CA RULING NorthRail, builder subject to RP laws

By Norman Bordadora
Philippine Daily Inquirer
First Posted 04:47:00 10/13/2008

MANILA, Philippines—The $500-million NorthRail project and the contractor appointed by the Chinese government to undertake it are subject to Philippine courts and laws, the Court of Appeals (CA) has ruled.

In an 18-page decision dated Sept. 30, the appellate court’s Fifth Division dismissed China National Machinery and Equipment Corporation’s (CNMEC) motion questioning the Makati Regional Trial Court’s jurisdiction over itself and the contract to build a rail system from northern Metro Manila to central Luzon.

The Court of Appeals upheld the Makati RTC’s orders of May 15, 2007, and March 10, 2008, that set hearings to determine whether the NorthRail project by CNMEC should be stopped for being disadvantageous to the government and for displacing residents at project sites.

“Ostensibly, petitioner CNMEC failed to establish that it is an agent of the (People’s Republic of China or PROC) entitled to sovereign immunity from suit and that the assailed agreements exempted from complying with the requirements of the law,” the court said in its decision.

“Ergo, it must submit itself to our jurisdiction and abide by our rules and regulations,” it said.

The CNMEC had argued—in an April 2006 motion to dismiss—that the Makati court had no jurisdiction over it since it was an agent of the sovereign Chinese government.

It also said that court had no jurisdiction over the NorthRail project since it was supposedly an executive agreement between the Philippine and Chinese governments.

The court undermined the Chinese contractor’s arguments.

“The NorthRail project or agreement is not an agreement between states, i.e., PROC and the Philippine governments, but between petitioner CNMEC, a juridical entity and NorthRail,” it said.

“Likewise, a scrutiny of the NorthRail contract and the loan agreement reveals that local laws should apply to them instead of international law,” it added.

The appellate court also said CNMEC wasn’t recognized as an agent of the Chinese government by the Department of Foreign Affairs.

The Fifth Division is made up of chair Associate Justice Remedios Salazar-Fernando and members, Associate Justices Rosalinda Asuncion-Vicente and Ramon Bato Jr.

Lawyers Harry Roque and Joel Butuyan and people’s organizations had filed a case for the annulment of the NorthRail contract against Executive Secretary Eduardo Ermita, among others, assailing the project as unconstitutional, illegal and immoral.

On March 17, 2006, the Makati RTC set the hearings on Roque’s and the others’ plea to stop the project.


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