Bayan v. Zamora, G.R. No.

138570, October 10, 2000

BUENA, J.:

THE FACTS

Facts:
The Republic of the Philippines and the United States of America entered into an agreement
called the Visiting Forces Agreement (VFA). The agreement was treated as a treaty by the
Philippine government and was ratified by then-President Joseph Estrada with the concurrence
of 2/3 of the total membership of the Philippine Senate.

The VFA defines the treatment of U.S. troops and personnel visiting the Philippines. It provides
for the guidelines to govern such visits, and further defines the rights of the U.S. and the Philippine
governments in the matter of criminal jurisdiction, movement of vessel and aircraft, importation
and exportation of equipment, materials and supplies.

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

Following the argument of the petitioner, under they provision cited, the “foreign military bases,
troops, or facilities” may be allowed in the Philippines unless the following conditions are
sufficiently met:
a) it must be a treaty,
b) it must be duly concurred in by the senate, ratified by a majority of the votes cast in a national
referendum held for that purpose if so required by congress, and
c) recognized as such by the other contracting state.

Criminal Jurisdiction Waived under VFA (relevant provisions)

(c) The authorities of either government may request the authorities of the other government to
waive their primary right to exercise jurisdiction in a particular case.

(d) Recognizing the responsibility of the United States military authorities to maintain good order
and discipline among their forces, Philippine authorities will, upon request by the United States,
waive their primary right to exercise jurisdiction except in cases of particular importance to the
Philippines. If the Government of the Philippines determines that the case is of particular
importance, it shall communicate such determination to the United States authorities within twenty
(20) days after the Philippine authorities receive the United States request.

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

ART VII, SECTION 21. No treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate.

ART XVIII, SECTION 25. After the expiration in 1991 of the Agreement between the Republic of
the Philippines and the United States of America concerning Military Bases, foreign military bases,
troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in
by the Senate and, when the Congress so requires, ratified by a majority of the votes cast by the
people in a national referendum held for that purpose, and recognized as a treaty by the other
contracting State.

ESCRA TOPIC:

Same; Same; International Law; Executive Agreements; Words and Phrases; The phrase
“recognized as a treaty” means that the other contracting party accepts or acknowledges the
agreement as a treaty.—This Court is of the firm view that the phrase “recognized as a treaty”
means that the other contracting party accepts or acknowledges the agreement as a treaty. To
require the other contracting state, the United States of America in this case, to submit the VFA
to the United States Senate for concurrence pursuant to its Constitution, is to accord strict
meaning to the phrase. Bayan (Bagong Alyansang Makabayan) vs. Zamora, 342 SCRA 449, G.R.
No. 138570, G.R. No. 138572, G.R. No. 138587, G.R. No. 138680, G.R. No. 138698 October 10,
2000

International Law; Treaties; Executive Agreements; Visiting Forces Agreement; As long as the
VFA possesses the elements of an agreement under international law, the said agreement is to
be taken equally as a treaty.—Moreover, it is inconsequential whether the United States treats
the VFA only as an executive agreement because, under international law, an executive
agreement is as binding as a treaty. To be sure, as long as the VFA possesses the elements of
an agreement under international law, the said agreement is to be taken equally as a treaty.
Bayan (Bagong Alyansang Makabayan) vs. Zamora, 342 SCRA 449, G.R. No. 138570, G.R. No.
138572, G.R. No. 138587, G.R. No. 138680, G.R. No. 138698 October 10, 2000

Same; Same; Same; Words and Phrases; A treaty, as defined by the Vienna Convention on the
Law of Treaties, is “an international instrument concluded between States in written form and
governed by international law, whether embodied in a single instrument or in two or more related
instruments, and whatever its particular designation.”—A treaty, as defined by the Vienna
Convention on the Law of Treaties, is “an international instrument concluded between States in
written form and governed by international law, whether embodied in a single instrument or in two
or more related instruments, and whatever its particular designation.” There are many other terms
used for a treaty or international agreement, some of which are: act, protocol, agreement,
compromis d’ arbitrage, concordat, convention, declaration, exchange of notes, pact, statute,
charter and modus vivendi. All writers, from Hugo Grotius onward, have pointed out that the
names or titles of international agreements included under the general term treaty have little or
no legal significance. Certain terms are useful, but they furnish little more than mere description.
Same; Same; Same; In international law, there is no difference between treaties and executive
agreements in their binding effect upon states concerned, as long as the negotiating functionaries
have remained within their powers.—Thus, in international law, there is no difference between
treaties and executive agreements in their binding effect upon states concerned, as long as the
negotiating functionaries have remained within their powers. International law continues to make
no distinction between treaties and executive agreements: they are equally binding obligations
upon nations. Bayan (Bagong Alyansang Makabayan) vs. Zamora, 342 SCRA 449, G.R. No.
138570, G.R. No. 138572, G.R. No. 138587, G.R. No. 138680, G.R. No. 138698 October 10,
2000

Same; Same; Same; Same; With the ratification of the VFA, which is equivalent to final
acceptance, and with the exchange of notes between the Philippines and the United States of
America, it now becomes obligatory and incumbent on our part, under the principles of
international law, to be bound by the terms of the agreement.—With the ratification of the VFA,
which is equivalent to final acceptance, and with the exchange of notes between the Philippines
and the United States of America, it now becomes obligatory and incumbent on our part, under
the principles of international law, to be bound by the terms of the agreement. Thus, no less than
Section 2, Article II of the Constitution, declares that the Philippines adopts the generally accepted
principles of international law as part of the law of the land and adheres to the policy of peace,
equality, justice, freedom, cooperation and amity with all nations.

Same; Same; Same; Same; Pacta Sunt Servanda; As an integral part of the community of nations,
we are responsible to assure that our government, Constitution and laws will carry out our
international obligation—we cannot readily plead the Constitution as a convenient excuse for
noncompliance with our obligations, duties and responsibilities under international law.—As a
member of the family of nations, the Philippines agrees to be bound by generally accepted rules
for the conduct of its international relations. While the international obligation devolves upon the
state and not upon any particular branch, institution, or individual member of its government, the
Philippines is nonetheless responsible for violations committed by any branch or subdivision of
its government or any official thereof. As an integral part of the community of nations, we are
responsible to assure that our government, Constitution and laws will carry out our international
obligation. Hence, we cannot readily plead the Constitution as a convenient excuse for non-
compliance with our obligations, duties and responsibilities under international law.

Same; Same; Same; Same; Same; Words and Phrases; Under the principle of pacta sunt
servanda, every treaty in force is binding upon the parties to it and must be performed by them in
good faith.—Beyond this, Article 13 of the Declaration of Rights and Duties of States adopted by
the International Law Commission in 1949 provides: “Every State has the duty to carry out in good
faith its obligations arising from treaties and other sources of international law, and it may not
invoke provisions in its constitution or its laws as an excuse for failure to perform this duty.” Equally
important is Article 26 of the Convention which provides that “Every treaty in force is binding upon
the parties to it and must be performed by them in good faith,” This is known as the principle of
pacta sunt servanda which preserves the sanctity of treaties and have been one of the most
fundamental principles of positive international law, supported by the jurisprudence of
international tribunals.

Lim V. Executive Secretary (2002)

G.R. No. 151445 April 11, 2002

FACTS:

Pursuant to the Visiting Forces Agreement (VFA) signed in 1999, personnel from the armed
forces of the United States of America started arriving in Mindanao to take partin "Balikatan 02-
1” on January 2002. The Balikatan 02-1 exercises involves the simulation of joint military
maneuvers pursuant to the Mutual Defense Treaty, a bilateral defense agreement entered into by
the Philippines and the United States in 1951. The exercise is rooted from the international anti-
terrorism campaign declared by President George W. Bush in reaction to the 3 commercial
aircrafts hijacking that smashed into twin towers of the World Trade Center in New York City and
the Pentagon building in Washington, D.C. allegedly by the al-Qaeda headed by the Osama bin
Laden that occurred on September 11, 2001. Arthur D. Lim and Paulino P. Ersando as citizens,
lawyers and taxpayers filed a petition for certiorari and prohibition attacking the constitutionality
of the joint exercise. Partylists Sanlakas and Partido Ng Manggagawa as residents of
Zamboanga and Sulu directly affected by the operations filed a petition-in-intervention.

The Solicitor General commented the prematurity of the action as it is based only on a fear of
future violation of the Terms of Reference and impropriety of availing of certiorari to ascertain a
question of fact specifically interpretation of the VFA whether it is covers "Balikatan 02-1” and no
question of constitutionality is involved. Moreover, there is lack of locus standi since it does not
involve tax spending and there is no proof of direct personal injury.

ISSUE: W/N the petition and the petition-in-intervention should prosper.

HELD: NO. 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 -
Supreme Court is not a trier of facts

Doctrine of Importance to the Public

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.
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.

Interpretation of Treaty

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. 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." All other activities, in other words, are fair game.
To aid in this, the Vienna Convention on the Law of Treaties Article 31 SECTION 3 and Article 32
contains provisos governing interpretations of international agreements. 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. According to
Professor Briggs, writer on the 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.

The meaning of the word “activities" was deliberately made that way to give both parties a certain
leeway in negotiation. Thus, the VFA gives legitimacy to the current Balikatan exercises. Both
the history and intent of the Mutual Defense Treaty and the VFA support the conclusion that
combat-related activities -as opposed to combat itself -such as the one subject of the instant
petition, are indeed authorized.
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." ." The indirect violation is actually
petitioners' worry, that in reality, "Balikatan 02-1" is actually a war principally conducted by the
United States government, and that the provision on self-defense serves only as camouflage to
conceal the true nature of the exercise. A clear pronouncement on this matter thereby becomes
crucial. In our considered opinion, neither the MDT nor the VFA allow foreign troops to engage
in an offensive war on Philippine territory. Under the salutary proscription stated in Article 2 of
the Charter of the United Nations.
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 especially Sec. 2, 7 and 8 of Article 2: Declaration of Principles and State
Policies in this case. 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." Even more pointedly
Sec. 25 on Transitory Provisions which shows 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.
International Law vs. Fundamental Law and Municipal Laws
Conflict arises then between the fundamental law and our obligations arising from international
agreements.
Philip Morris, Inc. v. Court of Appeals: “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.”
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." 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."
Our Constitution espouses the opposing view as stated in section 5 of Article VIII: “The Supreme
Court shall have the following powers: 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.”
Ichong v. Hernandez: “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”
Gonzales v. Hechanova: “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

ESCRA TOPICS

Lim vs. Executive Secretary Lim vs. Executive Secretary, 380 SCRA 739, G.R. No. 151445 April
11, 2002

Public International Law Topic

Same; Same; Same; 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.”—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.” 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.” Lim vs. Executive Secretary, 380 SCRA 739, G.R.
No. 151445 April 11, 2002

Constitutional Law Topic

Constitutional Law; Treatise; The Terms of Reference rightly fall within the context of the Visiting
Forces Agreement (VFA).—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. Lim vs.
Executive Secretary, 380 SCRA 739, G.R. No. 151445 April 11, 2002

KAPUNAN, J., Dissenting Opinion:

Constitutional Law; Treatise; There is no treaty allowing foreign military troops to engage in
combat with internal elements.—The Constitution prohibits foreign military bases, troops or
facilities unless a treaty permits the same. There is no treaty allowing foreign military troops to
engage in combat with internal elements. Lim vs. Executive Secretary, 380 SCRA 739, G.R. No.
151445 April 11, 2002

Pimentel v. Executive Secretary Digest

G.R. No. 158088 July 6, 2005

Facts:

1. The petitioners filed a petition for mandamus to compel the Office of the Executive Secretary
and the Department of Foreign Affairs to transmit the signed copy of the Rome Statute of the
International Criminal Court to the Senate of the Philippines for its concurrence pursuant to Sec.
21, Art VII of the 1987 Constitution.

2. The Rome Statute established the Int'l Criminal Court which will have jurisdiction over the most
serious crimes as genocide, crimes against humanity, war crimes and crimes of aggression as
defined by the Statute. The Philippines through the Chargie du Affairs in UN. The provisions of
the Statute however require that it be subject to ratification, acceptance or approval of the
signatory state.

3. Petitioners contend that ratification of a treaty, under both domestic and international law, is a
function of the Senate, hence it is the duty of the Executive Department to transmit the signed
copy to the senate to allow it to exercise its discretion.

ISSUE:

Whether or not the Exec. Secretary and the DFA have the ministerial duty to transmit to the
Senate the copy of the Rome Statute signed by a member of the Philippine mission to the U.N.
even without the signature of the President.
HELD:

The Supreme Court held NO.

1. The President as the head of state is the sole organ and authorized in the external relations
and he is also the country's sole representative with foreign nations, He is the mouthpiece with
respect to the country's foreign affairs.

2. In treaty-making, the President has the sole authority to negotiate with other states and enter
into treaties but this power is limited by the Constitution with the 2/3 required vote of all the
members of the Senate for the treaty to be valid. (Sec. 21, Art VII).

3. The legislative branch part is essential to provide a check on the executive in the field of foreign
relations, to ensure the nation's pursuit of political maturity and growth.

ESCRA TOPIC

Pimentel, Jr. vs. Office of the Executive Secretary, 462 SCRA 622, G.R. No. 158088 July 6,
2005
PIL TOPIC:

Same; Same; Same; Same; Same; International Law; Rome Statute of the International Criminal
Court; Only Senator Pimentel has the legal standing to file the instant suit since the other
petitioners, even as they maintain their standing as advocates and defenders of human rights,
and as citizens of the country, have not shown that they have sustained or will sustain a direct
injury from the non-transmittal of the signed text of the Rome Statute to the Senate—the Rome
Statute is intended to complement national criminal laws and courts and sufficient remedies are
available under our national laws to protect our citizens against human rights violations and
petitioners can always seek redress for any abuse in our domestic courts.—The question in
standing is whether a party has alleged such a personal stake in the outcome of the controversy
as to assure that concrete adverseness which sharpens the presentation of issues upon which
the court so largely depends for illumination of difficult constitutional questions. We find that
among the petitioners, only Senator Pimentel has the legal standing to file the instant suit. The
other petitioners maintain their standing as advocates and defenders of human rights, and as
citizens of the country. They have not shown, however, that they have sustained or will sustain a
direct injury from the non-transmittal of the signed text of the Rome Statute to the Senate. Their
contention that they will be deprived of their remedies for the protection and enforcement of their
rights does not persuade. The Rome Statute is intended to complement national criminal laws
and courts. Sufficient remedies are available under our national laws to protect our citizens
against human rights violations and petitioners can always seek redress for any abuse in our
domestic courts. Pimentel, Jr. vs. Office of the Executive Secretary, 462 SCRA 622, G.R. No.
158088 July 6, 2005

International Law; Treaties; Presidency; In our system of government, the President, being the
head of state, is regarded as the sole organ and authority in external relations and is the country’s
sole representative with foreign nations.—In our system of government, the President, being the
head of state, is regarded as the sole organ and authority in external relations and is the country’s
sole representative with foreign nations. As the chief architect of foreign policy, the President acts
as the country’s mouthpiece with respect to international affairs. Hence, the President is vested
with the authority to deal with foreign states and governments, extend or withhold recognition,
maintain diplomatic relations, enter into treaties, and otherwise transact the business of foreign
relations. In the realm of treaty-making, the President has the sole authority to negotiate with other
states. Nonetheless, while the President has the sole authority to negotiate and enter into treaties,
the Constitution provides a limitation to his power by requiring the concurrence of 2/3 of all the
members of the Senate for the validity of the treaty entered into by him. Section 21, Article VII of
the 1987 Constitution provides that “no treaty or international agreement shall be valid and
effective unless concurred in by at least two-thirds of all the Members of the Senate.” Pimentel,
Jr. vs. Office of the Executive Secretary, 462 SCRA 622, G.R. No. 158088 July 6, 2005

Same; Same; Same; Petitioners’ submission that the Philippines is bound under treaty law and
international law to ratify the treaty which it has signed is without basis—it is the ratification that
binds the state to the provisions thereof; There is no legal obligation to ratify a treaty, but it goes
without saying that the refusal must be based on substantial grounds and not on superficial or
whimsical reasons; The President has the discretion even after the signing of the treaty by the
Philippine representative whether or not to ratify the same.—Petitioners’ submission that the
Philippines is bound under treaty law and international law to ratify the treaty which it has signed
is without basis. The signature does not signify the final consent of the state to the treaty. It is the
ratification that binds the state to the provisions thereof. In fact, the Rome Statute itself requires
that the signature of the representatives of the states be subject to ratification, acceptance or
approval of the signatory states. Ratification is the act by which the provisions of a treaty are
formally confirmed and approved by a State. By ratifying a treaty signed in its behalf, a state
expresses its willingness to be bound by the provisions of such treaty. After the treaty is signed
by the state’s representative, the President, being accountable to the people, is burdened with
the responsibility and the duty to carefully study the contents of the treaty and ensure that they
are not inimical to the interest of the state and its people. Thus, the President has the discretion
even after the signing of the treaty by the Philippine representative whether or not to ratify the
same. The Vienna Convention on the Law of Treaties does not contemplate to defeat or even
restrain this power of the head of states. If that were so, the requirement of ratification of treaties
would be pointless and futile. It has been held that a state has no legal or even moral duty to ratify
a treaty which has been signed by its plenipotentiaries. There is no legal obligation to ratify a
treaty, but it goes without saying that the refusal must be based on substantial grounds and not
on superficial or whimsical reasons. Otherwise, the other state would be justified in taking offense.
Pimentel, Jr. vs. Office of the Executive Secretary, 462 SCRA 622, G.R. No. 158088 July 6, 2005
BAYAN MUNA, as represented by Rep. SATUR OCAMPO, Rep. CRISPIN BELTRAN, and
Rep. LIZA L. MAZA, Petitioner, vs. ALBERTO ROMULO, in his capacity as Executive
Secretary, and BLAS F. OPLE, in his capacity as Secretary of Foreign Affairs,
Respondents.
G.R. No. 159618 | February 1, 2011

ESCRA
Constitutional Law; Executive Department; Executive Agreements; RP-US Non-Surrender
Agreement; International Law; One State can agree to waive jurisdiction to subjects of another
State due to the recognition of the principle of extraterritorial immunity.—In the context of the
Constitution, there can be no serious objection to the Philippines agreeing to undertake the things
set forth in the Agreement. Surely, one State can agree to waive jurisdiction—to the extent agreed
upon—to subjects of another State due to the recognition of the principle of extraterritorial
immunity.

Same; Same; Same; Same; Same; What the Agreement contextually prohibits is the surrender
by either party of individuals to international tribunals, without the consent of the other party, which
may desire to prosecute the crime under its existing laws.—Persons who may have committed
acts penalized under the Rome Statute can be prosecuted and punished in the Philippines or in
the US; or with the consent of the RP or the US, before the ICC, assuming, for the nonce, that all
the formalities necessary to bind both countries to the Rome Statute have been met. For
perspective, what the Agreement contextually prohibits is the surrender by either party of
individuals to international tribunals, like the ICC, without the consent of the other party, which
may desire to prosecute the crime under its existing laws. With the view we take of things, there
is nothing immoral or violative of international law concepts in the act of the Philippines of
assuming criminal jurisdiction pursuant to the non-surrender agreement over an offense
considered criminal by both Philippine laws and the Rome Statute.

Pharmaceutical and Health Care Association of the Philippines v Duque III

Facts:
Petition for certiorari seeking to nullify the Revised Implementing Rules and Regulations (RIRR)
of E.O. 51 (Milk Code). Petitioner claims that the RIRR is not valid as it contains provisions that
are not constitutional and go beyond what it is supposed to implement. Milk Code was issued by
President Cory Aquino under the Freedom Constitution on Oct.1986. One of the preambular
clauses of the Milk Code states that the law seeks to give effect to Art 11 of the Int’l Code of
Marketing and Breastmilk Substitutes(ICBMS), a code adopted by the World Health
Assembly(WHA). From 1982-2006, The WHA also adopted severe resolutions to the effect that
breastfeeding should be supported, hence, it should be ensured that nutrition and health claims
are not permitted for breastmilk substitutes. In 2006, the DOH issued the assailed RIRR.

Issue:
Sub-Issue: W/N the pertinent int’l agreements entered into by the Phil are part of the law of the
land and may be implemented by DOH through the RIRR. If yes, W/N the RIRR is in accord with
int’l agreements

MAIN: W/N the DOH acted w/o or in excess of their jurisdiction, or with grave abuse of discretion
amounting to lack of excess of jurisdiction and in violation of the Constitution by promulgating the
RIRR.

Held:
Sub-issue:
Yes for ICBMS. Under 1987 Consti, int’l law can become domestic law by transformation (thru
constitutional mechanism such as local legislation) or incorporation (mere constitutional
declaration i.e treaties) The ICBMS and WHA resolutions were not treaties as they have not been
concurred by 2/3 of all members of the Senate as required under Sec, 21, Art 8. However, the
ICBMS had been transformed into domestic law through a local legislation such as the Milk Code.
The Milk Code is almost a verbatim reproduction of ICBMS.

No for WHA Resolutions. The Court ruled that DOH failed to establish that the provisions pertinent
WHA resolutions are customary int’l law that may be deemed part of the law of the land. For an
int’l rule to be considered as customary law, it must be established that such rule is being followed
by states because they consider it as obligatory to comply with such rules (opinion juris). The
WHO resolutions, although signed by most of the member states, were enforced or practiced by
at least a majority of member states. Unlike the ICBMS whereby legislature enacted most of the
provisions into the law via the Milk Code, the WHA Resolutions (specifically providing for exclusive
breastfeeding from 0-6 months, breastfeeding up to 24 Months and absolutely prohibiting ads for
breastmilk substitutes) have not been adopted as domestic law nor are they followed in our
country as well. The Filipinos have the option of how to take care of their babies as they see fit.
WHA Resolutions may be classified as SOFT LAW – non-binding norms, principles and practices
that influence state behavior. Soft law is not part of int’l law.Pharmaceutical and Health Care
Association of the Philippines v Duque III
Facts:
Petition for certiorari seeking to nullify the Revised Implementing Rules and Regulations (RIRR)
of E.O. 51 (Milk Code). Petitioner claims that the RIRR is not valid as it contains provisions that
are not constitutional and go beyond what it is supposed to implement. Milk Code was issued by
President Cory Aquino under the Freedom Constitution on Oct.1986. One of the preambular
clauses of the Milk Code states that the law seeks to give effect to Art 11 of the Int’l Code of
Marketing and Breastmilk Substitutes(ICBMS), a code adopted by the World Health
Assembly(WHA). From 1982-2006, The WHA also adopted severe resolutions to the effect that
breastfeeding should be supported, hence, it should be ensured that nutrition and health claims
are not permitted for breastmilk substitutes. In 2006, the DOH issued the assailed RIRR.

Issue:
Sub-Issue: W/N the pertinent int’l agreements entered into by the Phil are part of the law of the
land and may be implemented by DOH through the RIRR. If yes, W/N the RIRR is in accord with
int’l agreements

MAIN: W/N the DOH acted w/o or in excess of their jurisdiction, or with grave abuse of discretion
amounting to lack of excess of jurisdiction and in violation of the Constitution by promulgating the
RIRR.

Held:
Sub-issue:
Yes for ICBMS. Under 1987 Consti, int’l law can become domestic law by transformation (thru
constitutional mechanism such as local legislation) or incorporation (mere constitutional
declaration i.e treaties) The ICBMS and WHA resolutions were not treaties as they have not been
concurred by 2/3 of all members of the Senate as required under Sec, 21, Art 8. However, the
ICBMS had been transformed into domestic law through a local legislation such as the Milk Code.
The Milk Code is almost a verbatim reproduction of ICBMS.

No for WHA Resolutions. The Court ruled that DOH failed to establish that the provisions pertinent
WHA resolutions are customary int’l law that may be deemed part of the law of the land. For an
int’l rule to be considered as customary law, it must be established that such rule is being followed
by states because they consider it as obligatory to comply with such rules (opinion juris). The
WHO resolutions, although signed by most of the member states, were enforced or practiced by
at least a majority of member states. Unlike the ICBMS whereby legislature enacted most of the
provisions into the law via the Milk Code, the WHA Resolutions (specifically providing for exclusive
breastfeeding from 0-6 months, breastfeeding up to 24 Months and absolutely prohibiting ads for
breastmilk substitutes) have not been adopted as domestic law nor are they followed in our
country as well. The Filipinos have the option of how to take care of their babies as they see fit.
WHA Resolutions may be classified as SOFT LAW – non-binding norms, principles and practices
that influence state behavior. Soft law is not part of int’l law.

ESCRA TOPIC

PIL TOPIC
International Law; Treaties; Doctrine of Incorporation and Doctrine of Transformation; Words and
Phrases; Under the 1987 Constitution, international law can become part of the sphere of
domestic law either by transformation or incorporation; Treaties become part of the law of the land
through transformation pursuant to Article VII, Section 21 of the Constitution.—Under the 1987
Constitution, international law can become part of the sphere of domestic law either by
transformation or incorporation. The transformation method requires that an international law be
transformed into a domestic law through a constitutional mechanism such as local legislation. The
incorporation method applies when, by mere constitutional declaration, international law is
deemed to have the force of domestic law. Treaties become part of the law of the land through
transformation pursuant to Article VII, Section 21 of the Constitution which 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.” Thus, treaties or conventional international law must go
through a process prescribed by the Constitution for it to be transformed into municipal law that
can be applied to domestic conflicts. Pharmaceutical and Health Care Association of the
Philippines vs. Duque III, 535 SCRA 265, G.R. No. 173034 October 9, 2007

Same; Same; Same; Generally Accepted Principles of Law; Section 2, Article II of the 1987
Constitution, whereby the Philippines adopts the generally accepted principles of international law
as part of the law of the land, embodies the incorporation method.—Section 2, Article II of the
1987 Constitution, to wit: “SECTION 2. The Phil-ippines 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 (Emphasis supplied),” embodies the incorporation method.

Same; Same; Same; Same; Words and Phrases; Generally accepted principles of international
law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even
if they do not derive from treaty obligations; “Generally accepted principles of international law”
refers to norms of general or customary international law which are binding on all states, i.e.,
renunciation of war as an instrument of national policy, the principle of sovereign immunity, a
person’s right to life, liberty and due process, and pacta sunt servanda, among others.—In Mijares
v. Ranada, 455 SCRA 399 (2005) the Court held thus: [G]enerally accepted principles of
international law, by virtue of the incorporation clause of the Constitution, form part of the laws of
the land even if they do not derive from treaty obligations. The classical formulation in international
law sees those customary rules accepted as binding result from the combination [of] two
elements: the established, widespread, and consistent practice on the part of States; and a
psychological element known as the opinion juris sive necessitates (opinion as to law or
necessity). Implicit in the latter element is a belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring it. (Emphasis supplied) “Generally accepted
principles of international law” refers to norms of general or customary international law which are
binding on all states, i.e., renunciation of war as an instrument of national policy, the principle of
sovereign immunity, a person’s right to life, liberty and due process, and pacta sunt servanda,
among others. The concept of “generally accepted principles of law” has also been depicted in
this wise: Some legal scholars and judges look upon certain “general principles of law” as a
primary source of international law because they have the “character of jus rationale” and are
“valid through all kinds of human societies.” (Judge Tanaka in his dissenting opinion in the 1966
South West Africa Case, 1966 I.C.J. 296). O’Connell holds that certain priniciples are part of
international law because they are “basic to legal systems generally” and hence part of the jus
gentium. These principles, he believes, are established by a process of reasoning based on the
common identity of all legal systems. If there should be doubt or disagreement, one must look to
state practice and determine whether the municipal law principle provides a just and acceptable
solution. x x x (Emphasis supplied)

Same; Same; Same; Same; Same; Customary International Law; Custom or customary
international law means “a general and consistent practice of states followed by them from a
sense of legal obligation [opinio juris],” which statement contains the two basic elements of
custom: the material factor, that is, how states behave, and, the psychological or subjective factor,
that is, why they behave the way they do; Customary international law is deemed incorporated
into our domestic system.—Fr. Joaquin G. Bernas defines customary international law as follows:
Custom or customary international law means “a general and consistent practice of states
followed by them from a sense of legal obligation [opinio juris].” (Restatement) This statement
contains the two basic elements of custom: the material factor, that is, how states behave, and
the psychological or subjective factor, that is, why they behave the way they do. x x x x The initial
factor for determining the existence of custom is the actual behavior of states. This includes
several elements: duration, consistency, and generality of the practice of states. The required
duration can be either short or long. x x x x x x x Duration therefore is not the most important
element. More important is the consistency and the generality of the practice. x x x x x x x Once
the existence of state practice has been established, it becomes necessary to determine why
states behave the way they do. Do states behave the way they do because they consider it
obligatory to behave thus or do they do it only as a matter of courtesy? Opinio juris, or the belief
that a certain form of behavior is obligatory, is what makes practice an international rule. Without
it, practice is not law. (Italics and Emphasis supplied) Clearly customary international law is
deemed incorporated into our domestic system. Pharmaceutical and Health Care Association of
the Philippines vs. Duque III, 535 SCRA 265, G.R. No. 173034 October 9, 2007

Same; Same; Same; Same; Same; Same; Same; Soft Law; Words and Phrases; While “soft law”
does not fall into any of the categories of international law set forth in Article 38, Chapter III of the
1946 Statute of the International Court of Justice, it is, however, an expression of non-binding
norms, principles, and practices that influence state behavior.—It is propounded that WHA
Resolutions may constitute “soft law” or non-binding norms, principles and practices that influence
state behavior. “Soft law” does not fall into any of the categories of international law set forth in
Article 38, Chapter III of the 1946 Statute of the International Court of Justice. It is, however, an
expression of non-binding norms, principles, and practices that influence state behavior. Certain
declarations and resolutions of the UN General Assembly fall under this category. The most
notable is the UN Declaration of Human Rights, which this Court has enforced in various cases,
specifically, Government of Hongkong Special Administrative Region v. Olalia, 521 SCRA 470
(2007); Mejoff v. Director of Prisons, 90 Phil. 70, Mijares v. Rañada, 455 SCRA 397 (2005), and
Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies, Inc., 486
SCRA 405 (2006).

Same; Same; Same; Same; Same; Same; Same; Administrative Law; The provisions of the World
Health Assembly (WHA) Resolutions cannot be considered as part of the law of the land that can
be implemented by executive agencies without the need of a law enacted by the legislature.—
Respondents failed to establish that the provisions of pertinent WHA Resolutions are customary
international law that may be deemed part of the law of the land. Consequently, legislation is
necessary to transform the provisions of the WHA Resolutions into domestic law. The provisions
of the WHA Resolutions cannot be considered as part of the law of the land that can be
implemented by executive agencies without the need of a law enacted by the legislature.
Pharmaceutical and Health Care Association of the Philippines vs. Duque III, 535 SCRA 265,
G.R. No. 173034 October 9, 2007
*No Consti topic found

Plaridel M. Abaya vs. Hon. Secretary Hermogenes E. Ebdane, Jr.G. R. No. 167919 February
14, 2007
G. R. No. 167919

FACTS:
On May 7, 2004 Bids and Awards Committee (BAC) of the Department of Public Works and
Highways (DPWH) issued a Resolution No. PJHL-A-04-012. It was approved by DPWH Acting
Secretary Florante Soriquez. This resolution recommended the award to China Road & Bridge
Corporation of the contract for the implementation of civil works for Contract Package No. I (CP
I), which consists of the improvement/rehabilitation of the San Andres-Virac-Jct. Bago-Viga road,
with the lengt of 79.818 kilometers, in the island province of Catanduanes.
This Loan Agreement No. PH-204 was executed by and between the JBIC and the Philippine
Government pursuant to the exchange of Notes executed by and between Mr. Yoshihisa Ara,
Ambassador Extraordinary and Plenipotentiary of Japan to the Philippines, and then Foreign
Affairs Secretary Siazon, in behalf of their respective governments.

ISSUE:
Whether or not the Loan Agreement No. PH-204 between the JBIC and the Philippine
Government is a kind of a treaty.

HELD:
The Loan Agreement No. PH-204 taken in conjunction with the Exchange of Notes dated
December 27, 1999 between the Japanese Government and the Philippine Government is an
executive agreement.
An “exchange of notes” is a record of a routine agreement that has many similarities with the
private law contract. The agreement consists of the exchange of two documents, each of the
parties being in the possession of the one signed by the representative of the other.
…treaties, agreements, conventions, charters, protocols, declarations, memoranda of
understanding, modus vivendi and exchange of notes all are refer to international instruments
binding at international law.
Although these instruments differ from each other by title, they all have common features and
international law has applied basically the same rules to all these instruments. These rules are
the result of long practice among the States, which have accepted them as binding norms in their
mutual relations. Therefore, they are regarded as international customary law.
That case was dismissed by the SCORP last Feb. 14 2007.

What the petitioners wanted was that Foreign funded projects also undergo the procurement
process.
The dismissal of the case somehow gave justification for the delay of the implementing rules for
foreign funded projects (IRR-B) of the procurement law If we recall the decision of the Abaya vs
Ebdane was used by the DOJ when the DOTC Secretary was asking for an opinion from the
former, during the ZTE controversy.as ruled by the Supreme Court in Abaya v. Ebdane, an
exchange of notes is considered a form of an executive agreement, which becomes binding
through executive action without need of a vote by the
Senate and that (like treaties and conventions, it is an international instrument binding at
international law,
The second issue involves an examination of the coverage of Republic Act No. 9184, otherwise
known as the “Government Procurement Reform Act”. Section 4 of the said Act provides that it
shall
apply to: … the Procurement of infrastructure Projects, Goods and Consulting Services,
regardless of source of funds, whether local or foreign, by all branches and instrumentalities of
government, its departments, offices and agencies, including government-owned and/or -
controlled corporations and local government units, subject to the provisions of Commonwealth
Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this
Act to which the Philippine government is a signatory shall be observed.

ESCRA TOPIC

PIL TOPIC
Same; Same; International Law; The government is obliged to observe and enforce the terms and
conditions which are made part of a Loan Agreement in the procurement of goods and services
for the project subject of the Agreement.—In accordance with applicable laws, the procurement
of goods and services for the CP I project is governed by the corresponding loan agreement
entered into by the government and the JBIC, i.e., Loan Agreement No. PH-P204. The said loan
agreement stipulated that the procurement of goods and services for the Arterial Road Links
Development Project (Phase IV), of which CP I is a component, is to be governed by the JBIC
Procurement Guidelines. Section 5.06, Part II (International Competitive Bidding) thereof quoted
earlier reads: Section 5.06.Evaluation and Comparison of Bids x x x (e) Any procedure under
which bids above or below a predetermined bid value assessment are automatically disqualified
is not permitted. It is clear that the JBIC Procurement Guidelines proscribe the imposition of
ceilings on bid prices. On the other hand, it enjoins the award of the contract to the bidder whose
bid has been determined to be the lowest evaluated bid. The pertinent provision, quoted earlier,
is reiterated, thus: Section5.09. Award of Contract The contract is to be awarded to the bidder
whose bid has been determined to be the lowest evaluated bid and who meets the appropriate
standards of capability and financial resources. A bidder shall not be required as a condition of
award to undertake responsibilities or work not stipulated in the specifications or to modify the
bid. Since these terms and conditions are made part of Loan Agreement No. PH-P204, the
government is obliged to observe and enforce the same in the procurement of goods and services
for the CP I project. As shown earlier, private respondent China Road & Bridge Corporation’s bid
was the lowest evaluated bid, albeit 28.95% higher than the ABC. In accordance with the JBIC
Procurement Guidelines, therefore, it was correctly awarded the contract for the CP I project.
Abaya vs. Ebdane, Jr., 515 SCRA 720, G.R. No. 167919 February 14, 2007

Same; Same; Same; Same; Exchange of Notes; Words and Phrases; An “exchange of notes” is
a record of a routine agreement that has many similarities with the private law contract.—In this
connection, it is well to understand the definition of an “exchange of notes” under international
law. The term is defined in the United Nations Treaty Collection in this wise: An “exchange of
notes” is a record of a routine agreement that has many similarities with the private law contract.
The agreement consists of the exchange of two documents, each of the parties being in the
possession of the one signed by the representative of the other. Under the usual procedure, the
accepting State repeats the text of the offering State to record its assent. The signatories of the
letters may be government Ministers, diplomats or departmental heads. The technique of
exchange of notes is frequently resorted to, either because of its speedy procedure, or,
sometimes, to avoid the process of legislative approval. It is stated that “treaties, agreements,
conventions, charters, protocols, declarations, memoranda of understanding, modus vivendi and
exchange of notes” all refer to “international instruments binding at international law.” It is further
explained that—Although these instruments differ from each other by title, they all have common
features and international law has applied basically the same rules to all these instruments. These
rules are the result of long practice among the States, which have accepted them as binding
norms in their mutual relations. Therefore, they are regarded as international customary law.
Since there was a general desire to codify these customary rules, two international conventions
were negotiated. The 1969 Vienna Convention on the Law of Treaties (“1969 Vienna
Convention”), which entered into force on 27 January 1980, contains rules for treaties concluded
between States. The 1986 Vienna Convention on the Law of Treaties between States and
International Organizations (“1986 Vienna Convention”), which has still not entered into force,
added rules for treaties with international organizations as parties. Both the 1969 Vienna
Convention and the 1986 Vienna Convention do not distinguish between the different
designations of these instruments. Instead, their rules apply to all of those instruments as long as
they meet the common requirements. Abaya vs. Ebdane, Jr., 515 SCRA 720, G.R. No. 167919
February 14, 2007

CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP), Petitioner, vs. HON.
CESAR D. SANTAMARIA, in his official capacity as Presiding Judge of Branch 145,
Regional Trial Court of Makati City, et al., Respondents
G.R. No. 185572 | February 7, 2012

FACTS:
On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group)
(CNMEG), represented by its chairperson, Ren Hongbin, entered into a Memorandum of
Understanding with the North Luzon Railways Corporation (Northrail), represented by its
president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line from
Manila to San Fernando, La Union (the Northrail Project).

On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance
of the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein
China agreed to extend Preferential Buyer‘s Credit to the Philippine government to finance the
Northrail Project. The Chinese government designated EXIM Bank as the lender, while the
Philippine government named the DOF as the borrower. Under the Aug 30 MOU, EXIM Bank
agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20
years, with a 5-year grace period, and at the rate of 3% per annum.

On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang),
wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEG‘s
designation as the Prime Contractor for the Northrail Project.

On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the
construction of Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos
on a turnkey basis (the Contract Agreement). The contract price for the Northrail Project was
pegged at USD 421,050,000.

On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart
financial agreement – Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement). In
the Loan Agreement, EXIM Bank agreed to extend Preferential Buyer‘s Credit in the amount of
USD 400,000,000 in favor of the Philippine government in order to finance the construction of
Phase I of the Northrail Project.

On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction
with Urgent Motion for Summary Hearing to Determine the Existence of Facts and Circumstances
Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO
against CNMEG, the Office of the Executive Secretary, the DOF, the Department of Budget and
Management, the National Economic Development Authority and Northrail.

The case was filed before the Regional Trial Court, National Capital Judicial Region, Makati City,
Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the Contract Agreement
and the Loan Agreement were void for being contrary to (a) the Constitution; (b) Republic Act
No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c)
Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d)
Executive Order No. 292, otherwise known as the Administrative Code.

On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEG‘s Motion to Dismiss
and setting the case for summary hearing to determine whether the injunctive reliefs prayed for
should be issued. CNMEG then filed a Motion for Reconsideration, which was denied by the trial
court in an Order dated 10 March 2008. Thus, CNMEG filed before the CA a Petition for Certiorari
with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008. the
appellate court dismissed the Petition for Certiorari.

Subsequently, CNMEG filed a Motion for Reconsideration, which was denied by the CA in a
Resolution dated 5 December 2008.

Petitioners Argument:
Petitioner claims that the EXIM Bank extended financial assistance to Northrail because the bank
was mandated by the Chinese government, and not because of any motivation to do business in
the Philippines, it is clear from the foregoing provisions that the Northrail Project was a purely
commercial transaction.

Respondents Argument:
Respondents alleged that the Contract Agreement and the Loan Agreement were void for being
contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as
the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as
the Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the
Administrative Code.

ISSUE:
Whether or not the Northrail contracts are products of an executive agreement between two
sovereign states.

ESCRA
International Law; Vienna Convention; Treaties; Executive Agreements; Words and Phrases;
Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines a treaty
as follows: [A]n international agreement concluded between States in written form and governed
by international law, whether embodied in a single instrument or in two or more related
instruments and whatever its particular designation; An executive agreement is similar to a treaty,
except that the former (a) does not require legislative concurrence; (b) is usually less formal; and
(c) deals with a narrower range of subject matters.—Article 2(1) of the Vienna Convention on the
Law of Treaties (Vienna Convention) defines a treaty as follows: [A]n international agreement
concluded between States in written form and governed by international law, whether embodied
in a single instrument or in two or more related instruments and whatever its particular
designation. In Bayan Muna v. Romulo, 641 SCRA 244 (2011), this Court held that an executive
agreement is similar to a treaty, except that the former (a) does not require legislative
concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters.
Despite these differences, to be considered an executive agreement, the following three
requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement
must be between states; (b) it must be written; and (c) it must governed by international law. The
first and the third requisites do not obtain in the case at bar.
Constitutional Law; Immunity from Suit; International Law; Since the Contract Agreement explicitly
provides that Philippine law shall be applicable, the parties have effectively conceded that their
rights and obligations thereunder are not governed by international law.—Article 2 of the
Conditions of Contract, which under Article 1.1 of the Contract Agreement is an integral part of
the latter, states: APPLICABLE LAW AND GOVERNING LANGUAGE The contract shall in all
respects be read and construed in accordance with the laws of the Philippines. The contract shall
be written in English language. All correspondence and other documents pertaining to the
Contract which are exchanged by the parties shall be written in English language. Since the
Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have
effectively conceded that their rights and obligations thereunder are not governed by international
law. It is therefore clear from the foregoing reasons that the Contract Agreement does not partake
of the nature of an executive agreement. It is merely an ordinary commercial contract that can be
questioned before the local courts.

DEUTSCHE BANK AG MANILA BRANCH, petitioner, vs. COMMISSIONER OF INTERNAL

REVENUE, respondent.
G.R. No. 188550 | August 19, 2013

ESCRA
International Law; Treaties; Pacta Sunt Servanda; The time-honored international principle of
pacta sunt servanda demands the performance in good faith of treaty obligations on the part of
the states that enter into the agreement.―Our Constitution provides for adherence to the general
principles of international law as part of the law of the land. The time-honored international
principle of pacta sunt servanda demands the performance in good faith of treaty obligations on
the part of the states that enter into the agreement. Every treaty in force is binding upon the
parties, and obligations under the treaty must be performed by them in good faith. More
importantly, treaties have the force and effect of law in this jurisdiction.

Same; Same; Taxation; Tax treaties are entered into to minimize, if not eliminate the harshness
of international juridical double taxation, which is why they are also known as double tax treaty or
double tax agreements.―Tax treaties are entered into “to reconcile the national fiscal legislations
of the contracting parties and, in turn, help the taxpayer avoid simultaneous taxations in two
different jurisdictions.” CIR v. S.C. Johnson and Son, Inc., 309 SCRA 37 (1999), further clarifies
that “tax conventions are drafted with a view towards the elimination of international juridical
double taxation, which is defined as the imposition of comparable taxes in two or more states on
the same taxpayer in respect of the same subject matter and for identical periods. The apparent
rationale for doing away with double taxation is to encourage the free flow of goods and services
and the movement of capital, technology and persons between countries, conditions deemed vital
in creating robust and dynamic economies. Foreign investments will only thrive in a fairly
predictable and reasonable international investment climate and the protection against double
taxation is crucial in creating such a climate.” Simply put, tax treaties are entered into to minimize,
if not eliminate the harshness of international juridical double taxation, which is why they are also
known as double tax treaty or double tax agreements.

Same; Same; Same; A state that has contracted valid international obligations is bound to make
in its legislations those modifications that may be necessary to ensure the fulfillment of the
obligations undertaken.―“A state that has contracted valid international obligations is bound to
make in its legislations those modifications that may be necessary to ensure the fulfillment of the
obligations undertaken.” Thus, laws and issuances must ensure that the reliefs granted under tax
treaties are accorded to the parties entitled thereto. The BIR must not impose additional
requirements that would negate the availment of the reliefs provided for under international
agreements. More so, when the RP-Germany Tax Treaty does not provide for any pre-requisite
for the availment of the benefits under said agreement.

Same; Same; Same; Bearing in mind the rationale of tax treaties, the period of application for the
availment of tax treaty relief as required by RMO No. 1-2000 should not operate to divest
entitlement to the relief as it would constitute a violation of the duty required by good faith in
complying with a tax treaty.―Bearing in mind the rationale of tax treaties, the period of application
for the availment of tax treaty relief as required by RMO No. 1-2000 should not operate to divest
entitlement to the relief as it would constitute a violation of the duty required by good faith in
complying with a tax treaty. The denial of the availment of tax relief for the failure of a taxpayer to
apply within the prescribed period under the administrative issuance would impair the value of the
tax treaty. At most, the application for a tax treaty relief from the BIR should merely operate to
confirm the entitlement of the taxpayer to the relief.

Same; Tax Refunds; National Internal Revenue Code; Section 229 of the National Internal
Revenue Code (NIRC) provides the taxpayer a remedy for tax recovery when there has been an
erroneous payment of tax.―Section 229 of the NIRC provides the taxpayer a remedy for tax
recovery when there has been an erroneous payment of tax. The outright denial of petitioner’s
claim for a refund, on the sole ground of failure to apply for a tax treaty relief prior to the payment
of the BPRT, would defeat the purpose of Section 229.

RENE A.V. SAGUISAG, WIGBERTO E. TAÑADA, FRANCISCO "DODONG" NEMENZO, JR.,

SR. MARY JOHN MANANZAN, PACIFICO A. AGABIN, ESTEBAN "STEVE" SALONGA, H.
HARRY L. ROQUE, JR., EVALYN G. URSUA, EDRE U. OLALIA, DR. CAROL PAGADUAN-
ARAULLO, DR. ROLAND SIMBULAN, AND TEDDY CASIÑO, Petitioners, vs. EXECUTIVE
SECRETARY PAQUITO N. OCHOA, JR., DEPARTMENT OF NATIONAL DEFENSE
SECRETARY VOLTAIRE GAZMIN, DEPARTMENT OF FOREIGN AFFAIRS SECRETARY
ALBERT DEL ROSARIO, JR., DEPARTMENT OF BUDGET AND MANAGEMENT
SECRETARY FLORENCIO ABAD, AND ARMED FORCES OF THE PHILIPPINES CHIEF OF
STAFF GENERAL EMMANUEL T. BAUTISTA, Respondents.
G.R. No. 212426 | January 12, 2016

FACTS:
This is a Resolution on the Motion for Reconsideration seeking to reverse the Decision of this
Court in Saguisag et. al., v. Executive Secretary dated 12 January 2016.

Petitioners claim this Court erred when it ruled that the Enhanced Defense Cooperation
Agreement (EDCA) between the Philippines and the US was not a treaty. In connection to this,
petitioners move that EDCA must be in the form of a treaty in order to comply with the
constitutional restriction under Section 25, Article· XVIII of the 1987 Constitution on foreign military
bases, troops, and facilities. Additionally, they reiterate their arguments on the issues of
telecommunications, taxation, and nuclear weapons.

The principal reason for the Motion for Reconsideration is evidently petitioners’ disagreement with
the Decision that EDCA implements the VFA and Mutual Defense Treaty (MDT).

Petitioners argue that EDCA’s provisions fall outside the allegedly limited scope of the VFA and
MDT because it provides a wider arrangement than the VFA for military bases, troops, and
facilities, and it allows the establishment of U.S. military bases.

ISSUE:

Whether or not EDCA is a treaty.

RULING:

Petitioners detail their objections to EDCA in a similar way to their original petition, claiming that
the VFA and MDT did not allow EDCA to contain the following provisions:

1. Agreed Locations

2. Rotational presence of personnel

3. U.S. contractors

4. Activities of U.S. contractors

We ruled in Saguisag, et. al. that the EDCA is not a treaty despite the presence of these
provisions. The very nature of EDCA, its provisions and subject matter, indubitably categorize it
as an executive agreement – a class of agreement that is not covered by the Article XVIII Section
25 restriction – in painstaking detail. To partially quote the Decision:

Executive agreements may dispense with the requirement of Senate concurrence because of the
legal mandate with which they are concluded.
As culled from the deliberations of the Constitutional Commission, past Supreme Court Decisions,
and works of noted scholars, executive agreements merely involve arrangements on the
implementation of existing policies, rules, laws, or agreements.

They are concluded

(1) to adjust the details of a treaty;

(2) pursuant to or upon confirmation by an act of the Legislature; or

(3) in the exercise of the President’s independent powers under the Constitution.

The raison d’etre of executive agreements hinges on prior constitutional or legislative

authorizations.

The special nature of an executive agreement is not just a domestic variation in international
agreements.

International practice has accepted the use of various forms and designations of international
agreements, ranging from the traditional notion of a treaty – which connotes a formal, solemn
instrument – to engagements concluded in modern, simplified forms that no longer necessitate
ratification.

An international agreement may take different forms: treaty, act, protocol, agreement, concordat,
compromis d’arbitrage, convention, covenant, declaration, exchange of notes, statute, pact,
charter, agreed minute, memorandum of agreement, modus vivendi, or some other form.

Consequently, under international law, the distinction between a treaty and an international
agreement or even an executive agreement is irrelevant for purposes of determining international
rights and obligations.

However, this principle does not mean that the domestic law distinguishing treaties, international
agreements, and executive agreements is relegated to a mere variation in form, or that the
constitutional requirement of Senate concurrence is demoted to an optional constitutional
directive. There remain two very important features that distinguish treaties from executive
agreements and translate them into terms of art in the domestic setting.

First, executive agreements must remain traceable to an express or implied authorization under
the Constitution, statutes, or treaties. The absence of these precedents puts the validity and
effectivity of executive agreements under serious question for the main function of the Executive
is to enforce the Constitution and the laws enacted by the Legislature, not to defeat or interfere in
the performance of these rules. In turn, executive agreements cannot create new international
obligations that are not expressly allowed or reasonably implied in the law they purport to
implement.

Second, treaties are, by their very nature, considered superior to executive agreements. Treaties
are products of the acts of the Executive and the Senate unlike executive agreements, which are
solely executive actions. Because of legislative participation through the Senate, a treaty is
regarded as being on the same level as a statute. If there is an irreconcilable conflict, a later law
or treaty takes precedence over one that is prior. An executive agreement is treated differently.
Executive agreements that are inconsistent with either a law or a treaty are considered ineffective.
Both types of international agreement are nevertheless subject to the supremacy of the
Constitution.

Subsequently, the Decision goes to great lengths to illustrate the source of EDCA’s validity, in
that as an executive agreement it fell within the parameters of the VFA and MDT, and seamlessly
merged with the whole web of Philippine law. We need not restate the arguments here. It suffices
to state that this Court remains unconvinced that EDCA deserves treaty status under the law.

We find no reason for EDCA to be declared unconstitutional. It fully conforms to the Philippines’
legal regime through the MDT and VFA. It also fully conforms to the government’s continued
policy to enhance our military capability in the face of various military and humanitarian issues
that may arise

ESCRA
Constitutional Law; Treaties; Power to Concur in a Treaty; The power to concur in a treaty or an
international agreement is an institutional prerogative granted by the Constitution to the Senate,
not to the entire Legislature.—As correctly argued by respondent, the power to concur in a treaty
or an international agreement is an institutional prerogative granted by the Constitution to the
Senate, not to the entire Legislature. In Pimentel, Jr. v. Office of the Executive Secretary, 462
SCRA 622 (2005), this Court did not recognize the standing of one of the petitioners therein who
was a member of the House of Representatives. The petition in that case sought to compel the
transmission to the Senate for concurrence of the signed text of the Statute of the International
Criminal Court. Since that petition invoked the power of the Senate to grant or withhold its
concurrence in a treaty entered into by the Executive Department, only then incumbent Senator
Pimentel was allowed to assert that authority of the Senate of which he was a member.

Same; Judicial Review; When those who challenge the official act are able to craft an issue of
transcendental significance to the people, the Supreme Court (SC) may exercise its sound
discretion and take cognizance of the suit.—In a number of cases, this Court has indeed taken a
liberal stance towards the requirement of legal standing, especially when paramount interest is
involved. Indeed, when those who challenge the official act are able to craft an issue of
transcendental significance to the people, the Court may exercise its sound discretion and take
cognizance of the suit. It may do so in spite of the inability of the petitioners to show that they
have been personally injured by the operation of a law or any other government act.

Executive Power; The duty to faithfully execute the laws of the land is inherent in executive power
and is intimately related to the other executive functions.—The duty to faithfully execute the laws
of the land is inherent in executive power and is intimately related to the other executive functions.
These functions include the faithful execution of the law in autonomous regions; the right to
prosecute crimes; the implementation of transportation projects; the duty to ensure compliance
with treaties, executive agreements and executive orders; the authority to deport undesirable
aliens; the conferment of national awards under the President’s jurisdiction; and the overall
administration and control of the executive department.

Same; Presidency; Foreign Military Bases; Despite the President’s roles as defender of the State
and sole authority in foreign relations, the 1987 Constitution expressly limits his ability in instances
when it involves the entry of foreign military bases, troops or facilities.—Despite the President’s
roles as defender of the State and sole authority in foreign relations, the 1987 Constitution
expressly limits his ability in instances when it involves the entry of foreign military bases, troops
or facilities. The initial limitation is found in Section 21 of the provisions on the Executive
Department: “No treaty or international agreement shall be valid and effective unless concurred
in by at least two--thirds of all the Members of the Senate.” The specific limitation is given by
Section 25 of the Transitory Provisions, the full text of which reads as follows: SECTION 25. After
the expiration in 1991 of the Agreement between the Republic of the Philippines and the United
States of America concerning Military Bases, foreign military bases, troops, or facilities shall not
be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when
the Congress so requires, ratified by a majority of the votes cast by the people in a national
referendum held for that purpose, and recognized as a treaty by the other contracting State.

Same; Same; Same; The President is not authorized by law to allow foreign military bases, troops,
or facilities to enter the Philippines, except under a treaty concurred in by the Senate.—To this
Court, a plain textual reading of Article XIII, Section 25, inevitably leads to the conclusion that it
applies only to a proposed agreement between our government and a foreign government,
whereby military bases, troops, or facilities of such foreign government would be “allowed” or
would “gain entry” Philippine territory. Note that the provision “shall not be allowed” is a negative
injunction. This wording signifies that the President is not authorized by law to allow foreign
military bases, troops, or facilities to enter the Philippines, except under a treaty concurred in by
the Senate. Hence, the constitutionally restricted authority pertains to the entry of the bases,
troops, or facilities, and not to the activities to be done after entry.

Presidency; The President has the inherent power to enter into agreements with other states,
including the prerogative to conclude binding executive agreements that do not require further
Senate concurrence.—As the sole organ of our foreign relations and the constitutionally assigned
chief architect of our foreign policy, the President is vested with the exclusive power to conduct
and manage the country’s interface with other states and governments. Being the principal
representative of the Philippines, the Chief Executive speaks and listens for the nation; initiates,
maintains, and develops diplomatic relations with other states and governments; negotiates and
enters into international agreements; promotes trade, investments, tourism and other economic
relations; and settles international disputes with other states. As previously discussed, this
constitutional mandate emanates from the inherent power of the President to enter into
agreements with other states, including the prerogative to conclude binding executive agreements
that do not require further Senate concurrence. The existence of this presidential power is so well-
entrenched that Section 5(2)(a), Article VIII of the Constitution, even provides for a check on its
exercise. As expressed below, executive agreements are among those official governmental acts
that can be the subject of this Court’s power of judicial review: (2) Review, revise, reverse, modify,
or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and
orders 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.

Executive Agreements; Words and Phrases; In Commissioner of Customs v. Eastern Sea

Trading, 3 SCRA 351 (1961), executive agreements are defined as “international agreements
embodying adjustments of detail carrying out well-established national policies and traditions and
those involving arrangements of a more or less temporary nature.”—In Commissioner of Customs
v. Eastern Sea Trading, 3 SCRA 351 (1961), executive agreements are defined as “international
agreements embodying adjustments of detail carrying out well-established national policies and
traditions and those involving arrangements of a more or less temporary nature.” In Bayan Muna
v. Romulo, 641 SCRA 244 (2011), this Court further clarified that executive agreements can cover
a wide array of subjects that have various scopes and purposes. They are no longer limited to the
traditional subjects that are usually covered by executive agreements as identified in Eastern Sea
Trading.

Same; International Agreements; After noted constitutionalist Fr. Joaquin Bernas quoted the
Supreme Court’s (SC’s) ruling in Commissioner of Customs v. Eastern Sea Trading, 3 SCRA 351
(1961), the Constitutional Commission members ultimately decided that the term “international
agreements” as contemplated in Section 21, Article VII, does not include executive agreements,
and that a proviso is no longer needed.—One of the distinguishing features of executive
agreements is that their validity and effectivity are not affected by a lack of Senate concurrence.
This distinctive feature was recognized as early as in Eastern Sea Trading (1961), viz.: Treaties
are formal documents which require ratification with the approval of two-thirds of the Senate.
Executive agreements become binding through executive action without the need of a vote by the
Senate or by Congress. x x x x [T]he right of the Executive to enter into binding agreements
without the necessity of subsequent Congressional approval has been confirmed by long usage.
From the earliest days of our history we have entered into executive agreements covering such
subjects as commercial and consular relations, most-favored-nation rights, patent rights,
trademark and copyright protection, postal and navigation arrangements and the settlement of
claims. The validity of these has never been seriously questioned by our courts. (Emphases
supplied) That notion was carried over to the present Constitution. In fact, the framers specifically
deliberated on whether the general term “international agreement” included executive
agreements, and whether it was necessary to include an express proviso that would exclude
executive agreements from the requirement of Senate concurrence. After noted constitutionalist
Fr. Joaquin Bernas quoted the Court’s ruling in Eastern Sea Trading, the Constitutional
Commission members ultimately decided that the term “international agreements” as
contemplated in Section 21, Article VII, does not include executive agreements, and that a proviso
is no longer needed.

Same; Same; International practice has accepted the use of various forms and designations of
international agreements, ranging from the traditional notion of a treaty — which connotes a
formal, solemn instrument — to engagements concluded in modern, simplified forms that no
longer necessitate ratification.—The special nature of an executive agreement is not just a
domestic variation in international agreements. International practice has accepted the use of
various forms and designations of international agreements, ranging from the traditional notion of
a treaty — which connotes a formal, solemn instrument — to engagements concluded in modern,
simplified forms that no longer necessitate ratification. An international agreement may take
different forms: treaty, act, protocol, agreement, concordat, compromis d’arbitrage, convention,
covenant, declaration, exchange of notes, statute, pact, charter, agreed minute, memorandum of
agreement, modus vivendi, or some other form. Consequently, under international law, the
distinction between a treaty and an international agreement or even an executive agreement is
irrelevant for purposes of determining international rights and obligations.

Same; Section 9 of Executive Order (EO) No. 459, or the Guidelines in the Negotiation of
International Agreements and its Ratification, thus, correctly reflected the inherent powers of the
when it stated that the Department of Foreign Affairs (DFA) “shall determine whether an
agreement is an executive agreement or a treaty.”—Indeed, in the field of external affairs, the
President must be given a larger measure of authority and wider discretion, subject only to the
least amount of checks and restrictions under the Constitution. The rationale behind this power
and discretion was recognized by the Court in Vinuya v. Romulo, 619 SCRA 533 (2010), cited
earlier. Section 9 of Executive Order No. 459, or the Guidelines in the Negotiation of International
Agreements and its Ratification, thus, correctly reflected the inherent powers of the President
when it stated that the DFA “shall determine whether an agreement is an executive agreement or
a treaty.” Accordingly, in the exercise of its power of judicial review, the Court does not look into
whether an international agreement should be in the form of a treaty or an executive agreement,
save in cases in which the Constitution or a statute requires otherwise. Rather, in view of the vast
constitutional powers and prerogatives granted to the President in the field of foreign affairs, the
task of the Court is to determine whether the international agreement is consistent with the
applicable limitations.

LAND BANK OF THE PHILIPPINES, Petitioner, vs. ATLANTA INDUSTRIES, INC.,

Respondent.
G.R. No. 193796 | July 2, 2014 | PERLAS-BERNABE, J.:

FACTS:
The terms and conditions of Loan Agreement were incorporated and made part of the Subsidiary
Loan Agreement (SLA) that was subsequently entered into by Land Bank with the City
Government of Iligan. This means that the SLA cannot be treated as an independent and
unrelated contract but as a conjunct of, or having a joint and simultaneous occurrence with the
Loan Agreement. Its nature and consideration, being a mere accessory contract of Loan
Agreement, are the same as that of its principal contract. The accessory follows the principal;
and, concomitantly, accessory contracts should not be read independently of the main contract.
Land Bank of the Philippines (Land Bank) and International Bank for Reconstruction and
Development (IBRD) entered into a Loan Agreement for the implementation of the IBRD's
"Support for Strategic Local Development and Investment Project". The loan facility was fully
guaranteed by the Government of the Philippines and conditioned upon the participation of at
least two Local Government Units by way of a Subsidiary Loan Agreement (SLA) with Land Bank.
Land Bank entered into a SLA with the City Government of Iligan to finance the development and
expansion of the city's water supply system. Accordingly, the City Government of Iligan, through
its Bids and Awards Committee (BAC), conducted a public bidding for the supply and delivery of
various sizes of pipes and fittings using the IBRD Procurement Guidelines. Atlanta Industries, Inc.
(Atlanta) participated in the said bidding and came up with the second to the lowest bid. BAC
informed Atlanta that the bidding was declared a failure upon the recommendation of Land Bank
due to the IBRD's non-concurrence with the Bid Evaluation Report. Moreover, BAC informed
Atlanta of its disqualification from the bidding because it lacked several documentary
requirements.BAC conducted a re-bidding of the project, this notwithstanding, Atlanta in a letter
called the BAC's attention to its use of Bidding Documents, which, as it purported, not only failed
to conform with the Third Edition of the Philippine Bidding Documents for the Procurement of
Goods (PBDs) prescribed by the Government Procurement Policy Board (GPPB) but also
contained numerous provisions that were not in accordance with RA 9184 and its Implementing
Rules and Regulations (IRR). Atlanta filed a Petition for Prohibition and Mandamus to enjoin the
rebidding .of the project against the City Government of Iligan, the BAC, and Land Bank before
the Regional Trial Court (RTC). The RTC declared the subject bidding null and void on the ground
that it was done contrary to the rules and procedure prescribed in RA 9184 and its IRR.

ISSUE: Is the SLA between the Land Bank and the City Government of Iligan an executive
agreement similar to Loan Agreement such that the procurement of water UST Law Review, Vol.
LIX, No. 1, May 2015 pipes by the BAC of the City Government of Iligan should be deemed
exempt from the application of RA 9184?

RULING: Yes. RA 9184 recognizes the country's commitment to abide by its obligations under
any treaty or international or executive agreement. As the parties have correctly discerned, Loan
Agreement is in the nature of an executive agreement, thus governed by international law.
Examining its features, Loan Agreement between the IBRD and the Land Bank is an integral
component of the Guarantee Agreement executed by the Government of the Philippines as a
subject of international law possessed of a treaty-making capacity, and the IBRD, which, as an
international lending institution organized by world governments to provide loans conditioned
upon the guarantee of repayment by the borrowing sovereign state, is likewise regarded a subject
of international law and possessed of the capacity to enter into executive agreements with
sovereign states. The terms and conditions of Loan Agreement No. 4833-PH, being a project-
based and government-guaranteed loan facility, were incorporated and made part of the SLA that
was subsequently entered into by Land Bank with the City Government of Iligan. Considering that
Loan Agreement expressly provides that the procurement of the goods to be financed from the
loan proceeds shall be in accordance with the IBRD Guidelines, and that the accessory SLA
contract merely follows its principal's terms and conditions. The Court held that the procurement
of water pipes by the BAC of the City Government of Iligan is beyond the purview of RA 9184.

ESCRA
International Law; International Agreements; In Bayan Muna v. Romulo (Bayan Muna), 641 SCRA
244 (2011), the Supreme Court (SC) defined an international agreement as one concluded
between states in written form and governed by international law, “whether embodied in a single
instrument or in two or more related instruments and whatever its particular designation,” and
further expounded that it may be in the form of either (a) treaties that require legislative
concurrence after executive ratification; or (b) executive agreements that are similar to treaties,
except that they do not require legislative concurrence and are usually less formal and deal with
a narrower range of subject matters than treaties.—In Bayan Muna v. Romulo, 641 SCRA 244
(2011), (Bayan Muna) the Court defined an international agreement as one concluded between
states in written form and governed by international law, “whether embodied in a single instrument
or in two or more related instruments and whatever its particular designation,” and further
expounded that it may be in the form of either (a) treaties that require legislative concurrence after
executive ratification; or (b) executive agreements that are similar to treaties, except that they do
not require legislative concurrence and are usually less formal and deal with a narrower range of
subject matters than treaties. Examining its features, Loan Agreement No. 4833-PH between the
IBRD and the Land Bank is an integral component of the Guarantee Agreement executed by the
Government of the Philippines as a subject of international law possessed of a treaty-making
capacity, and the IBRD, which, as an international lending institution organized by world
governments to provide loans conditioned upon the guarantee of repayment by the borrowing
sovereign state, is likewise regarded a subject of international law and possessed of the capacity
to enter into executive agreements with sovereign states. Being similar to a treaty but without
requiring legislative concurrence, Loan Agreement No. 4833-PH — following the definition given
in the Bayan Muna case — is an executive agreement and is, thus, governed by international law.

Same; Pacta Sunt Servanda; Words and Phrases; Pacta sunt servanda is a fundamental maxim
of international law that requires the parties to keep their agreement in good faith.—The
Government of the Philippines is therefore obligated to observe its terms and conditions under
the rule of pacta sunt servanda, a fundamental maxim of international law that requires the parties
to keep their agreement in good faith. It bears pointing out that the pacta sunt servanda rule has
become part of the law of the land through the incorporation clause found under Section 2, Article
II of the 1987 Philippine Constitution, which states that the Philippines “adopts the generally
accepted principles of international law as part of the law of the land and adheres to the policy of
peace, equality, justice, freedom, cooperation, and amity with all nations.” Land Bank of the
Philippines vs. Atlanta Industries, Inc., 729 SCRA 12, G.R. No. 193796 July 2, 2014

MITSUBISHI CORPORATION - MANILA BRANCH, Petitioner, vs. COMMISSIONER OF

INTERNAL REVENUE, Respondent.
G.R. No. 175772 | June 5, 2017 | PERLAS-BERNABE, J.:

Facts:
On June 11, 1987, the governments of Japan and the Philippines executed an Exchange of Notes,
whereby the former agreed to extend a loan amounting to Forty Billion Four Hundred Million
Japanese Yen (¥40,400,000,000) to the latter through the then Overseas Economic Cooperation
Fund (OECF, now Japan Bank for International Cooperation) for the implementation of the Calaca
II Coal-Fired Thermal Power Plant Project (Project). In Paragraph 5 (2) of the Exchange of Notes,
the Philippine Government, by itself or through its executing agency, undertook to assume all
taxes imposed by the Philippines on Japanese contractors engaged in the Project.

Consequently, the OECF and the Philippine Government entered into Loan Agreement No. PH-
P768 dated September 25, 1987 for Forty Billion Four Hundred Million Japanese Yen
(¥40,400,000,000). Due to the need for additional funding for the Project, they also executed Loan
Agreement No. PH-P1419 dated December 20, 1994 for Five Billion Five Hundred Thirteen Million
Japanese Yen (¥5,513,000,000). Meanwhile, on June 21, 1991, the National Power Corporation
(NPC), as the executing government agency, entered into a contract with Mitsubishi Corporation
(i.e., petitioner's head office in Japan) for the engineering, supply, construction, installation,
testing, and commissioning of a steam generator, auxiliaries, and associated civil works for the
Project (Contract). The Contract's foreign currency portion was funded by the OECF loans. In line
with the Exchange of Notes, Article VIII (B) (1) of the Contract indicated NPC's undertaking to pay
any and all forms of taxes that are directly imposable under the Contract.

Petitioner completed the project on December 2, 1995, but it was only accepted by NPC on
January 31, 1998 through a Certificate of Completion and Final Acceptance. On July 15, 1998,
petitioner filed its Income Tax Return for the fiscal year that ended on March 31, 1998 with the
Bureau of Internal Revenue (BIR). Petitioner included in its income tax due the amount of P
44,288,712.00, representing income from the OECF-funded portion of the Project. On the same
day, petitioner also filed its Monthly Remittance Return of Income Taxes Withheld and remitted P
8,324,100.00 as BPRT for branch profits remitted to its head office in Japan out of its income for
the fiscal year that ended on March 31, 1998.

In a Decision dated December 17, 2003, the CTA Division granted the petition and ordered the
CIR to refund to petitioner the amounts it erroneously paid as income tax and BPRT. It held that
based on the Exchange of Notes, the Philippine Government, through the NPC as its executing
agency, bound itself to assume or shoulder petitioner's tax obligations. Therefore, petitioner's
payments of income tax and BPRT to the CIR, when such payments should have been made by
the NPC, undoubtedly constitute erroneous payments under Section 229 of the NIRC.

The CIR moved for reconsideration but was denied in a Resolution dated April 23, 2004; thus, the
CIR elevated the matter to the CTA En Banc. In a Decision dated May 24, 2006, the CTA En Banc
reversed the CTA Division's rulings and declared that petitioner is not entitled to a refund of the
taxes it paid to the CIR. Petitioner sought reconsideration, but the CTA En Banc denied the motion
in a Resolution dated December 4, 2006.

Issues:

Whether or not Mitsubishi Corporation – Manila Branch is entitled to a refund. Whether or not the
Bureau of Internal Revenue should be the authorized government agency where the tax refund
be claimed.

Held:

Yes, the petitioner is entitled to a refund. The CIR subsequently affirmed petitioner's non-liability
for taxes and entitlement to tax refunds by issuing Revenue Memorandum Order (RMO) No. 24-
200547 addressed to specified BIR offices. The RMO provides: Pursuant to the provisions of
RMC No. 32-99 as amended by RMC No. 42-99, Japanese contractors and nationals engaged in
OECF funded projects in the Philippines shall not be required to shoulder the fiscal levies or taxes
associated with the project. Therefore, the concerned Japanese contractors are entitled to claim
for the refund of all taxes paid and shouldered by them relative to the conduct of the Project. Also,
considering that petitioner paid the subject taxes in the aggregate amount of P 52,612,812.00,
which it was not required to pay, the BIR erroneously collected such amount.

On another issue, yes, the Bureau of Internal Revenue should be the authorized government
agency where the tax refund be claimed. The Supreme Court held that in Sections 204 (C) of the
NIRC grants the CIR the authority to credit or refund taxes which are erroneously collected by the
government. The authority of the CIR to refund erroneously collected taxes is likewise reflected
in Section 229 of the NIRC.

In this case, it is fairly apparent that the subject taxes in the amount of P 52,612,812.00 was
erroneously collected from petitioner, considering that the obligation to pay the same had already
been assumed by the Philippine Government by virtue of its Exchange of Notes with the Japanese
Government. Case law explains that an exchange of notes is considered as an executive
agreement, which is binding on the State even without Senate concurrence.

Hence, the petition is GRANTED. The Decision dated May 24, 2006 and the Resolution dated
December 4, 2006 of the Court of Tax Appeals (CTA) En Banc are REVERSED and SET ASIDE.
The Decision dated December 17, 2003 of the CTA is REINSTATED.

ESCRA
Political Law; Executive Agreements; Exchange of Notes; Case law explains that an exchange of
notes is considered as an executive agreement, which is binding on the State even without Senate
concurrence.—In this case, it is fairly apparent that the subject taxes in the amount of
P52,612,812.00 was erroneously collected from petitioner, considering that the obligation to pay
the same had already been assumed by the Philippine Government by virtue of its Exchange of
Notes with the Japanese Government. Case law explains that an exchange of notes is considered
as an executive agreement, which is binding on the State even without Senate concurrence. In
Abaya v. Ebdane, 515 SCRA 720 (2007): An “exchange of notes” is a record of a routine
agreement that has many similarities with the private law contract. The agreement consists of the
exchange of two documents, each of the parties being in the possession of the one signed by the
representative of the other. Under the usual procedure, the accepting State repeats the text of
the offering State to record its assent. The signatories of the letters may be government Ministers,
diplomats or departmental heads. The technique of exchange of notes is frequently resorted to,
either because of its speedy procedure, or, sometimes, to avoid the process of legislative
approval. It is stated that “treaties, agreements, conventions, charters, protocols, declarations,
memoranda of understanding, modus vivendi and exchange of notes” all refer to “international
instruments binding at international law.” x x x x Significantly, an exchange of notes is considered
a form of an executive agreement, which becomes binding through executive action without the
need of a vote by the Senate or Congress.

Taxation; Exchange of Notes; Tax Assumption Provision; Paragraph 5(2) of the Exchange of
Notes provides for a tax assumption provision whereby the Government of the Republic of the
Philippines will, itself or through its executing agencies or instrumentalities, assume all fiscal
levies or taxes imposed in the Republic of the Philippines on Japanese firms and nationals
operating as suppliers, contractors or consultants on and/or in connection with any income that
may accrue from the supply of products of Japan and services of Japanese nationals to be
provided under the Loan.—Paragraph 5(2) of the Exchange of Notes provides for a tax
assumption provision whereby: (2) The Government of the Republic of the Philippines will, itself
or through its executing agencies or instrumentalities, assume all fiscal levies or taxes imposed
in the Republic of the Philippines on Japanese firms and nationals operating as suppliers,
contractors or consultants on and/or in connection with any income that may accrue from the
supply of products of Japan and services of Japanese nationals to be provided under the Loan.
(Emphases and underscoring supplied) To “assume” means “[t]o take on, become bound as
another is bound, or put oneself in place of another as to an obligation or liability.” This means
that the obligation or liability remains, although the same is merely passed on to a different person.
In this light, the concept of an assumption is therefore different from an exemption, the latter being
the “[f]reedom from a duty, liability or other requirement” or “[a] privilege given to a judgment
debtor by law, allowing the debtor to retain [a] certain property without liability.” Thus, contrary to
the CTA En Banc’s opinion, the constitutional provisions on tax exemptions would not apply.

Same; Same; Same; The Philippine Government’s assumption of “all fiscal levies and taxes,”
which includes the subject taxes, is clearly a form of concession given to Japanese suppliers,
contractors or consultants in consideration of the Overseas Economic Cooperation Fund (OECF)
Loan, which proceeds were used for the implementation of the Project.—As explicitly worded, the
Philippine Government, through its executing agencies (i.e., NPC in this case) particularly
assumed “all fiscal levies or taxes imposed in the Republic of the Philippines on Japanese firms
and nationals operating as suppliers, contractors or consultants on and/or in connection with any
income that may accrue from the supply of products of Japan and services of Japanese nationals
to be provided under the [OECF] Loan.” The Philippine Government’s assumption of “all fiscal
levies and taxes,” which includes the subject taxes, is clearly a form of concession given to
Japanese suppliers, contractors or consultants in consideration of the OECF Loan, which
proceeds were used for the implementation of the Project. As part of this, NPC entered into the
June 21, 1991 Contract with Mitsubishi Corporation (i.e., petitioner’s head office in Japan) for the
engineering, supply, construction, installation, testing, and commissioning of a steam generator,
auxiliaries, and associated civil works for the Project, which foreign currency portion was funded
by the OECF loans. Thus, in line with the tax assumption provision under the Exchange of Notes,
Article VIII(B)(1) of the Contract states that NPC shall pay any and all forms of taxes that are
directly imposable under the Contract: Article VIII(B)(1) B. FOR ONSHORE PORTION. 1.) [The]
CORPORATION (NPC) shall, subject to the provisions under the Contract [Document] on Taxes,
pay any and all forms of taxes which are directly imposable under the Contract including VAT,
that may be imposed by the Philippine Government, or any of its agencies and political
subdivisions.

Same; Tax Refund; Considering that petitioner paid the subject taxes in the aggregate amount of
P52,612,812.00, which it was not required to pay, the Bureau of Internal Revenue (BIR)
erroneously collected such amount. Accordingly, petitioner is entitled to its refund.—It bears
stressing that the CIR had already acknowledged, through its administrative issuances, that
Japanese contractors involved in the Project are not liable for the subject taxes. In RMC No. 42-
99, the CIR interpreted the effect of the tax assumption clause in the Exchange of Notes on
petitioner’s tax liability, to wit: The foregoing provisions of the Exchange of Notes mean that the
Japanese contractors or nationals engaged in EOCF-funded projects in the Philippines shall not
be required to shoulder all fiscal levies or taxes associated with the project. x x x x x x x x x
Since the executing government agencies are mandated to assume the payment of [income
taxes] under the Exchange of Notes, the said Japanese firms or nationals need not pay taxes due
thereunder. (Emphases and underscoring supplied) The CIR subsequently affirmed petitioner’s
non-liability for taxes and entitlement to tax refunds by issuing Revenue Memorandum Order
(RMO) No. 24-2005 addressed to specified BIR offices. The RMO provides: Pursuant to the
provisions of [RMC] No. 32-99 as amended by RMC No. 42-99, Japanese contractors and
nationals engaged in OECF-funded projects in the Philippines shall not be required to shoulder
the fiscal levies or taxes associated with the project. Thus, the concerned Japanese contractors
are entitled to claim for the refund of all taxes paid and shouldered by them relative to the conduct
of the Project. You are, therefore, directed to expedite/prioritize the processing of the claims for
refund of Japanese contractors and nationals so [as] not to delay and jeopardize the release of
the funds for OECF-funded projects. (Emphases and underscoring supplied) Therefore,
considering that petitioner paid the subject taxes in the aggregate amount of P52,612,812.00,
which it was not required to pay, the BIR erroneously collected such amount. Accordingly,
petitioner is entitled to its refund.

Same; Same; The National Internal Revenue Code (NIRC) vests upon the Commissioner of
Internal Revenue (CIR), being the head of the Bureau of Internal Revenue (BIR), the authority to
credit or refund taxes which are erroneously collected by the government.—The NIRC vests upon
the CIR, being the head of the BIR, the authority to credit or refund taxes which are erroneously
collected by the government. This specific statutory mandate cannot be overridden by averse
interpretations made through mere administrative issuances, such as RMC No. 42-99, which —
as argued by the CIR –– shifts to the executing agencies (particularly, NPC in this case) the power
to refund the subject taxes: 3. In cases where income taxes were previously paid directly by the
Japanese contractors or nationals, the corresponding cash refund shall be recovered from the
government executing agencies upon the presentation of proof of payment by the Japanese
contractors or nationals.

DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Petitioner, vs.

CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE, Respondent.
G.R. No. 179732 | September 13, 2017 | LEONEN, J.,
FACTS:

On April 29, 1999, Republic of the Philippines, through the Department of Public Works and
Highways (DPWH), and CMC/Monark/Pacific/Hi-Tri J.V. (the Joint Venture) executed “Contract
Agreement for the Construction of Contract Pack-age 6MI-9, Pagadian-Buug Section,
Zamboanga del Sur, Sixth Road Project, Road Improvement Component Loan No. 1473-PHI”3
(Contract) for a total contract amount of P713,330,885.28.4

Parts I (General Conditions with forms of tender + agree-ment) and II (Conditions of Particular
Application + Guide­lines for Preparation of Part II Clauses) of the “Conditions of Contract for
Works of Civil Engineering Construction of the Federation International Des Ingenieurs —
Conseils” (Con­ditions of Contract) formed part of the Contract.5 DPWH hired BCEOM French
Engineering Consultants to oversee the project.6

On October 23, 2002, or while the project was ongoing, the Joint Venture’s truck and equipment
were set on fire. On March 11, 2003, a bomb exploded at Joint Venture’s hatching plant located
at Brgy. West Boyogan, Kumalarang, Zam-boanga del Sur. According to reports, the bombing
incident was caused by members of the Moro Islamic Liberation Front.7

The Joint Venture made several written demands for exten-sion and payment of the foreign
component of the Contract. There were efforts between the parties to settle the unpaid Payment
Certificates amounting to P26,737,029.49. Thus, only the foreign component of US$358,227.95
was up for negotiations subject to further reduction of the amount on account of payments
subsequently received by the Joint Venture from DPWH.8

In a letter dated September 18, 2003, BCEOM French Engineering Consultants recommended
that DPWH promptly pay the outstanding monies due the Joint Venture.9 The letter also stated
that the actual volume of the Joint Venture’s accomplishment was “2,732m2 of hardrock and
4,444m3 of rippable rock,” making the project 80% complete when it was halted.

CLAIMANT’S CLAIM

Meanwhile, on July 8, 2004, the Joint Venture sent a “Notice of Mutual Termination of Contract”13
to DPWH requesting for a mutual termination of the contract subject of the arbitration case. This
is due to its diminished financial capability due to DPWH’s late payments, changes in the project
involving payment terms, peace and order problems, and previous agreement by the parties.

On July 16, 2004, then DPWH Acting Secretary Florante Soriquez accepted the Joint Venture’s
request for mutual termination of the contract.

CLAIMANT’S CLAIM
Meanwhile, on July 8, 2004, the Joint Venture sent a “Notice of Mutual Termination of Contract”13
to DPWH requesting for a mutual termination of the contract subject of the arbitration case. This
is due to its diminished financial capability due to DPWH’s late payments, changes in the project
involving payment terms, peace and order problems, and previous agreement by the parties.

On July 16, 2004, then DPWH Acting Secretary Florante Soriquez accepted the Joint Venture’s
request for mutual termination of the contract.14
DPWH and the Joint Venture filed their respective petitions for review before the Court of
Appeals.19

The Court of Appeals in its Decision20 dated September 20, 2007, sustained CIAC’s Award with
certain modifications and remanded the case to CIAC for the determination of the number of days’
extension that the Joint Venture is entitled to and “the conversion rate in pesos of the awarded
foreign exchange payments stated.”21

The Court of Appeals held that CIAC did not commit reversible error in not awarding the price
adjustment sought by the Joint Venture under Presidential Decree No. 1594 since it was the Asian
Development Bank’s Guidelines on procurement that was applicable and not Presidential Decree
No. 1594.22

The Court of Appeals also held that CIAC did not err in not awarding actual damages in the form
of interest at the rate of 24% since there was no provision for such interest payment in the
Contract. However, the Court of Appeals ruled that CIAC was correct when it awarded legal
interest.23

The Court of Appeals sustained the Joint Venture’s argument on the noninclusion of a clear finding
of its entitlement to time extensions in the dispositive portion of the CIAC Award.24 The Court of
Appeals held that CIAC did not clearly dispose of the matter:

Yet, a close scrutiny of the foregoing disposition shows that it does not refer to the 133 days as
per Variation Order No. 2 since CIAC made mention that the project is already terminated and
the entire volume under said Order “will not be consumed.” Whether or not the Claimant then
deserves to get the full 133 calendar days is a matter that has to be clearly resolved. On this, We
hold that this Court is not prepared to engage into a technical bout that only the expertise of the
CIAC can pass upon.25

On the other hand, the Court of Appeals did not accept DPWH’s argument that the case was
already moot and academic. According to the Court of Appeals, when the Joint Venture requested
for the mutual termination of the Contract on July 8, 2004, it did not waive its right to be paid the
amounts due to it.26

The Court of Appeals, however, raised a concern with regard to CIAC’s order for DPWH to pay
its liabilities in US dollars. It held that the parties have agreed that “all payments for works carried
out after 31 May 2003 and related price escalation claims and retention releases in the contract
will be in pesos only, therefore no foreign exchange payments.” This was never contested by the
Joint Venture; hence, it may be presumed that it acquiesced to the request of the DPWH.27

ESCRA

Executive Agreements; Foreign Loan Agreements; A foreign loan agreement with international
financial institutions, such as a multilateral lending agency organized by governments like the
Asian Development Bank, is an executive or international agreement contemplated by our
government procurement system.—This Court has held that a foreign loan agreement with
international financial institu-tions, such as a multilateral lending agency organized by
govern-ments like the Asian Development Bank, is an executive or inter-national agreement
contemplated by our government procure-ment system.

Escra topics without facts yet:

Province of North Cotabato vs. Government of the Republic of the Philippines Peace Panel
on Ancestral Domain (GRP), 568 SCRA 402, G.R. No. 183591 October 14, 2008
FACTS:
On 8 August 2008, the Government of the Republic of the Philippines (GRP), represented by the
GRP Peace Panel and the Presidential Adviser on the Peace Process (PAPP), and the Moro
Islamic Liberation Front (MILF) were scheduled to sign the Memorandum of Agreement on the
Ancestral Domain (MOA-AD)Aspect of the previous GRP-MILF Tripoli Agreement on Peace of
2001 in Kuala Lumpur, Malaysia.The MOA-AD included, among others, a stipulation that creates
the Bangsamoro Juridical Entity (BJE), to which the GRP grants the authority and jurisdiction over
the ancestral domain and ancestral lands of the Bangsamoro—defined as the present geographic
area of the ARMM constituted by Lanao del Sur,Maguindanao, Sulu, Tawi-Tawi, Basilan, and
Marawi City, as well as the municipalities of Lanao del Norte which voted for inclusion inthe ARMM
in the 2001 plebiscite. The BJE is then granted the power to build, develop, and maintain its own
institutions. The MOA-AD also described the relationship of the GRP and the BJE as“associative,”
characterized by shared authority and responsibility. It further provides that its provisions requiring
“amendments to the existing legal framework” shall take effect upon signing of a Comprehensive
Compact.Before the signing, however, the Province of North Cotabato sought to compel the
respondents to disclose and furnish it with complete and official copies of the MOA-AD, as well
as to hold a public consultation thereon, invoking its right to information on matters of public
concern. A subsequent petition sought to have the City of Zamboanga excluded from the BJE.
The Court then issued a Temporary Restraining Order (TRO) on 4 August 2008, directing the
public respondents and their agents to cease and desist from formally signing the MOA-AD

ESCRA
PIL topic
International Law; “Associated State”; The Memorandum of Agreement on Ancestral Domain
(MOA-AD) contains many provisions which are consistent with the international legal concept of
association.—In international practice, the “associated state” arrangement has usually been used
as a transitional device of former colonies on their way to full independence. Examples of states
that have passed through the status of associated states as a transitional phase are Antigua, St.
Kitts-Nevis-Anguilla, Dominica, St. Lucia, St. Vincent and Grenada. All have since become
independent states. Back to the MOA-AD, it contains many provisions which are consistent with
the international legal concept of association, specifically the following: the BJE’s capacity to enter
into economic and trade relations with foreign countries, the commitment of the Central
Government to ensure the BJE’s participation in meetings and events in the ASEAN and the
specialized UN agencies, and the continuing responsibility of the Central Government over
external defense. Moreover, the BJE’s right to participate in Philippine official missions bearing
on negotiation of border agreements, environmental protection, and sharing of revenues
pertaining to the bodies of water adjacent to or between the islands forming part of the ancestral
domain, resembles the right of the governments of FSM and the Marshall Islands to be consulted
by the U.S. government on any foreign affairs matter affecting them. These provisions of the MOA
indicate, among other things, that the Parties aimed to vest in the BJE the status of an associated
state or, at any rate, a status closely approximating it. Province of North Cotabato vs. Government
of the Republic of the Philippines Peace Panel on Ancestral Domain (GRP), 568 SCRA 402, G.R.
No. 183591 October 14, 2008

Same; Same; That the Memorandum of Agreement on Ancestral Domain (MOA-AD) would have
been signed by representatives of States and international organizations not parties to the
Agreement would not have sufficed to vest in it a binding character under international law.—That
the MOA-AD would have been signed by representatives of States and international organizations
not parties to the Agreement would not have sufficed to vest in it a binding character under
international law.

Same; Same; The mere fact that in addition to the parties to the conflict, the peace settlement is
signed by representatives of states and international organizations does not mean that the
agreement is internationalized so as to create obligations in international law.—Assessing the
MOA-AD in light of the above criteria, it would not have amounted to a unilateral declaration on
the part of the Philippine State to the international community. The Philippine panel did not draft
the same with the clear intention of being bound thereby to the international community as a whole
or to any State, but only to the MILF. While there were States and international organizations
involved, one way or another, in the negotiation and projected signing of the MOA-AD, they
participated merely as witnesses or, in the case of Malaysia, as facilitator. As held in the Lomé
Accord case, the mere fact that in addition to the parties to the conflict, the peace settlement is
signed by representatives of states and international organizations does not mean that the
agreement is internationalized so as to create obligations in international law.

Same; Same; The Memorandum of Agreement on Ancestral Domain (MOA-AD) may not be
considered a unilateral declaration under international law.—In one important respect, the
circumstances surrounding the MOA-AD are closer to that of Burkina Faso wherein, as already
discussed, the Mali President’s statement was not held to be a binding unilateral declaration by
the ICJ. As in that case, there was also nothing to hinder the Philippine panel, had it really been
its intention to be bound to other States, to manifest that intention by formal agreement. Here,
that formal agreement would have come about by the inclusion in the MOA-AD of a clear
commitment to be legally bound to the international community, not just the MILF, and by an
equally clear indication that the signatures of the participating states-representatives would
constitute an acceptance of that commitment. Entering into such a formal agreement would not
have resulted in a loss of face for the Philippine government before the international community,
which was one of the difficulties that prevented the French Government from entering into a formal
agreement with other countries. That the Philippine panel did not enter into such a formal
agreement suggests that it had no intention to be bound to the international community. On that
ground, the MOA-AD may not be considered a unilateral declaration under international law.
Province of North Cotabato vs. Government of the Republic of the Philippines Peace Panel on
Ancestral Domain (GRP), 568 SCRA 402, G.R. No. 183591 October 14, 2008
PUNO, C.J., Separate Concurring Opinion:
Constitutional Law; Certiorari; International Law; If the Memorandum of Agreement on Ancestral
Domain (MOA-AD) is constitutionally infirm, it is because the conduct of the peace process itself
is flawed; Court should not restrict its review on the validity of the Memorandum of Agreement on
Ancestral Domain (MOA-AD) which is but the end product of the flawed conduct of the peace
negotiation with the Moro Islamic Liberation Front (MILF).—It is crystal clear that the initialing of
the MOA-AD is but the evidence of the government peace negotiating panel’s assent to the terms
contained therein. If the MOA-AD is constitutionally infirm, it is because the conduct of the peace
process itself is flawed. It is the constitutional duty of the Court is to determine whether there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
government peace negotiating panel in the conduct of the peace negotiations with the MILF. The
Court should not restrict its review on the validity of the MOA-AD which is but the end product of
the flawed conduct of the peace negotiation with the MILF.

Same; Same; Actions; Judicial Review; Where a controversy concerns fundamental constitutional
questions, the threshold must be adjusted to allow judicial scrutiny, in order that the issues may
be resolved at the earliest stage before anything irreversible is undertaken under cover of an
unconstitutional act.—In contending that this Court should refrain from resolving the merits of the
petitions at bar, two principal defenses were deployed by the Solicitor General: the issues raised
for resolution are not ripe for adjudication and regardless of their ripeness, are moot. With due
respect, the defenses cannot be sustained. To contend that an issue is not ripe for adjudication
is to invoke prematurity; that the issue has not reached a state where judicial intervention is
necessary, hence, there is in reality no actual controversy. On the other hand, to urge that an
issue has become moot concedes that judicial intervention was once proper but subsequent
developments make further judicial action unnecessary. Together, mootness and ripeness act as
a two-pronged pincer, squeezing the resolution of controversies within a narrow timeframe. First,
the issues at bar are ripe for resolution. In Ohio Forestry Ass’n., Inc. v. Sierra Club, 523 U.S. 726
(1998), the following factors were identified as indicative of the ripeness of a controversy: 1.
Whether delayed review would cause hardship to the plaintiffs; 2. Whether judicial intervention
would inappropriately interfere with further administrative action; 3. Whether the Court would
benefit from further factual development of the issues presented; Underlying the use of the
foregoing factors is first, the setting of a threshold for review and second, judicial application of
the threshold to the facts extant in a controversy. I respectfully submit that where a controversy
concerns fundamental constitutional questions, the threshold must be adjusted to allow judicial
scrutiny, in order that the issues may be resolved at the earliest stage before anything irreversible
is undertaken under cover of an unconstitutional act. Schwartz cites one vital consideration in
determining ripeness, viz.: In dealing with ripeness, one must distinguish between statutes and
other acts that are self-executing and those that are not. If a statute is self executing, it is ripe for
challenge as soon as it is enacted. For such a statute to be subject to judicial review, it is not
necessary that it be applied by an administrator, a prosecutor, or some other enforcement officer
in a concrete case. Although Schwartz employs the term “statute,” he qualifies that the principle
enunciated applies to other governmental acts as well.
Same; Same; Same; An actual controversy must be extant at all stages of judicial review, not
merely at the time the complaint is filed.—We now come to respondents’ argument on mootness.
In determining whether a case has been rendered moot, courts look at the development of events
to ascertain whether the petitioner making the constitutional challenge is confronted with a
continuing harm or a substantial potential of harm. Mootness is sometimes viewed as “the doctrine
of standing set in a time frame: The requisite personal interest must exist at the commencement
of the litigation and must continue throughout its existence.” Stated otherwise, an actual
controversy must be extant at all stages of judicial review, not merely at the time the complaint is
filed.
Same; Same; Same; Moot and Academic; The petitions at bar fall within that exceptional class of
cases which ought to be decided despite their mootness because the complained unconstitutional
acts are “capable of repetition yet evading review.”—Respondents insist that the petitions at bar
are moot for three reasons: (1) the petitioners North Cotabato and Zamboanga have already been
furnished copies of the MOA-AD; (2) the Executive Secretary has issued a Memorandum that the
government will not sign the MOA-AD and, (3) the GRP Peace Panel has been dissolved by the
President. These grounds are barren grounds. For one, the press statements of the Presidential
Adviser on the Peace Process, Gen. Hermogenes Esperon, Jr., are clear that the MOA-AD will
still be used as a major reference in future negotiations. For another, the MILF considers the
MOA-AD a “done deal,” hence, ready for implementation. On the other hand, the peace panel
may have been temporarily dismantled but the structures set up by the Executive and their
guidelines which gave rise to the present controversy remain intact. With all these realities, the
petitions at bar fall within that exceptional class of cases which ought to be decided despite their
mootness because the complained unconstitutional acts are “capable of repetition yet evading
review.”

Same; Same; The President as Chief Executive can negotiate peace with the Moro Islamic
Liberation Front (MILF) but it is peace that will insure that our laws are faithfully executed; The
power of the President to negotiate peace with the Moro Islamic Liberation Front (MILF) is not
plenary.—The President as Chief Executive can negotiate peace with the MILF but it is peace
that will insure that our laws are faithfully executed. The President can seek peace with the MILF
but without crossing the parameters of powers marked in the Constitution to separate the other
branches of government to preserve our democracy. For even in times of war, our system of
checks and balances cannot be infringed. More so in times where the only danger that faces the
State is the lesser danger of rebellion. Needless to stress, the power of the President to negotiate
peace with the MILF is not plenary. While a considerable degree of flexibility and breadth is
accorded to the peace negotiating panel, the latitude has its limits—the Constitution. The
Constitution was ordained by the sovereign people and its postulates may not be employed as
bargaining chips without their prior consent.
Same; Same; There is no power nor is there any right to violate the Constitution on the part of
any official of government.—There is no power nor is there any right to violate the Constitution on
the part of any official of government. No one can claim he has a blank check to violate the
Constitution in advance and the privilege to cure the violation later through amendment of its
provisions. Respondents’ thesis of violate now, validate later makes a burlesque of the
Constitution. Province of North Cotabato vs. Government of the Republic of the Philippines Peace
Panel on Ancestral Domain (GRP), 568 SCRA 402, G.R. No. 183591 October 14, 2008
Same; Same; International Law; Under domestic law, the Memorandum of Agreement on
Ancestral Domain (MOA-AD) cannot receive recognition as a legally binding agreement due to
the absence of the indispensable requisite of consent to be bound.—Consent is indubitably
manifested through the signature of the parties. That the Philippine government has not yet
consented to be bound by the MOA-AD is indubitable. The parties had agreed to a formal
signature ceremony in the presence of the Secretary of Foreign Affairs, the alter ego of the
President of the Philippines. The ceremony never took place. The MOA-AD itself expresses that
consent was to manifested by the affixation of signatures, not the affixation of initials. In addition,
the subsequent announcement by the President that the Philippine Government will not sign the
MOA-AD further establishes the absence of consent on the part of the Philippines to the MOA-
AD. Under domestic law, the MOA-AD cannot receive recognition as a legally binding agreement
due to the absence of the indispensable requisite of consent to be bound. Province of North
Cotabato vs. Government of the Republic of the Philippines Peace Panel on Ancestral Domain
(GRP), 568 SCRA 402, G.R. No. 183591 October 14, 2008
Same; Same; Grave Abuse of Discretion; Grave abuse of discretion can characterize only
consummated acts (or omissions), not an “almost (but not quite) consummated act.”—The
ponencia would wish to get around this inescapable truth by saying: “The MOA-AD not being a
document that can bind the Philippines under international law notwithstanding, respondents’
almost consummated act of guaranteeing amendments to the legal framework is, by itself,
sufficient to constitute grave abuse of discretion.” With due respect, I beg to disagree. Grave
abuse of discretion can characterize only consummated acts (or omissions), not an “almost (but
not quite) consummated act.” Province of North Cotabato vs. Government of the Republic of the
Philippines Peace Panel on Ancestral Domain (GRP), 568 SCRA 402, G.R. No. 183591 October
14, 2008

Constantino, Jr. vs. Cuisia, 472 SCRA 505, G.R. No. 106064 October 13, 2005 (RENATO V
ROSARIO UNG SA SYLLABUS)

FACTS:
Petition for certiorari, prohibition and mandamus of the Philippine Comprehensive Program for
1992. Petitioners are members of the non-government organization, Freedom from Debt
Coalition, which advocates a “pro-people and just Philippine debt policy.” They question the
Financing Program started by then President Corazon Aquino, characterized as a “multi-option
financing package”, wherein the President entered into three restructuring agreements with
foreign creditor governments. Petitioners stress that unlike other powers which may be validly
delegated by the President, the power to incur foreign debts is expressly reserved by the
Constitution in the person of the President.

ISSUE:
1. WON the President can borrow to meet publice expenditures in the form of bond.
2. WON the President can delegate the power to incur foreign debts to other executive
agencies.

ESCRA
*no specific international law topic found
Same; Same; Same; Obligations; It may not be amiss to recognize that there are many advocates
of the position that the Republic should renege on obligations that are considered as
“illegitimate.”—It may not be amiss to recognize that there are many advocates of the position
that the Republic should renege on obligations that are considered as “illegitimate.” However,
should the executive branch unilaterally, and possibly even without prior court determination of
the validity or invalidity of these contracts, repudiate or otherwise declare to the international
community its resolve not to recognize a certain set of “illegitimate” loans, adverse repercussions
would come into play. Constantino, Jr. vs. Cuisia, 472 SCRA 505, G.R. No. 106064 October 13,
2005
Consti Topic
Constitutional Law; Executive Department; Qualified Political Agency; Each head of a department
is, and must be, the President’s alter ego in the matters of that department where the President
is required by law to exercise authority.—Necessity thus gave birth to the doctrine of qualified
political agency, later adopted in Villena v. Secretary of the Interior from American jurisprudence,
viz.: With reference to the Executive Department of the government, there is one purpose which
is crystal-clear and is readily visible without the projection of judicial searchlight, and that is the
establishment of a single, not plural, Executive. The first section of Article VII of the Constitution,
dealing with the Executive Department, begins with the enunciation of the principle that “The
executive power shall be vested in a President of the Philippines.” This means that the President
of the Philippines is the Executive of the Government of the Philippines, and no other. The heads
of the executive departments occupy political positions and hold office in an advisory capacity,
and, in the language of Thomas Jefferson, “should be of the President's bosom confidence” (7
Writings, Ford ed., 498), and, in the language of Attorney-General Cushing (7 Op., Attorney-
General, 453), “are subject to the direction of the President.” Without minimizing the importance
of the heads of the various departments, their personality is in reality but the projection of that of
the President. Stated otherwise, and as forcibly characterized by Chief Justice Taft of the
Supreme Court of the United States, “each head of a department is, and must be, the President’s
alter ego in the matters of that department where the President is required by law to exercise
authority” (Myers vs. United States, 47 Sup. Ct. Rep., 21 at 30; 272 U.S., 52 at 133; 71 Law. ed.,
160). Constantino, Jr. vs. Cuisia, 472 SCRA 505, G.R. No. 106064 October 13, 2005
PANGANIBAN, J.: Separate Opinion:

Constitutional Law; Executive Department; Indubitably, former President Corazon C. Aquino’s

decision to honor the outstanding debts of the Republic at the time she assumed the presidency
was a policy matter well within her prerogative.—Former President Corazon C. Aquino’s decision
to honor the outstanding debts of the Republic at the time she assumed the presidency was a
policy matter well within her prerogative. It was purely an executive call; hence, beyond judicial
scrutiny. The Petition has failed to show grave abuse of discretion that would warrant judicial
intervention. I agree with the ponencia of the distinguished Mr. Justice Dante O. Tinga: not only
was the act of President Aquino impliedly granted via her vast executive powers; it was also
explicitly authorized under Section 20 of Article VII of the Constitution. Constantino, Jr. vs. Cuisia,
472 SCRA 505, G.R. No. 106064 October 13, 2005.