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(Statement of Rep. Edcel C. Lagman during the Forum on “Sa Ngalan ng Batas ng Bayan” on November 14, 2022 at the Manila Hotel)

With sincere gratitude and due respect to the Alphan brods who conceptualized and organized this forum, I wonder why we are having this conversation on charter change when no less than the Marcos Jr. administration is not initiating amending the 1987 Constitution.

Neither are Filipinos clamoring or even whispering for charter change. In fact, independent surveys show that every time there is a proposal to change the Constitution, the people are against it because they are wary that any change would perpetuate the hegemony of the incumbent politicians by extending their tenure and strengthen their political base.

Although the 1987 Constitution provides for three modes of amending the Constitution, including people’s initiative, the fact is there are only two principal modes: either by Constituent Assembly or Constitutional Convention.

There is opposition to a Constituent Assembly since proposing amendments to the Constitution is vested on the incumbent Representatives and Senators who may have their self-interests and pressure group interests to protect and promote.

Moreover, there is the prejudicial question on the manner of voting – whether voting separately per Chamber or individually per constituent member.

This question may have to be resolved categorically by the Supreme Court even before a Constituent Assembly is convened.

Voting separately by individual constituent members is implied in the case of Gonzales vs. Comelec (21 SCRA 774) promulgated on November 9, 1967 which made an unequivocal distinction between legislative power exercised by the Congress and the constituent authority discharged by Representatives and Senators convened as a Constituent Assembly. The High Court ruled that:

“Indeed, the power to amend the Constitution or to propose amendments thereto is not included in the general grant of legislative powers to Congress xxx Hence, when exercising the same, it is said that Senators and Members of the House of Representatives act, not as Members of Congress, but as component elements of a constituent assembly.”

The clear implication is when Representatives and Senators act as members of a Constituent Assembly, they are not legislators but constituent members who must vote individually and separately.

The more popular mode is through a Constitutional Convention. However, given the country’s present limited fiscal resources, the budgetary outlay for a Constitutional Convention may not be affordable and urgent considering the priority given to economic recovery after the Covid-19 pandemic which lingers until now.

Billions of pesos will be necessary to fund the election of delegates, emoluments of the elected delegates and secretariat, expenses for the operations of the Constitutional Convention, and the plebiscite. Economic recovery must be prioritized before any charter change.

Moreover, there is the apprehension that the delegates who will be elected would be proxies of the incumbent members of Congress and other political brokers.

Be that as it may, what is the specific agenda of a charter change? Will the agenda exclude proposals not included in the agenda or will the agenda be open ended? What are the more salient proposed amendments to be considered?

I would surmise that the agenda would include at least two major proposals: (1) removing or easing the protective economic provisions in the Constitution; and (2) changing the structure of the government from unitary to federal.

The main argument for the deletion or liberalization of the protective economic provisions is to attract and encourage the entry of foreign investments.

The lifting of the nationalistic provisions is not needed because no less than the prospective foreign investors do not clamor for the removal of the so-called “restrictive” provisions which are salutary safeguards for Filipino posterity.

Various empirical studies, including those of the United Nations Conference on Trade and Development (UNCTAD), the Organization for Economic Cooperation and Development (OECD), and the World Bank, show that the following factors principally determine the entry of foreign direct investments (FDIs): (1) ease of doing business, (2) adequacy and quality of infrastructure, (3) predictability of government policies, (4) government stability, (5) cost of power, (6) internet speed, (7) incidence of corruption, (8) transparency in public procurement, and (9) labor skills and rate of wages.

Removal or liberalization of the citizenship requirements in the Constitution is not one of the principal determinants for encouraging foreign investments.

Improvidently, the propensity to amend the economic provisions was achieved by the Congress without effecting any constitutional amendment with the enactment of R.A. 11659 or the New Public Service Act.

The constitutional protection requiring at least 60% Filipino corporate ownership and 100% Filipino individual ownership of basic and strategic industries has been an enduring safeguard for Filipino entrepreneurs and the nation’s posterity for about a century since the 1935 Constitution. This patriotic provision is restated in the 1972 and 1987 Constitutions.

The rationale of reserving to Filipino citizens control over public utilities is highlighted by the Supreme Court in Express Investment v. Bayantel: “to conserve and develop our patrimony” and ensure “a self-reliant and independent national economy effectively controlled by Filipinos”.

While luring foreign investments to beef up economic development is generally beneficial, it must not be undertaken to the extent of abandoning the nationalistic provisions of the Constitution which secures the patrimony for generations of future Filipinos. Our posterity and the protection of Filipino entrepreneurs must not be sacrificed at the altar of the gods of foreign capital.

The authors of the New Public Service Act pontificated that the enactment will allow foreign investments to supplement Filipino capital. On the contrary, the complete alienization of hitherto public utilities will supplant, not supplement, Filipino capital.

It must be recalled that South Korea and Taiwan became newly industrialized economies without dependence on the infusion of foreign direct investments (FDIs). Indeed, there must be no inordinate idolatry to the entry of FDIs.

Under the New Public Service Act, public utilities are redefined by limiting the same to distribution of electricity, transmission of electricity, water pipeline distribution, and sewerage pipeline systems. All other traditional public utilities not included in the enumeration are deemed to be public services, including common carriers (transportation conveyances and facilities) and telecommunications (including radio, television, and mass media), which will be exempt from the requisite percentage Filipino capital. With respect to mass media, it must be underscored that the Constitution requires no less than 100% Filipino ownership.

Consequently, all public services excluded from the delimited definition of “public utility” can now be owned to the extent of 100% by foreigners.

There is a malevolent subterfuge of a feigned dichotomy between “public utility” and “public service”. There is no difference between the two because public service is the very essence of a public utility. No less than the Supreme Court has consistently held that “public utility” is the same or synonymous to “public service” and the two are interchangeable.

In Republic vs. Manila Electric Company, the High Court held that “a public utility is engaged in public service - providing basic commodities and services indispensable to the interest of the general public.” In Napocor v. CA, it was ruled that the term public utility “implies public use and service”. Likewise, in JG Summit Holdings v. CA, it was pronounced that “a public utility provides a service or facility needed for present day living which cannot be denied to anyone who is willing to pay for it.” Verily, public service is the earmark of public utility.

Consequently, there is no sound reason or legal justification in making the subject distinction to justify defiance of the constitutional mandate requiring a minimum percentage ratio of Filipino ownership of public utilities. Even the Constitution does not make such distinction and does not authorize the Congress to legislate a distinction.

The other subterfuge is the pretense of amending the Public Service Act (PSA) when it is the Constitution itself which is erroneously amended by a mere statute. It must be underscored that Sec. 16(a) of the PSA, which is sought to be deleted, incorporated almost verbatim Sec. 8 of Art. XIV of the 1935 Constitution (with the inclusion of parity to American citizens and companies). This is now Sec. 11 of Art. XII of the 1987 Constitution without the parity provision.

No statute can amend the Constitution. It can be amended only through a constitutional amendment proposed by a constitutional assembly, constitutional convention, or by people’s initiative under Art. XVII of the Constitution.

The other expected principal proposal is the change of the government structure from unitary to federal. However, no less than its principal proponent, former President Rodrigo Duterte, has abandoned this initiative.

The major economic advisers of President Duterte were unanimous in not supporting federalism.

Former NEDA Secretary Ernesto Pernia has scored the country’s lack of preparedness for a shift to federalism.

  1. He said majority of our regions are fiscally ill-prepared for federalism. He also said that only the National Capital Region, Central Luzon, Southern Tagalog (Calabarzon), and lately Cebu or only four out of the proposed 18 federated regions have the political and economic infrastructure that would allow them to adopt federalism.
  1. Secretary Pernia also observed that implementing federalism before we are ready would be detrimental to economic growth.
  1. He warned that federalism might shred the country’s balance sheet. He underscored that “[t]he expenditure will be immense” and estimates that fiscal deficit may balloon to “6% or more.” This, he said, is “really going to wreak havoc in terms of our fiscal situation and we will certainly experience a downgrading in our ratings”. The possibility of a credit rating downgrade was confirmed by debt watcher Moody’s Investors Service.

Former Finance Secretary Carlos Dominguez, President Duterte’s chief economic adviser, also said that the proposed federalism “leaves much to be desired from a fiscal point of view” and its ambiguity could result in “dire, irreversible economic consequences.”

Former Budget Secretary Ben Diokno, also an Alphan, echoed the hesitance of Secretaries Pernia and Dominguez when he said that we must not make a premature plunge into the planned shift to a federal form of government.

He added that “the core of federalism is the fiscal side —how do you finance the federal government?”

Diokno said “we can’t just adopt a system of government without knowing the implications”.

In sum, the following are the key arguments against federalism:

  1. It would exacerbate imbalances in the development of regional states. The vast majority of the regional states have meager gross regional products to be self-sufficient. They will have to continue to depend on the national government for financial subsidy like in a unitary system.
  1. It would heighten ethnic and regional rivalries, destructive of national unity.
  1. It would create overlaps in jurisdiction between state governments and the national government.
  1. The bureaucracy would balloon leading to duplication of functions, inefficiency and opportunities for corruption.
  1. Change to federalism is a costly experiment.
  1. Political and economic dynasties will be further entrenched as they would operate in relatively smaller areas of influence.
  1. Separatists in Mindanao may not be satisfied because they want their own separate state; independence not only autonomy.

I submit that present specific problems can be adequately addressed by appropriate legislation, consistent with the ideals and fundamentals of the Constitution, with the caveat that implementation must be expeditious and complete.

Charter change will have its time, but not now when all available resources and earnest initiatives must be harnessed to achieve economic recovery.

Thank you for this opportunity to share my views.