CD - Abaya vs. Ebdane

Abaya vs. Ebdane, Jr.
Facts:
This is a petition for certiorari seeking to set aside and nullify Resolution No. PJHL-A-04-012 dated
May 7, 2004 issued by the Bids and Awards Committee (BAC) of DPWH and approved by then
DPWH Acting Secretary Florante Soriquez.
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 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.
Based on the Exchange of Notes dated December 27, 1999, 1the Government of Japan and
the G o ve rn me n t o f t h e P h il ip p in e s, t h r o u g h t h e i r re sp e ct i ve re p re se n t a t i ve s , h a ve
r e a ch e d a n understanding concerning Japanese loans to be extended to the Philippines.
These loans were a im e d a t p ro mo t in g o u r co u n t ry ’s e co n o mi c st a b i li za t i o n a n d
d e v e lo p me n t e f f o rt s. Th u s, i n a c c o r d a n c e w i t h t h e a g r e e m e n t r e a c h e d b y t h e
G o v e r n m e n t o f J a p a n a n d t h e P h i l i p p i n e G o ve rn me n t , t h e P h il ip p in e s o b t a i n e d f ro m
a n d wa s g ra n t e d a l o a n b y t h e Ja p a n B a n k f o r International Cooperation (JBIC).
Part of the proceeds of Loan Agreement was to be used to finance the Arterial Road
L i n k s Development Project (Phase IV), of which the Catanduanes Circumferential Road
was a part.
Further, it was provided under the said loan agreement that the guidelines for procurement of all
goods and services to be financed out of the proceeds of the said loan shall be as stipulated in the
Guidelines for Procurement (herein referred to as JBIC Procurement Guidelines).
Subsequently, the DPWH conducted a public bidding and the contract was awarded to China Road
and Bridge Corporation for being the lowest bidder.
Petitioners then filed the instant petition seeking to nullify the award of the contract to China
Road and Bridge Corporation on the ground that it violates Section 31 of R.A. 9184 since the bid was
more than P200 million overpriced on the Approved Budget for the Contract (ABC).
Petitioners further argued that while R.A. 9184 recognizes exemptions from its application
on treaties and international agreements, the JBIC is a Japanese banking agency, which
presumably has a separate juridical personality from the Japanese Government. Hence, the loan
agreement is not a treaty or international agreement.
In their counter-arguments, the public respondents argued that R.A. 9184 is not applicable
because the agreement was perfected before the effectivity of said law.
ISSUE:
Whether or not the Loan Agreement No. PH-204 between the JBIC and the Philippine Government is a
kind of a treaty.
HELD:
The Loan Agreement No. PH-204 taken in conjunction with the Exchange of Notes dated December 27,
1999 between the Japanese Government and the Philippine Government is an executive agreement.
The Loan Agreement 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 country’s 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."
An “exchange of notes” is a record of a routine agreement that has many similarities with the private law
contract. The agreement consists of the exchange of two documents, each of the parties being in the
possession of the one signed by the representative of the other.
Under the usual procedure, the accepting State repeats the text of the offering State to record its assent.
The signatories of the letters may be government Ministers, diplomats or departmental heads. The
technique of exchange of notes is frequently resorted to, either because of its speedy procedure, or,
sometimes, to avoid the process of legislative approval.
It is stated that "treaties, agreements, conventions, charters, protocols, declarations, memoranda of

understanding, modus vivendi and exchange of notes" all refer to "international instruments binding at
international law."
Although these instruments differ from each other by title, they all have common features and
international law has applied basically the same rules to all these instruments. These rules are the result
of long practice among the States, which have accepted them as binding norms in their mutual relations.
Significantly, an exchange of notes is considered a form of an executive agreement, which becomes

binding through executive action without the need of a vote by the Senate or Congress.
The 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; 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 sub-paragraph (1) of
paragraph 4 of Part II are procured in accordance with the guidelines for procurement of the
Bank, which set forth, inter alia, the procedures of international tendering to be followed except
where such procedures are inapplicable or inappropriate.
The JBIC Procurements Guidelines, as quoted earlier, forbids any procedure under which bids above or
below a predetermined bid value assessment are automatically disqualified. Succinctly put, it absolutely
prohibits the imposition of ceilings on bids.
Under the fundamental principle of international law of pacta sunt servanda, which is, in fact, embodied in
Section 4 of RA 9184 as it provides that "[a]ny treaty or international or executive agreement affecting the
subject matter of this Act to which the Philippine government is a signatory shall be observed," the
DPWH, as the executing agency of the projects financed by Loan Agreement No. PH-P204, rightfully
awarded the contract for the implementation of civil works for the CP I project to private respondent China
Road & Bridge Corporation.

CD - Abaya vs. Ebdane

Uploaded by

Copyright:

Available Formats

CD - Abaya vs. Ebdane

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CD - Abaya vs. Ebdane

Uploaded by

Copyright:

Available Formats

Abaya vs. Ebdane, Jr.

It is stated that "treaties, agreements, conventions, charters, protocols, declarations, memoranda of

Significantly, an exchange of notes is considered a form of an executive agreement, which becomes

You might also like