Lawyers say constitution should not set specific restrictions on foreign ownership


LAWYERS appearing on Tuesday before the Senate Constitutional Amendments and Revision of Codes Committee recommended a review and possible amendment of provisions in the 1987 Constitution limiting foreign ownership in many industries at 40%.

Ateneo de Manila law and economics professor Antony A. Abad, Jr., said at the hearing that the goal is to expose companies to real competition and make the economy less vulnerable to cartelization.

“You have to achieve that through economic equilibrium… that’s why competition is needed because we don’t want monopolies and cartels who determine the price, quantity and availability of a product; there will be a problem in consumer welfare,” he said, calling the economy “unbalanced.”

“There is also a need for political equilibrium, by making sure that there is no concentration of political power,” he added.

Mr. Abad said Congress called for a charter that contains only “immutable and the general, aspirational provisions.”

“The constitution’s purpose is the organization of government and governance, and then the aspirations of the people,” he added, noting that specific and restrictive provisions should be avoided.

He recommended that legislation fill the gaps where the Constitution cannot be specific.

Mr. Abad added that if eliminating poverty and protecting domestic industry is the government’s goal, then “the 60-40 (provision) is not the way to do it.”

“If the purpose of the 60-40 is the protection of the Philippine economy, that will not happen because the 60-40 is first arbitrary. Why 60-40?” he said, noting that such rules can be circumvented via the use of dummy corporations.

“If industry needs to be protected, then regulations should be provided in the registration process,” he added.

In the previous Congress, a resolution sought to insert the phrase “unless otherwise provided by law” to the constitutional provision capping foreign ownership, and to the Filipino ownership-only rule in force for land and certain industries deemed strategic.

Estelito P. Mendoza, a former solicitor-general, called this suggestion useless, saying that there “might as well have no provision at all.”

“On the economic provisions, we must deal with them on their own merits. You cannot solve them by just saying ‘unless otherwise provided by law,’” he said.

“I think we have to determine what the economic provisions are and that will require some study from the economic point of view,” he added.

Discussions on the revision of the constitution were renewed after Senator Robinhood Ferdinand C. Padilla, who chairs the committee, expressed support for eliminating the 60-40 rule, saying such a move will attract more foreign investment, including in joint oil and gas exploration with China in the South China Sea.

Foreign Affairs Secretary Enrique A. Manalo has said that China is seeking a 50-50% or 51-49% division rather than 60-40% in favor of the Philippines. It also wanted agreements to be governed by Chinese law, which was unacceptable to the Philippines.

Mr. Mendoza cited the need to “recognize the difference between exploration and exploitation.”

“Exploration is just identifying if there is oil present, and there’s no problem with joint exploration,” he said, “but the constitutional issue is on joint exploitation which has not been decided by the Supreme Court.”

Mr. Mendoza also called for the return of a provision allowing the declaration of martial law in case of imminent danger, since its removal may mean that “you cannot declare martial law or suspend the writ of habeas corpus until war (has broken out) which is not a practical solution.”

The constitution, he added, should also be amended in such a way that presidential appointments of judiciary officials are only final after confirmation by the Committee of Appointments.

Currently, members of the Supreme Court and judges of the lower courts are appointed by the President from a list prepared by the judicial and bar council without a need for confirmation.

Mr. Abad said the constitution is currently lacking inclusivity, accountability and transparency. “The system needs to be changed.”

“In the end, governance is in the system of government,” he said. “The presidential and unitary (current form of government) is a carryover from the colonial administration, which is highly centralized in Manila, but for a country like ours that is an archipelago, multilingual and multicultural, we should create different centers of gravity.”

For this reason, he is pushing for the shift to parliamentary and federal government.

“Everything is moving very fast but if your constitution is an old constitution that is holding back your economy, you will be defeated by other countries,” Mr. Abad said. — Alyssa Nicole O. Tan

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