Advantages and Disadvantages of Local Autonomy

ADVANTAGES AND DISADVANTAGES

OF LOCAL AUTONOMY

 

Advantages of Local Autonomy

 

Local government autonomy or self-rule empowers the local community to be self-reliant.[i] It enables them to take advantage of their strengths and address their weaknesses. Since the decision makers are locals, there is a greater probability that the locally formulated government programs will cater for the actual needs of the local community. Moreover, since the decision makers are based locally, there is also a greater opportunity for accountability vis-a-vis the local community.

 

To ensure that local governments have the capacity to be autonomous, each local government unit is empowered “to create its own sources of revenues and to levy taxes, fees and charges.”[ii] They are mandated to have “a just share ... in the national taxes.”[iii] They are also “entitled to an equitable hare in the proceeds of the utilization and development of the national wealth.”[iv]

 

More particularly, local government units have an internal revenue allotment of 40% in the collection of national internal revenue taxes.[v] They have a 40% share in the gross collection derived by the national government from mining taxes, royalties, forestry and fishery charges, and from the latter's share in any co-production, joint venture or production sharing agreement in the utilization and development of the national wealth within the former's territorial jurisdiction.[vi] In special economic zones, cities and municipalities have a 40% share in the 5% gross income tax imposed on business establishments operating within the zones located within their territorial jurisdiction.[vii]

 

To undertake local development, local government units may enter into contracts with private project proponents for the financing, construction, operation and maintenance of any financially viable infrastructure or development facility under a public-private partnership.[viii]

 

The local government units that enjoy autonomy are the provinces, cities, municipalities and barangays.[ix] The provinces comprise of cities and municipalities, while the latter comprise of barangays.

 

Disadvantages of Local Autonomy

 

In the context of a nation state comprised of both a national government and several local government units, local government autonomy may give rise to certain disadvantages, such as conflicting regulation, overlapping regulation, excessive regulation and excessive taxation.

 

(1) Conflicting regulation

 

The Local Government Code declares “the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals.”[x] The Code then provides as an operative principle the “effective allocation among the different local government units of their respective powers, functions, responsibilities, and resources.”[xi]

Notably however, the Code does NOT provide for any operative principle regarding the delineation of the respective power, functions, and responsibilities between the local and national governments. The Code simplistically assumes that “genuine and meaningful local autonomy” will necessarily make the local government units effective partners of the national government. The Code does NOT in any way address the reality of conflict of powers, functions and responsibilities between the national and local governments.

 

For example, in the management of traffic along the roads of Metro Manila, it is of common knowledge that certain local government units here insist on having their own set of traffic rules and regulations (i.e. number coding scheme) enforced on national roads, even though the traffic problem cuts through their political boundaries. The end result is of course further chaos. Is this what is meant by “genuine and meaningful local autonomy” that makes local governent units effective partners of the national government?

 

Another example, in the establishment of infrastructure facitilies subject to the environmental clearance requirements[xii], certain local government units unreasonably withhold the issuance of local permits, even though the project proponent has already secured the Environmental Clearance Certficate (ECC) from the Department of Environment and Natural Resources (DENR). This effectively prevents the project proponent from establishing the infrastructure facilities. Does the Local Government Code vest upon local government units such powers superior to that of national government agencies?

 

The answers to these questions are obviously in the negative. In order that the system of national and local governments actually work to complement rather than conflict with each other, there has to be a clear delineation of their powers, functions and responsibilities.

 

In this regard, this paper recommends the issuance of implementing rules and regulations or the amendment of the Local Government Code, to expressly provide for the following operative principles:

 

            (a) That “devolved local autonomy shall not be construed to empower local government units to authorize acts or omissions expressly prohibited by the national government, nor to prohibit acts or omissions expressly authorized by the national government;”[xiii]

 

            (b) That “devolved local autonomy shall not be construed to empower local government units to obstruct or disrupt, or cause the obstruction or disruption, of the formulation or implementation of national government policies, programs or projects, by direct or indirect measures, such as the enactment of ordinances, issuance of executive orders, or withholding of permits, licenses or clearances notwithstanding compliance with the applicable requirements;”[xiv]

 

            (c) That “in case of conflict between national government standards and local government standards, the former shall prevail over the latter, for purposes of the issuance of permits, licenses or clearances by local government units, in connection with the implementation of programs or projects adopted, conducted or authorized by the national government.”[xv]

 

            (d) That “the management of traffic in national roads and bridges shall be the responsibility of the national government acting through its implementing agency, while the management of traffic in city, municipal, provincial, metropolitan and barangay roads and bridges, shall be the responsibility of the city, municipal, provincial, metropolitan and barangay governments respectively. If in any case the traffic in local roads and bridges affect the traffic in national roads and bridges, the national government through its implementing agency shall be empowered to assume on temporary or permanent basis, the management of traffic in the local roads and bridges concerned upon written notice to the local chief executive;”[xvi]

 

            (e) That “the national government through its implementing agency may in the national interest devolve to the local government, subject to acceptance by the local government council concerned, the responsibility to manage traffic in national roads and bridges. No devolution made and accepted shall be irrevocable. the devolution of the responsibility to manage traffic in national roads and bridges may in the national interest be suspended or revoked at any time by the national government through its implementing agency.”[xvii]

 

(2) Overlapping regulation

 

Inasmuch as provinces comprise of cities and municipalities, while cities and municipalities comprise of barangays, there is an obvious overlap of territorial jurisdiction between and among them. In the best situation, there will be at least two (2) local government units with concurrent jurisdiction over the same area, i.e. the City and the Barangay. In the worst situation, there will be three (3) local government units with overlapping territorial jurisdiction, i.e. the Province, the City or Municipality, and the Barangay.

 

With this overlap in territorial jurisdiction in mind, it is important to note that ALL local government units are empowered to promote the general welfare. “Every local government unit ... exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units ... ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.”[xviii] Thus, “local government units ... exercise such other powers and discharge such other functions and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of the basic services...[xix]

 

With respect to the regulation of business activities, the Cities and Municipalities issue a business permit. For the same activities, the Barangays (of the City or Municipality) issue a business clearance.

 

In Makati City, the basic documents required by the City and those required by Barangays San Lorenzo and Bel-Air (with jurisdiction over the business district), are substantially the same: (1) SEC or DTI Registration, and (2) Lease Contract or Certificate of Title.[xx] In Pasig City, the basic documents required by the City and those required by Barangay San Antonio (with jurisdiction over the business district), are likewise substantially the same: (1) SEC or DTI Registration, and (2) Lease Contract or Certificate of Title.[xxi] Curiously, Barangay San Antonio imposes its own requirement for a Comprehensive General Liability Insurance, even though the City already imposes the same insurance requirement.[xxii] This is “double insurance” that doubles the cost of the insurance premiums, but nonetheless disallows double recovery, pursuant to the insurance laws.[xxiii]

 

Notably, the imposition of redundant requirements by equally autonomous local government units with overlapping territorial and functional jurisdiction, increase the cost of doing business. These redundant requirements unnecessarily waste the resources of business enterprises and hamper their efforts to generate income, pay taxes and create jobs. Instead of promoting the general welfare and providing basic services, these redundant requirements actually do the opposite.

 

For efficient regulation, this paper recommends that the local government system integrate the Barangay into the permit or registration process of the City or Municipality, rather than segregate the Barangay from the latter where the former becomes a mini-City or mini-Municipality with its own business clearance (as the functional equivalent of the business permit or business registration). To operationalize integration, the City or Municipality may deputize the Barangay to receive, process, transmit and release the business permit or business registration, for the convenience of the local taxpayers. Nonetheless, the City or Municipality retains the power to approve the permit or registration, as well as to collect the fees and charges, unless the collection function is outsourced to authorized agent banks with branches located close to the Barangay office, again for the convenience of the local taxpayers.

 

(3) Excessive regulation

 

The declared policy of the State provides “that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the national government to the local government units.”[xxiv]

 

Notably however, the Local Government Code does NOT provide for any operative principle regarding the coverage, extent and limit of the power, functions, and responsibilities of local government units as autonomous entities. The Code merely assumes that “genuine and meaningful local autonomy” will necessarily make the local government units self-reliant, responsive and accountable. The Code does NOT in any way address the reality of excessive regulation by local government units that remain unchecked because of their autonomous nature.

 

For example, in the lease of office space within the business districts of Metro Manila, the developer of an office building ordinarily secures a locational clearance, building permit and occupancy permit for the entire building, before it sells or leases units of office space within the premises. When an owner of an office unit in the building leases the premises to another, both the owner/lessor and the lessee are again required to secure their own locational clearance and occupancy permit, even though their usage is limited to office purposes only, and no structural or material alterations are made to the physical premises. Similar excessive regulations are imposed on owners and lessors of residential units. These redundant requirements increase the cost of doing business, and serve no meaningful public purpose or interest.

 

For the avoidance of excessive regulation, this paper recommends the issuance of implementing rules and regulations or the amendment of the Local Government Code, to expressly provide for the following operative principles in the lease of commercial or residential buildings:

                                                                                                                

            (a) In buildings designed and built in whole or in part for commercial or residential use, the locational clearance shall be required only for the construction phase of the entire building; no separate locational clearance shall be required from owners of units of commercial or residential space in the building, nor from lessors, lessees, sub-lessors and sub-lessees of said commercial or residential space; the building administrator or manager shall, by ordinance or implementing rules and regulations, be required to monitor and ensure that the use of the building or any part of thereof shall be limited to the authorized commercial or residential use;

 

            (b) In buildings designed and built in whole or in part for commercial or residential use, the building permit and occupancy permit shall be required only for the construction phase of the entire building; no separate building permit or occupancy permit shall be required from owners of units of commercial or residential space in the building, nor from lessors, lessees, sub-lessors and sub-lessees of said commercial or residential space, unless the occupant undertakes structural or material alterations in the electrical, mechanical, plumbing or fire safety systems of the building; the building administrator or manager shall, by ordinance or implementing rules and regulations, be required to monitor and ensure that no structural or material alteration in the electrical, mechanical, plumbing or fire safety systems of the building or any part thereof, shall be made by any occupant without securing a building permit and an occupancy permit.

           

For more efficient regulation, this paper submits the following measures for thorough consideration:

 

            (a) Shift from “permit” requirements (i.e. Mayor's permit) to “registration” requirements (i.e. Business registration). The shift will cut the processing time required to legally commence business operations. It will also prevent the City or Municipality from acting in bad faith or in deliberately delaying the process, because “registration” will be a purely ministerial function practically devoid of any discretionary aspect. The shift from the permit process to the registration process need not be for all types of businesses. For example, the permit process can still be the adopted procedure for businesses subject to the environmental clearance requirements.

           

            (b) Shift from “pre-inspection” (or inspection before approving permit or registration) to “post-inspection” (or inspection after approving permit or registration). The shift will substantially cut the processing time for the permit or registration. Public safety will not be compromised because the City or Municipality will still be required to conduct an inspection immediately after the approval of the permit or registration. The shift in the inspection process likewise need not be for all types of businesses. Again for example, pre-inspection can still be chosen procedure for businesses subject to the environmental clearance requirements.

 

(4) Excessive taxation

 

Inasmuch as each local government unit is empowered “to create its own sources of revenues and to levy taxes, fees and charges”,[xxv] there exists the real possibility that business enterprises will be subject to more than double taxation of the same business actitity. This will not only complicate the tax regime, it will also increase the cost of doing business beyond the budgets of business enterpises.

 

Fortunately, the Local Government Code has foreseen this possibility and sought it prudent to limit the kinds of taxes that may be imposed at the local level. Thus, local government units are prohibited from imposing income taxes[xxvi], value added taxes[xxvii], customs duties[xxviii], export taxes[xxix] and taxes on goods carried into or out of, or passing through, their territorial jurisdiction[xxx], among others.

 

To support their fiscal requirements, local government units are entitled to have “a just share ... in the national taxes.”[xxxi] This comes in the form of an internal revenue allotment equivalent to 40% of the collection of national internal revenue taxes.[xxxii]

 

For simple and reasonable taxation, this paper recommends that the present tax regime for local government units be retained to avoid double, triple or quadruple taxation of the same business activity. In lieu of the imposition of new local taxes, the internal revenue allotment system be improved to ensure that the allotments are properly and timely released to the local government units.

 

 

 

This material was written ex-gratia by Demosthenes B. Donato

for Tanggulang Demokrasya (Tan Dem), Inc.

All intellectual property rights are granted to the public domain.

05 September 2016. Makati City, Philippines.

 

 

 Disclaimer: The views and opinions expressed in this material are those of the author

and do not necessarily reflect the official policy or position of TanDem.

---

[i]Rep. Act No. 7160, as amended, Local Government Code of 1991, Section 2. See 1973 Constitution, Article II Declaration of Principles and State Policies, Section 10.

[ii]1987 Constitution, Article X Local Government, Section 5.

[iii]Id. Section 6.

[iv]Id. Section 7.

[v]Rep. Act No. 7160, as amended, Local Government Code of 1991, Section 284.

[vi]Id Section 290.

[vii]Rep. Act No. 7916, as amended by Rep. Act No. 8748, Special Economic Zone Act of 1995, Section 24.

[viii]Rep. Act No. 6957, as amended by Rep. Act No. 7718, Sec. 3.

[ix]Supra 1987 Constitution, Sections 1 & 2.

[x]Rep. Act No. 7160, as amended, Local Government Code of 1991, Section 2.

[xi]Id Section 3(a).

[xii]Pres. Dec. No. 1586, Environmental Impact Statement System.

[xiii]D.B.Donato, Proposed Revision of the Local Government Code, Page 1, 23 August 2016.

[xiv]Id.

[xv]Id.

[xvi]Id, Page 2.

[xvii]Id.

[xviii]Rep. Act No. 7160, as amended, Local Government Code of 1991, Section 16.

[xix]Id Section 17.

[xx]Makati City – Business Permit Application Form (2010). Barangay San Lorenzo – Business Clearance Application Form. Barangay Bel-Air – Business Clearance Application Form.

[xxi]Pasig City – Application for Business Permit (May 2015). Barangay San Antonio – Barangay Clearance for Business Permit Requirements for CY 2016.

[xxii]Supra Barangay.

[xxiii] Rep. Act No. 10607, Insurance Code, Sections 95 & 96.

[xxiv] Rep. Act No. 7160, as amended, Local Government Code of 1991, Section 2.

[xxv]1987 Constitution, Article X Local Government, Section 5.

[xxvi]Rep. Act No. 7160, as amended, Local Government Code of 1991, Section 133(a).

[xxvii]Id Section 133(i).

[xxviii]Id Section 133(d).

[xxix]Id Section 133(m).

[xxx]Id Section 133(e).

[xxxi]Supra 1987 Constitution, Section 6.

[xxxii]Supra Local Government Code, Section 284.

iNet: On Federalism

http://www.bbc.org.ph/v2/2016/On%20Federalism_Talk%20to%20Galing%20Pook_11nov2016.docx

 

On Federalism

Galing Pook Forum
November 11, 2016
By Christian S. Monsod

Since it was approved by a majority vote of 76% in a national plebiscite in 1987, there  have been six previous  attempts to change the present Constitution. The articulated purpose of all of them is the same – to improve the lives of the poor. They all failed – two were stopped by the Supreme Court on the ground of unconstituionality – a people’s initiative cannot revise the Constitution. The other four were withdrawn for lack of support . The articulated purpose of these attempts was perceived as mere smokescreeen to serve personal agendas – more power and/or more money for themselves.

 

DBD: Presidents Ramos, Estrada and Arroyo all tried to change the constitution to implement structural and policy reform. All attempts failed because the oligarchs, led by Aquino and Lopez, proved to be more powerful than any sitting president. Their successful strategy to block reform was the same. They demonized proponents using mass media, particularly ABS-CBN and Inquirer among others. The oligarchs also had strong supporters within the Supreme Court, particularly Justice Antonio Carpio and former Chief Justice Artemio Panganiban, to support and carry out the oligarch agenda of blocking what the proponents simply asked for – a plebiscite to let the people decide on the proposed structural and policy reforms. It is obviously deceitful and hypocritical to claim to be defenders of democracy, but at the same time use all means at their disposal both fair and foul to block a democratic plebiscite.

We are discussing today another proposed revision of the Constitution, this time by President Duterte, and its articulated purpose is the same – to improve the lives of the poor.  At this point, because the changes are being proposed when only 27% of our people know the Constitution, may I ask your indulgence to say something about that  Constitution.
The 1987 Constitution is about the promise of EDSA, a historic spontaneous moment of national solidarity. To the poor, EDSA was more than the changing of the guard, it was the promise of a new social order.

When we as a people wrote a new  Constitution in 1987, it was the first time that we spoke to the world as a truly independent and democratic Filipino nation.  It is a document that had not been imposed on us by any colonial power or by a dictatorship.

 

DBD: Mr. Christian Monsod needs to be reminded that he and ALL his fellow commissioners were NOT at all elected by the people. They were simply appointed by the former President Corazon Cojuangco-Aquino. If the people voted to ratify the 1987 Constitution, it was not necessarily because they approved its contents. I for one almost voted NO to the 1987 Constitution. In the end, I relented and voted YES because our country badly needed stability at that time. Anyway, I thought then that the people could always change it later for the better. I did not expect at all that people like Aquino and Monsod, whom we looked up to as leaders, would eventually prove to be champions of the oligarchy to suppress any and all efforts to change the constitution.
That Constitution reflects our history and our dreams of the tfuture.  We could have completely overhauled our system and form of government but the people, in our national consultations, overwhelingly preferred the stability of familiar structures – a democratic  representative, presidential system, with checks and balances and separation of powers and overwhelmingly they wanted the power to directly elect their president.

 

DBD: The 1987 Constitution is the most poorly written Constitution of the Philippines. In form, it is too long and replete with too many promises that could not be fulfilled anyway. In economic policy, it worsened the oligarch policy of capturing the local market for themselves, at the expense of the majority of the consumers and workers. This is through their numerous prohibitions against foreign investments, a policy that belongs to the old colonial times when foreign colonial investors were in fact backed by foreign colonial armies. The colonial armies have long gone, but the oligarchs refuse to compete freely against worthy foreign competitors. They would rather keep the local market exclusively for themselves, not so much out of national sentiment but more so out of insatiable greed. In political structure, they adopted an adulterated version of the US system. They provided for one-man rule of the entire executive branch of government in the person of the President, but he is elected at large and not by an electoral college or via district representatives. This election at large leaves the selection process vulnerable to the undue influence of mass media. So who owns mass media in this country? Well, you guessed right. The oligarchs own the leading mass media entities in this country. In the end, national elections become vulnerable to control by the “rich and famous”. Just look at the composition of Senate whose members are also elected at large and you will know what I mean.

But the Constitution also innovated with three central themes, firstly, the heart of the Constitution is social justice with the poor as the center of our development.  secondly, never again to any authoritarian government. Hence, the strict limitations and conditions for declaring martial law and new provisions, including in the Bill of Rights, to protect citizens against abuses by the State;  and thirdly, the national destiny must firmly and safely rest on Filipinos themselves. Never again amendments similar to the 1935 Constitution that gave Americans equal rights to our patrimony, foreign military bases, and economic policies where even our exchange rate after independence could not be changed without the approval of the U.S. President.

We also cut the umbilical cord of the 1935 and 1973 constitutions to the United States constitution, which gives primacy to civil and political rights because it is a country of immigrants who all started from the same position and only wanted to be free from autocracy. Hence, its emphasis on individual rights and a market system.

Our Constitution gives social and economic rights equal primacy with civil and political rights because we are a country of inequalities from the colonial days to the present where the starting positions of the rich and the poor are not equal.  Social justice is about the adjustment of these starting positions.

The primacy of social justice is based on the right to human dignity which precedes and supercedes constitutions, as encapsulated in what I consider the most important phrase in the entire document – “equitably diffusing wealth and political power for the common good” (Art. XIII, Sec. 1).  To fulfill that vision, the State can use its police powers to  implement the reforms, such as;  income distribution programs (primarily quality education and quality health care) and asset distribution programs (agrarian reform, urban land reform and housing, ancestral domain and fisheries reform ). This is the Constitution that President Duterte wants to overhaul.

A foreign observer describes the last elections as the first time that the periphery occupied the center. We might add that the high plurality vote for President Duterte represents the three challenges to his administration during the election campaign.

First are the everyday concerns of ordinary people namely, – criminality, the drug problem, the traffic problem, the red tape in delivering public services, corruption;

The second challenge is peace in Bangsamoro and with the National Democratic Front.

The third challenge is development.

The question: is federalism necessary to successfully address these challenges?

A shift from a unitary to a federal system is a major surgical revision of the Constitution.  So we better make sure there are no complications. We are all familiar with the saying about knife-happy surgeons that the operation was successful but, unfortunately, the patient died.

 

DBD: For the information of Mr. Monsod, we advocates have a wider view of “regional decentralization.” There are at least three (3) different forms. The first is by regional authority (just like the SBMA but covering an entire region). The second is by autonomous region (just like the ARMM). The third is the sub-state which entails the establishment of a federal form of government. There are NO fixed rules on what the powers should be vested in the regional government. To be prudent, we will need to let the systems evolve. We can start with the regional authority, and from there, if the people want it, move on to either the autonomous region or sub-state. So why are the agents of the oligarchs so noisy about the subject regional decentralization? My guess is simple. It’s because they will end up with less power to control or influence the regions. Less power usually means less monies for them, right? 
On the everyday concerns, the President is perceived as hitting the ground running in addressing the drug and criminality problems. His high approval rating spills over to the issue of extra-judicial killings where more people appear willing to give him the benefit of the doubt, as they did of Marcos at the start of martial law. But ultimately, the issue is whether the vigilante killings are perceived as state policy. And more than 4000 killings “under investigation” without a single solved case, as far as I know, is bad news.  However, there is also good news. the PNP acted quickly on the recent murder of our farmer leader in Coron, Palawan and our requests for police protection of farmers from harassments. There are other examples. How this all plays out is to be watched because the administration of justice is the most serious problem in our country and the frontliners in the justice system are the police.

What is clear is that these everyday concerns can be addressed with the powers of a central government under the present Constitution.  In fact, there is no better example than Davao City where, we are told, all it took was a strong leader with political will to get the job done.  Those who voted for President Duterte expect him to do at a national scale what he accomplished in Davao City, and appear willing to forgive “unintended consequences” as the father of the young couple who were killed by vigilantes recently told media.

The second challenge is peace. Do we need federalism to pass a new Bangsamoro Basic Bill ?  Or to forge a peace agreement with the National Democratic Front? I don’t think so.

 

DBD: For the peace agreement with the CPP-NPA-NDF, I agree there is no need to change the constitution. However, for the peace agreement with the Muslim separatist groups, there may be a need for this, as I have learned from one of my mentors who dealt with them for the longest time. Anyway, not all regions need to be transformed into a sub-state. Different regions can have different structures, i.e. regional authority, autonomous region, sub-state. Is that at all possible? Yes, of course. The people are sovereign in this country. They are free to decide on the matter of differentiated regional structures, and certainly not bound by strict theories found in textbooks authored by people who have no idea what the Muslims, Indigenous Peoples, and Christians scattered throughout 7,107 islands actually want. 
The Constitution already provides for the creation of the ARMM and the NDF has not taken a hard line on charter change. The President is right that a new BBL takes precedence to federalism and should be a template for others.  Since the President is familiar with the political terrain at the ground and personally knows the key figures both in Bangsamoro and the NDF, and he has a supermajority in the Congress, he will likely succeed on achieving peace on both fronts.

That leaves us with the challenge of development.

The biggest problems in our country today are mass poverty and inequality. Thirty years after EDSA and the promise of a new social order, we still have mass poverty and the highest inequality among our peers in our part of the world.The social reform programs are underperforming and the social divides have not changed.

 

DBD: Advocates carry several policy and structural reforms. Each measure is primarily intended to address a specific problem. Nonetheless, the different measures may converge and complement each other. For the problem of poverty, the solution is job creation. Considering that government has limited funds and no business expertise, while local investors are already operating within the economy, the only remaining source of job creation is the foreign investors. How do we do that? First, we need to legalize their entry. The numerous constitutional, statutory and regulatory prohibitions, coupled with the anti-dummy law, actually and effectively criminalize foreign investments in certain sectors of the economy. Second,  there’s the red tape, corruption, etc. We need to do all these measures if we want to be successful in luring foreign investors into the country. Will regional decentralization or federalism create jobs? Not necessarily. If the prohibitions against foreign investments remain in a federal system of government, I doubt seriously if new jobs using new foreign funds will be created. So why go for regional decentralization at all? It is because this measure of regional decentralization is actually a political measure (not an economic measure) intended to address the historical problem of remote control governance by “Imperial Manila”. I hope that clears up the discussion because the opponents of reform are either confused or they are trying to confuse the people.

This is a failure of development, which is defined as a sustained high growth rate plus equitable distribution. In other words, we have so far failed in human development which is “the process that widens the range of people’s choices to lead a long and healthy life, to be educated and knowlegedable and to enjoy a decent standard of living. It includes political freedom, guaranteed human rights and self-respect”. (UNDP 1990:10). Our worst failure of development is Muslim Mindanao.

We are, in fact, told that a number of factors account for our laggardness, but foremost are flawed policies and weak institutions that are rooted in a feudalistic system that has been impervious to change for generations and, of course, its companion evil -- corruption.  There is some good news: from 2010-2015 our average annual growth rate has increased to 6.2%  and poverty incidence has been reduced from about 24% to about 19%, without constitutional changes. But we have a long way to go to get out from the bottom of the pile.

 

DBD: I suggest that the statistics on poverty reduction during the time of former President Noynoy Aquino be checked and reviewed. I recall that certain official definitions used by NEDA and/or the DOLE were changed to show greater poverty reduction during the time of Aquino.

President Duterte says that our problems are mainly caused by “imperial Manila” with its central control of powers and resources that have stood in the way of development of the rest of the country, to the detriment of the poor. Hence, federalism.

I beg to disagree, I submit that we have failed not because of the Constitution, but because we have not fully implemented it, especially the provisions on social justice, and on local autonomy. The Constitution is not the problem, it is part of the solution.

We don’t have much information on the features of the federalism that the Presidejt wants. But in responding to his call, we can start by saying, and I hope you agree, that there is unanimity among us that federal countries around the world reflect the characteristics of their context and thus every country system is a hybrid of some kind. The Philippines is also considered a hybrid in international comparisons since the 1987 Constitution provided for a unitary system with 2 autonomous regions and autonomy for local governments.

From the advocates for Philippine federalism and the statements of the President we can relate their characteristics with the experience of countries as described by experts both domestic (like Prof. Rosario Manasan and Prof. Glen Lacza Pilapil) and international:

first, the recommendation for existing unitary governments is to reform rather than overhaul the system.

second,  a clear understanding and acceptance of federalism is a necessary feature. That is not our case today, where 73% of our people do not know anything about our Constitution, much more about federalism.  Yet our proposed process is a decision from above (a constituent assembly) when experience suggests that a process that is voluntary and incremental from the ground has better chances of success, like Spain. Incidentally such a process is provided in our Constitution (Art. X, Sec. 13).

third, since federalism reflects the history, socio-political, economic and cultural characteristics of its context and there are  existing inequalities, it tends to serve the interest of existing dominant groups in the federated states.

fourth a federalized state need not be democratic, an interesting insight;

fifth, the process of federalization is complex, needs a long transition period and is essentially asymmetric. The Duterte proposal seems to envisage an immediate symmetrical structural change regardless of local conditions and capabilities, with the hope that an “equalization fund” from the wealthier regions would help the poor regions until they are competitive. That may be a heroic assumption. Why will rich areas share their surplus indefinitely with the poor regions rather than with their own people who created it?  In which case, the poorer areas may become more marginalized;

sixth, federalization may not lead just to unifying communities but to their unraveling because self-determination has its domino effect, such as the existence of minorities within a minority.

seventh,  a redistribution of powers works best when flexible to changing circumstances. But a constitution that not only devolves but also shares sovereignty with the federated regions means that it cannot be changed solely by popular vote and makes the shift virtually irreversible.

eight, this  “federal entrenchment” is a risky proposition since experts say that there is no established evidence on the superiority of the federal to a unitary form of government, particularly on long-term outcomes. Long after President Duterte is gone.

ninth: on accountabiity, there are also big differences among our regions on the existence of  a strong civil society, especially in poor areas, which can stand up to the political dynasties, landed elites and warlords with the power and money to dominate not only the politics but also the economy and the media of these areas. Hence, the absence as well of strong opposition political parties in these areas.

Federalism invokes the principle of subsidiarity – that power must be devolved to as close to the people as possible, which:
(a) empowers and motivates local communities;
(b) generates more accountability of local officials;
(c) hastens development with competition among the regions.

The problem with the subsidiarity argument is its inductive reasoning. – it is based on the probabilities of a good result at each stage of the chain of reasoning  that will lead to the desirable ultimate objective.

In our case, there are LGUs dominated by political dynasties, landed elites or warlords. It does not necessarily follow that the greater powers given to the LGUs will end up with an empowered people.  On the contrary, it can result in a misuse or hijacking of the powers and resources by the existing power holders.

 

DBD: To restate, the advocates carry different reform measures to address different problems. The measure of regional decentralization is NOT intended to address the problem of the Family Dynasty. As stated above, regional decentralization is intended to address the problem known as “Imperial Manila”. The proposed solution to the problem posed by the Family Dynasty is to shift from the “mayor type system” where the local chief executive is elected at large, to a “council type system” where the local chief executive is elected by district councilors. The rational is that smaller constituencies are less vulnerable to the influence of mass media (where local radio stations and local papers are usually owned by the family dynasties), and this selection process requires a substantially lower number of voters to win. For example, in a town with 10,000 voters and only 2 candidates, a candidate needs 5,000 + 1 votes to win as mayor, assuming that all voters vote in a “mayor type system”. On the other hand, in a “council type system” assuming 10 districts with 1,000 voters per district, the party of a mayoralty candidate needs to win only 6 seats in the council. This would be 3,000 + 6 (or 500 + 1 per district) or total of 3,006 votes only, assuming all voters in all districts vote. Of course, the usual term limits, stricter prohibitions against family members, and stricter requirements on the SALN, will also have to be in place.

The Local Government Code (LGC) although considered a landmark legislation, has turned out to be inadequate on devolution and many of its provisions are not being implemented fully or correctly.

 

DBD: Business entities already dealing with LGUs actually think that there is excessive local autonomy. This thing about the supposed lack of autonomy is old and passe. It is for those without any experience in dealing with LGUs that behave like a Republic within a Republic. The Local Government Code has brought about excessive regulation and redundant regulation, ultimately resulting to a substantial increase in the cost of doing business. There can be further improvements in local autonomy, particularly in fiscal autonomy. Their regulatory powers however will have to be clearly delineated in relation to the national government, to avoid having LGUs that serve as stumbling blocks rather than as champions of local development.
In this regard, there are acknowledged fiscal experts such as Prof. Rosario Manasan and former Finance Usec. Milwida Guevara with instructive insights on the amendments to the LGC and other laws and reforms to give real powers to administatively capable LGUs, whether on education, health,  infrastructure, raising their own funds, and resources etc, and will enable them to achieve meaningful self-determination, without need of federalization.   Prof. Manasan has already shared with us her mastery of the fiscal and governance aspects of decentralization.

Former Finance USEC Milwida Guevara has a study on the fiscal capability of regions.  Based on the 2014 regional GDPs and an estimated minimum expenditure of P91b, only three (3) regions are financially viable, namely,  National Capital Region (NCR), Central Luzon and Calabarzon.

On education, she says that inequitable access to quality education can be addressed immediately by two reforms:

1.  Amend Sec. 98 of the Local Government Code on the creation, composition of Local School Boards to broaden the membership of Boards to include CSOs, business sector, religious groups, among others; and, to broaden the functions of the Local School Board to include policy formulation on students’ welfare, finance of activities which the locality needs, institution of a performance incentive scheme for schools, among others.

2. She points out that 37% of schools have no School Governing Councils; 46% have organized their SGCs but are not functional, and, less than one percent involves their SGCs in planning and program implementation.  Thus, parents and communities have little knowledge of the schools’ performance and have no ownership of school programs.   RA 9155, Governance of Basic Education Act of 2001, should be amended to mandate the establishment of School Governing Councils with powers to formulate and implement policies and programs on students’ welfare and school improvement programs.

With regard to economic zones which are expected to proliferate in the regions to jumpstart their development, the Philippine Human Development Report 2012/2013  points out that human development is about the welfare of people, not the development of places. The nature of economic development is uneven. It is not about bringing jobs to people but closing the distance between the people and the jobs by giving people the capabiity and mobility to choose where to go. But the principle is different when it comes to quality education and quality health care. Breaking the vicious cycle of poverty of the young means bringing these services to wherever they are regardless of the cost. That is what human development is about.

There are many experts with ideas like these which are consistent with inclusive sustainable development without need of federalization but they appear to be outside the radar screen of the government.

To summarize, I believe that the shift to a federal system is a leap of faith that it will somehow work.  That means that we will be taking a big risk that federalism will strengthen the political dynasties, landed elites and warlords and, given that 70%-80% of the House are from dynastic families with special interests, it is likely that the first casualty are the provisions on social justice and human development, which are precisely the provisions needed to address poverty and inequality.

What if their assumptions are wrong about the inevitability of a good version of federalism? What if federalism results instead in regional political fiefdoms?

Federalism is a slippery-slope and is virtually irreversible. Instead,  why don’t we take the path of a purposive implementation of the Constitution to address poverty and inequality?  And the demands of good governance. Given the depth of these problems, studies show that the social reforms and re-distribution programs should remain in a strong central government because of the need for massive funding that the poor LGUs cannot afford and the need for uniformity. Otherwise, there might be major differences among LGUs to the detriment of the poor. But  there can be full decentralization of functions and devolution of powers and resources on the delivery of government services and for local development, which is consistent with the mandate of local autonomy in the Constitution. This can be done simply by amending the Local Government Code and other laws like the mining and education laws and enacting corrective legislation. (The LGUs should be given a major share of the revenues from mining which extracts and exhausts the natural resources in their areas.)

In closing, may I say that I believe President Duterte’s heart is for the poor and he is good at addressing the everyday concerns of the people. The farmers and other marginalized groups I represent idolize him for his policy directions on agrarian reform and the environment. But he is not exactly in his elements on critical thinking on strategies, policies and programs for human development. Yet he is in a hurry to shift to federalism and he is also talking about shifting to a parliamentary system, about the need of martial powers to address lawlessness and about changing the limitations on foreign ownership. These are far-reaching structural changes in the Constitution for which he would exploit his high approval ratings by asking the people to trust him totally on their urgency and scope – the full range of which he has not even disclosed. This is dangerous demagoguery. I hope that federalism is not a trojan horse for other agenda, even if the President is well-meaning in helping the poor. He is also 71 years old and his choice of a successor leaves much to be desired.
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We may have another fight in our hands to defend our freedoms.

 

DBD: The people’s fight is to free themselves from the many burdens imposed under the 1987 Constitution of the oligarchy, by the oligarchy and for the oligarchy, with some ironic support from leftists who unbelievably think that nationalism is synonymous with being isolationist in the present day reality of a global economy.

 

NOTE: Dindo B. Donato (DBD) is the General Counsel of Tanggulang Demokrasya (TanDem), Inc.