Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

167919 February 14, 2007

PLAR !EL M. A"A#A, COMMO!ORE PLAR !EL C. GARC A $re%&re'( a)' PMA *+9 FOUN!AT ON, NC., re,. by &%- Pre-&'e)%, COMMO!ORE CARLOS L. AGUST N $re%&re'(, Petitioners, vs. .ON. SECRETAR# .ERMOGENES E. E"!ANE, /R., &) 0&- 1a,a1&%y a- Se1re%ary o2 %0e !EPARTMENT OF PU"L C 3OR4S a)' . G.3A#S, .ON. SECRETAR# EM L A T. "ONCO! N, &) 0er 1a,a1&%y a- Se1re%ary o2 %0e !EPARTMENT OF "U!GET a)' MANAGEMENT, .ON. SECRETAR# CESAR 5. PUR S MA, &) 0&- 1a,a1&%y a- Se1re%ary o2 %0e !EPARTMENT OF F NANCE, .ON. TREASURER NORMA L. LASALA, &) 0er 1a,a1&%y aTrea-urer o2 %0e "ureau o2 Trea-ury, a)' C. NA ROA! a)' "R !GE CORPORAT ON,Respondents. D CALLE/O, SR., J.: "efore the !ourt is the petition for certiorari and prohibition under Rule #$ of the Rules of !ourt see%in& to set aside and nullif' Resolution No. P(H)*+*,-*,./ dated Ma' 0, /,,- issued b' the "ids and +1ards !o22ittee 3"+!4 of the Depart2ent of Public 5or%s and Hi&h1a's 3DP5H4 and approved b' then DP5H +ctin& Secretar' 6lorante Sori7ue8. The assailed resolution reco22ended the a1ard to private respondent !hina Road 9 "rid&e !orporation of the contract for the i2ple2entation of civil 1or%s for !ontract Pac%a&e No. I 3!P I4, 1hich consists of the i2prove2ent:rehabilitation of the San +ndres 3!odon4*Virac*(ct. "a&o*Vi&a road, 1ith the len&th of 0;.<.< %ilo2eters, in the island province of !atanduanes. The !P I pro=ect is one of the four pac%a&es co2prisin& the pro=ect for the i2prove2ent:rehabilitation of the !atanduanes !ircu2ferential Road, coverin& a total len&th of about /,-.$.$ %ilo2eters, 1hich is the 2ain hi&h1a' in !atanduanes Province. The road section 3!atanduanes !ircu2ferential Road4 is part of the +rterial Road )in%s Develop2ent Pro=ect 3Phase IV4 funded under )oan +&ree2ent No. PH*P/,- dated Dece2ber /<, .;;; bet1een the (apan "an% for International !ooperation 3("I!4 and the >overn2ent of the Republic of the Philippines. "ac%&round "ased on the ?chan&e of Notes dated Dece2ber /0, .;;;, . the >overn2ent of (apan and the >overn2ent of the Philippines, throu&h their respective representatives, na2el', Mr. @oshihisa +ra, +2bassador ?traordinar' and Plenipotentiar' of (apan to the Republic of the Philippines, and then Secretar' of 6orei&n +ffairs Do2in&o ). Sia8on, have reached an understandin& concernin& (apanese loans to be e?tended to the Philippines. These loans 1ere ai2ed at pro2otin& our countr'As econo2ic stabili8ation and develop2ent efforts. The ?chan&e of Notes consisted of t1o docu2entsB 3.4 a )etter fro2 the >overn2ent of (apan, si&ned b' +2bassador +ra, addressed to then Secretar' of 6orei&n +ffairs Sia8on, confir2in& the !ISION

understandin& reached bet1een the t1o &overn2ents concernin& the loans to be e?tended b' the >overn2ent of (apan to the PhilippinesC and 3/4 a docu2ent deno2inated as Records of Discussion 1here the salient ter2s of the loans as set forth b' the >overn2ent of (apan, throu&h the (apanese dele&ation, 1ere reiterated and the said ter2s 1ere accepted b' the Philippine dele&ation. "oth +2bassador +ra and then Secretar' Sia8on si&ned the Records of Discussion as representatives of the >overn2ent of (apan and Philippine >overn2ent, respectivel'. The ?chan&e of Notes provided that the loans to be e?tended b' the >overn2ent of (apan to the Philippines consisted of t1o loansB )oan I and )oan II. The ?chan&e of Notes stated in partB I .. + loan in (apanese 'en up to the a2ount of sevent'*nine billion ei&ht hundred and si?t'* one 2illion 'en 3@0;,<#.,,,,,,,,4 3hereinafter referred to as Dthe )oan ID4 1ill be e?tended, in accordance 1ith the relevant la1s and re&ulations of (apan, to the >overn2ent of the Republic of the Philippines 3hereinafter referred to as Dthe "orro1er ID4 b' the (apan "an% for International !ooperation 3hereinafter referred to as Dthe "an%D4 to i2ple2ent the pro=ects enu2erated in the )ist + attached hereto 3hereinafter referred to as Dthe )ist +D4 accordin& to the allocation for each pro=ect as specified in the )ist +. /. 3.4 The )oan I 1ill be 2ade available b' loan a&ree2ents to be concluded bet1een the "orro1er I and the "an%. The ter2s and conditions of the )oan I as 1ell as the procedure for its utili8ation 1ill be &overned b' said loan a&ree2ents 1hich 1ill contain, inter alia, the follo1in& principlesB ... 3/4 ach of the loan a&ree2ents 2entioned in sub*para&raph 3.4 above 1ill be concluded after the "an% is satisfied of the feasibilit', includin& environ2ental consideration, of the pro=ect to 1hich such loan a&ree2ent relates. E. 3.4 The )oan I 1ill be 2ade available to cover pa'2ents to be 2ade b' the Philippine e?ecutin& a&encies to suppliers, contractors and:or consultants of eli&ible source countries under such contracts as 2a' be entered into bet1een the2 for purchases of products and:or services re7uired for the i2ple2entation of the pro=ects enu2erated in the )ist +, provided that such purchases are 2ade in such eli&ible source countries for products produced in and:or services supplied fro2 those countries. 3/4 The scope of eli&ible source countries 2entioned in sub*para&raph 3.4 above 1ill be a&reed upon bet1een the authorities concerned of the t1o >overn2ents. 3E4 + part of the )oan I 2a' be used to cover eli&ible local currenc' re7uire2ents for the i2ple2entation of the pro=ects enu2erated in the )ist +. -. 5ith re&ard to the shippin& and 2arine insurance of the products purchased under the )oan I, the >overn2ent of the Republic of the Philippines 1ill refrain fro2 i2posin& an' restrictions that 2a' hinder fair and free co2petition a2on& the shippin& and 2arine insurance co2panies. ? ? ? ?/
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Pertinentl', )ist +, 1hich specified the pro=ects to be financed under the )oan I, includes the +rterial Road )in%s Develop2ent Pro=ect 3Phase IV4, to 1itB )IST + Ma?i2u2 a2ount in 2illion 'en4 .. Secondar' ducation Develop2ent and I2prove2ent Pro=ect 0,/., /. Rural 5ater Suppl' Pro=ect 3Phase V4 ;$. E. "ohol Irri&ation Pro=ect 3Phase II4 #,,0< -. +&rarian Refor2 Infrastructure Support Pro=ect 3Phase II4 .#,;;, $. +rterial Road )in%s Develop2ent Pro=ect 3Phase IV4 .$,E<#. !ordillera Road I2prove2ent Pro=ect $,<$/ 0. Philippines*(apan 6riendship Hi&h1a' Mindanao Section Rehabilitation Pro=ect 3Phase II4 0,-E<. Rehabilitation and Maintenance of "rid&es +lon& +rterial Roads Pro=ect 3Phase IV4 $,,#< ;. Mariti2e Safet' I2prove2ent Pro=ect 3Phase !4 -,0..,. Pinatubo Ha8ard Fr&ent Miti&ation Pro=ect 3Phase II4 ;,,.E ... Pasi&*Mari%ina River !hannel I2prove2ent Pro=ect 3Phase I4 .,.#0 Total 0;,<#.E The ?chan&e of Notes further provided thatB III ???? E. The >overn2ent of the Republic of the Philippines 1ill ensure that the products and:or services 2entioned in sub*para&raph 3.4 of para&raph E of Part I and sub*para&raph 3.4 of para&raph - of Part II are procured in accordance 1ith the &uidelines for procure2ent of the "an%, 1hich set forth, inter alia, the procedures of international tenderin& to be follo1ed e?cept 1here such procedures are inapplicable or inappropriate. ? ? ? ?The Records of Discussion, 1hich for2ed part of the ?chan&e of Notes, also stated in part, thusB ????

.. 5ith reference to sub*para&raph 3E4 of para&raph E of Part I of the ?chan&e of Notes concernin& the financin& of eli&ible local currenc' re7uire2ents for the i2ple2entation of the pro=ects 2entioned in the said sub*para&raph, the representative of the (apanese dele&ation stated thatB 3.4 such re7uire2ent of local currenc' as &eneral ad2inistrative e?penses, interest durin& construction, ta?es and duties, e?penses concernin& office, re2uneration to e2plo'ees of the e?ecutin& a&encies and housin&, not directl' related to the i2ple2entation of the said pro=ects, as 1ell as purchase of land properties, co2pensation and the li%e, ho1ever, 1ill not be considered as eli&ible for financin& under the )oan IC and 3/4 the procure2ent of products and:or services 1ill be 2ade in accordance 1ith the procedures of international co2petitive tenderin& e?cept 1here such procedures are inapplicable and inappropriate. ? ? ? ?$ Thus, in accordance 1ith the a&ree2ent reached b' the >overn2ent of (apan and the Philippine >overn2ent, as e?pressed in the ?chan&e of Notes bet1een the representatives of the t1o &overn2ents, the Philippines obtained fro2 and 1as &ranted a loan b' the ("I!. )oan +&ree2ent No. PH*P/,- dated Dece2ber /<, .;;;, in particular, stated as follo1sB )oan +&ree2ent No. PH*P/,-, dated Dece2ber /<, .;;;, bet1een (+P+N "+NG 6OR INT RN+TION+) !OOP R+TION and the >OV RNM NT O6 TH R PF")I! O6 TH PHI)IPPIN S. In the li&ht of the contents of the ?chan&e of Notes bet1een the >overn2ent of (apan and the >overn2ent of the Republic of the Philippines dated Dece2ber /0, .;;;, concernin& (apanese loans to be e?tended 1ith a vie1 to pro2otin& the econo2ic stabili8ation and develop2ent efforts of the Republic of the Philippines. (+P+N "+NG 6OR INT RN+TION+) !OOP R+TION 3hereinafter referred to as Dthe "+NGD4 and TH >OV RNM NT O6 TH R PF")I! O6 TH PHI)IPPIN S 3hereinafter referred to as Dthe "orro1erD4 here1ith conclude the follo1in& )oan +&ree2ent 3hereinafter referred to as Dthe )oan +&ree2entD, 1hich includes all a&ree2ents supple2ental hereto4. ? ? ? ?# Fnder the ter2s and conditions of )oan +&ree2ent No. PH*P/,-, ("I! a&reed to lend the Philippine >overn2ent an a2ount not e?ceedin& 6I6T N "I))ION THR HFNDR D I>HT@*6OFR MI))ION (apanese @en 3@.$,E<-,,,,,,,,4 as principal for the i2ple2entation of the +rterial Road )in%s Develop2ent Pro=ect 3Phase IV4 on the ter2s and conditions set forth in the )oan +&ree2ent and in accordance 1ith the relevant la1s and re&ulations of (apan. 0 The said a2ount shall be used for the purchase of eli&ible &oods and services necessar' for the i2ple2entation of the above* 2entioned pro=ect fro2 suppliers, contractors or consultants. < 6urther, it 1as provided under the said loan a&ree2ent that other ter2s and conditions &enerall' applicable thereto shall be set forth in the >eneral Ter2s and !onditions, dated Nove2ber .;<0, issued b' the Overseas cono2ic !ooperation 6und 3O !64 and for the purpose, reference to Dthe O !6D and D6undD therein 3>eneral Ter2s and !onditions4 shall be substituted b' Dthe ("I!D and D"an%,D respectivel'.; Specificall', the &uidelines for procure2ent of all &oods and services to be

financed out of the proceeds of the said loan shall be as stipulated in the >uidelines for Procure2ent under O !6 )oans dated Dece2ber .;;0 3herein referred to as ("I! Procure2ent >uidelines4. ., +s 2entioned earlier, the proceeds of )oan +&ree2ent No. PH*P/,- 1as to be used to finance the +rterial Road )in%s Develop2ent Pro=ect 3Phase IV4, of 1hich the !atanduanes !ircu2ferential Road 1as a part. This road section, in turn, 1as divided into four contract pac%a&es 3!P4B !P IB San +ndres 3!odon4*Virac*(ct. "ato* Vi&a Road * 0;.<.< %2s !P IIB Vi&a*"a&a2anoc Road * .,.-, %2s. !P IIIB "a&a2anoc*Pandan Road * -0.$, %2s. !P IVB Pandan*!ara2oran*!odon Road * ##.-, %2s... Subse7uentl', the DP5H, as the &overn2ent a&enc' tas%ed to i2ple2ent the pro=ect, caused the publication of the DInvitation to Pre7ualif' and to "idD for the i2ple2entation of the !P I pro=ect in t1o leadin& national ne1spapers, na2el', the Manila Ti2es and Manila Standard on Nove2ber // and /;, and Dece2ber $, /,,/. + total of t1ent'*three 3/E4 forei&n and local contractors responded to the invitation b' sub2ittin& their acco2plished pre7ualification docu2ents on (anuar' /E, /,,E. In accordance 1ith the established pre7ualification criteria, ei&ht contractors 1ere evaluated or considered eli&ible to bid as concurred b' the ("I!. One of the2, ho1ever, 1ithdre1C thus, onl' seven contractors sub2itted their bid proposals. The bid docu2ents sub2itted b' the pre7ualified contractors:bidders 1ere e?a2ined to deter2ine their co2pliance 1ith the re7uire2ents as stipulated in +rticle # of the Instruction to "idders. ./ +fter the lapse of the deadline for the sub2ission of bid proposals, the openin& of the bids co22enced i22ediatel'. Prior to the openin& of the respective bid proposals, it 1as announced that the +pproved "ud&et for the !ontract 3+"!4 1as in the a2ount of P0E<,0.,,$#E.#0. The result of the biddin& revealed the follo1in& three lo1est bidders and their respective bids vis*H* vis the +"!B.E Ori&inal "id +s Read 3Pesos4 P ;;E,.<E,;,-.;< P.,,;;,;/#,$;<... P.,./$,,//,,0$.E+s*!orrected "id +2ount 3Pesos4 P;$/,$#-,</..0. P.,,;;,;/#,$;<... P.,./$,E;/,-0$.E#

Na2e of "idder .4 !hina Road +nd "rid&e !orporation /4 !avite Ideal IntAl !onst. Devt. !orp. E4 Italian Thai DevAt. Public !o2pan', )td.

Variance /<.;$I -<.;,I $/.E$I

The bid of private respondent !hina Road 9 "rid&e !orporation 1as corrected fro2 the ori&inal P;;E,.<E,;,-.;< 31ith variance of E-.-$I fro2 the +"!4 to P;$/,$#-,</..0. 31ith variance of /<.;$I fro2 the +"!4 based on their letter clarification dated +pril /., /,,-. .-

+fter further evaluation of the bids, particularl' those of the lo1est three bidders, Mr. Hedifu2e 8a1a, Pro=ect Mana&er of the !atanduanes !ircu2ferential Road I2prove2ent Pro=ect 3!!RIP4, in his !ontractorAs "id valuation Report dated +pril /,,-, reco22ended the a1ard of the contract to private respondent !hina Road 9 "rid&e !orporationB In accordance 1ith the >uidelines for the Procure2ents under OD+ JOfficial Develop2ent +ssistanceK )oans, the !onsultant hereb' reco22ends the a1ard of the contract for the construction of !P I, San +ndres 3!odon4 L Virac L (ct. "ato L Vi&a Section under the +rterial Road )in%s Develop2ent Pro=ects, Phase IV, ("I! )oan No. PH*P/,- to the )o1est !o2pl'in& "idder, !hina Road and "rid&e !orporation, at its total corrected bid a2ount of Nine Hundred 6ift'*T1o Million 6ive Hundred Si?t'*6our Thousand i&ht Hundred T1ent'*One 9 0.:.,, Pesos. .$ The "+! of the DP5H, 1ith the approval of then +ctin& Secretar' Sori7ue8, issued the assailed Resolution No. P(H)*+*,-*,./ dated Ma' 0, /,,- reco22endin& the a1ard in favor of private respondent !hina Road 9 "rid&e !orporation of the contract for the i2ple2entation of civil 1or%s for !P I, San +ndres 3!odon4 L Virac L (ct. "ato L Vi&a Road 3!atanduanes !ircu2ferential Road I2prove2ent Pro=ect4 of the +rterial Roads )in%s Develop2ent Pro=ect, Phase IV, located in !atanduanes Province, under ("I! )oan +&ree2ent No. PH*P/,-. .# On Septe2ber /;, /,,-, a !ontract of +&ree2ent 1as entered into b' and bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation for the i2ple2entation of the !P I pro=ect. The Parties Petitioner Plaridel M. +ba'a clai2s that he filed the instant petition as a ta?pa'er, for2er la12a%er, and a 6ilipino citi8en. Petitioner Plaridel !. >arcia li%e1ise clai2s that he filed the suit as a ta?pa'er, for2er 2ilitar' officer, and a 6ilipino citi8en. Petitioner PM+ A$; 6oundation, Inc., on the other hand, is a non*stoc%, non*profit corporation or&ani8ed under the e?istin& Philippine la1s. It clai2s that its 2e2bers are all ta?pa'ers and alu2ni of the Philippine Militar' +cade2'. It is represented b' its President, !arlos ). +&ustin. Na2ed as public respondents are the DP5H, as the &overn2ent a&enc' tas%ed 1ith the i2ple2entation of &overn2ent infrastructure pro=ectsC the Depart2ent of "ud&et and Mana&e2ent 3D"M4 as the &overn2ent a&enc' that authori8es the release and disburse2ent of public funds for the i2ple2entation of &overn2ent infrastructure pro=ectsC and the Depart2ent of 6inance 3DO64 as the &overn2ent a&enc' that acts as the custodian and 2ana&er of all financial resources of the &overn2ent. +lso na2ed as individual public respondents are Her2o&enes . bdane, (r., 2ilia T. "oncodin and !esar V. Purisi2a in their capacities as for2er Secretaries of the DP5H, D"M and DO6, respectivel'. On the other hand, public respondent Nor2a ). )asala 1as i2pleaded in her capacit' as Treasurer of the "ureau of Treasur'. Private respondent !hina Road 9 "rid&e !orporation is a dul' or&ani8ed corporation en&a&ed in the business of construction. The PetitionersA !ase The petitioners 2ainl' see% to nullif' DP5H Resolution No. P(H)*+*,-*,./ dated Ma' 0, /,,-, 1hich reco22ended the a1ard to private respondent !hina Road 9 "rid&e !orporation of the contract for the i2ple2entation of the civil 1or%s of !P I. The' also see% to annul the contract of a&ree2ent subse7uentl' entered into b' and bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation pursuant to the said resolution. The' pose the follo1in& issues for the !ourtAs resolutionB

I. 5hether or not Petitioners have standin& to file the instant Petition. II. 5hether or not Petitioners are entitled to the issuance of a 5rit of !ertiorari reversin& and settin& aside DP5H Resolution No. P(H)*+*,-*,./, reco22endin& the a1ard of the !ontract +&ree2ent for the i2ple2entation of civil 1or%s for !PI, San +ndres 3!ODON4* VIR+!*(!T "+TO*VI>+ RO+D 3!+T+NDF+N S !IR!FM6 R NTI+) RO+D IMPROV M NT PRO( !T4 of the +rterial Road )in%s Develop2ent Pro=ect, Phase IV, located in !atanduanes Province, under ("I! ):+ No. PH*P/,-, to !hina Road 9 "rid&e !orporation. III. 5hether or not the !ontract +&ree2ent e?ecuted b' and bet1een the Republic of the Philippines, throu&h the Depart2ent of Public 5or%s and Hi&h1a's, and the !hina Road 9 "rid&e !orporation, for the i2ple2entation of civil 1or%s for !PI, San +ndres 3!ODON4* VIR+!*(!T "+TO*VI>+ RO+D 3!+T+NDF+N S !IR!FM6 R NTI+) RO+D IMPROV M NT PRO( !T4 of the +rterial Road )in%s Develop2ent Pro=ect, Phase IV, located in !atanduanes Province, under ("I! ):+ No. PH*P/,-, is void ab initio. IV. 5hether or not Petitioners are entitled to the issuance of a 5rit of Prohibition per2anentl' prohibitin& the i2ple2entation of DP5H Resolution No. P(H)*+*,-*,./ and the !ontract +&ree2ent e?ecuted b' and bet1een the Republic of the Philippines 3throu&h the Depart2ent of Public 5or%s and Hi&h1a's4 and the !hina Road 9 "rid&e !orporation, and the disburse2ent of public funds b' the JDKepart2ent of J"Kud&et and JMKana&e2ent for such purpose. V. 5hether or not Petitioners are entitled to a Preli2inar' In=unction and:or a Te2porar' Restrainin& Order i22ediatel' en=oinin& the i2ple2entation of DP5H Resolution No. P(H)* +*,-*,./ and the !ontract +&ree2ent e?ecuted b' and bet1een the Republic of the Philippines 3throu&h the Depart2ent of Public 5or%s and Hi&h1a's4 and the !hina Road 9 "rid&e !orporation, and the disburse2ent of public funds b' the Depart2ent of "ud&et and Mana&e2ent for such purpose, durin& the pendenc' of this case. .0 Preli2inaril', the petitioners assert that the' have standin& or locus standi to file the instant petition. The' clai2 that as ta?pa'ers and concerned citi8ens, the' have the ri&ht and dut' to 7uestion the e?penditure of public funds on ille&al acts. The' point out that the Philippine >overn2ent allocates a peso*counterpart for !P I, 1hich a2ount is appropriated b' !on&ress in the >eneral +ppropriations +ctC hence, funds that are bein& utili8ed in the i2ple2entation of the 7uestioned pro=ect also parta%e of ta?pa'ersA 2one'. The present action, as a ta?pa'ersA suit, is thus alle&edl' proper. The' li%e1ise characteri8e the instant petition as one of transcendental i2portance that 1arrants the !ourtAs adoption of a liberal stance on the issue of standin&. It cited several cases 1here the !ourt brushed aside procedural technicalities in order to resolve issues involvin& para2ount public interest and transcendental i2portance. .< 6urther, petitioner +ba'a asserts that he possesses the re7uisite standin& as a for2er 2e2ber of the House of Representatives and one of the principal authors of Republic +ct No. ;.<- 3R+ ;.<-4.; %no1n as the >overn2ent Procure2ent Refor2 +ct, the la1 alle&edl' violated b' the public respondents. On the substantive issues, the petitioners anchor the instant petition on the contention that the a1ard of the contract to private respondent !hina Road 9 "rid&e !orporation violates R+ ;.<-, particularl' Section E. thereof 1hich readsB

S !. E.. !eilin& for "id Prices. L The +"! shall be the upper li2it or ceilin& for the "id prices. "id prices that e?ceed this ceilin& shall be dis7ualified outri&ht fro2 further participatin& in the biddin&. There shall be no lo1er li2it to the a2ount of the a1ard. In relation thereto, the petitioners cite the definition of the +"!, thusB S !. $. Definition of Ter2s. L ??? 3a4 +pproved "ud&et for the !ontract 3+"!4. L refers to the bud&et for the contract dul' approved b' the Head of the Procurin& ntit', as provided for in the >eneral +ppropriations +ct and:or continuin& appropriations, in the case of National >overn2ent +&enciesC the !orporate "ud&et for the contract approved b' the &overnin& "oards, pursuant to .O. No. $.<, series of .;0;, in the case of >overn2ent*O1ned and:or !ontrolled !orporations, >overn2ent 6inancial Institutions and State Fniversities and !olle&esC and the "ud&et for the contract approved b' the respective San&&unian, in the case of )ocal >overn2ent Fnits. ??? The petitioners theori8e that the fore&oin& provisions sho1 the 2andator' character of ceilin&s or upper li2its of ever' bid. Fnder the above*7uoted provisions of R+ ;.<-, all bids or a1ards should not e?ceed the ceilin&s or upper li2itsC other1ise, the contract is dee2ed void and ine?istent. Resolution No. P(H)*+*,-*,./ 1as alle&edl' issued 1ith &rave abuse of discretion because it reco22ended the a1ard of the contract to private respondent !hina Road 9 "rid&e !orporation 1hose bid 1as 2ore than P/,, 2illion overpriced based on the +"!. +s such, the a1ard is alle&edl' ille&al and unconscionable. In this connection, the petitioners opine that the contract subse7uentl' entered into b' and bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation is void ab initio for bein& prohibited b' R+ ;.<-. The' stress that Section E. thereof e?pressl' provides that Dbid prices that e?ceed this ceilin& shall be dis7ualified outri&ht fro2 participatin& in the biddin&.D The upper li2it or ceilin& is called the +"! and since the bid of private respondent !hina Road 9 "rid&e !orporation e?ceeded the +"! for the !P I pro=ect, it should have been alle&edl' dis7ualified fro2 the biddin& process and should not, b' la1, have been a1arded the said contract. The' invo%e +rticle .-,; of the !ivil !odeB +RT. .-,;. The follo1in& contracts are ine?istent and void fro2 the be&innin&B 3.4 Those 1hose cause, ob=ect or purpose is contrar' to la1, 2orals, &ood custo2s, public order or public polic'C 3/4 Those 1hich are absolutel' si2ulated or fictitiousC 3E4 Those 1hose cause or ob=ect did not e?ist at the ti2e of the transactionC 3-4 Those 1hose ob=ect is outside the co22erce of 2enC 3$4 Those 1hich conte2plate an i2possible serviceC

3#4 Those 1here the intention of the parties relative to the principal ob=ect of the contract cannot be ascertainedC 304 Those e?pressl' prohibited or declared void b' la1. 6or violatin& the above provision, the contract bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation is alle&edl' ine?istent and void ab initio and can produce no effects 1hatsoever. It is the contention of the petitioners that R+ ;.<- is applicable to both local* and forei&n*funded procure2ent contracts. The' cite the follo1in& e?cerpt of the deliberations of the "ica2eral !onference !o22ittee on the Disa&reein& Provisions of Senate "ill No. //-< and House "ill No. -<,;B/, R P. +"+@+. Mr. !hair2an, can 1e =ust propose additional a2end2entsM !an 1e &o bac% to Section -, Mr. !hair2anM TH !H+IRM+N 3S N. +N>+R+4. SectionM Section ano, Del, -M Definition L definition of ter2s. R P. +"+@+. Sa House bill, it is sa scope and application. TH !H+IRM+N 3S N. +N>+R+4. O%a'. R P. +"+@+. It should read as follo1sB DThis +ct shall appl' to the procure2ent of &oods, supplies and 2aterials, infrastructure pro=ects and consultin& services re&ardless of fundin& source 1hether local or forei&n b' the &overn2ent.D TH !H+IRM+N 3S N. +N>+R+4. O%a', accepted. 5e accept. The Senate accepts it. /. ??? ??? ??? TH !H+IRM+N 3S N +N>+R+4. (ust ta%e note of that ano. Med'o n&a proble2atic N'an eh. No1, =ust for the record Del, can 'ou repeat a&ain the =ustification for includin& forei&n funded contracts 1ithin the scope para 2alina1 because the 5orld "an% da1 2i&ht raise so2e ob=ection to it. R P. +"+@+. 5ell, Mr. !hair2an, 1e should include forei&n funded pro=ects %asi these are the bi& pro=ects. To &ive an e?a2ple, if 'ou allo1 bids above &overn2ent esti2ate, letAs sa' ta%e the case of $,, 2illion pro=ect, included in that $,, 2illion is the /, percent profit. If 'ou allo1 the2 to bid above &overn2ent esti2ate, the' 1ill add another sa' /< percent of 3sic4 E, percent, E, percent of $,, 2illion is another .$, 2illion. Ito, this is a rich source of &raft 2one', are&luhan na lan&, .$, 2illion, five contractors 1ill &ather, DO eto /, 2illion, /, 2illion, /, 2illion.D So, it is ri&&ed. N@un an& practice na nan&'a'ari. If 1e eli2inate that, if 1e have a ceilin& then, it 1ill not be ver' te2ptin& %asi 1alan& e?tra 2one' na p1eden& ibi&a' sa iban& contractor. So this pro2ote 3sic4 collusion a2on& bidders, of course, 1ith the cooperation of irresponsible officials of so2e a&encies. So 1e should have a ceilin& to include forei&n funded pro=ects.// The petitioners insist that )oan +&ree2ent No. PH*P/,- bet1een the ("I! and the Philippine >overn2ent is neither a treat', an international nor an e?ecutive a&ree2ent that 1ould bar the application of R+ ;.<-. The' point out that to be considered a treat', an international or an e?ecutive a&ree2ent, the parties 2ust be t1o soverei&ns or States 1hereas in the case of )oan

+&ree2ent No. PH*P/,-, the parties are the Philippine >overn2ent and the ("I!, a ban%in& a&enc' of (apan, 1hich has a separate =uridical personalit' fro2 the (apanese >overn2ent. The' further insist on the applicabilit' of R+ ;.<- contendin& that 1hile it too% effect on (anuar' /#, /,,E/E and )oan +&ree2ent No. PH*P/,- 1as e?ecuted prior thereto or on Dece2ber /<, .;;;, the actual procure2ent or a1ard of the contract to private respondent !hina Road 9 "rid&e !orporation 1as done after the effectivit' of R+ ;.<-. The said la1 is alle&edl' specific as to its application, 1hich is on the actual procure2ent of infrastructure and other pro=ects onl', and not on the loan a&ree2ents attached to such pro=ects. Thus, the petition onl' pra's for the annul2ent of Resolution No. P(H)*+*,-*,./ as 1ell as the contract bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation. The petitioners clarif' that the' do not pra' for the annul2ent of )oan +&ree2ent No. PH*P/,-. Since the sub=ect procure2ent and a1ard of the contract 1ere done after the effectivit' of R+ ;.<-, necessaril', the procure2ent rules established b' that la1 alle&edl' appl', and not Presidential Decree No. .$;- 3PD .$;-4 /- and ?ecutive Order No. -, 3 O -,4, series of /,,., /$ as contended b' the respondents. The latter la1s, includin& their i2ple2entin& rules, have alle&edl' been repealed b' R+ ;.<-. ven R+ -<#,, as a2ended, %no1n as the 6orei&n "orro1in&s +ct, the petitioners posit, 2a' have also been repealed or 2odified b' R+ ;.<- insofar as its provisions are inconsistent 1ith the latter. The petitioners also ar&ue that the DI2ple2entin& Rules and Re&ulations 3IRR4 of R+ ;.<-, Other1ise Gno1n as the >overn2ent Procure2ent Refor2 +ct, Part +D 3IRR*+4 cited b' the respondents is not applicable as these rules onl' &overn do2esticall'*funded procure2ent contracts. The' aver that the i2ple2entin& rules to &overn forei&n*funded procure2ent, as in the present case, have 'et to be drafted and in fact, there are concurrent resolutions drafted b' both houses of !on&ress for the Reconvenin& of the (oint !on&ressional Oversi&ht !o22ittee for the for2ulation of the IRR for forei&n*funded procure2ents under R+ ;.<-. The petitioners 2aintain that disburse2ent of public funds to i2ple2ent a patentl' void and ille&al contract is itself ille&al and 2ust be en=oined. The' brin& to the !ourtAs attention the fact that the 1or%s on the !P I pro=ect have alread' co22enced as earl' as October /,,-. The' thus ur&e the !ourt to issue a 1rit of certiorari to set aside Resolution No. P(H)*+*,-*,./ as 1ell as to declare null and void the contract entered into bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation. The' also pra' for the issuance of a te2porar' restrainin& order and, eventuall', a 1rit of prohibition to per2anentl' en=oin the DP5H fro2 i2ple2entin& Resolution No. P(H)*+*,-* ,./ and its contract 1ith private respondent !hina Road 9 "rid&e !orporation as 1ell as the D"M fro2 disbursin& funds for the said purpose. The RespondentsA !ounter*+r&u2ents The public respondents, na2el' the DP5H, D"M and DO6, and their respective na2ed officials, throu&h the Office of the Solicitor >eneral, ur&e the !ourt to dis2iss the petition on &rounds that the petitioners have no locus standi and, in an' case, Resolution No. P(H)*+*,-*,./ and the contract bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation are valid. +ccordin& to the public respondents, a ta?pa'erAs locus standi 1as reco&ni8ed in the follo1in& casesB 3a4 1here a ta? 2easure is assailed as unconstitutionalC /# 3b4 1here there is a 7uestion of validit' of election la1sC/0 3c4 1here le&islators 7uestioned the validit' of an' official action upon the clai2 that it infrin&es on their prero&atives as le&islatorsC /< 3d4 1here there is a clai2 of ille&al disburse2ent or 1asta&e of public funds throu&h the enforce2ent of an invalid or unconstitutional la1C/; 3e4 1here it involves the ri&ht of 2e2bers of the Senate or House of Representatives to 7uestion the validit' of a presidential veto or condition i2posed on an ite2 in an appropriation billCE, or 3f4 1here it involves an invalid la1, 1hich 1hen enforced 1ill put the petitioner in i22inent

dan&er of sustainin& so2e direct in=ur' as a result thereof, or that he has been or is about to be denied so2e ri&ht or privile&e to 1hich he is la1full' entitled or that he is about to be sub=ected to so2e burdens or penalties b' reason of the statute co2plained of. E. None of the above considerations alle&edl' obtains in the present case. It is also the vie1 of the public respondents that the fact that petitioner +ba'a 1as a for2er la12a%er 1ould not suffice to confer locus standi on hi2self. Me2bers of !on&ress 2a' properl' challen&e the validit' of an official act of an' depart2ent of the &overn2ent onl' upon sho1in& that the assailed official act affects or i2pairs their ri&hts and prero&atives as le&islators. The public respondents further assail the standin& of the petitioners to file the instant suit clai2in& that the' failed to alle&e an' specific in=ur' suffered nor an interest that is direct and personal to the2. If at all, the interest or in=uries clai2ed b' the petitioners are alle&edl' 2erel' of a &eneral interest co22on to all 2e2bers of the public. Their interest is alle&edl' too va&ue, hi&hl' speculative and uncertain to satisf' the re7uire2ents of locus standi. The public respondents find it note1orth' that the petitioners do not raise issues of constitutionalit' but onl' of contract la1, 1hich the petitioners not bein& privies to the a&ree2ent cannot raise. This is follo1in& the principle that a stran&er to a contract cannot sue either or both the contractin& parties to annul and set aside the sa2e e?cept 1hen he is pre=udiced on his ri&hts and can sho1 detri2ent 1hich 1ould positivel' result to hi2 fro2 the i2ple2entation of the contract in 1hich he has no intervention. There bein& no particulari8ed interest or ele2ental substantial in=ur' necessar' to confer locus standi, the public respondents i2plore the !ourt to dis2iss the petition. On the 2erits, the public respondents 2aintain that the i2position of ceilin&s or upper li2its on bid prices in R+ ;.<- does not appl' because the !P I pro=ect and the entire !atanduanes !ircu2ferential Road I2prove2ent Pro=ect, financed b' )oan +&ree2ent No. PH*P/,- e?ecuted bet1een the Philippine >overn2ent and the ("I!, is &overned b' the latterAs Procure2ent >uidelines 1hich precludes the i2position of ceilin&s on bid prices. Section $.,# of the ("I! Procure2ent >uidelines readsB Section $.,#. valuation and !o2parison of "ids. ??? 3e4 +n' procedure under 1hich bids above or belo1 a predeter2ined bid value assess2ent are auto2aticall' dis7ualified is not per2itted. It 1as e?plained that other forei&n ban%s such as the +sian Develop2ent "an% 3+D"4 and the 5orld "an% 35"4 si2ilarl' prohibit the brac%etin& or i2position of a ceilin& on bid prices. The public respondents stress that it 1as pursuant to )oan +&ree2ent No. PH*P/,- that the assailed Resolution No. P(H)*+*,-*,./ and the subse7uent contract bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation 2ateriali8ed. The' li%e1ise aver that )oan +&ree2ent No. PH*P/,- is &overned b' R+ -<#,, as a2ended, or the 6orei&n "orro1in&s +ct. Section - thereof statesB S !. -. In the contractin& of an' loan, credit or indebtedness under this +ct, the President of the Philippines 2a', 1hen necessar', a&ree to 1aive or 2odif', the application of an' la1 &rantin& preferences or i2posin& restrictions on international co2petitive biddin&, includin& a2on& others J+ct No. -/E;, !o22on1ealth +ct No. .E<K, the provisions of J!+ $-.K, insofar as such provisions

do not pertain to constructions pri2aril' for national defense or securit' purposes, JR+ $.<EKC Provided, ho1ever, That as far as practicable, utili8ation of the services of 7ualified do2estic fir2s in the prosecution of pro=ects financed under this +ct shall be encoura&edB Provided, further, That in case 1here international co2petitive biddin& shall be conducted preference of at least fifteen per centu2 shall be &ranted in favor of articles, 2aterials or supplies of the &ro1th, production or 2anufacture of the PhilippinesB Provided, finall', That the 2ethod and procedure in co2parison of bids shall be the sub=ect of a&ree2ent bet1een the Philippine >overn2ent and the lendin& institution. DO( Opinion No. -#, Series of .;<0, is relied upon b' the public respondents as it opined that an a&ree2ent for the e?clusion of forei&n assisted pro=ects fro2 the covera&e of local biddin& re&ulations does not contravene e?istin& le&islations because the statutor' basis for forei&n loan a&ree2ents is R+ -<#,, as a2ended, and under Section - thereof, the President is e2po1ered to 1aive the application of an' la1 i2posin& restrictions on the procure2ent of &oods and services pursuant to such loans. Me2orandu2 !ircular Nos. .,- and .,<, issued b' the President, to clarif' R+ -<#,, as a2ended, and PD .$;-, relative to the a1ard of forei&n*assisted pro=ects, are also invo%ed b' the public respondents, to 1itB Me2orandu2 !ircular No. .,-B In vie1 of the provisions of Section - of Republic +ct No. -<#,, as a2ended, other1ise %no1n as the D6orei&n "orro1in&s +ctD ??? It is hereb' clarified that forei&n*assisted infrastructure pro=ects 2a' be e?e2pted fro2 the application for the pertinent provisions of the I2ple2entin& Rules and Re&ulations 3IRR4 of Presidential Decree 3P.D.4 No. .$;- relative to the 2ethod and procedure in the co2parison of bids, 1hich 2atter 2a' be the sub=ect of a&ree2ent bet1een the infrastructure a&enc' concerned and the lendin& institution. It should be 2ade clear ho1ever that public biddin& is still re7uired and can onl' be 1aived pursuant to e?istin& la1s. Me2orandu2 !ircular No. .,<B In vie1 of the provisions of Section - of Republic +ct No. -<#,, as a2ended, other1ise %no1n as the D6orei&n "orro1in&s +ctD, it is hereb' clarified that, for pro=ects supported in 1hole or in part b' forei&n assistance a1arded throu&h international or local co2petitive biddin&, the &overn2ent a&enc' concerned 2a' a1ard the contract to the lo1est evaluated bidder at his bid price consistent 1ith the provisions of the applicable loan:&rant a&ree2ent. Specificall', 1hen the loan:&rant a&ree2ent so stipulates, the &overn2ent a&enc' concerned 2a' a1ard the contract to the lo1est bidder even if his:its bid e?ceeds the approved a&enc' esti2ate. It is understood that the concerned &overn2ent a&enc' shall, as far as practicable, adhere closel' to the i2ple2entin& rules and re&ulations of Presidential Decree No. .$;- durin& loan:&rant ne&otiation and the i2ple2entation of the pro=ects.E/ The public respondents characteri8e forei&n loan a&ree2ents, includin& )oan +&ree2ent No. PH* P/,-, as e?ecutive a&ree2ents and, as such, should be observed pursuant to the funda2ental

principle in international la1 of pacta sunt servanda. EE The' cite Section /, of +rticle VII of the !onstitution as &ivin& the President the authorit' to contract forei&n loansB S !. /,. The President 2a' contract or &uarantee forei&n loans on behalf of the Republic of the Philippines 1ith the prior concurrence of the Monetar' "oard, and sub=ect to such li2itations as 2a' be provided b' la1. The Monetar' "oard shall, 1ithin thirt' da's fro2 the end of ever' 7uarter of the calendar 'ear, sub2it to the !on&ress a co2plete report of its decisions on applications for loans to be contracted or &uaranteed b' the >overn2ent or >overn2ent*o1ned and !ontrolled !orporations 1hich 1ould have the effect of increasin& the forei&n debt, and containin& other 2atters as 2a' be provided b' la1. The !onstitution, the public respondents e2phasi8e, reco&ni8es the enforceabilit' of e?ecutive a&ree2ents in the sa2e 1a' that it reco&ni8es &enerall' accepted principles of international la1 as for2in& part of the la1 of the land.E- This reco&nition alle&edl' buttresses the bindin& effect of e?ecutive a&ree2ents to 1hich the Philippine >overn2ent is a si&nator'. It is pointed out b' the public respondents that e?ecutive a&ree2ents are essentiall' contracts &overnin& the ri&hts and obli&ations of the parties. + contract, bein& the la1 bet1een the parties, 2ust be faithfull' adhered to b' the2. >uided b' the funda2ental rule of pacta sunt servanda, the Philippine >overn2ent bound itself to perfor2 in &ood faith its duties and obli&ations under )oan +&ree2ent No. PH*P/,-. The public respondents further ar&ue a&ainst the applicabilit' of R+ ;.<- statin& that it 1as si&ned into la1 on (anuar' .,, /,,E.E$ On the other hand, )oan +&ree2ent No. PH*P/,- 1as e?ecuted on Dece2ber /<, .;;;, 1here the la1s then in force on &overn2ent procure2ents 1ere PD .$;- and O -,. The latter la1 3 O -,4, in particular, e?cluded fro2 its application Dan' e?istin& and future &overn2ent co22it2ents 1ith respect to the biddin& and a1ard of contracts financed partl' or 1holl' 1ith funds fro2 international financin& institutions as 1ell as fro2 bilateral and other si2ilar forei&n sources.D The applicabilit' of O -,, not R+ ;.<-, is alle&edl' bolstered b' the fact that the DInvitation to Pre7ualif' and to "idD for the i2ple2entation of the !P I pro=ect 1as published in t1o leadin& national ne1spapers, na2el', the Manila Ti2es and Manila Standard on Nove2ber //, /; and Dece2ber $, /,,/, or before the si&nin& into la1 of R+ ;.<- on (anuar' .,, /,,E. In this connection, the public respondents point to Section 00 of IRR*+, 1hich readsB S !. 00. Transitor' !lause. L In all procure2ent activities, if the advertise2ent or invitation for bids 1as issued prior to the effectivit' of the +ct, the provisions of O -, and its IRR, PD .$;- and its IRR, R+ 0.#, and its IRR, or other applicable la1s as the case 2a' be, shall &overn. In cases 1here the advertise2ents or invitations for bids 1ere issued after the effectivit' of the +ct but before the effectivit' of this IRR*+, procurin& entities 2a' continue adoptin& the procure2ent procedures, rules and re&ulations provided in O -, and its IRR, or other applicable la1s, as the case 2a' be. Section - of R+ ;.<- is also invo%ed b' the public respondents as it providesB S !. -. Scope and +pplications. L This +ct shall appl' to the Procure2ent of Infrastructure Pro=ects, >oods and !onsultin& Services, re&ardless of source of funds, 1hether local or forei&n, b' all branches and instru2entalities of &overn2ent, its depart2ents, offices and a&encies, includin& &overn2ent*o1ned and:or Lcontrolled corporations and local &overn2ent units, sub=ect to the provisions of !o22on1ealth +ct No. .E<. +n' treat' or international or e?ecutive a&ree2ent

affectin& the sub=ect 2atter of this +ct to 1hich the Philippine &overn2ent is a si&nator' shall be observed. It is also the position of the public respondents that even &rantin& ar&uendo that )oan +&ree2ent No. PH*P/,- 1ere an ordinar' loan contract, still, R+ ;.<- is inapplicable under the non*i2pair2ent clauseE# of the !onstitution. The said loan a&ree2ent e?pressl' provided that the procure2ent of &oods and services for the pro=ect financed b' the sa2e shall be &overned b' the >uidelines for Procure2ent under O !6 )oans dated Dece2ber .;;0. 6urther, Section $.,# of the ("I! Procure2ent >uidelines cate&oricall' provides that DJaKn' procedure under 1hich bids above or belo1 a predeter2ined bid value assess2ent are auto2aticall' dis7ualified is not per2itted.D The public respondents e?plain that since the contract is the la1 bet1een the parties and )oan +&ree2ent No. PH*P/,- states that the ("I! Procure2ent >uidelines shall &overn the partiesA relationship and further dictates that there be no ceilin& price for the biddin&, it naturall' follo1s that an' subse7uent la1 passed contrar' to the letters of the said contract 1ould have no effect 1ith respect to the partiesA ri&hts and obli&ations arisin& therefro2. To insist on the application of R+ ;.<- on the biddin& for the !P I pro=ect 1ould, not1ithstandin& the ter2s and conditions of )oan +&ree2ent No. PH*P/,-, alle&edl' violate the constitutional provision on non*i2pair2ent of obli&ations and contracts, and destro' vested ri&hts dul' ac7uired under the said loan a&ree2ent. )astl', the public respondents den' that there 1as ille&al disburse2ent of public funds b' the D"M. The' asseverate that all the releases 2ade b' the D"M for the i2ple2entation of the entire +rterial Road )in%s Pro=ect L Phase IV, 1hich includes the !atanduanes !ircu2ferential Road I2prove2ent Pro=ect, 1ere covered b' the necessar' appropriations 2ade b' la1, specificall' the >eneral +ppropriations +ct 3>++4. 6urther, the re7uire2ents and procedures prescribed for the release of the said funds 1ere dul' co2plied 1ith. 6or its part, private respondent !hina Road 9 "rid&e !orporation si2ilarl' assails the standin& of the petitioners, either as ta?pa'ers or, in the case of petitioner +ba'a, as a for2er la12a%er, to file the present suit. In addition, it is also alle&ed that, b' filin& the petition directl' to this !ourt, the petitioners failed to observe the hierarch' of courts. On the 2erits, private respondent !hina Road 9 "rid&e !orporation asserts that the applicable la1 to &overn the biddin& of the !P I pro=ect 1as O -,, not R+ ;.<-, because the for2er 1as the la1 &overnin& the procure2ent of &overn2ent pro=ects at the ti2e that it 1as bidded out. O -, 1as issued b' the Office of the President on October <, /,,. and Section . thereof states thatB S !. .. Scope and +pplication. This ?ecutive Order shall appl' to the procure2ent ofB 3a4 &oods, supplies, 2aterials and related servicesC 3b4 civil 1or%sC and 3c4 consultin& services, b' all National >overn2ent a&encies, includin& State Fniversities and !olle&es 3SF!s4, >overn2ent*O1ned or !ontrolled !orporations 3>O!!s4 and >overn2ent 6inancial Institutions 3>6Is4, hereb' referred to as the N+&encies.A This ?ecutive Order shall cover the procure2ent process fro2 the pre* procure2ent conference up to the a1ard of contract. ??? The Invitation to Pre7ualif' and to "id 1as first published on Nove2ber //, /,,/. On the other hand, R+ ;.<- 1as si&ned into la1 onl' on (anuar' .,, /,,E. Since the la1 in effect at the ti2e the procure2ent process 1as initiated 1as O -,, private respondent !hina Road 9 "rid&e !orporation

sub2its that it should be the said la1 1hich should &overn the entire procure2ent process relative to the !P I pro=ect. O -, e?pressl' reco&ni8es as an e?ception fro2 the application of the provisions thereof on approved bud&et ceilin&s, those pro=ects financed b' international financin& institutions 3I6Is4 and forei&n bilateral sources. Section . thereof, 7uoted in part earlier, further statesB S !. .. Scope and +pplication. ? ? ? Nothin& in this Order shall ne&ate an' e?istin& and future &overn2ent co22it2ents 1ith respect to the biddin& and a1ard of contracts financed partl' or 1holl' 1ith funds fro2 international financin& institutions as 1ell as fro2 bilateral and other si2ilar forei&n sources. Section ../ of the I2ple2entin& Rules and Re&ulations of O -, is li%e1ise invo%ed as it providesB 6or procure2ent financed 1holl' or partl' fro2 Official Develop2ent +ssistance 3OD+4 funds fro2 International 6inancin& Institutions 3I6Is4, as 1ell as fro2 bilateral and other si2ilar forei&n sources, the correspondin& loan:&rant a&ree2ent &overnin& said funds as ne&otiated and a&reed upon b' and bet1een the >overn2ent and the concerned I6I shall be observed. Private respondent !hina Road 9 "rid&e !orporation thus postulates that follo1in& O -,, the procure2ent of &oods and services for the !P I pro=ect should be &overned b' the ter2s and conditions of )oan +&ree2ent No. PH*P/,- entered into bet1een the ("I! and the Philippine >overn2ent. Pertinentl', Section $.,# of the ("I! Procure2ent >uidelines prohibits the settin& of ceilin&s on bid prices. Private respondent !hina Road 9 "rid&e !orporation clai2s that 1hen it sub2itted its bid for the !P I pro=ect, it relied in &ood faith on the provisions of O -,. It 1as alle&edl' on the basis of the said la1 that the DP5H a1arded the pro=ect to private respondent !hina Road 9 "rid&e !oporation even if its bid 1as hi&her than the +"!. Fnder the circu2stances, R+ ;.<- could not be applied retroactivel' for to do so 1ould alle&edl' i2pair the vested ri&hts of private respondent !hina Road 9 "rid&e !orporation arisin& fro2 its contract 1ith the DP5H. It is also contended b' private respondent !hina Road 9 "rid&e !orporation that even assu2in& ar&uendo that R+ ;.<- could be applied retroactivel', it is still the ter2s of )oan +&ree2ent No. PH* P/,- 1hich should &overn the procure2ent of &oods and services for the !P I pro=ect. It supports its theor' b' characteri8in& the said loan a&ree2ent, e?ecuted pursuant to the ?chan&e of Notes bet1een the >overn2ent of (apan and the Philippine >overn2ent, as an e?ecutive a&ree2ent. Private respondent !hina Road 9 "rid&e !orporation, li%e the public respondents, cites R+ -<#, as the basis for the ?chan&e of Notes and )oan +&ree2ent No. PH*P/,-. +s an international or e?ecutive a&ree2ent, the ?chan&e of Notes and )oan +&ree2ent No. PH*P/,- alle&edl' created a le&all' bindin& obli&ation on the parties. The follo1in& e?cerpt of the deliberations of the "ica2eral !onference !o22ittee on the Disa&reein& Provision of Senate "ill No. //-< and House "ill No. -<,; is cited b' private respondent !hina Road 9 "rid&e !orporation to support its contention that it is the intent of the la12a%ers to e?clude fro2 the application of R+ ;.<- those forei&n*funded pro=ectsB ???

R P. M+R!OS. @es, Mr. !hair2an, to respond and to put into the record, a =ustification for the inclusion of forei&n contracts, 2a' 1e =ust state that forei&n contracts have, of course, been brou&ht into the a2bit of the la1 because of the 6ilipino counterpart for this forei&n pro=ects, the' are no lon&er strictl' forei&n in nature but fall under the la1s of the Philippine &overn2ent. TH !H+IRM+N 3S N. +N>+R+4. O%a'. I thin% thatAs prett' clear. I thin% the possible concern is that so2e OD+ are 1ith strin&s attached especiall' the (apanese. The (apanese are 7uite strict about that, that the' are 3sic4 even provide the architect and the desi&n, etcetera, plus, of course, the &oods that 1ill be supplied. No1, I thin% 1eAve alread' provided that this is open to all and 1e 1ill reco&ni8e our international a&ree2ents so that this bill 1ill not also restrict the flo1 of forei&n fundin&, because so2e countries no1 2a%e it a condition that the' suppl' both services and &oods especiall' the (apanese. So I thin% 1e can put a sentence that 1e continue to honor our international obli&ations, di ba )auraM MR. N!+RN+!ION. +ctuall', sub=ect to an' treat'. TH !H+IRM+N 3S N. +N>+R+4. N@un pala eh. That should alla' their an?iet' and concern. O%a', buti na lan& for the record para 2ala2an nila na 1e are conscious sa OD+. E0 Private respondent !hina Road 9 "rid&e !orporation sub2its that based on the provisions of the ?chan&e of Notes and )oan +&ree2ent No. PH*P/,-, it 1as ri&htfull' and le&all' a1arded the !P I pro=ect. It ur&es the !ourt to dis2iss the petition for lac% of 2erit. The !ourtAs Rulin&s Petitioners, as ta?pa'ers, possess locus standi to file the present suit "riefl' stated, locus standi is Da ri&ht of appearance in a court of =ustice on a &iven 7uestion.D E< More particularl', it is a part'As personal and substantial interest in a case such that he has sustained or 1ill sustain direct in=ur' as a result of the &overn2ental act bein& challen&ed. It calls for 2ore than =ust a &enerali8ed &rievance. The ter2 DinterestD 2eans a 2aterial interest, an interest in issue affected b' the decree, as distin&uished fro2 2ere interest in the 7uestion involved, or a 2ere incidental interest.E; Standin& or locus standi is a peculiar concept in constitutional la1 -, and the rationale for re7uirin& a part' 1ho challen&es the constitutionalit' of a statute to alle&e such a personal sta%e in the outco2e of the controvers' is Dto assure that concrete adverseness 1hich sharpens the presentation of issues upon 1hich the court so lar&el' depends for illu2ination of difficult constitutional 7uestions.D-. )ocus standi, ho1ever, is 2erel' a 2atter of procedure-/ and it has been reco&ni8ed that in so2e cases, suits are not brou&ht b' parties 1ho have been personall' in=ured b' the operation of a la1 or an' other &overn2ent act but b' concerned citi8ens, ta?pa'ers or voters 1ho actuall' sue in the public interest.-E !onse7uentl', the !ourt, in a catena of cases,-- has invariabl' adopted a liberal stance on locus standi, includin& those cases involvin& ta?pa'ers. The prevailin& doctrine in ta?pa'erAs suits is to allo1 ta?pa'ers to 7uestion contracts entered into b' the national &overn2ent or &overn2ent* o1ned or controlled corporations alle&edl' in contravention of la1.-$ + ta?pa'er is allo1ed to sue 1here there is a clai2 that public funds are ille&all' disbursed, or that public 2one' is bein& deflected to an' i2proper purpose, or that there is a 1asta&e of public

funds throu&h the enforce2ent of an invalid or unconstitutional la1. -# Si&nificantl', a ta?pa'er need not be a part' to the contract to challen&e its validit'. -0 In the present case, the petitioners are suin& as ta?pa'ers. The' have sufficientl' de2onstrated that, not1ithstandin& the fact that the !P I pro=ect is pri2aril' financed fro2 loans obtained b' the &overn2ent fro2 the ("I!, nonetheless, ta?pa'ersA 2one' 1ould be or is bein& spent on the pro=ect considerin& that the Philippine >overn2ent is re7uired to allocate a peso*counterpart therefor. The public respondents the2selves ad2it that appropriations for these forei&n*assisted pro=ects in the >++ are co2posed of the loan proceeds and the peso*counterpart. The counterpart funds, the Solicitor >eneral e?plains, refer to the co2ponent of the pro=ect cost to be financed fro2 &overn2ent*appropriated funds, as part of the &overn2entAs co22it2ent in the i2ple2entation of the pro=ect.-< Hence, the petitioners correctl' asserted their standin& since a part of the funds bein& utili8ed in the i2ple2entation of the !P I pro=ect parta%es of ta?pa'ersA 2one'. 6urther, the serious le&al 7uestions raised b' the petitioners, e.&., 1hether R+ ;.<- applies to the !P I pro=ect, in particular, and to forei&n*funded &overn2ent pro=ects, in &eneral, and the fact that public interest is indubitabl' involved considerin& the public e?penditure of 2illions of pesos, 1arrant the !ourt to adopt in the present case its liberal polic' on locus standi. In an' case, for reasons 1hich 1ill be discussed shortl', the substantive ar&u2ents raised b' the petitioners fail to persuade the !ourt as it holds that Resolution No. P(H)*+*,-*,./ is valid. +s a corollar', the subse7uent contract entered into b' and bet1een the DP5H and private respondent !hina Road 9 "rid&e !orporation is li%e1ise valid. Histor' of Philippine Procure2ent )a1s It is necessar', at this point, to &ive a brief histor' of Philippine la1s pertainin& to procure2ent throu&h public biddin&. The Fnited States Philippine !o22ission introduced the +2erican practice of public biddin& throu&h +ct No. //, enacted on October .$, .;,,, b' re7uirin& the !hief n&ineer, Fnited States +r2' for the Division of the Philippine Islands, actin& as purchasin& a&ent under the control of the then Militar' >overnor, to advertise and call for a co2petitive biddin& for the purchase of the necessar' 2aterials and lands to be used for the construction of hi&h1a's and brid&es in the Philippine Islands.-; +ct No. 0-, enacted on (anuar' /., .;,. b' the Philippine !o22ission, re7uired the >eneral Superintendent of Public Instruction to purchase office supplies throu&h co2petitive public biddin&.$, +ct No. </, approved on (anuar' E., .;,., and +ct No. <E, approved on 6ebruar' #, .;,., re7uired the 2unicipal and provincial &overn2ents, respectivel', to hold co2petitive public biddin&s in the 2a%in& of contracts for public 1or%s and the purchase of office supplies.$. On (une /., .;,., the Philippine !o22ission, throu&h +ct No. .-#, created the "ureau of Suppl' and 1ith its creation, public biddin& beca2e a popular polic' in the purchase of supplies, 2aterials and e7uip2ent for the use of the national &overn2ent, its subdivisions and instru2entalities. $/ On 6ebruar' E, .;E#, then President Manuel ). Oue8on issued ?ecutive Order No. .# declarin& as a 2atter of &eneral polic' that &overn2ent contracts for public service or for furnishin& supplies, 2aterials and e7uip2ent to the &overn2ent should be sub=ected to public biddin&. $E The re7uire2ent of public biddin& 1as li%e1ise i2posed for public 1or%s of construction or repair pursuant to the Revised +d2inistrative !ode of .;.0. Then President Diosdado Macapa&al, in ?ecutive Order No. -, dated (une ., .;#E, reiterated the directive that no &overn2ent contract for public service or for furnishin& supplies, 2aterials and e7uip2ent to the &overn2ent or an' of its branches, a&encies or instru2entalities, should be entered into 1ithout public biddin& e?cept for ver' e?traordinar' reasons to be deter2ined b' a

!o22ittee constituted thereunder. Then President 6erdinand Marcos issued PD .$;- prescribin& &uidelines for &overn2ent infrastructure pro=ects and Section -$- thereof stated that the' should &enerall' be underta%en b' contract after co2petitive public biddin&. Then President !ora8on +7uino issued ?ecutive Order No. E,. 3.;<04 prescribin& &uidelines for &overn2ent ne&otiated contracts. Pertinentl', Section #/ of the +d2inistrative !ode of .;<0 reiterated the re7uire2ent of co2petitive public biddin& in &overn2ent pro=ects. In .;;,, !on&ress passed R+ #;$0,$$ 1hich authori8ed the financin&, construction, operation and 2aintenance of infrastructure b' the private sector. R+ 0.#, 1as li%e1ise enacted b' !on&ress in .;;. and it contains provisions &overnin& the procure2ent of &oods and locall'*funded civil 1or%s b' the local &overn2ent units. Then President 6idel Ra2os issued ?ecutive Order No. E,/ 3.;;#4, providin& &uidelines for the procure2ent of &oods and supplies b' the national &overn2ent. Then President (oseph =ercito strada issued ?ecutive Order No. /,. 3/,,,4, providin& additional &uidelines in the procure2ent of &oods and supplies b' the national &overn2ent. Thereafter, he issued ?ecutive Order No. /#/ 3/,,,4 a2endin& O E,/ 3.;;#4 and O /,. 3/,,,4. On October <, /,,., President >loria Macapa&al*+rro'o issued O -,, the la1 2ainl' relied upon b' the respondents, entitled !onsolidatin& Procure2ent Rules and Procedures for +ll National >overn2ent +&encies, >overn2ent*O1ned or !ontrolled !orporations and >overn2ent 6inancial Institutions, and Re7uirin& the Fse of the >overn2ent Procure2ent S'ste2. It accordin&l' repealed, a2ended or 2odified all e?ecutive issuances, orders, rules and re&ulations or parts thereof inconsistent there1ith.$# On (anuar' .,, /,,E, President +rro'o si&ned into la1 R+ ;.<-. It too% effect on (anuar' /#, /,,-, or fifteen da's after its publication in t1o ne1spapers of &eneral circulation. $0 It e?pressl' repealed, a2on& others, O -,, O /#/ 3/,,,4, O E,/3.;;#4 and PD .$;-, as a2endedB S !. 0#. Repealin& !lause. PThis la1 repeals ?ecutive Order No. -,, series of /,,., entitled D!onsolidatin& Procure2ent Rules and Procedures for +ll National >overn2ent +&encies, >overn2ent O1ned or !ontrolled !orporations and:or >overn2ent 6inancial Institutions, and Re7uirin& the Fse of the >overn2ent lectronic Procure2ent S'ste2DC ?ecutive Order No. /#/, series of .;;#, entitled D+2endin& ?ecutive Order No. E,/, series of .;;#, entitled Providin& Policies, >uidelines, Rules and Re&ulations for the Procure2ent of >oods:Supplies b' the National >overn2entD and Section E of ?ecutive Order No. /,., series of /,,,, entitled DProvidin& +dditional Policies and >uidelines in the Procure2ent of >oods:Supplies b' the National >overn2entDC ?ecutive Order No. E,/, series of .;;#, entitled DProvidin& Policies, >uidelines, Rules and Re&ulations for the Procure2ent of >oods:Supplies b' the National >overn2entD and Presidential Decree No. .$;- dated (une .., .;0<, entitled DPrescribin& Policies, >uidelines, Rules and Re&ulations for >overn2ent Infrastructure !ontracts.D This la1 a2ends Title Si?, "oo% T1o of Republic +ct No. 0.#,, other1ise %no1n as the D)ocal >overn2ent !ode of .;;.DC the relevant provisions of ?ecutive Order No. .#-, series of .;<0, entitled DProvidin& +dditional >uidelines in the Processin& and +pproval of !ontracts of the National >overn2entDC and the relevant provisions of Republic +ct No. 0<;< dated 6ebruar' /E, .;;$, entitled D+n +ct Providin& for the Moderni8ation of the +r2ed 6orces of the Philippines and for Other Purposes.D +n' other la1, presidential decree or issuance, e?ecutive order, letter of instruction, ad2inistrative order, procla2ation, charter, rule or re&ulation and:or parts thereof contrar' to or inconsistent 1ith the provisions of this +ct is hereb' repealed, 2odified or a2ended accordin&l'. In addition to these la1s, R+ -<#,, as a2ended, 2ust be 2entioned as Section - thereof provides that DJiKn the contractin& of an' loan, credit or indebtedness under this +ct, the President of the

Philippines 2a', 1hen necessar', a&ree to 1aive or 2odif' the application of an' la1 &rantin& preferences or i2posin& restrictions on international co2petitive biddin& ? ? ? Provided, finall', That the 2ethod and procedure in the co2parison of bids shall be the sub=ect of a&ree2ent bet1een the Philippine >overn2ent and the lendin& institution.D O -,, not R+ ;.<-, is applicable to the procure2ent process underta%en for the !P I pro=ect. R+ ;.<cannot be &iven retroactive application. It is not disputed that 1ith respect to the !P I pro=ect, the Invitation to Pre7ualif' and to "id for its i2ple2entation 1as published in t1o leadin& national ne1spapers, na2el', the Manila Ti2es and Manila Standard on Nove2ber //, /; and Dece2ber $, /,,/. +t the ti2e, the la1 in effect 1as O -,. On the other hand, R+ ;.<- too% effect t1o 2onths later or on (anuar' /#, /,,E. 6urther, its full i2ple2entation 1as even dela'ed as IRR*+ 1as onl' approved b' President +rro'o on Septe2ber .<, /,,E and subse7uentl' published on Septe2ber /E, /,,E in the Manila Ti2es and Mala'a ne1spapers.$< The provisions of O -, appl' to the procure2ent process pertainin& to the !P I pro=ect as it is e?plicitl' provided in Section . thereof thatB S !. .. Scope and +pplication. L This ?ecutive Order shall appl' to see procure2ent of 3a4 &oods, supplies, 2aterials and related serviceC 3b4 civil 1or%sC and 3c4 consultin& services, b' all National >overn2ent a&encies, includin& State Fniversities and !olle&es 3SF!s4, >overn2ent*O1ned or L !ontrolled !orporations 3>O!!s4 and >overn2ent 6inancial Institutions 3>6Is4, hereb' referred to as D+&encies.D This ?ecutive Order shall cover the procure2ent process fro2 the pre*procure2ent conference up to the a1ard of the contract. Nothin& in this Order shall ne&ate an' e?istin& and future &overn2ent co22it2ents 1ith respect to the biddin& and a1ard of contracts financed partl' or 1holl' 1ith funds fro2 international financin& institutions as 1ell as fro2 bilateral and si2ilar forei&n sources. The procure2ent process basicall' involves the follo1in& stepsB 3.4 pre*procure2ent conferenceC 3/4 advertise2ent of the invitation to bidC 3E4 pre*bid conferenceC 3-4 eli&ibilit' chec% of prospective biddersC 3$4 sub2ission and receipt of bidsC 3#4 2odification and 1ithdra1al of bidsC 304 bid openin& and e?a2inationC 3<4 bid evaluationC 3;4 post 7ualificationC 3.,4 a1ard of contract and notice to proceed.$; !learl' then, 1hen the Invitation to Pre7ualif' and to "id for the i2ple2entation of the !P I pro=ect 1as published on Nove2ber //, /; and Dece2ber $, /,,/, the procure2ent process thereof had alread' co22enced and the application of O -, to the procure2ent process for the !P I pro=ect had alread' attached. R+ ;.<- cannot be applied retroactivel' to &overn the procure2ent process relative to the !P I pro=ect because it is 1ell settled that a la1 or re&ulation has no retroactive application unless it e?pressl' provides for retroactivit'.#,Indeed, +rticle - of the !ivil !ode is clear on the 2atterB DJlKa1s shall have no retroactive effect, unless the contrar' is provided.D In the absence of such cate&orical provision, R+ ;.<- 1ill not be applied retroactivel' to the !P I pro=ect 1hose procure2ent process co22enced even before the said la1 too% effect. That the le&islators did not intend R+ ;.<- to have retroactive effect could be &leaned fro2 the IRR* + for2ulated b' the (oint !on&ressional Oversi&ht !o22ittee 3co2posed of the !hair2an of the

Senate !o22ittee on !onstitutional +2end2ents and Revision of )a1s, and t1o 2e2bers thereof appointed b' the Senate President and the !hair2an of the House !o22ittee on +ppropriations, and t1o 2e2bers thereof appointed b' the Spea%er of the House of Representatives4 and the >overn2ent Procure2ent Polic' "oard 3>PP"4. Section 00 of the IRR*+ states, thusB S !. 00. Transitor' !lause In all procure2ent activities, if the advertise2ent or invitation for bids 1as issued prior to the effectivit' of the +ct, the provisions of .O. -, and its IRR, P.D. .$;- and its IRR, R.+. 0.#, and its IRR, or other applicable la1s, as the case 2a' be, shall &overn. In cases 1here the advertise2ents or invitations for bids 1ere issued after the effectivit' of the +ct but before the effectivit' of this IRR*+, procurin& entities 2a' continue adoptin& the procure2ent procedures, rules and re&ulations provided in .O. -, and its IRR, P.D. .$;- and its IRR, R.+. 0.#, and its IRR, or other applicable la1s, as the case 2a' be. In other 1ords, under IRR*+, if the advertise2ent of the invitation for bids 1as issued prior to the effectivit' of R+ ;.<-, such as in the case of the !P I pro=ect, the provisions of O -, and its IRR, and PD .$;- and its IRR in the case of national &overn2ent a&encies, and R+ 0.#, and its IRR in the case of local &overn2ent units, shall &overn. +d2ittedl', IRR*+ covers onl' full' do2esticall'*funded procure2ent activities fro2 procure2ent plannin& up to contract i2ple2entation and that it is e?pressl' stated that IRR*" for forei&n*funded procure2ent activities shall be sub=ect of a subse7uent issuance. #. Nonetheless, there is no reason 1h' the polic' behind Section 00 of IRR*+ cannot be applied to forei&n*funded procure2ent pro=ects li%e the !P I pro=ect. Stated differentl', the polic' on the prospective or non*retroactive application of R+ ;.<- 1ith respect to do2esticall'*funded procure2ent pro=ects cannot be an' different 1ith respect to forei&n*funded procure2ent pro=ects li%e the !P I pro=ect. It 1ould be incon&ruous, even absurd, to provide for the prospective application of R+ ;.<- 1ith respect to do2esticall'*funded procure2ent pro=ects and, on the other hand, as ur&ed b' the petitioners, appl' R+ ;.<retroactivel' 1ith respect to forei&n* funded procure2ent pro=ects. To be sure, the la12a%ers could not have intended such an absurdit'. Thus, in the li&ht of Section . of O -,, Section 00 of IRR*+, as 1ell as the funda2ental rule e2bodied in +rticle - of the !ivil !ode on prospectivit' of la1s, the !ourt holds that the procure2ent process for the i2ple2entation of the !P I pro=ect is &overned b' O -, and its IRR, not R+ ;.<-. Fnder O -,, the a1ard of the contract to private respondent !hina Road 9 "rid&e !orporation is valid Section /$ of O -, provides that DJtKhe approved bud&et of the contract shall be the upper li2it or ceilin& of the bid price. "id prices 1hich e?ceed this ceilin& shall be dis7ualified outri&ht fro2 further participatin& in the biddin&. There shall be no lo1er li2it to the a2ount of the a1ard. ? ? ?D It should be observed that this te?t is al2ost si2ilar to the 1ordin& of Section E. of R+ ;.<-, relied upon b' the petitioners in contendin& that since the bid price of private respondent !hina Road 9 "rid&e !orporation e?ceeded the +"!, then it should not have been a1arded the contract for the !P I pro=ect. Nonetheless, O -, e?pressl' reco&ni8es as an e?ception to its scope and application those &overn2ent co22it2ents 1ith respect to biddin& and a1ard of contracts financed partl' or 1holl'

1ith funds fro2 international financin& institutions as 1ell as fro2 bilateral and other si2ilar forei&n sources. The pertinent portion of Section . of O -, is 7uoted ane1B S !. .. Scope and +pplication. L ? ? ? Nothin& in this Order shall ne&ate an' e?istin& and future &overn2ent co22it2ents 1ith respect to the biddin& and a1ard of contracts financed partl' or 1holl' 1ith funds fro2 international financin& institutions as 1ell as fro2 bilateral and si2ilar forei&n sources. In relation thereto, Section - of R+ -<#,, as a2ended, 1as correctl' cited b' the respondents as li%e1ise authori8in& the President, in the contractin& of an' loan, credit or indebtedness thereunder, D1hen necessar', a&ree to 1aive or 2odif' the application of an' la1 &rantin& preferences or i2posin& restrictions on international co2petitive biddin& ? ? ?.D The said provision of la1 further provides that Dthe 2ethod and procedure in the co2parison of bids shall be the sub=ect of a&ree2ent bet1een the Philippine >overn2ent and the lendin& institution.D !onse7uentl', in accordance 1ith these applicable la1s, the procure2ent of &oods and services for the !P I pro=ect is &overned b' the correspondin& loan a&ree2ent entered into b' the &overn2ent and the ("I!, i.e., )oan +&ree2ent No. PH*P/,-. The said loan a&ree2ent stipulated that the procure2ent of &oods and services for the +rterial Road )in%s Develop2ent Pro=ect 3Phase IV4, of 1hich !P I is a co2ponent, is to be &overned b' the ("I! Procure2ent >uidelines. Section $.,#, Part II 3International !o2petitive "iddin&4 thereof 7uoted earlier readsB Section $.,#. valuation and !o2parison of "ids ??? 3e4 +n' procedure under 1hich bids above or belo1 a predeter2ined bid value assess2ent are auto2aticall' dis7ualified is not per2itted.#/ It is clear that the ("I! Procure2ent >uidelines proscribe the i2position of ceilin&s on bid prices. On the other hand, it en=oins the a1ard of the contract to the bidder 1hose bid has been deter2ined to be the lo1est evaluated bid. The pertinent provision, 7uoted earlier, is reiterated, thusB Section $.,;. +1ard of !ontract The contract is to be a1arded to the bidder 1hose bid has been deter2ined to be the lo1est evaluated bid and 1ho 2eets the appropriate standards of capabilit' and financial resources. + bidder shall not be re7uired as a condition of a1ard to underta%e responsibilities or 1or% not stipulated in the specifications or to 2odif' the bid. #E Since these ter2s and conditions are 2ade part of )oan +&ree2ent No. PH*P/,-, the &overn2ent is obli&ed to observe and enforce the sa2e in the procure2ent of &oods and services for the !P I pro=ect. +s sho1n earlier, private respondent !hina Road 9 "rid&e !orporationAs bid 1as the lo1est evaluated bid, albeit /<.;$I hi&her than the +"!. In accordance 1ith the ("I! Procure2ent >uidelines, therefore, it 1as correctl' a1arded the contract for the !P I pro=ect. ven if R+ ;.<- 1ere to be applied retroactivel', the ter2s of the ?chan&e of Notes dated Dece2ber /0, .;;; and )oan +&ree2ent No. PH*P/,- 1ould still &overn the procure2ent for the !P I pro=ect

6or clarit', Section - of R+ ;.<- is 7uoted ane1, thusB S !. -. Scope and +pplications. L This +ct shall appl' to the Procure2ent of Infrastructure Pro=ects, >oods and !onsultin& Services, re&ardless of source of funds, 1hether local or forei&n, b' all branches and instru2entalities of &overn2ent, its depart2ents, offices and a&encies, includin& &overn2ent*o1ned and:or Lcontrolled corporations and local &overn2ent units, sub=ect to the provisions of !o22on1ealth +ct No. .E<. +n' treat' or international or e?ecutive a&ree2ent affectin& the sub=ect 2atter of this +ct to 1hich the Philippine &overn2ent is a si&nator' shall be observed. The petitioners, in order to place the procure2ent process underta%en for the !P I pro=ect 1ithin the a2bit of R+ ;.<-, vi&orousl' assert that )oan +&ree2ent No. PH*P/,- is neither a treat', an international a&ree2ent nor an e?ecutive a&ree2ent. The' cite ?ecutive Order No. -$; dated Nove2ber /$, .;;0 1here the three a&ree2ents are defined in this 1iseB a4 International a&ree2ent L shall refer to a contract or understandin&, re&ardless of no2enclature, entered into bet1een the Philippines and another &overn2ent in 1ritten for2 and &overned b' international la1, 1hether e2bodied in a sin&le instru2ent or in t1o or 2ore related instru2ents. b4 Treaties L international a&ree2ents entered into b' the Philippines 1hich re7uire le&islative concurrence after e?ecutive ratification. This ter2 2a' include co2pacts li%e conventions, declarations, covenants and acts. c4 ?ecutive a&ree2ents L si2ilar to treaties e?cept that the' do not re7uire le&islative concurrence.#The petitioners 2ainl' ar&ue that )oan +&ree2ent No. PH*P/,- does not fall under an' of the three cate&ories because to be an' of the three, an a&ree2ent had to be one 1here the parties are the Philippines as a State and another State. The ("I!, the petitioners 2aintain, is a (apanese ban%in& a&enc', 1hich presu2abl' has a separate =uridical personalit' fro2 the (apanese >overn2ent. The petitionersA ar&u2ents fail to persuade. The !ourt holds that )oan +&ree2ent No. PH*P/,ta%en in con=unction 1ith the ?chan&e of Notes dated Dece2ber /0, .;;; bet1een the (apanese >overn2ent and the Philippine >overn2ent is an e?ecutive a&ree2ent. To recall, )oan +&ree2ent No. PH*P/,- 1as e?ecuted b' and bet1een the ("I! and the Philippine >overn2ent pursuant to the ?chan&e of Notes e?ecuted b' and bet1een Mr. @oshihisa +ra, +2bassador ?traordinar' and Plenipotentiar' of (apan to the Philippines, and then 6orei&n +ffairs Secretar' Sia8on, in behalf of their respective &overn2ents. The ?chan&e of Notes e?pressed that the t1o &overn2ents have reached an understandin& concernin& (apanese loans to be e?tended to the Philippines and that these loans 1ere ai2ed at pro2otin& our countr'As econo2ic stabili8ation and develop2ent efforts. )oan +&ree2ent No. PH*P/,- 1as subse7uentl' e?ecuted and it declared that it 1as so entered b' the parties DJiKn the li&ht of the contents of the ?chan&e of Notes bet1een the >overn2ent of (apan and the >overn2ent of the Republic of the Philippines dated Dece2ber /0, .;;;, concernin& (apanese loans to be e?tended 1ith a vie1 to pro2otin& the econo2ic stabili8ation and develop2ent efforts of the Republic of the Philippines.D #$ Fnder the circu2stances, the ("I! 2a' 1ell be considered an ad=unct of the (apanese >overn2ent. 6urther, )oan +&ree2ent No. PH*P/,is indubitabl' an inte&ral part of the ?chan&e of Notes. It for2s part of the ?chan&e of Notes such that it cannot be properl' ta%en independent thereof.

In this connection, it is 1ell to understand the definition of an De?chan&e of notesD under international la1. The ter2 is defined in the Fnited Nations Treat' !ollection in this 1iseB +n De?chan&e of notesD is a record of a routine a&ree2ent that has 2an' si2ilarities 1ith the private la1 contract. The a&ree2ent consists of the e?chan&e of t1o docu2ents, each of the parties bein& in the possession of the one si&ned b' the representative of the other. Fnder the usual procedure, the acceptin& State repeats the te?t of the offerin& State to record its assent. The si&natories of the letters 2a' be &overn2ent Ministers, diplo2ats or depart2ental heads. The techni7ue of e?chan&e of notes is fre7uentl' resorted to, either because of its speed' procedure, or, so2eti2es, to avoid the process of le&islative approval. ## It is stated that Dtreaties, a&ree2ents, conventions, charters, protocols, declarations, 2e2oranda of understandin&, 2odus vivendi and e?chan&e of notesD all refer to Dinternational instru2ents bindin& at international la1.D#0 It is further e?plained that* +lthou&h these instru2ents differ fro2 each other b' title, the' all have co22on features and international la1 has applied basicall' the sa2e rules to all these instru2ents. These rules are the result of lon& practice a2on& the States, 1hich have accepted the2 as bindin& nor2s in their 2utual relations. Therefore, the' are re&arded as international custo2ar' la1. Since there 1as a &eneral desire to codif' these custo2ar' rules, t1o international conventions 1ere ne&otiated. The .;#; Vienna !onvention on the )a1 of Treaties 3D.;#; Vienna !onventionD4, 1hich entered into force on /0 (anuar' .;<,, contains rules for treaties concluded bet1een States. The .;<# Vienna !onvention on the )a1 of Treaties bet1een States and International Or&ani8ations 3D.;<# Vienna !onventionD4, 1hich has still not entered into force, added rules for treaties 1ith international or&ani8ations as parties. "oth the .;#; Vienna !onvention and the .;<# Vienna !onvention do not distin&uish bet1een the different desi&nations of these instru2ents. Instead, their rules appl' to all of those instru2ents as lon& as the' 2eet the co22on re7uire2ents. #< Si&nificantl', an e?chan&e of notes is considered a for2 of an e?ecutive a&ree2ent, 1hich beco2es bindin& throu&h e?ecutive action 1ithout the need of a vote b' the Senate or !on&ress. The follo1in& dis7uisition b' 6rancis ". Sa're, for2er Fnited States Hi&h !o22issioner to the Philippines, entitled DThe !onstitutionalit' of Trade +&ree2ent +cts,D 7uoted in !o22issioner of !usto2s v. astern Sea Tradin&,#; is aproposB +&ree2ents concluded b' the President 1hich fall short of treaties are co22onl' referred to as e?ecutive a&ree2ents and are no less co22on in our sche2e of &overn2ent than are the 2ore for2al instru2ents L treaties and conventions. The' so2eti2es ta%e the for2 of e?chan&e of notes and at other ti2es that of 2ore for2al docu2ents deno2inated Da&ree2entsD or DprotocolsD. The point 1here ordinar' correspondence bet1een this and other &overn2ents ends and a&ree2ents L 1hether deno2inated e?ecutive a&ree2ents or e?chan&e of notes or other1ise L be&in, 2a' so2eti2es be difficult of read' ascertain2ent. It 1ould be useless to underta%e to discuss here the lar&e variet' of e?ecutive a&ree2ents as such, concluded fro2 ti2e to ti2e. Hundreds of e?ecutive a&ree2ents, other than those entered into under the trade*a&ree2ents act, have been ne&otiated 1ith forei&n &overn2ents. ? ? ?0, The ?chan&e of Notes dated Dece2ber /0, .;;;, stated, inter alia, that the >overn2ent of (apan 1ould e?tend loans to the Philippines 1ith a vie1 to pro2otin& its econo2ic stabili8ation and develop2ent effortsC )oan I in the a2ount of @0;,<#$.,,,,,,,, 1ould be e?tended b' the ("I! to the Philippine >overn2ent to i2ple2ent the pro=ects in the )ist + 3includin& the +rterial Road )in%s Develop2ent Pro=ect * Phase IV4C and that such loan 3)oan I4 1ould be used to cover pa'2ents to be 2ade b' the Philippine e?ecutin& a&encies to suppliers, contractors and:or consultants of eli&ible source countries under such contracts as 2a' be entered into bet1een the2 for purchases of

products and:or services re7uired for the i2ple2entation of the pro=ects enu2erated in the )ist +.0.5ith respect to the procure2ent of the &oods and services for the pro=ects, it bears reiteratin& that as stipulatedB E. The >overn2ent of the Republic of the Philippines 1ill ensure that the products and:or services 2entioned in sub*para&raph 3.4 of para&raph E of Part I and sub*para&raph 3.4 of para&raph - of Part II are procured in accordance 1ith the &uidelines for procure2ent of the "an%, 1hich set forth, inter alia, the procedures of international tenderin& to be follo1ed e?cept 1here such procedures are inapplicable or inappropriate. 0/ The ("I! Procure2ents >uidelines, as 7uoted earlier, forbids an' procedure under 1hich bids above or belo1 a predeter2ined bid value assess2ent are auto2aticall' dis7ualified. Succinctl' put, it absolutel' prohibits the i2position of ceilin&s on bids. Fnder the funda2ental principle of international la1 of pacta sunt servanda, 0E 1hich is, in fact, e2bodied in Section - of R+ ;.<- as it provides that DJaKn' treat' or international or e?ecutive a&ree2ent affectin& the sub=ect 2atter of this +ct to 1hich the Philippine &overn2ent is a si&nator' shall be observed,D the DP5H, as the e?ecutin& a&enc' of the pro=ects financed b' )oan +&ree2ent No. PH*P/,-, ri&htfull' a1arded the contract for the i2ple2entation of civil 1or%s for the !P I pro=ect to private respondent !hina Road 9 "rid&e !orporation. 5H R 6OR , pre2ises considered, the petition is DISMISS D. SO ORD R D. ROMEO /. CALLE/O, SR. +ssociate (ustice 5 !ON!FRB CONSUELO #NARES6SANT AGO +ssociate (ustice MA. AL C A AUSTR A6MART NE7 +ssociate (ustice +TT M N TA 5. C. CO6NA7AR O +sscociate (ustice ST+TION

I attest that the conclusions in the above Decision had been reached in consultation before the case 1as assi&ned to the 1riter of the opinion of the !ourtAs Division. CONSUELO #NARES6SANT AGO +ssociate (ustice !hairperson ! RTI6I!+TION

Pursuant to Section .E, +rticle VIII of the !onstitution and the Division !hairpersonAs +ttestation, it is hereb' certified that the conclusions in the above decision 1ere reached in consultation before the case 1as assi&ned to the 1riter of the opinion of the !ourtAs Division.

RE#NATO S. PUNO !hief (ustice

Foo%)o%e+nne? D/D of the !o22ent of Private Respondent !hina Road 9 "rid&e !orporationC rollo, p. /-/.
. /

IdC id. at /-/*/--. Id.C id. at /-;. Id.C id. at /-#. Id.C id. at /$.. IdC id. at .,;. Id., Section ., +rticle I of )oan +&ree2ent No. PH*P/,- dated Dece2ber /<, .;;;. Id., Section /, +rticle I. Id., Section ., +rticle III. Id., Section /, +rticle III. !ontractorAs "id valuation Report, +nne? D D to the PetitionC rollo, p. -.. The e?a2ination of the bid docu2ents 1as based on the follo1in& ite2sB .st nvelope a4 +uthorit' of the si&nin& official3s4 in accordance 1ith !lause $.E b4 Ori&inal !op' of (oint Venture +&ree2ent in accordance 1ith !lause ..$./ 3if applicable4 c4 Dul' si&ned !onstruction Schedule 9 S*!urve in accordance 1ith Sub* !lause $.0.< d4 Dul' si&ned !onstruction Method in Narrative for2 in accordance 1ith Sub*!lause $.0.0 e4 Dul' si&ned Pro=ect Or&ani8ation !hart in accordance 1ith Sub*!lause $.0.0

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f4 Dul' si&ned Manpo1er and 7uip2ent Schedules in accordance 1ith Sub* !lause $.0.$ &4 !redit )ine co22it2ent fro2 reputable ban% e7uivalent to four 3-4 2onths avera&e operatin& e?penses or .,I of bid price or 1hichever is lo1er h4 "id Securit' furnished in accordance 1ith !lause $.; i4 !o2pliance to Depart2ent Order No. < Series of .;;. 9 D.O.Q.E$ =4 !ertification that the Detailed Fnit Price +nal'sis, !ash 6lo1 and Pa'2ent Schedule are in the second envelope %4 +uthorit' of bidders representative to attend in public biddin& 3Depart2ent Order No. .0#, Series of .;;E4 l4 !onstruction Safet' and health pro&ra2 b' !ontractor based on Depart2ent of )abor and 2plo'2entAs 3DO) 4 Occupational Safet' and Health Standards /nd nvelope a4 Dul' si&ned bid price in the "ill of Ouantities of Section D of Proposal "oo% b4 Dul' si&ned Detailed Fnit Price +nal'sis prepared in accordance 1ith !lause $.0.E c4 !ash 6lo1 and Pa'2ent Schedule prepared in accordance 1ith !lause $.0.# 3Id.C rollo, pp. --*-$.
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Supra note ..C rollo, p. -0. Id. Id.C id. at $/. +nne? DHD to the PetitionC id. at $;*#/. The petitionerAs Me2orandu2, p. ;C rollo, p. -E..

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!itin&, a2on& others, Gilosba'an v. >uin&ona, >.R. No. ..EE0$, Ma' $, .;;-, /E/ S!R+ ..,C Tatad v. Secretar' of the Depart2ent of ner&', E-# Phil. E/. 3.;;04C !have8 v. Presidential !o22ission on >ood >overn2ent, >.R. No. .E,0.#, /;; S!R+ 0-- 3.;;<4C and 6rancisco v. House of Representatives, -#, Phil. <E, 3/,,E4.
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ntitled +n +ct Providin& for the Moderni8ation, Standardi8ation and Re&ulation of the Procure2ent +ctivities of the >overn2ent and 6or Other Purposes.
.; /,

The t1o bills, upon their consolidation, beca2e R+ ;.<-.

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!itin& "ica2eral !onference !o22ittee, Dece2ber .0, /,,/, <B$/ a.2., p. /.. !itin& "ica2eral !onference !o22ittee Meetin&, Dece2ber .0, /,,/, ;B./ a.2., p. -,.

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Per the PetitionersA Me2orandu2, R+ ;.<- 1as published in Mala'a and the Manila Ti2es on (anuar' .., /,,E. It too% effect fifteen 3.$4 da's thereafter as provided in Section 0< thereof.
/E

ntitled Prescribin& Policies, >uidelines, Rules and Re&ulations for >overn2ent Infrastructure !ontracts.
/-

Issued b' President >loria Macapa&al*+rro'o on October <, /,,., entitled !onsolidatin& Procure2ent Rules and Procedures for +ll National >overn2ent +&encies, >overn2ent* O1ned and !ontrolled !orporations and >overn2ent 6inancial Institutions, and Re7uirin& the Fse of the >overn2ent lectronic Procure2ent S'ste2.
/$

!itin& Tolentino v. Secretar' of 6inance, >.R. No. ..$<0E, +u&ust /$, .;;-, /E$ S!R+ #E,.
/# /0

!itin& >on8ales v. !OM ) !, ./; Phil. 0 3.;#04. !itin& PHI)!ONS+ v. nri7ue8, >.R. No. ..E.,$, +u&ust .;, .;;-, /E$ S!R+ $,#.

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!itin& Infor2ation Technolo&' 6oundation of the Philippines v. !OM ) !, et al., >.R. No. .$;E.;, (anuar' .E, /,,-, -.; S!R+ .-..
/; E,

!itin& PHI)!ONS+ v. nri7ue8, supra. !itin& Gilosba'an v. Morato, E.# Phil. #$/ 3.;;$4. !ited in the Public RespondentsA Me2orandu2, pp. .0*.<C rollo, pp. $<.*$</. +rticle /# of the .;#; Vienna !onvention on the )a1 of Treaties statesB ver' treat' in force is bindin& upon the parties to it and 2ust be perfor2ed b' the2 in &ood faith.

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!itin& Section /, +rticle II 3Declaration of Principles and State Policies4 of the .;<0 !onstitutionB
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S !. /. The Philippines renounces 1ar as an instru2ent of national polic', adopts the &enerall' accepted principles of international la1 as part of the la1 of the land and adheres to the polic' of peace, e7ualit', =ustice, freedo2, cooperation, and a2it' 1ith all nations.
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See note /E. Section .,, +rticle III 3"ill of Ri&hts4 of the !onstitution readsB S !. .,. No la1 i2pairin& the obli&ation of contracts shall be passed.

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!itin& "ica2eral !onference !o22ittee Meetin&, Dece2ber .0, /,,/, ;B./ a.2., pp. -,* -..
E0 E<

David v. Macapa&al*+rro'o, >.R. No. .0.E;#, Ma' E, /,,#, -<; S!R+ .#,.

(u2a2il v. !afR, >.R. No. .--$0,, Septe2ber /., /,,$, -0, S!R+ -0$ citin&, a2on& others, Inte&rated "ar of the Philippines v. Sa2ora, E;/ Phil. #.<, #EE 3/,,,4.
E; -,

+&an v. Philippine International +ir Ter2inals !o., Inc., -$, Phil. 0-- 3/,,E4.

6ariTas v. ?ecutive Secretar', -#E Phil. .0;, .;$ 3/,,E4 citin& "a%er v. !arr, E#; F.S. .<# 3.;#/4.
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Id. at .;$. +&an v. Philippine International +ir Ter2inals !o., Inc., supra.

-E

+2on& others, !onstantino, (r. v. !uisia, >.R. No. .,#,#-, October .E, /,,$, -0/ S!R+ $.$C 6rancisco v. House of Representatives, supra note .<C +&an, (r. v. Philippine International Ter2inals !o., Inc., idC Del Mar v. Philippine +2use2ent and >a2in& !orporation, -,, Phil. E,0 3/,,,4C Tatad v. >arcia, E.E Phil. /;# 3.;;$4C Gilosba'an v. >uin&ona, (r., supra note .<.
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Tatad v. >arcia, id. 6rancisco v. House of Representatives, supra note .<, at <;#. (u2a2il v. !afR, supra note E<, at -<<. The Public RespondentsA Me2orandu2, pp. E,*E.C rollo, pp. $;-*$;$. !obacha and )ucenario, )a1 on Public "iddin& and >overn2ent !ontracts, p. -. Id. at $. Id. Id. at #. !ited in Manila International +irport +uthorit' v. Mabuna', E0; Phil. <EE, <-E 3/,,,4. The provision provided in partB S !. -. "iddin&. L !onstruction pro=ects shall &enerall' be underta%en b' contract after co2petitive public biddin&. ? ? ?

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ntitled +n +ct +uthori8in& the 6inancin&, !onstruction, Operation and Maintenance of Infrastructure Pro=ects b' the Private Sector, and 6or Other Purposes.
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Section -< thereof.

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Supra note /E. Frsal, >overn2ent Procure2ent Tool Git 3R+ ;.<-, +nnotated4, p. EE#. Sections .E up to E, of O -,. See also Sections /,*E0 of R+ ;.<-.

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Ho2e Develop2ent Mutual 6und v. !o22ission on +udit, >.R. No. .$0,,., October .;, /,,-, --, S!R+ #-E, #$/.
#, #.

Section . of IRR*+ reads in partB Sec. .. Purpose and >eneral !overa&e This I2ple2entin& Rules and Re&ulations 3IRR4 Part +, hereinafter called DIRR*+,D is pro2ul&ated pursuant to Section 0$ of Republic +ct No. ;.<- 3R.+. ;.<-4, other1ise %no1n as the >overn2ent Procure2ent Refor2 +ct 3>PR+4, for the purpose of prescribin& the necessar' rules and re&ulations for the 2oderni8ation, standardi8ation, and re&ulation of the procure2ent activities of the &overn2ent. This IRR*+ shall cover all full' do2esticall'*funded procure2ent activities fro2 procure2ent plannin& up to contract i2ple2entation and ter2ination, e?cept for the follo1in&B ??? The IRR*" for forei&n*funded procure2ent activities shall be the sub=ect of a subse7uent issuance.

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httpB::111:=bic.&o.=p:en&lish:oec:&uide:procure:section$.php Id. !ited in the PetitionersA Me2orandu2, p. /-C rollo, p. --#. Supra note #. httpB::untreat'.un.or&: n&lish:&uide.asp Id. Id. ..E Phil. EEE 3.;#.4. Id. at EE;. Supra note /. Supra note -. Supra note E/.

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