Abaya, Garcia & Agustin v Ebdane

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Abaya, Garcia & Agustin v Ebdane
PLARIDEL M. ABAYA, COMMODORE PLARIDEL C. GARCIA (retired) and PMA ’59 FOUNDATION, INC., rep. by its President, COMMODORE CARLOS L. AGUSTIN (retired), Petitioners,
vs.
HON. SECRETARY HERMOGENES E. EBDANE, JR., in his capacity as Secretary of the DEPARTMENT OF PUBLIC WORKS and HIGHWAYS, HON. SECRETARY EMILIA T. BONCODIN, in her capacity as Secretary of the DEPARTMENT OF BUDGET and MANAGEMENT, HON. SECRETARY CESAR V. PURISIMA, in his capacity as Secretary of the DEPARTMENT OF FINANCE, HON. TREASURER NORMA L. LASALA, in her capacity as Treasurer of the Bureau of Treasury, and CHINA ROAD and BRIDGE CORPORATION, Respondents.

G.R. No. 167919
February 14, 2007

Facts:

Based on the Exchange of Notes dated December 27, 1999, the Government of Japan and the Government of the Philippines, through their respective representatives, namely, Mr. Yoshihisa Ara, Ambassador Extraordinary and Plenipotentiary of Japan to the Republic of the Philippines, and then Secretary of Foreign Affairs Domingo L. Siazon, have reached an understanding concerning Japanese loans to be extended to the Philippines. These loans were aimed at promoting our country’s economic stabilization and development efforts.

The Exchange of Notes consisted of two documents: (1) a Letter from the Government of Japan, signed by Ambassador Ara, addressed to then Secretary of Foreign Affairs Siazon, confirming the understanding reached between the two governments concerning the loans to be extended by the Government of Japan to the Philippines; and (2) a document denominated as Records of Discussion where the salient terms of the loans as set forth by the Government of Japan, through the Japanese delegation, were reiterated and the said terms were accepted by the Philippine delegation. Both Ambassador Ara and then Secretary Siazon signed the Records of Discussion as representatives of the Government of Japan and Philippine Government, respectively.
The Exchange of Notes provided that the loans to be extended by the Government of Japan to the Philippines consisted of two loans: Loan I and Loan II.

The Parties

Petitioner Plaridel M. Abaya claims that he filed the instant petition as a taxpayer, former lawmaker, and a Filipino citizen. Petitioner Plaridel C. Garcia likewise claims that he filed the suit as a taxpayer, former military officer, and a Filipino citizen. Petitioner PMA ’59 Foundation, Inc., on the other hand, is a non-stock, non-profit corporation organized under the existing Philippine laws. It claims that its members are all taxpayers and alumni of the Philippine Military Academy. It is represented by its President, Carlos L. Agustin.

Named as public respondents are the DPWH, as the government agency tasked with the implementation of government infrastructure projects; the Department of Budget and Management (DBM) as the government agency that authorizes the release and disbursement of public funds for the implementation of government infrastructure projects; and the Department of Finance (DOF) as the government agency that acts as the custodian and manager of all financial resources of the government. Also named as individual public respondents are Hermogenes E. Ebdane, Jr., Emilia T. Boncodin and Cesar V. Purisima in their capacities as former Secretaries of the DPWH, DBM and DOF, respectively. On the other hand, public respondent Norma L. Lasala was impleaded in her capacity as Treasurer of the Bureau of Treasury.

Private respondent China Road & Bridge Corporation is a duly organized corporation engaged in the business of construction.

The Petitioners’ Case

The petitioners mainly seek to nullify DPWH Resolution No. PJHL-A-04-012 dated May 7, 2004, which recommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of the civil works of CP I. They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation pursuant to the said resolution.

Preliminarily, the petitioners assert that they have standing or locus standi to file the instant petition. They claim that as taxpayers and concerned citizens, they have the right and duty to question the expenditure of public funds on illegal acts. They point out that the Philippine Government allocates a peso-counterpart for CP I, which amount is appropriated by Congress in the General Appropriations Act; hence, funds that are being utilized in the implementation of the questioned project also partake of taxpayers’ money. The present action, as a taxpayers’ suit, is thus allegedly proper.

In this connection, the petitioners opine that the contract subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation is void ab initio for being prohibited by RA 9184. They stress that Section 31 thereof expressly provides that "bid prices that exceed this ceiling shall be disqualified outright from participating in the bidding." The upper limit or ceiling is called the ABC and since the bid of private respondent China Road & Bridge Corporation exceeded the ABC for the CP I project, it should have been allegedly disqualified from the bidding process and should not, by law, have been awarded the said contract. They invoke Article 1409 of the Civil Code.

The petitioners insist that Loan Agreement No. PH-P204 between the JBIC and the Philippine Government is neither a treaty, an international nor an executive agreement that would bar the application of RA 9184. They point out that to be considered a treaty, an international or an executive agreement, the parties must be two sovereigns or States whereas in the case of Loan Agreement No. PH-P204, the parties are the Philippine Government and the JBIC, a banking agency of Japan, which has a separate juridical personality from the Japanese Government.

The Respondents’ Counter-Arguments

The public respondents, namely the DPWH, DBM and DOF, and their respective named officials, through the Office of the Solicitor General, urge the Court to dismiss the petition on grounds that the petitioners have no locus standi and, in any case, Resolution No. PJHL-A-04-012 and the contract between the DPWH and private respondent China Road & Bridge Corporation are valid.

According to the public respondents, a taxpayer’s locus standi was recognized in the following cases: (a) where a tax measure is assailed as unconstitutional; (b) where there is a question of validity of election laws; (c) where legislators questioned the validity of any official action upon the claim that it infringes on their prerogatives as legislators; (d) where there is a claim of illegal disbursement or wastage of public funds through the enforcement of an invalid or unconstitutional law; (e) where it involves the right of members of the Senate or House of Representatives to question the validity of a presidential veto or condition imposed on an item in an appropriation bill; or (f) where it involves an invalid law, which when enforced will put the petitioner in imminent danger of sustaining some direct injury as a result thereof, or that he has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute complained of. None of the above considerations allegedly obtains in the present case.

Issue:

W/N petitioners violated the Section 4 of Republic Act No. 4860, as amended, otherwise known as the "Foreign Borrowings Act".

Held:

It is hereby clarified that foreign-assisted infrastructure projects may be exempted from the application for the pertinent provisions of the Implementing Rules and Regulations (IRR) of Presidential Decree (P.D.) No. 1594 relative to the method and procedure in the comparison of bids, which matter may be the subject of agreement between the infrastructure agency concerned and the lending institution. It should be made clear however that public bidding is still required and can only be waived pursuant to existing laws.

Memorandum Circular No. 108:

In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise known as the "Foreign Borrowings Act", it is hereby clarified that, for projects supported in whole or in part by foreign assistance awarded through international or local competitive bidding, the government agency concerned may award the contract to the lowest evaluated bidder at his bid price consistent with the provisions of the applicable loan/grant agreement.

Specifically, when the loan/grant agreement so stipulates, the government agency concerned may award the contract to the lowest bidder even if his/its bid exceeds the approved agency estimate.

It is understood that the concerned government agency shall, as far as practicable, adhere closely to the implementing rules and regulations of Presidential Decree No. 1594 during loan/grant negotiation and the implementation of the projects.

Agreements concluded by the President which fall short of treaties are commonly referred to as executive agreements and are no less common in our scheme of government than are the more formal instruments – treaties and conventions. They sometimes take the form of exchange of notes and at other times that of more formal documents denominated "agreements" or "protocols". The point where ordinary correspondence between this and other governments ends and agreements – whether denominated executive agreements or exchange of notes or otherwise – begin, may sometimes be difficult of ready ascertainment. It would be useless to undertake to discuss here the large variety of executive agreements as such, concluded from time to time. Hundreds of executive agreements, other than those entered into under the trade-agreements act, have been negotiated with foreign governments.

The Exchange of Notes dated December 27, 1999, stated, inter alia, that the Government of Japan would extend loans to the Philippines with a view to promoting its economic stabilization and development efforts; Loan I in the amount of Y79,8651,000,000 would be extended by the JBIC to the Philippine Government to implement the projects in the List A (including the Arterial Road Links Development Project - Phase IV); and that such loan (Loan I) would be used to cover payments to be made by the Philippine executing agencies to suppliers, contractors and/or consultants of eligible source countries under such contracts as may be entered into between them for purchases of products and/or services required for the implementation of the projects enumerated in the List A. With respect to the procurement of the goods and services for the projects, it bears reiterating that as stipulated:

The Government of the Republic of the Philippines will ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of paragraph 4 of Part II are procured in accordance with the guidelines for procurement of the Bank, which set forth, inter alia, the procedures of international tendering to be followed except where such procedures are inapplicable or inappropriate.

The JBIC Procurements Guidelines, as quoted earlier, forbids any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified. Succinctly put, it absolutely prohibits the imposition of ceilings on bids.

Under the fundamental principle of international law of pacta sunt servanda, which is, in fact, embodied in Section 4 of RA 9184 as it provides that "[a]ny treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed," the DPWH, as the executing agency of the projects financed by Loan Agreement No. PH-P204, rightfully awarded the contract for the implementation of civil works for the CP I project to private respondent China Road & Bridge Corporation.

WHEREFORE, premises considered, the petition is DISMISSED.