G.R. No.

118295 May 2, 1997

WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the Philippine Senate and
as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the House of
Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES, both as
taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM ASSOCIATION, CENTER
FOR ALTERNATIVE DEVELOPMENT INITIATIVES, LIKAS-KAYANG KAUNLARAN FOUNDATION, INC.,
PHILIPPINE RURAL RECONSTRUCTION MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID
NG PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in representation of various taxpayers and
as non-governmental organizations, petitioners,
vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON ALVAREZ, AGAPITO
AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA.
MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEA, SANTANINA RASUL,
RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE WEBB, in their respective capacities
as members of the Philippine Senate who concurred in the ratification by the President of the
Philippines of the Agreement Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in
his capacity as Secretary of Budget and Management; CARIDAD VALDEHUESA, in her capacity as
National Treasurer; RIZALINO NAVARRO, in his capacity as Secretary of Trade and Industry; ROBERTO
SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE OCAMPO, in his capacity as
Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs; and
TEOFISTO T. GUINGONA, in his capacity as Executive Secretary, respondents.



PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership
thereto of the vast majority of countries has revolutionized international business and economic
relations amongst states. It has irreversibly propelled the world towards trade liberalization and
economic globalization. Liberalization, globalization, deregulation and privatization, the third-
millennium buzz words, are ushering in a new borderless world of business by sweeping away as
mere historical relics the heretofore traditional modes of promoting and protecting national
economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and
currency controls. Finding market niches and becoming the best in specific industries in a market-
driven and export-oriented global scenario are replacing age-old "beggar-thy-neighbor" policies that
unilaterally protect weak and inefficient domestic producers of goods and services. In the words of
Peter Drucker, the well-known management guru, "Increased participation in the world economy
has become the key to domestic economic growth and prosperity."

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for
the establishment of three multilateral institutions inspired by that grand political body, the
United Nations were discussed at Dumbarton Oaks and Bretton Woods. The first was the World
Bank (WB) which was to address the rehabilitation and reconstruction of war-ravaged and later
developing countries; the second, the International Monetary Fund (IMF) which was to deal with
currency problems; and the third, the International Trade Organization (ITO), which was to foster
order and predictability in world trade and to minimize unilateral protectionist policies that invite
challenge, even retaliation, from other states. However, for a variety of reasons, including its non-
ratification by the United States, the ITO, unlike the IMF and WB, never took off. What remained was
only GATT the General Agreement on Tariffs and Trade. GATT was a collection of treaties
governing access to the economies of treaty adherents with no institutionalized body administering
the agreements or dependable system of dispute settlement.

After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the
Tokyo Round and the Uruguay Round, the world finally gave birth to that administering body the
World Trade Organization with the signing of the "Final Act" in Marrakesh, Morocco and the
ratification of the WTO Agreement by its members. 1

Like many other developing countries, the Philippines joined WTO as a founding member with the
goal, as articulated by President Fidel V. Ramos in two letters to the Senate (infra), of improving
"Philippine access to foreign markets, especially its major trading partners, through the reduction of
tariffs on its exports, particularly agricultural and industrial products." The President also saw in the
WTO the opening of "new opportunities for the services sector . . . , (the reduction of) costs and
uncertainty associated with exporting . . . , and (the attraction of) more investments into the
country." Although the Chief Executive did not expressly mention it in his letter, the Philippines
and this is of special interest to the legal profession will benefit from the WTO system of dispute
settlement by judicial adjudication through the independent WTO settlement bodies called (1)
Dispute Settlement Panels and (2) Appellate Tribunal. Heretofore, trade disputes were settled
mainly through negotiations where solutions were arrived at frequently on the basis of relative
bargaining strengths, and where naturally, weak and underdeveloped countries were at a
disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines "to place nationals and products of
member-countries on the same footing as Filipinos and local products" and (2) that the WTO
"intrudes, limits and/or impairs" the constitutional powers of both Congress and the Supreme Court,
the instant petition before this Court assails the WTO Agreement for violating the mandate of the
1987 Constitution to "develop a self-reliant and independent national economy effectively
controlled by Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential
use of Filipino labor, domestic materials and locally produced goods."

Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade
liberalization and economic globalization? Does it proscribe Philippine integration into a global
economy that is liberalized, deregulated and privatized? These are the main questions raised in this
petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for
the nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the
ratification by the President of the Philippines of the Agreement Establishing the World Trade
Organization (WTO Agreement, for brevity) and (2) for the prohibition of its implementation and
enforcement through the release and utilization of public funds, the assignment of public officials
and employees, as well as the use of government properties and resources by respondent-heads of
various executive offices concerned therewith. This concurrence is embodied in Senate Resolution
No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The Department of Trade and
Industry (Secretary Navarro, for brevity), representing the Government of the Republic of the
Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay
Round of Multilateral Negotiations (Final Act, for brevity).

By signing the Final Act, 2 Secretary Navarro on behalf of the Republic of the Philippines, agreed:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective
competent authorities, with a view to seeking approval of the Agreement in accordance with their
procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994
from the President of the Philippines, 3 stating among others that "the Uruguay Round Final Act is
hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the
Constitution."

On August 13, 1994, the members of the Philippine Senate received another letter from the
President of the Philippines 4 likewise dated August 11, 1994, which stated among others that "the
Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in Financial Services are hereby
submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution."

On December 9, 1994, the President of the Philippines certified the necessity of the immediate
adoption of P.S. 1083, a resolution entitled "Concurring in the Ratification of the Agreement
Establishing the World Trade Organization." 5

On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which "Resolved, as it is
hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by the President of
the Philippines of the Agreement Establishing the World Trade Organization." 6 The text of the WTO
Agreement is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of
Multilateral Trade Negotiations and includes various agreements and associated legal instruments
(identified in the said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as
Multilateral Trade Agreements, for brevity) as follows:

ANNEX 1

Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of he
General Agreement on Tariffs and Trade
1994
Agreement on Implementation of Article VII of the
General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating
Measures
Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual
Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing
the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism

On December 16, 1994, the President of the Philippines signed 7 the Instrument of Ratification,
declaring:

NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines,
after having seen and considered the aforementioned Agreement Establishing the World Trade
Organization and the agreements and associated legal instruments included in Annexes one (1), two
(2) and three (3) of that Agreement which are integral parts thereof, signed at Marrakesh, Morocco
on 15 April 1994, do hereby ratify and confirm the same and every Article and Clause thereof.

To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the
Agreement Proper and "the associated legal instruments included in Annexes one (1), two (2) and
three (3) of that Agreement which are integral parts thereof."

On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO
Agreement (and its integral annexes aforementioned) but also (1) the Ministerial Declarations and
Decisions and (2) the Understanding on Commitments in Financial Services. In his Memorandum
dated May 13, 1996, 8 the Solicitor General describes these two latter documents as follows:

The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide
range of matters, such as measures in favor of least developed countries, notification procedures,
relationship of WTO with the International Monetary Fund (IMF), and agreements on technical
barriers to trade and on dispute settlement.

The Understanding on Commitments in Financial Services dwell on, among other things, standstill or
limitations and qualifications of commitments to existing non-conforming measures, market access,
national treatment, and definitions of non-resident supplier of financial services, commercial
presence and new financial service.

On December 29, 1994, the present petition was filed. After careful deliberation on respondents'
comment and petitioners' reply thereto, the Court resolved on December 12, 1995, to give due
course to the petition, and the parties thereafter filed their respective memoranda. The court also
requested the Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations
stationed in Geneva, Switzerland, to submit a paper, hereafter referred to as "Bautista Paper," 9 for
brevity, (1) providing a historical background of and (2) summarizing the said agreements.

During the Oral Argument held on August 27, 1996, the Court directed:

(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy and
(2) the transcript of proceedings/hearings in the Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties signed
prior to the Philippine adherence to the WTO Agreement, which derogate from Philippine
sovereignty and (2) copies of the multi-volume WTO Agreement and other documents mentioned in
the Final Act, as soon as possible.

After receipt of the foregoing documents, the Court said it would consider the case submitted for
resolution. In a Compliance dated September 16, 1996, the Solicitor General submitted a printed
copy of the 36-volume Uruguay Round of Multilateral Trade Negotiations, and in another
Compliance dated October 24, 1996, he listed the various "bilateral or multilateral treaties or
international instruments involving derogation of Philippine sovereignty." Petitioners, on the other
hand, submitted their Compliance dated January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:

A. Whether the petition presents a political question or is otherwise not justiciable.

B. Whether the petitioner members of the Senate who participated in the deliberations and
voting leading to the concurrence are estopped from impugning the validity of the Agreement
Establishing the World Trade Organization or of the validity of the concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade Organization
contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of the 1987
Philippine Constitution.

D. Whether provisions of the Agreement Establishing the World Trade Organization unduly
limit, restrict and impair Philippine sovereignty specifically the legislative power which, under Sec. 2,
Article VI, 1987 Philippine Constitution is "vested in the Congress of the Philippines";

E. Whether provisions of the Agreement Establishing the World Trade Organization interfere
with the exercise of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they voted for concurrence in the ratification of the
constitutionally-infirm Agreement Establishing the World Trade Organization.

G. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they concurred only in the ratification of the
Agreement Establishing the World Trade Organization, and not with the Presidential submission
which included the Final Act, Ministerial Declaration and Decisions, and the Understanding on
Commitments in Financial Services.

On the other hand, the Solicitor General as counsel for respondents "synthesized the several issues
raised by petitioners into the following": 10

1. Whether or not the provisions of the "Agreement Establishing the World Trade Organization
and the Agreements and Associated Legal Instruments included in Annexes one (1), two (2) and
three (3) of that agreement" cited by petitioners directly contravene or undermine the letter, spirit
and intent of Section 19, Article II and Sections 10 and 12, Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the
exercise of legislative power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial power by
this Honorable Court in promulgating the rules of evidence.

4. Whether or not the concurrence of the Senate "in the ratification by the President of the
Philippines of the Agreement establishing the World Trade Organization" implied rejection of the
treaty embodied in the Final Act.

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor
General has effectively ignored three, namely: (1) whether the petition presents a political question
or is otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Taada
and Anna Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-
members of the Senate acted in grave abuse of discretion when they voted for concurrence in the
ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with
these three issues thus:

(1) The "political question" issue being very fundamental and vital, and being a matter that
probes into the very jurisdiction of this Court to hear and decide this case was deliberated upon
by the Court and will thus be ruled upon as the first issue;


(2) The matter of estoppel will not be taken up because this defense is waivable and the
respondents have effectively waived it by not pursuing it in any of their pleadings; in any event, this
issue, even if ruled in respondents' favor, will not cause the petition's dismissal as there are
petitioners other than the two senators, who are not vulnerable to the defense of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be
taken up as an integral part of the disposition of the four issues raised by the Solicitor General.

During its deliberations on the case, the Court noted that the respondents did not question the locus
standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They
probably realized that grave constitutional issues, expenditures of public funds and serious
international commitments of the nation are involved here, and that transcendental public interest
requires that the substantive issues be met head on and decided on the merits, rather than skirted
or deflected by procedural matters. 11

To recapitulate, the issues that will be ruled upon shortly are:

(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE STATED, DOES THE
PETITION INVOLVE A POLITICAL QUESTION OVER WHICH THIS COURT HAS NO JURISDICTION?

(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES CONTRAVENE SEC.
19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF THE PHILIPPINE CONSTITUTION?

(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR
THE EXERCISE OF LEGISLATIVE POWER BY CONGRESS?

(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF JUDICIAL
POWER BY THIS COURT IN PROMULGATING RULES ON EVIDENCE?

(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS ANNEXES
SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT INCLUDE THE FINAL ACT, MINISTERIAL
DECLARATIONS AND DECISIONS, AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL
SERVICES?

The First Issue: Does the Court
Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in
fact the duty of the judiciary to settle the dispute. "The question thus posed is judicial rather than
political. The duty (to adjudicate) remains to assure that the supremacy of the Constitution is
upheld." 12 Once a "controversy as to the application or interpretation of a constitutional provision
is raised before this Court (as in the instant case), it becomes a legal issue which the Court is bound
by constitutional mandate to decide." 13

The jurisdiction of this Court to adjudicate the matters 14 raised in the petition is clearly set out in
the 1987 Constitution, 15 as follows:

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government.

The foregoing text emphasizes the judicial department's duty and power to strike down grave abuse
of discretion on the part of any branch or instrumentality of government including Congress. It is an
innovation in our political law. 16 As explained by former Chief Justice Roberto Concepcion, 17 "the
judiciary is the final arbiter on the question of whether or not a branch of government or any of its
officials has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute
an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty
to pass judgment on matters of this nature."

As this Court has repeatedly and firmly emphasized in many cases, 18 it will not shirk, digress from
or abandon its sacred duty and authority to uphold the Constitution in matters that involve grave
abuse of discretion brought before it in appropriate cases, committed by any officer, agency,
instrumentality or department of the government.

As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate
remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should
be given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of
Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise
constitutional issues and to review and/or prohibit/nullify, when proper, acts of legislative and
executive officials. On this, we have no equivocation.

We should stress that, in deciding to take jurisdiction over this petition, this Court will not review the
wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or
pass upon the merits of trade liberalization as a policy espoused by said international body. Neither
will it rule on the propriety of the government's economic policy of reducing/removing tariffs, taxes,
subsidies, quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its
constitutional duty "to determine whether or not there had been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the Senate in ratifying the WTO
Agreement and its three annexes.

Second Issue: The WTO Agreement
and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.

Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution mandating
"economic nationalism" are violated by the so-called "parity provisions" and "national treatment"
clauses scattered in various parts not only of the WTO Agreement and its annexes but also in the
Ministerial Decisions and Declarations and in the Understanding on Commitments in Financial
Services.

Specifically, the "flagship" constitutional provisions referred to are Sec 19, Article II, and Secs. 10 and
12, Article XII, of the Constitution, which are worded as follows:

Article II

DECLARATION OF PRINCIPLES
AND STATE POLICIES

xxx xxx xxx

Sec. 19. The State shall develop a self-reliant and independent national economy effectively
controlled by Filipinos.

xxx xxx xxx

Article XII

NATIONAL ECONOMY AND PATRIMONY

xxx xxx xxx

Sec. 10. . . . The Congress shall enact measures that will encourage the formation and operation of
enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the
State shall give preference to qualified Filipinos.

xxx xxx xxx

Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make them competitive.

Petitioners aver that these sacred constitutional principles are desecrated by the following WTO
provisions quoted in their memorandum: 19

a) In the area of investment measures related to trade in goods (TRIMS, for brevity):

Article 2

National Treatment and Quantitative Restrictions.

1. Without prejudice to other rights and obligations under GATT 1994, no Member shall apply
any TRIM that is inconsistent with the provisions of Article II or Article XI of GATT 1994.

2. An illustrative list of TRIMS that are inconsistent with the obligations of general elimination
of quantitative restrictions provided for in paragraph I of Article XI of GATT 1994 is contained in the
Annex to this Agreement." (Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay
Round, Legal Instruments, p. 22121, emphasis supplied).

The Annex referred to reads as follows:

ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for in
paragraph 4 of Article III of GATT 1994 include those which are mandatory or enforceable under
domestic law or under administrative rulings, or compliance with which is necessary to obtain an
advantage, and which require:

(a) the purchase or use by an enterprise of products of domestic origin or from any domestic
source, whether specified in terms of particular products, in terms of volume or value of products, or
in terms of proportion of volume or value of its local production; or

(b) that an enterprise's purchases or use of imported products be limited to an amount related
to the volume or value of local products that it exports.

2. TRIMS that are inconsistent with the obligations of general elimination of quantitative
restrictions provided for in paragraph 1 of Article XI of GATT 1994 include those which are
mandatory or enforceable under domestic laws or under administrative rulings, or compliance with
which is necessary to obtain an advantage, and which restrict:

(a) the importation by an enterprise of products used in or related to the local production that
it exports;

(b) the importation by an enterprise of products used in or related to its local production by
restricting its access to foreign exchange inflows attributable to the enterprise; or

(c) the exportation or sale for export specified in terms of particular products, in terms of
volume or value of products, or in terms of a preparation of volume or value of its local production.
(Annex to the Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay Round Legal
Documents, p. 22125, emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:

The products of the territory of any contracting party imported into the territory of any other
contracting party shall be accorded treatment no less favorable than that accorded to like products
of national origin in respect of laws, regulations and requirements affecting their internal sale,
offering for sale, purchase, transportation, distribution or use, the provisions of this paragraph shall
not prevent the application of differential internal transportation charges which are based
exclusively on the economic operation of the means of transport and not on the nationality of the
product." (Article III, GATT 1947, as amended by the Protocol Modifying Part II, and Article XXVI of
GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement
on Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p. 177, emphasis supplied).

(b) In the area of trade related aspects of intellectual property rights (TRIPS, for brevity):

Each Member shall accord to the nationals of other Members treatment no less favourable than that
it accords to its own nationals with regard to the protection of intellectual property. . . (par. 1 Article
3, Agreement on Trade-Related Aspect of Intellectual Property rights, Vol. 31, Uruguay Round, Legal
Instruments, p. 25432 (emphasis supplied)

(c) In the area of the General Agreement on Trade in Services:

National Treatment

1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications set
out therein, each Member shall accord to services and service suppliers of any other Member, in
respect of all measures affecting the supply of services, treatment no less favourable than it accords
to its own like services and service suppliers.

2. A Member may meet the requirement of paragraph I by according to services and service
suppliers of any other Member, either formally suppliers of any other Member, either formally
identical treatment or formally different treatment to that it accords to its own like services and
service suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if
it modifies the conditions of completion in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member. (Article XVII, General Agreement
on Trade in Services, Vol. 28, Uruguay Round Legal Instruments, p. 22610 emphasis supplied).

It is petitioners' position that the foregoing "national treatment" and "parity provisions" of the WTO
Agreement "place nationals and products of member countries on the same footing as Filipinos and
local products," in contravention of the "Filipino First" policy of the Constitution. They allegedly
render meaningless the phrase "effectively controlled by Filipinos." The constitutional conflict
becomes more manifest when viewed in the context of the clear duty imposed on the Philippines as
a WTO member to ensure the conformity of its laws, regulations and administrative procedures with
its obligations as provided in the annexed agreements. 20 Petitioners further argue that these
provisions contravene constitutional limitations on the role exports play in national development
and negate the preferential treatment accorded to Filipino labor, domestic materials and locally
produced goods.

On the other hand, respondents through the Solicitor General counter (1) that such Charter
provisions are not self-executing and merely set out general policies; (2) that these nationalistic
portions of the Constitution invoked by petitioners should not be read in isolation but should be
related to other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read
properly, the cited WTO clauses do not conflict with Constitution; and (4) that the WTO Agreement
contains sufficient provisions to protect developing countries like the Philippines from the harshness
of sudden trade liberalization.

We shall now discuss and rule on these arguments.

Declaration of Principles
Not Self-Executing

By its very title, Article II of the Constitution is a "declaration of principles and state policies." The
counterpart of this article in the 1935 Constitution 21 is called the "basic political creed of the
nation" by Dean Vicente Sinco. 22 These principles in Article II are not intended to be self-executing
principles ready for enforcement through the courts. 23 They are used by the judiciary as aids or as
guides in the exercise of its power of judicial review, and by the legislature in its enactment of laws.
As held in the leading case of Kilosbayan, Incorporated vs. Morato, 24 the principles and state
policies enumerated in Article II and some sections of Article XII are not "self-executing provisions,
the disregard of which can give rise to a cause of action in the courts. They do not embody judicially
enforceable constitutional rights but guidelines for legislation."

In the same light, we held in Basco vs. Pagcor 25 that broad constitutional principles need legislative
enactments to implement the, thus:

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely
statements of principles and policies. As such, they are basically not self-executing, meaning a law
should be passed by Congress to clearly define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for
enforcement through the courts. They were rather directives addressed to the executive and to the
legislature. If the executive and the legislature failed to heed the directives of the article, the
available remedy was not judicial but political. The electorate could express their displeasure with
the failure of the executive and the legislature through the language of the ballot. (Bernas, Vol. II, p.
2).


The reasons for denying a cause of action to an alleged infringement of board constitutional
principles are sourced from basic considerations of due process and the lack of judicial authority to
wade "into the uncharted ocean of social and economic policy making." Mr. Justice Florentino P.
Feliciano in his concurring opinion in Oposa vs. Factoran, Jr., 26 explained these reasons as follows:

My suggestion is simply that petitioners must, before the trial court, show a more specific legal right
a right cast in language of a significantly lower order of generality than Article II (15) of the
Constitution that is or may be violated by the actions, or failures to act, imputed to the public
respondent by petitioners so that the trial court can validly render judgment grating all or part of the
relief prayed for. To my mind, the court should be understood as simply saying that such a more
specific legal right or rights may well exist in our corpus of law, considering the general policy
principles found in the Constitution and the existence of the Philippine Environment Code, and that
the trial court should have given petitioners an effective opportunity so to demonstrate, instead of
aborting the proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a cause of action be
a specific, operable legal right, rather than a constitutional or statutory policy, for at least two (2)
reasons. One is that unless the legal right claimed to have been violated or disregarded is given
specification in operational terms, defendants may well be unable to defend themselves intelligently
and effectively; in other words, there are due process dimensions to this matter.

The second is a broader-gauge consideration where a specific violation of law or applicable
regulation is not alleged or proved, petitioners can be expected to fall back on the expanded
conception of judicial power in the second paragraph of Section 1 of Article VIII of the Constitution
which reads:

Sec. 1. . . .

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)

When substantive standards as general as "the right to a balanced and healthy ecology" and "the
right to health" are combined with remedial standards as broad ranging as "a grave abuse of
discretion amounting to lack or excess of jurisdiction," the result will be, it is respectfully submitted,
to propel courts into the uncharted ocean of social and economic policy making. At least in respect
of the vast area of environmental protection and management, our courts have no claim to special
technical competence and experience and professional qualification. Where no specific, operable
norms and standards are shown to exist, then the policy making departments the legislative and
executive departments must be given a real and effective opportunity to fashion and promulgate
those norms and standards, and to implement them before the courts should intervene.

Economic Nationalism Should Be Read with
Other Constitutional Mandates to Attain
Balanced Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles
relating to the national economy and patrimony, should be read and understood in relation to the
other sections in said article, especially Secs. 1 and 13 thereof which read:

Sec. 1. The goals of the national economy are a more equitable distribution of opportunities,
income, and wealth; a sustained increase in the amount of goods and services produced by the
nation for the benefit of the people; and an expanding productivity as the key to raising the quality
of life for all especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of human and
natural resources, and which are competitive in both domestic and foreign markets. However, the
State shall protect Filipino enterprises against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given
optimum opportunity to develop. . . .

xxx xxx xxx

Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms
and arrangements of exchange on the basis of equality and reciprocity.

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic
development, as follows:

1. A more equitable distribution of opportunities, income and wealth;

2. A sustained increase in the amount of goods and services provided by the nation for the
benefit of the people; and

3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.

With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by
expressing preference in favor of qualified Filipinos "in the grant of rights, privileges and concessions
covering the national economy and patrimony" 27 and in the use of "Filipino labor, domestic
materials and locally-produced goods"; (2) by mandating the State to "adopt measures that help
make them competitive; 28 and (3) by requiring the State to "develop a self-reliant and independent
national economy effectively controlled by Filipinos." 29 In similar language, the Constitution takes
into account the realities of the outside world as it requires the pursuit of "a trade policy that serves
the general welfare and utilizes all forms and arrangements of exchange on the basis of equality ad
reciprocity"; 30 and speaks of industries "which are competitive in both domestic and foreign
markets" as well as of the protection of "Filipino enterprises against unfair foreign competition and
trade practices."

It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et
al., 31 this Court held that "Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory,
positive command which is complete in itself and which needs no further guidelines or
implementing laws or rule for its enforcement. From its very words the provision does not require
any legislation to put it in operation. It is per se judicially enforceable." However, as the
constitutional provision itself states, it is enforceable only in regard to "the grants of rights,
privileges and concessions covering national economy and patrimony" and not to every aspect of
trade and commerce. It refers to exceptions rather than the rule. The issue here is not whether this
paragraph of Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a rule, there
are enough balancing provisions in the Constitution to allow the Senate to ratify the Philippine
concurrence in the WTO Agreement. And we hold that there are.

All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair. 32 In other words, the Constitution
did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and
services in the development of the Philippine economy. While the Constitution does not encourage
the unlimited entry of foreign goods, services and investments into the country, it does not prohibit
them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on
foreign competition that is unfair.

WTO Recognizes Need to
Protect Weak Economies

Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to
protect weak and developing economies, which comprise the vast majority of its members. Unlike in
the UN where major states have permanent seats and veto powers in the Security Council, in the
WTO, decisions are made on the basis of sovereign equality, with each member's vote equal in
weight to that of any other. There is no WTO equivalent of the UN Security Council.

WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial Conference
and the General Council shall be taken by the majority of the votes cast, except in cases of
interpretation of the Agreement or waiver of the obligation of a member which would require three
fourths vote. Amendments would require two thirds vote in general. Amendments to MFN
provisions and the Amendments provision will require assent of all members. Any member may
withdraw from the Agreement upon the expiration of six months from the date of notice of
withdrawals. 33

Hence, poor countries can protect their common interests more effectively through the WTO than
through one-on-one negotiations with developed countries. Within the WTO, developing countries
can form powerful blocs to push their economic agenda more decisively than outside the
Organization. This is not merely a matter of practical alliances but a negotiating strategy rooted in
law. Thus, the basic principles underlying the WTO Agreement recognize the need of developing
countries like the Philippines to "share in the growth in international trade commensurate with the
needs of their economic development." These basic principles are found in the preamble 34 of the
WTO Agreement as follows:

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should be conducted
with a view to raising standards of living, ensuring full employment and a large and steadily growing
volume of real income and effective demand, and expanding the production of and trade in goods
and services, while allowing for the optimal use of the world's resources in accordance with the
objective of sustainable development, seeking both to protect and preserve the environment and to
enhance the means for doing so in a manner consistent with their respective needs and concerns at
different levels of economic development,

Recognizing further that there is need for positive efforts designed to ensure that developing
countries, and especially the least developed among them, secure a share in the growth in
international trade commensurate with the needs of their economic development,

Being desirous of contributing to these objectives by entering into reciprocal and mutually
advantageous arrangements directed to the substantial reduction of tariffs and other barriers to
trade and to the elimination of discriminatory treatment in international trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system
encompassing the General Agreement on Tariffs and Trade, the results of past trade liberalization
efforts, and all of the results of the Uruguay Round of Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying this multilateral
trading system, . . . (emphasis supplied.)

Specific WTO Provisos
Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic
principles, the WTO Agreement grants developing countries a more lenient treatment, giving their
domestic industries some protection from the rush of foreign competition. Thus, with respect to
tariffs in general, preferential treatment is given to developing countries in terms of the amount of
tariff reduction and the period within which the reduction is to be spread out. Specifically, GATT
requires an average tariff reduction rate of 36% for developed countries to be effected within a
period of six (6) years while developing countries including the Philippines are required to
effect an average tariff reduction of only 24% within ten (10) years.

In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to
agricultural products by 20% over six (6) years, as compared to only 13% for developing countries to
be effected within ten (10) years.

In regard to export subsidy for agricultural products, GATT requires developed countries to reduce
their budgetary outlays for export subsidy by 36% and export volumes receiving export subsidy by
21% within a period of six (6) years. For developing countries, however, the reduction rate is only
two-thirds of that prescribed for developed countries and a longer period of ten (10) years within
which to effect such reduction.

Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade
practices including anti-dumping measures, countervailing measures and safeguards against import
surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can
avail of these measures. There is hardly therefore any basis for the statement that under the WTO,
local industries and enterprises will all be wiped out and that Filipinos will be deprived of control of
the economy. Quite the contrary, the weaker situations of developing nations like the Philippines
have been taken into account; thus, there would be no basis to say that in joining the WTO, the
respondents have gravely abused their discretion. True, they have made a bold decision to steer the
ship of state into the yet uncharted sea of economic liberalization. But such decision cannot be set
aside on the ground of grave abuse of discretion, simply because we disagree with it or simply
because we believe only in other economic policies. As earlier stated, the Court in taking jurisdiction
of this case will not pass upon the advantages and disadvantages of trade liberalization as an
economic policy. It will only perform its constitutional duty of determining whether the Senate
committed grave abuse of discretion.

Constitution Does Not
Rule Out Foreign Competition

Furthermore, the constitutional policy of a "self-reliant and independent national economy" 35 does
not necessarily rule out the entry of foreign investments, goods and services. It contemplates
neither "economic seclusion" nor "mendicancy in the international community." As explained by
Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly aware of
overdependence on external assistance for even its most basic needs. It does not mean autarky or
economic seclusion; rather, it means avoiding mendicancy in the international community.
Independence refers to the freedom from undue foreign control of the national economy, especially
in such strategic industries as in the development of natural resources and public utilities. 36

The WTO reliance on "most favored nation," "national treatment," and "trade without
discrimination" cannot be struck down as unconstitutional as in fact they are rules of equality and
reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on "equality
and reciprocity," 37 the fundamental law encourages industries that are "competitive in both
domestic and foreign markets," thereby demonstrating a clear policy against a sheltered domestic
trade environment, but one in favor of the gradual development of robust industries that can
compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises
have shown capability and tenacity to compete internationally. And given a free trade environment,
Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow
and to prosper against the best offered under a policy of laissez faire.

Constitution Favors Consumers,
Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or enterprise, nor
does it contain any specific pronouncement that Filipino companies should be pampered with a total
proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims to
make available to the Filipino consumer the best goods and services obtainable anywhere in the
world at the most reasonable prices. Consequently, the question boils down to whether WTO/GATT
will favor the general welfare of the public at large.

Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?

Will WTO/GATT succeed in promoting the Filipinos' general welfare because it will as promised by
its promoters expand the country's exports and generate more employment?

Will it bring more prosperity, employment, purchasing power and quality products at the most
reasonable rates to the Filipino public?

The responses to these questions involve "judgment calls" by our policy makers, for which they are
answerable to our people during appropriate electoral exercises. Such questions and the answers
thereto are not subject to judicial pronouncements based on grave abuse of discretion.

Constitution Designed to Meet
Future Events and Contingencies

No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and
ratified in 1987. That does not mean however that the Charter is necessarily flawed in the sense that
its framers might not have anticipated the advent of a borderless world of business. By the same
token, the United Nations was not yet in existence when the 1935 Constitution became effective.
Did that necessarily mean that the then Constitution might not have contemplated a diminution of
the absoluteness of sovereignty when the Philippines signed the UN Charter, thereby effectively
surrendering part of its control over its foreign relations to the decisions of various UN organs like
the Security Council?

It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of
contemporary events. They should be interpreted to cover even future and unknown circumstances.
It is to the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels
but at the same time bend with the refreshing winds of change necessitated by unfolding events. As
one eminent political law writer and respected jurist 38 explains:

The Constitution must be quintessential rather than superficial, the root and not the blossom, the
base and frame-work only of the edifice that is yet to rise. It is but the core of the dream that must
take shape, not in a twinkling by mandate of our delegates, but slowly "in the crucible of Filipino
minds and hearts," where it will in time develop its sinews and gradually gather its strength and
finally achieve its substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown
from the brow of the Constitutional Convention, nor can it conjure by mere fiat an instant Utopia. It
must grow with the society it seeks to re-structure and march apace with the progress of the race,
drawing from the vicissitudes of history the dynamism and vitality that will keep it, far from
becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the nation.

Third Issue: The WTO Agreement and Legislative Power

The WTO Agreement provides that "(e)ach Member shall ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the annexed
Agreements." 39 Petitioners maintain that this undertaking "unduly limits, restricts and impairs
Philippine sovereignty, specifically the legislative power which under Sec. 2, Article VI of the 1987
Philippine Constitution is vested in the Congress of the Philippines. It is an assault on the sovereign
powers of the Philippines because this means that Congress could not pass legislation that will be
good for our national interest and general welfare if such legislation will not conform with the WTO
Agreement, which not only relates to the trade in goods . . . but also to the flow of investments and
money . . . as well as to a whole slew of agreements on socio-cultural matters . . . 40

More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is
lodged in the Congress. 41 And while the Constitution allows Congress to authorize the President to
fix tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts,
such authority is subject to "specified limits and . . . such limitations and restrictions" as Congress
may provide, 42 as in fact it did under Sec. 401 of the Tariff and Customs Code.

Sovereignty Limited by
International Law and Treaties

This Court notes and appreciates the ferocity and passion by which petitioners stressed their
arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-
encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily
agreed to by the Philippines, expressly or impliedly, as a member of the family of nations.
Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the
rest of the world. In its Declaration of Principles and State Policies, the Constitution "adopts the
generally accepted principles of international law as part of the law of the land, and adheres to the
policy of peace, equality, justice, freedom, cooperation and amity, with all nations." 43 By the
doctrine of incorporation, the country is bound by generally accepted principles of international law,
which are considered to be automatically part of our own laws. 44 One of the oldest and most
fundamental rules in international law is pacta sunt servanda international agreements must be
performed in good faith. "A treaty engagement is not a mere moral obligation but creates a legally
binding obligation on the parties . . . 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." 45

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects of their state power in exchange for greater
benefits granted by or derived from a convention or pact. After all, states, like individuals, live with
coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree
to limit the exercise of their otherwise absolute rights. Thus, treaties have been used to record
agreements between States concerning such widely diverse matters as, for example, the lease of
naval bases, the sale or cession of territory, the termination of war, the regulation of conduct of
hostilities, the formation of alliances, the regulation of commercial relations, the settling of claims,
the laying down of rules governing conduct in peace and the establishment of international
organizations. 46 The sovereignty of a state therefore cannot in fact and in reality be considered
absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature of
membership in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put
by John F. Kennedy, "Today, no nation can build its destiny alone. The age of self-sufficient
nationalism is over. The age of interdependence is here." 47

UN Charter and Other Treaties
Limit Sovereignty

Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented
to restrict its sovereign rights under the "concept of sovereignty as auto-limitation." 47-A Under
Article 2 of the UN Charter, "(a)ll members shall give the United Nations every assistance in any
action it takes in accordance with the present Charter, and shall refrain from giving assistance to any
state against which the United Nations is taking preventive or enforcement action." Such assistance
includes payment of its corresponding share not merely in administrative expenses but also in
expenditures for the peace-keeping operations of the organization. In its advisory opinion of July 20,
1961, the International Court of Justice held that money used by the United Nations Emergency
Force in the Middle East and in the Congo were "expenses of the United Nations" under Article 17,
paragraph 2, of the UN Charter. Hence, all its members must bear their corresponding share in such
expenses. In this sense, the Philippine Congress is restricted in its power to appropriate. It is
compelled to appropriate funds whether it agrees with such peace-keeping expenses or not. So too,
under Article 105 of the said Charter, the UN and its representatives enjoy diplomatic privileges and
immunities, thereby limiting again the exercise of sovereignty of members within their own territory.
Another example: although "sovereign equality" and "domestic jurisdiction" of all members are set
forth as underlying principles in the UN Charter, such provisos are however subject to enforcement
measures decided by the Security Council for the maintenance of international peace and security
under Chapter VII of the Charter. A final example: under Article 103, "(i)n the event of a conflict
between the obligations of the Members of the United Nations under the present Charter and their
obligations under any other international agreement, their obligation under the present charter shall
prevail," thus unquestionably denying the Philippines as a member the sovereign power to
make a choice as to which of conflicting obligations, if any, to honor.

Apart from the UN Treaty, the Philippines has entered into many other international pacts both
bilateral and multilateral that involve limitations on Philippine sovereignty. These are enumerated
by the Solicitor General in his Compliance dated October 24, 1996, as follows:

(a) Bilateral convention with the United States regarding taxes on income, where the
Philippines agreed, among others, to exempt from tax, income received in the Philippines by, among
others, the Federal Reserve Bank of the United States, the Export/Import Bank of the United States,
the Overseas Private Investment Corporation of the United States. Likewise, in said convention,
wages, salaries and similar remunerations paid by the United States to its citizens for labor and
personal services performed by them as employees or officials of the United States are exempt from
income tax by the Philippines.

(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of double
taxation with respect to taxes on income.

(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double taxation.

(d) Bilateral convention with the French Republic for the avoidance of double taxation.

(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt from
all customs duties, inspection fees and other duties or taxes aircrafts of South Korea and the regular
equipment, spare parts and supplies arriving with said aircrafts.

(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt from
customs duties, excise taxes, inspection fees and other similar duties, taxes or charges fuel,
lubricating oils, spare parts, regular equipment, stores on board Japanese aircrafts while on
Philippine soil.

(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian air
carriers the same privileges as those granted to Japanese and Korean air carriers under separate air
service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the Philippines
exempted Israeli nationals from the requirement of obtaining transit or visitor visas for a sojourn in
the Philippines not exceeding 59 days.

(i) Bilateral agreement with France exempting French nationals from the requirement of
obtaining transit and visitor visa for a sojourn not exceeding 59 days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that premises of
Special Missions in the Philippines are inviolable and its agents can not enter said premises without
consent of the Head of Mission concerned. Special Missions are also exempted from customs duties,
taxes and related charges.

(k) Multilateral convention on the Law of Treaties. In this convention, the Philippines agreed to
be governed by the Vienna Convention on the Law of Treaties.

(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of the
International Court of Justice. The International Court of Justice has jurisdiction in all legal disputes
concerning the interpretation of a treaty, any question of international law, the existence of any fact
which, if established, would constitute a breach "of international obligation."

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign
powers of taxation, eminent domain and police power. The underlying consideration in this partial
surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the
same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity
characterizes the Philippine commitments under WTO-GATT.

International treaties, whether relating to nuclear disarmament, human rights, the environment, the
law of the sea, or trade, constrain domestic political sovereignty through the assumption of external
obligations. But unless anarchy in international relations is preferred as an alternative, in most cases
we accept that the benefits of the reciprocal obligations involved outweigh the costs associated with
any loss of political sovereignty. (T)rade treaties that structure relations by reference to durable,
well-defined substantive norms and objective dispute resolution procedures reduce the risks of
larger countries exploiting raw economic power to bully smaller countries, by subjecting power
relations to some form of legal ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple fact that liberalization will
provide access to a larger set of potential new trading relationship than in case of the larger country
gaining enhanced success to the smaller country's market. 48

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived
without violating the Constitution, based on the rationale that the Philippines "adopts the generally
accepted principles of international law as part of the law of the land and adheres to the policy of . . .
cooperation and amity with all nations."

Fourth Issue: The WTO Agreement and Judicial Power

Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 49 intrudes on the
power of the Supreme Court to promulgate rules concerning pleading, practice and procedures. 50

To understand the scope and meaning of Article 34, TRIPS, 51 it will be fruitful to restate its full text
as follows:

Article 34

Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of the
owner referred to in paragraph 1 (b) of Article 28, if the subject matter of a patent is a process for
obtaining a product, the judicial authorities shall have the authority to order the defendant to prove
that the process to obtain an identical product is different from the patented process. Therefore,
Members shall provide, in at least one of the following circumstances, that any identical product
when produced without the consent of the patent owner shall, in the absence of proof to the
contrary, be deemed to have been obtained by the patented process:

(a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was made by the process and
the owner of the patent has been unable through reasonable efforts to determine the process
actually used.

2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall
be on the alleged infringer only if the condition referred to in subparagraph (a) is fulfilled or only if
the condition referred to in subparagraph (b) is fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in
protecting their manufacturing and business secrets shall be taken into account.

From the above, a WTO Member is required to provide a rule of disputable (not the words "in the
absence of proof to the contrary") presumption that a product shown to be identical to one
produced with the use of a patented process shall be deemed to have been obtained by the (illegal)
use of the said patented process, (1) where such product obtained by the patented product is new,
or (2) where there is "substantial likelihood" that the identical product was made with the use of the
said patented process but the owner of the patent could not determine the exact process used in
obtaining such identical product. Hence, the "burden of proof" contemplated by Article 34 should
actually be understood as the duty of the alleged patent infringer to overthrow such presumption.
Such burden, properly understood, actually refers to the "burden of evidence" (burden of going
forward) placed on the producer of the identical (or fake) product to show that his product was
produced without the use of the patented process.

The foregoing notwithstanding, the patent owner still has the "burden of proof" since, regardless of
the presumption provided under paragraph 1 of Article 34, such owner still has to introduce
evidence of the existence of the alleged identical product, the fact that it is "identical" to the
genuine one produced by the patented process and the fact of "newness" of the genuine product or
the fact of "substantial likelihood" that the identical product was made by the patented process.

The foregoing should really present no problem in changing the rules of evidence as the present law
on the subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a
similar presumption in cases of infringement of patented design or utility model, thus:

Sec. 60. Infringement. Infringement of a design patent or of a patent for utility model shall consist
in unauthorized copying of the patented design or utility model for the purpose of trade or industry
in the article or product and in the making, using or selling of the article or product copying the
patented design or utility model. Identity or substantial identity with the patented design or utility
model shall constitute evidence of copying. (emphasis supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption
applies only if (1) the product obtained by the patented process in NEW or (2) there is a substantial
likelihood that the identical product was made by the process and the process owner has not been
able through reasonable effort to determine the process used. Where either of these two provisos
does not obtain, members shall be free to determine the appropriate method of implementing the
provisions of TRIPS within their own internal systems and processes.

By and large, the arguments adduced in connection with our disposition of the third issue
derogation of legislative power will apply to this fourth issue also. Suffice it to say that the
reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does
not contain an unreasonable burden, consistent as it is with due process and the concept of
adversarial dispute settlement inherent in our judicial system.

So too, since the Philippine is a signatory to most international conventions on patents, trademarks
and copyrights, the adjustment in legislation and rules of procedure will not be substantial. 52

Fifth Issue: Concurrence Only in the WTO Agreement and
Not in Other Documents Contained in the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes but not in
the other documents referred to in the Final Act, namely the Ministerial Declaration and Decisions
and the Understanding on Commitments in Financial Services is defective and insufficient and
thus constitutes abuse of discretion. They submit that such concurrence in the WTO Agreement
alone is flawed because it is in effect a rejection of the Final Act, which in turn was the document
signed by Secretary Navarro, in representation of the Republic upon authority of the President. They
contend that the second letter of the President to the Senate 53 which enumerated what constitutes
the Final Act should have been the subject of concurrence of the Senate.

"A final act, sometimes called protocol de cloture, is an instrument which records the winding up of
the proceedings of a diplomatic conference and usually includes a reproduction of the texts of
treaties, conventions, recommendations and other acts agreed upon and signed by the
plenipotentiaries attending the conference." 54 It is not the treaty itself. It is rather a summary of
the proceedings of a protracted conference which may have taken place over several years. The text
of the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations" is
contained in just one page 55 in Vol. I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations. By signing said Final Act, Secretary Navarro as representative of the Republic of the
Philippines undertook:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective
competent authorities with a view to seeking approval of the Agreement in accordance with their
procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required
from its signatories, namely, concurrence of the Senate in the WTO Agreement.

The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They
were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that
representatives of the members can meet "to give effect to those provisions of this Agreement
which invoke joint action, and generally with a view to facilitating the operation and furthering the
objectives of this Agreement." 56

The Understanding on Commitments in Financial Services also approved in Marrakesh does not
apply to the Philippines. It applies only to those 27 Members which "have indicated in their
respective schedules of commitments on standstill, elimination of monopoly, expansion of operation
of existing financial service suppliers, temporary entry of personnel, free transfer and processing of
information, and national treatment with respect to access to payment, clearing systems and
refinancing available in the normal course of business." 57

On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed
included as its integral parts, 58 as follows:

Article II

Scope of the WTO

1. The WTO shall provide the common institutional frame-work for the conduct of trade
relations among its Members in matters to the agreements and associated legal instruments
included in the Annexes to this Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3,
(hereinafter referred to as "Multilateral Agreements") are integral parts of this Agreement, binding
on all Members.

3. The Agreements and associated legal instruments included in Annex 4 (hereinafter referred
to as "Plurilateral Trade Agreements") are also part of this Agreement for those Members that have
accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create
either obligation or rights for Members that have not accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A (hereinafter
referred to as "GATT 1994") is legally distinct from the General Agreement on Tariffs and Trade,
dated 30 October 1947, annexed to the Final Act adopted at the conclusion of the Second Session of
the Preparatory Committee of the United Nations Conference on Trade and Employment, as
subsequently rectified, amended or modified (hereinafter referred to as "GATT 1947").

It should be added that the Senate was well-aware of what it was concurring in as shown by the
members' deliberation on August 25, 1994. After reading the letter of President Ramos dated August
11, 1994, 59 the senators
of the Republic minutely dissected what the Senate was concurring in, as follows: 60

THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first
day hearing of this Committee yesterday. Was the observation made by Senator Taada that what
was submitted to the Senate was not the agreement on establishing the World Trade Organization
by the final act of the Uruguay Round which is not the same as the agreement establishing the
World Trade Organization? And on that basis, Senator Tolentino raised a point of order which,
however, he agreed to withdraw upon understanding that his suggestion for an alternative solution
at that time was acceptable. That suggestion was to treat the proceedings of the Committee as
being in the nature of briefings for Senators until the question of the submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new . . . is he making a new
submission which improves on the clarity of the first submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no
misunderstanding, it was his intention to clarify all matters by giving this letter.

THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Taada and later on Senator Tolentino since they were the
ones that raised this question yesterday?

Senator Taada, please.

SEN. TAADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted
to the Senate for ratification is not the Final Act of the Uruguay Round, but rather the Agreement on
the World Trade Organization as well as the Ministerial Declarations and Decisions, and the
Understanding and Commitments in Financial Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And after him
Senator Neptali Gonzales and Senator Lina.

SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted to us but I
saw the draft of his earlier, and I think it now complies with the provisions of the Constitution, and
with the Final Act itself . The Constitution does not require us to ratify the Final Act. It requires us to
ratify the Agreement which is now being submitted. The Final Act itself specifies what is going to be
submitted to with the governments of the participants.

In paragraph 2 of the Final Act, we read and I quote:

By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO
Agreement for the consideration of the respective competent authorities with a view to seeking
approval of the Agreement in accordance with their procedures.


In other words, it is not the Final Act that was agreed to be submitted to the governments for
ratification or acceptance as whatever their constitutional procedures may provide but it is the
World Trade Organization Agreement. And if that is the one that is being submitted now, I think it
satisfies both the Constitution and the Final Act itself .

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And
they had been adequately reflected in the journal of yesterday's session and I don't see any need for
repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any
comment on this?

SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales out of the
abundance of question. Then the new submission is, I believe, stating the obvious and therefore I
have no further comment to make.

Epilogue

In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are
invoking this Court's constitutionally imposed duty "to determine whether or not there has been
grave abuse of discretion amounting to lack or excess of jurisdiction" on the part of the Senate in
giving its concurrence therein via Senate Resolution No. 97. Procedurally, a writ of certiorari
grounded on grave abuse of discretion may be issued by the Court under Rule 65 of the Rules of
Court when it is amply shown that petitioners have no other plain, speedy and adequate remedy in
the ordinary course of law.

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. 61 Mere abuse of discretion is not enough. It must be grave abuse
of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion
or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 62
Failure on the part of the petitioner to show grave abuse of discretion will result in the dismissal of
the petition. 63

In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one
of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a
constitutional body independent and coordinate, and thus its actions are presumed regular and
done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow
such presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted
definition of grave abuse of discretion and the presumption of regularity in the Senate's processes,
this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate's exercise
of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the
Constitution. 64

It is true, as alleged by petitioners, that broad constitutional principles require the State to develop
an independent national economy effectively controlled by Filipinos; and to protect and/or prefer
Filipino labor, products, domestic materials and locally produced goods. But it is equally true that
such principles while serving as judicial and legislative guides are not in themselves sources of
causes of action. Moreover, there are other equally fundamental constitutional principles relied
upon by the Senate which mandate the pursuit of a "trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign markets," thereby
justifying its acceptance of said treaty. So too, the alleged impairment of sovereignty in the exercise
of legislative and judicial powers is balanced by the adoption of the generally accepted principles of
international law as part of the law of the land and the adherence of the Constitution to the policy of
cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to
the WTO Agreement thereby making it "a part of the law of the land" is a legitimate exercise of its
sovereign duty and power. We find no "patent and gross" arbitrariness or despotism "by reason of
passion or personal hostility" in such exercise. It is not impossible to surmise that this Court, or at
least some of its members, may even agree with petitioners that it is more advantageous to the
national interest to strike down Senate Resolution No. 97. But that is not a legal reason to attribute
grave abuse of discretion to the Senate and to nullify its decision. To do so would constitute grave
abuse in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a valid
exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside the
realm of judicial inquiry and review. That is a matter between the elected policy makers and the
people. As to whether the nation should join the worldwide march toward trade liberalization and
economic globalization is a matter that our people should determine in electing their policy makers.
After all, the WTO Agreement allows withdrawal of membership, should this be the political desire
of a member.

The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance 65 where "the East will become the dominant region of the world economically,
politically and culturally in the next century." He refers to the "free market" espoused by WTO as the
"catalyst" in this coming Asian ascendancy. There are at present about 31 countries including China,
Russia and Saudi Arabia negotiating for membership in the WTO. Notwithstanding objections against
possible limitations on national sovereignty, the WTO remains as the only viable structure for
multilateral trading and the veritable forum for the development of international trade law. The
alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly enriched with
original membership, keenly aware of the advantages and disadvantages of globalization with its on-
line experience, and endowed with a vision of the future, the Philippines now straddles the
crossroads of an international strategy for economic prosperity and stability in the new millennium.
Let the people, through their duly authorized elected officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza, Francisco,
Hermosisima, Jr. and Torres, Jr., JJ., concur.

Padilla and Vitug, JJ., concur in the result.

Footnotes

1 In Annex "A" of her Memorandum, dated August 8, 1996, received by this Court on August
12, 1996, Philippine Ambassador to the United Nations, World Trade Organization and other
international organizations Lilia R. Bautista (hereafter referred to as "Bautista Paper") submitted a
"46-year Chronology" of GATT as follows:

1947 The birth of GATT. On 30 October 1947, the General Agreement on Tariffs and Trade (GATT)
was signed by 23 nations at the Palais des Nations in Geneva. The Agreement contained tariff
concessions agreed to in the first multilateral trade negotiations and a set of rules designed to
prevent these concessions from being frustrated by restrictive trade measures.

The 23 founding contracting parties were members of the Preparatory Committee established by the
United Nations Economic and Social Council in 1946 to draft the charter of the International Trade
Organization (ITO). The ITO was envisaged as the final leg of a triad of post-War economic agencies
(the other two were the International Monetary Fund and the International Bank for Reconstruction
later the World Bank).

In parallel with this task, the Committee members decided to negotiate tariff concessions among
themselves. From April to October 1947, the participants completed some 123 negotiations and
established 20 schedules containing the tariff reductions and bindings which became an integral part
of GATT. These schedules resulting from the first Round covered some 45,000 tariff concessions and
about $10 billion in trade.

GATT was conceived as an interim measure that put into effect the commercial-policy provisions of
the ITO. In November, delegations from 56 countries met in Havana, Cuba, to consider the to ITO
draft as a whole. After long and difficult negotiations, some 53 countries signed the Final Act
authenticating the text of the Havana Charter in March 1948. There was no commitment, however,
from governments to ratification and, in the end, the ITO was stillborn, leaving GATT as the only
international instrument governing the conduct of world trade.

1948 Entry into force. On 1 January 1948, GATT entered into force. The 23 founding
members were: Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China, Cuba,
Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan,
Southern Rhodesia, Syria, South Africa, United Kingdom and the United States. The first Session of
the Contracting Parties was held from February to March in Havana, Cuba. The secretariat of the
Interim Commission for the ITO, which served as the ad hoc secretariat of GATT, moved from Lake
Placid, New York, to Geneva. The Contracting Parties held their second session in Geneva from
August to September.

1949 Second Round at Annecy. During the second Round of trade negotiations, held from
April to August at Annecy, France, the contracting parties exchanged some 5,000 tariff concessions.
At their third Session, they also dealt with the accession of ten more countries.

1950 Third Round at Torquay. From September 1950 to April 1951, the contracting parties
exchanged some 8,700 tariff concessions in the English town, yielding tariff reduction of about 25
per cent in relation to the 1948 level. Four more countries acceded to GATT. During the fifth Session
of the Contracting Parties, the United States indicated that the ITO Charter would not be re-
submitted to the US Congress; this, in effect, meant that ITO would not come into operation.

1956 Fourth Round at Geneva. The fourth Round was completed in May and produced
some $2.5 billion worth of tariff reductions. At the beginning of the year, the GATT commercial
policy course for officials of developing countries was inaugurated.

1958 The Haberler Report. GATT published Trends in International Trade in October. Known as
the "Haberler Report" in honour of Professor Gottfried Haberler, the chairman of the panel of
eminent economists, it provided initial guidelines for the work of GATT. The Contracting Parties at
their 13th Sessions, attended by Ministers, subsequently established three committees in GATT:
Committee I to convene a further tariff negotiating conference; Committee II to review the
agricultural policies of member governments and Committee III to tackle the problem facing
developing countries in their trade. The establishment of the European Economic Community during
the previous year also demanded large-scale tariff negotiations under Article XXIV: 6 of the General
Agreement.

1960 The Dillon Round. The fifth Round opened in September and was divided into two
phases: the first was concerned with negotiations with EEC member states for the creation of a
single schedule of concessions for the Community based on its Common External Tariff; and the
second was a further general round of tariff negotiations. Named in honour of US Under-Secretary of
State Douglas Dillon who proposed the negotiations, the Round was concluded in July 1962 and
resulted in about 4,400 tariff concessions covering $4.9 billion of trade.

1961 The Short-Term Arrangement covering cotton textiles was agreed as an exception to the
GATT rules. The arrangement permitted the negotiation of quota restrictions affecting the exports of
cotton-producing countries. In 1962 the "Short Term" Arrangement became the "Long term"
Arrangement, lasting until 1974 when the Multifibre Arrangement entered into force.

1964 The Kennedy Round. Meeting at Ministerial level, a Trade Negotiations Committee
formally opened the Kennedy Round in May. In June 1967, the Round's Final Act was signed by some
50 participating countries which together accounted for 75 per cent of world trade. For the first
time, negotiations departed from the product-by-product approach used in the previous Rounds to
an across-the-board or linear method of cutting tariffs for industrial goods. The working hypothesis
of a 50 per cent target cut in tariff levels was achieved in many areas. Concessions covered an
estimated total value of trade of about $410 billion. Separate agreements were reached on grains,
chemical products and a Code on Anti-Dumping.

1965 A New Chapter. The early 1960s marked the accession to the general Agreement of many
newly-independent developing countries. In February, the Contracting Parties, meeting in a special
session, adopted the text of Part IV on Trade and Development. The additional chapter to the GATT
required developed countries to accord high priority to the reduction of trade barriers to products of
developing countries. A Committee on Trade and Development was established to oversee the
functioning of the new GATT provisions. In the preceding year, GATT had established the
International Trade Centre (ITC) to help developing countries in trade promotion and identification
of potential markets. Since 1968, the ITC had been jointly operated by GATT and the UN Conference
on Trade and Development (UNCTAD).

1973 The Tokyo Round. The seventh Round was launched by Ministers in September at the
Japanese capital. Some 99 countries participated in negotiating a comprehensive body of
agreements covering both tariff and non-tariff matters. At the end of the Round in November 1979,
participants exchanged tariff reductions and bindings which covered more than $300 billion of trade.
As a result of these cuts, the weighted average tariff on manufactured goods in the world's nine
major industrial markets declined from 7.0 to 4.7 per cent. Agreements were reached in the
following areas: subsidies and countervailing measures, technical barriers to trade, import licensing
procedures, government procurement, customs valuation, a revised anti-dumping code, trade in
bovine meat, trade in dairy products and trade in civil aircraft. The first concrete result of the Round
was the reduction of import duties and other trade barriers by industrial countries on tropical
products exported by developing countries.

1974 On 1 January 1974, the Arrangement Regarding International Trade in Textiles, otherwise
known as the Multifibre Arrangement (MFA), entered into force. It superseded the arrangements
that had been governing trade in cotton textiles since 1961. The MFA seeks to promote the
expansion and progressive liberalization of trade in textile products while at the same time avoiding
disruptive effects in individual markets and lines of production. The MFA was extended in 1978,
1982, 1986, 1991 and 1992. MFA members account for most of the world exports of textiles and
clothing which in 1986 amounted to US$128 billion.

1982 Ministerial Meeting. Meeting for the first time in nearly ten years, the GATT Ministers in
November at Geneva reaffirmed the validity of GATT rules for the conduct of international trade and
committed themselves to combating protectionist pressures. They also established a wide-ranging
work programme for the GATT which was to lay down the groundwork for a new Round 1986. The
Uruguay Round. The GATT Trade Ministers meeting at Punta del Este, Uruguay, launched the eighth
Round of trade negotiations on 20 September. The Punta del Este Declaration, while representing a
single political undertaking, was divided into two sections. The first covered negotiations on trade in
goods and the second initiated negotiation on trade in services. In the area of trade in goods, the
Ministers committed themselves to a "standstill" on new trade measures inconsistent with their
GATT obligations and to a "rollback" programme aimed at phasing out existing inconsistent
measures. Envisaged to last four years, negotiations started in early February 1987 in the following
areas tariffs, non-tariff measures, tropical products, natural resource-based products, textiles and
clothing, agriculture, subsidies, safe-guards, trade-related aspects of intellectual property rights
including trade in counterfeit goods, and trade-related investment measures. The work of other
groups included a review of GATT articles, the GATT dispute settlement procedure, the Tokyo Round
agreements, as well as the functioning of the GATT system as a whole.

1994 "GATT 1994" is the updated version of GATT 1947 and takes into account the substantive
and institutional changes negotiated in the Uruguay Round GATT 1994 is an integral part of the
World Trade Organization established on 1 January 1995. It is agreed that there be a one year
transition period during which certain GATT 1947 bodies and commitments would co-exist with
those of the World Trade Organization.

2 The Final Act was signed by representatives of 125 entities, namely Algeria, Angola, Antigua
and Barbuda, Argentine Republic, Australia, Republic of Austria, State of Bahrain, People's Republic
of Bangladesh, Barbados, The Kingdom of Belgium Belize, Republic of Benin, Bolivia, Botswana,
Brazil, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Canada, Central African Republic, Chad,
Chile, People's Republic of China, Colombia, Congo, Costa Rica, Republic of Cote d'Ivoire, Cuba,
Cyprus, Czech Republic, Kingdom of Denmark, Commonwealth of Dominica, Dominican Republic,
Arab Republic of Egypt, El Salvador, European Communities, Republic of Fiji, Finland, French
Republic, Gabonese Republic, Gambia, Federal Republic of Germany, Ghana, Hellenic Republic,
Grenada, Guatemala, Republic of Guinea-Bissau, Republic of Guyana, Haiti, Honduras, Hong Kong,
Hungary, Iceland, India, Indonesia, Ireland, State of Israel, Italian Republic, Jamaica, Japan, Kenya,
Korea, State of Kuwait, Kingdom of Lesotho, Principality of Liechtenstein, Grand Duchy of
Luxembourg, Macau, Republic of Madagascar, Republic of Malawi, Malaysia, Republic of Maldives,
Republic of Mali, Republic of Malta, Islamic Republic of Mauritania, Republic of Mauritius, United
Mexican States, Kingdom of Morocco, Republic of Mozambique, Union of Myanmar, Republic of
Namibia, Kingdom of the Netherlands, New Zealand, Nicaragua, Republic of Niger, Federal Republic
of Nigeria, Kingdom of Norway, Islamic Republic of Pakistan, Paraguay, Peru, Philippines, Poland,
Potuguese Republic, State of Qatar, Romania, Rwandese Republic, Saint Kitts and Nevis, Saint Lucia,
Saint Vincent and the Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, South Africa,
Kingdom of Spain, Democratic Socialist Republic of Sri Lanka, Republic of Surinam, Kingdom of
Swaziland, Kingdom of Sweden, Swiss Confederation, United Republic of Tanzania, Kingdom of
Thailand, Togolese Republic, Republic of Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab
Emirates, United Kingdom of Great Britain and Northern Ireland, United States of America, Eastern
Republic of Uruguay, Venezuela, Republic of Zaire, Republic of Zambia, Republic of Zimbabwe; see
pp. 6-25, Vol. 1, Uruguay Round of Multilateral Trade Negotiations.

3 11 August 1994

The Honorable Members

Senate

Through Senate President Edgardo Angara

Manila

Ladies and Gentlemen:

I have the honor to forward herewith an authenticated copy of the Uruguay Round Final Act signed
by Department of Trade and Industry Secretary Rizalino S. Navarro for the Philippines on 15 April
1994 in Marrakesh, Morocco.

The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the
interrelationship between trade and economic policies affecting growth and development.

The Final Act will improve Philippine access to foreign markets, especially its major trading partners
through the reduction of tariffs on its exports particularly agricultural and industrial products. These
concessions may be availed of by the Philippines, only if it is a member of the World Trade
Organization. By GATT estimates, the Philippines can acquire additional export from $2.2 to $2.7
Billion annually under Uruguay Round. This will be on top of the normal increase in exports that the
Philippines may experience.

The Final Act will also open up new opportunities for the services sector in such areas as the
movement of personnel, (e.g. professional services and construction services), cross-border supply
(e.g. computer-related services), consumption abroad (e.g. tourism, convention services, etc.) and
commercial presence.

The clarified and improved rules and disciplines on anti-dumping and countervailing measures will
also benefit Philippine exporters by reducing the costs ad uncertainty associated with exporting
while at the same time providing means for domestic industries to safeguard themselves against
unfair imports.

Likewise, the provision of adequate protection for intellectual property rights is expected to attract
more investments into the country and to make it less vulnerable to unilateral actions by its trading
partners (e.g. Sec. 301 of the United States' Omnibus Trade Law).

In view of the foregoing, the Uruguay Round Final Act is hereby submitted to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution.

A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is enclosed.

Very truly yours,

(SGD.) FIDEL V. RAMOS

4 11 August 1994

The Honorable Members

Senate

Through Senate President Edgardo Angara

Manila

Ladies and Gentlemen:

I have the honor to forward herewith an authenticated copy of the Uruguay Round Final Act signed
by Department of Trade and Industry Secretary Rizalino S. Navarro for the Philippines on 13 April
1994 in Marrakech (sic), Morocco.

Members of the trade negotiations committee, which included the Philippines, agreed that the
Agreement Establishing the World Trade Organization, the Ministerial Declarations and Decisions,
and the Understanding on Commitments in Financial Services embody the results of their
negotiations and form an integral part of the Uruguay Round Final Act.

By signing the Uruguay Round Final Act, the Philippines, through Secretary Navarro, agreed:

(a) To submit the Agreement Establishing the World Trade Organization to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution; and

(b) To adopt the Ministerial Declarations and Decisions.

The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the
interrelationship between trade and economic policies affecting growth and development.

The Final Act will improve Philippine access to foreign markets, especially its major trading partners
through the reduction of tariffs on its exports particularly agricultural and industrial products. These
concessions may be availed of by the Philippines, only if it is a member of the World Trade
Organization. By GATT estimates, the Philippines can acquire additional export revenues from $2.2
to $2.7 Billion annually under Uruguay Round. This will be on top of the normal increase in the
exports that the Philippines may experience.

The Final Act will also open up new opportunities for the services sector in such areas as the
movement of personnel, (e.g., professional services and construction services), cross-border supply
(e.g., computer-related services), consumption abroad (e.g., tourism, convention services, etc.) and
commercial presence.

The clarified and improved rules ad disciplines on anti-dumping and countervailing measures will
also benefit Philippine exporters by reducing the costs and uncertainty associated with exporting
while at the same time providing a means for domestic industries to safeguard themselves against
unfair imports.

Likewise, the provision of adequate protection for intellectual property rights is expected to attract
more investments into the country and to make it a less vulnerable to unilateral actions by its
trading partners (e.g., Sec. 301 of the United States Omnibus Trade Law).

In view of the foregoing, the Uruguay Round Final Act, the Agreement Establishing the World Trade
Organization, the Ministerial Declarations and Decisions, and the Understanding on Commitments in
Financial Services, as embodied in the Uruguay Round Final Act and forming and integral part
thereof are hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of
the Constitution.

A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is enclosed.

Very truly yours,

(SGD.) FIDEL V. RAMOS





5 December 9, 1994

HON. EDGARDO J. ANGARA

Senate President

Senate Manila

Dear Senate President Angara:

Pursuant to the provisions of Sec. 26 (2) Article VI of the Constitution, I hereby certify to the
necessity of the immediate adoption of P.S. 1083 entitled:

CONCURRING IN THE RATIFICATION OF THE AGREEMENT ESTABLISHING THE WORLD TRADE
ORGANIZATION

to meet a public emergency consisting of the need for immediate membership in the WTO in order
to assure the benefits to the Philippine economy arising from such membership.

Very truly yours,

(SGD.) FIDEL V. RAMOS

6 Attached as Annex A, Petition; rollo, p. 52. P.S. 1083 is the forerunner of assailed Senate
Resolution No. 97. It was prepared by the Committee of the Whole on the General Agreement on
Tariffs and Trade chaired by Sen. Blas F. Ople and co-chaired by Sen. Gloria Macapagal-Arroyo; see
Annex C, Compliance of petitioners dated January 28, 1997.

7 The Philippines is thus considered an original or founding member of WTO, which as of July
26, 1996 had 123 members as follows: Antigua and Barbuda, Argentina, Australia, Austria, Bahrain,
Bangladesh, Barbados, Belguim, Belize, Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Burkina
Faso, Burundi, Cameroon, Canada, Central African Republic, Chili, Colombia, Costa Rica, Cote
d'Ivoire, Cuba, Cyprus, Czech Republic, Denmark, Djibouti, Dominica, Dominican Republic, Ecuador,
Egypt, El Salvador, European Community, Fiji, Finland, France, Gabon, Germany, Ghana, Greece,
Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, Haiti, Honduras, Honkong, Hungary, Iceland,
India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kenya, Korea, Kuwait, Lesotho, Liechtenstein,
Luxembourg, Macau, Madagascar, Malawi, Malaysia, Maldives, Mali, Malta, Mauritania, Mauritius,
Mexico, Morocco, Mozambique, Myanmar, Namibia, Netherlands for the Kingdom in Europe and
for the Netherlands Antilles, New Zealand, Nicaragua, Nigeria, Norway, Pakistan, Papua New Guinea,
Paraguay, Peru, Philippines, Poland, Portugal, Qatar, Romania, Rwanda, Saint Kitts and Nevis, Saint
Lucia, Saint Vincent & the Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, Slovenia,
Solomon Islands, South Africa, Spain, Sri Lanka, Surinam, Swaziland, Sweden, Switzerland, Tanzania,
Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates, United
Kingdom, United States, Uruguay, Venezuela, Zambia, and Zimbabwe. See Annex A, Bautista Paper,
infra.

8 Page 6; rollo p. 261.

9 In compliance, Ambassador Bautista submitted to the Court on August 12, 1996, a
Memorandum (the "Bautista Paper") consisting of 56 pages excluding annexes. This is the same
document mentioned in footnote no. 1.

10 Memorandum for Respondents, p. 13; rollo, p. 268.

11 Cf . Kilosbayan Incorporated vs. Morato, 246 SCRA 540, July 17, 1995 for a discussion on
locus standi. See also the Concurring Opinion of Mr. Justice Vicente V. Mendoza in Tatad vs. Garcia,
Jr., 243 SCRA 473, April 6, 1995, as well as Kilusang Mayo Uno Labor Center vs. Garcia, Jr., 239 SCRA
386, 414, December 23, 1994.

12 Aquino, Jr. vs. Ponce Enrile, 59 SCRA 183, 196, September 17, 1974, cited in Bondoc vs.
Pineda, 201 SCRA 792, 795, September 26, 1991.

13 Guingona, Jr. vs. Gonzales, 219 SCRA 326, 337, March 1, 1993.

14 See Taada and Macapagal vs. Cuenco, et al., 103 Phil. 1051 for a discussion on the scope of
"political question."

15 Section 1, Article VIII, (par. 2).

16 In a privilege speech on May 17, 1993, entitled "Supreme Court Potential Tyrant?"
Senator Arturo Tolentino concedes that this new provision gives the Supreme Court a duty "to
intrude into the jurisdiction of the Congress or the President."

17 I Record of the Constitutional Commission 436.

18 Cf . Daza vs. Singson, 180 SCRA 496, December 21, 1989.

19 Memorandum for Petitioners, pp. 14-16; rollo, pp. 204-206.

20 Par. 4, Article XVI, WTO Agreement, Uruguay Round of Multilateral Trade Negotiations, Vol.
1. p. 146.

21 Also entitled "Declaration of Principles." The nomenclature in the 1973 Charter is identical
with that in the 1987's.

22 Philippine Political Law, 1962 Ed., p. 116.

23 Bernas, The Constitution of the Philippines: A Commentary, Vol. II, 1988 Ed., p. 2. In the very
recent case of Manila Prince Hotel v. GSIS, G.R. No. 122156, February 3, 1997, p. 8, it was held that
"A provision which lays down a general principle, such as those found in Art. II of the 1987
Constitution, is usually not self-executing."

24 246 SCRA 540, 564, July 17, 1995. See also Tolentino vs. Secretary of Finance, G.R. No.
115455 and consolidated cases, August 25, 1995.

25 197 SCRA 52, 68, May 14, 1991.

26 224 SCRA 792, 817, July 30, 1993.

27 Sec. 10, Article XII.

28 Sec. 12, Article XII.

29 Sec. 19, Art. II.

30 Sec. 13, Art. XII.

31 G.R. No. 122156, February 3, 1997, pp. 13-14.

32 Sec. 1, Art. XII.

33 Bautista Paper, p. 19.

34 Preamble, WTO Agreement p. 137, Vol. 1, Uruguay Round of Multilateral Trade
Negotiations. Emphasis supplied.

35 Sec. 19, Article II, Constitution.

36 III Records of the Constitutional Commission 252.

37 Sec. 13, Article XII, Constitution.

38 Justice Isagani A. Cruz, Philippine Political Law, 1995 Ed., p. 13, quoting his own article
entitled, "A Quintessential Constitution" earlier published in the San Beda Law Journal, April 1972;
emphasis supplied.

39 Par. 4, Article XVI (Miscellaneous Provisions), WTO Agreement, p. 146, Vol. 1, Uruguay
Round of Multilateral Trade Negotiations.

40 Memorandum for the Petitioners, p. 29; rollo, p. 219.

41 Sec. 24, Article VI, Constitution.

42 Subsection (2), Sec. 28, Article VI, Constitution.

43 Sec. 2, Article II, Constitution.

44 Cruz, Philippine Political Law, 1995 Ed., p. 55.

45 Salonga and Yap, op cit 305.

46 Salonga, op. cit., p. 287.

47 Quoted in Paras and Paras, Jr., International Law and World Politics, 1994 Ed., p. 178.

47-A Reagan vs. Commission of Internal Revenue, 30 SCRA 968, 973, December 27, 1969.

48 Trebilcock and Howse. The Regulation of International Trade, p. 14, London, 1995, cited on
p. 55-56, Bautista Paper.

49 Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.

50 Item 5, Sec. 5, Article VIII, Constitution.

51 Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.

52 Bautista Paper, p. 13.

53 See footnote 3 of the text of this letter.

54 Salonga and Yap, op cit., pp. 289-290.

55 The full text, without the signatures, of the Final Act is as follows:

Final Act Embodying the Results of the

Uruguay Round of Multilateral Trade Negotiations

1. Having met in order to conclude the Uruguay Round of Multilateral Trade Negotiations,
representatives of the governments and of the European Communities, members of the Trade
Negotiations Committee, agree that the Agreement Establishing the World Trade Organization
(referred to in the Final Act as the "WTO Agreement"), the Ministerial Declarations and Decisions,
and the Understanding on Commitments in Financial Services, as annexed hereto, embody the
results of their negotiations and form an integral part of this Final Act.

2. By signing to the present Final Act, the representatives agree.

(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective
competent authorities with a view to seeking approval of the Agreement in accordance with their
procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

3. The representatives agree on the desirability of acceptance of the WTO Agreement by all
participants in the Uruguay Round of Multilateral Trade Negotiations (hereinafter referred to as
"participants") with a view to its entry into force by 1 January 1995, or as early as possible
thereafter. Not later than late 1994, Ministers will meet, in accordance with the final paragraph of
the Punta del Este Ministerial Declarations, to decide on the international implementation of the
results, including the timing of their entry into force.

4. the representatives agree that the WTO Agreement shall be open for acceptance as a whole,
by signature or otherwise, by all participants pursuant to Article XIV thereof. The acceptance and
entry into force of a Plurilateral Trade Agreement included in Annex 4 of the WTO Agreement shall
be governed by the provisions of that Plurilateral Trade Agreement.

5. Before accepting the WTO Agreement, participants which are not contracting parties to the
General Agreement on Tariffs and Trade must first have concluded negotiations for their accession
to the General Agreement and become contracting parties thereto. For participants which are not
contracting parties to the general Agreement as of the date of the Final Act, the Schedules are not
definitive and shall be subsequently completed for the purpose of their accession to the General
Agreement and acceptance of the WTO Agreement.

6. This Final Act and the texts annexed hereto shall be deposited with the Director-General to
the CONTRACTING PARTIES to the General Agreement on Tariffs and Trade who shall promptly
furnish to each participant a certified copy thereof.

DONE at Marrakesh this fifteenth day of April one thousand nine hundred and ninety-four, in a
single copy, in the English, French and Spanish languages, each text being authentic.

56 Bautista Paper, p. 16.

57 Baustista Paper, p. 16.

58 Uruguay Round of Multilateral Trade Negotiations, Vol. I, pp. 137-138.

59 See footnote 3 for complete text.

60 Taken from pp. 63-85, "Respondent" Memorandum.

61 Zarate vs. Olegario, G.R. No. 90655, October 7, 1996.

62 San Sebastian College vs. Court of Appeals, 197 SCRA 138, 144, May 15, 1991; Commissioner
of Internal Revenue vs. Court of Tax Appeals, 195 SCRA 444, 458 March 20, 1991; Simon vs. Civil
Service Commission, 215 SCRA 410, November 5, 1992; Bustamante vs. Commissioner on Audit, 216
SCRA 134, 136, November 27, 1992.

63 Paredes vs. Civil Service Commission, 192 SCRA 84, 94, December 4, 1990.

64 Sec. 21. No treaty or international agreement shall be valid and effective unless concurred in
by at least two-thirds of all the Members of the Senate."

65 Reader's Digest, December 1996 issue, p. 28.