Supreme Court allows lower court to proceed with North Rail case

MANILA, Philippines - A Chinese firm tasked to repair the railway tracks from Caloocan City to Clark Field lost its bid for the Supreme Court to stop a Makati Court from hearing a petition to void the $503-million project.

In upholding the Court of Appeals, the SC ruled the petition of China National Machinery and Equipment Corp. Group (CNMEG) to stop the hearing of the case filed by a group of lawyers and civil society organizations has no merit.

Last year, the CA found no merit in CNMEG’s claim that it enjoys diplomatic immunity, being a state-owned firm of the People’s Republic of China.

“(The CNMEG) must request the Foreign Office of a state where it is sued to convey to the court that it is entitled to such privilege,” read the CA decision.

“In this country, the practice is for the foreign entity to first secure an executive endorsement of diplomatic immunity.

“The bottom line is, (the request) must come from the DFA (Department of Foreign Affairs) which is the proper government agency with administrative competence to perform the task associated with diplomacy and foreign relations.”

In its petition, CNMEG said Judge Cesar Sta. Maria of Makati Regional Trial Court Branch 145 erred when he ordered the petitioner to appear and explain the details of the Northrail contract since it had “no jurisdiction over the person of herein petitioner and over the subject matter of the said case.”

Allowing the proceedings at the Makati court would “disrespect the sovereignty of the People’s Republic of China,” CNMEG added.

Policarpio, Pangulayan and Azura Law Office, CNMEG’s counsels, said Republic Act 8975 also prohibits lower courts from issuing restraining orders and injunctions on government infrastructure projects.

“Petitioners stand to suffer grave and irreparable injury by being compelled to answer private lawyers’ unjust and baseless claims.

“Petitioner has already commenced its duties and responsibilities under the Northrail project and invested its precious time, skills, industries and finances for the said project,” the counsels said.

“All of these will be put to naught if the proceedings will continue before the RTC.”

The case arose from a complaint for annulment of contract and injunction filed by University of the Philippines law professor Harry Roque and his group against the Office of the Executive Secretary, represented by Secretary Eduardo Ermita.

The respondents also included the Department of Finance, the Department of Budget and Management, the National Economic and Development Authority, Northrail and CNMEG.

Roque sought to void the $503-million project contract and the Buyer Credit Loan Agreement No. BLA 04055, dated Feb. 26, 2004 between the Export-Import bank of China (Eximbank) and the Philippine government for being unconstitutional and illegal.

The Northrail project refers to the rehabilitation of the Philippine National Railway’s north line, an estimated 80.2-kilometer project from Caloocan City in Metro Manila to Clark Field in Pampanga.