Republic of the Philippines

Commission on Higher Education

Regional Office No. VIII
CALBIGA WSETERN SAMAR COLLEGE
Polangi, Calbiga, Samar

a Module 4: Readings in Philippine History

_______________________________

Estudents

Prepared by:

ALEX O. PACAYRA, LPT

Instructor

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Chapter 4: ‘’Social, Political, Economic, and Cultural Issues in Philippine History’’

I. OBJECTIVES:

Learning Objectives:

 To analyze social, political, economic, and cultural issues in the Philippines using the lens
of history.

 To recognize that the problems of today are consequences of decisions and events that
happened in the past.

 To understand several enduring issues in Philippine society through history.

 To propose recommendations or solutions to present-day problems based on the

understanding of the past and anticipation of the future through to the study of history.

II. PRE -TEST:

(For attachment)

III. 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 understandings OI root causes and how we anticipate future scenarios in the
Philippine setting.

IV. CONTENT:

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.

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: () 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
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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 one revolution, in a meeting at
Biak-na-bato, November 1, 1897, unanimously adopted the following articles for the
constitution of the State.

1899: Malolos Constitution

After the signing of the truce, the Filipino revolutionary leaders accepted a payment from Spain
and went to exile in Hong Kong. Upon the defeat or 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 or 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 Isabelo Artacho; Mabini's Constitutional
Program of the Philippine Republic of 1898: the provisional constitution or Mariano Ponce in 1898
that followed the Spanish constitutions; and the autonomy projects of Paterno in 1898.

Primary Source: Preamble or 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 ensure 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 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 II, 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.

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The form of government, according to Title II, Article 4 is to be popular, representative,
alternative, and responsible, and shall exercise three distinct-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.

1935: The Commonwealth Constitution

It is worth mentioning that after the Treaty of Paris, the Philippines was subject to the power of
the United States of America, effectively the new 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 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.

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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 a regime of justice, liberty, and democracy, do ordain and
promulgate this constitution.

Constitution created the Commonwealth of the Philippines, an administrative body that governed
the Philippines from 1938 to 1946, is a transitional administration to 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 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 also 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 II, with the Japanese occupying the Philippines. Afterward, upon
liberation, the Philippines was declared an independent republic on 4 July 1946.

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 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 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,

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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 fora period of at
least several years. The President, on 17 January 1978, 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 was,
once again, to 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 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 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.

1987: Constitution After Martial Law

President Corazon Aquino's government had three options regarding retain the 1973 the
constitution: revert to the 1935 Constitution, retain the 1978 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’’.

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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-equal1 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 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, ana 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 284 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

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Commission on Audit, which examines all funds, transactions, and property accounts of the
government and its agencies.

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.

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 XVIl 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 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 or
separately. How the Congress convenes as a Con-Ass is also no 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 a constitutional convention. They may also submit to the electorate the question of
calling a 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 P). In this 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. 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-Santiago, 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

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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 III 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

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 excusive 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.

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 is also approved by the 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 distinct geographic, cultural, social, and economic contexts. Regions also nave 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.

see the light of day.

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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 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.

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.

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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.

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.

11
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 o establishment of the Partido
Sakdalista 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 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 II 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 Magsaysay. Magsaysay saw
the importance of pursuing genuine land reform program and convinced the Congress, majority of
which were landed elites, to pass 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 was 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.

12
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.

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-cultivator ship 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.

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 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;

13
 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 come 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;

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 and his cronies who were also
involved in the agricultural sector.

Post-1986 Agrarian Reform

The overthrow of Marcos and the 1987 Constitution resulted in a 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

14
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 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.

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 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
15
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 to 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
of government officials and expenses of the clergy. The difficulty faced by the Spaniards in
revenue collection through the tribute was the dispersed nature or 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 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 colónial 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
16
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 prestación 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 principales, or the former datus and local
elites who were co-opted by the Spaniards to subjugate and control 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 tributos and/or fallas, while the peasants
were left to 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 Herbosa 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
17
 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 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.

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 banks 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, and (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 provinces were authorized to double the fee
for the cédula to support the construction and maintenance of roads. The industria tax was levied
on the business community and became a highly complex system that assigned a certain tax to an
industrial or commercial activity according to their profitability. The new act also imposed a
percentage tax on sales 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

18
New measures and legislation were introduced to make the taxation system appear more equitable
during the Commonwealth. Income tax rate 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 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 II 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.

19
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 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 15% 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,
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 5,200,000;

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

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 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; (8) 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:

I. 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.

II. Expanded the coverage of the term "simple processes" by including broiling and roasting,
effectively narrowing the tax base for food products.

III. Expanded the coverage of the term "original state" by including molasses.

IV. 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 CPL 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
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products such as coal and petroleum products and electricity generat1on, transmission, and
distribution. Select professional services were also taxed. In February 20006, the VAT tax rate
was also increased from 10% to 12%.

As President Benigno Aquino III 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 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.

V. ACTIVITY:
A. Identification:
1. It is a set of fundamental principles or established precedents according to which a
state or other organization is governed.
2. In what year did the Constitution of the Philippines become official or effective?
3. It was a temporary constitution of the Philippine Republic during the Philippine
revolution.
4. This law is also known as the Philippine Republic Act.
5. What is the first Philippine Organic Law in the Philippines?
6. Who can initiate the impeachment of the president, members of the Supreme Court,
and other constitutionally protected public officials?
7. Its role is to investigate and prosecute any Philippine government official/s accused
of crimes, especially graft and corruption.
8. It is the rectification of the whole system of agriculture. It is also centered on the
relationship between production and the distribution of land among farmers.
9. This code or decree become the core of Agrarian Reform during Marcos regime.
10.Its purpose is to raise and provide funds or properties to support the needs of the
community.

B. Enumerate the ff.

 The 3 constitution that governed the country.
 The exempted in paying the tax during the Spanish period.

C. Answer the ff.

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 1. What do you think is the reason why there is a need to change the Philippine
Constitution?
2. What do you think will happen if president Rodrigo Duterte implemented Federalism
in the Philippines?
3. When did the Agrarian Reform started in the Philippines? What is the purpose of
Agrarian Reform? Why there is a need to create or form an Agrarian Reform?
4. What are the purpose and importance of taxation?
5. Discuss the evolution of Taxation in the Philippines from the Spanish period to the
present.
6. What recommendation or solution can you propose to present-day problems based
on your understanding of the past and anticipation of the future to the study of
history.

VI. REFERENCE:

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

Independence, the Malolos Constitution and the First Philippine Republic. Manila:
National Historical Institute.

Nolledo, J. (1999). Principles of Agrarian 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

FINAL EXAMINATION IN READINGS IN PHILIPPINE HISTORY

VII. POST TEST:

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A. True or False. Write True if the statement is true. Otherwise, write False in the
space provided.

1. The 1935 Commonwealth Constitution was a result of the passage in the

United States Congress of the Hare-Hawes- Cutting Act.

2. The Philippine Commonwealth was interrupted by the Cold War.

3. Before 1973, the constitution in effect in the Philippines was the 1935
Constitution.

4. Landownership in the Philippines during the Spanish colonial period was a

great source of hatred and resentment among the Filipinos.

5. The American period ushered in a great improvement in landownership in the

country.

6. Agrarian reform under the dictator Ferdinand Marcos was a failure.

7. The cédula personal was optional during the Spanish period.

8. Direct taxation was suggested by the Americans after World War II, but then
President Manuel Roxas declined it.

9. The VAT or value-added tax was introduced during the time of President
Elpidio Quirino.

10.The Sin Tax Reform 1s a good example on how tax reform could impact
social services.

B. Define the ff. word.

1. Constitution –
2. Agrarian Reform –
3. Taxation –
4. Law –
5. Cedula -

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