SEC violates Constitution – Malaya

SEC violates Constitution

‘Short cuts that violate the Fundamental Law even for the sake of prosperity cannot be allowed.’

The Securities and Exchange Commission is known to have relaxed the rules on foreign ownership in restricted companies. We do not know as of this writing the extent of the relaxation.

If the rules cover equity in public utilities and natural resources they clearly violate the Supreme Court ruling  in the Gamboa case involving foreign equity in PLDT of over 40 percent.,  

The court ordered PLDT to make adjustments.  That was kind of the Court.  The law says that the state may forfeit the excess of 40 percent in public utilities like the Philippine Long Distance Company.

This space never argued for the necessity of arbitrarily relaxing the rules on foreign equity in restricted areas.  At the same time, we believe that more foreign investments can be attracted the country if restrictions are relaxed.

The restrictions are a mandate of the Constitution.  If reducing the limit on foreign investments in restricted areas will help the economy move forward faster, by all means let us relax the rules.

But the only way to do so is by amending the Constitution.  The Securities and Exchange Commission may not have the authority to interpret the restrictions.  The Constitution and the laws are interpreted by the Supreme Court.  No other state agency, not even the SEC which implements the corporation law, can tinker with the Constitution.

Unfortunately, President Aquino does not seem to have a mind to call for amendments to the Constitution only in relation to the economic provisions.  What the President does not want to do, the SEC does with complete abandon and mindlessly ignores a precedent recently established by the Supreme Court in the PLDT foreign equity case.

In spite of several amendments to the Constitution, the provision on limitation of foreign investments in public utilities and natural resources was never even touched.  The fact is if there must be amendments at all to the Charter, it is the economic provisions and its limitations that must be modified or relaxed.

On such amendments depend the future of this country which never had enough resources to feed the fast-multiplying number of people.   Even a slowdown in the birth rate became a burning issue between the Church and the President.  The truth is lack of capital and starving millions are two of many reasons why this country remains poor in spite of appreciable growth under the Aquino administration.

The limitation to 40 percent is the mind of nationalist-poet-politician Claro M. Recto.  His mind is still in the minds of many people, particularly the left-leaning young and old Filipinos.  

They style themselves as nationalists, lovers of the country, its people and its natural resources and public utilities.  They do not want the wealth of this country in the hands of foreigners.  The argument is self-defeating and stupid.

Why should anyone care if the wealth, a good or little part it, anyway, is in the hands of – as I love to say – the fattest imperialist “pig” from Manhattan or the biggest communist businessman from China?

The point is they created wealth here, not only for their benefit but for the Filipino people. These strident nationalists are scared that foreign businessmen will repatriate profits to the mother companies.  But of course!  They have investors they have a duty to make them happy by giving dividends.

Why don’t these so-called nationalists object to the capital flight of Filipinos themselves every time they sense instability or political trouble?  

It is unfortunate, that the SEC is short-cutting the way to prosperity.  The Constitution and the laws are superior to the desire for prosperity.  But there is a lawful way  to attract foreign investments.  Let the Constitution be amended to relax the rules on foreign equity.  

Teresita Herbosa, chair of the SEC, is a brilliant lawyer from ACCRA.  She knows only too well that the SEC cannot violate the jurisprudence established by the Court.  Her SEC went on just the same and relaxed the rules.

Short cuts that violate the Fundamental Law even for the sake of prosperity cannot be allowed.  The SEC is absolutely without authority to amend the Charter.  Neither can it ignore a precedent of the Supreme Court.

What the SEC did should open the eyes of President Aquino and Congress that he controls to call for amendments to the economic provisions of the Constitution.  He too appears to be anti-foreign as manifested in his refusal to issue permits to new mining firms the largest among whom are foreign-owned or controlled.

It must be mentioned here that Fraport, the failed German partner of the failed Terminal III owned by Philippine International Air Transport Corp., has slightly more than 60 percent foreign equity.

No lawyer or businessmen has taken note of it, least of all taken  the issue to the Supreme Court.  The inaction is a manifestation of how the laws are selectively applied.

Or it indicates that people, businessmen included, do not object to higher foreign equity in restricted ventures like Terminal III which is a public utility.  Fraport violated the Constitution by having more than 40 percent in Piatco through cascade.  It even had the temerity to file a request for arbitration with the International Center of Settlement of Investment Disputes in Washington DC.

Of course, the Fraport-Piatco case is different from the decision of the SEC relaxing the rules on foreign equity in restricted ventures.  The only thing common between them is they both violate the Fundamental Law.  Nothing more.  Nothing less.  

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