Digest Author: Therese Buergo Public International Law D2016

Suplico vs NEDA (2008)

FACTS:
OSG filed a manifestation stating its position that the cases questioning the validity of the ZTE-NBN project
should be dismissed in light of the Governments decision not to continue with the said project. According to the
OSG, at that point, there is no more justiciable controversy for the SC to resolve.
o The original cases filed by petitioners sought to annul and set aside the validity of the award of the
contract to ZTE Corporation, alleging that the contract was awarded without the necessary public bidding.
Petitioners in this case opposed said motion saying, among others, that there is no sufficient proof to conclude
that the project had been permanently scrapped in that the desistance of the Government as to the project is a
mere verbal request. The indorsement which allegedly contained the express desistance of the Government was
not even attached to the OSGs motion and that even if it were, it was a self-serving manifestation. (They also
said that the PGMA administration has never been known for candor and that it has a very nasty habit of not
keeping its word.)
OSG filed a supplemental motion reiterating its position that there must be an actual case or controversy in the
case for the Court to have the power to decide the same. OSG also attached the transcript of the meeting
between the State leaders during which the decision of the Philippines not to continue with the project.
The court issued a TRO enjoining the parties from pursuing or transacting the ZTE-NBN Project.

ISSUES + RULING:

WON the cases should be dismissed for being moot and academic (YES)
It clearly appears that when PGMA, acting in her official capacity during the meeting held in China, informed
Chinas president (as shown in the Notes of the Meeting) that the Philippine Government had decided not to
continue with the Project for several reasons and constraints, there is no doubt that the reliefs as prayed for in the
3 cases mentioned above had also become moot.
The court has no alternative but to take judicial notice of this official act of the President of the Philippines.
It is simply impossible for the Court to annul and set aside the award of the ZTE-DOTC Broadband Deal without
any evidence to support a prior actual finding pointing to any violation of the law.

DISPOSITION: Dismissed.

(Relevant) Justice Carpios Dissent:

Position of J. Carpio: That the ZTE Supply Contract is void from the beginning, thus, the decision of the government not to
continue with the project had no legal effect on the status of the contract and did not moot the petitions. (That still, the
court may still make a pronouncement that the award itself is void despite the decision of the government not to continue.
Courts duty is to strike down the award for being unconstitutional.)
Not only are the legal issues in this case capable of repetition yet evading review, the ZTE Supply contract is
capable of being resurrected.
The petitions assail that the contract is void from the beginning for 2 reasons:
1. The contract has no appropriation from congress violating Sec 29(2) Art 6 of the Constitution
2. The absence of public bidding violates the Government Procurement Reform Act
The simple answer to these questions is that the ZTE Supply Contract is void from the beginning because in fact,
there was no appropriation law allowing it and there was no public bidding held.
Absence of an appropriation law:
o Aside from the Constitution, the Admin Code expressly prohibits the entering into contracts involving the
expenditure of public funds unless two prior requirements are satisfied: (1) appropriation law and (2) a
certification by the proper accounting official and auditor that the funds are available. Any contract
entered into contrary to the requirements is void. The Government Auditing Code has the same mandate.
o It is quite evident that the said requirements are conditions sine qua non for the execution of government
contracts. Failure to comply means failure to perfect the contract.
o The ZTE Supply contract does not comply with the 2 requirements.
Absence of Public Bidding:
Digest Author: Therese Buergo Public International Law D2016

o The Government Procurement Reform Act requires public bidding in all procurement of infrastructure,
goods and services. Such requirement applies to government procurements regardless of source of
funds, whether local or foreign. Hence, the requirement of public bidding applies to foreign-funded
contracts like the ZTE Supply Contract.
o The government admits that there was not public bidding for the supply contract. They do not even claim
that the contract falls under any of the exceptions to public bidding under Art 16 of the Government
Procurement Reform Act.
o Instead, ZTE claims that being part of an executive agreement, the contract is exempt under the last
sentence of Sec 4 of the Act: Any treaty or international or executive agreement affecting the
subject matter of this Act to which the Philippines is a signatory shall be observed.
There is no provision in the Executive Agreement that requires the conduct of competitive public
bidding before the award of the NBN project, or any project envisioned in the RP-China MNOU
for that matter. The subsequent exchange of notes between China and the Philippines clearly
shows that ZTE was chosen as the contractor for the NBN Project.
o ZTE Corporations argument will hold water if an executive agreement (RP-China Agreement) can amend
a mandatory statutory requirement of public bidding in the Government Procurement Reform Act. (ISSUE:
WON an executive agreement [ZTE Contract] can amend or repeal a law [Govt Procurement
Reform Act] NO)
o Admittedly, an executive agreement has the force and effect of law just like implementing rules of
executive agencies. However, just like implementing rules, executive agreements cannot amend or
repeal prior law but must comply with the laws they implement.
Only a treaty, upon ratification by the Senate, acquires the status of a municipal law. Thus,
a treaty may amend or repeal a prior law and vice-versa. Hence, a treaty may change state
policy embodied in a prior law.
Examples: International agreements involving political issues or changes of national
policy and those involving international arrangements of a permanent character
An executive agreement, being an exclusive act of the Executive branch, does not have the
status of a municipal law. Acting alone, the executive has no law-making power. While the
Executive does possess rule-making power, such power must be exercises consistent with the
law it seeks to implement.
Examples: international agreements embodying adjustments of detail carrying out well-
established national policies and traditions and those involving arrangements of a more
or less temporary nature
o Lastly, an executive agreement is generally governed by international law. In this case, however the ZTE
Contract itself provides that it shall be governed by Philippine law. Thus, by that, the ZTE contract
is not an executive agreements but simply a commercial contract, which must comply with the
public bidding mandated by the governing Philippine law.