Points to ponder

2011 was a very interesting year for both politics and business in this country.

The process to impeach Supreme Court Chief Justice Renato Corona has begun. I have my personal and professional misgivings, not only because I agree with observations that this will set a bad precedent but also because of its political motivations. Remember that President Noynoy Aquino admitted to having a hand in convincing the congressmen to support Corona’s impeachment. As lawyers, we have been trained to respect the idea that the Supreme Court is the final arbiter of all legal disputes. So when the President says that the SC erred in its rulings in a number of cases (the FASAP case and the TRO involving former President Arroyo) and that these errors are grounds for impeaching Corona, it only means one thing: Malacañang now has the final say on how cases before the SC should turn out.

I myself do not agree with a number of SC rulings, but if legal disputes do not end with the High Tribunal, doesn’t the idea of the executive branch meddling with the runnings of the SC run afoul of the constitutional principle of separation of powers that is one of the pillars of our democracy?

Thomas Jefferson once said that the press is a necessary evil in a democratic society and that he would rather have an abusive press than a suppressed one. He said and I quote: “The freedom of the press is one of the great bulwarks of liberty, and can never be restrained but by a despotic government.” I believe that the same thing applies to our judiciary.

However, this matter with Justice Corona turns out, it is my hope that my fears turn out unfounded.

Then of course, we have this doctrinal ruling of the Supreme Court penned by Associate Justice Antonio Carpio in the case filed by the late Wilson Gamboa against officials of the Philippine Long Distance Telephone Co. (PLDT). The original petition before the SC is for prohibition, injunction, declaratory relief and declaration of nullity of the sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC) by the government to Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate of First Pacific Company Ltd. The case, which basically involves the question as to whether or not PLDT is majority Filipino owned, created huge ripples whose impact has yet to be felt and realized.

Article 12, Section 11 of the 1987 Constitution requires that “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 60 per centum of whose capital is owned by such citizens…” (underscoring ours)

According to the SC in the dispositive portion of its ruling, the term “capital” in Article 12, Section 11 refers only to shares of stock entitled to vote in the election of directors. Thus, only to common shares, and not to the total outstanding capital stock (common and non-voting preferred shares), it said. In the body of the ruling however, the SC did not exclude voting preferred shares.

Former Chief Justice Artemio Panganiban, who sits as an independent director in the board of PLDT, noted in a speech at a UP forum that in resolving this “threshold” and allegedly “purely legal” issue, the majority – in the body of its decision – delved into facts it sourced from the Internet and from records of the Securities and Exchange Commission, in the process committing some egregious factual errors and violating the due process requirement.

Prior to this decision, Panganiban noted that the government – notably the Department of Justice and the SEC – have, since 1935 when the Constitution was first approved, uniformly held that the entire capital stock of a corporation, including voting and non-voting shares, shall be used in determining the 40 percent allocation to non-Filipinos. On this basis, the government has since then enticed foreigners to invest here, and relying on this representation, many foreigners invested in Philippine companies, including public utilities.

He added that the majority’s theoretical requirement that 60 percent of all financial benefits in a public utility must go to Filipinos regardless of how much they invested is totally unfair and blatantly ignores the most fundamental tenets of investments. “Under this absurd thesis, no foreigner will invest in our country. For the most basic rule in a free market economy is that investors share in the profits and other benefits of an enterprise based on the amount they invested and the risk they assumed.”

It is taking a long time for the SC to resolve the motions for reconsideration filed by the respondents. The Court said that it failed to consider the economic implications of its ruling. It’s no wonder that foreign investors are now adopting a wait-and-see attitude as far as investing here. After all, the stability of the judicial system as well as jurisprudence is one major consideration in making investments.

I do not wish to sound alarmist but with our government scrimping on public expenditure this year, foreign direct investments in limbo (one major car manufacturer is closing down its Philippine subsidiary and moving its plant to Thailand), expect 2012 to be a very difficult year. 

There are however nuggets of hope. I heard from my good friend David Lim of the Solid Group that he expects to double his sales of the MyPhone brand of mobile phones next year. The growth of his sales was phenomenal in 2011 compared to 2010. Globe Telecom is also pushing through with its multi-billion peso network expansion and modernization program while PLDT is still investing a big amount next year. A friend who distributes LG products says that total number of units sold went up but in terms of value, it went down because the price of electronic products such as LED and LCD televisions have gone down. The price of refrigerators and airconditioners however are stable. 

Despite the foot dragging as far as the implementation of the public-private partnership (PPP) program of President Aquino, those interested to participate are still there, waiting. San Miguel Corp. president Ramon Ang has said that his companies will participate in all biddings for PPP projects while the Metro Pacific Investments Corp. (MPIC) group of Manny Pangilinan is eyeing a number of big-ticket PPP projects. The local conglomerates are still fueling and will continue to fuel our economy. Let us hope that our government realizes that private business performs better if left alone.

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