G.R. No. 100883 December 2, 1991
CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan), petitioner, vs. THE EXECUTIVE SECRETARY, THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, THE BOARD OF INVESTMENTS, THE SECURITIES AND EXCHANGE COMMISSION, and THE BUREAU OF TRADE REGULATION AND CONSUMER PROTECTION, respondents.

FACTS

Congressman Enrique T. Garcia filed a petition challenging the constitutionality of Republic Act No. 7042 , the Foreign Investments Act of 1991. The petitioner argued that the law abdicates the state’s duty to regulate foreign investments, contravening the constitutional policy of developing a self-reliant economy controlled by Filipinos. He specifically assailed Section 5, which allows foreign investors to do business by mere registration with the SEC or BTRCP without prior approval, and Section 7, permitting up to 100% foreign ownership in domestic market enterprises unless restricted. He contended that the Foreign Investment Negative List system in Section 8 represents a passive deregulation, abandoning positive state control. He further criticized Lists A, B, and C as inadequately protective of Filipino enterprises and claimed the law repealed vital regulatory provisions of the Omnibus Investments Code, placing local investors at a fatal disadvantage.
The Solicitor General, representing the respondents, defended the law. He explained that RA 7042 merely removed a layer of bureaucracy—the case-to-case BOI approval for foreign equity exceeding 40% in non-pioneer enterprises—while maintaining regulation through registration requirements with the SEC or BTRCP. He emphasized that the Negative List definitively outlines areas reserved for Filipinos or regulated by law, thereby securing Filipino interests. The registration process itself, governed by existing statutes like P.D. 902-A, constitutes an exercise of regulatory authority. The state’s position was that the Act opens the economy to foreign investment only after safeguarding nationalistic mandates.

ISSUE

Whether Republic Act No. 7042 is unconstitutional for violating the constitutional policies on developing a self-reliant national economy and protecting Filipino enterprises against unfair foreign competition.

RULING

The Supreme Court DISMISSED the petition, upholding the constitutionality of RA 7042. The Court held that the petitioner failed to prove the law violated any specific constitutional provision. The legal logic centered on the doctrine of separation of powers and the limited role of judicial review. The Court clarified that the petitioner’s arguments pertained to the wisdom, efficacy, and economic policy behind the law—matters squarely within the legislative domain. The judiciary does not pass upon questions of wisdom, justice, or expediency of legislation unless there is a clear grave abuse of discretion or constitutional infringement.
The Court found no such abuse. It accepted the state’s explanation that the law did not abandon regulation but streamlined it through a clear Negative List and registration system, which still exercises authority over foreign investments. The Court concluded that the petition presented a debatable economic policy issue, better addressed to Congress, the body empowered to enact and amend laws. The constitutional mandate for a Filipino-controlled economy was not deemed violated, as the law’s mechanisms, including the Negative List, were seen as a permissible legislative method to balance economic nationalism with foreign investment attraction.