Charter Change 2006: Where Are We Now? Where Are We Going?

Charter Change – Where are we now? Where are we going? Christian S. Monsod Tagaytay, CBCP-NASSA, November 9, 2006

Where are we now? A. Supreme Court has struck down People’s Initiative (close but firm decision – gives hope that democratic institutions still work) B. Constituent Assembly option C. Constitutional Convention option D. Why charter change? - Revisiting issues

A. SC decision on People’s Initiative • Against: 8 justices: Panganiban, Carpio*, YnaresSantiago, Sandoval-Gutierrez, Austria-Martinez*, CarpioMorales*, Callejo*, Azcuna* • For: 7 justices: Puno, Quisumbing, Nazario*, Corona*, Cancio-Garcia*, Tinga*, Velasco* * appointed by PGMA

Decision: Dismiss PI (Justice Antonio Carpio, ponente) 1. PI “miserably failed” to comply with basic requirement of Constitution (Sec. 2, Art. XVII) • Initiative must be “directly proposed by the people…. upon a petition…….” • Lambino initiative is a revision, not an amendment 2. No need to revisit Santiago vs COMELEC 3. COMELEC did not commit grave abuse of discretion in dismissing Lambino initiative 4. Dissenting Opinion 5. Conclusions of SC 6. Postscript to SC decision

1. PI not direct proposal of people themselves • Precondition of petition – (a) people as authors, must see proposed amendments before signing; (b) proposal must be embodied in petition or incorporated as attachment • Signature sheet is not a “petition” – mentions only shift to parliamentary-unicameral + transitory provisions • Not all signatories could have seen/known – Lambino admitted printing only 100,000 copies of draft petition • HENCE, signatories uninformed of exact amendments and other changes, i.e. no term limits, interim parliament determines expiration of own term of office (except senators), further amendments within 45 days (“logrolling” – invalidates entire proposition) • GRAND DECEPTION, GIGANTIC FRAUD

1.1 Absurdity of Lambino PI • Rule of statutory construction: if later law is irreconciliable with earlier law, later law prevails • Lambino petition turns rule on its head - “in case of irreconciliable inconsistency, the earlier provision shall be amended to conform to a unicameral parliamentary form of government…”, SC: effect is to freeze two irreconciliable provisions until the earlier one “shall be amended” which requires a future separate constitutional amendment. • What “unicameral parliamentary” form will be followed? Do people know that they are adopting Bangladesh, Singapore, Israel, New Zealand (all unicameral) and not British, French, Spanish, German, Italian, Canadian, Australian or Malaysian (bicameral)

1.2 Lambino initiative is revision, not amendment • Art. XVII, sec. 1 provides for amendment or revision – by con-ass, and con-con • Art. XVII, sec. 2 provides for amendment (only) by people’s initiative • “revision” – alters basic principle of constitution, i.e. separation of powers, system of checks and balances; or alters substantial entirety (numerous provisions); requires deliberative body with recorded proceedings • “amendment” – adds, reduces, deletes without altering the basic principle or basic structure or framework of government, i.e. reducing voting age to 15, reducing Filipino ownership of mass media from 100% to 60% • Lambino argument not valid that difference is merely of procedure, i.e. whether those who change are full or part-time

2. Revisiting Santiago vs Comelec case not necessary • Settled doctrine – the courts will not pass on constitutionality of a statute if the case can be resolved on other grounds • Even assuming that RA 6735 is valid (as 10 sitting justices now say), decision will still be same because, to be valid, PI must first comply with Sec. 2, Art. XVII before complying with RA 6735 • PI violates Sec. 5 (b) of RA 6735 – proponents must sign “petition x x x as signatories” • Sec. 4 (4) of PI violates Sec. 10 (a) of RA 6735 against logrolling (more than one subject matter)

3. Comelec did not commit grave abuse of discretion in dismissing PI Comelec merely followed SC ruling in Pirma case (2nd case filed with SC in 1997) – “The Court ruled, first, by a unanimous vote, that no grave abuse of discretion could be attributed to the public respondent COMELEC in dismissing the petition filed by PIRMA therein, it appearing that it only complied with the dispositions in the Decisions of this Court in GR no. 127325 on March 19, 1997 (Santiago ruling) and its Resolution of June 10, 1997 (upholding Santiago ruling in the MR)

4. Dissenting Opinions (Puno et al): give due course to PI and remand to Comelec for further proceedings. • Let the people decide – “Legal sovereignty…is not subject to law for it is the author and source of law…and is thus the equivalent of legal omnipotence.” • Proposed changes “substantial but mere amendments” • “On the factor of changes in law and in facts, certain realities on ground cannot be blinked away. The urgent need to adjust certain provisions of the 1987 Constitution to enable the country to compete in the new millenium is given. The only point of contention is the mode to effect the change…”

5. Conclusions of SC • Present constitution is sovereign will of the people – 16,622,111 voted for it in 1987 • Sovereign approval included prescribed modes for amending or revising Constitution • “To allow today its cavalier change is to set adrift the Constitution in uncharted waters, to be tossed and turned by every dominant political group of the day.” • Lambino’s initiative is not “people’s choice” but “agenda of incumbent President”. Court must be wary of incantations of “people’s voice” or “sovereign will” • Primordial duty of Court is to defend and protect Constitution, its bible, the Court’s raison d’etre

6. Postscript to SC Decision (comments of OneVoice) • SC decision consistent with intent and deliberations of Constitutional Commission • SC decision criticized as “trying facts”. – Former Justice Vicente Mendoza – No. SC was not trying facts when it examined PI to determine if compliant with constitutional requirement (Sec. 2, Art. XVII) • On the other hand, Puno’s statement that need for charter change to compete in new millenium is a “given” and that only issue is mode for doing it, is the propaganda line of Arroyo administration. It is an economic and not a legal issue that is still unresolved in the charter change debate. Puno Opinion provides no supporting evidence for statement. Yet it is a premise for justifying PI.

B. Constituent Assembly Option (Plan B) • Issues on Con-ass – within gov’t coalition – who will be chief beneficiary of chacha? – constitutional issue – joint or separate vote? – still time for plebiscite before 2007elections? • Likely that Supreme Court will rule for separate vote as more consistent with the nature of a bicameral legislature. • Intent of Constitutional Commission – separate vote but draft provision was not adjusted when Concon voted 2322 for bicameral legislature

What Changes if con-ass? Based on Jaraula (J) and Pichay (P) versions… Commonalities: • both would weaken the powers of the Supreme Court • both give more powers to the PM than the Pres has under the 1987 Constitution (i.e. expanded power of appointment, commission on appointments abolished; PM can contract and guarantee foreign and domestic loan without Monetary Board) • interim parliament can constitute itself into con-ass and do anything, subject only to another plebiscite

What Changes? – cont’d Differences: • J: Pres is head of state, PM head of gov’t; P: No Pres, PM is head of state and of govt. • J: Federal system of govt is proposed to be established within 10 years from the ratification of the proposals: P: present unitary system of local govt and autonomous regions is maintained. • J: opens up the economy to foreigners, i.e., they may develop our natural resources, engage in insurance and advertising , own lands, public utilities, mass media and schools; P: maintains the Filipino-first provisions and Filipino ownership requirements of the 1987 Constitution • party-list system – P: same; J: subject to new law (party-list reps appointed rather than directly voted)

What Changes?....cont’d Differences: • P: changes the definition of our national territory by apparently excluding our claim over Sabah; does away with constitutional prohibitions on abortion, political dynasties, and the presence of nuclear weapons in the country; J: status quo • J: interim parliament to be set up immediately after the ratification of the proposals, but only until June 30, 2007 (but power to extend to later date); P: interim parliament to be convened in January 2008 after elections in Nov. 2007, and to last until June 30, 2010.

C. Constitutional convention option • Not likely favored by administration – - Con-con can have life and purpose of its own - Timing could be problematical for purposes of vested interests for parliamentary system. No 2007 elections key feature of plan - Long process could distract PGMA from addressing objective of economic legacy

D. Why charter change now? Revisiting Issues We are told by chacha advocates – • Philippines has not progressed in last 60 years and repeatedly undergo political instability. We have had presidential-bicameral system for same period. Therefore, presidential-bicameral system is main cause for our predicament. (“Let’s try something else even if we are not sure it will work.”) • Change in form of govt will change behavior of politicians • With shift to parliamentary-unicameral system: - “modernization” - political stability and efficient governance - economic progress with more FDI

Yet… • Current achievements (fiscal improvement, economic growth, improved credit rating, etc.) did not require charter change • New super-regions infrastructure program does not require charter change to implement. Neither do other programs under the Arroyo Medium-Term Phil. Development Program • Urgent concerns can all be addressed under present Constitution, i.e. health care, housing, education, peace and order, criminality, etc. • Preconditions for successful parliament, i.e. strong political parties, strong bureaucracy and credible electoral process, are not in place today.

Let us examine the arguments.. 1. 2. 3. 4.

Presidential vs. parliamentary – international context Bicameral vs unicameral legislature Lifting of economic “restrictions” Conclusions

1. Presidential to Parliamentary: International context Reforms experienced by democratic countries between 1962 and 1998: • Most had to do with the change of electoral rules (from majoritarian to proportional and vice-versa). • Only two countries changed their form of government: Cyprus (1970) and Sri Lanka (1978). Both of them shifted from parliamentary to presidential. (Persson, 2005)

Empirical findings on form of government – (i) On Corruption Results are ambiguous/conflicting • Persson/Tabellinini (2004): Evidence supports theoretical finding that accountability is stronger (i.e.corruption is less) in presidential than in parliamentary. But: only to a degree (relationship not “robust”) and depending on the quality of the democracy (result does not hold for “bad” democracies). • Lederman, et. al. (2005): Parliamentary systems associated with lower corruption. Shift from parliamentary to presidential leads to greater probability of more corruption: presidential system, as opposed to parliamentary - increased corruption by 0.8 points (robust).

On corruption … cont’d. • This supports theory that parliamentary systems allow for stronger and more immediate monitoring of executive by legislature because parliaments have the power of removal – although oversight capacity may be weakened when a single party dominates the legislature.

(ii) On democratic survival (vulnerability to military takeover) Stepan and Skach (1993)• parliamentary democracies had a rate of survival more than three times higher than that of presidential democracies; • presidential democracies were more than twice as likely as pure parliamentary democracies to experience a military coup; • not one presidential regime managed to survive as a democracy for ten consecutive years from 1980 to 1989, while 15 of the 41 parliamentary systems did.

However the SS 1993 study had serious methodological flaws: Mainwaring and Shugart, Haggard, Power and Gasiorowski (1997): • selection bias & spurious correlation (ignored other factors) • no evidence that constitutional type has any significant bearing on the success of Third World experiments in democracy between 1930 and 1995 • no statistically significant difference between breakdown rates of presidential and parliamentary • if longer period than 10 yrs is examined, opposite conclusion – presidential better survival rate

(iii) On Government Spending • Parliamentary (and proportional) democracies have larger government spending. Shift from parliamentary to presidential reduce the total size of government spending by about 5% of GDP in the long run; • Spending also grows faster in parliamentary forms, a feature present not only in national governments but in local governments as well. (PT2003, 2004, P 2005) • New majoritarian and presidential democracy cuts government consumption by almost 2% , while a new parliamentary democracy raises it considerably. The difference between the 2 forms of government is a highly significant 5% of GDP. (PT 2006)

(iv) On Structural Reforms (defined as openness, protection of property rights) • There is a large and significant correlation between parliamentary proportional democracy and structural reforms (PT 2004,P2005) • Significant correlation between parliamentary systems and openness (Lederman, 2005)

(v) On Economic Performance • There is no significant effect of parliamentary system on economic performance, as measured by per capita GDP, Total Factor Productivity, and labor productivity. (P 2005) • A new parliamentary democracy grows 1.5% less than a new presidential democracy (PT 2006)

IN SUM, evidence on the shift from Pres to Parliamentary i.

On Corruption: There is conflicting empirical evidence as to which form of government will lead to lower corruption ii. On Democratic Survival: There is conflicting evidence as to whether constitutional type has any significant bearing on the survival of democracies. iii. On Government Spending: The evidence is pretty strong that presidential regimes have smaller government (government spending as a percentage of GDP) than parliamentary regimes.

IN SUM, on the shift from Pres to Parliamentary - (cont’d) iv. On structural reforms (openness, protection of property rights): A parliamentary system is systematically correlated with structural policies. HOWEVER – a parliamentary system has no significant effect on economic performance v. On economic performance: A new presidential system grows faster than a new parliamentary system Therefore, no conclusive evidence for claimed advantages of parliamentary system. Moreover, would worsen concentration of power today. Will behavior of politicians improve by giving them more power?

2. Bicameral to unicameral We are told by cha cha advocates that: • • • •

Senate is cause of gridlock Faster legislation will benefit people Senate is unnecessary expense Shift to unicameral is really abolition of BOTH senate and house and creation of new parliament

However, …. True that shift gets rid of an institution (Senate) that many people dislike, but: • House, which people equally dislike, will still around with same people dominating interim parliament with more power than before • Senate as part of constitutional check and balance system will disappear • Speedy legislation and decisions can also mean speedy mistakes • Gridlock can also happen in unicameral parliament among different power blocks

3. Lifting of Economic Restrictions We are told by cha cha advocates that: Restrictions on foreign ownership have closed the door (“binding constraint”) on Foreign Direct Investment (FDI); investment climate is stifled. Therefore: – There is lost employment and growth opportunities – These provisions are anti-poor

However, some empirical findings: • Macro-level data shows association between foreign direct investment (FDI) and higher levels of income, but do not establish causality. Also, no generalization can be made about link between the activities of foreign firms and income distribution. • Historically, FDI played only a minor role in the growth of most high-performing Asian economies – 1967-1986 Countries where FDI >5% of GDI were HK, Malaysia, and Singapore. Countries where FDI <2% of GDI wereTaiwan, Korea, China and Japan. – More recently: Except for China and Singapore, FDI in East and SE Asia comprise<10% of GDI.

Some Empirical Findings… Factors Affecting Investment (per World Investment Report and surveys of investors themselves) • Adequate infrastructure • Skill levels (human capital) • Quality of the general regulatory framework • Clear Rules of the Game no uncertainty • Fiscal determination

In our experience… • Ownership of Land: Leases up to 75 years (like China) on land; condominium laws on housing • Foreign investors appear happy with: – “control” with less than 40% of common stock not unusual; “super-majority” requirements on key provisions sufficiently protects foreign minority – Liberal interpretation of “total capital” – Redefinition of boundaries of an industry – Innovative financial instruments (gdr)

IN SUM, on the lifting of restrictions 1. The claim that economic provisions of constitution have closed the door to FDI are not borne out by facts – addressed by liberal interpretation, or by redefinition through legislation, or the use of creative financial and other instruments. 2. Amending the constitution is not likely to open any new doors to FDI because for all intents and purposes, they are already open. 3. Amending the constitution will not bring in FDI unless more important factors, (see previous slide) affecting FDI are addressed

IN OTHER WORDS: Wrong Diagnosis • The diagnosis of chacha advocates that present Constitution is obstacle to modernization, political stability and economic growth - leads to wrong solutions, i.e. if Constitution (presidential-bicameral and economic provisions) is not the problem, why the rush to change it? • Rather, urgent needs of people can all be addressed under present Constitution. Implement provisions FULLY, especially social justice provisions and electoral reform • Political instability and divisiveness is exacerbated by push for charter change; relative calm with decision of SC

Where are we going?

• Motion for Reconsideration to SC likely to fail • Con-ass running out of time and will probably be struck down by SC. • Concon not favored for now by administration • Scheduled elections in 2007 will probably take place • Administration “hubris” could change political situation

What we want to happen.. • Administration abandons chacha; focuses on social reform and economy. Collective effort to restore trustworthiness of democratic institutions • Electoral reform, i.e. automation program, revamp of Comelec, appointment of one more good commissioner, reversal of Ombudsman decision on Mega-Pacific case • Massive voter education program and advocacy better candidates in 2007 both administration and opposition • Results and consequences of 2007 elections accepted as indirect referendum - final resolution of political issue on presidency • After 2007 elections – education campaign and national debate on need for any charter change and, if necessary, a constitutional convention.

If we speak with one voice, continue to persevere through the challenges and act together…

We can be part of the solution…. Thank you.