3 Readings in Philippine History 62

UNIT 4: SOCIAL, POLITICAL, ECONOMIC, AND CULTURAL

ISSUES IN PHILIPPINE HISTORY

4.0 Intended Learning Outcomes

a. Effectively communicate using various techniques and genres, historical
analysis of a particular event or issue that could help others understand the
chosen topic.
b. Propose recommendations or solutions to present day problems based on their
understanding of root causes, and their anticipation of future scenarios.
c. Display the importance of having the ability to work in a multi-disciplinary
team and contribute to a group endeavor.

4.1. Introduction

This chapter is dedicated to enduring issues in Philippine society, which history

could lend a hand in understanding, and hopefully, proposing solutions. These topics
include the mandated discussion on the Philippine constitution, policies on agrarian
reform, and taxation. It is hoped that these discussions will help us propose
recommendations or solutions to present-day problems based on our understanding
of root causes and how we anticipate future scenarios in the Philippine setting.
The lessons in this unit includes the history and development of the Philippine
Constitutions, the Agrarian Reform Landownership in the Philippine, under Spain
Land-ownership, under American Regime, Post-war Intervention Towards Agrarian
Reform Agrarian, Reform under Marcos, Post-1986 Agrarian Reform, CARPER, and
the Future of Agrarian Reform.
Moreover, the Evolution of Philippine Taxation, Taxation in Pre-Hispanic
Philippines, Taxation under the Spaniards , Taxation under the Americans, Taxation
under the Commonwealth, Fiscal Policy from 1946-Present, and the Basics of TRAIN
Law.
The activities incorporated in this learning material will help the students
develop their ability to evaluate credible primary sources for their authenticity and
provenance and further understand the role of history in the development of societies
and nation-states.
 3 Readings in Philippine History 63

4.2. Discussion and Activities

On this Unit, we will be discussing the social, political, cultural, and economic issues
in the country. We will begin by discussing the evolution of the Philippine Constitution by
closely looking at its development through the different stages of our history.

In your previous lessons as a student, perhaps you have already learned that the
Constitution of a nation-state is the legal framework in which all laws operate based on the
provisions it provides.

Before we begin with our discussion, I would like you to have a heartfelt
engagement first with the Preamble of the 1987 Constitution, where our democracy
operates.

A preamble is not technically pert of the Constitution but it lays the foundation and
gives an overview of the totality of the provisions of the Constitution. It came from the
Greek word “preambulare” meaning ‘to walk before’.

But before we proceed to our next lesson, I want you first to do an activity as shown
in the Exercise box below.

Exercise # 1 – Unit 4
Direction: Write your answer in a short bond paper (or Yellow paper). Write “Work
Sheet for Exercise #1 – Unit 4” on top of the paper. Indicate also your name, course, year
level, and section. You may use extra paper if necessary.

1. Translate
\\ in to Waray the Preamble of the 1987 Constitution.
\
“We, the sovereign Filipino people, imploring the aid of Almighty God, in order to build a
just and humane society and establish a Government that shall embody our ideals and
aspirations, promote the common good, conserve and develop our patrimony, and secure to
ourselves and our posterity the blessings of independence and democracy under the rule of
law and a regime of truth, justice, freedom, love, equality, and peace, do ordain and
promulgate this Constitution.

Rubric
Creativity (Language use and appropriateness) 10
Technicality (Translation skills) 10
Total 20 points
 3 Readings in Philippine History 64

Evolution of the Philippine Constitution

The constitution is defined as a set of fundamental principles or established
precedents according to which a state or other organization is governed, thus, the word
itself means to be a part of a whole, the coming together of distinct entities into one group,
with the same principles and ideals. These principles define the nature and extent of
government.
The Constitution of the Philippines, the supreme law of the Republic of the
Philippines, has been in effect since 1987. There were only three other constitutions that
have effectively governed the country: the 1935 Commonwealth Constitution, the 1973
Constitution, and the 1986 Freedom Constitution. However, there were earlier constitutions
attempted by Filipinos in the struggle to break free from the colonial yoke.

The 1897: Constitution of Biak-na-Bato

The Constitution of Biak-na-Bato was the provisionary Constitution of the Philippine
Republic during the Philippine Revolution, and was promulgated by the Philippine
Revolutionary Government on 1 November 1897. The constitution, borrowed from Cuba,
was written by Isabelo Artacho and Félix Ferrer in Spanish, and later on, translated into
Tagalog.
The organs of the government under the Constitution were: (1) the Supreme
Council, which was vested with the power of the Republic, headed by the president and
four department secretaries: the interior, foreign affairs, treasury, and war; (2) the Consejo
Supremo de Gracia Y Justicia (Supreme Council of Grace and Justice), which was given the
authority to make decisions and affirm or disprove the sentences rendered by other courts
and to dictate rules for the administration of justice; and (3) the Asamblea de
Representantes (Assembly of Representatives), which was to be convened after the
revolution to create a new Constitution and to elect a new Council of Government and
Representatives of the people.
The Constitution of Biak-na-Bato was never fully implemented, since a truce, the
Pact of Biak-na-Bato, was signed between the Spanish and the Philippine Revolutionary
Army.
Primary Source: Preamble of the Biak-na-Bato Constitution
The separation of the Philippines from the Spanish monarchy and their formation
into an independent state with its own government called the Philippine Republic
has been the end sought by the Revolution in the existing war, begun on the 24th of
August, 1896; and, therefore, in its name and by the power delegated by the Filipino
people, interpreting faithfully their desires and ambitions, we the representatives of
 3 Readings in Philippine History 65

the Revolution, in a meeting at Biak-na-bato, November 1, 1897, unanimously

adopted the following articles for the constitution of the State.

The 1899: Malolos Constitution

After the signing of the truce, the Filipino revolutionary leaders accepted g payment
from Spain and went to exile in Hong Kong. Upon the defeat of the spanish to the
Americans in the Battle of Manila Bay on 1 May 1898, the United States Navy transported
Aguinaldo back to the Philippines. The newly reformed Philippine revolutionary forces
reverted to the control of Aguinaldo, and the Philippine Declaration of Independence was
issued on 12 June 1898, together with several decrees that formed the First Philippine
Republic. The Malolos Congress was elected, which selected a commission to draw up a
draft constitution on 17 September 1898, which was composed of wealthy and educated
men.
The document they came up with, approved by the Congress on 29 November 1898,
and promulgated by Aguinaldo on 21 January 1899, was titled "The Political Constitution of
1899" and written in Spanish. The constitution has 39 articles divided into 14 titles, with
eight articles of transitory provisions, and a final additional article. The document was
patterned after the Spanish Constitution of 1812, with influences from the charters of
Belgium, Mexico, Brazil, Nicaragua, Costa Rica, and Guatemala, and the French
Constitution of 1793. According to Felipe Calderon, main author of the constitution, these
countries were studied because they shared similar social, political, ethnological, and
governance conditions with the Philippines. Prior constitutional projects in the Philippines
also influenced the Malolos Constitution, namely, the Kartilya and the Sanggunian
Hukuman, the charter of laws and morals of the Katipunan written by Emilio Jacinto in
1896; the Biak-na-Bato Constitution of 1897 planned by Isabelo Artacho; Mabini's
Constitutional Program of the Philippine Republic Of 1898; the provisional constitution of
Mariano Ponce in 1898 that followed the Spanish constitutions; and the autonomy projects
of Paterno in 1898.
Primary Source: Preamble of the Political Constitution of 1899
We, the Representatives of the Filipino People, lawfully convened, in order to
establish justice, provide for common defense, promote the general welfare and
insure the benefits of liberty, imploring the aid of the Sovereign Legislator of the
Universe for the attainment of these ends, have voted, decreed, and sanctioned the
following political constitution.
As a direct challenge to colonial authorities of the Spanish empire, the sovereignty
was retroverted to the people, a legal principle underlying the Philippine Revolution. The
 3 Readings in Philippine History 66

people delegated governmental functions to civil servants while they retained actual
sovereignty. The 27 articles of Title IV detail the natural rights and popular sovereignty of
Filipinos, the enumeration of which does not imply the prohibition of any other rights not
expressly stated. Title Ill, Article V also declares that the State recognizes the freedom and
equality of all beliefs, as well as the separation of Church and State. These are direct
reactions to features of the Spanish government in the Philippines, where the friars were
dominant agents of the state.
The form of government, according to Title Il, Article 4 is to be popular,
representative, alternative, and responsible, and shall exercise three distinct powers—
legislative, executive, and judicial. The legislative power was vested in a unicameral body
called the Assembly of Representatives, members of which are elected for terms of four
years. Secretaries of the government were given seats in the assembly, which meet annually
for a period of at least three months. Bills could be introduced either by the president or by
a member of the assembly. Some powers not legislative in nature were also given to the
body, such as the right to select its own officers, right of censure and interpellation, and the
right of impeaching the president, cabinet members, the chief justice of the Supreme Court,
and the solicitor-general. A permanent commission of seven, elected by the assembly, and
granted specific powers by the constitution, was to sit during the intervals between sessions
of the assembly.
Executive power was vested in the president, and elected by a constituent assembly
of the Assembly of Representatives and special representatives. The president will serve a
term of four years without re-election. There was no vice president, and in case of a
vacancy, a president was to be selected by the 'constituent assembly.
The 1899 Malolos Constitution was never enforced due to the ongoing war. The
Philippines was effectively a territory of the United States upon the signing of the Treaty of
Paris between Spain and the United States, transferring sovereignty of the Philippines on 10
December 1898.

The 1935: The Commonwealth Constitution

It is worth mentioning that after the Treaty of Paris, the Philippines subject to the
power of the United States of America, effectively the colonizers of the country. From 1898
to 1901, the Philippines would be placed under a military government until a civil
government would be put into place.
Two acts of the United States Congress were passed that may be considered to have
qualities of constitutionality. First was the Philippine Organic Act of 1902, the first organic
law for the Philippine Islands that provided for the creation of a popularly elected
 3 Readings in Philippine History 67

Philippine Assembly. The act specified that legislative power would be vested in a
bicameral legislature composed of the Philippine Commission as the upper house and the
Philippine Assembly as lower house. Key provisions of the act included a bill of rights for
Filipinos and the appointment of two non-voting Filipino Resident commissioners of the
Philippines as representative to the United States House of Representatives. The second act
that functioned as a constitution was the Philippine Autonomy Act of 1916, commonly
referred to as "Jones Law," which modified the structure of the Philippine government
through the removal of the Philippine Commission, replacing it with a Senate that served
as the upper house and its members elected by the Filipino voters, the first truly elected
national legislature. It was also this Act that explicitly declared the purpose of the United
States to end their sovereignty over the Philippines and recognize Philippine independence
as soon as a stable government can be established.
In 1932, with the efforts of the Filipino independence mission led by Sergio Osmeña
and Manuel Roxas, the United States Congress passed the Hare-Hawes-Cutting Act with
the promise of granting Filipinos' independence. The bill was opposed by then Senate
President Manuel L. Quezon and consequently, rejected by the Philippine Senate.
By 1934, another law, the Tydings-McDuffie Act, also known as the Philippine
Independence Act, was passed by the United States Congress that provided authority and
defined mechanisms for the establishment of a formal constitution by a constitutional
convention. The members of the convention were elected and held their first meeting on 30
July 1934, with Claro M. Recto unanimously elected as president.
The constitution was crafted to meet the approval of the United States government,
and to ensure that the United States would live up to its Promise to grant independence to
the Philippines.
Primary Source: Preamble of the 1935 Commonwealth
The Filipino people, imploring the aid of Divine Providence, in order to establish a
government that shall embody their ideals, conserve and develop the patrimony of
the nation, promote the general welfare, and secure to themselves and their posterity
the blessings of independence under a regime of justice, liberty, and democracy, do
ordain and promulgate this constitution.
The constitution created the Commonwealth of the Philippines, an administrative
body that governed the Philippines from 1935 to 1946. It is a transitional administration
prepare the country toward its full achievement of independence. It originally provided for
a unicameral National Assembly with a president and vice president elected to a six-year
term without re-election. It was amended in 1940 to have a bicameral Congress composed
of a Senate and a House of Representatives, as well as the creation of an independent
 3 Readings in Philippine History 68

electoral commission, and limited the term of office of the president and vice president to
four years, with one re-election. Rights to suffrage were originally afforded to male citizens
of the Philippines who are twenty-one years of age or over and are able to read and write;
this was later on extended to women within two years after the adoption of the
constitution.
While the dominant influence in the constitution was American, it ålso bears traces
of the Malolos Constitution, the German, Spanish, and Mexican constitutions, constitutions
of several South American countries, and the unwritten English Constitution.
The draft of the constitution was approved by the constitutional convention on 8
February 1935, and ratified by then U.S. President Franklin B. Roosevelt on 25 March 1935.
Elections were held in September 1935 and Manuel L. Quezon was elected President of the
Commonwealth.
The Commonwealth was briefly interrupted by the events of the World War Il, with
the Japanese occupying the Philippines. Afterward, upon liberation, the Philippines was
declared an independent republic on 4 July 1946.

The 1973: Constitutional Authoritarianism

In 1965, Ferdinand E. Marcos was elected president, and in 1967, Philippine
Congress passed a resolution calling for a constitutional convention to change the 1935
Constitution. Marcos won the re-election in 1969, in a bid boosted by campaign
overspending and use of government funds. Elections of the delegates to the constitutional
convention were held on 20 November 1970, and the convention began formally on 1 June
1971, with former President Carlos P. Garcia being elected as convention president.
Unfortunately, he died, and was succeeded by another former president, Diosdado
Macapagal.
Before the convention finished its work, Martial Law was declared. Marcos cited a
growing communist insurgency as reason for the Martial Law, which was provided for in
the 1935 Constitution. Some delegates of the ongoing constitutional convention were placed
behind bars and others went into hiding or were voluntary exiled. With Marcos as dictator,
the direction of the convention turned, with accounts that the president himself dictated
some provisions of the constitution, manipulating the document to be able to hold on to
power for as long as he could. On 29 November 1972, the convention approved its
proposed constitution.
The constitution was supposed to introduce a parliamentary-style government,
where legislative power was vested in a unicameral National Assembly, with members
being elected to a six-year term. The president was to be elected as the symbolic and
 3 Readings in Philippine History 69

ceremonial head of state chosen from the members of the National Assembly. The president
would serve a six-year term and could be re-elected to an unlimited number of terms.
Executive power was relegated to the Prime Minister, who was also the head of
government and Commander-in-Chief of the Armed Forces who was also to be elected
from the National Assembly.
President Marcos issued Presidential Decree No. 73 setting the date of the plebiscite
to ratify or reject the proposed constitution on 30 November 1973. This plebiscite was
postponed later on since Marcos feared that the public might vote to reject the constitution.
Instead of a plebiscite, Citizen Assemblies were held, from 10—15 January 1973, where the
citizens coming together and voting by hand, decided on whether to ratify the constitution,
suspend the convening of the Interim National Assembly, continue Martial Law, or place a
moratorium on elections for a period of at least several years. The President, on 17 January
1973, issued a proclamation announcing that the proposed constitution had been ratified by
an overwhelming vote of the members of the highly irregular Citizen Assemblies.
The constitution was amended several times. In 1976, Citizen Assemblies, once
again, decided to allow the continuation of Martial Law, as well as approved the
amendments: an Interim Batasang Pambansa to substitute for the Interim National
Assembly, the president to also become the Prime Minister and continue to exercise
legislative powers until Martial Law was lifted and authorized the President to legislate on
his own on an emergency basis, An overwhelming majority would ratify further
amendments succeedingly. In 1980, the retirement age of members of the judiciary was
extended to 70 years. In 1981, the parliamentary system was formally modified to a French-
style, semi-presidential system Where executive power was restored to the president, who
wag, once again, to be directly elected; an Executive Committee was to be created,
composed of the Prime Minister and 14 others, that served as the president's Cabinet; and
some electoral reforms were instituted. In 1984, the Executive Committee was abolished
and the position of the vice president was restored.
After all the amendments introduced, the 1973 Constitution was merely a way for
the President to keep executive powers, abolish the Senate, and by any means, never acted
as a parliamentary system, instead functioned as an authoritarian presidential system, with
all the real power concentrated in the hands of the president, with the backing of the
constitution.
The situation in the 1980s had been very turbulent. As Marcos amassed power,
discontent has also been burgeoning. The tide turned swiftly when in August 1983, Benigno
Aquino Jr., opposition leader and regarded as the most credible alternative to President
Marcos, was assassinated while under military escort immediately after his return from
 3 Readings in Philippine History 70

exile in the United States. There was widespread suspicion that the orders to assassinate
Aquino came from the top levels of the government and the military. This event caused the
coming together of the non-violent opposition against the Marcos authoritarian regime.
Marcos was then forced to hold "snap" elections a year early, and said elections were
marred by widespread fraud. Marcos declared himself winner despite international
condemnation and nationwide protests. A small group of military rebels attempted to stage
a coup, but failed; however, this triggered what came to be known as the EDSA People
Power Revolution of 1986, as people from all walks of life spilled onto the streets. Under
pressure from the United States of America, who used to support Marcos and his Martial
Law, the Marcos family fled into exile. His opponent in the snap elections, Benigno Aquino
Jr.'s widow, Corazon Aquino, was installed as president on 25 February 1986.

The 1987: Constitution After Martial Law

President Corazon Aquino's government had three options regarding the
constitution: revert to the 1935 Constitution, retain the 1973 Constitution and be granted the
power to make reforms, or start anew and break from the "vestiges of a disgraced
dictatorship." They decided to make a new constitution that, according to the president
herself, should be "truly reflective of the aspirations and ideals of the Filipino people."
In March 1986, President Aquino proclaimed a transitional constitution to last for a
year while a Constitutional Commission drafted a permanent constitution. This transitional
constitution, called the Freedom Constitution, maintained many provisions of the old one,
including in rewritten form the presidential right to rule by decree. In 1986, a constitutional
convention was created, composed of 48 members appointed by President Aquino from
varied backgrounds and representations. The convention drew up a permanent
constitution, largely restoring the setup abolished by Marcos in 1972, but with new ways to
keep the president in check, a reaction to the experience of Marcos's rule. The new
constitution was officially adopted on 2 February 1987.
The Constitution begins with a preamble and eighteen self-contained articles. It
established the Philippines as a "democratic republican State" where "sovereignty resides in
the people and all government authority emanates from them." It allocates governmental
powers among the executive, legislative, and judicial branches of the government.
The Executive branch is headed by the president and his cabinet, whom he appoints.
The president is the head of the state and the chief executive, but his power is limited by
significant checks from the two other co-equal branches of government, especially during
times of emergency. This is put in place to safeguard the country from the experience of
martial law despotism during the presidency of Marcos. In cases of national emergency, the
 3 Readings in Philippine History 71

president may still declare martial law, but not longer than a period of sixty days.
Congress, through a majority vote, can revoke this decision, or extend it for a period that
they determine. The Supreme Court may also review the declaration of martial law and
decide if there were sufficient justifying facts for the act. The president and the vice
president are elected at large by a direct vote, serving a single six-year term.
The legislative power resides in a Congress divided into two Houses: the Senate and
the House of Representatives. The 24 senators are elected at large by popular vote, and can
serve no more than two consecutive six-year terms. The House is composed of district
representatives representing a particular geographic area and makes up around 80% of the
total number of representatives. There are 234 legislative districts in the Philippines that
elect their representatives to serve three-year terms. The 1987 Constitution created a party-
list system to provide spaces for the participation of under-represented community sectors
or groups. Party-list representatives may fill up not more than 20% of the seats in the
House.
Aside from the exclusive power of legislation, Congress may also declare war,
through a two-thirds vote in both upper and lower houses. The power of legislation,
however, is also subject to an executive check, as the president retains the power to veto or
stop a bill from becoming a law. Congress may only override this power with a two-thirds
vote in both houses.
The Philippine Court system is vested with the power of the judiciary, and is
composed of a Supreme Court and lower courts as created by law. The Supreme Court is a
15-member court appointed by the president without the need to be confirmed by
Congress. The appointment the president makes, however, is limited to a list of nominees
provided by a constitutionally specified Judicial and Bar Council. The Supreme Court
Justices may hear, on appeal, any cases dealing with the constitutionality of any law, treaty,
or decree of the government, cases where questions of jurisdiction or judicial error are
concerned, or cases where the penalty is sufficiently grave. It may also exercise original
jurisdiction over cases involving government or international officials. The Supreme Court
is also in charge of overseeing the functioning and administration of the lower courts and
their personnel.
The Constitution also established three independent Constitutional Commissions,
namely, the Civil Service Commission, a central agency in charge of government personnel;
the Commission on Elections, mandated to enforce and administer all election laws and
regulations; and the Commission on Audit, which examines all funds, transactions, and
property accounts of the government and its agencies.
 3 Readings in Philippine History 72

To further promote the ethical and lawful conduct of the government, the Office of
the Ombudsman was created to investigate complaints that pertain to public corruption,
unlawful behavior of public officials, and other public misconduct. The Ombudsman can
charge public officials before the Sandiganbayan, a special court created for this purpose.

Amending the Constitution

Changing the Constitution is a perennial issue that crops up, and terms such as
"Cha-Cha," "Con-Ass," and "Con-Con" are regularly thrown around. Article XVII of the
1987 Constitution provides for three ways by which the Constitution can be changed.
Congress (House of Representatives and the Senate) may convene as a Constituent
Assembly (or Con-Ass) to propose amendments to the Constitution. It is not clear,
however, if Congress is to vote as a single body separately. How the Congress convenes
Con-ASS is also not provided for in the Constitution.
Another method is through the Constitutional Convention (or Con-Con), where
Congress, upon a vote of two-thirds of all its members, calls for constitutional convention.
They may also submit to the electorate the question of calling n convention through a
majority vote of all its members. In a Con-Con, delegates will propose amendments or
revisions to the constitution, not Congress. The 1987 Constitution does not provide for a
method by which delegates to the Con-Con are chosen.
The third method is called the "People's Initiative" (or PI). In thig method,
amendments to the Constitution may be proposed by the people upon a petition Of at least
12% of the total number of registered voters. All legislative districts must be represented by
at least 12% of the registered votes therein. No amendment is allowed more than once
every five years since a successful PI. The 1987 Constitution directs the Congress to enact a
law to implement provisions of the PI, which has not yet materialized.
Amendments or revision to the constitution shall be valid only when ratified by a
majority of the votes cast in a national referendum.
Only the House of Representatives can initiate the impeachment of the president,
members of the Supreme Court, and other constitutionally protected public officials such as
the Ombudsman. The Senate will then try the impeachment case. This is another safeguard
to promote moral and ethical conduct in the government.
Attempts to Amend or Change the 1987 Constitution
The 1987 Constitution provided for three methods by which the Constitution can be
amended, all requiring ratification by a majority vote in a national referendum. These
methods were Constituent Assembly, Constitutional Convention, and People's Initiative.
 3 Readings in Philippine History 73

Using these modes, there were efforts to amend or change the 1987 Constitution, starting
with the presidency of Fidel V. Ramos who succeeded Corazon Aquino. The first attempt
was in 1995, when then Secretary of National Security Council Jose Almonte drafted a
constitution, but it was exposed to the media and it never prospered. The second effort
happened in 1997, when a group called PIRMA hoped to gather signatures from voters to
change the constitution through a people's initiative. Many were against this, including
then Senator Miriam Defensor-Santingo, who brought the issue to court and won—with the
Supreme Court judging that a people's initiative cannot push through without an enabling
law.
The succeeding president, Joseph Ejercito Estrada, formed a study commission to
investigate the issues surrounding charter change fOCUSing on the economic and judiciary
provisions of the constitution. This effort was also blocked by different entities. After
President Estrada was replaced by another People Power and succeeded by his Vice
President, Gloria Macapagal. Arroyo, then House Speaker Jose de Venecia endorsed
constitutional Change through a Constituent Assembly, which entails a two-thirds vote of
the House to propose amendments or revision to the Constitution. This initiative was also
not successful since the term of President Arroyo was mired in controversy and scandal,
including the possibility of Arroyo extending her term as president, which the Constitution
does not allow.
The administration of the succeeding President Benigno Aquino Ill had no marked
interest in charter change, except those emanating from different members of Congress,
including the Speaker of the House, Feliciano Belmonte Jr., who attempted to introduce
amendments to the Constitution that concern economic provisions that aim toward
liberalization. This effort did not see the light of day.

Federalism in the Philippines was supported by President Duterte in the 2016

presidential elections, saying that it will evenly distribute wealth in the Philippines instead
of concentrating it in Manila, the capital of the country. As a form of government, a central
governing authority and constituent political units constitutionally share sovereignty.
Applied to the Philippines, the country will be broken into autonomous regions. Each
region will be further divided into local government units. The regions will have the
primary responsibility of industry development, public safety and instruction, education,
healthcare, transportation, and many more. Each region will also take charge of their own
finances, plans for development, and laws exclusive to their area. The national government,
on the other hand, will only handle matters of national interest such as foreign policy and
defense, among others. In this system, it is possible for the central government and the
regions to share certain powers.
 3 Readings in Philippine History 74

Our current system is that of a unitary form, where administrative powers and
resources are concentrated in the national government. Mayors and governors would have
to rely on allocations provided to them through a proposed budget that also by national
government, a system prone to abuse.
There are many pros to a federal form of government. Each region may custom fit
solutions to problems brought about by their di8tinct geographic, cultural, social, and
economic contexts. Regions also have more power over their finances, since they handle
majority of their income and only contributes to a small portion to the national
government. They can choose to directly fund their own development projects without
asking for the national government's go signal. A federal system could also promote
specialization, since the national government could focus on nationwide concerns while
regional governments can take care of administrative issues.
A federal form of government could also solve a lot of decade-old problems of the
country. It may be a solution to the conflict in Mindanao, since a separate Bangsamoro
region could be established for Muslim Mindanao. It could address the inequality in wealth
distribution and lessen the dependence to Metro Manila, since regions can proceed with
what they have to do without needing to consider the situation in the capital.
There are also cons to federalism. While it creates competition among regions, it
could also be a challenge to achieving unity in the country. There might be regions which
are not ready to govern themselves, or have lesser resources, which could mire them
deeper in poverty and make development uneven in the country. There could be issues
regarding overlaps in jurisdiction, since ambiguities may arise where national ends and
regional begins, or vice versa. As a proposed solution to the conflict in Mindanao, we must
also remember that the Autonomous Region in Muslim Mindanao (ARMM) has already
been created, and the conflict still continues. Federalism may not be enough for those who
clamor separation.
Any effort to shift the system of government also entails costs, and it would not be
cheap. It would cost billions to dismantle the current system and would take a long time
before the system normalizes and irons out its kinks.
In an upsurge of populism, President Rodrigo Duterte won the 2016 Presidential
elections in a campaign centering on law and order, proposing to reduce crime by killing
tens of thousands of criminals. He is also a known advocate of federalism, a compound
mode of government combining a central or federal government with regional
governments in a single political system. This advocacy is in part an influence of his
background, being a local leader in Mindanao that has been mired in poverty and violence
 3 Readings in Philippine History 75

for decades. On 7 December 2016, President Duterte signed an executive order creating a
consultative committee to review the 1987 Constitution.

Policies on Agrarian Reform

Agrarian reform is essentially the rectification of the whole system of agriculture, an
important aspect of the Philippine economy because nearly half of the population is
employed in the agricultural sector, and most citizens live in rural areas. Agrarian reform is
centered on the relationship between production and the distribution of land among
farmers. It is also focused on the political and economic class character of the relations of
production and distribution in farming and related enterprises, and how these connect to
the wider class structure. Through genuine and comprehensive agrarian reform, the
Philippines would be 'able to gain more from its agricultural potential and uplift the
Filipinos in the agricultural sector, who have been, for the longest time, suffering in poverty
and discontent.
In our attempt to understand the development of agrarian reform in the .
Philippines, we turn our attention to our country's history, especially our colonial past,
where we could find the root of the agrarian woes the country has experienced up to this
very day.

Landownership in the Philippines under Spain

When the Spaniards colonized the country, they brought with them a system of
pueblo agriculture, where rural communities, often dispersed and scattered in nature, were
organized into a pueblo and given land to cultivate.
Families were not allowed to own their land—the King of Spain owned the land, and
Filipinos were assigned to these lands to cultivate them, and they paid their colonial
tributes to the Spanish authorities in the form of agricultural products.
Later on, through the Law of the Indies, the Spanish crown awarded tracts of land to
(1) religious orders; (2) repartamientos for Spanish military as reward for their service; and
(3) Spanish encomenderos, those mandated to manage the encomienda or the lands given
to them, where Filipinos worked and paid their tributes to the encomendero. Filipinos were
not given the right to own land, and only worked in them so that they might have a share
of the crops and pay tribute. The encomienda system was an unfair and abusive system as
"compras y vandalas" became the norm for the Filipino farmers working the land—they
were made to sell their products at a very low price or surrender their products to the
encomenderos, who resold this at a profit• Filipinos in the encomienda were also required
to render services to their encomenderos that were unrelated to farming.
 3 Readings in Philippine History 76

From this encomienda system, the hacienda system developed in the beginning of
the nineteenth century as the Spanish government implemented policies that would fast
track the entry of the colony into the capitalist world. The economy was tied to the world
market as the Philippines became an exporter of raw materials and importer of goods.
Agricultural exports were demanded and the hacienda system was developed as a new
form of ownership. In the 1860s, Spain enacted a law ordering landholders to register their
landholdings, and only those who knew benefitted from this. Lands were claimed and
registered in other people's names, and many peasant families who were "assigned" to the
land in the earlier days of colonization were driven out or forced to come under the power
of these people who claimed rights to the land because they held a title.
This is the primary reason why revolts in the Philippines were often agrarian in
nature. Before the colonization, Filipinos had communal ownership of land. The system
introduced by the Spaniards became a bitter source of hatred and discontent for the
Filipinos. Religious orders, the biggest landowners in the Philippines, also became a main
source of abuse and exploitation for the Filipinos, increasing the rent paid by the Filipinos
on a whim.
Filipinos fought the Philippine Revolution in a confluence of motivations, but the
greatest desire for freedom would be the necessity of owning land. Upon the end of the
Philippine Revolution, the revolutionary government would declare all large landed
estates, especially the confiscated friar lands as government property. However, the first
Philippine republic was short-lived. The entrance of the Americans would signal a new era
of colonialism and imperialism in the Philippines.

Landownership in the Philippines under the Americans

The Americans were aware that the main cause of social unrest in the Philippines
was landlessness, and they attempted to put an end to the deplorable conditions of the
tenant farmers by passing several land policies to increase the small landholders and
distribute ownership to a bigger number of Filipino tenants and farmers. The Philippine
Bill of 1902 provided regulations on the disposal of public lands. A private individual may
own 16 hectares of land while corporate landholders may have 1,024 hectares. Americans
were also given rights to own agricultural lands in the country. The Philippine Commission
also enacted Act No. 496 or the Land Registration Act, which introduced the Torrens
system to address the absence of earlier records of issued land titles and conduct accurate
land surveys. In 1903, the homestead program was introduced, allowing a tenant to enter
into an agricultural business by acquiring a farm of at least 16 hectares. This program,
however, was limited to areas in Northern Luzon and Mindanao, where colonial
penetration had been difficult for Americans, a problem they inherited from the Spaniards.
 3 Readings in Philippine History 77

Landownership did not improve during the American period; in fact, it even
worsened, because there was no limit to the size of landholdings people could possess and
the accessibility of possession was limited to those who could afford to buy, register, and
acquire fixed property titles. Not all friar lands acquired by the Americans were given to
landless peasant farmers. Some lands were sold or leased to American and Filipino
business interest. This early land reform program was also implemented without support
mechanisms—if a landless peasant farmer received land, he only received land, nothing
more. Many were forced to return to tenancy and wealthy Filipino hacienderos purchased
or forcefully took over lands from farmers who could not afford to pay .their debts. The
system introduced by the Americans enabled more lands to be placed under tenancy,
which led to widespread peasant uprisings, such as the Colorum and Sakdal Uprising in
Luzon. Peasants and workers found refuge from millenarian movements that gave them
hope that change could still happen through militancy.

The Sakdal (or Sakdalista) Uprising was a peasant rebellion in Central Luzon that
lasted for two days, May 2—3, 1935. It was easily crushed by government forces then, but
this historical event tells of the social inequality brought about by issues in land ownership
and tenancy in the country.
The Filipino word sakdal means "to accuse," which is the title of the newspaper
helmed by Benigno Ramos. He rallied support from Manila and nearby provinces through
the publication, which led to the establishment of the Partido Sakdali8ta in 1933. They
demanded reforms from the government, such as the abolition of taxes and "equal or
common" ownership of land, among others. They also opposed the dominant Nacionalista
Party's acceptance of gradual independence from the United States, and instead demanded
immediate severance of ties with America.
For a new party with a small clout, they did well in the 1934 general elections,
scoring three seats in the House of Representatives and several local posts. This encouraged
them to attempt an uprising in 1935. Upon being crushed, Ramos fled to Tokyo and the
Partido Sakdalista collapsed.

During the years of the Commonwealth government, the situation further worsened
as peasant uprisings increased and landlord-tenant relationship became more and more
disparate. President Quezon laid down a social justice program focused on the purchase of
haciendas, which were to be divided and sold to tenants. His administration also created
the National Rice and Corn Corporation (NARIC) to assign public defenders to assist
peasants in court battles for their rights to the land, and the Court of Industrial Relations to
exercise jurisdiction over disagreements arising from landowner-tenant relationship. The
 3 Readings in Philippine History 78

homestead program also continued through the National Land Settlement Administration
(NLSA). Efforts toward agrarian reform by the Commonwealth failed because of many
problems such as budget allocation for the settlement program and widespread peasant
uprisings. World War Il put a halt to all interventions to solve these problems as the
Japanese occupied the country.

Post-War Interventions toward Agrarian Reform

Rehabilitation and rebuilding after the war were focused on providing solutions to
the problems of the past. The administration of President Roxas passed Republic Act No. 34
to establish a 70-30 sharing arrangement between tenant and landlord, respectively, which
reduced the interest of landowners' loans to tenants at six percent or less. The government
also attempted to redistribute hacienda lands, falling prey to the woes of similar attempts
since no support was given to small farmers who were given lands.
Under the term of President Elpidio Quirino, the Land Settlement Development
Corporation (LASEDECO) was established to accelerate and expand the resettlement
program for peasants. This agency later on became the National Resettlement and
Rehabilitation Administration (NARRA) under the administration of President Ramon
Magsaygay.
Magsaygay saw the importance of pursuing genuine land reform program and
convinced the Congress, majority of which were landed elites, to page legislation to
improve the land reform situation. Republic Act No. 1199 or the Agricultural Tenancy Act
was passed to govern the relationship between landholders and tenant farmers, protecting
the tenurial rights of tenants and enforced tenancy practices. Through this law, the Court of
Agricultural Relations was created in 1955 to improve tenancy security, fix land rentals of
tenanted farms, and resolve land disputes filed by the landowners and peasant
organizations. The Agricultural Tenancy Commission wag also established to administer
problems created by tenancy. The Agricultural Credit and Cooperative Financing
Administration (ACCFA) was also created mainly to provide warehouse facilities and assist
farmers in marketing their products. The administration spearheaded the establishment of
the Agricultural and Industrial Bank to provide easier terms in applying for homestead and
other farmlands.
NARRA accelerated the government's resettlement program and distribution of
agricultural lands to landless tenants and farmers. It also aimed to convince members of the
Huks, a movement of rebels in Central Luzon, to resettle in areas where they could restart
their lives as peaceful citizens.
 3 Readings in Philippine History 79

Despite a more vigorous effort toward agrarian reform, the situation for the farmers
remained dire since the government lacked funds and provided inadequate support
services for the programs. The landed elite did not fully cooperate and they criticized the
programs.
A major stride in land reform arrived during the term of President Diosdado
Macapagal through the Agricultural Land Reform Code (Republic Act No. 3844).
Primary Source: Declaration of Policy under RA No. 3844 or Agricultural Land
Reform Code
Source: Section 2. Declaration of Policy—it is the policy of the State:
(1) To establish owner-cultivatorship and the economic family-size farm as the basis
of Philippine agriculture and, as a consequence, divert landlord capital in agriculture
to industrial development;
(2) To achieve a dignified existence for the small farmers free from pernicious
institutional restraints and practices;
(3) To create a truly viable social and economic structure in agriculture conducive to
greater productivity and higher farm incomes;
(4) To apply all labor laws equally and without discrimination to both industrial and
agricultural wage earners;
(5) To provide a more vigorous and systematic land resettlement program and
public land distribution; and
(6) To make the small farmers more independent, self-reliant and responsible
citizens, and a source of genuine strength in our democratic society.
This Code abolished share tenancy in the Philippines and prescribed a program to
convert tenant-farmers to lessees and later on owner-cultivators. It also aimed to free
tenants from tenancy and emphasize owner-cultivatorship and farmer independence,
equity, productivity improvement, and public land distribution. Despite being one of the
most comprehensive pieces of land reform legislation ever passed in the Philippines,
Congress did not make any effort to come up with a separate bill to fund its
implementation, despite the fact that it proved beneficial in the provinces where it was pilot
tested.

The Agrarian Reform Efforts under Marcos

President Marcos declared Martial Law in 1972, enabling him to essentially wipe out
the landlord-dominated Congress. Through his "technocrats," he was able to expand
 3 Readings in Philippine History 80

executive power to start a "fundamental restructuring’’ of government, including its efforts

in solving the deep structural problems of the countryside. Presidential Decree No. 27 or
the Code of Agrarian Reform of the Philippines became the core of agrarian reform during
Marcos regime.

Primary Source: Presidential Decree No. 27, 21 October 1972

This shall apply to tenant farmers of private agricultural lands primarily devoted to
rice and corn under a system of sharecrop or lease-tenancy, whether classified as
landed estate or not;
The tenant farmer, whether in land classified as landed estate or not, shall be
deemed owner of a portion constituting a family-size farm of five (5) hectares if not
irrigated and three (3) hectares if irrigated;
In all cases, the landowner may retain an area of not more than seven (7) hectares if
such landowner is cultivating such area or will now cultivate it;
For the purpose of determining the cost of the land to be transferred to the tenant-
farmer pursuant to this Decree, the value of the land shall be equivalent to two and
one-half (2 1/2) times the average harvest of three normal crop years immediately
preceding the promulgation of this Decree;
The total cost of the land, including interest at the rate of six (6) per centum per
annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual
amortizations;
In case of default, the amortization due shall be paid by the farmers' cooperative in
which the defaulting tenant-farmer is a member, with the cooperative having a right
of recourse against him;
The government shall guaranty such amortizations with shares of stock in
government-owned and government-controlled corporations;
No title to the land owned by the tenant-farmers under this Decree shall be actually
issued to a tenant-farmer unless and until the tenant- farmer has become a full-
fledged member of a duly recognized farmer’s cooperative;
Title to land acquired pursuant to this Decree or the Land Reform Program of the
Government shall not be transferable except by hereditary succession or to the
Government in accordance with the provisions of this Decree, the Code of Agrarian
Reforms and other existing laws and regulations;
 3 Readings in Philippine History 81

The Department of Agrarian Reform through its Secretary is hereby empowered to

promulgate rules and regulations for the implementation of this Decree.
"Operation Land Transfer*' on lands occupied by tenants of more than seven
hectares on rice and corn lands commenced, and through legal compulsion and an
improved delivery of support services to small farmers, agrarian reform seemed to be
finally achievable. Under the rice self-sufficiency program "Masagana '99," farmers were
able to borrow from banks and purchase three-hectare plots of lands and agricultural
inputs. However, the landlord class still found ways to circumvent the law. Because only
rice lands were the focus of agrarian reform, some landlords only needed to change crops
to be exempted from the program, such as coconut and sugar lands. Lands worked by
wage labor were also exempt from the program, so the landed elite only had to evict their
tenants and hired workers instead. Landlessness increased, which made it all the more
difficult for the program to succeed because landless peasants were excluded from the
program. Many other methods were employed by the elite to find a way to maintain their
power and dominance, which were worsened by the corruption of Marcos poand his
cronies who were also involved in the agricultural sector.

The Post-1986 Agrarian Reform

The overthrow of Marcos and the 1987 Constitution resulted in g renewed interest
and attention to agrarian reform as President Corazon Aquino envisioned agrarian reform
to be the centerpiece of her administration's social legislation, which proved difficult
because her background betrayed her—she came from a family of a wealthy and landed
clan that owned the Hacienda Luisita.
On 22 July 1987, Aquino issued Presidential Proclamation 131 and Executive Order
229, which outlined her land reform program. In 1988, the Congress passed Republic Act
No. 6657 or the Comprehensive Agrarian Reform Law (CARL), which introduced the
program with the same name (Comprehensive Agrarian Reform Program or CARP). It
enabled the redistribution of agricultural lands to tenant-farmers from landowners, who
were paid in exchange by the government through just compensation and allowed them to
retain not more than five hectares. Corporate landowners were, however, allowed under
law to voluntarily divest a proportion of their capital stock, equity, or participation in favor
of their workers or other qualified beneficiaries instead of turning over their land to the
government.
CARP was limited because it accomplished very little during the administration of
Aquino. It only accomplished 22.5% of land distribution in six years owing to the fact that
Congress, dominated by the landed elite, was unwilling to fund the high compensation
 3 Readings in Philippine History 82

costs of the program. It was also mired in controversy, since Aquino seemingly bowed
down to the pressure of her relatives by allowing the stock redistribution option. Hacienda
Luisita reorganized itself into a corporation and distributed stocks to farmers.
Under the term of President Ramos, CARP implementation was speeded in order to
meet the ten-year time frame, despite limitations and constraints in funding, logistics, and
participation of involved sectors. By 1996, the Department of Agrarian Reform (DAR)
distributed only 58.25% of the total area target to be covered by the program. To address
the lacking funding and the dwindling time for the implementation of CARP, Ramos
signed Republic Act No. 8532 in 1998 to amend CARL and extend the program to another
ten years.

The CARPER and the Future of Agrarian Reform in the Philippines

The new deadline of CARP expired in 2008, leaving 1.2 million farmer beneficiaries
and 1.6 million hectares of agricultural land to be distributed to farmers. In 2009, President
Arroyo signed Republic Act No. 9700 or the Comprehensive Agrarian Reform Program
Extension with Reforms (CARPER), the amendatory law that extended the deadline to five
more years. Section 30 of the law also mandates that any case and/or proceeding involving
the implementation of the provisions of CARP, as amended, which may remain pending on
30 June 2014 shall be allowed to proceed to its finality and executed even beyond such date.
From 2009 to 2014, CARPER has distributed a total of 1 million hectares of land to
900,000 farmer beneficiaries. After 27 years of land reform and two Aquino administrations,
500,000 hectares of lands remain undistributed. The DAR and the Department of
Environment and Natural Resources (DENR) are the government agencies mandated to
fulfill CARP and CARPER, but even the combined effort and resources of the two agencies
have proved incapable of fully achieving the goal of agrarian reform in the Philippines. The
same problems have plagued its implementation: the powerful landed elite and the
ineffectual bureaucracy of the Philippine government. Until these two challenges are
surmounted, genuine agrarian reform in the Philippines remains but a dream to Filipino
farmers who have been fighting for their right to landownership for centuries.

Evolution of Philippine Taxation

In today's world, taxation is a reality that all citizens must contend with for the
primary reason that governments raise revenue from the people they govern to be able to
function fully. In exchange for the taxes that people pay, the government promises to
improve the citizens' lives through good governance. Taxation, as a government
 3 Readings in Philippine History 83

mechanism to raise funds, developed and evolved through time, and in the context of the
Philippines, we must understand that it came with our colonial experience.

Taxation in Spanish Philippines

The Philippines may have abundant natural resources even before the encroachment
of the Spaniards, but our ancestors were mainly involved in a subsistence economy, and
while the payment of tribute or taxes (buhis/ buwis/handug) or the obligation to provide
labor services to the datus in some early Filipino communities in the Philippines may
resemble taxation, it is essentially different from the contemporary meaning of the concept.
The arrival of the Spaniards altered this subsistence system because they imposed
the payment of tributos (tributes) from the Filipinos, similar what had been practiced in all
colonies in America. The purpose is to generate resources to finance the maintenance of the
islands, such as salaries government officials and expenses of the clergy. The difficulty
faced by the Spaniards in revenue collection through the tribute was the dispersed nature
of the settlements, which they solved by introducing the system of reduccion by creating
pueblos, where Filipinos were gathered and awarded plots of land to till. Later on, the
settlements will be handled by encomenderos who received rewards from the Spanish
crown for their services. Exempted from payment of tributos were the principales: alcaldes,
gobernadores, cabezas de barangay, soldiers, members of the civil guard, government
officials, and vagrants.
The Filipinos who were once satisfied with agricultural production for subsistence
had to increase production to meet the demands of payments and a more intensive
agricultural system had to be introduced. Later on, half of the tribute was paid in cash and
the rest with produce. This financed the conquest of the Philippines.
Toward the end of the sixteenth century, the Manila-Acapulco trade was established
through the galleons, a way by which the Spaniards could make sure that European
presence would be sustained. Once a year, the galleon would be loaded up with
merchandise from Asia and sent to New Spain (Mexico), and back. This improved the
economy of the Philippines and reinforced the control of the Spaniards all over the country.
Tax collection was still very poor and subsidy from the Spain would be needed through the
situado real delivered from the Mexican treasury to the Philippines through the galleons.
This subsidy stopped as Mexico became independent in 1820.
In 1884, the payment of tribute was put to a stop and was replaced by a poll tax
collected through a certificate of identification called the cédula personal. This is required
from every resident and must be carried while traveling. Unlike the tribute, the payment of
cédulas is by person, not by family. Payment of the cédula is progressive and according to
 3 Readings in Philippine History 84

income categories. This system, however, was a heavy burden for the peasants and was
easy for the wealthy. But because of this, revenue collection greatly increased and became
the main source of government income. The Chinese in the Philippines were also made to
pay their discriminatory cédula which was bigger than what the Filipinos paid.
Two direct taxes were added in 1878 and imposed on urban incomes. Urbana is a tax
on the annual rental value of an urban real estate and industria is a tax on salaries,
dividends, and profits. These taxes were universal and affected all kinds of economic
activity except agriculture, which was exempt to encourage growth.
Indirect taxes such as customs duties were imposed on exports and imports to
further raise revenue, especially during the nineteenth century when economic growth
increased exponentially. There were no excise taxes collected by the Spaniards throughout
the years of colonialism.
The colonial government also gained income from monopolies, such as the sale of
stamped paper, manufacture and sale of liquor, cockpits, and opium, but the biggest of the
state monopolies was tobacco, which began in 1781 and halted in 1882. Only certain areas
were assigned to cultivate tobacco, which the government purchased at a price dictated to
the growers. This monopoly made it possible for the colony to create a surplus of income
that made it self-sufficient without the need for the situado real and even contributed to the
Treasury of Spain.
Forced labor was a character of Spanish colonial taxation in the Philippines and was
required from the Filipinos. It proved useful in defending the territory of the colony and
augmenting the labor required by woodcutting and shipbuilding especially during the time
of the galleon trade. Through the polo system, male Filipinos were obliged to serve, a
burden that resulted in an increase in death rate and flight to the mountains, which led to a
decrease in population in the seventeenth century. This changed later on, as polos and
servicios became lighter, and was organized at the municipal level. Labor provided was
used in public works, such as the building of roads and bridges. Some were made to serve
the municipal office or as night guards.
Males were required to provide labor for 40 days a year (reduced to 15 days a year in
1884). They may opt out by paying the fallas of three pesos per annum, which was usually
lost to corruption because it was collected at the municipal level and were known as caidas
or droppings. The polos would be called prestacion personal (personal services) by the
second half of the nineteenth century.
Taxation in the Philippines during the Spanish colonial period was characterized by
the heavy burden placed on the Filipinos, and the corruption of the principaleg, or the
former datus and local elites who were co-opted by the Spaniards to subjugate and control
 3 Readings in Philippine History 85

the natives on their behalf. The principales who were given positions such as cabezas de
barangay or alcaldes in the local government were able to enrich themselves by pocketing
tributon and/or fallas, while the peasants were left Co be abused. Taxation appeared
progressive but the disparity between the less taxed principales and the heavily taxed
peasants made the rich richer and the poor poorer.
Primary Source: Mariano Herbosa Writes to Rizal About Taxes
Source: Mariano Ilerbosa to Jose Rizal, Calamba, 29 August 1886, Letters Between
Rizal and Family Members (Manila: National Heroes Commission, 1964), 239—241.
The tax! With regard to your question on this, the answer is very long, as it is the
cause of the prevailing misery here. What I can write you will be only one-half of the
story and even Dumas, senior, cannot exhaust the subject. Nevertheless, I'll try to
write what I can, though I may not be able to give a complete story, you may at least
know half of it.
Here, there are many kinds of taxes. What they call irrigated rice land, even if it has
no water, must pay a tax of 50 cavanes of palay (unhusked rice) and land with six
cavanes of seed pay 5 pesos in cash. The land they call dry land that is planted to
sugar cane, maize, and others pay different rates. Even if the agreed amount is 30
pesos for land with six cavanes of seed, if they see that the harvest is good, they
increase the tax, but they don't decrease it, if the harvest is poor. There is land whose
tax is 25 pesos or 20 pesos, according to custom.
The most troublesome are the residential lots in the town. There is no fixed
rule that is followed, only their whim. Hence, even if it is only one span in size, if a
stone wall is added, 50 pesos must be paid, the lowest being 20 pesos. But a nipa or
cogon house pays only one peso for an area of ten fathoms square. Another feature
of this system is that on the day you accept the conditions, the contract will be
written which cannot be changed for four years, but the tax is increased every year.
For these reasons, for two years now the payment of tax is confused and little by
little the fear of the residents here of the word "vacant" is being dispelled, which our
ancestors had feared so much. The result is bargaining, like they do in buying fish. It
is advisable to offer a low figure and payment can be postponed, unlike before when
people were very much afraid to pay after May.
I'm looking for a receipt to send you, but I cannot find any, because we don't
get a receipt every time we pay. Anyway it is value-less as it does not state the
amount paid; it only says that the tax for that year was paid, without stating whether
it is five centavos, twenty-five centavos one hundred, or one thousand pesos. The
residents who ask or get the said receipt accept it with closed eyes. The receipt has
 3 Readings in Philippine History 86

no signature in the place where the amount paid ought to be, although it bears their
name. Until now I cannot comprehend why some are signed and others are not. This
is more or less what is happening here in the payment of the land tax and it has been
so for many years since I can remember.
Besides this, the taxes on the plants in the fields that are far from the town,
like the land in Pansol, are various. The tax on the palay is separate from the tax on
maize, mongo, or garlic. There is no limit to this tax, for they fix it themselves. Since
July no one buys sugar and since June locusts are all over the town and they are
destroying palay and sugar cane, which is what we regret here. The governor gave
50 pesos to pay the catchers of locusts, but when they took them to the town hall
they were paid only 25 cents a cavan and a half; and it seems that the locusts are not
decreasing. According to the guess of the residents here only 300 cavanes of locusts
have been caught in this town. Many still remain. Though the governor has not sent
any more money, the people have not stopped catching them.

The Taxation under the Americans

The Americans who acquired the Philippines aimed to make the economy self-
sufficient by running the government with the smallest possible sum of revenue and create
surplus in the budget. From 1898 to 1903, the Americans followed the Spanish system of
taxation with some modifications, noting that the system introduced by the Spaniards were
outdated and regressive. The military government suspended the contracts for the sale of
opium, lottery, and mint charges for coinage of money. Later on, the urbana would be
replaced by tax on real estate, which became known as the land tax. The land tax was
levied on both urban and rural real estates.
The problem with land tax was that land titling in the rural area was very disorderly:
the appraising of land value was influenced by political and familial factors and the
introduction of a taxation system on agricultural land faced objections from the landed
elite. Tax evasion was prevalent, especially among the elites.
The Internal Revenue Law of 1904 was passed as a reaction to the problems of
collecting land tax. It prescribed ten major sources of revenue: (1) licensed taxes on firms
dealing in alcoholic beverages and tobacco, (2) excise taxes on alcoholic beverages and
tobacco products, (3) taxes on and bankers, (4) document stamp taxes, (5) the cédula, (6)
taxes on insurance and insurance companies (7) taxes on forest products (8) mining
concessions (9) taxes on business and manufacturing, (10) occupational licenses.
The cédula went through changes in the new law as the rate was fixed per adult
male, which resulted in a great decline in revenues. In 1907, some were authorized to
 3 Readings in Philippine History 87

double the fee for the cédula to support the provinces and maintenance of roads. The
industria tax was levied on the construction business community and became a highly
complex system that assigneda certain tax to an industrial or commercial activity according
to their profitability. The new act also imposed a percentage tax on sakes payable quarterly.
In 1913, the Underwood-Simmons Tariff Act was passed, resulting in a reduction in
the revenue of the government as export taxes levied on sugar, tobacco, hemp, and copra
were lifted. To make up for the loss, then Governor General Francis Burton Harrison urged
that tax receipts be increased to make up for the loss. Minor changes were made to the 1904
Internal Revenue Act such as the imposition of taxes on mines, petroleum products, and
dealers of petroleum products and tobacco.
New sources of taxes were introduced later on. In 1914, an income tax was
introduced; in 1919, an inheritance tax was created; and in 1932, a national lottery was
established to create more revenue for the government. However, these new creations were
not enough to increase government revenues.

Taxation during the Commonwealth Period

New measures and legislation were introduced to make the taxation system appear
more equitable during the Commonwealth. Income tax rates were increased in 1936,
adding a surtax rate on individual net incomes in excess of 10,000 pesos. Income tax rates of
corporations were also increased. In 1937, the cédula tax was abolished, which appeared to
be a progressive move; but in 1940, a residence tax was imposed on every citizen aged 18
years old and on every corporation.
In 1939, the Commonwealth government drafted the National Internal Revenue
Code, introducing major changes in the new tax system, as follows:
1. The normal tax of three percent and the surtax on income was replaced by a single tax at
a progressive rate.
2. Personal exemptions were reduced.
3. Corporation income tax was slightly increased by introducing taxes on inherited estates
or gifts donated in the name of dead persons.
4. The cumulative sales tax was replaced by a single turnover tax of 10% on luxuries.
5. Taxes on liquors, cigarettes, forestry products, and mining were increased.
6. Dividends were made taxable.

The introduced tax structure was an improvement of the earlier system introduced
by the Americans, but still remained inequitable. The lower class still felt the bulk of the
 3 Readings in Philippine History 88

burden of taxation, while the upper class, the landed elite or the people in political
positions, were able to maneuver the situation that would benefit them more. The
agriculture sector was still taxed low to promote growth, but there was no incentive for
industrial investment to take root and develop.
Finally, a common character of taxation during the American occupation in the
Philippines was not used to diversify the economy or direct economic development as
some sectors still carried the disproportionate share of the tax burden.
As World War Il reached the Philippine shores, economic activity was put to a stop
and the Philippines bowed to a new set of administrators, the Japanese. The Japanese
military administration in the Philippines during World War II immediately continued the
system of tax collection introduced during the Commonwealth, but exempted the articles
belonging to the Japanese armed forces. Foreign trade fell and the main sources of taxation
came from amusements, manufactures, professions, and business licenses. As the war
raged, tax collection was a difficult task and additional incomes of the government were
derived from the sales of the National Sweepstakes and sale of government bonds.
The expenditure of the Japanese military government grew greatly, and they issued
military notes in order to cover the costs of the war.

Fiscal Policy from 1946 to Present

The impact of the war on the Philippine economy was effectively disparate, as
Manila, the capital, was razed to the ground while the rest of the Philippines was relatively
untouched. But the highly agriculture-based economy was disrupted. The United States
may have declared the Philippines independent, but as the country needed rehabilitation
funds from the United States, the dependency of the Philippines to the Americans was an
opportunity to be taken advantage of by the former colonial administrators. The economic
situation was so problematic that by 1949, there was a severe lack of funds in many aspects
of governance, such as the military and education sectors. No efforts were made to improve
tax collection and the United States advised the adoption of direct taxation. The
administration of President Manuel Roxas declined the proposal because it did not want to
alienate its allies in Congress.
The impetus for economic growth came during the time of President Elpidio Quirino
through the implementation of import and exchange controls that led to import
substitution development. This policy allowed for the expansion of a viable manufacturing
sector that reduced economic dependence on imports. New tax measures were also passed,
which included higher corporate tax rates that increased government revenues—tax
 3 Readings in Philippine History 89

revenue in 1953 increased twofold compared to 1948, the year when Quirino first assumed
presidency.
While the succeeding presidencies of Magsaysay, Garcia, and Macapagal promised
to study the tax structure and policy of the country (through the creation of a Tax
Commission in 1959 by means of Republic Act No. 2211) to make way for a more robust
and efficient tax collection scheme, post-war fiscal policy remained regressive,
characterized by the overburdening of the lowest classes while the landed elite who held
business interests were in Congress to ensure that taxes would not be levied to them who
belonged to the higher classes of society. The period of the post-war republic also saw a rise
in corruption. From 1959 to 1968, Congress did not pass any tax legislation despite
important changes in the economy and the vested interests of Filipino businessmen in
Congress would manifest in many instances such as the rejection of taxes on imports.
Indirect taxation still contributed to three quarters of tax revenues and the Omnibus Tax
Law of 1969 did not increase the ratio of income tax to general tax revenue. Collection of
taxes remained poor; tax structure was still problematic; and much of public funds were
lost to corruption, which left the government incapable of funding projects geared toward
development.
Under the Marcos authoritarian regime, the tax system remained regressive. During
the latter part of the Marcos's years (1981—1985), the tax system was still heavily
dependent on indirect taxes, which made up 70% of total tax collection. The tax system also
remained unresponsive. Taxes grew at an average annual rate of 150/0 and generated a
low tax yield. Tax effort defined as the ratio between the share of the actual tax collection in
gross domestic product and predictable taxable capacity, was at a low 10.7%
As Corazon Aquino took the helm of the government after the EDSA Revolution, she
reformed the tax system through the 1986 Tax Reform Program. The aim was to improve
the responsiveness of the tax system promote equity by ensuring that similarly situated
individuals and firms bear the same tax burden, promote growth by withdrawing or
modifying taxes that reduce incentives to work or produce, and improve tax administration
by simplifying the tax system and promoting tax compliance.
A major reform in the tax system introduced under the term of Aquino was the
introduction of the value-added tax (VAT), with the following features:
1. uniform rate of 10% on sale of domestic and imported goods and services and zero
percent on exports and foreign-currency denominated sales;
2. ten (10) percent in lieu of varied rates applicable to fixed taxes (60 nominal rates),
advance sales tax, tax on original sale, subsequent sales tax, compensating tax, miller's tax,
 3 Readings in Philippine History 90

contractor's tax, broker's tax, film lessors and distributor's tax, excise tax on solvents and
matches, and excise tax on processed videotapes;
3. two percent tax on entities with annual sales or receipts of less than
4. adoption of tax credit method of calculating tax by subtracting tax on inputs from tax on
gross sales;
5. exemption of the sale of basic commodities such as agriculture and marine food products
in their original state, price-regulated petroleum products and fertilizers; and
6. additional 20% tax on non-essential articles such jewelry, perfumes, toilet waters, yacht,
and other vessels for pleasure and sports.
The VAT law was signed in 1986 and put to effect in 1988. While it was a reliable
source of revenue for the government, new tax laws would reduce its reliability as
legislated exemptions grew.
Along with tax reform came the administrative reforms, such as the restructuring of
the Department of Finance and its attached agency, the Bureau of Internal Revenue (BIR)
through the Executive Order 127. Tax collection and tax audits were intensified;
computerization was introduced; and corruption Was relatively reduced, which improved
the trust in the BIR in general. As a result of the tax reform of the Aquino administration,
both tax and revenue effort rose, increasing from 10.7% in 1985 to 15.4% in 1992.
Greater political stability during the administration of Fidel Ramos in 1992 allowed
for continued economic growth. The Ramos administration ventured into its own tax
reform program in 1997 through the Comprehensive Tax Reform Program, which was
implemented to (1) make the tax system broad-based, simple, and with reasonable tax rates;
(2) minimize tax avoidance allowed by existing flaws and loopholes in the system; (3)
encourage payments by increasing tax exemptions levels, lowering the highest tax rates,
and simplifying procedure; and (4) rationalize the grant of tax incentives, which was
estimated to be worth 531.7 billion pesos in 1994.
The VAT base was also broadened in 1997 to include services, through Republic Act
7716. The features of the improved VAT law were as follows:
1. Restored the VAT exemptions for all cooperatives (agricultural, electric, credit or
multipurpose, and others) provided that the share capital of each member does not exceed
515,000 pesos.
2. Expanded the coverage of the term "simple processes" by including broiling and roasting,
effectively narrowing the tax base for food products.
3. Expanded the coverage of the term "original state" by including molasses.
 3 Readings in Philippine History 91

4. Exempted from the VAT are the following:

• Importation of meat
• Sale or importation of coal and natural gas in whatever form or state
• Educational services rendered by private educational institutions duly accredited by
the Commission on Higher Education (CHED)
• House and lot and other residential dwellings valued at 51 million and below,
subject to adjustment using the Consumer Price Index (CPI)
• Lease of residential units with monthly rental per unit of not more than 58,000,
subject to adjustment using CPI
• Sale, importation, printing, or publication of books and any newspaper

The succeeding term of President Joseph Estrada in 1998 was too short to constitute any
change in the tax system. Then Vice President Gloria Macapagal-Arroyo was swept to
power through another EDSA Revolution As president, she undertook increased
government spending without adjusting tax collections. This resulted in large deficits from
2002 to 2004 The government had to look for additional sources of revenue, and in 2005 the
Expanded Value-Added Tax (E-VAT) was signed into law as Republic Act 9337. This
expanded the VAT base, subjecting to VAT energy products such as coal and petroleum
products and electricity generation, transmission, and distribution. Select professional
services were also taxed. In February 2006 the VAT tax rate was also increased from 10% to
12%.
As President Benigno Aquino Ill succeeded President Arroyo in 2010, he promised that
no new taxes would be imposed and additional revenue would have to come from
adjusting existing taxes. The administration ventured into the adjustment of excise tax on
liquor and cigarettes or the Sin Tax Reform, motivations for which was primarily fiscal,
public health, and social order_ related considerations. Republic Act 10351 was passed, and
government revenues from alcohol and tobacco excise taxes increased. Collections from
tobacco and alcohol in 2015 made up 1.1% of the Gross Domestic Product and the
improvement in tax collection resulted in the Philippines receiving a credit rating upgrade
into investment grade status. The Sin Tax Reform was an exemplar on how tax reform
could impact social services as it allowed for the increase of the Department of Health
budget (triple in 2015) and free health insurance premiums for the poor people enrolled in
PhilHealth increased (from 55.2 million in 2012 to 515.4 million in 2015).
The administration of the new President Rodrigo Duterte promised tax reform,
particularly in income taxes as it vowed to lower income tax rates shouldered by working
Filipinos. The present income tax scheme of the country is the second highest in Southeast
Asia and the current laws on income taxes were outdated as they were drafted two decades
 3 Readings in Philippine History 92

ago. The proposed tax reform also seeks to limit VAT exemptions and increase excise taxes
on petroleum products and automobiles. It is hoped that reforms in the country's tax policy
will result in the much-desired economic development that will be felt even by the lowest
classes in society.

Exercise # 2
Direction: Write your answers in a short bond paper (or Yellow paper of at
least 250 words but not more than 500 words. Write “Work Sheet for Exercise # 2- Unit
4” on top of the paper. Indicate also your name, course, year level, and section. You may
use extra paper if necessary and answer the following activity:

1. Using a graphic organizer, illustrate the development of the Philippine Constitution, and
cite the significant features in each.

Rubric
Content 10
Organization & Structure 10
Mechanics of Writing 5
Total 25

UNIT ASSESSMENT

Assessment # 1.

Direction: In not more than 200 words, discuss and explain why is there a need to
modify and change the Constitution at the different period of our history? Moreover,
relate your answers to the social, political, cultural, and economic conditions of the
country, historically and to the present. Cite factual examples in the
contextualization of your answers. Write your answer in a short bond paper (or
yellow paper). Write “Work Sheet for Assessment #1- Unit 4” on top of the paper.
Indicate also your name, course, year level, and section. You may use extra paper if
necessary.
 3 Readings in Philippine History 93

Rubric
Content 10
Organization 10
Mechanics in Writing 5
Total 25 points

__________________________________♣♣♣ __________________________________
Assessment # 2.
Direction: Comprehensively discuss the reason why the Agrarian Reform program
of the country is essential in building this nation. Moreover, explain and cite
examples why the previous agrarian programs of the government fail, and what
could you recommend for the attainment of its success? Your answer should not be
more than 150 words. Write your answer in a short bond paper (or Yellow paper).
Write “Work Sheet for Assessment #2- Unit 4” on top of the paper. Indicate also
your name, course, year level, and section. You may use extra paper if
necessary. Rubric is same with Assessment # 1.

__________________________________♣♣♣ __________________________________
Assessment # 3.
Direction: Write your answer in a short bond paper (or Yellow paper). Write “Work
Sheet for Assessment # 3- Unit 4” on top of the paper. Indicate also your name,
course, year level, and section. You may use extra paper if necessary, in answering
the questions below. Rubric is same with Assessment #1.

1. Explain the raison d’etre why taxes are considered the lifeblood of the state.
2. Examines the role of taxation law in promoting (or hindering) the nation building,
and provide appropriate recommendations rooted in a historical understanding of
the issue.

References
Agricultural Land Reform Code of 1963 (Republic Act 3844). Comprehensive Agrarian
Reform Law of 1988 (Republic Act 6657). Decreeing the Emancipation of Tenants
from the Soil (Presidential Decree No. 27).
Land Reform Act of 1955 (Republic Act 1400).
National Heroes Commission. (1964). Letters Between Rizal and Family Members. Manila:
National Heroes Commission.
National Historical Institute. (1997). Documents of the 1898 Declaration of Philippine
 3 Readings in Philippine History 94

Independence, the Malolos Constitution and the First Philippine Republic. Manila:
National Historical Institute.
Nolledo, J. (1999). Principles ofAgrarian Reform, Cooperatives and Taxation. Mandaluyong
City: National Book Store.
Philippine Organic Act of 1902.
Querol, M. (1974). Land Reform in Asia. Manila: Solidaridad Publishing House.

1.4 Acknowledgment

The images, tables, figures and information contained in this module were
taken from the references cited above.