Papers Relating to the Foreign Relations of the United States, 1921, Volume II
The Chargé in Mexico ( Summerlin ) to the Secretary of State
[Received October 14.]
Sir: In confirmation of my telegram No. 186 of to-day,83 I have the honor to forward herewith copy and translation of the Mexican Supreme Court decision, made public last night, in the amparo [Page 464] case of The Texas Oil Company against the Secretary of Commerce, Industry and Labor and the President of the Republic.
The local press reports that the decision bears the signature of all eleven of the Supreme Court Magistrates.
The decision appears to confirm the validity of the Executive Decrees of July 31, August 8th and 12th, 1918,84 establishing certain taxes and prescribing certain rules for the exploitation of petroleum, by virtue of the extraordinary powers in financial matters conferred on the Executive by the Congress; and states that the fourth paragraph of Article XXVII of the Constitution, in so far as it relates to petroleum and all hydro-carbons, solid, liquid or gaseous, is not retroactive as regards rights legitimately acquired prior to May 1, 1917.
I have [etc.]
Decision of the Mexican Supreme Court in the “Amparo” Case of the Texas Company of Mexico, August 30, 1921 86
In view of the amparo applied for by Licentiate Adalberto Ríos as attorney for the Texas Company of Mexico, S.A., against acts of the President of the Republic and of the Department of Industry, Commerce, and Labor, because, according to the complainant company, such acts seek to deprive it of its rights and interfere with its peaceful possession of lot number 36, in Zacamixtle, Municipality of Tancoco, Canton of Tuxpam, State of Vera Cruz, in violation of articles 14, 16, and 27 of the General Constitution of the Republic; and
Resulting, first: The attorney in the complaint in reference sets out that the Texas Company of Mexico, S.A., acquired the right to explore and exploit petroleum in respect of the lot aforesaid; that, while the company was in possession of and exercising said rights, Mr. Rafael Cortina, by virtue of the decree of August 8, 1918, covering petroleum matters, issued by the President of the Republic by virtue of the extraordinary powers granted him by the Congress of the Nation in matters pertinent to the Department of Hacienda, denounced the aforesaid lot in the Tuxpam Agency of the Department of Industry, Commerce, and Labor; that said denouncement being accepted, it followed the legal course prescribed by the aforesaid decree until it came before the Department of Industry for revision, the complainant company having duly protested against [Page 465] and manifested its nonconformity with the proceedings therein; and that on December 10, 1920, attorney Ríos was informed that the Department of Industry had issued title in favor of Mr. Cortina for the exploitation of the said tract of land, which act Mr. Ríos considers to be in violation of the complainant company’s guarantees, because its intent is to deprive the company of the rights which it had acquired theretofore, which rights are duly proven by the respective documents.
Resulting, second: Article 14 of the Constitution is considered violated, because according to this precept, no one may be deprived of his possessions or rights except by due process of law instituted before the tribunals and wherein the attendant formalities of procedure are duly observed; and the Citizen President of the Republic and the Secretary of Industry, Commerce, and Labor, as a result of the denouncement proceedings and in particular by the issuance of title, have sought to deprive said company of the rights which it had acquired, without having proceeded against said company by means of the respective courts of justice; moreover, said article 14 prescribes that a retroactive effect shall not be given to any law to the prejudice of any person whatsoever, and in the present case the authority responsible is giving a retroactive effect to the decree of August 8, 1918, since the rights theretofore acquired are not respected, which rights inured to said company by virtue of the laws in force at the time of the acquisition, said laws being the mining code of November 22, 1884, article 10, and the mining law of July 4, 1892, article 2. In the final part of the petition it is expressly stated that protest is made against the retroactivity which it is sought to give to article 27 and also to the decrees of July 31 and August 8 and 12, 1918.
Article 16 of the Constitution is deemed to be violated, because, while it establishes the precedent that no one shall be molested in his possessions except under an order in writing issued by competent authority, setting forth the legal ground and justification for the action taken, yet in this case the authority responsible has proceeded, without competency, to perform acts which molest the company in its possessions, since the President of the Republic has not been empowered to enact laws, or even in lesser degree to issue regulations in respect of article 27 of the Constitution, unless our opinion herein be deemed at variance with the decree referred to, of August 8, which is entitled “Regulative Prescriptions of Article 14 of the Decree of July 31, 1918”, because the mere title of the decree does not alter the nature or essence of its contents, which without doubt relate to the regulation of article 27; moreover, section I of article 89 of the said Constitution limits the powers of the President of the [Page 466] Republic to the issuance of regulations with regard to laws enacted by the Congress of the Nation, and solely in order that said laws may be observed; the complainant company also sets forth that article 27 of the Constitution has been violated, because in saying that ownership of the lands and waters embraced within the limits of national territory is vested originally in the Nation, which has had and has the right to transfer dominion thereof to private persons, thus constituting private ownership, and that expropriation may only be effected for reasons of public utility, the responsible authorities in their attempt to exercise expropriation with regard to the complainant company—since their acts are tantamount to the foregoing—have violated the requirements which must be observed in cases of expropriation, without taking into consideration that the said company has a private title in respect of rights of exploration and exploitation of petroleum on the lot of which mention has been made. The complainant company says there has been a violation of its right on another point also, in that article 27 itself provides that the Federal Government can grant concessions to private persons or to civil or commercial societies formed in accordance with Mexican laws only provided that regular exploitation operations be undertaken with regard to the elements under reference and that due compliance be given to the requirements prescribed by the law; and inasmuch as these regulative laws defining the requirements which must be observed in order that the Federal Government might grant concessions have not been promulgated, said Government has proceeded improperly; and on the other hand, the titles which the Department of Industry is issuing are contrary to article 27, because said article says that concessions may be granted, whereas titles are not concessions, being a form of property different from them, and the Executive cannot by his own act create the conditions and requirements for the exploitation of petroleum.
Resulting, third: A request for data having been made of the authorities responsible, a document was submitted by the Department of Industry, for itself and in agreement with the President of the Republic, on December 28, which set forth that the complainant company’s opposition herein referred to was not in due form nor in obedience to the laws pertinent to the procedure in denouncement; that it had merely limited itself to sending its protest; that said company had not made the manifestations provided for by article 14 of the decree of February 19, 1918,87 in relation with article 14 of the decree of July 31 of the said year, nor had paid the taxes on the petroleum lands levied by articles 1–5 of the said decree of July 31; that the decrees in reference did not lack the element of Constitutional [Page 467] validity, for, whatever might be said to the contrary, such allegations would be baseless from the moment the legislative authority should approve and ratify the extraordinary powers conceded to the Executive in matters relating to the Hacienda; wherefore the laws under reference may be considered as requiring general observance until the enactment of the organic law on petroleum.
Resulting, fourth: The hearing having taken place on February 17 of this year, the judge denied the amparo, relying mainly on the fact that article 27 of the Constitution left acquired rights without any force whatever, modifying the relative laws on private property, and that the Executive, in regulating by the decree of August 8 the conditions under which private persons may explore and exploit the petroleum in the subsoil of the properties, did nothing more than regulate that which is its property, or rather the property of the Nation, in the same manner and with the same right as a private person would have done with his own property.
Resulting, fifth: Licentiate Ríos, not agreeing to the decision referred to, filed an appeal for revision, setting forth as damaging factors that although article 27 declares petroleum to be the property of the Nation, the same article recognized private ownership, and that the judge erred in deciding that rights of private persons were extinguished by the said Constitutional prescription; that said decision was also founded on the law of July 31, 1918, and the regulation thereof of August 8 of the same year, despite the fact that these were issued by the Executive by virtue of extraordinary powers in the Department of Hacienda, whereas the decision relates to acts of the Department of Industry, Commerce, and Labor, in respect of which department no such powers have been given him; and that the law and regulations referred to lacked the countersignature of the Secretary of Industry, Commerce, and Labor expressly required by the text of article 92 of the Constitution.
The appeal has gone through all its stages before this Supreme Court, the Federal District Attorney praying that in this action the decision appealed from be confirmed.
Considering, first: This decision having to concern itself with the offenses set out by the complainant company, in connection with the paragraphs contained in the petition, it will be necessary first to consider the validity or competency of the decrees issued by the Executive of the Nation July 31 and August 8 and 12 of the year 1918, which established taxes and prescribed certain regulations in respect of the exploitation of petroleum properties, inasmuch as these have been impugned as to their legality, the principal allegation being that they were issued by the Executive without due authority and also that they were published with the authentication of the Department [Page 468] of Hacienda and not with that of the Department of Industry, Commerce, and Labor, to which this duty belonged because said decrees contained dispositions and regulations relating to the petroleum industry. In this respect it suffices to say that the Executive of the Union acted in virtue of the extraordinary powers conceded to him by the National Congress in the Department of Hacienda, according to the decree of May 8, 1917, and that this same Congress by the law of December 30, 1918, not only approved the use which he made of such powers, but also ratified the said decrees issued as a result thereof by the Citizen President of the Republic; in this respect the decrees under reference must not now be deemed as solely issued by the Executive, but as laws enacted by the Congress of the Union, being as a consequence legitimate and obligatory, and this too, in the present case, long before the month of June 1920, when the acts complained of took place.
By virtue of these facts and with regard to the present case wherein amparo is sought, the impugning statements of the complainant as to the said decrees are without foundation.
Considering, second: In regard to the violation of guarantees, that is alleged on the ground of the retroactive effects which the complainants allege are given to the decrees referred to, to their prejudice, especially that of August 8 in its relation to article 14 of the decree of July 31, 1918, it is necessary to set forth the following reasoning:
In article 14 of the Constitution in force, the first mandate is: “No law shall be given retroactive effect to the prejudice of any person whatsoever.”
This Constitutional precept does not concern the legislator; it is addressed to the judges, to the tribunals, and generally to the authorities whose business is the application of the laws or their execution. This is an essential point in which article 14 of the present Constitution differs from the article of the same number of the Constitution of ’57 which sets forth categorically: “No retroactive law can be enacted.”
Retroactive laws are made either by the ordinary legislator or by the Constitutional Congress when the precepts of the political code are framed. In the first case, a retroactive effect cannot be given to the prejudice of any one, this being estopped by article 14 of the present Constitution, which is the supreme law that must be respected even as against any secondary law (see article 133 of the same political code). In the second case, they must be applied retroactively, as will be explained farther on, in despite of article 14 of the Constitution and without the violation of individual guarantees; because the precepts which coexist in one Constitution have equal obligatory force. It is necessary to try to harmonize them, when [Page 469] determining their interpretation and their proper application, and if some are at variance with others, it is necessary to Consider those which are singular or special as exceptions to those which establish principles or general rules.
Our Constitutional legislator in 1917, by virtue of his most ample faculties, could from important political or social motives or motives of general interest, create exceptions to article 14 of the Constitution in force, by establishing retroactive precepts, and if it be that he has so proceeded, such precepts must be retroactively applied.
It is well known, on the other hand, that in order that a new law may have retroactive effect, two concurrent circumstances must be present: that it apply as to time past and that it damage rights acquired under the protection of other former laws, because this new law is in opposition to them. The latter circumstance, above all, is essential; for even when laws relate to the past but are nevertheless harmless to rights and do not affect any rights previously acquired, retroactivity does not then really exist, and they cannot be the cause of conflicts or be the basis of a legal claim.
These premises being accepted, we must ascertain whether paragraph 4 of article 27 of the Constitution in force, which nationalizes, among other substances, petroleum and all solid, liquid, or gaseous hydrocarbons, is or is not retroactive. We must therefore define the meaning of this paragraph 4, because if it is retroactive, there must also be applied retroactively the decrees complained of that have this article as a basis, notwithstanding article 14 of the Constitution; and if this paragraph is not retroactive, then the decrees are contrary to the said Constitutional text. And as they are issued by the ordinary legislator they are subject to the restrictions of the said article 14 of the most recent supreme law.
Paragraph 4 of article 27 of the present Constitution cannot be deemed retroactive, either in letter or in spirit, inasmuch as it does not damage acquired rights.
Not by the letter thereof, for it does not contain an express mandate decreeing retroactivity, nor does the wording thereof convey this idea by implication; nor by its spirit, for it proves to be in consonance with the other articles of the same Constitution, which recognize, in a general way, the ancient principles upon which rest the rights of man and which grant to him ample guarantees, and because if it be held to be not retroactive, it also proves to be in harmony with the principles expressed in the paragraphs which immediately precede it on the subject of private ownership from its inception and also in harmony with the texts relative to petroleum which immediately follow it, as integral parts of the same article 27 of the Constitution.[Page 470]
From all this it is inferred that, in consonance with the rules universally accepted for the interpretation of laws and those imposed by sound logic, it must be held that paragraph 4 of article 37  of our present Constitution is not retroactive, inasmuch as it does not damage former rights legitimately acquired. This precept establishes the nationalization of petroleum and its by-products as well as that of the other substances to which it refers, amplifying the enumeration that existed in our former mining laws, but respecting the rights legitimately acquired prior to May 1, 1917, the date on which the present Constitution went into effect in its entirety.
Considering, third: In view of that which has been before expressed and in strict compliance with that which is established by section I of article 107 of the Constitution, it is opportune to determine whether in the present case, of which this amparo treats, vested rights have been injured by the violation of the individual guarantees as alleged by the complainants.
In our Republic there have been in effect in successive periods the mining code of 1884; the mining law of June 4, 1892; and that of November 25, 1909, which in article 2 granted the owner of the land the right to explore and exploit oil freely in order to appropriate what he might find without the necessity of a permit from any authority; and it also granted him the right to transmit the said rights as he would any other property, either for a consideration or gratuitously. By virtue of this provision, Severiana Hernández, widow of Martínez, and her sons, acting under that law as joint owners of lot 36 of Zacamixtle, could explore and exploit oil in that land, and also transfer their rights by the exercise of this faculty, as they did in favor of Manuel S. Ravíse by virtue of the contract contained in the deed of April 28, 1917, in which it appears that the grantors fixed and received a price higher than would have been paid them for the surface of the land because it was not sought to cultivate the property or to build upon it, but to look for oil and to exploit it if found. So that the rights of the owners of the land which are granted in article 2 of the said law of November 25, 1909, were transferred by means of positive acts; and we are therefore dealing with vested rights acquired by Ravisé as to the exploitation and exploration of petroleum in the said Zacamixtle lot from the date of that contract, that is, before the present Constitution began to be effective in its entirety. The purchaser, Manuel S. Ravisé, could legally transmit those rights and he actually did in favor of the Texas Company of Mexico, S.A., by a deed dated September 21 of the same year, and it is therefore beyond discussion that this company could in its turn enjoy the said rights as legally obtained. In view of the legal status of the Texas Company of Mexico, S.A., [Page 471] when the present Constitution came into force, and as regards their rights to the said lot 36 of Zacamixtle, the fact that the Department of Industry, Commerce, and Labor, which is a department of the Executive power, issued a title to explore and exploit the petroleum belonging to the said lot in favor of Rafael Cortina, based upon the decree of August 8, 1918, which presupposes the direct ownership by the Nation of the petroleum existing in the subsoil of the Republic, constitutes assuredly a retroactive application of the said decree and a dispossession of the rights of exploration and exploitation already mentioned, without any legal basis, violating thereby the guarantees set forth in article 14 and article 27, paragraph 2 of the present Constitution. In view of these facts and of those contained in the foregoing finding, which serve as a basis in determining the proper application of paragraph 4 of article 27 of our basic law in the sense that it is not retroactive in the present case, it is not admissible, nor may we legally sustain the contrary opinion issued by the judge of the inferior court in the suit under revision; and it is therefore declared that without a violation of these individual guarantees the plaintiff company could not be deprived of the said rights which it obtained legally from Manuel S. Ravisé, who in his turn acquired them legally by virtue of a purchase for value made from Severiana Hernández, widow of Martínez, and her sons.
From the foregoing we rule:
- First: The decision under revision issued by the first proprietary district judge of the Federal District, dated February 17, 1921, which refused the amparo prayed for in the federal court by the Texas Company of Mexico, S.A., is revoked.
- Second: The justice of the Union protects and aids the Texas Company of Mexico, S.A., against the act of the President of the Republic and the Department of Industry, Commerce, and Labor, which consists in having issued to Rafael Cortina a title to explore and exploit the petroleum contained in lot 36 of Zacamixtle, Municipality of Tancoco, Canton of Tuxpam, State of Vera Cruz.
Let this be published and distributed; let the necessary stamps be affixed; and let the papers, with a certified copy of this resolution, be returned to the court whence they proceeded, and the docket in due time filed.
Thus by unanimous vote of eleven Justices as to the final part of the decision and by a majority of eight votes as to the legal bases, the Supreme Court decided.
The President of the Court, Moreno, did not deem it necessary to examine the articles in the complaint regarding the extraordinary powers granted to the President, condemnation of property for public utility, or dispossession without a prior suit, his vote being based [Page 472] solely on the ground that paragraph 4 of article 27 of the Constitution had been applied retroactively, as had also the decrees of July 31 and August 8 and 12, 1918, thus violating the guarantees given in article 14 of the Constitution. Justice Garza Pérez did not accept the first finding, since he did not deem it pertinent. Justice Flores considered discussion and decision as to extraordinary powers, as to condemnation for public uses, and as to dispossession without a previous suit, unnecessary, inasmuch as the amparo has been granted for violation of guarantees in respect of non-retroactivity.
The President and the Justices sign.