The inflated truth about our laws

by Emmanuel S de Dios on Jun 28, 2014No Comments

Introspective
Business World, 26 June 2014

Clarity and uniform interpretation over both time and space are thought to be appealing
characteristics of laws. Nothing is as straightforward as the classic eye for an eye and tooth for a
tooth, or the command to flog the man and woman guilty of fornication each with a hundred
stripes. Or even (when it existed) the death penalty for the crime of rape or for drug dealing. As long
as society continues to hold to these correspondences between crimes and their respective penalties,
justice as society conceives it, is implemented uniformly, regardless of time and place.
But certainty and timelessness are easy to come by only in existential extremes such as the above
(what economists might call corner solutions, such as death). Things become more complex when
gradations and distinctions are necessary. This is nowhere more evident than when monetary values
are incorporated in the law.
Precision frequently demands that framers of the law prescribe definite monetary amounts.
Examples of this abound. Prison terms for estafa and qualified theft will vary depending on the peso
amounts stolen. Individual and corporate income taxes under the tax code are defined by a schedule
that depends on a persons or corporations peso earnings. The tax on cigarettes depends on whether
the brand costs more or less than 11.50 per pack. (At the University of the Philippines, our own
subsidised tuition and and assistance scheme requires different fees from students according to
levels of their familys peso incomes.)
The problem, of course, is that those same money amounts used to define categories, penalties and
obligations clear and unambiguous enough when the laws and rules were crafted no longer have
the same meaning as time passes. Inflation is the prime culprit. Changes in the general price level
alter the value of of the money unit and render the money metric like a rubber ruler, whose length
can be stretched and distorted through time. Because of this, one is no longer certain that justice is
faithfully and uniformly served across time.
This is highlighted by a case recently decided by the Supreme Court (Lito Corpuz v. People of the
Philippines; GR 180016). A person was found guilty of having committed estafa in 1991 involving
98,000. The Revised Penal Code (passed in 1930 and unchanged to this day) imposes varying
amounts of jail time for estafa depending on the monetary amounts involved. The maximum amount
is 22,001 and above, which corresponds to a jail penalty of eight years and one day, plus one year
for every additional 10,000 but not to exceed 20 years. This correspondence between the monetary
offense and penalty embodied societys sense of justice and proportion at the time. Applying the
letter of the existing law to the present case, the convicted would have to serve a total of 15 years.
But P98,000 in 1991 prices is certainly not the same as P98,000 in 1930 prices. With high inflation
over the years, the equivalent amount in 1930 prices is obviously far less, and therefore so should be
the corresponding penalty.
In a lucid dissenting opinion (shared by Justice Marvic Leonen), Justice Roberto Abad makes an
educated estimate that prices may have increased a hundredfold between the two periods. If so, then
the same offense would merit a far lower penalty: The 98,000 jewelry items subject of the offense
would have a value of only 980 in 1932. Consequently, had [the convicted person] committed the
crime in that year, he would have been imprisoned for only two years and four months maximum.
But since he committed it 59 years later in 1991 when the jewelry items are now valued at 98,000
due to inflation, he would be imprisoned for 15 years maximum the same crime, the same law, yet
a shockingly higher penalty. This result would undoubtedly deny Corpuz his constitutional right to
equal protection of the law.
In the end, the rest of the Supreme Court did not support Abads and Leonens opinions. While half-
conceding the validity of the substantive points raised, the other justices refrained from acting on
them, on the ground that doing so would amount to revising the law, which is the job of Congress. In
the meantime, some obvious injustice is being committed every day not only in this case but in all
other instances where superannuated schedules based on nominal money values are applied most
important are unwarrantedly long deprivations of liberty handed by the courts, no less.
If the Supreme Court persists in its view that it will not interpret real versus nominal values, then
clearly the ball is in the legislatures court. House Speaker Feliciano Belmonte Jr., in a memorandum
to the court, essentially stood upon Congress prerogative to prescribe punishment (the
recodification of the Revised Penal Code is already being done by Congress), but more significantly
he also denied the need to amend the schedule of penalties, or the need to maintain consistency or
proportionality in penalties through time. Indeed, he says, the greater punitiveness arising from
the change in the peso values has unintentionally but fortuitously made the penalty scheme more
reasonable and protective of the poor. (The Speaker neglects to explain how a penal code that
punishes estafa worth P100 with a jail term of four to six months can be pro-poor.) In other words,
the Supreme Court has tossed the problem to Congress, and therefore we can expect Congress to
do nothing.
This is unfortunate as well as inconsistent. After all, Congress has not shied away from indexing
the sin taxes to inflation, increasing the nominal amounts of tax by 4% annually to protect the real
value of government revenues. In the opposite manner, however, it has also tarried in adjusting
income brackets in the tax code, effectively allowing inflation to push people up the tax brackets and
pay higher average and marginal tax rates again resulting in higher revenues for government.
Index some things but not others. Where is consistency?
All of this can only lead to the suspicion that the government is assiduous only when it comes to
protecting the real value of its claims against its citizens especially when these claims are in
pecuniary form. But it is niggardly and slow in dispensing that most basic and minimal non-
monetary claim citizens expect from it justice and fair treatment.