Aquino overstating gains from Corona conviction to hide own agenda

Aquino’s claim that the conviction of Corona proved that genuine change can be achieved is exaggerating the gains of the people from the impeachment trial. The road towards real reforms that will truly benefit our people remains obstructed by the narrow and self-serving economic and political agenda of those who wield power. (Photo from

President Benigno Aquino III, in his official statement, described the gains from the conviction of Renato Corona this way: “Ang pinakamalaking handog ng paglilitis na ito: Muli po nating napatunayan na posible palang makamit ang pagbabago. Posible palang magkaroon ng justice, at hindi puro “just-tiis” ang litanya sa ating bansa. Napatunayan nating mangingibabaw ang katotohanan, laban sa pagkukubli; mananaig ang tapat, laban sa tiwali; at magtatagumpay ang tama, laban sa mali.”

Aquino is overstating the people’s gains from the conviction of Corona. Obviously, he is doing so to conceal his own agenda in pushing for the ouster of the former Chief Justice from the Supreme Court (SC).

Contrary to Aquino’s declaration, the guilty verdict could not be simply translated as the triumph of justice over injustice or the victory of the righteous over the corrupt. For all their “daang matuwid” rhetoric, Aquino and his Liberal Party (LP) have their own selfish political and economic agenda in the conviction of Corona.

LP reign

One is control over the Judiciary. For every faction of the ruling elite that comes to Malacañang, the first important task is to consolidate its political power. From the onset, Aquino and the ruling LP have displayed control over the House of Representatives (HoR), proof of which were the swift impeachment of former Ombudsman Merceditas Gutierrez in September 2010 and Corona in December 2011. (Gutierrez resigned in April 2011 even before the impeachment trial at the Senate could begin.) Another Arroyo appointee, SC Justice Mariano del Castillo, is also facing impeachment at the HoR. After an overwhelming 20-3 conviction of Corona, it appears that even the Senate is also heavily influenced by the Executive.

With Corona now out of the SC, Aquino can appoint his own choice of Chief Justice. The chilling effect of the ouster of Corona and the pending impeachment of del Castillo on other members of the High Court, particularly the appointees of Arroyo, ensures effective control by the President over the Judiciary. Right now, Aquino has three appointees in the SC – Ma. Lourdes Sereno, Bienvenido Reyes and Estela Perlas-Bernabe.

It is important for Aquino and the LP to make certain that the Supreme Court will toe Malacañang’s line for a variety of reasons. Politically, the biggest reason is the continuity of the LP reign when Aquino’s term expires in 2016. As noted by columnist Rigoberto Tiglao, key to this is the presidential ambition of LP chief Mar Roxas, who ran but lost as Aquino’s running mate in the last polls.

Roxas has filed an electoral protest against Vice President Jejomar Binay before the Presidential Electoral Tribunal (PET), which is also the SC. To boost his chances of clinching the presidency in 2016, Roxas needs a much high profile role, so don’t be surprised if we soon find him sitting as the second highest official of the land.

The PET is now being chaired by acting Chief Justice Antonio Carpio, who founded the notorious “The Firm”, which serves as Roxas’ counsel in his poll protest. Corona had identified Carpio, who had also wanted to become Chief Justice but was ignored by Arroyo in favor of Corona, and The Firm as one of the forces behind his impeachment.

Hacienda Luisita

Meanwhile, for Aquino, the ouster of Corona is sweet revenge for the latter’s role in the SC decision to dismantle the Hacienda Luisita. With the clear message sent to SC members by the removal of Corona, there is a very real risk that the High Court might soon undermine the favorable ruling obtained by the Luisita farmers and farmworkers.

Of particular concern is the possibility of reversing the decision of the SC to peg the payment at 1989 valuation and not the 2006 level being sought by the family of the President. Aquino himself has expressed publicly that his family deserves “just compensation” for Hacienda Luisita.

Note that when the SC decided the issue on just compensation, the result was a very close 8-6 in favor of the 1989 valuation. Note that among the six Justices that sided with Aquino’s family were Aquino’s appointees (Sereno, Reyes and Bernabe) plus del Castillo, who as mentioned is facing impeachment at the HoR.

Incidentally, since the impeachment complaint was filed against him in February, del Castillo has already voted twice in favor of Aquino. One is on just compensation in relation to Hacienda Luisita. The other is on the issue of Corona’s dollar accounts, where the SC issued a temporary restraining order (TRO) to prevent the Senate from examining the said accounts. Del Castillo along with Aquino’s appointees (except Reyes) and Carpio voted against the TRO.

Bungling cases vs. Gloria

In his speech, Aquino recalled the context of the impeachment complaint against Corona: “Alam na po natin ang malalim na pinagsamahan nila ni Ginang Arroyo. Simula pa lang kinuwestyon na natin ang kanyang midnight appointment dahil sa pananaw na labag ito sa Saligang Batas… Sa paglaon po, naging malinaw sa atin na imbis na siya mismong dapat nagbibigay-linaw sa batas, ang siyang nagpapalabo nito.”

Aquino claimed that had the ousted Chief Magistrate succeeded in allowing Arroyo to flee last year, the former President and now Pampanga congresswoman will just wait out the prescriptive period on the filing of charges against her to expire. It will be remembered that Arroyo tried to go abroad supposedly to seek medical treatment but was prevented by Department of Justice (DOJ), which also ignored the SC TRO on its travel ban.

But Aquino should be reminded that that it was his administration’s failure to promptly file the necessary cases against Arroyo that opened up opportunities for Arroyo’s scheme to leave the country. For more than 500 days, not a single case was filed by the Aquino administration. And when it was forced by the aborted escape of Arroyo, it lodged the weakest case – electoral sabotage in relation to the 2007 polls.

Now, there is even a danger that the court hearing this case will grant Arroyo’s petition to file bail after government prosecutors admitted that two key witnesses were supposedly missing. One of the missing is said to be the “star witness” who can pin down the former President. This is yet another indication how the Aquino administration is bungling the cases against Arroyo.

Questionable sincerity

Aquino’s sincerity to really go after Arroyo, her family and allies for plunder, electoral sabotage and human rights abuses has been questioned repeatedly. And despite the conviction of Corona, such doubt remains considering how the Aquino administration has been handling the issue of Arroyo’s accountability.

During the impeachment trial, for instance, the LP-led prosecution team diluted the issue of Corona’s collusion with Arroyo and focused on pounding the questionable Statements of Assets, Liabilities and Net Worth (SALNs) of Corona, which in the process also underscored the two-facedness of Senator Franklin Drilon, Congressman Niel Tupas and the rest of the noisy LP stalwarts who spearheaded the impeachment campaign.

Meanwhile, Aquino has remained mum on the issue of the anomalous 2004 elections (the “Hello Garci” scandal), where Arroyo’s role was more prominent. It has not filed any case on the atrocious human rights violations committed in the name of Oplan Bantay Laya (OBL), the notorious military campaign of the Arroyo regime. It has not filed any case on the various corruption cases involving the Arroyo camp such as the botched $329-million NBN-ZTE deal.

Towards genuine change?

Aquino’s claim that the conviction of Corona proved that genuine change can be achieved is exaggerating the gains of the people from the impeachment trial. The road towards real reforms that will truly benefit our people remains obstructed by the narrow and self-serving economic and political agenda of those who wield power.

The guilty verdict does not in any way automatically assure that Arroyo and her cabal will be punished for their numerous crimes against the Filipino people in the nine and a half years that they held power. It does not in any way mean that systemic graft and corruption in the bureaucracy that have been draining the country of much needed resources for economic development and provision of social services will finally end.

It does not mean that the judiciary has been totally cleansed of crooks in robes that would merit the return of public trust in our courts. The poor still remain disadvantaged under the flawed justice system, which will continue to favor the rich and powerful even after Corona’s conviction. Sa presinto pa rin magpapaliwanag ang mahihirap at magpapalusot pa rin ang mayayaman.

Genuine and deep-seated reforms, to be sure, are not done overnight. Certainly, the ouster of Corona does not immediately translate to the political and economic changes that the people have long been aspiring and fighting for. But it is important to put the conviction of Corona in the proper perspective and reject the illusion and lies being peddled by Aquino and his spin doctors.

Thus, we need to be vigilant more than ever to ensure that whatever little victory the people earned from the conviction of Corona will surely translate to more meaningful gains for the people, including the conviction of Arroyo herself. With equal watchfulness, we must also keep an eye on and resist every step of the Aquino clique to consolidate its control over the bureaucracy for self-serving political and economic ends. #

Consumer issues, Oil deregulation

14 years of oil deregulation is enough! (Part 1)

Because oil is a very socially sensitive commodity, the Oil Deregulation Law has become one of the country's most contentious laws (Photo by Nino Jesus Orbeta)

On February 10 (Friday), Republic Act (RA) 8479, or more notoriously known as the Oil Deregulation Law, will mark its 14th year of implementation. The law, which was aggressively pushed by the International Monetary Fund (IMF), was enacted on Feb. 10, 1998 by the 10th Congress. Because oil is a very socially sensitive commodity, the ODL has become one of the most contentious laws in the country. Its constitutionality had been the subject of several petitions at the Supreme Court (SC). In the past five Congresses, many legislators have filed bills amending or repealing the ODL. The Executive has convened, since 2005, three “independent” panels to review the law, including one recently set up by the Aquino administration.

From RA 8180 to RA 8479

In fact, RA 8479 was not the original deregulation law. The original, RA 8180, was enacted on Mar. 28, 1996. But massive people’s protests greeted the passage of RA 8180. Organizations under the Bagong Alyansang Makabayan (Bayan) launched two people’s strikes against oil price increases. The Asian financial crunch in 1997 further inflamed the unrest. Following a massive strike in October 1997, the Supreme Court (SC) was forced to issue a temporary restraining order (TRO) against the deregulation law. RA 8180 was finally declared as unconstitutional by the SC in a Nov. 5, 1997 decision.

According to the SC, the said law breached constitutional provisions outlined in Article XII Section 19. This provision states that “The State shall regulate or prohibit monopolies when public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.” In its decision, the SC recognized that the Philippine oil industry conceded that “operated and controlled by an oligopoly, a foreign oligopoly at that.”

The High Court further pointed out that “The much ballyhooed coming in of new players in the oil industry is quite remote considering that these prospective investors cannot fight the existing and well-established oil companies in the country today, namely Caltex, Shell, and Petron. Even if these new players will come in, they will still have no chance to compete with the said three (3) existing big oil companies considering that there is an imposition of oil tariff differential of 4% between importation of crude oil of the said oil refineries paying only 3% tariff rate for the said importation and 7% tariff rate to be paid by businessmen who have no oil refineries in the Philippines but will import finished petroleum/oil products which is (sic) being taxed with 7% tariff rates.”

However, then President Fidel V. Ramos marshaled his allies in Congress to immediately pass a replacement, correcting the unconstitutional provisions cited by the SC. The minimum inventory requirement was deleted while the import tariff rate was pegged at 3% for both crude oil and refined petroleum products. In two months since the SC junked RA 8180, Congress enacted RA 8479, which continues to be effective until today. Another petition was filed against RA 8479 arguing that price control should not be lifted because it contradicts the anti-monopoly provision of the Constitution. But in a Dec. 17, 1999 decision, the SC denied the said petition.

Role of the IMF

The passage of RA 8180 (and its replacement RA 8479) was tied to a loan of almost $1.04 billion that the Philippines contracted with the International Monetary Fund (IMF) in 1995 under the multilateral institution’s Extended Fund Facility (EFF). The deal with the IMF actually involved six major areas covering 43 specific measures. Aside from the deregulation of the oil industry, other conditionalities included tax reform, import liberalization, financial sector reform, foreign investment liberalization, and privatization. According to Bangko Sentral ng Pilipinas (BSP) Governor Gabriel Singson, the IMF wanted these provisions in the Oil Deregulation Law in order for the country to exit from the IMF “on a secure footing.”

Not only did the IMF push for the passage of an oil deregulation law, it also actively influenced the actual provisions that such legislation will contain. In fact, to access some $300 million in the first tranche of the EFF, as well as another $300 million in loans from the Japan Export Import Bank (JEXIM), the IMF had first to approve the then newly enacted RA 8180. (See BusinessWorld, “New oil deregulation law gets nod,” February 20, 1998) The IMF had also pushed for automatic price adjustment and elimination of any form of subsidy as among the main provisions that an oil deregulation law must contain.

The timing of full deregulation also became a contentious issue during the deliberations in Congress. The Senate and the House of Representatives were then pushing for a transition period before full deregulation takes place but the Executive was rejecting the proposal because the IMF requirement was immediate liberalization of the oil industry. To accommodate the IMF conditionality, the Ramos administration lobbied for an acceleration clause. Congress, in the end, passed RA 8479 with such clause, stated in Chapter VI Section 19, which authorizes the President to accelerate the start of full deregulation (which the law states shall start five months following the effectivity of RA 8479) except for socially-sensitive oil products (i.e. LPG, regular gasoline, and kerosene). As expected, Ramos exercised this prerogative and accelerated the implementation of full deregulation (earlier by four months) to hasten the approval of fresh loans worth $1.6 billion under the IMF’s standby credit facility. (See BusinessWorld, “Oil deregulation rushed for ‘IMF credit,’” March 16, 1998)

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SLEx toll hike: Supreme Court defends private profit over public interest

SC reasoning on toll hike sets a bad precedent for future cases questioning the fairness of user fees being charged by private firms operating vital infrastructure (Photo from Wiki Pilipinas)

Last October 21, the Supreme Court (SC) upheld the constitutionality of toll hikes and of public-private toll deals, paving the way for the quadrupling of the rates at the South Luzon Expressway (SLEx). According to SLEx’s private operator, the South Luzon Tollway Corp. (SLTC), they will implement the higher rates either this week or in the first week of November. And as if the pending toll hikes were not burdensome enough, the Malaysian-owned SLTC has also advised the public of another wave of increases before the year ends.

Subsidy, gradual increase?

President Noynoy Aquino apparently recognizes the potential impact of the huge toll hike on his political capital. He disclosed that the Toll Regulatory Board (TRB) is meeting today (Oct. 26) to discuss possible ways to mitigate the effect of the toll increase, including the provision of subsidy or to implement the toll hike gradually. By providing subsidy, Aquino admits the long exposed fallacy that privatization will reduce fiscal pressure on government and affirms criticism that public-private partnership (PPP) is actually costlier. Gradual increases, on the other hand, will only delay and prolong the burden of commuters and motorists.

Subsidized or full cost, gradual or in installments, the public will still pay for the excessive increase in toll. The Aquino administration is not answering the more fundamental questions on people’s access and control of a strategic aspect of economic and social development, which the SC decision on toll hike actually brought to the fore.

Arguing for neoliberalism

In a 75-page unanimous decision penned by Justice Presbitero Velasco, the SC argued not only for the legality of the Supplemental Toll Operation Agreement (STOA) between the Toll Regulatory Board (TRB) and the SLTC as well as other private operators of the country’s major toll roads. The judiciary has also argued strongly for the right of private and foreign corporations to profit “reasonably” from the operation of expressways and in the process affirmed the flawed neoliberal argument underlying the privatization of infrastructure development.

As quoted by The Philippine Star, the SC decision read: “The viability of any infrastructure project depends on the returns – which should be reasonable – of the investment coming from the private sector… While the interests of the public are ideally to be accorded primacy in considering government contracts, the reality on the ground is that the tollway projects may not at all be possible or would be difficult to realize without the involvement of the investing private sector, which expects its usual share of profit… The use of a tollway is a privilege that comes at a cost. The toll is a price paid for the use of a privilege. There are to be sure alternative roads and routes, which motorists may fall back on if they are unwilling to pay the toll. The toll, as might be expected, is pegged at a level that makes the developmental projects and their maintenance viable; otherwise, no investment can be expected for the furtherance of the projects”.

Bad precedent

The SC reasoning sets a bad precedent for future cases questioning the fairness of user fees being charged by private firms operating vital infrastructure in the country. First, the SC distorted the purpose of infrastructure development by declaring the use of a tollway as a privilege and those who could not afford it are not entitled to such privilege. Second, it downgraded the role of the State in providing public goods such as infrastructure. And third, it undermined public interest by making it less important than the right to profit of a private investor.

Infrastructure services, because they play a crucial role in economic and social development, must be considered as public goods and access to them is not a privilege but a human right. At all times, public interest must be accorded primacy and should never be demoted as less important than the expectation of the investing private sector to earn its usual share of profit.

Wrong claims

If the recent SC ruling on toll roads will become part of Philippine jurisprudence, it will have serious implications on other privatized infrastructure such as water distribution in Metro Manila. And given the renewed push for public-private partnership (PPP) in infrastructure under the Aquino administration, the potential impact on the people’s economic and social rights is indeed far-reaching. Aside from roads, power and water utilities, PPP targets, as pushed by the World Bank and already being implemented in rich countries, also include schools and hospitals.

The SC wrongly claimed that the use of a toll road is a privilege since there are alternative routes that motorists can use. In the first place, the national highway going to south Luzon is not a viable alternative due to severe traffic congestion. More importantly, in the context of public goods and development, there is neither economic logic nor justice in penalizing through exorbitant toll a small business or an ordinary wage earner for preferring to use a more efficient route. The purpose of developing infrastructure is to ensure that people’s living conditions are as decent and comfortable as possible, and to help make economic production efficient, viable, and sustainable.

Moreover, the SC also wrongly claimed that the toll is pegged at a level that makes the maintenance of expressway projects and further investment viable. In the case of SLEx, its new toll rates are based on the guaranteed 17 percent return on investment (ROI) stipulated in its STOA between SLTC and TRB. But as I have pointed out in a previous post, public infrastructure does not necessarily entail a guaranteed ROI, which only tends to make user fees unduly onerous.

Costlier in the long run

Finally, for the SC, the public has no choice since tollway projects are supposedly impossible or difficult to implement without a private operator. In the Philippines, privatization of infrastructure is only about two-decades old. Before the 1990s, the public sector was responsible for building, maintaining, and operating roads, utilities, and other infrastructure. But because of globalization and neoliberal restructuring, profit-seeking corporations took over many important State responsibilities such as infrastructure development.

The supposed lack of State resources is often exaggerated to justify the privatization of infrastructure. However, our experience shows that PPPs are costlier in the long run. Take the case of the privatization of the National Power Corp. (Napocor) that only inflated public debt by P203 billion; or the privatization of the Metropolitan Waterworks and Sewerage System (MWSS) where government was forced to bail out Maynilad to the tune of P8.3 billion; or the MRT along Edsa which the previous administration had to temporarily take over through a lump sum payment of $800 million.

State guarantees

In reality, private investors do not bring much investment to the table as often touted but actually rely on foreign loans, frequently with state guarantees. The Aquino administration’s PPP program, for instance, will likely be funded through a multibillion foreign borrowing scheme. One possibility is the creation of a government corporate entity that would sell bonds to foreign creditors. The funds raised will be used to bankroll the infrastructure projects.

To further make the PPP program more attractive, the National Economic and Development Authority (Neda) is proposing to amend the implementing rules and regulations (IRR) of the BOT Law to require state guarantees on PPP projects, including unsolicited proposals. Direct government guarantees assure creditors that, in the case of a loan default, the national government or any of its agencies will assume responsibility for the repayment of debt which the project proponent directly incurred in implementing the project.

Deepened contradiction

The SC decision on toll hikes further deepened the fundamental contradiction between public goods and private capital, and between private profits and public interests, that is inherent in privatization/PPP.

Aside from SLEx, motorists using another privately operated major toll road, the North Luzon Expressway (NLEx), could be paying more soon as well if the TRB will approve the 12 percent toll hike petition to be filed by MNTC. Next month, MRT fares are expected to go up by as much as 100 percent in preparation for its re-privatization. Meanwhile, power and water rates continue to go through the ceiling as privatized utilities amass, in the words of the SC, their “usual share of profit”.