G.R. No.

L-14279 October 31, 1961

THE COMMISSIONER OF CUSTOMS and THE COLLECTOR OF CUSTOMS, petitioners,

vs.

EASTERN SEA TRADING, respondent.

Office of the Solicitor General for petitioners.

Valentin Gutierrez for respondent.

CONCEPCION, J.:

Petition for review of a judgment of the Court of Tax Appeals reversing a decision of the
Commissioner of Customs.

Respondent Eastern Sea Trading was the consignee of several shipments of onion and garlic
which arrived at the Port of Manila from August 25 to September 7, 1954. Some shipments came
from Japan and others from Hong Kong. In as much as none of the shipments had the certificate
required by Central Bank Circulars Nos. 44 and 45 for the release thereof, the goods thus imported
were seized and subjected to forfeiture proceedings for alleged violations of section 1363(f) of the
Revised Administrative Code, in relation to the aforementioned circulars of the Central Bank. In
due course, the Collector of Customs of Manila rendered a decision on September 4, 1956,
declaring said goods forfeited to the Government and — the goods having been, in the meantime,
released to the consignees on surety bonds, filed by the same, as principal, and the Alto Surety &
Insurance Co., Inc., as surety, in compliance with orders of the Court of First Instance of Manila,
in Civil Cases Nos. 23942 and 23852 thereof — directing that the amounts of said bonds be paid,
by said principal and surety, jointly and severally, to the Bureau of Customs, within thirty (30) days
from notice.

On appeal taken by the consignee, said decision was affirmed by the Commissioner of Customs
on December 27, 1956. Subsequently, the consignee sought a review of the decision of said two
(2) officers by the Court of Tax Appeals, which reversed the decision of the Commissioner of
Customs and ordered that the aforementioned bonds be cancelled and withdrawn. Hence, the
present petition of the Commissioner of Customs for review of the decision of the Court of Tax
Appeals.

The latter is based upon the following premises, namely: that the Central Bank has no authority to
regulate transactions not involving foreign exchange; that the shipments in question are in the
nature of "no-dollar" imports; that, as such, the aforementioned shipments do not involve foreign
exchange; that, insofar as a Central Bank license and a certificate authorizing the importation or
release of the goods under consideration are required by Central Bank Circulars Nos. 44 and 45,
the latter are null and void; and that the seizure and forfeiture of the goods imported from Japan
1
cannot be justified under Executive Order No. 328, not only because the same seeks to implement
2 3 4
an executive agreement — extending the effectivity of our Trades and Financial Agreements
with Japan — which (executive agreement), it believed, is of dubious validity, but, also, because
there is no governmental agency authorized to issue the import license required by the
aforementioned executive order.
The authority of the Central Bank to regulate no-dollar imports and the validity of the
aforementioned Circulars Nos. 44, and 45 have already been passed upon and repeatedly upheld
by this Court (Pascual vs. Commissioner of Customs, L-10979 [June 30, 1959]; Acting
Commissioner of Customs vs. Leuterio, L-9142 [October 17, 1959] Commissioner of Customs vs.
Pascual, L-9836 [November 18, 1959]; Commissioner of Customs vs. Serree Investment Co., L-
12007 [May 16, 1960]; Commissioner of Customs vs. Serree Investment Co., L-14274 [November
29, 1960]), for the reason that the broad powers of the Central Bank, under its charter, to maintain
our monetary stability and to preserve the international value of our currency, under section 2 of
Republic Act No. 265, in relation to section 14 of said Act — authorizing the bank to issue such
rules and regulations as it may consider necessary for the effective discharge of the responsibilities
and the exercise of the powers assigned to the Monetary Board and to the Central Bank — connote
the authority to regulate no-dollar imports, owing to the influence and effect that the same may and
do have upon the stability of our peso and its international value.

The Court of Tax Appeals entertained doubts on the legality of the executive agreement sought to
be implemented by Executive Order No. 328, owing to the fact that our Senate had not concurred
in the making of said executive agreement. The concurrence of said House of Congress is required
by our fundamental law in the making of "treaties" (Constitution of the Philippines, Article VII,
Section 10[7]), which are, however, distinct and different from "executive agreements," which may
be validly entered into without such concurrence.

Treaties are formal documents which require ratification with the approval of two thirds of the
Senate. Executive agreements become binding through executive action without the need of a
vote by the Senate or by Congress.

xxx xxx xxx

. . . 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.

xxx xxx xxx

Agreements with respect to the registration of trade-marks have been concluded by the Executive
with various countries under the Act of Congress of March 3, 1881 (21 Stat. 502). Postal
conventions regulating the reciprocal treatment of mail matters, money orders, parcel post, etc.,
have been concluded by the Postmaster General with various countries under authorization by
Congress beginning with the Act of February 20, 1792 (1 Stat. 232, 239). Ten executive
agreements were concluded by the President pursuant to the McKinley Tariff Act of 1890 (26 Stat.
567, 612), and nine such agreements were entered into under the Dingley Tariff Act 1897 (30 Stat.
151, 203, 214). A very much larger number of agreements, along the lines of the one with Rumania
previously referred to, providing for most-favored-nation treatment in customs and related matters
have been entered into since the passage of the Tariff Act of 1922, not by direction of the Act but
in harmony with it.

xxx xxx xxx

International agreements involving political issues or changes of national policy and those involving
international arrangements of a permanent character usually take the form of treaties. But
international agreements embodying adjustments of detail carrying out well-established national
policies and traditions and those involving arrangements of a more or less temporary nature usually
take the form of executive agreements.

xxx xxx xxx

Furthermore, the United States Supreme Court has expressly recognized the validity and
constitutionality of executive agreements entered into without Senate approval. (39 Columbia Law
Review, pp. 753-754) (See, also, U.S. vs. Curtis-Wright Export Corporation, 299 U.S. 304, 81 L.
ed. 255; U.S. vs. Belmont, 301 U.S. 324, 81 L. ed. 1134; U.S. vs. Pink, 315 U.S. 203, 86 L. ed.
796; Ozanic vs. U.S., 188 F. 2d. 288; Yale Law Journal, Vol. 15, pp. 1905-1906; California Law
Review, Vol. 25, pp. 670-675; Hyde on International Law [Revised Edition], Vol. 2, pp. 1405, 1416-
1418; Willoughby on the U.S. Constitutional Law, Vol. I [2d ed.], pp. 537-540; Moore, International
Law Digest, Vol. V, pp. 210-218; Hackworth, International Law Digest, Vol. V, pp. 390-407).
(Emphasis supplied.)

In this connection, Francis B. Sayre, former U.S. High Commissioner to the Philippines, said in his
work on "The Constitutionality of Trade Agreement Acts":

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" time 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 trademarks and copyrights, etcetera. 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 of the settlement of claims against foreign governments,
were concluded independently of any legislation." (39 Columbia Law Review, pp. 651, 755.)

The validity of the executive agreement in question is thus patent. In fact, the so-called Parity
Rights provided for in the Ordinance Appended to our Constitution were, prior thereto, the subject
of an executive agreement, made without the concurrence of two-thirds (2/3) of the Senate of the
United States.

Lastly, the lower court held that it would be unreasonable to require from respondent-appellee an
import license when the Import Control Commission was no longer in existence and, hence, there
was, said court believed, no agency authorized to issue the aforementioned license. This
conclusion is untenable, for the authority to issue the aforementioned licenses was not vested
exclusively upon the Import Control Commission or Administration. Executive Order No. 328
provided for export or import licenses "from the Central Bank of the Philippines or the Import
Control Administration" or Commission. Indeed, the latter was created only to perform the task of
implementing certain objectives of the Monetary Board and the Central Bank, which otherwise had
to be undertaken by these two (2) agencies. Upon the abolition of said Commission, the duty to
provide means and ways for the accomplishment of said objectives had merely to be discharged
directly by the Monetary Board and the Central Bank, even if the aforementioned Executive Order
had been silent thereon.

WHEREFORE, the decision appealed from is hereby reversed and another one shall be entered
affirming that of the Commissioner of Customs, with cost against respondents defendant-appellee,
Eastern Sea Trading. It is so ordered.
G.R. No. L-10500 June 30, 1959

USAFFE VETERANS ASSOCIATION, INC., plaintiff-appellant,

vs.

THE TREASURER OF THE PHILIPPINES, ET AL., defendants-appellees.

Lorenzo B. Camins, Castor C. Ames and Alberto M. K. Jamir for appellant.

Office of the Solicitor General Ambrosio Padilla, Assistant Solicitor General Jose P. Alejandro
and Solicitor Jorge R. Coquia for appellees.

BENGZON, J.:

The central issue in this litigation concerns the validity of the Romulo-Snyder Agreement (1950)
whereby the Philippine Government undertook to return to the United States Government in ten
annual installments, a total of about 35-million dollars advanced by the United States to, but
unexpanded by, the National Defense Forces of the Philippines.

In October 1954, the USAFFE Veterans Associations Inc., hereafter called Usaffe Veterans, for
itself and for many other Filipino veterans of World War II, ex-members of the United States Armed
Forces in the Far East (USAFFE) prayed in its complaint before the Manila court of first instance
that said Agreement be annulled, that payments thereunder be declared illegal and that defendants
as officers of the Philippine Republic be restrained from disbursing any funds in the National
Treasury in pursuance of said Agreement. Said Usaffe Veterans further asked that the moneys
available, instead of being remitted to the United States, should be turned over to the Finance
Service of the Armed Forces of the Philippines for the payment of all pending claims of the veterans
represented by plaintiff.

The complaint rested on plaintiff's three propositions: first, that the funds to be "returned" under
the Agreement were funds appropriated by the American Congress for the Philippine army, actually
delivered to the Philippine Government and actually owned by said Government; second, that U.S.
Secretary Snyder of the Treasury, had no authority to retake such funds from the P.I. Government;
and third, that Philippine foreign Secretary Carlos P. Romulo had no authority to return or promise
to return the aforesaid sums of money through the so-called Romulo-Snyder Agreement.

The defendants moved to dismiss, alleging Governmental immunity from suit. But the court
required an answer, and then heard the case merits. Thereafter, it dismissed the complaint, upheld
the validity of the Agreement and dissolved the preliminary injunction i had previously issued. The
plaintiff appealed.

On July 26, 1941, foreseeing the War in the Pacific, President Franklin D. Roosevelt, called into
the service of the Armed Forces of the United States, for the duration of the emergency, all the
organized military forces of the Philippine Commonwealth. His order was published here by
Proclamation No. 740 of President Quezon on August 10, 1941. In October 1941, by two special
orders, General Douglas MacArthur, Commanding General of the United States Army Forces in
the Far East (known as USAFFE) placed under his command all the Philippine Army units including
the Philippine Constabulary, about 100,000 officers and soldiers.
For the expenses incident to such incorporation, mobilization and activities, the Congress of the
United States provided in its Appropriation Act of December 17, 1941 (Public Law No. 353, 77th
Congress) as follows:

For all expenses necessary for the mobilization, operation and maintenance of the Army of the
Philippines, including expenses connected with calling into the service of the armed forces of the
United States the organized military forces of the Government of the Commonwealth of the
Philippines, . . . but shall be expanded and accounted for in the manner prescribed by the President
of the United States, S269,000.00; to remain available until June 30, 1943, which shall be available
for payment to the Government of the Commonwealth of the Philippines upon its written request,
either in advance of or in reimbursement for all or any part of the estimated or actual costs, as
authorized by the Commanding General, United States Army Forces in the Far East, of necessary
expenses for the purposes aforesaid. . . . (Emphasis Ours.)

In subsequent Acts, the U.S. Congress appropriated moneys in language identical to the above:
S28,313,000.00 for the fiscal year ending June 30, 1943; and S100,000,000 each year, for the
1
fiscal years ending June 30, 1944, June 30, 1945, and June 30, 1946. The last pertinent
appropriation was Public law No. 301 (79th Congress) known as the Rescission Act. It simply set
aside 200 million dollars for the Army for the fiscal year ending June 30, 1946.

Now, pursuant to the power reserved to him under Public Law 353 above-quoted, President
Roosevelt issued on January 3, 1942, his executive Order No. 9011 prescribing partly as follows:

2. (a) Necessary expenditures from funds in the Philippine Treasury for the purposes authorized
by the Act of December 17, 1941, will be made by disbursing officers of the Army of the Philippines
on the approval of authority of the Commanding General, United States Army Forces in the Far
East, and such purposes as he may deem proper, and his determination thereon shall be final and
conclusive upon the accounting officers of the Philippine Government, and such expenditures will
be accounted for in accordance with procedures established by the Philippine Commonwealth
Laws and regulations. (Emphasis Ours.)

Out of the total amounts thus appropriated by the United States Congress as above itemized,
P570,863,000.00 was transferred directly to the Philippines Armed Forces by means of vouchers
which stated "Advance of Funds under Public law 353-77th Congress and Executive Order No.
9011". This amount was used (mostly) to discharge in the Philippine Islands the monetary
obligations assumed by the U.S. Government as a result of the induction of the Philippine Armed
Forces into the U.S. Army, and of its operations beginning in 1941. Part of these obligations
consisted in the claims of Filipino USAFFE soldiers for arrears in pay and in the charges for
supplies used by them and the guerrillas.

Of the millions so transferred, there remained unexpended and uncommitted in the possession of
the Philippine Armed Forces as of December 31, 1949 about 35 million dollars. As at that time, the
Philippine Government badly needed funds for its activities, President Quirino, through Governor
Miguel Cuaderno of the Central Bank proposed to the corresponding officials of the U.S.
Government the retention of the 35-million dollars as a loan, and for its repayment in ten annual
installments. After protracted negotiations the deal was concluded, and the Romulo-Snyder
Agreement was signed in Washington on November 6, 1950, by the then Philippine Secretary of
Foreign Affairs, Carlos P. Romulo, and the then American Secretary of the Treasury, John W.
Snyder.

Principal stipulation therein was this paragraph:

3. The Government of the Republic of the Philippines further agrees to pay the dollar amount
payable hereunder to the Secretary of the Treasury of the United States in ten annual installments,
the first nine payments to be in the amount of S3,500,000.00 and the final residual payment to be
in the amount determined by deducting the total of the previous principal payments from the total
amount of dollars to be paid to the Secretary of the Treasury of the United States, the latter amount
to be determined as provided in Article II hereof. . . .

It should be added that the agreement, made on the basis of the parties' belief that S35-million
was the outstanding balance, provided in its article II for an audit by appropriate officers to compute
the exact amount due.

In compliance with the Agreement, this Government has appropriated by law and paid to the United
States up to and including 1954, yearly installments totaling of P33,187,663.24. There is no reason
to doubt that subsequent budgets failed to make the corresponding appropriations for other
installments.

In this appeal, the Usaffe Veterans reiterated with extended arguments, their basic propositions.
They insists: first, the money delivered to the U.S. to the Armed Forces of the Philippine Island
were straight payments for military services; ownership thereof vested in the Philippine
Government upon delivery, and consequently, there was nothing to return, nothing to consider as
a loan; and second, the Romulo-Snyder Agreement was void because it was not binding on the
Philippine Government for lack of authority of the officers who concluded the same.

With regard to the first point, it must be remembered that the first Congressional Act of December
17, 1941 (Public Law No. 353) appropriating S269-million expressly said the amount "shall be
available for payment to the Government of the Commonwealth of the Philippines upon its written
request, either in advance of or in reimbursement for all or any part of the estimated or actual
costs" of operation, mobilization and maintenance of the Philippine Army. Note carefully, the
money is to handled to the Philippine Government either in advance of expenditures or in
reimbursement thereof. All the vouchers signed upon receipt of the money state clearly, " Advance
of funds under Public law 353-7th Congress and Executive Order No. 9011".

In any system of accounting, advances of funds for expenditures contemplate disbursements to

be reported, and credited if approved, against such advances, the unexpended sums to be
returned later. In fact, the Congressional law itself required accounting "in the manner prescribed
by the President of the U.S." and said President in his Executive Order No. 9011, outlined the
procedure whereby advanced funds shall be accounted for. Furthermore, it requires as a condition
sine qua non that all expenditures shall first be approved by the Commanding General, United
States Army Forces Army Forces in the Far East.

Now, these ideas of "funds advanced" to meet such expenditures of the Philippine Army as may
be approved by the USAFFE Commanding-General, in connection with the requirement of
accounting therefor evidently contradict appellant's thesis that the moneys represented straight
payments to the Philippine Government for its armed services, and passed into the absolute control
of such Government.

2
In fact, the respective army officers of both nations, who are presumed to know their business,
have consistently regarded the money as funds advanced, to be subsequently accounted for —
which means submission of expenditures, and if approved, return of unexpended balance.
Now then, it is undeniable that upon a final rendition of accounts by the Philippine Government, a
superabit resulted of at least 35 million dollars in favor of the U. S. Instead of returning such amount
in one lump sum, our Executive Department arranged for its repayment in ten annual installments.
Prima facie such arrangement should raise no valid objection, given the obligation to return-which
we know exists.

Yet plaintiff attempts to block such repayment because many alleged claims of veterans have not
been processed and paid, December 31, 1949, having been fixed as the deadline for the
presentation and/or payment of such claims. Plaintiff obviously calculates that if the return is
prevented and the money kept here, it might manage to persuade the powers-that-be extend the
deadline anew. Hence the two-pronged attack: (a) no obligation to repay; (b) the officers who
promised to repay had no authority to bind this Government.

The first ground has proved untenable.

On the second, there is no doubt that President Quirino approved the negotiations. And he had
power to contract budgetary loans under Republic Act No. 213, amending the Republic Act No.
16. The most important argument, however, rests on the lack of ratification of the Agreement by
the Senate of the Philippines to make it binding on this Government. On this matter, the defendants
explain as follows:

That the agreement is not a "treaty" as that term is used in the Constitution, is conceded. The
agreement was never submitted to the Senate for concurrence (Art. VII, Sec. 10 (7). However, it
must be noted that treaty is not the only form that an international agreement may assume. For
the grant of the treaty-making power to the Executive and the Senate does not exhaust the power
of the government over international relations. Consequently, executive agreements may be
entered with other states and are effective even without the concurrence of the Senate (Sinco,
Philippine Political Law, 10th ed., 303; Tañada and Fernando, Constitution of the Philippines, 4th
ed., Vol. II, 1055). It is observed in this connection that from the point of view of the international
law, there is no difference between treaties and executive agreements in their binding effect upon
states concerned as long as the negotiating functionaries have remained within their powers
(Hackworth, Digest of International Law, Vol. 5, 395, citing U. S. vs. Belmont, 301 U. S. 342, State
of Russia vs. National City Bank of New York, 69 F. (2d) 44; United States vs. Pink, 315 U. S. 203;
Altman & Co., vs. United States, 224 U. S. 583. See also McDougal and Lans, "Treaties and
Executive Agreements 54 Yale Law Journal 181, 318, et seg.; and Sinco; Op. cit. 305) "The
distinction between so-called executive agreements" and "treaties" is purely a constitutional one
and has no international legal significance" (Research in International Law Draft Convention on
the Law of Treaties (Harvard Law School), Comment, 29 Am. J. Int.) Law Supp. 653, 897. See
also Hackworth, op. cit. 391).

There are now various forms of such pacts or agreements entered into by and between sovereign
states which do not necessarily come under the strict sense of a treaty and which do not require
ratification or consent of the legislative body of the State, but nevertheless, are considered valid
international agreements. In a survey of the practice of States made by Harvard Research in the
Draft Convention in the Law of Treaties (1935, pp. 711-713) it has been shown that there had been
more executive agreements entered into by States than treaties (Hudson, International Legislation,
I, p. ixii-xcvii).

In the leading case of Altman vs, U. S., 224, U. S. 583, it was held that "an international compact
negotiated between the representatives of two sovereign nations and made in the name and or
behalf of the contracting parties and dealing with important commercial relations between the two
countries, is a treaty both internationally although as an executive agreement it is not technically a
treaty requiring the advice and consent of the Senate. (Herbert Briggs, The Law of Nations, 1947
ed., p. 489).

Nature of Executive Agreements.

Executive Agreements fall into two classes: (1) agreements made purely as executive acts
affecting external relations and independent of or without legislative authorization, which may be
termed as presidential agreements and (2) agreements entered into in pursuants of acts of
Congress, which have been designated as Congressional-Executive Agreements (Sinco, supra,
304; Hackworth, supra, 390; McDougal and Lans, supra, 204-205; Hyke, International Law, 2nd
ed., Vol. II; et seq.)

The Romulo-Snyder Agreement may fall under any of these two classes, for precisely on
September 18, 1946, Congress of the Philippines specifically authorized the President of the
Philippines to obtain such loans or incur such indebtedness with the Government of the United
States, its agencies or instrumentalities (Republic Act No. 16, September 18, 1946, amended by
Republic Act No. 213, June 1, 1948). . . .

Even granting, arguendo, that there was no legislative authorization, it is hereby maintained that
the Romulo-Snyder Agreement was legally and validly entered into to conform to the second
category, namely, "agreements entered into purely as executive acts without legislative
authorization." This second category usually includes money agreements relating to the settlement
of pecuniary claims of citizens. It may be said that this method of settling such claims has come to
be the usual way of dealing with matters of this kind (Memorandum of the Solicitor of the
Department of State (Nielson) sent to Senator Lodge by the Under-Secretary of State (Philip),
August 23, 1922, MS Dept. of State, file 711.00/98a).

Such considerations seems persuasive; indeed, the Agreement was not submitted to the U.S.
Senate either; but we do not stop to check the authorities above listed nor test the conclusions
derived therefrom in order to render a definite pronouncement, for the reason that our Senate
3
Resolution No. 15 practically admits the validity and binding force of such Agreement.
Furthermore, the acts of Congress Appropriating funds for the yearly installments necessary to
comply with such Agreements constitute a ratification thereof, which places the question the
validity out of the Court's reach, no constitutional principle having been invoked to restrict
Congress' plenary power to appropriate funds-loan or no loan.

In conclusion, plaintiff, to say the least, failed to make a clear case for the relief demanded; its
petition was therefore, properly denied.

Paras, C.J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia and Barrera,
JJ., concur.
Plaridel M. Abaya vs. Hon. Secretary Hermogenes E. Ebdane,
Jr.G. R. No. 167919 February 14, 2007
G. R. No. 167919
February 14, 2007
Plaridel M. Abaya vs. Hon. Secretary Hermogenes E. Ebdane, Jr.

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

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

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

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

G. R. No. 159618, February 01, 2011

Facts:

Petitioner Bayan Muna is a duly registered party-list group established to

represent the marginalized sectors of society. Respondent Blas F. Ople, now
deceased, was the Secretary of Foreign Affairs during the period material to
this case. Respondent Alberto Romulo was impleaded in his capacity as
then Executive Secretary.

Rome Statute of the International Criminal Court

Having a key determinative bearing on this case is the Rome Statute

establishing the International Criminal Court (ICC) with “the power to
exercise its jurisdiction over persons for the most serious crimes of
international concern x x x and shall be complementary to the national
criminal jurisdictions.” The serious crimes adverted to cover those
considered grave under international law, such as genocide, crimes against
humanity, war crimes, and crimes of aggression.

On December 28, 2000, the RP, through Charge d’Affaires Enrique A.

Manalo, signed the Rome Statute which, by its terms, is “subject to
ratification, acceptance or approval” by the signatory states. As of the filing
of the instant petition, only 92 out of the 139 signatory countries appear to
have completed the ratification, approval and concurrence process. The
Philippines is not among the 92.

RP-US Non-Surrender Agreement

On May 9, 2003, then Ambassador Francis J. Ricciardone sent US Embassy

Note No. 0470 to the Department of Foreign Affairs (DFA) proposing the
terms of the non-surrender bilateral agreement (Agreement, hereinafter)
between the USA and the RP.

Via Exchange of Notes No. BFO-028-037 dated May 13, 2003 (E/N BFO-
028-03, hereinafter), the RP, represented by then DFA Secretary Ople,
agreed with and accepted the US proposals embodied under the US
Embassy Note adverted to and put in effect the Agreement with the US
government. In esse, the Agreement aims to protect what it refers to and
defines as “persons” of the RP and US from frivolous and harassment suits
that might be brought against them in international tribunals.8 It is
reflective of the increasing pace of the strategic security and defense
partnership between the two countries. As of May 2, 2003, similar bilateral
agreements have been effected by and between the US and 33 other
countries.

The Agreement pertinently provides as follows:

1. For purposes of this Agreement, “persons” are current or former

Government officials, employees (including contractors), or military
personnel or nationals of one Party.

2. Persons of one Party present in the territory of the other shall not, absent
the express consent of the first Party,

(a) be surrendered or transferred by any means to any international

tribunal for any purpose, unless such tribunal has been established by the
UN Security Council, or

(b) be surrendered or transferred by any means to any other entity or third

country, or expelled to a third country, for the purpose of surrender to or
transfer to any international tribunal, unless such tribunal has been
established by the UN Security Council.

3. When the [US] extradites, surrenders, or otherwise transfers a person of

the Philippines to a third country, the [US] will not agree to the surrender
or transfer of that person by the third country to any international tribunal,
unless such tribunal has been established by the UN Security Council,
absent the express consent of the Government of the Republic of the
Philippines [GRP].

4. When the [GRP] extradites, surrenders, or otherwise transfers a person

of the [USA] to a third country, the [GRP] will not agree to the surrender or
transfer of that person by the third country to any international tribunal,
unless such tribunal has been established by the UN Security Council,
absent the express consent of the Government of the [US].

5. This Agreement shall remain in force until one year after the date on
which one party notifies the other of its intent to terminate the Agreement.
The provisions of this Agreement shall continue to apply with respect to any
act occurring, or any allegation arising, before the effective date of
termination.

In response to a query of then Solicitor General Alfredo L. Benipayo on the

status of the non-surrender agreement, Ambassador Ricciardone replied in
his letter of October 28, 2003 that the exchange of diplomatic notes
constituted a legally binding agreement under international law; and that,
under US law, the said agreement did not require the advice and consent of
the US Senate.

In this proceeding, petitioner imputes grave abuse of discretion to

respondents in concluding and ratifying the Agreement and prays that it be
struck down as unconstitutional, or at least declared as without force and
effect.

Issue: Whether or not the RP-US NON SURRENDER AGREEMENT is

void ab initio for contracting obligations that are either immoral or
otherwise at variance with universally recognized principles of international
law.

Ruling: The petition is bereft of merit.

Validity of the RP-US Non-Surrender Agreement

Petitioner’s initial challenge against the Agreement relates to form, its

threshold posture being that E/N BFO-028-03 cannot be a valid medium
for concluding the Agreement.

Petitioners’ contention––perhaps taken unaware of certain well-recognized

international doctrines, practices, and jargons––is untenable. One of these
is the doctrine of incorporation, as expressed in Section 2, Article II of the
Constitution, wherein the Philippines adopts the generally accepted
principles of international law and international jurisprudence as part of
the law of the land and adheres to the policy of peace, cooperation, and
amity with all nations. An exchange of notes falls “into the category of inter-
governmental agreements,” which is an internationally accepted form of
international agreement. The United Nations Treaty Collections (Treaty
Reference Guide) defines the term as follows:

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.

In another perspective, the terms “exchange of notes” and “executive

agreements” have been used interchangeably, exchange of notes being
considered a form of executive agreement that becomes binding through
executive action. On the other hand, executive agreements concluded by the
President “sometimes take the form of exchange of notes and at other times
that of more formal documents denominated ‘agreements’ or ‘protocols.’”
As former US High Commissioner to the Philippines Francis B. Sayre
observed in his work, The Constitutionality of Trade Agreement Acts:

The point where ordinary correspondence between this and other

governments ends and agreements – whether denominated executive
agreements or exchange of notes or otherwise – begin, may sometimes be
difficult of ready ascertainment. x x x

It is fairly clear from the foregoing disquisition that E/N BFO-028-03––be

it viewed as the Non-Surrender Agreement itself, or as an integral
instrument of acceptance thereof or as consent to be bound––is a
recognized mode of concluding a legally binding international written
contract among nations.

Agreement Not Immoral/Not at Variance

with Principles of International Law

Petitioner urges that the Agreement be struck down as void ab initio for
imposing immoral obligations and/or being at variance with allegedly
universally recognized principles of international law. The immoral aspect
proceeds from the fact that the Agreement, as petitioner would put it,
“leaves criminals immune from responsibility for unimaginable atrocities
that deeply shock the conscience of humanity; x x x it precludes our country
from delivering an American criminal to the [ICC] x x x.”63

The above argument is a kind of recycling of petitioner’s earlier position,

which, as already discussed, contends that the RP, by entering into the
Agreement, virtually abdicated its sovereignty and in the process
undermined its treaty obligations under the Rome Statute, contrary to
international law principles.

The Court is not persuaded. Suffice it to state in this regard that the non-
surrender agreement, as aptly described by the Solicitor General, “is an
assertion by the Philippines of its desire to try and punish crimes under its
national law. x x x The agreement is a recognition of the primacy and
competence of the country’s judiciary to try offenses under its national
criminal laws and dispense justice fairly and judiciously.”

Petitioner, we believe, labors under the erroneous impression that the

Agreement would allow Filipinos and Americans committing high crimes of
international concern to escape criminal trial and punishment. This is
manifestly incorrect. Persons who may have committed acts penalized
under the Rome Statute can be prosecuted and punished in the Philippines
or in the US; or with the consent of the RP or the US, before the ICC,
assuming, for the nonce, that all the formalities necessary to bind both
countries to the Rome Statute have been met. For perspective, what the
Agreement contextually prohibits is the surrender by either party of
individuals to international tribunals, like the ICC, without the consent of
the other party, which may desire to prosecute the crime under its existing
laws. With the view we take of things, there is nothing immoral or violative
of international law concepts in the act of the Philippines of assuming
criminal jurisdiction pursuant to the non-surrender agreement over an
offense considered criminal by both Philippine laws and the Rome Statute.
Saguisag v. Exec Secretary Ochoa
July 26, 2016 G.R. No. 212426 EDCA,
Treaty, Executive Agreement,
International Agreement
AUGUST 22, 2018

FACTS:

This is a Resolution on the Motion for

Reconsideration seeking to reverse the
Decision of this Court in Saguisag et. al., v.
Executive Secretary dated 12 January 2016.

Petitioners claim this Court erred when it

ruled that the Enhanced Defense
Cooperation Agreement (EDCA) between the
Philippines and the US was not a treaty. In
connection to this, petitioners move that
EDCA must be in the form of a treaty in
order to comply with the constitutional
restriction under Section 25, Article· XVIII of
the 1987 Constitution on foreign military
bases, troops, and facilities. Additionally,
they reiterate their arguments on the issues
of telecommunications, taxation, and
nuclear weapons.
The principal reason for the Motion for
Reconsideration is evidently petitioners’
disagreement with the Decision that EDCA
implements the VFA and Mutual Defense
Treaty (MDT).

Petitioners argue that EDCA’s provisions fall

outside the allegedly limited scope of the
VFA and MDT because it provides a wider
arrangement than the VFA for military
bases, troops, and facilities, and it allows
the establishment of U.S. military bases.

ISSUE:

Whether or not EDCA is a treaty.

RULING:

Petitioners detail their objections to EDCA in

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

1. Agreed Locations

2. Rotational presence of personnel

3. U.S. contractors

4. Activities of U.S. contractors

We ruled in Saguisag, et. al. that the EDCA is

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

Executive agreements may dispense with

the requirement of Senate concurrence
because of the legal mandate with which
they are concluded.

As culled from the deliberations of the

Constitutional Commission, past Supreme
Court Decisions, and works of noted
scholars, executive agreements merely
involve arrangements on the
implementation of existing policies, rules,
laws, or agreements.

They are concluded

(1) to adjust the details of a treaty;

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

(3) in the exercise of the President’s

independent powers under the Constitution.

The raison d’etre of executive agreements

hinges on prior constitutional or legislative
authorizations.

The special nature of an executive

agreement is not just a domestic variation in
international agreements.

International practice has accepted the use

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

An international agreement may take

different forms: treaty, act, protocol,
agreement, concordat, compromis
d’arbitrage, convention, covenant,
declaration, exchange of notes, statute,
pact, charter, agreed minute, memorandum
of agreement, modus vivendi, or some other
form.
Consequently, under international law, the
distinction between a treaty and an
international agreement or even an
executive agreement is irrelevant for
purposes of determining international
rights and obligations.

However, this principle does not mean that

the domestic law distinguishing treaties,
international agreements, and executive
agreements is relegated to a mere variation
in form, or that the constitutional
requirement of Senate concurrence is
demoted to an optional constitutional
directive. There remain two very important
features that distinguish treaties from
executive agreements and translate them into
terms of art in the domestic setting.

First, executive agreements must remain

traceable to an express or implied
authorization under the Constitution,
statutes, or treaties. The absence of these
precedents puts the validity and effectivity
of executive agreements under serious
question for the main function of the
Executive is to enforce the Constitution and
the laws enacted by the Legislature, not to
defeat or interfere in the performance of
these rules. In turn, executive agreements
cannot create new international obligations
that are not expressly allowed or reasonably
implied in the law they purport to
implement.
Second, treaties are, by their very nature,
considered superior to executive
agreements. Treaties are products of the
acts of the Executive and the Senate unlike
executive agreements, which are solely
executive actions. Because of legislative
participation through the Senate, a treaty is
regarded as being on the same level as a
statute. If there is an irreconcilable conflict,
a later law or treaty takes precedence over
one that is prior. An executive agreement is
treated differently. Executive agreements
that are inconsistent with either a law or a
treaty are considered ineffective. Both types
of international agreement are nevertheless
subject to the supremacy of the
Constitution.

Subsequently, the Decision goes to great

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

We find no reason for EDCA to be declared

unconstitutional. It fully conforms to the
Philippines’ legal regime through the MDT
and VFA. It also fully conforms to the
government’s continued policy to enhance
our military capability in the face of various
military and humanitarian issues that may
arise.
INTELLECTUAL PROPERTY ASSOCIATION OF THE PHILIPPINES, Petitioner,
vs.
HON. PAQUITO OCHOA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON.
ALBERT DEL ROSARIO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT
OF FOREIGN AFFAIRS, AND HON. RICARDO BLANCAFLOR, IN HIS CAPACITY AS
THE DIRECTOR GENERAL OF THE INTELLECTUAL PROPERTY OFFICE OF THE
PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

In this special civil action for certiorari and prohibition, the Intellectual Property
Association of the Philippines (IPAP) seeks to declare the accession of the
Philippines to the Protocol Relating to the Madrid Agreement Concerning the
International Registration of Marks (Madrid Protocol) unconstitutional on the ground
of the lack of concurrence by the Senate, and in the alternative, to declare the
implementation thereof as unconstitutional because it conflicts with Republic Act No.
8293, otherwise known as the Intellectual Property Code of the Philippines (IP Code).1

We find and declare that the President's ratification is valid and constitutional
because the Madrid Protocol, being an executive agreement as determined by the
Department of Foreign Affairs, does not require the concurrence of the Senate.

Antecedents

The Madrid System for the International Registration of Marks (Madrid System), which
is the centralized system providing a one-stop solution for registering and managing
marks worldwide, allows the trademark owner to file one application in one language,
and to pay one set of fees to protect his mark in the territories of up to 97 member-
states.2 The Madrid System is governed by the Madrid Agreement, concluded in 1891,
and the Madrid Protocol, concluded in 1989.3

The Madrid Protocol, which was adopted in order to remove the challenges deterring
some countries from acceding to the Madrid Agreement, has two objectives, namely:
(1) to facilitate securing protection for marks; and (2) to make the management of the
registered marks easier in different countries.4

In 2004; the Intellectual Property Office of the Philippines (IPOPHL), the government
agency mandated to administer the intellectual property system of the country and to
implement the state policies on intellectual property; began considering the country's
accession to the Madrid Protocol. However, based on its assessment in 2005, the
IPOPHL needed to first improve its own operations before making the
recommendation in favor of accession. The IPOPHL thus implemented reforms to
eliminate trademark backlogs and to reduce the turnaround time for the registration of
marks.5
In the meanwhile, the IPOPHL mounted a campaign for information dissemination to
raise awareness of the Madrid Protocol. It launched a series of consultations with
stakeholders and various business groups regarding the Philippines' accession to the
Madrid Protocol. It ultimately arrived at the conclusion that accession would benefit
the country and help raise the level of competitiveness for Filipino brands. Hence, it
recommended in September 2011 to the Department of Foreign Affairs (DFA) that the
Philippines should accede to the Madrid Protocol.6

After its own review, the DFA endorsed to the President the country's accession to
the Madrid Protocol. Conformably with its express authority under Section 9 of
Executive Order No. 459 (Providing for the Guidelines in the Negotiation of
International Agreements and its Ratification) dated November 25, 1997, the DFA
determined that the Madrid Protocol was an executive agreement.1âwphi1 The
IPOPHL, the Department of Science and Technology, and the Department of Trade
and Industry concurred in the recommendation of the DFA.7

On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol
through an instrument of accession, The instrument of accession was deposited with
the Director General of the World Intellectual Property Organization (WIPO) on April
25, 2012.8 The Madrid Protocol entered into force in the Philippines on July 25, 2012.9

Petitioner IP AP, an association of more than 100 law firms and individual
practitioners in Intellectual Property Law whose main objective is to promote and
protect intellectual property rights in the Philippines through constant assistance and
involvement in the legislation of intellectual property law,10 has commenced this
special civil action for certiorari and prohibition11 to challenge the validity of the
President's accession to the Madrid Protocol without the concurrence of the Senate.
Citing Pimentel, Jr. v. Office of the Executive Secretary, the IPAP has averred:

Nonetheless, while the President has the sole authority to negotiate and enter into
treaties, the Constitution provides a limitation to his power by requiring the
concurrence of 2/3 of all the members of the Senate for the validity of the treaty
entered into by him. Section 21, Article VII of the 1987 Constitution provides that "no
treaty or international agreement shall be valid and effective unless concurred in by at
least two-thirds of all the Members of the Senate." The 1935 and the 1973 Constitution
also required the concurrence by the legislature to the treaties entered into by the
executive.12

According to the IPAP, the Madrid Protocol is a treaty, not an executive agreement;
hence, respondent DFA Secretary Albert Del Rosario acted with grave abuse of
discretion in determining the Madrid Protocol as an executive agreement.13

The IPAP has argued that the implementation of the Madrid Protocol in the
Philippines; specifically the processing of foreign trademark applications, conflicts
with the IP Code,14 whose Section 125 states:

Sec. 125. Representation; Address for Service. - If the applicant is not domiciled or
has no real and effective commercial establishment in the Philippines; he shall
designate by a written document filed in the office, the name and address of a
Philippine resident who may be served notices or process in proceedings affecting
the mark. Such notices or services may be served upon the person so designated by
leaving a copy thereof at the address specified in the last designation filed. If the
person so designated cannot be found at the address given in the last designation,
such notice or process may be served upon the Director. (Sec. 3; R.A. No. 166 a)

It has posited that Article 2 of the Madrid Protocol provides in contrast:

Article 2

Securing Protection through International Registration

(1) Where an application for the registration of a mark has been filed with the Office of
a Contracting Party, or where a mark has been registered in the register of the Office
of a Contracting Party, the person in whose name that application (hereinafter
referred to as "the basic application;') or that registration (hereinafter referred to as
"the basic registration") stands may, subject to the provisions of this Protocol secure
protection for his mark in the territory of the Contracting Parties, by obtaining the
registration of that mark in the register of the International Bureau of the World
Intellectual Property Organization (hereinafter referred to as "the international
registration," "the International Register," "the International Bureau" and "the
Organization'', respectively), provided that,

(i) where the basic application has been filed with the Office of a Contracting State or
where the basic registration has been made by such an Office, the person in whose
name that application or registration stands is a national of that Contracting State, or
is domiciled, or has a real and effective industrial or commercial establishment, in the
said Contracting State,

(ii) where the basic application has been filed with the Office of a Contracting
Organization or where the basic registration has been made by such an Office, the
person in whose name that application or registration stands is a national of a State
member of that Contracting Organization, or is domiciled, or has a real and effective
industrial or commercial establishment, in the territory of the said Contracting
Organization.

(2) The application for international registration (hereinafter referred to as "the

international application") shall be filed with the International Bureau through the
intermediary of the Office with which the basic application was filed or by which the
basic registration was made (hereinafter referred to as "the Office of origin"), as the
case may be.

(3) Any reference in this Protocol to an "Office" or an "Office of a Contracting Party"

shall be construed as a reference to the office that is in charge, on behalf of a
Contracting Party, of the registration of marks, and any reference in this Protocol to
"marks" shall be construed as a reference to trademarks and service marks.
(4) For the purposes of this Protocol, "territory of a Contracting Party" means, where
the Contracting Party is a State, the territory of that State and, where the Contracting
Party is an intergovernmental organization, the territory in which the constituting
treaty of that intergovernmental organization applied.

The IPAP has insisted that Article 2 of the Madrid Protocol means that foreign
trademark applicants may file their applications through the International Bureau or
the WIPO, and their applications will be automatically granted trademark protection
without the need for designating their resident agents in the country.15

Moreover, the IPAP has submitted that the procedure outlined in the Guide to the
International Registration of Marks relating to representation before the International
Bureau is the following, to wit:

Rule 3(1)(a) 09.02 References in the Regulations, Administrative Instructions or in this

Guide to representation relate only to representation before the International Bureau.
The questions of the need for a representative before the Office of origin or the Office
of a designated Contracting Party (for example, in the event of a refusal of protection
issued by such an Office), who may act as a representative in such cases and the
method of appointment, are outside the scope of the Agreement, Protocol and
Regulations and are governed by the law and practice of the Contracting Party
concerned.

which procedure is in conflict with that under Section 125 of the IP Code, and
constitutes in effect an amendment of the local law by the Executive Department.16

The IPAP has prayed that the implementation of the Madrid Protocol in the Philippines
be restrained in order to prevent future wrongs considering that the IP AP and its
constituency have a clear and unmistakable right not to be deprived of the rights
granted them by the IP Code and existing local laws.17

In its comment in behalf of the respondents, the Office of the Solicitor General (OSG)
has stated that the IPAP does not have the locus standi to challenge the accession to
the Madrid Protocol; that the IPAP cannot invoke the Court's original jurisdiction
absent a showing of any grave abuse of discretion on the part of the respondents;
that the President's ratification of the Madrid Protocol as an executive agreement is
valid because the Madrid Protocol is only procedural, does not create substantive
rights, and does not require the amendment of the IP Code; that the IPAP is not
entitled to the restraining order or injunction because it suffers no damage from the
ratification by the President, and there is also no urgency for such relief; and the IPAP
has no clear unmistakable right to the relief sought.18

Issues

The following issues are to be resolved, namely:

I. Whether or not the IP AP has locus standi to challenge the President's ratification of
the Madrid Protocol;
II. Whether or not the President's ratification of the Madrid Protocol is valid and
constitutional; and

III. Whether or not the Madrid Protocol is in conflict with the IP Code.

Ruling of the Court

The petition for certiorari and prohibition is without merit.

A.

The issue of legal standing to sue, or locus standi

The IPAP argues in its reply19 that it has the locus standi to file the present case by
virtue of its being an association whose members stand to be injured as a result of
the enforcement of the Madrid Protocol in the Philippines; that the injury pertains to
the acceptance and approval of applications submitted through the Madrid Protocol
without local representation as required by Section 125 of the IP Code;20 and that
such will diminish the rights granted by the IP Code to Intellectual Property Law
practitioners like the members of the IPAP.21

The argument of the IPAP is untenable.

Legal standing refers to "a right of appearance in a court of justice on a given

question."22 According to Agan, Jr. v. Philippine International Air Terminals Co.,
Inc.,23standing is "a peculiar concept in constitutional law because 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."

The Court has frequently felt the need to dwell on the issue of standing in public or
constitutional litigations to sift the worthy from the unworthy public law litigants
seeking redress or relief. The following elucidation in De Castro v. Judicial and Bar
Council24offers the general understanding of the context of legal standing, or locus
standi for that purpose, viz. :

In public or constitutional litigations, the Court is often burdened with the

determination of the locus standi of the petitioners due to the ever-present need to
regulate the invocation of the intervention of the Court to correct any official action or
policy in order to avoid obstructing the efficient functioning of public officials and
offices involved in public service. It is required, therefore, that the petitioner must
have a personal stake in the outcome of the controversy, for, as indicated in Agan, Jr.
v. Philippine International Air Terminals Co., Inc.:

The question on legal standing is whether such parties have "'alleged such a personal
stake in the outcome of the controversy as to assure that concrete adverseness
which sharpens the presentation of issues upon which the court so largely depends
for illumination of difficult constitutional questions," Accordingly, it has been held
that the interest of a person assailing the constitutionality of a statute must be direct
and personal. He must be able to show, not only that the law or any government act is
invalid, but also that he sustained or is in imminent danger of sustaining some direct
injury as a result of its enforcement, and not merely that he suffers thereby in some
indefinite way. It must appear that the person complaining has been or is about to be
denied some right or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act complained of.

It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury
test for determining whether a petitioner in a public action had locus standi. There,
the Court held that the person who would assail the validity of a statute must have "a
personal and substantial interest in the case such that he has sustained, or will
sustain direct injury as a result." Vera was followed in Custodio v. President of the
Senate, Manila Race Horse Trainers' Association v. De la Fuente, Anti-Chinese League
of the Philippines v. Felix, and Pascual v. Secretary of Public Works.

Yet, the Court has also held that the requirement of locus standi, being a mere
procedural technicality, can be waived by the Court in the exercise of its discretion.
For instance, in 1949, in Araneta v. Dinglasan, the Court liberalized the approach
when the cases had "transcendental importance." Some notable controversies whose
petitioners did not pass the direct injury test were allowed to be treated in the same
way as in Araneta v. Dinglasan.

In the 1975 decision in Aquino v. Commission on Elections, this Court decided to

resolve the issues raised by the petition due to their "farreaching implications,'; even
if the petitioner had no personality to file the suit. The liberal approach of Aquino v.
Commission on Elections has been adopted in several notable cases, permitting
ordinary citizens, legislators, and civic organizations to bring their suits involving the
constitutionality or validity of laws, regulations, and rulings.

However, the assertion of a public right as a predicate for challenging a supposedly

illegal or unconstitutional executive or legislative action rests on the theory that the
petitioner represents the public in general. Although such petitioner may not be as
adversely affected by the action complained against as are others, it is enough that he
sufficiently demonstrates in his petition that he is entitled to protection or relief from
the Court in the vindication ofa public right.25

The injury that the IPAP will allegedly suffer from the implementation of the Madrid
Protocol is imaginary, incidental and speculative as opposed to a direct and material
injury required by the foregoing tenets on locus standi. Additionally, as the OSG
points out in the comment,26 the IPAP has misinterpreted Section 125 of the IP Code
on the issue of representation. The provision only states that a foreign trademark
applicant "shall designate by a written document filed in the office, the name and
address of a Philippine resident who may be served notices or process in
proceedings affecting the mark;" it does not grant anyone in particular the right to
represent the foreign trademark applicant. Hence, the IPAP cannot justly claim that it
will suffer irreparable injury or diminution of rights granted to it by Section 125 of the
IP Code from the implementation of the Madrid Protocol.

Nonetheless, the IPAP also emphasizes that the paramount public interest involved
has transcendental importance because its petition asserts that the Executive
Department has overstepped the bounds of its authority by thereby cutting into
another branch's functions and responsibilities.27 The assertion of the IPAP may be
valid on this score. There is little question that the issues raised herein against the
implementation of the Madrid Protocol are of transcendental importance. Accordingly,
we recognize IPAP's locus standi to bring the present challenge. Indeed, the Court
has adopted a liberal attitude towards locus standi whenever the issue presented for
consideration has transcendental significance to the people, or whenever the issues
raised are of paramount importance to the public.28

B.

Accession to the

Madrid Protocol was constitutional

The IP AP submits that respondents Executive Secretary and DFA Secretary Del
Rosario gravely abused their discretion in determining that there was no need for the
Philippine Senate's concurrence with the Madrid Protocol; that the Madrid Protocol
involves changes of national policy, and its being of a permanent character requires
the Senate's concurrence,29 pursuant to Section 21, Article VII of the Constitution,
which states that "no treaty or international agreement shall be valid and effective
unless concurred in by at least two-thirds of all the Members of the Senate."

Before going further, we have to distinguish between treaties and international

agreements, which require the Senate's concurrence, on one hand, and executive
agreements, which may be validly entered into without the Senate's concurrence.
Executive Order No. 459, Series of 1997,30 notes the following definitions, to wit:

Sec. 2. Definition of Terms.

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.
The Court has highlighted the difference between treaties and executive agreements
in Commissioner of Customs v. Eastern Sea Trading,31 thusly:

International agreements involving political issues or changes of national policy and

those involving international arrangements of a permanent character usually take the
form of treaties. But international agreements embodying adjustments of detail
carrying out well-established national policies and traditions and those involving
arrangements of a more or less temporary nature usually take the form of executive
agreements.

In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459,32 is
initially given the power to determine whether an agreement is to be treated as a
treaty or as an executive agreement. To determine the issue of whether DFA Secretary
Del Rosario gravely abused his discretion in making his determination relative to the
Madrid Protocol, we review the jurisprudence on the nature of executive agreements,
as well as the subject matters to be covered by executive agreements.

The pronouncement in Commissioner of Customs v. Eastern Sea Trading33is

instructive, to wit:

x x x The concurrence of said House of Congress is required by our fundamental law

in the making of "treaties" (Constitution of the Philippines; Article VII, Section 10[7]),
which are, however, distinct and different from "executive agreements," which may be
validly entered into without such concurrence.

"Treaties are formal documents which require ratification with the approval of two
thirds of the Senate. Executive agreements become binding through executive action
without the need of a vote by the Senate or by Congress.

xxxx

"x x x 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.

xxxx

Agreements with respect to the registration of trademarks have been concluded by

the Executive with various countries under the Act of Congress of March 3, 1881 (21
Stat. 502), x x x

xxxx
In this connection, Francis B. Sayre, former U.S. High Commissioner to the
Philippines, said in his work on "The Constitutionality of Trade Agreement Acts":

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 or 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. x x x 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 trademarks
and copyrights, etcetera. 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 of the settlement of claims against foreign governments, were
concluded independently of any legislation. (Emphasis ours)

As the foregoing pronouncement indicates, the registration of trademarks and

copyrights have been the subject of executive agreements entered into without the
concurrence of the Senate. Some executive agreements have been concluded in
conformity with the policies declared in the acts of Congress with respect to the
general subject matter.

It then becomes relevant to examine our state policy on intellectual property in

general, as reflected in Section 2 of our IP Code, to wit:

Section 2. Declaration of State Policy. - The State recognizes that an effective

intellectual and industrial property system is vital to the development of domestic and
creative activity, facilitates transfer of technology, attracts foreign investments, and
ensures market access for our products. It shall protect and secure the exclusive
rights of scientists, inventors, artists and other gifted citizens to their intellectual
property and creations, particularly when beneficial to the people, for such periods as
provided in this Act.

The use of intellectual property bears a social function. To this end, the State shall
promote the diffusion of knowledge and information for the promotion of national
development and progress and the common good.
It is also the policy of the State to streamline administrative procedures of registering
patents, trademarks and copyright, to liberalize the registration on the transfer of
technology; and to enhance the enforcement of intellectual property rights in the
Philippines.

In view of the expression of state policy having been made by the Congress itself, the
IPAP is plainly mistaken in asserting that "there was no Congressional act that
authorized the accession of the Philippines to the Madrid Protocol."34

Accordingly, DFA Secretary Del Rosario’s determination and treatment of the Madrid
Protocol as an executive agreement; being in apparent contemplation of the express
state policies on intellectual property as well as within his power under Executive
Order No. 459, are upheld. We observe at this point that there are no hard and fast
rules on the propriety of entering into a treaty or an executive agreement on a given
subject as an instrument of international relations. The primary consideration in the
choice of the form of agreement is the parties' intent and desire to craft their
international agreement in the form they so wish to further their respective interests.
The matter of form takes a back seat when it comes to effectiveness and binding
effect of the enforcement of a treaty or an executive agreement; inasmuch as all the
parties; regardless of the form, become obliged to comply conformably with the time-
honored principle of pacta sunt servanda.35The principle binds the parties to perform
in good faith their parts in the agreements.36

c.

There is no conflict between the

Madrid Protocol and the IP Code.

The IPAP also rests its challenge on the supposed conflict between the Madrid
Protocol and the IP Code, contending that the Madrid Protocol does away with the
requirement of a resident agent under Section 125 of the IP Code; and that the Madrid
Protocol is unconstitutional for being in conflict with the local law, which it cannot
modify.

The IPAP's contentions stand on a faulty premise. The method of registration through
the IPOPHL, as laid down by the IP Code, is distinct and separate from the method of
registration through the WIPO, as set in the Madrid Protocol. Comparing the two
methods of registration despite their being governed by two separate systems of
registration is thus misplaced.

In arguing that the Madrid Protocol conflicts with Section 125 of the IP Code, the IP
AP highlights the importance of the requirement for the designation of a resident
agent. It underscores that the requirement is intended to ensure that non-resident
entities seeking protection or privileges under Philippine Intellectual Property Laws
will be subjected to the country's jurisdiction. It submits that without such resident
agent, there will be a need to resort to costly, time consuming and cumbersome
extraterritorial service of writs and processes.37
The IPAP misapprehends the procedure for examination under the Madrid Protocol,
The difficulty, which the IPAP illustrates, is minimal, if not altogether inexistent. The
IPOPHL actually requires the designation of the resident agent when it refuses the
registration of a mark. Local representation is further required in the submission of
the Declaration of Actual Use, as well as in the submission of the license contract.38
The Madrid Protocol accords with the intent and spirit of the IP Code, particularly on
the subject of the registration of trademarks. The Madrid Protocol does not amend or
modify the IP Code on the acquisition of trademark rights considering that the
applications under the Madrid Protocol are still examined according to the relevant
national law, In that regard, the IPOPHL will only grant protection to a mark that meets
the local registration requirements.

WHEREFORE, this Court DISMISSES the petition for certiorari and prohibition for lack
of merit; and ORDERS the petitioner to pay the costs of suit.