Vol. XXII, No. 129 [ BusinessWorld Online ]
Monday, February 2, 2009 | MANILA, PHILIPPINES
A STATE-OWNED Chinese company has asked the Supreme Court to halt a lower court litigation of the multimillion-dollar railroad project connecting Metro Manila to Central Luzon, saying this could lead to irreparable damage between Chinese-Philippine relations.
In a 63-page pleading, China National Machinery & Equipment Corp. (CNMEG) said the trial court has no jurisdiction over the case since CNMEG is only a state agent, not the executor, of the $503-million Manila-Clark Rapid Railways system (North Rail).
The project, which would mainly use the old northern line of the moribund Philippine National Railways would link the National Capital Region to Clark Economic Zone in Pampanga province (Region 3).
"Its role on this project is determined by the People’s Republic of China and not by any court in this jurisdiction," the firm said.
The Makati Regional Trial Court has continued to receive evidence on North Rail’s legality.
The Court of Appeals has ordered the proceedings to continue amid the request of lawyers and nongovernmental organizations that the contract be annulled as it did not undergo public bidding.
The plan was first conceived under the Joint Statement on the Framework of Bilateral Cooperation in the Twenty-First Century, a cooperation agreement in trade, investment, agriculture and taxation, among others, signed on May 16, 2000.
State-owned and -controlled North Luzon Railways Corp. and CNMEG conducted a feasibility study on the state of the railway line system. As a result, China agreed to finance North Rail, in a memorandum of agreement dated Aug. 30, 2003, through a preferential buyer’s credit from the Exim Bank of China. China appointed CNMEG as contractor.
Since it is an executive agreement, "such a move to stop the project can only emanate from the Republic of the Philippines on a government to government level," the Chinese company said.
It is in the context of an executive agreement that freed the contract from the required competitive bidding, it added.
"It is only in this restricted sense that petitioner asserts the absence of any basis for [the trial court] to continue hearing the complaint since the lower court is without authority to hear and determine a case involving an executive agreement," it said.
Republic Act 8975, or the law that provides for the expeditious implementation of government projects, prohibits lower courts from issuing any preventive remedies to a case. Only the Supreme Court could do so, the Chinese firm said. — Ira P. Pedrasa
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