G.R. No.

100883 December 2, 1991

CONGRESSMAN ENRIQUE T. GARCIA (Secon D!"#r!c# o$ %&#&&n', petitioner,
vs.
T(E E)ECUTI*E SECRETAR+, T(E NATIONA, ECONOMIC AND DE*E,O-MENT
AUT(ORIT+, T(E %OARD O. IN*ESTMENTS, T(E SECURITIES AND E)C(ANGE
COMMISSION, &n T(E %UREAU O. TRADE REGU,ATION AND CONSUMER
-ROTECTION, respondents.
Sen&#or *ICENTE T. -ATERNO &n -(I,I--INE ASSOCIATION O. %ATTER+
MANU.ACTURERS, intervenors.
Abraham C. La Vina for petitioner.
Padilla, Jimenez, Kintanar and Asuncion Law Firm for PABA.
!emaree J.B. "a#al and Jhosep $. Lopez for %en. V. Paterno

CRU/, J.:p
The petitioner challenges RA 7042 on the ground that it defeats the constitutional policy of
developing a self-reliant and independent national economy effectively controlled by ilipinos and
the protection of ilipino enterprises against unfair foreign competition and trade practices. !e
claims that the la" abdicates all regulation of foreign enterprises in this country and gives them
unfair advantages over local investments "hich are practically elbo"ed out in their o"n land "ith the
complicity of their o"n government.
#pecifically, he argues that under #ection $ of the said la" a foreign investor may do business in the
%hilippines or invest in a domestic enterprise up to &00' of its capital "ithout need of prior approval.
All that it has to do is register "ith the #ecurities and ()change *ommission or the +ureau of Trade
Regulation and *onsumer %rotection in the case of a single proprietorship. The said section ma,es
certain that -the #(* or +TR*%, as the case may be, shall not impose any limitations on the e)tent
of foreign o"nership in an enterprise additional to those provided in this Act.-
urthermore, #ection 7 provides that -non-%hilippine nationals may o"n up to one hundred percent
.&00'/ of domestic mar,et enterprises unless foreign o"nership therein is prohibited or limited by
e)isting la" or the oreign 0nvestment 1egative 2ist under #ection 3 hereof.- The provision for a
oreign 0nvestment 1egative 2ist in #ection 3 does not satisfy the constitutional mandate for the
government to regulate and e)ercise authority over foreign investments. The system of negative list
abandons the positive aspect of regulation and e)ercise of authority over foreign investments. 0n
effect, it assumes that so long as foreign investments are not in areas covered by the list, such
investments are not detrimental to but are good for the national economy.
The petitioner attac,s 2ist A as not a true negative list in the strict sense of the term. 0t "ould merely
enumerate areas of activities already reserved to %hilippine nationals by mandate of the *onstitution
and specific la"s. 2ist + "ould contain areas of activities and enterprises already regulated
according to la" and includes small and medium-si4ed domestic mar,et enterprises or e)port
enterprises "hich utili4e ra" materials from depleting natural resources "ith paid-in e5uity capital of
less than the e5uivalent of 6#7$00,000.00. 0n other "ords, -small to medium- are reserved to
%hilippine nationals8 in effect ilipinos are not encouraged to go big. 2ist * "ould merely contain
areas of investment m "hich -e)isting enterprises already serve ade5uately the needs of the
economy and the consumers and do not need further foreign investments.- The category of -e)isting
enterprises- should be 5ualified by the term -ilipino.- 9ther"ise, 2ist * "ould protect e)isting
foreign enterprises as "ell.
The petitioner also attac,s #ection : because if a %hilippine national believes that an area of
investment should be included in list *, the burden is on him to sho" that the criteria enumerated in
said section are met.
0t is alleged that Articles 2, ;2, < ;$ of the 9mnibus 0nvestments *ode of &:32 are done a"ay "ith
by RA 7042. 0t is also argued that by repealing Articles 4:, $0, $4 and $= of the &:37 9mnibus
0nvestments *ode, RA 1o. 7042 further abandons the regulation of foreign investments by doing
a"ay "ith important re5uirements for doing business in the %hilippines.
inally, the petitioner claims that the transitory provisions of RA 7042, "hich allo" practically
unlimited entry of foreign investments for three years, sub>ect only to a supposed Transitory oreign
0nvestment 1egative 2ist, not only completely deregulates foreign investments but "ould place
ilipino enterprises at a fatal disadvantage in their o"n country.
0n his *omment, the #olicitor ?eneral counters that the phrase -"ithout need of prior approval-
applies to e5uity restrictions alone. This is "ell e)plained by the fact that prior to the effectivity of RA
7042, Article 4= of the 9mnibus 0nvestments *ode of &:37 .(9 1o. 22=/, provided that a non-
%hilippine national could, "ithout need of prior authority from the +oard of 0nvestments .+90/, invest
in@ .&/ any enterprise registered under +oo, 0 .0nvestments "ith 0ncentives/8 and .2/ enterprises not
registered under +oo, 0, to the e)tent that the total investment of the non-%hilippine national did not
e)ceed 40' of the outstanding capital. 9n the other hand, under Article 47 thereof, if an investment
by a non-%hilippine nationals in an enterprise not registered under +oo, 0 "as such that the total
participation by non-%hilippine nationals in the outstanding capital thereof e)ceeded 40', prior
authority from the +90 "as re5uired.
Aith the effectivity of RA 7042, a certain layer of bureaucracy has been removed, specifically, the
case-to-case authori4ation by +90. urthermore, "ith the introduction of the 1egative 2ist under
#ections 3 < &$, the areas of investments not open to foreign investors are already determined and
outlined8 hence, registration "ith the #(* or +TR*%, as the case may be, is no" the initial step to
be ta,en by foreign investors.
This registration constitutes regulation and e)ercise of authority over foreign investments. 6nder
#(* and +TR*% rules and regulations, foreign investors must first comply "ith certain re5uirements
before they can be issued a license to do business in the %hilippines. The #(* has %B :02-A, as
amended, and +% =3 for its governing la"s. %ertinent provisions of these la"s are contained in the
#(* 2icensing %rocedure of oreign *orporations. or +TR*%, the applicable la"s are (9 1o. &;;
in con>unction "ith (9 1o. :&;.
#ection 7 of RA 7042 allo"s non-%hilippine nationals to o"n up to &00' of domestic mar,et
enterprises onl& in areas of investments outside the prohibitions and limitations imposed by la" to
protect ilipino o"nership and interest. urthermore, the oreign 0nvestment 1egative 2ist under
#ection 3 reserves to ilipinos sensitive areas of investments. 2ist * prohibits foreign investors from
engaging in areas of activities "here e)isting enterprises already serve ade5uately the needs of the
economy and the consumer.
The Act opens the door to foreign investments only after securing to ilipinos their rights and
interests over the national economy.
The provisions of the *onstitution and other specific la"s ."hich "ould be used as a basis for 2ist A/
regulate or limit the e)tent of foreign o"nership in enterprises engaged in areas of activity reserved
for ilipinos. To insist other"ise "ould be tantamount to saying that those la"s are useless and
should therefore be erased from the statute boo,s.
The fact that 2ist + contains areas already regulated pursuant to la" already ma,es it clear that it is
regulatory. 0t channels efforts at promoting foreign investments to bigger enterprises "here there is
an acute lac, of ilipino capital. !o"ever, this should not be construed as a scheme to discourage
ilipino enterprises from going into big enterprises. 9n the contrary, the scheme is for foreign
investments to supplement ilipino capital in big enterprises.
Activities "hich do not ade5uately meet-the needs of the consumers should not be included in list *
so as to allo" healthy competition. 9ther"ise, consumers "ould be at the mercy of unscrupulous
producers. oreign corporations already doing business in the %hilippines under a valid license prior
to the enactment of RA 7042 necessarily come "ithin the protection of the la".
The #olicitor ?eneral adds that #ection : provides for the criteria to be used by 1(BA in
determining the areas of investment for inclusion in 2ist *. The petition for inclusion therein re5uires
-a public hearing at "hich affected parties "ill have the opportunity to sho" "hether the petitioner
industry ade5uately serves the economy and the consumers.- +ut this does not mean that the Act is
shifting the burden of proof to ilipino enterprises "hile deregulating foreign investments at the same
time. 9n the contrary, this provision is designed to protect the consumers as not all e)isting
enterprises satisfy the criteria inclusion in 2ist *. The re5uisite proof and public hearing under
#ection : are, therefore, necessary to prevent detriment to the economy and the consumers.
Regarding the alleged elimination of certain rules in the *ode, the #olicitor ?eneral stresses that
#ection &= of the provides that only -Articles forty-four .44/ to fifty-si) .$=/ +oo, 00 of (9 1o. 22= are
repealed.- The approval by the +90 and the other regulatory re5uirements set forth in the
aforementioned articles "ere purposely removed because the determination of the areas of
investment open to foreign investors is made easy by the oreign 0nvestment 1egative 2ist
formulated and recommended by 1(BA follo"ing the process and criteria provided in #ections 3 < :
of the Act.
*oncluding, he argues that the Transitory oreign 0nvestment 1egative 2ist is not imaginary. 0n fact,
it practically includes the same areas of investment reserved to ilipino under #ection $. Coreover,
during the transitory period, -#(* shall disallo" registration of the applying non-%hilippine national if
the e)isting >oint venture enterprises, particularly the ilipino partners therein, can reasonably prove
they are capable to ma,e the investment needed for the domestic mar,et activities to be underta,en
by the competing applicant.-
Allo"ed to intervene, #enator Dicente T. %aterno,00 raises substantially the same points stressed by
the #olicitor ?eneral in defense of the Act and amplifies the argument that the Act does not
deregulate foreign investments to the disadvantage of the ilipino entrepreneur. !e discusses at
length the different regulatory re5uirements for doing business in the %hilippines and e)plains the
over-all strategy embodied in the Act to develop a self-reliant economy, as "ell as the provisions
designed to promote full employment for ilipinos. !e also suggests that the constitutional challenge
should be re>ected outright for noncompliance "ith the re5uisites of a >udicial in5uiry into a
constitutional 5uestion, to "it@ .&/ there must be an actual case or controversy8 .2/ the constitutional
5uestion must be raised by a proper party8 .;/ the constitutional 5uestion must be raised at the
earliest opportunity8 and .4/ the resolution of the constitutional 5uestion must be necessary to the
decision of the case. 1
The court has carefully gone over the petition and "ryly observes that it could have been pruned and
limited to the strictly legal principles involved in the interest of a speedier disposition of the case. A
considerable portion of the petition, and this is also true of the reply .if not more so/, sounds too
much li,e speechifying that is better addressed to a political audience than to a court of >ustice.
Cuch valuable time "ould have been saved in the presentation of a leaner, strictly legal tract.
*oming first to the procedural ob>ections to the petition, "e agree that there is at this point no actual
case or controversy, particularly because of the absence of the implementing rules that are
supposed to carry the Act into effect. A controversy must be one that is appropriate or -ripe- for
determination, not con>ectural or anticipatory. Ae hold, ho"ever, that the petitioner, as a citi4en and
ta)payer, and particularly as a member of the !ouse of Representatives, comes under the definition
that a proper party is one "ho has sustained or is in danger of sustaining an in>ury as a result of the
act complained of. 2 Ae "ill also hold that the constitutional 5uestion has not been raised tardily but
in fact, as >ust remar,ed, prematurely.
9n the merits, "e find that the constitutional challenge must be re>ected for failure to sho" that there
is an indubitable ground for it, not to say even a necessity to resolve it. The policy of the courts is to
avoid ruling on constitutional 5uestions and to presume that the acts of the political departments are
valid in the absence of a clear and unmista,able sho"ing to the contrary. To doubt is to sustain. This
presumption is based on the doctrine of separation of po"ers "hich en>oins upon each department a
becoming respect for the acts of the other departments. The theory is that as the >oint act of
*ongress and the %resident of the %hilippines, a la" has been carefully studied and determined to
be in accordance "ith the fundamental la" before it "as finally enacted.
0n the case at bar, the la" is challenged on broad constitutional principles and the proposition that
the ilipino investor is unduly discriminated against in his o"n land. Bue process is invo,ed. The
provisions on nationalism are cited. (conomic dependency is deplored. 0n the light, ho"ever, of the
e)planation given by the #olicitor ?eneral and of the 0ntervenor in their respective *omments, "e
hold that the cause of unconstitutionality has not been proved by the petitioner. 9n the contrary, "e
are satisfied that the Act does not violate any of the constitutional provisions the petitioner has
mentioned.
Ahat "e see here is a debate on the "isdom or the efficacy of the Act, but this is a matter on "hich
"e are not competent to rule. As *ooley observed@ -Bebatable 5uestions are for the legislature to
decide. The courts do not sit to resolve the merits of conflicting issues.- 3 0n An'ara #. (lectoral
Commission, 1 Eustice 2aurel made it clear that -the >udiciary does not pass upon 5uestions of
"isdom, >ustice or e)pediency of legislation.- And fittingly so for in the e)ercise of >udicial po"er, "e
are allo"ed only -to settle actual controversies involving rights "hich are legally demandable and
enforceable,- 2 and may not annul an act of the political departments simply because "e feel it is
un"ise or impractical. 0t is true that, under the e)panded concept of the political 5uestion, "e may
no" also -determine "hether or not there has been a grave abuse of discretion amounting to lac, or
e)cess of >urisdiction on the part of any branch or instrumentality of the ?overnment.- 3 Ae find,
ho"ever, that irregularity does not e)ist in the case at bar.
The petitioner is commended for his high civic spirit and his 4eal in the protection of the ilipino
investors against unfair foreign competition. !is painsta,ing study and analysis of the oreign
0nvestments Act of &::& reveals not only his nationalistic fervor but also an impressive grasp of this
comple) sub>ect. +ut his vie"s are e)pressed in the "rong forum. The *ourt is not a political arena.
!is ob>ections to the la" are better heard by his colleagues in the *ongress of the %hilippines, "ho
have the po"er to re"rite it, if they so please, in the fashion he suggests.
A!(R(9R(, the petition is B0#C0##(B, "ithout any pronouncement as to costs. 0t is so ordered.
)ar#asa, elencio*+errera, ,utierrez, Jr., Paras, Feliciano, Bidin, ,ri-o*A.uino, edialdea,
"e'alado, !a#ide, Jr. and "omero, JJ., concur.
Padilla, J., too/ no part.
Fernan, C.J., is on lea#e.

4 .oo#no#e"
00 The %hilippine Association of +attery Canufacturers "as also allo"ed to intervene
but merely supported the allegations and arguments of the petitioner.
& Bumlao v. *ommission on (lections, :$ #*RA ;:2.
2 (0 Parte 2evitt, ;0; 6.#. =;.
; *onstitutional 2imitations, 3th ed., ;7:-30.
4 =; %hil. &;:.
$ *onstitution, Art. D000, #ec. &
= 1bid.