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  • Abaya v. Ebdane 14 February 2007

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    This case digest discusses the international law principle of pacta sunt servanda as it relates to a loan agreement between Japan and the Philippines. Under the agreement, Japan provided a loan to fund an infrastructure project in the Philippines. While Philippine law normally prohibits contract awards that exceed the approved budget, the law exempts contracts financed by international loans. Applying the principle of pacta sunt servanda, which requires treaties to be observed in good faith, the court upheld the contract award to China Road & Bridge Corporation for the infrastructure project, even though it exceeded the approved budget, because the project was financed by an international loan.

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    Case digest

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    14.-Abaya-v.-Ebdane-14-February-2007

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    This case digest discusses the international law principle of pacta sunt servanda as it relates to a loan agreement between Japan and the Philippines. Under the agreement, Japan provided a loan to fund an infrastructure project in the Philippines. While Philippine law normally prohibits contract awards that exceed the approved budget, the law exempts contracts financed by international loans. Applying the principle of pacta sunt servanda, which requires treaties to be observed in good faith, the court upheld the contract award to China Road & Bridge Corporation for the infrastructure project, even though it exceeded the approved budget, because the project was financed by an international loan.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    13 views1 page

    Abaya v. Ebdane 14 February 2007

    Uploaded by

    amil mangotara
    This case digest discusses the international law principle of pacta sunt servanda as it relates to a loan agreement between Japan and the Philippines. Under the agreement, Japan provided a loan to fund an infrastructure project in the Philippines. While Philippine law normally prohibits contract awards that exceed the approved budget, the law exempts contracts financed by international loans. Applying the principle of pacta sunt servanda, which requires treaties to be observed in good faith, the court upheld the contract award to China Road & Bridge Corporation for the infrastructure project, even though it exceeded the approved budget, because the project was financed by an international loan.

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    of 1

    2019-119284 Public International Law

    Case Digest No. 14

    Plaridel Abaya v. Ebdante


    G.R. No. 167919. Feb. 14, 2007

    TOPIC/S: Under the fundamental principle of international law of pacta sunt


    servanda, treaties must be observed in good faith.

    FACTS:

    The Governments of Japan and the Philippines, through their respective


    representatives have reached an understanding concerning loans to be extended to
    the Philippines aimed at promoting economic stabilization and development efforts.
    Thus, JBIC (bank) granted a loan to the Phil Gov’t, where proceeds of which was to
    be used to finance Phase 4 of the Project (Catanduanes Circumferential Road).

    Subsequently, the DPWH, tasked to implement the project, caused the


    publication of the "Invitation to Prequalify and to Bid." Prior to the opening of the
    respective bid proposals, it was announced that the Approved Budget for the Contract
    (ABC) was in the amount of ₱738,710,563.67. Subsequently, 3 bidders were
    considered for having the lowest bids. After further evaluation of the bids, particularly
    those of the lowest three bidders, Mr. Hedifume Ezawa, the Project Manager,
    recommended the award of the contract to private respondent China Road & Bridge
    Corporation, with its bid amount of P952,564,821.71.

    The Bids and Awards Committee of the DPWH issued a resolution


    recommending the award in favor of China Road & Bridge Corp and a Contract of
    Agreement was entered into between the DPWH and the respondent company for the
    implementation of the CP1 Project.

    The petitioners averred that China Road & Bridge Corp violates Sec 31 of RA
    9184 which set limit or ceiling for bid prices. Bids or awards should not exceed the
    ceiling or upper limits, otherwise, the contract is deemed void and inexistent. In this
    case, the award is more than P200M overpriced based on the ABC. Thus, it is
    allegedly illegal and unconscionable.

    ISSUES:

    Whether or not the award of the contract granted to China Road & Bridge Corp
    is valid.

    RULINGS:

    Under the fundamental principle of international law of pacta sunt


    servanda, treaties must be observed in good faith.

    Sec 25 of EO 40 similar as Sec 31 of RA 9184, disqualifies bid prices exceeding


    the ceiling. However, such (EO 40) expressly exempts from its application those
    government commitments with respect to bidding and award of contracts financed
    partly or wholly with funds from international financing institutions as well as from
    bilateral and other similar foreign source.

    Under the fundamental principle of international law of pacta sunt servanda,


    which is, in fact, embodied in Section 4 of RA 9184 as it provides that “any 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.

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