TAADA VS ANGARA

EN BANC
[G.R. No. 118295. May 2, 1997]
WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the Philippine
Senate and as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the
House of Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R.
MORALES, both as taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC
PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT
INITIATIVES, LIKAS-KAYANG KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL
RECONSTRUCTION MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG
PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in representation of various
taxpayers and as non-governmental organizations, petitioners, vs. EDGARDO ANGARA,
ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON ALVAREZ, AGAPITO
AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO HERRERA, JOSE LINA,
GLORIA MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEA,
SANTANINA RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE
WEBB, in their respective capacities as members of the Philippine Senate who concurred in
the ratification by the President of the Philippines of the Agreement Establishing the World
Trade Organization; SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget and
Management; CARIDAD VALDEHUESA, in her capacity as National Treasurer; RIZALINO
NAVARRO, in his capacity as Secretary of Trade and Industry; ROBERTO SEBASTIAN, in
his capacity as Secretary of Agriculture; ROBERTO DE OCAMPO, in his capacity as
Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs;
and TEOFISTO T. GUINGONA, in his capacity as Executive Secretary, respondents.
D E C I S I O N
PANGANIBAN, J.:
The emergence on January 1, 1995 of the World Trade Organization, abetted by the
membership thereto of the vast majority of countries has revolutionized international
business and economic relations amongst states. It has irreversibly propelled the world
towards trade liberalization and economic globalization. Liberalization, globalization,
deregulation and privatization, the third-millennium buzz words, are ushering in a new
borderless world of business by sweeping away as mere historical relics the heretofore
traditional modes of promoting and protecting national economies like tariffs, export
subsidies, import quotas, quantitative restrictions, tax exemptions and currency controls.
Finding market niches and becoming the best in specific industries in a market-driven and
export-oriented global scenario are replacing age-old beggar-thy-neighbor policies that
unilaterally protect weak and inefficient domestic producers of goods and services. In the
words of Peter Drucker, the well-known management guru, Increased participation in the
world economy has become the key to domestic economic growth and prosperity.
Brief Historical Background
To hasten worldwide recovery from the devastation wrought by the Second World War,
plans for the establishment of three multilateral institutions -- inspired by that grand
political body, the United Nations -- were discussed at Dumbarton Oaks and Bretton
Woods. The first was the World Bank (WB) which was to address the rehabilitation and
reconstruction of war-ravaged and later developing countries; the second, the International
Monetary Fund (IMF) which was to deal with currency problems; and the third, the
International Trade Organization (ITO), which was to foster order and predictability in world
trade and to minimize unilateral protectionist policies that invite challenge, even retaliation,
from other states. However, for a variety of reasons, including its non-ratification by the
United States, the ITO, unlike the IMF and WB, never took off. What remained was only
GATT -- the General Agreement on Tariffs and Trade. GATT was a collection of treaties
governing access to the economies of treaty adherents with no institutionalized body
administering the agreements or dependable system of dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the Kennedy
Round, the Tokyo Round and the Uruguay Round, the world finally gave birth to that
administering body -- the World Trade Organization -- with the signing of the Final Act in
Marrakesh, Morocco and the ratification of the WTO Agreement by its members.i[1]
Like many other developing countries, the Philippines joined WTO as a founding member
with the goal, as articulated by President Fidel V. Ramos in two letters to the Senate (infra),
of improving Philippine access to foreign markets, especially its major trading partners,
through the reduction of tariffs on its exports, particularly agricultural and industrial
products. The President also saw in the WTO the opening of new opportunities for the
services sector x x x, (the reduction of) costs and uncertainty associated with exporting x x
x, and (the attraction of) more investments into the country. Although the Chief Executive
did not expressly mention it in his letter, the Philippines - - and this is of special interest to
the legal profession - - will benefit from the WTO system of dispute settlement by judicial
adjudication through the independent WTO settlement bodies called (1) Dispute Settlement
Panels and (2) Appellate Tribunal. Heretofore, trade disputes were settled mainly through
negotiations where solutions were arrived at frequently on the basis of relative bargaining
strengths, and where naturally, weak and underdeveloped countries were at a
disadvantage.
The Petition in Brief
Arguing mainly (1) that the WTO requires the Philippines to place nationals and products
of member-countries on the same footing as Filipinos and local products and (2) that the
WTO intrudes, limits and/or impairs the constitutional powers of both Congress and the
Supreme Court, the instant petition before this Court assails the WTO Agreement for
violating the mandate of the 1987 Constitution to develop a self-reliant and independent
national economy effectively controlled by Filipinos x x x (to) give preference to qualified
Filipinos (and to) promote the preferential use of Filipino labor, domestic materials and
locally produced goods.
Simply stated, does the Philippine Constitution prohibit Philippine participation in
worldwide trade liberalization and economic globalization? Does it prescribe Philippine
integration into a global economy that is liberalized, deregulated and privatized? These are
the main questions raised in this petition for certiorari, prohibition and mandamus under
Rule 65 of the Rules of Court praying (1) for the nullification, on constitutional grounds, of
the concurrence of the Philippine Senate in the ratification by the President of the
Philippines of the Agreement Establishing the World Trade Organization (WTO Agreement,
for brevity) and (2) for the prohibition of its implementation and enforcement through the
release and utilization of public funds, the assignment of public officials and employees, as
well as the use of government properties and resources by respondent-heads of various
executive offices concerned therewith. This concurrence is embodied in Senate Resolution
No. 97, dated December 14, 1994.
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of the Department of
Trade and Industry (Secretary Navarro, for brevity), representing the Government of the
Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the
Results of the Uruguay Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act,ii[2] Secretary Navarro on behalf of the Republic of the Philippines,
agreed:
(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective
competent authorities, with a view to seeking approval of the Agreement in accordance with
their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
On August 12, 1994, the members of the Philippine Senate received a letter dated August
11, 1994 from the President of the Philippines,iii[3] stating among others that the Uruguay
Round Final Act is hereby submitted to the Senate for its concurrence pursuant to Section
21, Article VII of the Constitution.
On August 13, 1994, the members of the Philippine Senate received another letter from the
President of the Philippinesiv[4] likewise dated August 11, 1994, which stated among others
that the Uruguay Round Final Act, the Agreement Establishing the World Trade
Organization, the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services are hereby submitted to the Senate for its concurrence
pursuant to Section 21, Article VII of the Constitution.
On December 9, 1994, the President of the Philippines certified the necessity of the
immediate adoption of P.S. 1083, a resolution entitled Concurring in the Ratification of the
Agreement Establishing the World Trade Organization.v[5]
On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which Resolved,
as it is hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by
the President of the Philippines of the Agreement Establishing the World Trade
Organization.vi[6] The text of the WTO Agreement is written on pages 137 et seq. of Volume I
of the 36-volume Uruguay Round of Multilateral Trade Negotiations and includes various
agreements and associated legal instruments (identified in the said Agreement as Annexes
1, 2 and 3 thereto and collectively referred to as Multilateral Trade Agreements, for brevity)
as follows:
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994
Agreement on Implementation of Article VII of the General on Tariffs and
Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating Measures
Agreement on Safeguards
Annex 1B: General Agreement on Trade in Services and Annexes
Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights
ANNEX 2
Understanding on Rules and Procedures Governing the Settlement of
Disputes
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signedvii[7] the Instrument of
Ratification, declaring:
NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the
Philippines, after having seen and considered the aforementioned Agreement Establishing
the World Trade Organization and the agreements and associated legal instruments
included in Annexes one (1), two (2) and three (3) of that Agreement which are integral
parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do hereby ratify and confirm
the same and every Article and Clause thereof.
To emphasize, the WTO Agreement ratified by the President of the Philippines is composed
of the Agreement Proper and the associated legal instruments included in Annexes one (1),
two (2) and three (3) of that Agreement which are integral parts thereof.
On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO
Agreement (and its integral annexes aforementioned) but also (1) the Ministerial
Declarations and Decisions and (2) the Understanding on Commitments in Financial
Services. In his Memorandum dated May 13, 1996,viii[8]

the Solicitor General describes
these two latter documents as follows:
The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a
wide range of matters, such as measures in favor of least developed countries, notification
procedures, relationship of WTO with the International Monetary Fund (IMF), and
agreements on technical barriers to trade and on dispute settlement.
The Understanding on Commitments in Financial Services dwell on, among other things,
standstill or limitations and qualifications of commitments to existing non-conforming
measures, market access, national treatment, and definitions of non-resident supplier of
financial services, commercial presence and new financial service.
On December 29, 1994, the present petition was filed. After careful deliberation on
respondents comment and petitioners reply thereto, the Court resolved on December 12,
1995, to give due course to the petition, and the parties thereafter filed their respective
memoranda. The Court also requested the Honorable Lilia R. Bautista, the Philippine
Ambassador to the United Nations stationed in Geneva, Switzerland, to submit a paper,
hereafter referred to as Bautista Paper,ix[9] for brevity, (1) providing a historical
background of and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy
and (2) the transcript of proceedings/hearings in the Senate; and
(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties
signed prior to the Philippine adherence to the WTO Agreement, which derogate from
Philippine sovereignty and (2) copies of the multi-volume WTO Agreement and other
documents mentioned in the Final Act, as soon as possible.
After receipt of the foregoing documents, the Court said it would consider the case
submitted for resolution. In a Compliance dated September 16, 1996, the Solicitor General
submitted a printed copy of the 36-volume Uruguay Round of Multilateral Trade
Negotiations, and in another Compliance dated October 24, 1996, he listed the various
bilateral or multilateral treaties or international instruments involving derogation of
Philippine sovereignty. Petitioners, on the other hand, submitted their Compliance dated
January 28, 1997, on January 30, 1997.
The Issues
In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:
A. Whether the petition presents a political question or is otherwise not justiciable.
B. Whether the petitioner members of the Senate who participated in the deliberations
and voting leading to the concurrence are estopped from impugning the validity of
the Agreement Establishing the World Trade Organization or of the validity of the
concurrence.
C. Whether the provisions of the Agreement Establishing the World Trade Organization
contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of
the 1987 Philippine Constitution.
D. Whether provisions of the Agreement Establishing the World Trade Organization
unduly limit, restrict and impair Philippine sovereignty specifically the legislative
power which, under Sec. 2, Article VI, 1987 Philippine Constitution is vested in the
Congress of the Philippines;
E. Whether provisions of the Agreement Establishing the World Trade Organization
interfere with the exercise of judicial power.
F. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they voted for concurrence in the
ratification of the constitutionally-infirm Agreement Establishing the World Trade
Organization.
G. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they concurred only in the
ratification of the Agreement Establishing the World Trade Organization, and not
with the Presidential submission which included the Final Act, Ministerial
Declaration and Decisions, and the Understanding on Commitments in Financial
Services.
On the other hand, the Solicitor General as counsel for respondents synthesized the
several issues raised by petitioners into the following:x[10]
1. Whether or not the provisions of the Agreement Establishing the World Trade
Organization and the Agreements and Associated Legal Instruments included in Annexes
one (1), two (2) and three (3) of that agreement cited by petitioners directly contravene or
undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and 12,
Article XII of the 1987 Constitution.
2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the
exercise of legislative power by Congress.
3. Whether or not certain provisions of the Agreement impair the exercise of judicial power
by this Honorable Court in promulgating the rules of evidence.
4. Whether or not the concurrence of the Senate in the ratification by the President of the
Philippines of the Agreement establishing the World Trade Organization implied rejection of
the treaty embodied in the Final Act.
By raising and arguing only four issues against the seven presented by petitioners, the
Solicitor General has effectively ignored three, namely: (1) whether the petition presents a
political question or is otherwise not justiciable; (2) whether petitioner-members of the
Senate (Wigberto E. Taada and Anna Dominique Coseteng) are estopped (prevent, stop, thwart,
prohibit, ward off, halt, forbid) from joining this suit; and (3) whether the respondent-members of the
Senate acted in grave abuse of discretion when they voted for concurrence in the
ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to
deal with these three issues thus:
(1) The political question issue -- being very fundamental and vital, and being a matter
that probes into the very jurisdiction of this Court to hear and decide this case -- was
deliberated upon by the Court and will thus be ruled upon as the first issue;
(2) The matter of estoppel (legal rule barring inconsistency: a legal rule that prevents somebody
from stating a position inconsistent with one previously stated, especially when the earlier
representation has been relied upon by others) will not be taken up because this defense is
waivable and the respondents have effectively waived it by not pursuing it in any of their
pleadings; in any event, this issue, even if ruled in respondents favor, will not cause the
petitions dismissal as there are petitioners other than the two senators, who are not
vulnerable (extremely susceptible: easily persuadable or liable to give in to temptation.)to the
defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the respondent senators
will be taken up as an integral part of the disposition of the four issues raised by the
Solicitor General.
During its deliberations on the case, the Court noted that the respondents did not question
the locus standi of petitioners. Hence, they are also deemed to have waived the benefit of
such issue. They probably realized that grave constitutional issues, expenditures of public
funds and serious international commitments of the nation are involved here, and that
transcendental public interest requires that the substantive issues be met head on and
decided on the merits, rather than skirted or deflected by procedural matters.xi[11]
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE
STATED, DOES THE PETITION INVOLVE A POLITICAL QUESTION OVER WHICH
THIS COURT HAS NO JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES
CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF THE
PHILIPPINE CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT,
OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY CONGRESS?
(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF
JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS
ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT
INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS, AND
THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?
The First Issue: Does the Court Have Jurisdiction Over the Controversy?
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not
only the right but in fact the duty of the judiciary to settle the dispute. The question thus
posed is judicial rather than political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld.xii[12] Once a controversy as to the application or
interpretation of a constitutional provision is raised before this Court (as in the instant
case), it becomes a legal issue which the Court is bound by constitutional mandate to
decide.xiii[13]
The jurisdiction of this Court to adjudicate the mattersxiv[14] raised in the petition is clearly
set out in the 1987 Constitution,xv[15]

as follows:
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the government.
The foregoing text emphasizes the judicial departments duty and power to strike down
grave abuse of discretion on the part of any branch or instrumentality of government
including Congress. It is an innovation in our political law.xvi[16]

As explained by former
Chief Justice Roberto Concepcion,xvii[17] the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has acted without jurisdiction
or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion
amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass
judgment on matters of this nature.
As this Court has repeatedly and firmly emphasized in many cases,xviii[18]

it will not shirk,
digress from or abandon its sacred duty and authority to uphold the Constitution in
matters that involve grave abuse of discretion brought before it in appropriate cases,
committed by any officer, agency, instrumentality or department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or
adequate remedy in the ordinary course of law, we have no hesitation at all in holding that
this petition should be given due course and the vital questions raised therein ruled upon
under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are
appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify,
when proper, acts of legislative and executive officials. On this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will not
review the wisdom of the decision of the President and the Senate in enlisting the country
into the WTO, or pass upon the merits of trade liberalization as a policy espoused by said
international body. Neither will it rule on the propriety of the governments economic policy
of reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and other
import/trade barriers. Rather, it will only exercise its constitutional duty to determine
whether or not there had been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Senate in ratifying the WTO Agreement and its three
annexes.
Second Issue: The WTO Agreement and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the letter, spirit and intent of the Constitution
mandating economic nationalism are violated by the so-called parity provisions and
national treatment clauses scattered in various parts not only of the WTO Agreement and
its annexes but also in the Ministerial Decisions and Declarations and in the
Understanding on Commitments in Financial Services.
Specifically, the flagship constitutional provisions referred to are Sec. 19, Article II, and
Secs. 10 and 12, Article XII, of the Constitution, which are worded as follows:
Article II
DECLARATION OF PRINCIPLES AND STATE POLICIES
xx xx xx xx
Sec. 19. The State shall develop a self-reliant and independent national economy effectively
controlled by Filipinos.
xx xx xx xx
Article XII
NATIONAL ECONOMY AND PATRIMONY
xx xx xx xx
Sec. 10. x x x. The Congress shall enact measures that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.
xx xx xx xx
Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials
and locally produced goods, and adopt measures that help make them competitive.
Petitioners aver that these sacred constitutional principles are desecrated by the following
WTO provisions quoted in their memorandum:xix[19]
a) In the area of investment measures related to trade in goods (TRIMS, for brevity):
Article 2
National Treatment and Quantitative Restrictions.
1. Without prejudice to other rights and obligations under GATT 1994. no Member
shall apply any TRIM that is inconsistent with the provisions of Article III or
Article XI of GATT 1994.
2. An Illustrative list of TRIMS that are inconsistent with the obligations of general
elimination of quantitative restrictions provided for in paragraph I of Article XI of
GATT 1994 is contained in the Annex to this Agreement. (Agreement on Trade-
Related Investment Measures, Vol. 27, Uruguay Round, Legal Instruments,
p.22121, emphasis supplied).
The Annex referred to reads as follows:
ANNEX
Illustrative List
1. TRIMS that are inconsistent with the obligation of national treatment provided
for in paragraph 4 of Article III of GATT 1994 include those which are
mandatory or enforceable under domestic law or under administrative rulings, or
compliance with which is necessary to obtain an advantage, and which require:
(a) the purchase or use by an enterprise of products of domestic origin or from any
domestic source, whether specified in terms of particular products, in terms of
volume or value of products, or in terms of proportion of volume or value of its
local production; or
(b) that an enterprises purchases or use of imported products be limited to an
amount related to the volume or value of local products that it exports.
2. TRIMS that are inconsistent with the obligations of general elimination of
quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994
include those which are mandatory or enforceable under domestic laws or under
administrative rulings, or compliance with which is necessary to obtain an
advantage, and which restrict:
(a) the importation by an enterprise of products used in or related to the local
production that it exports;
(b) the importation by an enterprise of products used in or related to its local
production by restricting its access to foreign exchange inflows attributable to the
enterprise; or
(c) the exportation or sale for export specified in terms of particular products, in
terms of volume or value of products, or in terms of a preparation of volume or
value of its local production. (Annex to the Agreement on Trade-Related
Investment Measures, Vol. 27, Uruguay Round Legal Documents, p.22125,
emphasis supplied).
The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:
The products of the territory of any contracting party imported into the territory of any
other contracting party shall be accorded treatment no less favorable than that
accorded to like products of national origin in respect of laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. the provisions of this paragraph shall not prevent the application of
differential internal transportation charges which are based exclusively on the economic
operation of the means of transport and not on the nationality of the product. (Article III,
GATT 1947, as amended by the Protocol Modifying Part II, and Article XXVI of GATT, 14
September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement on
Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p.177, emphasis
supplied).
b) In the area of trade related aspects of intellectual property rights (TRIPS, for
brevity):
Each Member shall accord to the nationals of other Members treatment no less
favourable than that it accords to its own nationals with regard to the protection of
intellectual property... (par. 1, Article 3, Agreement on Trade-Related Aspect of Intellectual
Property rights, Vol. 31, Uruguay Round, Legal Instruments, p.25432 (emphasis supplied)
(c) In the area of the General Agreement on Trade in Services:
National Treatment
1. In the sectors inscribed in its schedule, and subject to any conditions and
qualifications set out therein, each Member shall accord to services and service
suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than it accords to its own like services
and service suppliers.
2. A Member may meet the requirement of paragraph I by according to services and
service suppliers of any other Member, either formally identical treatment or
formally different treatment to that it accords to its own like services and service
suppliers.
3. Formally identical or formally different treatment shall be considered to be less
favourable if it modifies the conditions of completion in favour of services or
service suppliers of the Member compared to like services or service suppliers of
any other Member. (Article XVII, General Agreement on Trade in Services, Vol. 28,
Uruguay Round Legal Instruments, p.22610 emphasis supplied).
It is petitioners position that the foregoing national treatment and parity provisions of
the WTO Agreement place nationals and products of member countries on the same
footing as Filipinos and local products, in contravention of the Filipino First policy of
the Constitution. They allegedly render meaningless the phrase effectively controlled by
Filipinos. The constitutional conflict becomes more manifest when viewed in the context of
the clear duty imposed on the Philippines as a WTO member to ensure the conformity of its
laws, regulations and administrative procedures with its obligations as provided in the
annexed agreements.xx[20] Petitioners further argue that these provisions contravene
constitutional limitations on the role exports play in national development and negate the
preferential treatment accorded to Filipino labor, domestic materials and locally produced
goods.
On the other hand, respondents through the Solicitor General counter (1) that such
Charter provisions are not self-executing and merely set out general policies; (2) that these
nationalistic portions of the Constitution invoked by petitioners should not be read in
isolation but should be related to other relevant provisions of Art. XII, particularly Secs. 1
and 13 thereof; (3) that read properly, the cited WTO clauses do not conflict with the
Constitution; and (4) that the WTO Agreement contains sufficient provisions to protect
developing countries like the Philippines from the harshness of sudden trade liberalization.
We shall now discuss and rule on these arguments.
Declaration of Principles Not Self-Executing
By its very title, Article II of the Constitution is a declaration of principles and state
policies. The counterpart of this article in the 1935 Constitutionxxi[21] is called the basic
political creed of the nation by Dean Vicente Sinco.xxii[22] These principles in Article II are
not intended to be self-executing principles ready for enforcement through the courts.xxiii[23]
They are used by the judiciary as aids or as guides in the exercise of its power of judicial
review, and by the legislature in its enactment of laws. As held in the leading case of
Kilosbayan, Incorporated vs. Morato,xxiv[24] the principles and state policies enumerated in
Article II and some sections of Article XII are not self-executing provisions, the disregard of
which can give rise to a cause of action in the courts. They do not embody judicially
enforceable constitutional rights but guidelines for legislation.
In the same light, we held in Basco vs. Pagcorxxv[25] that broad constitutional principles need
legislative enactments to implement them, thus:
On petitioners allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family)
and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2
(Educational Values) of Article XIV of the 1987 Constitution, suffice it to state also that
these are merely statements of principles and policies. As such, they are basically not self-
executing, meaning a law should be passed by Congress to clearly define and effectuate
such principles.
In general, therefore, the 1935 provisions were not intended to be self-executing principles
ready for enforcement through the courts. They were rather directives addressed to the
executive and to the legislature. If the executive and the legislature failed to heed the
directives of the article, the available remedy was not judicial but political. The electorate
could express their displeasure with the failure of the executive and the legislature through
the language of the ballot. (Bernas, Vol. II, p. 2).
The reasons for denying a cause of action to an alleged infringement of broad constitutional
principles are sourced from basic considerations of due process and the lack of judicial
authority to wade into the uncharted ocean of social and economic policy making. Mr.
Justice Florentino P. Feliciano in his concurring opinion in Oposa vs. Factoran, Jr.,xxvi[26]
explained these reasons as follows:
My suggestion is simply that petitioners must, before the trial court, show a more specific
legal right -- a right cast in language of a significantly lower order of generality than Article
II (15) of the Constitution -- that is or may be violated by the actions, or failures to act,
imputed to the public respondent by petitioners so that the trial court can validly render
judgment granting all or part of the relief prayed for. To my mind, the court should be
understood as simply saying that such a more specific legal right or rights may well exist in
our corpus of law, considering the general policy principles found in the Constitution and
the existence of the Philippine Environment Code, and that the trial court should have
given petitioners an effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component of a cause of
action be a specific, operable legal right, rather than a constitutional or statutory policy, for
at least two (2) reasons. One is that unless the legal right claimed to have been violated or
disregarded is given specification in operational terms, defendants may well be unable to
defend themselves intelligently and effectively; in other words, there are due process
dimensions to this matter.
The second is a broader-gauge consideration -- where a specific violation of law or
applicable regulation is not alleged or proved, petitioners can be expected to fall back on
the expanded conception of judicial power in the second paragraph of Section 1 of Article
VIII of the Constitution which reads:
Section 1. x x x
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government. (Emphases supplied)
When substantive standards as general as the right to a balanced and healthy ecology and
the right to health are combined with remedial standards as broad ranging as a grave
abuse of discretion amounting to lack or excess of jurisdiction, the result will be, it is
respectfully submitted, to propel courts into the uncharted ocean of social and economic
policy making. At least in respect of the vast area of environmental protection and
management, our courts have no claim to special technical competence and experience and
professional qualification. Where no specific, operable norms and standards are shown to
exist, then the policy making departments -- the legislative and executive departments --
must be given a real and effective opportunity to fashion and promulgate those norms and
standards, and to implement them before the courts should intervene.
Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain
Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general
principles relating to the national economy and patrimony, should be read and understood
in relation to the other sections in said article, especially Secs. 1 and 13 thereof which read:
Section 1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding productivity
as the key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of
human and natural resources, and which are competitive in both domestic and foreign
markets. However, the State shall protect Filipino enterprises against unfair foreign
competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall
be given optimum opportunity to develop. x x x
x x x x x x x x x
Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes
all forms and arrangements of exchange on the basis of equality and reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national
economic development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by the nation for the
benefit of the people; and
3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic
nationalism (1) by expressing preference in favor of qualified Filipinos in the grant of
rights, privileges and concessions covering the national economy and patrimonyxxvii[27] and
in the use of Filipino labor, domestic materials and locally-produced goods; (2) by
mandating the State to adopt measures that help make them competitive;xxviii[28] and (3) by
requiring the State to develop a self-reliant and independent national economy effectively
controlled by Filipinos.xxix[29] In similar language, the Constitution takes into account the
realities of the outside world as it requires the pursuit of a trade policy that serves the
general welfare and utilizes all forms and arrangements of exchange on the basis of equality
and reciprocity;xxx[30] and speaks of industries which are competitive in both domestic and
foreign markets as well as of the protection of Filipino enterprises against unfair foreign
competition and trade practices.
It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance
System, et al.,xxxi[31] this Court held that Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in itself and which needs
no further guidelines or implementing laws or rules for its enforcement. From its very
words the provision does not require any legislation to put it in operation. It is per se
judicially enforceable. However, as the constitutional provision itself states, it is
enforceable only in regard to the grants of rights, privileges and concessions covering
national economy and patrimony and not to every aspect of trade and commerce. It refers
to exceptions rather than the rule. The issue here is not whether this paragraph of Sec. 10
of Art. XII is self-executing or not. Rather, the issue is whether, as a rule, there are enough
balancing provisions in the Constitution to allow the Senate to ratify the Philippine
concurrence in the WTO Agreement. And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services,
labor and enterprises, at the same time, it recognizes the need for business exchange with
the rest of the world on the bases of equality and reciprocity and limits protection of
Filipino enterprises only against foreign competition and trade practices that are
unfair.xxxii[32] In other words, the Constitution did not intend to pursue an isolationist
policy. It did not shut out foreign investments, goods and services in the development of
the Philippine economy. While the Constitution does not encourage the unlimited entry of
foreign goods, services and investments into the country, it does not prohibit them either.
In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on
foreign competition that is unfair.
WTO Recognizes Need to Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some built-in
advantages to protect weak and developing economies, which comprise the vast majority of
its members. Unlike in the UN where major states have permanent seats and veto powers
in the Security Council, in the WTO, decisions are made on the basis of sovereign equality,
with each members vote equal in weight to that of any other. There is no WTO equivalent
of the UN Security Council.
WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial
Conference and the General Council shall be taken by the majority of the votes cast, except
in cases of interpretation of the Agreement or waiver of the obligation of a member which
would require three fourths vote. Amendments would require two thirds vote in general.
Amendments to MFN provisions and the Amendments provision will require assent of all
members. Any member may withdraw from the Agreement upon the expiration of six
months from the date of notice of withdrawals.xxxiii[33]
Hence, poor countries can protect their common interests more effectively through the WTO
than through one-on-one negotiations with developed countries. Within the WTO,
developing countries can form powerful blocs to push their economic agenda more
decisively than outside the Organization. This is not merely a matter of practical alliances
but a negotiating strategy rooted in law. Thus, the basic principles underlying the WTO
Agreement recognize the need of developing countries like the Philippines to share in the
growth in international trade commensurate with the needs of their economic
development. These basic principles are found in the preamblexxxiv[34] of the WTO
Agreement as follows:
The Parties to this Agreement,
Recognizing that their relations in the field of trade and economic endeavour should be
conducted with a view to raising standards of living, ensuring full employment and a large
and steadily growing volume of real income and effective demand, and expanding the
production of and trade in goods and services, while allowing for the optimal use of the
worlds resources in accordance with the objective of sustainable development, seeking both
to protect and preserve the environment and to enhance the means for doing so in a
manner consistent with their respective needs and concerns at different levels of economic
development,
Recognizing further that there is need for positive efforts designed to ensure that developing
countries, and especially the least developed among them, secure a share in the growth in
international trade commensurate with the needs of their economic development,
Being desirous of contributing to these objectives by entering into reciprocal and mutually
advantageous arrangements directed to the substantial reduction of tariffs and other
barriers to trade and to the elimination of discriminatory treatment in international trade
relations,
Resolved, therefore, to develop an integrated, more viable and durable multilateral trading
system encompassing the General Agreement on Tariffs and Trade, the results of past trade
liberalization efforts, and all of the results of the Uruguay Round of Multilateral Trade
Negotiations,
Determined to preserve the basic principles and to further the objectives underlying this
multilateral trading system, x x x. (underscoring supplied.)
Specific WTO Provisos Protect Developing Countries
So too, the Solicitor General points out that pursuant to and consistent with the foregoing
basic principles, the WTO Agreement grants developing countries a more lenient treatment,
giving their domestic industries some protection from the rush of foreign competition.
Thus, with respect to tariffs in general, preferential treatment is given to developing
countries in terms of the amount of tariff reduction and the period within which the
reduction is to be spread out. Specifically, GATT requires an average tariff reduction rate of
36% for developed countries to be effected within a period of six (6) years while developing
countries -- including the Philippines -- are required to effect an average tariff reduction of
only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic
support to agricultural products by 20% over six (6) years, as compared to only 13% for
developing countries to be effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires developed countries to
reduce their budgetary outlays for export subsidy by 36% and export volumes receiving
export subsidy by 21% within a period of six (6) years. For developing countries, however,
the reduction rate is only two-thirds of that prescribed for developed countries and a longer
period of ten (10) years within which to effect such reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition and
trade practices including anti-dumping measures, countervailing measures and safeguards
against import surges. Where local businesses are jeopardized by unfair foreign
competition, the Philippines can avail of these measures. There is hardly therefore any
basis for the statement that under the WTO, local industries and enterprises will all be
wiped out and that Filipinos will be deprived of control of the economy. Quite the contrary,
the weaker situations of developing nations like the Philippines have been taken into
account; thus, there would be no basis to say that in joining the WTO, the respondents
have gravely abused their discretion. True, they have made a bold decision to steer the
ship of state into the yet uncharted sea of economic liberalization. But such decision
cannot be set aside on the ground of grave abuse of discretion, simply because we disagree
with it or simply because we believe only in other economic policies. As earlier stated, the
Court in taking jurisdiction of this case will not pass upon the advantages and
disadvantages of trade liberalization as an economic policy. It will only perform its
constitutional duty of determining whether the Senate committed grave abuse of discretion.
Constitution Does Not Rule Out Foreign Competition
Furthermore, the constitutional policy of a self-reliant and independent national
economyxxxv[35] does not necessarily rule out the entry of foreign investments, goods and
services. It contemplates neither economic seclusion nor mendicancy in the
international community. As explained by Constitutional Commissioner Bernardo
Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly aware of
overdependence on external assistance for even its most basic needs. It does not mean
autarky or economic seclusion; rather, it means avoiding mendicancy in the international
community. Independence refers to the freedom from undue foreign control of the national
economy, especially in such strategic industries as in the development of natural resources
and public utilities.xxxvi[36]
The WTO reliance on most favored nation, national treatment, and trade without
discrimination cannot be struck down as unconstitutional as in fact they are rules of
equality and reciprocity that apply to all WTO members. Aside from envisioning a trade
policy based on equality and reciprocity,xxxvii[37] the fundamental law encourages
industries that are competitive in both domestic and foreign markets, thereby
demonstrating a clear policy against a sheltered domestic trade environment, but one in
favor of the gradual development of robust industries that can compete with the best in the
foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability
and tenacity to compete internationally. And given a free trade environment, Filipino
entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow
and to prosper against the best offered under a policy of laissez faire.
Constitution Favors Consumers, Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor of any business or
enterprise, nor does it contain any specific pronouncement that Filipino companies should
be pampered with a total proscription of foreign competition. On the other hand,
respondents claim that WTO/GATT aims to make available to the Filipino consumer the
best goods and services obtainable anywhere in the world at the most reasonable prices.
Consequently, the question boils down to whether WTO/GATT will favor the general welfare
of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos general welfare because it will -- as
promised by its promoters -- expand the countrys exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and quality products at the
most reasonable rates to the Filipino public?
The responses to these questions involve judgment calls by our policy makers, for which
they are answerable to our people during appropriate electoral exercises. Such questions
and the answers thereto are not subject to judicial pronouncements based on grave abuse
of discretion.
Constitution Designed to Meet Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted
and ratified in 1987. That does not mean however that the Charter is necessarily flawed in
the sense that its framers might not have anticipated the advent of a borderless world of
business. By the same token, the United Nations was not yet in existence when the 1935
Constitution became effective. Did that necessarily mean that the then Constitution might
not have contemplated a diminution of the absoluteness of sovereignty when the
Philippines signed the UN Charter, thereby effectively surrendering part of its control over
its foreign relations to the decisions of various UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not only the
vagaries of contemporary events. They should be interpreted to cover even future and
unknown circumstances. It is to the credit of its drafters that a Constitution can withstand
the assaults of bigots and infidels but at the same time bend with the refreshing winds of
change necessitated by unfolding events. As one eminent political law writer and respected
juristxxxviii[38] explains:
The Constitution must be quintessential rather than superficial, the root and not the
blossom, the base and framework only of the edifice that is yet to rise. It is but the core of
the dream that must take shape, not in a twinkling by mandate of our delegates, but slowly
in the crucible of Filipino minds and hearts, where it will in time develop its sinews and
gradually gather its strength and finally achieve its substance. In fine, the Constitution
cannot, like the goddess Athena, rise full-grown from the brow of the Constitutional
Convention, nor can it conjure by mere fiat an instant Utopia. It must grow with the
society it seeks to re-structure and march apace with the progress of the race, drawing
from the vicissitudes of history the dynamism and vitality that will keep it, far from
becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that (e)ach Member shall ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the annexed
Agreements.xxxix[39] Petitioners maintain that this undertaking unduly limits, restricts and
impairs Philippine sovereignty, specifically the legislative power which under Sec. 2, Article
VI of the 1987 Philippine Constitution is vested in the Congress of the Philippines. It is an
assault on the sovereign powers of the Philippines because this means that Congress could
not pass legislation that will be good for our national interest and general welfare if such
legislation will not conform with the WTO Agreement, which not only relates to the trade in
goods x x x but also to the flow of investments and money x x x as well as to a whole slew of
agreements on socio-cultural matters x x x.xl[40]
More specifically, petitioners claim that said WTO proviso derogates from the power to tax,
which is lodged in the Congress.xli[41] And while the Constitution allows Congress to
authorize the President to fix tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts, such authority is subject to specified limits and x x x
such limitations and restrictions as Congress may provide,xlii[42] as in fact it did under Sec.
401 of the Tariff and Customs Code.
Sovereignty Limited by International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners stressed
their arguments on this issue. However, while sovereignty has traditionally been deemed
absolute and all-encompassing on the domestic level, it is however subject to restrictions
and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a
member of the family of nations. Unquestionably, the Constitution did not envision a
hermit-type isolation of the country from the rest of the world. In its Declaration of
Principles and State Policies, the Constitution adopts the generally accepted principles of
international law as part of the law of the land, and adheres to the policy of peace, equality,
justice, freedom, cooperation and amity, with all nations."xliii[43] By the doctrine of
incorporation, the country is bound by generally accepted principles of international law,
which are considered to be automatically part of our own laws.xliv[44] One of the oldest and
most fundamental rules in international law is pacta sunt servanda -- international
agreements must be performed in good faith. A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on the parties x x x. A state which has
contracted valid international obligations is bound to make in its legislations such
modifications as may be necessary to ensure the fulfillment of the obligations
undertaken.xlv[45]
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By
their voluntary act, nations may surrender some aspects of their state power in exchange
for greater benefits granted by or derived from a convention or pact. After all, states, like
individuals, live with coequals, and in pursuit of mutually covenanted objectives and
benefits, they also commonly agree to limit the exercise of their otherwise absolute rights.
Thus, treaties have been used to record agreements between States concerning such widely
diverse matters as, for example, the lease of naval bases, the sale or cession of territory, the
termination of war, the regulation of conduct of hostilities, the formation of alliances, the
regulation of commercial relations, the settling of claims, the laying down of rules governing
conduct in peace and the establishment of international organizations.xlvi[46] The sovereignty
of a state therefore cannot in fact and in reality be considered absolute. Certain
restrictions enter into the picture: (1) limitations imposed by the very nature of membership
in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put by
John F. Kennedy, Today, no nation can build its destiny alone. The age of self-sufficient
nationalism is over. The age of interdependence is here.xlvii[47]
UN Charter and Other Treaties Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51 charter members, it
consented to restrict its sovereign rights under the concept of sovereignty as auto-
limitation.47-A Under Article 2 of the UN Charter, (a)ll members shall give the United
Nations every assistance in any action it takes in accordance with the present Charter, and
shall refrain from giving assistance to any state against which the United Nations is taking
preventive or enforcement action. Such assistance includes payment of its corresponding
share not merely in administrative expenses but also in expenditures for the peace-keeping
operations of the organization. In its advisory opinion of July 20, 1961, the International
Court of Justice held that money used by the United Nations Emergency Force in the
Middle East and in the Congo were expenses of the United Nations under Article 17,
paragraph 2, of the UN Charter. Hence, all its members must bear their corresponding
share in such expenses. In this sense, the Philippine Congress is restricted in its power to
appropriate. It is compelled to appropriate funds whether it agrees with such peace-
keeping expenses or not. So too, under Article 105 of the said Charter, the UN and its
representatives enjoy diplomatic privileges and immunities, thereby limiting again the
exercise of sovereignty of members within their own territory. Another example: although
sovereign equality and domestic jurisdiction of all members are set forth as underlying
principles in the UN Charter, such provisos are however subject to enforcement measures
decided by the Security Council for the maintenance of international peace and security
under Chapter VII of the Charter. A final example: under Article 103, (i)n the event of a
conflict between the obligations of the Members of the United Nations under the present
Charter and their obligations under any other international agreement, their obligation
under the present charter shall prevail, thus unquestionably denying the Philippines -- as
a member -- the sovereign power to make a choice as to which of conflicting obligations, if
any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international pacts
-- both bilateral and multilateral -- that involve limitations on Philippine sovereignty.
These are enumerated by the Solicitor General in his Compliance dated October 24, 1996,
as follows:
(a) Bilateral convention with the United States regarding taxes on income, where the
Philippines agreed, among others, to exempt from tax, income received in the
Philippines by, among others, the Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the Overseas Private Investment
Corporation of the United States. Likewise, in said convention, wages, salaries and
similar remunerations paid by the United States to its citizens for labor and
personal services performed by them as employees or officials of the United States
are exempt from income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of
double taxation with respect to taxes on income.
(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double
taxation.
(d) Bilateral convention with the French Republic for the avoidance of double taxation.
(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt
from all customs duties, inspection fees and other duties or taxes aircrafts of South
Korea and the regular equipment, spare parts and supplies arriving with said
aircrafts.
(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt
from customs duties, excise taxes, inspection fees and other similar duties, taxes or
charges fuel, lubricating oils, spare parts, regular equipment, stores on board
Japanese aircrafts while on Philippine soil.
(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian
air carriers the same privileges as those granted to Japanese and Korean air carriers
under separate air service agreements.
(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the
Philippines exempted Israeli nationals from the requirement of obtaining transit or
visitor visas for a sojourn in the Philippines not exceeding 59 days.
(I) Bilateral agreement with France exempting French nationals from the requirement of
obtaining transit and visitor visa for a sojourn not exceeding 59 days.
(j) Multilateral Convention on Special Missions, where the Philippines agreed that
premises of Special Missions in the Philippines are inviolable and its agents can not
enter said premises without consent of the Head of Mission concerned. Special
Missions are also exempted from customs duties, taxes and related charges.
(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines
agreed to be governed by the Vienna Convention on the Law of Treaties.
(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of
the International Court of Justice. The International Court of Justice has
jurisdiction in all legal disputes concerning the interpretation of a treaty, any
question of international law, the existence of any fact which, if established, would
constitute a breach of international obligation.
In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its
sovereign powers of taxation, eminent domain and police power. The underlying
consideration in this partial surrender of sovereignty is the reciprocal commitment of the
other contracting states in granting the same privilege and immunities to the Philippines,
its officials and its citizens. The same reciprocity characterizes the Philippine commitments
under WTO-GATT.
International treaties, whether relating to nuclear disarmament, human rights, the
environment, the law of the sea, or trade, constrain domestic political sovereignty through
the assumption of external obligations. But unless anarchy in international relations is
preferred as an alternative, in most cases we accept that the benefits of the reciprocal
obligations involved outweigh the costs associated with any loss of political sovereignty.
(T)rade treaties that structure relations by reference to durable, well-defined substantive
norms and objective dispute resolution procedures reduce the risks of larger countries
exploiting raw economic power to bully smaller countries, by subjecting power relations to
some form of legal ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple fact that
liberalization will provide access to a larger set of potential new trading relationship than in
case of the larger country gaining enhanced success to the smaller countrys market.xlviii[48]
The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived
without violating the Constitution, based on the rationale that the Philippines adopts the
generally accepted principles of international law as part of the law of the land and adheres
to the policy of x x x cooperation and amity with all nations.
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles
of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)xlix[49]

intrudes on the power of the Supreme Court to promulgate rules concerning pleading,
practice and procedures.l[50]
To understand the scope and meaning of Article 34, TRIPS,li[51] it will be fruitful to restate
its full text as follows:
Article 34
Process Patents: Burden of Proof
1. For the purposes of civil proceedings in respect of the infringement of the rights of
the owner referred to in paragraph 1(b) of Article 28, if the subject matter of a patent is
a process for obtaining a product, the judicial authorities shall have the authority to
order the defendant to prove that the process to obtain an identical product is different
from the patented process. Therefore, Members shall provide, in at least one of the
following circumstances, that any identical product when produced without the consent
of the patent owner shall, in the absence of proof to the contrary, be deemed to have
been obtained by the patented process:
(a) if the product obtained by the patented process is new;
(b) if there is a substantial likelihood that the identical product was made by the
process and the owner of the patent has been unable through reasonable efforts
to determine the process actually used.
2. Any Member shall be free to provide that the burden of proof indicated in paragraph
1 shall be on the alleged infringer only if the condition referred to in subparagraph (a) is
fulfilled or only if the condition referred to in subparagraph (b) is fulfilled.
3. In the adduction of proof to the contrary, the legitimate interests of defendants in
protecting their manufacturing and business secrets shall be taken into account.
From the above, a WTO Member is required to provide a rule of disputable (note the words
in the absence of proof to the contrary) presumption that a product shown to be identical
to one produced with the use of a patented process shall be deemed to have been obtained
by the (illegal) use of the said patented process, (1) where such product obtained by the
patented product is new, or (2) where there is substantial likelihood that the identical
product was made with the use of the said patented process but the owner of the patent
could not determine the exact process used in obtaining such identical product. Hence, the
burden of proof contemplated by Article 34 should actually be understood as the duty of
the alleged patent infringer to overthrow such presumption. Such burden, properly
understood, actually refers to the burden of evidence (burden of going forward) placed on
the producer of the identical (or fake) product to show that his product was produced
without the use of the patented process.
The foregoing notwithstanding, the patent owner still has the burden of proof since,
regardless of the presumption provided under paragraph 1 of Article 34, such owner still
has to introduce evidence of the existence of the alleged identical product, the fact that it is
identical to the genuine one produced by the patented process and the fact of newness
of the genuine product or the fact of substantial likelihood that the identical product was
made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as the
present law on the subject, Republic Act No. 165, as amended, otherwise known as the
Patent Law, provides a similar presumption in cases of infringement of patented design or
utility model, thus:
SEC. 60. Infringement. - Infringement of a design patent or of a patent for utility model
shall consist in unauthorized copying of the patented design or utility model for the
purpose of trade or industry in the article or product and in the making, using or selling of
the article or product copying the patented design or utility model. Identity or substantial
identity with the patented design or utility model shall constitute evidence of copying.
(underscoring supplied)
Moreover, it should be noted that the requirement of Article 34 to provide a disputable
presumption applies only if (1) the product obtained by the patented process is NEW or (2)
there is a substantial likelihood that the identical product was made by the process and the
process owner has not been able through reasonable effort to determine the process used.
Where either of these two provisos does not obtain, members shall be free to determine the
appropriate method of implementing the provisions of TRIPS within their own internal
systems and processes.
By and large, the arguments adduced in connection with our disposition of the third issue -
- derogation of legislative power - will apply to this fourth issue also. Suffice it to say that
the reciprocity clause more than justifies such intrusion, if any actually exists. Besides,
Article 34 does not contain an unreasonable burden, consistent as it is with due process
and the concept of adversarial dispute settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions on patents,
trademarks and copyrights, the adjustment in legislation and rules of procedure will not be
substantial.lii[52]
Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained
in the Final Act
Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes --
but not in the other documents referred to in the Final Act, namely the Ministerial
Declaration and Decisions and the Understanding on Commitments in Financial Services --
is defective and insufficient and thus constitutes abuse of discretion. They submit that
such concurrence in the WTO Agreement alone is flawed because it is in effect a rejection of
the Final Act, which in turn was the document signed by Secretary Navarro, in
representation of the Republic upon authority of the President. They contend that the
second letter of the President to the Senateliii[53] which enumerated what constitutes the
Final Act should have been the subject of concurrence of the Senate.
A final act, sometimes called protocol de clture, is an instrument which records the
winding up of the proceedings of a diplomatic conference and usually includes a
reproduction of the texts of treaties, conventions, recommendations and other acts agreed
upon and signed by the plenipotentiaries attending the conference.liv[54] It is not the treaty
itself. It is rather a summary of the proceedings of a protracted conference which may have
taken place over several years. The text of the Final Act Embodying the Results of the
Uruguay Round of Multilateral Trade Negotiations is contained in just one pagelv[55] in Vol.
I of the 36-volume Uruguay Round of Multilateral Trade Negotiations. By signing said Final
Act, Secretary Navarro as representative of the Republic of the Philippines undertook:
"(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions."
The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act
required from its signatories, namely, concurrence of the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for
ratification. They were approved by the ministers by virtue of Article XXV: 1 of GATT which
provides that representatives of the members can meet to give effect to those provisions of
this Agreement which invoke joint action, and generally with a view to facilitating the
operation and furthering the objectives of this Agreement.lvi[56]
The Understanding on Commitments in Financial Services also approved in Marrakesh
does not apply to the Philippines. It applies only to those 27 Members which have
indicated in their respective schedules of commitments on standstill, elimination of
monopoly, expansion of operation of existing financial service suppliers, temporary entry of
personnel, free transfer and processing of information, and national treatment with respect
to access to payment, clearing systems and refinancing available in the normal course of
business.lvii[57]
On the other hand, the WTO Agreement itself expresses what multilateral agreements are
deemed included as its integral parts,lviii[58] as follows:
Article II
Scope of the WTO
1. The WTO shall provide the common institutional framework for the conduct of trade
relations among its Members in matters to the agreements and associated legal
instruments included in the Annexes to this Agreement.
2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3
(hereinafter referred to as Multilateral Agreements) are integral parts of this
Agreement, binding on all Members.
3. The Agreements and associated legal instruments included in Annex 4 (hereinafter
referred to as Plurilateral Trade Agreements) are also part of this Agreement for those
Members that have accepted them, and are binding on those Members. The Plurilateral
Trade Agreements do not create either obligation or rights for Members that have not
accepted them.
4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A
(hereinafter referred to as GATT 1994) is legally distinct from the General Agreement
on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act adopted at the
conclusion of the Second Session of the Preparatory Committee of the United Nations
Conference on Trade and Employment, as subsequently rectified, amended or modified
(hereinafter referred to as GATT 1947).
It should be added that the Senate was well-aware of what it was concurring in as shown
by the members deliberation on August 25, 1994. After reading the letter of President
Ramos dated August 11, 1994,lix[59] the senators of the Republic minutely dissected what
the Senate was concurring in, as follows: lx[60]
THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the
first day hearing of this Committee yesterday. Was the observation made by Senator
Taada that what was submitted to the Senate was not the agreement on establishing the
World Trade Organization by the final act of the Uruguay Round which is not the same as
the agreement establishing the World Trade Organization? And on that basis, Senator
Tolentino raised a point of order which, however, he agreed to withdraw upon
understanding that his suggestion for an alternative solution at that time was acceptable.
That suggestion was to treat the proceedings of the Committee as being in the nature of
briefings for Senators until the question of the submission could be clarified.
And so, Secretary Romulo, in effect, is the President submitting a new... is he making a new
submission which improves on the clarity of the first submission?
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no
misunderstanding, it was his intention to clarify all matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Taada and later on Senator Tolentino since they
were the ones that raised this question yesterday?
Senator Taada, please.
SEN. TAADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would now clearly appear that what is being
submitted to the Senate for ratification is not the Final Act of the Uruguay Round, but
rather the Agreement on the World Trade Organization as well as the Ministerial
Declarations and Decisions, and the Understanding and Commitments in Financial
Services.
I am now satisfied with the wording of the new submission of President Ramos.
SEN. TAADA. . . . of President Ramos, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And
after him Senator Neptali Gonzales and Senator Lina.
SEN TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted
to us but I saw the draft of his earlier, and I think it now complies with the provisions of
the Constitution, and with the Final Act itself. The Constitution does not require us to
ratify the Final Act. It requires us to ratify the Agreement which is now being submitted.
The Final Act itself specifies what is going to be submitted to with the governments of the
participants.
In paragraph 2 of the Final Act, we read and I quote:
By signing the present Final Act, the representatives agree: (a) to submit as appropriate
the WTO Agreement for the consideration of the respective competent authorities with a
view to seeking approval of the Agreement in accordance with their procedures.
In other words, it is not the Final Act that was agreed to be submitted to the governments
for ratification or acceptance as whatever their constitutional procedures may provide but it
is the World Trade Organization Agreement. And if that is the one that is being submitted
now, I think it satisfies both the Constitution and the Final Act itself.
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record.
And they had been adequately reflected in the journal of yesterdays session and I dont see
any need for repeating the same.
Now, I would consider the new submission as an act ex abudante cautela.
THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any
comment on this?
SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales out
of the abundance of question. Then the new submission is, I believe, stating the obvious
and therefore I have no further comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the WTO Agreement,
petitioners are invoking this Courts constitutionally imposed duty to determine whether or
not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the Senate in giving its concurrence therein via Senate Resolution No. 97.
Procedurally, a writ of certiorari grounded on grave abuse of discretion may be issued by
the Court under Rule 65 of the Rules of Court when it is amply shown that petitioners have
no other plain, speedy and adequate remedy in the ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction.lxi[61] Mere abuse of discretion is not enough. It must
be grave abuse of discretion as when the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and must be so patent and so gross as
to amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law.lxii[62] Failure on the part of the petitioner to
show grave abuse of discretion will result in the dismissal of the petition.lxiii[63]
In rendering this Decision, this Court never forgets that the Senate, whose act is under
review, is one of two sovereign houses of Congress and is thus entitled to great respect in
its actions. It is itself a constitutional body independent and coordinate, and thus its
actions are presumed regular and done in good faith. Unless convincing proof and
persuasive arguments are presented to overthrow such presumptions, this Court will
resolve every doubt in its favor. Using the foregoing well-accepted definition of grave abuse
of discretion and the presumption of regularity in the Senates processes, this Court cannot
find any cogent reason to impute grave abuse of discretion to the Senates exercise of its
power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the
Constitution.lxiv[64]
It is true, as alleged by petitioners, that broad constitutional principles require the State to
develop an independent national economy effectively controlled by Filipinos; and to protect
and/or prefer Filipino labor, products, domestic materials and locally produced goods. But
it is equally true that such principles -- while serving as judicial and legislative guides --
are not in themselves sources of causes of action. Moreover, there are other equally
fundamental constitutional principles relied upon by the Senate which mandate the pursuit
of a trade policy that serves the general welfare and utilizes all forms and arrangements of
exchange on the basis of equality and reciprocity and the promotion of industries which
are competitive in both domestic and foreign markets, thereby justifying its acceptance of
said treaty. So too, the alleged impairment of sovereignty in the exercise of legislative and
judicial powers is balanced by the adoption of the generally accepted principles of
international law as part of the law of the land and the adherence of the Constitution to the
policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its
consent to the WTO Agreement thereby making it a part of the law of the land is a
legitimate exercise of its sovereign duty and power. We find no patent and gross
arbitrariness or despotism by reason of passion or personal hostility in such exercise. It
is not impossible to surmise that this Court, or at least some of its members, may even
agree with petitioners that it is more advantageous to the national interest to strike down
Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of
discretion to the Senate and to nullify its decision. To do so would constitute grave abuse
in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a
valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is
outside the realm of judicial inquiry and review. That is a matter between the elected policy
makers and the people. As to whether the nation should join the worldwide march toward
trade liberalization and economic globalization is a matter that our people should determine
in electing their policy makers. After all, the WTO Agreement allows withdrawal of
membership, should this be the political desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissancelxv[65]

where the East will become the dominant region of the world
economically, politically and culturally in the next century. He refers to the free market
espoused by WTO as the catalyst in this coming Asian ascendancy. There are at present
about 31 countries including China, Russia and Saudi Arabia negotiating for membership
in the WTO. Notwithstanding objections against possible limitations on national
sovereignty, the WTO remains as the only viable structure for multilateral trading and the
veritable forum for the development of international trade law. The alternative to WTO is
isolation, stagnation, if not economic self-destruction. Duly enriched with original
membership, keenly aware of the advantages and disadvantages of globalization with its
on-line experience, and endowed with a vision of the future, the Philippines now straddles
the crossroads of an international strategy for economic prosperity and stability in the new
millennium. Let the people, through their duly authorized elected officers, make their free
choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza,
Francisco, Hermosisima, Jr., and Torres, Jr., JJ., concur.
Padilla, and Vitug, JJ., in the result.





i[1] In Annex A of her Memorandum, dated August 8, 1996, received by this Court on
August 12, 1996, Philippine Ambassador to the United Nations, World Trade Organization
and other international organizations Lilia R. Bautista (hereafter referred to as Bautista
Paper) submitted a 46-year Chronology of GATT as follows:
1947 The birth of GATT. On 30 October 1947, the General Agreement
on Tariffs and Trade (GATT) was signed by 23 nations at the Palais des
Nations in Geneva. The Agreement contained tariff concessions agreed to
in the first multilateral trade negotiations and a set of rules designed to
prevent these concessions from being frustrated by restrictive trade
measures.
The 23 founding contracting parties were members of the Preparatory
Committee established by the United Nations Economic and Social
Council in 1946 to draft the charter of the International Trade
Organization (ITO). The ITO was envisaged as the final leg of a triad of
post-War economic agencies (the other two were the International
Monetary Fund and the International Bank for Reconstruction - later the
World Bank).

In parallel with this task, the Committee members decided to negotiate
tariff concessions among themselves. From April to October 1947, the
participants completed some 123 negotiations and established 20
schedules containing the tariff reductions and bindings which became an
integral part of GATT. These schedules resulting from the first Round
covered some 45,000 tariff concessions and about $10 billion in trade.
GATT was conceived as an interim measure that put into effect the
commercial-policy provisions of the ITO. In November, delegations from
56 countries met in Havana, Cuba, to consider the ITO draft as a whole.
After long and difficult negotiations, some 53 countries signed the Final
Act authenticating the text of the Havana Charter in March 1948. There
was no commitment, however, from governments to ratification and, in
the end, the ITO was stillborn, leaving GATT as the only international
instrument governing the conduct of world trade.
1948 Entry into force. On 1 January 1948, GATT entered into force.
The 23 founding members were: Australia, Belgium, Brazil, Burma,
Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India,
Lebanon, Luxemburg, Netherlands, New Zealand, Norway, Pakistan,
Southern Rhodesia, Syria, South Africa, United Kingdom and United
States. The first Session of the contracting parties was held from
February to March in Havana, Cuba. The secretariat of the Interim
Commission for the ITO, which served as the ad hoc secretariat of GATT,
move from lake Placid, New York, to Geneva. The Contracting Parties
held their second session in Geneva from August to September.
1949 Second Round at Annecy. During the second Round of trade
negotiations, held from April to August at Annecy, France, the
contracting parties exchange some 5,000 tariff concession. At their third
Session, they also dealt with the accession of ten more countries.
1950 Third Round At Torquay. From September 1950 to April 1951,
the contracting parties exchange some 8,700 tariff concessions in the
English town, yielding tariff reduction of about 25 per cent in relation to
the 1948 level. Four more countries acceded to GATT. During the fifth
Session of the Contracting Parties, the United States indicated that the
ITO Charter would not be re-submitted to the US congress; this, in effect,
meant that ITO would not come into operation.
1956 Fourth Round at Geneva. The fourth Round was completed in
May and produce some $2.5 billion worth of tariff reductions. At the
beginning of the year, the GATT commercial policy course for officials of
developing countries was inaugurated.
1958 The Haberler Report. GATT published Trends in International
Trade in October. Known as the "Haberler Report" in honour of Professor
Gottfried Haberler, the chairman of the panel of imminent economist, it
provided initial guidelines for the work of GATT. The Contracting Parties
at their 13th Sessions, attended by Ministers, subsequently established 3
committees in GATT: Committee I to convene a further tariff negotiating
conference; Committee II To review the agricultural policies of member
governments and Committee III to tackle the problems facing developing
countries in their trade. The establishment of the European Economic
Community during the previous year also demanded large scale tariff
negotiation under Article XXIV 6 of the General Agreement.
1960 The Dillon Round. The fifth Round opened in September and was
divided into two phases: the first was concerned with EEC members
states for the creation of a single schedule of concessions for the
Community based on its Common External Tariff; and the second was a
further general round of tariff negotiations. Named in honor of US
Under-Secretary of State Douglas Dillon who proposed the negotiations,
the Round was concluded in July 1962 and resulted in about 4,400 tariff
concessions covering $4.9 billion of trade.
1961 The Short-Term Arrangement covering cotton textiles was agreed
as an exception to the GATT rules. The arrangement permitted the

negotiation of quota restrictions affecting the exports of cotton-producing
countries. In 1962 the "Short Term " Arrangement become the "Long
term" Arrangement, lasting until 1974 when the Multifibre Arrangement
entered into force.
1964 The Kennedy Round. Meeting at Ministerial Level, a Trade
Negotiations Committee formally opened the Kennedy Round in May. In
June 1967, the Round's Final Act was signed by some 50 participating
countries which together accounted for 75 per cent of world trade. For
the first time, negotiation departed from product-by-product approach
used in the previous Rounds to an across-the-board or linear method of
cutting tariffs for industrial goods. The working hypothesis of a 50 per
cent target cut in tariff levels was achieved in many areas. Concessions
covered an estimated total value of trade of about $40 billion. Separate
agreements were reached on grains, chemical products and a Code on
Anti-Dumping.
1965 A New Chapter. The early 1960s marked the accession to the
General Agreement of many newly-independent developing countries. In
February, the Contracting Parties, meeting in a special session, adopted
the text of Part IV on Trade and Development. The additional chapter to
the GATT required developed countries to accord high priority to the
reduction of trade barriers to products of developing countries. A
committee on Trade and Development was established to oversee the
functioning of the new GATT provisions. In the preceding year, GATT
had established the International Trade Center (ITC) to help developing
countries in trade promotion and identification of potential markets.
Since 1968, the ITC had been jointly operated by GATT and the UN
Conference on Trade and Development (UNCTAD).
1973 The Tokyo Round. The seventh Round was launched by
Ministers in September at the Japanese capital. Some 99 countries
participated in negotiating a comprehensive body of agreements covering
both tariff and non-tariff matters. At the end of the Round in November
1979, participants exchange tariff reduction and bindings which covered
more than $300 billion of trade. As a result of these cuts, the weighted
average tariff on manufactured goods in the world's nine major Industrial
Markets declined from 7.0 to 4.7 per cent. Agreements were reached in
the following areas; subsidies and countervailing measures, technical
barriers to trade, import licensing procedures, government procurement,
customs valuation, a revised anti-dumping code, trade in bovine meat,
trade in daily products and trade in civil aircraft. The first concrete
result of the Round was the reduction of import duties and other trade
barriers by industrial countries on tropical products exported by
developing countries.
1974 On 1 January 1974, the Arrangement Regarding International
Trade in textiles, otherwise known as the Multifibre Arrangement
(MFA), entered into force. Its superseded the arrangement that had been
governing trade in cotton textiles since 1961. The MFA seeks to promote
the expansion and progressive liberalization of trade in textile product
while at the same time avoiding disruptive effects in individual markets
in lines of production. The MFA was extended in 1978, 1982, 1986,
1991 and 1992. MFA members account for most of the world exports of
textiles and clothing which in 1986 amounted to US$128 billion.
1982 Ministerial Meeting. Meeting for the first time in nearly ten years,
the GATT Ministers in November at Geneva reaffirmed the validity of
GATT rules for the conduct of international trade and committed
themselves to combating protectionist pressures. They also established a
wide-ranging work programme for the GATT which was to laid down the
ground work for a new Round. 1986 The Uruguay Round. The GATT
Trade Ministers meeting at Punta del Este, Uruguay, launched the eighth
Round of Trade Negotiations on 20 September. The Punta del Este,
declarations, while representing a single political undertaking, was

divided into two section. The First covered negotiations on Trade in
goods and the second initiated negotiation on trade in services. In the
area of trade in goods, the Ministers committed themselves to a
"standstill" on new trade measures inconsistent with their GATT
obligations and to a "rollback" programme aimed at phasing out existing
inconsistent measures. Envisaged to last four years, negotiations started
in early February 1987 in the following areas: tariffs, non-tariff
measures, tropical products, natural resource-based products, textiles
and clothing, agriculture, subsidies, safeguards, trade-related aspects of
intellectual property rights including trade in counterfeit goods, in trade-
related investment measures. The work of other groups included a review
of GATT articles, the GATT dispute-settlement procedure, the Tokyo
Round agreements, as well as functioning of the GATT system as a
whole.
1994 "GATT 1994" is the updated version of GATT 1947 and takes into
account the substantive and institutional changes negotiated in the Uruguay
Round. GATT 1994 is an integral part of the World Trade Organization
established on 1 January 1995. It is agreed that there be a one year transition
period during which certain GATT 1947 bodies and commitments would co-
exist with those of the World Trade Organization."
ii[2] The Final Act was signed by representatives of 125 entities, namely Algeria, Angola,
Antigua and Barbuda, Argentine Republic, Australia, Republic of Austria, State of Bahrain,
Peoples Republic of Bangladesh, Barbados, The Kingdom of Belgium, Belize, Republic of
Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Burkina Faso, Burundi, Cameroon,
Canada, Central African Republic, Chad, Chile, Peoples Republic of China, Colombia,
Congo, Costa Rica, Republic of Cote dIvoire, Cuba, Cyprus, Czech Republic, Kingdom of
Denmark, Commonwealth of Dominica, Dominican Republic, Arab Republic of Egypt, El
Salvador, European Communities, Republic of Fiji, Finland, French Republic, Gabonese
Republic, Gambia, Federal Republic of Germany, Ghana, Hellenic Republic, Grenada,
Guatemala, Republic of Guinea-Bissau, Republic of Guyana, Haiti, Honduras, Hong Kong,
Hungary, Iceland, India, Indonesia, Ireland, State of Israel, Italian Republic, Jamaica,
Japan, Kenya, Korea, State of Kuwait, Kingdom of Lesotho, Principality of Liechtenstein,
Grand Duchy of Luxembourg, Macau, Republic of Madagascar, Republic of Malawi,
Malaysia, Republic of Maldives, Republic of Mali, Republic of Malta, Islamic Republic of
Mauritania, Republic of Mauritius, United Mexican States, Kingdom of Morocco, Republic of
Mozambique, Union of Myanmar, Republic of Namibia, Kingdom of the Netherlands, New
Zealand, Nicaragua, Republic of Niger, Federal Republic of Nigeria, Kingdom of Norway,
Islamic Republic of Pakistan, Paraguay, Peru, Philippines, Poland, Portuguese Republic,
State of Qatar, Romania, Rwandese Republic, Saint Kitts and Nevis, Saint Lucia, Saint
Vincent and the Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, South
Africa, Kingdom of Spain, Democratic Socialist Republic of Sri Lanka, Republic of Surinam,
Kingdom of Swaziland, Kingdom of Sweden, Swiss Confederation, United Republic of
Tanzania, Kingdom of Thailand, Togolese Republic, Republic of Trinidad and Tobago,
Tunisia, Turkey, Uganda, United Arab Emirates, United Kingdom of Great Britain and
Northern Ireland, United States of America, Eastern Republic of Uruguay, Venezuela,
Republic of Zaire, Republic of Zambia, Republic of Zimbabwe; see pp. 6-25, Vol. 1, Uruguay
Round of Multilateral Trade Negotiations.
iii[3] 11 August 1994
The Honorable Members
Senate
Through Senate President Edgardo Angara
Manila
Ladies and Gentlemen:
I have the honor to forward herewith an authenticated copy of the Uruguay Round Final
Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro for the
Philippines on 15 April 1994 in Marrakesh, Morocco.
The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the
interrelationship between trade and economic policies affecting growth and development.
The Final Act will improve Philippine access to foreign markets, especially its major trading
partners through the reduction of tariffs on its exports particularly agricultural and

industrial products. These concessions may be availed of by the Philippines, only if it is a
member of the World Trade Organization. By GATT estimates, the Philippines can acquire
additional export revenues from $2.2 to $2.7 Billion annually under Uruguay Round. This
will be on top of the normal increase in exports that the Philippines may experience.
The Final Act will also open up new opportunities for the services sector in such areas as
the movement of personnel, (e.g. professional services and construction services), cross-
border supply (e.g. computer-related services), consumption abroad (e.g. tourism,
convention services, etc.) and commercial presence.
The clarified and improved rules and disciplines on anti-dumping and countervailing
measures will also benefit Philippine exporters by reducing the costs and uncertainty
associated with exporting while at the same time providing a means for domestic industries
to safeguard themselves against unfair imports.
Likewise, the provision of adequate protection for intellectual property rights is expected to
attract more investments into the country and to make it less vulnerable to unilateral
actions by its trading partners (e.g. Sec. 301 of the United States Omnibus Trade Law).
In view of the foregoing, the Uruguay Round Final Act is hereby submitted to the Senate for
its concurrence pursuant to Section 21, Article VII of the Constitution.
A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is
enclosed.
Very truly yours,
(SGD.) FIDEL V. RAMOS
iv[4] 11 August 1994
The Honorable Members
Senate
Through Senate President Edgardo Angara
Manila
Ladies and Gentlemen:
I have the honor to forward herewith an authenticated copy of the Uruguay Round
Final Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro for the
Philippines on 13 April 1994 in Marrakech (sic), Morocco.
Members of the trade negotiations committee, which included the Philippines, agreed
that the Agreement Establishing the World Trade Organization, the Ministerial Declarations
and Decisions, and the Understanding on Commitments in Financial Services embody the
results of their negotiations and form an integral part of the Uruguay Round Final Act.
By signing the Uruguay Round Final Act, the Philippines, through Secretary Navarro,
agreed:
(a) To submit the Agreement Establishing the World Trade Organization to the Senate for
its concurrence pursuant to Section 21, Article VII of the Constitution; and
(b) To adopt the Ministerial Declarations and Decisions.
The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the
interrelationship between trade and economic policies affecting growth and development.
The Final Act will improve Philippine access to foreign markets, especially its major
trading partners through the reduction of tariffs on its exports particularly agricultural and
industrial products. These concessions may be availed of by the Philippines, only if it is a
member of the World Trade Organization. By GATT estimates, the Philippines can acquire
additional export revenues from $2.2 to $2.7 Billion annually under Uruguay Round. This
will be on top of the normal increase in the exports that the Philippines may experience.
The Final Act will also open up new opportunities for the services sector in such
areas as the movement of personnel, (e.g., professional services and construction services),
cross-border supply (e.g., computer-related services), consumption abroad (e.g., tourism,
convention services, etc.) and commercial presence.
The clarified and improved rules and disciplines on anti-dumping and countervailing
measures will also benefit Philippine exporters by reducing the costs and uncertainty
associated with exporting while at the same time providing a means for domestic industries
to safeguard themselves against unfair imports.
Likewise, the provision of adequate protection for intellectual property rights is
expected to attract more investments into the country and to make it a less vulnerable to
unilateral actions by its trading partners (e.g., Sec. 301 of the United States Omnibus
Trade Law).

In view of the foregoing, the Uruguay Round Final Act, the Agreement Establishing
the World Trade Organization, the Ministerial Declarations and Decisions, and the
Understanding on Commitments in Financial Services, as embodied in the Uruguay Round
Final Act and forming and integral part thereof are hereby submitted to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution.
A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is
enclosed.
Very truly yours,
(SGD.) FIDEL V. RAMOS
v[5] December 9, 1994
HON. EDGARDO J. ANGARA
Senate President
Senate, Manila
Dear Senate President Angara:
Pursuant to the provisions of Sec. 26 (2) Article VI of the Constitution, I hereby
certify to the necessity of the immediate adoption of P.S. 1083, entitled:
CONCURRING IN THE RATIFICATION OF THE AGREEMENT ESTABLISHING THE WORLD
TRADE ORGANIZATION
to meet a public emergency consisting of the need for immediate membership in the WTO in
order to assure the benefits to the Philippine economy arising from such membership.
Very truly yours,
(SGD.) FIDEL V. RAMOS
vi[6] Attached as Annex A, Petition; rollo, p. 52. P.S. 1083 is the forerunner of assailed
Senate Resolution No. 97. It was prepared by the Committee of the Whole on the General
Agreement on Tariffs and Trade chaired by Sen. Blas F. Ople and co-chaired by Sen. Gloria
Macapagal-Arroyo; see Annex C, Compliance of petitioners dated January 28, 1997.
vii[7] The Philippines is thus considered an original or founding member of WTO, which as
of July 26, 1996 had 123 members as follows: Antigua and Barbuda, Argentina, Australia,
Austria, Bahrain, Bangladesh, Barbados, Belgium, Belize, Benin, Bolivia, Botswana, Brazil,
Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Canada, Central African Republic,
Chili, Colombia, Costa Rica, Cote dIvoire, Cuba, Cyprus, Czech Republic, Denmark,
Djibouti, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, European
Community, Fiji, Finland, France, Gabon, Germany, Ghana, Greece, Grenada, Guatemala,
Guinea, Guinea Bissau, Guyana, Haiti, Honduras, Hongkong, Hungary, Iceland, India,
Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kenya, Korea, Kuwait, Lesotho,
Liechtenstein, Luxembourg, Macau, Madagascar, Malawi, Malaysia, Maldives, Mali, Malta,
Mauritania, Mauritius, Mexico, Morocco, Mozambique, Myanmar, Namibia, Netherlands --
for the Kingdom in Europe and for the Netherlands Antilles, New Zealand, Nicaragua,
Nigeria, Norway, Pakistan, Papua New Guinea, Paraguay, Peru, Philippines, Poland,
Portugal, Qatar, Romania, Rwanda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent & the
Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, Slovenia, Solomon Islands,
South Africa, Spain, Sri Lanka, Surinam, Swaziland, Sweden, Switzerland, Tanzania,
Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates,
United Kingdom, United States, Uruguay, Venezuela, Zambia, and Zimbabwe. See Annex
A, Bautista Paper, infra.
viii[8] Page 6; rollo, p. 261.
ix[9] In compliance, Ambassador Bautista submitted to the Court on August 12, 1996, a
Memorandum (the Bautista Paper) consisting of 56 pages excluding annexes. This is the
same document mentioned in footnote no. 1.
x[10] Memorandum for Respondents, p. 13; rollo, p. 268.
xi[11] Cf. Kilosbayan, Incorporated vs. Morato, 246 SCRA 540, July 17, 1995 for a
discussion on locus standi. See also the Concurring Opinion of Mr. Justice Vicente V.
Mendoza in Tatad vs. Garcia, Jr., 243 SCRA 473, April 6, 1995, as well as Kilusang Mayo
Uno Labor Center vs. Garcia, Jr., 239 SCRA 386, 414, December 23, 1994.
xii[12] Aquino, Jr. vs. Ponce Enrile, 59 SCRA 183, 196, September 17, 1974, cited in
Bondoc vs. Pineda, 201 SCRA 792, 795, September 26, 1991.
xiii[13] Guingona, Jr. vs. Gonzales, 219 SCRA 326, 337, March 1, 1993.
xiv[14] See Tanada and Macapagal vs. Cuenco, et al., 103 Phil. 1051 for a discussion on the
scope of political question.
xv[15] Section 1, Article VIII, (par. 2).

xvi[16] In a privilege speech on May 17, 1993, entitled Supreme Court -- Potential Tyrant?
Senator Arturo Tolentino concedes that this new provision gives the Supreme Court a duty
to intrude into the jurisdiction of the Congress or the President.
xvii[17] I Record of the Constitutional Commission 436.
xviii[18] Cf. Daza vs. Singson, 180 SCRA 496, December 21, 1989.
xix[19] Memorandum for Petitioners, pp. 14-16; rollo, pp. 204-206.
xx[20] Par. 4, Article XVI, WTO Agreement, Uruguay Round of Multilateral Trade
Negotiations, Vol. 1, p. 146.
xxi[21] Also entitled Declaration of Principles. The nomenclature in the 1973 Charter is
identical with that in the 1987s.
xxii[22] Philippine Political Law, 1962 Ed., p. 116.
xxiii[23] Bernas, The Constitution of the Philippines: A Commentary, Vol. II, 1988 Ed., p. 2.
In the very recent case of Manila Prince Hotel vs. GSIS, G.R. No. 122156, February 3, 1997,
p. 8, it was held that A provision which lays down a general principle, such as those found
in Art. II of the 1987 Constitution, is usually not self-executing.
xxiv[24] 246 SCRA 540, 564, July 17, 1995. See also Tolentino vs. Secretary of Finance,
G.R. No. 115455 and consolidated cases, August 25, 1995.
xxv[25] 197 SCRA 52, 68, May 14, 1991.
xxvi[26] 224 SCRA 792, 817, July 30, 1993.
xxvii[27] Sec. 10, Article XII.
xxviii[28] Sec. 12, Article XII.
xxix[29] Sec. 19, Art. II.
xxx[30] Sec. 13, Art. XII.
xxxi[31] G.R. No. 122156, February 3, 1997, pp. 13-14.
xxxii[32] Sec. 1, Art. XII.
xxxiii[33] Bautista Paper, p. 19.
xxxiv[34] Preamble, WTO Agreement p. 137, Vol. 1, Uruguay Round of Multilateral Trade
Negotiations. Underscoring supplied.
xxxv[35] Sec. - 19, Article II, Constitution.
xxxvi[36] III Records of the Constitutional Commission 252.
xxxvii[37] Sec. 13, Article XII, Constitution.
xxxviii[38] Justice Isagani A. Cruz, Philippine Political Law, 1995 Ed., p. 13, quoting his
own article entitled, A Quintessential Constitution earlier published in the San Beda Law
Journal, April 1972; underscoring supplied.
xxxix[39] Par. 4, Article XVI (Miscellaneous Provisions), WTO Agreement, p.146, Vol. 1,
Uruguay Round of Multilateral Trade Negotiations.
xl[40] Memorandum for the Petitioners, p. 29; rollo, p. 219.
xli[41] Sec. 24, Article VI, Constitution.
xlii[42] Subsection (2), Sec. 28, Article, VI Constitution.
xliii[43] Sec. 2, Article II, Constitution.
xliv[44] Cruz, Philippine Political Law, 1995 Ed., p. 55.
xlv[45] Salonga and Yap, op cit 305.
xlvi[46] Salonga, op. cit., p. 287.
xlvii[47] Quoted in Paras and Paras, Jr., International Law and World Politics, 1994 Ed., p.
178.
47-A Reagan vs. Commission of Internal Revenue, 30 SCRA 968, 973, December 27, 1969.
xlviii[48] Trebilcock and Howse. The Regulation of International Trade, p. 14, London,
1995, cited on p. 55-56, Bautista Paper.
xlix[49] Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.
l[50] Item 5, Sec. 5, Article VIII, Constitution.
li[51] Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.
lii[52] Bautista Paper, p. 13.
liii[53] See footnote 3 of the text of this letter.
liv[54] Salonga and Yap, op cit., pp. 289-290.
lv[55] The full text, without the signatures, of the Final Act is as follows:
Final Act Embodying the Results of the
Uruguay Round of Multilateral Trade Negotiations
1. Having met in order to conclude the Uruguay Round of Multilateral Trade
Negotiations, representatives of the governments and of the European Communities,
members of the Trade Negotiations Committee, agree that the Agreement

Establishing the World Trade Organization (referred to in the Final Act as the WTO
Agreement), the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services, as annexed hereto, embody the results of their
negotiations and form an integral part of this Final Act.
2. By signing to the present Final Act, the representatives agree.
(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
3. The representatives agree on the desirability of acceptance of the WTO Agreement
by all participants in the Uruguay Round of Multilateral Trade Negotiations
(hereinafter referred to as participants) with a view to its entry into force by 1
January 1995, or as early as possible thereafter. Not later than late 1994, Ministers
will meet, in accordance with the final paragraph of the Punta del Este Ministerial
Declarations, to decide on the international implementation of the results, including
the timing of their entry into force.
4. The representatives agree that the WTO Agreement shall be opened for acceptance
as a whole, by signature or otherwise, by all participants pursuant to Article XIV
thereof. The acceptance and entry into force of a Plurilateral Trade Agreement
included in Annex 4 of the WTO Agreement shall be governed by the provisions of
that Plurilateral Trade Agreement.
5. Before accepting the WTO Agreement, participants which are not contracting
parties to the General Agreement on Tariffs and Trade must first have concluded
negotiations for their accession to the General Agreement and become contracting
parties thereto. For participants which are not contracting parties to the general
Agreement as of the date of the Final Act, the Schedules are not definitive and shall
be subsequently completed for the purpose of their accession to the General
Agreement and acceptance of the WTO Agreement.
6. This Final Act and the Texts annexed hereto shall be deposited with the Director-
General to the CONTRACTING PARTIES to the General Agreement on Tariffs and
Trade who shall promptly furnish to each participant a certified copy thereof.
DONE at Marrakesh this fifteenth day of April One thousand nine hundred and ninety-four,
in a single copy, in the English, French and Spanish languages, each text being authentic."
lvi[56] Bautista Paper, p. 16.
lvii[57] Bautista Paper, p. 16.
lviii[58] Uruguay Round of Multilateral Trade Negotiations, Vol. I, pp. 137-138.
lix[59] See footnote 3 for complete text.
lx[60] Taken from pp. 63-85, Respondent Memorandum.
lxi[61] Zarate vs. Olegario, G.R. No. 90655, October 7, 1996.
lxii[62] San Sebastian College vs. Court of Appeals, 197 SCRA 138, 144, May 15, 1991;
Commissioner of Internal Revenue vs. Court of Tax Appeals, 195 SCRA 444, 458 March 20,
1991; Simon vs. Civil Service Commission, 215 SCRA 410, November 5, 1992; Bustamante
vs. Commissioner on Audit, 216 SCRA 134, 136, November 27, 1992.
lxiii[63] Paredes vs. Civil Service Commission, 192 SCRA 84, 94, December 4, 1990.
lxiv[64] Sec. 21. No treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate.
lxv[65] Readers Digest, December 1996 issue, p. 28.






Republic of the Philippines
SUPREME COURT
Manila
EN BANC


G.R. No. 118910 November 16, 1995
KILOSBAYAN, INCORPORATED, JOVITO R. SALONGA, CIRILO A. RIGOS, ERME
CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO,
FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, RAFAEL G. FERNANDO,
RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, SEN. FREDDIE WEBB,
SEN. WIGBERTO TAADA, REP. JOKER P. ARROYO, petitioners,
vs.
MANUEL L. MORATO, in his capacity as Chairman of the Philippine Charity
Sweepstakes Office, and the PHILIPPINE GAMING MANAGEMENT CORPORATION,
respondents.
R E S O L U T I O N

MENDOZA, J.:
Petitioners seek reconsideration of our decision in this case. They insist that the decision in
the first case has already settled (1) whether petitioner Kilosbayan, Inc. has a standing to
sue and (2) whether under its charter (R.A. No. 1169, as amended) the Philippine Charity
Sweepstakes Office can enter into any form of association or collaboration with any party in
operating an on-line lottery. Consequently, petitioners contend, these questions can no
longer be reopened.
Because two members of the Court did not consider themselves bound by the decision in
the first case, petitioners suggest that the two, in joining the dissenters in the first case in
reexamining the questions in the present case, acted otherwise than according to law. They
cite the following statement in the opinion of the Court:
The voting on petitioners' standing in the previous case was a narrow one, with
seven (7) members sustaining petitioners' standing and six (6) denying
petitioners' right to bring the suit. The majority was thus a tenuous one that is
not likely to be maintained in any subsequent litigation. In addition, there have
been changes in the membership of the Court, with the retirement of Justices
Cruz and Bidin and the appointment of the writer of this opinion and Justice
Francisco. Given this fact it is hardly tenable to insist on the maintenance of
the ruling as to petitioners' standing.
Petitioners claim that this statement "conveys a none too subtle suggestion, perhaps
a Freudian slip, that the two new appointees, regardless of the merit of the Decision
in the first Kilosbayan case against the lotto (Kilosbayan, et al. v. Guingona, 232
SCRA 110 (1994)) must of necessity align themselves with all the Ramos appointees
who were dissenters in the first case and constitute the new majority in the second
lotto case." And petitioners ask, "why should it be so?"
Petitioners ask a question to which they have made up an answer. Their attempt at
psychoanalysis, detecting a Freudian slip where none exists, may be more revealing of their
own unexpressed wish to find motives where there are none which they can impute to some
members of the Court.
For the truth is that the statement is no more than an effort to explain rather than to
justify the majority's decision to overrule the ruling in the previous case. It is simply
meant to explain that because the five members of the Court who dissented in the first case
(Melo, Quiason, Puno, Vitug and Kapunan, JJ.) and the two new members (Mendoza and
Francisco, JJ.) thought the previous ruling to be erroneous and its reexamination not to be
barred by stare decisis, res judicata or conclusiveness of judgment, or law of the case, it
was hardly tenable for petitioners to insist on the first ruling.

Consequently to petitioners' question "What is the glue that holds them together," implying
some ulterior motives on the part of the new majority in reexamining the two questions, the
answer is: None, except a conviction on the part of the five, who had been members of the
Court at the time they dissented in the first case, and the two new members that the
previous ruling was erroneous. The eighth Justice (Padilla, J.) on the other hand agrees
with the seven Justices that the ELA is in a real sense a lease agreement and therefore does
not violate R.A. No. 1169.
The decision in the first case was a split decision: 7-6. With the retirement of one of the
original majority (Cruz, J.) and one of the dissenters (Bidin, J.) it was not surprising that
the first decision in the first case was later reversed.
It is argued that, in any case, a reexamination of the two questions is barred because the
PCSO and the Philippine Gaming Management Corporation made a " formal commitment not
to ask for a reconsideration of the Decision in the first lotto case and instead submit a new
agreement that would be in conformity with the PCSO Charter (R.A. No. 1169, as amended)
and with the Decision of the Supreme Court in the first Kilosbayan case against on-line, hi-
tech lotto."
To be sure, a new contract was entered into which the majority of the Court finds has been
purged of the features which made the first contract objectionable. Moreover, what the
PCSO said in its manifestation in the first case was the following:
1. They are no longer filing a motion for reconsideration of the Decision of this
Honorable Court dated May 5, 1994, a copy of which was received on May 6,
1994.
2. Respondents PCSO and PGMC are presently negotiating a new lease
agreement consistent with the authority of PCSO under its charter (R.A. No.
1169, as amended by B.P. Blg. 42) and conformable with the pronouncements
of this Honorable Court in its Decision of May 5, 1995.
The PGMC made substantially the same manifestation as the PCSO.
There was thus no "formal commitment" but only a manifestation that the parties were
not filing a motion for reconsideration. Even if the parties made a "formal commitment," the
six (6) dissenting Justices certainly could not be bound thereby not to insist on their
contrary view on the question of standing. Much less were the two new members bound by
any "formal commitment" made by the parties. They believed that the ruling in the first
case was erroneous. Since in their view reexamination was not barred by the doctrine of
stare decisis, res judicata or conclusiveness of judgment or law of the case, they voted the
way they did with the remaining five (5) dissenters in the first case to form a new majority
of eight.
Petitioners ask, "Why should this be so?" Because, as explained in the decision, the first
decision was erroneous and no legal doctrine stood in the way of its reexamination. It can,
therefore, be asked "with equal candor": "Why should this not be so?"
Nor is this the first time a split decision was tested, if not reversed, in a subsequent case
because of change in the membership of a court. In 1957, this Court, voting 6-5, held in
Feliciano v. Aquinas, G.R. No. L-10201, Sept. 23, 1957 that the phrase "at the time of the
election" in 2174 of the Revised Administrative Code of 1917 meant that a candidate for
municipal elective position must be at least 23 years of age on the date of the election. On
the other hand, the dissenters argued that it was enough if he attained that age on the day
he assumed office.
Less than three years later, the same question was before the Court again, as a candidate
for municipal councilor stated under oath in her certificate of candidacy that she was
eligible for that position although she attained the requisite age (23 years) only when she
assumed office. The question was whether she could be prosecuted for falsification. In

People v. Yang, 107 Phi. 888 (1960), the Court ruled she could not. Justice, later Chief
Justice, Benison, who dissented in the first case, Feliciano v. Aquinas, supra, wrote the
opinion of the Court, holding that while the statement that the accused was eligible was
"inexact or erroneous, according to the majority in the Feliciano case," the accused could
not be held liable for falsification, because
the question [whether the law really required candidates to have the required
age on the day of the election or whether it was sufficient that they attained it
at the beginning of the term of office] has not been discussed anew, despite the
presence of new members; we simply assume for the purpose of this decision
that the doctrine stands.
Thus because in the meantime there had been a change in the membership of the Court
with the retirement of two members (Recess and Flex, JJ.) who had taken part in the
decision in the first case and their replacement by new members (Barrera and Gutierrez-
David, JJ.) and the fact that the vote in the first case was a narrow one (6 to 5), the Court
allowed that the continuing validity of its ruling in the first case might well be doubted. For
this reason it gave the accused the benefit of the doubt that she had acted in the good faith
belief that it was sufficient that she was 23 years of age when she assumed office.
In that case, the change in the membership of the Court and the possibility of change in
the ruling were noted without anyone much less would-be psychoanalysts finding in
the statement of the Court any Freudian slip. The possibility of change in the rule as a
result of change in membership was accepted as a sufficient reason for finding good faith
and lack of criminal intent on the part of the accused.
Indeed, a change in the composition of the Court could prove the means of undoing an
erroneous decision. This was the lesson of Knox v. Lee, 12 Wall. 457 (1871). The Legal
Tender Acts, which were passed during the Civil War, made U.S. notes (greenbacks) legal
tender for the payment of debts, public or private, with certain exceptions. The validity of
the acts, as applied to preexisting debts, was challenged in Hepburn v. Griswold, 8 Wall.
603 (1869). The Court was then composed of only eight (8) Justices because of
Congressional effort to limit the appointing power of President Johnson. Voting 5-3, the
Court declared the acts void. Chief Justice Chase wrote the opinion of the Court in which
four others, including Justice Grier, concurred. Justices Miller, Swayne and Davis
dissented. A private memorandum left by the dissenting Justices described how an effort
was made "to convince an aged and infirm member of the court [Justice Grier] that he had
not understood the question on which he voted," with the result that what was originally a
4-4 vote was converted into a majority (5-3) for holding the acts invalid.
On the day the decision was announced, President Grant nominated to the Court William
Strong and Joseph P. Bradley to fill the vacancy caused by the resignation of Justice Grier
and to restore the membership of the Court to nine. In 1871, Hepburn v. Griswold was
overruled in the Legal Tender Cases, as Knox v. Lee came to be known, in an opinion by
Justice Strong, with a dissenting opinion by Chief Justice Chase and the three other
surviving members of the former majority. There were allegations that the new Justices
were appointed for their known views on the validity of the Legal Tender Acts, just as there
were others who defended the character and independence of the new Justices. History has
vindicated the overruling of the Hepburn case by the new majority. The Legal Tender Cases
proved to be the Court's means of salvation from what Chief Justice Hughes later described
as one of the Court's "self-inflicted wounds."
1

We now consider the specific grounds for petitioners' motion for reconsideration.
I. We have held that because there are no genuine issues of constitutionality in this case,
the rule concerning real party in interest, applicable to private litigation rather than the
more liberal rule on standing, applies to petitioners. Two objections are made against that
ruling: (1) that the constitutional policies and principles invoked by petitioners, while not
supplying the basis for affirmative relief from the courts, may nonetheless be resorted to for
striking down laws or official actions which are inconsistent with them and (2) that the

Constitution, by guaranteeing to independent people's organizations "effective and
reasonable participation at all levels of social, political and economic decision-making" (Art.
XIII, 16), grants them standing to sue on constitutional grounds.
The policies and principles of the Constitution invoked by petitioner read:
Art. II, 5. The maintenance of peace and order, the protection life, liberty, and
property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.
Id., 12. The natural and primary right and duty of parents in the rearing of
the youth for civic efficiency and the development of moral character shall
receive the support of the Government.
Id., 13. The State recognizes the vital role of the youth in nation-building and
shall promote and protect their physical, moral, spiritual, intellectual, and
social well-being. It shall inculcate in the youth patriotism and nationalism,
and encourage their involvement in public and civic affairs.
Id., 17. The State shall give priority to education, science and technology, arts,
culture, and sports to foster patriotism and nationalism, accelerate social
progress, and promote total human liberation and development.
As already stated, however, these provisions are not self-executing. They do not confer
rights which can be enforced in the courts but only provide guidelines for legislative or
executive action. By authorizing the holding of lottery for charity, Congress has in effect
determined that consistently with these policies and principles of the Constitution, the
PCSO may be given this authority. That is why we said with respect to the opening by the
PAGCOR of a casino in Cagayan de Oro, "the morality of gambling is not a justiciable issue.
Gambling is not illegal per se. . . . It is left to Congress to deal with the activity as it sees fit."
(Magtajas v. Pryce Properties Corp., Inc., 234 SCRA 255, 268 [1994]).
It is noteworthy that petitioners do not question the validity of the law allowing lotteries. It
is the contract entered into by the PCSO and the PGMC which they are assailing. This case,
therefore, does not raise issues of constitutionality but only of contract law, which
petitioners, not being privies to the agreement, cannot raise.
Nor does Kilosbayan's status as a people's organization give it the requisite personality to
question the validity of the contract in this case. The Constitution provides that "the State
shall respect the role of independent people's organizations to enable the people to pursue
and protect, within the democratic framework, their legitimate and collective interests and
aspirations through peaceful and lawful means," that their right to "effective and
reasonable participation at all levels of social, political, and economic decision-making shall
not be abridged." (Art. XIII, 15-16)
These provisions have not changed the traditional rule that only real parties in interest or
those with standing, as the case may be, may invoke the judicial power. The jurisdiction of
this Court, even in cases involving constitutional questions, is limited by the "case and
controversy" requirement of Art. VIII, 5. This requirement lies at the very heart of the
judicial function. It is what differentiates decision-making in the courts from decision-
making in the political departments of the government and bars the bringing of suits by
just any party.
Petitioners quote extensively from the speech of Commissioner Garcia before the
Constitutional Commission, explaining the provisions on independent people's
organizations. There is nothing in the speech, however, which supports their claim of
standing. On the contrary, the speech points the way to the legislative and executive
branches of the government, rather than to the courts, as the appropriate fora for the
advocacy of petitioners' views.
2
Indeed, the provisions on independent people's
organizations may most usefully be read in connection with the provision on initiative and

referendum as a means whereby the people may propose or enact laws or reject any of
those passed by Congress. For the fact is that petitioners' opposition to the contract in
question is nothing more than an opposition to the government policy on lotteries.
It is nevertheless insisted that this Court has in the past accorded standing to taxpayers
and concerned citizens in cases involving "paramount public interest." Taxpayers, voters,
concerned citizens and legislators have indeed been allowed to sue but then only (1) in
cases involving constitutional issues and
(2) under certain conditions. Petitioners do not meet these requirements on standing.
Taxpayers are allowed to sue, for example, where there is a claim of illegal disbursement of
public funds. (Pascual v. Secretary of Public Works, 110 Phi. 331 (1960); Sanidad v.
Comelec, 73 SCRA 333 (1976); Bugnay Const. & Dev. v. Laron, 176 SCRA 240 (1989); City
Council of Cebu v. Cuizon, 47 SCRA 325 [1972]) or where a tax measure is assailed as
unconstitutional. (VAT Cases [Tolentino v. Secretary of Finance], 235 SCRA 630 [1994])
Voters are allowed to question the validity of election laws because of their obvious interest
in the validity of such laws. (Gonzales v. Comelec, 21 SCRA 774 [1967]) Concerned citizens
can bring suits if the constitutional question they raise is of "transcendental importance"
which must be settled early. (Emergency Powers Cases [Araneta v. Dinglasan], 84 Phi. 368
(1949); Iloilo Palay and Corn Planters Ass'n v. Feliciano, 121 Phi. 358 (1965); Philconsa v.
Gimenez, 122 Phi. 894 (1965); CLU v. Executive Secretary, 194 SCRA 317 [1991])
Legislators are allowed to sue to question the validity of any official action which they claim
infringes their prerogatives qua legislators. (Philconsa v. Enriquez, 235 506 (1994);
Guingona v. PCGG, 207 SCRA 659 (1992); Gonzales v. Macaraig, 191 SCRA 452 (1990);
Tolentino v. Comelec, 41 SCRA 702 (1971); Tatad v. Garcia, G.R. No. 114222, April 16,
1995 (Mendoza, J., concurring))
Petitioners do not have the same kind of interest that these various litigants have.
Petitioners assert an interest as taxpayers, but they do not meet the standing requirement
for bringing taxpayer's suits as set forth in Dumlao v. Comelec, 95 SCRA 392, 403 (1980), to
wit:
While, concededly, the elections to be held involve the expenditure of public
moneys, nowhere in their Petition do said petitioners allege that their tax money
is "being extracted and spent in violation of specific constitutional protections
against abuses of legislative power" (Flast v. Cohen, 392 U.S., 83 [1960]), or
that there is a misapplication of such funds by respondent COMELEC (see
Pascual vs. Secretary of Public Works, 110 Phil. 331 [1960]), or that public
money is being deflected to any improper purpose. Neither do petitioners seek
to restrain respondent from wasting public funds through the enforcement of
an invalid or unconstitutional law. (Philippine Constitution Association vs.
Mathay, 18 SCRA 300 [1966]), citing Philippine Constitution Association vs.
Gimenez, 15 SCRA 479 [1965]). Besides, the institution of a taxpayer's suit, per
se, is no assurance of judicial review. As held by this Court in Tan vs.
Macapagal (43 SCRA 677 [1972]), speaking through our present Chief Justice,
this Court is vested with discretion as to whether or not a taxpayer's suit
should be entertained. (Emphasis added)
Petitioners' suit does not fall under any of these categories of taxpayers' suits.
Neither do the other cases cited by petitioners support their contention that taxpayers have
standing to question government contracts regardless of whether public funds are involved
or not. In Gonzales v. National Housing, Corp., 94 SCRA 786 (1979), petitioner filed a
taxpayer's suit seeking the annulment of a contract between the NHC and a foreign
corporation. The case was dismissed by the trial court. The dismissal was affirmed by this
Court on the grounds of res judicata and pendency of a prejudicial question, thus avoiding
the question of petitioner's standing.
On the other hand, in Gonzales v. Raquiza, 180 SCRA 254 (1989), petitioner sought the
annulment of a contract made by the government with a foreign corporation for the

purchase of road construction equipment. The question of standing was not discussed, but
even if it was, petitioner's standing could be sustained because he was a minority
stockholder of the Philippine National Bank, which was one of the defendants in the case.
In the other case cited by petitioners, City Council of Cebu v. Cuizon, 47 SCRA 325 (1972),
members of the city council were allowed to sue to question the validity of a contract
entered into by the city government for the purchase of road construction equipment
because their contention was that the contract had been made without their authority. In
addition, as taxpayers they had an interest in seeing to it that public funds were spent
pursuant to an appropriation made by law.
But, in the case at bar, there is an allegation that public funds are being misapplied or
misappropriated. The controlling doctrine is that of Gonzales v. Marcos, 65 SCRA 624
(1975) where it was held that funds raised from contributions for the benefit of the Cultural
Center of the Philippines were not public funds and petitioner had no standing to bring a
taxpayer's suit to question their disbursement by the President of the Philippines.
Thus, petitioners' right to sue as taxpayers cannot be sustained. Nor as concerned citizens
can they bring this suit because no specific injury suffered by them is alleged. As for the
petitioners, who are members of Congress, their right to sue as legislators cannot be
invoked because they do not complain of any infringement of their rights as legislators.
Finally, in Valmonte v. PCSO, G.R. No. 78716, September 22, 1987, we threw out a petition
questioning another form of lottery conducted by the PCSO on the ground that petitioner,
who claimed to be a "citizen, lawyer, taxpayer and father of three minor children," had no
direct and personal interest in the lottery. We said: "He must be able to show, not only that
the law is invalid, but also that he has sustained or is in immediate danger of sustaining
some direct injury as a result of its enforcement, and not merely that he suffers thereby in
some indefinite way. It must appear that the person complaining has been or is about to be
denied some right or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute complained of." In the case at
bar, petitioners have not shown why, unlike petitioner in the Valmonte case, they should be
accorded standing to bring this suit.
The case of Oposa v. Factoran, Jr. 224 SCRA 792 (1993) is different. Citizens' standing to
bring a suit seeking the cancellation of timber licenses was sustained in that case because
the Court considered Art. II, 16 a right-conferring provision which can be enforced in the
courts. That provision states:
The State shall protect and advance the right of the people to a balanced and
healthful ecology in accord with the rhythm and harmony of nature.
(Emphasis)
In contrast, the policies and principles invoked by petitioners in this case do not
permit of such categorization.
Indeed, as already stated, petitioners' opposition is not really to the validity of the ELA but
to lotteries which they regard to be immoral. This is not, however, a legal issue, but a policy
matter for Congress to decide and Congress has permitted lotteries for charity.
Nevertheless, although we have concluded that petitioners do not have standing, we have
not stopped there and dismissed their case. For in the view we take, whether a party has a
cause of action and, therefore, is a real party in interest or one with standing to raise a
constitutional question must turn on whether he has a right which has been violated. For
this reason the Court has not ducked the substantive issues raised by petitioners.
II. R.A. No. 1169, as amended by B.P No . 42, states:
1. The Philippine Charity Sweepstakes Office. The Philippine Charity
Sweepstakes Office, hereinafter designated the Office, shall be the principal

government agency for raising and providing for funds for health programs,
medical assistance and services and charities of national character, and as
such shall have the general powers conferred in section thirteen of Act
Numbered One Thousand Four Hundred Fifty-Nine, as amended, and shall
have the authority:
A. To hold and conduct charity sweepstakes races, lotteries and other similar
activities, in such frequency and manner, as shall be determined, and subject
to such rules and regulations as shall be promulgated by the Board of
Directors.
B. Subject to the approval of the Minister of Human Settlements, to engage in
health and welfare-related investments, programs, projects and activities which
may be profit-oriented, by itself or in collaboration, association or joint venture
with any person, association, company or entity, whether domestic or foreign,
except for the activities mentioned in the preceding paragraph (A), for the
purpose of providing for permanent and continuing sources of funds for health
programs, including the expansion of existing ones, medical assistance and
services, and/or charitable grants: Provided, That such investments will not
compete with the private sector in areas where investments are adequate as
may be determined by the National Economic and Development Authority.
Petitioners insist on the ruling in the previous case that the PCSO cannot hold and conduct
charity sweepstakes, lotteries and other similar activities in collaboration, association or
joint venture with any other party because of the clause "except for the activities mentioned
in the preceding paragraph (A)" in paragraph (B) of 1. Petitioners contend that the ruling is
the law of this case because the parties are the same and the case involves the same issue,
i.e., the meaning of this statutory provision.
The "law of the case" doctrine is inapplicable, because this case is not a continuation of the
first one. Petitioners also say that inquiry into the same question as to the meaning of the
statutory provision is barred by the doctrine of res judicata. The general rule on the
"conclusiveness of judgment," however, is subject to the exception that a question may be
reopened if it is a legal question and the two actions involve substantially different claims.
This is generally accepted in American law from which our Rules of Court was adopted.
(Montana v. United States, 440 U.S. 59 L.Ed.2d 147, 210 (1979); RESTATEMENT OF THE
LAW 2d, ON JUDGMENTS, 28; P. BATOR, D. MELTZER, P. MISHKIN AND D. SHAPIRO,
THE FEDERAL COURTS AND THE FEDERAL SYSTEM 1058, n.2 [3rd Ed., 1988]) There is
nothing in the record of this case to suggest that this exception is inapplicable in this
jurisdiction.
Indeed, the questions raised in this case are legal questions and the claims involved are
substantially different from those involved in the prior case between the parties. As already
stated, the ELA is substantially different from the Contract of Lease declared void in the
first case.
Borrowing from the dissenting opinion of Justice Feliciano, petitioners argue that the
phrase "by itself or in collaboration, association or joint venture with any other party"
qualifies not only 1 (B) but also 1 (A), because the exception clause ("except for the
activities mentioned in the preceding paragraph [A]") "operates, as it were, as a renvoi
clause which refers back to Section 1(A) and in this manner avoids the necessity of
simultaneously amending the text of Section 1(A)."
This interpretation, however, fails to take into account not only the location of the phrase in
paragraph (B), when it should be in paragraph (A) had that been the intention of the
lawmaking authority, but also the phrase "by itself." In other words, under paragraph (B),
the PCSO is prohibited from "engag[ing] in . . . investments, programs, projects and
activities" if these involve sweepstakes races, lotteries and other similar activities not only
"in collaboration, association or joint venture" with any other party but also "by itself."

Obviously, this prohibition cannot apply when the PCSO conducts these activities itself.
Otherwise, what paragraph (A) authorizes the PCSO to do, paragraph (B) would prohibit.
The fact is that the phrase in question does not qualify the authority of the PCSO under
paragraph (A), but rather the authority granted to it by paragraph (B). The amendment of
paragraph (B) by B.P. Blg. 42 was intended to enable the PCSO to engage in certain
investments, programs, projects and activities for the purpose of raising funds for health
programs and charity. That is why the law provides that such investments by the PCSO
should "not compete with the private sector in areas where investments are adequate as
may be determined by the National Economic and Development Authority." Justice Davide,
then an Assemblyman, made a proposal which was accepted, reflecting the understanding
that the bill they were discussing concerned the authority of the PCSO to invest in the
business of others. The following excerpt from the Record of the Batasan Pambansa shows
this to be the subject of the discussion:
MR. DAVIDE. May I introduce an amendment after "adequate". The intention of
the amendment is not to leave the determination of whether it is adequate or
not to anybody. And my amendment is to add after "adequate" the words AS
MAY BE DETERMINED BY THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY. As a mater of fact, it will strengthen the authority to invest in
these areas, provided that the determination of whether the private sector's
activity is already adequate must be determined by the National Economic and
Development Authority.
Mr. ZAMORA. Mr. Speaker, the committee accepts the proposed amendment.
MR. DAVIDE. Thank you, Mr. Speaker.
(2 RECORD OF THE BATASAN PAMBANSA, Sept. 6, 1979,
p. 1007)
Thus what the PCSO is prohibited from doing is from investing in a business engaged in
sweepstakes races, lotteries and other similar activities. It is prohibited from doing so
whether "in collaboration, association or joint venture" with others or "by itself." This seems to
be the only possible interpretation of 1 (A) and (B) in light of its text and its legislative
history. That there is today no other entity engaged in sweepstakes races, lotteries and the
like does not detract from the validity of this interpretation.
III. The Court noted in its decision that the provisions of the first contract, which were
considered to be features of a joint venture agreement, had been removed in the new
contract. For instance, 5 of the ELA provides that in the operation of the on-line lottery,
the PCSO must employ "its own competent and qualified personnel." Petitioners claim,
however, that the "contemporaneous interpretation" of PGMC officials of this provision is
otherwise. They cite the testimony of Glen Barroga of the PGMC before a Senate committee
to the effect that under the ELA the PGMC would be operating the lottery system "side by
side" with PCSO personnel as part of the transfer of technology.
Whether the transfer of technology would result in a violation of PCSO's franchise should
be determined by facts and not by what some officials of the PGMC state by way of opinion.
In the absence of proof to the contrary, it must be presumed that 5 reflects the true
intention of the parties. Thus, Art. 1370 of the Civil Code says that "If the terms of a
contract are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall control." The intention of the parties must be
ascertained from their "contemporaneous and subsequent acts." (Art. 1371; Atlantic Gulf
Co. v. Insular Government, 10 Phil. 166 [1908]) It cannot simply be judged from what one
of them says. On the other hand, the claim of third parties, like petitioners, that the clause
on upgrading of equipment would enable the parties after a while to change the contract
and enter into something else in violation of the law is mere speculation and cannot be a
basis for judging the validity of the contract.

IV. It is contended that 1 of E.O. No. 301 covers all types of "contract[s] for public services
or for furnishing of supplies, materials and equipment to the government or to any of its
branches, agencies or instrumentalities" and not only contracts of purchase and sale.
Consequently, a lease of equipment, like the ELA, must be submitted to public bidding in
order to be valid. This contention is based on two premises: (1) that 1 of E.O. No. 301
applies to any contract whereby the government acquires title to or the use of the
equipment and (2) that the words "supplies," "materials," and "equipment" are distinct from
each other so that when an exception in 1 speaks of "supplies," it cannot be construed to
mean "equipment."
Petitioners' contention will not bear analysis. For example, the term "supplies" is used in
paragraph (a), which provides that a contract for the furnishing of "supplies" in order to
meet an emergency is exempt from public bidding. Unless "supplies" is construed to include
"equipment," however, the lease of heavy equipment needed for rescue operations in case of
a calamity will have to be submitted to public bidding before it can be entered into by the
government.
In dissent Justice Feliciano says that in such a situation the government can simply resort
to expropriation, paying compensation afterward. This is just like purchasing the
equipment through negotiation when the question is whether the purchase should be by
public bidding, not to mention the fact that the power to expropriate may not be exercised
when the government can very well negotiate with private owners.
Indeed, there are fundamental difficulties in simultaneously contending (1) that E.O. No.
301, 1 covers both contracts of sale and lease agreements and (2) that the words
"supplies," "materials" and "equipment" can not be interchanged. Thus, under paragraph
(b) of 1, public bidding is not required "whenever the supplies are to be used in connection
with a project or activity which cannot be delayed without causing detriment to the public
service." Following petitioners' theory, there should be a public bidding before the
government can enter into a contract for the lease of bulldozers and dredging equipment
even if these are urgently needed in areas ravaged by lahar because, first, lease contracts
are covered by the general rule and, second, the exception to public bidding in paragraph
(b) covers only "supplies" but not equipment.
To take still another example. Paragraph (d), which does away with the requirement of
public bidding "whenever the supplies under procurement have been unsuccessfully placed
on bid for at least two consecutive times, either due to lack of bidders or the offers received
in each instance were exorbitant or nonconforming to specifications." Again, following the
theory of the petitioners, a contract for the lease of equipment cannot be entered into even
if there are no bids because, first, lease contracts are governed by the general rule on
public bidding and, second, the exception to public bidding in paragraph (d) applies only to
contracts for the furnishing of "supplies."
Other examples can be given to show the absurdity of interpreting 1 as applicable to any
contract for the furnishing of supplies, materials and equipment and of considering the
words "supplies," "materials" and "equipment" to be not interchangeable. Our ruling that 1
of E.O. No. 301 does not cover the lease of equipment avoids these fundamental difficulties
and is supported by the text of 1, which is entitled "Guidelines for Negotiated Contracts"
and by the fact that the only provisions of E.O. No. 301 on leases, namely, 6 and 7,
concern the lease of buildings by or to the government. Thus the text of 1 reads:
1. Guidelines for Negotiated Contracts. Any provision of law, decree,
executive order or other issuances to the contrary notwithstanding, no contract
for public services or for furnishing supplies, materials and equipment to the
government or any of its branches, agencies or instrumentalities shall be
renewed or entered into without public bidding, except under any of the
following situations:

a. Whenever the supplies are urgently needed to meet an
emergency which may involve the loss of, or danger to, life and/or
property;
b. Whenever the supplies are to be used in connection with a
project or activity which cannot be delayed without causing
detriment to the public service;
c. Whenever the materials are sold by an exclusive distributor or
manufacturer who does not have subdealers selling at lower prices
and for which no suitable substitute can be obtained elsewhere at
more advantageous terms to the government;
d. Whenever the supplies under procurement have been
unsuccessfully placed on bid for at least two consecutive times,
either due to lack of bidders or the offers received in each instance
were exhorbitant or non-conforming to specifications;
e. In cases where it is apparent that the requisition of the needed
supplies through negotiated purchase is most advantageous to the
government to be determined by the Department Head concerned;
and
f. Whenever the purchase is made from an agency of the
government.
Indeed, the purpose for promulgating E.O. No. 301 was merely to decentralize the system of
reviewing negotiated contracts of purchase for the furnishing of supplies, materials and
equipment as well as lease contracts of buildings. Theretofore, E.O. No. 298, promulgated
on August 12, 1940, required consultation with the Secretary of Justice and the
Department Head concerned and the approval of the President of the Philippines before
contracts for the furnishing of supplies, materials and equipment could be made on a
negotiated basis, without public bidding. E.O. No. 301 changed this by providing as follows:
2. Jurisdiction over Negotiated Contracts. In line with the principles of
decentralization and accountability, negotiated contracts for public services or
for furnishing supplies, materials or equipment may be entered into by the
department or agency head or the governing board of the government-owned or
controlled corporation concerned, without need of prior approval by higher
authorities, subject to availability of funds, compliance with the standards or
guidelines prescribed in Section 1 hereof, and to the audit jurisdiction of the
commission on Audit in accordance with existing rules and regulations.
Negotiated contracts involving P2,000,000 up to P10,000,000 shall be signed
by the Secretary and two other Undersecretaries.
xxx xxx xxx
7. Jurisdiction Over Lease Contracts. The heads of agency intending to rent
privately-owned buildings or spaces for their use, or to lease out government-
owned buildings or spaces for private use, shall have authority to determine
the reasonableness of the terms of the lease and the rental rates thereof, and to
enter into such lease contracts without need of prior approval by higher
authorities, subject to compliance with the uniform standards or guidelines
established pursuant to Section 6 hereof by the DPWH and to the audit
jurisdiction of COA or its duly authorized representative in accordance with
existing rules and regulations.
In sum, E.O. No. 301 applies only to contracts for the purchase of supplies, materials and
equipment, and it was merely to change the system of administrative review of emergency

purchases, as theretofore prescribed by E.O. No. 298, that E.O. No. 301 was issued on July
26, 1987. Part B of this Executive Order applies to leases of buildings, not of equipment,
and therefore does not govern the lease contract in this case. Even if it applies, it does not
require public bidding for entering into it.
Our holding that E.O. No. 301, 1 applies only to contracts of purchase and sale is
conformable to P.D. No. 526, promulgated on August 2, 1974, which is in pari materia. P.D.
No. 526 requires local governments to hold public bidding in the "procurement of supplies."
By specifying "procurement of supplies" and excepting from the general rule "purchases"
when made under certain circumstances, P.D. No. 526, 12 indicates quite clearly that it
applies only to contracts of purchase and sale. This provision reads:
12. Procurement without public bidding. Procurement of supplies may be
made without the benefit of public bidding in the following modes:
(1) Personal canvass of responsible merchants;
(2) Emergency purchases;
(3) Direct purchases from manufacturers or exclusive distributors;
(4) Thru the Bureau of Supply Coordination; and
(5) Purchase from other government entities or foreign governments.
Sec. 3 broadly defines the term "supplies" as including
everything except real estate, which may be needed in the
transaction of public business, or in the pursuit of any
undertaking, project, or activity, whether of the nature of
equipment, furniture, stationery, materials for construction, or
personal property of any sort, including non-personal or
contractual services such as the repair and maintenance of
equipment and furniture, as well as trucking, hauling, janitorial,
security, and related or analogous services.
Thus, the texts of both E.O. No. 301, 1 and of P.D. No. 526, 1 and 12, make it clear that
only contracts for the purchase and sale of supplies, materials and equipment are
contemplated by the rule concerning public biddings.
Finally, it is contended that equipment leases are attractive and commonly used in place of
contracts of purchase and sale because of "multifarious credit and tax constraints" and
therefore could not have been left out from the requirement of public bidding. Obviously
these credit and tax constraints can have no attraction to the government when considering
the advantages of sale over lease of equipment. The fact that lease contracts are in common
use is not a reason for implying that the rule on public bidding applies not only to
government purchases but also to lease contracts. For the fact also is that the government
leases equipment, such as copying machines, personal computers and the like, without going
through public bidding.
FOR THE FOREGOING REASONS, the motion for reconsideration of petitioners is DENIED
with finality.
SO ORDERED.

Melo, Puno, Kapunan, Francisco and Hermosisima, Jr., JJ., concur.
Narvasa, C.J. and Panganiban , JJ., took no part.

Padilla and Vitug, JJ., maintained their separate concurring opinion.
Feliciano, Regalado, Davide, Jr., Romero and Bellosillo, JJ., maintained their dissenting
opinion.
Footnotes
1 The two other cases were Dred Scott v. Sanford, 19 How. 393 (1857)
(which invalidated an act of Congress forbidding slavery in the South)
and Pollack v. Farmers Loan & Trust Co., 157 U.S. 429, 158 U.S. 601
(1895) (which held a tax on income derived from property to be a tax on
the property itself which had to be apportioned according to population
under the U.S. Constitution) C. HUGHES, THE SUPREME COURT OF
THE UNITED STATES 50-54 (1928).
2 That is why in the main decision it was pointed out that petitioners
might try the Commission on Audit, the Ombudsman or the Solicitor
General (except that in this case the latter has found nothing wrong with
the contract) in airing their grievances, a point apparently overlooked by
Davide, J. in his dissent noting an alleged inconsistency in the majority's
ruling that petitioners have no standing in the courts but that they can
complain to the COA, the Ombudsman or the Solicitor General. The rules
on standing do not obtain in these agencies; petitioners can file their
complaints there ex relatione.

The Lawphil Project - Arellano Law Foundation



======================================================================
OPOSA VS FACTORAN
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 101083 July 30, 1993
JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors,
and represented by their parents ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE
SADIUA, minor, represented by her parents CALVIN and ROBERTA SADIUA, CARLO,
AMANDA SALUD and PATRISHA, all surnamed FLORES, minors and represented by
their parents ENRICO and NIDA FLORES, GIANINA DITA R. FORTUN, minor,
represented by her parents SIGRID and DOLORES FORTUN, GEORGE II and MA.
CONCEPCION, all surnamed MISA, minors and represented by their parents GEORGE
and MYRA MISA, BENJAMIN ALAN V. PESIGAN, minor, represented by his parents
ANTONIO and ALICE PESIGAN, JOVIE MARIE ALFARO, minor, represented by her
parents JOSE and MARIA VIOLETA ALFARO, MARIA CONCEPCION T. CASTRO, minor,
represented by her parents FREDENIL and JANE CASTRO, JOHANNA DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO
JOAQUIN T. NARVASA, minor, represented by his parents GREGORIO II and
CRISTINE CHARITY NARVASA, MA. MARGARITA, JESUS IGNACIO, MA. ANGELA and
MARIE GABRIELLE, all surnamed SAENZ, minors, represented by their parents
ROBERTO and AURORA SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and
DAVID IAN, all surnamed KING, minors, represented by their parents MARIO and

HAYDEE KING, DAVID, FRANCISCO and THERESE VICTORIA, all surnamed ENDRIGA,
minors, represented by their parents BALTAZAR and TERESITA ENDRIGA, JOSE MA.
and REGINA MA., all surnamed ABAYA, minors, represented by their parents
ANTONIO and MARICA ABAYA, MARILIN, MARIO, JR. and MARIETTE, all surnamed
CARDAMA, minors, represented by their parents MARIO and LINA CARDAMA,
CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA, minors and
represented by their parents RICARDO and MARISSA OPOSA, PHILIP JOSEPH,
STEPHEN JOHN and ISAIAH JAMES, all surnamed QUIPIT, minors, represented by
their parents JOSE MAX and VILMI QUIPIT, BUGHAW CIELO, CRISANTO, ANNA,
DANIEL and FRANCISCO, all surnamed BIBAL, minors, represented by their parents
FRANCISCO, JR. and MILAGROS BIBAL, and THE PHILIPPINE ECOLOGICAL
NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of
the Department of Environment and Natural Resources, and THE HONORABLE
ERIBERTO U. ROSARIO, Presiding Judge of the RTC, Makati, Branch 66, respondents.
Oposa Law Office for petitioners.
The Solicitor General for respondents.

DAVIDE, JR., J.:
In a broader sense, this petition bears upon the right of Filipinos to a balanced and
healthful ecology which the petitioners dramatically associate with the twin concepts of
"inter-generational responsibility" and "inter-generational justice." Specifically, it touches
on the issue of whether the said petitioners have a cause of action to "prevent the
misappropriation or impairment" of Philippine rainforests and "arrest the unabated
hemorrhage of the country's vital life support systems and continued rape of Mother
Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66
(Makati, Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial Region.
The principal plaintiffs therein, now the principal petitioners, are all minors duly
represented and joined by their respective parents. Impleaded as an additional plaintiff is
the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and non-profit
corporation organized for the purpose of, inter alia, engaging in concerted action geared for
the protection of our environment and natural resources. The original defendant was the
Honorable Fulgencio S. Factoran, Jr., then Secretary of the Department of Environment
and Natural Resources (DENR). His substitution in this petition by the new Secretary, the
Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the
petitioners.
1
The complaint
2
was instituted as a taxpayers' class suit
3
and alleges that the
plaintiffs "are all citizens of the Republic of the Philippines, taxpayers, and entitled to the
full benefit, use and enjoyment of the natural resource treasure that is the country's virgin
tropical forests." The same was filed for themselves and others who are equally concerned
about the preservation of said resource but are "so numerous that it is impracticable to
bring them all before the Court." The minors further asseverate that they "represent their
generation as well as generations yet unborn."
4
Consequently, it is prayed for that
judgment be rendered:
. . . ordering defendant, his agents, representatives and other persons acting in
his behalf to
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements.

and granting the plaintiffs ". . . such other reliefs just and equitable under the premises."
5

The complaint starts off with the general averments that the Philippine archipelago of 7,100
islands has a land area of thirty million (30,000,000) hectares and is endowed with rich,
lush and verdant rainforests in which varied, rare and unique species of flora and fauna
may be found; these rainforests contain a genetic, biological and chemical pool which is
irreplaceable; they are also the habitat of indigenous Philippine cultures which have
existed, endured and flourished since time immemorial; scientific evidence reveals that in
order to maintain a balanced and healthful ecology, the country's land area should be
utilized on the basis of a ratio of fifty-four per cent (54%) for forest cover and forty-six per
cent (46%) for agricultural, residential, industrial, commercial and other uses; the
distortion and disturbance of this balance as a consequence of deforestation have resulted
in a host of environmental tragedies, such as (a) water shortages resulting from drying up
of the water table, otherwise known as the "aquifer," as well as of rivers, brooks and
streams, (b) salinization of the water table as a result of the intrusion therein of salt water,
incontrovertible examples of which may be found in the island of Cebu and the
Municipality of Bacoor, Cavite, (c) massive erosion and the consequential loss of soil fertility
and agricultural productivity, with the volume of soil eroded estimated at one billion
(1,000,000,000) cubic meters per annum approximately the size of the entire island of
Catanduanes, (d) the endangering and extinction of the country's unique, rare and varied
flora and fauna, (e) the disturbance and dislocation of cultural communities, including the
disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and seabeds
and consequential destruction of corals and other aquatic life leading to a critical reduction
in marine resource productivity, (g) recurrent spells of drought as is presently experienced
by the entire country, (h) increasing velocity of typhoon winds which result from the
absence of windbreakers, (i) the floodings of lowlands and agricultural plains arising from
the absence of the absorbent mechanism of forests, (j) the siltation and shortening of the
lifespan of multi-billion peso dams constructed and operated for the purpose of supplying
water for domestic uses, irrigation and the generation of electric power, and (k) the
reduction of the earth's capacity to process carbon dioxide gases which has led to
perplexing and catastrophic climatic changes such as the phenomenon of global warming,
otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. This notwithstanding, they expressed their
intention to present expert witnesses as well as documentary, photographic and film
evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million
hectares of rainforests constituting roughly 53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no more than 1.2
million hectares of said rainforests or four per cent (4.0%) of the country's land
area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin old-
growth rainforests are left, barely 2.8% of the entire land mass of the Philippine
archipelago and about 3.0 million hectares of immature and uneconomical
secondary growth forests.
11. Public records reveal that the defendant's, predecessors have granted
timber license agreements ('TLA's') to various corporations to cut the aggregate
area of 3.89 million hectares for commercial logging purposes.

A copy of the TLA holders and the corresponding areas covered is hereto
attached as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000 hectares per annum
or 25 hectares per hour nighttime, Saturdays, Sundays and holidays
included the Philippines will be bereft of forest resources after the end of this
ensuing decade, if not earlier.
13. The adverse effects, disastrous consequences, serious injury and
irreparable damage of this continued trend of deforestation to the plaintiff
minor's generation and to generations yet unborn are evident and
incontrovertible. As a matter of fact, the environmental damages enumerated in
paragraph 6 hereof are already being felt, experienced and suffered by the
generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and deforest
the remaining forest stands will work great damage and irreparable injury to
plaintiffs especially plaintiff minors and their successors who may never
see, use, benefit from and enjoy this rare and unique natural resource
treasure.
This act of defendant constitutes a misappropriation and/or impairment of the
natural resource property he holds in trust for the benefit of plaintiff minors
and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful
ecology and are entitled to protection by the State in its capacity as the parens
patriae.
16. Plaintiff have exhausted all administrative remedies with the defendant's
office. On March 2, 1990, plaintiffs served upon defendant a final demand to
cancel all logging permits in the country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex
"B".
17. Defendant, however, fails and refuses to cancel the existing TLA's to the
continuing serious damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLA's is an act
violative of the rights of plaintiffs, especially plaintiff minors who may be left
with a country that is desertified (sic), bare, barren and devoid of the wonderful
flora, fauna and indigenous cultures which the Philippines had been
abundantly blessed with.
19. Defendant's refusal to cancel the aforementioned TLA's is manifestly
contrary to the public policy enunciated in the Philippine Environmental Policy
which, in pertinent part, states that it is the policy of the State
(a) to create, develop, maintain and improve conditions under which man and
nature can thrive in productive and enjoyable harmony with each other;
(b) to fulfill the social, economic and other requirements of present and future
generations of Filipinos and;
(c) to ensure the attainment of an environmental quality that is conductive to a
life of dignity and well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the aforementioned
TLA's is contradictory to the Constitutional policy of the State to

a. effect "a more equitable distribution of opportunities, income and wealth"
and "make full and efficient use of natural resources (sic)." (Section 1, Article
XII of the Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and resources (sic)"
(Section 14, Article XIV, id.);
d. "protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature." (Section 16, Article
II, id.)
21. Finally, defendant's act is contrary to the highest law of humankind the
natural law and violative of plaintiffs' right to self-preservation and
perpetuation.
22. There is no other plain, speedy and adequate remedy in law other than the
instant action to arrest the unabated hemorrhage of the country's vital life
support systems and continued rape of Mother Earth.
6

On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss
the complaint based on two (2) grounds, namely: (1) the plaintiffs have no cause of action
against him and (2) the issue raised by the plaintiffs is a political question which properly
pertains to the legislative or executive branches of Government. In their 12 July 1990
Opposition to the Motion, the petitioners maintain that (1) the complaint shows a clear and
unmistakable cause of action, (2) the motion is dilatory and (3) the action presents a
justiciable question as it involves the defendant's abuse of discretion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to
dismiss.
7
In the said order, not only was the defendant's claim that the complaint states
no cause of action against him and that it raises a political question sustained, the
respondent Judge further ruled that the granting of the relief prayed for would result in the
impairment of contracts which is prohibited by the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised
Rules of Court and ask this Court to rescind and set aside the dismissal order on the
ground that the respondent Judge gravely abused his discretion in dismissing the action.
Again, the parents of the plaintiffs-minors not only represent their children, but have also
joined the latter in this case.
8

On 14 May 1992, We resolved to give due course to the petition and required the parties to
submit their respective Memoranda after the Office of the Solicitor General (OSG) filed a
Comment in behalf of the respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as
it contains sufficient allegations concerning their right to a sound environment based on
Articles 19, 20 and 21 of the Civil Code (Human Relations), Section 4 of Executive Order
(E.O.) No. 192 creating the DENR, Section 3 of Presidential Decree (P.D.) No. 1151
(Philippine Environmental Policy), Section 16, Article II of the 1987 Constitution recognizing
the right of the people to a balanced and healthful ecology, the concept of generational
genocide in Criminal Law and the concept of man's inalienable right to self-preservation
and self-perpetuation embodied in natural law. Petitioners likewise rely on the respondent's
correlative obligation per Section 4 of E.O. No. 192, to safeguard the people's right to a
healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of
discretion in granting Timber License Agreements (TLAs) to cover more areas for logging
than what is available involves a judicial question.

Anent the invocation by the respondent Judge of the Constitution's non-impairment clause,
petitioners maintain that the same does not apply in this case because TLAs are not
contracts. They likewise submit that even if TLAs may be considered protected by the said
clause, it is well settled that they may still be revoked by the State when the public interest
so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their
complaint a specific legal right violated by the respondent Secretary for which any relief is
provided by law. They see nothing in the complaint but vague and nebulous allegations
concerning an "environmental right" which supposedly entitles the petitioners to the
"protection by the state in its capacity as parens patriae." Such allegations, according to
them, do not reveal a valid cause of action. They then reiterate the theory that the question
of whether logging should be permitted in the country is a political question which should
be properly addressed to the executive or legislative branches of Government. They
therefore assert that the petitioners' resources is not to file an action to court, but to lobby
before Congress for the passage of a bill that would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot
be done by the State without due process of law. Once issued, a TLA remains effective for a
certain period of time usually for twenty-five (25) years. During its effectivity, the same
can neither be revised nor cancelled unless the holder has been found, after due notice and
hearing, to have violated the terms of the agreement or other forestry laws and regulations.
Petitioners' proposition to have all the TLAs indiscriminately cancelled without the requisite
hearing would be violative of the requirements of due process.
Before going any further, We must first focus on some procedural matters. Petitioners
instituted Civil Case No. 90-777 as a class suit. The original defendant and the present
respondents did not take issue with this matter. Nevertheless, We hereby rule that the said
civil case is indeed a class suit. The subject matter of the complaint is of common and
general interest not just to several, but to all citizens of the Philippines. Consequently,
since the parties are so numerous, it, becomes impracticable, if not totally impossible, to
bring all of them before the court. We likewise declare that the plaintiffs therein are
numerous and representative enough to ensure the full protection of all concerned
interests. Hence, all the requisites for the filing of a valid class suit under Section 12, Rule
3 of the Revised Rules of Court are present both in the said civil case and in the instant
petition, the latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that they
represent their generation as well as generations yet unborn. We find no difficulty in ruling
that they can, for themselves, for others of their generation and for the succeeding
generations, file a class suit. Their personality to sue in behalf of the succeeding
generations can only be based on the concept of intergenerational responsibility insofar as
the right to a balanced and healthful ecology is concerned. Such a right, as hereinafter
expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety.
9
Such
rhythm and harmony indispensably include, inter alia, the judicious disposition, utilization,
management, renewal and conservation of the country's forest, mineral, land, waters,
fisheries, wildlife, off-shore areas and other natural resources to the end that their
exploration, development and utilization be equitably accessible to the present as well as
future generations.
10
Needless to say, every generation has a responsibility to the next to
preserve that rhythm and harmony for the full enjoyment of a balanced and healthful
ecology. Put a little differently, the minors' assertion of their right to a sound environment
constitutes, at the same time, the performance of their obligation to ensure the protection
of that right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now proceed to the
merits of the petition.
After a careful perusal of the complaint in question and a meticulous consideration and
evaluation of the issues raised and arguments adduced by the parties, We do not hesitate

to find for the petitioners and rule against the respondent Judge's challenged order for
having been issued with grave abuse of discretion amounting to lack of jurisdiction. The
pertinent portions of the said order reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint, the Court cannot
help but agree with the defendant. For although we believe that plaintiffs have
but the noblest of all intentions, it (sic) fell short of alleging, with sufficient
definiteness, a specific legal right they are seeking to enforce and protect, or a
specific legal wrong they are seeking to prevent and redress (Sec. 1, Rule 2,
RRC). Furthermore, the Court notes that the Complaint is replete with vague
assumptions and vague conclusions based on unverified data. In fine, plaintiffs
fail to state a cause of action in its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being
impressed with political color and involving a matter of public policy, may not
be taken cognizance of by this Court without doing violence to the sacred
principle of "Separation of Powers" of the three (3) co-equal branches of the
Government.
The Court is likewise of the impression that it cannot, no matter how we
stretch our jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to
cancel all existing timber license agreements in the country and to cease and
desist from receiving, accepting, processing, renewing or approving new timber
license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law.
11

We do not agree with the trial court's conclusions that the plaintiffs failed to allege with
sufficient definiteness a specific legal right involved or a specific legal wrong committed,
and that the complaint is replete with vague assumptions and conclusions based on
unverified data. A reading of the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right the right to a balanced
and healthful ecology which, for the first time in our nation's constitutional history, is
solemnly incorporated in the fundamental law. Section 16, Article II of the 1987
Constitution explicitly provides:
Sec. 16. The State shall protect and advance the right of the people to a
balanced and healthful ecology in accord with the rhythm and harmony of
nature.
This right unites with the right to health which is provided for in the preceding
section of the same article:
Sec. 15. The State shall protect and promote the right to health of the people
and instill health consciousness among them.
While the right to a balanced and healthful ecology is to be found under the Declaration of
Principles and State Policies and not under the Bill of Rights, it does not follow that it is
less important than any of the civil and political rights enumerated in the latter. Such a
right belongs to a different category of rights altogether for it concerns nothing less than
self-preservation and self-perpetuation aptly and fittingly stressed by the petitioners
the advancement of which may even be said to predate all governments and constitutions.
As a matter of fact, these basic rights need not even be written in the Constitution for they
are assumed to exist from the inception of humankind. If they are now explicitly mentioned
in the fundamental charter, it is because of the well-founded fear of its framers that unless
the rights to a balanced and healthful ecology and to health are mandated as state policies
by the Constitution itself, thereby highlighting their continuing importance and imposing
upon the state a solemn obligation to preserve the first and protect and advance the

second, the day would not be too far when all else would be lost not only for the present
generation, but also for those to come generations which stand to inherit nothing but
parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain
from impairing the environment. During the debates on this right in one of the plenary
sessions of the 1986 Constitutional Commission, the following exchange transpired
between Commissioner Wilfrido Villacorta and Commissioner Adolfo Azcuna who sponsored
the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions against
all forms of pollution air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment
necessarily carries with it the correlative duty of not impairing the
same and, therefore, sanctions may be provided for impairment of
environmental balance.
12

The said right implies, among many other things, the judicious management and
conservation of the country's forests.
Without such forests, the ecological or environmental balance would be irreversiby
disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right to
health, as well as the other related provisions of the Constitution concerning the
conservation, development and utilization of the country's natural resources,
13
then
President Corazon C. Aquino promulgated on 10 June 1987 E.O. No. 192,
14
Section 4 of
which expressly mandates that the Department of Environment and Natural Resources
"shall be the primary government agency responsible for the conservation, management,
development and proper use of the country's environment and natural resources,
specifically forest and grazing lands, mineral, resources, including those in reservation and
watershed areas, and lands of the public domain, as well as the licensing and regulation of
all natural resources as may be provided for by law in order to ensure equitable sharing of
the benefits derived therefrom for the welfare of the present and future generations of
Filipinos." Section 3 thereof makes the following statement of policy:
Sec. 3. Declaration of Policy. It is hereby declared the policy of the State to
ensure the sustainable use, development, management, renewal, and
conservation of the country's forest, mineral, land, off-shore areas and other
natural resources, including the protection and enhancement of the quality of
the environment, and equitable access of the different segments of the
population to the development and the use of the country's natural resources,
not only for the present generation but for future generations as well. It is also
the policy of the state to recognize and apply a true value system including
social and environmental cost implications relative to their utilization,
development and conservation of our natural resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative
Code of 1987,
15
specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. (1) The State shall ensure, for the benefit of the
Filipino people, the full exploration and development as well as the judicious
disposition, utilization, management, renewal and conservation of the country's
forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other
natural resources, consistent with the necessity of maintaining a sound

ecological balance and protecting and enhancing the quality of the environment
and the objective of making the exploration, development and utilization of
such natural resources equitably accessible to the different segments of the
present as well as future generations.
(2) The State shall likewise recognize and apply a true value system that takes
into account social and environmental cost implications relative to the
utilization, development and conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological balance and
protecting and enhancing the quality of the environment." Section 2 of the same Title, on
the other hand, specifically speaks of the mandate of the DENR; however, it makes
particular reference to the fact of the agency's being subject to law and higher authority.
Said section provides:
Sec. 2. Mandate. (1) The Department of Environment and Natural Resources
shall be primarily responsible for the implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out the
State's constitutional mandate to control and supervise the exploration,
development, utilization, and conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will
serve as the bases for policy formulation, and have defined the powers and functions of the
DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution,
specific statutes already paid special attention to the "environmental right" of the present
and future generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy)
and P.D. No. 1152 (Philippine Environment Code) were issued. The former "declared a
continuing policy of the State (a) to create, develop, maintain and improve conditions under
which man and nature can thrive in productive and enjoyable harmony with each other, (b)
to fulfill the social, economic and other requirements of present and future generations of
Filipinos, and (c) to insure the attainment of an environmental quality that is conducive to
a life of dignity and well-being."
16
As its goal, it speaks of the "responsibilities of each
generation as trustee and guardian of the environment for succeeding generations."
17
The
latter statute, on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful
ecology is as clear as the DENR's duty under its mandate and by virtue of its powers and
functions under E.O. No. 192 and the Administrative Code of 1987 to protect and
advance the said right.
A denial or violation of that right by the other who has the corelative duty or obligation to
respect or protect the same gives rise to a cause of action. Petitioners maintain that the
granting of the TLAs, which they claim was done with grave abuse of discretion, violated
their right to a balanced and healthful ecology; hence, the full protection thereof requires
that no further TLAs should be renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal right or rights of the
other; and its essential elements are legal right of the plaintiff, correlative
obligation of the defendant, and act or omission of the defendant in violation of
said legal right.
18

It is settled in this jurisdiction that in a motion to dismiss based on the ground that the
complaint fails to state a cause of action,
19
the question submitted to the court for
resolution involves the sufficiency of the facts alleged in the complaint itself. No other
matter should be considered; furthermore, the truth of falsity of the said allegations is

beside the point for the truth thereof is deemed hypothetically admitted. The only issue to
be resolved in such a case is: admitting such alleged facts to be true, may the court render
a valid judgment in accordance with the prayer in the complaint?
20
In Militante vs.
Edrosolano,
21
this Court laid down the rule that the judiciary should "exercise the utmost
care and circumspection in passing upon a motion to dismiss on the ground of the absence
thereof [cause of action] lest, by its failure to manifest a correct appreciation of the facts
alleged and deemed hypothetically admitted, what the law grants or recognizes is effectively
nullified. If that happens, there is a blot on the legal order. The law itself stands in
disrepute."
After careful examination of the petitioners' complaint, We find the statements under the
introductory affirmative allegations, as well as the specific averments under the sub-
heading CAUSE OF ACTION, to be adequate enough to show, prima facie, the claimed
violation of their rights. On the basis thereof, they may thus be granted, wholly or partly,
the reliefs prayed for. It bears stressing, however, that insofar as the cancellation of the
TLAs is concerned, there is the need to implead, as party defendants, the grantees thereof
for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy
formulation or determination by the executive or legislative branches of Government is not
squarely put in issue. What is principally involved is the enforcement of a right vis-a-vis
policies already formulated and expressed in legislation. It must, nonetheless, be
emphasized that the political question doctrine is no longer, the insurmountable obstacle to
the exercise of judicial power or the impenetrable shield that protects executive and
legislative actions from judicial inquiry or review. The second paragraph of section 1, Article
VIII of the Constitution states that:
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable,
and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law,
22
Mr. Justice Isagani A.
Cruz, a distinguished member of this Court, says:
The first part of the authority represents the traditional concept of judicial
power, involving the settlement of conflicting rights as conferred as law. The
second part of the authority represents a broadening of judicial power to enable
the courts of justice to review what was before forbidden territory, to wit, the
discretion of the political departments of the government.
As worded, the new provision vests in the judiciary, and particularly the
Supreme Court, the power to rule upon even the wisdom of the decisions of the
executive and the legislature and to declare their acts invalid for lack or excess
of jurisdiction because tainted with grave abuse of discretion. The catch, of
course, is the meaning of "grave abuse of discretion," which is a very elastic
phrase that can expand or contract according to the disposition of the
judiciary.
In Daza vs. Singson,
23
Mr. Justice Cruz, now speaking for this Court, noted:
In the case now before us, the jurisdictional objection becomes even less
tenable and decisive. The reason is that, even if we were to assume that the
issue presented before us was political in nature, we would still not be
precluded from revolving it under the expanded jurisdiction conferred upon us
that now covers, in proper cases, even the political question. Article VII, Section
1, of the Constitution clearly provides: . . .

The last ground invoked by the trial court in dismissing the complaint is the non-
impairment of contracts clause found in the Constitution. The court a quo declared that:
The Court is likewise of the impression that it cannot, no matter how we
stretch our jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to
cancel all existing timber license agreements in the country and to cease and
desist from receiving, accepting, processing, renewing or approving new timber
license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law.
24

We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a
sweeping pronouncement. In the first place, the respondent Secretary did not, for obvious
reasons, even invoke in his motion to dismiss the non-impairment clause. If he had done
so, he would have acted with utmost infidelity to the Government by providing undue and
unwarranted benefits and advantages to the timber license holders because he would have
forever bound the Government to strictly respect the said licenses according to their terms
and conditions regardless of changes in policy and the demands of public interest and
welfare. He was aware that as correctly pointed out by the petitioners, into every timber
license must be read Section 20 of the Forestry Reform Code (P.D. No. 705) which provides:
. . . Provided, That when the national interest so requires, the President may
amend, modify, replace or rescind any contract, concession, permit, licenses or
any other form of privilege granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by executive action. It
is not a contract, property or a property right protested by the due process clause of
the Constitution. In Tan vs. Director of Forestry,
25
this Court held:
. . . A timber license is an instrument by which the State regulates the
utilization and disposition of forest resources to the end that public welfare is
promoted. A timber license is not a contract within the purview of the due
process clause; it is only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in this case.
A license is merely a permit or privilege to do what otherwise would be
unlawful, and is not a contract between the authority, federal, state, or
municipal, granting it and the person to whom it is granted; neither is it
property or a property right, nor does it create a vested right; nor is it taxation
(37 C.J. 168). Thus, this Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights (People vs. Ong Tin,
54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive
Secretary:
26

. . . Timber licenses, permits and license agreements are the principal
instruments by which the State regulates the utilization and disposition of
forest resources to the end that public welfare is promoted. And it can hardly
be gainsaid that they merely evidence a privilege granted by the State to
qualified entities, and do not vest in the latter a permanent or irrevocable right
to the particular concession area and the forest products therein. They may be
validly amended, modified, replaced or rescinded by the Chief Executive when
national interests so require. Thus, they are not deemed contracts within the
purview of the due process of law clause [See Sections 3(ee) and 20 of Pres.
Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-
24548, October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be passed.
27


cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant
case does not involve a law or even an executive issuance declaring the cancellation or
modification of existing timber licenses. Hence, the non-impairment clause cannot as yet be
invoked. Nevertheless, granting further that a law has actually been passed mandating
cancellations or modifications, the same cannot still be stigmatized as a violation of the
non-impairment clause. This is because by its very nature and purpose, such as law could
have only been passed in the exercise of the police power of the state for the purpose of
advancing the right of the people to a balanced and healthful ecology, promoting their
health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp.
28
this Court stated:
The freedom of contract, under our system of government, is not meant to be
absolute. The same is understood to be subject to reasonable legislative
regulation aimed at the promotion of public health, moral, safety and welfare.
In other words, the constitutional guaranty of non-impairment of obligations of
contract is limited by the exercise of the police power of the State, in the
interest of public health, safety, moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New York,
29
quoted in Philippine
American Life Insurance Co. vs. Auditor General,
30
to wit:
Under our form of government the use of property and the making of contracts
are normally matters of private and not of public concern. The general rule is
that both shall be free of governmental interference. But neither property rights
nor contract rights are absolute; for government cannot exist if the citizen may
at will use his property to the detriment of his fellows, or exercise his freedom
of contract to work them harm. Equally fundamental with the private right is
that of the public to regulate it in the common interest.
In short, the non-impairment clause must yield to the police power of the state.
31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause
could apply with respect to the prayer to enjoin the respondent Secretary from receiving,
accepting, processing, renewing or approving new timber licenses for, save in cases of
renewal, no contract would have as of yet existed in the other instances. Moreover, with
respect to renewal, the holder is not entitled to it as a matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and
the challenged Order of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777
is hereby set aside. The petitioners may therefore amend their complaint to implead as
defendants the holders or grantees of the questioned timber license agreements.
No pronouncement as to costs.
SO ORDERED.
Cruz, Padilla, Bidin, Grio-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo and Quiason,
JJ., concur.
Narvasa, C.J., Puno and Vitug, JJ., took no part.



Separate Opinions


FELICIANO, J., concurring
I join in the result reached by my distinguished brother in the Court, Davide, Jr., J., in this
case which, to my mind, is one of the most important cases decided by this Court in the
last few years. The seminal principles laid down in this decision are likely to influence
profoundly the direction and course of the protection and management of the environment,
which of course embraces the utilization of all the natural resources in the territorial base
of our polity. I have therefore sought to clarify, basically to myself, what the Court appears
to be saying.
The Court explicitly states that petitioners have the locus standi necessary to sustain the
bringing and, maintenance of this suit (Decision, pp. 11-12). Locus standi is not a function
of petitioners' claim that their suit is properly regarded as a class suit. I understand locus
standi to refer to the legal interest which a plaintiff must have in the subject matter of the
suit. Because of the very broadness of the concept of "class" here involved membership
in this "class" appears to embrace everyone living in the country whether now or in the
future it appears to me that everyone who may be expected to benefit from the course of
action petitioners seek to require public respondents to take, is vested with the necessary
locus standi. The Court may be seen therefore to be recognizing a beneficiaries' right of
action in the field of environmental protection, as against both the public administrative
agency directly concerned and the private persons or entities operating in the field or sector
of activity involved. Whether such beneficiaries' right of action may be found under any and
all circumstances, or whether some failure to act, in the first instance, on the part of the
governmental agency concerned must be shown ("prior exhaustion of administrative
remedies"), is not discussed in the decision and presumably is left for future determination
in an appropriate case.
The Court has also declared that the complaint has alleged and focused upon "one specific
fundamental legal right the right to a balanced and healthful ecology" (Decision, p. 14).
There is no question that "the right to a balanced and healthful ecology" is "fundamental"
and that, accordingly, it has been "constitutionalized." But although it is fundamental in
character, I suggest, with very great respect, that it cannot be characterized as "specific,"
without doing excessive violence to language. It is in fact very difficult to fashion language
more comprehensive in scope and generalized in character than a right to "a balanced and
healthful ecology." The list of particular claims which can be subsumed under this rubic
appears to be entirely open-ended: prevention and control of emission of toxic fumes and
smoke from factories and motor vehicles; of discharge of oil, chemical effluents, garbage
and raw sewage into rivers, inland and coastal waters by vessels, oil rigs, factories, mines
and whole communities; of dumping of organic and inorganic wastes on open land, streets
and thoroughfares; failure to rehabilitate land after strip-mining or open-pit mining;
kaingin or slash-and-burn farming; destruction of fisheries, coral reefs and other living sea
resources through the use of dynamite or cyanide and other chemicals; contamination of
ground water resources; loss of certain species of fauna and flora; and so on. The other
statements pointed out by the Court: Section 3, Executive Order No. 192 dated 10 June
1987; Section 1, Title XIV, Book IV of the 1987 Administrative Code; and P.D. No. 1151,
dated 6 June 1977 all appear to be formulations of policy, as general and abstract as the
constitutional statements of basic policy in Article II, Section 16 ("the right to a balanced
and healthful ecology") and 15 ("the right to health").
P.D. No. 1152, also dated 6 June 1977, entitled "The Philippine Environment Code," is,
upon the other hand, a compendious collection of more "specific environment management
policies" and "environment quality standards" (fourth "Whereas" clause, Preamble) relating
to an extremely wide range of topics:
(a) air quality management;
(b) water quality management;

(c) land use management;
(d) natural resources management and conservation embracing:
(i) fisheries and aquatic resources;
(ii) wild life;
(iii) forestry and soil conservation;
(iv) flood control and natural calamities;
(v) energy development;
(vi) conservation and utilization of surface and ground water
(vii) mineral resources
Two (2) points are worth making in this connection. Firstly, neither petitioners nor the
Court has identified the particular provision or provisions (if any) of the Philippine
Environment Code which give rise to a specific legal right which petitioners are seeking to
enforce. Secondly, the Philippine Environment Code identifies with notable care the
particular government agency charged with the formulation and implementation of
guidelines and programs dealing with each of the headings and sub-headings mentioned
above. The Philippine Environment Code does not, in other words, appear to contemplate
action on the part of private persons who are beneficiaries of implementation of that Code.
As a matter of logic, by finding petitioners' cause of action as anchored on a legal right
comprised in the constitutional statements above noted, the Court is in effect saying that
Section 15 (and Section 16) of Article II of the Constitution are self-executing and judicially
enforceable even in their present form. The implications of this doctrine will have to be
explored in future cases; those implications are too large and far-reaching in nature even to
be hinted at here.
My suggestion is simply that petitioners must, before the trial court, show a more specific
legal right a right cast in language of a significantly lower order of generality than Article
II (15) of the Constitution that is or may be violated by the actions, or failures to act,
imputed to the public respondent by petitioners so that the trial court can validly render
judgment granting all or part of the relief prayed for. To my mind, the Court should be
understood as simply saying that such a more specific legal right or rights may well exist in
our corpus of law, considering the general policy principles found in the Constitution and
the existence of the Philippine Environment Code, and that the trial court should have
given petitioners an effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component of a cause of
action be a specific, operable legal right, rather than a constitutional or statutory policy, for
at least two (2) reasons. One is that unless the legal right claimed to have been violated or
disregarded is given specification in operational terms, defendants may well be unable to
defend themselves intelligently and effectively; in other words, there are due process
dimensions to this matter.
The second is a broader-gauge consideration where a specific violation of law or
applicable regulation is not alleged or proved, petitioners can be expected to fall back on
the expanded conception of judicial power in the second paragraph of Section 1 of Article
VIII of the Constitution which reads:
Section 1. . . .

Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable,
and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
When substantive standards as general as "the right to a balanced and healthy
ecology" and "the right to health" are combined with remedial standards as broad
ranging as "a grave abuse of discretion amounting to lack or excess of jurisdiction,"
the result will be, it is respectfully submitted, to propel courts into the uncharted
ocean of social and economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim to special
technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making
departments the legislative and executive departments must be given a real and
effective opportunity to fashion and promulgate those norms and standards, and to
implement them before the courts should intervene.
My learned brother Davide, Jr., J., rightly insists that the timber companies, whose
concession agreements or TLA's petitioners demand public respondents should cancel,
must be impleaded in the proceedings below. It might be asked that, if petitioners'
entitlement to the relief demanded is not dependent upon proof of breach by the timber
companies of one or more of the specific terms and conditions of their concession
agreements (and this, petitioners implicitly assume), what will those companies litigate
about? The answer I suggest is that they may seek to dispute the existence of the specific
legal right petitioners should allege, as well as the reality of the claimed factual nexus
between petitioners' specific legal rights and the claimed wrongful acts or failures to act of
public respondent administrative agency. They may also controvert the appropriateness of
the remedy or remedies demanded by petitioners, under all the circumstances which exist.
I vote to grant the Petition for Certiorari because the protection of the environment,
including the forest cover of our territory, is of extreme importance for the country. The
doctrines set out in the Court's decision issued today should, however, be subjected to
closer examination.


# Separate Opinions
FELICIANO, J., concurring
I join in the result reached by my distinguished brother in the Court, Davide, Jr., J., in this
case which, to my mind, is one of the most important cases decided by this Court in the
last few years. The seminal principles laid down in this decision are likely to influence
profoundly the direction and course of the protection and management of the environment,
which of course embraces the utilization of all the natural resources in the territorial base
of our polity. I have therefore sought to clarify, basically to myself, what the Court appears
to be saying.
The Court explicitly states that petitioners have the locus standi necessary to sustain the
bringing and, maintenance of this suit (Decision, pp. 11-12). Locus standi is not a function
of petitioners' claim that their suit is properly regarded as a class suit. I understand locus
standi to refer to the legal interest which a plaintiff must have in the subject matter of the
suit. Because of the very broadness of the concept of "class" here involved membership
in this "class" appears to embrace everyone living in the country whether now or in the
future it appears to me that everyone who may be expected to benefit from the course of
action petitioners seek to require public respondents to take, is vested with the necessary
locus standi. The Court may be seen therefore to be recognizing a beneficiaries' right of

action in the field of environmental protection, as against both the public administrative
agency directly concerned and the private persons or entities operating in the field or sector
of activity involved. Whether such beneficiaries' right of action may be found under any and
all circumstances, or whether some failure to act, in the first instance, on the part of the
governmental agency concerned must be shown ("prior exhaustion of administrative
remedies"), is not discussed in the decision and presumably is left for future determination
in an appropriate case.
The Court has also declared that the complaint has alleged and focused upon "one specific
fundamental legal right the right to a balanced and healthful ecology" (Decision, p. 14).
There is no question that "the right to a balanced and healthful ecology" is "fundamental"
and that, accordingly, it has been "constitutionalized." But although it is fundamental in
character, I suggest, with very great respect, that it cannot be characterized as "specific,"
without doing excessive violence to language. It is in fact very difficult to fashion language
more comprehensive in scope and generalized in character than a right to "a balanced and
healthful ecology." The list of particular claims which can be subsumed under this rubic
appears to be entirely open-ended: prevention and control of emission of toxic fumes and
smoke from factories and motor vehicles; of discharge of oil, chemical effluents, garbage
and raw sewage into rivers, inland and coastal waters by vessels, oil rigs, factories, mines
and whole communities; of dumping of organic and inorganic wastes on open land, streets
and thoroughfares; failure to rehabilitate land after strip-mining or open-pit mining;
kaingin or slash-and-burn farming; destruction of fisheries, coral reefs and other living sea
resources through the use of dynamite or cyanide and other chemicals; contamination of
ground water resources; loss of certain species of fauna and flora; and so on. The other
statements pointed out by the Court: Section 3, Executive Order No. 192 dated 10 June
1987; Section 1, Title XIV, Book IV of the 1987 Administrative Code; and P.D. No. 1151,
dated 6 June 1977 all appear to be formulations of policy, as general and abstract as the
constitutional statements of basic policy in Article II, Section 16 ("the right to a balanced
and healthful ecology") and 15 ("the right to health").
P.D. No. 1152, also dated 6 June 1977, entitled "The Philippine Environment Code," is,
upon the other hand, a compendious collection of more "specific environment management
policies" and "environment quality standards" (fourth "Whereas" clause, Preamble) relating
to an extremely wide range of topics:
(a) air quality management;
(b) water quality management;
(c) land use management;
(d) natural resources management and conservation embracing:
(i) fisheries and aquatic resources;
(ii) wild life;
(iii) forestry and soil conservation;
(iv) flood control and natural calamities;
(v) energy development;
(vi) conservation and utilization of surface and ground water
(vii) mineral resources
Two (2) points are worth making in this connection. Firstly, neither petitioners nor the
Court has identified the particular provision or provisions (if any) of the Philippine
Environment Code which give rise to a specific legal right which petitioners are seeking to

enforce. Secondly, the Philippine Environment Code identifies with notable care the
particular government agency charged with the formulation and implementation of
guidelines and programs dealing with each of the headings and sub-headings mentioned
above. The Philippine Environment Code does not, in other words, appear to contemplate
action on the part of private persons who are beneficiaries of implementation of that Code.
As a matter of logic, by finding petitioners' cause of action as anchored on a legal right
comprised in the constitutional statements above noted, the Court is in effect saying that
Section 15 (and Section 16) of Article II of the Constitution are self-executing and judicially
enforceable even in their present form. The implications of this doctrine will have to be
explored in future cases; those implications are too large and far-reaching in nature even to
be hinted at here.
My suggestion is simply that petitioners must, before the trial court, show a more specific
legal right a right cast in language of a significantly lower order of generality than Article
II (15) of the Constitution that is or may be violated by the actions, or failures to act,
imputed to the public respondent by petitioners so that the trial court can validly render
judgment granting all or part of the relief prayed for. To my mind, the Court should be
understood as simply saying that such a more specific legal right or rights may well exist in
our corpus of law, considering the general policy principles found in the Constitution and
the existence of the Philippine Environment Code, and that the trial court should have
given petitioners an effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component of a cause of
action be a specific, operable legal right, rather than a constitutional or statutory policy, for
at least two (2) reasons. One is that unless the legal right claimed to have been violated or
disregarded is given specification in operational terms, defendants may well be unable to
defend themselves intelligently and effectively; in other words, there are due process
dimensions to this matter.
The second is a broader-gauge consideration where a specific violation of law or
applicable regulation is not alleged or proved, petitioners can be expected to fall back on
the expanded conception of judicial power in the second paragraph of Section 1 of Article
VIII of the Constitution which reads:
Section 1. . . .
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable,
and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
When substantive standards as general as "the right to a balanced and healthy
ecology" and "the right to health" are combined with remedial standards as broad
ranging as "a grave abuse of discretion amounting to lack or excess of jurisdiction,"
the result will be, it is respectfully submitted, to propel courts into the uncharted
ocean of social and economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim to special
technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making
departments the legislative and executive departments must be given a real and
effective opportunity to fashion and promulgate those norms and standards, and to
implement them before the courts should intervene.
My learned brother Davide, Jr., J., rightly insists that the timber companies, whose
concession agreements or TLA's petitioners demand public respondents should cancel,
must be impleaded in the proceedings below. It might be asked that, if petitioners'
entitlement to the relief demanded is not dependent upon proof of breach by the timber

companies of one or more of the specific terms and conditions of their concession
agreements (and this, petitioners implicitly assume), what will those companies litigate
about? The answer I suggest is that they may seek to dispute the existence of the specific
legal right petitioners should allege, as well as the reality of the claimed factual nexus
between petitioners' specific legal rights and the claimed wrongful acts or failures to act of
public respondent administrative agency. They may also controvert the appropriateness of
the remedy or remedies demanded by petitioners, under all the circumstances which exist.
I vote to grant the Petition for Certiorari because the protection of the environment,
including the forest cover of our territory, is of extreme importance for the country. The
doctrines set out in the Court's decision issued today should, however, be subjected to
closer examination.
# Footnotes
1 Rollo, 164; 186.
2 Id., 62-65, exclusive of annexes.
3 Under Section 12, Rule 3, Revised Rules of Court.
4 Rollo, 67.
5 Id., 74.
6 Rollo, 70-73.
7 Annex "B" of Petitions; Id., 43-44.
8 Paragraph 7, Petition, 6; Rollo, 20.
9 Webster's Third New International Dictionary, unabridged, 1986, 1508.
10 Title XIV (Environment and Natural Resources), Book IV of the
Administrative Code of 1987, E.O. No. 292.
11 Annex "B" of Petition; Rollo, 43-44.
12 Record of the Constitutional Commission, vol. 4, 913.
13 For instance, the Preamble and Article XII on the National Economy and
Patrimony.
14 The Reorganization Act of the Department of Environment and Natural
Resources.
15 E.O. No. 292.
16 Section 1.
17 Section 2.
18 Ma-ao Sugar Central Co. vs. Barrios, 79 Phil. 666 [1947]; Community
Investment and Finance Corp. vs. Garcia, 88 Phil. 215 [1951]; Remitere vs.
Vda. de Yulo, 16 SCRA 251 [1966]; Caseas vs. Rosales, 19 SCRA 462 [1967];
Virata vs. Sandiganbayan, 202 SCRA 680 [1991]; Madrona vs. Rosal, 204
SCRA 1 [1991].
19 Section 1(q), Rule 16, Revised Rules of Court.

20 Adamos vs. J.M. Tuason and Co., Inc. 25 SCRA 529 [1968]; Virata vs.
Sandiganbayn, supra; Madrona vs. Rosal, supra.
21 39 SCRA 473, 479 [1971].
22 1991 ed., 226-227.
23 180 SCRA 496, 501-502 [1989]. See also, Coseteng vs. Mitra, 187 SCRA
377 [1990]; Gonzales vs. Macaraig, 191 SCRA 452 [1990]; Llamas vs. Orbos,
202 SCRA 844 [1991]; Bengzon vs. Senate Blue Ribbon Committee, 203 SCRA
767 [1991].
24 Rollo, 44.
25 125 SCRA 302, 325 [1983].
26 190 SCRA 673, 684 [1990].
27 Article III, 1987 Constitution.
28 110 Phil. 198, 203 [1960]; footnotes omitted.
29 291 U.S. 502, 523, 78 L. ed. 940, 947-949.
30 22 SCRA 135, 146-147 [1968].
31 Ongsiako vs. Gamboa, 86 Phil. 50 [1950]; Abe vs. Foster Wheeler Corp.
supra.; Phil. American Life Insurance Co. vs. Auditor General, supra.; Alalayan
vs. NPC, 24 SCRA 172[1968]; Victoriano vs. Elizalde Rope Workers' Union, 59
SCRA 54 [1974]; Kabiling vs. National Housing Authority, 156 SCRA 623
[1987].

The Lawphil Project - Arellano Law Foundation




Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-13250 October 29, 1971
THE COLLECTOR OF INTERNAL REVENUE, petitioner,
vs.
ANTONIO CAMPOS RUEDA, respondent..
Assistant Solicitor General Jose P. Alejandro and Special Attorney Jose G. Azurin, (O.S.G.) for
petitioner.
Ramirez and Ortigas for respondent.


FERNANDO, J.:
The basic issue posed by petitioner Collector of Internal Revenue in this appeal from a
decision of the Court of Tax Appeals as to whether or not the requisites of statehood, or at
least so much thereof as may be necessary for the acquisition of an international
personality, must be satisfied for a "foreign country" to fall within the exemption of Section
122 of the National Internal Revenue Code
1
is now ripe for adjudication. The Court of Tax
Appeals answered the question in the negative, and thus reversed the action taken by
petitioner Collector, who would hold respondent Antonio Campos Rueda, as administrator
of the estate of the late Estrella Soriano Vda. de Cerdeira, liable for the sum of P161,874.95
as deficiency estate and inheritance taxes for the transfer of intangible personal properties
in the Philippines, the deceased, a Spanish national having been a resident of Tangier,
Morocco from 1931 up to the time of her death in 1955. In an earlier resolution
promulgated May 30, 1962, this Court on the assumption that the need for resolving the
principal question would be obviated, referred the matter back to the Court of Tax Appeals
to determine whether the alleged law of Tangier did grant the reciprocal tax exemption
required by the aforesaid Section 122. Then came an order from the Court of Tax Appeals
submitting copies of legislation of Tangier that would manifest that the element of
reciprocity was not lacking. It was not until July 29, 1969 that the case was deemed
submitted for decision. When the petition for review was filed on January 2, 1958, the basic
issue raised was impressed with an element of novelty. Four days thereafter, however, on
January 6, 1958, it was held by this Court that the aforesaid provision does not require
that the "foreign country" possess an international personality to come within its terms.
2

Accordingly, we have to affirm.
The decision of the Court of Tax Appeals, now under review, sets forth the background facts
as follows: "This is an appeal interposed by petitioner Antonio Campos Rueda as
administrator of the estate of the deceased Doa Maria de la Estrella Soriano Vda. de
Cerdeira, from the decision of the respondent Collector of Internal Revenue, assessing
against and demanding from the former the sum P161,874.95 as deficiency estate and
inheritance taxes, including interest and penalties, on the transfer of intangible personal
properties situated in the Philippines and belonging to said Maria de la Estrella Soriano
Vda. de Cerdeira. Maria de la Estrella Soriano Vda. de Cerdeira (Maria Cerdeira for short) is
a Spanish national, by reason of her marriage to a Spanish citizen and was a resident of
Tangier, Morocco from 1931 up to her death on January 2, 1955. At the time of her demise
she left, among others, intangible personal properties in the Philippines."
3
Then came this
portion: "On September 29, 1955, petitioner filed a provisional estate and inheritance tax
return on all the properties of the late Maria Cerdeira. On the same date, respondent,
pending investigation, issued an assessment for state and inheritance taxes in the
respective amounts of P111,592.48 and P157,791.48, or a total of P369,383.96 which tax
liabilities were paid by petitioner ... . On November 17, 1955, an amended return was filed
... wherein intangible personal properties with the value of P396,308.90 were claimed as
exempted from taxes. On November 23, 1955, respondent, pending investigation, issued
another assessment for estate and inheritance taxes in the amounts of P202,262.40 and
P267,402.84, respectively, or a total of P469,665.24 ... . In a letter dated January 11, 1956,
respondent denied the request for exemption on the ground that the law of Tangier is not
reciprocal to Section 122 of the National Internal Revenue Code. Hence, respondent
demanded the payment of the sums of P239,439.49 representing deficiency estate and
inheritance taxes including ad valorem penalties, surcharges, interests and compromise
penalties ... . In a letter dated February 8, 1956, and received by respondent on the
following day, petitioner requested for the reconsideration of the decision denying the claim
for tax exemption of the intangible personal properties and the imposition of the 25% and
5% ad valorem penalties ... . However, respondent denied request, in his letter dated May 5,
1956 ... and received by petitioner on May 21, 1956. Respondent premised the denial on
the grounds that there was no reciprocity [with Tangier, which was moreover] a mere
principality, not a foreign country. Consequently, respondent demanded the payment of the
sums of P73,851.21 and P88,023.74 respectively, or a total of P161,874.95 as deficiency
estate and inheritance taxes including surcharges, interests and compromise penalties."
4


The matter was then elevated to the Court of Tax Appeals. As there was no dispute between
the parties regarding the values of the properties and the mathematical correctness of the
deficiency assessments, the principal question as noted dealt with the reciprocity aspect as
well as the insisting by the Collector of Internal Revenue that Tangier was not a foreign
country within the meaning of Section 122. In ruling against the contention of the Collector
of Internal Revenue, the appealed decision states: "In fine, we believe, and so hold, that the
expression "foreign country", used in the last proviso of Section 122 of the National Internal
Revenue Code, refers to a government of that foreign power which, although not an
international person in the sense of international law, does not impose transfer or death
upon intangible person properties of our citizens not residing therein, or whose law allows a
similar exemption from such taxes. It is, therefore, not necessary that Tangier should have
been recognized by our Government order to entitle the petitioner to the exemption benefits
of the proviso of Section 122 of our Tax. Code."
5

Hence appeal to this court by petitioner. The respective briefs of the parties duly submitted,
but as above indicated, instead of ruling definitely on the question, this Court, on May 30,
1962, resolve to inquire further into the question of reciprocity and sent back the case to
the Court of Tax Appeals for the motion of evidence thereon. The dispositive portion of such
resolution reads as follows: "While section 122 of the Philippine Tax Code aforequoted
speaks of 'intangible personal property' in both subdivisions (a) and (b); the alleged laws of
Tangier refer to 'bienes muebles situados en Tanger', 'bienes muebles radicantes en
Tanger', 'movables' and 'movable property'. In order that this Court may be able to
determine whether the alleged laws of Tangier grant the reciprocal tax exemptions required
by Section 122 of the Tax Code, and without, for the time being, going into the merits of the
issues raised by the petitioner-appellant, the case is [remanded] to the Court of Tax Appeals
for the reception of evidence or proof on whether or not the words `bienes muebles',
'movables' and 'movable properties as used in the Tangier laws, include or embrace
'intangible person property', as used in the Tax Code."
6
In line with the above resolution,
the Court of Tax Appeals admitted evidence submitted by the administrator petitioner
Antonio Campos Rueda, consisting of exhibits of laws of Tangier to the effect that "the
transfers by reason of death of movable properties, corporeal or incorporeal, including
furniture and personal effects as well as of securities, bonds, shares, ..., were not subject,
on that date and in said zone, to the payment of any death tax, whatever might have been
the nationality of the deceased or his heirs and legatees." It was further noted in an order of
such Court referring the matter back to us that such were duly admitted in evidence during
the hearing of the case on September 9, 1963. Respondent presented no evidence."
7

The controlling legal provision as noted is a proviso in Section 122 of the National Internal
Revenue Code. It reads thus: "That no tax shall be collected under this Title in respect of
intangible personal property (a) if the decedent at the time of his death was a resident of a
foreign country which at the time of his death did not impose a transfer tax or death tax of
any character in respect of intangible person property of the Philippines not residing in that
foreign country, or (b) if the laws of the foreign country of which the decedent was a
resident at the time of his death allow a similar exemption from transfer taxes or death
taxes of every character in respect of intangible personal property owned by citizens of the
Philippines not residing in that foreign country."
8
The only obstacle therefore to a definitive
ruling is whether or not as vigorously insisted upon by petitioner the acquisition of internal
personality is a condition sine qua non to Tangier being considered a "foreign country".
Deference to the De Lara ruling, as was made clear in the opening paragraph of this
opinion, calls for an affirmance of the decision of the Court of Tax Appeals.
It does not admit of doubt that if a foreign country is to be identified with a state, it is
required in line with Pound's formulation that it be a politically organized sovereign
community independent of outside control bound by penalties of nationhood, legally
supreme within its territory, acting through a government functioning under a regime of
law.
9
It is thus a sovereign person with the people composing it viewed as an organized
corporate society under a government with the legal competence to exact obedience to its
commands.
10
It has been referred to as a body-politic organized by common consent for
mutual defense and mutual safety and to promote the general welfare.
11
Correctly has it
been described by Esmein as "the juridical personification of the nation."
12
This is to view

it in the light of its historical development. The stress is on its being a nation, its people
occupying a definite territory, politically organized, exercising by means of its government
its sovereign will over the individuals within it and maintaining its separate international
personality. Laski could speak of it then as a territorial society divided into government and
subjects, claiming within its allotted area a supremacy over all other institutions.
13
McIver
similarly would point to the power entrusted to its government to maintain within its
territory the conditions of a legal order and to enter into international relations.
14
With the
latter requisite satisfied, international law do not exact independence as a condition of
statehood. So Hyde did opine.
15

Even on the assumption then that Tangier is bereft of international personality, petitioner
has not successfully made out a case. It bears repeating that four days after the filing of
this petition on January 6, 1958 in Collector of Internal Revenue v. De Lara,
16
it was
specifically held by us: "Considering the State of California as a foreign country in relation
to section 122 of our Tax Code we believe and hold, as did the Tax Court, that the Ancilliary
Administrator is entitled the exemption from the inheritance tax on the intangible personal
property found in the Philippines."
17
There can be no doubt that California as a state in
the American Union was in the alleged requisite of international personality. Nonetheless, it
was held to be a foreign country within the meaning of Section 122 of the National Internal
Revenue Code.
18

What is undeniable is that even prior to the De Lara ruling, this Court did commit itself to
the doctrine that even a tiny principality, that of Liechtenstein, hardly an international
personality in the sense, did fall under this exempt category. So it appears in an opinion of
the Court by the then Acting Chief Justicem Bengson who thereafter assumed that position
in a permanent capacity, in Kiene v. Collector of Internal Revenue.
19
As was therein noted:
'The Board found from the documents submitted to it proof of the laws of Liechtenstein
that said country does not impose estate, inheritance and gift taxes on intangible
property of Filipino citizens not residing in that country. Wherefore, the Board declared that
pursuant to the exemption above established, no estate or inheritance taxes were
collectible, Ludwig Kiene being a resident of Liechtestein when he passed away."
20
Then
came this definitive ruling: "The Collector hereafter named the respondent cites
decisions of the United States Supreme Court and of this Court, holding that intangible
personal property in the Philippines belonging to a non-resident foreigner, who died outside
of this country is subject to the estate tax, in disregard of the principle 'mobilia sequuntur
personam'. Such property is admittedly taxable here. Without the proviso above quoted, the
shares of stock owned here by the Ludwig Kiene would be concededly subject to estate and
inheritance taxes. Nevertheless our Congress chose to make an exemption where conditions
are such that demand reciprocity as in this case. And the exemption must be honored."
21

WHEREFORE, the decision of the respondent Court of Tax Appeals of October 30, 1957 is
affirmed. Without pronouncement as to costs.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Villamor and Makasiar, JJ., concur.
Reyes, J.B.L., J., concurs in the result.
Teehankee and Barredo, JJ., took no part.

Footnotes
1 Commonwealth Act No. 466 as amended (1939).
2 Collector of Internal Revenue v. De Lara, 102 Phil. 813 (1958).
3 Annex C, Petition, Decision of Court of Tax Appeals, p. 1.

4 Ibid, pp. 2-3.
5 Ibid, p. 9.
6 Resolution, pp. 4-5.
7 Order of November 19, 1963 p. 2.
8 Section 122 of the National Internal Revenue Code (1939) reads insofar as
relevant: "For the purposes of this Title the terms 'gross estate' and 'gift'
include real estate and tangible personal property, or mixed, physically located
in the Philippines; franchise which must be exercised in the Philippines;
shares, obligations, or bonds issued by any corporation or sociedad anonima
organized or constituted in the Philippines in accordance with its laws; shares,
obligations, or bonds issued by any foreign corporation eighty-five per centum
of the business of which is located in the Philippines; shares, obligations, or
bonds issued by any foreign corporation if such shares, obligations, or bonds
have acquired a business situs in the Philippines; shares or rights in any
partnership, business or industry established in the Philippines; or any
personal property, whether tangible or intangible, located in the Philippines;
Provided, however, That in the case of a resident, the transmission or transfer
of any intangible personal property, regardless of its location, subject to the
taxes prescribed in this Title; And provided, further, that no tax shall be
collected under this Title in respect of intangible personal property (a) if the
decedent at the time of his death was a resident of a foreign country which at
the time of his death did not impose a transfer tax or death tax of any
character in respect of intangible personal property of citizens of the
Philippines not residing in that foreign country, or (b) if the laws of the foreign
country of which the decedent was a resident at the time of his death allow a
similar exemption from transfer taxes or death taxes of every character in
respect of intangible personal property owned by citizens of the Philippines not
residing in that foreign country."
9 Cf. Pound: "The political organization of a society legally supreme within and
independent of legal control from without." II Jurisprudence, p. 346 (1959).
10 Cf. Willoughby, Fundamental Concepts of Public Law, p. 3 (1925).
11 Cf. 1 Cooley, Constitutional Limitations, p. 3 (1927).
12 Cf. Cohen, Recent Theories of Sovereignty, p. 15 (1937). Pitamic speaks of it
as a juridical organization of human beings. Treatise on the State, p. 17 (1933).
13 Laski, Grammar of Polities, p. 25 (1934).
14 Cf. McIver, The State, p. 22 (1926).
15 Hyde, International Law, 2nd ed., p. 22 (1945).
16 102 Phil. 813 (1958).
17 Ibid, p. 820.
18 In the subsequent case of Collector of Internal Revenue v. Fisher, L-11622,
January 28, 1961, 1 SCRA 93, this Court did find that the reciprocity found in
the California statutes was partial not total, thus holding that Section 122
would not apply, without however reversing the doctrine that an international
personality is not a requisite. "
19 97 Phil. 352 (1955).

20 Ibid, p. 354.

The Lawphil Project - Arellano Law Foundation


Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-36409 October 26, 1973
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LORETA GOZO, defendant-appellant.
Office of the Solicitor General Felix Q. Antonio, Assistant Solicitor General Jaime M. Lantin
and Solicitor Norberto P. Eduardo for plaintiff-appellee.
Jose T. Nery for defendant-appellant.

FERNANDO, J.:
Appellant seeks to set aside a judgment of the Court of First Instance of Zambales,
convicting her of a violation of an ordinance of Olongapo, Zambales, requiring a permit from
the municipal mayor for the construction or erection of a building, as well as any
modification, alteration, repair or demolition thereof. She questions its validity, or at the
very least, its applicability to her, by invoking due process,
1
a contention she would
premise on what for her is the teaching of People v. Fajardo.
2
If such a ground were far
from being impressed with solidity, she stands on quicksand when she would deny the
applicability of the ordinance to her, on the pretext that her house was constructed within
the naval base leased to the American armed forces. While yielding to the well-settled
doctrine that it does not thereby cease to be Philippine territory, she would, in effect, seek
to emasculate our sovereign rights by the assertion that we cannot exercise therein
administrative jurisdiction. To state the proposition is to make patent how much it is tinged
with unorthodoxy. Clearly then, the lower court decision must be affirmed with the sole
modification that she is given thirty days from the finality of a judgment to obtain a permit,
failing which, she is required to demolish the same.
The facts are undisputed. As set forth in the decision of the lower court: "The accused
bought a house and lot located inside the United States Naval Reservation within the
territorial jurisdiction of Olongapo City. She demolished the house and built another one in
its place, without a building permit from the City Mayor of Olongapo City, because she was
told by one Ernesto Evalle, an assistant in the City Mayor's office, as well as by her
neighbors in the area, that such building permit was not necessary for the construction of
the house. On December 29, 1966, Juan Malones, a building and lot inspector of the City
Engineer's Office, Olongapo City, together with Patrolman Ramon Macahilas of the
Olongapo City police force apprehended four carpenters working on the house of the
accused and they brought the carpenters to the Olongapo City police headquarters for
interrogation. ... After due investigation, Loreta Gozo was charged with violation of
Municipal Ordinance No. 14, S. of 1964 with the City Fiscal's Office."
3
The City Court of
Olongapo City found her guilty of violating Municipal Ordinance No. 14, Series of 1964 and
sentenced her to an imprisonment of one month as well as to pay the costs. The Court of
Instance of Zambales, on appeal, found her guilty on the above facts of violating such
municipal ordinance but would sentence her merely to pay a fine of P200.00 and to
demolish the house thus erected. She elevated the case to the Court of Appeals but in her
brief, she would put in issue the validity of such an ordinance on constitutional ground or
at the very least its applicability to her in view of the location of her dwelling within the
naval base. Accordingly, the Court of Appeals, in a resolution of January 29, 1973, noting
the constitutional question raised, certified the case to this Court.
There is, as mentioned in the opening paragraph of this petition, no support in law for the
stand taken by appellant.
1. It would be fruitless for her to assert that local government units are devoid of authority
to require building permits. This Court, from Switzer v. Municipality of

Cebu,
4
decided in 1911, has sanctioned the validity of such measures. It is much too late
in the day to contend that such a requirement cannot be validly imposed. Even appellant,
justifiably concerned about the unfavorable impression that could be created if she were to
deny that such competence is vested in municipal corporations and chartered cities, had to
concede in her brief: "If, at all; the questioned ordinance may be predicated under the
general welfare clause ... ."
5
Its scope is wide, well-nigh all embracing, covering every
aspect of public health, public morals, public safety, and the well being and good order of
the community.
6

It goes without saying that such a power is subject to limitations. Certainly, if its exercise is
violative of any constitutional right, then its validity could be impugned, or at the very least,
its applicability to the person adversely affected could be questioned. So much is settled
law. Apparently, appellant has adopted the view that a due process question may indeed be
raised in view of what for her is its oppressive character. She is led to such a conclusion,
relying on People v. Fajardo.
7
A more careful scrutiny of such a decision would not have led
her astray, for that case is easily distinguishable. The facts as set forth in the opinion
follow: "It appears that on August 15, 1950, during the incumbency of defendant-appellant
Juan F. Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal
council passed the ordinance in question providing as follows: "... 1. Any person or persons
who will construct or repair a building should, before constructing or repairing, obtain a
written permit from the Municipal Mayor. ... 2. A fee of not less than P2.00 should be
charged for each building permit and P1.00 for each repair permit issued. ... 3. [Penalty]-
Any violation of the provisions of the above, this ordinance, shall make the violator liable to
pay a fine of not less than P25 nor more than P50 or imprisonment of not less than 12 days
nor more than 24 days or both, at the discretion of the court. If said building destroys the
view of the Public Plaza or occupies any public property, it shall be removed at the expense
of the owner of the building or house. ... ." Four years later, after the term of appellant
Fajardo as mayor had expired, he and his son-in-law, appellant Babilonia, filed a written
request with the incumbent municipal mayor for a permit to construct a building adjacent
to their gasoline station on a parcel of land registered in Fajardo's name, located along the
national highway and separated from the public plaza by a creek ... . On January 16, 1954,
the request was denied, for the reason among others that the proposed building would
destroy the view or beauty of the public plaza ... . On January 18, 1954, defendants
reiterated their request for a building permit ..., but again the request was turned down by
the mayor. Whereupon, appellants proceeded with the construction of the building without
a permit, because they needed a place of residence very badly, their former house having
been destroyed by a typhoon and hitherto they had been living on leased property."
8

Clearly then, the application of such an ordinance to Fajardo was oppressive. A conviction
therefore for a violation thereof both in the justice of the peace court of Baao, Camarines
Sur as well as in the Court of First Instance could not be sustained. In this case, on the
contrary, appellant never bothered to comply with the ordinance. Perhaps aware of such a
crucial distinction, she would assert in her brief: "The evidence showed that even if the
accused were to secure a permit from the Mayor, the same would not have been granted. To
require the accused to obtain a permit before constructing her house would be an exercise
in futility. The law will not require anyone to perform an impossibility, neither in law or in
fact: ... ."
9
It would be from her own version, at the very least then, premature to anticipate
such an adverse result, and thus to condemn an ordinance which certainly lends itself to
an interpretation that is neither oppressive, unfair, or unreasonable. That kind of
interpretation suffices to remove any possible question of its validity, as was expressly
announced in Primicias v. Fugoso.
10
So it appears from this portion of the opinion of
Justice Feria, speaking for the Court: "Said provision is susceptible of two constructions:
one is that the Mayor of the City of Manila is vested with unregulated discretion to grant or
refuse to grant permit for the holding of a lawful assembly or meeting, parade, or
procession in the streets and other public places of the City of Manila; and the other is that
the applicant has the right to a permit which shall be granted by the Mayor, subject only to
the latter's reasonable discretion to determine or specify the streets or public places to be
used for the purpose, with a view to prevent confusion by overlapping, to secure convenient
use of the streets and public places by others, and to provide adequate and proper policing
to minimize the risk of disorder. After a mature deliberation, we have arrived at the
conclusion that we must adopt the second construction, that is, construe the provisions of
the said ordinance to mean that it does not confer upon the Mayor the power to refuse to

grant the permit, but only the discretion, in issuing the permit, to determine or specify the
streets or public places where the parade or procession may pass or the meeting may be
held."
11
If, in a case affecting such a preferred freedom as the right to assembly, this Court
could construe an ordinance of the City of Manila so as to avoid offending against a
constitutional provision, there is nothing to preclude it from a similar mode of approach in
order to show the lack of merit of an attack against an ordinance requiring a permit.
Appellant cannot therefore take comfort from any broad statement in the Fajardo opinion,
which incidentally is taken out of context, considering the admitted oppressive application
of the challenged measure in that litigation. So much then for the contention that she could
not have been validly convicted for a violation of such ordinance. Nor should it be forgotten
that she did suffer the same fate twice, once from the City Court and thereafter from the
Court of First Instance. The reason is obvious.Such ordinance applies to her.
2. Much less is a reversal indicated because of the alleged absence of the rather novel
concept of administrative jurisdiction on the part of Olongapo City. Nor is novelty the only
thing that may be said against it. Far worse is the assumption at war with controlling and
authoritative doctrines that the mere existence of military or naval bases of a foreign
country cuts deeply into the power to govern. Two leading cases may be cited to show how
offensive is such thinking to the juristic concept of sovereignty, People v. Acierto,
12
and
Reagan v. Commissioner of Internal Revenue.
13
As was so emphatically set forth by Justice
Tuason in Acierto: "By the Agreement, it should be noted, the Philippine Government
merely consents that the United States exercise jurisdiction in certain cases. The consent
was given purely as a matter of comity, courtesy, or expediency. The Philippine Government
has not abdicated its sovereignty over the bases as part of the Philippine territory or
divested itself completely of jurisdiction over offenses committed therein. Under the terms
of the treaty, the United States Government has prior or preferential but not exclusive
jurisdiction of such offenses. The Philippine Government retains not only jurisdictional
rights not granted, but also all such ceded rights as the United States Military authorities
for reasons of their own decline to make use of. The first proposition is implied from the
fact of Philippine sovereignty over the bases; the second from the express provisions of the
treaty."
14
There was a reiteration of such a view in Reagan. Thus: "Nothing is better settled
than that the Philippines being independent and sovereign, its authority may be exercised
over its entire domain. There is no portion thereof that is beyond its power. Within its
limits, its decrees are supreme, its commands paramount. Its laws govern therein, and
everyone to whom it applies must submit to its terms. That is the extent of its jurisdiction,
both territorial and personal. Necessarily, likewise, it has to be exclusive. If it were not
thus, there is a diminution of sovereignty."
15
Then came this paragraph dealing with the
principle of auto-limitation: "It is to be admitted any state may, by its consent, express or
implied, submit to a restriction of its sovereign rights. There may thus be a curtailment of
what otherwise is a power plenary in character. That is the concept of sovereignty as auto-
limitation, which, in the succinct language of Jellinek, "is the property of a state-force due
to which it has the exclusive capacity of legal self-determination and self-restriction." A
state then, if it chooses to, may refrain from the exercise of what otherwise is illimitable
competence."
16
The opinion was at pains to point out though that even then, there is at the
most diminution of jurisdictional rights, not its disappearance. The words employed follow:
"Its laws may as to some persons found within its territory no longer control. Nor does the
matter end there. It is not precluded from allowing another power to participate in the
exercise of jurisdictional right over certain portions of its territory. If it does so, it by no
means follows that such areas become impressed with an alien character. They retain their
status as native soil. They are still subject to its authority. Its jurisdiction may be
diminished, but it does not disappear. So it is with the bases under lease to the American
armed forces by virtue of the military bases agreement of 1947. They are not and cannot be
foreign territory."
17

Can there be anything clearer, therefore, than that only a turnabout, unwarranted and
unjustified, from what is settled and orthodox law can lend the slightest degree of
plausibility to the contention of absence of administrative jurisdiction. If it were otherwise,
what was aptly referred to by Justice Tuason "as a matter of comity, courtesy, or
expediency" becomes one of obeisance and submission. If on a concern purely domestic in
its implications, devoid of any connection with national security, the Military-Bases
Agreement could be thus interpreted, then sovereignty indeed becomes a mockery and an
illusion. Nor does appellant's thesis rest on less shaky foundation by the mere fact that

Acierto and Reagan dealt with the competence of the national government, while what is
sought to be emasculated in this case is the so-called administrative jurisdiction of a
municipal corporation. Within the limits of its territory, whatever statutory powers are
vested upon it may be validly exercised. Any residual authority and therein conferred,
whether expressly or impliedly, belongs to the national government, not to an alien country.
What is even more to be deplored in this stand of appellant is that no such claim is made
by the American naval authorities, not that it would do them any good if it were so
asserted. To quote from Acierto anew: "The carrying out of the provisions of the Bases
Agreement is the concern of the contracting parties alone. Whether, therefore, a given case
which by the treaty comes within the United States jurisdiction should be transferred to the
Philippine authorities is a matter about which the accused has nothing to do or say. In
other words, the rights granted to the United States by the treaty insure solely to that
country and can not be raised by the offender."
18
If an accused would suffer from such
disability, even if the American armed forces were the beneficiary of a treaty privilege, what
is there for appellant to take hold of when there is absolutely no showing of any alleged
grant of what is quaintly referred to as administrative jurisdiction? That is all, and it is
more than enough, to make manifest the futility of seeking a reversal.
WHEREFORE, the appealed decision of November 11, 1969 is affirmed insofar as it found
the accused, Loreta Gozo, guilty beyond reasonable doubt of a violation of Municipal
Ordinance No. 14, series of 1964 and sentencing her to pay a fine of P200.00 with
subsidiary imprisonment in case of insolvency, and modified insofar as she is required to
demolish the house that is the subject matter of the case, she being given a period of thirty
days from the finality of this decision within which to obtain the required permit. Only
upon her failure to do so will that portion of the appealed decision requiringdemolition be
enforced. Costs against the accused.
Makalintal, C.J., Zaldivar, Castro, Teehankee, Makasiar, Antonio and Esguerra, JJ., concur.
Barredo, J., took no part.

Footnotes
1 According to Article III, Section 1, paragraph 1 of the Constitution: "No person shall be
deprived of life, liberty or property without due process of law, nor shall any person be
denied the equal protection of the laws."
2 104 Phil. 443 (1958).
3 Decision, Appendix A to the Brief for the Defendant-Appellant, 1A-1B.
4 20 Phil. 111. Cf. People v. Cruz, 54 Phil. 25 (1929); Tan Chat v. Municipality of Iloilo, 60
Phil. 465 (1934); Hipolito v. City of Manila, 87 Phil. 180 (1950); Uy Matiao and Co. v. The
City of Cebu, 93 Phil. 300 (1953) ; University of the East v. City of Manila, 96 Phil. 316
(1954); Verzosa v. City of Baguio, 109 Phil. 571 (1960) ; Lopera v. Vicente, L-18102, June
30, 1962, 5 SCRA 549; People v. Soria, L-18982, January 31, 1963, 7 SCRA 242.
5 Brief for the Defendant-Appellant, 10. She would cite Sec. 2238 of the Revised
Administrative Code, but strict accuracy would demand that she should refer to the specific
provision in the Olongapo city charter.
6 Cf. United States v. Alexander, 8 Phil. 29 (1907): Punzalan v. Ferriols, 19 Phil. 214
(1911); United States v. Espiritusanto, 23 Phil. 610 (1912); United States v. Ten Yu, 24
Phil. 1 (1912); United States v. Abundan, 24 Phil. 165 (1913); Case v. Board of Health, 24
Phil. 250 (1913); United States v. Hilario, 24 Phil. 392 (1913).; United States v. Chan
Tienco, 25 Phil. 89 (1913); United States v. Joson, 26 Phil. 1 (1913); Rivera v. Campbell, 34
Phil. 348 (1916) ; United States v. Salaveria, 39 Phil. 103 (1918); Kwong Sing v. City of
Manila, 41 Phil. 103 (1920); Vinco v. Municipality of Hinigaran, 41 Phil. 790 (1917); People
v. Cruz, 54 Phil. 24 (1929); Tan Chat v. Municipality of Iloilo, 60 Phil. 465 (1934); People v.
Lardizabal, 61 Phil. 360 (1935); Malabon Sugar Co. v. Municipality of Malabon, 61 Phil. 717
(1935); People v. Chan, 65 Phil. 611 (1938); People v. Sabarre, 65 Phil. 684 (1938); People v.
Esguerra, 81 Phil. 33 (1948); Ebona v. Municipality of Daet, 85 Phil. 369 (1950); Manila
Race Horse Trainers Asso. v. De la Fuente, 88 Phil. 60 (1951); Vega v. Municipal Board of
the City of Iloilo, 94 Phil. 949 (1954); Co Kiam v. City of Manila, 96 Phil. 649 (1955);
Physical Therapy Org. of the Phil. v. Municipal Board of Manila, 101 Phil. 1142 (1957); Uy
Ha v. City Mayor, 108 Phil. 400 (1960); Gaerlan v. Baguio City Council, 109 Phil. 1100
(1960); Gerena v. City of Manila 110 Phil. 958 (1961).
7 104 Phil. 443 (1958).
8 Ibid, 444-445.

9 Brief for the Defendant-Appellant, 11.
10 80 Phil. 71 (1948).
11 Ibid, 77.
12 92 Phil. 534 (1953).
13 L-26379, Dec. 27, 1969, 30 SCRA 968.
14 92 Phil. 534, 542.
15 30 SCRA 968, 973.
16 Ibid.
17 Ibid, 973-974.
18 92 Phil. 534, 542.

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