G.R. No. 245981 & G.R. No. 246594, August 9, 2022
Neri J. Colmenares, et al. vs. Rodrigo R. Duterte, President of the Republic of the Philippines, et al.

FACTS

The consolidated petitions assail the constitutionality of the Preferential Buyer’s Credit Loan Agreements entered into by the Philippine Government (through the Department of Finance) and the Chinese Export-Import Bank (EXIM Bank) to fund the Chico River Pump Irrigation Project and the New Centennial Water Source-Kaliwa Dam Project. Petitioners primarily argue that the loan agreements violate Section 20, Article VII of the 1987 Constitution, as they were executed without the prior concurrence of the Bangko Sentral ng Pilipinas Monetary Board (BSP MB). They further contend that the agreements contravene the constitutional “Filipino First” policy because the related Memorandum of Understanding (MOU) with China effectively limits the procurement of contractors to Chinese entities, thereby excluding qualified Filipino contractors.

ISSUE

The core issues are: (1) whether the loan agreements are void for lack of the BSP MB’s prior concurrence as required by the Constitution, and (2) whether the loan agreements and the related MOU violate the constitutional policy giving preference to qualified Filipinos.

RULING

The Court, through the Separate Concurring Opinion of Justice Caguioa, upheld the validity of the loan agreements and denied the petitions. On the first issue, the opinion clarified that the constitutional requirement of “prior concurrence” is satisfied by the BSP MB’s “Approval-in-Principle,” not its “Final Approval.” The BSP’s own rules delineate a three-stage process: Approval-in-Principle (granted before final loan negotiations), finalization of documents, and Final Approval (which authorizes the actual drawdown of funds). For both contested loans, the BSP MB granted its Approval-in-Principle before the execution of the loan agreements, imposing specific conditions for the subsequent Final Approval. This procedure constitutes the requisite prior concurrence, as it involves the BSP MB’s expert evaluation of the loan’s implications on monetary stability and external debt before the government becomes contractually bound.
On the second issue, the opinion reasoned that the constitutional Filipino First policy is not applicable to the procurement of contractors under these specific loan agreements. The funding was secured pursuant to a government-to-government MOU with China, wherein the Chinese EXIM Bank, as the lender, imposed the condition that the projects be implemented by Chinese contractors. This is a standard and reasonable measure for a lender to ensure project completion and loan repayment. Since the loan itself was contingent on this condition, Filipino contractors were never qualified bidders for these particular projects from the outset. Therefore, the preference for Filipino contractors cannot be invoked, as its application would nullify the very loan facility that the Executive branch, within its policy discretion, secured for national infrastructure development.