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Kuroda vs Jalandoni 83 Phil 171

Facts

Shinegori Kuroda, a former Lieutenant-General of the Japanese Imperial Army and Commanding General
of the Japanese Imperial Forces in the Philippines was charged before the Philippine Military
Commission for war crimes. As he was the commanding general during such period of war, he was tried
for failure to discharge his duties and permitting the brutal atrocities and other high crimes committed
by his men against noncombatant civilians and prisoners of the Japanese forces, in violation of of the
laws and customs of war.

Kuroda, in his petition, argues that the Military Commission is not a valid court because the law that
created it, Executive Order No. 68, is unconstitutional. He further contends that using as basis the Hague
Convention’s Rules and Regulations covering Land Warfare for the war crime committed cannot stand
ground as the Philippines was not a signatory of such rules in such convention. Furthermore, he alleges
that the United States is not a party of interest in the case and that the two US prosecutors cannot
practice law in the Philippines.

Issue

1. Whether or not Executive Order No. 68 is constitutional

2. Whether or not the US is a party of interest to this case

Held

The Supreme Court ruled that Executive Order No. 68, creating the National War Crimes Office and
prescribing rules on the trial of accused war criminals, is constitutional as it is aligned with Sec 3,Article 2
of the Constitution which states that “The Philippines renounces war as an instrument of national policy
and adopts the generally accepted principles of international law as part of the law of the nation.” The
generally accepted principles of international law includes those formed during the Hague Convention,
the Geneva Convention and other international jurisprudence established by United Nations. These
include the principle that all persons, military or civilian, who have been guilty of planning, preparing or
waging a war of aggression and of the commission of crimes and offenses in violation of laws and
customs of war, are to be held accountable. In the doctrine of incorporation, the Philippines abides by
these principles and therefore has a right to try persons that commit such crimes and most especially
when it is committed againsts its citizens. It abides with it even if it was not a signatory to these
conventions by the mere incorporation of such principles in the constitution.

The United States is a party of interest because the country and its people have been equally, if not
more greatly, aggrieved by the crimes with which the petitioner is charged for. By virtue of Executive
Order No. 68, the Military Commission is a special military tribunal and that the rules as to parties and
representation are not governed by the rules of court but by the very provisions of this special law.
CO KIM CHAM (alias CO KIM CHAM), petitioner,

vs.

EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance of Manila, respondents.1

FERIA, J.:

This petition for mandamus in which petitioner prays that the respondent judge of the lower
court be ordered to continue the proceedings in civil case No. 3012 of said court, which were initiated
under the regime of the so-called Republic of the Philippines established during the Japanese military
occupation of these Islands.

The respondent judge refused to take cognizance of and continue the proceedings in said case
on the ground that the proclamation issued on October 23, 1944, by General Douglas MacArthur had
the effect of invalidating and nullifying all judicial proceedings and judgements of the court of the
Philippines under the Philippine Executive Commission and the Republic of the Philippines established
during the Japanese military occupation, and that, furthermore, the lower courts have no jurisdiction to
take cognizance of and continue judicial proceedings pending in the courts of the defunct Republic of
the Philippines in the absence of an enabling law granting such authority. And the same respondent, in
his answer and memorandum filed in this Court, contends that the government established in the
Philippines during the Japanese occupation were no de facto governments.

On January 2, 1942, the Imperial Japanese Forces occupied the City of Manila, and on the next day their
Commander in Chief proclaimed "the Military Administration under law over the districts occupied by
the Army." In said proclamation, it was also provided that "so far as the Military Administration permits,
all the laws now in force in the Commonwealth, as well as executive and judicial institutions, shall
continue to be effective for the time being as in the past," and "all public officials shall remain in their
present posts and carry on faithfully their duties as before."

A civil government or central administration organization under the name of "Philippine Executive
Commission was organized by Order No. 1 issued on January 23, 1942, by the Commander in Chief of
the Japanese Forces in the Philippines, and Jorge B. Vargas, who was appointed Chairman thereof, was
instructed to proceed to the immediate coordination of the existing central administrative organs and
judicial courts, based upon what had existed therefore, with approval of the said Commander in Chief,
who was to exercise jurisdiction over judicial courts.

The Chairman of the Executive Commission, as head of the central administrative organization, issued
Executive Orders Nos. 1 and 4, dated January 30 and February 5, 1942, respectively, in which the
Supreme Court, Court of Appeals, Courts of First Instance, and the justices of the peace and municipal
courts under the Commonwealth were continued with the same jurisdiction, in conformity with the
instructions given to the said Chairman of the Executive Commission by the Commander in Chief of
Japanese Forces in the Philippines in the latter's Order No. 3 of February 20, 1942, concerning basic
principles to be observed by the Philippine Executive Commission in exercising legislative, executive and
judicial powers. Section 1 of said Order provided that "activities of the administration organs and judicial
courts in the Philippines shall be based upon the existing statutes, orders, ordinances and customs. . . ."
On October 14, 1943, the so-called Republic of the Philippines was inaugurated, but no substantial
change was effected thereby in the organization and jurisdiction of the different courts that functioned
during the Philippine Executive Commission, and in the laws they administered and enforced.

On October 23, 1944, a few days after the historic landing in Leyte, General Douglas MacArthur issued a
proclamation to the People of the Philippines which declared:

1. That the Government of the Commonwealth of the Philippines is, subject to the supreme
authority of the Government of the United States, the sole and only government having legal and valid
jurisdiction over the people in areas of the Philippines free of enemy occupation and control;

2. That the laws now existing on the statute books of the Commonwealth of the Philippines and
the regulations promulgated pursuant thereto are in full force and effect and legally binding upon the
people in areas of the Philippines free of enemy occupation and control; and

3. That all laws, regulations and processes of any other government in the Philippines than that of
the said Commonwealth are null and void and without legal effect in areas of the Philippines free of
enemy occupation and control.

On February 3, 1945, the City of Manila was partially liberated and on February 27, 1945, General
MacArthur, on behalf of the Government of the United States, solemnly declared "the full powers and
responsibilities under the Constitution restored to the Commonwealth whose seat is here established as
provided by law."

In the light of these facts and events of contemporary history, the principal questions to be resolved in
the present case may be reduced to the following:(1) Whether the judicial acts and proceedings of the
court existing in the Philippines under the Philippine Executive Commission and the Republic of the
Philippines were good and valid and remained so even after the liberation or reoccupation of the
Philippines by the United States and Filipino forces; (2)Whether the proclamation issued on October 23,
1944, by General Douglas MacArthur, Commander in Chief of the United States Army, in which he
declared "that all laws, regulations and processes of any of the government in the Philippines than that
of the said Commonwealth are null and void and without legal effect in areas of the Philippines free of
enemy occupation and control," has invalidated all judgements and judicial acts and proceedings of the
said courts; and (3) If the said judicial acts and proceedings have not been invalidated by said
proclamation, whether the present courts of the Commonwealth, which were the same court existing
prior to, and continued during, the Japanese military occupation of the Philippines, may continue those
proceedings pending in said courts at the time the Philippines were reoccupied and liberated by the
United States and Filipino forces, and the Commonwealth of the Philippines were reestablished in the
Islands.

We shall now proceed to consider the first question, that is, whether or not under the rules of
international law the judicial acts and proceedings of the courts established in the Philippines under the
Philippine Executive Commission and the Republic of the Philippines were good and valid and remained
good and valid even after the liberation or reoccupation of the Philippines by the United States and
Filipino forces.
1. It is a legal truism in political and international law that all acts and proceedings of the
legislative, executive, and judicial departments of a de facto government are good and valid. The
question to be determined is whether or not the governments established in these Islands under the
names of the Philippine Executive Commission and Republic of the Philippines during the Japanese
military occupation or regime were de facto governments. If they were, the judicial acts and proceedings
of those governments remain good and valid even after the liberation or reoccupation of the Philippines
by the American and Filipino forces.

There are several kinds of de facto governments. The first, or government de facto in a proper legal
sense, is that government that gets possession and control of, or usurps, by force or by the voice of the
majority, the rightful legal governments and maintains itself against the will of the latter, such as the
government of England under the Commonwealth, first by Parliament and later by Cromwell as
Protector. The second is that which is established and maintained by military forces who invade and
occupy a territory of the enemy in the course of war, and which is denominated a government of
paramount force, as the cases of Castine, in Maine, which was reduced to British possession in the war
of 1812, and Tampico, Mexico, occupied during the war with Mexico, by the troops of the United States.
And the third is that established as an independent government by the inhabitants of a country who rise
in insurrection against the parent state of such as the government of the Southern Confederacy in revolt
not concerned in the present case with the first kind, but only with the second and third kinds of de
facto governments.

Speaking of government "de facto" of the second kind, the Supreme Court of the United States, in the
case of Thorington vs. Smith (8 Wall., 1), said: "But there is another description of government, called
also by publicists a government de facto, but which might, perhaps, be more aptly denominated a
government of paramount force. Its distinguishing characteristics are (1), that its existence is maintained
by active military power with the territories, and against the rightful authority of an established and
lawful government; and (2), that while it exists it necessarily be obeyed in civil matters by private
citizens who, by acts of obedience rendered in submission to such force, do not become responsible, or
wrongdoers, for those acts, though not warranted by the laws of the rightful government. Actual
governments of this sort are established over districts differing greatly in extent and conditions. They
are usually administered directly by military authority, but they may be administered, also, civil
authority, supported more or less directly by military force. . . . One example of this sort of government
is found in the case of Castine, in Mine, reduced to British possession in the war of 1812 . . . U. S. vs. Rice
(4 Wheaton, 253). A like example is found in the case of Tampico, occupied during the war with Mexico,
by the troops of the United States . . . Fleming vs. Page (9 Howard, 614). These were cases of temporary
possessions of territory by lawfull and regular governments at war with the country of which the
territory so possessed was part."

The powers and duties of de facto governments of this description are regulated in Section III of the
Hague Conventions of 1907, which is a revision of the provisions of the Hague Conventions of 1899 on
the same subject of said Section III provides "the authority of the legislative power having actually
passed into the hands of the occupant, the latter shall take steps in his power to reestablish and insure,
as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in
force in the country."
According to the precepts of the Hague Conventions, as the belligerent occupant has the right and is
burdened with the duty to insure public order and safety during his military occupation, he possesses all
the powers of a de facto government, and he can suspended the old laws and promulgate new ones and
make such changes in the old as he may see fit, but he is enjoined to respect, unless absolutely
prevented by the circumstances prevailing in the occupied territory, the municipal laws in force in the
country, that is, those laws which enforce public order and regulate social and commercial life of the
country. On the other hand, laws of a political nature or affecting political relations, such as, among
others, the right of assembly, the right to bear arms, the freedom of the press, and the right to travel
freely in the territory occupied, are considered as suspended or in abeyance during the military
occupation. Although the local and civil administration of justice is suspended as a matter of course as
soon as a country is militarily occupied, it is not usual for the invader to take the whole administration
into his own hands. In practice, the local ordinary tribunals are authorized to continue administering
justice; and judges and other judicial officers are kept in their posts if they accept the authority of the
belligerent occupant or are required to continue in their positions under the supervision of the military
or civil authorities appointed, by the Commander in Chief of the occupant. These principles and practice
have the sanction of all publicists who have considered the subject, and have been asserted by the
Supreme Court and applied by the President of the United States.

The doctrine upon this subject is thus summed up by Halleck, in his work on International Law (Vol. 2, p.
444): "The right of one belligerent to occupy and govern the territory of the enemy while in its military
possession, is one of the incidents of war, and flows directly from the right to conquer. We, therefore,
do not look to the Constitution or political institutions of the conqueror, for authority to establish a
government for the territory of the enemy in his possession, during its military occupation, nor for the
rules by which the powers of such government are regulated and limited. Such authority and such rules
are derived directly from the laws war, as established by the usage of the of the world, and confirmed by
the writings of publicists and decisions of courts — in fine, from the law of nations. . . . The municipal
laws of a conquered territory, or the laws which regulate private rights, continue in force during military
occupation, excepts so far as they are suspended or changed by the acts of conqueror. . . . He,
nevertheless, has all the powers of a de facto government, and can at his pleasure either change the
existing laws or make new ones."

And applying the principles for the exercise of military authority in an occupied territory, which were
later embodied in the said Hague Conventions, President McKinley, in his executive order to the
Secretary of War of May 19,1898, relating to the occupation of the Philippines by United States forces,
said in part: "Though the powers of the military occupant are absolute and supreme, and immediately
operate upon the political condition of the inhabitants, the municipal laws of the conquered territory,
such as affect private rights of person and property and provide for the punishment of crime, are
considered as continuing in force, so far as they are compatible with the new order of things, until they
are suspended or superseded by the occupying belligerent; and in practice they are not usually
abrogated, but are allowed to remain in force and to be administered by the ordinary tribunals,
substantially as they were before the occupation. This enlightened practice is, so far as possible, to be
adhered to on the present occasion. The judges and the other officials connected with the
administration of justice may, if they accept the authority of the United States, continue to administer
the ordinary law of the land as between man and man under the supervision of the American
Commander in Chief." (Richardson's Messages and Papers of President, X, p. 209.)
As to "de facto" government of the third kind, the Supreme Court of the United States, in the same case
of Thorington vs. Smith, supra, recognized the government set up by the Confederate States as a de
facto government. In that case, it was held that "the central government established for the insurgent
States differed from the temporary governments at Castine and Tampico in the circumstance that its
authority did no originate in lawful acts of regular war; but it was not, on the account, less actual or less
supreme. And we think that it must be classed among the governments of which these are examples. . . .

In the case of William vs. Bruffy (96 U. S. 176, 192), the Supreme Court of the United States, discussing
the validity of the acts of the Confederate States, said: "The same general form of government, the same
general laws for the administration of justice and protection of private rights, which had existed in the
States prior to the rebellion, remained during its continuance and afterwards. As far as the Acts of the
States do not impair or tend to impair the supremacy of the national authority, or the just rights of
citizens under the Constitution, they are, in general, to be treated as valid and binding. As we said in
Horn vs. Lockhart (17 Wall., 570; 21 Law. ed., 657): "The existence of a state of insurrection and war did
not loosen the bonds of society, or do away with civil government or the regular administration of the
laws. Order was to be preserved, police regulations maintained, crime prosecuted, property protected,
contracts enforced, marriages celebrated, estates settled, and the transfer and descent of property
regulated, precisely as in the time of peace. No one, that we are aware of, seriously questions the
validity of judicial or legislative Acts in the insurrectionary States touching these and kindered subjects,
where they were not hostile in their purpose or mode of enforcement to the authority of the National
Government, and did not impair the rights of citizens under the Constitution'. The same doctrine has
been asserted in numerous other cases."

And the same court, in the case of Baldy vs. Hunter (171 U. S., 388, 400), held: "That what occured or
was done in respect of such matters under the authority of the laws of these local de facto governments
should not be disregarded or held to be invalid merely because those governments were organized in
hostility to the Union established by the national Constitution; this, because the existence of war
between the United States and the Confederate States did not relieve those who are within the
insurrectionary lines from the necessity of civil obedience, nor destroy the bonds of society nor do away
with civil government or the regular administration of the laws, and because transactions in the ordinary
course of civil society as organized within the enemy's territory although they may have indirectly or
remotely promoted the ends of the de facto or unlawful government organized to effect a dissolution of
the Union, were without blame 'except when proved to have been entered into with actual intent to
further invasion or insurrection:'" and "That judicial and legislative acts in the respective states
composing the so-called Confederate States should be respected by the courts if they were not hostile in
their purpose or mode of enforcement to the authority of the National Government, and did not impair
the rights of citizens under the Constitution."

In view of the foregoing, it is evident that the Philippine Executive Commission, which was organized by
Order No. 1, issued on January 23, 1942, by the Commander of the Japanese forces, was a civil
government established by the military forces of occupation and therefore a de facto government of the
second kind. It was not different from the government established by the British in Castine, Maine, or by
the United States in Tampico, Mexico. As Halleck says, "The government established over an enemy's
territory during the military occupation may exercise all the powers given by the laws of war to the
conqueror over the conquered, and is subject to all restrictions which that code imposes. It is of little
consequence whether such government be called a military or civil government. Its character is the
same and the source of its authority the same. In either case it is a government imposed by the laws of
war, and so far it concerns the inhabitants of such territory or the rest of the world, those laws alone
determine the legality or illegality of its acts." (Vol. 2, p. 466.) The fact that the Philippine Executive
Commission was a civil and not a military government and was run by Filipinos and not by Japanese
nationals, is of no consequence. In 1806, when Napoleon occupied the greater part of Prussia, he
retained the existing administration under the general direction of a french official (Langfrey History of
Napoleon, 1, IV, 25); and, in the same way, the Duke of Willington, on invading France, authorized the
local authorities to continue the exercise of their functions, apparently without appointing an English
superior. (Wellington Despatches, XI, 307.). The Germans, on the other hand, when they invaded France
in 1870, appointed their own officials, at least in Alsace and Lorraine, in every department of
administration and of every rank. (Calvo, pars. 2186-93; Hall, International Law, 7th ed., p. 505, note 2.)

The so-called Republic of the Philippines, apparently established and organized as a sovereign state
independent from any other government by the Filipino people, was, in truth and reality, a government
established by the belligerent occupant or the Japanese forces of occupation. It was of the same
character as the Philippine Executive Commission, and the ultimate source of its authority was the same
— the Japanese military authority and government. As General MacArthur stated in his proclamation of
October 23, 1944, a portion of which has been already quoted, "under enemy duress, a so-called
government styled as the 'Republic of the Philippines' was established on October 14, 1943, based upon
neither the free expression of the people's will nor the sanction of the Government of the United
States." Japan had no legal power to grant independence to the Philippines or transfer the sovereignty
of the United States to, or recognize the latent sovereignty of, the Filipino people, before its military
occupation and possession of the Islands had matured into an absolute and permanent dominion or
sovereignty by a treaty of peace or other means recognized in the law of nations. For it is a well-
established doctrine in International Law, recognized in Article 45 of the Hauge Conventions of 1907
(which prohibits compulsion of the population of the occupied territory to swear allegiance to the
hostile power), the belligerent occupation, being essentially provisional, does not serve to transfer
sovereignty over the territory controlled although the de jure government is during the period of
occupancy deprived of the power to exercise its rights as such. (Thirty Hogshead of Sugar vs. Boyle, 9
Cranch, 191; United States vs. Rice, 4 Wheat., 246; Fleming vs. Page, 9 Howard, 603; Downes vs. Bidwell,
182 U. S., 345.) The formation of the Republic of the Philippines was a scheme contrived by Japan to
delude the Filipino people into believing in the apparent magnanimity of the Japanese gesture of
transferring or turning over the rights of government into the hands of Filipinos. It was established
under the mistaken belief that by doing so, Japan would secure the cooperation or at least the neutrality
of the Filipino people in her war against the United States and other allied nations.

Indeed, even if the Republic of the Philippines had been established by the free will of the Filipino who,
taking advantage of the withdrawal of the American forces from the Islands, and the occupation thereof
by the Japanese forces of invasion, had organized an independent government under the name with the
support and backing of Japan, such government would have been considered as one established by the
Filipinos in insurrection or rebellion against the parent state or the Unite States. And as such, it would
have been a de facto government similar to that organized by the confederate states during the war of
secession and recognized as such by the by the Supreme Court of the United States in numerous cases,
notably those of Thorington vs. Smith, Williams vs. Bruffy, and Badly vs. Hunter, above quoted; and
similar to the short-lived government established by the Filipino insurgents in the Island of Cebu during
the Spanish-American war, recognized as a de facto government by the Supreme Court of the United
States in the case of McCleod vs. United States (299 U. S., 416). According to the facts in the last-named
case, the Spanish forces evacuated the Island of Cebu on December 25, 1898, having first appointed a
provisional government, and shortly afterwards, the Filipinos, formerly in insurrection against Spain,
took possession of the Islands and established a republic, governing the Islands until possession thereof
was surrendered to the United States on February 22, 1898. And the said Supreme Court held in that
case that "such government was of the class of de facto governments described in I Moore's
International Law Digest, S 20, . . . 'called also by publicists a government de facto, but which might,
perhaps, be more aptly denominated a government of paramount force . . '." That is to say, that the
government of a country in possession of belligerent forces in insurrection or rebellion against the
parent state, rests upon the same principles as that of a territory occupied by the hostile army of an
enemy at regular war with the legitimate power.

The governments by the Philippine Executive Commission and the Republic of the Philippines during the
Japanese military occupation being de facto governments, it necessarily follows that the judicial acts and
proceedings of the courts of justice of those governments, which are not of a political complexion, were
good and valid, and, by virtue of the well-known principle of postliminy (postliminium) in international
law, remained good and valid after the liberation or reoccupation of the Philippines by the American and
Filipino forces under the leadership of General Douglas MacArthur. According to that well-known
principle in international law, the fact that a territory which has been occupied by an enemy comes
again into the power of its legitimate government of sovereignty, "does not, except in a very few cases,
wipe out the effects of acts done by an invader, which for one reason or another it is within his
competence to do. Thus judicial acts done under his control, when they are not of a political
complexion, administrative acts so done, to the extent that they take effect during the continuance of
his control, and the various acts done during the same time by private persons under the sanction of
municipal law, remain good. Were it otherwise, the whole social life of a community would be paralyzed
by an invasion; and as between the state and the individuals the evil would be scarcely less, — it would
be hard for example that payment of taxes made under duress should be ignored, and it would be
contrary to the general interest that the sentences passed upon criminals should be annulled by the
disappearance of the intrusive government ." (Hall, International Law, 7th ed., p. 518.) And when the
occupation and the abandonment have been each an incident of the same war as in the present case,
postliminy applies, even though the occupant has acted as conqueror and for the time substituted his
own sovereignty as the Japanese intended to do apparently in granting independence to the Philippines
and establishing the so-called Republic of the Philippines. (Taylor, International Law, p. 615.)

That not only judicial but also legislative acts of de facto governments, which are not of a political
complexion, are and remain valid after reoccupation of a territory occupied by a belligerent occupant, is
confirmed by the Proclamation issued by General Douglas MacArthur on October 23, 1944, which
declares null and void all laws, regulations and processes of the governments established in the
Philippines during the Japanese occupation, for it would not have been necessary for said proclamation
to abrogate them if they were invalid ab initio.

2. The second question hinges upon the interpretation of the phrase "processes of any other
government" as used in the above-quoted proclamation of General Douglas MacArthur of October 23,
1944 — that is, whether it was the intention of the Commander in Chief of the American Forces to annul
and void thereby all judgments and judicial proceedings of the courts established in the Philippines
during the Japanese military occupation.

The phrase "processes of any other government" is broad and may refer not only to the judicial
processes, but also to administrative or legislative, as well as constitutional, processes of the Republic of
the Philippines or other governmental agencies established in the Islands during the Japanese
occupation. Taking into consideration the fact that, as above indicated, according to the well-known
principles of international law all judgements and judicial proceedings, which are not of a political
complexion, of the de facto governments during the Japanese military occupation were good and valid
before and remained so after the occupied territory had come again into the power of the titular
sovereign, it should be presumed that it was not, and could not have been, the intention of General
Douglas MacArthur, in using the phrase "processes of any other government" in said proclamation, to
refer to judicial processes, in violation of said principles of international law. The only reasonable
construction of the said phrase is that it refers to governmental processes other than judicial processes
of court proceedings, for according to a well-known rule of statutory construction, set forth in 25 R. C. L.,
p. 1028, "a statute ought never to be construed to violate the law of nations if any other possible
construction remains."

It is true that the commanding general of a belligerent army of occupation, as an agent of his
government, may not unlawfully suspend existing laws and promulgate new ones in the occupied
territory, if and when the exigencies of the military occupation demand such action. But even assuming
that, under the law of nations, the legislative power of a commander in chief of military forces who
liberates or reoccupies his own territory which has been occupied by an enemy, during the military and
before the restoration of the civil regime, is as broad as that of the commander in chief of the military
forces of invasion and occupation (although the exigencies of military reoccupation are evidently less
than those of occupation), it is to be presumed that General Douglas MacArthur, who was acting as an
agent or a representative of the Government and the President of the United States, constitutional
commander in chief of the United States Army, did not intend to act against the principles of the law of
nations asserted by the Supreme Court of the United States from the early period of its existence,
applied by the Presidents of the United States, and later embodied in the Hague Conventions of 1907, as
above indicated. It is not to be presumed that General Douglas MacArthur, who enjoined in the same
proclamation of October 23, 1944, "upon the loyal citizens of the Philippines full respect and obedience
to the Constitution of the Commonwealth of the Philippines," should not only reverse the international
policy and practice of his own government, but also disregard in the same breath the provisions of
section 3, Article II, of our Constitution, which provides that "The Philippines renounces war as an
instrument of national policy, and adopts the generally accepted principles of international law as part
of the law of the Nation."

Moreover, from a contrary construction great inconvenience and public hardship would result, and
great public interests would be endangered and sacrificed, for disputes or suits already adjudged would
have to be again settled accrued or vested rights nullified, sentences passed on criminals set aside, and
criminals might easily become immune for evidence against them may have already disappeared or be
no longer available, especially now that almost all court records in the Philippines have been destroyed
by fire as a consequence of the war. And it is another well-established rule of statutory construction that
where great inconvenience will result from a particular construction, or great public interests would be
endangered or sacrificed, or great mischief done, such construction is to be avoided, or the court ought
to presume that such construction was not intended by the makers of the law, unless required by clear
and unequivocal words. (25 R. C. L., pp. 1025, 1027.)

The mere conception or thought of possibility that the titular sovereign or his representatives who
reoccupies a territory occupied by an enemy, may set aside or annul all the judicial acts or proceedings
of the tribunals which the belligerent occupant had the right and duty to establish in order to insure
public order and safety during military occupation, would be sufficient to paralyze the social life of the
country or occupied territory, for it would have to be expected that litigants would not willingly submit
their litigation to courts whose judgements or decisions may afterwards be annulled, and criminals
would not be deterred from committing crimes or offenses in the expectancy that they may escaped the
penalty if judgments rendered against them may be afterwards set aside.

That the proclamation has not invalidated all the judgements and proceedings of the courts of justice
during the Japanese regime, is impliedly confirmed by Executive Order No. 37, which has the force of
law, issued by the President of the Philippines on March 10, 1945, by virtue of the emergency legislative
power vested in him by the Constitution and the laws of the Commonwealth of the Philippines. Said
Executive order abolished the Court of Appeals, and provided "that all case which have heretofore been
duly appealed to the Court of Appeals shall be transmitted to the Supreme Court final decision." This
provision impliedly recognizes that the judgments and proceedings of the courts during the Japanese
military occupation have not been invalidated by the proclamation of General MacArthur of October 23,
because the said Order does not say or refer to cases which have been duly appealed to said court prior
to the Japanese occupation, but to cases which had therefore, that is, up to March 10, 1945, been duly
appealed to the Court of Appeals; and it is to be presumed that almost all, if not all, appealed cases
pending in the Court of Appeals prior to the Japanese military occupation of Manila on January 2, 1942,
had been disposed of by the latter before the restoration of the Commonwealth Government in 1945;
while almost all, if not all, appealed cases pending on March 10, 1945, in the Court of Appeals were from
judgments rendered by the Court of First Instance during the Japanese regime.

The respondent judge quotes a portion of Wheaton's International Law which say: "Moreover when it is
said that an occupier's acts are valid and under international law should not be abrogated by the
subsequent conqueror, it must be remembered that no crucial instances exist to show that if his acts
should be reversed, any international wrong would be committed. What does happen is that most
matters are allowed to stand by the restored government, but the matter can hardly be put further than
this." (Wheaton, International Law, War, 7th English edition of 1944, p. 245.) And from this quotion the
respondent judge "draws the conclusion that whether the acts of the occupant should be considered
valid or not, is a question that is up to the restored government to decide; that there is no rule of
international law that denies to the restored government to decide; that there is no rule of international
law that denies to the restored government the right of exercise its discretion on the matter, imposing
upon it in its stead the obligation of recognizing and enforcing the acts of the overthrown government."

There is doubt that the subsequent conqueror has the right to abrogate most of the acts of the occupier,
such as the laws, regulations and processes other than judicial of the government established by the
belligerent occupant. But in view of the fact that the proclamation uses the words "processes of any
other government" and not "judicial processes" prisely, it is not necessary to determine whether or not
General Douglas MacArthur had power to annul and set aside all judgments and proceedings of the
courts during the Japanese occupation. The question to be determined is whether or not it was his
intention, as representative of the President of the United States, to avoid or nullify them. If the
proclamation had, expressly or by necessary implication, declared null and void the judicial processes of
any other government, it would be necessary for this court to decide in the present case whether or not
General Douglas MacArthur had authority to declare them null and void. But the proclamation did not
so provide, undoubtedly because the author thereof was fully aware of the limitations of his powers as
Commander in Chief of Military Forces of liberation or subsequent conqueror.

Not only the Hague Regulations, but also the principles of international law, as they result from the
usages established between civilized nations, the laws of humanity and the requirements of the public
of conscience, constitute or from the law of nations. (Preamble of the Hague Conventions; Westlake,
International Law, 2d ed., Part II, p. 61.) Article 43, section III, of the Hague Regulations or Conventions
which we have already quoted in discussing the first question, imposes upon the occupant the
obligation to establish courts; and Article 23 (h), section II, of the same Conventions, which prohibits the
belligerent occupant "to declare . . . suspended . . . in a Court of Law the rights and action of the
nationals of the hostile party," forbids him to make any declaration preventing the inhabitants from
using their courts to assert or enforce their civil rights. (Decision of the Court of Appeals of England in
the case of Porter vs. Fruedenburg, L.R. [1915], 1 K.B., 857.) If a belligerent occupant is required to
establish courts of justice in the territory occupied, and forbidden to prevent the nationals thereof from
asserting or enforcing therein their civil rights, by necessary implication, the military commander of the
forces of liberation or the restored government is restrained from nullifying or setting aside the
judgments rendered by said courts in their litigation during the period of occupation. Otherwise, the
purpose of these precepts of the Hague Conventions would be thwarted, for to declare them null and
void would be tantamount to suspending in said courts the right and action of the nationals of the
territory during the military occupation thereof by the enemy. It goes without saying that a law that
enjoins a person to do something will not at the same time empower another to undo the same.
Although the question whether the President or commanding officer of the United States Army has
violated restraints imposed by the constitution and laws of his country is obviously of a domestic nature,
yet, in construing and applying limitations imposed on the executive authority, the Supreme Court of the
United States, in the case of Ochoa, vs. Hernandez (230 U.S., 139), has declared that they "arise from
general rules of international law and from fundamental principles known wherever the American flag
flies."

In the case of Raymond vs. Thomas (91 U.S., 712), a special order issued by the officer in command of
the forces of the United States in South Carolina after the end of the Civil War, wholly annulling a decree
rendered by a court of chancery in that state in a case within its jurisdiction, was declared void, and not
warranted by the acts approved respectively March 2, 1867 (14 Stat., 428), and July 19 of the same year
(15 id., 14), which defined the powers and duties of military officers in command of the several states
then lately in rebellion. In the course of its decision the court said; "We have looked carefully through
the acts of March 2, 1867 and July 19, 1867. They give very large governmental powers to the military
commanders designated, within the States committed respectively to their jurisdiction; but we have
found nothing to warrant the order here in question. . . . The clearest language would be necessary to
satisfy us that Congress intended that the power given by these acts should be so exercised. . . . It was
an arbitrary stretch of authority, needful to no good end that can be imagined. Whether Congress could
have conferred the 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. (Mithell vs. Harmony, 13 How., 115; Warden
vs. Bailey, 4 Taunt., 67; Fabrigas vs. Moysten, 1 Cowp., 161; s.c., 1 Smith's L.C., pt. 2, p. 934.) Viewing the
subject before us from the standpoint indicated, we hold that the order was void."

It is, therefore, evident that the proclamation of General MacArthur of October 23, 1944, which
declared that "all laws, regulations and processes of any other government in the Philippines than that
of the said Commonwealth are null and void without legal effect in areas of the Philippines free of
enemy occupation and control," has not invalidated the judicial acts and proceedings, which are not a
political complexion, of the courts of justice in the Philippines that were continued by the Philippine
Executive Commission and the Republic of the Philippines during the Japanese military occupation, and
that said judicial acts and proceedings were good and valid before and now good and valid after the
reoccupation of liberation of the Philippines by the American and Filipino forces.

3. The third and last question is whether or not the courts of the Commonwealth, which are the
same as those existing prior to, and continued during, the Japanese military occupation by the Philippine
Executive Commission and by the so-called Republic of the Philippines, have jurisdiction to continue now
the proceedings in actions pending in said courts at the time the Philippine Islands were reoccupied or
liberated by the American and Filipino forces, and the Commonwealth Government was restored.

Although in theory the authority the authority of the local civil and judicial administration is suspended
as a matter of course as soon as military occupation takes place, in practice the invader does not usually
take the administration of justice into his own hands, but continues the ordinary courts or tribunals to
administer the laws of the country which he is enjoined, unless absolutely prevented, to respect. As
stated in the above-quoted Executive Order of President McKinley to the Secretary of War on May 19,
1898, "in practice, they (the municipal laws) are not usually abrogated but are allowed to remain in
force and to be administered by the ordinary tribunals substantially as they were before the occupation.
This enlightened practice is, so far as possible, to be adhered to on the present occasion." And Taylor in
this connection says: "From a theoretical point of view it may be said that the conqueror is armed with
the right to substitute his arbitrary will for all preexisting forms of government, legislative, executive and
judicial. From the stand-point of actual practice such arbitrary will is restrained by the provision of the
law of nations which compels the conqueror to continue local laws and institution so far as military
necessity will permit." (Taylor, International Public Law, p.596.) Undoubtedly, this practice has been
adopted in order that the ordinary pursuits and business of society may not be unnecessarily deranged,
inasmuch as belligerent occupation is essentially provisional, and the government established by the
occupant of transient character.

Following these practice and precepts of the law of nations, Commander in Chief of the Japanese Forces
proclaimed on January 3, 1942, when Manila was occupied, the military administration under martial
law over the territory occupied by the army, and ordered that "all the laws now in force in the
Commonwealth, as well as executive and judicial institutions, shall continue to be affective for the time
being as in the past," and "all public officials shall remain in their present post and carry on faithfully
their duties as before." When the Philippine Executive Commission was organized by Order No. 1 of the
Japanese Commander in Chief, on January 23, 1942, the Chairman of the Executive Commission, by
Executive Orders Nos. 1 and 4 of January 30 and February 5, respectively, continued the Supreme Court,
Court of Appeals, Court of First Instance, and justices of the peace of courts, with the same jurisdiction
in conformity with the instructions given by the Commander in Chief of the Imperial Japanese Army in
Order No. 3 of February 20, 1942. And on October 14, 1943 when the so-called Republic of the
Philippines was inaugurated, the same courts were continued with no substantial change in organization
and jurisdiction thereof.

If the proceedings pending in the different courts of the Islands prior to the Japanese military occupation
had been continued during the Japanese military administration, the Philippine Executive Commission,
and the so-called Republic of the Philippines, it stands to reason that the same courts, which had
become reestablished and conceived of as having in continued existence upon the reoccupation and
liberation of the Philippines by virtue of the principle of postliminy (Hall, International Law, 7th ed., p.
516), may continue the proceedings in cases then pending in said courts, without necessity of enacting a
law conferring jurisdiction upon them to continue said proceedings. As Taylor graphically points out in
speaking of said principles "a state or other governmental entity, upon the removal of a foreign military
force, resumes its old place with its right and duties substantially unimpaired. . . . Such political
resurrection is the result of a law analogous to that which enables elastic bodies to regain their original
shape upon removal of the external force, — and subject to the same exception in case of absolute
crushing of the whole fibre and content." (Taylor, International Public Law, p. 615.)

The argument advanced by the respondent judge in his resolution in support in his conclusion that the
Court of First Instance of Manila presided over by him "has no authority to take cognizance of, and
continue said proceedings (of this case) to final judgment until and unless the Government of the
Commonwealth of the Philippines . . . shall have provided for the transfer of the jurisdiction of the
courts of the now defunct Republic of the Philippines, and the cases commenced and the left pending
therein," is "that said courts were a government alien to the Commonwealth Government. The laws
they enforced were, true enough, laws of the Commonwealth prior to Japanese occupation, but they
had become the laws — and the courts had become the institutions — of Japan by adoption (U.S. vs.
Reiter. 27 F. Cases, No. 16146), as they became later on the laws and institutions of the Philippine
Executive Commission and the Republic of the Philippines."

The court in the said case of U.S. vs. Reiter did not and could not say that the laws and institutions of the
country occupied if continued by the conqueror or occupant, become the laws and the courts, by
adoption, of the sovereign nation that is militarily occupying the territory. Because, as already shown,
belligerent or military occupation is essentially provisional and does not serve to transfer the
sovereignty over the occupied territory to the occupant. What the court said was that, if such laws and
institutions are continued in use by the occupant, they become his and derive their force from him, in
the sense that he may continue or set them aside. The laws and institution or courts so continued
remain the laws and institutions or courts of the occupied territory. The laws and the courts of the
Philippines, therefore, did not become, by being continued as required by the law of nations, laws and
courts of Japan. The provision of Article 45, section III, of the Hague Conventions of 1907 which prohibits
any compulsion of the population of occupied territory to swear allegiance to the hostile power,
"extends to prohibit everything which would assert or imply a change made by the invader in the
legitimate sovereignty. This duty is neither to innovate in the political life of the occupied districts, nor
needlessly to break the continuity of their legal life. Hence, so far as the courts of justice are allowed to
continue administering the territorial laws, they must be allowed to give their sentences in the name of
the legitimate sovereign " (Westlake, Int. Law, Part II, second ed., p. 102). According to Wheaton,
however, the victor need not allow the use of that of the legitimate government. When in 1870, the
Germans in France attempted to violate that rule by ordering, after the fall of the Emperor Napoleon,
the courts of Nancy to administer justice in the name of the "High German Powers occupying Alsace and
Lorraine," upon the ground that the exercise of their powers in the name of French people and
government was at least an implied recognition of the Republic, the courts refused to obey and
suspended their sitting. Germany originally ordered the use of the name of "High German Powers
occupying Alsace and Lorraine," but later offered to allow use of the name of the Emperor or a
compromise. (Wheaton, International Law, War, 7th English ed. 1944, p. 244.)

Furthermore, it is a legal maxim, that excepting that of a political nature, "Law once established
continues until changed by the some competent legislative power. It is not change merely by change of
sovereignty." (Joseph H. Beale, Cases on Conflict of Laws, III, Summary Section 9, citing Commonwealth
vs. Chapman, 13 Met., 68.) As the same author says, in his Treatise on the Conflict on Laws (Cambridge,
1916, Section 131): "There can no break or interregnum in law. From the time the law comes into
existence with the first-felt corporateness of a primitive people it must last until the final disappearance
of human society. Once created, it persists until a change take place, and when changed it continues in
such changed condition until the next change, and so forever. Conquest or colonization is impotent to
bring law to an end; in spite of change of constitution, the law continues unchanged until the new
sovereign by legislative acts creates a change."

As courts are creatures of statutes and their existence defends upon that of the laws which create and
confer upon them their jurisdiction, it is evident that such laws, not being a political nature, are not
abrogated by a change of sovereignty, and continue in force "ex proprio vigore" unless and until
repealed by legislative acts. A proclamation that said laws and courts are expressly continued is not
necessary in order that they may continue in force. Such proclamation, if made, is but a declaration of
the intention of respecting and not repealing those laws. Therefore, even assuming that Japan had
legally acquired sovereignty over these Islands, which she had afterwards transferred to the so-called
Republic of the Philippines, and that the laws and the courts of these Islands had become the courts of
Japan, as the said courts of the laws creating and conferring jurisdiction upon them have continued in
force until now, it necessarily follows that the same courts may continue exercising the same jurisdiction
over cases pending therein before the restoration of the Commonwealth Government, unless and until
they are abolished or the laws creating and conferring jurisdiction upon them are repealed by the said
government. As a consequence, enabling laws or acts providing that proceedings pending in one court
be continued by or transferred to another court, are not required by the mere change of government or
sovereignty. They are necessary only in case the former courts are abolished or their jurisdiction so
change that they can no longer continue taking cognizance of the cases and proceedings commenced
therein, in order that the new courts or the courts having jurisdiction over said cases may continue the
proceedings. When the Spanish sovereignty in the Philippine Islands ceased and the Islands came into
the possession of the United States, the "Audiencia" or Supreme Court was continued and did not cease
to exist, and proceeded to take cognizance of the actions pending therein upon the cessation of the
Spanish sovereignty until the said "Audiencia" or Supreme Court was abolished, and the Supreme Court
created in Chapter II of Act No. 136 was substituted in lieu thereof. And the Courts of First Instance of
the Islands during the Spanish regime continued taking cognizance of cases pending therein upon the
change of sovereignty, until section 65 of the same Act No. 136 abolished them and created in its
Chapter IV the present Courts of First Instance in substitution of the former. Similarly, no enabling acts
were enacted during the Japanese occupation, but a mere proclamation or order that the courts in the
Island were continued.
On the other hand, during the American regime, when section 78 of Act No. 136 was enacted abolishing
the civil jurisdiction of the provost courts created by the military government of occupation in the
Philippines during the Spanish-American War of 1898, the same section 78 provided for the transfer of
all civil actions then pending in the provost courts to the proper tribunals, that is, to the justices of the
peace courts, Court of First Instance, or Supreme Court having jurisdiction over them according to law.
And later on, when the criminal jurisdiction of provost courts in the City of Manila was abolished by
section 3 of Act No. 186, the same section provided that criminal cases pending therein within the
jurisdiction of the municipal court created by Act No. 183 were transferred to the latter.

That the present courts as the same courts which had been functioning during the Japanese regime and,
therefore, can continue the proceedings in cases pending therein prior to the restoration of the
Commonwealth of the Philippines, is confirmed by Executive Order No. 37 which we have already
quoted in support of our conclusion in connection with the second question. Said Executive Order
provides"(1) that the Court of Appeals created and established under Commonwealth Act No. 3 as
amended, be abolished, as it is hereby abolished," and "(2) that all cases which have heretofore been
duly appealed to the Court of Appeals shall be transmitted to the Supreme Court for final decision. . . ."
In so providing, the said Order considers that the Court of Appeals abolished was the same that existed
prior to, and continued after, the restoration of the Commonwealth Government; for, as we have stated
in discussing the previous question, almost all, if not all, of the cases pending therein, or which had
theretofore (that is, up to March 10, 1945) been duly appealed to said court, must have been cases
coming from the Courts of First Instance during the so-called Republic of the Philippines. If the Court of
Appeals abolished by the said Executive Order was not the same one which had been functioning during
the Republic, but that which had existed up to the time of the Japanese occupation, it would have
provided that all the cases which had, prior to and up to that occupation on January 2, 1942, been dully
appealed to the said Court of Appeals shall be transmitted to the Supreme Court for final decision.

It is, therefore, obvious that the present courts have jurisdiction to continue, to final judgment, the
proceedings in cases, not of political complexion, pending therein at the time of the restoration of the
Commonwealth Government.

Having arrived at the above conclusions, it follows that the Court of First Instance of Manila has
jurisdiction to continue to final judgment the proceedings in civil case No. 3012, which involves civil
rights of the parties under the laws of the Commonwealth Government, pending in said court at the
time of the restoration of the said Government; and that the respondent judge of the court, having
refused to act and continue him does a duty resulting from his office as presiding judge of that court,
mandamus is the speedy and adequate remedy in the ordinary course of law, especially taking into
consideration the fact that the question of jurisdiction herein involved does affect not only this
particular case, but many other cases now pending in all the courts of these Islands.

In view of all the foregoing it is adjudged and decreed that a writ of mandamus issue, directed to the
respondent judge of the Court of First Instance of Manila, ordering him to take cognizance of and
continue to final judgment the proceedings in civil case No. 3012 of said court. No pronouncement as to
costs. So ordered.
BORIS MEJOFF, petitioner, vs.THE DIRECTOR OF PRISONS, respondent.

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 xxx 1âw phïl.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.


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.

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 pertaining directly and
immediately to the most important public function of any government - the defense of the state — is
equally as untenable as requiring 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 in the aforesaid
manifestation and memorandum as amicus curiae, wherein it joined petitioner for the grant of the
remedy prayed for.

2. There should be no misinterpretation of the scope of the decision reached by this Court.
Petitioner, as the Commander of the United States Naval Base in Olongapo, does not possess
diplomatic immunity. He may therefore be proceeded against in his personal capacity, or when the
action taken by him cannot be imputed to the government which he represents. Thus, after the
Military Bases Agreement, in Miquiabas v. Commanding General33and Dizon v. 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 interfered with by the logging operations.'"36 Nowhere in the answer of
respondents, nor in their memorandum, was this point met. It remained unrefuted.

WHEREFORE, the writ of certiorari prayed for is granted, nullifying and setting aside the writ of
preliminary injunction issued by respondent Judge in Civil Case 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 preliminary injunction of respondent Judge is hereby made
permanent. Costs against private respondent Edgardo Gener.
Tanada v Angara

PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership
thereto of the vast majority of countries has revolutionized international business and economic relations
amongst states. It has irreversibly propelled the world towards trade liberalization and economic
globalization. Liberalization, globalization, deregulation and privatization, the third-millennium buzz words,
are ushering in a new borderless world of business by sweeping away as mere historical relics the
heretofore traditional modes of promoting and protecting national economies like tariffs, export subsidies,
import quotas, quantitative restrictions, tax exemptions and currency controls. Finding market niches and
becoming the best in specific industries in a market-driven and export-oriented global scenario are replacing
age-old beggar-thy-neighbor policies that unilaterally protect weak and inefficient domestic producers of
goods and services. In the words of Peter Drucker, the well-known management guru, Increased
participation in the world economy has become the key to domestic economic growth and prosperity.

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the
establishment of three multilateral institutions -- inspired by that grand political body, the United Nations --
were discussed at Dumbarton Oaks and Bretton Woods. The first was the World Bank (WB) which was to
address the rehabilitation and reconstruction of war-ravaged and later developing countries; the second,
the International Monetary Fund (IMF) which was to deal with currency problems; and the third, the
International Trade Organization (ITO), which was to foster order and predictability in world trade and to
minimize unilateral protectionist policies that invite challenge, even retaliation, from other states. However,
for a variety of reasons, including its non-ratification by the United States, the ITO, unlike the IMF and WB,
never took off. What remained was only GATT -- the General Agreement on Tariffs and Trade. GATT was
a collection of treaties governing access to the economies of treaty adherents with no institutionalized body
administering the agreements or dependable system of dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the
Tokyo Round and the Uruguay Round, the world finally gave birth to that administering body -- the World
Trade Organization -- with the signing of the Final Act in Marrakesh, Morocco and the ratification of the
WTO Agreement by its members. [1]

Like many other developing countries, the Philippines joined WTO as a founding member with the
goal, as articulated by President Fidel V. Ramos in two letters to the Senate (infra), of improving Philippine
access to foreign markets, especially its major trading partners, through the reduction of tariffs on its
exports, particularly agricultural and industrial products. The President also saw in the WTO the opening of
new opportunities for the services sector x x x, (the reduction of) costs and uncertainty associated with
exporting x x x, and (the attraction of) more investments into the country. Although the Chief Executive did
not expressly mention it in his letter, the Philippines - - and this is of special interest to the legal profession
- - will benefit from the WTO system of dispute settlement by judicial adjudication through the independent
WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate Tribunal.Heretofore, trade
disputes were settled mainly through negotiations where solutions were arrived at frequently on the basis
of relative bargaining strengths, and where naturally, weak and underdeveloped countries were at a
disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines to place nationals and products of member-
countries on the same footing as Filipinos and local products and (2) that the WTO intrudes, limits and/or
impairs the constitutional powers of both Congress and the Supreme Court, the instant petition before this
Court assails the WTO Agreement for violating the mandate of the 1987 Constitution to develop a self-
reliant and independent national economy effectively controlled by Filipinos x x x (to) give preference to
qualified Filipinos (and to) promote the preferential use of Filipino labor, domestic materials and locally
produced goods.
Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade
liberalization and economic globalization? Does it prescribe Philippine integration into a global economy
that is liberalized, deregulated and privatized? These are the main questions raised in this petition
for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for the nullification,
on constitutional grounds, of the concurrence of the Philippine Senate in the ratification by the President of
the Philippines of the Agreement Establishing the World Trade Organization (WTO Agreement, for brevity)
and (2) for the prohibition of its implementation and enforcement through the release and utilization of public
funds, the assignment of public officials and employees, as well as the use of government properties and
resources by respondent-heads of various executive offices concerned therewith. This concurrence is
embodied in Senate Resolution No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of


the Department of Trade and Industry (Secretary Navarro, for brevity), representing the Government of the
Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the
Uruguay Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act, Secretary Navarro on behalf of the Republic of the Philippines, agreed:
[2]

(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities,
with a view to seeking approval of the Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994
from the President of the Philippines, stating among others that the Uruguay Round Final Act is hereby
[3]

submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.
On August 13, 1994, the members of the Philippine Senate received another letter from the President
of the Philippines likewise dated August 11, 1994, which stated among others that the Uruguay Round
[4]

Final Act, the Agreement Establishing the World Trade Organization, the Ministerial Declarations and
Decisions, and the Understanding on Commitments in Financial Services are hereby submitted to the
Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.
On December 9, 1994, the President of the Philippines certified the necessity of the immediate
adoption of P.S. 1083, a resolution entitled Concurring in the Ratification of the Agreement Establishing the
World Trade Organization. [5]

On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which Resolved, as it is
hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by the President of the
Philippines of the Agreement Establishing the World Trade Organization. The text of the WTO Agreement
[6]

is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations and includes various agreements and associated legal instruments (identified in the said
Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral Trade Agreements, for
brevity) as follows:

ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods

General Agreement on Tariffs and Trade 1994

Agreement on Agriculture

Agreement on the Application of Sanitary and

Phytosanitary Measures

Agreement on Textiles and Clothing

Agreement on Technical Barriers to Trade

Agreement on Trade-Related Investment Measures

Agreement on Implementation of Article VI of the General Agreement on Tariffs and


Trade 1994

Agreement on Implementation of Article VII of the General on Tariffs and Trade 1994

Agreement on Pre-Shipment Inspection

Agreement on Rules of Origin

Agreement on Imports Licensing Procedures

Agreement on Subsidies and Coordinating Measures

Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism

On December 16, 1994, the President of the Philippines signed the Instrument of Ratification,
[7]

declaring:

NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines, after
having seen and considered the aforementioned Agreement Establishing the World Trade Organization and the
agreements and associated legal instruments included in Annexes one (1), two (2) and three (3) of that Agreement
which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do hereby ratify and confirm the
same and every Article and Clause thereof.
To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the
Agreement Proper and the associated legal instruments included in Annexes one (1), two (2) and three (3)
of that Agreement which are integral parts thereof.
On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO Agreement
(and its integral annexes aforementioned) but also (1) the Ministerial Declarations and Decisions and (2)
the Understanding on Commitments in Financial Services. In his Memorandum dated May 13, 1996, the [8]

Solicitor General describes these two latter documents as follows:

The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide range of matters,
such as measures in favor of least developed countries, notification procedures, relationship of WTO with the
International Monetary Fund (IMF), and agreements on technical barriers to trade and on dispute settlement.

The Understanding on Commitments in Financial Services dwell on, among other things, standstill or limitations
and qualifications of commitments to existing non-conforming measures, market access, national treatment, and
definitions of non-resident supplier of financial services, commercial presence and new financial service.

On December 29, 1994, the present petition was filed. After careful deliberation on respondents
comment and petitioners reply thereto, the Court resolved on December 12, 1995, to give due course to
the petition, and the parties thereafter filed their respective memoranda. The Court also requested the
Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations stationed in Geneva,
Switzerland, to submit a paper, hereafter referred to as Bautista Paper, for brevity, (1) providing a historical
[9]

background of and (2) summarizing the said agreements.


During the Oral Argument held on August 27, 1996, the Court directed:

(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy and (2) the transcript of
proceedings/hearings in the Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties signed prior to the
Philippine adherence to the WTO Agreement, which derogate from Philippine sovereignty and (2) copies of the
multi-volume WTO Agreement and other documents mentioned in the Final Act, as soon as possible.

After receipt of the foregoing documents, the Court said it would consider the case submitted for
resolution. In a Compliance dated September 16, 1996, the Solicitor General submitted a printed copy of
the 36-volume Uruguay Round of Multilateral Trade Negotiations, and in another Compliance dated
October 24, 1996, he listed the various bilateral or multilateral treaties or international instruments involving
derogation of Philippine sovereignty. Petitioners, on the other hand, submitted their Compliance dated
January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:

A. Whether the petition presents a political question or is otherwise not justiciable.

B. Whether the petitioner members of the Senate who participated in the deliberations and voting leading to the
concurrence are estopped from impugning the validity of the Agreement Establishing the World Trade
Organization or of the validity of the concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade Organization contravene the
provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of the 1987 Philippine Constitution.
D. Whether provisions of the Agreement Establishing the World Trade Organization unduly limit, restrict and
impair Philippine sovereignty specifically the legislative power which, under Sec. 2, Article VI, 1987
Philippine Constitution is vested in the Congress of the Philippines;

E. Whether provisions of the Agreement Establishing the World Trade Organization interfere with the exercise
of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or
excess of jurisdiction when they voted for concurrence in the ratification of the constitutionally-infirm
Agreement Establishing the World Trade Organization.

G. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or
excess of jurisdiction when they concurred only in the ratification of the Agreement Establishing the
World Trade Organization, and not with the Presidential submission which included the Final Act,
Ministerial Declaration and Decisions, and the Understanding on Commitments in Financial Services.

On the other hand, the Solicitor General as counsel for respondents synthesized the several issues
raised by petitioners into the following: [10]

1. Whether or not the provisions of the Agreement Establishing the World Trade Organization and the Agreements
and Associated Legal Instruments included in Annexes one (1), two (2) and three (3) of that agreement cited by
petitioners directly contravene or undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and
12, Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of legislative
power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial power by this Honorable Court
in promulgating the rules of evidence.

4. Whether or not the concurrence of the Senate in the ratification by the President of the Philippines of the
Agreement establishing the World Trade Organization implied rejection of the treaty embodied in the Final Act.

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor
General has effectively ignored three, namely: (1) whether the petition presents a political question or is
otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Taada and Anna
Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-members of the
Senate acted in grave abuse of discretion when they voted for concurrence in the ratification of the WTO
Agreement. The foregoing notwithstanding, this Court resolved to deal with these three issues thus:

(1) The political question issue -- being very fundamental and vital, and being a matter that probes into the very
jurisdiction of this Court to hear and decide this case -- was deliberated upon by the Court and will thus be ruled
upon as the first issue;

(2) The matter of estoppel will not be taken up because this defense is waivable and the respondents have effectively
waived it by not pursuing it in any of their pleadings; in any event, this issue, even if ruled in respondents favor, will
not cause the petitions dismissal as there are petitioners other than the two senators, who are not vulnerable to the
defense of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be taken up as an
integral part of the disposition of the four issues raised by the Solicitor General.
During its deliberations on the case, the Court noted that the respondents did not question the locus
standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They probably
realized that grave constitutional issues, expenditures of public funds and serious international
commitments of the nation are involved here, and that transcendental public interest requires that the
substantive issues be met head on and decided on the merits, rather than skirted or deflected by procedural
matters. [11]

To recapitulate, the issues that will be ruled upon shortly are:


(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE STATED, DOES THE PETITION
INVOLVE A POLITICAL QUESTION OVER WHICH THIS COURT HAS NO JURISDICTION?

(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES CONTRAVENE SEC. 19, ARTICLE
II, AND SECS. 10 AND 12, ARTICLE XII, OF THE PHILIPPINE CONSTITUTION?

(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR THE EXERCISE
OF LEGISLATIVE POWER BY CONGRESS?

(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF JUDICIAL POWER BY THIS
COURT IN PROMULGATING RULES ON EVIDENCE?

(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS ANNEXES SUFFICIENT
AND/OR VALID, CONSIDERING THAT IT DID NOT INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS
AND DECISIONS, AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?

The First Issue: Does the Court Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution,
the petition no doubt raises a justiciable controversy. Where an action of the legislative branch is seriously
alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary
to settle the dispute. The question thus posed is judicial rather than political. The duty (to adjudicate)
remains to assure that the supremacy of the Constitution is upheld. Once a controversy as to the
[12]

application or interpretation of a constitutional provision is raised before this Court (as in the instant case),
it becomes a legal issue which the Court is bound by constitutional mandate to decide. [13]

The jurisdiction of this Court to adjudicate the matters raised in the petition is clearly set out in the
[14]

1987 Constitution, as follows:


[15]

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.

The foregoing text emphasizes the judicial departments duty and power to strike down grave abuse of
discretion on the part of any branch or instrumentality of government including Congress. It is an innovation
in our political law. As explained by former Chief Justice Roberto Concepcion, the judiciary is the final
[16] [17]

arbiter on the question of whether or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting
to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this
nature.
As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or
[18]

abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of
discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or
department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate
remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should be
given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of
Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues
and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials. On this, we
have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will not review
the wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or pass
upon the merits of trade liberalization as a policy espoused by said international body. Neither will it rule on
the propriety of the governments economic policy of reducing/removing tariffs, taxes, subsidies, quantitative
restrictions, and other import/trade barriers. Rather, it will only exercise its constitutional duty to determine
whether or not there had been a grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the Senate in ratifying the WTO Agreement and its three annexes.

Second Issue: The WTO Agreement and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the letter, spirit and intent of the Constitution mandating economic
nationalism are violated by the so-called parity provisions and national treatment clauses scattered in
various parts not only of the WTO Agreement and its annexes but also in the Ministerial Decisions and
Declarations and in the Understanding on Commitments in Financial Services.
Specifically, the flagship constitutional provisions referred to are Sec. 19, Article II, and Secs. 10 and
12, Article XII, of the Constitution, which are worded as follows:

Article II

DECLARATION OF PRINCIPLES AND STATE POLICIES

xx xx xx xx

Sec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.

xx xx xx xx

Article XII

NATIONAL ECONOMY AND PATRIMONY

xx xx xx xx

Sec. 10. x x x. The Congress shall enact measures that will encourage the formation and operation of enterprises
whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give
preference to qualified Filipinos.

xx xx xx xx

Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced
goods, and adopt measures that help make them competitive.

Petitioners aver that these sacred constitutional principles are desecrated by the following WTO
provisions quoted in their memorandum: [19]
a) In the area of investment measures related to trade in goods (TRIMS, for brevity):

Article 2

National Treatment and Quantitative Restrictions.

1. Without prejudice to other rights and obligations under GATT 1994. no Member shall apply any TRIM
that is inconsistent with the provisions of Article III or Article XI of GATT 1994.

2. An Illustrative list of TRIMS that are inconsistent with the obligations of general elimination of
quantitative restrictions provided for in paragraph I of Article XI of GATT 1994 is contained in the
Annex to this Agreement. (Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay
Round, Legal Instruments, p.22121, emphasis supplied).

The Annex referred to reads as follows:

ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for in paragraph 4 of
Article III of GATT 1994 include those which are mandatory or enforceable under domestic law or
under administrative rulings, or compliance with which is necessary to obtain an advantage, and
which require:

(a) the purchase or use by an enterprise of products of domestic origin or from any domestic source,
whether specified in terms of particular products, in terms of volume or value of products, or in
terms of proportion of volume or value of its local production; or

(b) that an enterprises purchases or use of imported products be limited to an amount related to the
volume or value of local products that it exports.

2. TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions provided
for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or enforceable under
domestic laws or under administrative rulings, or compliance with which is necessary to obtain an
advantage, and which restrict:

(a) the importation by an enterprise of products used in or related to the local production that it exports;

(b) the importation by an enterprise of products used in or related to its local production by restricting its
access to foreign exchange inflows attributable to the enterprise; or

(c) the exportation or sale for export specified in terms of particular products, in terms of volume or value
of products, or in terms of a preparation of volume or value of its local production. (Annex to the
Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay Round Legal Documents,
p.22125, emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:

The products of the territory of any contracting party imported into the territory of any other contracting party shall
be accorded treatment no less favorable than that accorded to like products of national origin in respect of
laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. the provisions of this paragraph shall not prevent the application of differential internal
transportation charges which are based exclusively on the economic operation of the means of transport and not on
the nationality of the product. (Article III, GATT 1947, as amended by the Protocol Modifying Part II, and Article
XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement on
Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p.177, emphasis supplied).

b) In the area of trade related aspects of intellectual property rights (TRIPS, for brevity):

Each Member shall accord to the nationals of other Members treatment no less favourable than that it
accords to its own nationals with regard to the protection of intellectual property... (par. 1, Article 3, Agreement on
Trade-Related Aspect of Intellectual Property rights, Vol. 31, Uruguay Round, Legal Instruments, p.25432
(emphasis supplied)

(c) In the area of the General Agreement on Trade in Services:

National Treatment

1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications set out therein,
each Member shall accord to services and service suppliers of any other Member, in respect of all
measures affecting the supply of services, treatment no less favourable than it accords to its own
like services and service suppliers.

2. A Member may meet the requirement of paragraph I by according to services and service suppliers of
any other Member, either formally identical treatment or formally different treatment to that it accords
to its own like services and service suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if it


modifies the conditions of completion in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member. (Article XVII, General Agreement
on Trade in Services, Vol. 28, Uruguay Round Legal Instruments, p.22610 emphasis supplied).

It is petitioners position that the foregoing national treatment and parity provisions of the WTO
Agreement place nationals and products of member countries on the same footing as Filipinos and local
products, in contravention of the Filipino First policy of the Constitution. They allegedly render meaningless
the phrase effectively controlled by Filipinos. The constitutional conflict becomes more manifest when
viewed in the context of the clear duty imposed on the Philippines as a WTO member to ensure the
conformity of its laws, regulations and administrative procedures with its obligations as provided in the
annexed agreements. Petitioners further argue that these provisions contravene constitutional limitations
[20]

on the role exports play in national development and negate the preferential treatment accorded to Filipino
labor, domestic materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that such Charter provisions
are not self-executing and merely set out general policies; (2) that these nationalistic portions of the
Constitution invoked by petitioners should not be read in isolation but should be related to other relevant
provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read properly, the cited WTO clauses do
not conflict with the Constitution; and (4) that the WTO Agreement contains sufficient provisions to protect
developing countries like the Philippines from the harshness of sudden trade liberalization.
We shall now discuss and rule on these arguments.

Declaration of Principles Not Self-Executing


By its very title, Article II of the Constitution is a declaration of principles and state policies. The
counterpart of this article in the 1935 Constitution is called the basic political creed of the nation by Dean
[21]

Vicente Sinco. These principles in Article II are not intended to be self-executing principles ready for
[22]

enforcement through the courts. They are used by the judiciary as aids or as guides in the exercise of its
[23]

power of judicial review, and by the legislature in its enactment of laws. As held in the leading case
of Kilosbayan, Incorporated vs. Morato, the principles and state policies enumerated in Article II and some
[24]

sections of Article XII are not self-executing provisions, the disregard of which can give rise to a cause of
action in the courts.They do not embody judicially enforceable constitutional rights but guidelines for
legislation.
In the same light, we held in Basco vs. Pagcor that broad constitutional principles need legislative
[25]

enactments to implement them, thus:

On petitioners allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13 (Role of Youth)
of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the
1987 Constitution, suffice it to state also that these are merely statements of principles and policies. As such, they
are basically not self-executing, meaning a law should be passed by Congress to clearly define and effectuate such
principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement
through the courts. They were rather directives addressed to the executive and to the legislature. If the executive and
the legislature failed to heed the directives of the article, the available remedy was not judicial but political. The
electorate could express their displeasure with the failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2).

The reasons for denying a cause of action to an alleged infringement of broad constitutional principles
are sourced from basic considerations of due process and the lack of judicial authority to wade into the
uncharted ocean of social and economic policy making. Mr. Justice Florentino P. Feliciano in his concurring
opinion in Oposa vs. Factoran, Jr., explained these reasons as follows:
[26]

My suggestion is simply that petitioners must, before the trial court, show a more specific legal right -- a right cast in
language of a significantly lower order of generality than Article II (15) of the Constitution -- that is or may be
violated by the actions, or failures to act, imputed to the public respondent by petitioners so that the trial court can
validly render judgment granting all or part of the relief prayed for. To my mind, the court should be understood as
simply saying that such a more specific legal right or rights may well exist in our corpus of law, considering the
general policy principles found in the Constitution and the existence of the Philippine Environment Code, and that
the trial court should have given petitioners an effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a cause of action be a specific,
operable legal right, rather than a constitutional or statutory policy, for at least two (2) reasons.One is that unless the
legal right claimed to have been violated or disregarded is given specification in operational terms, defendants may
well be unable to defend themselves intelligently and effectively; in other words, there are due process dimensions
to this matter.

The second is a broader-gauge consideration -- where a specific violation of law or applicable regulation is not
alleged or proved, petitioners can be expected to fall back on the expanded conception of judicial power in the
second paragraph of Section 1 of Article VIII of the Constitution which reads:

Section 1. x x x

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government. (Emphases supplied)

When substantive standards as general as the right to a balanced and healthy ecology and the right to health are
combined with remedial standards as broad ranging as a grave abuse of discretion amounting to lack or excess of
jurisdiction, the result will be, it is respectfully submitted, to propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area of environmental protection and management, our
courts have no claim to special technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making departments -- the legislative and
executive departments -- must be given a real and effective opportunity to fashion and promulgate those norms and
standards, and to implement them before the courts should intervene.

Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain Balanced
Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles
relating to the national economy and patrimony, should be read and understood in relation to the other
sections in said article, especially Secs. 1 and 13 thereof which read:

Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth;
a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an
expanding productivity as the key to raising the quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian
reform, through industries that make full and efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against
unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum
opportunity to develop. x x x

xxxxxxxxx

Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements
of exchange on the basis of equality and reciprocity.

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic
development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by the nation for the benefit of
the people; and
3. An expanding productivity as the key to raising the quality of life for all especially the underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by
expressing preference in favor of qualified Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony and in the use of Filipino labor, domestic materials and
[27]

locally-produced goods; (2) by mandating the State to adopt measures that help make them
competitive; and (3) by requiring the State to develop a self-reliant and independent national economy
[28]

effectively controlled by Filipinos. In similar language, the Constitution takes into account the realities of
[29]

the outside world as it requires the pursuit of a trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity; and speaks of industries
[30]

which are competitive in both domestic and foreign markets as well as of the protection of Filipino
enterprises against unfair foreign competition and trade practices.
It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et
al., this Court held that Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive
[31]

command which is complete in itself and which needs no further guidelines or implementing laws or rules
for its enforcement. From its very words the provision does not require any legislation to put it in operation. It
is per se judicially enforceable. However, as the constitutional provision itself states, it is enforceable only
in regard to the grants of rights, privileges and concessions covering national economy and patrimony and
not to every aspect of trade and commerce. It refers to exceptions rather than the rule. The issue here is
not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a
rule, there are enough balancing provisions in the Constitution to allow the Senate to ratify the Philippine
concurrence in the WTO Agreement. And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on
the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign
competition and trade practices that are unfair. In other words, the Constitution did not intend to pursue
[32]

an isolationist policy. It did not shut out foreign investments, goods and services in the development of the
Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods,
services and investments into the country, it does not prohibit them either. In fact, it allows an exchange on
the basis of equality and reciprocity, frowning only on foreign competition that is unfair.

WTO Recognizes Need to Protect Weak Economies

Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to protect
weak and developing economies, which comprise the vast majority of its members. Unlike in the UN where
major states have permanent seats and veto powers in the Security Council, in the WTO, decisions are
made on the basis of sovereign equality, with each members vote equal in weight to that of any other. There
is no WTO equivalent of the UN Security Council.

WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial Conference and the General
Council shall be taken by the majority of the votes cast, except in cases of interpretation of the Agreement or waiver
of the obligation of a member which would require three fourths vote. Amendments would require two thirds vote in
general. Amendments to MFN provisions and the Amendments provision will require assent of all members. Any
member may withdraw from the Agreement upon the expiration of six months from the date of notice of
withdrawals.[33]

Hence, poor countries can protect their common interests more effectively through the WTO than
through one-on-one negotiations with developed countries. Within the WTO, developing countries can form
powerful blocs to push their economic agenda more decisively than outside the Organization. This is not
merely a matter of practical alliances but a negotiating strategy rooted in law. Thus, the basic principles
underlying the WTO Agreement recognize the need of developing countries like the Philippines to share in
the growth in international trade commensurate with the needs of their economic development. These basic
principles are found in the preamble of the WTO Agreement as follows:
[34]

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to
raising standards of living, ensuring full employment and a large and steadily growing volume of real income and
effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal
use of the worlds resources in accordance with the objective of sustainable development, seeking both to protect and
preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs
and concerns at different levels of economic development,

Recognizing further that there is need for positive efforts designed to ensure that developing countries, and
especially the least developed among them, secure a share in the growth in international trade commensurate with
the needs of their economic development,

Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous
arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of
discriminatory treatment in international trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the
General Agreement on Tariffs and Trade, the results of past trade liberalization efforts, and all of the results of the
Uruguay Round of Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying this multilateral trading
system, x x x. (underscoring supplied.)

Specific WTO Provisos Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic
principles, the WTO Agreement grants developing countries a more lenient treatment, giving their domestic
industries some protection from the rush of foreign competition. Thus, with respect to tariffs in general,
preferential treatment is given to developing countries in terms of the amount of tariff reduction and
the period within which the reduction is to be spread out. Specifically, GATT requires an average tariff
reduction rate of 36% for developed countries to be effected within a period of six (6) years while developing
countries -- including the Philippines -- are required to effect an average tariff reduction of only 24% within
ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to
agricultural products by 20% over six (6) years, as compared to only 13% for developing countries to be
effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires developed countries to reduce
their budgetary outlays for export subsidy by 36% and export volumes receiving export subsidy by 21%
within a period of six (6) years. For developing countries, however, the reduction rate is only two-thirds of
that prescribed for developed countries and a longer period of ten (10) years within which to effect such
reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade
practices including anti-dumping measures, countervailing measures and safeguards against import
surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can avail of
these measures. There is hardly therefore any basis for the statement that under the WTO, local industries
and enterprises will all be wiped out and that Filipinos will be deprived of control of the economy. Quite the
contrary, the weaker situations of developing nations like the Philippines have been taken into account;
thus, there would be no basis to say that in joining the WTO, the respondents have gravely abused their
discretion.True, they have made a bold decision to steer the ship of state into the yet uncharted sea of
economic liberalization. But such decision cannot be set aside on the ground of grave abuse of discretion,
simply because we disagree with it or simply because we believe only in other economic policies. As earlier
stated, the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of
trade liberalization as an economic policy. It will only perform its constitutional duty of determining whether
the Senate committed grave abuse of discretion.
Constitution Does Not Rule Out Foreign Competition

Furthermore, the constitutional policy of a self-reliant and independent national economy does not [35]

necessarily rule out the entry of foreign investments, goods and services. It contemplates neither economic
seclusion nor mendicancy in the international community. As explained by Constitutional Commissioner
Bernardo Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence on
external assistance for even its most basic needs. It does not mean autarky or economic seclusion; rather, it means
avoiding mendicancy in the international community. Independence refers to the freedom from undue foreign
control of the national economy, especially in such strategic industries as in the development of natural resources
and public utilities.
[36]

The WTO reliance on most favored nation, national treatment, and trade without discrimination cannot
be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO
members. Aside from envisioning a trade policy based on equality and reciprocity, the fundamental law
[37]

encourages industries that are competitive in both domestic and foreign markets, thereby demonstrating a
clear policy against a sheltered domestic trade environment, but one in favor of the gradual development
of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and
Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade
environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity
to grow and to prosper against the best offered under a policy of laissez faire.

Constitution Favors Consumers, Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or enterprise, nor
does it contain any specific pronouncement that Filipino companies should be pampered with a total
proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims to make
available to the Filipino consumer the best goods and services obtainable anywhere in the world at the
most reasonable prices. Consequently, the question boils down to whether WTO/GATT will favor the
general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos general welfare because it will -- as promised by
its promoters -- expand the countrys exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and quality products at the most
reasonable rates to the Filipino public?
The responses to these questions involve judgment calls by our policy makers, for which they are
answerable to our people during appropriate electoral exercises. Such questions and the answers thereto
are not subject to judicial pronouncements based on grave abuse of discretion.

Constitution Designed to Meet Future Events and Contingencies

No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and ratified
in 1987. That does not mean however that the Charter is necessarily flawed in the sense that its framers
might not have anticipated the advent of a borderless world of business. By the same token, the United
Nations was not yet in existence when the 1935 Constitution became effective. Did that necessarily mean
that the then Constitution might not have contemplated a diminution of the absoluteness of sovereignty
when the Philippines signed the UN Charter, thereby effectively surrendering part of its control over its
foreign relations to the decisions of various UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of
contemporary events. They should be interpreted to cover even future and unknown circumstances. It is to
the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels but at the same
time bend with the refreshing winds of change necessitated by unfolding events. As one eminent political
law writer and respected jurist explains:
[38]

The Constitution must be quintessential rather than superficial, the root and not the blossom, the base and
framework only of the edifice that is yet to rise. It is but the core of the dream that must take shape, not in a
twinkling by mandate of our delegates, but slowly in the crucible of Filipino minds and hearts, where it will in time
develop its sinews and gradually gather its strength and finally achieve its substance. In fine, the Constitution
cannot, like the goddess Athena, rise full-grown from the brow of the Constitutional Convention, nor can it conjure
by mere fiat an instant Utopia. It must grow with the society it seeks to re-structure and march apace with the
progress of the race, drawing from the vicissitudes of history the dynamism and vitality that will keep it, far from
becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the nation.

Third Issue: The WTO Agreement and Legislative Power

The WTO Agreement provides that (e)ach Member shall ensure the conformity of its laws, regulations
and administrative procedures with its obligations as provided in the annexed Agreements. Petitioners [39]

maintain that this undertaking unduly limits, restricts and impairs Philippine sovereignty, specifically the
legislative power which under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the Congress
of the Philippines. It is an assault on the sovereign powers of the Philippines because this means that
Congress could not pass legislation that will be good for our national interest and general welfare if such
legislation will not conform with the WTO Agreement, which not only relates to the trade in goods x x x but
also to the flow of investments and money x x x as well as to a whole slew of agreements on socio-cultural
matters x x x. [40]

More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is
lodged in the Congress. And while the Constitution allows Congress to authorize the President to fix tariff
[41]

rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts, such authority
is subject to specified limits and x x x such limitations and restrictions as Congress may provide, as in fact [42]

it did under Sec. 401 of the Tariff and Customs Code.

Sovereignty Limited by International Law and Treaties

This Court notes and appreciates the ferocity and passion by which petitioners stressed their
arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-
encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily agreed
to by the Philippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the
Constitution did not envision a hermit-type isolation of the country from the rest of the world. In its
Declaration of Principles and State Policies, the Constitution adopts the generally accepted principles of
international law as part of the law of the land, and adheres to the policy of peace, equality, justice, freedom,
cooperation and amity, with all nations." By the doctrine of incorporation, the country is bound by generally
[43]

accepted principles of international law, which are considered to be automatically part of our own
laws. One of the oldest and most fundamental rules in international law is pacta sunt servanda --
[44]

international agreements must be performed in good faith. A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on the parties x x x. A state which has contracted valid
international obligations is bound to make in its legislations such modifications as may be necessary to
ensure the fulfillment of the obligations undertaken. [45]
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects of their state power in exchange for greater benefits
granted by or derived from a convention or pact. After all, states, like individuals, live with coequals, and in
pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of
their otherwise absolute rights. Thus, treaties have been used to record agreements between States
concerning such widely diverse matters as, for example, the lease of naval bases, the sale or cession of
territory, the termination of war, the regulation of conduct of hostilities, the formation of alliances, the
regulation of commercial relations, the settling of claims, the laying down of rules governing conduct in
peace and the establishment of international organizations. The sovereignty of a state therefore cannot in
[46]

fact and in reality be considered absolute. Certain restrictions enter into the picture: (1) limitations imposed
by the very nature of membership in the family of nations and (2) limitations imposed by treaty
stipulations. As aptly put by John F. Kennedy, Today, no nation can build its destiny alone. The age of self-
sufficient nationalism is over. The age of interdependence is here. [47]

UN Charter and Other Treaties Limit Sovereignty

Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented
to restrict its sovereign rights under the concept of sovereignty as auto-limitation.47-A Under Article 2 of the
UN Charter, (a)ll members shall give the United Nations every assistance in any action it takes in
accordance with the present Charter, and shall refrain from giving assistance to any state against which
the United Nations is taking preventive or enforcement action. Such assistance includes payment of its
corresponding share not merely in administrative expenses but also in expenditures for the peace-keeping
operations of the organization. In its advisory opinion of July 20, 1961, the International Court of Justice
held that money used by the United Nations Emergency Force in the Middle East and in the Congo were
expenses of the United Nations under Article 17, paragraph 2, of the UN Charter. Hence, all its members
must bear their corresponding share in such expenses. In this sense, the Philippine Congress is restricted
in its power to appropriate. It is compelled to appropriate funds whether it agrees with such peace-keeping
expenses or not. So too, under Article 105 of the said Charter, the UN and its representatives enjoy
diplomatic privileges and immunities, thereby limiting again the exercise of sovereignty of members within
their own territory. Another example: although sovereign equality and domestic jurisdiction of all members
are set forth as underlying principles in the UN Charter, such provisos are however subject to enforcement
measures decided by the Security Council for the maintenance of international peace and security under
Chapter VII of the Charter. A final example: under Article 103, (i)n the event of a conflict between the
obligations of the Members of the United Nations under the present Charter and their obligations under any
other international agreement, their obligation under the present charter shall prevail, thus unquestionably
denying the Philippines -- as a member -- the sovereign power to make a choice as to which of conflicting
obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international pacts -- both
bilateral and multilateral -- that involve limitations on Philippine sovereignty. These are enumerated by the
Solicitor General in his Compliance dated October 24, 1996, as follows:

(a) Bilateral convention with the United States regarding taxes on income, where the Philippines agreed,
among others, to exempt from tax, income received in the Philippines by, among others, the Federal
Reserve Bank of the United States, the Export/Import Bank of the United States, the Overseas Private
Investment Corporation of the United States. Likewise, in said convention, wages, salaries and similar
remunerations paid by the United States to its citizens for labor and personal services performed by them
as employees or officials of the United States are exempt from income tax by the Philippines.

(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of double taxation with
respect to taxes on income.

(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double taxation.
(d) Bilateral convention with the French Republic for the avoidance of double taxation.

(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt from all customs
duties, inspection fees and other duties or taxes aircrafts of South Korea and the regular equipment, spare
parts and supplies arriving with said aircrafts.

(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt from customs duties,
excise taxes, inspection fees and other similar duties, taxes or charges fuel, lubricating oils, spare parts,
regular equipment, stores on board Japanese aircrafts while on Philippine soil.

(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian air carriers the same
privileges as those granted to Japanese and Korean air carriers under separate air service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the Philippines exempted
Israeli nationals from the requirement of obtaining transit or visitor visas for a sojourn in the Philippines
not exceeding 59 days.

(I) Bilateral agreement with France exempting French nationals from the requirement of obtaining transit and
visitor visa for a sojourn not exceeding 59 days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that premises of Special
Missions in the Philippines are inviolable and its agents can not enter said premises without consent of the
Head of Mission concerned. Special Missions are also exempted from customs duties, taxes and related
charges.

(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines agreed to be governed
by the Vienna Convention on the Law of Treaties.

(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of the International Court
of Justice. The International Court of Justice has jurisdiction in all legal disputes concerning the
interpretation of a treaty, any question of international law, the existence of any fact which, if established,
would constitute a breach of international obligation.

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign
powers of taxation, eminent domain and police power. The underlying consideration in this partial surrender
of sovereignty is the reciprocal commitment of the other contracting states in granting the same privilege
and immunities to the Philippines, its officials and its citizens. The same reciprocity characterizes the
Philippine commitments under WTO-GATT.

International treaties, whether relating to nuclear disarmament, human rights, the environment, the law of the sea, or
trade, constrain domestic political sovereignty through the assumption of external obligations. But unless anarchy in
international relations is preferred as an alternative, in most cases we accept that the benefits of the reciprocal
obligations involved outweigh the costs associated with any loss of political sovereignty. (T)rade treaties that
structure relations by reference to durable, well-defined substantive norms and objective dispute resolution
procedures reduce the risks of larger countries exploiting raw economic power to bully smaller countries, by
subjecting power relations to some form of legal ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple fact that liberalization will provide access to a
larger set of potential new trading relationship than in case of the larger country gaining enhanced success to the
smaller countrys market. [48]

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without
violating the Constitution, based on the rationale that the Philippines adopts the generally accepted
principles of international law as part of the law of the land and adheres to the policy of x x x cooperation
and amity with all nations.

Fourth Issue: The WTO Agreement and Judicial Power

Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) intrudes on the power of the
[49]

Supreme Court to promulgate rules concerning pleading, practice and procedures. [50]

To understand the scope and meaning of Article 34, TRIPS, it will be fruitful to restate its full text as
[51]

follows:

Article 34

Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in
paragraph 1(b) of Article 28, if the subject matter of a patent is a process for obtaining a product, the judicial
authorities shall have the authority to order the defendant to prove that the process to obtain an identical
product is different from the patented process. Therefore, Members shall provide, in at least one of the
following circumstances, that any identical product when produced without the consent of the patent owner
shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process:

(a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was made by the process and the owner of
the patent has been unable through reasonable efforts to determine the process actually used.

2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the
alleged infringer only if the condition referred to in subparagraph (a) is fulfilled or only if the condition
referred to in subparagraph (b) is fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their
manufacturing and business secrets shall be taken into account.

From the above, a WTO Member is required to provide a rule of disputable (note the words in the
absence of proof to the contrary) presumption that a product shown to be identical to one produced with
the use of a patented process shall be deemed to have been obtained by the (illegal) use of the said
patented process, (1) where such product obtained by the patented product is new, or (2) where there is
substantial likelihood that the identical product was made with the use of the said patented process but the
owner of the patent could not determine the exact process used in obtaining such identical product. Hence,
the burden of proof contemplated by Article 34 should actually be understood as the duty of the alleged
patent infringer to overthrow such presumption. Such burden, properly understood, actually refers to the
burden of evidence (burden of going forward) placed on the producer of the identical (or fake) product to
show that his product was produced without the use of the patented process.
The foregoing notwithstanding, the patent owner still has the burden of proof since, regardless of the
presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence of the
existence of the alleged identical product, the fact that it is identical to the genuine one produced by the
patented process and the fact of newness of the genuine product or the fact of substantial likelihood that
the identical product was made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as the present law
on the subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a similar
presumption in cases of infringement of patented design or utility model, thus:

SEC. 60. Infringement. - Infringement of a design patent or of a patent for utility model shall consist in
unauthorized copying of the patented design or utility model for the purpose of trade or industry in the article or
product and in the making, using or selling of the article or product copying the patented design or utility
model. Identity or substantial identity with the patented design or utility model shall constitute evidence of copying.
(underscoring supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption
applies only if (1) the product obtained by the patented process is NEW or (2) there is a substantial likelihood
that the identical product was made by the process and the process owner has not been able through
reasonable effort to determine the process used. Where either of these two provisos does not obtain,
members shall be free to determine the appropriate method of implementing the provisions of TRIPS within
their own internal systems and processes.
By and large, the arguments adduced in connection with our disposition of the third issue -- derogation
of legislative power - will apply to this fourth issue also. Suffice it to say that the reciprocity clause more
than justifies such intrusion, if any actually exists. Besides, Article 34 does not contain an unreasonable
burden, consistent as it is with due process and the concept of adversarial dispute settlement inherent in
our judicial system.
So too, since the Philippine is a signatory to most international conventions on patents, trademarks
and copyrights, the adjustment in legislation and rules of procedure will not be substantial. [52]

Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained in
the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes -- but not in
the other documents referred to in the Final Act, namely the Ministerial Declaration and Decisions and the
Understanding on Commitments in Financial Services -- is defective and insufficient and thus constitutes
abuse of discretion. They submit that such concurrence in the WTO Agreement alone is flawed because it
is in effect a rejection of the Final Act, which in turn was the document signed by Secretary Navarro, in
representation of the Republic upon authority of the President. They contend that the second letter of the
President to the Senate which enumerated what constitutes the Final Act should have been the subject of
[53]

concurrence of the Senate.


A final act, sometimes called protocol de clture, is an instrument which records the winding up of
the proceedings of a diplomatic conference and usually includes a reproduction of the texts of treaties,
conventions, recommendations and other acts agreed upon and signed by the plenipotentiaries attending
the conference. It is not the treaty itself. It is rather a summary of the proceedings of a protracted
[54]

conference which may have taken place over several years. The text of the Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations is contained in just one page in Vol. I of [55]

the 36-volume Uruguay Round of Multilateral Trade Negotiations. By signing said Final Act, Secretary
Navarro as representative of the Republic of the Philippines undertook:

"(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent
authorities with a view to seeking approval of the Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions."

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required
from its signatories, namely, concurrence of the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They
were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that representatives of
the members can meet to give effect to those provisions of this Agreement which invoke joint action, and
generally with a view to facilitating the operation and furthering the objectives of this Agreement. [56]

The Understanding on Commitments in Financial Services also approved in Marrakesh does not apply
to the Philippines. It applies only to those 27 Members which have indicated in their respective schedules
of commitments on standstill, elimination of monopoly, expansion of operation of existing financial service
suppliers, temporary entry of personnel, free transfer and processing of information, and national treatment
with respect to access to payment, clearing systems and refinancing available in the normal course of
business. [57]

On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed
included as its integral parts, as follows:
[58]

Article II

Scope of the WTO

1. The WTO shall provide the common institutional framework for the conduct of trade relations among its
Members in matters to the agreements and associated legal instruments included in the Annexes to this
Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3 (hereinafter referred to as
Multilateral Agreements) are integral parts of this Agreement, binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4 (hereinafter referred to as Plurilateral
Trade Agreements) are also part of this Agreement for those Members that have accepted them, and are
binding on those Members. The Plurilateral Trade Agreements do not create either obligation or rights for
Members that have not accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A (hereinafter referred to as
GATT 1994) is legally distinct from the General Agreement on Tariffs and Trade, dated 30 October 1947,
annexed to the Final Act adopted at the conclusion of the Second Session of the Preparatory Committee of the
United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified
(hereinafter referred to as GATT 1947).

It should be added that the Senate was well-aware of what it was concurring in as shown by the
members deliberation on August 25, 1994. After reading the letter of President Ramos dated August 11,
1994, the senators of the Republic minutely dissected what the Senate was concurring in, as follows:
[59] [60]

THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first day hearing of this
Committee yesterday. Was the observation made by Senator Taada that what was submitted to the Senate was not
the agreement on establishing the World Trade Organization by the final act of the Uruguay Round which is not the
same as the agreement establishing the World Trade Organization?And on that basis, Senator Tolentino raised a
point of order which, however, he agreed to withdraw upon understanding that his suggestion for an alternative
solution at that time was acceptable. That suggestion was to treat the proceedings of the Committee as being in the
nature of briefings for Senators until the question of the submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new... is he making a new submission which
improves on the clarity of the first submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no misunderstanding, it was his
intention to clarify all matters by giving this letter.
THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Taada and later on Senator Tolentino since they were the ones that raised this
question yesterday?

Senator Taada, please.

SEN. TAADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted to the Senate
for ratification is not the Final Act of the Uruguay Round, but rather the Agreement on the World Trade
Organization as well as the Ministerial Declarations and Decisions, and the Understanding and Commitments in
Financial Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And after him Senator Neptali
Gonzales and Senator Lina.

SEN TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted to us but I saw the draft
of his earlier, and I think it now complies with the provisions of the Constitution, and with the Final Act itself. The
Constitution does not require us to ratify the Final Act. It requires us to ratify the Agreement which is now being
submitted. The Final Act itself specifies what is going to be submitted to with the governments of the participants.

In paragraph 2 of the Final Act, we read and I quote:

By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO Agreement for the
consideration of the respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures.

In other words, it is not the Final Act that was agreed to be submitted to the governments for ratification or
acceptance as whatever their constitutional procedures may provide but it is the World Trade Organization
Agreement. And if that is the one that is being submitted now, I think it satisfies both the Constitution and the Final
Act itself.

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And they had been
adequately reflected in the journal of yesterdays session and I dont see any need for repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any comment on this?

SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales out of the abundance of
question. Then the new submission is, I believe, stating the obvious and therefore I have no further comment to
make.
Epilogue

In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are
invoking this Courts constitutionally imposed duty to determine whether or not there has been grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of the Senate in giving its concurrence
therein via Senate Resolution No. 97. Procedurally, a writ of certiorari grounded on grave abuse of
discretion may be issued by the Court under Rule 65 of the Rules of Court when it is amply shown that
petitioners have no other plain, speedy and adequate remedy in the ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of
[61]

discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform the duty enjoined or to act at all in contemplation of law. Failure on the part of the
[62]

petitioner to show grave abuse of discretion will result in the dismissal of the petition. [63]

In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one
of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a
constitutional body independent and coordinate, and thus its actions are presumed regular and done in
good faith. Unless convincing proof and persuasive arguments are presented to overthrow such
presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted definition
of grave abuse of discretion and the presumption of regularity in the Senates processes, this Court cannot
find any cogent reason to impute grave abuse of discretion to the Senates exercise of its power of
concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the Constitution. [64]

It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an
independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino labor,
products, domestic materials and locally produced goods. But it is equally true that such principles -- while
serving as judicial and legislative guides -- are not in themselves sources of causes of action. Moreover,
there are other equally fundamental constitutional principles relied upon by the Senate which mandate the
pursuit of a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange
on the basis of equality and reciprocity and the promotion of industries which are competitive in both
domestic and foreign markets, thereby justifying its acceptance of said treaty. So too, the alleged
impairment of sovereignty in the exercise of legislative and judicial powers is balanced by the adoption of
the generally accepted principles of international law as part of the law of the land and the adherence of
the Constitution to the policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the
WTO Agreement thereby making it a part of the law of the land is a legitimate exercise of its sovereign duty
and power. We find no patent and gross arbitrariness or despotism by reason of passion or personal
hostility in such exercise. It is not impossible to surmise that this Court, or at least some of its members,
may even agree with petitioners that it is more advantageous to the national interest to strike down Senate
Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to the Senate and
to nullify its decision. To do so would constitute grave abuse in the exercise of our own judicial power and
duty.Ineludably, what the Senate did was a valid exercise of its authority. As to whether such exercise was
wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter between the
elected policy makers and the people. As to whether the nation should join the worldwide march toward
trade liberalization and economic globalization is a matter that our people should determine in electing their
policy makers. After all, the WTO Agreement allows withdrawal of membership, should this be the political
desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance where the East will become the dominant region of the world economically, politically and
[65]

culturally in the next century. He refers to the free market espoused by WTO as the catalyst in this coming
Asian ascendancy. There are at present about 31 countries including China, Russia and Saudi Arabia
negotiating for membership in the WTO. Notwithstanding objections against possible limitations on national
sovereignty, the WTO remains as the only viable structure for multilateral trading and the veritable forum
for the development of international trade law. The alternative to WTO is isolation, stagnation, if not
economic self-destruction. Duly enriched with original membership, keenly aware of the advantages and
disadvantages of globalization with its on-line experience, and endowed with a vision of the future, the
Philippines now straddles the crossroads of an international strategy for economic prosperity and stability
in the new millennium. Let the people, through their duly authorized elected officers, make their free choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
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.

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:

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 actually no question of
constitutionality involved. The true object of the instant 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.
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

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

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

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: chanro bles vi rtua l lawlib ra ry

"SECTION 2. Section 3, Chapter 1 of Batas Pambansa Blg. 129, is hereby amended to read as follows: jgc:chan roble s.com.p h

"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

Petitioner elaborates that President Aquino is presumed to have intended to 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 position as Justice of the Court of Appeals to the
Ministry of Justice as 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 reads: jgc:c hanro bles. com.ph

"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. chanroble s.com:c ralaw: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 reform and to alter any existing form of government without regard to the existing
constitution." 23

The three (3) clauses that precede the text of the Provisional (Freedom) Constitution, 24 read: jgc:chanro bles. com.ph

"WHEREAS, the new government under President Corazon C. Aquino was installed through a direct exercise
of the power of the Filipino people assisted by units of the New Armed Forces of the Philippines;

"WHEREAS, the heroic action of the people was done in defiance of the provisions of the 1973 Constitution,
as amended;

"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."25 cralaw: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 Cabinet and other key officers of the administration, the departure of
the Marcos Cabinet officials, revampt of the Judiciary and the Military signalled the point where the legal
system then in effect, had ceased to be obeyed by the Filipino.

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 abolished by the revolution and that the Court of Appeals
established under Executive Order No. 33 was an entirely new court with appointments thereto 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. No. 129 as amended by Executive Order No. 33 refers to
prospective situations as distinguished from retroactive ones.
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.
THE HOLY SEE, petitioner,
vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of

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.

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.

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.

Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real
estate business.

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.

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).

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.

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).

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).

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.

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.

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.

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).

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.

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).

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.

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).

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.

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).

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.

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]).

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.

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.

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.

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.

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]).

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]).

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]).

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).

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]).

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]).

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.

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.

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]).

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]).

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."

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.

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.

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]).

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

SO ORDERED.
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. 1aw ph!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.

Ostrand and Johns, JJ., concur.


Republic v Marcos
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 Government2 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 documentation appearing in the supplemental appendix also implicates the
Marcoses.
Overall, the evidence of ownership of the Bernstein properties is strong, if not 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 beneficial owners of the Manhattan properties.
Glockhurst Corp., N.V., is on slightly different footing. It argues that there is no competent evidence that
the Marcoses beneficially owned Glockhurst or 200 Madison Avenue. Yet, their brief concedes that
Glockhurst is owned by the very same Panamanian corporations that own Herald Center Ltd. Thus,
whoever owns Herald Center by way of the Panamanian corporations also owns Glockhurst. As noted
above, the August 9, 1983, memorandum to the "Beneficial Owners of Canadian, Voloby, Nyland, and
Glockhurst" indicates the cash flow from the three properties, the Crown Building, 40 Wall Street, and
Herald Center, "before the acquisition of Madison ... [which is] to be achieved purely through borrowing
(by Canadian and Glockhurst)," with subsequent cash flow after the acquisition of Madison also set forth.
In addition, Joseph Bernstein 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 direction of Mrs.
Tantoco for the purpose of buying 200 Madison Avenue. He also testified that Mrs. Tantoco indicated in a
meeting at 66th Street by way of explanation to Mrs. Marcos that the four properties constituted "a
balanced portfolio in the four corners of town." Before the Solarz Committee Bernstein testified that Mrs.
Marcos would probably not have been at the so-called Barry Knox meetings in 1984 if she had not been
an owner of 200 Madison Avenue. He also stated that 200 Madison Avenue was one of the four
properties that Ron Zamora mentioned in Geneva in March 1985 as possibly being put up for sale by the
"principal." We note that it also appears from the supplemental appendix (which would need appropriate
authentication and introduction into evidence on any hearing on a final injunction) that apparently $4.3
million was paid to Glockhurst from trust accounts in Manila managed by Rolando Gapud. The 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 Tantoco, $9.5 million to Voloby, $6 million to Floirendo,
and $4.3 million to "Blackhurst" on November 4, 1983, for a total of $25.3 million.
The evidence of the Marcoses' ownership of Lindenmere, the Center Moriches property, is somewhat less
compelling. Mrs. Marcos attended several parties there involving thirty to fifty people. Documents
indicating substantial payments to Lindenmere, including the monthly payment of bills, were found in
Gimenez's files in the Palace. An architect, Augusto Comacho, testified that he worked on both
Lindenmere and The Republic's townhouse at 15 East 66th Street. Bills covering that work are in the
record to the tune of several million dollars. When Comacho was not paid for this work, he sought
payment directly from Mrs. Marcos and from her New York secretary, Vilma Bautista. He ultimately
brought suit and settled for $825,000 after negotiating with Fe 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 & Cohen, which then paid Comacho.
Title to Lindenmere is held by Ancor Holdings, N.V., a Netherlands Antilles corporation. Diosdado C.
Ordonez, an employee of Revere Sugar Corporation and a long-term associate of Antonio Floirendo,
testified that Floirendo owns Ancor Holdings. According to Ordonez, Floirendo also owns 100% of Revere
Sugar, an outcome of the acquisition of the sweetener division of Sucrest Corp. Evidence in the
supplemental appendix tends to show, however, that the Marcoses also had an interest in Revere Sugar,
a fact that helps to identify the financial ties between the Marcoses and Floirendo. The clearest example
of these ties is contained in Fe Gimenez's accounting (in the joint appendix), which shows payments of
$9.5 million to Voloby and $4.3 million to "Blackhurst," matching payments from the Gapud trust accounts
to be found in the supplemental appendix. This very same accounting notes a $6 million payment to
Floirendo. Other evidence links Floirendo to various payments on the Manhattan properties.
Of course, as Judge Leval noted, when considering a preliminary injunction he need not make conclusive
factual findings. Rather, he indicated that no proofs had been submitted to rebut the inferences on which
The Republic relies and concluded only that the standards for issuance of a preliminary injunction had
been satisfied. We agree, and find that there is sufficient evidence as to all five properties to support the
district court's grant of a preliminary injunction based on its findings of irreparable harm and probable
ownership by the Marcoses.
Our task therefore is to determine whether there is federal jurisdiction, whether there are allegations
sufficient to state a claim for relief, and whether there are, as the appellants argue, defenses making the
claims not justiciable. These defenses include lack of standing on the part of The Republic, sovereign
immunity, the act of state doctrine, and forum non conveniens, sovereign immunity.
All parties in this case now advocate a finding of federal jurisdiction. This is, of course, immaterial.
Federal jurisdiction cannot be conferred by agreement of 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
case before it. See, e.g., Louisville & Nashville Railroad Co. v. Mottley, 211 U.S. 149, 152, 29 S. Ct. 42,
43, 53 L. Ed. 126 (1908). After the case was argued in our court, Judge Leval issued an opinion and
order dated June 26, 1986, holding that there is federal jurisdiction in this case. Judge Leval thought the
issue of jurisdiction not to be "open to serious doubt" because this is a case "arising under the
Constitution, laws or treaties of the United States" and is therefore within federal question jurisdiction
under 28 U.S.C. § 1331 (1982). We agree.
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.

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