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Impact of a re-enacted budget

14 June 2006 – The congressional bicameral conference committee’s discussions on the 2006 budget hit a stalemate after members of the Senate refused to restore a P64 billion cut on the P1.053 billion budget proposed by Malacañang and approved by the House of Representatives.

The Senate approved a P1.027 trillion budget on 1 June with cuts amounting to P26.3 billion from programmed funds and P37.7 billion from unprogrammed appropriations.

The House is also partly to blame for the failure to enact a new budget since it submitted their version late last April. Though Senate finance committee chairman Manuel Villar Jr. has remained hopeful of breaking the budget impasse in July, the House contingent seems pessimistic.

If the government continues to operate under last year’s budget of P907.6 billion, analysts estimate a P40 billion deficit this year instead of P125 billion. A lower budget could also result in less government borrowing, less interest payments, and no new spending for infrastructure. Operating under last year’s budget would also give President Gloria Macapagal-Arroyo leeway to realign savings from last year’s programs to her pet projects.

The senators refused to restore the cuts—despite President Arroyo’s threat to veto the reduced budget—because of perceptions that some proposed programs might be used to fund Charter change initiatives and the campaign of the President’s allies in the 2007 elections. Of the P26.3 billion cut, P5 billion was allotted for the “Kilos Asenso Program” and P3 billion for “Kalayaan Barangay Program.” Instead of funding these questionable programs, the senators wanted to add funds to more important items like education.

Several nongovernmental organization leaders also urged the Senate to review the P1.25 billion allocation for “confidential and intelligence expenses,” of which P650 million will be under the President's control, and to prioritize the budget for education, health, and agriculture programs.

Other slashed items in the budget include P42.01 million from the Department of Foreign Affairs; P49.09 million from the Department of Health; P13.68 million from the Department of Labor Employment; P701.84 million from the Department of National Defense; P4 billion from the Department of Public Works and Highways; and P2.88 billion from the Department of Transportation and Communication.

The Presidential Commission on Good Government and the National Printing Office got zero budgets from the Senate, while the Visiting Forces Agreement Commission was given a P1.00 budget.

Legislators are now looking at passing a supplemental budget in case the bicameral conference committee won't succeed in coming up with a compromise deal on the budget cuts.

Bicam to tackle conflicting
budget versions

5 June 2006 – Preliminary discussions among Congress’ bicameral conference committee members were held yesterday to begin the work towards reconciling the Senate and House versions of the 2006 national budget. The legislators are aiming to complete their discussions by 7 June as both houses will be on sine die adjournment from 10 June until 23 July.

On 1 June, the Senate passed on third and final reading its version of the 2006 budget amounting to P1.027 trillion. Originally proposed by Senate committee on finance chairman Manuel Villar, the Senate version is P26 billion less than the P1.053 trillion budget proposed by Malacañang and approved by the House of Representatives in full.

As proposed, the Senate deleted the budget of several projects, such as the Kilos Asenso Support Fund (P3 billion), the Kalayaan Barangay Program Fund (P3.69 billion), and the incentive package for employees availing of the Rationalization Program under the Pension and Gratuity Fund (P10 billion).

Senators also agreed to scrap the entire budget of the Presidential Commission on Good Government amounting to P65.53 million, as well as the P107.2 million allocation for the National Printing Office. They also cut P2.72 billion from the budget of the Department of Transportation and Communications.

On the other hand, the Senate increased the budget of the Department of Health by P350 million and added P50 million to the Agriculture of Fisheries Modernization Program for the Young Farmers Program. The Senate also gave P100 million more to the Commission on Higher Education and another P100 million to the University of the Philippines.

Testing God’s will

9 March 2006 – President Gloria Macapagal-Arroyo has claimed that it is God’s will that she is president. But some groups are now challenging her to test God’s will by agreeing to hold a snap election and thus settle once and for all the issue of her legitimacy as president.

Allegations of election rigging continue to hound the president as calls for the conduct of a credible investigation into the controversy have been ignored or frustrated. Many analysts believe that the mounting pressure for truth will continue if answers are not forthcoming. In the meantime, the president has banned officials from appearing in congressional hearings without her clearance, resorted to the “calibrated preemptive response” to clamp down on protests, and declared a state of national emergency to allow her administration to move against its perceived enemies. Although proclamation 1017 has already been lifted, the president’s confrontational approach has all the more given her critics common cause to oppose her iron-fisted tactics.

President Arroyo is now facing another problem. Early this month, Senator Ramon Magsaysay, Jr. released the results of the agriculture and blue ribbon committees’ investigation on the alleged diversion of fertilizer funds for the 2004 election campaign of the president. Several farmers’ groups have testified that they did not receive any fertilizers in 2004, despite a P728 million allocation for fertilizer by the agriculture department. The Senate committees want to hold President Arroyo accountable for the mismanagement of the funds.

Gen. Garcia’s family to face arrest

9 March 2006 – The Sandiganbayan Second Division yesterday ordered the arrest of Gen. Carlos F. Garcia’s wife, Clarita, and three sons, Ian Carl, Juan Paolo, and Timothy Mark. This is in connection with the plunder case filed by the Office of the Ombudsman against them in April 2005. They were found to have violated the plunder law by amassing ill-gotten wealth totaling an estimated P303,272,005.99. While serving as comptroller of the Armed Forces from March 2001 to April 2004, Gen. Garcia received commissions, kickbacks, and benefits related to his authority over contracts. The P303 million the Garcias are said to have amassed include real property in the Philippines and the U.S., luxury vehicles, peso and dollar bank deposits, and other investments.

On 2 December 2005, a military court had found Gen. Garcia guilty of violating 2 Articles of War for understating assets and liabilities in 2002 and 2003, and for holding a U.S. “green card” while serving as an officer of the Philippine army. He was sentenced to two years of hard labor and is currently detained at Camp Crame.

The Sandiganbayan charge sheet described Garcia’s wife and sons as “conduits and willing receptacles” of his illegal activities. Plunder as provided for in Republic Act 7080 is a capital offense and is nonbailable.

State of national emergency lifted; unresolved issues remain

6 March 2006 – Despite the lifting of the state of national emergency last 3 March, various sectors continue to question President Gloria Macapagal-Arroyo’s exercise of power, accusing her of suppressing free speech, harassing the press, and violating the Constitution by prohibiting public assembly.

Party-list congressmen and several protesters were arrested without warrants and the offices of the Daily Tribune were raided by the police after the president came out with Presidential Proclamation 1017 declaring a state of national emergency on 24 February (which, ironically, fell within the observance of the 20th anniversary of the first EDSA Revolution). Immediately, seven petitions were filed before the Supreme Court to declare the proclamation unconstitutional. The high court is set to hear the oral arguments on the petitions tomorrow, 7 March.

The president justified her proclamation by citing a purported “conspiracy of political opponents, military adventurists, and communist rebels” to oust her. Two days later, on 26 February, in an incident that revealed the level of discontent within the military regarding the Arroyo administration, restive Marines questioned the sudden relief of their commandant, Major General Renato Miranda, leading to a tense six-hour standoff at the Marines headquarters.

Many political analysts see the unresolved questions regarding the legitimacy of the Arroyo presidency as the root of the political turmoil. Her election victory in 2004 is still under a cloud of doubt because of accusations of vote rigging. The alleged diversion of recovered ill-gotten Marcos wealth and agricultural funds to boost the president’s re-election campaign in 2004 has also tainted her presidency.

High court to hear EO 464 petitions

20 February 2006 – The Supreme Court is set to hear tomorrow the oral arguments on the constitutionality of Executive Order No. 464, which requires administration, police, and military officials to ask permission from the President before appearing in congressional hearings. The order has been a source of conflict between the Senate and the Executive ever since it was issued just before two military officials were to testify at a Senate hearing and link the administration to cheating during the 2004 elections.

Petitioners against EO 464 include party-list group Bayan Muna, COURAGE, Counsels for the Defense of Liberties, former solicitor general Francisco Chavez, Alternative Law Groups Inc., the Senate led by Senate President Franklin Drilon, and PDP-Laban represented by Makati City Mayor Jejomar Binay.

The petitioners argue that EO 464 violates the Constitution, particularly Art. VI, Sec. 22, which allows either chamber of Congress to hear heads of departments on any matter pertaining to their departments; Art. VI, Sec. 21, which gives Congress the power to legislate and investigate in aid of legislation; and Art. III, Sec. 4 and 7, which guarantee the freedom of speech and expression and the people’s right to information on matters of public concern.

The respondents are Executive Secretary Eduardo Ermita, Defense Secretary Avelino Cruz Jr., and Armed Forces of the Philippines Chief of Staff Generoso Senga. Through the solicitor general, the respondents are contesting that EO 464 merely regulates access to information.

Comelec commissioners
asked to resign

14 December 2005 - The Senate has adopted Report No. 44 of its Blue Ribbon Committee, which found Commission on Elections commissioners and the members of the Comelec’s Bids and Awards Committee liable for the anomalous P1.25-billion contract with the Mega Pacific Consortium for the purchase of automated counting machines in 2003. The committee called for the resignation of the said officials and asked the Ombudsman to immediately file charges against them.

The Comelec commissioners involved are chairman Benjamin Abalos, Rufino Javier, Mehol Sadain, Resurreccion Borra, and Florentino Tuazon Jr. Now-retired commissioners Luzviminda Tancangco and Ralph Lantion were also cited. BAC members responsible for the bidding were chairman Eduardo Mejos and directors Gideon de Guzman, Bartolome Sinocruz, Lamberto Llamas, and the now retired Jose Balbuena.

The investigation was prompted by Sen. Aquilino Pimentel’s privilege speech, “Mega Bucks Blind Comelec,” last 18 August 2004. Pimentel cited government losses amounting to over P300 million because of the overpricing of the automated counting machines. Another P36-million loss was incurred because the Comelec paid at the exchange rate of P58 per U.S. dollar when the rate should have been P55 per dollar. The Comelec also agreed to the inclusion of certain taxes in the contract, when the same contract exempts Mega Pacific from such taxes.

On 13 January 2004, the Supreme Court nullified the contract, but it did not prevent the Comelec from paying Mega Pacific.

Senate deliberations for the Comelec’s budget for 2006 are still ongoing. The budget approved by the Department of Budget and Management for the modernization program of the Comelec amounts to P1.6 billion. Of that amount, P1.3 billion will again be used for the purchase of new automated counting machines.

Presidential legal counsel
appointed as Ombudsman

1 December 2005 – Presidential Legal Counsel Merceditas Gutierrez was appointed Ombudsman despite concerns raised over her ties to President Gloria Macapagal-Arroyo and her husband, Miguel Arroyo. Gutierrez was a classmate of the latter at the Ateneo Law School.

Gutierrez faces the daunting challenge of tackling over 50 pending corruption cases and, more importantly, proving her impartiality in prosecuting these cases. She will face three big cases involving the president, former Justice Secretary Hernando Perez, and the Commission on Elections. These cases are the plunder charge filed against President Arroyo for the alleged misuse of the P728-million fertilizer fund, the bribery charge filed against Perez by former Manila congressman Mark Jimenez, and a case filed against the Comelec for the controversial P1.3-billion contract with Mega-Pacific eSolutions for the commission’s poll automation project.

Though the Judicial and Bar Council unanimously voted for Gutierrez’s nomination, the Transparency and Accountability Network, a coalition of 25 organizations working to reduce corruption in the country, said the JBC failed to give interested parties sufficient time to submit nominations and to comment on the applicants. TAN claims that the process of selecting the new Ombudsman was done in haste. Secretary Gutierrez was chosen over 13 other nominees to the post.

Gutierrez served as acting justice secretary twice, from November 2002 to January 2003 and from December 2003 to August 2004, before her appointment as chief presidential counsel in September 2004. Previously, she served as the justice department’s undersecretary, assistant chief state counsel, and senior state counsel.

What’s wrong with emergency rule?

27 September 2005 – Over the weekend, Justice Secretary Raul Gonzalez admitted that he instructed his staff to study the possible government takeover of oil and power firms as well as air and shipping lines in case the economy worsens due to rising world oil prices. His admission came after a report spread that the Department of Justice had drafted a presidential proclamation to impose emergency rule. Some businessmen, oil company officials, and energy department officials said that the government’s interference might only sow fear among investors.

Despite denials from Malacañang and the justice department that martial law will not be imposed, most people still think that the draft proclamation could be a devise to counter the increasing anti-Arroyo rallies these past weeks after the impeachment complaint against President Gloria Macapagal-Arroyo was quashed at the House of Representatives. In a July 2005 nationwide survey of Pulse Asia, 67% of Filipinos do not see the need to impose martial law despite the political and economic problems plaguing the country. Most people believe that cutting civil liberties and controlling private entities will not help solve the crisis and only further erode public confidence in the government.

Any declaration of a national emergency has to be confirmed or ratified by Congress.

New EVAT law not yet in effect

19 September 2005 – All five petitioners who questioned the constitutionality of the expanded value-added tax law (Republic Act 9337) have filed motions for reconsideration before the Supreme Court. This means the law, which was supposed to take effect on 1 July, will remain unimplemented for now.

The petitioners are led by the Abakada Guro party-list group, Senator Aquilino Pimentel Jr., the Association of Pilipinas Shell Dealers Inc., Representative Francis Escudero, and Bataan Governor Enrique Garcia Jr. They asked the High Court to revisit their position on the removal of the “no pass-on” provisions at the bicameral conference committee, the exclusive origin of revenue bills from the House of Representatives, and the standby authority of President Gloria Macapagal-Arroyo to raise the VAT rate.

Meanwhile, Budget Secretary Romulo Neri now favors the deferment of the implementation of EVAT on fuel and power, noting the negative impact this would have on the economy. Around 147 congressmen are supporting House Joint Resolution 12, which calls for the postponement of the EVAT for the two sectors until 1 June 2006. The resolution’s author, Representative Joey Salceda, cited the rising prices of petroleum products as the main reason behind the measure.

Senate to question Venable lobby deal

19 September 2005 – Members of the Senate are pushing for an investigation of the agreement signed by National Security Adviser Norberto Gonzales with U.S.-based law firm Venable LLP on 25 July 2005 to lobby for funding for Philippine government projects, including Charter change. The revelation of the “secret” deal has sparked a fresh wave of controversy surrounding President Gloria Macapagal-Arroyo’s administration, forcing the president to approve yesterday Gonzales’s recommendation to scrap the contract.

Despite the deal’s cancellation, Senator Joker Arroyo, who is the Senate Blue Ribbon Committee chairman, still wants to investigate the extent of Gonzales’s authority to sign lobby contracts with foreigners on behalf of the Philippine government. Opposition Senator Aquilino Pimentel Jr., meanwhile, thinks that Gonzales had no business signing the contract because constitutional amendments do not fall within the scope of national security. Critics also want Gonzales to reveal the “real” source of funds for the $75,000 monthly retainer of Venable despite claims that no public funds would be spent.

The agreement binds Venable to serve as the Philippine government’s liaison with U.S. government officials, provide information on policy including directions of U.S. federal legislation that may have an impact on the Philippines, and participate in strategic planning. Venable is also tasked to secure grants or congressional earmarks for support of Charter change; facilitate the reinclusion of the Philippines into assistance programs and credit facilities; and create a capability enhancement program for the Armed Forces of the Philippines and an upgrade program for the Philippine National Police.

Impeachment complaints vs. GMA dismissed, but political woes continue

7 September 2005 – The House of Representatives in a marathon session last 5–6 September voted to ratify the House justice committee’s report to junk the three impeachment complaints against President Gloria Macapagal-Arroyo. A majority of 158 lawmakers voted “yes” to approve Committee Report No. 1012, while only 51 lawmakers voted “no,” 6 abstained from voting, and 21 members failed to vote.

The justice committee finished its work in 14 days, even if the Constitution actually provided it 60 session days to tackle the complaints. Surrounded by allegations that Malacañang dangled pork barrel funds and government positions to relatives of lawmakers to ensure the defeat of all impeachment bids, the committee hearings dwelled on technicalities and failed to address the serious charges against the president. A “weak” impeachment complaint filed by lawyer Oliver Lozano was chosen over the other two complaints, including a more comprehensive amended complaint filed by opposition lawmakers. Given the numerical superiority of pro-administration representatives in the justice committee and in the overall House membership, even the Lozano complaint was eventually junked for “insufficiency of substance.”

Despite the defeat in the House, the president’s critics have made known their intention to pursue the truth behind the accusations raised against the president. They insist that she has yet to answer the allegations of electoral fraud, corruption, and human rights violations. Meanwhile, lawyer Ernesto Francisco refiled on 6 September a petition questioning the constitutionality of rules the House used in tackling the impeachment complaints. Lawyers Oliver Lozano and Harry Roque have also filed separate petitions questioning the legality of the rules on impeachment used.

Supreme Court upholds constitutionality of amended EVAT law

2 September 2005 – The Supreme Court yesterday dismissed by a majority vote all five petitions seeking to invalidate Republic Act 9337 and thus upheld the constitutionality of the amended expanded value-added tax law.

The temporary restraining order on the new EVAT law issued on 1 July 2005 will be lifted upon the finality of the decision—15 days after parties shall have received their copies of the decision.

Justice Ma. Alicia Austria-Martinez wrote the majority decision. Supreme Court Public Information Office Chief Ismail Khan said a number of justices dissented on the constitutionality of specific provisions, but none reached the required majority vote of at least eight justices.

The justices who dissented and voted to declare the unconstitutionality of specific provisions of RA 9337 are:

1. Section 1 (tax rate on domestic corporations and conditions on raising the EVAT rate to 12% in 2006), Section 2 (tax rate on foreign corporations), and Section 3 (deductions from gross income): Chief Justice Davide, Azcuna, Corona, Panganiban, and Sandoval-Gutierrez

2. Section 4 (VAT on sale of goods and properties), Section 5 (VAT on importation of goods), Section 6 (VAT on sale of services and use of properties), and Section 7 (VAT exempt transactions): Corona and Sandoval-Gutierrez (Callejo, Puno, and Ynares-Santiago voted to dismiss the petitions on the ground of prematurity)

3. Section 8 (tax credits): Carpio-Morales and Tinga

4. Section 10 (tax credits of input tax) and Section 11 (invoicing and accounting requirements for VAT-registered persons): Corona and Sandoval-Gutierrez

5. Section 12 (return and payment of VAT): Corona, Sandoval-Gutierrez, and Tinga

6. Section 13 (tax on VAT-exempt persons): Corona and Sandoval-Gutierrez

7. Section 14 (tax on domestic carriers and keepers of garages), Section 15 (tax on franchises), Section 16 (tax on banks and nonbank financial intermediaries), Section 17 (tax on manufactured oils and other fuels), and Section 18 (tax on mineral products): Davide, Corona, Sandoval-Gutierrez

8. Section 19 (registration requirements) and Section 20 (issuances of receipts): Corona and Sandoval-Gutierrez

9. Section 21 (disposition of incremental revenues): Callejo, Corona, Garcia, Puno, Sandoval-Gutierrez, Ynares-Santiago, and Tinga

10. Corona, Callejo, Garcia, Puno, Sandoval-Gutierrez, and Ynares-Santiago voted to declare unconstitutional the deletion of the “no pass-on” provision by the Bicameral Conference Committee.

Only 30% of Filipinos say Charter
needs change—SWS

3 August 2005 – The Social Weather Stations, in its latest survey, says 70% of Filipinos have no suggested constitutional amendments and only 30% say there are provisions that need to be changed now. The survey also showed that 73% of respondents have little or almost no knowledge of the Constitution.

Administration officials are planning to launch a massive campaign on Charter change, but such a campaign might backfire given the declining trust in the presidency. According to SWS president Mahar Mangahas, the poll results indicate that there is very little initiative for constitutional change from the public. The push, it seems, is coming from certain sectors only.

The survey also found that 64% of respondents are against allowing past presidents to become prime minister if the country shifts to a parliamentary form of government. SWS polled 1,200 respondents from May 14 to 23, a month before the state of the nation address of President Arroyo, where she called for a “great debate” on Charter change.