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THIRD DIVISION

ANA MARIA A. KORUGA,

Petitioner,

- versus -

TEODORO O. ARCENAS, JR., ALBERTC. AGUIRRE, CESAR S. PAGUIO,FRANCISCO A. RIVERA, and THEHONORABLE COURT OF APPEALS,THIRD DIVISION,

Respondents. x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x TEODORO O. ARCENAS, JR., ALBERTC. AGUIRRE, CESAR S. PAGUIO, andFRANCISCO A. RIVERA,

Petitioners,

- versus -

HON. SIXTO MARELLA, JR., PresidingJudge, Branch138, Regional Trial Courtof Makati City,and ANA MARIA A. KORUGA,

Respondents.

G.R. No. 168332

G.R. No. 169053

Present:

YNARES-SANTIAGO, J., Chairperson,

CARPIO ,* CORONA ,**

NACHURA, and PERALTA, JJ.

Promulgated:

June 19, 2009

x------------------------------------------------------------------------------------x

http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/168332.htm#_ftn1










(b) For granting and approving loans and/or “loaned” sums ofmoney to six (6) “dummy” borrower corporations (“BorrowerCorporations”) which, at the time of loan approval, had no financialcapacity to justify the loans. (sic)

(c) For approving and accepting a dacion en pago , or payment of loans with property instead of cash, resulting to a diminishedfuture cumulative interest income by the Bank and a decline in its liquidity

position. (sic)

(d) For knowingly giving “favorable treatment” to theBorrower Corporations in which some or most of them haveinterests, i.e. interlocking directors/officers thereof, interlockingownerships. (sic)

(e) For employing their respective offices and functions as the

Bank’s officers and directors, or omitting to perform their functions andduties, with negligence, unfaithfulness or abuse of confidence of fiduciaryduty, misappropriated or misapplied or ratified by inaction themisappropriation or misappropriations, of (sic) almost P1.6 Billion Pesos(sic) constituting the Bank’s funds placed under their trust andadministration, by unlawfully releasing loans to the BorrowerCorporations or refusing or failing to impugn these, knowing before theloans were released or thereafter that the Bank’s cash resources would bedissipated thereby, to the prejudice of the Petitioner, other Banco Filipinodepositors, and the public.

10.2 Right of a stockholder to inspect the records of a corporation(including financial statements) under Sections 74 and 75 of the Code, asimplemented by the Interim Rules;

(a) Unlawful refusal to allow the Petitioner from inspecting orotherwise accessing the corporate records of the bank despite repeateddemand in writing, where she is a stockholder. (sic)

10.3 Receivership and Creation of a Management Committee pursuant to:

(a) Rule 59 of the 1997 Rules of Civil Procedure (“Rules”) ;

(b) Section 5.2 of R.A. No. 8799;

(c) Rule 1, Section 1(a)(1) of the Interim Rules ;

(d) Rule 1, Section 1(a)(2) of the Interim Rules;

(e) Rule 7 of the Interim Rules;



(f) Rule 9 of the Interim Rules; and

(g) The General Banking Law of 2000 and the New CentralBank Act .[3]

On September 12, 2003, Arcenas, et al. filed their Answer raising, amongothers, the trial court’s lack of jurisdiction to take cognizance of the case. Theyalso filed a Manifestation and Motion seeking the dismissal of the case on thefollowing grounds: (a) lack of jurisdiction over the subject matter; (b) lack of

jurisdiction over the persons of the defendants; (c) forum-shopping; and (d) for being a nuisance/harassment suit. They then moved that the trial court rule on theiraffirmative defenses, dismiss the intra-corporate case, and set the case for

preliminary hearing.

In an Order dated October 18, 2004, the trial court denied the Manifestationand Motion, ruling thus:

The result of the procedure sought by defendants Arcenas, et al. (sic) is for theCourt to conduct a preliminary hearing on the affirmative defenses raised by themin their Answer. This [is] proscribed by the Interim Rules of Procedure onIntracorporate (sic) Controversies because when a preliminary hearing isconducted it is “as if a Motion to Dismiss was filed” (Rule 1 6, Section 6, 1997Rules of Civil Procedure). A Motion to Dismiss is a prohibited pleading under theInterim Rules, for which reason, no favorable consideration can be given to theManifestation and Motion of defendants, Arcenas, et al.

The Court finds no merit to (sic) the claim that the instant case is anuisance or harassment suit.

WHEREFORE, the Court defers resolution of the affirmative defensesraised by the defendants Arcenas, et al .[4]

Arcenas, et al. moved for reconsideration [5] but, on January 18, 2005, theRTC denied the motion .[6] This prompted Arcenas, et al. to file before the CA aPetition for Certiorari and Prohibition under Rule 65 of the Rules of Court with a

prayer for the issuance of a writ of preliminary injunction and a temporaryretraining order (TRO) .[7]






















On February 9, 2005, the CA issued a 60-day TRO enjoining Judge Marellafrom conducting further proceedings in the case .[8]

On February 22, 2005, the RTC issued a Notice of Pre-tria l[9] setting the case

for pre-trial on June 2 and 9, 2005. Arcenas, et al. filed a Manifestation andMotion [10] before the CA, reiterating their application for a writ of preliminaryinjunction. Thus, on April 18, 2005, the CA issued the assailed Resolution, whichreads in part:

(C)onsidering that the Temporary Restraining Order issued by this Court onFebruary 9, 2005 expired on April 10, 2005, it is necessary that a writ of

preliminary injunction be issued in order not to render ineffectual whatever finalresolution this Court may render in this case, after the petitioners shall have

posted a bond in the amount of FIVE HUNDRED THOUSAND (P500,000.00)PESOS.

SO ORDERED .[11]

Dissatisfied, Koruga filed this Petition for Certiorari under Rule 65 of theRules of Court. Koruga alleged that the CA effectively gave due course toArcenas, et al.’s petition when it issued a writ of preliminary injunction withoutfactual or legal basis, either in the April 18, 2005 Resolution itself or in the records

of the case. She prayed that this Court restrain the CA from implementing the writof preliminary injunction and, after due proceedings, make the injunction againstthe assailed CA Resolution permanent .[12]

In their Comment, Arcenas, et al. raised several procedural and substantiveissues. They alleged that the Verification and Certification against Forum-Shopping attached to the Petition was not executed in the manner prescribed byPhilippine law since, as admitted by Koruga’s counsel himself, the same was onlya facsimile.

They also averred that Koruga had admitted in the Petition that she neverasked for reconsideration of the CA’s April 18, 2005 Resolution, contending thatthe Petition did not raise pure questions of law as to constitute an exception to therequirement of filing a Motion for Reconsideration before a Petitionfor Certiorari is filed.





















They, likewise, alleged that the Petition may have already been rendered

moot and academic by the July 20, 2005 CA Decision ,[13] which denied theirPetition, and held that the RTC did not commit grave abuse of discretion in issuing

the assailed orders, and thus ordered the RTC to proceed with the trial of the case.

Meanwhile, on March 13, 2006, this Court issued a Resolution granting the prayer for a TRO and enjoining the Presiding Judge of Makati RTC, Branch 138,from proceeding with the hearing of the case upon the filing by Arcenas, et al. ofa P50,000.00 bond. Koruga filed a motion to lift the TRO, which this Court deniedon July 5, 2006.

On the other hand, respondents Dr. Conrado P. Banzon and Gen. RamonMontaño also filed their Comment on Koruga’s Petition, raising substantially thesame arguments as Arcenas, et al.

G.R. No. 169053

G.R. No. 169053 is a Petition for Review on Certiorari under Rule 45 of theRules of Court, with prayer for the issuance of a TRO and a writ of preliminaryinjunction filed by Arcenas, et al.

In their Petition, Arcenas, et al. asked the Court to set aside theDecision [14] dated July 20, 2005 of the CA in CA-G.R. SP No. 88422, whichdenied their petition, having found no grave abuse of discretion on the part of theMakati RTC. The CA said that the RTC Orders were interlocutory in nature and,thus, may be assailed by certiorari or prohibition only when it is shown that thecourt acted without or in excess of jurisdiction or with grave abuse of discretion. Itadded that the Supreme Court frowns upon resort to remedial measures against

interlocutory orders.

Arcenas, et al. anchored their prayer on the following grounds: that, in theirAnswer before the RTC, they had raised the issue of failure of the court to acquire

jurisdiction over them due to improper service of summons; that the Koruga actionis a nuisance or harassment suit; that there is another case involving the same

parties for the same cause pending before the Monetary Board of the BSP, and this










constituted forum-shopping; and that jurisdiction over the subject matter of thecase is vested by law in the BSP .[15]

Arcenas, et al . assign the following errors:

I. THE COURT OF APPEALS, IN “FINDING NO GRAVE ABUSE OFDISCRETION COMMITTED BY PUBLIC RESPONDENT REGIONALTRIAL COURT OF MAKATI, BRANCH 138, IN ISSUING THEASSAILED ORDERS,” FAILED TO CONSIDER AND MERELYGLOSSED OVER THE MORE TRANSCENDENT ISSUES OF THELACK OF JURISDICTION ON THE PART OF SAID PUBLICRESPONDENT OVER THE SUBJECT MATTER OF THE CASEBEFORE IT, LITIS PENDENTIA AND FORUM SHOPPING, ANDTHE CASE BELOW BEING A NUISANCE OR HARASSMENT SUIT,EITHER ONE AND ALL OF WHICH GOES/GO TO RENDER THEISSUANCE BY PUBLIC RESPONDENT OF THE ASSAILEDORDERS A GRAVE ABUSE OF DISCRETION.

II. THE FINDING OF THE COURT OF APPEALS OF “NO GRAVEABUSE OF DISCRETION COMMITTED BY PUBLIC RESPONDENTREGIONAL TRIAL COURT OF MAKATI, BRANCH 138, IN ISSUINGTHE ASSAILED ORDERS,” IS NOT IN ACCORD WITH LAW ORWITH THE APPLICABLE DECISIONS OF THIS HONORABLECOURT .[16]

Meanwhile, in a Manifestation and Motion filed on August 31, 2005,Koruga prayed for, among others, the consolidation of her Petition with thePetition for Review on Certiorari under Rule 45 filed by Arcenas, et al., docketedas G.R. No. 169053. The motion was granted by this Court in a Resolution datedSeptember 26, 2005.

Our Ruling

Initially, we will discuss the procedural issue.

Arcenas, et al. argue that Koruga’s petition should be dismissed for itsdefective Verification and Certification Against Forum-Shopping, since only afacsimile of the same was attached to the Petition. They also claim that theVerification and Certification Against Forum-Shopping, allegedly executed











in Seattle, Washington, was not authenticated in the manner prescribed byPhilippine law and not certified by the Philippine Consulate in the United States.

This contention deserves scant consideration.

On the last page of the Petition in G.R. No. 168332, Koruga’s counselexecuted an Undertaking, which reads as follows:

In view of that fact that the Petitioner is currently in the United States,undersigned counsel is attaching a facsimile copy of the Verification andCertification Against Forum-Shopping duly signed by the Petitioner and notarized

by Stephanie N. Goggin, a Notary Public for the Sate (sic) of Washington. Uponarrival of the original copy of the Verification and Certification as certified by theOffice of the Philippine Consul, the undersigned counsel shall immediately

provide duplicate copies thereof to the Honorable Court .[17]

Thus, in a Compliance [18] filed with the Court on September 5, 2005, petitioner submitted the original copy of the duly notarized and authenticatedVerification and Certification Against Forum-Shopping she had executed .[19] ThisCourt noted and considered the Compliance satisfactory in its Resolution dated

November 16, 2005. There is, therefore, no need to further belabor this issue.

We now discuss the substantive issues in this case.

First, we resolve the prayer to nullify the CA’s April 18, 2005 Resolution.

We hold that the Petition in G.R. No. 168332 has become moot andacademic. The writ of preliminary injunction being questioned had effectively beendissolved by the CA’s July 20, 2005 Decision. The dispositive portion of theDecision reads in part:

The case is REMANDED to the court a quo for further proceedings and toresolve with deliberate dispatch the intra-corporate controversies and determinewhether there was actually a valid service of summons. If, after hearing, suchservice is found to have been improper, then new summons should be servedforthwith .[20]


















Accordingly, there is no necessity to restrain the implementation of the writ of preliminary injunction issued by the CA on April 18, 2005, since it no longerexists.

However, this Court finds that the CA erred in upholding the jurisdiction of,and remanding the case to, the RTC.

The resolution of these petitions rests mainly on the determination of onefundamental issue: Which body has jurisdiction over the Koruga Complaint, theRTC or the BSP?

We hold that it is the BSP that has jurisdiction over the case.

A reexamination of the Complaint is in order.

Koruga’s Complaint charged defendants with violation of Sections 31 to 34of the Corporation Code, prohibiting self-dealing and conflict of interest ofdirectors and officers; invoked her right to inspect the corporation’s records underSections 74 and 75 of the Corporation Code; and prayed for Receivership andCreation of a Management Committee, pursuant to Rule 59 of the Rules of CivilProcedure, the Securities Regulation Code, the Interim Rules of Procedure

Governing Intra-Corporate Controversies, the General Banking Law of 2000, andthe New Central Bank Act. She accused the directors and officers of BancoFilipino of engaging in unsafe, unsound, and fraudulent banking practices, more

particularly, acts that violate the prohibition on self-dealing.

It is clear that the acts complained of pertain to the conduct of BancoFilipino’s banking busin ess. A bank, as defined in the General Banking

Law ,[21] refers to an entity engaged in the lending of funds obtained in the form of

deposits .[22]

The banking business is properly subject to reasonable regulationunder the police power of the state because of its nature and relation to the fiscalaffairs of the people and the revenues of the state. Banks are affected with publicinterest because they receive funds from the general public in the form of deposits.It is the Government’s responsibility to see to it that the financial interests of tho sewho deal with banks and banking institutions, as depositors or otherwise, are

protected. In this country, that task is delegated to the BSP, which pursuant to its











Charter, is authorized to administer the monetary, banking, and credit system ofthe Philippines. It is further authorized to take the necessary steps against any

banking institution if its continued operation would cause prejudice to itsdepositors, creditors and the general public as well .[23]

The law vests in the BSP the supervision over operations and activities of banks. The New Central Bank Act provides:

Section 25. Supervision and Examination. - The Bangko Sentral shallhave supervision over, and conduct periodic or special examinations of, bankinginstitutions and quasi-banks, including their subsidiaries and affiliates engaged inallied activities .[24]

Specifically, the BSP’s supervisory and regulatory powers include:

4.1 The issuance of rules of conduct or the establishment of standards ofoperation for uniform application to all institutions or functions covered,taking into consideration the distinctive character of the operations ofinstitutions and the substantive similarities of specific functions to whichsuch rules, modes or standards are to be applied;

4.2 The conduct of examination to determine compliance with laws andregulations if the circumstances so warrant as determined by the

Monetary Board ;4.3 Overseeing to ascertain that laws and Regulations are complied with ;

4.4 Regular investigation which shall not be oftener than once a yearfrom the last date of examination to determine whether aninstitution is conducting its business on a safe or soundbasis : Provided, That the deficiencies/irregularities found by ordiscovered by an audit shall be immediately addressed;

4.5 Inquiring into the solvency and liquidity of the institution (2-D); or

4.6 Enforcing prompt corrective action .[25]

Koruga alleges that “the dispute in the trial court involves the manner withwhich the Directors’ (sic) have handled the Bank’s affairs, specifically thefraudulent loans and dacion en pago authorized by the Directors in favor of several















dummy corporations known to have close ties and are indirectly controlled by theDirectors.” [26] Her allegations, then, call for the examination of the allegedlyquestionable loans. Whether these loans are covered by the prohibition on self-dealing is a matter for the BSP to determine. These are not ordinary intra-

corporate matters; rather, they involve banking activities which are, by law,regulated and supervised by the BSP. As the Court has previously held:

It is well-settled in both law and jurisprudence that the Central MonetaryAuthority, through the Monetary Board, is vested with exclusive authority toassess, evaluate and determine the condition of any bank, and finding suchcondition to be one of insolvency, or that its continuance in business wouldinvolve a probable loss to its depositors or creditors, forbid bank or non-bankfinancial institution to do business in the Philippines; and shall designate anofficial of the BSP or other competent person as receiver to immediately take

charge of its assets and liabilities .[27]

Correlatively, the General Banking Law of 2000 specifically deals withloans contracted by bank directors or officers, thus:

SECTION 36. Restriction on Bank Exposure to Directors, Officers,Stockholders and Their Related Interests. — No director or officer of any bankshall, directly or indirectly, for himself or as the representative or agent of others,

borrow from such bank nor shall he become a guarantor, indorser or surety for

loans from such bank to others, or in any manner be an obligor or incur anycontractual liability to the bank except with the written approval of the majority ofall the directors of the bank, excluding the director concerned: Provided, Thatsuch written approval shall not be required for loans, other credit accommodationsand advances granted to officers under a fringe benefit plan approved by theBangko Sentral. The required approval shall be entered upon the records of the

bank and a copy of such entry shall be transmitted forthwith to the appropriatesupervising and examining department of the Bangko Sentral.

Dealings of a bank with any of its directors, officers or stockholders andtheir related interests shall be upon terms not less favorable to the bank than thoseoffered to others.

After due notice to the board of directors of the bank, the office of any bank director or officer who violates the provisions of this Section may bedeclared vacant and the director or officer shall be subject to the penal provisionsof the New Central Bank Act.










BANK OF AMERICA VS. AMERICAN REALTY Leave a comment

Bank of America vs American Realty CorporationGR 133876 December 29, 1999 Facts :Petitioner granted loans to 3 foreign corporations. As security, the latter mortgaged a property locatedin the Philippines owned by herein respondent ARC. ARC is a third party mortgagor who pledged itsown property in favor of the 3 debtor-foreign corporations.

The debtors failed to pay. Thus, peti tioner filed collection suits in foreign courts to enforce the loan.Subsequently, it filed a petition in the Sheriff to extra-judicially foreclose the said mortgage, whichwas granted.

On 12 February 1993, private respondent filed before the Pasig RTC, Branch 159, an action fordamages against the petitioner, for the latter‟s act of foreclosing extra -judicially the real estatemortgages despite the pendency of civil suits before foreign courts for the collection of the principalloan.

Issue :WON petitioner‟s act of f iling a collection suit against the principal debtors for the recovery of the loanbefore foreign courts constituted a waiver of the remedy of foreclosure.

Held : Yes.1. Loan; Mortgage; remedies:

In the absence of express statutory provisions, a mortgage creditor may institute against themortgage debtor either a personal action or debt or a real action to foreclose the mortgage. In otherwords, he may pursue either of the two remedies, but not both. By such election, his cause of actioncan by no means be impaired, for each of the two remedies is complete in itself.

In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and notcumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose, aremedy is deemed chosen upon the filing of the suit for collection or upon the filing of the complaint inan action for foreclosure of mortgage. As to extrajudicial foreclosure, such remedy is deemed electedby the mortgage creditor upon filing of the petition not with any court of justice but with the Office ofthe Sheriff of the province where the sale is to be made.

In the case at bar, petitioner only has one cause of action which is non-payment of the debt.Nevertheless, alternative remedies are available for its enjoyment and exercise. Petitioner then mayopt to exercise only one of two remedies so as not to violate the rule against splitting a cause ofaction.

Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of filing four civilsuits before foreign courts, necessarily abandoned the remedy to foreclose the real estate mortgagesconstituted over the properties of third-party mortgagor and herein private respondent ARC.Moreover, by filing the four civil actions and by eventually foreclosing extra-judicially the mortgages,petitioner in effect transgressed the rules against splitting a cause of action well -enshrined in

jurisprudence and our statute books.

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http://vbdiaz.wordpress.com/2013/03/28/bank-of-america-vs-american-realty/#comments



2. Conflicts of Law

Incidentally, petitioner alleges that under English Law, which according to petitioner is the governinglaw with regard to the principal agreements, the mortgagee does not lose its security interest bysimply filing civil actions for sums of money.

We rule in the negative.

In a long l ine of decisions, this Court adopted the well-imbedded principle in our jurisdiction that thereis no judicial notice of any foreign law. A foreign law must be properly pleaded and proved as a fact.Thus, if the foreign law involved is not properly pleaded and proved, our courts will presume that theforeign law is the same as our local or domestic or internallaw. This is what we refer to as the doctrine of processual presumption.In the instant case, assuming arguendo that the English Law on the matter were properly pleaded andproved in said foreign law would still not find applicability.

Thus, when the foreign law, judgment or contract is contrary to a sound and established public policy

of the forum, the said foreign law, judgment or order shall not be applied.

Additionally, prohibitive laws concerning persons, their acts or property, and those which have fortheir object public order, public policy and good customs shall not be rendered ineffective by laws or

judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

The public policy sought to be protected in the instant case is the principle imbedded in our jurisdictionproscribing the splitting up of a single cause of action.

Moreover, foreign law should not be applied when its application would work undeniable injustice tothe citizens or residents of the forum. To give justice is the most important function of law; hence, alaw, or judgment or contract that is obviously unjust negates the fundamental principles of Conflict of

Laws.

BAYAN MUNA VS. ROMULO Leave a comment

Bayan Muna vs RomuloG. R. No. 159618, February 01, 2011 Facts :Petitioner Bayan Muna is a duly registered party-list group established to represent the marginalizedsectors of society. Respondent Blas F. Ople, now deceased, was the Secretary of Foreign Affairs duringthe period material to this case. Respondent Alberto Romulo was impleaded in his capacity as thenExecutive Secretary.

Rome Statute of the International Criminal Court

Having a key determinative bearing on this case is the Rome Statute establishing the InternationalCriminal Court (ICC) with “the power to exercise its jurisdiction over persons for the most s eriouscrimes of international concern x x x and shall be complementary to the national criminal

jurisdictions.” The serious crimes adverted to cover those considered grave under international law,such as genocide, crimes against humanity, war crimes, and crimes of aggression.

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http://vbdiaz.wordpress.com/2013/03/30/bayan-muna-vs-romulo/#comments



On December 28, 2000, the RP, through Charge d‟Affaires Enrique A. Manalo, signed the RomeStatute which, by its terms, is “subject to ratification, acceptance or approval” by the signatory states.As of the filing of the instant petition, only 92 out of the 139 signatory countries appear to havecompleted the ratification, approval and concurrence process. The Philippines is not among the 92.RP-US Non-Surrender Agreement

On May 9, 2003, then Ambassador Francis J. Ricciardone sent US Embassy Note No. 0470 to theDepartment of Foreign Affairs (DFA) proposing the terms of the non-surrender bilateral agreement(Agreement, hereinafter) between the USA and the RP.Via Exchange of Notes No. BFO-028-037 dated May 13, 2003 (E/N BFO-028-03, hereinafter), the RP,represented by then DFA Secretary Ople, agreed with and accepted the US proposals embodied underthe US Embassy Note adverted to and put in effect the Agreement with the US government. In esse,the Agreement aims to protect what it refe rs to and defines as “persons” of the RP and US fromfrivolous and harassment suits that might be brought against them in international tribunals.8 It isreflective of the increasing pace of the strategic security and defense partnership between the twocountries. As of May 2, 2003, similar bilateral agreements have been effected by and between the USand 33 other countries.The Agreement pertinently provides as follows:

1. For purposes of this Agreement, “persons” are current or former Government officials , employees(including contractors), or military personnel or nationals of one Party.

2. Persons of one Party present in the territory of the other shall not, absent the express consent ofthe first Party,

(a) be surrendered or transferred by any means to any international tribunal for any purpose, unlesssuch tribunal has been established by the UN Security Council, or

(b) be surrendered or transferred by any means to any other entity or third country, or expelled to athird country, for the purpose of surrender to or transfer to any international tribunal, unless suchtribunal has been established by the UN Security Council.

3. When the [US] extradites, surrenders, or otherwise transfers a person of the Philippines to a thirdcountry, the [US] will not agree to the surrender or transfer of that person by the third country to anyinternational tribunal, unless such tribunal has been established by the UN Security Council, absentthe express consent of the Government of the Republic of the Philippines [GRP].

4. When the [GRP] extradites, surrenders, or otherwise transfers a person of the [USA] to a thirdcountry, the [GRP] will not agree to the surrender or transfer of that person by the third country toany international tribunal, unless such tribunal has been established by the UN Security Council,absent the express consent of the Government of the [US].

5. This Agreement shall remain in force until one year after the date on which one party notifies theother of its intent to terminate the Agreement. The provisions of this Agreement shall continue toapply with respect to any act occurring, or any allegation arising, before the effective date oftermination.

In response to a query of then Solicitor General Alfredo L. Benipayo on the status of the non-surrender agreement, Ambassador Ricciardone replied in his letter of October 28, 2003 that theexchange of diplomatic notes constituted a legally binding agreement under international law; and



that, under US law, the said agreement did not require the advice and consent of the US Senate.In this proceeding, petitioner imputes grave abuse of discretion to respondents in concluding andratifying the Agreement and prays that it be struck down as unconstitutional, or at least declared aswithout force and effect.Issue : Whether or not the RP-US NON SURRENDER AGREEMENT is void ab initio for contracting

obligations that are either immoral or otherwise at variance with universally recognized principles ofinternational law.Ruling : The petition is bereft of merit.Validity of the RP-US Non-Surrender Agreement

Petitioner‟s initial challenge against the Agreement relates to form, its threshold posture being thatE/N BFO-028-03 cannot be a valid medium for concluding the Agreement.

Petitioners‟ contention–– perhaps taken unaware of certain well-recognized international doctrines,practices, and jargons –– is untenable. One of these is the doctrine of incorporation, as expressed inSection 2, Article II of the Constitution, wherein the Philippines adopts the generally acceptedprinciples of international law and international jurisprudence as part of the law of the land and

adheres to the policy of peace, cooperation, and amity with all nations. An exchange of notes falls “into the category of inter -governmental agreements,” which is an internationally accepted form ofinternational agreement. The United Nations Treaty Collections (Treaty Reference Guide) defines theterm as follows:

An “exchange of notes” is a record of a routine agreement, that has many similarities with the priva telaw contract. The agreement consists of the exchange of two documents, each of the parties being inthe possession of the one signed by the representative of the other. Under the usual procedure, theaccepting State repeats the text of the offering State to record its assent. The signatories of theletters may be government Ministers, diplomats or departmental heads. The technique of exchange ofnotes is frequently resorted to, either because of i ts speedy procedure, or, sometimes, to avoid theprocess of legislative approval.

In another perspective, the terms “exchange of notes” and “executive agreements” have been usedinterchangeably, exchange of notes being considered a form of executive agreement that becomesbinding through executive action. On the other hand, executive agreements concluded by thePresident “sometimes take the form of exchange of notes and at other times that of more formaldocuments denominated „agreements‟ or „protocols.‟” As former US High Commissioner to thePhilippines Francis B. Sayre observed in his work, The Constitutionality of Trade Agreement Acts:

The point where ordinary correspondence between this and other governments ends and agreements– whether denominated executive agreements or exchange of notes or otherwise – begin, maysometimes be difficult of ready ascertainment. x x x

It is fairly clear from the foregoing disquisition that E/N BFO-028-03 –– be it viewed as the Non-Surrender Agreement itself, or as an integral instrument of acceptance thereof or as consent to bebound –– is a recognized mode of concluding a legally binding international written contract amongnations.Agreement Not Immoral/Not at Variancewith Principles of International LawPetitioner urges that the Agreement be struck down as void ab initio for imposing immoral obligationsand/or being at variance with allegedly universally recognized principles of international law. The



immoral aspect proceeds from the fact that the Agreement, as petitioner would put it, “leavescriminals immune from responsibility for unimaginable atrocities that deeply shock the conscience ofhumanity; x x x it precludes our country from delivering an American criminal to the [ICC] x x x.”63

The above argument is a kind of recycling of petitioner‟s earlier position, which, as alrea dy discussed,contends that the RP, by entering into the Agreement, virtually abdicated its sovereignty and in theprocess undermined its treaty obligations under the Rome Statute, contrary to international lawprinciples.

The Court is not persuaded. Suffice it to state in this regard that the non-surrender agreement, asaptly described by the Solicitor General, “is an assertion by the Philippines of its desire to try andpunish crimes under its national law. x x x The agreement is a recognition of the primacy andcompetence of the country‟s judiciary to try offenses under its national criminal laws and dispense

justice fairly and judiciously.”

Petitioner, we believe, labors under the erroneous impression that the Agreement would allow Filipinosand Americans committing high crimes of international concern to escape criminal trial and

punishment. This is manifestly incorrect. Persons who may have committed acts penalized under theRome Statute can be prosecuted and punished in the Philippines or in the US; or with the consent ofthe RP or the US, before the ICC, assuming, for the nonce, that all the formalities necessary to bindboth countries to the Rome Statute have been met. For perspective, what the Agreement contextuallyprohibits is the surrender by either party of individuals to international tribunals, like the ICC, withoutthe consent of the other party, which may desire to prosecute the crime under its existing laws. Withthe view we take of things, there is nothing immoral or violative of international law concepts in theact of the Phil ippines of assuming criminal jurisdiction pursuant to the non-surrender agreement overan offense considered criminal by both Philippine laws and the Rome Statute.

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