not s&ff%ce to confer loc&s stand% on h%mself. embers of ongress may #ro#erly challenge theval%d%ty of an off%c%al act of any de#artment of the government only &#on sho'%ng that the assa%led off%c%al

act affects or %m#a%rs the%r r%ghts and #rerogat%ves as leg%slators.

;he #&bl%c res#ondents f&rther assa%l the stand%ng of the #et%t%oners to f%le the %nstant s&%t cla%m%ng thatthey fa%led to allege any s#ec%f%c %n9&ry s&ffered nor an %nterest that %s d%rect and #ersonal to them. *f at all,the %nterest or %n9&r%es cla%med by the #et%t%oners are allegedly merely of a general %nterest common to allmembers of the #&bl%c. ;he%r %nterest %s allegedly too vag&e, h%ghly s#ec&lat%ve and &ncerta%n to sat%sfy there@&%rements of loc&s stand%.

;he #&bl%c res#ondents f%nd %t note'orthy that the #et%t%oners do not ra%se %ss&es of const%t&t%onal%ty b&tonly of contract la', 'h%ch the #et%t%oners not be%ng #r%v%es to the agreement cannot ra%se. ;h%s %sfollo'%ng the #r%nc%#le that a stranger to a contract cannot s&e e%ther or both the contract%ng #art%es toann&l and set as%de the same exce#t 'hen he %s #re9&d%ced on h%s r%ghts and can sho' detr%ment 'h%ch'o&ld #os%t%vely res&lt to h%m from the %m#lementat%on of the contract %n 'h%ch he has no %ntervent%on.

;here be%ng no #art%c&lar%)ed %nterest or elemental s&bstant%al %n9&ry necessary to confer loc&s stand%, the#&bl%c res#ondents %m#lore the o&rt to d%sm%ss the #et%t%on.

Hn the mer%ts, the #&bl%c res#ondents ma%nta%n that the %m#os%t%on of ce%l%ngs or &##er l%m%ts on b%d #r%ces%n 8A 1 does not a##ly beca&se the $ * #ro9ect and the ent%re atand&anes %rc&mferent%al 8oad*m#rovement $ro9ect, f%nanced by -oan Agreement No. $/$20 exec&ted bet'een the $h%l%##%ne!overnment and the "B*, %s governed by the latter(s $roc&rement !&%del%nes 'h%ch #recl&des the%m#os%t%on of ce%l%ngs on b%d #r%ces. ect%on 4.0< of the "B* $roc&rement !&%del%nes reads:

















ect%on 4.0<. Eval&at%on and om#ar%son of B%ds.

x x x

6e Any #roced&re &nder 'h%ch b%ds above or belo' a #redeterm%ned b%d val&e assessment area&tomat%cally d%s@&al%f%ed %s not #erm%tted.

*t 'as ex#la%ned that other fore%gn ban+s s&ch as the As%an Develo#ment Ban+ 6ADB and the =orldBan+ 6=B s%m%larly #roh%b%t the brac+et%ng or %m#os%t%on of a ce%l%ng on b%d #r%ces.

;he #&bl%c res#ondents stress that %t 'as #&rs&ant to -oan Agreement No. $/$20 that the assa%led8esol&t%on No. $"-/A/0/012 and the s&bse@&ent contract bet'een the D$= and #r%vate res#ondenth%na 8oad > Br%dge or#orat%on mater%al%)ed. ;hey l%+e'%se aver that -oan Agreement No. $/$20 %sgoverned by 8A <0, as amended, or the Fore%gn Borro'%ngs Act. ect%on thereof states:

E. . *n the contract%ng of any loan, cred%t or %ndebtedness &nder th%s Act, the $res%dent of the$h%l%##%nes may, 'hen necessary, agree to 'a%ve or mod%fy, the a##l%cat%on of any la' grant%ng#references or %m#os%ng restr%ct%ons on %nternat%onal com#et%t%ve b%dd%ng, %ncl&d%ng among others Act No.25, ommon'ealth Act No. 15G, the #rov%s%ons of A 41G, %nsofar as s&ch #rov%s%ons do not #erta%n

to constr&ct%ons #r%mar%ly for nat%onal defense or sec&r%ty #&r#oses, 8A 415G? $rov%ded, ho'ever, ;hatas far as #ract%cable, &t%l%)at%on of the serv%ces of @&al%f%ed domest%c f%rms %n the #rosec&t%on of #ro9ectsf%nanced &nder th%s Act shall be enco&raged: $rov%ded, f&rther, ;hat %n case 'here %nternat%onalcom#et%t%ve b%dd%ng shall be cond&cted #reference of at least f%fteen #er cent&m shall be granted %n favor of art%cles, mater%als or s&##l%es of the gro'th, #rod&ct%on or man&fact&re of the $h%l%##%nes: $rov%ded,f%nally, ;hat the method and #roced&re %n com#ar%son of b%ds shall be the s&b9ect of agreement bet'eenthe $h%l%##%ne !overnment and the lend%ng %nst%t&t%on.

DH" H#%n%on No. <, er%es of 17, %s rel%ed &#on by the #&bl%c res#ondents as %t o#%ned that anagreement for the excl&s%on of fore%gn ass%sted #ro9ects from the coverage of local b%dd%ng reg&lat%onsdoes not contravene ex%st%ng leg%slat%ons beca&se the stat&tory bas%s for fore%gn loan agreements %s 8A<0, as amended, and &nder ect%on thereof, the $res%dent %s em#o'ered to 'a%ve the a##l%cat%on of any la' %m#os%ng restr%ct%ons on the #roc&rement of goods and serv%ces #&rs&ant to s&ch loans.

emorand&m %rc&lar Nos. 10 and 10, %ss&ed by the $res%dent, to clar%fy 8A <0, as amended, and$D 14, relat%ve to the a'ard of fore%gn/ass%sted #ro9ects, are also %nvo+ed by the #&bl%c res#ondents, to'%t:

emorand&m %rc&lar No. 10:

*n v%e' of the #rov%s%ons of ect%on of 8e#&bl%c Act No. <0, as amended, other'%se +no'n as theFore%gn Borro'%ngs Act

x x x

*t %s hereby clar%f%ed that fore%gn/ass%sted %nfrastr&ct&re #ro9ects may be exem#ted from the a##l%cat%on for the #ert%nent #rov%s%ons of the *m#lement%ng 8&les and 8eg&lat%ons 6*88 of $res%dent%al Decree 6$.D.No. 14 relat%ve to the method and #roced&re %n the com#ar%son of b%ds, 'h%ch matter may be thes&b9ect of agreement bet'een the %nfrastr&ct&re agency concerned and the lend%ng %nst%t&t%on. *t sho&ldbe made clear ho'ever that #&bl%c b%dd%ng %s st%ll re@&%red and can only be 'a%ved #&rs&ant to ex%st%ngla's.

emorand&m %rc&lar No. 10:



*n v%e' of the #rov%s%ons of ect%on of 8e#&bl%c Act No. <0, as amended, other'%se +no'n as theFore%gn Borro'%ngs Act, %t %s hereby clar%f%ed that, for #ro9ects s&##orted %n 'hole or %n #art by fore%gnass%stance a'arded thro&gh %nternat%onal or local com#et%t%ve b%dd%ng, the government agency concernedmay a'ard the contract to the lo'est eval&ated b%dder at h%s b%d #r%ce cons%stent '%th the #rov%s%ons of thea##l%cable loanCgrant agreement.

#ec%f%cally, 'hen the loanCgrant agreement so st%#&lates, the government agency concerned may a'ardthe contract to the lo'est b%dder even %f h%sC%ts b%d exceeds the a##roved agency est%mate.

*t %s &nderstood that the concerned government agency shall, as far as #ract%cable, adhere closely to the%m#lement%ng r&les and reg&lat%ons of $res%dent%al Decree No. 14 d&r%ng loanCgrant negot%at%on and the%m#lementat%on of the #ro9ects.52

;he #&bl%c res#ondents character%)e fore%gn loan agreements, %ncl&d%ng -oan Agreement No. $/$20,as exec&t%ve agreements and, as s&ch, sho&ld be observed #&rs&ant to the f&ndamental #r%nc%#le %n%nternat%onal la' of #acta s&nt servanda.55 ;hey c%te ect%on 20 of Art%cle ** of the onst%t&t%on as g%v%ngthe $res%dent the a&thor%ty to contract fore%gn loans:

E. 20. ;he $res%dent may contract or g&arantee fore%gn loans on behalf of the 8e#&bl%c of the

$h%l%##%nes '%th the #r%or conc&rrence of the onetary Board, and s&b9ect to s&ch l%m%tat%ons as may be#rov%ded by la'. ;he onetary Board shall, '%th%n th%rty days from the end of every @&arter of thecalendar year, s&bm%t to the ongress a com#lete re#ort of %ts dec%s%ons on a##l%cat%ons for loans to becontracted or g&aranteed by the !overnment or !overnment/o'ned and ontrolled or#orat%ons 'h%ch'o&ld have the effect of %ncreas%ng the fore%gn debt, and conta%n%ng other matters as may be #rov%ded byla'.

;he onst%t&t%on, the #&bl%c res#ondents em#has%)e, recogn%)es the enforceab%l%ty of exec&t%veagreements %n the same 'ay that %t recogn%)es generally acce#ted #r%nc%#les of %nternat%onal la' asform%ng #art of the la' of the land.5 ;h%s recogn%t%on allegedly b&ttresses the b%nd%ng effect of exec&t%veagreements to 'h%ch the $h%l%##%ne !overnment %s a s%gnatory. *t %s #o%nted o&t by the #&bl%c res#ondentsthat exec&t%ve agreements are essent%ally contracts govern%ng the r%ghts and obl%gat%ons of the #art%es. Acontract, be%ng the la' bet'een the #art%es, m&st be fa%thf&lly adhered to by them. !&%ded by the

f&ndamental r&le of #acta s&nt servanda, the $h%l%##%ne !overnment bo&nd %tself to #erform %n good fa%th%ts d&t%es and obl%gat%ons &nder -oan Agreement No. $/$20.

;he #&bl%c res#ondents f&rther arg&e aga%nst the a##l%cab%l%ty of 8A 1 stat%ng that %t 'as s%gned %ntola' on "an&ary 10, 2005.54 Hn the other hand, -oan Agreement No. $/$20 'as exec&ted onDecember 2, 1, 'here the la's then %n force on government #roc&rements 'ere $D 14 and EH0. ;he latter la' 6EH 0, %n #art%c&lar, excl&ded from %ts a##l%cat%on any ex%st%ng and f&t&re governmentcomm%tments '%th res#ect to the b%dd%ng and a'ard of contracts f%nanced #artly or 'holly '%th f&nds from%nternat%onal f%nanc%ng %nst%t&t%ons as 'ell as from b%lateral and other s%m%lar fore%gn so&rces.

;he a##l%cab%l%ty of EH 0, not 8A 1, %s allegedly bolstered by the fact that the *nv%tat%on to $re@&al%fyand to B%d for the %m#lementat%on of the $ * #ro9ect 'as #&bl%shed %n t'o lead%ng nat%onal ne's#a#ers,namely, the an%la ;%mes and an%la tandard on November 22, 2 and December 4, 2002, or before the

s%gn%ng %nto la' of 8A 1 on "an&ary 10, 2005. *n th%s connect%on, the #&bl%c res#ondents #o%nt toect%on 77 of *88/A, 'h%ch reads:

E. 77. ;rans%tory la&se. L

*n all #roc&rement act%v%t%es, %f the advert%sement or %nv%tat%on for b%ds 'as %ss&ed #r%or to the effect%v%ty of the Act, the #rov%s%ons of EH 0 and %ts *88, $D 14 and %ts *88, 8A 71<0 and %ts *88, or other a##l%cable la's as the case may be, shall govern.











*n cases 'here the advert%sements or %nv%tat%ons for b%ds 'ere %ss&ed after the effect%v%ty of the Act b&tbefore the effect%v%ty of th%s *88/A, #roc&r%ng ent%t%es may cont%n&e ado#t%ng the #roc&rement #roced&res,r&les and reg&lat%ons #rov%ded %n EH 0 and %ts *88, or other a##l%cable la's, as the case may be.

ect%on of 8A 1 %s also %nvo+ed by the #&bl%c res#ondents as %t #rov%des:

E. . co#e and A##l%cat%ons. L ;h%s Act shall a##ly to the $roc&rement of *nfrastr&ct&re $ro9ects,!oods and ons&lt%ng erv%ces, regardless of so&rce of f&nds, 'hether local or fore%gn, by all branchesand %nstr&mental%t%es of government, %ts de#artments, off%ces and agenc%es, %ncl&d%ng government/o'nedandCor Lcontrolled cor#orat%ons and local government &n%ts, s&b9ect to the #rov%s%ons of ommon'ealth

Act No. 15. Any treaty or %nternat%onal or exec&t%ve agreement affect%ng the s&b9ect matter of th%s Act to'h%ch the $h%l%##%ne government %s a s%gnatory shall be observed.

*t %s also the #os%t%on of the #&bl%c res#ondents that even grant%ng arg&endo that -oan Agreement No. $/$20 'ere an ord%nary loan contract, st%ll, 8A 1 %s %na##l%cable &nder the non/%m#a%rment cla&se 5< of the onst%t&t%on. ;he sa%d loan agreement ex#ressly #rov%ded that the #roc&rement of goods and serv%cesfor the #ro9ect f%nanced by the same shall be governed by the !&%del%nes for $roc&rement &nder HEF-oans dated December 17. F&rther, ect%on 4.0< of the "B* $roc&rement !&%del%nes categor%cally#rov%des that aGny #roced&re &nder 'h%ch b%ds above or belo' a #redeterm%ned b%d val&e assessment

are a&tomat%cally d%s@&al%f%ed %s not #erm%tted.

;he #&bl%c res#ondents ex#la%n that s%nce the contract %s the la' bet'een the #art%es and -oan Agreement No. $/$20 states that the "B* $roc&rement !&%del%nes shall govern the #art%es(relat%onsh%# and f&rther d%ctates that there be no ce%l%ng #r%ce for the b%dd%ng, %t nat&rally follo's that anys&bse@&ent la' #assed contrary to the letters of the sa%d contract 'o&ld have no effect '%th res#ect to the#art%es( r%ghts and obl%gat%ons ar%s%ng therefrom.

;o %ns%st on the a##l%cat%on of 8A 1 on the b%dd%ng for the $ * #ro9ect 'o&ld, not'%thstand%ng theterms and cond%t%ons of -oan Agreement No. $/$20, allegedly v%olate the const%t&t%onal #rov%s%on onnon/%m#a%rment of obl%gat%ons and contracts, and destroy vested r%ghts d&ly ac@&%red &nder the sa%d loanagreement.

-astly, the #&bl%c res#ondents deny that there 'as %llegal d%sb&rsement of #&bl%c f&nds by the DB. ;heyasseverate that all the releases made by the DB for the %m#lementat%on of the ent%re Arter%al 8oad -%n+s$ro9ect L $hase *, 'h%ch %ncl&des the atand&anes %rc&mferent%al 8oad *m#rovement $ro9ect, 'erecovered by the necessary a##ro#r%at%ons made by la', s#ec%f%cally the !eneral A##ro#r%at%ons Act 6!AA.F&rther, the re@&%rements and #roced&res #rescr%bed for the release of the sa%d f&nds 'ere d&ly com#l%ed'%th.

For %ts #art, #r%vate res#ondent h%na 8oad > Br%dge or#orat%on s%m%larly assa%ls the stand%ng of the#et%t%oners, e%ther as tax#ayers or, %n the case of #et%t%oner Abaya, as a former la'ma+er, to f%le the#resent s&%t. *n add%t%on, %t %s also alleged that, by f%l%ng the #et%t%on d%rectly to th%s o&rt, the #et%t%onersfa%led to observe the h%erarchy of co&rts.

Hn the mer%ts, #r%vate res#ondent h%na 8oad > Br%dge or#orat%on asserts that the a##l%cable la' togovern the b%dd%ng of the $ * #ro9ect 'as EH 0, not 8A 1, beca&se the former 'as the la'govern%ng the #roc&rement of government #ro9ects at the t%me that %t 'as b%dded o&t. EH 0 'as %ss&edby the Hff%ce of the $res%dent on Hctober , 2001 and ect%on 1 thereof states that:

E. 1. co#e and A##l%cat%on. ;h%s Exec&t%ve Hrder shall a##ly to the #roc&rement of: 6a goods,s&##l%es, mater%als and related serv%ces? 6b c%v%l 'or+s? and 6c cons&lt%ng serv%ces, by all Nat%onal!overnment agenc%es, %ncl&d%ng tate n%vers%t%es and olleges 6s, !overnment/H'ned or ontrolled or#orat%ons 6!Hs and !overnment F%nanc%al *nst%t&t%ons 6!F*s, hereby referred to as the





Agenc%es.( ;h%s Exec&t%ve Hrder shall cover the #roc&rement #rocess from the #re/#roc&rementconference &# to the a'ard of contract.

x x x

;he *nv%tat%on to $re@&al%fy and to B%d 'as f%rst #&bl%shed on November 22, 2002. Hn the other hand, 8A

1 'as s%gned %nto la' only on "an&ary 10, 2005. %nce the la' %n effect at the t%me the #roc&rement#rocess 'as %n%t%ated 'as EH 0, #r%vate res#ondent h%na 8oad > Br%dge or#orat%on s&bm%ts that %tsho&ld be the sa%d la' 'h%ch sho&ld govern the ent%re #roc&rement #rocess relat%ve to the $ * #ro9ect.

EH 0 ex#ressly recogn%)es as an exce#t%on from the a##l%cat%on of the #rov%s%ons thereof on a##rovedb&dget ce%l%ngs, those #ro9ects f%nanced by %nternat%onal f%nanc%ng %nst%t&t%ons 6*F*s and fore%gn b%lateralso&rces. ect%on 1 thereof, @&oted %n #art earl%er, f&rther states:

E. 1. co#e and A##l%cat%on. x x x

Noth%ng %n th%s Hrder shall negate any ex%st%ng and f&t&re government comm%tments '%th res#ect to theb%dd%ng and a'ard of contracts f%nanced #artly or 'holly '%th f&nds from %nternat%onal f%nanc%ng %nst%t&t%onsas 'ell as from b%lateral and other s%m%lar fore%gn so&rces.

ect%on 1.2 of the *m#lement%ng 8&les and 8eg&lat%ons of EH 0 %s l%+e'%se %nvo+ed as %t #rov%des:

For #roc&rement f%nanced 'holly or #artly from Hff%c%al Develo#ment Ass%stance 6HDA f&nds from*nternat%onal F%nanc%ng *nst%t&t%ons 6*F*s, as 'ell as from b%lateral and other s%m%lar fore%gn so&rces, thecorres#ond%ng loanCgrant agreement govern%ng sa%d f&nds as negot%ated and agreed &#on by andbet'een the !overnment and the concerned *F* shall be observed.

$r%vate res#ondent h%na 8oad > Br%dge or#orat%on th&s #ost&lates that follo'%ng EH 0, the#roc&rement of goods and serv%ces for the $ * #ro9ect sho&ld be governed by the terms and cond%t%onsof -oan Agreement No. $/$20 entered %nto bet'een the "B* and the $h%l%##%ne !overnment.$ert%nently, ect%on 4.0< of the "B* $roc&rement !&%del%nes #roh%b%ts the sett%ng of ce%l%ngs on b%d

#r%ces.

$r%vate res#ondent h%na 8oad > Br%dge or#orat%on cla%ms that 'hen %t s&bm%tted %ts b%d for the $ *#ro9ect, %t rel%ed %n good fa%th on the #rov%s%ons of EH 0. *t 'as allegedly on the bas%s of the sa%d la' thatthe D$= a'arded the #ro9ect to #r%vate res#ondent h%na 8oad > Br%dge o#orat%on even %f %ts b%d 'ash%gher than the AB. nder the c%rc&mstances, 8A 1 co&ld not be a##l%ed retroact%vely for to do so'o&ld allegedly %m#a%r the vested r%ghts of #r%vate res#ondent h%na 8oad > Br%dge or#orat%on ar%s%ngfrom %ts contract '%th the D$=.

*t %s also contended by #r%vate res#ondent h%na 8oad > Br%dge or#orat%on that even ass&m%ngarg&endo that 8A 1 co&ld be a##l%ed retroact%vely, %t %s st%ll the terms of -oan Agreement No. $/$20'h%ch sho&ld govern the #roc&rement of goods and serv%ces for the $ * #ro9ect. *t s&##orts %ts theory bycharacter%)%ng the sa%d loan agreement, exec&ted #&rs&ant to the Exchange of Notes bet'een the

!overnment of "a#an and the $h%l%##%ne !overnment, as an exec&t%ve agreement.

$r%vate res#ondent h%na 8oad > Br%dge or#orat%on, l%+e the #&bl%c res#ondents, c%tes 8A <0 as thebas%s for the Exchange of Notes and -oan Agreement No. $/$20. As an %nternat%onal or exec&t%veagreement, the Exchange of Notes and -oan Agreement No. $/$20 allegedly created a legally b%nd%ngobl%gat%on on the #art%es.

;he follo'%ng excer#t of the del%berat%ons of the B%cameral onference omm%ttee on the D%sagree%ng$rov%s%on of enate B%ll No. 22 and o&se B%ll No. 0 %s c%ted by #r%vate res#ondent h%na 8oad >



Br%dge or#orat%on to s&##ort %ts content%on that %t %s the %ntent of the la'ma+ers to excl&de from thea##l%cat%on of 8A 1 those fore%gn/f&nded #ro9ects:

x x x

8E$. A8H. 3es, r. ha%rman, to res#ond and to #&t %nto the record, a 9&st%f%cat%on for the %ncl&s%on

of fore%gn contracts, may 'e 9&st state that fore%gn contracts have, of co&rse, been bro&ght %nto the amb%tof the la' beca&se of the F%l%#%no co&nter#art for th%s fore%gn #ro9ects, they are no longer str%ctly fore%gn %nnat&re b&t fall &nder the la's of the $h%l%##%ne government.

;E A*8AN 6EN. AN!A8A. H+ay. * th%n+ that(s #retty clear. * th%n+ the #oss%ble concern %s thatsome HDA are '%th str%ngs attached es#ec%ally the "a#anese. ;he "a#anese are @&%te str%ct abo&t that,that they are 6s%c even #rov%de the arch%tect and the des%gn, etcetera, #l&s, of co&rse, the goods that '%llbe s&##l%ed.

No', * th%n+ 'e(ve already #rov%ded that th%s %s o#en to all and 'e '%ll recogn%)e o&r %nternat%onalagreements so that th%s b%ll '%ll not also restr%ct the flo' of fore%gn f&nd%ng, beca&se some co&ntr%es no'ma+e %t a cond%t%on that they s&##ly both serv%ces and goods es#ec%ally the "a#anese.

o * th%n+ 'e can #&t a sentence that 'e cont%n&e to honor o&r %nternat%onal obl%gat%ons, d% ba -a&raM

8. ENA8NA*HN. Act&ally, s&b9ect to any treaty.

;E A*8AN 6EN. AN!A8A. 3&n #ala eh. ;hat sho&ld allay the%r anx%ety and concern. H+ay, b&t%na lang for the record #ara malaman n%la na 'e are consc%o&s sa HDA.57

$r%vate res#ondent h%na 8oad > Br%dge or#orat%on s&bm%ts that based on the #rov%s%ons of theExchange of Notes and -oan Agreement No. $/$20, %t 'as r%ghtf&lly and legally a'arded the $ *#ro9ect. *t &rges the o&rt to d%sm%ss the #et%t%on for lac+ of mer%t.

;he o&rt(s 8&l%ngs

$et%t%oners, as tax#ayers, #ossess loc&s stand% to f%le the #resent s&%t

Br%efly stated, loc&s stand% %s a r%ght of a##earance %n a co&rt of 9&st%ce on a g%ven @&est%on.5 ore#art%c&larly, %t %s a #arty(s #ersonal and s&bstant%al %nterest %n a case s&ch that he has s&sta%ned or '%lls&sta%n d%rect %n9&ry as a res&lt of the governmental act be%ng challenged. *t calls for more than 9&st ageneral%)ed gr%evance. ;he term %nterest means a mater%al %nterest, an %nterest %n %ss&e affected by thedecree, as d%st%ng&%shed from mere %nterest %n the @&est%on %nvolved, or a mere %nc%dental%nterest.5 tand%ng or loc&s stand% %s a #ec&l%ar conce#t %n const%t&t%onal la'0 and the rat%onale for re@&%r%ng a #arty 'ho challenges the const%t&t%onal%ty of a stat&te to allege s&ch a #ersonal sta+e %n theo&tcome of the controversy %s to ass&re that concrete adverseness 'h%ch shar#ens the #resentat%on of %ss&es &#on 'h%ch the co&rt so largely de#ends for %ll&m%nat%on of d%ff%c&lt const%t&t%onal @&est%ons.1

-oc&s stand%, ho'ever, %s merely a matter of #roced&re2 and %t has been recogn%)ed that %n some cases,s&%ts are not bro&ght by #art%es 'ho have been #ersonally %n9&red by the o#erat%on of a la' or any other government act b&t by concerned c%t%)ens, tax#ayers or voters 'ho act&ally s&e %n the #&bl%c%nterest.5 onse@&ently, the o&rt, %n a catena of cases, has %nvar%ably ado#ted a l%beral stance onloc&s stand%, %ncl&d%ng those cases %nvolv%ng tax#ayers.

;he #reva%l%ng doctr%ne %n tax#ayer(s s&%ts %s to allo' tax#ayers to @&est%on contracts entered %nto by thenat%onal government or government/ o'ned or controlled cor#orat%ons allegedly %n contravent%on of la'.4 A tax#ayer %s allo'ed to s&e 'here there %s a cla%m that #&bl%c f&nds are %llegally d%sb&rsed, or that



























#&bl%c money %s be%ng deflected to any %m#ro#er #&r#ose, or that there %s a 'astage of #&bl%c f&ndsthro&gh the enforcement of an %nval%d or &nconst%t&t%onal la'.< %gn%f%cantly, a tax#ayer need not be a#arty to the contract to challenge %ts val%d%ty.7

*n the #resent case, the #et%t%oners are s&%ng as tax#ayers. ;hey have s&ff%c%ently demonstrated that,not'%thstand%ng the fact that the $ * #ro9ect %s #r%mar%ly f%nanced from loans obta%ned by the government

from the "B*, nonetheless, tax#ayers( money 'o&ld be or %s be%ng s#ent on the #ro9ect cons%der%ng thatthe $h%l%##%ne !overnment %s re@&%red to allocate a #eso/co&nter#art therefor. ;he #&bl%c res#ondentsthemselves adm%t that a##ro#r%at%ons for these fore%gn/ass%sted #ro9ects %n the !AA are com#osed of theloan #roceeds and the #eso/co&nter#art. ;he co&nter#art f&nds, the ol%c%tor !eneral ex#la%ns, refer tothe com#onent of the #ro9ect cost to be f%nanced from government/a##ro#r%ated f&nds, as #art of thegovernment(s comm%tment %n the %m#lementat%on of the #ro9ect. ence, the #et%t%oners correctly assertedthe%r stand%ng s%nce a #art of the f&nds be%ng &t%l%)ed %n the %m#lementat%on of the $ * #ro9ect #arta+es of tax#ayers( money.

F&rther, the ser%o&s legal @&est%ons ra%sed by the #et%t%oners, e.g., 'hether 8A 1 a##l%es to the $ *#ro9ect, %n #art%c&lar, and to fore%gn/f&nded government #ro9ects, %n general, and the fact that #&bl%c%nterest %s %nd&b%tably %nvolved cons%der%ng the #&bl%c ex#end%t&re of m%ll%ons of #esos, 'arrant the o&rtto ado#t %n the #resent case %ts l%beral #ol%cy on loc&s stand%.

*n any case, for reasons 'h%ch '%ll be d%sc&ssed shortly, the s&bstant%ve arg&ments ra%sed by the#et%t%oners fa%l to #ers&ade the o&rt as %t holds that 8esol&t%on No. $"-/A/0/012 %s val%d. As acorollary, the s&bse@&ent contract entered %nto by and bet'een the D$= and #r%vate res#ondent h%na8oad > Br%dge or#orat%on %s l%+e'%se val%d.

%story of $h%l%##%ne $roc&rement -a's

*t %s necessary, at th%s #o%nt, to g%ve a br%ef h%story of $h%l%##%ne la's #erta%n%ng to #roc&rement thro&gh#&bl%c b%dd%ng. ;he n%ted tates $h%l%##%ne omm%ss%on %ntrod&ced the Amer%can #ract%ce of #&bl%cb%dd%ng thro&gh Act No. 22, enacted on Hctober 14, 100, by re@&%r%ng the h%ef Eng%neer, n%ted tates

Army for the D%v%s%on of the $h%l%##%ne *slands, act%ng as #&rchas%ng agent &nder the control of the then%l%tary !overnor, to advert%se and call for a com#et%t%ve b%dd%ng for the #&rchase of the necessary

mater%als and lands to be &sed for the constr&ct%on of h%gh'ays and br%dges %n the $h%l%##%ne*slands. Act No. 7, enacted on "an&ary 21, 101 by the $h%l%##%ne omm%ss%on, re@&%red the !eneral&#er%ntendent of $&bl%c *nstr&ct%on to #&rchase off%ce s&##l%es thro&gh com#et%t%ve #&bl%c b%dd%ng. 40 ActNo. 2, a##roved on "an&ary 51, 101, and Act No. 5, a##roved on Febr&ary <, 101, re@&%red them&n%c%#al and #rov%nc%al governments, res#ect%vely, to hold com#et%t%ve #&bl%c b%dd%ngs %n the ma+%ng of contracts for #&bl%c 'or+s and the #&rchase of off%ce s&##l%es.41

Hn "&ne 21, 101, the $h%l%##%ne omm%ss%on, thro&gh Act No. 1<, created the B&rea& of &##ly and'%th %ts creat%on, #&bl%c b%dd%ng became a #o#&lar #ol%cy %n the #&rchase of s&##l%es, mater%als ande@&%#ment for the &se of the nat%onal government, %ts s&bd%v%s%ons and %nstr&mental%t%es.42 Hn Febr&ary 5,15<, then $res%dent an&el -. O&e)on %ss&ed Exec&t%ve Hrder No. 1< declar%ng as a matter of general#ol%cy that government contracts for #&bl%c serv%ce or for f&rn%sh%ng s&##l%es, mater%als and e@&%#ment tothe government sho&ld be s&b9ected to #&bl%c b%dd%ng.45 ;he re@&%rement of #&bl%c b%dd%ng 'as l%+e'%se

%m#osed for #&bl%c 'or+s of constr&ct%on or re#a%r #&rs&ant to the 8ev%sed Adm%n%strat%ve ode of 117.

;hen $res%dent D%osdado aca#agal, %n Exec&t%ve Hrder No. 0 dated "&ne 1, 1<5, re%terated thed%rect%ve that no government contract for #&bl%c serv%ce or for f&rn%sh%ng s&##l%es, mater%als ande@&%#ment to the government or any of %ts branches, agenc%es or %nstr&mental%t%es, sho&ld be entered %nto'%tho&t #&bl%c b%dd%ng exce#t for very extraord%nary reasons to be determ%ned by a omm%ttee const%t&tedthere&nder. ;hen $res%dent Ferd%nand arcos %ss&ed $D 14 #rescr%b%ng g&%del%nes for government%nfrastr&ct&re #ro9ects and ect%on 4 thereof stated that they sho&ld generally be &nderta+en by contractafter com#et%t%ve #&bl%c b%dd%ng.


























;hen $res%dent ora)on A@&%no %ss&ed Exec&t%ve Hrder No. 501 617 #rescr%b%ng g&%del%nes for government negot%ated contracts. $ert%nently, ect%on <2 of the Adm%n%strat%ve ode of 17 re%terated there@&%rement of com#et%t%ve #&bl%c b%dd%ng %n government #ro9ects. *n 10, ongress #assed 8A<47,44 'h%ch a&thor%)ed the f%nanc%ng, constr&ct%on, o#erat%on and ma%ntenance of %nfrastr&ct&re by the#r%vate sector. 8A 71<0 'as l%+e'%se enacted by ongress %n 11 and %t conta%ns #rov%s%ons govern%ngthe #roc&rement of goods and locally/f&nded c%v%l 'or+s by the local government &n%ts.

;hen $res%dent F%del 8amos %ss&ed Exec&t%ve Hrder No. 502 61<, #rov%d%ng g&%del%nes for the#roc&rement of goods and s&##l%es by the nat%onal government. ;hen $res%dent "ose#h E9erc%to Estrada%ss&ed Exec&t%ve Hrder No. 201 62000, #rov%d%ng add%t%onal g&%del%nes %n the #roc&rement of goods ands&##l%es by the nat%onal government. ;hereafter, he %ss&ed Exec&t%ve Hrder No. 2<2 62000 amend%ng EH502 61< and EH 201 62000.

Hn Hctober , 2001, $res%dent !lor%a aca#agal/Arroyo %ss&ed EH 0, the la' ma%nly rel%ed &#on by theres#ondents, ent%tled onsol%dat%ng $roc&rement 8&les and $roced&res for All Nat%onal !overnment

Agenc%es, !overnment/H'ned or ontrolled or#orat%ons and !overnment F%nanc%al *nst%t&t%ons, and8e@&%r%ng the se of the !overnment $roc&rement ystem. *t accord%ngly re#ealed, amended or mod%f%edall exec&t%ve %ss&ances, orders, r&les and reg&lat%ons or #arts thereof %ncons%stent there'%th.4<

Hn "an&ary 10, 2005, $res%dent Arroyo s%gned %nto la' 8A 1. *t too+ effect on "an&ary 2<, 200, or f%fteen days after %ts #&bl%cat%on %n t'o ne's#a#ers of general c%rc&lat%on. 47 *t ex#ressly re#ealed, amongothers, EH 0, EH 2<2 62000, EH 50261< and $D 14, as amended:

E. 7<. 8e#eal%ng la&se. P;h%s la' re#eals Exec&t%ve Hrder No. 0, ser%es of 2001, ent%tledonsol%dat%ng $roc&rement 8&les and $roced&res for All Nat%onal !overnment Agenc%es, !overnmentH'ned or ontrolled or#orat%ons andCor !overnment F%nanc%al *nst%t&t%ons, and 8e@&%r%ng the se of the!overnment Electron%c $roc&rement ystem? Exec&t%ve Hrder No. 2<2, ser%es of 1<, ent%tledAmend%ng Exec&t%ve Hrder No. 502, ser%es of 1<, ent%tled $rov%d%ng $ol%c%es, !&%del%nes, 8&les and8eg&lat%ons for the $roc&rement of !oodsC&##l%es by the Nat%onal !overnment and ect%on 5 of Exec&t%ve Hrder No. 201, ser%es of 2000, ent%tled $rov%d%ng Add%t%onal $ol%c%es and !&%del%nes %n the$roc&rement of !oodsC&##l%es by the Nat%onal !overnment? Exec&t%ve Hrder No. 502, ser%es of 1<,ent%tled $rov%d%ng $ol%c%es, !&%del%nes, 8&les and 8eg&lat%ons for the $roc&rement of !oodsC&##l%es by

the Nat%onal !overnment and $res%dent%al Decree No. 14 dated "&ne 11, 17, ent%tled $rescr%b%ng$ol%c%es, !&%del%nes, 8&les and 8eg&lat%ons for !overnment *nfrastr&ct&re ontracts. ;h%s la' amends;%tle %x, Boo+ ;'o of 8e#&bl%c Act No. 71<0, other'%se +no'n as the -ocal !overnment ode of 11?the relevant #rov%s%ons of Exec&t%ve Hrder No. 1<, ser%es of 17, ent%tled $rov%d%ng Add%t%onal!&%del%nes %n the $rocess%ng and A##roval of ontracts of the Nat%onal !overnment? and the relevant#rov%s%ons of 8e#&bl%c Act No. 7 dated Febr&ary 25, 14, ent%tled An Act $rov%d%ng for theodern%)at%on of the Armed Forces of the $h%l%##%nes and for Hther $&r#oses. Any other la', #res%dent%aldecree or %ss&ance, exec&t%ve order, letter of %nstr&ct%on, adm%n%strat%ve order, #roclamat%on, charter, r&leor reg&lat%on andCor #arts thereof contrary to or %ncons%stent '%th the #rov%s%ons of th%s Act %s herebyre#ealed, mod%f%ed or amended accord%ngly.

*n add%t%on to these la's, 8A <0, as amended, m&st be ment%oned as ect%on thereof #rov%des that%Gn the contract%ng of any loan, cred%t or %ndebtedness &nder th%s Act, the $res%dent of the $h%l%##%nes

may, 'hen necessary, agree to 'a%ve or mod%fy the a##l%cat%on of any la' grant%ng #references or %m#os%ng restr%ct%ons on %nternat%onal com#et%t%ve b%dd%ng x x x $rov%ded, f%nally, ;hat the method and#roced&re %n the com#ar%son of b%ds shall be the s&b9ect of agreement bet'een the $h%l%##%ne!overnment and the lend%ng %nst%t&t%on.

EH 0, not 8A 1, %s a##l%cable to the #roc&rement

#rocess &nderta+en for the $ * #ro9ect. 8A 1










cannot be g%ven retroact%ve a##l%cat%on.

*t %s not d%s#&ted that '%th res#ect to the $ * #ro9ect, the *nv%tat%on to $re@&al%fy and to B%d for %ts%m#lementat%on 'as #&bl%shed %n t'o lead%ng nat%onal ne's#a#ers, namely, the an%la ;%mes and an%latandard on November 22, 2 and December 4, 2002. At the t%me, the la' %n effect 'as EH 0. Hn theother hand, 8A 1 too+ effect t'o months later or on "an&ary 2<, 2005. F&rther, %ts f&ll %m#lementat%on

'as even delayed as *88/A 'as only a##roved by $res%dent Arroyo on e#tember 1, 2005 ands&bse@&ently #&bl%shed on e#tember 25, 2005 %n the an%la ;%mes and alaya ne's#a#ers.4

;he #rov%s%ons of EH 0 a##ly to the #roc&rement #rocess #erta%n%ng to the $ * #ro9ect as %t %s ex#l%c%tly#rov%ded %n ect%on 1 thereof that:

E. 1. co#e and A##l%cat%on. L ;h%s Exec&t%ve Hrder shall a##ly to see #roc&rement of 6a goods,s&##l%es, mater%als and related serv%ce? 6b c%v%l 'or+s? and 6c cons&lt%ng serv%ces, by all Nat%onal!overnment agenc%es, %ncl&d%ng tate n%vers%t%es and olleges 6s, !overnment/H'ned or Lontrolled or#orat%ons 6!Hs and !overnment F%nanc%al *nst%t&t%ons 6!F*s, hereby referred to asAgenc%es. ;h%s Exec&t%ve Hrder shall cover the #roc&rement #rocess from the #re/#roc&rementconference &# to the a'ard of the contract.

Noth%ng %n th%s Hrder shall negate any ex%st%ng and f&t&re government comm%tments '%th res#ect to theb%dd%ng and a'ard of contracts f%nanced #artly or 'holly '%th f&nds from %nternat%onal f%nanc%ng %nst%t&t%onsas 'ell as from b%lateral and s%m%lar fore%gn so&rces.

;he #roc&rement #rocess bas%cally %nvolves the follo'%ng ste#s: 61 #re/#roc&rement conference? 62advert%sement of the %nv%tat%on to b%d? 65 #re/b%d conference? 6 el%g%b%l%ty chec+ of #ros#ect%ve b%dders?64 s&bm%ss%on and rece%#t of b%ds? 6< mod%f%cat%on and '%thdra'al of b%ds? 67 b%d o#en%ng andexam%nat%on? 6 b%d eval&at%on? 6 #ost @&al%f%cat%on? 610 a'ard of contract and not%ce to#roceed.4 learly then, 'hen the *nv%tat%on to $re@&al%fy and to B%d for the %m#lementat%on of the $ *#ro9ect 'as #&bl%shed on November 22, 2 and December 4, 2002, the #roc&rement #rocess thereof hadalready commenced and the a##l%cat%on of EH 0 to the #roc&rement #rocess for the $ * #ro9ect hadalready attached.

8A 1 cannot be a##l%ed retroact%vely to govern the #roc&rement #rocess relat%ve to the $ * #ro9ectbeca&se %t %s 'ell settled that a la' or reg&lat%on has no retroact%ve a##l%cat%on &nless %t ex#ressly#rov%des for retroact%v%ty.<0*ndeed, Art%cle of the %v%l ode %s clear on the matter: lGa's shall have noretroact%ve effect, &nless the contrary %s #rov%ded. *n the absence of s&ch categor%cal #rov%s%on, 8A 1'%ll not be a##l%ed retroact%vely to the $ * #ro9ect 'hose #roc&rement #rocess commenced even beforethe sa%d la' too+ effect.

;hat the leg%slators d%d not %ntend 8A 1 to have retroact%ve effect co&ld be gleaned from the *88/Aform&lated by the "o%nt ongress%onal Hvers%ght omm%ttee 6com#osed of the ha%rman of the enateomm%ttee on onst%t&t%onal Amendments and 8ev%s%on of -a's, and t'o members thereof a##o%nted bythe enate $res%dent and the ha%rman of the o&se omm%ttee on A##ro#r%at%ons, and t'o membersthereof a##o%nted by the #ea+er of the o&se of 8e#resentat%ves and the !overnment $roc&rement$ol%cy Board 6!$$B. ect%on 77 of the *88/A states, th&s:

E. 77. ;rans%tory la&se

*n all #roc&rement act%v%t%es, %f the advert%sement or %nv%tat%on for b%ds 'as %ss&ed #r%or to the effect%v%ty of the Act, the #rov%s%ons of E.H. 0 and %ts *88, $.D. 14 and %ts *88, 8.A. 71<0 and %ts *88, or other a##l%cable la's, as the case may be, shall govern.

*n cases 'here the advert%sements or %nv%tat%ons for b%ds 'ere %ss&ed after the effect%v%ty of the Act b&tbefore the effect%v%ty of th%s *88/A, #roc&r%ng ent%t%es may cont%n&e ado#t%ng the #roc&rement #roced&res,










r&les and reg&lat%ons #rov%ded %n E.H. 0 and %ts *88, $.D. 14 and %ts *88, 8.A. 71<0 and %ts *88, or other a##l%cable la's, as the case may be.

*n other 'ords, &nder *88/A, %f the advert%sement of the %nv%tat%on for b%ds 'as %ss&ed #r%or to theeffect%v%ty of 8A 1, s&ch as %n the case of the $ * #ro9ect, the #rov%s%ons of EH 0 and %ts *88, and $D14 and %ts *88 %n the case of nat%onal government agenc%es, and 8A 71<0 and %ts *88 %n the case of

local government &n%ts, shall govern.

Adm%ttedly, *88/A covers only f&lly domest%cally/f&nded #roc&rement act%v%t%es from #roc&rement #lann%ng&# to contract %m#lementat%on and that %t %s ex#ressly stated that *88/B for fore%gn/f&nded #roc&rementact%v%t%es shall be s&b9ect of a s&bse@&ent %ss&ance.<1 Nonetheless, there %s no reason 'hy the #ol%cybeh%nd ect%on 77 of *88/A cannot be a##l%ed to fore%gn/f&nded #roc&rement #ro9ects l%+e the $ *#ro9ect. tated d%fferently, the #ol%cy on the #ros#ect%ve or non/retroact%ve a##l%cat%on of 8A 1 '%thres#ect to domest%cally/f&nded #roc&rement #ro9ects cannot be any d%fferent '%th res#ect to fore%gn/f&nded #roc&rement #ro9ects l%+e the $ * #ro9ect. *t 'o&ld be %ncongr&o&s, even abs&rd, to #rov%de for the #ros#ect%ve a##l%cat%on of 8A 1 '%th res#ect to domest%cally/f&nded #roc&rement #ro9ects and, onthe other hand, as &rged by the #et%t%oners, a##ly 8A 1 retroact%vely '%th res#ect to fore%gn/ f&nded#roc&rement #ro9ects. ;o be s&re, the la'ma+ers co&ld not have %ntended s&ch an abs&rd%ty.

;h&s, %n the l%ght of ect%on 1 of EH 0, ect%on 77 of *88/A, as 'ell as the f&ndamental r&le embod%ed %n Art%cle of the %v%l ode on #ros#ect%v%ty of la's, the o&rt holds that the #roc&rement #rocess for the%m#lementat%on of the $ * #ro9ect %s governed by EH 0 and %ts *88, not 8A 1.

nder EH 0, the a'ard of the contract to #r%vate

res#ondent h%na 8oad > Br%dge or#orat%on %s val%d

ect%on 24 of EH 0 #rov%des that tGhe a##roved b&dget of the contract shall be the &##er l%m%t or ce%l%ngof the b%d #r%ce. B%d #r%ces 'h%ch exceed th%s ce%l%ng shall be d%s@&al%f%ed o&tr%ght from f&rther #art%c%#at%ng%n the b%dd%ng. ;here shall be no lo'er l%m%t to the amo&nt of the a'ard. x x x *t sho&ld be observed thatth%s text %s almost s%m%lar to the 'ord%ng of ect%on 51 of 8A 1, rel%ed &#on by the #et%t%oners %ncontend%ng that s%nce the b%d #r%ce of #r%vate res#ondent h%na 8oad > Br%dge or#orat%on exceeded the

AB, then %t sho&ld not have been a'arded the contract for the $ * #ro9ect.

Nonetheless, EH 0 ex#ressly recogn%)es as an exce#t%on to %ts sco#e and a##l%cat%on those governmentcomm%tments '%th res#ect to b%dd%ng and a'ard of contracts f%nanced #artly or 'holly '%th f&nds from%nternat%onal f%nanc%ng %nst%t&t%ons as 'ell as from b%lateral and other s%m%lar fore%gn so&rces. ;he #ert%nent#ort%on of ect%on 1 of EH 0 %s @&oted ane':

E. 1. co#e and A##l%cat%on. L x x x

Noth%ng %n th%s Hrder shall negate any ex%st%ng and f&t&re government comm%tments '%th res#ect to theb%dd%ng and a'ard of contracts f%nanced #artly or 'holly '%th f&nds from %nternat%onal f%nanc%ng %nst%t&t%onsas 'ell as from b%lateral and s%m%lar fore%gn so&rces.

*n relat%on thereto, ect%on of 8A <0, as amended, 'as correctly c%ted by the res#ondents as l%+e'%sea&thor%)%ng the $res%dent, %n the contract%ng of any loan, cred%t or %ndebtedness there&nder, 'hennecessary, agree to 'a%ve or mod%fy the a##l%cat%on of any la' grant%ng #references or %m#os%ngrestr%ct%ons on %nternat%onal com#et%t%ve b%dd%ng x x x. ;he sa%d #rov%s%on of la' f&rther #rov%des that themethod and #roced&re %n the com#ar%son of b%ds shall be the s&b9ect of agreement bet'een the $h%l%##%ne!overnment and the lend%ng %nst%t&t%on.





onse@&ently, %n accordance '%th these a##l%cable la's, the #roc&rement of goods and serv%ces for the$ * #ro9ect %s governed by the corres#ond%ng loan agreement entered %nto by the government and the"B*, %.e., -oan Agreement No. $/$20. ;he sa%d loan agreement st%#&lated that the #roc&rement of goods and serv%ces for the Arter%al 8oad -%n+s Develo#ment $ro9ect 6$hase *, of 'h%ch $ * %s acom#onent, %s to be governed by the "B* $roc&rement !&%del%nes. ect%on 4.0<, $art ** 6*nternat%onalom#et%t%ve B%dd%ng thereof @&oted earl%er reads:

ect%on 4.0<. Eval&at%on and om#ar%son of B%ds

x x x

6e Any #roced&re &nder 'h%ch b%ds above or belo' a #redeterm%ned b%d val&e assessment area&tomat%cally d%s@&al%f%ed %s not #erm%tted.<2

*t %s clear that the "B* $roc&rement !&%del%nes #roscr%be the %m#os%t%on of ce%l%ngs on b%d #r%ces. Hn theother hand, %t en9o%ns the a'ard of the contract to the b%dder 'hose b%d has been determ%ned to be thelo'est eval&ated b%d. ;he #ert%nent #rov%s%on, @&oted earl%er, %s re%terated, th&s:

ect%on 4.0. A'ard of ontract

;he contract %s to be a'arded to the b%dder 'hose b%d has been determ%ned to be the lo'est eval&atedb%d and 'ho meets the a##ro#r%ate standards of ca#ab%l%ty and f%nanc%al reso&rces. A b%dder shall not bere@&%red as a cond%t%on of a'ard to &nderta+e res#ons%b%l%t%es or 'or+ not st%#&lated %n the s#ec%f%cat%onsor to mod%fy the b%d.<5

%nce these terms and cond%t%ons are made #art of -oan Agreement No. $/$20, the government %sobl%ged to observe and enforce the same %n the #roc&rement of goods and serv%ces for the $ * #ro9ect.

As sho'n earl%er, #r%vate res#ondent h%na 8oad > Br%dge or#orat%on(s b%d 'as the lo'est eval&atedb%d, albe%t 2.4K h%gher than the AB. *n accordance '%th the "B* $roc&rement !&%del%nes, therefore, %t'as correctly a'arded the contract for the $ * #ro9ect.

Even %f 8A 1 'ere to be a##l%ed retroact%vely, the terms of the Exchange of Notes dated December 27,1 and -oan Agreement No. $/$20 'o&ld st%ll govern the #roc&rement for the $ * #ro9ect

For clar%ty, ect%on of 8A 1 %s @&oted ane', th&s:

E. . co#e and A##l%cat%ons. L ;h%s Act shall a##ly to the $roc&rement of *nfrastr&ct&re $ro9ects,!oods and ons&lt%ng erv%ces, regardless of so&rce of f&nds, 'hether local or fore%gn, by all branchesand %nstr&mental%t%es of government, %ts de#artments, off%ces and agenc%es, %ncl&d%ng government/o'nedandCor Lcontrolled cor#orat%ons and local government &n%ts, s&b9ect to the #rov%s%ons of ommon'ealth

Act No. 15. Any treaty or %nternat%onal or exec&t%ve agreement affect%ng the s&b9ect matter of th%s Act to'h%ch the $h%l%##%ne government %s a s%gnatory shall be observed.

;he #et%t%oners, %n order to #lace the #roc&rement #rocess &nderta+en for the $ * #ro9ect '%th%n the amb%t

of 8A 1, v%goro&sly assert that -oan Agreement No. $/$20 %s ne%ther a treaty, an %nternat%onalagreement nor an exec&t%ve agreement. ;hey c%te Exec&t%ve Hrder No. 4 dated November 24, 17'here the three agreements are def%ned %n th%s '%se:

a *nternat%onal agreement L shall refer to a contract or &nderstand%ng, regardless of nomenclat&re, entered %nto bet'een the $h%l%##%nes and another government %n 'r%tten form andgoverned by %nternat%onal la', 'hether embod%ed %n a s%ngle %nstr&ment or %n t'o or more related%nstr&ments.







b ;reat%es L %nternat%onal agreements entered %nto by the $h%l%##%nes 'h%ch re@&%re leg%slat%veconc&rrence after exec&t%ve rat%f%cat%on. ;h%s term may %ncl&de com#acts l%+e convent%ons,declarat%ons, covenants and acts.

c Exec&t%ve agreements L s%m%lar to treat%es exce#t that they do not re@&%re leg%slat%veconc&rrence.<

;he #et%t%oners ma%nly arg&e that -oan Agreement No. $/$20 does not fall &nder any of the threecategor%es beca&se to be any of the three, an agreement had to be one 'here the #art%es are the$h%l%##%nes as a tate and another tate. ;he "B*, the #et%t%oners ma%nta%n, %s a "a#anese ban+%ngagency, 'h%ch #res&mably has a se#arate 9&r%d%cal #ersonal%ty from the "a#anese !overnment.

;he #et%t%oners( arg&ments fa%l to #ers&ade. ;he o&rt holds that -oan Agreement No. $/$20 ta+en %ncon9&nct%on '%th the Exchange of Notes dated December 27, 1 bet'een the "a#anese !overnmentand the $h%l%##%ne !overnment %s an exec&t%ve agreement.

;o recall, -oan Agreement No. $/$20 'as exec&ted by and bet'een the "B* and the $h%l%##%ne!overnment #&rs&ant to the Exchange of Notes exec&ted by and bet'een r. 3osh%h%sa Ara,

Ambassador Extraord%nary and $len%#otent%ary of "a#an to the $h%l%##%nes, and then Fore%gn Affa%rs

ecretary %a)on, %n behalf of the%r res#ect%ve governments. ;he Exchange of Notes ex#ressed that thet'o governments have reached an &nderstand%ng concern%ng "a#anese loans to be extended to the$h%l%##%nes and that these loans 'ere a%med at #romot%ng o&r co&ntry(s econom%c stab%l%)at%on anddevelo#ment efforts.

-oan Agreement No. $/$20 'as s&bse@&ently exec&ted and %t declared that %t 'as so entered by the#art%es %Gn the l%ght of the contents of the Exchange of Notes bet'een the !overnment of "a#an and the!overnment of the 8e#&bl%c of the $h%l%##%nes dated December 27, 1, concern%ng "a#anese loans tobe extended '%th a v%e' to #romot%ng the econom%c stab%l%)at%on and develo#ment efforts of the 8e#&bl%cof the $h%l%##%nes.<4 nder the c%rc&mstances, the "B* may 'ell be cons%dered an ad9&nct of the"a#anese !overnment. F&rther, -oan Agreement No. $/$20 %s %nd&b%tably an %ntegral #art of theExchange of Notes. *t forms #art of the Exchange of Notes s&ch that %t cannot be #ro#erly ta+en%nde#endent thereof.

*n th%s connect%on, %t %s 'ell to &nderstand the def%n%t%on of an exchange of notes &nder %nternat%onal la'.;he term %s def%ned %n the n%ted Nat%ons ;reaty ollect%on %n th%s '%se:

An exchange of notes %s a record of a ro&t%ne agreement that has many s%m%lar%t%es '%th the #r%vate la'contract. ;he agreement cons%sts of the exchange of t'o doc&ments, each of the #art%es be%ng %n the#ossess%on of the one s%gned by the re#resentat%ve of the other. nder the &s&al #roced&re, the acce#t%ngtate re#eats the text of the offer%ng tate to record %ts assent. ;he s%gnator%es of the letters may begovernment %n%sters, d%#lomats or de#artmental heads. ;he techn%@&e of exchange of notes %s fre@&entlyresorted to, e%ther beca&se of %ts s#eedy #roced&re, or, somet%mes, to avo%d the #rocess of leg%slat%vea##roval.<<

*t %s stated that treat%es, agreements, convent%ons, charters, #rotocols, declarat%ons, memoranda of &nderstand%ng, mod&s v%vend% and exchange of notes all refer to %nternat%onal %nstr&ments b%nd%ng at%nternat%onal la'.<7 *t %s f&rther ex#la%ned that/

Altho&gh these %nstr&ments d%ffer from each other by t%tle, they all have common feat&res and%nternat%onal la' has a##l%ed bas%cally the same r&les to all these %nstr&ments. ;hese r&les are the res&ltof long #ract%ce among the tates, 'h%ch have acce#ted them as b%nd%ng norms %n the%r m&t&al relat%ons.;herefore, they are regarded as %nternat%onal c&stomary la'. %nce there 'as a general des%re to cod%fythese c&stomary r&les, t'o %nternat%onal convent%ons 'ere negot%ated. ;he 1< %enna onvent%on onthe -a' of ;reat%es 61< %enna onvent%on, 'h%ch entered %nto force on 27 "an&ary 10, conta%ns













r&les for treat%es concl&ded bet'een tates. ;he 1< %enna onvent%on on the -a' of ;reat%es bet'eentates and *nternat%onal Hrgan%)at%ons 61< %enna onvent%on, 'h%ch has st%ll not entered %nto force,added r&les for treat%es '%th %nternat%onal organ%)at%ons as #art%es. Both the 1< %enna onvent%on andthe 1< %enna onvent%on do not d%st%ng&%sh bet'een the d%fferent des%gnat%ons of these %nstr&ments.*nstead, the%r r&les a##ly to all of those %nstr&ments as long as they meet the common re@&%rements.<

%gn%f%cantly, an exchange of notes %s cons%dered a form of an exec&t%ve agreement, 'h%ch becomesb%nd%ng thro&gh exec&t%ve act%on '%tho&t the need of a vote by the enate or ongress. ;he follo'%ngd%s@&%s%t%on by Franc%s B. ayre, former n%ted tates %gh omm%ss%oner to the $h%l%##%nes, ent%tled ;heonst%t&t%onal%ty of ;rade Agreement Acts, @&oted %n omm%ss%oner of &stoms v. Eastern ea;rad%ng,< %s a#ro#os:

Agreements concl&ded by the $res%dent 'h%ch fall short of treat%es are commonly referred to as exec&t%veagreements and are no less common %n o&r scheme of government than are the more formal %nstr&ments

L treat%es and convent%ons. ;hey somet%mes ta+e the form of exchange of notes and at other t%mes that of more formal doc&ments denom%nated agreements or #rotocols. ;he #o%nt 'here ord%narycorres#ondence bet'een th%s and other governments ends and agreements L 'hether denom%natedexec&t%ve agreements or exchange of notes or other'%se L beg%n, may somet%mes be d%ff%c&lt of readyascerta%nment. *t 'o&ld be &seless to &nderta+e to d%sc&ss here the large var%ety of exec&t%ve agreements

as s&ch, concl&ded from t%me to t%me. &ndreds of exec&t%ve agreements, other than those entered %nto&nder the trade/agreements act, have been negot%ated '%th fore%gn governments. x x x70

;he Exchange of Notes dated December 27, 1, stated, %nter al%a, that the !overnment of "a#an 'o&ldextend loans to the $h%l%##%nes '%th a v%e' to #romot%ng %ts econom%c stab%l%)at%on and develo#mentefforts? -oan * %n the amo&nt of 37,<41,000,000 'o&ld be extended by the "B* to the $h%l%##%ne!overnment to %m#lement the #ro9ects %n the -%st A 6%ncl&d%ng the Arter%al 8oad -%n+s Develo#ment $ro9ect/ $hase *? and that s&ch loan 6-oan * 'o&ld be &sed to cover #ayments to be made by the $h%l%##%neexec&t%ng agenc%es to s&##l%ers, contractors andCor cons&ltants of el%g%ble so&rce co&ntr%es &nder s&chcontracts as may be entered %nto bet'een them for #&rchases of #rod&cts andCor serv%ces re@&%red for the%m#lementat%on of the #ro9ects en&merated %n the -%st A.71=%th res#ect to the #roc&rement of the goodsand serv%ces for the #ro9ects, %t bears re%terat%ng that as st%#&lated:

5. ;he !overnment of the 8e#&bl%c of the $h%l%##%nes '%ll ens&re that the #rod&cts andCor serv%cesment%oned %n s&b/#aragra#h 61 of #aragra#h 5 of $art * and s&b/#aragra#h 61 of #aragra#h of $art **are #roc&red %n accordance '%th the g&%del%nes for #roc&rement of the Ban+, 'h%ch set forth, %nter al%a, the#roced&res of %nternat%onal tender%ng to be follo'ed exce#t 'here s&ch #roced&res are %na##l%cable or %na##ro#r%ate.72

;he "B* $roc&rements !&%del%nes, as @&oted earl%er, forb%ds any #roced&re &nder 'h%ch b%ds above or belo' a #redeterm%ned b%d val&e assessment are a&tomat%cally d%s@&al%f%ed. &cc%nctly #&t, %t absol&tely#roh%b%ts the %m#os%t%on of ce%l%ngs on b%ds.

nder the f&ndamental #r%nc%#le of %nternat%onal la' of #acta s&nt servanda,75 'h%ch %s, %n fact, embod%ed%n ect%on of 8A 1 as %t #rov%des that aGny treaty or %nternat%onal or exec&t%ve agreement affect%ngthe s&b9ect matter of th%s Act to 'h%ch the $h%l%##%ne government %s a s%gnatory shall be observed, the

D$=, as the exec&t%ng agency of the #ro9ects f%nanced by -oan Agreement No. $/$20, r%ghtf&llya'arded the contract for the %m#lementat%on of c%v%l 'or+s for the $ * #ro9ect to #r%vate res#ondent h%na8oad > Br%dge or#orat%on.

=E8EFH8E, #rem%ses cons%dered, the #et%t%on %s D**ED.

H H8DE8ED.













Abaya v Ebdane Digest and Full Text

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