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STATEMENT OF FACTS 13. On December 30, 2003, a Contract Agreement (“Northrail Contract”) was executed between North Luzon Railways Corporation (“Northrail”), a Philippine government owned and controlled corporation, and the China National Machinery & Equipment Corporation (“CNMEC”), a corporation purportedly organized and created under the laws of China. The contract involved Northrail employing CNMEC as prime contractor for the construction of railways from Caloocan City to Malolos, Bulacan (Section I, Phase I of Philippine North Luzon Railways Project). 14. On February 26, 2004, a Buyer Credit Loan Agreement (“Loan Agreement”) was executed between the Export-Import Bank of China and the Government of the Republic of the Philippines. Among other things, the said Loan Agreement provided that China EXIM Bank, as the lender, will extend Four Hundred Million US Dollars (US$400,000,000.00) in loans called Preferential Buyer’s Credit, to the Government of the Republic of the Philippines. The loan will be for the financing of the construction of the Northrail Project Section I, Phase I. The Loan Agreement also mandated that CNMEC will act as the Prime Contractor for the project. 15. Further documents reveal that the total project cost is Five Hundred and Three Million US Dollars (US$503,000,000.00), of which One Hundred Seven Million US Dollars (US$107,000,000.00) will be provided as counterpart funds by the Philippine Government, through the Northrail. 6
16. The Northrail Contract and the Loan Agreement however appear to be illegal and void for not having complied with the following laws: 1) REPUBLIC ACT NO. 9184; 2) THE GOVERNMENT AUDITING CODE; 3) THE ADMINISTRATIVE CODE OF 1987 4) R.A. NO. 4566 OR THE CONTRACTOR’S LICENSE LAW; and 5) THE PHILIPPINE CONSTITUTION. In particular, the Northrail Contract was awarded without compliance with a competitive bidding process. It is not supported with a proper certification of availability of funds and proof of CNMEC’s license to act as a contractor either. And the Loan Ageement does not appear to have had prior concurrence of the Monetary Board, in violation of the Constitution. The instruments are therefore invalid and should not be implemented, nor should they have any effects. 17. Regardless of their invalidity, billions of pesos in public funds will be spent by the government pursuant to these instruments in the implementation of the Northrail project. These expenditures constitute illegal disbursements of public funds by government officials which should be corrected at the earliest possible time to avoid further unnecessary bleeding of government funds. The wasted funds will ultimately be shouldered by an already weary public who will later have to pay these through more taxes. 7
Page 1 and 2: REPUBLIC OF THE PHILIPPINES SUPREME
Page 3 and 4: Butuyan Law Offices, of which they
Page 5: 10. Public Respondent National Econ
Page 9 and 10: from the University of the Philippi
Page 11 and 12: improper purpose, or that there is
Page 13 and 14: II. THE NORTHRAIL CONTRACT IS VOID
Page 15 and 16: is a defective contention because n
Page 17 and 18: which also has its own juridical pe
Page 19 and 20: funds unless there is an appropriat
Page 21 and 22: 44. CNMEC cannot therefore engage a
Page 23 and 24: terms of lost homes, livelihoods an
Page 25 and 26: 57. A failure to stop the implement
Page 27 and 28: 2) AN ORDER DECLARING NULL AND VOID
Page 29 and 30: COPY FURNISHED: Honorable Eduardo E

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