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Law serves society

/ 10:20 PM November 27, 2013

Let me start with a basic presumption: When the Supreme Court comes up with a split decision, it means it could have justified the decision either way. The 14-0 decision on the Priority Development Assistance Fund (PDAF) left no question and no room to reconsider (unless there was genuinely new evidence): The PDAF is unconstitutional. And the Supreme Court was very clear in its decision regarding effectivity: “This decision is immediately executory but prospective in effect.”

But when the decision is 6-6-2, you could go either way. The split decisions on a number of business-related cases show that interpretation can be made. Add to that the time it takes to make those “incorrect” decisions, and I’m left with the sad conclusion that the Supreme Court pays too much attention to legal technicalities and narrow interpretations rather than allows the Philippines to progress and to create jobs and a decent way of life for all Filipinos.


I did a quick review and found 10 cases where the Supreme Court made decisions against foreign investors, with negative impact on the business climate and the economy as a whole.

I work on a basic assumption: Law is the servant of society, not the other way around, particularly at the level of the Supreme Court. Its justices should not base their decisions on strict adherence to the letter of the law. Lower-court judges may be (and I stress “may be”) constrained to follow the law exactly as it’s written; the Supreme Court justices aren’t. They have the room to interpret.


What Philippine society needs as a top priority is getting people out of poverty and giving them jobs and a decent life. Surely the justices want that, too. So why do they allow insignificant technicalities to block this from happening? Do they think three million (the Social Weather Stations’ more believable figure is 11 million) Filipinos don’t deserve to have jobs?  Because that’s what they’re doing with their antibusiness decisions.

The Philippines has the lowest level of foreign direct investments (FDIs) among major Southeast Asian economies. From 2000 to 2009 Singapore attracted $177 billion in FDIs, followed by Thailand, $65 billion; Malaysia, $42 billion; and Vietnam, $35 billion. The next lowest is Indonesia, which got $28 billion—75 percent higher than the Philippines’ miserable $16 billion. Even on local investments, the Philippines fares poorly. As a percentage of gross domestic product (GDP), domestic investment from 2000 to 2009 was at an average of 17.4 percent, Indonesia was 24.5 percent; Thailand, 26 percent; Malaysia, 21.7 percent; and Vietnam, 35.3 percent.

One of the major reasons we don’t get FDIs and local investments are measly is a capricious court system—a court system that considers law above society. It is time the poor and the unemployed stood up in anger at a heartless court system. I’m beginning to realize that the Philippine court system is probably the biggest problem this country has.

What has triggered my anger? The recent absurdity of the Supreme Court decision that San Roque Power Corp. could not get a refund of P481 million of excess value-added tax (VAT) it had to pay. The government had PROMISED San Roque that it would give the amount back if San Roque invested, so it did. But the Supreme Court said San Roque had no right to that refund because—get this—it hadn’t applied within the window of days dictated by (ill-considered) law. You can’t have a refund due you because of “days”!

The Court of Tax Appeals had previously granted San Roque its VAT refund claim. However, this ruling was taken by the Bureau of Internal Revenue to the Supreme Court. The justices focused on whether the appeal was within the right days, arguing as to when the count started instead of arguing as to whether the refund was legitimately due—which it is because the sovereign Philippine government promised it to San Roque, and the investors built the plants based on that promise. The issue here is government commitments to business. The court should clarify this FOR THE FUTURE.

The business community has come together in a way that has never been seen before. Some 17 foreign and local business chambers are working together to help get much larger levels of investment so jobs can be created. They are putting time and effort into working, with the executive and legislative branches, for a better business environment that will entice investors. But the judiciary is defeating their efforts. The Chief Justice has met with us and promised cooperation—but on eliminating corruption, not on understanding business and how the courts can help.

I appeal to the justices: Think of the poor, change your decision.


* * *

You currently pay P23.12/cubic meter for water piped into your house by Manila Water and P28.99/cbm by Maynilad. The water concessionaires requested an increase by P5.83/cbm and P8.58/cbm, respectively. There was a public outcry that the Metropolitan Waterworks and Sewerage System (MWSS) presumably heeded, as it ordered a reduction.

The public pays P25/liter for bottles of water with no complaint. There are 1,000 liters in a cubic meter, so if you paid bottled-water rates for your household water, you’d pay P25,000/cbm. The average monthly household bill would skyrocket from P552 to P600,000 or from P692 to P597,000.

Incidentally, I haven’t heard a peep from MWSS after my two columns questioning why it is putting two successful projects at risk. Nor have I heard from the Aquino administration whose image in the international community is being impaired by acts like this. And this is not the only one. There have been several. No wonder new FDI isn’t coming; no wonder it’s going to other countries in Asia.

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TAGS: column, constitutionality, decisions, PDAF, Peter Wallace, Priority Development Assistance Fund, Supreme Court
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