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II.2 What is the effect of the subsequent transfer of sovereignty from Spain to the US and later on from the US to the Republic of the Philippines on the said provision? Explain. Answer: Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Art. 14 of the Code of Commerce must be deemed to have been abrogated because where there is a change of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign. (Macariola vs. Asuncion, 114 SCRA 77) III. B Compare and differentiate one from the other. Answer: INITIATIVE is the power of the people to propose amendments to the Constitution or to propose and enact legislations through an election called for the purpose. REFERENDUM is the power of the electorate to approve or reject a legislation through an election called for the purpose. (Sec. 3, R.A. No. 6735). III. C1 In constitutions with initiative clause, like the Philippine Constitution, which allow amendments but not revision, court’s develop two-part test. What are the tests? Explain. Answer: These are quantitative and qualitative tests. The quantitative test asks whether the proposed change is so extensive in its provision as to change directly the “substance entirety” of the constitution by the deletion or alteration of numerous provisions. The court examines only the number of provisions affected and does not consider the degree of the change. The qualitative test inquires into the qualitative effects of the proposed change in the constitution. The main inquiry is whether the change will accomplish such far reaching

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II.2 What is the effect of the subsequent transfer of sovereignty from Spain to the US and later on from the US to the Republic of the Philippines on the said provision? Explain.

Answer:Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Art. 14 of the Code of Commerce must be deemed to have been abrogated because where there is a change of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign. (Macariola vs. Asuncion, 114 SCRA 77)

III. B Compare and differentiate one from the other.

Answer:INITIATIVE is the power of the people to propose amendments to the Constitution or to propose and enact legislations through an election called for the purpose. REFERENDUM is the power of the electorate to approve or reject a legislation through an election called for the purpose. (Sec. 3, R.A. No. 6735).

III. C1 In constitutions with initiative clause, like the Philippine Constitution, which allow amendments but not revision, court’s develop two-part test. What are the tests? Explain.

Answer:These are quantitative and qualitative tests.The quantitative test asks whether the proposed change is so extensive in its provision as to change directly the “substance entirety” of the constitution by the deletion or alteration of numerous provisions. The court examines only the number of provisions affected and does not consider the degree of the change.

The qualitative test inquires into the qualitative effects of the proposed change in the constitution. The main inquiry is whether the change will accomplish such far reaching

III. C2 If there is a change in the structure of the government, is there revision of the Constitution? Explain using the two-part test.

Answer:Under both the quantitative and qualitative tests, the initiative is a revision and not merely an amendment. Quantitatively, the proposed changes overhaul two articles - Article VI on the Legislature and Article VII on the Executive - affecting a total of 105 provisions in the entire Constitution. Qualitatively, the proposed changes alter substantially the basic plan of government, from presidential to parliamentary, and from a bicameral to a unicameral legislature. (Lambino vs. COMELEC, Oct. 25, 2006).

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IV. A The rules of International Law are neither unyielding nor impervious to change. The increasing need of sovereign States to enter into purely commercial activities remotely connected with the discharge of their governmental functions brought about a new concept of sovereign immunity, the restrictive theory. Explain fully what this recent concept is.

Answer:This concept, the restrictive theory, holds that the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii, but not with regard to private acts or acts jure gestionis. (Republic of Indonesia vs. Vinzon, June 26, 2003).

IV. B China National Machinery & Equipment Corp. (CNMEG) entered into a Memorandum of Understanding with the North Luzon Railways Corporation (Northrail) for the conduct of a feasibility study on a possible railway line (the Northrail Project). Thereafter, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the Philippines (DOF) entered into a Memorandum of Understanding, wherein China agreed to extend Preferential Buyer’s Credit to the Philippine government to finance the Northrail Project. The Chinese government designated EXIM Bank as the lender, while the Philippine government named the DOF as the borrower. The Chinese Ambassador to the Philippines wrote a letter to DOF Secretary informing him of CNMEG’s designation as the Prime Contractor for the Northrail Project. Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon Railway System (the Contract Agreement). Then, the Philippine government and EXIM Bank entered into a counterpart financial agreement (the Loan Agreement). In the Loan Agreement, EXIM Bank agreed to extend Preferential Buyer’s Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to finance the construction of Phase I of the Northrail Project. A Complaint for Annulment of Contract and Injunction was filed against CNMEG, the Executive Secretary, the DOF, the DBM, the NEDA and Northrail.

1. Is CNMEG entitled to immunity, precluding it from being sued before a local court?Answer:No. A threshold question that must be answered is whether CNMEG performs governmental or proprietary functions. A thorough examination of the basic facts of the case would show that CNMEG is engaged in a proprietary activity.Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it with immunity. This view finds support in Malong vs. PNR, in which this Court held that "(i)mmunity from suit is determined by the character of the objects for which the entity was organized." Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented to be sued under Chinese law. Thus, in the absence of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As a result, it has the capacity to sue and be sued under Section 36 of the Corporation Code.Moreover, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. However, this determination by the OSG, or by the OGCC for that matter, does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification.

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2. CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy of the People’s Republic of China, stating that the Northrail Project is in pursuit of a sovereign activity. Further, it also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. What are the intrinsic values of the earlier mentioned certifications? Are the said documents binding upon our courts?

Answer:First, the Certification executed by the Economic and Commercial Office of the Embassy of the People’s Republic of China is not the kind of certification that can establish CNMEG’s entitlement to immunity from suit, as Holy See unequivocally refers to the determination of the "Foreign Office of the state where it is sued." Further, the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC) does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification.

3. May an agreement to submit any dispute to arbitration be construed as an implicit waiver of immunity from suit?

Answer:In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the legal reasoning behind the waiver in this case.

a. Is the Contract Agreement an executive agreement?Answer:To be considered an executive agreement, the following three requisites provided under the Vienna Convention must concur: (a) the agreement must be between states; (b) it must be written; and (c) it must governed by international law. The first and the third requisites do not obtain in the case at bar.First, the Contract Agreement was not concluded between the Philippines and China, but between Northrail and CNMEG. Both Northrail and CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese governments, respectively.Moreover, since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively conceded that their rights and obligations thereunder are not governed by international law. (CNMEG vs. Hon. Santamaria, Feb. 7, 2012).

V.B Broadly speaking, there is a violation of the separation of powers principle when one branch of government unduly encroaches on the domain of another. US Supreme Court decisions instruct that the principle of separation of powers may be violated in two (2) ways. Enumerate the ways where there is a violation of the earlier mentioned principle.

Answer:

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Firstly, "one branch may interfere impermissibly with the other’s performance of its constitutionally assigned function"; and "alternatively, the doctrine may be violated when one branch assumes a function that more properly is entrusted to another." In other words, there is a violation of the principle when there is impermissible (a) interference with and/or (b) assumption of another department‘s functions. (ibid).

V.C Over the decades, "pork" funds in the Philippines have increased tremendously, owing in no small part to previous Presidents who reportedly used the "Pork Barrel" in order to gain congressional support. Recently, the National Bureau of Investigation (NBI) began its probe into allegations that "the government has been defrauded of some P10 Billion over the past 10 years by a syndicate using funds from the pork barrel of lawmakers and various government agencies for scores of ghost projects. Are the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto unconstitutional considering that they violate the principle of/constitutional provisions on:

(a) Separation of powers?(b) Non-delegability of legislative power?(c) Checks and balances?

Answer:Separation of PowersUnder the 2013 PDAF Article, it cannot be seriously doubted that legislators have been accorded post-enactment authority to identify PDAF projects. Aside from the area of project identification, legislators have also been accorded post-enactment authority in the areas of fund release and realignment.Clearly, these post-enactment measures which govern the areas of project identification, fund release and fund realignment are not related to functions of congressional oversight and, hence, allow legislators to intervene and/or assume duties that properly belong to the sphere of budget execution. The fundamental rule, as categorically articulated in Abakada, cannot be overstated – from the moment the law becomes effective, any provision of law that empowers Congress or any of its members to play any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus unconstitutional . That the said authority is treated as merely recommendatory in nature does not alter its unconstitutional tenor since the prohibition, to repeat, covers any role in the implementation or enforcement of the law. Towards this end, the Court must therefore abandon its ruling in Philconsa which sanctioned the conduct of legislator identification on the guise that the same is merely recommendatory and such reliance on the same falters altogether. Besides, it must be pointed out that they failed to substantiate their position that the identification authority of legislators is only of recommendatory import. Quite the contrary, they have admitted that the identification of the legislator constitutes a mandatory requirement before his PDAF can be tapped as a funding source, thereby highlighting the indispensability of the said act to the entire budget execution process.

Non-delegability of Legislative PowerInsofar as it confers post-enactment identification authority to individual legislators, violates the principle of non-delegability since said legislators are effectively allowed to individually exercise the power of appropriation, which is lodged in Congress. That the power to appropriate must be exercised only through legislation is clear from Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law." Essentially, under the 2013 PDAF Article, individual legislators are given a personal lump-sum fund from which they are able to dictate (a) how much from such fund would go to (b) a specific project or beneficiary that they themselves also determine. As these two (2) acts comprise

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the exercise of the power of appropriation as described in Bengzon, and given that the 2013 PDAF Article authorizes individual legislators to perform the same, undoubtedly, said legislators have been conferred the power to legislate which the Constitution does not, however, allow.

Checks and BalancesUnder the 2013 PDAF Article, the amount of P24.79 Billion only appears as a collective allocation limit since the said amount would be further divided among individual legislators who would then receive personal lump-sum allocations and could, after the GAA is passed, effectively appropriate PDAF funds based on their own discretion. As these intermediate appropriations are made by legislators only after the GAA is passed and hence, outside of the law, it necessarily means that the actual items of PDAF appropriation would not have been written into the General Appropriations Bill and thus effectuated without veto consideration. This kind of lump-sum/post-enactment legislative identification budgeting system fosters the creation of a budget within a budget" which subverts the prescribed procedure of presentment and consequently impairs the President‘s power of item veto. The lump-sum amount of P24.79 Billion would be treated as a mere funding source allotted for multiple purposes of spending, i.e., scholarships, medical missions, assistance to indigents, preservation of historical materials, construction of roads, flood control, etc. This setup connotes that the appropriation law leaves the actual amounts and purposes of the appropriation for further determination and, therefore, does not readily indicate a discernible item which may be subject to the President‘s power of item veto

VI.B The GSIS seeks exemption from the payment of legal fees imposed on GOCCs. The GSIS anchors its petition on Section 39 of its charter, which provides that “[t]axes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including accruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges or duties of all kinds. xxx.”

a. What is the basis of the Supreme Court in imposing legal fees to litigants (including the GSIS)?Answer:Rule 141 (on Legal Fees) of the Rules of Court was promulgated by this Court in the exercise of its rule-making powers under Section 5(5), Article VIII of the Constitution:Sec. 5. The Supreme Court shall have the following powers:x x x(5) Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and procedure in all courts, xxx.

b. May the legislature exempt the Government Service Insurance System (GSIS) from legal fees imposed by the Court on government-owned and controlled corporations and local government units? Answer:The separation of powers among the three co-equal branches of our government has erected an impregnable wall that keeps the power to promulgate rules of pleading, practice and procedure within the sole province of this Court. The other branches trespass upon this prerogative if they enact laws or issue orders that effectively repeal, alter or modify any of the

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procedural rules promulgated by this Court. Viewed from this perspective, the claim of a legislative grant of exemption from the payment of legal fees necessarily fails.Congress could not have carved out an exemption for the GSIS from the payment of legal fees without transgressing another equally important institutional safeguard of the Court’s independence — fiscal autonomy. Fiscal autonomy recognizes the power and authority of the Court to levy, assess and collect fees, including legal fees. (Re: Petition for Recognition of the Exemption of the Government Service Insurance System from Payment of Legal Fees, 612 SCRA 193).

II.B Thereafter, the judge rendered a decision, which became final for lack of an appeal. Then, a project of partition was submitted to Judge X which he approved. A portion of lot 1184-E, one of the properties subject to partition under the above-mentioned civil case, was acquired by Judge X. Y alleged that Judge X violated, among others, Article 14 of the Code of Commerce, prohibiting judges from engaging in commerce. The said code was enacted during the Spanish regime in the Philippines.a. What is the nature of the above-mentioned provision in the Code of Commerce?

Answer:Although the aforestated provision is incorporated in the Code of Commerce which is part of the commercial laws of the Philippines, it, however, partakes of the nature of a political law as it regulates the relationship between the government and certain public officers and employees, like justices and judges.

b. What is the effect of the subsequent transfer of sovereignty from Spain to the US and later on from the US to the Republic of the Philippines on the said provision? Explain.Answer:Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Art. 14 of the Code of Commerce must be deemed to have been abrogated because where there is a change of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign. (Macariola vs. Asuncion, 114 SCRA 77)