SUPREME COURT
Manila
EN BANC
LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations
and partnerships adversely affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer
of Manila, respondents.
Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for
petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for
respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent
City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.
LABRADOR, J.:
This Court has before it the delicate task of passing upon the validity and
constitutionality of a legislative enactment, fundamental and far-reaching in
significance. The enactment poses questions of due process, police power and equal
protection of the laws. It also poses an important issue of fact, that is whether the
conditions which the disputed law purports to remedy really or actually exist.
Admittedly springing from a deep, militant, and positive nationalistic impulse, the law
purports to protect citizen and country from the alien retailer. Through it, and within
the field of economy it regulates, Congress attempts to translate national aspirations for
economic independence and national security, rooted in the drive and urge for national
survival and welfare, into a concrete and tangible measures designed to free the
national retailer from the competing dominance of the alien, so that the country and
the nation may be free from a supposed economic dependence and bondage. Do the
facts and circumstances justify the enactment?
II. Pertinent provisions of Republic Act No. 1180
Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it
nationalizes the retail trade business. The main provisions of the Act are: (1) a
prohibition against persons, not citizens of the Philippines, and against associations,
partnerships, or corporations the capital of which are not wholly owned by citizens of
the Philippines, from engaging directly or indirectly in the retail trade; (2) an exception
from the above prohibition in favor of aliens actually engaged in said business on May
15, 1954, who are allowed to continue to engaged therein, unless their licenses are
forfeited in accordance with the law, until their death or voluntary retirement in case of
natural persons, and for ten years after the approval of the Act or until the expiration of
term in case of juridical persons; (3) an exception therefrom in favor of citizens and
juridical entities of the United States; (4) a provision for the forfeiture of licenses (to
engage in the retail business) for violation of the laws on nationalization, control
weights and measures and labor and other laws relating to trade, commerce and
industry; (5) a prohibition against the establishment or opening by aliens actually
engaged in the retail business of additional stores or branches of retail business, (6) a
provision requiring aliens actually engaged in the retail business to present for
registration with the proper authorities a verified statement concerning their
businesses, giving, among other matters, the nature of the business, their assets and
liabilities and their offices and principal offices of judicial entities; and (7) a provision
allowing the heirs of aliens now engaged in the retail business who die, to continue such
business for a period of six months for purposes of liquidation.
Petitioner, for and in his own behalf and on behalf of other alien residents corporations
and partnerships adversely affected by the provisions of Republic Act. No. 1180, brought
this action to obtain a judicial declaration that said Act is unconstitutional, and to enjoin
the Secretary of Finance and all other persons acting under him, particularly city and
municipal treasurers, from enforcing its provisions. Petitioner attacks the
constitutionality of the Act, contending that: (1) it denies to alien residents the equal
protection of the laws and deprives of their liberty and property without due process of
law ; (2) the subject of the Act is not expressed or comprehended in the title thereof; (3)
the Act violates international and treaty obligations of the Republic of the Philippines;
(4) the provisions of the Act against the transmission by aliens of their retail business
thru hereditary succession, and those requiring 100% Filipino capitalization for a
corporation or entity to entitle it to engage in the retail business, violate the spirit of
Sections 1 and 5, Article XIII and Section 8 of Article XIV of the Constitution.
In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the
Act was passed in the valid exercise of the police power of the State, which exercise is
authorized in the Constitution in the interest of national economic survival; (2) the Act
has only one subject embraced in the title; (3) no treaty or international obligations are
infringed; (4) as regards hereditary succession, only the form is affected but the value of
the property is not impaired, and the institution of inheritance is only of statutory origin.
There is no question that the Act was approved in the exercise of the police power, but
petitioner claims that its exercise in this instance is attended by a violation of the
constitutional requirements of due process and equal protection of the laws. But before
proceeding to the consideration and resolution of the ultimate issue involved, it would
be well to bear in mind certain basic and fundamental, albeit preliminary,
considerations in the determination of the ever recurrent conflict between police power
and the guarantees of due process and equal protection of the laws. What is the scope
of police power, and how are the due process and equal protection clauses related to it?
What is the province and power of the legislature, and what is the function and duty of
the courts? These consideration must be clearly and correctly understood that their
application to the facts of the case may be brought forth with clarity and the issue
accordingly resolved.
It has been said the police power is so far - reaching in scope, that it has become almost
impossible to limit its sweep. As it derives its existence from the very existence of the
State itself, it does not need to be expressed or defined in its scope; it is said to be co-
extensive with self-protection and survival, and as such it is the most positive and active
of all governmental processes, the most essential, insistent and illimitable. Especially is
it so under a modern democratic framework where the demands of society and of
nations have multiplied to almost unimaginable proportions; the field and scope of
police power has become almost boundless, just as the fields of public interest and
public welfare have become almost all-embracing and have transcended human
foresight. Otherwise stated, as we cannot foresee the needs and demands of public
interest and welfare in this constantly changing and progressive world, so we cannot
delimit beforehand the extent or scope of police power by which and through which the
State seeks to attain or achieve interest or welfare. So it is that Constitutions do not
define the scope or extent of the police power of the State; what they do is to set forth
the limitations thereof. The most important of these are the due process clause and the
equal protection clause.
b. Limitations on police power. —
The basic limitations of due process and equal protection are found in the following
provisions of our Constitution:
SECTION 1.(1) No person shall be deprived of life, liberty or property without due
process of law, nor any person be denied the equal protection of the laws.
(Article III, Phil. Constitution)
These constitutional guarantees which embody the essence of individual liberty and
freedom in democracies, are not limited to citizens alone but are admittedly universal in
their application, without regard to any differences of race, of color, or of nationality.
(Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)
The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not
intended to prohibit legislation, which is limited either in the object to which it is
directed or by territory within which is to operate. It does not demand absolute equality
among residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced.
The equal protection clause is not infringed by legislation which applies only to those
persons falling within a specified class, if it applies alike to all persons within such class,
and reasonable grounds exists for making a distinction between those who fall within
such class and those who do not. (2 Cooley, Constitutional Limitations, 824-825.)
The due process clause has to do with the reasonableness of legislation enacted in
pursuance of the police power. Is there public interest, a public purpose; is public
welfare involved? Is the Act reasonably necessary for the accomplishment of the
legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient
foundation or reason in connection with the matter involved; or has there not been a
capricious use of the legislative power? Can the aims conceived be achieved by the
means used, or is it not merely an unjustified interference with private interest? These
are the questions that we ask when the due process test is applied.
The conflict, therefore, between police power and the guarantees of due process and
equal protection of the laws is more apparent than real. Properly related, the power and
the guarantees are supposed to coexist. The balancing is the essence or, shall it be said,
the indispensable means for the attainment of legitimate aspirations of any democratic
society. There can be no absolute power, whoever exercise it, for that would be tyranny.
Yet there can neither be absolute liberty, for that would mean license and anarchy. So
the State can deprive persons of life, liberty and property, provided there is due process
of law; and persons may be classified into classes and groups, provided everyone is
given the equal protection of the law. The test or standard, as always, is reason. The
police power legislation must be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means. And if distinction and
classification has been made, there must be a reasonable basis for said distinction.
Now, in this matter of equitable balancing, what is the proper place and role of the
courts? It must not be overlooked, in the first place, that the legislature, which is the
constitutional repository of police power and exercises the prerogative of determining
the policy of the State, is by force of circumstances primarily the judge of necessity,
adequacy or reasonableness and wisdom, of any law promulgated in the exercise of the
police power, or of the measures adopted to implement the public policy or to achieve
public interest. On the other hand, courts, although zealous guardians of individual
liberty and right, have nevertheless evinced a reluctance to interfere with the exercise
of the legislative prerogative. They have done so early where there has been a clear,
patent or palpable arbitrary and unreasonable abuse of the legislative prerogative.
Moreover, courts are not supposed to override legitimate policy, and courts never
inquire into the wisdom of the law.
With the above considerations in mind, we will now proceed to delve directly into the
issue involved. If the disputed legislation were merely a regulation, as its title indicates,
there would be no question that it falls within the legitimate scope of legislative power.
But it goes further and prohibits a group of residents, the aliens, from engaging therein.
The problem becomes more complex because its subject is a common, trade or
occupation, as old as society itself, which from the immemorial has always been open to
residents, irrespective of race, color or citizenship.
In a primitive economy where families produce all that they consume and consume all
that they produce, the dealer, of course, is unknown. But as group life develops and
families begin to live in communities producing more than what they consume and
needing an infinite number of things they do not produce, the dealer comes into
existence. As villages develop into big communities and specialization in production
begins, the dealer's importance is enhanced. Under modern conditions and standards of
living, in which man's needs have multiplied and diversified to unlimited extents and
proportions, the retailer comes as essential as the producer, because thru him the
infinite variety of articles, goods and needed for daily life are placed within the easy
reach of consumers. Retail dealers perform the functions of capillaries in the human
body, thru which all the needed food and supplies are ministered to members of the
communities comprising the nation.
There cannot be any question about the importance of the retailer in the life of the
community. He ministers to the resident's daily needs, food in all its increasing forms,
and the various little gadgets and things needed for home and daily life. He provides his
customers around his store with the rice or corn, the fish, the salt, the vinegar, the
spices needed for the daily cooking. He has cloths to sell, even the needle and the
thread to sew them or darn the clothes that wear out. The retailer, therefore, from the
lowly peddler, the owner of a small sari-sari store, to the operator of a department
store or, a supermarket is so much a part of day-to-day existence.
The alien retailer must have started plying his trades in this country in the bigger centers
of population (Time there was when he was unknown in provincial towns and villages).
Slowly but gradually be invaded towns and villages; now he predominates in the cities
and big centers of population. He even pioneers, in far away nooks where the
beginnings of community life appear, ministering to the daily needs of the residents and
purchasing their agricultural produce for sale in the towns. It is an undeniable fact that
in many communities the alien has replaced the native retailer. He has shown in this
trade, industry without limit, and the patience and forbearance of a slave.
Derogatory epithets are hurled at him, but he laughs these off without murmur; insults
of ill-bred and insolent neighbors and customers are made in his face, but he heeds
them not, and he forgets and forgives. The community takes note of him, as he appears
to be harmless and extremely useful.
There is a general feeling on the part of the public, which appears to be true to fact,
about the controlling and dominant position that the alien retailer holds in the nation's
economy. Food and other essentials, clothing, almost all articles of daily life reach the
residents mostly through him. In big cities and centers of population he has acquired not
only predominance, but apparent control over distribution of almost all kinds of goods,
such as lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of
other goods and articles. And were it not for some national corporations like the Naric,
the Namarco, the Facomas and the Acefa, his control over principal foods and products
would easily become full and complete.
Petitioner denies that there is alien predominance and control in the retail trade. In one
breath it is said that the fear is unfounded and the threat is imagined; in another, it is
charged that the law is merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also so many
unmanageable factors in the retail business make control virtually impossible. The first
argument which brings up an issue of fact merits serious consideration. The others are
matters of opinion within the exclusive competence of the legislature and beyond our
prerogative to pass upon and decide.
The best evidence are the statistics on the retail trade, which put down the figures in
black and white. Between the constitutional convention year (1935), when the fear of
alien domination and control of the retail trade already filled the minds of our leaders
with fears and misgivings, and the year of the enactment of the nationalization of the
retail trade act (1954), official statistics unmistakably point out to the ever-increasing
dominance and control by the alien of the retail trade, as witness the following tables:
AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT
Item Gross
Year and Retailer's
Assets Sales
Nationality
(Pesos) (Pesos)
1941:
1947:
1948: (Census)
1949:
1951:
The above statistics do not include corporations and partnerships, while the figures on
Filipino establishments already include mere market vendors, whose capital is
necessarily small..
The above figures reveal that in percentage distribution of assests and gross sales, alien
participation has steadily increased during the years. It is true, of course, that Filipinos
have the edge in the number of retailers, but aliens more than make up for the
numerical gap through their assests and gross sales which average between six and
seven times those of the very many Filipino retailers. Numbers in retailers, here, do not
imply superiority; the alien invests more capital, buys and sells six to seven times more,
and gains much more. The same official report, pointing out to the known
predominance of foreign elements in the retail trade, remarks that the Filipino retailers
were largely engaged in minor retailer enterprises. As observed by respondents, the
native investment is thinly spread, and the Filipino retailer is practically helpless in
matters of capital, credit, price and supply.
It is this domination and control, which we believe has been sufficiently shown to exist,
that is the legislature's target in the enactment of the disputed nationalization would
never have been adopted. The framers of our Constitution also believed in the existence
of this alien dominance and control when they approved a resolution categorically
declaring among other things, that "it is the sense of the Convention that the public
interest requires the nationalization of the retail trade; . . . ." (II Aruego, The Framing of
the Philippine Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-
two years ago; and the events since then have not been either pleasant or comforting.
Dean Sinco of the University of the Philippines College of Law, commenting on the
patrimony clause of the Preamble opines that the fathers of our Constitution were
merely translating the general preoccupation of Filipinos "of the dangers from alien
interests that had already brought under their control the commercial and other
economic activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and
analyzing the concern of the members of the constitutional convention for the
economic life of the citizens, in connection with the nationalistic provisions of the
Constitution, he says:
But there has been a general feeling that alien dominance over the economic life
of the country is not desirable and that if such a situation should remain, political
independence alone is no guarantee to national stability and strength. Filipino
private capital is not big enough to wrest from alien hands the control of the
national economy. Moreover, it is but of recent formation and hence, largely
inexperienced, timid and hesitant. Under such conditions, the government as the
instrumentality of the national will, has to step in and assume the initiative, if not
the leadership, in the struggle for the economic freedom of the nation in
somewhat the same way that it did in the crusade for political freedom. Thus . . .
it (the Constitution) envisages an organized movement for the protection of the
nation not only against the possibilities of armed invasion but also against its
economic subjugation by alien interests in the economic field. (Phil. Political Law
by Sinco, 10th ed., p. 476.)
Belief in the existence of alien control and predominance is felt in other quarters.
Filipino businessmen, manufacturers and producers believe so; they fear the dangers
coming from alien control, and they express sentiments of economic independence.
Witness thereto is Resolution No. 1, approved on July 18, 1953, of the Fifth National
convention of Filipino Businessmen, and a similar resolution, approved on March 20,
1954, of the Second National Convention of Manufacturers and Producers. The man in
the street also believes, and fears, alien predominance and control; so our newspapers,
which have editorially pointed out not only to control but to alien stranglehold. We,
therefore, find alien domination and control to be a fact, a reality proved by official
statistics, and felt by all the sections and groups that compose the Filipino community.
But the dangers arising from alien participation in the retail trade does not seem to lie in
the predominance alone; there is a prevailing feeling that such predominance may truly
endanger the national interest. With ample capital, unity of purpose and action and
thorough organization, alien retailers and merchants can act in such complete unison
and concert on such vital matters as the fixing of prices, the determination of the
amount of goods or articles to be made available in the market, and even the choice of
the goods or articles they would or would not patronize or distribute, that fears of
dislocation of the national economy and of the complete subservience of national
economy and of the consuming public are not entirely unfounded. Nationals, producers
and consumers alike can be placed completely at their mercy. This is easily illustrated.
Suppose an article of daily use is desired to be prescribed by the aliens, because the
producer or importer does not offer them sufficient profits, or because a new
competing article offers bigger profits for its introduction. All that aliens would do is to
agree to refuse to sell the first article, eliminating it from their stocks, offering the new
one as a substitute. Hence, the producers or importers of the prescribed article, or its
consumers, find the article suddenly out of the prescribed article, or its consumers, find
the article suddenly out of circulation. Freedom of trade is thus curtailed and free
enterprise correspondingly suppressed.
We can even go farther than theoretical illustrations to show the pernicious influences
of alien domination. Grave abuses have characterized the exercise of the retail trade by
aliens. It is a fact within judicial notice, which courts of justice may not properly
overlook or ignore in the interests of truth and justice, that there exists a general feeling
on the part of the public that alien participation in the retail trade has been attended by
a pernicious and intolerable practices, the mention of a few of which would suffice for
our purposes; that at some time or other they have cornered the market of essential
commodities, like corn and rice, creating artificial scarcities to justify and enhance
profits to unreasonable proportions; that they have hoarded essential foods to the
inconvenience and prejudice of the consuming public, so much so that the Government
has had to establish the National Rice and Corn Corporation to save the public from
their continuous hoarding practices and tendencies; that they have violated price
control laws, especially on foods and essential commodities, such that the legislature
had to enact a law (Sec. 9, Republic Act No. 1168), authorizing their immediate and
automatic deportation for price control convictions; that they have secret combinations
among themselves to control prices, cheating the operation of the law of supply and
demand; that they have connived to boycott honest merchants and traders who would
not cater or yield to their demands, in unlawful restraint of freedom of trade and
enterprise. They are believed by the public to have evaded tax laws, smuggled goods
and money into and out of the land, violated import and export prohibitions, control
laws and the like, in derision and contempt of lawful authority. It is also believed that
they have engaged in corrupting public officials with fabulous bribes, indirectly causing
the prevalence of graft and corruption in the Government. As a matter of fact appeals to
unscrupulous aliens have been made both by the Government and by their own lawful
diplomatic representatives, action which impliedly admits a prevailing feeling about the
existence of many of the above practices.
The circumstances above set forth create well founded fears that worse things may
come in the future. The present dominance of the alien retailer, especially in the big
centers of population, therefore, becomes a potential source of danger on occasions of
war or other calamity. We do not have here in this country isolated groups of harmless
aliens retailing goods among nationals; what we have are well organized and powerful
groups that dominate the distribution of goods and commodities in the communities
and big centers of population. They owe no allegiance or loyalty to the State, and the
State cannot rely upon them in times of crisis or emergency. While the national holds his
life, his person and his property subject to the needs of his country, the alien may even
become the potential enemy of the State.
We are fully satisfied upon a consideration of all the facts and circumstances that the
disputed law is not the product of racial hostility, prejudice or discrimination, but the
expression of the legitimate desire and determination of the people, thru their
authorized representatives, to free the nation from the economic situation that has
unfortunately been saddled upon it rightly or wrongly, to its disadvantage. The law is
clearly in the interest of the public, nay of the national security itself, and indisputably
falls within the scope of police power, thru which and by which the State insures its
existence and security and the supreme welfare of its citizens.
a. Objections to alien participation in retail trade. — The next question that now poses
solution is, Does the law deny the equal protection of the laws? As pointed out above,
the mere fact of alienage is the root and cause of the distinction between the alien and
the national as a trader. The alien resident owes allegiance to the country of his birth or
his adopted country; his stay here is for personal convenience; he is attracted by the
lure of gain and profit. His aim or purpose of stay, we admit, is neither illegitimate nor
immoral, but he is naturally lacking in that spirit of loyalty and enthusiasm for this
country where he temporarily stays and makes his living, or of that spirit of regard,
sympathy and consideration for his Filipino customers as would prevent him from taking
advantage of their weakness and exploiting them. The faster he makes his pile, the
earlier can the alien go back to his beloved country and his beloved kin and countrymen.
The experience of the country is that the alien retailer has shown such utter disregard
for his customers and the people on whom he makes his profit, that it has been found
necessary to adopt the legislation, radical as it may seem.
Another objection to the alien retailer in this country is that he never really makes a
genuine contribution to national income and wealth. He undoubtedly contributes to
general distribution, but the gains and profits he makes are not invested in industries
that would help the country's economy and increase national wealth. The alien's
interest in this country being merely transient and temporary, it would indeed be ill-
advised to continue entrusting the very important function of retail distribution to his
hands.
The practices resorted to by aliens in the control of distribution, as already pointed out
above, their secret manipulations of stocks of commodities and prices, their utter
disregard of the welfare of their customers and of the ultimate happiness of the people
of the nation of which they are mere guests, which practices, manipulations and
disregard do not attend the exercise of the trade by the nationals, show the existence of
real and actual, positive and fundamental differences between an alien and a national
which fully justify the legislative classification adopted in the retail trade measure. These
differences are certainly a valid reason for the State to prefer the national over the alien
in the retail trade. We would be doing violence to fact and reality were we to hold that
no reason or ground for a legitimate distinction can be found between one and the
other.
The above objectionable characteristics of the exercise of the retail trade by the aliens,
which are actual and real, furnish sufficient grounds for legislative classification of retail
traders into nationals and aliens. Some may disagree with the wisdom of the
legislature's classification. To this we answer, that this is the prerogative of the law-
making power. Since the Court finds that the classification is actual, real and reasonable,
and all persons of one class are treated alike, and as it cannot be said that the
classification is patently unreasonable and unfounded, it is in duty bound to declare that
the legislature acted within its legitimate prerogative and it can not declare that the act
transcends the limit of equal protection established by the Constitution.
Broadly speaking, the power of the legislature to make distinctions and classifications
among persons is not curtailed or denied by the equal protection of the laws clause. The
legislative power admits of a wide scope of discretion, and a law can be violative of the
constitutional limitation only when the classification is without reasonable basis. In
addition to the authorities we have earlier cited, we can also refer to the case of Linsey
vs. Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined
the application of equal protection clause to a law sought to be voided as contrary
thereto:
. . . . "1. The equal protection clause of the Fourteenth Amendment does not take
from the state the power to classify in the adoption of police laws, but admits of
the exercise of the wide scope of discretion in that regard, and avoids what is
done only when it is without any reasonable basis, and therefore is purely
arbitrary. 2. A classification having some reasonable basis does not offend against
that clause merely because it is not made with mathematical nicety, or because
in practice it results in some inequality. 3. When the classification in such a law is
called in question, if any state of facts reasonably can be conceived that would
sustain it, the existence of that state of facts at the time the law was enacted
must be assumed. 4. One who assails the classification in such a law must carry
the burden of showing that it does not rest upon any reasonable basis but is
essentially arbitrary."
The question as to whether or not citizenship is a legal and valid ground for classification
has already been affirmatively decided in this jurisdiction as well as in various courts in
the United States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where the
validity of Act No. 2761 of the Philippine Legislature was in issue, because of a condition
therein limiting the ownership of vessels engaged in coastwise trade to corporations
formed by citizens of the Philippine Islands or the United States, thus denying the right
to aliens, it was held that the Philippine Legislature did not violate the equal protection
clause of the Philippine Bill of Rights. The legislature in enacting the law had as ultimate
purpose the encouragement of Philippine shipbuilding and the safety for these Islands
from foreign interlopers. We held that this was a valid exercise of the police power, and
all presumptions are in favor of its constitutionality. In substance, we held that the
limitation of domestic ownership of vessels engaged in coastwise trade to citizens of the
Philippines does not violate the equal protection of the law and due process or law
clauses of the Philippine Bill of Rights. In rendering said decision we quoted with
approval the concurring opinion of Justice Johnson in the case of Gibbons vs. Ogden, 9
Wheat., I, as follows:
"Licensing acts, in fact, in legislation, are universally restraining acts; as, for
example, acts licensing gaming houses, retailers of spirituous liquors, etc. The act,
in this instance, is distinctly of that character, and forms part of an extensive
system, the object of which is to encourage American shipping, and place them
on an equal footing with the shipping of other nations. Almost every commercial
nation reserves to its own subjects a monopoly of its coasting trade; and a
countervailing privilege in favor of American shipping is contemplated, in the
whole legislation of the United States on this subject. It is not to give the vessel
an American character, that the license is granted; that effect has been correctly
attributed to the act of her enrollment. But it is to confer on her American
privileges, as contra distinguished from foreign; and to preserve the Government
from fraud by foreigners; in surreptitiously intruding themselves into the
American commercial marine, as well as frauds upon the revenue in the trade
coastwise, that this whole system is projected."
It is true that some decisions of the Federal court and of the State courts in the United
States hold that the distinction between aliens and citizens is not a valid ground for
classification. But in this decision the laws declared invalid were found to be either
arbitrary, unreasonable or capricious, or were the result or product of racial antagonism
and hostility, and there was no question of public interest involved or pursued. In Yu
Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared
invalid a Philippine law making unlawful the keeping of books of account in any
language other than English, Spanish or any other local dialect, but the main reasons for
the decisions are: (1) that if Chinese were driven out of business there would be no
other system of distribution, and (2) that the Chinese would fall prey to all kinds of
fraud, because they would be deprived of their right to be advised of their business and
to direct its conduct. The real reason for the decision, therefore, is the court's belief that
no public benefit would be derived from the operations of the law and on the other
hand it would deprive Chinese of something indispensable for carrying on their
business. In Yick Wo vs. Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on
officials to withhold consent in the operation of laundries both as to persons and place,
was declared invalid, but the court said that the power granted was arbitrary, that there
was no reason for the discrimination which attended the administration and
implementation of the law, and that the motive thereof was mere racial hostility. In
State vs. Montgomery, 47 A. 165 (Maine, 1900), a law prohibiting aliens to engage as
hawkers and peddlers was declared void, because the discrimination bore no
reasonable and just relation to the act in respect to which the classification was
proposed.
The case at bar is radically different, and the facts make them so. As we already have
said, aliens do not naturally possess the sympathetic consideration and regard for the
customers with whom they come in daily contact, nor the patriotic desire to help bolster
the nation's economy, except in so far as it enhances their profit, nor the loyalty and
allegiance which the national owes to the land. These limitations on the qualifications of
the aliens have been shown on many occasions and instances, especially in times of
crisis and emergency. We can do no better than borrow the language of Anton vs. Van
Winkle, 297 F. 340, 342, to drive home the reality and significance of the distinction
between the alien and the national, thus:
. . . . It may be judicially known, however, that alien coming into this country are
without the intimate knowledge of our laws, customs, and usages that our own
people have. So it is likewise known that certain classes of aliens are of different
psychology from our fellow countrymen. Furthermore, it is natural and
reasonable to suppose that the foreign born, whose allegiance is first to their
own country, and whose ideals of governmental environment and control have
been engendered and formed under entirely different regimes and political
systems, have not the same inspiration for the public weal, nor are they as well
disposed toward the United States, as those who by citizenship, are a part of the
government itself. Further enlargement, is unnecessary. I have said enough so
that obviously it cannot be affirmed with absolute confidence that the Legislature
was without plausible reason for making the classification, and therefore
appropriate discriminations against aliens as it relates to the subject of
legislation. . . . .
We now come to due process as a limitation on the exercise of the police power. It has
been stated by the highest authority in the United States that:
. . . . And the guaranty of due process, as has often been held, demands only that
the law shall not be unreasonable, arbitrary or capricious, and that the means
selected shall have a real and substantial relation to the subject sought to be
attained. . . . .
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:
. . . . To justify the state in thus interposing its authority in behalf of the public, it
must appear, first, that the interests of the public generally, as distinguished from
those of a particular class, require such interference; and second, that the means
are reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. . . .
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of
constitutionality:
In determining whether a given act of the Legislature, passed in the exercise of
the police power to regulate the operation of a business, is or is not
constitutional, one of the first questions to be considered by the court is whether
the power as exercised has a sufficient foundation in reason in connection with
the matter involved, or is an arbitrary, oppressive, and capricious use of that
power, without substantial relation to the health, safety, morals, comfort, and
general welfare of the public.
Petitioner's main argument is that retail is a common, ordinary occupation, one of those
privileges long ago recognized as essential to the orderly pursuant of happiness by free
men; that it is a gainful and honest occupation and therefore beyond the power of the
legislature to prohibit and penalized. This arguments overlooks fact and reality and rests
on an incorrect assumption and premise, i.e., that in this country where the occupation
is engaged in by petitioner, it has been so engaged by him, by the alien in an honest
creditable and unimpeachable manner, without harm or injury to the citizens and
without ultimate danger to their economic peace, tranquility and welfare. But the
Legislature has found, as we have also found and indicated, that the privilege has been
so grossly abused by the alien, thru the illegitimate use of pernicious designs and
practices, that he now enjoys a monopolistic control of the occupation and threatens a
deadly stranglehold on the nation's economy endangering the national security in times
of crisis and emergency.
The real question at issue, therefore, is not that posed by petitioner, which overlooks
and ignores the facts and circumstances, but this, Is the exclusion in the future of aliens
from the retail trade unreasonable. Arbitrary capricious, taking into account the
illegitimate and pernicious form and manner in which the aliens have heretofore
engaged therein? As thus correctly stated the answer is clear. The law in question is
deemed absolutely necessary to bring about the desired legislative objective, i.e., to free
national economy from alien control and dominance. It is not necessarily unreasonable
because it affects private rights and privileges (11 Am. Jur. pp. 1080-1081.) The test of
reasonableness of a law is the appropriateness or adequacy under all circumstances of
the means adopted to carry out its purpose into effect (Id.) Judged by this test, disputed
legislation, which is not merely reasonable but actually necessary, must be considered
not to have infringed the constitutional limitation of reasonableness.
The necessity of the law in question is explained in the explanatory note that
accompanied the bill, which later was enacted into law:
This bill proposes to regulate the retail business. Its purpose is to prevent persons
who are not citizens of the Philippines from having a strangle hold upon our
economic life. If the persons who control this vital artery of our economic life are
the ones who owe no allegiance to this Republic, who have no profound devotion
to our free institutions, and who have no permanent stake in our people's
welfare, we are not really the masters of our destiny. All aspects of our life, even
our national security, will be at the mercy of other people.
The framers of the Constitution could not have intended to impose the constitutional
restrictions of due process on the attainment of such a noble motive as freedom from
economic control and domination, thru the exercise of the police power. The fathers of
the Constitution must have given to the legislature full authority and power to enact
legislation that would promote the supreme happiness of the people, their freedom and
liberty. On the precise issue now before us, they expressly made their voice clear; they
adopted a resolution expressing their belief that the legislation in question is within the
scope of the legislative power. Thus they declared the their Resolution:
That it is the sense of the Convention that the public interest requires the
nationalization of retail trade; but it abstain from approving the amendment
introduced by the Delegate for Manila, Mr. Araneta, and others on this matter
because it is convinced that the National Assembly is authorized to promulgate a
law which limits to Filipino and American citizens the privilege to engage in the
retail trade. (11 Aruego, The Framing of the Philippine Constitution, quoted on
pages 66 and 67 of the Memorandum for the Petitioner.)
The seriousness of the Legislature's concern for the plight of the nationals as manifested
in the approval of the radical measures is, therefore, fully justified. It would have been
recreant to its duties towards the country and its people would it view the sorry plight
of the nationals with the complacency and refuse or neglect to adopt a remedy
commensurate with the demands of public interest and national survival. As the
repository of the sovereign power of legislation, the Legislature was in duty bound to
face the problem and meet, through adequate measures, the danger and threat that
alien domination of retail trade poses to national economy.
A cursory study of the provisions of the law immediately reveals how tolerant, how
reasonable the Legislature has been. The law is made prospective and recognizes the
right and privilege of those already engaged in the occupation to continue therein
during the rest of their lives; and similar recognition of the right to continue is accorded
associations of aliens. The right or privilege is denied to those only upon conviction of
certain offenses. In the deliberations of the Court on this case, attention was called to
the fact that the privilege should not have been denied to children and heirs of aliens
now engaged in the retail trade. Such provision would defeat the law itself, its aims and
purposes. Beside, the exercise of legislative discretion is not subject to judicial review. It
is well settled that the Court will not inquire into the motives of the Legislature, nor pass
upon general matters of legislative judgment. The Legislature is primarily the judge of
the necessity of an enactment or of any of its provisions, and every presumption is in
favor of its validity, and though the Court may hold views inconsistent with the wisdom
of the law, it may not annul the legislation if not palpably in excess of the legislative
power. Furthermore, the test of the validity of a law attacked as a violation of due
process, is not its reasonableness, but its unreasonableness, and we find the provisions
are not unreasonable. These principles also answer various other arguments raised
against the law, some of which are: that the law does not promote general welfare; that
thousands of aliens would be thrown out of employment; that prices will increase
because of the elimination of competition; that there is no need for the legislation; that
adequate replacement is problematical; that there may be general breakdown; that
there would be repercussions from foreigners; etc. Many of these arguments are
directed against the supposed wisdom of the law which lies solely within the legislative
prerogative; they do not import invalidity.
A subordinate ground or reason for the alleged invalidity of the law is the claim that the
title thereof is misleading or deceptive, as it conceals the real purpose of the bill which
is to nationalize the retail business and prohibit aliens from engaging therein. The
constitutional provision which is claimed to be violated in Section 21 (1) of Article VI,
which reads:
No bill which may be enacted in the law shall embrace more than one subject
which shall be expressed in the title of the bill.
What the above provision prohibits is duplicity, that is, if its title completely fails to
appraise the legislators or the public of the nature, scope and consequences of the law
or its operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory
consideration of the title and the provisions of the bill fails to show the presence of
duplicity. It is true that the term "regulate" does not and may not readily and at first
glance convey the idea of "nationalization" and "prohibition", which terms express the
two main purposes and objectives of the law. But "regulate" is a broader term than
either prohibition or nationalization. Both of these have always been included within
the term regulation.
Under the title of an act to "regulate", the sale of intoxicating liquors, the
Legislature may prohibit the sale of intoxicating liquors. (Sweet vs. City of
Wabash, 41 Ind., 7; quoted in page 41 of Answer.)
Within the meaning of the Constitution requiring that the subject of every act of
the Legislature shall be stated in the tale, the title to regulate the sale of
intoxicating liquors, etc." sufficiently expresses the subject of an act prohibiting
the sale of such liquors to minors and to persons in the habit of getting
intoxicated; such matters being properly included within the subject of regulating
the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in p. 42 of Answer.)
The word "regulate" is of broad import, and necessarily implies some degree of
restraint and prohibition of acts usually done in connection with the thing to be
regulated. While word regulate does not ordinarily convey meaning of prohibit,
there is no absolute reason why it should not have such meaning when used in
delegating police power in connection with a thing the best or only efficacious
regulation of which involves suppression. (State vs. Morton, 162 So. 718, 182 La.
887, quoted in p. 42 of Answer.)
The general rule is for the use of general terms in the title of a bill; it has also been said
that the title need not be an index to the entire contents of the law (I Sutherland,
Statutory Construction, See. 4803, p. 345.) The above rule was followed the title of the
Act in question adopted the more general term "regulate" instead of "nationalize" or
"prohibit". Furthermore, the law also contains other rules for the regulation of the retail
trade which may not be included in the terms "nationalization" or "prohibition"; so were
the title changed from "regulate" to "nationalize" or "prohibit", there would have been
many provisions not falling within the scope of the title which would have made the Act
invalid. The use of the term "regulate", therefore, is in accord with the principle
governing the drafting of statutes, under which a simple or general term should be
adopted in the title, which would include all other provisions found in the body of the
Act.
One purpose of the constitutional directive that the subject of a bill should be embraced
in its title is to apprise the legislators of the purposes, the nature and scope of its
provisions, and prevent the enactment into law of matters which have received the
notice, action and study of the legislators or of the public. In the case at bar it cannot be
claimed that the legislators have been appraised of the nature of the law, especially the
nationalization and the prohibition provisions. The legislators took active interest in the
discussion of the law, and a great many of the persons affected by the prohibitions in
the law conducted a campaign against its approval. It cannot be claimed, therefore, that
the reasons for declaring the law invalid ever existed. The objection must therefore, be
overruled.
Another subordinate argument against the validity of the law is the supposed violation
thereby of the Charter of the United Nations and of the Declaration of the Human Rights
adopted by the United Nations General Assembly. We find no merit in the Nations
Charter imposes no strict or legal obligations regarding the rights and freedom of their
subjects (Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the
Declaration of Human Rights contains nothing more than a mere recommendation or a
common standard of achievement for all peoples and all nations (Id. p. 39.) That such is
the import of the United Nations Charter aid of the Declaration of Human Rights can be
inferred the fact that members of the United Nations Organizations, such as Norway
and Denmark, prohibit foreigners from engaging in retail trade, and in most nations of
the world laws against foreigners engaged in domestic trade are adopted.
The Treaty of Amity between the Republic of the Philippines and the Republic of China
of April 18, 1947 is also claimed to be violated by the law in question. All that the treaty
guarantees is equality of treatment to the Chinese nationals "upon the same terms as
the nationals of any other country." But the nationals of China are not discriminating
against because nationals of all other countries, except those of the United States, who
are granted special rights by the Constitution, are all prohibited from engaging in the
retail trade. But even supposing that the law infringes upon the said treaty, the treaty is
always subject to qualification or amendment by a subsequent law (U. S. vs. Thompson,
258, Fed. 257, 260), and the same may never curtail or restrict the scope of the police
power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.)
X. Conclusion
Resuming what we have set forth above we hold that the disputed law was enacted to
remedy a real actual threat and danger to national economy posed by alien dominance
and control of the retail business and free citizens and country from dominance and
control; that the enactment clearly falls within the scope of the police power of the
State, thru which and by which it protects its own personality and insures its security
and future; that the law does not violate the equal protection clause of the Constitution
because sufficient grounds exist for the distinction between alien and citizen in the
exercise of the occupation regulated, nor the due process of law clause, because the law
is prospective in operation and recognizes the privilege of aliens already engaged in the
occupation and reasonably protects their privilege; that the wisdom and efficacy of the
law to carry out its objectives appear to us to be plainly evident — as a matter of fact it
seems not only appropriate but actually necessary — and that in any case such matter
falls within the prerogative of the Legislature, with whose power and discretion the
Judicial department of the Government may not interfere; that the provisions of the law
are clearly embraced in the title, and this suffers from no duplicity and has not misled
the legislators or the segment of the population affected; and that it cannot be said to
be void for supposed conflict with treaty obligations because no treaty has actually been
entered into on the subject and the police power may not be curtailed or surrendered
by any treaty or any other conventional agreement.
Some members of the Court are of the opinion that the radical effects of the law could
have been made less harsh in its impact on the aliens. Thus it is stated that the more
time should have been given in the law for the liquidation of existing businesses when
the time comes for them to close. Our legal duty, however, is merely to determine if the
law falls within the scope of legislative authority and does not transcend the limitations
of due process and equal protection guaranteed in the Constitution. Remedies against
the harshness of the law should be addressed to the Legislature; they are beyond our
power and jurisdiction.
Ichong vs Hernandez
Facts: Petitioner, for and in his own behalf and on behalf of other alien residents
corporations and partnerships adversely affected by the provisions of Republic Act. No.
1180, “An Act to Regulate the Retail Business,” filed to obtain a judicial declaration that
said Act is unconstitutional contending that: (1) it denies to alien residents the equal
protection of the laws and deprives of their liberty and property without due process of
law ; (2) the subject of the Act is not expressed or comprehended in the title thereof; (3)
the Act violates international and treaty obligations of the Republic of the Philippines; (4)
the provisions of the Act against the transmission by aliens of their retail business thru
hereditary succession, and those requiring 100% Filipino capitalization for a corporation
or entity to entitle it to engage in the retail business, violate the spirit of Sections 1 and 5,
Article XIII and Section 8 of Article XIV of the Constitution.
Issue: Whether RA 1180 denies to alien residents the equal protection of the laws and
deprives of their liberty and property without due process of law
Held: No. The equal protection of the law clause is against undue favor and individual or
class privilege, as well as hostile discrimination or the oppression of inequality. It is not
intended to prohibit legislation, which is limited either in the object to which it is directed
or by territory within which is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced. The
equal protection clause is not infringed by legislation which applies only to those persons
falling within a specified class, if it applies alike to all persons within such class, and
reasonable grounds exists for making a distinction between those who fall within such
class and those who do not. (2 Cooley, Constitutional Limitations, 824-825.)
The due process clause has to do with the reasonableness of legislation enacted in
pursuance of the police power. Is there public interest, a public purpose; is public welfare
involved? Is the Act reasonably necessary for the accomplishment of the legislature’s
purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or
reason in connection with the matter involved; or has there not been a capricious use of
the legislative power? Can the aims conceived be achieved by the means used, or is it not
merely an unjustified interference with private interest? These are the questions that we
ask when the due process test is applied.
The conflict, therefore, between police power and the guarantees of due process and
equal protection of the laws is more apparent than real. Properly related, the power and
the guarantees are supposed to coexist. The balancing is the essence or, shall it be said,
the indispensable means for the attainment of legitimate aspirations of any democratic
society. There can be no absolute power, whoever exercise it, for that would be tyranny.
Yet there can neither be absolute liberty, for that would mean license and anarchy. So the
State can deprive persons of life, liberty and property, provided there is due process of
law; and persons may be classified into classes and groups, provided everyone is given
the equal protection of the law. The test or standard, as always, is reason. The police
power legislation must be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means. And if distinction and
classification has been made, there must be a reasonable basis for said distinction.
The law does not violate the equal protection clause of the Constitution because
sufficient grounds exist for the distinction between alien and citizen in the exercise of
the occupation regulated, nor the due process of law clause, because the law is
prospective in operation and recognizes the privilege of aliens already engaged in the
occupation and reasonably protects their privilege; that the wisdom and efficacy of the
law to carry out its objectives appear to us to be plainly evident — as a matter of fact it
seems not only appropriate but actually necessary — and that in any case such matter
falls within the prerogative of the Legislature, with whose power and discretion the
Judicial department of the Government may not interfere; that the provisions of the law
are clearly embraced in the title, and this suffers from no duplicity and has not misled the
legislators or the segment of the population affected; and that it cannot be said to be void
for supposed conflict with treaty obligations because no treaty has actually been entered
into on the subject and the police power may not be curtailed or surrendered by any
treaty or any other conventional agreement.
Lao Ichong is a Chinese businessman who entered the country to take advantage of
business opportunities herein abound (then) – particularly in the retail business. For
some time he and his fellow Chinese businessmen enjoyed a “monopoly” in the local
market in Pasay. Until in June 1954 when Congress passed the RA 1180 or the Retail
Trade Nationalization Act the purpose of which is to reserve to Filipinos the right to
engage in the retail business. Ichong then petitioned for the nullification of the said Act
on the ground that it contravened several treaties concluded by the RP which, according
to him, violates the equal protection clause (pacta sund servanda). He said that as a
Chinese businessman engaged in the business here in the country who helps in the
income generation of the country he should be given equal opportunity.
ISSUE: Whether or not a law may invalidate or supersede treaties or generally accepted
principles.
HELD: Yes, a law may supersede a treaty or a generally accepted principle. In this case,
there is no conflict at all between the raised generally accepted principle and with RA
1180. The equal protection of the law clause “does not demand absolute equality
amongst residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced”;
and, that the equal protection clause “is not infringed by legislation which applies only
to those persons falling within a specified class, if it applies alike to all persons within
such class, and reasonable grounds exist for making a distinction between those who fall
within such class and those who do not.”
For the sake of argument, even if it would be assumed that a treaty would be in conflict
with a statute then the statute must be upheld because it represented an exercise of
the police power which, being inherent could not be bargained away or surrendered
through the medium of a treaty. Hence, Ichong can no longer assert his right to operate
his market stalls in the Pasay city market.
EN BANC
CONCEPCION, J.:
Forthwith, respondents were required to file their answer to the petition which they
did, and petitioner's pray for a writ of preliminary injunction was set for hearing at
which both parties appeared and argued orally. Moreover, a memorandum was filed,
shortly thereafter, by the respondents. Considering, later on, that the resolution said
incident may require some pronouncements that would be more appropriate in a
decision on the merits of the case, the same was set for hearing on the merits
thereafter. The parties, however, waived the right to argue orally, although counsel for
respondents filed their memoranda.
Respondents assail petitioner's right to the reliefs prayed for because he "has not
exhausted all administrative remedies available to him before coming to court". We
have already held, however, that the principle requiring the previous exhaustion of
administrative remedies is not applicable where the question in dispute is purely a legal
one",3 or where the controverted act is "patently illegal" or was performed without
jurisdiction or in excess of jurisdiction,4 or where the respondent is a department
secretary, whose acts as an alter-ego of the President bear the implied or assumed
approval of the latter,5 unless actually disapproved by him,6 or where there are
circumstances indicating the urgency of judicial intervention.7 The case at bar fails under
each one of the foregoing exceptions to the general rule. Respondents' contention is,
therefore, untenable.
Respondents question the sufficiency of petitioner's cause of action upon the theory
that the proposed importation in question is not governed by Republic Acts Nos. 2207
and 3452, but was authorized by the President as Commander-in-Chief "for military
stock pile purposes" in the exercise of his alleged authority under Section 2 of
Commonwealth Act No. 1;8 that in cases of necessity, the President "or his subordinates
may take such preventive measure for the restoration of good order and maintenance
of peace"; and that, as Commander-in-Chief of our armed forces, "the President ... is
duty-bound to prepare for the challenge of threats of war or emergency without waiting
for any special authority".
Regardless of whether Republic Act No. 3452 repeals Republic Act No. 2207, as
contended by petitioner herein - on which our view need not be expressed — we are
unanimously of the opinion - assuming that said Republic Act No. 2207 is still in force —
that the two Acts are applicable to the proposed importation in question because the
language of said laws is such as to include within the purview thereof all importations of
rice and corn into the Philippines". Pursuant to Republic Act No. 2207, "it shall be
unlawful for any person, association, corporation or government agency to import rice
and corn into any point in the Philippines", although, by way of exception, it adds, that
"the President of the Philippines may authorize the importation of these commodities
through any government agency that he may designate", is the conditions prescribed in
Section 2 of said Act are present. Similarly, Republic Act No. 3452 explicitly enjoins "the
Rice and Corn Administration or any government agency" from importing rice and corn.
Respondents allege, however, that said provisions of Republic Act Nos. 2207 and 3452,
prohibiting the importation of rice and corn by any "government agency", do not apply
to importations "made by the Government itself", because the latter is not a
"government agency". This theory is devoid of merit. The Department of National
Defense and the Armed Forces of the Philippines, as well as respondents herein, and
each and every officer and employee of our Government, our government agencies
and/or agents. The applicability of said laws even to importations by the Government as
such, becomes more apparent when we consider that:
2. Immediately after enjoining the Rice and Corn administration and any other
government agency from importing rice and corn, Section 10 of Republic Act No. 3452
adds "that the importation of rice and corn is left to private parties upon payment of the
corresponding taxes", thus indicating that only "private parties" may import rice under
its provisions; and
3. Aside from prescribing a fine not exceeding P10,000.00 and imprisonment of not
more than five (5) years for those who shall violate any provision of Republic Act No.
3452 or any rule and regulation promulgated pursuant thereto, Section 15 of said Act
provides that "if the offender is a public official and/or employees", he shall be subject
to the additional penalty specified therein. A public official is an officer of the
Government itself, as distinguished from officers or employees of instrumentalities of
the Government. Hence, the duly authorized acts of the former are those of the
Government, unlike those of a government instrumentality which may have a
personality of its own, distinct and separate from that of the Government, as such. The
provisions of Republic Act No. 2207 are, in this respect, even more explicit. Section 3
thereof provides a similar additional penalty for any "officer or employee of the
Government" who "violates, abets or tolerates the violation of any provision" of said
Act. Hence, the intent to apply the same to transactions made by the very government is
patent.
Indeed, the restrictions imposed in said Republic Acts are merely additional to those
prescribed in Commonwealth Act No. 138, entitled "An Act to give native products and
domestic entities the preference in the purchase of articles for the Government."
Pursuant to Section 1 thereof:
The Purchase and Equipment Division of the Government of the Philippines and
other officers and employees of the municipal and provincial governments and
the Government of the Philippines and of chartered cities, boards, commissions,
bureaus, departments, offices, agencies, branches, and bodies of any description,
including government-owned companies, authorized to requisition, purchase, or
contract or make disbursements for articles, materials, and supplies for public
use, public buildings, or public works shall give preference to materials ...
produced ... in the Philippines or in the United States, and to domestic entities,
subject to the conditions hereinbelow specified. (Emphasis supplied.)
Under this provision, in all purchases by the Government, including those made by
and/or for the armed forces, preference shall be given to materials produced in the
Philippines. The importation involved in the case at bar violates this general policy of our
Government, aside from the provisions of Republic Acts Nos. 2207 and 3452.
The attempt to justify the proposed importation by invoking reasons of national security
— predicated upon the "worsening situation in Laos and Vietnam", and "the recent
tension created by the Malaysia problem" - and the alleged powers of the President as
Commander-in-Chief of all armed forces in the Philippines, under Section 2 of the
National Defense Act (Commonwealth Act No. 1), overlooks the fact that the protection
of local planters of rice and corn in a manner that would foster and accelerate self-
sufficiency in the local production of said commodities constitutes a factor that is vital to
our ability to meet possible national emergency. Even if the intent in importing goods in
anticipation of such emergency were to bolster up that ability, the latter would, instead,
be impaired if the importation were so made as to discourage our farmers from
engaging in the production of rice.
Besides, the stockpiling of rice and corn for purpose of national security and/or national
emergency is within the purview of Republic Act No. 3452. Section 3 thereof expressly
authorizes the Rice and Corn Administration "to accumulate stocks as a national reserve
in such quantities as it may deem proper and necessary to meet any contingencies".
Moreover, it ordains that "the buffer stocks held as a national reserve ... be deposited by
the administration throughout the country under the proper dispersal plans ... and may
be released only upon the occurrence of calamities or emergencies ...". (Emphasis
applied.)
Again, the provisions of Section 2 of Commonwealth Act No. 1, upon which respondents
rely so much, are not self-executory. They merely outline the general objectives of said
legislation. The means for the attainment of those objectives are subject to
congressional legislation. Thus, the conditions under which the services of citizens, as
indicated in said Section 2, may be availed of, are provided for in Sections 3, 4 and 51 to
88 of said Commonwealth Act No. 1. Similarly, Section 5 thereof specifies the manner in
which resources necessary for our national defense may be secured by the Government
of the Philippines, but only "during a national mobilization",9 which does not exist.
Inferentially, therefore, in the absence of a national mobilization, said resources shall be
produced in such manner as Congress may by other laws provide from time to time.
Insofar as rice and corn are concerned, Republic Acts Nos. 2207 and 3452, and
Commonwealth Act No. 138 are such laws.
Respondents cite Corwin in support of their pretense, but in vain. An examination of the
work cited10 shows that Corwin referred to the powers of the President during "war
time"11 or when he has placed the country or a part thereof under "martial law".12 Since
neither condition obtains in the case at bar, said work merely proves that respondents'
theory, if accepted, would, in effect, place the Philippines under martial law, without a
declaration of the Executive to that effect. What is worse, it would keep us perpetually
under martial law.
It has been suggested that even if the proposed importation violated Republic Acts Nos.
2207 and 3452, it should, nevertheless, be permitted because "it redounds to the
benefit of the people". Salus populi est suprema lex, it is said.
If there were a local shortage of rice, the argument might have some value. But the
respondents, as officials of this Government, have expressly affirmed again and again
that there is no rice shortage. And the importation is avowedly for stockpile of the Army
— not the civilian population.
But let us follow the respondents' trend of thought. It has a more serious implication
that appears on the surface. It implies that if an executive officer believes that
compliance with a certain statute will not benefit the people, he is at liberty to disregard
it. That idea must be rejected - we still live under a rule of law.
And then, "the people" are either producers or consumers. Now — as respondents
explicitly admit — Republic Acts Nos. 2207 and 3452 were approved by the Legislature
for the benefit of producers and consumers, i.e., the people, it must follow that the
welfare of the people lies precisely in the compliance with said Acts.
It is not for respondent executive officers now to set their own opinions against that of
the Legislature, and adopt means or ways to set those Acts at naught. Anyway, those
laws permit importation — but under certain conditions, which have not been, and
should be complied with.
It is lastly contended that the Government of the Philippines has already entered into
two (2) contracts for the Purchase of rice, one with the Republic of Vietnam, and
another with the Government of Burma; that these contracts constitute valid executive
agreements under international law; that such agreements became binding effective
upon the signing thereof by representatives the parties thereto; that in case of conflict
between Republic Acts Nos. 2207 and 3452 on the one hand, and aforementioned
contracts, on the other, the latter should prevail, because, if a treaty and a statute are
inconsistent with each other, the conflict must be resolved — under the American
jurisprudence — in favor of the one which is latest in point of time; that petitioner
herein assails the validity of acts of the Executive relative to foreign relations in the
conduct of which the Supreme Court cannot interfere; and the aforementioned
contracts have already been consummated, the Government of the Philippines having
already paid the price of the rice involved therein through irrevocable letters of credit in
favor of the sell of the said commodity. We find no merit in this pretense.
The Court is not satisfied that the status of said tracts as alleged executive agreements
has been sufficiently established. The parties to said contracts do not pear to have
regarded the same as executive agreements. But, even assuming that said contracts
may properly considered as executive agreements, the same are unlawful, as well as
null and void, from a constitutional viewpoint, said agreements being inconsistent with
the provisions of Republic Acts Nos. 2207 and 3452. Although the President may, under
the American constitutional system enter into executive agreements without previous
legislative authority, he may not, by executive agreement, enter into a transaction
which is prohibited by statutes enacted prior thereto. Under the Constitution, the main
function of the Executive is to enforce laws enacted by Congress. The former may not
interfere in the performance of the legislative powers of the latter, except in the
exercise of his veto power. He may not defeat legislative enactments that have acquired
the status of law, by indirectly repealing the same through an executive agreement
providing for the performance of the very act prohibited by said laws.
The American theory to the effect that, in the event of conflict between a treaty and a
statute, the one which is latest in point of time shall prevail, is not applicable to the case
at bar, for respondents not only admit, but, also insist that the contracts adverted to are
not treaties. Said theory may be justified upon the ground that treaties to which the
United States is signatory require the advice and consent of its Senate, and, hence, of a
branch of the legislative department. No such justification can be given as regards
executive agreements not authorized by previous legislation, without completely
upsetting the principle of separation of powers and the system of checks and balances
which are fundamental in our constitutional set up and that of the United States.
The alleged consummation of the aforementioned contracts with Vietnam and Burma
does not render this case academic, Republic Act No. 2207 enjoins our Government not
from entering into contracts for the purchase of rice, but from importing rice, except
under the conditions Prescribed in said Act. Upon the other hand, Republic Act No. 3452
has two (2) main features, namely: (a) it requires the Government to purchase rice and
corn directly from our local planters, growers or landowners; and (b) it prohibits
importations of rice by the Government, and leaves such importations to private parties.
The pivotal issue in this case is whether the proposed importation — which has not
been consummated as yet — is legally feasible.
Lastly, a judicial declaration of illegality of the proposed importation would not compel
our Government to default in the performance of such obligations as it may have
contracted with the sellers of the rice in question, because, aside from the fact that said
obligations may be complied with without importing the commodity into the
Philippines, the proposed importation may still be legalized by complying with the
provisions of the aforementioned laws.
The members of the Court have divergent opinions on the question whether or not
respondents herein should be enjoined from implementing the aforementioned
proposed importation. However, the majority favors the negative view, for which
reason the injunction prayed for cannot be granted.
Bengzon, CJ, Padilla, Labrador, Reyes, J.B.L., Dizon and Makalintal, JJ., concur.
Paredes and Regala, JJ., concur in the result.
GONZALES v. HECHANOVA
Then President Diosdado Macapagal entered into two executive agreements with
Vietnam and Burma for the importation of rice without complying with the requisite of
securing a certification from the Nat’l Economic Council showing that there is a shortage
in cereals. Hence, Hechanova authorized the importation of 67000 tons of rice from
abroad to the detriment of our local planters. Gonzales, then president of the Iloilo
Palay and Corn Planters Association assailed the executive agreements. Gonzales
averred that Hechanova is without jurisdiction or in excess of jurisdiction”, because RA
3452 prohibits the importation of rice and corn by “the Rice and Corn Administration or
any other government agency.
ISSUE: Whether or not RA 3452 prevails over the 2 executive agreements entered into
by Macapagal.
HELD: Under the Constitution, the main function of the Executive is to enforce laws
enacted by Congress. The former may not interfere in the performance of the legislative
powers of the latter, except in the exercise of his veto power. He may not defeat
legislative enactments that have acquired the status of laws, by indirectly repealing the
same through an executive agreement providing for the performance of the very act
prohibited by said laws. In the event of conflict between a treaty and a statute, the one
which is latest in point of time shall prevail, is not applicable to the case at bar,
Hechanova not only admits, but, also, insists that the contracts adverted to are not
treaties. No such justification can be given as regards executive agreements not
authorized by previous legislation, without completely upsetting the principle of
separation of powers and the system of checks and balances which are fundamental in
our constitutional set up.
As regards the question whether an executive or an international agreement may be
invalidated by our courts, suffice it to say that the Constitution of the Philippines has
clearly settled it in the affirmative, by providing that the SC may not be deprived “of its
jurisdiction to review, revise, reverse, modify, or affirm on appeal, certiorari, or writ of
error, as the law or the rules of court may provide, final judgments and decrees of
inferior courts in “All cases in which the constitutionality or validity of any treaty, law,
ordinance, or executive order or regulation is in question”. In other words, our
Constitution authorizes the nullification of a treaty, not only when it conflicts with the
fundamental law, but, also, when it runs counter to an act of Congress.
EN BANC
PANGANIBAN, J.:
The emergence on January 1, 1995 of the World Trade Organization, abetted by the
membership thereto of the vast majority of countries has revolutionized international
business and economic relations amongst states. It has irreversibly propelled the world
towards trade liberalization and economic globalization. Liberalization, globalization,
deregulation and privatization, the third-millennium buzz words, are ushering in a new
borderless world of business by sweeping away as mere historical relics the heretofore
traditional modes of promoting and protecting national economies like tariffs, export
subsidies, import quotas, quantitative restrictions, tax exemptions and currency
controls. Finding market niches and becoming the best in specific industries in a market-
driven and export-oriented global scenario are replacing age-old "beggar-thy-neighbor"
policies that unilaterally protect weak and inefficient domestic producers of goods and
services. In the words of Peter Drucker, the well-known management guru, "Increased
participation in the world economy has become the key to domestic economic growth
and prosperity."
To hasten worldwide recovery from the devastation wrought by the Second World War,
plans for the establishment of three multilateral institutions — inspired by that grand
political body, the United Nations — were discussed at Dumbarton Oaks and Bretton
Woods. The first was the World Bank (WB) which was to address the rehabilitation and
reconstruction of war-ravaged and later developing countries; the second, the
International Monetary Fund (IMF) which was to deal with currency problems; and the
third, the International Trade Organization (ITO), which was to foster order and
predictability in world trade and to minimize unilateral protectionist policies that invite
challenge, even retaliation, from other states. However, for a variety of reasons,
including its non-ratification by the United States, the ITO, unlike the IMF and WB, never
took off. What remained was only GATT — the General Agreement on Tariffs and Trade.
GATT was a collection of treaties governing access to the economies of treaty adherents
with no institutionalized body administering the agreements or dependable system of
dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the Kennedy
Round, the Tokyo Round and the Uruguay Round, the world finally gave birth to that
administering body — the World Trade Organization — with the signing of the "Final
Act" in Marrakesh, Morocco and the ratification of the WTO Agreement by its
members.1
Like many other developing countries, the Philippines joined WTO as a founding
member with the goal, as articulated by President Fidel V. Ramos in two letters to the
Senate (infra), of improving "Philippine access to foreign markets, especially its major
trading partners, through the reduction of tariffs on its exports, particularly agricultural
and industrial products." The President also saw in the WTO the opening of "new
opportunities for the services sector . . . , (the reduction of) costs and uncertainty
associated with exporting . . . , and (the attraction of) more investments into the
country." Although the Chief Executive did not expressly mention it in his letter, the
Philippines — and this is of special interest to the legal profession — will benefit from
the WTO system of dispute settlement by judicial adjudication through the independent
WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate Tribunal.
Heretofore, trade disputes were settled mainly through negotiations where solutions
were arrived at frequently on the basis of relative bargaining strengths, and where
naturally, weak and underdeveloped countries were at a disadvantage.
Arguing mainly (1) that the WTO requires the Philippines "to place nationals and
products of member-countries on the same footing as Filipinos and local products" and
(2) that the WTO "intrudes, limits and/or impairs" the constitutional powers of both
Congress and the Supreme Court, the instant petition before this Court assails the WTO
Agreement for violating the mandate of the 1987 Constitution to "develop a self-reliant
and independent national economy effectively controlled by Filipinos . . . (to) give
preference to qualified Filipinos (and to) promote the preferential use of Filipino labor,
domestic materials and locally produced goods."
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The Department of
Trade and Industry (Secretary Navarro, for brevity), representing the Government of the
Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the
Results of the Uruguay Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act,2 Secretary Navarro on behalf of the Republic of the Philippines,
agreed:
On August 12, 1994, the members of the Philippine Senate received a letter dated
August 11, 1994 from the President of the Philippines,3 stating among others that "the
Uruguay Round Final Act is hereby submitted to the Senate for its concurrence pursuant
to Section 21, Article VII of the Constitution."
On August 13, 1994, the members of the Philippine Senate received another letter from
the President of the Philippines4 likewise dated August 11, 1994, which stated among
others that "the Uruguay Round Final Act, the Agreement Establishing the World Trade
Organization, the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services are hereby submitted to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution."
On December 9, 1994, the President of the Philippines certified the necessity of the
immediate adoption of P.S. 1083, a resolution entitled "Concurring in the Ratification of
the Agreement Establishing the World Trade Organization."5
On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which
"Resolved, as it is hereby resolved, that the Senate concur, as it hereby concurs, in the
ratification by the President of the Philippines of the Agreement Establishing the World
Trade Organization."6 The text of the WTO Agreement is written on pages 137 et seq. of
Volume I of the 36-volume Uruguay Round of Multilateral Trade Negotiations and
includes various agreements and associated legal instruments (identified in the said
Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral
Trade Agreements, for brevity) as follows:
ANNEX 1
ANNEX 2
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signed7 the Instrument of
Ratification, declaring:
On the other hand, the Final Act signed by Secretary Navarro embodies not only the
WTO Agreement (and its integral annexes aforementioned) but also (1) the Ministerial
Declarations and Decisions and (2) the Understanding on Commitments in Financial
Services. In his Memorandum dated May 13, 1996,8 the Solicitor General describes
these two latter documents as follows:
On December 29, 1994, the present petition was filed. After careful deliberation on
respondents' comment and petitioners' reply thereto, the Court resolved on December
12, 1995, to give due course to the petition, and the parties thereafter filed their
respective memoranda. The court also requested the Honorable Lilia R. Bautista, the
Philippine Ambassador to the United Nations stationed in Geneva, Switzerland, to
submit a paper, hereafter referred to as "Bautista Paper,"9 for brevity, (1) providing a
historical background of and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
(a) the petitioners to submit the (1) Senate Committee Report on the
matter in controversy and (2) the transcript of proceedings/hearings in the
Senate; and
(b) the Solicitor General, as counsel for respondents, to file (1) a list of
Philippine treaties signed prior to the Philippine adherence to the WTO
Agreement, which derogate from Philippine sovereignty and (2) copies of
the multi-volume WTO Agreement and other documents mentioned in the
Final Act, as soon as possible.
After receipt of the foregoing documents, the Court said it would consider the case
submitted for resolution. In a Compliance dated September 16, 1996, the Solicitor
General submitted a printed copy of the 36-volume Uruguay Round of Multilateral
Trade Negotiations, and in another Compliance dated October 24, 1996, he listed the
various "bilateral or multilateral treaties or international instruments involving
derogation of Philippine sovereignty." Petitioners, on the other hand, submitted their
Compliance dated January 28, 1997, on January 30, 1997.
The Issues
In their Memorandum dated March 11, 1996, petitioners summarized the issues as
follows:
On the other hand, the Solicitor General as counsel for respondents "synthesized the
several issues raised by petitioners into the following": 10
4. Whether or not the concurrence of the Senate "in the ratification by the
President of the Philippines of the Agreement establishing the World
Trade Organization" implied rejection of the treaty embodied in the Final
Act.
By raising and arguing only four issues against the seven presented by petitioners, the
Solicitor General has effectively ignored three, namely: (1) whether the petition
presents a political question or is otherwise not justiciable; (2) whether petitioner-
members of the Senate (Wigberto E. Tañada and Anna Dominique Coseteng) are
estopped from joining this suit; and (3) whether the respondent-members of the Senate
acted in grave abuse of discretion when they voted for concurrence in the ratification of
the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with
these three issues thus:
(1) The "political question" issue — being very fundamental and vital, and being a
matter that probes into the very jurisdiction of this Court to hear and decide this case —
was deliberated upon by the Court and will thus be ruled upon as the first issue;
(2) The matter of estoppel will not be taken up because this defense is waivable and the
respondents have effectively waived it by not pursuing it in any of their pleadings; in any
event, this issue, even if ruled in respondents' favor, will not cause the petition's
dismissal as there are petitioners other than the two senators, who are not vulnerable
to the defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the respondent senators
will be taken up as an integral part of the disposition of the four issues raised by the
Solicitor General.
During its deliberations on the case, the Court noted that the respondents did not
question the locus standi of petitioners. Hence, they are also deemed to have waived
the benefit of such issue. They probably realized that grave constitutional issues,
expenditures of public funds and serious international commitments of the nation are
involved here, and that transcendental public interest requires that the substantive
issues be met head on and decided on the merits, rather than skirted or deflected by
procedural matters. 11
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes
the Constitution, the petition no doubt raises a justiciable controversy. Where an action
of the legislative branch is seriously alleged to have infringed the Constitution, it
becomes not only the right but in fact the duty of the judiciary to settle the dispute.
"The question thus posed is judicial rather than political. The duty (to adjudicate)
remains to assure that the supremacy of the Constitution is upheld." 12 Once a
"controversy as to the application or interpretation of a constitutional provision is raised
before this Court (as in the instant case), it becomes a legal issue which the Court is
bound by constitutional mandate to decide." 13
The jurisdiction of this Court to adjudicate the matters 14 raised in the petition is clearly
set out in the 1987 Constitution, 15 as follows:
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the government.
The foregoing text emphasizes the judicial department's duty and power to strike down
grave abuse of discretion on the part of any branch or instrumentality of government
including Congress. It is an innovation in our political law. 16 As explained by former
Chief Justice Roberto Concepcion, 17 "the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of
discretion amounting to excess of jurisdiction. This is not only a judicial power but a
duty to pass judgment on matters of this nature."
As this Court has repeatedly and firmly emphasized in many cases, 18 it will not shirk,
digress from or abandon its sacred duty and authority to uphold the Constitution in
matters that involve grave abuse of discretion brought before it in appropriate cases,
committed by any officer, agency, instrumentality or department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or
adequate remedy in the ordinary course of law, we have no hesitation at all in holding
that this petition should be given due course and the vital questions raised therein ruled
upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus
are appropriate remedies to raise constitutional issues and to review and/or
prohibit/nullify, when proper, acts of legislative and executive officials. On this, we have
no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will
not review the wisdom of the decision of the President and the Senate in enlisting the
country into the WTO, or pass upon the merits of trade liberalization as a policy
espoused by said international body. Neither will it rule on the propriety of the
government's economic policy of reducing/removing tariffs, taxes, subsidies,
quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its
constitutional duty "to determine whether or not there had been a grave abuse of
discretion amounting to lack or excess of jurisdiction" on the part of the Senate in
ratifying the WTO Agreement and its three annexes.
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution
mandating "economic nationalism" are violated by the so-called "parity provisions" and
"national treatment" clauses scattered in various parts not only of the WTO Agreement
and its annexes but also in the Ministerial Decisions and Declarations and in the
Understanding on Commitments in Financial Services.
Specifically, the "flagship" constitutional provisions referred to are Sec 19, Article II, and
Secs. 10 and 12, Article XII, of the Constitution, which are worded as follows:
Article II
DECLARATION OF PRINCIPLES
AND STATE POLICIES
Sec. 19. The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos.
Article XII
Sec. 10. . . . The Congress shall enact measures that will encourage the
formation and operation of enterprises whose capital is wholly owned by
Filipinos.
Sec. 12. The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt measures that
help make them competitive.
Petitioners aver that these sacred constitutional principles are desecrated by the
following WTO provisions quoted in their memorandum: 19
Article 2
ANNEX
Illustrative List
National Treatment
It is petitioners' position that the foregoing "national treatment" and "parity provisions"
of the WTO Agreement "place nationals and products of member countries on the same
footing as Filipinos and local products," in contravention of the "Filipino First" policy of
the Constitution. They allegedly render meaningless the phrase "effectively controlled
by Filipinos." The constitutional conflict becomes more manifest when viewed in the
context of the clear duty imposed on the Philippines as a WTO member to ensure the
conformity of its laws, regulations and administrative procedures with its obligations as
provided in the annexed agreements. 20 Petitioners further argue that these provisions
contravene constitutional limitations on the role exports play in national development
and negate the preferential treatment accorded to Filipino labor, domestic materials
and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that such
Charter provisions are not self-executing and merely set out general policies; (2) that
these nationalistic portions of the Constitution invoked by petitioners should not be
read in isolation but should be related to other relevant provisions of Art. XII,
particularly Secs. 1 and 13 thereof; (3) that read properly, the cited WTO clauses do not
conflict with Constitution; and (4) that the WTO Agreement contains sufficient
provisions to protect developing countries like the Philippines from the harshness of
sudden trade liberalization.
Declaration of Principles
Not Self-Executing
By its very title, Article II of the Constitution is a "declaration of principles and state
policies." The counterpart of this article in the 1935 Constitution 21 is called the "basic
political creed of the nation" by Dean Vicente Sinco. 22 These principles in Article II are
not intended to be self-executing principles ready for enforcement through the courts.
23 They are used by the judiciary as aids or as guides in the exercise of its power of
judicial review, and by the legislature in its enactment of laws. As held in the leading
case of Kilosbayan, Incorporated vs. Morato, 24 the principles and state policies
enumerated in Article II and some sections of Article XII are not "self-executing
provisions, the disregard of which can give rise to a cause of action in the courts. They
do not embody judicially enforceable constitutional rights but guidelines for legislation."
In the same light, we held in Basco vs. Pagcor 25 that broad constitutional principles
need legislative enactments to implement the, thus:
My suggestion is simply that petitioners must, before the trial court, show
a more specific legal right — a right cast in language of a significantly
lower order of generality than Article II (15) of the Constitution — that is
or may be violated by the actions, or failures to act, imputed to the public
respondent by petitioners so that the trial court can validly render
judgment grating all or part of the relief prayed for. To my mind, the court
should be understood as simply saying that such a more specific legal right
or rights may well exist in our corpus of law, considering the general policy
principles found in the Constitution and the existence of the Philippine
Environment Code, and that the trial court should have given petitioners
an effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.
Sec. 1. . . .
Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general
principles relating to the national economy and patrimony, should be read and
understood in relation to the other sections in said article, especially Secs. 1 and 13
thereof which read:
In the pursuit of these goals, all sectors of the economy and all regions of
the country shall be given optimum opportunity to develop. . . .
Sec. 13. The State shall pursue a trade policy that serves the general
welfare and utilizes all forms and arrangements of exchange on the basis
of equality and reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national
economic development, as follows:
2. A sustained increase in the amount of goods and services provided by the nation for
the benefit of the people; and
3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic
nationalism (1) by expressing preference in favor of qualified Filipinos "in the grant of
rights, privileges and concessions covering the national economy and patrimony" 27 and
in the use of "Filipino labor, domestic materials and locally-produced goods"; (2) by
mandating the State to "adopt measures that help make them competitive; 28 and (3)
by requiring the State to "develop a self-reliant and independent national economy
effectively controlled by Filipinos." 29 In similar language, the Constitution takes into
account the realities of the outside world as it requires the pursuit of "a trade policy
that serves the general welfare and utilizes all forms and arrangements of exchange on
the basis of equality ad reciprocity"; 30 and speaks of industries "which are competitive
in both domestic and foreign markets" as well as of the protection of "Filipino
enterprises against unfair foreign competition and trade practices."
It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance
System, et al., 31 this Court held that "Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in itself and which
needs no further guidelines or implementing laws or rule for its enforcement. From its
very words the provision does not require any legislation to put it in operation. It is per
se judicially enforceable." However, as the constitutional provision itself states, it is
enforceable only in regard to "the grants of rights, privileges and concessions covering
national economy and patrimony" and not to every aspect of trade and commerce. It
refers to exceptions rather than the rule. The issue here is not whether this paragraph of
Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a rule, there
are enough balancing provisions in the Constitution to allow the Senate to ratify the
Philippine concurrence in the WTO Agreement. And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods,
services, labor and enterprises, at the same time, it recognizes the need for business
exchange with the rest of the world on the bases of equality and reciprocity and limits
protection of Filipino enterprises only against foreign competition and trade practices
that are unfair. 32 In other words, the Constitution did not intend to pursue an
isolationist policy. It did not shut out foreign investments, goods and services in the
development of the Philippine economy. While the Constitution does not encourage the
unlimited entry of foreign goods, services and investments into the country, it does not
prohibit them either. In fact, it allows an exchange on the basis of equality and
reciprocity, frowning only on foreign competition that is unfair.
Upon the other hand, respondents maintain that the WTO itself has some built-in
advantages to protect weak and developing economies, which comprise the vast
majority of its members. Unlike in the UN where major states have permanent seats and
veto powers in the Security Council, in the WTO, decisions are made on the basis of
sovereign equality, with each member's vote equal in weight to that of any other. There
is no WTO equivalent of the UN Security Council.
Hence, poor countries can protect their common interests more effectively through the
WTO than through one-on-one negotiations with developed countries. Within the WTO,
developing countries can form powerful blocs to push their economic agenda more
decisively than outside the Organization. This is not merely a matter of practical
alliances but a negotiating strategy rooted in law. Thus, the basic principles underlying
the WTO Agreement recognize the need of developing countries like the Philippines to
"share in the growth in international trade commensurate with the needs of their
economic development." These basic principles are found in the preamble 34 of the
WTO Agreement as follows:
In regard to export subsidy for agricultural products, GATT requires developed countries
to reduce their budgetary outlays for export subsidy by 36% and export volumes
receiving export subsidy by 21% within a period of six (6) years. For developing
countries, however, the reduction rate is only two-thirds of that prescribed for
developed countries and a longer period of ten (10) years within which to effect such
reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition
and trade practices including anti-dumping measures, countervailing measures and
safeguards against import surges. Where local businesses are jeopardized by unfair
foreign competition, the Philippines can avail of these measures. There is hardly
therefore any basis for the statement that under the WTO, local industries and
enterprises will all be wiped out and that Filipinos will be deprived of control of the
economy. Quite the contrary, the weaker situations of developing nations like the
Philippines have been taken into account; thus, there would be no basis to say that in
joining the WTO, the respondents have gravely abused their discretion. True, they have
made a bold decision to steer the ship of state into the yet uncharted sea of economic
liberalization. But such decision cannot be set aside on the ground of grave abuse of
discretion, simply because we disagree with it or simply because we believe only in
other economic policies. As earlier stated, the Court in taking jurisdiction of this case will
not pass upon the advantages and disadvantages of trade liberalization as an economic
policy. It will only perform its constitutional duty of determining whether the Senate
committed grave abuse of discretion.
The WTO reliance on "most favored nation," "national treatment," and "trade without
discrimination" cannot be struck down as unconstitutional as in fact they are rules of
equality and reciprocity that apply to all WTO members. Aside from envisioning a trade
policy based on "equality and reciprocity," 37 the fundamental law encourages
industries that are "competitive in both domestic and foreign markets," thereby
demonstrating a clear policy against a sheltered domestic trade environment, but one in
favor of the gradual development of robust industries that can compete with the best in
the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown
capability and tenacity to compete internationally. And given a free trade environment,
Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino
capacity to grow and to prosper against the best offered under a policy of laissez faire.
The Constitution has not really shown any unbalanced bias in favor of any business or
enterprise, nor does it contain any specific pronouncement that Filipino companies
should be pampered with a total proscription of foreign competition. On the other
hand, respondents claim that WTO/GATT aims to make available to the Filipino
consumer the best goods and services obtainable anywhere in the world at the most
reasonable prices. Consequently, the question boils down to whether WTO/GATT will
favor the general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to
reality?
Will WTO/GATT succeed in promoting the Filipinos' general welfare because it will — as
promised by its promoters — expand the country's exports and generate more
employment?
Will it bring more prosperity, employment, purchasing power and quality products at
the most reasonable rates to the Filipino public?
The responses to these questions involve "judgment calls" by our policy makers, for
which they are answerable to our people during appropriate electoral exercises. Such
questions and the answers thereto are not subject to judicial pronouncements based on
grave abuse of discretion.
No doubt, the WTO Agreement was not yet in existence when the Constitution was
drafted and ratified in 1987. That does not mean however that the Charter is necessarily
flawed in the sense that its framers might not have anticipated the advent of a
borderless world of business. By the same token, the United Nations was not yet in
existence when the 1935 Constitution became effective. Did that necessarily mean that
the then Constitution might not have contemplated a diminution of the absoluteness of
sovereignty when the Philippines signed the UN Charter, thereby effectively
surrendering part of its control over its foreign relations to the decisions of various UN
organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not only
the vagaries of contemporary events. They should be interpreted to cover even future
and unknown circumstances. It is to the credit of its drafters that a Constitution can
withstand the assaults of bigots and infidels but at the same time bend with the
refreshing winds of change necessitated by unfolding events. As one eminent political
law writer and respected jurist 38 explains:
The WTO Agreement provides that "(e)ach Member shall ensure the conformity of its
laws, regulations and administrative procedures with its obligations as provided in the
annexed Agreements." 39 Petitioners maintain that this undertaking "unduly limits,
restricts and impairs Philippine sovereignty, specifically the legislative power which
under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the Congress of
the Philippines. It is an assault on the sovereign powers of the Philippines because this
means that Congress could not pass legislation that will be good for our national interest
and general welfare if such legislation will not conform with the WTO Agreement, which
not only relates to the trade in goods . . . but also to the flow of investments and money
. . . as well as to a whole slew of agreements on socio-cultural matters . . . 40
More specifically, petitioners claim that said WTO proviso derogates from the power to
tax, which is lodged in the Congress. 41 And while the Constitution allows Congress to
authorize the President to fix tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts, such authority is subject to "specified limits
and . . . such limitations and restrictions" as Congress may provide, 42 as in fact it did
under Sec. 401 of the Tariff and Customs Code.
Sovereignty Limited by
International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners stressed
their arguments on this issue. However, while sovereignty has traditionally been
deemed absolute and all-encompassing on the domestic level, it is however subject to
restrictions and limitations voluntarily agreed to by the Philippines, expressly or
impliedly, as a member of the family of nations. Unquestionably, the Constitution did
not envision a hermit-type isolation of the country from the rest of the world. In its
Declaration of Principles and State Policies, the Constitution "adopts the generally
accepted principles of international law as part of the law of the land, and adheres to
the policy of peace, equality, justice, freedom, cooperation and amity, with all nations."
43 By the doctrine of incorporation, the country is bound by generally accepted
principles of international law, which are considered to be automatically part of our own
laws. 44 One of the oldest and most fundamental rules in international law is pacta sunt
servanda — international agreements must be performed in good faith. "A treaty
engagement is not a mere moral obligation but creates a legally binding obligation on
the parties . . . 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." 45
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty.
By their voluntary act, nations may surrender some aspects of their state power in
exchange for greater benefits granted by or derived from a convention or pact. After all,
states, like individuals, live with coequals, and in pursuit of mutually covenanted
objectives and benefits, they also commonly agree to limit the exercise of their
otherwise absolute rights. Thus, treaties have been used to record agreements between
States concerning such widely diverse matters as, for example, the lease of naval bases,
the sale or cession of territory, the termination of war, the regulation of conduct of
hostilities, the formation of alliances, the regulation of commercial relations, the settling
of claims, the laying down of rules governing conduct in peace and the establishment of
international organizations. 46 The sovereignty of a state therefore cannot in fact and in
reality be considered absolute. Certain restrictions enter into the picture: (1) limitations
imposed by the very nature of membership in the family of nations and (2) limitations
imposed by treaty stipulations. As aptly put by John F. Kennedy, "Today, no nation can
build its destiny alone. The age of self-sufficient nationalism is over. The age of
interdependence is here." 47
Thus, when the Philippines joined the United Nations as one of its 51 charter members,
it consented to restrict its sovereign rights under the "concept of sovereignty as auto-
limitation."47-A Under Article 2 of the UN Charter, "(a)ll members shall give the United
Nations every assistance in any action it takes in accordance with the present Charter,
and shall refrain from giving assistance to any state against which the United Nations is
taking preventive or enforcement action." Such assistance includes payment of its
corresponding share not merely in administrative expenses but also in expenditures for
the peace-keeping operations of the organization. In its advisory opinion of July 20,
1961, the International Court of Justice held that money used by the United Nations
Emergency Force in the Middle East and in the Congo were "expenses of the United
Nations" under Article 17, paragraph 2, of the UN Charter. Hence, all its members must
bear their corresponding share in such expenses. In this sense, the Philippine Congress is
restricted in its power to appropriate. It is compelled to appropriate funds whether it
agrees with such peace-keeping expenses or not. So too, under Article 105 of the said
Charter, the UN and its representatives enjoy diplomatic privileges and immunities,
thereby limiting again the exercise of sovereignty of members within their own territory.
Another example: although "sovereign equality" and "domestic jurisdiction" of all
members are set forth as underlying principles in the UN Charter, such provisos are
however subject to enforcement measures decided by the Security Council for the
maintenance of international peace and security under Chapter VII of the Charter. A
final example: under Article 103, "(i)n the event of a conflict between the obligations of
the Members of the United Nations under the present Charter and their obligations
under any other international agreement, their obligation under the present charter
shall prevail," thus unquestionably denying the Philippines — as a member — the
sovereign power to make a choice as to which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international
pacts — both bilateral and multilateral — that involve limitations on Philippine
sovereignty. These are enumerated by the Solicitor General in his Compliance dated
October 24, 1996, as follows:
(a) Bilateral convention with the United States regarding taxes on income,
where the Philippines agreed, among others, to exempt from tax, income
received in the Philippines by, among others, the Federal Reserve Bank of
the United States, the Export/Import Bank of the United States, the
Overseas Private Investment Corporation of the United States. Likewise, in
said convention, wages, salaries and similar remunerations paid by the
United States to its citizens for labor and personal services performed by
them as employees or officials of the United States are exempt from
income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing, among others, for the
avoidance of double taxation with respect to taxes on income.
(c) Bilateral convention with the Kingdom of Sweden for the avoidance of
double taxation.
(d) Bilateral convention with the French Republic for the avoidance of
double taxation.
(e) Bilateral air transport agreement with Korea where the Philippines
agreed to exempt from all customs duties, inspection fees and other
duties or taxes aircrafts of South Korea and the regular equipment, spare
parts and supplies arriving with said aircrafts.
(f) Bilateral air service agreement with Japan, where the Philippines agreed
to exempt from customs duties, excise taxes, inspection fees and other
similar duties, taxes or charges fuel, lubricating oils, spare parts, regular
equipment, stores on board Japanese aircrafts while on Philippine soil.
(g) Bilateral air service agreement with Belgium where the Philippines
granted Belgian air carriers the same privileges as those granted to
Japanese and Korean air carriers under separate air service agreements.
(h) Bilateral notes with Israel for the abolition of transit and visitor visas
where the Philippines exempted Israeli nationals from the requirement of
obtaining transit or visitor visas for a sojourn in the Philippines not
exceeding 59 days.
(i) Bilateral agreement with France exempting French nationals from the
requirement of obtaining transit and visitor visa for a sojourn not
exceeding 59 days.
In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its
sovereign powers of taxation, eminent domain and police power. The underlying
consideration in this partial surrender of sovereignty is the reciprocal commitment of
the other contracting states in granting the same privilege and immunities to the
Philippines, its officials and its citizens. The same reciprocity characterizes the Philippine
commitments under WTO-GATT.
The point is that, as shown by the foregoing treaties, a portion of sovereignty may be
waived without violating the Constitution, based on the rationale that the Philippines
"adopts the generally accepted principles of international law as part of the law of the
land and adheres to the policy of . . . cooperation and amity with all nations."
Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic
Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) 49 intrudes on the power of the Supreme Court to promulgate rules concerning
pleading, practice and procedures. 50
To understand the scope and meaning of Article 34, TRIPS, 51 it will be fruitful to restate
its full text as follows:
Article 34
2. Any Member shall be free to provide that the burden of proof indicated
in paragraph 1 shall be on the alleged infringer only if the condition
referred to in subparagraph (a) is fulfilled or only if the condition referred
to in subparagraph (b) is fulfilled.
From the above, a WTO Member is required to provide a rule of disputable (not the
words "in the absence of proof to the contrary") presumption that a product shown to
be identical to one produced with the use of a patented process shall be deemed to
have been obtained by the (illegal) use of the said patented process, (1) where such
product obtained by the patented product is new, or (2) where there is "substantial
likelihood" that the identical product was made with the use of the said patented
process but the owner of the patent could not determine the exact process used in
obtaining such identical product. Hence, the "burden of proof" contemplated by Article
34 should actually be understood as the duty of the alleged patent infringer to
overthrow such presumption. Such burden, properly understood, actually refers to the
"burden of evidence" (burden of going forward) placed on the producer of the identical
(or fake) product to show that his product was produced without the use of the
patented process.
The foregoing notwithstanding, the patent owner still has the "burden of proof" since,
regardless of the presumption provided under paragraph 1 of Article 34, such owner still
has to introduce evidence of the existence of the alleged identical product, the fact that
it is "identical" to the genuine one produced by the patented process and the fact of
"newness" of the genuine product or the fact of "substantial likelihood" that the
identical product was made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as the
present law on the subject, Republic Act No. 165, as amended, otherwise known as the
Patent Law, provides a similar presumption in cases of infringement of patented design
or utility model, thus:
By and large, the arguments adduced in connection with our disposition of the third
issue — derogation of legislative power — will apply to this fourth issue also. Suffice it
to say that the reciprocity clause more than justifies such intrusion, if any actually exists.
Besides, Article 34 does not contain an unreasonable burden, consistent as it is with due
process and the concept of adversarial dispute settlement inherent in our judicial
system.
Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes
— but not in the other documents referred to in the Final Act, namely the Ministerial
Declaration and Decisions and the Understanding on Commitments in Financial Services
— is defective and insufficient and thus constitutes abuse of discretion. They submit
that such concurrence in the WTO Agreement alone is flawed because it is in effect a
rejection of the Final Act, which in turn was the document signed by Secretary Navarro,
in representation of the Republic upon authority of the President. They contend that the
second letter of the President to the Senate 53 which enumerated what constitutes the
Final Act should have been the subject of concurrence of the Senate.
"A final act, sometimes called protocol de cloture, is an instrument which records the
winding up of the proceedings of a diplomatic conference and usually includes a
reproduction of the texts of treaties, conventions, recommendations and other acts
agreed upon and signed by the plenipotentiaries attending the conference." 54 It is not
the treaty itself. It is rather a summary of the proceedings of a protracted conference
which may have taken place over several years. The text of the "Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations" is contained in just
one page 55 in Vol. I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations. By signing said Final Act, Secretary Navarro as representative of the
Republic of the Philippines undertook:
The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final
Act required from its signatories, namely, concurrence of the Senate in the WTO
Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for
ratification. They were approved by the ministers by virtue of Article XXV: 1 of GATT
which provides that representatives of the members can meet "to give effect to those
provisions of this Agreement which invoke joint action, and generally with a view to
facilitating the operation and furthering the objectives of this Agreement." 56
On the other hand, the WTO Agreement itself expresses what multilateral agreements
are deemed included as its integral parts, 58 as follows:
Article II
1. The WTO shall provide the common institutional frame-work for the
conduct of trade relations among its Members in matters to the
agreements and associated legal instruments included in the Annexes to
this Agreement.
It should be added that the Senate was well-aware of what it was concurring in as
shown by the members' deliberation on August 25, 1994. After reading the letter of
President Ramos dated August 11, 1994, 59 the senators
of the Republic minutely dissected what the Senate was concurring in, as follows: 60
THE CHAIRMAN: Yes. Now, the question of the validity of the submission
came up in the first day hearing of this Committee yesterday. Was the
observation made by Senator Tañada that what was submitted to the
Senate was not the agreement on establishing the World Trade
Organization by the final act of the Uruguay Round which is not the same
as the agreement establishing the World Trade Organization? And on that
basis, Senator Tolentino raised a point of order which, however, he agreed
to withdraw upon understanding that his suggestion for an alternative
solution at that time was acceptable. That suggestion was to treat the
proceedings of the Committee as being in the nature of briefings for
Senators until the question of the submission could be clarified.
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there
should be no misunderstanding, it was his intention to clarify all matters
by giving this letter.
Can this Committee hear from Senator Tañada and later on Senator
Tolentino since they were the ones that raised this question yesterday?
Based on what Secretary Romulo has read, it would now clearly appear
that what is being submitted to the Senate for ratification is not the Final
Act of the Uruguay Round, but rather the Agreement on the World Trade
Organization as well as the Ministerial Declarations and Decisions, and the
Understanding and Commitments in Financial Services.
THE CHAIRMAN. Thank you, Senator Tañada. Can we hear from Senator
Tolentino? And after him Senator Neptali Gonzales and Senator Lina.
SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission
actually transmitted to us but I saw the draft of his earlier, and I think it
now complies with the provisions of the Constitution, and with the Final
Act itself . The Constitution does not require us to ratify the Final Act. It
requires us to ratify the Agreement which is now being submitted. The
Final Act itself specifies what is going to be submitted to with the
governments of the participants.
In paragraph 2 of the Final Act, we read and I quote:
By signing the present Final Act, the representatives agree: (a) to submit as
appropriate the WTO Agreement for the consideration of the respective
competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures.
In other words, it is not the Final Act that was agreed to be submitted to
the governments for ratification or acceptance as whatever their
constitutional procedures may provide but it is the World Trade
Organization Agreement. And if that is the one that is being submitted
now, I think it satisfies both the Constitution and the Final Act itself .
THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want
to make any comment on this?
SEN. LINA. Mr. President, I agree with the observation just made by
Senator Gonzales out of the abundance of question. Then the new
submission is, I believe, stating the obvious and therefore I have no further
comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the WTO Agreement,
petitioners are invoking this Court's constitutionally imposed duty "to determine
whether or not there has been grave abuse of discretion amounting to lack or excess of
jurisdiction" on the part of the Senate in giving its concurrence therein via Senate
Resolution No. 97. Procedurally, a writ of certiorari grounded on grave abuse of
discretion may be issued by the Court under Rule 65 of the Rules of Court when it is
amply shown that petitioners have no other plain, speedy and adequate remedy in the
ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. 61 Mere abuse of discretion is not
enough. It must be grave abuse of discretion as when the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so
patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law. 62 Failure on the
part of the petitioner to show grave abuse of discretion will result in the dismissal of the
petition. 63
In rendering this Decision, this Court never forgets that the Senate, whose act is under
review, is one of two sovereign houses of Congress and is thus entitled to great respect
in its actions. It is itself a constitutional body independent and coordinate, and thus its
actions are presumed regular and done in good faith. Unless convincing proof and
persuasive arguments are presented to overthrow such presumptions, this Court will
resolve every doubt in its favor. Using the foregoing well-accepted definition of grave
abuse of discretion and the presumption of regularity in the Senate's processes, this
Court cannot find any cogent reason to impute grave abuse of discretion to the Senate's
exercise of its power of concurrence in the WTO Agreement granted it by Sec. 21 of
Article VII of the Constitution. 64
It is true, as alleged by petitioners, that broad constitutional principles require the State
to develop an independent national economy effectively controlled by Filipinos; and to
protect and/or prefer Filipino labor, products, domestic materials and locally produced
goods. But it is equally true that such principles — while serving as judicial and
legislative guides — are not in themselves sources of causes of action. Moreover, there
are other equally fundamental constitutional principles relied upon by the Senate which
mandate the pursuit of a "trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign markets,"
thereby justifying its acceptance of said treaty. So too, the alleged impairment of
sovereignty in the exercise of legislative and judicial powers is balanced by the adoption
of the generally accepted principles of international law as part of the law of the land
and the adherence of the Constitution to the policy of cooperation and amity with all
nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its
consent to the WTO Agreement thereby making it "a part of the law of the land" is a
legitimate exercise of its sovereign duty and power. We find no "patent and gross"
arbitrariness or despotism "by reason of passion or personal hostility" in such exercise.
It is not impossible to surmise that this Court, or at least some of its members, may even
agree with petitioners that it is more advantageous to the national interest to strike
down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of
discretion to the Senate and to nullify its decision. To do so would constitute grave
abuse in the exercise of our own judicial power and duty. Ineludably, what the Senate
did was a valid exercise of its authority. As to whether such exercise was wise, beneficial
or viable is outside the realm of judicial inquiry and review. That is a matter between
the elected policy makers and the people. As to whether the nation should join the
worldwide march toward trade liberalization and economic globalization is a matter that
our people should determine in electing their policy makers. After all, the WTO
Agreement allows withdrawal of membership, should this be the political desire of a
member.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an
Asian Renaissance 65 where "the East will become the dominant region of the world
economically, politically and culturally in the next century." He refers to the "free
market" espoused by WTO as the "catalyst" in this coming Asian ascendancy. There are
at present about 31 countries including China, Russia and Saudi Arabia negotiating for
membership in the WTO. Notwithstanding objections against possible limitations on
national sovereignty, the WTO remains as the only viable structure for multilateral
trading and the veritable forum for the development of international trade law. The
alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly
enriched with original membership, keenly aware of the advantages and disadvantages
of globalization with its on-line experience, and endowed with a vision of the future, the
Philippines now straddles the crossroads of an international strategy for economic
prosperity and stability in the new millennium. Let the people, through their duly
authorized elected officers, make their free choice.
SO ORDERED.
TANADA VS ANGARA
Facts:
This is a case petition by Sen. Wigberto Tanada, together with other lawmakers,
taxpayers, and various NGO’s to nullify the Philippine ratification of the World Trade
Organization (WTO) Agreement.
Petitioners believe that this will be detrimental to the growth of our National Economy
and against to the “Filipino First” policy. The WTO opens access to foreign markets,
especially its major trading partners, through the reduction of tariffs on its exports,
particularly agricultural and industrial products. Thus, provides new opportunities for
the service sector cost and uncertainty associated with exporting and more investment
in the country. These are the predicted benefits as reflected in the agreement and as
viewed by the signatory Senators, a “free market” espoused by WTO.
Petitioners also contends that it is in conflict with the provisions of our constitution,
since the said Agreement is an assault on the sovereign powers of the Philippines
because it meant that Congress could not pass legislation that would be good for
national interest and general welfare if such legislation would not conform to the WTO
Agreement.
Issues:
Discussions:
1987 Constitution states that Judicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the government.
Although the Constitution mandates to develop a self-reliant and independent
national economy controlled by Filipinos, does not necessarily rule out the entry
of foreign investments, goods and services. It contemplates neither “economic
seclusion” nor “mendicancy in the international community.” The WTO itself has
some built-in advantages to protect weak and developing economies, which
comprise the vast majority of its members. Unlike in the UN where major states
have permanent seats and veto powers in the Security Council, in the WTO,
decisions are made on the basis of sovereign equality, with each member’s vote
equal in weight to that of any other. Hence, poor countries can protect their
common interests more effectively through the WTO than through one-on-one
negotiations with developed countries. Within the WTO, developing countries
can form powerful blocs to push their economic agenda more decisively than
outside the Organization. Which is not merely a matter of practical alliances but a
negotiating strategy rooted in law. Thus, the basic principles underlying the WTO
Agreement recognize the need of developing countries like the Philippines to
“share in the growth in international trade commensurate with the needs of their
economic development.”
In its Declaration of Principles and State Policies, the Constitution “adopts the
generally accepted principles of international law as part of the law of the land,
and adheres to the policy of peace, equality, justice, freedom, cooperation and
amity, with all nations. By the doctrine of incorporation, the country is bound by
generally accepted principles of international law, which are considered to be
automatically part of our own laws. 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.
Paragraph 1, Article 34 of the General Provisions and Basic Principles of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) may
intrudes on the power of the Supreme Court to promulgate rules concerning
pleading, practice and procedures. With regard to Infringement of a design
patent, WTO members shall be free to determine the appropriate method of
implementing the provisions of TRIPS within their own internal systems and
processes.
The alleged impairment of sovereignty in the exercise of legislative and judicial
powers is balanced by the adoption of the generally accepted principles of
international law as part of the law of the land and the adherence of the
Constitution to the policy of cooperation and amity with all nations. The Senate,
after deliberation and voting, voluntarily and overwhelmingly gave its consent to
the WTO Agreement thereby making it “a part of the law of the land” is a
legitimate exercise of its sovereign duty and power.
Rulings: