Safeguard Liberty, Conquer Poverty, Share Prosperity (Part Three — for the Business Community)

Address delivered by retired Chief Justice ARTEMIO V. PANGANIBAN during the 4th INTEGRITY SUMMIT held on September 19, 2014 at the Dusit Thane Hotel, Makati City, sponsored by the Makati Business Club and the European Chamber of Commerce and Industry.

  May I tell you the tale of a judge who thought he had a reputation for fairness and transparency. Before the trial in a case began, he summoned the lawyers of the parties to his chambers.


He calmly told them, “Compañeros, both of you surreptitiously bribed me. You, counsel for the plaintiff, gave me P250,000, while you, counsel for the defendant, sent me P200,000. As an evenhanded and transparent judge, I will not allow anyone of you to unduly influence me. So, I am returning P50,000 to you counsel for the plaintiff. Now. after I have leveled the playing field, both of you can expect equal treatment from me.”


Let me also tell you of the tale of another judge known for his strictness. One day, he was visited at his home by a practicing lawyer. “Compañero,” the magistrate boomed, “Why are you here? Don’t you know it is unethical for a lawyer to speak with a judge outside the courtroom?” “Yes, Your Honor, I am aware of that. But I did not come here to speak with you about my pending case. I came here to sell you a brand new Mercedes Benz that is now parked on your driveway,” meekly explained the lawyer. After peeping at a window to view the car, the judge retorted, “Ah, you came as a car salesman, not as a lawyer. How much is the car?” To which the enterprising lawyer whispered, “P1,000, Your Honor.” The judge smiled and said, “In that case, I’ll buy two, one for me and one for my wife.”


These stories are of course anecdotal and meant to be jokes to cheer you up. Laughable these jokes may be; nonetheless, they demonstrate some of the devilish games and witchcraft that may have impelled the Makati Business Club (MBC) and the European Chamber of Commerce of the Philippines (ECCP) to sponsor this “Integrity Initiative” today. The first joke shows the wrong way to level the playing field and the second shows the wrong way to legalize a bribe.

Ladies and gentlemen, judges will not be bribed unless clients inveigle their lawyers to go beyond the outer limits of advocacy and soar to the stratosphere of corruption and malevolence. At times, lawyers are told by unscrupulous clients, “I do not care whether you know the law. My question is: Do you know the judge?” Remember, there are no bribe-takers, when there are no bribe-givers.


I could really end my address now for I have already demonstrated how the business community can stop corruption. However, as your guest speaker, I have been tasked to bore you with a long peroration on how to properly level the playing field and how to properly solve corruption, and help our nation prosper through judicial reforms.


Past Reform Programs

Whenever judicial reform is the topic of discussion, I am always reminded of the very comprehensive “Action Program for Judicial Reform,” or APJR, started by my esteemed predecessor, Chief Justice Hilario G. Davide Jr. in 1998.


The APJR was supported not only by the Philippine government but also by international institutions like the World Bank, the UN Development Program and the Asian Development Bank, as well as all major national aid agencies, like those of the United States, Canada, Japan, Australia, Britain and the Netherlands.


It was so successful that the World Bank uploaded it in its website as a model for all developing countries applying for World Bank assistance for judicial reforms.


During my term as Chief Justice, I continued the APJR with emphasis on what I call the ACID problems that corrode justice in our country. Thus, upon assuming office, I announced my “Vision and Mission Statement” as follows:


“I vow to lead a judiciary characterized by four Ins: Integrity, Independence, Industry and Intelligence — one that is morally courageous to resist influence, interference, indifference and insolence. I envision a judiciary that is impervious to the plague of “ships” — kinship, relationship, friendship and fellowship.


“I pledge to continue and strengthen the Supreme Court’s on-going Action Program for Judicial Reforms (APJR) with special focus on what I call the ACID problems that corrode justice in our country; namely, (1) limited Access to justice by the poor; (2) Corruption; (3) Incompetence, and (4) Delay in the delivery of quality justice.


“I look for competent and ethical lawyers who are responsible, dependable, and morally upright; and who courageously uphold truth and justice above everything else.


“I shall grant maximum financial and fringe benefits to our 26,000 employees nationwide from whom, in turn, I ask for three things: (1) Dedication to duty, (2) Honesty in every way, and (3) full Loyalty to the judiciary, or DHL


“All the foregoing visions and objectives must lead to the loftier goals of safeguarding the liberty and nurturing the prosperity of our people.


“The twin beacons of LIBERTY and PROSPERITY constitute my core judicial philosophy.”


To promote this philosophy, I called a Global Forum on Liberty and Prosperity in Makati on October 18-20, 2006 as my valedictory project prior my retirement. Led by the Chief Justices of Canada, Russia, France and several others, over 300 jurists, lawyers and law professors from all over the world attended this conference. They signed a Manila Declaration urging the Philippines to lead in reconvening the Global Forum in other countries on a rotating basis. Canadian Chief Justice Beverley McLacklin suggested I add “Under the Rule of Law” to my judicial philosophy, a suggestion I happily accepted.


Unfortunately, my successors in office did not continue both Chief Justice Davide’s and my judicial reform initiatives. Consequently, the international aid agencies discontinued their assistance. The World Bank deleted the APJR from its website.


Realizing this, I pressed on, even in retirement, with my judicial philosophy of liberty and prosperity under the rule of law. Using my retirement pay, I organized the Foundation for Liberty and Prosperity, or FLP, to celebrate my 75th birthday in December 2011. With the help of the Metro Pacific Investment Corporation and the Metrobank Foundation, the FLP – as its initial project – created and funded 10 professorial chairs in nine leading law schools and one in the Philippine Judicial Academy. I thought that the first vital step in inculcating the value of liberty and prosperity is through education.


Fortunately, current Chief Justice Maria Lourdes P.A. Sereno supported FLP’s initiative and keynoted the launching of the Chief Justice Panganiban Professorial Chairs Program on September 18, 2012. She also saw the need for judicial reforms along the lines of the APJR and ACID, but with her own updates. I would advise the Integrity Initiative to assist the Supreme Court in crafting its full program. Already , the World Bank and the Asian Development Bank have shown interest in helping her.


Brief Political and Constitutional History

Indeed, judicial reforms are needed to better compensate judges, assure their independence, prevent corruption, provide more dignified courtrooms, speed up justice and institute other systemic, physical and internal changes. But, today, let me take up another aspect of judicial reform, that is, to refocus the judicial mindset on the economic development of our country and thereby help conquer poverty and share prosperity. Let me start with a little background on our intermixing political and constitutional history.


Since our independence on June 12, 1898 and the founding of the Supreme Court in 1901, our people had always aspired for political independence. So, all our basic laws – from the Malolos Constitution to the Philippine Bill of 1902, to the Tydings-McDuffie Act, to the 1935 Constitution and to the 1987 Charter, the emphasis had always been the protection of political freedoms.


          Our present (1987) Constitution was prepared by venerable men and women who experienced the repressions and torments of martial law. Consequently, the Constitution they drafted made sure that no president, however well-intentioned and patriotic, could ever install authoritarian rule again.


To achieve this goal, the framers took away much of the powers of the presidency, strengthened Congress and the independent agencies, and most significant, gave the judiciary over-arching powers to prevent and subdue abuses and excesses of the president and the legislature.


Accordingly, our Constitution gave the judiciary not just the power but the  duty to strike down “grave abuse of discretion… on the part of any branch or instrumentality of the Government.” Grave abuse was not defined by the Charter; instead, it gave the Supreme Court wide latitude to flesh out its meaning, scope and extent, which made the power even more awesome.[2]


Many other prerogatives the Supreme Court was given, but the voiding of gravely abusive acts of its co-equal branches made our Court the most powerful tribunal in the world. Its power is limited only by the wisdom and self-restraint of the justices themselves.


Overall, the judiciary, in my humble view, has performed well in safeguarding the liberty of our people.[3] Moreover, if shown to be mistaken, it corrects itself. When convinced by incontrovertible facts that the Priority Development Assistance Fund, or PDAF, was evil, it reversed its unanimous decision in LAMP vs Sec. of Budget (Apr. 24, 2012) upholding the pork barrel and struck it down a year later also unanimously in Belgica vs Exec. Sec. (Nov. 10, 2013). It has also carefully struck down some “acts and practices under the Disbursement Acceleration Program” or DAP, but not the DAP itself.


Sensitive to Public Welfare

It has also shown sensitivity to the Herculean search for lasting peace in our country. On the day the Memorandum of Agreement on Ancient Domain (MOA-AD) was to be signed by the Arroyo administration and the Moro Islamic Liberation Front, the Supreme Court promptly issued a Temporary Restraining Order (TRO). I think this was because the MOA-AD was sprung on our people, without any transparency and without exposing the preliminary steps to public scrutiny.


In contrast, though the Framework Agreement on the Bangsamoro (FAB) and its four annexes contain basically the same provisions as the MOA-AD, no TRO was issued. The Court merely required a routine comment from the respondents. I think this is because the Aquino administration was transparent in its peace process.


Also, no TRO was issued on the petitions assailing the Enhanced Defense Cooperation Agreement despite the constitutional provision that “foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate…”


Indeed, the Supreme Court can be sensitive to the needs of our time and calibrate the use of its awesome powers to promote the general welfare. Historically, it has been faithful to the call to preserve and protect our people from tyranny and oppression, whether from colonizers or from native authoritarian rulers.


May I, however, point out that our Constitution was promulgated in 1987, at a time when the prevailing economic mantra was the protection of Filipino enterprises and services, summed up in the nationalistic slogan, “Filipino First.” Thus, many industries, businesses, services and professions were reserved completely or partially for Filipino citizens.


At that time also, the government was deeply entrenched in business. It owned and operated corporations that produced basic necessities like steel. water, electricity, telephone service, petroleum, coconut products, sugar, etc. The result, as we all know now, was a disaster for the economy: not only were the government firms grossly inefficient; they also lost heavily and became a monstrous burden that increased our foreign indebtedness. The National Power Corporation alone lost almost a trillion pesos and yet failed to produce enough electricity resulting in rotating countrywide black outs in the early 1990’s.[4]


Abandoning self-centeredness        

However, soon after our new Constitution was ratified in 1987, the world changed and the protectionist theories of economic development were abandoned in most parts of the world. And the era of liberalization, globalization, deregulation and privatization bloomed when the World Trade Organization (WTO) was born on January 1, 1995.[5]


The Philippine adherence to the WTO was challenged in the Supreme Court in Tanada vs. Angara (May 2, 1997), on the ground that the WTO Treaty allegedly violated the “flagship provisions” of the Constitution mandating economic nationalism. This novel case was assigned to me for study in 1995 when I entered the Supreme Court.


In upholding the WTO Treaty, my unanimously-concurred decision argued: “While the Constitution mandates a bias in favor of Filipino goods, services, labor and enterprises, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity, and limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair.”[6]


May I emphasize that in embracing globalization and the WTO, our country was in fact pursuing its national interest. We recognized the stark reality that the world has become a global village where no country can progress in isolation. Even socialist countries like Russia and China have joined WTO. Only hermit kingdoms and totalitarian regimes like North Korea have not entered WTO. As a consequence, their economy stagnated in self-damning isolation. To build our nation, we must indeed look at the lessons of the past, but more importantly, we must live with the realities of the present as we plan for a better future.


I took the occasion in the WTO case, which was promulgated in 1997 when I was just two years in the Court, to proclaim my core legal philosophy of “Liberty and Prosperity.” I believe that in litigations involving civil liberties, the scales of justice should weigh heavily against the government and in favor of the people, pursuant to the doctrine of strict scrutiny. But in matters affecting the economy and the prosperity of our people, courts – in the absence of grave abuse of discretion – must defer to the Executive and Legislative Branches of government, in accordance with the principle of deferential interpretation of laws and executive issuances. The responsibility for promoting and developing the country’s economy rests primarily on its political leaders. Should they fail in this duty, our people can replace them during periodic elections.


I also believe in private enterprise as the engine of economic growth. Thus, government must promote entrepreneurship and encourage private capital. At the same time, the government has the duty of overseeing the fair and equitable distribution of private wealth to all our people, especially the poor and marginalized. The government, likewise, has the responsibility of enlarging the areas of economic growth to future generations of Filipinos. Thus, the economic pie must not only be fairly divided, it must also be enlarged so that more benefits could be spread to more people under the social justice principle of giving more law to those who have less in life.


Indeed, when it wants to, our Supreme Court is able to transcend obsolete economic barriers by progressively citing countervailing constitutional provisions as it did in the WTO case, or by thinking more creatively, as it did more recently in Initiatives for Dialogue vs PSALM (Oct. 9, 2012 per Justice Martin S. Villarama Jr.), which ruled that water flowing in a river is a natural resource reserved for Filipinos. However, once “appropriated” by a qualified local company and “collected in a dam,” it becomes private in character and may thereafter be used by a Korean firm to generate electricity.[7]


Because of the need to attract investors, there have been proposals to amend the Constitution. While Charter Change would be the more definitive and permanent solution, in the meantime, a more progressive and creative interpretation would do.


Two Ways of Interpreting the Constitution

          Before leaving the subject, let me just say that there are at least two ways of interpreting or construing constitutions. The textualists or originalists interpret according to the original intent of the framers, regardless of the dire consequences on current and future events. They rely on “dura lex sed lex.” Their self-imposed duty is “to apply laws faithfully and desist from engaging in socio-economic or political experimentations,” which they denounce as “judicial legislation.”


On the other hand, the liberals or progressives believe in a living Constitution; one that grows with time, solves the vagaries of the present and anticipates the needs of the future. I belong to this latter group who believe that jurists are not mere social technicians and legal automatons. Rather, they are social engineers who courageously fix their gaze on the underlying principles and overarching aspirations of the Constitution to nurture a free and prosperous nation.


The United States Supreme Court has been struggling for a long time on these differing schools of constitutional construction. During my term as Chief Justice, I visited US Justice Antonin Scalia, said to be the leader of the originalists in the US Court. I was inviting him to speak before the aforementioned Global Forum on Liberty and Prosperity that our Supreme Court was sponsoring on October 18-20, 2006 just prior to my retirement.

He smiled and said, “Mr. Chief Justice, you do not really want me there. I would be useless in the Forum because I do not believe in international law. When I joined the US Supreme Court, I swore to defend the US Constitution and nothing else. And I interpret it according to the original intent of our framers, which did not include international law. Please see my friend, Justice Anthony Kennedy. I am sure he will welcome an opportunity to expound on his international philosophies and ideas.” True enough, when I saw Justice Kennedy later, he agreed to speak at our Global Forum even if via teleconferencing only, because he had already committed to be in another venue on those dates.


My point is: the Constitution should be interpreted according to the evolving needs of our people who ratified it, not rigidly according to its letter. It is a living instrument that can be construed to fight new perplexities unknown to or unanticipated by its framers.


With this mindset, our Supreme Court can use its vast powers to speed up justice, minimize technicalities and make meaningful distinctions to promote the general welfare. It can uphold our people’s paramount security, peace and economic wellbeing. Indeed, with the prudent use of its awesome powers, the Court can safeguard liberty and at the same time nurture prosperity.


To sum up, I call on all of you to support the reform initiatives now being crafted by the Supreme Court as I speak. And equally important, please help me and the Foundation for Liberty and Prosperity to reshape the mind-set of our judiciary and the legal profession not only to safeguard the liberty of our people but also to help conquer poverty and share prosperity. Let us join hands and work together to secure justice and jobs; freedom and food; peace and prosperity; ethics and economics; democracy and development; liberty and prosperity. Indeed, liberty and prosperity must always go together; one is useless without the other.


Maraming salamat po.

[1] Address delivered by retired Chief Justice ARTEMIO V. PANGANIBAN during the 4th INTEGRITY SUMMIT held on September 19, 2014 at the Dusit Thane Hotel, Makati City, sponsored by the Makati Business Club and the European Chamber of Commerce and Industry.

[2] Clearly, the Constitution knighted the judiciary as the guardian of liberty and the nemesis of authoritarian rule. Even the United States, from where we copied our political system, has not endowed its judiciary with such plenary authority.

[3] To prevent a repetition of the human rights abuses during martial law, our Constitution requires arresting policemen to verbally advise arrestees of their “Miranda” rights: “the right to remain silent and to have competent and independent counsel preferably of his own choice. If the person cannot afford the services of counsel, he must be provided with one. These rights cannot be waived except in writing and in the presence of counsel.”


The Miranda rights were invented by the US Supreme Court; they are not found in the text of the US Constitution. But our framers wrote them into our Charter. So, too, evidence obtained illegally and confessions extracted by force or false pretense cannot be used against the accused. For this reason, many have been acquitted, even if in fact guilty, because of the actual or feigned violation of these rights.

[4] The nationalistic fervor was used (some say “misused’) when the Supreme Court, in Manila Prince vs. GSIS (Feb. 3, 1997), voided a public auction already won by a foreign company, on the ground that purportedly, the subject of the bidding, the Manila Hotel, constituted a part of the “national patrimony,” and should thus be awarded to a losing Filipino company that matched the price of the winning foreign bidder, pursuant to Section 10 of Article XII of the Constitution that states: “In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.” For the record, I was one of the dissenters in that decision.

[5] The WTO ushered, to quote the Supreme Court in Tanada vs Angara (May 2, 1997), “a new borderless world of business by sweeping away as mere historical relics the heretofore traditional modes of promoting and protecting national economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and currency controls. Finding market niches and becoming the best in specific industries in a market-driven and export-oriented global scenario (replaced) age-old ‘beggar-thy-neighbor’ policies that unilaterally protected weak and inefficient domestic producers of goods and services.”

[6] “In other words, the Constitution did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not prohibit them either. It fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.”


[7] However, there are instances too when the Supreme Court refused to be creative and became restrictive in interpreting the economic provisions of the Constitution. One recent example is Gamboa vs Teves (June 28, 2011 per Justice Antonio T. Carpio), which held that the 40 percent constitutional limitation on foreign ownership in public utilities, like telephones, should be computed only on the “shares of stock entitled to vote in the election of directors… not to the to the total outstanding capital stock,” which may include non-voting shares.


In several speeches, I have discussed this controversial decision, but for today, let me just say that when this nationalistic provision was included in the 1935 Constitution and until now under the present Constitution, the Department of Justice and the Securities and Exchange Commission have interpreted the constitutional provision to refer to the entire capital stock, not just to the voting shares.


On this basis, many foreign investors have brought their capital here. I think it would not be fair to penalize them or to deprive them of their investments now under the new Supreme Court ruling. They have relied in good faith on the representation of our government that they were not violating the Constitution in making their investments. To be fair, and to retain the trust of foreign investors, I think the decision should be made prospective, and investors should be given time to divest or to adjust to the new decision.

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