USAFFE v. Treasurer of the Philippines (1959)

USAFFE VETERANS ASSOCIATION, INC. v TREASURER OF THE PHILIPPINES, ET. AL. (June 30, 1959) Appeal from a judgment of the CFI of Manila

FACTS:
• Romulo-Snyder Agreement (1950): RP Govt undertook to return to the US Govt in 10 annual installments, a total of about $35M advanced by the US to, but unexpended by, the Nat’l Defense Forces of the RP.
• Oct 1954: The Usaffe Veterans Associations Inc prayed in its complaint before the CFI that said Agreement be annulled; that payments thereunder be declared illegal; & that defendants as officers of RP be restrained from disbursing any funds in the Nat’l Treasury in pursuance of said Agreement.
• Usaffe Veterans further asked that the moneys available, instead of being remitted to the US, should be turned over to the Finance Service of the AFP for the payment of all pending claims of the veterans represented by plaintiff.
• 3 PROPOSITIONS OF PLAINTIFF IN COMPLAINT: 1) that the funds to be “returned” under the Agreement were funds appropriated by the US Congress for the RP Army, actually delivered to the RP Govt & actually owned by the said Government; 2) that U.S Secretary Snyder of the Treasury, had no authority to retake such funds from the RP Govt; 3) The RP Foreign Secretary Carlos P. Romulo had no authority to return or promise to return the aforesaid sums of money through the Agreement.
• The court eventually upheld the validity of the Agreement. Plaintiff appealed.
• July 26, 1941: Foreseeing the War in the Pacific, Pres Roosevelt, called into the service of the US Armed Forces, for the duration of the emergency, all organized mil forces of the Commonwealth. (His order was published here by Proc No 740 of Pres Quezon on Aug 10, 1941)
• October 1941: By 2 special orders, MacArthur, Commanding Gen of USAFFE, placed under his command all the RP Army units including Phil Constabulary.
• Thus, US Congress provided in its Appropriation Act of Dec 17, 1941 (Public Law No. 353): “For all expenses necessary for the mobilization, operation & maintenance of the RP Army, including expenses connected w/ calling into the service RP mil forces…$269,000.00; to remain available ‘til June 30, 1943, w/c shall be available for payment to the Commonwealth upon its written request, either in advance of or in reimbursement for all or any part of the estimated or actual costs, as authorized by the USAFFE Commanding Gen, of the necessary expenses for the purposes aforesaid.”
• Pursuant to the power reserved to him under Public Law 353, Roosevelt issued EO 9011: “2(a) Necessary expenditures from funds in the Phil Treasury for the purposes authorized by Public Law 353, will be made by disbursing officers of the RP Army on the approval of authority of the Commandign General, USAFFE, & such purposes as he may deem proper…”
• P570,863,000.00 was transferred directly to the AFP by means of vouchers w/c stated “Advance of Funds under Public Law 353 & EO 9011” This was used mostly to discharge in RP the monetary obligations assumed by the US as a result of the induction of the AFP into the US Army, & its operations beginning in 1941.
• There remained unexpended & uncommitted $35M in the possession of the AFP as of Dec 31, 1949. Bec the RP Govt then badly needed funds, Pres Quirino, through CB Gov Cuaderno, proposed to US officials the retention of the $35M as a loan, & for its repayment in 10 annual installments. This was the Romulo-Snyder Agreement, signed in Washington on Nov 6, 1950 by RP Foreign Affairs Sec Romulo, & US Sec of Treasury, John Snyder.
• PRESENT ACTION: Usaffe’s arguments – 1) the money delivered by the US to the AFP were straight payments for mil services; ownership thus vested in RP Govt upon delivery, & consequently, there was nothing to return, nothing to consider as a loan; 2) the Agreement was void bec there was no loan to be repaid & bec it was not binding on the RP Govt for lack of authority of the officers who concluded it.

ISSUES
• Basic issue: Validity of the Romulo-Snyder Agreement – Court can’t pass judgment
1. WON there is obligation to repay - YES
2. WON the officers who promised to repay had authority to bind this Govt – YES

RATIO:

1. YES
• Note that the $269M appropriated in Public Law 353 (see 8th bullet) expressly said that the money is to be handed to the RP Govt either in advance of or in reimbursement thereof.
• In any system of accounting, advances of funds for expenditures contemplate disbursements to be reported, & credited if approved, against such advances, the unexpended sums to be returned later. Congressional law itself required accounting “in the manner prescribed by US Pres - & said Pres in EO 9011, outlined the procedure whereby advanced funds shall be accounted for.
• It also requires as a condition sine qua non that all expenditures shall first be approved by the USAFFE Commanding Gen.
• These ideas of “funds advanced” to meet expenditures of the Phil Army as may be approved by the USAFFE Comm-Gen, in connection w/ the accounting requirement, evidently contradict appellant’s thesis that the moneys represented straight payments to RP Govt for its armed services, & passed into the absolute control of such Govt
• Instead of returning such amount into one lump sum, our Exec Dept arranged for its repayment in 10 annual installments. Prima facie such arrangement should raise no valid objection, given the obligation to return.

2. YES (They have authority to bind Govt even w/o Senate concurrence)
• There is no doubt Pres Quirino approved the negotiations. And he had the power to contract budgetary loans under RA 213, amending RA 16.
• The most impt argument, however, rests on the lack of ratification of the Agreement by RP Senate to make it binding on the Govt.
• The ff explanation of the defendant was considered persuasive by the Court…
 The agreement is not a ‘treaty’ as that term is used in CONSTI. However, a treaty is not the only form that an int’l agreement may assume. For the grant of treatymaking power to the Executive & the Senate does not exhaust the power of the govt over int’l relations.
 Executive agreements may be entered into w/ other states & are effective even w/o concurrence of Senate.
 In int’l law, there’s no difference bet’n treaties & executive agreements in their binding effect upon states concerned as long as the negotiating functionaries have remained w/n their powers.
 The distinction bet’n executive agreements & treaties is purely a const’l one & has not int’l legal significance.
 Altman v. US: An int’l compact negotiated bet’n the reps of 2 sovereign nations & made in the name or behalf of the contracting parties & dealing w/ impt commercial rel’ns bet’n the 2 countries, is a treaty both internationally although as an executive agreement it is not technically a treaty requiring the advice & consent of the Senate
 2 classes of Executive Agreements: 1) agreements made purely as executive acts affecting external relations & independent of or w/o legislative authorization, w/c may be termed as pres’l agreements; 2) agreements entered into in pursuance of acts of Cong, w/c have been designated as Congressional-Executive Agreements
 The Romulo-Snyder Agreement may fall under any of these 2 classes for on Sept 18, 1946, RP Congress authorized the RP Pres to obtain such loans or incur such indebtedness w/ the US.
 Even granting there’s no leg authorization, the Agreement was legally & validly entered into to conform to the 2nd category, namely, as agreements entered into purely as executive acts w/o leg authorization’, w/c usu includes money agreements.
• The Agreement was not submitted to the US Senate either. But the Phil Senate’s Resolution No. 15 practically admits the validity & binding force of such Agreement.
• Further, the acts of Congress appropriating funds for the yearly installments necessary to comply w/ such Agreement constitute a ratification thereof, W/C PLACES THE QUESTION OF VALIDITY OUT OF THE COURT’S REACH, NO CONST’L PRINCIPLE HAVING BEEN INVOKED TO RESTRICT CONGRESS’ PLENARY POEWR TO APPROPRIATE FUNDS – LOAN OR NO LOAN.

HELD: Plaintiff failed to make a clear case for the relief demanded. Petition DENIED.