G.R. No. L-5731. June 22, 1954

This is a petition instituted in the Court of First Instance of
Manila under the provisions of the Philippine Property Act of the
United States against the Sun Life Assurance Company of Canada, to
compel the latter to comply with the demand of the former to pay him
the sum of P310.10, which represents one-half of the proceeds of an
endowment policy (No. 757199) which matured on August 20, 1946, and
which is payable to one Naogiro Aihara, a Japanese national. Under the
policy Aihara and his wife, Filomena Gayapan, were insured jointly for
the sum of Pl,000, and upon its maturity the proceeds thereof were
payable to said insured, share and share alike, or P310.10 each. The
defenses set up in the court of origin are: (1) that the immunities
provided in section 5(b) (2) of the Trading With the Enemy Act
of the United States are of doubtful application in the Philippines,
and have never been adopted by any law of the Philippines as applicable
here or obligatory on the local courts; (2) that the defendant is a
trustee of the fund and is under a legal obligation to see to it that
it is paid to the person or persons entitled thereto, and unless the
petitioner executes a suitable discharge and an adequate guaranty to
indemnify and keep it free and harmless from any further liability
under the policy, it may not be compelled to make the payment demanded.
The Court of First Instance of Manila having approved and granted the
petition, the respondent has appealed to this Court, contending that
the Court of origin erred in holding that the Trading With the Enemy
Act of the United States is binding upon the inhabitants of this
country, notwithstanding the attainment of complete independence on
July 4, 1946, and in ordering the payment prayed for.

On July 3, 1946, the Congress of the United States passed Public Law
485-79th Congress, known as the Philippine Property Act of 1946.
Section 3 thereof provides that “The Trading with the Enemy Act of
October 6, 1917 (40 Stat. 411), as amended, shall continue in force in
the Philippines after July 4, 1946, * * *.” To implement the provisions
of the act, the President of the United States on July 3, 1946,
promulgated Executive Order No. 9747, “continuing the functions of the
Alien Property Custodian and the Department of the Treasury in the
Philippines.” Prior to and preparatory to the approval of said
Philippine Property Act of 1946, an agreement was entered into between
President Manuel Roxas of the Commonwealth and U. S. Commissioner Paul
V. McNutt whereby title to enemy agricultural lands and other
properties was to be conveyed by the United States to the Philippines
in order to help the rehabilitation of the latter, but that in order to
avoid complex legal problems in relation to said enemy properties, the
Alien Property Custodian of the United States was to continue
operations in the Philippines even after the latter’s independence,
that he may settle all claims that may exist or arise against the
above-mentioned enemy properties, in accordance with the Trading With
the Enemy Act of the United States. (Report of the Committee on Insular
Affairs No. 2296 and Senate Report No. 1578 from the Committee on
Territories and Insular Affairs, to accompany S. 2345, accompanying H.
R. 6801, 79th Congress, 2nd Session.) This purpose of conveying enemy
properties to the Philippines after all claims against them shall have
been settled is expressly embodied in the Philippine Property Act of
1946.

SEC. 3. The Trading With the Enemy Act of October 6,
1917 (40 Stat. 411), as amended, shall continue in force in the
Philippines after July 4, 1946, and all powers and authority conferred
upon the President of the United States or the Alien Property Custodian
by the terms of the said Trading With the Enemy Act, as amended, with
respect to the Philippines, shall continue thereafter to be exercised
by the President of the United States, or such officer or agency as he
may designate: Provided, That all property vested in or transferred to
the President of the United States, the Alien Property Custodian, or
any such officer or agency as the President of the United States may
designate under the Trading With the Enemy Act, as amended, which was
located in the Philippines at the time of such vesting, or the proceeds
thereof, and which shall remain after the satisfaction of any claim
payable under the Trading With the Enemy Act, as amended, and after the
payment of such costs and expenses of administration as may by law be
charged against such property or proceeds, shall be transferred by the
President of the United States to the Republic of the Philippines:
Provided further, That such property, or proceeds thereof, may be
transferred by the President of the United States to the Republic of
the Philippines upon indemnification acceptable to the President of the
United States by the Republic of the Philippines for such claims,
costs, and expenses of administration as may by law be charged against
such property or proceeds thereof before final adjudication of such
claims, costs and expenses of administration. Provided further, That
the courts of first instance of the Republic of the Philippines are
hereby given jurisdiction to make and enter all such rules as to notice
or otherwise, and all such orders and decrees and to issue such process
as may be necessary and proper in the premises to enforce any orders,
rules, and regulations issued by the President of the United States,
the Alien Property Custodian, or such officer or agency designated by
the President of the United States pursuant to the Trading With the
Enemy Act, as amended, with such right of appeal therefrom as may be
provided by law: And provided further, That any suit authorized under
the Trading With the Enemy Act, as amended, with respect to property
vested in or transferred to the President of the United States, the
Alien Property Custodian, or any officer or agency designated by the
President of the United States hereunder, which at the time of such
vesting or transfer was located with the Philippines, shall after July
4, 1946, be brought, in the appropriate court of first instance of the
Republic of the Philippines, against the officer or agency hereunder
designated by the President of the United States with right of appeal
therefrom as may be provided by law. In any litigation authorized under
this section, the officer or administrative head of the agency
designated hereunder may appear personally, or through attorneys
appointed by him, without regard to the requirements of law other than
this section.

And when the proclamation of the independence of the Philippines by
President Truman was made, said independence was granted “in accordance
with and subject to the reservations provided in the applicable
statutes of the United States.” The enforcement of the Trading With the
Enemy Act of the United States was contemplated to be made applicable
after independence, within the meaning of the reservations.

On the part of the Philippines, conformity to the enactment of the
Philippine Property Act of 1946 of the United States was announced by
President Manuel Roxas in a joint statement signed by him and by
Commissioner McNutt. Ambassador Romulo also formally expressed the
conformity of the Philippine Government to the approval of said act to
the American Senate prior to its approval. And after the grant of
independence, the Congress of the Philippines approved Republic Act No.
8, entitled

AN ACT TO AUTHORIZE THE PRESIDENT OF
THE PHILIPPINES TO ENTER INTO SUCH CONTRACT OR UNDERTAKINGS AS MAY BE
NECESSARY TO EFFECTUATE THE TRANSFER TO THE REPUBLIC OF THE PHILIPPINES
UNDER THE PHILIPPINE PROPERTY ACT OF NINETEEN HUNDRED AND FORTY-SIX OF
ANY PROPERTY OR PROPERTY RIGHTS OR THE PROCEEDS THEREOF AUTHORIZED TO
BE TRANSFERRED UNDER SAID ACT; PROVIDING FOR THE ADMINISTRATION AND
DISPOSITION OF SUCH PROPERTIES ONCE RECEIVED; AND APPROPRIATING THE
NECESSARY FUND THEREFOR.

The Congress of the Philippines also approved Republic Act No. 7,
which established a Foreign Funds Control Office. After the approval of
the Philippine Property Act of 1946 of the United States, the
Philippine Government also formally expressed, through the Secretary of
Foreign Affairs, conformity thereto. (See letters of Secretary dated
August 22, 1946, and June 3, 1947.) The Congress of the Philippines has
also approved Republic Act No. 477, which provides for the
administration and disposition of properties which have been or may
hereafter be transferred to the Republic of the Philippines in
accordance with the Philippine Property Act of 1946 of the United
States.

It is evident, therefore, that the consent of the Philippine
Government to the application of the Philippine Property Act of 1946 to
the Philippines after independence was given, not only by the Executive
Department of the Philippine Government, but also by the Congress,
which enacted the laws that would implement or carry out the benefits
accruing from the operation of the United States law. The
respondent-appellant, however, contends that the operation of the law
after independence could not have actually taken, or may not take
place, because both Republic Act No. 8 and Republic Act No. 477 do
not contain any specific provision whereby the Philippine Property Act
of 1946 or its provisions is made applicable to the Philippines. It is
also contended that in the absence of such express provision in any of
the laws passed by the Philippine Congress, said Philippine Property
Act of 1946 does not form part of our laws and is not binding upon the
courts and inhabitants of the country.

There is no question that a foreign law may have extraterritorial
effect in a country other than the country of origin, provided the
latter, in which it is sought to be made operative, gives its consent
thereto. This principle is supported by unquestioned authority.

The jurisdiction of the nation within its territory
is necessarily exclusive and absolute. It is susceptible of no
limitation not imposed by itself. Any restriction upon it, deriving
validity from an external source, would imply a diminution of its
sovereignty to the extent of the restriction, and an investment of that
sovereignty to the same extent in that power which would impose such
restriction. All exceptions, therefore, to the full and complete power
of a nation within its own territories, must be traced up to the
consent of the nation itself. They can flow from no other legitimate
source. This consent may be either express or implied. (Philippine
Political Law by Sinco, pp. 27-28, citing Chief Justice Marshall’s
statement in the Exchange, 7 Branch 116)

In the course of his dissenting opinion in the case of S. S. Lotus,
decided by the Permanent Court of International Justice, John Bassett
Moore said:

1. It is an admitted principle of International Law that a
   nation possesses and exercises within its own territory an absolute and
   exclusive jurisdiction, and that any exception to this right must be
   traced to the consent of the nation, either express or implied
   (Schooner Exchange vs. McFadden [1812], 7 Cranch 116, 136). The benefit
   of this principle equally ensures to all independent and sovereign
   States, and is attended with a corresponding responsibility for what
   takes place within the national territory. (Digest of International
   Law, by Backworth, Vol. II, pp. 1-2)

The above principle is not denied by respondent-appellant. But its
argument on this appeal is that while the acts enacted by the
Philippine Congress impliedly accept the benefits of the operation of
the United States law (Philippine Property Act of 1946), no provision
in the said acts of the Philippine Congress makes said United States
law expressly applicable. In answer to this contention, it must be
stated that the consent of a State to the operation of a foreign law
within its territory does not need to be express; it is enough that
said consent be implied from its conduct or from that of its authorized
officers.

515. No rule of International Law exists which prescribe a necessary form of ratification.—Ratification
can, therefore, be given tacitly as well as expressly. Tacit
ratification takes place when a State begins the execution of a treaty
without expressly ratifying it. It is usual for ratification to take
the form of a document duly signed by the Heads of the States concerned
and their Secretaries for Foreign Affairs. It is usual to draft as many
documents as there are parties to the Convention, and to exchange these
documents between the parties. Occasionally the whole of the treaty is
recited verbatim in the ratifying documents, but sometimes only the
title, preamble, and date of the treaty, and the names of the signatory
representatives are cited. As ratification is only the confirmation of
an already existing treaty, the essential requirements in a ratifying
document is merely that it should refer clearly and unmistakably to the
treaty to be ratified. The citation of title, preamble, date, and names
of the representatives is, therefore quite sufficient to satisfy that
requirement. (Oppenheim, pp. 818-819; underscoring ours.)

International
Law does not require that agreements between nations must be concluded
in any particular form or style. The law of nations is much more
interested in the faithful performance of international obligations
than in prescribing procedural requirements. (Treaties and Executive
Agreements, by Myres S. McDougal and Asher Lands, Yale Law Journal,
Vol. 54, pp. 318-319)

In the case at bar, our ratification of or concurrence to the
agreement for the extension of the Philippine Property Act of 1946 is
clearly implied from the acts of the President of the Philippines and
of the Secretary of Foreign Affairs, as well as by the enactment of
Republic Acts Nos. 7, 8, and 477.

We must emphasize the fact that the operation of the Philippine
Property Act of 1946 in the Philippines is not derived from the
unilateral act of the United States Congress, which made it expressly
applicable, or from the saving provision contained in the proclamation
of independence. It is well-settled in the United States that its laws
have no extraterritorial effect. The application of said law in the
Philippines is based concurrently on said act (Philippine Property Act
of 1946) and on the tacit consent thereto and the conduct of the
Philippine Government itself in receiving the benefits of its
provisions.

It is also claimed by the respondent-appellant that then trial court
erred in ordering it to pay the petitioner the amount demanded, without
the execution by the petitioner of a deed of discharge and indemnity
for its protection. The Trading With the Enemy Act of the United
States, the application of which was extended to the Philippines by
mutual agreement of the two Governments, contains an express provision
to the effect that delivery of property or interest therein made to or
for the account of the United States in pursuance of the provision of
the law, shall be considered as a full acquittance and discharge for
purposes of the obligation of the person making the delivery or
payment. (Section 5(b) (2), Trading With the Enemy Act.) This
express provision of the United States law saves the
respondent-appellant from any further liability for the amount ordered
to be paid to the petitioner, and fully protects it from any further
claim with respect thereto. The request of the respondent-appellant
that a security be granted it for the payment to be made under the law
is, therefore, unnecessary, because the judgment rendered in this case
is sufficient to prove such acquittance and discharge.

The decision appealed from should be as it is hereby affirmed, with costs against the respondent-appellant.

Paras, C J., Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo and Concepcion, JJ., concur.