Under common law, it once held that the judgment of the courts did not legislate or create laws heretofore nonexistent. Under Declaratory Theory, a court merely discovers and then constitutes evidence of what law is. This contradicts misconceptions that common law is written through the judge’s decisions.
The same is somewhat applicable to our legal system when we think of courts as agencies that do not create but merely sustain laws. While jurisprudence might be established in landmark decisions and append itself to existing statutes, theoretically these simply clarify what previously existed.
However, as laws pile one on top of the other, jurisprudence can effectively establish unheralded fiat. More where courts have become not simply more proactive in addressing complex controversies but also more aggressive in tackling collateral issues, ever-changing norms and realities, especially those spawned by new technologies.
While ours is an entirely different legal system where our statutes are coded and written, there is some commonality we can relate to when, through interpretations, our courts likewise virtually write or rewrite laws. Increasingly aggressive, the Supreme Court, where it is constitutionally empowered with legal interpretation can, indeed, virtually create and thus, in a sense, legislate.
For example, when confronted with issues that involved the national patrimony, the court’s decisions often reflect both tempora et mores and economic realities.
Such alchemy comprised the decisions in the Manila Hotel privatization (Manila Prince Hotel v. the Government Service Insurance System et al. Supreme Court (SC), GR 122156, February 3, 1997) as well as questions of foreign equity, control and capital structures in the SC’s reaffirmation of the Mining Act of 1994.
With Michael Defensor then holding the environment portfolio and Gloria Arroyo sitting in Malacañang, the SC virtually allowed 100-percent foreign ownership of mining companies ruling as constitutional foreign-service contracts in large-scale exploration, development and utilization of minerals, petroleum and mineral oils.
Never mind that the basic act simply stated that the government may undertake such “via agreements with foreign-owned corporations involving either technical or financial assistance.” And never mind the gaping differences between “technical or financial assistance” and 100-percent foreign equity and control. Under what emerged as Financial and Technical Assistance Agreements (FTAA), 100-percent foreign-controlled companies were intrusions into a traditionally restricted area allowing them extraordinary leeway that even where open-pit mining was prohibited by local laws, foreigners with an FTAA were allowed to tear open the earth.
Betraying our desperate need, note that the critical terms in the FTAA are “financial” and “technical.” While hardly a question of law, economic need invariably intrudes and compels consideration.
Technologies require constant infusions of massive capital in such breakthrough industries as telecommunications and energy to ancient brick-and-mortar enterprises as mining and exploration. Unfortunately, these often involve capital we do not have. The reality that the local economy neither has the economic wherewithal nor the technology required could not be denied where economics impacts on statutes.
In contrast to wide latitudes afforded in mining, in the recent SC decision (Wilson P. Gamboa v. The Secretary of Finance, et al., GR 176579, June 28, 2011) on questions of capital and control in Philippine Long Distance Telephone Co. (PLDT), by redefining “capital,” the ruling is effectively detrimental to foreign investment.
Drastic redefinitions are unfortunate for all who’ve maintained honest capital structures. PLDT’s capital structure has always been open to scrutiny. Read the SC decision. The company did not resort to dummies.
In defending its decision, the SC referred to the national fervor when the decision to establish a predominantly Filipino character was first established under the 1935 Constitution. Despite half-a- century difference, the operant 1987 Constitution simply reflects the same nationalism when the ownership ratio was rewritten.
Never mind that the concepts of nation states largely fashionable in the early part of the last century had given way to virtually borderless economic states or regional economies in the second half before being totally encompassed by globalization in this century. Laws are correctly conservative. Unfortunately, inherent anachronistic biases often prevail longer than they should.
The same bias was held in the Manila Hotel privatization case where similar nationalist fervors and “national patrimony” was not only invoked but was redefined to include a hotel where previous parameters involved only natural resources.
Note the redefinition by interpretation. Under the first and second paragraphs of Section 2, Art. XII of the 1987 Constitution national patrimony refers only to “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 all marine wealth in its territorial sea, and exclusive marine zone.”
Arrayed side by side, landmark decisions that alter the investment landscape send out ambivalent and conflicting signals to foreign investors. Unfortunately, investors require firmer foundations than constantly shifting sands.
