G. R. No.

167919
February 14, 2007
Plaridel M. Abaya vs. Hon. Secretary Hermogenes E. Ebdane, Jr.
Callejo, Sr., J.
FACTS:
On May 7, 2004 Bids and Awards Committee (BAC) of the Department of
Public Works and Highways (DPWH) issued a Resolution No. PJHL-A-04-012
which recommended the award to China Road & Bridge Corporation of the
contract for the implementation of civil works for Contract Package No. I (CP I).
This consists of the improvement/rehabilitation of the San Andres-Virac-Jct.
Bago-Viga road, with the lengt of 79.818 kilometers, in the island province of
Catanduanes.
Loan Agreement No. PH-P204 was executed by and between the JBIC and the
Philippine Government pursuant to the Exchange of Notes executed by and
between Mr. Yoshihisa Ara, Ambassador Extraordinary and Plenipotentiary of
Japan to the Philippines, and then Foreign Affairs Secretary Siazon, in behalf
of their respective governments. The Exchange of Notes expressed that the
two governments have reached an understanding concerning Japanese loans
to be extended to the Philippines and that these loans were aimed at
promoting our countrys economic stabilization and development efforts.
In accordance with the established prequalification criteria, eight contractors
were evaluated or considered eligible to bid as concurred by the JBIC. Prior to
the opening of the respective bid proposals, it was announced that the
Approved Budget for the Contract (ABC) was in the amount of
P738,710,563.67. Consequently, the bid goes to private respondent in the
amount of P952,564,821.71 (with a variance of 25.98% from the ABC). Hence,
this petition on the contention that it violates Sec. 31 of RA 9184 (Government
Procurement Reform Act) which provides that :
Sec. 31 Ceiling for Bid Prices. The ABC shall be the upper limit
or ceiling for the bid prices. Bid prices that exceed this ceiling shall
be disqualified outright from further participating in the proceeding.
There shall be no lower limit to the amount of the award.
The petitioners further contend that the Loan Agreement between Japan and
the Philippines is neither an international treaty nor an executive agreement
that would bar the application of RA9184.
Based on Executive Order No. 459 dated November 25, 1997
where the three agreements are defined in this wise:
a) International agreement shall refer to a contract or
understanding, regardless of nomenclature, entered into between
the Philippines and another government in written form and
governed by international law, whether embodied in a single
instrument or in two or more related instruments.
b) Treaties international agreements entered into by the
Philippines which require legislative concurrence after executive
ratification. This term may include compacts like conventions,
declarations, covenants and acts.
c) Executive agreements similar to treaties except that they do not
require legislative concurrence
They pointed out that to be considered as such, the parties must be two (2)
sovereigns or states whereas in this loan agreement, the parties were the
Philippine government and the JBIC, a banking agency of Japan, which has a
separate juridical personality from the Japanese government.
Issues:
1. WON the Loan agreement is an executive agreement/treaty?
2. WON petitioners have locus standi
Held:
Loan Agreement No. PH-P204 taken in conjunction with the Exchange of
Notes dated December 27, 1999 between the Japanese Government and the
Philippine Government is an executive agreement.

Loan Agreement No. PH-P204 is indubitably an integral part of the

Exchange of Notes. It forms part of the Exchange of Notes such
that it cannot be properly taken independent thereof

An "exchange of notes" is a record of a routine agreement that has

many similarities with the private law contract. The agreement
consists of the exchange of two documents, each of the parties
being in the possession of the one signed by the representative of
the other. Under the usual procedure, the accepting State repeats
the text of the offering State to record its assent. The signatories of
the letters may be government Ministers, diplomats or departmental
heads. The technique of exchange of notes is frequently resorted
to, either because of its speedy procedure, or, sometimes, to avoid
the process of legislative approval
treaties, agreements, conventions, charters, protocols, declarations,
memoranda of understanding, modus vivendi and exchange of
notes" all refer to "international instruments binding at international
law.
Although these instruments differ from each other by title, they all
have common features and international law has applied basically
the same rules to all these instruments. These rules are the result of
long practice among the States, which have accepted them as
binding norms in their mutual relations. Therefore, they are
regarded as international customary law.
an exchange of notes is considered a form of an executive
agreement, which becomes binding through executive action
without the need of a vote by the Senate or Congress

Under the fundamental principle of international law of pacta sunt servanda,

which is, in fact, embodied in Section 4 of RA 9184 as it provides that "[a]ny
treaty or international or executive agreement affecting the subject matter of
this Act to which the Philippine government is a signatory shall be observed,"
the DPWH, as the executing agency of the projects financed by Loan
Agreement No. PH-P204, rightfully awarded the contract for the
implementation of civil works for the CP I project to private respondent China
Road & Bridge Corporation.
Petition dismissed.
Yes. Petitioners, as taxpayers, possess locus standi to file the present suit.
Briefly stated, locus standi is a right of appearance in a court of justice on a
given question. More particularly, it is a partys personal and substantial
interest in a case such that he has sustained or will sustain direct injury as a
result of the governmental act being challenged. Locus standi, however, is
merely a matter of procedure and it has been recognized that in some cases,
suits are not brought by parties who have been personally injured by the
operation of a law or any other government act but by concerned citizens,
taxpayers or voters who actually sue in the public interest. Consequently, the
Court, in a catena of cases, has invariably adopted a liberal stance on locus
standi,
including
those
cases
involving
taxpayers.
The prevailing doctrine in taxpayers suits is to allow taxpayers to question
contracts entered into by the national government or government- owned or
controlled corporations allegedly in contravention of law. A taxpayer is allowed
to sue where there is a claim that public funds are illegally disbursed, or that
public money is being deflected to any improper purpose, or that there is a
wastage of public funds through the enforcement of an invalid or
unconstitutional law. Significantly, a taxpayer need not be a party to the
contract to challenge its validity.
"A taxpayer need not be a party to the contract to challenge its validity."
G.R. No. 185572, Feb 7, 2012
CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP), v HON.
CESAR D. SANTAMARIA,
[International Responsibility Definition of Treaty]
PONENTE: Sereno, J.
SHORT VERSION:
FACTS: Respondents prayed for the annulment of contracts entered into by
CNMEG and Northrail. These contracts involved the construction of the North
Luzon Railway System from Caloocan to Malolos on a turnkey basis. CNMEG
prays for the dismissal of the suit, contending that it is entitled to immunity,
precluding it from being sued before a local court, and that the contract

agreement is an executive agreement, such that it cannot be questioned by or

before a local court.
HELD: The contract agreement is not an executive agreement. It was not
concluded between the government of the Philippines and China but between
Northrail and CNMEG, which is neither a government nor a government
agency of China but a corporation duly organized and created under the laws
of
the
Peoples
Republic
of
China.

jurisdiction over (a) its person, as it was an agent of the Chinese government,
making it immune from suit, and (b) the subject matter, as the Northrail Project
was a product of an executive agreement. RTC issued an Omnibus Order
denying MTD and set the case for summary hearing. CNMEG filed an MR,
which was denied by RTC. CNMEG filed before the CA a Petition for Certiorari
with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction. CA
dismissed this petition, and the subsequent MR.

Because the Contract Agreement explicitly provides that Philippine Law shall
be applicable, the parties have effectively conceded that their rights and
obligations thereunder are not governed by international law. It is merely an
ordinary commercial contract that can be questioned before the local courts.

21 January 2009: CNMEG filed the instant Petition for Review on Certiorari.

CNMEG engaged in a proprietary activity hence was not covered by sovereign

immunity. The Memorandum of Understanding between CNMEG and Northrail
showed that CNMEG sought the construction of the Luzon Railways as a
proprietary or commercial venture in the ordinary course of its business. It was
clear that CNMEG initiated the undertaking, and not the Chinese government.
LONGER VERSION
FACTS:
14 September 2002: China National Machinery & Equipment Corp. (Group)
(CNMEG), represented by its chairperson, Ren Hongbin, entered into a
Memorandum of Understanding (MOU) with the North Luzon Railways
Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the
conduct of a feasibility study on a possible railway line from Manila to San
Fernando, La Union (the Northrail Project).
30 August 2003: the Export Import Bank of China (EXIM Bank) and the
Department of Finance (DOF) entered into an MOU (Aug 30 MOU), wherein
China agreed to extend Preferential Buyers Credit to the Philippine
government to finance the Northrail Project.
The Chinese government designated EXIM Bank as the lender,
while the Philippine government named the DOF as the borrower.
Under the Aug 30 MOU, EXIM Bank agreed to extend an amount
not exceeding USD 400,000,000 in favor of the DOF, payable in 20
years, with a 5-year grace period, and at the rate of 3% per annum.5
1 October 2003: the Chinese Ambassador to PH, Wang Chungui (Amb.
Wang), wrote a letter to DOF Sec. Jose Isidro Camacho (Sec. Camacho)
informing him of CNMEGs designation as the Prime Contractor for the
Northrail Project.
30 December 2003: Northrail and CNMEG executed a Contract Agreement for
the construction of Section I, Phase I of the North Luzon Railway System from
Caloocan to Malolos on a turnkey basis (the Contract Agreement). The
contract price for the Northrail Project was pegged at USD 421,050,000
(kickback!)
26 February 2004: PH govt and EXIM Bank entered into a counterpart
financial agreement Buyer Credit Loan Agreement (the Loan Agreement).
EXIM Bank agreed to extend Preferential Buyers Credit in the
amount of USD 400,000,000 in favor of the Philippine government
in order to finance the construction of Phase I of the Northrail
Project.
13 February 2006: The respondents filed a Complaint for Annulment of
Contract and Injunction with Urgent Motion for Summary Hearing to Determine
the Existence of Facts and Circumstances Justifying the Issuance of Writs of
Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG,
the Office of the Executive Secretary, DOF, DBM, NEDA and Northrail with
RTC Makati.
Respondents alleged that the Contract Agreement and the Loan
Agreement were void for being contrary to (a) the Constitution; (b)
RA 9184 (Government Procurement Reform Act) (c) PD 1445
(Government Auditing Code) and (d) EO 292 (Admin Code)
RTC issued an Order setting the case for hearing on the issuance of injunctive
reliefs. CNMEG filed an Urgent MR of this Order. Before RTC could rule on the
MR, CNMEG filed a Motion to Dismiss arguing that RTC did not have the

ISSUES AND RATIO:

1. Whether CNMEG is entitled to immunity, precluding it from
being sued before a local court.
This Court explained the doctrine of sovereign immunity in Holy See v.
Rosario:
There are two conflicting concepts of sovereign immunity, each
widely held and firmly established.
o According to the classical or absolute theory, a
sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign.
o 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.
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.
JUSMAG v. National Labor Relations Commission: SC affirmed the
Philippines adherence to the restrictive theory
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract
does not, per se, mean that sovereign states may, at all times, be
sued in local courts. The complexity of relationships between
sovereign states, brought about by their increasing commercial
activities, mothered a morerestrictive application of the doctrine.
As it stands now, the application of the doctrine of immunity from
suit has been restricted to sovereign or governmental activities (jure
imperii). The mantle of state immunity cannot be extended to
commercial, private and proprietary acts (jure gestionis).
Since the Philippines adheres to the restrictive theory, it is crucial to
ascertain the legal nature of the act involved whether the entity
claiming immunity performs governmental, as opposed to proprietary,
functions.
As held in United States of America v. Ruiz:
The restrictive application of State immunity is proper only
when the proceedings arise out of commercial transactions of
the foreign sovereign, its commercial activities or economic
affairs. Stated differently, a State may be said to have 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 contract relates to the
exercise of its sovereign functions.
WON CNMEG performed proprietary functions. YES!
The parties executed the Contract Agreement for the purpose of constructing
the Luzon Railways: to construct railways from Caloocan to Malolos,
Contractor has offered to provide the project on turnkey basis, etc etc.. --Court said these did not on their own reveal whether the construction of the
Luzon railways was meant to be a proprietary endeavor.
The above-cited portion of the Contract Agreement, however, does not on its
own reveal whether the construction of the Luzon railways was meant to be a
proprietary endeavor. In order to fully understand the intention behind and the

purpose of the entire undertaking, the Contract Agreement must not be read in
isolation.
Instead, it must be construed in conjunction with 3 other documents
executed in relation to the Northrail Project:
1.

Memorandum of Understanding dated 14 September 2002 shows that

CNMEG sought the construction of the Luzon Railways as a proprietary
venture.
WHEREAS, CNMEG has the financial capability, professional
competence and technical expertise to assess the state of the and
recommend implementation plans as well as undertake its rehabilitation
and/or modernization;
WHEREAS, CNMEG has expressed interest in the rehabilitation and/or
modernization of the MLN from Metro Manila to San Fernando, La Union
passing through the provinces of Bulacan, Pampanga, Tarlac,
Pangasinan and La Union.
WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs proposal to
undertake a Feasibility Study (the "Study") at no cost to NORTHRAIL
CORP.
xxx
APPROVAL PROCESS x x x regulations and procedures required from
both parties, the parties shall commence the preparation and negotiation
of the terms and conditions of the Contract to be entered into between
them on the implementation of the Project. The parties shall use their
best endeavors to formulate and finalize a Contract with a view to signing
the Contract within one hundred twenty (120) days from CNMEGs
presentation of the Study.

Clearly, it was CNMEG that initiated the undertaking, and not the Chinese
government. The Feasibility Study was conducted not because of any
diplomatic gratuity from or exercise of sovereign functions by the
Chinese government, but was plainly a business strategy employed by
CNMEG with a view to securing this commercial enterprise.
2. Letter dated 1 October 2003 by Amb. Wang - CNMEG, and not the
Chinese government, initiated the Northrail Project was confirmed by Amb.
Wang:
1. CNMEG has the proven competence and capability to undertake
the Project as evidenced by the ranking of 42 given by the ENR
among 225 global construction companies.
2. CNMEG already signed an MOU with the North Luzon Railways
Corporation during the visit of Chairman Li Peng. Such being the
case, they have already established an initial working relationship
with your North Luzon Railways Corporation. This would categorize
CNMEG as the state corporation within the Peoples Republic of
China which initiated our Governments involvement in the Project.
3. Among the various state corporations of the Peoples Republic of
China, only CNMEG has the advantage of being fully familiar with
the current requirements of the Northrail Project having already
accomplished a Feasibility Study which was used as inputs by the
North Luzon Railways Corporation in the approvals process
required by the Republic of the Philippines.
Thus, the desire of CNMEG to secure the Northrail Project was in the
ordinary or regular course of its business as a global construction
company. The implementation of the Northrail Project was intended to
generate profit for CNMEG, with the Contract Agreement placing a
contract price of USD 421,050,000 for the venture.
The use of the term "state corporation" to refer to CNMEG was only
descriptive of its nature as a government-owned and/or -controlled
corporation, and its assignment as the Primary Contractor did not imply
that it was acting on behalf of China in the performance of the latters
sovereign functions.
To imply otherwise would result in an absurd situation, in which all
Chinese corporations owned by the state would be automatically

considered as performing governmental activities, even if they are

clearly engaged in commercial or proprietary pursuits.
3. The Loan Agreement
CNMEG claims immunity on the ground that the Aug 30 MOU on the financing
of the Northrail Project was signed by the Philippine and Chinese
governments, and its assignment as the Primary Contractor meant that it was
bound to perform a governmental function on behalf of China.
However, the Loan Agreement, which originated from the same
Aug 30 MOU, belies this reasoning:
Article 11. Commercial Activity: The execution and delivery of this
Agreement by the Borrower constitute, and the Borrowers
performance of and compliance with its obligations under this
Agreement will constitute, private and commercial acts done and
performed for commercial purposes under the laws of the
Republic of the Philippines and neither the Borrower nor any of
its assets is entitled to any immunity or privilege (sovereign or
otherwise) from suit, execution or any other legal process with
respect to its obligations under this Agreement, as the case
may be, in any jurisdiction.
Notwithstanding the foregoing, the Borrower does not waive any
immunity with respect of its assets which are (i) used by a
diplomatic or consular mission of the Borrower and (ii) assets of a
military character and under control of a military authority or
defense agency and (iii) located in the Philippines and dedicated to
public or governmental use (as distinguished from patrimonial
assets or assets dedicated to commercial use).
(k) Proceedings to Enforce Agreement In any proceeding in the
Republic of the Philippines to enforce this Agreement, the choice of
the laws of the Peoples Republic of China as the governing law
hereof will be recognized and such law will be applied. The waiver
of immunity by the Borrower, the irrevocable submissions of the
Borrower to the non-exclusive jurisdiction of the courts of the
Peoples Republic of China and the appointment of the Borrowers
Chinese Process Agent is legal, valid, binding and enforceable and
any judgment obtained in the Peoples Republic of China will be if
introduced, evidence for enforcement in any proceedings against
the Borrower and its assets in the Republic of the Philippines
provided that (a) the court rendering judgment had jurisdiction over
the subject matter of the action in accordance with its jurisdictional
rules, (b) the Republic had notice of the proceedings, (c) the
judgment of the court was not obtained through collusion or fraud,
and (d) such judgment was not based on a clear mistake of fact or
law.
Further, the Loan Agreement likewise contained an express waiver of
immunity:
15.5 Waiver of Immunity - The Borrower irrevocably and
unconditionally waives, any immunity to which it or its property may
at any time be or become entitled, whether characterized as
sovereign immunity or otherwise, from any suit, judgment, service of
process upon it or any agent, execution on judgment, set-off,
attachment prior to judgment, attachment in aid of execution to
which it or its assets may be entitled in any legal action or
proceedings with respect to this Agreement or any of the
transactions contemplated hereby or hereunder. Notwithstanding
the foregoing, the Borrower does not waive any immunity in respect
of its assets which are (i) used by a diplomatic or consular mission
of the Borrower, (ii) assets of a military character and under control
of a military authority or defense agency and (iii) located in the
Philippines and dedicated to a public or governmental use (as
distinguished from patrimonial assets or assets dedicated to
commercial use).
Thus, despite CNMEGs claim that the EXIM Bank extended financial
assistance to Northrail because the bank was mandated by the Chinese
government, and not because of any motivation to do business in the

Philippines, it is clear from the foregoing provisions that the Northrail

Project was a purely commercial transaction.
Admittedly, the Loan Agreement was entered into between EXIM Bank and the
Philippine government, while the Contract Agreement was between Northrail
and CNMEG. Although the Contract Agreement is silent on the classification of
the legal nature of the transaction, the foregoing provisions of the Loan
Agreement, which was an inextricable part of the entire undertaking,
nonetheless revealed the intention of the parties to the Northrail Project to
classify the whole venture as commercial or proprietary in character.

WON CNMEG is immune from suit under Chinese law. It failed

to adduce evidence!

Even assuming that CNMEG performs governmental functions, such claim

does not automatically vest it with immunity.
Malong v. Phil. National Railways: Immunity from suit is
determined by the character of the objects for which the entity was
organized."
In this regard, Court examined its ruling in Deutsche Gesellschaft Fr
Technische Zusammenarbeit (GTZ) v. CA, where it ruled that GTZ was not
immune from suit. [basically the court discussed this case here]
Germany and the Philippines entered into a Technical Cooperation Agreement,
pursuant to which both signed an arrangement promoting the Social Health
InsuranceNetworking and Empowerment (SHINE) project. The two
governments named their respective implementing organizations: the DOH and
the Philippine Health Insurance Corporation (PHIC) for the Philippines, and
GTZ for the implementation of Germanys contributions.
The arguments raised by GTZ and OSG were the ff:
The SHINE project was implemented pursuant to the bilateral
agreements between the Philippine and German governments.
GTZ was tasked, under the 1991 agreement, with the
implementation of the contributions of the German government.
The activities performed by GTZ pertaining to the SHINE project are
governmental in nature, related as they are to the promotion of
health insurance in the Philippines.
The fact that GTZ entered into employment contracts with the private
respondents did not disqualify it from invoking immunity from suit, as held in
cases such as Holy See v. Rosario, Jr., which set forth what remains valid
doctrine:
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.
GTZ and OSG failed to address if GTZ, by conception, enjoyed the Federal
Republics immunity from suit.
The principle of state immunity from suit, whether a local state or a foreign
state, is reflected in Section 9, Article XVI of the Constitution, which states that
"the State may not be sued without its consent." Who or what consists of "the
State"?
For one, the doctrine is available to foreign States insofar as they
are sought to be sued in the courts of the local State, necessary as
it is to avoid "unduly vexing the peace of nations."
If the instant suit had been brought directly against the Federal Republic of
Germany, there would be no doubt that it is a suit brought against a State, and

the only necessary inquiry is whether said State had consented to be sued.
However, the present suit was brought against GTZ.
GTZs counsel characterizes GTZ as "the implementing agency
of the Government of the Federal Republic of Germany.
BUT SC said assuming that the characterization is correct, it does
not automatically invest GTZ with the ability to invoke State
immunity from suit.
The distinction lies in whether the agency is incorporated or
unincorporated.
State immunity from suit may be waived by general or special law. The special
law can take the form of the original charter of the incorporated government
agency. Jurisprudence is replete with examples of incorporated government
agencies which were ruled not entitled to invoke immunity from suit, owing to
provisions in their charters manifesting their consent to be sued.
Court noted that PHIC was established by RA 7875 which granted
the corporation the power to sue and be sued in court
Is GTZ an incorporated agency of the German government? There is
some mystery surrounding that question. Neither GTZ nor the OSG go
beyond the claim that petitioner is "the implementing agency of the
Government of the Federal Republic of Germany."
GTZ has not supplied any evidence defining its legal nature beyond
that of the bare descriptive "implementing agency."
There is no doubt that the 1991 Agreement designated GTZ as the
"implementing agency" in behalf of the German government. Yet the
catch is that such term has no precise definition that is responsive
to our concerns. Inherently, an agent acts in behalf of a principal,
and the GTZ can be said to act in behalf of the German state. But
that is as far as "implementing agency" could take us.
The term by itself does not supply whether GTZ is incorporated or
unincorporated, whether it is owned by the German state or by
private interests, whether it has juridical personality independent of
the German government or none at all.
GTZ has failed to establish that under German law, it has not
consented to be sued despite it being owned by the Federal
Republic of Germany.
The Court adhered to the rule that in the absence of evidence to the
contrary, foreign laws on a particular subject are presumed to be the
same as those of the Philippines, and following the most intelligent
assumption the Court gathered, GTZ was akin to a governmental owned
or controlled corporation without original charter which, by virtue of the
Corporation Code, has expressly consented to be sued.
Applying the abovementioned ruling, it was readily apparent that CNMEG
cannot claim immunity from suit, even if it contends that it performs
governmental functions.
Its designation as the Primary Contractor does not automatically
grant it immunity, just as the term "implementing agency" has no
precise definition for purposes of ascertaining whether GTZ was
immune from suit.
Although CNMEG claims to be a government-owned corporation, it
failed to adduce evidence that it has not consented to be sued
under Chinese law.
CNMEG is to be presumed to be a government-owned and
-controlled corporation without an original charter. As a result,
it has the capacity to sue and be sued under Section 36 of the
Corporation Code.
CNMEG failed to present a certification from the Department of
Foreign Affairs
Holy See v. Rosario: The determination by the Executive that an entity is
entitled to sovereign or diplomatic immunity is a political question conclusive
upon the courts.
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 Philippines, the practice was for the foreign government or
the international organization to first secure an executive
endorsement of its claim of sovereign or diplomatic immunity.
PAANO? It varies.
In International Catholic Migration Commission v. Calleja: 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: the Secretary of
Foreign Affairs sent the trial court a telegram to that effect.
In Baer v. Tizon: The US 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 this case, the DFA through the Office of Legal Affairs moved with the SC to
be allowed to intervene on the side of CNMEG. The Court allowed DFA to file
its memorandum
In some cases, the defense of sovereign immunity was submitted directly to
the local courts by the respondents through their private counsels. 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.

WON any agency of the Executive Branch can make a

determination of immunity from suit, which may be considered
as conclusive upon the courts. YES. THE DFA!

DFA v. NLRC emphasized the DFAs competence and authority to provide

such necessary determination:
The DFAs function includes the determination of persons and
institutions covered by diplomatic immunities, a determination
which, when challenged, entitles it to seek relief from the court so
as not to seriously impair the conduct of the country's foreign
relations.
The DFA must be allowed to plead its case whenever necessary or
advisable to enable it to help keep the credibility of the Philippine
government before the international community.
When international agreements are concluded, the parties thereto
are deemed to have likewise accepted the responsibility of seeing
to it that their agreements are duly regarded. In our country, this
task falls principally of the DFA as being the highest executive
department with the competence and authority to so act in this
aspect of the international arena.
The fact that this authority is EXCLUSIVE to the DFA was also
emphasized in GTZ v. CA:
SC said that LA, in both of its rulings, noted that it was imperative
for GTZ to secure from the DFA "a certification of respondents
diplomatic status and entitlement to diplomatic privileges including
immunity from suits."
The requirement might not necessarily be imperative. However, had
GTZ obtained such certification from the DFA, it would have
provided factual basis for its claim of immunity that would, at the
very least, establish a disputable evidentiary presumption that the
foreign party is indeed immune which the opposing party will have
to overcome with its own factual evidence.
CNMEG offers the Certification executed by the Economic and Commercial
Office of the Embassy of the Peoples Republic of China, stating that the
Northrail Project is in pursuit of a sovereign activity.
This is NOT the kind of certification that can establish their claim to
immunity, because it was said in the case of Holy See v. Rosario

that such certification unequivocally refers to the determination of

the "Foreign Office of the state where it is sued."
CNMEG also claims that its immunity from suit has the executive endorsement
of both the OSG and the Office of the Government Corporate Counsel
(OGCC), which must be respected by the courts.
However, as expressly ruled in GTZ v. CA, this determination by
the OSG, or by the OGCC for that matter, does not inspire the same
degree of confidence as a DFA certification.
BUT SC SAID: Even with a DFA certification, SC is not precluded
from making an inquiry into the intrinsic correctness of such
certification.

WON an agreement to submit any dispute to arbitration may be

construed as an implicit waiver of immunity from suit.

In the US, the Foreign Sovereign Immunities Act of 1976 provides for a waiver
by implication of state immunity.
In the said law, the agreement to submit disputes to arbitration in a
foreign country is construed as an implicit waiver of immunity from
suit.
Although there is no similar law in the Philippines, there is reason to apply the
legal reasoning behind the waiver in this case.
The Conditions of Contract, which is an integral part of the Contract
Agreement stated:
33. SETTLEMENT OF DISPUTES AND ARBITRATION
33.2. Arbitration
All disputes or controversies arising from this Contract which cannot
be settled between the Employer and the Contractor shall be
submitted to arbitration in accordance with the UNCITRAL
Arbitration Rules at present in force and as may be amended by the
rest of this Clause. The appointing authority shall be Hong Kong
International Arbitration Center. The place of arbitration shall be in
Hong Kong at Hong Kong International Arbitration Center (HKIAC).
Under the above provisions, if any dispute arises between Northrail
and CNMEG, both parties are bound to submit the matter to the
HKIAC for arbitration. x x x The party to arbitration wishing to have
an arbitral award recognized and enforced in the Philippines must
petition the proper regional trial court (a) where the assets to be
attached or levied upon is located; (b) where the acts to be enjoined
are being performed; (c) in the principal place of business in the
Philippines of any of the parties; (d) if any of the parties is an
individual, where any of those individuals resides; or (e) in the
National Capital Judicial Region.
It is clear that CNMEG has agreed that it will not be afforded immunity from
suit. Thus, the courts have the competence and jurisdiction to ascertain the
validity of the Contract Agreement.

2.

WON the Contract Agreement is an executive agreement. NO!!

(finally)
Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna
Convention) defines a treaty as follows:
An international agreement concluded between States in written
form and governed by international law, whether embodied in a
single instrument or in two or more related instruments and
whatever its particular designation.
Bayan Muna v. Romulo: SC held that an executive agreement is similar to a
treaty, except that the former
a) does not require legislative concurrence
b) is usually less formal
c) deals with a narrower range of subject matters
Despite these differences, to be considered an executive agreement, the
following three requisites provided under the Vienna Convention must
nevertheless concur:

a)
b)
c)

the agreement must be between states

it must be written
it must governed by international law

The 1st and 3rd requisites are absent in this case.

A. CNMEG is neither a government nor a government agency.
The Contract Agreement was not concluded between the Philippines and
China, but between Northrail and CNMEG.
By the terms of the Contract Agreement, Northrail is a GOCC while
CNMEG is a corporation duly organized and created under the laws
of PRC.
Thus, both Northrail and CNMEG entered into the Contract
Agreement as entities with personalities distinct and separate from
the Philippine and Chinese governments, respectively.
Neither can it be said that CNMEG acted as agent of the Chinese government.
The fact that Amb. Wang, in his letter (Oct 2003) described CNMEG
as a "state corporation" and declared its designation as the Primary
Contractor in the Northrail Project did not mean it was to perform
sovereign functions on behalf of China.
That label was only descriptive of its nature as a state-owned
corporation, and did not preclude it from engaging in purely
commercial or proprietary ventures.
B. The Contract Agreement is to be governed by Philippine law.
Article 2 of the Conditions of Contract, which under Article 1.1 of the Contract
Agreement is an integral part of the latter, states:
APPLICABLE LAW AND GOVERNING LANGUAGE
The contract shall in all respects be read and construed in
accordance with the laws of the Philippines.
The contract shall be written in English language. All
correspondence and other documents pertaining to the Contract
which are exchanged by the parties shall be written in English
language.
-

Since the Contract Agreement explicitly provides that Philippine law

shall be applicable, the parties have effectively conceded that their
rights and obligations thereunder are not governed by international
law.
It is therefore clear from the foregoing reasons that the Contract
Agreement does not partake of the nature of an executive
agreement. It is merely an ordinary commercial contract that can be
questioned before the local courts.

WHEREFORE, the instant Petition is DENIED. Petitioner China National

Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and
the Contract Agreement is not an executive agreement. CNMEGs prayer
for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for
being moot and academic. This case is REMANDED to the Regional Trial
Court of Makati, Branch 145, for further proceedings as regards the validity of
the contracts subject of Civil Case No. 06-203.
Corona, C.J., Carpio, Velasco, Leonardo-De Castro, Brion, Peralta, Bersamin,
Del Castillo, Abad, Villarama, Perez, Mendoza, Reyes, Perlas Bernabe JJ.
Concur.
MAGALLONA v. ERMITA, G.R. 187167, August 16, 2011
Facts:
In 1961, Congress passed R.A. 3046 demarcating the maritime baselines of
the Philippines as an Archepelagic State pursuant to UNCLOS I of 9158,
codifying the sovereignty of State parties over their territorial sea. Then in
1968, it was amended by R.A. 5446, correcting some errors in R.A. 3046
reserving the drawing of baselines around Sabah.
In 2009, it was again amended by R.A. 9522, to be compliant with the
UNCLOS III of 1984. The requirements complied with are: to shorten one
baseline, to optimize the location of some basepoints and classify KIG and
Scarborough Shoal as regime of islands.

Petitioner now assails the constitutionality of the law for three main reasons:
1. it reduces the Philippine maritime territory under Article 1;
2. it opens the countrys waters to innocent and sea lanes passages hence
undermining our sovereignty and security; and
3. treating KIG and Scarborough as regime of islands would weaken our claim
over those territories.
Issue: Whether R.A. 9522 is constitutional?
Ruling:
1. UNCLOS III has nothing to do with acquisition or loss of territory. it is just a
codified norm that regulates conduct of States. On the other hand, RA 9522 is
a baseline law to mark out basepoints along coasts, serving as geographic
starting points to measure. it merely notices the international community of the
scope of our maritime space.
2. If passages is the issue, domestically, the legislature can enact legislation
designating routes within the archipelagic waters to regulate innocent and sea
lanes passages. but in the absence of such, international law norms operate.
the fact that for archipelagic states, their waters are subject to both passages
does not place them in lesser footing vis a vis continental coastal states.
Moreover, RIOP is a customary international law, no modern state can invoke
its sovereignty to forbid such passage.
3. On the KIG issue, RA 9522 merely followed the basepoints mapped by RA
3046 and in fact, it increased the Phils. total maritime space. Moreover, the
itself commits the Phils. continues claim of sovereignty and jurisdiction over
KIG.
If not, it would be a breach to 2 provisions of the UNCLOS III:
Art. 47 (3): drawing of basepoints shall not depart to any appreciable extent
from the general configuration of the archipelago.
Art 47 (2): the length of baselines shall not exceed 100 mm.
KIG and SS are far from our baselines, if we draw to include them, well breach
the rules: that it should follow the natural configuration of the archipelago.
FROM A DIFFERENT SOURCE
HELD: No. The Supreme Court emphasized that RA 9522, or UNCLOS, itself
is not a means to acquire, or lose, territory. The treaty and the baseline law has
nothing to do with the acquisition, enlargement, or diminution of the Philippine
territory. What controls when it comes to acquisition or loss of territory is the
international law principle on occupation, accretion, cession and prescription
and NOT the execution of multilateral treaties on the regulations of sea-use
rights or enacting statutes to comply with the treatys terms to delimit maritime
zones and continental shelves.
The law did not decrease the demarcation of our territory. In fact it increased it.
Under the old law amended by RA 9522 (RA 3046), we adhered with the
rectangular lines enclosing the Philippines. The area that it covered was
440,994 square nautical miles (sq. na. mi.). But under 9522, and with the
inclusion of the exclusive economic zone, the extent of our maritime was
increased to 586,210 sq. na. mi. (See image below for comparison)
If any, the baselines law is a notice to the international community of the scope
of the maritime space and submarine areas within which States parties
exercise treaty-based rights.
Anent their particular contentions:
a. The law did not abandon the Sabah claim. This is evident on the provision of
Section 2 of RA 9522:

are

Section 2. The definition of the baselines of the territorial sea of the Philippine
Archipelago as provided in this Act is without prejudice to the delineation of
the baselines of the territorial sea around the territory of Sabah, situated
in North Borneo, over which the Republic of the Philippines has acquired
dominion and sovereignty.

Nevertheless, we still continue to lay claim over the KIG and the Scarborough
Shoal through effective occupation.
NOTES:
Under UNCLOS and the baselines law, we have three levels of maritime zones
where we exercise treaty-based rights:
a. territorial waters 12 nautical miles from the baselines; where we exercise
sovereignty
b. contiguous zone 24 nautical miles from the baselines; jurisdiction where
we can enforce customs, fiscal, immigration, and sanitation laws (CFIS).
c. exclusive economic zone 200 nautical miles from the baselines; where we
have the right to exploit the living and non-living resources in the exclusive
economic zone
Note: a fourth zone may be added which is the continental shelf this is
covered by Article 77 of the UNCLOS.
AQUINO

JULY

16

Petitioner emphasize that the refusal of the government to disclose the said
agreement violates there right to information on matters of public concern and
of public interest. That the non-disclosure of the same documents undermines
their right to effective and reasonable participation in all levels of social,
political
and
economic
decision
making.
Respondent herein invoke executive privilege. They relied on the ground that
the matter sought involves a diplomatic negotiation then in progress, thus
constituting an exception to the right to information and the policy of full
disclosure of matters that are of public concern like the JPEPA. That diplomatic
negotiation are covered by the doctrine of executive privilege.
Issue:
Whether or not the petition has been entirely rendered moot and academic
because
of
the
subsequent
event
that
occurred?
Whether the information sought by the petitioners are of public concern and

the

doctrine

of

executive

privilege?

LONGER DIGEST
FACTS:
This is regarding the JPEPA, the bilateral free trade agreement ratified by the
President with Japan, concerning trade in goods, rules of origin, customs
procedures, paperless trading, trade in services, investment, etc.
Prior to Presidents signing of JPEPA in Sept. 2006, petitioners nongovernment organizations, Congresspersons, citizens and taxpayers sought
via petition for mandamus and prohibition to obtain from respondents the full
text of the JPEPA, including the Philippine and Japanese offers submitted
during the negotiation process and all pertinent attachments and annexes
thereto. Particularly, Congress through the House Committee are calling for an
inquiry into the JPEPA, but at the same time, the Executive is refusing to give
them the said copies until the negotiation is completed.

2008

FACTS:
Petition for mandamus and prohibition was filed by the petitioners, as
congresspersons, citizens and taxpayers, requesting respondents to submit to
them the full text of the Japan-Philippines Economic Partnership Agreement
(JPEPA).

by

Moving on to the second issue, The Supreme Court Ruled that Diplomatic
negotiations, therefore, are recognized as privileged in this jurisdiction, the
JPEPA negotiations constituting no exception. It bears emphasis, however, that
such privilege is only presumptive. For as Senate v. Ermita holds, recognizing
a type of information as privileged does not mean that it will be considered
privileged in all instances. Only after a consideration of the context in which the
claim is made may it be determined if there is a public interest that calls for the
disclosure of the desired information, strong enough to overcome its
traditionally
privileged
status.
The court adopted also the doctrine in PMPF v. Manglapus, Wherein
petitioners were seeking information from the Presidents representatives on
the state of the then on-going negotiations of the RP-US Military Bases
Agreement. The Court denied the petition, stressing that secrecy of
negotiations with foreign countries is not violative of the constitutional
provisions of freedom of speech or of the press nor of the freedom of access to
information.

c. The classification of the KIG (or the Spratlys), as well as the Scarborough
Shoal, as a regime of islands did not diminish our maritime area. Under
UNCLOS and under the baselines law, since they are regimes of islands, they
generate their own maritime zones in short, they are not to be enclosed
within the baselines of the main archipelago (which is the Philippine Island
group). This is because if we do that, then we will be enclosing a larger area
which would already depart from the provisions of UNCLOS that the
demarcation should follow the natural contour of the archipelago.

VS

covered

Held:
On the first issue, the Supreme Court ruled that t]he principal relief petitioners
are praying for is the disclosure of the contents of the JPEPA prior to its
finalization between the two States parties, public disclosure of the text of the
JPEPA after its signing by the President, during the pendency of the present
petition, has been largely rendered moot and academic.
The text of the JPEPA having then been made accessible to the public, the
petition has become moot and academic to the extent that it seeks the
disclosure
of
the
full
text
thereof.
The petition is not entirely moot, however, because petitioners seek to obtain,
not merely the text of the JPEPA, but also the Philippine and Japanese offers
in
the
course
of
the
negotiations.

b. UNCLOS may term our waters as archipelagic waters and that we may
term it as our internal waters, but the bottom line is that our country exercises
sovereignty over these waters and UNCLOS itself recognizes that. However,
due to our observance of international law, we allow the exercise of others of
their right of innocent passage. No modern State can validly invoke its
sovereignty to absolutely forbid innocent passage that is exercised in
accordance with customary international law without risking retaliatory
measures from the international community.

AKBAYAN

still

ISSUES:
o
o
o

Whether or not petitioners have legal standing

Whether or not the Philippine and Japanese offers during the
negotiation process are privileged
Whether or not the President can validly exclude Congress,
exercising its power of inquiry and power to concur in treaties, from the
negotiation process
RULING:
Standing
In a petition anchored upon the right of the people to information on matters of
public concern, which is a public right by its very nature, petitioners need not
show that they have any legal or special interest in the result, it being sufficient
to show that they are citizens and, therefore, part of the general public which
possesses the right. As the present petition is anchored on the right to
information and petitioners are all suing in their capacity as citizens and groups
of citizens including petitioners-members of the House of Representatives who
additionally are suing in their capacity as such, the standing of petitioners to file
the
present
suit
is
grounded
in
jurisprudence.

JPEPA,
A
Matter
of
Public
Concern
To be covered by the right to information, the information sought must meet the
threshold requirement that it be a matter of public concern xxx
From the nature of the JPEPA as an international trade agreement, it is evident
that the Philippine and Japanese offers submitted during the negotiations
towards its execution are matters of public concern. This, respondents do not
dispute. They only claim that diplomatic negotiations are covered by the
doctrine of executive privilege, thus constituting an exception to the right to
information
and
the
policy
of
full
public
disclosure.
Privileged Character of Diplomatic Negotiations Recognized
The privileged character of diplomatic negotiations has been recognized in this
jurisdiction. In discussing valid limitations on the right to information, the Court
in Chavez v. PCGG held that information on inter-government exchanges prior
to the conclusion of treaties and executive agreements may be subject to
reasonable safeguards for the sake of national interest.
Applying the principles adopted in PMPF v. Manglapus, it is clear that while the
final text of the JPEPA may not be kept perpetually confidential since there
should be ample opportunity for discussion before [a treaty] is approved the
offers exchanged by the parties during the negotiations continue to be
privileged even after the JPEPA is published. It is reasonable to conclude that
the Japanese representatives submitted their offers with the understanding that
historic confidentiality would govern the same. Disclosing these offers could
impair the ability of the Philippines to deal not only with Japan but with other
foreign
governments
in
future
negotiations.
A ruling that Philippine offers in treaty negotiations should not be open to public
scrutiny would discourage future Philippine representatives from frankly
expressing their views during negotiations. While, on first impression, it
appears wise to deter Philippine representatives from entering into
compromises, it bears noting that treaty negotiations, or any negotiation for
that matter, normally involve a process of quid pro quo, and oftentimes
negotiators have to be willing to grant concessions in an area of lesser
importance in order to obtain more favorable terms in an area of greater
national
interest.
Diplomatic negotiations, therefore, are recognized as privileged in this
jurisdiction, the JPEPA negotiations constituting no exception. It bears
emphasis, however, that such privilege is only presumptive. For as Senate v.
Ermita holds, recognizing a type of information as privileged does not mean
that it will be considered privileged in all instances. Only after a consideration
of the context in which the claim is made may it be determined if there is a
public interest that calls for the disclosure of the desired information, strong
enough
to
overcome
its
traditionally
privileged
status.
Does the exception apply even though JPEPA is primarily economic and
does
not
involve
national
security?
While there are certainly privileges grounded on the necessity of safeguarding
national security such as those involving military secrets, not all are founded
thereon. One example is the informers privilege, or the privilege of the
Government not to disclose the identity of a person or persons who furnish
information of violations of law to officers charged with the enforcement of that
law. The suspect involved need not be so notorious as to be a threat to
national security for this privilege to apply in any given instance. Otherwise, the
privilege would be inapplicable in all but the most high-profile cases, in which
case not only would this be contrary to long-standing practice. It would also be
highly
prejudicial
to
law
enforcement
efforts
in
general.
Also illustrative is the privileged accorded to presidential communications,
which are presumed privileged without distinguishing between those which
involve matters of national security and those which do not, the rationale for
the privilege being that a frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested
parties, is essential to protect the independence of decision-making of those
tasked to exercise Presidential, Legislative and Judicial power.
In the same way that the privilege for judicial deliberations does not depend on
the nature of the case deliberated upon, so presidential communications are

privileged

whether

they

involve

matters

of

national

security.

It bears emphasis, however, that the privilege accorded to presidential

communications is not absolute, one significant qualification being that the
Executive cannot, any more than the other branches of government, invoke a
general confidentiality privilege to shield its officials and employees from
investigations by the proper governmental institutions into possible criminal
wrongdoing. This qualification applies whether the privilege is being invoked in
the context of a judicial trial or a congressional investigation conducted in aid of
legislation.
Closely related to the presidential communications privilege is the deliberative
process privilege recognized in the United States. As discussed by the U.S.
Supreme Court in NLRB v. Sears, Roebuck & Co, deliberative process covers
documents reflecting advisory opinions, recommendations and deliberations
comprising part of a process by which governmental decisions and policies are
formulated. Notably, the privileged status of such documents rests, not on the
need to protect national security but, on the obvious realization that officials
will not communicate candidly among themselves if each remark is a potential
item of discovery and front page news, the objective of the privilege being to
enhance
the
quality
of
agency
decisions.
The diplomatic negotiations privilege bears a close resemblance to the
deliberative process and presidential communications privilege. It may be
readily perceived that the rationale for the confidential character of diplomatic
negotiations, deliberative process, and presidential communications is similar,
if
not
identical.
The earlier discussion on PMPF v. Manglapus shows that the privilege for
diplomatic negotiations is meant to encourage a frank exchange of exploratory
ideas between the negotiating parties by shielding such negotiations from
public view. Similar to the privilege for presidential communications, the
diplomatic negotiations privilege seeks, through the same means, to protect
the independence in decision-making of the President, particularly in its
capacity as the sole organ of the nation in its external relations, and its sole
representative with foreign nations. And, as with the deliberative process
privilege, the privilege accorded to diplomatic negotiations arises, not on
account of the content of the information per se, but because the information is
part of a process of deliberation which, in pursuit of the public interest, must be
presumed
confidential.
Clearly, the privilege accorded to diplomatic negotiations follows as a logical
consequence from the privileged character of the deliberative process.
Does diplomatic privilege only apply to certain stages of the negotiation
process?
In Chavez v. PEA and Chavez v. PCGG, the Court held that with regard to the
duty to disclose definite propositions of the government, such duty does not
include recognized exceptions like privileged information, military and
diplomatic secrets and similar matters affecting national security and public
order.
Treaty-making
power
of
the
President
xxx they (petitioners) argue that the President cannot exclude Congress from
the JPEPA negotiations since whatever power and authority the President has
to negotiate international trade agreements is derived only by delegation of
Congress, pursuant to Article VI, Section 28(2) of the Constitution and Sections
401
and
402
of
Presidential
Decree
No.
1464.
The subject of Article VI Section 28(2) of the Constitution is not the power to
negotiate treaties and international agreements, but the power to fix tariff rates,
import
and
export
quotas,
and
other
taxes
xxx.
As to the power to negotiate treaties, the constitutional basis thereof is Section
21 of Article VII the article on the Executive Department.
xxx
While the power then to fix tariff rates and other taxes clearly belongs to
Congress, and is exercised by the President only be delegation of that body, it

has long been recognized that the power to enter into treaties is vested directly
and exclusively in the President, subject only to the concurrence of at least
two-thirds of all the Members of the Senate for the validity of the treaty. In this
light, the authority of the President to enter into trade agreements with foreign
nations provided under P.D. 1464 may be interpreted as an acknowledgment of
a power already inherent in its office. It may not be used as basis to hold the
President or its representatives accountable to Congress for the conduct of
treaty
negotiations.
This is not to say, of course, that the Presidents power to enter into treaties is
unlimited but for the requirement of Senate concurrence, since the President
must still enure that all treaties will substantively conform to all the relevant
provisions
of
the
Constitution.
It follows from the above discussion that Congress, while possessing vast
legislative powers, may not interfere in the field of treaty negotiations. While
Article VII, Section 21 provides for Senate concurrence, such pertains only to
the validity of the treaty under consideration, not to the conduct of negotiations
attendant to its conclusion. Moreover, it is not even Congress as a while that
has been given the authority to concur as a means of checking the treatymaking power of the President, but only the Senate.

xxx the Court holds that, in determining whether an information is covered by

the right to information, a specific showing of need for such information is not
a relevant consideration, but only whether the same is a matter of public
concern. When, however, the government has claimed executive privilege, and
it has established that the information is indeed covered by the same, then the
party demanding it, if it is to overcome the privilege, must show that that
information is vital, not simply for the satisfaction of its curiosity, but for its
ability to effectively and reasonably participate in social, political, and economic
decision-making.
ARIGO VS SWIFT G.R. No. 206510
VILLARAMA, JR, J.:
Facts:

September 16, 2014

In 2013, the USS Guardian of the US Navy ran aground on an area near the
Tubbataha Reefs, a marine habitat of which entry and certain human activities
are prevented and afforded protection by a Philippine law. The grounding
incident prompted the petitioners to seek for issuance of Writ of Kalikasan with
TEPO from the SC.

Thus, as in the case of petitioners suing in their capacity as private citizens,

petitioners-members of the House of Representatives fail to present a
sufficient showing of need that the information sought is critical to the
performance of the functions of Congress, functions that do not include treatynegotiation.

Among those impleaded are US officials in their capacity as commanding

officers of the US Navy. As petitioners argued, they were impleaded because
there was a waiver of immunity from suit between US and PH pursuant to the
VFA terms.

Did the respondents alleged failure to timely claim executive privilege

constitute
waiver
of
such
privilege?

Petitioners claimed that the grounding, salvaging and post-salvaging

operations of the USS Guardian violated their constitutional rights to a
balanced and healthful ecology since these events caused and continue to
cause environmental damage of such magnitude as to affect other provinces
surrounding the Tubbataha Reefs. Aside from damages, they sought a
directive from the SC for the institution of civil, administrative and criminal suits
for acts committed in violation of environmental laws and regulations in
connection with the grounding incident. They also prayed for the annulment of
some VFA provisions for being unconstitutional.

That respondent invoked the privilege for the first time only in their Comment to
the present petition does not mean that the claim of privilege should not be
credited. Petitioners position presupposes that an assertion of the privilege
should have been made during the House Committee investigations, failing
which
respondents
are
deemed
to
have
waived
it.
xxx (but) Respondents failure to claim the privilege during the House
Committee hearings may not, however, be construed as a waiver thereof by
the Executive branch. xxx what respondents received from the House
Committee and petitioner-Congressman Aguja were mere requests for
information. And as priorly stated, the House Committee itself refrained from
pursuing its earlier resolution to issue a subpoena duces tecum on account of
then Speaker Jose de Venecias alleged request to Committee Chairperson
Congressman
Teves
to
hold
the
same
in
abeyance.
The privilege is an exemption to Congress power of inquiry. So long as
Congress itself finds no cause to enforce such power, there is no strict
necessity to assert the privilege. In this light, respondents failure to invoke the
privilege during the House Committee investigations did not amount to waiver
thereof.
Showing

of

Need

Test

In executive privilege controversies, the requirement that parties present a

sufficient showing of need only means, in substance, that they should show a
public interest in favor of disclosure sufficient in degree to overcome the claim
of privilege. Verily, the Court in such cases engages in a balancing of interests.
Such a balancing of interests is certainly not new in constitutional adjudication
involving
fundamental
rights.
xxx However, when the Executive has as in this case invoked the privilege,
and it has been established that the subject information is indeed covered by
the privilege being claimed, can a party overcome the same by merely
asserting that the information being demanded is a matter of public concern,
without any further showing required? Certainly not, for that would render the
doctrine of executive privilege of no force and effect whatsoever as a limitation
on the right to information, because then the sole test in such controversies
would be whether an information is a matter of public concern.
Right

to

information

vis-a-vis

Executive

Privilege

Issue 1: W/N petitoners have locus standi to file the suit

YES. In the landmark case of Oposa v. Factoran, Jr., the SC recognized the
"public right" of citizens to "a balanced and healthful ecology which, for the first
time in our constitutional history, is solemnly incorporated in the fundamental
law."
On the novel element in the class suit filed by the petitioners minors in Oposa,
this Court ruled that not only do ordinary citizens have legal standing to sue for
the enforcement of environmental rights, they can do so in representation of
their own and future generations.
The liberalization of standing first enunciated in Oposa, insofar as it refers to
minors and generations yet unborn, is now enshrined in the Rules which allows
the filing of a citizen suit in environmental cases.
The provision on citizen suits in the Rules "collapses the traditional rule on
personal and direct interest, on the principle that humans are stewards of
nature."
ISSUE 2: W/N the waiver of immunity from suit under VFA applies to this
case
NO.
The VFA is an agreement which defines the treatment of United States troops
and personnel visiting the Philippines to promote "common security interests"
between the US and the Philippines in the region. It provides for the guidelines
to govern such visits of military personnel, and further defines the rights of the
United States and the Philippine government in the matter of criminal
jurisdiction, movement of vessel and aircraft, importation and exportation of
equipment, materials and supplies.36 The invocation of US federal tort laws and
even common law is thus improper considering that it is the VF A which

governs disputes involving US military ships and crew navigating Philippine

waters in pursuance of the objectives of the agreement.
First, any waiver of State immunity under the VFA pertains only
to criminal jurisdiction and not to special civil actions such as for the issuance
of the writ of kalikasan. Hence, contrary to petitioners claim, the US
government could not be deemed to have waived its immunity from suit. In
fact, it can be inferred from Section 17, Rule 7 of the Rules on Writ of
Kalikasan that a criminal case against a person charged with a violation of an
environmental law is to be filed separately.
Second, the US respondents were sued in their official capacity as
commanding officers of the US Navy who have control and supervision over
the USS Guardian and its crew. Since the satisfaction of any judgment against
these officials would require remedial actions and the appropriation of funds by
the US government, the suit is deemed to be one against the US itself. Thus,
the principle of State Immunity from suit bars the exercise of jurisdiction by the
court over their persons.
The Court considered a view that a ruling on the application or non-application
of criminal jurisdiction provisions of the VFA to US personnel who may be
found responsible for the grounding of the USS Guardian, would be premature
and beyond the province of a petition for a writ of Kalikasan.
ISSUE 3: W/N the US government may still be held liable for damages
caused to the Tubbataha Reefs
Yes. The US government is liable for damages in relation to the grounding
incident under the customary laws of navigation.
During the deliberations, Senior Associate Justice Antonio T. Carpio took the
position that the conduct of the US in this case, when its warship entered a
restricted area in violation of R.A. No. 10067 and caused damage to the TRNP
reef system, brings the matter within the ambit of Article 31 of the United
Nations Convention on the Law of the Sea (UNCLOS). While historically,
warships enjoy sovereign immunity from suit as extensions of their flag
State, Art. 31 of the UNCLOS creates an exception to this rule in cases
where they fail to complywith the rules and regulations of the coastal
State regarding passage through the latters internal waters and the
territorial sea.

As it is, the waiver of State immunity under the VFA pertains only to criminal
jurisdiction and not to special civil actions. Since jurisdiction cannot be had
over the respondents for being immuned from suit, there is no way damages
which resulted from violation of environmental laws could be awarded to
petitioners.
In any case, the Rules on Writ of Kalikasan provides that a criminal case
against a person charged with a violation of an environmental law is to be filed
separately. Hence, a ruling on the application or non-application of criminal
jurisdiction provisions of the VFA to a US personnel who may be found
responsible for the grounding of the USS Guardian, would be premature and
beyond the province of a petition for a writ of Kalikasan. The Rules allows the
recovery of damages, including the collection of administrative fines under R.A.
No. 10067, in a separate civil suit or that deemed instituted with the criminal
action charging the same violation of an environmental law.
ISSUE 5: WON VFA is unconstitutional
The Court refused to rule on this issue.

The VFA was duly concurred in by the Philippine Senate and has been
recognized as a treaty by the US as attested and certified by the duly
authorized representative of the US government. The VFA being a valid and
binding agreement, the parties are required as a matter of international law to
abide by its terms and provisions. A petition under the Rules on Writ of
Kalikasan is not the proper remedy to assail the constitutionality of its
provisions.

----------OTHERS------Doctrine of State Immunity from Suit

Although the US to date has not ratified the UNCLOS, as a matter of long
standing policy, theUS considers itself bound by customary international
rules on the traditional uses of the oceans, which is codified in UNCLOS.

The immunity of the State from suit, known also as the doctrine of sovereign
immunity or non-suability of the State,17 is expressly provided in Article XVI of
the 1987 Constitution which states:

As to the non-ratification by the US, it must be noted that the US refusal to join
the UNCLOS was centered on its disagreement with UNCLOS regime of deep
seabed mining (Part XI) which considers the oceans and deep seabed
commonly owned by mankind. Such has nothing to do with the acceptance by
the US of customary international rules on navigation. (Justice Carpio)

Section 3. The State may not be sued without its consent.

Hence, non-membership in the UNCLOS does not mean that the US will
disregard the rights of the Philippines as a Coastal State over its internal
waters and territorial sea. It is thus expected of the US to bear international
responsibility under Art. 31 in connection with the USS Guardian grounding
which adversely affected the Tubbataha reefs.
ISSUE 4: WoN a claim for damages caused by violation of
environmental laws is proper in the suit
NO. Claim for Damages Caused by Violation of Environmental Laws Must be
Filed Separately
The invocation of US federal tort laws and even common law is improper
considering that it is the VFA which governs disputes involving US military
ships and crew navigating Philippine waters in pursuance of the objectives of
the agreement.

In United States of America v. Judge Guinto, 18 we discussed the principle of

state immunity from suit, as follows:
The rule that a state may not be sued without its consent, now expressed in
Article XVI, Section 3, of the 1987 Constitution, is one of the generally
accepted principles of international law that we have adopted as part of the law
of our land under Article II, Section 2. x x x.
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 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. Upon its admission to
such society, the state is automatically obligated to comply with these
principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based on the
justification given by Justice Holmes that ''there can be no legal right against
the authority which makes the law on which the right depends."
[Kawanakoa v. Polybank, 205 U.S. 349]. There are other practical reasons for
the enforcement of the doctrine. In the case of the foreign state sought to be
impleaded in the local jurisdiction, the added inhibition is expressed in the

maxim par in parem, non habet imperium. All states are sovereign equals
and cannot assert jurisdiction over one another. A contrary disposition
would, in the language of a celebrated case, "unduly vex the peace of nations."
[De Haber v. Queen of Portugal, 17 Q. B. 171]
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 state 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,. such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must be regarded
as against the state itself although it has not been formally impleaded. [Garcia
v. Chief of Staff, 16 SCRA 120] In such a situation, the state may move to
dismiss the comp.taint on the ground that it has been filed without its consent
UNCLOS
The UNCLOS is a product of international negotiation that seeks to balance
State sovereignty (mare clausum) and the principle of freedom of the high seas
(mare liberum).29 The freedom to use the world's marine waters is one of the
oldest customary principles of international law. 30 The UNCLOS gives to the
coastal State sovereign rights in varying degrees over the different zones of
the sea which are: 1) internal waters, 2) territorial sea, 3) contiguous zone, 4)
exclusive economic zone, and 5) the high seas. It also gives coastal States
more or less jurisdiction over foreign vessels depending on where the vessel is
located.31
Insofar as the internal waters and territorial sea is concerned, the Coastal State
exercises sovereignty, subject to the UNCLOS and other rules of international
law. Such sovereignty extends to the air space over the territorial sea as well
as to its bed and subsoil.32
In the case of warships,33 as pointed out by Justice Carpio, they continue to
enjoy sovereign immunity subject to the following exceptions:
Article 30
Non-compliance by warships with the laws and regulations of the coastal State
If any warship does not comply with the laws and regulations of the coastal
State concerning passage through the territorial sea and disregards any
request for compliance therewith which is made to it, the coastal State may
require it to leave the territorial sea immediately.
Article 31
Responsibility of the flag State for damage caused by a warship or other
government ship operated for non-commercial purposes
The flag State shall bear international responsibility for any loss or damage to
the coastal State resulting from the non-compliance by a warship or other
government ship operated for non-commercial purposes with the laws and
regulations of the coastal State concerning passage through the territorial sea
or with the provisions of this Convention or other rules of international law.
Article 32
Immunities of warships and other government ships operated for noncommercial purposes
LIM vs. EXECUTIVE SECRETARY
Facts:
Beginning January of year 2002, personnel from the armed forces of the
United States of America started arriving in Mindanao to take part, in
conjunction with the Philippine military, in Balikatan 02-1. They are a
simulation of joint military maneuvers pursuant to the Mutual Defense Treaty a
bilateral defense agreement entered into by the Philippines and the United
States in 1951. Its aim is to enhance the strategic and technological
capabilities of our armed forces through joint training with its American

counterparts; the Balikatan is the largest such training exercise directly

supporting the MDTs objectives. It is this treaty to which the VFA adverts and
the obligations thereunder which it seeks to reaffirm.
On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed
this petition for certiorari and prohibition, attacking the constitutionality of the
joint exercise.
Issue:
Whether Balikatan 02-1 activities covered by the Visiting Forces Agreement?
Ruling:
To resolve this, it is necessary to refer to the VFA itself. The VFA permits
United States personnel to engage, on an impermanent basis, in activities,
the exact meaning of which was left undefined. The sole encumbrance placed
on its definition is couched in the negative, in that United States personnel
must abstain from any activity inconsistent with the spirit of this agreement,
and in particular, from any political activity.
The Vienna Convention on the Law of Treaties, Articles 31 and 32 contains
provisos governing interpretations of international agreements. It clearly
provides that the cardinal rule of interpretation must involve an examination of
the text, which is presumed to verbalize the parties intentions. The Convention
likewise dictates what may be used as aids to deduce the meaning of terms,
which it refers to as the context of the treaty, as well as other elements may be
taken into account alongside the aforesaid context.
It appeared farfetched that the ambiguity surrounding the meaning of the
word .activities arose from accident. It was deliberately made that way to give
both parties a certain leeway in negotiation. In this manner, visiting US forces
may sojourn in Philippine territory for purposes other than military. As
conceived, the joint exercises may include training on new techniques of patrol
and surveillance to protect the nations marine resources, sea search-andrescue operations to assist vessels in distress, disaster relief operations, civic
action projects such as the building of school houses, medical and
humanitarian missions, and the like.
Under these auspices, the VFA gives legitimacy to the current Balikatan
exercises. It is only logical to assume that .Balikatan 02-1, a mutual antiterrorism advising, assisting and training exercise, falls under the umbrella of
sanctioned or allowable activities in the context of the agreement.

NORTH COTABATO VS. GRP GR NO. 183591

FACTS: The Memorandum of Agreement on the Ancestral Domain (MOA-AD)
brought about by the Government of the republic of the Philippines (GRP) and
the Moro Islamic Liberation Front (MILF) as an aspect of Tripoli Agreement of
Peace in 2001 is scheduled to be signed in Kuala Lumpur, Malaysia.
This agreement was petitioned by the Province of North Cotabato for
Mandamus and Prohibition with Prayer for the Issuance of Writ of Preliminary
Injunction and Temporary Restraining Order. The agreement mentions
"Bangsamoro Juridical Entity" (BJE) to which it grants the authority and
jurisdiction over the Ancestral Domain and Ancestral Lands of the
Bangsamoro; authority and jurisdiction over all natural resources within internal
waters. The agreement is composed of two local statutes: the organic act for
autonomous region in Muslim Mindanao and the Indigenous Peoples Rights
Act (IPRA).
ISSUE: Whether or not the GRP violated the Constitutional and statutory
provisions on public consultation and the right to information when they
negotiated and initiated the MOA-AD and Whether or not the MOA-AD brought
by the GRP and MILF is constitutional
HELD: GRP violated the Constitutional and statutory provisions on public
consultation and the right to information when they negotiated and initiated the
MOA-AD and it are unconstitutional because it is contrary to law and the
provisions of the constitution thereof.

REASONING: The GRP is required by this law to carry out public consultations
on both national and local levels to build consensus for peace agenda and
process and the mobilization and facilitation of peoples participation in the
peace process.
Article III (Bill of Rights)
Sec. 7. The right of people on matters of public concern shall be recognized,
access to official records and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government research data used
as basis for policy development shall be afforded the citizen, subject to such
limitations as may be provided by law.
Article II
Sec. 28. Subject to reasonable conditions prescribed by law , that state adopts
and implements a policy of full public disclosure of all its transactions involving
public interest.
LGC (1991), require all national agencies and officers to conduct periodic
consultations. No project or program be implemented unless such
consultations are complied with and approval mus be obtained.
Article VII (Executive Department)
Sec. 21. No treaty or international agreement shall be valid and effective
unless concurred in by at least two-thirds of all the Members of the Senate.
Article X. (Local Government)
Sec. 1. The territorial and political subdivisions of the Republic of the
Philippines are the province, cities, municipalities and barangays. There shall
be autonomous regions on Muslim Mindanao and the Cordillera as hereinafter
provided.
Sec. 15. There shall be created autonomous regions in Muslim Mindanao and
in the Cordilleras consisting of provinces, cities, municipalities and
geographical areas sharing common and distinctive historical and cultural
heritage, economic and social structures and other relevant characteristics
within the framework of this constitution and the national sovereignty as well as
territorial integrity of the Republic of the Philippines.
Section 16. The President shall exercise general supervision over autonomous
regions to ensure that laws are faithfully executed.
Sec. 18. The creation of autonomous region shall be effective when approved
by a majority of the votes cast by the constituents units in a plebiscite called for
the purpose, provided that only provinces, cities and geographic areas voting
favourably in such plebiscite shall be included in the autonomous region.
Sec. 20. Within its territorial jurisdiction and subject to the provisions of this
Constitution and national laws, the organic act of autonomous regions shall
provide for legislative powers over:
1. Administrative organization;
2. Creation of sources of revenues;
3. Ancestral domain and natural resources;
4. Personal, family, and property relations;
5. Regional urban and rural planning development;
6. Economic, social, and tourism development;
7. Educational policies;
8. Preservation and development of the cultural heritage; and
9. Such other matters as may be authorized by law for the promotion of the
general welfare of the people of the region.
The President has sole authority in the treaty-making.
ARTICLE XVII (AMENDMENTS OR REVISIONS)
Section 1. Any amendment to, or revision of, this Constitution may be proposed
by:

1. The Congress, upon a vote of three-fourths of all its Members; or

2. A constitutional convention.
Section 4. Any amendment to, or revision of, this Constitution under Section 1
hereof shall be valid when ratified by a majority of the votes cast in a plebiscite
which shall be held not earlier than sixty days nor later than ninety days after
the approval of such amendment or revision.
MOA-AD states that all provisions thereof which cannot be reconciled with the
present constitution and laws shall come into force upon signing of a
comprehensive compact and upon effecting the necessary changes to the
legal framework. The presidents authority is limited to proposing constitutional
amendments. She cannot guarantee to any third party that the required
amendments will eventually be put in place nor even be submitted to a
plebiscite. MOA-AD itself presents the need to amend therein.

COMMISSIONER of CUSTOMS v EASTERN SEA TRADING

FACTS: Eastern Sea Trading (EST) was a shipping company which
imports from Japan onion and garlic into the Philippines. In 1956, the
Commissioner of Customs ordered the seizure and forfeiture of the import
goods because EST was not able to comply with Central Bank Circulars 44
and 45. The said circulars were pursuant to Executive Order 328. On the other
hand, EO 328 was the implementing law of the Trades and Financial
Agreements, an executive agreement, entered into between the Philippines
and Japan. The said executive agreement states, among others, that all import
transactions between Japan and the Philippines should be invoiced in dollar. In
this case, the said items imported by EST from Japan were not invoiced in
dollar.
EST questioned the validity of the said EO averring that the executive
agreement that the EO was implementing was never concurred upon by the
Senate. The issue was elevated to the Court of Tax Appeals and the latter ruled
in favor of EST. The Commissioner appealed.
ISSUE: Whether or not the Executive Agreement is subject to the concurrence
by the Senate.
HELD: No, Executive Agreements are not like treaties which are subject to the
concurrence of at least 2/3 of the members of the Senate. Agreements
concluded by the President which fall short of treaties are commonly referred
to as executive agreements and are no less common in our scheme of
government than are the more formal instruments treaties and conventions.
They sometimes take the form of exchanges of notes and at other times that of
more formal documents denominated agreements or protocols.
The point where ordinary correspondence between this and other governments
ends and agreements whether denominated executive agreements or
exchanges of notes or otherwise begin, may sometimes be difficult of ready
ascertainment. It would be useless to undertake to discuss here the large
variety of executive agreements as such, concluded from time to time.
Hundreds of executive agreements, other than those entered into under the
trade- agreements act, have been negotiated with foreign governments. . . . It
would seem to be sufficient, in order to show that the trade agreements under
the act of 1934 are not anomalous in character, that they are not treaties, and
that they have abundant precedent in our history, to refer to certain classes of
agreements heretofore entered into by the Executive without the approval of
the Senate.
They cover such subjects as the inspection of vessels, navigation dues,
income tax on shipping profits, the admission of civil aircraft, customs matters,
and commercial relations generally, international claims, postal matters, the
registration of trade-marks and copyrights, etc. Some of them were concluded
not by specific congressional authorization but in conformity with policies
declared in acts of Congress with respect to the general subject matter, such
as tariff acts; while still others, particularly those with respect to the settlement
of claims against foreign governments, were concluded independently of any
legislation.
The right of the Executive to enter into binding agreements without the
necessity of subsequent Congressional approval has been confirmed by
long usage. From the earliest days of our history we have entered into

executive agreements covering such subjects as commercial and

consular relations, most-favored-nation rights, patent rights, trademark
and copyright protection, postal and navigation arrangements and the
settlement of claims. The validity of these has never been seriously
questioned by our courts.
SHANGRI-LA INT: HOTEL MGMT LTD V DEVELOPERS GRP COMPANIES
Facts:
R claims ownership SHANGRI-LA mark and S logo in the Philippines on the
strength of its prior use thereof within the country. It filed an application
pursuant to Sections 2 and 4 of RA No. 166 as amended and was issued
corresponding certificate of registration and since then, started using the mark
and logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels
with interest in hotels and hotel-related transactions and has adopted the
name Shangri-La as part of the corporate names of all companies organized
under its aegis. To centralize the operations of all Shangri-la hotels and the
ownership of the Shangri-La mark and S logo, the Kuok Group had
incorporated several companies that form part of the SLIHM and has
caused the registration of, and in fact registered, the Shangri-La mark and S
logo in the patent offices in different countries around the world.
P filed an Inter Partes Case, praying for the cancellation of the registration of
the mark and logo issued to R on the ground that the same were illegally and
fraudulently obtained and appropriated.
R filed a complaint for TMI & Damages alleging that it has, for the last 8 years,
been the prior exclusive user in the Philippines of the mark and logo in
question and the registered owner thereof for its restaurant and allied services.
P pointed the Paris Convention for the Protection of Industrial Property as
affording security and protection to SLIHMs exclusive right to said mark and
logo claiming having used, since late 1975, the internationally known and
specially-designed Shangri-La mark and S logo for all the hotels in their
hotel chain.
The trial court came out with its decision rendering judgment in favor for R. P
appealed to the CA which affirmed that of the lower courts decision and further
denied their MR.
Issue:
Whether or not prior use of a mark is a requirement for registration.
Ruling:
Under the provisions of the former trademark law, R.A. No. 166, as amended,
which was in effect up to December 31, 1997, hence, the law in force at the
time of respondents application for registration of trademark, the root of
ownership of a trademark is actual use in commerce. Section 2 of said law
requires that before a trademark can be registered, it must have been actually
used in commerce and service for not less than two months in the Philippines
prior to the filing of an application for its registration.
While the present law on trademarks has dispensed with the requirement of
prior actual use at the time of registration, the law in force at the time of
registration must be applied, and thereunder it was held that as a condition
precedent to registration of trademark, trade name or service mark, the same
must have been in actual use in the Philippines before the filing of the
application for registration.
Here, respondents own witness, Ramon Syhunliong, testified that a jeepney
signboard artist allegedly commissioned to create the mark and logo submitted
his designs only in December 1982. This was two-and-a-half months after the
filing of the respondents trademark application on October 18, 1982 with the
BPTTT. It was also only in December 1982 when the respondents restaurant
was opened for business. Respondent cannot now claim before the Court that
the certificate of registration itself is proof that the two-month prior use
requirement was complied with, what with the fact that its very own witness
testified otherwise in the trial court. And because at the time (October 18,
1982) the respondent filed its application for trademark registration of the

Shangri-La mark and S logo, respondent was not using these in the
Philippines commercially, the registration is void.
Admittedly, the CA was not amiss in saying that the law requires the actual use
in commerce of the said trade name and S logo in the Philippines. Hence,
consistent with its finding that the bulk of the petitioners evidence shows
that the alleged use of the Shangri-La trade name was done abroad and not in
the Philippines, it is understandable for that court to rule in
respondents. Unfortunately, however, what the CA failed to perceive is that
there is a crucial difference between the aforequoted Section 2 and
Section 2-A of R.A. No. 166. For, while Section 2 provides for what is
registrable, Section 2-A, on the other hand, sets out how ownership is
acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner
thereof and must have actually used the mark in commerce in the Philippines
for 2 months prior to the application for registration.Since ownership of the
trademark is required for registration, Section 2-A of the same law sets out to
define how one goes about acquiring ownership thereof. Under Section 2-A, it
is clear that actual use in commerce is also the test of ownership but the
provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that Section 2-A
does not require that the actual use of a trademark must be within the
Hence, under R.A. No. 166, as amended, one may be an owner of a mark
due to actual use thereof but not yet have the right to register such ownership
here due to failure to use it within the Philippines for two months.
While the petitioners may not have qualified under Section 2 of RA. No.
166 as a registrant neither did respondent DGCI, since the latter also failed to
fulfill the 2-month actual use requirement. What is worse, DGCI was not even
the owner of the mark. For it to have been the owner, the mark must
not have been already appropriated (i.e.,used) by someone else. At the
time of respondent DGCIs registration of the mark, the same was
already being used by the petitioners, albeit abroad, of which DGCIs
president was fully aware.
However, while the Philippines was already a signatory to the Paris
Convention, the IPC only took effect on January 1, 1988, and in the absence of
a retroactivity clause, R.A. No. 166 still applies. Consequently, the petitioners
cannot claim protection under the Paris Convention. Nevertheless, with the
double infirmity of lack of two-month prior use, as well as bad faith in the
respondents registration of the mark, it is evident that the petitioners
cannot be guilty of infringement. It would be a great injustice to adjudge the
petitioners guilty of infringing a mark when they are actually the originator and
creator thereof.
WHEREFORE, the instant petition is GRANTED. The assailed Decision and
Resolution of the CA and the RTC are hereby SET ASIDE. Accordingly, the
complaint for is ordered DISMISSED.

SECRETARY OF JUSTICE VS LANTION AND MARK JIMENEZ

G.R. NO. 139465. OCTOBER 17, 2000

Facts: On January 13, 1977, President Ferdinand E. Marcos issued

Presidential Decree No. 1069 Prescribing the Procedure for the Extradition of
Persons Who Have Committed Crimes in a Foreign Country.
The Decree is founded on: the Doctrine of Incorporation under the Constitution;
the mutual concern for the suppression of crime both in the state where it was
committed and the state where the criminal may have escaped. On November
13, 1994, Secretary of Justice Franklin Drilon, representing the Government of
the Republic of the Philippines, signed in Manila the Extradition Treaty
between the Government of the Philippines and th eGovernment of the U.S.A.
The Philippine Senate ratified the said Treaty. On June 18, 1999,
the Department of Justice received from the Department of Foreign Affairs U.S
Note Verbale No. 0522 containing a request for the extradition of private
respondent Mark Jimenez to the United States. Mark Jimenez was charged of
multiple crimes ranging from tax evasion to wire tapping to conspiracy to

defraud the USA. Jimenez was then wanted In the US. The US government,
pursuant to the RP-US extradition treaty requested to have Jimenez be
extradited there. Jimenez requested for a copy of the complaint against him as
well as the extradition request by the USA. The DOJ secretary refused to
provide him copy thereof advising that it is still premature to give him so and
that it is not apreliminary investigation hence he is not entitled to receive such
copies; and denied the request for the consistency of Article 7 of the RPUS Extradition Treaty stated in Article 7that the Philippine Government must
present the interests of the United States in any proceedingsarising out of a
request for extradition. Jimenez sued the DOJ Secretary (Franklin Drilon). The
lower court ruled in favor of Jimenez
Issues:
1. Whether or not the private respondent is entitled to the due process right to
notice and hearing during the evaluation stage of the extradition process
2. Whether or NOT the right of the people to information on matters of public
concern granted under Sec. 7 of Art. III of the 1987 Constitution is violated
3. Whether or not there is a conflict between between the treaty and the due
process clause in the Constitution?
4. Whether or not to uphold a citizens basic due process rights or the
governments ironclad duties under a treaty.
Held:
First Issue: No. Private respondent is bereft of the right to notice and hearing
during the evaluation stage of the extradition process.
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. 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 especially by one whose extradition papers
are still undergoing evaluation. As held by the US Supreme Court in United
States v. Galanis:
"An extradition proceeding is not a criminal prosecution, and the constitutional
safeguards that accompany a criminal trial in this country do not shield an
accused from extradition pursuant to a valid treaty.
As an extradition proceeding is not criminal in character and the evaluation
stage in an extradition proceeding is not akin to a preliminary investigation, the
due process safeguards in the latter do not necessarily apply to the former.
The procedural due process required by a given set of circumstances "must
begin with a determination of the precise nature of the government function
involved as well as the private interest that has been affected by governmental
action." The concept of due process is flexible for "not all situations calling for
procedural safeguards call for the same kind of procedure."
In tilting the balance in favor of the interests of the State, the Court stresses
that it is not ruling that the private respondent has no right to due process at all
throughout the length and breadth of the extrajudicial proceedings. Procedural
due process requires a determination of what process is due, when it is due,
and the degree of what is due. Stated otherwise, a prior determination should
be made as to whether procedural protections are at all due and when they are
due, which in turn depends on the extent to which an individual will be
"condemned to suffer grievous loss."
As aforesaid, P.D. No. 1069 which implements the RP-US Extradition Treaty
affords an extraditee sufficient opportunity to meet the evidence against
him once the petition is filed in court. The time for the extraditee to know the
basis of the request for his extradition is merely moved to the filing in court of
the formal petition for extradition. The extraditee's right to know is momentarily
withheld during the evaluation stage of the extradition process to
accommodate the more compelling interest of the State to prevent escape of
potential extraditees which can be precipitated by premature information of the
basis of the request for his extradition. No less compelling at that stage of the

extradition proceedings is the need to be more deferential to the judgment of a

co-equal branch of the government, the Executive, which has been endowed
by our Constitution with greater power over matters involving our foreign
relations. Needless to state, this balance of interests is not a static but a
moving balance which can be adjusted as the extradition process moves from
the administrative stage to the judicial stage and to the execution stage
depending on factors that will come into play. In sum, we rule that
the temporary hold on private respondent's privilege of notice and hearing is
a soft restraint on his right to due process which will not deprive him
of fundamental fairness should he decide to resist the request for his
extradition to the United States. There is no denial of due process as long as
fundamental fairness is assured a party.
Second Issue
NO. During the evaluation procedure, no official governmental action of our
own government has as yet been done; hence the invocation of the right is
premature. Later, and in contrast, records of the extradition hearing would
already fall under matters of public concern, because our government by then
shall have already made an official decision to grant the extradition request.
Third Issue
NO.En contrario, these two components of the law of the land are not pined
against each other. There is no occasion to choose which of the two should be
upheld. Instead, we see a void in the provisions of the RP-US Extradition
Treaty, as implemented by Presidential Decree No. 1069, as regards the basic
due process rights of a prospective extraditee at the evaluation stage of
extradition proceedings. From the procedures earlier abstracted, after the filing
of the extradition petition and during the judicial determination of the propriety
of extradition, the rights of notice and hearing are clearly granted to the
prospective extraditee. However, prior thereto, the law is silent as to these
rights. Reference to the U.S. extradition procedures also manifests this
silence.In the absence of a law or principle of law, we must apply the rules of
fair play.
An application of the basic twin due process rights of notice and hearing will
not go against the treaty or the implementing law. Neither the Treaty nor the
Extradition Law precludes these rights from a prospective extraditee.The
doctrine of incorporation is applied whenever municipal tribunals (or local
courts) are confronted with situations in which there appears to be a conflict
between a rule of international law and the provisions of the constitution or
statute of the local state. Efforts should first be exerted to harmonize them, so
as to give effect to both since it is to be presumed that municipal law was
enacted with proper regard for the generally accepted principles of
international law in observance of the observance of the Incorporation Clause
in the above-cited constitutional provision.
Fourth Issue
Petitiondismissed.
The human rights of person, whether citizen or alien , and the rights of the
accused guaranteed in our Constitution should take precedence over treaty
rights claimed by a contracting state. The duties of the government to the
individual deserve preferential consideration when they collide with its treaty
obligations to the government of another state. This is so although we
recognize treaties as a source of binding obligations under generally accepted
principles of international law incorporated in our Constitution as part of the law
of
the
land.
The doctrine of incorporation is applied whenever municipal tribunals are
confronted with situation in which there appears to be a conflict between a rule
of international law and the provision of the constitution or statute of the local
state.
Petitioner (Secretary of Justice) is ordered to furnish Mark Jimenez copies of
the extradition request and its supporting papers, and to grant him (Mark
Jimenez) a reasonable period within which to file his comment with supporting
evidence.

Under the Doctrine of Incorporation, rules of international law form part of the
law of the land and no further legislative action is needed to make such rules
applicable in the domestic sphere.

dictates that municipal law should be upheld by the municipal courts, for the
reason that such courts are organs of municipal law and are accordingly bound
by it in all circumstances.

The doctrine of incorporation is applied whenever municipal tribunals are

confronted with situations in which there appears to be a conflict between a
rule of international law and the provisions of the constitution or statute of the
local state.

The fact that international law has been made part of the law of the land does
not pertain to or imply the primacy of international law over national or
municipal law in the municipal sphere. The doctrine of incorporation, as applied
in most countries, decrees that rules of international law are given equal
standing with, but are not superior to, national legislative enactments.
Accordingly, the principle lex posterior derogate priori takes effect a treaty
may repeal a statute and a statute may repeal a treaty. In states where the
Constitution is the highest law of the land, such as the Republic of the
Philippines, both statutes and treaties may be invalidated if they are in conflict
with the constitution

Efforts should first be exerted to harmonize them, so as to give effect to both

since it is to be presumed that municipal law was enacted with proper regard
for the generally accepted principles of international law in observance of the
incorporation clause in the above cited constitutional provision.
In a situation, however, where the conflict is irreconcilable and a choice has to
be made between a rule of international law and a municipal law, jurisprudence