Chapter VIII. Decisions of national tribunals

Philippines

PHILIPPINE SUPREME COURT

The Philippine Constitution and Philippine participation in worldwide trade liberalization and economic globalization—Question of possible nullification of the concurrence of the Philippine Senate in the ratification by the presi-dent of the Philippines of the Agreement Establishing the World Trade Organization—Analysis of the scope, goals and policies of the World Trade Organization —Limitation of sovereignty by international law and treaties

EN BANC

[G.R.No. 118295. 2 May 1997.]

Wigberto E. Tañada 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 Kilusang 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, José Lina, Gloria Macapagal-Arroyo, Orlando Mercado, Blas Ople, John Osmeña, 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.

493

DECISION

PANGANIBAN,./.:

The emergence on I January 1995 of the World Trade Organization (WTO), abetted by the membership thereto of the vast majority of countries, has revolutionized international business and economic relations among States. It has irreversibly propelled the world towards trade liberalization and economic globalization. Liberalization, globalization, deregulation and privatization, the thirdmillennium buzzwords, 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-neighbour" 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, 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 invited challenge, even retaliation, from other States. However, for a variety of reasons, including its non-ratification by the United States, ITO, unlike IMF and the World Bank, never took off. What remained was only the General Agreement on Tariffs and Trade (GATT). 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 ex-ports, particularly agricultural and industrial products". The President also saw in 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—would benefit from the WTO system of dispute settlement by judicial adjudication through the independent WTO settlement bodies called (

1. Dispute Settlement Panel and (¿>) 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 (a) that WTO required the Philippines "to place nationals and products of member countries on the same footing as Filipinos and local products" and (6) that 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 labour, domestic materials and locally produced goods".

   Simply stated, does the Philippine Constitution prohibit Philippine partici-pation in worldwide trade liberalization and economic globalization? Does it proscribe Philippine integration into a global economy that is liberalized, deregu-lated 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

   (a) 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 (b) 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 97, dated 14 December 1994.

   The/acts

   On 15 April 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 Trade Negotiations (Final Act, for brevity).

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

   "(

1. 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 12 August 1994, the members of the Philippine Senate received a letter dated 11 August 1994 from the President of the Philippines,3 stating among other things 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 13 August 1994, the members of the Philippine Senate received another letter from the President of the Philippines4 likewise dated 11 August 1994, which stated among other things 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 arc hereby submitted to the Senate for its concurrence pursuant to section 21, article VII, of the Constitution".

   On 9 December 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 14 December 1994, the Philippine Senate adopted resolution 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...