Cha-cha: risking legitimacy for unsure gains

UNLESS WEcan ensure that a revised constitution will enjoy the same overwhelming mandate enjoyed by the 1987 Charter, we are better off rectifying the current deficiencies through presidential and legislative initiatives and judicial interpretation. Otherwise we risk bartering a tried and tested anchor of legitimacy for an improved constitutional text that even at its best may not even yield the promised economic gains.

Make no bones about it. The 1987 Constitution is not perfect. It codifies obsolete protectionist clauses that are out of step with the times. Beyond any doubt, Filipino First may be a good slogan. But which Filipino?

According to old orthodoxy that dates back to the 1950s, Filipino First should protect the Filipino industrialist. And today more than a half-century later, look where it has brought our economy: neither truly Filipino and certainly not First. Yet that is the orthodoxy that we calcified into the 1987 Constitution.

Now the new thinking says that when we say Filipino First, we should think of the ordinary workingman. Think of the young Filipino graduate seeking an entry-level job. Think of the young father and mother looking for a job that pays a living wage so that their children can live in a safe home, study in good schools and eat healthy food. Think of mid-career and senior Filipino workers seeking a stable source of income and for security in their old age. In the 21st century, Filipino First means creating more jobs for these Filipinos.

I therefore agree that the protectionism of the 1987 Constitution is outmoded. We must be more welcoming of foreign capital that can generate new income and new jobs. But will revising the constitutional text achieve that? I seriously doubt it. The costs outweigh the benefits.

One, maybe the hoped-for windfall won’t materialize. The purported benefit is that more foreign investors will come if we do away with the Filipino equity requirement. That should be a no-brainer for foreign businessmen: That’s one less barrier, one less step in a long process. But is that the controlling factor that turns off foreign investors? Again, look at the lessons from other countries. Studies have looked at the usual incentives offered by developing countries: tax holidays, customs exemptions, and—significant for us here—liberal equity requirements. These are all good, the foreigners say, but what ticked them off were other things like corruption, lack of infrastructure and an uncertain investment climate—and here we include unpredictable and unstable rulings by courts and administrative agencies.

Indeed some businessmen would rather pay taxes in full, provided these are collected and spent honestly. They can live with whatever rules we have on Filipino versus foreign control of corporations, so long as those rules are fixed, known in advance and not changeable mid-stream. In other words, corruption, infrastructure and stability are more valuable to them than tax holidays. To borrow from the “Field of Dreams,” if we revise it, maybe they still won’t come.

Two, even if we amend the constitutional text, that doesn’t really settle things for good because, in the famous adage, the Constitution is what the courts say it is. The best example is the 60-40 Filipino equity rule codified in the 1987 Constitution. That rule seemed categorical enough for a very long time, but the computation of the minimum 60-percent Filipino requirement was re- cently changed by the Supreme Court.

Removing that cumbersome protectionist clause is not enough. There remain a whole range of laws on the environment, indigenous peoples’ rights, labor standards and labor relations—all of them indispensable—that will still find their way before the courts. In all those cases, we need to modernize judicial thinking so that the same problem that plagued the Filipino equity rule will not bedevil them—last-minute reinterpretations, the knee-jerk rejection of anything foreign, the lingering embrace of archaic orthodoxy.

And all these at what price? We relinquish the unquestioned legitimacy of the 1987 Constitution, adopted by our people with an overwhelming mandate right after Edsa 1. It has the unmatchable advantage of having been written right after a revolutionary moment that shapes our life as a nation until today. The 1987 Constitution is the document that institutionalizes the ideology of Edsa 1.

Charter change proponents suggest that we tinker with that Constitution today on an issue as emotional and contentious as foreign participation in our economy. That is a surefire guarantee that the debate will be acrimonious and divisive, and that in a plebiscite, those amendments will get a mandate far less than what the 1987 Constitution won in the afterglow of Edsa 1.

The Supreme Court has already shown what enlightened judicial review can achieve when it validated foreign participation in mining through financial and technical agreements. For sure, the Court achieved that only by reversing its own ruling on motion for reconsideration. But why give up the sure advantage of unquestioned legitimacy in exchange for the unsure benefit of a foreign investment bonanza? We can’t eat legitimacy, I know, but lack of legitimacy can devour us too.

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