GLOBALIZATION OF LEGAL SERVICES:

CHALLENGES AND POSSIBILITIES IN

THE PffiLIPPINES SETTING

PROF H. HARRY ROQUE JR.

BA (Mich), LLB (UP), Ll.M (London) Partner, Roque and Butuyan Law Offices; Senior Lechrrer,
UP College of Law; Research Fellow, Institute of International Legal Studies, UP Law Center.

A. INTRODUCTION

The World Trade Organization (WTO) has not only liberalized trade in
goods but in services as well. One area worth looking into is whether the WTO
can now facilitate cross border legal practice.

The General Agreement on Trade and Tariffs (GATT) is the predecessor

of the World Trade Organization. What makes the WTO unique from GATT is
that the WTO covers not just trade in goods or merchandise, but trade in services
as well.

This paper will examine the provision of the Urnguay Round General
Agreement on Trade in Services (GATS) and determine whether it is applicable to
the legal profession. If it does, this paper will examine both the challenges and
possibilities of cross border legal services in the Philippines. It is important to
emphasize that the Uruguay Round services are not yet complete and are largely
untested. Each government has issued commitments on the schedule of its
liberalization for trade in services but it is only a first step. The schedules are not
similar to the GATT schedule of 1994, but with the first limited tariff.cutting
measures carried out when the GATT was launched. The conclusions reached here
are thus only preliminary and are bound to change depending on any future
commitments that the country may enter into.

B. THEGATS

In broad outline, and to some extent also in substance, the Uruguay Round
services package resembles the package for goods. There is a central set of rules,
the GATS, 1 which to a great extent was directly modeled on the GATT and relies
on many of the same principles. There are supplementary agreements - some in
the form of annexes to the GA TS, others embodied in Ministerial decisions -
which deal with specific sectors and other issues. There are also national
schedules, one for each WTO member, which set out commitments not to impose
greater restrictions than are specified on the supply of services by other members.

The Agreement itself consists of six parts. Part I contains the scope and
definitions of the Agreement. Pait II contains the General Obligations and
disciplines, including the "MFN clause," or the provision that each Member shall

1
Annex lB to the Uruguay Rotmd Agreement Establishing the World Trade Organization, 15
April 1994, hereinafter referred to as the "GATS'' for brevity
56 I' hilippines

accord immediately and unconditionally to any Member treatment no less

favorable that it accords to like services and service suppliers of any other
country.2 Under the same Article, Members are allowed to maintain measures
inconsistent with the MFN clause provided such are listed in the Annex II
Exemptions. Also provided in Part II are further obligations: to be transparent;3 to
administer all measures of application affecting trade in services in a manner that
is reasonable, objective, and impartia1;4 and to recognize education or experience
obtained in a particular country for purposes of the fulfillment of its standards, or
criteria for the authorization, licensing, or certification of service suppliers. 5

Similar to the GATT, Part II of the GATS provides for exceptions for
restrictions either as general exceptions,6 an emergency safeguard measure,7 on
account of a balance of payment and external financial difficulties, 8 or as and by
way of security exceptions. 9 In all of these exceptions, it is required that the
restrictions should not be applied in an arbitrary or discriminatory manner.

Part III of the Agreement covers specific commitments and contains the
principle of "national treatment." 10 It is here, though, where a similarity between
the GATS and the GATT is misleading. While the GATS require each Member
''to accord services and service suppliers of any other Member treatment no less
11
favorable that it accords to its own like services and service suppliers, " the
obligation under the GATS is in relation to specific commitments made by
member countries, while under the GAIT. the comparison is with reference to the
general rules set out in its Articles. 12 Accordingly, the rule to accord national
treatment under the OATS depend significantly on what a Member has
specifically undertaken, in its own schedule, to do. 13 Under Part III, Members are
also given the leeway to negotiate commitments with respect to measures
14
affecting trade in services.

Probably the most important section of the GA TS is Part IV, which

requires member nations to enter into successive rounds of negotiations
periodically with a view to achieving a progressively higher level of
liberalization. 15 The scope of the future negotiations is specified: the reduction or
elimination of the adverse effocts on trade in services of measures as a means of
providing effective market access. 16

2
ld., Art. 11
3
Id., Art. ill
4
Id., Art. VI
5
Td., Art. VTT
6
Id., A1t. XIV
7
ld., Art. x
8
Id., Art. XII
9
ld., Art. XIV
10
Id., Art. XVII
11 Id.
12
TI1e General Agreement On Tariffs and Trade (GATT), Art. l
13
Supra, Alt. XVI (1)
14
Id Art XVIII
Id:: P~ IV, Progressive Liberalization
15
16
Id., Art XIX (I)
 Globalizalion of Legal Services: Challenges and 57
Possibilities in the Philippines Setting

Part V of the Agreement covers Institutional Provisions for Consultations

and Arbitration. Part VI contains the Final Provisions, including denial of benefits
to non-complying members and further definitions.

Appended as Annexes to the Agreement are the Article II Exemptions,

Movement of Natural Persons Supplying Services under the Agreement, Air
Transport Services, Financial Services, Telecommunications, and Negotiations on
Basic Telecommunications.

C. GATS AND THE LEGAL PROFESSION

The provision of Legal Services is not specifically mentioned in the

GATS. Despite this omission, it is generally assumed that GATS does include
cross border legal services because by definition, a "service" is defined as
including "any service in any sector except services supplied in the exercise of
17
governmental authority."

Fmthermore, specific provisions of the GATS are relevant to the provision

of professional services, which indubitably includes legal services. Thus,
paragraph 6 of Article VI provides:

" In sectors where specific commitments regarding professional services

are undertaken, each Member shall provide for adequate provisions to
verify the competence ofprofessionals ofany other member. " 18

Likewise, Paragraph 1 of Article 7 indicates:

" For the purpose of fitlfillment ... of its standards or criteria for the
authori=ation, licensing or cert!fication ofservices suppliers ... a Member
may reco¥,nize the education or experience obtained . . . in a particular
country." 9

Trade in legal services may, under Article 1 of the GA TS, be through the
following modes:

1. Mode 1, the supply of a legal service from the territory of one Member
to another, or refe1Ted to as "cross border services"20
2. Mode 2, supply of a service from a territory of a Member to the
service consmner of another, or providing services by a foreign law
firm to a client overseas, a mode referred to as "consumption
21
abroad"
3. Mode 3, supply by a service supplier of one Member through
commercial presence in the territory of any other member, a situation
which contemplates foreign law firms forming a local juridical entity

17
Id., Art 1 (3) b
18
Id., Art. 6
19
Id., Art. 7
20
Id., Art. 1 (2) a
21
ld., Art 1 (2) b
58 I' hilippines

in the territory of another state, referred to as "commercial presence"22

and
4. Mode 4, by a service supplier of one Member, through the presence of
natural persons of a Member in the territory of another, a situation that
entails foreiff firms practicing through natural persons in the foreign
jurisdiction. 3

There can be no doubt regarding the use of GATS as conventional basis

for the provision of cross border services. In the year 2000, or on the occasion of
the 5th year anniversary of the WTO, legal services were included in the new
services negotiations under Article XIX of the GATS, with Australia24 and the
25
United States proposing negotiations on a limited cross border provisions of
legal services.

The Australian proposal is the so-called "limited licensing concept"

defined as "a regulatory approach that permits foreign legal practitioners and
foreign law firms to practice their home-country law, third-country law (where
qualified) and international law in a host country, without having to satisfy the
more burdensome requirements in relation to gaining a right to practice host-
country law. " 26

The International Bar Association has adopted a resolution calling for the
''Regulation of Foreign Lawyers as practitioners of foreign law for the limited
purpose of permitting them to practice the law of their home jurisdiction in the
27
host jurisdiction without examination or full admission to the host bar. "

As a means of implementing the proposal, the Australians propose a

formal recognition, under a transparent regime, of the right of a foreign legal
practitioner to practice home-country law, international law and, where
appropriately qualified, third-country law; and the right to practice the foreign
legal practitioner's home-country law, third-country law and international law in
partnership or in other forms of voluntary commercial association with other
foreign legal practitioners or host-country legal practitioners, without limitations
28
on the number and type of such associations.

The American proposal for negotiation, on the other hand, is the

following:

22
Id., Art. 1 (2) c
23
Id., Art. 1 (2) d
24
World Trade Organization 'Connnunication from Australia: Negotiating Proposal for Legal
Services' S/CSS/W/67 (27 March 2001).
25
World Trade Organization "Connnunication from the United States of America: Negotiating
Proposal for Legal Services S/CSS/W/28 (18 December 2000)
26
Supra, par. 2
27
Intemational Bar Association 'Resolution on the General Principles for the Establishment and
Regulation of Foreign Lawyers' adopted by the Cotmcil of the IBA in Vienna on 6 June 1998. For
the pmpose of the resolution, the IBA definition of 'home jurisdiction' includes "a person licensed
or otherwise authorised to practice law in a given country, or internal jurisdiction thereof."
2
~ Op. cit., note 24, par.7
 Globalizalion of Legal Services: Challenges and 59
Possibilities in the Philippines Setting

1. The GATS classification list should be understood to include the

provision of legal advice or legal representation in such capacities as
counselling in business transactions, participation in the governance of
business organizations, mediation, arbitration and similar non-judicial
dispute resolution services, public advocacy, and lobbying; and
2. The WTO Members must be allowed to examine liberalization
opportunities with regard to market access and national treatment
barriers as those terms are understood in the GATS.

The specific focus of such liberalization, under the American proposal,

would be in the context of Mode 3. The Americans also proposed that discussions
should include other relevant modes of supply, including mode 4 (movement of
personnel).-~9

It appears that while the Australian proposal seems to be more limited in

scope than the American proposal, both proposals do not propose a cart blanche
liberalization of the legal profession. The existing proposals exclude liberalization
in the litigation process itself, such as actions for divorce, sum of money, and
other forms of litigations which form the staple of domestic litigations. The
American proposal, however, includes matters which may be the subject of
mediation and arbitration.

The basis for this is legal practitioners involved in providing international

legal services are generally interested in providing 'producer' (intermediate)
services concerned with commercial transactions and not 'cons umer' services,
which are typically 'final' services (ie, family, matrimonial, estate, personal injury
and similar personal legal services). Foreign legal practitioners are also not
usually interested in obtaining a right of audience in the courts of host
jurisdictions, except for a right to appear in international commercial arbitration.
Generally, a foreign legal practitioner's main interest is in providing advisory legal
services in home-country law, third-country law and international law. 30

Accordingly, a limited license scheme, as scheduled for negotiation by

Australia and the US, provides foreign practitioners access to a country without
intruding into the primary domain (practice of host-country law) of that country's
practitioners. There are also flow-on benefits for host-country practitioners such
as providing supporting or complementary advisory services in host-country law
and from international commercial arbitration being conducted in the host
country.

The first mode of cross border legal services, the provision of legal
services from one territory to another, does not seem feasible given that the legal
profession worldwide is at least subject to conditions imposed by a licensing
body, normally in the exercise of a constitutional mandate over the practice of the
legal profession.

29
Op. cit., note 25, par.5 and 6
30
Op. cit., note 24, par 6
60 I' hilippines

The Australian and American proposals did not take into consideration the
MFN clause and the nationality principle in the same manner that these principles
are currently applied to facilitate the free flow of goods under the GA TT. Instead,
both proposals recognize that these p1inciples shall be applicable only to specific
commitments made by member countries pursuant to the GATS, which is in the
context of the particular and very narrow aspects of legal practice embodied in
both proposals.

D. POSSIBILITIES AND CHALLENGES IN THE PHILIPPINE SETTING

The Philippines has not made any specific commitments for the legal
profession under the GATS, nor has it submitted any proposals for negotiation
specifically relating to cross border legal services. 31 This is understandable given
that under existing constitutional and remedial norms, the concept of a liberalized
law practice pursuant to the MFN clause and the nationality principle is
theoretically impossible.

Like the majority of states compnsmg the ASEAN, the Philippine

Constitution limits the practice of professions, including the legal profession, to
Filipino citizens. 32

The Philippine Supreme Court spelled out the basis for this protectionist
policy in In Re: JF Boomer. There, the High Court classified the legal profession
as an exercise of a public function, and held that "the Sovereignty of the people
stands behind all public functions, and it is a matter of high and wise policy not to
. c: . .,33
entrust that functlon to LOre1gners.,

Not only does the Philippines limit the practice of law to Filipino citizens,
it even limits the practice of the profession to residents of the Philipfsines,34and to
those who completed the required legal education in the Philippines. 5

The prospect of a liberalized legal profession patterned after the proposals

of Australia and the United States is, however, not remote.

First, despite the protectionist measures imposed in the legal profession,

the reality is that foreign entities have been able to practice both law and
accounting, through a commercial presence in the country under item 2C, Article
I, or Mode 3 of the GATS. Some examples are the firms Baker and Mckenzie
which is practising through a locally incorporated ''associated" legal partnership
36
of Quisumbing Torres and Associates, PriceWaterhouseCoopers which has a

31
http ://www.wto.org/english/tratop_e/serv_e/serv_commitments_e.htrn#commit_exempt
32
Sec. 14, Art. XII, 1987 Constitution
33
12 Lawyers J. 421 (1947) in Magallona, Chapter 12, "Transnationalization of Law Practice",
hltemational Law Issues in Perspective (1996), UP Law Complex
34
Rule 138, Section 2, Revised Rules of Comt of the Philippines
33
RE: Application of Adriano M. Hernandez, Resolution of the Philippine Supreme Court En
Banc, July 27, 1993.
36
http://www.bakerinfo.com/BakerNet/Places/ Asia+ Pacifi c/Regional+Site/Description/default.htm
 Globalizalion of Legal Services: Challenges and 61
Possibilities in the Philippines Setting

tie-up with Joaquin Cunanan and Co .. 37 and Ernst & Young38 which has a tie-up
also with the local firm Sycip Gorres Velayo and Co.

Conversely. Philippine firms have been engaged in the provision of cross

border legal services under mode 4 of the GATS paiticularly in areas where the
country has developed an expertise, such as in the field of Build Operate Transfer
(BOT) power contracts. Here, the country's biggest law firm. Sycip Salccar
Hernandez and Gatmaitan has developed a niche practice representing a Japanese
trading firm engaged in the development and construction of power plants in
South Asian countries. 39

Recently, the Philippines has been involved in international law cases

where the government hired foreign lawyers under mode 4 of the GATS.
Foremost of this is the recent intervention of the Philippines in the
Lipadan/Sipadan islands case between Malaysia and Indonesia where the
Philippines retained an American International Law expert, Professor William
Reisman. as one of its agents.40 In another case, the government retained an
Ame1ican lawyer, Chuck Medel, when the Philippines filed a case against Brazil
over the propriety of countervailing duties imposed by the latter on Philippine
dessicated coconut.41

The Philippines has also retained foreign lawyers in no less than three
arbitration cases. In the ICSID. the Philippines nominated James Crawford, an
Australian, to be its arbitrator in an arbitration initiated by the Societe Generate de
42
Surveillance (SGS) for unpaid service fees. The two other arbitrations are
pending in the International Court of Arbitration of the ICC. In one of the cases,
PIATCO has retained the services of the Singaporean firm of Lee and Lee in its
43
case against the Philippine Government.

In a recent talk at the University of the Philippines, the country's

Undersecretary of Justice and Chief Government Corporate Counsel manifested
the willingness and intent of the government to retain the services of foreign
lawyers to represent it in international arbitrations.44

The second, and more important reason why the prospect of cross border
legal practice is not remote. is the fact that the Philippines has been the biggest
exporter of professionals and skilled workers to the world. The country would
benefit further in a more liberalized trade of services worldwide, particularly

37
http://www.pwcglobal.com/extweb/pwclocations.nsfNiewLocByCityDisplay/Philippines-GX-E
NG- CY
38
http://www.ey.com/global/content.nsfi'Philippines/Home
39
http://www.syciplaw.com/main.html. Also, Atty. Jaime Renato Gatmaytan, a Partner involved in
these power projects, confinned this fact in an interview with this writer on 27 March 2003.
40
http://www. icj-cij .org/icjwww/idocket/iinma/iinmajudgment/iINMA_ ijudgment_ 20011023 .PDF
41
Round Table Discussion on International Arbitrations Involving the Philippines, UP College of
Law, 11 March 2003
42 Id.
43
Statement attributed to Jefferson Cheng, Treasurer, Philippine International Air Terminals
Company Inc. (PlATCO)
44
op. cit, note 41
62 I' hilippines

under mode 4 of the GATS which contemplates the movement of natural persons
across national boundaries.

There are no less than seven million Filipinos employed around the
world. 45 In some sectors, such as in the maritime industry, Filipino service
providers play such a dominant role to the point that the Philippines is today
recognized as the biggest supplier of seafarers. Filipinos man no less than one-
fourth of the world's shipping fleet. 46

Filipino registered nurses are said to outnumber their third-country peers in

the United States, England and Germany. The Philippines is also a major source
of domestic help. The reality is most of those working as professional governesses
or baby-sitters are teachers, accountants and other professionals.

Filipino engineers, construction crew and maintenance workers built the

infrastructures of many Middle Eastern countries. Filipino IT professionals
occupy top jobs in Silicon Valley and the IT industry in the US. Filipino doctors
and surgeons are highly appreciated in foreign hospitals. All international
organizations are staffed with Philippine-born professionals. Filipino musicians
are considered the troubadours of Asia.

Filipino professionals remit an average of $7 billion to $8 billion a year to

the Phi·1·ippmes.
. 47

A more liberal trade in services will work to the advantage of the

Philippines. It would enable more Filipino professionals to practice overseas; as in
the case of doctors who may want to work in the United Kingdom. Despite an
acute shortage in the UK National Health Service (NHS) for medical specialists,
Filipino doctors are unable to practice in the UK because the Medical Licensure
Body in the UK demands reciprocity from countries where they recruit foreign
doctors. Since the Philippines limits the practice of professions only to Filipinos,
English doctors could thus not practice in the Philippines and consequently, the
Philippines was disqualified as a source for foreign doctors to work within the
NHS. 48 Ironically, there are currently no less than 25,000 Filipino nurses working
in the UK.

Given the fact that the Philippines already enjoys the advantage of being
the foremost exporter of service and service providers; it is not unlikely that the
country's policy makers may soon opt for further measures of liberalization
including in the practice of professions, even if it entails amending no less than
the highest law of the land. One labor economist observed:

"Overseas deployment is an important contributor to the Philippine

economy ... Facilitating trade in services ... presents a vast opportunity
particularly in an era where information technology offers almost limitless

45
http://www.manilatimes.net/national/2003zjanl24/opinion/20030124opi2.html
46 Id.
•1 Id.
4
~ Interview with Ruth Jameson, Senior Recruitment Consultant, MEDACS Overseas, a Division
of Blue Arrow UK, April 15, 2003.
 Globalizalion of Legal Services: Challenges and 63
Possibilities in the Philippines Setting

forms of economic activities. A key element in expanding trade . is

negotiations to reduce barriers and facilitate greater and freer cross-
border flows of service providers. Only when a proactive and
developmental approach to negotiations is adopted will the GATS
agreement achieve its goal ofdistributing opportunities to all. ,,;v

Finally, in addition to existing practice and economics, it is ironic that the

Supreme Court itself may be the biggest reason why the Philippines may agree in
the foture to tUrther liberalization in legal services.

Under the 1987 Philippine Constitution, the Supreme Court has the sole
50
mandate to promulgate rules concerning the admission to the practice of law.

So zealous is the Court in the defense of this exclusive prerogative that in a

case where Congress attempted to legislate a lower passing grade for the bar
examinations, the Court struck the said law as being unconstitutional:

"In the judicial system from which ours has been evolved, the admission,
suspension, disbarment and reinstatement of attorneys at law in the
practice of the profession and their supervision have been indisputably a
judicial function and responsibility. Because of this attribute, its
continuous and zealous possession and exercise of the judicial power have
been demonstrated durinf more than six centuries and certainly constitute
the most solid of titles. " 5

It has been argued that the decision of the President to be a signatory to the
WTO, including the GATS, may amount to an encroachment on the exclusive
prerogative of the Court to promulgate rules concerning admission to the Bar.
According to the same wiiter, it is possible for the Philippine Supreme Court to
declare the WTO, and the GATS particularly, as invalid:

"Returning now to GATS, assuming that the Executive Department has

concluded the Agreement, or accepted the Final Act of the Uruguay
Round, on the understanding made explicit in the Schedule of Specific
Commitments that trade in services as regulated by GATS contemplates
legal services (constituting practice of law), it stands to be charged of
aggrandizement ofpower properly belonging to the Supreme Court under
the Constitution. This violation of constitutional demarcation of powers is
quite apart from a political usurpation of the same Supreme Court's
authority by the senate when the latter will be called upon to concur in
GATS, pursuant to Section 21, Article Vil of the Constitution. In this case
the Senate's pmver to concur in treaties would be exercised on the basis of
an act ofthe Executive violative of the Constitution. " 51

49
Francisco, "Baniers to Temporary Migration of Filipino Workers as Service Providers"
http://www. wto.orglenglish/tratop_ e/serv_e/symp_ apr_02_ francisco _e.doc
50
Article VII, Section 21, 1987 Constitution of the Philippines
51
94Phil. 534(1954)
52
Op. cit., note 33, p. 243-44
64 I' hilippines

This writer argued furthermore that there is already a precedent case in

Philippine jurisprudence where the High Court has struck down as invalid the
Treaty on Academic Degrees and the Exercise of Profession concluded between
the Philippines and Spain, which sought to allow Filipino nationals to practice law
53
in the Philippines on account of his license to practice law in Spain. In re
Garcia, the Philippine Supreme Court ruled:

"It could not have been intended to modify the lmvs and regulations
governing admission to the practice of lmv in the Philippines, for the
reason that the Executive Department may not encroach upon the
constitutional prerogative of the Supreme Court to promulgate rules for
admission to the practice of lmv in the Philippines, the power to repeal,
alter or supplement such rules being reserved only to the Congress of the
Philippines. " 54
55
In 1997, a group led by then Senator Wigberto Tanada sought to declare
as invalid President Fidel Ramos' decision to sign the Marrakesh Agreeement
establishing the WTO, as well as the Senate's concmTence and ratification of the
said treaty. The petitioners had two arguments: first, the WTO, particularly the
MFN clause and the nationality principle, violate specific sections of the
Constitution giving preference to Filipino enterprises; and second, the WTO
Agreement unduly limits and impairs Philippine sovereignty, specifically the
legislative power vested in the Philippine Congress, and judicial power vested in
the Supreme Court.

In dispensing with the first basis of challenge, the Court ruled that the
specific provisions of the Constitution invoked by the Petitioners were not self-
executory provisions, but were merely declarations of principles and state policies.
The Court concluded that these provisions do not embody judicially enforceable
constitutional rights but only guidelines for legislation. 56

The Supreme Court concluded that while the Constitution does recognize a
''Filipino First" policy, it also recognizes the need for business exchange on the
basis of equality and reciprocity. The court also commented that what the
Constitution frowns upon is foreign competition that is unfair. 57

On the second argument, the Supreme Court ruled that while sovereignty
has traditionally been deemed absolute and all encompassing on the domestic
level, it is however subject to restrictions and limitations voluntarily agreed to by
58
the Philippines as a member of the family of nations.

53
Id., p. 339
54
9 Phil. 705
55
272 SCRA 18 (1997)
56
Id., p. 54
57
Id., p. 62
5
~ Id., pp 66-73
 Globalizalion of Legal Services: Challenges and 65
Possibilities in the Philippines Setting

The court then applied the incorporation doctrine and concluded that the
WTO as a treaty, may indeed limit or restrict the absoluteness of sovereignty in
59
exchange for greater benefits granted by or derived from the Convention.

On the matter of the alleged encroachment on judicial power, the court

60
declared that "the reciprocity clause more than justifies such an intrusion."

In hindsight, the Petitioners in Tanada versus Angara may have had a

stronger case if they questioned the constitutionality of the GATS in particular
instead of the WTO's provisions on the Trade Related Aspects of Intellectual
Property Rights (TRIPS).

In any case, the case of Tanada versus Angara stands as precedent for the
view that if and when the Philippines does enter into a voluntary commitment to
include legal services within the purview of the GATS, it could be seen as a
limitation of a particular attribute of sovereignty; done voluntarily, and in
exchange for greater benefits.

E. POSSIBILITIES

The WTO in general is criticized on the basis that free trade will benefit
only the stronger economies that have the goods and services to export to weaker
economies.

In the trade on services, critics have insisted that the developing world
may be inundated by foreign service providers should the GATS succeed in
61
promoting fmther liberalization in the trade of services.

This has not been the experience of the Philippines. On the contrary, it has
developed a comparative advantage as a net exporter of service and service
providers. There does not appear to be any reason why the Philippines should not
turn out to be a net exporter of legal services, as well, given the sheer number of
lawyers in the country, and the fact that the practice of law is conducted
exclusively in English.

The experience of Mode 3 service providers supports the argument for

cross border legal practice. The world's largest law firm has been in operation in
the country for no less than three decades but there is no indication it has retarded
or in any way adversely affected the success of other Filipino firms without
international affiliation. On the contrary, the biggest law firm in the country is a
62
Filipino firm without foreign affiliation . The same may be said of the other large
firms in the country.

Baker & Mckenzie's impact is seen only in specific aspects of the legal
profession, all of which pertain to the areas specified under the American proposal
for negotiations under the GATS : the giving of legal advice or legal representation

59
Id., p. 70
60
Id., p. 73
61
http://www.oneworld.net/cgi-bin/index.cgi?root=l29&ml=http://www.wdm.org.uk
62
op. cit, note 40
66 I' hilippines

in such capacities as counseling in business transactions. participation in the

governance of business organizations, mediation, arbitration and similar non-
judicial dispute resolution services, public advocacy, and lobbying; and insofar as
bulk of its clients appear to be American transnational corporations.

The practice oflaw in the Philippines is still dominated by small firms and
lone practitioners, all of whom are Filipinos. There is no reason why this should
change even if the Australian or the American proposals are agreed to by the
Philippines. Under both proposals, "consumer" legal services are still left
exclusively to be practised by local practitioners.

F. CONCLUSION

GATS provide the legal basis for the prov1s10n of cross border legal
services. Although it is not specifically mentioned as one of the services that falls
within the purview of the agreement, the WTO has already received at least two
proposals for negotiations involving legal services. Both proposals, however. do
not contemplate the application of the MFN clause and the nationality principle,
both of which exist in the General Agreement on Tariffs and Trade. On the
contrary, the scope of both proposals is very narrow leaving much of the
"consumer services" still in the hands of local practitioners.

The Philippines, as the biggest supplier of service providers. stands to

benefit from further liberalization particularly under Mode 4 of the GATS, which
involves physical movement of national persons across boundaries. Not only has it
developed a comparative advantage in the export of manpower, the Philippines
has also benefited from the foreign exchange remitted by its seven million
workforce overseas. There is no reason why the Philippines should not benefit
from a Mode 4 "export" of its law services, in the same manner that it has
benefited tremendously from the export of manpower as a whole.

While the Philippine Constitution and the existing Rules of Court may
seem to be barriers to cross border legal services in the Philippines, the fact is,
Philippine jurisprudence does recognize the possibility of liberalization in the
legal profession. In the case of Tanada versus Angara, the country's highest court
ruled that while the country' s membership in the WTO does result in a derogation
of the country's sovereignty, it is in exchange for greater benefits which the
country may get as a member of the organization. This may become the legal
basis for revisions in both the country' s 1987 Constitution and the Rules of Court
to enable the "liberalization " of the legal profession, at least in the context of the
existing proposals submitted by Australia and the United States.