How the judiciary can help the economy

Amid the serious economic crisis engulfing the developed world, the Philippines has shown remarkable resilience. This year, our economy grew 6.3 percent in the first quarter and 5.9 percent in the second quarter. This rate of growth may slow down a bit but it is still projected to end the year at 5.5 percent, better than many Asian neighbors like Malaysia, Thailand, Singapore and Vietnam, but behind China and possibly Indonesia.

Deference to political branches. Clearly, the responsibility for propelling our economy and alleviating poverty rests primarily with our President and Congress, together with the private business sector, which is the recognized engine of economic growth in our democratic system.

Nonetheless, the question frequently asked is how the judiciary can help the economy. My stock answer is that, in judging controversies involving the economy, the judiciary must defer as much as possible to the political branches of government.

Absent a clear violation of the Constitution or grave abuse of discretion, courts should respect the economic programs and actions of our political leaders. After all, our people mandated them with that responsibility. Should they fail in discharging their mandate, they would be answerable to our people who may reject their programs or replace them during periodic elections.

May I quickly add, however, that in cases involving human rights and liberty, courts must do the opposite; they must strictly construe the laws in favor of the people and against the government.

Deferential interpretation applied. For example, for many decades, the protection of native goods and local products was the popular policy here. In pursuit of that policy, Congress barred the importation of foreign goods and set up high tariffs and taxes on imported products. In this way, local products were promoted and patronized.

Later, however, nations became more interdependent and protectionism became obsolete. The World Trade Organization (WTO) was organized to tear down tariffs and other trade barriers. Economic paradigms shifted from government control to deregulation, from government ownership to privatization, from national sovereignty to globalization and liberalization of trade. Joining this worldwide trend, our Senate ratified the Philippine adherence to WTO.

Citing nationalistic provisions of our Constitution mandating “economic nationalism,” some senators challenged the constitutionality of the Senate action. However, using deferential interpretation in Tañada vs. Angara (May 2, 1997), the Supreme Court unanimously upheld the ratification, ruling in this wise:

“While the Constitution has a bias in favor of Filipino goods, services, labor and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity, and limits the protection of Philippine enterprises only against foreign competition and trade practices that are unfair.”

Exercising judicial restraint, the high court refused to pass upon the wisdom or viability of deregulation and globalization. It said: “Ineludibly, what the Senate did [in ratifying the WTO Treaty] was a valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter between the elected policy makers and the people.”

Deference to present policies. To propel the economy and achieve prosperity, President Aquino adopted economic policies, like the Conditional Cash Transfer program to ease immediately our poor people’s misery and foster the education and well being of their children. Also, he turned to public-private partnerships (PPP) to provide basic services, like power generation, water supply, tollways, ports, etc.

When tackling legal issues arising from these programs, courts I think should use deferential interpretation. Long-term investors, the real backbone of the economy, expect jurisprudence to be stable, consistent and predictable. Courts should interfere only when specific contracts implementing these policies clearly violate the Constitution and the laws, or are tainted with grave abuse of discretion.

An example that warranted the Supreme Court’s intervention is the contract of the government for the construction of Terminal III of Ninoy Aquino International Airport. The high court voided the contract for plainly violating the law on public bidding. It also invoked the state’s right to regulate monopolies. Far from being an unwanted interloper, the high court upheld revered business axioms in ruling that public bidding must “level the playing field” among the bidders, and must be conducted transparently and fairly.

Understandably, the President wants to fulfill his election promise to mitigate our people’s poverty and to expand our economy in many novel and creative ways. Naturally, he would frown on any undue interference by the judiciary.

The same attitude is true in other countries. For example, US President Franklin Delano Roosevelt was so irritated with the US Supreme Court’s obstruction of his New Deal programs to save the economy from the Great Recession of the late 1920s that he contemplated “packing” the court with his own men.

Fortunately, the Supreme Court changed its orientation when “conservative” Justice Owen Roberts joined the four “liberal” justices and tilted the slim majority in favor of Roosevelt’s policies. Thus, the US President desisted from his plans against the judiciary.

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