This policy brief is a product of a national forum on charter change and federalism held last April 5th, 2019 in Makati City. The forum was organized by IAG, International Institute for Democracy and Electoral Assistance (IDEA), Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives and Senate Economic Planning Office (SEPO) with support from the Australian Department of Foreign Affairs and Trade (DFAT). 


As the Philippines elects new members of the legislature, Sen. Aquilino Pimentel III—along with his father, a former Senate president, one of the most consistent proponents of federalism—expects a Senate more open to a shift to a federal form of government.


Speaking in March and confident that a new Senate will have more members supportive of the legislative agenda of President Rodrigo Duterte, who has been campaigning for federalism since before he was elected to Malacañang, he said in news reports that “I think they will have to open their minds to at least entertain federalism.”


A constant talking point in the president’s State of the Nation addresses before Congress, the shift to federalism has been touted as a cure for unequal development in the regions and a focus on policy- and decision-making from Manila.


Pimentel said lawmakers will also have a sense of urgency in working on the shift to federalism because it will have been halfway through the Duterte presidency and supporters will have less time to deliver on one of the pillars of the president’s election platform.


At a forum in April, Ronald Golding, director general of the Senate Economic Planning Office, said advocates of federalism will have to work with a "new set of legislators who will decide if charter change is worth pursuing or not."


The 18th Congress will mean more than just a new set of lawmakers. Since pending legislation will need to be filed anew, it will also mean a reset of discussions on matters like federalism since hearings and discussions will have to be held again for the benefit of the new members of Congress.


Progress on federalism has been hampered by a lack of public awareness and support for the shift—a July 2018 Pulse Asia survey suggested 67% of respondents do not want the 1987 Constitution changed and 62% were against shifting to a federal system—as well as objections from members of the political opposition that decentralization within the context of the 1987 Constitution can address the issues that federalism is supposed to cure.


Those opposed to federalism also raise the issue of political dynasties, saying federalism may only strengthen the monopoly that local clans have on power.


These, and a historical distrust of charter change as a possible ploy for a sitting president to stay in power beyond the term limit set in the 1987 Constitution have made the shift to federalism an uphill and, possibly for advocates, a seemingly lonely climb.


‘Stronger’ local government units


Those opposed to the shift argue that the Local Government Code gives provincial and city governments much the same powers as the proposed federal states.


“The Number One promise of those pushing for federalism is the strengthening of local autonomy. But this is already enshrined in the present Constitution,” Rep. Lito Atienza said in December 2008 when the House of Representatives approved Resolution of Both Houses No. 15, a federalism initiative distinct from the effort of the Duterte-appointed Consultative Committee to Review the 1987 Constitution.


But political scientist and professor Julio Teehankee, a member of that committee, said in April that the Philippines has been under the structure of a unitary state since even before it was an independent nation.


He said the current form of government is on a colonial administrative structure headed by a governor-general—the presidential palace itself is inherited from Spanish governors-generals and American governors—and superimposes the concept of “one nation, one state,” a concept that is problematic given the cultural and ethnic diversity of the Philippines.


Although local government units have more autonomy, Teehankee points out that these LGUs exist “at the pleasure” of the national government, which can reshape or reorganize them if it wants to.


Among the powers given to federated regions under the draft constitution prepared by the consultative committee, are those over socio-economic development and planning, creation of sources of revenue, and financial administration and management.


They will also have power over their constituent local government units.


Parties over clans


Teehankee also points out that the proposed constitution has a self-executing provision against political dynasties and a provision to strengthen political parties that would curb the phenomenon of clans being de facto parties.


Among the proposals of in the committee’s draft is to require Commission on Elections accreditation of a party’s principles, platform and programs, and a requirement of a “fair, honest and democratic” process for choosing party officials and candidates.


Tax-creditable donations for a Democracy Fund for parties and a ban on party switching within two years of elections will also strengthen parties, he says, and stop the phenomenon of ruling parties ballooning when a new president comes to power.


He acknowledges, however, that the “electoral calculus of 2019 and 2022 will make the passage of the ban on political dynasties and party switching impossible.”


Bangsamoro Organic Law, a template for a federal state?


Despite the greater autonomy promised by passage of the Bangsamoro Organic Law, lawyer Ishak Mastura, COO of the IAG Development Consulting Inc., cautions against using it as a template for federalism.


He says that being crafted within the framework of a unitary state makes it far from being one since autonomy under the 1987 Constitution does not provide for federal features and does not have the concept of shared sovereignty.


Powers of an autonomous region are subject to national law and he says it is yet unclear whether, for example, the chief minister of the Bangsamoro Autonomous Region has the delegated supervision over local governments.


An Intergovernmental Relations Body will still have to resolve disputes between the regional and national governments.


Being subject to national laws weakens the region’s autonomy he says as he warns that the Bangsamoro parliament would be limited in passing original legislation because it will have to be mindful of those national laws.


“By implication, if national laws continue to apply in the Bangsamoro without limitation, any and all acts by the Bangsamoro government can be questioned by the national government and its agencies,” he says, adding it falls on the Bangsamoro parliament to assert its autonomous powers through regional legislation


He says the Bangsamoro Organic Law can “largely work as a framework of autonomy provided that the limits of national government intrusions on autonomy are defined through the Intergovernmental Relations Body.”


Human rights and state rights


Sakuntala Kadirgamar, executive director of the Law and Society Trust in Sri Lanka, says in a related point that “the question of who gets to draft the new constitution is key” since this will not only make constitution-making more inclusive and increase the chances of the public “buying in”, it will also help keep the exercise from becoming a “dividing of spoils” among the elites.


“Moreover, giving regions more power while promising to address regional inequality can have the unintended effect of empowering regional strongmen and dynasties if not accompanied by other constitutional reforms to address these challenges,” she says.


She also warns about the risk of federal states curtailing human rights within their jurisdictions.


“While federalism is seen as a deconcentration of power and bringing government closer to the people it can have negative impact on human rights and rule of law,” she says, saying federal states could invoke state rights and implement policies that would invalidate human rights  


She says that it is important that federal states will not be able to revoke rights guaranteed by the central government.


Drafters will need to consider the responsibility and relationship between the state and the citizen, says, as well as how actively the government will protect those rights.


There is a difference between the government committing not to violate human rights and the government playing an active role in enabling its citizens to exercise their rights.


Consideration should also be given to questions on whether rights are guaranteed to all, especially those who have historically been marginalized like women and indigenous peoples


Fiscal federalism


The estimated cost of the shift to federalism—upwards of P253 billion according to the National Economic and Development Authority in 2018—has also been raised as a hurdle to overhauling the political structure of the Philippines.


Political analyst and professor Edmund Tayao, also a member of the consultative committee, says, though that the cost will be much smaller since agencies that will be under the federated regions and the bureaucracy in general will necessarily be streamlined with the shift.


“Current agencies will have to be merged as specific agencies are now downloaded to the regional level. The computation then that simply counts the number of current departments and having the same at the regional level is simply way off the target,” he says.


He says that “the computation is mainly a projection that is based on current figures generated by the setup that is being reformed”, which he says assumes that the structure of government will be much the same.


He says that “resources or funds that should be given to or may be generated by a particular level of government should depend primarily on the functions or powers that are assigned to it,” and a shift to federalism would mean a change in the functions and powers of those levels of government.


He has gone on record to say that the cost is closer to P13.3 billion.


He adds that considerations on revenue sharing should do more than just replicate what is already being done in the current setup.


“For example, should we adopt the same or a similar formulation of proportionate fiscal sharing of revenues, i.e. based on the population and land area like the Internal Revenue Allotment?”


“If this is the case, aren’t we retaining the current setup that favors the already big but not necessarily competitive and not giving enough means for the other regions to catch up?”


Fiscal provisions in federalism proposals


Romulo Miral Jr., director general of the Congressional Policy and Budget Research Department of the House of Representatives, meanwhile says that the government needs to deal with the Common Pool Resource problem where resources are shared but there is little incentive for those in the pool to contribute as much as they can.


He says this has lead to a “weak appreciation of benefit and cost of public spending” since there is little consideration for how, for example, a certain public infrastructure project will benefit the whole.


This also tends towards patronage politics and political dynasties, a phenomenon he says fiscal federalism will curb.


Federalism will also help with another challenge to the national government: Dealing with different levels of local governments from provinces to cities and municipalities by grouping them under the federal states.


He points out that fragmented local governments, when coupled with patronage politics, results in unequal levels of service delivered to the people.


Miral says that fiscal federalism needs to have a proper and clear assignment of functions between the national government and the federal regions or states.


There should also be vertical fiscal balance, where “expenditure functions of the different levels of government should be matched with corresponding revenue raising powers” and horizontal fiscal balance, where units in each level of government can provide services “at a comparable standard.”


There should also be mechanisms for relations between the federal government and the regional or state governments, for example in federal policy-making and in tax harmonization.


The consultative committee’s draft constitution gives the federal regions the exclusive power to create revenue within their jurisdictions and gives them the authority to levy real estate taxes and other local taxes as well as motor vehicle and franchise fees.


They will also get an equal share of 50% of income taxes, value-added taxes, excise taxes, and customs duties as well as 50% of net revenues from the exploration, development and use of natural resources within their territories.


Under RBH No. 15, meanwhile, gives local governments and federal states the power to create their own sources of revenue, which includes taxes, fees and charges “subject to such guidelines and limitations as Congress may provide.”


They will also get their “just share” of all national taxes and “an equitable share” in the utilization and development of “national wealth” in their areas.


Potential challenges in transition


Amanda Cats-Baril, an international lawyer and International IDEA's constitution-building advisor for the Asia Pacific, said awareness and support for charter change can be boosted by explaining that even if "charter change is on the bottom of a population's concern… a federal system could affect issues like job creation," which many do consider a priority.


She said there should be more consultations during the constitution writing process since a "more participatory process improves engagement in the process."


If the country does buy in to a change to a federal form of government, Cats-Baril says it will have to deal with resistance from the “center”, which has been in power for so long.


“National institutions may find it difficult to adapt to new limitations on their own power and to accept that some aspects of government now are handled by the states or regions,” she says.


That could include the potential clashes between legislation that Mastura warns about in the case of the Bangsamoro Autonomous Region in Muslim Mindanao, or in the central government’s refusal to put up the administrative infrastructure that states will need to take on their new responsibilities.


There may also be failures and delays in the distribution of resources and a tendency for micro-management, she says.


The subnational units, or federal regions, will also need time and assistance to create their own institutions, which will include setting up arrangements for receiving and spending government funds and “building new relationships” with the central government as well as their constituents.


“Uncertainty about the powers and responsibilities of each level of government can lead to disputes between levels of government, duplication, and potentially unconstitutional exercise of powers,” she says, which will mean the need for courts to decide new jurisprudence for the new government system.


Aside from the institutional changes, federalism will also need a cultural change as people “[adopt] new practices, new modes of behavior, and new ways of thinking about the ways in which government works.”


Although transitory provisions can be included to make the shift smoother, Cats-Baril also cautions against sweeping “power to remove obstacles” provisions that might be abused by governments.


Transition mechanisms in the Bayanihan draft


Lawyer Randolph Parcasio, referring to the draft submitted by the consultative committee, says there are provisions in place to allay fears of charter change being used as a tool for the incumbent to stay in power, pointing out that the terms of office of the president and vice president cannot be extended beyond June 30, 2020.


The president is also prohibited from running for president in the 2020 polls.


"The provision that prohibits the extension of the term of office of the incumbent president and vice president which will expire in June 2022 and related provisions in the draft negate criticism that federalism is being used by the incumbent president to perpetuate himself in power," he says.


A transition president and vice president as well as the Senate president and House speaker, as well as 10 appointees and all past presidents will be part of a commission that will work on a transition plan towards a federal Philippines, a move that Parcasio says will make sure it is not a “one-man show.”


The inclusion of past presidents will also be a demonstration of unity as well as a symbolic bridge between the old republic and new.


Critics of charter change, though, are wary of that transition extending longer than planned and have made comparisons to the experience with the 1973 Constitution.


Under the transitory provisions of that constitution, the incumbent president and vice president, members of the 1971 constitutional convention, and members of the Senate and House of Representatives would form the Interim National Assembly.


The incumbent president, who was then Marcos, was supposed to initially convene the Interim National Assembly until an interim Speaker has been elected.


Marcos declared martial law on Sept. 21, 1972, less than a year before a new constitution was approved.


Inter-Agency Task Force still working


Local Government Assistant Secretary Jonathan Malaya said in April that the government's Inter-Agency Task Force on Federalism and Constitutional Reform has been working on the Bayanihan Federalism draft since July 2018, although this has been with less fanfare as when the draft was announced.


The task force is divided into clusters, with specific agencies assigned to lead them.


The Department of Justice leads the cluster on the structure of federal government while the Department of the Interior and Local Government is working on the structure of regional and local governments.


The Budget department, meanwhile, is working on intergovernmental relations and the Department of Finance heads the Fiscal and Financial Administration cluster.


NEDA handles the National Economy and Patrimony cluster while the Office of the Ombudsman is working on the accountability of public officers aspect of the draft.


The Civil Service Commission and Commission on Higher Education lead the clusters for Constitutional Commissions and Rights and Obligations respectively.


The Defense department is handling the national territory and security aspect while the transitory provisions are being handled by the Development Academy of the Philippines.


He says consultations are ongoing and that agencies included in the IATF are expected to submit data-driven proposals for consolidation.


According to the IATF timeline, cluster reporting and consolidation should be under way by June.


He adds the work on the draft will be transparent and that reports will be "made available for everybody to scrutinize."


Malaya told forum attendees that government is working on a draft that will withstand comments and criticisms earlier hurled at the ConCom's Bayanihan Federalism draft. "We should be ready to defend this in Plaza Miranda," he said.


Moving forward


Participants at the April 5 forum were in agreement that whether or not the Philippines ultimately decides to adopt federalism the conversation around constitution-making needs to continue.


"Constitutionalists, such as myself believe that constitutions can play an important role in providing such a framework. Although they are not a complete panacea, they provide the foundation for such state and nation building. They must also be well implemented, constantly reviewed, refurbished and tweaked to be responsive to changing times and demographics," Kadirgamar says.


Kadirgamar, who has assisted in the constitution-making exercises of her country as well as of Nepal, Indonesia, Yemen, Libya and Somalia, says there is no one path for all countries, noting that federalism is a source of “outrage among many” in Sri Lanka but offers solutions for other countries.


She says there are universal questions that go with the process of writing a new constitution, primary of those being how to structure and divide power between the executive, the legislature and the judiciary.


“What are their respective roles and responsibilities and how will they manage the intersectionality between their roles and responsibilities?” she says, stressing the need for checks and balances.


Drafters will also have to consider whether power should be centralized or decentralized, and to what extent this will be done.


“It is easier to agree on what are universal issues but more difficult to agree to the particular because that is rooted in history, culture, historical fears,” she says.


Kadirgamar says that aside from government-initiated moves for charter change, there is "nothing to stop local communities from listening to their people and provide a draft" of how they would like the new system of government to be.


Taking lessons from Sri Lanka’s experience with charter change, Kadirgamar says that constitutional reform goes beyond holding hearings in Congress but “requires shifting hearts and minds.”


She said that in the case of Sri Lanka, this was done through public hearings where “people fatigued by the war and government abuses were more ready for changes than their parliamentarians who were e more vested in the vitriolic discourse.”


Kadirgamar likens participatory constitutional reform process to the “bebinca”—the Goan dessert, not the Filipino rice cake—”heat from the top and heat from below – leadership and the people must support it.”