ABAYA VS EBDANE

Facts:
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 countrys economic stabilization and development efforts.
The assailed resolution recommended the award to private respondent China Road
& Bridge Corporation of the contract for the implementation of civil works for
Contract Package No. I (CP I), which consists of the improvement/rehabilitation of
the San Andres (Codon)-Virac-Jct. Bago-Viga road, with the length of 79.818
kilometers, in the island province of Catanduanes. The DPWH caused the publication
of the Invitation to Prequalify and to Bid for the implementation of the CP I project,
in two leading national newspapers, namely, the Manila Times and Manila Standard
on November 22 and 29, and December 5, 2002.
A total of twenty-three (23) foreign and local contractors responded to the invitation
by submitting their accomplished prequalification documents on January 23, 2003.
In accordance with the established prequalification criteria, eight contractors were
evaluated or considered eligible to bid as concurred by the JBIC. Prior to the opening
of the respective bid proposals, it was announced that the Approved Budget for the
Contract (ABC) was in the amount of P738,710,563.67.
The bid goes to private respondent China Road & Bridge Corporation was corrected
from the original P993,183,904.98 (with variance of 34.45% from the ABC) to
P952,564,821.71 (with variance of 28.95% from the ABC) based on their letter
clarification dated April 21, 2004.
The petitioners anchor the instant petition on the contention that the award of the
contract to private respondent China Road & Bridge Corporation violates RA 9184,
particularly Section 31 thereof which reads:
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.
The petitioners insist that Loan Agreement is neither 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 however contend that 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.
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.
Issue :
Whether or not the the loan agreement violates RA 9184.
Ruling:
The court ruled in favor of the respondents. The Court holds that Loan Agreement
No. PH-P204 taken in conjunction with the Exchange of Notes dated December 27,
1999 between the Japanese Government and the Philippine Government is an
executive agreement.
To recall, Loan Agreement No. PH-P204 was executed by and between the JBIC and
the Philippine Government pursuant to the Exchange of Notes executed by and
between Mr. Yoshihisa Ara, Ambassador Extraordinary and Plenipotentiary of Japan
to the Philippines, and then Foreign Affairs Secretary Siazon, in behalf of their
respective governments. The Exchange of Notes expressed that the two
governments have reached an understanding concerning Japanese loans to be
extended to the Philippines and that these loans were aimed at promoting our
countrys economic stabilization and development efforts.
Loan Agreement No. PH-P204 was subsequently executed and it declared that it was
so entered by the parties "[i]n 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."65 Under the circumstances, the JBIC may well be
considered an adjunct of the Japanese Government. Further, Loan Agreement No.

PH-P204 is indubitably an integral part of the Exchange of Notes. It forms part of the
Exchange of Notes such that it cannot be properly taken independent thereof
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.

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 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:
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 subparagraph (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
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.

DEPARTMENT OF BUDGET AND MANAGEMENT PROCUREMENT SERVICE VS

KOLONWEL TRADING
Facts: Before the Court are these consolidated three (3) petitions for review under
Rule 45 of the Rules of Court, with a prayer for a temporary restraining order, to
nullify and set aside the Order dated December 4, 2006 of the Manila Regional Trial
Court (RTC), Branch 18, in SP Civil Case No. 06-116010, a special civil action
for certiorari and prohibition thereat commenced by herein respondent Kolonwel
Trading (Kolonwel for short) against the Department of Budget and Management
Procurement Service (DBM-PS), et al. At the core of the controversy are the bidding
and the eventual contract awards for the supply and delivery of some 17.5 million
copies of Makabayan (social studies) textbooks andteachers manuals, a project of
the Department of Education (DepEd). The contract was awarded to several
publishers for the different textbooks and Kolonwel was disqualified for which it
appealed to the Inter-Agency Bids and Awards Committee but was denied. Kolonwel
filed with the RTC of Manila a special civil action for certiorari and prohibition with a
prayer for a temporary restraining order (TRO) and/or writ of preliminary injunction.
Docketed as SP Civil Case No. 06-116010, and raffled to Branch 18 of the court, the
petition sought to nullify IABAC Res. Nos. 001-2006 and 001-2006-A and to set aside
the contract awards in favor of other publishers. Other publishers filed a motion to
dismiss Kolonwels petition on several grounds, among them want of jurisdiction and
lack of cause of action, inter alia alleging that the latter had pursued judicial relief
without first complying with the protest procedure prescribed by Republic Act (R.A.)
No. 9184, otherwise known as the Government Procurement Reform Act..
Issue: Whether or not the RTC erred in assuming jurisdiction over the case despite
Kolonwels failure to observe the protest mechanism provided under Sec. 55, Sec.
57 and 58 of the Government Procurement Reform Act because it is a foreign
funded project.
Ruling: The Court is unable to lend concurrence to the trial courts and
respondents positions on the interplay of the protest and jurisdictional issues. As
may be noted, that Section 55 of R.A. No. 9184 sets three (3) requirements that
must be met by the party desiring to protest the decision of the Bids and Awards
Committee (BAC). These are: 1) the protest must be in writing, in the form of a
verified position paper; 2) the protest must be submitted to the head of the
procuring entity; and 3) the payment of a non-refundable protest fee. The
jurisdictional caveat that authorizes courts to assume or, inversely, precludes courts
from assuming, jurisdiction over suits assailing the BACs decisions is in turn found
in the succeeding Section 58 which provides that the courts would have jurisdiction
over such suits only if the protest procedure has already been completed.
Considering that the respondents petition in RTC Manila was actually filed in
violation of the protest process set forth in Section 55 of R.A. No. 9184, that court

could not have lawfully acquired jurisdiction over the subject matter of this case. In
fact, Section 58, supra, of R.A. No. 9184 emphatically states that cases filed in
violation of the protest process therein provided shall be dismissed for lack of
jurisdiction.
The question as to whether or not foreign loan agreements with international
financial institutions, such as Loan No. 7118-PH, partake of an executive or
international agreement within the purview of the Section 4 of R.A. No. 9184, has
been answered by the Court in the affirmative in Abaya,
supra.Significantly, Abaya declared that the RP-JBIC loan agreement was to be of
governing application over the CP I project and that the JBIC Procurement
Guidelines, as stipulated in the loan agreement, shall primarily govern the
procurement of goods necessary to implement the main project. WHEREFORE, the
instant consolidated petitions are GRANTED and the assailed Order dated December
4, 2006 of the Regional Trial Court of Manila in its SP Case No. 06116010 is NULLIFIED and SET ASIDE.

Mijares v. Ranada
Facts:
Invoking the Alien Tort Act, petitioners Mijares, et al.*, all of whom suffered human
rights violations during the Marcos era, obtained a Final Judgment in their favor
against the Estate of the late Ferdinand Marcos amounting to roughly $1.9B in
compensatory and exemplary damages for tortuous violations of international law in
the US District Court of Hawaii. This Final Judgment was affirmed by the US Court of
Appeals.
As a consequence, Petitioners filed a Complaint with the RTC Makati for the
enforcement of the Final Judgment, paying P410 as docket and filing fees based on
Rule 141, 7(b) where the value of the subject matter is incapable of pecuniary
estimation. The Estate of Marcos however, filed a MTD alleging the non-payment of
the correct filing fees. RTC Makati dismissed the Complaint stating that the subject
matter was capable of pecuniary estimation as it involved a judgment rendered by a
foreign court ordering the payment of a definite sum of money allowing for the easy
determination of the value of the foreign judgment. As such, the proper filing fee
was P472M, which Petitioners had not paid.
Issue: Whether or not the amount paid by the Petitioners is the proper filing fee.
Held:
Yes, but on a different basisamount merely corresponds to the same amount
required for other actions not involving property. RTC Makati erred in concluding

that the filing fee should be computed on the basis of the total sum claimed or the
stated value of the property in litigation. The Petitioners Complaint was lodged
against the Estate of Marcos but it is clearly based on a judgment, the Final
Judgment of the US District Court. However, the Petitioners err in stating that the
Final Judgment is incapable of pecuniary estimation because it is so capable. On this
point, Petitioners state that this might lead to an instance wherein a first level court
(MTC, MeTC, etc.) would have jurisdiction to enforce a foreign judgment. Under the
B.P.129, such courts are not vested with such jurisdiction. 33 of B.P.129 refers to
instances wherein the cause of action or subject matter pertains to an assertion of
rights over property or a sum of money. But here, the subject matter is the foreign
judgment itself. 16 of B.P.129 reveals that the complaint for enforcement of
judgment even if capable of pecuniary estimation would fall under the jurisdiction of
the RTCs. Thus, the Complaint to enforce the US District Court judgment is one
capable of pecuniary estimations but at the same time, it is also an action based on
judgment against an estate, thus placing it beyond the ambit of 7(a) of Rule 141.
What governs the proper computation of the filing fees over Complaints for the
enforcement of foreign judgments is 7(b)(3), involving other actions not involving
property.

China National Machinery v. Santamaria

Facts: On 14 September 2002, petitioner China National Machinery & Equipment
Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered into a
Memorandum of Understanding with the North Luzon Railways Corporation
(Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a
feasibility study on a possible railway line from Manila to San Fernando, La Union
(the Northrail Project).
On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the
Department of Finance of the Philippines (DOF) entered into a Memorandum of
Understanding (Aug 30 MOU), wherein China agreed to extend Preferential Buyers
Credit to the Philippine government to finance the Northrail Project. 3 The Chinese
government designated EXIM Bank as the lender, while the Philippine government
named the DOF as the borrower. Under the Aug 30 MOU, EXIM Bank agreed to
extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in
20 years, with a 5-year grace period, and at the rate of 3% per annum.

On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui

(Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho)
informing him of CNMEGs designation as the Prime Contractor for the Northrail
Project.
On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for
the construction of Section I, Phase I of the North Luzon Railway System from
Caloocan to Malolos on a turnkey basis (the Contract Agreement). 7 The contract
price for the Northrail Project was pegged at USD 421,050,000.
On 26 February 2004, the Philippine government and EXIM Bank entered into a
counterpart financial agreement Buyer Credit Loan Agreement No. BLA 04055 (the
Loan Agreement). In the Loan Agreement, EXIM Bank agreed to extend Preferential
Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine
government in order to finance the construction of Phase I of the Northrail Project.
On 13 February 2006, respondents filed a Complaint for Annulment of Contract and
Injunction with Urgent Motion for Summary Hearing to Determine the Existence of
Facts and Circumstances Justifying the Issuance of Writs of Preliminary Prohibitory
and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive
Secretary, the DOF, the Department of Budget and Management, the National
Economic Development Authority and Northrail. The case was filed before the
Regional Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC
Br. 145). In the Complaint, respondents alleged that the Contract Agreement and
the Loan Agreement were void for being contrary to (a) the Constitution; (b)
Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government
Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the
Government Auditing Code; and (d) Executive Order No. 292, otherwise known as
the Administrative Code.
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to
Dismiss and setting the case for summary hearing to determine whether the
injunctive reliefs prayed for should be issued. CNMEG then filed a Motion for
Reconsideration, which was denied by the trial court in an Order dated 10 March
2008. Thus, CNMEG filed before the CA a Petition for Certiorari with Prayer for the
Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008.
the appellate court dismissed the Petition for Certiorari. Subsequently, CNMEG filed
a Motion for Reconsideration, which was denied by the CA in a Resolution dated 5
December 2008.
Petitioners Argument: Petitioner claims that the EXIM Bank extended financial
assistance to Northrail because the bank was mandated by the Chinese
government, and not because of any motivation to do business in the Philippines, it

is clear from the foregoing provisions that the Northrail Project was a purely
commercial transaction.
Respondents Argument: respondents alleged that the Contract Agreement and
the Loan Agreement were void for being contrary to (a) the Constitution; (b)
Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government
Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the
Government Auditing Code; and (d) Executive Order No. 292, otherwise known as
the Administrative Code.
Issues: Whether or not petitioner CNMEG is an agent of the sovereign Peoples
Republic of China.
Whether or not the Northrail contracts are products of an executive agreement
between two sovereign states.
Ruling:
The instant Petition is DENIED. Petitioner China National Machinery &
Equipment Corp. (Group) is not entitled to immunity from suit, and the Contract
Agreement is not an executive agreement. CNMEGs prayer for the issuance of a
TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic.
The Court explained the doctrine of sovereign immunity in Holy See v. Rosario, to
wit:
There are two conflicting concepts of sovereign immunity, each widely held and
firmly established. According to the classical or absolute theory, a sovereign
cannot, without its consent, be made a respondent in the courts of
another sovereign. According to the newer or restrictive theory, the immunity
of the sovereign is recognized only with regard to public acts or acts jure
imperii of a state, but not with regard to private acts or acts jure
gestionis. (Emphasis supplied; citations omitted.)
As it stands now, the application of the doctrine of immunity from suit has been
restricted to sovereign or governmental activities (jure imperii). The mantle of state
immunity cannot be extended to commercial, private and proprietary acts (jure
gestionis).
Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the
legal nature of the act involved whether the entity claiming immunity performs
governmental, as opposed to proprietary, functions. As held in United States of
America v. Ruiz
Admittedly, the Loan Agreement was entered into between EXIM Bank and the
Philippine government, while the Contract Agreement was between Northrail and
CNMEG. Although the Contract Agreement is silent on the classification of the legal
nature of the transaction, the foregoing provisions of the Loan Agreement, which is
an inextricable part of the entire undertaking, nonetheless reveal the intention of

the parties to the Northrail Project to classify the whole venture as commercial or
proprietary in character.
Thus, piecing together the content and tenor of the Contract Agreement, the
Memorandum of Understanding dated 14 September 2002, Amb. Wangs letter
dated 1 October 2003, and the Loan Agreement would reveal the desire of CNMEG
to construct the Luzon Railways in pursuit of a purely commercial activity performed
in the ordinary course of its business

PHILIPPINE INTERNATIONAL TRADING CORPORATION Vs. ANGELES

The controversy springs from the issuance by the PITC of Administrative

Order No. SOCPEC 89-08-01, under which, applications to the PITC for
importation from the Peoples Republic of China (PROC. for brevity) must be
accompanied by a viable and confirmed Export Program of Philippine
Products to PROC carried out by the importer himself or through a tie-up with
a legitimate importer in an amount equivalent to the value of the importation
from PROC being applied for, or, simply, at one is to one ratio