THIRD DIVISION

PLARIDEL M. ABAYA, G.R. No. 167919

COMMODORE PLARIDEL
C. GARCIA (retired) and PMA Present:
59 FOUNDATION, INC., rep.
by its President, COMMODORE
CARLOS L. AGUSTIN YNARES-SANTIAGO, J.
(retired), Chairperson,
Petitioners, AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
- versus -

HON. SECRETARY Promulgated:

HERMOGENES E. EBDANE,
JR., in his capacity as Secretary
of the DEPARTMENT OF PUBLIC February 14, 2007
WORKS and HIGHWAYS, HON.
SECRETARY EMILIA T. BONCODIN,
in her capacity as Secretary of the
DEPARTMENT OF BUDGET and
MANAGEMENT, HON. SECRETARY
CESAR V. PURISIMA, in his capacity
as Secretary of the DEPARTMENT OF
FINANCE, HON. TREASURER NORMA
L. LASALA, in her capacity as Treasurer
of the Bureau of Treasury, and CHINA ROAD
and BRIDGE CORPORATION,
Respondents.

x------------------------------------------------------------------------------------------------------------------------------x

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for certiorari and prohibition under Rule 65 of the Rules of Court seeking to

set aside and nullify Resolution No. PJHL-A-04-012 dated May 7, 2004 issued by the Bids and Awards Committee

(BAC) of the Department of Public Works and Highways (DPWH) and approved by then DPWH Acting Secretary

Florante Soriquez. The assailed resolution recommended the award to private respondent China Road & Bridge

Corporation of the contract for the implementation of civil works for Contract Package No. I (CP I), which consists

of the improvement/rehabilitation of the San Andres (Codon)-Virac-Jct. Bago-Viga road, with the length of 79.818

kilometers, in the island province of Catanduanes.

 The CP I project is one of the four packages comprising the project for the improvement/rehabilitation of

the Catanduanes Circumferential Road, covering a total length of about 204.515 kilometers, which is the main

highway in Catanduanes Province. The road section (Catanduanes Circumferential Road) is part of the Arterial

Road Links Development Project (Phase IV) funded under Loan Agreement No. PH-P204 dated December 28,

1999 between the Japan Bank for International Cooperation (JBIC) and the Government of the Republic of

the Philippines.

Background

Based on the Exchange of Notes dated December 27, 1999, [1] the Government of Japan and the

Government of the Philippines, through their respective representatives, namely, Mr. Yoshihisa Ara, Ambassador

Extraordinary and Plenipotentiary of Japan to the Republic of the Philippines, and then Secretary of Foreign Affairs

Domingo L. Siazon, have reached an understanding concerning Japanese loans to be extended to the

Philippines. These loans were aimed at promoting our countrys economic stabilization and development efforts.

The Exchange of Notes consisted of two documents: (1) a Letter from the Government of Japan, signed by

Ambassador Ara, addressed to then Secretary of Foreign Affairs Siazon, confirming the understanding reached

between the two governments concerning the loans to be extended by the Government of Japan to the Philippines;

and (2) a document denominated as Records of Discussion where the salient terms of the loans as set forth by the

Government of Japan, through the Japanese delegation, were reiterated and the said terms were accepted by the

Philippine delegation. Both Ambassador Ara and then Secretary Siazon signed the Records of Discussion as

representatives of the Government of Japan and Philippine Government, respectively.

The Exchange of Notes provided that the loans to be extended by the Government of Japan to

the Philippines consisted of two loans: Loan I and Loan II. The Exchange of Notes stated in part:

1. A loan in Japanese yen up to the amount of seventy-nine billion eight hundred and sixty-
one million yen (Y79,861,000,000) (hereinafter referred to as the Loan I) will be extended, in
accordance with the relevant laws and regulations of Japan, to the Government of the Republic of
the Philippines (hereinafter referred to as the Borrower I) by the Japan Bank for International
Cooperation (hereinafter referred to as the Bank) to implement the projects enumerated in the
 List A attached hereto (hereinafter referred to as the List A) according to the allocation for each
project as specified in the List A.

2. (1) The Loan I will be made available by loan agreements to be concluded between the
Borrower I and the Bank. The terms and conditions of the Loan I as well as the procedure for its
utilization will be governed by said loan agreements which will contain, inter alia, the following
principles:
...

(2) Each of the loan agreements mentioned in sub-paragraph (1) above will be concluded after
the Bank is satisfied of the feasibility, including environmental consideration, of the project to
which such loan agreement relates.

3. (1) The Loan I will be made available to cover payments to be made by the Philippine
executing agencies to suppliers, contractors and/or consultants of eligible source countries under
such contracts as may be entered into between them for purchases of products and/or services
required for the implementation of the projects enumerated in the List A, provided that such
purchases are made in such eligible source countries for products produced in and/or services
supplied from those countries.

(2) The scope of eligible source countries mentioned in sub-paragraph (1) above will be
agreed upon between the authorities concerned of the two Governments.

(3) A part of the Loan I may be used to cover eligible local currency requirements for the
implementation of the projects enumerated in the List A.

4. With regard to the shipping and marine insurance of the products purchased under the
Loan I, the Government of the Republic of the Philippines will refrain from imposing any
restrictions that may hinder fair and free competition among the shipping and marine insurance
companies.

x x x x[2]

Pertinently, List A, which specified the projects to be financed under the Loan I, includes the Arterial Road

Links Development Project (Phase IV), to wit:

LIST A

Maximum amount
in million yen)

1. Secondary Education Development and

Improvement Project 7,210

2. Rural Water Supply Project (Phase V) 951

3. Bohol Irrigation Project (Phase II) 6,078

4. Agrarian Reform Infrastructure Support

Project (Phase II) 16,990

5. Arterial Road Links Development Project

(Phase IV) 15,384
6. Cordillera Road Improvement Project 5,852

7. Philippines-Japan Friendship Highway Mindanao

Section Rehabilitation Project (Phase II) 7,434

8. Rehabilitation and Maintenance of Bridges

Along Arterial Roads Project (Phase IV) 5,068

9. Maritime Safety Improvement Project

(Phase C) 4,714

10. Pinatubo Hazard Urgent Mitigation Project

(Phase II) 9,013
 11. Pasig-Marikina River Channel Improvement
Project (Phase I) 1,167

Total 79,861[3]

The Exchange of Notes further provided that:

III

xxxx

3. The Government of the Republic of the Philippines will ensure that the products and/or
services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of
paragraph 4 of Part II are procured in accordance with the guidelines for procurement of the Bank,
which set forth, inter alia, the procedures of international tendering to be followed except where
such procedures are inapplicable or inappropriate.

x x x x[4]

The Records of Discussion, which formed part of the Exchange of Notes, also stated in part, thus:
xxxx

1. With reference to sub-paragraph (3) of paragraph 3 of Part I of the Exchange of Notes

concerning the financing of eligible local currency requirements for the implementation of the
projects mentioned in the said sub-paragraph, the representative of the Japanese delegation stated
that:

(1) such requirement of local currency as general administrative expenses, interest

during construction, taxes and duties, expenses concerning office, remuneration to
employees of the executing agencies and housing, not directly related to the
implementation of the said projects, as well as purchase of land properties,
compensation and the like, however, will not be considered as eligible for financing
under the Loan I; and

(2) the procurement of products and/or services will be made in accordance with the
procedures of international competitive tendering except where such procedures are
inapplicable and inappropriate.

x x x x[5]

Thus, in accordance with the agreement reached by the Government of Japan and the Philippine

Government, as expressed in the Exchange of Notes between the representatives of the two governments,

the Philippines obtained from and was granted a loan by the JBIC. Loan Agreement No. PH-P204 dated December

28, 1999, in particular, stated as follows:

 Loan Agreement No. PH-P204, dated December 28, 1999, between JAPAN BANK FOR
INTERNATIONAL COOPERATION and the GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES.

In the light of the contents of the Exchange of Notes between the Government of Japan and
the Government of the Republic of the Philippines dated December 27, 1999, concerning Japanese
loans to be extended with a view to promoting the economic stabilization and development efforts
of the Republic of the Philippines.

JAPAN BANK FOR INTERNATIONAL COOPERATION (hereinafter referred to as the

BANK) and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES (hereinafter
referred to as the Borrower) herewith conclude the following Loan Agreement (hereinafter
referred to as the Loan Agreement, which includes all agreements supplemental hereto).

x x x x[6]

Under the terms and conditions of Loan Agreement No. PH-P204, JBIC agreed to lend the Philippine

Government an amount not exceeding FIFTEEN BILLION THREE HUNDRED EIGHTY-FOUR MILLION

Japanese Yen (Y 15,384,000,000) as principal for the implementation of the Arterial Road Links Development

Project (Phase IV) on the terms and conditions set forth in the Loan Agreement and in accordance with the relevant

laws and regulations of Japan.[7] The said amount shall be used for the purchase of eligible goods and services

necessary for the implementation of the above-mentioned project from suppliers, contractors or consultants. [8]

Further, it was provided under the said loan agreement that other terms and conditions generally applicable

thereto shall be set forth in the General Terms and Conditions, dated November 1987, issued by the Overseas

Economic Cooperation Fund (OECF) and for the purpose, reference to the OECF and Fund therein (General

Terms and Conditions) shall be substituted by the JBIC and Bank, respectively. [9] Specifically, the guidelines

for procurement of all goods and services to be financed out of the proceeds of the said loan shall be as stipulated in

the Guidelines for Procurement under OECF Loans dated December 1997 (herein referred to as JBIC Procurement

Guidelines).[10]

As mentioned earlier, the proceeds of Loan Agreement No. PH-P204 was to be used to finance the Arterial

Road Links Development Project (Phase IV), of which theCatanduanes Circumferential Road was a part. This road

section, in turn, was divided into four contract packages (CP):

CP I: San Andres (Codon)-Virac-Jct. Bato- Viga Road - 79.818 kms

CP II: Viga-Bagamanoc Road - 10.40 kms.
CP III: Bagamanoc-Pandan Road - 47.50 kms.
CP IV: Pandan-Caramoran-Codon Road - 66.40 kms.[11]
 Subsequently, the DPWH, as the government agency tasked to implement the project, caused the

publication of the Invitation to Prequalify and to Bid for the implementation of the CP I project in two leading

national newspapers, namely, the Manila Times and Manila Standard on November 22 and 29, and December 5,

2002.

A total of twenty-three (23) foreign and local contractors responded to the invitation by submitting their

accomplished prequalification documents on January 23, 2003. In accordance with the established prequalification

criteria, eight contractors were evaluated or considered eligible to bid as concurred by the JBIC. One of them,

however, withdrew; thus, only seven contractors submitted their bid proposals.
 The bid documents submitted by the prequalified contractors/bidders were examined to determine their

compliance with the requirements as stipulated in Article 6 of the Instruction to Bidders. [12] After the lapse of the

deadline for the submission of bid proposals, the opening of the bids commenced immediately. Prior to the opening

of the respective bid proposals, it was announced that the Approved Budget for the Contract (ABC) was in the

amount of P738,710,563.67.

The result of the bidding revealed the following three lowest bidders and their respective bids vis--vis the

ABC:[13]

Name of Bidder Original Bid As-Corrected

As Read Bid Amount Variance
(Pesos) (Pesos)
1) China Road
And Bridge P 993,183,904.98 P952,564,821.71 28.95%
Corporation
2) Cavite Ideal
Intl Const. P1,099,926,598.11 P1,099,926,598.11 48.90%
Devt. Corp.
3) Italian Thai
Devt. Public P1,125,022,075.34 P1,125,392,475.36 52.35%
Company, Ltd.

The bid of private respondent China Road & Bridge Corporation was corrected from the

original P993,183,904.98 (with variance of 34.45% from the ABC) toP952,564,821.71 (with variance of 28.95%

from the ABC) based on their letter clarification dated April 21, 2004.[14]

After further evaluation of the bids, particularly those of the lowest three bidders, Mr. Hedifume Ezawa,

Project Manager of the Catanduanes Circumferential Road Improvement Project (CCRIP), in his Contractors Bid

Evaluation Report dated April 2004, recommended the award of the contract to private respondent China Road &

Bridge Corporation:

In accordance with the Guidelines for the Procurements under ODA [Official Development
Assistance] Loans, the Consultant hereby recommends the award of the contract for the
construction of CP I, San Andres (Codon) Virac Jct. Bato Viga Section under the Arterial
Road Links Development Projects, Phase IV, JBIC Loan No. PH-P204 to the Lowest Complying
Bidder, China Road and Bridge Corporation, at its total corrected bid amount of Nine Hundred
Fifty-Two Million Five Hundred Sixty-Four Thousand Eight Hundred Twenty-One & 71/100
Pesos.[15]
 The BAC of the DPWH, with the approval of then Acting Secretary Soriquez, issued the assailed Resolution

No. PJHL-A-04-012 dated May 7, 2004 recommending the award in favor of private respondent China Road &

Bridge Corporation of the contract for the implementation of civil works for CP I, San Andres (Codon) Virac Jct.

Bato Viga Road (Catanduanes Circumferential Road Improvement Project) of the Arterial Roads Links

Development Project, Phase IV, located in Catanduanes Province, under JBIC Loan Agreement No. PH-P204.
[16]
On September 29, 2004, a Contract of Agreement was entered into by and between the DPWH and private

respondent China Road & Bridge Corporation for the implementation of the CP I project.
 The Parties

Petitioner Plaridel M. Abaya claims that he filed the instant petition as a taxpayer, former lawmaker, and a

Filipino citizen. Petitioner Plaridel C. Garcia likewise claims that he filed the suit as a taxpayer, former military

officer, and a Filipino citizen. Petitioner PMA 59 Foundation, Inc., on the other hand, is a non-stock, non-profit

corporation organized under the existing Philippine laws. It claims that its members are all taxpayers and alumni of

the Philippine Military Academy. It is represented by its President, Carlos L. Agustin.

Named as public respondents are the DPWH, as the government agency tasked with the implementation of

government infrastructure projects; the Department of Budget and Management (DBM) as the government agency

that authorizes the release and disbursement of public funds for the implementation of government infrastructure

projects; and the Department of Finance (DOF) as the government agency that acts as the custodian and manager of

all financial resources of the government. Also named as individual public respondents are Hermogenes E. Ebdane,

Jr., Emilia T. Boncodin and Cesar V. Purisima in their capacities as former Secretaries of the DPWH, DBM and

DOF, respectively. On the other hand, public respondent Norma L. Lasala was impleaded in her capacity as

Treasurer of the Bureau of Treasury.

Private respondent China Road & Bridge Corporation is a duly organized corporation engaged in the

business of construction.

The Petitioners Case

The petitioners mainly seek to nullify DPWH Resolution No. PJHL-A-04-012 dated May 7, 2004, which

recommended the award to private respondent China Road & Bridge Corporation of the contract for the

implementation of the civil works of CP I. They also seek to annul the contract of agreement subsequently entered

into by and between the DPWH and private respondent China Road & Bridge Corporation pursuant to the said

resolution.

They pose the following issues for the Courts resolution:

I. Whether or not Petitioners have standing to file the instant Petition.

 II. Whether or not Petitioners are entitled to the issuance of a Writ of Certiorari reversing and
setting aside DPWH Resolution No. PJHL-A-04-012, recommending the award of the Contract
Agreement for the implementation of civil works for CPI, San Andres (CODON)-VIRAC-JCT
BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROAD IMPROVEMENT
PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes
Province, under JBIC L/A No. PH-P204, to China Road & Bridge Corporation.

III. Whether or not the Contract Agreement executed by and between the Republic of the
Philippines, through the Department of Public Works and Highways, and the China Road &
Bridge Corporation, for the implementation of civil works for CPI, San Andres (CODON)-
VIRAC-JCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROAD
IMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located
in Catanduanes Province, under JBIC L/A No. PH-P204, is void ab initio.

IV. Whether or not Petitioners are entitled to the issuance of a Writ of Prohibition permanently
prohibiting the implementation of DPWH Resolution No. PJHL-A-04-012 and the Contract
Agreement executed by and between the Republic of the Philippines (through the Department of
Public Works and Highways) and the China Road & Bridge Corporation, and the disbursement of
public funds by the [D]epartment of [B]udget and [M]anagement for such purpose.

V. Whether or not Petitioners are entitled to a Preliminary Injunction and/or a Temporary

Restraining Order immediately enjoining the implementation of DPWH Resolution No. PJHL-A-
04-012 and the Contract Agreement executed by and between the Republic of
the Philippines (through the Department of Public Works and Highways) and the China Road &
Bridge Corporation, and the disbursement of public funds by the Department of Budget and
Management for such purpose, during the pendency of this case.[17]

Preliminarily, the petitioners assert that they have standing or locus standi to file the instant petition. They

claim that as taxpayers and concerned citizens, they have the right and duty to question the expenditure of public

funds on illegal acts. They point out that the Philippine Government allocates a peso-counterpart for CP I, which

amount is appropriated by Congress in the General Appropriations Act; hence, funds that are being utilized in the

implementation of the questioned project also partake of taxpayers money. The present action, as a taxpayers suit,

is thus allegedly proper.

They likewise characterize the instant petition as one of transcendental importance that warrants the Courts

adoption of a liberal stance on the issue of standing. It cited several cases where the Court brushed aside procedural

technicalities in order to resolve issues involving paramount public interest and transcendental importance.
[18]
Further, petitioner Abaya asserts that he possesses the requisite standing as a former member of the House of

Representatives and one of the principal authors of Republic Act No. 9184 (RA 9184) [19] known as the Government

Procurement Reform Act, the law allegedly violated by the public respondents.
 On the substantive issues, the petitioners anchor the instant petition on the contention that the award of the

contract to private respondent China Road & Bridge Corporation violates RA 9184, particularly Section 31 thereof

which reads:

SEC. 31. Ceiling for Bid Prices. The ABC shall be the upper limit or ceiling for the Bid
prices. Bid prices that exceed this ceiling shall be disqualified outright from further participating
in the bidding. There shall be no lower limit to the amount of the award.

In relation thereto, the petitioners cite the definition of the ABC, thus:

SEC. 5. Definition of Terms.

xxx

(a) Approved Budget for the Contract (ABC). refers to the budget for the contract duly
approved by the Head of the Procuring Entity, as provided for in the General Appropriations Act
and/or continuing appropriations, in the case of National Government Agencies; the Corporate
Budget for the contract approved by the governing Boards, pursuant to E.O. No. 518, series of
1979, in the case of Government-Owned and/or Controlled Corporations, Government Financial
Institutions and State Universities and Colleges; and the Budget for the contract approved by the
respective Sanggunian, in the case of Local Government Units.

xxx

The petitioners theorize that the foregoing provisions show the mandatory character of ceilings or upper limits

of every bid. Under the above-quoted provisions of RA 9184, all bids or awards should not exceed the ceilings or

upper limits; otherwise, the contract is deemed void and inexistent.

Resolution No. PJHL-A-04-012 was allegedly issued with grave abuse of discretion because it

recommended the award of the contract to private respondent China Road & Bridge Corporation whose bid was

more than P200 million overpriced based on the ABC. As such, the award is allegedly illegal and unconscionable.

In this connection, the petitioners opine that the contract subsequently entered into by and between the

DPWH and private respondent China Road & Bridge Corporation is void ab initio for being prohibited by RA

9184. They stress that Section 31 thereof expressly provides that bid prices that exceed this ceiling shall be

disqualified outright from participating in the bidding. The upper limit or ceiling is called the ABC and since the

bid of private respondent China Road & Bridge Corporation exceeded the ABC for the CP I project, it should have
been allegedly disqualified from the bidding process and should not, by law, have been awarded the said

contract. They invoke Article 1409 of the Civil Code:

ART. 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void by law.

For violating the above provision, the contract between the DPWH and private respondent China Road &

Bridge Corporation is allegedly inexistent and void ab initio and can produce no effects whatsoever.

It is the contention of the petitioners that RA 9184 is applicable to both local- and foreign-funded

procurement contracts. They cite the following excerpt of the deliberations of the Bicameral Conference Committee

on the Disagreeing Provisions of Senate Bill No. 2248 and House Bill No. 4809:[20]

REP. ABAYA. Mr. Chairman, can we just propose additional amendments? Can we go
back to Section 4, Mr. Chairman?

THE CHAIRMAN (SEN. ANGARA). Section? Section ano, Del, 4? Definition

definition of terms.

REP. ABAYA. Sa House bill, it is sa scope and application.

THE CHAIRMAN (SEN. ANGARA). Okay.

REP. ABAYA. It should read as follows: This Act shall apply to the procurement of
goods, supplies and materials, infrastructure projects and consulting services regardless of funding
source whether local or foreign by the government.

THE CHAIRMAN (SEN. ANGARA). Okay, accepted. We accept. The Senate accepts it.
[21]

xxx xxx xxx

THE CHAIRMAN (SEN ANGARA). Just take note of that ano. Medyo nga problematic
yan eh. Now, just for the record Del, can you repeat again the justification for including foreign
funded contracts within the scope para malinaw because the World Bank daw might raise some
objection to it.

REP. ABAYA. Well, Mr. Chairman, we should include foreign funded projects kasi these
are the big projects. To give an example, if you allow bids above government estimate, lets say
 take the case of 500 million project, included in that 500 million is the 20 percent profit. If you
allow them to bid above government estimate, they will add another say 28 percent of (sic) 30
percent, 30 percent of 500 million is another 150 million. Ito, this is a rich source of graft money,
aregluhan na lang, 150 million, five contractors will gather, O eto 20 million, 20 million, 20
million. So, it is rigged. Yun ang practice na nangyayari. If we eliminate that, if we have a
ceiling then, it will not be very tempting kasi walang extra money na pwedeng ibigay sa ibang
contractor. So this promote (sic) collusion among bidders, of course, with the cooperation of
irresponsible officials of some agencies. So we should have a ceiling to include foreign funded
projects.[22]

The petitioners insist that Loan Agreement No. PH-P204 between the JBIC and the Philippine Government

is neither a treaty, an international nor an executive agreement that would bar the application of RA 9184. They

point out that to be considered a treaty, an international or an executive agreement, the parties must be two

sovereigns or States whereas in the case of Loan Agreement No. PH-P204, the parties are the Philippine

Government and the JBIC, a banking agency of Japan, which has a separate juridical personality from the Japanese

Government.

They further insist on the applicability of RA 9184 contending that while it took effect on January 26,

2003[23] and Loan Agreement No. PH-P204 was executed prior thereto or on December 28, 1999, the actual

procurement or award of the contract to private respondent China Road & Bridge Corporation was done after the

effectivity of RA 9184. The said law is allegedly specific as to its application, which is on the actual procurement of

infrastructure and other projects only, and not on the loan agreements attached to such projects. Thus, the petition

only prays for the annulment of Resolution No. PJHL-A-04-012 as well as the contract between the DPWH and

private respondent China Road & Bridge Corporation. The petitioners clarify that they do not pray for the

annulment of Loan Agreement No. PH-P204. Since the subject procurement and award of the contract were done

after the effectivity of RA 9184, necessarily, the procurement rules established by that law allegedly apply, and not

Presidential Decree No. 1594 (PD 1594) [24]and Executive Order No. 40 (EO 40), series of 2001, [25] as contended by

the respondents. The latter laws, including their implementing rules, have allegedly been repealed by RA

9184. Even RA 4860, as amended, known as the Foreign Borrowings Act, the petitioners posit, may have also been

repealed or modified by RA 9184 insofar as its provisions are inconsistent with the latter.

The petitioners also argue that the Implementing Rules and Regulations (IRR) of RA 9184, Otherwise

Known as the Government Procurement Reform Act, Part A (IRR-A) cited by the respondents is not applicable as
these rules only govern domestically-funded procurement contracts. They aver that the implementing rules to

govern foreign-funded procurement, as in the present case, have yet to be drafted and in fact, there are concurrent

resolutions drafted by both houses of Congress for the Reconvening of the Joint Congressional Oversight

Committee for the formulation of the IRR for foreign-funded procurements under RA 9184.

The petitioners maintain that disbursement of public funds to implement a patently void and illegal contract

is itself illegal and must be enjoined. They bring to the Courts attention the fact that the works on the CP I project

have already commenced as early as October 2004. They thus urge the Court to issue a writ of certiorari to set aside

Resolution No. PJHL-A-04-012 as well as to declare null and void the contract entered into between the DPWH and

private respondent China Road & Bridge Corporation. They also pray for the issuance of a temporary restraining

order and, eventually, a writ of prohibition to permanently enjoin the DPWH from implementing Resolution No.

PJHL-A-04-012 and its contract with private respondent China Road & Bridge Corporation as well as the DBM

from disbursing funds for the said purpose.

The Respondents Counter-Arguments

The public respondents, namely the DPWH, DBM and DOF, and their respective named officials, through

the Office of the Solicitor General, urge the Court to dismiss the petition on grounds that the petitioners have

no locus standi and, in any case, Resolution No. PJHL-A-04-012 and the contract between the DPWH and private

respondent China Road & Bridge Corporation are valid.

According to the public respondents, a taxpayers locus standi was recognized in the following cases: (a)

where a tax measure is assailed as unconstitutional; [26] (b) where there is a question of validity of election laws; [27] (c)

where legislators questioned the validity of any official action upon the claim that it infringes on their prerogatives

as legislators;[28] (d) where there is a claim of illegal disbursement or wastage of public funds through the

enforcement of an invalid or unconstitutional law;[29] (e) where it involves the right of members of the Senate or

House of Representatives to question the validity of a presidential veto or condition imposed on an item in an

appropriation bill;[30] or (f) where it involves an invalid law, which when enforced will put the petitioner in imminent

danger of sustaining some direct injury as a result thereof, or that he 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 complained of.[31] None of the above considerations allegedly obtains in the present case.

It is also the view of the public respondents that the fact that petitioner Abaya was a former lawmaker

would not suffice to confer locus standi on himself. Members of Congress may properly challenge the validity of an

official act of any department of the government only upon showing that the assailed official act affects or impairs

their rights and prerogatives as legislators.

The public respondents further assail the standing of the petitioners to file the instant suit claiming that they

failed to allege any specific injury suffered nor an interest that is direct and personal to them. If at all, the interest or

injuries claimed by the petitioners are allegedly merely of a general interest common to all members of the

public. Their interest is allegedly too vague, highly speculative and uncertain to satisfy the requirements of locus

standi.

The public respondents find it noteworthy that the petitioners do not raise issues of constitutionality but

only of contract law, which the petitioners not being privies to the agreement cannot raise. This is following the

principle that a stranger to a contract cannot sue either or both the contracting parties to annul and set aside the same

except when he is prejudiced on his rights and can show detriment which would positively result to him from the

implementation of the contract in which he has no intervention. There being no particularized interest or elemental

substantial injury necessary to confer locus standi, the public respondents implore the Court to dismiss the petition.

On the merits, the public respondents maintain that the imposition of ceilings or upper limits on bid prices

in RA 9184 does not apply because the CP I project and the entire Catanduanes Circumferential Road Improvement

Project, financed by Loan Agreement No. PH-P204 executed between the Philippine Government and the JBIC, is

governed by the latters Procurement Guidelines which precludes the imposition of ceilings on bid prices. Section

5.06 of the JBIC Procurement Guidelines reads:

Section 5.06. Evaluation and Comparison of Bids.

xxx

(e) Any procedure under which bids above or below a predetermined bid value assessment
are automatically disqualified is not permitted.
 It was explained that other foreign banks such as the Asian Development Bank (ADB) and the World Bank

(WB) similarly prohibit the bracketing or imposition of a ceiling on bid prices.

The public respondents stress that it was pursuant to Loan Agreement No. PH-P204 that the assailed

Resolution No. PJHL-A-04-012 and the subsequent contract between the DPWH and private respondent China Road

& Bridge Corporation materialized. They likewise aver that Loan Agreement No. PH-P204 is governed by RA

4860, as amended, or the Foreign Borrowings Act. Section 4 thereof states:

SEC. 4. In the contracting of any loan, credit or indebtedness under this Act, the President of
the Philippines may, when necessary, agree to waive or modify, the application of any law granting
preferences or imposing restrictions on international competitive bidding, including among others
[Act No. 4239, Commonwealth Act No. 138], the provisions of [CA 541], insofar as such
provisions do not pertain to constructions primarily for national defense or security purposes, [RA
5183]; Provided, however, That as far as practicable, utilization of the services of qualified
domestic firms in the prosecution of projects financed under this Act shall be
encouraged: Provided, further, That in case where international competitive bidding shall be
conducted preference of at least fifteen per centum shall be granted in favor of articles, materials
or supplies of the growth, production or manufacture of the Philippines: Provided, finally, That the
method and procedure in comparison of bids shall be the subject of agreement between the
Philippine Government and the lending institution.

DOJ Opinion No. 46, Series of 1987, is relied upon by the public respondents as it opined that an

agreement for the exclusion of foreign assisted projects from the coverage of local bidding regulations does not

contravene existing legislations because the statutory basis for foreign loan agreements is RA 4860, as amended, and

under Section 4 thereof, the President is empowered to waive the application of any law imposing restrictions on the

procurement of goods and services pursuant to such loans.

Memorandum Circular Nos. 104 and 108, issued by the President, to clarify RA 4860, as amended, and PD

1594, relative to the award of foreign-assisted projects, are also invoked by the public respondents, to wit:

Memorandum Circular No. 104:

In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise
known as the Foreign Borrowings Act

xxx

It is hereby clarified that foreign-assisted infrastructure projects may be exempted from the
application for the pertinent provisions of the Implementing Rules and Regulations (IRR) of
Presidential Decree (P.D.) No. 1594 relative to the method and procedure in the comparison of
 bids, which matter may be the subject of agreement between the infrastructure agency concerned
and the lending institution. It should be made clear however that public bidding is still required
and can only be waived pursuant to existing laws.

Memorandum Circular No. 108:

In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise
known as the Foreign Borrowings Act, it is hereby clarified that, for projects supported in whole
or in part by foreign assistance awarded through international or local competitive bidding, the
government agency concerned may award the contract to the lowest evaluated bidder at his bid
price consistent with the provisions of the applicable loan/grant agreement.

Specifically, when the loan/grant agreement so stipulates, the government agency concerned
may award the contract to the lowest bidder even if his/its bid exceeds the approved agency
estimate.

It is understood that the concerned government agency shall, as far as practicable, adhere
closely to the implementing rules and regulations of Presidential Decree No. 1594 during
loan/grant negotiation and the implementation of the projects.[32]

The public respondents characterize foreign loan agreements, including Loan Agreement No. PH-P204, as

executive agreements and, as such, should be observed pursuant to the fundamental principle in international law

of pacta sunt servanda.[33] They cite Section 20 of Article VII of the Constitution as giving the President the

authority to contract foreign loans:

SEC. 20. The President may contract or guarantee foreign loans on behalf of the Republic of
the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations
as may be provided by 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.

The Constitution, the public respondents emphasize, recognizes the enforceability of executive agreements

in the same way that it recognizes generally accepted principles of international law as forming part of the law of the

land.[34] This recognition allegedly buttresses the binding effect of executive agreements to which the Philippine

Government is a signatory. It is pointed out by the public respondents that executive agreements are essentially

contracts governing the rights and obligations of the parties. A contract, being the law between the parties, must be

faithfully adhered to by them. Guided by the fundamental rule of pacta sunt servanda, the Philippine Government

bound itself to perform in good faith its duties and obligations under Loan Agreement No. PH-P204.
 The public respondents further argue against the applicability of RA 9184 stating that it was signed into law

on January 10, 2003.[35] On the other hand, Loan Agreement No. PH-P204 was executed on December 28, 1999,

where the laws then in force on government procurements were PD 1594 and EO 40. The latter law (EO 40), in

particular, excluded from its application any existing and future government commitments with respect to the

bidding and award of contracts financed partly or wholly with funds from international financing institutions as well

as from bilateral and other similar foreign sources.

The applicability of EO 40, not RA 9184, is allegedly bolstered by the fact that the Invitation to

Prequalify and to Bid for the implementation of the CP I project was published in two leading national newspapers,

namely, the Manila Times and Manila Standard on November 22, 29 and December 5, 2002, or before the signing

into law of RA 9184 on January 10, 2003. In this connection, the public respondents point to Section 77 of IRR-A,

which reads:

SEC. 77. Transitory Clause.

In all procurement activities, if the advertisement or invitation for bids was issued prior to the
effectivity of the Act, the provisions of EO 40 and its IRR, PD 1594 and its IRR, RA 7160 and its
IRR, or other applicable laws as the case may be, shall govern.

In cases where the advertisements or invitations for bids were issued after the effectivity of
the Act but before the effectivity of this IRR-A, procuring entities may continue adopting the
procurement procedures, rules and regulations provided in EO 40 and its IRR, or other applicable
laws, as the case may be.

Section 4 of RA 9184 is also invoked by the public respondents as it provides:

SEC. 4. Scope and Applications. This Act shall apply to the Procurement of Infrastructure
Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign,
by all branches and instrumentalities of government, its departments, offices and agencies,
including government-owned and/or controlled corporations and local government units, subject
to the provisions of Commonwealth Act No. 138. Any treaty or international or executive
agreement affecting the subject matter of this Act to which the Philippine government is a
signatory shall be observed.

It is also the position of the public respondents that even granting arguendo that Loan Agreement No. PH-

P204 were an ordinary loan contract, still, RA 9184 is inapplicable under the non-impairment clause [36] of the

Constitution. The said loan agreement expressly provided that the procurement of goods and services for the project

financed by the same shall be governed by the Guidelines for Procurement under OECF Loans dated December
1997. Further, Section 5.06 of the JBIC Procurement Guidelines categorically provides that [a]ny procedure under

which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.

The public respondents explain that since the contract is the law between the parties and Loan Agreement

No. PH-P204 states that the JBIC Procurement Guidelines shall govern the parties relationship and further dictates

that there be no ceiling price for the bidding, it naturally follows that any subsequent law passed contrary to the

letters of the said contract would have no effect with respect to the parties rights and obligations arising therefrom.

To insist on the application of RA 9184 on the bidding for the CP I project would, notwithstanding the

terms and conditions of Loan Agreement No. PH-P204, allegedly violate the constitutional provision on non-

impairment of obligations and contracts, and destroy vested rights duly acquired under the said loan agreement.

Lastly, the public respondents deny that there was illegal disbursement of public funds by the DBM. They

asseverate that all the releases made by the DBM for the implementation of the entire Arterial Road Links Project

Phase IV, which includes the Catanduanes Circumferential Road Improvement Project, were covered by the

necessary appropriations made by law, specifically the General Appropriations Act (GAA). Further, the

requirements and procedures prescribed for the release of the said funds were duly complied with.

For its part, private respondent China Road & Bridge Corporation similarly assails the standing of the

petitioners, either as taxpayers or, in the case of petitioner Abaya, as a former lawmaker, to file the present suit. In

addition, it is also alleged that, by filing the petition directly to this Court, the petitioners failed to observe the

hierarchy of courts.

On the merits, private respondent China Road & Bridge Corporation asserts that the applicable law to

govern the bidding of the CP I project was EO 40, not RA 9184, because the former was the law governing the

procurement of government projects at the time that it was bidded out. EO 40 was issued by the Office of the

President on October 8, 2001 and Section 1 thereof states that:

SEC. 1. Scope and Application. This Executive Order shall apply to the procurement of: (a)
goods, supplies, materials and related services; (b) civil works; and (c) consulting services, by all
National Government agencies, including State Universities and Colleges (SUCs), Government-
Owned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs),
hereby referred to as the Agencies. This Executive Order shall cover the procurement
process from the pre-procurement conference up to the award of contract.
 xxx

The Invitation to Prequalify and to Bid was first published on November 22, 2002. On the other hand, RA

9184 was signed into law only on January 10, 2003. Since the law in effect at the time the procurement process was

initiated was EO 40, private respondent China Road & Bridge Corporation submits that it should be the said law

which should govern the entire procurement process relative to the CP I project.

EO 40 expressly recognizes as an exception from the application of the provisions thereof on approved

budget ceilings, those projects financed by international financing institutions (IFIs) and foreign bilateral

sources. Section 1 thereof, quoted in part earlier, further states:

SEC. 1. Scope and Application. x x x

Nothing in this Order shall negate any existing and future government commitments with
respect to the bidding and award of contracts financed partly or wholly with funds from
international financing institutions as well as from bilateral and other similar foreign sources.

Section 1.2 of the Implementing Rules and Regulations of EO 40 is likewise invoked as it provides:

For procurement financed wholly or partly from Official Development Assistance (ODA)
funds from International Financing Institutions (IFIs), as well as from bilateral and other similar
foreign sources, the corresponding loan/grant agreement governing said funds as negotiated and
agreed upon by and between the Government and the concerned IFI shall be observed.

Private respondent China Road & Bridge Corporation thus postulates that following EO 40, the procurement

of goods and services for the CP I project should be governed by the terms and conditions of Loan Agreement No.

PH-P204 entered into between the JBIC and the Philippine Government. Pertinently, Section 5.06 of the JBIC

Procurement Guidelines prohibits the setting of ceilings on bid prices.

Private respondent China Road & Bridge Corporation claims that when it submitted its bid for the CP I

project, it relied in good faith on the provisions of EO 40. It was allegedly on the basis of the said law that the

DPWH awarded the project to private respondent China Road & Bridge Coporation even if its bid was higher than

the ABC. Under the circumstances, RA 9184 could not be applied retroactively for to do so would allegedly impair

the vested rights of private respondent China Road & Bridge Corporation arising from its contract with the DPWH.
 It is also contended by private respondent China Road & Bridge Corporation that even

assuming arguendo that RA 9184 could be applied retroactively, it is still the terms of Loan Agreement No. PH-

P204 which should govern the procurement of goods and services for the CP I project. It supports its theory by

characterizing the said loan agreement, executed pursuant to the Exchange of Notes between the Government of

Japan and the Philippine Government, as an executive agreement.

Private respondent China Road & Bridge Corporation, like the public respondents, cites RA 4860 as the basis

for the Exchange of Notes and Loan Agreement No. PH-P204. As an international or executive agreement, the

Exchange of Notes and Loan Agreement No. PH-P204 allegedly created a legally binding obligation on the parties.

The following excerpt of the deliberations of the Bicameral Conference Committee on the Disagreeing

Provision of Senate Bill No. 2248 and House Bill No. 4809 is cited by private respondent China Road & Bridge

Corporation to support its contention that it is the intent of the lawmakers to exclude from the application of RA

9184 those foreign-funded projects:

xxx

REP. MARCOS. Yes, Mr. Chairman, to respond and to put into the record, a justification for the
inclusion of foreign contracts, may we just state that foreign contracts have, of course, been
brought into the ambit of the law because of the Filipino counterpart for this foreign projects, they
are no longer strictly foreign in nature but fall under the laws of the Philippine government.

THE CHAIRMAN (SEN. ANGARA). Okay. I think thats pretty clear. I think the possible
concern is that some ODA are with strings attached especially the Japanese. The Japanese are
quite strict about that, that they are (sic) even provide the architect and the design, etcetera, plus,
of course, the goods that will be supplied.

Now, I think weve already provided that this is open to all and we will recognize our international
agreements so that this bill will not also restrict the flow of foreign funding, because some
countries now make it a condition that they supply both services and goods especially the
Japanese.

So I think we can put a sentence that we continue to honor our international obligations, di ba
Laura?

MR. ENCARNACION. Actually, subject to any treaty.

THE CHAIRMAN (SEN. ANGARA). Yun pala eh. That should allay their anxiety and
concern. Okay, buti na lang for the record para malaman nila na we are conscious sa ODA. [37]
 Private respondent China Road & Bridge Corporation submits that based on the provisions of the Exchange of

Notes and Loan Agreement No. PH-P204, it was rightfully and legally awarded the CP I project. It urges the Court

to dismiss the petition for lack of merit.

The Courts Rulings

Petitioners, as taxpayers, possess

locus standi to file the present suit

Briefly stated, locus standi is a right of appearance in a court of justice on a given question. [38] More

particularly, it is a partys personal and substantial interest in a case such that he has sustained or will sustain direct

injury as a result of the governmental act being challenged. It calls for more than just a generalized grievance. The

term interest means a material interest, an interest in issue affected by the decree, as distinguished from mere

interest in the question involved, or a mere incidental interest. [39] Standing or locus standi is a peculiar concept in

constitutional law[40] and the rationale for requiring a party who challenges the constitutionality of a statute to allege

such a personal stake in the outcome of the controversy is to assure that concrete adverseness which sharpens the

presentation of issues upon which the court so largely depends for illumination of difficult constitutional

questions.[41]

Locus standi, however, is merely a matter of procedure [42] and it has been recognized that 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. [43] Consequently, the Court, in

acatena of cases,[44] has invariably adopted a liberal stance on locus standi, including those cases involving

taxpayers.

The prevailing doctrine in taxpayers suits is to allow taxpayers to question contracts entered into by the

national government or government- owned or controlled corporations allegedly in contravention of law. [45] 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.[46] Significantly, a taxpayer need not be a party to the contract to challenge its

validity.[47]

In the present case, the petitioners are suing as taxpayers. They have sufficiently demonstrated that,

notwithstanding the fact that the CP I project is primarily financed from loans obtained by the government from the

JBIC, nonetheless, taxpayers money would be or is being spent on the project considering that the Philippine

Government is required to allocate a peso-counterpart therefor. The public respondents themselves admit that

appropriations for these foreign-assisted projects in the GAA are composed of the loan proceeds and the peso-

counterpart. The counterpart funds, the Solicitor General explains, refer to the component of the project cost to be

financed from government-appropriated funds, as part of the governments commitment in the implementation of the

project.[48] Hence, the petitioners correctly asserted their standing since a part of the funds being utilized in the

implementation of the CP I project partakes of taxpayers money.

Further, the serious legal questions raised by the petitioners, e.g., whether RA 9184 applies to the CP I

project, in particular, and to foreign-funded government projects, in general, and the fact that public interest is

indubitably involved considering the public expenditure of millions of pesos, warrant the Court to adopt in the

present case its liberal policy on locus standi.

In any case, for reasons which will be discussed shortly, the substantive arguments raised by the petitioners

fail to persuade the Court as it holds that Resolution No. PJHL-A-04-012 is valid. As a corollary, the subsequent

contract entered into by and between the DPWH and private respondent China Road & Bridge Corporation is

likewise valid.
History of Philippine Procurement Laws

It is necessary, at this point, to give a brief history of Philippine laws pertaining to procurement through public

bidding. The United States Philippine Commission introduced the American practice of public bidding through Act

No. 22, enacted on October 15, 1900, by requiring the Chief Engineer, United States Army for the Division of the

Philippine Islands, acting as purchasing agent under the control of the then Military Governor, to advertise and call

for a competitive bidding for the purchase of the necessary materials and lands to be used for the construction of

highways and bridges in the Philippine Islands. [49] Act No. 74, enacted on January 21, 1901 by the Philippine

Commission, required the General Superintendent of Public Instruction to purchase office supplies through

competitive public bidding.[50] Act No. 82, approved on January 31, 1901, and Act No. 83, approved on February 6,

1901, required the municipal and provincial governments, respectively, to hold competitive public biddings in the

making of contracts for public works and the purchase of office supplies.[51]

On June 21, 1901, the Philippine Commission, through Act No. 146, created the Bureau of Supply and with its

creation, public bidding became a popular policy in the purchase of supplies, materials and equipment for the use of

the national government, its subdivisions and instrumentalities. [52] On February 3, 1936, then President Manuel L.

Quezon issued Executive Order No. 16 declaring as a matter of general policy that government contracts for public

service or for furnishing supplies, materials and equipment to the government should be subjected to public bidding.
[53]
The requirement of public bidding was likewise imposed for public works of construction or repair pursuant to

the Revised Administrative Code of 1917.

Then President Diosdado Macapagal, in Executive Order No. 40 dated June 1, 1963, reiterated the directive

that no government contract for public service or for furnishing supplies, materials and equipment to the government

or any of its branches, agencies or instrumentalities, should be entered into without public bidding except for very

extraordinary reasons to be determined by a Committee constituted thereunder. Then President Ferdinand Marcos

issued PD 1594 prescribing guidelines for government infrastructure projects and Section 4 [54] thereof stated that

they should generally be undertaken by contract after competitive public bidding.

Then President Corazon Aquino issued Executive Order No. 301 (1987) prescribing guidelines for

government negotiated contracts. Pertinently, Section 62 of the Administrative Code of 1987 reiterated the
requirement of competitive public bidding in government projects. In 1990, Congress passed RA 6957,[55] which

authorized the financing, construction, operation and maintenance of infrastructure by the private sector. RA 7160

was likewise enacted by Congress in 1991 and it contains provisions governing the procurement of goods and

locally-funded civil works by the local government units.

Then President Fidel Ramos issued Executive Order No. 302 (1996), providing guidelines for the

procurement of goods and supplies by the national government. Then President Joseph Ejercito Estrada issued

Executive Order No. 201 (2000), providing additional guidelines in the procurement of goods and supplies by the

national government. Thereafter, he issued Executive Order No. 262 (2000) amending EO 302 (1996) and EO 201

(2000).
 On October 8, 2001, President Gloria Macapagal-Arroyo issued EO 40, the law mainly relied upon by the

respondents, entitled Consolidating Procurement Rules and Procedures for All National Government Agencies,

Government-Owned or Controlled Corporations and Government Financial Institutions, and Requiring the Use of

the Government Procurement System. It accordingly repealed, amended or modified all executive issuances, orders,

rules and regulations or parts thereof inconsistent therewith.[56]

On January 10, 2003, President Arroyo signed into law RA 9184. It took effect on January 26, 2004, or fifteen

days after its publication in two newspapers of general circulation. [57] It expressly repealed, among others, EO 40,

EO 262 (2000), EO 302(1996) and PD 1594, as amended:

SEC. 76. Repealing Clause. This law repeals Executive Order No. 40, series of 2001,
entitled Consolidating Procurement Rules and Procedures for All National Government Agencies,
Government Owned or Controlled Corporations and/or Government Financial Institutions, and
Requiring the Use of the Government Electronic Procurement System; Executive Order No. 262,
series of 1996, entitled Amending Executive Order No. 302, series of 1996, entitled Providing
Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the
National Government and Section 3 of Executive Order No. 201, series of 2000, entitled
Providing Additional Policies and Guidelines in the Procurement of Goods/Supplies by the
National Government; Executive Order No. 302, series of 1996, entitled Providing Policies,
Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National
Government and Presidential Decree No. 1594 dated June 11, 1978, entitled Prescribing
Policies, Guidelines, Rules and Regulations for Government Infrastructure Contracts. This law
amends Title Six, Book Two of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991; the relevant provisions of Executive Order No. 164, series of 1987,
entitled Providing Additional Guidelines in the Processing and Approval of Contracts of the
National Government; and the relevant provisions of Republic Act No. 7898 dated February 23,
1995, entitled An Act Providing for the Modernization of the Armed Forces of the Philippines
and for Other Purposes. Any other law, presidential decree or issuance, executive order, letter of
instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof
contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended
accordingly.

In addition to these laws, RA 4860, as amended, must be mentioned as Section 4 thereof provides that [i]n

the contracting of any loan, credit or indebtedness under this Act, the President of the Philippines may, when

necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on

international competitive bidding x x x Provided, finally, That the method and procedure in the comparison of bids

shall be the subject of agreement between the Philippine Government and the lending institution.

EO 40, not RA 9184, is applicable to the procurement

process undertaken for the CP I project. RA 9184
cannot be given retroactive application.
 It is not disputed that with respect to the CP I project, the Invitation to Prequalify and to Bid for its

implementation was published in two leading national newspapers, namely, the Manila Times and Manila Standard

on November 22, 29 and December 5, 2002. At the time, the law in effect was EO 40. On the other hand, RA 9184

took effect two months later or on January 26, 2003. Further, its full implementation was even delayed as IRR-A

was only approved by President Arroyo on September 18, 2003 and subsequently published on September 23,

2003 in the Manila Times and Malaya newspapers.[58]

The provisions of EO 40 apply to the procurement process pertaining to the CP I project as it is explicitly

provided in Section 1 thereof that:

SEC. 1. Scope and Application. This Executive Order shall apply to see procurement of (a)
goods, supplies, materials and related service; (b) civil works; and (c) consulting services, by all
National Government agencies, including State Universities and Colleges (SUCs), Government-
Owned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs),
hereby referred to as Agencies. This Executive Order shall cover the procurement process
from the pre-procurement conference up to the award of the contract.

Nothing in this Order shall negate any existing and future government commitments with
respect to the bidding and award of contracts financed partly or wholly with funds from
international financing institutions as well as from bilateral and similar foreign sources.
 The procurement process basically involves the following steps: (1) pre-procurement conference; (2)

advertisement of the invitation to bid; (3) pre-bid conference; (4) eligibility check of prospective bidders; (5)

submission and receipt of bids; (6) modification and withdrawal of bids; (7) bid opening and examination; (8) bid

evaluation; (9) post qualification; (10) award of contract and notice to proceed. [59] Clearly then, when the Invitation

to Prequalify and to Bid for the implementation of the CP I project was published on November 22, 29 and

December 5, 2002, the procurement process thereof had already commenced and the application of EO 40 to the

procurement process for the CP I project had already attached.

RA 9184 cannot be applied retroactively to govern the procurement process relative to the CP I project

because it is well settled that a law or regulation has no retroactive application unless it expressly provides for

retroactivity.[60] Indeed, Article 4 of the Civil Code is clear on the matter: [l]aws shall have no retroactive effect,

unless the contrary is provided. In the absence of such categorical provision, RA 9184 will not be applied

retroactively to the CP I project whose procurement process commenced even before the said law took effect.

That the legislators did not intend RA 9184 to have retroactive effect could be gleaned from the IRR-A

formulated by the Joint Congressional Oversight Committee (composed of the Chairman of the Senate Committee

on Constitutional Amendments and Revision of Laws, and two members thereof appointed by the Senate President

and the Chairman of the House Committee on Appropriations, and two members thereof appointed by the Speaker

of the House of Representatives) and the Government Procurement Policy Board (GPPB). Section 77 of the IRR-A

states, thus:

SEC. 77. Transitory Clause

In all procurement activities, if the advertisement or invitation for bids was issued prior to
the effectivity of the Act, the provisions of E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A.
7160 and its IRR, or other applicable laws, as the case may be, shall govern.

In cases where the advertisements or invitations for bids were issued after the effectivity of the Act
but before the effectivity of this IRR-A, procuring entities may continue adopting the procurement
procedures, rules and regulations provided in E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A.
7160 and its IRR, or other applicable laws, as the case may be.

In other words, under IRR-A, if the advertisement of the invitation for bids was issued prior to the effectivity

of RA 9184, such as in the case of the CP I project, the provisions of EO 40 and its IRR, and PD 1594 and its IRR in
the case of national government agencies, and RA 7160 and its IRR in the case of local government units, shall

govern.

Admittedly, IRR-A covers only fully domestically-funded procurement activities from procurement planning

up to contract implementation and that it is expressly stated that IRR-B for foreign-funded procurement activities

shall be subject of a subsequent issuance. [61] Nonetheless, there is no reason why the policy behind Section 77 of

IRR-A cannot be applied to foreign-funded procurement projects like the CP I project. Stated differently, the policy

on the prospective or non-retroactive application of RA 9184 with respect to domestically-funded procurement

projects cannot be any different with respect to foreign-funded procurement projects like the CP I project. It would

be incongruous, even absurd, to provide for the prospective application of RA 9184 with respect to domestically-

funded procurement projects and, on the other hand, as urged by the petitioners, apply RA 9184 retroactively with

respect to foreign- funded procurement projects. To be sure, the lawmakers could not have intended such an

absurdity.

Thus, in the light of Section 1 of EO 40, Section 77 of IRR-A, as well as the fundamental rule embodied in

Article 4 of the Civil Code on prospectivity of laws, the Court holds that the procurement process for the

implementation of the CP I project is governed by EO 40 and its IRR, not RA 9184.

Under EO 40, the award of the contract to private

respondent China Road & Bridge Corporation is valid

Section 25 of EO 40 provides that [t]he approved budget of the contract shall be the upper limit or ceiling of

the bid price. Bid prices which exceed this ceiling shall be disqualified outright from further participating in the

bidding. There shall be no lower limit to the amount of the award. x x x It should be observed that this text is

almost similar to the wording of Section 31 of RA 9184, relied upon by the petitioners in contending that since the

bid price of private respondent China Road & Bridge Corporation exceeded the ABC, then it should not have been

awarded the contract for the CP I project.

Nonetheless, EO 40 expressly recognizes as an exception to its scope and application those government

commitments with respect to bidding and award of contracts financed partly or wholly with funds from international
financing institutions as well as from bilateral and other similar foreign sources. The pertinent portion of Section 1

of EO 40 is quoted anew:

SEC. 1. Scope and Application. x x x

Nothing in this Order shall negate any existing and future government commitments
with respect to the bidding and award of contracts financed partly or wholly with funds
from international financing institutions as well as from bilateral and similar foreign
sources.
 In relation thereto, Section 4 of RA 4860, as amended, was correctly cited by the respondents as likewise

authorizing the President, in the contracting of any loan, credit or indebtedness thereunder, when necessary, agree

to waive or modify the application of any law granting preferences or imposing restrictions on international

competitive bidding x x x. The said provision of law further provides that the method and procedure in the

comparison of bids shall be the subject of agreement between the Philippine Government and the lending

institution.

Consequently, in accordance with these applicable laws, the procurement of goods and services for the CP I

project is governed by the corresponding loan agreement entered into by the government and the JBIC, i.e., Loan

Agreement No. PH-P204. The said loan agreement stipulated that the procurement of goods and services for the

Arterial Road Links Development Project (Phase IV), of which CP I is a component, is to be governed by the JBIC

Procurement Guidelines. Section 5.06, Part II (International Competitive Bidding) thereof quoted earlier reads:

Section 5.06. Evaluation and Comparison of Bids

xxx

(e) Any procedure under which bids above or below a predetermined bid value assessment are
automatically disqualified is not permitted.[62]

It is clear that the JBIC Procurement Guidelines proscribe the imposition of ceilings on bid prices. On the

other hand, it enjoins the award of the contract to the bidder whose bid has been determined to be the lowest

evaluated bid. The pertinent provision, quoted earlier, is reiterated, thus:

Section 5.09. Award of Contract

The contract is to be awarded to the bidder whose bid has been determined to be the lowest
evaluated bid and who meets the appropriate standards of capability and financial resources. A
bidder shall not be required as a condition of award to undertake responsibilities or work not
stipulated in the specifications or to modify the bid.[63]

Since these terms and conditions are made part of Loan Agreement No. PH-P204, the government is

obliged to observe and enforce the same in the procurement of goods and services for the CP I project. As shown

earlier, private respondent China Road & Bridge Corporations bid was the lowest evaluated bid, albeit 28.95%
higher than the ABC. In accordance with the JBIC Procurement Guidelines, therefore, it was correctly awarded the

contract for the CP I project.

Even if RA 9184 were to be applied retroactively, the

terms of the Exchange of Notes dated December 27,
1999 and Loan Agreement No. PH-P204 would still
govern the procurement for the CP I project

For clarity, Section 4 of RA 9184 is quoted anew, thus:

SEC. 4. Scope and Applications. This Act shall apply to the Procurement of Infrastructure
Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign,
by all branches and instrumentalities of government, its departments, offices and agencies,
including government-owned and/or controlled corporations and local government units, subject
to the provisions of Commonwealth Act No. 138. Any treaty or international or executive
agreement affecting the subject matter of this Act to which the Philippine government is a
signatory shall be observed.

The petitioners, in order to place the procurement process undertaken for the CP I project within the ambit of

RA 9184, vigorously assert that Loan Agreement No. PH-P204 is neither a treaty, an international agreement nor an

executive agreement. They cite Executive Order No. 459 dated November 25, 1997 where the three agreements are

defined in this wise:

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.[64]

The petitioners mainly argue that Loan Agreement No. PH-P204 does not fall under any of the three

categories because to be any of the three, an agreement had to be one where the parties are the Philippines as a State

and another State. The JBIC, the petitioners maintain, is a Japanese banking agency, which presumably has a

separate juridical personality from the Japanese Government.

 The petitioners arguments fail to persuade. The Court holds that Loan Agreement No. PH-P204 taken in

conjunction with the Exchange of Notes dated December 27, 1999between the Japanese Government and the

Philippine Government is an executive agreement.

To recall, Loan Agreement No. PH-P204 was executed by and between the JBIC and the Philippine

Government pursuant to the Exchange of Notes executed by and between Mr. Yoshihisa Ara, Ambassador

Extraordinary and Plenipotentiary of Japan to the Philippines, and then Foreign Affairs Secretary Siazon, in behalf

of their respective governments. The Exchange of Notes expressed that the two governments have reached an

understanding concerning Japanese loans to be extended to the Philippines and that these loans were aimed at

promoting our countrys economic stabilization and development efforts.

 Loan Agreement No. PH-P204 was subsequently executed and it declared that it was so entered by the

parties [i]n the light of the contents of the Exchange of Notes between the Government of Japan and the

Government of the Republic of the Philippines dated December 27, 1999, concerning Japanese loans to be extended

with a view to promoting the economic stabilization and development efforts of the Republic of the

Philippines.[65] Under the circumstances, the JBIC may well be considered an adjunct of the Japanese Government.

Further, Loan Agreement No. PH-P204 is indubitably an integral part of the Exchange of Notes. It forms part of the

Exchange of Notes such that it cannot be properly taken independent thereof.

In this connection, it is well to understand the definition of an exchange of notes under international

law. The term is defined in the United Nations Treaty Collection in this wise:

An exchange of notes is a record of a routine agreement that has many similarities with the
private law contract. The agreement consists of the exchange of two documents, each of the
parties being in the possession of the one signed by the representative of the other. Under the
usual procedure, the accepting State repeats the text of the offering State to record its assent. The
signatories of the letters may be government Ministers, diplomats or departmental heads. The
technique of exchange of notes is frequently resorted to, either because of its speedy procedure, or,
sometimes, to avoid the process of legislative approval.[66]

It is stated that treaties, agreements, conventions, charters, protocols, declarations, memoranda of

understanding, modus vivendi and exchange of notes all refer to international instruments binding at international

law.[67] It is further explained that-

Although these instruments differ from each other by title, they all have common features and
international law has applied basically the same rules to all these instruments. These rules are the
result of long practice among the States, which have accepted them as binding norms in their
mutual relations. Therefore, they are regarded as international customary law. Since there was a
general desire to codify these customary rules, two international conventions were
negotiated. The 1969 Vienna Convention on the Law of Treaties (1969 Vienna Convention),
which entered into force on 27 January 1980, contains rules for treaties concluded between
States. The 1986 Vienna Convention on the Law of Treaties between States and International
Organizations (1986 Vienna Convention), which has still not entered into force, added rules for
treaties with international organizations as parties. Both the 1969 Vienna Convention and the
1986 Vienna Convention do not distinguish between the different designations of these
instruments. Instead, their rules apply to all of those instruments as long as they meet the common
requirements.[68]

Significantly, an exchange of notes is considered a form of an executive agreement, which becomes binding

through executive action without the need of a vote by the Senate or Congress. The following disquisition by
Francis B. Sayre, former United States High Commissioner to the Philippines, entitled The Constitutionality of

Trade Agreement Acts, quoted in Commissioner of Customs v. Eastern Sea Trading,[69] is apropos:

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 exchange 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 exchange 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[70]

The Exchange of Notes dated December 27, 1999, stated, inter alia, that the Government of Japan would

extend loans to the Philippines with a view to promoting its economic stabilization and development efforts; Loan I

in the amount of Y79,8651,000,000 would be extended by the JBIC to the Philippine Government to implement the

projects in the List A (including the Arterial Road Links Development Project - Phase IV); and that such loan (Loan

I) would be used to cover payments to be made by the Philippine executing agencies to suppliers, contractors and/or

consultants of eligible source countries under such contracts as may be entered into between them for purchases of

products and/or services required for the implementation of the projects enumerated in the List A. [71] With respect to

the procurement of the goods and services for the projects, it bears reiterating that as stipulated:

3. The Government of the Republic of the Philippines will ensure that the products and/or
services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of
paragraph 4 of Part II are procured in accordance with the guidelines for procurement of the
Bank, which set forth, inter alia, the procedures of international tendering to be followed except
where such procedures are inapplicable or inappropriate.[72]

The JBIC Procurements Guidelines, as quoted earlier, forbids any procedure under which bids above or

below a predetermined bid value assessment are automatically disqualified. Succinctly put, it absolutely prohibits

the imposition of ceilings on bids.

Under the fundamental principle of international law of pacta sunt servanda,[73] which is, in fact, embodied

in Section 4 of RA 9184 as it provides that [a]ny treaty or international or executive agreement affecting the subject

matter of this Act to which the Philippine government is a signatory shall be observed, the DPWH, as the executing
agency of the projects financed by Loan Agreement No. PH-P204, rightfully awarded the contract for the

implementation of civil works for the CP I project to private respondentChina Road & Bridge Corporation.

WHEREFORE, premises considered, the petition is DISMISSED.

SO ORDERED.

FACTS :

This a petition for certiorari and prohibition to set aside and nullify Res. No. PJHL-A-04-012
dated May 27, 2004 issued by the Bids and Action Committee (BAC) of the DPWH. This
resolution recommended the award to private respondent China Road and Bridge
Corporation of the contract which consist of the improvement and rehabilitation of a 79.818-
km road in the island of Catanduanes.

Based on an Exchange of Notes, Japan and the Philippines have reached an understanding
that Japanese loans are to be extended to the country with the aim of promoting economic
stabilization and development efforts.

In accordance with the established prequalification criteria, eight contractors were evaluated
or considered eligible to bid as concurred by the JBIC. Prior to the opening of the respective
bid proposals, it was announced that the Approved Budget for the Contract (ABC) was in the
amount of P738,710,563.67. Consequently, the bid goes to private respondent in the
amount of P952,564,821.71 (with a variance of 25.98% from the ABC). Hence this petition
on the contention that it violates Sec. 31 of RA 9184 which provides that :

Sec. 31 Ceiling for Bid Prices. The ABC shall be the upper limit or ceiling for the bid
prices. Bid prices that exceed this ceiling shall be disqualified outright from further
participating in the proceeding. There shall be no lower limit to the amount of the award.

The petitioners further contends that the Loan Agreement between Japan and the Philippines
is neither an international nor an executive agreement that would bar the application of
RA9184. They pointed out that to be considered as such, the parties must be two (2)
sovereigns or states whereas in this loan agreement, the parties were the Philippine
government and the JBIC, a banking agency of Japan, which has a separate juridical
personality from the Japanese government.
ISSUE :

Whether or not the assailed resolution violates RA 9184.

RULING :

The petition is dismissed. Under the fundamental principle of international law of pacta sunt
servanda, which is in fact, embodied is Section 4 of RA9184, any treaty or international or
executive agreement affecting the subject matter of this Act to which the Philippine
government is a signatory, shall be observed. The DPWH, as the executing agency of the
project financed by the Loan Agreement rightfully awarded the contract to private
respondent China Road and Bridge Corporation.

The Loan Agreement was executed and declared that it was so entered by the parties in the
light of the contents of the Exchange of Notes between the government of Japan and the
government of the Philippines dated Dec. 27, 1999. Under the circumstances, the JBIC may
well be considered an adjunct of the Japanese government. The JBIC procurement guidelines
absolutely prohibits the imposition of ceilings and bids.

EN BANC
 DEPARTMENT of BUDGET G.R. No. 175608
and MANAGEMENT PROCUREMENT
SERVICE (DBM-PS) and the Inter-Agency Bids and
Awards Committee (IABAC),
Petitioners,

- versus -

KOLONWEL TRADING,
Respondent.

x --------------------------------------------------x
VIBAL PUBLISHING HOUSE, INC., LG &
M CORPORATION and SD PUBLICATIONS, INC.,
Petitioners,

- versus -

KOLONWEL TRADING,
Respondent.
x------------------------------------------------x
DEPARTMENT OF
EDUCATION,
Petitioner,

- versus -

KOLONWEL TRADING,
Respondent.
Present:

*
PUNO, C.J.,
**
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
***
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
GARCIA,
VELASCO, JR., and
NACHURA, JJ.
 Promulgated:

June 8, 2007

G.R. No. 175616

G.R. No. 175659

x-----------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

Before the Court are these consolidated three (3) petitions for review under Rule 45 of the Rules of Court,
with a prayer for a temporary restraining order, to nullify and set aside the Order[1] dated December 4, 2006 of the
Manila Regional Trial Court (RTC), Branch 18, in SP Civil Case No. 06-116010, a special civil action
for certiorari and prohibition thereat commenced by herein respondent Kolonwel Trading (Kolonwel for short)
against the Department of Budget and Management Procurement Service (DBM-PS), et al.

At the core of the controversy are the bidding and the eventual contract awards for the supply and delivery of
some 17.5 million copies of Makabayan (social studies) textbooks and teachers manuals, a project of the
Department of Education (DepEd).

The factual antecedents:

In the middle of 2005, the DepEd requested the services of the DBM-PS to undertake the aforementioned
procurement project which is to be jointly funded by the World Bank (WB), through the Second Social Expenditure
Management Program (SEMP2) of the Philippines (RP) International Bank for Reconstruction and Development
(IBRD) Loan Agreement No. 7118-PH[2] (Loan No. 7118-PH, hereinafter) dated September 12, 2002; and the Asian
Development Bank (ADB), through SEDIP Loan No. 1654-PHI. Earlier, the Executive Director of the Government
Procurement Policy Board (GPPB), in reply to a DepEd query, stated that procurement[s] for MAKABAYAN
textbooks where funds therefore (sic) are sourced from World Bank Loan shall be governed by the applicable
procurement guidelines of the foreign lending institution. The 2005 Call for Submission of Textbooks and Teachers
Manuals shall be viewed vis--vis relevant World Bank guidelines.[3]

On October 27, 2005, the DBM-PS Inter-Agency Bids and Awards Committee (IABAC) called for a
bidding for the supply of the Makabayan textbooks and manuals, divided into three (3) lots, to wit: Lot 1
for Sibika Grades 1-3; Lot 2 for HeKaSi Grades 4-6 and Lot 3 for Araling Panlipunan Years I-IV. Of the entities,
foreign and local,which responded and procured the Bidding Documents,[4] only eleven (11) bidders submitted,
either as principal or in joint venture arrangement, proposals for the different lots.Among them were Watana
Phanit Printing & Publishing Co., Ltd., of Thailand (Watana, for short), petitioner Vibal Publishing House, Inc.,
(Vibal, hereinafter), Daewoo International Corporation of South Korea (Daewoo, for brevity) and
[5]
respondent Kolonwel. Kolonwels tender appeared to cover all three (3) lots.

Following the bid and the book content/body evaluation process, the IABAC, via Resolution (Res.) No. 001-
[6]
2006 dated March 9, 2006, resolved to recommend to the [WB] and the [ADB] failure of bids for all lots in view
of the abovementioned disqualifications, non-compliance and reservations of [DepEd]. Issues of Conflict of
interest with respect to Watana and Vibal, failure in cover stock testing for Kolonwel and DepEds
reservation were among the disqualifying reasons stated in the resolution.

On March 15, 2006, the IABAC submitted to WB for its review and information Res. No. 001-2006.
Appended to the covering letter was a document entitled Bid Evaluation Report and Recommendation for Award of
Contract.[7]

The following events, as recited in the assailed Manila RTC order and as borne out by the records, then
transpired:

1. In a letter[8] dated April 24, 2006 to the DepEd and the DBM-PS IABAC Chairman, the WB, through its
Regional Senior Economist, Ms. Rekha Menon, disagreed, for stated reasons, with the IABACsfinding of conflict
of interest on the part of Vibal and Watana and the rejection of their bids. Ms. Menon, however, upheld the
disqualification of all the other bidders. She thus asked the IABAC to review its evaluation and to provide the WB
with the revised Bid Evaluation Report (BER), taking into account the December 31, 2006 RP-IBRD Loan closing
date.

2. On May 11, 2006, the IABAC informed Kolonwel of its or its bids failure to post qualify and of the
grounds for the failure.[9]

In its reply-letter of May 18, 2006,[10] Kolonwel raised several issues and requested that its disqualification be
reconsidered and set aside. In reaction, IABAC apprised WB of Kolonwels concerns stated in its letter-reply.

3) Subsequently, the IABAC, agreeing with WBs position articulated in Ms. Menon, issued Res. No. 001-
2006-A effectively recommending to WB the contract award to Vibal of Sibika 1 & 3 and HekaSi5;
to Watana of Sibika 2 and HeKaSi 4 & 5 and to Daewoo of Sibika 3. Upon review, WB offered no objection to
the recommended award.[11]

4) The issuance of notices of award and the execution on September 12, 2006 of the
corresponding Purchaser-Supplier contracts followed.[12]

5. On June 23, 2006, the DBM-PS IABAC chairman informed Kolonwel of the denial of its request
for reconsideration and of the WBs concurrence with the denial.[13] The IABAC denied, on September 8, 2006, a
second request for reconsideration of Kolonwel [14] after WB found the reasons therefor, as detailed in PS IABAC
Res. No. 001-2006-B[15] dated July 18, 2006, unmeritorious, particularly on the aspect of cover stock testing.

Such was the state of things when on, October 12, 2006, Kolonwel filed with the RTC of Manila a special
civil action for certiorari and prohibition with a prayer for a temporary restraining order (TRO) and/or writ of
preliminary injunction. Docketed as SP Civil Case No. 06-116010, and raffled to Branch 18 of the court, [16] the
petition sought to nullify IABAC Res. Nos. 001-2006 and 001-2006-A and to set aside the contract awards in favor
of Vibal and Watana. In support of its TRO application, Kolonwel alleged, among other things, that the supply-
awardees were rushing with the implementation of the void supply contracts to beat the loan closing-date deadline.

A week after, the Manila RTC scheduled - and eventually conducted - a summary hearing on the TRO
application. In an order[17] of October 31, 2006, as amended in another order [18] dated November 20, 2006, the court
granted a 20-day TRO enjoining the IABAC, et al, starting November 6, 2006, from proceeding with the subject
September 12, 2006 purchase- supply contracts. In the original order, the court set the preliminary conference and
hearing for the applied preliminary injunction on November 7, and 8, 2006, respectively.

In the meantime, Vibal filed an urgent motion to dismiss [19] Kolonwels petition on several grounds, among
them want of jurisdiction and lack of cause of action, inter aliaalleging that the latter had pursued judicial relief
without first complying with the protest procedure prescribed by Republic Act (R.A.) No. 9184, otherwise known as
the Government Procurement Reform Act. The DepEd later followed with its own motion to dismiss, partly based
on the same protest provision. As records show, the trial court did not conduct a hearing on either dismissal motions,
albeit it heard the parties on their opposing claims respecting the propriety of issuing a writ of preliminary
injunction.

[20]
On December 4, 2006, the Manila RTC issued its assailed Order finding for Kolonwel, as petitioner a quo,
disposing as follows:

WHEREFORE, the court grants the petition for certiorari and prohibition. The
IABAC Resolution No. 001-2006-A dated May 30, 2006 is annulled and set aside. IABAC
Resolution No. 001-2006 is declared validly and regularly issued in the absence of a showing of
grave abuse of discretion or excess of jurisdiction. All subsequent actions of the respondents
resulting from the issuance of IABAC Resolution No. 001-2006-A are consequently nullified
and set aside. This court grants a final injunction pursuant to Sec. 9 of Rule 58 of the Rules of
Court as amended, restraining respondents Department of Education and Culture (sic), [DBM-
PS], [IABAC], Vibal Publishing House, Inc., LG & M Corporation and SD Publications from the
commission or continuance of acts, contracts or transactions proceeding from the issuance of
IABAC Resolution No. 001-2006-A.
 SO ORDERED. (Emphasis and words in brackets supplied)

Hence, these three (3) petitions which the Court, per its Resolution [21] of January 16, 2007, ordered
consolidated. Earlier, the Court issued, in G. R. No. 175616, a TRO[22] enjoining the presiding judge[23] of the RTC of
Manila, Branch 18, from proceeding with SP Civil Case No. 06-116010 or implementing its assailed order.

Petitioners urge the annulment of the assailed RTC Order dated December 4, 2006, on jurisdictional ground,
among others. It is their parallel posture that the Manila RTC erred in assuming jurisdiction over the case despite
respondent Kolonwels failure to observe the protest mechanism provided under Sec. 55 in relation to Secs. 57 and
58 of R.A. No. 9184, respectively reading as follows:

Sec. 55. Protest on Decision of the BAC.- Decisions of the BAC [Bids and Awards
Committee] in all stages of procurement may be protested to the head of the procuring
entity. Decisions of the BAC may be protested by filing a verified position paper and paying
a non-refundable protest fee. The amount of the protest fee and the periods during which the
protest may be filed and resolved shall be specific in the IRR.

Sec. 57. Non-interruption of the Bidding Process. In no case shall any process taken from
any decision treated in this Article stay or delay the bidding process. Protests must first be
resolved before any award is made.

Sec. 58. Report to Regular Courts; Certiorari.- Court action may be resorted to only after
the protests contemplated in this Article shall have been completed. Cases that are filed in
violation of the process specified in this article shall be dismissed for lack of jurisdiction. The
[RTC] shall have jurisdiction over final decisions of the head of the procuring entity. (Emphasis
and words in bracket added.)

As a counterpoint, the respondent draws attention to its having twice asked, and having been twice spurned
by, the IABAC to reconsider its disqualification, obviously agreeing with the Manila RTC that the judicial window
was already opened under the exhaustion of available administrative remedies principle. In the same breath,
however, the respondent would argue, again following the RTCs line, that it was prevented from filing a protest
inasmuch as the government had not issued the Implementing Rules and Regulations (IRR) of R.A.
No. 9184 to render the protest mechanism of the law operative for foreign-funded projects.

The Court is unable to lend concurrence to the trial courts and respondents positions on the interplay of the
protest and jurisdictional issues. As may be noted, the aforequoted Section 55 of R.A. No. 9184 sets three (3)
requirements that must be met by the party desiring to protest the decision of the Bids and Awards Committee
(BAC). These are: 1) the protest must be in writing, in the form of a verified position paper; 2) the protest must be
submitted to the head of the procuring entity; and 3) the payment of a non-refundable protest fee. The jurisdictional
caveat that authorizes courts to assume or, inversely, precludes courts from assuming, jurisdiction over suits
assailing the BACs decisions is in turn found in the succeeding Section 58 which provides that the courts would
have jurisdiction over such suits only if the protest procedure has already been completed.

Respondents letters of May 18, 2006[24] and June 28, 2006[25] in which it requested reconsideration of its
disqualification cannot plausibly be given the status of a protest in the context of the aforequoted provisions of R.A.
No. 9184. For one, neither of the letter-request was addressed to the head of the procuring entity, in this case the
DepEd Secretary or the head of the DBM Procurement Service, as required by law. For another, the same letters
were unverified. And not to be overlooked of course is the fact that the third protest-completing
requirement, i.e., payment of protest fee, was not complied with.

Given the above perspective, it cannot really be said that the respondent availed itself of the protest procedure
prescribed under Section 55 of R.A. No. 9184 before going to the RTC of Manila via a petition for certiorari. Stated
a bit differently, respondent sought judicial intervention even before duly completing the protest process. Hence, its
filing of SP Civil Case No. 06-116010 was precipitate. Or, as the law itself would put it, cases that are filed in
violation of the protest process shall be dismissed for lack of jurisdiction.

Considering that the respondents petition in RTC Manila was actually filed in violation of the protest process
set forth in Section 55 of R.A. No. 9184, that court could not have lawfully acquired jurisdiction over the subject
matter of this case. In fact, Section 58, supra, of R.A. No. 9184 emphatically states that cases filed in violation of
the protest process therein provided shall be dismissed for lack of jurisdiction.

It is to be stressed that the protest mechanism adverted to is a built-in administrative remedy embodied in the
law itself. It was not prescribed by an administrative agency tasked with implementing a statute through the medium
of interpretative circulars or bulletins. Ignoring thus this administrative remedy would be to defy the law itself.

It will not avail the respondent any to argue that the absence of an IRR to make the protest mechanism under
R.A. No. 9184 become operative for foreign-funded projects was what prevented it from complying with the protest
procedure. As the last sentence of the afore-quoted Section 55 of R.A. No. 9184 is couched, the specific office of an
IRR for foreign-funded project, vis--vis the matter of protest, is limited to fixing the amount of the protest fee and
the periods during which the protest may be filed and resolved. Surely, the absence of provisions on protest fee and
reglementary period does not signify the deferment of the implementation of the protest mechanism as a
condition sine qua non to resort to judicial relief. As applied to the present case, the respondent had to file a protest
and pursue it until its completion before going to court. There was hardly any need to wait for the specific filing
period to be prescribed by the IRR because the protest, as a matter of necessity, has to be lodged before court action.
 Neither is it necessary that the amount of protest fee be prescribed first. Respondent could very well have
proceeded with its protest without paying the required protest fee, remitting the proper amount once the appropriate
IRR fixed the protest fee.

There may perhaps be room for relaxing the prescription on protest if a bona fide attempt to comply with legal
requirements had been made. But the fact alone that the respondent did not even submit a verified position paper by
way of protest argues against such plausibility. Significantly, none of the reconsideration-seeking letters of the
respondent advert to the protest procedure under Section 55 of R.A. No. 9184, even by way of noting that it was at a
loss as to the inoperativeness of such provision in the light of the absence of an IRR.

In its petition before the Manila RTC, the respondent veritably admitted to not complying with the protest
requirement, albeit with the lame excuse that it was effectively barred from complying with the required
administrative remedies of protest. Neither did the respondent then argue that it was not able to comply due to the
absence of an IRR for foreign- funded projects.

At any rate, there is, in fact a set of implementing rules and regulations, denominated as IRR-A, issued on
July 11, 2003 by the GPPB and the Joint Congressional Oversight Committee, Section 55.1 [26] of which provides that
prior to a resort to protest, the aggrieved party must first file a motion for reconsideration of the decision of the
BAC. It is only after the BAC itself denies reconsideration that the protest, accompanied by a fixed protest fee, shall
be filed within the period defined in the IRR.

It may be that IRR-A specifically defines its coverage to all fully domestically-funded procurement
activities, it being also provided that foreign-funded procurement activities shall be the subject of a subsequent
issuance. [27] However, a similarly drawn argument involving IRR-A was set aside in Abaya v. Ebdane,[28] a case
involving Loan Agreement No. PH-P204 entered into by and between the RP and the Japan Bank for International
Cooperation (JBIC) for the implementation DPWH Contract Package No.I (CP I). Wrote the Court in Abaya:

Admittedly, IRR-A covers only fully domestically-funded procurement activities from

procurement planning up to contract implementation and that it is expressly stated that IRR-B for
foreign-funded procurement activities shall be subject of a subsequent issuance. Nonetheless, there
is no reason why the policy behind Section 77 of IRR-A cannot be applied to foreign-funded
procurement projects like the CP I project. Stated differently, the policy on the prospective or non-
retroactive application of RA 9184 with respect to domestically-funded procurement projects
cannot be any different with respect to foreign-funded procurement projects . It would be
incongruous, even absurd, to provide for the prospective application of RA 9184 with respect to
domestically-funded procurement projects and, on the other hand, as urged by the petitioners,
apply RA 9184 retroactively with respect to foreign-funded procurement projects. To be sure, the
lawmakers could not have intended such an absurdity.
 As in Abaya, there really should be no reason why the policy behind Section 55.l of IRR-A on the procedure
for protest cannot be applied, even analogously, to foreign-funded procurement projects, such as those in this case.
Indeed, there is no discernable justification why a different procedure should obtain with respect to foreign-funded
procurement undertakings as opposed to a locally funded project, and certainly there is no concrete foundation in
R.A. 9184 to indicate that Congress intended such a variance in the protest procedure.

The Manila RTC, in granting the petition for certiorari and prohibition, stated the observation that there was
substantial compliance of the requirement of protest.[29]Yet, it is not even clear that respondent Kolonwel, in its
dealings with the IABAC, particularly in seeking reconsideration of its decision, was even aware of the protest
requirements. What is beyond dispute, however, is that courts are precluded by express legislative command from
entertaining protests from decisions of the BAC. What Congress contextually intended under the premises was that
not only would there be a distinct administrative grievance mechanism to be observed in assailing decisions of the
BAC, but that courts would be without jurisdiction over actions impugning decisions of the BACs, unless, in the
meantime, the protest procedure mandated under Section 55 of R.A. No. 9184 is brought to its logical completion.

It is Congress by law, not the courts by discretion, which defines the courts jurisdiction not otherwise
conferred by the Constitution. Through the same medium, Congress also draws the parameters in the exercise of the
functions of administrative agencies. Section 55 of R.A. No. 9184 could not be any clearer when it mandates the
manner of protesting the decision of bids and awards committees. Similarly, there can be no quibbling that, under
Section 58 of the same law, courts do not have jurisdiction over decisions of the BACs unless the appropriate protest
has been made and completed. The absence of the IRR does not detract from the reality that R.A. No. 9184 requires
a protest to be filed under the form therein prescribed.

Given the above perspective, the Manila RTC had no jurisdiction over respondent Kolonwels petition
for certiorari and prohibition. Accordingly, it ought to have granted herein petitioners motion to dismiss, but it did
not. Worse, the court even added another layer to its grievous error when it granted the respondents basic petition
for certiorariand prohibition itself.

Compounding the Manila RTCs error is its having proceeded with SP Civil Case No. 06-116010 even without
acquiring jurisdiction over Watana. As may be recalled, the respondent, in its petition before the RTC, impleaded
Watana as one of the defendants, the latter having been awarded by the IABAC Sibika 2 and HeKaSi 4 &5. The
records, however, show that Watana was not served with summons. The Sheriffs Return dated October 18, 2006,
noted that summons was not served on Watana and another defendant at No. 1281 G. Araneta Avenue cor.
Ma. Clara Street, Quezon City, on the ground that said companies were not holding office thereat according to Mr.
Marvin V. Catacutan.
 There can be no dispute that Watana is an indispensable party to the respondents petition in SP Civil Case
No. 06-116010, Kolonwel having therein assailed and sought to nullify the contract-award made in its and Vibals
favor. Indispensable parties are those with such interest in the controversy that a final decree would necessarily
affect their rights so that courts cannot proceed without their presence. [30] All of them must be included in a suit for
an action to prosper or for a final determination to be had. [31] Watana, to repeat, was never served with summons;
neither did it participate in the proceedings below. Plainly, then, the Manila RTC did not acquire jurisdiction over
one of the indispensable parties, the joinder of whom is compulsory.[32]

With the foregoing disquisitions, the Court finds it unnecessary to even dwell on the other points raised in this
consolidated cases. In the light, however, of the Manila RTCs holding that the WB Guidelines on Procurement
under IBRD Loans do not in any way provided superiority over local laws on the matter, [33] the Court wishes to state
the following observation:

As may be recalled, all interested bidders were put on notice that the DepEds procurement project was to be
funded from the proceeds of the RP-IBRD Loan No. 7118-PH, [34] Section 1, Schedule 4 of which stipulates that
Goods shall be procured in accordance with the provisions of Section 1 [35] of the Guidelines for Procurement
under IBRD Loans. Accordingly, the IABAC conducted the bidding for the supply of textbooks and manuals
based on the WB Guidelines, particularly the provisions on International Competitive Bidding (ICB). Section 4 of
R.A. No. 9184 expressly recognized this particular process, thus:

Sec. 4. Scope and application. - This Act shall apply to the Procurement of Goods and
Consulting Services, regardless of source of funds, whether local or foreign by all branches and
instrumentalities of government . Any treaty or international or executive agreement
affecting the subject matter of this Act to which the Philippine government is a signatory
shall be observed. (Emphasis added.)

The question as to whether or not foreign loan agreements with international financial institutions, such as
Loan No. 7118-PH, partake of an executive or international agreement within the purview of the Section 4 of R.A.
No. 9184, has been answered by the Court in the affirmative in Abaya, supra. Significantly, Abaya declared that the
RP-JBIC loan agreement was to be of governing application over the CP I project and that the JBIC Procurement
Guidelines, as stipulated in the loan agreement, shall primarily govern the procurement of goods necessary to
implement the main project.

Under the fundamental international law principle of pacta sunt servanda,[36] which is in fact embodied in the
afore-quoted Section 4 of R.A. No. 9184, the RP, as borrower, bound itself to perform in good faith its duties and
obligation under Loan No. 7118- PH. Applying this postulate in the concrete to this case, the IABAC was legally
obliged to comply with, or accord primacy to, the WB Guidelines on the conduct and implementation of the
bidding/procurement process in question.

WHEREFORE, the instant consolidated petitions are GRANTED and the assailed Order dated December
4, 2006 of the Regional Trial Court of Manila in its SP Case No. 06-116010 is NULLIFIED and SET ASIDE.

No cost.

SO ORDERED.
ISSUE:

Whether or not the foreign loan agreements (Loan No. 7118-PH) with international financial
institutions, partake of an executive or international agreement and shall govern the procurement of
goods necessary to implement the project.

HELD:

This issue has been affirmatively answered in the case of Abaya. In that case, the court declared that
the RP-JBIC loan agreement was to be of governing application over the CP I project and that the JBIC
Procurement Guidelines, as stipulated in the loan agreement.

Under the fundamental international law principle of pacta sunt servanda, the RP, as borrower, bound
itself to perform in good faith its duties and obligation under Loan No. 7118-PH. Applying this
postulate, the IABAC was legally obliged to comply with, or accord primacy to, the WB Guidelines on
the conduct and implementation of the bidding/procurement process in question.

[G.R. No. 151445. April 11, 2002]

ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners, vs. HONORABLE EXECUTIVE SECRETARY
as alter ego of HER EXCELLENCY GLORIA MACAPAGAL-ARROYO, and HONORABLE
ANGELO REYES in his capacity as Secretary of National Defense, respondents.
SANLAKAS and PARTIDO NG MANGGAGAWA, petitioners-intervenors, vs. GLORIA MACAPAGAL-
ARROYO, ALBERTO ROMULO, ANGELO REYES,respondents.

DECISION
DE LEON, JR., J.:

This case involves a petition for certiorari and prohibition as well as a petition-in-intervention, praying that
respondents be restrained from proceeding with the so-called Balikatan 02-1 and that after due notice and hearing,
that judgment be rendered issuing a permanent writ of injunction and/or prohibition against the deployment of U.S.
troops in Basilan and Mindanao for being illegal and in violation of the Constitution.
 The facts are as follows:
Beginning January of this year 2002, personnel from the armed forces of the United States of America started
arriving in Mindanao to take part, in conjunction with the Philippine military, in Balikatan 02-1. These so-called
Balikatan exercises are the largest combined training operations involving Filipino and American troops. In
theory, they are a simulation of joint military maneuvers pursuant to the Mutual Defense Treaty, [1] a bilateral defense
agreement entered into by the Philippines and the United States in 1951.
Prior to the year 2002, the last Balikatan was held in 1995. This was due to the paucity of any formal
agreement relative to the treatment of United States personnel visiting the Philippines. In the meantime, the
respective governments of the two countries agreed to hold joint exercises on a reduced scale. The lack of
consensus was eventually cured when the two nations concluded the Visiting Forces Agreement (VFA) in 1999.
The entry of American troops into Philippine soil is proximately rooted in the international anti-terrorism
campaign declared by President George W. Bush in reaction to the tragic events that occurred on September 11,
2001. On that day, three (3) commercial aircrafts were hijacked, flown and smashed into the twin towers of the
World Trade Center in New York City and the Pentagon building in Washington, D.C. by terrorists with alleged links
to the al-Qaeda (the Base), a Muslim extremist organization headed by the infamous Osama bin Laden. Of no
comparable historical parallels, these acts caused billions of dollars worth of destruction of property and incalculable
loss of hundreds of lives.
On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed this petition for certiorari and
prohibition, attacking the constitutionality of the joint exercise. [2] They were joined subsequently by SANLAKAS
and PARTIDO NG MANGGAGAWA, both party-list organizations, who filed a petition-in-intervention on February
11, 2002.
Lim and Ersando filed suit in their capacities as citizens, lawyers and taxpayers. SANLAKAS and PARTIDO,
on the other hand, aver that certain members of their organization are residents of Zamboanga and Sulu, and hence
will be directly affected by the operations being conducted in Mindanao. They likewise pray for a relaxation on the
rules relative to locus standi citing the unprecedented importance of the issue involved.
On February 7, 2002 the Senate conducted a hearing on the Balikatan exercise wherein Vice-President
Teofisto T. Guingona, Jr., who is concurrently Secretary of Foreign Affairs, presented the Draft Terms of Reference
(TOR).[3] Five days later, he approved the TOR, which we quote hereunder:

I. POLICY LEVEL

1. The Exercise shall be Consistent with the Philippine Constitution and all its activities shall be in consonance
with the laws of the land and the provisions of the RP-US Visiting Forces Agreement (VFA).

2. The conduct of this training Exercise is in accordance with pertinent United Nations resolutions against
global terrorism as understood by the respective parties.

3. No permanent US basing and support facilities shall be established. Temporary structures such as those for
troop billeting, classroom instruction and messing may be set up for use by RP and US Forces during the Exercise.

4. The Exercise shall be implemented jointly by RP and US Exercise Co-Directors under the authority of the
Chief of Staff, AFP. In no instance will US Forces operate independently during field training exercises
(FTX). AFP and US Unit Commanders will retain command over their respective forces under the overall authority
of the Exercise Co-Directors. RP and US participants shall comply with operational instructions of the APP during
the FTX.

5. The exercise shall be conducted and completed within a period of not more than six months, with the
projected participation of 660 US personnel and 3,800 RP Forces. The Chief of Staff, AFP shall direct the Exercise
Co-Directors to wind up and terminate the Exercise and other activities within the six month Exercise period.
6. The Exercise is a mutual counter-terrorism advising, assisting and training Exercise relative to Philippine
efforts against the ASG, and will be conducted on the Island of Basilan. Further advising, assisting and training
exercises shall be conducted in Malagutay and the Zamboanga area. Related activities in Cebu will be for support of
the Exercise.

7. Only 160 US Forces organized in 12-man Special Forces Teams shall be deployed with AFP field
commanders. The US teams shall remain at the Battalion Headquarters and, when approved, Company Tactical
headquarters where they can observe and assess the performance of the APP Forces.

8. US exercise participants shall not engage in combat, without prejudice to their right of self-defense.

9. These terms of Reference are for purposes of this Exercise only and do not create additional legal obligations
between the US Government and the Republic of the Philippines.

II. EXERCISE LEVEL

1. TRAINING

a. The Exercise shall involve the conduct of mutual military assisting, advising and training of RP and US
Forces with the primary objective of enhancing the operational capabilities of both forces to combat terrorism.

b. At no time shall US Forces operate independently within RP territory.

c. Flight plans of all aircraft involved in the exercise will comply with the local air traffic regulations.

2. ADMINISTRATION & LOGISTICS

a. RP and US participants shall be given a country and area briefing at the start of the Exercise. This briefing
shall acquaint US Forces on the culture and sensitivities of the Filipinos and the provisions of the VFA. The briefing
shall also promote the full cooperation on the part of the RP and US participants for the successful conduct of the
Exercise.

b. RP and US participating forces may share, in accordance with their respective laws and regulations, in the use
of their resources, equipment and other assets. They will use their respective logistics channels.

c. Medical evaluation shall be jointly planned and executed utilizing RP and US assets and resources.

d. Legal liaison officers from each respective party shall be appointed by the Exercise Directors.

3. PUBLIC AFFAIRS

a. Combined RP-US Information Bureaus shall be established at the Exercise Directorate in Zamboanga City
and at GHQ, AFP in Camp Aguinaldo, Quezon City.

b. Local media relations will be the concern of the AFP and all public affairs guidelines shall be jointly
developed by RP and US Forces.

c. Socio-Economic Assistance Projects shall be planned and executed jointly by RP and US Forces in
accordance with their respective laws and regulations, and in consultation with community and local government
officials.
 Contemporaneously, Assistant Secretary for American Affairs Minerva Jean A. Falcon and United
States Charge d Affaires Robert Fitts signed the Agreed Minutes of the discussion between the Vice-President and
Assistant Secretary Kelly.[4]
Petitioners Lim and Ersando present the following arguments:
I

THE PHILIPPINES AND THE UNITED STATES SIGNED THE MUTUAL DEFENSE TREATY (MDT) in 1951
TO PROVIDE MUTUAL MILITARY ASSISTANCE IN ACCORDANCE WITH THE CONSTITUTIONAL
PROCESSES OF EACH COUNTRY ONLY IN THE CASE OF AN ARMED ATTACK BY AN EXTERNAL
AGGRESSOR, MEANING A THIRD COUNTRY AGAINST ONE OF THEM.

BY NO STRETCH OF THE IMAGINATION CAN IT BE SAID THAT THE ABU SAYYAF BANDITS IN
BASILAN CONSTITUTE AN EXTERNAL ARMED FORCE THAT HAS SUBJECT THE PHILIPPINES TO AN
ARMED EXTERNAL ATTACK TO WARRANT U.S. MILITARY ASSISTANCE UNDER THE MDT OF 1951.

II

NEITHER DOES THE VFA OF 1999 AUTHORIZE AMERICAN SOLDIERS TO ENGAGE IN COMBAT
OPERATIONS IN PHILIPPINE TERRITORY, NOT EVEN TO FIRE BACK IF FIRED UPON.

Substantially the same points are advanced by petitioners SANLAKAS and PARTIDO.
In his Comment, the Solicitor General points to infirmities in the petitions regarding, inter alia, Lim and
Ersandos standing to file suit, the prematurity of the action, as well as the impropriety of availing of certiorari to
ascertain a question of fact. Anent their locus standi, the Solicitor General argues that first, they may not file suit in
their capacities as taxpayers inasmuch as it has not been shown that Balikatan 02-1 involves the exercise of
Congress taxing or spending powers. Second, their being lawyers does not invest them with sufficient personality
to initiate the case, citing our ruling in Integrated Bar of the Philippines v. Zamora.[5] Third, Lim and Ersando have
failed to demonstrate the requisite showing of direct personal injury. We agree.
It is also contended that the petitioners are indulging in speculation. The Solicitor General is of the view that
since the Terms of Reference are clear as to the extent and duration of Balikatan 02-1, the issues raised by
petitioners are premature, as they are based only on a fear of future violation of the Terms of Reference. Even
petitioners resort to a special civil action for certiorari is assailed on the ground that the writ may only issue on the
basis of established facts.
Apart from these threshold issues, the Solicitor General claims that there is actually no question of
constitutionality involved. The true object of the instant suit, it is said, is to obtain an interpretation of the
VFA. The Solicitor General asks that we accord due deference to the executive determination that Balikatan 02-1
is covered by the VFA, considering the Presidents monopoly in the field of foreign relations and her role as
commander-in-chief of the Philippine armed forces.
Given the primordial importance of the issue involved, it will suffice to reiterate our view on this point in a
related case:

Notwithstanding, in view of the paramount importance and the constitutional significance of the issues raised
in the petitions, this Court, in the exercise of its sound discretion, brushes aside the procedural barrier and
takes cognizance of the petitions, as we have done in the early Emergency Powers Cases, where we had
occasion to rule:

x x x ordinary citizens and taxpayers were allowed to question the constitutionality of several executive
orders issued by President Quirino although they were involving only an indirect and general interest
shared in common with the public. The Court dismissed the objection that they were not proper parties
and ruled that transcendental importance to the public of these cases demands that they be settled
 promptly and definitely, brushing aside, if we must, technicalities of procedure. We have since then
applied the exception in many other cases. [citation omitted]

This principle was reiterated in the subsequent cases of Gonzales vs. COMELEC, Daza vs. Singson, and Basco vs.
Phil. Amusement and Gaming Corporation, where we emphatically held:

Considering however the importance to the public of the case at bar, and in keeping with the Courts
duty, under the 1987 Constitution, to determine whether or not the other branches of the government
have kept themselves within the limits of the Constitution and the laws that they have not abused the
discretion given to them, the Court has brushed aside technicalities of procedure and has taken
cognizance of this petition. xxx

Again, in the more recent case of Kilosbayan vs. Guingona, Jr., this Court ruled that in cases of transcendental
importance, the court may relax the standing requirements and allow a suit to prosper even where there is no
direct injury to the party claiming the right of judicial review.

Although courts generally avoid having to decide a constitutional question based on the doctrine of separation of
powers, which enjoins upon the departments of the government a becoming respect for each others acts, this Court
nevertheless resolves to take cognizance of the instant petitions.[6]

Hence, we treat with similar dispatch the general objection to the supposed prematurity of the action. At any
rate, petitioners' concerns on the lack of any specific regulation on the latitude of activity US personnel may
undertake and the duration of their stay has been addressed in the Terms of Reference.
The holding of Balikatan 02-1 must be studied in the framework of the treaty antecedents to which the
Philippines bound itself. The first of these is the Mutual Defense Treaty (MDT, for brevity). The MDT has been
described as the core of the defense relationship between the Philippines and its traditional ally, the United
States. Its aim is to enhance the strategic and technological capabilities of our armed forces through joint training
with its American counterparts; the Balikatan is the largest such training exercise directly supporting the MDTs
objectives. It is this treaty to which the VFA adverts and the obligations thereunder which it seeks to reaffirm.
The lapse of the US-Philippine Bases Agreement in 1992 and the decision not to renew it created a vacuum in
US-Philippine defense relations, that is, until it was replaced by the Visiting Forces Agreement. It should be recalled
that on October 10, 2000, by a vote of eleven to three, this court upheld the validity of the VFA. [7] The VFA provides
the regulatory mechanism by which United States military and civilian personnel [may visit] temporarily in the
Philippines in connection with activities approved by the Philippine Government. It contains provisions relative to
entry and departure of American personnel, driving and vehicle registration, criminal jurisdiction, claims,
importation and exportation, movement of vessels and aircraft, as well as the duration of the agreement and its
termination. It is the VFA which gives continued relevance to the MDT despite the passage of years. Its primary
goal is to facilitate the promotion of optimal cooperation between American and Philippine military forces in the
event of an attack by a common foe.
The first question that should be addressed is whether Balikatan 02-1 is covered by the Visiting Forces
Agreement. To resolve this, it is necessary to refer to the VFA itself. Not much help can be had therefrom,
unfortunately, since the terminology employed is itself the source of the problem. The VFA permits United States
personnel to engage, on an impermanent basis, in activities, the exact meaning of which was left undefined. The
expression is ambiguous, permitting a wide scope of undertakings subject only to the approval of the Philippine
government.[8] The sole encumbrance placed on its definition is couched in the negative, in that United States
personnel must abstain from any activity inconsistent with the spirit of this agreement, and in particular, from any
political activity.[9] All other activities, in other words, are fair game.
We are not left completely unaided, however. The Vienna Convention on the Law of Treaties, which contains
provisos governing interpretations of international agreements, state:

SECTION 3. INTERPRETATION OF TREATIES

 Article 31

General rule of interpretation

1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of
the treaty in their context and in the light of its object and purpose.

2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including
its preamble and annexes:

(a) any agreement relating to the treaty which was made between all the parties in connexion
with the conclusion of the treaty;

(b) any instrument which was made by one or more parties in connexion with the conclusion
of the treaty and accepted by the other parties as an instrument related to the party.

3. There shall be taken into account, together with the context:

(a) any subsequent agreement between the parties regarding the interpretation of the treaty or
the application of its provisions;

(b) any subsequent practice in the application of the treaty which establishes the agreement of
the parties regarding its interpretation;

(c) any relevant rules of international law applicable in the relations between the parties.

4. A special meaning shall be given to a term if it is established that the parties so intended.

Article 32

Supplementary means of interpretation

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the
circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to
determine the meaning when the interpretation according to article 31:

(a) leaves the meaning ambiguous or obscure; or

(b) leads to a result which is manifestly absurd or unreasonable.

It is clear from the foregoing that the cardinal rule of interpretation must involve an examination of the text,
which is presumed to verbalize the parties intentions. The Convention likewise dictates what may be used as aids
to deduce the meaning of terms, which it refers to as the context of the treaty, as well as other elements may be taken
into account alongside the aforesaid context. As explained by a writer on the Convention,

[t]he Commissions proposals (which were adopted virtually without change by the conference and are now
reflected in Articles 31 and 32 of the Convention) were clearly based on the view that the text of a treaty must be
presumed to be the authentic expression of the intentions of the parties; the Commission accordingly came down
firmly in favour of the view that the starting point of interpretation is the elucidation of the meaning of the text, not
an investigation ab initio into the intentions of the parties. This is not to say that the travaux prparatoires of a
treaty, or the circumstances of its conclusion, are relegated to a subordinate, and wholly ineffective, role. As
Professor Briggs points out, no rigid temporal prohibition on resort to travaux prparatoires of a treaty was intended
by the use of the phrase supplementary means of interpretation in what is now Article 32 of the Vienna
Convention. The distinction between the general rule of interpretation and the supplementary means of
interpretation is intended rather to ensure that the supplementary means do not constitute an alternative, autonomous
method of interpretation divorced from the general rule.[10]

The Terms of Reference rightly fall within the context of the VFA.
After studied reflection, it appeared farfetched that the ambiguity surrounding the meaning of the word
activities arose from accident. In our view, it was deliberately made that way to give both parties a certain leeway
in negotiation. In this manner, visiting US forces may sojourn in Philippine territory for purposes other than
military. As conceived, the joint exercises may include training on new techniques of patrol and surveillance to
protect the nations marine resources, sea search-and-rescue operations to assist vessels in distress, disaster relief
operations, civic action projects such as the building of school houses, medical and humanitarian missions, and the
like.
Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only logical to assume
that Balikatan 02-1, a mutual anti-terrorism advising, assisting and training exercise, falls under the umbrella of
sanctioned or allowable activities in the context of the agreement. Both the history and intent of the Mutual Defense
Treaty and the VFA support the conclusion that combat-related activities as opposed tocombat itself such as
the one subject of the instant petition, are indeed authorized.
That is not the end of the matter, though. Granted that Balikatan 02-1 is permitted under the terms of the
VFA, what may US forces legitimately do in furtherance of their aim to provide advice, assistance and training in
the global effort against terrorism? Differently phrased, may American troops actually engage in combat in
Philippine territory? The Terms of Reference are explicit enough. Paragraph 8 of section I stipulates that US
exercise participants may not engage in combat except in self-defense. We wryly note that this sentiment is
admirable in the abstract but difficult in implementation. The target of Balikatan 02-1, the Abu Sayyaf, cannot
reasonably be expected to sit idly while the battle is brought to their very doorstep. They cannot be expected to pick
and choose their targets for they will not have the luxury of doing so. We state this point if only to signify our
awareness that the parties straddle a fine line, observing the honored legal maxim Nemo potest facere per alium
quod non potest facere per directum. [11] The indirect violation is actually petitioners worry, that in reality,
Balikatan 02-1 is actually a war principally conducted by the United States government, and that the provision on
self-defense serves only as camouflage to conceal the true nature of the exercise. A clear pronouncement on this
matter thereby becomes crucial.
In our considered opinion, neither the MDT nor the VFA allow foreign troops to engage in an offensive war on
Philippine territory. We bear in mind the salutary proscription stated in the Charter of the United Nations, to wit:

Article 2

The Organization and its Members, in pursuit of the Purposes stated in Article 1, shall act in accordance with the
following Principles.

xxx xxx xxx xxx

4. All Members shall refrain in their international relations from the threat or use of force against the territorial
integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United
Nations.

xxx xxx xxx xxx

In the same manner, both the Mutual Defense Treaty and the Visiting Forces Agreement, as in all other treaties
and international agreements to which the Philippines is a party, must be read in the context of the 1987
Constitution. In particular, the Mutual Defense Treaty was concluded way before the present Charter, though it
nevertheless remains in effect as a valid source of international obligation. The present Constitution contains key
provisions useful in determining the extent to which foreign military troops are allowed in Philippine
territory. Thus, in the Declaration of Principles and State Policies, it is provided that:
xxx xxx xxx xxx

SEC. 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles
of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom,
cooperation, and amity with all nations.

xxx xxx xxx xxx

SEC. 7. The State shall pursue an independent foreign policy. In its relations with other states the paramount
consideration shall be national sovereignty, territorial integrity, national interest, and the right to self-determination.

SEC. 8. The Philippines, consistent with the national interest, adopts and pursues a policy of freedom from nuclear
weapons in the country.

xxx xxx xxx xxx

The Constitution also regulates the foreign relations powers of the Chief Executive when it provides that [n]o
treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the
members of the Senate.[12] Even more pointedly, the Transitory Provisions state:

Sec. 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.

The aforequoted provisions betray a marked antipathy towards foreign military presence in the country, or of
foreign influence in general. Hence, foreign troops are allowed entry into the Philippines only by way of direct
exception. Conflict arises then between the fundamental law and our obligations arising from international
agreements.
A rather recent formulation of the relation of international law vis--vis municipal law was expressed in Philip
Morris, Inc. v. Court of Appeals,[13] to wit:

xxx Withal, the fact that international law has been made part of the law of the land does not by any means imply the
primacy of international law over national law in the municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given a standing equal, not superior, to national legislation.

This is not exactly helpful in solving the problem at hand since in trying to find a middle ground, it favors neither
one law nor the other, which only leaves the hapless seeker with an unsolved dilemma. Other more traditional
approaches may offer valuable insights.
From the perspective of public international law, a treaty is favored over municipal law pursuant to the
principle of pacta sunt servanda. Hence, [e]very treaty in force is binding upon the parties to it and must be
performed by them in good faith. [14] Further, a party to a treaty is not allowed to invoke the provisions of its
internal law as justification for its failure to perform a treaty. [15]
Our Constitution espouses the opposing view. Witness our jurisdiction as stated in section 5 of Article VIII:

The Supreme Court shall have the following powers:

xxx xxx xxx xxx

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide,
final judgments and order of lower courts in:

(A) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.

xxx xxx xxx xxx

In Ichong v. Hernandez,[16] we ruled that the provisions of a treaty are always subject to qualification or
amendment by a subsequent law, or that it is subject to the police power of the State. In Gonzales v. Hechanova,[17]

xxx As regards the question whether an international agreement may be invalidated by our courts, suffice it to say
that the Constitution of the Philippines has clearly settled it in the affirmative, by providing, in Section 2 of Article
VIII thereof, that the Supreme Court may not be deprived of its jurisdiction to review, revise, reverse, modify, or
affirm on appeal, certiorari, or writ of error as the law or the rules of court may provide, final judgments and decrees
of inferior courts in (1) All cases in which the constitutionality or validity of any treaty, law, ordinance, or
executive order or regulation is in question. In other words, our Constitution authorizes the nullification of a treaty,
not only when it conflicts with the fundamental law, but, also, when it runs counter to an act of Congress.

The foregoing premises leave us no doubt that US forces are prohibited from engaging in an offensive war on
Philippine territory.
Yet a nagging question remains: are American troops actively engaged in combat alongside Filipino soldiers
under the guise of an alleged training and assistance exercise? Contrary to what petitioners would have us do, we
cannot take judicial notice of the events transpiring down south, [18] as reported from the saturation coverage of the
media. As a rule, we do not take cognizance of newspaper or electronic reports per se, not because of any issue as
to their truth, accuracy, or impartiality, but for the simple reason that facts must be established in accordance with
the rules of evidence. As a result, we cannot accept, in the absence of concrete proof, petitioners allegation that the
Arroyo government is engaged in doublespeak in trying to pass off as a mere training exercise an offensive effort
by foreign troops on native soil. The petitions invite us to speculate on what is really happening in Mindanao, to
issue, make factual findings on matters well beyond our immediate perception, and this we are understandably loath
to do.
It is all too apparent that the determination thereof involves basically a question of fact. On this point, we must
concur with the Solicitor General that the present subject matter is not a fit topic for a special civil action
for certiorari. We have held in too many instances that questions of fact are not entertained in such a remedy. The
sole object of the writ is to correct errors of jurisdiction or grave abuse of discretion. The phrase grave abuse of
discretion has a precise meaning in law, denoting abuse of discretion too patent and gross as to amount to an
evasion of a positive duty, or a virtual refusal to perform the duty enjoined or act in contemplation of law, or where
the power is exercised in an arbitrary and despotic manner by reason of passion and personal hostility. [19]
In this connection, it will not be amiss to add that the Supreme Court is not a trier of facts. [20]
Under the expanded concept of judicial power under the Constitution, courts are charged with 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. [21] From the facts obtaining, we find that the holding of
Balikatan 02-1 joint military exercise has not intruded into that penumbra of error that would otherwise call for
correction on our part. In other words, respondents in the case at bar have not committed grave abuse of discretion
amounting to lack or excess of jurisdiction.
WHEREFORE, the petition and the petition-in-intervention are hereby DISMISSED without prejudice to the
filing of a new petition sufficient in form and substance in the proper Regional Trial Court.
SO ORDERED.
Bellosillo, Melo, Mendoza, Quisumbing, and Carpio, JJ., concur.
Davide, Jr., C.J., and Puno, J., join the main and separate opinion of J. Panganiban.
Vitug, J., in the result.
 Kapunan, J., see dissenting opinion.
Panganiban, J., see separate opinion.
Ynares-Santiago, and Sandoval-Gutierrez, JJ., join the dissenting opinion of J. Kapunan.

[1]
For ready reference, the text of the treaty is reproduced herein:
MUTUAL DEFENSE TREATY
BETWEEN THE REPUBLIC OF THE PHILIPPINES
AND THE UNITED STATES OF AMERICA
30 August 1951
The parties to 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 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 United States of America and the
Republic of the Philippines,
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 relations from the threat or use of force in any manner
inconsistent with the purpose 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 the 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 attack on
the metropolitan territory of either of the Parties, or on the island territories under its jurisdiction in the Pacific or on
its armed forces, public vessels or aircraft used 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 United States of America and the Republic of the Philippines 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 WITNESS WHEREOF the undersigned Plenipotentiaries have signed this Treaty.
DONE in duplicate at Washington this thirtieth day of August, 1951.
xxx xxx xxx xxx
[2]
The day before, the first petition in connection with the joint military enterprise was filed -- G.R. No. 151433,
entitled In the Matter of Declaration as Constitutional and Legal the Balikatan RP-US Military
Exercises. Petitioner therein Atty. Eduardo B. Inlayo manifested that he would be perfectly comfortable should
the Court merely note his petition. We did not oblige him; in a Resolution dated February 12, 2002, we dismissed
his petition on the grounds of insufficiency in form and substance and lack of jurisdiction. After extending a hearty
Valentines greeting to the Court en banc, Atty. Inlayo promised to laminate the aforesaid resolution as a testimonial
of his once upon a time participation in an issue of national consequence.
[3]
Annex 1 of the Comment.
[4]
Annex 2 of the Comment. The Minutes state:
Secretary Guingona and Assistant Secretary Kelly welcomed the holding of Balikatan 02-1 exercise (the
Exercise) and the conclusion of the Terms of Reference for the Exercise. Assistant Secretary Kelly thanked
Secretary Guingona for Secretary Guingonas personal approval of the Terms of Reference.
Both Secretary Guingona and Assistant Secretary Kelly emphasized the importance of cooperating, within
the bounds provided for by their respective constitutions and laws, in the fight against international terrorism.
Both Secretary Guingona and Assistant Secretary Kelly expressed the belief that the Exercise shall not in
any way contribute to any escalation of other conflicts in Mindanao, shall not adversely affect the progress of
ongoing peace negotiations between the Government of the Philippines and other parties, and shall not put at risk the
friendly relations between the Philippines and its neighbors as well as with other states. Secretary Guingona stated
that he had in mind the ongoing peace negotiations with the NDF and the MILF and he emphasized that it is
important to make sure that the Exercise shall not in any way hinder those negotiations.
Both Secretary Guingona and Assistant Secretary Kelly stated that they look forward to the realization of
the nearly US$100 million in security assistance for fiscal years 2001-2002 agreed upon between H.E. President
Gloria Macapagal-Arroyo and H.E. President George W. Bush last November 2001.
 Secretary Guingona stated that the Philippines welcomes the assistance that the U.S. will be providing,
saying that while Filipino soldier does not lack experience, courage and determination, they could benefit from
additional knowledge and updated military technologies.
Assistant Secretary Kelly said that he is glad the U.S. is able to provide advice, assistance and training
and reiterated the policy position expressed by H.E. President George W. Bush during his State of the Nation
Address that U.S. forces are in the Philippines to advise, assist and train Philippine military forces.
Both Secretary Guingona and Assistant Secretary Kelly reiterated that, as provided in the Terms of
Reference, U.S. Forces shall not engage in combat during the Exercise, except in accordance with their right to act
in self-defense.
Both Secretary Guingona and Assistant Secretary Kelly reiterated that, pursuant to Article II of the Visiting
Forces Agreement, U.S. forces are bound to respect the laws of the Philippines during the Exercise.
Both Secretary Guingona and Assistant Secretary Kelly recognized that, pursuant to Article VI of the
Visiting Forces Agreement, both the U.S. and Philippine Governments waive any and all claims against the other for
any deaths or injuries to their military and civilian personnel from the Exercise.
Secretary Guingona and Assistant Secretary Kelly designated Ambassador Minerva Falcon and Charge d
Affaires, a.i. Robert Fitts to initial these minutes.
Both secretary Guingona and Assistant Secretary Kelly agreed to consult from time to time on matters
relating to the Exercise as well as on other matters.
[5]
338 SCRA 81, 100-101 (2000).
[6]
BAYAN, et. al. v. Zamora, 342 SCRA 449 (2000).
[7]
BAYAN, et. al. v. Zamora, et. al., 342 SCRA 449 (2000).
[8]
Article I [Definitions], VFA.
[9]
Article II [Respect for Law], VFA.
[10]
I.M. SINCLAIR, THE VIENNA CONVENTION ON THE LAW OF TREATIES 71-72 (1973).
[11]
No one is allowed to do indirectly what he is prohibited to do directly.
[12]
Sec. 21, Art. VII.
[13]
224 SCRA 576, 593 (1993).
[14]
Vienna Convention on the Law of Treaties, art. 26.
[15]
Id, art. 27. However, this is without prejudice to the provisions of art. 46 of the convention, which provides:
1. A State may not invoke the fact that its consent to be bound by a treaty has been expressed in
violation of a provision of its internal law regarding competence to conclude treaties as invalidating its consent
unless that violation was manifest and concerned a rule of its internal law of fundamental importance.
2. A violation is manifest if it would be objectively evident to any State conducting itself in the manner
in accordance with normal practice and in good faith.
[16]
101 Phil. 1155, 1191 (1957).
[17]
9 SCRA 230, 242 (1963).
[18]
Pertinent sections of Rule 129 provide: SECTION 1. Judicial notice, when mandatory.A court shall take
judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political
history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the
world and their seals, the political constitution and history of the Philippines, the official acts of the legislative,
executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical
divisions. Likewise, it is also provided in the next succeeding section: SEC. 2. Judicial notice, when discretionary.
A court may take judicial notice of matters which are of public knowledge, or are capable of unquestionable
demonstration, or ought to be known to judges because of their judicial functions.
[19]
Sanchez v. National Labor Relations Commission, 312 SCRA 727 (1999).
[20]
Hervas v. Court of Appeals, 319 SCRA 776 (1999); Valmonte v. Court of Appeals, 303 SCRA 278 (1999).
[21]
Article VIII, section 1.

FACTS :

Beginning 2002, personnel from the armed forces of the United States started arriving in
Mindanao, to take part, in conjunction with the Philippine military, in Balikatan 02-1. In
theory, they are a simulation of joint military maneuvers pursuant to the Mutual Defense
Treaty, a bilateral defense agreement entered into by the Philippines and the United States
in 1951.

On Feb. 2002, Lim filed this petition for certiorari and prohibition, praying that respondents
be restrained from proceeding with the so-called Balikatan 02-1, and that after due notice
and hearing, judgment be rendered issuing a permanent writ of injuction and/or prohibition
against the deployment of US troops in Basilan and Mindanao for being illegal and in
violation of the Constitution.

Petitioners contend that the RP and the US signed the Mutual Defense Treaty to provide
mutual military assistance in accordance with the constitutional processes of each country
only in the case of a armed attack by an external aggressor, meaning a third country,
against one of them. They further argued that it cannot be said that the Abu Sayyaf in
Basilan constitutes an external aggressor to warrant US military assistance in accordance
with MDT of 1951. Another contention was that the VFA of 1999 does not authorize American
soldiers to engage in combat operations in Philippine territory.

ISSUE :

Whether or not the Balikatan 02-1 activities are covered by the VFA.

RULING :

Petition is dismissed. The VFA itself permits US personnel to engage on an impermanent

basis, in activities, the exact meaning of which is left undefined. The sole encumbrance
placed on its definition is couched in the negative, in that the US personnel must abstain
from any activity inconsistent with the spirit of this agreement, and in particular, from any
political activity.

Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only
logical to assume that Balikatan 02-1 a mutual anti terrorism advising assisting and
training exercise falls under the umbrella of sanctioned or allowable activities in the context
of the agreement. Both the history and intent of the Mutual Defense Treaty and the VFA
support the conclusion that combat-related activities as opposed to combat itself such as
the one subject of the instant petition, are indeed authorized. Wherefore, the petition and
the petition-in-intervention were dismissed.

[G.R. No. 138570. October 10, 2000]

BAYAN (Bagong Alyansang Makabayan), a JUNK VFA MOVEMENT, BISHOP TOMAS MILLAMENA
(Iglesia Filipina Independiente), BISHOP ELMER BOLOCAN (United Church of Christ of the
Phil.), DR. REYNALDO LEGASCA, MD, KILUSANG MAMBUBUKID NG PILIPINAS,
KILUSANG MAYO UNO, GABRIELA, PROLABOR, and the PUBLIC INTEREST LAW
CENTER, petitioners, vs. EXECUTIVE SECRETARY RONALDO ZAMORA, FOREIGN
AFFAIRS SECRETARY DOMINGO SIAZON, DEFENSE SECRETARY ORLANDO MERCADO,
BRIG. GEN. ALEXANDER AGUIRRE, SENATE PRESIDENT MARCELO FERNAN, SENATOR
FRANKLIN DRILON, SENATOR BLAS OPLE, SENATOR RODOLFO BIAZON, and SENATOR
FRANCISCO TATAD, respondents.

[G.R. No. 138572. October 10, 2000]

PHILIPPINE CONSTITUTION ASSOCIATION, INC.(PHILCONSA), EXEQUIEL B. GARCIA,

AMADOGAT INCIONG, CAMILO L. SABIO, AND RAMON A. GONZALES, petitioners,
vs. HON. RONALDO B. ZAMORA, as Executive Secretary, HON. ORLANDO MERCADO, as
Secretary of National Defense, and HON. DOMINGO L. SIAZON, JR., as Secretary of
Foreign Affairs, respondents.

[G.R. No. 138587. October 10, 2000]

TEOFISTO T. GUINGONA, JR., RAUL S. ROCO, and SERGIO R. OSMEA III, petitioners,
vs. JOSEPH E. ESTRADA, RONALDO B. ZAMORA, DOMINGO L. SIAZON, JR., ORLANDO
B. MERCADO, MARCELO B. FERNAN, FRANKLIN M. DRILON, BLAS F. OPLE and
RODOLFO G. BIAZON,respondents.
 [G.R. No. 138680. October 10, 2000]

INTEGRATED BAR OF THE PHILIPPINES, Represented by its National President, Jose Aguila
Grapilon, petitioners, vs. JOSEPH EJERCITO ESTRADA, in his capacity as President,
Republic of the Philippines, and HON. DOMINGO SIAZON, in his capacity as Secretary of
Foreign Affairs, respondents.

[G.R. No. 138698. October 10, 2000]

JOVITO R. SALONGA, WIGBERTO TAADA, ZENAIDA QUEZON-AVENCEA, ROLANDO

SIMBULAN, PABLITO V. SANIDAD, MA. SOCORRO I. DIOKNO, AGAPITO A. AQUINO,
JOKER P. ARROYO, FRANCISCO C. RIVERA JR., RENE A.V. SAGUISAG, KILOSBAYAN,
MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
(MABINI), petitioners, vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF FOREIGN
AFFAIRS, THE SECRETARY OF NATIONAL DEFENSE, SENATE PRESIDENT MARCELO B.
FERNAN, SENATOR BLAS F. OPLE, SENATOR RODOLFO G. BIAZON, AND ALL OTHER
PERSONS ACTING THEIR CONTROL, SUPERVISION, DIRECTION, AND INSTRUCTION IN
RELATION TO THE VISITING FORCES AGREEMENT (VFA), respondents.

DECISION
BUENA, J.:

Confronting the Court for resolution in the instant consolidated petitions for certiorari and prohibition
are issues relating to, and borne by, an agreement forged in the turn of the last century between the
Republic of the Philippines and the United States of America -the Visiting Forces Agreement.
The antecedents unfold.
On March 14, 1947, the Philippines and the United States of America forged a Military Bases
Agreement which formalized, among others, the use of installations in the Philippine territory by United
States military personnel. To further strengthen their defense and security relationship, the Philippines
and the United States entered into a Mutual Defense Treaty on August 30, 1951. Under the treaty, the
parties agreed to respond to any external armed attack on their territory, armed forces, public vessels,
and aircraft.[1]
In view of the impending expiration of the RP-US Military Bases Agreement in 1991, the Philippines
and the United States negotiated for a possible extension of the military bases agreement. On September
16, 1991, the Philippine Senate rejected the proposed RP-US Treaty of Friendship, Cooperation and
Security which, in effect, would have extended the presence of US military bases in the Philippines. [2] With
the expiration of the RP-US Military Bases Agreement, the periodic military exercises conducted between
the two countries were held in abeyance. Notwithstanding, the defense and security relationship between
the Philippines and the United States of America continued pursuant to the Mutual Defense Treaty.
On July 18, 1997, the United States panel, headed by US Defense Deputy Assistant Secretary for
Asia Pacific Kurt Campbell, met with the Philippine panel, headed by Foreign Affairs Undersecretary
Rodolfo Severino Jr., to exchange notes on the complementing strategic interests of the United States
and the Philippines in the Asia-Pacific region. Both sides discussed, among other things, the possible
elements of the Visiting Forces Agreement (VFA for brevity). Negotiations by both panels on the VFA led
to a consolidated draft text, which in turn resulted to a final series of conferences and negotiations [3] that
culminated in Manila on January 12 and 13, 1998. Thereafter, then President Fidel V. Ramos approved
the VFA, which was respectively signed by public respondent Secretary Siazon and Unites States
Ambassador Thomas Hubbard on February 10, 1998.
On October 5, 1998, President Joseph E. Estrada, through respondent Secretary of Foreign Affairs,
ratified the VFA.[4]
On October 6, 1998, the President, acting through respondent Executive Secretary Ronaldo Zamora,
officially transmitted to the Senate of the Philippines, [5] the Instrument of Ratification, the letter of the
President[6] and the VFA, for concurrence pursuant to Section 21, Article VII of the 1987 Constitution. The
Senate, in turn, referred the VFA to its Committee on Foreign Relations, chaired by Senator Blas F. Ople,
and its Committee on National Defense and Security, chaired by Senator Rodolfo G. Biazon, for their joint
consideration and recommendation. Thereafter, joint public hearings were held by the two Committees. [7]
On May 3, 1999, the Committees submitted Proposed Senate Resolution No. 443 [8] recommending
the concurrence of the Senate to the VFA and the creation of a Legislative Oversight Committee to
oversee its implementation. Debates then ensued.
On May 27, 1999, Proposed Senate Resolution No. 443 was approved by the Senate, by a two-
thirds (2/3) vote[9] of its members. Senate Resolution No. 443 was then re-numbered as Senate
Resolution No. 18.[10]
On June 1, 1999, the VFA officially entered into force after an Exchange of Notes between
respondent Secretary Siazon and United States Ambassador Hubbard.
The VFA, which consists of a Preamble and nine (9) Articles, provides for the mechanism for
regulating the circumstances and conditions under which US Armed Forces and defense personnel may
be present in the Philippines, and is quoted in its full text, hereunder:

Article I
Definitions

As used in this Agreement, United States personnel means United States military and civilian personnel
temporarily in the Philippines in connection with activities approved by the Philippine Government.

Within this definition:

1. The term military personnel refers to military members of the United States Army, Navy,
Marine Corps, Air Force, and Coast Guard.
2. The term civilian personnel refers to individuals who are neither nationals of, nor ordinary
residents in the Philippines and who are employed by the United States armed forces or who
are accompanying the United States armed forces, such as employees of the American Red
Cross and the United Services Organization.

Article II
Respect for Law

It is the duty of the United States personnel to respect the laws of the Republic of the Philippines and to
abstain from any activity inconsistent with the spirit of this agreement, and, in particular, from any political
activity in the Philippines. The Government of the United States shall take all measures within its authority to
ensure that this is done.

Article III
Entry and Departure

1. The Government of the Philippines shall facilitate the admission of United States personnel and their
departure from the Philippines in connection with activities covered by this agreement.
 2. United States military personnel shall be exempt from passport and visa regulations upon entering and
departing the Philippines.

3. The following documents only, which shall be presented on demand, shall be required in respect of United
States military personnel who enter the Philippines:

(a) personal identity card issued by the appropriate United States authority showing full name, date of
birth, rank or grade and service number (if any), branch of service and photograph;

(b) individual or collective document issued by the appropriate United States authority, authorizing the
travel or visit and identifying the individual or group as United States military personnel; and

(c) the commanding officer of a military aircraft or vessel shall present a declaration of health, and when
required by the cognizant representative of the Government of the Philippines, shall conduct a
quarantine inspection and will certify that the aircraft or vessel is free from quarantinable diseases.
Any quarantine inspection of United States aircraft or United States vessels or cargoes thereon shall
be conducted by the United States commanding officer in accordance with the international health
regulations as promulgated by the World Health Organization, and mutually agreed procedures.

4. United States civilian personnel shall be exempt from visa requirements but shall present, upon demand,
valid passports upon entry and departure of the Philippines.

5. If the Government of the Philippines has requested the removal of any United States personnel from its
territory, the United States authorities shall be responsible for receiving the person concerned within its
own territory or otherwise disposing of said person outside of the Philippines.

Article IV
Driving and Vehicle Registration

1. Philippine authorities shall accept as valid, without test or fee, a driving permit or license issued by the
appropriate United States authority to United States personnel for the operation of military or official
vehicles.

2. Vehicles owned by the Government of the United States need not be registered, but shall have appropriate
markings.

Article V
Criminal Jurisdiction

1. Subject to the provisions of this article:

(a) Philippine authorities shall have jurisdiction over United States personnel with respect to
offenses committed within the Philippines and punishable under the law of the
Philippines.
(b) United States military authorities shall have the right to exercise within the Philippines all
criminal and disciplinary jurisdiction conferred on them by the military law of the United
States over United States personnel in the Philippines.
2. (a) Philippine authorities exercise exclusive jurisdiction over United States personnel with
respect to offenses, including offenses relating to the security of the Philippines,
punishable under the laws of the Philippines, but not under the laws of the United
States.
 (b) United States authorities exercise exclusive jurisdiction over United States personnel
with respect to offenses, including offenses relating to the security of the United
States, punishable under the laws of the United States, but not under the laws of the
Philippines.
(c) For the purposes of this paragraph and paragraph 3 of this article, an offense relating
to security means:

(1) treason;

(2) sabotage, espionage or violation of any law relating to national defense.

3. In cases where the right to exercise jurisdiction is concurrent, the following rules shall apply:
(a) Philippine authorities shall have the primary right to exercise jurisdiction over all offenses
committed by United States personnel, except in cases provided for in paragraphs 1(b), 2
(b), and 3 (b) of this Article.
(b) United States military authorities shall have the primary right to exercise jurisdiction over
United States personnel subject to the military law of the United States in relation to.
(1) offenses solely against the property or security of the United States or offenses solely
against the property or person of United States personnel; and
(2) offenses arising out of any act or omission done in performance of official duty.
(c) The authorities of either government may request the authorities of the other government
to waive their primary right to exercise jurisdiction in a particular case.
(d) Recognizing the responsibility of the United States military authorities to maintain good
order and discipline among their forces, Philippine authorities will, upon request by the
United States, waive their primary right to exercise jurisdiction except in cases of
particular importance to the Philippines. If the Government of the Philippines determines
that the case is of particular importance, it shall communicate such determination to the
United States authorities within twenty (20) days after the Philippine authorities receive
the United States request.
(e) When the United States military commander determines that an offense charged by
authorities of the Philippines against United states personnel arises out of an act or
omission done in the performance of official duty, the commander will issue a certificate
setting forth such determination. This certificate will be transmitted to the appropriate
authorities of the Philippines and will constitute sufficient proof of performance of official
duty for the purposes of paragraph 3(b)(2) of this Article. In those cases where the
Government of the Philippines believes the circumstances of the case require a review of
the duty certificate, United States military authorities and Philippine authorities shall
consult immediately. Philippine authorities at the highest levels may also present any
information bearing on its validity. United States military authorities shall take full account
of the Philippine position. Where appropriate, United States military authorities will take
disciplinary or other action against offenders in official duty cases, and notify the
Government of the Philippines of the actions taken.
(f) If the government having the primary right does not exercise jurisdiction, it shall notify the
authorities of the other government as soon as possible.
(g) The authorities of the Philippines and the United States shall notify each other of the
disposition of all cases in which both the authorities of the Philippines and the United
States have the right to exercise jurisdiction.
4. Within the scope of their legal competence, the authorities of the Philippines and United
States shall assist each other in the arrest of United States personnel in the Philippines and
in handling them over to authorities who are to exercise jurisdiction in accordance with the
provisions of this article.
5. United States military authorities shall promptly notify Philippine authorities of the arrest or
detention of United States personnel who are subject of Philippine primary or exclusive
jurisdiction. Philippine authorities shall promptly notify United States military authorities of the
arrest or detention of any United States personnel.
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,
from the commission of the offense until completion of all judicial proceedings. United States
military authorities shall, upon formal notification by the Philippine authorities and without
delay, make such personnel available to those authorities in time for any investigative or
judicial proceedings relating to the offense with which the person has been charged in
extraordinary cases, the Philippine Government shall present its position to the United
States Government regarding custody, which the United States Government shall take into
full account. In the event Philippine judicial proceedings are not completed within one year,
the United States shall be relieved of any obligations under this paragraph. The one-year
period will not include the time necessary to appeal. Also, the one-year period will not
include any time during which scheduled trial procedures are delayed because United States
authorities, after timely notification by Philippine authorities to arrange for the presence of
the accused, fail to do so.
7. Within the scope of their legal authority, United States and Philippine authorities shall assist
each other in the carrying out of all necessary investigation into offenses and shall cooperate
in providing for the attendance of witnesses and in the collection and production of evidence,
including seizure and, in proper cases, the delivery of objects connected with an offense.
8. When United States personnel have been tried in accordance with the provisions of this
Article and have been acquitted or have been convicted and are serving, or have served
their sentence, or have had their sentence remitted or suspended, or have been pardoned,
they may not be tried again for the same offense in the Philippines. Nothing in this
paragraph, however, shall prevent United States military authorities from trying United States
personnel for any violation of rules of discipline arising from the act or omission which
constituted an offense for which they were tried by Philippine authorities.
9. When United States personnel are detained, taken into custody, or prosecuted by Philippine
authorities, they shall be accorded all procedural safeguards established by the law of the
Philippines. At the minimum, United States personnel shall be entitled:
(a) To a prompt and speedy trial;
(b) To be informed in advance of trial of the specific charge or charges made against them
and to have reasonable time to prepare a defense;
(c) To be confronted with witnesses against them and to cross examine such witnesses;
(d) To present evidence in their defense and to have compulsory process for obtaining
witnesses;
(e) To have free and assisted legal representation of their own choice on the same basis as
nationals of the Philippines;
(f) To have the service of a competent interpreter; and
(g) To communicate promptly with and to be visited regularly by United States authorities,
and to have such authorities present at all judicial proceedings. These proceedings shall
 be public unless the court, in accordance with Philippine laws, excludes persons who
have no role in the proceedings.
10. The confinement or detention by Philippine authorities of United States personnel shall be
carried out in facilities agreed on by appropriate Philippine and United States authorities.
United States Personnel serving sentences in the Philippines shall have the right to visits
and material assistance.
11. United States personnel shall be subject to trial only in Philippine courts of ordinary
jurisdiction, and shall not be subject to the jurisdiction of Philippine military or religious
courts.

Article VI
Claims

1. Except for contractual arrangements, including United States foreign military sales letters of
offer and acceptance and leases of military equipment, both governments waive any and all
claims against each other for damage, loss or destruction to property of each others armed
forces or for death or injury to their military and civilian personnel arising from activities to
which this agreement applies.
2. For claims against the United States, other than contractual claims and those to which
paragraph 1 applies, the United States Government, in accordance with United States law
regarding foreign claims, will pay just and reasonable compensation in settlement of
meritorious claims for damage, loss, personal injury or death, caused by acts or omissions of
United States personnel, or otherwise incident to the non-combat activities of the United
States forces.

Article VII
Importation and Exportation

1. United States Government equipment, materials, supplies, and other property imported into
or acquired in the Philippines by or on behalf of the United States armed forces in
connection with activities to which this agreement applies, shall be free of all Philippine
duties, taxes and other similar charges. Title to such property shall remain with the United
States, which may remove such property from the Philippines at any time, free from export
duties, taxes, and other similar charges. The exemptions provided in this paragraph shall
also extend to any duty, tax, or other similar charges which would otherwise be assessed
upon such property after importation into, or acquisition within, the Philippines. Such
property may be removed from the Philippines, or disposed of therein, provided that
disposition of such property in the Philippines to persons or entities not entitled to exemption
from applicable taxes and duties shall be subject to payment of such taxes, and duties and
prior approval of the Philippine Government.
2. Reasonable quantities of personal baggage, personal effects, and other property for the
personal use of United States personnel may be imported into and used in the Philippines
free of all duties, taxes and other similar charges during the period of their temporary stay in
the Philippines. Transfers to persons or entities in the Philippines not entitled to import
privileges may only be made upon prior approval of the appropriate Philippine authorities
including payment by the recipient of applicable duties and taxes imposed in accordance
with the laws of the Philippines. The exportation of such property and of property acquired in
the Philippines by United States personnel shall be free of all Philippine duties, taxes, and
other similar charges.

Article VIII
Movement of Vessels and Aircraft
 1. Aircraft operated by or for the United States armed forces may enter the Philippines upon
approval of the Government of the Philippines in accordance with procedures stipulated in
implementing arrangements.
2. Vessels operated by or for the United States armed forces may enter the Philippines upon
approval of the Government of the Philippines. The movement of vessels shall be in
accordance with international custom and practice governing such vessels, and such agreed
implementing arrangements as necessary.
3. Vehicles, vessels, and aircraft operated by or for the United States armed forces shall not be
subject to the payment of landing or port fees, navigation or over flight charges, or tolls or
other use charges, including light and harbor dues, while in the Philippines. Aircraft operated
by or for the United States armed forces shall observe local air traffic control regulations
while in the Philippines. Vessels owned or operated by the United States solely on United
States Government non-commercial service shall not be subject to compulsory pilotage at
Philippine ports.

Article IX
Duration and Termination

This agreement shall enter into force on the date on which the parties have notified each other in writing
through the diplomatic channel that they have completed their constitutional requirements for entry into
force. This agreement shall remain in force until the expiration of 180 days from the date on which either party
gives the other party notice in writing that it desires to terminate the agreement.

Via these consolidated[11] petitions for certiorari and prohibition, petitioners - as legislators, non-
governmental organizations, citizens and taxpayers - assail the constitutionality of the VFA and impute to
herein respondents grave abuse of discretion in ratifying the agreement.
We have simplified the issues raised by the petitioners into the following:
I

Do petitioners have legal standing as concerned citizens, taxpayers, or legislators to question the
constitutionality of the VFA?

II

Is the VFA governed by the provisions of Section 21, Article VII or of Section 25, Article XVIII of the
Constitution?

III

Does the VFA constitute an abdication of Philippine sovereignty?

a. Are Philippine courts deprived of their jurisdiction to hear and try offenses committed by US
military personnel?
b. Is the Supreme Court deprived of its jurisdiction over offenses punishable by reclusion
perpetua or higher?
IV

Does the VFA violate:

a. the equal protection clause under Section 1, Article III of the Constitution?
 b. the Prohibition against nuclear weapons under Article II, Section 8?
c. Section 28 (4), Article VI of the Constitution granting the exemption from taxes and duties for
the equipment, materials supplies and other properties imported into or acquired in the
Philippines by, or on behalf, of the US Armed Forces?

LOCUS STANDI

At the outset, respondents challenge petitioners standing to sue, on the ground that the latter have
not shown any interest in the case, and that petitioners failed to substantiate that they have sustained, or
will sustain direct injury as a result of the operation of the VFA. [12] Petitioners, on the other hand, counter
that the validity or invalidity of the VFA is a matter of transcendental importance which justifies their
standing.[13]
A party bringing a suit challenging the constitutionality of a law, act, or statute must show not only
that the law is invalid, but also that he has sustained or in is in immediate, or imminent danger of
sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in
some indefinite way. He must show that he 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 complained of.[14]
In the case before us, petitioners failed to show, to the satisfaction of this Court, that they have
sustained, or are in danger of sustaining any direct injury as a result of the enforcement of the VFA. As
taxpayers, petitioners have not established that the VFA involves the exercise by Congress of its taxing or
spending powers.[15] On this point, it bears stressing that a taxpayers suit refers to a case where the act
complained of directly involves the illegal disbursement of public funds derived from taxation. [16] Thus,
in Bugnay Const. & Development Corp. vs. Laron[17], we held:

x x x it is exigent that the taxpayer-plaintiff sufficiently show that he would be benefited or injured by the judgment
or entitled to the avails of the suit as a real party in interest. Before he can invoke the power of judicial review, he
must specifically prove that he has sufficient interest in preventing the illegal expenditure of money raised by
taxation and that he will sustain a direct injury as a result of the enforcement of the questioned statute or contract. It
is not sufficient that he has merely a general interest common to all members of the public.

Clearly, inasmuch as no public funds raised by taxation are involved in this case, and in the absence
of any allegation by petitioners that public funds are being misspent or illegally expended, petitioners, as
taxpayers, have no legal standing to assail the legality of the VFA.
Similarly, Representatives Wigberto Taada, Agapito Aquino and Joker Arroyo, as petitioners-
legislators, do not possess the requisite locus standi to maintain the present suit. While this Court, in Phil.
Constitution Association vs. Hon. Salvador Enriquez, [18] sustained the legal standing of a member of
the Senate and the House of Representatives to question the validity of a presidential veto or a condition
imposed on an item in an appropriation bull, we cannot, at this instance, similarly uphold petitioners
standing as members of Congress, in the absence of a clear showing of any direct injury to their person
or to the institution to which they belong.
Beyond this, the allegations of impairment of legislative power, such as the delegation of the power
of Congress to grant tax exemptions, are more apparent than real. While it may be true that petitioners
pointed to provisions of the VFA which allegedly impair their legislative powers, petitioners failed however
to sufficiently show that they have in fact suffered direct injury.
In the same vein, petitioner Integrated Bar of the Philippines (IBP) is stripped of standing in these
cases. As aptly observed by the Solicitor General, the IBP lacks the legal capacity to bring this suit in the
absence of a board resolution from its Board of Governors authorizing its National President to
commence the present action.[19]
 Notwithstanding, in view of the paramount importance and the constitutional significance of the
issues raised in the petitions, this Court, in the exercise of its sound discretion, brushes aside the
procedural barrier and takes cognizance of the petitions, as we have done in the early Emergency
Powers Cases,[20] where we had occasion to rule:

x x x ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders
issued by President Quirino although they were involving only an indirect and general interest shared in common
with the public. The Court dismissed the objection that they were not proper parties and ruled that transcendental
importance to the public of these cases demands that they be settled promptly and definitely, brushing aside,
if we must, technicalities of procedure. We have since then applied the exception in many other
cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).
(Underscoring Supplied)

This principle was reiterated in the subsequent cases of Gonzales vs. COMELEC,[21] Daza vs.
Singson,[22] and Basco vs. Phil. Amusement and Gaming Corporation,[23] where we emphatically held:

Considering however the importance to the public of the case at bar, and in keeping with the Courts duty, under the
1987 Constitution, to determine whether or not the other branches of the government have kept themselves within
the limits of the Constitution and the laws and that they have not abused the discretion given to them, the Court has
brushed aside technicalities of procedure and has taken cognizance of this petition. x x x

Again, in the more recent case of Kilosbayan vs. Guingona, Jr.,[24] thisCourt ruled that in cases of
transcendental importance, the Court may relax the standing requirements and allow a suit to
prosper even where there is no direct injury to the party claiming the right of judicial review.
Although courts generally avoid having to decide a constitutional question based on the doctrine of
separation of powers, which enjoins upon the departments of the government a becoming respect for
each others acts,[25] this Court nevertheless resolves to take cognizance of the instant petitions.

APPLICABLE CONSTITUTIONAL PROVISION

One focal point of inquiry in this controversy is the determination of which provision of the
Constitution applies, with regard to the exercise by the senate of its constitutional power to concur with
the VFA. Petitioners argue that Section 25, Article XVIII is applicable considering that the VFA has for its
subject the presence of foreign military troops in the Philippines. Respondents, on the contrary, maintain
that Section 21, Article VII should apply inasmuch as the VFA is not a basing arrangement but an
agreement which involves merely the temporary visits of United States personnel engaged in joint military
exercises.
The 1987 Philippine Constitution contains two provisions requiring the concurrence of the Senate on
treaties or international agreements. Section 21, Article VII, which herein respondents invoke, reads:

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.

Section 25, Article XVIII, provides:

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.
 Section 21, Article VII deals with treatise or international agreements in general, in which case, the
concurrence of at least two-thirds (2/3) of all the Members of the Senate is required to make the subject
treaty, or international agreement, valid and binding on the part of the Philippines. This provision lays
down the general rule on treatise or international agreements and applies to any form of treaty with a wide
variety of subject matter, such as, but not limited to, extradition or tax treatise or those economic in
nature. All treaties or international agreements entered into by the Philippines, regardless of subject
matter, coverage, or particular designation or appellation, requires the concurrence of the Senate to be
valid and effective.
In contrast, Section 25, Article XVIII is a special provision that applies to treaties which involve the
presence of foreign military bases, troops or facilities in the Philippines. Under this provision, the
concurrence of the Senate is only one of the requisites to render compliance with the constitutional
requirements and to consider the agreement binding on the Philippines. Section 25, Article XVIII further
requires that foreign military bases, troops, or facilities may be allowed in the Philippines only by virtue
of a treaty duly concurred in by the Senate, ratified by a majority of the votes cast in a national
referendum held for that purpose if so required by Congress, and recognized as such by the other
contracting state.
It is our considered view that both constitutional provisions, far from contradicting each other, actually
share some common ground. These constitutional provisions both embody phrases in the negative and
thus, are deemed prohibitory in mandate and character. In particular, Section 21 opens with the clause
No treaty x x x, and Section 25 contains the phrase shall not be allowed.Additionally, in both instances,
the concurrence of the Senate is indispensable to render the treaty or international agreement valid and
effective.
To our mind, the fact that the President referred the VFA to the Senate under Section 21, Article VII,
and that the Senate extended its concurrence under the same provision, is immaterial. For in either case,
whether under Section 21, Article VII or Section 25, Article XVIII, the fundamental law is crystalline that
the concurrence of the Senate is mandatory to comply with the strict constitutional requirements.
On the whole, the VFA is an agreement which defines the treatment of United States troops and
personnel visiting the Philippines. It provides for the guidelines to govern such visits of military personnel,
and further defines the rights of the United States and the Philippine government in the matter of criminal
jurisdiction, movement of vessel and aircraft, importation and exportation of equipment, materials and
supplies.
Undoubtedly, Section 25, Article XVIII, which specifically deals with treaties involving foreign military
bases, troops, or facilities, should apply in the instant case. To a certain extent and in a limited sense,
however, the provisions of section 21, Article VII will find applicability with regard to the issue and for the
sole purpose of determining the number of votes required to obtain the valid concurrence of the Senate,
as will be further discussed hereunder.
It is a finely-imbedded principle in statutory construction that a special provision or law prevails over
a general one. Lex specialis derogat generali. Thus, where there is in the same statute a particular
enactment and also a general one which, in its most comprehensive sense, would include what is
embraced in the former, the particular enactment must be operative, and the general enactment must be
taken to affect only such cases within its general language which are not within the provision of the
particular enactment.[26]
In Leveriza vs. Intermediate Appellate Court,[27] we enunciated:

x x x that another basic principle of statutory construction mandates that general legislation must give way to a
special legislation on the same subject, and generally be so interpreted as to embrace only cases in which the special
provisions are not applicable (Sto. Domingo vs. de los Angeles, 96 SCRA 139), that a specific statute prevails over a
general statute (De Jesus vs. People, 120 SCRA 760) and that where two statutes are of equal theoretical application
to a particular case, the one designed therefor specially should prevail (Wil Wilhensen Inc. vs. Baluyot, 83 SCRA
38).
 Moreover, it is specious to argue that Section 25, Article XVIII is inapplicable to mere transient
agreements for the reason that there is no permanent placing of structure for the establishment of a
military base. On this score, the Constitution makes no distinction between transient and
permanent. Certainly, we find nothing in Section 25, Article XVIII that requires foreign troops or
facilities to be stationed or placed permanently in the Philippines.
It is a rudiment in legal hermenuetics that when no distinction is made by law, the Court should not
distinguish- Ubi lex non distinguit nec nos distinguire debemos.
In like manner, we do not subscribe to the argument that Section 25, Article XVIII is not controlling
since no foreign military bases, but merely foreign troops and facilities, are involved in the VFA. Notably, a
perusal of said constitutional provision reveals that the proscription covers foreign military bases,
troops, or facilities. Stated differently, this prohibition is not limited to the entry of troops and facilities
without any foreign bases being established. The clause does not refer to foreign military bases,
troops, or facilities collectively but treats them as separate and independent subjects. The use of comma
and the disjunctive word or clearly signifies disassociation and independence of one thing from the
others included in the enumeration,[28] such that, the provision contemplates three different situations - a
military treaty the subject of which could be either (a) foreign bases, (b) foreign troops, or (c) foreign
facilities - any of the three standing alone places it under the coverage of Section 25, Article XVIII.
To this end, the intention of the framers of the Charter, as manifested during the deliberations of the
1986 Constitutional Commission, is consistent with this interpretation:
MR. MAAMBONG. I just want to address a question or two to Commissioner Bernas.
This formulation speaks of three things: foreign military bases, troops or facilities. My first question
is: If the country does enter into such kind of a treaty, must it cover the three-bases, troops
or facilities-or could the treaty entered into cover only one or two?
FR. BERNAS. Definitely, it can cover only one. Whether it covers only one or it covers three, the
requirement will be the same.
MR. MAAMBONG. In other words, the Philippine government can enter into a treaty covering
not bases but merely troops?
FR. BERNAS. Yes.
MR. MAAMBONG. I cannot find any reason why the government can enter into a treaty covering only
troops.
FR. BERNAS. Why not? Probably if we stretch our imagination a little bit more, we will find some. We
just want to cover everything.[29] (Underscoring Supplied)
Moreover, military bases established within the territory of another state is no longer viable because
of the alternatives offered by new means and weapons of warfare such as nuclear weapons, guided
missiles as well as huge sea vessels that can stay afloat in the sea even for months and years without
returning to their home country. These military warships are actually used as substitutes for a land-home
base not only of military aircraft but also of military personnel and facilities. Besides, vessels are mobile
as compared to a land-based military headquarters.
At this juncture, we shall then resolve the issue of whether or not the requirements of Section 25
were complied with when the Senate gave its concurrence to the VFA.
Section 25, Article XVIII disallows foreign military bases, troops, or facilities in the country, unless the
following conditions are sufficiently met, viz: (a) it must be under a treaty; (b) the treaty must be duly
concurred in by the Senate and, when so required by congress, ratified by a majority of the votes cast
by the people in a national referendum; and (c) recognized as a treaty by the other contracting state.
There is no dispute as to the presence of the first two requisites in the case of the VFA. The
concurrence handed by the Senate through Resolution No. 18 is in accordance with the provisions of the
Constitution, whether under the general requirement in Section 21, Article VII, or the specific mandate
mentioned in Section 25, Article XVIII, the provision in the latter article requiring ratification by a majority
of the votes cast in a national referendum being unnecessary since Congress has not required it.
As to the matter of voting, Section 21, Article VII particularly requires that a treaty or international
agreement, to be valid and effective, must be concurred in by at least two-thirds of all the members
of the Senate. On the other hand, Section 25, Article XVIII simply provides that the treaty be duly
concurred in by the Senate.
Applying the foregoing constitutional provisions, a two-thirds vote of all the members of the Senate is
clearly required so that the concurrence contemplated by law may be validly obtained and deemed
present. While it is true that Section 25, Article XVIII requires, among other things, that the treaty-the VFA,
in the instant case-be duly concurred in by the Senate, it is very true however that said provision must
be related and viewed in light of the clear mandate embodied in Section 21, Article VII, which in more
specific terms, requires that the concurrence of a treaty, or international agreement, be made by a two
-thirds vote of all the members of the Senate. Indeed, Section 25, Article XVIII must not be treated in
isolation to section 21, Article, VII.
As noted, the concurrence requirement under Section 25, Article XVIII must be construed in relation
to the provisions of Section 21, Article VII. In a more particular language, the concurrence of the Senate
contemplated under Section 25, Article XVIII means that at least two-thirds of all the members of the
Senate favorably vote to concur with the treaty-the VFA in the instant case.
Under these circumstances, the charter provides that the Senate shall be composed of twenty-four
(24) Senators.[30] Without a tinge of doubt, two-thirds (2/3) of this figure, or not less than sixteen (16)
members, favorably acting on the proposal is an unquestionable compliance with the requisite number of
votes mentioned in Section 21 of Article VII. The fact that there were actually twenty-three (23) incumbent
Senators at the time the voting was made, [31] will not alter in any significant way the circumstance that
more than two-thirds of the members of the Senate concurred with the proposed VFA, even if the two-
thirds vote requirement is based on this figure of actual members (23). In this regard, the fundamental law
is clear that two-thirds of the 24 Senators, or at least 16 favorable votes, suffice so as to render
compliance with the strict constitutional mandate of giving concurrence to the subject treaty.
Having resolved that the first two requisites prescribed in Section 25, Article XVIII are present, we
shall now pass upon and delve on the requirement that the VFA should be recognized as a treaty by the
United States of America.
Petitioners content that the phrase recognized as a treaty, embodied in section 25, Article XVIII,
means that the VFA should have the advice and consent of the United States Senate pursuant to its own
constitutional process, and that it should not be considered merely an executive agreement by the United
States.
In opposition, respondents argue that the letter of United States Ambassador Hubbard stating that
the VFA is binding on the United States Government is conclusive, on the point that the VFA is recognized
as a treaty by the United States of America. According to respondents, the VFA, to be binding, must only
be accepted as a treaty by the United States.
This Court is of the firm view that the phrase recognized as a treaty means that the other
contracting party accepts or acknowledges the agreement as a treaty.[32] To require the other
contracting state, the United States of America in this case, to submit the VFA to the United States Senate
for concurrence pursuant to its Constitution,[33] is to accord strict meaning to the phrase.
Well-entrenched is the principle that the words used in the Constitution are to be given their ordinary
meaning except where technical terms are employed, in which case the significance thus attached to
them prevails. Its language should be understood in the sense they have in common use. [34]
Moreover, it is inconsequential whether the United States treats the VFA only as an executive
agreement because, under international law, an executive agreement is as binding as a treaty. [35] To be
sure, as long as the VFA possesses the elements of an agreement under international law, the said
agreement is to be taken equally as a treaty.
 A treaty, as defined by the Vienna Convention on the Law of Treaties, is an international instrument
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. [36] There
are many other terms used for a treaty or international agreement, some of which are: act, protocol,
agreement, compromis d arbitrage, concordat, convention, declaration, exchange of notes, pact, statute,
charter and modus vivendi. All writers, from Hugo Grotius onward, have pointed out that the names or
titles of international agreements included under the general term treaty have little or no legal
significance. Certain terms are useful, but they furnish little more than mere description. [37]
Article 2(2) of the Vienna Convention provides that the provisions of paragraph 1 regarding the use
of terms in the present Convention are without prejudice to the use of those terms, or to the meanings
which may be given to them in the internal law of the State.
Thus, in international law, there is no difference between treaties and executive agreements in their
binding effect upon states concerned, as long as the negotiating functionaries have remained within their
powers.[38] International law continues to make no distinction between treaties and executive agreements:
they are equally binding obligations upon nations. [39]
In our jurisdiction, we have recognized the binding effect of executive agreements even without the
concurrence of the Senate or Congress. In Commissioner of Customs vs. Eastern Sea Trading, [40] we
had occasion to pronounce:

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 settlement of claims. The validity of
these has never been seriously questioned by our courts.

x x x x x 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. Curtis Wright 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. 25, pp. 670-675; Hyde on International Law [revised Edition],
Vol. 2, pp. 1405, 1416-1418; willoughby on the U.S. Constitution 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) (Emphasis Ours)

The deliberations of the Constitutional Commission which drafted the 1987 Constitution is
enlightening and highly-instructive:
MR. MAAMBONG. Of course it goes without saying that as far as ratification of the other state is
concerned, that is entirely their concern under their own laws.
FR. BERNAS. Yes, but we will accept whatever they say. If they say that we have done everything to
make it a treaty, then as far as we are concerned, we will accept it as a treaty. [41]
The records reveal that the United States Government, through Ambassador Thomas C. Hubbard,
has stated that the United States government has fully committed to living up to the terms of the VFA.
[42]
For as long as the united States of America accepts or acknowledges the VFA as a treaty, and binds
itself further to comply with its obligations under the treaty, there is indeed marked compliance with the
mandate of the Constitution.
Worth stressing too, is that the ratification, by the President, of the VFA and the concurrence of the
Senate should be taken as a clear an unequivocal expression of our nations consent to be bound by said
treaty, with the concomitant duty to uphold the obligations and responsibilities embodied thereunder.
 Ratification is generally held to be an executive act, undertaken by the head of the state or of the
government, as the case may be, through which the formal acceptance of the treaty is proclaimed. [43] A
State may provide in its domestic legislation the process of ratification of a treaty. The consent of the
State to be bound by a treaty is expressed by ratification when: (a) the treaty provides for such ratification,
(b) it is otherwise established that the negotiating States agreed that ratification should be required, (c)
the representative of the State has signed the treaty subject to ratification, or (d) the intention of the State
to sign the treaty subject to ratification appears from the full powers of its representative, or was
expressed during the negotiation.[44]
In our jurisdiction, the power to ratify is vested in the President and not, as commonly believed, in the
legislature. The role of the Senate is limited only to giving or withholding its consent, or concurrence, to
the ratification.[45]
With the ratification of the VFA, which is equivalent to final acceptance, and with the exchange of
notes between the Philippines and the United States of America, it now becomes obligatory and
incumbent on our part, under the principles of international law, to be bound by the terms of the
agreement. Thus, no less than Section 2, Article II of the Constitution, [46] declares that the Philippines
adopts the generally accepted principles of international law as part of the law of the land and adheres to
the policy of peace, equality, justice, freedom, cooperation and amity with all nations.
As a member of the family of nations, the Philippines agrees to be bound by generally accepted rules
for the conduct of its international relations. While the international obligation devolves upon the state and
not upon any particular branch, institution, or individual member of its government, the Philippines is
nonetheless responsible for violations committed by any branch or subdivision of its government or any
official thereof. As an integral part of the community of nations, we are responsible to assure that our
government, Constitution and laws will carry out our international obligation. [47] Hence, we cannot readily
plead the Constitution as a convenient excuse for non-compliance with our obligations, duties and
responsibilities under international law.
Beyond this, Article 13 of the Declaration of Rights and Duties of States adopted by the International
Law Commission in 1949 provides: Every State has the duty to carry out in good faith its obligations
arising from treaties and other sources of international law, and it may not invoke provisions in its
constitution or its laws as an excuse for failure to perform this duty.[48]
Equally important is Article 26 of the convention which provides that Every treaty in force is binding
upon the parties to it and must be performed by them in good faith. This is known as the principle
of pacta sunt servanda which preserves the sanctity of treaties and have been one of the most
fundamental principles of positive international law, supported by the jurisprudence of international
tribunals.[49]

NO GRAVE ABUSE OF DISCRETION

In the instant controversy, the President, in effect, is heavily faulted for exercising a power and
performing a task conferred upon him by the Constitution-the power to enter into and ratify
treaties. Through the expediency of Rule 65 of the Rules of Court, petitioners in these consolidated cases
impute grave abuse of discretion on the part of the chief Executive in ratifying the VFA, and referring the
same to the Senate pursuant to the provisions of Section 21, Article VII of the Constitution.
On this particular matter, grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or, when the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an
evasion of positive duty enjoined or to act at all in contemplation of law.[50]
By constitutional fiat and by the intrinsic nature of his office, the President, as head of State, is the
sole organ and authority in the external affairs of the country. In many ways, the President is the chief
architect of the nations foreign policy; his dominance in the field of foreign relations is (then)
conceded.[51] Wielding vast powers an influence, his conduct in the external affairs of the nation, as
Jefferson describes, is executive altogether."[52]
As regards the power to enter into treaties or international agreements, the Constitution vests the
same in the President, subject only to the concurrence of at least two-thirds vote of all the members of the
Senate. In this light, the negotiation of the VFA and the subsequent ratification of the agreement are
exclusive acts which pertain solely to the President, in the lawful exercise of his vast executive and
diplomatic powers granted him no less than by the fundamental law itself. Into the field of negotiation the
Senate cannot intrude, and Congress itself is powerless to invade it.[53] Consequently, the acts or
judgment calls of the President involving the VFA-specifically the acts of ratification and entering into a
treaty and those necessary or incidental to the exercise of such principal acts - squarely fall within the
sphere of his constitutional powers and thus, may not be validly struck down, much less calibrated by this
Court, in the absence of clear showing of grave abuse of power or discretion.
It is the Courts considered view that the President, in ratifying the VFA and in submitting the same to
the Senate for concurrence, acted within the confines and limits of the powers vested in him by the
Constitution. It is of no moment that the President, in the exercise of his wide latitude of discretion and in
the honest belief that the VFA falls within the ambit of Section 21, Article VII of the Constitution, referred
the VFA to the Senate for concurrence under the aforementioned provision. Certainly, no abuse of
discretion, much less a grave, patent and whimsical abuse of judgment, may be imputed to the President
in his act of ratifying the VFA and referring the same to the Senate for the purpose of complying with the
concurrence requirement embodied in the fundamental law. In doing so, the President merely performed
a constitutional task and exercised a prerogative that chiefly pertains to the functions of his office. Even if
he erred in submitting the VFA to the Senate for concurrence under the provisions of Section 21 of Article
VII, instead of Section 25 of Article XVIII of the Constitution, still, the President may not be faulted or
scarred, much less be adjudged guilty of committing an abuse of discretion in some patent, gross, and
capricious manner.
For while it is conceded that Article VIII, Section 1, of the Constitution has broadened the scope of
judicial inquiry into areas normally left to the political departments to decide, such as those relating to
national security, it has not altogether done away with political questions such as those which arise in the
field of foreign relations.[54] The High Tribunals function, as sanctioned by Article VIII, Section 1, is merely
(to) check whether or not the governmental branch or agency has gone beyond the constitutional limits of
its jurisdiction, not that it erred or has a different view. In the absence of a showing (of) grave abuse of
discretion amounting to lack of jurisdiction, there is no occasion for the Court to exercise its corrective
powerIt has no power to look into what it thinks is apparent error. [55]
As to the power to concur with treaties, the constitution lodges the same with the Senate
alone. Thus, once the Senate[56] performs that power, or exercises its prerogative within the boundaries
prescribed by the Constitution, the concurrence cannot, in like manner, be viewed to constitute an abuse
of power, much less grave abuse thereof. Corollarily, the Senate, in the exercise of its discretion and
acting within the limits of such power, may not be similarly faulted for having simply performed a task
conferred and sanctioned by no less than the fundamental law.
For the role of the Senate in relation to treaties is essentially legislative in character; [57] the Senate,
as an independent body possessed of its own erudite mind, has the prerogative to either accept or reject
the proposed agreement, and whatever action it takes in the exercise of its wide latitude of discretion,
pertains to the wisdom rather than the legality of the act. In this sense, the Senate partakes a principal,
yet delicate, role in keeping the principles of separation of powers and of checks and balances alive and
vigilantly ensures that these cherished rudiments remain true to their form in a democratic government
such as ours. The Constitution thus animates, through this treaty-concurring power of the Senate, a
healthy system of checks and balances indispensable toward our nations pursuit of political maturity and
growth. True enough, rudimentary is the principle that matters pertaining to the wisdom of a legislative act
are beyond the ambit and province of the courts to inquire.
In fine, absent any clear showing of grave abuse of discretion on the part of respondents, this Court-
as the final arbiter of legal controversies and staunch sentinel of the rights of the people - is then without
power to conduct an incursion and meddle with such affairs purely executive and legislative in character
and nature. For the Constitution no less, maps out the distinct boundaries and limits the metes and
bounds within which each of the three political branches of government may exercise the powers
exclusively and essentially conferred to it by law.
WHEREFORE, in light of the foregoing disquisitions, the instant petitions are hereby DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Kapunan, Quisumbing, Purisima, Pardo, Gonzaga-Reyes, Ynares-
Santiago, and De Leon, Jr., JJ., concur.
Melo, and Vitug, JJ., join the dissent of J. Puno.
Puno, J., see dissenting opinion.
Mendoza, J., in the result.
Panganiban, J., no part due to close personal and former professional relations with a petitioner,
Sen. J.R. Salonga.

[1]
Article V. Any such armed attack and all measures taken as a result thereof shall be immediately
reported to the Security Council of the United Nations. Such measures shall be terminated when the
Security Council has taken the measure necessary to restore and maintain international peace and
security.
[2]
Joint Report of the Senate Committee on Foreign Relation and the Committee on National Defense and
Security on the Visiting Forces Agreement.
[3]
Joint Committee Report.
[4]
Petition, G.R. No. 138698, Annex B, Rollo, pp. 61-62.
INSTRUMENT OF RATIFICATION
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETINGS:
KNOW YE, that whereas, the Agreement between the government of the Republic of the Philippines and
the Government of the United States of America Regarding the Treatment of the United States Armed
Forces Visiting the Philippines, hereinafter referred to as VFA, was signed in Manila on 10 February 1998;
WHEREAS, the VFA is essentially a framework to promote bilateral defense cooperation between the
Republic of the Philippines and the United States of America and to give substance to the 1951 RP-US
Mutual Defense Treaty (RP-US MDT). To fulfill the objectives of the RP-US MDT, it is necessary that
regular joint military exercises are conducted between the Republic of the Philippines and the United
States of America;
WHEREAS, the VFA seeks to provide a conducive setting for the successful conduct of combined military
exercises between the Philippines and the United States armed forces to ensure interoperability of the
RP-US MDT;
WHEREAS, in particular, the VFA provides the mechanism for regulating the circumstances and
conditions under which US armed forces and defense personnel may be present in the Philippines such
as the following inter alia:
(a) specific requirements to facilitate the admission of United States personnel and their departure from
the Philippines in connection with activities covered by the agreement;
(b) clear guidelines on the prosecution of offenses committed by any member of the United States armed
forces while in the Philippines;
(c) precise directive on the importation and exportation of United States Government equipment,
materials, supplies and other property imported into or acquired in the Philippines by or on behalf of the
United States armed forces in connection with activities covered by the Agreement; and
(d) explicit regulations on the entry of United States vessels, aircraft, and vehicles;
WHEREAS, Article IX of the Agreement provides that it shall enter into force on the date on which the
Parties have notified each other in writing, through diplomatic channels, that they have completed their
constitutional requirements for its entry into force. It shall remain in force until the expiration of 180 days
from the date on which either Party gives the other Party written notice to terminate the Agreement.
NOW, THEREFORE, be it known that I, JOSEPH EJERCITO ESTRADA, President of the Republic of the
Philippines, after having seen and considered the aforementioned Agreement between the Government of
the United States of America Regarding the Treatment of the United States Armed Forces Visiting the
Philippines, do hereby ratify and confirm the same and each and every Article and Clause thereof.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused the seal of the Republic of the
Philippines to be affixed.
GIVEN under my hand at the City of Manila, this 5th day of October, in the year of Our Lord one thousand
nine hundred and ninety-eight.
[5]
Petition, G.R. No. 138587, Annex C, Rollo, p. 59.
The Honorable Senate President and
Member of the Senate
Senate of the Philippines
Pasay City
Gentlemen and Ladies of the Senate:
I have the honor to transmit herewith the Instrument of Ratification duly signed by H.E. President Joseph
Ejercito Estrada, his message to the Senate and a draft Senate Resolution of Concurrence in connection
with the ratification of the AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA REGARDING THE
TREATMENT OF THE UNITED STATES ARMED FORCES VISITING THE PHILIPPINES.
With best wishes.
Very truly yours,
RONALDO B. ZAMORA
Executive Secretary
[6]
Petition, G.R. No. 138698, Annex C.
[7]
Between January 26 and March 11, 1999, the two Committees jointly held six public hearings-three in
Manila and one each in General Santos, Angeles City and Cebu City.
[8]
Petition , G.R. No. 138570, Annex C, Rollo, pp. 88-95.
WHEREAS, the VFA is essentially a framework for promoting the common security interest of the two
countries; and for strengthening their bilateral defense partnership under the 1951 RP-US Mutual
Defense Treaty;
x x x x x x x x x
WHEREAS, the VFA does not give unrestricted access or unhampered movement to US Forces in the
Philippines; in fact, it recognizes the Philippine government as the sole authority to approve the conduct
of any visit or activity in the country by US Forces, hence the VFA is not a derogation of Philippine
sovereignty;
WHEREAS, the VFA is not a basing arrangement; neither does it pave way for the restoration of the
American bases and facilities in the Philippines, in contravention of the prohibition against foreign bases
and permanent stationing of foreign troops under Article XVIII, Section 25 of the 1987 Constitution-
because the agreement envisions only temporary visits of US personnel engaged in joint military
exercises or other activities as may be approved by the Philippine Government;
WHEREAS, the VFA gives Philippine courts primary jurisdiction over offenses that may be committed by
US personnel within Philippine territory, with the exception of those incurred solely against the security or
property of the Us or solely against the person or property of US personnel, and those committed in the
performance of official duty;
x x x x x x x x x
WHEREAS, by virtue of Article II of the VFA, the United States commits to respect the laws of the
Republic of the Philippines, including the Constitution, which declares in Article II, Section 8 thereof, a
policy of freedom from nuclear weapons consistent with the national interest;
WHEREAS, the VFA shall serve as the legal mechanism to promote defense cooperation between two
countries-enhancing the preparedness of the Armed Forces of the Philippines against external threats;
and enabling the Philippines to bolster the stability of the Pacific area in a shared effort with its neighbor-
states;
WHEREAS, the VFA will enhance our political, economic and security partnership and cooperation with
the United States-which has helped promote the development of our country and improved the lives of
our people;
WHEREAS, in accordance with the powers and functions of Senate as mandated by the Constitution,
this Chamber, after holding several public hearings and deliberations, concurs in the Presidents
ratification of the VFA, for the following reasons:
(1) The Agreement will provide the legal mechanism to promote defense cooperation between the
Philippines and the U.S. and thus enhance the tactical, strategic, and technological capabilities of our
armed forces;
(2) The Agreement will govern the treatment of U.S., military and defense personnel within Philippine
territory, while they are engaged in activities covered by the Mutual Defense Treaty and conducted with
the prior approval of the Philippine government; and
(3) The Agreement will provide the regulatory mechanism for the circumstances and conditions under
which U.S. military forces may visit the Philippines; x x x
x x x x x x x x x
WHEREAS, in accordance with Article IX of the VFA, the Philippine government reserves the right to
terminate the agreement unilaterally once it no longer redounds to our national interest: Now, therefore,
be it
Resolved, that the Senate concur, as it hereby concurs, in the Ratification of the Agreement between the
Government of the Republic of the Philippines and the United States of America Regarding the Treatment
of United States Armed Forces visiting the Philippines. x x x
[9]
The following voted for concurrence: (1) Senate President Marcelo Fernan, (2) Senate
President Pro Tempore Blas Ople, (3) Senator Franklin Drilon, (4) Senator Rodolfo Biazon, (5) Senator
Francisco Tatad, (6) Senator Renato Cayetano, (7) Senator Teresa Aquino-Oreta, (8) Senator Robert
Barbers, (9) Senator Robert Jaworski, (10) Senator Ramon Magsaysay, Jr., (11) Senator John Osmea,
(12) Senator Juan Flavier, (13) Senator Mirriam Defensor-Santiago, (14) Senator Juan Ponce-Enrile, (15)
Senator Vicente Sotto III, (16) Senator Ramon Revilla, (17) Senator Anna Dominique Coseteng, and (18)
Senator Gregorio Honasan.
Only the following voted to reject the ratification of the VFA: (1) Senator Teofisto Guingona, Jr., (2)
Senator Raul Roco, (3) Senator Sergio Osmena III, (4) Senator Aquilino Pimentel, Jr., and (5) Senator
Loren Legarda-Leviste.
[10]
See Petition, G.R. No. 138570, Rollo, pp. 105.
[11]
Minute Resolution dated June 8, 1999.
[12]
See Consolidated Comment.
[13]
Reply to Consolidated Comment, G.R. No. 138698; G.R. No. 138587.
[14]
Valmonte vs. Philippine Charity Sweepstakes Office, (Res.) G.R. No. 78716, September 22, 1987,
cited in Telecommunications and Broadcast Attorneys of the Philippines, Inc. vs. COMELEC, 289 SCRA
337, 343 [1998]; Valley Forge College vs. Americans United, 454 US 464, 70 L. Ed. 2d 700 [1982];
Bugnay Const. And Dev. Corp. vs. Laron, 176 SCRA 240, 251-252 [1989]; Tatad vs. Garcia, Jr. 243 SCRA
436, 473 [1995].
[15]
See Article VI, Sections 24, 25 and 29 of the 1987 Constitution.
[16]
Pascual vs. Secretary of Public Works, 110 Phil. 331 [1960]; Maceda vs. Macaraig, 197 SCRA 771
[1991]; Lozada vs. COMELEC, 120 SCRA 337 [1983]; Dumlao vs. COMELEC, 95 SCRA 392 [1980];
Gonzales vs. Marcos, 65 SCRA 624 [1975].
[17]
176 SCRA 240, 251-252 [1989].
[18]
235 SCRA 506 [1994].
[19]
Consolidated Memorandum, p. 11.
[20]
Araneta vs. Dinglasan, 84 Phil. 368 [1949]; Iloilo Palay & Corn Planters Association vs. Feliciano, 121
Phil. 358 [1965]; Philippine Constitution Association vs. Gimenez, 122 Phil. 894 [1965].
[21]
21 SCRA 774 [1967].
[22]
180 SCRA 496, 502 [1988] cited in Kilosbayan, Inc. vs. Guingona, Jr., 232 SCRA 110 [1994].
[23]
197 SCRA 52, 60 [1991].
[24]
232 SCRA 110 [1994].
[25]
J. Santos vs. Northwest Orient Airlines, 210 SCRA 256, 261 [1992].
[26]
Manila Railroad Co. vs. Collector of Customs, 52 Phil. 950.
[27]
157 SCRA 282 [1988] cited in Republic vs. Sandiganbayan, 173 SCRA 72, 85 [1989].
[28]
Castillo-co v. Barbers, 290 SCRA 717, 723 (1998).
[29]
Records of the Constitutional Commission, September 18, 1986 Deliberation, p. 782.
[30]
1987 Constitution, Article VI, Section 2. - the Senate shall be composed of twenty-four Senators who
shall be elected at large by the qualified voters of the Philippines, as may be provided by law.
[31]
The 24th member (Gloria Macapagal-Arroyo) of the Senate whose term was to expire in 2001 was
elected Vice-President in the 1998 national elections.
[32]
Ballentines Legal Dictionary, 1995.
[33]
Article 2, Section 2, paragraph 2 of the United States Constitution, speaking of the United States
President provides: He shall have power, by and with the advice and consent of the Senate to make
treaties, provided two-thirds of the senators present concur.
[34]
J.M. Tuason & Co., Inc. vs. Land Tenure Association, 31 SCRA 413 [1970].
[35]
Altman Co. vs. United States, 224 US 263 [1942], cited in Coquia and Defensor-Santiago, International
Law, 1998 Ed. P. 497.
[36]
Vienna Convention, Article 2.
[37]
Gerhard von Glahn, Law among Nations, an Introduction to Public International Law, 4th Ed., p. 480.
[38]
Hackworth, Digest of International Law, Vol. 5, p. 395, cited in USAFE Veterans Association Inc. vs.
Treasurer of the Philippines, 105 Phil. 1030, 1037 [1959].
[39]
Richard J. Erickson, The Making of Executive Agreements by the United States Department of
Defense: An agenda for Progress, 13 Boston U. Intl. L.J. 58 [1995], citing Restatement [third] of Foreign
Relations Law pt. III, introductory note [1987] and Paul Reuter, Introduction to the Law of Treaties 22
[Jose Mico & Peter Haggemacher trans., 1989] cited in Consolidated Memorandum, p. 32.
[40]
3 SCRA 351, 356-357 [1961].
[41]
4 Record of the Constitutional Commission 782 [Session of September 18, 1986].
[42]
Letter of Ambassador Hubbard to Senator Miriam Defensor-Santiago:
Dear Senator Santiago:
I am happy to respond to your letter of April 29, concerning the way the US Government views the
Philippine-US Visiting Forces Agreement in US legal terms. You raise an important question and I believe
this response will help in the Senate deliberations.
As a matter of both US and international law, an international agreement like the Visiting Forces
Agreement is legally binding on the US Government, In international legal terms, such an agreement is a
treaty. However, as a matter of US domestic law, an agreement like the VFA is an executive agreement,
because it does not require the advice and consent of the senate under Article II, section 2 of our
Constitution.
The Presidents power to conclude the VFA with the Philippines, and other status of forces agreements
with the other countries, derives from the Presidents responsibilities for the conduct of foreign
relations (Art. II, Sec. 1) and his constitutional powers as Commander in Chief of the Armed
Forces. Senate advice and consent is not needed, inter alia, because the VFA and similar agreements
neither change US domestic nor require congressional appropriation of funds. It is important to note that
only about five percent of the international agreement entered into by the US Governments require
Senate advice and consent. However, in terms of the US Governments obligation to adhere to the terms
of the VFA, there is no difference between a treaty concurred in by our Senate and an executive
agreement. Background information on these points can be found in the Restatement 3rd of the Foreign
Relations Law of the United States, Sec. 301, et seq. [1986].
I hope you find this answer helpful. As the Presidents representative to the Government of the
Philippines, I can assure you that the United States Government is fully committed to living up to the
terms of the VFA.
Sincerely yours,
THOMAS C. HUBBARD
Ambassador

FACTS :

On March 14, 1947, the Philippines and the United States of America forged a military bases
agreement which formalized, among others, the use of installations in the Philippine territory
by the US military personnel. To further strengthen their defense and security relationship,
the Philippines and the US entered into a Mutual Defense Treaty on August 30, 1951. Under
the treaty, the parties agreed to respond to any external armed attack on their territory,
armed forces, public vessels and aircraft.
In 1991, with the expiration of RP-US Military Bases Agreement, the periodic military
exercises between the two countries were held in abeyance. However, the defence and
security relationship continued pursuant to the Mutual Defense Treaty. On July 18, 1997 RP
and US exchanged notes and discussed, among other things, the possible elements of the
Visiting Forces Agreement (VFA). Negotiations by both panels on VFA led to a consolitdated
draft text and a series of conferences. Eventually, President Fidel V. Ramos approved the
VFA.

On October 5, 1998 President Joseph E. Estrada ratified the VFA thru respondent Secretary of
Foreign Affairs. On October 6, 1998, the President, acting thru Executive Secretary Zamora
officially transmitted to the Senate, the Instrument of Ratification, letter of the President and
the VFA for approval. It was approved by the Senate by a 2/3 vote of its members. On June 1,
1999, the VFA officially entered into force after an exchange of notes between Secretary
Siazon and US Ambassador Hubbard.

The VFA provides for the mechanism for regulating the circumstances and conditions under
which US Armed Forces and defense personnel may be present in the Philippines. Hence this
petition for certiorari and prohibition, assailing the constitutionality of the VFA and imputing
grave abuse of discretion to respondents in ratifying the agreement.

Petitioners argued, inter alia, that the VFA violates 25, Article XVIII of the 1987 Constitution,
which provides that foreign military bases, troops, or facilities shall not be allowed in the Philippines
except under a treaty duly concurred in by the Senate . . . and recognized as a treaty by the other
contracting State.

II. THE ISSUE

Was the VFA unconstitutional?

III. THE RULING

[The Court DISMISSED the consolidated petitions, held that the petitioners did not commit grave
abuse of discretion, and sustained the constitutionality of the VFA.]

NO, the VFA is not unconstitutional.

Section 25, Article XVIII disallows foreign military bases, troops, or facilities in the country, unless
the following conditions are sufficiently met, viz: (a) it must be under a treaty; (b) the treaty must be duly
concurred in by the Senate and, when so required by congress, ratified by a majority of the votes cast
by the people in a national referendum; and (c) recognized as a treaty by the other contracting state.

There is no dispute as to the presence of the first two requisites in the case of the VFA. The
concurrence handed by the Senate through Resolution No. 18 is in accordance with the provisions of the
Constitution . . . the provision in [in 25, Article XVIII] requiring ratification by a majority of the votes cast in
a national referendum being unnecessary since Congress has not required it.

xxx xxx xxx

This Court is of the firm view that the phrase recognized as a treaty means that the other
contracting party accepts or acknowledges the agreement as a treaty. To require the other
contracting state, the United States of America in this case, to submit the VFA to the United States Senate
for concurrence pursuant to its Constitution, is to accord strict meaning to the phrase.

Well-entrenched is the principle that the words used in the Constitution are to be given their
ordinary meaning except where technical terms are employed, in which case the significance thus
attached to them prevails. Its language should be understood in the sense they have in common use.

Moreover, it is inconsequential whether the United States treats the VFA only as an executive
agreement because, under international law, an executive agreement is as binding as a treaty. To be
sure, as long as the VFA possesses the elements of an agreement under international law, the said
agreement is to be taken equally as a treaty.

xxx xxx xxx

The records reveal that the United States Government, through Ambassador Thomas C.
Hubbard, has stated that the United States government has fully committed to living up to the terms of the
VFA. For as long as the United States of America accepts or acknowledges the VFA as a treaty, and binds
itself further to comply with its obligations under the treaty, there is indeed marked compliance with the
mandate of the Constitution.
EN BANC

SENATOR AQUILINO PIMENTEL, JR., G.R. No. 158088

REP. ETTA ROSALES, PHILIPPINE
COALITION FOR THE ESTABLISHMENT
OF THE INTERNATIONAL Present:
CRIMINAL COURT, TASK FORCE
DETAINEES OF THE PHILIPPINES, Davide, Jr., C.J.,
FAMILIES OF VICTIMS OF Puno,
INVOLUNTARY DISAPPEARANCES, Panganiban,
BIANCA HACINTHA R. ROQUE, Quisumbing,
HARRISON JACOB R. ROQUE, Ynares-Santiago,
*
AHMED PAGLINAWAN, RON P. SALO, Sandoval-Gutierrez,
LEAVIDES G. DOMINGO, EDGARDO *Carpio,
CARLO VISTAN, NOEL VILLAROMAN, Austria-Martinez,
CELESTE CEMBRANO, LIZA ABIERA, *Corona,
JAIME ARROYO, MARWIL LLASOS, Carpio Morales,
CRISTINA ATENDIDO, ISRAFEL Callejo, Sr.,
FAGELA, and ROMEL BAGARES, Azcuna,
Petitioners, Tinga,
Chico-Nazario, and
- versus - Garcia, JJ.

OFFICE OF THE EXECUTIVE

SECRETARY, represented by Promulgated:
HON. ALBERTO ROMULO, and the
DEPARTMENT OF FOREIGN
AFFAIRS, represented by HON. BLAS OPLE, July 6, 2005
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

PUNO J.:
 This is a petition for mandamus filed by petitioners to compel the Office of the Executive Secretary and the

Department of Foreign Affairs to transmit the signed copy of the Rome Statute of the International Criminal Court to

the Senate of the Philippines for its concurrence in accordance with Section 21, Article VII of the 1987

Constitution.

The Rome Statute established the International Criminal Court which shall have the power to exercise its

jurisdiction over persons for the most serious crimes of international concern xxx and shall be complementary to the

national criminal jurisdictions.[1] Its jurisdiction covers the crime of genocide, crimes against humanity, war crimes

and the crime of aggression as defined in the Statute. [2] The Statute was opened for signature by all states in Rome

on July 17, 1998 and had remained open for signature until December 31, 2000 at the United Nations Headquarters

in New York. The Philippines signed the Statute on December 28, 2000 through Charge d Affairs Enrique A.

Manalo of the Philippine Mission to the United Nations. [3] Its provisions, however, require that it be subject to

ratification, acceptance or approval of the signatory states.[4]

Petitioners filed the instant petition to compel the respondents the Office of the Executive Secretary and the

Department of Foreign Affairs to transmit the signed text of the treaty to the Senate of the Philippines for

ratification.

It is the theory of the petitioners that ratification of a treaty, under both domestic law and international law, is

a function of the Senate. Hence, it is the duty of the executive department to transmit the signed copy of the Rome

Statute to the Senate to allow it to exercise its discretion with respect to ratification of treaties. Moreover,

petitioners submit that the Philippines has a ministerial duty to ratify the Rome Statute under treaty law and

customary international law. Petitioners invoke the Vienna Convention on the Law of Treaties enjoining the states to

refrain from acts which would defeat the object and purpose of a treaty when they have signed the treaty prior to

ratification unless they have made their intention clear not to become parties to the treaty.[5]
 The Office of the Solicitor General, commenting for the respondents, questioned the standing of the

petitioners to file the instant suit. It also contended that the petition at bar violates the rule on hierarchy of courts.

On the substantive issue raised by petitioners, respondents argue that the executive department has no duty to

transmit the Rome Statute to the Senate for concurrence.

A petition for mandamus may be filed when any tribunal, corporation, board, officer or person unlawfully

neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or

station.[6] We have held that to be given due course, a petition for mandamus must have been instituted by a party

aggrieved by the alleged inaction of any tribunal, corporation, board or person which unlawfully excludes said party

from the enjoyment of a legal right. The petitioner in every case must therefore be an aggrieved party in the sense

that he possesses a clear legal right to be enforced and a direct interest in the duty or act to be performed. [7] The

Court will exercise its power of judicial review only if the case is brought before it by a party who has the legal

standing to raise the constitutional or legal question. Legal standing means a personal and substantial interest in

the case such that the party has sustained or will sustain direct injury as a result of the government act that is being

challenged. The term interest is material interest, an interest in issue and to be affected by the decree, as

distinguished from mere interest in the question involved, or a mere incidental interest. [8]

The petition at bar was filed by Senator Aquilino Pimentel, Jr. who asserts his legal standing to file the suit as

member of the Senate; Congresswoman Loretta Ann Rosales, a member of the House of Representatives and

Chairperson of its Committee on Human Rights; the Philippine Coalition for the Establishment of the International

Criminal Court which is composed of individuals and corporate entities dedicated to the Philippine ratification of the

Rome Statute; the Task Force Detainees of the Philippines, a juridical entity with the avowed purpose of promoting

the cause of human rights and human rights victims in the country; the Families of Victims of Involuntary

Disappearances, a juridical entity duly organized and existing pursuant to Philippine Laws with the avowed purpose

of promoting the cause of families and victims of human rights violations in the country; Bianca Hacintha Roque
and Harrison Jacob Roque, aged two (2) and one (1), respectively, at the time of filing of the instant petition, and

suing under the doctrine of inter-generational rights enunciated in the case of Oposa vs. Factoran, Jr.;[9] and a

group of fifth year working law students from the University of the Philippines College of Law who are suing as

taxpayers.

The question in standing is whether a party has 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.[10]

We find that among the petitioners, only Senator Pimentel has the legal standing to file the instant suit. The

other petitioners maintain their standing as advocates and defenders of human rights, and as citizens of the country.

They have not shown, however, that they have sustained or will sustain a direct injury from the non-transmittal of

the signed text of the Rome Statute to the Senate. Their contention that they will be deprived of their remedies for

the protection and enforcement of their rights does not persuade. The Rome Statute is intended to complement

national criminal laws and courts. Sufficient remedies are available under our national laws to protect our citizens

against human rights violations and petitioners can always seek redress for any abuse in our domestic courts.

As regards Senator Pimentel, it has been held that to the extent the powers of Congress are impaired, so is

the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that

institution.[11] Thus, legislators have the standing to maintain inviolate the prerogatives, powers and privileges

vested by the Constitution in their office and are allowed to sue to question the validity of any official action which

they claim infringes their prerogatives as legislators. The petition at bar invokes the power of the Senate to grant or

withhold its concurrence to a treaty entered into by the executive branch, in this case, the Rome Statute. The

petition seeks to order the executive branch to transmit the copy of the treaty to the Senate to allow it to exercise

such authority. Senator Pimentel, as member of the institution, certainly has the legal standing to assert such

authority of the Senate.

 We now go to the substantive issue.

The core issue in this petition for mandamus is whether the Executive Secretary and the Department of

Foreign Affairs have a ministerial duty to transmit to the Senate the copy of the Rome Statute signed by a member

of the Philippine Mission to the United Nations even without the signature of the President.

We rule in the negative.

In our system of government, the President, being the head of state, is regarded as the sole organ and authority

in external relations and is the countrys sole representative with foreign nations. [12] As the chief architect of foreign

policy, the President acts as the countrys mouthpiece with respect to international affairs. Hence, the President is

vested with the authority to deal with foreign states and governments, extend or withhold recognition, maintain

diplomatic relations, enter into treaties, and otherwise transact the business of foreign relations. [13] In the realm of

treaty-making, the President has the sole authority to negotiate with other states.

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. Section 10 (7), Article VII of the 1935 Constitution provided:
Sec. 10. (7) The President shall have the power, with the concurrence of two-thirds of all
the Members of the Senate, to make treaties xxx.

Section 14 (1) Article VIII of the 1973 Constitution stated:

Sec. 14. (1) Except as otherwise provided in this Constitution, no treaty shall be valid and
effective unless concurred in by a majority of all the Members of the Batasang Pambansa.
 The participation of the legislative branch in the treaty-making process was deemed essential to provide a

check on the executive in the field of foreign relations. [14] By requiring the concurrence of the legislature in the

treaties entered into by the President, the Constitution ensures a healthy system of checks and balance necessary in

the nations pursuit of political maturity and growth.[15]

In filing this petition, the petitioners interpret Section 21, Article VII of the 1987 Constitution to mean that the

power to ratify treaties belongs to the Senate.

We disagree.

Justice Isagani Cruz, in his book on International Law, describes the treaty-making process in this wise:
The usual steps in the treaty-making process are: negotiation, signature, ratification, and
exchange of the instruments of ratification. The treaty may then be submitted for registration and
publication under the U.N. Charter, although this step is not essential to the validity of the
agreement as between the parties.

Negotiation may be undertaken directly by the head of state but he now usually assigns this
task to his authorized representatives. These representatives are provided with credentials known
as full powers, which they exhibit to the other negotiators at the start of the formal discussions. It
is standard practice for one of the parties to submit a draft of the proposed treaty which, together
with the counter-proposals, becomes the basis of the subsequent negotiations. The negotiations
may be brief or protracted, depending on the issues involved, and may even collapse in case the
parties are unable to come to an agreement on the points under consideration.

If and when the negotiators finally decide on the terms of the treaty, the same is opened
for signature. This step is primarily intended as a means of authenticating the instrument and for
the purpose of symbolizing the good faith of the parties; but, significantly, it does not indicate
the final consent of the state in cases where ratification of the treaty is required . The
document is ordinarily signed in accordance with the alternat, that is, each of the several
negotiators is allowed to sign first on the copy which he will bring home to his own state.

Ratification, which is the next step, is the formal act by which a state confirms and accepts
the provisions of a treaty concluded by its representatives. The purpose of ratification is to
enable the contracting states to examine the treaty more closely and to give them an
opportunity to refuse to be bound by it should they find it inimical to their interests. It is for
this reason that most treaties are made subject to the scrutiny and consent of a department
of the government other than that which negotiated them.

xxx

The last step in the treaty-making process is the exchange of the instruments of
ratification, which usually also signifies the effectivity of the treaty unless a different date has
been agreed upon by the parties. Where ratification is dispensed with and no effectivity clause is
embodied in the treaty, the instrument is deemed effective upon its signature. [16] [emphasis
supplied]
 Petitioners arguments equate the signing of the treaty by the Philippine representative with ratification. It

should be underscored that the signing of the treaty and the ratification are two separate and distinct steps in the

treaty-making process. As earlier discussed, the signature is primarily intended as a means of authenticating the

instrument and as a symbol of the good faith of the parties. It is usually performed by the states authorized

representative in the diplomatic mission. Ratification, on the other hand, is the formal act by which a state confirms

and accepts the provisions of a treaty concluded by its representative. It is generally held to be an executive act,

undertaken by the head of the state or of the government. [17] Thus, Executive Order No. 459 issued by President

Fidel V. Ramos on November 25, 1997 provides the guidelines in the negotiation of international agreements and its

ratification. It mandates that after the treaty has been signed by the Philippine representative, the same shall be

transmitted to the Department of Foreign Affairs. The Department of Foreign Affairs shall then prepare the

ratification papers and forward the signed copy of the treaty to the President for ratification. After the President has

ratified the treaty, the Department of Foreign Affairs shall submit the same to the Senate for concurrence. Upon

receipt of the concurrence of the Senate, the Department of Foreign Affairs shall comply with the provisions of the

treaty to render it effective. Section 7 of Executive Order No. 459 reads:

Sec. 7. Domestic Requirements for the Entry into Force of a Treaty or an Executive
Agreement. The domestic requirements for the entry into force of a treaty or an executive
agreement, or any amendment thereto, shall be as follows:

A. Executive Agreements.

i. All executive agreements shall be transmitted to the

Department of Foreign Affairs after their signing for the preparation of
the ratification papers. The transmittal shall include the highlights of
the agreements and the benefits which will accrue to the Philippines
arising from them.

ii. The Department of Foreign Affairs, pursuant to the

endorsement by the concerned agency, shall transmit the agreements to
the President of the Philippines for his ratification. The original signed
instrument of ratification shall then be returned to the Department of
Foreign Affairs for appropriate action.

B. Treaties.

i. All treaties, regardless of their designation, shall comply

with the requirements provided in sub-paragraph[s] 1 and 2, item A
 (Executive Agreements) of this Section. In addition, the Department of
Foreign Affairs shall submit the treaties to the Senate of the Philippines
for concurrence in the ratification by the President. A certified true
copy of the treaties, in such numbers as may be required by the Senate,
together with a certified true copy of the ratification instrument, shall
accompany the submission of the treaties to the Senate.

ii. Upon receipt of the concurrence by the Senate, the

Department of Foreign Affairs shall comply with the provision of the
treaties in effecting their entry into force.

Petitioners submission that the Philippines is bound under treaty law and international law to ratify the treaty

which it has signed is without basis. The signature does not signify the final consent of the state to the treaty. It is

the ratification that binds the state to the provisions thereof. In fact, the Rome Statute itself requires that the

signature of the representatives of the states be subject to ratification, acceptance or approval of the signatory states.

Ratification is the act by which the provisions of a treaty are formally confirmed and approved by a State. By

ratifying a treaty signed in its behalf, a state expresses its willingness to be bound by the provisions of such treaty.

After the treaty is signed by the states representative, the President, being accountable to the people, is burdened

with the responsibility and the duty to carefully study the contents of the treaty and ensure that they are not inimical

to the interest of the state and its people. Thus, the President has the discretion even after the signing of the treaty by

the Philippine representative whether or not to ratify the same. The Vienna Convention on the Law of Treaties does

not contemplate to defeat or even restrain this power of the head of states. If that were so, the requirement of

ratification of treaties would be pointless and futile. It has been held that a state has no legal or even moral duty to

ratify a treaty which has been signed by its plenipotentiaries. [18] There is no legal obligation to ratify a treaty, but it

goes without saying that the refusal must be based on substantial grounds and not on superficial or whimsical

reasons. Otherwise, the other state would be justified in taking offense. [19]

It should be emphasized that under our Constitution, the power to ratify is vested in the President, subject to

the concurrence of the Senate. The role of the Senate, however, is limited only to giving or withholding its consent,

or concurrence, to the ratification.[20] Hence, it is within the authority of the President to refuse to submit a treaty to
the Senate or, having secured its consent for its ratification, refuse to ratify it. [21] Although the refusal of a state to

ratify a treaty which has been signed in its behalf is a serious step that should not be taken lightly,[22] such decision is

within the competence of the President alone, which cannot be encroached by this Court via a writ of mandamus.

This Court has no jurisdiction over actions seeking to enjoin the President in the performance of his official duties.

[23]
The Court, therefore, cannot issue the writ of mandamusprayed for by the petitioners as it is beyond its

jurisdiction to compel the executive branch of the government to transmit the signed text of Rome Statute to the

Senate.

IN VIEW WHEREOF, the petition is DISMISSED.

SO ORDERED.

FACTS:

The Rome Statute established the ICC which shall have the power to exercise its jurisdiction
over persons for the most serious crimes of international concern xxx and shall be
complementary to the national criminal jurisdictions. The Philippines, through Charge d
Affairs Enrique A. Manalo of the Philippine Mission to the UN, signed the Rome Statute on
Dec. 28, 2000. Its provisions, however, require that it be subject to ratification, acceptance
or approval of the signatory states. Petitioners now file this petition to compel the Office of
the President to transmit the signed copy of the Rome Statute to the Senate for its
concurrence.

ISSUE:

Whether or not the Executive Secretary and the DFA have a ministerial duty to
transmit to the Senate the copy of the Rome Statute

HELD:

We rule in the negative.

In our system of government, the President, being the head of state, is regarded as the sole
organ and authority in external relations and is the countrys sole representative with foreign
nations. As the chief architect of foreign policy, the President acts as the countrys
mouthpiece with respect to international affairs. Hence, the President is vested with the
authority to deal with foreign states and governments, extend or withhold recognition,
maintain diplomatic relations, enter into treaties, and otherwise transact the business of
foreign relations. In the realm of treaty-making, the President has the sole authority to
negotiate with other states.

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 participation of the legislative branch in the treaty-making process was deemed
essential to provide a check on the executive in the field of foreign relations. By requiring
the concurrence of the legislature in the treaties entered into by the President, the
Constitution ensures a healthy system of checks and balance necessary in the nations
pursuit of political maturity and growth.

Signing vs. Ratification of Treaty

It should be underscored that the signing of the treaty and the ratification are two separate
and distinct steps in the treaty-making process. As earlier discussed, the signature is
primarily intended as a means of authenticating the instrument and as a symbol of the good
faith of the parties. It is usually performed by the states authorized representative in the
diplomatic mission. Ratification, on the other hand, is the formal act by which a state
confirms and accepts the provisions of a treaty concluded by its representative. It is
generally held to be an executive act, undertaken by the head of the state or of
the government.

Purpose of Ratification

Petitioners submission that the Philippines is bound under treaty law and international law
to ratify the treaty which it has signed is without basis. The signature does not signify the
final consent of the state to the treaty. It is the ratification that binds the state to
the provisions thereof. In fact, the Rome Statute itself requires that the signature of the
representatives of the states be subject to ratification, acceptance or approval of the
signatory states. Ratification is the act by which theprovisions of a treaty are formally
confirmed and approved by a State. By ratifying a treaty signed in its behalf, a state
expresses its willingness to be bound by the provisions of such treaty. After the treaty is
signed by the states representative, the President, being accountable to the people, is
burdened with the responsibility and the duty to carefully study the contents of the treaty
and ensure that they are not inimical to the interest of the state and its people. Thus, the
President has the discretion even after the signing of the treaty by the Philippine
representative whether or not to ratify the same. The Vienna Convention on the Law
of Treaties does not contemplate to defeat or even restrain this power of the head of states.
If that were so, the requirement of ratification of treaties would be pointless and futile. It has
been held that a state has no legal or even moral duty to ratify a treaty which has been
signed by its plenipotentiaries. There is no legal obligation to ratify a treaty, but it goes
without saying that the refusal must be based on substantial grounds and not on superficial
or whimsical reasons. Otherwise, the other state would be justified in taking offense.

President has the Power to Ratify Treaties

It should be emphasized that under our Constitution, the power to ratify is vested in the
President, subject to the concurrence of the Senate. The role of the Senate, however, is
limited only to giving or withholding its consent, or concurrence, to the ratification. Hence, it
is within the authority of the President to refuse to submit a treaty to the Senate or, having
secured its consent for its ratification, refuse to ratify it. Although the refusal of a state to
ratify a treaty which has been signed in its behalf is a serious step that should not be taken
lightly, such decision is within the competence of the President alone, which cannot be
encroached by this Court via a writ of mandamus. This Court has no jurisdiction over actions
seeking to enjoin the President in the performance of his official duties. The Court, therefore,
cannot issue the writ of mandamus prayed for by the petitioners as it is beyond its
jurisdiction to compel the executive branch of thegovernment to transmit the signed text of
Rome Statute to the Senate.

ISSUE 2: Whether or not petitioners have the legal standing to file the instant suit.--- NO.

Only Senator Pimentel has a legal standing to the extent of his power as member of
Congress. Other petitioners have not shown that they have sustained a direct injury from
the non-transmittal and that they can seek redress in our domestic courts.

Petitioners interpretation of the Constitution is incorrect. The power to ratify treaties does
not belong to the Senate.

EN BANC

[G.R. No. 118295. May 2, 1997]

WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the Philippine Senate
and as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the House
of Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES,
both as taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM
ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, LIKAS-KAYANG
KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION MOVEMENT,
DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and PHILIPPINE
PEASANT INSTITUTE, in representation of various taxpayers and as non-governmental
organizations, petitioners, vs. EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-
SHAHANI, HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI
GONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA MACAPAGAL-ARROYO,
ORLANDO MERCADO, BLAS OPLE, JOHN OSMEA, SANTANINA RASUL, RAMON
REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE WEBB, in their respective
capacities as members of the Philippine Senate who concurred in the ratification by the
President of the Philippines of the Agreement Establishing the World Trade Organization;
SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget and Management; CARIDAD
VALDEHUESA, in her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity
as Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as Secretary of
Agriculture; ROBERTO DE OCAMPO, in his capacity as Secretary of Finance; ROBERTO
ROMULO, in his capacity as Secretary of Foreign Affairs; and TEOFISTO T. GUINGONA, in
his capacity as Executive Secretary,respondents.

DECISION
PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership
thereto of the vast majority of countries has revolutionized international business and economic relations
amongst states. It has irreversibly propelled the world towards trade liberalization and economic
globalization. Liberalization, globalization, deregulation and privatization, the third-millennium buzz
words, are ushering in a new borderless world of business by sweeping away as mere historical relics the
heretofore traditional modes of promoting and protecting national economies like tariffs, export subsidies,
import quotas, quantitative restrictions, tax exemptions and currency controls. Finding market niches and
becoming the best in specific industries in a market-driven and export-oriented global scenario are
replacing age-old beggar-thy-neighbor policies that unilaterally protect weak and inefficient domestic
producers of goods and services. In the words of Peter Drucker, the well-known management guru,
Increased participation in the world economy has become the key to domestic economic growth and
prosperity.
 Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the
establishment of three multilateral institutions -- inspired by that grand political body, the United Nations --
were discussed at Dumbarton Oaks and Bretton Woods. The first was the World Bank (WB) which was
to address the rehabilitation and reconstruction of war-ravaged and later developing countries;
the second, the International Monetary Fund (IMF) which was to deal with currency problems; and the
third, the International Trade Organization (ITO), which was to foster order and predictability in world trade
and to minimize unilateral protectionist policies that invite challenge, even retaliation, from other
states. However, for a variety of reasons, including its non-ratification by the United States, the ITO,
unlike the IMF and WB, never took off. What remained was only GATT -- the General Agreement on
Tariffs and Trade. GATT was a collection of treaties governing access to the economies of treaty
adherents with no institutionalized body administering the agreements or dependable system of dispute
settlement.
After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the
Tokyo Round and the Uruguay Round, the world finally gave birth to that administering body -- the World
Trade Organization -- with the signing of the Final Act in Marrakesh, Morocco and the ratification of the
WTO Agreement by its members.[1]
Like many other developing countries, the Philippines joined WTO as a founding member with the
goal, as articulated by President Fidel V. Ramos in two letters to the Senate (infra), of improving
Philippine access to foreign markets, especially its major trading partners, through the reduction of tariffs
on its exports, particularly agricultural and industrial products. The President also saw in the WTO the
opening of new opportunities for the services sector x x x, (the reduction of) costs and uncertainty
associated with exporting x x x, and (the attraction of) more investments into the country. Although the
Chief Executive did not expressly mention it in his letter, the Philippines - - and this is of special interest to
the legal profession - - will benefit from the WTO system of dispute settlement by judicial adjudication
through the independent WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate
Tribunal. Heretofore, trade disputes were settled mainly through negotiations where solutions were
arrived at frequently on the basis of relative bargaining strengths, and where naturally, weak and
underdeveloped countries were at a disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines to place nationals and products of
member-countries on the same footing as Filipinos and local products and (2) that the WTO intrudes,
limits and/or impairs the constitutional powers of both Congress and the Supreme Court, the instant
petition before this Court assails the WTO Agreement for violating the mandate of the 1987 Constitution to
develop a self-reliant and independent national economy effectively controlled by Filipinos x x x (to) give
preference to qualified Filipinos (and to) promote the preferential use of Filipino labor, domestic materials
and locally produced goods.
Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade
liberalization and economic globalization? Does it prescribe Philippine integration into a global economy
that is liberalized, deregulated and privatized? These are the main questions raised in this petition
for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for the
nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the ratification by
the President of the Philippines of the Agreement Establishing the World Trade Organization (WTO
Agreement, for brevity) and (2) for the prohibition of its implementation and enforcement through the
release and utilization of public funds, the assignment of public officials and employees, as well as the
use of government properties and resources by respondent-heads of various executive offices concerned
therewith. This concurrence is embodied in Senate Resolution No. 97, dated December 14, 1994.
 The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of

the Department of Trade and Industry (Secretary Navarro, for brevity), representing the Government of
the Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the
Uruguay Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act,[2] Secretary Navarro on behalf of the Republic of the Philippines, agreed:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities,
with a view to seeking approval of the Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994
from the President of the Philippines, [3] stating among others that the Uruguay Round Final Act is hereby
submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.
On August 13, 1994, the members of the Philippine Senate received another letter from the
President of the Philippines[4] likewise dated August 11, 1994, which stated among others that the
Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in Financial Services are hereby
submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.
On December 9, 1994, the President of the Philippines certified the necessity of the immediate
adoption of P.S. 1083, a resolution entitled Concurring in the Ratification of the Agreement Establishing
the World Trade Organization.[5]
On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which Resolved, as it is
hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by the President of the
Philippines of the Agreement Establishing the World Trade Organization. [6] The text of the WTO
Agreement is written on pages 137 et seq. of Volume I of the 36-volumeUruguay Round of Multilateral
Trade Negotiations and includes various agreements and associated legal instruments (identified in the
said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral Trade
Agreements, for brevity) as follows:

ANNEX 1

Annex 1A: Multilateral Agreement on Trade in Goods

General Agreement on Tariffs and Trade 1994

Agreement on Agriculture

Agreement on the Application of Sanitary and

Phytosanitary Measures

Agreement on Textiles and Clothing

Agreement on Technical Barriers to Trade

Agreement on Trade-Related Investment Measures

 Agreement on Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994

Agreement on Implementation of Article VII of the General on Tariffs and Trade 1994

Agreement on Pre-Shipment Inspection

Agreement on Rules of Origin

Agreement on Imports Licensing Procedures

Agreement on Subsidies and Coordinating Measures

Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism

On December 16, 1994, the President of the Philippines signed [7] the Instrument of Ratification,
declaring:

NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines, after
having seen and considered the aforementioned Agreement Establishing the World Trade Organization and the
agreements and associated legal instruments included in Annexes one (1), two (2) and three (3) of that Agreement
which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do hereby ratify and confirm the
same and every Article and Clause thereof.

To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the
Agreement Proper and the associated legal instruments included in Annexes one (1), two (2) and three
(3) of that Agreement which are integral parts thereof.
On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO
Agreement (and its integral annexes aforementioned) but also (1) the Ministerial Declarations and
Decisions and (2) the Understanding on Commitments in Financial Services. In his Memorandum dated
May 13, 1996,[8] the Solicitor General describes these two latter documents as follows:

The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide range of matters,
such as measures in favor of least developed countries, notification procedures, relationship of WTO with the
International Monetary Fund (IMF), and agreements on technical barriers to trade and on dispute settlement.

The Understanding on Commitments in Financial Services dwell on, among other things, standstill or limitations
and qualifications of commitments to existing non-conforming measures, market access, national treatment, and
definitions of non-resident supplier of financial services, commercial presence and new financial service.
 On December 29, 1994, the present petition was filed. After careful deliberation on respondents
comment and petitioners reply thereto, the Court resolved on December 12, 1995, to give due course to
the petition, and the parties thereafter filed their respective memoranda. The Court also requested the
Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations stationed in Geneva,
Switzerland, to submit a paper, hereafter referred to as Bautista Paper, [9] for brevity, (1) providing a
historical background of and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:

(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy and (2) the transcript of
proceedings/hearings in the Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties signed prior to the
Philippine adherence to the WTO Agreement, which derogate from Philippine sovereignty and (2) copies of the
multi-volume WTO Agreement and other documents mentioned in the Final Act, as soon as possible.

After receipt of the foregoing documents, the Court said it would consider the case submitted for
resolution. In a Compliance dated September 16, 1996, the Solicitor General submitted a printed copy of
the 36-volume Uruguay Round of Multilateral Trade Negotiations, and in another Compliance dated
October 24, 1996, he listed the various bilateral or multilateral treaties or international instruments
involving derogation of Philippine sovereignty. Petitioners, on the other hand, submitted their
Compliance dated January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:

A. Whether the petition presents a political question or is otherwise not justiciable.

B. Whether the petitioner members of the Senate who participated in the deliberations and voting leading to
the concurrence are estopped from impugning the validity of the Agreement Establishing the World Trade
Organization or of the validity of the concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade Organization contravene the
provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of the 1987 Philippine Constitution.

D. Whether provisions of the Agreement Establishing the World Trade Organization unduly limit, restrict and
impair Philippine sovereignty specifically the legislative power which, under Sec. 2, Article VI, 1987
Philippine Constitution is vested in the Congress of the Philippines;

E. Whether provisions of the Agreement Establishing the World Trade Organization interfere with the
exercise of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or
excess of jurisdiction when they voted for concurrence in the ratification of the constitutionally-infirm
Agreement Establishing the World Trade Organization.

G. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or
excess of jurisdiction when they concurred only in the ratification of the Agreement Establishing the
World Trade Organization, and not with the Presidential submission which included the Final Act,
Ministerial Declaration and Decisions, and the Understanding on Commitments in Financial Services.
 On the other hand, the Solicitor General as counsel for respondents synthesized the several issues
raised by petitioners into the following:[10]

1. Whether or not the provisions of the Agreement Establishing the World Trade Organization and the Agreements
and Associated Legal Instruments included in Annexes one (1), two (2) and three (3) of that agreement cited by
petitioners directly contravene or undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and
12, Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of legislative
power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial power by this Honorable Court
in promulgating the rules of evidence.

4. Whether or not the concurrence of the Senate in the ratification by the President of the Philippines of the
Agreement establishing the World Trade Organization implied rejection of the treaty embodied in the Final Act.

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor
General has effectively ignored three, namely: (1) whether the petition presents a political question or is
otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Taada and Anna
Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-members of the
Senate acted in grave abuse of discretion when they voted for concurrence in the ratification of the WTO
Agreement. The foregoing notwithstanding, this Court resolved to deal with these three issues thus:

(1) The political question issue -- being very fundamental and vital, and being a matter that probes into the very
jurisdiction of this Court to hear and decide this case -- was deliberated upon by the Court and will thus be ruled
upon as the first issue;

(2) The matter of estoppel will not be taken up because this defense is waivable and the respondents have
effectively waived it by not pursuing it in any of their pleadings; in any event, this issue, even if ruled in
respondents favor, will not cause the petitions dismissal as there are petitioners other than the two senators, who
are not vulnerable to the defense of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be taken up as an
integral part of the disposition of the four issues raised by the Solicitor General.

During its deliberations on the case, the Court noted that the respondents did not question the locus
standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They
probably realized that grave constitutional issues, expenditures of public funds and serious international
commitments of the nation are involved here, and that transcendental public interest requires that the
substantive issues be met head on and decided on the merits, rather than skirted or deflected by
procedural matters.[11]
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE
STATED, DOES THE PETITION INVOLVE A POLITICAL QUESTION OVER WHICH THIS
COURT HAS NO JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES
CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF THE
PHILIPPINE CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR
IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY CONGRESS?
 (4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF
JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS
ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT INCLUDE
THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS, AND THE
UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?

The First Issue: Does the Court Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute. The question thus posed is judicial rather than political. The
duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld. [12] Once a
controversy as to the application or interpretation of a constitutional provision is raised before this Court
(as in the instant case), it becomes a legal issue which the Court is bound by constitutional mandate to
decide.[13]
The jurisdiction of this Court to adjudicate the matters [14] raised in the petition is clearly set out in the
1987 Constitution,[15] as follows:

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.

The foregoing text emphasizes the judicial departments duty and power to strike down grave abuse
of discretion on the part of any branch or instrumentality of government including Congress. It is an
innovation in our political law.[16] As explained by former Chief Justice Roberto Concepcion, [17] the
judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials
has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of
discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass
judgment on matters of this nature.
As this Court has repeatedly and firmly emphasized in many cases, [18] it will not shirk, digress from or
abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of
discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or
department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate
remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should be
given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of
Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional
issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials. On
this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will not review
the wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or pass
upon the merits of trade liberalization as a policy espoused by said international body. Neither will it rule
on the propriety of the governments economic policy of reducing/removing tariffs, taxes, subsidies,
quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its constitutional duty
to determine whether or not there had been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Senate in ratifying the WTO Agreement and its three annexes.
 Second Issue: The WTO Agreement and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the letter, spirit and intent of the Constitution mandating economic
nationalism are violated by the so-called parity provisions and national treatment clauses scattered in
various parts not only of the WTO Agreement and its annexes but also in the Ministerial Decisions and
Declarations and in the Understanding on Commitments in Financial Services.
Specifically, the flagship constitutional provisions referred to are Sec. 19, Article II, and Secs. 10
and 12, Article XII, of the Constitution, which are worded as follows:

Article II

DECLARATION OF PRINCIPLES AND STATE POLICIES

xx xx
xx xx

Sec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.

xx xx
xx xx

Article XII

NATIONAL ECONOMY AND PATRIMONY

xx xx
xx xx

Sec. 10. x x x. The Congress shall enact measures that will encourage the formation and operation of enterprises
whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give
preference to qualified Filipinos.

xx xx
xx xx

Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced
goods, and adopt measures that help make them competitive.

Petitioners aver that these sacred constitutional principles are desecrated by the following WTO
provisions quoted in their memorandum:[19]

a) In the area of investment measures related to trade in goods (TRIMS, for brevity):

Article 2

National Treatment and Quantitative Restrictions.

 1. Without prejudice to other rights and obligations under GATT 1994. no Member shall apply any TRIM
that is inconsistent with the provisions of Article III or Article XI of GATT 1994.

2. An Illustrative list of TRIMS that are inconsistent with the obligations of general elimination of
quantitative restrictions provided for in paragraph I of Article XI of GATT 1994 is contained in the
Annex to this Agreement. (Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay
Round, Legal Instruments, p.22121, emphasis supplied).

The Annex referred to reads as follows:

ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for in paragraph 4 of
Article III of GATT 1994 include those which are mandatory or enforceable under domestic law or
under administrative rulings, or compliance with which is necessary to obtain an advantage, and
which require:

(a) the purchase or use by an enterprise of products of domestic origin or from any domestic source,
whether specified in terms of particular products, in terms of volume or value of products, or in
terms of proportion of volume or value of its local production; or

(b) that an enterprises purchases or use of imported products be limited to an amount related to the
volume or value of local products that it exports.

2. TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions provided
for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or enforceable under
domestic laws or under administrative rulings, or compliance with which is necessary to obtain an
advantage, and which restrict:

(a) the importation by an enterprise of products used in or related to the local production that it exports;

(b) the importation by an enterprise of products used in or related to its local production by restricting its
access to foreign exchange inflows attributable to the enterprise; or

(c) the exportation or sale for export specified in terms of particular products, in terms of volume or
value of products, or in terms of a preparation of volume or value of its local production. (Annex to
the Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay Round Legal Documents,
p.22125, emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:

The products of the territory of any contracting party imported into the territory of any other contracting party shall
be accorded treatment no less favorable than that accorded to like products of national origin in respect of
laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. the provisions of this paragraph shall not prevent the application of differential internal
transportation charges which are based exclusively on the economic operation of the means of transport and not on
the nationality of the product. (Article III, GATT 1947, as amended by the Protocol Modifying Part II, and Article
XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement on
Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p.177, emphasis supplied).

b) In the area of trade related aspects of intellectual property rights (TRIPS, for brevity):
Each Member shall accord to the nationals of other Members treatment no less favourable than that it
accords to its own nationals with regard to the protection of intellectual property... (par. 1, Article 3, Agreement on
Trade-Related Aspect of Intellectual Property rights, Vol. 31, Uruguay Round, Legal Instruments, p.25432 (emphasis
supplied)

(c) In the area of the General Agreement on Trade in Services:

National Treatment

1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications set out therein,
each Member shall accord to services and service suppliers of any other Member, in respect of all
measures affecting the supply of services, treatment no less favourable than it accords to its own
like services and service suppliers.

2. A Member may meet the requirement of paragraph I by according to services and service suppliers of
any other Member, either formally identical treatment or formally different treatment to that it accords
to its own like services and service suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if it

modifies the conditions of completion in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member. (Article XVII, General
Agreement on Trade in Services, Vol. 28, Uruguay Round Legal Instruments, p.22610 emphasis
supplied).

It is petitioners position that the foregoing national treatment and parity provisions of the WTO
Agreement place nationals and products of member countries on the same footing as Filipinos and local
products, in contravention of the Filipino First policy of the Constitution. They allegedly render
meaningless the phrase effectively controlled by Filipinos. The constitutional conflict becomes more
manifest when viewed in the context of the clear duty imposed on the Philippines as a WTO member to
ensure the conformity of its laws, regulations and administrative procedures with its obligations as
provided in the annexed agreements.[20] Petitioners further argue that these provisions contravene
constitutional limitations on the role exports play in national development and negate the preferential
treatment accorded to Filipino labor, domestic materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that such
Charter provisions are not self-executing and merely set out general policies; (2) that these nationalistic
portions of the Constitution invoked by petitioners should not be read in isolation but should be related to
other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read properly, the cited
WTO clauses do not conflict with the Constitution; and (4) that the WTO Agreement contains sufficient
provisions to protect developing countries like the Philippines from the harshness of sudden trade
liberalization.
We shall now discuss and rule on these arguments.

Declaration of Principles Not Self-Executing

By its very title, Article II of the Constitution is a declaration of principles and state policies. The
counterpart of this article in the 1935 Constitution [21] is called the basic political creed of the nation by
Dean Vicente Sinco.[22] These principles in Article II are not intended to be self-executing principles ready
for enforcement through the courts.[23] They are used by the judiciary as aids or as guides in the exercise
of its power of judicial review, and by the legislature in its enactment of laws. As held in the leading case
of Kilosbayan, Incorporated vs. Morato,[24] the principles and state policies enumerated in Article II and
some sections of Article XII are not self-executing provisions, the disregard of which can give rise to a
cause of action in the courts. They do not embody judicially enforceable constitutional rights but
guidelines for legislation.
In the same light, we held in Basco vs. Pagcor[25] that broad constitutional principles need legislative
enactments to implement them, thus:

On petitioners allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13 (Role of
Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of
the 1987 Constitution, suffice it to state also that these are merely statements of principles and policies. As such,
they are basically not self-executing, meaning a law should be passed by Congress to clearly define and effectuate
such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement
through the courts. They were rather directives addressed to the executive and to the legislature. If the executive
and the legislature failed to heed the directives of the article, the available remedy was not judicial but political. The
electorate could express their displeasure with the failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2).

The reasons for denying a cause of action to an alleged infringement of broad constitutional
principles are sourced from basic considerations of due process and the lack of judicial authority to wade
into the uncharted ocean of social and economic policy making. Mr. Justice Florentino P. Feliciano in his
concurring opinion in Oposa vs. Factoran, Jr.,[26] explained these reasons as follows:

My suggestion is simply that petitioners must, before the trial court, show a more specific legal right -- a right cast
in language of a significantly lower order of generality than Article II (15) of the Constitution -- that is or may be
violated by the actions, or failures to act, imputed to the public respondent by petitioners so that the trial court can
validly render judgment granting all or part of the relief prayed for. To my mind, the court should be understood as
simply saying that such a more specific legal right or rights may well exist in our corpus of law, considering the
general policy principles found in the Constitution and the existence of the Philippine Environment Code, and that
the trial court should have given petitioners an effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a cause of action be a specific,
operable legal right, rather than a constitutional or statutory policy, for at least two (2) reasons. One is that unless
the legal right claimed to have been violated or disregarded is given specification in operational terms, defendants
may well be unable to defend themselves intelligently and effectively; in other words, there are due process
dimensions to this matter.

The second is a broader-gauge consideration -- where a specific violation of law or applicable regulation is not
alleged or proved, petitioners can be expected to fall back on the expanded conception of judicial power in the
second paragraph of Section 1 of Article VIII of the Constitution which reads:

Section 1. xxx

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government. (Emphases supplied)

When substantive standards as general as the right to a balanced and healthy ecology and the right to health are
combined with remedial standards as broad ranging as a grave abuse of discretion amounting to lack or excess of
jurisdiction, the result will be, it is respectfully submitted, to propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area of environmental protection and management, our
courts have no claim to special technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making departments -- the legislative and
executive departments -- must be given a real and effective opportunity to fashion and promulgate those norms and
standards, and to implement them before the courts should intervene.

Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain Balanced
Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles
relating to the national economy and patrimony, should be read and understood in relation to the other
sections in said article, especially Secs. 1 and 13 thereof which read:

Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian
reform, through industries that make full and efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against
unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum
opportunity to develop. x x x

x x x x x
x xxx

Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements
of exchange on the basis of equality and reciprocity.

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic
development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by the nation for the benefit of
the people; and
3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by
expressing preference in favor of qualified Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony [27] and in the use of Filipino labor, domestic materials and
locally-produced goods; (2) by mandating the State to adopt measures that help make them competitive;
[28]
and (3) by requiring the State to develop a self-reliant and independent national economy effectively
controlled by Filipinos.[29] In similar language, the Constitution takes into account the realities of the
outside world as it requires the pursuit of a trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity; [30] and speaks of industries
which are competitive in both domestic and foreign markets as well as of the protection of Filipino
enterprises against unfair foreign competition and trade practices.
It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et
al.,[31] this Court held that Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive
command which is complete in itself and which needs no further guidelines or implementing laws or rules
for its enforcement. From its very words the provision does not require any legislation to put it in
operation. It is per se judicially enforceable. However, as the constitutional provision itself states, it is
enforceable only in regard to the grants of rights, privileges and concessions covering national economy
and patrimony and not to every aspect of trade and commerce. It refers to exceptions rather than the
rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather,
the issue is whether, as a rule, there are enough balancing provisions in the Constitution to allow the
Senate to ratify the Philippine concurrence in the WTO Agreement. And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on
the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign
competition and trade practices that are unfair. [32] In other words, the Constitution did not intend to pursue
an isolationist policy. It did not shut out foreign investments, goods and services in the development of
the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods,
services and investments into the country, it does not prohibit them either. In fact, it allows an exchange
on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.

WTO Recognizes Need to Protect Weak Economies

Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to
protect weak and developing economies, which comprise the vast majority of its members. Unlike in the
UN where major states have permanent seats and veto powers in the Security Council, in the WTO,
decisions are made on the basis of sovereign equality, with each members vote equal in weight to that of
any other. There is no WTO equivalent of the UN Security Council.

WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial Conference and the General
Council shall be taken by the majority of the votes cast, except in cases of interpretation of the Agreement or waiver
of the obligation of a member which would require three fourths vote. Amendments would require two thirds vote
in general. Amendments to MFN provisions and the Amendments provision will require assent of all
members. Any member may withdraw from the Agreement upon the expiration of six months from the date of
notice of withdrawals.[33]

Hence, poor countries can protect their common interests more effectively through the WTO than
through one-on-one negotiations with developed countries. Within the WTO, developing countries can
form powerful blocs to push their economic agenda more decisively than outside the Organization. This
is not merely a matter of practical alliances but a negotiating strategy rooted in law. Thus, the basic
principles underlying the WTO Agreement recognize the need of developing countries like the Philippines
to share in the growth in international trade commensurate with the needs of their economic
development. These basic principles are found in the preamble[34] of the WTO Agreement as follows:

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to
raising standards of living, ensuring full employment and a large and steadily growing volume of real income and
effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal
use of the worlds resources in accordance with the objective of sustainable development, seeking both to protect
and preserve the environment and to enhance the means for doing so in a manner consistent with their respective
needs and concerns at different levels of economic development,

Recognizing further that there is need for positive efforts designed to ensure that developing countries, and
especially the least developed among them, secure a share in the growth in international trade commensurate with
the needs of their economic development,
Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous
arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of
discriminatory treatment in international trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the
General Agreement on Tariffs and Trade, the results of past trade liberalization efforts, and all of the results of the
Uruguay Round of Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying this multilateral trading
system, x x x. (underscoring supplied.)

Specific WTO Provisos Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic
principles, the WTO Agreement grants developing countries a more lenient treatment, giving their
domestic industries some protection from the rush of foreign competition. Thus, with respect to tariffs in
general, preferential treatment is given to developing countries in terms of the amount of tariff
reduction and the period within which the reduction is to be spread out. Specifically, GATT requires an
average tariff reduction rate of 36% for developed countries to be effected within a period of six (6)
years while developing countries -- including the Philippines -- are required to effect an average tariff
reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to
agricultural products by 20% over six (6) years, as compared to only 13% for developing countries to be
effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires developed countries to reduce
their budgetary outlays for export subsidy by 36% and export volumes receiving export subsidy by 21%
within a period of six (6) years. For developing countries, however, the reduction rate is only two-thirds of
that prescribed for developed countries and a longer period of ten (10) years within which to effect such
reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade
practices including anti-dumping measures, countervailing measures and safeguards against import
surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can avail of
these measures. There is hardly therefore any basis for the statement that under the WTO, local
industries and enterprises will all be wiped out and that Filipinos will be deprived of control of the
economy. Quite the contrary, the weaker situations of developing nations like the Philippines have been
taken into account; thus, there would be no basis to say that in joining the WTO, the respondents have
gravely abused their discretion. True, they have made a bold decision to steer the ship of state into the
yet uncharted sea of economic liberalization. But such decision cannot be set aside on the ground
of grave abuse of discretion, simply because we disagree with it or simply because we believe only in
other economic policies. As earlier stated, the Court in taking jurisdiction of this case will not pass upon
the advantages and disadvantages of trade liberalization as an economic policy. It will only perform its
constitutional duty of determining whether the Senate committed grave abuse of discretion.

Constitution Does Not Rule Out Foreign Competition

Furthermore, the constitutional policy of a self-reliant and independent national economy [35] does
not necessarily rule out the entry of foreign investments, goods and services. It contemplates neither
economic seclusion nor mendicancy in the international community. As explained by Constitutional
Commissioner Bernardo Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence on
external assistance for even its most basic needs. It does not mean autarky or economic seclusion; rather, it means
avoiding mendicancy in the international community. Independence refers to the freedom from undue foreign
control of the national economy, especially in such strategic industries as in the development of natural resources
and public utilities.[36]

The WTO reliance on most favored nation, national treatment, and trade without discrimination
cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to
all WTO members. Aside from envisioning a trade policy based on equality and reciprocity, [37] the
fundamental law encourages industries that are competitive in both domestic and foreign markets,
thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of
the gradual development of robust industries that can compete with the best in the foreign
markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to
compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in
Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under
a policy of laissez faire.

Constitution Favors Consumers, Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or enterprise,
nor does it contain any specific pronouncement that Filipino companies should be pampered with a total
proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims to
make available to the Filipino consumer the best goods and services obtainable anywhere in the world at
the most reasonable prices. Consequently, the question boils down to whether WTO/GATT will favor the
general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos general welfare because it will -- as promised by
its promoters -- expand the countrys exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and quality products at the most
reasonable rates to the Filipino public?
The responses to these questions involve judgment calls by our policy makers, for which they are
answerable to our people during appropriate electoral exercises. Such questions and the answers
thereto are not subject to judicial pronouncements based on grave abuse of discretion.

Constitution Designed to Meet Future Events and Contingencies

No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and
ratified in 1987. That does not mean however that the Charter is necessarily flawed in the sense that its
framers might not have anticipated the advent of a borderless world of business. By the same token, the
United Nations was not yet in existence when the 1935 Constitution became effective. Did that
necessarily mean that the then Constitution might not have contemplated a diminution of the
absoluteness of sovereignty when the Philippines signed the UN Charter, thereby effectively surrendering
part of its control over its foreign relations to the decisions of various UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of
contemporary events. They should be interpreted to cover even future and unknown circumstances. It is
to the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels but at the
same time bend with the refreshing winds of change necessitated by unfolding events. As one eminent
political law writer and respected jurist [38] explains:
The Constitution must be quintessential rather than superficial, the root and not the blossom, the base and
framework only of the edifice that is yet to rise. It is but the core of the dream that must take shape, not in a
twinkling by mandate of our delegates, but slowly in the crucible of Filipino minds and hearts, where it will in time
develop its sinews and gradually gather its strength and finally achieve its substance. In fine, the Constitution
cannot, like the goddess Athena, rise full-grown from the brow of the Constitutional Convention, nor can it conjure
by mere fiat an instant Utopia. It must grow with the society it seeks to re-structure and march apace with the
progress of the race, drawing from the vicissitudes of history the dynamism and vitality that will keep it, far from
becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the nation.

Third Issue: The WTO Agreement and Legislative Power

The WTO Agreement provides that (e)ach Member shall ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the annexed
Agreements.[39] Petitioners maintain that this undertaking unduly limits, restricts and impairs Philippine
sovereignty, specifically the legislative power which under Sec. 2, Article VI of the 1987 Philippine
Constitution is vested in the Congress of the Philippines. It is an assault on the sovereign powers of the
Philippines because this means that Congress could not pass legislation that will be good for our national
interest and general welfare if such legislation will not conform with the WTO Agreement, which not only
relates to the trade in goods x x x but also to the flow of investments and money x x x as well as to a
whole slew of agreements on socio-cultural matters x x x. [40]
More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is
lodged in the Congress.[41] And while the Constitution allows Congress to authorize the President to fix
tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts, such
authority is subject to specified limits and x x x such limitations and restrictions as Congress may
provide,[42] as in fact it did under Sec. 401 of the Tariff and Customs Code.

Sovereignty Limited by International Law and Treaties

This Court notes and appreciates the ferocity and passion by which petitioners stressed their
arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-
encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily agreed
to by the Philippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the
Constitution did not envision a hermit-type isolation of the country from the rest of the world. In its
Declaration of Principles and State Policies, the Constitution adopts the generally accepted principles of
international law as part of the law of the land, and adheres to the policy of peace, equality, justice,
freedom, cooperation and amity, with all nations." [43] By the doctrine of incorporation, the country is bound
by generally accepted principles of international law, which are considered to be automatically part of our
own laws.[44] One of the oldest and most fundamental rules in international law is pacta sunt servanda --
international agreements must be performed in good faith. A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on the parties x x x. A state which has contracted valid
international obligations is bound to make in its legislations such modifications as may be necessary to
ensure the fulfillment of the obligations undertaken.[45]
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects of their state power in exchange for greater benefits
granted by or derived from a convention or pact. After all, states, like individuals, live with coequals, and
in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise
of their otherwise absolute rights. Thus, treaties have been used to record agreements between States
concerning such widely diverse matters as, for example, the lease of naval bases, the sale or cession of
territory, the termination of war, the regulation of conduct of hostilities, the formation of alliances, the
regulation of commercial relations, the settling of claims, the laying down of rules governing conduct in
peace and the establishment of international organizations. [46] The sovereignty of a state therefore cannot
in fact and in reality be considered absolute. Certain restrictions enter into the picture: (1) limitations
imposed by the very nature of membership in the family of nations and (2) limitations imposed by treaty
stipulations. As aptly put by John F. Kennedy, Today, no nation can build its destiny alone. The age of
self-sufficient nationalism is over. The age of interdependence is here.[47]

UN Charter and Other Treaties Limit Sovereignty

Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented
to restrict its sovereign rights under the concept of sovereignty as auto-limitation. 47-AUnder Article 2 of
the UN Charter, (a)ll members shall give the United Nations every assistance in any action it takes in
accordance with the present Charter, and shall refrain from giving assistance to any state against which
the United Nations is taking preventive or enforcement action. Such assistance includes payment of its
corresponding share not merely in administrative expenses but also in expenditures for the peace-
keeping operations of the organization. In its advisory opinion of July 20, 1961, the International Court of
Justice held that money used by the United Nations Emergency Force in the Middle East and in the
Congo were expenses of the United Nations under Article 17, paragraph 2, of the UN Charter. Hence,
all its members must bear their corresponding share in such expenses. In this sense, the Philippine
Congress is restricted in its power to appropriate. It is compelled to appropriate funds whether it agrees
with such peace-keeping expenses or not. So too, under Article 105 of the said Charter, the UN and its
representatives enjoy diplomatic privileges and immunities, thereby limiting again the exercise of
sovereignty of members within their own territory. Another example: although sovereign equality and
domestic jurisdiction of all members are set forth as underlying principles in the UN Charter,
such provisos are however subject to enforcement measures decided by the Security Council for the
maintenance of international peace and security under Chapter VII of the Charter. A final example: under
Article 103, (i)n the event of a conflict between the obligations of the Members of the United Nations
under the present Charter and their obligations under any other international agreement, their obligation
under the present charter shall prevail, thus unquestionably denying the Philippines -- as a member -- the
sovereign power to make a choice as to which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international pacts -- both
bilateral and multilateral -- that involve limitations on Philippine sovereignty. These are enumerated by
the Solicitor General in his Compliance dated October 24, 1996, as follows:

(a) Bilateral convention with the United States regarding taxes on income, where the Philippines agreed,
among others, to exempt from tax, income received in the Philippines by, among others, the Federal
Reserve Bank of the United States, the Export/Import Bank of the United States, the Overseas Private
Investment Corporation of the United States. Likewise, in said convention, wages, salaries and similar
remunerations paid by the United States to its citizens for labor and personal services performed by them
as employees or officials of the United States are exempt from income tax by the Philippines.

(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of double taxation with
respect to taxes on income.

(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double taxation.

(d) Bilateral convention with the French Republic for the avoidance of double taxation.

(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt from all customs
duties, inspection fees and other duties or taxes aircrafts of South Korea and the regular equipment, spare
parts and supplies arriving with said aircrafts.
 (f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt from customs duties,
excise taxes, inspection fees and other similar duties, taxes or charges fuel, lubricating oils, spare parts,
regular equipment, stores on board Japanese aircrafts while on Philippine soil.

(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian air carriers the same
privileges as those granted to Japanese and Korean air carriers under separate air service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the Philippines exempted
Israeli nationals from the requirement of obtaining transit or visitor visas for a sojourn in the Philippines
not exceeding 59 days.

(I) Bilateral agreement with France exempting French nationals from the requirement of obtaining transit and
visitor visa for a sojourn not exceeding 59 days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that premises of Special
Missions in the Philippines are inviolable and its agents can not enter said premises without consent of the
Head of Mission concerned. Special Missions are also exempted from customs duties, taxes and related
charges.

(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines agreed to be governed
by the Vienna Convention on the Law of Treaties.

(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of the International Court
of Justice. The International Court of Justice has jurisdiction in all legal disputes concerning the
interpretation of a treaty, any question of international law, the existence of any fact which, if established,
would constitute a breach of international obligation.

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign
powers of taxation, eminent domain and police power. The underlying consideration in this partial
surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the same
privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity
characterizes the Philippine commitments under WTO-GATT.

International treaties, whether relating to nuclear disarmament, human rights, the environment, the law of the sea,
or trade, constrain domestic political sovereignty through the assumption of external obligations. But unless anarchy
in international relations is preferred as an alternative, in most cases we accept that the benefits of the reciprocal
obligations involved outweigh the costs associated with any loss of political sovereignty. (T)rade treaties that
structure relations by reference to durable, well-defined substantive norms and objective dispute resolution
procedures reduce the risks of larger countries exploiting raw economic power to bully smaller countries, by
subjecting power relations to some form of legal ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple fact that liberalization will provide access to a
larger set of potential new trading relationship than in case of the larger country gaining enhanced success to the
smaller countrys market.[48]

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without
violating the Constitution, based on the rationale that the Philippines adopts the generally accepted
principles of international law as part of the law of the land and adheres to the policy of x x x cooperation
and amity with all nations.

Fourth Issue: The WTO Agreement and Judicial Power

 Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) [49] intrudes on the power of
the Supreme Court to promulgate rules concerning pleading, practice and procedures. [50]
To understand the scope and meaning of Article 34, TRIPS, [51] it will be fruitful to restate its full text as
follows:

Article 34

Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in
paragraph 1(b) of Article 28, if the subject matter of a patent is a process for obtaining a product, the judicial
authorities shall have the authority to order the defendant to prove that the process to obtain an identical
product is different from the patented process. Therefore, Members shall provide, in at least one of the
following circumstances, that any identical product when produced without the consent of the patent owner
shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process:

(a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was made by the process and the owner of
the patent has been unable through reasonable efforts to determine the process actually used.

2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the
alleged infringer only if the condition referred to in subparagraph (a) is fulfilled or only if the condition
referred to in subparagraph (b) is fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their
manufacturing and business secrets shall be taken into account.

From the above, a WTO Member is required to provide a rule of disputable (note the words in the
absence of proof to the contrary) presumption that a product shown to be identical to one produced with
the use of a patented process shall be deemed to have been obtained by the (illegal) use of the said
patented process, (1) where such product obtained by the patented product is new, or (2) where there is
substantial likelihood that the identical product was made with the use of the said patented process but
the owner of the patent could not determine the exact process used in obtaining such identical
product. Hence, the burden of proof contemplated by Article 34 should actually be understood as the
duty of the alleged patent infringer to overthrow such presumption. Such burden, properly understood,
actually refers to the burden of evidence (burden of going forward) placed on the producer of the
identical (or fake) product to show that his product was produced without the use of the patented process.
The foregoing notwithstanding, the patent owner still has the burden of proof since, regardless of
the presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence of
the existence of the alleged identical product, the fact that it is identical to the genuine one produced by
the patented process and the fact of newness of the genuine product or the fact of substantial
likelihood that the identical product was made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as the present law
on the subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a similar
presumption in cases of infringement of patented design or utility model, thus:

SEC. 60. Infringement. - Infringement of a design patent or of a patent for utility model shall consist in
unauthorized copying of the patented design or utility model for the purpose of trade or industry in the article or
product and in the making, using or selling of the article or product copying the patented design or utility
model. Identity or substantial identity with the patented design or utility model shall constitute evidence of
copying. (underscoring supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption
applies only if (1) the product obtained by the patented process is NEW or (2) there is a substantial
likelihood that the identical product was made by the process and the process owner has not been able
through reasonable effort to determine the process used. Where either of these two provisos does not
obtain, members shall be free to determine the appropriate method of implementing the provisions of
TRIPS within their own internal systems and processes.
By and large, the arguments adduced in connection with our disposition of the third issue --
derogation of legislative power - will apply to this fourth issue also. Suffice it to say that the reciprocity
clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does not contain an
unreasonable burden, consistent as it is with due process and the concept of adversarial dispute
settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions on patents, trademarks
and copyrights, the adjustment in legislation and rules of procedure will not be substantial. [52]

Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained in
the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes -- but not in
the other documents referred to in the Final Act, namely the Ministerial Declaration and Decisions and the
Understanding on Commitments in Financial Services -- is defective and insufficient and thus constitutes
abuse of discretion. They submit that such concurrence in the WTO Agreement alone is flawed because
it is in effect a rejection of the Final Act, which in turn was the document signed by Secretary Navarro, in
representation of the Republic upon authority of the President. They contend that the second letter of the
President to the Senate[53] which enumerated what constitutes the Final Act should have been the subject
of concurrence of the Senate.
A final act, sometimes called protocol de clture, is an instrument which records the winding up of
the proceedings of a diplomatic conference and usually includes a reproduction of the texts of treaties,
conventions, recommendations and other acts agreed upon and signed by the plenipotentiaries attending
the conference.[54] It is not the treaty itself. It is rather a summary of the proceedings of a protracted
conference which may have taken place over several years. The text of the Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations is contained in just one page [55] in Vol. I
of the 36-volume Uruguay Round of Multilateral Trade Negotiations. By signing said Final Act, Secretary
Navarro as representative of the Republic of the Philippines undertook:

"(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent
authorities with a view to seeking approval of the Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions."

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required
from its signatories, namely, concurrence of the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They
were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that representatives of
the members can meet to give effect to those provisions of this Agreement which invoke joint action, and
generally with a view to facilitating the operation and furthering the objectives of this Agreement. [56]
 The Understanding on Commitments in Financial Services also approved in Marrakesh does not
apply to the Philippines. It applies only to those 27 Members which have indicated in their respective
schedules of commitments on standstill, elimination of monopoly, expansion of operation of existing
financial service suppliers, temporary entry of personnel, free transfer and processing of information, and
national treatment with respect to access to payment, clearing systems and refinancing available in the
normal course of business.[57]
On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed
included as its integral parts,[58] as follows:

Article II

Scope of the WTO

1. The WTO shall provide the common institutional framework for the conduct of trade relations among its
Members in matters to the agreements and associated legal instruments included in the Annexes to this
Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3 (hereinafter referred to as
Multilateral Agreements) are integral parts of this Agreement, binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4 (hereinafter referred to as Plurilateral
Trade Agreements) are also part of this Agreement for those Members that have accepted them, and are
binding on those Members. The Plurilateral Trade Agreements do not create either obligation or rights for
Members that have not accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A (hereinafter referred to as
GATT 1994) is legally distinct from the General Agreement on Tariffs and Trade, dated 30 October 1947,
annexed to the Final Act adopted at the conclusion of the Second Session of the Preparatory Committee of the
United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified
(hereinafter referred to as GATT 1947).

It should be added that the Senate was well-aware of what it was concurring in as shown by the
members deliberation on August 25, 1994. After reading the letter of President Ramos dated August 11,
1994,[59] the senators of the Republic minutely dissected what the Senate was concurring in, as follows: [60]

THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first day hearing of
this Committee yesterday. Was the observation made by Senator Taada that what was submitted to the Senate was
not the agreement on establishing the World Trade Organization by the final act of the Uruguay Round which is not
the same as the agreement establishing the World Trade Organization? And on that basis, Senator Tolentino raised a
point of order which, however, he agreed to withdraw upon understanding that his suggestion for an alternative
solution at that time was acceptable. That suggestion was to treat the proceedings of the Committee as being in the
nature of briefings for Senators until the question of the submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new... is he making a new submission which
improves on the clarity of the first submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no misunderstanding, it was his
intention to clarify all matters by giving this letter.

THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Taada and later on Senator Tolentino since they were the ones that raised
this question yesterday?
Senator Taada, please.

SEN. TAADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted to the Senate
for ratification is not the Final Act of the Uruguay Round, but rather the Agreement on the World Trade Organization
as well as the Ministerial Declarations and Decisions, and the Understanding and Commitments in Financial
Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And after him Senator
Neptali Gonzales and Senator Lina.

SEN TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted to us but I saw the draft
of his earlier, and I think it now complies with the provisions of the Constitution, and with the Final Act itself. The
Constitution does not require us to ratify the Final Act. It requires us to ratify the Agreement which is now being
submitted. The Final Act itself specifies what is going to be submitted to with the governments of the participants.

In paragraph 2 of the Final Act, we read and I quote:

By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO Agreement for
the consideration of the respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures.

In other words, it is not the Final Act that was agreed to be submitted to the governments for ratification or
acceptance as whatever their constitutional procedures may provide but it is the World Trade Organization
Agreement. And if that is the one that is being submitted now, I think it satisfies both the Constitution and the Final
Act itself.

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And they had been
adequately reflected in the journal of yesterdays session and I dont see any need for repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any comment on this?

SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales out of the abundance of
question. Then the new submission is, I believe, stating the obvious and therefore I have no further comment to
make.

Epilogue
 In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are
invoking this Courts constitutionally imposed duty to determine whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the Senate in giving its
concurrence therein via Senate Resolution No. 97. Procedurally, a writ of certiorarigrounded on grave
abuse of discretion may be issued by the Court under Rule 65 of the Rules of Court when it is amply
shown that petitioners have no other plain, speedy and adequate remedy in the ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. [61] Mere abuse of discretion is not enough. It must be graveabuse of
discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to
a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. [62] Failure on the part
of the petitioner to show grave abuse of discretion will result in the dismissal of the petition. [63]
In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one
of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a
constitutional body independent and coordinate, and thus its actions are presumed regular and done in
good faith. Unless convincing proof and persuasive arguments are presented to overthrow such
presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted definition
of grave abuse of discretion and the presumption of regularity in the Senates processes, this Court
cannot find any cogent reason to impute grave abuse of discretion to the Senates exercise of its power of
concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the Constitution. [64]
It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an
independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino
labor, products, domestic materials and locally produced goods. But it is equally true that such principles
-- while serving as judicial and legislative guides -- are not in themselves sources of causes of
action. Moreover, there are other equally fundamental constitutional principles relied upon by the Senate
which mandate the pursuit of a trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity and the promotion of industries which
are competitive in both domestic and foreign markets, thereby justifying its acceptance of said treaty. So
too, the alleged impairment of sovereignty in the exercise of legislative and judicial powers is balanced by
the adoption of the generally accepted principles of international law as part of the law of the land and the
adherence of the Constitution to the policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the
WTO Agreement thereby making it a part of the law of the land is a legitimate exercise of its sovereign
duty and power. We find no patent and gross arbitrariness or despotism by reason of passion or
personal hostility in such exercise. It is not impossible to surmise that this Court, or at least some of its
members, may even agree with petitioners that it is more advantageous to the national interest to strike
down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to
the Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own
judicial power and duty. Ineludably, what the Senate did was a valid exercise of its authority. As to
whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and
review. That is a matter between the elected policy makers and the people. As to whether the nation
should join the worldwide march toward trade liberalization and economic globalization is a matter that
our people should determine in electing their policy makers. After all, the WTO Agreement allows
withdrawal of membership, should this be the political desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance[65] where the East will become the dominant region of the world economically, politically and
culturally in the next century. He refers to the free market espoused by WTO as the catalyst in this
coming Asian ascendancy. There are at present about 31 countries including China, Russia and Saudi
Arabia negotiating for membership in the WTO. Notwithstanding objections against possible limitations
on national sovereignty, the WTO remains as the only viable structure for multilateral trading and the
veritable forum for the development of international trade law. The alternative to WTO is isolation,
stagnation, if not economic self-destruction. Duly enriched with original membership, keenly aware of
the advantages and disadvantages of globalization with its on-line experience, and endowed with a vision
of the future, the Philippines now straddles the crossroads of an international strategy for economic
prosperity and stability in the new millennium. Let the people, through their duly authorized elected
officers, make their free choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza,
Francisco, Hermosisima, Jr., and Torres, Jr., JJ., concur.
Padilla, and Vitug, JJ., in the result.

[1]
In Annex A of her Memorandum, dated August 8, 1996, received by this Court on August 12, 1996,
Philippine Ambassador to the United Nations, World Trade Organization and other international
organizations Lilia R. Bautista (hereafter referred to as Bautista Paper) submitted a 46-year
Chronology of GATT as follows:
1947 The birth of GATT. On 30 October 1947, the General Agreement on Tariffs and
Trade (GATT) was signed by 23 nations at the Palais des Nations in
Geneva. The Agreement contained tariff concessions agreed to in the first
multilateral trade negotiations and a set of rules designed to prevent these
concessions from being frustrated by restrictive trade measures.
The 23 founding contracting parties were members of the Preparatory Committee
established by the United Nations Economic and Social Council in 1946 to draft
the charter of the International Trade Organization (ITO). The ITO was
envisaged as the final leg of a triad of post-War economic agencies (the other
two were the International Monetary Fund and the International Bank for
Reconstruction - later the World Bank).
In parallel with this task, the Committee members decided to negotiate tariff concessions
among themselves. From April to October 1947, the participants completed
some 123 negotiations and established 20 schedules containing the tariff
reductions and bindings which became an integral part of GATT. These
schedules resulting from the first Round covered some 45,000 tariff concessions
and about $10 billion in trade.
GATT was conceived as an interim measure that put into effect the commercial-
policy provisions of the ITO. In November, delegations from 56 countries met in
Havana, Cuba, to consider the ITO draft as a whole. After long and difficult
negotiations, some 53 countries signed the Final Act authenticating the text of the
Havana Charter in March 1948. There was no commitment, however, from
governments to ratification and, in the end, the ITO was stillborn, leaving GATT
as the only international instrument governing the conduct of world trade.
1948 Entry into force. On 1 January 1948, GATT entered into force. The 23 founding
members were: Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China,
Cuba, Czechoslovakia, France, India, Lebanon, Luxemburg, Netherlands, New
Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, United
Kingdom and United States. The first Session of the contracting parties was held
from February to March in Havana, Cuba. The secretariat of the Interim
Commission for the ITO, which served as the ad hoc secretariat of GATT, move
from lake Placid, New York, to Geneva. The Contracting Parties held their
second session in Geneva from August to September.
1949 Second Round at Annecy. During the second Round of trade negotiations,
held from April to August at Annecy, France, the contracting parties exchange
some 5,000 tariff concession. At their third Session, they also dealt with the
accession of ten more countries.
1950 Third Round At Torquay. From September 1950 to April 1951, the contracting
parties exchange some 8,700 tariff concessions in the English town, yielding tariff
reduction of about 25 per cent in relation to the 1948 level. Four more countries
acceded to GATT. During the fifth Session of the Contracting Parties, the United
States indicated that the ITO Charter would not be re-submitted to the US
congress; this, in effect, meant that ITO would not come into operation.
1956 Fourth Round at Geneva. The fourth Round was completed in May and
produce some $2.5 billion worth of tariff reductions. At the beginning of the year,
the GATT commercial policy course for officials of developing countries was
inaugurated.
1958 The Haberler Report. GATT published Trends in International Trade in
October. Known as the "Haberler Report" in honour of Professor Gottfried
Haberler, the chairman of the panel of imminent economist, it provided initial
guidelines for the work of GATT. The Contracting Parties at their 13th Sessions,
attended by Ministers, subsequently established 3 committees in
GATT: Committee I to convene a further tariff negotiating conference; Committee
II To review the agricultural policies of member governments and Committee III to
tackle the problems facing developing countries in their trade. The establishment
of the European Economic Community during the previous year also demanded
large scale tariff negotiation under Article XXIV 6 of the General Agreement.
1960 The Dillon Round. The fifth Round opened in September and was divided into
two phases: the first was concerned with EEC members states for the creation of
a single schedule of concessions for the Community based on its Common
External Tariff; and the second was a further general round of tariff
negotiations. Named in honor of US Under-Secretary of State Douglas Dillon
who proposed the negotiations, the Round was concluded in July 1962 and
resulted in about 4,400 tariff concessions covering $4.9 billion of trade.
1961 The Short-Term Arrangement covering cotton textiles was agreed as an
exception to the GATT rules. The arrangement permitted the negotiation of
quota restrictions affecting the exports of cotton-producing countries. In 1962 the
"Short Term " Arrangement become the "Long term" Arrangement, lasting until
1974 when the Multifibre Arrangement entered into force.
1964 The Kennedy Round. Meeting at Ministerial Level, a Trade Negotiations
Committee formally opened the Kennedy Round in May. In June 1967, the
Round's Final Act was signed by some 50 participating countries which together
accounted for 75 per cent of world trade. For the first time, negotiation departed
from product-by-product approach used in the previous Rounds to an across-the-
board or linear method of cutting tariffs for industrial goods. The working
hypothesis of a 50 per cent target cut in tariff levels was achieved in many
areas. Concessions covered an estimated total value of trade of about $40
billion. Separate agreements were reached on grains, chemical products and a
Code on Anti-Dumping.
1965 A New Chapter. The early 1960s marked the accession to the General
Agreement of many newly-independent developing countries. In February, the
Contracting Parties, meeting in a special session, adopted the text of Part IV on
Trade and Development. The additional chapter to the GATT required developed
countries to accord high priority to the reduction of trade barriers to products of
 developing countries. A committee on Trade and Development was established
to oversee the functioning of the new GATT provisions. In the preceding year,
GATT had established the International Trade Center (ITC) to help developing
countries in trade promotion and identification of potential markets. Since 1968,
the ITC had been jointly operated by GATT and the UN Conference on Trade and
Development (UNCTAD).
1973 The Tokyo Round. The seventh Round was launched by Ministers in
September at the Japanese capital. Some 99 countries participated in
negotiating a comprehensive body of agreements covering both tariff and non-
tariff matters. At the end of the Round in November 1979, participants exchange
tariff reduction and bindings which covered more than $300 billion of trade. As a
result of these cuts, the weighted average tariff on manufactured goods in the
world's nine major Industrial Markets declined from 7.0 to 4.7 per
cent. Agreements were reached in the following areas; subsidies and
countervailing measures, technical barriers to trade, import licensing procedures,
government procurement, customs valuation, a revised anti-dumping code, trade
in bovine meat, trade in daily products and trade in civil aircraft. The first
concrete result of the Round was the reduction of import duties and other trade
barriers by industrial countries on tropical products exported by developing
countries.
1974 On 1 January 1974, the Arrangement Regarding International Trade in textiles,
otherwise known as the Multifibre Arrangement (MFA), entered into force. Its
superseded the arrangement that had been governing trade in cotton textiles
since 1961. The MFA seeks to promote the expansion and progressive
liberalization of trade in textile product while at the same time avoiding disruptive
effects in individual markets in lines of production. The MFA was extended in
1978, 1982, 1986, 1991 and 1992. MFA members account for most of the world
exports of textiles and clothing which in 1986 amounted to US$128 billion.
1982 Ministerial Meeting. Meeting for the first time in nearly ten years, the GATT
Ministers in November at Geneva reaffirmed the validity of GATT rules for the
conduct of international trade and committed themselves to combating
protectionist pressures. They also established a wide-ranging work programme
for the GATT which was to laid down the ground work for a new Round.
1986 The Uruguay Round.The GATT Trade Ministers meeting at Punta del
Este, Uruguay, launched the eighth Round of Trade Negotiations on 20
September. The Punta del Este, declarations, while representing a single
political undertaking, was divided into two section. The First covered
negotiations on Trade in goods and the second initiated negotiation on trade in
services. In the area of trade in goods, the Ministers committed themselves to
a "standstill" on new trade measures inconsistent with their GATT obligations
and to a "rollback" programme aimed at phasing out existing inconsistent
measures. Envisaged to last four years, negotiations started in early February
1987 in the following areas: tariffs, non-tariff measures, tropical products, natural
resource-based products, textiles and clothing, agriculture, subsidies,
safeguards, trade-related aspects of intellectual property rights including trade in
counterfeit goods, in trade- related investment measures. The work of other
groups included a review of GATT articles, the GATT dispute-settlement
procedure, the Tokyo Round agreements, as well as functioning of the GATT
system as a whole.
1994 "GATT 1994" is the updated version of GATT 1947 and takes into account the
substantive and institutional changes negotiated in the Uruguay Round. GATT 1994 is an
integral part of the World Trade Organization established on 1 January 1995. It is agreed
 that there be a one year transition period during which certain GATT 1947 bodies and
commitments would co-exist with those of the World Trade Organization."
[2]
The Final Act was signed by representatives of 125 entities, namely Algeria, Angola, Antigua and
Barbuda, Argentine Republic, Australia, Republic of Austria, State of Bahrain, Peoples Republic
of Bangladesh, Barbados, The Kingdom of Belgium, Belize, Republic of Benin, Bolivia, Botswana,
Brazil, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Canada, Central African Republic,
Chad, Chile, Peoples Republic of China, Colombia, Congo, Costa Rica, Republic of Cote
dIvoire, Cuba, Cyprus, Czech Republic, Kingdom of Denmark, Commonwealth of Dominica,
Dominican Republic, Arab Republic of Egypt, El Salvador, European Communities, Republic of
Fiji, Finland, French Republic, Gabonese Republic, Gambia, Federal Republic of Germany,
Ghana, Hellenic Republic, Grenada, Guatemala, Republic of Guinea-Bissau, Republic of Guyana,
Haiti, Honduras, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, State of Israel, Italian
Republic, Jamaica, Japan, Kenya, Korea, State of Kuwait, Kingdom of Lesotho, Principality of
Liechtenstein, Grand Duchy of Luxembourg, Macau, Republic of Madagascar, Republic of
Malawi, Malaysia, Republic of Maldives, Republic of Mali, Republic of Malta, Islamic Republic of
Mauritania, Republic of Mauritius, United Mexican States, Kingdom of Morocco, Republic of
Mozambique, Union of Myanmar, Republic of Namibia, Kingdom of the Netherlands, New
Zealand, Nicaragua, Republic of Niger, Federal Republic of Nigeria, Kingdom of Norway, Islamic
Republic of Pakistan, Paraguay, Peru, Philippines, Poland, Portuguese Republic, State of Qatar,
Romania, Rwandese Republic, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the
Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, South Africa, Kingdom of Spain,
Democratic Socialist Republic of Sri Lanka, Republic of Surinam, Kingdom of Swaziland,
Kingdom of Sweden, Swiss Confederation, United Republic of Tanzania, Kingdom of Thailand,
Togolese Republic, Republic of Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab
Emirates, United Kingdom of Great Britain and Northern Ireland, United States of America,
Eastern Republic of Uruguay, Venezuela, Republic of Zaire, Republic of Zambia, Republic of
Zimbabwe; see pp. 6-25, Vol. 1, Uruguay Round of Multilateral Trade Negotiations.
[3]
11 August 1994
The Honorable Members
Senate
Through Senate President Edgardo Angara
Manila
Ladies and Gentlemen:
I have the honor to forward herewith an authenticated copy of the Uruguay Round Final Act signed by
Department of Trade and Industry Secretary Rizalino S. Navarro for the Philippines on 15 April
1994 in Marrakesh, Morocco.
The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the
interrelationship between trade and economic policies affecting growth and development.
The Final Act will improve Philippine access to foreign markets, especially its major trading partners
through the reduction of tariffs on its exports particularly agricultural and industrial
products. These concessions may be availed of by the Philippines, only if it is a member of the
World Trade Organization. By GATT estimates, the Philippines can acquire additional export
revenues from $2.2 to $2.7 Billion annually under Uruguay Round. This will be on top of the
normal increase in exports that the Philippines may experience.
The Final Act will also open up new opportunities for the services sector in such areas as the movement
of personnel, (e.g. professional services and construction services), cross-border supply (e.g.
computer-related services), consumption abroad (e.g. tourism, convention services, etc.) and
commercial presence.
The clarified and improved rules and disciplines on anti-dumping and countervailing measures will also
benefit Philippine exporters by reducing the costs and uncertainty associated with exporting while
at the same time providing a means for domestic industries to safeguard themselves against
unfair imports.
Likewise, the provision of adequate protection for intellectual property rights is expected to attract more
investments into the country and to make it less vulnerable to unilateral actions by its trading
partners (e.g. Sec. 301 of the United States Omnibus Trade Law).
In view of the foregoing, the Uruguay Round Final Act is hereby submitted to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution.
A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is enclosed.
Very truly yours,
(SGD.) FIDEL V. RAMOS
[4]
11 August 1994
The Honorable Members
Senate
Through Senate President Edgardo Angara
Manila
Ladies and Gentlemen:
I have the honor to forward herewith an authenticated copy of the Uruguay Round Final
Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro for the Philippines
on 13 April 1994 in Marrakech (sic), Morocco.
Members of the trade negotiations committee, which included the Philippines, agreed that
the Agreement Establishing the World Trade Organization, the Ministerial Declarations and
Decisions, and the Understanding on Commitments in Financial Services embody the results of
their negotiations and form an integral part of the Uruguay Round Final Act.
By signing the Uruguay Round Final Act, the Philippines, through Secretary Navarro,
agreed:
(a) To submit the Agreement Establishing the World Trade Organization to the Senate for its concurrence
pursuant to Section 21, Article VII of the Constitution; and
(b) To adopt the Ministerial Declarations and Decisions.
The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the
interrelationship between trade and economic policies affecting growth and development.
The Final Act will improve Philippine access to foreign markets, especially its major
trading partners through the reduction of tariffs on its exports particularly agricultural and
industrial products. These concessions may be availed of by the Philippines, only if it is a
member of the World Trade Organization. By GATT estimates, the Philippines can acquire
additional export revenues from $2.2 to $2.7 Billion annually under Uruguay Round. This will be
on top of the normal increase in the exports that the Philippines may experience.
The Final Act will also open up new opportunities for the services sector in such areas as
the movement of personnel, (e.g., professional services and construction services), cross-border
supply (e.g., computer-related services), consumption abroad (e.g., tourism, convention services,
etc.) and commercial presence.
 The clarified and improved rules and disciplines on anti-dumping and countervailing
measures will also benefit Philippine exporters by reducing the costs and uncertainty associated
with exporting while at the same time providing a means for domestic industries to safeguard
themselves against unfair imports.
Likewise, the provision of adequate protection for intellectual property rights is expected
to attract more investments into the country and to make it a less vulnerable to unilateral actions
by its trading partners (e.g., Sec. 301 of the United States Omnibus Trade Law).
In view of the foregoing, the Uruguay Round Final Act, the Agreement Establishing the
World Trade Organization, the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services, as embodied in the Uruguay Round Final Act and forming
and integral part thereof are hereby submitted to the Senate for its concurrence pursuant to
Section 21, Article VII of the Constitution.
A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is
enclosed.
Very truly yours,
(SGD.) FIDEL V. RAMOS
[5]
December 9, 1994
HON. EDGARDO J. ANGARA
Senate President
Senate, Manila
Dear Senate President Angara:
Pursuant to the provisions of Sec. 26 (2) Article VI of the Constitution, I hereby certify to
the necessity of the immediate adoption of P.S. 1083, entitled:
CONCURRING IN THE RATIFICATION OF THE AGREEMENT ESTABLISHING THE WORLD TRADE
ORGANIZATION
to meet a public emergency consisting of the need for immediate membership in the WTO in
order to assure the benefits to the Philippine economy arising from such membership.
Very truly yours,
(SGD.) FIDEL V. RAMOS
[6]
Attached as Annex A, Petition; rollo, p. 52. P.S. 1083 is the forerunner of assailed Senate Resolution
No. 97. It was prepared by the Committee of the Whole on the General Agreement on Tariffs and
Trade chaired by Sen. Blas F. Ople and co-chaired by Sen. Gloria Macapagal-Arroyo; see Annex
C, Compliance of petitioners dated January 28, 1997.
[7]
The Philippines is thus considered an original or founding member of WTO, which as of July 26, 1996
had 123 members as follows: Antigua and Barbuda, Argentina, Australia, Austria, Bahrain,
Bangladesh, Barbados, Belgium, Belize, Benin, Bolivia, Botswana, Brazil, Brunei Darussalam,
Burkina Faso, Burundi, Cameroon, Canada, Central African Republic, Chili, Colombia, Costa
Rica, Cote dIvoire, Cuba, Cyprus, Czech Republic, Denmark, Djibouti, Dominica, Dominican
Republic, Ecuador, Egypt, El Salvador, European Community, Fiji, Finland, France, Gabon,
Germany, Ghana, Greece, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, Haiti,
Honduras, Hongkong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan,
Kenya, Korea, Kuwait, Lesotho, Liechtenstein, Luxembourg, Macau, Madagascar, Malawi,
Malaysia, Maldives, Mali, Malta, Mauritania, Mauritius, Mexico, Morocco, Mozambique, Myanmar,
Namibia, Netherlands -- for the Kingdom in Europe and for the Netherlands Antilles, New
Zealand, Nicaragua, Nigeria, Norway, Pakistan, Papua New Guinea, Paraguay, Peru, Philippines,
 Poland, Portugal, Qatar, Romania, Rwanda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent &
the Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, Slovenia, Solomon Islands,
South Africa, Spain, Sri Lanka, Surinam, Swaziland, Sweden, Switzerland, Tanzania, Thailand,
Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates, United Kingdom,
United States, Uruguay, Venezuela, Zambia, and Zimbabwe. See Annex A, Bautista Paper, infra.
[8]
Page 6; rollo, p. 261.
[9]
In compliance, Ambassador Bautista submitted to the Court on August 12, 1996, a Memorandum (the
Bautista Paper) consisting of 56 pages excluding annexes. This is the same document
mentioned in footnote no. 1.
[10]
Memorandum for Respondents, p. 13; rollo, p. 268.
[11]
Cf. Kilosbayan, Incorporated vs. Morato, 246 SCRA 540, July 17, 1995 for a discussion on locus
standi. See also the Concurring Opinion of Mr. Justice Vicente V. Mendoza in Tatad vs. Garcia,
Jr., 243 SCRA 473, April 6, 1995, as well as Kilusang Mayo Uno Labor Center vs. Garcia, Jr., 239
SCRA 386, 414, December 23, 1994.
[12]
Aquino, Jr. vs. Ponce Enrile, 59 SCRA 183, 196, September 17, 1974, cited in Bondoc vs. Pineda, 201
SCRA 792, 795, September 26, 1991.
[13]
Guingona, Jr. vs. Gonzales, 219 SCRA 326, 337, March 1, 1993.
[14]
See Tanada and Macapagal vs. Cuenco, et al., 103 Phil. 1051 for a discussion on the scope of
political question.
[15]
Section 1, Article VIII, (par. 2).
[16]
In a privilege speech on May 17, 1993, entitled Supreme Court -- Potential Tyrant? Senator Arturo
Tolentino concedes that this new provision gives the Supreme Court a duty to intrude into the
jurisdiction of the Congress or the President.
[17]
I Record of the Constitutional Commission 436.
[18]
Cf. Daza vs. Singson, 180 SCRA 496, December 21, 1989.
[19]
Memorandum for Petitioners, pp. 14-16; rollo, pp. 204-206.
[20]
Par. 4, Article XVI, WTO Agreement, Uruguay Round of Multilateral Trade Negotiations, Vol. 1, p. 146.
[21]
Also entitled Declaration of Principles. The nomenclature in the 1973 Charter is identical with that in
the 1987s.
[22]
Philippine Political Law, 1962 Ed., p. 116.
[23]
Bernas, The Constitution of the Philippines: A Commentary, Vol. II, 1988 Ed., p. 2. In the very recent
case of Manila Prince Hotel vs. GSIS, G.R. No. 122156, February 3, 1997, p. 8, it was held that
A provision which lays down a general principle, such as those found in Art. II of the 1987
Constitution, is usually not self-executing.
[24]
246 SCRA 540, 564, July 17, 1995. See also Tolentino vs. Secretary of Finance, G.R. No. 115455
and consolidated cases, August 25, 1995.
[25]
197 SCRA 52, 68, May 14, 1991.
[26]
224 SCRA 792, 817, July 30, 1993.
[27]
Sec. 10, Article XII.
[28]
Sec. 12, Article XII.
[29]
Sec. 19, Art. II.
[30]
Sec. 13, Art. XII.
[31]
G.R. No. 122156, February 3, 1997, pp. 13-14.
[32]
Sec. 1, Art. XII.
[33]
Bautista Paper, p. 19.
[34]
Preamble, WTO Agreement p. 137, Vol. 1, Uruguay Round of Multilateral Trade
Negotiations. Underscoring supplied.
[35]
Sec. - 19, Article II, Constitution.
[36]
III Records of the Constitutional Commission 252.
[37]
Sec. 13, Article XII, Constitution.
[38]
Justice Isagani A. Cruz, Philippine Political Law, 1995 Ed., p. 13, quoting his own article entitled, A
Quintessential Constitution earlier published in the San Beda Law Journal, April 1972;
underscoring supplied.
[39]
Par. 4, Article XVI (Miscellaneous Provisions), WTO Agreement, p.146, Vol. 1, Uruguay Round of
Multilateral Trade Negotiations.
[40]
Memorandum for the Petitioners, p. 29; rollo, p. 219.
[41]
Sec. 24, Article VI, Constitution.
[42]
Subsection (2), Sec. 28, Article, VI Constitution.
[43]
Sec. 2, Article II, Constitution.
[44]
Cruz, Philippine Political Law, 1995 Ed., p. 55.
[45]
Salonga and Yap, op cit 305.
[46]
Salonga, op. cit., p. 287.
[47]
Quoted in Paras and Paras, Jr., International Law and World Politics, 1994 Ed., p. 178.
47-A
Reagan vs. Commission of Internal Revenue, 30 SCRA 968, 973, December 27, 1969.
[48]
Trebilcock and Howse. The Regulation of International Trade, p. 14, London, 1995, cited on p. 55-56,
Bautista Paper.
[49]
Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.
[50]
Item 5, Sec. 5, Article VIII, Constitution.
[51]
Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.
[52]
Bautista Paper, p. 13.
[53]
See footnote 3 of the text of this letter.
[54]
Salonga and Yap, op cit., pp. 289-290.
[55]
The full text, without the signatures, of the Final Act is as follows:
Final Act Embodying the Results of the
Uruguay Round of Multilateral Trade Negotiations
1. Having met in order to conclude the Uruguay Round of Multilateral Trade Negotiations, representatives
of the governments and of the European Communities, members of the Trade Negotiations
Committee, agree that the Agreement Establishing the World Trade Organization (referred to in
the Final Act as the WTO Agreement), the Ministerial Declarations and Decisions, and the
 Understanding on Commitments in Financial Services, as annexed hereto, embody the results of
their negotiations and form an integral part of this Final Act.
2. By signing to the present Final Act, the representatives agree.
(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent
authorities with a view to seeking approval of the Agreement in accordance with their procedures;
and
(b) to adopt the Ministerial Declarations and Decisions.
3. The representatives agree on the desirability of acceptance of the WTO Agreement by all participants
in the Uruguay Round of Multilateral Trade Negotiations (hereinafter referred to as participants)
with a view to its entry into force by 1 January 1995, or as early as possible thereafter. Not later
than late 1994, Ministers will meet, in accordance with the final paragraph of the Punta del Este
Ministerial Declarations, to decide on the international implementation of the results, including the
timing of their entry into force.
4. The representatives agree that the WTO Agreement shall be opened for acceptance as a whole, by
signature or otherwise, by all participants pursuant to Article XIV thereof. The acceptance and
entry into force of a Plurilateral Trade Agreement included in Annex 4 of the WTO Agreement
shall be governed by the provisions of that Plurilateral Trade Agreement.
5. Before accepting the WTO Agreement, participants which are not contracting parties to the General
Agreement on Tariffs and Trade must first have concluded negotiations for their accession to the
General Agreement and become contracting parties thereto. For participants which are not
contracting parties to the general Agreement as of the date of the Final Act, the Schedules are not
definitive and shall be subsequently completed for the purpose of their accession to the General
Agreement and acceptance of the WTO Agreement.
6. This Final Act and the Texts annexed hereto shall be deposited with the Director-General to the
CONTRACTING PARTIES to the General Agreement on Tariffs and Trade who shall promptly
furnish to each participant a certified copy thereof.
DONE at Marrakesh this fifteenth day of April One thousand nine hundred and ninety-four, in a single
copy, in the English, French and Spanish languages, each text being authentic."
[56]
Bautista Paper, p. 16.
[57]
Bautista Paper, p. 16.
[58]
Uruguay Round of Multilateral Trade Negotiations, Vol. I, pp. 137-138.
[59]
See footnote 3 for complete text.
[60]
Taken from pp. 63-85, Respondent Memorandum.
[61]
Zarate vs. Olegario, G.R. No. 90655, October 7, 1996.
[62]
San Sebastian College vs. Court of Appeals, 197 SCRA 138, 144, May 15, 1991; Commissioner of
Internal Revenue vs. Court of Tax Appeals, 195 SCRA 444, 458 March 20, 1991; Simon vs. Civil
Service Commission, 215 SCRA 410, November 5, 1992; Bustamante vs. Commissioner on
Audit, 216 SCRA 134, 136, November 27, 1992.
[63]
Paredes vs. Civil Service Commission, 192 SCRA 84, 94, December 4, 1990.
[64]
Sec. 21. 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.
[65]
Readers Digest, December 1996 issue, p. 28.

I. THE FACTS

Petitioners Senators Taada, et al. questioned the constitutionality of the concurrence by the
Philippine Senate of the Presidents ratification of the international Agreement establishing the World
Trade Organization (WTO). They argued that the WTO Agreement violates the mandate of the 1987
Constitution to develop a self-reliant and independent national economy effectively controlled by Filipinos
. . . (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino labor,
domestic materials and locally produced goods. Further, they contended that the national treatment and
parity provisions of the WTO Agreement place nationals and products of member countries on the
same footing as Filipinos and local products, in contravention of the Filipino First policy of our
Constitution, and render meaningless the phrase effectively controlled by Filipinos.

II. THE ISSUE

Does the 1987 Constitution prohibit our country from participating in worldwide trade liberalization
and economic globalization and from integrating into a global economy that is liberalized, deregulated and
privatized?

III. THE RULING

[The Court DISMISSED the petition. It sustained the concurrence of the Philippine Senate of the
Presidents ratification of the Agreement establishing the WTO.]

NO, the 1987 Constitution DOES NOT prohibit our country from participating in worldwide
trade liberalization and economic globalization and from integrating into a global economy that is
liberalized, deregulated and privatized.

There are enough balancing provisions in the Constitution to allow the Senate to ratify the
Philippine concurrence in the WTO Agreement.

[W]hile the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on
the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign
competition and trade practices that are unfair. In other words, the Constitution did not intend to pursue an
isolationist policy. It did not shut out foreign investments, goods and services in the development of the
Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods,
services and investments into the country, it does not prohibit them either.In fact, it allows an exchange on
the basis of equality and reciprocity, frowning only on foreign competition that is unfair.

xxx xxx xxx

[T]he constitutional policy of a self-reliant and independent national economy does not
necessarily rule out the entry of foreign investments, goods and services. It contemplates neither
economic seclusion nor mendicancy in the international community. As explained by Constitutional
Commissioner Bernardo Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly aware of
overdependence on external assistance for even its most basic needs. It does not mean autarky or
economic seclusion; rather, it means avoiding mendicancy in the international community. Independence
refers to the freedom from undue foreign control of the national economy, especially in such strategic
industries as in the development of natural resources and public utilities.

The WTO reliance on most favored nation, national treatment, and trade without
discrimination cannot be struck down as unconstitutional as in fact they are rules of equality and
reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on equality and
reciprocity, the fundamental law encourages industries that are competitive in both domestic and foreign
markets, thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in
favor of the gradual development of robust industries that can compete with the best in the foreign
markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to
compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in
Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under
a policy of laissez faire.

xxx xxx xxx

It is true, as alleged by petitioners, that broad constitutional principles require the State to develop
an independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino
labor, products, domestic materials and locally produced goods. But it is equally true that such principles
while serving as judicial and legislative guides are not in themselves sources of causes of action.
Moreover, there are other equally fundamental constitutional principles relied upon by the Senate which
mandate the pursuit of a trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity and the promotion of industries which
are competitive in both domestic and foreign markets, thereby justifying its acceptance of said treaty. So
too, the alleged impairment of sovereignty in the exercise of legislative and judicial powers is balanced by
the adoption of the generally accepted principles of international law as part of the law of the land and the
adherence of the Constitution to the policy of cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to
the WTO Agreement thereby making it a part of the law of the land is a legitimate exercise of its
sovereign duty and power. We find no patent and gross arbitrariness or despotism by reason of passion
or personal hostility in such exercise. It is not impossible to surmise that this Court, or at least some of its
members, may even agree with petitioners that it is more advantageous to the national interest to strike
down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to the
Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own
judicial power and duty. Ineludibly, what the Senate did was a valid exercise of its authority. As to whether
such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a
matter between the elected policy makers and the people. As to whether the nation should join the
worldwide march toward trade liberalization and economic globalization is a matter that our people should
determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of membership,
should this be the political desire of a member.

SHORTER VERSION OF ISSUE AND HELD!!!

ISSUE

Whether the provisions of the WTO Agreement and its annexes limit, restrict, or impair the exercise of
legislative power by Congress.

HELD

While sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it
is however subject to limitations and restrictions voluntarily agreed to by the Philippines as a member of
the family of nations. One of the oldest and most fundamental rules in international law is pacta sunt
servanda international agreements must be performed in good faith. A treaty engagement is not a
mere moral obligation but creates a legally binding obligation on the parties xxx. A state which has
contracted valid international obligations is bound to make in its legislation such modifications as may be
necessary to ensure the fulfillment of the obligations undertaken.

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary
act, nations may surrender some aspects of their state power in exchange for greater benefits granted by
or derived from a convention or pact. After all, states, like individuals live with coequals, and in pursuit of
mutuality covenanted objectives and benefits, they also commonly agree to limit the exercise of their
otherwise absolute rights.

The sovereignty of a state therefore cannot in fact and in reality be considered absolute. Certain
restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the family of
nations and (2) limitations imposed by treaty stipulations.