NPM 062-2004

Requesting Entity: Department of Transportation and Communications

Issues Concern: Procurement of Consulting Services for the Laguindingan Airport Development Project



Whether or not the procurement of consulting services funded through a loan agreement entered into by the Government of the Philippines with the Export-Import Bank of Korea is covered by the National Economic Development Authority (NEDA) Guidelines for the Procurement of Consulting Services.

It can be observed that a number of Philippine laws and executive issuances have established the consistent policy upholding international agreements entered into by the Philippine Government with other states and international organizations to faithfully comply with its commitment in its international dealings. This is in accordance with principle of pacta sunt servanda - international agreements must be performed in good faith, which is one of the oldest and most fundamental rules in international law. Under this maxim, a state which has contracted valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of the obligations undertaken. For this reason, the legislative trend in the area of government procurement is to exempt international agreements from the application of our domestic procurement laws.

[W]e are of the opinion that the procurement of Consulting Services for the Laguindingan Airport Development Project and the consequent supplemental agreement modifying the consultancy contract with the winning bidder are beyond the ambit of our domestic laws on procurement and contract implementation of government projects. Based on your representations, we have observed that the Laguindingan Airport Development Project is covered by a loan agreement with the Export-Import Bank of Korea, which is an international financial institution. Hence, such loan agreement is in a nature of an international agreement which exclusively governs the consultancy contract with Yooshin Engineering Corporation. While it may be true that this contract would not fall under the exempting clause of Section 4 of R.A. 9184 as this project was advertised and bidded out long before its effectivity, the NEDA’s Guidelines itself on the Procurement of Consulting Services has the same policy on international agreements.