By Butch Fernandez, Cai U. Ordinario, David Cagahastian, Jovee Marie N. dela Cruz, Catherine N. Pillas & Jasper Y. Arcalas
THREE times various forces wanted to take Manila. Now, officials want to move forces outside of the capital. “For a long time, the powers reside in Manila,” Aquilino Q. Pimentel Jr. said. “Everything awaits approval of the government in Manila.”
Speaking at a forum hosted by the BusinessMirror and the European Chamber of Commerce of the Philippines (ECCP), the former Senate president cited the “powers of government are too concentrated in Manila” as one of the reasons for the country’s move to a federal form of government.
But at least, as many hope, the move to diffuse Manila’s power in decision-making and resource allocation would not be as bloody as the 1945 Battle of Manila.
And while the first two Battles of Manila, in 1762 and in 1898, were about gaining symbolic power over the archipelago, the current “battle” between those for and those against tinkering with the Constitution at least agrees on one thing: It would not be easy.
But there are costs, according to local and foreign leaders at the forum on Tuesday at the Marriott Hotel.
Centralized power
ACCORDING to Deputy Speaker Ferdinand L. Hernandez, who represented Speaker Pantaleon D. Alvarez in the forum on Tuesday, development has only been centralized in the National Capital Region (NCR).
“Poverty incidence for families in the NCR as of 2015 is around 4 percent,” Hernandez said. “It is the only place in the Philippines that has a single-digit percentage of poverty incidence[s].”
Sans citing the source of his data, Hernandez said next to the NCR is Region 4A, a cluster of provinces near the NCR, which has a poverty incidence at 10.4 percent.
“The ARMM [Autonomous Region in Muslim Mindanao] is last, with a devastating percentage of 53.4 percent,” he said at the forum. “Economic progress has evidently failed to trickle down where it is needed the most.”
PDP-Laban Rep. Alfredo B. Benitez of Negros Occidental has noted during the forum that economic development and delivery of basic social services are concentrated in Metro Manila.
While admitting that poverty incidence has decreased in the past 20 years, Benitez said the country is still far from achieving its goal to cut poverty incidence by half, saying “poverty remains prevalent in the Visayas and Mindanao.”
Curious case
HERNANDEZ noted during the forum that the Philippines has continuously lagged behind its neighbors despite the country’s potential and the efforts of the best and brightest of Filipinos.
“The Philippines is a curious case,” he said. “It is overflowing with hardworking and talented people, more than 100 million to be precise, 10 percent of whom are overseas, working as part of the backbone of foreign economies.”
Reading from a prepared speech of Alvarez, Hernandez said that, while the country’s GDP is one of the strongest in the region, “the size of the Philippine economy is more or less equivalent to that of Singapore, a country that is 430 times smaller than the Philippines, with hardly any natural resources and a population of just around 5 million.”
“There is an evident disconnect between our country’s potential and its actual performance,” he added.
Location, location
FOR Benitez, the issue is where economic development is felt.
“For the past 30 years, the economy has been growing,” Benitez said. “But let’s look at it from where it is growing.”
He shares Hernandez’s view that the Philippine economy has experienced steady growth, especially in recent years, becoming one of the fastest-growing economies in Asia.
“However, you can see it [the results of this development] is really concentrated in one area [Metro Manila],” Benitez said. “There is glaring disparity between the share of the NCR and other regions in the GDP.”
Sans citing the source of his data, Benitez added at least 37 percent of the GDP in 2014 was concentrated in the NCR.
In the Philippines’s current form of government, all funds are centralized in the NCR, and the provinces need to remit their income to the National Treasury, Hernandez explained.
“Why is NCR developing?” Benitez added in the same forum. “Because most of the budget goes to the NCR.”
Benitez said Metro Manila alone gets 15 percent of the 2016 national budget. Meanwhile, Luzon gets 20 percent, the Visayas gets 9 percent and Mindanao gets 13 percent.
Raison d’être
ACCORDING to Hernandez, the Duterte administration and the leadership of the 17th Congress are now trying to address the underdevelopment by changing the country’s form of government.
“We have tried to solve this riddle of underdevelopment. Policies have been crafted and implemented,” Hernandez said. “[These policies] started as promising, but soon lost momentum and eventually died.”
Reading from Alvarez’s speech, Hernandez said “observers have reasonably asked if the Philippines is destined to repeat this cycle.”
Accordind to Hernandez, such question prompted government officials “to examine the present structure we have.”
For lawmakers like Hernandez, the first thing they realized is that “the Philippines is structured as a highly centralized unitary state.”
“Power is centralized in the national government.”
Hernandez, sans citing the source of his data, said estimates show that the national government has exclusive rights over 80 percent of all taxes. The remaining 20 percent are left to the local governments,” Hernandez explained. “The national government then decides how the revenue it has collected will be budgeted and spent.”
High costs
FOR Germans, however, the Philippines must brace itself for the high costs.
In a presentation at the BusinessMirror’s forum, Konrad Adenauer Stiftung (KAS) Head Benedikt Seemann said a federal form of government is not free. In the experience of Germany, there are various kinds of taxes that often become points of contention in government.
Seemann also said a federal government works well under a parliamentary system. Only the United States has been successful in having a presidential system in a federal government.
“Actually, federalism comes at a cost,” Seemann said. “Federalism does not come for free.”
He added that “federalism cannot stand alone” and that it “works best in parliamentary systems.”
Seemann explained that in terms of taxes, Germany has corporate taxes, value-added and/or sales tax, income tax and death/inheritance tax.
The share of the federal government, Länder or Bundesländer (federal states), and local government units (LGUs) are always a poignant topic among local officials and citizens.
In terms of corporate taxes, the share of the federal government and the Bundesländ is at 50 percent each while in terms of the VAT, the federal government receives 53.9 percent, Bundesländ 44.1 percent and LGUs only 2 percent.
The share of the federal government in terms of income taxes is at 42.5 percent; Bundesländ, 42.5 percent; and LGUs, 15 percent. Proceeds from death/inheritance tax all go to the Bundesländ, Seemann added.
German model
WITH the recent influx of refugees in Germany, Seemannn said LGUs have claimed they are experiencing a tight fiscal space to accommodate these immigrants because of a small share in public funds.
Germany has 16 Bundesländer or federal states, each with a state assembly and a parliamentary system of government.
These states also have 16 different constitutions, since federalism is not merely an administrative arrangement. These states have exclusive powers and also share powers with the federal government.
But aside from issues surrounding the sharing of public funds, Seemann said having a parliament in a federal government can help stem graft and corruption better than a presidential form of government in a federal country.
Seemann said having enough checks and balances will help the country lift millions from poverty. He said corruption is one of the major reasons for high poverty incidence nationwide.
“In general, parliamentary system provides better checks and balances and is less prone to corruption, and it is so by design,” Seemann said. “And, I think, corruption and governance is one of the root causes of poverty here in the Philippines.”
French model
FRENCH Embassy Chargé d’Affaires Laurent Le Godec clarified the French government is not a federal form of government, but is a unitary form of parliament that has a president and features some of the advantages of a federal form of government.
The French model was the one President Duterte earlier referred to that the Philippines should follow.
“We’re honored to be referred to by your President as the model that should be emulated,” Le Godec said. “But we would like to clarify that we are not a federal country at all.”
According to Le Godec, his people “made the choice in the French Revolution that we will be a unitary country to unify the nation and destroy the old feudal powers.”
Still, he suggested that the French system of government, in allowing the local governments to flourish and develop, could be a good example for the Philippines to follow, since France, at one point in time, also had to contend with the inequality in the economic development of Paris and the countryside.
He said there are many measures that France adopted to boost local economic development and strengthen the powers of the local governments, such as creating administrative units, which advise and control the way the local governments work, and the establishment of regional courts of audit, which audit how the local governments spend their budget.
“The main objective is to boost local economic development and strengthen the powers of the local government. But we did not feel the need to shift to federalism,” he said.
Checks, balances
A distinct advantage that the federal system can lend to a political system is a stronger avenue for checks and balances through strong LGUs, the head of the Canadian Chamber of Commerce of the Philippines (CanCham) said.
Julian Payne, president of CanCham, pointed out the need for provinces to put in place a system of checks and balances in line with the national government.
“The federal government cannot make laws in areas of provincial jurisdiction and, second, it also cannot unilaterally change the Constitution,” Payne said. “In both the US and Canada, the federal government is a check on some areas, such as education and health.”
He explained that the checks and balances are more a function of the decentralization of power.
Payne said federalism can accomplish the following: allows customization of policy programs within regions based on cultural, linguistic and geographical differences; provides a level of elected government, closer to the people in the provinces and territories; provides equalization of financial resources; and last, the system provides a system of checks and balances on the national government “for activities where the state has jurisdiction.”
US, Canada
SIMILAR to the US federal system, there are powers exclusive to the federal government, there are those exclusive to the states and there are shared powers, as well, according to Payne.
But the chamber president argued that three of the four objectives can also be attained by proper decentralization of institutional powers—save for the last objective.
“Historically there’s always been pressure for certain countries to decentralize via federalism. These are usually for large countries with dispersed population, or archipelagic countries, or multi-tribal and linguistic countries. For most, it’s the alternative but not the only one,” he said.
“However, it is usually considered the alternative for a specific reason: because dominant bureaucratic and economic elites tend to resist decentralization because this cut into their power. Federalization is seen as a way to actually ensure effective decentralization,” he added.
The CanCham president posited that the success of the federal system in the Philippines will depend on the following: the jurisdictional split, which will entail a major change in the financial allocation between the provincial and the federal governments; if the Philippines adopts a parliamentary or congressional form of government; and third, the amount of power vested on the head of state.
Gaining advantage
FOR former Finance Secretary Margarito B. Teves, there might be a need to provide subsidies for the poorer regions, either from the national government or from the richer regions, at the start of the shift to a federal form of government.
Teves said he believes these subsidies are needed to jump-start the development in the previously neglected regions of the Philippines.
“We might need to give more revenues to the poorer regions because, otherwise, we would have the same situation wherein the poor regions will remain poor,” Teves told the BusinessMirror at the sidelines of the forum. “But it will result eventually in more investments because if I’m a businessman, I don’t have to be confined to the richer regions to make investments, because I might as well try to see if I can make more money in the other regions than I ever thought before.”
For Pimentel, another option could be what he calls “equalization payments.” He said these payments could be made to the poorer regions to allow them to catch up in infrastructure spending.
“There should be an equalization fund, raised from the mandated contributions from the federal states,” Pimentel said. “The equalization fund would be the share of the funding which may be needed by some federal states that are lagging behind in development.”
Pimentel proposal
PIMENTEL is proposing the creation of 11 federal states in the Philippines, with Metro Manila becoming only a federal administrative region.
Pimentel, who has been advocating the shift to federalism since the 1980s, said amendments to the Constitution should be enacted to truly stimulate development in the countryside, as the Local Government Code (LGC) only devolved powers from the Department of Agriculture, the Department of Health and the Department of Social Welfare and Development.
Although these functions have already been devolved, he said there are still many instances where the national government asserts jurisdiction over these functions, especially during times of natural calamities.
“There must be a streamlining of government, allowing concerned departments to transfer or realign themselves under the new system of government,” Pimentel said. “There is talk to merely amend the LGC—to expand the powers to the other departments not covered by the original scope.”
“But in that case,” he added, “the central government can still do the same and arrogate the powers that have already been devolved.”
According to Pimentel, the government must “move forward in addressing this by changing the fundamental law.”
Charter change
FOR Pimentel, a constitutional assembly (Con-ass) “can do the job” to amend the Constitution as long as Mr. Duterte “keeps an eye on what Congress is doing.”
“As I tried to point out, he has since apparently changed his [President Duterte] mind from constitutional convention to Con-ass,” Pimentel said. “He feels that revising the Constitution by Con-ass will be easier and faster.
The Con-ass is convened by the bicameral congress of the country, meaning the passage of the Constitution amendments will be made by the Senate and the House of the Representatives. However, the Constitution does not specify whether Congress shall vote as one body or separately.
Pimentel said it is better that the Senate and House of Representatives will vote separately. “Because if Congress will vote as one, then the Senate will be outnumbered by the House.”
Benitez said Con-ass is under the scrutiny of the public, given the possible interference by the legislators’ personal agenda during the assembly.
“There’s a trust issue perceived by the public that members of Congress will include their personal agenda than what’s good for the country in a Con-ass,” Benitez said.
He added that “the easier, faster and cheaper way of revising the Constitution” should be the choice of the government.
“Look at the end product: What are the provisions to be amended and, basically, will [it] end in the same format either through a convention or assembly,” Benitez said. “At the end of the day, we are still going to have a referendum.”
Inching closer
LAWMAKERS are inching closer to fulfilling Mr. Duterte’s main agenda of transitioning to a federal form of government, with leaders of Congress agreeing to start joint deliberations on the proposal early next year. However, the issue on the two chambers voting separately or not is again emerging as the deal-breaker.
Senate Majority Leader Vicente C. Sotto and Pimentel indicated that the two chambers of Congress need to resolve first whether they would vote jointly or separately.
Sotto said legislators could start tackling the Palace-endorsed proposal earlier as soon as the 2017 national budget law is passed before the congressional year-end recess.
The House could start deliberating on the initiative by October, after its work on the 2017 budget. The Senate would then do its part on the national appropriations law, with the passage of the new budget expected by December.
Sotto also confirmed a bicameral consensus is firming up in both chambers of Congress favoring early passage of legislation to start the process of amending the Constitution to shift to a federal system, as conveyed by House leaders in a recent meeting with their Senate counterparts.
“There is strong support in the House for [the two chambers to convene as] a constituent assembly to do the task” of amending the Charter.
Deal-breaker
SOTTO admitted a possible deal-breaker would be on how members of the two chambers (300 congressmen and 24 senators) will vote to adopt the revisions leading to a federal system; with senators firm on separate voting.
Sotto affirmed that on the part of the Senate, “we insist on voting separately.”
He pointed out that the 1987 Constitution contains four provisions, which specified the Senate and the House would vote separately, adding that the only time the two chambers would be voting jointly is when the President declares martial law and lawmakers are called to “vote jointly in special session to revoke such declaration.”
The Senate Majority leader cited Article VI, Section 23 of the Constitution, which provides that “Congress, by a vote of two-thirds of both Houses in joint session assembled voting separately, shall have sole power to declare the existence of a state of war.”
Key provisions
SOTTO added that Article VII, Section 4 of the same Constitution, likewise, states in part: “the person having the highest number of votes shall be proclaimed elected, but in case two or more shall have an equal and highest number of votes, one of them shall forthwith be chosen by the vote of majority of all members of Congress voting separately.”
Moreover, Section 9 of Article VII also provides that in case of vacancy in the Office of the Vice President, the President shall nominate from among senators and congressmen “who shall assume office upon confirmation of a majority vote of all members of both Houses of Congress voting separately.”
In addition, Sotto cited Section 11, which provides that if Congress is notified that the President is unable to discharge his duties, the members of Congress, within 10 days of receipt of such notice, shall “determine by two-thirds vote of both chambers voting separately” that the President is indeed unable to discharge his duties and the Vice President shall act as President.”
Resource share
PIMENTEL agreed that the Senate and the House should vote separately on the proposal to amend the Constitution to pave the way for a federal system he had long espoused as founding chairman of the Partido ng Demokratikong Pilipino-Laban ng Bayan (PDP-Laban), which is also the party of President Duterte.
Pimentel pointed out that the Senate and the House can deliberate jointly on the proposal to amend the Charter, “but they should vote separately.”
“It stands to reason that the opinion of both the Senate and the House will be taken” in the process of amending the Constitution, he added.
As for the sharing of the country’s resources, Pimentel proposed the 80-20 income-sharing scheme—80 percent of the state’s income is for them to keep while the remaining 20 percent goes to the federal government.
On top of the 80-20 scheme, Pimentel also said the government should also adopt an equalization fund program that would aid the poorer states.
In the equalization fund scheme, the federal government shells out funds in the form of loans to states that are in dire need of development funds, Pimentel said.
“This will be administered by a loan commission composed of representatives from all the federal states,” Pimentel said.
Justifying federalism
BENITEZ, chairman of the House Committee on Housing and Urban Development, pointed to the failure of achieving the inclusive growth touted by the previous administration as the reason for changing the country’s system of government.
“[Poverty and uneven development] are the reasons why most of the Filipinos want to change the Constitution,” Benitez said. “When Filipinos don’t feel the benefit of economic growth down to the grassroots level then, definitely, we have people clamoring for change.”
“Why do we need to amend the Constitution? Is it because the President wants it?” the lawmaker from Negros Occidental said. “Or are there other reasons like the delivery of social services and promotion of better life?”
According to Hernandez, “restructuring [the government] and decentralization concept that we have been advocating will be a good valid reason.”
“Devolving more powers and responsibilities to local governments will cut the process of securing projects and delivery of basic services for local communities.”
Image credits: Nonoy Lacza