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In This Issue
JULY - SEPTEMBER 2003
VOL. IX   NO. 3


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  S P E C I A L     R E P O R T   —   O P E N    F O R    B U S I N E S S


A SEAT IN the House of Representatives has always been a ticket to the charmed circle of the Philippine political and economic elite. Representation in Congress has provided for political families protection for their businesses and access to a wealth of privileges (tax exemptions, bank loans, state subsidies, franchises, concessions, licenses) for their various interests. For newer players, a seat in the House can provide opportunities for deal and money making and the seed capital for expansion into legitimate business. For these reasons, seats in Congress are so fiercely contested.

Danding Cojuangco Jr. and his two sons, Carlos and Mark, come from a big landholding family in Tarlac but they are in big business as well. [Rolly Salvador]

Danding Cojuangco Jr. and his two sons, Carlos and Mark, come from a big landholding family in Tarlac but they are in big business as well. [Rolly Salvador]

Over the years, the power to make laws has been used by representatives for their personal or family gain. The enactment of the loophole- and exemption-rich Comprehensive Agrarian Reform Law (CARL) in 1988 is a prime example of how landlords used their legislative powers to protect their landholdings. Soon afterward, another law exempting prawn and fish farms from redistribution was enacted, providing more proof of how the business interests of representatives influenced legislation. But since then, there have been no concerted attempts to further erode land reform.

"The unwritten law now," says Abad, "is that the landowners won't pass a law diminishing CARL and we won't pass a law strengthening it. It's a stalemate. But the farmers lose out in the end, because the implementation of the law is weak and the courts have tended to decide in favor of the landowners."

The power of one of the most important business interests in Congress — the property developers like former House Speaker and now Senator Manuel Villar Jr. — was seen with the passage in the Ninth Congress of the Comprehensive and Integrated Shelter Financing Act, which increased the funds for the National Home Mortgage Finance Corporation, the state agency that grants generous financing and loan guarantees to housing firms. It is perhaps no coincidence that about half of all legislators have interests in real estate. Abad thinks that because of this, the House has stalled the enactment of a land-use law that will delineate which lands should remain agricultural and which can be converted to other uses. "The status quo," he asserts, "is better for those in the realty business."

Congress also has the power of the purse, meaning it scrutinizes the annual national budget prepared by the executive branch. The budget hearings have traditionally been the venue for congressmen to wangle concessions, including appointments and projects, from departments and agencies eager to have their budgets approved.

Construction is another major interest in Congress. One of every 10 congressmen declared interests in construction firms in their statements of assets, but some representatives and congressional staff say many more legislators — perhaps as many as seven in 10 — are involved in construction through nominees or dummy companies. They say that such interests become evident during budget hearings when congressmen who have shares in construction firms openly ask for projects from government agencies in exchange for approving their budgets. The same holds true during appointment hearings, when legislators promise to approve the appointment of Cabinet secretaries in exchange for favors or contracts from their agencies.

Last year, the League of Municipalities of the Philippines filed a complaint in the House ethics committee accusing Palawan Rep. Vicente Sandoval, the chair of the House contingent in the Commission on Appointments, for supposedly stalling the confirmation of Heherson Alvarez as secretary of the Department of Environment and Natural Resources (DENR). They said Sandoval opposed Alvarez because the DENR secretary had issued an order banning commercial fishing in waters 15 kilometers or less from the shore. Sandoval, the complainants said, owned a fishing fleet that was bound to suffer from the order.

The congressman subsequently clarified that his family had already gotten out of fishing, although his niece is owner of a big fishing and cannery firm. But while Sandovals' primary business interests are now in cargo shipping, they are also engaged in the repair of commercial fishing vessels.

Fishing interests became evident as well during the deliberations on the Fisheries Code in 1997 and 1998, when legislators involved in fisheries such as Iloilo Rep. Narciso Monfort and Mindoro Occidental Rep. Jose T. Villarosa stood up in defense of commercial fishing. Despite these, however, a Fisheries Code that protected the rights of small fishers was enacted, largely because of pressure from local officials who wanted control over municipal waters for their fishing communities.

As the deliberations on the Code were taking place close to the elections, congressmen led by House Speaker Jose de Venecia, who was then planning to seek the presidency, gave in to the demands of the mayors, much to the disappointment of the commercial fishing lobby. The Code is a good example of how legislators' business interests don't always prevail. The legislative process, while generally skewed in favor of the powerful, can under a combination of circumstances also protect the rights of the less privileged.

It would be inaccurate, therefore, to look at Congress in a one-dimensional way: as an institution designed solely to protect and promote the interests of the rich. The legislative arena is not completely impervious to the demands of the greater society, and it has been able to produce progressive laws such as the Indigenous People's Rights Act (which recognized the right of indigenous peoples to their ancestral land), the Clean Air Act (which banned incinerators and provided measures to alleviate air pollution), and the Urban Housing and Development Act (which provided housing support and some security of tenure to "squatters").

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