Case Summary (G.R. No. 167919)
Background of the Loan Agreement
Through an Exchange of Notes between the Governments of Japan and the Philippines (Dec. 27, 1999), Japan agreed to extend Loan I (¥79,861 million) under JBIC to finance projects listed in “List A,” including Phase IV of the Arterial Road Links Development Project (¥15,384 million for Catanduanes Circumferential Road). Loan Agreement No. PH-P204 (Dec. 28, 1999) between JBIC and the Philippine Government incorporated general terms and conditions of OECF loans and mandated that procurement follow JBIC’s December 1997 Procurement Guidelines.
Bidding Process and Award
DPWH published the Invitation to Prequalify and Bid for CP I on Nov. 22, 29 and Dec. 5, 2002. Seven prequalified bidders submitted proposals. China Road & Bridge Corporation’s bid (originally ₱993.18 M, corrected to ₱952.56 M) was the lowest evaluated despite exceeding the ₱738.71 M Approved Budget for Contract (ABC) by 28.95 %. The Consultant’s Bid Evaluation Report (April 2004) and DPWH BAC Resolution No. PJHL-A-04-012 (May 7, 2004), approved by Acting Secretary Soriquez, recommended award to China Road & Bridge. The Agreement was executed on Sept. 29, 2004.
Petitioners’ Claims
Petitioners, suing as taxpayers, challenged (1) their locus standi; (2) the legality of BAC Resolution No. PJHL-A-04-012; (3) the voidness ab initio of the Agreement for exceeding the ABC in violation of RA 9184 Sec. 31 and Civil Code Art. 1409(7); and (4) sought prohibitory and injunctive relief to enjoin implementation and disbursement of public funds. They argued RA 9184 applies regardless of funding source and that foreign-funded contracts are included by legislative history.
Respondents’ Arguments
DPWH, DBM, DOF and China Road & Bridge contended: (a) petitioners lack personal, substantial injury and thus locus standi; (b) CP I procurement was governed by EO 40 (2001) and PD 1594, not RA 9184, because the bid invitation predated RA 9184’s effectivity; (c) EO 40 and RA 4860 Sec. 4 permit waiver of domestic procurement restrictions for foreign-assisted projects; (d) Loan Agreement PH-P204 and the Exchange of Notes constitute an executive agreement to be observed under pacta sunt servanda; (e) JBIC Guidelines prohibit bid ceilings and require award to lowest evaluated bidder, validating China Road & Bridge’s award.
Locus Standi of Taxpayers
The Court recognized taxpayers’ standing to challenge alleged illegal disbursement of public funds, including peso-counterpart appropriations in the General Appropriations Act for foreign-assisted projects. Petitioner Abaya’s status as a former lawmaker and principal author of RA 9184 did not alter the analysis but petitioners’ taxpayer status sufficed under the Court’s liberal policy.
Governing Procurement Laws
A historical overview traced Philippine procurement from early American-era statutes through EO 16 (1936), PD 1594 (1978), EO 302/201 (1996–2000), EO 40 (2001) and RA 9184 (2003). RA 9184’s transitory clause (IRR-A Sec. 77) expressly preserved EO 40, PD 1594 and RA 7160 for procurements whose advertisements predated RA 9184’s effectivity.
Applicability of EO 40 and Non-Retroactivity of RA 9184
Because the CP I Invitation to Bid was published in November–December 2002, before RA 9184 took effect (Jan. 26, 2003), EO 40 governed the procurement process under Civil Code Art. 4’s prohibition on retroactive application of laws. EO 40 Sec. 1 excluded foreign-assisted projects from domestic bid ceilings, and EO 40’s IRR reinforced reliance on applicable loan/grant agreements for procurement rules.
Compliance with Loan Agreement and Procurement Guidelines
Under RA 4860 Sec. 4 and EO 40, the terms of Loan Agreement PH-P204—including JBIC Procurement Guidelines—governed CP I procurement. JBIC Guideline 5.06(e) forbids automatic disqualification based on bid ceilings, a
...continue readingCase Syllabus (G.R. No. 167919)
Facts of the Case
- The Department of Public Works and Highways (DPWH) undertook the Catanduanes Circumferential Road Improvement Project under JBIC Loan Agreement No. PH-P204 (Phase IV of the Arterial Road Links Development Project), divided into four contract packages (CP I–IV).
- CP I covered the San Andres (Codon)–Virac–Jct. Bato–Viga road, 79.818 km in Catanduanes, with an ABC of ₱738,710,563.67.
- Seven prequalified bidders submitted proposals; the three lowest were China Road & Bridge Corporation (China Road), Cavite Ideal Intal Construction & Development Corp., and Italian-Thai Development Public Co., Ltd.
- China Road’s original bid of ₱993,183,904.98 (34.45% above ABC) was adjusted to ₱952,564,821.71 (28.95% above ABC).
- The Consultant’s Bid Evaluation Report recommended award to China Road as the lowest evaluated bidder; the DPWH Bids and Awards Committee (BAC), approved by the Acting Secretary, issued Resolution No. PJHL-A-04-012 on May 7, 2004 awarding CP I to China Road.
- A contract was formally executed on September 29, 2004; work commenced in October 2004.
Petitioners and Their Standing
- Petitioners: Plaridel M. Abaya (taxpayer, former lawmaker), Commodore Plaridel C. Garcia (retired, taxpayer), and PMA 59 Foundation, Inc. (non-profit of PMA alumni/taxpayers).
- They filed a Rule 65 petition for certiorari and prohibition to nullify BAC Resolution No. PJHL-A-04-012 and the ensuing contract.
- They allege taxpayer standing to challenge illegal expenditure of public funds on an award above the ABC.
- Petitioner Abaya claims additional standing as principal author of RA 9184.
Issues Presented
- Whether petitioners have locus standi to question the award and contract.
- Whether the BAC Resolution recommending award to China Road should be set aside for exceeding the ABC in violation of RA 9184.
- Whether the DPWH–China Road contract is void ab initio under RA 9184 and Civil Code Article 1409.
- Whether a writ of prohibition should permanently enjoin implementation and disbursement of funds.
- Whether a temporary restraining order or preliminary injunction should issue pending resolution.
Petitioners’ Arguments
- As taxpayers and former legislator, they may sue to enjoin illegal disbursement of public funds and enforcement of void contracts.
- RA 9184 applies “regardless of source of funds” (Section 4) to f