SC decisions on the economy

Because of the growing worldwide interest in our surging economy, retired Justice Adolfo S. Azcuna, a member of the 1986 Constitutional Commission and incumbent chancellor of the Philippine Judicial Academy, dissected four controversial decisions on the economic provisions of the Constitution during his recent lecture at the Ateneo Law School.

Patrimony and mining. Justice Azcuna, one of the 10 holders of the Chief Justice Panganiban Professorial Chair on Liberty and Prosperity, first discussed Manila Prince Hotel vs GSIS (Feb. 3, 1997, per Justice Josue N. Bellosillo). Here, the Supreme Court directed the Government Service Insurance System to award the sale of Manila Hotel to a losing Filipino bidder after it equaled the higher bid of a Malaysian competitor.

To justify the award, the Supreme Court cited this constitutional provision: “In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.”

Chief Justice Andres R. Narvasa, Justices Jose A. R. Melo, Reynato S. Puno and I dissented. My dissent said that the Manila Hotel was not a part of our “national economy and patrimony,” that the majority subverted the essence of public bidding to level the playing field, and that the constitutional preference applied only when “the scores are tied. But not when the ballgame is over and the foreigners clearly posted the highest score.”

The second case, La Bugal-B’laan vs Ramos, involved a Financial and Technical Assistance Agreement (FTAA) entered into by President Fidel V. Ramos with an Australian company. In its Jan. 27, 2004, decision (per Justice Conchita Carpio Morales), the Supreme Court, voting 8-5, struck down major provisions of the Mining Law of 1995 and its implementing regulations, as well as the FTAA for violating the constitutional dictum requiring the development of natural resources to be “under the full control and supervision of the State.”

Acting on the motion for reconsideration, the Supreme Court on Dec. 1, 2004, reversed itself, 10-4. It upheld the said law, regulations and FTAA, because the Charter expressly authorized the President to enter into FTAAs with foreign corporations for large-scale mining and impliedly allowed the foreign partners some management covenants to assure that the billions they invested would be used for the purposes intended, provided that ultimate full control remained with the President. I wrote this latter ruling.

Same or similar issues are again raised in the Supreme Court that has now changed membership except for Justice Antonio T. Carpio, who led the dissenters in the December 1, 2004, ruling. Congress is likewise mulling revisions in the Mining Law.

Due to festering policy volatility, the mining industry has not grown as expected. Mineral exploration gestates over a long time and requires huge venture capital that is sometimes lost when the extracted minerals turn out to be commercially unviable. Hence, unless government assures credible and stable long-term policies that are not changed midstream, investors will remain lukewarm.

Utilities and water. The third case, Gamboa vs Teves (June 28, 2011, per Justice Carpio), held that the 40-percent constitutional limitation on foreign ownership in public utilities should be computed only on the “shares of stock entitled to vote in the election of directors… not to the total outstanding capital stock,” which may include nonvoting shares.

The fourth case, Initiatives for Dialogue vs PSALM (October 9, 2012, per Justice Martin S. Villarama Jr.), ruled that water flowing in a river is a natural resource reserved for Filipinos. However, once “appropriated” by a qualified local company and “collected in a dam,” it becomes private in character and may thereafter be used by a Korean firm to generate electricity.

During the open forum, the question was raised whether it was necessary to amend the Charter to make it more investor-friendly and more in keeping with the unignorable realities of globalization and deregulation, or whether a more liberal interpretation will do.

Constitutional interpretation. It reminded me of my column last April 14 which discussed the two main ways of constitutional interpretation: 1) strictly according to the original intent of the framers; or 2) liberally according to how our people who ratified the Constitution understood it, given its underlying principles and overarching aspirations.

To show that these two ways of interpretation are not confined to local jurists, I related during my closing remarks my conversation years ago with US Supreme Court Justice Antonin Scalia, said to be the leader of the originalists in the United States. I was inviting him to speak before the Global Forum on Liberty and Prosperity that our Supreme Court was sponsoring on Oct. 18-20, 2006, just prior to my retirement.

He smiled and said, “Mr. Chief Justice, you do not really want me there. I would be useless in the Forum. When I joined the US Supreme Court, I swore to defend and implement the US Constitution and nothing else. And I interpret it according to the original intent of our framers, which did not include international law. Please see my friend next door, Justice Anthony Kennedy. I am sure he will welcome an opportunity to expound on his international philosophies and ideas.”

True enough, when I saw Justice Kennedy later, he agreed to speak at our Global Forum even if via video teleconferencing only, because he had committed to be in another country on those dates.

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