G.R. No.
L-2662 March 26, 1949 personality as an independent state and their appointment as prosecutor are a
SHIGENORI KURODA, petitioner,
vs.
Major General RAFAEL JALANDONI, Brigadier General CALIXTO DUQUE,
Colonel MARGARITO TORALBA, Colonel IRENEO BUENCONSEJO, Colonel
PEDRO TABUENA, Major FEDERICO ARANAS, MELVILLE S. HUSSEY and
ROBERT PORT, respondents.
Pedro Serran, Jose G. Lukban, and Liberato B. Cinco for petitioner.
Fred Ruiz Castro Federico Arenas Mariano Yengco, Jr., Ricardo A. Arcilla and S.
Melville Hussey for respondents.
MORAN, C.J.:
Shigenori Kuroda, formerly a Lieutenant-General of the Japanese Imperial Army
and Commanding General of the Japanese Imperial Forces in The Philippines
during a period covering 19433 and 19444 who is now charged before a
military Commission convened by the Chief of Staff of the Armed forces of the
Philippines with having unlawfully disregarded and failed "to discharge his
duties as such command, permitting them to commit brutal atrocities and other
high crimes against noncombatant civilians and prisoners of the Imperial
Japanese Forces in violation of the laws and customs of war" — comes before
this Court seeking to establish the illegality of Executive Order No. 68 of the
President of the Philippines: to enjoin and prohibit respondents Melville S.
Hussey and Robert Port from participating in the prosecution of petitioner's
case before the Military Commission and to permanently prohibit respondents
from proceeding with the case of petitioners.
In support of his case petitioner tenders the following principal arguments.
First. — "That Executive Order No. 68 is illegal on the ground that it violates not
only the provision of our constitutional law but also our local laws to say
nothing of the fact (that) the Philippines is not a signatory nor an adherent to
the Hague Convention on Rules and Regulations covering Land Warfare and
therefore petitioners is charged of 'crimes' not based on law, national and
international." Hence petitioner argues — "That in view off the fact that this
commission has been empanelled by virtue of an unconstitutional law an illegal
order this commission is without jurisdiction to try herein petitioner."
Second. — That the participation in the prosecution of the case against
petitioner before the Commission in behalf of the United State of America of
attorneys Melville Hussey and Robert Port who are not attorneys authorized by
the Supreme Court to practice law in the Philippines is a diminution of our
violation of our Constitution for the reason that they are not qualified to
practice law in the Philippines.
Third. — That Attorneys Hussey and Port have no personality as prosecution
the United State not being a party in interest in the case.
Executive Order No. 68, establishing a National War Crimes Office prescribing
rule and regulation governing the trial of accused war criminals, was issued by
the President of the Philippines on the 29th days of July, 1947 This Court holds
that this order is valid and constitutional. Article 2 of our Constitution provides
in its section 3, that —
The Philippines renounces war as an instrument of national policy and
adopts the generally accepted principles of international law as part of
the of the nation.
In accordance with the generally accepted principle of international law of the
present day including the Hague Convention the Geneva Convention and
significant precedents of international jurisprudence established by the United
Nation all those person military or civilian who have been guilty of planning
preparing or waging a war of aggression and of the commission of crimes and
offenses consequential and incidental thereto in violation of the laws and
customs of war, of humanity and civilization are held accountable therefor.
Consequently in the promulgation and enforcement of Execution Order No. 68
the President of the Philippines has acted in conformity with the generally
accepted and policies of international law which are part of the our
Constitution.
The promulgation of said executive order is an exercise by the President of his
power as Commander in chief of all our armed forces as upheld by this Court in
the case of Yamashita vs. Styer (L-129, 42 Off. Gaz., 664) 1 when we said —
War is not ended simply because hostilities have ceased. After cessation
of armed hostilities incident of war may remain pending which should
be disposed of as in time of war. An importance incident to a conduct of
war is the adoption of measure by the military command not only to
repel and defeat the enemies but to seize and subject to disciplinary
measure those enemies who in their attempt to thwart or impede our
military effort have violated the law of war. (Ex parte Quirin 317 U.S., 1;
63 Sup. Ct., 2.) Indeed the power to create a military commission for the
trial and punishment of war criminals is an aspect of waging war. And
in the language of a writer a military commission has jurisdiction so
long as a technical state of war continues. This includes the period of an
 armistice or military occupation up to the effective of a treaty of peace
and may extend beyond by treaty agreement. (Cowles Trial of
War Criminals by Military Tribunals, America Bar Association Journal
June, 1944.)
Consequently, the President as Commander in Chief is fully empowered to
consummate this unfinished aspect of war namely the trial and punishment of
war criminal through the issuance and enforcement of Executive Order No. 68.
Petitioner argues that respondent Military Commission has no Jurisdiction to
try petitioner for acts committed in violation of the Hague Convention and the
Geneva Convention because the Philippines is not a signatory to the first and
signed the second only in 1947. It cannot be denied that the rules and regulation
of the Hague and Geneva conventions form, part of and are wholly based on the
generally accepted principals of international law. In facts these rules and
principles were accepted by the two belligerent nation the United State and
Japan who were signatories to the two Convention, Such rule and principles
therefore form part of the law of our nation even if the Philippines was not a
signatory to the conventions embodying them for our Constitution has been
deliberately general and extensive in its scope and is not confined to the
recognition of rule and principle of international law as continued inn treaties
to which our government may have been or shall be a signatory.
Furthermore when the crimes charged against petitioner were allegedly
committed the Philippines was under the sovereignty of United States and thus
we were equally bound together with the United States and with Japan to the
right and obligation contained in the treaties between the belligerent countries.
These rights and obligation were not erased by our assumption of full
sovereignty. If at all our emergency as a free state entitles us to enforce the right
on our own of trying and punishing those who committed crimes against crimes
against our people. In this connection it is well to remember what we have said
in the case of Laurel vs. Misa (76 Phil., 372):
. . . The change of our form government from Commonwealth to
Republic does not affect the prosecution of those charged with the
crime of treason committed during then Commonwealth because it is
an offense against the same sovereign people. . . .
By the same token war crimes committed against our people and our
government while we were a Commonwealth are triable and punishable by our
present Republic.
Petitioner challenges the participation of two American attorneys namely
Melville S. Hussey and Robert Port in the prosecution of his case on the ground
that said attorney's are not qualified to practice law in Philippines in accordance
with our Rules of court and the appointment of said attorneys as prosecutors is
violative of our national sovereignty.
In the first place respondent Military Commission is a special military tribunal
governed by a special law and not by the Rules of court which govern ordinary
civil court. It has already been shown that Executive Order No. 68 which
provides for the organization of such military commission is a valid and
constitutional law. There is nothing in said executive order which requires that
counsel appearing before said commission must be attorneys qualified to
practice law in the Philippines in accordance with the Rules of Court. In facts it
is common in military tribunals that counsel for the parties are usually military
personnel who are neither attorneys nor even possessed of legal training.
Secondly the appointment of the two American attorneys is not violative of our
nation sovereignty. It is only fair and proper that United States, which has
submitted the vindication of crimes against her government and her people to a
tribunal of our nation should be allowed representation in the trial of those very
crimes. If there has been any relinquishment of sovereignty it has not been by
our government but by the United State Government which has yielded to us the
trial and punishment of her enemies. The least that we could do in the spirit of
comity is to allow them representation in said trials.
Alleging that the United State is not a party in interest in the case petitioner
challenges the personality of attorneys Hussey and Port as prosecutors. It is of
common knowledge that the United State and its people have been equally if not
more greatly aggrieved by the crimes with which petitioner stands charged
before the Military Commission. It can be considered a privilege for our
Republic that a leader nation should submit the vindication of the honor of its
citizens and its government to a military tribunal of our country.
The Military Commission having been convened by virtue of a valid law with
jurisdiction over the crimes charged which fall under the provisions of
Executive Order No. 68, and having said petitioner in its custody, this Court will
not interfere with the due process of such Military commission.
For all the foregoing the petition is denied with costs de oficio.
Paras, Feria, Pablo, Bengzon, Tuason, Montemayor and Reyes, JJ., concur.
G.R. No. L-51 November 16, 1945 invasion as a result of which the invader has rendered the invaded government
incapable of publicly exercising its authority, and that the invader is in position
CO KIM CHAM (alias CO CHAM), petitioner, to substitute and has substituted his own authority for that of the legitimate
vs. government of the territory invaded." (International Law Chiefly as Interpreted
EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance and Applied by the United States, by Hyde Vol. II, pp. 361, 362.) " Belligerent
of Manila, respondents. occupation must be both actual and effective. Organized resistance must be
overcome and the forces in possession must have taken measures to establish
Marcelino Lontok for petitioner. law and order. It doubtless suffices if the occupying army can, within a
Revilla and Palma for respondent Valdez Tan Keh. reasonable time, send detachments of troops to make its authority felt within
Respondent Judge Dizon in his own behalf. the occupied district." (Id., p. 364.) "Occupation once acquired must be
Vicente Hilado and J. A. Wolfson as amici curiae. maintained . . . . It does not cease, however, . . . Nor does the existence of a
rebellion or the operations of guerrilla bands cause it to cease, unless the
legitimate government is re-established and the occupant fails promptly to
RESOLUTION suppress such rebellion or guerrilla operations." (Id., p. 365.)

FERIA, J.:
This is a motion for reconsideration of our decision rendered in this case filed
by the respondent. Two attorneys at law, who were allowed to appear as amici
curiae, have also presented memoranda to discuss certain points on which the
dissenting opinions rely.
(1) It is contended that the military occupation of the Philippine Islands by the
Japanese was not actual and effective because of the existence of guerrilla bands
in barrios and mountains and even towns and villages; and consequently, no
government de facto could have been validly established by the Japanese
military forces in the Philippines under the precepts of the Hague Conventions
and the law of nations.
The presence of guerrilla bands in barrios and mountains, and even in towns of
the Philippines whenever these towns were left by Japanese garrisons or by the
detachments of troops sent on patrol to these places, was not sufficient to make
the military occupation ineffective, nor did it cause that occupation to cease, or
prevent the constitution or establishment of a de facto government in the
Islands. The belligerent occupation of the Philippines by the Japanese invaders
became an accomplished fact from the time General Wainwright, Commander of
the American and Filipino forces in Luzon, and General Sharp, Commander of
the forces in Visayas and Mindanao, surrendered and ordered the surrender of
their forces to the Japanese invaders, and the Commonwealth Government had
become incapable of publicly exercising its authority, and the invader had
substituted his own authority for that of the legitimate government in Luzon,
Visayas and Mindanao.
"According to the rules of Land Warfare of the United States Army, belligerent
or so-called military occupation is a question of fact. It presupposes a hostile
But supposing arguendo that there were provinces or districts in these Islands
not actually and effectively occupied by the invader, or in which the latter,
consequently, had not substituted his own authority for that of the invaded
government, and the Commonwealth Government had continued publicly
exercising its authority, there is no question as to the validity of the judicial acts
and proceedings of the courts functioning in said territory, under the municipal
law, just as there can be no question as to the validity of the judgments and
proceedings of the courts continued in the territory occupied by the belligerent
occupant, under the law of nations.
(2) It is submitted that the renunciation in our Constitution and in the Kellog-
Briand Pact of war as an instrument of national policy, rendered inapplicable
the rules of international law authorizing the belligerent Japanese army of
occupation to set up a provisional or de facto government in the Philippines,
because Japan started war treacherously and emphasized was as an instrument
of national policy; and that to give validity to the judicial acts of courts
sponsored by the Japanese would be tantamount to giving validity to the acts of
these invaders, and would be nothing short of legalizing the Japanese invasion
of the Philippines.
In reply to this contention, suffice it to say that the provisions of the Hague
Conventions which impose upon a belligerent occupant the duty to continue the
courts as well as the municipal laws in force in the country unless absolutely
prevented, in order to reestablish and insure "I" ordre et al vie publice," that is,
the public order and safety, and the entire social and commercial life of the
country, were inserted, not for the benefit of the invader, butfor the protection
and benefit of the people or inhabitants of the occupied territory and of those not
in the military service, in order that the ordinary pursuits and business of society
may not be unnecessarily deranged.
This is the opinion of all writers on international law up to date, among then
Wheaton (Vol. II, p. 236) and Oppenheim (Vol. II, p. 338) in their recently
revised Treatises on International Law, edited in the year 1944, and the
Interpretation of the Supreme Court of the United States in many cases,
specially in the case of Dow vs. Johnson (106 U. S., 158), in which that Court
said: "As a necessary consequence of such occupation and domination, the
political relations of its people to their former government are, for the time
being, severed. But for their protection and benefit, and the protection and
benefit of others not in the military service, or, in other words, in order that the
ordinary pursuits and business of society may not be unnecessarily deranged,
the municipal laws, that is, such as affect private rights of persons and property
and provide for the punishment of crime, are generally allowed to continue in
force, and to be administered by the ordinary tribunals as they were
administered before the occupation. They are considered as continuing, unless
suspended or superseded by the occupying belligerent." (Dow vs.Johnson, 100
U. S., 158; 25 U. S. [Law, ed.], 632).
The fact that the belligerent occupant is a treacherous aggressor, as Japan was,
does not, therefore, exempt him from complying with the said precepts of the
Hague Conventions, nor does it make null and void the judicial acts of the courts
continued by the occupant in the territory occupied. To deny validity to such
judicial acts would benefit the invader or aggressor, who is presumed to be
intent upon causing as much harm as possible to the inhabitants or nationals of
the enemy's territory, and prejudice the latter; it would cause more suffering to
the conquered and assist the conqueror or invader in realizing his nefarious
design; in fine, it would result in penalizing the nationals of the occupied
territory, and rewarding the invader or occupant for his acts of treachery and
aggression.
(3) We held in our decision that the word "processes," as used in the
proclamation of General Douglas MacArthur of October 23, 1944, cannot be
interpreted to mean judicial processes; and because of the cogent reasons
therein set forth, we did not deem it necessary to specify the processes to which
said proclamation should be construed to refer. As some doubt still lingers in
the minds of persons interested is sustaining a contrary interpretation or
construction, we are now constrained to say that term as used in the
proclamation should be construed to mean legislative and constitutional
processes, by virtue of the maxim "noscitur a sociis." According to this maxim,
where a particular word or phrase is ambiguous in itself or is equally
susceptible of various meanings, its meaning may be made clear and specific by
considering the company in which it is found. (Black on Interpretation of Laws,
2d ed., pp. 194-196.) Since the proclamation provides that "all laws, regulations
and processes of any other government in the Philippines than that of the said
Commonwealth are null and void," the word "processes" must be interpreted or
construed to refer to the Executive Orders of the Chairman of the Philippine
Executive Commission, Ordinances promulgated by the President of the so-
called Republic of the Philippines, and the Constitution itself of said Republic,
and others that are of the same class as the laws and regulations with which the
word "processes" is associated.
To illustrate, "an English act required licenses for "houses, rooms, shops, or
buildings, kept open for public refreshment, resort, and entertainment." It was
adjudged that the word "entertainment," in this connection, did not necessarily
mean a concert, dramatic performance, or other divertissement, nor did it
necessarily imply the furnishing of food or drink, but that, judged from its
associations, it meant the reception and accommodation of the public. So where
a policy of marine insurance is specified to protect the assured against "arrests,
restraints, and detainments of all kings, princes, and people," the word "people"
means the ruling or governing power of the country, this signification being
impressed upon it by its association with the words "kings" and "princes."
Again, in a statute relating to imprisonment for debt, which speaks of debtors
who shall be charged with "fraud" or undue preference to one creditor to the
prejudice of another, the word "undue" means fraudulent. A statute of
bankruptcy, declaring that any fraudulent "gift, transfer or delivery" of property
shall constitute an act of bankruptcy, applies only to such deliveries as are in the
nature of a gift — such as change the ownership of the property, to the
prejudice of creditors; it does not include a delivery to a bailee for safekeeping."
(Black on Interpretation of Laws, supra.)
(4) The state of Wheaton (International Law), 7th ed., p. 245) that "when it is
said that an occupier's acts are valid, it must be remembered that no crucial
instances exist to show that if his acts should all be reversed (by the restored
government or its representatives) no international wrong would be
committed," evidently does not mean that the restored government or its
representatives may reverse the judicial acts and proceedings of the courts
during the belligerent occupation without violating the law of nations and doing
any wrong at all. A violation of the law of nations does not always and
necessarily cause an international wrong. As the said judicial acts which apply
the municipal laws, that is, such as affect private rights of persons and property,
and provide for the punishment of crimes, are good and valid even after
occupation has ceased, although it is true that no crucial instances exist to show
that, were they reversed or invalidated by the restored or legitimate
government, international wrong would be committed, it is nonetheless true
and evident that by such abrogation national wrong would be caused to the
inhabitants or citizens of the legitimate government. According to the law of
nations and Wheaton himself, said judicial acts are legal and valid before and
after the occupation has ceased and the legitimate government has been
restored. As there are vested rights which have been acquired by he parties by
virtue of such judgments, the restored government or its representative cannot
reverse or abrogate them without causing wrong or injury to the interested
parties, because such reversal would deprive them of their properties without
due process of law.
In this connection, it may not be amiss to refer to the decision of the Supreme
Court of the United States in the case of Raymond vs. Thomas (91 U. S., 712),
quoted in our decision as applicable by analogy. In said case, the Commander in
Chief of the United States forces in South Carolina, after the end of the Civil War
and while the territory was still under Military Government, issued a special
order annulling a decree rendered by a court of chancery in a case within its
jurisdiction, on the wrong assumption that he had authority to do so under the
acts of Congress approved March 2, and July 19, 1867, which defined his powers
and duties. That Supreme Court declared void the said special order on the
ground "that it was an arbitrary stretch of authority needful to no good end that
can be imagined. Whether Congress could have conferred power to do such an
act is a question we are not called upon to consider. It is an unbending rule of
law that the exercise of military power where the rights of the citizen are
concerned, shall never be pushed beyond what the exigency requires."
adequate remedy. For it is a well established rule that "if a a court has
erroneously decided some question of law or of practice, presented as a
preliminary objection, and upon such erroneous construction has refused to go
into the merits of the case, mandamus will lie to compel it to proceed." (High on
Extraordinary Legal Remedies, section 151; Castro Revilla vs.Garduño, 53 Phil.,
934.)
In view of the foregoing, the motion for reconsideration filed by the
respondents is denied. The petition for oral argument on said motion for
reconsideration, based on the resolution of division of this Court dated July 3,
1945, amendatory of section 2, Rule 54, of the Rules of Court, is also denied,
since said resolution has not yet been adopted by this Court in banc, and the
respondents and amici curiae were allowed to file, and they filed, their
arguments in writing.
Moran, C. J., Ozaeta, Paras, Jaranilla, De Joya, and Pablo, JJ., concur.

(5) It is argued with insistence that the courts of the Commonwealth continued
in the Philippines by the belligerent occupant became also courts of Japan, and
their judgments and proceedings being acts of foreign courts cannot now be
considered valid and continued by the courts of the Commonwealth
Government after the restoration of the latter. As we have already stated in our
decision the fundamental reasons why said courts, while functioning during the
Japanese regime, could not be considered as courts of Japan, it is sufficient now
to invite attention to the decision of the Supreme Court of the United States in
the case of The Admittance, Jecker vs. Montgomery (13 How., 498; 14 Law. ed.,
240), which we did not deem necessary to quote in our decision, in which it was
held that "the courts, established or sanctioned in Mexico during the war by the
commanders of the American forces, were nothing more than the agents of the
military power, to assist it in preserving order in the conquered territory, and to
protect the inhabitants in their persons and property while it was occupied by
the American arms. They were subject to the military power, and their decisions
under its control, whenever the commanding officer thought proper to
interfere. They were not courts of the United States, and had no right to
adjudicate upon a question of prize or no prize." (The Admittance,
Jecker vs. Montgomery, 13 How., 498; 14 Law. ed., 240.).

(6) The petition for mandamus in the present case is the plain, speedy and
adequate remedy. The mandamusapplied for is not to compel the respondent
judge to order the reconstitution of the record of the case, because the record
had already been reconstituted by order of the court. It is sought to compel the
respondent judge to continue the proceedings in said case. As the judge refused
to act on the ground that he had no power or jurisdiction to continue taking
cognizance of the case, mandamus and not appeal is the plain, speedy and
G.R. No. L-4254 September 26, 1951
BORIS MEJOFF, petitioner,
vs.
THE DIRECTOR OF PRISONS, respondent.
Ambrosio T. Dollete for petitioner.
First Assistant Solicitor General Roberto A. Gianson and Solicitor Florencio
Villamor for respondents.
TUASON, J.:
This is a second petition for habeas corpus by Boris Mejoff, the first having been
denied in a decision of this Court of July 30, 1949. The history of the petitioner's
detention was thus briefly set forth in that decision, written by Mr. Justice
Bengzon:
The petitioner Boris Mejoff is an alien of Russian descent who was
brought to this country from Shanghai as a secret operative by the
Japanese forces during the latter's regime in these Islands. Upon
liberation he was arrested as a Japanese spy, by U.S. Army Counter
Intelligence Corps. Later he was handed to theCommonwealth
Government for disposition in accordance with Commonwealth Act No.
682. Thereafter, the People's Court ordered his release. But the
deportation Board taking his case up, found that having no travel
documents Mejoff was illegally in this country, and consequently
referred the matter to the immigration authorities. After the
corresponding investigation, the Board of commissioners of
Immigration on April 5, 1948, declared that Mejoff had entered the
Philippines illegally in 1944, without inspection and admission by the
immigration officials at a designation port of entry and, therefore, it
ordered that he be deported on the first available transportation to
Russia. The petitioner was then under custody, he having been arrested
on March 18, 1948. In May 1948 he was transferred to the Cebu
Provincial Jail together with three other Russians to await the arrival of
some Russian vessels. In July and August of that year two boats of
Russian nationality called at the Cebu Port. But their masters refused to
take petitioner and his companions alleging lack of authority to do so.
In October 1948 after repeated failures to ship this deportee abroad,
the authorities removed him to Bilibid Prison at Muntinglupa where he
has been confined up to the present time, inasmuch as the
Commissioner of Immigration believes it is for the best interests of the
country to keep him under detention while arrangements for his
departure are being made.
The Court held the petitioner's detention temporary and said that "temporary
detention is a necessary step in the process of exclusion or expulsion of
undesirable aliens and that pending arrangements for his deportation, the
Government has the right to hold the undesirable alien under confinement for a
reasonable lenght of time." It took note of the fact, manifested by the Solicitor
General's representative in the course of the of the oral argumment, that "this
Government desires to expel the alien, and does not relish keeping him at the
people's expense . . . making efforts to carry out the decree of exclusion by the
highest officer of the land." No period was fixed within which the immigration
authorities should carry out the contemplated deportation beyond the
statement that "The meaning of 'reasonable time' depends upon the
circumstances, specially the difficulties of obtaining a passport, the availability
of transportation, the diplomatic arrangements with the governments
concerned and the efforts displayed to send the deportee away;" but the Court
warned that "under established precedents, too long a detention may justify the
issuance of a writ of habeas corpus."
Mr. Justice Paras, now Chief Justice, Mr. Justice Feria, Mr. Justice Perfecto, and
the writer of this decision dissented. Mr. Justice Feria and Mr. Justice Perfecto
voted for outright discharge of the prisoner from custody. Mr. Justice Paras
qualified his dissent by stating that he might agree "to further detention of the
herein petitioner, provided that he be released if after six months, the
Government is still unable to deport him." This writer joined in the latter
dissent but thought that two months constituted reasonable time.
Over two years having elapsed since the decision aforesaid was promulgated,
the Government has not found way and means of removing the petitioner out of
the country, and none are in sight, although it should be said in justice to the
deportation authorities, it was through no fault of theirs that no ship or country
would take the petitioner.
Aliens illegally staying in the Philippines have no right of asylum therein
(Sowapadji vs. Wixon, Sept. 18, 1946, 157 F. ed., 289, 290), even if they are
"stateless," which the petitioner claims to be. It is no less true however, as
impliedly stated in this Court's decision, supra, that foreign nationals, not
enemy against whom no charge has been made other than that their permission
to stay has expired, may not indefinitely be kept in detention. The protection
against deprivation of liberty without due process of law and except for crimes
committed against the laws of the land is not limited to Philippine citizens but
extends to all residents, except enemy aliens, regardless of nationality. Whether
an alien who entered the country in violation of its immigration laws may be
detained for as long as the Government is unable to deport him, is a point we
need not decide. The petitioner's entry into the Philippines was not unlawful; he
was brought by the armed and belligerent forces of a de facto government
whose decrees were law furing the occupation.
Moreover, by its Constitution (Art. II, Sec. 3) the Philippines "adopts the
generally accepted principles of international law as part of the law of Nation."
And in a resolution entitled "Universal Declaration of Human Rights" and
approved by the General Assembly of the United Nations of which the
Philippines is a member, at its plenary meeting on December 10, 1948, the right
to life and liberty and all other fundamental rights as applied to all human
beings were proclaimed. It was there resolved that "All human beings are born
free and equal in degree and rights" (Art. 1); that "Everyone is entitled to all the
rights and freedom set forth in this Declaration, without distinction of any kind,
such as race, colour, sex, language, religion, political or other opinion,
nationality or social origin, property, birth, or other status" (Art. 2): that "Every
one has the right to an effective remedy by the competent national tribunals for
acts violating the fundamental rights granted him by the Constitution or by law"
(Art. 8); that "No one shall be subjected to arbitrary arrest, detention or exile"
(Art. 9); etc.
In U. S. vs. Nichols, 47 Fed. Supp., 201, it was said that the court "has the power
to release from custody an alien who has been detained an unreasonably long
period of time by the Department of Justice after it has become apparent that
although a warrant for his deportation has been issued, the warrant can not be
effectuated;" that "the theory on which the court is given the power to act is that
the warrant of deportation, not having been able to be executed, is functus
officio and the alien is being held without any authority of law." The decision
cited several cases which, it said, settled the matter definitely in that
jurisdiction, adding that the same result had reached in innumerable cases
elsewhere. The cases referred to were United States ex rel. Ross vs. Wallis, 2 Cir.
279 F. 401, 404; Caranica vs. Nagle, 9 Cir., 28 F. 2d 955; Saksagansky vs. Weedin,
9 Cir., 53 F. 2d 13, 16 last paragraph; Ex parte Matthews, D.C.W.D. Wash., 277 F.
857; Moraitis vs. Delany, D.C. Md. Aug. 28, 1942, 46 F. Supp. 425.
The most recent case, as far as we have been able to find, was that of
Staniszewski vs. Watkins (1948), 90 Fed. Supp., 132, which is nearly foursquare
with the case at hand. In that case a stateless person, formerly a Polish national,
resident in the United States since 1911 and many times serving as a seaman on
American vessels both in peace and in war, was ordered excluded from the
United States and detained at Ellis Island at the expense of the steamship
company, when he returned from a voyage on which he had shipped from New
York for one or more European ports and return to the United States. The
grounds for his exclusion were that he had no passport or immigration visa, and
that in 1937 had been convicted of perjury because in certain documents he
presented himself to be an American citizen. Upon his application for release
on habeas corpus, the Court released him upon his own recognizance. Judge
Leibell, of the United States District Court for the Southern District of New York,
said in part:
When the return to the writ of habeas corpus came before this court, I
suggested that all interested parties . . . make an effort to arrange to
have the petitioner ship out of some country that he would receive him
as a resident. He is, a native-born Pole but the Polish Consul has
advised him in writing that he is no longer a Polish subject. This
Government does not claim that he is a Polish citizen. His attorney says
he is a stateless. The Government is willing that he go back to the ship,
but if he were sent back aboard a ship and sailed to the Port
(Cherbourg, France) from which he last sailed to the United States, he
would probably be denied permission to land. There is no other
country that would take him, without proper documents.
It seems to me that this is a genuine hardship case and that the
petitioner should be released from custody on proper terms. . . .
What is to be done with the petitioner? The government has had him in
custody almost seven months and practically admits it has no place to
send him out of this country. The steamship company, which employed
him as one of a group sent to the ship by the Union, with proper
seaman's papers issued by the United States Coast Guard, is paying $3 a
day for petitioner's board at Ellis Island. It is no fault of the steamship
company that petitioner is an inadmissible alien as the immigration
officials describe him. . . .
I intend to sustain the writ of habeas corpus and order the release of
the petitioner on his own recognizance. He will be required to inform
the immigration officials at Ellis Island by mail on the 15th of each
month, stating where he is employed and where he can be reached by
mail. If the government does succeed in arranging for petitioner's
deportation to a country that will be ready to receive him as a resident,
it may then advise the petitioner to that effect and arrange for his
deportation in the manner provided by law.
Although not binding upon this Court as a precedent, the case aforecited affords
a happy solution to the quandry in which the parties here finds themselves,
solution which we think is sensible, sound and compatible with law and the
Constitution. For this reason, and since the Philippine law on immigration was
patterned after or copied from the American law and practice, we choose to
follow and adopt the reasoning and conclusions in the Staniszewski decision
with some modifications which, it is believed, are in consonance with the
prevailing conditions of peace and order in the Philippines.
It was said or insinuated at the hearing ofthe petition at bar, but not alleged in
the return, that the petitioner was engaged in subversive activities, and fear was
expressed that he might join or aid the disloyal elements if allowed to be at
large. Bearing in mind the Government's allegation in its answer that "the
herein petitioner was brought to the Philippines by the Japanese forces," and
the fact that Japan is no longer at war with the United States or the Philippines
nor identified with the countries allied against these nations, the possibility of
the petitioner's entertaining or committing hostile acts prejudicial to the
interest and security of this country seems remote.
If we grant, for the sake of argument, that such a possibility exists, still the
petitioner's unduly prolonged detention would be unwarranted by law and the
Constitution, if the only purpose of the detention be to eliminate a danger that is
by no means actual, present, or uncontrolable. After all, the Government is not
impotent to deal with or prevent any threat by such measure as that just
outlined. The thought eloquently expressed by Mr. Justice Jackson of the United
States Supreme Court in connection with the appliccation for bail of ten
Communists convicted by a lower court of advocacy of violent overthrow of the
United States Government is, in principle, pertinent and may be availed of at
this juncture. Said the learned Jurist:
The Governmet's alternative contention is that defendants, by
misbehavior after conviction, have forfeited their claim to bail. Grave
public danger is said to result from what they may be expected to do, in
addition to what they have done since their conviction. If I assume that
defendants are disposed to commit every opportune disloyal to act
helpful to Communist countries, it is still difficult to reconcile with
traditional American law the jailing of persons by the courts because of
anticipated but as yet uncommitted crimes. lmprisonment to protect
society from predicted but unconsummated offenses is so
unprecedented in this country and so fraught with danger of excesses
and injustice that I am loath to resort it, even as a discretionary judicial
technique to supplement conviction of such offenses as those of which
defendants stand convicted.
But the right of every American to equal treatment before the law is
wrapped up in the same constitutional bundle with those of these
Communists. If an anger or disgust with these defendants we throw out
the bundle, we alsocast aside protection for the liberties of more
worthy critics who may be in opposition to the government of some
future day.
xxx xxx x x x1âwphïl.nêt
If, however, I were to be wrong on all of these abstract or theoretical
matters of principle, there is a very practical aspect of this application
which must not be overlooked or underestimated — that is the
disastrous effect on the reputation of American justice if I should now
send these men to jail and the full Court later decide that their
conviction is invalid. All experience with litigation teaches that
existence of a substantial question about a conviction implies a more
than negligible risk of reversal. Indeed this experience lies back of our
rule permitting and practice of allowing bail where such questions
exist, to avoid the hazard of unjustifiably imprisoning persons with
consequent reproach to our system of justice. If that is prudent judicial
practice in the ordinary case, how much more important to avoid every
chance of handing to the Communist world such an ideological weapon
as it would have if this country should imprison this handful of
Communist leaders on a conviction that our highest Court would
confess to be illegal. Risks, of course, are involved in either granting or
refusing bail. I am naive enough to underestimate the troublemaking
propensities of the defendants. But, with the Department of Justice alert
to the the dangers, the worst they can accomplish in the short time it
will take to end the litigation is preferable to the possibility of national
embarrassment from a celebrated case of unjustified imprisonment of
Communist leaders. Under no circumstances must we permit their
symbolization of an evil force in the world to be hallowed and glorified
by any semblance of martyrdom. The way to avoid that risk is not to jail
these men until it is finally decided that they should stay jailed.
If that case is not comparable with ours on the issues presented, its underlying
principle is of universal application. In fact, its ratio decidendi applies with
greater force to the present petition, since the right of accused to bail pending
apppeal of his case, as in the case of the ten Communists, depends upon the
discretion of the court, whereas the right to be enlarged before formal charges
are instituted is absolute. As already noted, not only are there no charges
pending against the petitioner, but the prospects of bringing any against him are
slim and remote.
Premises considered, the writ will issue commanding the respondents to
release the petitioner from custody upon these terms: The petitioner shall be
placed under the surveillance of the immigration authorities or their agents in
such form and manner as may be deemed adequate to insure that he keep peace
and be available when the Government is ready to deport him. The surveillance
shall be reasonable and the question of reasonableness shall be submitted to
this Court or to the Court of First Instance of Manila for decision in case of
abuse. He shall also put up a bond for the above purpose in the amount of
P5,000 with sufficient surety or sureties, which bond the Commissioner of
Immigration is authorized to exact by section 40 of Commonwealth Act No. 613.
No costs will be charged.
Paras, C.J., Feria, Bengzon, Padilla, Reyes and Jugo, JJ., concur.
G.R. No. L-24294 May 3, 1974
DONALD BAER, Commander U.S. Naval Base, Subic Bay, Olongapo,
Zambales, petitioner,
vs.
HON. TITO V. TIZON, as Presiding Judge of the Court of First Instance of
Bataan, and EDGARDO GENER, respondents.
Sycip, Salazar, Luna Manalo & Feliciano for petitioner.
A. E. Dacanay for private respondent.
Office of the Solicitor General Camilo D. Quiason as amicus curiae.
FERNANDO, J.:p
There is nothing novel about the question raised in this certiorari proceeding
against the then Judge Tito V. Tizon, filed by petitioner Donald Baer, then
Commander of the United States Naval Base, Subic Bay, Olongapo, Zambales,
seeking to nullify the orders of respondent Judge denying his motion to dismiss
a complaint filed against him by the private respondent, Edgardo Gener, on the
ground of sovereign immunity of a foreign power, his contention being that it
was in effect a suit against the United States, which had not given its consent.
The answer given is supplied by a number of cases coming from this Tribunal
starting from a 1945 decision, Raquiza v. Bradford1 to Johnson v.
Turner,2 promulgated in 1954. The doctrine of immunity from suit is of
undoubted applicability in this jurisdiction. It cannot be otherwise, for under
the 1935 Constitution, as now, it is expressly made clear that the Philippines
"adopts the generally accepted principles of international law as part of the law
of the Nation."3 As will subsequently be shown, there was a failure on the part of
the lower court to accord deference and respect to such a basic doctrine, a
failure compounded by its refusal to take note of the absence of any legal right
on the part of petitioner. Hence, certiorari is the proper remedy.
The facts are not in dispute. On November 17, 1964, respondent Edgardo Gener,
as plaintiff, filed a complaint for injunction with the Court of First Instance of
Bataan against petitioner, Donald Baer, Commander of the United States Naval
Base in Olongapo. It was docketed as Civil Case No. 2984 of the Court of First
Instance of Bataan. He alleged that he was engaged in the business of logging in
an area situated in Barrio Mabayo, Municipality of Morong, Bataan and that the
American Naval Base authorities stopped his logging operations. He prayed for
a writ of preliminary injunction restraining petitioner from interfering with his
logging operations. A restraining order was issued by respondent Judge on
November 23, 1964.4 Counsel for petitioner, upon instructions of the American
Ambassador to the Philippines, entered their appearance for the purpose of
contesting the jurisdiction of respondent Judge on the ground that the suit was
one against a foreign sovereign without its consent.5 Then, on December 12,
1964, petitioner filed a motion to dismiss, wherein such ground was reiterated.
It was therein pointed out that he is the chief or head of an agency or
instrumentality of the United States of America, with the subject matter of the
action being official acts done by him for and in behalf of the United States of
America. It was added that in directing the cessation of logging operations by
respondent Gener within the Naval Base, petitioner was entirely within the
scope of his authority and official duty, the maintenance of the security of the
Naval Base and of the installations therein being the first concern and most
important duty of the Commander of the Base.6 There was, on December 14,
1964, an opposition and reply to petitioner's motion to dismiss by respondent
Gener, relying on the principle that "a private citizen claiming title and right of
possession of certain property may, to recover possession of said property, sue
as individuals, officers and agents of the Government, who are said to be
illegally withholding the same from him, though in doing so, said officers and
agents claim that they are acting for the Government." That was his basis for
sustaining the jurisdiction of respondent Judge.7 Petitioner, thereafter, on
January 12, 1965, made a written offer of documentary evidence, including
certified copies of telegrams of the Forestry Director to Forestry personnel in
Balanga, Bataan dated January 8, and January 11, 1965, directing immediate
investigation of illegal timber cutting in Bataan and calling attention to the fact
that the records of the office show no new renewal of timber license or
temporary extension permits.8 The above notwithstanding, respondent Judge,
on January 12, 1965, issued an order granting respondent Gener's application
for the issuance of a writ of preliminary injunction and denying petitioner's
motion to dismiss the opposition to the application for a writ of preliminary
injunction.9
A motion for reconsideration having proved futile, this petition for certiorari
was filed with this Court. The prayer was for the nullification and setting aside
of the writ of preliminary injunction issued by respondent Judge in the
aforesaid Civil Case No. 2984 of the Court of First Instance of Bataan. A
resolution of March 17, 1965 was issued by this Court requiring respondents to
file an answer and upon petitioner's posting a bond of P5,000.00 enjoining them
from enforcing such writ of preliminary injunction. The answer was duly
forthcoming. It sought to meet the judicial question raised by the legal
proposition that a private citizen claiming title and right of possession of a
certain property may, to recover the same, sue as individuals officers and agents
of the government alleged to be illegally withholding such property even if
there is an assertion on their part that they are acting for the government.
Support for such a view is found in the American Supreme Court decisions
of United States v. Lee10 and Land v. Dollar.11Thus the issue is squarely joined
whether or not the doctrine of immunity from suit without consent is
applicable. Thereafter, extensive memoranda were filed both by petitioner and
respondents. In addition, there was a manifestation and memorandum of the
Republic of the Philippines as amicus curiae where, after a citation of American
Supreme Court decisions going back to Schooner Exchange v. M'faddon,12 an
1812 decision, to United States v. Belmont,13 decided in 1937, the plea was made
that the petition for certiorari be granted..
A careful study of the crucial issue posed in this dispute yields the conclusion, as
already announced, that petitioner should prevail.
1. The invocation of the doctrine of immunity from suit of a foreign state
without its consent is appropriate. More specifically, insofar as alien armed
forces is concerned, the starting point is Raquiza v. Bradford, a 1945
decision.14In dismissing a habeas corpus petition for the release of petitioners
confined by American army authorities, Justice Hilado, speaking for the Court,
cited from Coleman v. Tennessee,15 where it was explicitly declared: "It is well
settled that a foreign army, permitted to march through a friendly country or to
be stationed in it, by permission of its government or sovereign, is exempt from
the civil and criminal jurisdiction of the place." 16 Two years later, in Tubb and
Tedrow v. Griess,17 this Court relied on the ruling in Raquiza v. Bradford and
cited in support thereof excerpts from the works of the following authoritative
writers: Vattel, Wheaton, Hall, Lawrence, Oppenhein, Westlake, Hyde, and
McNair and Lauterpacht.18 Accuracy demands the clarification that after the
conclusion of the Philippine-American Military Bases Agreement, the treaty
provisions should control on such matter, the assumption being that there was
a manifestation of the submission to jurisdiction on the part of the foreign
power whenever appropriate.19More to the point is Syquia v. Almeda
Lopez,20 where plaintiffs as lessors sued the Commanding General of the United
States Army in the Philippines, seeking the restoration to them of the apartment
buildings they owned leased to United States armed forces stationed in the
Manila area. A motion to dismiss on the ground of non-suability was filed and
upheld by respondent Judge. The matter was taken to this Court in a mandamus
proceeding. It failed. It was the ruling that respondent Judge acted correctly
considering that the "action must be considered as one against the U.S.
Government."21 The opinion of Justice Montemayor continued: "It is clear that
the courts of the Philippines including the Municipal Court of Manila have no
jurisdiction over the present case for unlawful detainer. The question of lack of
jurisdiction was raised and interposed at the very beginning of the action. The
U.S. Government has not given its consent to the filing of this suit which is
essentially against her, though not in name. Moreover, this is not only a case of a
citizen filing a suit against his own Government without the latter's consent but
it is of a citizen filing an action against a foreign government without said
government's consent, which renders more obvious the lack of jurisdiction of
the courts of his country. The principles of law behind this rule are so
elementary and of such general acceptance that we deem it unnecessary to cite
authorities in support thereof."22 Then came Marvel Building Corporation v.
Philippine War Damage Commission,23 where respondent, a United States agency
established to compensate damages suffered by the Philippines during World
War II was held as falling within the above doctrine as the suit against it "would
eventually be a charge against or financial liability of the United States
Government because ..., the Commission has no funds of its own for the purpose
of paying money judgments."24 The Syquiaruling was again explicitly relied
upon in Marquez Lim v. Nelson,25 involving a complaint for the recovery of a
motor launch, plus damages, the special defense interposed being "that the
vessel belonged to the United States Government, that the defendants merely
acted as agents of said Government, and that the United States Government is
therefore the real party in interest."26 So it was in Philippine Alien Property
Administration v. Castelo,27 where it was held that a suit against the Alien
Property Custodian and the Attorney General of the United States involving
vested property under the Trading with the Enemy Act is in substance a suit
against the United States. To the same effect is Parreno v. McGranery,28 as the
following excerpt from the opinion of Justice Tuason clearly shows: "It is a
widely accepted principle of international law, which is made a part of the law
of the land (Article II, Section 3 of the Constitution), that a foreign state may not
be brought to suit before the courts of another state or its own courts without
its consent."29 Finally, there is Johnson v. Turner,30 an appeal by the defendant,
then Commanding General, Philippine Command (Air Force, with office at Clark
Field) from a decision ordering the return to plaintiff of the confiscated military
payment certificates known as scrip money. In reversing the lower court
decision, this Tribunal, through Justice Montemayor, relied on Syquia v. Almeda
Lopez,31 explaining why it could not be sustained.
The solidity of the stand of petitioner is therefore evident. What was sought by
private respondent and what was granted by respondent Judge amounted to an
interference with the performance of the duties of petitioner in the base area in
accordance with the powers possessed by him under the Philippine-American
Military Bases Agreement. This point was made clear in these words:
"Assuming, for purposes of argument, that the Philippine Government, through
the Bureau of Forestry, possesses the "authority to issue a Timber License to cut
logs" inside a military base, the Bases Agreement subjects the exercise of rights
under a timber license issued by the Philippine Government to the exercise by
the United States of its rights, power and authority of control within the bases;
and the findings of the Mutual Defense Board, an agency of both the Philippine
and United States Governments, that "continued logging operation by Mr. Gener
within the boundaries of the U.S. Naval Base would not be consistent with the
security and operation of the Base," is conclusive upon the respondent Judge. ..
The doctrine of state immunity is not limited to cases which would result in a
pecuniary charge against the sovereign or would require the doing of an
affirmative act by it. Prevention of a sovereign from doing an affirmative act interfered with by the logging operations.'"36 Nowhere in the answer of
pertaining directly and immediately to the most important public function of respondents, nor in their memorandum, was this point met. It remained
any government - the defense of the state — is equally as untenable as requiring unrefuted.
it to do an affirmative act."32 That such an appraisal is not opposed to the
interpretation of the relevant treaty provision by our government is made clear WHEREFORE, the writ of certiorari prayed for is granted, nullifying and setting
in the aforesaid manifestation and memorandum as amicus curiae, wherein it aside the writ of preliminary injunction issued by respondent Judge in Civil Case
joined petitioner for the grant of the remedy prayed for. No. 2984 of the Court of First Instance of Bataan. The injunction issued by this
Court on March 18, 1965 enjoining the enforcement of the aforesaid writ of
2. There should be no misinterpretation of the scope of the decision reached by preliminary injunction of respondent Judge is hereby made permanent. Costs
this Court. Petitioner, as the Commander of the United States Naval Base in against private respondent Edgardo Gener.
Olongapo, does not possess diplomatic immunity. He may therefore be
proceeded against in his personal capacity, or when the action taken by him Zaldivar, Antonio, Fernandez and Aquino, JJ., concur.
cannot be imputed to the government which he represents. Thus, after the
Military Bases Agreement, in Miquiabas v. Commanding General33and Dizon v. Barredo, J., took no part.
The Commanding General of the Philippine-Ryukus Command,34 both of them
being habeas corpus petitions, there was no question as to the submission to
jurisdiction of the respondents. As a matter of fact, in Miquiabas v. Commanding
General,35 the immediate release of the petitioner was ordered, it being
apparent that the general court martial appointed by respondent Commanding
General was without jurisdiction to try petitioner. Thereafter, in the cited cases
of Syquia, Marquez Lim, and Johnson, the parties proceeded against were
American army commanding officers stationed in the Philippines. The
insuperable obstacle to the jurisdiction of respondent Judge is that a foreign
sovereign without its consent is haled into court in connection with acts
performed by it pursuant to treaty provisions and thus impressed with a
governmental character.

3. The infirmity of the actuation of respondent Judge becomes even more

glaring when it is considered that private respondent had ceased to have any
right of entering within the base area. This is made clear in the petition in these
words: "In 1962, respondent Gener was issued by the Bureau of Forestry an
ordinary timber license to cut logs in Barrio Mabayo, Morong, Bataan. The
license was renewed on July 10, 1963. In 1963, he commenced logging
operation inside the United States Naval Base, Subic Bay, but in November 1963
he was apprehended and stopped by the Base authorities from logging inside
the Base. The renewal of his license expired on July 30, 1964, and to date his
license has not been renewed by the Bureau of Forestry. .. In July 1964, the
Mutual Defense Board, a joint Philippines-United States agency established
pursuant to an exchange of diplomatic notes between the Secretary of Foreign
Affairs and the United States Ambassador to provide "direct liaison and
consultation between appropriate Philippine and United States authorities on
military matters of mutual concern,' advised the Secretary of Foreign Affairs in
writing that: "The enclosed map shows that the area in which Mr. Gener was
logging definitely falls within the boundaries of the base. This map also depicts
certain contiguous and overlapping areas whose functional usage would be
G.R. No. 151445 April 11, 2002
ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY as alter ego of HER EXCELLENCEY
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 MACAPAGA-ARROYO, ALBERTO ROMULO, ANGELO
REYES, respondents.
DISSENTING OPINION
SEPARATE OPINION
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 (V FA) 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-Iist 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 71 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).3Five 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 AFP 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 AFP 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 VF A. 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 actually no question of constitutionality involved. The true object of the instant
THE PHILIPPINES AND THE UNITED STATES SIGNED THE MUTUAL
DEFENSE TREATY (MDT) in 1951 TO PROVIDE MUTUAL MILITARY
ASSIST ANCE IN ACCORDANCE WITH THE 'CONSTITUTIONAL
PROCESSE-S' 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 IMAGINA TION 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 Ersando's 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
suit, it is said, is to obtain an interpretation of the V FA. The Solicitor General
asks that we accord due deference to the executive determination that
"Balikatan 02-1" is covered by the VFA, considering the President's 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 Court's 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 department of the government a becoming respect for each
other's act, this Court nevertheless resolves to take cognizance of the
instant petition.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 MDT's objectives. It is this treaty to which the V FA 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 V FA 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 V FA 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 ill accordance with the
ordinary meaning to be given to the tenus 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 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 Commission's 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 travauxpreparatoires 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 preparatoires 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 nation's
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 V FA support the
conclusion that combat-related activities -as opposed to combat 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 I" 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 V FA 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-a-
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 I
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 -( I) 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 I 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.
EN BANC
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
PRESIDENT GLORIA MACAPAGAL-ARROYO and HONORABLE ANGELO
REYES in his official capacity as Secretary of National Defense, respondents.
SANLAKAS and PARTIDO NG MANGGAGAWA, intervenors.
DISSENTING OPINION
KAPUNAN, J.:
On September 11, 2001, terrorists, with the use of hijacked commercial
airplanes, attacked the World Trade Center Building in New York City and the
Pentagon Building in Washington D.C., U.S.A., killing thousands of people.
Following the attacks, the United States declared a "global war" against
terrorism and started to bomb and attack Afghanistan to topple the Taliban
regime and capture Osama bin Laden, the suspected mastermind of the
September 11, 2001 attacks. With the Northern Alliance mainly providing the
ground forces, the Taliban regime fell in a few months, without Osama bin
Laden having been captured. He is believed either to be still in Afghanistan or
has crossed the border into Pakistan.
In line with President Gloria Macapagal-Arroyo's pledge to render all-out aid to
the US in its campaign against "global terrorism," an arrangement for a. joint
military exercises known as "RP-US Balikatan 02-1 Exercises" was entered into
between the US and Philippine authorities, allegedly within the ambit of the
Visiting Forces Agreement (V FA) with the main objective of enhancing the
operational capabilities of the countries in combating terrorism. The US
government has identified the Abu Sayyaf Group (ASG) in the Philippines as a
terrorist group forming part of a "terrorist underground" linked to the al-Qaeda
network of Osama bin Laden.
Beginning January 21, 2002, American troops started arriving in Mindanao as
part of the total contingent force of 660 soldiers, 160 to be stationed in Basilan,
200 to 250 in Zamboanga, and 250 in the Air Force base in Mactan, Cebu.
The salient features of the joint military exercises as embodied in the Terms of
Reference (TOR) are summarized as follows:
(a) The exercise shall be consistent with the Constitution and other
Philippine laws, particularly the RP-US Visiting Forces Agreement;
(b) No permanent US bases and support facilities will be established;
(c) The exercise shall be implemented jointly by RP and US Exercise Co-
Directors under the direction of the Chief of Staff of the AFP and in no
instance will US Forces operate independently during field training
exercises;
(d) It 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, and the Chief of Staff of the AFP shall direct the
Exercise Co-Directors to wind up the Exercise and other activities and
the withdrawal of US forces within the six-month period;
(e) The exercise "is a mutual counter-terrorism advising, assisting and
training exercise" relative to Philippine efforts against the Abu Sayyaf
Group 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 also be conducted in
support of the Exercise;
(f) Only 160 US troops organized in 12-man Special Forces Teams shall
be deployed in Basilan, with the US Team remaining at the Company
Tactical Headquarters where they can observe and assess the
performance of the troops; and
(g) US exercise participants shall not engage in combat, without
prejudice to their right to self-defense.
Petitioners now seek the issuance of a writ of prohibition/injunction to prevent
US troops from participating in areas of armed conflict on the ground that such
is in gross violation of the Constitution. They argue that:
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 SUBJECTED THE PHILIPPINES TO AN
ARMED EXTERNAL ATTACK TO WARRANT US MILITARY ASSISTANCE
UNDER THE MDT OF 1951.
II
NEITHER DOES THE VFA OF 1999 AUTHORIZED AMERICAN SOLDIERS
TO ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE TERRITORY,
NOT EVEN TO FIRE BACK "IF FIRED UPON."
Sanlakas and Partido ng Manggagawa as intervenors seek the same relief as
petitioners, stressing that the Constitution prohibits the presence of foreign
military troops or facilities in the country, except under a treaty duly concurred
in by the Senate and recognized as a treaty by the other state.
The petition is impressed with merit.
There is no treaty allowing
US troops to engage in combat.
The Constitution prohibits foreign military bases, troops or facilities unless a
treaty permits the same. Section 25, Article XVIII of the Constitution 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.
There is no treaty allowing foreign military troops to engage in combat with
internal elements.
The Mutual Defense Treaty (MDT) between the Republic of the Philippines and
the United States of America does not authorize US military troops to engage
the ASG in combat. The MDT contemplates only an "external armed attack."
Article III of the treaty cannot be more explicit:
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. [Emphasis
supplied.]
Supporting this conclusion is the third paragraph of the MDT preamble where
the parties express their desire
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. [Emphasis supplied.]
There is no evidence that
the ASG is connected with
"global terrorism."
There is no empirical basis for the allegation that the "terrorism" which the ASG
is accused of constitutes an "external armed attack." The ASG has committed
mostly crimes of kidnapping for ransom and murder - common crimes that are
punishable under the penal code but which, by themselves, hardly constitute
"terrorism."
Parenthetically, there is lack of agreement as to the precise definition of
terrorism. Indeed, one man's terrorist may be another man's freedom fighter.
The divergent interests of States have caused contradicting definitions and
conflicting perceptions of what constitutes "terrorist acts" that make it difficult
for the United Nations to reach a decision on the definition of terrorism.
Because of this "definitional predicament," the power of definition is easily
exercised by a superpower which, by reason of its unchallenged hegemony,
could draw lists of what it considers terrorist organizations or states sponsoring
terrorism based on criteria determined by the hegemon's own strategic
interests.1
In any case, ties between the ASG and so-called international "terrorist"
organizations have not been established.2Even assuming that such ties do exist,
it does not necessarily make the "attacks" by the ASG "external" as to fall within
the ambit of the MDT.
Balikatan exercises are
not covered by VFA as
US troops are not
allowed to engage in combat.
Neither is the present situation covered by the so-called Visiting Forces
Agreement (VFA). The V FA was concluded after the removal of the US military
bases, troops and facilities in the aftermath of the termination of the treaty
allowing the presence of American military bases in the Philippines. The VF A is
nothing more than what its formal name suggests: an "Agreement between the
Government of the Republic of the Philippines and the Government of the
United States of America regarding the Treatment of United States Armed
Forces Visiting the Philippines. "The last paragraph of the V FA preamble also
"recogniz[es] the desirability of defining the treatment of United States
personnel visiting the Republic of the Philippines."
The VFA was entered into to enable American troops to enter the country again
after the removal of the American military bases so they can participate in
military exercises under the auspices of the Mutual Defense Treaty. It provided
the legal framework under which American soldiers will be treated while they
remain in the country.
The military exercises contemplated in the VFA are those in accordance with
the National Defense Plan (NDP) of the Philippines. The NDP was previously
approved and adopted by the Mutual Defense Board, jointly chaired by the Chief
of Staff of the Armed Forces of the Philippines and the Commander in the Pacific
of the United States Armed Forces.
The NDP is directed against potential foreign aggressors, not designed to deal
with internal disorders. This was what the Senate understood when it ratified
the VFA in Senate Resolution No. 18, which reads:
The VFA shall serve as the legal mechanism to promote defense
cooperation between the 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.
The VFA's ambiguous reference to "activities"3 is not a loophole that legitimizes
the presence of US troops in Basilan. In the treaty's preamble, the parties
"reaffirm their obligations under the Mutual Defense Treaty of August 30,
1951." As the preamble comprises part of a treaty's context for the purpose of
interpretation, the VFA must be read in light of the provisions of the MDT. As
stated earlier, the MDT contemplates only an external armed attack;
consequently, the "activities" referred to in the V FA cannot thus be interpreted
to include armed confrontation with or suppression of the ASG members who
appear to be mere local bandits, mainly engaged in kidnapping for ransom and
murder -even arson, extortion and illegal possession of firearms, all of which
are common offenses under our criminal laws. These activities involve purely
police matters and domestic law and order problems; they are hardly "external"
attacks within the contemplation of the MDT and the V FA. To construe the
vagueness of the term "activities" in the V FA as authorizing American troops to
confront the ASG in armed conflict would, therefore, contravene both spirit and
letter of the MDT.
Respondents maintain that the American troops are not here to fight the ASG
but merely to engage in "training exercises." To allay fears that the American
troops are here to engage the ASG in combat, the TOR professes that the present
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." The TOR further provides that 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."
These avowals of assistance, advice, and training, however, fly in the face of the
presence of US troops in the heart of the ASG's stronghold. Such presence is an
act of provocation that makes an armed confrontation between US soldiers and
ASG members inevitable.
The US troops in Basilan have been described as being "on a slippery slope
between training and fighting."Their very presence makes them a target for
terrorist and for the local Moslem populace, which has been bitterly anti-
American since colonial times. Though they are called advisers, the Americans
win be going on risky missions deep into the jungle. A former Green Beret who
is an analyst of Washington's Center for Strategies and Budgetary Assessments
notes that "when troops go out on patrol, they come as close as they can to
direct combat."4
"Advising" or "training" Filipino soldiers hardly describes the involvement of US
troops (unaccompanied by Filipino counterparts) on board combat helicopters
which land on the battlegrounds to evacuate Filipino soldiers wounded while
fighting the ASG. For example, on April 5,2002, US troops on board a Pave Hawk
helicopter flew to the scene of a night battle on Basilan Island to evacuate a
wounded Filipino soldier. This was reportedly the third time in recent weeks
that chopper-borne US forces had evacuated Filipino soldiers fighting the ASG.5
Whatever euphemisms may be conjured to characterize American
involvement, the RP-US Balikatan 02-1 Exercises are aimed at seeking out
the ASG and exterminating it.
The prohibition contained in the TOR against US exercise participants from
engaging in combat but "without prejudice to their right to self- defense"
provides little consolation. Combat muddles the distinction between aggression
and self-defense. US troops can always say they did not fire first and no one
would dare say otherwise. The ASG has been so demonized that no one cares
how it is exorcised. Significantly, the TOR does not define the parameters of
"self-defense." Militarily, a pre-emptive strike could be interpreted as an act of
self -defense.
What I fear most is that the country would be dragged into a more devastating
and protracted conflict as a result of the continued presence of US military
troops in Basilan. A single ASG sniper's bullet felling an American soldier could
be used as an excuse for massive retaliation by US ground and air forces to
attack and bomb out every suspected ASG lair, all in the name of "self -defense.
Apprehensions over possible catastrophic consequence of US military
involvement in our country are not without historical basis.
The US experience in Vietnam, for example, began as an expression of support
for the establishment of South Vietnam under Bao Dai's leadership in 1949 to.
counteract the support given by communist China and the Soviet Union to North
Vietnam. In 1950, the US began providing military assistance in fighting North
Vietnam by sending military advisors as well as US tanks, planes, artillery and
other supplies. The US became more involved in the Vietnam conflict when in
1961, it sent the first 400 Green Beret "Special Advisors" to South Vietnam to
train the latter's soldiers in methods of counter-insurgency against the Viet
Cong guerillas. It clarified that the American soldiers were not in Vietnam
to engage in combat.6
However, due to the increased success of the Viet Cong guerillas, assisted by the
Northern Vietnamese Army, the US eventually began to run covert operations
using South Vietnamese commandos in speed boats to harass radar sites along
the coastline of North Vietnam. In 1964, after an alleged torpedo attack by
North Vietnam of the American destroyers USS. Maddox and USS. C. Turner Joy
in the Gulf of Tonkin, the US decided to retaliate by conducting bombing raids in
North Vietnam.7
The Vietnam War resulted in the death of two million Vietnamese and injuries
to three million others. Twelve million Vietnamese became refugees and
thousands of children became orphaned.8 Millions of acres of Vietnam's forests
were defoliated by a herbicide called Agent Orange, dropped from the air.
Millions of mines and unexploded bombs and artillery shells are still scattered
in the countryside, posing constant danger to life and limb.
US militarv presence is
essentially indefinite
and open-ended.
Already, there are indications that the US intends to reestablish a more
enduring presence in the country. Defense Secretary Angelo Reyes was
quoted to have declared on March 20, 2002 that 2,665 US soldiers will take part
in the RP-US Balikatan 02-2 starting next month in Central Luzon and that 10
more military exercises will be held this year.9 How many more war exercises
are needed for "training and advising" Filipino soldiers? What conditions must
be satisfied for the United States to consider the "war against terrorism" in
Mindanao terminated? The endless frequency and successive repetition of the
war exercises covering the two largest islands of the country amount, in a real
sense, to the permanent presence of foreign military troops here sans a treaty in
blatant violation of the constitutional proscription.
US President George w. Bush in his January 30, 2002 speech declared:
The men and women of our armed-forces have delivered a message to
every enemy of the United States. You shall not escape the justice of this
nation. x x x.
Should any country be timid in the face of terror, if they do not act,
America will.
President Arroyo, in a speech at the Regis Hotel in New York City on February 1,
2002, pledged her "full support" to US President George W. Bush in the fight
against international terrorism. She declared that "the Philippines will continue
to be a partner of the United States in the war to end terrorism" and that "(t)he
anti-terrorism partnership will continue after the whole world is secure against
the terrorist."10
In his speech on the White House Laws on March 11, 2002, President Bush
exhorted:
America encourages and expects governments everywhere to help
remove the terrorist parasites that threaten their own countries and
the peace of the world. x x x. We are helping right now in the
Philippines, where terrorist with links to Al Qaeda are trying to seize
the southern part of the country to establish a military regime.
 They are oppressing local peoples, and have kidnapped both American
and Filipino citizens."11
The Philippine Daily Inquirer in its March 17, 2002 issue carried the
following report:
The United States wants to bring in more troops for the controversial
Balikatan 02-1 training exercise aimed at wiping out the Abu Sayyaf
bandits in Basilan.
The US military last week began calling the war-games "Operation
Enduring Freedom-Philippines," giving credence to claims that the
country has become, after Afghanistan, the second front of the US-led
global war on terrorism.
Today's issue of April 1, 2002 reporting as its source New York News Service,
quoted a senior Bush administration official as saying:
We are looking at prolonged training. x x x. It takes more to build up
capabilities than saying here are some night vision goggles.
The declarations of the two Presidents on the war against terrorism and their
avowal to secure the world against the terrorists would ineluctably suggest a
long-drawn conflict without a foreseeable end. Worse, it is not unlikely that
this war could expand and escalate to include as protagonists the Moro
Islamic Liberation Front and the Moro National Liberation Front and -not
improbably -the National People's Army, all lumped-up as "terrorists" in a
unilateral characterization.
No less than US Deputy Defense Secretary Paul Wolfowitz declared that the
proposed $48-billion increase to the US defense budget for 2003 is intended to
sustain the war on terrorism,12 including that fought in this country, thus: .
Deputy Defense Secretary Paul Wolfowitz on Wednesday said the
Pentagon needs a big budget increase next year on terrorism, which has
expanded from Afghanistan to the Philippines and now appears to be
moving to Georgia.13
The Court can take judicial notice of the foregoing pronouncements as they are
of public knowledge,14 having been widely circulated in all channels of the
media. Neither have they been denied.
US military intervention
is not the solution to the
Mindanao problem.
Assuming that the ASG is a terrorist organization, U.S. military intervention is
not the solution to achieve peace. The annihilation of the rebel bandits would be
a futile quest so long at the root causes of their criminality are not addressed. A
study15 by the United Nations Secretariat, however, acknowledges that
international terrorism springs from "misery, frustration, grievance and
'despair," elements which, many believe, are present in Basilan. Two veteran
Philippine journalists have described the province as Mindanao's "war
laboratory," where lawlessness, government neglect, religious strife, poverty,
and power struggle are rampant.16
If indeed acts of terrorism are cries of desperation, if terrorism is but a
symptom of the greater maladies of "misery, frustration, grievance and despair,"
then it cannot be remedied alone by ASG's physical extermination, which
appears to be the object of President Bush and President Macapagal- Arroyo's
joint campaign against global terrorism." Admittedly, the State has the right to
use force as a means of self-preservation. But perhaps we should all consider
that a military solution is but a first-aid measure, not the prescription to these
diseases. It has been opined that:
The issue of terrorism in the Philippines should be dealt with not from
the perspective of Manila-Washington ties but from a serious study of
how terrorism figures in the minds of leaders and armed men
belonging to the large but deeply factionalized guerrilla movements in
the country. Terrorism can never be dissociated from guerrilla warfare
and the separatist movement in Mindanao. From these movements
would arise religious extremists or millennarian groups. With the right
resources and the right agenda, these movements will continue to
attract men-skilled, intelligent, and experienced-who will come to grasp
the practical realities of waging a war with the minimum of resources
but maximum public impact.
The government does not have to look for foreign connections-and be
motivated by the desire to help foreign friends to address a problem
that has been and will be the making of its own home grown armies.17
The presence of US troops in Basilan, whether from the legal, philosophical-or
even from the practical perspective cannot be justified, On the contrary, it is
counterproductive. It serves to fuel an already volatile situation. US troops are
likely less able, if not less willing, to distinguish between the innocent and the
enemy. The inevitable "collateral damage," the killing of women and children,
Muslims and Christians, the destruction of homes, schools and hospitals would
fan the flames of fanaticism and transform mere rogues into martyrs.

The Filipino soldier has proven himself brave, courageous, fearless and
tenacious in the field of battle as shown in Bataan and Corregidor, in the four
long years of guerilla warfare thereafter against the Japanese, and in the
struggle for independence against Spain and the United States at the turn of the
last century. The local army and police have successfully battled in the past
against Communist and other insurgents which were more organized and
numerous, operating in larger parts of the country and fighting for their political
beliefs. If our troops need training by us advisers or have to conduct joint
exercises with US troops to improve their fighting capability, these could be
more effectively achieved if done outside Basilan or away from the danger
zones. Instead of bringing troops to the combat zones, the US can do more by
supplying our soldiers with modern and high tech weaponry.

Prescinding from the foregoing disquisitions, it is totally erroneous to argue

that petitioners do not have legal standing or that the issues raised by them are
premature and not based on sufficient facts. The issues raised are of
transcendental importance.18 The Balikatan exercises pose direct injury to
some of the petitioners (intervenors) who live in the affected areas. The
presence of us troops in the combat zones "assisting" and "advising" our troops
in combat against the ASG is a blatant violation of the Constitutional
proscription against the stationing of foreign troops to fight a local insurgency
and puts the country in peril of becoming a veritable killing field. If the time is
not ripe to challenge the continuing affront against the Constitution and the
safety of the people, when is the right time? When the countryside has been
devastated and numerous lives lost?

I therefore vote to give due course to the petition.

EN BANC
[A.M. No. 90-11-2697-CA. June 29, 1992.]
LETTER OF ASSOCIATE JUSTICE REYNATO S. PUNO of the Court of Appeals
dated 14 November 1990.
RESOLUTION
PADILLA, J.:
Petitioner Associate Justice Reynato S. Puno, a member of the Court of Appeals,
wrote a letter dated 14 November 1990 addressed to this Court, seeking the
correction of his seniority ranking in the Court of Appeals.
It appears from the records that petitioner was first appointed Associate Justice
of the Court of Appeals on 20 June 1980 but took his oath of office for said
position only on 29 November 1982, after serving as Assistant Solicitor General
in the Office of the Solicitor General since 1974. 1 Petitioner elaborates that President Aquino is presumed to have intended to
On 17 January 1983, the Court of Appeals was reorganized and became the
Intermediate Appellate Court pursuant to Batas Pambansa Blg. 129 entitled "An
Act Reorganizing the Judiciary. Appropriating Funds Therefor and For Other
Purposes." 2 Petitioner was appointed Appellate Justice in the First Special
Cases Division of the Intermediate Appellate Court. On 7 November 1984,
petitioner accepted an appointment to be ceased to be a member of the
Judiciary. 3 position as Justice of the Court of Appeals to the Ministry of Justice as
The aftermath of the EDSA Revolution in February 1986 brought about a
reorganization of the entire government, including the Judiciary. To effect the
reorganization of the Intermediate Appellate Court and other lower courts, a
Screening Committee was created, with the then Minister of Justice, now
Senator Neptali Gonzales as Chairman and then Solicitor General, now
Philippine Ambassador to the United Nations Sedfrey Ordoñez as Vice
Chairman. President Corazon C. Aquino, exercising legislative powers by virtue
of the revolution, issued Executive Order No. 33 to govern the aforementioned
reorganization of the Judiciary. 4 reads:jgc:chanrobles.com.ph
The Screening Committee recommended the return of petitioner as Associate
Justice of the new Court of Appeals and assigned him the rank of number eleven
(11) in the roster of appellate court justices. When the appointments were
signed by President Aquino on 28 July 1986, petitioner’s seniority ranking
changed, however, from number eleven (11) to number twenty six (26). 5
Petitioner now alleges that the change in his seniority ranking could only be
attributed to inadvertence for, otherwise, it would run counter to the provisions
of Section 2 of Executive Order No. 33, which reads:chanrobles virtual
lawlibrary
"SECTION 2. Section 3, Chapter 1 of Batas Pambansa Blg. 129, is hereby
amended to read as follows:jgc:chanrobles.com.ph
"SEC. 2. Organization. — There is hereby created a Court of Appeals which shall
consist of a Presiding Justice and fifty Associate Justices who shall be appointed
by the President of the Philippines. The Presiding Justice shall be so designated
in his appointment and the Associate Justice shall have precedence according to
the dates of their respective appointments, or when the appointments of two or
more shall bear the same date, according to the order in which their
appointments were issued by the President. Any Member who is reappointed to
the Court after rendering service in any other position in the government shall
retain the precedence to which he was entitled under his original appointment,
and his service in the Court shall, for all intents and purpose be considered as
continuous and uninterrupted." 6
comply with her own Executive Order No. 33 so much so that the correction of
the inadvertent error would only implement the intent of the President as well
as the spirit of Executive Order No. 33 and will not provoke any kind of
constitutional confrontation (between the President and the Supreme Court). 7
Petitioner points to the case of Justice Oscar Victoriano, former Presiding Justice
of the Court of Appeals who, according to petitioner, was transferred from his
Commissioner of Land Registration and in 1986 was reappointed to the Court of
Appeals. Petitioner states that his (Victoriano’s) stint in the Commission of Land
Registration did not adversely affect his seniority ranking in the Court of
Appeals, for, in his case, Executive Order No. 33 was correctly applied. 8
In a resolution of the Court en banc dated 29 November 1990, the Court granted
Justice Puno’s request. 9 It will be noted that before the issuance of said
resolution, there was no written opposition to, or comment on petitioner’s
aforesaid request. The dispositive portion of the resolution
"IN VIEW WHEREOF, the petition of Associate Justice Reynato S. Puno for
correction of his seniority ranking in the Court of Appeals is granted. The
presiding Justice of the Court of Appeals, the Honorable Rodolfo A. Nocon, is
hereby directed to correct the seniority rank of Justice Puno from number
twelve (12) to number five (5). Let copies of this Resolution be furnished the
Court Administrator and the Judicial and Bar Council for their guidance and
information." 10
A motion for reconsideration of the resolution of the Court en banc dated 29
November 1990 was later filed by Associate Justices Jose C. Campos, Jr. and Luis
A. Javellana, two (2) of the Associate Justices affected by the ordered correction.
They contend that the present Court of Appeals is a new Court with fifty one
(51) members and that petitioner could not claim a reappointment to a prior
court; neither can he claim that he was returning to his former court, for the
courts where he had previously been appointed ceased to exist at the date of his
last appointment. 11
The Court en banc in a resolution dated 17 January 1992 required the petitioner
to file his comment on the motion for reconsideration of the resolution dated 29
November 1990.
In his Comment, petitioner argues that, by virtue of Executive Order No. 33 read
in relation to B.P. Blg. 129, his seniority ranking in the Court of Appeals is now
number five (5) for, though President Aquino rose to power by virtue of a
revolution, she had pledged at the issuance of Proclamation No. 3 (otherwise
known as the Freedom Constitution) that "no right provided under the
unratified 1973 Constitution (shall) be absent in the Freedom Constitution." 12
Moreover, since the last sentence of Section 2 of Executive Order No. 33
virtually re-enacted the last sentence of Sec. 3, Chapter 1 of B.P. Blg. 129,
statutory construction rules on simultaneous repeal and re-enactment mandate,
according to petitioner, the preservation and enforcement of all rights and
liabilities which had accrued under the original statute. 13 Furthermore,
petitioner avers that, although the power of appointment is executive in
character and cannot be usurped by any other branch of the Government, such
power can still be regulated by the Constitution and by the appropriate law, in
this case, by the limits set by Executive Order NO. 33 14 for the power of
appointment cannot be wielded in violation of law. 15
Justices Javellana and Campos were required by the Court to file their reply to
Justice Puno’s comment on their motion for reconsideration of the resolution of
the Court en banc dated 24 January 1991.chanrobles.com:cralaw:red
In their Reply and Supplemental Reply, Associate Justices Javellana and Campos
submit that the appeal or request for correction filed by the petitioner was
addressed to the wrong party. They aver that as petitioner himself had alleged
the mistake to be an "inadvertent error" of the Office of the President, ergo, he
should have filed his request for correction also with said Office of the President
and not directly with the Supreme Court. 16 Furthermore, they point out that
petitioner had indeed filed with the Office of the President a request or petition
for correction of his ranking, (seniority) but the same was not approved such
that his recourse should have been an appropriate action before the proper
court and impleading all parties concerned. The aforesaid non-approval by the
Office of the President they argue, should be respected by the Supreme Court
"not only on the basis of the doctrine of separation of powers but also their
presumed knowledge ability and even expertise in the laws they are entrusted
to enforce" 17 for it (the non-approval) is a confirmation that petitioner’s
seniority ranking at the time of his appointment by President Aquino was, in
fact, deliberate and not an "inadvertent error" as petitioner would have the
Court believe. 18
The resolution of this controversy is not a pleasant task for the Court since it
involves not only members of the next highest court of the land but persons
who are close to members of this Court. But the controversy has to be resolved.
The core issue in this case is whether the present Court of Appeals is a new
court such that it would negate any claim to precedence or seniority admittedly
enjoyed by petitioner in the Court of Appeals and Intermediate Appellate Court
existing prior to Executive Order No. 33 or whether the present Court of
Appeals is merely a continuation of the Court of Appeals and Intermediate
Appellate Court existing prior to said Executive Order No. 33.
It is the holding of the Court that the present Court of Appeals is a new entity,
different and distinct from the Court of Appeals or the Intermediate Appellate
Court existing prior to Executive Order No. 33, for it was created in the wake of
the massive reorganization launched by the revolutionary government of
Corazon C. Aquino in the aftermath of the people power (EDSA) revolution in
1986.
A resolution has been defined as "the complete overthrow of the established
government in any country or state by those who were previously subject to it"
19 or as "a sudden, radical and fundamental change in the government or
political system, usually effected with violence or at least some acts of violence."
20 In Kelsen’s book, General Theory of Law and State, it is defined as that which
"occurs whenever the legal order of a community is nullified and replaced by a
new order . . . a way not prescribed by the first order itself." 21
It was through the February 1986 revolution, a relatively peaceful one, and
more popularly known as the "people power revolution" that the Filipino
people tore themselves away from an existing regime. This revolution also saw
the unprecedented rise to power of the Aquino government.
From the natural law point of view, the right of revolution has been defined as
"an inherent right of a people to cast out their rulers, change their policy or
effect radical reforms in their system of government or institutions by force or a
general uprising when the legal and constitutional methods of making such
change have proved inadequate or are so obstructed as to be unavailable." 22 It
has been said that "the locus of positive law-making power lies with the people
of the state" and from there is derived "the right of the people to abolish, to Cabinet and other key officers of the administration, the departure of the
reform and to alter any existing form of government without regard to the Marcos Cabinet officials, revampt of the Judiciary and the Military signalled the
existing constitution." 23 point where the legal system then in effect, had ceased to be obeyed by the
Filipino.
The three (3) clauses that precede the text of the Provisional (Freedom)
Constitution, 24 read:jgc:chanrobles.com.ph The Court holds that the Court of Appeals and Intermediate Appellate Court
existing prior to Executive Order No. 33 phased out as part of the legal system
"WHEREAS, the new government under President Corazon C. Aquino was abolished by the revolution and that the Court of Appeals established under
installed through a direct exercise of the power of the Filipino people assisted Executive Order No. 33 was an entirely new court with appointments thereto
by units of the New Armed Forces of the Philippines; having no relation to earlier appointments to the abolished courts, and that the
reference to precedence in rank contained in the last sentence of Sec. 2, BP Blg.
"WHEREAS, the heroic action of the people was done in defiance of the No. 129 as amended by Executive Order No. 33 refers to prospective situations
provisions of the 1973 Constitution, as amended; as distinguished from retroactive ones.

"WHEREFORE, I, Corazon C. Aquino, President of the Philippines, by virtue of
the powers vested in me by the sovereign mandate of the people, do hereby
promulgate the following Provisional Constitution."25cralaw:red
These summarize the Aquino government’s position that its mandate is taken
from "a direct exercise of the power of the Filipino people." 26
Discussions and opinions of legal experts also proclaim that the Aquino
government was "revolutionary in the sense that it came into existence in
defiance of the existing legal processes" 27 and that it was a revolutionary
government "instituted by the direct action of the people and in opposition to
the authoritarian values and practices of the overthrown government." 28
A question which naturally comes to mind is whether the then existing legal
order was overthrown by the Aquino government. "A legal order is the
authoritative code of a polity. Such code consists of all the rules found in the
enactments of the organs of the polity. Where the state operates under a written
constitution, its organs may be readily determined from a reading of its
provisions. Once such organs are ascertained, it becomes an easy matter to
locate their enactments. The rules in such enactments, along with those in the
constitution, comprise the legal order of that constitutional state." 29 It is
assumed that the legal order remains as a "culture system" of the polity as long
as the latter endures 30 and that a point may be reached, however, where the
legal system ceases to be operative as a whole for it is no longer obeyed by the
population nor enforced by the officials. 31
It is widely known that Mrs. Aquino’s rise to the presidency was not due to
constitutional processes; in fact, it was achieved in violation of the provisions of
the 1973 Constitution as a Batasang Pambansa resolution had earlier declared
Mr. Marcos at the winner in the 1986 presidential election. 32 Thus it can be
said that the organization of Mrs. Aquino’s Government which was met by little
resistance and her control of the state evidenced by the appointment of the
But even assuming, arguendo, that Executive Order No. 33 did not abolish the
precedence or seniority ranking resulting from previous appointment to the
Court of Appeals or Intermediate Appellate Court existing prior to the 1986
revolution, it is believed that President Aquino as head of then revolutionary
government, could disregard or set aside such precedence or seniority in
ranking when she made her appointments to the reorganized Court of Appeals
in 1986.
It is to be noted that, at the time of the issuance of Executive Order No. 33,
President Aquino was still exercising the powers of a revolutionary
government, encompassing both executive and legislative powers, such that she
could, if she so desired, amend, modify or repeal any part of B.P. Blg. 129 or her
own Executive Order No. 33. It should also be remembered that the same
situation was still in force when she issued the 1986 appointments to the Court
of Appeals. In other words, President Aquino, at the time of the issuance of the
1986 appointments, modified or disregarded the rule embodied in B.P. Blg. 129
as amended by Executive Order No. 33, on precedence or seniority in the case of
the petitioner, for reasons known only to her. Since the appointment extended
by the President to the petitioner in 1986 for membership in the new Court of
Appeals with its implicit ranking in the roster of justices, was a valid
appointment anchored on the President’s exercise of her then revolutionary
powers, it is not for the Court at this time to question or correct that exercise.
ACCORDINGLY, the Court GRANTS the Motion for Reconsideration and the
seniority rankings of members of the Court of Appeals, including that of the
petitioner, at the time the appointments were made by the President in 1986,
are recognized and upheld.
SO ORDERED.
G.R. No. 101949 December 1, 1994
THE HOLY SEE, Petitioner, v. THE HON. ERIBERTO U. ROSARIO, JR., as
Presiding Judge of the Regional Trial Court of Makati, Branch 61 and
STARBRIGHT SALES ENTERPRISES, INC., Respondents.
Padilla Law Office for petitioner.chanrobles virtual law library
Siguion Reyna, Montecillo & Ongsiako for private respondent.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to
reverse and set aside the Orders dated June 20, 1991 and September 19, 1991 of
the Regional Trial Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-
183.chanroblesvirtualawlibrarychanrobles virtual law library
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the
complaint in Civil Case No. 90-183, while the Order dated September 19, 1991
denied the motion for reconsideration of the June 20,1991
Order.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner is the Holy See who exercises sovereignty over the Vatican City in
Rome, Italy, and is represented in the Philippines by the Papal
Nuncio.chanroblesvirtualawlibrarychanrobles virtual law library
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation
engaged in the real estate business.chanroblesvirtualawlibrarychanrobles
virtual law library
This petition arose from a controversy over a parcel of land consisting of 6,000
square meters (Lot 5-A, Transfer Certificate of Title No. 390440) located in the
Municipality of Parañaque, Metro Manila and registered in the name of
petitioner.chanroblesvirtualawlibrarychanrobles virtual law library
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer
Certificates of Title Nos. 271108 and 265388 respectively and registered in the
name of the Philippine Realty Corporation
(PRC).chanroblesvirtualawlibrarychanrobles virtual law library
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr.,
acting as agent to the sellers. Later, Licup assigned his rights to the sale to
private respondent.chanroblesvirtualawlibrarychanrobles virtual law library
In view of the refusal of the squatters to vacate the lots sold to private
respondent, a dispute arose as to who of the parties has the responsibility of
evicting and clearing the land of squatters. Complicating the relations of the
parties was the sale by petitioner of Lot 5-A to Tropicana Properties and
Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional
Trial Court, Branch 61, Makati, Metro Manila for annulment of the sale of the
three parcels of land, and specific performance and damages against petitioner,
represented by the Papal Nuncio, and three other defendants: namely, Msgr.
Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No.
90-183).chanroblesvirtualawlibrarychanrobles virtual law library
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of
petitioner and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at
the price of P1,240.00 per square meters; (2) the agreement to sell was made on
the condition that earnest money of P100,000.00 be paid by Licup to the sellers,
and that the sellers clear the said lots of squatters who were then occupying the
same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month,
Licup assigned his rights over the property to private respondent and informed
the sellers of the said assignment; (5) thereafter, private respondent demanded
from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property
of squatters; however, Msgr. Cirilos informed private respondent of the
squatters' refusal to vacate the lots, proposing instead either that private
respondent undertake the eviction or that the earnest money be returned to the
latter; (6) private respondent counterproposed that if it would undertake the
eviction of the squatters, the purchase price of the lots should be reduced from
P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest
money of P100,000.00 and wrote private respondent giving it seven days from
receipt of the letter to pay the original purchase price in cash; (8) private
respondent sent the earnest money back to the sellers, but later discovered that
on March 30, 1989, petitioner and the PRC, without notice to private
respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of
Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers'
transfer certificate of title over the lots were cancelled, transferred and
registered in the name of Tropicana; (9) Tropicana induced petitioner and the
PRC to sell the lots to it and thus enriched itself at the expense of private
respondent; (10) private respondent demanded the rescission of the sale to
Tropicana and the reconveyance of the lots, to no avail; and (11) private
respondent is willing and able to comply with the terms of the contract to sell
and has actually made plans to develop the lots into a townhouse project, but in
view of the sellers' breach, it lost profits of not less than
P30,000.000.00.chanroblesvirtualawlibrarychanrobles virtual law library
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale
between petitioner and the PRC on the one hand, and Tropicana on the other;
(2) the reconveyance of the lots in question; (3) specific performance of the
agreement to sell between it and the owners of the lots; and (4)
damages.chanroblesvirtualawlibrarychanrobles virtual law library
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the
complaint - petitioner for lack of jurisdiction based on sovereign immunity from
suit, and Msgr. Cirilos for being an improper party. An opposition to the motion
was filed by private respondent.chanroblesvirtualawlibrarychanrobles virtual
law library
On June 20, 1991, the trial court issued an order denying, among others,
petitioner's motion to dismiss after finding that petitioner "shed off [its]
sovereign immunity by entering into the business contract in question" (Rollo,
pp. 20-21).chanroblesvirtualawlibrarychanrobles virtual law library
On July 12, 1991, petitioner moved for reconsideration of the order. On August
30, 1991, petitioner filed a "Motion for a Hearing for the Sole Purpose of
Establishing Factual Allegation for claim of Immunity as a Jurisdictional
Defense." So as to facilitate the determination of its defense of sovereign
immunity, petitioner prayed that a hearing be conducted to allow it to establish
certain facts upon which the said defense is based. Private respondent opposed
this motion as well as the motion for
reconsideration.chanroblesvirtualawlibrarychanrobles virtual law library
On October 1, 1991, the trial court issued an order deferring the resolution on
the motion for reconsideration until after trial on the merits and directing
petitioner to file its answer (Rollo, p. 22).chanroblesvirtualawlibrarychanrobles
virtual law library
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes
the privilege of sovereign immunity only on its own behalf and on behalf of its
official representative, the Papal Nuncio.chanroblesvirtualawlibrarychanrobles
virtual law library
On December 9, 1991, a Motion for Intervention was filed before us by the
Department of Foreign Affairs, claiming that it has a legal interest in the
outcome of the case as regards the diplomatic immunity of petitioner, and that it
"adopts by reference, the allegations contained in the petition of the Holy See
insofar as they refer to arguments relative to its claim of sovereign immunity
from suit" (Rollo, p. 87).chanroblesvirtualawlibrarychanrobles virtual law
library
Private respondent opposed the intervention of the Department of Foreign
Affairs. In compliance with the resolution of this Court, both parties and the
Department of Foreign Affairs submitted their respective memoranda.
II
A preliminary matter to be threshed out is the procedural issue of whether the
petition for certiorari under Rule 65 of the Revised Rules of Court can be availed
of to question the order denying petitioner's motion to dismiss. The general rule
is that an order denying a motion to dismiss is not reviewable by the appellate
courts, the remedy of the movant being to file his answer and to proceed with
the hearing before the trial court. But the general rule admits of exceptions, and
one of these is when it is very clear in the records that the trial court has no
alternative but to dismiss the complaint (Philippine National Bank v. Florendo,
206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114
[1992]. In such a case, it would be a sheer waste of time and energy to require
the parties to undergo the rigors of a
trial.chanroblesvirtualawlibrarychanrobles virtual law library
The other procedural question raised by private respondent is the personality
or legal interest of the Department of Foreign Affairs to intervene in the case in
behalf of the Holy See (Rollo, pp. 186-
190).chanroblesvirtualawlibrarychanrobles virtual law library
In Public International Law, when a state or international agency wishes to
plead sovereign or diplomatic immunity in a foreign court, it requests the
Foreign Office of the state where it is sued to convey to the court that said
defendant is entitled to immunity.chanroblesvirtualawlibrarychanrobles virtual
law library
In the United States, the procedure followed is the process of "suggestion,"
where the foreign state or the international organization sued in an American
court requests the Secretary of State to make a determination as to whether it is
entitled to immunity. If the Secretary of State finds that the defendant is
immune from suit, he, in turn, asks the Attorney General to submit to the court a
"suggestion" that the defendant is entitled to immunity. In England, a similar
procedure is followed, only the Foreign Office issues a certification to that effect
instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965];
Note: Immunity from Suit of Foreign Sovereign Instrumentalities and
Obligations, 50 Yale Law Journal 1088
[1941]).chanroblesvirtualawlibrarychanrobles virtual law library
In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of its claim
of sovereign or diplomatic immunity. But how the Philippine Foreign Office
conveys its endorsement to the courts varies. In International Catholic Migration
Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just
sent a letter directly to the Secretary of Labor and Employment, informing the
latter that the respondent-employer could not be sued because it enjoyed
diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242
(1972), the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary
of Foreign Affairs to request the Solicitor General to make, in behalf of the
Commander of the United States Naval Base at Olongapo City, Zambales, a
"suggestion" to respondent Judge. The Solicitor General embodied the
"suggestion" in a Manifestation and Memorandum as amicus
curiae.chanroblesvirtualawlibrarychanrobles virtual law library
In the case at bench, the Department of Foreign Affairs, through the Office of
Legal Affairs moved with this Court to be allowed to intervene on the side of
petitioner. The Court allowed the said Department to file its memorandum in
support of petitioner's claim of sovereign
immunity.chanroblesvirtualawlibrarychanrobles virtual law library
In some cases, the defense of sovereign immunity was submitted directly to the
local courts by the respondents through their private counsels (Raquiza v.
Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80
Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and
companion cases). In cases where the foreign states bypass the Foreign Office,
the courts can inquire into the facts and make their own determination as to the
nature of the acts and transactions involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over
petitioner, being a foreign state enjoying sovereign immunity. On the other
hand, private respondent insists that the doctrine of non-suability is not
anymore absolute and that petitioner has divested itself of such a cloak when, of
its own free will, it entered into a commercial transaction for the sale of a parcel
of land located in the Philippines.chanroblesvirtualawlibrarychanrobles virtual
law library
A. The Holy See
Before we determine the issue of petitioner's non-suability, a brief look into its
status as a sovereign state is in order.chanroblesvirtualawlibrarychanrobles
virtual law library
Before the annexation of the Papal States by Italy in 1870, the Pope was the
monarch and he, as the Holy See, was considered a subject of International Law.
With the loss of the Papal States and the limitation of the territory under the
Holy See to an area of 108.7 acres, the position of the Holy See in International
Law became controversial (Salonga and Yap, Public International Law 36-37
[1992]).chanroblesvirtualawlibrarychanrobles virtual law library
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy
recognized the exclusive dominion and sovereign jurisdiction of the Holy See
over the Vatican City. It also recognized the right of the Holy See to receive
foreign diplomats, to send its own diplomats to foreign countries, and to enter
into treaties according to International Law (Garcia, Questions and Problems In
International Law, Public and Private 81
[1948]).chanroblesvirtualawlibrarychanrobles virtual law library
The Lateran Treaty established the statehood of the Vatican City "for the
purpose of assuring to the Holy See absolute and visible independence and of
guaranteeing to it indisputable sovereignty also in the field of international
relations" (O'Connell, I International Law 311
[1965]).chanroblesvirtualawlibrarychanrobles virtual law library
In view of the wordings of the Lateran Treaty, it is difficult to determine
whether the statehood is vested in the Holy See or in the Vatican City. Some
writers even suggested that the treaty created two international persons - the
Holy See and Vatican City (Salonga and Yap, supra,
37).chanroblesvirtualawlibrarychanrobles virtual law library
The Vatican City fits into none of the established categories of states, and the
attribution to it of "sovereignty" must be made in a sense different from that in
which it is applied to other states (Fenwick, International Law 124-125 [1948];
Cruz, International Law 37 [1991]). In a community of national states, the
Vatican City represents an entity organized not for political but for ecclesiastical
purposes and international objects. Despite its size and object, the Vatican City
has an independent government of its own, with the Pope, who is also head of
the Roman Catholic Church, as the Holy See or Head of State, in conformity with
its traditions, and the demands of its mission in the world. Indeed, the world-
wide interests and activities of the Vatican City are such as to make it in a sense
an "international state" (Fenwick, supra., 125; Kelsen, Principles of
International Law 160 [1956]).chanroblesvirtualawlibrarychanrobles virtual
law library
One authority wrote that the recognition of the Vatican City as a state has
significant implication - that it is possible for any entity pursuing objects
essentially different from those pursued by states to be invested with
international personality (Kunz, The Status of the Holy See in International Law,
46 The American Journal of International Law 308
[1952]).chanroblesvirtualawlibrarychanrobles virtual law library
Inasmuch as the Pope prefers to conduct foreign relations and enter into
transactions as the Holy See and not in the name of the Vatican City, one can
conclude that in the Pope's own view, it is the Holy See that is the international
person.chanroblesvirtualawlibrarychanrobles virtual law library
The Republic of the Philippines has accorded the Holy See the status of a foreign
sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had
diplomatic representations with the Philippine government since 1957 (Rollo, p.
87). This appears to be the universal practice in international
relations.chanroblesvirtualawlibrarychanrobles virtual law library
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted
the generally accepted principles of International Law. Even without this
affirmation, such principles of International Law are deemed incorporated as
part of the law of the land as a condition and consequence of our admission in
the society of nations (United States of America v. Guinto, 182 SCRA 644
[1990]).chanroblesvirtualawlibrarychanrobles virtual law library
There are two conflicting concepts of sovereign immunity, each widely held and
firmly established. According to the classical or absolute theory, a sovereign
cannot, without its consent, be made a respondent in the courts of another
sovereign. According to the newer or restrictive theory, the immunity of the
sovereign is recognized only with regard to public acts or acts jure imperii of a
state, but not with regard to private acts or acts jure gestionis
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-
Santiago, Public International Law 194
[1984]).chanroblesvirtualawlibrarychanrobles virtual law library
Some states passed legislation to serve as guidelines for the executive or judicial
determination when an act may be considered as jure gestionis. The United
States passed the Foreign Sovereign Immunities Act of 1976, which defines a
commercial activity as "either a regular course of commercial conduct or a
particular commercial transaction or act." Furthermore, the law declared that
the "commercial character of the activity shall be determined by reference to
the nature of the course of conduct or particular transaction or act, rather than
by reference to its purpose." The Canadian Parliament enacted in 1982 an Act to
Provide For State Immunity in Canadian Courts. The Act defines a "commercial
activity" as any particular transaction, act or conduct or any regular course of
conduct that by reason of its nature, is of a "commercial character."chanrobles
virtual law library
The restrictive theory, which is intended to be a solution to the host of problems
involving the issue of sovereign immunity, has created problems of its own.
Legal treatises and the decisions in countries which follow the restrictive theory
have difficulty in characterizing whether a contract of a sovereign state with a
private party is an act jure gestionis or an act jure
imperii.chanroblesvirtualawlibrarychanrobles virtual law library
The restrictive theory came about because of the entry of sovereign states into
purely commercial activities remotely connected with the discharge of
governmental functions. This is particularly true with respect to the Communist
states which took control of nationalized business activities and international
trading.chanroblesvirtualawlibrarychanrobles virtual law library
This Court has considered the following transactions by a foreign state with
private parties as acts jure imperii: (1) the lease by a foreign government of
apartment buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312
[1949]; (2) the conduct of public bidding for the repair of a wharf at a United
States Naval Station (United States of America v. Ruiz, supra.); and (3) the
change of employment status of base employees (Sanders v. Veridiano, 162
SCRA 88 [1988]).chanroblesvirtualawlibrarychanrobles virtual law library
On the other hand, this Court has considered the following transactions by a
foreign state with private parties as acts jure gestionis: (1) the hiring of a cook in
the recreation center, consisting of three restaurants, a cafeteria, a bakery, a
store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to
cater to American servicemen and the general public (United States of America
v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of
barber shops in Clark Air Base in Angeles City (United States of America v.
Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and other
facilities open to the general public is undoubtedly for profit as a commercial
and not a governmental activity. By entering into the employment contract with
the cook in the discharge of its proprietary function, the United States
government impliedly divested itself of its sovereign immunity from
suit.chanroblesvirtualawlibrarychanrobles virtual law library
In the absence of legislation defining what activities and transactions shall be
considered "commercial" and as constituting acts jure gestionis, we have to
come out with our own guidelines, tentative they may
be.chanroblesvirtualawlibrarychanrobles virtual law library
Certainly, the mere entering into a contract by a foreign state with a private
party cannot be the ultimate test. Such an act can only be the start of the
inquiry. The logical question is whether the foreign state is engaged in the
activity in the regular course of business. If the foreign state is not engaged
regularly in a business or trade, the particular act or transaction must then be
tested by its nature. If the act is in pursuit of a sovereign activity, or an incident
thereof, then it is an act jure imperii, especially when it is not undertaken for
gain or profit.chanroblesvirtualawlibrarychanrobles virtual law library
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will
be deemed to have impliedly waived its non-suability if it has entered into a
contract in its proprietary or private capacity. It is only when the contract
involves its sovereign or governmental capacity that no such waiver may be
implied.
In the case at bench, if petitioner has bought and sold lands in the ordinary
course of a real estate business, surely the said transaction can be categorized
as an act jure gestionis. However, petitioner has denied that the acquisition and
subsequent disposal of Lot 5-A were made for profit but claimed that it acquired
said property for the site of its mission or the Apostolic Nunciature in the
Philippines. Private respondent failed to dispute said
claim.chanroblesvirtualawlibrarychanrobles virtual law library
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of
Manila. The donation was made not for commercial purpose, but for the use of
petitioner to construct thereon the official place of residence of the Papal
Nuncio. The right of a foreign sovereign to acquire property, real or personal, in
a receiving state, necessary for the creation and maintenance of its diplomatic
mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations
(Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered
into force in the Philippines on November 15,
1965.chanroblesvirtualawlibrarychanrobles virtual law library
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from
the civil and administrative jurisdiction of the receiving state over any real
action relating to private immovable property situated in the territory of the
receiving state which the envoy holds on behalf of the sending state for the
purposes of the mission. If this immunity is provided for a diplomatic envoy,
with all the more reason should immunity be recognized as regards the
sovereign itself, which in this case is the Holy
See.chanroblesvirtualawlibrarychanrobles virtual law library
The decision to transfer the property and the subsequent disposal thereof are
likewise clothed with a governmental character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the
squatters living thereon made it almost impossible for petitioner to use it for
the purpose of the donation. The fact that squatters have occupied and are still
occupying the lot, and that they stubbornly refuse to leave the premises, has
been admitted by private respondent in its complaint (Rollo, pp. 26,
27).chanroblesvirtualawlibrarychanrobles virtual law library
The issue of petitioner's non-suability can be determined by the trial court
without going to trial in the light of the pleadings, particularly the admission of
private respondent. Besides, the privilege of sovereign immunity in this case
was sufficiently established by the Memorandum and Certification of the
Department of Foreign Affairs. As the department tasked with the conduct of
the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I,
Sec. 3), the Department of Foreign Affairs has formally intervened in this case
and officially certified that the Embassy of the Holy See is a duly accredited
diplomatic mission to the Republic of the Philippines exempt from local
jurisdiction and entitled to all the rights, privileges and immunities of a
diplomatic mission or embassy in this country (Rollo, pp. 156-157). The
determination of the executive arm of government that a state or
instrumentality is entitled to sovereign or diplomatic immunity is a political
question that is conclusive upon the courts (International Catholic Migration
Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is
recognized and affirmed by the executive branch, it is the duty of the courts to
accept this claim so as not to embarrass the executive arm of the government in
conducting the country's foreign relations (World Health Organization v.
Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration
Commission and in World Health Organization, we abide by the certification of
the Department of Foreign Affairs.chanroblesvirtualawlibrarychanrobles virtual
law library
Ordinarily, the procedure would be to remand the case and order the trial court
to conduct a hearing to establish the facts alleged by petitioner in its motion. In
view of said certification, such procedure would however be pointless and
unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No.
109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its
grievances. Under both Public International Law and Transnational Law, a
person who feels aggrieved by the acts of a foreign sovereign can ask his own
government to espouse his cause through diplomatic
channels.chanroblesvirtualawlibrarychanrobles virtual law library
Private respondent can ask the Philippine government, through the Foreign
Office, to espouse its claims against the Holy See. Its first task is to persuade the
Philippine government to take up with the Holy See the validity of its claims. Of
course, the Foreign Office shall first make a determination of the impact of its
espousal on the relations between the Philippine government and the Holy See
(Young, Remedies of Private Claimants Against Foreign States, Selected Readings
on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the
Philippine government decides to espouse the claim, the latter ceases to be a
private cause.chanroblesvirtualawlibrarychanrobles virtual law library

According to the Permanent Court of International Justice, the forerunner of the

International Court of Justice:

By taking up the case of one of its subjects and by reporting to diplomatic action
or international judicial proceedings on his behalf, a State is in reality asserting
its own rights - its right to ensure, in the person of its subjects, respect for the
rules of international law (The Mavrommatis Palestine Concessions, 1 Hudson,
World Court Reports 293, 302 [1924]).

WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil
Case No. 90-183 against petitioner is
DISMISSED.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.
 LAWYERS LEAGUE FOR A BETTER PHILIPPINES AND/OR OLIVER A.
LOZANO VS. PRESIDENT CORAZON C. AQUINO, ET AL.
SIRS/MADAMS:
Quoted hereunder, for your information, is a resolution of this Court MAY 22,
1986.
In G.R. No. 73748, Lawyers League for a Better Philippines vs. President
Corazon C. Aquino, et al.; G.R. No. 73972, People's Crusade for Supremacy of the
Constitution vs. Mrs. Cory Aquino, et al., and G.R. No. 73990, Councilor Clifton U.
Ganay vs. Corazon C. Aquino, et al., the legitimacy of the government of
President Aquino is questioned. It is claimed that her government is illegal
because it was not established pursuant to the 1973 Constitution.
DIGEST
FACTS:
On February 25, 1986, President Corazon Aquino issued Proclamation No. 1
announcing that she and Vice President Laurel were taking power.
On March 25, 1986, proclamation No.3 was issued providing the basis of the
Aquino government assumption of power by stating that the "new government
was installed through a direct exercise of the power of the Filipino people
assisted by units of the New Armed Forces of the Philippines."
ISSUE:
Whether or not the government of Corazon Aquino is legitimate.

As early as April 10, 1986, this Court* had already voted to dismiss the
petitions for the reasons to be stated below. On April 17, 1986, Atty.
Lozano as counsel for the petitioners in G.R. Nos. 73748 and 73972
withdrew the petitions and manifested that they would pursue the
question by extra-judicial methods. The withdrawal is functus oficio.
HELD:
Yes. The legitimacy of the Aquino government is not a justiciable matter but
belongs to the realm of politics where only the people are the judge.

The three petitions obviously are not impressed with merit. Petitioners have no  The Court further held that:
personality to sue and their petitions state no cause of action. For the legitimacy  The people have accepted the Aquino government which is in effective
of the Aquino government is not a justiciable matter. It belongs to the realm of control of the entire country;
politics where only the people of the Philippines are the judge. And the people  It is not merely a de facto government but in fact and law a de jure
have made the judgment; they have accepted the government of President government; and
Corazon C. Aquino which is in effective control of the entire country so that it is
 The community of nations has recognized the legitimacy of the new
not merely a de factogovernment but is in fact and law a de jure government.
government.
Moreover, the community of nations has recognized the legitimacy of the
present government. All the eleven members of this Court, as reorganized, have
sworn to uphold the fundamental law of the Republic under her government.

In view of the foregoing, the petitions are hereby dismissed.

Very truly yours,

(Sgd.) GLORIA C. PARAS

Clerk of Court

* The Court was then composed of Teehankee, C.J. and Abad Santos., Melencio-
Herrera, Plana, Escolin, Gutierrez, Jr., Cuevas, Alampay and Patajo, JJ.---------------
---------------------------
G.R. No. L-18463 October 4, 1922
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,
vs.
GREGORIO PERFECTOR, defendant-appellant.
Alfonso E. Mendoza and the appellant in behalf of the latter.
Attorney-General Villa-Real for appellee.
MALCOLM, J.:
The important question is here squarely presented of whether article 256 of the
Spanish Penal Code, punishing "Any person who, by . . . writing, shall defame,
abuse, or insult any Minister of the Crown or other person in authority . . .," is
still in force.
About August 20, 1920, the Secretary of the Philippine Senate, Fernando M.
Guerrero, discovered that certain documents which constituted the records of
testimony given by witnesses in the investigation of oil companies, had
disappeared from his office. Shortly thereafter, the Philippine Senate, having
been called into special session by the Governor-General, the Secretary for the
Senate informed that body of the loss of the documents and of the steps taken
by him to discover the guilty party. The day following the convening of the
Senate, September 7, 1920, the newspaper La Nacion, edited by Mr. Gregorio
Perfecto, published an article reading as follows:
Half a month has elapsed since the discovery, for the first time, of the
scandalous robbery of records which were kept and preserved in the
iron safe of the Senate, yet up to this time there is not the slightest
indication that the author or authors of the crime will ever be
discovered.
To find them, it would not, perhaps, be necessary to go out of the Sente
itself, and the persons in charge of the investigation of the case would
not have to display great skill in order to succeed in their undertaking,
unless they should encounter the insuperable obstacle of offical
concealment.
In that case, every investigation to be made would be but a mere
comedy and nothing more.
After all, the perpetration of the robbery, especially under the
circumstances that have surrounded it, does not surprise us at all.
The execution of the crime was but the natural effect of the
environment of the place in which it was committed.
How many of the present Senators can say without remorse in their
conscience and with serenity of mind, that they do not owe their victory
to electoral robbery? How may?
The author or authors of the robbery of the records from the said iron
safe of the Senate have, perhaps, but followed the example of certain
Senators who secured their election through fraud and robbery.
The Philippine Senate, in its session of September 9, 1920, adopted a resolution
authorizing its committee on elections and privileges to report as to the action
which should be taken with reference to the article published in La Nacion. On
September 15, 1920, the Senate adopted a resolution authorizing the President
of the Senate to indorse to the Attorney-General, for his study and
corresponding action, all the papers referring to the case of the newspaper La
Nacion and its editor, Mr. Gregorio Perfecto. As a result, an information was
filed in the municipal court of the City of Manila by an assistant city fiscal, in
which the editorial in question was set out and in which it was alleged that the
same constituted a violation of article 256 of the Penal Code. The defendant
Gregorio Perfecto was found guilty in the municipal court and again in the Court
of First Instance of Manila.
During the course of the trial in the Court of First Instance, after the prosecution
had rested, the defense moved for the dismissal of the case. On the subject of
whether or not article 256 of the Penal Code, under which the information was
presented, is in force, the trial judge, the Honorable George R. Harvey, said:
This antiquated provision was doubtless incorporated into the Penal
Code of Spain for the protection of the Ministers of the Crown and other
representatives of the King against free speech and action by Spanish
subjects. A severe punishment was prescribed because it was doubtless
considered a much more serious offense to insult the King's
representative than to insult an ordinary individual. This provision,
with almost all the other articles of that Code, was extended to the
Philippine Islands when under the dominion of Spain because the
King's subject in the Philippines might defame, abuse or insult the
Ministers of the Crown or other representatives of His Majesty. We now
have no Ministers of the Crown or other persons in authority in the
Philippines representing the King of Spain, and said provision, with
 other articles of the Penal Code, had apparently passed into "innocuous
desuetude," but the Supreme Corut of the Philippine Islands has, by a
majority decision, held that said article 256 is the law of the land to-
day. . . .
The Helbig case is a precedent which, by the rule of stare decisis, is
binding upon this court until otherwise determined by proper
authority.
In the decision rendered by the same judge, he concluded with the following
language:
In the United States such publications are usually not punishable as
criminal offense, and little importance is attached to them, because they
are generally the result of political controversy and are usually
regarded as more or less colored or exaggerated. Attacks of this
character upon a legislative body are not punishable, under the Libel
Law. Although such publications are reprehensible, yet this court feels
some aversion to the application of the provision of law under which
this case was filed. Our Penal Code has come to us from the Spanish
regime. Article 256 of that Code prescribes punishment for persons
who use insulting language about Ministers of the Crown or other
"authority." The King of Spain doubtless left the need of such protection
to his ministers and others in authority in the Philippines as well as in
Spain. Hence, the article referred to was made applicable here.
Notwithstanding the change of sovereignty, our Supreme Court, in a
majority decision, has held that this provision is still in force, and that
one who made an insulting remark about the President of the United
States was punishable under it. (U.S. vs. Helbig, supra.) If it applicable in
that case, it would appear to be applicable in this case. Hence, said
article 256 must be enforced, without fear or favor, until it shall be
repealed or superseded by other legislation, or until the Supreme Court
shall otherwise determine.
In view of the foregoing considerations, the court finds the defendant
guilty as charged in the information and under article 256 of their Penal
Code sentences him to suffer two months and one day of arresto
mayor and the accessory penalties prescribed by law, and to pay the
costs of both instances.
The fifteen errors assigned by the defendant and appellant, reenforced by an
extensive brief, and eloquent oral argument made in his own behalf and by his
learned counsel, all reduce themselves to the pertinent and decisive question
which was announced in the beginning of this decision.
It will be noted in the first place that the trial judge considered himself bound to
follow the rule announced in the case of United States vs. Helbig (R. G. No.
14705, 1 not published). In that case, the accused was charged with having said,
"To hell with the President and his proclamations, or words to that effect," in
violation of article 256 of the Penal Code. He was found guilty in a judgment
rendered by the Court of First Instance of Manila and again on appeal to the
Supreme Court, with the writer of the instant decision dissenting on two
principal grounds: (1) That the accused was deprived of the constitutional right
of cross-examination, and (2) that article 256 of the Spanish Penal Code is no
longer in force. Subsequently, on a motion of reconsideration, the court, being of
the opinion that the Court of First Instance had committed a prejudicial error in
depriving the accused of his right to cross-examine a principal witness, set aside
the judgment affirming the judgment appealed from and ordered the return of
the record to the court of origin for the celebration of a new trial. Whether such
a trial was actually had, is not known, but at least, the record in the Helbig case
has never again been elevated to this court.
There may perchance exist some doubt as to the authority of the decision in the
Helbig case, in view of the circumstances above described. This much, however,
is certain: The facts of the Helbig case and the case before us, which we may
term the Perfecto case, are different, for in the first case there was an oral
defamation, while in the second there is a written defamation. Not only this, but
a new point which, under the facts, could not have been considered in the
Helbig case, is, in the Perfecto case, urged upon the court. And, finally, as is
apparent to all, the appellate court is not restrained, as was the trial court, by
strict adherence to a former decision. We much prefer to resolve the question
before us unhindered by references to the Helbig decision.
This is one of those cases on which a variety of opinions all leading to the same
result can be had. A majority of the court are of the opinion that the Philippine
Libel Law, Act No. 277, has had the effect of repealing so much of article 256 of
the Penal Code as relates to written defamation, abuse, or insult, and that under
the information and the facts, the defendant is neither guilty of a violation of
article 256 of the Penal Code, nor of the Libel Law. The view of the Chief Justice
is that the accused should be acquitted for the reason that the facts alleged in
the information do not constitute a violation of article 156 of the Penal Code.
Three members of the court believe that article 256 was abrogated completely
by the change from Spanish to American sovereignty over the Philippines and is
inconsistent with democratic principles of government.
Without prejudice to the right of any member of the court to explain his
position, we will discuss the two main points just mentioned.
1. Effect of the Philippine Libel Law, Act No. 277, on article 256 of the
Spanish Penal Code. — The Libel Law, Act No. 277, was enacted by the
 Philippine Commission shortly after organization of this legislative
body. Section 1 defines libel as a "malicious defamation, expressed
either in writing, printing, or by signs or pictures, or the like, or public
theatrical exhibitions, tending to blacken the memory of one who is
dead or to impeach the honesty, virtue, or reputation, or publish the
alleged or natural deffects of one who is alive, and thereby expose him
to public hatred, contempt or ridicule." Section 13 provides that "All
laws and parts of laws now in force, so far as the same may be in
conflict herewith, are hereby repealed. . . ."
That parts of laws in force in 1901 when the Libel Law took effect, were in
conflict therewith, and that the Libel Law abrogated certain portion of the
Spanish Penal Code, cannot be gainsaid. Title X of Book II of the Penal Code,
covering the subjects of calumny and insults, must have been particularly
affected by the Libel Law. Indeed, in the early case of Pardo de Tavera vs. Garcia
Valdez ([1902], 1. Phil., 468), the Supreme Court spoke of the Libel Law as
"reforming the preexisting Spanish law on the subject of calumnia and injuria."
Recently, specific attention was given to the effect of the Libel Law on the
provisions of the Penal Code, dealing with calumny and insults, and it was found
that those provisions of the Penal Code on the subject of calumny and insults in
which the elements of writing an publicity entered, were abrogated by the Libel
Law. (People vs. Castro [1922], p. 842, ante.)
The Libel Law must have had the same result on other provisions of the Penal
Code, as for instance article 256.
The facts here are that the editor of a newspaper published an article, naturally
in writing, which may have had the tendency to impeach the honesty, virtue, or
reputation of members of the Philippine Senate, thereby possibly exposing them
to public hatred, contempt, or ridicule, which is exactly libel, as defined by the
Libel Law. Sir J. F. Stephen is authority for the statement that a libel is indictable
when defaming a "body of persons definite and small enough for individual
members to be recognized as such, in or by means of anything capable of being
a libel." (Digest of Criminal Law, art. 267.) But in the United States, while it may
be proper to prosecute criminally the author of a libel charging a legislator with
corruption, criticisms, no matter how severe, on a legislature, are within the
range of the liberty of the press, unless the intention and effect be seditious. (3
Wharton's Criminal Law, p. 2131.) With these facts and legal principles in mind,
recall that article 256 begins: Any person who, by . . . writing, shall defame,
abuse, or insult any Minister of the Crown or other person in authority," etc.
The Libel Law is a complete and comprehensive law on the subject of libel. The
well-known rule of statutory construction is, that where the later statute clearly
covers the old subject-matter of antecedent acts, and it plainly appears to have
been the purpose of the legislature to give expression in it to the whole law on
the subject, previous laws are held to be repealed by necessary implication. (1
Lewis' Sutherland Statutory Construction, p. 465.) For identical reasons, it is
evident that Act No. 277 had the effect so much of this article as punishes
defamation, abuse, or insults by writing.
Act No. 292 of the Philippine Commission, the Treason and Sedition Law, may
also have affected article 256, but as to this point, it is not necessary to make a
pronouncement.
2. Effect of the change from Spanish to Amercian sevoreignty over the
Philippine son article 256 of the Spanish Penal Code. — Appellant's main
proposition in the lower court and again energetically pressed in the
appellate court was that article 256 of the Spanish Penal Code is not
now in force because abrogated by the change from Spanish to
American sovereignty over the Philippines and because inconsistent
with democratic principles of government. This view was indirectly
favored by the trial judge, and, as before stated, is the opinion of three
members of this court.
Article 256 is found in Chapter V of title III of Book II of the Spanish Penal Code.
Title I of Book II punishes the crimes of treason, crimes that endanger the peace
or independence of the state, crimes against international law, and the crime of
piracy. Title II of the same book punishes the crimes of lese majeste, crimes
against the Cortes and its members and against the council of ministers, crimes
against the form of government, and crimes committed on the occasion of the
exercise of rights guaranteed by the fundamental laws of the state, including
crime against religion and worship. Title III of the same Book, in which article
256 is found, punishes the crimes of rebellion, sedition, assaults upon persons
in authority, and their agents, and contempts, insults, injurias, and threats
against persons in authority, and insults, injurias, and threats against their
agents and other public officers, the last being the title to Chapter V. The first
two articles in Chapter V define and punish the offense of contempt committed
by any one who shall be word or deed defame, abuse, insult, or threathen a
minister of the crown, or any person in authority. The with an article
condemning challenges to fight duels intervening, comes article 256, now being
weighed in the balance. It reads as follows: "Any person who, by word, deed, or
writing, shall defame, abuse, or insult any Minister of the Crown or other person
in authority, while engaged in the performance of official duties, or by reason of
such performance, provided that the offensive minister or person, or the
offensive writing be not addressed to him, shall suffer the penalty of arresto
mayor," — that is, the defamation, abuse, or insult of any Minister of the Crown
of the Monarchy of Spain (for there could not be a Minister of the Crown in the
United States of America), or other person in authority in the Monarchy of Spain.
It cannot admit of doubt that all those provisions of the Spanish Penal Code
having to do with such subjects as treason, lese majeste, religion and worship,
rebellion, sedition, and contempts of ministers of the crown, are not longer in
force. Our present task, therefore, is a determination of whether article 256 has
met the same fate, or, more specifically stated, whether it is in the nature of a
municipal law or political law, and is consistent with the Constitution and laws
of the United States and the characteristics and institutions of the American
Government.
It is a general principle of the public law that on acquisition of territory the
previous political relations of the ceded region are totally abrogated. "Political"
is here used to denominate the laws regulating the relations sustained by the
inhabitants to the sovereign. (American Insurance Co. vs. Canter [1828], 1 Pet.,
511; Chicago, Rock Island and Pacific Railway Co. vs. McGlinn [1885], 114 U.S.,
542; Roa vs. Collector of Customs [1912], 23 Phil., 315.) Mr. Justice Field of the
United States Supreme Court stated the obvious when in the course of his
opinion in the case of Chicago, Rock Island and Pacific Railway Co. vs. McGlinn,
supra, he said: "As a matter of course, all laws, ordinances and regulations in
conflict with the political character, institutions and Constitution of the new
government are at once displaced. Thus, upon a cession of political jurisdiction
and legislative power — and the latter is involved in the former — to the United
States, the laws of the country in support of an established religion or abridging
the freedom of the press, or authorizing cruel and unusual punishments, and he
like, would at once cease to be of obligatory force without any declaration to that
effect." To quote again from the United States Supreme Court: "It cannot be
admitted that the King of Spain could, by treaty or otherwise, impart to the United
States any of his royal prerogatives; and much less can it be admitted that they
have capacity to receive or power to exercise them. Every nation acquiring
territory, by treaty or otherwise, must hold it subject to the Constitution and
laws of its own government, and not according to those of the government
ceding it." (Pollard vs. Hagan [1845], 3 Hos., 210.)
On American occupation of the Philippines, by instructions of the President to
the Military Commander dated May 28, 1898, and by proclamation of the latter,
the municipal laws of the conquered territory affecting private rights of person
and property and providing for the punishment of crime were nominally
continued in force in so far as they were compatible with the new order of
things. But President McKinley, in his instructions to General Merritt, was
careful to say: "The first effect of the military occupation of the enemy's
territory is the severance of the former political relation of the inhabitants and
the establishment of a new political power." From that day to this, the ordinarily
it has been taken for granted that the provisions under consideration were still
effective. To paraphrase the language of the United States Supreme Court in
Weems vs. United States ([1910], 217 U. S., 349), there was not and could not be,
except as precise questions were presented, a careful consideration of the codal
provisions and a determination of the extent to which they accorded with or
were repugnant to the "'great principles of liberty and law' which had been 'made
the basis of our governmental system.' " But when the question has been
squarely raised, the appellate court has been forced on occasion to hold certain
portions of the Spanish codes repugnant t democratic institutions and American
constitutional principles. (U.S. vs. Sweet [1901], 1 Phil., 18; U.S. vs. Balcorta
[1913], 25 Phil., 273; U.S. vs. Balcorta [1913], 25 Phil., 533;
Weems vs. U.S., supra.)
The nature of the government which has been set up in the Philippines under
American sovereignty was outlined by President McKinley in that Magna Charta
of Philippine liberty, his instructions to the Commission, of April 7, 1900. In
part, the President said:
In all the forms of government and administrative provisions which
they are authorized to prescribe, the Commission should bear in mind
that he government which they are establishing is designed not for our
satisfaction or for the expression of our theoretical views, but for the
happiness, peace, and prosperity of the people of the Philippine Islands,
and the measures adopted should be made to conform to their customs,
their habits, and even their prejudices, to the fullest extent consistent
with the accomplishment of the indispensable requisites of just and
effective government. At the same time the Commission should bear in
mind, and the people of the Islands should be made plainly to understand,
that there are certain great principles of government which have been
made the basis of our governmental system, which we deem essential to
the rule of law and the maintenance of individual freedom, and of which
they have, unfortunately, been denied the experience possessed by us; that
there are also certain practical rules of government which we have found
to be essential to the preservation of these great principles of liberty and
law, and that these principles and these rules of government must be
established and maintained in their islands for the sake of their liberty
and happiness, however much they may conflict with the customs or
laws of procedure with which they are familiar. It is evident that the
most enligthened thought of the Philippine Islands fully appreciates the
importance of these principles and rules, and they will inevitably within
a short time command universal assent.
The courts have naturally taken the same view. Mr. Justice Elliott, speaking for
our Supreme Court, in the case of United States vs. Bull ([1910], 15 Phil., 7), said:
"The President and Congress framed the government on the model with which
American are familiar, and which has proven best adapted for the advancement
of the public interests and the protection of individual rights and privileges."
Therefore, it has come with somewhat of a shock to hear the statement made
that the happiness, peace, and prosperity of the people of the Philippine Islands
and their customs, habits, and prejudices, to follow the language of President
McKinley, demand obeisance to authority, and royal protection for that
authority.
According to our view, article 256 of the Spanish Penal Code was enacted by the
Government of Spain to protect Spanish officials who were the representatives
of the King. With the change of sovereignty, a new government, and a new
theory of government, as set up in the Philippines. It was in no sense a
continuation of the old, although merely for convenience certain of the existing
institutions and laws were continued. The demands which the new government
made, and makes, on the individual citizen are likewise different. No longer is
there a Minister of the Crown or a person in authority of such exalted position
that the citizen must speak of him only with bated breath. "In the eye of our
Constitution and laws, every man is a sovereign, a ruler and a freeman, and has
equal rights with every other man. We have no rank or station, except that of
respectability and intelligence as opposed to indecency and ignorance, and the
door to this rank stands open to every man to freely enter and abide therein, if
he is qualified, and whether he is qualified or not depends upon the life and
character and attainments and conduct of each person for himself. Every man
may lawfully do what he will, so long as it is not malum in se or malum
prohibitum or does not infringe upon the qually sacred rights of others."
(State vs. Shepherd [1903], 177 Mo., 205; 99 A. S. R., 624.)
It is true that in England, from which so many of the laws and institutions of the
United States are derived, there were once statutes of scandalum magnatum,
under which words which would not be actionable if spoken of an ordinary
subject were made actionable if spoken of a peer of the realm or of any of the
great officers of the Crown, without proof of any special damage. The Crown of
England, unfortunately, took a view less tolerant that that of other sovereigns,
as for instance, the Emperors Augustus, Caesar, and Tiberius. These English
statutes have, however, long since, become obsolete, while in the United States,
the offense of scandalum magnatum is not known. In the early days of the
American Republic, a sedition law was enacted, making it an offense to libel the
Government, the Congress, or the President of the United States, but the law met
with so much popular disapproval, that it was soon repealed. "In this country no
distinction as to persons is recognized, and in practice a person holding a high
office is regarded as a target at whom any person may let fly his poisonous
words. High official position, instead of affording immunity from slanderous and
libelous charges, seems rather to be regarded as making his character free
plunder for any one who desires to create a senation by attacking it." (Newell,
Slander and Libel, 3d ed., p. 245; Sillars vs. Collier [1890], 151 Mass., 50; 6 L.R.A.,
680.)
Article 256 of the Penal Code is contrary to the genius and fundamental
principles of the American character and system of government. The gulf which
separates this article from the spirit which inspires all penal legislation of
American origin, is as wide as that which separates a monarchy from a
democratic Republic like that of the United States. This article was crowded out
by implication as soon as the United States established its authority in the
Philippine Islands. Penalties out of all proportion to the gravity of the offense,
grounded in a distorted monarchical conception of the nature of political
authority, as opposed to the American conception of the protection of the
interests of the public, have been obliterated by the present system of
government in the Islands. 1awph!l.net
From an entirely different point of view, it must be noted that this article
punishes contempts against executive officials, although its terms are broad
enough to cover the entire official class. Punishment for contempt of non-
judicial officers has no place in a government based upon American principles.
Our official class is not, as in monarchies, an agent of some authority greater
than the people but it is an agent and servant of the people themselves. These
officials are only entitled to respect and obedience when they are acting within
the scope of their authority and jurisdiction. The American system of
government is calculated to enforce respect and obedience where such respect
and obedience is due, but never does it place around the individual who
happens to occupy an official position by mandate of the people any official
halo, which calls for drastic punishment for contemptuous remarks.
The crime of lese majeste disappeared in the Philippines with the ratification of
the Treaty of Paris. Ministers of the Crown have no place under the American
flag.
To summarize, the result is, that all the members of the court are of the opinion,
although for different reasons, that the judgment should be reversed and the
defendant and appellant acquitted, with costs de officio. So ordered.
Tinoco Claims Arbitration (Great Britain v. Costa Rica) case brief
Tinoco Claims Arbitration (Great Britain v. Costa Rica)

(1923) 1 R.I.A.A. 369

Procedural History:
Arbitration of contract repudiation.

Overview:
Great Britain (P) claimed that the former government of Costa Rica (D), the
Tinoco regime, had granted oil concessions to a British company that had to be
honored by the present regime. The Tinoco regime had seized power in Costa
Rica by coup. Great Britain (P) and the United States never recognized the
Tinoco regime. When the Tinoco regime fell, the restored government nullified
all Tinoco contracts, including an oil concession to a British company.
Great Britain (P) claimed that the Tinoco government was the only government
in existence at the time the contract was signed and its acts could not be
repudiated. Costa Rica (D) claimed that Great Britain (P) was estopped from
enforcing the contract by its nonrecognition of the Tinoco regime. The matter
was sent for arbitration.

Issue:
Does nonrecognition of a new government by other governments destroy the de
facto status of the government?

Rule:
-A government that establishes itself and maintains a peaceful de facto
administration need not to conform to previous constitution and
nonrecognition of the govt. by other govt.’s does not destroy the de facto status
of the govt.

Analysis:
The arbitrator found there was no estoppel. The evidence of nonrecognition did
not outweigh the evidence of the de facto status of the Tinoco regime.
Unrecognized governments thus may have the power to form valid contracts.

Outcome:
No. A government that establishes itself and maintains a peaceful de facto
administration need not conform to a previous constitution and nonrecognition
of the govern ment by other governments does not destroy the de facto status of
the government. Great Britain's (P) nonrecognition of the Tinoco regime did not
dispute the de facto existence of that regime. There was no estoppel since the
successor government had not been led by British nonrecognition to change its
position.

MEXICO V US
On 9 January 2003, Mexico brought a case against the United States of America
in a dispute concerning alleged violations of Articles 5 and 36 of the Vienna
Convention on Consular Relations of 24 April 1963 with respect to 54 Mexican
nationals who had been sentenced to death in certain states of the United States.
At the same time as its Application, Mexico also submitted a request for the
indication of provisional measures, among other things so that the United States
would take all measures necessary to ensure that no Mexican national was
executed and no action was taken that might prejudice the rights of Mexico or
its nationals with regard to any decision the Court might render on the merits of
the case. After hearing the Parties at public hearings on the provisional
measures held on 21 January 2003, the Court, on 5 February 2003, made an
Order, by which it decided that the :
“United States of America sh[ould] take all measures necessary to ensure that
Mr. Cesar Roberto Fierro Reyna, Mr. Roberto Moreno Ramos and Mr. Osvaldo
Torres Aguilera [three Mexican nationals] [we]re not executed pending final
judgment in these proceedings”,
that the “United States of America sh[ould] inform the Court of all measures
taken in implementation of [that] Order”, and that the Court would remain
seised of the matters which formed the subject of that Order until the Court had
rendered its final judgment. The same day, it issued another Order fixing 6 June
2003 as the time-limit for the filing of the Memorial by Mexico and 6 October
2003 as the time-limit for the filing of the Counter-Memorial by the United
States of America. The President of the Court subsequently extended those
dates respectively to 20 June 2003 and 3 November 2003. Those pleadings were
filed within the time-limits thus extended.
After holding public hearings in December 2004, the Court rendered its
Judgment on 31 March 2004. Mexico had amended its claims during the written
phase of the proceedings and again at the oral proceedings, so that the Court
ultimately ruled on the cases of 52 (rather than 54) Mexican nationals.
The Court first considered four objections by the United States to its jurisdiction
and five objections to admissibility. Mexico had argued that all of these
objections were inadmissible because they had been submitted outside the
time-limit prescribed by the Rules of Court, but the Court did not accept this.
The Court then dismissed the United States objections, whilst reserving certain
of them for consideration at the merits stage.
Ruling on the merits of the case, the Court began by considering whether the 52
individuals concerned were solely of Mexican nationality. Finding that the
United States had failed to show that certain of them were also United States
nationals, the Court held that the United States was under an obligation to
provide consular information pursuant to Article 36, paragraph 1 (b), of the
Vienna Convention in respect of all 52 Mexican nationals. Regarding the
meaning to be given to the phrase “without delay” in Article 36 (1) (b), the Court
further held that there is an obligation to provide consular information as soon
as it is realized that the arrested person is a foreign national, or that there are
grounds for thinking that he is probably a foreign national. The Court found
that, in all of the cases except one, the United States had violated its obligation
to provide the required consular information. Taking note of the interrelated
nature of the three subparagraphs (a), (b) and (c) of paragraph 1 of Article 36 of
the Vienna Convention, the Court then went on to find that the United States
had, in 49 cases, also violated the obligation to enable Mexican consular officers
to communicate with, have access to and visit their nationals and, in 34 cases, to
arrange for their legal representation.
In relation to Mexico’s arguments concerning paragraph 2 of Article 36 and the
right of its nationals to effective review and reconsideration of convictions and
sentences impaired by a violation of Article 36 (1), the Court found that, in view
of its failure to revise the procedural default rule since the Court’s decision in
the LaGrand case, the United States had in three cases violated paragraph 2 of
Article 36, although the possibility of judicial re-examination was still open in
the 49 other cases.
1 and 2 of Article 36 in the case of the three Mexican nationals concerned by the
Order of 5 February 2003 indicating provisional measures, and that no review
and reconsideration of conviction and sentence had been carried out in those
cases. The Court considered that it was therefore for the United States to find an
appropriate remedy having the nature of review and reconsideration according
to the criteria indicated in the Judgment

In regard to the legal consequences of the proven violations of Article 36 and to

Mexico’s requests for restitutio in integrum, through the partial or total
annulment of convictions and sentences, the Court pointed out that what
international law required was reparation in an adequate form, which in this
case meant review and reconsideration by United States courts of the Mexican
nationals’ convictions and sentences. The Court considered that the choice of
means for review and reconsideration should be left to the United States, but
that it was to be carried out by taking account of the violation of rights under
the Vienna Convention. After recalling that the process of review and
reconsideration should occur in the context of judicial proceedings, the Court
stated that the executive clemency process was not sufficient in itself to serve
that purpose, although appropriate clemency procedures could supplement
judicial review and reconsideration. Contrary to Mexico’s claims, the Court
found no evidence of a regular and continuing pattern of breaches of Article 36
by the United States. The Court moreover recognized the efforts of the United
States to encourage compliance with the Vienna Convention, and took the view
that that commitment provided a sufficient guarantee and assurance of non-
repetition as requested by Mexico.

The Court further observed that, while the present case concerned only Mexican
nationals, that should not be taken to imply that its conclusions did not apply to
other foreign nationals finding themselves in similar situations in the United
States. Finally, the Court recalled that the United States had violated paragraphs
The Republic of the Philippines, Plaintiff-appellee, v. Ferdinand E. Marcos,
Imelda Marcos, Ralph Bernstein, Josephbernstein, Gliceria Tantoco, Vilma
Bautista, Antoniofloirendo, Paul A. Crotty, As Commissioner of Finance of
Thecity of New York, Department of Finance of the City of Newyork, City
Register's Office of the City of New York, Johnkinsella, County Clerk,
Suffolk County, New York Landcompany, A/k/a Greatneckers Realty, Inc.,
Canadian Landcompany of America, A/k/a Canadian Land Company of
America,n.v. (formerly Lastura Corporation, N.v.), Lasturacorporation,
N.v., Herald Center, Ltd. (formerly Volby,ltd.), Volby, Ltd., Glockhurst Corp.,
N.v., Realmadproperties Ltd., Briwater Associates, a Partnership,
Nyland(cf8) Ltd. (formerly Ainsville, N.v.), Ainsville, N.v., Andancor
Holdings, N.v., Defendants,new York Land Company, Joseph Bernstein,
Ralph Bernstein,the Canadian Land Company of America, Herald Center
Ltd.,and Nyland (cf8) Ltd., and Ancor Holdings, N.v., Andglockhurst Corp.,
N.v., Defendants-appellants, 806 F.2d 344 (2d Cir. 1986)
US Court of Appeals for the Second Circuit - 806 F.2d 344 (2d Cir. 1986)
Argued June 11, 1986. Decided Nov. 26, 1986
Michael J. Silverberg, New York City (Phillips, Nizer, Benjamin, Krim & Ballon,
Lawrence M. Sands, New York City, of counsel), for defendants-appellants New
York Land Co., Joseph Bernstein and Ralph Bernstein.
Philip R. Carter, New York City (Bernstein, Carter & Deyo, Tina Schechter, New
York City, of counsel), for defendants-appellants The Canadian Land Co. of
America, Herald Center Ltd., and Nyland (CF8) Ltd.
Gerald Walpin, New York City (Rosenman Colin Freund Lewis & Cohen,
Lawrence G. Golde, Steven Dixon, Donna Soares, New York City, of counsel), for
defendant-appellant Ancor Holdings, N.V.
David J. Eiseman, New York City (Golenbock, Eiseman, Assor, Bell & Perlmutter,
Jeffrey T. Golenbock, New York City, of counsel), for defendant-appellant
Glockhurst Corp., N.V.
Morton Stavis, Peter Weiss, New York City (Center for Constitutional Rights,
Franklin Siegel, Juan Saavedra-Castro, New York City, of counsel); (Severina
Rivera, Mahlon F. Perkins, Jr., Ralph Shapiro, Michael Krinsky, Washington, D.C.,
on the brief); (Sills, Beck, Cummis, Zuckerman, Radin, Tischman & Epstein, P.A.,
Clive S. Cummis, Jeffrey J. Greenbaum, Washington, D.C., of counsel), for
plaintiff-appellee The Republic of the Philippines.
Before OAKES, ALTIMARI, and MAHONEY, Circuit Judges.
OAKES, Circuit Judge:
This appeal is from a grant of a preliminary injunction in favor of The Republic
of the Philippines ("The Republic") by the United States District Court for the
Southern District of New York, Pierre N. Leval, Judge. The injunction continued
an expiring temporary restraining order conditioned on the posting of a bond of
$3 million against the transfer or encumbrance of five pieces of real property
(the "properties"), four of which are located in New York City and one of which
is in Long Island, New York. Judge Leval found that The Republic of the
Philippines had met the standard under Jackson Dairy, Inc. v. H.P. Hood & Sons,
Inc., 596 F.2d 70, 72 (2d Cir. 1979) (per curiam), for issuing a preliminary
injunction by "amply show [ing] 'sufficiently serious questions going to the
merits to make them a fair ground for litigation' together with irreparable harm
and a balance of hardships tipping in [the Republic's] favor." Order of May 2,
1986, as amended May 5, 1986 (quoting Jackson Dairy, 596 F.2d at 72). 634 F.
Supp. 279.
At the heart of this case is the issue of who owns the five properties,1 which
consist of the following:
1. 40 Wall Street, a 71-story office building owned by Nyland (CF8) Ltd., a
Netherlands Antilles corporation which in turn is owned by three Panamanian
corporations that issued "bearer" shares to unknown persons.
2. The Crown Building, previously the Genesco Building, at 57th Street and Fifth
Avenue, owned by The Canadian Land Company of America, formerly a
Netherlands Antilles corporation called Lastura Corporation, which in turn is
owned by three other Panamanian corporations that also issued "bearer"
shares.
3. Herald Center, previously the Korvette Building, at Sixth Avenue and 34th
Street, which is owned by Herald Center Ltd., formerly Voloby Ltd., a British
Virgin Islands corporation. Herald Center Ltd. is owned by three other
Panamanian corporations, again issuers of "bearer" shares.
(These three properties have been managed by the appellants Joseph and Ralph
Bernstein, and will sometimes be referred to as the Bernstein properties.)
4. 200 Madison Avenue, at the southwest corner of 36th Street and Madison
Avenue, which is owned by Glockhurst Corp., N.V., which in turn is owned by the
same three Panamanian corporations that own Herald Center Ltd.
5. Lindenmere, an estate in Suffolk County, Long Island, in the town of
Brookhaven, Center Moriches, Long Island. Lindenmere was originally
purchased by Luna 7 Corporation, which was owned by several Filipinos, and
was later conveyed to Ancor Holdings, N.V., a Netherlands Antilles corporation.
Beneficial ownership is claimed by defendant Antonio Floirendo, a Philippine
businessman and close associate of the Marcoses.
The appellants are the corporations holding title to the properties, together
with Joseph Bernstein and Ralph Bernstein (the "Bernsteins"), whose law firm
represents three of the corporate appellants, and New York Land Company,
which is owned by the Bernsteins and which manages three of the properties.
Other defendants named in this suit include Ferdinand E. Marcos and Imelda
Marcos, the former President and First Lady of the Philippines who purportedly
are the beneficial owners of the properties, and their alleged associates Gliceria
Tantoco, Vilma Bautista, and Antonio Floirendo, although these individuals are
not involved in this appeal and did not appear in the proceedings below.
The original complaint in this action, dated March 2, 1986, was filed in the
Supreme Court of the State of New York, County of New York, prior to its
removal to the United States District Court for the Southern District of New
York. After the complaint was filed, but prior to removal of the case to federal
court, President Corazon C. Aquino signed Executive Order Number 2, which,
among other things, authorized the Commission on Good Government 2 to
appeal to foreign countries to freeze the assets of the Marcoses and their
associates. This order, as discussed later, contributed heavily to interjecting a
federal issue into the case sufficient to confer federal question subject matter
jurisdiction.
In a section entitled "Background," the complaint outlines the well-publicized
circumstances leading up to the recent upheaval in the Philippines. It first states
that Ferdinand Marcos became president of the Philippines in 1966. On
September 21, 1972, he declared martial law, thus allegedly becoming the
dictator of the Philippines with personal control over its government and
economy. During the entire period of his rule, and particularly after the
imposition of martial law, Marcos allegedly participated in a variety of activities
constituting a gross denial of human rights, including abduction, murder,
torture, summary incarceration and execution, and control of the media. In
addition, he is also alleged to have engaged in widespread and systematic theft
of funds and properties that were and are the property of the Philippine
government and people. The complaint charges that Marcos accomplished this
by using techniques such as (1) accepting payments, bribes, kickbacks, interests
in business ventures, and other things of value in exchange for the grant of
government favors, contracts, licenses, franchises, loans and other public
benefits; (2) blatantly expropriating private property for the benefit of persons
beholden to or fronting for Marcos, with this expropriation at times carried out
by violence or the threat of violence or incarceration; (3) arranging loans by the
Philippine government to private parties who were Marcos's cronies or friends;
(4) directly raiding the public treasury; (5) diverting loans, credits, and
advances from other governments intended for use by the Philippine
government; and (6) creating public monopolies which were placed in the
hands of Marcos's loyalists or nominees. These actions of Marcos, together with
similar acts by his wife, are said not only to be in violation of the laws of the
Philippines but also to have caused a massive drain upon the funds of the
Philippine government.
Returning to the specific facts of this case, the complaint alleges that Ferdinand
Marcos now resides in Hawaii with his wife, Imelda, after fleeing the Philippines
and surrendering his position on February 25, 1986. The Marcoses allegedly do
business in New York and use agents, representatives, and nominees in New
York and elsewhere to assist in the operation of the properties. Specifically, the
complaint charges that there was a conspiracy among Ferdinand and Imelda
Marcos; Ralph and Joseph Bernstein; Gliceria Tantoco, a close friend and
business associate of the Marcoses who until February 1985 dealt with the
Bernsteins in New York; Vilma Bautista, who worked in the Philippine consulate
in New York and the Philippine Mission to the United Nations and acted as
personal secretary to Imelda Marcos in New York; Antonio Floirendo, a
Philippine plantation owner and businessman who made a $600,000 payment
as a deposit on Herald Center and claims to be the owner of Ancor Holdings; and
numerous other persons, including Fe Giminez, personal secretary and
confidante of Imelda Marcos. By virtue of the alleged conspiracy, assets and
properties acquired by or for the benefit of the Marcoses were placed in the
names of nominees. In this way the five properties in New York were allegedly
purchased for the benefit of the Marcoses from the proceeds of moneys and
assets stolen as stated above from the Philippine government.
The complaint goes on to allege that on or about February 26, 1986, the current
Philippine government created the Presidential Commission for Good
Government, under the chairmanship of former Senator Jovito Salonga. This
commission has been specifically directed to investigate and cause to be
adjudicated in the Philippines any meritorious claims that specific properties or
assets are the product of theft from the government and also to take steps to
retrieve any government property taken by the Marcoses. The complaint states
that the judicial system of the Philippines is patterned after that of the United
States and that under the present government the system provides or will
provide all elements of due process of law.
Finally, the complaint alleges that there have been clear indications that Marcos
or his nominees are seeking to liquidate or transfer some assets, including the
New York properties involved here. Unless the relief sought is granted, the
complaint continues, the properties now held by or for the benefit of the
Marcoses may be further transferred and dissipated, possibly to purchasers in
good faith. Thus, the complaint asks that the court enjoin and restrain the
defendants from transferring, conveying, encumbering, or in any way adversely
affecting the rights of the government of the Philippines in and to the properties
pending determination as to the true ownership of and entitlement to the
parcels of land.
The district court granted this relief and issued a preliminary injunction on May
2, 1986. Since this grant, The Republic has augmented its considerable
preinjunction discovery--obtained despite the defendants' lack of cooperation--
with additional materials. Accordingly, it has submitted a supplemental
appendix that includes material not before the district court at the time its
injunction was granted, all subject to the objection of the appellants. Because we
could hold the appeal pursuant to 28 U.S.C. § 2106 (1982) pending further
findings and conclusions by the district court were we to conclude that subject
matter jurisdiction was questionable, see IIT v. Vencap, Ltd., 519 F.2d 1001,
1018-19 (2d Cir. 1975), we will in a few instances refer to matter in the
supplemental appendix but will do so provisionally and specifically.
The evidence of the Marcoses' ownership of the New York properties is complex
and circumstantial. Most of it relates to the Bernstein properties: 40 Wall Street,
the Crown Building, and Herald Center. Joseph Bernstein, both in deposition and
in testimony before the Solarz House Subcommittee, repeatedly stated that he
believed but did not know with certainty that Imelda Marcos owned the
properties. That belief was based in large part on her behavior and comments
during a series of meetings. For example, at a 1981 meeting at the Waldorf-
Astoria with Mrs. Marcos and Gliceria Tantoco, Bernstein got the impression
that they wanted to buy Herald Center, then known as the Korvette Building, to
make it a Philippine commercial center. He testified that Mrs. Marcos said to
Mrs. Tantoco, "Glissy, you put your stores there and make it expand our exports
of Philippine goods." Over the years Bernstein "personally came to the
impression that Mrs. Marcos had certain controls that [he] from time to time
viewed as indicative of ownership, but [he didn't] actually know as a matter of
fact who owns [Herald Center]." Bernstein considered two 1984 meetings at 15
East 66th Street, a townhouse owned by the Philippine government, not here
involved, probably the strongest indicators of Mrs. Marcos's involvement. At
those meetings Bernstein and Mrs. Tantoco were trying to get money out of Mrs.
Marcos; they needed at the time about $10 million to develop the 40 Wall Street
property, and the Bernsteins had recommended to Mrs. Tantoco that it be sold.
At the first meeting, Mrs. Marcos refused to contribute, saying "there is no
money" and "paddle your own canoe," but at the same time stated that the
building "wouldn't be sold." At the second meeting, she turned to Rolando
Gapud, president of Security Bank & Trust Company of Manila and the
Marcoses' financial adviser, to ask, "Do we have $10 million?" This gave
Bernstein "the impression that if she had $10 million for it she must have some
interest" in the building. On another occasion the Bernsteins, Mrs. Marcos, and
Mrs. Tantoco were at the 66th Street townhouse in the evening and Mrs.
Tantoco urged that they take a trip downtown; they drove to 40 Wall Street
where Mrs. Tantoco and Mrs. Marcos got out of the car and looked at the
building for a few minutes. When they returned to the car Mrs. Marcos
remarked that it was a "nice" building, appearing to be proud of it.
As to Bernstein's connections with Ferdinand Marcos, Bernstein stated that in
March 1982 he and Marcos met at a resort just south of Manila. On a veranda
overlooking the Pacific they discussed the international tax aspects of the
structure of a loan by a major French bank in the amount of some $34 million to
Lastura, a Netherlands Antilles corporation that had acquired the building at
730 Fifth Avenue, later known as the Crown Building. Marcos, who seemed
quite knowledgeable, wanted to make sure that the loan was structured to
minimize interest costs by avoiding United States withholding taxes. Bernstein
subsequently met Marcos in a meeting in Marcos's private quarters, the family
area at Malacanang Palace, where Mrs. Marcos, Mrs. Tantoco, Ralph Bernstein,
and Rolando Gapud were present. The main purpose of the meeting was to
discuss a trust agreement that Marcos directed Bernstein to draft. Bernstein did
so and delivered the draft to Mrs. Tantoco in New York. On a third occasion,
when Bernstein was leaving the Philippines on a plane with Mrs. Marcos in
April 1982, Marcos came to say good-bye and reminded Bernstein about the
trust agreement.
Perhaps as significant pieces of evidence as any, however, were two documents
discovered in Manila in Malacanang Palace after the departure of the Marcoses.
These documents, which Bernstein authenticated before the Solarz Committee,
were declarations of trust executed by Bernstein on April 4 and April 5, 1982, at
the direction of Gapud. The April 4 declaration set Bernstein up as a trustee for
the benefit of President Ferdinand E. Marcos with respect to all matters relating
to Lastura Corporation; the April 5 declaration deleted Marcos's name and
inserted Beneficio Investment, Inc., a Panamanian corporation.
Bernstein stated that there did not seem to be any distinction as to ownership
between any of the four Manhattan properties. He thought the use of off-shore
corporations and bearer shares routine, for tax purposes; he initially had a
power of attorney to act on behalf of the three Panamanian corporations that
owned Voloby and for a while held their shares of stock. Gapud, according to
Bernstein, represented "the principals," though no one ever mentioned names;
Bernstein's impression was that he represented the Marcos family. Moreover,
early on, when Mrs. Tantoco first took Bernstein to meet with Mrs. Marcos she
referred to her as the "principal." Bernstein also met in Geneva in March 1985
with Ron Zamora, a counsel to President Marcos, who told him that "the
principal" had decided to sell the four Manhattan properties. Bernstein sought
to have the first chance to buy them since the Bernsteins had been involved
with the properties for such a long time.
In addition to Bernstein's testimony, Victor Politas, former vice president of
New York Land Company, testified before the Solarz Committee that both
Bernstein and Mrs. Tantoco told him that the four New York properties were
owned by Mrs. Marcos. Several documents allegedly found in Malacanang
Palace after the Marcoses left the Philippines also indicate that the Marcoses
had an interest in the four New York properties. One document, dated August 9,
1983, is from Mrs. Tantoco to "the Beneficial Owners of Canadian, Voloby,
Nyland, and Glockhurst." This memorandum discusses both the feasibility of
raising $16.8 million through a third mortgage on 40 Wall Street and the cash
flow for the three Bernstein properties before and after the planned acquisition
of 200 Madison Avenue. Another document, also found at the Palace, is entitled
"New York Real Estate Accounts Summary Report" and describes in detail the
equity investment in the three Bernstein properties as well as the financial
condition of Voloby, Nyland, and Canadian Land Company, titleholders of Herald
Center, 40 Wall Street, and the Crown Building, respectively. Other from Mrs. Marcos and from her New York secretary, Vilma Bautista. He
documentation appearing in the supplemental appendix also implicates the ultimately brought suit and settled for $825,000 after negotiating with Fe
Marcoses. Gimenez. The $825,000 settlement was paid out of one of the trust accounts
under Gapud's control to the law firm of Rosenman Colin Freund Lewis &
Overall, the evidence of ownership of the Bernstein properties is strong, if not
Cohen, which then paid Comacho.
overwhelming, no evidence has been offered to refute it, and the Bernstein brief
on appeal fails to challenge the conclusion that the Marcoses are in fact the Title to Lindenmere is held by Ancor Holdings, N.V., a Netherlands Antilles
beneficial owners of the Manhattan properties. corporation. Diosdado C. Ordonez, an employee of Revere Sugar Corporation
and a long-term associate of Antonio Floirendo, testified that Floirendo owns
Glockhurst Corp., N.V., is on slightly different footing. It argues that there is no
Ancor Holdings. According to Ordonez, Floirendo also owns 100% of Revere
competent evidence that the Marcoses beneficially owned Glockhurst or 200
Sugar, an outcome of the acquisition of the sweetener division of Sucrest Corp.
Madison Avenue. Yet, their brief concedes that Glockhurst is owned by the very
Evidence in the supplemental appendix tends to show, however, that the
same Panamanian corporations that own Herald Center Ltd. Thus, whoever
Marcoses also had an interest in Revere Sugar, a fact that helps to identify the
owns Herald Center by way of the Panamanian corporations also owns
financial ties between the Marcoses and Floirendo. The clearest example of
Glockhurst. As noted above, the August 9, 1983, memorandum to the "Beneficial
these ties is contained in Fe Gimenez's accounting (in the joint appendix), which
Owners of Canadian, Voloby, Nyland, and Glockhurst" indicates the cash flow
shows payments of $9.5 million to Voloby and $4.3 million to "Blackhurst,"
from the three properties, the Crown Building, 40 Wall Street, and Herald
matching payments from the Gapud trust accounts to be found in the
Center, "before the acquisition of Madison ... [which is] to be achieved purely
supplemental appendix. This very same accounting notes a $6 million payment
through borrowing (by Canadian and Glockhurst)," with subsequent cash flow
to Floirendo. Other evidence links Floirendo to various payments on the
after the acquisition of Madison also set forth. In addition, Joseph Bernstein
Manhattan properties.
testified that approximately $20 million of the proceeds of a mortgage taken on
the Crown Building were transferred from Canadian Land to Glockhurst at the Of course, as Judge Leval noted, when considering a preliminary injunction he
direction of Mrs. Tantoco for the purpose of buying 200 Madison Avenue. He need not make conclusive factual findings. Rather, he indicated that no proofs
also testified that Mrs. Tantoco indicated in a meeting at 66th Street by way of had been submitted to rebut the inferences on which The Republic relies and
explanation to Mrs. Marcos that the four properties constituted "a balanced concluded only that the standards for issuance of a preliminary injunction had
portfolio in the four corners of town." Before the Solarz Committee Bernstein been satisfied. We agree, and find that there is sufficient evidence as to all five
testified that Mrs. Marcos would probably not have been at the so-called Barry properties to support the district court's grant of a preliminary injunction based
Knox meetings in 1984 if she had not been an owner of 200 Madison Avenue. He on its findings of irreparable harm and probable ownership by the Marcoses.
also stated that 200 Madison Avenue was one of the four properties that Ron
Our task therefore is to determine whether there is federal jurisdiction, whether
Zamora mentioned in Geneva in March 1985 as possibly being put up for sale by
there are allegations sufficient to state a claim for relief, and whether there are,
the "principal." We note that it also appears from the supplemental appendix
as the appellants argue, defenses making the claims not justiciable. These
(which would need appropriate authentication and introduction into evidence
defenses include lack of standing on the part of The Republic, sovereign
on any hearing on a final injunction) that apparently $4.3 million was paid to
immunity, the act of state doctrine, and forum non conveniens, sovereign
Glockhurst from trust accounts in Manila managed by Rolando Gapud. The
immunity.
records of this payment conform to a document in the handwriting of Imelda
Marcos's personal secretary, Fe Gimenez, showing payments of $5.5 million to All parties in this case now advocate a finding of federal jurisdiction. This is, of
Tantoco, $9.5 million to Voloby, $6 million to Floirendo, and $4.3 million to course, immaterial. Federal jurisdiction cannot be conferred by agreement of
"Blackhurst" on November 4, 1983, for a total of $25.3 million. the parties and irrespective of such agreement a federal court has a duty on its
own motion to consider whether there is properly federal jurisdiction in the
The evidence of the Marcoses' ownership of Lindenmere, the Center Moriches
case before it. See, e.g., Louisville & Nashville Railroad Co. v. Mottley, 211 U.S.
property, is somewhat less compelling. Mrs. Marcos attended several parties
149, 152, 29 S. Ct. 42, 43, 53 L. Ed. 126 (1908). After the case was argued in our
there involving thirty to fifty people. Documents indicating substantial
court, Judge Leval issued an opinion and order dated June 26, 1986, holding that
payments to Lindenmere, including the monthly payment of bills, were found in
there is federal jurisdiction in this case. Judge Leval thought the issue of
Gimenez's files in the Palace. An architect, Augusto Comacho, testified that he
jurisdiction not to be "open to serious doubt" because this is a case "arising
worked on both Lindenmere and The Republic's townhouse at 15 East 66th
under the Constitution, laws or treaties of the United States" and is therefore
Street. Bills covering that work are in the record to the tune of several million
within federal question jurisdiction under 28 U.S.C. § 1331 (1982). We agree.
dollars. When Comacho was not paid for this work, he sought payment directly
We recognize that the likelihood or inevitability that federal law matters will be
raised in the answer or some subsequent pleading does not bring a case within
federal question jurisdiction. Mottley, 211 U.S. at 152, 29 S. Ct. at 43. Rather, we
are to examine the "well-pleaded complaint" to determine whether it relies on
any doctrine of federal law. Franchise Tax Board v. Construction Laborers
Vacation Trust, 463 U.S. 1, 103 S. Ct. 2841, 77 L. Ed. 2d 420 (1983), reaffirms
that the lower federal courts have "jurisdiction to hear, originally or by removal
from a state court, only those cases in which a well-pleaded complaint
establishes either that federal law creates the cause of action or that the
plaintiff's right to relief necessarily depends on resolution of a substantial
question of federal law." 463 U.S. at 27-28, 103 S. Ct. at 2856 (holding that a suit
by a state tax authority both to enforce its levies against funds held in trust
pursuant to an ERISA-covered employment benefit plan and to declare the
validity of the levies notwithstanding ERISA is neither a creature of ERISA itself
nor a suit of which the federal courts may take jurisdiction). Thus, we must
analyze the plaintiff's complaint separate and apart from any defenses that the
defendants have asserted or might assert in the future, to see if this action
arises under federal law.
Such an examination shows that the plaintiff's claims necessarily require
determinations that will directly and significantly affect American foreign
relations. In Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 425, 84 S. Ct.
923, 938, 11 L. Ed. 2d 804 (1964), the Supreme Court stated that issues
involving "our relationships with other members of the international
community must be treated exclusively as an aspect of federal law." While the
issue in Sabbatino involved application of the act of state doctrine, in holding
that the doctrine was to be applied as a matter of federal law the Court reasoned
that foreign policy matters, entrusted by the Constitution primarily to the
executive branch, have " 'constitutional' underpinnings," id. at 423, 84 S. Ct. at
938, and that the problems that arise when foreign policy matters come before
the courts "are uniquely federal in nature," id. at 424, 84 S. Ct. at 938. As Judge
Leval pointed out, two months after the Sabbatino decision the late Henry
Friendly wrote that in the Sabbatino case "the Supreme Court has found in the
Constitution a mandate to fashion a federal law of foreign relations." Friendly, In
Praise of Erie and of the New Federal Common Law, 39 N.Y.U. L. Rev. 383, 408 n.
119 (1964). The same judge wrote for this court in Republic of Iraq v. First
National City Bank, 353 F.2d 47, 50 (2d Cir. 1965), cert. denied, 382 U.S. 1027,
86 S. Ct. 648, 15 L. Ed. 2d 540 (1966), that:
The Supreme Court has declared that a question concerning the effect of an act
of state "must be treated exclusively as an aspect of federal law." ... We deem
that ruling to be applicable here even though, as we conclude below, this is not a
case in which the courts of the forum are bound to respect the act of the foreign
state.
The opinion in Republic of Iraq went on to say that the decision whether to
enforce the act of a foreign sovereign affecting property in the United States "is
closely tied to our foreign affairs, with consequent need for nationwide
uniformity," id., and that "when property confiscated is within the United States
at the time of the attempted confiscation, our courts will give effect to acts of
state 'only if they are consistent with the policy and law of the United States,' "
id. at 51. See also Allied Bank International v. Banco Credito Agricola, 757 F.2d
516, 521 (2d Cir.), cert. dismissed, --- U.S. ----, 106 S. Ct. 30, 87 L. Ed. 2d 706
(1985); Restatement of Foreign Relations Law Sec. 469 comment b (Tent. Final
Draft 1985); Henkin, The Foreign Affairs Power of the Federal Courts:
Sabbatino, 64 Colum. L. Rev. 805, 815 (1964); Note, The Federal Common Law,
82 Harv. L. Rev. 1512, 1520-21 (1969). The principles stated in Sabbatino and
Republic of Iraq extend beyond the act of state doctrine context in which both
cases arose and support the existence of federal jurisdiction where the
allegations in the complaint, as in this case, concern efforts by a foreign
government to reach or obtain property located here.
Further support for holding that there is federal question jurisdiction over
actions having important foreign policy implications is found in the very recent
case of Merrell Dow Pharmaceuticals Inc. v. Thompson, --- U.S. ----, 106 S. Ct.
3229, 92 L. Ed. 2d 650 (1986), in which the Court emphasized the flexible and
pragmatic considerations involved in determining federal jurisdiction in "close"
cases. See id. 106 S. Ct. at 3236 n. 12 (jurisdiction under section 1331 turns on
the "nature of the federal issues at stake"); see also Stone & Webster
Engineering Corp. v. Ilsley, 690 F.2d 323, 328 n. 4 (2d Cir. 1982), aff'd, 463 U.S.
1220, 103 S. Ct. 3564, 77 L. Ed. 2d 1405 (1983). As stated by Chief Judge
Lumbard in Ivy Broadcasting Co. v. American Telephone & Telegraph Co., 391
F.2d 486, 492 (2d Cir. 1968):
We believe that a cause of action ... "arises under" federal law if the dispositive
issues stated in the complaint require the application of federal common law....
The word "laws" in Sec. 1331 should be construed to include laws created by
federal judicial decisions as well as by congressional legislation.
See also Illinois v. City of Milwaukee, 406 U.S. 91, 99-100, 92 S. Ct. 1385, 1390-
1391, 31 L. Ed. 2d 712 (1972); 13B C. Wright, A. Miller & E. Cooper, Federal
Practice and Procedure Sec. 3563 at 60-61 (2d ed. 1984).
Weighing in favor of the application of federal common law here is the fact that
prior to the filing of the complaint in the New York State Supreme Court, The
Republic of the Philippines had already promulgated Executive Order No. 1
appointing the President's Commission on Good Government and charging it
with the recovery of all ill-gotten wealth accumulated "by the former President."
And, prior to the removal to federal court, Executive Order No. 2 had been
promulgated freezing the assets of the Marcoses in the Philippines and
appealing to foreign governments to freeze assets in their countries. Whether
any confiscatory action by the Philippines will be entitled to credit in the United
States courts is a question for another day, but it is surely a question that will be
governed by federal law within the original jurisdiction of the court under
section 1331 of the Judicial Code.
On the face of the complaint, to be sure, the plaintiff brought this case under a
theory more nearly akin to a state cause of action for conversion, requiring the
imposition of a constructive trust or equitable lien upon the "ill-gotten" gains,
see Restatement of Restitution Secs. 128 comment l, 161 (1937), rather than
under stated federal common law. But a "well-pleaded" complaint can be read
in one of two ways to implicate federal law. As was held in Avco Corp. v. Aero
Lodge No. 735, 376 F.2d 337, 340 (6th Cir. 1967), aff'd, 390 U.S. 557, 88 S. Ct.
1235, 20 L. Ed. 2d 126 (1968), federal court jurisdiction may not be defeated
simply by pleading a state cause of action when that cause of action had been
preempted by federal law--in Avco, section 301 of the Labor Management
Relations Act of 1947, 29 U.S.C. § 185 (1982). Discussing Avco in Franchise Tax
Board, the Supreme Court said that Avco had held that federal jurisdiction exists
even though the plaintiff pleads a state cause of action if federal law "is so
powerful as to displace entirely any state cause of action." 463 U.S. at 23, 103 S.
Ct. at 2853. Our question then would be whether the federal common law in the
area of foreign affairs is so "powerful," or important, as to displace a purely
state cause of action of constructive trust. We think it probably is: an action
brought by a foreign government against its former head of state arises under
federal common law because of the necessary implications of such an action for
United States foreign relations. But even if we were wrong on this point, at the
least this case presents "the presence of a federal issue in a state-created cause
of action" within Merrell Dow Pharmaceuticals, Inc. v. Thompson, --- U.S. ----,
106 S. Ct. 3229, 3233, 92 L. Ed. 2d 650 (1986). This is true because the action is
brought by a foreign government against its former head of state to regain
properly allegedly obtained as the result of acts while he was head of state.
We hold that federal jurisdiction is present in any event because the claim
raises, as a necessary element, the question whether to honor the request of a
foreign government that the American courts enforce the foreign government's
directives to freeze property in the United States subject to future process in the
foreign state. The question whether to honor such a request by a foreign
government is itself a federal question to be decided with uniformity as a matter
of federal law, and not separately in each state, see Republic of Iraq, supra,
regardless of whether the overall claim is viewed as one of federal or state
common law.
On this view, we need not determine whether there is federal jurisdiction under
the Alien Tort Claims statute. We note simply that Filartiga v. Pena-Irala, 630
F.2d 876, 888-89 (2d Cir. 1980), does hold that individual claims involving
torture are justiciable under the statute. Though there are generalized
allegations of torture in violation of the human rights of unnamed individuals in
the present complaint, we do not read the complaint as seeking restitution to
private individuals and appellee does not suggest otherwise. See also Dreyfus v.
Von Finck, 534 F.2d 24, 30-31 (2d Cir.) (coerced transfer of Jewish German
citizen's property by Nazis not a violation of international law triable in a
United States court), cert. denied, 429 U.S. 835, 97 S. Ct. 102, 50 L. Ed. 2d 101
(1976); IIT v. Vencap, Ltd., 519 F.2d 1001, 1015 (2d Cir. 1975) (acts of theft not
violations of international law and not triable here under Alien Tort Claims
statute).
We have already indicated that The Republic has offered sufficient evidence to
justify the issuance of a preliminary injunction, evidence of both the Marcoses'
beneficial ownership of the properties involved and the irreparability of the
harm that would result if no injunction freezing the assets pending final
determination of their ownership were issued. Additionally, in seeking to state a
claim for relief under the federal or state common law theory of constructive
trust and equitable lien, The Republic has also presented evidence that the
funds used to acquire the properties were illegally obtained.
Bernstein testified that one night in a New York restaurant Mrs. Marcos started
talking "in terms of what she owned in the world." After mentioning her Swiss
bank account she pulled out a statement indicating that the account was worth
in the nature of $120 million. Perhaps the strongest evidence in the record that
the Marcoses' money was obtained illicitly is a memorandum dated March 25,
1983, for Ferdinand Marcos from the president of the Philippine National Bank
(PNB), the official depository of The Republic of the Philippines. This document
requests approval to charge temporarily against the Office of the President's
accounts receivable several unliquidated advances from the bank's New York
branch totaling over $9.8 million. The memorandum states that " [d]isposition
of the receivable will subsequently be made from the Philippine Intelligence
Fund to be provided out of PNB profits when the income or profit position of
PNB can absorb it." Accompanying memoranda indicate the actual items
whereby the $9.8 million of expenditures was accumulated, many items
representing deposits to the accounts of Fe Gimenez or Vilma Bautista in the
hundreds of thousands of dollars. The memoranda also indicate a $300,000
payment to Voloby, payments to Mrs. Tantoco, and, separately, a $500,000
check from PNB to Antonio Floirendo dated July 23, 1982. The supplemental
appendix contains an affidavit by Fernando Flores, Senior Assistant Manager of
the Cash Department at the Manila office of Security Bank & Trust Company.
Flores states that starting in 1982 he received instructions from Rolando Gapud,
president of the bank, as to certain trust accounts. Large boxes of cash were
brought to Flores by Gapud to be turned over to the Cash Department for
counting and then deposited into the accounts designated by Gapud. From
January 11, 1985, to August 13, 1985, deposits totaling over $20 million were
made to just one of these accounts and in 1984-85 numerous payments were
made from another to Vilma Bautista, Rosenman Colin Freund, and other
accounts in New York.
We think The Republic has presented enough evidence of illegality to warrant a
preliminary injunction based on a claim for imposition of a constructive trust or
an equitable lien. As Judge Cardozo put it when he was on the New York Court of
Appeals, "A constructive trust is the formula through which the conscience of
equity finds expression. When property has been acquired in such
circumstances that the holder of the legal title may not in good conscience
retain the beneficial interest, equity converts him into a trustee." Beatty v.
Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378, 380 (1919). The
court " 'reserves freedom to apply this remedy to whatever knavery human
ingenuity can invent.' " Simonds v. Simonds, 45 N.Y.2d 233, 241, 380 N.E.2d 189,
194, 408 N.Y.S.2d 359, 363 (1978) (quoting Bogert, Trusts and Trustees Sec.
471 at 29 (2d ed. rev. 1978)). And, " ' [a] constructive trust will be erected
wherever necessary to satisfy the demands of justice.... [I]ts application is
limited only by the inventiveness of men who find new ways to enrich
themselves unjustly by grasping what should not belong to them.' " Id. at 241,
380 N.E.2d at 194, 408 N.Y.S.2d at 363 (quoting Latham v. Father Divine, 299
N.Y. 22, 27, 85 N.E.2d 168, 170 (1949)). See also Restatement of Restitution Sec.
160 comment a (1937) (constructive trust is simply a remedy to prevent unjust
enrichment and may or may not involve a fiduciary relationship); id. Sec. 160
comment g (stating that where property is held by one person upon a
constructive trust for another and the former transfers the property to a third
person who is not a bona fide purchaser, the interest of the beneficiary is not
cut off); id. Sec. 168 (same). Moreover, the Restatement of Restitution makes it
evident that the doctrine of equitable liens may be operative here, perhaps
requiring a less specific tracing of the proceeds than in the case of a constructive
trust. See id. Secs. 128 comment l, 161.
If the overall claim is one based on state law, it is clearly sufficient under the
New York law stated above. Even if the claim is one under federal common law,
it would still be sufficient if state law is adopted as the federal common law, as
is appropriate in cases such as this where adoption of state law does not conflict
with federal policy. See United States v. Crain, 589 F.2d 996, 999 (9th Cir. 1979).
Moreover, the sufficiency of the claim as a matter of federal common law is
shown by analogy to federal cases involving the duties of federal employees to
the United States. For example, United States v. Carter, 217 U.S. 286, 306, 30 S.
Ct. 515, 520, 54 L. Ed. 769 (1910), demonstrates that the law of constructive
trusts (and equitable liens) finds a basis in federal common law. There the Court
stated, "The larger interests of public justice will not tolerate, under any
circumstances, that a public official shall retain any profit or advantage which
he may realize through the acquirement of an interest in conflict with his
fidelity as an agent [of the United States]." Our own case, United States v. Podell,
572 F.2d 31, 35 (2d Cir. 1978), holds likewise, and as a matter of federal
common law imposed a constructive trust on moneys received by a United
States congressman who violated both his fiduciary duty and a conflict of
interest statute by appearing before federal agencies on behalf of a private
client.
The appellants have argued that under New York Civ.Prac.R. Sec. 6201
(McKinney 1980) a party who does not seek a money judgment is not entitled to
prejudgment attachment and therefore cannot obtain a preliminary injunction.
Of course a party is not entitled preliminarily to enjoin the transfer of property
that will be irrelevant to a final judgment. De Beers Consolidated Mines, Ltd. v.
United States, 325 U.S. 212, 220, 65 S. Ct. 1130, 1134, 89 L. Ed. 1566 (1945).
However, preliminary injunctions are proper to prevent a defendant from
making a judgment uncollectible, In re Feit & Drexler, Inc., 760 F.2d 406, 416
(2d Cir. 1985); see also International Controls v. Vesco, 490 F.2d 1334, 1347 (2d
Cir.), cert. denied, 417 U.S. 932, 94 S. Ct. 2644, 41 L. Ed. 2d 236 (1974), and " [a]
preliminary injunction is always appropriate to grant intermediate relief of the
same character as that which may be granted finally." De Beers Consolidated
Mines, 325 U.S. at 220, 65 S. Ct. at 1134. Here, the preliminary relief sought by
The Republic is intended to prevent any transfer or encumbrance of the
properties that would place them beyond The Republic's reach or would
prevent reconveyance of the properties to The Republic. There thus appears to
be no bar to the grant of a preliminary injunction and the district court may
either itself determine ownership or defer to Philippine proceedings, assuming
they proceed with sufficient dispatch to avoid raising problems of due process
as to the property here.
Glockhurst and Ancor, in reliance on Coleman v. Miller, 307 U.S. 433, 59 S. Ct.
972, 83 L. Ed. 1385 (1939), and Baker v. Carr, 369 U.S. 186, 82 S. Ct. 691, 7 L. Ed.
2d 663 (1962), claim that this case is not justiciable because its determination
involves unmanageable standards and because it potentially could cause
embarrassment to the executive in its conduct of foreign affairs. But we agree
with The Republic that there is nothing more unmanageable about this case
than about any other case involving theft, misappropriation, corporate veils,
and constructive trusts. The United States has made it clear that it does not fear
embarrassment if the courts of this country were to take jurisdiction of this and
other disputes between The Republic and ex-President Marcos. On the contrary,
by letter and motion granted in open court for leave to file a statement of
interest, all pursuant to Allied Bank International v. Banco Credito Agricola,
supra, the Department of Justice, with the concurrence of the Office of the Legal
Adviser to the Department of State has argued that with respect to the act of
state doctrine the burden is on the party asserting the applicability of the
doctrine, that defendants have to date not discharged their burden of proving
acts of state, and that, as to the allegations of head of state immunity, the
defendants do not have standing to invoke the doctrine. By implication this
position carries with it the proposition that the United States does not consider
this suit to be an improper intrusion on its management of foreign affairs. 3
The New York Land Company and the Bernsteins' brief questions the standing
of The Republic of the Philippines to sue for alleged injuries to private citizens,
but The Republic's brief points out that restitution to private individuals "is no
part of this suit" and we take that at its face value.
Appellants strongly assert that the act of state doctrine prohibits adjudication in
our court of the legality of the acts of a foreign head of state within his own
country. We are cited to Underhill v. Hernandez, 65 Fed. 577 (CCA 1895),
aff'd, 168 U.S. 250, 18 S. Ct. 83, 42 L. Ed. 456 (1897), and to Hatch v. Baez, 7 Hun.
596 (N.Y.Sup.Ct.1876). In Underhill this court refused to permit a suit for false
imprisonment and assault and battery against a former "civil and military chief"
of the city of Bolivar, Venezuela. The Supreme Court, affirming, held that every
sovereign state is bound to respect the independence of every other sovereign
state. 168 U.S. at 252, 18 S. Ct. at 84. In Hatch the New York Supreme Court held
that an action could not be maintained in New York against the former
president of the Dominican Republic for acts done in his official capacity even
though he had ceased to be president when the suit was brought. See also Banco
Nacional de Cuba v. Sabbatino, 376 U.S. at 436-37, 84 S. Ct. at 944-945 (United
States court may not examine the alleged illegality of an uncompensated taking
of property within Cuba by the government of Cuba from a Cuban corporation),
and Oetjen v. Central Leather Co., 246 U.S. 297, 303-04, 38 S. Ct. 309, 311, 62 L.
Ed. 726 (1918) (suit to regain property alleged to have been illegally seized by a
foreign government within its own territory dismissed though within the
jurisdiction of the United States court), both reaffirmed in First National City
Bank v. Banco Nacional de Cuba, 406 U.S. 759, 92 S. Ct. 1808, 32 L. Ed. 2d 466
(1972) (plurality opinion); Bernstein v. Van Heyghen Freres, S.A., 163 F.2d 246,
249 (2d Cir.) (court will not pass on validity under law of foreign state of acts of
officials of that state purporting to act as such), cert. denied, 332 U.S. 772, 68 S.
Ct. 88, 92 L. Ed. 357 (1947); Banco de Espana v. Federal Reserve Bank of New
York, 114 F.2d 438 (2d Cir. 1940) (act of state doctrine barred suit against
former officials of deposed Spanish government for having diverted silver by
means of illegal secret decrees).
Sabbatino treats the act of state doctrine as resting fundamentally on separation
of powers concerns. There the court decided
only that the Judicial Branch will not examine the validity of a taking of property
within its own territory by a foreign sovereign government, extant and
recognized by this country at the time of suit, in the absence of a treaty or other
unambiguous agreement regarding controlling legal principles, even if the
complaint alleges that the taking violates customary international law.
376 U.S. at 428, 84 S. Ct. at 940. While the position taken by the Executive is a
relevant factor, it is not dispositive. First National City Bank v. Banco Nacional
de Cuba, 406 U.S. at 773 & n. 4, 92 S. Ct. at 1816 & n. 4 (Douglas, J., concurring in
result); id. at 775-76, 92 S. Ct. at 1817 (Powell, J., concurring in judgment);
Banco Nacional de Cuba v. Chase Manhattan Bank, 658 F.2d 875, 884 (2d Cir.
1981). "Whether to invoke the act of state doctrine is ultimately and always a
judicial question." Allied Bank International v. Banco Credito Agricola de
Cartago, 757 F.2d 516, 521 n. 2 (2d Cir.), cert. dismissed, --- U.S. ----, 106 S. Ct.
30, 87 L. Ed. 2d 706 (1985).
Restatement (Second) of Foreign Relations Law Sec. 41 (1965) provides further
definition of the doctrine: United States courts "will refrain from examining the
validity of an act of a foreign state by which that state has exercised its
jurisdiction to give effect to its public interests" (emphasis added). See also id.
Sec. 41 comment d at 127; Restatement (Revised) of Foreign Relations Law Sec.
428 (Tent. Draft No. 4, 1983) (no review of acts of a "foreign state taken in its
sovereign capacity"); id. Sec. 469 (Tent. Draft No. 7, 1986) (no review of "acts of
a governmental character"). That the acts must be public acts of the sovereign
has been repeatedly affirmed. See Alfred Dunhill of London, Inc. v. Republic of
Cuba, 425 U.S. 682, 694 & n. 10, 96 S. Ct. 1854, 1861 & n. 10, 48 L. Ed. 2d 301
(1976) (noting that in Ricaud v. American Metal Co., 246 U.S. 304, 38 S. Ct. 312,
62 L. Ed. 733 (1918), Oetjen, supra, and Underhill, supra, the conduct "was the
public act of those with authority to exercise sovereign powers" (emphasis
added)); Dunhill, 425 U.S. at 720, 96 S. Ct. at 1873 (Marshall, J., dissenting)
(defining an act of state more broadly than the majority, but limiting it to a
"foreign state ... exercis [ing] a sovereign power either to act or to refrain from
acting"); Sabbatino, 376 U.S. at 401, 84 S. Ct. at 926 (the doctrine precludes
inquiry into validity of "public acts" of foreign sovereign within its own
territory); Filartiga v. Pena-Irala, 630 F.2d at 889 (doubting whether action by a
state official, in violation of the constitution and laws of Paraguay, unratified by
the government, could be characterized as an act of state); Hunt v. Mobil Oil
Corp., 550 F.2d 68, 73 (2d Cir.) (underscoring that acts must be "public" and
"governmental" for the doctrine to apply), cert. denied, 434 U.S. 984, 98 S. Ct.
608, 54 L. Ed. 2d 477 (1977); Jimenez v. Aristeguieta, 311 F.2d 547, 557-58 (5th
Cir. 1962) (doctrine applies only when an official having sovereign authority
acts in an official capacity; a dictator is not the sovereign and his financial
crimes committed in violation of his position and not in pursuance of it are not
acts of a sovereign, but rather were for his own benefit and "as far from being
an act of state as rape"), cert. denied, 373 U.S. 914, 83 S. Ct. 1302, 10 L. Ed. 2d
415 (1963); see also Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371,
1380 (5th Cir. 1980); Sharon v. Time, Inc., 599 F. Supp. 538, 544 (S.D.N.Y. 1984).
Cases relied on by appellants to the effect that acts that are illegal in the foreign
state may still be protected from judicial scrutiny under the act of state doctrine
are not to the contrary. In Banco de Espana, 114 F.2d at 444, this court held that
if the acts are those of a foreign sovereign--including acts of officials
purportedly operating in their official capacity--then the act of state doctrine
applies. See also Bernstein, 163 F.2d at 249; French v. Banco Nacional de Cuba,
23 N.Y.2d 46, 52, 242 N.E.2d 704, 709, 295 N.Y.S.2d 433, 440 (1968) (so long as
the act is the act of the foreign sovereign, it matters not that the sovereign has
transgressed its own laws).
Appellants simply fail to make the crucial distinction between acts of Marcos as
head of state, which may be protected from judicial scrutiny even if illegal under
Philippine law, and his purely private acts. Although the distinction between
public and private acts of a foreign official may be difficult to determine, our
courts have repeatedly done so. See Dunhill, 425 U.S. at 695, 96 S. Ct. at 1862
("Distinguishing between the public and governmental acts of sovereign states
on the one hand and their private and commercial acts on the other is not a
novel approach."); Texas Trading & Milling Corp. v. Federal Republic of Nigeria,
647 F.2d 300, 308-09 (2d Cir. 1981) (interpreting the commercial exception to
the Foreign Sovereign Immunities Act), cert. denied, 454 U.S. 1148, 102 S. Ct.
1012, 71 L. Ed. 2d 301 (1982). Since the burden of proof is on the party
invoking the act of state defense, Dunhill, 425 U.S. at 694, 96 S. Ct. at 1861,
appellants must ultimately demonstrate that the challenged acts of Marcos were
in fact public acts (the allegations of the complaint covering both public and
private acts). In addition, Dunhill appears to require a certain amount of
formality to indicate that the act is in fact the act of the sovereign, although
probably not the degree of formality suggested by former Judge Sofaer in
Sharon, 599 F. Supp. at 544-45.
Two other considerations may limit the applicability of the doctrine even to
Marcos's public acts. First, the Marcos government is no longer in power. Thus,
the danger of interference with the Executive's conduct of foreign policy is
surely much less than the typical case where the act of state is that of the
current foreign government. Neither of the two cases in our circuit that have
applied the doctrine to the acts of former governments, Banco de Espana, supra,
and Bernstein, supra, discuss the separation of powers issue, and both cases
appear more strongly to rely on the earlier sovereign immunity rationale. In
Sabbatino the Court explicitly questioned this aspect of Bernstein in light of the
doctrine's recast separation of powers rationale: "The balance of relevant
considerations may also be shifted if the government which perpetrated the
challenged act of state is no longer in existence, as in the Bernstein case, for the
political interest of this country may, as a result, be measurably altered." 376
U.S. at 428, 84 S. Ct. at 940. Thus, before the doctrine is applied even to Marcos's
public acts, the court must weigh in balance the foreign policy interests that
favor or disfavor application of the act of state doctrine.
Moreover, the act of state doctrine reflects respect for foreign states, so that
when a state comes into our courts and asks that our courts scrutinize its
actions, the justification for application of the doctrine may well be significantly
weaker. Restatement (Revised) of Foreign Relations Law Sec. 469 comment e
(Tent. Draft No. 7, 1986). We note, however, that the Restatement refers to acts
of the current government, not the situation here.
In short, the district court will necessarily scrutinize the acts that The Republic
challenges. Defendants must present evidence that these acts were public (e.g.,
that Marcos's wealth was obtained through official expropriation decrees or
public monopolies). The court then must decide whether to examine these
public acts in light of the considerations discussed above. If it chooses not to do
so--and the determination whether the Marcoses obtained their wealth illegally,
and hence the determination of ownership of the property at issue in this case,
is impossible without such scrutiny--the court should consider deferring to a
Philippine adjudication that comports with due process. But in any event, at this
stage we agree with the position of the United States quoted above that the
defendants have not discharged their burden of proving an act of state. Only
after that burden is met do other relevant factors need to be considered.
Appellants' next claim is that The Republic's Executive Orders are confiscation
decrees affecting property in the United States. In Republic of Iraq, supra, where
the Republic of Iraq sought to confiscate a bank account and stock held in a
custodian account in New York by the late King Faisal II, we ruled that the effect
of a foreign act of state affecting property within the United States is a question
of federal law and that a confiscation decree will be given consideration only if
the decree is consistent with our policy and laws. 353 F.2d at 51. We then held
that the decree in question was not consistent with our law. Citing Banco de
Vizcaya v. Don Alfonso de Borbon y Austria, [1935] 1 K.B. 140, we held that
confiscation of the assets of an individual is shocking to our sense of justice
"even if he wears a crown," and pointed out that our Constitution sets itself
against such confiscations not only by virtue of guarantees of due process and
the Fifth and Fourteenth Amendments, but by specific prohibitions of bills of
attainder in Article I. 353 F.2d at 51-52.
But, of course, the decrees in question in this case are not in and of themselves
confiscation decrees. Here, no confiscation has occurred. In Republic of Iraq, the
plaintiff argued that by virtue of its ordinance it had acquired title to the King's
New York property when the ordinance was promulgated. 241 F. Supp. 567, 572
(S.D.N.Y. 1965). Similarly, in Bandes v. Harlow & Jones, Inc., 570 F. Supp.
955 (S.D.N.Y. 1983), the district court considered that the Nicaraguan actions
there involved had confiscated U.S.-located property. Id. at 960, 963. Here, by
contrast, an examination of Executive Orders Nos. 1 and 2 shows that they do
not purport to seize the United States properties of the Marcoses, nor does The
Republic seek to enforce these orders as the basis for a recovery, even though
they were accompanied by adequate evidence to warrant the issuance of a
preliminary injunction against the transfer of the properties. The contention
that a future adjudication in the Philippines will not comport with due process
is not ripe. We have every reason to believe--at least we have no reason to
suspect to the contrary--that any Philippine decree will comport with due
process of law as the courts of the United States would envisage it. The
complaint seeks recovery of property illegally taken by a former head of state,
not confiscation of property legally owned by him.
Appellants also claim that the Marcoses are entitled to sovereign immunity. We
agree that appellants have no standing to assert this claim. But even if
appellants had standing, we are not at all certain that the immunity of a foreign
state, though it extends to its head of state, Restatement (Second) of Foreign
Relations Law Secs. 65, 66(b) (1965), goes so far as to render a former head of
state immune as regards his private acts. See The Schooner Exchange v.
M'Faddon, 11 U.S. (7 Cranch) 116, 145, 3 L. Ed. 287 (1812); Sucharitkul, State
Immunities and Trading Activities in International Law 27-28, 32-34, 47-50
(1959). The rationale underlying sovereign immunity--avoiding embarrassment
to our government and showing respect for a foreign state--may well be absent
when the individual is no longer head of state and the current government is
suing him. In any event, the Foreign Sovereign Immunity Act may not support
appellants' immunity claim in light of its "commercial activity" exception, 28
U.S.C. § 1603(d), (e) (1982), and as we said above, these appellants lack
standing to raise the immunity issue on the Marcoses' behalf, Restatement
(Second) of Foreign Relations Law Sec. 71 (1965).
We note Nixon v. Fitzgerald, 457 U.S. 731, 102 S. Ct. 2690, 73 L. Ed. 2d 349
(1982). There it was held that a former President of the United States enjoyed
immunity from damages liability for acts within the outer perimeter of his
official responsibility. Id. at 755-56, 102 S. Ct. at 2704. To the extent that it
appears, as the proof develops, that this suit ultimately rests on official acts, the
district court will of course be free to take that into account.
The district court, in refusing to dismiss on forum non conveniens grounds,
noted that the plaintiff seeks to impress a constructive trust only in regard to
property located in New York and seeks the appointment of a receiver pending
final resolution of the case. At this stage, we note that forum non conveniens
determinations are committed to the sound discretion of the trial court. Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 257, 102 S. Ct. 252, 266, 70 L. Ed. 2d 419
(1981). True, Islamic Republic of Iran v. Pahlavi, 94 A.D.2d 374, 464 N.Y.S.2d
487 (1983), aff'd, 62 N.Y.2d 474, 467 N.E.2d 245, 478 N.Y.S.2d 597 (1984), held
that Iran's in personam action against the former Shah and his wife alleging that
they had accepted bribes, misappropriated funds, and embezzled or converted
billions of dollars belonging to the national treasury of Iran should be dismissed
because the litigation had little relation or connection to the state of New York
other than the presence of the Shah and his wife in the state. There, the
Appellate Division noted that it was not a dispute over the ownership of
"specific property in this state." 94 A.D.2d at 377, 464 N.Y.S.2d at 490. Rather,
the complaint there asked that a constructive trust be imposed "on assets of the
defendants throughout the world." Id. at 377, 464 N.Y.S.2d at 490. Our case,
however, involves a dispute as to the ownership of specific property in this state
and only such property. Here the plaintiff seeks to impress a constructive trust
only on assets in New York. The assets in dispute are pieces of real property,
fixed and immovable. It thus seems difficult to deem the Southern District of
New York an inconvenient forum. Nor is there any showing that an alternative
forum is available and adequate to provide appropriate remedies in respect to
this property, ultimate ownership of which rests with the holders of bearer
shares of off-shore corporations. We put little or no stock in the suggestion
made at oral argument that these shares could be located, attached, and the
corporations themselves properly be brought before this or some other court.
Judge Leval rejected the forum non conveniens argument, noting that the
complaint only seeks the United States' recognition of a Philippine decree and
that the district court will not be asked to try the basic issues accusing President
Marcos of unlawful takings. He did see that the court might be required to
adjudicate whether Marcos is the owner of the New York properties, evidence
as to which is in both New York and the Philippines, but he did not visualize that
the case would involve questions of unlawful takings and the rights of the
Philippine Republic. As for final relief, Judge Leval stated that evidence of
wrongdoing would be reviewed only to the extent necessary to inquire whether
the ultimate Philippine decree, if any, is consistent with the law and policy of the
United States under Republic of Iraq. This action is merely ancillary to an
eventual Philippine decree or judgment and was brought in the Southern
District only because the real estate is located here.
Judgment affirmed.
1
This issue was the subject of detailed sworn testimony in early 1986 before the
Asian and Pacific Affairs Subcommittee (the Solarz Committee) of the House
Committee on Foreign Affairs
2
The Commission on Good Government was created under Executive Order No.
1, dated February 28, 1986. One of its purposes is
[t]he recovery of all ill-gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives, subordinates and close
associates, whether located in the Philippines or abroad, including the takeover
or sequestration of all business enterprises and entities owned or controlled by
them, during his administration, directly or through nominees, by taking undue
advantage of their public office and/or using their powers, authority, influence,
connections or relationship.
3
This conclusion is reinforced by a declaration of Michael H. Armacost,
Undersecretary of State for Political Affairs, made on March 15, 1986, submitted
to the United States Court of International Trade in connection with a pending
suit before that court, and in our record. Undersecretary Armacost pointed out
that the United States' relations with the Philippines are extremely important
and that it is the policy of the United States to strengthen and broaden those
relations, especially in light of the two countries' shared basic values such as a
commitment to democratic government and respect for human rights. The
Armacost declaration also points out that the United States has two of its largest
overseas military facilities located in the Philippines, facilities of critical
importance to the security of both nations, that the two countries have
numerous defense agreements, and that the United States has provided the
Philippines with over $250 million in military assistance in the past five years
and permits Philippine nationals to enlist in the United States Navy
The statement also emphasizes the important United States-Philippine
economic relationship involving in 1985 alone over $3.7 billion worth of
bilateral trade, a direct United States investment in the Philippines of over $1.2
billion, and United States monetary aid to the Philippines totaling $226 million.
The statement also notes United States-Philippine cooperation in numerous
areas including agriculture, education, nuclear energy, and science, and
mentions that the United States government recognized the new Philippine
government headed by Corazon Aquino and "welcomed its commitment to
fulfill the democratic aspirations of the Filipino people." The declaration refers
to the establishment of the official Presidential Commission on Good
Government headed by former Philippine Senator Jovito Salonga and to the
United States' agreement to receive Senator Salonga at a diplomatic level.
Undersecretary Armacost asserted that the Aquino government will view the
United States' actions on this matter as an important indicator of the future
course of our bilateral relations and stated that it is in the foreign policy
interests of the United States to honor the Philippine government's requests at
the earliest possible time.
1.0 Case Summary
1.1 Factual background
On 23 August 1991, SGS Société Générale de Surveillance S.A. (“SGS”) concluded
an agreement with the Republic of the Philippines regarding the provision of
comprehensive import supervision services (“the Contract”). Under the
Contract, SGS agreed to provide specialized services to assist in improving the
customs clearance and control processes of the Philippines.
The Contract required SGS to provide pre-shipment inspection services of the
Philippines’ imports in the country of export, including verification of the
imports’ quality, quantity and price. Under the terms of the Contract, SGS was
required to maintain a liaison office in the Philippines and to provide certain
technical and training assistance to the country.
The Contract was extended three times, first in 1994 at the end of the initial
three-year period, then in 1998 until 1999, and then finally from 31 December
1999 to 31 March 2000, at which point the Philippines government
discontinued SGS’s services under the Contract. SGS submitted monetary claims
to the Philippines government for unpaid sums under the Contract, amounting
to approximately US$140 million plus interest.
1.2 Summary of legal issues and decision on jurisdiction
After unsuccessfully pursuing settlement, SGS commenced ICSID arbitration
proceedings, alleging that the Philippines had violated several articles of the
Switzerland–Philippines Bilateral Investment Treaty (BIT) by refusing to pay
the amounts claimed under the Contract, failing to accord SGS fair and equitable
treatment, unlawfully expropriating SGS’s property, and breaching the so-called
“umbrella clause” (which required the host state’s observance of commitments
made to specific investments).
The Philippines objected to the Tribunal’s jurisdiction over the matter, arguing
that there was no “investment” in its territory as required by the BIT, that the
dispute was purely contractual in character and that the issues in dispute were
governed by the contractual dispute resolution clause, which referred the
parties to Philippines courts.
The Tribunal ruled that SGS had made an investment in the territory of the
Philippines and that both the umbrella clause and the broad dispute resolution
clause in the BIT gave it jurisdiction to hear the contract claims.
The Tribunal held, however, that the contract claims were inadmissible because
priority was to be given to the forum selection clause in the Contract. The
Tribunal stayed the proceedings in favour of the dispute resolution forum
specified in the Contract.
2.0 Select Legal Issues
The Tribunal’s decision came a few months after the SGS v. Pakistan decision,
which considered similar facts and legal issues and involved the same claimant
performing the same type of services for the respondent state. While SGS v.
Pakistan took a restrictive view of the effects of the umbrella clause and broad
dispute resolution clause, the Tribunal in SGS v. Philippines took a contrary view
by deciding that it had jurisdiction based on both provisions. The apparently
conflicting decisions of the two SGS tribunals have led to uncertainty regarding
the impacts of umbrella clauses and broad dispute resolution provisions in
investment treaties.
SGS v. Philippines raises critical concerns about how broad interpretations of
these common provisions may elevate commitments states have made to
investors under contracts or national laws to commitments enforceable under
international law. The SGS v. Philippines Tribunal mitigated the impacts of its
broad interpretation to some degree, however, by finding that, although it had
jurisdiction to hear the contract claims under both the umbrella clause and the
broad dispute resolution clause, it would give effect to the forum selection
clause in the contract between the claimant and respondent and therefore stay
the proceedings.
The Tribunal’s findings on the impact of the umbrella clause and broad dispute
resolution provision in the BIT are analyzed below, as is (albeit more briefly)
another aspect of the Tribunal’s decision impacting the scope of the BIT—the
definition of a covered “investment.”
2.1 Broad interpretation of “investment” as including a contract for the
provision of services performed mostly outside the territory of the host
state
The BIT required that the investment be made in the territory of the host state,
in accordance with its laws and regulations. SGS’s commitments under the
Contract required the provision of services both within and outside the
Philippines, although the majority of these were abroad. The Tribunal found
that even though SGS carried out pre-inspection shipment services abroad, its
liaison offices in the Philippines were a “substantial and non-severable aspect of
the overall service” (para 102). It further stated that there “was no distinct or
separate investment elsewhere than in the territory of the Philippines but a
single integrated process of inspection arranged through the Manila Liaison
Office, itself unquestionably an investment ‘in the territory of ’ the Philippines”
(para. 112). The Tribunal also placed emphasis on the scale and duration of
SGS’s activity in the territory. It concluded that SGS’s activities constituted an
investment made in the territory of the host state and in accordance with the
BIT.
Similar to the tribunal’s decision in SGS v. Pakistan, the SGS v.
Philippines Tribunal’s liberal interpretation of the requirement that the
investment should be made in the territory of the host state means that even
those activities that are primarily carried out abroad may still be covered under
the BIT, provided they are connected to some activities in the host state’s
territory. One effect of this interpretation is that it provides only a weak filtering
mechanism to help limit the scope of a BIT’s protection to those investments
that meaningfully contribute to host states’ economic developments.
2.2 The power of umbrella clauses to transform purely contractual claims
into treaty claims
SGS argued that the Philippines’ failure to pay for services under the Contract
constituted a breach of the BIT’s umbrella clause, Article X(2), which provides,
“Each Contracting Party shall observe any obligation it has assumed with regard
to specific investments in its territory by investors of the other Contracting
Party” (emphasis added).
TheSGS v. PhilippinesTribunal agreed, holding that the umbrella clause in the
Switzerland–Philippines treaty meant what it said: that the host state would
have to observe any legal obligation that the host state had or would assume
with respect to specific investments covered by the BIT (para. 115).
The Tribunal set forth a number of arguments to support that finding, as well as
to support its decision to deviate from the “highly restrictive interpretation”
given to the umbrella clause by the SGS v. Pakistan Tribunal (noting that there
was no doctrine of binding precedent under international law requiring it to
adhere to the other SGS decision) (para.120). First, the Tribunal looked at the
concrete wording of the clause in the Switzerland–Philippines BIT, which it held
to “say, and to say clearly” that the host state would have to observe any legal
commitment it had or would in the future assume with respect to any specific
covered investments (para. 115). The Tribunal then pointed out that the
language of the Switzerland– Pakistan BIT was “formulated in different and
rather vaguer terms than [the umbrella clause] of the Swiss–Philippines BIT”
(para. 119). Further significant to the SGS v. Philippines Tribunal was the text of
the preamble, from which it concluded that any uncertainty regarding the scope
of the clause should be resolved in favour of protecting investment. This
underlines the importance of using broader preambular objectives in treaties,
to avoid interpretations by tribunals that the singular objective of the BIT is the
protection of foreign investment.
TheSGS v. PhilippinesTribunal also addressed the concern raised by the SGS v.
Pakistan Tribunal that giving the umbrella clause the effect of bringing contract
claims under a treaty tribunal’s jurisdiction would override the forum selection
clauses negotiated by parties to applicable investor–state contracts. TheSGS v.
Philippines Tribunal found that while this was a valid concern, assuming
jurisdiction over contract claims through the umbrella clause does not
necessarily have to override contractual forum selection clauses.
Illustrating this theory, the Tribunal accepted jurisdiction under the umbrella
clause over contract claims, but decided to give effect to the forum selection
clause in the Contract, which mandated that domestic Philippine courts would
have exclusive jurisdiction over contract disputes. The Tribunal emphasized
that “a binding exclusive jurisdiction clause in a contract should be respected,
unless overridden by another valid provision” (para. 138, emphasis added). The
Tribunal decided that the BIT did not override the forum selection clause in the
Contract, reasoning that general provisions such as the umbrella clause are
generally not interpreted as overriding specific provisions of particular
contracts freely negotiated between the parties.
By staying the proceedings in favour of the parties’ chosen forum in the
Contract, the Tribunal addressed the concerns of the SGS v. Pakistan Tribunal
over the impact broad interpretations of umbrella clauses would have on
existing forum selection clauses in investor–state contracts. The dissenting
arbitrator, however, disagreed with this particular aspect of the decision,
finding that the Tribunal should have issued a decision on the merits, based on
the broad scope of the umbrella clause and consent to ICSID arbitration under
the BIT. This dissenting view leaves the door open for future decisions
permitting the umbrella clause to effectively rewrite the dispute resolution
clause in investor–state contracts.
TheSGS v. Philippinesand SGS v. Pakistan decisions are often cited as examples of
ICSID decisions that result in divergent findings on similar treaty provisions.
While some tribunals have followed the restrictive reading of the umbrella
clause in SGS v. Pakistan, in decisions such as Eureko B.V. v. Poland[1]and Noble
Ventures v. Romania[2]tribunals favour the SGS v. Philippines findings on the
effect of the umbrella clause regarding jurisdiction over contract claims.
2.3 Does the general description of a “dispute concerning an investment”
in the BIT’s investor– state arbitration clause encompass claims of an
essentially contractual character?
Article VIII(1) of the Switzerland–Philippines BIT provides for settlement of at issue in the SGS cases) more generally state that they cover disputes “relating
“disputes with respect to investments between a Contracting Party and an to investments,” without clarification regarding the inclusion—or, for that
investor of the other Contracting Party” (para. 130). Like its broad view of the matter, exclusion—of contract claims.
umbrella clause, the Tribunal took a broad view of this dispute resolution clause
by finding that the phrase “disputes with respect to investments” could apply to
an expropriation claim under the BIT as well as to a dispute arising from an
investment contract such as the SGS– Philippines Contract. Specifically, the
Tribunal stated that “the phrase‘disputes with respect to investments’ naturally
includes contractual disputes” (para. 132, emphasis added).

The Tribunal went on to discuss the impact its assertion of jurisdiction over
contract claims would have on the exclusive jurisdiction clauses in such
contracts. And as noted above, it concluded that it was possible “for BIT
tribunals to give effect to the parties’ contracts while respecting the general
language of BIT dispute settlement provisions” (para. 134). The Tribunal ruled
that the dispute resolution clause in the BIT provided it jurisdiction over the
contract claims arising out of the SGS–Philippines Contract, but that it would
nevertheless respect the exclusive forum selection clause in the Contract
because that provision could not be waived or overridden by the broad dispute
resolution clause in the BIT or by the consent to arbitration under the
Convention on the Settlement of Investment Disputes between States and
Nationals of Other States.

TheSGS v. PhilippinesTribunal took a different view than the SGS v.

Pakistan Tribunal, which held that a similarly drafted dispute resolution clause
in the applicable BIT did not give that tribunal jurisdiction over contract claims.
The two conflicting interpretations in SGS v. Pakistan and SGS v. Philippines on
this issue create significant uncertainty regarding hundreds of broad dispute
resolution clauses in BITs and their impacts upon forum selection clauses in an
unknown, but likely extensive, number of investor–state contracts.[3]

Notes

[1] Partial Award and Dissenting Opinion dated 19 August 2005, available
at http://ita.law.uvic.ca/documents/Eureko-
PartialAwardandDissentingOpinion.pdf.

[2] ICSID Case No. ARB/01/11, Award dispatched to the parties 12 October
2005, available at http://ita.law.uvic.ca/documents/Noble.pdf.

[3] While some treaties’ dispute resolution provisions specifically indicate that
they cover breaches of treaty obligations, a large number (including the treaties