The powers of government and its limitations

Section 9, Article II of the Constitution provides that "the State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all."

The social justice provision of the Constitution is to be fulfilled by the government. But what, exactly, is government? At its most basic level, government is the recognized authority that makes decisions for a group of citizens. Government is made up of political and administrative institutions that have the following is made up of political and administrative institutions that have the following powers: to make and enforce laws for a group; to decide the goals for the group; and to distribute rewards and benefits within the group.

Making and enforcing laws is the most visible and easily understood of these ideas. Government, for example, makes laws to control traffic, to prevent crime and to control pollution, and most of all to lay down policies to ensure that the social justice purpose enshrined in our Constitution is achieved.

As embodied in the preamble of the Constitution, the nation’s first vision is to build a just and humane society. Our people’s dream is also to establish a government that shall embody our ideals and aspirations, promote for common good, conserve and develop our patrimony, and secure to ourselves and our prosperity the blessings of independence and democracy under the rule of law and a regime of truth, justice, freedom, love, equality and peace.

To put flesh, life and meaning to said constitutional vision, our legislature is tasked to pass the corresponding laws. There are three kinds of laws that government, through its legislature, can pass. First are the procedural laws that lay down the ways and manner by which certain defined ends and objectives may be met. Second are the substantive laws which define the rights and obligations of the citizens and the government. Finally, and most importantly, are the enabling laws which enables government to effectively confront and solve any problem of governance.

The enactment of enabling laws is the ultimate power of government in a democracy. Enabling laws arm the government with the necessary means and tools to meet any government concern such as the building of infrastructure and utilities, the creation of jobs and the meeting of the basic requirements of our people for food, clothing, shelter and employment.

Yet, with all these vast powers of government it is saddening to witness government itself seemingly helpless in effectively addressing the needs of its people and in conquering the mass poverty that to this day is the lot of the majority of our countrymen.

Worse, while government already fails to enact the apt enabling laws to allow it to discharge its responsibilities to its people, it incomprehendingly even passes laws that handcuffs itself in discharging its constitutional mandate to promote the common good. Herein lies the tragedy.

A concrete example of this instance is section 117 of the Central Bank Charter (R.A. 7653). Section 117 of the law provides that the issue of securities representing obligations of the government may be made through the Bangko Sentral provided that it shall not guarantee the placement of said securities and shall not subscribe to their issue.

This law prohibits the Bangko Sentral from guaranteeing the placement of government securities and from subscribing to government issuances of securities. This section absolutely decapitates the power of the central bank to assist government in raising funds on a long-term, low-interest basis in local currency to finance the needed investments of government in infrastructure and utilities. For said section bars the central bank from buying government issued securities such as government bonds.

It, therefore, effectively renders impotent the power of the BSP to assist and help the government finance the construction of all the infrastructure and utilities urgently needed to develop the country now. This has created a very peculiarly abnormal, if not irregular situation, where our own government instead of running to the BSP for loans for public investment projects, has to seek funding through continued foreign borrowings.

It is laws such section 117 of the Central Bank Act that negates the very power of government to effectively discharge its mandate. Government cannot now borrow long-term, low-interest funds from the central bank that is secured against future taxes. Without such authority to borrow money against future taxes, government cannot, through the use of local money, finance the needed roads, highways, ports, airports, schools, markets, hospitals and government buildings all over the country. Neither can government establish the needed power, water and telecommunications facilities. In short, we cannot develop.

There are other provisions and laws in our statute books that diminish, curtail and even paralyze the government in successfully fulfilling its role. It is respectfully suggested that these self-defeating laws be forthwith identified and as immediately be repealed, amended, revoked or otherwise striken-off from our statute books.

Urgently as well, government must enact the enabling laws to give it the power to do whatever is necessary to promote the common good.

For starters, we repeat the urgent need to amend section 117 of the Central Bank Act and put an enabling provision instead that reads: "In order to foster sustained economic growth, the BSP is mandated to buy with local currency 30-year long-term and up to four percent low-interest securities or bonds with a 10-year grace period issued by the government, its agencies and instrumentalities for purposes of financing the building and construction of all the infrastructure and utilities of the country."

Let us enact the enabling laws now.

(You may write your comments/suggestion at 15/F Equitable Bank Tower Paseo de Roxas, Makati City or through e-mail at [email protected])

(Editor’s note: Atty. Roxas is writing a limited series of articles dealing with financial matters and other important business topics.)