Goldwater v.

Carter, 444 U.S. 996 (1979)

GOLDWATER V CARTER

FACTS: Senator Barry Goldwater and other members of

Congress challenged President Jimmy Carter's termination
of the Mutual Defense Treaty with Taiwan without
consulting or securing the prior approval of the Senate.
Article II, section 2, clause 2 of the Constitution states that
the president has the power to make treaties, provided that
two-thirds of the Senate concurs. However, the Constitution
does not address the question of how a treaty may be
abrogated.

ISSUE: Whether or not President can abrogate by himself

an international treaty

HELD: The US Supreme Court left the question

unanswered, the matter is not yet ripe for judicial review
since it is one having the nature of political question, hence,
the judgment of the Court of Appeals is vacated and the
case is remanded to the District Court with directions to
dismiss the complaint.

Justice William Rehnquist, in a concurring opinion joined by

Chief Justice Warren Burger and Justices Potter Stewart
and John Paul Stevens, argued that this was a non-
justiciable political question because it involved the
“authority of the President in the conduct of our country's
foreign relations … specifically a treaty commitment to use
military force in the defense of a foreign government if
attacked” (pp. 1002–1004). The Court was “asked to settle
a dispute between coequal branches of government, each
of which has resources available to protect and assert its
interests, resources not available to private litigants outside
the judicial forum” (p. 1004). Justice Lewis Powell
concurred separately, arguing that the issue was not “ripe”
for judicial decision since Congress had not yet confronted
the president about the treaty.

If Congress had challenged the President’s authority to

terminate, then the court would have justiciable issue to
decide.  Without a challenge the issue only involves a
political question. Neither the Senate nor the House have
taken any action, thereby rendering the case unripe for
decision.  There is no specific language preventing the
President from terminating treaties without approval.  There
is no showing that Congress has rejected the President’s
claim.  It is Congress’ choice to challenge the President not
the Court’s.

The Judicial Branch should not decide issues affecting

the allocation of power between the President and
Congress until the political branches reach a constitutional
impasse. Otherwise, we would encourage small groups or
even individual Members of Congress to seek judicial
resolution of issues before the normal political process has
the opportunity to resolve the conflict.
Vinuya v. Executive Secretary, G.R. No. 162230, April 28, XPN: To be sure, not all cases implicating foreign
2010 relations present political questions, and courts
certainly possess the authority to construe or
invalidate treaties and executive agreements
FACTS:
Petition for Certiorari under Rule 65 of the Rules of Court The President regarding foreign relations
with an application for the issuance of a writ of preliminary
mandatory injunction against the Office of the Executive The conduct of foreign relations is full of complexities and
Secretary, (DFA, DOJ), and (OSG). consequences, sometimes with life and death significance to
the nation especially in times of war. It can only be entrusted
Petitioners are all members of the MALAYA LOLAS, a non- to that department of government which can act on the basis
stock, non-profit organization registered with the Securities of the best available information and can decide with
and Exchange Commission, established for the purpose of decisiveness. x x x It is also the President who possesses the
providing aid to the victims of rape by Japanese military most comprehensive and the most confidential information
forces in the Philippines during the Second World War. about foreign countries for our diplomatic and consular
officials regularly brief him on meaningful events all over the
Petitioners claim that since 1998, they have approached the world.
Executive Department through the DOJ, DFA, and OSG,
requesting assistance in filing a claim against the Japanese Philippines not obliged to espouse petioners’ claim
officials and military officers
The Philippines is not under any international obligation to
However, officials of the Executive Department declined to espouse petitioners’ claims.
assist the petitioners, and took the position that the
individual claims of the comfort women for compensation In the international sphere, traditionally, the only means
had already been fully satisfied by Japan’s compliance with available for individuals to bring a claim within the
the Peace Treaty between the Philippines and Japan. international legal system has been when the individual is
able to persuade a government to bring a claim on the
Petitioners’ arguments: Petitioners argue that the general individual’s behalf.
waiver of claims made by the Philippine government in the
Treaty of Peace with Japan is void. 1924 Mavrommatis Palestine Concessions Case:

They allege that the prohibition against these international By taking up the case of one of its subjects and by resorting to
crimes is jus cogens norms from which no derogation is diplomatic action or international judicial proceedings on his
possible; as such, in waiving the claims of Filipina comfort behalf, a State is in reality asserting its own right to ensure, in
women and failing to espouse their complaints against Japan, the person of its subjects, respect for the rules of
the Philippine government is in breach of its legal obligation international law.
not to afford impunity for crimes against humanity.
Once a State has taken up a case on behalf of one of its
Respondents’ Arguments: Respondents maintain that all subjects before an international tribunal, in the eyes of the
claims of the Philippines and its nationals relative to the war latter the State is sole claimant.
were dealt with in the San Francisco Peace Treaty of 1951 and
the bilateral Reparations Agreement of 1956. Barcelona Traction:

The Court would here observe that, within the limits

prescribed by international law, a State may exercise
ISSUE: WON the Executive Department committed grave diplomatic protection by whatever means and to whatever
abuse of discretion in not espousing petitioners’ claims for extent it thinks fit, for it is its own right that the State is
official apology and other forms of reparations against Japan. asserting. Should the natural or legal person on whose behalf
it is acting consider that their rights are not adequately
HELD: NO. From a Domestic Law Perspective, the Executive protected, they have no remedy in international law. All they
Department has the exclusive prerogative to determine can do is resort to national law, if means are available, with a
whether to espouse petitioners’ claims against Japan. view to furthering their cause or obtaining redress.

Political Question Diplomatic protection of a State

In Tañada v. Cuenco,40 we held that political questions refer The International Law Commission’s (ILC’s) Draft Articles on
“to those questions which, under the Constitution, are to be Diplomatic Protection fully support this traditional view. They
decided by the people in their sovereign capacity, or in regard (i) state that “the right of diplomatic protection belongs to or
to which full discretionary authority has been delegated to vests in the State,”59 (ii) affirm its discretionary nature by
the legislative or executive branch of the government. It is clarifying that diplomatic protection is a “sovereign
concerned with issues dependent upon the wisdom, not prerogative” of the State;60 and (iii) stress that the state “has
legality of a particular measure the right to exercise diplomatic protection on behalf of a
national. It is under no duty or obligation to do so.
Foreign relations a political question
(States’ duty to protect its nationals) If it is a duty
It is well-established that “[t]he conduct of the foreign internationally, it is only a moral and not a legal duty, and
relations of our government is committed by the Constitution there is no means of enforcing its fulfillment.
to the executive and legislative—’the political’—departments
of the government, and the propriety of what may be done in Erga omnes
the exercise of this political power is not subject to judicial
inquiry or decision.” Barcelona Traction:
x x x an essential distinction should be drawn between the
obligations of a State towards the international community as
a whole, and those arising vis-à-vis another State in the field
of diplomatic protection. By their very nature, the former are
the concern of all States. In view of the importance of the
rights involved, all States can be held to have a legal interest
in their protection; they are obligations erga omnes.

 In a commentary accompanying the draft convention, the ILC

indicated that “the prudent course seems to be to x x x leave
the full content of this rule to be worked out in State practice
and in the jurisprudence of international tribunals.” 76 Thus,
while the existence of jus cogens in international law is
undisputed, no consensus exists on its substance, 77 beyond a
tiny core of principles and rules.78
G.R. No. 175888               February 11, 2009 The provision is thus designed to ensure that any agreement
allowing the presence of foreign military bases, troops or
SUZETTE NICOLAS y SOMBILON, Petitioner, facilities in Philippine territory shall be equally binding on the
vs. Philippines and the foreign sovereign State involved. The idea
ALBERTO ROMULO, is to prevent a recurrence of the situation in which the terms
and conditions governing the presence of foreign armed
FACTS: forces in our territory were binding upon us but not upon the
foreign State.
Respondent Lance Corporal (L/CPL) Daniel Smith is a member
of the United States Armed Forces. He was charged with the VFA rules regarding custody of US citizens
crime of rape committed against a Filipina, petitioner herein
The VFA provides that in cases of offenses committed by the
Pursuant to the Visiting Forces Agreement (VFA) between the members of the US Armed Forces in the Philippines, the
Republic of the Philippines and the United States, entered following rules apply:
into on February 10, 1998, the United States, at its request,
was granted custody of defendant Smith pending the Article V
proceedings.
Criminal Jurisdiction
RTC of Makati, following the end of the trial, rendered its
Decision, finding defendant Smith guilty xxx

As a result, the Makati court ordered Smith detained at the 6. The custody of any United States personnel over whom the
Makati jail until further orders. Philippines is to exercise jurisdiction shall immediately reside
with United States military authorities, if they so request,
however, defendant Smith was taken out of the Makati jail by from the commission of the offense until completion of all
a contingent of Philippine law enforcement agents, judicial proceedings. United States military authorities shall,
purportedly acting under orders of the Department of the upon formal notification by the Philippine authorities and
Interior and Local Government, and brought to a facility for without delay, make such personnel available to those
detention under the control of the United States government, authorities in time for any investigative or judicial
provided for under new agreements between the Philippines proceedings relating to the offense with which the person has
and the United States, referred to as the Romulo-Kenney been charged.
Agreement of December
Equal protection not violated
The matter was brought before the Court of Appeals which
decided on January 2, 2007, as follows: The equal protection clause is not violated, because there is a
substantial basis for a different treatment of a member of a
WHEREFORE, all the foregoing considered, we resolved to foreign military armed forces allowed to enter our territory
DISMISS the petition for having become moot. and all other accused.

Petitioners’ contention: Petitioners contend that the Rules Regarding Forces Agreements
Philippines should have custody of defendant L/CPL Smith
because, first of all, the VFA is void and unconstitutional. They The rule in international law is that a foreign armed forces
argue that to allow the transfer of custody of an accused to a allowed to enter one’s territory is immune from local
foreign power is to provide for a different rule of procedure jurisdiction, except to the extent agreed upon. But the
for that accused, which also violates the equal protection principle remains, i.e., the receiving State can exercise
clause of the Constitution jurisdiction over the forces of the sending State only to the
extent agreed upon by the parties.1
ISSUE: WON the presence of US Armed Forces in Philippine
territory pursuant to the VFA is allowed "under a treaty duly VFA rules regarding detention
concurred in by the Senate xxx and recognized as a treaty by
the other contracting State." Article V

HELD: YES. Criminal Jurisdiction

First, as held in Bayan v. Zamora,5 the VFA was duly concurred xxx

in by the Philippine Senate and has been recognized as a
treaty by the United States as attested and certified by the Sec. 10. The confinement or detention by Philippine
duly authorized representative of the United States authorities of United States personnel shall be carried out in
government. facilities agreed on by appropriate Philippines and United
States authorities. United States personnel serving sentences
The second reason has to do with the relation between the in the Philippines shall have the right to visits and material
VFA and the RP-US Mutual Defense Treaty of August 30, assistance.
1951. This earlier agreement was signed and duly ratified
with the concurrence of both the Philippine Senate and the Custody v. Detention under VFA, Romulo-Kennedy
United States Senate. agreements not in accord

The VFA, which is the instrument agreed upon to provide for It is clear that the parties to the VFA recognized the
the joint RP-US military exercises, is simply an implementing difference between custody during the trial and detention
agreement to the main RP-US Military Defense Treaty. after conviction, because they provided for a specific
arrangement to cover detention. And this specific
The provision of the Constitution is Art. XVIII, Sec. 25 arrangement clearly states not only that the detention shall
be carried out in facilities agreed on by authorities of both
parties, but also that the detention shall be "by Philippine
authorities." Therefore, the Romulo-Kenney Agreements of SENATOR AQUILINO PIMENTEL, JR., REP. ETTA ROSALES,
December 19 and 22, 2006, which are agreements on the PHILIPPINE COALITION FOR THE ESTABLISHMENT OF THE
detention of the accused in the United States Embassy, are INTERNATIONAL CRIMINAL COURT, TASK FORCE DETAINEES
not in accord with the VFA itself because such detention is OF THE PHILIPPINES, FAMILIES OF VICTIMS OF
not "by Philippine authorities." INVOLUNTARY DISAPPEARANCES, BIANCA HACINTHA R.
ROQUE, HARRISON JACOB R. ROQUE, AHMED
PAGLINAWAN, RON P. SALO,* LEAVIDES G. DOMINGO,
EDGARDO CARLO VISTAN, NOEL VILLAROMAN, CELESTE
Additional matters CEMBRANO, LIZA ABIERA, JAIME ARROYO, MARWIL LLASOS,
CRISTINA ATENDIDO, ISRAFEL FAGELA, and ROMEL
BAGARES, Petitioners,
the Court addresses the recent decision of the United States
vs.
Supreme Court in Medellin v. Texas ( 552 US ___ No. 06-984,
OFFICE OF THE EXECUTIVE SECRETARY, HON. ALBERTO
March 25, 2008), which held that treaties entered into by the
ROMULO, and the DEPARTMENT OF FOREIGN AFFAIRS,
United States are not automatically part of their domestic law
represented by HON. BLAS OPLE, Respondents.
unless these treaties are self-executing or there is an
implementing legislation to make them enforceable.
FACTS:
the Court issued a Resolution, thus:
This is a petition for mandamus filed by petitioners to compel
the Office of the Executive Secretary and the Department of
"G.R. No. 175888 (Suzette Nicolas y Sombilon v. Alberto
Foreign Affairs to transmit the signed copy of the Rome
Romulo, et al.); G.R. No. 176051 (Jovito R. Salonga, et al. v.
Statute of the International Criminal Court to the Senate of
Daniel Smith, et al.); and G.R. No. 176222 (Bagong Alyansang
the Philippines for its concurrence in accordance with Section
Makabayan [BAYAN], et al. v. President Gloria Macapagal-
21, Article VII of the 1987 Constitution.
Arroyo, et al.).

Petitioners’ contention: It is the theory of the petitioners that

First, the VFA is a self-executing Agreement, as that term is
ratification of a treaty, under both domestic law and
defined in Medellin itself, because the parties intend its
international law, is a function of the Senate. Hence, it is the
provisions to be enforceable, precisely because the
duty of the executive department to transmit the signed copy
Agreement is intended to carry out obligations and
of the Rome Statute to the Senate to allow it to exercise its
undertakings under the RP-US Mutual Defense Treaty
discretion with respect to ratification of treaties.
Secondly, the VFA is covered by implementing legislation,
namely, the Case-Zablocki Act, USC Sec. 112(b), inasmuch as
it is the very purpose and intent of the US Congress that Moreover, petitioners submit that the Philippines has a
executive agreements registered under this Act within 60 ministerial duty to ratify the Rome Statute under treaty law
days from their ratification be immediately implemented. and customary international law.

Finally, the RP-US Mutual Defense Treaty was advised and ISSUE: WON the executive may be compelled to pass the
consented to by the US Senate on March 20, 1952, as signed copy of the Rome Statute of the International Criminal
reflected in the US Congressional Record, 82nd Congress, Court to the Senate of the Philippines for its concurrence
Second Session, Vol. 98 – Part 2, pp. 2594-2595.
HELD: NO. the President is vested with the authority to deal
Accordingly, there are three types of treaties in the American with foreign states and governments, extend or withhold
system: recognition, maintain diplomatic relations, enter into treaties,
and otherwise transact the business of foreign relations. 13 In
the realm of treaty-making, the President has the sole
1. Art. II, Sec. 2 treaties – These are advised and consented to
authority to negotiate with other states.
by the US Senate in accordance with Art. II, Sec. 2 of the US
Constitution.
Treaty making process by Justice Cruz
2. Executive–Congressional Agreements: These are joint
agreements of the President and Congress and need not be The usual steps in the treaty-making process are: negotiation,
submitted to the Senate. signature, ratification, and exchange of the instruments of
ratification. The treaty may then be submitted for registration
and publication under the U.N. Charter, although this step is
3. Sole Executive Agreements. – These are agreements
not essential to the validity of the agreement as between the
entered into by the President. They are to be submitted to
parties.
Congress within sixty (60) days of ratification under the
provisions of the Case-Zablocki Act, after which they are
recognized by the Congress and may be implemented. Negotiation may be undertaken directly by the head of state
but he now usually assigns this task to his authorized
representatives. These representatives are provided with
credentials known as full powers, which they exhibit to the
other negotiators at the start of the formal discussions. It is
standard practice for one of the parties to submit a draft of
the proposed treaty which, together with the counter-
proposals, becomes the basis of the subsequent negotiations.
The negotiations may be brief or protracted, depending on
the issues involved, and may even "collapse" in case the
parties are unable to come to an agreement on the points
under consideration.

If and when the negotiators finally decide on the terms of the

treaty, the same is opened for signature. This step is primarily
intended as a means of authenticating the instrument and for
the purpose of symbolizing the good faith of the parties; but,
significantly, it does not indicate the final consent of the
state in cases where ratification of the treaty is required.
The document is ordinarily signed in accordance with Hence, it is within the authority of the President to refuse to
the alternat, that is, each of the several negotiators is allowed submit a treaty to the Senate or, having secured its consent
to sign first on the copy which he will bring home to his own for its ratification, refuse to ratify it.21 
state.
Although the refusal of a state to ratify a treaty which has
Ratification, which is the next step, is the formal act by which been signed in its behalf is a serious step that should not be
a state confirms and accepts the provisions of a treaty taken lightly,22 such decision is within the competence of the
concluded by its representatives. The purpose of ratification President alone, which cannot be encroached by this
is to enable the contracting states to examine the treaty Court via a writ of mandamus.
more closely and to give them an opportunity to refuse to
be bound by it should they find it inimical to their interests.
It is for this reason that most treaties are made subject to
the scrutiny and consent of a department of the
government other than that which negotiated them.

The last step in the treaty-making process is the exchange of

the instruments of ratification, which usually also signifies the
effectivity of the treaty unless a different date has been
agreed upon by the parties. Where ratification is dispensed
with and no effectivity clause is embodied in the treaty, the
instrument is deemed effective upon its signature.

Signing vs. Ratification

As earlier discussed, the signature is primarily intended as a

means of authenticating the instrument and as a symbol of
the good faith of the parties. It is usually performed by the
state’s authorized representative in the diplomatic mission.

Ratification, on the other hand, is the formal act by which a

state confirms and accepts the provisions of a treaty
concluded by its representative. It is generally held to be an
executive act, undertaken by the head of the state or of the
government.

Executive Order No. 459 issued by President Fidel V. Ramos

on November 25, 1997 provides the guidelines in the
negotiation of international agreements and its ratification.

It mandates that after the treaty has been signed by the

Philippine representative, the same shall be transmitted to
the Department of Foreign Affairs.

The Department of Foreign Affairs shall then prepare the

ratification papers and forward the signed copy of the treaty
to the President for ratification.

After the President has ratified the treaty, the Department of

Foreign Affairs shall submit the same to the Senate for
concurrence. Upon receipt of the concurrence of the Senate,
the Department of Foreign Affairs shall comply with the
provisions of the treaty to render it effective.

Phils not bound to ratify a treaty which has been signed

Petitioners’ submission that the Philippines is bound under

treaty law and international law to ratify the treaty which it
has signed is without basis. The signature does not signify the
final consent of the state to the treaty. It is the ratification
that binds the state to the provisions thereof

Thus, the President has the discretion even after the signing
of the treaty by the Philippine representative whether or not
to ratify the same.

President have the power to ratify, Congress merely won

they will concur with such ratification

It should be emphasized that under our Constitution, the

power to ratify is vested in the President, subject to the
concurrence of the Senate. The role of the Senate, however,
is limited only to giving or withholding its consent, or
concurrence, to the ratification.20 
G.R. No. 106064 October 13, 2005 Specific legal authority for the buyback of loans is established
under Section 2 of Republic Act (R.A.) No. 240, viz:
Spouses Renato Constantino, Jr. and Lourdes Constantino
and their minor children Renato Redentor, Anna Marika Sec. 2. The Secretary of Finance shall cause to be paid out of
Lissa, Nina Elissa, and Anna Karmina, Freedom From Debt any moneys in the National Treasury not otherwise
Coalition, and Filomeno Sta. Ana III, Petitioners, appropriated, or from any sinking funds provided for the
vs. purpose by law, any interest falling due, or accruing, on any
Hon. Jose B. Cuisia, in his capacity as Governor of the portion of the public debt authorized by law. He shall also
Central Bank, Hon. Ramon del Rosario, in his capacity as cause to be paid out of any such money, or from any such
Secretary of Finance, Hon. Emmanuel V. Pelaez, in his sinking funds the principal amount of any obligations which
capacity as Philippine Debt Negotiating Chairman, and the have matured, or which have been called for redemption or
NATIONAL TREASURER, Respondents. for which redemption has been demanded in accordance
with terms prescribed by him prior to date of issue: Provided,
FACTS: however, That he may, if he so chooses and if the holder is
willing, exchange any such obligation with any other direct or
guaranteed obligation or obligations of the Philippine
During the Corazon Aquino regime, her administration came Government of equivalent value. In the case of interest-
up with a scheme to reduce the country’s external debt. The bearing obligations, he shall pay not less than their face
solution resorted to was to incur foreign debts. Three value; in the case of obligations issued at a discount he shall
restructuring programs were sought to initiate the program pay the face value at maturity; or, if redeemed prior to
for foreign debts, they are basically buyback programs and maturity, such portion of the face value as is prescribed by
bond-conversion programs. the terms and conditions under which such obligations were
originally issued. (Emphasis supplied.)
Petitioners’ Contention: Petitioners averred that the buyback
and bond-conversion schemes were onerous and they do not The afore-quoted provisions of law specifically allow the
constitute the loan “contract” or “guarantee” contemplated President to pre-terminate debts without further action from
in Sec. 20, Art. VII of the Constitution. Congress.

Second, according to petitioners even assuming that the Second Issue: Delegation of Power
contracts under the Financing Program are constitutionally
permissible, yet it is only the President who may exercise the The evident exigency of having the Secretary of Finance
power to enter into these contracts and such power may not implement the decision of the President to execute the debt-
be delegated to respondents. relief contracts is made manifest by the fact that the process
of establishing and executing a strategy for managing the
ISSUE: government’s debt is deep within the realm of the expertise
of the Department of Finance, primed as it is to raise the
required amount of funding, achieve its risk and cost
HELD:
objectives, and meet any other sovereign debt management
goals.
First Issue: The Scope of Section 20, Article VII
If, as petitioners would have it, the President were to
For their first constitutional argument, petitioners submit that personally exercise every aspect of the foreign borrowing
the buyback and bond-conversion schemes do not constitute power, he/she would have to pause from running the country
the loan "contract" or "guarantee" contemplated in the long enough to focus on a welter of time-consuming detailed
Constitution and are consequently prohibited. activities

The language of the Constitution is simple and clear as it is Doctrine of qualified political agency
broad. It allows the President to contract and guarantee
foreign loans. It makes no prohibition on the issuance of
As it was, the backdrop consisted of a major policy
certain kinds of loans or distinctions as to which kinds of debt
determination made by then President Aquino that sovereign
instruments are more onerous than others. This Court may
debts have to be respected and the concomitant reality that
not ascribe to the Constitution meanings and restrictions that
the Philippines did not have enough funds to pay the debts.
would unduly burden the powers of the President.
Inevitably, it fell upon the Secretary of Finance, as the alter
ego of the President regarding "the sound and efficient
The only restriction that the Constitution provides, aside from management of the financial resources of the
the prior concurrence of the Monetary Board, is that the Government,"57  to formulate a scheme for the
loans must be subject to limitations provided by law. implementation of the policy publicly expressed by the
President herself.
On the Buyback Scheme
Power to contract or guarantee foreign debts does not fall
In their Comment,  petitioners assert that the power to pay within the non-delegable powers of the President
public debts lies with Congress and was deliberately withheld
by the Constitution from the President. We cannot conclude that the power of the President to
contract or guarantee foreign debts falls within the same
However, the law-making authority has promulgated a law exceptional class. Indubitably, the decision to contract or
ordaining an automatic appropriations provision for debt guarantee foreign debts is of vital public interest, but only
servicing46 by virtue of which the President is empowered to akin to any contractual obligation undertaken by the
execute debt payments without the need for further sovereign, which arises not from any extraordinary incident,
appropriations. but from the established functions of governance.
Debt service is not included in the General Appropriation Act,
since authorization therefor already exists under RA Nos.
4860 and 245, as amended, and PD 1967.
PLARIDEL M. ABAYA, COMMODORE PLARIDEL C. GARCIA The petitioners insist that Loan Agreement No. PH-P204
(retired) and PMA ’59 FOUNDATION, INC., rep. by its between the JBIC and the Philippine Government is neither a
President, COMMODORE CARLOS L. AGUSTIN treaty, an international nor an executive agreement that
(retired), Petitioners, would bar the application of RA 9184. They point out that to
vs. be considered a treaty, an international or an executive
HON. SECRETARY HERMOGENES E. EBDANE, JR., in his agreement, the parties must be two sovereigns or States
capacity as Secretary of the DEPARTMENT OF PUBLIC whereas in the case of Loan Agreement No. PH-P204, the
WORKS and HIGHWAYS, HON. SECRETARY EMILIA T. parties are the Philippine Government and the JBIC, a banking
BONCODIN, in her capacity as Secretary of the agency of Japan, which has a separate juridical personality
DEPARTMENT OF BUDGET and MANAGEMENT, HON. from the Japanese Government. (The petitioners, in order to
SECRETARY CESAR V. PURISIMA, in his capacity as Secretary place the procurement process undertaken for the CP I
of the DEPARTMENT OF FINANCE, HON. TREASURER project within the ambit of RA 9184, vigorously assert that
NORMA L. LASALA, in her capacity as Treasurer of the Loan Agreement No. PH-P204 is neither a treaty, an
Bureau of Treasury, and CHINA ROAD and BRIDGE international agreement nor an executive agreement.)
CORPORATION, Respondents.
Respondents’ contention: On the merits, the public
FACTS: respondents maintain that the imposition of ceilings or upper
limits on bid prices in RA 9184 does not apply because the CP
On May 7, 2004 Bids and Awards Committee (BAC) of I project and the entire Catanduanes Circumferential Road
the Department of Public Works and Highways (DPWH) Improvement Project, financed by Loan Agreement No. PH-
issued a Resolution No. PJHL-A-04-012. P204 executed between the Philippine Government and the
JBIC, is governed by the latter’s Procurement Guidelines
It was approved by DPWH Acting Secretary Florante which precludes the imposition of ceilings on bid prices.
Soriquez. This resolution recommended the award to
China Road & Bridge Corporation of the contract for The public respondents characterize foreign loan agreements,
the implementation of civil works for Contract Package including Loan Agreement No. PH-P204, as executive
No. I (CP I), which consists of the agreements and, as such, should be observed pursuant to the
improvement/rehabilitation of the San Andres-Virac- fundamental principle in international law of pacta sunt
Jct. Bago-Viga road, with the lengt of 79.818 servanda.33 They cite Section 20 of Article VII of the
kilometers, in the island province of Catanduanes. Constitution as giving the President the authority to contract
foreign loans
Based on the Exchange of Notes dated December 27,
1999,1 the Government of Japan and the Government of the ISSUE: WON the Loan Agreement No. PH-204 between
Philippines, through their respective representatives, namely, the JBIC and the Philippine Government is a kind of a
Mr. Yoshihisa Ara, Ambassador Extraordinary and treaty
Plenipotentiary of Japan to the Republic of the Philippines,
and then Secretary of Foreign Affairs Domingo L. Siazon, have HELD: YES. It is an executive agreement.
reached an understanding concerning Japanese loans to be
extended to the Philippines.
Loan Agreement No. PH-P204 was subsequently executed
and it declared that it was so entered by the parties "[i]n the
Thus, in accordance with the agreement reached by the light of the contents of the Exchange of Notes between the
Government of Japan and the Philippine Government, as Government of Japan and the Government of the Republic of
expressed in the Exchange of Notes between the the Philippines dated December 27, 1999, concerning
representatives of the two governments, the Philippines Japanese loans to be extended with a view to promoting the
obtained from and was granted a loan by the JBIC. Loan economic stabilization and development efforts of the
Agreement No. PH-P204 Republic of the Philippines."65 Under the circumstances, the
JBIC may well be considered an adjunct of the Japanese
Loan Agreement No. PH-P204, dated December 28, 1999, Government. Further, Loan Agreement No. PH-P204 is
between JAPAN BANK FOR INTERNATIONAL COOPERATION indubitably an integral part of the Exchange of Notes. It forms
and the GOVERNMENT OF THE REPUBLIC OF THE part of the Exchange of Notes such that it cannot be properly
PHILIPPINES. taken independent thereof.

Petitioners’ contention: the petitioners anchor the instant Definition of exchange of notes
petition on the contention that the award of the contract to
private respondent China Road & Bridge Corporation violates An "exchange of notes" is a record of a routine agreement
RA 9184, particularly Section 31 thereof which reads that has many similarities with the private law contract. The
agreement consists of the exchange of two documents, each
SEC. 31. Ceiling for Bid Prices. – The ABC shall be the upper of the parties being in the possession of the one signed by the
limit or ceiling for the Bid prices. Bid prices that exceed this representative of the other. Under the usual procedure, the
ceiling shall be disqualified outright from further participating accepting State repeats the text of the offering State to
in the bidding. There shall be no lower limit to the amount of record its assent. The signatories of the letters may be
the award. government Ministers, diplomats or departmental heads. The
technique of exchange of notes is frequently resorted to,
The petitioners theorize that the foregoing provisions show either because of its speedy procedure, or, sometimes, to
the mandatory character of ceilings or upper limits of every avoid the process of legislative approval.
bid. Under the above-quoted provisions of RA 9184, all bids
or awards should not exceed the ceilings or upper limits; It is stated that "treaties, agreements, conventions, charters,
otherwise, the contract is deemed void and inexistent. protocols, declarations, memoranda of understanding, modus
vivendi and exchange of notes" all refer to "international
Resolution No. PJHL-A-04-012 was allegedly issued with grave instruments binding at international law."
abuse of discretion because it recommended the award of
the contract to private respondent China Road & Bridge Significantly, an exchange of notes is considered a form of an
Corporation whose bid was more than ₱200 million executive agreement, which becomes binding through
overpriced based on the ABC.
executive action without the need of a vote by the Senate or
Congress.

Virtue of pacta sunt servanda

Under the fundamental principle of international law of pacta

sunt servanda,73 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
THE PROVINCE OF NORTH COTABATO, duly represented by addition to the parties to the conflict, the document
GOVERNOR JESUS SACDALAN and/or VICE-GOVERNOR formalizing the settlement is signed by foreign heads of
EMMANUEL PIÑOL, for and in his own behalf, petitioners, state or their representatives and representatives of
vs. international organizations, means the agreement of the
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES parties is internationalized so as to create obligations in
PEACE PANEL ON ANCESTRAL DOMAIN (GRP), represented international law.
by SEC. RODOLFO GARCIA, ATTY. LEAH ARMAMENTO, ATTY.
SEDFREY CANDELARIA, MARK RYAN SULLIVAN and/or GEN. xxxx
HERMOGENES ESPERON, JR., the latter in his capacity as the
present and duly-appointed Presidential Adviser on the 40. Almost every conflict resolution will involve the parties to
Peace Process (OPAPP) or the so-called Office of the the conflict and the mediator or facilitator of the settlement, or
Presidential Adviser on the Peace Process, respondents. persons or bodies under whose auspices the settlement took
place but who are not at all parties to the conflict, are not
contracting parties and who do not claim any obligation from
FACTS:
the contracting parties or incur any obligation from the
settlement.
Concerns have been raised that the MOA-AD would have
given rise to a binding international law obligation on the part
41. In this case, the parties to the conflict are the lawful
of the Philippines to change its Constitution in conformity
authority of the State and the RUF which has no status of
thereto, on the ground that it may be considered either as a
statehood and is to all intents and purposes a faction
binding agreement under international law, or a unilateral
within the state. The non-contracting signatories of the
declaration of the Philippine government to the international
Lomé Agreement were moral guarantors of the principle
community that it would grant to the Bangsamoro people all
that, in the terms of Article XXXIV of the Agreement,
the concessions therein stated. Neither ground finds sufficient
"this peace agreement is implemented with integrity and
support in international law, however.
in good faith by both parties". The moral guarantors
assumed no legal obligation. It is recalled that the UN by its
The MOA-AD, as earlier mentioned in the overview thereof, representative appended, presumably for avoidance of doubt,
would have included foreign dignitaries as signatories. In an understanding of the extent of the agreement to be
addition, representatives of other nations were invited to implemented as not including certain international crimes.
witness its signing in Kuala Lumpur. These circumstances
readily lead one to surmise that the MOA-AD would have had
42. An international agreement in the nature of a treaty must
the status of a binding international agreement had it been
create rights and obligations regulated by international law so
signed. An examination of the prevailing principles in
that a breach of its terms will be a breach determined under
international law, however, leads to the contrary conclusion.
international law which will also provide principle means of
enforcement. The Lomé Agreement created neither rights
The Decision on Challenge to Jurisdiction: Lomé Accord nor obligations capable of being regulated by international
Amnesty180 (the Lomé Accord case) of the Special Court of law. An agreement such as the Lomé Agreement which
Sierra Leone is enlightening. The Lomé Accord was a peace brings to an end an internal armed conflict no doubt
agreement signed on July 7, 1999 between the Government of creates a factual situation of restoration of peace that the
Sierra Leone and the Revolutionary United Front (RUF), a international community acting through the Security
rebel group with which the Sierra Leone Government had Council may take note of. That, however, will not convert
been in armed conflict for around eight years at the time of it to an international agreement which creates an
signing. There were non-contracting signatories to the obligation enforceable in international, as distinguished
agreement, among which were the Government of the from municipal, law. A breach of the terms of such a peace
Togolese Republic, the Economic Community of West agreement resulting in resumption of internal armed conflict
African States, and the UN. or creating a threat to peace in the determination of the
Security Council may indicate a reversal of the factual
On January 16, 2002, after a successful negotiation between situation of peace to be visited with possible legal
the UN Secretary-General and the Sierra Leone Government, consequences arising from the new situation of conflict
another agreement was entered into by the UN and that created. Such consequences such as action by the Security
Government whereby the Special Court of Sierra Leone was Council pursuant to Chapter VII arise from the situation and
established. The sole purpose of the Special Court, an not from the agreement, nor from the obligation imposed by it.
international court, was to try persons who bore the greatest Such action cannot be regarded as a remedy for the breach. A
responsibility for serious violations of international peace agreement which settles an internal armed conflict
humanitarian law and Sierra Leonean law committed in the cannot be ascribed the same status as one which settles an
territory of Sierra Leone since November 30, 1996. international armed conflict which, essentially, must be
between two or more warring States. The Lomé
Among the stipulations of the Lomé Accord was a provision Agreement cannot be characterised as an international
for the full pardon of the members of the RUF with respect to instrument. x x x" (Emphasis, italics and underscoring
anything done by them in pursuit of their objectives as supplied)
members of that organization since the conflict began.
Similarly, that the MOA-AD would have been signed by
In the Lomé Accord case, the Defence argued that the Accord representatives of States and international organizations not
created an internationally binding obligation not to prosecute parties to the Agreement would not have sufficed to vest in it a
the beneficiaries of the amnesty provided therein, citing, binding character under international law.
among other things, the participation of foreign dignitaries and
international organizations in the finalization of that In another vein, concern has been raised that the MOA-AD
agreement. The Special Court, however, rejected this would amount to a unilateral declaration of the Philippine
argument, ruling that the Lome Accord is not a treaty and that State, binding under international law, that it would comply
it can only create binding obligations and rights between the with all the stipulations stated therein, with the result that it
parties in municipal law, not in international law. Hence, the would have to amend its Constitution accordingly regardless
Special Court held, it is ineffective in depriving an of the true will of the people. Cited as authority for this view
international court like it of jurisdiction. is Australia v. France,181 also known as the Nuclear Tests
Case, decided by the International Court of Justice (ICJ).
"37. In regard to the nature of a negotiated settlement of
an internal armed conflict it is easy to assume and to argue In the Nuclear Tests Case, Australia challenged before the ICJ
with some degree of plausibility, as Defence counsel for the the legality of France's nuclear tests in the South Pacific.
defendants seem to have done, that the mere fact that in France refused to appear in the case, but public statements
from its President, and similar statements from other French African Unity on a frontier dispute then pending between Mali
officials including its Minister of Defence, that its 1974 series and Burkina Faso.
of atmospheric tests would be its last, persuaded the ICJ to
dismiss the case. 182 Those statements, the ICJ held, amounted Unlike in the Nuclear Tests Case, the ICJ held that the
to a legal undertaking addressed to the international statement of Mali's President was not a unilateral act with
community, which required no acceptance from other States legal implications. It clarified that its ruling in the Nuclear
for it to become effective. Tests case rested on the peculiar circumstances surrounding
the French declaration subject thereof, to wit:
Essential to the ICJ ruling is its finding that the French
government intended to be bound to the international 40. In order to assess the intentions of the author of a
community in issuing its public statements, viz: unilateral act, account must be taken of all the factual
circumstances in which the act occurred. For example, in the
43. It is well recognized that declarations made by way Nuclear Tests cases, the Court took the view that since the
of unilateral acts, concerning legal or factual situations, may applicant States were not the only ones concerned at the
have the effect of creating legal obligations. Declarations of possible continuance of atmospheric testing by the French
this kind may be, and often are, very specific. When it is the Government, that Government's unilateral declarations
intention of the State making the declaration that it should had ‘conveyed to the world at large, including the
become bound according to its terms, that intention Applicant, its intention effectively to terminate these
confers on the declaration the character of a legal tests‘ (I.C.J. Reports 1974, p. 269, para. 51; p. 474, para.
undertaking, the State being thenceforth legally required 53). In the particular circumstances of those cases, the
to follow a course of conduct consistent with the French Government could not express an intention to be
declaration. An undertaking of this kind, if given publicly, bound otherwise than by unilateral declarations. It is
and with an intent to be bound, even though not made within difficult to see how it could have accepted the terms of a
the context of international negotiations, is binding. In these negotiated solution with each of the applicants without
circumstances, nothing in the nature of a quid pro quo nor any thereby jeopardizing its contention that its conduct was
subsequent acceptance of the declaration, nor even any reply lawful. The circumstances of the present case are radically
or reaction from other States, is required for the declaration to different. Here, there was nothing to hinder the Parties
take effect, since such a requirement would be inconsistent from manifesting an intention to accept the binding
with the strictly unilateral nature of the juridical act by which character of the conclusions of the Organization of African
the pronouncement by the State was made. Unity Mediation Commission by the normal method: a
formal agreement on the basis of reciprocity. Since no
44. Of course, not all unilateral acts imply obligation; but a agreement of this kind was concluded between the Parties, the
State may choose to take up a certain position in relation Chamber finds that there are no grounds to interpret the
to a particular matter with the intention of being bound- declaration made by Mali's head of State on 11 April 1975 as a
the intention is to be ascertained by interpretation of the unilateral act with legal implications in regard to the present
act. When States make statements by which their freedom of case. (Emphasis and underscoring supplied)
action is to be limited, a restrictive interpretation is called for.
Assessing the MOA-AD in light of the above criteria, it would
xxxx not have amounted to a unilateral declaration on the part of the
Philippine State to the international community. The
51. In announcing that the 1974 series of atmospheric tests Philippine panel did not draft the same with the clear intention
would be the last, the French Government conveyed to the of being bound thereby to the international community as a
world at large, including the Applicant, its intention whole or to any State, but only to the MILF. While there were
effectively to terminate these tests. It was bound to assume States and international organizations involved, one way or
that other States might take note of these statements and another, in the negotiation and projected signing of the MOA-
rely on their being effective. The validity of these AD, they participated merely as witnesses or, in the case of
statements and their legal consequences must be Malaysia, as facilitator. As held in the Lomé Accord case, the
considered within the general framework of the security of mere fact that in addition to the parties to the conflict, the
international intercourse, and the confidence and trust which peace settlement is signed by representatives of states and
are so essential in the relations among States. It is from the international organizations does not mean that the agreement
actual substance of these statements, and from the is internationalized so as to create obligations in international
circumstances attending their making, that the legal law.
implications of the unilateral act must be deduced. The
objects of these statements are clear and they were Since the commitments in the MOA-AD were not addressed to
addressed to the international community as a whole, and States, not to give legal effect to such commitments would not
the Court holds that they constitute an undertaking be detrimental to the security of international intercourse - to
possessing legal effect. The Court considers *270 that the the trust and confidence essential in the relations among
President of the Republic, in deciding upon the effective States.
cessation of atmospheric tests, gave an undertaking to the
international community to which his words were addressed. x In one important respect, the circumstances surrounding the
x x (Emphasis and underscoring supplied) MOA-AD are closer to that of Burkina Faso wherein, as
already discussed, the Mali President's statement was not held
As gathered from the above-quoted ruling of the ICJ, public to be a binding unilateral declaration by the ICJ. As in that
statements of a state representative may be construed as case, there was also nothing to hinder the Philippine panel,
a unilateral declaration only when the following conditions are had it really been its intention to be bound to other States, to
present: the statements were clearly addressed to the manifest that intention by formal agreement. Here, that formal
international community, the state intended to be bound to that agreement would have come about by the inclusion in the
community by its statements, and that not to give legal effect MOA-AD of a clear commitment to be legally bound to the
to those statements would be detrimental to the security of international community, not just the MILF, and by an equally
international intercourse. Plainly, unilateral declarations arise clear indication that the signatures of the participating states-
only in peculiar circumstances. representatives would constitute an acceptance of that
commitment. Entering into such a formal agreement would not
The limited applicability of the Nuclear Tests Case ruling was have resulted in a loss of face for the Philippine government
recognized in a later case decided by the ICJ entitled Burkina before the international community, which was one of the
Faso v. Mali,183 also known as the Case Concerning the difficulties that prevented the French Government from
Frontier Dispute. The public declaration subject of that case entering into a formal agreement with other countries. That the
was a statement made by the President of Mali, in an interview Philippine panel did not enter into such a formal agreement
by a foreign press agency, that Mali would abide by the suggests that it had no intention to be bound to the
decision to be issued by a commission of the Organization of international community. On that ground, the MOA-AD
may not be considered a unilateral declaration under The contents of the MOA-AD is a matter of paramount public
international law. concern involving public interest in the highest order. In
declaring that the right to information contemplates steps and
The MOA-AD not being a document that can bind the negotiations leading to the consummation of the contract,
Philippines under international law notwithstanding, jurisprudence finds no distinction as to the executory nature or
respondents' almost consummated act of guaranteeing commercial character of the agreement.
amendments to the legal framework is, by itself, sufficient
to constitute grave abuse of discretion. The grave abuse lies An essential element of these twin freedoms is to keep a
not in the fact that they considered, as a solution to the Moro continuing dialogue or process of communication between the
Problem, the creation of a state within a state, but in their government and the people. Corollary to these twin rights is
brazen willingness to guarantee that Congress and the the design for feedback mechanisms. The right to public
sovereign Filipino people would give their imprimatur to consultation was envisioned to be a species of these public
their solution. Upholding such an act would amount to rights.
authorizing a usurpation of the constituent powers vested only
in Congress, a Constitutional Convention, or the people At least three pertinent laws animate these constitutional
themselves through the process of initiative, for the only way imperatives and justify the exercise of the people's right to be
that the Executive can ensure the outcome of the amendment consulted on relevant matters relating to the peace agenda.
process is through an undue influence or interference with that
process. One, E.O. No. 3 itself is replete with mechanics for continuing
consultations on both national and local levels and for a
The sovereign people may, if it so desired, go to the extent of principal forum for consensus-building. In fact, it is the duty
giving up a portion of its own territory to the Moros for the of the Presidential Adviser on the Peace Process to conduct
sake of peace, for it can change the Constitution in any it regular dialogues to seek relevant information, comments,
wants, so long as the change is not inconsistent with what, in advice, and recommendations from peace partners and
international law, is known as Jus Cogens.184 Respondents, concerned sectors of society.
however, may not preempt it in that decision.
Two, Republic Act No. 7160 or the Local Government Code
SUMMARY of 1991 requires all national offices to conduct consultations
before any project or program critical to the environment and
The petitions are ripe for adjudication. The failure of human ecology including those that may call for the eviction
respondents to consult the local government units or of a particular group of people residing in such locality, is
communities affected constitutes a departure by respondents implemented therein. The MOA-AD is one peculiar program
from their mandate under E.O. No. 3. Moreover, respondents that unequivocally and unilaterally vests ownership of a vast
exceeded their authority by the mere act of guaranteeing territory to the Bangsamoro people, which could pervasively
amendments to the Constitution. Any alleged violation of the and drastically result to the diaspora or displacement of a great
Constitution by any branch of government is a proper matter number of inhabitants from their total environment.
for judicial review.
Three, Republic Act No. 8371 or the Indigenous Peoples
As the petitions involve constitutional issues which are of Rights Act of 1997 provides for clear-cut procedure for the
paramount public interest or of transcendental importance, the recognition and delineation of ancestral domain, which entails,
Court grants the petitioners, petitioners-in-intervention and among other things, the observance of the free and prior
intervening respondents the requisite locus standi in keeping informed consent of the Indigenous Cultural
with the liberal stance adopted in David v. Macapagal-Arroyo. Communities/Indigenous Peoples. Notably, the statute does
not grant the Executive Department or any government
Contrary to the assertion of respondents that the non-signing agency the power to delineate and recognize an ancestral
of the MOA-AD and the eventual dissolution of the GRP domain claim by mere agreement or compromise.
Peace Panel mooted the present petitions, the Court finds that
the present petitions provide an exception to the "moot and The invocation of the doctrine of executive privilege as a
academic" principle in view of (a) the grave violation of the defense to the general right to information or the specific right
Constitution involved; (b) the exceptional character of the to consultation is untenable. The various explicit legal
situation and paramount public interest; (c) the need to provisions fly in the face of executive secrecy. In any event,
formulate controlling principles to guide the bench, the bar, respondents effectively waived such defense after it
and the public; and (d) the fact that the case is capable of unconditionally disclosed the official copies of the final draft
repetition yet evading review. of the MOA-AD, for judicial compliance and public scrutiny.

The MOA-AD is a significant part of a series of agreements In sum, the Presidential Adviser on the Peace Process
necessary to carry out the GRP-MILF Tripoli Agreement on committed grave abuse of discretion when he failed to carry
Peace signed by the government and the MILF back in June out the pertinent consultation process, as mandated by E.O.
2001. Hence, the present MOA-AD can be renegotiated or No. 3, Republic Act No. 7160, and Republic Act No. 8371.
another one drawn up that could contain similar or The furtive process by which the MOA-AD was designed and
significantly dissimilar provisions compared to the original. crafted runs contrary to and in excess of the legal authority,
and amounts to a whimsical, capricious, oppressive, arbitrary
The Court, however, finds that the prayers for mandamus have and despotic exercise thereof. It illustrates a gross evasion of
been rendered moot in view of the respondents' action in positive duty and a virtual refusal to perform the duty
providing the Court and the petitioners with the official copy enjoined.
of the final draft of the MOA-AD and its annexes.
The MOA-AD cannot be reconciled with the present
The people's right to information on matters of public concern Constitution and laws. Not only its specific provisions but the
under Sec. 7, Article III of the Constitution is in splendid very concept underlying them, namely, the associative
symmetry with the state policy of full public disclosure of all relationship envisioned between the GRP and the
its transactions involving public interest under Sec. 28, Article BJE, are unconstitutional, for the concept presupposes that
II of the Constitution. The right to information guarantees the the associated entity is a state and implies that the same is on
right of the people to demand information, while Section 28 its way to independence.
recognizes the duty of officialdom to give information even if
nobody demands. The complete and effective exercise of the While there is a clause in the MOA-AD stating that the
right to information necessitates that its complementary provisions thereof inconsistent with the present legal
provision on public disclosure derive the same self-executory framework will not be effective until that framework is
nature, subject only to reasonable safeguards or limitations as amended, the same does not cure its defect. The inclusion of
may be provided by law. provisions in the MOA-AD establishing an associative
relationship between the BJE and the Central Government is,
itself, a violation of the Memorandum of Instructions From
The President dated March 1, 2001, addressed to the
government peace panel. Moreover, as the clause is worded, it
virtually guarantees that the necessary amendments to the
Constitution and the laws will eventually be put in place.
Neither the GRP Peace Panel nor the President herself is
authorized to make such a guarantee. Upholding such an act
would amount to authorizing a usurpation of the constituent
powers vested only in Congress, a Constitutional Convention,
or the people themselves through the process of initiative, for
the only way that the Executive can ensure the outcome of the
amendment process is through an undue influence or
interference with that process.

While the MOA-AD would not amount to an international

agreement or unilateral declaration binding on the Philippines
under international law, respondents' act of guaranteeing
amendments is, by itself, already a constitutional violation that
renders the MOA-AD fatally defective.

WHEREFORE, respondents' motion to dismiss is DENIED.

The main and intervening petitions are GIVEN DUE
COURSE and hereby GRANTED.

The Memorandum of Agreement on the Ancestral Domain

Aspect of the GRP-MILF Tripoli Agreement on Peace of 2001
is declared contrary to law and the Constitution.

SO ORDERED.
G.R. No. 159618               February 1, 2011 Under international law, there is no difference between
treaties and executive agreements in terms of their binding
BAYAN MUNA, as represented by Rep. SATUR OCAMPO, effects on the contracting states concerned,34 as long as the
Rep. CRISPIN BELTRAN, and Rep. LIZA L. MAZA, Petitioner, negotiating functionaries have remained within their powers.
vs.
37
ALBERTO ROMULO, in his capacity as Executive Secretary,  As has been observed by US constitutional scholars, a treaty
and BLAS F. OPLE, in his capacity as Secretary of Foreign has greater "dignity" than an executive agreement, because
Affairs, Respondents. its constitutional efficacy is beyond doubt, a treaty having
behind it the authority of the President, the Senate, and the
FACTS: people;38 a ratified treaty, unlike an executive agreement,
takes precedence over any prior statutory enactment.
then Ambassador Francis J. Ricciardone sent US Embassy
Note No. 0470 to the Department of Foreign Affairs (DFA) There are no hard and fast rules on the propriety of entering,
proposing the terms of the non-surrender bilateral on a given subject, into a treaty or an executive agreement as
agreement (Agreement, hereinafter) between the USA and an instrument of international relations. The primary
the RP. consideration in the choice of the form of agreement is the
parties’ intent and desire to craft an international agreement
Via Exchange of Notes No. BFO-028-03 7 dated May 13, 2003 in the form they so wish to further their respective interests.
(E/N BFO-028-03, hereinafter), the RP, represented by then
DFA Secretary Ople, agreed with and accepted the US The RP-US Non-Surrender Agreement is an
proposals embodied under the US Embassy Note adverted to Exchange of Notes constituting an
and put in effect the Agreement with the US government. In intergovernmental agreement. It is an international
esse, the Agreement aims to protect what it refers to and agreement but not in treaty form. It does not
defines as "persons" of the RP and US from frivolous and
contravene the Rome Statute because the ICC
harassment suits that might be brought against them in
international tribunals.8 recognizes the primacy of international agreements.
Primary jurisdiction rests upon the state and
In response to a query of then Solicitor General Alfredo L. secondarily with the ICC.
Benipayo on the status of the non-surrender agreement,
Ambassador Ricciardone replied in his letter of October 28,
2003 that the exchange of diplomatic notes constituted a
legally binding agreement under international law; and that,
under US law, the said agreement did not require the advice
and consent of the US Senate

Petitioners’ contentions: petitioner imputes grave abuse of

discretion to respondents in concluding and ratifying
the Agreement and prays that it be struck down as
unconstitutional, or at least declared as without force and
effect.petitioner submits that the subject of
the Agreement does not fall under any of the subject-
categories that are enumerated in the Eastern Sea
Trading case, and that may be covered by an executive
agreement, such as commercial/consular relations, most-
favored nation rights, patent rights, trademark and copyright
protection, postal and navigation arrangements and
settlement of claims.

Respondents’ contention: respondents question petitioner’s

standing to maintain a suit and counter that the Agreement,
being in the nature of an executive agreement, does not
require Senate concurrence for its efficacy.

ISSUE: whether or not the Agreement, which has not been

submitted to the Senate for concurrence, contravenes and
undermines the Rome Statute and other treaties.

HELD: NO.

Senate Concurrence Not Required

Article 2 of the Vienna Convention on the Law of Treaties

defines a treaty as "an international agreement concluded
between states in written form and governed by international
law, whether embodied in a single instrument or in two or
more related instruments and whatever its particular
designation."32 International agreements may be in the form
of (1) treaties that require legislative concurrence after
executive ratification; or (2) executive agreements that are
similar to treaties, except that they do not require legislative
concurrence and are usually less formal and deal with a
narrower range of subject matters than treaties.
G.R. No. 185572               February 7, 2012 formal; and (c) deals with a narrower range of subject
matters.50
CHINA NATIONAL MACHINERY & EQUIPMENT CORP.
(GROUP), Petitioner, Despite these differences, to be considered an executive
vs. agreement, the following three requisites provided under the
HON. CESAR D. SANTAMARIA, in his official capacity as Vienna Convention must nevertheless concur: (a) the
Presiding Judge of Branch 145, Regional Trial Court of agreement must be between states; (b) it must be written;
Makati City, HERMINIO HARRY L. ROQUE, JR., JOEL R. and (c) it must governed by international law. The first and
BUTUYAN, ROGER R. RAYEL, ROMEL R. BAGARES, the third requisites do not obtain in the case at bar.
CHRISTOPHER FRANCISCO C. BOLASTIG, LEAGUE OF URBAN
POOR FOR ACTION (LUPA), KILUSAN NG MARALITA SA A. CNMEG is neither a government nor a government agency.
MEYCAUAYAN (KMM-LUPA CHAPTER), DANILO M.
CALDERON, VICENTE C. ALBAN, MERLYN M. VAAL, LOLITA S. The Contract Agreement was not concluded between the
QUINONES, RICARDO D. LANOZO, JR., CONCHITA G. GOZO, Philippines and China, but between Northrail and CNMEG. 51 
MA. TERESA D. ZEPEDA, JOSEFINA A. LANOZO, and SERGIO By the terms of the Contract Agreement, Northrail is a
C. LEGASPI, JR., KALIPUNAN NG DAMAYANG MAHIHIRAP government-owned or -controlled corporation, while CNMEG
(KADAMAY), EDY CLERIGO, RAMMIL DINGAL, NELSON B. is a corporation duly organized and created under the laws of
TERRADO, CARMEN DEUNIDA, and EDUARDO the People’s Republic of China.52 Thus, both Northrail and
LEGSON, Respondents. CNMEG entered into the Contract Agreement as entities with
personalities distinct and separate from the Philippine and
FACTS: Chinese governments, respectively.

petitioner China National Machinery & Equipment Corp. Neither can it be said that CNMEG acted as agent of the
(Group) (CNMEG), represented by its chairperson, Ren Chinese government. As previously discussed, the fact that
Hongbin, entered into a Memorandum of Understanding with Amb. Wang, in his letter dated 1 October 2003, 53 described
the North Luzon Railways Corporation (Northrail), CNMEG as a "state corporation" and declared its designation
represented by its president, Jose L. Cortes, Jr. for the as the Primary Contractor in the Northrail Project did not
conduct of a feasibility study on a possible railway line from mean it was to perform sovereign functions on behalf of
Manila to San Fernando, La Union China. That label was only descriptive of its nature as a state-
owned corporation, and did not preclude it from engaging in
The Chinese government designated the Export Import Bank purely commercial or proprietary ventures.
of China EXIM Bank as the lender, while the Philippine
government named the DOF as the borrower. APPLICABLE LAW AND GOVERNING LANGUAGE

Northrail and CNMEG executed a Contract Agreement for the The contract shall in all respects be read and construed in
construction of Section I, Phase I of the North Luzon Railway accordance with the laws of the Philippines.
System from Caloocan to Malolos on a turnkey basis (the
Contract Agreement). Since the Contract Agreement explicitly provides that
Philippine law shall be applicable, the parties have effectively
the Philippine government and EXIM Bank entered into a conceded that their rights and obligations thereunder are not
counterpart financial agreement – Buyer Credit Loan governed by international law.
Agreement No. BLA 04055 (the Loan Agreement).

respondents filed a Complaint for Annulment of Contract and

Injunction with Urgent Motion for Summary Hearing to
Determine the Existence of Facts and Circumstances
Justifying the Issuance of Writs of Preliminary Prohibitory and
Mandatory Injunction and/or TRO against CNMEG, the Office
of the Executive Secretary, the DOF, the Department of
Budget and Management, the National Economic
Development Authority and Northrail.

, CNMEG filed a Motion to Dismiss dated 12 April 2006,

arguing that the trial court did not have jurisdiction over (a)
its person, as it was an agent of the Chinese government,
making it immune from suit, and (b) the subject matter, as
the Northrail Project was a product of an executive
agreement.

ISSUE: Whether or not the Northrail contracts are products of

an executive agreement between two sovereign states.

HELD: NO.

[A]n international agreement concluded between States in

written form and governed by international law, whether
embodied in a single instrument or in two or more related
instruments and whatever its particular designation.

In Bayan Muna v. Romulo, this Court held that an executive

agreement is similar to a treaty, except that the former (a)
does not require legislative concurrence; (b) is usually less
 DEUTSCHE BANK AG MANILA the entitlement of the taxpayer to the relief under the RP-
BRANCH, Petitioner, v. COMMISSIONER OF INTERNAL Germany Tax Treaty.  
REVENUE, Respondent.
Tax treaties
FACTS:
Tax treaties are entered into “to reconcile the national fiscal
petitioner withheld and remitted to respondent on 21 legislations of the contracting parties and, in turn, help the
October 2003 the amount of PHP 67,688,553.51, which taxpayer avoid simultaneous taxations in two different
represented the fifteen percent (15%) branch profit jurisdictions.”
remittance tax (BPRT)
Simply put, tax treaties are entered into to minimize, if not
Believing that it made an overpayment of the BPRT, eliminate the harshness of international juridical double
petitioner filed with the BIR Large Taxpayers Assessment and taxation, which is why they are also known as double tax
Investigation Division on 4 October 2005 an administrative treaty or double tax agreements.
claim for refund or issuance of its tax credit certificate

On the same date, petitioner requested from the

International Tax Affairs Division (ITAD) a confirmation of its
entitlement to the preferential tax rate of 10% under the RP-
Germany Tax Treaty.

However, the claim of petitioner for a refund was denied on

the ground that the application for a tax treaty relief was not
filed with ITAD prior to the payment by the former of its BPRT
and actual remittance of its branch profits to DB Germany, or
prior to its availment of the preferential rate of ten percent
(10%) under the RP-Germany Tax Treaty provision. The
court a quo held that petitioner violated the fifteen (15) day
period mandated under Section III paragraph (2) of Revenue
Memorandum Order (RMO) No. 1-2000\

Petitioner’s contention: Petitioner argues that, considering

that it has met all the conditions under Article 10 of the RP-
Germany Tax Treaty, the CTA erred in denying its claim solely
on the basis of RMO No. 1-2000. The filing of a tax treaty
relief application is not a condition precedent to the
availment of a preferential tax rate.

Respondent’s contention: Respondent counters that the

requirement of prior application under RMO No. 1-2000 is
mandatory in character. RMO No. 1-2000 was issued
pursuant to the unquestioned authority of the Secretary of
Finance to promulgate rules and regulations for the effective
implementation of the NIRC.

ISSUE: WON the failure to strictly comply with RMO No. 1-

2000 will deprive persons or corporations of the benefit of a
tax treaty.

HELD: NO. A requirement of the BIR to first file tax

treaty reliefs application within 15 days before
availing of the preferential tax rate of 10% under
the RP - Germany tax treaty cannot prevail over a
treaty relief.

Likewise, it must be stressed that there is nothing in RMO

No. 1-2000 which would indicate a deprivation of
entitlement to a tax treaty relief for failure to comply with
the 15-day period.

Bearing in mind the rationale of tax treaties, the period of

application for the availment of tax treaty relief as required
by RMO No. 1-2000 should not operate to divest entitlement
to the relief as it would constitute a violation of the duty
required by good faith in complying with a tax treaty.

Logically, noncompliance with tax treaties has negative

implications on international relations, and unduly
discourages foreign investors.

It went on to state that at most, the application for a tax

treaty relief from the BIR should merely operate to confirm
LAND BANK OF THE PHILIPPINES, Petitioner, Government of Iligan should be deemed exempt from the
vs. application of RA 9184.
ATLANTA INDUSTRIES, INC., Respondent.
HELD: YES.loan between Landbank and the IBRD is
FACTS: an executive agreement; terms therein were
incorporated in a loan between Landbank and Iligan
Land Bank of the Philippines (Land Bank) and the City which exempted the agreement from the
International Bank for Reconstruction and
bidding process under R.A. 9184.
Development4 (IBRD) entered into Loan Agreement No. 4833-
PH5 for the implementation. of the IBRD's "Support for
Strategic Local Development and Investment . Project" Loan Agreement No. 4833-PH between the IBRD and the
Land Bank is an executive agreement
Land Bank entered into an SLA 7 with the City Government of
Iligan to finance the development and expansion of the city's Loan Agreement No. 4833-PH between the IBRD and the Land
water supply system, which had two (2) components, namely: Bank is an integral component of the Guarantee Agreement
(a) the procurement of civil works; and ( b) the procurement executed by the Government of the Philippines as a subject of
of goods for the supply and delivery of various sizes of PE 100 international law possessed of a treaty-making capacity, and
HDPE pipes and fittings the IBRD, which, as an international lending institution
organized by world governments to provide loans
conditioned upon the guarantee of repayment by the
Accordingly, the City Government of Iligan, through its BAC,
borrowing sovereign state, is likewise regarded a subject of
conducted a public bidding for the supply and delivery of
international law and possessed of the capacity to enter into
various sizes of PE 100 HDPE pipes and fittings using the IBRD
executive agreements with sovereign states.
Procurement Guidelines.

Being similar to a treaty but without requiring legislative

Respondent Atlanta Industries, Inc. (Atlanta) participated in
concurrence, Loan Agreement No. 4833-PH - following the
the said bidding and came up with the second to the lowest
definition given in the Bayan Muna case - is an executive
bid
agreement and is, thus, governed by international law.

However, in a letter12 dated July 27, 2009, the BAC informed

SLA conjunct with the Loan agreement(accessory contract)
Atlanta that the bidding was declared a failure upon the
recommendation of Land "Bank due to the IBRD 's non-
concurrence with the Bid Evaluation Report. Moreover, in a As may be palpably observed, the terms and conditions of
letter13 dated August 28, 2009, the BAC informed Atlanta of Loan Agreement No. 4833-PH, being a project-based and
its disqualification from the bidding because it lacked several government-guaranteed loan facility, were incorporated and
documentary requirements. made part of the SLA that was subsequently entered into by
Land Bank with the City Government of
Iligan.51 Consequently, this means that the SLA cannot be
Atlanta filed on December 10, 2009 a Petition for Prohibition
treated as an independent and unrelated contract but as a
and Mandamus22 with an urgent prayer for the issuance of a
conjunct of, or having a joint and simultaneous occurrence
temporary restraining order (TRO) and/or writ of preliminary
with, Loan Agreement No. 4833-PH.
injunction to enjoin the re-bidding .of the project against the
City Government of Iligan, the BAC, and Land Bank before the
Manila RTC, the SLA has attained indivisibility with the Loan Agreement
and the Guarantee Agreement through the incorporation of
each other's terms and conditions such that the character of
the Manila RTC declared the subject bidding null and void on
one has likewise become the character of the other.
the ground that it was done contrary to the rules and
procedure prescribed in RA 9184 and its IRR.

Moreover, it .held that the IBRD could not have passed on its
status as an international institution exempt from RA 9184
simply because it loaned money to Land Bank.31 It added that
the SLA subsequently executed by Land Bank with the City
Government of Iligan cannot validly provide for the use of
bidding procedures different from those provided under RA
9184 because the said SLA is not in the nature of an
international agreement similar to the Loan Agreement with
the IBRD.

Respondent’s contention: t posits that the City Government

of Iligan could not claim to be exempt under any of the
enumerated instances because it is not a party to the IBRD
Loan Agreement.46 

It further asserts that a provision in the SLA between Larid

Bank and the City Government of Iligan providing for
procurement procedures different from that required under
RA 9184 would not be valid since it is not a treaty or an
executive agreement in the way that Loan Agreement, No.
4833-PH is.

ISSUE: whether or not the SLA between the Land Bank and
the City Government of Iligan is an executive agreement
similar to Loan Agreement No. 4833-PH such that the
procurement of water pipes by the BAC of the City
MITSUBISHI CORPORATION - MANILA BRANCH, Petitioner absent any tax exemption. En Banc said the Exchange of
vs Notes granted no tax exemption to petitioner. Also said
COMMISSIONER OF INTERNAL REVENUE, Respondent Exchange of Notes cannot be read as a treaty validly granting
tax exemption without Senate concurrence. Said RMC No. 42-
FACTS: 99 mandates Mitsubishi to recover the subject taxes from
NPC, and not from the CIR.
the governments of Japan and the Philippines executed an
Exchange of Notes, 5 whereby the former agreed to extend a ISSUES: [1] Whether petitioner is entitled to a refund
loan amounting to Forty Billion Four Hundred Million
Japanese Yen (¥40,400,000,000) to the latter through the HELD: YES. Sections 204 (C) of the NIRC grants the CIR the
then Overseas Economic Cooperation Fund (OECF, now Japan authority to credit or refund taxes which are erroneously
Bank for International Cooperation) for the implementation collected by the government. The authority of the CIR to
of the Calaca II Coal-Fired Thermal Power Plant Project refund erroneously collected taxes is likewise reflected in
(Project). Section 229 of the NIRC.

In Paragraph 5 (2) of the Exchange of Notes, the Philippine In this case, it is fairly apparent that the subject taxes in the
Government, by itself or through its executing agency, amount of P52,612,812.00 was erroneously collected from
undertook to assume all taxes imposed by the Philippines on petitioner, considering that the obligation to pay the same
Japanese contractors engaged in the Project had already been assumed by the Philippine Government by
virtue of its Exchange of Notes with the Japanese
the National Power Corporation (NPC), as the executing Government. Case law explains that an exchange of notes is
government agency, entered into a contract with Mitsubishi considered as an executive agreement, which is binding on
Corporation (i.e.,  petitioner's head office in Japan) for the the State even without Senate concurrence. (Abaya v.
engineering, supply, construction, installation, testing, and Ebdane)
commissioning of a steam generator, auxiliaries, and
associated civil works for the Project (Contract). 11 The Paragraph 5 (2) of the Exchange of Notes provides for a tax
Contract's foreign currency portion was funded by the OECF assumption provision.
loans. 12 In line with the Exchange of Notes, Article VIII (B) (1)
of the Contract indicated NPC' s undertaking to pay any and To "assume" means "[t]o take on, become bound as another
all forms of taxes that are directly imposable under the is bound, or put oneself in place of another as to an
Contract obligation or liability." This means that the obligation or
liability remains, although the same is merely passed on to a
petitioner filed its Income Tax Return for the fiscal year that different person. In this light, the concept of an assumption is
ended on March 31, 1998 with the Bureau of Internal therefore different from an exemption, the latter being the
Revenue (BIR). "[f]reedom from a duty, liability or other requirement" or "[a]
privilege given to a judgment debtor by law, allowing the
16
 On the same day, petitioner also filed its Monthly debtor to retain [a] certain property without liability." Thus,
Remittance Return of Income Taxes Withheld and remitted contrary to the CTA En Banc's opinion, the constitutional
₱8,324,100.00 as BPRT for branch profits remitted to its head provisions on tax exemptions would not apply.
office in Japan out of its income for the fiscal year that ended
on March 31, 1998 .17 As explicitly worded, the Philippine Government, through its
executing agencies (i.e., NPC in this case) particularly
petitioner filed with the respondent Commissioner on assumed "all fiscal levies or taxes imposed in the Republic of
Internal Revenue (CIR) an administrative claim for refund of the Philippines on Japanese firms and nationals operating as
Fifty Two Million Six Hundred Twelve Thousand, Eight suppliers, contractors or consultants on and/or in connection
Hundred Twelve Pesos (P52,612,812.00), representing the with any income that may accrue from the supply of products
erroneously paid amounts of P44,288,712.00 as income tax of Japan and services of Japanese nationals to be provided
and ₱8,324,100.00 as BPRT corresponding to the OECF- under the [OECF] Loan."
funded portion of the Project. Petitioner's
entitlement to the refund is based on the This notwithstanding, petitioner included in its income tax
due the amount of P44,288,712.00, representing income
tax assumption provision in the Exchange from the OECF-funded portion of the Project, and further
of Notes (which is an executive agreement) remitted P8,324,100.00 as BPRT for branch profits remitted to
its head office in Japan out of its income for the fiscal year
CTA Division granted the petition and ordered the CIR to that ended on March 31, 1998.[45] These taxes clearly fall
refund to petitioner the amounts it erroneously paid as within the ambit of the tax assumption provision under the
income tax and BPRT. It held that based on the Exchange of Exchange of Notes, which was further fleshed out in the
Notes, the Philippine Government, through the NPC as its Contract. Hence, it is the Philippine Government, through the
executing agency, bound itself to assume or shoulder NPC, which should shoulder the payment of the same.
petitioner's tax obligations. Therefore, petitioner's payments
of income tax and BPRT to the CIR, when such payments It bears stressing that the CIR had already acknowledged,
should have been made by the NPC, undoubtedly constitute through its administrative issuances, that Japanese
erroneous payments under Section 229 of the NIRC. contractors involved in the Project are not liable for the
subject taxes. In RMC No. 42-99, the CIR interpreted the
CTA Division acknowledged that based on RMC No. 42-99 effect of the tax assumption clause in the Exchange of Notes
dated June 2, 1999, the proper remedy for a Japanese on petitioner's tax liability.
contractor who previously paid the taxes directly to the BIR is
to recover or obtain a refund from the government executing The CIR subsequently affirmed petitioner's non-liability for
agency - the NPC in this case. However, it ruled that RMC No. taxes and entitlement to tax refunds by issuing Revenue
42-99 cannot be given retroactive effect. It took effect after Memorandum Order (RMO) No. 24-2005[47] addressed to
the return was filed. specified BIR offices.

CTA En Banc reversed the CTA Division. En Banc said CIR has Therefore, considering that petitioner paid the subject taxes
no power to grant a refund under Section 229 of the NIRC in the aggregate amount of P52,612,812.00, which it was not
required to pay, the BIR erroneously collected such amount.
Accordingly, petitioner is entitled to its refund.

[2] If in the affirmative, from which government entity

should the refund be claimed?

The NIRC vests upon the CIR, being the head of the BIR, the
authority to credit or refund taxes which are erroneously
collected by the government. This specific statutory mandate
cannot be overridden by averse interpretations made
through mere administrative issuances, such as RMC No. 42-
99, which - as argued by the CIR - shifts to the executing
agencies (particularly, NPC in this case) the power to refund
the subject taxes.

A revenue memorandum circular is an administrative ruling

issued by the CIR to interpret tax laws. It is widely accepted
that an interpretation by the executive officers, whose duty is
to enforce the law, is entitled to great respect from the
courts. However, such interpretation is not conclusive and
will be disregarded if judicially found to be incorrect. Verily,
courts will not tolerate administrative issuances that
override, instead of remaining consistent and in harmony
with, the law they seek to implement, as in this case.

Thus, Item B (3) of RMC No. 42-99, an administrative issuance

directing petitioner to claim the refund from NPC, cannot
prevail over Sections 204 and 229 of the NIRC, which provide
that claims for refund of erroneously collected taxes must be
filed with the CIR.

Although the NPC is exempt from the payment of income tax

pursuant to Section 13 of its charter (Republic Act No. 6395),
the NPC is liable to pay petitioner's tax liabilities to the BIR, in
view of the tax assumption provision in the Exchange of
Notes and the Contract.
 DEPARTMENT OF PUBLIC WORKS AND and the Court of Appeals.
HIGHWAYS, Petitioner, v. CMC/MONARK/PACIFIC/HI-TRI
JOINT VENTURE, Respondent. This Court has held that a foreign loan agreement with
international financial institutions, such as a multilateral
FACTS: lending agency organized by governments like the Asian
Development Bank, is an executive or international
Seventh, whether or not the Joint Venture is entitled to its agreement contemplated by our government procurement
claim for equipment and financial losses due to peace and system.101
order situation (additional costs
In Abaya v. Ebdane, Jr.,102 this Court upheld the applicability
VII of the Japan Bank for International Cooperation's
Procurement Guidelines to the implementation of the
According to respondent the delay in the issuance of the projects to be undertaken pursuant to the loan agreement
Notice to Proceed entitles it to a price adjustment under between the Republic of the Philippines and Japan Bank for
Presidential Decree No. 1594. Bidding was conducted in International Cooperation.103
January 1998 and respondent was declared the winning
bidder. The Contract was signed on April 29, 1999. However, While the Implementing Rules and Regulations104 of
the Notice to Proceed was issued on May 5, 1999, or after a Presidential Decree No. 1594 provide the formula for price
delay of more than 120 days from the bidding date, which adjustment in case of delay in the issuance of a notice to
entitles the bidder to an adjustment in the contract unit price proceed, the law does not proscribe parties from making
under Presidential Decree No. 1594.98 certain contractual stipulations. In this case, the Construction
Contract is clear that in case of price adjustments, Clause 70
On the other hand, petitioner claims that respondent did not of the Conditions of Contract will apply:
question the findings of the Court of Appeals regarding price 3. That computation and payment of contract prices
adjustment and claim for actual damages. Hence, it should adjustment will be applied in accordance with Clause 70 of
not be allowed to assail the Court of Appeals' ruling on this the Conditions of Contract;105
issue before this Court.99 It is unclear from the records, however, whether the Asian
Development Bank Guidelines was substantially the same as
Both CIAC and the Court of Appeals found that respondent Clause 70 of the Conditions of Contract. Nevertheless, as in
was not entitled to a price adjustment: the Abaya case, it should be the guidelines that the parties
As to the first issue raised by the Claimant, this Court finds have agreed upon, i.e., the Asian Development Bank
that the CIAC committed no reversible error in not awarding Guidelines, that should govern in case of issues arising from
the price adjustment being sought by the Claimant under P.D. the contract. Respondent failed to proffer evidence on what
1594, finding as flawed its claim based on the alleged DPWH's the Asian Development Bank Guidelines provide, if any, in the
delay in the issuance of the notice to proceed. event of a delay in the issuance of a Notice to Proceed.

We quote with approval the pertinent ratiocination of the

CIAC on this point, thus:
....

However, the Claimant is not entitled to a price adjustment

under P.D. 1594 because it is the ADB Guideline[s] on
Procurement which should be followed, and not the
provisions on P.D. 1594. In fact the bid of the Contractor was
awarded despite its being above the approved Agency
Estimates (AAE), based on the ADB guidelines, and against
the provisions of P.D. 1594 (paragraph 7.2 of Joint Affidavit by
Heinz Reister, Diron and Pandapatan).

The Arbitral Tribunal finds that the Guidelines of the Asian

Development Bank govern this subject Project. Moreover,
P.D. 1594 honors the treaties and international or executive
agreements to which the Philippine Government is a
signatory. Loan agreements such as those entered into with
international funding institutions like ADB are considered to
be within the ambit of DOJ opinion No. 46, S. 1987 and are
therefore exempt from the application of P.D. No. 1594 as
amended (Paragraph 7.1.1 of Joint Affidavit by Heinz Reister,
Diron and Pandapatan).

....
If the Claimant's bid was awarded despite its being above the
approved Agency Estimates based on the ADB guidelines, and
against the provisions of P.D. 1594, We cannot see the
rationale on why the Claimant now refuses to abide by the
ADB guidelines on procurement. After the claimant was
benefited by the approved bid at the inception of the project,
We hold that it is unjustified for the Claimant not to be bound
by the ADB guidelines under the pretext that it fails to get the
supposed price adjustment.100 (Emphasis supplied)
While respondent did not appeal the Court of Appeals' ruling
with regard to its entitlement to a price adjustment under
Presidential Decree No. 1594, for purposes of clarity and to
finally settle the matter, this Court affirms the findings of CIAC