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Tanada vs.

272 SCRA 18. May 2, 1997
Panganiban, J.


On April 15, 1994, the Philippine Government represented by its Secretary

of the Department of Trade and Industry signed the Final Act binding the
Philippine Government to submit to its respective competent authorities the WTO
(World Trade Organization) Agreements to seek approval for such. On December
14, 1994, Resolution No. 97 was adopted by the Philippine Senate to ratify the
WTO Agreement.

The suit was filed to nullify the concurrence of the Philippines Senate to the
President’s Ratification of the Agreement establishing the World Trade
Organization. It was contended that the agreement places nationals and products of
member countries on the same footing as Filipinos and local products in
contravention of the Filipino First Policy as dictated in Sections 10 and 12, Article
XII of the Constitution. Also, the petitioners contend that the WTO Agreement
violates Sec 19, Article II, providing for the development of a self reliant and
independent national economy.

Petitioners maintained that this Agreement was an assault on the sovereign

powers of the Philippines because it meant that Congress could not pass legislation
that would be good for national interest and general welfare if such legislation
would not conform to the WTO Agreement.

Whether the provisions of the WTO Agreement and its annexes limit,
restrict, or impair the exercise of legislative power by Congress.
Whether or not the Resolution No. 97 ratifying the WTO Agreement is


While sovereignty has traditionally been deemed absolute and all-

encompassing on the domestic level, it is however subject to limitations and
restrictions voluntarily agreed to by the Philippines as a member of the family of
nations. One of the oldest and most fundamental rules in international law is pacta
sunt servanda — international agreements must be performed in good faith. “A
treaty engagement is not a mere moral obligation but creates a legally binding
obligation on the parties xxx. A state which has contracted valid international
obligations is bound to make in its legislation such modifications as may be
necessary to ensure the fulfillment of the obligations undertaken.By their inherent
nature, treaties really limit or restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects of their state power in exchange
for greater benefits granted by or derived from a convention or pact. After all,
states, like individuals live with coequals, and in pursuit of mutuality covenanted
objectives and benefits, they also commonly agree to limit the exercise of their
otherwise absolute rights.

The sovereignty of a state therefore cannot in fact and in reality be

considered absolute. Certain restrictions enter into the picture: (1) limitations
imposed by the very nature of membership in the family of nations and (2)
limitations imposed by treaty stipulations.

The Supreme Court ruled the Resolution No. 97 is not unconstitutional.

While the constitution mandates a bias in favor of Filipino goods, services, labor
and enterprises, at the same time, it recognizes the need for business exchange
with the rest of the world on the bases of equality and reciprocity and limits
protection of Filipino interests only against foreign competition and trade practices
that are unfair. In other words, the Constitution did not intend to pursue an
isolationalist policy. Furthermore, the constitutional policy of a “self-reliant and
independent national economy” does not necessarily rule out the entry of foreign
investments, goods and services. It contemplates neither “economic seclusion” nor
“mendicancy in the international community.”