Abaya vs. Ebdane
G.R. No. 167919 February 14, 2007
Facts:
Petitioner seeks to set aside and nullify Resolution No. PJHL-A-04-012 dated May 7, 2004 issued by the Bids and Awards Committee (BAC) of the Department of Public Works and Highways (DPWH) and approved by then DPWH.
Based on the Exchange of Notes dated December 27, 1999, the Government of Japan and the Government of the Philippines, through their respective representatives, namely, Mr. Yoshihisa Ara, Ambassador Extraordinary and Plenipotentiary of Japan to the Republic of the Philippines, and then Secretary of Foreign Affairs Domingo L. Siazon, have reached an understanding concerning Japanese loans to be extended to the Philippines.
The DPWH caused the publication of the "Invitation to Prequalify and to Bid" for the implementation of the CP I project in two leading national newspapers, namely, the Manila Times and Manila Standard on November 22 and 29, and December 5, 2002.
In accordance with the established prequalification criteria, eight contractors were evaluated or considered eligible to bid as concurred by the JBIC. Prior to the opening of the respective bid proposals, it was announced that the Approved Budget for the Contract (ABC) was in the amount of P738,710,563.67. The bid goes to private respondent China Road & Bridge Corporation in the amount of P952,564,821.71 (with variance of 28.95% from the ABC).
The petitioners anchor the instant petition on the contention that the award of the contract to private respondent China Road & Bridge Corporation violates Sec 31 of RA 9184 which states that:
SEC. 31. Ceiling for Bid Prices. – The ABC shall be the upper limit or ceiling for the Bid prices. Bid prices that exceed this ceiling shall be disqualified outright from further participating in the bidding. There shall be no lower limit to the amount of the award.
The petitioners insist that Loan Agreement is neither an international nor an executive agreement that would bar the application of RA 9184. They point out that to be considered a treaty, an international or an executive agreement, the parties must be two sovereigns or States whereas in the case of Loan Agreement No. PH-P204, the parties are the Philippine Government and the JBIC, a banking agency of Japan, which has a separate juridical personality from the Japanese Government.
The respondents however contend that foreign loan agreements, including Loan Agreement No. PH-P204, as executive agreements and, as such, should be observed pursuant to the fundamental principle in international law of pacta sunt servanda. Thus, the Philippine Government is bound to perform in good faith its duties and obligations under Loan Agreement No. PH-P204.
Issue :
Whether the loan agreement violates RA 9184.
Ruling:
The court ruled in favor of the respondents.
Significantly, an exchange of notes is considered a form of an executive agreement, which becomes binding through executive action without the need of a vote by the Senate or Congress. Executive agreements, sometimes take the form of exchange of notes and at other times that of more formal documents denominated "agreements" or "protocols". Ordinary correspondence between this and other governments ends and agreements – whether denominated executive agreements or exchange of notes or otherwise – begin, may sometimes be difficult of ready ascertainment.
The fundamental principle of international law of pacta sunt servanda, which is, in fact, embodied in Section 4 of RA 9184 as it provides that "[a]ny treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed," the DPWH, as the executing agency of the projects financed by Loan Agreement No. PH-P204, rightfully awarded the contract for the implementation of civil works for the CP I project to private respondent China Road & Bridge Corporation.
PIMENTEL, JR., v. EXECUTIVE SECRETARY
462 SCRA 622, 6 July 2005
FACTS :
The Rome Statute established the International Criminal Court which “shall have the power to exercise its jurisdiction over persons for the most serious crimes of international concern xxx and shall be complementary to the national criminal jurisdictions.” Its jurisdiction covers the crime of genocide, crimes against humanity, war crimes and the crime of aggression as defined in the Statute.
On December 28, 2000, the Philippines signed the Rome Statue. The Rome Statute however requires that the signature of the representatives of the states be subject to ratification, acceptance or approval of the signatory states.
Thus, a petition for mandamus was filed by petitioners to compel the Office of the Executive Secretary and the Department of Foreign Affairs to transmit the signed copy of the Rome Statute of the International Criminal Court to the Senate of the Philippines for its concurrence in accordance with Sec. 21, Art. VII of the 1987 Philippine Constitution.
ISSUE :
Whether the Executive Secretary and the Department of Foreign Affairs have a ministerial duty to transmit to the Senate the copy of the Rome Statute signed by a member of the Philippine Mission to the United Nations even without the signature of the President.
RULING :
The court ruled in the negative. The President, being the head of state, is regarded as the sole organ and authority in external relations and is the country’s sole representative with foreign nations. The President is vested with the authority to deal with foreign states and governments, extend or withhold recognition, maintain diplomatic relations, enter into treaties, and otherwise transact the business of foreign relations. In the realm of treaty-making, the President has the sole authority to negotiate with other states.
While the President has the sole authority to negotiate and enter into treaties, the Constitution provides a limitation to his power by requiring the concurrence of 2/3 of all the members of the Senate for the validity of the treaty entered into by him. Section 21, Article VII of the 1987 Constitution provides that “no treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate.” The participation of the legislative branch in the treaty-making process was deemed essential to provide a check on the executive in the field of foreign relations. By requiring the concurrence of the legislature in the treaties entered into by the President, the Constitution ensures a healthy system of checks and balance necessary in the nation’s pursuit of political maturity and growth.
Petitioners’ arguments equate the signing of the treaty by the Philippine representative with ratification. It should be underscored that the signing of the treaty and the ratification are two separate and distinct steps in the treaty-making process.
The signature is primarily intended as a means of authenticating the instrument and as a symbol of the good faith of the parties. Ratification, on the other hand, is the formal act by which a state confirms and accepts the provisions of a treaty concluded by its representative. The signature does not signify the final consent of the state to the treaty. It is the ratification that binds the state to the provisions thereof.
The Rome Statute itself requires that the signature of the representatives of the states be subject to ratification, acceptance or approval of the signatory states. Ratification is the act by which the provisions of a treaty are formally confirmed and approved by a State. By ratifying a treaty signed in its behalf, a state expresses its willingness to be bound by the provisions of such treaty. It has been held that a state has no legal or even moral duty to ratify a treaty which has been signed by its plenipotentiaries. There is no legal obligation to ratify a treaty, but it goes without saying that the refusal must be based on substantial grounds and not on superficial or whimsical reasons.
That under our Constitution, the power to ratify is vested in the President, subject to the concurrence of the Senate. The role of the Senate, however, is limited only to giving or withholding its consent, or concurrence, to the ratification. It is within the authority of the President to refuse to submit a treaty to the Senate or, having secured its consent for its ratification, refuse to ratify it.
This Court has no jurisdiction over actions seeking to enjoin the President in the performance of his official duties. The Court, therefore, cannot issue the writ of mandamus prayed for by the petitioners as it is beyond its jurisdiction to compel the executive branch of the government to transmit the signed text of Rome Statute to the Senate.
Lim vs. Executive Secretary
G.R. No. 151445. April 11, 2002
Facts:
Beginning January of year 2002, personnel from the armed forces of the United States of America started arriving in Mindanao to take part, in conjunction with the Philippine military, in “Balikatan 02-1.” They are a simulation of joint military maneuvers pursuant to the Mutual Defense Treaty (MDT) a bilateral defense agreement entered into by the Philippines and the United States in 1951.
The entry of American troops into Philippine soil is proximately rooted in the international anti-terrorism campaign declared by President George W. Bush in reaction to the tragic events that occurred on September 11, 2001.The MDT has been described as the “core” of the defense relationship between the Philippines and its traditional ally, the United States. Its aim is to enhance the strategic and technological capabilities of our armed forces through joint training with its American counterparts; the “Balikatan” is the largest such training exercise directly supporting the MDT’s objectives. It is this treaty to which the VFA adverts and the obligations thereunder which it seeks to reaffirm.
On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed this petition for certiorari and prohibition, attacking the constitutionality of the joint exercise. They were joined subsequently by SANLAKAS and PARTIDO NG MANGGAGAWA, both party-list organizations, who filed a petition-in-intervention on February 11, 2002
Issue:
Whether “Balikatan 02-1” is covered by the Visiting Forces Agreement?
Ruling:
The VFA permits United States personnel to engage, on an impermanent basis, in “activities,” the exact meaning of which was left undefined. The sole encumbrance placed on its definition is couched in the negative, in that United States personnel must “abstain from any activity inconsistent with the spirit of this agreement, and in particular, from any political activity.
The Vienna Convention on the Law of Treaties, Articles 31 and 32 contains provisos governing interpretations of international agreements. It clearly provides that the cardinal rule of interpretation must involve an examination of the text, which is presumed to verbalize the parties’ intentions. The Convention likewise dictates what may be used as aids to deduce the meaning of terms, which it refers to as the context of the treaty, as well as other elements may be taken into account alongside the aforesaid context.
It appeared farfetched that the ambiguity surrounding the meaning of the word 'activities" arose from accident. It was deliberately made that way to give both parties a certain leeway in negotiation. In this manner, visiting US forces may sojourn in Philippine territory for purposes other than military. As conceived, the joint exercises may include training on new techniques of patrol and surveillance to protect the nation's marine resources, sea search-and-rescue operations to assist vessels in distress, disaster relief operations, civic action projects such as the building of school houses, medical and humanitarian missions, and the like.
Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only logical to assume that .'Balikatan 02-1," a "mutual anti- terrorism advising, assisting and training exercise," falls under the umbrella of sanctioned or allowable activities in the context of the agreement. Both the history and intent of the Mutual Defense Treaty and the VFA support the conclusion that combat-related activities -as opposed to combat itself -such as the one subject of the instant petition, are indeed authorized.
CIR vs. SC Johnson
G.R. No. 127105. June 25, 1999
Facts:
S.C. JOHNSON AND SON, INC., a domestic corporation organized and operating under the Philippine laws, entered into a license agreement with SC Johnson and Son, United States of America (USA), a non-resident foreign corporation based in the U.S.A. The respondent was granted the right to use the trademark, patents and technology owned by SC Johnson and Son, United States of America (USA) including the right to manufacture, package and distribute the products covered by the Agreement and secure its assistance in management, marketing and production.
For the use of the trademark or technology, the respondent was obliged to pay royalties based on a percentage of net sales and subjected the same to 25% withholding tax on royalty payments which it paid for the period covering July 1992 to May 1993 in the total amount of P1,603,443.00
On October 29, 1993, a claim for refund of overpaid withholding tax on royalties was filed by the respondent with the International Tax Affairs Division (ITAD) of the BIR arguing that they fall squarely within the same circumstances under the rulings issued in MacGeorge and Gillete. They contended that royalties paid to SC Johnson and Son, USA is only subject to 10% withholding tax pursuant to the most-favored nation clause of the RP-US Tax Treaty [Article 13 Paragraph 2 (b) (iii)] in relation to the RP-West Germany Tax Treaty [Article 12 (2) (b)]" (Petition for Review [filed with the Court of Appeals]
When the Commissioner did not act on said claim for refund S.C. Johnson & Son, Inc. (S.C. Johnson) filed a petition for review before the Court of Tax Appeals (CTA).The Court of Tax Appeals rendered its decision in favor of S.C. Johnson and ordered the Commissioner of Internal Revenue to issue a tax credit certificate in the amount of P963,266.00 representing overpaid withholding tax on royalty payments, beginning July, 1992 to May, 1993.2
The Commissioner of Internal Revenue thus filed a petition for review with the Court of Appeals which rendered the decision finding no merit in the petition and affirming in toto the CTA ruling.
Thus, this petition.
Issue:
Whether the Court of Appeals erred in ruling that SC Johnson and Son, USA is entitled to the “Most Favored Nation” Tax rate of 10% on Royalties as provide in the RP-US Tax Treaty in relation to the RP-West Germany Tax Treaty?
Ruling:
Article 13 (2) (b) (iii) of the RP-US Tax Treaty states that:
1) Royalties derived by a resident of one of the Contracting States from sources within the other Contracting State may be taxed by both Contracting States.
2) However, the tax imposed by that Contracting State shall not exceed.
a) In the case of the United States, 15 percent of the gross amount of the royalties, and
b) In the case of the Philippines, the least of:
(i) 25 percent of the gross amount of the royalties;
(ii) 15 percent of the gross amount of the royalties, where the royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred areas of activities; and
(iii) the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar circumstances to a resident of a third State.
x x x x x x x x x
Article 12 (2) (b) of the RP-Germany Tax Treaty provides:
(2) However, such royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed:
x x x x x x x x x
b) 10 percent of the gross amount of royalties arising from the use of, or the right to use, any patent, trademark, design or model, plan, secret formula or process, or from the use of or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.
For as long as the transfer of technology, under Philippine law, is subject to approval, the limitation of the tax rate mentioned under b) shall, in the case of royalties arising in the Republic of the Philippines, only apply if the contract giving rise to such royalties has been approved by the Philippine competent authorities.
Under Article 24 of the RP-West Germany Tax Treaty, the Philippine tax paid on income from sources within the Philippines is allowed as a credit against German income and corporation tax on the same income. In the case of royalties for which the tax is reduced to 10 or 15 percent according to paragraph 2 of Article 12 of the RP-West Germany Tax Treaty, the credit shall be 20% of the gross amount of such royalty. To illustrate, the royalty income of a German resident from sources within the Philippines arising from the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, is taxed at 10% of the gross amount of said royalty under certain conditions. The rate of 10% is imposed if credit against the German income and corporation tax on said royalty is allowed in favor of the German resident. That means the rate of 10% is granted to the German taxpayer if he is similarly granted a credit against the income and corporation tax of West Germany. The clear intent of the "matching credit" is to soften the impact of double taxation by different jurisdictions.
The RP-US Tax Treaty contains no similar "matching credit" as that provided under the RP-West Germany Tax Treaty. Hence, the tax on royalties under the RP-US Tax Treaty is not paid under similar circumstances as those obtaining in the RP-West Germany Tax Treaty. Therefore, the "most favored nation" clause in the RP-West Germany Tax Treaty cannot be availed of in interpreting the provisions of the RP-US Tax Treaty.
Since the RP-US Tax Treaty does not give a matching tax credit of 20 percent for the taxes paid to the Philippines on royalties as allowed under the RP-West Germany Tax Treaty, private respondent cannot be deemed entitled to the 10 percent rate granted under the latter treaty for the reason that there is no payment of taxes on royalties under similar circumstances.
Bayan vs. Zamora
G.R. No. 138570. October 10, 2000
FACTS :
On March 14, 1947, the Philippines and the United States of America forged a military bases agreement which formalized, among others, the use of installations in the Philippine territory by the US military personnel. To further strengthen their defense and security relationship, the Philippines and the US entered into a Mutual Defense Treaty on August 30, 1951. Under the treaty, the parties agreed to respond to any external armed attack on their territory, armed forces, public vessels and aircraft.
In 1991, with the expiration of RP-US Military Bases Agreement, the periodic military exercises between the two countries were held in abeyance. However, the defense and security relationship continued pursuant to the Mutual Defense Treaty. On July 18, 1997 RP and US exchanged notes and discussed, among other things, the possible elements of the Visiting Forces Agreement (VFA). Negotiations by both panels on VFA led to a consolidated draft text and a series of conferences. Eventually, President Fidel V. Ramos approved the VFA.
On October 5, 1998 President Joseph E. Estrada ratified the VFA thru respondent Secretary of Foreign Affairs. On October 6, 1998, the President, acting thru Executive Secretary Zamora officially transmitted to the Senate, the Instrument of Ratification, letter of the President and the VFA for approval. It was approved by the Senate by a 2/3 vote of its members. On June 1, 1999, the VFA officially entered into force after an exchange of notes between Secretary Siazon and US Ambassador Hubbard.
The VFA provides for the mechanism for regulating the circumstances and conditions under which US Armed Forces and defense personnel may be present in the Philippines. Hence this petition for certiorari and prohibition, assailing the constitutionality of the VFA and imputing grave abuse of discretion to respondents in ratifying the agreement.
ISSUE :
Whether or not the VFA is unconstitutional.
RULING :
The 1987 Philippine Constitution provides:
Sec. 21 Art. VII - “No treaty or international agreement shall be valid and effective unless concurred in by at least 2/3 of all the Members of the Senate.
Sec. 25 Art. XVIII - “After the expiration in 1991 of the Agreement between the RP and the US concerning Military Bases, foreign military bases, troops or facilities shall not be allowed in the Philippines except under a treaty duly concurred in and when the Congress so requires, ratified by a majority of votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the Senateby the other contracting state”.
Sec. 21 Art. VII applies to any form of treaties and international agreements in general with a wide variety of subject matter. All treaties and international agreements entered into by the Philippines, regardless of subject matter, coverage or particular designation requires the concurrence of the Senate to be valid and effective.
Sec. 25 Art. XVIII on the other hand applies to treaties which involve presence of foreign military bases, troops and facilities in the Philippines.
Both constitutional provisions share some common ground. The fact that the President referred the VFA to the Senate under Sec. 21 Art. VII, and that Senate extended its concurrence under the same provision is immaterial.
Undoubtedly, Sec. 25 Art. XVIII which specifically deals with treaties involving foreign military bases and troops should apply in the instant case. Hence, for VFA to be constitutional it must sufficiently meet the following requisites :
a) it must be under a treaty
b) the treaty must be duly concurred in by the Senate, and when so required by Congress, ratified by a majority of votes cast by the people in a national referendum
c) recognized as a treaty by the other contracting State
There is no dispute in the presence of the first two requisites. The third requisite implies that the other contracting party accepts or acknowledges the agreement as a treaty. Moreover, it is inconsequential whether the US treats the VFA only as an executive agreement because, under international law, an executive agreement is as binding as a treaty. They are equally binding obligations upon nations. Therefore, there is indeed marked compliance with the mandate of the constitution.
The petition is thus dismissed.
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