August 18, 1958 G.R. No. L-12662CHUA LAO, ETC., ET AL., petitioners-appellants,vs.HON. CIPRIANO A. RAYMUNDO, as Mayor of the Municipality of Pasig, Rizal, ET AL., respondents- Chua Lao, Cheng Kee Tek, Go Keng Bon, Hai Hing, Chua Kee, Chua Gui, Lim Chuan, Lee Tiong, Chua Kee Kim and Teng Guan, all Chinese citizens, are the holders of stalls, Nos. 69, 66, 67, 68, 59, 70, 71, 75, 80 and 83, respectively, in the meat section of the public market of Pasig, Rizal, allegedly even before the outbreak of the Second World War, and were duly licensed to engage in the retail business. The meat section of the aforesaid public market has 54 stalls; as of 1955, 33 of them were actually occupied — 23 by Filipinos and 10 by Chinese — and 21 were vacant.

On January 8, 1955, prompted by a letter sent by Filipino meat vendors calling attention to the fact that there were alien stallholders in the public market, the Municipal Council of Pasig, Rizal, passed and approved Resolution No. 5, series of 1955, declaring all the stalls in the meat section of the public market of said municipality vacant starting February 1, 1955 (Exhibit A). But 15 stallholders (Filipinos) in the same section took exception to the measure for the reason that if the stalls that they were occupying would be subjected to applications and be disposed of by lot, they may not be able to get the same places. Being apprised of this situation, the Municipal Council, pursuant to Republic Act 37 as implemented by Department Orders Nos. 32 and 42, enacted Resolution No. 10 dated January 22, 1955, amending Resolution No. 5, declaring as vacant the stalls in the meat section of the public market of Pasig, Rizal held by aliens, effective February 10, 1955, for distribution among Filipino applicants. It was also provided that only if there would be stalls unapplied for by Filipinos or in the absence of any Filipino applicant would aliens be allowed to lease any of them (Exhibit A-1).

As the Municipal Mayor and the Municipal Treasurer of Pasig, Rizal, were set to enforce the said resolution, the Chinese stallholders filed a petition for prohibition with the Court of First Instance of Rizal, Pasig branch, naming said officials as respondents (Civil Case No. 3437), alleging that the aforesaid resolution was unduly discriminatory, oppressive and prejudicial to their interest, and prayed that respondents be definitely enjoined from enforcing resolutions Nos. 5 and 10, series of 1955, on the ground that they were unconstitutional. And upon petitioners' filing of bond for P5,000, a writ of preliminary injunction was issued by the Court enjoining respondents from enforcing the disputed resolutions.

On March 30, 1955, after the respondents had filed their answer, the parties submitted a stipulation of facts providing, among others:

x x x x x x x x x

4. That the stalls occupied by the petitioners were declared vacant by the municipal council, pursuant to Resolution No. 5, as amended by No. 10, Series of 1955, of the municipal council of Pasig, Rizal Czz5UBXd2.

And pursuant to that resolution, the Municipal Treasurer declared the said 10 stalls occupied by the petitioners, vacant, and set a date for the reception of applications for leases up to February 20, 1955. As a consequence of that call of the Municipal Treasurer, twelve (12) applications were filed by Filipino citizens for the ten (10) stalls occupied by the petitioners.

5. That out of the 21 vacant stalls, five (5) are already leased to Filipino citizens permanently, who have paid the corresponding fees. The lease have been executed after the issuance of the writ of preliminary injunction.

The remaining sixteen (16) vacant stalls in the meat section of the said public market of Pasig, Rizal, have been applied for by 16 Filipino applicants, in accordance with the standing rules and regulations or ordinances of the Municipal Council on March 4, 1955.

6. That the twelve (12) Filipino applicants for the stalls occupied by the petitioners are different persons

from those who applied for the sixteen (16) vacant stalls, except one, Benjamin Alberto, who applied also for one of the sixteen (16) stalls.

7. That the twelve (12) applicants for the stalls occupied by the herein petitioners filed their applications for the said stalls prior to the institutions of this case.

However, no leases for the same were awarded in view of the writ of preliminary injunction.

8. That the stalls occupied by the herein petitioners are equally as good as the other forty-four (44) market stalls in the same meat section of the said public market of Pasig, in the sense that they are made of the same materials, cement, and the same size and the same charges are collected by the Municipal Treasurer of the said municipality of Pasig, Rizal.

Based on the aforesaid agreement, the lower Court rendered judgment dated May 21, 1955, holding that the enactment of the ordinances in question was a valid exercise of the power of the Municipal Council pursuant to Administrative Order No. 32 of the Department of Finance, as amended, after finding that the 10 stalls occupied by Chinese were applied for by Filipinos, and that of the 21 originally existing vacant stalls, 5 had already been leased to Filipinos and the remaining 16 also duly applied for.

On June 15, 1955, petitioners filed a motion for new trial on the strength of a written statement by the respondent Municipal Treasurer dated June 14, 1955, to the effect that of the 5 Filipinos who were awarded lease of stalls after the institution of that action, 1 paid the fee only up to March 31, 1955, and the remaining 4, while paying the corresponding fees, did not regularly occupy or utilize the same. It was further declared that as of March 31, 1955, 17 stalls in the same section remained vacant. As said motion was denied, petitioners appealed to the Court of Appeals. The case, however, was certified to this Court for the reason that the main question refers to the Constitutionality of Resolutions 5 and 10, series of 1955, of the Municipal Council of Pasig, Rizal, and therefore falls within the jurisdiction of the Supreme Court (Section 17-1, Republic Act 296).

The questions presented by the instant action are: (1) whether or not the aforementioned Resolutions of the Municipal Council of Pasig are discriminatory and oppressive to be violative of the Constitution; and (2) whether or not the lower Court erred in denying petitioner's motion for new trial.

It is clear that while it is true that there were 21 vacant stalls in the meat section of the public market of Pasig, Rizal, equally as good as any other stall in the same market, the 10 stalls occupied by aliens were applied for by Filipinos, in view of which, the Municipal Council had to enact the disputed Resolutions. In assailing the constitutionality of said measures, petitioners-appellants contend that the purpose of the aforesaid enactments apparently was to eject them from their place of business and deprive them of their means of livelihood qumI1u.

The Municipal Council of Pasig, Rizal, is under the law empowered "to establish or authorize the establishment of . . . markets, and inspect and regulate the use of the same" (Section 2442-[q], Revised Administrative Code). Section 2238 of the same legal body, which prescribes the general powers of municipal councils, also vests them with authority to "enact such ordinances and make such regulations, not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties conferred upon it by law and such as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of the municipality and the inhabitants thereof." But for a municipal ordinance to be valid and have force and effect, it must not only be within the powers of the council to enact but same must not be in conflict with or repugnant to the general law. In the case at bar, the Council invoked the provisions of Republic Act 37 as basis of the resolutions in question, and considering that appellants did not contest, much less prove, that the said resolutions were not in conformity with said law or that they were not within the power of the council to enact, the question that necessarily comes up is whether Republic Act 37, nationalizing the occupancy and use of stalls in public markets by giving preference to citizens of this Republic in matters of lease thereof (Section 1, Republic Act 37) is constitutional or not. This question has already been settled and determined in a previous case when several Chinese stallholders, claiming that the

enforcement of Republic Act 37 would infringe their right to due process and equal protection clause of the Constitution, filed an action for prohibition against the Secretary of Finance seeking to restrain and prohibit the latter from implementing said law. In upholding the validity of the aforesaid Act and the administrative order of the Secretary of Finance, this Court pronounced:

Public markets are public services or utilities as much as the public supply and sale of gas, gasoline, electricity, water and public transportation are. Under the Constitution, the operation of all public service are reserved to Filipino citizens and to corporations and associations sixty per centum of the capital of which belongs to Filipino citizens.

x x x x x x x x x

In impugning the validity of Republic Act No. 37, appellees invoke general guarantees in the Bill of Rights, such as the due process of law and the equal protection of the laws. Even if their position could be supported under said general guarantees, . . . said guarantees have to give way to the specific provision above quoted, which reserves to Filipino citizens the operation of public services or utilities.

Furthermore, the establishment, maintenance, and operation of public markets, as much as public works, are part of the functions of government. The privilege of participating in said functions, such as that of occupying public market stalls, is not among the fundamental rights or even among the general civil rights protected by the guarantees of the Bill of Rights. The exercise or enjoyment of public functions are reserved to a class of persons possessing the specific qualifications required by law. Such is the case of the privilege to vote, to occupy a government position, or to participate in public works. They are reserved exclusively to citizens. Public functions are powers of national sovereignty and it is elementary that such sovereignty be exercised exclusively by nationals. (Co Chiong vs. Cuaderno, 83 Phil. 242; 46 O.G. 4833).

Petitioners-appellants, however, maintain, that this right to preference could only be availed of where there are both Filipino and alien applicants to the same stall or stalls, but in cases where there are other vacant stalls, equally as good as those already occupied by aliens which could be applied for and awarded to Filipino applicants, the latter cannot single out those held by aliens and have them declared vacant on the theory that they are entitled to preference under the law. To do so, appellants argue would be highly discriminatory and oppressive.

In enacting Republic Act No. 37, the Legislature, obviously prompted by a desire to rid or relieve this country of the shackles of foreign economic control and domination, intended to give to its citizenry monopoly of the retail business in the public markets — an aspiration which this Court declared to be within the limits of legislative authority (Ichong vs. Hernandez, 101 Phil. 1155). For this reason, said law specifically provides:

SECTION 1. — All citizens of the Philippines shall have preference in the lease of public market stalls". Rep. Act No. 37).

It may be noted that the aforesaid Act does not specify when the privilege allowed by Republic Act No. 37 accrues. The law, apparently, is applicable whenever there is a conflict of interest between Filipino applicants and aliens for lease of stalls in public markets, in which situation the right to preference immediately arises. Accordingly where the law does not distinguish, we should not make any distinction. In the case at bar, it does not appear how the market fees for the stalls in question are collected, and considering that the lease therefor terminates everyday, if the fee is paid daily, or every month or every year as the case may be, the privilege could be revoked by the state, through the municipal council, upon the expiration of such lease, and considering further that the resolutions terminating the lease granted to appellants herein, by declaring the stalls occupied by them as vacant, are not repugnant or contradictory to any general law, there is no plausible reason why the decision of the lower court and the order denying appellants' motion for new trial should not be affirmed.

Wherefore, the decision appealed from is hereby affirmed, with costs against appellants. It is so ordered.

Paras, C.J. Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J. B. L. and Endencia, JJ., concur. .Referring Cases

Sorry, no referring cases.

G.R. Nos. 146710-15, March 2, 2001JOSEPH E. ESTRADA, petitioner VS. ANIANO DESIERTO, in his capacity as Ombudsman, RAMON GONZALES et.al,respondents

G.R. No. 146738, March 2, 2001JOSEPH E. ESTRADA, petitioner VS. GLORIA MACAPAGAL-ARROYO, respondentFACTS:The case basically revolves around the series of events that happened prior and subsequent to the event we know as EDSA II. During the 1998 elections, Joseph E. Estrada and Gloria Macapagal Arroyo were elected as president and vice-president respectively. The downfall of the Estrada administration began when For. Gov. Luis Chavit Singson went to the media and released his exposé that petitioner was part of the Jueteng scandal as having received large sums of money. After this expose, a lot of different groups and many personalities had asked for the resignation of the petitioner. Some of which are the Catholic Bishops Conference of the Philippines (CBCP), Sen. Nene Pimentel, Archbishop of Manila, Jaime Cardinal Sin, For. Pres. Fidel Ramos, and For. Pres. Corazon Aquino who asked petitioner to make the “supreme self-sacrifice”. Respondent also resigned as Secretary of the Department of Social Welfare and Services and also asked petitioner for his resignation. 4 senior economic advisers of the petitioner resigned and then Speaker Manny Villar, together with 47 representatives, defected from Lapian ng Masang Pilipino.By November, an impeachment case was to be held as Speaker Manny Villar had transmitted the Articles of Impeachment to the senate. On November 20, the 21 senators took oath as judges to the impeachment trial with SC CJ Hilario Davide, Jr., presiding. The impeachment trial was one for the ages. It was a battle royal of well known lawyers. But then came the fateful day, when by the vote of 11-10, the judges came to a decision to not open the second envelop allegedly containing evidence showing that the petitioner had a secret bank account under the name “Jose Velarde” containing P3.3 billion. The not opening of the 2ndenvelop resulted to the people going to the streets and the public prosecutors withdrawing from the trial. On January 19, AFP Chief of Staff Angelo Reyes marched to EDSA shrine and declared “on behalf of your Armed Forces, the 130,000 strong members of the Armed Forces, we wish to announce that we are withdrawing our support to this government.” PNP Chief, Director General Panfilo Lacson together with some Cabinet members made the same announcement.

June 20 was the day of surrender. At around 12:20 AM, negotiations started for the peaceful transition of power. But at around 12 noon, respondent took oath as the 14th president of the Philippines. At 2:30 PM, petitioner and his family left Malacanang. He issued the following Press Statement:

“20 January 2001STATEMENT FROMPRESIDENT JOSEPH EJERCITO ESTRADAAt twelve o’clock noon today, Vice President Gloria Macapagal-Arroyo took her oath as President of the Republic of the Philippines.  While along with many other legal minds of our country, I have strong and serious doubts about the legality and constitutionality of her proclamation as President, I do not wish to be a factor that will prevent the restoration of unity and order in our civil society.It is for this reason that I now leave Malacañang Palace, the seat of the presidency of this country, for the sake of peace and in order to begin the healing process of our nation.  I leave the Palace of our people with gratitude for the opportunities given to me for service to our people.  I will not shirk from any future challenges that may come ahead in the same service of our country.I call on all my supporters and followers to join me in the promotion of a constructive national spirit of reconciliation and solidarity.May the Almighty bless our country and beloved people.MABUHAY!(Sgd.) JOSEPH EJERCITO ESTRADA”It also appears that on the same day, January 20, 2001, he signed the following letter:“Sir:By virtue of the provisions of Section 11, Article VII of the Constitution, I am hereby transmitting this declaration that I am unable to exercise the powers and duties of my office.  By operation of law and the Constitution, the Vice-President shall be the Acting President.(Sgd.) JOSEPH EJERCITO ESTRADA”On January 22, this Court issued the following Resolution in Administrative Matter No. 01-1-05-SC. The said resolution confirmed the authority given by the 12 SC justices to the CJ during the oath taking that happened on January 20. Soon, other countries accepted the respondent as the new president of thePhilippines. The House then passed Resolution No. 175 “expressing the full support of the House of Representatives to the administration of Her Excellency Gloria Macapagal-Arroyo, President of thePhilippines.” It also approved Resolution No. 176 “expressing the support of the House of Representatives to the assumption into office by Vice President Gloria Macapagal-Arroyo as President of the Republic of the Philippines, extending its congratulations and expressing its support for her administration as a partner in the attainment of the nation’s goals under the Constitution.”On February 6, respondent recommended Teofisto Guingona to be the vice president. On February 7, the Senate adopted Resolution 82 which confirmed the nomination of Senator Guingona. On the same day, the Senate passed Resolution No. 83 declaring that the impeachment court is functus officio and has been terminated. Several cases were filed against the petitioner which are as follows: (1) OMB Case No. 0-00-1629, filed by Ramon A. Gonzales on October 23, 2000 for bribery and graft and corruption; (2) OMB Case No. 0-00-1754 filed by the Volunteers Against Crime and Corruption on November 17, 2000 for plunder, forfeiture, graft and corruption, bribery, perjury, serious misconduct, violation of the Code of Conduct for government Employees, etc; (3) OMB Case No. 0-00-1755 filed by the Graft Free PhilippinesFoundation, Inc. on November 24, 2000 for plunder, forfeiture, graft and corruption, bribery, perjury, serious misconduct; (4) OMB Case No. 0-00-1756 filed by Romeo Capulong, et al., on November 28, 2000 formalversation of public funds, illegal use of public funds and property, plunder, etc., (5) OMB Case No. 0-00-1757 filed by Leonard de Vera, et al., on November 28, 2000 for bribery, plunder, indirect bribery, violation of PD 1602, PD 1829, PD 46, and RA 7080; and (6) OMB Case No. 0-00-1758 filed by Ernesto B. Francisco, Jr. on December 4, 2000 for plunder, graft and corruption.A special panel of investigators was forthwith created by the respondent Ombudsman to investigate the charges against the petitioner.  It is chaired by Overall Deputy Ombudsman Margarito P. Gervasio with the following as members, viz:  Director Andrew Amuyutan, Prosecutor Pelayo Apostol, Atty. Jose de Jesus and Atty. Emmanuel Laureso.  On January 22, the panel issued an Order directing the petitioner to file his counter-affidavit and the affidavits of his witnesses as well as other supporting documents in answer to the aforementioned complaints against him.

Thus, the stage for the cases at bar was set.  On February 5, petitioner filed with this Court GR No. 146710-15, a petition for prohibition with a prayer for a writ of preliminary injunction.  It sought to enjoin the respondent Ombudsman from “conducting any further proceedings in Case Nos. OMB 0-00-1629, 1754, 1755, 1756, 1757 and 1758 or in any other criminal complaint that may be filed in his office, until after the term of petitioner as President is over and only if legally warranted.” Thru another counsel, petitioner, on February 6, filed GR No. 146738 for Quo Warranto.  He prayed for judgment “confirming petitioner to be the lawful and incumbent President of the Republic of the Philippines temporarily unable to discharge the duties of his office, and declaring respondent to have taken her oath as and to be holding the Office of the President, only in an acting capacity pursuant to the provisions of the Constitution.” Acting on GR Nos. 146710-15, the Court, on the same day, February 6, required the respondents “to comment thereon within a non-extendible period expiring on 12 February 2001.” On February 13, the Court ordered the consolidation of GR Nos. 146710-15 and GR No. 146738 and the filing of the respondents’ comments “on or before 8:00 a.m. of February 15.”In a resolution dated February 20, acting on the urgent motion for copies of resolution and press statement for “Gag Order” on respondent Ombudsman filed by counsel for petitioner in G.R. No. 146738, the Court resolved:“(1) to inform the parties that the Court did not issue a resolution on January 20, 2001 declaring the office of the President vacant and that neither did the Chief Justice issue a press statement justifying the alleged resolution;(2) to order the parties and especially their counsel who are officers of the Court under pain of being cited for contempt to refrain from making any comment or discussing in public the merits of the cases at bar while they are still pending decision by the Court, and(3) to issue a 30-day status quo order effective immediately enjoining the respondent Ombudsman from resolving or deciding the criminal cases pending investigation in his office against petitioner Joseph E. Estrada and subject of the cases at bar, it appearing from news reports that the respondent Ombudsman may immediately resolve the cases against petitioner Joseph E. Estrada seven (7) days after the hearing held on February 15, 2001, which action will make the cases at bar moot and academic.”ISSUES:I Whether the petitions present a justiciable controversy.II Assuming that the petitions present a justiciable controversy, whether petitioner Estrada is a President on leave while respondent Arroyo is an Acting President.III Whether conviction in the impeachment proceedings is a condition precedent for the criminal prosecution of petitioner Estrada.  In the negative and on the assumption that petitioner is still President, whether he is immune from criminal prosecution.IV Whether the prosecution of petitioner Estrada should be enjoined on the ground of prejudicial publicity.DECISION:I No. The case is legal not political.II No. He is not a president on leave.III No. The impeachment proceedings was already aborted. As a non-sitting president, he is not entitled to immunity from criminal prosecutionIV There is not enough evidence to warrant this Court to enjoin the preliminary investigation of the petitioner by the respondent Ombudsman.RATIO/REASON:

1. I. Whether or not the case involves a political questionRespondents contend that the cases at bar pose a political question. Gloria Macapagal Arroyo became a President through the People power revolution. Her legitimacy as president was also accepted by other nations. Thus, they conclude that the following shall serve as political thicket which the Court cannot enter.The Court rules otherwise. A political question has been defined by our Court as “those questions which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to whichfull discretionary authority has been delegated to the legislative or executive branch of the government.  It is concerned with issues dependent upon the wisdom, not legality of a particular measure.”Respondents allege that the legality of the Arroyo administration should be treated similarly with the Aquino administration. Respondents propose that the situation of the Arroyo and Aquino administrations

are similar. However, the Court finds otherwise. The Court has made substantial distinctions which are the following:

Aquino Arroyo

Government was a result of a successful revolution Government was a result of a peaceful revolution

In the Freedom constitution, it was stated that the Aquino government was instilled directly by the people in defiance of the 1973 Constitution as amended.

Arroyo took the oath of the 1987 Constitution. She is discharging the authority of the president under the 1987 constitution.

It is a well settled rule that the legitimacy of a government sired by a successful revolution by people power is beyond judicial scrutiny for that government automatically orbits out of the constitutional loop. But this would not apply as the Court finds substantial difference between the 2 EDSA Revolutions. It would show that there are differences between the 2 governments set up by EDSA I and II. This was further explained by the Court by comparing the 2 EDSA Revolutions.

EDSA I EDSA II

Extra-constitutional. Hence, “Xxx IN DEFIANCE OF THE 1973 CONSTITUTION, AS AMENDED”—cannot be subject of judicial review

Intra-Constitutional. Hence, the oath of the respondent as President includes the protection and upholding of the 1987 Constitution.—resignation of the President makes it subject to judicial review

exercise of the people power of revolution whichoverthrew the whole government

exercise of people power of freedom of speech and freedom of assembly to petition the government for redress of grievances which only affected the office of the President

Political question Legal Question

In this issue, the Court holds that the issue is legal and not political.

1. II. Whether or not petitioner resigned as PresidentResignation is a factual question and its elements are beyond quibble:  there must be an intent to resign and the intent must be coupled by acts of relinquishment. There is no required form of resignation. It can be expressed, implied, oral or written. It is true that respondent never wrote a letter of resignation before he left Malacanang on June 20, 2001. In this issue, the Court would use the totality test or the totality of prior, contemporaneous and posterior facts and circumstantial evidence bearing a material relevance on the issue.Using this test, the Court rules that the petitioner had resigned. The Court knows the amount of stress that the petitioner had suffered. With just a blink of an eye, he lost the support of the legislative when then Manny Villar and other Representatives had defected. AFP Chief of Staff General Angelo Reyes had already gone to EDSA.  PNP Chief Director General Panfilo Lacson and other cabinet secretaries had withdrawn as well. By looking into the Angara diaries, it was pointed out that the petitioner had suggested a snap election at May on which he would not be a candidate. Proposing a snap election in which he is not a candidate means that he had intent to resign. When the proposal for a dignified exit or resignation was proposed, petitioner did not disagree but listened closely. This is proof that petitioner had reconciled himself to the reality that he had to resign.  His mind was already concerned with the five-day grace period he could stay in the palace.  It was a matter of time.The negotiations that had happened were about a peaceful transfer of power. It was already implied that petitioner would resign. The negotiations concentrated on the following: (1) the transition period of five days after the petitioner’s resignation; (2) the guarantee of the safety of the petitioner and his family, and (3) the agreement to open the second envelope to vindicate the name of the petitioner. Also taken from the Angara diaries, The President says. “Pagod na pagod na ako.  Ayoko na masyado nang masakit.  Pagod na ako sa red tape, bureaucracy, intriga.  (I am very tired.  I don’t want any more of this – it’s too painful.  I’m tired of the red tape, the bureaucracy, the intrigue.) I just want to clear my name, then I will go.” The quoted statement of the petitioner was a clear evidence that he has resigned.The second round of negotiations were about the consolidating of the clauses which were proposed by both sides. The second round of negotiation cements the reading that the petitioner has resigned.  It will be noted that during this second round of negotiation, the resignation of the petitioner was

again treated as a given fact.  The only unsettled points at that time were the measures to be undertaken by the parties during and after the transition period.When everything was already signed by the side of the petitioner and ready to be faxed by Angara, the negotiator for the respondent, Angelo Reyes, called to Angara saying that the SC would respondent to have her oath taking. Before petitioner left Malacanang, he made a last statement.The statement reads: ‘At twelve o’clock noon today, Vice President Gloria Macapagal-Arroyo took her oath as President of the Republic of the Philippines.  While along with many other legal minds of our country, I have strong and serious doubts about the legality and constitutionality of her proclamation as president, I do not wish to be a factor that will prevent the restoration of unity and order in our civil society.It is for this reason that I now leave Malacañang Palace, the seat of the presidency of this country, for the sake of peace and in order to begin the healing process of our nation.  I leave the Palace of our people with gratitude for the opportunities given to me for service to our people.  I will not shrik from any future challenges that may come ahead in the same service of our country.I call on all my supporters and followers to join me in the promotion of a constructive national spirit of reconciliation and solidarity.May the Almighty bless our country and our beloved people.MABUHAY!’”By making such statement, petitioner impliedly affirms the following: (1) he acknowledged the oath-taking of the respondent as President of the Republic albeit with the reservation about its legality; (2) he emphasized he was leaving the Palace, the seat of the presidency, for the sake of peace and in order to begin the healing process of our nation.  He did not say he was leaving the Palace due to any kind of inability and that he was going to re-assume the presidency as soon as the disability disappears; (3) he expressed his gratitude to the people for the opportunity to serve them.  Without doubt, he was referring to the past opportunity given him to serve the people as President; (4) he assured that he will not shirk from any future challenge that may come ahead in the same service of our country.  Petitioner’s reference is to a future challenge after occupying the office of the presidentwhich he has given up; and (5) he called on his supporters to join him in the promotion of a constructive national spirit of reconciliation and solidarity.  Certainly, the national spirit of reconciliation and solidarity could not be attained if he did not give up the presidency.Petitioner however argues that he only took a temporary leave of absence. This is evidenced by a letter which reads as follows:“SirBy virtue of the provisions of Section II, Article VII of the Constitution, I am hereby transmitting this declaration that I am unable to exercise the powers and duties of my office.  By operation of law and the Constitution, the Vice President shall be the Acting President.(Sgd.) Joseph Ejercito Estrada”The Court was surprised that the petitioner did not use this letter during the week long crisis. It would be very easy for him to say before he left Malacanang that he was temporarily unable to govern, thus, he is leaving Malacanang. Under any circumstance, however, the mysterious letter cannot negate the resignation of the petitioner.  If it was prepared before the press release of the petitioner clearly showing his resignation from the presidency, then the resignation must prevail as a later act.  If, however, it was prepared after the press release, still, it commands scant legal significance.Petitioner also argues that he could not resign. His legal basis is RA 3019 which states:“Sec. 12.  No public officer shall be allowed to resign or retire pending an investigation, criminal or administrative, or pending a prosecution against him, for any offense under this Act or under the provisions of the Revised Penal Code on bribery.”During the amendments, another section was inserted which states that:During the period of amendments, the following provision was inserted as section 15:“Sec. 15. Termination of office — No public official shall be allowed to resign or retire pending an investigation, criminal or administrative, or pending a prosecution against him, for any offense under the Act or under the provisions of the Revised Penal Code on bribery.The separation or cessation of a public official from office shall not be a bar to his prosecution under this Act for an offense committed during his incumbency.”The original senate bill was rejected because of the 2nd paragraph of section 15. Nonetheless, another similar bill was passed. Section 15 then became section 13. There is another reason why petitioner’s contention should be rejected. In the cases at bar, the records show that when petitioner resigned on

January 20, 2001, the cases filed against him before the Ombudsman were OMB Case Nos. 0-00-1629, 0-00-1755, 0-00-1756, 0-00-1757 and 0-00-1758. While these cases have been filed, the respondent Ombudsman refrained from conducting the preliminary investigation of the petitioner for the reason that as the sitting President then, petitioner was immune from suit.  Technically, the said cases cannot be considered as pending for the Ombudsman lacked jurisdiction to act on them.  Section 12 of RA No. 3019 cannot therefore be invoked by the petitioner for it contemplates of cases whose investigation or prosecution do not suffer from any insuperable legal obstacle like the immunity from suit of a sitting President.Petitioner contends that the impeachment proceeding is an administrative investigation that, under section 12 of RA 3019, bars him from resigning.  The Court holds otherwise. The impeachment proceeding may be arguable. However, even if the impeachment proceeding is administrative, it cannot be considered pending because the process had already broke down. There was also a withdrawal by the prosecutors to partake in the impeachment case. In fact, the proceeding was postponed indefinitely. In fact, there was no impeachment case pending when he resigned.

1. III. Whether or not the petitioner is only temporarily unable to act as PresidentThis issue arose from the January 20 letter which was addressed to then Speaker Fuentebella and then Senate President Pimentel. Petitioner’s contention is that he is a president on leave and that the respondent is an acting president. This contention is the centerpiece of petitioner’s stance that he is aPresident on leave and respondent Arroyo is only an Acting President.An examination of section 11, Article VII is in order.  It provides:“SEC. 11.  Whenever the President transmit to the President of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the Vice-President as Acting President.Whenever a majority of all the Members of the Cabinet transmit to the President of the Senate and to the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice-President shall immediately assume the powers and duties of the office as Acting President.Thereafter, when the President transmits to the President of the Senate and to the Speaker of the House of Representatives his written declaration that no inability exists, he shall reassume the powers and duties of his office.  Meanwhile, should a majority of all the Members of the Cabinet transmit within five days to the President of the Senate and to the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Congress shall decide the issue.  For that purpose, the Congress shall convene, if it is not in session, within forty-eight hours, in accordance with its rules and without need of call.If the Congress, within ten days after receipt of the last written declaration, or, if not in session within twelve days after it is required to assemble, determines by a two-thirds vote of both Houses, voting separately, that the President is unable to discharge the powers and duties of his office, the Vice-President shall act as President; otherwise, the President shall continue exercising the powers and duties of his office."After studying in-depth the series of events that happened after petitioner left Malacanang, it is very clear that the inability of the petitioner as president is not temporary. The question is whether this Court has jurisdiction to review the claim of temporary inability of petitioner Estrada and thereafter revise the decision of both Houses of Congress recognizing respondent Arroyo as President of the Philippines. The Court says that they cannot, for such is an example of a political question, in which the matter has solely been left to the legislative,

1. IV. Whether or not the petitioner enjoys immunity from suit. If yes, what is the extent of the immunity

Petitioner Estrada makes two submissions: first, the cases filed against him before the respondent Ombudsman should be prohibited because he has not been convicted in the impeachment proceedings against him; and second, he enjoys immunity from all kinds of suit, whether criminal or civil. The “immunity” the petitioner points to is the principle of non-liability.The principle of non-liability simply states that a chief executive may not be personally mulcted in civil damages for the consequences of an act executed in the performance of his official duties. He is liable when he acts in a case so plainly outside of his power and authority that he cannot be said to have exercise discretion in determining whether or not he had the right to act.  What is held here is that he will

be protected from personal liability for damages not only when he acts within his authority, but also when he is without authority, provided he actually used discretion and judgment, that is, the judicial faculty, in determining whether he had authority to act or not.  In other words, he is entitled to protection in determining the question of his authority.  If he decide wrongly, he is still protected provided the question of his authority was one over which two men, reasonably qualified for that position, might honestly differ; but he is not protected if the lack of authority to act is so plain that two such men could not honestly differ over its determination.The Court rejects the petitioner’s argument that before he could be prosecuted, he should be first convicted of impeachment proceedings. The impeachment proceeding was already aborted because of the walking out of the prosecutors. This was then formalized by a Senate resolution (Resolution #83) which declared the proceeding functus officio. According to the debates in the Constitutional Convention, when an impeachment proceeding have become moot due to the resignation of the President, proper civil and criminal cases may be filed against him.We now come to the scope of immunity that can be claimed by petitioner as a non-sitting President.  The cases filed against petitioner Estrada are criminal in character.  They involve plunder, bribery and graft and corruption.  By no stretch of the imagination can these crimes, especially plunder which carries the death penalty, be covered by the allege mantle of immunity of a non-sitting president.  Petitioner cannot cite any decision of this Court licensing the President to commit criminal acts and wrapping him with post-tenure immunity from liability.   It will be anomalous to hold that immunity is an inoculation from liability for unlawful acts and omissions. As for civil immunity, it means immunity from civil damages only covers “official acts”.

1. V. Whether of not the prosecution of petitioner Estrada should be enjoined to prejudicial publicity

Petitioner contends that the respondent Ombudsman should be stopped from conducting an investigation of the cases filed against him for he has already developed a bias against the petitioner. He submits that it is a violation of due process. There are two (2) principal legal and philosophical schools of thought on how to deal with the rain of unrestrained publicity during the investigation and trial of high profile cases. TheBritish approach the problem with the presumption that publicity will prejudice a jury.  Thus, English courts readily stay and stop criminal trials when the right of an accused to fair trial suffers a threat. TheAmerican approach is different.  US courts assume a skeptical approach about the potential effect of pervasive publicity on the right of an accused to a fair trial. During cases like such, the test of actual prejudice shall be applied. The test shows that there must be allegation and proof that the judges have been unduly influenced, not simply that they might be, by the barrage of publicity. The Court rules thatthere is not enough evidence to warrant this Court to enjoin the preliminary investigation of the petitioner by the respondent Ombudsman.  Petitioner needs to offer more than hostile headlines to discharge his burden of proof.According to the records, it was the petitioner who assailed the biasness of the Ombudsman. The petitioner alleges that there were news reports which said that the Ombudsman had already prejudged the cases against him. The Court rules that the evidence presented is insufficient. The Court also cannotadopt the theory of derivative prejudice of petitioner, i.e., that the prejudice of respondent Ombudsman flows to his subordinates. Investigating prosecutors should not be treated like unthinking slot machines. Moreover, if the respondent Ombudsman resolves to file the cases against the petitioner and the latter believes that the finding of probable cause against him is the result of bias, he still has the remedy of assailing it before the proper court.

Holy See vs. Rosario ---38 SCRA 524

FACTS: A piece of real property was acquired by the Holy See by way of donation from the Archdiocese of Manila. The purpose was to construct the official place of residence of the Papal Nuncio. Later, the Holy See sold the property on condition that it will evict the squatters therein. For failure to comply with the condition, the Holy See was sued. It moved to dismiss on the ground of state immunity.

ISSUE: Whether respondent trial court has jurisdiction over petitioner being a foreign state enjoying sovereign immunity.

HELD: The Republic of the Philippines has accorded the Holy See the status if a foreign sovereign, the Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine Government since 1957.The privilege of sovereign immunity in this case was sufficiently established by the memorandum and certification of the Department of Foreign Affairs. The DFA has formally intervened in this case and officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country. The determination of the executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts.

Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive arm of the government in conducting the country’s foreign relations.

G.R. No. 101949 December 1, 1994

THE HOLY SEE,petitioner,

vs.

THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati,

Branch 61 and STARBRIGHT SALES ENTERPRISES, INC.,responde nts.

Padilla Law Office for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

QUIASON,J.:

This is a petition forcertiorari under Rule 65 of the Revised Rules of Court to reverse and set aside

theOrders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61,

Makati,Metro Manila in Civil Case No. 90-183.

The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No.

90-183, while the Order dated September 19, 1991 denied the motion for reconsideration of the June

20,1991 Order.

Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is

represented in the Philippines by the Papal Nuncio.

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

estate business.

This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5-A,

Transfer Certificate of Title No. 390440) located in the Municipality of Parañaque, Metro Manila and

registered in the name of petitioner.

Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title Nos.

271108 and 265388 respectively and registered in the name of the Philippine Realty Corporation (PRC).

The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the

sellers. Later, Licup assigned his rights to the sale to private respondent.

In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as

towho of the parties has the responsibility of evicting and clearing the land of squatters. Complicating

therelations of the parties was the sale by petitioner of Lot 5-A to Tropicana Properties and

DevelopmentCorporation (Tropicana).

I

On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61,

Makati, Metro Manila for annulment of the sale of the three parcels of land, and specific performance and

damages against petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr.

Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No.

90-183).

The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC,

agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meters; (2) the

agreement to sell was made on the condition that earnest money of P100,000.00 be paid by Licup to the

sellers, and that the sellers clear the said lots of squatters who were then occupying the same; (3) Licup

paid the earnest money to Msgr. Cirilos; (4) in the same month, Licup assigned his rights over the

property to private respondent and informed the sellers of the said assignment; (5) thereafter, private

respondent demanded from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property of

squatters; however, Msgr. Cirilos informed private respondent of the squatters' refusal to vacate the lots,

proposing instead either that private respondent undertake the eviction or that the earnest money be

returned to the latter; (6) private respondent counterproposed that if it would undertake the eviction of the

squatters, the purchase price of the lots should be reduced from P1,240.00 to P1,150.00 per square

meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00 and wrote private respondent giving it

seven days from receipt of the letter to pay the original purchase price in cash; (8) private respondent

sent the earnest money back to the sellers, but later discovered that on March 30, 1989, petitioner and

the PRC, without notice to private respondent, sold the lots to Tropicana, as evidenced by two separate

Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer

certificate of title over the lots were cancelled, transferred and registered in the name of Tropicana; (9)

Tropicana induced petitioner and the PRC to sell the lots to it and thus enriched itself at the expense of

private respondent; (10) private respondent demanded the rescission of the sale to Tropicana and the

reconveyance of the lots, to no avail; and (11) private respondent is willing and able to comply with the

terms of the contract to sell and has actually made plans to develop the lots into a townhouse project, but

in view of the sellers' breach, it lost profits of not less than P30,000.000.00.

Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the

PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3)

specific performance of the agreement to sell between it and the owners of the lots; and (4) damages.

On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint — petitioner

forlack of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper

party.An opposition to the motion was filed by private respondent.

On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to dismiss

after finding that petitioner "shed off [its] sovereign immunity by entering into the business contract in

question" (Rollo, pp. 20-21).

On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991, petitioner filed a

"Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation for claim of Immunity as a

Jurisdictional Defense." So as to facilitate the determination of its defense of sovereign immunity,

petitioner prayed that a hearing be conducted to allow it to establish certain facts upon which the said

defense is based. Private respondent opposed this motion as well as the motion for reconsideration.

On October 1, 1991, the trial court issued an order deferring the resolution on the motion for

reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p. 22).

Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign

immunity only on its own behalf and on behalf of its official representative, the Papal Nuncio.

On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign Affairs,

claiming that it has a legal interest in the outcome of the case as regards the diplomatic immunity of

petitioner, and that it "adopts by reference, the allegations contained in the petition of the Holy See insofar

as they refer to arguments relative to its claim of sovereign immunity from suit" (Rollo, p. 87).

Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the

resolution of this Court, both parties and the Department of Foreign Affairs submitted their respective

memoranda.

II

A preliminary matter to be threshed out is the procedural issue of whether the petition forcertiorari under

Rule 65 of the Revised Rules of Court can be availed of to question the order denying petitioner's motion

to dismiss. The general rule is that an order denying a motion to dismiss is not reviewable by the

appellate courts, the remedy of the movant being to file his answer and to proceed with the hearing before

the trial court. But the general rule admits of exceptions, and one of these is when it is very clear in the

records that the trial court has no alternative but to dismiss the complaint (Philippine National Bank v.

Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a

case, it would be a sheer waste of time and energy to require the parties to undergo the rigors of a trial.

The other procedural question raised by private respondent is the personality or legal interest of the

Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190).

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic

immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the

court that said defendant is entitled to immunity.

In the United States, the procedure followed is the process of "suggestion," where the foreign state or the

international organization sued in an American court requests the Secretary of State to make a

determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is

immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that the

defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office

issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law 130

[1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law

Journal 1088 [1941]).

In the Philippines, the practice is for the foreign government or the international organization to first

secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine

Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration

Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to

the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be

sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242

(1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57

SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General

to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a

"suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation

and Memorandum as amicus curiae.

In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with

thisCourt to be allowed to intervene on the side of petitioner. The Court allowed the said Department to

file itsmemorandum in support of petitioner's claim of sovereign immunity.

In some cases, the defense of sovereign immunity was submitted directly to the local courts by the

respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v.

Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644

[1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts

can inquire into the facts and make their own determination as to the nature of the acts and transactions

involved.

III

The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a

foreignstate enjoying sovereign immunity. On the other hand, private respondent insists that the doctrine

of non-suability is not anymore absolute and that petitioner has divested itself of such a cloak when, of its

ownfree will, it entered into a commercial transaction for the sale of a parcel of land located in the

Philippines.

A. The Holy See

Before we determine the issue of petitioner's non-suability, a brief look into its status as a sovereign state

is in order.

Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the

Holy See, was considered a subject of International Law. With the loss of the Papal States and the

limitation of the territory under the Holy See to an area of 108.7 acres, the position of the Holy See in

International Law became controversial (Salonga and Yap, Public International Law 36-37 [1992]).

In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive

dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of

the Holy See to receive foreign diplomats, to send its own diplomats to foreign countries, and to enter into

treaties according to International Law (Garcia, Questions and Problems In International Law, Public and

Private 81 [1948]).

The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the

HolySee absolute and visible independence and of guaranteeing to it indisputable sovereignty also in the

fieldof international relations" (O'Connell, I International Law 311 [1965]).

In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is vested

inthe Holy See or in the Vatican City. Some writers even suggested that the treaty created two

internationalpersons — the Holy See and Vatican City (Salonga and Yap,supra, 37).

The Vatican City fits into none of the established categories of states, and the attribution to it of

"sovereignty" must be made in a sense different from that in which it is applied to other states (Fenwick,

International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a community of national states,

the Vatican City represents an entity organized not for political but for ecclesiastical purposes and

international objects. Despite its size and object, the Vatican City has an independent government of its

own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head of State, in

conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide interests

and activities of the Vatican City are such as to make it in a sense an "international state" (Fenwick,

supra., 125; Kelsen, Principles of International Law 160 [1956]).

One authority wrote that the recognition of the Vatican City as a state has significant implication — that

itis possible for any entity pursuing objects essentially different from those pursued by states to be

investedwith international personality (Kunz, The Status of the Holy See in International Law, 46 The

AmericanJournal of International Law 308 [1952]).

Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy Seeand

not in the name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy Seethat is

the international person.

The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The

HolySee, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the

Philippinegovernment since 1957 (Rollo, p. 87). This appears to be the universal practice in international

relations

B. Sovereign Immunity

As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted

principles of International Law. Even without this affirmation, such principles of International Law are

deemed incorporated as part of the law of the land as a condition and consequence of our admission in

the society of nations (United States of America v. Guinto, 182 SCRA 644 [1990]).

There are two conflicting concepts of sovereign immunity, each widely held and firmly established.

According to the classical or absolute theory, a sovereign cannot, without its consent, be made a

respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity

of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with

regard to private acts or acts jure gestionis

(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public

International Law 194 [1984]).

Some states passed legislation to serve as guidelines for the executive or judicial determination when an

act may be considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act

of 1976, which defines a commercial activity as "either a regular course of commercial conduct or a

particular commercial transaction or act." Furthermore, the law declared that the "commercial character of

the activity shall be determined by reference to the nature of the course of conduct or particular

transaction or act, rather than by reference to its purpose." The Canadian Parliament enacted in 1982 an

Act to Provide For State Immunity in Canadian Courts. The Act defines a "commercial activity" as any

particular transaction, act or conduct or any regular course of conduct that by reason of its nature, is of a

"commercial character."

The restrictive theory, which is intended to be a solution to the host of problems involving the issue of

sovereign immunity, has created problems of its own. Legal treatises and the decisions in countries which

follow the restrictive theory have difficulty in characterizing whether a contract of a sovereign state with a

private party is an act jure gestionis or an act jure imperii.

The restrictive theory came about because of the entry of sovereign states into purely commercial

activities remotely connected with the discharge of governmental functions. This is particularly true with

respect to the Communist states which took control of nationalized business activities and international

trading.

This Court has considered the following transactions by a foreign state with private parties as actsjure

imperii: (1) the lease by a foreign government of apartment buildings for use of its military officers (Syquia

v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the repair of a wharf at a United

StatesNaval Station (United States of America v. Ruiz,supra.); and (3) the change of employment status

of baseemployees (Sanders v. Veridiano, 162 SCRA 88 [1988]).

On the other hand, this Court has considered the following transactions by a foreign state with private

parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting of three

restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air Station in

Baguio City, to cater to American servicemen and the general public (United States of America v.

Rodrigo,

182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops in Clark Air Base in Angeles

City (United States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and

other facilities open to the general public is undoubtedly for profit as a commercial and not a

governmental activity. By entering into the employment contract with the cook in the discharge of its

proprietary function, the United States government impliedly divested itself of its sovereign immunity from

suit.

In the absence of legislation defining what activities and transactions shall be considered

"commercial"and as constituting acts jure gestionis, we have to come out with our own guidelines,

tentative they may be.

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate

test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is

engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a

business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit

of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not

undertaken for gain or profit.

As held in United States of America v. Guinto, (supra):

There is no question that the United States of America, like any other state, will be

deemed to have impliedly waived its non-suability if it has entered into a contract in its

proprietary or private capacity. It is only when the contract involves its sovereign or

governmental capacity that no such waiver may be implied.

In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate

business, surely the said transaction can be categorized as an act jure gestionis. However, petitioner has

denied that the acquisition and subsequent disposal of Lot 5-A were made for profit but claimed that it

acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines. Private

respondent failed to dispute said claim.

Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made

not for commercial purpose, but for the use of petitioner to construct thereon the official place of

residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a

receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the

1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the

Philippine Senate and entered into force in the Philippines on November 15, 1965.

In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and

administrativejurisdiction of the receiving state over any real action relating to private immovable property

situated in theterritory of the receiving state which the envoy holds on behalf of the sending state for the

purposes of themission. If this immunity is provided for a diplomatic envoy, with all the more reason

should immunity berecognized as regards the sovereign itself, which in this case is the Holy See.

The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a

governmental character. Petitioner did not sell Lot

5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made

it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have

occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been

admitted by private respondent in its complaint (Rollo, pp. 26, 27).

The issue of petitioner's non-suability can be determined by the trial court without going to trial in the light

of the pleadings, particularly the admission of private respondent. Besides, the privilege of sovereign

immunity in this case was sufficiently established by the Memorandum and Certification of the

Department of Foreign Affairs. As the department tasked with the conduct of the Philippines' foreign

relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has

formally intervened in this case and officially certified that the Embassy of the Holy See is a duly

accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled

to all the rights, privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp.

156-157). The determination of the executive arm of government that a state or instrumentality is entitled

to sovereign or diplomatic immunity is a political question that is conclusive upon the courts (International)

Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is

recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not

to embarrass the executive arm of the government in conducting the country's foreign relations (World

Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission

and in World Health Organization, we abide by the certification of the Department of Foreign Affairs.

Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing

toestablish the facts alleged by petitioner in its motion. In view of said certification, such procedure

wouldhowever be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco,

G.R.No. 109645, July 25, 1994).

IV

Private respondent is not left without any legal remedy for the redress of its grievances. Under both

PublicInternational Law and Transnational Law, a person who feels aggrieved by the acts of a foreign

sovereigncan ask his own government to espouse his cause through diplomatic channels.

Private respondent can ask the Philippine government, through the Foreign Office, to espouse its

claimsagainst the Holy See. Its first task is to persuade the Philippine government to take up with the Holy

Seethe validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of

itsespousal on the relations between the Philippine government and the Holy See (Young, Remedies of

Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign

Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter

ceases to be a private cause.

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

Justice:

By taking up the case of one of its subjects and by reporting to diplomatic action or

international judicial proceedings on his behalf, a State is in reality asserting its own

rights — its right to ensure, in the person of its subjects, respect for the rules of

international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court

Reports 293, 302 [1924]).

WHEREFORE, the petition forcertiorari is GRANTED and the complaint in Civil Case No. 90-183 against

petitioner is DISMISSED.

SO ORDERED.

[G.R. No. 148571. September 24, 2002]GOVERNMENT OF THE UNITED STATES OF AMERICA, represented by the Philippine Department of Justice, Petitioner, v. Hon. GUILLERMO G. PURGANAN, Morales, and Presiding Judge, Regional Trial Court of Manila, Branch 42; and MARK B. JIMENEZ a.k.a. MARIO BATACAN CRESPO,Respondents.D E C I S I O N

PANGANIBAN, J.:

In extradition proceedings, are prospective extraditees entitled to notice and hearing before warrants for their arrest can be issued? Equally important, are they entitled to the right to bail and provisional liberty while the extradition proceedings are pending? In general, the answer to these two novel questions is No. The explanation of and the reasons for, as well as the exceptions to, this rule are laid out in this Decision.The Case

Before us is a Petition for Certiorari under Rule 65 of the Rules of Court, seeking to void and set aside the Orders dated May 23, 2001[1 and July 3, 2001[2 issued by the Regional Trial Court (RTC) of Manila, Branch 42.[3 The first assailed Order set for hearing petitioners application for the issuance of a warrant for the arrest of Respondent Mark B. Jimenez.The second challenged Order, on the other hand, directed the issuance of a warrant, but at the same time granted bail to Jimenez. The dispositive portion of the Order reads as follows:WHEREFORE, in the light of the foregoing, the [Court] finds probable cause against respondent Mark Jimenez. Accordingly let a Warrant for the arrest of the respondent be issued. Consequently and taking into consideration Section 9, Rule 114 of the Revised Rules of Criminal Procedure, this Court fixes the reasonable amount of bail for respondents temporary liberty at ONE MILLION PESOS (Php 1,000,000.00), the same to be paid in cash.Furthermore respondent is directed to immediately surrender to this Court his passport and the Bureau of Immigration and Deportation is likewise directed to include the name of the respondent in its Hold Departure List.[4Essentially, the Petition prays for the lifting of the bail Order, the cancellation of the bond, and the taking of Jimenez into legal custody.The FactsThis Petition is really a sequel to GR No. 139465 entitled Secretary of Justice v. Ralph C. Lantion.[5Pursuant to the existing RP-US Extradition Treaty,[6 the United States Government, through diplomatic channels, sent to the Philippine Government Note Verbale No. 0522 dated June 16, 1999, supplemented by Note Nos. 0597, 0720 and 0809 and accompanied by duly authenticated documents requesting the extradition of Mark B. Jimenez, also known as Mario Batacan Crespo. Upon receipt of the Notes and documents, the secretary of foreign affairs (SFA) transmitted them to the secretary of justice (SOJ) for appropriate action, pursuant to Section 5 of Presidential Decree (PD) No. 1069, also known as the Extradition Law.Upon learning of the request for his extradition, Jimenez sought and was granted a Temporary Restraining Order (TRO) by the RTC of Manila, Branch 25.[7 The TRO prohibited the Department of Justice (DOJ) from filing with the RTC a petition for his extradition. The validity of the TRO was, however, assailed by the SOJ in a Petition before this Court in the said GR No. 139465. Initially, the Court -- by a vote of 9-6 -- dismissed the Petition. The SOJ was ordered to furnish private respondent copies of the extradition request and its supporting papers and to grant the latter a reasonable period within which to file a comment and supporting evidence.[8Acting on the Motion for Reconsideration filed by the SOJ, this Court issued its October 17, 2000 Resolution.[9 By an identical vote of 9-6 -- after three justices changed their votes -- it reconsidered and reversed its earlier Decision. It held that private respondent was bereft of the right to notice and hearing during the evaluation stage of the extradition process. This Resolution has become final and executory.Finding no more legal obstacle, the Government of the United States of America, represented by the Philippine DOJ, filed with the RTC on May 18, 2001, the appropriate Petition for Extradition which was docketed as Extradition Case No. 01192061. The Petition alleged, inter alia, that Jimenez was the subject of an arrest warrant issued by the United States District Court for the Southern District of Florida on April 15, 1999. The warrant had been issued in connection with the following charges in Indictment No. 99-00281 CR-SEITZ: (1) conspiracy to defraud the United States and to commit certain offenses in violation of Title 18 US Code Section 371; (2) tax evasion, in violation of Title 26 US Code Section 7201; (3) wire fraud, in violation of Title 18 US Code Sections 1343 and 2; (4) false statements, in violation of Title 18 US Code Sections 1001 and 2; and (5) illegal campaign contributions, in violation of Title 2 US Code Sections 441b, 441f and 437g(d) and Title 18 US Code Section 2. In order to prevent the flight of Jimenez, the Petition prayed for the issuance of an order for his immediate arrest pursuant to Section 6 of PD No. 1069.Before the RTC could act on the Petition, Respondent Jimenez filed before it an Urgent Manifestation/Ex-Parte Motion,[10 which prayed that petitioners application for an arrest warrant be set for hearing.In its assailed May 23, 2001 Order, the RTC granted the Motion of Jimenez and set the case for hearing on June 5, 2001. In that hearing, petitioner manifested its reservations on the procedure adopted by the trial court allowing the accused in an extradition case to be heard prior to the issuance of a warrant of arrest.

After the hearing, the court a quo required the parties to submit their respective memoranda. In his Memorandum, Jimenez sought an alternative prayer: that in case a warrant should issue, he be allowed to post bail in the amount of P100,000.The alternative prayer of Jimenez was also set for hearing on June 15, 2001. Thereafter, the court below issued its questioned July 3, 2001 Order, directing the issuance of a warrant for his arrest and fixing bail for his temporary liberty at one million pesos in cash.[11 After he had surrendered his passport and posted the required cash bond, Jimenez was granted provisional liberty via the challenged Order dated July 4, 2001.[12Hence, this Petition.[13IssuesPetitioner presents the following issues for the consideration of this Court:I.The public respondent acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in adopting a procedure of first hearing a potential extraditee before issuing an arrest warrant under Section 6 of PD No. 1069.II.The public respondent acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in granting the prayer for bail and in allowing Jimenez to go on provisional liberty because:1. An extradition court has no power to authorize bail, in the absence of any law that provides for such power.2. Section 13, Article III (right to bail clause) of the 1987 Philippine Constitution and Section 4, Rule 114 (Bail) of the Rules of Court, as amended, which [were] relied upon, cannot be used as bases for allowing bail in extradition proceedings.3. The presumption is against bail in extradition proceedings or proceedings leading to extradition.4. On the assumption that bail is available in extradition proceedings or proceedings leading to extradition, bail is not a matter of right but only of discretion upon clear showing by the applicant of the existence of special circumstances.5. Assuming that bail is a matter of discretion in extradition proceedings, the public respondent received no evidence of special circumstances which may justify release on bail.6. The risk that Jimenez will flee is high, and no special circumstance exists that will engender a well-founded belief that he will not flee.7. The conditions attached to the grant of bail are ineffectual and do not ensure compliance by the Philippines with its obligations under the RP-US Extradition Treaty.8. The Court of Appeals Resolution promulgated on May 10, 2001 in the case entitled Eduardo T. Rodriguez et al. vs. The Hon. Presiding Judge, RTC, Branch 17, Manila, CA-G.R. SP No. 64589, relied upon by the public respondent in granting bail, had been recalled before the issuance of the subject bail orders.[14In sum, the substantive questions that this Court will address are: (1) whether Jimenez is entitled to notice and hearing before a warrant for his arrest can be issued, and (2) whether he is entitled to bail and to provisional liberty while the extradition proceedings are pending. Preliminarily, we shall take up the alleged prematurity of the Petition for Certiorari arising from petitioners failure to file a Motion for Reconsideration in the RTC and to seek relief in the Court of Appeals (CA), instead of in this Court.[15 We shall also preliminarily discuss five extradition postulates that will guide us in disposing of the substantive issues.The Courts RulingThe Petition is meritorious.Preliminary MattersAlleged Prematurity of Present PetitionPetitioner submits the following justifications for not filing a Motion for Reconsideration in the Extradition Court: (1) the issues were fully considered by such court after requiring the parties to submit their respective memoranda and position papers on the matter and thus, the filing of a reconsideration motion would serve no useful purpose; (2) the assailed orders are a patent nullity, absent factual and legal basis therefor; and (3) the need for relief is extremely urgent, as the passage of sufficient time would give Jimenez ample opportunity to escape and avoid extradition; and (4) the issues raised are purely of law.[16

For resorting directly to this Court instead of the CA, petitioner submits the following reasons: (1) even if the petition is lodged with the Court of Appeals and such appellate court takes cognizance of the issues and decides them, the parties would still bring the matter to this Honorable Court to have the issues resolved once and for all [and] to have a binding precedent that all lower courts ought to follow; (2) the Honorable Court of Appeals had in one case[17 ruled on the issue by disallowing bail but the court below refused to recognize the decision as a judicial guide and all other courts might likewise adopt the same attitude of refusal; and (3) there are pending issues on bail both in the extradition courts and the Court of Appeals, which, unless guided by the decision that this Honorable Court will render in this case, would resolve to grant bail in favor of the potential extraditees and would give them opportunity to flee and thus, cause adverse effect on the ability of the Philippines to comply with its obligations under existing extradition treaties.[18As a general rule, a petition for certiorari before a higher court will not prosper unless the inferior court has been given, through a motion for reconsideration, a chance to correct the errors imputed to it. This rule, though, has certain exceptions: (1) when the issue raised is purely of law, (2) when public interest is involved, or (3) in case of urgency.[19 As a fourth exception, the Court has also ruled that the filing of a motion for reconsideration before availment of the remedy of certiorari is not a sine qua non, when the questions raised are the same as those that have already been squarely argued and exhaustively passed upon by the lower court.[20 Aside from being of this nature, the issues in the present case also involve pure questions of law that are of public interest. Hence, a motion for reconsideration may be dispensed with.Likewise, this Court has allowed a direct invocation of its original jurisdiction to issue writs of certiorari when there are special and important reasons therefor.[21 In Fortich v. Corona [22 we stated:[T]he Supreme Court has the full discretionary power to take cognizance of the petition filed directly [before] it if compelling reasons, or the nature and importance of the issues raised, warrant. This has been the judicial policy to be observed and which has been reiterated in subsequent cases, namely: Uy vs. Contreras, et. al., Torres vs. Arranz, Bercero vs. De Guzman, and, Advincula vs. Legaspi, et. al. As we have further stated in Cuaresma:x x x. A direct invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is established policy. x x x.Pursuant to said judicial policy, we resolve to take primary jurisdiction over the present petition in the interest of speedy justice and to avoid future litigations so as to promptly put an end to the present controversy which, as correctly observed by petitioners, has sparked national interest because of the magnitude of the problem created by the issuance of the assailed resolution. Moreover, x x x requiring the petitioners to file their petition first with the Court of Appeals would only result in a waste of time and money.That the Court has the power to set aside its own rules in the higher interests of justice is well-entrenched in our jurisprudence. We reiterate what we said in Piczon vs. Court of Appeals:[23Be it remembered that rules of procedure are but mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. Time and again, this Court has suspended its own rules and excepted a particular case from their operation whenever the higher interests of justice so require. In the instant petition, we forego a lengthy disquisition of the proper procedure that should have been taken by the parties involved and proceed directly to the merits of the case.In a number of other exceptional cases,[24 we held as follows:This Court has original jurisdiction, concurrent with that of Regional Trial Courts and the Court of Appeals, over petitions for certiorari, prohibition,mandamus, quo warranto and habeas corpus, and we entertain direct resort to us in cases where special and important reasons or exceptional and compelling circumstances justify the same.In the interest of justice and to settle once and for all the important issue of bail in extradition proceedings, we deem it best to take cognizance of the present case. Such proceedings constitute a matter of first impression over which there is, as yet, no local jurisprudence to guide lower courts.Five Postulates of ExtraditionThe substantive issues raised in this case require an interpretation or construction of the treaty and the law on extradition. A cardinal rule in the interpretation of a treaty or a law is to ascertain and give effect to its intent.[25 Since PD 1069 is intended as a guide for the implementation of extradition treaties to which

the Philippines is a signatory,[26 understanding certain postulates of extradition will aid us in properly deciding the issues raised here.1. Extradition Is a Major Instrument for the Suppression of Crime.First, extradition treaties are entered into for the purpose of suppressing crime[27 by facilitating the arrest and the custodial transfer[28 of a fugitive[29 from one state to the other.With the advent of easier and faster means of international travel, the flight of affluent criminals from one country to another for the purpose of committing crime and evading prosecution has become more frequent. Accordingly, governments are adjusting their methods of dealing with criminals and crimes that transcend international boundaries.Today, a majority of nations in the world community have come to look upon extradition as the major effective instrument of international co-operation in the suppression of crime.[30 It is the only regular system that has been devised to return fugitives to the jurisdiction of a court competent to try them in accordance with municipal and international law.[31An important practical effect x x x of the recognition of the principle that criminals should be restored to a jurisdiction competent to try and punish them is that the number of criminals seeking refuge abroad will be reduced. For to the extent that efficient means of detection and the threat of punishment play a significant role in the deterrence of crime within the territorial limits of a State, so the existence of effective extradition arrangements and the consequent certainty of return to the locus delicti commissi play a corresponding role in the deterrence of flight abroad in order to escape the consequence of crime. x x x. From an absence of extradition arrangements flight abroad by the ingenious criminal receives direct encouragement and thus indirectly does the commission of crime itself.[32In Secretary v. Lantion[33 we explained:The Philippines also has a national interest to help in suppressing crimes and one way to do it is to facilitate the extradition of persons covered by treaties duly entered [into] by our government. More and more, crimes are becoming the concern of one world. Laws involving crimes and crime prevention are undergoing universalization. One manifest purpose of this trend towards globalization is to deny easy refuge to a criminal whose activities threaten the peace and progress of civilized countries. It is to the great interest of the Philippines to be part of this irreversible movement in light of its vulnerability to crimes, especially transnational crimes.Indeed, in this era of globalization, easier and faster international travel, and an expanding ring of international crimes and criminals, we cannot afford to be an isolationist state. We need to cooperate with other states in order to improve our chances of suppressing crime in our own country.2. The Requesting State Will Accord Due Process to the AccusedSecond, an extradition treaty presupposes that both parties thereto have examined, and that both accept and trust, each others legal system and judicial process.[34 More pointedly, our duly authorized representatives signature on an extradition treaty signifies our confidence in the capacity and the willingness of the other state to protect the basic rights of the person sought to be extradited.[35 That signature signifies our full faith that the accused will be given, upon extradition to the requesting state, all relevant and basic rights in the criminal proceedings that will take place therein; otherwise, the treaty would not have been signed, or would have been directly attacked for its unconstitutionality.3. The Proceedings Are Sui GenerisThird, as pointed out in Secretary of Justice v. Lantion,[36 extradition proceedings are not criminal in nature. In criminal proceedings, the constitutional rights of the accused are at fore; in extradition which is sui generis -- in a class by itself -- they are not.An extradition [proceeding] is sui generis. It is not a criminal proceeding which will call into operation all the rights of an accused as guaranteed by the Bill of Rights. To begin with, the process of extradition does not involve the determination of the guilt or innocence of an accused. His guilt or innocence will be adjudged in the court of the state where he will be extradited. Hence, as a rule, constitutional rights that are only relevant to determine the guilt or innocence of an accused cannot be invoked by an extraditee x x x.x x xThere are other differences between an extradition proceeding and a criminal proceeding. An extradition proceeding is summary in nature while criminal proceedings involve a full-blown trial. In contradistinction to a criminal proceeding, the rules of evidence in an extradition proceeding allow admission of evidence under less stringent standards. In terms of the quantum of evidence to be satisfied, a criminal case requires proof beyond reasonable doubt for conviction while a fugitive may be ordered extradited upon

showing of the existence of a prima facie case. Finally, unlike in a criminal case where judgment becomes executory upon being rendered final, in an extradition proceeding, our courts may adjudge an individual extraditable but the President has the final discretion to extradite him. The United States adheres to a similar practice whereby the Secretary of State exercises wide discretion in balancing the equities of the case and the demands of the nations foreign relations before making the ultimate decision to extradite.Given the foregoing, it is evident that the extradition court is not called upon to ascertain the guilt or the innocence of the person sought to be extradited.[37 Such determination during the extradition proceedings will only result in needless duplication and delay. Extradition is merely a measure of international judicial assistance through which a person charged with or convicted of a crime is restored to a jurisdiction with the best claim to try that person. It is not part of the function of the assisting authorities to enter into questions that are the prerogative of that jurisdiction.[38 The ultimatepurpose of extradition proceedings in court is only to determine whether the extradition request complies with the Extradition Treaty, and whether the person sought is extraditable.[394. Compliance Shall Be in Good Faith.Fourth, our executive branch of government voluntarily entered into the Extradition Treaty, and our legislative branch ratified it. Hence, the Treaty carries the presumption that its implementation will serve the national interest.Fulfilling our obligations under the Extradition Treaty promotes comity[40with the requesting state. On the other hand, failure to fulfill our obligations thereunder paints a bad image of our country before the world community. Such failure would discourage other states from entering into treaties with us, particularly an extradition treaty that hinges on reciprocity.[41Verily, we are bound by pacta sunt servanda to comply in good faith with our obligations under the Treaty.[42 This principle requires that we deliver the accused to the requesting country if the conditions precedent to extradition, as set forth in the Treaty, are satisfied. In other words, [t]he demanding government, when it has done all that the treaty and the law require it to do, is entitled to the delivery of the accused on the issue of the proper warrant, and the other government is under obligation to make the surrender.[43 Accordingly, the Philippines must be ready and in a position to deliver the accused, should it be found proper.5. There Is an Underlying Risk of FlightFifth, persons to be extradited are presumed to be flight risks. This prima facie presumption finds reinforcement in the experience[44 of the executive branch: nothing short of confinement can ensure that the accused will not flee the jurisdiction of the requested state in order to thwart their extradition to the requesting state.The present extradition case further validates the premise that persons sought to be extradited have a propensity to flee. Indeed, extradition hearings would not even begin, if only the accused were willing to submit to trial in the requesting country.[45 Prior acts of herein respondent -- (1) leaving the requesting state right before the conclusion of his indictment proceedings there; and (2) remaining in the requested state despite learning that the requesting state is seeking his return and that the crimes he is charged with are bailable -- eloquently speak of his aversion to the processes in the requesting state, as well as his predisposition to avoid them at all cost. These circumstances point to an ever-present, underlying high risk of flight. He has demonstrated that he has the capacity and the will to flee. Having fled once, what is there to stop him, given sufficient opportunity, from fleeing a second time?First Substantive Issue:

Is Respondent Entitled to Notice and Hearing

Before the Issuance of a Warrant of Arrest?Petitioner contends that the procedure adopted by the RTC --informing the accused, a fugitive from justice, that an Extradition Petition has been filed against him, and that petitioner is seeking his arrest -- gives him notice to escape and to avoid extradition. Moreover, petitioner pleads that such procedure may set a dangerous precedent, in that those sought to be extradited -- including terrorists, mass murderers and war criminals -- may invoke it in future extradition cases.On the other hand, Respondent Jimenez argues that he should not be hurriedly and arbitrarily deprived of his constitutional right to liberty without due process. He further asserts that there is as yet no specific law or rule setting forth the procedure prior to the issuance of a warrant of arrest, after the petition for

extradition has been filed in court; ergo, the formulation of that procedure is within the discretion of the presiding judge.Both parties cite Section 6 of PD 1069 in support of their arguments. It states:SEC. 6. Issuance of Summons; Temporary Arrest; Hearing, Service of Notices.- (1) Immediately upon receipt of the petition, the presiding judge of the court shall, as soon as practicable, summon the accused to appear and to answer the petition on the day and hour fixed in the order. [H]e may issue a warrant for the immediate arrest of the accused which may be served any where within the Philippines if it appears to the presiding judge that the immediate arrest and temporary detention of the accused will best serve the ends of justice. Upon receipt of the answer, or should the accused after having received the summons fail to answer within the time fixed, the presiding judge shall hear the case or set another date for the hearing thereof.(2) The order and notice as well as a copy of the warrant of arrest, if issued, shall be promptly served each upon the accused and the attorney having charge of the case. (Emphasis ours)Does this provision sanction RTC Judge Purganans act of immediately setting for hearing the issuance of a warrant of arrest? We rule in the negative.1. On the Basis of the Extradition LawIt is significant to note that Section 6 of PD 1069, our Extradition Law, uses the word immediate to qualify the arrest of the accused. This qualification would be rendered nugatory by setting for hearing the issuance of the arrest warrant. Hearing entails sending notices to the opposing parties,[46 receiving facts and arguments[47 from them,[48 and giving them time to prepare and present such facts and arguments. Arrest subsequent to a hearing can no longer be considered immediate. The law could not have intended the word as a mere superfluity but, on the whole, as a means of imparting a sense of urgency and swiftness in the determination of whether a warrant of arrest should be issued.By using the phrase if it appears, the law further conveys that accuracy is not as important as speed at such early stage. The trial court is not expected to make an exhaustive determination to ferret out the true and actual situation, immediately upon the filing of the petition. From the knowledge and the material then available to it, the court is expected merely to get a good first impression -- a prima facie finding -- sufficient to make a speedy initial determination as regards the arrest and detention of the accused.Attached to the Petition for Extradition, with a Certificate of Authentication among others, were the following: (1) Annex H, the Affidavit executed on May 26, 1999 by Mr. Michael E. Savage -- trial attorney in the Campaign Financing Task Force of the Criminal Division of the US Department of Justice; (2) Annexes H to G, evidentiary Appendices of various exhibits that constituted evidence of the crimes charged in the Indictment, with Exhibits 1 to 120 (duly authenticated exhibits that constituted evidence of the crimes charged in the Indictment); (3) Annex BB, the Exhibit I Appendix of Witness [excerpts] Statements Referenced in the Affidavit of Angela Byers and enclosed Statements in two volumes; (4) Annex GG, the Exhibit J Table of Contents for Supplemental Evidentiary Appendix with enclosed Exhibits 121 to 132; and (5) Annex MM, the Exhibit L Appendix of Witness [excerpts] Statements Referenced in the Affidavit of Betty Steward and enclosed Statements in two volumes.[49It is evident that respondent judge could have already gotten an impression from these records adequate for him to make an initial determination of whether the accused was someone who should immediately be arrested in order to best serve the ends of justice. He could have determined whether such facts and circumstances existed as would lead a reasonably discreet and prudent person to believe that the extradition request was prima facie meritorious. In point of fact, he actually concluded from these supporting documents that probable cause didexist. In the second questioned Order, he stated:In the instant petition, the documents sent by the US Government in support of [its] request for extradition of herein respondent are enough to convince the Court of the existence of probable cause to proceed with the hearing against the extraditee.[50We stress that the prima facie existence of probable cause for hearing the petition and, a priori, for issuing an arrest warrant was already evident from the Petition itself and its supporting documents. Hence, after having already determined therefrom that a prima facie finding did exist, respondent judge gravely abused his discretion when he set the matter for hearing upon motion of Jimenez.[51Moreover, the law specifies that the court sets a hearing upon receipt of the answer or upon failure of the accused to answer after receiving the summons. In connection with the matter of immediate arrest, however, the word hearing is notably absent from the provision. Evidently, had the holding of a hearing at that stage been intended, the law could have easily so provided. It also bears emphasizing at this point that extradition proceedings are summary[52in nature. Hence, the silence of the Law and the Treaty leans

to the more reasonable interpretation that there is no intention to punctuate with a hearing every little step in the entire proceedings.It is taken for granted that the contracting parties intend something reasonable and something not inconsistent with generally recognized principles of International Law, nor with previous treaty obligations towards third States. If, therefore, the meaning of a treaty is ambiguous, the reasonable meaning is to be preferred to the unreasonable, the more reasonable to the less reasonable x x x .[53Verily, as argued by petitioner, sending to persons sought to be extradited a notice of the request for their arrest and setting it for hearing at some future date would give them ample opportunity to prepare and execute an escape. Neither the Treaty nor the Law could have intended that consequence, for the very purpose of both would have been defeated by the escape of the accused from the requested state.2. On the Basis of the ConstitutionEven Section 2 of Article III of our Constitution, which is invoked by Jimenez, does not require a notice or a hearing before the issuance of a warrant of arrest. It provides:Sec. 2. The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized.To determine probable cause for the issuance of arrest warrants, the Constitution itself requires only the examination -- under oath or affirmation -- of complainants and the witnesses they may produce. There is no requirement to notify and hear the accused before the issuance of warrants of arrest.In Ho v. People[54 and in all the cases cited therein, never was a judge required to go to the extent of conducting a hearing just for the purpose of personally determining probable cause for the issuance of a warrant of arrest. All we required was that the judge must have sufficient supporting documents upon which to make his independent judgment, or at the very least, upon which to verify the findings of the prosecutor as to the existence of probable cause.[55In Webb v. De Leon,[56 the Court categorically stated that a judge was not supposed to conduct a hearing before issuing a warrant of arrest:Again, we stress that before issuing warrants of arrest, judges merely determine personally the probability, not the certainty of guilt of an accused. In doing so, judges do not conduct a de novo hearing to determine the existence of probable cause. They just personally review the initial determination of the prosecutor finding a probable cause to see if it is supported by substantial evidence.At most, in cases of clear insufficiency of evidence on record, judges merely further examine complainants and their witnesses.[57 In the present case, validating the act of respondent judge and instituting the practice of hearing the accused and his witnesses at this early stage would be discordant with the rationale for the entire system. If the accused were allowed to be heard and necessarily to present evidence during theprima facie determination for the issuance of a warrant of arrest, what would stop him from presenting his entire plethora of defenses at this stage -- if he so desires -- in his effort to negate a prima facie finding? Such a procedure could convert the determination of a prima facie case into a full-blown trial of the entire proceedings and possibly make trial of the main case superfluous. This scenario is also anathema to the summary nature of extraditions.That the case under consideration is an extradition and not a criminal action is not sufficient to justify the adoption of a set of procedures more protective of the accused. If a different procedure were called for at all, a more restrictive one -- not the opposite -- would be justified in view of respondents demonstrated predisposition to flee.Since this is a matter of first impression, we deem it wise to restate the proper procedure:Upon receipt of a petition for extradition and its supporting documents, the judge must study them and make, as soon as possible, a prima facie finding whether (a) they are sufficient in form and substance, (b) they show compliance with the Extradition Treaty and Law, and (c) the person sought is extraditable. At his discretion, the judge may require the submission of further documentation or may personally examine the affiants and witnesses of the petitioner. If, in spite of this study and examination, no prima facie finding[58 is possible, the petition may be dismissed at the discretion of the judge.On the other hand, if the presence of a prima facie case is determined, then the magistrate must immediately issue a warrant for the arrest of the extraditee, who is at the same time summoned to answer the petition and to appear at scheduled summary hearings. Prior to the issuance of the warrant, the judge must not inform or notify the potential extraditee of the pendency of the petition, lest the latter be given the

opportunity to escape and frustrate the proceedings. In our opinion, the foregoing procedure will best serve the ends of justice in extradition cases.Second Substantive Issue:Is Respondent Entitled to Bail?Article III, Section 13 of the Constitution, is worded as follows:Art. III, Sec. 13. All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable by sufficient sureties, or be released on recognizance as may be provided by law. The right to bail shall not be impaired even when the privilege of the writ of habeas corpus is suspended. Excessive bail shall not be required.Respondent Mark B. Jimenez maintains that this constitutional provision secures the right to bail of all persons, including those sought to be extradited. Supposedly, the only exceptions are the ones charged with offenses punishable with reclusion perpetua, when evidence of guilt is strong. He also alleges the relevance to the present case of Section 4[59 of Rule 114 of the Rules of Court which, insofar as practicable and consistent with the summary nature of extradition proceedings, shall also apply according to Section 9 of PD 1069.On the other hand, petitioner claims that there is no provision in the Philippine Constitution granting the right to bail to a person who is the subject of an extradition request and arrest warrant.Extradition Different from Ordinary Criminal ProceedingsWe agree with petitioner. As suggested by the use of the word conviction, the constitutional provision on bail quoted above, as well as Section 4 of Rule 114 of the Rules of Court, applies only when a person has been arrested and detained for violation of Philippine criminal laws. It does not apply to extradition proceedings, because extradition courts do not render judgments of conviction or acquittal.Moreover, the constitutional right to bail flows from the presumption of innocence in favor of every accused who should not be subjected to the loss of freedom as thereafter he would be entitled to acquittal, unless his guilt be proved beyond reasonable doubt.[60 It follows that the constitutional provision on bail will not apply to a case like extradition, where the presumption of innocence is not at issue.The provision in the Constitution stating that the right to bail shall not be impaired even when the privilege of the writ of habeas corpus is suspended does not detract from the rule that the constitutional right to bail is available only in criminal proceedings. It must be noted that the suspension of the privilege of the writ of habeas corpus finds application only to persons judicially charged for rebellion or offenses inherent in or directly connected with invasion.[61 Hence, the second sentence in the constitutional provision on bail merely emphasizes the right to bail in criminal proceedings for the aforementioned offenses. It cannot be taken to mean that the right is available even in extradition proceedings that are not criminal in nature.That the offenses for which Jimenez is sought to be extradited are bailable in the United States is not an argument to grant him one in the present case. To stress, extradition proceedings are separate and distinct from the trial for the offenses for which he is charged. He should apply for bail before the courts trying the criminal cases against him, not before the extradition court.No Violation of Due ProcessRespondent Jimenez cites the foreign case Paretti[62 in arguing that, constitutionally, [n]o one shall be deprived of x x x liberty x x x without due process of law.Contrary to his contention, his detention prior to the conclusion of the extradition proceedings does not amount to a violation of his right to due process. We iterate the familiar doctrine that the essence of due process is the opportunity to be heard[63 but, at the same time, point out that the doctrine does not always call for a prior opportunity to be heard.[64 Where the circumstances -- such as those present in an extradition case -- call for it, a subsequent opportunity to be heard is enough.[65 In the present case, respondent will be given full opportunity to be heard subsequently, when the extradition court hears the Petition for Extradition. Hence, there is no violation of his right to due process and fundamental fairness.Contrary to the contention of Jimenez, we find no arbitrariness, either, in the immediate deprivation of his liberty prior to his being heard. That his arrest and detention will not be arbitrary is sufficiently ensured by (1) the DOJs filing in court the Petition with its supporting documents after a determination that the extradition request meets the requirements of the law and the relevant treaty; (2) the extradition judges independent prima facie determination that his arrest will best serve the ends of justice before the issuance of a warrant for his arrest; and (3) his opportunity, once he is under the courts custody, to apply for bail as an exception to the no-initial-bail rule.

It is also worth noting that before the US government requested the extradition of respondent, proceedings had already been conducted in that country. But because he left the jurisdiction of the requesting state before those proceedings could be completed, it was hindered from continuing with the due processes prescribed under its laws. His invocation of due process now has thus become hollow. He already had that opportunity in the requesting state; yet, instead of taking it, he ran away.In this light, would it be proper and just for the government to increase the risk of violating its treaty obligations in order to accord Respondent Jimenez his personal liberty in the span of time that it takes to resolve the Petition for Extradition? His supposed immediate deprivation of liberty without the due process that he had previously shunned pales against the governments interest in fulfilling its Extradition Treaty obligations and in cooperating with the world community in the suppression of crime. Indeed, [c]onstitutional liberties do not exist in a vacuum; the due process rights accorded to individuals must be carefully balanced against exigent and palpable government interests.[66Too, we cannot allow our country to be a haven for fugitives, cowards and weaklings who, instead of facing the consequences of their actions, choose to run and hide. Hence, it would not be good policy to increase the risk of violating our treaty obligations if, through overprotection or excessively liberal treatment, persons sought to be extradited are able to evade arrest or escape from our custody. In the absence of any provision -- in the Constitution, the law or the treaty -- expressly guaranteeing the right to bail in extradition proceedings, adopting the practice of not granting them bail, as a general rule, would be a step towards deterring fugitives from coming to the Philippines to hide from or evade their prosecutors.The denial of bail as a matter of course in extradition cases falls into place with and gives life to Article 14[67 of the Treaty, since this practice would encourage the accused to voluntarily surrender to the requesting state to cut short their detention here. Likewise, their detention pending the resolution of extradition proceedings would fall into place with the emphasis of the Extradition Law on the summary nature of extradition cases and the need for their speedy disposition.Exceptions to the No Bail RuleThe rule, we repeat, is that bail is not a matter of right in extradition cases. However, the judiciary has the constitutional duty to curb grave abuse of discretion[68 and tyranny, as well as the power to promulgate rules to protect and enforce constitutional rights.[69 Furthermore, we believe that the right to due process is broad enough to include the grant of basic fairness to extraditees. Indeed, the right to due process extends to the life, liberty or property of every person. It is dynamic and resilient, adaptable to every situation calling for its application.[70Accordingly and to best serve the ends of justice, we believe and so hold that, after a potential extraditee has been arrested or placed under the custody of the law, bail may be applied for and granted as an exception, only upon a clear and convincing showing (1) that, once granted bail, the applicant will not be a flight risk or a danger to the community; and (2) that there exist special, humanitarian and compelling circumstances[71 including, as a matter of reciprocity, those cited by the highest court in the requesting state when it grants provisional liberty in extradition cases therein.Since this exception has no express or specific statutory basis, and since it is derived essentially from general principles of justice and fairness, the applicant bears the burden of proving the above two-tiered requirement with clarity, precision and emphatic forcefulness. The Court realizes that extradition is basically an executive, not a judicial, responsibility arising from the presidential power to conduct foreign relations. In its barest concept, it partakes of the nature of police assistance amongst states, which is not normally a judicial prerogative. Hence, any intrusion by the courts into the exercise of this power should be characterized by caution, so that the vital international and bilateral interests of our country will not be unreasonably impeded or compromised. In short, while this Court is ever protective of the sporting idea of fair play, it also recognizes the limits of its own prerogatives and the need to fulfill international obligations.Along this line, Jimenez contends that there are special circumstances that are compelling enough for the Court to grant his request for provisional release on bail. We have carefully examined these circumstances and shall now discuss them.1. Alleged DisenfranchisementWhile his extradition was pending, Respondent Jimenez was elected as a member of the House of Representatives. On that basis, he claims that his detention will disenfranchise his Manila district of 600,000 residents. We are not persuaded. In People v. Jalosjos,[72 the Court has already debunked the disenfranchisement argument when it ruled thus:

When the voters of his district elected the accused-appellant to Congress, they did so with full awareness of the limitations on his freedom of action. They did so with the knowledge that he could achieve only such legislative results which he could accomplish within the confines of prison. To give a more drastic illustration, if voters elect a person with full knowledge that he is suffering from a terminal illness, they do so knowing that at any time, he may no longer serve his full term in office.In the ultimate analysis, the issue before us boils down to a question of constitutional equal protection.The Constitution guarantees: x x x nor shall any person be denied the equal protection of laws. This simply means that all persons similarly situated shall be treated alike both in rights enjoyed and responsibilities imposed. The organs of government may not show any undue favoritism or hostility to any person. Neither partiality nor prejudice shall be displayed.Does being an elective official result in a substantial distinction that allows different treatment? Is being a Congressman a substantial differentiation which removes the accused-appellant as a prisoner from the same class as all persons validly confined under law?The performance of legitimate and even essential duties by public officers has never been an excuse to free a person validly [from] prison. The duties imposed by the mandate of the people are multifarious. The accused-appellant asserts that the duty to legislate ranks highest in the hierarchy of government. The accused-appellant is only one of 250 members of the House of Representatives, not to mention the 24 members of the Senate, charged with the duties of legislation. Congress continues to function well in the physical absence of one or a few of its members. Depending on the exigency of Government that has to be addressed, the President or the Supreme Court can also be deemed the highest for that particular duty. The importance of a function depends on the need for its exercise. The duty of a mother to nurse her infant is most compelling under the law of nature. A doctor with unique skills has the duty to save the lives of those with a particular affliction. An elective governor has to serve provincial constituents. A police officer must maintain peace and order. Never has the call of a particular duty lifted a prisoner into a different classification from those others who are validly restrained by law.A strict scrutiny of classifications is essential lest[,] wittingly or otherwise, insidious discriminations are made in favor of or against groups or types of individuals.The Court cannot validate badges of inequality. The necessities imposed by public welfare may justify exercise of government authority to regulate even if thereby certain groups may plausibly assert that their interests are disregarded.We, therefore, find that election to the position of Congressman is not a reasonable classification in criminal law enforcement. The functions and duties of the office are not substantial distinctions which lift him from the class of prisoners interrupted in their freedom and restricted in liberty of movement. Lawful arrest and confinement are germane to the purposes of the law and apply to all those belonging to the same class.[73It must be noted that even before private respondent ran for and won a congressional seat in Manila, it was already of public knowledge that the United States was requesting his extradition. Hence, his constituents were or should have been prepared for the consequences of the extradition case against their representative, including his detention pending the final resolution of the case. Premises considered and in line with Jalosjos, we are constrained to rule against his claim that his election to public office is by itself a compelling reason to grant him bail.2. Anticipated DelayRespondent Jimenez further contends that because the extradition proceedings are lengthy, it would be unfair to confine him during the pendency of the case. Again we are not convinced. We must emphasize that extradition cases are summary in nature. They are resorted to merely to determine whether the extradition petition and its annexes conform to the Extradition Treaty, not to determine guilt or innocence. Neither is it, as a rule, intended to address issues relevant to the constitutional rights available to the accused in a criminal action.We are not overruling the possibility that petitioner may, in bad faith, unduly delay the proceedings. This is quite another matter that is not at issue here. Thus, any further discussion of this point would be merely anticipatory and academic.However, if the delay is due to maneuverings of respondent, with all the more reason would the grant of bail not be justified. Giving premium to delay by considering it as a special circumstance for the grant of bail would be tantamount to giving him the power to grant bail to himself. It would also encourage him to stretch out and unreasonably delay the extradition proceedings even more. This we cannot allow.3. Not a Flight Risk?

Jimenez further claims that he is not a flight risk. To support this claim, he stresses that he learned of the extradition request in June 1999; yet, he has not fled the country. True, he has not actually fled during the preliminary stages of the request for his extradition. Yet, this fact cannot be taken to mean that he will not flee as the process moves forward to its conclusion, as he hears the footsteps of the requesting government inching closer and closer. That he has not yet fled from the Philippines cannot be taken to mean that he will stand his ground and still be within reach of our government if and when it matters; that is, upon the resolution of the Petition for Extradition.In any event, it is settled that bail may be applied for and granted by the trial court at anytime after the applicant has been taken into custody and prior to judgment, even after bail has been previously denied. In the present case, the extradition court may continue hearing evidence on the application for bail, which may be granted in accordance with the guidelines in this Decision.Brief Refutation of DissentsThe proposal to remand this case to the extradition court, we believe, is totally unnecessary; in fact, it is a cop-out. The parties -- in particular, Respondent Jimenez -- have been given more than sufficient opportunity both by the trial court and this Court to discuss fully and exhaustively private respondents claim to bail. As already stated, the RTC set for hearing not only petitioners application for an arrest warrant, but also private respondents prayer for temporary liberty. Thereafter required by the RTC were memoranda on the arrest, then position papers on the application for bail, both of which were separately filed by the parties.This Court has meticulously pored over the Petition, the Comment, the Reply, the lengthy Memoranda and the Position Papers of both parties. Additionally, it has patiently heard them in Oral Arguments, a procedure not normally observed in the great majority of cases in this Tribunal. Moreover, after the Memos had been submitted, the parties -- particularly the potential extraditee -- have bombarded this Court with additional pleadings -- entitled Manifestations by both parties and Counter-Manifestation by private respondent -- in which the main topic was Mr. Jimenezs plea for bail.A remand would mean that this long, tedious process would be repeated in its entirety. The trial court would again hear factual and evidentiary matters. Be it noted, however, that, in all his voluminous pleadings and verbal propositions, private respondent has not asked for a remand. Evidently, even he realizes that there is absolutely no need to rehear factual matters. Indeed, the inadequacy lies not in the factual presentation of Mr. Jimenez. Rather, it lies in his legal arguments. Remanding the case will not solve this utter lack of persuasion and strength in his legal reasoning.In short, this Court -- as shown by this Decision and the spirited Concurring, Separate and Dissenting Opinions written by the learned justices themselves -- has exhaustively deliberated and carefully passed upon all relevant questions in this case. Thus, a remand will not serve any useful purpose; it will only further delay these already very delayed proceedings,[74 which our Extradition Law requires to be summary in character. What we need now is prudent and deliberate speed, not unnecessary and convoluted delay. What is needed is a firm decision on the merits, not a circuitous cop-out.Then, there is also the suggestion that this Court is allegedly disregarding basic freedoms when a case is one of extradition. We believe that this charge is not only baseless, but also unfair. Suffice it to say that, in its length and breath, this Decision has taken special cognizance of the rights to due process and fundamental fairness of potential extraditees.SummationAs we draw to a close, it is now time to summarize and stress these ten points:1. The ultimate purpose of extradition proceedings is to determine whether the request expressed in the petition, supported by its annexes and the evidence that may be adduced during the hearing of the petition, complies with the Extradition Treaty and Law; and whether the person sought is extraditable. The proceedings are intended merely to assist the requesting state in bringing the accused -- or the fugitive who has illegally escaped -- back to its territory, so that the criminal process may proceed therein.2. By entering into an extradition treaty, the Philippines is deemed to have reposed its trust in the reliability or soundness of the legal and judicial system of its treaty partner, as well as in the ability and the willingness of the latter to grant basic rights to the accused in the pending criminal case therein.3. By nature then, extradition proceedings are not equivalent to a criminal case in which guilt or innocence is determined. Consequently, an extradition case is not one in which the constitutional rights of the accused are necessarily available. It is more akin, if at all, to a courts request to police authorities for the arrest of the accused who is at large or has escaped detention or jumped bail. Having once escaped the

jurisdiction of the requesting state, the reasonable prima facie presumption is that the person would escape again if given the opportunity.4. Immediately upon receipt of the petition for extradition and its supporting documents, the judge shall make a prima facie finding whether the petition is sufficient in form and substance, whether it complies with the Extradition Treaty and Law, and whether the person sought is extraditable. The magistrate has discretion to require the petitioner to submit further documentation, or to personally examine the affiants or witnesses. If convinced that a prima facie case exists, the judge immediately issues a warrant for the arrest of the potential extraditee and summons him or her to answer and to appear at scheduled hearings on the petition.5. After being taken into custody, potential extraditees may apply for bail. Since the applicants have a history of absconding, they have the burden of showing that (a) there is no flight risk and no danger to the community; and (b) there exist special, humanitarian or compelling circumstances. The grounds used by the highest court in the requesting state for the grant of bail therein may be considered, under the principle of reciprocity as a special circumstance. In extradition cases, bail is not a matter of right; it is subject to judicial discretion in the context of the peculiar facts of each case.6. Potential extraditees are entitled to the rights to due process and to fundamental fairness. Due process does not always call for a prioropportunity to be heard. A subsequent opportunity is sufficient due to the flight risk involved. Indeed, available during the hearings on the petition and the answer is the full chance to be heard and to enjoy fundamental fairness that is compatible with the summary nature of extradition.7. This Court will always remain a protector of human rights, a bastion of liberty, a bulwark of democracy and the conscience of society. But it is also well aware of the limitations of its authority and of the need for respect for the prerogatives of the other co-equal and co-independent organs of government.8. We realize that extradition is essentially an executive, not a judicial, responsibility arising out of the presidential power to conduct foreign relations and to implement treaties. Thus, the Executive Department of government has broad discretion in its duty and power of implementation.9. On the other hand, courts merely perform oversight functions and exercise review authority to prevent or excise grave abuse and tyranny. They should not allow contortions, delays and over-due process every little step of the way, lest these summary extradition proceedings become not only inutile but also sources of international embarrassment due to our inability to comply in good faith with a treaty partners simple request to return a fugitive. Worse, our country should not be converted into a dubious haven where fugitives and escapees can unreasonably delay, mummify, mock, frustrate, checkmate and defeat the quest for bilateral justice and international cooperation.10. At bottom, extradition proceedings should be conducted with all deliberate speed to determine compliance with the Extradition Treaty and Law; and, while safeguarding basic individual rights, to avoid the legalistic contortions, delays and technicalities that may negate that purpose.WHEREFORE, the Petition is GRANTED. The assailed RTC Order dated May 23, 2001 is hereby declared NULL and VOID, while the challenged Order dated July 3, 2001 is SET ASIDE insofar as it granted bail to Respondent Mark Jimenez. The bail bond posted by private respondent isCANCELLED. The Regional Trial Court of Manila is directed to conduct the extradition proceedings before it, with all deliberate speed pursuant to the spirit and the letter of our Extradition Treaty with the United States as well as our Extradition Law. No costs.SO ORDERED.

US Vs. Ruiz 136 SCRA 487Facts:

The usa had a naval base in subic, zambales. The base was one of those provided in the military bases agreement between phils. and the US. Respondent alleges that it won in the bidding conducted by the US for the constrcution of wharves in said base that was merely awarded to another group. For this reason, a suit for specific preformance was filed by him against the US.

Issue: Whether the US naval base in bidding for said contracts exercise governmental functions to be able to invoke state immunity.

Held:

The traditional role of the state immunity excempts a state from being sued in the courts of another state without its consent or waiver. This rule is necessary consequence of the principle of indepemndence and equality of states. Howecer, the rules of international law are not petrified; they are continually and evolving and because the activities of states have multiplied. It has been necessary to distinguish them between sovereign and governmental acts and private, commercial and proprietory acts. the result is that state immunity now extends only to sovereign and governmental acts.

The restrictive application of state immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign. Its commercial activities of economic affairs. A state may be descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued. Only when it enters into business contracts. It does not apply where the conracts relates the exercise of its sovereign function. In this case, the project are integral part of the naval base which is devoted to the defense of both US and phils., indisputably, a function of the government of highest order, they are not utilized for , nor dedicated to commercial or business purposes.

4THE STATE: JURISTIC CONCEPT AND POLITICAL UNITARTICLE XVIGENERAL PROVISIONSSection 1.The State may not be sued without its consent.State Immunity from suit; In GeneralU.S. v. Guinto,182 SCRA 644 (1990)Held: The rule that a State may not be sued without its consent is one ofthe generally accepted principles of

international law that were have adopted as part of the law of our land. Even without such affirmation, we

would still be bound by the generally accepted principles of international law under the doctrine of

incorporation. Under this doctrine, as accepted by the majority of the states, such principles are deemed

incorporated in the law of every civilized state as a condition and consequence of its membership in the

society

of nations. All states are sovereign equals and cannot assert jurisdiction over one another.

While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable

to

complaints filed against officials of the states for acts allegedly performed by them in the discharge of

their

duties. The rule is that if the judgment against such officials will require the state itself to perform an

affirmative

act to satisfy the same, the suit must be regarded as against the state although it has not been formally

impleaded.

When the government enters into a contract, it is deemed to have descended to the level of the other

contracting party and divested of its sovereign immunity from suit with its implied consent. In the case o

US, the

customary law of international law on state immunity is expressed with more specificity in the RP-US

Bases

Treaty. There is no question that the US, like any other state, will be deemed to have impliedly waived its

non-

suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract

involves its sovereign or governmental capacity that no such waiver may be implied.

It is clear from a study of the records of GR No. 80018 that the petitioners therein were acting in the

exercise of

their official functions when they conducted the buy-bust operations against the complainant and

thereafter

testified against him at his trial. It follows that for discharging their duties as agents of the US, they cannot

be

directly impleaded for acts imputable to their principal, which has not given its consent to be sued.

As for GR No. 80018, the record is too meager to indicate what really happened. The needed inquiry first

be

made by the lower court so it may assess and resolve the conflicting claims of the parties on the basis of

evidence that has yet to be presented at the trial. Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISION G.R. No. 108813 December 15, 1994JUSMAG PHILIPPINES,petitioner,vs.THE NATIONAL LABOR RELATIONS COMMISSION (Second Division) and FLORENCIOSACRAMENTO, Union President, JPFCEA,respondents.Juan, Luces, Luna and Associates for petitioner.Galutera & Aguilar Law Offices for private respondent. PUNO,J.:The immunity from suit of the Joint United States Military Assistance Group to the Republicof the Philippines (JUSMAG-Philippines) is the pivotal issue in the case at bench.JUSMAG assails theJanuary 29, 1993 Resolution of the NATIONAL LABOR RELATIONS COMMISSION (public respondent), in NLRC NCR CASE NO. 00-03-02092-92, reversingtheJuly 30, 1991 Order of the Labor Arbiter , and ordering the latter to assume jurisdictionover the complaint for illegal dismissal filed by FLORENCIO SACRAMENTO (privaterespondent) against petitioner.First, the undisputed facts.Private respondent was one of the seventy-four (74)security assistance support personnel (SASP) working at JUSMAG-Philippines.

1 He had been with JUSMAG fromDecember 18, 1969, until his dismissal on April 27, 1992. When dismissed, he held theposition of Illustrator 2 and was the incumbent President of JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES ASSOCIATION (JPFCEA), a labor organization dulyregistered with the Department of Labor and Employment. His services were terminatedallegedly due to the abolition of his position.2He was also advised that he was under administrative leave until April 27, 1992, although the same was not charged against hisleave.On March 31, 1992, private respondent filed a complaint with the Department of Labor andEmployment on the ground that he was illegally suspended and dismissed from service byJUSMAG.3 He asked for his reinstatement.JUSMAG then filed a Motion to Dismiss invoking itsimmunity from suit as an agency of theUnited States. It further alleged lack of employer-employee relationship and that it has nojuridical personality to sue and be sued

 In an Order dated July 30, 1991, Labor Arbiter Daniel C. Cueto dismissed the subjectcomplaint "for want of jurisdiction."5 Private respondent appealed6 to the National Labor Relations Commission (public respondent), assailing the ruling that petitioner is immune fromsuit for alleged violation of our labor laws. JUSMAG filed its Opposition,7 reiterating itsimmunity from suit for its non-contractual, governmental and/or public acts.In a Resolution, dated January 29, 1993, the NLRC8 reversed the ruling of the Labor Arbiter as it held that petitioner had lost its right not to be sued. The resolution was predicated ontwo grounds: (1) the principle of estoppel —that JUSMAG failed to refute the existence of employer-employee relationship under the "control test"; and (2) JUSMAG has waived itsright to immunity from suit when it hired the services of private respondent on December 18,1969.The NLRC relied on the case of Harry Lyons vs. United States of America,9 where the"United States Government (was considered to have) waived its immunity from suit byentering into (a) contract of stevedoring services, and thus, it submitted itself to thejurisdiction of the local courts."Accordingly, the case was remanded to the labor arbiter for reception of evidence as to theissue on illegal dismissal.Hence, this petition, JUSMAG contends:ITHE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OFDISCRETION AMOUNTING TO LACK AND/OR EXCESS OFJURISDICTION —A. IN REVERSING THE DECISION OF THE LABORARBITER AND IN NOT AFFIRMING THE DISMISSAL OFTHE COMPLAINT IT BEING A SUIT AGAINST THE UNITEDSTATES OF AMERICA WHICH HAD NOT GIVEN ITSCONSENT TO BE SUED; ANDB. IN FINDING WAIVER BY JUSMAG OF IMMUNITY

FROMSUIT;IITHE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OFDISCRETION AMOUNTING TO LACK AND/OR EXCESS OFJURISDICTION —A. WHEN IT FOUND AN EMPLOYER-EMPLOYEERELATIONSHIP BETWEEN JUSMAG AND PRIVATERESPONDENT; ANDB. WHEN IT CONSIDERED JUSMAG ESTOPPED FROMDENYING THAT PRIVATE RESPONDENT IS ITS EMPLOYEE FOR FAILURE TO PRESENT PROOF TO THECONTRARY.We find the petition impressed with merit.It is meet to discuss the historical background of the JUSMAG to determine its immunity fromsuit.JUSMAG was created pursuant to the Military Assistance Agreement10 dated March 21,1947, between the Government of the Republic of the Philippines and the Government of theUnited States of America. As agreed upon, JUSMAG shall consist of Air, Naval and Armygroup, and its primary task was to advise and assist the Philippines, on air force, army andnaval matters.11Article 14 of the 1947 Agreement provides,inter alia, that "the cost of all services required bythe Group, including compensation of locally employed interpreters, clerks, laborers, and other personnel , except personal servants, shall be borne by the Republic of thePhilippines."This set-up was to change in 1991. In Note No 22, addressed to the Department of ForeignAffairs (DFA) of the Philippines, dated January 23, 1991, the United States Government, thruits Embassy, manifested its preparedness "to provide funds to cover the salaries of security assistance support personnel " and security guards, the rent of JUSMAG occupied buildingsand housing, and the cost of utilities.12 This offer was accepted by our Government, thru theDFA, in Note No. 911725, dated April 18, 1991.13Consequently, aMemorandum of Agreement 14 was forged between the Armed Forces of thePhilippines and JUSMAG-Philippines, thru General Lisandro C. Abadia and U.S. Brigadier General Robert G. Sausser. The Agreement delineated the terms of the assistance-in-kind of JUSMAG for 1991, the relevant parts of which read:a. The term salaries as used in this agreement include those for the securityguards currently contracted between JUSMAG and A' Prime SecurityServices Inc., and theSecurity Assistance Support Personnel (SASP). . . . .b. The term Security Assistance Support Personnel (SASP) doesnot includeactive duty uniformed members of the Armed Forces of the Philippinesperforming duty at JUSMAG.c.It is understood that SASP are employees of the Armed Forces of thePhilippines(AFP ). Therefore,the AFP agrees to appoint, for service withJUSMAG, no more than 74 personnel to designated positions with JUSMAG.d.SASP are under the total operational control of the Chief, JUSMAG-Philippines. The term "Operational Control" includes, but is not limited to, allpersonnel administrative actions, such as: hiring recommendations; firingrecommendations; position classification; discipline; nomination and approvalof incentive awards; and payroll computation. Personnel administration willbe guided by Annex E of JUSMAG-Philippines Memo 10-2.For the period of time that there is an exceptional funding agreement between the government of the Philippines and the United States Government (USG), JUSMAG will pay the total payroll costs for the SASP employees

. Payroll costs include onlyregular salary; approved overtime, costs of living allowance; medicalinsurance; regular contributions to the Philippine Social Security System,PAG-IBIG Fund and Personnel Economic Relief Allowance (PERA); and thethirteenth-month bonus. Payroll costs do not include gifts or other bonuspayments in addition to those previously defined above. Entitlements notconsidered payroll costs under this agreement will be funded and paid by theAFP.e. All SASP employedas of July 1, 1990 will continue their service withJUSMAG at their current rate of pay and benefits up to 30 June 1991, withan annual renewal of employment thereafter subject to renewal of their appointment with the AFP (employees and rates of pay are indicated atEnclosure 3). No promotion or transfer internal to JUSMAG of the listedpersonnel will result in the reduction of their pay and benefits.f. All SASP will, after proper classification, be paid salaries and benefits atestablished AFP civilian rates. Rules for computation of pay and allowanceswill be made available to the Comptroller, JUSMAG, by the Comptroller,GHQ, AFP. Additionally, any legally mandated changes in salary levels or methods of computation shall be transmitted within 48 hours of receipt byComptroller, GHQ to Comptroller, JUSMAG.g. The AFP agrees not to terminate SASP without 60 days prior written noticeto Chief, JUSMAG-Philippines. Any termination of these personnel thought tobe necessary because of budgetary restrictions or manpower ceiling will besubject to consultations between AFP and JUSMAG to ensure thatJUSMAG's mission of dedicated support to the AFP will not be degraded or harmed in any way.h.The AFP agrees to assume the severance pay/retirement pay liability for all appointed SASP . (Enclosure 3 lists the severance pay liability date for current SASP). Any termination of services, other than voluntary resignationsor termination for cause, will result in immediate payments of AFP of alltermination pay to the entitled employee. Vouchers for severance/retirementpay and accrued bonuses and annual leave will be presented to theComptroller, GHQ, AFP, not later than 14 calendar days prior to requireddate of payment.i. All SASP listed in Enclosure 3 will continue to participate in the PhilippineSocial Security System.A year later, or in 1992, the United States Embassy sent another note of similar import to theDepartment of Foreign Affairs (No. 227, dated April 8, 1992), extending the fundingagreement for the salaries of SASP and security guards until December 31, 1992.From the foregoing, it is apparent that when JUSMAG took the services of privaterespondent, it was performing a governmental function on behalf of the United Statespursuant to the Military Assistance Agreement dated March 21, 1947. Hence, we agree withpetitioner that the suit is, in effect, one against the United States Government, albeit it wasnot impleaded in the complaint. Considering that the United States has not waived or consented to the suit, the complaint against JUSMAG cannot not prosper. n this jurisdiction, we recognize and adopt the generally accepted principles of internationallaw as part of the law of the land.15 Immunity of State from suit is one of these universallyrecognized principles. In international law, "immunity" is commonly understood as anexemption of the state and its organs from the judicial jurisdiction of another state.16 This isanchored on the principle of the sovereign equality of states under which one state cannotassert jurisdiction over another in violation of the maximpar in parem non habet imperium(an equal has no power over an equal).17Under thetraditional rule of State immunity , a state cannot be sued in the courts of another State, without its consent or waiver. However, inSantos, et al., vs. Santos, et al .,18 werecognized an exception to the doctrine of immunity from suit by a state, thus:. . . . Nevertheless, if, where and when the state or its government enters intoa contract, through its officers or agents, in furtherance of a legitimate aimand purpose and pursuant to constitutional legislative authority, wherebymutual or reciprocal benefits accrue and rights and obligations arisetherefrom, and if the law

granting the authority to enter into such contractdoes not provide for or name the officer against whom action may be broughtin the event of a breach thereof,the state itself may be sued, even without itsconsent, because by entering into a contract, the sovereign state hasdescended to the level of the citizen and its consent to be sued is implied from the very act of entering into such contract . . . . . (emphasis ours)It was in this light that the state immunity issue inHarry Lyons, Inc., vs. United States of America 19 was decided.In the case of Harry Lyons, Inc ., the petitioner entered into a contract with the United StatesGovernment for stevedoring services at the U.S. Naval Base, Subic Bay, Philippines. It thensought to collect from the US government sums of money arising from the contract. One of the issues posed in the case was whether or not the defunct Court of First Instance hadjurisdiction over the defendant United States, a sovereign state which cannot be suedwithout its consent. This Court upheld the contention of Harry Lyons, Inc., that "when asovereign state enters into a contract with a private person, the state can be sued upon thetheory that it has descended to the level of an individual from which it can be implied that ithas given its consent to be sued under the contract."The doctrine of state immunity from suit has undergone further metamorphosis. The viewevolved that the existence of a contract does not,per se, mean that sovereign states may, atall times, be sued in local courts. The complexity of relationships between sovereign states,brought about by their increasing commercial activities, mothered amorerestrictiveapplication of the doctrine.20 Thus, inUnited States of America vs.Ruiz ,21 we clarified that our pronouncement inHarry Lyons,supra, with respect to the waiver of State immunity, wasobiter and "has no value as an imperative authority."As it stands now, the application of the doctrine of immunity from suit hasbeenrestricted tosovereignor governmental activities(jure imperii ).22 The mantle of stateimmunitycannot be extended tocommercial, private and proprietary acts

(jure gestionis). Asaptly stated by this Court (En banc ) inUS vs. Ruiz, supra:The restrictive application of State immunity is proper when the proceedingsarise out of commercial transactions of the foreign sovereign, its commercialactivities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and thus can be deemed to havetacitly given its consent to be usedonly when it enters intobusinesscontracts. It doesnot apply where the contract relates to the exercise of itssovereign functions. (emphasis ours)We held further, that the application of the doctrine of state immunity depends on thelegal natureof the act.Ergo, since agovernmental functionwas involved — the transaction dealtwith the improvement of the wharves in the naval installation at Subic Bay — it was held thatthe United States was not deemed to have waived its immunity from suit.Then came the case of United States vs. Hon. Rodrigo, et al .23 In said case, Genove wasemployed as a cook in the Main Club located at U.S. Air Force Recreation Center, John HayAir Station. He was dismissed from service after he was found to have polluted the stock of soup with urine. Genove countered with a complaint for damages. Apparently, the restaurantservices offered at the John Hay Air Station partake of the nature of a business enterpriseundertaken by the United States government in itsproprietary capacity . The Court thennoted that the restaurant is well known and available to the general public, thus, the servicesare operated for profit, as a commercial and not a governmental activity. Speaking throughAssociate Justice Isagani Cruz, the Court (En Banc ) said:The consequence of this finding is that the petitioners cannot invoke thedoctrine of state immunity to justify the dismissal of the damage suit againstthem by Genove. Such defense will not prosper even if it be established thatthey were acting as agents of the United States when they investigated andlater dismissed Genove. For the matter, not even the United Statesgovernment itself can claim such immunity. The reason is that by enteringinto the employment contract with Genovein the discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity from suit.(emphasis ours)Conversely, if the contract was entered into in the discharge of itsgovernmental functions,the sovereign state cannot be deemed to have waived its immunity from suit.24 Such is thecase at bench. Prescinding from this premise, we need not determine whether JUSMAGcontrols the employment conditions of the private respondent.We also hold that there appears to

be no basis for public respondent to rule that JUSMAG isstopped from denying the existence of employer-employee relationship with privaterespondent. On the contrary, in its Opposition before the public respondent, JUSMAGconsistently contended that the (74) SASP, including private respondent, working inJUSMAG, are employees of the Armed Forces of the Philippines. This can be gleaned from:(1) the Military Assistance Agreement,supra, (2) the exchange of notes between our Government, thru Department of Foreign Affairs, and the United States, thru the USEmbassy to the Philippines, and (3) the Agreement on May 21, 1991,suprabetween theArmed Forces of the Philippines and JUSMAG.We symphatize with the plight of private respondent who had served JUSMAG for more thantwenty (20) years. Considering his length of service with JUSMAG, he deserves a morecompassionate treatment. Unfortunately, JUSMAG is beyond the jurisdiction of this Court.Nonetheless, the Executive branch, through the Department of Foreign Affairs and theArmed Forces of the Philippines, can take the cudgel for private respondent and the other SASP working for JUSMAG, pursuant to the aforestated Military Assistance Agreement IN VIEW OF THE FOREGOING, the petition for certiorari is GRANTED. Accordingly, theimpugned Resolution dated January 29, 1993 of the National Labor Relations Commission isREVERSED and SET ASIDE. No costs.SO ORDERED.

G.R. Nos. 97468-70 September 2, 1993SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER represented by its Chief, DR. FLOR J. LACANILAO, petitioner, vs.DANILO ACOSTA in his capacity as Labor Arbiter of the National Labor Relations Commission, Regional Arbitration, Branch VI, CORAZON CANTO, DAN BALIAO, ELIZABETH SUPETRAN, CARMELITA FERRER, CATHRYN CONTRADOR, and DORIC VELOSO, respondents.Hector P. Teodosio for petitioner.Cirilo Ganzon, Jr. for private respondents. VITUG, J.:This is an original petition for certiorari and prohibition, with a prayer for the issuance of a restraining order, to set aside the order of respondent labor arbiter, dated 20 September 1990, denying herein petitioner's motion to dismiss the cases subject matter of the petition for lack of jurisdiction.Two labor cases, docketed as RAB Case No. VI- 0156-86 and RAB case No. VI - 0214-86, were filed by the herein private respondents against the petitioner, Southeast Asian Fisheries Development Center (SEAFDEC), before the National Labor Relations Commission (NLRC), Regional Arbitration Branch, Iloilo City. In these cases, the private respondents claim having been wrongfully terminated from their employment by the petitioner.On 22 August 1990, the petitioner, contending to be an international inter-government organization, composed of various Southeast Asian countries, filed a Motion to Dismiss, challenging the jurisdiction of the public respondent in taking cognizance of the above cases.On 20 September 1990, the public respondent issued the assailed order denying the Motion to Dismiss. In due course, a Motion for Reconsideration was interposed but the same, in an order, dated 07 January 1991, was likewise denied.Hence, the instant petition. This Court, on 20 March 1991, issued the temporary restraining order prayed for.The private respondents, as well as respondent labor arbiter, allege that the petitioner is not immune from suit and assuming that if, indeed, it is an international organization, it has, however, impliedly, if not expressly, waived its immunity by belatedly raising the issue of jurisdiction.The Solicitor General, on his part, filed a Manifestation and Motion, which the Court granted, praying that he be excused from filing his comment for respondent Labor Arbiter, he not being in agreement with the latter's position on this matter.

On 30 March 1992, this Court dismissed the instant petition in a resolution which reads:. . . — Considering the allegations, issues and arguments adduced in the petition for certiorari as well as the separate comments thereon of the public and private respondents, and the consolidated reply thereto of the petitioner, the Court RESOLVED to dismiss the petition for failure to sufficiently show that the questioned judgment is tainted with grave abuse of discretion. The temporary restraining order issued on March 20, 1991 is hereby LIFTED effective immediately.

In time, the petitioner moved for a reconsideration, arguing that the ground for its seeking the allowance of the petition is the labor arbiter's lack of jurisdiction over the dispute.The court is now asked to rule upon the motion for reconsideration.We rule for the petitioner.It is beyond question that petitioner SEAFDEC is an international agency enjoying diplomatic immunity. This, we have already held in Southeast Asian Fisheries Development Center-Aquaculture Department vs. National Labor Relations Commission, G.R. No. 86773, 206 SCRA 283/1992; see also Lacanilao v. de Leon, G.R. No. 76532, 147 SCRA, 286/1987/, where we said —

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC.It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom of Laos, Malaysia, Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam . . . .The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16, 1968. Its purpose is as follows:

The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member governments of the Center, hereinafter called the 'Members', and through collaboration with international organizations and governments external to the Center.

(Agreement Establishing the SEAFDEC, Art. 1; . . .).SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC. . . . to be established in Iloilo for the promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing mandates:

1. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located.As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law (p. 83,1956 ed.):

Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of international purposes, economic or social and mainly non-political. Among the notable instances are the International Labor Organization, the International Institute of Agriculture, the International Danube Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. As such, according to one leading authority they must be deemed to possess a species of international personality of their own. (Salonga and Yap, Public International Law, 83 [1956 ed.]

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one Director in governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1,. . .), and that its national laws and regulations shall apply only insofar as its contributions to SEAFDEC of "an agreed amount of money,

movable and immovable property and services necessary for the establishment and operation of the Center" are concerned (Art. 11, ibid). It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in Opinion No. 139, Series of 1984 —4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such objection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. In the case at bar, for instance, the entertainment by the National Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to interference by the Philippine Government in the management decisions of the SEARCA governing board; even worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the requirements of Philippine law, which may not necessarily coincide with the interests of the other member-states. It is precisely to forestall these possibilities that in cases where the extent of the immunity is specified in the enabling instruments of international organizations (jurisdictional immunity, is specified in the enabling instruments of international organizations), jurisdictional immunity from the host country is invariably among the first accorded. (See Jenks, Id.; See Bowett. The Law of International Institutions. pp. 284-285).

At its Sixth Meeting held at Kuala Lumpur, Malaysia, on 3 to 7 July 1973, the SEAFDEC Council approved the formal establishment of its Aquaculture Department in the province of Iloilo, Philippines, to promote research in Aquaculture as so expressed in the "Whereas" Clauses of Presidential Decree No. 292 issued on 13 September 1973 1. Furthermore, Section 2 of the same decree had provided for the autonomous character of SEAFDEC, thus:

. . . .All funds received by the Department shall be receipted and disbursed in accordance with the Agreement establishing the Southeast Asian Fisheries Development Center and pertinent resolutions duly approved by the SEAFDEC Council.

As aptly pointed out by Associate Justice Isagani Cruz of this Court—Certain administrative bodies created by agreement among states may be vested with international personality when two conditions concur, to wit:, that their purposes are mainly non-political and that they are autonomous,i.e., not subject to the control of any state. 2

Anent the issue of waiver of immunity, suffice it to say at the moment that the petitioner has timely raised the issue of jurisdiction. While the petitioner did not question the public respondent's lack of jurisdiction at the early stages of the proceedings, it, nevertheless, did so before it rested its case and certainly well before the proceedings thereat had terminated.WHEREFORE, our resolution, dated 30 March 1992, dismissing the petition for certiorari, is hereby reconsidered, and another is entered (a) granting due course to the petition; (b) setting aside the order, dated 20 September 1990, of the public respondent; and (c) enjoining the public respondent from further proceeding with RAB Case No. VI-0156-86 and RAB Case No. VI-0214-86. No costs.SO ORDERED.FIRST DIVISION[G.R. No. 125865. January 28, 2000]JEFFREY LIANG (HUEFENG), petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.D E C I S I O NYNARES-SANTIAGO, J.:Petitioner is an economist working with the Asian Development Bank (ADB). Sometime in 1994, for allegedly uttering defamatory words against fellow ADB worker Joyce Cabal, he was charged before the Metropolitan Trial Court (MeTC) of Mandaluyong City with two counts of grave oral defamation docketed as Criminal Cases Nos. 53170 and 53171. Petitioner was arrested by virtue of a warrant issued by the

MeTC. After fixing petitioner’s bail at P2,400.00 per criminal charge, the MeTC released him to the custody of the Security Officer of ADB. The next day, the MeTC judge received an "office of protocol" from the Department of Foreign Affairs (DFA) stating that petitioner is covered by immunity from legal process under Section 45 of the Agreement between the ADB and the Philippine Government regarding the Headquarters of the ADB (hereinafter Agreement) in the country. Based on the said protocol communication that petitioner is immune from suit, the MeTC judge without notice to the prosecution dismissed the two criminal cases. The latter filed a motion for reconsideration which was opposed by the DFA. When its motion was denied, the prosecution filed a petition for certiorari and mandamus with the Regional Trial Court (RTC) of Pasig City which set aside the MeTC rulings and ordered the latter court to enforce the warrant of arrest it earlier issued. After the motion for reconsideration was denied, petitioner elevated the case to this Court via a petition for review arguing that he is covered by immunity under the Agreement and that no preliminary investigation was held before the criminal cases were filed in court.The petition is not impressed with merit.First, courts cannot blindly adhere and take on its face the communication from the DFA that petitioner is covered by any immunity. The DFA’s determination that a certain person is covered by immunity is only preliminary which has no binding effect in courts. In receiving ex-parte the DFA’s advice and in motu proprio dismissing the two criminal cases without notice to the prosecution, the latter’s right to due process was violated. It should be noted that due process is a right of the accused as much as it is of the prosecution. The needed inquiry in what capacity petitioner was acting at the time of the alleged utterances requires for its resolution evidentiary basis that has yet to be presented at the proper time.[1] At any rate, it has been ruled that the mere invocation of the immunity clause does not ipso facto result in the dropping of the charges.[2]

Second, under Section 45 of the Agreement which provides: Jksm"Officers and staff of the Bank including for the purpose of this Article experts and consultants performing missions for the Bank shall enjoy the following privileges and immunities:

a.).......immunity from legal process with respect to acts performed by them in their official capacity except when the Bank waives the immunity."

the immunity mentioned therein is not absolute, but subject to the exception that the act was done in "official capacity." It is therefore necessary to determine if petitioner’s case falls within the ambit of Section 45(a). Thus, the prosecution should have been given the chance to rebut the DFA protocol and it must be accorded the opportunity to present its controverting evidence, should it so desire.Third, slandering a person could not possibly be covered by the immunity agreement because our laws do not allow the commission of a crime, such as defamation, in the name of official duty.[3] The imputation of theft is ultra vires and cannot be part of official functions. It is well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice or in bad faith or beyond the scope of his authority or jurisdiction.[4] It appears that even the government’s chief legal counsel, the Solicitor General, does not support the stand taken by petitioner and that of the DFA.Fourth, under the Vienna Convention on Diplomatic Relations, a diplomatic agent, assuming petitioner is such, enjoys immunity from criminal jurisdiction of the receiving state except in the case of an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving state outside his official functions.[5] As already mentioned above, the commission of a crime is not part of official duty.Finally, on the contention that there was no preliminary investigation conducted, suffice it to say that preliminary investigation is not a matter of right in cases cognizable by the MeTC such as the one at bar.[6] Being purely a statutory right, preliminary investigation may be invoked only when specifically granted by law.[7] The rule on criminal procedure is clear that no preliminary investigation is required in cases falling within the jurisdiction of the MeTC.[8] Besides, the absence of preliminary investigation does not affect the court’s jurisdiction nor does it impair the validity of the information or otherwise render it defective.[9]

WHEREFORE, the petition is DENIED.

HE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and MINISTER

COUNSELLOR AZHARI KASIM, petitioners, vs.JAMES VINZON

 

FACTS:

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a Maintenance

Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade and Services.

The equipment covered by the Maintenance Agreement are air conditioning units and was to take effect

in a period of four years. When Indonesian Minister Counsellor Kasim assumed the position of Chief of

Administration in March 2000, he allegedly found respondent’s work and services unsatisfactory and not

in compliance with the standards set in the Maintenance Agreement. Hence, the Indonesian Embassy

terminated the agreement in a letter dated August 31, 2000. Respondent filed a complaint claiming that

the aforesaid termination was arbitrary and unlawful. Petitioners filed a Motion to Dismiss assailing that

Republic of Indonesia, as a foreign sovereign State, has sovereign immunity from suit and cannot be

sued as a party-defendant in the Philippines.

 

ISSUE:

whether or not the Court of Appeals erred in sustaining the trial court’s decision that petitioners have

waived their immunity from suit by using as its basis the abovementioned provision in the Maintenance

Agreement.

 

RULING:

The SC GRANTED the petition.

The rule that a State may not be sued without its consent is a necessary consequence of the principles of

independence and equality of States. The mere entering into a contract by a foreign State with a private

party cannot be construed as the ultimate test of whether or not it is an act jure imperii or jure gestionis.

Such act is only the start of the inquiry. A sovereign State does not merely establish a diplomatic mission

and leave it at that; the establishment of a diplomatic mission encompasses its maintenance and upkeep.

Hence, the State may enter into contracts with private entities to maintain the premises, furnishings and

equipment of the embassy and the living quarters of its agents and officials. It is therefore clear that

petitioner Republic of Indonesia was acting in pursuit of a sovereign activity when it entered into a

contract with respondent for the upkeep or maintenance of the air conditioning units, generator sets,

electrical facilities, water heaters, and water motor pumps of the Indonesian Embassy and the official

residence of the Indonesian ambassador.

. 154705. June 26, 2003]

THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and MINISTER COUNSELLOR AZHARI KASIM, petitioners, vs. JAMES VINZON, doing business under the name and style of VINZON TRADE AND SERVICES, respondent.D E C I S I O NAZCUNA, J:This is a petition for review on certiorari to set aside the Decision of the Court of Appeals dated May 30, 2002 and its Resolution dated August 16, 2002, in CA-G.R. SP No. 66894 entitled The Republic of Indonesia, His Excellency Ambassador Soeratmin and Minister Counselor Azhari Kasim v. Hon. Cesar Santamaria, Presiding Judge, RTC Branch 145, Makati City, and James Vinzon, doing business under the name and style of Vinzon Trade and Services.Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade and Services. The Maintenance Agreement stated that respondent shall, for a consideration, maintain specified equipment at the Embassy Main Building, Embassy Annex Building and the Wisma Duta, the official residence of petitioner Ambassador Soeratmin. The equipment covered by the Maintenance Agreement are air conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps. It is likewise stated therein that the agreement shall be effective for a period of four years and will renew itself automatically unless cancelled by either party by giving thirty days prior written notice from the date of expiry.1

Petitioners claim that sometime prior to the date of expiration of the said agreement, or before August 1999, they informed respondent that the renewal of the agreement shall be at the discretion of the incoming Chief of Administration, Minister Counsellor Azhari Kasim, who was expected to arrive in February 2000. When Minister Counsellor Kasim assumed the position of Chief of Administration in March 2000, he allegedly found respondents work and services unsatisfactory and not in compliance with the standards set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the agreement in a letter dated August 31, 2000.[2 Petitioners claim, moreover, that they had earlier verbally informed respondent of their decision to terminate the agreement.On the other hand, respondent claims that the aforesaid termination was arbitrary and unlawful. Respondent cites various circumstances which purportedly negated petitioners alleged dissatisfaction over respondents services: (a) in July 2000, Minister Counsellor Kasim still requested respondent to assign to the embassy an additional full-time worker to assist one of his other workers; (b) in August 2000, Minister Counsellor Kasim asked respondent to donate a prize, which the latter did, on the occasion of the Indonesian Independence Day golf tournament; and (c) in a letter dated August 22, 2000, petitioner Ambassador Soeratmin thanked respondent for sponsoring a prize and expressed his hope that the cordial relations happily existing between them will continue to prosper and be strengthened in the coming years.Hence, on December 15, 2000, respondent filed a complaint3 against petitioners docketed as Civil Case No. 18203 in the Regional Trial Court (RTC) of Makati, Branch 145. On February 20, 2001, petitioners filed a Motion to Dismiss, alleging that the Republic of Indonesia, as a foreign sovereign State, has sovereign immunity from suit and cannot be sued as a party-defendant in the Philippines. The said motion further alleged that Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents as defined under the Vienna Convention on Diplomatic Relations and therefore enjoy diplomatic immunity.4 In turn, respondent filed on March 20, 2001, an Opposition to the said motion alleging that the Republic of Indonesia has expressly waived its immunity from suit. He based this claim upon the following provision in the Maintenance Agreement:Any legal action arising out of this Maintenance Agreement shall be settled according to the laws of the Philippines and by the proper court of Makati City, Philippines.Respondents Opposition likewise alleged that Ambassador Soeratmin and Minister Counsellor Kasim can be sued and held liable in their private capacities for tortious acts done with malice and bad faith.5

On May 17, 2001, the trial court denied herein petitioners Motion to Dismiss. It likewise denied the Motion for Reconsideration subsequently filed.The trial courts denial of the Motion to Dismiss was brought up to the Court of Appeals by herein petitioners in a petition for certiorari and prohibition. Said petition, docketed as CA-G.R. SP No. 66894, alleged that the trial court gravely abused its discretion in ruling that the Republic of

Indonesia gave its consent to be sued and voluntarily submitted itself to the laws and jurisdiction of Philippine courts and that petitioners Ambassador Soeratmin and Minister Counsellor Kasim waived their immunity from suit.On May 30, 2002, the Court of Appeals rendered its assailed decision denying the petition for lack of merit.[6 On August 16, 2002, it denied herein petitioners motion for reconsideration.[7Hence, this petition.In the case at bar, petitioners raise the sole issue of whether or not the Court of Appeals erred in sustaining the trial courts decision that petitioners have waived their immunity from suit by using as its basis the abovementioned provision in the Maintenance Agreement.The petition is impressed with merit.International law is founded largely upon the principles of reciprocity, comity, independence, and equality of States which were adopted as part of the law of our land under Article II, Section 2 of the 1987 Constitution.8 The rule that a State may not be sued without its consent is a necessary consequence of the principles of independence and equality of States.[9 As enunciated in Sanders v. Veridiano II,[10 the practical justification for the doctrine of sovereign immunity is that there can be no legal right against the authority that makes the law on which the right depends. In the case of foreign States, the rule is derived from the principle of the sovereign equality of States, as expressed in the maxim par in parem non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another.[11 A contrary attitude would unduly vex the peace of nations.12

The rules of International Law, however, are neither unyielding nor impervious to change. The increasing need of sovereign States to enter into purely commercial activities remotely connected with the discharge of their governmental functions brought about a new concept of sovereign immunity. This concept, the restrictive theory, holds that the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii, but not with regard to private acts or acts jure gestionis.13

In United States v. Ruiz,[14 for instance, we held that the conduct of public bidding for the repair of a wharf at a United States Naval Station is an act jure imperii. On the other hand, we considered as an act jure gestionis the hiring of a cook in the recreation center catering to American servicemen and the general public at the John Hay Air Station in Baguio City,15 as well as the bidding for the operation of barber shops in Clark Air Base in Angeles City.[16Apropos the present case, the mere entering into a contract by a foreign State with a private party cannot be construed as the ultimate test of whether or not it is an act jure imperii or jure gestionis. Such act is only the start of the inquiry. Is the foreign State engaged in the regular conduct of a business? If the foreign State is not engaged regularly in a business or commercial activity, and in this case it has not been shown to be so engaged, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii.17

Hence, the existence alone of a paragraph in a contract stating that any legal action arising out of the agreement shall be settled according to the laws of the Philippines and by a specified court of the Philippines is not necessarily a waiver of sovereign immunity from suit. The aforesaid provision contains language not necessarily inconsistent with sovereign immunity. On the other hand, such provision may also be meant to apply where the sovereign party elects to sue in the local courts, or otherwise waives its immunity by any subsequent act. The applicability of Philippine laws must be deemed to include Philippine laws in its totality, including the principle recognizing sovereign immunity. Hence, the proper court may have no proper action, by way of settling the case, except to dismiss it.Submission by a foreign state to local jurisdiction must be clear and unequivocal. It must be given explicitly or by necessary implication. We find no such waiver in this case.Respondent concedes that the establishment of a diplomatic mission is a sovereign function. On the other hand, he argues that the actual physical maintenance of the premises of the diplomatic mission, such as the upkeep of its furnishings and equipment, is no longer a sovereign function of the State.[18We disagree. There is no dispute that the establishment of a diplomatic mission is an act jure imperii. A sovereign State does not merely establish a diplomatic mission and leave it at that; the establishment of a diplomatic mission encompasses its maintenance and upkeep. Hence, the

State may enter into contracts with private entities to maintain the premises, furnishings and equipment of the embassy and the living quarters of its agents and officials. It is therefore clear that petitioner Republic of Indonesia was acting in pursuit of a sovereign activity when it entered into a contract with respondent for the upkeep or maintenance of the air conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps of the Indonesian Embassy and the official residence of the Indonesian ambassador.The Solicitor General, in his Comment, submits the view that, the Maintenance Agreement was entered into by the Republic of Indonesia in the discharge of its governmental functions. In such a case, it cannot be deemed to have waived its immunity from suit. As to the paragraph in the agreement relied upon by respondent, the Solicitor General states that it was not a waiver of their immunity from suit but a mere stipulation that in the event they do waive their immunity, Philippine laws shall govern the resolution of any legal action arising out of the agreement and the proper court in Makati City shall be the agreed venue thereof.19

On the matter of whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued herein in their private capacities, Article 31 of the Vienna Convention on Diplomatic Relations provides:x x x1. A diplomatic agent shall enjoy immunity from the criminal jurisidiction of the receiving State. He shall also enjoy immunity from its civil and administrative jurisdiction, except in the case of:(a) a real action relating to private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission;(b) an action relating to succession in which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person and not on behalf of the sending State;(c) an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions.x x xThe act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in terminating the Maintenance Agreement is not covered by the exceptions provided in the abovementioned provision.The Solicitor General believes that said act may fall under subparagraph (c) thereof,[20 but said provision clearly applies only to a situation where the diplomatic agent engages in any professional or commercial activity outside official functions, which is not the case herein.WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA G.R. SP No. 66894 are REVERSED and SET ASIDE and the complaint in Civil Case No. 18203 against petitioners is DISMISSED.No costs.SO ORDERED.Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Corona, Carpio-Morales, and Callejo, Sr., JJ., concur.Austria-Martinez, J., on leave.

minucher v. CA 214 SCRA 242 (1992)

MINUCHER v. CA (September 24, 1992)

Petitioner: KHOSROW MINUCHER

Respondents: CA & ARTHUR W. CALZO, JR.

Nature: PETITION for review of the decision of the Court of Appeals

Ponente: DAVIDE, JR., J.

1. CALZO FRAMES UP MINUCHER FOR POSSESSION OF HEROIN. Calzo, an agent of the Drug

Enforcement Administration of Department of Justice of the USA ordered from Minucher, a labor attaché

of the Iran Embassy in Manila Iranian were introduced by a common associate, Inigo. Calzo offered to

help Minucher with his problem with his family’s US visas for a fee of $2,000. Calzo also found buyers of

certain Iranian goods which Calzo was selling such as silk and carpets. So, Calzo came to the residence

of Minucher and asked to be entrusted with a pair of Persian silk carpets with a floor price of $24,000

each, for which he had a buyer. The following day, Calzo returned to Minucher’s residence, took the

carpets and gave the latter $24,000; after about an hour, Calzo returned, claimed that he had already

made arrangements with his contacts at the American Embassy concerning the visas and asked for

$2,000. He was given this amount. It turned out, however, that Calzo had prepared an elaborate plan to

frame-up Minucher for alleged trafficking; both were falsely arrested by Calzo and some American and

Filipino police officers, and were taken to Camp Crame in their underwear. Calzo and his companions

took petitioner’s 3 suitcases containing various documents, his wallet containing money and the keys to

his house and car, as well as the $24,000 which Calzo had earlier delivered to him. Minucher and his

companion, Torabian were handcuffed together for 3 days and were not given food and water; they were

asked to confess to the possession of heroin or else they would be jailed or even executed by Iranian

terrorists. Consequently, the two were charged for the violation of Section 4 of RA. No. 6425 (Dangerous

Drugs Act of 1972) before the Pasig RTC. They were, however, acquitted by the said court. Calzo

testified for the prosecution in the said case.

2. COMPLAINT FOR DAMAGES. Minucher files a complaint for damages against Calzo and alleges that

Calzo falsely testified against him in the criminal case. Minucher also avers that charges of unlawful

arrest, robbery and estafa or swindling have already been filed against the Calzo. He therefore prays for

actual and compensatory damages of not less than P480,000 ($24,000) representing the fair market

value of the Persian silk carpet and $2,000 representing the refund of the amount he had given for the

visas; moral damages in the amount of P5 million; exemplary damages in the sum of P100,000 and

attorney’s fees of at least P200,000 to answer for litigation expenses incurred for his defense in the

criminal case and for the prosecution of the civil case,

3. SPECIAL APPEARANCE TO QUASH SUMMONS. Calzo’s counsel, the law firm LUNA, SISON AND

MANAS, filed a Special Appearance and Motion alleging therein that since Calzo is an agent of the Drug

Enforcement Administration of the USA, and the acts and omissions complained of were performed by

him in the performance of official functions, the case is now under study by the Departments of State and

Justice in Washington, D.C. for the purpose of determining what defenses would be appropriate; said

counsel also prayed that the period to answer be extended. Then, counsel filed a Special Appearance to

Quash Summons alleging therein that: The action being it personal action for damages arising from an

alleged tort, the defendant being outside the Philippines and not being a resident of the Philippines,

Defendant is beyond the processes of this court,” and praying that the summons issued be quashed. The

trial court denied the motion in its Order. Unsatisfied with the said order, Calzo filed a petition for certiorari

with the CA. In its Decision, the CA dismissed the petition for lack of merit. Calzo elevated the case to the

SC but was dismissed due to non-compliance with par 2 of Circular No. 1-88 and its failure to show that

the CA had committed any reversible error. 

4. CALZO FILED HIS ANSWER. Thereafter, Calzo filed with the trial court his Answer in the civil case

wherein he denies the material allegations in the complaint, sets forth the following Affirmative Defenses:

“The Complaint fails to state a cause of action: in having Minucher and Torabian arrested and detained at

Camp Crame; a quantity of heroin, seized from plaintiff by Philippine police authorities and in seizing the

money used in the drug transaction, defendant acted in the discharge of his official duties or otherwise in

the performance of his official functions as agent of the Drug Enforcement Administration, U.S.

Department of Justice and interposes a counterclaim for P100,000 to answer for attorney’s fees and the

expenses of litigation.”

5. CALZO’S MTD BASED ON A DIPLOMATIC NOTE. Calzo filed a Motion to Dismiss the case on the

ground that as per the copy of Diplomatic Note No. 414 issued by the Embassy of the United States of

America,13 dated 29 May 1990 and certified to be a true and faithful copy of the original by one Donald K.

Woodward, Vice Consul of the United States of America on 11 June 1990, the Embassy advised the

Department of Foreign Affairs of the Republic of the Philippines that:

“x x x Arthur W. Scalzo, was a member of the diplomatic staff of the United States diplomatic mission from

his arrival in the Philippines on October 14, 1985 until his departure on August 10, 1988. x x x

x x x in May 1986, with the cooperation of Philippine law enforcement officials and in the exercise of his

functions as a member of the mission, Mr. Scalzo investigated Mr. Khosrow Minucher, the plaintiff in the

aforementioned case for allegedly trafficking in a prohibited drug. It is this investigation which has given

rise to the plaintiff’s complaint. The Embassy takes note of the provisions of Article 39(2) of the Vienna

Convention on Diplomatic Relations, which provides that Mr. Scalzo retains immunity from civil suit for

sets performed in the exercise of his functions, as is the caw here, even though he has departed (sic) the

country.”

The trial court issued an order denying the motion for being “devoid of merit.”

6. CA DISMISSED CASE. Calzo then filed with the CA a petition for certiorari. CA promulgated a Decision

dismissing the case due to the trial court’s lack of jurisdiction over the person of the defendant because

the latter possessed diplomatic immunity. MR denied because: “When therefore Mr. Scalzo testified in the

Criminal Case against Khosrow Minucher it was in connection with his official functions as an agent of the

Drug Enforcement Administration of the United States and member (sic) of the American Mission charged

with cooperating with the Philippine law enforcement agency. He therefore, enjoys immunity from criminal

and civil jurisdiction of the receiving State under Article 31 of the Vienna Convention on Diplomatic

Relations.” Hence, this petition for review under Rule 45 of the Rules of Court. 

ISSUE: WON a complaint for damages should be dismissed on the sole basis of a statement contained in

a Diplomatic Note, belatedly issued after an answer to the said complaint had already been filed, that the

defendant was a member of the diplomatic staff of the United States Diplomatic Mission in the Philippines

at the time the cause of action accrued? 

HELD: NO.

7. CORRECT GROUND TO DISMISS: FAILURE TO STATE A COA. While the trial court correctly denied

the motion to dismiss, the CA gravely abused its discretion in dismissing the civil case on the basis of an

erroneous assumption that simply-because of the Diplomatic Note, the private respondent is clothed with

diplomatic immunity, thereby divesting the trial court of jurisdiction over his person. It may at once be

stated that even if the Calzo enjoys diplomatic immunity, a dismissal of the case cannot be ordered on the

ground of lack of jurisdiction over his person, but rather for lack of a cause of action because even if he

committed the imputed act and could have been otherwise made liable therefor, his immunity would bar

any suit against him in connection therewith and would prevent recovery of damages arising therefrom. 

8. COURT ACQUIRED JURISDICTION OVER CALZO. Jurisdiction over the person of the defendant is

acquired either by his voluntary appearance or by the service of summons upon him. While in the instant

case, private respondent’s counsel filed, on 26 October 1988, a motion to quash summons because being

outside the Philippines and being a non-resident alien, he is beyond the processes of the court, which

was properly denied by the trial court, he had in effect already waived any defect in the service of the

summons by earlier asking, on 2 occasions, for an extension of time to file an answer, and by ultimately

filing an Answer with Counterclaim. There is no question that the trial court acquired jurisdiction over the

person of the private respondent.

9. THE CASE SHOULD NOT HAVE BEEN DISMISSED. The complaint for damages filed by the

Minucher still cannot be peremptorily dismissed. Said complaint contains sufficient allegations which

indicate that the private respondent committed the imputed acts in his personal capacity and outside the

scope of his official duties and functions. As described in the complaint, he committed criminal acts for

which he is also civilly liable. In the Special Appearance to Quash Summons earlier alluded to, an the

other hand, private respondent maintains that the claim for damages arose “from an alleged tort.”

Whether such claim arises from criminal acts or from tort, there can be no question that private

respondent was sued in his personal capacity for acts committed outside his official functions duties. In

the decision acquitting petitioner in the criminal case involving the violation of the Dangerous Drugs Act,

copy of which is attached to his complaint for damages and which must be deemed as an integral part

thereof, the trial court gave full credit to petitioner’s theory that he was a victim of a frame-up instigated by

the private respondent. Thus, there is a prima facie showing in the complaint that indeed private

respondent could be held personally liable for the acts committed beyond his official functions or duties.

10. REITERATED DOCTRINE IN SHAUF. In Shauf vs. Court of Appeals, after citing pertinent authorities,

this Court ruled: “The aforecited authorities are clear on the matter. They state that the doctrine of

immunity from suit will not apply and may not be invoked where the public official is being sued in his

private and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and

agents of the government is removed the moment they are sued in their individual capacity. This situation

usually arises where the public official acts without authority or in excess of the powers vested in him. It is

a well-settled principle of law that a public official may be liable in his personal private capacity for

whatever damage he may haw mused by his act done with malice and in bad faith, or beyond the scope

of his authority or jurisdiction (Dumlao vs. Court of Appeals, et al., 114 SCRA 247 [1982]).”

11. ARTICLE 31 OF THE VIENNA CONVENTION ON DIPLOMATIC RELATIONS admits of exceptions. It

reads:

“I. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall

also enjoy immunity from its civil and administrative jurisdiction except in the case of an action relating to

any professional or commercial activity exercised by the diplomatic agent in the receiving State, outside

his official functions. (Emphasis supplied).

12. NO EVIDENCE TO PROVE HE ACTED IN HIS OFFICIAL CAPACITY. There is of course the claim of

private respondent that the act imputed to him were done in his official capacity. Nothing supports this

self-serving claim other than the so-called Diplomatic Note. In short, insofar as the records are concerned,

Calzo did not come forward with evidence to prove that indeed, he had acted in his official capacity. It

does not appear that an actual hearing on the motion to dismiss was conducted and that Calzo offered

evidence in support thereof. Thus, it is apropos to quote what this Court stated in United States of

America vs. Guinto:

“But even as we are, certain that the individual petitioners in G.R. No. 80018 were acting in the discharge

of their official functions, we hesitate to make the same conclusion in G.R. No. 80258. The contradictory

factual allegations in this case deserve in our view a closer study of what actually happened to the

plaintiffs. The record is too meager to indicate if the defendants were really discharging their official duties

or had actually exceeded their authority when the incident in question occurred. Lacking this information,

this Court cannot directly decide this case. The needed inquiry must first be made by the lower court so it

may assess and resolve the conflicting claims of the parties on the basis of the evidence that has yet to

be presented at the trial. Only after it shall have determined in what capacity the petitioners were acting at

the time of the incident in question will this Court determine, if still necessary, if the doctrine of state

immunity is applicable.”

It may be mentioned in this regard that Calzo himself, in his Pre-trial Brief, unequivocally states that he

would present documentary evidence consisting of DEA records on his investigation and surveillance of

plaintiff and on his position and duties as DEA special agent in Manila. Having thus reserved his right to

present evidence in support of his position, which is the basis for the alleged diplomatic immunity, the

barren self-serving claim in the belated motion to dismiss cannot be relied upon for a reasonable,

intelligent and fair resolution of the issue of diplomatic immunity.

The public respondent then should have sustained the trial court’s denial of the motion to dismiss. Verily,

such should have been the most proper and appropriate recourse. It should not have been overwhelmed

by the self-serving Diplomatic Note whose belated issuance is even suspect and whose authenticity has

not yet been proved. The undue haste with which the CA yielded to the private respondent’s claim is

arbitrary. 

DISPOSITION. WHEREFORE, the challenged decision of the CA is SET ASIDE and the Order of the

Regional Trial Court of Manila denying private respondent’s Motion to Dismiss is hereby REINSTATED.

Shauf v. CA 191 SCRA 713

SHAUF vs. COURT OF APPEALS

Petition for certiorari to review the decision of CA

FACTS:

• 1990: Petitioner, Loida Shauf, a Filipino by origin and married to an American who is a member of the

US Air Force, was rejected for a position of Guidance Counselor in the Base Education Office at Clark Air

Base. She boasts of related working experience and being a qualified dependent locally available.

• By reason of her non-selection, she filed a complaint for damages and an equal employment opportunity

complaint against private respondents, Don Detwiler (civillian personnel officer) and Anthony Persi

(Education Director), for alleged discrimination by reason of her sex (female), color (brown) and national

origin (Filipino by birth).

• Shauf was offered a temporary position as a temporary Assistant Education Adviser for a 180-day

period with the condition that if a vacancy occurs, she will be automatically selected to fill the vacancy.

But if no vacancy occurs after 180 days, she will be released but will be selected to fill a future vacancy if

she’s available. Shauf accepted the offer. During that time, Mrs. Mary Abalateo’s was about to vacate her

position. But Mrs. Abalateo’s appointment was extended thus, Shauf was never appointed to said

position. She claims that the Abalateo’s stay was extended indefinitely to deny her the appointment as

retaliation for the complaint that she filed against Persi. Persi denies this allegation. He claims it was a

joint decision of the management & it was in accordance of with the applicable regulation. 

• Shauf filed for damages and other relief in different venues such as the Civil Service Commission,

Appeals Review Board, Philippine Regional Trial Court, etc.

• RTC ruled in favor of Shauf ordering defendants to pay $39,662.49 as actual damages + 20% of such

amount as attorney’s fees + P100k as moral & exemplary damages. 

• Both parties appealed to the CA. Shauf prayed for the increase of the damages to be collected from

defendants. Defendants on the other hand, continued using the defense that they are immune from suit

for acts done/statements made by them in performance of their official governmental functions pursuant

to RP-US Military Bases Agreement of 1947. They claim that the Philippines does not have jurisdiction

over the case because it was under the exclusive jurisdiction of a US District Court. They likewise claim

that petitioner failed to exhaust all administrative remedies thus case should be dismissed. CA reversed

RTC decision. According to the CA, defendants are immune from suit. 

• Shauf claims that the respondents are being sued in their private capacity thus this is not a suit against

the US government w/c would require consent.

• Respondents still maintain their immunity from suit. They further claim that the rule allowing suits against

public officers & employees for criminal & unauthorized acts is applicable only in the Philippines & is not

part of international law. 

ISSUE: 

WON private respondents are immune from suit being officers of the US Armed Forces

HELD: 

Respondents ordered, jointly and severally, to pay petitioners the sum of P100K as moral damages, P20K

for atty’s fees.

RATIO: 

No, the respondents cannot rely on the US blanket of diplomatic immunity for all its acts or the acts of its

agents in the Phils. Private respondents are personally liable in indemnifying petitioner Shauf.

While the doctrine of immunity is also applicable to complaints filed against state officials, it only

contemplates acts done in their official capacity. This does not cover acts contrary to law & injurious to the

rights of the plaintiff. When an official acts in a manner that invades or violates the personal & property

rights of another, the aggrieved party may sue the official & such suit will not be a suit against the state.

(Director of the Bureau of Telecommunications vs. Aligaen) The doctrine of immunity from suit will not

apply where the public official is being sued in his private & personal capacity as an ordinary citizen. 

The discrimination is very evident. Shauf was not considered for the position even if she was previously

employed as a Guidance Counselor at the Clark Airbase. She was not granted an interview. The person

appointed was not even qualified for that position and that person kept the position despite orders from

the US Civil Service Commission for his removal. Extension of Abalateo’s services is another proof. She

was not appointed even if US officials found her highly qualified for the position (letters from the Director

of the US Civil Service Commission, Staff Judge Advocate of the Department of Air Force). Shauf has

proven that discrimination did occur whereas respondents merely denied allegations. 

The US Constitution assures everyone of equality in employment & work opportunities regardless of sex,

race, or creed. The Philippine Constitution has a similar provision. Persi & Detwiler violated Shauf’s

constitutional right to earn a living, an integral aspect of her right to life. Thus, they should be accountable.

Though Shauf is entitled to damages, she should not be paid for the supposedly unearned income had

she been hired as a Guidance Counselor. She never acquired rights over that amount because she was

never appointed. 

Shauf followed the proper procedure in seeking relief for the defendants’ discriminatory acts. The

Department of Air Force in Washington told her that one of her appeal rights would be to file a civil action

if a final decision has not been rendered after 180 days from the dated of the initial appeal to the

Commission. The appeal was lodged on Sept. 30, 1978 and it has not been decided up to the time SC

has decided. Shauf is entitled to choose the remedy, not otherwise prohibited, which will best advance &

protect her interests.

FIRST DIVISIONG.R. No. 142396. February 11, 2003]KHOSROW MINUCHER, petitioner, vs. HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.D E C I S I O N

VITUG, J.:

Sometime in May 1986, an Information for violation of Section 4 of Republic Act No. 6425, otherwise also known as the Dangerous Drugs Act of 1972, was filed against petitioner Khosrow Minucher and one Abbas Torabian with the Regional Trial Court, Branch 151, of Pasig City. The criminal charge followed a buy-bust operation conducted by the Philippine police narcotic agents in the house of Minucher, an Iranian national, where a quantity of heroin, a prohibited drug, was said to have been seized. The narcotic agents were accompanied by private respondent Arthur Scalzo who would, in due time, become one of the principal witnesses for the prosecution. On 08 January 1988, Presiding Judge Eutropio Migrino rendered a decision acquitting the two accused.On 03 August 1988, Minucher filed Civil Case No. 88-45691 before the Regional Trial Court (RTC), Branch 19, of Manila for damages on account of what he claimed to have been trumped-up charges of drug trafficking made by Arthur Scalzo. The Manila RTC detailed what it had found to be the facts and circumstances surrounding the case.

"The testimony of the plaintiff disclosed that he is an Iranian national. He came to the Philippines to study in the University of the Philippines in 1974. In 1976, under the regime of the Shah of Iran, he was appointed Labor Attach for the Iranian Embassies in Tokyo, Japan and Manila, Philippines. When the Shah of Iran was deposed by Ayatollah Khomeini, plaintiff became a refugee of the United Nations and continued to stay in the Philippines. He headed the Iranian National Resistance Movement in the Philippines.He came to know the defendant on May 13, 1986, when the latter was brought to his house and introduced to him by a certain Jose Iigo, an informer of the Intelligence Unit of the military. Jose Iigo, on the other hand, was met by plaintiff at the office of Atty. Crisanto Saruca, a lawyer for several Iranians whom plaintiff assisted as head of the anti-Khomeini movement in the Philippines.During his first meeting with the defendant on May 13, 1986, upon the introduction of Jose Iigo, the defendant expressed his interest in buying caviar. As a matter of fact, he bought two kilos of caviar from plaintiff and paid P10,000.00 for it. Selling caviar, aside from that of Persian carpets, pistachio nuts and other Iranian products was his business after the Khomeini government cut his pension of over $3,000.00 per month. During their introduction in that meeting, the defendant gave the plaintiff his calling card, which showed that he is working at the US Embassy in the Philippines, as a special agent of the Drug Enforcement Administration, Department of Justice, of the United States, and gave his address as US Embassy, Manila. At the back of the card appears a telephone number in defendants own handwriting, the number of which he can also be contacted.It was also during this first meeting that plaintiff expressed his desire to obtain a US Visa for his wife and the wife of a countryman named Abbas Torabian. The defendant told him that he [could] help plaintiff for a fee of $2,000.00 per visa. Their conversation, however, was more concentrated on politics, carpets and caviar. Thereafter, the defendant promised to see plaintiff again.On May 19, 1986, the defendant called the plaintiff and invited the latter for dinner at Mario's Restaurant at Makati. He wanted to buy 200 grams of caviar. Plaintiff brought the merchandize but for the reason that the defendant was not yet there, he requested the restaurant people to x x x place the same in the refrigerator. Defendant, however, came and plaintiff gave him the caviar for which he was paid. Then their conversation was again focused on politics and business.On May 26, 1986, defendant visited plaintiff again at the latter's residence for 18 years at Kapitolyo, Pasig. The defendant wanted to buy a pair of carpets which plaintiff valued at $27,900.00. After some haggling, they agreed at $24,000.00. For the reason that defendant did not yet have the money, they agreed that defendant would come back the next day. The following day, at 1:00 p.m., he came back with his $24,000.00, which he gave to the plaintiff, and the latter, in turn, gave him the pair of carpets.At about 3:00 in the afternoon of May 27, 1986, the defendant came back again to plaintiff's house and directly proceeded to the latter's bedroom, where the latter and his countryman, Abbas Torabian, were playing chess. Plaintiff opened his safe in the bedroom and obtained $2,000.00 from it, gave it to the defendant for the latter's fee in obtaining a visa for plaintiff's wife. The defendant told him that he would be leaving the Philippines very soon and requested him to come out of the house for a while so that he can introduce him to his cousin waiting in a cab. Without much ado, and without putting on his shirt as he was only in his pajama pants, he followed the defendant where he saw a parked cab opposite the street. To his complete surprise, an American jumped out of the cab with a drawn high-powered gun. He was in the company of about 30 to 40 Filipino soldiers with 6 Americans, all armed. He was handcuffed and after about 20 minutes in the street, he was brought inside the house by the defendant. He was made to sit down while in handcuffs while the defendant was inside his bedroom. The defendant came out of the bedroom and out from defendant's attach case, he took something and placed it on the table in front of the plaintiff. They also took plaintiff's wife who was at that time at the boutique near his house and likewise arrested Torabian, who was playing chess with him in the bedroom and both were handcuffed together. Plaintiff was not told why he was being handcuffed and why the privacy of his house, especially his bedroom was invaded by defendant. He was not allowed to use the telephone. In fact, his telephone was unplugged. He asked for any warrant, but the defendant told him to `shut up. He was nevertheless told that he would be able to call for his lawyer who can defend him.The plaintiff took note of the fact that when the defendant invited him to come out to meet his cousin, his safe was opened where he kept the $24,000.00 the defendant paid for the carpets and another $8,000.00 which he also placed in the safe together with a bracelet worth $15,000.00 and a pair of earrings worth $10,000.00. He also discovered missing upon his release his 8 pieces hand-made Persian carpets, valued at $65,000.00, a painting he bought for P30,000.00 together with his TV and betamax sets. He

claimed that when he was handcuffed, the defendant took his keys from his wallet. There was, therefore, nothing left in his house.That his arrest as a heroin trafficker x x x had been well publicized throughout the world, in various newspapers, particularly in Australia, America, Central Asia and in the Philippines. He was identified in the papers as an international drug trafficker. x x xIn fact, the arrest of defendant and Torabian was likewise on television, not only in the Philippines, but also in America and in Germany. His friends in said places informed him that they saw him on TV with said news.After the arrest made on plaintiff and Torabian, they were brought to Camp Crame handcuffed together, where they were detained for three days without food and water."[1During the trial, the law firm of Luna, Sison and Manas, filed a special appearance for Scalzo and moved for extension of time to file an answer pending a supposed advice from the United States Department of State and Department of Justice on the defenses to be raised. The trial court granted the motion. On 27 October 1988, Scalzo filed another special appearance to quash the summons on the ground that he, not being a resident of the Philippines and the action being one in personam, was beyond the processes of the court. The motion was denied by the court, in its order of 13 December 1988, holding that the filing by Scalzo of a motion for extension of time to file an answer to the complaint was a voluntary appearance equivalent to service of summons which could likewise be construed a waiver of the requirement of formal notice. Scalzo filed a motion for reconsideration of the court order, contending that a motion for an extension of time to file an answer was not a voluntary appearance equivalent to service of summons since it did not seek an affirmative relief. Scalzo argued that in cases involving the United States government, as well as its agencies and officials, a motion for extension was peculiarly unavoidable due to the need (1) for both the Department of State and the Department of Justice to agree on the defenses to be raised and (2) to refer the case to a Philippine lawyer who would be expected to first review the case. The court a quo denied the motion for reconsideration in its order of 15 October 1989.Scalzo filed a petition for review with the Court of Appeals, there docketed CA-G.R. No. 17023, assailing the denial. In a decision, dated 06 October 1989, the appellate court denied the petition and affirmed the ruling of the trial court. Scalzo then elevated the incident in a petition for review on certiorari, docketed G.R. No. 91173, to this Court. The petition, however, was denied for its failure to comply with SC Circular No. 1-88; in any event, the Court added, Scalzo had failed to show that the appellate court was in error in its questioned judgment.Meanwhile, at the court a quo, an order, dated 09 February 1990, was issued (a) declaring Scalzo in default for his failure to file a responsive pleading (answer) and (b) setting the case for the reception of evidence. On 12 March 1990, Scalzo filed a motion to set aside the order of default and to admit his answer to the complaint. Granting the motion, the trial court set the case for pre-trial. In his answer, Scalzo denied the material allegations of the complaint and raised the affirmative defenses (a) of Minuchers failure to state a cause of action in his complaint and (b) that Scalzo had acted in the discharge of his official duties as being merely an agent of the Drug Enforcement Administration of the United States Department of Justice. Scalzo interposed a counterclaim of P100,000.00 to answer for attorneys' fees and expenses of litigation.Then, on 14 June 1990, after almost two years since the institution of the civil case, Scalzo filed a motion to dismiss the complaint on the ground that, being a special agent of the United States Drug Enforcement Administration, he was entitled to diplomatic immunity. He attached to his motion Diplomatic Note No. 414 of the United States Embassy, dated 29 May 1990, addressed to the Department of Foreign Affairs of the Philippines and a Certification, dated 11 June 1990, of Vice Consul Donna Woodward, certifying that the note is a true and faithful copy of its original. In an order of 25 June 1990, the trial court denied the motion to dismiss.On 27 July 1990, Scalzo filed a petition for certiorari with injunction with this Court, docketed G.R. No. 94257 and entitled "Arthur W. Scalzo, Jr., vs. Hon. Wenceslao Polo, et al.," asking that the complaint in Civil Case No. 88-45691 be ordered dismissed. The case was referred to the Court of Appeals, there docketed CA-G.R. SP No. 22505, per this Courts resolution of 07 August 1990. On 31 October 1990, the Court of Appeals promulgated its decision sustaining the diplomatic immunity of Scalzo and ordering the dismissal of the complaint against him. Minucher filed a petition for review with this Court, docketed G.R. No. 97765 and entitled "Khosrow Minucher vs. the Honorable Court of Appeals, et. al. (cited in 214 SCRA 242), appealing the judgment of the Court of Appeals. In a decision, dated 24 September 1992, penned by Justice (now Chief Justice) Hilario Davide, Jr., this Court reversed the decision of the appellate court

and remanded the case to the lower court for trial. The remand was ordered on the theses (a) that the Court of Appeals erred in granting the motion to dismiss of Scalzo for lack of jurisdiction over his person without even considering the issue of the authenticity of Diplomatic Note No. 414 and (b) that the complaint contained sufficient allegations to the effect that Scalzo committed the imputed acts in his personal capacity and outside the scope of his official duties and, absent any evidence to the contrary, the issue on Scalzos diplomatic immunity could not be taken up.The Manila RTC thus continued with its hearings on the case. On 17 November 1995, the trial court reached a decision; it adjudged:WHEREFORE, and in view of all the foregoing considerations, judgment is hereby rendered for the plaintiff, who successfully established his claim by sufficient evidence, against the defendant in the manner following:"`Adjudging defendant liable to plaintiff in actual and compensatory damages of P520,000.00; moral damages in the sum of P10 million; exemplary damages in the sum of P100,000.00; attorney's fees in the sum of P200,000.00 plus costs.`The Clerk of the Regional Trial Court, Manila, is ordered to take note of the lien of the Court on this judgment to answer for the unpaid docket fees considering that the plaintiff in this case instituted this action as a pauper litigant."[2While the trial court gave credence to the claim of Scalzo and the evidence presented by him that he was a diplomatic agent entitled to immunity as such, it ruled that he, nevertheless, should be held accountable for the acts complained of committed outside his official duties. On appeal, the Court of Appeals reversed the decision of the trial court and sustained the defense of Scalzo that he was sufficiently clothed with diplomatic immunity during his term of duty and thereby immune from the criminal and civil jurisdiction of the Receiving State pursuant to the terms of the Vienna Convention.Hence, this recourse by Minucher. The instant petition for review raises a two-fold issue: (1) whether or not the doctrine of conclusiveness of judgment, following the decision rendered by this Court in G.R. No. 97765, should have precluded the Court of Appeals from resolving the appeal to it in an entirely different manner, and (2) whether or not Arthur Scalzo is indeed entitled to diplomatic immunity.The doctrine of conclusiveness of judgment, or its kindred rule of res judicata, would require 1) the finality of the prior judgment, 2) a valid jurisdiction over the subject matter and the parties on the part of the court that renders it, 3) a judgment on the merits, and 4) an identity of the parties, subject matter and causes of action.[3 Even while one of the issues submitted in G.R. No. 97765 - "whether or not public respondent Court of Appeals erred in ruling that private respondent Scalzo is a diplomat immune from civil suit conformably with the Vienna Convention on Diplomatic Relations" - is also a pivotal question raised in the instant petition, the ruling in G.R. No. 97765, however, has not resolved that point with finality. Indeed, the Court there has made this observation -"It may be mentioned in this regard that private respondent himself, in his Pre-trial Brief filed on 13 June 1990, unequivocally states that he would present documentary evidence consisting of DEA records on his investigation and surveillance of plaintiff and on his position and duties as DEA special agent in Manila. Having thus reserved his right to present evidence in support of his position, which is the basis for the alleged diplomatic immunity, the barren self-serving claim in the belated motion to dismiss cannot be relied upon for a reasonable, intelligent and fair resolution of the issue of diplomatic immunity."[4Scalzo contends that the Vienna Convention on Diplomatic Relations, to which the Philippines is a signatory, grants him absolute immunity from suit, describing his functions as an agent of the United States Drugs Enforcement Agency as conducting surveillance operations on suspected drug dealers in the Philippines believed to be the source of prohibited drugs being shipped to the U.S., (and) having ascertained the target, (he then) would inform the Philippine narcotic agents (to) make the actual arrest." Scalzo has submitted to the trial court a number of documents -1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;2. Exh. '1' - Certification of Vice Consul Donna K. Woodward dated 11 June 1990;3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;4. Exh. '6' - Diplomatic Note No. 791 dated 17 November 1992; and5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia, Legal Adviser, Department of Foreign Affairs, dated 27 June 1990 forwarding Embassy Note No. 414 to the Clerk of Court of RTC Manila, Branch 19 (the trial court);7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st Indorsement (Exh. '3'); and

8. Exh. '8' - Letter dated 18 November 1992 from the Office of the Protocol, Department of Foreign Affairs, through Asst. Sec. Emmanuel Fernandez, addressed to the Chief Justice of this Court.[5The documents, according to Scalzo, would show that: (1) the United States Embassy accordingly advised the Executive Department of the Philippine Government that Scalzo was a member of the diplomatic staff of the United States diplomatic mission from his arrival in the Philippines on 14 October 1985 until his departure on 10 August 1988; (2) that the United States Government was firm from the very beginning in asserting the diplomatic immunity of Scalzo with respect to the case pursuant to the provisions of the Vienna Convention on Diplomatic Relations; and (3) that the United States Embassy repeatedly urged the Department of Foreign Affairs to take appropriate action to inform the trial court of Scalzos diplomatic immunity. The other documentary exhibits were presented to indicate that: (1) the Philippine government itself, through its Executive Department, recognizing and respecting the diplomatic status of Scalzo, formally advised the Judicial Department of his diplomatic status and his entitlement to all diplomatic privileges and immunities under the Vienna Convention; and (2) the Department of Foreign Affairs itself authenticated Diplomatic Note No. 414. Scalzo additionally presented Exhibits "9" to "13" consisting of his reports of investigation on the surveillance and subsequent arrest of Minucher, the certification of the Drug Enforcement Administration of the United States Department of Justice that Scalzo was a special agent assigned to the Philippines at all times relevant to the complaint, and the special power of attorney executed by him in favor of his previous counsel[6 to show (a) that the United States Embassy, affirmed by its Vice Consul, acknowledged Scalzo to be a member of the diplomatic staff of the United States diplomatic mission from his arrival in the Philippines on 14 October 1985 until his departure on 10 August 1988, (b) that, on May 1986, with the cooperation of the Philippine law enforcement officials and in the exercise of his functions as member of the mission, he investigated Minucher for alleged trafficking in a prohibited drug, and (c) that the Philippine Department of Foreign Affairs itself recognized that Scalzo during his tour of duty in the Philippines (14 October 1985 up to 10 August 1988) was listed as being an Assistant Attach of the United States diplomatic mission and accredited with diplomatic status by the Government of the Philippines. In his Exhibit 12, Scalzo described the functions of the overseas office of the United States Drugs Enforcement Agency, i.e., (1) to provide criminal investigative expertise and assistance to foreign law enforcement agencies on narcotic and drug control programs upon the request of the host country, 2) to establish and maintain liaison with the host country and counterpart foreign law enforcement officials, and 3) to conduct complex criminal investigations involving international criminal conspiracies which affect the interests of the United States.The Vienna Convention on Diplomatic Relations was a codification of centuries-old customary law and, by the time of its ratification on 18 April 1961, its rules of law had long become stable. Among the city states of ancient Greece, among the peoples of the Mediterranean before the establishment of the Roman Empire, and among the states of India, the person of the herald in time of war and the person of the diplomatic envoy in time of peace were universally held sacrosanct.[7 By the end of the 16th century, when the earliest treatises on diplomatic law were published, the inviolability of ambassadors was firmly established as a rule of customary international law.[8 Traditionally, the exercise of diplomatic intercourse among states was undertaken by the head of state himself, as being the preeminent embodiment of the state he represented, and the foreign secretary, the official usually entrusted with the external affairs of the state. Where a state would wish to have a more prominent diplomatic presence in the receiving state, it would then send to the latter a diplomatic mission. Conformably with the Vienna Convention, the functions of the diplomatic mission involve, by and large, the representation of the interests of the sending state and promoting friendly relations with the receiving state.[9The Convention lists the classes of heads of diplomatic missions to include (a) ambassadors or nuncios accredited to the heads of state,[10 (b) envoys,[11 ministers or internuncios accredited to the heads of states; and (c) charges d' affairs[12 accredited to the ministers of foreign affairs.[13 Comprising the "staff of the (diplomatic) mission" are the diplomatic staff, the administrative staff and the technical and service staff. Only the heads of missions, as well as members of the diplomatic staff, excluding the members of the administrative, technical and service staff of the mission, are accorded diplomatic rank. Even while the Vienna Convention on Diplomatic Relations provides for immunity to the members of diplomatic missions, it does so, nevertheless, with an understanding that the same be restrictively applied. Only "diplomatic agents," under the terms of the Convention, are vested with blanket diplomatic immunity from civil and criminal suits. The Convention defines "diplomatic agents" as the heads of missions or members of the diplomatic staff, thus impliedly withholding the same privileges from all others. It might bear stressing that even consuls, who represent their respective states in concerns of

commerce and navigation and perform certain administrative and notarial duties, such as the issuance of passports and visas, authentication of documents, and administration of oaths, do not ordinarily enjoy the traditional diplomatic immunities and privileges accorded diplomats, mainly for the reason that they are not charged with the duty of representing their states in political matters. Indeed, the main yardstick in ascertaining whether a person is a diplomat entitled to immunity is the determination of whether or not he performs duties of diplomatic nature.Scalzo asserted, particularly in his Exhibits 9 to 13, that he was an Assistant Attach of the United States diplomatic mission and was accredited as such by the Philippine Government. An attach belongs to a category of officers in the diplomatic establishment who may be in charge of its cultural, press, administrative or financial affairs. There could also be a class of attaches belonging to certain ministries or departments of the government, other than the foreign ministry or department, who are detailed by their respective ministries or departments with the embassies such as the military, naval, air, commercial, agricultural, labor, science, and customs attaches, or the like. Attaches assist a chief of mission in his duties and are administratively under him, but their main function is to observe, analyze and interpret trends and developments in their respective fields in the host country and submit reports to their own ministries or departments in the home government.[14 These officials are not generally regarded as members of the diplomatic mission, nor are they normally designated as having diplomatic rank.In an attempt to prove his diplomatic status, Scalzo presented Diplomatic Notes Nos. 414, 757 and 791, all issued post litem motam, respectively, on 29 May 1990, 25 October 1991 and 17 November 1992. The presentation did nothing much to alleviate the Court's initial reservations in G.R. No. 97765, viz:"While the trial court denied the motion to dismiss, the public respondent gravely abused its discretion in dismissing Civil Case No. 88-45691 on the basis of an erroneous assumption that simply because of the diplomatic note, the private respondent is clothed with diplomatic immunity, thereby divesting the trial court of jurisdiction over his person.x x xAnd now, to the core issue - the alleged diplomatic immunity of the private respondent. Setting aside for the moment the issue of authenticity raised by the petitioner and the doubts that surround such claim, in view of the fact that it took private respondent one (1) year, eight (8) months and seventeen (17) days from the time his counsel filed on 12 September 1988 a Special Appearance and Motion asking for a first extension of time to file the Answer because the Departments of State and Justice of the United States of America were studying the case for the purpose of determining his defenses, before he could secure the Diplomatic Note from the US Embassy in Manila, and even granting for the sake of argument that such note is authentic, the complaint for damages filed by petitioner cannot be peremptorily dismissed.

x x x

"There is of course the claim of private respondent that the acts imputed to him were done in his official capacity. Nothing supports this self-serving claim other than the so-called Diplomatic Note. x x x. The public respondent then should have sustained the trial court's denial of the motion to dismiss. Verily, it should have been the most proper and appropriate recourse. It should not have been overwhelmed by the self-serving Diplomatic Note whose belated issuance is even suspect and whose authenticity has not yet been proved. The undue haste with which respondent Court yielded to the private respondent's claim is arbitrary."A significant document would appear to be Exhibit No. 08, dated 08 November 1992, issued by the Office of Protocol of the Department of Foreign Affairs and signed by Emmanuel C. Fernandez, Assistant Secretary, certifying that "the records of the Department (would) show that Mr. Arthur W. Scalzo, Jr., during his term of office in the Philippines (from 14 October 1985 up to 10 August 1988) was listed as an Assistant Attach of the United States diplomatic mission and was, therefore, accredited diplomatic status by the Government of the Philippines." No certified true copy of such "records," the supposed bases for the belated issuance, was presented in evidence.Concededly, vesting a person with diplomatic immunity is a prerogative of the executive branch of the government. In World Health Organization vs. Aquino,[15 the Court has recognized that, in such matters, the hands of the courts are virtually tied. Amidst apprehensions of indiscriminate and incautious grant of immunity, designed to gain exemption from the jurisdiction of courts, it should behoove the Philippine government, specifically its Department of Foreign Affairs, to be most circumspect, that should particularly

be no less than compelling, in its post litem motamissuances. It might be recalled that the privilege is not an immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the exercise of territorial jurisdiction.[16 The government of the United States itself, which Scalzo claims to be acting for, has formulated its standards for recognition of a diplomatic agent. The State Department policy is to only concedediplomatic status to a person who possesses an acknowledged diplomatic title and performs duties of diplomatic nature.[17Supplementary criteria for accreditation are the possession of a valid diplomatic passport or, from States which do not issue such passports, a diplomatic note formally representing the intention to assign the person to diplomatic duties, the holding of a non-immigrant visa, being over twenty-one years of age, and performing diplomatic functions on an essentially full-time basis.[18 Diplomatic missions are requested to provide the most accurate and descriptive job title to that which currently applies to the duties performed. The Office of the Protocol would then assign each individual to the appropriate functional category.19

But while the diplomatic immunity of Scalzo might thus remain contentious, it was sufficiently established that, indeed, he worked for the United States Drug Enforcement Agency and was tasked to conduct surveillance of suspected drug activities within the country on the dates pertinent to this case. If it should be ascertained that Arthur Scalzo was acting well within his assigned functions when he committed the acts alleged in the complaint, the present controversy could then be resolved under the related doctrine of State Immunity from Suit.The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary international law then closely identified with the personal immunity of a foreign sovereign from suit[20 and, with the emergence of democratic states, made to attach not just to the person of the head of state, or his representative, but also distinctly to the state itself in its sovereign capacity.[21 If the acts giving rise to a suit are those of a foreign government done by its foreign agent, although not necessarily a diplomatic personage, but acting in his official capacity, the complaint could be barred by the immunity of the foreign sovereign from suit without its consent. Suing a representative of a state is believed to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an individual but for the State, in whose service he is, under the maxim - par in parem, non habet imperium - that all states are sovereign equals and cannot assert jurisdiction over one another.[22 The implication, in broad terms, is that if the judgment against an official would require the state itself to perform an affirmative act to satisfy the award, such as the appropriation of the amount needed to pay the damages decreed against him, the suit must be regarded as being against the state itself, although it has not been formally impleaded.[23In United States of America vs. Guinto,24 involving officers of the United States Air Force and special officers of the Air Force Office of Special Investigators charged with the duty of preventing the distribution, possession and use of prohibited drugs, this Court has ruled -"While the doctrine (of state immunity) appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. x x x. It cannot for a moment be imagined that they were acting in their private or unofficial capacity when they apprehended and later testified against the complainant. It follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given its consent to be sued. x x x As they have acted on behalf of the government, and within the scope of their authority, it is that government, and not the petitioners personally, [who were] responsible for their acts."[25This immunity principle, however, has its limitations. Thus, Shauf vs. Court of Appeals[26 elaborates:It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and injurious to the rights of the plaintiff. As was clearly set forth by Justice Zaldivar in Director of the Bureau of Telecommunications, et al., vs. Aligaen, et al. (33 SCRA 368): `Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit in equity against a State officer or the director of a State department on the ground that, while claiming to act for the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent. The rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice.

x x x

(T)he doctrine of immunity from suit will not apply and may not be invoked where the public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and agents of the government is removed the moment they are sued in their individual capacity. This situation usually arises where the public official acts without authority or in excess of the powers vested in him. It is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith or beyond the scope of his authority and jurisdiction.27

A foreign agent, operating within a territory, can be cloaked with immunity from suit but only as long as it can be established that he is acting within the directives of the sending state. The consent of the host state is an indispensable requirement of basic courtesy between the two sovereigns. Guinto and Shauf both involve officers and personnel of the United States, stationed within Philippine territory, under the RP-US Military Bases Agreement. While evidence is wanting to show any similar agreement between the governments of the Philippines and of the United States (for the latter to send its agents and to conduct surveillance and related activities of suspected drug dealers in the Philippines), the consent or imprimatur of the Philippine government to the activities of the United States Drug Enforcement Agency, however, can be gleaned from the facts heretofore elsewhere mentioned. The official exchanges of communication between agencies of the government of the two countries, certifications from officials of both the Philippine Department of Foreign Affairs and the United States Embassy, as well as the participation of members of the Philippine Narcotics Command in the buy-bust operation conducted at the residence of Minucher at the behest of Scalzo, may be inadequate to support the "diplomatic status" of the latter but they give enough indication that the Philippine government has given its imprimatur, if not consent, to the activities within Philippine territory of agent Scalzo of the United States Drug Enforcement Agency. The job description of Scalzo has tasked him to conduct surveillance on suspected drug suppliers and, after having ascertained the target, to inform local law enforcers who would then be expected to make the arrest. In conducting surveillance activities on Minucher, later acting as the poseur-buyer during the buy-bust operation, and then becoming a principal witness in the criminal case against Minucher, Scalzo hardly can be said to have acted beyond the scope of his official function or duties.All told, this Court is constrained to rule that respondent Arthur Scalzo, an agent of the United States Drug Enforcement Agency allowed by the Philippine government to conduct activities in the country to help contain the problem on the drug traffic, is entitled to the defense of state immunity from suit.WHEREFORE, on the foregoing premises, the petition is DENIED. No costs.SO ORDERED.

minucher v. CA 214 SCRA 242 (1992)

MINUCHER v. CA (September 24, 1992)

Petitioner: KHOSROW MINUCHER

Respondents: CA & ARTHUR W. CALZO, JR.

Nature: PETITION for review of the decision of the Court of Appeals

Ponente: DAVIDE, JR., J.

1. CALZO FRAMES UP MINUCHER FOR POSSESSION OF HEROIN. Calzo, an agent of the Drug

Enforcement Administration of Department of Justice of the USA ordered from Minucher, a labor attaché

of the Iran Embassy in Manila Iranian were introduced by a common associate, Inigo. Calzo offered to

help Minucher with his problem with his family’s US visas for a fee of $2,000. Calzo also found buyers of

certain Iranian goods which Calzo was selling such as silk and carpets. So, Calzo came to the residence

of Minucher and asked to be entrusted with a pair of Persian silk carpets with a floor price of $24,000

each, for which he had a buyer. The following day, Calzo returned to Minucher’s residence, took the

carpets and gave the latter $24,000; after about an hour, Calzo returned, claimed that he had already

made arrangements with his contacts at the American Embassy concerning the visas and asked for

$2,000. He was given this amount. It turned out, however, that Calzo had prepared an elaborate plan to

frame-up Minucher for alleged trafficking; both were falsely arrested by Calzo and some American and

Filipino police officers, and were taken to Camp Crame in their underwear. Calzo and his companions

took petitioner’s 3 suitcases containing various documents, his wallet containing money and the keys to

his house and car, as well as the $24,000 which Calzo had earlier delivered to him. Minucher and his

companion, Torabian were handcuffed together for 3 days and were not given food and water; they were

asked to confess to the possession of heroin or else they would be jailed or even executed by Iranian

terrorists. Consequently, the two were charged for the violation of Section 4 of RA. No. 6425 (Dangerous

Drugs Act of 1972) before the Pasig RTC. They were, however, acquitted by the said court. Calzo

testified for the prosecution in the said case.

2. COMPLAINT FOR DAMAGES. Minucher files a complaint for damages against Calzo and alleges that

Calzo falsely testified against him in the criminal case. Minucher also avers that charges of unlawful

arrest, robbery and estafa or swindling have already been filed against the Calzo. He therefore prays for

actual and compensatory damages of not less than P480,000 ($24,000) representing the fair market

value of the Persian silk carpet and $2,000 representing the refund of the amount he had given for the

visas; moral damages in the amount of P5 million; exemplary damages in the sum of P100,000 and

attorney’s fees of at least P200,000 to answer for litigation expenses incurred for his defense in the

criminal case and for the prosecution of the civil case,

3. SPECIAL APPEARANCE TO QUASH SUMMONS. Calzo’s counsel, the law firm LUNA, SISON AND

MANAS, filed a Special Appearance and Motion alleging therein that since Calzo is an agent of the Drug

Enforcement Administration of the USA, and the acts and omissions complained of were performed by

him in the performance of official functions, the case is now under study by the Departments of State and

Justice in Washington, D.C. for the purpose of determining what defenses would be appropriate; said

counsel also prayed that the period to answer be extended. Then, counsel filed a Special Appearance to

Quash Summons alleging therein that: The action being it personal action for damages arising from an

alleged tort, the defendant being outside the Philippines and not being a resident of the Philippines,

Defendant is beyond the processes of this court,” and praying that the summons issued be quashed. The

trial court denied the motion in its Order. Unsatisfied with the said order, Calzo filed a petition for certiorari

with the CA. In its Decision, the CA dismissed the petition for lack of merit. Calzo elevated the case to the

SC but was dismissed due to non-compliance with par 2 of Circular No. 1-88 and its failure to show that

the CA had committed any reversible error. 

4. CALZO FILED HIS ANSWER. Thereafter, Calzo filed with the trial court his Answer in the civil case

wherein he denies the material allegations in the complaint, sets forth the following Affirmative Defenses:

“The Complaint fails to state a cause of action: in having Minucher and Torabian arrested and detained at

Camp Crame; a quantity of heroin, seized from plaintiff by Philippine police authorities and in seizing the

money used in the drug transaction, defendant acted in the discharge of his official duties or otherwise in

the performance of his official functions as agent of the Drug Enforcement Administration, U.S.

Department of Justice and interposes a counterclaim for P100,000 to answer for attorney’s fees and the

expenses of litigation.”

5. CALZO’S MTD BASED ON A DIPLOMATIC NOTE. Calzo filed a Motion to Dismiss the case on the

ground that as per the copy of Diplomatic Note No. 414 issued by the Embassy of the United States of

America,13 dated 29 May 1990 and certified to be a true and faithful copy of the original by one Donald K.

Woodward, Vice Consul of the United States of America on 11 June 1990, the Embassy advised the

Department of Foreign Affairs of the Republic of the Philippines that:

“x x x Arthur W. Scalzo, was a member of the diplomatic staff of the United States diplomatic mission from

his arrival in the Philippines on October 14, 1985 until his departure on August 10, 1988. x x x

x x x in May 1986, with the cooperation of Philippine law enforcement officials and in the exercise of his

functions as a member of the mission, Mr. Scalzo investigated Mr. Khosrow Minucher, the plaintiff in the

aforementioned case for allegedly trafficking in a prohibited drug. It is this investigation which has given

rise to the plaintiff’s complaint. The Embassy takes note of the provisions of Article 39(2) of the Vienna

Convention on Diplomatic Relations, which provides that Mr. Scalzo retains immunity from civil suit for

sets performed in the exercise of his functions, as is the caw here, even though he has departed (sic) the

country.”

The trial court issued an order denying the motion for being “devoid of merit.”

6. CA DISMISSED CASE. Calzo then filed with the CA a petition for certiorari. CA promulgated a Decision

dismissing the case due to the trial court’s lack of jurisdiction over the person of the defendant because

the latter possessed diplomatic immunity. MR denied because: “When therefore Mr. Scalzo testified in the

Criminal Case against Khosrow Minucher it was in connection with his official functions as an agent of the

Drug Enforcement Administration of the United States and member (sic) of the American Mission charged

with cooperating with the Philippine law enforcement agency. He therefore, enjoys immunity from criminal

and civil jurisdiction of the receiving State under Article 31 of the Vienna Convention on Diplomatic

Relations.” Hence, this petition for review under Rule 45 of the Rules of Court. 

ISSUE: WON a complaint for damages should be dismissed on the sole basis of a statement contained in

a Diplomatic Note, belatedly issued after an answer to the said complaint had already been filed, that the

defendant was a member of the diplomatic staff of the United States Diplomatic Mission in the Philippines

at the time the cause of action accrued? 

HELD: NO.

7. CORRECT GROUND TO DISMISS: FAILURE TO STATE A COA. While the trial court correctly denied

the motion to dismiss, the CA gravely abused its discretion in dismissing the civil case on the basis of an

erroneous assumption that simply-because of the Diplomatic Note, the private respondent is clothed with

diplomatic immunity, thereby divesting the trial court of jurisdiction over his person. It may at once be

stated that even if the Calzo enjoys diplomatic immunity, a dismissal of the case cannot be ordered on the

ground of lack of jurisdiction over his person, but rather for lack of a cause of action because even if he

committed the imputed act and could have been otherwise made liable therefor, his immunity would bar

any suit against him in connection therewith and would prevent recovery of damages arising therefrom. 

8. COURT ACQUIRED JURISDICTION OVER CALZO. Jurisdiction over the person of the defendant is

acquired either by his voluntary appearance or by the service of summons upon him. While in the instant

case, private respondent’s counsel filed, on 26 October 1988, a motion to quash summons because being

outside the Philippines and being a non-resident alien, he is beyond the processes of the court, which

was properly denied by the trial court, he had in effect already waived any defect in the service of the

summons by earlier asking, on 2 occasions, for an extension of time to file an answer, and by ultimately

filing an Answer with Counterclaim. There is no question that the trial court acquired jurisdiction over the

person of the private respondent.

9. THE CASE SHOULD NOT HAVE BEEN DISMISSED. The complaint for damages filed by the

Minucher still cannot be peremptorily dismissed. Said complaint contains sufficient allegations which

indicate that the private respondent committed the imputed acts in his personal capacity and outside the

scope of his official duties and functions. As described in the complaint, he committed criminal acts for

which he is also civilly liable. In the Special Appearance to Quash Summons earlier alluded to, an the

other hand, private respondent maintains that the claim for damages arose “from an alleged tort.”

Whether such claim arises from criminal acts or from tort, there can be no question that private

respondent was sued in his personal capacity for acts committed outside his official functions duties. In

the decision acquitting petitioner in the criminal case involving the violation of the Dangerous Drugs Act,

copy of which is attached to his complaint for damages and which must be deemed as an integral part

thereof, the trial court gave full credit to petitioner’s theory that he was a victim of a frame-up instigated by

the private respondent. Thus, there is a prima facie showing in the complaint that indeed private

respondent could be held personally liable for the acts committed beyond his official functions or duties.

10. REITERATED DOCTRINE IN SHAUF. In Shauf vs. Court of Appeals, after citing pertinent authorities,

this Court ruled: “The aforecited authorities are clear on the matter. They state that the doctrine of

immunity from suit will not apply and may not be invoked where the public official is being sued in his

private and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and

agents of the government is removed the moment they are sued in their individual capacity. This situation

usually arises where the public official acts without authority or in excess of the powers vested in him. It is

a well-settled principle of law that a public official may be liable in his personal private capacity for

whatever damage he may haw mused by his act done with malice and in bad faith, or beyond the scope

of his authority or jurisdiction (Dumlao vs. Court of Appeals, et al., 114 SCRA 247 [1982]).”

11. ARTICLE 31 OF THE VIENNA CONVENTION ON DIPLOMATIC RELATIONS admits of exceptions. It

reads:

“I. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall

also enjoy immunity from its civil and administrative jurisdiction except in the case of an action relating to

any professional or commercial activity exercised by the diplomatic agent in the receiving State, outside

his official functions. (Emphasis supplied).

12. NO EVIDENCE TO PROVE HE ACTED IN HIS OFFICIAL CAPACITY. There is of course the claim of

private respondent that the act imputed to him were done in his official capacity. Nothing supports this

self-serving claim other than the so-called Diplomatic Note. In short, insofar as the records are concerned,

Calzo did not come forward with evidence to prove that indeed, he had acted in his official capacity. It

does not appear that an actual hearing on the motion to dismiss was conducted and that Calzo offered

evidence in support thereof. Thus, it is apropos to quote what this Court stated in United States of

America vs. Guinto:

“But even as we are, certain that the individual petitioners in G.R. No. 80018 were acting in the discharge

of their official functions, we hesitate to make the same conclusion in G.R. No. 80258. The contradictory

factual allegations in this case deserve in our view a closer study of what actually happened to the

plaintiffs. The record is too meager to indicate if the defendants were really discharging their official duties

or had actually exceeded their authority when the incident in question occurred. Lacking this information,

this Court cannot directly decide this case. The needed inquiry must first be made by the lower court so it

may assess and resolve the conflicting claims of the parties on the basis of the evidence that has yet to

be presented at the trial. Only after it shall have determined in what capacity the petitioners were acting at

the time of the incident in question will this Court determine, if still necessary, if the doctrine of state

immunity is applicable.”

It may be mentioned in this regard that Calzo himself, in his Pre-trial Brief, unequivocally states that he

would present documentary evidence consisting of DEA records on his investigation and surveillance of

plaintiff and on his position and duties as DEA special agent in Manila. Having thus reserved his right to

present evidence in support of his position, which is the basis for the alleged diplomatic immunity, the

barren self-serving claim in the belated motion to dismiss cannot be relied upon for a reasonable,

intelligent and fair resolution of the issue of diplomatic immunity.

The public respondent then should have sustained the trial court’s denial of the motion to dismiss. Verily,

such should have been the most proper and appropriate recourse. It should not have been overwhelmed

by the self-serving Diplomatic Note whose belated issuance is even suspect and whose authenticity has

not yet been proved. The undue haste with which the CA yielded to the private respondent’s claim is

arbitrary. 

DISPOSITION. WHEREFORE, the challenged decision of the CA is SET ASIDE and the Order of the

Regional Trial Court of Manila denying private respondent’s Motion to Dismiss is hereby REINSTATED.

BAYAN vs. Zamora G.R. No. 138570 October 10,   2000

July 11, 2009 at 9:51 am (1) 

FACTS :

On March 14, 1947, the Philippines and the United States of America forged a military bases

agreement which formalized, among others, the use of installations in the Philippine territory

by the US military personnel. To further strengthen their defense and security relationship,

the Philippines and the US entered into a Mutual Defense Treaty on August 30, 1951. Under

the treaty, the parties agreed to respond to any external armed attack on their territory,

armed forces, public vessels and aircraft.

In 1991, with the expiration of RP-US Military Bases Agreement, the periodic military

exercises between the two countries were held in abeyance. However, the defence and

security relationship continued pursuant to the Mutual Defense Treaty. On July 18, 1997 RP

and US exchanged notes and discussed, among other things,  the possible elements of the

Visiting Forces Agreement (VFA). Negotiations by both panels on VFA led to a consolitdated

draft text and a series of conferences. Eventually, President Fidel V. Ramos approved the

VFA.

On October 5, 1998 President Joseph E. Estrada ratified the VFA thru respondent Secretary

of Foreign Affairs. On October 6, 1998, the President, acting thru Executive Secretary

Zamora officially transmitted to the Senate, the Instrument of Ratification, letter of the

President and the VFA for approval. It was approved by the Senate by a 2/3 vote of its

members. On June 1, 1999, the VFA officially entered into force after an exchange of notes

between Secretary Siazon and US Ambassador Hubbard.

The VFA provides for the mechanism for regulating the circumstances and conditions under

which US Armed Forces and defense personnel may be present in the Philippines. Hence this

petition for certiorari and prohibition, assailing the constitutionality of the VFA and imputing

grave abuse of discretion to respondents in ratifying the agreement.

ISSUE : Whether or not the VFA is unconstitutional.

RULING :

Petition is dismissed.

The 1987 Philippine Constitution contains two provisions requiring the concurrence of the

Senate on treaties or international agreements. Sec. 21 Art. VII, which respondent invokes,

reads: “No treaty or international agreement shall be valid and effective unless concurred in

by at least 2/3 of all the Members of the Senate. Sec. 25 Art. XVIII provides : “After the

expiration in 1991 of the Agreement between the RP and the US concerning Military Bases,

foreign military bases, troops or facilities shall not be allowed in the Philippines except under

a treaty duly concurred in and when the Congress so requires, ratified by a majority of votes

cast by the people in a national referendum held for that purpose, and recognized as a

treaty by the Senateby the other contracting state”.

The first cited provision applies to any form of  treaties and international agreements in

general with a wide variety of subject matter. All treaties and international agreements

entered into by the Philippines, regardless of subject matter, coverage or particular

designation requires the concurrence of the Senate to be valid and effective.

In contrast, the second cited provision applies to treaties which involve presence of foreign

military bases, troops and facilities in the Philippines. Both constitutional provisions share

some common ground. The fact that the President referred the VFA to the Senate under Sec.

21 Art. VII, and that Senate extended its concurrence under the same provision is

immaterial.

Undoubtedly, Sec. 25 Art. XVIII which specifically deals with treaties involving foreign

military bases and troops should apply in the instant case. Hence, for VFA to be

constitutional it must sufficiently meet the following requisites :

a) it must be under a treaty

b) the treaty must be duly concurred in by the Senate, and when so required by Congress,

ratified by a majority of votes cast by the people in a national referendum

c) recognized as a treaty by the other contracting State

There is no dispute in the presence of the first two requisites.  The third requisite implies

that the other contracting party accepts or acknowledges the agreement as a treaty.

Moreover, it is inconsequential whether the US treats the VFA only as an executive

agreement because, under international law, an executive agreement is as binding as a

treaty. They are equally binding obligations upon nations. Therefore, there is indeed marked

compliance with the mandate of the constitution.

The court also finds that there is no grave abuse of discretion on the part of the executive

department as to their power to ratify the VFA.

G.R. No. 101538 June 23, 1992

AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto Santos, petitioner, vs.NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.

 

CRUZ, J.:

This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention, reading as follows:

Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination.

The petitioner is a minor and a resident of the Philippines. Private respondent Northwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines.

On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The scheduled departure date from Tokyo was December 20, 1986. No date was specified for his return to San Francisco. 1

On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco airport for his scheduled departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight from Tokyo to Manila. He therefore had to be wait-listed.

On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of jurisdiction. Citing the above-quoted article, it contended that the complaint could be instituted only in the territory of one of the High Contracting Parties, before:

1. the court of the domicile of the carrier;

2. the court of its principal place of business;

3. the court where it has a place of business through which the contract had been made;

4. the court of the place of destination.

The private respondent contended that the Philippines was not its domicile nor was this its principal place of business. Neither was the petitioner's ticket issued in this country nor was his destination Manila but San Francisco in the United States.

On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The petitioner appealed to the Court of Appeals, which affirmed the decision of the lower court. 3 On June 26, 1991, the petitioner filed a motion for reconsideration, but the same was denied. 4 The petitioner then came to this Court, raising substantially the same issues it submitted in the Court of Appeals.

The assignment of errors may be grouped into two major issues, viz:

(1) the constitutionality of Article 28(1) of the Warsaw Convention; and

(2) the jurisdiction of Philippine courts over the case.

The petitioner also invokes Article 24 of the Civil Code on the protection of minors.

I

THE ISSUE OF CONSTITUTIONALITY

A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw Convention violates the constitutional guarantees of due process and equal protection.

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto. "to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof." 5

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country.

The petitioner contends that Article 28(1) cannot be applied in the present case because it is unconstitutional. He argues that there is no substantial distinction between a person who purchases a ticket in Manila and a person who purchases his ticket in San Francisco. The classification of the places in which actions for damages may be brought is arbitrary and irrational and thus violates the due process and equal protection clauses.

It is well-settled that courts will assume jurisdiction over a constitutional question only if it is shown that the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights susceptible of judicial determination; the constitutional question must have been opportunely raised by the proper party; and the resolution of the question is unavoidably necessary to the decision of the case itself. 6

Courts generally avoid having to decide a constitutional question. This attitude is based on the doctrine of separation of powers, which enjoins upon the departments of the government a becoming respect for each other's acts.

The treaty which is the subject matter of this petition was a joint legislative-executive act. The presumption is that it was first carefully studied and determined to be constitutional before it was adopted and given the force of law in this country.

The petitioner's allegations are not convincing enough to overcome this presumption. Apparently, the Convention considered the four places designated in Article 28 the most convenient forums for the litigation of any claim that may arise between the airline and its passenger, as distinguished from all other places. At any rate, we agree with the respondent court that this case can be decided on other grounds without the necessity of resolving the constitutional issue.

B. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the Warsaw Convention is inapplicable because of a fundamental change in the circumstances that served as its basis.

The petitioner goes at great lengths to show that the provisions in the Convention were intended to protect airline companies under "the conditions prevailing then and which have long ceased to exist." He argues that in view of the significant developments in the airline industry through the years, the treaty has become irrelevant. Hence, to the extent that it has lost its basis for approval, it has become unconstitutional.

The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this doctrine constitutes an attempt to formulate a legal principle which would justify non-performance of a treaty obligation if the conditions with relation to which the parties contracted have changed so materially and so unexpectedly as to create a situation in which the exaction of performance would be unreasonable." 7 The key element of this doctrine is the vital change in the condition of the contracting parties that they could not have foreseen at the time the treaty was concluded.

The Court notes in this connection the following observation made in Day v. Trans World Airlines, Inc.: 8

The Warsaw drafters wished to create a system of liability rules that would cover all the hazards of air travel . . . The Warsaw delegates knew that, in the years to come, civil aviation would change in ways that they could not foresee. They wished to design a system of air law that would be both durable and flexible enough to keep pace with these changes . . . The ever-changing needs of the system of civil aviation can be served within the framework they created.

It is true that at the time the Warsaw Convention was drafted, the airline industry was still in its infancy. However, that circumstance alone is not sufficient justification for the rejection of the treaty at this time. The changes recited by the petitioner were, realistically, not entirely unforeseen although they were expected in a general sense only. In fact, the Convention itself, anticipating such developments, contains the following significant provision:

Article 41. Any High Contracting Party shall be entitled not earlier than two years after the coming into force of this convention to call for the assembling of a new international conference in order to consider any improvements which may be made in this convention. To this end, it will communicate with the Government of the French Republic which will take the necessary measures to make preparations for such conference.

But the more important consideration is that the treaty has not been rejected by the Philippine government. The doctrine of rebus sic stantibus does not operate automatically to render the treaty inoperative. There is a necessity for a formal act of rejection, usually made by the head of State, with a statement of the reasons why compliance with the treaty is no longer required.

In lieu thereof, the treaty may be denounced even without an expressed justification for this action. Such denunciation is authorized under its Article 39, viz:

Article 39. (1) Any one of the High Contracting Parties may denounce this convention by a notification addressed to the Government of the Republic of Poland, which shall at once inform the Government of each of the High Contracting Parties.

(2) Denunciation shall take effect six months after the notification of denunciation, and shall operate only as regards the party which shall have proceeded to denunciation.

Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or pursuant to Article 39, is not a function of the courts but of the other branches of government. This is a political act. The conclusion and renunciation of treaties is the prerogative of the political departments and may not be usurped by the judiciary. The courts are concerned only with the interpretation and application of laws and treaties in force and not with their wisdom or efficacy.

C. The petitioner claims that the lower court erred in ruling that the plaintiff must sue in the United States, because this would deny him the right to access to our courts.

The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the United States would constitute a constructive denial of his right to access to our courts for the protection of his rights. He would consequently be deprived of this vital guaranty as embodied in the Bill of Rights.

Obviously, the constitutional guaranty of access to courts refers only to courts with appropriate jurisdiction as defined by law. It does not mean that a person can go to any court for redress of his grievances regardless of the nature or value of his claim. If the petitioner is barred from filing his complaint before our courts, it is because they are not vested with the appropriate jurisdiction under the Warsaw Convention, which is part of the law of our land.

II

THE ISSUE OF JURISDICTION.

A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw Convention is a rule merely of venue and was waived by defendant when it did not move to dismiss on the ground of improper venue.

By its own terms, the Convention applies to all international transportation of persons performed by aircraft for hire.

International transportation is defined in paragraph (2) of Article 1 as follows:

(2) For the purposes of this convention, the expression "international transportation" shall mean any transportation in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation or a transshipment, are situated [either] within the territories of two High Contracting Parties . . .

Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its passenger.

Since the flight involved in the case at bar is international, the same being from the United States to the Philippines and back to the United States, it is subject to the provisions of the Warsaw Convention, including Article 28(1), which enumerates the four places where an action for damages may be brought.

Whether Article 28(1) refers to jurisdiction or only to venue is a question over which authorities are sharply divided. While the petitioner cites several cases holding that Article 28(1) refers to venue rather than jurisdiction, 9 there are later cases cited by the private respondent supporting the conclusion that the provision is jurisdictional. 10

Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon d court which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong county may be waived by the failure of the defendant to make a timely objection. In either case, the court may render a valid judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether or not a prohibition exists against their alteration. 11

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a venue provision. First, the wording of Article 32, which indicates the places where the action for damages "must" be brought, underscores the mandatory nature of Article 28(1). Second, this characterization is consistent with one of the objectives of the Convention, which is to "regulate in a uniform manner the conditions of international transportation by air." Third, the Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time when the damage occurred.

This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways, Ltd., 12 where it was held:

. . . Of more, but still incomplete, assistance is the wording of Article 28(2), especially when considered in the light of Article 32. Article 28(2) provides that "questions of procedure shall be governed by the law of the court to which the case is submitted" (Emphasis supplied). Section (2) thus may be read to leave for domestic decision questions regarding the suitability and location of a particular Warsaw Convention case.

In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second question shall be governed by the law of the court to which the case is submitted.

The petitioner submits that since Article 32 states that the parties are precluded "before the damages occurred" from amending the rules of Article 28(1) as to the place where the action may be brought, it would follow that the Warsaw Convention was not intended to preclude them from doing so "after the damages occurred."

Article 32 provides:

Art. 32. Any clause contained in the contract and all special agreements entered into before the damage occurred by which the parties purport to infringe the rules laid down by this convention, whether by deciding the law to be applied, or by altering the rules as to jurisdiction, shall be null and void. Nevertheless for the transportation of goods,

arbitration clauses shall be allowed, subject to this convention, if the arbitration is to take place within one of the jurisdictions referred to in the first paragraph of Article 28.

His point is that since the requirements of Article 28(1) can be waived "after the damages (shall have) occurred," the article should be regarded as possessing the character of a "venue" and not of a "jurisdiction" provision. Hence, in moving to dismiss on the ground of lack of jurisdiction, the private respondent has waived improper venue as a ground to dismiss.

The foregoing examination of Article 28(1) in relation to Article 32 does not support this conclusion. In any event, we agree that even granting arguendo that Article 28(1) is a venue and not a jurisdictional provision, dismissal of the case was still in order. The respondent court was correct in affirming the ruling of the trial court on this matter, thus:

Santos' claim that NOA waived venue as a ground of its motion to dismiss is not correct. True it is that NOA averred in its MOTION TO DISMISS that the ground thereof is "the Court has no subject matter jurisdiction to entertain the Complaint" which SANTOS considers as equivalent to "lack of jurisdiction over the subject matter . . ." However, the gist of NOA's argument in its motion is that the Philippines is not the proper place where SANTOS could file the action — meaning that the venue of the action is improperly laid. Even assuming then that the specified ground of the motion is erroneous, the fact is the proper ground of the motion — improper venue — has been discussed therein.

Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of non-waiver if there are special circumstances justifying this conclusion, as in the petition at bar. As we observed in Javier vs. Intermediate Court of Appeals: 13

Legally, of course, the lack of proper venue was deemed waived by the petitioners when they failed to invoke it in their original motion to dismiss. Even so, the motivation of the private respondent should have been taken into account by both the trial judge and the respondent court in arriving at their decisions.

The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of Appeals, where it was held that Article 28(1) is a venue provision. However, the private respondent avers that this was in effect reversed by the case of Aranas v. United Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision. Neither of these cases is binding on this Court, of course, nor was either of them appealed to us. Nevertheless, we here express our own preference for the later case of Aranas insofar as its pronouncements on jurisdiction conform to the judgment we now make in this petition.

B. The petitioner claims that the lower court erred in not ruling that under Article 28(1) of the Warsaw Convention, this case was properly filed in the Philippines, because Manila was the destination of the plaintiff.

The Petitioner contends that the facts of this case are analogous to those in Aanestad v. Air Canada. 16 In that case, Mrs. Silverberg purchased a round-trip ticket from Montreal to Los Angeles and back to Montreal. The date and time of departure were specified but not of the return flight. The plane crashed while on route from Montreal to Los Angeles, killing Mrs. Silverberg. Her administratrix filed an action for damages against Air Canada in the U.S. District Court of California. The defendant moved to dismiss for lack of jurisdiction but the motion was denied thus:

. . . It is evident that the contract entered into between Air Canada and Mrs. Silverberg as evidenced by the ticket booklets and the Flight Coupon No. 1, was a contract for Air Canada to carry Mrs. Silverberg to Los Angeles on a certain flight, a certain time and a certain class, but that the time for her to return remained completely in her power.

Coupon No. 2 was only a continuing offer by Air Canada to give her a ticket to return to Montreal between certain dates. . . .

The only conclusion that can be reached then, is that "the place of destination" as used in the Warsaw Convention is considered by both the Canadian C.T.C. and the United States C.A.B. to describe at least two "places of destination," viz., the "place of destination" of a particular flight either an "outward destination" from the "point of origin" or from the "outward point of destination" to any place in Canada.

Thus the place of destination under Art. 28 and Art. 1 of the Warsaw Convention of the flight on which Mrs. Silverberg was killed, was Los Angeles according to the ticket, which was the contract between the parties and the suit is properly filed in this Court which has jurisdiction.

The Petitioner avers that the present case falls squarely under the above ruling because the date and time of his return flight to San Francisco were, as in the Aanestad case, also left open. Consequently, Manila and not San Francisco should be considered the petitioner's destination.

The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where the United States District Court (Eastern District of Pennsylvania) said:

. . . Although the authorities which addressed this precise issue are not extensive, both the cases and the commentators are almost unanimous in concluding that the "place of destination" referred to in the Warsaw Convention "in a trip consisting of several parts . . . is the ultimate destination that is accorded treaty jurisdiction." . . .

But apart from that distinguishing feature, I cannot agree with the Court's analysis in Aanestad; whether the return portion of the ticket is characterized as an option or a contract, the carrier was legally bound to transport the passenger back to the place of origin within the prescribed time and. the passenger for her part agreed to pay the fare and, in fact, did pay the fare. Thus there was mutuality of obligation and a binding contract of carriage, The fact that the passenger could forego her rights under the contract does not make it any less a binding contract. Certainly, if the parties did not contemplate the return leg of the journey, the passenger would not have paid for it and the carrier would not have issued a round trip ticket.

We agree with the latter case. The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination.

The petitioner submits that the Butz case could not have overruled the Aanestad case because these decisions are from different jurisdictions. But that is neither here nor there. In fact, neither of these cases is controlling on this Court. If we have preferred the Butz case, it is because, exercising our own freedom of choice, we have decided that it represents the better, and correct, interpretation of Article 28(1).

Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction under the Convention.

The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties

to the Convention that every contract of carriage has one place of departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."

C. The petitioner claims that the lower court erred in not ruling that under Art. 28(1) of the Warsaw Convention, this case was properly filed in the Philippines because the defendant has its domicile in the Philippines.

The petitioner argues that the Warsaw Convention was originally written in French and that in interpreting its provisions, American courts have taken the broad view that the French legal meaning must govern. 18 In French, he says, the "domicile" of the carrier means every place where it has a branch office.

The private respondent notes, however, that in Compagnie Nationale Air France vs. Giliberto, 19 it was held:

The plaintiffs' first contention is that Air France is domiciled in the United States. They say that the domicile of a corporation includes any country where the airline carries on its business on "a regular and substantial basis," and that the United States qualifies under such definition. The meaning of domicile cannot, however, be so extended. The domicile of a corporation is customarily regarded as the place where it is incorporated, and the courts have given the meaning to the term as it is used in article 28(1) of the Convention. (See Smith v. Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d 798, 802; Nudo v. Societe Anonyme Belge d' Exploitation de la Navigation Aerienne Sabena Belgian World Airlines (E.D. pa. 1962). 207 F. Supp, 191; Karfunkel v. Compagnie Nationale Air France (S.D.N.Y. 1977), 427 F. Suppl. 971, 974). Moreover, the structure of article 28(1), viewed as a whole, is also incompatible with the plaintiffs' claim. The article, in stating that places of business are among the bases of the jurisdiction, sets out two places where an action for damages may be brought; the country where the carrier's principal place of business is located, and the country in which it has a place of business through which the particular contract in question was made, that is, where the ticket was bought, Adopting the plaintiffs' theory would at a minimum blur these carefully drawn distinctions by creating a third intermediate category. It would obviously introduce uncertainty into litigation under the article because of the necessity of having to determine, and without standards or criteria, whether the amount of business done by a carrier in a particular country was "regular" and "substantial." The plaintiff's request to adopt this basis of jurisdiction is in effect a request to create a new jurisdictional standard for the Convention.

Furthermore, it was argued in another case 20 that:

. . . In arriving at an interpretation of a treaty whose sole official language is French, are we bound to apply French law? . . . We think this question and the underlying choice of law issue warrant some discussion. . . We do not think this statement can be regarded as a conclusion that internal French law is to be "applied" in the choice of law sense, to determine the meaning and scope of the Convention's terms. Of course, French legal usage must be considered in arriving at an accurate English translation of the French. But when an accurate English translation is made and agreed upon, as here, the inquiry into meaning does not then revert to a quest for a past or present French law to be "applied" for revelation of the proper scope of the terms. It does not follow from the fact that the treaty is written in French that in interpreting it, we are forever chained to French law, either as it existed when the treaty was written or in its present state of development. There is no suggestion in the treaty that French law was intended to govern the meaning of Warsaw's terms, nor have we found any indication to this effect in its legislative history or from our study of its application and interpretation by other courts. Indeed, analysis of the cases indicates that the courts, in interpreting and applying the Warsaw Convention, have, not considered

themselves bound to apply French law simply because the Convention is written in French. . . .

We agree with these rulings.

Notably, the domicile of the carrier is only one of the places where the complaint is allowed to be filed under Article 28(1). By specifying the three other places, to wit, the principal place of business of the carrier, its place of business where the contract was made, and the place of destination, the article clearly meant that these three other places were not comprehended in the term "domicile."

D. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the Warsaw Convention does not apply to actions based on tort.

The petitioner alleges that the gravamen of the complaint is that private respondent acted arbitrarily and in bad faith, discriminated against the petitioner, and committed a willful misconduct because it canceled his confirmed reservation and gave his reserved seat to someone who had no better right to it. In short. the private respondent committed a tort.

Such allegation, he submits, removes the present case from the coverage of the Warsaw Convention. He argues that in at least two American cases, 21 it was held that Article 28(1) of the Warsaw Convention does not apply if the action is based on tort.

This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article in question was interpreted thus:

. . . Assuming for the present that plaintiff's claim is "covered" by Article 17, Article 24 clearly excludes any relief not provided for in the Convention as modified by the Montreal Agreement. It does not, however, limit the kind of cause of action on which the relief may be founded; rather it provides that any action based on the injuries specified in Article 17 "however founded," i.e., regardless of the type of action on which relief is founded, can only be brought subject to the conditions and limitations established by the Warsaw System. Presumably, the reason for the use of the phrase "however founded," in two-fold: to accommodate all of the multifarious bases on which a claim might be founded in different countries, whether under code law or common law, whether under contract or tort, etc.; and to include all bases on which a claim seeking relief for an injury might be founded in any one country. In other words, if the injury occurs as described in Article 17, any relief available is subject to the conditions and limitations established by the Warsaw System, regardless of the particular cause of action which forms the basis on which a plaintiff could seekrelief . . .

The private respondent correctly contends that the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention. The petitioner has apparently misconstrued the import of Article 25(l) of the Convention, which reads as follows:

Art. 25 (1). The carrier shall not be entitled to avail himself of the provisions of this Convention which exclude or limit his liability. if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to willful misconduct.

It is understood under this article that the court called upon to determine the applicability of the limitation provision must first be vested with the appropriate jurisdiction. Article 28(1) is the provision in the Convention which defines that jurisdiction. Article 22 23merely fixes the monetary ceiling for the liability of the carrier in cases covered by the Convention. If the carrier is indeed guilty of willful misconduct, it can

avail itself of the limitations set forth in this article. But this can be done only if the action has first been commenced properly under the rules on jurisdiction set forth in Article 28(1).

III

THE ISSUE OF PROTECTION TO MINORS

The petitioner calls our attention to Article 24 of the Civil Code, which states:

Art. 24. In all contractual property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.

Application of this article to the present case is misplaced. The above provision assumes that the court is vested with jurisdiction to rule in favor of the disadvantaged minor, As already explained, such jurisdiction is absent in the case at bar.

CONCLUSION

A number of countries have signified their concern over the problem of citizens being denied access to their own courts because of the restrictive provision of Article 28(1) of the Warsaw Convention. Among these is the United States, which has proposed an amendment that would enable the passenger to sue in his own domicile if the carrier does business in that jurisdiction. The reason for this proposal is explained thus:

In the event a US citizen temporarily residing abroad purchases a Rome to New York to Rome ticket on a foreign air carrier which is generally subject to the jurisdiction of the US, Article 28 would prevent that person from suing the carrier in the US in a "Warsaw Case" even though such a suit could be brought in the absence of the Convention.

The proposal was incorporated in the Guatemala Protocol amending the Warsaw Convention, which was adopted at Guatemala City on March 8,1971. 24 But it is still ineffective because it has not yet been ratified by the required minimum number of contracting parties. Pending such ratification, the petitioner will still have to file his complaint only in any of the four places designated by Article 28(1) of the Warsaw Convention.

The proposed amendment bolsters the ruling of this Court that a citizen does not necessarily have the right to sue in his own courts simply because the defendant airline has a place of business in his country.

The Court can only sympathize with the petitioner, who must prosecute his claims in the United States rather than in his own country at least inconvenience. But we are unable to grant him the relief he seeks because we are limited by the provisions of the Warsaw Convention which continues to bind us. It may not be amiss to observe at this point that the mere fact that he will have to litigate in the American courts does not necessarily mean he will litigate in vain. The judicial system of that country in known for its sense of fairness and, generally, its strict adherence to the rule of law.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

G.R. No. 127105 June 25, 1999

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.S.C. JOHNSON AND SON, INC., and COURT OF APPEALS, respondents.

 

GONZAGA-REYES, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the decision of the Court of Appeals dated November 7, 1996 in CA-GR SP No. 40802 affirming the decision of the Court of Tax Appeals in CTA Case No. 5136.

The antecedent facts as found by the Court of Tax Appeals are not disputed, to wit:

[Respondent], a domestic corporation organized and operating under the Philippine laws, entered into a license agreement with SC Johnson and Son, United States of America (USA), a non-resident foreign corporation based in the U.S.A. pursuant to which the [respondent] was granted the right to use the trademark, patents and technology owned by the latter including the right to manufacture, package and distribute the products covered by the Agreement and secure assistance in management, marketing and production from SC Johnson and Son, U. S. A.

The said License Agreement was duly registered with the Technology Transfer Board of the Bureau of Patents, Trade Marks and Technology Transfer under Certificate of Registration No. 8064 (Exh. "A").

For the use of the trademark or technology, [respondent] was obliged to pay SC Johnson and Son, USA royalties based on a percentage of net sales and subjected the same to 25% withholding tax on royalty payments which [respondent] paid for the period covering July 1992 to May 1993 in the total amount of P1,603,443.00 (Exhs. "B" to "L" and submarkings).

On October 29, 1993, [respondent] filed with the International Tax Affairs Division (ITAD) of the BIR a claim for refund of overpaid withholding tax on royalties arguing that, "the antecedent facts attending [respondent's] case fall squarely within the same circumstances under which said MacGeorge and Gillete rulings were issued. Since the agreement was approved by the Technology Transfer Board, the preferential tax rate of 10% should apply to the [respondent]. We therefore submit that royalties paid by the [respondent] to SC Johnson and Son, USA is only subject to 10% withholding tax pursuant to the most-favored nation clause of the RP-US Tax Treaty [Article 13 Paragraph 2 (b) (iii)] in relation to the RP-West Germany Tax Treaty [Article 12 (2) (b)]" (Petition for Review [filed with the Court of Appeals], par. 12). [Respondent's] claim for there fund of P963,266.00 was computed as follows:

Gross 25% 10%

Month/ Royalty Withholding Withholding

Year Fee Tax Paid Tax Balance

——— ——— ——— ——— ———

July 1992 559,878 139,970 55,988 83,982

August 567,935 141,984 56,794 85,190

September 595,956 148,989 59,596 89,393

October 634,405 158,601 63,441 95,161

November 620,885 155,221 62,089 93,133

December 383,276 95,819 36,328 57,491

Jan 1993 602,451 170,630 68,245 102,368

February 565,845 141,461 56,585 84,877

March 547,253 136,813 54,725 82,088

April 660,810 165,203 66,081 99,122

May 603,076 150,769 60,308 90,461

———— ———— ———— ———

P6,421,770 P1,605,443 P642,177 P963,266 1

======== ======== ======== ========

The Commissioner did not act on said claim for refund. Private respondent S.C. Johnson & Son, Inc. (S.C. Johnson) then filed a petition for review before the Court of Tax Appeals (CTA) where the case was docketed as CTA Case No. 5136, to claim a refund of the overpaid withholding tax on royalty payments from July 1992 to May 1993.

On May 7, 1996, the Court of Tax Appeals rendered its decision in favor of S.C. Johnson and ordered the Commissioner of Internal Revenue to issue a tax credit certificate in the amount of P963,266.00 representing overpaid withholding tax on royalty payments, beginning July, 1992 to May, 1993. 2

The Commissioner of Internal Revenue thus filed a petition for review with the Court of Appeals which rendered the decision subject of this appeal on November 7, 1996 finding no merit in the petition and affirming in toto the CTA ruling. 3

This petition for review was filed by the Commissioner of Internal Revenue raising the following issue:

THE COURT OF APPEALS ERRED IN RULING THAT SC JOHNSON AND SON, USA IS ENTITLED TO THE "MOST FAVORED NATION" TAX RATE OF 10% ON ROYALTIES AS PROVIDED IN THE RP-US TAX TREATY IN RELATION TO THE RP-WEST GERMANY TAX TREATY.

Petitioner contends that under Article 13(2) (b) (iii) of the RP-US Tax Treaty, which is known as the "most favored nation" clause, the lowest rate of the Philippine tax at 10% may be imposed on royalties derived by a resident of the United States from sources within the Philippines only if the circumstances of the resident of the United States are similar to those of the resident of West Germany. Since the RP-US Tax Treaty contains no "matching credit" provision as that provided under Article 24 of the RP-West Germany Tax Treaty, the tax on royalties under the RP-US Tax Treaty is not paid under similar circumstances as those obtaining in the RP-West Germany Tax Treaty. Even assuming that the phrase "paid under similar circumstances" refers to the payment of royalties, and not taxes, as held by the Court of Appeals, still, the "most favored nation" clause cannot be invoked for the reason that when a tax treaty contemplates circumstances attendant to the payment of a tax, or royalty remittances for that matter, these must

necessarily refer to circumstances that are tax-related. Finally, petitioner argues that since S.C. Johnson's invocation of the "most favored nation" clause is in the nature of a claim for exemption from the application of the regular tax rate of 25% for royalties, the provisions of the treaty must be construed strictly against it.

In its Comment, private respondent S.C. Johnson avers that the instant petition should be denied (1) because it contains a defective certification against forum shopping as required under SC Circular No. 28-91, that is, the certification was not executed by the petitioner herself but by her counsel; and (2) that the "most favored nation" clause under the RP-US Tax Treaty refers to royalties paid under similar circumstances as those royalties subject to tax in other treaties; that the phrase "paid under similar circumstances" does not refer to payment of the tax but to the subject matter of the tax, that is, royalties, because the "most favored nation" clause is intended to allow the taxpayer in one state to avail of more liberal provisions contained in another tax treaty wherein the country of residence of such taxpayer is also a party thereto, subject to the basic condition that the subject matter of taxation in that other tax treaty is the same as that in the original tax treaty under which the taxpayer is liable; thus, the RP-US Tax Treaty speaks of "royalties of the same kind paid under similar circumstances". S.C. Johnson also contends that the Commissioner is estopped from insisting on her interpretation that the phrase "paid under similar circumstances" refers to the manner in which the tax is paid, for the reason that said interpretation is embodied in Revenue Memorandum Circular ("RMC") 39-92 which was already abandoned by the Commissioner's predecessor in 1993; and was expressly revoked in BIR Ruling No. 052-95 which stated that royalties paid to an American licensor are subject only to 10% withholding tax pursuant to Art 13(2)(b)(iii) of the RP-US Tax Treaty in relation to the RP-West Germany Tax Treaty. Said ruling should be given retroactive effect except if such is prejudicial to the taxpayer pursuant to Section 246 of the National Internal Revenue Code.

Petitioner filed Reply alleging that the fact that the certification against forum shopping was signed by petitioner's counsel is not a fatal defect as to warrant the dismissal of this petition since Circular No. 28-91 applies only to original actions and not to appeals, as in the instant case. Moreover, the requirement that the certification should be signed by petitioner and not by counsel does not apply to petitioner who has only the Office of the Solicitor General as statutory counsel. Petitioner reiterates that even if the phrase "paid under similar circumstances" embodied in the most favored nation clause of the RP-US Tax Treaty refers to the payment of royalties and not taxes, still the presence or absence of a "matching credit" provision in the said RP-US Tax Treaty would constitute a material circumstance to such payment and would be determinative of the said clause's application.1âwphi1.nêt

We address first the objection raised by private respondent that the certification against forum shopping was not executed by the petitioner herself but by her counsel, the Office of the Solicitor General (O.S.G.) through one of its Solicitors, Atty. Tomas M. Navarro.

SC Circular No. 28-91 provides:

SUBJECT: ADDITIONAL REQUISITES FOR PETITIONS FILED WITH THE SUPREME COURT AND THE COURT OF APPEALS TO PREVENT FORUM SHOPPING OR MULTIPLE FILING OF PETITIONS AND COMPLAINTS

TO: xxx xxx xxx

The attention of the Court has been called to the filing of multiple petitions and complaints involving the same issues in the Supreme Court, the Court of Appeals or other tribunals or agencies, with the result that said courts, tribunals or agencies have to resolve the same issues.

(1) To avoid the foregoing, in every petition filed with the Supreme Court or the Court of Appeals, the petitioner aside from complying with pertinent provisions of the Rules of Court and existing circulars, must certify under oath to all of the following facts or undertakings: (a) he has not theretofore commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any tribunal oragency; . . .

(2) Any violation of this revised Circular will entail the following sanctions: (a) it shall be a cause for the summary dismissal of the multiple petitions or complaints; . . .

The circular expressly requires that a certificate of non-forum shopping should be attached to petitions filed before this Court and the Court of Appeals. Petitioner's allegation that Circular No. 28-91 applies only to original actions and not to appeals as in the instant case is not supported by the text nor by the obvious intent of the Circular which is to prevent multiple petitions that will result in the same issue being resolved by different courts.

Anent the requirement that the party, not counsel, must certify under oath that he has not commenced any other action involving the same issues in this Court or the Court of Appeals or any other tribunal or agency, we are inclined to accept petitioner's submission that since the OSG is the only lawyer for the petitioner, which is a government agency mandated under Section 35, Chapter 12, title III, Book IV of the 1987 Administrative Code 4 to be represented only by the Solicitor General, the certification executed by the OSG in this case constitutes substantial compliance with Circular No. 28-91.

With respect to the merits of this petition, the main point of contention in this appeal is the interpretation of Article 13 (2) (b) (iii) of the RP-US Tax Treaty regarding the rate of tax to be imposed by the Philippines upon royalties received by a non-resident foreign corporation. The provision states insofar as pertinentthat —

1) Royalties derived by a resident of one of the Contracting States from sources within the other Contracting State may be taxed by both Contracting States.

2) However, the tax imposed by that Contracting State shall not exceed.

a) In the case of the United States, 15 percent of the gross amount of the royalties, and

b) In the case of the Philippines, the least of:

(i) 25 percent of the gross amount of the royalties;

(ii) 15 percent of the gross amount of the royalties, where the royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred areas of activities; and

(iii) the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar

circumstances to a resident of a third State.

xxx xxx xxx

(emphasis supplied)

Respondent S. C. Johnson and Son, Inc. claims that on the basis of the quoted provision, it is entitled to the concessional tax rate of 10 percent on royalties based on Article 12 (2) (b) of the RP-Germany Tax Treaty which provides:

(2) However, such royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed:

xxx xxx xxx

b) 10 percent of the gross amount of royalties arising from the use of, or the right to use, any patent, trademark, design or model, plan, secret formula or process, or from the use of or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

For as long as the transfer of technology, under Philippine law, is subject to approval, the limitation of the tax rate mentioned under b) shall, in the case of royalties arising in the Republic of the Philippines, only apply if the contract giving rise to such royalties has been approved by the Philippine competent authorities.

Unlike the RP-US Tax Treaty, the RP-Germany Tax Treaty allows a tax credit of 20 percent of the gross amount of such royalties against German income and corporation tax for the taxes payable in the Philippines on such royalties where the tax rate is reduced to 10 or 15 percent under such treaty. Article 24 of the RP-Germany Tax Treaty states —

1) Tax shall be determined in the case of a resident of the Federal Republic of Germany as follows:

xxx xxx xxx

b) Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against German income and corporation tax payable in respect of the following items of income arising in the Republic of the Philippines, the tax paid under the laws of the Philippines in accordance with this Agreement on:

xxx xxx xxx

dd) royalties, as defined in paragraph 3 of Article 12;

xxx xxx xxx

c) For the purpose of the credit referred in subparagraph; b) the Philippine tax shall be deemed to be

xxx xxx xxx

cc) in the case of royalties for which the tax is reduced to 10 or 15 per cent according to paragraph 2 of Article 12, 20 percent of the gross amount of such royalties.

xxx xxx xxx

According to petitioner, the taxes upon royalties under the RP-US Tax Treaty are not paid under circumstances similar to those in the RP-West Germany Tax Treaty since there is no provision for a 20 percent matching credit in the former convention and private respondent cannot invoke the concessional tax rate on the strength of the most favored nation clause in the RP-US Tax Treaty. Petitioner's position is explained thus:

Under the foregoing provision of the RP-West Germany Tax Treaty, the Philippine tax paid on income from sources within the Philippines is allowed as a credit against German income and corporation tax on the same income. In the case of royalties for which the tax is reduced to 10 or 15 percent according to paragraph 2 of Article 12 of the RP-West Germany Tax Treaty, the credit shall be 20% of the gross amount of such royalty. To illustrate, the royalty income of a German resident from sources within the Philippines arising from the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, is taxed at 10% of the gross amount of said royalty under certain conditions. The rate of 10% is imposed if credit against the German income and corporation tax on said royalty is allowed in favor of the German resident. That means the rate of 10% is granted to the German taxpayer if he is similarly granted a credit against the income and corporation tax of West Germany. The clear intent of the "matching credit" is to soften the impact of double taxation by different jurisdictions.

The RP-US Tax Treaty contains no similar "matching credit" as that provided under the RP-West Germany Tax Treaty. Hence, the tax on royalties under the RP-US Tax Treaty is not paid under similar circumstances as those obtaining in the RP-West Germany Tax Treaty. Therefore, the "most favored nation" clause in the RP-West Germany Tax Treaty cannot be availed of in interpreting the provisions of the RP-US Tax Treaty. 5

The petition is meritorious.

We are unable to sustain the position of the Court of Tax Appeals, which was upheld by the Court of Appeals, that the phrase "paid under similar circumstances in Article 13 (2) (b), (iii) of the RP-US Tax Treaty should be interpreted to refer to payment of royalty, and not to the payment of the tax, for the reason that the phrase "paid under similar circumstances" is followed by the phrase "to a resident of a third state". The respondent court held that "Words are to be understood in the context in which they are used", and since what is paid to a resident of a third state is not a tax but a royalty "logic instructs" that the treaty provision in question should refer to royalties of the same kind paid under similar circumstances.

The above construction is based principally on syntax or sentence structure but fails to take into account the purpose animating the treaty provisions in point. To begin with, we are not aware of any law or rule pertinent to the payment of royalties, and none has been brought to our attention, which provides for the payment of royalties under dissimilar circumstances. The tax rates on royalties and the circumstances of

payment thereof are the same for all the recipients of such royalties and there is no disparity based on nationality in the circumstances of such payment. 6 On the other hand, a cursory reading of the various tax treaties will show that there is no similarity in the provisions on relief from or avoidance of double taxation 7 as this is a matter of negotiation between the contracting parties. 8 As will be shown later, this dissimilarity is true particularly in the treaties between the Philippines and the United States and between the Philippines and West Germany.

The RP-US Tax Treaty is just one of a number of bilateral treaties which the Philippines has entered into for the avoidance of double taxation. 9 The purpose of these international agreements is to reconcile the national fiscal legislations of the contracting parties in order to help the taxpayer avoid simultaneous taxation in two different jurisdictions. 10 More precisely, the tax conventions are drafted with a view towards the elimination of international juridical double taxation, which is defined as the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods. 11 The apparent rationale for doing away with double taxation is of encourage the free flow of goods and services and the movement of capital, technology and persons between countries, conditions deemed vital in creating robust and dynamic economies. 12 Foreign investments will only thrive in a fairly predictable and reasonable international investment climate and the protection against double taxation is crucial in creating such a climate. 13

Double taxation usually takes place when a person is resident of a contracting state and derives income from, or owns capital in, the other contracting state and both states impose tax on that income or capital. In order to eliminate double taxation, a tax treaty resorts to several methods. First, it sets out the respective rights to tax of the state of source or situs and of the state of residence with regard to certain classes of income or capital. In some cases, an exclusive right to tax is conferred on one of the contracting states; however, for other items of income or capital, both states are given the right to tax, although the amount of tax that may be imposed by the state of source is limited. 14

The second method for the elimination of double taxation applies whenever the state of source is given a full or limited right to tax together with the state of residence. In this case, the treaties make it incumbent upon the state of residence to allow relief in order to avoid double taxation. There are two methods of relief — the exemption method and the credit method. In the exemption method, the income or capital which is taxable in the state of source or situs is exempted in the state of residence, although in some instances it may be taken into account in determining the rate of tax applicable to the taxpayer's remaining income or capital. On the other hand, in the credit method, although the income or capital which is taxed in the state of source is still taxable in the state of residence, the tax paid in the former is credited against the tax levied in the latter. The basic difference between the two methods is that in the exemption method, the focus is on the income or capital itself, whereas the credit method focuses upon the tax. 15

In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the Philippines will give up a part of the tax in the expectation that the tax given up for this particular investment is not taxed by the othercountry. 16 Thus the petitioner correctly opined that the phrase "royalties paid under similar circumstances" in the most favored nation clause of the US-RP Tax Treaty necessarily contemplated "circumstances that are tax-related".

In the case at bar, the state of source is the Philippines because the royalties are paid for the right to use property or rights, i.e. trademarks, patents and technology, located within the Philippines. 17 The United States is the state of residence since the taxpayer, S. C. Johnson and Son, U. S. A., is based there. Under the RP-US Tax Treaty, the state of residence and the state of source are both permitted to tax the royalties, with a restraint on the tax that may be collected by the state of source. 18 Furthermore, the method employed to give relief from double taxation is the allowance of a tax credit to citizens or residents of the United States (in an appropriate amount based upon the taxes paid or accrued to the Philippines) against the United States tax, but such amount shall not exceed the limitations provided by United States law for the taxable year. 19 Under Article 13 thereof, the Philippines may impose one of

three rates — 25 percent of the gross amount of the royalties; 15 percent when the royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred areas of activities; or the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar circumstances to a resident of a third state.

Given the purpose underlying tax treaties and the rationale for the most favored nation clause, the concessional tax rate of 10 percent provided for in the RP-Germany Tax Treaty should apply only if the taxes imposed upon royalties in the RP-US Tax Treaty and in the RP-Germany Tax Treaty are paid under similar circumstances. This would mean that private respondent must prove that the RP-US Tax Treaty grants similar tax reliefs to residents of the United States in respect of the taxes imposable upon royalties earned from sources within the Philippines as those allowed to their German counterparts under the RP-Germany Tax Treaty.

The RP-US and the RP-West Germany Tax Treaties do not contain similar provisions on tax crediting. Article 24 of the RP-Germany Tax Treaty, supra, expressly allows crediting against German income and corporation tax of 20% of the gross amount of royalties paid under the law of the Philippines. On the other hand, Article 23 of the RP-US Tax Treaty, which is the counterpart provision with respect to relief for double taxation, does not provide for similar crediting of 20% of the gross amount of royalties paid. Said Article 23 reads:

Article 23

Relief from double taxation

Double taxation of income shall be avoided in the following manner:

1) In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle thereof), the United States shall allow to a citizen or resident of the United States as a credit against the United States tax the appropriate amount of taxes paid or accrued to the Philippines and, in the case of a United States corporation owning at least 10 percent of the voting stock of a Philippine corporation from which it receives dividends in any taxable year, shall allow credit for the appropriate amount of taxes paid or accrued to the Philippines by the Philippine corporation paying such dividends with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid or accrued to the Philippines, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the United States tax on income from sources within the Philippines or on income from sources outside the United States) provided by United States law for the taxable year. . . .

The reason for construing the phrase "paid under similar circumstances" as used in Article 13 (2) (b) (iii) of the RP-US Tax Treaty as referring to taxes is anchored upon a logical reading of the text in the light of the fundamental purpose of such treaty which is to grant an incentive to the foreign investor by lowering the tax and at the same time crediting against the domestic tax abroad a figure higher than what was collected in the Philippines.

In one case, the Supreme Court pointed out that laws are not just mere compositions, but have ends to be achieved and that the general purpose is a more important aid to the meaning of a law than any rule which grammar may lay down. 20 It is the duty of the courts to look to the object to be accomplished, the evils to be remedied, or the purpose to be subserved, and should give the law a reasonable or liberal construction which will best effectuate its purpose. 21 The Vienna Convention on the Law of Treaties

states that a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object andpurpose. 22

As stated earlier, the ultimate reason for avoiding double taxation is to encourage foreign investors to invest in the Philippines — a crucial economic goal for developing countries. 23 The goal of double taxation conventions would be thwarted if such treaties did not provide for effective measures to minimize, if not completely eliminate, the tax burden laid upon the income or capital of the investor. Thus, if the rates of tax are lowered by the state of source, in this case, by the Philippines, there should be a concomitant commitment on the part of the state of residence to grant some form of tax relief, whether this be in the form of a tax credit or exemption. 24 Otherwise, the tax which could have been collected by the Philippine government will simply be collected by another state, defeating the object of the tax treaty since the tax burden imposed upon the investor would remain unrelieved. If the state of residence does not grant some form of tax relief to the investor, no benefit would redound to the Philippines, i.e., increased investment resulting from a favorable tax regime, should it impose a lower tax rate on the royalty earnings of the investor, and it would be better to impose the regular rate rather than lose much-needed revenues to another country.

At the same time, the intention behind the adoption of the provision on "relief from double taxation" in the two tax treaties in question should be considered in light of the purpose behind the most favored nation clause.

The purpose of a most favored nation clause is to grant to the contracting party treatment not less favorable than that which has been or may be granted to the "most favored" among other countries. 25 The most favored nation clause is intended to establish the principle of equality of international treatment by providing that the citizens or subjects of the contracting nations may enjoy the privileges accorded by either party to those of the most favored nation. 26 The essence of the principle is to allow the taxpayer in one state to avail of more liberal provisions granted in another tax treaty to which the country of residence of such taxpayer is also a party provided that the subject matter of taxation, in this case royalty income, is the same as that in the tax treaty under which the taxpayer is liable. Both Article 13 of the RP-US Tax Treaty and Article 12 (2) (b) of the RP-West Germany Tax Treaty, above-quoted, speaks of tax on royalties for the use of trademark, patent, and technology. The entitlement of the 10% rate by U.S. firms despite the absence of a matching credit (20% for royalties) would derogate from the design behind the most grant equality of international treatment since the tax burden laid upon the income of the investor is not the same in the two countries. The similarity in the circumstances of payment of taxes is a condition for the enjoyment of most favored nation treatment precisely to underscore the need for equality of treatment.

We accordingly agree with petitioner that since the RP-US Tax Treaty does not give a matching tax credit of 20 percent for the taxes paid to the Philippines on royalties as allowed under the RP-West Germany Tax Treaty, private respondent cannot be deemed entitled to the 10 percent rate granted under the latter treaty for the reason that there is no payment of taxes on royalties under similar circumstances.

It bears stress that tax refunds are in the nature of tax exemptions. As such they are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the exemption. 27The burden of proof is upon him who claims the exemption in his favor and he must be able to justify his claim by the clearest grant of organic or statute law. 28 Private respondent is claiming for a refund of the alleged overpayment of tax on royalties; however, there is nothing on record to support a claim that the tax on royalties under the RP-US Tax Treaty is paid under similar circumstances as the tax on royalties under the RP-West Germany Tax Treaty.

WHEREFORE, for all the foregoing, the instant petition is GRANTED. The decision dated May 7, 1996 of the Court of Tax Appeals and the decision dated November 7, 1996 of the Court of Appeals are hereby SET ASIDE.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 127882           January 27, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its Chairman F'LONG MIGUEL M. LUMAYONG, WIGBERTO E. TAÑADA, PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR., F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE, SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L. GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA P. TACUAYAN, minors JOLY L. BUGOY, represented by his father UNDERO D. BUGOY, ROGER M. DADING, represented by his father ANTONIO L. DADING, ROMY M. LAGARO, represented by his father TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented by his father MIGUEL M. LUMAYONG, RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by his father DANNY M. SAL, DAISY RECARSE, represented by her mother LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR, MARIO L. MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP, VIRGILIO CULAR, MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR, JR., represented by their father VIRGILIO CULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father MARIO JOSE B. TALJA, SHARMAINE R. CUNANAN, represented by her father ALFREDO M. CUNANAN, ANTONIO JOSE A. VITUG III, represented by his mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, represented by his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG LINGATING, represented by her father RIO OLIMPIO A. LINGATING, MARIO JOSE B. TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR., SUSAN O. BOLANIO, OND, LOLITA G. DEMONTEVERDE, BENJIE L. NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA, EDUARDO AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his father ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GF-WV), ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB), CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION, INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners, vs.VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), HORACIO RAMOS, DIRECTOR, MINES AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES, EXECUTIVE SECRETARY, and WMC

(PHILIPPINES), INC.4 respondents.

D E C I S I O N

CARPIO-MORALES, J.:

The present petition for mandamus and prohibition assails the constitutionality of Republic Act No. 7942,5 otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the Implementing Rules and Regulations issued pursuant thereto, Department of Environment and Natural Resources (DENR) Administrative Order 96-40, and of the Financial and Technical Assistance Agreement (FTAA) entered into on March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc. (WMCP), a corporation organized under Philippine laws.

On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 2796 authorizing the DENR Secretary to accept, consider and evaluate proposals from foreign-owned corporations or foreign investors for contracts or agreements involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute with the foreign proponent. In entering into such proposals, the President shall consider the real contributions to the economic growth and general welfare of the country that will be realized, as well as the development and use of local scientific and technical resources that will be promoted by the proposed contract or agreement. Until Congress shall determine otherwise, large-scale mining, for purpose of this Section, shall mean those proposals for contracts or agreements for mineral resources exploration, development, and utilization involving a committed capital investment in a single mining unit project of at least Fifty Million Dollars in United States Currency (US $50,000,000.00).7

On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the exploration, development, utilization and processing of all mineral resources."8 R.A. No. 7942 defines the modes of mineral agreements for mining operations,9 outlines the procedure for their filing and approval,10 assignment/transfer11 and withdrawal,12 and fixes their terms.13 Similar provisions govern financial or technical assistance agreements.14

The law prescribes the qualifications of contractors15 and grants them certain rights, including timber,16 water17 and easement18 rights, and the right to possess explosives.19 Surface owners, occupants, or concessionaires are forbidden from preventing holders of mining rights from entering private lands and concession areas.20 A procedure for the settlement of conflicts is likewise provided for.21

The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It regulates the transport, sale and processing of minerals,25 and promotes the development of mining communities, science and mining technology,26 and safety and environmental protection.27

The government's share in the agreements is spelled out and allocated,28 taxes and fees are imposed,29 incentives granted.30 Aside from penalizing certain acts,31 the law likewise specifies grounds for the cancellation, revocation and termination of agreements and permits.32

On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two newspapers of general circulation, R.A. No. 7942 took effect.33 Shortly before the effectivity of R.A. No. 7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao

del Sur and North Cotabato.34

On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.

On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40,35 giving the DENR fifteen days from receipt36 to act thereon. The DENR, however, has yet to respond or act on petitioners' letter.37

Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order. They allege that at the time of the filing of the petition, 100 FTAA applications had already been filed, covering an area of 8.4 million hectares,38 64 of which applications are by fully foreign-owned corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining company over offshore areas.39

Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:

I

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows fully foreign owned corporations to explore, develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of the Constitution;

II

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows the taking of private property without the determination of public use and for just compensation;

III

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution;

IV

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows enjoyment by foreign citizens as well as fully foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of Article XII of the Constitution;

V

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows priority to foreign and fully foreign owned corporations in the exploration, development and utilization of mineral

resources contrary to Article XII of the Constitution;

VI

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;

VII

x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement between the President of the Republic of the Philippines and Western Mining Corporation Philippines Inc. because the same is illegal and unconstitutional.40

They pray that the Court issue an order:

(a) Permanently enjoining respondents from acting on any application for Financial or Technical Assistance Agreements;

(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and void;

(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR Administrative Order No. 96-40 and all other similar administrative issuances as unconstitutional and null and void; and

(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines, Inc. as unconstitutional, illegal and null and void.41

Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos, the then DENR Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau of the DENR. Also impleaded is private respondent WMCP, which entered into the assailed FTAA with the Philippine Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), "a wholly owned subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major Australian mining and exploration company."42 By WMCP's information, "it is a 100% owned subsidiary of WMC LIMITED."43

Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial inquiry have not been met and that the petition does not comply with the criteria for prohibition and mandamus. Additionally, respondent WMCP argues that there has been a violation of the rule on hierarchy of courts.

After petitioners filed their reply, this Court granted due course to the petition. The parties have since filed their respective memoranda.

WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporation organized under Philippine laws.44 WMCP was subsequently renamed "Tampakan Mineral Resources Corporation."45 WMCP claims that at least 60% of the equity of Sagittarius is owned by Filipinos and/or Filipino-owned corporations while about 40% is owned by Indophil Resources NL, an Australian company.46 It further claims that by such sale and transfer of

shares, "WMCP has ceased to be connected in any way with WMC."47

By virtue of such sale and transfer, the DENR Secretary, by Order of December 18, 2001,48 approved the transfer and registration of the subject FTAA from WMCP to Sagittarius. Said Order, however, was appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of the President which upheld it by Decision of July 23, 2002.49 Its motion for reconsideration having been denied by the Office of the President by Resolution of November 12, 2002,50 Lepanto filed a petition for review51 before the Court of Appeals. Incidentally, two other petitions for review related to the approval of the transfer and registration of the FTAA to Sagittarius were recently resolved by this Court.52

It bears stressing that this case has not been rendered moot either by the transfer and registration of the FTAA to a Filipino-owned corporation or by the non-issuance of a temporary restraining order or a preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the President.53 The validity of the transfer remains in dispute and awaits final judicial determination. This assumes, of course, that such transfer cures the FTAA's alleged unconstitutionality, on which question judgment is reserved.

WMCP also points out that the original claimowners of the major mineralized areas included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation, are all Filipino-owned corporations,54 each of which was a holder of an approved Mineral Production Sharing Agreement awarded in 1994, albeit their respective mineral claims were subsumed in the WMCP FTAA;55 and that these three companies are the same companies that consolidated their interests in Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP concludes that in the event that the FTAA is invalidated, the MPSAs of the three corporations would be revived and the mineral claims would revert to their original claimants.57

These circumstances, while informative, are hardly significant in the resolution of this case, it involving the validity of the FTAA, not the possible consequences of its invalidation.

Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first and the last need be delved into; in the latter, the discussion shall dwell only insofar as it questions the effectivity of E. O. No. 279 by virtue of which order the questioned FTAA was forged.

I

Before going into the substantive issues, the procedural questions posed by respondents shall first be tackled.

REQUISITES FOR JUDICIAL REVIEW

When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the following requisites are present:

(1) The existence of an actual and appropriate case;

(2) A personal and substantial interest of the party raising the constitutional question;

(3) The exercise of judicial review is pleaded at the earliest opportunity; and

(4) The constitutional question is the lis mota of the case. 58

Respondents claim that the first three requisites are not present.

Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable." The power of judicial review, therefore, is limited to the determination of actual cases and controversies.59

An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not conjectural or anticipatory,60 lest the decision of the court would amount to an advisory opinion.61 The power does not extend to hypothetical questions62 since any attempt at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.63

"Legal standing" or locus standi has been defined as a personal and substantial interest in the case such that the party has sustained or will sustain direct injury as a result of the governmental act that is being challenged,64 alleging more than a generalized grievance.65 The gist of the question of standing is whether a party alleges "such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult constitutional questions."66 Unless a person is injuriously affected in any of his constitutional rights by the operation of statute or ordinance, he has no standing.67

Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association, Inc., a farmers and indigenous people's cooperative organized under Philippine laws representing a community actually affected by the mining activities of WMCP, members of said cooperative,68 as well as other residents of areas also affected by the mining activities of WMCP.69 These petitioners have standing to raise the constitutionality of the questioned FTAA as they allege a personal and substantial injury. They claim that they would suffer "irremediable displacement"70 as a result of the implementation of the FTAA allowing WMCP to conduct mining activities in their area of residence. They thus meet the appropriate case requirement as they assert an interest adverse to that of respondents who, on the other hand, insist on the FTAA's validity.

In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No. 279, by authority of which the FTAA was executed.

Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both contracting parties to annul it.71 In other words, they contend that petitioners are not real parties in interest in an action for the annulment of contract.

Public respondents' contention fails. The present action is not merely one for annulment of contract but for prohibition and mandamus. Petitioners allege that public respondents acted without or in excess of jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the case involves constitutional questions, this Court is not concerned with whether petitioners are real parties in interest, but with whether they have legal standing. As held in Kilosbayan v. Morato:72

x x x. "It is important to note . . . that standing because of its constitutional and public policy underpinnings, is very different from questions relating to whether a particular plaintiff is the real party in interest or has capacity to sue. Although all three requirements are directed towards ensuring that only certain parties can maintain an action, standing restrictions require

a partial consideration of the merits, as well as broader policy concerns relating to the proper role of the judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])

Standing is a special concern in constitutional law because in some cases suits are brought not by parties who have been personally injured by the operation of a law or by official action taken, but by concerned citizens, taxpayers or voters who actually sue in the public interest. Hence, the question in standing is whether such parties have "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." (Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)

As earlier stated, petitioners meet this requirement.

The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the requisites of justiciability. Although these laws were not in force when the subject FTAA was entered into, the question as to their validity is ripe for adjudication.

The WMCP FTAA provides:

14.3 Future Legislation

Any term and condition more favourable to Financial &Technical Assistance Agreement contractors resulting from repeal or amendment of any existing law or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement.

It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to WMCP, hence, these laws, to the extent that they are favorable to WMCP, govern the FTAA.

In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.

SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. – x x x That the provisions of Chapter XIV on government share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a mining lessee or contractor unless the mining lessee or contractor indicates his intention to the secretary, in writing, not to avail of said provisions x x x Provided, finally, That such leases, production-sharing agreements, financial or technical assistance agreements shall comply with the applicable provisions of this Act and its implementing rules and regulations.

As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed that they apply to the WMCP FTAA.

Misconstruing the application of the third requisite for judicial review – that the exercise of the review is pleaded at the earliest opportunity – WMCP points out that the petition was filed only almost two years after the execution of the FTAA, hence, not raised at the earliest opportunity.

The third requisite should not be taken to mean that the question of constitutionality must be raised immediately after the execution of the state action complained of. That the question of constitutionality has not been raised before is not a valid reason for refusing to allow it to be raised later.73 A contrary rule would mean that a law, otherwise unconstitutional, would lapse

into constitutionality by the mere failure of the proper party to promptly file a case to challenge the same.

PROPRIETY OF PROHIBITION AND MANDAMUS

Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:

SEC. 2. Petition for prohibition. – When the proceedings of any tribunal, corporation, board, or person, whether exercising functions judicial or ministerial, are without or in excess of its or his jurisdiction, or with grave abuse of discretion, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant to desist from further proceeding in the action or matter specified therein.

Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist from continuing with the commission of an act perceived to be illegal.75

The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract itself may be fait accompli, its implementation is not. Public respondents, in behalf of the Government, have obligations to fulfill under said contract. Petitioners seek to prevent them from fulfilling such obligations on the theory that the contract is unconstitutional and, therefore, void.

The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus aspect of the petition is rendered unnecessary.

HIERARCHY OF COURTS

The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise lie. The rule has been explained thus:

Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass upon the issues of a case. That way, as a particular case goes through the hierarchy of courts, it is shorn of all but the important legal issues or those of first impression, which are the proper subject of attention of the appellate court. This is a procedural rule borne of experience and adopted to improve the administration of justice.

This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court has concurrent jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give a party unrestricted freedom of choice of court forum. The resort to this Court's primary jurisdiction to issue said writs shall be allowed only where the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify such invocation. We held in People v. Cuaresma that:

A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only where there are special and important reasons therefor, clearly and specifically set out in the petition. This

is established policy. It is a policy necessary to prevent inordinate demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket x x x.76 [Emphasis supplied.]

The repercussions of the issues in this case on the Philippine mining industry, if not the national economy, as well as the novelty thereof, constitute exceptional and compelling circumstances to justify resort to this Court in the first instance.

In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an actual case or legal standing when paramount public interest is involved.77 When the issues raised are of paramount importance to the public, this Court may brush aside technicalities of procedure.78

II

Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity came after President Aquino had already lost her legislative powers under the Provisional Constitution.

And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279, violates Section 2, Article XII of the Constitution because, among other reasons:

(1) It allows foreign-owned companies to extend more than mere financial or technical assistance to the State in the exploitation, development, and utilization of minerals, petroleum, and other mineral oils, and even permits foreign owned companies to "operate and manage mining activities."

(2) It allows foreign-owned companies to extend both technical and financial assistance, instead of "either technical or financial assistance."

To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision, the concepts contained therein, and the laws enacted pursuant thereto, is in order.

Section 2, Article XII reads in full:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino

citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

THE SPANISH REGIME AND THE REGALIAN DOCTRINE

The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain into these Islands, this feudal concept is based on the State's power of dominium, which is the capacity of the State to own or acquire property.79

In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has by virtue of his prerogatives. In Spanish law, it refers to a right which the sovereign has over anything in which a subject has a right of property or propriedad. These were rights enjoyed during feudal times by the king as the sovereign.

The theory of the feudal system was that title to all lands was originally held by the King, and while the use of lands was granted out to others who were permitted to hold them under certain conditions, the King theoretically retained the title. By fiction of law, the King was regarded as the original proprietor of all lands, and the true and only source of title, and from him all lands were held. The theory of jura regalia was therefore nothing more than a natural fruit of conquest.80

The Philippines having passed to Spain by virtue of discovery and conquest,81 earlier Spanish decrees declared that "all lands were held from the Crown."82

The Regalian doctrine extends not only to land but also to "all natural wealth that may be found in the bowels of the earth."83 Spain, in particular, recognized the unique value of natural resources, viewing them, especially minerals, as an abundant source of revenue to finance its wars against other nations.84 Mining laws during the Spanish regime reflected this perspective.85

THE AMERICAN OCCUPATION AND THE CONCESSION REGIME

By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the Philippine Islands" to the United States. The Philippines was hence governed by means of organic acts that were in the nature of charters serving as a Constitution of the occupied territory from 1900 to 1935.86 Among the principal organic acts of the Philippines was the Act of Congress of July 1, 1902, more commonly known as the Philippine Bill of 1902, through which the United States Congress assumed the administration of the Philippine Islands.87 Section 20 of said Bill reserved the disposition of mineral lands of the public domain from sale. Section 21 thereof allowed the free and open exploration, occupation and purchase of mineral deposits not only to citizens of the Philippine Islands but to those of the United States as well:

Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase, and the land in which they are found, to occupation and purchase, by citizens of the United States or of said Islands: Provided, That when on any lands in said Islands entered and occupied as agricultural lands under the provisions of this Act, but not patented, mineral deposits have been found, the working of such mineral deposits is forbidden until the person, association, or corporation who or which has entered and is occupying such lands shall have paid to the Government of said Islands such additional sum or sums as will make the total amount paid for the mineral claim or claims in which said deposits are located equal to the amount charged by the Government for the same as mineral claims.

Unlike Spain, the United States considered natural resources as a source of wealth for its nationals and saw fit to allow both Filipino and American citizens to explore and exploit minerals in public lands, and to grant patents to private mineral lands.88 A person who acquired ownership over a parcel of private mineral land pursuant to the laws then prevailing could exclude other persons, even the State, from exploiting minerals within his property.89 Thus, earlier jurisprudence90 held that:

A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the statutes of the United States, has the effect of a grant by the United States of the present and exclusive possession of the lands located, and this exclusive right of possession and enjoyment continues during the entire life of the location. x x x.

x x x.

The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his location not only against third persons, but also against the Government. x x x. [Italics in the original.]

The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the Regalian theory, mineral rights are not included in a grant of land by the state; under the American doctrine, mineral rights are included in a grant of land by the government.91

Section 21 also made possible the concession (frequently styled "permit", license" or "lease")92 system.93 This was the traditional regime imposed by the colonial administrators for the exploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.).94

Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within a given area.95 Thus, the concession amounts to complete control by the concessionaire over the country's natural resource, for it is given exclusive and plenary rights to exploit a particular resource at the point of extraction.96 In consideration for the right to exploit a natural resource, the concessionaire either pays rent or royalty, which is a fixed percentage of the gross proceeds.97

Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual framework of the concession.98 For instance, Act No. 2932,99 approved on August 31, 1920, which provided for the exploration, location, and lease of lands containing petroleum and other mineral oils and gas in the Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the leasing and development of coal lands in the Philippines, both utilized the concession system.101

THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES

By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie Law, the People of the Philippine Islands were authorized to adopt a constitution.102 On July 30, 1934, the Constitutional Convention met for the purpose of drafting a constitution, and the Constitution subsequently drafted was approved by the Convention on February 8, 1935.103 The Constitution was submitted to the President of the United States on March 18, 1935.104 On March 23, 1935, the President of the United States certified that the Constitution conformed substantially with the provisions of the Act of Congress approved on March 24, 1934.105 On May 14, 1935, the Constitution was ratified by the Filipino people.106

The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the Philippines, including mineral lands and minerals, to be property belonging to the State.107 As adopted in a republican system, the medieval concept of jura regalia is stripped of royal overtones and ownership of the land is vested in the State.108

Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution provided:

SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and the limit of the grant.

The nationalization and conservation of the natural resources of the country was one of the fixed and dominating objectives of the 1935 Constitutional Convention.109 One delegate relates:

There was an overwhelming sentiment in the Convention in favor of the principle of state ownership of natural resources and the adoption of the Regalian doctrine. State ownership of natural resources was seen as a necessary starting point to secure recognition of the state's power to control their disposition, exploitation, development, or utilization. The delegates of the Constitutional Convention very well knew that the concept of State ownership of land and natural resources was introduced by the Spaniards, however, they were not certain whether it was continued and applied by the Americans. To remove all doubts, the Convention approved the provision in the Constitution affirming the Regalian doctrine.

The adoption of the principle of state ownership of the natural resources and of the Regalian doctrine was considered to be a necessary starting point for the plan of nationalizing and conserving the natural resources of the country. For with the establishment of the principle of state ownership of the natural resources, it would not be hard to secure the recognition of the power of the State to control their disposition, exploitation, development or utilization.110

The nationalization of the natural resources was intended (1) to insure their conservation for

Filipino posterity; (2) to serve as an instrument of national defense, helping prevent the extension to the country of foreign control through peaceful economic penetration; and (3) to avoid making the Philippines a source of international conflicts with the consequent danger to its internal security and independence.111

The same Section 1, Article XIII also adopted the concession system, expressly permitting the State to grant licenses, concessions, or leases for the exploitation, development, or utilization of any of the natural resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital of which is owned by Filipinos.lawph!l.ne+

The swell of nationalism that suffused the 1935 Constitution was radically diluted when on November 1946, the Parity Amendment, which came in the form of an "Ordinance Appended to the Constitution," was ratified in a plebiscite.112 The Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize and exploit our natural resources to citizens of the United States and business enterprises owned or controlled, directly or indirectly, by citizens of the United States:113

Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of the foregoing Constitution, during the effectivity of the Executive Agreement entered into by the President of the Philippines with the President of the United States on the fourth of July, nineteen hundred and forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in no case to extend beyond the third of July, nineteen hundred and seventy-four, the disposition, exploitation, development, and utilization of all agricultural, timber, and mineral lands of the public domain, waters, minerals, coals, petroleum, and other mineral oils, all forces and sources of potential energy, and other natural resources of the Philippines, and the operation of public utilities, shall, if open to any person, be open to citizens of the United States and to all forms of business enterprise owned or controlled, directly or indirectly, by citizens of the United States in the same manner as to, and under the same conditions imposed upon, citizens of the Philippines or corporations or associations owned or controlled by citizens of the Philippines.

The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also known as the Laurel-Langley Agreement, embodied in Republic Act No. 1355.114

THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM

In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949, was approved on June 18, 1949.

The Petroleum Act of 1949 employed the concession system for the exploitation of the nation's petroleum resources. Among the kinds of concessions it sanctioned were exploration and exploitation concessions, which respectively granted to the concessionaire the exclusive right to explore for116 or develop117 petroleum within specified areas.

Concessions may be granted only to duly qualified persons118 who have sufficient finances, organization, resources, technical competence, and skills necessary to conduct the operations to be undertaken.119

Nevertheless, the Government reserved the right to undertake such work itself.120 This proceeded from the theory that all natural deposits or occurrences of petroleum or natural gas in public and/or private lands in the Philippines belong to the State.121 Exploration and exploitation concessions did not confer upon the concessionaire ownership over the petroleum lands and petroleum deposits.122However, they did grant concessionaires the right to explore,

develop, exploit, and utilize them for the period and under the conditions determined by the law.123

Concessions were granted at the complete risk of the concessionaire; the Government did not guarantee the existence of petroleum or undertake, in any case, title warranty.124

Concessionaires were required to submit information as maybe required by the Secretary of Agriculture and Natural Resources, including reports of geological and geophysical examinations, as well as production reports.125 Exploration126 and exploitation127 concessionaires were also required to submit work programs.lavvphi1.net

Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax,128 the object of which is to induce the concessionaire to actually produce petroleum, and not simply to sit on the concession without developing or exploiting it.129 These concessionaires were also bound to pay the Government royalty, which was not less than 12½% of the petroleum produced and saved, less that consumed in the operations of the concessionaire.130 Under Article 66, R.A. No. 387, the exploitation tax may be credited against the royalties so that if the concessionaire shall be actually producing enough oil, it would not actually be paying the exploitation tax.131

Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty due to the Government within one year from the date it becomes due,133 constituted grounds for the cancellation of the concession. In case of delay in the payment of the taxes or royalty imposed by the law or by the concession, a surcharge of 1% per month is exacted until the same are paid.134

As a rule, title rights to all equipment and structures that the concessionaire placed on the land belong to the exploration or exploitation concessionaire.135 Upon termination of such concession, the concessionaire had a right to remove the same.136

The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of the law, through the Director of Mines, who acted under the Secretary's immediate supervision and control.137 The Act granted the Secretary the authority to inspect any operation of the concessionaire and to examine all the books and accounts pertaining to operations or conditions related to payment of taxes and royalties.138

The same law authorized the Secretary to create an Administration Unit and a Technical Board.139 The Administration Unit was charged, inter alia, with the enforcement of the provisions of the law.140The Technical Board had, among other functions, the duty to check on the performance of concessionaires and to determine whether the obligations imposed by the Act and its implementing regulations were being complied with.141

Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the benefits and drawbacks of the concession system insofar as it applied to the petroleum industry:

Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of the concession system is that the State's financial involvement is virtually risk free and administration is simple and comparatively low in cost. Furthermore, if there is a competitive allocation of the resource leading to substantial bonuses and/or greater royalty coupled with a relatively high level of taxation, revenue accruing to the State under the

concession system may compare favorably with other financial arrangements.

Disadvantages of Concession. There are, however, major negative aspects to this system. Because the Government's role in the traditional concession is passive, it is at a distinct disadvantage in managing and developing policy for the nation's petroleum resource. This is true for several reasons. First, even though most concession agreements contain covenants requiring diligence in operations and production, this establishes only an indirect and passive control of the host country in resource development. Second, and more importantly, the fact that the host country does not directly participate in resource management decisions inhibits its ability to train and employ its nationals in petroleum development. This factor could delay or prevent the country from effectively engaging in the development of its resources. Lastly, a direct role in management is usually necessary in order to obtain a knowledge of the international petroleum industry which is important to an appreciation of the host country's resources in relation to those of other countries.142

Other liabilities of the system have also been noted:

x x x there are functional implications which give the concessionaire great economic power arising from its exclusive equity holding. This includes, first, appropriation of the returns of the undertaking, subject to a modest royalty; second, exclusive management of the project; third, control of production of the natural resource, such as volume of production, expansion, research and development; and fourth, exclusive responsibility for downstream operations, like processing, marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of the natural resource being exploited, it has been shorn of all elements of control over such natural resource because of the exclusive nature of the contractual regime of the concession. The concession system, investing as it does ownership of natural resources, constitutes a consistent inconsistency with the principle embodied in our Constitution that natural resources belong to the state and shall not be alienated, not to mention the fact that the concession was the bedrock of the colonial system in the exploitation of natural resources.143

Eventually, the concession system failed for reasons explained by Dimagiba:

Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not have properly spurred sustained oil exploration activities in the country, since it assumed that such a capital-intensive, high risk venture could be successfully undertaken by a single individual or a small company. In effect, concessionaires' funds were easily exhausted. Moreover, since the concession system practically closed its doors to interested foreign investors, local capital was stretched to the limits. The old system also failed to consider the highly sophisticated technology and expertise required, which would be available only to multinational companies.144

A shift to a new regime for the development of natural resources thus seemed imminent.

PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACT SYSTEM

The promulgation on December 31, 1972 of Presidential Decree No. 87,145 otherwise known as The Oil Exploration and Development Act of 1972 signaled such a transformation. P.D. No. 87 permitted the government to explore for and produce indigenous petroleum through "service contracts."146

"Service contracts" is a term that assumes varying meanings to different people, and it has carried many names in different countries, like "work contracts" in Indonesia, "concession

agreements" in Africa, "production-sharing agreements" in the Middle East, and "participation agreements" in Latin America.147 A functional definition of "service contracts" in the Philippines is provided as follows:

A service contract is a contractual arrangement for engaging in the exploitation and development of petroleum, mineral, energy, land and other natural resources by which a government or its agency, or a private person granted a right or privilege by the government authorizes the other party (service contractor) to engage or participate in the exercise of such right or the enjoyment of the privilege, in that the latter provides financial or technical resources, undertakes the exploitation or production of a given resource, or directly manages the productive enterprise, operations of the exploration and exploitation of the resources or the disposition of marketing or resources.148

In a service contract under P.D. No. 87, service and technology are furnished by the service contractor for which it shall be entitled to the stipulated service fee.149 The contractor must be technically competent and financially capable to undertake the operations required in the contract.150

Financing is supposed to be provided by the Government to which all petroleum produced belongs.151 In case the Government is unable to finance petroleum exploration operations, the contractor may furnish services, technology and financing, and the proceeds of sale of the petroleum produced under the contract shall be the source of funds for payment of the service fee and the operating expenses due the contractor.152 The contractor shall undertake, manage and execute petroleum operations, subject to the government overseeing the management of the operations.153 The contractor provides all necessary services and technology and the requisite financing, performs the exploration work obligations, and assumes all exploration risks such that if no petroleum is produced, it will not be entitled to reimbursement.154 Once petroleum in commercial quantity is discovered, the contractor shall operate the field on behalf of the government.155

P.D. No. 87 prescribed minimum terms and conditions for every service contract.156 It also granted the contractor certain privileges, including exemption from taxes and payment of tariff duties,157 and permitted the repatriation of capital and retention of profits abroad.158

Ostensibly, the service contract system had certain advantages over the concession regime.159 It has been opined, though, that, in the Philippines, our concept of a service contract, at least in the petroleum industry, was basically a concession regime with a production-sharing element.160

On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new Constitution.161 Article XIV on the National Economy and Patrimony contained provisions similar to the 1935 Constitution with regard to Filipino participation in the nation's natural resources. Section 8, Article XIV thereof provides:

Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases

beneficial use may be the measure and the limit of the grant.

While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of natural resources, it also allowed Filipinos, upon authority of the Batasang Pambansa, to enter into service contracts with any person or entity for the exploration or utilization of natural resources.

Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the Philippines shall be limited to citizens, or to corporations or associations at least sixty per centum of which is owned by such citizens. The Batasang Pambansa, in the national interest, may allow such citizens, corporations or associations to enter into service contracts for financial, technical, management, or other forms of assistance with any person or entity for the exploration, or utilization of any of the natural resources. Existing valid and binding service contracts for financial, technical, management, or other forms of assistance are hereby recognized as such. [Emphasis supplied.]

The concept of service contracts, according to one delegate, was borrowed from the methods followed by India, Pakistan and especially Indonesia in the exploration of petroleum and mineral oils.162The provision allowing such contracts, according to another, was intended to "enhance the proper development of our natural resources since Filipino citizens lack the needed capital and technical know-how which are essential in the proper exploration, development and exploitation of the natural resources of the country."163

The original idea was to authorize the government, not private entities, to enter into service contracts with foreign entities.164 As finally approved, however, a citizen or private entity could be allowed by the National Assembly to enter into such service contract.165 The prior approval of the National Assembly was deemed sufficient to protect the national interest.166 Notably, none of the laws allowing service contracts were passed by the Batasang Pambansa. Indeed, all of them were enacted by presidential decree.

On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated Presidential Decree No. 151.167 The law allowed Filipino citizens or entities which have acquired lands of the public domain or which own, hold or control such lands to enter into service contracts for financial, technical, management or other forms of assistance with any foreign persons or entity for the exploration, development, exploitation or utilization of said lands.168

Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974, was enacted on May 17, 1974. Section 44 of the decree, as amended, provided that a lessee of a mining claim may enter into a service contract with a qualified domestic or foreign contractor for the exploration, development and exploitation of his claims and the processing and marketing of the product thereof.

Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowed Filipinos engaged in commercial fishing to enter into contracts for financial, technical or other forms of assistance with any foreign person, corporation or entity for the production, storage, marketing and processing of fish and fishery/aquatic products.171

Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19, 1975, allowed "forest products licensees, lessees, or permitees to enter into service contracts for financial, technical, management, or other forms of assistance . . . with any foreign person or entity for the exploration, development, exploitation or utilization of the forest

resources."173

Yet another law allowing service contracts, this time for geothermal resources, was Presidential Decree No. 1442,174 which was signed into law on June 11, 1978. Section 1 thereof authorized the Government to enter into service contracts for the exploration, exploitation and development of geothermal resources with a foreign contractor who must be technically and financially capable of undertaking the operations required in the service contract.

Thus, virtually the entire range of the country's natural resources –from petroleum and minerals to geothermal energy, from public lands and forest resources to fishery products – was well covered by apparent legal authority to engage in the direct participation or involvement of foreign persons or corporations (otherwise disqualified) in the exploration and utilization of natural resources through service contracts.175

THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS

After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a revolutionary government. On March 25, 1986, President Aquino issued Proclamation No. 3,176promulgating the Provisional Constitution, more popularly referred to as the Freedom Constitution. By authority of the same Proclamation, the President created a Constitutional Commission (CONCOM) to draft a new constitution, which took effect on the date of its ratification on February 2, 1987.177

The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII states: "All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State."

Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the same provision, prohibits the alienation of natural resources, except agricultural lands.

The third sentence of the same paragraph is new: "The exploration, development and utilization of natural resources shall be under the full control and supervision of the State." The constitutional policy of the State's "full control and supervision" over natural resources proceeds from the concept of jura regalia, as well as the recognition of the importance of the country's natural resources, not only for national economic development, but also for its security and national defense.178 Under this provision, the State assumes "a more dynamic role" in the exploration, development and utilization of natural resources.179

Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing the State to grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural resources. By such omission, the utilization of inalienable lands of public domain through "license, concession or lease" is no longer allowed under the 1987 Constitution.180

Having omitted the provision on the concession system, Section 2 proceeded to introduce "unfamiliar language":181

The State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or

associations at least sixty per centum of whose capital is owned by such citizens.

Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the State two "options."182 One, the State may directly undertake these activities itself; or two, it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or entities at least 60% of whose capital is owned by such citizens.

A third option is found in the third paragraph of the same section:

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.

While the second and third options are limited only to Filipino citizens or, in the case of the former, to corporations or associations at least 60% of the capital of which is owned by Filipinos, a fourth allows the participation of foreign-owned corporations. The fourth and fifth paragraphs of Section 2 provide:

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Although Section 2 sanctions the participation of foreign-owned corporations in the exploration, development, and utilization of natural resources, it imposes certain limitations or conditions to agreements with such corporations.

First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these agreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipino citizen, corporation or association may enter into a service contract with a "foreign person or entity."

Second, the size of the activities: only large-scale exploration, development, and utilization is allowed. The term "large-scale usually refers to very capital-intensive activities."183

Third, the natural resources subject of the activities is restricted to minerals, petroleum and other mineral oils, the intent being to limit service contracts to those areas where Filipino capital may not be sufficient.184

Fourth, consistency with the provisions of statute. The agreements must be in accordance with the terms and conditions provided by law.

Fifth, Section 2 prescribes certain standards for entering into such agreements. The agreements must be based on real contributions to economic growth and general welfare of the country.

Sixth, the agreements must contain rudimentary stipulations for the promotion of the development and use of local scientific and technical resources.

Seventh, the notification requirement. The President shall notify Congress of every financial or technical assistance agreement entered into within thirty days from its execution.

Finally, the scope of the agreements. While the 1973 Constitution referred to "service contracts for financial, technical, management, or other forms of assistance" the 1987 Constitution provides for "agreements. . . involving either financial or technical assistance." It bears noting that the phrases "service contracts" and "management or other forms of assistance" in the earlier constitution have been omitted.

By virtue of her legislative powers under the Provisional Constitution,185 President Aquino, on July 10, 1987, signed into law E.O. No. 211 prescribing the interim procedures in the processing and approval of applications for the exploration, development and utilization of minerals. The omission in the 1987 Constitution of the term "service contracts" notwithstanding, the said E.O. still referred to them in Section 2 thereof:

Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal applications and applications for approval of operating agreements and mining service contracts, shall be accepted and processed and may be approved x x x. [Emphasis supplied.]

The same law provided in its Section 3 that the "processing, evaluation and approval of all mining applications . . . operating agreements and service contracts . . . shall be governed by Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations. . . ."

As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of which the subject WMCP FTAA was executed on March 30, 1995.

On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that the Act "shall govern the exploration, development, utilization, and processing of all mineral resources." Such declaration notwithstanding, R.A. No. 7942 does not actually cover all the modes through which the State may undertake the exploration, development, and utilization of natural resources.

The State, being the owner of the natural resources, is accorded the primary power and responsibility in the exploration, development and utilization thereof. As such, it may undertake these activities through four modes:

The State may directly undertake such activities.

(2) The State may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations.

(3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens.

(4) For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned

corporations involving technical or financial assistance.186

Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and surveys,187 and a passing mention of government-owned or controlled corporations,188 R.A. No. 7942 does not specify how the State should go about the first mode. The third mode, on the other hand, is governed by Republic Act No. 7076189 (the People's Small-Scale Mining Act of 1991) and other pertinent laws.190 R.A. No. 7942 primarily concerns itself with the second and fourth modes.

Mineral production sharing, co-production and joint venture agreements are collectively classified by R.A. No. 7942 as "mineral agreements."191 The Government participates the least in a mineral production sharing agreement (MPSA). In an MPSA, the Government grants the contractor192 the exclusive right to conduct mining operations within a contract area193 and shares in the gross output.194 The MPSA contractor provides the financing, technology, management and personnel necessary for the agreement's implementation.195 The total government share in an MPSA is the excise tax on mineral products under Republic Act No. 7729,196 amending Section 151(a) of the National Internal Revenue Code, as amended.197

In a co-production agreement (CA),198 the Government provides inputs to the mining operations other than the mineral resource,199 while in a joint venture agreement (JVA), where the Government enjoys the greatest participation, the Government and the JVA contractor organize a company with both parties having equity shares.200 Aside from earnings in equity, the Government in a JVA is also entitled to a share in the gross output.201 The Government may enter into a CA202 or JVA203 with one or more contractors. The Government's share in a CA or JVA is set out in Section 81 of the law:

The share of the Government in co-production and joint venture agreements shall be negotiated by the Government and the contractor taking into consideration the: (a) capital investment of the project, (b) the risks involved, (c) contribution of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing between the Government and the contractor. The Government shall also be entitled to compensations for its other contributions which shall be agreed upon by the parties, and shall consist, among other things, the contractor's income tax, excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said foreign stockholders, in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws.

All mineral agreements grant the respective contractors the exclusive right to conduct mining operations and to extract all mineral resources found in the contract area.204 A "qualified person" may enter into any of the mineral agreements with the Government.205 A "qualified person" is

any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines x x x.206

The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "a contract involving financial or technical assistance for large-scale exploration, development, and utilization of natural resources."207 Any qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of natural resources in the Philippines may enter into such agreement directly with the Government

through the DENR.208 For the purpose of granting an FTAA, a legally organized foreign-owned corporation (any corporation, partnership, association, or cooperative duly registered in accordance with law in which less than 50% of the capital is owned by Filipino citizens)209 is deemed a "qualified person."210

Other than the difference in contractors' qualifications, the principal distinction between mineral agreements and FTAAs is the maximum contract area to which a qualified person may hold or be granted.211 "Large-scale" under R.A. No. 7942 is determined by the size of the contract area, as opposed to the amount invested (US $50,000,000.00), which was the standard under E.O. 279.

Like a CA or a JVA, an FTAA is subject to negotiation.212 The Government's contributions, in the form of taxes, in an FTAA is identical to its contributions in the two mineral agreements, save that in an FTAA:

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical assistance agreement contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive.213

III

Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a consideration of the substantive issues presented by the petition is now in order.

THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279

Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not come into effect.

E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the opening of Congress on July 27, 1987.214 Section 8 of the E.O. states that the same "shall take effect immediately." This provision, according to petitioners, runs counter to Section 1 of E.O. No. 200,215 which provides:

SECTION 1. Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.216 [Emphasis supplied.]

On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after its publication at which time Congress had already convened and the President's power to legislate had ceased.

Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners Association of the Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued pursuant thereto.

Nevertheless, petitioners' contentions have no merit.

It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date other than – even before – the 15-day period after its publication. Where a law provides for its own date of effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed,

this is the very essence of the phrase "unless it is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200, therefore, applies only when a statute does not provide for its own date of effectivity.

What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Tañada v. Tuvera,217 is the publication of the law for without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis n[eminem] excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.

While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its invalidation since the Constitution, being "the fundamental, paramount and supreme law of the nation," is deemed written in the law.218 Hence, the due process clause,219 which, so Tañada held, mandates the publication of statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No. 200 which provides for publication "either in the Official Gazette or in a newspaper of general circulation in the Philippines," finds suppletory application. It is significant to note that E.O. No. 279 was actually published in the Official Gazette220 on August 3, 1987.

From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Tañada v. Tuvera, this Court holds that E.O. No. 279 became effective immediately upon its publication in the Official Gazette on August 3, 1987.

That such effectivity took place after the convening of the first Congress is irrelevant. At the time President Aquino issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislative powers under the Provisional Constitution.221 Article XVIII (Transitory Provisions) of the 1987 Constitution explicitly states:

Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congress is convened.

The convening of the first Congress merely precluded the exercise of legislative powers by President Aquino; it did not prevent the effectivity of laws she had previously enacted.

There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute.

THE CONSTITUTIONALITY OF THE WMCP FTAA

Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution, FTAAs should be limited to "technical or financial assistance" only. They observe, however, that, contrary to the language of the Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned mining corporation, to extend more than mere financial or technical assistance to the State, for it permits WMCP to manage and operate every aspect of the mining activity. 222

Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the instrument must be so construed as to give effect to the intention of the people who adopted it.223This intention is to be sought in the constitution itself, and the apparent meaning of the words is to be taken as expressing it, except in cases where that assumption would lead to absurdity, ambiguity, or contradiction.224 What the Constitution says according to the text of the provision, therefore, compels acceptance and negates the power of the courts to alter it,

based on the postulate that the framers and the people mean what they say.225 Accordingly, following the literal text of the Constitution, assistance accorded by foreign-owned corporations in the large-scale exploration, development, and utilization of petroleum, minerals and mineral oils should be limited to "technical" or "financial" assistance only.

WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O. No. 279 encompasses a "broad number of possible services," perhaps, "scientific and/or technological in basis."226 It thus posits that it may also well include "the area of management or operations . . . so long as such assistance requires specialized knowledge or skills, and are related to the exploration, development and utilization of mineral resources."227

This Court is not persuaded. As priorly pointed out, the phrase "management or other forms of assistance" in the 1973 Constitution was deleted in the 1987 Constitution, which allows only "technical or financial assistance." Casus omisus pro omisso habendus est. A person, object or thing omitted from an enumeration must be held to have been omitted intentionally.228 As will be shown later, the management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate.

Respondents insist that "agreements involving technical or financial assistance" is just another term for service contracts. They contend that the proceedings of the CONCOM indicate "that although the terminology 'service contract' was avoided [by the Constitution], the concept it represented was not." They add that "[t]he concept is embodied in the phrase 'agreements involving financial or technical assistance.'"229 And point out how members of the CONCOM referred to these agreements as "service contracts." For instance:

SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the past service contracts under Mr. Marcos is the general law to be enacted by the legislature and the notification of Congress by the President? That is the only difference, is it not?

MR. VILLEGAS. That is right.

SR. TAN. So those are the safeguards[?]

MR. VILLEGAS. Yes. There was no law at all governing service contracts before.

SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]

WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and Tadeo who alluded to service contracts as they explained their respective votes in the approval of the draft Article:

MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the provision on service contracts. I felt that if we would constitutionalize any provision on service contracts, this should always be with the concurrence of Congress and not guided only by a general law to be promulgated by Congress. x x x.231 [Emphasis supplied.]

x x x.

MR. GARCIA. Thank you.

I vote no. x x x.

Service contracts are given constitutional legitimization in Section 3, even when they have been proven to be inimical to the interests of the nation, providing as they do the legal loophole for the exploitation of our natural resources for the benefit of foreign interests. They constitute a serious negation of Filipino control on the use and disposition of the nation's natural resources, especially with regard to those which are nonrenewable.232 [Emphasis supplied.]

x x x

MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy and Patrimony, going over said provisions meticulously, setting aside prejudice and personalities will reveal that the article contains a balanced set of provisions. I hope the forthcoming Congress will implement such provisions taking into account that Filipinos should have real control over our economy and patrimony, and if foreign equity is permitted, the same must be subordinated to the imperative demands of the national interest.

x x x.

It is also my understanding that service contracts involving foreign corporations or entities are resorted to only when no Filipino enterprise or Filipino-controlled enterprise could possibly undertake the exploration or exploitation of our natural resources and that compensation under such contracts cannot and should not equal what should pertain to ownership of capital. In other words, the service contract should not be an instrument to circumvent the basic provision, that the exploration and exploitation of natural resources should be truly for the benefit of Filipinos.

Thank you, and I vote yes.233 [Emphasis supplied.]

x x x.

MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.

Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang "imperyalismo." Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilang monopolyong kapitalista at ang salitang "imperyalismo" ay buhay na buhay sa National Economy and Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on," naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon pa rin ang parity rights, ang service contract, ang 60-40 equity sa natural resources. Habang naghihirap ang sambayanang Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man ang Article on National Economy and Patrimony ay hindi nagpaalis sa pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at ang national industrialization. Ito ang tinatawag naming pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade na ito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa

Kanluran. Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I vote no.234 [Emphasis supplied.]

This Court is likewise not persuaded.

As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article on National Economy and Patrimony. If the CONCOM intended to retain the concept of service contracts under the 1973 Constitution, it could have simply adopted the old terminology ("service contracts") instead of employing new and unfamiliar terms ("agreements . . . involving either technical or financial assistance"). Such a difference between the language of a provision in a revised constitution and that of a similar provision in the preceding constitution is viewed as indicative of a difference in purpose.235 If, as respondents suggest, the concept of "technical or financial assistance" agreements is identical to that of "service contracts," the CONCOM would not have bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce the first to a mere euphemism for the second and render the change in phraseology meaningless.

An examination of the reason behind the change confirms that technical or financial assistance agreements are not synonymous to service contracts.

[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by its adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined in light of the history of the times, and the condition and circumstances under which the Constitution was framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the particular provision and the purpose sought to be accomplished thereby, in order to construe the whole as to make the words consonant to that reason and calculated to effect that purpose.236

As the following question of Commissioner Quesada and Commissioner Villegas' answer shows the drafters intended to do away with service contracts which were used to circumvent the capitalization (60%-40%) requirement:

MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particular Section 3, is there a safeguard against the possible control of foreign interests if the Filipinos go into coproduction with them?

MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our first attempt to avoid some of the abuses in the past regime in the use of service contracts to go around the 60-40 arrangement. The safeguard that has been introduced – and this, of course can be refined – is found in Section 3, lines 25 to 30, where Congress will have to concur with the President on any agreement entered into between a foreign-owned corporation and the government involving technical or financial assistance for large-scale exploration, development and utilization of natural resources.237 [Emphasis supplied.]

In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner Quesada regarding the participation of foreign interests in Philippine natural resources, which was supposed to be restricted to Filipinos.

MS. QUESADA. Another point of clarification is the phrase "and utilization of natural resources shall be under the full control and supervision of the State." In the 1973 Constitution, this was limited to citizens of the Philippines; but it was removed and substituted by "shall be under the full control and supervision of the State." Was the

concept changed so that these particular resources would be limited to citizens of the Philippines? Or would these resources only be under the full control and supervision of the State; meaning, noncitizens would have access to these natural resources? Is that the understanding?

MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it states:

Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, production-sharing agreements with Filipino citizens.

So we are still limiting it only to Filipino citizens.

x x x.

MS. QUESADA. Going back to Section 3, the section suggests that:

The exploration, development, and utilization of natural resources… may be directly undertaken by the State, or it may enter into co-production, joint venture or production-sharing agreement with . . . corporations or associations at least sixty per cent of whose voting stock or controlling interest is owned by such citizens.

Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development and utilization of natural resources, the President with the concurrence of Congress may enter into agreements with foreign-owned corporations even for technical or financial assistance.

I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that foreign investors will use their enormous capital resources to facilitate the actual exploitation or exploration, development and effective disposition of our natural resources to the detriment of Filipino investors. I am not saying that we should not consider borrowing money from foreign sources. What I refer to is that foreign interest should be allowed to participate only to the extent that they lend us money and give us technical assistance with the appropriate government permit. In this way, we can insure the enjoyment of our natural resources by our own people.

MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors to participate. It is only technical or financial assistance – they do not own anything – but on conditions that have to be determined by law with the concurrence of Congress. So, it is very restrictive.

If the Commissioner will remember, this removes the possibility for service contracts which we said yesterday were avenues used in the previous regime to go around the 60-40 requirement.238[Emphasis supplied.]

The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope in proposing an amendment to the 60-40 requirement:

MR. DAVIDE. May I be allowed to explain the proposal?

MR. MAAMBONG. Subject to the three-minute rule, Madam President.

MR. DAVIDE. It will not take three minutes.

The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino people are sovereign and that one of the objectives for the creation or establishment of a government is to conserve and develop the national patrimony. The implication is that the national patrimony or our natural resources are exclusively reserved for the Filipino people. No alien must be allowed to enjoy, exploit and develop our natural resources. As a matter of fact, that principle proceeds from the fact that our natural resources are gifts from God to the Filipino people and it would be a breach of that special blessing from God if we will allow aliens to exploit our natural resources.

I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien corporations but only for them to render financial or technical assistance. It is not for them to enjoy our natural resources. Madam President, our natural resources are depleting; our population is increasing by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our natural resources, there will be no more natural resources for the next generations of Filipinos. It may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a certain extent the exploitation of our natural resources, and we became victims of foreign dominance and control. The aliens are interested in coming to the Philippines because they would like to enjoy the bounty of nature exclusively intended for Filipinos by God.

And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble "to preserve and develop the national patrimony for the sovereign Filipino people and for the generations to come," we must at this time decide once and for all that our natural resources must be reserved only to Filipino citizens.

Thank you.239 [Emphasis supplied.]

The opinion of another member of the CONCOM is persuasive240 and leaves no doubt as to the intention of the framers to eliminate service contracts altogether. He writes:

Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakings for which the President may enter into contracts with foreign-owned corporations, and enunciates strict conditions that should govern such contracts. x x x.

This provision balances the need for foreign capital and technology with the need to maintain the national sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms in their own territory, there is no danger of relinquishing sovereignty to foreign interests.

Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign investors (fully alien-owned) can NOT participate in Filipino enterprises except to provide: (1) Technical Assistance for highly technical enterprises; and (2) Financial Assistance for large-scale enterprises.

The intent of this provision, as well as other provisions on foreign investments, is to prevent the practice (prevalent in the Marcos government) of skirting the 60/40 equation using the cover of service contracts.241 [Emphasis supplied.]

Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on National Economy and Patrimony, adopted the concept of "agreements . . . involving either technical or financial assistance" contained in the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft) which was taken into consideration during the deliberation of the

CONCOM.243 The former, as well as Article XII, as adopted, employed the same terminology, as the comparative table below shows:

DRAFT OF THE UP LAW CONSTITUTION

PROJECT

PROPOSED RESOLUTION NO. 496

OF THE CONSTITUTIONAL

COMMISSION

ARTICLE XII OF THE 1987 CONSTITUTION

Sec. 1. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, flora and fauna and other natural resources of the Philippines are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. Such activities may be directly undertaken by the state, or it may enter into co-production, joint venture, production sharing agreements with Filipino citizens or corporations or associations sixty per cent of whose voting stock or controlling interest is owned by such citizens for a period of not more than twenty-five years, renewable for not more than twenty-five years and under such terms and conditions as may be provided by law. In

Sec. 3. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, production-sharing agreements with Filipino citizens or corporations or associations at least sixty per cent of whose voting stock or controlling interest is owned by such citizens. Such agreements shall be for a period of twenty-five years, renewable for not more than twenty-five years, and under such term and conditions as may be provided by law. In

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In case of water rights for

case as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

The National Assembly may by law allow small scale utilization of natural resources by Filipino citizens.

The National Assembly, may, by two-thirds vote of all its members by special law provide the terms and conditions under which a foreign-owned corporation may enter into agreements with the government involving either technical or financial assistance for large-scale exploration, development, or utilization of natural resources. [Emphasis supplied.]

cases of water rights for irrigation, water supply, fisheries or industrial uses other than the development for water power, beneficial use may be the measure and limit of the grant.

The Congress may by law allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming in rivers, lakes, bays, and lagoons.

The President with the concurrence of Congress, by special law, shall provide the terms and conditions under which a foreign-owned corporation may enter into agreements with the government involving either technical or financial assistance for large-scale exploration, development, and utilization of natural resources. [Emphasis supplied.]

irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of

local scientific and technical resources. [Emphasis supplied.]

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the phrase "technical or financial assistance."

In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A. Agabin, who was a member of the working group that prepared the U.P. Law draft, criticized service contracts for they "lodge exclusive management and control of the enterprise to the service contractor, which is reminiscent of the old concession regime. Thus, notwithstanding the provision of the Constitution that natural resources belong to the State, and that these shall not be alienated, the service contract system renders nugatory the constitutional provisions cited."244 He elaborates:

Looking at the Philippine model, we can discern the following vestiges of the concession regime, thus:

1. Bidding of a selected area, or leasing the choice of the area to the interested party and then negotiating the terms and conditions of the contract; (Sec. 5, P.D. 87)

2. Management of the enterprise vested on the contractor, including operation of the field if petroleum is discovered; (Sec. 8, P.D. 87)

3. Control of production and other matters such as expansion and development; (Sec. 8)

4. Responsibility for downstream operations – marketing, distribution, and processing may be with the contractor (Sec. 8);

5. Ownership of equipment, machinery, fixed assets, and other properties remain with contractor (Sec. 12, P.D. 87);

6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec. 13, P.D. 87); and

7. While title to the petroleum discovered may nominally be in the name of the government, the contractor has almost unfettered control over its disposition and sale, and even the domestic requirements of the country is relegated to a pro rata basis (Sec. 8).

In short, our version of the service contract is just a rehash of the old concession regime x x x. Some people have pulled an old rabbit out of a magician's hat, and foisted it upon us as a new and different animal.

The service contract as we know it here is antithetical to the principle of sovereignty over our natural resources restated in the same article of the [1973] Constitution containing the provision for service contracts. If the service contractor happens to be a foreign corporation, the contract would also run counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our natural resources.245 [Emphasis supplied. Underscoring in the original.]

Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of the system:

x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but the essence of nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that the exploitation or development of the country's natural resources be limited to Filipino citizens or corporations owned or controlled by them. However, the martial-law Constitution allowed them, once these resources are in their name, to enter into service contracts with foreign investors for financial, technical, management, or other forms of assistance. Since foreign investors have the capital resources, the actual exploitation and development, as well as the effective disposition, of the country's natural resources, would be under their direction, and control, relegating the Filipino investors to the role of second-rate partners in joint ventures.

Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the highest level of state policy that which was prohibited under the 1973 Constitution, namely: the exploitation of the country's natural resources by foreign nationals. The drastic impact of [this] constitutional change becomes more pronounced when it is considered that the active party to any service contract may be a corporation wholly owned by foreign interests. In such a case, the citizenship requirement is completely set aside, permitting foreign corporations to obtain actual possession, control, and [enjoyment] of the country's natural resources.246 [Emphasis supplied.]

Accordingly, Professor Agabin recommends that:

Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm ownership over our natural resources. That is the only way we can exercise effective control over our natural resources.

This should not mean complete isolation of the country's natural resources from foreign investment. Other contract forms which are less derogatory to our sovereignty and control over natural resources – like technical assistance agreements, financial assistance [agreements], co-production agreements, joint ventures, production-sharing – could still be utilized and adopted without violating constitutional provisions. In other words, we can adopt contract forms which recognize and assert our sovereignty and ownership over natural resources, and where the foreign entity is just a pure contractor instead of the beneficial owner of our economic resources.247 [Emphasis supplied.]

Still another member of the working group, Professor Eduardo Labitag, proposed that:

2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the government may be allowed, subject to authorization by special law passed by an

extraordinary majority to enter into either technical or financial assistance. This is justified by the fact that as presently worded in the 1973 Constitution, a service contract gives full control over the contract area to the service contractor, for him to work, manage and dispose of the proceeds or production. It was a subterfuge to get around the nationality requirement of the constitution.248 [Emphasis supplied.]

In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft summarized the rationale therefor, thus:

5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of the 1973 Constitution as amended. This 1973 provision shattered the framework of nationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in the Constitution"). Through the service contract, the 1973 Constitution had legitimized that which was prohibited under the 1935 constitution—the exploitation of the country's natural resources by foreign nationals. Through the service contract, acts prohibited by the Anti-Dummy Law were recognized as legitimate arrangements. Service contracts lodge exclusive management and control of the enterprise to the service contractor, not unlike the old concession regime where the concessionaire had complete control over the country's natural resources, having been given exclusive and plenary rights to exploit a particular resource and, in effect, having been assured of ownership of that resource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New Bottles"). Service contracts, hence, are antithetical to the principle of sovereignty over our natural resources, as well as the constitutional provision on nationalization or Filipinization of the exploitation of our natural resources.

Under the proposed provision, only technical assistance or financial assistance agreements may be entered into, and only for large-scale activities. These are contract forms which recognize and assert our sovereignty and ownership over natural resources since the foreign entity is just a pure contractor and not a beneficial owner of our economic resources. The proposal recognizes the need for capital and technology to develop our natural resources without sacrificing our sovereignty and control over such resources by the safeguard of a special law which requires two-thirds vote of all the members of the Legislature. This will ensure that such agreements will be debated upon exhaustively and thoroughly in the National Assembly to avert prejudice to the nation.249 [Emphasis supplied.]

The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of beneficial ownership of the country's natural resources to foreign owned corporations. While, in theory, the State owns these natural resources – and Filipino citizens, their beneficiaries – service contracts actually vested foreigners with the right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not Filipinos, became the beneficiaries of Philippine natural resources. This arrangement is clearly incompatible with the constitutional ideal of nationalization of natural resources, with the Regalian doctrine, and on a broader perspective, with Philippine sovereignty.

The proponents nevertheless acknowledged the need for capital and technical know-how in the large-scale exploitation, development and utilization of natural resources – the second paragraph of the proposed draft itself being an admission of such scarcity. Hence, they recommended a compromise to reconcile the nationalistic provisions dating back to the 1935 Constitution, which reserved all natural resources exclusively to Filipinos, and the more liberal 1973 Constitution, which allowed foreigners to participate in these resources through service contracts. Such a compromise called for the adoption of a new system in the exploration, development, and utilization of natural resources in the form of technical agreements or financial agreements which, necessarily, are distinct concepts from service contracts.

The replacement of "service contracts" with "agreements… involving either technical or financial assistance," as well as the deletion of the phrase "management or other forms of assistance," assumes greater significance when note is taken that the U.P. Law draft proposed other equally crucial changes that were obviously heeded by the CONCOM. These include the abrogation of the concession system and the adoption of new "options" for the State in the exploration, development, and utilization of natural resources. The proponents deemed these changes to be more consistent with the State's ownership of, and its "full control and supervision" (a phrase also employed by the framers) over, such resources. The Project explained:

3. In line with the State ownership of natural resources, the State should take a more active role in the exploration, development, and utilization of natural resources, than the present practice of granting licenses, concessions, or leases – hence the provision that said activities shall be under the full control and supervision of the State. There are three major schemes by which the State could undertake these activities: first, directly by itself; second, by virtue of co-production, joint venture, production sharing agreements with Filipino citizens or corporations or associations sixty per cent (60%) of the voting stock or controlling interests of which are owned by such citizens; or third, with a foreign-owned corporation, in cases of large-scale exploration, development, or utilization of natural resources through agreements involving either technical or financial assistance only. x x x.

At present, under the licensing concession or lease schemes, the government benefits from such benefits only through fees, charges, ad valorem taxes and income taxes of the exploiters of our natural resources. Such benefits are very minimal compared with the enormous profits reaped by theses licensees, grantees, concessionaires. Moreover, some of them disregard the conservation of natural resources and do not protect the environment from degradation. The proposed role of the State will enable it to a greater share in the profits – it can also actively husband its natural resources and engage in developmental programs that will be beneficial to them.

4. Aside from the three major schemes for the exploration, development, and utilization of our natural resources, the State may, by law, allow Filipino citizens to explore, develop, utilize natural resources in small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers, gold panners, and others similarly situated who exploit our natural resources for their daily sustenance and survival.250

Professor Agabin, in particular, after taking pains to illustrate the similarities between the two systems, concluded that the service contract regime was but a "rehash" of the concession system. "Old wine in new bottles," as he put it. The rejection of the service contract regime, therefore, is in consonance with the abolition of the concession system.

In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other proposed changes, there is no doubt that the framers considered and shared the intent of the U.P. Law proponents in employing the phrase "agreements . . . involving either technical or financial assistance."

While certain commissioners may have mentioned the term "service contracts" during the CONCOM deliberations, they may not have been necessarily referring to the concept of service contracts under the 1973 Constitution. As noted earlier, "service contracts" is a term that assumes different meanings to different people.251 The commissioners may have been using the term loosely, and not in its technical and legal sense, to refer, in general, to agreements concerning natural resources entered into by the Government with foreign corporations. These loose statements do not necessarily translate to the adoption of the 1973

Constitution provision allowing service contracts.

It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to Sr. Tan's question, Commissioner Villegas commented that, other than congressional notification, the only difference between "future" and "past" "service contracts" is the requirement of a general law as there were no laws previously authorizing the same.252 However, such remark is far outweighed by his more categorical statement in his exchange with Commissioner Quesada that the draft article "does not permit foreign investors to participate" in the nation's natural resources – which was exactly what service contracts did – except to provide "technical or financial assistance."253

In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the present charter prohibits service contracts.254 Commissioner Gascon was not totally averse to foreign participation, but favored stricter restrictions in the form of majority congressional concurrence.255 On the other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the spectrum and their objections may be interpreted as votes against any foreign participation in our natural resources whatsoever.

WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice, expressing the view that a financial or technical assistance agreement "is no different in concept" from the service contract allowed under the 1973 Constitution. This Court is not, however, bound by this interpretation. When an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law; and the administrative interpretation of the law is at best advisory, for it is the courts that finally determine what the law means.258

In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned corporations is an exception to the rule that participation in the nation's natural resources is reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "very restrictive."259 Commissioner Nolledo also remarked that "entering into service contracts is an exception to the rule on protection of natural resources for the interest of the nation and, therefore, being an exception, it should be subject, whenever possible, to stringent rules."260 Indeed, exceptions should be strictly but reasonably construed; they extend only so far as their language fairly warrants and all doubts should be resolved in favor of the general provision rather than the exception.261

With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act authorizes service contracts. Although the statute employs the phrase "financial and technical agreements" in accordance with the 1987 Constitution, it actually treats these agreements as service contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.

Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A. No. 7942 states:

SEC. 33. Eligibility.—Any qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of mineral resources in the Philippines may enter into a financial or technical assistance agreement directly with the Government through the Department. [Emphasis supplied.]

"Exploration," as defined by R.A. No. 7942,

means the searching or prospecting for mineral resources by geological, geochemical or geophysical surveys, remote sensing, test pitting, trending, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quantity and quality thereof and the feasibility of mining them for profit.262

A legally organized foreign-owned corporation may be granted an exploration permit,263 which vests it with the right to conduct exploration for all minerals in specified areas,264 i.e., to enter, occupy and explore the same.265 Eventually, the foreign-owned corporation, as such permittee, may apply for a financial and technical assistance agreement.266

"Development" is the work undertaken to explore and prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities.267

"Utilization" "means the extraction or disposition of minerals."268 A stipulation that the proponent shall dispose of the minerals and byproducts produced at the highest price and more advantageous terms and conditions as provided for under the implementing rules and regulations is required to be incorporated in every FTAA.269

A foreign-owned/-controlled corporation may likewise be granted a mineral processing permit.270 "Mineral processing" is the milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products.271

An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance with the provisions of R.A. No. 7942 and its implementing rules272 and for work programs and minimum expenditures and commitments.273 And it obliges itself to furnish the Government records of geologic, accounting, and other relevant data for its mining operation.274

"Mining operation," as the law defines it, means mining activities involving exploration, feasibility, development, utilization, and processing.275

The underlying assumption in all these provisions is that the foreign contractor manages the mineral resources, just like the foreign contractor in a service contract.

Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining rights that it grants contractors in mineral agreements (MPSA, CA and JV).276 Parenthetically, Sections 72 to 75 use the term "contractor," without distinguishing between FTAA and mineral agreement contractors. And so does "holders of mining rights" in Section 76. A foreign contractor may even convert its FTAA into a mineral agreement if the economic viability of the contract area is found to be inadequate to justify large-scale mining operations,277 provided that it reduces its equity in the corporation, partnership, association or cooperative to forty percent (40%).278

Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing, managerial, and technical expertise. . . ."279 This suggests that an FTAA contractor is bound to provide some management assistance – a form of assistance that has been eliminated and, therefore, proscribed by the present Charter.

By allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral resources to these contractors, leaving the State with nothing but bare title

thereto.

Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained 60%-40% capitalization requirement for corporations or associations engaged in the exploitation, development and utilization of Philippine natural resources.

In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of the Constitution:

(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:

Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement or mineral processing permit.

(2) Section 23,280 which specifies the rights and obligations of an exploration permittee, insofar as said section applies to a financial or technical assistance agreement,

(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance agreement;

(4) Section 35,281 which enumerates the terms and conditions for every financial or technical assistance agreement;

(5) Section 39,282 which allows the contractor in a financial and technical assistance agreement to convert the same into a mineral production-sharing agreement;

(6) Section 56,283 which authorizes the issuance of a mineral processing permit to a contractor in a financial and technical assistance agreement;

The following provisions of the same Act are likewise void as they are dependent on the foregoing provisions and cannot stand on their own:

(1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial or technical assistance agreement.

Section 34,285 which prescribes the maximum contract area in a financial or technical assistance agreements;

Section 36,286 which allows negotiations for financial or technical assistance agreements;

Section 37,287 which prescribes the procedure for filing and evaluation of financial or technical assistance agreement proposals;

Section 38,288 which limits the term of financial or technical assistance agreements;

Section 40,289 which allows the assignment or transfer of financial or technical assistance agreements;

Section 41,290 which allows the withdrawal of the contractor in an FTAA;

The second and third paragraphs of Section 81,291 which provide for the Government's share in a financial and technical assistance agreement; and

Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies to said contractors;

When the parts of the statute are so mutually dependent and connected as conditions, considerations, inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a whole, and that if all could not be carried into effect, the legislature would not pass the residue independently, then, if some parts are unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with them.293

There can be little doubt that the WMCP FTAA itself is a service contract.

Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,] process and dispose of all Minerals products and by-products thereof that may be produced from the Contract Area."294 The FTAA also imbues WMCP with the following rights:

(b) to extract and carry away any Mineral samples from the Contract area for the purpose of conducting tests and studies in respect thereof;

(c) to determine the mining and treatment processes to be utilised during the Development/Operating Period and the project facilities to be constructed during the Development and Construction Period;

(d) have the right of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to the provisions of Presidential Decree No. 512 (if applicable) and not be prevented from entry into private ands by surface owners and/or occupants thereof when prospecting, exploring and exploiting for minerals therein;

x x x

(f) to construct roadways, mining, drainage, power generation and transmission facilities and all other types of works on the Contract Area;

(g) to erect, install or place any type of improvements, supplies, machinery and other equipment relating to the Mining Operations and to use, sell or otherwise dispose of, modify, remove or diminish any and all parts thereof;

(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties, easement rights and the use of timber, sand, clay, stone, water and other natural resources in the Contract Area without cost for the purposes of the Mining Operations;

x x x

(i) have the right to mortgage, charge or encumber all or part of its interest and obligations under this Agreement, the plant, equipment and infrastructure and the

Minerals produced from the Mining Operations;

x x x. 295

All materials, equipment, plant and other installations erected or placed on the Contract Area remain the property of WMCP, which has the right to deal with and remove such items within twelve months from the termination of the FTAA.296

Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management and personnel necessary for the Mining Operations." The mining company binds itself to "perform all Mining Operations . . . providing all necessary services, technology and financing in connection therewith,"297 and to "furnish all materials, labour, equipment and other installations that may be required for carrying on all Mining Operations."298> WMCP may make expansions, improvements and replacements of the mining facilities and may add such new facilities as it considers necessary for the mining operations.299

These contractual stipulations, taken together, grant WMCP beneficial ownership over natural resources that properly belong to the State and are intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.

In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and Protection of Investments between the Philippine and Australian Governments, which was signed in Manila on January 25, 1995 and which entered into force on December 8, 1995.

x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the fact that [WMCP's] FTAA was entered into prior to the entry into force of the treaty does not preclude the Philippine Government from protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of the treaty provides that "Each Party shall encourage and promote investments in its area by investors of the other Party and shall [admit] such investments in accordance with its Constitution, Laws, regulations and investment policies" and in Article 3 (2), it states that "Each Party shall ensure that investments are accorded fair and equitable treatment." The latter stipulation indicates that it was intended to impose an obligation upon a Party to afford fair and equitable treatment to the investments of the other Party and that a failure to provide such treatment by or under the laws of the Party may constitute a breach of the treaty. Simply stated, the Philippines could not, under said treaty, rely upon the inadequacies of its own laws to deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered into before the enactment of RA 7942 such as those mentioned in PD 87 or EO 279.

This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by a mere Filipino citizen, but by the Philippine Government itself, through its President no less, which, in entering into said treaty is assumed to be aware of the existing Philippine laws on service contracts over the exploration, development and utilization of natural resources. The execution of the FTAA by the Philippine Government assures the Australian Government that the FTAA is in accordance with existing Philippine laws.300 [Emphasis and italics by private respondents.]

The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in turn, would amount to a violation of Section 3, Article II of the Constitution adopting

the generally accepted principles of international law as part of the law of the land. One of these generally accepted principles is pacta sunt servanda, which requires the performance in good faith of treaty obligations.

Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion that "the Philippines could not . . . deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered into before the enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a breach of the treaty invoked. For this decision herein invalidating the subject FTAA forms part of the legal system of the Philippines.301 The equal protection clause302 guarantees that such decision shall apply to all contracts belonging to the same class, hence, upholding rather than violating, the "fair and equitable treatment" stipulation in said treaty.

One other matter requires clarification. Petitioners contend that, consistent with the provisions of Section 2, Article XII of the Constitution, the President may enter into agreements involving "either technical or financial assistance" only. The agreement in question, however, is a technical and financial assistance agreement.

Petitioners' contention does not lie. To adhere to the literal language of the Constitution would lead to absurd consequences.303 As WMCP correctly put it:

x x x such a theory of petitioners would compel the government (through the President) to enter into contract with two (2) foreign-owned corporations, one for financial assistance agreement and with the other, for technical assistance over one and the same mining area or land; or to execute two (2) contracts with only one foreign-owned corporation which has the capability to provide both financial and technical assistance, one for financial assistance and another for technical assistance, over the same mining area. Such an absurd result is definitely not sanctioned under the canons of constitutional construction.304 [Underscoring in the original.]

Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of "either/or." A constitution is not to be interpreted as demanding the impossible or the impracticable; and unreasonable or absurd consequences, if possible, should be avoided.305 Courts are not to give words a meaning that would lead to absurd or unreasonable consequences and a literal interpretation is to be rejected if it would be unjust or lead to absurd results.306 That is a strong argument against its adoption.307 Accordingly, petitioners' interpretation must be rejected.

The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the petition.

WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:

(1) The following provisions of Republic Act No. 7942:

(a) The proviso in Section 3 (aq),

(b) Section 23,

(c) Section 33 to 41,

(d) Section 56,

(e) The second and third paragraphs of Section 81, and

(f) Section 90.

(2) All provisions of Department of Environment and Natural Resources Administrative Order 96-40, s. 1996 which are not in conformity with this Decision, and

(3) The Financial and Technical Assistance Agreement between the Government of the Republic of the Philippines and WMC Philippines, Inc.

SO ORDERED.

Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga. JJ., concur.Vitug, J., see Separate Opinion.Panganiban, J., see Separate Opinion.Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J., Panganiban's separate opinion.Azcuna, no part, one of the parties was a client.

TECSON VS. COMELEC [424 SCRA 277; G.R. No. 161434; 3 Mar 2004]Wednesday, February 18, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: Victorino X. Fornier, petitioner initiated a petition before the COMELEC to disqualify

FPJ and to deny due course or to cancel his certificate of candidacy upon the thesis that FPJ

made a material misrepresentation in his certificate of candidacy by claiming to be anatural-

born Filipino citizen when in truth, according to Fornier, his parents were foreigners; his

mother, Bessie Kelley Poe, was anAmerican, and his father, Allan Poe, was a

Spanish national, being the son of Lorenzo Pou, a Spanish subject. Granting, petitioner

asseverated, that Allan F. Poe was a Filipino citizen, he could not have transmitted his

Filipino citizenship to FPJ, the latter being an illegitimate child of an alien mother. Petitioner

based the allegation of the illegitimate birth of respondent on two assertions - first, Allan F.

Poe contracted a prior marriage to a certain Paulita Gomez before his marriage to Bessie

Kelley and, second, even if no such prior marriage had existed, Allan F. Poe, married Bessie

Kelly only a year after thebirth of respondent.

Issue: Whether or Not FPJ is a natural born Filipino citizen.

Held: It is necessary to take on the matter of whether or not respondent FPJ is a natural-

born citizen, which, in turn, depended on whether or not the father of respondent, Allan F.

Poe, would have himself been a Filipino citizen and, in the affirmative, whether or not the

alleged illegitimacy of respondent prevents him from taking after the Filipino citizenship of

his putative father. Any conclusion on the Filipino citizenship of Lorenzo Pou could only be

drawn from the presumption that having died in 1954 at 84 years old, Lorenzo would have

been born sometime in the year 1870, when the Philippines was under Spanish rule, and

that San Carlos, Pangasinan, his place of residence upon his death in 1954, in the absence

of any other evidence, could have well been his place of residence before death, such that

Lorenzo Pou would have benefited from the "en masse Filipinization" that the Philippine Bill

had effected in 1902. Thatcitizenship (of Lorenzo Pou), if acquired, would thereby extend to

his son, Allan F. Poe, father of respondent FPJ. The 1935 Constitution, during which regime

respondent FPJ has seen first light, conferscitizenship to all persons whose fathers are

Filipino citizens regardless of whether such children are legitimate or illegitimate.

But while the totality of the evidence may not establish conclusively that respondent FPJ is

a natural-born citizen of the Philippines, the evidence on hand still would preponderate in his

favor enough to hold that he cannot be held guilty of having made a material

misrepresentation in his certificate of candidacy in violation of Section 78, in relation to

Section 74, of the Omnibus Election Code. 

G.R. No. 161434             March 3, 2004

MARIA JEANETTE C. TECSON and FELIX B. DESIDERIO, JR., petitioners, vs.The COMMISSION ON ELECTIONS, RONALD ALLAN KELLY POE (a.k.a. FERNANDO POE, JR.) and VICTORINO X. FORNIER, respondents.

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

G.R. No. 161634             March 3, 2004

ZOILO ANTONIO VELEZ, petitioner, vs.RONALD ALLAN KELLEY POE, a.k.a. FERNANDO POE, JR., respondent.

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

G. R. No. 161824             March 3, 2004

VICTORINO X. FORNIER, petitioner, vs.HON. COMMISSION ON ELECTIONS and RONALD ALLAN KELLEY POE, ALSO KNOWN AS FERNANDO POE JR., respondents.

D E C I S I O N

VITUG, J.:

Citizenship is a treasured right conferred on those whom the state believes are deserving of the privilege. It is a "precious heritage, as well as an inestimable acquisition,"1 that cannot be taken lightly by anyone - either by those who enjoy it or by those who dispute it.

Before the Court are three consolidated cases, all of which raise a single question of profound importance to the nation. The issue of citizenship is brought up to challenge the qualifications of a presidential candidate to hold the highest office of the land. Our people are waiting for the judgment of the Court with bated breath. Is Fernando Poe, Jr., the hero of silver screen, and now one of the main contenders for the presidency, a natural-born Filipino or is he not?

The moment of introspection takes us face to face with Spanish and American colonial roots and reminds us of the rich heritage of civil law and common law traditions, the fusion resulting in a hybrid of laws and jurisprudence that could be no less than distinctly Filipino.

Antecedent Case Settings

On 31 December 2003, respondent Ronald Allan Kelly Poe, also known as Fernando Poe, Jr. (hereinafter "FPJ"), filed his certificate of candidacy for the position of President of the Republic of the Philippines under the Koalisyon ng Nagkakaisang Pilipino (KNP) Party, in the forthcoming national elections. In his certificate of candidacy, FPJ, representing himself to be a natural-born citizen of the Philippines, stated his name to be "Fernando Jr.," or "Ronald Allan" Poe, his date of birth to be 20 August 1939 and his place of birth to be Manila.

Victorino X. Fornier, petitioner in G.R. No. 161824, entitled "Victorino X. Fornier, Petitioner, versus Hon. Commission on Elections and Ronald Allan Kelley Poe, also known as Fernando Poe, Jr., Respondents," initiated, on 09 January 2004, a petition docketed SPA No. 04-003 before the Commission on Elections ("COMELEC") to disqualify FPJ and to deny due course or to cancel his certificate of candidacy upon the thesis that FPJ made a material misrepresentation in his certificate of candidacy by claiming to be a natural-born Filipino citizen when in truth, according to Fornier, his parents were foreigners; his mother, Bessie Kelley Poe, was an American, and his father, Allan Poe, was a Spanish national, being the son of Lorenzo Pou, a Spanish subject. Granting, petitioner asseverated, that Allan F. Poe was a Filipino citizen, he could not have transmitted his Filipino citizenship to FPJ, the latter being an illegitimate child of an alien mother. Petitioner based the allegation of the illegitimate birth of respondent on two assertions - first, Allan F. Poe contracted a prior marriage to a certain Paulita Gomez before his marriage to Bessie Kelley and, second, even if no such prior marriage had existed, Allan F. Poe, married Bessie Kelly only a year after the birth of respondent.

In the hearing before the Third Division of the COMELEC on 19 January 2004, petitioner, in support of his claim, presented several documentary exhibits - 1) a copy of the certificate of birth of FPJ, 2) a certified photocopy of an affidavit executed in Spanish by Paulita Poe y Gomez attesting to her having filed a case for bigamy and concubinage against the father of respondent, Allan F. Poe, after discovering his bigamous relationship with Bessie Kelley, 3) an English translation of the affidavit aforesaid, 4) a certified photocopy of the certificate of birth of Allan F. Poe, 5) a certification issued by the Director of the Records

Management and Archives Office, attesting to the fact that there was no record in the National Archives that a Lorenzo Poe or Lorenzo Pou resided or entered the Philippines before 1907, and 6) a certification from the Officer-In-Charge of the Archives Division of the National Archives to the effect that no available information could be found in the files of the National Archives regarding the birth of Allan F. Poe.

On his part, respondent, presented twenty-two documentary pieces of evidence, the more significant ones being - a) a certification issued by Estrella M. Domingo of the Archives Division of the National Archives that there appeared to be no available information regarding the birth of Allan F. Poe in the registry of births for San Carlos, Pangasinan, b) a certification issued by the Officer-In-Charge of the Archives Division of the National Archives that no available information about the marriage of Allan F. Poe and Paulita Gomez could be found, c) a certificate of birth of Ronald Allan Poe, d) Original Certificate of Title No. P-2247 of the Registry of Deeds for the Province of Pangasinan, in the name of Lorenzo Pou, e) copies of Tax Declaration No. 20844, No. 20643, No. 23477 and No. 23478 in the name of Lorenzo Pou, f) a copy of the certificate of death of Lorenzo Pou, g) a copy of the purported marriage contract between Fernando Pou and Bessie Kelley, and h) a certification issued by the City Civil Registrar of San Carlos City, Pangasinan, stating that the records of birth in the said office during the period of from 1900 until May 1946 were totally destroyed during World War II.

On 23 January 2004, the COMELEC dismissed SPA No. 04-003 for lack of merit. Three days later, or on 26 January 2004, Fornier filed his motion for reconsideration. The motion was denied on 06 February 2004 by the COMELEC en banc. On 10 February 2004, petitioner assailed the decision of the COMELEC before this Court conformably with Rule 64, in relation to Rule 65, of the Revised Rules of Civil Procedure. The petition, docketed G. R. No. 161824, likewise prayed for a temporary restraining order, a writ of preliminary injunction or any other resolution that would stay the finality and/or execution of the COMELEC resolutions.

The other petitions, later consolidated with G. R. No. 161824, would include G. R. No. 161434, entitled "Maria Jeanette C. Tecson, and Felix B. Desiderio, Jr., vs. The Commission on Elections, Ronald Allan Kelley Poe (a.k.a. ‘Fernando Poe, Jr.’), and Victorino X. Fornier," and the other, docketed G. R. No. 161634, entitled "Zoilo Antonio G. Velez, vs. Ronald Allan Kelley Poe, a.k.a. Fernando Poe, Jr.," both challenging the jurisdiction of the COMELEC and asserting that, under Article VII, Section 4, paragraph 7, of the 1987 Constitution, only the Supreme Court had original and exclusive jurisdiction to resolve the basic issue on the case.

Jurisdiction of the Court

In G. R. No. 161824

In seeking the disqualification of the candidacy of FPJ and to have the COMELEC deny due course to or cancel FPJ’s certificate of candidacy for alleged misrepresentation of a material fact (i.e., that FPJ was a natural-born citizen) before the COMELEC, petitioner Fornier invoked Section 78 of the Omnibus Election Code –

"Section 78. Petition to deny due course to or cancel a certificate of candidacy. --- A verified petition seeking to deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the ground that any material representation contained therein as required under Section 74 hereof is false" –

in consonance with the general powers of COMELEC expressed in Section 52 of the Omnibus Election Code -

"Section 52. Powers and functions of the Commission on Elections. In addition to the powers and functions conferred upon it by the Constitution, the Commission shall have exclusive charge of

the enforcement and administration of all laws relative to the conduct of elections for the purpose of ensuring free, orderly and honest elections" -

and in relation to Article 69 of the Omnibus Election Code which would authorize "any interested party" to file a verified petition to deny or cancel the certificate of candidacy of any nuisance candidate.

Decisions of the COMELEC on disqualification cases may be reviewed by the Supreme Court per Rule 642 in an action for certiorari under Rule 653 of the Revised Rules of Civil Procedure. Section 7, Article IX, of the 1987 Constitution also reads –

"Each Commission shall decide by a majority vote of all its Members any case or matter brought before it within sixty days from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum, required by the rules of the Commission or by the Commission itself. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof."

Additionally, Section 1, Article VIII, of the same Constitution provides that judicial power is vested in one Supreme Court and in such lower courts as may be established by law which 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."

It is sufficiently clear that the petition brought up in G. R. No. 161824 was aptly elevated to, and could well be taken cognizance of by, this Court. A contrary view could be a gross denial to our people of their fundamental right to be fully informed, and to make a proper choice, on who could or should be elected to occupy the highest government post in the land.

In G. R. No. 161434 and G. R. No. 161634

Petitioners Tecson, et al., in G. R. No. 161434, and Velez, in G. R. No. 161634, invoke the provisions of Article VII, Section 4, paragraph 7, of the 1987 Constitution in assailing the jurisdiction of the COMELEC when it took cognizance of SPA No. 04-003 and in urging the Supreme Court to instead take on the petitions they directly instituted before it. The Constitutional provision cited reads:

"The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election, returns, and qualifications of the President or Vice-President, and may promulgate its rules for the purpose."

The provision is an innovation of the 1987 Constitution. The omission in the 1935 and the 1973 Constitution to designate any tribunal to be the sole judge of presidential and vice-presidential contests, has constrained this Court to declare, in Lopez vs. Roxas,4 as "not (being) justiciable" controversies or disputes involving contests on the elections, returns and qualifications of the President or Vice-President. The constitutional lapse prompted Congress, on 21 June 1957, to enact Republic Act No. 1793, "An Act Constituting an Independent Presidential Electoral Tribunal to Try, Hear and Decide Protests Contesting the Election of the President-Elect and the Vice-President-Elect of the Philippines and Providing for the Manner of Hearing the Same." Republic Act 1793 designated the Chief Justice and the Associate Justices of the Supreme Court to be the members of the tribunal. Although the subsequent adoption of the parliamentary form of government under the 1973 Constitution might have implicitly affected Republic Act No. 1793, the statutory set-up, nonetheless, would now be deemed revived under the present Section 4, paragraph 7, of the 1987 Constitution.

Ordinary usage would characterize a "contest" in reference to a post-election scenario. Election contests consist of either an election protest or a quo warranto which, although two distinct remedies, would have one objective in view, i.e., to dislodge the winning candidate from office. A perusal of the phraseology in Rule 12, Rule 13, and Rule 14 of the "Rules of the Presidential Electoral Tribunal," promulgated by the Supreme Court en banc on 18 April 1992, would support this premise -

"Rule 12. Jurisdiction. - The Tribunal shall be the sole judge of all contests relating to the election, returns, and qualifications of the President or Vice-President of the Philippines.

"Rule 13. How Initiated. - An election contest is initiated by the filing of an election protest or a petition for quo warranto against the President or Vice-President. An election protest shall not include a petition for quo warranto. A petition for quo warranto shall not include an election protest.

"Rule 14. Election Protest. - Only the registered candidate for President or for Vice-President of the Philippines who received the second or third highest number of votes may contest the election of the President or the Vice-President, as the case may be, by filing a verified petition with the Clerk of the Presidential Electoral Tribunal within thirty (30) days after the proclamation of the winner."

The rules categorically speak of the jurisdiction of the tribunal over contests relating to the election, returns and qualifications of the "President" or "Vice-President", of the Philippines, and not of "candidates" for President or Vice-President. A quo warranto proceeding is generally defined as being an action against a person who usurps, intrudes into, or unlawfully holds or exercises a public office.5 In such context, the election contest can only contemplate a post-election scenario. In Rule 14, only a registered candidate who would have received either the second or third highest number of votes could file an election protest. This rule again presupposes a post-election scenario.

It is fair to conclude that the jurisdiction of the Supreme Court, defined by Section 4, paragraph 7, of the 1987 Constitution, would not include cases directly brought before it, questioning the qualifications of a candidate for the presidency or vice-presidency before the elections are held.

Accordingly, G. R. No. 161434, entitled "Maria Jeanette C. Tecson, et al., vs. Commission on Elections et al.," and G. R. No. 161634, entitled "Zoilo Antonio Velez vs. Ronald Allan Kelley Poe a.k.a. Fernando Poe, Jr." would have to be dismissed for want of jurisdiction.

The Citizenship Issue

Now, to the basic issue; it should be helpful to first give a brief historical background on the concept of citizenship.

Perhaps, the earliest understanding of citizenship was that given by Aristotle, who, sometime in 384 to 322 B.C., described the "citizen" to refer to a man who shared in the administration of justice and in the holding of an office.6 Aristotle saw its significance if only to determine the constituency of the "State," which he described as being composed of such persons who would be adequate in number to achieve a self-sufficient existence.7 The concept grew to include one who would both govern and be governed, for which qualifications like autonomy, judgment and loyalty could be expected. Citizenship was seen to deal with rights and entitlements, on the one hand, and with concomitant obligations, on the other.8 In its ideal setting, a citizen was active in public life and fundamentally willing to submit his private interests to the general interest of society.

The concept of citizenship had undergone changes over the centuries. In the 18th century, the concept was limited, by and large, to civil citizenship, which established the rights necessary for individual freedom, such as rights to property, personal liberty and justice.9 Its meaning expanded during the 19th

century to include political citizenship, which encompassed the right to participate in the exercise of political power.10 The 20th century saw the next stage of the development of social citizenship, which laid emphasis on the right of the citizen to economic well-being and social security.11 The idea of citizenship has gained expression in the modern welfare state as it so developed in Western Europe. An ongoing and final stage of development, in keeping with the rapidly shrinking global village, might well be the internationalization of citizenship.12

The Local Setting - from Spanish Times to the Present

There was no such term as "Philippine citizens" during the Spanish regime but "subjects of Spain" or "Spanish subjects."13 In church records, the natives were called 'indios', denoting a low regard for the inhabitants of the archipelago. Spanish laws on citizenship became highly codified during the 19th century but their sheer number made it difficult to point to one comprehensive law. Not all of these citizenship laws of Spain however, were made to apply to the Philippine Islands except for those explicitly extended by Royal Decrees.14

Spanish laws on citizenship were traced back to the Novisima Recopilacion, promulgated in Spain on 16 July 1805 but as to whether the law was extended to the Philippines remained to be the subject of differing views among experts;15 however, three royal decrees were undisputably made applicable to Spaniards in the Philippines - the Order de la Regencia of 14 August 1841,16 the Royal Decree of 23 August 1868 specifically defining the political status of children born in the Philippine Islands,17 and finally, the Ley Extranjera de Ultramar of 04 July 1870, which was expressly made applicable to the Philippines by the Royal Decree of 13 July 1870.18

The Spanish Constitution of 1876 was never extended to the Philippine Islands because of the express mandate of its Article 89, according to which the provisions of the Ultramar among which this country was included, would be governed by special laws.19

It was only the Civil Code of Spain, made effective in this jurisdiction on 18 December 1889, which came out with the first categorical enumeration of who were Spanish citizens. -

"(a) Persons born in Spanish territory,

"(b) Children of a Spanish father or mother, even if they were born outside of Spain,

"(c) Foreigners who have obtained naturalization papers,

"(d) Those who, without such papers, may have become domiciled inhabitants of any town of the Monarchy."20

The year 1898 was another turning point in Philippine history. Already in the state of decline as a superpower, Spain was forced to so cede her sole colony in the East to an upcoming world power, the United States. An accepted principle of international law dictated that a change in sovereignty, while resulting in an abrogation of all political laws then in force, would have no effect on civil laws, which would remain virtually intact.

The Treaty of Paris was entered into on 10 December 1898 between Spain and the United States.21 Under Article IX of the treaty, the civil rights and political status of the native inhabitants of the territories ceded to the United States would be determined by its Congress -

"Spanish subjects, natives of the Peninsula, residing in the territory over which Spain by the present treaty relinquishes or cedes her sovereignty may remain in such territory or may remove therefrom, retaining in either event all their rights of property, including the right to sell or dispose

of such property or of its proceeds; and they shall also have the right to carry on their industry, commerce, and professions, being subject in respect thereof to such laws as are applicable to foreigners. In case they remain in the territory they may preserve their allegiance to the Crown of Spain by making, before a court of record, within a year from the date of the exchange of ratifications of this treaty, a declaration of their decision to preserve such allegiance; in default of which declaration they shall be held to have renounced it and to have adopted the nationality of the territory in which they reside.

Thus –

"The civil rights and political status of the native inhabitants of the territories hereby ceded to the United States shall be determined by the Congress."22

Upon the ratification of the treaty, and pending legislation by the United States Congress on the subject, the native inhabitants of the Philippines ceased to be Spanish subjects. Although they did not become American citizens, they, however, also ceased to be "aliens" under American laws and were thus issued passports describing them to be citizens of the Philippines entitled to the protection of the United States.

The term "citizens of the Philippine Islands" appeared for the first time in the Philippine Bill of 1902, also commonly referred to as the Philippine Organic Act of 1902, the first comprehensive legislation of the Congress of the United States on the Philippines -

".... that all inhabitants of the Philippine Islands continuing to reside therein, who were Spanish subjects on the 11th day of April, 1891, and then resided in said Islands, and their children born subsequent thereto, shall be deemed and held to be citizens of the Philippine Islands and as such entitled to the protection of the United States, except such as shall have elected to preserve their allegiance to the Crown of Spain in accordance with the provisions of the treaty of peace between the United States and Spain, signed at Paris, December tenth eighteen hundred and ninety eight."23

Under the organic act, a "citizen of the Philippines" was one who was an inhabitant of the Philippines, and a Spanish subject on the 11th day of April 1899. The term "inhabitant" was taken to include 1) a native-born inhabitant, 2) an inhabitant who was a native of Peninsular Spain, and 3) an inhabitant who obtained Spanish papers on or before 11 April 1899.24

Controversy arose on to the status of children born in the Philippines from 11 April 1899 to 01 July 1902, during which period no citizenship law was extant in the Philippines. Weight was given to the view, articulated in jurisprudential writing at the time, that the common law principle of jus soli, otherwise also known as the principle of territoriality, operative in the United States and England, governed those born in the Philippine Archipelago within that period.25 More about this later.

In 23 March 1912, the Congress of the United States made the following amendment to the Philippine Bill of 1902 -

"Provided, That the Philippine Legislature is hereby authorized to provide by law for the acquisition of Philippine citizenship by those natives of the Philippine Islands who do not come within the foregoing provisions, the natives of other insular possession of the United States, and such other persons residing in the Philippine Islands who would become citizens of the United States, under the laws of the United States, if residing therein."26

With the adoption of the Philippine Bill of 1902, the concept of "Philippine citizens" had for the first time crystallized. The word "Filipino" was used by William H. Taft, the first Civil Governor General in the Philippines when he initially made mention of it in his slogan, "The Philippines for the Filipinos." In 1916,

the Philippine Autonomy Act, also known as the Jones Law restated virtually the provisions of the Philippine Bill of 1902, as so amended by the Act of Congress in 1912 -

"That all inhabitants of the Philippine Islands who were Spanish subjects on the eleventh day of April, eighteen hundred and ninety-nine, and then resided in said Islands, and their children born subsequently thereto, shall be deemed and held to be citizens of the Philippine Islands, except such as shall have elected to preserve their allegiance to the Crown of Spain in accordance with the provisions of the treaty of peace between the United States and Spain, signed at Paris December tenth, eighteen hundred and ninety-eight and except such others as have since become citizens of some other country; Provided, That the Philippine Legislature, herein provided for, is hereby authorized to provide for the acquisition of Philippine citizenship by those natives of the Philippine Islands who do not come within the foregoing provisions, the natives of the insular possessions of the United States, and such other persons residing in the Philippine Islands who are citizens of the United States, or who could become citizens of the United States under the laws of the United States, if residing therein."

Under the Jones Law, a native-born inhabitant of the Philippines was deemed to be a citizen of the Philippines as of 11 April 1899 if he was 1) a subject of Spain on 11 April 1899, 2) residing in the Philippines on said date, and, 3) since that date, not a citizen of some other country.

While there was, at one brief time, divergent views on whether or not jus soli was a mode of acquiring citizenship, the 1935 Constitution brought to an end to any such link with common law, by adopting, once and for all, jus sanguinis or blood relationship as being the basis of Filipino citizenship -

"Section 1, Article III, 1935 Constitution. The following are citizens of the Philippines -

"(1) Those who are citizens of the Philippine Islands at the time of the adoption of this Constitution

"(2) Those born in the Philippines Islands of foreign parents who, before the adoption of this Constitution, had been elected to public office in the Philippine Islands.

"(3) Those whose fathers are citizens of the Philippines.

"(4) Those whose mothers are citizens of the Philippines and upon reaching the age of majority, elect Philippine citizenship.

"(5) Those who are naturalized in accordance with law."

Subsection (4), Article III, of the 1935 Constitution, taken together with existing civil law provisions at the time, which provided that women would automatically lose their Filipino citizenship and acquire that of their foreign husbands, resulted in discriminatory situations that effectively incapacitated the women from transmitting their Filipino citizenship to their legitimate children and required illegitimate children of Filipino mothers to still elect Filipino citizenship upon reaching the age of majority. Seeking to correct this anomaly, as well as fully cognizant of the newly found status of Filipino women as equals to men, the framers of the 1973 Constitution crafted the provisions of the new Constitution on citizenship to reflect such concerns -

"Section 1, Article III, 1973 Constitution - The following are citizens of the Philippines:

"(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution.

"(2) Those whose fathers or mothers are citizens of the Philippines.

"(3) Those who elect Philippine citizenship pursuant to the provisions of the Constitution of nineteen hundred and thirty-five.

"(4) Those who are naturalized in accordance with law."

For good measure, Section 2 of the same article also further provided that –

"A female citizen of the Philippines who marries an alien retains her Philippine citizenship, unless by her act or omission she is deemed, under the law to have renounced her citizenship."

The 1987 Constitution generally adopted the provisions of the 1973 Constitution, except for subsection (3) thereof that aimed to correct the irregular situation generated by the questionable proviso in the 1935 Constitution.

Section I, Article IV, 1987 Constitution now provides:

"The following are citizens of the Philippines:

"(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution.

"(2) Those whose fathers or mothers are citizens of the Philippines.

"(3) Those born before January 17, 1973 of Filipino mothers, who elect Philippine citizenship upon reaching the age of majority; and

"(4) Those who are naturalized in accordance with law."

The Case Of FPJ

Section 2, Article VII, of the 1987 Constitution expresses:

"No person may be elected President unless he is a natural-born citizen of the Philippines, a registered voter, able to read and write, at least forty years of age on the day of the election, and a resident of the Philippines for at least ten years immediately preceding such election."

The term "natural-born citizens," is defined to include "those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their Philippine citizenship."27

The date, month and year of birth of FPJ appeared to be 20 August 1939 during the regime of the 1935 Constitution. Through its history, four modes of acquiring citizenship - naturalization, jus soli, res judicata and jus sanguinis28 – had been in vogue. Only two, i.e., jus soli and jus sanguinis, could qualify a person to being a "natural-born" citizen of the Philippines. Jus soli, per Roa vs. Collector of Customs29 (1912), did not last long. With the adoption of the 1935 Constitution and the reversal of Roa in Tan Chong vs. Secretary of Labor30 (1947), jus sanguinis or blood relationship would now become the primary basis of citizenship by birth.

Documentary evidence adduced by petitioner would tend to indicate that the earliest established direct ascendant of FPJ was his paternal grandfather Lorenzo Pou, married to Marta Reyes, the father of Allan F. Poe. While the record of birth of Lorenzo Pou had not been presented in evidence, his death certificate, however, identified him to be a Filipino, a resident of San Carlos, Pangasinan, and 84 years old at the time of his death on 11 September 1954. The certificate of birth of the father of FPJ, Allan F. Poe, showed

that he was born on 17 May 1915 to an Español father, Lorenzo Pou, and a mestiza Español mother, Marta Reyes. Introduced by petitioner was an "uncertified" copy of a supposed certificate of the alleged marriage of Allan F. Poe and Paulita Gomez on 05 July 1936. The marriage certificate of Allan F. Poe and Bessie Kelley reflected the date of their marriage to be on 16 September 1940. In the same certificate, Allan F. Poe was stated to be twenty-five years old, unmarried, and a Filipino citizen, and Bessie Kelley to be twenty-two years old, unmarried, and an American citizen. The birth certificate of FPJ, would disclose that he was born on 20 August 1939 to Allan F. Poe, a Filipino, twenty-four years old, married to Bessie Kelly, an American citizen, twenty-one years old and married.

Considering the reservations made by the parties on the veracity of some of the entries on the birth certificate of respondent and the marriage certificate of his parents, the only conclusions that could be drawn with some degree of certainty from the documents would be that -

1. The parents of FPJ were Allan F. Poe and Bessie Kelley;

2. FPJ was born to them on 20 August 1939;

3. Allan F. Poe and Bessie Kelley were married to each other on 16 September, 1940;

4. The father of Allan F. Poe was Lorenzo Poe; and

5. At the time of his death on 11 September 1954, Lorenzo Poe was 84 years old.

Would the above facts be sufficient or insufficient to establish the fact that FPJ is a natural-born Filipino citizen? The marriage certificate of Allan F. Poe and Bessie Kelley, the birth certificate of FPJ, and the death certificate of Lorenzo Pou are documents of public record in the custody of a public officer. The documents have been submitted in evidence by both contending parties during the proceedings before the COMELEC.

The birth certificate of FPJ was marked Exhibit "A" for petitioner and Exhibit "3" for respondent. The marriage certificate of Allan F. Poe to Bessie Kelley was submitted as Exhibit "21" for respondent. The death certificate of Lorenzo Pou was submitted by respondent as his Exhibit "5." While the last two documents were submitted in evidence for respondent, the admissibility thereof, particularly in reference to the facts which they purported to show, i.e., the marriage certificate in relation to the date of marriage of Allan F. Poe to Bessie Kelley and the death certificate relative to the death of Lorenzo Pou on 11 September 1954 in San Carlos, Pangasinan, were all admitted by petitioner, who had utilized those material statements in his argument. All three documents were certified true copies of the originals.

Section 3, Rule 130, Rules of Court states that -

"Original document must be produced; exceptions. - When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:

"x x x           x x x           x x x

"(d) When the original is a public record in the custody of a public office or is recorded in a public office."

Being public documents, the death certificate of Lorenzo Pou, the marriage certificate of Allan F. Poe and Bessie Kelly, and the birth certificate of FPJ, constitute prima facie proof of their contents. Section 44, Rule 130, of the Rules of Court provides:

"Entries in official records. Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated."

The trustworthiness of public documents and the value given to the entries made therein could be grounded on 1) the sense of official duty in the preparation of the statement made, 2) the penalty which is usually affixed to a breach of that duty, 3) the routine and disinterested origin of most such statements, and 4) the publicity of record which makes more likely the prior exposure of such errors as might have occurred.31

The death certificate of Lorenzo Pou would indicate that he died on 11 September 1954, at the age of 84 years, in San Carlos, Pangasinan. It could thus be assumed that Lorenzo Pou was born sometime in the year 1870 when the Philippines was still a colony of Spain. Petitioner would argue that Lorenzo Pou was not in the Philippines during the crucial period of from 1898 to 1902 considering that there was no existing record about such fact in the Records Management and Archives Office. Petitioner, however, likewise failed to show that Lorenzo Pou was at any other place during the same period. In his death certificate, the residence of Lorenzo Pou was stated to be San Carlos, Pangasinan. In the absence of any evidence to the contrary, it should be sound to conclude, or at least to presume, that the place of residence of a person at the time of his death was also his residence before death. It would be extremely doubtful if the Records Management and Archives Office would have had complete records of all residents of the Philippines from 1898 to 1902.

Proof of Paternity and Filiation

Under Civil Law.

Petitioner submits, in any case, that in establishing filiation (relationship or civil status of the child to the father [or mother]) or paternity (relationship or civil status of the father to the child) of an illegitimate child, FPJ evidently being an illegitimate son according to petitioner, the mandatory rules under civil law must be used.

Under the Civil Code of Spain, which was in force in the Philippines from 08 December 1889 up until the day prior to 30 August 1950 when the Civil Code of the Philippines took effect, acknowledgment was required to establish filiation or paternity. Acknowledgment was either judicial (compulsory) or voluntary. Judicial or compulsory acknowledgment was possible only if done during the lifetime of the putative parent; voluntary acknowledgment could only be had in a record of birth, a will, or a public document.32 Complementary to the new code was Act No. 3753 or the Civil Registry Law expressing in Section 5 thereof, that -

"In case of an illegitimate child, the birth certificate shall be signed and sworn to jointly by the parents of the infant or only by the mother if the father refuses. In the latter case, it shall not be permissible to state or reveal in the document the name of the father who refuses to acknowledge the child, or to give therein any information by which such father could be identified."

In order that the birth certificate could then be utilized to prove voluntary acknowledgment of filiation or paternity, the certificate was required to be signed or sworn to by the father. The failure of such requirement rendered the same useless as being an authoritative document of recognition.33 In Mendoza vs. Mella,34 the Court ruled -

"Since Rodolfo was born in 1935, after the registry law was enacted, the question here really is whether or not his birth certificate (Exhibit 1), which is merely a certified copy of the registry record, may be relied upon as sufficient proof of his having been voluntarily recognized. No such reliance, in our judgment, may be placed upon it. While it contains the names of both parents, there is no showing that they signed the original, let alone swore to its contents as required in

Section 5 of Act No. 3753. For all that might have happened, it was not even they or either of them who furnished the data to be entered in the civil register. Petitioners say that in any event the birth certificate is in the nature of a public document wherein voluntary recognition of a natural child may also be made, according to the same Article 131. True enough, but in such a case, there must be a clear statement in the document that the parent recognizes the child as his or her own."

In the birth certificate of respondent FPJ, presented by both parties, nowhere in the document was the signature of Allan F. Poe found. There being no will apparently executed, or at least shown to have been executed, by decedent Allan F. Poe, the only other proof of voluntary recognition remained to be "some other public document." In Pareja vs. Pareja,35 this Court defined what could constitute such a document as proof of voluntary acknowledgment:

"Under the Spanish Civil Code there are two classes of public documents, those executed by private individuals which must be authenticated by notaries, and those issued by competent public officials by reason of their office. The public document pointed out in Article 131 as one of the means by which recognition may be made belongs to the first class."

Let us leave it at that for the moment.

The 1950 Civil Code categorized the acknowledgment or recognition of illegitimate children into voluntary, legal or compulsory. Voluntary recognition was required to be expressedly made in a record of birth, a will, a statement before a court of record or in any authentic writing. Legal acknowledgment took place in favor of full blood brothers and sisters of an illegitimate child who was recognized or judicially declared as natural. Compulsory acknowledgment could be demanded generally in cases when the child had in his favor any evidence to prove filiation. Unlike an action to claim legitimacy which would last during the lifetime of the child, and might pass exceptionally to the heirs of the child, an action to claim acknowledgment, however, could only be brought during the lifetime of the presumed parent.

Amicus Curiae Ruben F. Balane defined, during the oral argument, "authentic writing," so as to be an authentic writing for purposes of voluntary recognition, simply as being a genuine or indubitable writing of the father. The term would include a public instrument (one duly acknowledged before a notary public or other competent official) or a private writing admitted by the father to be his.

The Family Code has further liberalized the rules; Article 172, Article 173, and Article 175 provide:

"Art. 172. The filiation of legitimate children is established by any of the following:

"(1) The record of birth appearing in the civil register or a final judgment; or

"(2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned.

"In the absence of the foregoing evidence, the legitimate filiation shall be proved by:

"(1) The open and continuous possession of the status of a legitimate child; or

"(2) Any other means allowed by the Rules of Court and special laws.

"Art. 173. The action to claim legitimacy may be brought by the child during his or her lifetime and shall be transmitted to the heirs should the child die during minority or in a state of insanity. In these cases, the heirs shall have a period of five years within which to institute the action.

"The action already commenced by the child shall survive notwithstanding the death of either or both of the parties.

"x x x           x x x           x x x.

"Art. 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same, evidence as legitimate children.

"The action must be brought within the same period specified in Article 173, except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent."

The provisions of the Family Code are retroactively applied; Article 256 of the code reads:

"Art. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws."

Thus, in Vda. de Sy-Quia vs. Court of Appeals,36 the Court has ruled:

"We hold that whether Jose was a voluntarily recognized natural child should be decided under Article 278 of the Civil Code of the Philippines. Article 2260 of that Code provides that 'the voluntary recognition of a natural child shall take place according to this Code, even if the child was born before the effectivity of this body of laws' or before August 30, 1950. Hence, Article 278 may be given retroactive effect."

It should be apparent that the growing trend to liberalize the acknowledgment or recognition of illegitimate children is an attempt to break away from the traditional idea of keeping well apart legitimate and non-legitimate relationships within the family in favor of the greater interest and welfare of the child. The provisions are intended to merely govern the private and personal affairs of the family. There is little, if any, to indicate that the legitimate or illegitimate civil status of the individual would also affect his political rights or, in general, his relationship to the State. While, indeed, provisions on "citizenship" could be found in the Civil Code, such provisions must be taken in the context of private relations, the domain of civil law; particularly -

"Civil Law is that branch of law which has for its double purpose the organization of the family and the regulation of property. It has thus [been] defined as the mass of precepts which determine and regulate the relations of assistance, authority and obedience among members of a family, and those which exist among members of a society for the protection of private interests."37

In Yañez de Barnuevo vs. Fuster,38 the Court has held:

"In accordance with Article 9 of the Civil Code of Spain, x x x the laws relating to family rights and duties, or to the status, condition and legal capacity of persons, govern Spaniards although they reside in a foreign country; that, in consequence, 'all questions of a civil nature, such as those dealing with the validity or nullity of the matrimonial bond, the domicile of the husband and wife, their support, as between them, the separation of their properties, the rules governing property, marital authority, division of conjugal property, the classification of their property, legal causes for divorce, the extent of the latter, the authority to decree it, and, in general, the civil effects of marriage and divorce upon the persons and properties of the spouses, are questions that are governed exclusively by the national law of the husband and wife."

The relevance of "citizenship" or "nationality" to Civil Law is best exemplified in Article 15 of the Civil Code, stating that -

"Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad" -

that explains the need to incorporate in the code a reiteration of the Constitutional provisions on citizenship. Similarly, citizenship is significant in civil relationships found in different parts of the Civil Code,39 such as on successional rights and family relations.40 In adoption, for instance, an adopted child would be considered the child of his adoptive parents and accorded the same rights as their legitimate child but such legal fiction extended only to define his rights under civil law41 and not his political status.

Civil law provisions point to an obvious bias against illegitimacy. This discriminatory attitude may be traced to the Spanish family and property laws, which, while defining proprietary and successional rights of members of the family, provided distinctions in the rights of legitimate and illegitimate children. In the monarchial set-up of old Spain, the distribution and inheritance of titles and wealth were strictly according to bloodlines and the concern to keep these bloodlines uncontaminated by foreign blood was paramount.

These distinctions between legitimacy and illegitimacy were codified in the Spanish Civil Code, and the invidious discrimination survived when the Spanish Civil Code became the primary source of our own Civil Code. Such distinction, however, remains and should remain only in the sphere of civil law and not unduly impede or impinge on the domain of political law.

The proof of filiation or paternity for purposes of determining his citizenship status should thus be deemed independent from and not inextricably tied up with that prescribed for civil law purposes. The Civil Code or Family Code provisions on proof of filiation or paternity, although good law, do not have preclusive effects on matters alien to personal and family relations. The ordinary rules on evidence could well and should govern. For instance, the matter about pedigree is not necessarily precluded from being applicable by the Civil Code or Family Code provisions.

Section 39, Rule 130, of the Rules of Court provides -

"Act or Declaration about pedigree. The act or declaration of a person deceased, or unable to testify, in respect to the pedigree of another person related to him by birth or marriage, may be received in evidence where it occurred before the controversy, and the relationship between the two persons is shown by evidence other than such act or declaration. The word `pedigree’ includes relationship, family genealogy, birth, marriage, death, the dates when and the places where these facts occurred, and the names of the relatives. It embraces also facts of family history intimately connected with pedigree."

For the above rule to apply, it would be necessary that (a) the declarant is already dead or unable to testify, (b) the pedigree of a person must be at issue, (c) the declarant must be a relative of the person whose pedigree is in question, (d) declaration must be made before the controversy has occurred, and (e) the relationship between the declarant and the person whose pedigree is in question must be shown by evidence other than such act or declaration.

Thus, the duly notarized declaration made by Ruby Kelley Mangahas, sister of Bessie Kelley Poe submitted as Exhibit 20 before the COMELEC, might be accepted to prove the acts of Allan F. Poe, recognizing his own paternal relationship with FPJ, i.e, living together with Bessie Kelley and his children (including respondent FPJ) in one house, and as one family -

"I, Ruby Kelley Mangahas, of legal age and sound mind, presently residing in Stockton, California, U.S.A., after being sworn in accordance with law do hereby declare that:

"1. I am the sister of the late Bessie Kelley Poe.

"2. Bessie Kelley Poe was the wife of Fernando Poe, Sr.

"3. Fernando and Bessie Poe had a son by the name of Ronald Allan Poe, more popularly known in the Philippines as `Fernando Poe, Jr.,’ or `FPJ’.

"4. Ronald Allan Poe `FPJ’ was born on August 20, 1939 at St. Luke's Hospital, Magdalena Street, Manila.

"x x x           x x x           x x x

"7. Fernando Poe Sr., and my sister Bessie, met and became engaged while they were students at the University of the Philippines in 1936. I was also introduced to Fernando Poe, Sr., by my sister that same year.

"8. Fernando Poe, Sr., and my sister Bessie had their first child in 1938.

"9. Fernando Poe, Sr., my sister Bessie and their first three children, Elizabeth, Ronald, Allan and Fernando II, and myself lived together with our mother at our family's house on Dakota St. (now Jorge Bocobo St.), Malate until the liberation of Manila in 1945, except for some months between 1943-1944.

"10. Fernando Poe, Sr., and my sister, Bessie, were blessed with four (4) more children after Ronald Allan Poe.

"x x x           x x x           x x x

"18. I am executing this Declaration to attest to the fact that my nephew, Ronald Allan Poe is a natural born Filipino, and that he is the legitimate child of Fernando Poe, Sr.

"Done in City of Stockton, California, U.S.A., this 12th day of January 2004.

Ruby Kelley Mangahas Declarant DNA Testing

In case proof of filiation or paternity would be unlikely to satisfactorily establish or would be difficult to obtain, DNA testing, which examines genetic codes obtained from body cells of the illegitimate child and any physical residue of the long dead parent could be resorted to. A positive match would clear up filiation or paternity. In Tijing vs. Court of Appeals,42 this Court has acknowledged the strong weight of DNA testing -

"Parentage will still be resolved using conventional methods unless we adopt the modern and scientific ways available. Fortunately, we have now the facility and expertise in using DNA test for identification and parentage testing. The University of the Philippines Natural Science Research Institute (UP-NSRI) DNA Analysis Laboratory has now the capability to conduct DNA typing using short tandem repeat (STR) analysis. The analysis is based on the fact that the DNA of a child/person has two (2) copies, one copy from the mother and the other from the father. The DNA from the mother, the alleged father and the child are analyzed to establish parentage. Of course, being a novel scientific technique, the use of DNA test as evidence is still open to challenge. Eventually, as the appropriate case comes, courts should not hesitate to rule on the admissibility of DNA evidence. For it was said, that courts should apply the results of science when competently obtained in aid of situations presented, since to reject said result is to deny progress."

Petitioner’s Argument For Jurisprudential Conclusiveness

Petitioner would have it that even if Allan F. Poe were a Filipino citizen, he could not have transmitted his citizenship to respondent FPJ, the latter being an illegitimate child. According to petitioner, prior to his marriage to Bessie Kelley, Allan F. Poe, on July 5, 1936, contracted marriage with a certain Paulita Gomez, making his subsequent marriage to Bessie Kelley bigamous and respondent FPJ an illegitimate child. The veracity of the supposed certificate of marriage between Allan F. Poe and Paulita Gomez could be most doubtful at best. But the documentary evidence introduced by no less than respondent himself, consisting of a birth certificate of respondent and a marriage certificate of his parents showed that FPJ was born on 20 August 1939 to a Filipino father and an American mother who were married to each other a year later, or on 16 September 1940. Birth to unmarried parents would make FPJ an illegitimate child. Petitioner contended that as an illegitimate child, FPJ so followed the citizenship of his mother, Bessie Kelley, an American citizen, basing his stand on the ruling of this Court in Morano vs. Vivo,43 citing Chiongbian vs. de Leo44 and Serra vs. Republic.45

On the above score, the disquisition made by amicus curiae Joaquin G. Bernas, SJ, is most convincing; he states -

"We must analyze these cases and ask what the lis mota was in each of them. If the pronouncement of the Court on jus sanguinis was on the lis mota, the pronouncement would be a decision constituting doctrine under the rule of stare decisis. But if the pronouncement was irrelevant to the lis mota, the pronouncement would not be a decision but a mere obiter dictum which did not establish doctrine. I therefore invite the Court to look closely into these cases.

"First, Morano vs. Vivo. The case was not about an illegitimate child of a Filipino father. It was about a stepson of a Filipino, a stepson who was the child of a Chinese mother and a Chinese father. The issue was whether the stepson followed the naturalization of the stepfather. Nothing about jus sanguinis there. The stepson did not have the blood of the naturalized stepfather.

"Second, Chiongbian vs. de Leon. This case was not about the illegitimate son of a Filipino father. It was about a legitimate son of a father who had become Filipino by election to public office before the 1935 Constitution pursuant to Article IV, Section 1(2) of the 1935 Constitution. No one was illegitimate here.

"Third, Serra vs. Republic. The case was not about the illegitimate son of a Filipino father. Serra was an illegitimate child of a Chinese father and a Filipino mother. The issue was whether one who was already a Filipino because of his mother who still needed to be naturalized. There is nothing there about invidious jus sanguinis.

"Finally, Paa vs. Chan.46 This is a more complicated case. The case was about the citizenship of Quintin Chan who was the son of Leoncio Chan. Quintin Chan claimed that his father, Leoncio, was the illegitimate son of a Chinese father and a Filipino mother. Quintin therefore argued that he got his citizenship from Leoncio, his father. But the Supreme Court said that there was no valid proof that Leoncio was in fact the son of a Filipina mother. The Court therefore concluded that Leoncio was not Filipino. If Leoncio was not Filipino, neither was his son Quintin. Quintin therefore was not only not a natural-born Filipino but was not even a Filipino.

"The Court should have stopped there. But instead it followed with an obiter dictum. The Court said obiter that even if Leoncio, Quintin's father, were Filipino, Quintin would not be Filipino because Quintin was illegitimate. This statement about Quintin, based on a contrary to fact assumption, was absolutely unnecessary for the case. x x x It was obiter dictum, pure and simple, simply repeating the obiter dictum in Morano vs. Vivo.

"x x x           x x x           x x x

"Aside from the fact that such a pronouncement would have no textual foundation in the Constitution, it would also violate the equal protection clause of the Constitution not once but twice. First, it would make an illegitimate distinction between a legitimate child and an illegitimate child, and second, it would make an illegitimate distinction between the illegitimate child of a Filipino father and the illegitimate child of a Filipino mother.

"The doctrine on constitutionally allowable distinctions was established long ago by People vs. Cayat.47 I would grant that the distinction between legitimate children and illegitimate children rests on real differences. x x x But real differences alone do not justify invidious distinction. Real differences may justify distinction for one purpose but not for another purpose.

"x x x What is the relevance of legitimacy or illegitimacy to elective public service? What possible state interest can there be for disqualifying an illegitimate child from becoming a public officer. It was not the fault of the child that his parents had illicit liaison. Why deprive the child of the fullness of political rights for no fault of his own? To disqualify an illegitimate child from holding an important public office is to punish him for the indiscretion of his parents. There is neither justice nor rationality in that. And if there is neither justice nor rationality in the distinction, then the distinction transgresses the equal protection clause and must be reprobated."

The other amici curiae, Mr. Justice Vicente Mendoza (a former member of this Court), Professor Ruben Balane and Dean Martin Magallona, at bottom, have expressed similar views. The thesis of petitioner, unfortunately hinging solely on pure obiter dicta, should indeed fail.

Where jurisprudence regarded an illegitimate child as taking after the citizenship of its mother, it did so for the benefit the child. It was to ensure a Filipino nationality for the illegitimate child of an alien father in line with the assumption that the mother had custody, would exercise parental authority and had the duty to support her illegitimate child. It was to help the child, not to prejudice or discriminate against him.

The fact of the matter – perhaps the most significant consideration – is that the 1935 Constitution, the fundamental law prevailing on the day, month and year of birth of respondent FPJ, can never be more explicit than it is. Providing neither conditions nor distinctions, the Constitution states that among the citizens of the Philippines are "those whose fathers are citizens of the Philippines." There utterly is no cogent justification to prescribe conditions or distinctions where there clearly are none provided.

In Sum –

(1) The Court, in the exercise of its power of judicial review, possesses jurisdiction over the petition in G. R. No. 161824, filed under Rule 64, in relation to Rule 65, of the Revised Rules of Civil Procedure. G.R. No. 161824 assails the resolution of the COMELEC for alleged grave abuse of discretion in dismissing, for lack of merit, the petition in SPA No. 04-003 which has prayed for the disqualification of respondent FPJ from running for the position of President in the 10th May 2004 national elections on the contention that FPJ has committed material representation in his certificate of candidacy by representing himself to be a natural-born citizen of the Philippines.

(2) The Court must dismiss, for lack of jurisdiction and prematurity, the petitions in G. R. No. 161434 and No. 161634 both having been directly elevated to this Court in the latter’s capacity as the only tribunal to resolve a presidential and vice-presidential election contest under the Constitution. Evidently, the primary jurisdiction of the Court can directly be invoked only after, not before, the elections are held.

(3) In ascertaining, in G.R. No. 161824, whether grave abuse of discretion has been committed by the COMELEC, it is necessary to take on the matter of whether or not respondent FPJ is a natural-born citizen, which, in turn, depended on whether or not the father of respondent, Allan F. Poe, would have himself been a Filipino citizen and, in the affirmative, whether or not the alleged

illegitimacy of respondent prevents him from taking after the Filipino citizenship of his putative father. Any conclusion on the Filipino citizenship of Lorenzo Pou could only be drawn from the presumption that having died in 1954 at 84 years old, Lorenzo would have been born sometime in the year 1870, when the Philippines was under Spanish rule, and that San Carlos, Pangasinan, his place of residence upon his death in 1954, in the absence of any other evidence, could have well been his place of residence before death, such that Lorenzo Pou would have benefited from the "en masse Filipinization" that the Philippine Bill had effected in 1902. That citizenship (of Lorenzo Pou), if acquired, would thereby extend to his son, Allan F. Poe, father of respondent FPJ. The 1935 Constitution, during which regime respondent FPJ has seen first light, confers citizenship to all persons whose fathers are Filipino citizens regardless of whether such children are legitimate or illegitimate.

(4) But while the totality of the evidence may not establish conclusively that respondent FPJ is a natural-born citizen of the Philippines, the evidence on hand still would preponderate in his favor enough to hold that he cannot be held guilty of having made a material misrepresentation in his certificate of candidacy in violation of Section 78, in relation to Section 74, of the Omnibus Election Code. Petitioner has utterly failed to substantiate his case before the Court, notwithstanding the ample opportunity given to the parties to present their position and evidence, and to prove whether or not there has been material misrepresentation, which, as so ruled in Romualdez-Marcos vs. COMELEC,48 must not only be material, but also deliberate and willful.

WHEREFORE, the Court RESOLVES to DISMISS –

1. G. R. No. 161434, entitled "Maria Jeanette C. Tecson and Felix B. Desiderio, Jr., Petitioners, versus Commission on Elections, Ronald Allan Kelley Poe (a.k.a. "Fernando Poe, Jr.,) and Victorino X. Fornier, Respondents," and G. R. No. 161634, entitled "Zoilo Antonio Velez, Petitioner, versus Ronald Allan Kelley Poe, a.k.a. Fernando Poe, Jr., Respondent," for want of jurisdiction.

2. G. R. No. 161824, entitled "Victorino X. Fornier, Petitioner, versus Hon. Commission on Elections and Ronald Allan Kelley Poe, also known as Fernando Poe, Jr.," for failure to show grave abuse of discretion on the part of respondent Commission on Elections in dismissing the petition in SPA No. 04-003.

No Costs.

SO ORDERED.

Tanada vs Angara, 272 SCRA 18, May 2, 1997

Facts : This is a petition seeking to nullify the Philippine ratification of the World Trade

Organization (WTO) Agreement. Petitioners question the concurrence of herein respondents

acting in their capacities as Senators via signing the said agreement.

The WTO opens access to foreign markets, especially its major trading partners, through the

reduction of tariffs on its exports, particularly agricultural and industrial products. Thus,

provides new opportunities for the service sector cost and uncertainty associated with

exporting and more investment in the country. These are the predicted benefits as reflected

in the agreement and as viewed by the signatory Senators, a “free market” espoused by

WTO.

Petitioners on the other hand viewed the WTO agreement as one that limits, restricts and

impair Philippine economic sovereignty and legislative power. That the Filipino First policy of

the Constitution was taken for granted as it gives foreign trading intervention.

Issue : Whether or not there has been a grave abuse of discretion amounting to lack or

excess of jurisdiction on the part of the Senate in giving its concurrence of the said WTO

agreement.

Held: In its Declaration of Principles and state policies, the Constitution “adopts the

generally accepted principles of international law as part of the law of the land, and adheres

to the policy of peace, equality, justice, freedom, cooperation and amity , with all nations. By

the doctrine of incorporation, the country is bound by generally accepted principles of

international law, which are considered automatically part of our own laws. Pacta sunt

servanda – international agreements must be performed in good faith. A treaty is not a mere

moral obligation but creates a legally binding obligation on the parties.

Through WTO the sovereignty of the state cannot in fact and reality be considered as

absolute because it is a regulation of commercial relations among nations. Such as when

Philippines joined the United Nations (UN) it consented to restrict its sovereignty right under

the “concept of sovereignty as autolimitation.” What Senate did was a valid exercise of

authority. As to determine whether such exercise is wise, beneficial or viable is outside the

realm of judicial inquiry and review. The act of signing the said agreement is not a legislative

restriction as WTO allows withdrawal of membership should this be the political desire of a

member. Also, it should not be viewed as a limitation of economic sovereignty. WTO remains

as the only viable structure for multilateral trading and the veritable forum for the

development of international trade law. Its alternative is isolation, stagnation if not

economic self-destruction. Thus, the people be allowed, through their duly elected officers,

make their free choice.

Petition is DISMISSED for lack of merit.