G.R. No. 245981 and 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

Petitioners, several party-list representatives and concerned citizens, filed consolidated petitions assailing the constitutionality of two Preferential Buyer’s Credit Loan Agreements entered into by the Philippine government with the Export-Import Bank of China (EXIM Bank) for the Chico River Pump Irrigation Project and the New Centennial Water Source-Kaliwa Dam Project. They argued these agreements violated multiple constitutional safeguards, including the requirement for prior Monetary Board concurrence under Section 20, Article VII of the 1987 Constitution and the nationalistic economic provisions, particularly the “Filipino First” policy under Section 10, Article XII.
The majority of the Court upheld the validity of the loan agreements, finding that the executive branch complied with constitutional and statutory requirements. The ponencia ruled that the required prior concurrence of the Monetary Board was satisfied through the Bangko Sentral ng Pilipinas’ (BSP) registration of the loans under its foreign exchange regulations, which constituted the necessary approval. It also held that the constitutional preference for Filipino goods and labor was not violated, as the loan agreements themselves did not directly mandate the procurement of foreign contractors or materials but were subject to the Government Procurement Reform Act.

ISSUE

The core issue in the dissenting opinion is whether the Supreme Court correctly exercised its power of judicial review in dismissing the petitions and declaring the loan agreements constitutional.

RULING

Justice Leonen, in his dissenting opinion, argued that the majority erred in not striking down the loan agreements as unconstitutional. He emphasized that judicial review is the Court’s duty to ensure no branch of government commits a grave abuse of discretion by transgressing constitutional boundaries. He contended the majority failed to rigorously apply this power.
On the specific constitutional violations, the dissent found the requirement for prior Monetary Board concurrence was not satisfied. Mere registration of the loans with the BSP for monitoring purposes under foreign exchange rules is functionally and legally distinct from the prior, substantive evaluation and concurrence mandated by the Constitution to assess the loan’s impact on the national economy. Furthermore, the dissent argued the loan agreements violated the Filipino First policy. Provisions stipulating the use of Chinese contractors, materials, and even a requirement to conduct arbitration in China under Chinese law effectively created a preference for foreign interests, contravening the constitutional mandate to favor qualified Filipinos. The dissent concluded that these glaring defects rendered the agreements unconstitutional, and the Court should have exercised its moderating power to invalidate them to protect the national interest from potentially onerous foreign obligations.