544 Phil. 645
CALLEJO, SR., J.:
1. A loan in Japanese yen up to the amount of seventy-nine billion eight hundred and sixty-one million yen (Y79,861,000,000) (hereinafter referred to as “the Loan I”) will be extended, in accordance with the relevant laws and regulations of Japan, to the Government of the Republic of the Philippines (hereinafter referred to as “the Borrower I”) by the Japan Bank for International Cooperation (hereinafter referred to as “the Bank”) to implement the projects enumerated in the List A attached hereto (hereinafter referred to as “the List A”) according to the allocation for each project as specified in the List A.
2. (1) The Loan I will be made available by loan agreements to be concluded between the Borrower I and the Bank. The terms and conditions of the Loan I as well as the procedure for its utilization will be governed by said loan agreements which will contain, inter alia, the following principles:. . .
(2) Each of the loan agreements mentioned in sub-paragraph (1) above will be concluded after the Bank is satisfied of the feasibility, including environmental consideration, of the project to which such loan agreement relates.
3. (1) The Loan I will be made available 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, provided that such purchases are made in such eligible source countries for products produced in and/or services supplied from those countries.
(2) The scope of eligible source countries mentioned in sub-paragraph (1) above will be agreed upon between the authorities concerned of the two Governments.
(3) A part of the Loan I may be used to cover eligible local currency requirements for the implementation of the projects enumerated in the List A.
4. With regard to the shipping and marine insurance of the products purchased under the Loan I, the Government of the Republic of the Philippines will refrain from imposing any restrictions that may hinder fair and free competition among the shipping and marine insurance companies.
x x x x[2]
Maximum amount in million yen) | |
| 7,210 |
| 951 |
| 6,078 |
| 16,990 |
| 15,384 |
| 5,852 |
| 7,434 |
| 5,068 |
| 4,714 |
| 9,013 |
| 1,167 |
Total | 79,861[3] |
x x x x
x x x xThus, in accordance with the agreement reached by the Government of Japan and the Philippine Government, as expressed in the Exchange of Notes between the representatives of the two governments, the Philippines obtained from and was granted a loan by the JBIC. Loan Agreement No. PH-P204 dated December 28, 1999, in particular, stated as follows:1. With reference to sub-paragraph (3) of paragraph 3 of Part I of the Exchange of Notes concerning the financing of eligible local currency requirements for the implementation of the projects mentioned in the said sub-paragraph, the representative of the Japanese delegation stated that:
(1) such requirement of local currency as general administrative expenses, interest during construction, taxes and duties, expenses concerning office, remuneration to employees of the executing agencies and housing, not directly related to the implementation of the said projects, as well as purchase of land properties, compensation and the like, however, will not be considered as eligible for financing under the Loan I; and
(2) the procurement of products and/or services will be made in accordance with the procedures of international competitive tendering except where such procedures are inapplicable and inappropriate.
x x x x[5]
Loan Agreement No. PH-P204, dated December 28, 1999, between JAPAN BANK FOR INTERNATIONAL COOPERATION and the GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES.Under the terms and conditions of Loan Agreement No. PH-P204, JBIC agreed to lend the Philippine Government an amount not exceeding FIFTEEN BILLION THREE HUNDRED EIGHTY-FOUR MILLION Japanese Yen (Y 15,384,000,000) as principal for the implementation of the Arterial Road Links Development Project (Phase IV) on the terms and conditions set forth in the Loan Agreement and in accordance with the relevant laws and regulations of Japan.[7] The said amount shall be used for the purchase of eligible goods and services necessary for the implementation of the above-mentioned project from suppliers, contractors or consultants.[8]
In the light of the contents of the Exchange of Notes between the Government of Japan and the Government of the Republic of the Philippines dated December 27, 1999, concerning Japanese loans to be extended with a view to promoting the economic stabilization and development efforts of the Republic of the Philippines.
JAPAN BANK FOR INTERNATIONAL COOPERATION (hereinafter referred to as “the BANK”) and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES (hereinafter referred to as “the Borrower”) herewith conclude the following Loan Agreement (hereinafter referred to as “the Loan Agreement”, which includes all agreements supplemental hereto).
x x x x[6]
CP I: San Andres (Codon)-Virac-Jct. Bato - Viga Road | - | 79.818 kms |
CP II: Viga-Bagamanoc Road | - | 10.40 kms |
CP III: Bagamanoc-Pandan Road | - | 47.50 kms. |
CP IV: Pandan-Caramoran-Codon Road | - | 66.40 kms.[11] |
Name of Bidder | Original Bid As Read (Pesos) | As-Corrected Bid Amount (Pesos) | Variance |
1)China Road And Bridge Corporation | P 993,183,904.98 | P952,564,821.71 | 28.95% |
2) Cavite Ideal Int’l Const. Devt. Corp. | P1,099,926,598.11 | P1,099,926,598.11 | 48.90% |
3) Italian Thai Dev’t. Public Company,Ltd. | P1,125,022,075.34 | P1,125,392,475.36 | 52.35% |
In accordance with the Guidelines for the Procurements under ODA [Official Development Assistance] Loans, the Consultant hereby recommends the award of the contract for the construction of CP I, San Andres (Codon) – Virac – Jct. Bato – Viga Section under the Arterial Road Links Development Projects, Phase IV, JBIC Loan No. PH-P204 to the Lowest Complying Bidder, China Road and Bridge Corporation, at its total corrected bid amount of Nine Hundred Fifty-Two Million Five Hundred Sixty-Four Thousand Eight Hundred Twenty-One & 71/100 Pesos.[15]The BAC of the DPWH, with the approval of then Acting Secretary Soriquez, issued the assailed Resolution No. PJHL-A-04-012 dated May 7, 2004 recommending the award in favor of private respondent China Road & Bridge Corporation of the contract for the implementation of civil works for CP I, San Andres (Codon) – Virac – Jct. Bato – Viga Road (Catanduanes Circumferential Road Improvement Project) of the Arterial Roads Links Development Project, Phase IV, located in Catanduanes Province, under JBIC Loan Agreement No. PH-P204.[16] On September 29, 2004, a Contract of Agreement was entered into by and between the DPWH and private respondent China Road & Bridge Corporation for the implementation of the CP I project.
I. Whether or not Petitioners have standing to file the instant Petition.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.
II. Whether or not Petitioners are entitled to the issuance of a Writ of Certiorari reversing and setting aside DPWH Resolution No. PJHL-A-04-012, recommending the award of the Contract Agreement for the implementation of civil works for CPI, San Andres (CODON)-VIRAC-JCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROAD IMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes Province, under JBIC L/A No. PH-P204, to China Road & Bridge Corporation.
III. Whether or not the Contract Agreement executed by and between the Republic of the Philippines, through the Department of Public Works and Highways, and the China Road & Bridge Corporation, for the implementation of civil works for CPI, San Andres (CODON)-VIRAC-JCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROAD IMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes Province, under JBIC L/A No. PH-P204, is void ab initio.
IV. Whether or not Petitioners are entitled to the issuance of a Writ of Prohibition permanently prohibiting the implementation of DPWH Resolution No. PJHL-A-04-012 and the Contract Agreement executed by and between the Republic of the Philippines (through the Department of Public Works and Highways) and the China Road & Bridge Corporation, and the disbursement of public funds by the [D]epartment of [B]udget and [M]anagement for such purpose.
V. Whether or not Petitioners are entitled to a Preliminary Injunction and/or a Temporary Restraining Order immediately enjoining the implementation of DPWH Resolution No. PJHL-A-04-012 and the Contract Agreement executed by and between the Republic of the Philippines (through the Department of Public Works and Highways) and the China Road & Bridge Corporation, and the disbursement of public funds by the Department of Budget and Management for such purpose, during the pendency of this case.[17]
SEC. 31. Ceiling for Bid Prices. – The ABC shall be the upper limit or ceiling for the Bid prices. Bid prices that exceed this ceiling shall be disqualified outright from further participating in the bidding. There shall be no lower limit to the amount of the award.In relation thereto, the petitioners cite the definition of the ABC, thus:
SEC. 5. Definition of Terms. –x x x
(a) Approved Budget for the Contract (ABC). – refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the General Appropriations Act and/or continuing appropriations, in the case of National Government Agencies; the Corporate Budget for the contract approved by the governing Boards, pursuant to E.O. No. 518, series of 1979, in the case of Government-Owned and/or Controlled Corporations, Government Financial Institutions and State Universities and Colleges; and the Budget for the contract approved by the respective Sanggunian, in the case of Local Government Units.
ART. 1409. The following contracts are inexistent and void from the beginning:For violating the above provision, the contract between the DPWH and private respondent China Road & Bridge Corporation is allegedly inexistent and void ab initio and can produce no effects whatsoever.
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
REP. ABAYA. Mr. Chairman, can we just propose additional amendments? Can we go back to Section 4, Mr. Chairman?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 CHAIRMAN (SEN. ANGARA). Section? Section ano, Del, 4? Definition – definition of terms.
REP. ABAYA. Sa House bill, it is sa scope and application.
THE CHAIRMAN (SEN. ANGARA). Okay.
REP. ABAYA. It should read as follows: “This Act shall apply to the procurement of goods, supplies and materials, infrastructure projects and consulting services regardless of funding source whether local or foreign by the government.”
THE CHAIRMAN (SEN. ANGARA). Okay, accepted. We accept. The Senate accepts it.[21]
xxx xxx xxx
THE CHAIRMAN (SEN ANGARA). Just take note of that ano. Medyo nga problematic ‘yan eh. Now, just for the record Del, can you repeat again the justification for including foreign funded contracts within the scope para malinaw because the World Bank daw might raise some objection to it.
REP. ABAYA. Well, Mr. Chairman, we should include foreign funded projects kasi these are the big projects. To give an example, if you allow bids above government estimate, let’s say take the case of 500 million project, included in that 500 million is the 20 percent profit. If you allow them to bid above government estimate, they will add another say 28 percent of (sic) 30 percent, 30 percent of 500 million is another 150 million. Ito, this is a rich source of graft money, aregluhan na lang, 150 million, five contractors will gather, “O eto 20 million, 20 million, 20 million.” So, it is rigged. ‘Yun ang practice na nangyayari. If we eliminate that, if we have a ceiling then, it will not be very tempting kasi walang extra money na pwedeng ibigay sa ibang contractor. So this promote (sic) collusion among bidders, of course, with the cooperation of irresponsible officials of some agencies. So we should have a ceiling to include foreign funded projects.[22]
Section 5.06. Evaluation and Comparison of Bids.It was explained that other foreign banks such as the Asian Development Bank (ADB) and the World Bank (WB) similarly prohibit the bracketing or imposition of a ceiling on bid prices.
x x x
(e) Any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.
SEC. 4. In the contracting of any loan, credit or indebtedness under this Act, the President of the Philippines may, when necessary, agree to waive or modify, the application of any law granting preferences or imposing restrictions on international competitive bidding, including among others [Act No. 4239, Commonwealth Act No. 138], the provisions of [CA 541], insofar as such provisions do not pertain to constructions primarily for national defense or security purposes, [RA 5183]; Provided, however, That as far as practicable, utilization of the services of qualified domestic firms in the prosecution of projects financed under this Act shall be encouraged: Provided, further, That in case where international competitive bidding shall be conducted preference of at least fifteen per centum shall be granted in favor of articles, materials or supplies of the growth, production or manufacture of the Philippines: Provided, finally, That the method and procedure in comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.DOJ Opinion No. 46, Series of 1987, is relied upon by the public respondents as it opined that an agreement for the exclusion of foreign assisted projects from the coverage of local bidding regulations does not contravene existing legislations because the statutory basis for foreign loan agreements is RA 4860, as amended, and under Section 4 thereof, the President is empowered to waive the application of any law imposing restrictions on the procurement of goods and services pursuant to such loans.
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.The public respondents characterize foreign loan agreements, including Loan Agreement No. PH-P204, as executive agreements and, as such, should be observed pursuant to the fundamental principle in international law of pacta sunt servanda.[33] They cite Section 20 of Article VII of the Constitution as giving the President the authority to contract foreign loans:
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.[32]
SEC. 20. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decisions on applications for loans to be contracted or guaranteed by the Government or Government-owned and Controlled Corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law.The Constitution, the public respondents emphasize, recognizes the enforceability of executive agreements in the same way that it recognizes generally accepted principles of international law as forming part of the law of the land.[34] This recognition allegedly buttresses the binding effect of executive agreements to which the Philippine Government is a signatory. It is pointed out by the public respondents that executive agreements are essentially contracts governing the rights and obligations of the parties. A contract, being the law between the parties, must be faithfully adhered to by them. Guided by the fundamental rule of pacta sunt servanda, the Philippine Government bound itself to perform in good faith its duties and obligations under Loan Agreement No. PH-P204.
SEC. 77. Transitory Clause. –Section 4 of RA 9184 is also invoked by the public respondents as it provides:
In all procurement activities, if the advertisement or invitation for bids was issued prior to the effectivity of the Act, the provisions of EO 40 and its IRR, PD 1594 and its IRR, RA 7160 and its IRR, or other applicable laws as the case may be, shall govern.
In cases where the advertisements or invitations for bids were issued after the effectivity of the Act but before the effectivity of this IRR-A, procuring entities may continue adopting the procurement procedures, rules and regulations provided in EO 40 and its IRR, or other applicable laws, as the case may be.
SEC. 4. Scope and Applications. – This Act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign, by all branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or –controlled corporations and local government units, subject to the provisions of Commonwealth Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed.It is also the position of the public respondents that even granting arguendo that Loan Agreement No. PH-P204 were an ordinary loan contract, still, RA 9184 is inapplicable under the non-impairment clause[36] of the Constitution. The said loan agreement expressly provided that the procurement of goods and services for the project financed by the same shall be governed by the Guidelines for Procurement under OECF Loans dated December 1997. Further, Section 5.06 of the JBIC Procurement Guidelines categorically provides that “[a]ny procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.”
SEC. 1. Scope and Application. This Executive Order shall apply to the procurement of: (a) goods, supplies, materials and related services; (b) civil works; and (c) consulting services, by all National Government agencies, including State Universities and Colleges (SUCs), Government-Owned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), hereby referred to as the ‘Agencies.’ This Executive Order shall cover the procurement process from the pre-procurement conference up to the award of contract.
SEC. 1. Scope and Application. x x xSection 1.2 of the Implementing Rules and Regulations of EO 40 is likewise invoked as it provides:
Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and other similar foreign sources.
For procurement financed wholly or partly from Official Development Assistance (ODA) funds from International Financing Institutions (IFIs), as well as from bilateral and other similar foreign sources, the corresponding loan/grant agreement governing said funds as negotiated and agreed upon by and between the Government and the concerned IFI shall be observed.Private respondent China Road & Bridge Corporation thus postulates that following EO 40, the procurement of goods and services for the CP I project should be governed by the terms and conditions of Loan Agreement No. PH-P204 entered into between the JBIC and the Philippine Government. Pertinently, Section 5.06 of the JBIC Procurement Guidelines prohibits the setting of ceilings on bid prices.
REP. MARCOS. Yes, Mr. Chairman, to respond and to put into the record, a justification for the inclusion of foreign contracts, may we just state that foreign contracts have, of course, been brought into the ambit of the law because of the Filipino counterpart for this foreign projects, they are no longer strictly foreign in nature but fall under the laws of the Philippine government.Private respondent China Road & Bridge Corporation submits that based on the provisions of the Exchange of Notes and Loan Agreement No. PH-P204, it was rightfully and legally awarded the CP I project. It urges the Court to dismiss the petition for lack of merit.
THE CHAIRMAN (SEN. ANGARA). Okay. I think that’s pretty clear. I think the possible concern is that some ODA are with strings attached especially the Japanese. The Japanese are quite strict about that, that they are (sic) even provide the architect and the design, etcetera, plus, of course, the goods that will be supplied.
Now, I think we’ve already provided that this is open to all and we will recognize our international agreements so that this bill will not also restrict the flow of foreign funding, because some countries now make it a condition that they supply both services and goods especially the Japanese.
So I think we can put a sentence that we continue to honor our international obligations, di ba Laura?
MR. ENCARNACION. Actually, subject to any treaty.
THE CHAIRMAN (SEN. ANGARA). ‘Yun pala eh. That should allay their anxiety and concern. Okay, buti na lang for the record para malaman nila na we are conscious sa ODA.[37]
SEC. 76. Repealing Clause. —This law repeals Executive Order No. 40, series of 2001, entitled “Consolidating Procurement Rules and Procedures for All National Government Agencies, Government Owned or Controlled Corporations and/or Government Financial Institutions, and Requiring the Use of the Government Electronic Procurement System”; Executive Order No. 262, series of 1996, entitled “Amending Executive Order No. 302, series of 1996, entitled Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government” and Section 3 of Executive Order No. 201, series of 2000, entitled “Providing Additional Policies and Guidelines in the Procurement of Goods/Supplies by the National Government”; Executive Order No. 302, series of 1996, entitled “Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government” and Presidential Decree No. 1594 dated June 11, 1978, entitled “Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure Contracts.” This law amends Title Six, Book Two of Republic Act No. 7160, otherwise known as the “Local Government Code of 1991”; the relevant provisions of Executive Order No. 164, series of 1987, entitled “Providing Additional Guidelines in the Processing and Approval of Contracts of the National Government”; and the relevant provisions of Republic Act No. 7898 dated February 23, 1995, entitled “An Act Providing for the Modernization of the Armed Forces of the Philippines and for Other Purposes.” Any other law, presidential decree or issuance, executive order, letter of instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly.In addition to these laws, RA 4860, as amended, must be mentioned as Section 4 thereof provides that “[i]n the contracting of any loan, credit or indebtedness under this Act, the President of the Philippines may, when necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on international competitive bidding x x x Provided, finally, That the method and procedure in the comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.”
SEC. 1. Scope and Application. – This Executive Order shall apply to see procurement of (a) goods, supplies, materials and related service; (b) civil works; and (c) consulting services, by all National Government agencies, including State Universities and Colleges (SUCs), Government-Owned or –Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), hereby referred to as “Agencies.” This Executive Order shall cover the procurement process from the pre-procurement conference up to the award of the contract.The procurement process basically involves the following steps: (1) pre-procurement conference; (2) advertisement of the invitation to bid; (3) pre-bid conference; (4) eligibility check of prospective bidders; (5) submission and receipt of bids; (6) modification and withdrawal of bids; (7) bid opening and examination; (8) bid evaluation; (9) post qualification; (10) award of contract and notice to proceed.[59] Clearly then, when the Invitation to Prequalify and to Bid for the implementation of the CP I project was published on November 22, 29 and December 5, 2002, the procurement process thereof had already commenced and the application of EO 40 to the procurement process for the CP I project had already attached.Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and similar foreign sources.
SEC. 77. Transitory ClauseIn other words, under IRR-A, if the advertisement of the invitation for bids was issued prior to the effectivity of RA 9184, such as in the case of the CP I project, the provisions of EO 40 and its IRR, and PD 1594 and its IRR in the case of national government agencies, and RA 7160 and its IRR in the case of local government units, shall govern.
In all procurement activities, if the advertisement or invitation for bids was issued prior to the effectivity of the Act, the provisions of E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A. 7160 and its IRR, or other applicable laws, as the case may be, shall govern.
In cases where the advertisements or invitations for bids were issued after the effectivity of the Act but before the effectivity of this IRR-A, procuring entities may continue adopting the procurement procedures, rules and regulations provided in E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A. 7160 and its IRR, or other applicable laws, as the case may be.
SEC. 1. Scope and Application. – x x xIn relation thereto, Section 4 of RA 4860, as amended, was correctly cited by the respondents as likewise authorizing the President, in the contracting of any loan, credit or indebtedness thereunder, “when necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on international competitive bidding x x x.” The said provision of law further provides that “the method and procedure in the comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.”
Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and similar foreign sources.
Section 5.06. Evaluation and Comparison of BidsIt is clear that the JBIC Procurement Guidelines proscribe the imposition of ceilings on bid prices. On the other hand, it enjoins the award of the contract to the bidder whose bid has been determined to be the lowest evaluated bid. The pertinent provision, quoted earlier, is reiterated, thus:
x x x
(e) Any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.[62]
Section 5.09. Award of ContractSince these terms and conditions are made part of Loan Agreement No. PH-P204, the government is obliged to observe and enforce the same in the procurement of goods and services for the CP I project. As shown earlier, private respondent China Road & Bridge Corporation’s bid was the lowest evaluated bid, albeit 28.95% higher than the ABC. In accordance with the JBIC Procurement Guidelines, therefore, it was correctly awarded the contract for the CP I project.
The contract is to be awarded to the bidder whose bid has been determined to be the lowest evaluated bid and who meets the appropriate standards of capability and financial resources. A bidder shall not be required as a condition of award to undertake responsibilities or work not stipulated in the specifications or to modify the bid.[63]
SEC. 4. Scope and Applications. – This Act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign, by all branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or –controlled corporations and local government units, subject to the provisions of Commonwealth Act No. 138. Any 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 petitioners, in order to place the procurement process undertaken for the CP I project within the ambit of RA 9184, vigorously assert that Loan Agreement No. PH-P204 is neither a treaty, an international agreement nor an executive agreement. They cite Executive Order No. 459 dated November 25, 1997 where the three agreements are defined in this wise:
a) International agreement – shall refer to a contract or understanding, regardless of nomenclature, entered into between the Philippines and another government in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments.The petitioners mainly argue that Loan Agreement No. PH-P204 does not fall under any of the three categories because to be any of the three, an agreement had to be one where the parties are the Philippines as a State and another State. The JBIC, the petitioners maintain, is a Japanese banking agency, which presumably has a separate juridical personality from the Japanese Government.
b) Treaties – international agreements entered into by the Philippines which require legislative concurrence after executive ratification. This term may include compacts like conventions, declarations, covenants and acts.
c) Executive agreements – similar to treaties except that they do not require legislative concurrence.[64]
An “exchange of notes” is a record of a routine agreement that has many similarities with the private law contract. The agreement consists of the exchange of two documents, each of the parties being in the possession of the one signed by the representative of the other. Under the usual procedure, the accepting State repeats the text of the offering State to record its assent. The signatories of the letters may be government Ministers, diplomats or departmental heads. The technique of exchange of notes is frequently resorted to, either because of its speedy procedure, or, sometimes, to avoid the process of legislative approval.[66]It is stated that “treaties, agreements, conventions, charters, protocols, declarations, memoranda of understanding, modus vivendi and exchange of notes” all refer to “international instruments binding at international law.”[67] It is further explained that-
Although these instruments differ from each other by title, they all have common features and international law has applied basically the same rules to all these instruments. These rules are the result of long practice among the States, which have accepted them as binding norms in their mutual relations. Therefore, they are regarded as international customary law. Since there was a general desire to codify these customary rules, two international conventions were negotiated. The 1969 Vienna Convention on the Law of Treaties (“1969 Vienna Convention”), which entered into force on 27 January 1980, contains rules for treaties concluded between States. The 1986 Vienna Convention on the Law of Treaties between States and International Organizations (“1986 Vienna Convention”), which has still not entered into force, added rules for treaties with international organizations as parties. Both the 1969 Vienna Convention and the 1986 Vienna Convention do not distinguish between the different designations of these instruments. Instead, their rules apply to all of those instruments as long as they meet the common requirements.[68]Significantly, an exchange of notes is considered a form of an executive agreement, which becomes binding through executive action without the need of a vote by the Senate or Congress. The following disquisition by Francis B. Sayre, former United States High Commissioner to the Philippines, entitled “The Constitutionality of Trade Agreement Acts,” quoted in Commissioner of Customs v. Eastern Sea Trading,[69] is apropos:
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. x x x[70]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.[71] With respect to the procurement of the goods and services for the projects, it bears reiterating that as stipulated:
3. 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.[72]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.
1st Envelope[13] Supra note 11; rollo, p. 47.
a) Authority of the signing official(s) in accordance with Clause 5.3
b) Original Copy of Joint Venture Agreement in accordance with Clause 1.5.2 (if applicable)
c) Duly signed Construction Schedule & S-Curve in accordance with Sub-Clause 5.7.8
d) Duly signed Construction Method in Narrative form in accordance with Sub-Clause 5.7.7
e) Duly signed Project Organization Chart in accordance with Sub-Clause 5.7.7
f) Duly signed Manpower and Equipment Schedules in accordance with Sub-Clause 5.7.5
g) Credit Line commitment from reputable bank equivalent to four (4) months average operating expenses or 10% of bid price or whichever is lower
h) Bid Security furnished in accordance with Clause 5.9
i) Compliance to Department Order No. 8 Series of 1991 & D.O.#135
j) Certification that the Detailed Unit Price Analysis, Cash Flow and Payment Schedule are in the second envelope
k) Authority of bidders representative to attend in public bidding (Department Order No. 176, Series of 1993)
l) Construction Safety and health program by Contractor based on Department of Labor and Employment’s (DOLE) Occupational Safety and Health Standards
2nd Envelope
a) Duly signed bid price in the Bill of Quantities of Section D of Proposal Book
b) Duly signed Detailed Unit Price Analysis prepared in accordance with Clause 5.7.3
c) Cash Flow and Payment Schedule prepared in accordance with Clause 5.7.6 (Id.; rollo, pp. 44-45.