TAÑADA​ v. ANGARA, G.R. No. 118295, BRITISH AMERICAN TOBACCO v.

02 May 1997 CAMACHO, G.R. No. 163583, 20

August 2008

FACTS FACTS

The World Trade Organization or WTO June 2001, petitioner British American
was established in Marrakesh, Morocco in Tobacco introduced and sold Lucky
1995. The Philippines, one of its founding Strike, Lucky Strike Lights and Lucky
members, joined the Agreement as it Strike Menthol Lights cigarettes w/ SRP P
would greatly benefit their economy 9.90/pack - Initial assessed excise tax: P
because they would enjoy access to 8.96/pack (Sec. 145 [c])
foreign markets, and reduction of tariffs
February 17, 2003: RR 9-2003: Periodic
on exports. President Fidel V. Ramos
review every 2 years or earlier of the
also saw numerous opportunities in
current net retail price of new brands and
joining the Agreement such as new
variants thereof for the purpose of the
opportunities for the services sector, the
establishing and updating their tax
reduction of costs and uncertainty
classification
associated with exporting, and the
attraction of more investments into the March 11, 2003: RMO 6-2003: Guidelines
country. On April 15, 1994, Rizalino and procedures in establishing current net
Navarro, DTI Secretary, signed in retail prices of new brands of cigarettes
Marrakesh, Morocco, the Final Act and alcohol products
Embodying the Results of the Uruguay
Round of Multilateral Negotiations. On August 8, 2003: RR 22-2003: Implement
December 14, 1994, the Senate the revised tax classification of certain
concurred in the ratification of the new brands introduced in the market after
President of the Philippines of the January 1, 1997 based on the survey of
Agreement Establishing the WTO which their current net retail prices. This
includes various agreements and increased the excise tax to P13.44 since
associated legal instruments. On the average net retail price is above P
December 16, 1994,the President signed 10/pack.
the Instrument of Ratification.
ISSUES ISSUES

Does the Agreement ratifying the WTO 1. Does the order pertaining to the
contravene the provisions of the classification of goods violate the
Philippine Constitution? provisions of the GATT?

Does the ratification of the Agreement 2. Does the classification warrant the
impair the exercise of sovereignty and resort to dispute settlement mechanisms
other inherent powers (legislative, judicial) before the WTO?
of the Philippines as a state?

Is the concurrence of the Senate, valid?

ARGUMENTS ARGUMENTS

Petitioners argue that: Petitioner contends that RA 8240, as

amended by RA 9334, and its
(1) the WTO requires the Philippines "to
implementing rules and regulations
place nationals and products of
violate the General Agreement on Tariffs
member-countries on the same footing as
and Trade (GATT) of 1947, as amended,
Filipinos and local products" and
specifically, Paragraph 2, Article III, Part
(2) the WTO "intrudes, limits and/or II: “The products of the territory of any
impairs" the constitutional powers of both contracting party imported into the
Congress and the Supreme Court, the territory of any other contracting party
instant petition before this Court assails shall not be subject, directly or indirectly,
the WTO Agreement for violating the to internal taxes or other internal charges
mandate of the 1987 Constitution to of any kind in excess of those applied,
"develop a self-reliant and independent directly or indirectly, to like domestic
national economy effectively controlled by products. Moreover, no contracting party
Filipinos . . . (to) give preference to shall otherwise apply internal taxes or
qualified Filipinos (and to) promote the other internal charges to imported or
preferential use of Filipino labor, domestic domestic products in a manner contrary
materials and locally produced goods. to the principles set forth in paragraph 1.”

It claims that it is the duty of this Court to

correct, in favor of the GATT, whatever
inconsistency exists between the assailed
law and the GATT in order to prevent
triggering the international dispute
 settlement mechanism under the
GATT-WTO Agreement.

RULING RULING

The ratification of the Agreement does not We disagree.

impair the exercise of sovereignty and
other inherent powers of the Philippines
as a state. Doctrine of incorporation, The classification freeze provision
Section 2 Article II of the Philippine uniformly applies to all newly introduced
Constitution, wherein the Philippines brands in the market, whether imported or
adopts the generally accepted principles locally manufactured. It does not purport
of international law and international to single out imported cigarettes in order
jurisprudence as part of the law of the to unduly favor locally produced ones.
land and adheres to the policy of peace, Further, petitioner’s evidence was
cooperation, and amity with all nations. anchored on the alleged unequal tax
By this doctrine, the country is bound by treatment between old and new brands
generally accepted principles of which involves a different frame of
international law, which are considered to reference vis-à-vis local and imported
be automatically part of our own laws. products. Petitioner has, therefore, failed
The Agreement is also governed by the to clearly prove its case, both factually
oldest and most fundamental rules in and legally, within the parameters of the
international law, ​pacta sunt servanda o ​ r GATT.
international agreements must be
performed in good faith. A treaty creates At any rate, even assuming arguendo that
a legally binding obligation on the parties. petitioner was able to prove that the
A state that contracted such international classification freeze provision violates the
obligations is bound to make in its GATT, the outcome would still be the
legislation modifications that are same. The GATT is a treaty duly ratified
necessary to fulfill the obligations by the Philippine Senate and under Article
undertaken. Treaties inherently restrict VII, Section 2181 of the Constitution, it
the absoluteness of sovereignty. Nations merely acquired the status of a statute.82
may surrender some aspects of their Applying the basic principles of statutory
power voluntarily in exchange for benefits construction in case of irreconcilable
granted by or derived from a convection conflict between statutes, RA 8240, as
or pact. This Agreement may be amended by RA 9334, would prevail over
considered as rules of equality and the GATT either as a later enactment by
reciprocity that applies to WTO members. Congress or as a special law dealing with
the taxation of sin products. Thus, in
States under this Agreement agreed to Abbas v. Commission on Elections,83 we
limit the exercise of their otherwise had occasion to explain:
absolute rights.
Petitioners premise their arguments on
According to the Supreme Court, We find the assumption that the Tripoli Agreement
no "patent and gross" arbitrariness or is part of the law of the land, being a
despotism "by reason of passion or binding international agreement. The
personal hostility" in such exercise. Solicitor General asserts that the Tripoli
Hence, the concurrence of the Senate is Agreement is neither a binding treaty, not
valid. having been entered into by the Republic
of the Philippines with a sovereign state
and ratified according to the provisions of
the 1973 or 1987 Constitutions, nor a
binding international agreement.

We find it neither necessary nor

determinative of the case to rule on the
nature of the Tripoli Agreement and its
binding effect on the Philippine
Government whether under public
international or internal Philippine law. In
the first place, it is now the Constitution
itself that provides for the creation of an
autonomous region in Muslim Mindanao.
The standard for any inquiry into the
validity of R.A. No. 6734 would therefore
be what is so provided in the Constitution.
Thus, any conflict between the provisions
of R.A. No. 6734 and the provisions of the
Tripoli Agreement will not have the effect
of enjoining the implementation of the
Organic Act. Assuming for the sake of
argument that the Tripoli Agreement is a
binding treaty or international agreement,
it would then constitute part of the law of
the land. But as internal law it would not
be superior to R.A. No. 6734, an
enactment of the Congress of the
Philippines, rather it would be in the same
class as the latter [SALONGA, PUBLIC
INTERNATIONAL LAW 320 (4th ed.,
1974), citing Head Money Cases, 112
U.S. 580 (1884) and Foster v. Nelson, 2
Pet. 253 (1829)]. Thus, if at all, R.A. No.
6734 would be amendatory of the Tripoli
Agreement, being a subsequent law. Only
a determination by this Court that R.A.
No. 6734 contravenes the Constitution
would result in the granting of the reliefs
sought. (Emphasis supplied)