Pimentel v.
Executive Secretary guidelines in the negotiation of international
G.R. No. 158088 July 6, 2005
Facts:
The petitioners filed a petition for mandamus to
compel the Office of the Executive Secretary and the
Department of Foreign Affairs to transmit the signed
copy of the Rome Statute of the International
Criminal Court to the Senate of the Philippines for
its concurrence pursuant to Sec. 21, Art VII of the
1987 Constitution.
The Rome Statute established the Int'l Criminal
Court which will have jurisdiction over the most
serious crimes as genocide, crimes against
humanity, war crimes and crimes of aggression as
defined by the Statute. The provisions of the Statute
however require that it be subject to ratification,
acceptance or approval of the signatory state.
Petitioners contend that ratification of a treaty,
under both domestic and international law, is a
function of the Senate, hence it is the duty of the
Executive Department to transmit the signed copy
to the senate to allow it to exercise its discretion.
Issue: Whether or not the Exec. Secretary and the
DFA have the ministerial duty to transmit to the
Senate the copy of the Rome Statute signed by a
member of the Philippine mission to the U.N. even
without the signature of the President.
Ruling:
The Supreme Court held NO.
The President as the head of state is the sole organ
and authorized in the external relations and he is
also the country's sole representative with foreign
nations, He is the mouthpiece with respect to the
country's foreign affairs.
In treaty-making, the President has the sole
authority to negotiate with other states and enter
into treaties but this power is limited by the
Constitution with the 2/3 required vote of all the
members of the Senate for the treaty to be valid.
(Sec. 21, Art VII).
The legislative branch part is essential to provide a
check on the executive in the field of foreign
relations, to ensure the nation's pursuit of political
maturity and growth.
The signing of the treaty and the ratification are two
separate and distinct steps in the treaty-making
process—the signature is primarily intended as a
means of authenticating the instrument and as a
symbol of the good faith of the parties, usually
performed by the state’s authorized representative,
while ratification is the formal act by which a state
confirms and accepts the provisions of a treaty
concluded by its representative, and is generally
held to be an executive act, undertaken by the head
of the state or of the government.
Executive Order No. 459 issued by President Fidel
V. Ramos on November 25, 1997 provides the
agreements and its ratification. It mandates that:
a. after the treaty has been signed by the
Philippine representative,
b. the same shall be transmitted to the
Department of Foreign Affairs.
c. The Department of Foreign Affairs shall
then prepare the ratification papers and
forward the signed copy of the treaty to the
President for ratification.
d. After the President has ratified the treaty,
the Department of Foreign Affairs shall
submit the same to the Senate for
concurrence.
e. Upon receipt of the concurrence of the
Senate, the Department of Foreign Affairs
shall comply with the provisions of the treaty
to render it effective.
It should be emphasized that under our
Constitution, the power to ratify is vested in the
President, subject to the concurrence of the Senate.
The role of the Senate, however, is limited only to
giving or withholding its consent, or concurrence, to
the ratification. Hence, it is within the authority of
the President to refuse to submit a treaty to the
Senate or, having secured its consent for its
ratification, refuse to ratify it. Although the refusal
of a state to ratify a treaty which has been signed in
its behalf is a serious step that should not be taken
lightly, such decision is within the competence of
the President alone, which cannot be encroached by
this Court via a writ of mandamus. This Court has
no jurisdiction over actions seeking to enjoin the
President in the performance of his official duties.
The Court, therefore, cannot issue the writ of
mandamus prayed for by the petitioners as it is
beyond its jurisdiction to compel the executive
branch of the government to transmit the signed
text of Rome Statute to the Senate.
Commissioner of Customs vs. Eastern Sea
Trading,
3 SCRA 351, No. L-14279 October 31, 1961
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.
While the concurrence of the Senate is required by
the Constitution in the making of “treaties”
(Constitution of the Phil., Article VII, Section 10 [7],
“executive agreements” may be validly entered into
without such concurrence.
Agustin vs. Edu
88 SCRA 195, No. L-49112 February 2, 1979
Facts:
President Marcos issued the Letter of Instruction
No. 229 which states that all owners, users or
drivers shall have at all times one pair of early
warning devise (EWD) in their cars acquire from any
source depending on the owner’s choice.
The Letter of Instruction was assailed by petitioner
Leovillo Agustin to have violated the constitution
guarantee of due process against Hon Edu, Land
Transportation Commissioner, Hon. Juan Ponce
Enrile, Minister of national Defense, Hon. Juinio,
Minister of Public Works, Transportation and
Communication and Hon. Aquino, Minister of Public
Highways. Because of such contentions, the
Implementing Rules and Regulation was ordered to
be suspended for a period of 6 months.
Petitioner alleges that EWD are not necessary
because vehicles already have hazard lights
(blinking lights) that can be used as a warning
device. Also petitioner contest that the letter of
instruction violates the delegation of police power
because it is deemed harsh, oppressive and
unreasonable for the motorists and those dealers of
EWD will become instant millionaires because of
such law.
Issue: Whether or not Petitioner’s contentions
possess merit.
Held: Petitioner’s contentions are without merit
because the exercise of police power may interfere
with personal liberty or property to ensure and
promote the safety, health and prosperity of the
State. Also, such letter of instruction is intended to
promote public safety and it is indeed a rare
occurrence that such contention was alleged in an
instruction with such noble purpose.
Petitioner also failed to present the factual
foundation that is necessary to invalidate the said
letter of instruction. In cases where there is absence
in the factual foundation, it should be presumed
that constitutionality shall prevail. Pres. Marcos on
the other hand possesses vital statistics that will
justify the need for the implementation of this
instruction. As signatory to the 1968 Vienna
Conventions on Road Signs and Signals, our
country must abide with the standards given as
stated in our Constitution that
The 2968 Vienna Convention on Road Signs and
Signals is impressed with the character of “generally
accepted principles of international law” which
under the Constitution the Philippines adopts as
part of the law of the land. —The petition itself
quoted these two whereas clauses of the assailed
Letter of Instruction:
“[Whereas], the hazards posed by such
obstructions to traffic have been recognized
by international bodies concerned with
traffic safety, the 1968 Vienna Convention
on Road Signs and Signals and the United
Nations Organization (U.N.);
[Whereas], the said Vienna Convention,
which was ratified by the Philippine
Government under P.D. No. 207,
recommended the enactment of local
legislation for the installation of road safety
signs and devices: * * *:”
It cannot be disputed then that this Declaration of
Principle found in the Constitution possesses
relevance: “The Philippines “adopts the generally
accepted principles of international law as part of
the law of the land; The 1968 Vienna Convention on
Road Signs and Signals is impressed with such a
character. It is not for this country to repudiate a
commitment to which it had pledged its word. The
concept of Pacta sunt servanda stands in the way of
such an attitude, which is, moreover, at war with
the principle of international morality.
Wherefore, the petition is dismissed. The restraining
order regarding the implementation of the Reflector
Law is lifted making the said law immediately
executory.
Tañada vs. Angara
272 SCRA 18, G.R. No. 118295 May 2, 1997
Facts:
Petitioners prayed for the nullification, on
constitutional grounds, of the concurrence of the
Philippine Senate in the ratification by the President
of the Philippines of the Agreement Establishing the
World Trade Organization (WTO Agreement, for
brevity) and for the prohibition of its implementation
and enforcement through the release and utilization
of public funds, the assignment of public officials
and employees, as well as the use of government
properties and resources by respondent-heads of
various executive offices concerned therewith.
They contended that WTO agreement violates the
mandate of the 1987 Constitution to “develop a self-
reliant and independent national economy
effectively controlled by Filipinos x x x (to) give
preference to qualified Filipinos (and to) promote the
preferential use of Filipino labor, domestic materials
and locally produced goods” as (1) the WTO requires
the Philippines “to place nationals and products of
member-countries on the same footing as Filipinos
and local products” and (2) that the WTO “intrudes,
limits and/or impairs” the constitutional powers of
both Congress and the Supreme Court.
Issue:
Whether provisions of the Agreement Establishing
the World Trade Organization unduly limit, restrict
and impair Philippine sovereignty specifically the
legislative power which, under Sec. 2, Article VI,
1987 Philippine Constitution is ‘vested in the
Congress of the Philippines.
Held:
No, the WTO agreement does not unduly limit,
restrict, and impair the Philippine sovereignty,
particularly the legislative power granted by the
Philippine Constitution. The Senate was acting in
the proper manner when it concurred with the
President’s ratification of the agreement.
While sovereignty has traditionally been deemed
absolute and all-encompassing on the domestic
level, it is however subject to restrictions and
limitations voluntarily agreed to by the Philippines,
expressly or impliedly, as a member of the family of
nations. Unquestionably, the Constitution did not
envision a hermit-type isolation of the country from
the rest of the world. In its Declaration of Principles
and State Policies, the Constitution “adopts the
generally accepted principles of international law as
part of the law of the land, and adheres to the policy
of peace, equality, justice, freedom, cooperation and
amity, with all nations.” By the doctrine of
incorporation, the country is bound by generally
accepted principles of international law, which are
considered to be automatically part of our own laws.
One of the oldest and most fundamental rules in
international law is pacta sunt servanda —
international agreements must be performed in
good faith. “A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on
the parties x x x. A state which has contracted valid
international obligations is bound to make in its
legislations such modifications as may be necessary
to ensure the fulfillment of the obligations
undertaken.”
By their inherent nature, treaties really limit or
restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects
of their state power in exchange for greater benefits
granted by or derived from a convention or pact.
After all, states, like individuals, live with coequals,
and in pursuit of mutually covenanted objectives
and benefits, they also commonly agree to limit the
exercise of their otherwise absolute rights. Thus,
treaties have been used to record agreements
between States concerning such widely diverse
matters as, for example, the lease of naval bases, the
sale or cession of territory, the termination of war,
the regulation of conduct of hostilities, the
formation of alliances, the regulation of commercial
relations, the settling of claims, the laying down of
rules governing conduct in peace and the
establishment of international organizations. The
sovereignty of a state therefore cannot in fact and in
reality be considered absolute. Certain restrictions
enter into the picture: (1) limitations imposed by the
very nature of membership in the family of nations
and (2) limitations imposed by treaty stipulations.
As aptly put by John F. Kennedy, “Today, no nation
can build its destiny alone. The age of self-sufficient
nationalism is over. The age of interdependence is
here.”
The WTO reliance on “most favored nation,”
“national treatment,” and “trade without
discrimination” cannot be struck down as
unconstitutional as in fact they are rules of equality
and reciprocity that apply to all WTO members.
Aside from envisioning a trade policy based on
“equality and reciprocity,” the fundamental law
encourages industries that are “competitive in both
domestic and foreign markets,” thereby
demonstrating a clear policy against a sheltered
domestic trade environment, but one in favor of the
gradual development of robust industries that can
compete with the best in the foreign markets.
Indeed, Filipino managers and Filipino enterprises
have shown capability and tenacity to compete
internationally. And given a free trade environment,
Filipino entrepreneurs and managers in Hongkong
have demonstrated the Filipino capacity to grow and
to prosper against the best offered under a policy of
laissez faire.
WHEREFORE, the petition is DISMISSED for lack of
merit
CIR VS SC JOHNSON & SON, INCS AND CA
[G.R. No. 127105. June 25, 1999]
Facts:
Respondent, JOHNSON AND SON, INC. a domestic
corporation organized and operating under the
Philippine laws, entered into a license agreement
with SC Johnson and Son, United States of America
(USA), a non-resident foreign corporation based in
the U.S.A. pursuant to which the [respondent] was
granted the right to use the trademark, patents and
technology owned by the latter including the right to
manufacture, package and distribute the products
covered by the Agreement and secure assistance in
management, marketing and production from SC
Johnson and Son, U. S. A.
The said License Agreement was duly registered
with the Technology Transfer Board of the Bureau
of Patents, Trade Marks and Technology Transfer
under Certificate of Registration No. 8064 . For the
use of the trademark or technology, Respondent was
obliged to pay SC Johnson and Son, USA royalties
based on a percentage of net sales and subjected the
same to 25% withholding tax on royalty payments
which respondent paid for the period covering July
1992 to May 1993. On October 29, 1993, SC
JOHNSON AND SON, USA filed with the
International Tax Affairs Division (ITAD) of the BIR
a claim for refund of overpaid withholding tax on
royalties arguing that, since the agreement was
approved by the Technology Transfer Board, the
preferential tax rate of 10% should apply to the
respondent. Respondent submits that royalties paid
to SC Johnson and Son, USA is only subject to 10%
withholding tax pursuant to the most-favored
nation clause of the RP-US Tax Treaty in relation to
the RP-West Germany Tax Treaty. The Internal Tax
Affairs Division of the BIR ruled against SC Johnson
and Son, Inc. and an appeal was filed by the former
to the Court of tax appeals.
The CTA ruled against CIR and ordered that a tax
credit be issued in favor of SC Johnson and Son,
Inc. Unpleased with the decision, the CIR filed an
appeal to the CA which subsequently affirmed in
toto the decision of the CTA. Hence, an appeal on
certiorari was filed to the SC.
THE MAIN ISSUE:
WON SC JOHNSON AND SON, USA IS ENTITLED
TO THE MOST FAVORED NATION TAX RATE OF
10% ON ROYALTIES AS PROVIDED IN THE RP-US
TAX TREATY IN RELATION TO THE RP-WEST
GERMANY TAX TREATY.
The concessional tax rate of 10 percent provided for
in the RP-Germany Tax Treaty could not apply to
taxes imposed upon royalties in the RP-US Tax
Treaty since the two taxes imposed under the two
tax treaties are not paid under similar
circumstances, they are not containing similar
provisions on tax crediting.
The United States is the state of residence since the
taxpayer, S. C. Johnson and Son, U. S. A., is based
there. Under the RP-US Tax Treaty, the state of
residence and the state of source are both permitted
to tax the royalties, with a restraint on the tax that
may be collected by the state of source.
Furthermore, the method employed to give relief
from double taxation is the allowance of a tax credit
to citizens or residents of the United States against
the United States tax, but such amount shall not
exceed the limitations provided by United States law
for the taxable year. The Philippines may impose one
of three rates- 25 percent of the gross amount of the
royalties; 15 percent when the royalties are paid by
a corporation registered with the Philippine Board of
Investments and engaged in preferred areas of
activities; or the lowest rate of Philippine tax that
may be imposed on royalties of the same kind paid
under similar circumstances to a resident of a third
state.
Given the purpose underlying tax treaties and the
rationale for the most favored nation clause, the Tax
Treaty should apply only if the taxes imposed upon
royalties in the RP-US Tax Treaty and in the RP-
Germany Tax Treaty are paid under similar
circumstances. This would mean that private
respondent must prove that the RP-US Tax Treaty
grants similar tax reliefs to residents of the United
States in respect of the taxes imposable upon
royalties earned from sources within the Philippines
as those allowed to their German counterparts
under the RP-Germany Tax Treaty. The RP-US and
the RP-West Germany Tax Treaties do not contain
similar provisions on tax crediting. Article 24 of the
RP-Germany Tax Treaty, supra, expressly allows
crediting against German income and corporation
tax of 20% of the gross amount of royalties paid
under the law of the Philippines. On the other hand,
Article 23 of the RP-US Tax Treaty, which is the
counterpart provision with respect to relief for
double taxation, does not provide for similar
crediting of 20% of the gross amount of royalties
paid.
At the same time, the intention behind the adoption
of the provision on relief from double taxation in the
two tax treaties in question should be considered in
light of the purpose behind the most favored nation
clause.
What is the most favored nation clause?
The purpose of a most favored nation clause is to
grant to the contracting party treatment not less
favorable than that which has been or may be
granted to the “most favored” among other
countries. It is intended to establish the principle of
equality of international treatment by providing that
the citizens or subjects of the contracting nations
may enjoy the privileges accorded by either party to
those of the most favored nation. The essence of the
principle is to allow the taxpayer in one state to avail
of more liberal provisions granted in another tax
treaty to which the country of residence of such
taxpayer is also a party provided that the subject
matter of taxation, in this case royalty income, is the
same as that in the tax treaty under which the
taxpayer is liable.
The RP-US Tax Treaty does not give a matching tax
credit of 20 percent for the taxes paid to the
Philippines on royalties as allowed under the RP-
West Germany Tax Treaty, private respondent
cannot be deemed entitled to the 10 percent rate
granted under the latter treaty for the reason that
there is no payment of taxes on royalties under
similar circumstances.
TAXATION RELATED TOPICS:
What is the purpose of a tax treaty?
The purpose of these international agreements is to
reconcile the national fiscal legislations of the
contracting parties in order to help the taxpayer
avoid simultaneous taxation in two different
jurisdictions.
The goal of double taxation conventions would be
thwarted if such treaties did not provide for effective
measures to minimize, if not completely eliminate,
the tax burden laid upon the income or capital of
the investor. Thus, if the rates of tax are lowered by
the state of source, in this case, by the Philippines,
there should be a concomitant commitment on the
part of the state of residence to grant some form of
tax relief, whether this be in the form of a tax credit
or exemption. Otherwise, the tax which could have
been collected by the Philippine government will
simply be collected by another state, defeating the
object of the tax treaty since the tax burden imposed
upon the investorwould remain unrelieved. If the
state of residence does not grant some form of tax
relief to the investor, no benefit would redound to
the Philippines, i.e., increased investment resulting
from a favorable tax regime, should it impose a lower
tax rate on the royalty earnings of the investor, and
it would be better to impose the regular rate rather
than lose much-needed revenues to another
country.
What is international double taxation and the
rationale for doing away with it?
International juridical double taxation is defined as
the imposition of comparable taxes in two or more
states on the same taxpayer in respect of the same
subject matter and for identical periods; The
apparent rationale for doing away with double
taxation is to encourage the free flow of goods and
services and the movement of capital, technology
and persons between countries, conditions deemed
vital in creating robust and dynamic economies.
When is there double taxation?
Double taxation usually takes place when a person
is resident of a contracting state and derives income
from, or owns capital in, the other contracting state
and both states impose tax on that income or
capital.
What are the methods of eliminating double
taxation?
• First, it sets out the respective rights to tax
of the state of source or situs and of the state of
residence with regard to certain classes of income or
capital. In some cases, an exclusive right to tax is
conferred on one of the contracting states; however,
for other items of income or capital, both states are
given the right to tax, although the amount of tax
that may be imposed by the state of source is
limited.
• The second method for the elimination of
double taxation applies whenever the state of source
is given a full or limited right to tax together with the
state of residence. In this case, the treaties make it
incumbent upon the state of residence to allow relief
in order to avoid double taxation. In this case, the
treaties make it incumbent upon the state of
residence to allow relief in order to avoid double
taxation.
What are the methods of relief under the
second method?
There are two methods of relief—the
exemption method and the credit method.
• Exemption method, the income or capital
which is taxable in the state of source or situs is
exempted in the state of residence, although in some
instances it may be taken into account in
determining the rate of tax applicable to the
taxpayer’s remaining income or capital.
• Credit method, although the income or
capital which is taxed in the state of source is still
taxable in the state of residence, the tax paid in the
former is credited against the tax levied in the latter.
• The basic difference between the two
methods is that in the exemption method, the focus
is on the income or capital itself, whereas the credit
method focuses upon the tax.
What is the rationale of reducing tax rates in
negotiating tax treaties?
In negotiating tax treaties, the underlying rationale
for reducing the tax rate is that the
Philippines will give up a part of the tax in the
expectation that the tax given up for this particular
investment is not taxed by the other country.
What are tax refunds?
Tax refunds are in the nature of tax exemptions, and
as such they are regarded as in derogation of
sovereign authority and to be construed strictissimi
juris against the person or entity claiming the
exemption.
Who has the burden of proof in tax exemption?
The burden of proof is upon him who claims the
exemption in his favor and he must be able to justify
his claim by the clearest grant of organic or statute
law.
Kilosbayan, Incorporated vs. Morato
246 SCRA 540, G.R. No. 118910 July 17, 1995
Facts:

1. GR 113375 (KIlosbayan vs. Guingona) held
invalidity of the contract between Philippine Charity
Sweepstakes Office (PCSO) and the privately owned
Philippine Gaming Management Corporation
(PGMC) for the operation of a nationwide on-line
lottery system. The contract violated the provision
in the PCSO Charter which prohibits PCSO from
holding and conducting lotteries through a
collaboration, association, or joint venture.
2. Both parties again signed an Equipment Lease
Agreement (ELA) for online lottery equipment and
accessories on January 25, 1995. The agreement
are as follow:
a. Rental is 4.3% of gross amount of ticket
sales by PCSO at which in no case be less
than an annual rental computed at P35,000
per terminal in commercial operation.
b. Rent is computed bi-weekly.
c. Term is 8 years.
d. PCSO is to employ its own personnel and
responsible for the facilities.
e. Upon expiration of term, PCSO can
purchase the equipment at P25M.
3. Kilosbayan again filed a petition to declare
amended ELA invalid because:
a. It is the same as the old contract of lease.
b. It is still violates of PCSO’s charter.
c. It violates of the law regarding public
bidding. It has not been approved by the
President and it is not most advantageous to
the government.
4. PCSO and PGMC filed separate comments
a. ELA is a different lease contract with none
of the vestiges in the prior contract.
b. ELA is not subject to public bidding
because it fell in the exception provided in
EO No. 301.
c. Power to determine if ELA is advantageous
vests in the Board of Directors of PCSO.
d. Lack of funds. PCSO cannot purchase its
own online lottery equipment.
e. Petitioners seek to further their moral
crusade.
f. Petitioners do not have a legal standing
because they were not parties to the
contract.
Issues:
1. Whether or not petitioner Kilosbayan,
Incorporated has a legal standing to sue.
2. Whether or not the ELA between PCSO and PGMC
in operating an online lottery is valid.
Rulings:
In the resolution of the case, the Court held that:
1. Petitioners do not have a legal standing to sue.
a. STARE DECISIS cannot apply. The
previous ruling sustaining the standing of
the petitioners is a departure from the
settled rulings on real parties in interest
because no constitutional issues were
actually involved.
b. LAW OF THE CASE (opinion delivered on
a former appeal) cannot also apply. Since the
present case is not the same one litigated by
the parties before in Kilosbayan vs.
Guingona, Jr., the ruling cannot be in any
sense be regarded as “the law of this case”.
The parties are the same but the cases are
not.
c. RULE ON “CONCLUSIVENESS OF
JUDGMENT” cannot still apply. An issue
actually and directly passed upon and
determine in a former suit cannot again be
drawn in question in any future action
between the same parties involving a
different cause of action. But the rule does
not apply to issues of law at least when
substantially unrelated claims are involved.
When the second proceeding involves an
instrument or transaction identical with, but
in a form separable from the one dealt with
in the first proceeding, the Court is free in
the second proceeding to make an
independent examination of the legal
matters at issue.
d. Since ELA is a different contract, the
previous decision does not preclude
determination of the petitioner’s standing.
e. Standing is a concept in constitutional law
and here no constitutional question is
actually involved. The more appropriate
issue is whether the petitioners are ‘real
parties of interest’.
f. Question of contract of law: The real
parties are those who are parties to the
agreement or are bound either principally or
are prejudiced in their rights with respect to
one of the contracting parties and can show
the detriment which would positively result
to them from the contract.
g. Petitioners do not have such present
substantial interest. Questions to the nature
or validity of public contracts may be made
before COA or before the Ombudsman.
2. Equipment Lease Agreement (ELA) is valid.
a. It is different with the prior lease
agreement: PCSO now bears all losses
because the operation of the system is
completely in its hands.
b. Fixing the rental rate to a minimum is a
matter of business judgment and the Court
is not inclined to review.
c. Rental rate is within the 15% net receipts
fixed by law as a maximum. (4.3% of gross
receipt is discussed in the dissenting opinion
of Feliciano, J.)
d. In the contract, it stated that the parties
can change their agreement. Petitioners
state that this would allow PGMC to control
and operate the on-line lottery system. The
Court held that the claim is speculative. In
any case, in the construction of statutes, the
presumption is that in making contracts, the
government has acted in good faith. The
doctrine that the possibility of abuse is not a
reason for denying power.
e. It was held in Kilosbayan Vs. Guingona
that PCSO does not have the power to enter
 into any contract which would involve it in
any form of “collaboration, association, or
joint venture” for the holding of sweepstakes
activities. This only mentions that PCSO is
prohibited from investing in any activities
that would compete in their own activities.
f. It is claimed that ELA is a joint venture
agreement which does not compete with
their own activities. The Court held that is
also based on speculation. Evidence is
needed to show that the transfer of
technology would involve the PCSO and its
personnel in prohibited association with the
PGMC.
g. E.O. 301 (on law of public bidding) applies
only to contracts for the purchase of
supplies, materials and equipment and not
on the contracts of lease. Public bidding for
leases are only for privately-owned buildings
or spaces for government use or of
government owned buildings or spaces for
private use.
Petitioners have no standing. ELA is a valid lease
contract. The motion for reconsideration of
petitioners is DENIED with finality.
(Bagong Alyansang Makabayan) vs. Zamora,
342 SCRA 449, G.R. No. 138570, G.R. No.
138572, G.R. No. 138587, G.R. No. 138680, G.R.
No. 138698 October 10, 2000
FACTS:
The Philippines and the United States entered into
a Mutual Defense Treaty on August 30, 1951, To
further strengthen their defense and security
relationship. Under the treaty, the parties agreed to
respond to any external armed attack on their
territory, armed forces, public vessels, and aircraft.
On September 16, 1991, the Philippine Senate
rejected the proposed RP-US Treaty of Friendship,
Cooperation and Security which, in effect, would
have extended the presence of US military bases in
the Philippines.
On July 18, 1997 RP and US exchanged notes and
discussed, among other things, the possible
elements of the Visiting Forces Agreement (VFA).
This resulted to a series of conferences and
negotiations which culminated on January 12 and
13, 1998. Thereafter, President Fidel Ramos
approved the VFA, which was respectively signed by
Secretary Siazon and United States Ambassador
Thomas Hubbard.
On October 5, 1998, President Joseph E. Estrada,
through respondent Secretary of Foreign Affairs,
ratified the VFA. On October 6, 1998, the President,
acting through respondent Executive Secretary
Ronaldo Zamora, officially transmitted to the Senate
of the Philippines, the Instrument of Ratification,
the letter of the President and the VFA, for
concurrence pursuant to Section 21, Article VII of
the 1987 Constitution.
Petitions for certiorari and prohibition, petitioners –
as legislators, non-governmental organizations,
citizens and taxpayers – assail the constitutionality
of the VFA and impute to herein respondents grave
abuse of discretion in ratifying the agreement.
Petitioner contends, under the provision cited, the
“foreign military bases, troops, or facilities” may be
allowed in the Philippines unless the following
conditions are sufficiently met: a) it must be a
treaty, b) it must be duly concurred in by the senate,
ratified by a majority of the votes cast in a national
referendum held for that purpose if so required by
congress, and c) recognized as such by the other
contracting state.
Respondents, on the other hand, argue that Section
21 Article VII is applicable so that, what is requires
for such treaty to be valid and effective is the
concurrence in by at least two-thirds of all the
members of the senate.
ISSUES AND RULING:
1. Issue 1: Do the Petitioners have legal standing as
concerned citizens, taxpayers, or legislators to
question the constitutionality of the VFA?
NO. Petitioners Bayan Muna, etc. have no standing.
A party bringing a suit challenging the
Constitutionality of a law must show not only that
the law is invalid, but that he has sustained or is in
immediate danger of sustaining some direct injury
as a result of its enforcement, and not merely that
he suffers thereby in some indefinite way.
Petitioners have failed to show that they are in any
danger of direct injury as a result of the VFA.
As taxpayers, they have failed to establish that the
VFA involves the exercise by Congress of its taxing
or spending powers. A taxpayer's suit refers to a
case where the act complained of directly involves
the illegal disbursement of public funds derived
from taxation. Before he can invoke the power of
judicial review, he must specifically prove that he
has sufficient interest in preventing the illegal
expenditure of money raised by taxation and that he
will sustain a direct injury as a result of the
enforcement of the questioned statute or contract. It
is not sufficient that he has merely a general interest
common to all members of the public. Clearly,
inasmuch as no public funds raised by taxation are
involved in this case, and in the absence of any
allegation by petitioners that public funds are being
misspent or illegally expended, petitioners, as
taxpayers, have no legal standing to assail the
legality of the VFA.
Similarly, the petitioner-legislators (Tanada, Arroyo,
etc.) do not possess the requisite locus standi to sue.
In the absence of a clear showing of any direct injury
to their person or to the institution to which they
belong, they cannot sue. The Integrated Bar of the
Philippines (IBP) is also stripped of standing in these
cases. The IBP lacks the legal capacity to bring this
suit in the absence of a board resolution from its
Board of Governors authorizing its National
President to commence the present action.
Notwithstanding, in view of the paramount
importance and the constitutional significance of
the issues raised, the Court may brush aside the
procedural barrier and takes cognizance of the
petitions.
2. Issue 2: Is the VFA governed by section 21, Art.
VII, or section 25, Art. XVIII of the Constitution?
Section 25, Art XVIII, not section 21, Art. VII,
applies, as the VFA involves the presence of foreign
military troops in the Philippines.
The Constitution contains two provisions requiring
the concurrence of the Senate on treaties or
international agreements.
Section 21, Article VII reads: “[n]o treaty or
international agreement shall be valid and effective
unless concurred in by at least two-thirds of all the
Members of the Senate.”
Section 25, Article XVIII, provides:”[a]fter the
expiration in 1991 of the Agreement between the
Republic of the Philippines and the United States of
America concerning Military Bases, foreign military
bases, troops, or facilities shall not be allowed in the
Philippines except under a treaty duly concurred in
by the Senate and, when the Congress so requires,
ratified by a majority of the votes cast by the people
in a national referendum held for that purpose, and
recognized as a treaty by the other contracting
State.”
Section 21, Article VII deals with treaties or
international agreements in general, in which case,
the concurrence of at least two-thirds (2/3) of all the
Members of the Senate is required to make the
treaty valid and binding to the Philippines. This
provision lays down the general rule on treaties. All
treaties, regardless of subject matter, coverage, or
particular designation or appellation, requires the
concurrence of the Senate to be valid and effective.
In contrast, Section 25, Article XVIII is a special
provision that applies to treaties which involve the
presence of foreign military bases, troops or facilities
in the Philippines. Under this provision, the
concurrence of the Senate is only one of the
requisites to render compliance with the
constitutional requirements and to consider the
agreement binding on the Philippines. Sec 25
further requires that “foreign military bases, troops,
or facilities” may be allowed in the Philippines only
by virtue of a treaty duly concurred in by the Senate,
ratified by a majority of the votes cast in a national
referendum held for that purpose if so required by
Congress, and recognized as such by the other
contracting state.
On the whole, the VFA is an agreement which
defines the treatment of US troops visiting the
Philippines. It provides for the guidelines to govern
such visits of military personnel, and further defines
the rights of the US and RP government in the
matter of criminal jurisdiction, movement of vessel
and aircraft, import and export of equipment,
materials and supplies. Undoubtedly, Section 25,
Article XVIII, which specifically deals with treaties
involving foreign military bases, troops, or facilities,
should apply in the instant case. To a certain extent,
however, the provisions of Section 21, Article VII will
find applicability with regard to determining the
number of votes required to obtain the valid
concurrence of the Senate.
It is specious to argue that Section 25, Article XVIII
is inapplicable to mere transient agreements for the
reason that there is no permanent placing of
structure for the establishment of a military base.
The Constitution makes no distinction between
“transient” and “permanent”. We find nothing in
Section 25, Article XVIII that requires foreign troops
or facilities to be stationed or placed permanently in
the Philippines. When no distinction is made by
law; the Court should not distinguish. We do not
subscribe to the argument that Section 25, Article
XVIII is not controlling since no foreign military
bases, but merely foreign troops and facilities, are
involved in the VFA. The proscription covers “foreign
military bases, troops, or facilities.” Stated
differently, this prohibition is not limited to the
entry of troops and facilities without any foreign
bases being established. The clause does not refer
to “foreign military bases, troops, or facilities”
collectively but treats them as separate and
independent subjects, such that three different
situations are contemplated — a military treaty the
subject of which could be either (a) foreign bases, (b)
foreign troops, or (c) foreign facilities — any of the
three standing alone places it under the coverage of
Section 25, Article XVIII.
3. Issue 3: Was Sec 25 Art XVIII's requisites satisfied
to make the VFA effective?
YES
Section 25, Article XVIII disallows foreign military
bases, troops, or facilities in the country, unless the
following conditions are sufficiently met:
(a) it must be under a treaty;
(b) the treaty must be duly concurred in by the
Senate and, when so required by Congress, ratified
by a majority of the votes cast by the people in a
national referendum; and
(c) recognized as a treaty by the other contracting
state.
There is no dispute as to the presence of the first
two requisites in the case of the VFA. The
concurrence handed by the Senate through
Resolution No. 18 is in accordance with the
Constitution, as there were at least 16 Senators that
concurred.
As to condition (c), the Court held that the phrase
“recognized as a treaty” means that the other
contracting party accepts or acknowledges the
agreement as a treaty. To require the US to submit
the VFA to the US Senate for concurrence pursuant
to its Constitution, is to accord strict meaning to the
phrase. Well-entrenched is the principle that the
words used in the Constitution are to be given their
ordinary meaning except where technical terms are
employed, in which case the significance thus
attached to them prevails. Its language should be
understood in the sense they have in common use.

The records reveal that the US Government, through

Ambassador Hubbard, has stated that the US has
fully committed to living up to the terms of the VFA.
For as long as the US accepts or acknowledges the
VFA as a treaty, and binds itself further to comply
with its treaty obligations, there is indeed
compliance with the mandate of the Constitution.

Worth stressing too, is that the ratification by the

President of the VFA, and the concurrence of the
Senate, should be taken as a clear and unequivocal
expression of our nation's consent to be bound by
said treaty, with the concomitant duty to uphold the
obligations and responsibilities embodied
thereunder. Ratification is generally held to be an
executive act, undertaken by the head of the state,
through which the formal acceptance of the treaty is
proclaimed. A State may provide in its domestic
legislation the process of ratification of a treaty. In
our jurisdiction, the power to ratify is vested in the
President and not, as commonly believed, in the
legislature. The role of the Senate is limited only to
giving or withholding its consent, or concurrence, to
the ratification.

With the ratification of the VFA it now becomes

obligatory and incumbent on our part, under
principles of international law (pacta sunt
servanda), to be bound by the terms of the
agreement. Thus, no less than Section 2, Article II
declares that the Philippines adopts the generally
accepted principles of international law as part of
the law of the land and adheres to the policy of
peace, equality, justice, freedom, cooperation and
amity with all nations.