Corporate Watch

Is there an Imperial Manila? It sounds traitorous to call Manila “Imperial,” as if Manila were not Filipino but a state apart, like the foreign imperial colonizers that Filipinos — united as a people — fought against to win independence and recognition as one country and one nation.
Have we not purged ourselves of the factionalism and regionalism that almost thwarted the revolutionary fight for independence from Spain in 1898? We think we have cleansed ourselves of that, in 120 years of unified democratic self-governance. Noticeably, there is now much less of regional groupings and social identification as Visayan, Tagalog, Bicolano, Cebuano, Ilokano, etc., — and the more ready declaration is “I am Filipino.” That almost all Filipinos now speak the national language above the 185 languages of the Philippines identified in the Ethnologue (Languages of the World 18th ed., 2015) says we are a united people.
This derogatory name “Imperial Manila” is unfairly divisive at this time, when the country is just rising in the socio-political and economic world, at last to stand shoulder-to-shoulder with other developing countries — after being called “The sick man of Asia” for the excessive foreign debts that fed the corruption in the 14 years of the Ferdinand Marcos dictatorship. It is painfully embarrassing that the pejorative title on the country’s political and economic center, Manila, should be inflicted upon it by the leader of the country — voted in as president by 16 million voters (29.4% of registered voters and 14.6% of all Filipinos).
“It (the current system) is an excuse for them (elitist politicians) to hang on to power in Imperial Manila. They have always been there in one single office, running the Philippines,” Rodrigo Duterte said in a speech during the election campaign (Agence France-Presse June 28, 2016). He promised to end the domination of “Imperial Manila” with a radical shift to federalism that he says is vital to fighting poverty and ending a deadly Muslim separatist insurgency (Ibid.).
After much to-and-fro on whether there shall be a Constitutional Convention of elected delegates as after the 1986 EDSA People Power Revolution, or a Constitutional Assembly convened from among the current legislators, President Duterte instead formed a 22-member Consultative Committee (ConCom) to prepare a draft federal constitution (ABS-CBN News Feb 14, 2018). Former Chief Justice Reynato Puno, who penned the Freedom Constitution of the revolutionary government of President Corazon Aquino in February 1986 chairs the ConCom. The one other prominent member of the ConCom is former Senate President Aquilino Pimentel Jr., who was Local Government Secretary in Corazon Aquino’s presidency, and chief author of the Local Government Code of 1991. When asked what’s wrong with the 1986 Constitution that it has now to be radically changed, both professed that proliferate political dynasties must be dismantled as they and the other ConCom members also firmly believe that federalism will decentralize power from “Imperial Manila” (Ibid.).
In 144 days, the Concom submitted the proposed federal constitution to President Duterte ( July 9, 2018). The day after, the President approved the ConCom’s draft, except for his (Duterte’s) request that the transitory provisions should provide for an elected president during transition (BusinessWorld July 10, 2018).
Duterte is expected to endorse the draft to Congress during his third State of the Nation Address on July 23. Presidential spokesperson Harry Roque said that the submission was a significant step in realizing Duterte’s goal of a shift to federalism ( July 9, 2018).
Is it federalism at all costs?
Even former Senate President Juan Ponce Enrile who was released from detention for a pending plunder case, and who agrees with President Duterte on most other issues, said “the draft federal charter submitted by the Consultative Committee that was later approved by President Rodrigo Duterte is too big of a government…the cost of federalism would be too much for the Filipino people to bear…It will burden the people too much with taxes, and the economy I don’t think it can shoulder the cost of this huge government that is being proposed” (gmanewsonline July 13, 2018).
Benjamin R. Punongbayan, founder of Punongbayan & Araullo, one of the Philippines’ leading auditing firms analyzed “the current national taxes; the existing national debt, its refinancing, and greenfield borrowings; and the transfer of national assets to see how all these fall into place in federalism’s objective of giving the states freedom of action and of moving them away from the domineering authority of Imperial Manila” (“Federalism, Money, and Taxes,” BusinessWorld, Part 1: May 28; and Part 2: May 30, 2018).
Punongbayan brought out the predicament of businesses, specially businesses operating nationwide, in “establishing how a business entity’s revenue is recognized for each state and how the entity’s cost and expenses are allocated among its operations in the various states” (Ibid.).
For example: “where sales are initiated in one state and concluded when the sold goods are delivered to a user located in another state, there must be a clear rule as to which state the sales should be reported,” he said. While existing accounting standards may suggest treatments, these standards are entity-focused and not geography-focused. Recognition of income and expenses by businesses will be confused, under a federalist setup and the by-passing of “Imperial Manila” (as a central clearing house). Therefore, an applicable tax rule must be established to make the treatment clear, Punongbayan says. Income taxes, customs duties, value-added tax (VAT) and even the gross receipts taxes will have to be overhauled (Ibid.)
“There is really no need for federalism,” Punongbayan says. “The present unitary government can revise the national tax allocations such that it retains only what the national government needs and the balance allocated to the provinces on a fair basis” (Ibid.). Funny, but in the ConCom draft, taxes and fees to be collected by Federal Regions (Article XII — Fiscal Powers and Financial Administration) have been whittled down from earlier generous entitlements to only 11 local taxes already collected under existing Local Government administration rules. There’s no avoiding Imperial Manila.
I told you so, former Chief Justice Hilario Davide says. “All such goals and objectives can adequately and sufficiently be accomplished by merely, but effectively and efficiently implementing the relevant provisions of our present 1987 Constitution for strong local autonomy and decentralization” (BusinessWorld Nov. 22, 2017).
“A shift to federalism is a lethal experiment. A fatal leap. A plunge to death. A leap to hell,” Davide says.
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.