G.R. No. 106064. October 13, 2005.
* the international community its resolve not to recognize a certain set of “illegitimate” loans,
SPOUSES RENATO CONSTANTINO, JR. and LOURDES CONSTANTINO and their minor children
RENATO REDENTOR, ANNA MARIKA LISSA, NINA ELISSA, and ANNA KARMINA, FREEDOM
FROM DEBT COALITION, and FILOMENO STA. ANA III, petitioners, vs. HON. JOSE B. CUISIA, in
his capacity as Governor of the Central Bank, HON. RAMON DEL ROSARIO, in his capacity as
Secretary of Finance, HON. EMMANUEL V. PELAEZ, in his capacity as Philippine Debt
Negotiating Chairman, and the NATIONAL TREASURER, respondents.
Remedial Law; Actions; Parties; A taxpayer is allowed to sue where there is a claim that
public funds are illegally disbursed, or that the public money is being deflected to any improper
purpose, or that there is a wastage of public funds through the enforcement of an invalid or
unconstitutional law.—The recent trend on locus standi has veered towards a liberal treatment
in taxpayer’s suits. In Tatad v. Garcia, Jr., this Court reiterated that the “prevailing doctrines in
taxpayer’s suits are to allow taxpayers to question contracts entered into by the national
government or government owned and controlled corporations allegedly in contravention of
law.” A taxpayer is allowed to sue where there is a claim that public funds are illegally
disbursed, or that public money is being deflected to any improper purpose, or that there is a
wastage of public funds through the enforcement of an invalid or unconstitutional law.
Moreover, a ruling on the issues of this case will not only determine the validity or invalidity of
the subject pre-termination and bond-conversion of foreign debts but also create a precedent
for other debts or debt-related contracts executed or to be executed in behalf of the President
of the Philippines by the Secretary of Finance. Considering the reported Philippine debt of
P3.80 trillion as of November 2004, the foreign public borrowing component of which reached
P1.81 trillion in November, equivalent to 47.6% of total government borrowings, the
importance of the issues raised and the magnitude of the public interest involved are
indubitable.
Civil Law; Contracts; Loans; Fraudulently contracted loans are voidable and, as such,
valid and enforceable until annulled by the courts. On the other hand, void contracts that have
already been fulfilled must be declared void in view of the maxim that no one is allowed to take
the law in his own hands.—Fraudulently contracted loans are voidable and, as such, valid and
enforceable until annulled by the courts. On the other hand, void contracts that have already
been fulfilled must be declared void in view of the maxim that no one is allowed to take the
law in his own hands. Petitioners’ theory depends on a prior annulment or declaration of nullity
of the preexisting loans, which thus far have not been submitted to this Court. Additionally,
void contracts are unratifiable by their very nature; they are null and void ab initio.
Consequently, from the viewpoint of civil law, what petitioners present as the Republic’s “right
to repudiate” is yet a contingent right, one which cannot be allowed as an anticipatory basis
for annulling the debt-relief contracts. Petitioners’ contention that the debt-relief agreements
are tantamount to waivers of the Republic’s “right to repudiate” so-called behest loans is
without legal foundation.
507
VOL. 472, OCTOBER 13, 2005 507
Constantino, Jr. vs. Cuisia
Same; Same; Same; Obligations; It may not be amiss to recognize that there are many
advocates of the position that the Republic should renege on obligations that are considered
as “illegitimate.”—It may not be amiss to recognize that there are many advocates of the
position that the Republic should renege on obligations that are considered as “illegitimate.”
However, should the executive branch unilaterally, and possibly even without prior court
determination of the validity or invalidity of these contracts, repudiate or otherwise declare to
adverse repercussions would come into play.
Same; Same; Same; Same; Interests; Words and Phrases; Loans are transactions
wherein the owner of a property allows another party to use the property and where
customarily, the latter promises to return the property after a specified period with payment
for its use, called interest.—Loans are transactions wherein the owner of a property allows
another party to use the property and where customarily, the latter promises to return the
property after a specified period with payment for its use, called interest. On the other hand,
bonds are interest-bearing or discounted government or corporate securities that obligate the
issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to
repay the principal amount of the loan at maturity. The word “bond” means contract,
agreement, or guarantee. All of these terms are applicable to the securities known as bonds.
An investor who purchases a bond is lending money to the issuer, and the bond represents the
issuer’s contractual promise to pay interest and repay principal according to specific terms. A
short-term bond is often called a note. The language of the Constitution is simple and clear as
it is broad. It allows the President to contract and guarantee foreign loans. It makes no
prohibition on the issuance of certain kinds of loans or distinctions as to which kinds of debt
instruments are more onerous than others. This Court may not ascribe to the Constitution
meanings and restrictions that would unduly burden the powers of the President. The plain,
clear and unambiguous language of the Constitution should be construed in a sense that will
allow the full exercise of the power provided therein. It would be the worst kind of judicial
legislation if the courts were to misconstrue and change the meaning of the organic act.
508
508 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
Same; Bonds; Loans; Statutes; The Supreme Court notes that R.A. No. 245 as amended
by P.D. No. 142, s. 1973, entitled An Act Authorizing the Secretary of Finance to Borrow to Meet
Public Expenditures Authorized by Law, and for Other Purposes, allows foreign loans to be
contracted in the form of, inter alia, bonds.—We note that Republic Act (R.A.) No. 245 as
amended by Pres. Decree (P.D.) No. 142, s. 1973, entitled An Act Authorizing the Secretary of
Finance to Borrow to Meet Public Expenditures Authorized by Law, and for Other Purposes,
allows foreign loans to be contracted in the form of, inter alia, bonds. Thus: Sec. 1. In order to
meet public expenditures authorized by law or to provide for the purchase, redemption, or
refunding of any obligations, either direct or guaranteed of the Phil-ippine Government, the
Secretary of Finance, with the approval of the President of the Philippines, after consultation
with the Monetary Board, is authorized to borrow from time to time on the credit of the
Republic of the Philippines such sum or sums as in his judgment may be necessary, and to
issue therefor evidences of indebtedness of the Philippine Government." Such evidences of
indebtedness may be of the following types: . . . . c. Treasury bonds, notes, securities or other
evidences of indebtedness having maturities of one year or more but not exceeding twenty-
five years from the date of issue. (Emphasis supplied.) Under the foregoing provisions,
sovereign bonds may be issued not only to supplement government expenditures but also to
provide for the purchase, redemption, or refunding of any obligation, either direct or
guaranteed, of the Philippine Government.
Same; Loans; Buyback; Words and Phrases; Buyback is a necessary power which springs
from the grant of the foreign borrowing power.—Buyback is a necessary power which springs
from the grant of the foreign borrowing power. Every statute is understood, by implication, to
contain all such provisions as may be necessary to effectuate its object and purpose, or to
make effective rights, powers, privileges or jurisdiction which it grants, including all such
collateral and subsidiary consequences as may be fairly and logically inferred from its terms.
The President is not empowered to borrow money from foreign banks and governments on
the credit of the Republic only to be left bereft of authority to implement the payment despite
appropriations therefor.
509
VOL. 472, OCTOBER 13, 2005 509
Constantino, Jr. vs. Cuisia
Constitutional Law; Executive Department; Qualified Political Agency; Each head of a
department is, and must be, the President’s alter ego in the matters of that department where
the President is required by law to exercise authority.—Necessity thus gave birth to the
doctrine of qualified political agency, later adopted in Villena v. Secretary of the Interior from
American jurisprudence, viz.: With reference to the Executive Department of the government,
there is one purpose which is crystal-clear and is readily visible without the projection of
judicial searchlight, and that is the establishment of a single, not plural, Executive. The first
section of Article VII of the Constitution, dealing with the Executive Department, begins with
the enunciation of the principle that “The executive power shall be vested in a President of the
Philippines.” This means that the President of the Philippines is the Executive of the
Government of the Philippines, and no other. The heads of the executive departments occupy
political positions and hold office in an advisory capacity, and, in the language of Thomas
Jefferson, “should be of the President's bosom confidence” (7 Writings, Ford ed., 498), and, in
the language of Attorney-General Cushing (7 Op., Attorney-General, 453), “are subject to the
direction of the President.” Without minimizing the importance of the heads of the various
departments, their personality is in reality but the projection of that of the President. Stated
otherwise, and as forcibly characterized by Chief Justice Taft of the Supreme Court of the
United States, “each head of a department is, and must be, the President’s alter ego in the
matters of that department where the President is required by law to exercise authority”
(Myers vs. United States, 47 Sup. Ct. Rep., 21 at 30; 272 U.S., 52 at 133; 71 Law. ed., 160).
Same; Same; Same; There are powers vested in the President by the Constitution which
may not be delegated to or exercised by an agent or alter ego of the President.—There are
powers vested in the President by the Constitution which may not be delegated to or exercised
by an agent or alter ego of the President. Justice Laurel, in his ponencia in Villena, makes this
clear: Withal, at first blush, the argument of ratification may seem plausible under the
circumstances, it should be observed that there are certain acts which, by their very nature,
cannot be validated by subsequent approval or ratification by the President. There are certain
constitutional powers and prerogatives of the Chief Executive of the Nation which must be
exercised by him in person and no amount of approval or ratification
510
510 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
will validate the exercise of any of those powers by any other person. Such, for instance,
in his power to suspend the writ of habeas corpus and proclaim martial law (PAR. 3, SEC. 11,
Art. VII) and the exercise by him of the benign prerogative of mercy (par. 6, sec. 11, Idem).
Same; Same; Same; Statutes; Section 1 of R.A. No. 245 empowers the Secretary of
Finance with the approval of the President and after consultation of the Monetary Board, “to
borrow from time to time on the credit of the Republic of the Philippines such sum or sums as
in his judgment may be necessary, and to issue therefor evidences of indebtedness of the
Philippine Government.—With constitutional parameters already established, we may also
note, as a source of suppletory guidance, the provisions of R.A. No. 245. The aforequoted
Section 1 thereof empowers the Secretary of Finance with the approval of the President and
after consultation of the Monetary Board, “to borrow from time to time on the credit of the
Republic of the Philippines such sum or sums as in his judgment may be necessary, and to issue
therefor evidences of indebtedness of the Philippine Government.” Ineluctably then, while the
President wields the borrowing power it is the Secretary of Finance who normally carries out
its thrusts.
Same; Same; Same; The Constitution allocates to the President the exercise of the
foreign borrowing power “subject to such limitations as may be provided under law.” Said
presidential prerogative may be exercised by the President’s alter ego, who in this case is the
Secretary of Finance.—In the instant case, the Constitution allocates to the President the
exercise of the foreign borrowing power “subject to such limitations as may be provided under
law.” Following Southern Cross, but in line with the limitations as defined in Villena, the
presidential prerogative may be exercised by the President’s alter ego, who in this case is the
Secretary of Finance.
Same; Remedial Law; Courts; Judicial Review; The exercise of the power of judicial
review is merely to check—not supplant—the Executive, or to simply ascertain whether he has
gone beyond the constitutional limits of his jurisdiction but not to exercise the power vested in
him or to determine the wisdom of his act.—That the means employed to achieve the goal of
debt-relief do not sit well with petitioners is beyond the power of this Court to remedy. The
exercise of the power of judicial review is merely to check—not supplant—the Executive, or to
simply ascertain whether he has gone beyond the
511
VOL. 472, OCTOBER 13, 2005 511
Constantino, Jr. vs. Cuisia
constitutional limits of his jurisdiction but not to exercise the power vested in him or to
determine the wisdom of his act. In cases where the main purpose is to nullify governmental
acts whether as unconstitutional or done with grave abuse of discretion, there is a strong
presumption in favor of the validity of the assailed acts. The heavy onus is in on petitioners to
overcome the presumption of regularity.
PANGANIBAN, J.: Separate Opinion:
Constitutional Law; Executive Department; Indubitably, former President Corazon C.
Aquino’s decision to honor the outstanding debts of the Republic at the time she assumed the
presidency was a policy matter well within her prerogative.—Former President Corazon C.
Aquino’s decision to honor the outstanding debts of the Republic at the time she assumed the
presidency was a policy matter well within her prerogative. It was purely an executive call;
hence, beyond judicial scrutiny. The Petition has failed to show grave abuse of discretion that
would warrant judicial intervention. I agree with the ponencia of the distinguished Mr. Justice
Dante O. Tinga: not only was the act of President Aquino impliedly granted via her vast
executive powers; it was also explicitly authorized under Section 20 of Article VII of the
Constitution.
Civil Law; Criminal Law; Contracts; Loans; Unless they themselves are proven to have
participated in corrupt or unlawful acts in obtaining the loans, respondents should not be held
criminally liable for the allegedly fraudulent contracts entered into by their predecessors in
office.—Unless voided by the courts, the loan contracts are presumed valid. Moreover, unless
they themselves are proven to have participated in corrupt or unlawful acts in obtaining the
loans, respondents should not be held criminally liable for the allegedly fraudulent contracts
entered into by their predecessors in office. As it is, the Petition does not even allege that any
of them had any role in the execution of any of the 14 loans reported by COA to be fraudulent.
Criminal Law; The Supreme Court found that, contrary to the Office of the Ombudsman’s
(OMB) findings, there was sufficient evidence establishing a probable cause for the filing of
charges against Disini.—The Court found that, contrary to the OMB’s findings, there was
sufficient evidence establishing a probable cause for the filing of charges against Disini, who
had capitalized, exploited
512
512 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
and taken advantage of his close personal relations with the former President x x x [and
had] requested and received pecuniary considerations from Westinghouse and Burns & Roe,
which were endeavoring to close the PNPP contract with the Philippine government.”
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari, Prohibition and Mandamus.
The facts are stated in the opinion of the Court.
Ruben C. Carranza, Jr. for petitioners.
The Solicitor General for respondents.
TINGA, J.:
The quagmire that is the foreign debt problem has especially confounded developing nations
around the world for decades. It has defied easy solutions acceptable both to debtor countries
and their creditors. It has also emerged as cause celebre for various political movements and
grassroots activists and the wellspring of much scholarly thought and debate.
The present petition illustrates some of the ideological and functional differences between
experts on how to achieve debt relief. However, this being a court of law, not an academic
forum or a convention on development economics, our resolution has to hinge on the
presented legal issues which center on the appreciation of the constitutional provision that
empowers the President to contract and guarantee foreign loans. The ultimate choice is
between a restrictive reading of the constitutional provision and an alimentative application
thereof consistent with time-honored principles on executive power and the alter
ego doctrine.
This Petition for Certiorari, Prohibition and Mandamus assails said contracts which were
entered into pursuant to the Philippine Comprehensive Financing Program for 1992
(“Financing Program” or “Program”). It seeks to enjoin respondents from executing additional
debt-relief contracts pursuant thereto. It also urges the Court to issue an order compelling the
Secretary of Justice to institute criminal and administrative cases against respondents for acts
which circumvent or negate the provisions Art. XII of the Constitution.1
Parties and Facts
The petition was filed on 17 July 1992 by petitioners spouses Renato Constantino, Jr. and
Lourdes Constantino and their minor children, Renato Redentor, Anna Marika Lissa, Nina
Elissa, and Anna Karmina, Filomeno Sta. Ana III, and the Freedom from Debt Coalition, a non-
stock, nonprofit, non-government organization that advocates a “pro-people and just
Philippine debt policy.”2 Named respondents were the then Governor of the Bangko Sentral
ng Pilipinas, the Secretary of Finance, the National Treasurer, and the Philippine Debt
Negotiation Chairman Emmanuel V. Pelaez.3 All respondents were members of the Philippine
panel tasked to negotiate with the country’s foreign creditors pursuant to the Financing
Program.
The operative facts are sparse and there is little need to elaborate on them.
The Financing Program was the culmination of efforts that began during the term of
former President Corazon Aquino to manage the country’s external debt problem through a
negotiation-oriented debt strategy involving cooperation and negotiation with foreign
creditors.4 Pursuant to this strategy, the Aquino government entered into three restructuring
agreements with representatives of foreign creditor governments
_______________
1 Acts which under Sec. 22, Article XII of the Constitution shall be considered inimical to
the national interest and subject to criminal and civil sanctions, as may be provided by law.
2 Rollo, pp. 3-4.
3 Former Vice-President of the Philippines, since deceased.
4 Rollo, p. 58.
514
514 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
during the period of 1986 to 1991.5 During the same period, three similarly-oriented
restructuring agreements were executed with commercial bank creditors.6
On 28 February 1992, the Philippine Debt Negotiating Team, chaired by respondent
Pelaez, negotiated an agreement with the country’s Bank Advisory Committee, representing
all foreign commercial bank creditors, on the Financing Program which respondents
characterized as “a multi-option financing package.”7The Program was scheduled to be
executed on 24 July 1992 by respondents in behalf of the Republic. Nonetheless, petitioners
alleged that even prior to the execution of the Program respondents had already implemented
its “buyback component” when on 15 May 1992, the Philippines bought back P1.26 billion of
external debts pursuant to the Program.8
The petition sought to enjoin the ratification of the Program, but the Court did not issue
any injunctive relief. Hence, it came to pass that the Program was signed in London as
scheduled. The petition still has to be resolved though as petitioners seek the annulment “of
any and all acts done by respondents, their subordinates and any other public officer pursuant
to the agreement and program in question.”9 Even after the signing of the Program,
respondents themselves acknowledged that the remaining principal objective of the petition
is to set aside respondents’ actions.10
Petitioners characterize the Financing Program as a package offered to the country’s
foreign creditors consisting of two debt-relief options.11 The first option was a cash buyback of
portions of the Philippine foreign debt at a discount.12 The second option allowed creditors to
convert existing Philippine debt instruments into any of three kinds of bonds/securities: (1)
new money bonds with a five-year grace period and 17 years final maturity, the purchase of
which would allow the creditors to convert their eligible debt papers into bearer bonds with
the same terms; (2) interest-reduction bonds with a maturity of 25 years; and (3) principal-
collateralized interest-reduction bonds with a maturity of 25 years.13
On the other hand, according to respondents the Financing Program would cover about
U.S. $5.3 billion of foreign commercial debts and it was expected to deal comprehensively with
the commercial bank debt problem of the country and pave the way for the country’s access
to capital markets.14 They add that the Program carried three basic options from which foreign
bank lenders could choose, namely: to lend money, to exchange existing restructured
Philippine debts with an interest reduction bond; or to exchange the same
_______________
10Id., at p. 58.
11Id., at p. 5.
12 Ibid.
13 Ibid., citing a Newsday article dated 27 April 1992, Annex “A” of the Petition.
14 Rollo, p. 60 citing a speech given by former Central Bank Governor Jose L. Cuisia, Jr. at
the joint meeting of FINEX, Makati Business Club and Management Association of the
Philippines held on 19 November 1991 at the Grand Ballroom of the Hotel Intercontinental
(COA) report which identified several “behest” loans as either contracted or guaranteed
fraudulently during the Marcos regime.17 They posit that since these and other similar debts,
such as the ones pertaining to the Bataan Nuclear Power Plant,18 were eligible for buyback or
conversion under the Program, the resultant relief agreements pertaining thereto would be
void for being waivers of the Republic’s right to repudiate the void or fraudulently contracted
loans.
For their part, respondents dispute the points raised by petitioners. They also question the
standing of petitioners to institute the present petition and the justiciability of the issues
presented.
The Court shall tackle the procedural questions ahead of the substantive issues.
_______________
17

Manila. 1. North Davao Mining Corp. $117.712

516
(In millions of U.S. Dollars)
516 SUPREME COURT REPORTS ANNOTATED
2. Bukidnon Sugar Milling Co., Inc. 68.940
Constantino, Jr. vs. Cuisia
3. United Planters Sugar Milling Co. 62.669
Philippine debts with a principal collateralized interest reduction bond.15
4. Northern Cotabato Sugar Ind. Inc. 45.200
Issues for Resolution
Petitioners raise several issues before this Court. 5. Asia Industries Inc. 25.000
First, they object to the debt-relief contracts entered into pursuant to the Financing 6. Domestic Satellite Philippines 18.540
Program as beyond the powers granted to the President under Section 20, Article VII of the
7. PNB Deposit Facility/AMEXCO 17.000
Constitution.16 The provision states that the President may contract or guarantee foreign loans
in behalf of the Republic. It is claimed that the buyback and securitization/bond conversion 8. Pamplona Redwood Veneer Inc. 15.160
schemes are neither “loans” nor “guarantees,” and hence beyond the power of the President 9. Mindanao Coconut Oil Mills 6.900
to execute. 10. Government Service Insurance System 10.650
Second, according to petitioners even assuming that the contracts under the Financing
Program are constitutionally permissible, yet it is only the President who may exercise the 11. Philippine Phosphate Fertilizer Corp. 565.514
power to enter into these contracts and such power may not be delegated to respondents. 12. Pagdanganan Timbre Products Inc. 13.500
Third, petitioners argue that the Financing Program violates several constitutional policies 13. Menzi Development Corp. 13.000
and that contracts executed or to be executed pursuant thereto were or will be done by
respondents with grave abuse of discretion amounting to lack or excess of jurisdiction. 14. Sabena Mining Corp. 27.500
18Rollo, p. 6.
_______________
518
15
Ibid. 518 SUPREME COURT REPORTS ANNOTATED
16
“The President may contract or guarantee foreign loans in behalf of the Republic of the Constantino, Jr. vs. Cuisia
Philippines with the prior concurrence of the Monetary Board and subject to such limitations
The Court’s Rulings
as may be provided under law. The Monetary Board shall, within thirty days from the end of
every quarter of the calendar year, submit to the Congress a complete report of its decisions
on applications for loans to be contracted or guaranteed by the government or government- Standing of Petitioners
owned and controlled corporations which would have the effect of increasing the foreign debt,
and containing other matters as may be provided by law.” The individual petitioners are suing as citizens of the Philippines; those among them who are
517 of age are suing in their additional capacity as taxpayers.19 It is not indicated in what capacity
the Freedom from Debt Coalition is suing.
VOL. 472, OCTOBER 13, 2005 517
Respondents point out that petitioners have no standing to file the present suit since the
Constantino, Jr. vs. Cuisia rule allowing taxpayers to assail executive or legislative acts has been applied only to cases
Petitioners contend that the Financing Program was made available for debts that were either where the constitutionality of a statute is involved. At the same time, however, they urge this
fraudulently contracted or void. In this regard, petitioners rely on a 1992 Commission on Audit Court to exercise its wide discretion and waive petitioners’ lack of standing. They invoke the
transcendental importance of resolving the validity of the questioned debt-relief contracts and
others of similar import.
The recent trend on locus standi has veered towards a liberal treatment in taxpayer’s suits.
In Tatad v. Garcia Jr.,20 this Court reiterated that the “prevailing doctrines in tax-payer’s suits
are to allow taxpayers to question contracts entered into by the national government or
government owned and controlled corporations allegedly in contravention of
law.”21 A taxpayer is allowed to sue where there is a claim that public funds are illegally
disbursed, or that public money
_______________
19 Id., at p. 4.
20 313 Phil. 296; 243 SCRA 436 (1995).
21 Id., at p. 320; p. 455, citing Kilosbayan v. Guingona, Jr., G.R. No. 113375, 5 May 1994, 232
SCRA 110, 139. Del Mar v. Philippine Amusement and Gaming Corporation, 346 SCRA 485, 501
(2000) citing Kilosbayan, Inc., et al. v. Morato, 250 SCRA 333 (1976); Dumlao v. Commission on
Elections, 95 SCRA 392 (1980); Sanidad v. Commission on Elections, 73 SCRA
333 (1976); Philconsa v. Mathay, 18 SCRA 300 (1966); Pascual v. Secretary of Public Works, 110
Phil. 331 (1960); Pelaez v. Auditor General, 15 SCRA 569 (1965); Philconsa v. Gimenez, 15 SCRA
479(1965); Iloilo Palay & Corn Planters Association v. Feliciano, 13 SCRA 377 (1965).
519
VOL. 472, OCTOBER 13, 2005 519
Constantino, Jr. vs. Cuisia
is being deflected to any improper purpose, or that there is a wastage of public funds through
the enforcement of an invalid or unconstitutional law.22
Moreover, a ruling on the issues of this case will not only determine the validity or
invalidity of the subject pre-termination and bond-conversion of foreign debts but also create
a precedent for other debts or debt-related contracts executed or to be executed in behalf of
the President of the Philippines by the Secretary of Finance. Considering the reported
Philippine debt of P3.80 trillion as of November 2004, the foreign public borrowing component
of which reached P1.81 trillion in November, equivalent to 47.6% of total government
borrowings,23 the importance of the issues raised and the magnitude of the public interest
involved are indubitable.
Thus, the Court’s cognizance of this petition is also based on the consideration that the
determination of the issues presented will have a bearing on the state of the country’s
economy, its international financial ratings, and perhaps even the Filipinos’ way of life. Seen in
this light, the transcendental importance of the issues herein presented cannot be doubted.
_______________
22 Francisco v. House of Representatives, G.R. No. 160405, November 10, 2003, 415 SCRA
44, 136.
23 <http://www.adb.org/documents/books/ado/2005/phi.asp>; See also newspaper
article by Maricel E. Burgonio, GOVT DEBTS REACH P4T IN JANUARY, The Manila Times, April
28, 2005 reporting that the national government incurred a total outstanding debt of P4 trillion
as of January 2005, representing an increase of 5.1 percent from the reported P3.81 trillion as
of end-2004, per Department of Finance data and of the government’s total debt, about P1.97
trillion is owed to foreign creditors; P2.04 trillion is owed to domestic creditors,
http://www.manilatimes.net/national/2005/apr/28/yehey/ business/20050428bus2.html>,
“reported also in the “news item” site of the Department of Budget and Management,
<http://www. dbm.gov.ph/current_issues/pressrelease/2005/04-april/press_042805-
ovt%20debts.htm>.
520
520 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
Where constitutional issues are properly raised in the context of alleged facts, procedural
questions acquire a relatively minor significance.24 We thus hold that by the very nature of the
power wielded by the President, the effect of using this power on the economy, and the well-
being in general of the Filipino nation, the Court must set aside the procedural barrier of
standing and rule on the justiciable issues presented by the parties.
Ripeness/Actual Case Dimension
Even as respondents concede the transcendental importance of the issues at bar, in
their Rejoinder they ask this Court to dismiss the Petition. Allegedly, petitioners’ arguments are
mere attempts at abstraction.25 Respondents are correct to some degree. Several issues, as
shall be discussed in due course, are not ripe for adjudication.
The allegation that respondents waived the Philippines’ right to repudiate void and
fraudulently contracted loans by executing the debt-relief agreements is, on many levels, not
justiciable.
In the first place, records do not show whether the so-called behest loans—or other
allegedly void or fraudulently contracted loans for that matter—were subject of the debt-relief
contracts entered into under the Financing Program.
Moreover, asserting a right to repudiate void or fraudulently contracted loans begs the
question of whether indeed particular loans are void or fraudulently contracted. Fraudulently
contracted loans are voidable and, as such, valid and enforceable until annulled by the courts.
On the other hand, void contracts that have already been fulfilled must be declared void in
view of the maxim that no one is allowed to
_______________
24Guingona, Jr. v. Gonzales, G.R. No. 106971, 20 October 1992, 214 SCRA 709, 794.
25Rollo, p. 105.
521
VOL. 472, OCTOBER 13, 2005 521
Constantino, Jr. vs. Cuisia
take the law in his own hands.26 Petitioners’ theory depends on a prior annulment or
declaration of nullity of the preexisting loans, which thus far have not been submitted to this
Court. Additionally, void contracts are unratifiable by their very nature; they are null and
void ab initio. Consequently, from the viewpoint of civil law, what petitioners present as the
Republic’s “right to repudiate” is yet a contingent right, one which cannot be allowed as an
anticipatory basis for annulling the debt-relief contracts. Petitioners’ contention that the debt-
relief agreements are tantamount to waivers of the Republic’s “right to repudiate” so-called
behest loans is without legal foundation.
It may not be amiss to recognize that there are many advocates of the position that the
Republic should renege on obligations that are considered as “illegitimate.” However, should
the executive branch unilaterally, and possibly even without prior court determination of the
validity or invalidity of these contracts, repudiate or otherwise declare to the international
community its resolve not to recognize a certain set of “ille-gitimate” loans, adverse
repercussions27 would come into play. Dr. Felipe Medalla, former Director General of the
National Economic Development Authority, has warned, thus:
“One way to reduce debt service is to repudiate debts, totally or selectively. Taken to its limit,
however, such a strategy would put the Philippines at such odds with too many enemies.
Foreign commercial banks by themselves and without the cooperation of creditor
governments, especially the United States, may not be in a position
_______________
26
See ARTURO M. TOLENTINO, THE CIVIL CODE, Vol. IV, c. 1987, p. 632.
27
Among the consequences discussed hereunder, the standard cross-default provisions in
Philippine foreign loans may come into effect, in which case, default even in one loan would
be a ground for other creditors to declare default on other loans. See INNOVATIVE SOLUTIONS
TO THE PHILIPPINE DEBT PROBLEM by Gov. Gabriel C. Singson, speaking at a debt forum held
28 March 2005, hosted by the Management Association of the Philippines.
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522 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
to inflict much damage, but concerted sanctions from commercial banks, multilateral financial
institutions and creditor governments would affect not only our sources of credit but also our
access to markets for our exports and the level of development assistance. . . . [T]he country
might face concerted sanctions even if debts were repudiated only selectively.
The point that must be stressed is that repudiation is not an attractive alternative if net
payments to creditors in the short and medium-run can be reduced through an agreement (as
opposed to a unilaterally set ceiling on debt service payments) which provides for both
rescheduling of principal and capitalization of interest, or its equivalent in new loans, which
would make it easier for the country to pay interest.”28
Sovereign default is not new to the Philippine setting. In October 1983, the Philippines declared
a moratorium on principal payments on its external debts that eventually lasted four
years,29 that virtually closed the country’s access to new foreign money30 and drove investors
to leave the Philippine market, resulting in some devastating consequences. 31 It
_______________
28Dr. Felipe Medalla, The Management of External Debt, PIDS DEVELOPMENT RESEARCH
NEWS, Volume V, No. 2, (1987), p. 2. Dr. Medalla is an Associate Professor at the School of
Economics, University of the Philippines.
29 External Debt: Developments, Issues, and Options, speech delivered by former Finance
Secretary Vicente R. Jayme during the general membership meeting of the Makati Business
Club on 31 May 1988, at the Hotel Inter-Continental, Manila.
30 Thus the period that followed was characterized by stringent foreign exchange
rationing. See talk delivered by former Finance Secretary Edgardo B. Espiritu at the Freedom
From Debt Coalition’s Fiscal and Debt Discussion at the University of the Philippines in
December 2002.
31 “In less than a year after the country sought debt moratorium, the exchange rate went
as high as 100 percent, bellwether interest rate shot up to 43 percent and inflation soared to
47.1 percent, after investors raced each other in leaving a deteriorating economy.” Former
Central Bank Governor Gabriel Singson in the “news item” site of the Department of Budget
and Management,
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Constantino, Jr. vs. Cuisia
would appear then that this beguilingly attractive and dangerously simplistic solution deserves
the utmost circumspect cogitation before it is resorted to.
In any event, the discretion on the matter lies not with the courts but with the executive.
Thus, the Program was conceptualized as an offshoot of the decision made by then President
Aquino that the Philippines should recognize its sovereign debts32 despite the controversy that
engulfed many debts incurred during the Marcos era. It is a scheme whereby the Philippines
restructured its debts following a negotiated approach instead of a default approach to
manage the bleak Philippine debt situation.
As a final point, petitioners have no real basis to fret over a possible waiver of the right to
repudiate void contracts. Even assuming that spurious loans had become the subject of debt-
_______________
http://www.map.com.ph/articles_innovative%20solution%20for%20p
hil%20problem.htm; “Thus far, the Philippines is the only country in Asia that experienced a
debt moratorium. I believe that no single event has brought more damage to the economy—
not even the 1997 Asian financial crisis—than the 1983 debt moratorium. P - $ exchange rate
went up by almost 100% from P 9.17 on January 3, 1983 to P 18.02 to the dollar on June 6,
1984, a period of less than one year and a half; interest rates. The 91-day T-bill hit 43% in Nov.
1984; GNP in 1984 was negative 9.11l; Inflation—average inflation for 1984 jumped to 47.1%.
At the height of the Asian financial crisis in 1998 the average inflation was 9.7%; the country
had no access to the voluntary capital markets for almost 10 years, 1983 to 1992.” Speech of
former Central Bank Governor Gabriel C. Singson, supra note 27.
32 The debt crisis has effectively snagged the debtor countries in a financial vise.
Meanwhile, the creditors generally insist on debt service payment, often in amounts that were
greater than national spending on health and education. The crisis must be addressed at the
global level. See Jeffrey Sachs, THE END OF POVERTY, Penguin Group (USA), Inc., 375 Hudson
St., New York, N.Y., 10014, U.S.A. Jeffrey Sachs is the Director of the Earth Institute, Quetelet
Professor of Sustainable Development, and Professor of Health Policy and Management at
Columbia University as well as Special Advisor to United Nations Secretary General Kofi Annan.
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524 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
relief contracts, respondents unequivocally assert that the Republic did not waive any right to
repudiate void or fraudulently contracted loans, it having incorporated a “no-waiver” clause in
the agreements.33
Substantive Issues
It is helpful to put the matter in perspective before moving on to the merits. The Financing
Program extinguished portions of the country’s pre-existing loans through either debt buyback
or bond-conversion. The buyback approach essentially pre-terminated portions of public debts
while the bond-conversion scheme extinguished public debts through the obtention of a new
loan by virtue of a sovereign bond issuance, the proceeds of which in turn were used for
terminating the original loan.
First Issue: The Scope of Section 20, Article VII
For their first constitutional argument, petitioners submit that the buyback and bond-
conversion schemes do not constitute the loan “contract” or “guarantee” contemplated in the
Constitution and are consequently prohibited. Sec. 20, Art. VII of the Constitution
provides, viz.:
“The President may contract or guarantee foreign loans in behalf of the Republic of the
Philippines with the prior concurrence of the Monetary Board and subject to such limitations
as may be provided under law. The Monetary Board shall, within thirty days from the end of
every quarter of the calendar year, submit to the Congress a complete report of its decisions
on applications for loans to be contracted or guaranteed by the government or government-
owned and controlled corporations which would have the effect of increasing the foreign debt,
and containing other matters as may be provided by law.”
_______________
33Annex “D” of Comment, Id., at p. 130.
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Constantino, Jr. vs. Cuisia
On Bond-Conversion
Loans are transactions wherein the owner of a property allows another party to use the
property and where customarily, the latter promises to return the property after a specified
period with payment for its use, called interest. 34 On the other hand, bonds are interest-
bearing or discounted government or corporate securities that obligate the issuer to pay the
bond-holder a specified sum of money, usually at specific intervals, and to repay the principal
amount of the loan at maturity.35 The word “bond” means contract, agreement, or guarantee.
All of these terms are applicable to the securities known as bonds. An investor who purchases
a bond is lending money to the issuer, and the bond represents the issuer’s contractual
promise to pay interest and repay principal according to specific terms. A short-term bond is
often called a note.36
The language of the Constitution is simple and clear as it is broad. It allows the President
to contract and guarantee foreign loans. It makes no prohibition on the issuance of certain
kinds of loans or distinctions as to which kinds of debt instruments are more onerous than
others. This Court may not ascribe to the Constitution meanings and restrictions that would
unduly burden the powers of the President. The plain, clear and unambiguous language of the
Constitution should be construed in a sense that will allow the full exercise of the power
provided therein. It would be the worst kind of judicial legislation if the courts were to
misconstrue and change the meaning of the organic act.
The only restriction that the Constitution provides, aside from the prior concurrence of
the Monetary Board, is that the
_______________
34 John Downes and Jordan Elliot Goodman, BARRON’S FINANCIAL GUIDES DICTIONARY OF
FINANCE AND INVESTMENT TERMS, (2003, 6th ed.), p. 389.
35 Id., at p. 70.
36 Mark Levinson, GUIDE TO FINANCIAL MARKETS, (3rd ed.), p. 60.
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526 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
loans must be subject to limitations provided by law. In this regard, we note that Republic Act
(R.A.) No. 245 as amended by Pres. Decree (P.D.) No. 142, s. 1973, entitled An Act Authorizing
the Secretary of Finance to Borrow to Meet Public Expenditures Authorized by Law, and for
Other Purposes, allows foreign loans to be contracted in the form of, inter alia, bonds. Thus:
Sec. 1. In order to meet public expenditures authorized by law or to provide for the purchase,
redemption, or refunding of any obligations, either direct or guaranteed of the Philippine
Government, the Secretary of Finance, with the approval of the President of the Philippines,
after consultation with the Monetary Board, is authorized to borrow from time to time on
the credit of the Republic of the Philippines such sum or sums as in his judgment may be
necessary, and to issue therefor evidences of indebtedness of the Philippine Government.”
Such evidences of indebtedness may be of the following types:
....
c. Treasury bonds, notes, securities or other evidences of indebtedness having maturities
of one year or more but not exceeding twenty-five years from the date of issue. (Emphasis
supplied.)
Under the foregoing provisions, sovereign bonds may be issued not only to supplement
government expenditures but also to provide for the purchase,37 redemption,38 or refund-
_______________
37 Purchase Fund—provision in some PREFERRED STOCK contracts and BOND indentures
requiring the issuer to use its best efforts to purchase a specified number of shares or bonds
annually at a price not to exceed par value. Unlike SINKING FUND provisions, which require
that a certain number of bonds be retired annually, purchase funds require only that a tender
offer be made; if no securities are tendered, none are retired. Purchase fund issued benefit
the investor in a period of rising rates when the redemption price is higher than the market
price and the proceeds can be put to work at a higher return. BARRON’S FINANCIAL GUIDES
DICTIONARY OF FINANCE AND INVESTMENT TERMS, supra note 34 AT 548.
38 Redemption—repayment of a dept security or preferred stock issue, at or before
maturity, at PAR or a premium price. Id., at p. 566.
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Constantino, Jr. vs. Cuisia
ing39 of any obligation, either direct or guaranteed, of the Philippine Government.
Petitioners, however, point out that a supposed difference between contracting a loan
and issuing bonds is that the former creates a definite creditor-debtor relationship between
the parties while the latter does not.40 They explain that a contract of loan enables the debtor
to restructure or novate the loan, which benefit is lost upon the conversion of the debts to
bearer bonds such that “the Philippines surrenders the novatable character of a loan contract
for the irrevocable and unpostponable demandability of a bearer bond.”41 Allegedly, the
Constitution prohibits the President from issuing bonds which are “far more onerous” than
loans.42
This line of thinking is flawed to say the least. The negotiable character of the subject
bonds is not mutually exclusive with the Republic’s freedom to negotiate with bondholders for
the revision of the terms of the debt. Moreover, the securities market provides some
flexibility—if the Philippines wants to pay in advance, it can buy out its bonds in the market; if
interest rates go down but the Philippines does not have money to retire the bonds, it can
replace the old bonds with new ones; if it defaults on the bonds, the bondholders shall organize
and bring about a re-negotiation or settlement.43 In fact,
_______________
39 Refunding—replacing an old debt with a new one, usually in order to lower the interest
cost of the issuer. For instance, a corporation or municipality that has issued 10% bonds may
want to refund them by issuing 7% bonds if interest rates have dropped. Id., at p. 567.
40 Rollo, p. 10.
41 Id., at p. 11.
42 Id., at p. 12.
43 CESAR G. SALDAÑA, PH D., “A MARKET VALUATION UNDER BARGAINING GAME
PERSPECTIVE TO THE PHILIPPINE DEBT PACKAGE OF 1991,” a paper read before the Senate
Committee on Economic Affairs at the public hearing on “Inquiry
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528 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
several countries have restructured their sovereign bonds in view either of inability and/or
unwillingness to pay the indebtedness.44Petitioners have not presented a plausible reason that
would preclude the Philippines from acting in a similar fashion, should it so opt.
This theory may even be dismissed in a perfunctory manner since petitioners are merely
expecting that the Philippines would opt to restructure the bonds but with the negotiable
character of the bonds, would be prevented from so doing. This is a contingency which
petitioners do not assert as having come to pass or even imminent. Consummated acts of the
executive cannot be struck down by this Court merely on the basis of petitioners’ anticipatory
cavils.
On the Buyback Scheme
In their Comment, petitioners assert that the power to pay public debts lies with Congress and
was deliberately withheld by the Constitution from the President.45 It is true that in the balance
of power between the three branches of government, it is Congress that manages the
country’s coffers by virtue of
_______________
Into the Proposed Financial Debt Restructuring Package” on Thursday, 16 January 1992 at
the Executive House Building, Philippine Senate, Manila. Rollo, p. 112.
44 Argentina began swapping defaulted bonds for new securities … to restructure $104
billion of debt; CHARTS INVESTMENT MANAGEMENT SERVICE LTD., 25 May 2005,
<http://www.charts. com.mt/news.asp?id=1379>; Pakistan restructured its bonds with no
major systemic effects. IMF STAFF STUDY, BARD DISCUSSION EXAMINE EXPERIENCE WITH
SOVEREIGN BOND RESTRUCTURINGS, IMF SURVEY Vol. 30 No. 4, 19 February 2001, p. 58,
<http://www.imf.org/external/pubs/ft/survey/2001/ 021901.pdf>; The government of
Uruguay officially accepted the outcome of the sovereign debt restructuring initiative, as 90%
of the bondholders participated in the swap. LATIN AMERICA WEEKLY OUTLOOK, 23 May 2003,
<http://www.scotiabank.com.mx/resources/052303latin.pdf>.
45 Rollo, p. 163.
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its taxing and spending powers. However, the law-making authority has promulgated a law
ordaining an automatic appropriations provision for debt servicing46 by virtue of which the
President is empowered to execute debt payments without the need for further
appropriations. Regarding these legislative enactments, this Court has held, viz.:
“Congress … deliberates or acts on the budget proposals of the President, and Congress in the
exercise of its own judgment and wisdom formulates an appropriation act precisely following
the process established by the Constitution, which specifies that no money may be paid from
the Treasury except in accordance with an appropriation made by law.
Debt service is not included in the General Appropriation Act, since authorization therefor
already exists under RA Nos. 4860 and 245, as amended, and PD 1967. Precisely in the light of
this subsisting authorization as embodied in said Republic Acts and PD for debt service,
Congress does not concern itself with details for implementation by the Executive, but largely
with annual levels and approval thereof upon due deliberations as part of the whole obligation
program for the year. Upon such approval, Congress has spoken and cannot be said to have
delegated its wisdom to the Executive, on whose part lies the implementation or execution of
the legislative wisdom.”47
Specific legal authority for the buyback of loans is established under Section 2 of Republic Act
(R.A.) No. 240, viz.:
_______________
46 P.D. No. 1177 (July 30, 1977), SECTION 31. Automatic Appropriations.—All expenditures
for (a) personnel retirement premiums, government service insurance, and other similar fixed
expenditures, (b) principal and interest on public debt, (c) national government guarantees of
obligations which are drawn upon, are automatically appropriated: provided, that no
obligations shall be incurred or payments made from funds thus automatically appropriated
except as issued in the form of regular budgetary allotments.
47 Guingona v. Carague, G.R. No. 94571, 22 April 1991, 196 SCRA, 221, 236.
530
530 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
Sec. 2. The Secretary of Finance shall cause to be paid out of any moneys in the National
Treasury not otherwise appropriated, or from any sinking funds provided for the purpose by
law, any interest falling due, or accruing, on any portion of the public debt authorized by
law. He shall also cause to be paid out of any such money, or from any such sinking funds
the principal amount of any obligations which have matured, or which have been called for
redemption or for which redemption has been demanded in accordance with terms prescribed
by him prior to date of issue: Provided, however, That he may, if he so chooses and if the holder
is willing, exchange any such obligation with any other direct or guaranteed obligation or
obligations of the Philippine Government of equivalent value. In the case of interest-bearing
obligations, he shall pay not less than their face value; in the case of obligations issued at a
discount he shall pay the face value at maturity; or, if redeemed prior to maturity, such
portion of the face value as is prescribed by the terms and conditions under which such
obligations were originally issued.(Emphasis supplied.)
The afore-quoted provisions of law specifically allow the President to pre-terminate debts
without further action from Congress.
Petitioners claim that the buyback scheme is neither a guarantee nor a loan since its
underlying intent is to extinguish debts that are not yet due and demandable. 48 Thus, they
suggest that contracts entered pursuant to the buyback scheme are unconstitutional for not
being among those contemplated in Sec. 20, Art. VII of the Constitution.
Buyback is a necessary power which springs from the grant of the foreign borrowing
power. Every statute is understood, by implication, to contain all such provisions as may be
necessary to effectuate its object and purpose, or to make effective rights, powers, privileges
or jurisdiction which it grants, including all such collateral and subsidiary consequences as
_______________
48Rollo, p. 10.
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Constantino, Jr. vs. Cuisia
may be fairly and logically inferred from its terms.49 The President is not empowered to borrow
money from foreign banks and governments on the credit of the Republic only to be left bereft
of authority to implement the payment despite appropriations therefor.
Even petitioners concede that “[t]he Constitution, as a rule, does not enumerate—let
alone enumerate all—the acts which the President (or any other public officer) may not
do,”50 and “[t]he fact that the Constitution does not explicitly bar the President from exercising
a power does not mean that he or she does not have that power.”51 It is inescapable from the
standpoint of reason and necessity that the authority to contract foreign loans and guarantees
without restrictions on payment or manner thereof coupled with the availability of the
corresponding appropriations, must include the power to effect payments or to make
payments unavailing by either restructuring the loans or even refusing to make any payment
altogether.
More fundamentally, when taken in the context of sovereign debts, a buyback is simply
the purchase by the sovereign issuer of its own debts at a discount. Clearly then, the objection
to the validity of the buyback scheme is without basis.
Second Issue: Delegation of Power
Petitioners stress that unlike other powers which may be validly delegated by the President,
the power to incur foreign debts is expressly reserved by the Constitution in the person of the
President. They argue that the gravity by which the exercise of the power will affect the Filipino
nation requires that the President alone must exercise this power. They submit that the
requirement of prior concurrence of an entity specifically named by the Constitution—the
Monetary Board—
_______________
49 Go Chico v. Martinez, 45 Phil. 256 (1923).
50 Id., at p. 161.
51 Ibid.
532
532 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
reinforces the submission that not respondents but the President “alone and personally” can
validly bind the country.
Petitioners’ position is negated both by explicit constitutional52and legal53 imprimaturs, as
well as the doctrine of qualified political agency.
The evident exigency of having the Secretary of Finance implement the decision of the
President to execute the debt-relief contracts is made manifest by the fact that the process of
establishing and executing a strategy for managing the government’s debt is deep within the
realm of the expertise of the Department of Finance, primed as it is to raise the required
amount of funding, achieve its risk and cost objectives, and meet any other sovereign debt
management goals.54
If, as petitioners would have it, the President were to personally exercise every aspect of
the foreign borrowing power, he/she would have to pause from running the country long
enough to focus on a welter of time-consuming detailed activities—the propriety of
incurring/guaranteeing loans, studying and choosing among the many methods that may be
taken toward this end, meeting countless times with creditor representatives to negotiate,
obtaining the concurrence of the Monetary Board, explaining and defending the negotiated
deal to the public, and more often than not, flying to the agreed place of execution to sign the
documents. This sort of constitutional interpretation would negate the very existence of
cabinet positions and the respective expertise which the holders thereof are accorded and
would unduly hamper the President’s effectivity in running the government.
_______________
52 Sec. 20, Art. VII, 1987 CONST.
53 R.A. No. 245, as amended.
54 GUIDELINES FOR PUBLIC DEBT MANAGEMENT, PREPARED BY THE STAFFS OF THE
INTERNATIONAL MONETARY FUND AND THE WORLD BANK, 21 March 2001, <http://www.
imf.org/external/np/mae/pdebt/2000/eng/>.
533
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Necessity thus gave birth to the doctrine of qualified political agency, later adopted in Villena
v. Secretary of the Interior55 from American jurisprudence, viz.:
“With reference to the Executive Department of the government, there is one purpose which
is crystal-clear and is readily visible without the projection of judicial searchlight, and that is
the establishment of a single, not plural, Executive. The first section of Article VII of the
Constitution, dealing with the Executive Department, begins with the enunciation of the
principle that “The executive power shall be vested in a President of the Philippines.” This
means that the President of the Philippines is the Executive of the Government of the
Philippines, and no other. The heads of the executive departments occupy political positions
and hold office in an advisory capacity, and, in the language of Thomas Jefferson, “should be
of the President’s bosom confidence” (7 Writings, Ford ed., 498), and, in the language of
Attorney-General Cushing (7 Op., Attorney-General, 453), “are subject to the direction of the
President.” Without minimizing the importance of the heads of the various departments, their
personality is in reality but the projection of that of the President. Stated otherwise, and as
forcibly characterized by Chief Justice Taft of the Supreme Court of the United States, “each
head of a department is, and must be, the President’s alter ego in the matters of that
department where the President is required by law to exercise authority” (Myers vs. United
States, 47 Sup. Ct. Rep., 21 at 30; 272 U.S., 52 at 133; 71 Law. ed., 160).”56
As it was, the backdrop consisted of a major policy determination made by then President
Aquino that sovereign debts have to be respected and the concomitant reality that the
Philippines did not have enough funds to pay the debts. Inevitably, it fell upon the Secretary of
Finance, as the alter ego of the President regarding “the sound and efficient management of
the financial resources of the Government,”57 to formulate a
_______________
55 67 Phil. 451 (1939).
56 Id., at p. 464.
57 THE ADMINISTRATIVE CODE, E.O. 292, Book II, Title II, Chapter 1.
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534 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
scheme for the implementation of the policy publicly expressed by the President herself.
Nevertheless, there are powers vested in the President by the Constitution which may not
be delegated to or exercised by an agent or alter ego of the President. Justice Laurel, in
his ponencia in Villena, makes this clear:
Withal, at first blush, the argument of ratification may seem plausible under the circumstances,
it should be observed that there are certain acts which, by their very nature, cannot be
validated by subsequent approval or ratification by the President. There are certain
constitutional powers and prerogatives of the Chief Executive of the Nation which must be
exercised by him in person and no amount of approval or ratification will validate the exercise
of any of those powers by any other person. Such, for instance, in his power to suspend the
writ of habeas corpus and proclaim martial law (PAR. 3, SEC. 11, Art. VII) and the exercise by
him of the benign prerogative of mercy (par. 6, sec. 11, Idem).58
These distinctions hold true to this day. There are certain presidential powers which arise out
of exceptional circumstances, and if exercised, would involve the suspension of fundamental
freedoms, or at least call for the supersedence of executive prerogatives over those exercised
by co-equal branches of government. The declaration of martial law, the suspension of the writ
of habeas corpus, and the exercise of the pardoning power notwithstanding the judicial
determination of guilt of the accused, all fall within this special class that demands the
exclusive exercise by the President of the constitutionally vested power. The list is by no means
exclusive, but there must be a showing that the executive power in question is of
similar gravitas and exceptional import.
We cannot conclude that the power of the President to contract or guarantee foreign
debts falls within the same exceptional class. Indubitably, the decision to contract or guarantee
_______________
58Villena v. Secretary of the Interior, supra note 44 at pp. 462-463.
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Constantino, Jr. vs. Cuisia
foreign debts is of vital public interest, but only akin to any contractual obligation undertaken
by the sovereign, which arises not from any extraordinary incident, but from the established
functions of governance.
Another important qualification must be made. The Secretary of Finance or any
designated alter ego of the President is bound to secure the latter’s prior consent to or
subsequent ratification of his acts. In the matter of contracting or guaranteeing foreign loans,
the repudiation by the President of the very acts performed in this regard by the alter ego will
definitely have binding effect. Had petitioners herein succeeded in demonstrating that the
President actually withheld approval and/or repudiated the Financing Program, there could be
a cause of action to nullify the acts of respondents. Notably though, petitioners do not assert
that respondents pursued the Program without prior authorization of the President or that the
terms of the contract were agreed upon without the President’s authorization. Congruent with
the avowed preference of then President Aquino to honor and restructure existing foreign
debts, the lack of showing that she countermanded the acts of respondents leads us to
conclude that said acts carried presidential approval.
With constitutional parameters already established, we may also note, as a source of
suppletory guidance, the provisions of R.A. No. 245. The afore-quoted Section 1 thereof
empowers the Secretary of Finance with the approval of the President and after
consultation59 of the Monetary Board, “to borrow from time to time on the credit of the
Republic of the Philippines such sum or sums as in his judgment may be necessary, and to issue
therefor evidences of indebtedness of the Philippine Government.” Ineluctably then, while the
President wields the borrowing power it is the Secretary of Finance who normally carries out
its thrusts.
_______________
59Now concurrence under the 1987 Constitution.
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536 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
In our recent rulings in Southern Cross Cement Corporation v. The Philippine Cement
Manufacturers Corp.,60 this Court had occasion to examine the authority granted by Congress
to the Department of Trade and Industry (DTI) Secretary to impose safeguard measures
pursuant to the Safeguard Measures Act. In doing so, the Court was impelled to construe
Section 28(2), Article VI of the Constitution, which allowed Congress, by law, to authorize the
President to “fix within specified limits, and subject to such limitations and restrictions as it
may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program of the
Government.”61
While the Court refused to uphold the broad construction of the grant of power as
preferred by the DTI Secretary, it nonetheless tacitly acknowledged that Congress could
designate the DTI Secretary, in his capacity as alter ego of the President, to exercise the
authority vested on the chief executive under Section 28(2), Article VI.62 At the same time, the
Court emphasized that since Section 28(2), Article VI authorized Congress to impose limitations
and restrictions on the authority of the President to impose tariffs and imposts, the DTI
Secretary was necessarily subjected to the same restrictions that Congress could impose on
the President in the exercise of this taxing power.
Similarly, in the instant case, the Constitution allocates to the President the exercise of the
foreign borrowing power
_______________
60 G.R. No. 158540, 8 July 2004, 434 SCRA 65.
61 Section 28, Article VI. . . .
2) The Congress may, by law, authorize the President to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the Government.
62 1987 CONST.
537
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Constantino, Jr. vs. Cuisia
“subject to such limitations as may be provided under law.” Following Southern Cross, but in
line with the limitations as defined in Villena, the presidential prerogative may be exercised by
the President’s alter ego, who in this case is the Secretary of Finance.
It bears emphasis that apart from the Constitution, there is also a relevant statute, R.A.
No. 245, that establishes the parameters by which the alter ego may act in behalf of the
President with respect to the borrowing power. This law expressly provides that the Secretary
of Finance may enter into foreign borrowing contracts. This law neither amends nor goes
contrary to the Constitution but merely implements the subject provision in a manner
consistent with the structure of the Executive Department and the alter ego doctrine. In this
regard, respondents have declared that they have followed the restrictions provided under
R.A. No. 245,63 which include the requisite presidential authorization and which, in the absence
of proof and even allegation to the contrary, should be regarded in a fashion congruent with
the presumption of regularity bestowed on acts done by public officials.
Moreover, in praying that the acts of the respondents, especially that of the Secretary of
Finance, be nullified as being in violation of a restrictive constitutional interpretation,
petitioners in effect would have this Court declare R.A. No. 245 unconstitutional. We will not
strike down a law or provisions thereof without so much as a direct attack thereon when simple
and logical statutory construction would suffice.
Petitioners also submit that the unrestricted character of the Financing Program violates
the framers’ intent behind Section 20, Article VII to restrict the power of the President. This
intent, petitioners note, is embodied in the proviso in Sec. 20, Art. VII, which states that said
power is “subject to such limitations as may be provided under law.” However, as previously
discussed, the debt-relief contracts are governed by the terms of R.A. No. 245, as amended
by P.D. No. 142 s. 1973, and therefore were not developed in an unrestricted setting.
Third Issue: Grave Abuse of Discretion and
Violation of Constitutional Policies
We treat the remaining issues jointly, for in view of the foregoing determination, the general
allegation of grave abuse of discretion on the part of respondents would arise from the
purported violation of various state policies as expressed in the Constitution.
Petitioners allege that the Financing Program violates the constitutional state policies to
promote a social order that will “ensure the prosperity and independence of the nation” and
free “the people from poverty,64 foster “social justice in all phases of national
development,”65 and develop a self-reliant and independent national economy effectively
controlled by Filipinos”;66 thus, the contracts executed or to be executed pursuant thereto
were or would be tainted by a grave abuse of discretion amounting to lack or excess of
jurisdiction.
Respondents cite the following in support of the propriety of their acts:67 (1) a Department
of Finance study showing that as a result of the implementation of voluntary debt reductions
schemes, the country’s debt stock was reduced by U.S. $4.4 billion as of December 1991;68 (2)
revelations made by independent individuals made in a hearing before the Senate Committee
on Economic Affairs indicating that the assailed agreements would bring about substantial
benefits to
_______________
64 Sec. 9, Art. II, 1987 CONST.
65 Sec. 10, Id.
66 Sec. 19, Id.
67 Id., at pp. 95-97.
68 Rollo, p. 96, referring to Annex “E” of Respondent’s Comment, Id., at pp. 131-141.
539
VOL. 472, OCTOBER 13, 2005 539
Constantino, Jr. vs. Cuisia
the country;69 and (3) the Joint Legislative-Executive Foreign Debt Council’s endorsement of
the approval of the financing package containing the debt-relief agreements and issuance of a
Motion to Urge the Philippine Debt Negotiating Panel to continue with the negotiation on the
aforesaid package.70
Even with these justifications, respondents aver that their acts are within the arena of
political questions which, based on the doctrine of separation of powers, 71 the judiciary must
leave without interference lest the courts substitute their judgment for that of the official
concerned and decide a matter which by its nature or law is for the latter alone to decide.72
On the other hand, in furtherance of their argument on respondents’ violation of
constitutional policies, petitioners cite an article of Jude Esguerra, The 1992 Buyback and
Securitization Agreement with Philippine Commercial Bank Creditors,73 in illustrating a best-
case scenario in entering the subject debt-relief agreements. The computation results in a yield
of $218.99 million, rather than the $2,041.00 million claimed by the debt negotiators.74On the
other hand, the worst-case scenario allegedly is that a net amount of $1.638 million will flow
out of the country as a result of the debt package.75
Assuming the accuracy of the foregoing for the nonce, despite the watered-down
parameters of petitioners’ computations, we can make no conclusion other than that
respondents’ efforts were geared towards debt-relief with marked positive results and
towards achieving the constitutional policies which petitioners so hastily declare as having
been violated by respondents. We recognize that as with other schemes dependent on volatile
market and economic structures, the contracts entered into by respondents may possibly have
a net outflow and therefore negative result. However, even petitioners call this latter event
the worst-case scenario. Plans are seldom foolproof. To ask the Court to strike down debt-
relief contracts, which, according to independent third party evaluations using historically-
suggested rates would result in “substantial debt-relief,”76 based merely on the possibility of
petitioners’ worst-case scenario projection, hardly seems reasonable.
Moreover, the policies set by the Constitution as litanized by petitioners are not a panacea
that can annul every gov-
_______________
75
According to Jude Esguerra, using a scenario where: (1) the interest rate assumptions of
Governor Cuisia (52%) in the first year, increasing gradually to 7% by the 6th year) turn out to
be wrong and the average interest rate over the next six years is around 5.5%, and (2) the
Philippines uses up its own dollar reserves rather than loans from WB, Japan and the IMF to We find that petitioners have not sufficiently established any basis for the Court to declare
pay for the costs of the package—over the next six years. the acts of respondents as unconstitutional.
76 A Market Valuation Under Bargaining Game Perspective to the Philippine Debt Package WHEREFORE the petition is hereby DISMISSED. No costs.
of 1991 by Cesar G. Saldaña, Ph.D., a paper read before the Senate Committee on Economic SO ORDERED.
Affairs at the public hearing on “Inquiry Into the Proposed Financial Debt Restructuring
Package” on Thursday, 16 January 1992 at the Executive House Building, Philippine Senate,
Manila. Rollo, pp. 102-120; See alsoStatement On the Philippine Foreign Debt Problem by O.V.
Espiritu, President of the Bankers Association of the Philippines and speaking in behalf thereof,
Rollo, pp. 121-128.
541
VOL. 472, OCTOBER 13, 2005 541
Constantino, Jr. vs. Cuisia
ernmental act sought to be struck down. The gist of petitioners’ arguments on violation of
constitutional policies and grave abuse of discretion boils down to their allegation that the
debt-relief agreements entered into by respondents do not deliver the kind of debt-relief that
petitioners would want. Petitioners cite the aforementioned article in stating that that “the
agreement achieves little that cannot be gained through less complicated means like
postponing (rescheduling) principal payments,”77 thus:
[T]he price of success in putting together this “debt-relief package” (indicates) the possibility
that a simple rescheduling agreement may well turn out to be less expensive than this
comprehensive “debt-relief” package. This means that in the next six years the humble and
simple rescheduling process may well be the lesser evil because there is that distinct possibility
that less money will flow out of the country as a result.
Note must be taken that from these citations, petitioners submit that there is possibly a better
way to go about debt rescheduling and, on that basis, insist that the acts of respondents must
be struck down. These are rather tenuous grounds to condemn the subject agreements as
violative of constitutional principles.
Conclusion
The raison d’ etre of the Financing Program is to manage debts incurred by the Philippines in a
manner that will lessen the burden on the Filipino taxpayers—thus the term “debt-relief
agreements.” The measures objected to by petitioners were not aimed at incurring more debts
but at terminating pre-existing debts and were backed by the know-how of the country’s
economic managers as affirmed by third party empirical analysis.
_______________

77Rollo, p. 183.
542
542 SUPREME COURT REPORTS ANNOTATED
Constantino, Jr. vs. Cuisia
That the means employed to achieve the goal of debt-relief do not sit well with petitioners is
beyond the power of this Court to remedy. The exercise of the power of judicial review is
merely to check—not supplant—the Executive, or to simply ascertain whether he has gone
beyond the constitutional limits of his jurisdiction but not to exercise the power vested in him
or to determine the wisdom of his act.78 In cases where the main purpose is to nullify
governmental acts whether as unconstitutional or done with grave abuse of discretion, there
is a strong presumption in favor of the validity of the assailed acts. The heavy onus is in on
petitioners to overcome the presumption of regularity.
 G.R. No. 175888. February 11, 2009.*
SUZETTE NICOLAS y SOMBILON, petitioner, vs. ALBERTO ROMULO, in his capacity as Secretary
of Foreign Affairs; RAUL GONZALEZ, in his capacity as Secretary of Justice; EDUARDO ERMITA,
in his capacity as Executive Secretary; RONALDO PUNO, in his capacity as Secretary of the
Interior and Local Government; SERGIO APOSTOL, in his capacity as Presidential Legal Counsel;
and L/CPL. DANIEL SMITH, respondents.
International Law; Treaties; Visiting Forces Agreement; Military Bases; National
Territory; Clark and Subic and the other places in the Philippines covered by the RP-US Military
Bases Agreement of 1947 were not Philippine Territory, as they were excluded from the cession
and retained by the U.S.—The provision of the Constitution is Art. XVIII, Sec. 25 which states:
Sec. 25. After the expiration in 1991 of the Agreement between the Philippines and the United
States of America concerning Military Bases, foreign military bases, troops, or facilities shall
not be allowed in the Philippines except under a treaty duly concurred in by the Senate and,
when the Congress so requires, ratified by a majority of the votes cast by the people in a
national referendum held for that purpose, and recognized as a treaty by the other contracting
State. The reason for this provision lies in history and the Philippine experience in regard to
the United States military bases in the country. It will be recalled that under the Philippine Bill
of 1902, which laid the basis for the Philippine Commonwealth and, eventually, for the
recognition of independence, the United States agreed to cede to the Philippines all the
territory it acquired from Spain under the Treaty of Paris, plus a few islands later added to its
realm, except certain naval ports and/or military bases and facilities, which the United States
retained for itself. This is noteworthy, because what this means is that Clark and Subic and the
other places in the Philippines covered by the RP-US Military Bases Agreement of 1947 were
not Philippine territory, as they were excluded from the cession and retained by the US.
Accordingly, the Philippines had no jurisdiction over these bases except to the extent allowed
by the United States. Furthermore, the RP-US Military Bases Agreement was never advised for
ratification by the United States Senate, a disparity in treatment, because the Philippines
regarded it as a treaty and had it concurred in by our Senate. Subsequently, the United States
agreed to turn over these bases to the Philippines; and with the expiration of the RP-US
Military Bases Agreement in 1991, the territory covered by these bases were finally ceded to
the Philippines.
Same; Same; Same; Same; Same; Article XVIII, Sec. 25 of the Constitution is designed to
ensure that any agreement allowing the presence of foreign military bases, troops or facilities
in Philippine territory shall be equally binding on the Philippines and the foreign sovereign State
involved, the idea being to prevent a recurrence of what happened in the past.—To prevent a
recurrence of this experience, the provision in question was adopted in the 1987 Constitution.
The provision is thus designed to ensure that any agreement allowing the presence of foreign
military bases, troops or facilities in Philippine territory shall be equally binding on the
Philippines and the foreign sovereign State involved. The idea is to prevent a recurrence of the
situation in which the terms and conditions governing the presence of foreign armed forces in
our territory were binding upon us but not upon the foreign State.
Same; Same; Same; Same; Same; Judicial Notice; The presence of US Armed Forces in
Philippine territory pursuant to the Visiting Forces Agreement (VFA) is allowed “under a treaty
duly concurred in by the Senate x x x and recognized as a treaty by the other contracting State”;
Notice can be taken of the internationally known practice by the United States of submitting to
its Senate for advice and consent agreements that are policymaking in nature, whereas those
that carry out or further implement these policymaking agreements are merely submitted to
Congress, under the provisions of the so-called Case-Zablocki Act, within 60 days from
ratification.—Applying the provision to the situation involved in these cases, the question is
whether or not the presence of US Armed Forces in Philippine territory pursuant to the VFA is
allowed “under a treaty duly concurred in by the Senate x x x and recognized as a treaty by
the other contracting State.” This Court finds that it is, for two reasons. First, as held in Bayan
v. Zamora, 342 SCRA 449 (2000), the VFA was duly concurred in by the Philippine Senate and
has been recognized as a treaty by the United States as attested and certified by the duly
authorized representative of the United States government. The fact that the VFA was not
submitted for advice and consent of the United States Senate does not detract from its status
as a binding international agreement or treaty recognized by the said State. For this is a matter
of internal United States law. Notice can be taken of the internationally known practice by the
United States of submitting to its Senate for advice and consent agreements that are
policymaking in nature, whereas those that carry out or further implement these441
VOL. 578, FEBRUARY 11, 2009 441
Nicolas vs. Romulo
policymaking agreements are merely submitted to Congress, under the provisions of the
so-called Case-Zablocki Act, within sixty days from ratification. The second reason has to do
with the relation between the VFA and the RP-US Mutual Defense Treaty of August 30, 1951.
This earlier agreement was signed and duly ratified with the concurrence of both the Philippine
Senate and the United States Senate.
Same; Same; Same; Same; As an implementing agreement of the RP-US Mutual Defense
Treaty, it was not necessary to submit the Visiting Forces Agreement (VFA) to the US Senate for
advice and consent, but merely to the US Congress under the Case-Zablocki Act within 60 days
of its ratification; The provision of Art. XVIII, Sec. 25 of the Constitution, is complied with by
virtue of the fact that the presence of the US Armed Forces through the Visiting Forces
Agreement (VFA) is a presence “allowed under” the RP-US Mutual Defense Treaty.—As an
implementing agreement of the RP-US Mutual Defense Treaty, it was not necessary to submit
the VFA to the US Senate for advice and consent, but merely to the US Congress under the
Case-Zablocki Act within 60 days of its ratification. It is for this reason that the US has certified
that it recognizes the VFA as a binding international agreement, i.e., a treaty, and this
substantially complies with the requirements of Art. XVIII, Sec. 25 of our Constitution. The
provision of Art. XVIII, Sec. 25 of the Constitution, is complied with by virtue of the fact that
the presence of the US Armed Forces through the VFA is a presence “allowed under” the RP-
US Mutual Defense Treaty. Since the RP-US Mutual Defense Treaty itself has been ratified and
concurred in by both the Philippine Senate and the US Senate, there is no violation of the
Constitutional provision resulting from such presence.
Same; Same; Same; Same; Equal Protection Clause; There is a substantial basis for a
different treatment of a member of a foreign military armed forces allowed to enter our
territory and all the other accused—the rule in international law is that a foreign armed forces
allowed to enter one’s territory is immune from local jurisdiction, except to the extent agreed
upon.—The equal protection clause is not violated, because there is a substantial basis for a
different treatment of a member of a foreign military armed forces allowed to enter our
territory and all other accused. The rule in international law is that a foreign armed forces
allowed to enter one’s territory is im-442
442 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
mune from local jurisdiction, except to the extent agreed upon. The Status of Forces
Agreements involving foreign military units around the world vary in terms and conditions,
according to the situation of the parties involved, and reflect their bargaining power. But the
principle remains, i.e., the receiving State can exercise jurisdiction over the forces of the
sending State only to the extent agreed upon by the parties. As a result, the situation involved
is not one in which the power of this Court to adopt rules of procedure is curtailed or violated,
but rather one in which, as is normally encountered around the world, the laws (including rules
of procedure) of one State do not extend or apply—except to the extent agreed upon—to
subjects of another State due to the recognition of extraterritorial immunity given to such
bodies as visiting foreign armed forces.
Same; Same; Same; Same; Words and Phrases; The parties to the Visiting Forces
Agreement (VFA) recognized the difference between custody during the trial and detention
after conviction, because they provided for a specific arrangement to cover detention, and this
specific arrangement clearly states not only that the detention shall be carried out in facilities
agreed on by authorities of both parties, but also that the detention shall be “by Philippine
authorities.”—It is clear that the parties to the VFA recognized the difference between custody
during the trial and detention after conviction, because they provided for a specific
arrangement to cover detention. And this specific arrangement clearly states not only that the
detention shall be carried out in facilities agreed on by authorities of both parties, but also that
the detention shall be “by Philippine authorities.” Therefore, the Romulo-Kenney Agreements
of December 19 and 22, 2006, which are agreements on the detention of the accused in the
United States Embassy, are not in accord with the VFA itself because such detention is not “by
Philippine authorities.”
Same; Same; Same; Legal Research; Judgments; The Visiting Forces Agreement (VFA) is
a self-executing Agreement, as that term is defined in Medellin v. Texas, 552 U.S. [not yet
numbered for citation purposes] (2008), the Visiting Forces Agreement (VFA) is covered
by implementing legislation, namely, the Case-Zablocki Act, USC Sec. 112(b), and, the RP-US
Mutual Defense Treaty was advised and consented to by the US Senate on March 20, 1952.—
After deliberation, the Court holds, on these points, as follows: First, the VFA is a self-executing
Agreement, as that term is defined in Medellin itself, because the parties intend its provisions
to be enforceable, precisely443
VOL. 578, FEBRUARY 11, 2009 443
Nicolas vs. Romulo
because the Agreement is intended to carry out obligations and undertakings under the
RP-US Mutual Defense Treaty. As a matter of fact, the VFA has been implemented and
executed, with the US faithfully complying with its obligation to produce L/CPL Smith before
the court during the trial. Secondly, the VFA is covered by implementing legislation, namely,
the Case-Zablocki Act, USC Sec. 112(b), inasmuch as it is the very purpose and intent of the US
Congress that executive agreements registered under this Act within 60 days from their
ratification be immediately implemented. The parties to these present cases do not question
the fact that the VFA has been registered under the Case-Zablocki Act. In sum, therefore, the
VFA differs from the Vienna Convention on Consular Relations and the Avena decision of the
International Court of Justice (ICJ), subject matter of the Medellindecision. The Convention and
the ICJ decision are not self-executing and are not registrable under the Case-Zablocki Act, and
thus lack legislative implementing authority. Finally, the RP-US Mutual Defense Treaty was
advised and consented to by the US Senate on March 20, 1952, as reflected in the US
Congressional Record, 82nd Congress, Second Session, Vol. 98–Part 2, pp. 2594-2595.
Same; Same; Same; The framers of the Constitution were aware that the application of
international law in domestic courts varies from country to country—it was not the intention
of the framers of the 1987 Constitution, in adopting Article XVIII, Sec. 25, to require the other
contracting State to convert their system to achieve alignment and parity with ours.—The
framers of the Constitution were aware that the application of international law in domestic
courts varies from country to country. As Ward N. Ferdinandusse states in his Treatise, DIRECT
APPLICATION OF INTERNATIONAL CRIMINAL LAW IN NATIONAL COURTS, some countries
require legislation whereas others do not. It was not the intention of the framers of the 1987
Constitution, in adopting Article XVIII, Sec. 25, to require the other contracting State to convert
their system to achieve alignment and parity with ours. It was simply required that the treaty
be recognized as a treaty by the other contracting State. With that, it becomes for both parties
a binding international obligation and the enforcement of that obligation is left to the normal
recourse and processes under international law.444
444 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
Same; Same; Words and Phrases; Three Types of Treaties in the American System; An
executive agreement is a “treaty” within the meaning of that word in international law and
constitutes enforceable domestic law vis-à-vis the United States.—As held by the US Supreme
Court in Weinberger v. Rossi, 456 U.S. 25 (1982), an executive agreement is a “treaty” within
the meaning of that word in international law and constitutes enforceable domestic law vis-à-
vis the United States. Thus, the US Supreme Court in Weinberger enforced the provisions of
the executive agreement granting preferential employment to Filipinos in the US Bases here.
Accordingly, there are three types of treaties in the American system: 1. Art. II, Sec. 2 treaties—
These are advised and consented to by the US Senate in accordance with Art. II, Sec. 2 of the
US Constitution. 2. Executive–Congressional Agreements: These are joint agreements of the
President and Congress and need not be submitted to the Senate. 3. Sole Executive
Agreements.—These are agreements entered into by the President. They are to be submitted
to Congress within sixty (60) days of ratification under the provisions of the Case-Zablocki Act,
after which they are recognized by the Congress and may be implemented.
PUNO, C.J., Dissenting Opinion:
International Law; Treaties; Visiting Forces Agreement; Constitutional Law; An
examination of Bayan v. Zamora, 342 SCRA 449 (2000), which upheld the validity of the Visiting
Forces Agreement (VFA) is necessary in light of a recent change in U.S. policy on treaty
enforcement.—An examination of Bayan v. Zamora, which upheld the validity of the VFA, is
necessary in light of a recent change in U.S. policy on treaty enforcement. Of significance is the
case of Medellin v. Texas, 522 U.S. __ (2008) where it was held by the U.S. Supreme Court that
while treaties entered into by the President with the concurrence of the Senate are binding
international commitments, they are not domestic law unless Congress enacts implementing
legislation or unless the treaty itself is “self-executing.”
Same; Same; Same; Legal Research; The U.S. President’s authority to enter into treaties
that are enforceable within its domestic sphere was severely limited by Medellin, id.—In fine,
the U.S. President’s authority to enter into treaties that are enforceable within its domestic
sphere was severely limited by Medellin. In Medellin, the United States posited the theory that
the President’s constitutional445
VOL. 578, FEBRUARY 11, 2009 445
Nicolas vs. Romulo
role uniquely qualifies him to resolve the sensitive foreign policy decisions that bear on
compliance with an ICJ decision. In said case, the U.S. President, through the issuance of the
Memorandum, sought to vindicate the United States interest in ensuring the reciprocal
observance of the Vienna Convention, protecting relations with foreign governments, and
demonstrating commitment to the role of international law. Though these interests were
compelling, the Supreme Court held that “the president’s authority to act, as with the exercise
of any governmental power, must stem from an act of Congress or from the Constitution
itself.”
Same; Same; Same; With Medelllin, the case law is now settled that acknowledgment by
the U.S. President that an agreement is a treaty, even with the concurrence of the U.S. Senate,
is not sufficient to make a treaty enforceable in its domestic sphere, unless the words of the
treaty itself clearly express the intention to make the treaty self-executory, or unless there is
corresponding legislative enactment providing for its domestic enforceability—Visiting Forces
Agreement (VFA) failed to meet the constitutional requirement of recognition by the U.S. as a
treaty.—With Medellin, the case law is now settled that acknowledgement by the U.S.
President that an agreement is a treaty, even with the concurrence of the U.S. Senate, is not
sufficient to make a treaty enforceable in its domestic sphere, unless the words of the treaty
itself clearly express the intention to make the treaty self-executory, or unless there is
corresponding legislative enactment providing for its domestic enforceability. The VFA does
not satisfy either of these requirements and cannot thus be enforced within the
U.S. I reiterate my dissent in Bayan v. Zamora that the VFA failed to meet the constitutional
requirement of recognition by the U.S. as a treaty.
Same; Same; Same; The Visiting Forces Agreement (VFA) is an executive agreement that
does not derive any support from a treaty, or prior Congressional authorization or enactment.—
Medellin, citing the Youngstown Framework, affirmed the tripartite scheme for evaluating
executive action in this area: First, “[w]hen the President acts pursuant to an express or implied
authorization of Congress, his authority is at its maximum, for it includes all that he possesses
in his own right plus all that Congress can delegate.” Second, “[w]hen the President acts in
absence of either a congressional grant or denial of authority, he can only rely upon his own
independent powers, but there is a zone of twilight in which he and Congress may have446
446 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
concurrent authority, or in which its distribution is uncertain.” In this circumstance,
Presidential authority can derive support from “congressional inertia, indifference or
acquiescence.” Finally, “[w]hen the President takes measures incompatible with the express
or implied will of Congress, his power is at its lowest ebb,” and the Court can sustain his actions
“only by disabling the Congress from acting upon the subject.” The VFA is an executive
agreement that does not derive any support from a treaty, or prior Congressional authorization
or enactment. The VFA falls within the third category of the Youngstown Framework and,
thus, Presidential power is at its lowest ebb. The President’s actions cannot be sustained and
enforced in the domestic sphere without congressional enactment or in the light of contrary
legislation.
Same; Same; Same; At best, the Visiting Forces Agreement (VFA) can be considered as
an international commitment by the U.S., but “the responsibility of transforming an
international obligation arising from a non-self-executing treaty into domestic law falls to
Congress.”—The VFA can be considered as an international commitment by the U.S., but “the
responsibility of transforming an international obligation arising from a non-self-executing
treaty into domestic law falls to Congress.” It is therefore an error to perpetuate the ruling of
the majority of this Court in Bayan that it is inconsequential whether the United States treats
the VFA only as an executive agreement because, under international law, an executive
agreement is binding as a treaty. Medellin has held that the binding effect of a treaty as an
international obligation does not automatically mean that the treaty is enforceable in the
domestic sphere. Medellin tells us that the binding effect of the treaty is mutually exclusive
from the actual enforcement of the rights and obligations sourced from it. Though the VFA
attaches international obligations to the parties to the agreement, it is irrelevant in the
enforcement of a non-self-executory treaty in the domestic courts of the U.S. As long as the
text of the VFA does not clearly show that it is self-executory and as long as U.S. Congress has
not made it enforceable in the domestic sphere, it does not have obligatory force in U.S.
domestic courts.
Same; Same; Same; Even assuming there is a Senate concurrence in the RP-U.S. Mutual
Defense Treaty, the Visiting Forces Agreement (VFA) still cannot be given domestic effect in the
United States—it is up to the Court to decide whether the terms of a treaty reflect a
determination by the President who negotiated it and the447
VOL. 578, FEBRUARY 11, 2009 447
Nicolas vs. Romulo
Senate that confirmed it if the treaty has domestic effect; The dichotomy where the
Philippine government has considered the Visiting Forces Agreement (VFA) to be fully
enforceable within our jurisdiction yet the U.S. does not look at the Visiting Forces Agreement
(VFA) as enforceable within its domestic jurisdiction is evidently proscribed by the
Constitution.—Regardless of whether there is concurrence by the U.S. Senate in the RP-U.S.
Mutual Defense Treaty, the disparity in the legal treatment of the VFA by the U.S. is clear,
considering the Medellin ruling. Indeed, even assuming there is a Senate concurrence in the
RP-U.S. Mutual Defense Treaty, the VFA still cannot be given domestic effect in the United
States. It is up to the Court to decide whether the terms of a treaty reflect a determination by
the President who negotiated it and the Senate that confirmed it if the treaty has domestic
effect. To repeat, any treaty becomes enforceable within the U.S. only when the Court has
determined it to be so, based on the clear terms of the treaty or through Congressional
enactment to implement the provisions of the treaty. It bears stressing that the RP government
has already enforced the provisions of the VFA and has transferred custody of Lance Corporal
Daniel Smith to U.S. authorities. The Philippine government has considered the VFA to be fully
enforceable within our jurisdiction; yet, the U.S. does not look at the VFA as enforceable within
its domestic jurisdiction. This dichotomy is evidently proscribed by the Constitution, for such
dichotomy would render our sovereignty in tatters.
CARPIO, J., Dissenting Opinion:
International Law; Treaties; Visiting Forces Agreement; The Philippine Constitution bars
the efficacy of a treaty that is enforceable as domestic law only in the Philippines but
unenforceable as domestic law in the other contracting State.—Under Medellin, 552 U.S. ___
(2008), the VFA is indisputably not enforceable as domestic federal law in the United States.
On the other hand, since the Philippine Senate ratified the VFA, the VFA constitutes domestic
law in the Philippines. This unequal legal status of the VFA violates Section 25, Article XVIII of
the Philippine Constitution, which specifically requires that a treaty involving the presence of
foreign troops in the Philippines must be equally binding on the Philippines and on the other
contracting State. In short, the Philippine Constitution bars the efficacy of such a treaty that is
enforceable as domestic law only in the Philippines but unenforceable as domestic law in the
other contracting State. The Philippines is a sovereign and inde-448
448 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
pendent State. It is no longer a colony of the United States. This Court should not
countenance an unequal treaty that is not only contrary to the express mandate of the
Philippine Constitution, but also an affront to the sovereignty, dignity and independence of the
Philippine State.
Same; Same; Same; The clear intent of the phrase “recognized as a treaty by the other
contracting State” in Sec. 25, Article XVIII of the Constitution is to insure that the treaty has the
same legal effect on the Philippines as on the other contracting State.—There is no dispute that
Section 25, Article XVIII of the Philippine Constitution governs the constitutionality of the VFA.
Section 25 states: Section 25. After the expiration in 1991 of the Agreement between the
Republic of the Philippines and the United States of America concerning Military Bases, foreign
military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty
duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of
the votes cast by the people in a national referendum held for that purpose, and recognized
as a treaty by the other contracting State. (Emphasis supplied) The clear intent of the phrase
“recognized as a treaty by the other contracting State” is to insure that the treaty has the same
legal effect on the Philippines as on the other contracting State. This requirement is unique to
agreements involving the presence of foreign troops in the Philippines, along with the
requirement, if Congress is so minded, to hold a national referendum for the ratification of
such a treaty.
Same; Same; Same; Legal Research; Medellin v. Texas, 552 U.S. ___ (2008), has stunned
legal scholars in the United States and there is no escaping its legal effect on the Visiting Forces
Agreement (VFA) here in the Philippines.—Medellin has stunned legal scholars in the United
States and there is no escaping its legal effect on the VFA here in the Philippines. Even U.S.
President George W. Bush had to bow to the ruling that he had no authority to enforce the
Vienna Convention on Consular Relations in the United States in the absence of any
implementing legislation by the U.S. Congress, despite the fact that the U.S. Senate had
ratified the Convention. Medellin tersely states: In sum, while treaties “may comprise
international commitments…they are not domestic law unless Congress has either enacted
implementing statutes or the treaty itself conveys an intention that it be ‘self-449
VOL. 578, FEBRUARY 11, 2009 449
Nicolas vs. Romulo
executing’ and is ratified on these terms. (Emphasis supplied) To drive home the point
that the U.S. President cannot enforce the Convention in the United States, Medellin states
that the “President’s authority to act, as with the exercise of any governmental power, ‘must
stem either from an act of Congress or from the Constitution itself.”
Same; Same; Same; It would be naïve and foolish for the Philippines, or for any other
State for that matter, to implement as part of its domestic law a treaty that the United States
does not recognize as part of its own domestic law; The wisdom of the framers in crafting
Section 25, Article XVIII of the Philippine Constitution is now apparent.—The Philippines cannot
take comfort that the VFA can still give rise to an obligation under international law on the part
of the United States, even as the VFA does not constitute domestic law in the United States.
Assuming that the United States will submit to the jurisdiction of the ICJ, the futility of relying
on the Security Council to enforce the ICJ decision is apparent. In the chilling words of Medellin,
“the United States retained the unqualified right to exercise its veto of any Security Council
resolution.” The only way to avoid this veto of the United States is to make the treaty part of
U.S. domestic law. It would be naïve and foolish for the Philippines, or for any other State for
that matter, to implement as part of its domestic law a treaty that the United States does not
recognize as part of its own domestic law. That would only give the United States the
“unqualified right” to free itself from liability for any breach of its own obligation under the
treaty, despite an adverse ruling from the ICJ. The wisdom of the framers in crafting Section
25, Article XVIII of the Philippine Constitution is now apparent. The other contracting State
must “recognize as a treaty” any agreement on the presence of foreign troops in the
Philippines, and such treaty must be equally binding on the Philippines and on the other
contracting State. In short, if the treaty is part of domestic law of the Philippines, it must also
be part of domestic law of the other contracting State. Otherwise, the treaty cannot take effect
in the Philippines.
Same; Same; Same; Legal Research; Notification under the Case-Zablocki Act does not
enact the executive agreement into domestic law of the United States.—Executive agreements
are not ratified by the U.S. Senate but merely notified to the U.S. Congress under the Case-
Zablocki Act, which does not apply to treaties. Notification under the Case-Zablocki Act does
not enact the executive agreement450
450 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
into domestic law of the United States. On the other hand, “the failure to transmit to
Congress under the Case-Zablocki Act x x x does not alter the legal effect of an (executive)
agreement.” The Case-Zablocki Act operates merely as a timely notification to the U.S.
Congress of the executive agreements, “other than a treaty,” that the U.S. President has
entered into with foreign States. This is clear from the provisions of the Case-Zablocki Act: x x
x
Same; Same; Same; Same; The purpose of the Case-Zablocki Act is “to address the lack
of legal constraints over the President’s choice of the form of an agreement,” whether an
executive agreement or a treaty—it allows the U.S. Congress to timely monitor if an agreement
is mislabeled as an executive agreement when it should be a treaty subject to U.S. Senate
ratification.—The Case-Zablocki Act mandates the notification to the U.S. Congress of
executive agreements “other than a treaty.” The purpose of the Case-Zablocki Act is “to
address the lack of legal constraints over the President’s choice of the form of an agreement,”
whether an executive agreement or a treaty. It allows the U.S. Congress to timely monitor if
an agreement is mislabeled as an executive agreement when it should be a treaty subject to
U.S. Senate ratification. As one commentator explained: If Congress is dissatisfied with the
character or lack of consultation on the form of an agreement, or with the content of the
agreement itself, it has other means of making its displeasure known. In the exercise of its
oversight power, Congress could hold hearings, as it did in 1976 on the United States-Turkish
Defense Cooperation Agreement, to consider the merits of concluding such an agreement at a
time of tension involving one or more nations relevant to the agreement. At any time Congress
can also modify an executive agreement, as it can a treaty, by enacting subsequent contrary
legislation. Congress has taken such action in the past, regrettably placing the United States in
the position of breaching the agreement under international law. Finally, Congress could
withhold funding for an executive agreement. To date, Congress has not exercised its
“spending power” in this manner, except as to isolated issues. “Spending power” is likely to be
used by Congress only as a last resort.
Same; Same; Same; For the Visiting Forces Agreement (VFA) to be constitutional under
Section 25, Article XVIII of the Philippine Constitution, the United States must first recognize the
VFA as a treaty, and then ratify the Visiting Forces Agreement (VFA) to form part of its domestic
law.—The United States Government does not451
VOL. 578, FEBRUARY 11, 2009 451
Nicolas vs. Romulo
 recognize the VFA as a treaty but merely as an executive agreement. For the VFA to be
constitutional under Section 25, Article XVIII of the Philippine Constitution, the United States
must first recognize the VFA as a treaty, and then ratify the VFA to form part of its domestic
law. In the words of Father Bernas, the United States must “[c]omplete the process by
accepting [the VFA] as a treaty through ratification by [the U.S.] Senate as the United States
Constitution requires.” Medellin has now added the further requirement that the U.S. Congress
must adopt an implementing legislation to the VFA, or the VFA must be renegotiated to make
it self-executory and ratified as such by the U.S. Senate. Unless and until this is done, the VFA
is not “recognized as a treaty” by the United States, and thus it cannot be given effect in the
Philippines.
Same; Same; Same; Under Medellin, the 1952 RP-U.S. Mutual Defense Treaty (MDT) is
not part of the domestic law of the United States and the U.S. President has no power to enforce
the MDT under U.S. domestic law—the MDT does not contain any provision making it self-
executory once ratified by the U.S. Senate, and the U.S. Congress has also not adopted any
implementing legislation for the MDT.—Under Medellin, the 1952 RP-US Mutual Defense
Treaty (MDT) is not part of the domestic law of the United States and the U.S. President has
no power to enforce the MDT under U.S. domestic law. Based on the Medellin requirements
for a treaty to be binding and enforceable under U.S. domestic law, the MDT suffers the same
fate as the Vienna Convention on Consular Relations. Both the MDT and the Convention were
ratified by the U.S. Senate. However, both the MDT and the Convention contain only the
usual ratification and entry into force provisions found in treaties. Both the MDT and the
Convention do not contain any provision making them self-executory once ratified by the U.S.
Senate. The U.S. Congress has also not adopted any implementing legislation for the MDT or
the Convention. Consequently, the VFA, as an executive agreement, cannot depend for its legal
efficacy on the MDT because the MDT itself, under Medellin, is not binding and enforceable
under U.S. domestic law, just like the Convention.
SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Evalyn G. Ursua for petitioner in G.R. No. 175888.452
452 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
Roque and Butuyan Law Offices for petitioner in G.R. No. 176051.
Pacifico Agabin for petitioners BAYAN, et al. in G.R. No. 176222.
Antonio R. Bautista for Sergio Apostol.
Jose P.P. Justiniano for Lance Corporal Daniel Smith.
AZCUNA, J.:
These are petitions for certiorari, etc. as special civil actions and/or for review of the
Decision of the Court of Appeals in Lance Corporal Daniel J. Smith v. Hon. Benjamin T. Pozon,
et al., in CA-G.R. SP No. 97212, dated January 2, 2007.
The facts are not disputed.
Respondent Lance Corporal (L/CPL) Daniel Smith is a member of the United States Armed
Forces. He was charged with the crime of rape committed against a Filipina, petitioner herein,
sometime on November 1, 2005, as follows:
“The undersigned accused LCpl. Daniel Smith, Ssgt. Chad Brian Carpentier, Dominic
Duplantis, Keith Silkwood and Timoteo L. Soriano, Jr. of the crime of Rape under Article 266-A
of the Revised Penal Code, as amended by Republic Act 8353, upon a complaint under oath
filed by Suzette S. Nicolas, which is attached hereto and made an integral part hereof as Annex
“A,” committed as follows:
“That on or about the First (1st) day of November 2005, inside the Subic Bay Freeport Zone,
Olongapo City and within the jurisdiction of this Honorable Court, the above-named accused’s
(sic), being then members of the United States Marine Corps, except Timoteo L. Soriano, Jr.,
conspiring, confederating together and mutually helping one another, with lewd design and by
means of force, threat and intimidation, with abuse of superior strength and taking advantage
of the intoxication of the victim, did then and there willfully, unlawfully and feloniously sexually
abuse and have sexual intercourse with or carnal knowledge of one Suzette S. Nicolas, a 22-
year old unmarried woman inside a Starex Van with Plate No. WKF-162, owned by Starways
Travel and Tours, with Office address at 8900 P. Vic-453
VOL. 578, FEBRUARY 11, 2009 453
Nicolas vs. Romulo
tor St., Guadalupe, Makati City, and driven by accused Timoteo L. Soriano, Jr., against the will
and consent of the said Suzette S. Nicolas, to her damage and prejudice.
CONTRARY TO LAW.”1
Pursuant to the Visiting Forces Agreement (VFA) between the Republic of the Philippines
and the United States, entered into on February 10, 1998, the United States, at its request, was
granted custody of defendant Smith pending the proceedings.
During the trial, which was transferred from the Regional Trial Court (RTC) of Zambales to
the RTC of Makati for security reasons, the United States Government faithfully complied with
its undertaking to bring defendant Smith to the trial court every time his presence was
required.
On December 4, 2006, the RTC of Makati, following the end of the trial, rendered its
Decision, finding defendant Smith guilty, thus:
“WHEREFORE, premises considered, for failure of the prosecution to adduce sufficient
evidence against accused S/SGT. CHAD BRIAN CARPENTER, L/CPL. KEITH SILKWOOD AND
L/CPL. DOMINIC DUPLANTIS, all of the US Marine Corps assigned at the USS Essex, are hereby
ACQUITTED to the crime charged.
The prosecution having presented sufficient evidence against accused L/CPL. DANIEL J.
SMITH, also of the US Marine Corps at the USS Essex, this Court hereby finds him GUILTY
BEYOND REASONABLE DOUBT of the crime of RAPE defined under Article 266-A, paragraph 1
(a) of the Revised Penal Code, as amended by R.A. 8353, and, in accordance with Article 266-
B, first paragraph thereof, hereby sentences him to suffer the penalty of reclusion
perpetua together with the accessory penalties provided for under Article 41 of the same
Code.
Pursuant to Article V, paragraph No. 10, of the Visiting Forces Agreement entered into by
the Philippines and the United States, accused L/CPL. DANIEL J. SMITH shall serve his sentence
in the
_______________
1 Annex “B” of RTC Decision, CA Rollo, p. 45.
454
454 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
facilities that shall, thereafter, be agreed upon by appropriate Philippine and United States
authorities. Pending agreement on such facilities, accused L/CPL. DANIEL J. SMITH is hereby
temporarily committed to the Makati City Jail.
 Accused L/CPL. DANIEL J. SMITH is further sentenced to indemnify complainant SUZETTE
S. NICOLAS in the amount of P50,000.00 as compensatory damages plus P50,000.00 as moral
damages.
SO ORDERED.”2
As a result, the Makati court ordered Smith detained at the Makati jail until further orders.
On December 29, 2006, however, defendant Smith was taken out of the Makati jail by a
contingent of Philippine law enforcement agents, purportedly acting under orders of the
Department of the Interior and Local Government, and brought to a facility for detention under
the control of the United States government, provided for under new agreements between
the Philippines and the United States, referred to as the Romulo-Kenney Agreement of
December 19, 2006 which states:
The Government of the Republic of the Philippines and the Government of the United States
of America agree that, in accordance with the Visiting Forces Agreement signed between our
two nations, Lance Corporal Daniel J. Smith, United States Marine Corps, be returned to U.S.
military custody at the U.S. Embassy in Manila.
(Sgd.) Kristie A. Kenney (Sgd.) Alberto G. Romulo
Representative of the United States Representative of the Republic
of America of the Philippines
DATE: 12-19-06 DATE: December 19, 2006
and the Romulo-Kenney Agreement of December 22, 2006 which states:
_______________
2 Annex “B” of CA Rollo, pp. 36-96.
455
VOL. 578, FEBRUARY 11, 2009 455
Nicolas vs. Romulo
“The Department of Foreign Affairs of the Republic of the Philippines and the Embassy of the
United States of America agree that, in accordance with the Visiting Forces Agreement signed
between the two nations, upon transfer of Lance Corporal Daniel J. Smith, United States
Marine Corps, from the Makati City Jail, he will be detained at the first floor, Rowe (JUSMAG)
Building, U.S. Embassy Compound in a room of approximately 10 x 12 square feet. He will be
guarded round the clock by U.S. military personnel. The Philippine police and jail authorities,
under the direct supervision of the Philippine Department of Interior and Local Government
(DILG) will have access to the place of detention to ensure the United States is in compliance
with the terms of the VFA.”
The matter was brought before the Court of Appeals which decided on January 2, 2007, as
follows:
“WHEREFORE, all the foregoing considered, we resolved to DISMISS the petition for having
become moot.”3
Hence, the present actions.
The petitions were heard on oral arguments on September 19, 2008, after which the
parties submitted their memoranda.
Petitioners contend that the Philippines should have custody of defendant L/CPL Smith
because, first of all, the VFA is void and unconstitutional.
This issue had been raised before, and this Court resolved in favor of the constitutionality
of the VFA. This was in Bayan v. Zamora,4 brought by Bayan, one of petitioners in the present
cases.
Against the barriers of res judicata vis-à-vis Bayan, and stare decisis vis-à-vis all the
parties, the reversal of the previous ruling is sought on the ground that the issue is of
primordial importance, involving the sovereignty of the Republic, as well as a specific mandate
of the Constitution.
_______________
3 Rollo, pp. 90-127.
4 G.R. No. 138570, October 10, 2000, 342 SCRA 449.
456
456 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
The provision of the Constitution is Art. XVIII, Sec. 25 which states:
“Sec. 25. After the expiration in 1991 of the Agreement between the Philippines and the
United States of America concerning Military Bases, foreign military bases, troops, or facilities
shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate
and, when the Congress so requires, ratified by a majority of the votes cast by the people in a
national referendum held for that purpose, and recognized as a treaty by the other contracting
State.”
The reason for this provision lies in history and the Philippine experience in regard to the
United States military bases in the country.
It will be recalled that under the Philippine Bill of 1902, which laid the basis for the
Philippine Commonwealth and, eventually, for the recognition of independence, the United
States agreed to cede to the Philippines all the territory it acquired from Spain under the Treaty
of Paris, plus a few islands later added to its realm, except certain naval ports and/or military
bases and facilities, which the United States retained for itself.
This is noteworthy, because what this means is that Clark and Subic and the other places
in the Philippines covered by the RP-US Military Bases Agreement of 1947 were not Philippine
territory, as they were excluded from the cession and retained by the US.
Accordingly, the Philippines had no jurisdiction over these bases except to the extent
allowed by the United States. Furthermore, the RP-US Military Bases Agreement was never
advised for ratification by the United States Senate, a disparity in treatment, because the
Philippines regarded it as a treaty and had it concurred in by our Senate.
Subsequently, the United States agreed to turn over these bases to the Philippines; and
with the expiration of the RP-US Military Bases Agreement in 1991, the territory covered by
these bases were finally ceded to the Philippines.457
VOL. 578, FEBRUARY 11, 2009 457
Nicolas vs. Romulo
To prevent a recurrence of this experience, the provision in question was adopted in the
1987 Constitution.
The provision is thus designed to ensure that any agreement allowing the presence of
foreign military bases, troops or facilities in Philippine territory shall be equally binding on the
Philippines and the foreign sovereign State involved. The idea is to prevent a recurrence of the
situation in which the terms and conditions governing the presence of foreign armed forces in
our territory were binding upon us but not upon the foreign State.
 Applying the provision to the situation involved in these cases, the question is whether or
not the presence of US Armed Forces in Philippine territory pursuant to the VFA is allowed
“under a treaty duly concurred in by the Senate xxx and recognized as a treaty by the other
contracting State.”
This Court finds that it is, for two reasons.
First, as held in Bayan v. Zamora,5 the VFA was duly concurred in by the Philippine Senate
and has been recognized as a treaty by the United States as attested and certified by the duly
authorized representative of the United States government.
The fact that the VFA was not submitted for advice and consent of the United States
Senate does not detract from its status as a binding international agreement or treaty
recognized by the said State. For this is a matter of internal United States law. Notice can be
taken of the internationally known practice by the United States of submitting to its Senate for
advice and consent agreements that are policymaking in nature, whereas those that carry out
or further implement these policymaking agreements are merely submitted to Congress,
_______________
5 Supra, note 4.
458
458 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
under the provisions of the so-called Case-Zablocki Act, within sixty days from ratification.6
The second reason has to do with the relation between the VFA and the RP-US Mutual
Defense Treaty of August 30, 1951. This earlier agreement was signed and duly ratified with
the concurrence of both the Philippine Senate and the United States Senate.
The RP-US Mutual Defense Treaty states:7
MUTUAL DEFENSE TREATY BETWEEN THE REPUBLIC OF THE PHILIPPINES AND THE UNITED
STATES OF AMERICA. Signed at Washington, August 30, 1951.
The Parties of this Treaty
Reaffirming their faith in the purposes and principles of the Charter of the United Nations
and their desire to live in peace with all peoples and all governments, and desiring to
strengthen the fabric of peace in the Pacific area.
Recalling with mutual pride the historic relationship which brought their two peoples
together in a common bond of sympathy
_______________
6 The Case-Zablocki Act, 1 U.S.C. 112b (a) (1976 ed., Supp IV). See also Weinberger v. Rossi,
456 U.S. 25 (1982), in which the U.S. Supreme Court sustained recognition as a “treaty” of
agreements not concurred in by the U.S. Senate.
7 The RP-US Mutual Defense Treaty was signed in Washington, D.C. on August 30, 1951.
Its ratification was advised by the US Senate on March 20, 1952, and the US President ratified
the Treaty on April 15, 1952.
The Treaty was concurred in by the RP Senate, S.R. No. 84, May 12, 1952. The Philippine
instrument of ratification was signed by the RP President on August 27, 1952. The Agreement
entered into force on August 27, 1952 upon the exchange of ratification between the Parties.
This Agreement is published in II DFA TS No. 1, p. 13; 177 UNTS, p. 133; 3 UST 3847-3952.
The RP Presidential proclamation of the Agreement, Proc. No. 341, S. 1952, is published in 48
O.G. 4224 (Aug. 1952).
459
VOL. 578, FEBRUARY 11, 2009 459
Nicolas vs. Romulo
and mutual ideals to fight side-by-side against imperialist aggression during the last war.
Desiring to declare publicly and formally their sense of unity and their common
determination to defend themselves against external armed attack, so that no potential
aggressor could be under the illusion that either of them stands alone in the Pacific area.
Desiring further to strengthen their present efforts for collective defense for the
preservation of peace and security pending the development of a more comprehensive
system of regional security in the Pacific area.
Agreeing that nothing in this present instrument shall be considered or interpreted as in
any way or sense altering or diminishing any existing agreements or understandings between
the Republic of the Philippines and the United States of America.
Have agreed as follows:
Article I. The parties undertake, as set forth in the Charter of the United Nations, to
settle any international disputes in which they may be involved by peaceful means in such a
manner that international peace and security and justice are not endangered and to refrain in
their international relation from the threat or use of force in any manner inconsistent with the
purposes of the United Nations.
Article II. In order more effectively to achieve the objective of this Treaty, the Parties
separately and jointly by self-help and mutual aid will maintain and develop their individual
and collective capacity to resist armed attack.
Article III. The Parties, through their Foreign Ministers or their deputies, will consult
together from time to time regarding the implementation of this Treaty and whenever in the
opinion of either of them the territorial integrity, political independence or security of either
of the Parties is threatened by external armed attack in the Pacific.
Article IV. Each Party recognizes that an armed attack in the Pacific area on either of the
parties would be dangerous to its own peace and safety and declares that it would act to meet
the common dangers in accordance with its constitutional processes.
Any such armed attack and all measures taken as a result thereof shall be immediately
reported to the Security Council of the460
460 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
United Nations. Such measures shall be terminated when the Security Council has taken the
measures necessary to restore and maintain international peace and security.
Article V. For the purpose of Article IV, an armed attack on either of the Parties is
deemed to include an armed attack on the metropolitan territory of either of the Parties, or
on the island territories under its jurisdiction in the Pacific Ocean, its armed forces, public
vessels or aircraft in the Pacific.
Article VI. This Treaty does not affect and shall not be interpreted as affecting in any way
the rights and obligations of the Parties under the Charter of the United Nations or the
responsibility of the United Nations for the maintenance of international peace and security.
Article VII. This Treaty shall be ratified by the Republic of the Philippines and the United
Nations (sic) of America in accordance with their respective constitutional processes and will
come into force when instruments of ratification thereof have been exchanged by them at
Manila.
Article VIII. This Treaty shall remain in force indefinitely. Either Party may terminate it
one year after notice has been given to the other party.
 In withness whereof the undersigned Plenipotentiaries have signed this Treaty. 462 SUPREME COURT REPORTS ANNOTATED
Done in duplicate at Washington this thirtieth day of August, 1951.
For the Republic of the Philippines: Nicolas vs. Romulo
(Sgd.) CARLOS P. ROMULO The provision of Art. XVIII, Sec. 25 of the Constitution, is complied with by virtue of the
(Sgd.) JOAQUIN M. ELIZALDE fact that the presence of the US Armed Forces through the VFA is a presence “allowed under”
(Sgd.) VICENTE J. FRANCISCO the RP-US Mutual Defense Treaty. Since the RP-US Mutual Defense Treaty itself has been
(Sgd.) DIOSDADO MACAPAGAL ratified and concurred in by both the Philippine Senate and the US Senate, there is no violation
For the United States of America: of the Constitutional provision resulting from such presence.
(Sgd.) DEAN ACHESON The VFA being a valid and binding agreement, the parties are required as a matter of
(Sgd.) JOHN FOSTER DULLES international law to abide by its terms and provisions.
(Sgd.) TOM CONNALLY The VFA provides that in cases of offenses committed by the members of the US Armed
(Sgd.) ALEXANDER WILEY8 Forces in the Philippines, the following rules apply:
_______________ Article V
Criminal Jurisdiction
8 Emphasis supplied. xxx
461 6. The custody of any United States personnel over whom the Philippines is to exercise
jurisdiction shall immediately reside with United States military authorities, if they so request,
VOL. 578, FEBRUARY 11, 2009 461 from the commission of the offense until completion of all judicial proceedings. United States
Nicolas vs. Romulo military authorities shall, upon formal notification by the Philippine authorities and without
Clearly, therefore, joint RP-US military exercises for the purpose of developing the delay, make such personnel available to those authorities in time for any investigative or
capability to resist an armed attack fall squarely under the provisions of the RP-US Mutual judicial proceedings relating to the offense with which the person has been charged. In
Defense Treaty. The VFA, which is the instrument agreed upon to provide for the joint RP-US extraordinary cases, the Philippine Government shall present its position to the United States
military exercises, is simply an implementing agreement to the main RP-US Military Defense Government regarding custody, which the United States Government shall take into full
Treaty. The Preamble of the VFA states: account. In the event Philippine judicial proceedings are not completed within one year, the
The Government of the United States of America and the Government of the Republic of the United States shall be relieved of any obligations under this paragraph. The one year period
Philippines, will not include the time necessary to appeal. Also, the one year period will not include any
Reaffirming their faith in the purposes and principles of the Charter of the United Nations and time during which scheduled trial procedures are delayed because United States authorities,
their desire to strengthen international and regional security in the Pacific area; after timely notification by Philippine authorities to arrange for the presence of the accused,
Reaffirming their obligations under the Mutual Defense Treaty of August 30, 1951; fail to do so.”
Noting that from time to time elements of the United States armed forces may visit the 463
Republic of the Philippines; VOL. 578, FEBRUARY 11, 2009 463
Considering that cooperation between the United States and the Republic of the Philippines
promotes their common security interests; Nicolas vs. Romulo
Recognizing the desirability of defining the treatment of United States personnel visiting the Petitioners contend that these undertakings violate another provision of the Constitution,
Republic of the Philippines; namely, that providing for the exclusive power of this Court to adopt rules of procedure for all
Have agreed as follows:”9 courts in the Philippines (Art. VIII, Sec. 5[5]). They argue that to allow the transfer of custody
Accordingly, as an implementing agreement of the RP-US Mutual Defense Treaty, it was of an accused to a foreign power is to provide for a different rule of procedure for that accused,
not necessary to submit the VFA to the US Senate for advice and consent, but merely to the which also violates the equal protection clause of the Constitution (Art. III, Sec. 1.).
US Congress under the Case–Zablocki Act within 60 days of its ratification. It is for this reason Again, this Court finds no violation of the Constitution.
that the US has certified that it recognizes the VFA as a binding international agreement, i.e., The equal protection clause is not violated, because there is a substantial basis for a
a treaty, and this substantially complies with the requirements of Art. XVIII, Sec. 25 of our different treatment of a member of a foreign military armed forces allowed to enter our
Constitution.10 territory and all other accused.11
_______________ The rule in international law is that a foreign armed forces allowed to enter one’s territory
is immune from local jurisdiction, except to the extent agreed upon. The Status of Forces
Agreements involving foreign military units around the world vary in terms and conditions,
9 Emphasis supplied.
according to the situation of the parties involved, and reflect their bargaining power. But the
10 See Letter of Ambassador Thomas C. Hubbard quoted in Bayan, 342 SCRA 449, 491
principle remains, i.e., the receiving State can exercise jurisdiction over the forces of the
(2000).
sending State only to the extent agreed upon by the parties.12
462
 As a result, the situation involved is not one in which the power of this Court to adopt rules
of procedure is curtailed or violated, but rather one in which, as is normally encountered
around the world, the laws (including rules of procedure) of one State do not extend or apply—
except to the extent agreed upon—to subjects of another State due to the recognition of
extraterritorial immunity given to such bodies as visiting foreign armed forces.
_______________
11 See, the summation of the rule on equal protection in Isagani A. Cruz, Constitutional
Law, pp. 123-139 (2007), and the authorities cited therein.
12 See Dieter Fleck, Ed., The Handbook of the Law of Visiting Forces, Oxford: 2001.
464
464 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
Nothing in the Constitution prohibits such agreements recognizing immunity from
jurisdiction or some aspects of jurisdiction (such as custody), in relation to long-recognized
subjects of such immunity like Heads of State, diplomats and members of the armed forces
contingents of a foreign State allowed to enter another State’s territory. On the contrary, the
Constitution states that the Philippines adopts the generally accepted principles of
international law as part of the law of the land. (Art. II, Sec. 2).
Applying, however, the provisions of VFA, the Court finds that there is a different
treatment when it comes to detention as against custody. The moment the accused has to be
detained, e.g., after conviction, the rule that governs is the following provision of the VFA:
Article V
Criminal Jurisdiction
xxx
Sec. 10. The confinement or detention by Philippine authorities of United States
personnel shall be carried out in facilities agreed on by appropriate Philippines and United
States authorities. United States personnel serving sentences in the Philippines shall have the
right to visits and material assistance.
It is clear that the parties to the VFA recognized the difference between custody during
the trial and detention after conviction, because they provided for a specific arrangement to
cover detention. And this specific arrangement clearly states not only that the detention shall
be carried out in facilities agreed on by authorities of both parties, but also that the detention
shall be “by Philippine authorities.” Therefore, the Romulo-Kenney Agreements of December
19 and 22, 2006, which are agreements on the detention of the accused in the United States
Embassy, are not in accord with the VFA itself because such detention is not “by Philippine
authorities.”465
VOL. 578, FEBRUARY 11, 2009 465
Nicolas vs. Romulo
Respondents should therefore comply with the VFA and negotiate with representatives of
the United States towards an agreement on detention facilities under Philippine authorities as
mandated by Art. V, Sec. 10 of the VFA.
Next, the Court addresses the recent decision of the United States Supreme Court
in Medellin v. Texas (552 US ___ No. 06-984, March 25, 2008), which held that treaties entered
into by the United States are not automatically part of their domestic law unless these treaties
are self-executing or there is an implementing legislation to make them enforceable.
On February 3, 2009, the Court issued a Resolution, thus:
“G.R. No. 175888 (Suzette Nicolas y Sombilon v. Alberto Romulo, et al.); G.R. No. 176051
(Jovito R. Salonga, et al. v. Daniel Smith, et al.); and G.R. No. 176222 (Bagong Alyansang
Makabayan [BAYAN], et al. v. President Gloria Macapagal-Arroyo, et al.).
The parties, including the Solicitor General, are required to submit within three (3) days a
Comment/Manifestation on the following points:
1. What is the implication on the RP-US Visiting Forces Agreement of the recent US
Supreme Court decision in Jose Ernesto Medellin v. Texas, dated March 25, 2008, to the effect
that treaty stipulations that are not self-executory can only be enforced pursuant to legislation
to carry them into effect; and that, while treaties may comprise international commitments,
they are not domestic law unless Congress has enacted implementing statutes or the treaty
itself conveys an intention that it be “self-executory” and is ratified on these terms?
2. Whether the VFA is enforceable in the US as domestic law, either because it is self-
executory or because there exists legislation to implement it.
3. Whether the RP-US Mutual Defense Treaty of August 30, 1951 was concurred in by
the US Senate and, if so, is there proof of the US Senate advice and consent resolution? Peralta,
J., no part.”
After deliberation, the Court holds, on these points, as follows:466
466 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
First, the VFA is a self-executing Agreement, as that term is defined in Medellin itself,
because the parties intend its provisions to be enforceable, precisely because the Agreement
is intended to carry out obligations and undertakings under the RP-US Mutual Defense Treaty.
As a matter of fact, the VFA has been implemented and executed, with the US faithfully
complying with its obligation to produce L/CPL Smith before the court during the trial.
Secondly, the VFA is covered by implementing legislation, namely, the Case-Zablocki Act,
USC Sec. 112(b), inasmuch as it is the very purpose and intent of the US Congress that executive
agreements registered under this Act within 60 days from their ratification be immediately
implemented. The parties to these present cases do not question the fact that the VFA has
been registered under the Case-Zablocki Act.
In sum, therefore, the VFA differs from the Vienna Convention on Consular Relations and
the Avena decision of the International Court of Justice (ICJ), subject matter of
the Medellin decision. The Convention and the ICJ decision are not self-executing and are not
registrable under the Case-Zablocki Act, and thus lack legislative implementing authority.
Finally, the RP-US Mutual Defense Treaty was advised and consented to by the US Senate
on March 20, 1952, as reflected in the US Congressional Record, 82nd Congress, Second
Session, Vol. 98–Part 2, pp. 2594-2595.
The framers of the Constitution were aware that the application of international law in
domestic courts varies from country to country.
As Ward N. Ferdinandusse states in his Treatise, DIRECT APPLICATION OF INTERNATIONAL
CRIMINAL LAW IN NATIONAL COURTS, some countries require legislation whereas others do
not.
It was not the intention of the framers of the 1987 Constitution, in adopting Article XVIII, Sec.
25, to require the other contracting State to convert their system to achieve align-467
VOL. 578, FEBRUARY 11, 2009 467
Nicolas vs. Romulo
ment and parity with ours. It was simply required that the treaty be recognized as a treaty by
the other contracting State. With that, it becomes for both parties a binding international
obligation and the enforcement of that obligation is left to the normal recourse and processes
under international law.
Furthermore, as held by the US Supreme Court in Weinberger v. Rossi,13 an executive
agreement is a “treaty” within the meaning of that word in international law and constitutes
enforceable domestic law vis-à-vis the United States. Thus, the US Supreme Court
in Weinberger enforced the provisions of the executive agreement granting preferential
employment to Filipinos in the US Bases here.
Accordingly, there are three types of treaties in the American system:
1. Art. II, Sec. 2 treaties—These are advised and consented to by the US Senate in
accordance with Art. II, Sec. 2 of the US Constitution.
2. Executive–Congressional Agreements: These are joint agreements of the President
and Congress and need not be submitted to the Senate.
3. Sole Executive Agreements.—These are agreements entered into by the President.
They are to be submitted to Congress within sixty (60) days of ratification under the provisions
of the Case-Zablocki Act, after which they are recognized by the Congress and may be
implemented.
As regards the implementation of the RP-US Mutual Defense Treaty, military aid or
assistance has been given under it and this can only be done through implementing legislation.
The VFA itself is another form of implementation of its provisions.
WHEREFORE, the petitions are PARTLY GRANTED, and the Court of Appeals’ Decision in
CA-G.R. SP No. 97212 dated
_______________

13 Supra, Note 6.
468
468 SUPREME COURT REPORTS ANNOTATED
Nicolas vs. Romulo
January 2, 2007 is MODIFIED. The Visiting Forces Agreement (VFA) between the Republic of
the Philippines and the United States, entered into on February 10, 1998, is UPHELD as
constitutional, but the Romulo-Kenney Agreements of December 19 and 22, 2006 are
DECLARED not in accordance with the VFA, and respondent Secretary of Foreign Affairs is
hereby ordered to forthwith negotiate with the United States representatives for the
appropriate agreement on detention facilities under Philippine authorities as provided in Art.
V, Sec. 10 of the VFA, pending which the status quo shall be maintained until further orders by
this Court.
The Court of Appeals is hereby directed to resolve without delay the related matters
pending therein, namely, the petition for contempt and the appeal of L/CPL Daniel Smith from
the judgment of conviction.
No costs.
SO ORDERED.
 No. L-14279. October 31, 1961.
THE COMMISSIONER OF CUSTOMS and THE COLLECTOR OF CUSTOMS,
petitioners, vs. EASTERN SEA TRADING,respondent.
Import and export; Central Bank; Authority to regulateno-dollar imports.—The Central
Bank has authority to regulate no-dollar imports, because its broad powers, under the charter,
to maintain monetary stability and to preserve the international value of the currency, under
section 2 of Republic Act No. 265, in relation to section 14 of said Act—authorizing the bank to
issue such rules and regulations as it may consider necessary for the effective discharge of the
responsibilities and the exercise of the powers assigned to the Monetary Board and to the
Central Bank—connote the authority to regulate no-dollar imports, owing to the influence and
effect that the same may and do have upon the stability of the peso and its international value.
Same; Issuance of import licenses not vested exclusively upon Import Control
Commission.—The authority to issue import licenses was not vested exclusively upon the
Import Control Commission, because Executive Order No. 328 provided for export or import
licenses “from the Central Bank of the Philippines or the Import Control Administration” or
Commission. The latter was created only to perform the task of implementing certain
objectives of the Monetary Board and the Central Bank, which otherwise had to be undertaken
by these two (2) agencies. Upon the abolition of said Commission, the duty to provide means
and ways for the accomplishment of said objectives had merely to be discharged directly by
the Monetary Board and the Central Bank, even if the aforementioned Executive Order had
been silent thereon.
Constitutional law; Executive agreement; Concurrence of Senate not required.—While
the concurrence of the Senate is required by the Constitution in the making of “treaties”
(Constitution of the Phil., Article VII, Section 10 [7], “executive agreements” may be validly
entered into without such concurrence.
PETITION for review of a judgment of the Court of Tax Appeals.
The facts are stated in the opinion of the Court.
Solicitor General for petitioners.
Valentin Gutierrez for respondent.
CONCEPCION, J.:
Petition for review of a judgment of the Court of Tax Appeals reversing a decision of the
Commissioner of Customs.
Respondent Eastern Sea Trading was the consignee of several shipments of onion and
garlic which arrived at the Port of Manila from August 25 to September 7, 1954. Some
shipments came from Japan and others from Hong
353
VOL. 3, OCTOBER 31, 1961 353
Commissioner of Customs vs. Eastern Sea Trading
Kong. Inasmuch as none of the shipments had the certificate required by Central Bank Circulars
Nos. 44 and 45 for the release thereof, the goods thus imported were seized and subjected to
forfeiture proceedings for alleged violations of section 1363 (f) of the Revised Administrative
Code, in relation to the aforementioned circulars of the Central Bank. In due course, the
Collector of Customs of Manila rendered a decision on September 4, 1956, declaring said goods
forfeited to the Government and—the goods having been, in the meantime, released to the
consignees on surety bonds, filed by the same, as principal, and the Alto Surety & Insurance
Co., Inc., as surety, in compliance with orders of the Court of First Instance of Manila, in Civil
Cases Nos. 23942 and 23852 thereof—directing that the amounts of said bonds be paid, by
said principal and surety, jointly and severally, to the Bureau of Customs, within thirty (30) days
from notice.
On appeal taken by the consignee, said decision was affirmed by the Commissioner of
Customs on December 27, 1956. Subsequently, the consignee sought a review of the decision
of said two (2) officers by the Court of Tax Appeals, which reversed the decision of the
Commissioner of Customs and ordered that the aforementioned bonds be cancelled and
withdrawn. Hence, the present petition of the Commissioner of Customs for review of the
decision of the Court of Tax Appeals.
The latter is based upon the following premises, namely: that the Central Bank has no
authority to regulate transactions not involving foreign exchange; that the shipments in
question are in the nature of “no-dollar” imports; that, as such, the aforementioned shipments
do not involve foreign exchange; that, insofar as a Central Bank license and a certificate
authorizing the importation or release of the goods under consideration are required by
Central Bank Circulars Nos. 44 and 45, the latter are null and void; and that the seizure and
forfeiture of the goods imported from Japan cannot be justified under Executive Order No.
328,1 not only because the same seeks to implement an executive
_______________
1
Dated June 22, 1950. It provides, inter alia, that from and after said date, no commodity
may be exported to or im-
354
354 SUPREME COURT REPORTS ANNOTATED
Commissioner of Customs vs. Eastern Sea Trading
agreement2—extending the effectivity of our Trade3 and Financial Agreements4 with Japan—
which (executive
______________
ported from Occupied Japan without an export or import license from the Central Bank of
the Philippines or the Import Control Administration, and that the annual exports and imports
to the Philippines and from Occupied Japan, as contained in the Trade Plan shall be allocated
and the licenses therefor shall be issued only to bona fide Philippine exporters and importers,
subject to the provisions of section 9 of said Executive Order and to such rules and regulations
as may be prescribed by the Import Control Administration and the Central Bank of the
Philippines.
2 According to a communication dated April 24, 1957 of the then Acting Secretary of
Foreign Affairs (Exhibit F), Japan was subrogated into the rights, obligations and interests of
the SCAP and Japan on March 19, 1952, and since then the agreements have been
extended mutatis mutandis 18 times, the current one to expire at the end of April, 1957.
3 The Trade Agreement, dated May 18, 1950, provides, inter alia, for the adoption of a
trade plan, on an annual basis, between the Philippines and Occupied Japan; that, subject to
exceptions, all trade shall be conducted in accordance with the Financial Agreement between
the two countries, and through specified channels; that subject to exchange, import and export
control restrictions, both countries would permit the importation from and exportation to
each other of the commodities specified in the trade plan, within specified limits; that
consultations would be held for necessary modifications of the trade plan; that a machinery
would be established to ensure accurate and up-to-date information regarding the operation
of the agreement and to insure the implementation of the trade plan; and that the parties
would do everything feasible to ensure compliance with the export-import control, exchange
control and such other controls pertaining to international trade as may be in force in their
respective territories from time to time. The agreement, likewise, specifies the method of
revision or cancellation thereof, the procedure for the review of the trading position between
the parties and the time of its effectivity (upon “exchange of formal ratification”, pending
which, “it shall take effect upon signature by authorized representatives as modus
vivendi between the parties”).
4 The Financial Agreement, dated May 18, 1950, provides, inter alia, that all transactions
covered by the Trade Agreement shall be invoiced in U.S.A. dollars and shall be entered into
the account of each party to be maintained in the books of the principal financial agent banks
designated by each party; that debits and credits shall be offset against each other in said
accounts and payments shall be made on the net balance only;
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VOL. 3, OCTOBER 31, 1961 355
Commissioner of Customs vs. Eastern Sea Trading
agreement), it believed, is of dubious validity, but, also, because there is no governmental
agency authorized to issue the import license required by the aforementioned executive order.
The authority of the Central Bank to regulate no-dollar imports and the validity of the
aforementioned Circulars Nos. 44, and 45 have already been passed upon and repeatedly
upheld by this Court (Pascual vs. Commissioner of Customs, L-10979 [June 30, 1959]; Acting
Commissioner of Customs vs. Leuterio, L-9142 [October 17, 1959] Commissioner of Customs
vs. Pascual, L-9836 [November 18, 1959]; Commissioner of Customs vs. Serree Investment
Co., L-12007 [May 16, 1960]; Commissioner of Customs vs. Serree Investment Co., L-
14274 [November 29, 1960]), for the reason that the broad powers of the Central Bank, under
its charter, to maintain our monetary stability and to preserve the international value of our
currency, under section 2 of Republic Act No. 265, in relation to section 14 of said Act—
authorizing the bank to issue such rules and regulations as it may consider necessary for the
effective discharge of the responsibilities and the exercise of the powers assigned to the
Monetary Board and to the Central Bank—connote the authority to regulate no-dollar imports,
owing to the influence and effect that the same may and do have upon the stability of our peso
and its international value.
The Court of Tax Appeals entertained doubts on the legality of the executive agreement
sought to be implemented by Executive Order No. 328, owing to the fact that our Senate had
not concurred in the making of said executive agreement. The concurrence of said House of
Congress is required by our fundamental law in the making of “treaties” (Constitution of the
Philippines, Article VII, Section 10 [7]), which are, however, distinct and different from
“executive agreements,” which may be validly entered into without such concurrence.
“Treaties are formal documents which require ratification with the approval of two thirds of
the Senate. Executive agreements become binding through executive action without the need
of a vote by the Senate or by Congress.
x x x x
“x x x the right of the Executive to enter into binding agreements withoutthe necessity of
subsequent Congressional approval has been confirmed by long usage. From the earliest days
of our history we have entered into executive agreements covering such subjects as
commercial and consular relations, most-favored-nation rights, patent rights, trademark and
copyright protection, postal and navigation arrangements and the settlement of claims. The
validity of these has never been seriously questioned by our courts.
x x x x
“Agreements with respect to the registration of trade-marks have been concluded by the
Executive with various countries under the Act of Congress of March 3, 1881 (21 Stat. 502).
Postal conventions regulating the reciprocal treatment of mail matters, money orders, parcel
post, etc., have been concluded by the Postmaster General with various countries under
authorization by Congress beginning with the Act of February 20, 1792 (1 Stat. 232, 239). Ten
executive agreements were concluded by the President pursuant to the McKinley Tariff Act of
1890 (26 Stat. 567, 612), and nine such agreements were entered into under the Dingley Tariff
Act 1897 (30 Stat. 151, 203, 214). A very much larger number of agreements, along the lines
of the one with Rumania previously referred to, providing for most-favored-nation treatment
in customs and related matters have been entered into since the passage of the Tariff Act of
1922, not by direction of the Act but in harmony with it.
x x x x
“International agreements involving political issues or changes of national policy and those
involving international arrangements of a permanent character usually take the form of
treaties. But international agreements embodying adjustments of detail carrying out well-
established national policies and traditions and those involving arrangements of a more or
less temporary nature usually take the form of executive agreements.
x x x x
“Furthermore, the United States Supreme Court has expressly recognized the validity and
constitutionality of executive agreements entered into without Senate approval.” (39
Columbia Law Review, pp. 753-754) (See, also, U.S. vs. CurtisWright Export Corporation, 299
U.S. 304, 81 L. ed. 255; U.S. vs. Belmont, 301 U.S. 324, 81 L. ed. 1134; U.S. vs. Pink, 315 U.S.
203, 86 L. ed. 796; Ozanic vs. U.S., 188 F. 2d. 288; Yale Law Journal, Vol. 15, pp. 1905-1906;
California Law Review, Vol.
357
VOL. 3, OCTOBER 31, 1961 357
Commissioner of Customs vs. Eastern Sea Trading
25, pp. 670-675; Hyde on International Law [Revised Edition], Vol. 2, pp. 1405, 1416-1418;
Willoughby on the U.S. Constitutional Law, Vol. I [2d ed.], pp. 537-540; Moore, International
Law Digest, Vol. V, pp. 210-218; Hackworth, International Law Digest, Vol. V, pp. 390-407).
(Italics supplied.)
In this connection, Francis B. Sayre, former U.S. High Commissioner to the Philippines, said in
his work on “The Constitutionality of Trade Agreement Acts”:
“Agreements concluded by the President which fall short of treaties are commonly referred to
as executive agreements and are no less common in our scheme of government than are the
more formal instruments—treaties and conventions. They sometimes take the form of
exchanges of notes and at other times that of more formal documents denominated
‘agreements’ or ‘protocols’. The point where ordinary correspondence between this and other
governments ends and agreements—whether denominated executive agreements or
exchanges of notes or otherwise—begin, may sometimes be difficult of ready ascertainment.
It would be useless to undertake to discuss here the large variety of executive agreements as
such, concluded from time to time. Hundreds of executive agreements, other than those
entered into under the trade-agreements act, have been negotiated with foreign
governments. x x x It would seem to be sufficient, in order to show that the trade agreements
under the act of 1934 are not anomalous in character, that they are not treaties, and that they
have abundant precedent in our history, to refer to certain classes of agreements heretofore
entered into by the Executive without the approval of the Senate. They cover such subjects as
the inspection of vessels, navigation dues, income tax on shipping profits, the admission of civil
aircraft, customs matters, and commercial relations generally, international claims, postal
matters, the registration of trademarks and copyrights, etcetera. Some of them were
concluded not by specific congressional authorization but in conformity with policies declared
in acts of Congress with respect to the general subject matter, such as tariff acts; while still
others, particularly those with respect of the settlement of claims against foreign
governments, were concluded independently of any legislation.” (39 Columbia Law Review,
pp. 651, 755.)
The validity of the executive agreement in question is thus patent. In fact, the so-called Parity
Rights provided for in the Ordinance Appended to our Constitution were, prior thereto, the
subject of an executive agreement, made without the concurrence of two-thirds (2/3) of the
Senate of the United States.
Lastly, the lower court held that it would be unreason
358
358 SUPREME COURT REPORTS ANNOTATED
Commissioner of Customs vs. Eastern Sea Trading
able to require from respondent-appellee an import license when the Import Control
Commission was no longer in existence and, hence, there was, said court believed, no agency
authorized to issue the aforementioned license. This conclusion is untenable, for the authority
to issue the aforementioned licenses was not vested exclusively upon the Import Control
Commission or Administration. Executive Order No. 328 provided for export or import licenses
“from the Central Bank of the Philippines or the Import Control Administration” or
Commission. Indeed, the latter was created only to perform the task of implementing certain
objectives of the Monetary Board and the Central Bank, which otherwise had to be undertaken
by these two (2) agencies. Upon the abolition of said Commission, the duty to provide means
and ways for the accomplishment of said objectives had merely to be discharged directly by
the Monetary Board and the Central Bank, even if the aforementioned Executive Order had
been silent thereon.
WHEREFORE, the decision appealed from is hereby reversed and another one shall be
entered affirming that of the Commissioner of Customs, with costs against respondent-
appellee, Eastern Sea Trading. It is so ordered.
 G.R. No. 204605. July 19, 2016.*
INTELLECTUAL PROPERTY ASSOCIATION OF THE PHILIPPINES, petitioner, vs. HON. PAQUITO
OCHOA, in his capacity as Executive Secretary, HON. ALBERT DEL ROSARIO, in his capacity as
Secretary of the Department of Foreign Affairs, and HON. RICARDO BLANCAFLOR, in his
capacity as the Director General of the Intellectual Property Office of the Philippines,
respondents.
Remedial Law; Civil Procedure; Locus Standi; Words and Phrases; Legal standing refers
to “a right of appearance in a court of justice on a given question.”—Legal standing refers to
“a right of appearance in a court of justice on a given question.” According to Agan, Jr. v.
Philippine International Air Terminals Co., Inc., 402 SCRA 612 (2003), standing is “a peculiar
concept in constitutional law because in some cases, suits are not brought by parties who have
been personally injured by the operation of a law or any other government act but by
concerned citizens, taxpayers or voters who actually sue in the public interest.”
Department of Foreign Affairs; Jurisdiction; In the Philippines, the Department of Foreign
Affairs (DFA), by virtue of Section 9, Executive Order (EO) No. 459, is initially given the power
to determine whether an agreement is to be treated as a treaty or as an executive
agreement.—In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459, is
initially given the power to determine whether an agreement is to be treated as a treaty or as
an executive agreement. To determine the issue of whether DFA Secretary Del Rosario gravely
abused his discretion in making his determination relative to the Madrid Protocol, we review
the jurisprudence on the nature of executive agreements, as well as the subject matters to be
covered by executive agreements.
Mercantile Law; Trademarks; Copyrights; Executive Agreements; The registration of
trademarks and copyrights have been the subject of executive agreements entered into without
the concurrence
_______________
* EN BANC.
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Intellectual Property Association of the Philippines vs. Ochoa
of the Senate.—The registration of trademarks and copyrights have been the subject of
executive agreements entered into without the concurrence of the Senate. Some executive
agreements have been concluded in conformity with the policies declared in the acts of
Congress with respect to the general subject matter.
Same; Intellectual Properties; Trademarks; Madrid Protocol; Department of Foreign
Affairs (DFA) Secretary Del Rosario’s determination and treatment of the Madrid Protocol as
an executive agreement, being in apparent contemplation of the express state policies on
intellectual property as well as within his power under Executive Order (EO) No. 459, are
upheld.—DFA Secretary Del Rosario’s determination and treatment of the Madrid Protocol as
an executive agreement, being in apparent contemplation of the express state policies on
intellectual property as well as within his power under Executive Order No. 459, are upheld.
We observe at this point that there are no hard and fast rules on the propriety of entering into
a treaty or an executive agreement on a given subject as an instrument of international
relations. The primary consideration in the choice of the form of agreement is the parties’
intent and desire to craft their international agreement in the form they so wish to further
their respective interests. The matter of form takes a back seat when it comes to effectiveness
and binding effect of the enforcement of a treaty or an executive agreement, inasmuch as all
the parties, regardless of the form, become obliged to comply conformably with the time-
honored principle of pacta sunt servanda. The principle binds the parties to perform in good
faith their parts in the agreements.
Same; Same; Same; Same; The Madrid Protocol does not amend or modify the
Intellectual Property Code of the Philippines (IP Code) on the acquisition of trademark rights
considering that the applications under the Madrid Protocol are still examined according to the
relevant national law. In that regard, the Intellectual Property Office of the Philippines (IPOPHL)
will only grant protection to a mark that meets the local registration requirements.—The IPAP
misapprehends the procedure for examination under the Madrid Protocol. The difficulty,
which the IPAP illustrates, is minimal, if not altogether inexistent. The IPOPHL actually requires
the designation of the resident agent when it refuses the registration of a mark. Local
representation is further required in the submission of the
136
136 SUPREME COURT REPORTS ANNOTATED
Intellectual Property Association of the Philippines vs. Ochoa
Declaration of Actual Use, as well as in the submission of the license contract.
The Madrid Protocol accords with the intent and spirit of the IP Code, particularly on the
subject of the registration of trademarks. The Madrid Protocol does not amend or modify the
IP Code on the acquisition of trademark rights considering that the applications under
the Madrid Protocol are still examined according to the relevant national law. In that regard,
the IPOPHL will only grant protection to a mark that meets the local registration requirements
.
BRION, J., Separate Concurring Opinion:
Madrid Protocol; Executive Agreements; View that the Madrid Protocol is valid and
effective in the Philippines as an executive agreement that the President can enter into without
need of Senate concurrence. The reason, stated at its simplest, is that the President was merely
implementing a policy previously approved through a law by Congress, when he signed the
Madrid Protocol as an executive agreement.—Section 21, Article VII of the 1987 Constitution
is a reflection of this setup. It is a carefully worded provision in the Constitution made to ensure
that the President’s prerogative in the conduct of international affairs is subject to the check
and balance by the Senate, requiring that the Senate first concur in international agreements
that the President enters into before they take effect in the Philippines. Under this regime,
the Madrid Protocol is valid and effective in the Philippines as an executive agreement that the
President can enter into without need of Senate concurrence. The reason, stated at its
simplest, is that the President was merely implementing a policy previously approved through
a law by Congress, when he signed the Madrid Protocol as an executive agreement. The
obligations under the Madrid Protocol are thus valid and effective in the Philippines for having
been made pursuant to the exercise of the President’s executive powers.
Political Law; Separation of Powers; View that the Philippine government operates under
the complementary principles of separation of powers and checks and balances.—The
Philippine government operates under the complementary principles of separation of powers
and checks and balances. The three functions of government are concentrated in its three
great branches, with each branch supreme in its own sphere: the Legislaturepossesses the
power to create laws that are binding in the Philippines, which the Executive has
137
VOL. 797, JULY 19, 2016 137
Intellectual Property Association of the Philippines vs. Ochoa
the duty to implement and enforce. The Judiciary, on the other hand, resolves conflicts
that may arise from the implementation of these laws and, on occasion, nullifies acts of
government (whether legislative or executive) that have been made with grave abuse of
discretion under the Court’s expanded jurisdiction in Article VIII, Section 1 of the 1987
Constitution. That each branch of government is supreme in its own sphere does not, however,
mean that they no longer interact with or are isolated from one another in the exercise of their
respective duties. To be sure, one branch cannot usurp the power of another without violating
the principle of separation of powers, but this is not an absolute rule; rather, it is a rule that
operates hand in hand with arrangements that allow the participation of one branch in another
branch’s action under the system of checks and balances that the Constitution itself provides.
The Constitution in fact imposes such joint action so that one branch can check and balance
the actions of the other, to ensure public accountability and guard against the tyrannical
concentration of power.
Same; Treaties; View that while a treaty ratified by the President is binding upon the
Philippines in the international plane, it would need the concurrence of the legislature before it
can be considered as valid and effective in the Philippine domestic jurisdiction.—While a treaty
ratified by the President is binding upon the Philippines in the international plane, it would
need the concurrence of the legislature before it can be considered as valid and effective in
the Philippine domestic jurisdiction. Prior to and even without concurrence, the treaty, once
ratified, is valid and binding upon the Philippines in the international plane. But in order to take
effect in the Philippine domestic plane, it would have to first undergo legislative concurrence
as required under the Constitution.
Same; International Agreements; View that in the international sphere, the term
international agreement covers both a treaty, an executive agreement, or by whatever name
or title an agreement may be called, as long as it is concluded between States, is in written
form, and is governed by international law.—In the international sphere, the term
international agreement covers both a treaty, an executive agreement, or by whatever name
or title an agreement may be called, as long as it is concluded between States, is in written
form, and is governed by international law. Thus, the Vienna Convention on the Law on treaties
provide: Article 2. Section 1(a) “Treaty” means
138
138 SUPREME COURT REPORTS ANNOTATED
Intellectual Property Association of the Philippines vs. Ochoa
an international agreement concluded between States in written form and governed by
International Law, whether embodied in a single instrument or in two or more related
instruments and whatever its particular designation. The Philippines was a signatory of the
Vienna Convention at the time the 1986 Constitutional Commission deliberated on and crafted
the 1987 Constitution. Deliberations of the Constitutional Commission even referred to the
Vienna Convention on treaties while discussing what is now Article VII, Section 21.
Same; Executive Agreements; View that an executive agreement, when examined under
the definition of what constitutes a treaty under the Vienna Convention on Treaties, falls within
the Convention’s definition.—Despite the attempt in the 1987 Constitution to ensure that all
international agreements, regardless of designation, be the subject of Senate concurrence, the
Constitution likewise acknowledged that the President can enter into executive agreements
that the Senate no longer needs to concur in. An executive agreement, when examined under
the definition of what constitutes a treaty under the Vienna Convention on Treaties, falls
within the Convention’s definition. An executive agreement as used in Philippine law is
definitely “an international agreement concluded between States in written form and
governed by International Law, whether embodied in a single instrument or in two or more
related instruments and whatever its particular designation[.]” The confusion that the
seemingly differing treatment of executive agreement brings, however, is more apparent than
real when it is considered that both instruments — a treaty and an executive agreement —
both have constitutional recognition that can be reconciled: an executive agreement is an
exception to the Senate concurrence requirement of Article VII, Section 21 of the 1987
Constitution; it is an international agreement that does not need Senate concurrence to be
valid and effective in the Philippines. Its exceptional character arises from the reality that the
Executive possesses the power and duty to execute and implement laws which, when
considered together with the President’s foreign affairs powers, authorizes the President to
agree to international obligations that he can already implement as Chief Executive of the
Philippine government. In other words, the President can ratify as executive agreements those
obligations that he can already execute and implement because they already carry prior
legislative authorization, or have already gone through the
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treaty-making process under Article VII, Section 21 of the 1987 Constitution.
Same; Same; Treaties; View that treaties, which have the impact of statutory law in the
Philippines, can amend or prevail over prior statutory enactments. Executive agreements —
which are at the level of implementing rules and regulations or administrative orders in the
domestic sphere — have no such effect.—Treaties are international agreements that need
concurrence from the Senate. They do not originate solely from the President’s duty as the
executor of the country’s laws, but from the shared function that the Constitution mandated
between the President and the Senate under Article VII, Section 21 of the 1987 Constitution.
Between the two, a treaty exists on a higher plane as it carries the authority of the President
and the Senate. Treaties, which have the impact of statutory law in the Philippines, can amend
or prevail over prior statutory enactments. Executive agreements — which are at the level of
implementing rules and regulations or administrative orders in the domestic sphere — have
no such effect. These cannot contravene or amend statutory enactments and treaties.
Same; Same; Same; International Agreements; View that when an international
agreement merely implements an existing agreement, it is properly in the form of an executive
agreement. In contrast, when an international agreement involves the introduction of a new
subject matter or an amendment of existing agreements or laws, then it should properly be in
the form of a treaty.—When an international agreement merely implements an existing
agreement, it is properly in the form of an executive agreement. In contrast, when an
international agreement involves the introduction of a new subject matter or an amendment
of existing agreements or laws, then it should properly be in the form of a treaty. Otherwise,
the enforceability of this international agreement in the domestic sphere should be carefully
examined, as it carries no support from the legislature. To emphasize, should an executive
agreement amend or contravene statutory enactments and treaties, then it is void and cannot
be enforced in the Philippines; the Executive who issued it had no authority to issue an
instrument that is contrary to or outside of a legislative act or a treaty. In this sense, an
executive agreement that creates new obligations or amends existing ones, has been issued
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with grave abuse of discretion amounting to a lack of or excess of jurisdiction, and can
be judicially nullified through judicial review.
Same; Same; Madrid Protocol; View that under the Madrid System, a person can register
his trademark internationally by filing for an international registration of his trademark in one
of the contracting parties (CP) under the Madrid System.—Applying these standards to the
contents of the Madrid Protocol, I find that the obligations in this international agreement may
be the subject of an executive agreement. The Madrid Protocol facilitates the Philippines’
entry to the Madrid System. Under the Madrid System, a person can register his trademark
internationally by filing for an international registration of his trademark in one of the
contracting parties (CP) under the Madrid System. Once a person has filed for or acquired a
trademark with the IPO in his country of origin (that is also a CP), he can file for the
international recognition of his trademark with the same office.
Same; Same; Same; Trademarks; View that the Madrid Protocol does not replace the
procedure for the registration of trademarks under the Intellectual Property Code of the
Philippines (IP Code); neither does it impose or change the substantive requirements for the
grant of a trademark.—A foreign national may, in applying for an international registration of
his trademark, include the Philippines as among the jurisdictions with which he seeks to
register his trademark. Upon receipt of his application from the IPO of his country of origin,
the WIPO would forward the application to the Philippine Intellectual Property Office (IPOPHL).
The IPOPHL would then conduct a substantive examination of the application, and determine
whether the trademark may be registered under Philippine law. Note, at this point, that the
Madrid Protocol does not replace the procedure for the registration of trademarks under the
IP Code; neither does it impose or change the substantive requirements for the grant of a
trademark. Whether through the mechanism under the Madrid Protocol or the IP Code, the
requirements for a successful trademark registration remain the same.
Same; Same; Same; View that the trademark registration filed through the Madrid
Protocol is valid for ten (10) years from the date of registration, the same period of protection
granted to registrants
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under the Intellectual Property Code of the Philippines (IP Code).—Upon receipt and
examination of this application, the IPOPHL Still possesses the discretion to grant or deny the
same. The applicant or registrant (whether through the Madrid Protocol or the traditional
means under the IP Code) would also still have to file a declaration of actual use of mark with
evidence to that affect within three years from the filing date of the application, otherwise, its
registration shall be cancelled. The trademark registration filed through the Madrid Protocol is
valid for ten years from the date of registration, the same period of protection granted to
registrants under the IP Code.
Same; Same; Same; View that the registration process under the Madrid Protocol would,
in effect, dispense with the requirement of naming a domestic representative for foreign
nationals not domiciled in the Philippines upon filing his application for trademark registration,
as mandated in Section 124 of the Intellectual Property Code of the Philippines (IP Code).—
Since the Executive is already authorized to create implementing rules and regulations that
streamline the trademark registration process provided under the IP Code, then the
Philippines’ obligation under the Madrid Protocol may be implemented without subsequent
Senate concurrence. This obligation to recognize applications filed through the WIPO already
has prior legislative authorization, given that the Executive can, in the course of implementing
Section 124 of the IP Code, draft implementing rules that streamline the procedure without
changing its substantive aspects. As I have already pointed out, the Madrid Protocol merely
allows the WIPO’s International Bureau to file an application before the IPOPHL on behalf of
the foreign national that filed for an international registration before the WIPO. This practice
is not prohibited under the IP Code, and may even be arguably encouraged under the
declaration of state policy in the IP Code. Notably, the IP Code does not require personal filing
of the application for trademark registration; neither does it prohibit the submission of the
application on behalf of an applicant. Indeed, the registration process under the Madrid
Protocol would, in effect, dispense with the requirement of naming a domestic representative
for foreign nationals not domiciled in the Philippines upon filing his application for trademark
registration, as mandated in Section 124 of the IP Code.
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Same; Same; Same; View that the Madrid Protocol, in streamlining the procedure for
registering trademarks of foreign nationals, in effect directed the domestic representative’s
participation where necessary and merely postponed the naming of a domestic representative
requirement under Section 124 of the Intellectual Property Code of the Philippines (IP Code).—
A domestic representative is still integral to the process of registering a trademark in the
Philippines, All foreign nationals not domiciled in the Philippines would still have to name a
domestic representative in the course of his application for registration, otherwise, his
trademark would, at the very least, be cancelled after three years of nonuse. The Madrid
Protocol, in streamlining the procedure for registering trademarks of foreign nationals, in
effect directed the domestic representative’s participation where necessary and merely
postponed the naming of a domestic representative requirement under Section 124 of the IP
Code. The Protocol did not all together forego with it.
PERLAS-BERNABE, J., Concurring Opinion:
 Intellectual Property Code of the Philippines; Trademarks; View that Section 122 of
Republic Act (RA) No. 8293 or the “Intellectual Property Code of the Philippines” (IP Code)
provides that “[t]he rights in a mark shall be acquired through registration made validly in
accordance with the provisions of this law.”—Section 122 of Republic Act No. (RA) 8293 or the
“Intellectual Property Code of the Philippines” (IP Code) provides that “[t]he rights in a mark
shall be acquired through registration made validly in accordance with the provisions of this
law.” For applicants not domiciled in the Philippines, Section 124 of the IP Code requires “[t]he
appointment of an agent or representative”: Section 124. Requirements of application.—
124.1. The application for the registration of the mark shall be in Filipino or in English and shall
contain the following: x x x x (e) The appointment of an agent or representative, if the applicant
is not domiciled in the Philippines.
Madrid Protocol; Trademarks; View that through the Philippines’ accession to the
Madrid Protocol and hence, adoption of the Madrid System for the International Registration
of Marks (Madrid System), an applicant who is not domiciled in the Philippines but a national
of a Contracting Party is now given the option to file his application in the Intellectual Property
(IP) Office of his own home
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country and thereupon, secure protection for his mark.—Through the Philippines’
accession to the Madrid Protocol and hence, adoption of the Madrid System for the
International Registration of Marks (Madrid System), an applicant who is not domiciled in the
Philippines but a national of a Contracting Party is now given the option to file his application
in the IP Office of his own home country and thereupon, secure protection for his mark.
Same; Same; View that Article 5 of the Madrid Protocol which provides that “any Office
of a Contracting Party which has been notified by the International Bureau of an extension to
that Contracting Party x x x shall have the right to declare in a notification of refusal that
protection cannot be granted in the said Contracting Party to the mark which is the subject of
such extension.”—The non-domiciliary’s filing of an application in the IP Office of his home
country is only the initial step to secure protection for his mark. Significantly, the application,
after having been formally examined by the WIPO, has to be referred to the national or
regional IP Office of the country in which the applicant seeks protection for the conduct of
substantive examination. Ultimately, it is the latter office (in our case the Intellectual Property
Office of the Philippines [IPOPHL]) which decides to accept or refuse registration. This is
reflected in Article 5 of the Madrid Protocol which provides that “any Office of a Contracting
Party which has been notified by the International Bureau of an extension to that Contracting
Party x x x shall have the right to declare in a notification of refusal that protection cannot be
granted in the said Contracting Party to the mark which is the subject of such extension.”
Intellectual Property Code of the Philippines; Trademarks; View that the grounds for
refusal of protection enumerated in the Paris Convention, specifically under
Article 6quinquies (B) thereof, are substantially the same grounds for refusal for registration of
marks as enumerated under Section 123.1 of the Intellectual Property Code of the Philippines
(IP Code).—It bears stressing that the grounds for refusal of protection enumerated in the Paris
Convention, specifically under Article 6quinquies (B) thereof, are substantially the same
grounds for refusal for registration of marks as enumerated under Section 123.1 of the IP Code.
This further strengthens the classification of the Madrid Protocol as a mere executive
agreement and not as a treaty, considering that it does not introduce
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any substantive alterations to our local law on trademarks, i.e., the IP Code.
Madrid Protocol; Trademarks; View that there is no merit in petitioner Intellectual
Property Association of the Philippines’ (IPAP’s) supposition that the Madrid Protocol conflicts
with Section 125 of the Intellectual Property Code of the Philippines (IP Code).—Even without
delving into the issue of its legal standing, there is no merit in petitioner Intellectual Property
Association of the Philippines’ supposition that the Madrid Protocol conflicts with Section 125
of the IP Code. As the ponencia aptly pointed out, “[t]he Madrid Protocol does not amend [or]
modify the IP Code on the acquisition of trademark rights[,] considering that the applications
under the Madrid Protocol are still examined according to the relevant national law,” and “in
[this] regard, the IPOPHL will only grant protection to a mark that meets the local registration
requirements.”
Same; Same; View that the Madrid Protocol only provides for a centralized system of
international registration of marks, which, in no way, denies the authority of the Philippines,
through the Intellectual Property Office of the Philippines (IPOPHL), to substantively examine
and consequently, grant or reject an application in accordance with our own laws and
regulations.—The Madrid Protocol only provides for a centralized system of international
registration of marks, which, in no way, denies the authority of the Philippines, through the
IPOPHL, to substantively examine and consequently, grant or reject an application in
accordance with our own laws and regulations. Hence, it does not involve a change in our
national policy, which necessitates the need for a treaty. Its attribution as an executive
agreement was therefore correct, negating the existence of any grave abuse of discretion
tantamount to lack or excess of jurisdiction.
LEONEN, J., Separate Concurring Opinion:
Constitutional Law; Judicial Power; View that judicial power includes “the duty . . . 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
procedural vehicle notwithstanding, the Rules of Court cannot limit the powers granted to this
Court by the Constitution itself.
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Recalling Article VIII, Section 1 of the 1987 Constitution, judicial power includes “the
duty . . . 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.” This constitutional mandate is sparse in its qualification of the nature of the
action of “any branch or instrumentality of the government.” Whether this Court may limit it
only to judicial or quasi-judicial actions will be constitutionally suspect. The requirement is that
there should be, in a justiciable case, a clear showing that there is “grave abuse of discretion
amounting to lack or excess of jurisdiction.”
Political Law; Delegation of Powers; International Agreements; View that I am not
prepared to grant that the President can delegate to the Secretary of the Department of Foreign
Affairs (DFA) the prerogative to determine whether an international agreement is a treaty or
an executive agreement.—I am not prepared to grant that the President can delegate to the
Secretary of the Department of Foreign Affairs the prerogative to determine whether an
international agreement is a treaty or an executive agreement. Nor should this case be the
venue to declare that all executive agreements need not undergo senate concurrence. Tracing
the history of Article VII, Section 21 of the Constitution reveals, through the “[c]hanges or
retention of language and syntax[,]” its congealed meaning. The pertinent constitutional
provision has evolved into its current broad formulation to ensure that the power to enter into
a binding international agreement is not concentrated on a single government department.
Same; Treaties; View that the power and responsibility to enter into treaties is now
shared by the executive and legislative departments.—This Court, in the recent case
of Saguisag v. Ochoa, Jr., 779 SCRA 241 (2016), characterized this exception as having “left a
large margin of discretion that the President could use to bypass the Legislature altogether.”
This Court noted this as “a departure from the 1935 Constitution, which explicitly gave the
President the power to enter into treaties only with the concurrence of the [National
Assembly].” As in the 1935 Constitution, this exception is no longer present in the current
formulation of the provision. The power and responsibility to enter into treaties is now shared
by the executive and legislative departments. Furthermore, the role of the legislative
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department is expanded to cover not only treaties but international agreements in
general as well.
Same; Same; Presidency; View that an interpretation that the executive has unlimited
discretion to determine if an agreement requires senate concurrence not only runs counter to
the principle of checks and balances; it may also render the constitutional requirement of
senate concurrence meaningless.—Having an option does not necessarily mean absolute
discretion on the choice of international agreement. There are certain national interest issues
and policies covered by all sorts of international agreements, which may not be dealt with by
the President alone. An interpretation that the executive has unlimited discretion to determine
if an agreement requires senate concurrence not only runs counter to the principle of checks
and balances; it may also render the constitutional requirement of senate concurrence
meaningless.
Same; International Agreements; Presidency; View that as long as the subject matter of
the agreement covers political issues and national policies of a more permanent character, the
international agreement must be concurred in by the Senate.—Article VII, Section 21 does not
limit the requirement of senate concurrence to treaties alone. It may cover other international
agreements, including those classified as executive agreements, if: (1) they are more
permanent in nature; (2) their purposes go beyond the executive function of carrying out
national policies and traditions; and (3) they amend existing treaties or statutes. As long as the
subject matter of the agreement covers political issues and national policies of a more
permanent character, the international agreement must be concurred in by the Senate.
Intellectual Property Code of the Philippines; Madrid Protocol; View that it may be
unnecessary in this case to determine whether the Madrid Protocol amends Section 125 of the
Intellectual Property Code of the Philippines (IP Code).—It may be unnecessary in this case to
determine whether the Madrid Protocol amends Section 125 of the Intellectual Property Code.
The Solicitor General makes a persuasive argument that the accession to this international
agreement does not per se remove the possibility of appointing a resident agent. Petitioner
likewise acknowledges that domestic requirements regarding local representation may be
reserved by the executive upon accession to the Madrid Protocol.
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SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari and Prohibition.
The facts are stated in the opinion of the Court.
Lorna Patajo-Kapunan, Sonya Margarita Benemerito-Castillo, Deanna Melissa S.
Lorenzo-Singian, Maria Carmen Hazel N. Humangit and Katrina Ortega Clemente for
petitioner.
The Solicitor General for respondents.
BERSAMIN, J.:
In this special civil action for certiorari and prohibition, the Intellectual Property
Association of the Philippines (IPAP) seeks to declare the accession of the Philippines to
the Protocol Relating to the Madrid Agreement Concerning the International Registration of
Marks (Madrid Protocol) unconstitutional on the ground of the lack of concurrence by the
Senate, and in the alternative, to declare the implementation thereof as unconstitutional
because it conflicts with Republic Act No. 8293, otherwise known as the Intellectual Property
Code of the Philippines (IP Code).1
We find and declare that the President’s ratification is valid and constitutional because
the Madrid Protocol, being an executive agreement as determined by the Department of
Foreign Affairs, does not require the concurrence of the Senate.
Antecedents
The Madrid System for the International Registration of Marks (Madrid System), which is
the centralized system providing a one-stop solution for registering and managing marks
worldwide, allows the trademark owner to file one application in one language, and to pay one
set of fees to pro-
_______________
1 Rollo, p. 4.
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tect his mark in the territories of up to 97 member-states.2 The Madrid System is governed by
the Madrid Agreement, concluded in 1891, and the Madrid Protocol, concluded in 1989.3
The Madrid Protocol, which was adopted in order to remove the challenges deterring
some countries from acceding to the Madrid Agreement, has two objectives, namely: (1) to
facilitate securing protection for marks; and (2) to make the management of the registered
marks easier in different countries.4
In 2004, the Intellectual Property Office of the Philippines (IPOPHL), the government
agency mandated to administer the intellectual property system of the country and to
implement the state policies on intellectual property, began considering the country’s
accession to the Madrid Protocol. However, based on its assessment in 2005, the IPOPHL
needed to first improve its own operations before making the recommendation in favor of
accession. The IPOPHL thus implemented reforms to eliminate trademark backlogs and to
reduce the turnaround time for the registration of marks.5
5 Rollo, pp. 170-171.
In the meanwhile, the IPOPHL mounted a campaign for information dissemination to raise
awareness of the Madrid Protocol. It launched a series of consultations with stakeholders and
various business groups regarding the Philippines’ accession to the Madrid Protocol. It
ultimately arrived at the conclusion that accession would benefit the country and help raise
the level of competitiveness for Filipino brands. Hence, it recommended in September 2011 to
the Department
_______________
2 Madrid – The International Trademark System, http://www.wipo.int/madrid/en/(last
visited March 31, 2016).
3 Madrid Agreement Concerning the International Registration of
Marks, http://www.wipo.int/treaties/en/registration/madrid/ (last visited March 31, 2016).
4 Benefits of the Madrid
System, http://www.wipo.int/madrid/en/madrid_benefits.html (last visited March 31, 2016).
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of Foreign Affairs (DFA) that the Philippines should accede to the Madrid Protocol.6
After its own review, the DFA endorsed to the President the country’s accession to
the Madrid Protocol. Conformably with its express authority under Section 9 of Executive
Order No. 459 (Providing for the Guidelines in the Negotiation of International Agreements and
its Ratification) dated November 25, 1997, the DFA determined that the Madrid Protocol was
an executive agreement. The IPOPHL, the Department of Science and Technology, and the
Department of Trade and Industry concurred in the recommendation of the DFA.7
On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol through
an instrument of accession. The instrument of accession was deposited with the Director
General of the World Intellectual Property Organization (WIPO) on April 25, 2012,8 The Madrid
Protocol entered into force in the Philippines on July 25, 2012.9
Petitioner IPAP, an association of more than 100 law firms and individual practitioners in
Intellectual Property Law whose main objective is to promote and protect intellectual property
rights in the Philippines through constant assistance and involvement in the legislation of
intellectual property law,10 has commenced this special civil action for certiorari and
prohibition11 to challenge the validity of the President’s accession to the Madrid
Protocol without the concurrence of the Senate. Citing Pimentel, Jr. v. Office of the Executive
Secretary, the IPAP has averred:
_______________
6 Id., at pp. 172-175.
7 Id., at pp. 175-176.
8 http://www.wipo.int/treaties/en/notifications/madridp-
gp/treaty_madridp_gp_194.html.
9 Rollo, pp. 57-58.
10 Id., at p. 5.
11 Id., at pp. 1-30.
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Nonetheless, while the President has the sole authority to negotiate and enter into
treaties, the Constitution provides a limitation to his power by requiring the concurrence of
2/3 of all the members of the Senate for the validity of the treaty entered into by him. Section
21, Article VII of the 1987 Constitution provides that “no treaty or international agreement
shall be valid and effective unless concurred in by at least two-thirds of all the Members of the
Senate.” The 1935 and the 1973 Constitution also required the concurrence by the legislature
to the treaties entered into by the executive.12
According to the IPAP, the Madrid Protocol is a treaty, not an executive agreement; hence,
respondent DFA Secretary Albert Del Rosario acted with grave abuse of discretion in
determining the Madrid Protocol as an executive agreement.13
The IPAP has argued that the implementation of the Madrid Protocol in the Philippines,
specifically the processing of foreign trademark applications, conflicts with the IP
Code,14 whose Section 125 states:
Sec. 125. Representation; Address for Service.—If the applicant is not domiciled or has
no real and effective commercial establishment in the Philippines, he shall designate by a
written document filed in the office, the name and address of a Philippine resident who may
be served notices or process in proceedings affecting the mark. Such notices or services may
be served upon the person so designated by leaving a copy thereof at the address specified in
the last designation filed. If the person so designated cannot be found at the address given in
the last designation, such notice or process may be served upon the Director. (Sec. 3, R.A. No.
166a)
_______________
12 G.R. No. 158088, July 6, 2005, 462 SCRA 622, 632-633.
13 Rollo, pp. 16-21.
14 Id., at p. 21.
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It has posited that Article 2 of the Madrid Protocol provides in contrast:
Article 2
Securing Protection through International
Registration
(1) Where an application for the registration of a mark has been filed with the Office of
a Contracting Party, or where a mark has been registered in the register of the Office of a
Contracting Party, the person in whose name that application (hereinafter referred to as “the
basic application”) or that registration (hereinafter referred to as “the basic registration”)
stands may, subject to the provisions of this Protocol secure protection for his mark in the
territory of the Contracting Parties, by obtaining the registration of that mark in the register of
the International Bureau of the World Intellectual Property Organization (hereinafter referred
to as “the international registration,” “the International Register,” “the International Bureau”
and “the Organization,” respectively), provided that:
(i) where the basic application has been filed with the Office of a Contracting
State or where the basic registration has been made by such an Office, the person in
whose name that application or registration stands is a national of that Contracting
State, or is domiciled, or has a real and effective industrial or commercial
establishment, in the said Contracting State,
(ii) where the basic application has been filed with the Office of a Contracting
Organization or where the basic registration has been made by such an Office, the
person in whose name that application or registration stands is a national of a State
member of that Contracting Organization, or is domiciled, or has a real and effective
industrial or
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commercial establishment, in the territory of the said Contracting Organization.
(2) The application for international registration (hereinafter referred to as “the
international application”) shall be filed with the International Bureau through the
intermediary of the Office with which the basic application was filed or by which the basic
registration was made (hereinafter referred to as “the Office of origin”), as the case may be.
(3) Any reference in this Protocol to an “Office” or an “Office of a Contracting Party” shall
be construed as a reference to the office that is in charge, on behalf of a Contracting Party, of
the registration of marks, and any reference in this Protocol to “marks” shall be construed as
a reference to trademarks and service marks.
(4) For the purposes of this Protocol, “territory of a Contracting Party” means, where the
Contracting Party is a State, the territory of that State and, where the Contracting Party is an
intergovernmental organization, the territory in which the constituting treaty of that
intergovernmental organization applied.
The IPAP has insisted that Article 2 of the Madrid Protocolmeans that foreign trademark
applicants may file their applications through the International Bureau or the WIPO, and their
applications will be automatically granted trademark protection without the need for
designating their resident agents in the country.15
Moreover, the IPAP has submitted that the procedure outlined in the Guide to the
International Registration of Marks relating to representation before the International Bureau
is the following, to wit:
Rule 3(1)(a) 09.02 References in the Regulations, Administrative Instructions or in this Guide
to representation relate only to representation before the International
_______________
15 Id., at pp. 21-22.
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Bureau. The questions of the need for a representative before the Office of origin or the Office
of a designated Contracting Party (for example, in the event of a refusal of protection issued
by such an Office), who may act as a representative in such cases and the method of
appointment, are outside the scope of the Agreement, Protocol and Regulations and are
governed by the law and practice of the Contracting Party concerned.
which procedure is in conflict with that under Section 125 of the IP Code, and constitutes in
effect an amendment of the local law by the Executive Department.16
The IPAP has prayed that the implementation of the Madrid Protocol in the Philippines be
restrained in order to prevent future wrongs considering that the IPAP and its constituency
have a clear and unmistakable right not to be deprived of the rights granted them by the IP
Code and existing local laws.17
In its comment in behalf of the respondents, the Office of the Solicitor General (OSG) has
stated that the IPAP does not have the locus standi to challenge the accession to the Madrid
Protocol; that the IPAP cannot invoke the Court’s original jurisdiction absent a showing of any
grave abuse of discretion on the part of the respondents; that the President’s ratification of
the Madrid Protocolas an executive agreement is valid because the Madrid Protocol is only
procedural, does not create substantive rights, and does not require the amendment of the IP
Code; that the IPAP is not entitled to the restraining order or injunction because it suffers no
damage from the ratification by the President, and there is also no urgency for such relief; and
the IPAP has no clear unmistakable right to the relief sought.18
Issues
The following issues are to be resolved, namely:
I. Whether or not the IPAP has locus standi to challenge the
President’s ratification of the Madrid Protocol;
II. Whether or not the President’s ratification of the Madrid
Protocol is valid and constitutional; and
 III. Whether or not the Madrid Protocol is in conflict with
the IP Code.
Ruling of the Court
The petition for certiorari and prohibition is without merit.
A.
The issue of legal standing to sue, or locus standi
The IPAP argues in its reply19 that it has the locus standi to file the present case by virtue
of its being an association whose members stand to be injured as a result of the enforcement
of the Madrid Protocol in the Philippines; that the injury pertains to the acceptance and
approval of applications submitted through the Madrid Protocolwithout local representation
as required by Section 125 of the IP Code;20 and that such will diminish the rights granted by
the IP Code to Intellectual Property Law practitioners like the members of the IPAP.21
The argument of the IPAP is untenable.
Legal standing refers to “a right of appearance in a court of justice on a given
question.”22 According to Agan, Jr. v. Phil-
_______________
19 Id., at pp. 283-307.
20 Id., at pp. 284-286.
21 Id., at p. 23.
22 Black’s Law Dictionary, p. 941 (6th ed., 1991).
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ippine International Air Terminals Co., Inc.,23 standing is “a peculiar concept in constitutional
law because in some cases, suits are not brought by parties who have been personally injured
by the operation of a law or any other government act but by concerned citizens, taxpayers or
voters who actually sue in the public interest.”
The Court has frequently felt the need to dwell on the issue of standing in public or
constitutional litigations to sift the worthy from the unworthy public law litigants seeking
redress or relief. The following elucidation in De Castro v. Judicial and Bar Council24offers the
general understanding of the context of legal standing, or locus standi for that purpose, viz.:
In public or constitutional litigations, the Court is often burdened with the determination of
the locus standi of the petitioners due to the ever-present need to regulate the invocation of
the intervention of the Court to correct any official action or policy in order to avoid obstructing
the efficient functioning of public officials and offices involved in public service. It is required,
therefore, that the petitioner must have a personal stake in the outcome of the controversy,
for, as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have “alleged such a
personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court so
largely depends for illumination of difficult constitutional questions.” Accordingly, it
has been held that the interest of a person assailing the constitutional-
_______________
23 G.R. Nos. 155001, 155547, and 155661, May 5, 2003, 402 SCRA 612, 645.
24 G.R. Nos. 191002, 191032, 191057, 191149, and A.M. No. 10-2-5-SC, March 17, 2010,
615 SCRA 666.
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ity of a statute must be direct and personal. He must be able to show, not only that
the law or any government act is invalid, but also that he sustained or is in imminent
danger of sustaining some direct injury as a result of its enforcement, and not merely
that he suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to which he is
lawfully entitled or that he is about to be subjected to some burdens or penalties by
reason of the statute or act complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test
for determining whether a petitioner in a public action had locus standi. There, the Court held
that the person who would assail the validity of a statute must have “a personal and substantial
interest in the case such that he has sustained, or will sustain direct injury as a result.” Vera was
followed in Custodio v. President of the Senate, Manila Race Horse Trainers’ Association v. De
la Fuente, Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public
Works.
Yet, the Court has also held that the requirement of locus standi, being a mere procedural
technicality, can be waived by the Court in the exercise of its discretion. For instance, in 1949,
in Araneta v. Dinglasan, the Court liberalized the approach when the cases had
“transcendental importance.” Some notable controversies whose petitioners did not pass
the direct injurytest were allowed to be treated in the same way as in Araneta v. Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve
the issues raised by the petition due to their “far-reaching implications,” even if the petitioner
had no personality to file the suit. The liberal approach of Aquino v. Commission on
Elections has been adopted in several notable cases, permit-
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ting ordinary citizens, legislators, and civic organizations to bring their suits involving the
constitutionality or validity of laws, regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly illegal
or unconstitutional executive or legislative action rests on the theory that the petitioner
represents the public in general. Although such petitioner may not be as adversely affected by
the action complained against as are others, it is enough that he sufficiently demonstrates in
his petition that he is entitled to protection or relief from the Court in the vindication of a public
right.25
The injury that the IPAP will allegedly suffer from the implementation of the Madrid
Protocol is imaginary, incidental and speculative as opposed to a direct and material injury
required by the foregoing tenets on locus standi. Additionally, as the OSG points out in the
comment,26 the IPAP has misinterpreted Section 125 of the IP Code on the issue of
representation. The provision only states that a foreign trademark applicant “shall designate
by a written document filed in the office, the name and address of a Philippine resident who
may be served notices or process in proceedings affecting the mark”; it does not grant anyone
in particular the right to represent the foreign trademark applicant. Hence, the IPAP cannot
justly claim that it will suffer irreparable injury or diminution of rights granted to it by Section
125 of the IP Code from the implementation of the Madrid Protocol.
Nonetheless, the IPAP also emphasizes that the paramount public interest involved has
transcendental importance because its petition asserts that the Executive Department has
overstepped the bounds of its authority by thereby cutting into another branch’s functions and
responsibilities.27 The assertion of the IPAP may be valid on this score. There is
_______________
25 Id., at pp. 722-726. (Bold emphasis is part of the original text)
26 Rollo, p. 183.
27 Id., at pp. 286-289.
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little question that the issues raised herein against the implementation of the Madrid
Protocol are of transcendental importance. Accordingly, we recognize IPAP’s locus standi to
bring the present challenge. Indeed, the Court has adopted a liberal attitude towards locus
standi whenever the issue presented for consideration has transcendental significance to the
people, or whenever the issues raised are of paramount importance to the public.28
B.
Accession to the
Madrid Protocol was constitutional
The IPAP submits that respondents Executive Secretary and DFA Secretary Del Rosario
gravely abused their discretion in determining that there was no need for the Philippine
Senate’s concurrence with the Madrid Protocol; that the Madrid Protocol involves changes of
national policy, and its being of a permanent character requires the Senate’s
concurrence,29 pursuant to Section 21, Article VII of the Constitution, which states that “no
treaty or international agreement shall be valid and effective unless concurred in by at least
two-thirds of all the Members of the Senate.”
Before going further, we have to distinguish between treaties and international
agreements, which require the Senate’s concurrence, on one hand, and executive agreements,
which may be validly entered into without the Senate’s concurrence.
_______________
28 Francisco, Jr. v. Nagmamalasakit na mga Manananggol ng mga Manggagawang
Pilipino, Inc., G.R. Nos. 160261, 160262, 160263, 160277, 160292, 160295, 160310, 160318,
160342, 160343, 160360, 160365, 160370, 160376, 160392, 160397, 160403, and 160405,
November 10, 2003, 415 SCRA 44, 139.
29 Rollo, pp. 16-21.
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Executive Order No. 459, Series of 1997,30 notes the following definitions, to wit:
Sec. 2. Definition of Terms.—
a. International agreement – shall refer to a contract or understanding, regardless of
nomenclature, entered into between the Philippines and another government in written form
and governed by international law, whether embodied in a single instrument or in two or more
related instruments.
b. Treaties – international agreements entered into by the Philippines which require legislative
concurrence after executive ratification. This term may include compacts like conventions,
declarations, covenants and acts.
c. Executive Agreements – similar to treaties except that they do not require legislative
concurrence.
The Court has highlighted the difference between treaties and executive agreements
in Commissioner of Customs v. Eastern Sea Trading,31 thusly:
International agreements involving political issues or changes of national policy and those
involving international arrangements of a permanent character usually take the form of
treaties. But international agreements embodying adjustments of detail carrying out well-
established national policies and traditions and those involving arrangements of a more or
less temporary nature usually take the form of executive agreements.
In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459,32 is initially
given the power to determine
_______________
30 Providing for the Guidelines in the Negotiation of International Agreements and its
Ratification (issued November 25, 1997 by President Ramos).
31 No. L-14279, October 31, 1961, 3 SCRA 351, 356.
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160 SUPREME COURT REPORTS ANNOTATED
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whether an agreement is to be treated as a treaty or as an executive agreement. To determine
the issue of whether DFA Secretary Del Rosario gravely abused his discretion in making his
determination relative to the Madrid Protocol, we review the jurisprudence on the nature of
executive agreements, as well as the subject matters to be covered by executive agreements.
The pronouncement in Commissioner of Customs v. Eastern Sea Trading33 is instructive, to
wit:
x x x The concurrence of said House of Congress is required by our fundamental law in the
making of “treaties” (Constitution of the Philippines, Article VII, Section 10), which are,
however, distinct and different from “executive agreements,” which may be validly entered
into without such concurrence.
“Treaties are formal documents which require ratification with the approval of
two thirds of the Senate. Executive agreements become binding through executive
action without the need of a vote by the Senate or by Congress.
xxxx
“x x x the right of the Executive to enter into binding agreements without the
necessity of subsequent Congressional approval has been confirmed by long usage.
From the earliest days of our history we have entered into executive agreements
covering such subjects as commercial and consular relations, most-favored-nation
rights, patent rights, trademark and copyright protection, postal and navigation
arrangements and the
_______________
32 SEC. 9. Determination of the Nature of the Agreement.—The Department of
Foreign Affairs shall determine whether an agreement is an executive agreement or a treaty.
33 Supra note 31 at pp. 355-357.
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settlement of claims. The validity of these has never been seriously questioned by our
courts.
xxxx
Agreements with respect to the registration of trademarkshave been concluded
by the Executive with various countries under the Act of Congress of March 3, 1881
(21 Stat. 502). x x x
xxxx
In this connection, Francis B. Sayre, former U.S. High Commissioner to the Philippines, said
in his work on “The Constitutionality of Trade Agreement Acts”:
Agreements concluded by the President which fall short of treaties are commonly
referred to as executive agreements and are no less common in our scheme of
government than are the more formal instruments — treaties and conventions. They
sometimes take the form of exchanges of notes and at other times that or more formal
documents denominated ‘agreements’ or ‘protocols.’ The point where ordinary
correspondence between this and other governments ends and agreements —
whether denominated executive agreements or exchanges of notes or otherwise —
begin, may sometimes be difficult of ready ascertainment. It would be useless to
undertake to discuss here the large variety of executive agreements as such,
concluded from time to time. Hundreds of executive agreements, other than those
entered into under the trade agreements act, have been negotiated with foreign
governments. x x x It would seem to be sufficient, in order to show that the trade
agreements under the act of 1934 are not anomalous in character, that they are not
treaties, and that they have abundant precedent in our history, to refer to certain
classes of agreements heretofore entered into
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Intellectual Property Association of the Philippines vs. Ochoa
by the Executive without the approval of the Senate. They cover such subjects as the
inspection of vessels, navigation dues, income tax on shipping profits, the admission
of civil aircraft, customs matters, and commercial relations generally, international
claims, postal matters, the registration of trademarks and copyrights, etcetera.
Some of them were concluded not by specific congressional authorization but in
conformity with policies declared in acts of Congress with respect to the general
subject matter, such as tariff acts; while still others, particularly those with respect of
the settlement of claims against foreign governments, were concluded independently
of any legislation. (Emphasis ours)
As the foregoing pronouncement indicates, the registration of trademarks and copyrights
have been the subject of executive agreements entered into without the concurrence of the
Senate. Some executive agreements have been concluded in conformity with the policies
declared in the acts of Congress with respect to the general subject matter.
It then becomes relevant to examine our state policy on intellectual property in general,
as reflected in Section 2 of our IP Code, to wit:
Section 2. Declaration of State Policy.—The State recognizes that an effective
intellectual and industrial property system is vital to the development of domestic and
creative activity, facilitates transfer of technology, attracts foreign investments, and ensures
market access for our products. It shall protect and secure the exclusive rights of scientists,
inventors, artists and other gifted citizens to their intellectual property and creations,
particularly when beneficial to the people, for such periods as provided in this Act.
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The use of intellectual property bears a social function. To this end, the State shall promote
the diffusion of knowledge and information for the promotion of national development and
progress and the common good.
It is also the policy of the State to streamline administrative procedures of registering
patents, trademarks and copyright, to liberalize the registration on the transfer of technology,
and to enhance the enforcement of intellectual property rights in the Philippines.
In view of the expression of state policy having been made by the Congress itself, the IPAP
is plainly mistaken in asserting that “there was no Congressional act that authorized the
accession of the Philippines to the Madrid Protocol.”34
 Accordingly, DFA Secretary Del Rosario’s determination and treatment of the Madrid
Protocol as an executive agreement, being in apparent contemplation of the express state
policies on intellectual property as well as within his power under Executive Order No. 459, are
upheld. We observe at this point that there are no hard and fast rules on the propriety of
entering into a treaty or an executive agreement on a given subject as an instrument of
international relations. The primary consideration in the choice of the form of agreement is
the parties’ intent and desire to craft their international agreement in the form they so wish
to further their respective interests. The matter of form takes a back seat when it comes to
effectiveness and binding effect of the enforcement of a treaty or an executive agreement,
inasmuch as all the parties, regardless of the form, become obliged to comply conformably
with the time-honored principle of pacta sunt servanda.35 The principle binds the parties to
perform in good faith their parts in the agreements.36

C.
There is no conflict between the
Madrid Protocol and the IP Code

The IPAP also rests its challenge on the supposed conflict between the Madrid
Protocol and the IP Code, contending that the Madrid Protocol does away with the
requirement of a resident agent under Section 125 of the IP Code; and that the Madrid
Protocol is unconstitutional for being in conflict with the local law, which it cannot modify.
The IPAP’s contentions stand on a faulty premise. The method of registration through the
IPOPHL, as laid down by the IP Code, is distinct and separate from the method of registration
through the WIPO, as set in the Madrid Protocol. Comparing the two methods of registration
despite their being governed by two separate systems of registration is thus misplaced.
In arguing that the Madrid Protocol conflicts with Section 125 of the IP Code, the IPAP
highlights the importance of the requirement for the designation of a resident agent. It
underscores that the requirement is intended to ensure that nonresident entities seeking
protection or privileges under Philippine Intellectual Property Laws will be subjected to the
country’s jurisdiction. It submits that without such resident agent, there will be a need to resort
to costly, time consuming and cumbersome extraterritorial service of writs and processes.37
The IPAP misapprehends the procedure for examination under the Madrid Protocol. The
difficulty, which the IPAP illustrates, is minimal, if not altogether inexistent. The IPOPHL
actually requires the designation of the resident agent when it refuses the registration of a
mark. Local representation is further required in the submission of the Declaration of Actual
Use, as well as in the submission of the license contract.38 The Madrid Protocolaccords with
the intent and spirit of the IP Code, particularly on the subject of the registration of trademarks.
The Madrid Protocol does not amend or modify the IP Code on the acquisition of trademark
rights considering that the applications under the Madrid Protocolare still examined according
to the relevant national law. In that regard, the IPOPHL will only grant protection to a mark
that meets the local registration requirements.
WHEREFORE, this Court DISMISSES the petition for certiorari and prohibition for lack of
merit; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
 No. L-23846. September 9, 1977.*
GO TEK, petitioner-appellee, vs. DEPORTATION BOARD, respondent-appellant.
Aliens; Deportation law; Immigration law; The Deportation Board has jurisdiction to
investigate an alien for illegal possession of fake dollar even if he has not yet been convicted of
illegal possession thereof.—We hold that the Board has jurisdiction to investigate Go Tek for
illegal possession of fake checks (as well as his alleged “guerilla” activities) in spite of the fact
that he has not yet been convicted of illegal possession thereof under article 168 of the Revised
Penal Code and notwithstanding that that act is not among the grounds for the deportation of
undesirable aliens as enumerated in section 37 of the Immigration Law. The charge against Go
Tek before the Board was not premature.
Same; Same; Same; Deportation of aliens may be ordered by the President under Section
69 of the Revised Administrative Code or by the Commissioner on Immigration under Section
37 of Immigration Law.—So under existing law, the deportation of an undesirable alien may
be affected (1) by order of the President, after due investigation, pursuant to section 69 of the
Revised Administrative Code and (2) by the Commissioner of Immigration, upon
recommendation of the Board of Commissioners under section 37 of the Immigration Law (Qua
Chee Gan vs. Deportation Board, supra.)
Same; Same; Same; State has inherent power to deport undesirable aliens.—The State
has the inherent power to deport undesirable aliens (Chuoco Tiaco vs. Forbes, 228 U.S. 549,
57 L. Ed. 960, 40 Phil. 1122, 1125). That power may be exercised by the Chief Executive “when
he deems such action necessary for the peace and domestic tranquility of the nation”. . . Justice
Johnson’s opinion is that when the Chief Executive finds that there are aliens whose continued
presence in the country is injurious to the public interest. “He may, even in the absence of
express law, deport them”.
Same; Same; Same; The intention of the law is to grant the Chief Executive full discretion
to determine whether an alien’s stay in the country is undesirable.—As observed by Justice
Labrador, there is no legal nor constitutional provision defining the power to deport aliens
because the intention of the law is to grant the Chief Executive “full
_____________
*SECOND DIVISION.
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18 SUPREME COURT REPORTS ANNOTATED
Go Tek vs. Deportation Board
discretion to determine whether an alien’s residence in the country is so undesirable as
to affect or injure the security, welfare or interest of the state. The adjudication of facts upon
which deportation is predicated also devolves on the Chief Executive whose decision is final
and executive.”
Same; Same; Same; Executive order for deportation need not be dependent on a prior
judicial conviction in a criminal case.—It is fundamental that an executive order for deportation
is not dependent on a prior judicial conviction in a criminal case” (Ang Beng vs. Commissioner
of Immigration, 100 Phil. 801, 803). Thus, it was held that the fact an alien has been acquitted
in a criminal proceeding of the particular charge does not prevent the deportation of such alien
based on the same charge. Such acquittal does not constitute res judicata in the deportation
proceedings. Conviction of a crime is not necessary to warrant deportation.
APPEAL from a decision of the Court of First instance of Manila. Alikpala, J.
The facts are stated in the opinion of the Court.
Teodoro C. Ronquillo for appellee.
Solicitor-General Arturo A. Alafriz, Assistant Solicitor General Felicisimo R.
Rosete and Solicitor Octavio R. Ramirez for appellant.
AQUINO, J.:
This is a deportation case. On March 3, 1964 the chief prosecutor of the Deportation Board
filed a complaint against Go Tek, a Chinaman residing at Ilagan, Isabela and 1208-B,
Misericordia Street, Sta. Cruz, Manila.
It was alleged in the complaint that in December, 1963 certain agents of the National
Bureau of Investigation (NBI) searched an office located at 1439 O’Donnel Street, Sta. Cruz,
Manila, believed to be the headquarters of a guerilla unit of the “Emergency Intelligence
Section, Army of the United States”, and that among those arrested thereat was Go Tek, an
alleged sector commander and intelligence and record officer of that guerilla unit.
It was further alleged that fake dollar checks were found in Go Tek’s possession and that,
therefore, he had violated article 168 of the Revised Penal Code and rendered himself an
undesirable alien.
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Go Tek vs. Deportation Board
The prosecutor prayed that after trial the Board should recommend to the President of the
Philippines the immediate deportation of Go Tek as an undesirable alien, “his presence in this
country having been and will always be inimical and a menace to the peace, welfare, and
security of the community”. (Case No. R-1116).
Go Tek filed a motion to dismiss on the ground that the complaint was premature because
there was a pending case against him in the city fiscal’s office of Manila for violation of article
168 (I.S. 64-7267). He contended that the Board had no jurisdiction to try the case in view of
the obiter dictum in Qua Chee Gan vs. Deportation Board, 118 Phil. 868, 875, that the
President may deport aliens only on the grounds specified in the law.
The Board, composed of Manuel A. Concordia, Arturo A. Alafriz and Manuel V. Reyes, in
its resolution of April 21, 1964 denied Go Tek’s motion. The Board reasoned out that a criminal
conviction is not a prerequisite before the State may exercise its right to deport an undesirable
alien and that the Board is only a fact-finding body whose function is to make a report and
recommendation to the President in whom is lodged the exclusive power to deport an alien or
dismiss a deportation proceeding.
In view of the denial of his motion to quash, Go Tek on June 10, 1964 filed in the Court of
First Instance of Manila a prohibition action against the Board. On July 8, 1964 the court issued
a writ of preliminary injunction restraining the board from hearing Go Tek’s case.
After hearing, the trial court (Judge Federico C. Alikpala presiding) in its decision of October
31, 1964 granted the writ of prohibition and ordered the Board to desist from taking
cognizance of the complaint against Go Tek.
The court, citing the said obiter dictum in the Qua Chee Gancase, held that mere
possession of forged dollar checks is not a ground for deportation under the Immigration Law;
that under section 37(3) of the law before an alien may be deported for having been convicted
and sentenced to imprisonment for a term of one year or more for a crime involving moraf
turpitude, a conviction is necessary, and that since Go Tek had not been convicted of the
offense punished in article 168, the deportation proceeding was premature.
The Board appealed to this Court on the ground that the decision is contrary to law. The
Solicitor General contends that the trial
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20 SUPREME COURT REPORTS ANNOTATED
Go Tek vs. Deportation Board
court erred in assuming that the President may deport undesirable aliens only on the grounds
enumerated by law; in holding that mere possession of forged dollar checks is not a ground for
deportation and that a criminal conviction is necessary, and in not finding that the Board has
jurisdiction over Go Tek’s case.
The Solicitor General in his motion of July 18, 1977 manifested that Judge Alikpala (to
whom the criminal case was also assigned after the fiscal had filed it in court), in his order of
June 16, 1965 dismissed provisionally the case against Go Tek for violation of article 168
(Criminal Case No. 78174).
The parties stipulated that the “Deportation Board is an agency of the President of the
Philippines charged with the investigation of undesirable aliens and to report and recommend
proper action on the basis of its findings therein.”
The issue is whether the Deportation Board can entertain a deportation proceeding based
on a ground which is not specified in section 37 of the Immigration Law and although the alien
has not yet been convicted of the offense imputed to him.
We hold that the Board has jurisdiction to investigate Go Tek for illegal possession of fake
dollar checks (as well as his alleged “guerilla” activities) in spite of the fact that he has not yet
been convicted of illegal possession thereof under article 168 of the Revised Penal Code and
notwithstanding that that act is not among the grounds for the deportation of undesirable
aliens as enumerated in section 37 of the Immigration Law. The charge against Go Tek before
the Board was not premature.
The aforementioned obiter dictum in the Qua Chee Gan case, invoked by Go Tek and relied
upon by the trial court, is not decisive of this case. In the Qua Chee Gan case the aliens were
charged with economic sabotage which is a ground for deportation under Republic Act No.
503.
The ratio decidendi of the Qua Chee Gan case is that the provision of Executive Order No.
398, series of 1951, empowering the Deportation Board to issue a warrant of arrest upon the
filing of formal charges against an alien, is “illegal” or unconstitutional because it is contrary to
the provision in section 1(3), Article III of the 1935 Constitution that warrants shall issue upon
probable cause to be determined by the judge after examining under oath the complainant
and the witnesses he may produce. (Note that under section 3, Article IV of the 1973
Constitution, probable cause may
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Go Tek vs. Deportation Board
be determined “by the judge, or such other responsible officer as may be authorized by law”.
See Santos vs. Commissioner of Immigration, L-25694, November 29, 1976, 74 SCRA 96, per
Fernando, J.)
A thorough comprehension of the President’s power to deport aliens may show the
baselessness of the instant prohibition action of Go Tek. The President’s power to deport aliens
and the investigation of aliens subject to deportation are provided for in the following
provisions of the Revised Administrative Code:
SEC. 69. Deportation of subject of foreign power.—A subject of a foreign power residing in the
Philippine Islands shall not be deported, expelled, or excluded from said Islands or repatriated
to his own country by the Governor-General except upon prior investigation, conducted by
said Executive or his authorized agent, of the ground upon which such action is contemplated.
In such case the person concerned shall be informed of the charge or charges against him and
he shall be allowed not less than three days for the preparation of his defense. He shall also
have the right to be heard by himself or counsel, to produce witnesses in his own behalf, and
to cross-examine the opposing witnesses.”
On the other hand, section 37 of the Immigration Law provides that certain aliens may be
arrested upon the warrant of the Commissioner of Immigration or of any other officer
designated by him for the purpose and deported upon the Commissioner’s warrant “after a
determination by the Board of Commissioners of the existence of the ground for deportation
as charged against the alien.” Thirteen classes of aliens who may be deported by the
Commissioner are specified in section 37 (See Po Siok Pin vs. Vivo, L-24792, February 14,
1975, 62 SCRA 363, 368).
So, under existing law; the deportation of an undesirable alien may be effected (1) by order
of the President, after due investigation, pursuant to section 69 of the Revised Administrative
Code and (2) by the Commissioner of Immigration, upon recommendation of the Board of
Commissioners under section 37 of the Immigration Law (Qua Chee Gan vs. Deportation
Board, supra).
The State has the inherent power to deport undesirable aliens (Chuoco Tiaco vs.
Forbes, 228 U.S. 549, 57 L. Ed. 960, 40 Phil. 1122, 1125). That power may be exercised by the
Chief Executive “when he deems such action necessary for the peace and domestic
22
22 SUPREME COURT REPORTS ANNOTATED
Go Tek vs. Deportation Board
tranquility of the nation”. Justice Johnson’s opinion is that when the Chief Executive finds that
there are aliens whose continued presence in the country is injurious to the public interest,
“he may, even in the absence of express law, deport them”. (Forbes vs. Chuoco Tiaco and
Crossfield, 16 Phil. 534, 568, 569; In re McCulloch Dick, 38 Phil. 41).
“The right of a country to expel or deport aliens because their continued presence is
detrimental to public welfare is absolute and unqualified” (Tiu Chun Hai and Go Tam vs.
Commissioner of Immigration and the Director of NBI, 104 Phil. 949, 956).
The Deportation Board is composed of the Undersecretary of Justice as chairman, the
Solicitor General, and a representative of the Secretary of National Defense (Executive Order
No. 455 dated June 25, 1951, 47 O.G. 2800).
Section 69 and Executive Order No. 398, reorganizing the Deportation Board, do not
specify the grounds for deportation. Paragraph 1(a) of Executive Order No. 398 merely
provides that “the Deportation Board, motu proprio or upon complaint of any person, is
authorized to conduct investigations in the manner prescribed in section 69 of the Revised
Administrative Code to determine whether a subject of a foreign power residing in the
Philippines is an undesirable alien or not, and thereafter to recommend to the President of the
Philippines the deportation of such alien.”
As observed by Justice Labrador, there is no legal nor constitutional provision defining the
power to deport aliens because the intention of the law is to grant the Chief Executive “full
discretion to determine whether an alien’s residence in the country is so undesirable as to
affect or injure the security, welfare or interest of the state. The adjudication of facts upon
which deportation is predicated also devolves on the Chief Executive whose decision is final
and executory.” (Tan Tong vs. Deportation Board, 96 Phil. 934, 936; Tan Sin vs. Deportation
Board, 104 Phil. 868, 872).
It has been held that the Chief Executive is the sole and exclusive judge of the existence of
facts which warrant the deportation of aliens, as disclosed in an investigation conducted in
accordance with section 69. No other tribunal is at liberty to reexamine or to controvert the
sufficiency of the evidence on which he acted. (Martin vs. Mott, 12 Wheat., 19, 31, cited in In
re McCulloch Dick,
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Go Tek vs. Deportation Board
38 Phil. 41, 62).
In the Dick case it was noted “that every alien forfeits his right of asylum in the country in
which he resides, in the absence of treaty provisions to the contrary, when his conduct or his
mode of life renders his presence there inimical to the public interests”. “The reasons may be
summed up and condensed in a single word: the public interest of the State.” (38 Phil. 41, 47,
100).
“It is fundamental that an executive order for deportation is not dependent on a prior
judicial conviction in a criminal case” (Ang Beng vs. Commissioner of Immigration, 100 Phil.
801, 803). Thus, it was held that the fact that an alien has been acquitted in a criminal
proceeding of the particular charge does not prevent the deportation of such alien based on
the same charge. Such acquittal does not constitute res judicata in the deportation
proceedings. Conviction of a crime is not necessary to warrant deportation. (3 C.J.S. 743, note
40, citing Lewis vs. Frick, 233 U.S. 291, 58 L. Ed. 967 and U.S. ex. rel. Mastoras vs. McCandless,
61 F. 2nd 366; Tama Miyake vs. U.S.257 F. 732).
And in the Tan Tong case, supra, it was ruled that the Deportation Board could take
cognizance of the charge of illegal importation against an alien, as a ground for deportation,
even if he has not been convicted of that offense.
It should be borne in mind that the decision of the Deportation Board is merely
recommendatory. The Chief Executive has to approve the board’s recommendation. Abuses or
harassments committed by the prosecutor or by the Board should first be brought to his
attention.
WHEREFORE, the lower court’s decision is reversed and set aside. The writ of preliminary
injunction is dissolved. The case is remanded to the Deportation Board for further proceedings.
Costs against the petitioner-appellee.
SO ORDERED.
 No. L-82827. November 14, 1988.*
LUIS D. BELTRAN, petitioner, vs. THE HON. RAMON P. MAKASIAR, Presiding Judge of Branch 35
of the Regional Trial Court, at Manila, THE HON. LUIS VICTOR, CITY FISCAL OF MANILA, PEOPLE
OF THE PHILIPPINES, SUPERINTENDENT OF THE WESTERN POLICE DISTRICT, AND THE
MEMBERS OF THE PROCESS SERVING UNIT AT THE REGIONAL TRIAL COURT OF MANILA,
respondents.
Constitutional Law; Due Process; Preliminary Investigation; Due process does not require
that respondent in a criminal case actually file his counter-affidavits, all that is required is for
said respondent to be given an opportunity to submit his counter-affidavits.—It may also be
added that with respect to petitioner Beltran, the allegation of denial of due process of law in
the preliminary investigation is negated by the fact that instead of submitting his counter-
affidavits, he filed a "Motion to Declare Proceedings Closed," in effect waiving his right to
refute the complaint by filling counter-affidavits. Due process of law does not require that the
respondent in a criminal case actually file his counter-affidavits before the preliminary
investigation is deemed completed. All that is required is that the respondent be given the
opportunity to submit counter-affidavits if he is so minded.
Same; Bill of Rights; Warrant of Arrest; Probable Cause, Determination of; Personal
Examination by the Judge; Based on Circular No. 12, to satisfy the existence of probable cause
for issuance of a warrant of arrest, the judge may rely on the report of the fiscal, and need not
personally examine the complainant and the latter's witnesses.—What the Constitution
underscores is the exclusive and personal responsibility of the issuing judge to satisfy himself
of the existence of probable cause. In satisfying himself of the existence of probable cause for
the issuance of a warrant of arrest, the judge is not required to personally examine the
complainant and his witnesses. Following established doctrine and procedure, he shall: (1)
personally evaluate the report and the supporting documents submitted by the fiscal regarding
the existence of probable cause and, on the basis thereof, issue a warrant of arrest; or (2) if on
the basis thereof he finds no probable cause, he may disregard the fiscal's report and
395
VOL. 167, NOVEMBER 14, 1988 395
Soliven vs. Makasiar
require the submission of supporting affidavits of witnesses to aid him in arriving at a
conclusion as to the existence of probable cause. Sound policy dictates this procedure,
otherwise judges would be unduly laden with the preliminary examination and investigation
of criminal complaints instead of concentrating on hearing and deciding cases filed before their
courts. On June 30,1978, the Supreme Court unanimously adopted Circular No. 12, setting
down guidelines for the issuance of warrants of arrest. The procedure therein provided is
reiterated and clarified in this resolution.
Same; Executive Department; The President; Immunity from Suit; The presidential
privilege of immunity from suit may be invoked only by the holder of the office; and not by any
other person in the President's behalf.—The rationale for the grant to the President of the
privelege of immunity from suit is to assure the exercise of Presidential duties and functions
free from any hindrance or distraction, considering that being the Chief Executive of the
Government is a job that, aside from requiring all of the office-holder's time, also demands
undivided attention. But this privilege of immunity from suit, pertains to the President by
virtue of the office and may be invoked only by the holder of the office; not by any other person
in the President's behalf. Thus, an accused in a criminal case in which the President is
complainant cannot raise the presidential privilege as a defense to prevent the case from
proceeding against such accused. Moreover, there is nothing in our laws that would prevent
the President from waiving the privilege. Thus, if so minded the President may shed the
protection afforded by the privilege and submit to the court's jurisdiction. The choice of
whether to exercise the privilege or to waive it is solely the President's prerogative. It is a
decision that cannot be assumed and imposed by any other person.
GUTIERREZ, JR, J.: Separate Concurring Opinion
Constitutional Law; Bill of Rights; Freedom of the Press; Libel; A prosecution for libel
should not be allowed to continue, where after discounting the possibility that the words may
not really be that libelous, there is likely to be a "chilling effect", a patently inhibiting factor on
the willingness of newspapermen to courageously perform their critical role in society.—This
Court has stressed as authoritative doctrine in Elizalde v. Gutierrez (76 SCRA 448 [1977]) that
a prosecution for libel lacks justification if the offending words find sanctuary within the shelter
of the free press guaranty. In other words, prosecution for libel should not be allowed to
continue, where after discounting the possibility that the words may not be really that libelous,
there is likely to be a chilling effect, a patently inhibiting
396
396 SUPREME COURT REPORTS ANNOTATED
Soliven vs. Makasiar
factor on the willingness of newspapermen, especially editors and publishers to
courageously perform their critical role in society. If, instead of merely reading more carefully
what a columnist writes in his daily column, the editors tell their people to lay off certain issues
or certain officials, the effect 011 a free press would be highly injurious. Because many
questions regarding press freedom are left unanswered by our resolution, I must call attention
to our decisions which caution that "no inroads on press freedom should be allowed in the
guise of punitive action visited on what otherwise should be characterized as libel."
Same; Same; Same; Same; What would ordinarily be slander if directed at a typical
person, should be examined from various perspectives if directed at a high government
official.—As early as March 8,1918, the decision in United States v. Bustos (37 Phil. 731) stated
that "(c)omplete liberty to comment on the conduct of public men is a scalpel in the case of
free speech. The sharp incision of its probe relieves the abscesses of officialdom. Men in public
life may suffer under a hostile and unjust accusation; the wound can be assuaged with the
balm of a clear conscience." The Court pointed out that while defamation is not authorized,
criticism is to be expected and should be borne for the common good. In People v. Perfecto
(43 Phil. 887 [1922]), the Court stated: xxx xxx xxx "xxx No longer is there a Minister of the
Crown or a person in authority of such exalted position that the citizen must speak of him only
with bated breath. 'In the eye of our Constitution and laws, every man is a sovereign, a ruler
and a freeman, and has equal rights with every other man.'" (at p. 900) In fact, the Court
observed that high official position, instead of affording immunity from slanderous and libelous
charges, would actually invite attacks by those who desire to create sensation. It would seem
that what would ordinarily be slander if directed at the typical person should be examined
from various perspectives if directed at a high government official. Again, the Supreme Court
should draw this fine line instead of leaving it to lower tribunals.
PETITION for certiorari and prohibition to review the decision of the Regional Trial Court of
Manila, Br. 35. Makasiar, J.
The facts are stated in the resolution of the Court.
Angara, Abello, Concepcion, Regala and Cruz for petitioners in G.R. No. 82585.
 Perfecto V. Fernandez, Jose P. Fernandez and Cristobal P. Fernandez for petitioner procedure, he shall: (1) personally evaluate the report and the supporting documents
in G.R. Nos. 82827 and 83979. submitted by the fiscal regarding the existence of probable cause and, on the basis thereof,
RESOLUTION issue a warrant of arrest; or (2) if on the basis thereof he finds no probable cause, he may
disregard the fiscal's report and require the submission of supporting affidavits of witnesses to
PER CURIAM: aid him in arriving at a conclusion as to the existence of probable cause.
Sound policy dictates this procedure, otherwise judges would be unduly laden with the
preliminary examination and investigation of criminal complaints instead of concentrating on
In these consolidated cases, three principal issues were raised: (1) whether or not petitioners
hearing and deciding cases filed before their courts.
were denied due process when informations for libel were filed against them although the
On June 30,1987, the Supreme Court unanimously adopted Circular No. 12, setting down
finding of the existence of a prima facie case was still under review by the Secretary of Justice
guidelines for the issuance of warrants of arrest. The procedure therein provided is reiterated
and, subsequently, by the President; (2) whether or not the constitutional rights of Beltran
and clarified in this resolution.
were violated when respondent RTC judge issued a warrant for his arrest without personally
It has not been shown that respondent judge has deviated from the prescribed procedure.
examining the complainant and the witnesses, if any, to determine probable cause; and (3)
Thus, with regard to the issuance of the warrants of arrest, a finding of grave abuse of
whether or not the President of the Philippines, under the Constitution, may initiate criminal
discretion amounting to lack or excess of jurisdiction cannot be sustained.
proceedings against the petitioners through the filing of a complaint-affidavit.
Anent the third issue, petitioner Beltran argues that "the reasons which necessitate
Subsequent events have rendered the first issue moot and academic. On March 30,1988,
presidential immunity from suit impose a correlative disability to file suit". He contends that if
the Secretary of Justice denied petitioners' motion for reconsideration and upheld the
criminal proceedings ensue by virtue of the President's filing of ber complaint-affidavit, she
resolution of the Undersecretary of Justice sustaining the City Fiscal's finding of a prima
may subsequently have to be a witness for the prosecution, bringing her under the trial court's
facie case against petitioners. A second motion for reconsideration filed by petitioner Beltran
jurisdiction. This, continues Beltran, would in an indirect way defeat her privilege of immunity
was denied by the Secretary of Justice on April 7,1988. On appeal, the President, through the
from suit, as by testifying on the witness stand, she would be exposing herself to possible
Executive Secretary, affirmed the resolution of the Secretary of Justice on May 2, 1988. The
contempt of court or perjury.
motion for reconsideration was denied by the Executive Secretary on May 16, 1988. With these
The rationale for the grant to the President of the privilege of immunity from suit is to
developments, petitioners' contention that they have been denied the administrative
assure the exercise of Presidential duties and functions free from any hindrance 01; distraction,
remedies available under the law has lost factual support.
considering that being the Chief Executive of the Government is a job that, aside from requiring
It may also be added that with respect to petitioner Beltran, the allegation of denial of due
all of the office-holder's time, also demands undivided attention.
process of law in the preliminary investigation is negated by the fact that instead of submitting
But this privilege of immunity from suit, pertains to the President by virtue of the office
his counter-affidavits, he filed a "Motion to Declare Proceedings Closed", in effect waiving his
and may be invoked only by the holder of the office; not by any other person in the President's
right to refute the complaint by filing counter-affidavits. Due process of law does not require
behalf. Thus, an accused in a criminal case in which the President is complainant cannot raise
that the respondent in a criminal case actually file his counter-affidavits before the preliminary
the presidential privilege as a defense to prevent the case from proceeding against such
investigation is deemed completed. All that is required is that the respondent be given the
accused.
opportunity to submit counter-affidavits if he is so minded. The second issue, raised by
Moreover, there is nothing in our laws that would prevent the President from waiving the
petitioner Beltran, calls for an interpretation of the constitutional provision on the issuance of
privilege. Thus, if so minded the President may shed the protection afforded by the privilege
warrants of arrest. The pertinent provision reads:
and submit to the court's jurisdiction. The choice of whether to exercise the privilege or to
Art. III, Sec. 2. The right of the people to be secure in their persons, houses, papers and effects
waive it is solely the President's prerogative. It is a decision that cannot be assumed and
against unreasonable searches and seizures of whatever nature and for any purpose shall be
imposed by any other person.
inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause
As regards the contention of petitioner Beltran that he could not be held liable for libel
to be determined personally by the judge after examination under oath or affirmation of the
because of the privileged character 01 the publication, the Court reiterates that it is not a trier
complainant and the witnesses he may produce, and particularly describing the place to be
of facts and that such a defense is best left to the trial court to appreciate after receiving the
searched and the persons or things to be seized.
evidence of the parties.
The addition of the word "personally" after the word "determined" and the deletion of the
As to petitioner Beltran's claim that to allow the libel case to proceed would produce a
grant of authority by the 1973 Constitution to issue warrants to "other responsible officers as
"chilling effect" on press freedom, the Court finds no basis at this stage to rule on the point.
may be authorized by law", has apparently convinced petitioner Beltran that the Constitution
The petitions fail to establish that public respondents, through their separate acts, gravely
now requires the judge to personally examine the complainant and his witnesses in his
abused their discretion as to amount to lack of jurisdiction. Hence, the writs of certiorari and
determination of probable cause for the issuance of warrants of arrest. This is not an accurate
prohibition prayed for cannot issue.
interpretation.
WHEREFORE, finding no grave abuse of discretion amounting to excess or lack of
What the Constitution underscores is the exclusive and personal responsibility of the
jurisdiction on the part of the public respondents, the Court Resolved to DISMISS the petitions
issuing judge to satisfy himself of the existence of probable cause. In satisfying himself of the
in G. R. Nos. 82585, 82827 and 83979. The Order to maintain the status quo contained in the
existence of probable cause for the issuance of a warrant of arrest, the judge is not required
Resolution of the Court en banc dated April 7, 1988 and reiterated in the Resolution dated April
to personally examine the complainant and his witnesses. Following established doctrine and
26,1988 is LIFTED.
 ——————
[No. 37878. November 25, 1932]
MANILA ELECTRIC COMPANY, petitioner, vs. PASAY TRANSPORTATION COMPANY, INC., ET AL., respondents.
1.CONSTITUTIONAL LAW; ACT NO. 1446, SECTION 11, VALIDITY OF; MEMBERS OF THE SUPREME COURT SITTING
AS A BOARD OF ARBITRATORS; DIVISION OF POWERS.—The Supreme Court of the Philippine Islands
represents one of the three divisions of power in the Philippine Government. It is judicial
power and judicial power only which is exercised by the Supreme Court. The Supreme
Court and its members should not and cannot be required to exercise any power or to
perform any trust or to assume any duty not pertaining to or connected with the
administering of judicial functions.
2.ID.; ID.; ID.; ID.; JURISDICTION OF THE SUPREME COURT.—The Supreme Court exercises jurisdiction as
a court and this jurisdiction does not include the exercise of jurisdiction by the members
of the Supreme Court sitting as a board of arbitrators.
3.ID.; ID.; ID.; ID.; ID.—A board of arbitrators is not a "court" in any proper sense of the term
and possesses none of the jurisdiction which the Organic Act contemplates shall be exercised
by the Supreme Court.
4.ID.; ID.; ID.; ID.; ID.; ARBITRATION AND AWARD.—Arbitration represents a method of the parties'
own choice. A submission to arbitration is a contract. A clause in a contract providing that
all matters in dispute between the parties shall be referred to arbitrators and to them
alone is contrary to public policy and cannot oust the courts of jurisdiction. However,
unless the arbitration agreement is such as absolutely to close the doors of the courts
against the parties, the courts should look with favor upon such amicable arrangements.
5.ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR.—Section 11 of Act No. 1446 contravenes the maxims which
guide the operation of a democratic government constitutionally established.
6.ID.; ID,; ID.; ID.; ID.; ID.; ID.—It would be improper and illegal for the members of the Supreme
Court, to sit as a board of arbitrators the decision of a majority of whom shall be final.
ORIGINAL ACTION in tjae Supreme Court. Petition under the provisions of section 11 of Act No.
1446.
The facts are stated in the opinion of the court.
Ross, Lawrence & Selph for petitioner.
Rivera & Francisco for respondent Pasay Transportation Co.
P. A. Remigio for respondent E. B. Gutierrez.
A. M. Zarate for respondent Raymundo Transportation Co.
Vicente Ampil for respondent J. Ampil.
MALCOLM, J.:
The preliminary and basic question presented by the petition of the Manila Electric
Company, requesting the members of the Supreme Court, sitting as a board of arbitrators, to
fix the terms upon which certain transportation com-
602
602 PHILIPPINE REPORTS ANNOTATED
Manila Electric Co. vs. Pasay Transportation Co.
panies shall be permitted to use the Pasig bridge of the Manila Electric Company and the
compensation to be paid to the Manila Electric Company by such transportation companies,
relates to the validity of section 11 of Act No. 1446 and to the legal right of the members of
the Supreme Court, sitting as a board of arbitrators, to act on the petition. Act No. 1446 above
referred to is entitled, "An Act granting a franchise to Charles M. Swift to construct, maintain,
and operate an electric railway, and to construct, maintain, and operate an electric light, heat,
and power system from a point in the City of Manila in an easterly direction to the town of
Pasig, in the Province of Rizal." Section 11 of the Act provides: "Whenever any franchise or
right of way is granted to any other person or corporation, now or hereafter in existence, over
portions of the lines and tracks of the grantee herein, the terms on which said other person or
corporation shall use such right of way, and the compensation to be paid to the grantee herein
by such other person or corporation for said use, shall be fixed by the members of the Supreme
Court, sitting as a board of arbitrators, the decision of a majority of whom shall be final."
When the petition of the Manila Electric Company was filed in this court, it was ordered
that the petitioner be required to serve copies on the Attorney-General and the transportation
companies -affected by the petition. Thereafter, the Attorney-General disclaimed any interest
in the proceedings, and opposition was entered to the petition by a number of public utility
operators. On the submission of memoranda after an oral hearing, the petition was made
ready for resolution.
Examining the statutory provision which is here invoked, it is first noted that power is
attempted to be granted to the members of the Supreme Court sitting as a board of arbitrators
and not to the Supreme Court as an entity. It
603
VOL. 57, NOVEMBER 25, 1932 603
Manila Electric Co. vs. Pasay Transportation Co.
is next seen that the decision of a majority of the members of the Supreme Court is made final.
And it is finally observed that the franchise granted the Manila Electric Company by the
Government of the Philippine Islands, although only a contract between the parties to it, is
now made to effect the rights of persons not signatories to the covenant.
The law calls for arbitration which represents a method of the parties' own choice. A
submission to arbitration is a contract. The parties to an arbitration agreement may not oust
the courts of jurisdiction of the matters submitted to arbitration. These are familiar rules which
find support in articles 1820 and 1821 of the Civil Code. Citation of authority is hardly
necessary, except that it should be recalled that in the Philippines, and in the United States for
that matter, it has been held that a clause in a contract, providing that all matters in dispute
between the parties shall be referred to arbitrators and to them alone, is contrary to public
policy and cannot oust the courts of jurisdiction. (Wahl and Wahl vs. Donaldson, Sims & Co.
[1903], 2 Phil., 301; Puentebella vs. Negros Coal Co. [1927], 50 Phil., 69; Vega vs. San Carlos
Milling Co. [1924], 51 Phil., 908; District of Columbia vs. Bailey [1897], 171 U. S., 161.)
We would not be understood as extending the principles governing arbitration and award
too far. Unless the arbitration agreement is such as absolutely to close the doors of the courts
against the parties, the courts should look with favor upon such amicable arrangements. We
can also perceive a distinction between a private contract for submission to arbitration and
agreements to arbitrate falling within the terms of a statute enacted for such purpose and
affecting others than the parties to a particular franchise. Here, however, whatever else may
be said in extenuation, it remains true that the decision of the board of arbitrators is made
final, which if literally enforced
604
604 PHILIPPINE REPORTS ANNOTATED
Manila Electric Co. vs. Pasay Transportation Co.
would leave a public utility, not a party to the contract authorized by Act No. 1446, without
recourse to the courts for a judicial determination of the question in dispute.
 Counsel for the petitioner rely principally on the case of Tallassee Falls Mfg. 606 PHILIPPINE REPORTS ANNOTATED
Co. vs. Commissioners' Court [1908], 158 Ala., 263. It was there held that an Act of a state
legislature authorizing the commissioners' court of a certain county to regulate and fix the rate Manila Electric Co. vs. Pasay Transportation Co.
of toll to be charged by the owners of a bridge is not unconstitutional as delegating legislative other. * * * Its jurisdiction and powers and duties being defined in the organic law of
power to the courts. But that is not the question before us. Here the question is not one of the government, and being all strictly judicial, Congress cannot require or authorize the court
whether or not there has been a delegation of legislative authority to a court. More precisely, to exercise any other jurisdiction or power, or perform any other duty. * * * The award
the issue concerns the legal right of the members of the Supreme Court, sitting as a board of of execution is a part, and an essential part of every judgment passed by a court exercising
arbitrators the decision of a majority of whom shall be final, to act in that capacity. judicial power. It is no judgment, in the legal sense of the term, without it. Without such an
We run counter to this dilemma. Either the members of the Supreme Court, sitting as a award the judgment would be inoperative and nugatory, leaving the aggrieved party without
board of arbitrators, exercise judicial functions, or the members of the Supreme Court, sitting a remedy. It would be merely an opinion, which would remain a dead letter, and without any
as a board of arbitrators, exercise administrative or quasi judicial functions. The first case operation upon the rights of the parties, unless Congress should at some future time sanction
would appear not to fall within the jurisdiction granted the Supreme Court. Even conceding it, and pass a law authorizing the court to carry its opinion into effect. Such is not the judicial
that it does, it would presuppose the right to bring the matter in dispute before the courts, for power confided to this court, in the exercise of its appellate jurisdiction; yet it is the whole
any other construction would tend to oust the courts of jurisdiction and render the award a power that the court is allowed to exercise under this act of Congress, * * * And while it
nullity. But if this be the proper construction, we would then have the anomaly of a decision executes firmly all the judicial powers entrusted to it, the court will carefully abstain from
by the members of the Supreme Court, sitting as a board of arbitrators, taken therefrom to the exercising any power that is not strictly judicial in its character, and which is not clearly
courts and eventually coming before the Supreme Court, where the Supreme Court would confided to it by the Constitution. * * *" (Gordon vs. United States [1864], 2 Wall., 561;
review the decision of its members acting as arbitrators. Or in the second case, if the functions 117 U. S„ 697, Appendix.)
performed by the members of the Supreme Court, sitting as a board of arbitrators, be con- Confining the decision to the basic question at issue, the Supreme Court holds that section
sidered as administrative or quasi judicial in nature, that would result in the porformance of 11 of Act No. 1446 contravenes the maxims which guide the operation of a democratic
duties which the members of the Supreme Court could not lawfully take it upon government constitutionally established, and that it would be improper and illegal for the
605 members of the Supreme Court, sitting as a board of arbitrators, the decision of a majority of
whom shall be final, to act on the petition of the Manila Electric Company. As a result, the
VOL. 57, NOVEMBER 25, 1932 605
members of the Supreme Court decline to proceed further in the matter.
Manila Electric Co. vs. Pasay Transportation Co. Avancena, C.J., Street, Villamor, Ostrand, Villa-Real, Ahad Santos, Hull, Vickers,
themselves to perform. The present petition also furnishes an apt illustration of another Imperial, and Butte, JJ., concur.
anomaly, for we find the Supreme Court as a court asked to determine if the members of the Petition denied.
court may be constituted a board of arbitrators, which is not a court at all.
The Supreme Court of the Philippine Islands represents one of the three divisions of power © Copyright 2018 Central Book Supply, Inc. All rights reserved.
in our government. It is judicial power and judicial power only which is exercised by the
Supreme Court. Just as the Supreme Court, as the guardian of constitutional rights, should not
sanction usurpations by any other department of the government, so should it as strictly
confine its own sphere of influence to the powers expressly or by implication conferred on it
by the Organic Act. The Supreme Court and its members should not and cannot be required to
exercise any power or to perform any trust or to assume any duty not pertaining to or
connected with the administering of judicial functions.
The Organic Act provides that the Supreme Court of the Philippine Islands shall possess
and exercise jurisdiction as heretofore provided and such additional jurisdiction as shall
hereafter be prescribed by law (sec. 26). When the Organic Act speaks of the exercise of
"jurisdiction" by the Supreme Court, it could only mean the exercise of "jurisdiction" by the
Supreme Court acting as a court, and could hardly mean the exercise of "jurisdiction" by the
members of the Supreme Court, sitting as a board of arbitrators. There is an important
distinction between the Supreme Court as an entity and the members of the Supreme Court.
A board of arbitrators is not a "court" in any proper sense of the term, and possesses none of
the jurisdiction which the Organic Act contemplates shall be exercised by the Supreme Court.
In the last judicial paper from the pen of Chief Justice Taney, it was said:
"The power conferred on this court is exclusively judicial, and it cannot be required or
authorized to exercise any
606
 No. L-78780. July 23, 1987.*
DAVID G. NITAFAN, WENCESLAO M. POLO, and MAXIMO A. SAVELLANO, JR.,
petitioners, vs. COMMISSIONER OF INTERNAL REVENUE and THE FINANCIAL OFFICER,
SUPREME COURT OF THE PHILIPPINES, respondents.
Constitutional Law; Salaries of Justices and Judges subject to income taxation; Ruling in
Perfecto vs. Meer and Endencia vs. David, discarded.—lt may be pointed out that, early on, the
Court had dealt with the matter administratively in response to representations that the Court
direct its Finance Officer to discontinue the withholding of taxes from salaries of members of
the Bench. Thus, on June 4, 1987, the Court en banc had re-affirmed the Chief Justice's
directive as follows: "RE: Question of exemption from income taxation.—The Court
REAFFIRMED the Chief Justice's previous and standing directive to the Fiscal Management and
Budget Office of this Court to continue with the deduction of the withholding taxes from the
salaries of the Justices of the Supreme Court as well as from the salaries of all other members
of the judiciary." That should have resolved the question. However, with the filing of this
petition, the Court has deemed it best to settle the legal issue raised through this judicial
pronouncement. As will be shown hereinafter, the clear intent of the Constitutional
Commission was to delete the proposed express grant of exemption from payment of income
tax to members of the Judiciary, so as to "give substance to equality among the three branches
of Government" in the words of Commissioner Rigos. In the course of the deliberations, it was
further expressly made clear, specially with regard to Commissioner Joaquin F. Bernas'
accepted amendment to the amendment of Commissioner Rigos, that the salaries of members
of the Judiciary would be subject to the general income tax applied to all taxpayers. This intent
was somehow and inadvertently not clearly set forth in the final text of the Constitution as
approved and ratified in February, 1987 (infra, pp. 7-8). Although the intent may have been
obscured by the failure to include in the General Provisions a proscription against exemption
of any public officer or employee, including constitutional officers, from payment of income
tax, the Court since then has authorized the continuation of the deduction of the withholding
tax from the salaries of the
_______________
*EN BANC.
285
VOL. 152, JULY 23, 1987 285
Nitafan vs. Commissioner of lnternal Revenue
members of the Supreme Court, as well as from the salaries of all other members of the
Judiciary. The Court hereby makes of record that it had then discarded the ruling in Perfecto
vs. Meer and Endencia vs. David, infra, that declared the salaries of members of the Judiciary
exempt from payment of the income tax and considered such payment as a diminution of their
salaries during their continuance in office. The Court hereby reiterates that the salaries of
Justices and Judges are properly subject to a general income tax law applicable to all income
earners and that the payment of such income tax by Justices and Judges does not fall within
the constitutional protection against decrease of their salaries during their continuance in
office.
Statutory Construction; Intent of the framers of the organic law and of the people
adopting it should be given effect.—The debates, interpellations and opinions expressed
regarding the constitutional provision in question until it was finally approved by the
Commission disclosed that the true intent of the framers of the 1987 Constitution, in adopting
it, was to make the salaries of members of the Judiciary taxable. The ascertainment of that
intent is but in keeping with the fundamental principle of constitutional construction that the
intent of the framers of the organic law and of the people adopting it should be given effect.
The primary task in constitutional construction is to ascertain and thereafter assure the
realization of the purpose of the framers and of the people in the adoption of the Constitution.
It may also be safely assumed that the people in ratifying the Constitution were guided mainly
by the explanation offered by the framers. Besides, construing Section 10, Articles VIII, of the
1987 Constitution, which, for clarity, is again reproduced hereunder: "The salary of the Chief
Justice and of the Associate Justices of the Supreme Court, and of judges of lower courts shall
be fixed by law. During their continuance in office, their salary shall not be decreased." (Italics
supplied). It is plain that the Constitution authorizes Congress to pass a law fixing another rate
of compensation of Justices and Judges but such rate must be higher than that which they are
receiving at the time of enactment, or if lower, it would be applicable only to those appointed
after its approval. It would be a strained construction to read into the provision an exemption
from taxation in the light of the discussion in the Constitutional Commission.
RESOLUTION
286
286 SUPREME COURT REPORTS ANNOTATED
Nitafan vs. Commissioner of Internal Revenue
MELENCIO-HERRERA, J.:
Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53,
respectively, of the Regional Trial Court, National Capital Judicial Region, all with stations in
Manila, seek to prohibit and/or perpetually enjoin respondents, the Commissioner of Internal
Revenue and the Financial Officer of the Supreme Court, from making any deduction of
withholding taxes from their salaries.
In a nutshell, they submit that "any tax withheld from their emoluments or compensation
as judicial officers constitutes a decrease or diminution of their salaries, contrary to the
provision of Section 10, Article VIII of the 1987 Constitution mandating that '(d)uring their
continuance in office, their salary shall not be decreased,' even as it is anathema to the ideal
of an independent judiciary envisioned in and by said Constitution."
It may be pointed out that, early on, the Court had dealt with the matter administratively
in response to representations that the Court direct its Finance Officer to discontinue the
withholding of taxes from salaries of members of the Bench. Thus, on June 4, 1987, the
Court en banc had reaffirmed the Chief Justice's directive as follows:
"RE: Question of exemption from income taxation.—The Court REAFFIRMED the Chief Justice's
previous and standing directive to the Fiscal Management and Budget Office of this Court to
continue with the deduction of the withholding taxes from the salaries of the Justices of the
Supreme Court as well as from the salaries of all other members of the judiciary."
That should have resolved the question. However, with the filing of this petition, the Court has
deemed it best to settle the legal issue raised through this judicial pronouncement. As will be
shown hereinafter, the clear intent of the Constitutional Commission was to delete the
proposed express grant of exemption from payment of income tax to members of the
Judiciary, so as to "give substance to equality among the three branches of Government" in
the words of Commissioner Rigos. In the course of the deliberations, it was further expressly
made clear, specially with regard to Commissioner Joa-
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Nitafan vs. Commissioner of lnternal Revenue
quin F. Bernas' accepted amendment to the amendment of Commissioner Rigos, that the
salaries of members of the Judiciary would be subject to the general income tax applied to all
taxpayers.
This intent was somehow and inadvertently not clearly set forth in the final text of the
Constitution as approved and ratified in February, 1987 (infra, pp. 7-8). Although the intent
may have been obscured by the failure to include in the General Provisions a proscription
against exemption of any public officer or employee, including constitutional officers, from
payment of income tax, the Court since then has authorized the continuation of the deduction
of the withholding tax from the salaries of the members of the Supreme Court, as well as from
the salaries of all other members of the Judiciary. The Court hereby makes of record that it had
then discarded the ruling in Perfecto vs. Meer and Endencia vs. David, infra, that declared the
salaries of members of the Judiciary exempt from payment of the income tax and considered
such payment as a diminution of their salaries during their continuance in office. The Court
hereby reiterates that the salaries of Justices and Judges are properly subject to a general
income tax law applicable to all income earners and that the payment of such income tax by
Justices and Judges does not fall within the constitutional protection against decrease of their
salaries during their continuance in office.
A comparison of the Constitutional provisions involved is called for. The 1935 Constitution
provided:
"x x x (The members of the Supreme Court and all judges of inferior courts) shall receive such
compensation as may be fixed by law, which shall not be diminished during their continuance
in office x x x".1 (Italics supplied).
Under the 1973 Constitution, the same provision read:
"The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of
judges of inferior courts shall be fixed by law, which shall not be decreased during their
continuance in office.
_______________
1Section 9, Article VIII.
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288 SUPREME COURT REPORTS ANNOTATED
Nitafan vs. Commissioner of Internal Revenue
x x x".2 (Emphasis ours).
And in respect of income tax exemption, another provision in the same 1973 Constitution
specifically stipulated:
"No salary or any form of emolument of any public officer or employee, including
constitutional officers, shall be exempt from payment of income tax. "3
The provision in the 1987 Constitution, which petitioners rely on, reads:
"The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of
judges of lower courts shall be fixed by law. During their continuance in office, their salary shall
not be decreased. "4(Italics supplied).
The 1987 Constitution does not contain a provision similar to Section 6, Article XV of the 1973
Constitution, for which reason, petitioners claim that the intent of the framers is to revert to
the original concept of "non-diminution" of salaries of judicial officers.
The deliberations of the 1986 Constitutional Commission relevant to Section 10, Article
VIII, negate such contention.
The draft proposal of Section 10, Article VIII, of the 1987 Constitution read:
"Section 13. The salary of the Chief Justice and the Associate Justices of the Supreme Court
and of judges of the lower courts shall be fixed by law. During their continuance in office, their
salary shall not be diminished nor subjected to income tax. Until the National Assembly shall
provide otherwise, the Chief Justice shall receive an annual salary of ____________and each
Associate Justice __________pesos. "5 (Emphasis ours)
During the debates on the draft Article (Committee Report
_______________
2 Section 10, Article X.
3 Section 6, Article XV, General Provisions.
4 Section 10, Article VIII.
5 Record of the Constitutional Commission, Vol. I, p. 433.
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VOL. 152, JULY 23, 1987 289
Nitafan vs. Commissioner of lnternal Revenue
No. 18), two Commissioners presented their objections to the provision on tax exemption,
thus:
"MS. AQUINO. Finally, on the matter of exemption from tax of the salary of justices, does this
not violate the principle of the uniformity of taxation and the principle of equal protection of
the law? After all, tax is levied not on the salary but on the combined income, such that when
the judge receives a salary and it is comingled with the other income, we tax the income, not
the salary. Why do we have to give special privileges to the salary of justices?
"MR. CONCEPCION. It is the independence of the judiciary. We prohibit the increase or
decrease of their salary during their term. This is an indirect way of decreasing their salary and
affecting the independence of the judges.
"MS. AQUINO. I appreciate that to be in the nature of a clause to respect tenure, but the
special privilege on taxation might, in effect, be a violation of the principle of uniformity in
taxation and the equal protection clause.6
x x x
"MR. OPLE. x x x
"Of course, we share deeply the concern expressed by the sponsor, Commissioner Roberto
Concepcion, for whom we have the highest respect, to surround the Supreme Court and the
judicial system as a whole with the whole armor of defense against the executive and
legislative invasion of their independence. But in so doing, some of the citizens outside,
especially the humble government employees, might say that in trying to erect a bastion of
justice, we might end up with the fortress of privileges, an island of extra territoriality under
the Republic of the Philippines, because a good number of powers and rights accorded to the
Judiciary here may not be enjoyed in the remotest degree by other employees of the
government.
" An example is the exception from income tax, which is a kind of economic immunity,
which is, of course, denied to the entire executive department and the legislative."7
And during the period of amendments on the draft Article, on July 14, 1986, Commissioner
Cirilo A. Rigos proposed that
_______________
 6Record of the Constitutional Commission, p. 460.
7ibid., at page 467.
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290 SUPREME COURT REPORTS ANNOTATED
Nitafan vs. Commissioner of Internal Revenue
the term "diminished" be changed to "decreased" and that the words "nor subjected to income
tax" be deleted so as to "give substance to equality among the three branches in the
government."
Commissioner Florenz D. Regalado, on behalf of the Committee on the Judiciary, defended
the original draft and referred to the ruling of this Court in Perfecto vs. Meer8 that "the
independence of the judges is of far greater importance than any revenue that could come
from taxing their salaries." Commissioner Rigos then moved that the matter be put to a vote.
Commissioner Joaquin G. Bernas stood up "in support of an amendment to the amendment
with the request for a modification of the amendment," as follows:
"FR. BERNAS. Yes. I am going to propose an amendment to the amendment saying that it is not
enough to drop the phrase 'shall not be subjected to income tax,' because if that is all that the
Gentleman will do, then he will just fall back on the decision in Perfecto vs. Meer and in Dencia
vs. David [should be Endencia and Jugo vs. David, etc., 93 Phil. 696[ which excludes them from
income tax, but rather I would propose that the statement will read: 'During their continuance
in office, their salary shall not be diminished BUT MAY BE SUBJECT TO GENERAL INCOME TAX.'
In support of this position, I would say that the argument seems to be that the justice and
judges should not be subjected to income tax because they already gave up the income from
their practice. That is true also of Cabinet members and all other employees. And I know right
now, for instance, there are many people who have accepted employment in the government
involving a reduction of income and yet are still subject to income tax. So, they are not the only
citizens whose income is reduced by accepting service in government."
Commissioner Rigos accepted the proposed amendment to the amendment. Commissioner
Rustico F. de los Reyes, Jr. then moved for a suspension of the session. Upon resumption,
Commissioner Bernas announced:
"During the suspension, we came to an understanding with the original proponent,
Commissioner Rigos, that his amendment on page 6,. line 4 would read: 'During their
continuance in office, their salary
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885 Phil. 552 (1950).
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Nitafan vs. Commissioner of Internal Revenue
shall not be DECREASED.' But this is on the understanding that there will be a provision in the
Constitution similar to Section 6 of Article XV, the General Provisions of the 1973 Constitution,
which says:
'No salary or any form of emolument of any public officer or employee, including constitutional
officers, shall be exempt f from payment of income tax.'
"So, we put a period (.) after 'DECREASED' on the understanding that the salary of justices
is subject to tax."
When queried about the specific Article in the General Provisions on non-exemption from tax
of salaries of public officers, Commissioner Bernas replied:
"FR. BERNAS. Yes, I do not know if such an article will be found in the General Provisions. But
at any rate, when we put a period (.) after 'DECREASED,' it is on the understanding that the
doctrine in Perfecto vs. Meer and Dencia vs. David will not apply anymore."
The amendment to the original draft, as discussed and understood, was finally approved
without objection.
"THE PRESIDING OFFICER (Mr. Bengzon). The understanding, therefore, is that there will be a
provision under the Article on General Provisions. Could Commissioner Rosario Braid kindly
take note that the salaries of officials of the government including constitutional officers shall
not be exempt from income tax? The amendment proposed herein and accepted by the
Committee now reads as follows: 'During their continuance in office, their salary shall not be
DECREASED'; and the phrase 'nor subjected to income tax' is deleted."9
The debates, interpellations and opinions expressed regarding the constitutional provision in
question until it was finally approved by the Commission disclosed that the true intent of the
framers of the 1987 Constitution, in adopting it, was to make the salaries of members of the
Judiciary taxable. The ascertainment of that intent is but in keeping with the fundamental
principle of constitutional construction that the intent of the framers of the organic law and of
the people adopting it should be given effect.10 The primary task in constitutional construction
is to ascertain and thereafter assure the realization of the purpose of the framers and of the
people in the adoption of the Constitution.11 It may also be safely assumed that the people in
ratifying the Constitution were guided mainly by the explanation offered by the framers. 12
Besides, construing Section 10, Articles VIII, of the 1987 Constitution, which, for clarity, is
again reproduced hereunder:
"The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of
judges of lower courts shall be fixed by law. During their continuance in office, their salary shall
not be decreased." (Italics supplied).
it is plain that the Constitution authorizes Congress to pass a law fixing another rate of
compensation of Justices and Judges but such rate must be higher than that which they are
receiving at the time of enactment, or if lower, it would be applicable only to those appointed
after its approval. It would be a strained construction to read into the provision an exemption
from taxation in the light of the discussion in the Constitutional Commission.
With the foregoing interpretation, and as stated heretofore, the ruling that "the
imposition of income tax upon the salary of judges is a dimunition thereof, and so violates the
Constitution" in Perfecto vs. Meer,13 as affirmed in Endencia vs. David14 must be declared
discarded. The framers of the fundamental law, as the alter ego of the people, have expressed
in clear and unmistakable terms the meaning and import of Section 10, Article VIII, of the 1987
Constitution that they have adopted.
Stated otherwise, we accord due respect to the intent of the people, through the
discussions and deliberations of their representatives, in the spirit that all citizens should bear
their aliquot part of the cost of maintaining the government and should share the burden of
general income taxation equitably.
WHEREFORE, the instant petition for Prohibition is hereby dismissed.