Monday, September 26, 2005

Forgotten freedoms in the Philippine constitution

The Philippine Constitution of 1987 is big on political freedoms. Its protection of economic freedom though leaves much to be desired. Consider Article XII on "The National Economy and Patrimony." Section 1 starts off as: The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the under-privileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.

Nice. Equitable production is defined as the primary goal of the economy. Expanding productivity is pinpointed as the "key" to increasing living standards.

Sinister undertones however can be seen in the phrase "protect Filipino enterprises." How does one define "unfair" foreign competition and trade practices? These days any cheap foreign product becomes a magnet of accusations of unfair trade.

Where is the constitutional protection of the Filipino consumer's freedom to choose?

Section 2 is on natural resources: All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

Okay: private enterprises in mining, water supply, etc. must be sixty percent owned by Filipinos. Why the restriction? Ownership is vested in the state, so whatever benefits are due to the state can be had through production sharing agreements, etc. The restriction may prevent the state from gaining access to the best value-for-money investors worldwide. More of this constricting effect from the following:

Section 10: In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years.

The following may be abused:
Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest.

The justice secretary has been mulling current oil pricing conditions as the "trigger" for a takeover. Triggers such as breakdown of law and order, crippling labor strikes, etc. may conceivably be an excuse for such temporary takeover. But high input prices? When the government takes over, it's going to pay the high input prices anyway. If it sells the product at low prices, then it will have to foot the bill from the general tax fund, sooner or later. Moreover government can invoke "emergency powers" to run amok with its fuel rationing schemes. But markets under free competition already have a rationing scheme in place - prices. This system preserves the freedom to trade and to refuse trade as warranted by individual choice. Where is the constitutional protection of this freedom?

Amendment of the charter should involve repeal of Constitutional provisions against foreign ownership. (Die-hard nationalists still have recourse to Congress for imposing restrictions.) The Constitution should also contain explicit statements about protecting economic freedoms of all individuals, particularly those of consumers, who are the most encompassing of the economic classes. This way it gets easier to argue against protectionist pressures. Finally, a Constitutional provision on controlling public debt to manageable levels may also be contemplated, if only to protect the freedom of future generations from the profligacy of their forebears. This makes it easier to argue against the entitlement-and-subsidy mentality.

Strange how economic tyranny can persist, even under a democratic government. Charter change provides a wonderful opportunity to rectify this inconsistency.

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