Supreme Court affirms non-self-executing nature of the constitutional policy of economic independence [National Federation of Hog Farmers, Inc., v. Board of Investments, G.R. No. 205835 (23 June 2020)]
In its recent decision in National Federation of Hog Farmers, Inc., v. Board of Investments, et al., G.R. No. 205835 (23 June 2020) (“National Federation of Hog Farmers, Inc.”), the Supreme Court affirmed its 1997 ruling in Tañada v. Angara, G.R. No. 118295 (02 May 1997) (“Tañada”) that Article II, Section 19 of the 1987 Constitution, which embodied the policy of economic independence, is not a self-executing provision. As a result, noncompliance with Article II, Section 19 does not give rise to a cause of action and is not judicially enforceable.
National Federation of Hog Farmers, Inc. dealt with whether or not the Board of Investments committed grave abuse of discretion when it approved the applications for registration of Charoen Pokphand Foods Philippines Corporation (“Charoen”), a 100% foreign-owned company from Thailand. The petitioners National Federation of Hog Farmers, Abono Party-list, Alyansa ng mga Grupong Haligi ng Agham at Teknolohiya Para sa Mamamayan, Inc., Agricultural Sector Alliance of the Philippines, Inc., Pork Producers Federation of the Philippines, Inc., Sorosoro Ibaba Development Cooperative, and Association of Philippine Aqua Feeds Millers, Inc. alleged that the approval of the said applications violated their constitutional right to be protected against unfair foreign competition and trade practices, and that they would sustain injury as they do not enjoy similar incentives.
The Supreme Court dismissed the petition. On the petitioners’ argument that Charoen’s presence would drive them “out of the market due to cut-throat competition,” the Supreme Court observed that the claim of unfair competition is primarily factual in nature. In particular, since the petitioners claimed to be injured by the entry of new players in the relevant market, the claim required a definition of the relevant market involved. As a factual finding was required, the petition was ruled to be premature.
Further, the Supreme Court held that the Philippines adopts a liberal approach in allowing foreign investments to enter the country. According to the decision, only enterprises imbued with public interest, such as public utilities, mass media, and use of natural resources, are restricted from foreign investors under the 1987 Constitution. In support of this ruling, the Supreme Court cited Tañada, where the validity of the World Trade Organization Agreement was sustained on the ground that Article II, Section 19 is not a self-executing provision, and that, moreover, the 1987 Constitution does not proscribe foreign competition.
Despite this, the Supreme Court highlighted that there was no factual showing of how foreign investments affected Filipino enterprises in Tañada. Hence, it entertained the possibility of revisiting the ruling in a proper case.