FINAL REPORT - Philippine Center for Investigative Journalism

“EXECUTIVE SUMMARY
Legality of the Contract between NLRC and CNMEC
The Contract between the NLRC and CNMEC is unlawful and
void for failure to comply with the mandatory requirement of
competitive public bidding under RA 9184 in the selection of CNMEC
as the Prime Contractor. While there are exceptions under RA 9184
where competitive public bidding may be dispensed with, these
exceptions do not obtain in the selection of CNMEC, for the following
reasons.
First, there is no ‘imminent danger to life or property during a
state of calamity, or when time is of the essence arising from natural or
manmade calamities or other causes where immediate action is
necessary to prevent damage to or loss of life or property, or to restore
vital public services, infrastructure facilities and other public utilities’ or
‘where the subject contract is adjacent or contiguous to an ongoing
infrastructure project.’ Second, the Contract cannot be construed as a
treaty or executive agreement, whether viewed from the perspective of
international law under Article 2(1)(a) of the Vienna Convention of the
Law of Treaties or under Philippine law.
The Contract may be void as it appears to have failed to
comply with the Government Auditing Code and the Administrative
Code of 1987. To recall, the Northrail project will also be financed by
counterpart funds from the government. By positive provision of law, a
proposed government contract involving the expenditure of public funds
that is unsupported by a certificate as to the existence of appropriation
and the availability of necessary funds, which certificate must be
attached to as an integral part of the proposed contract, is fatally
defective.
Corollarily, CNMEC should establish that it is duly licensed to
undertake infrastructure projects in the Philippines as required by
RA 4566.
Legality of the Buyer Credit Loan Agreement
The Buyer Credit Loan Agreement between EXIM Bank and the
Republic of the Philippines is of questionable validity as it appears
that there was no prior concurrence by the Monetary Board, as
required by Section 20, Article VII of the Constitution. In the same
vein, the BCLA is so intertwined, with the Contract such that they
can be viewed as an integral agreement, as the appointment of
CNMEC as Prime Contractor under the Contract appears to be an
indispensable consideration for the execution of the BCLA. Accordingly
the nullity of the Contract casts doubt on the legality of the BCLA.
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