Garcia vs.

Executive Secretary
Facts:
Petitioner alleges that RA 7042 violates constitutional policies that pertain to
o developing a self-reliant and independent national economy effectively controlled by
Filipinos
o the protection of Filipino enterprises against unfair foreign competition and trade practices
Sec. 5
o Foreign investor may do business in the Philippines or invest a domestic enterprise up to
100% of its capital without need of prior approval aside from:
Registering with the Securities and Exchange Commission (SEC) or
The Bureau of Trade Regulations and Consumer Protection (BTRCP)
For single proprietorship
o SEC or BTRCP shall not impose any limitations on the extent of foreign ownership in an
enterprise
Sec. 7 and 8
o non Philippine nationals may own up to 100% of domestic market enterprises UNLESS
foreign ownership therein is prohibited or limited by existing law or the Foreign Investment
Negative List [FINL] under Sec. 8 hereof
o FINL or the system of negative list abandons the positive aspect of regulation over foreign
investments
o Works on the assumption that foreign investments not included in the list are not
detrimental to but favorable to the national economy
o List A
Not a true negative list
Merely enumerates areas of activity already reserved to Philippine nationals by
mandate of the Constitution and specific laws
o List B
Contain areas of activities and enterprises already regulated
small to medium sized domestic markets are reserved to Filipinos
Not encouraged to go big
o List C
Areas of investment
existing enterprises already serve adequately the needs of the economy
and do not need further foreign investments
Existing enterprises should be qualified by the term Filipino
Otherwise, list C would protect foreign enterprises as well
Sec 9
o Burden of proof is on the Filipino to include an area of investment in List C
RA 7042 repealed Omnibus Investment Code of 1982: arts. 2, 32, 35; OIC of 1987 arts. 49, 50, 54, 56
o Further abandons regulation of foreign investments
Transitory provisions of RA 7042
o Allow unlimited entry of foreign investments for 3 years subject only to a Transitory Foreign
Investment Negative List
Deregulates FI and disadvantages Filipino enterprises
Sol. Gen:
o without need for prior approval applies to equity restrictions alone
o RA7042 removes a certain layer of bureaucracy: the case-t-case authorization by BOI
o Registration under SEC and BTRCP constitutes regulation nd exercise of authority over FI
o Act opens the door to FIs only after securing to Filipinos their rights and interests over the
national economy
o List A is based on the Constitution and specific laws to regulate or limit extent of foreign
ownership in enterprises
Petitioner suggests that those laws are useless
o List B
The scheme is for FIs to supplement Filipino capital in big enterprises
o List C
allows healthy competition by not including those which inadequately meet the
needs of the consumers
o Sec. 9 provides for the criteria to be used by NEDA in determining the areas of investment
for List C
Requisite of proof and public hearing to prevent detriment to the economy and
consumers
o Only arts 44-56 of Book I of EO no 226 are repealed
o Transitory Foreign Investment Negative List is not imaginary
Senator Vicente T. Paterno allowed to intervene
o Aside from raising the same points of the Sol. Gen., he suggests that the petition should be
dismissed for non-compliance with the requisites of a judicial review
1. Actual case and controversy
2. Constitutional question must be raised by a proper party
3. Constitutional question must be raised at the earliest opportunity
4. Resolution of the constitutional question must be the necessary to the decision of
the case
Issues:
1. w/n there is an actual controversy
2. w/n there is legal standing
3. w/n the constitutional question raised at the earliest opportunity
4. w/n the petition is justiciable
Held:
1. No. Absence of the implementing rules that are supposed to carry Act in effect.
A controversy must be ripe for determination not conjectural or anticipatory
2. Yes. Petitioner as a citizen, taxpayer, and member of HoR as a proper party who has sustained or is in
danger of sustaining injury due to the Act
3. No. Prematurely raised
4. No. The policy of the courts is to avoid ruling on constitutional questions and to presume that the
acts of the political depts. Are valid in the absence of a clear and unmistakable showing to the
contrary.
Petitioner fails to prove the unconstitutionality of the Act
What we see here is a debate on the wisdom or the efficacy of the Act
Cooley: debatable questions are for the legislature to decide
The Court is not a political arena. His objections to the law are better heard by his colleagues in
Congress who have the power to rewrite it