DOJ Opinion No. 071, s. 1988

DOJ OPINION NO. 071 , s. 1988 April 13, 1988 Undersecretary Lilia Bautista Department of Trade & Industry 361 Sen. Gil J. Puyat Avenue Makati, Metro Manila M a d a m : This refers to your request for opinion as to the need for ratification of the agreements mentioned hereunder by the Philippine Senate, and if necessary, the procedure for such submission. "i) Revised Basic Agreement on ASEAN Industrial Joint Ventures., The original Basic Agreement on ASEAN Industrial Joint Ventures was signed on 7 November 1983 and duly ratified by the Philippine Government. The revised agreement incorporates additional features to the scheme which are intended to speed up industrial cooperation among ASEAN countries. LLjur "ii) ASEAN Investment Guarantee. The ASEAN Investment Guarantee Agreement is a multilateralized investment guarantee agreement providing for safeguards against non-commercial risks of investments and is therefore aimed at increasing the flow in intra-ASEAN investments. "iii) Protocol on Improvements on Extension of Tariff Preferences under the ASEAN Preferential Trading Arrangements; and "iv) Memorandum of Understanding on Standstill and Rollback on Non-Tariff Barriers Among ASEAN Countries." The ratificatory authority of the Senate over treaties and international agreements is founded upon the following constitutional provision, to wit: "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." (Art. VII 1987 Constitution) The 1969 Vienna Convention on the Law of Treaties, of which the Philippines is a signatory, defines "ratification" as the international act so named whereby a State establishes on the international plane its consent to be bound by a treaty" (Sec. 1 (b), Art. 2). The same Convention provides that the consent of a State to be bound by a treaty is expressed by ratification when, inter alia the treaty specifically so states or when it is otherwise established that such ratification is required (Sec. 1, Art. 14) Examination of the provisions of the subject agreements, particularly as to entry into force, discloses that while the ASEAN Industrial Joint Ventures Agreement (the "AIJV Agreement") and the ASEAN Investment Guarantee Agreement (the "Investment Agreement") shall enter into force on the thirtieth (30th) day after deposit of the instrument of Ratification." (Arts. VI & XIII, respectively), the Protocol on Improvements on Extension of Tariff Preferences under the ASEAN Preferential Trading Arrangements (the "Protocol") provides that it "shall enter into force on 1 January 1988 (Art. VII)", while the Memorandum of Understanding on Standstill and Rollback on Non-Tariff Barriers Among ASEAN Countries (the "Memorandum of Understanding") states that it shall come into force "from the date of its signature" (Art. IX). It is thus readily ascertainable from the subject agreements that with respect to the AIJV and Investment Agreements, the parties signatories thereto shall become bound only after said agreement shall have been ratified, while as regards the Protocol and Memorandum of Understanding, the parties thereto shall become bound upon the signing thereof. In other words, the parties to the subject agreements intended that only the AIJV and Investment Agreements need concurrence by their respective appropriate authorities. prcd While it might be argued that the AIJV and Investment Agreements may be categorized as executive since they deal on commercial relations and/or implement well-defined national policies on foreign investments (see Commissioner vs. Eastern Sea Trading, 3 SCRA 351) and, in line with this Department's Opinion No. 71, series 1987, are not within the contemplation of Section 21, Article VII of the charter, supra hence not subject to Senate concurrence, it has been said that whether or not an international agreement becomes binding upon signature or requires ratification would depend upon the intention of the parties, when the same is ascertainable (Brownlie, Public International Law, 2nd Ed., p. 586; O'Connell, International Law, Vol. 1, 1965 Ed., p. 245). Indeed, a leading authority in international law opines that even a protocol, declaration or exchange of notes need ratification when specifically stipulated (Oppenheim-Lauterpacht, Vol. 1, 8th Ed., pp. 907-908). In this connection, it is noted that in Philippine diplomatic experience, there were instances of trade and postal agreements, which are admittedly executive agreements, but have been subjected to ratification by former President Marcos, as the sole repository of lawmaking authority (see the Philippine-Gabonese Trade Agreements dated September 11, 1976 and the Philippine-People's Republic of China Postal Agreement dated November 18, 1978, Philippine Treaty Series, Vol. VII, pp. 515-518 & 826-834, respectively). On the other hand, the Trade Agreement between the Philippines and Indonesia dated May 30, 1969 and the Philippine-French Investment Promotion Agreement dated June 14, 1976 were not subjected to ratification by the legislative authority (Philippine Treaty Series, supra , Vol. VI pp. 192-195 & Vol. VII, pp. 493-496, respectively). As regards the Protocol and Memorandum of Understanding, there is an additional reason why they are no longer subject to Senate confirmation. The instrument of ratification of the Agreement on ASEAN Preferential Trading Arrangement ("ASEAN PTA") was signed by the former President of the Philippine on May 13, 1977 (Philippine Treaty Series, UP Law Center, Vol. VII, p. 614). The Protocol and Memorandum of Understanding merely implement the aforesaid existing agreement on ASEAN PTA. These agreements, insofar as they provide the details of an existing treaty, may be deemed to be executive agreements requiring no confirmation by the Senate. Moreover, they may be considered trade agreements which were entered into by authority of Section 402 (a) of the Tariff and Customs Code, which reads: "a. For the purpose of expanding foreign markets for Philippine products as a means of assistance in the economic development of the country, in overcoming domestic unemployment, in increasing the purchasing power of the Philippine peso, and in establishing and maintaining better relations between the Philippines and other countries, the President, is authorized, from time to time: (1) To enter into trade agreements with foreign governments or instrumentalities thereof; and (2) To modify import duties (including any necessary change in classification) and other import restrictions as are required or appropriate to carry out and promote foreign trade with other countries: Provided, however, That in modifying import duties or fixing import quota the requirements prescribed in subsection "a" of Section 401 shall be observed: Provided, further, That any modification of import duties and any fixing of import quotas made pursuant to the Agreement on ASEAN Preferential Trading Arrangements ratified on August 1, 1977 shall not be subjected to the limitations of aforesaid section "a" of Section 401." Having been executed on the basis of explicit authority conferred by statute, these agreements no longer require legislative confirmation. Upon the other hand, the AIJV and Investment Agreements are separate and distinct from the ASEAN PTA. The said agreements are not trade agreements within the contemplation of Section 402 of the Tariff and Customs Code supra . It is noted that the AIJV Agreement provides for exclusivity privileges covering the setting up of new production facilities for certain products (par. 5, Art. III). The ASEAN PTA, on the other hand, extends exclusivity only in trade preferences (Art. 10, Chap. III). prcd Anent the procedure for submission of the pertinent agreements to the Senate for its concurrences, it is suggested that their submission be coursed through the Office of the President which is the proper agency in that regard. Please be guided accordingly. Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice