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Tuesday, July 15, 2008
SC junks petition to void NBN-ZTE deal
MANILA -- Voting 11-3, Supreme Court (SC) magistrates on Monday dismissed for being moot three petitions questioning the constitutionality of the controversial US$329 million national broadband deal (NBN) entered by the government with the Chinese firm ZTE Corp.
The three petitions were filed by Iloilo Vice Governor Rolex Suplico, a group called Lawyers and Advocates for Accountability, Transparency, Integrity and Good Governance (Latigo), and the Amsterdam Holdings Inc., which also vied for the NBN project.
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All justices concurred, except for Associate Justices Antonio Carpio, Conchita Carpio-Morales, and Ma. Alicia Austria-Martinez. Justice Minita Chico-Nazario was on official leave.
In a decision penned by Associate Justice Ruben Reyes, the SC said the petitions have become moot when President Gloria Macapagal-Arroyo decided to discontinue with the project during a meeting held on October 2, 2007 in China with its President Hu Jintao.
"Since we consider the act of cancellation by President Arroyo of the proposed ZTE-NBN project with the Chinese President as an official act of the executive department, the Court must take judicial notice of such official act without need of evidence," the court ruled.
The court explained that under Section 1, Rule 129 of the Rules of Court, it is mandatory for the court to take judicial notice of the official acts of the President of the Philippines without introduction of evidence.
"Pontificating on issues which no longer legitimately constitute an actual case or controversy will do more harm than good to the nation as a whole. Wise exercise of judicial discretion militates against resolving the academic issues, as petitioners want this court to do," the SC added.
And even if the court will disregard the mootness of the case, the SC said it cannot completely rule on the merits of the case because the resolution of the three petitions involves settling factual issues, which definitely requires reception of evidence.
"There is not an iota of doubt that this may not be done by this court in the first instance because, as has been stated often enough, this court is not a trier of facts," the SC said.
The majority decision further stated that it would be impossible for the court to annul and set aside the award of the ZTE contract, as prayed for by petitioners, without evidence to support a prior factual finding pointing to any violation of law that could lead to such an annulment order.
In its petition, AHI sought full access to all agreements entered into by the respondents involving the NBN project pursuant to Article 8, Section 5 (1) of the Constitution.
But the high court said it would be too presumptuous on the part of the court to summarily compel public respondents to comply with pertinent provisions of law regarding procurement of government infrastructure projects without any factual basis or prior determination of particular violations committed by specific government officials of the executive branch.
In coming out with this decision, the SC likewise dissolved the temporary restraining order that it issued on September 11, 2007, enjoining the government from implementing the broadband infrastructure project, which sought to inter-connect all agencies of the government down to the barangay level.
However, in his dissenting opinion, Carpio said the ZTE-NBN deal is void ab initio (from the beginning) for being contrary to the Constitution, the Administrative Code of 1987, the Government Auditing Code of the Philippines, and the Government Procurement Reform Act.
He said the supply contract is void from the beginning in the absence of any of these three requirements: an appropriations law, a certificate of appropriation and fund availability and public bidding.
"As such, the ZTE Supply Contract is legally non-existent. The Philippine government's decision 'not to continue with the (project)' during the pendency of the case, even if deemed a cancellation of the contract, had no legal effect on the status of the contract and did not moot this petition," Carpio said, noting the transcendental importance of the case.
He noted that the contract was signed without an appropriation from Congress and without public bidding, and the SC has a duty to resolve the important issues in this case, including the novel question on the status of executive agreements that conflict with national law, to prevent a recurrence of government contracts that violate the Constitution and existing statutes
"This case puts to the test the efficacy of constitutional and statutory proscriptions designed precisely to prevent such contracts... Not only are the legal issues in this case 'capable of repetition yet evading review.' The ZTE supply contract itself is capable of being resurrected," he said.
Carpio pointed out that the cancellation of the contract was just a unilateral declaration as per Endorsement of the DOTC, while ZTE has not manifested to the Court its consent to the discontinuance or cancellation of the supply contract.
Thus the decision of the government to abandon the NBN-ZTE project has not rendered the petitions moot.
Under the agreement between the governments of the Philippines and China, the NBN project will be financed by the Export-Import Bank (Exim) Bank of China under the terms of three percent annual interest and 20 year repayment period inclusive of a five-year grace period.
The original NBN contract with ZTE for US$329-million was signed by Arroyo on April 20, 2007 in Hainan, China.
Since its signing, DOTC has not disclosed the details of the contact.
The contract was signed in a bid to save the government about P3.4 billion yearly in telephone bills.
Funding under the contact with ZTE would come from a 15-year loan from the Chinese state-owned bank with a five-year grace period. (ECV/Sunnex)
For more Philippine news, visit Sun.Star Baguio. (July 15, 2008 issue)
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